UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

 

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934

 

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	☒	Definitive Proxy Statement
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		Soliciting Material Pursuant to §240.14a–12
UR-ENERGY INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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UR-ENERGY INC.

10758 West Centennial Road, Suite 200

Littleton, Colorado 80127

 

 

NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD ON JUNE 3, 2021

 

To the Shareholders of Ur-Energy Inc.:

 

The Annual and Special Meeting of Shareholders of Ur-Energy Inc. (the “Company”), will be held in person at the Hampton Inn & Suites, 7611 Shaffer Parkway, Littleton, Colorado 80127 on Thursday, June 3, 2021 at 1:00 p.m. Mountain Time / 3:00 p.m. Eastern Time to receive the audited consolidated financial statements of the Company for the year ended December 31, 2020, together with the report from the auditors thereon, and for the purpose of considering and voting upon proposals to:

 

 

The Board of Directors recommends a vote “FOR” each of the director nominees and “FOR” Proposals 2, 3 and 4. The Board of Directors has fixed the close of business on April 13, 2021 as the record date for determination of the shareholders entitled to vote at the meeting and any adjournment(s) or postponement(s) thereof. This Notice of Annual and Special Meeting of Shareholders and related proxy materials are first being distributed or made available to shareholders beginning on or about April 21, 2021.

 

We cordially invite you to attend the Annual and Special Meeting of Shareholders either in person or to listen by tollfree access as described in the Management Proxy Circular. Whether or not you plan to attend, it is important that your shares be represented and voted at the meeting. Please refer to your proxy card for more information on how to vote your shares at the meeting and return your voting instructions as promptly as possible.

 

Important Notice Regarding Availability of Proxy Materials for the 2021 Annual and Special Meeting of Shareholders: The attached Management Proxy Circular, proxy card, and the Company’s Annual Report to Shareholders (including financial statements) for the fiscal year ended December 31, 2020 are available at www.envisionreports.com/URGQ2021 or can be found at http://www.ur-energy.com.

 

Thank you for your support.

 

	BY ORDER OF THE BOARD OF DIRECTORS,
	/s/ Jeffrey T. Klenda, Chairman

 

 

MANAGEMENT PROXY CIRCULAR

TABLE OF CONTENTS

 

SOLICITATION OF PROXIES	1
APPOINTMENT OF PROXIES	2
VOTING INSTRUCTIONS	2
REVOCATION OF PROXIES	3
VOTING AND DISCRETION OF PROXIES	3
COMMON SHARES ENTITLED TO VOTE	4
VOTES REQUIRED	4
QUORUM	4
RIGHTS OF DISSENT	4
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	5
PARTICULARS OF MATTERS TO BE ACTED UPON	6
Proposal No. 1: Election of Directors	6
Proposal No. 2: Re-Appointment of PricewaterhouseCoopers LLP, Chartered Professional Accountants, as our Independent Auditors and Approval for the Directors to Fix the Remuneration of the Auditors	9
Proposal No. 3: Approval, on an Advisory Basis, of the Compensation of the Company’s Named Executive Officers	10
Proposal No. 4: Approval of the Amendments to the Ur-Energy Inc. Amended and Restated Restricted Share Unit and Equity Incentive Plan (the “RSU&EI Plan”)	10
MANAGEMENT	13
COMPENSATION PROGRAM	14
EXECUTIVE COMPENSATION	22
EQUITY INCENTIVE PLANS	24
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL	28
COMPENSATION OF DIRECTORS	31
REPORT OF THE AUDIT COMMITTEE	33
STATEMENT OF CORPORATE GOVERNANCE PRACTICES	34
INDEBTEDNESS OF DIRECTORS AND OFFICERS	44
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	44
HOUSEHOLDING	45
ACCOMPANYING FINANCIAL INFORMATION AND INCORPORATION BY REFERENCE	45
ANNUAL REPORT TO SHAREHOLDERS	45
SHAREHOLDER PROPOSALS	45
AVAILABILITY OF DOCUMENTS	46
OTHER MATTERS	46
APPROVAL	46
SCHEDULE A	A-1

 

 

UR-ENERGY INC.

10758 West Centennial Road, Suite 200

Littleton, Colorado 80127

 

 

MANAGEMENT PROXY CIRCULAR

ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS

JUNE 3, 2021

 

 

SOLICITATION OF PROXIES

This Management Proxy Circular (the “Circular”) is furnished in connection with the solicitation by the management of Ur-Energy Inc. (“we,” “us,” the “Company” or “Ur-Energy”) of proxies for use at the annual and special meeting of shareholders of the Company (the “Meeting”) to be held in person at the Hampton Inn & Suites, 7611 Shaffer Parkway, Littleton, Colorado 80127 on Thursday, June 3, 2021 commencing at 1:00 p.m. Mountain Time / 3:00 p.m. Eastern Time, and at any adjournment thereof, for the purposes set forth in the accompanying Notice of Meeting (the “Notice”). The solicitation will be primarily by mail, but proxies may also be solicited personally or by telephone by directors, officers, employees or representatives of the Company. All costs of solicitation will be borne by the Company. This Circular and related proxy materials are being first distributed or made available to shareholders beginning on or about April 21, 2021. The information contained herein is given as at April 13, 2021 unless otherwise indicated.

 

We expect to hold our annual meeting in person on June 3, 2021. We continue to be mindful of the public health and travel concerns our shareholders may have and recommendations that public health and governmental officials have issued and may issue in light of the continuing COVID-19 situation. As a result, if the current public health situation in Colorado worsens, we may impose additional procedures or limitations to assure the safety of meeting attendees or may decide to hold the meeting in a different location or solely by means of remote communication (i.e., a virtual-only meeting). We currently plan to address COVID-19 concerns relating to the meeting by having directors and other meeting participants whose physical presence at the meeting is not essential attend and participate in the meeting via teleconference. 

 

In addition (i) shareholders and others who might otherwise attend in person may instead listen to the meeting in real-time by calling toll-free 877-407-9124 (international: 201-689-8584) and/or logging on to https://agm.issuerdirect.com/urg and (ii) shareholders who have questions they would like to pose at the meeting may send those questions to our Corporate Secretary in advance of the meeting at legaldept@Ur-Energy.com.  Please include your name and return email address when you convey your questions. We believe that these procedures will reduce risks relating to COVID-19 and provide many of the benefits of a virtual-only meeting while minimizing associated costs of a virtual meeting. 

 

As set forth below, if you are a registered shareholder and wish to vote the day of the meeting or are a proxy appointee voting the day of meeting, you must do so in person. We will continue to monitor the COVID-19 situation and if changes to our current plan become advisable, we will disclose the updated plan on our website and by press release. We encourage you to check our website prior to the meeting if you plan to attend in person. We look forward to welcoming everyone in person next year.

 

All dollar amounts in this Circular are in U.S. dollars, except where indicated otherwise. On April 13, 2021, the noon exchange rate of Canadian currency in exchange for United States currency, as reported by the Bank of Canada, was US$1.00 = C$1.2554.

 

This Circular, the proxy (or voter information) card, and the Company’s Annual Report to Shareholders (including financial statements) for the fiscal year ended December 31, 2020 are available at https://www.ur-energy.com.

 

 

APPOINTMENT OF PROXIES

The persons named in the enclosed form of proxy are the Chairman of the Board/Chief Executive Officer, Mr. Klenda, and our Corporate Secretary, Penne Goplerud. Each shareholder has the right to appoint a person other than the persons named in the enclosed form of proxy, who need not be a shareholder of the Company, to represent such shareholder at the Meeting or any adjournment thereof. Such right may be exercised by inserting such person’s name in the blank space provided in the form of proxy and striking out the other names or by completing another proper form of proxy.

 

VOTING INSTRUCTIONS

Registered Shareholders

 

There are two methods by which registered shareholders (“Registered Shareholders”), whose names are shown on the books or records of the Company as owning common shares no par value of the Company (“Common Shares”), can vote their Common Shares at the Meeting either in person at the Meeting or by proxy. Should a Registered Shareholder wish to vote in person at the Meeting, the Registered Shareholder should attend the Meeting where his or her vote will be taken and counted. Although we are making a toll-free number available to listen to the Meeting, if you wish to vote the day of the Meeting, you must do so in person. Should the Registered Shareholder not wish to attend the meeting or not wish to vote in person, his or her vote may be cast by proxy through one of the methods described below and the Common Shares represented by the proxy will be voted or withheld from voting, in accordance with the instructions as indicated in the form of proxy, on any ballot that may be called for, and if a choice was specified with respect to any matter to be acted upon, the shares will be voted accordingly.

 

A Registered Shareholder may vote by proxy by using one of the following methods: (i) the paper form of proxy to be returned by mail or delivery; (ii) by Internet; or (iii) by telephone. The methods of using each of these procedures are as follows:

 

Voting by Mail. A Registered Shareholder may vote by mail or delivery by completing, dating and signing the enclosed form of proxy and depositing it with Computershare Investor Services Inc. (the “Transfer Agent”) using the envelope provided or by mailing it to Computershare Investor Services Inc., Attention: Proxy Department, 100 University Avenue, 8th Floor, Toronto, Ontario M5J 2Y1 or to the Corporate Secretary of the Company at 10758 West Centennial Road, Suite 200, Littleton, Colorado 80127 for receipt no later than 11:59 p.m. (ET) on Monday, May 31, 2021, or if the Meeting is adjourned, by no later than 1:00 p.m. Mountain Time on the last business day preceding the reconvened Meeting.

 

Voting by Internet. A Registered Shareholder may vote by Internet by accessing the following website: www.envisionreports.com/URGQ2021, and going to “vote now.” When you log on to the site you will be required to input a control number as instructed on the form of proxy. Please see additional information enclosed with the Circular on the form of proxy. Registered Shareholders may vote by Internet for receipt no later than 11:59 p.m. (ET) on Monday, May 31, 2021, or if the Meeting is adjourned, no later than 1:00 p.m. Mountain Time on the last business day preceding the reconvened Meeting.

 

Voting by Telephone. A Registered Shareholder may vote by telephone by calling the toll free number 1-866-732-8683 from a touch tone phone. When you telephone you will be required to input a control number as instructed on the form of proxy. Please see additional information enclosed with the Circular on the form of proxy. Registered Shareholders may vote by telephone for receipt no later than 11:59 p.m. (ET) on Monday, May 31, 2021, or if the Meeting is adjourned, no later than 1:00 p.m. Mountain Time on the last business day preceding the reconvened Meeting.

 

Voting by mail or the Internet are the only methods by which a Registered Shareholder may choose an appointee other than the management appointees named on the proxy and must be completed by the Registered Shareholder or by an attorney authorized in writing or, if the Registered Shareholder is a corporation or other legal entity, by an authorized officer or attorney.

 

 

Non-Registered Shareholders (Beneficial Owners)

 

If you hold shares through a broker, bank or other nominee, you will receive material from that firm asking how you want to vote and instructing you of the procedures to follow in order for you to vote your shares. If the nominee does not receive voting instructions from you, it may vote only on proposals that are considered “routine” matters under applicable rules. Each of the proposals at the Meeting, other than Proposal No. 2, are “non-routine” matters and therefore an intermediary holding shares for a beneficial owner will not have the authority to vote on those matters in the absence of instructions from the beneficial owner. A nominee’s inability to vote on some proposals because it lacks discretionary authority to do so is commonly referred to as a “broker non-vote.” Broker non-votes are not counted in the tabulation of votes cast on a particular proposal and therefore will not have an effect on the approval of that proposal.

 

Notice and Access

We distribute our proxy materials to shareholders via the Internet under the “Notice and Access” approach permitted by rules of the SEC. This approach conserves natural resources and reduces our distribution costs, while providing a timely and convenient method of accessing the materials and voting. On or before April 21, 2021, we mailed a Notice of Internet Availability of Proxy Materials to participating shareholders, containing instructions on how to access the proxy materials on the Internet to vote your shares over the Internet or by telephone. You will not receive a printed copy of the proxy materials unless you request them. If you would like to receive a printed copy of our proxy materials, including a printed proxy card on which you may submit your vote by mail, then you should follow the instructions for obtaining a printed copy of our proxy materials contained in the Notice of Internet Availability of Proxy Materials.

