Quaterra Resources Inc. - Exhibit 99.2 - Filed by newsfilecorp.com
QUATERRA RESOURCES INC.
1100 – 1199 West Hastings
Street, Vancouver, B.C. V6E 3T5
Telephone: (604) 681-9059 Fax: (604)
641-2740
www.quaterra.com
MANAGEMENT INFORMATION CIRCULAR
AS AT AND DATED
MAY 15, 2017
(Unless otherwise noted;
All $ references in US dollars)
This Management Information Circular (“Information Circular”)
accompanies the Notice of the 2017 Annual General Meeting (“Notice of Meeting”)
of holders of common shares (“shareholders”) of Quaterra Resources Inc.
(the “Company”) scheduled to be held on Thursday, June 22, 2017 (the
“Meeting”), and is furnished in connection with a solicitation of proxies for
use at that Meeting and at any adjournment or postponement thereof.
PERSONS OR COMPANIES MAKING THE SOLICITATION
THE FORM OF PROXY ACCOMPANYING THIS INFORMATION CIRCULAR
IS
BEING SOLICITED BY MANAGEMENT OF THE COMPANY
Solicitations will be made by mail and possibly supplemented by
telephone, electronic means or other personal contact to be made without special
compensation by directors, officers and employees of the Company. The Company
may reimburse shareholders’ nominees or agents for the cost incurred in
obtaining from their principals authorization to execute forms of proxy. It is
not anticipated that any solicitation will be made by specially engaged
employees or soliciting agents. The cost of solicitation will be borne by the
Company.
No person has been authorized to give any information or to
make any representation other than as contained in this Information Circular in
connection with the solicitation of proxies. If given or made, such information
or representations must not be relied upon as having been authorized by the
Company. The delivery of this Information Circular shall not create, under any
circumstances, any implication that there has been no change in the Information
set forth herein since the date of this Information Circular. This Information
Circular does not constitute the solicitation of a proxy by anyone in any
jurisdiction in which such solicitation is not authorized, or in which the
person making such solicitation is not qualified to do so, or to anyone to whom
it is unlawful to make such an offer of solicitation.
APPOINTMENT OF PROXYHOLDER
Only registered shareholders or duly appointed proxyholders
are permitted to vote at the Meeting. Those shareholders so desiring may be
represented by proxy at the Meeting. The persons named in the form of proxy
accompanying this Information Circular are directors and/or officers of the
Company (“Management Appointees”). A shareholder has the right to appoint a
person or company (who need not be a shareholder) to attend and act on the
shareholder’s behalf at the Meeting other than the Management Appointees. To
exercise this right, the shareholder must either insert the name of the desired
person in the blank space provided in the form of proxy accompanying this
Information Circular and strike out the names of the Management Appointees or
submit another proper form of proxy.
NON-REGISTERED SHAREHOLDERS
Only shareholders whose names appear on the records of the
Company (“registered shareholders”) or duly appointed proxyholders are permitted
to vote at the Meeting. Most shareholders of the Company are not registered
shareholders because the shares they own are not registered in their names.
More particularly, a person is not a registered shareholder in respect of shares
which are held on behalf of that person (the “Non-Registered Holder”) but which
are registered either (a) in the name of an intermediary (an “Intermediary”) that the Non-Registered Holder
deals with in respect of the shares including, among others, banks, trust
companies, securities dealers or brokers and trustees or administrators of
self-administered RRSP’s, RRIF’s, RESP’s and similar plans; or (b) in the name
of a clearing agency such as The Canadian Depository for Securities Limited
(“CDS”) of which the Intermediary is a participant. In accordance with current
securities regulatory policy, the Company has distributed proxy-related
materials for the Meeting (collectively, the “Meeting Materials”) to the
clearing agencies and Intermediaries.
