Novadaq Technologies: Consolidated Financial Statements
The following excerpt is from the company's SEC filing
A copy of the consolidated financial statements of the Corporation for the year ended December 31, 2013 and the report of Ernst &
Young LLP (E&Y) on the consolidated financial statements accompanying this Circular will be submitted to Shareholders at the Meeting. Copies of the consolidated financial statements and management discussion and analysis for
the year ending December 31, 2013 (MD&A) can also be obtained on SEDAR at www.sedar.com, by contacting the Corporations Corporate Secretary at 5090 Explorer Drive, Suite 202, Mississauga, Ontario, L4W 4T9, or by
telephone at 905-629-3822.
Six (6) nominees have been proposed by the Corporations board of directors (the Board) for election as directors
of the Corporation. The six nominees are listed on page 7. All nominees are currently directors of the Corporation with the exception of Mr. Thomas Wellner who is being nominated for the first time. It is not anticipated that any of the
nominees will be unable to serve as directors, but if that should occur for any reason prior to the Meeting, or any adjournment or postponement thereof, the persons named in the enclosed form of proxy shall be entitled to vote for any other
nominee(s) in their discretion.
Each director elected will hold office until the next annual meeting of Shareholders or until his or her
successor is duly elected or appointed. The current members of the Audit Committee, the Compensation Committee and the Corporate Governance Committee are indicated in the table and notes thereto on page seven (7).
If you complete and return the attached form of proxy, your representatives at the Meeting, or
any adjournment or postponement thereof, will vote your shares FOR the election of the nominees set out herein unless you specifically direct that your vote be withheld.
The Board and Management propose that the firm of KPMG LLP, be appointed as auditors of the Corporation to hold office until the next annual
meeting of Shareholders, and that the Board be authorized to fix the auditors remuneration. KPMG LLP was first appointed as the auditor of the Corporation effective March 31, 2014, upon the resignation, at the request of the Corporation,
of the Corporations previous auditor, E&Y, on March 31, 2014. There have not been any reportable events between the Corporation and E&Y for the purposes of National Instrument 51-102 Continuous Disclosure Obligations. A
copy of the Corporations reporting package with respect to the resignation at the request of the Corporation of E&Y and the appointment of KPMG LLP (including the Notice of Change of Auditor, a letter from E&Y and a letter from KPMG
LLP) is attached as Appendix A to this Circular.
In order to be effective, the resolution must receive the affirmative vote
of a majority of the votes cast by Shareholders present in person or represented by proxy at the Meeting.
If you complete and return the
attached form of proxy, the persons named in the enclosed proxy will vote your shares FOR the appointment of KPMG LLP, as auditors of the Corporation at remuneration to be fixed by the Board, unless you specifically indicate on the form that your
vote be withheld.
The policies of the Toronto Stock Exchange (the TSX) require that every three years after the institution of a
security-based compensation arrangement which does not have a fixed number of securities issuable, as is the case with the Corporations Option Plan, all unallocated options must be reconfirmed and approved by the Corporations
The Option Plan sets the maximum number of shares reserved for issuance under the plan as equal to ten (10%) percent
of the number of shares in the capital of the Corporation that are outstanding from time to time. Based on 55,187,520 common shares being issued and outstanding as of the date hereof, there were 2,726,287 common shares that have not been allocated
under the Option Plan. The Board proposes that the unallocated options under the Corporations Option Plan be approved and authorized until the date that is three (3) years from the date of the Meeting.
The full text of the resolutions approving the unallocated options under the Option Plan is attached to this Circular as Appendix
C. To be effective, the approval of the unallocated options must be given by resolution of the Shareholders and such resolution must receive the affirmative vote of a majority of the votes cast by Shareholders present in person or
represented by proxy at the Meeting. The Board recommends that Shareholders vote in favour of the resolution approving the unallocated options under the Option Plan. Unless instructed to vote against in the accompanying form of proxy, it is the
intention of the persons named therein to vote the shares represented thereby in favour of the approval of the unallocated options under the Option Plan.
April 14, 2014, the Board adopted an amended and restated majority voting policy, reflecting the most recent amendments to the TSX Company Manual with respect to the election of directors. In an uncontested election of directors of the
Corporation, each director shall be elected by the vote of a majority of the shares represented in person or by proxy at the Shareholders meeting convened for such election of directors. If any nominee for director receives a greater number of
votes withheld from his or her election than votes for such election, that director shall immediately tender his or her resignation to the Chair of the Board following the meeting.
The Corporate Governance Committee shall consider any such offer of resignation and recommend to the Board whether or not to accept the
resignation. In its deliberations, the Corporate Governance Committee may consider any stated reasons as to why Shareholders withheld votes from the election of the relevant director, the length of service and the qualifications of the
director whose resignation has been tendered, such directors contributions to the Corporation, the Corporations corporate governance policies, available alternatives to cure the underlying cause of the withheld votes, the overall
composition of the Board (including the current mix of skills and attributes of the Board), whether accepting the resignation would cause the Corporation to fail to meet any applicable listing, statutory or regulatory requirements, and any other
factors that the members of the Corporate Governance Committee consider relevant.
The Board shall act on the Corporate Governance
Committees recommendation within 90 days following the applicable Shareholders meeting, after considering the factors identified by the Corporate Governance Committee and any other factors that the members of the Board consider relevant.
The Board is expected to accept the resignation except in situations where extenuating circumstances would warrant the director continuing to serve on the Board. The resignation of a director will be effective when accepted by the Board. Any
director who tenders his or her resignation pursuant to this policy will not participate in the Corporate Governance Committees consideration regarding whether to recommend acceptance to the Board or the Boards consideration regarding
whether to accept the tendered resignation.
Following the Boards decision on the resignation, the Board shall promptly disclose,
via press release, a copy of which shall be concurrently delivered to the TSX, its decision regarding whether to accept or reject the directors resignation. Should the Board decline to accept the resignation, it shall fully state in the press
release its reasoning behind such decision.
Subject to any applicable corporate law restrictions or requirements, if a resignation is
accepted, the Board may leave the resultant vacancy unfilled until the next annual general meeting. Alternatively, it may fill the vacancy through the appointment of a new director whom the Board considers to merit the confidence of the
Shareholders, or it may call a special meeting of Shareholders at which one or more management nominees would be presented a to fill the vacant position or positions, as applicable.
The table and notes below set out, in respect of each nominee to the Board, the name and municipality of residence of each person proposed to
be nominated for election as a director, the period or periods during which the nominee has served as a director of the Corporation, the nominees principal occupation or employment during the last five years and all other positions with the
Corporation and any affiliate thereof now held by the nominee, if any, and the number of common shares beneficially owned by the nominee or over which the nominee exercises control or direction (in all cases, whether directly or indirectly) as of
April 17, 2014. The statement as to share ownership, control and direction is, in each instance, based upon information furnished by said nominee.