 

REVOCATION OF PROXIES

A shareholder who has given a proxy has the power to revoke it as to any matter on which a vote shall not already have been cast pursuant to the authority conferred by such proxy and may do so (i) by delivering another properly executed proxy bearing a later date and depositing it as aforesaid, including within the prescribed time limits noted above; (ii) by depositing an instrument in writing revoking the proxy executed by the shareholder or by the shareholder’s attorney authorized in writing (A) at our head office with the Corporate Secretary at 10758 West Centennial Road, Suite 200, Littleton, Colorado 80127 at any time up to and including the last business day preceding the day of the Meeting, or any adjournment thereof, at which the proxy is to be used, or (B) with the Chair of the Meeting, prior to its commencement, on the day of the Meeting, or at any adjournment thereof; (iii) by attending the Meeting in person and so requesting; or (iv) in any other manner permitted by law.

 

If you hold your shares through a broker, bank or other nominee, you must follow their instructions to revoke your initial proxy vote or to otherwise vote at the Meeting.

 

VOTING AND DISCRETION OF PROXIES

On any ballot that may be called for, the shares represented by proxies in favor of the persons named by management of the Company will be voted in the manner identified in the proxy, in each case in accordance with the instructions of the shareholder. In the absence of any instructions on the proxy, it is the intention of the persons named by management in the accompanying form of proxy to vote

 

 

The form of proxy confers discretionary authority upon the persons named therein with respect to amendments or variations of the matters identified in the Notice or any other matters that may properly come before the Meeting. As at the date of this Circular, management of the Company knows of no such amendments, variations or other matters that may properly come before the Meeting other than the matters referred to in the Notice.

COMMON SHARES ENTITLED TO VOTE

As at April 13, 2021, the authorized capital of the Company consisted of an unlimited number of Common Shares, of which 189,389,100 Common Shares were issued and outstanding, and an unlimited number of Class A Preference Shares, issuable in series, of which none has been issued. A holder of record of Common Shares as at the close of business on April 13, 2021 (the “Record Date”) is entitled to one vote for each Common Share held by the shareholder. In accordance with the Canada Business Corporations Act, the Company will prepare a list of holders of Common Shares on the Record Date. Each holder of Common Shares named in the list at the close of business on the Record Date will be entitled to vote the Common Shares shown opposite his or her name on the list at the Meeting.

 

VOTES REQUIRED

The directors nominated for election pursuant to Proposal No. 1 will be elected by plurality vote, meaning that the seven nominees who receive the most votes, whether in person or by proxy, will be elected. Broker non-votes will have no effect on the election of Directors. The Company has adopted a majority voting policy pursuant to which any director who fails to receive a majority of the votes cast will be required to tender their resignation. See “Statement of Corporate Governance – Majority Voting Policy.”

 

With respect to Proposal No. 2, the affirmative vote of a majority of the votes cast at the meeting (either in person or by proxy) will be required for approval.

 

With respect to Proposal No. 3, the affirmative vote of a majority of the Common Shares present at the meeting (either in person or by proxy) and entitled to vote on this matter will be required for approval. Broker non-votes will have no effect on the vote on Proposal No. 3. Because your vote on this proposal is advisory, it will not be binding on the Board of Directors or the Company. However, the Board will review the voting results and take them into consideration when making future decisions regarding executive compensation.

 

With respect to Proposal No. 4, the affirmative vote of a majority of the votes cast at the meeting (either in person or by proxy) will be required for approval, however, the TSX rules provide that all eligible insiders in order to participate in the RSU&EI Plan may not vote on the proposed amendments. Accordingly, the RSU&EI Plan resolution must be passed by a majority of votes cast at the meeting (either in person or by proxy), excluding 5,674,838 Common Shares held by certain insiders of the Company and their affiliates. Broker non-votes will have no effect on the outcome of this proposal.

 

QUORUM

The presence, in person or by proxy, of two shareholders holding not less than 10% of the Common Shares entitled to vote as of the Record Date constitutes a quorum for the transaction of business at the Meeting. In the event there is not a quorum present to approve any proposals at the time of the Meeting, the Meeting shall be adjourned to a date no less than seven days later than the scheduled Meeting date in order to permit further solicitation of proxies. The scrutineer will treat Common Shares represented by a properly signed and returned proxy as present at the Meeting for purposes of determining a quorum, without regard to whether the proxy is marked as casting a vote or abstaining.

 

RIGHTS OF DISSENT

Pursuant to the Canada Business Corporations Act, there are no rights of dissent in respect of the resolutions to be voted on by the shareholders at this Meeting. 

 

 

SECURITY OWNERSHIP OF

CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Security Ownership of Management

 

As of April 13, 2021, our Record Date, we had 189,389,100 Common Shares issued and outstanding, and 4,888,345 stock options which may be exercised currently or within the sixty (60) days following April 13, 2021.

 

	Number of	Percentage of Issued and
	Common Shares of	Outstanding Common Shares of
Name of Holder	Ur-Energy	Ur-Energy
Directors and Named Executive Officers (1)(2)
W. William Boberg (3)	1,191,219	*
John W. Cash	448,870	*
Rob Chang	350,631	*
James M. Franklin(4)	991,192	*
Penne A. Goplerud	754,269	*
Steven M. Hatten	456,611	*
Gary C. Huber	439,690	*
Jeffrey T. Klenda (5)	3,516,421	1.81%
Thomas H. Parker	586,504	*
Roger L. Smith	830,508	*
Kathy E. Walker	535,150	*
All Directors and executive officers, as a group (11 persons)	10,101,065	5.20%

 

*      Less than one percent

 

 

Security Ownership of Certain Beneficial Owners

 

The following table sets forth the beneficial ownership of the Company’s Common Shares as of April 13, 2021 by each person (other than the Directors and executive officers of the Company) who owned of record, or was known to own beneficially, more than 5% of the outstanding voting shares of Common Shares.

 

	Number of	Percentage of Issued and
	Common Shares of	Outstanding Common Shares of
Name of Holder	Ur-Energy	Ur-Energy
Major Shareholders
MMCAP International Inc. SPC(1)	18,749,520	9.9%

 

 

PARTICULARS OF MATTERS TO BE ACTED UPON

Proposal No. 1: Election of Directors

The articles of the Company provide that the Board of Directors of the Company (the “Board of Directors” or the “Board”) shall consist of a minimum of one and a maximum of ten directors, the number of which is currently fixed at seven. Election of directors will be conducted on an individual basis, and will include Jeffrey T. Klenda, James M. Franklin, W. William Boberg, Thomas H. Parker, Gary C. Huber, Kathy E. Walker and Rob Chang. As discussed in the description of the Company’s Majority Voting Policy, below, each Director must receive a majority of the votes cast (in person or by proxy) as to his or her election or will be required to submit his or her resignation pursuant to the policy.

 

Nominees: Each of the seven persons named above is a nominee for election as a director at the Annual and Special Meeting for a term of one year or until his or her successor is elected and qualified. Unless authority is withheld, the proxies will be voted for the election of such nominees. Each of the nominees is currently serving as a director of the Company. All the nominees were elected to the Board of Directors at the last annual meeting of shareholders. Management does not anticipate that any of the nominees for election as directors will be unable to serve as a director, but if that should occur for any reason prior to the Meeting, the persons named in the accompanying form of proxy reserve the right to vote for another nominee in their discretion or for the election of only the remaining nominees.

 

The Board of Directors has delegated to the Corporate Governance and Nominating Committee the responsibility for reviewing and recommending nominees for director. The Board determines which candidates to nominate or appoint, as appropriate, after considering the recommendation of the Corporate Governance and Nominating Committee.

 

Certain of our directors have historically and do currently serve on boards of directors of other companies. We view this to be beneficial to the Company, provided there is no conflict of interest, nor restrictions on time which are disadvantageous to our Board’s interests. Current service on the boards of other public companies is set forth, below, under “Service on Additional Boards.” The Company believes that service on other boards allows for broader experience and expertise which benefits the individual and the companies served, including Ur-Energy. None of our directors sits on more than three public company boards or, alternatively, is the CEO of a public company and sits on the board of more than two public companies besides the one for which he/she is the CEO (i.e., none of our directors is “overboarded”).

 

Qualifications: In evaluating a director candidate, the Corporate Governance and Nominating Committee considers the candidate’s independence, character, business experience, industry-specific experience including technical expertise, corporate governance skills and abilities, training and education, commitment to performing the duties of a director, and other skills, abilities, or attributes that fill specific needs of the Board or its committees. Each nominee brings a strong and unique background and set of skills to the Board, giving the Board, as a whole, competence and experience in a wide variety of areas, including natural resources exploration and development, mining operations, executive management, board service, corporate governance, finance, financial markets, government, employment, and international business. These varied and substantial backgrounds, skills and qualifications, as described in more detail below, and the contributions of each to the development and current operations of the Company as described below under the heading “Board Composition – Including Tenure and Outlook on Set Retirement Age,” led the Corporate Governance and Nominating Committee and the Board of Directors to the conclusion that each of the nominees should serve as a Director.

 

 

Recommendation of Ur-Energy’s Board of Directors

 

The Board of Directors recommends that the shareholders vote FOR the election of all of the named nominees for director and, unless a shareholder gives instructions on the proxy card to the contrary, the proxies named thereon intend to so vote.

 

Jeffrey T. Klenda, 64, B.A.

Chairman, President & CEO

 

Mr. Klenda graduated from the University of Colorado in 1980 and began his career as a stockbroker specializing in venture capital offerings. Prior to founding Ur-Energy in 2004, he worked as a Certified Financial Planner and was a member of the International Board of Standards and Practices. In 1986, he started Klenda Financial Services, an independent financial services company providing investment advisory services to high-end individuals and corporate clients as well as providing venture capital to corporations seeking entry to the U.S. securities markets. In the same year, Mr. Klenda formed Independent Brokers of America, Inc., a national marketing organization. He also served as President of Security First Financial, a company he founded to provide consultation to individuals and corporations seeking investment management and early stage funding. Over the last 35 years, Mr. Klenda has acted as an officer and/or director for numerous publicly-traded companies, having taken his first company public at 28 years of age. Mr. Klenda has served as the Chairman of the Board of Directors of the Company since 2006. He served as Executive Director from January 2006 to May 2015. Thereafter, he served as Acting Chief Executive Officer until being named President and Chief Executive Officer by our Board of Directors in December 2016.

 

The Board of Directors has concluded that Mr. Klenda is well qualified and should serve as a director on the basis of his numerous contributions to the Company since its inception, his nearly 40 years of experience in the financial markets and in service to numerous publicly traded companies as an officer and director.

 

James M. Franklin, 78, PhD, FRSC, P.Geo

Director & Chair of the HSE & Technical Committee

 

Dr. Franklin has over 50 years’ experience as a geologist. He is a Fellow of the Royal Society of Canada. Since 1998, he has been an Adjunct Professor at Queen’s University, since 2001, at Laurentian University and since 2006 at the University of Ottawa. He is a past President of the Geological Association of Canada and of the Society of Economic Geologists. He retired in 1998 as Chief Geoscientist of the Geological Survey of Canada, Earth Sciences Sector. Since that time, he has been a consulting geologist and is currently a director of Gold79 Mines Ltd. (formerly, Aura Resources Inc.) (since October 2003), and Nuinsco Resources Ltd. (since June 2018). Dr. Franklin’s lifetime achievements have been honored by several professional organizations: among his honors, Dr. Franklin has been awarded GAC’s Logan and Duncan R. Derry medals, CIM’s Selwyn Blaylock, A.O. Dufresne, Distinguished Lecturer and Julian Boldy Memorial awards and the Society of Economic Geologists Thayer Lindsley and Distinguished Lecturer awards. He has also received the R.A.F. Penrose Gold Medal from SEG for his many contributions to a broad cross section of geosciences. In 2017 he was made a Fellow of Lakehead University, honoring his contributions to education and economic development in northern Ontario. Dr. Franklin was inducted into the Canadian Mining Hall of Fame in 2019 for his many contributions to the mining industry.

 

The Board of Directors has concluded that Dr. Franklin is well qualified and should serve as a director on the basis of his contributions as a director to the Company since its inception and his more than 50 years of experience in geosciences and mineral resource work in industry, governmental service and academia.