1
Current securities regulatory policy requires Intermediaries to
forward the Meeting Materials to, and to seek voting instructions from,
Non-Registered Holders unless a Non-Registered Holder has waived the right to
receive them. Intermediaries will often use service companies to forward the
Meeting Materials to Non-Registered Holders. Generally, Non-Registered Holders
who have not waived the right to receive Meeting Materials will either:
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(a) |
be given a form of proxy which has already been signed
by the Intermediary (typically by a facsimile, stamped signature),
which is restricted as to the number of shares beneficially owned by the
Non-Registered Holder but which is otherwise not completed. Because the
Intermediary has already signed the form of proxy, this form of proxy is
not required to be signed by the Non -Registered Holder when submitting
the proxy. In this case, the Non - Registered Holder who wishes to submit
a proxy should otherwise properly complete this form of proxy and
submit it to the Company, c/o Computershare Investor Services Inc.,
9th Floor, 100 University Avenue, Toronto,
Ontario M5J 2Y1, fax number 416-263-9261; or |
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(b) |
more typically, be given a voting instruction or proxy
authorization form which is not signed by the Intermediary, and
which, when properly completed and signed by the Non - Registered Holder
and returned to the Intermediary or its service company, (such as
Broadridge Financial Solutions Inc.), will constitute voting instructions
(often called a “proxy authorization form”) which the Intermediary must
follow. Typically, the proxy authorization form will consist of a one page
pre-printed form. Sometimes, instead of the one page pre- printed form,
the proxy authorization form will consist of a regular printed proxy form
accompanied by a page of instructions which contains a removable label
containing a bar- code and other information. In order for this proxy form
to validly constitute a proxy authorization form, the Non-Registered
Holder must remove the label from the instructions and affix it to the
proxy form, properly complete and sign the proxy form and return it to the
Intermediary or its service company, or otherwise communicate voting
instructions to the Intermediary or its service company (by way of
telephone or the Internet, for example) in accordance with the
instructions of the Intermediary or its service company. A Non-
Registered Holder cannot use a proxy authorization form to vote shares
directly at the Meeting. |
In either case, the purpose of this procedure is to permit
Non-Registered Holders to direct the voting of the shares which they
beneficially own.
The Meeting Materials are being sent to both registered and
non-registered owners of shares. If you are a Non-Registered Holder and the
Company or its agent has sent the Meeting Materials directly to you as a
non-objecting beneficial owner under National Instrument 54-101 Communication
with Beneficial Owners of Securities of a Reporting Issuer (“NI 54-101”),
your name and address and information about your holdings of securities have
been obtained in accordance with applicable securities regulatory requirements
from the Intermediary holding shares on your behalf. By choosing to send the
Meeting Materials to you directly, the Company (and not the Intermediary holding
shares on your behalf) has assumed responsibility for (i) delivering the Meeting
Materials to you, and (ii) executing your proper voting instructions. Please
return your voting instructions as specified in the request for voting
instructions.
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Management of the Company intends to pay for Intermediaries to
forward to objecting beneficial owners under NI 54-101 the Meeting Materials and
Form 54-101F7 – Request for Voting Instructions Made by Intermediary.
Non-Registered Holders cannot be recognized at the Meeting
for purposes of voting their shares in person or by way of depositing a form of
proxy. If you are a Non-Registered Holder and wish to vote in person at the
Meeting, please see the voting instructions you received or contact your
Intermediary well in advance of the Meeting to determine how you can do so.
Non-Registered Holders should carefully follow the voting
instructions they receive, including those on how and when voting instructions
are to be provided, in order to have their shares voted at the Meeting.
DEPOSIT AND VOTING OF PROXIES
To be effective, the instrument of proxy must be dated and
signed and, together with the power of attorney or other authority, if any,
under which it is signed or a notarially certified copy thereof, deposited
either at the office of Computershare Investor Services Inc., 9th
Floor, 100 University Avenue, Toronto, Ontario M5J 2Y1, or at the office
of the Company at Suite 1100, 1199 West Hastings Street, Vancouver, BC V6E 3T5,
not less than 48 hours, excluding Saturdays, Sundays, and holidays, prior to the
time of the holding of the Meeting or any adjournment or postponement thereof.
Late proxies may be accepted or rejected by the Chairman of the Meeting in the
Chairman’s discretion, and the Chairman is under no obligation to accept or
reject any particular late proxy.