Arun Menawat. Dr. Menawat has been the President and Chief Executive Officer of Novadaq since 2003. From 1999 to 2003,
Dr. Menawat held increasing executive responsibilities including President and Chief Operating Officer of Cedara Software Corporation, a publicly traded medical imaging software company. Prior to joining Cedara, Dr. Menawat was Vice
President of Operations at Tenneco Inc., a diversified business conglomerate, now separated into multiple companies. He also served as business manager and research & development manager at Hercules Incorporated, a specialty chemicals
company. Dr. Menawat holds B.S. in biology from the University of District of Columbia and an M.S. and Ph.D. in Chemical (Bio) Engineering from the University of Maryland. Dr. Menawat completed a fellowship in biomedical engineering at the
National Institute of Health. He also holds an Executive MBA from the J.L. Kellogg School of Management, Northwestern University. Mr. Menawat is also a director of MedCurrent Corporation and Ontario Bioscience Innovation Organization.
Aaron Davidson. Mr. Davidson is a Managing Director of H.I.G. BioVentures and focuses on investment opportunities in the life
sciences sector. Prior to joining H.I.G. in 2004, he was a Vice President with Ventures West with a focus on venture investing in life science companies. Mr. Davidson began his career with Lilly where he spent a decade with Lilly in various
management roles in the United States and Canada including business development, strategic planning, market research, and financial planning. Mr. Davidson currently serves on the boards of directors of Alder Biopharmaceuticals Inc., Cardeas
Pharma, HyperBranch Medical Technology, Intact Vascular, NeurAxon Inc., and Novadaq. He served on the boards of directors of Salmedix and Gemin X Pharmaceuticals prior to their acquisitions by Cephalon in 2005 and 2011, respectively, and the board
of directors of Oncogenex Pharmaceuticals prior to its public listing. Mr. Davidson earned his MBA from Harvard Business School and a Bachelor of Commerce degree from McGill University.
Anthony Griffiths. Mr. Griffiths is Chairman of the Board of the Corporation and is currently an independent business consultant
and corporate director. Mr. Griffiths became the Chairman of Mitel Corporation, a telecommunications company, in 1987, and also assumed the positions of President and Chief Executive Officer in addition to that of Chairman from 1991 to 1993.
Mr. Griffiths is also the Chairman of Russel Metals Inc., and a director of Fairfax Financial Holdings Limited.
Harold O. Koch,
Jr. For the past 38 years, Mr. Koch has held senior management positions in research and development, regulatory, and business development in the pharmaceutical and Class III medical device fields. Mr. Koch was the Vice President of
Business Development & Scientific Affairs and later Senior Vice President at Pamlab LLC (now Nestlé Health Science Pamlab, Inc.) (Pamlab), a developer, licensor and marketer of pharmaceutical products since
July 2002, and effective January 1, 2012, became the Executive Vice President and Chief Scientific Officer of Pamlab. Prior to joining Pamlab, Mr. Koch held senior management positions with Rorer Group, Cooper Companies, Akorn, Inc., and
Santen, Inc. and has consulted for various ophthalmic biotechnology companies. Mr. Koch holds three US patents in ophthalmology, one of which is the leading viscoelastic product in the US (Viscoat), with annual sales in excess of US$100 million
and four pending applications. Mr. Koch holds a Bachelor of Science degree in medical microbiology from Texas A&M University and is an active member of the Licensing Executives Society.
Thomas Wellner. Mr. Wellner is the President and CEO of Revera Inc. (Revera), which is a leading provider of
seniors accommodation, care and services, with over 30,000 employees, having operations in 242 sites across Canada and the U.S. Mr. Wellner is also involved with the holding company, WellCap Advisors Limited, providing strategic guidance
to a number of clients and also investing in healthcare and technology companies. Prior to his role at Rivera, Mr. Wellner was co-CEO of LifeLabs, Canadas largest laboratory services company, where he was responsible for leading the
integration of CML HealthCare (CML) into the LifeLabs organization while leveraging the opportunity to enhance the delivery of diagnostic healthcare services to Canadians, as well as business development functions of the
newly-combined organization. Further, Mr. Wellner was President and Chief Executive Officer of CML, and in such role, he led the company through a transformational and strategic re-assessment, culminating in both the signing of a $1.2B
transaction to crystalize $300,000,000 in shareholder value as well as the merger with LifeLabs. Mr. Wellner also spent 20 years with Eli Lilly & Company in a variety of senior operational and strategic leadership roles in Canada,
China, United States, Latin America, Europe, and the United Kingdom and worked with private equity on a startup as President and CEO of Therapure Biopharma, a privately held bio-manufacturing and drug development company. He currently serves on the
boards of the Ontario Association of Medical Laboratories, Diamedica (DMA TSX), Cipher Pharma (DND-TSX), Freshbooks (private company) and Atlantic Healthcare Plc (private company in the United Kingdom), and Life Sciences Ontario (LSO
Industry Association). He is also on the Board of Governors of Rothesay Netherwood School, a private Atlantic Canadian boarding school, since November 2011, has served on the editorial committee for Pharmaceutical Marketing Europe, and has
led business cases at INSEAD and Harvard Business School. Mr. Wellner holds a Bachelor of Science with Honours in Life Sciences from Queens University.
Mr. Griffiths was a director of AbitibiBowater Inc. until June 2010. The company and certain of its U.S. and Canadian subsidiaries filed
for protection in Canada under the Companies Creditors Arrangement Act (CCAA) and in the United States under Chapter 11 of the United States Bankruptcy Code in April 2009. On December 9, 2010 the company emerged
from creditor protection under the CCAA in Canada and Chapter 11 in the United States.
Mr. Griffiths was formerly a director of
PreMD Inc. until February 2010, and, in connection with the voluntary delisting of the companys shares from the TSX, cease trade orders were issued in April 2009 requiring all trading in, and all acquisitions of, securities of the company to
cease permanently due to the companys failure to file continuous disclosure materials required by Ontario securities law. The cease trade orders are still in effect.
Mr. Griffiths was also a director of Slater Steel Inc. until August 2004, which operated
under the protection of the CCAA in an orderly wind-down in June 2003. In addition, the company and the Canadian court ordered monitor filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code with respect to the
companys United States and Canadian subsidiaries.
Other than as noted above, no director or executive officer of the Corporation
is, or within the past ten years before the date of this Circular has (i) been a director, chief executive officer or chief financial officer of a company that was subject to a cease trade order or similar order or an order that denied the
company access to any exemption under securities legislation for a period of more than 30 consecutive days; or (ii) been a director of a company that, while the nominee was acting in that capacity, made a proposal under legislation relating to
bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, trustee or receiver manager appointed to hold its assets; or (iii) was subject to a cease trade order or
similar order or an order that denied the company access to any exemption under securities legislation for a period of more than 30 consecutive days that was issued after the director or executive officer ceased to be a director, chief executive
officer or chief financial officer and which resulted from an event that occurred while that person was acting in that capacity.
discussion and analysis (CD&A) describes and explains the Corporations policies and practices with respect to the 2013 compensation of its named executive officers, being its Chief Executive Officer
(CEO) and Chief Financial Officer (CFO) and the three most highly compensated executive officers other than the CEO and CFO (collectively with the CEO and CFO, the NEOs).