 

 

W. William (Bill) Boberg, 81, M.Sc., P. Geo

Director

 

Mr. Boberg has served as a director of the Company since January 2006. Mr. Boberg served as the Company’s President and Chief Executive Officer (2006 to 2011). Prior to that time, Mr. Boberg was the Company’s senior U.S. geologist and Vice President U.S. Operations (2004 to 2006). Before his initial involvement with the Company, he was a consulting geologist having over 40 years’ experience investigating, assessing and developing a wide variety of mineral resources in diverse geologic environments in western North America, South America and Africa. Mr. Boberg worked for Gulf Minerals, Hecla Mining, Anaconda, Continental Oil Minerals Department, Wold Nuclear, Kennecott, Western Mining, Canyon Resources and Africa Mineral Resource Specialists. Mr. Boberg has over 30 years of experience exploring for uranium in the continental U.S. He discovered the Moore Ranch Uranium Deposit and the Ruby Ranch Uranium Deposit as well as several smaller deposits in Wyoming’s Powder River Basin. He received his Bachelor’s Degree in Geology from Montana State University and his Master’s Degree in Geology from the University of Colorado. He is a registered Wyoming Professional Geologist and fellow of the Society of Economic Geologists. He is a member of the Society for Mining, Metallurgy & Exploration Inc., American Institute of Professional Geologists (for which he is a Certified Professional Geologist), the Denver Regional Exploration Society and the American Association of Petroleum Geologists. Mr. Boberg is also a director for Gold79 Mines Ltd. (formerly, Aura Resources Inc.) (since June 2008).

 

The Board of Directors has concluded that Mr. Boberg is well qualified and should serve as a director on the basis of his contributions to the Company since 2004 (since 2006 as a director and, from 2006 until 2011, as the President and CEO), as well as his more than 40 years of experience in mineral resources exploration and development.

 

Thomas H. Parker, 78, M.Eng., P.E.

Lead Director, Chair of Audit Committee & Chair of Treasury & Investment Committee

 

Mr. Parker has worked extensively in senior management positions in the mining industry, having begun his career in the mining industry 56 years ago. Mr. Parker is a mining engineer graduate from South Dakota School of Mines, with a Master’s Degree in Mineral Engineering Management from Penn State. Mr. Parker was President and CEO, and a director of U.S. Silver Corporation until his retirement in 2012.  Prior to that, Mr. Parker was President and CEO of Gold Crest Mines, Inc., before which  he was the President and CEO of High Plains Uranium, Inc., a junior uranium mining company acquired by Energy Metals in 2007. Mr. Parker also served for 10 years as Executive Vice President of Anderson and Schwab, a management consulting firm. Prior to Anderson and Schwab, Mr. Parker held many executive management positions including with Costain Minerals Corporation, ARCO, Kerr McGee Coal Corporation and Conoco. He also has worked in the potash, limestone, talc, coal and molybdenum industries and has extensive experience working in Niger, France and Venezuela.

 

The Board of Directors has concluded that Mr. Parker is well qualified and should serve as a director on the basis of his contributions to the Company as a director since 2007 and, most recently, as our Lead Director since 2014, as well as his more than 55 years of experience in the mining industry and in executive management positions.

 

Gary C. Huber, 69, PhD, P.Geo

Director, Chair of Compensation Committee & Chair of Corporate Governance and Nominating Committee

 

Dr. Huber is a mining executive with over 40 years of natural resources experience. Previously, Dr. Huber served as a director for Ur-Energy during 2007. Dr. Huber returned to serve as a director for Ur-Energy in 2015. In the interim, Dr. Huber served as President and CEO of Neutron Energy, Inc. (2007-2012), a privately held uranium company which was conducting project feasibility analyses as well as permitting of two uranium mines and a mill complex. Dr. Huber is the founder, in 2006, and managing member of Rangeland E&P, LLC, a private company established for oil and gas exploration. Dr. Huber recently served as an independent director of Gold Resource Corporation, a precious metal mining company. He was chairman of its audit committee and a member of the compensation committee. He also has served as an independent director of Capital Gold Corp., a gold mining company with operations in Mexico, and served on its audit and corporate governance committees. Dr. Huber was one of the founders of Canyon Resources Corporation in 1979, and served in various capacities there until 2006, including as director, chief financial officer, vice president of finance, treasurer and secretary. He also served as the president and chief executive officer of CR Minerals Corporation, an industrial minerals subsidiary of Canyon Resources, from 1987 to 1998. Dr. Huber holds a PhD in geology from Colorado School of Mines and received a Bachelor of Science in geology from Fort Lewis College. He is a fellow of the Society of Economic Geologists, where he previously served as the chairman of its audit and investment committees; a member of the Society for Mining, Metallurgy and Exploration, where he previously served as the chairman of the audit committee. Dr. Huber served as a director and treasurer of The Society of Independent Professional Earth Scientists, a not-for-profit professional group. He also has served as President of the Society of Independent Earth Scientists Foundation, which awards scholarships to undergraduate and graduate students majoring in the earth sciences fields. Dr. Huber formerly was a director of the Denver Gold Group, a not-for-profit industry association for publicly traded precious metal companies. Dr. Huber is a Utah registered Professional Geologist.

 

 

The Board of Directors has concluded that Dr. Huber is well qualified and should serve as a director of the Company on the basis of his earlier contributions to the Company as a director (in 2007, and since his return to the Board in 2015), and because of his extensive mining industry experience including in areas of natural resources development and mining operations, and executive management and finance, developed by serving as an executive officer and director of publicly-traded natural resource companies.

 

Kathy E. Walker, 62, MBA

Director

 

Ms. Walker is the President and Chief Executive Officer of Elm Street Resources Inc., an energy marketing company based in Paintsville, Kentucky. Ms. Walker is also the Director of the eKentucky Advanced Manufacturing Institute, Inc., a workforce development training facility in Eastern Kentucky. She brings more than 30 years’ experience in various energy and financial related business endeavors to our Board. Ms. Walker holds an MBA from Xavier University. Prior to starting Elm Street Resources, she served as Secretary and Controller of Agip Coal, USA, a subsidiary of the Italian National Energy Agency ENI. She is currently a member of the National Coal Council; a member of the Kentucky Coal Association; a member of the Kentucky Judicial Campaign Conduct Committee; and the Chair of the Morehead State University Board of Regents. Ms. Walker was a founder and board member of First Security Bank, Lexington, Kentucky and of Great Nations Bank, Norman, Oklahoma.

 

The Board of Directors has concluded that Ms. Walker is well qualified and should serve as a director of the Company on the basis of her contributions to the Company as a director since 2017, and because of her extensive energy-related business experience including in areas of sales and marketing, executive management and finance, developed by serving as an executive officer and director of various entities.

 

Rob Chang, 43, MBA

Director

 

Rob Chang has 26 years of experience in the financial services industry and is a sought after expert in uranium markets. An experienced senior executive, he currently sits on the boards of publicly traded mineral resource companies. He is currently the Co-Founder and Chief Executive Officer of Gryphon Digital Mining and his past roles include serving as the Managing Director and Head of Metals & Mining at Cantor Fitzgerald where he provided research coverage in precious metals, base metals, lithium, and uranium. He is well familiar with the uranium mining industry and is considered a subject matter expert by several media outlets. He was recognized by Bloomberg as the “Best Precious Metals Analyst” in Q1 2016. Mr. Chang is frequently quoted by and a regular guest of several media outlets including Bloomberg, Reuters, CNBC, and the Wall Street Journal. Mr. Chang previously served as a Director of Research and Portfolio Manager at Middlefield Capital, a Canadian investment firm which managed $3 billion in assets. He was also on a five-person multi-strategy hedge fund team where he specialized in equity and derivative investments. Mr. Chang completed his MBA at the University of Toronto’s Rotman School of Management. Mr. Chang also serves as a director on the boards of Fission Uranium Corp. (since April 2018) and Shine Mineral Corp. (since November 2018).

 

The Board of Directors has concluded that Mr. Chang is well qualified and should serve as a director of the Company on the basis of his contributions to the Board since 2018, and his extensive knowledge of the financial markets and financial services industry, as well as his knowledge of the uranium mining industry.

 

Appointment of Auditor

 

The Audit Committee selected and has recommended the independent accounting firm of PricewaterhouseCoopers LLP with respect to the audit of our financial statements for the year ended December 31, 2021. At the Meeting, it is proposed to re-appoint PricewaterhouseCoopers LLP, Chartered Professional Accountants, as auditors of the Company, to serve until the next annual meeting of shareholders with their remuneration to be fixed by the Board of Directors.

 

 

In the interests of safety, and in light of ongoing travel and gathering conditions related to COVID-19, we currently expect that our Audit Partner from PricewaterhouseCoopers LLP will participate in our Meeting by telephone.

 

Independent Accountant Fees and Services

 

PricewaterhouseCoopers LLP and its affiliates have been the auditors of Ur-Energy since December 2004. The fees accrued for audit and audit-related services performed by PricewaterhouseCoopers LLP in relation to our financial years ended December 31, 2020 and 2019, paid and shown below in C$, were as follows:

 

	December 31, 2020	December 31, 2019
Audit fees (1)	$171,200	$ 209,475
Audit related fees (2)	$ 55,300	$ 57,750
All other fees (3)	$ 59,810	$ 21,129
Total	$286,310	$ 288,354

 

Audit Committee’s Pre-Approval Practice

 

All services reflected in the preceding table for 2020 and 2019 were pre-approved in accordance with the policy of the Audit Committee of the Board of Directors

 

It is proposed to approve an ordinary resolution to re-appoint the firm of PricewaterhouseCoopers LLP, Chartered Professional Accountants, as auditors of the Company to hold office until the close of the next annual meeting of shareholders or until PricewaterhouseCoopers LLP is removed from office or resigns, and to authorize the Board of Directors of the Company to fix the remuneration of PricewaterhouseCoopers LLP as auditors of the Company.

 

Recommendation of Ur-Energy’s Board of Directors

 

The Board of Directors recommends that the shareholders vote FOR the re-appointment of PricewaterhouseCoopers LLP, Chartered Professional Accountants, and to authorize the Board of Directors of the Company to fix the remuneration of PricewaterhouseCoopers LLP as auditors and, unless a shareholder gives instructions on the proxy card to the contrary, the proxies named thereon intend to so vote.

 

The approval of Proposal No. 2 requires the approval of a majority of the votes cast by shareholders (either in person or by proxy) at the Meeting.

 

Proposal No. 3: Approval, on an Advisory Basis, of the Compensation of the Company’s Named Executive Officers

Advisory Vote on Named Executive Officer Compensation

 

In accordance with SEC rules, our shareholders will be asked at the Meeting to cast a non-binding advisory vote on the compensation of our Named Executive Officers as disclosed in this Circular, including the disclosures under “Compensation Program” and “Executive Compensation” and the compensation tables and related narrative disclosure. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our Named Executive Officers and the policies and practices described in this Circular.

 

 

We conducted a similar advisory vote in 2020 and approximately 86% of the votes cast at that meeting voted in favor of the compensation of our Named Executive Officers. For the past five years, our advisory “say on pay” vote has averaged above 90%. This vote is advisory, which means that its outcome is not binding on the Company, the Board of Directors or the Compensation Committee of the Board of Directors.

 

We are continuing our practice of having an annual say-on-pay advisory vote, so the next advisory vote will occur at our annual meeting in 2022.

 

The Compensation Committee and the Board of Directors believe that our compensation policies and procedures are effective in achieving our goals. As described under “Compensation Program” our compensation program is designed to motivate executive officers and employees to achieve pre-determined objectives without taking excessive risks; provide competitive compensation and benefit programs to attract and retain highly-qualified executives and employees; encourage an ownership mentality; and, fundamentally, to support the achievement of results. We believe that the Company’s compensation program, with its balance of (i) short-term incentives (including cash bonus awards and performance conditions for such awards), (ii) long-term incentives (including equity awards of stock options and restricted share units which vest over varied periods of two to three years), and (iii) share ownership guidelines for executive officers, reward sustained performance that is aligned with long-term shareholder interests. Shareholders are encouraged to read both “Compensation Program” and “Executive Compensation” sections below, as well as the compensation tables and related narrative disclosure. Shareholders will be asked to approve the following ordinary resolution (the “Advisory Vote on Named Executive Officer Compensation Resolution”) at the Meeting:

 

BE IT RESOLVED THAT the Company’s shareholders approve, on an advisory basis, the compensation of the Named Executive Officers, as disclosed in the Company’s Management Proxy Circular for this annual and special meeting of shareholders, including the “Compensation Program” and “Executive Compensation” sections and the compensation tables and related narrative disclosure.

 

Recommendation of Ur-Energy’s Board of Directors

 

The Board of Directors recommends that shareholders vote FOR approval of the Advisory Vote on Named Executive Officer Compensation Resolution.