THE SHARES REPRESENTED BY A PROPERLY EXECUTED AND DEPOSITED
PROXY WILL BE VOTED OR WITHHELD FROM VOTING ON EACH MATTER REFERRED TO IN THE
NOTICE OF MEETING IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN (PROVIDED SUCH
INSTRUCTIONS ARE CERTAIN) ON ANY BALLOT THAT MAY BE CALLED FOR AND, IF A CHOICE
IS SPECIFIED WITH RESPECT TO ANY MATTER TO BE ACTED UPON AT THE MEETING, THE
SHARES SHALL BE VOTED OR WITHHELD FROM VOTING ACCORDINGLY. WHERE NO CHOICE IS
SPECIFIED IN RESPECT OF ANY MATTER TO BE ACTED UPON AND ONE OF THE MANAGEMENT
APPOINTEES IS NAMED IN THE FORM OF PROXY TO ACT AS THE SHAREHOLDER’S
PROXYHOLDER, THE SHARES REPRESENTED BY THE PROXY WILL BE VOTED IN FAVOUR OF ALL
SUCH MATTERS. THE FORM OF PROXY ACCOMPANYING THIS INFORMATION CIRCULAR GIVES
THE PERSON OR COMPANY NAMED AS PROXYHOLDER DISCRETIONARY AUTHORITY REGARDING
AMENDMENTS OR VARIATIONS TO MATTERS IDENTIFIED IN THE NOTICE OF MEETING AND
OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING. IN THE EVENT THAT
AMENDMENTS OR VARIATIONS TO MATTERS IDENTIFIED IN THE NOTICE OF MEETING ARE
PROPERLY BROUGHT BEFORE THE MEETING OR ANY OTHER BUSINESS IS PROPERLY BROUGHT
BEFORE THE MEETING, IT IS THE INTENTION OF THE MANAGEMENT APPOINTEES TO VOTE IN
ACCORDANCE WITH THEIR BEST JUDGMENT ON SUCH MATTERS OR BUSINESS ON ANY BALLOT
THAT MAY BE CALLED FOR. AT THE TIME OF PRINTING THIS INFORMATION CIRCULAR,
MANAGEMENT KNOWS OF NO SUCH AMENDMENTS, VARIATIONS OR OTHER MATTERS WHICH MAY BE
BROUGHT BEFORE THE MEETING.
REVOCABILITY OF PROXY
In addition to revocation in any other manner permitted by law,
a proxy may be revoked by instrument in writing executed by the registered
shareholder or the registered shareholder’s attorney authorized in writing, or
if the registered shareholder is a corporation, by a duly authorized officer or
attorney thereof, and deposited either at the registered office of the Company
at any time up to and including the last business day preceding the day of the
Meeting, or any adjournment or postponement thereof, or, as to any matter in
respect of which a vote shall not already have been cast pursuant to such proxy,
with the Chairman of the Meeting on the day of the Meeting, or any
adjournment or postponement thereof, and upon either of such deposits the proxy
is revoked.
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Only registered shareholders have the right to revoke a proxy.
Non-Registered Holders who wish to change their vote must arrange for their
Intermediaries to revoke the proxy on their behalf.
INTEREST OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE
ACTED UPON
Except as otherwise disclosed, to the knowledge of the Company,
no director or executive officer since the commencement of the Company’s last
completed fiscal year, and no proposed nominee for election as a director, or
any associate or affiliate of the foregoing persons, has any material interest,
direct or indirect, by way of beneficial ownership of securities or otherwise,
in any of the matters to be acted upon at the Meeting other than the election of
directors.
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The Company`s authorized share structure consists of an
unlimited number of common shares without par value. There is one class of
shares only and there are 200,969,314 common shares issued and outstanding.
Shareholders of record as of May 15, 2017 will be entitled to receive notice of
and to vote at the Meeting.
At a General Meeting of the Company, on a show of hands, every
registered shareholder present in person and entitled to vote and every
proxyholder duly appointed by a registered shareholder who would have been
entitled to vote shall have one vote and, on a poll, every registered
shareholder present in person or represented by proxy or other proper authority
and entitled to vote shall have one vote for each share of which such
shareholder is the registered holder. Shares represented by proxy will only be
voted as to the number of shares represented if a poll or ballot is called for.
A poll or ballot may be requested by a registered shareholder or proxyholder
present and entitled to vote at the Meeting or required because the number of
votes attached to shares represented by proxies that are to be voted against a
matter is greater than 5% of the votes attached to all shares that are entitled
to be voted and to be represented at the Meeting.