The Corporations executive compensation program is administered by the Compensation Committee. The Compensation Committee has, as a part
of its mandate, responsibility to review the remuneration of the officers of the Corporation, including the NEOs. The Compensation Committee also evaluates the performance of the Corporations executive officers and reviews the design and
competitiveness of the Corporations incentive compensation programs. The compensation of the NEOs in 2013 was consistent with the Corporations historical practices and in accordance with its compensation philosophy and objectives, as set
The Corporations executive compensation philosophy is to provide competitive compensation to attract and retain talented high-achievers
capable of achieving the Corporations strategic and performance objectives. Consistent with this philosophy, the primary objectives of the Corporations compensation program for its NEOs are:
to attract and retain talented, high-achieving executives critical to the success of the Corporation and the creation and protection of long-term Shareholder value;
to align the interests of Management and the Corporations Shareholders by emphasizing performance based compensation that recognizes individual and the Corporations performance, which help to create
long-term Shareholder value.
The Corporation believes that providing competitive overall compensation enables the Corporation to attract and retain qualified executives and
other personnel. A competitive, fixed base salary is essential for this purpose. In addition, grants of long-term incentives, in the form of time-vested stock options, serve to further encourage the retention of the Corporations NEOs while
incentivizing Management to create and protect Shareholder value.
The Corporations compensation program seeks to align Management interests with Shareholder interests through both short-term and
long-term incentives linking compensation to performance. The short-term incentive is an annual cash bonus which is linked to individual performance and the Corporations performance. Further, long-term incentives of stock option grants
comprise a significant portion of overall compensation for the Corporations NEOs. The Compensation Committee believes this is appropriate because it creates a direct correlation between variations in the Corporations share price (which
is based in part on the Corporations financial performance) and the compensation of its NEOs, thereby aligning the interests of the Corporations executives and Shareholders.
The current members of the Compensation Committee are Mr. Aaron Davidson, Mr. Anthony Griffiths and Mr. William Mackinnon. If
the proposed slate of directors is elected, Mr. Aaron Davidson, Mr. William Mackinnon, and Mr. Anthony Griffiths will serve on the Compensation Committee. Each member of the current and proposed Compensation Committee is independent
within the meaning of National Instrument 58-101Disclosure of Corporate Governance Practices. Committee members have direct experience relevant to their responsibilities based on the senior positions held from both current and previous
employment positions which provide the skill and experience to make decisions on the suitability of the Corporations compensation policies and practices.
reviewing and making recommendations to the Board with respect to the Corporations overall compensation for its NEOs and each element of such compensation, including base salary, annual bonus, long-term incentive
grants, and other benefits and perquisites;
reviewing and approving corporate goals and objectives relevant to the CEO and other members of senior management and evaluating their performance in light of such goals and objectives;
reviewing and making recommendations to the Board with respect to option grants and bonus allocations to eligible non-executive employees; and
In making its annual recommendations and
determinations as to the Corporations executive compensation, the Compensation Committee receives input from Management, but decisions made by the Compensation Committee in determining compensation for the Corporations officers and
directors are the responsibility of the Compensation Committee and may reflect factors and considerations other than the information and recommendations provided by Management.
Although the Compensation Committee is responsible for determining and, where necessary, making recommendations to the Board on the
compensation of the Corporations NEOs, the CEO and other members of Management assist the Compensation Committee in this process by compiling information to be used by the Compensation Committee in its compensation determinations, reporting on
historical compensation levels and methods within the Corporation, reviewing and reporting on the performance of the non-CEO executive officers and compiling and assessing information respecting compensation levels of officers having similar
positions at companies with similar revenues and businesses. Management also assists in advising as to the NEOs performance in relation to their respective entitlements to an annual bonus. See below under Elements of Executive
Compensation Base Salary and Annual Cash Bonus.
The Compensation Committee believes the CEO provides useful input in
advising on recommended levels of compensation for the other NEOs because, due to his frequent interaction with these officers, the CEO is best-positioned to assess their performance and their contribution to the Corporation. While the CEO may
attend meetings of the Compensation Committee to provide such advice and recommendations, he is not a member of the Compensation Committee and he is not entitled to vote on matters before the Compensation Committee. The CEO also is not present
during in-camera sessions of the Compensation Committee and during discussion of his own compensation, whether at the Compensation Committee or Board level.
The Compensation Committee retained Radford, an Aon Hewitt Company (Radford)
in September 2013 as its external independent compensation advisor to review the Corporations current executive compensation program. Radford provided a preliminary report on December 11, 2013, which was reviewed by the Board and
Compensation Committee on February 5, 2014. The preliminary report was included in the Compensation Committees analysis in developing the compensation guidelines for 2014, beginning on page 11 of this Circular. The table below lists the
fees paid to Radford over the last two fiscal years:
Radford assembled a benchmark group of the following 19 companies
to serve as a comparator for compensation purposes, which was approved by the Compensation Committee on February 5, 2014. The selection criteria for the benchmark group were companies in comparable industries with similar market
The Corporation believes these elements of compensation, when
combined, form an appropriate mix of compensation because they provide for stable income, in the case of base salary, as well as an appropriate balance between short-term (annual bonus) and long-term incentives (option grants) to induce and reward
behavior that creates value for Shareholders.
The Compensation Committee recommends the compensation of the Corporations senior executives, including the President and CEO, for
approval by the Board. The Compensation Committee sets the compensation for senior executive officers (other than the President and CEO) on the recommendation of the Chairman of the Board, and the President and CEO. The objective of the Compensation
Committee is to set compensation which is competitive for the markets in which the Corporation operates. Compensation is intended to approximate competitive levels for similar positions in similar organizations of comparable size. In making its
determinations, the Compensation Committee considers the executives experience and established or expected performance.
first quarter of each fiscal year, the Board and Compensation Committee approve written qualitative and quantitative goals, based on certain financial operating metrics. These goals form the basis for the review of the management team and the
determination of compensation, including bonuses, at the end of each year. The Corporation does not disclose financial performance targets or performance goals in respect of specific qualitative performance-related factors on the basis that this
information is confidential and sensitive and its disclosure would seriously prejudice the Corporations business interests.
The compensation balance between salary and bonus is increasingly weighted towards bonus. This
has the benefit of maintaining greater operating leverage while ensuring that the Corporation rewards performers and encourages underperformers to accomplish more. The Compensation Committee and Management will annually establish stretch goals that
have clear objective measures. The goals, while challenging to meet, should be achievable for high performing employees. The intention is to pay 100% of bonus when the objectives are achieved as this is an important part of cash compensation for
Management. It is also intended that if the Corporation has performed well financially, exceeding the financial plans of the Corporation, that individual high performers should be able to earn more than 100% of bonus.