 

The approval of the advisory vote on Proposal No. 3 requires the affirmative vote of a majority of the Common Shares present at the meeting (either in person or by proxy). Although the advisory vote is non-binding, the Board will review the results of the vote and will take the results of the vote into account in determinations concerning executive compensation.

 

Proposal No. 4: Approval of the Amendments to the Ur-Energy Inc. Amended and Restated Restricted Share Unit and Equity Incentive Plan (the “RSU&EI Plan”)

At the Meeting, shareholders will be asked to consider and pass a resolution substantially in the form set out below, to approve and ratify amendments to the Ur-Energy Inc. Amended and Restated Restricted Share Unit and Equity Incentive Plan (the “RSU&EI Plan”).

The amendments to be approved allow for grants of (a) performance share units (“PSUs”) and (b) direct issuance of Common Shares (with or without conditions of vesting), as well as to change the name of the plan. The amendments do not request any increase in the percentage number of shares available for issuance under the RSU&EI Plan. The RSU&EI Plan, including these recent amendments, as approved by the Board of Directors, is summarized in more detail under the heading “Stock Options and Amended and Restated Restricted Share Unit and Equity Incentive Plan,” below.

A copy of the RSU&EI Plan is attached to this Circular as Schedule A. A shareholder may also obtain a copy of the plan from the Secretary of the Company upon request at 10758 West Centennial Road, Suite 200, Littleton, Colorado, 80127, telephone 720-981-4588.

 

 

As amended, the RSU&EI Plan continues to include directors and employees, including executive officers, of Ur-Energy as possible eligible participants. As at April 13, 2021, there are 10 employees and six non-executive directors who are eligible to participate in the plan. As at April 13, 2021, the closing price of our Common Shares on the NYSE American was $1.10 and on the TSX was C$1.37.

The Board of Directors believes that it is in the best interests of the Company to amend the RSU&EI Plan in these ways to enhance our compensation program and specifically our bonus programs, to continue to permit the Board of Directors to grant RSUs and to expand our long-term incentives to include PSUs and direct share issuances of Common Shares (“DSIs”) to directors and employees, including executive officers, of the Company and its subsidiaries. The additional bonus alternatives that these amendments provide also supports our continuing efforts to attract and retain highly qualified directors and employees, including executive officers, who will be motivated towards the success of the Company. The RSU&EI Plan, including these amendments, encourages share ownership in the Company by directors and employees, including officers, who work on behalf of the Company.

If at the Meeting, the shareholders of the Company do not approve the amendments as proposed, all currently outstanding RSUs and the existing Amended and Restated Restricted Share Unit Plan (the “Existing RSU Plan”) as previously approved by the shareholders on May 2, 2019, will be unaffected, and future grants will be made under the Existing RSU Plan in its form prior to the amendments by the Board of Directors on April 13, 2021.

Because the RSU&EI Plan participants and the amounts of any awards are determined in the absolute discretion of the Board of Directors, the benefits to be delivered under the amended RSU&EI Plan at this time are indeterminable at this time. 

BE IT RESOLVED THAT:

The Board of Directors recommends that the shareholders vote FOR the RSU&EI Plan Amendments Resolution.

The TSX rules provide that all eligible insiders in order to participate in the RSU&EI Plan may not vote on these amendments. Accordingly, the RSU&EI Plan resolution must be passed by a majority of votes cast by shareholders present in person or represented by proxy at the meeting, excluding 5,674,838 Common Shares held by certain insiders of the Company and their affiliates.

 

 

MANAGEMENT

Identification of Executive Officers

 

Jeffrey T. Klenda, 64, B.A.

Chairman, President & Chief Executive Officer

 

Mr. Klenda graduated from the University of Colorado in 1980 and began his career as a stockbroker specializing in venture capital offerings. Prior to founding Ur-Energy in 2004, he worked as a Certified Financial Planner and was a member of the International Board of Standards and Practices. In 1986, he started Klenda Financial Services, an independent financial services company providing investment advisory services to high-end individuals and corporate clients as well as providing venture capital to corporations seeking entry to the U.S. securities markets. In the same year, Mr. Klenda formed Independent Brokers of America, Inc., a national marketing organization. He also served as President of Security First Financial, a company he founded to provide consultation to individuals and corporations seeking investment management and early-stage funding. Over the last 35 years, Mr. Klenda has acted as an officer and/or director for numerous publicly traded companies, having taken his first company public at 28 years of age. Mr. Klenda has served as the Chairman of the Board of Directors of the Company since 2006. He served as Executive Director from January 2006 to May 2015. Thereafter, he served as Acting Chief Executive Officer until being named President and Chief Executive Officer by our Board of Directors in December 2016.

 

Roger L. Smith, 63, CPA, MBA, CGMA

Chief Financial Officer and Chief Administrative Officer

 

Mr. Smith has 35 years of mining and manufacturing experience including finance, accounting, IT, ERP and systems implementations, mergers, acquisitions, audit, tax and public and private reporting in international environments. Mr. Smith served as Ur-Energy’s Chief Financial Officer and Vice President Finance, IT and Administration until May 2011, when he assumed the title and responsibilities of Chief Administrative Officer as well as Chief Financial Officer. Mr. Smith joined Ur-Energy in May 2007, after having served as Vice President, Finance for Luzenac America, Inc., a subsidiary of Rio Tinto PLC and Director of Financial Planning and Analysis for Rio Tinto Minerals, a division of Rio Tinto PLC, from September 2000 to May 2007. Mr. Smith has also held such positions as Vice President Finance, Corporate Controller, Accounting Manager, and Internal Auditor with companies such as Vista Gold Corporation, Westmont Gold Inc. and Homestake Mining Corporation. He has a Master of Business Administration and Bachelor of Arts in Accounting from Western State Colorado University, Gunnison, Colorado.

 

Steven M. Hatten, 58, B.Sc.

Vice President Operations

 

Mr. Hatten has served as Ur-Energy’s Vice President Operations since 2011. Prior to that, Mr. Hatten was Ur-Energy’s Engineering Manager from 2007 to 2010 and Director of Engineering and Operations 2010 to 2011. He has over 25 years of experience with a strong background in in situ recovery uranium design and operations. He previously worked as a Project Engineer for Power Resources, Inc., the Manager Wellfield Operations for Rio Algom Mining Corp. and Operations Manager at Cameco’s Smith Ranch – Highland Facility. Mr. Hatten has a Bachelor of Science in petroleum Engineering from Texas Tech University.

 

John W. Cash, 48, M.Sc.

Vice President Regulatory Affairs

 

Mr. Cash has been our Vice President Regulatory Affairs since 2014. Previously, he was named Vice President Regulatory Affairs, Exploration & Geology in 2011 and served in that capacity until March 2014. Prior to 2011, Mr. Cash was our Environment, Health, Safety and Regulatory Affairs Manager from 2007 to 2010 and Director of Regulatory Affairs 2010 to 2011. He previously worked for Crow Butte Resources, Inc. a subsidiary of Cameco, from 2002 to 2007, including as Senior Environmental/Safety Superintendent, Safety Director/Wellfield Supervisor and Operations Superintendent. Prior to that time, Mr. Cash also worked in uranium exploration. He is a Fellow of the World Nuclear University Summer Institute, 2005. Mr. Cash has a Master of Science in geology and geophysics from the University of Missouri-Rolla.

 

 

 

 

Ms. Goplerud has 25 years of diverse legal experience in complex litigation, business matters and natural resources transactions. She was named General Counsel and Corporate Secretary of the Company in 2011, having joined Ur-Energy as its Associate General Counsel in 2007. While in private practice, she represented clients in commercial litigation, arbitration and mediation involving mining, oil and gas, commercial and corporate disputes, securities and environmental law. She also has counseled business clients and represented clients in the negotiation of business transactions. Prior to joining Ur-Energy, much of Ms. Goplerud’s practice focused on natural resources work in the U.S. and abroad. Ms. Goplerud obtained her JD from the University of Iowa College of Law.

 

COMPENSATION PROGRAM

 

We are a “smaller reporting company” as defined by SEC regulations. As a result, we are not required to include a comprehensive Compensation Discussion and Analysis in this Circular. We are providing, voluntarily, certain of the information that would typically be contained in a Compensation Discussion and Analysis section in an effort to provide our shareholders with additional information regarding our executive compensation policies, practices and plans, and in order to provide context for your consideration of our advisory ‘say on pay’ proposal.

 

Compensation Program

 

We believe that the caliber and commitment of our executive officers are critical to our continued success and performance, and the overall commitment of all of our employees. The Compensation Committee reviews and makes recommendations to the Board with respect to the overall approach to compensation for all of our employees, and specifically with respect to our executive officers, including the Chief Executive Officer, Jeffrey Klenda, and the remuneration of directors.

 

Pursuant to our obligations of disclosure as a smaller reporting company, our named executive officers (“Named Executive Officers” or “NEOs”) for 2020 were:

 

 

We maintain a compensation program in which both performance and compensation are routinely evaluated. Further, we maintain a program in which (a) pay for performance is supported by a significant percentage of executive pay being at risk (50% of CEO compensation; 45% of other executive officers); (b) motivating executive officers to create shareholder value by using total shareholder return as a part of the Company’s “Total Company” objectives; (c) performance by all employees on personal objectives and corporate objectives is evaluated, with executive officers’ short-term incentive bonus awards being more closely aligned to performance on corporate objectives (60%) based upon the greater opportunity, and responsibility, to shape corporate performance (hourly and non-managerial staff bonuses are more heavily weighted to their personal objectives) with generally 80% of an executive’s long-term incentive is based upon stock options; (d) certain defined thresholds must be reached as a minimum level of performance, typically 50% of the target (or, a score of 2 on our 1-4 scale), before eligibility for payout on any objective and, by contrast, short-term incentive bonuses are effectively capped, as the maximum level of performance for each objective is typically set at 150% of the target (or, a score of 4 on our 1-4 scale); (e) reasonable salaries and overall compensation packages are based upon regularly updated compensation surveys and ongoing review of peer comparators’ practices; (f) compliance with executive stock ownership guidelines is routinely monitored; (g) we have no multi-year contracts with executive employees, and our employment agreements with executive officers protect specialized and proprietary information, and contacts with personnel obtained while employed with the Company; (h) we do not permit repricing of stock options; (i) executives are not permitted to hedge their beneficially-held Company’s shares; and (j) we have adopted a clawback policy, all as discussed further below.

 

Our compensation program is designed to effectively link compensation to performance as demonstrated by the completion by our executive officers of corporate and personal objectives that are designed to drive creation of shareholder value. The Compensation Committee believes that it is important to maintain a clear link between the achievement of these objectives and compensation payout. We have thoughtfully reviewed the metrics and priorities most appropriately used to establish and maintain that connection. In doing so, we consider:

 

 

The objectives of our compensation program are to support the achievement of results; motivate executive officers to achieve pre-determined objectives without taking excessive risks; provide competitive compensation and benefit programs to attract and retain highly qualified executives; and encourage an ownership mentality, which is further augmented through share ownership guidelines for all executive officers.

 

Our compensation program continues to follow the same progression throughout the year:

 

 

Compensation Structure

 

Our compensation program consists of base salary, short- and long-term incentives, and other perquisites. The components of total direct compensation relate to performance as follows:

 

 

Employment Agreements with Named Executive Officers

 

We have employment agreements with each of our current executive officers. The agreements contain standard employment provisions, as well as salary, entitlement to a cash bonus to be determined in the discretion of the Board, and statements of eligibility for Company benefits (health and wellness benefits, paid time off, 401(k) plan), and equity compensation plans (stock option and RSU plans). The agreements also provide for post-termination obligations of the executives (one-year non-solicitation provisions applicable to all executive officers; and one-year non-competition provisions in the agreements of Messrs. Hatten and Cash). Post-termination obligations of the Company with respect to the NEOs, including in an event of change of control, are discussed and summarized below under the heading “Potential Payments Upon Termination or Change of Control.” The Compensation Committee reviews the employment agreements of and compensation program for the executive officers on a periodic basis.

 

 

Objectives to be Met Through “Pay Mix”

 

The compensation program is designed to provide motivation and incentives to our executive officers and employees with a view toward enhancing shareholder value and successfully implementing our corporate objectives. The compensation program accomplishes this by rewarding performance that is designed to create shareholder value. The portion of variable, at-risk, performance-based compensation is commensurate to an executive officer’s or employee’s position and increases as their respective level of responsibility increases. Further, the mix and structure of compensation is designed to strike an appropriate balance to achieve pre-determined objectives without motivating excessive risk taking.