To the knowledge of the directors and executive officers of the
Company, as at the date of this Information Circular, no person or company
beneficially owns, or controls or directs, directly or indirectly, voting
securities carrying 10% or more of the outstanding voting rights of the Company.
ELECTION OF DIRECTORS
Each director of the Company is elected annually and holds
office until the next Annual General Meeting of the shareholders unless that
person ceases to be a director before then. Unless such authority is
withheld, the Management Appointees intend to vote the shares represented by
proxy for the election of the nominees herein listed on any poll or ballot that
may be called for.
MANAGEMENT DOES NOT CONTEMPLATE THAT ANY OF THE NOMINEES HEREIN
LISTED WILL BE UNABLE TO SERVE AS A DIRECTOR. IN THE EVENT THAT PRIOR TO THE
MEETING ANY VACANCIES OCCUR IN THE SLATE OF NOMINEES HEREIN LISTED, IT IS
INTENDED THAT DISCRETIONARY AUTHORITY SHALL BE EXERCISED BY THE MANAGEMENT
APPOINTEES, IF NAMED IN THE PROXY, TO VOTE THE SHARES REPRESENTED BY PROXY FOR
THE ELECTION OF ANY OTHER PERSON OR PERSONS AS DIRECTORS UNLESS THE SHAREHOLDER
HAS SPECIFIED THAT THE SHARES REPRESENTED BY PROXY ARE TO BE WITHHELD FROM
VOTING IN THE ELECTION OF DIRECTORS.
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Management proposes that the number of directors for the
Company be determined at five (5) for the ensuing year, subject to such
increases as may be permitted by the Articles of the Company, and that each of
the following persons be nominated for election as a director of the Company for
the ensuing year. Information concerning these persons, as furnished by the
individual nominees, is as follows:
Name, Jurisdiction of Residence
and Position
with the Company
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Principal Occupation,
Business or Employment
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Director Since
|
Number of Securities
Beneficially Owned,
Directly or Indirectly,
or Controlled or
Directed |
Thomas C. Patton
Washington, USA
Chairman, CEO
and Director |
Chairman and CEO of the Company
|
November 1998 |
5,214,762(1) |
Gerald Prosalendis
British Columbia, Canada
President, COO and Director |
President and COO of the Company
|
June 23, 2016 |
318,451 |
John Kerr
British Columbia, Canada
Director
|
Geological Engineer |
May 1993 |
103,334 |
LeRoy Wilkes
Colorado, USA
Director |
Retired Mining Executive |
August 2006 |
115,428 |
Terrence Eyton
British Columbia, Canada
Director
|
Chartered Accountant |
March 2015 |
345,000(2)
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| (1) |
Thomas Patton directly holds 3,114,762 common shares and
indirectly has control over 2,100,000 common shares. |
| (2) |
Terrence Eyton directly holds 135,000 common shares and
indirectly has control over 210,000 common shares. |
The Company’s Audit Committee is currently comprised of
Terrence Eyton (Chair), John Kerr and LeRoy Wilkes. The current members of the
Corporate Governance, Nomination and Compensation Committee are LeRoy Wilkes
(Chair), Terrence Eyton and John Kerr. The Company also has a Safety, Health,
Security and Environment Committee, the members of which are John Kerr (Chair),
Thomas Patton and Terrence Eyton.
Unless otherwise instructed, the persons named in the
accompanying form of proxy intend to vote FOR the election of the foregoing
individuals as directors until the close of the next annual general meeting of
the Shareholders or until their successors are otherwise elected or appointed.
Majority Voting
The Company has adopted a Majority Voting Policy in its
Corporate Governance Principles. Pursuant to this Policy, any nominee proposed
for election as a director in an uncontested election who receives, from the
shares voted at the meeting in person or by proxy, a greater number of shares
withheld than shares voted in favour of his or her election, must
promptly tender his or her resignation to the Chairman of the Board. Any such
resignation shall take effect upon acceptance by the Board. The Compensation and
Nomination Committee will expeditiously consider the director’s offer to resign
and, unless there are extraordinary circumstances, will recommend to the Board
to accept such resignation. The Board will have 90 days to make a final decision
and announce such decision, including any reasons for not accepting a
resignation, by way of a press release. The applicable director will not
participate in any Committee or Board deliberations after the resignation offer.