Corporations Option Plan is intended to serve as a long-term incentive plan that will align the interests of the Corporations directors, officers, employees and consultants with the interests of the Shareholders. Once annually, the CEO
develops a list of options to be granted to executives based on the Corporations performance, personal performance and industry benchmarks. The CEO submits this list to the Compensation Committee who reviews in Committee and further recommends
to the Board for approval. For further information regarding the Option Plan, please see the section entitled Equity Compensation Plans in this Circular.
The perquisites provided to the Corporations NEOs in 2013 were limited to car allowances. None of the NEOs received perquisites that
amounted to greater than $10,000.
Compensation payable to each NEO is largely based on the achievement of certain performance goals.
Performance goals affect option grants and annual cash bonuses, and are considered in assessing annual salary adjustments. Performance goals are established annually and designed to align with the Corporations strategic objectives. Performance
goals for the financial year ended December 31, 2013 included a number of internal targets relating to revenue, research & development, corporate development and personal goals established between the NEOs and the Board of the
Corporation. Given the Corporations stage of operations, these performance goals are generally based on achieving specified milestones within time and budget parameters. Compensation payable to a NEO may be adjusted up or down based on
attainment of performance goals and broader conditions.
The Corporation does not engage in nor permit any NEO or director to purchase
financial instruments, including prepaid variable forward contracts, equity swaps, collars, or units of exchange funds that are designed to hedge or offset a decrease in market value of equity securities granted as compensation or held, directly or
indirectly, by the NEO or director.
The Compensation Committee meets annually to review and recommend to the Board the CEOs plan for compensation of directors and officers.
The Compensation Committee also meets periodically throughout the year to address issues of stock option grants, compensation for new senior employees, and to review any reports provided by compensation consultants. In order to identify and mitigate
compensation policies and practices that could encourage a NEO at a principal business unit or division to take inappropriate or excessive risks, the Corporation ensures that its Board has oversight, through the Compensation Committee, regarding
compensation metrics that are aligned with long term value growth of the Corporation. The Corporation has hired an external compensation consultant to ensure that its compensation policies and practices are aligned with industry standards, and are
reasonably unlikely to have a material adverse effect on the Corporation.
Below is a line graph that compares (a) the yearly cumulative total Shareholder return on the Corporations common shares with
(b) the cumulative total return of the TSX Composite Index for the period of time indicated, assuming an initial investment of $100, from 2008 through to 2013 inclusive.
The trend shown in the above graph does not necessarily correspond to the Corporations compensation to
its NEOs for the financial year ended December 31, 2013 or for any prior fiscal periods. The trading price of the Corporations common shares is subject to fluctuation based on several factors, many of which are outside the control of the
Corporation. In determining compensation, the Corporation strives to be competitive in order to attract and retain talented high-achievers capable of achieving the Corporations strategic and performance objectives. See Overview of
The following tables provide information respecting compensation received in or in respect of the financial year ended December 31, 2013
by each of the Corporations NEOs, who are the following executive officers of the Corporation: (a) the CEO, (b) the CFO and (c) the other three most highly compensated executive officers during the financial year ended
December 31, 2013.
Dr. Arun Menawat
President and Chief
Dr. Rick Mangat
Senior Vice President
Mr. Stephen Purcell
Chief Financial Officer
Mr. Roger Deck
Ms. Mary Kay Baggs
Senior Vice President,
Dr. Menawats compensation is derived solely from his role as President and Chief Executive Officer of the Corporation. Dr. Menawat does not receive compensation for his role as a Director of the
All amounts have been actually paid and those amounts paid in Canadian dollars have been translated at the average exchange rate during 2013 of 1.0299 Canadian dollars per USD$1.00.
Executive option-based awards, granted on May 22, 2013, utilized the Black-Scholes model to determine the fair market value
of USD$9.27 per option. The Black-Scholes model was used to determine the fair market value of executive option-based rewards because the Corporations option-based award plan has standard structure and vesting conditions and the Black-Scholes
model is the standard model used within the industry for accounting for equity based payments. The input factors to determine the value were volatility of 74%, exercise price of USD$14.18, interest rate of 2.16%, and an expected life of 6.8 years.
In converting values from Canadian dollars to U.S. dollars, the Corporation utilized an exchange rate of 0.97.
The Corporation did not, at any time during the 2013 financial year, adjust, amend, cancel,
replace or significantly modify the exercise price of options previously awarded to, earned by, paid to, or payable to, a NEO.
Annual incentive payments were based upon the Corporations performance, personal performance and industry
benchmarks, recommended by the CEO and approved by the Compensation Committee for further approval by the Board. Incentive payments occurred no later than December 31, 2013.
The Summary Compensation Table reports all amounts earned for financial year 2013. All amounts included in the annual incentive plans were
paid before year-end 2013.
Annual incentive payments were cash bonuses paid in full during the financial year, to NEOs based on corporate
and individual performance, as recommended by the CEO and approved by the Board.
Corporation does not offer pension plans including defined benefit or defined contribution plans to employees, nor does it provide compensation related to any type of pension plan.
The process the Corporation uses to grant option-based awards to executive officers is described in the
Stock Options section of the CD&A.
Dr. Arun Menawat,
President and Chief Executive
$ $ $
Dr. Rick Mangat,
$ $ $
Mr. Stephen Purcell,
Chief Financial Officer
$ $ $
Mr. Roger Deck,
Vice President, Operations
$ $ $
Ms. Mary Kay Baggs
Senior Vice President,
$ $ $
The following table provides information regarding the value on vesting of incentive plan awards for the financial year ended December 31,
Options which vested in 2013 were in-the-money at year-end. The amount is based on the difference between the market price of the underlying security on the date it vested during 2013 and the exercise price
of the option times the number of options that vested.
The amount is based on the difference between the market price of the underlying security on the day it vested during 2013 and the exercise price of the option times the number of options that vested.
Each of the Corporations NEOs, as of December 31, 2013, is a party to an employment agreement with the Corporation that sets forth
certain instances where payments and other obligations arise on the termination of their employment (whether voluntary, involuntary, or constructive), or upon a change of control. Such obligations and other significant factors for each contract are
Dr. Arun Menawat. The employment agreement with Dr. Menawat is for an indefinite term, subject to the
termination provisions within the agreement. The agreement provides for a base salary of CDN$280,000, which is subject to annual review and adjustment, and eligibility to receive an annual bonus based on a target of 40% of the amount of
Dr. Menawats base salary, which amount may be increased by the Board in its sole discretion. As at January 1, 2014, Dr. Menawats annual salary was CDN$431,000 and will remain effective going forward. The agreement contains
non-solicitation and non-competition covenants in favour of the Corporation which apply during the term of Dr. Menawats employment and for a period of two years following the termination of his employment (one year for his non-competition
covenant if terminated otherwise than for cause), and confidentiality covenants in favour of the Corporation which apply indefinitely. In addition, if Dr. Menawat is terminated for any reason other than for cause, Dr. Menawat will receive
an amount equal to the aggregate of his base salary and bonus in respect of the current fiscal year. If Dr. Menawat is terminated or resigns for good reason (as defined therein) upon a change of control, Dr. Menawat will receive an amount
equal to two times the sum of his base salary in respect of the current fiscal year and the average of his bonus in respect of the past and current year and all of his outstanding options will vest, to the extent that they were previously unvested.