 

Our share price may be heavily influenced by changes in uranium and other commodity prices, which are outside of our control. As a result, the compensation program is designed to focus on areas where the executive officers and employees have the most influence. To achieve this, a combination of operational, financial and share price criteria are utilized when selecting corporate and personal objectives and establishing an appropriate combination of pay.

 

The compensation structure and “pay mix” in place for 2020 for our CEO and other executive officers was as follows:

 

The characteristics of the compensation program’s mix of pay, as they relate to the executive officers, include:

 

The incentive compensation actually received by the executive officers varies based upon individual performance and the achievement of the pre-determined corporate and personal objectives and is ultimately subject to the discretion of the Compensation Committee and the Board.

 

 

Components of Compensation

 

Base Salary

Base salary is the fixed portion of cash compensation earned by and paid to our executive officers and employees. We seek to identify levels of base salary or wage which will aid in attracting and retaining quality employees. Base salaries for all employees are reviewed annually by management. The Compensation Committee reviews the base salary for each executive officer routinely or upon a promotion or other change in job responsibility, based on the individual’s level of responsibility, the importance of the position and the individual’s contribution to our overall performance. The Compensation Committee also assesses the base salaries of the executive officers relative to a group of peer companies with similar scope and operations to ensure that base salaries are positioned competitively with executive officers in similar roles at peer companies. Our overall objective remains to provide a competitive base salary designed to recruit and retain qualified, high-performing executives, while responsibly administering our budget and achieving our corporate objectives.

 

Short-Term Incentive Plan

Total cash compensation includes base salary and any variable (at risk) short-term cash incentive compensation. Bonus awards under our short-term incentive plan (“STIP”) are calculated using a formula that is based upon performance in relation to corporate objectives, set by the Chief Executive Officer and executive management and approved by the Board, and in relation to personal objectives, also overseen by the CEO and Board. The STIP program is designed to recognize and reward both corporate and individual performance results. Weighting of corporate and personal objectives as related to the STIP program provides greater personal responsibility of each executive officer for not only the corporate objectives, but also his or her personal objectives which are tied to that year’s corporate and departmental objectives. This, too, was developed through consideration of peer group practices and other standards.

 

We continue to use corporate objectives to broadly measure our total corporate performance in consideration of our STIPs, as well as for other purposes. Health, safety and environmental performance objectives are embedded throughout our process. As well, we have continued to ask each employee to adopt a personal safety objective each year. We continue to evaluate Total Company, Lost Creek, Pathfinder Mines and Corporate Services objectives.

 

Each performance objective is measured on three performance levels (Threshold, Target and Maximum). Threshold, Target and Maximum performance-level values are based on quantifiable measures when possible, where typically the Threshold value is 80% of Target and the Maximum value is 120% of Target. When quantifiable measures are not possible, or more than one measure is used, we use a four-point scale to measure results. The target level of performance is set at an aggressive level that represents a ‘reasonable stretch.’ For example, when using our four-point scale to measure results, a score of 3 (Fully Successful) is used as the Target. Achieving the Target would result in a 100% payout of the objective. The Threshold level of performance is the minimum performance that must be met before being eligible for any payout. The Threshold performance level is typically set at 80% of Target, or a score of 2 (Partially, but not Fully, Successful Performance) on the four-point scale. There is no payout if the Threshold is not met. Achieving the Threshold would result in a 50% payout. Maximum level of performance is typically set at 120% of Target, or a score of 4 (Superior Performance). Achieving or exceeding the Maximum would result in a 150% payout.

 

The following table shows the current target levels and weightings used to establish STIP awards for our Executive Officers, including our CEO:

 

STIP Targets and Weights
POSITION	STIP Target (% of Base Salary)	Corporate Objectives Weight	Persona lObjectives Weight
Chairman, President and CEO: Jeffrey T. Klenda	40%	60%	40%
Other Executive Officers (CFO, Corporate Secretary, Vice President Operations and Vice President Regulatory Affairs)	30%	60%	40%

 

 

Actual STIP awards are based on performance for the year and are typically paid in the following year after our year-end results are evaluated. We calculate the STIP awards as follows:

 

 

Long-Term Equity Incentives

The long-term incentive plan (“LTIP”) includes our Option Plan and the RSU&EI Plan (or, with the Option Plan, the “Plans”). The Plans together form a long-term incentive plan for employees including executive officers and, in the case of the Option Plan, our consultants. Eligibility for participation and awards under the Plans are determined by the Compensation Committee, considering the recommendations of the Chief Executive Officer (and, for the Chief Executive Officer, the recommendations of the Compensation Committee to the Board). The purposes of the Plans are to provide eligible participants with the opportunity to own Common Shares of the Company, enhance Ur-Energy’s ability to attract, retain and motivate key personnel, and align each participant’s interests with those of the Company’s shareholders. Awards made under the Plans are based upon a pre-established formula tied to base salary and the compensation structure. The LTIP target for our CEO is 60% of his base salary; the LTIP target for our other Named Executive Officers is 50% of his or her base salary. A more detailed discussion of the Plans, including amendments to the RSU&EI Plan which our shareholders are asked to be approved at the Meeting, can be found below under “Stock Options and Restated and Amended Restricted Share Unit and Equity Incentive Plan.”

 

Perquisites Including Benefits

We provide employees, including our executive officers, with perquisites including personal benefits that we believe are reasonable and consistent with the overall compensation program to better enable us to attract and retain quality employees. We periodically review the levels of perquisites provided to the employees and executive officers to ensure competitiveness and value. Executive officers participate on the same terms as other employees in our healthcare and other benefit programs including a 401(k) Plan, medical, prescription drug, dental, vision, short- and long-term disability, life and supplemental life insurances; employee assistance program; and health and dependent care flexible spending accounts.

 

Compensation Risk Assessment

The charter for our Compensation Committee requires the Committee to review and consider the implications of the risks associated with our compensation policies and practices to avoid encouraging inappropriate risk taking by executive officers. The Compensation Committee has undertaken reviews of this type in conjunction with periodic reviews of the compensation program, including most recently in December 2020. The Committee has implemented and maintained multiple practices to ensure that there are not incentives to take inappropriate or excessive risks, including: combining fixed and variable compensation, granting appropriate levels of equity compensation, and mandating equity ownership requirements for executive officers and directors which are routinely reviewed. Based upon the Compensation Committee’s review, we do not believe that the Company’s executive or non-executive compensation structure is reasonably likely to have a material adverse effect on the Company.

 

2020 Review of Compensation Program and Establishment of Peer Group

 

The Compensation Committee from time to time undertakes a comprehensive review of our compensation program which includes competitive market data, pay grades, share ownership guidelines and short-term and long-term incentives. Most recently, a review of the program was completed in 2020. As we typically have done, the compensation program review included the development of our peer group, to be utilized for multiple purposes. As with other peer comparator groups before it, the peer group was used within our corporate objectives as a base from which we can compare our performance to peer companies and is also used for comparison when we evaluate our directors’ and officers’ compensation. If the selected peer group has insufficient depth of data for a particular executive’s compensation, we extend our review to companies outside the peer group which have similar executive positions. Generally, the Compensation Committee reviews and/or updates our peer group annually and then recommends it, with any changes or additions, to the Board for its approval.

 

 

The peer group approved by the Board for 2020 included six uranium producers and explorers and ten other mining companies (e.g., gold, silver) with similar revenues, total assets and market capitalization, with a focus on U.S. or North American based companies. Our review continues to reflect a lack of similarly-situated uranium explorers and producers and therefore reaches out into other sectors of the mining industry to operating companies. Generally, our ranking is in the middle of the peer group in terms of revenues, total assets and market capital. Our 2020 peer group, as approved by the Board of Directors, is as follows:

 

ALEXCO Resource Corp.	Americas Gold and Silver Corporation	Argonaut Gold Inc.
Denison Mines Corp.	Endeavour Silver Corp.	Energy Fuels Inc.
Fission Uranium Corp.	Gold Resource Corporation	Golden Star Resources Ltd.
Great Panther Mining Limited	Largo Resources Ltd.	NexGen Energy Ltd.
Seabridge Gold Inc.	Silvercorp Metals Inc.	Uranium Energy Corp.
Westwater Resources, Inc.

 

As a result of our compensation program review and establishment of the peer group, no changes to our compensation program were determined to be appropriate at this time.

 

2020 Performance on Objectives

 

Our corporate objectives during 2020 continued to focus on safe, compliant operations at Lost Creek, while addressing the continuing challenges in the uranium recovery and fuel-cycle industries. The overlay of the COVID-19 pandemic, and challenges resulting from general uncertainty, market upheaval, gathering and travel restrictions, remote work, and other aspects of the ‘new normal,’ while maintaining physical and mental wellness, led us to a broader focus for the year’s objectives. Due to the evolving conditions, our plans were considered and refined from time to time by our executive management and Board. In its review of the performance-to-objectives for 2020, our Board made the assessment that the Company’s performance, and the performance of each executive, generally met or exceeded our performance objectives. Highlights of 2020 corporate performance are discussed below.

 

The Company ended the year with a cash and cash equivalents balance of $4.3 million. Excluding net realizable value adjustments, we recognized a gross profit related to U3O8 sales of $3.1 million during 2020, which represents a gross profit margin of approximately 38 percent. The Company realized an average price per pound sold of $41.50 or approximately 29 percent above the year’s average spot price. Purchased pounds were delivered into all contractual commitments in 2020, permitting us to preserve our ready-to-sell inventory at the conversion facility. At year-end, the inventory totaled 268,485 pounds U3O8, and, currently, is approximately 285,000 pounds U3O8. Additionally, various financings over the past 15 months permit us to now hold our production inventory pending improved spot market pricing or to deliver into the new U.S. uranium reserve.

 

During 2020, we remained dedicated in our pursuit of a renewed and healthy uranium mining industry which is vital to U.S. energy and national security. While our Section 232 trade action (2018-2019) did not result in immediate trade action by the White House, it is the foundation from which the new national uranium reserve is being established by the U.S. Department of Energy.

 

The U.S. Nuclear Fuel Working Group (the “Working Group”), which was formed as a direct result of our trade action, issued its report in Q2 2020 with numerous strong recommendations to reinvigorate the nuclear fuel cycle industries, beginning with the uranium recovery industry. We continued in our efforts as a stakeholder throughout the year, and are pleased with the ultimate relief package, which included an initial appropriation of $75M for FY2021 for the establishment of the uranium reserve program. Federal budget recommendations include a ten-year program with an annual appropriation of $150M through FY2030.

 

Additionally, we advocated for the extension and amendment to the Russian Suspension Agreement (“RSA”) which was not only extended 20-years at an average lower annual import rate for the additional term, but the extended RSA was then codified by Congress in December 2020.

 

 

On project-specific regulatory efforts, we continued to advance the permitting and licensing of our Shirley Basin project, for which we expect to receive all major regulatory approvals in 2021 H1. The BLM granted its approval in 2020 Q2; we also received other state permits and authorizations for the project during 2020. Our applications to amend the Lost Creek permits and licenses to include the KM and LC East Project expansion also advanced during the year, with the State of Wyoming Uranium Recovery Program granting the amendment to our Lost Creek source material license in 2021 Q1. All other major authorizations and permits for this expansion are also expected to be received in 2021.

 

Due to the impacts to the economy of the COVID-19 pandemic and the continuing depressed market conditions, we conducted no development work at Lost Creek in 2020. Continued production from MU1 and the first three header houses of MU2 allowed us to capture approximately 10,790 pounds U3O8 at Lost Creek. During the year, we dried and drummed 15,873 pounds U3O8, which was shipped to the conversion facility in 2021 Q1. Controlling production at lower rates, even with reduced staff, allowed us to further optimize production processes, conduct additional maintenance and generally continue with full operational readiness to ramp up production when conditions warrant. Our long-tenured staff has completed extensive cross training and represents significant production expertise for our current and future operations.

 

In Q2, we made application for SBA Paycheck Protection Program loans, which allowed us to further support Lost Creek and our corporate and professional staff. We reached agreement with the State of Wyoming and Sweetwater County to defer an additional 18 months of principal payments on our State Bond Loan, resulting in a $7.8 million dollar savings in that period. Additionally, we completed a registered direct public offering in August 2020, from which we realized $4.3 million net proceeds. Together with the public offering we completed in February 2021 (gross proceeds $15.2 million), our cash position as of February 24, 2021, was $18.6 million.