In such circumstances, Dr. Menawat will also receive benefits for two years following termination or resignation for good reason or alternatively, he shall receive the costs of replacing the benefits for the same period.
Dr. Rick Mangat. The employment agreement with Dr. Mangat is for an indefinite term, subject to the termination provisions
within the agreement. The agreement provides for a base salary of CDN$120,000 which is subject to annual review and adjustment. On January 1, 2014, Dr. Mangats annual salary was increased to CDN$246,000. The agreement contains
non-solicitation and non-competition covenants in favour of the Corporation which apply during
the term of Dr. Mangats employment and for a period of two years following the termination of his employment, and confidentiality covenants in favour of the Corporation which apply
indefinitely. In addition, if Dr. Mangat is terminated for any reason other than for cause, Dr. Mangat will receive his base salary and benefits for six months following his termination. As at January 1, 2013, Dr. Mangats
title has changed to Founder and his responsibilities has changed to special projects as assigned by the President and Chief Executive Officer.
Stephen Purcell. The employment agreement with Mr. Purcell is for an indefinite term, subject to the termination provisions within
the agreement. The agreement provides for a base salary of CDN$125,000 which is subject to annual review and adjustment. As at January 1, 2014, Mr. Purcells annual salary was CDN$228,000. The agreement contains non-solicitation and
non-competition covenants in favour of the Corporation which apply during the term of Mr. Purcells employment and for a period of two years following the termination of his employment, and confidentiality covenants in favour of the
Corporation which apply indefinitely. In addition, if Mr. Purcell is terminated for any reason other than for cause, Mr. Purcell will receive his base salary and benefits for six months following his termination.
Roger Deck. The employment agreement with Mr. Deck is for an indefinite term, subject to the termination provisions within the
agreement. The agreement provides for a base salary of CDN $110,000 which is subject to annual review and adjustment. As at January 1, 2014, Mr. Decks annual salary was CDN$228,000. The agreement contains non-solicitation and
non-competition covenants in favour of the Corporation which apply during the term of Mr. Decks employment and for a period of two years following the termination of his employment, and confidentiality covenants in favour of the
Corporation which apply indefinitely. In addition, if Mr. Deck is terminated for any reason other than for cause, Mr. Deck will receive his base salary and benefits for six months following his termination.
Mary Kay Baggs. The employment agreement with Ms. Baggs is for an indefinite term, subject to the termination provisions within
the agreement. The agreement provides for a base salary of CDN$125,000 which is subject to annual review and adjustment. As at January 1, 2014, Ms. Baggs annual salary was CDN$190,532. The agreement contains non-solicitation and non-
competition covenants in favour of the Corporation which apply during the term of Ms. Baggs employment and for a period of two years following the termination of her employment, and confidentiality covenants in favour of the Corporation
which apply indefinitely. In addition, if Ms. Baggs is terminated for any reason other than for cause, Ms. Baggs will receive her base salary and benefits for six months following her termination.
The following table provides details regarding the estimated incremental payments, payables and benefits from the Corporation to each of the
NEOs assuming termination on December 31, 2013:
In the event of a change of control, the employment agreement with Dr. Menawat provides that he would be entitled to twice the amounts reflected, for base salary and severance, for a total amount of $2,088,304.
Also, in the event of a change of control, the agreement provides for the 128,333 options with an in-the-money value of USD$886,732 as at December 31, 2013, subject to the accelerated vesting entitlement.
Amounts are shown in U.S. dollars, the Corporations reporting currency. Amounts actually paid in Canadian dollars have been translated at the average exchange rate during 2013 of 1.0299 Canadian dollars per
The directors of the Corporation, other than the President and CEO, were paid in respect of the financial year-ended December 31, 2013, an
annual fee of $40,000 for their services.
Directors of the Corporation are also eligible to receive stock option grants. During the
fiscal year 2013, each of Mr. Aaron Davidson, Mr. Anthony Griffiths, Mr. Harold Koch, Jr., Mr. William Mackinnon and Mr. G. Steven Burrill were granted 8,500 stock options under the Corporations Option Plan. Options
are granted to directors on an ad hoc basis so as to ensure that all directors have, from time to time, unvested options of the Corporation. The Corporation believes that the unvested options help align the interests of the directors with those of
the Corporation. Except as set out above, directors are not eligible to receive other compensation.
Directors services to the Corporation include attendance during Board and Committee meetings, and the provision of governance and oversight. The level of compensation is determined by benchmarking peer companies
within the Corporations industry.
The amounts in this column represent the grant date fair value of options granted during 2013 and may not represent the amounts the Directors will actually realize from the awards. The grant date fair value of the
options granted during 2013 has been estimated at the date of grant in accordance with the International Financial Reporting Standard 2 using a Black-Scholes option pricing model.
Dr. Menawats compensation is derived solely from his role as President and Chief Executive Officer of the Corporation. Dr. Menawat does not receive compensation for his role as a director of the
None of the members of the Compensation Committee are currently, or were during the financial year ended December 31, 2013, an officer or
employee of the Corporation. No member of the Compensation Committee is, or during the financial year ended December 31, 2013 was, indebted to the Corporation or any of its subsidiaries, or to any other entity where such debt is supported by a
guarantee, support agreement, letter of credit or other similar arrangement or
understanding, provided by the Corporation or its subsidiaries. Except as described or referred to in this Circular, no member of the Compensation Committee has, or had during the financial year
ended December 31, 2013, any material interest in any transaction that has materially affected or would materially affect the Corporation or any of its subsidiaries.
Effective as of March 29, 2005, and as amended and restated (as discussed below), the Board approved the Option Plan whereby options are
granted at the current fair market value of the underlying common shares of the Corporation, in accordance with the terms of the Option Plan applicable to all employees, senior officers, directors and consultants of the Corporation or any affiliate
of the Corporation. The maximum number of common shares that may be issued under the Option Plan may not exceed 10% of the number of outstanding common shares of the Corporation from time to time. As at April 17, 2014, 2,792,465 options have
been granted under the Option Plan and based upon 55,187,520 common shares being issued and outstanding as of the date hereof, there remain 2,726,287 common shares that have not been allocated under the Option Plan.
At the meeting of Shareholders of the Corporation held on May 15, 2008, the Shareholders ratified, confirmed and approved an amendment to
the then existing Option Plan extending the maximum term of the options from five (5) years to ten (10) years. The extension applied to all options which were outstanding as of March 17, 2007, being the date the Board amended the
Option Plan, subject to shareholder ratification. The Option Plan was ratified at the annual and special Shareholder meeting held on May 20, 2011.
The Option Plan is administered by the Board and the committees of the Board to which it may delegate authority. The Board is responsible for
determining the terms relating to each option, including the number of common shares subject to each option, the exercise price and the expiration date of each option, and the extent to which each option is exercisable during the term of the option.
Pursuant to the Option Plan, the price at which the options are granted is equal to the volume weighted average trading price of the common shares on the exchange where they are listed on the five trading days immediately preceding the date of grant
or such greater amount as the Board may determine, provided, however, that the exercise price of the options shall not be less than the minimum exercise price required by applicable rules of the TSX. Options generally vest over a period of three
years and must be exercised no later than ten years from the date granted.
Certain restrictions on grants apply, including that the
number of common shares reserved for issuance to insiders under the Option Plan and any other securities-based compensation arrangements shall not exceed 10% of the outstanding issue of common shares of the Corporation, and the number of common
shares issued to insiders, within any one-year period, under the Option Plan and any other securities-based compensation arrangements cannot exceed 10% of the outstanding issue of common shares.
The Corporation does not provide financial assistance to option holders in connection with their participation in the Option Plan. Unless
otherwise provided for, upon an option holders employment with the Corporation being terminated by the Corporation, whether with cause or without cause, or upon the option holders resignation (other than for retirement), the expiry date
of any vested stock option granted to him or her shall be the earlier of (i) the expiry
date shown on the relevant notice of grant and (ii) the date that is thirty (30) days following the date such option holder ceased to be an employee of the Corporation; all stock
options granted that are outstanding but not vested on such date of termination or resignation immediately terminate. If the option holder dies, retires, ceases to be a director (in the case where an option holder is not an employee or consultant of
the Corporation), or ceases to be eligible under the Option Plan due to disability, the expiry date of any vested stock option granted to him or her is the earlier of (i) the expiry date shown on the relevant notice of grant or (ii) the
date that is one hundred and eighty (180) days following the date such option holder retired or ceased to be a director (as the case may be). All stock options granted that are outstanding but not vested on such date immediately terminate. Each
option is non-transferable except by will or by laws of succession in the domicile of the deceased option holder.
Subject to any
necessary regulatory approval, the Board may, at its discretion, amend the Option Plan and the terms and conditions of any option previously granted and may make such amendment for the purpose of complying with any changes in any relevant law, rule,
regulation, regulatory requirement or requirement of the TSX, or for any other purpose which may be permitted by law. Any such amendment, however, shall not alter the terms or conditions of, or impair any right of any participant pursuant to any
option awarded prior to such amendment, without the consent of such participant, unless such amendment is required by applicable law, any applicable stock exchange or governmental entity.
Notwithstanding the foregoing, the Board shall be required to obtain shareholder approval in order to: (i) increase the maximum number of
shares issuable under the Option Plan, (ii) reduce the exercise price or purchase price of any option, (iii) extend the term of any option, (iv) make a change to the class of persons eligible to participate under the Option Plan, or
(v) make any amendment which would permit any option granted under the Option Plan to be transferable or assignable other than by will or under succession laws (estate settlement).
Under the Option Plan, the maximum aggregate number of common shares which may be subject to options under the Option Plan is 10% of the common shares of the Corporation outstanding from time to time.
Effective as of July 1, 2008, the Board approved an Employee Share Purchase Plan (ESPP) for the purpose of encouraging
and facilitating common share ownership by employees, to further align the interests of employees with the success of the Corporation, and to attract and retain employees. All full-time employees who have worked at least three consecutive complete
months for the Corporation are eligible to be participants (Participants). Under the ESPP, a plan administrator was appointed to receive Participant contributions up to 10% of the Participants annual base salary, the
Corporation matching contributions equal to 15% of Participant contributions, and to use total contributions to purchase common shares on behalf of Participants through the facilities of the primary exchange on which the common shares are listed for
trading, being currently the TSX and the NASDAQ. Common shares purchased under the ESPP are subject to a transfer restriction for six months after the date of purchase. Purchase expenses are paid by the Corporation, and sale expenses are paid by the
Participant. The Corporation may amend, suspend, or terminate the ESPP at any time.
As at April 17, 2014, no individual who is, or at any time during the most recently completed financial year was, a director or executive
officer of the Corporation, and no proposed nominee for election as a director for the Corporation, and no associate of any such director, executive officer or proposed nominee is, or at any time since the beginning of the most recently completed
financial year of the Corporation has been, indebted to the Corporation or any of its subsidiaries.
Except as disclosed elsewhere in this Circular, no director or officer of the Corporation, or any associate or affiliate thereof or, to the
knowledge of the Corporation, any holder holding 10% or more of the voting shares of the Corporation or any associate or affiliate thereof, has had any material interest, direct or indirect, by way of beneficial ownership of shares or otherwise, in
any matter to be acted upon or in any transaction of the Corporation since January 1, 2013, or in any proposed transaction that has materially affected or will materially affect the Corporation or any of its affiliates.
Shareholders entitled to vote at the next annual meeting of Shareholders and who wish to submit a proposal in respect of any matter to be
raised at such meeting must ensure that the Corporation receives such proposal no later than December 20, 2014.
The Corporation will provide to any person or company, upon receipt of a request by the Corporate Secretary of the
Corporation and, in the case of a security holder, without charge, a copy of: (i) the Corporations most recent Annual Information Form, together with a copy of any document, or the pertinent pages of any document incorporated therein by
reference; (ii) the financial statements for the Corporations fiscal year ended December 31, 2013, together with the accompanying report of the auditor, and any interim financial statements of the Corporation that have been filed for
any period subsequent to December 31, 2013 and managements discussion and analysis thereof; and (iii) this Circular. Additional information relating to the Corporation may be accessed on SEDAR at www.sedar.com and the website of the
U.S. Securities and Exchange Commission at www.sec.gov. Financial information is provided in the Corporations comparative financial statements and MD&A.
The undersigned President and Chief Executive Officer of the Corporation certifies that the contents and sending of this Circular have been
approved by the Board of the Corporation.
On March 21, 2014, it was determined, pursuant to a resolution of the board of directors (the Board) of the Corporation, on the recommendation of the audit committee (the Audit
Committee), to engage the accounting firm of KPMG LLP to fill the vacancy by Ernst & Young LLP and to hold office until the next annual and special meeting of shareholders of the Corporation, to be held on May 21, 2014, at
which time KPMG LLP will be proposed for appointment as auditor of the Corporation.
Ernst & Young LLP tendered its resignation on March 31, 2014, as auditor of the Corporation at the request of the Corporation.
The determination was considered and approved by each of the Board and the Audit Committee, and constitutes a termination of Ernst & Young LLP and an appointment of KPMG LLP for the
purposes of NI 51-102.
The reports of Ernst & Young LLP on the financial statements of the Corporation for the two most recently completed fiscal years, being the years ended December 31, 2012 and 2013, did not express a
Pursuant to National Instrument 51-102 (Part 4.11). we have read the above-noted Change of Auditor Notice and confirm our agreement with the information
contained in the Notice pertaining to our firm.
Pursuant to National Instrument 51-102 (Part
4.11), we have read the Notice of Change of Auditors of Novadaq Technologies Inc. dated March 31, 2014 and confirm our agreement with the information contained in the Notice pertaining to our firm.
KPMG LLP is a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. KPMG Canada
provides services to KPMG LLP.