 

With our continuing focus on safe and compliant operations, it is notable that Lost Creek received strong inspection reports and operated in an environmentally sound fashion, notwithstanding the challenges of the year and further reduced staffing. We continue to strengthen our robust safety culture at Lost Creek and throughout the Company. Although we had a commuter accident early in the year which resulted in lost-time, Lost Creek site operations and elsewhere throughout the Company and our other projects remained free from lost-time accidents. While we have had occasions under which it was advised that a staff member self-isolate for a period of time, we had only one staff member ill with COVID-19. There was not a material impact on operations during the absence of this individual from work. We remain vigilant in monitoring ongoing changes to public health guidance and look to safeguard our staff and operations to the ongoing pandemic. Additionally, we will continue to remain stewards of the environment with our oversight of operations at Lost Creek and all of our mineral properties.

 

2021 Compensation Program and Outlook

 

We currently anticipate that the compensation program will remain largely the same in 2021 for employees and executive officers. The continuing market environment is such that we are maintaining a reduced production level, while optimizing our operational readiness. If additional supply destruction causes market conditions to improve, or when the implementation of the U.S. uranium reserve is complete, we stand ready to enter additional contracts and ramp-up production at Lost Creek. Development and construction of Shirley Basin may also proceed, following receipt of all authorizations and appropriate market conditions.

 

The establishment of the uranium reserve is encouraging; however, there can be no certainty of the timing of the procurement process or our role in the program, and therefore, the outcome of this continuing process and its effects on the U.S. uranium market is uncertain.

 

We have maintained our Lost Creek assets and retained core technical, operational and management staff to run the safest, optimal operations, and to be prepared to ramp-up when market conditions improve. With initial development costs of approximately $14 million and no significant capital expenditures, these measures also provide us with the operational leverage for an efficient and low-cost ramp-up at Lost Creek when warranted.

 

We will continue to concentrate on operating safely in an environmentally-sound fashion, focusing on the health and well-being of our employees, including in the continuing circumstances surrounding COVID-19, while returning value to our shareholders.

 

 

Additional Compensation Practices

 

Share Ownership Guidelines

 

All of our executive officers and directors are encouraged to have a significant long-term financial interest in our Company. To encourage alignment of the interests of the executive officers and directors with those of our shareholders, in 2009, our Board mandated that each executive officer of Ur-Energy, whether then appointed or appointed thereafter, is required to invest an amount equal to one times the executive officer’s annual base salary in shares or securities redeemable into shares on or before the later of (i) December 31, 2013, (ii) the fifth anniversary of the executive officer’s appointment, or (iii) the date of the most recent salary increase. The investment amount is calculated using the amount of the base salary of the executive officer at the later of (i) January 1, 2009, (ii) the date of executive officer’s appointment, or the date of the most recent base salary increase. The share ownership requirements are also applicable to the non-executive directors who are required to invest an amount equal to three times their annual retainer. See further discussion under “Share Ownership Guidelines for Directors,” below. As at December 31, 2020, all directors and executive officers meet the Share Ownership Guidelines or are on-track to meet the Share Ownership Guidelines within the prescribed timeframes.

 

Anti-Hedging Policy; Pledging

 

We have a formal anti-hedging policy which prohibits our executive officers and directors from engaging in any hedging or similar monetization transactions with respect to the Company’s securities, including, but not limited to, through the use of financial instruments such as exchange funds, prepaid variable forwards, equity swaps, puts, calls, collars, forwards and other derivative instruments, or through the establishment of a short position in the Company’s securities.

 

The Board has not formally adopted a policy restricting the pledging of its Common Shares held by executive officers or directors as, historically, there has been little or no pledging of the Company’s shares by our executive officers or directors. Currently, only one insider has pledged Common Shares; those pledged Common Shares represent less than one percent of our issued and outstanding shares. Among the directors and executive officers, there have been no other pledged Common Shares of the Company. See notes to Security Ownership of Management table, above.

 

Clawback Policy

 

The Company has adopted a clawback policy pursuant to which the Company would be entitled to recoup incentive compensation amounts paid to executive officer(s) in the event of a future restatement of financial results and other specified events. This policy covers all incentive cash and equity compensation, including any cash bonuses, RSUs or stock options received by the executives. It provides that the Board may direct the Company to recoup the incentive cash and equity compensation of the executive(s) at fault if all three of the following events occur:

 

If all three of the preceding events occur, the Board of Directors, following review and recommendation by the Compensation Committee, will decide when and how the policy will apply. The Company may recoup the portion of incentive cash and equity compensation received by the executive(s) at fault during the year(s) subject to the restatement that is in excess of the incentive compensation that would have been received based on the restated results.

 

 

Tax and Accounting Considerations

 

The Compensation Committee considers tax and accounting rules and regulations when structuring our executive compensation program. Our plans and programs are designed to comply with or be exempt from the requirements of Section 409A of the Internal Revenue Code of 1986, as amended (the “IRS Code”), which regulates deferred compensation and provides for potentially early taxation and a 20% additional tax on non-compliant arrangements. Equity awards are accounted for under FASB ASC Topic 718, which requires the recognition of expense for the fair value of such awards, and the Compensation Committee considers the accounting expense of such awards when authorizing stock option and RSU grants.

 

Executive Compensation – Related Fees

The Compensation Committee did not utilize any third-party consulting services during 2020. Management and the Compensation Committee continue to utilize online data sources.

 

EXECUTIVE COMPENSATION

Say on Pay Advisory Vote in 2020

 

In 2020, our shareholders approved our compensation program for our Named Executive Officers by a vote in favor of 86%. For the past five years, our advisory “say on pay” vote has averaged above 90%. The Compensation Committee believes the results of our advisory votes on “say on pay” continue to confirm that the clear majority of our shareholders are satisfied with our executive compensation policies and decisions, and that our executive compensation program effectively aligns the interests of our Named Executive Officers with the interests of our shareholders.

 

With challenged uranium market conditions persisting, only an informal review of executive compensation was made in 2020 as no changes were anticipated to be made in executive compensation. We included survey data from the peer group established by the Company, utilizing publicly available data and studies. The review confirms that our executive officers remain behind even the median ranges of the comparator company data, with certain limited exceptions. Effective in 2019, an initial correction was made to adjust the base compensation of our CEO, Mr. Klenda. Due to continuing market conditions, however, no further corrective action has been taken since and recommended corrections to other executive pay have also not been taken. No increase to executive pay was implemented during 2020; the last increase was when executives were provided cost of living raises, only, in November 2019 at the same time such raises were provided to all employees.

 

We continue to review our human resources in light of the Company’s current operations and needs. Responsive to both persistently low uranium prices, and resulting reductions in production, we have reduced our overall employee count from a combined Ur-Energy USA (Wyoming/Colorado) and Lost Creek total of 90 employees at year-end 2013 to a combined 18 full-time employees at year-end 2020. This reduction has included controlled attrition as well as the reductions in force which have been implemented. Eleven employees were laid off in 2020.

 

Pursuant to our Board’s recommendation, we continue with an annual advisory (non-binding) say on pay vote. Although our compensation program has changed little in recent years, and we did not and do not currently anticipate that the program will change significantly, we believe that an annual update for our shareholders is appropriate. Based upon the advisory vote by our shareholders in 2020, concerning “say when on pay,” our Board adopted an annual advisory vote for “say on pay.” Our next say when on pay vote will be in 2026.

 

 

Summary Compensation Table

 

The following table sets forth the summary information concerning compensation earned during the financial years ended December 31, 2020 and 2019 by our Named Executive Officers serving at December 31, 2020.

 

Name and principal position (1)	Year	Salary ($)	Bonus (2) ($)	Stock awards (3)(4)(5) ($)	Option awards (3)(4)(5) ($)	Non-equity incentive plan compensation ($)	Change in pension value and nonqualified deferred compensation ($)	All other compensation (6) ($)	Total ($)
Jeffrey T. Klenda	2020	441,662	88,333	54,160	102,064	Nil	Nil	Nil	686,219
President and	2019	426,050	112,183	62,082	109,917	Nil	Nil	Nil	710,232
Chief Executive Officer
Roger L. Smith	2020	289,900	43,485	29,625	55,828	Nil	Nil	11,596	430,434
Chief Financial Officer and	2019	282,425	54,487	33,958	60,124	Nil	Nil	11,297	442,291
Chief Administrative Officer
Penne A. Goplerud	2020	260,624	39,094	26,634	50,190	Nil	Nil	10,425	386,968
General Counsel and	2019	253,908	48,945	30,529	54,052	Nil	Nil	10,156	397,590
Corporate Secretary

 

 

EQUITY INCENTIVE PLANS

The following table sets forth certain summary information concerning our equity compensation plans as at December 31, 2020. Directors, officers, employees, and consultants are eligible to participate in the Option Plan. Directors and employees, including executive officers, are eligible to participate in the RSU Plan.

 

	Number of Common Shares to be Issued Upon Exercise of Outstanding Options, Warrants and Rights	Weighted Average Exercise Price of Outstanding Options, Warrants and Rights (2) (US$)	Number of Common Shares Remaining for Future Issuance (Excluding Common Shares to be Issued Upon Exercise of Outstanding Options, Warrants and Rights)
Equity compensation plans approved by securityholders (1)	13,315,386	$ 0.61	1,692,334
Equity compensation plans not approved by security-holders	-	-	-

 

 

Stock Options and the Amended and Restated Restricted Share Unit and Equity Incentive Plan

 

We adopted the Ur-Energy Inc. Amended and Restated Stock Option Plan in 2005 in order to advance our interests by providing directors, officers, employees and consultants with a financial incentive tied to the Company’s long-term financial performance and continued service to or employment with us. Subsequently, we adopted the Ur-Energy Inc. Restricted Share Unit Plan, as thereafter amended, as part of our overall stock-based compensation plan. The RSU Plan has allowed participants to earn Common Shares over time, rather than options that give participants the right to purchase shares at a set price. Proposed amendments to rename and include additional equity incentives as part of the RSU Plan which are proposed to be approved by the shareholders at this Meeting are described below.

 

A total of up to 10% of Ur-Energy’s issued and outstanding Common Shares may be reserved for issuance pursuant to the Plans, in the aggregate. As of April 13, 2021, we have listed and reserved 13,283,902 Common Shares in the aggregate of a total 18,938,910 (or 10%) available. We have 11,003,195 Common Shares reserved under the Option Plan, and 2,280,707 Common Shares reserved under the RSU Plan. Therefore, up to 7,626,240 Common Shares (4%) are available under the Plans.

 

Of the shares currently reserved, 9,967,551 options for Common Shares have been granted and are outstanding, as of April 13, 2021, or approximately 5.3% of our issued and outstanding Common Shares. There are 1,345,119 RSUs that have been granted and are outstanding as of April 13, 2021, or approximately 0.7% of our issued and outstanding Common Shares. Historically, we have allocated approximately 80% of those reserved shares to the Option Plan and 20% to the RSU Plan, and award grants using a ratio of 4:1 Options to RSUs. The number of shares reserved is subject to adjustment if the Common Shares are subdivided, consolidated, converted or reclassified or the number of Common Shares varies as a result of a stock dividend or an increase or a reduction in our share capital. Dividends or dividend equivalents on unvested awards of all types are generally subject to the same vesting conditions as the underlying awards to which they relate. The run rate (or, “burn rate”) on the equity plans for the past three years is as follows:

 

	2020	2019	2018
Stock Option Plan	1.8%	1.8%	1.5%
Restricted Share Unit Plan	0.4%	0.4%	0.3%

 

As at April 13, 2021, the closing price of our Common Shares on the NYSE American was $1.10 and on the TSX was C$1.37.

 

 

Option Plan

 

Under the Option Plan, options may be granted to our directors, executive officers, eligible employees and consultants. As of April 13, 2021, there are 10 employees and six non-executive directors who are eligible to participate in the Option Plan. The Option Plan was most recently approved by shareholders on May 6, 2020.