On June 30, 2005, the
Canadian Securities Administrators (CSA) implemented National Instrument 58-101 Disclosure of Corporate Governance Practices (NI 58-101) and National Policy 58-201 Corporate Governance
Guidelines (NP 58-201). NI 58-101 and NP 58-201 have replaced the corporate governance guidelines of the TSX and provide for mandated disclosure under NI 58-101 of a corporations corporate governance practices, as well
as best practices under NP 58-201.
The Board and Management recognize the importance of corporate governance to the effective Management
of the Corporation and to its Shareholders. The Corporations approach to significant issues of corporate governance is designed with a view to ensuring that the business and affairs of the Corporation are effectively managed so as to enhance
Shareholder value. The Board and the Corporation have devoted significant attention and resources to ensuring that the Corporations system of corporate governance meets or exceeds applicable legal and stock exchange requirements in both Canada
and the United States.
The Board is currently
comprised of six (6) directors. The Board is responsible for determining whether or not each director is independent (as defined below) and has determined that a majority of the current Board (namely Mr. Aaron Davidson,
Mr. Anthony Griffiths, Mr. Harold Koch, Jr., Mr. William Mackinnon and Mr. G. Steven Burrill) is independent, and if elected as a director, Mr. Thomas Wellner, a proposed director, would also be independent. Pursuant
to National Instrument 58-101 and National Instrument 52-110 Audit Committees, a director is independent if such director has no direct or indirect material relationship with the Corporation, which could, in the view of the
Corporations Board, be reasonably expected to interfere with the exercise of a members independent judgment. Dr. Arun Menawat is not independent under these standards as he is also the President and CEO of the Corporation.
The Board has not adopted a formal policy limiting the number of directors who sit on a board of directors of another public company but
believes disclosure of common board memberships is important. Given that many of the directors have a variety of business interests, directors are required to disclose to the Board or any applicable committee thereof any real or perceived conflict
in relation to any matter or proposed matter to be considered and in such circumstances, it is the Boards policy that such directors excuse themselves from all deliberations of such matters.
The entire complement of independent directors on the Board and each of the committees are encouraged to meet regularly without Management
present. The Chair of the Board conducts these sessions at Board meetings and the chair of each committee conducts them at committee meetings. During the last financial year ended December 31, 2013, there have been seven (7) such meetings
of the independent directors.
Mr. Anthony Griffiths, the Chair of the Board is a non-executive director and meets the Boards independence standards. The primary
functions of the Chair are to facilitate the operations and deliberations of the Board and the satisfaction of the Boards responsibilities under its mandate. The Chairs key responsibilities include duties relating to setting Board
meeting agendas, chairing board and Shareholder meetings, director development, providing input on potential director candidates, providing feedback to the President and CEO, and communicating with Shareholders and regulators. The responsibilities
of the Chair are reviewed by the Governance Committee and considered by the Board for approval each year.
During the financial year ended December 31, 2013, the Board met a total of fifteen times, including one (1) Special Committee
Meeting, the Audit Committee met a total of four (4) times, the Compensation Committee met a total of two (2) times, and the Governance Committee met a total of two (2) times. The attendance record of each director is set out below:
Summary of Board and Committee Meetings Held
For the 12-month period ended December 31, 2013
Summary of Attendance of Directors
For the 12-month period ended December 31, 2013
The Board is responsible for supervising the management of the Corporations business and affairs. Any responsibility that is not
specifically delegated to a Board committee or to Management remains with the full Board.
The Board, through the Governance Committee, reviews and adopts a strategic process on an annual
basis that takes into consideration the opportunities and risks of the business. The Board oversees the implementation of the strategic process by Management. Members of Management also frequently make presentations to the Board and/or the
Governance Committee regarding updates on and discussions of the strategic process and implementation actions.
The Board oversees the
identification and management of the Corporations principal risks. The Governance Committee has been delegated the responsibility of identifying the principal risks of the business and ensuring the implementation of appropriate risk management
systems, which are approved by the Board upon the recommendations of the Governance Committee. In addition, the Audit Committee, through its regular meetings with the external counsel and their review of the findings and activities of the external
auditors, are aware of the significant risks or exposures to the Corporations business and has been given the responsibility of reviewing the programs of risk assessment and the steps taken by the Corporation to address significant risks or
exposures of all types, including insurance coverage and tax compliance, and reporting to the Board on a regular basis.
through the Governance Committee, oversees succession planning, including the development and monitoring of Management and the Board. The Governance Committee is responsible, to the extent possible, to satisfy itself of the integrity of the
President and CEO and other executive officers of the Corporation and that such individuals create a culture of integrity throughout the Corporation.
The Board, through its Governance Committee, has discussed and considered how the Corporation communicates with its Shareholders, other
stakeholders and the public. The Board has approved a policy respecting confidentiality, disclosure and insider trading to establish, among other things, consistent guidelines for determining when information is material, how it is disclosed and, to
avoid making selective disclosure, and making all material disclosures on a widely disseminated basis. The Governance Committee has been delegated the responsibility of overseeing the effectiveness and compliance with such policy and to report to
the Board on a regular basis. The Corporation seeks to communicate with its Shareholders through a variety of channels, including quarterly reports, annual reports, annual information forms, news releases and conference calls.
The Board, through the Audit Committee and with the assistance of the Governance Committee, reviews with Management and the Corporations
auditors the adequacy of the Corporations internal controls and management information systems on a regular basis. The Board has established a prescribed checklist for itself, the Audit Committee and the Governance Committee. These governance
checklists outline key responsibilities and tasks and their scheduled performance and completion for each quarter and year-end.
The Board has not developed written position descriptions for the Chair of the Board or the Chair of each committee of the Board. The Board
believes that the charters of the Audit Committee and the Governance Committee adequately delineate the roles of the Chairs of such committees. Each of the Audit Committee and the Governance Committee are responsible for reviewing their respective
charters on a regular basis and to recommend to the Board any changes as considered appropriate from time to time.
The Corporation has
developed written position descriptions for the CEO and other positions in senior management. The Governance Committee has been delegated the responsibility of defining and updating, on a regular basis, with the President and CEO, the position
descriptions of each position in senior management.
An orientation and education program is available for new members of the Board, which includes an introductory overview of the Corporation,
including all relevant corporate information, committee mandates, policies affecting directors, the role, duties and expectations of directors and other background information. The Governance Committee is responsible for carrying out the orientation
and continuing educations functions.
To foster the Boards familiarity with corporate matters on an on-going basis, the Board from
time to time, invites senior operating management to attend Board meetings to report on their respective business unit activities. Also, such senior operating management provide written reports to the Board.
The Board has
adopted a Code of Business Ethics and Conduct (the Code) that applies to all directors, officers and employees of the Corporation and its subsidiaries. The Code provides a framework of guidelines and principles to encourage
ethical and professional behavior in conducting the business of the Corporation. The Code is reviewed and monitored on a regular basis by the Audit Committee.