 

The maximum number of Common Shares that may be reserved for issuance to any one person under the Option Plan is five percent of the number of Common Shares outstanding at the time of reservation. The options are personal and non-assignable. Option holders do not have any shareholder rights (and, specifically, shall not be entitled to dividends) with respect to options unless and until the options are exercised and Common Shares are issued in the name of the option holder. The exercise price for Common Shares subject to an option is determined by the Board of Directors at the time of grant and may not be less than the market price of the Common Shares at the time the option is granted. Market price at any date in respect of the Common Shares means the closing price of the Common Shares on the TSX (or, if the Common Shares are not then listed and posted for trading on the TSX, then on the recognized stock exchange on which such Common Shares are listed or posted or, if such Common Shares are not so listed on any recognized stock exchange, then on the over-the-counter market on which they are traded or posted as selected for such purpose by the Compensation Committee or in accordance with Section 5.5 of the Option Plan) on the immediately preceding trading day.

 

Options vest over a three-year period: one-third on the first anniversary, one-third on the second anniversary and one-third on the third anniversary of the grant; dividends, for all awards, shall not be payable on unvested options; the term of all options is five years. Additionally, in no event shall more than five percent of the shares available for issuance under the Option Plan have a stated vesting/exercisability schedule of less than one year from the date of grant. The aggregate number of Common Shares issued to insiders within any 12-month period, or issuable to insiders at any time, under the Stock Option Plan and any other security-based compensation arrangement of the Company, may not exceed 10% of the total number of issued and outstanding Common Shares during such time.

 

Options granted under the Option Plan are subject to early termination under certain circumstances, including (i) one year after the death of the option holder, (ii) three months after the option holder’s resignation or dismissal without cause as an employee or consultant, or (iii) immediately upon the option holder’s dismissal for cause as an employee. In each case, only options vested at the time of the event which gave rise to such early termination may be exercised by the option holder during such period. The Option Plan also provides that upon a change of control all options under the Option Plan vest immediately and are immediately exercisable.

 

The Option Plan and the terms of any outstanding option may be amended at any time by the Board subject to any required regulatory or shareholder approvals, provided that where such an amendment would prejudice the rights of an option holder under any outstanding option, the consent of the option holder is required to be obtained. Amendments requiring shareholder approval are those amendments set forth in the TSX Company Manual. Amendments that do not require shareholder approval are “housekeeping” amendments such as amendments to the Option Plan to comply with regulatory requirements, amendments related to the administration of the Option Plan and to change the eligibility requirements under the Option Plan and terms and conditions on which the options may be granted. The Option Plan may be suspended, terminated or discontinued in the sole discretion of our Board of Directors.

 

Stock options are generally treated as ordinary compensation income as and when Common Shares are issued to the participant upon exercise of the award, however, in the case of Incentive Stock Options, the options may be taxable at long-term capital gains tax rates when the issued Common Shares are sold so long as certain conditions are met. If the participant is an employee, the compensation income may be subject to withholding for income and employment tax purposes. The Company is generally entitled to an income tax deduction equal to the amount of ordinary income recognized by the participant, subject to possible limitations imposed by the IRS Code. Please note that the foregoing description is based upon U.S. federal income tax laws in effect on the date of this Circular and does not purport to be complete, and does not discuss state, local or non-U.S. tax consequences.

 

 

Amended and Restated Restricted Share Unit and Equity Incentive Plan (RSU&EI Plan)

 

The Existing RSU Plan was originally adopted by the Board of Directors on May 7, 2010 and, as previously amended, was approved in its entirety most recently by our shareholders on May 2, 2019. The shareholders are asked at the Meeting to approve amendments to the Existing RSU Plan, approved in April 2021 by the Board of Directors, on the recommendation of the Compensation Committee, including the renaming of the plan as the “Amended and Restated Restricted Share Unit and Equity Incentive Plan” (“RSU&EI Plan”). In addition to the restricted share units available for grant under the plan currently, the amendments permit the granting of awards within our compensation program of (a) performance share units (“PSUs”); and (b) direct share issuances of Common Shares (“DSIs”) to eligible participants.

 

The amendments do not request any increase in the percentage number of shares available for issuance under the RSU&EI Plan. The amendments are also described in Proposal No. 4, above, and the full text of the plan is attached as Schedule A of this Circular. As discussed above under “Particulars of Matters To Be Acted Upon,” the TSX rules provide that all eligible insiders in order to participate in the RSU&EI Plan may not vote on these amendments. Accordingly, the resolution must be passed by a majority of votes, excluding 5,674,838 Common Shares held by certain insiders of the Company and their affiliates.

 

Under the RSU&EI Plan, including its amendments, awards of RSUs, PSUs and DSIs, may be granted to directors and employees, including executive officers, of the Company as possible eligible participants. As of April 13, 2021, there are 10 employees and six non-executive directors who are eligible to participate in the RSU&EI Plan. Our Board has appointed the Compensation Committee to determine which persons are entitled to participate in the plan and the number of awards to be awarded to each participant. The plan does not limit the participation of any specific eligible participant including insiders.

 

Restricted Share Units

 

RSUs awarded to participants are credited to a notional account that is established on their behalf and maintained in accordance with the plan. Each RSU awarded conditionally entitles the participant to the delivery of one Common Share (or cash in lieu of such share at the Compensation Committee’s discretion) upon attainment of the RSU vesting period. Grants of RSUs vest 100% on the two-year anniversary of the date of the grant. Upon payment by the corporation of a dividend, each outstanding RSU is credited with a dividend equivalent equal to the dividend paid per share, which dividend equivalent is then converted into additional RSUs that are subject to the same vesting schedule as the RSUs to which they relate. The plan permits the Company to either redeem RSUs for cash or issue Common Shares from treasury to satisfy all or any portion of a vested RSU award. If redeemed for cash, RSUs will be redeemed for an amount equal to fair market value which means the closing price of the Common Shares on the TSX on the business day immediately prior to the redemption date, or if the shares are not listed on the TSX, then on such other stock exchange or quotation system as may be selected by the Compensation Committee, provided that, if the Common Shares are not listed or quoted on any other stock exchange or quotation system, then the fair market value will be the value determined by the Compensation Committee in its sole discretion acting in good faith. The redemption date of any RSU will not be after the end of the calendar year which is three years following the end of the year in which services to which the grant of such RSU relates were performed by the participant.

 

In the event of a change of control, as defined in the plan, we are required to redeem 100% of the RSUs granted to participants. In the event of an involuntary termination of an employee, other than for cause, or a director who is not re-elected, we are required to redeem the RSUs for cash. Rights respecting RSUs shall not be transferable or assignable other than by will.

 

Performance Share Units

 

PSUs are performance-based awards that may entitle the recipient to receive Common Shares (or cash in lieu of shares at the Compensation Committee’s discretion) upon attainment of one or more performance goals over a designated performance period set forth in the PSU grant agreement. Each award of PSUs will contain a target number of PSUs that may be earned, with the actual number earned to be determined pursuant to a formula set forth in the PSU grant agreement based on the extent to which corresponding performance criteria have been attained during the performance period. Upon payment by the corporation of a dividend, each outstanding target PSU is credited with a dividend equivalent equal to the amount of the dividend paid per share, which dividend equivalent is then converted into additional PSUs that are subject to the same performance conditions and formula and vest at the same time as the PSUs to which they relate.

 

 

Unless settled earlier in accordance with the plan, earned PSUs will be settled on or within 30 days after the end of the performance period. The plan permits the Company to either settle PSUs for cash or issue Common Shares from treasury to satisfy all or any portion of a PSU award. If settled for cash, PSUs will be settled for an amount equal to fair market value which means the closing price of the Common Shares on the TSX on the business day immediately prior to the settlement date, or if the shares are not listed on the TSX, then on such other stock exchange or quotation system as may be selected by the Compensation Committee, provided that, if the Common Shares are not listed or quoted on any other stock exchange or quotation system, then the fair market value will be the value determined by the Compensation Committee in its sole discretion acting in good faith.

 

In the event of a change of control, as defined in the plan, the performance period of each outstanding PSU shall be deemed to have ended and the Compensation Committee shall determine the number of PSUs earned based upon performance (under a specific award) to the time of change of control, subject to certain discretionary determinations of the Committee under the plan. Unless otherwise provided in a PSU grant agreement upon a participant’s termination of employment or other service or death prior to the end of the performance period for an award of PSUs, such PSUs shall be forfeited.

 

Direct Share Issuances

 

Subject to applicable securities law requirements as well as the rules of the exchanges under which our shares trade, DSIs awarded to participants are awards of Common Shares granted in such amounts and subject to such terms and conditions as the Compensation Committee determines in its sole discretion. It is anticipated that the DSIs will complement our other bonus program awards in instances when such an award of DSIs is made in lieu of a routine (STIP) or extraordinary cash bonus, as a milestone award (outside PSU grant terms), or other circumstances in which this use of our equity compensation plans is deemed appropriate in the discretion of the Compensation Committee. DSIs may be fully vested on the grant date or may be subject to vesting, as determined by the Compensation Committee. DSIs that are subject to a vesting schedule may not be transferred prior to vesting. Dividends on unvested DSIs may be paid in cash or may be reinvested in additional Common Shares, in either case subject to the same vesting schedule as the DSI to which they relate.

 

Unless otherwise provided in the DSI grant agreement that is subject to vesting, upon a participant’s termination of employment or other service or death, the provisions related to termination and death as set forth under the heading “Restricted Share Unit (RSUs)” above shall apply by analogy. Any unvested Common Shares that do not vest as a result of the participant’s termination of employment of other service or death shall be immediately forfeited and returned to the Corporation without the payment of any consideration.

 

Administration of the RSU&EI Plan and Tax Consequences

 

The Board may from time to time amend or suspend the RSU&EI Plan and may at any time terminate the plan. No such amendment, suspension or termination shall adversely affect the rights of any eligible person with respect to outstanding and unredeemed awards under the plan credited to that person without that holder’s consent. Amendments requiring shareholder approval are those amendments set forth in the TSX Company Manual, such as the percentage of the issued and outstanding Common Shares available to be granted under the RSU&EI Plan, an extension of the term for redemption of RSUs or settlement of PSUs held by a participant and amendments to Section 8.1 of the RSU&EI Plan. Amendments that do not require shareholder approval are “housekeeping” amendments such as amendments to the RSU&EI Plan to comply with regulatory requirements, amendments related to the administration of the plan and to change the eligibility requirements under the plan and terms and conditions on which the awards may be granted.

 

RSUs and PSUs are generally treated as ordinary compensation income as and when Common Shares are issued to the participant upon vesting or settlement of the award and DSIs are treated as ordinary compensation income at the time of grant if fully vested under the plan or, if such grant is subject to vesting under the RSU&EI Plan, at the time of vesting of the Common Shares. If the participant is an employee, this income is subject to withholding for income and employment tax purposes. The Company is generally entitled to an income tax deduction equal to the amount of ordinary income recognized by the participant. Please note that the foregoing description is based upon U.S. federal income tax laws in effect on the date of this Circular and does not purport to be complete, and does not discuss state, local or non-U.S. tax consequences.

 

Outstanding Equity Awards at December 31, 2020

 

The following table sets forth information concerning the value vested or earned in respect of incentive plan awards during the year ended December 31, 2020 by each of the Named Executive Officers.

 

	Option-based Awards					Share-based Awards
Name	Number of securities underlying unexercised options (#) exercisable	Number of securities underlying unexercised options (#) unexercisable	Equity incentive plan awards: number of securities underlying unexercised options (#)	Option exercise price (C$)	Option expiration date	Number of shares or units of stock that have not vested (#)	Market value of shares or units of stock that have not vested (US$)	Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#)	Equity incentive plan awards: Market or payout value of unearned shares, units or other rights that have not vested ($)
Jeffrey T. Klenda	338,118	Nil	Nil	0.73	12/16/21
	239,422	Nil	Nil	0.90	12/15/22
	73,284	37,752	Nil	0.93	08/20/23
	68,528	35,303	Nil	0.91	12/14/23
	139,015	278,029	Nil	0.79	11/05/24
	Nil	460,865	Nil	0.63	11/13/25
					11/05/21	104,261	85,165	Nil	Nil
					11/13/22	115,217	94,114	Nil	Nil
Roger L. Smith	241,184	Nil	Nil	0.73	12/16/21
	170,788	Nil	Nil	0.90	12/15/22
	52,276	26,930	Nil	0.93	08/20/23
	48,884	25,183	Nil	0.91	12/14/23
	76,040	152,079	Nil	0.79	11/05/24
	Nil	252,087	Nil	0.63	11/13/25
					11/05/21	57,030	46,584	Nil	Nil
					11/13/22	63,022	51,479	Nil	Nil
Penne A. Goplerud	216,836	Nil	Nil	0.73	12/16/21
	153,546	Nil	Nil	0.90	12/15/22
	46,999	24,212	Nil	0.93	08/20/23
	43,948	22,640	Nil	0.91	12/14/23
	68,360	136,721	Nil	0.79	11/05/24
	Nil	226,630	Nil	0.63	11/13/25
					11-05-21	51,271	41,880	Nil	Nil
					11/13/22	56,658	46,280	Nil	Nil

 

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL

Employment Agreements with our Named Executive Officers

 

As discussed above, our Named Executive Officers have employment agreements with the Company, as have been amended from time to time. Relevant to potential payments to be made upon termination without cause or change of control, the agreements provide that an executive officer is entitled to certain amounts, based upon the executive’s then-current salary. As discussed below, our employment agreements, and the Company’s equity compensation plans, specify the obligations of the Company to the executive officers in the event of termination or change of control.

 

Equity Award Provisions

 

Upon separation of employment of our executive officers, including under circumstances of termination without cause or change of control, the Option Plan and RSU Plan govern the treatment of outstanding equity compensation in the form of vested stock options and RSUs not yet redeemed. All vested options of Designated Officers (all of our current executive officers, as defined by the plan and resolution of our Board) will expire on the expiration date identified at the time of the grant of the option, and all unvested options will expire upon termination.

 

The RSU&EI Plan provides that the RSUs of an employee who is an eligible person who is involuntarily terminated without cause, shall be redeemed for cash at a fair market value on the redemption/termination date. In the event of a change of control, as defined in the plan, all of the RSUs granted and outstanding will be redeemed as soon as reasonably practical and not later than 30 days following the redemption date associated with the change of control. The RSU&EI Plan provides for redemption, instead of cancellation, of outstanding RSUs at the date of redemption for retiring directors and executive officers, which is defined as a threshold of combined service and age of 65 years, and a minimum of five years of service to the Corporation.

 

Change of Control and Termination Benefits Tables

 

Each of our executive officers has entered into an employment agreement that provides for certain payments if the executive’s employment is terminated in connection with a change of control. In addition, upon the occurrence of a change of control, all of the executive officer’s unvested options and RSUs will vest. The table below shows the amounts that would be payable or vest assuming that a change of control occurred on December 31, 2020 and that Named Executive Officer’s employment terminated on that date. The Compensation Committee has established a policy that the Company will not enter into an employment agreement with any new executive officer that includes a single-trigger severance arrangement.

 

		Cash		Equity		Pension/NQDC		Perquisites/benefits		Tax reimbursement		Other		Total
Name		($)(1)		($)(2)		($)		($)		($)		($)		($)
Jeffrey T. Klenda		1,324,986		538,424		Nil		Nil		Nil		Nil		1,863,410
Roger L. Smith		724,750		315,943		Nil		Nil		Nil		Nil		1,040,693
Penne A. Goplerud		521,248		284,039		Nil		Nil		Nil		Nil		805,287

 

In 2020, employment agreements were amended to revise the amount of severance to be paid to each Named Executive Officer. The amendments all were approved by the Board (upon the recommendation of the Compensation Committee in each event), to better conform to current market and peer group comparable arrangements. Each executive’s amount of severance is calculated solely based upon then-current salary (i.e., without cash bonus value included). The changes are as follows: CEO, Jeffrey Klenda (from an amount equal to two years to an amount equal to three years of his then-current salary); CFO, Roger Smith (from an amount equal to 24 months to an amount equal to 30 months of his then-current base salary); Corporate Secretary, Penne Goplerud (from an amount equal to 18 months to an amount equal to 24 months of her then-current base salary). The circumstances under which each of our executives would be entitled to receive the severance payment were not modified. No other provisions of the employment agreements were modified.

 

Additionally, the following summarizes the compensation or other benefits which would be owed and paid to our executive officers if employment is terminated for the specified reasons, effective December 31, 2020. We believe that these terms are fair and are competitive with the market and our peer group, based upon industry and geographical practices.

 

 

Type of Termination	Severance Payment(1)(2)	STIP Bonus	Stock Options	RSUs(3)
Resignation or Retirement	CEO will receive three-year salary payment, based on current salary, per agreement Other executive officers, no severance payment	Pro rata entitlement to discretionary bonus, per agreement	Unvested options are cancelled; vested options expire at date on option for current executive officers (as a “Designated Officer” per Section 6.7 of Plan)	RSUs are cancelled unless retirement provision is satisfied; RSUs will be carried with the executive until redemption, if the executive has combined service and age of 65 years, and a minimum of five years of service to the Company
Termination without cause	CEO: three-year salary payment, based upon then-current salary. CFO: 2.5 year salary payment, based upon then-current salary. Other executive officers: two-year salary payment, based upon then-current salary	Pro rata entitlement to discretionary bonus, per agreement	Unvested options are cancelled; vested options expire at date on option for current executive officers (as a “Designated Officer” per Section 6.7 of Plan)	Outstanding RSUs are redeemed for cash at fair market value, as defined in the Plan
Termination for cause	None	Possible pro rata share entitlement	None	None
Change of control (and/or termination within 24 months of a change of control)	CEO: three year salary payment, based upon then-current salary. Other executive officers two year salary payment, based upon then-current salary	Pro rata entitlement to discretionary bonus, per agreement	All options become fully vested and exercisable	Outstanding RSUs are redeemed for cash at fair market value, as defined in the Plan
Death	CEO will receive three-year salary payment, based on then-current salary. ● ● Other executive officers, no severance payment	Pro rata entitlement to discretionary bonus, per agreement	Unvested options are cancelled; vested options expire at the earlier of expiry at date on option or one year from the date of death (with discretion of Board as per Section 6.3(b) of Plan to extend)	RSUs are redeemed (Section 3.2 of Plan); date of death is redemption date

 

 

 

COMPENSATION OF DIRECTORS

 

Our non-executive directors are paid a cash retainer of $41,000 annually, and are not paid Board meeting fees. Committee meeting fees were paid as follows during 2020: $500 per Audit Committee meeting and $250 per meeting for other committees. In addition, work time spent for committee participation, not including attendance at regular meetings, is compensated at the rate of $250/half day and $500/full day, to be monitored by the Compensation Committee and reported to the Board. No such additional work time was paid to our non-executive directors in 2020. No changes were made to the compensation of our directors during 2020.

 

We routinely conduct reviews of the compensation of the non-executive directors on an internal basis, utilizing data about our peers which we obtain through public sources. Results have indicated that the Company’s non-executive director base cash and equity-based compensation remained generally within a range of the median of the comparator group, although consistently at the lower end of the range, particularly because the Company does not provide an additional retainer amount for committee chair positions, or additional compensation for those in other leadership roles, such as our Lead Director. Although the committee fees remain below median comparators, those fees remain unchanged.

 

In addition to other compensation received by our directors, a 2008 resolution provides that non-executive directors participating on ad hoc or special committees of the Board of Directors, which may be constituted from time to time, are entitled to additional director fees, to be determined in accordance with additional duties and requirements requested of those individuals from time to time. There currently are no such ad hoc or special committees of the Board of Directors.

	Fees earned	Share-based awards(1)	Option-based awards(2)	Non-equity incentive plan compensation	Pension value	All other compensation	Total
Name	$	$	$	$	$	$	$
W. William Boberg	42,750	25,139	47,374	Nil	Nil	Nil	115,263
Rob Chang	45,250	25,139	47,374	Nil	Nil	Nil	117,763
James M. Franklin	43,750	25,139	47,374	Nil	Nil	Nil	116,263
Gary C. Huber	46,250	25,139	47,374	Nil	Nil	Nil	118,763
Thomas H. Parker	45,250	25,139	47,374	Nil	Nil	Nil	117,763
Kathy E. Walker	44,250	25,139	47,374	Nil	Nil	Nil	116,763

 

 

 

Share Ownership Guidelines for Non-Executive Directors

 

Our non-executive directors also are encouraged to have a significant long-term financial interest in the Company. In 2009, the Compensation Committee recommended, and Board of Directors adopted, a resolution requiring mandatory minimum share ownership by the non-executive directors to encourage the alignment of their interests with those of our shareholders. Thereafter, non-executive directors were required to invest an amount equal to the non-executive director’s annual retainer in shares or securities redeemable into shares on or before the later of (i) December 31, 2013, (ii) the fifth anniversary of the non-executive director’s election or appointment, or (iii) the fifth anniversary of the most recent annual retainer increase. The retainer amount was to be calculated using the amount of the annual retainer at the later of (i) January 1, 2009, (ii) the date of the non-executive director’s election or appointment, or (iii) the date of the most recent annual retainer increase.

 

As discussed above under the heading “Share Ownership Guidelines,” in 2012 the Compensation Committee recommended, and the Board of Directors approved, Share Ownership Guidelines which provide greater detail concerning these ownership requirements. Additionally, the Board approved a recommendation that the share ownership requirement be adjusted with respect to the non-executive directors, to require each to acquire and own three times their annual retainer. All non-executive directors meet the Share Ownership Guidelines or are on-track to meet the Share Ownership Guidelines within the prescribed timeframes.

 

 

Outstanding Equity Awards at December 31, 2020

	Option-based Awards				Share-based Awards
	Number of securities underlying unexercised options	Option exercise price	Option expiration	Value of unexercised in-the-money options	Number of shares or units of shares that have not vested	Market or payout value of share-based awards that have not vested
Name	(#)	(C$)	date	($)	(#)	($)
W. William Boberg	128,000	0.73	12/16/21	31,166
	120,000	0.90	12/15/22	13,195
	55,653	0.93	08/20/23	4,808
	50,527	0.91	12/14/23	5,159
	193,574	0.79	11/05/24	38,009
	213,914	0.63	11/13/25	68,885
			11/05/21		48,394	39,530
			11/13/22		53,479	43,684
Rob Chang	200,000	0.77	03/30/23	42,413
	55,653	0.93	08/20/23	4,808
	50,527	0.91	12/14/23	5,159
	193,574	0.79	11/05/24	38,009
	213,914	0.63	11/13/25	68,885
			11/05/21		48,394	39,530
			11/13/22		53,479	43,684
James M. Franklin	128,000	0.73	12/16/21	31,166
	120,000	0.90	12/15/22	13,195
	55,653	0.93	08/20/23	4,808
	50,527	0.91	12/14/23	5,159
	193,574	0.79	11/05/24	38,009
	213,914	0.63	11/13/25	68,885
			11/05/21		48,394	39,530
			11/13/22		53,479	43,684
Gary C. Huber	128,000	0.73	12/16/21	31,166
	120,000	0.90	12/15/22	13,195
	55,653	0.93	08/20/23	4,808
	50,527	0.91	12/14/23	5,159
	193,574	0.79	11/05/24	38,009
	213,914	0.63	11/13/25	68,885
			11/05/21		48,394	39,530
			11/13/22		53,479	43,684
Thomas H. Parker	128,000	0.73	12/16/21	31,166
	120,000	0.90	12/15/22	13,195
	55,653	0.93	08/20/23	4,808
	50,527	0.91	12/14/23	5,159
	193,574	0.79	11/05/24	38,009
	213,914	0.63	11/13/25	68,885
			11/05/21		48,394	39,530
			11/13/22		53,479	43,684
Kathy E. Walker	200,000	0.73	09/07/22	48,696
	120,000	0.90	12/15/22	13,195
	55,653	0.93	08/20/23	4,808
	50,527	0.91	12/14/23	5,159
	193,574	0.79	11/05/24	38,009
	213,914	0.63	11/13/25	68,885
			11/05/21		48,394	39,530
			11/13/22		53,479	43,684

 

 

The non-executive directors are eligible to receive grants of options and RSUs at the discretion of the Board, and did so in 2020 as indicated in the following table:

 

Incentive Plan Awards - Value Vested or Earned During the
Financial Year Ended December 31, 2020
	Option-based Awards			Share-based Awards			Non-equity incentive plan compensation
Name	Number of Securities Underlying Options Vested (#)	Value vested during the year ($)		Number of Shares or Units of Shares Vested (#)	Value vested during the year ($)		Value earned during the year ($)
W. William Boberg	140,365	Nil		26,546	15,119		Nil
Rob Chang	166,232	Nil		26,546	15,119		Nil
James M. Franklin	140,365	Nil		26,546	15,119		Nil
Gary C. Huber	140,365	Nil		26,546	15,119		Nil
Thomas H. Parker	140,365	Nil		26,546	15,119		Nil
Kathy E. Walker	208,365	Nil		26,546	15,119		Nil