The Disclosure and Compliance Committee, comprised of the Chief Executive Officer, the Chief Financial Officer and a senior vice president,
monitors and reviews day-to-day compliance with the Code. The Disclosure and Compliance Committee meets quarterly in advance of each quarterly Audit Committee meeting to review and report compliance and bring forward any issues under the Code that
have arisen in the preceding financial quarter.
At each regularly scheduled quarterly meeting of the Audit Committee, the Chair of the
Audit Committee also makes a point to inquire of each person in attendance, including the Chief Executive Officer, the Chief Financial Officer and the auditors if there are any known issues related to compliance with the Corporations Code. Any
issues are then reported to the Board and the Governance Committee.
It is the Corporations policy to seek to ensure that its best interests are paramount in
all of its dealings with customers, suppliers, consultants, competitors, existing and potential business partners and other representatives, and are conducted in a manner that avoids actual or potential conflicts of interest.
The text of the Code is available at www.sedar.com and the Corporations website at www.novadaq.com or can be obtained by request from
The Governance Committee is responsible for establishing qualifications for directors and procedures for identifying possible nominees who meet
these criteria. In doing so, the Governance Committee is to consider the desired competencies and skills and the appropriate size of the Board. When vacancies arise on the Board, the Governance Committee recommends to the Board potential nominees,
having regard to the needs of the Board.
The Governance Committee is responsible for assessing the effectiveness of the Board as a whole and its committees. The Governance Committee
evaluates the performance and contribution of individual members of the Board in their capacity as directors and as members of any Board Committee and recommends timely changes in the role, size, composition and structure of the Board and the Board
During each of the quarterly meetings held each year by the Board and its committees, that is, the Audit Committee,
Compensation Committee and the Governance Committee, there are in-camera sessions where there is opportunity to discuss the performance of individual directors and senior management. The Chair of the Board has in-person meetings at least monthly and
otherwise holds meetings on a periodic basis with the Chief Executive Officer to discuss the operation of the Corporation.
The Board has three committees. Each committee has a charter, which is reviewed by the Board and considered by the Board for approval every
Committee is currently composed of Mr. William Mackinnon, Mr. Harold O. Koch, Jr., and Mr. Aaron Davidson. If the proposed slate of directors is elected, Mr. William Mackinnon, Mr. Harold O. Koch, and
Mr. Aaron Davidson will serve on the Audit Committee. The Board considers all current and prospective members of the Audit Committee to be independent and financially literate within the meaning of National Instrument
52-110 Audit Committees. The Audit Committee has a specifically defined mandate and charter which clearly defines its role and responsibilities. The Audit Committee is responsible for
recommending to the Board the appointment and compensation of the Corporations external auditor; overseeing the work of the external auditor, including the resolution of disagreements
between the external auditor and Management; pre-approving all non-audit services (or delegating such pre-approval if and to the extent permitted by law) to be provided to the Corporation or its subsidiaries by the Corporations external
auditor, satisfying themselves that adequate procedures are in place for the review of the Corporations public disclosure of financial information extracted or derived from its financial statements, including periodically assessing the
adequacy of such procedures, establishing procedures for the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal controls or auditing matters, and for the confidential, anonymous submission by
employees of the Corporation or its subsidiaries of concerns regarding questionable accounting or auditing matters, and reviewing and approving the annual and interim financial statements, related Management Discussion and Analysis and other
financial information provided by the Corporation to any governmental body or the public. A copy of the Audit Committee charter is available at www.sedar.com, as an appendix to the Corporations most recently filed Annual Information Form for
the year ended December 31, 2013 (the AIF).
The Audit Committee is to be comprised of a minimum of three
directors, as determined by the Board and elected by the Board on an annual basis or until their successors shall be duly appointed. Unless a Chair of the Audit Committee is elected by the full Board, the members of the Audit Committee may designate
a chair by majority vote of the full Audit Committee membership. The Chair of the Audit Committee is currently Mr. William Mackinnon. Additional information regarding the Corporations Audit Committee can be found in the Corporations
AIF. The AIF can be found on www.sedar.com, or a copy of it can be obtained by contacting the Corporations Corporate Secretary at 5090 Explorer Drive, Suite 202, Mississauga, Ontario, L4W 4T9, or by telephone at 905-629-3822.
Committee reviews and recommends for Board approval the remuneration of directors, including the annual retainer, Option Plan participation and other benefits conferred upon the directors.
The Compensation Committee also recommends the compensation of the Corporations senior executives, including the President and CEO for
approval by the Board. The objective of the Compensation Committee is to set compensation which is competitive for the markets in which the Corporation operates and which results in the creation of Shareholder value over the long-term (i.e.,
Management and Board incentives are aligned with owners gains). The Compensation Committee seeks to ensure that base salaries are competitive relative to the industry and bonuses, if any, reflect individual performance in the context of the
overall performance of the Corporation, as measured by issues such as profitability, stock price and initiatives undertaken in the year.
Committee is responsible for reviewing, approving and if appropriate, recommending to the Board the compensation and objectives of the President and CEO and other members of Management; administering the Corporations compensation plans for
Management and the Board, including the Corporations Option Plan and other compensation plans or structures that may be adopted by the Corporation from time-to-time; assessing the effectiveness of the Board as a whole, and that of individual
members; periodically assessing the Corporations governance practices; proposing nominees to the Board; recommending resignation or removal of directors or officers where their current or past conduct is or has been improper or liable to
adversely affect the Corporation or its reputation; and orienting new directors.
The Board determines the composition of the Committee,
including its number of members. The members of the Governance Committee and its chair shall be elected by the Board on an annual basis, or until they are removed by the Board or their successors are duly appointed. Unless a Chair of the Governance
Committee is elected by a full Board, the members of the Governance Committee may designate a chair by majority vote of the full Governance Committee membership. Currently, the Chair of the Governance Committee is Mr. G. Steven Burrill. If the
proposed slate of directors is elected, the new Chair of the Governance Committee is intended to be Mr. Harold Koch and the Governance Committee will be composed of Mr. Harold Koch, Mr. Anthony Griffiths and a third member as elected
at the first Board meeting following the Meeting.
During 2013, all members of the Audit Committee, the Compensation Committee and the
Governance Committee met the Boards independence standards. If the proposed slate of directors is elected, all new committee members will be similarly independent.
THAT the unallocated options issuable under the Second Amended and Restated Stock Option Plan of the Company, be and are hereby approved, ratified, sanctioned and confirmed, which approval and authorization shall
be effective until May 14, 2017;
THAT any officer or director of the Company be, and each is hereby, authorized and directed, for and on behalf of the Company, to sign and execute all documents, to conclude any agreements and to do and perform
all acts and things deemed necessary or advisable in order to give effect to this Resolution, including compliance with all securities laws and regulations; and
THAT the Board of Directors of the Company be, and it is hereby, authorized to cause all measures to be taken, such further agreements to be entered into and such further documents to be executed as may be deemed
necessary or advisable to give effect to and fully carry out the intent of this Resolution.
The above information was disclosed in a filing to the SEC. To see this filing in its entirety, click here.
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