The Corporate Governance Committee charter is available on the Company’s website
at www.quaterra.com.
Cease Trade Orders, Penalties and Bankruptcies
Except as otherwise disclosed in this Information Circular, to
the knowledge of the Company, no director:
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a.
is, as at the date of this Information Circular, or has been, within 10 years
before the date of this Information Circular, a director, chief executive
officer or chief financial officer of any company (including the Company) that:
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(i) |
was subject to an order that was issued while the
proposed director was acting in the capacity as director, chief executive
officer or chief financial officer; |
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(ii) |
was subject to an order that was issued after the
proposed director ceased to be a director, chief executive officer or
chief financial officer and which resulted from an event that occurred
while that person was acting in the capacity as a director, chief
executive officer or chief financial officer; |
b.
is, as at the date of this Information Circular, or has been within 10 years
before the date of this Information Circular, a director or executive officer of
any company (including the Company) that, while that person was acting in that
capacity, or within a year of that person ceasing to act in that capacity,
became bankrupt, made a proposal under any legislation relating to bankruptcy or
insolvency or was subject to or instituted any proceedings, arrangement or
compromise with creditors or had a receiver, receiver manager or trustee
appointed to hold its assets;
c.
has within 10 years before the date of this Information Circular, become
bankrupt, made a proposal under any legislation relating to bankruptcy or
insolvency, or become subject to or instituted any proceedings, arrangement or
compromise with creditors, or had a receiver, receiver manager or trustee
appointed to hold the assets of the proposed director;
d.
has been subject to:
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(i) |
since December 31, 2000, any penalties or sanctions
imposed by a court relating to securities legislation or by a securities
regulatory authority or has entered into a settlement agreement with a
securities regulatory authority, or before December 31, 2000, the
disclosure of which would likely be important to a reasonable
securityholder in deciding whether to vote for a proposed
director; |
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(ii) |
any other penalties or sanctions imposed by a court or
regulatory body that would likely be considered important to a reasonable
securityholder in deciding whether to vote for a proposed director;
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e.
is to be elected under any arrangement or understanding between the proposed
director and any other person or company, except the directors and executive
officers of the Company acting solely in such capacity.
For the purpose of the paragraphs above, “order” means: (i) a
cease trade order; (ii) an order similar to a cease trade order; or (iii) an
order that denied the relevant company access to any exemption under securities
legislation that was in effect for a period of more than 30 consecutive days.
- Copper Mesa Mining Corporation
LeRoy E. Wilkes, was a
director of Copper Mesa Mining Corporation which had a cease trading order
issued against it on April 8, 2009 for failure to file its annual financial
statements, accompanying management's discussion and analysis and annual
information form (collectively, the “Annual Filings”) for its financial year
ended December 31, 2008. On June 3, 2009, the cease trade order was revoked as
Copper Mesa Mining Corporation had filed its Annual Filings. Mr. Wilkes ceased
to be a director of such company on November 5, 2009.
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APPOINTMENT OF AUDITORS
At the Meeting, shareholders will be requested to re-appoint
PricewaterhouseCoopers LLP, Chartered Professional Accountants as auditors of
the Company to hold office until the next annual meeting of shareholders or
until a successor is appointed, and to authorize the Board of Directors to fix
the auditors’ remuneration. PricewaterhouseCoopers LLP was first appointed
auditors of the Company on October 7, 2016.
The person(s) designated by management of the Company in the
enclosed form of proxy intend to vote FOR the re-appointment of
PricewaterhouseCoopers LLP, Chartered Professional Accountants, as auditors of
the Company to hold office until the next annual meeting of shareholders or
until a successor is appointed and the authorization of the Board of Directors
to fix the remuneration of the auditors.
STOCK OPTION PLAN
At the Meeting, the shareholders will be asked to approve the
Company’s stock option plan (the “Plan”) and the number of common shares
reserved for issuance under the Plan in accordance with and subject to the rules
and policies of the TSX Venture Exchange (“TSXV”).
The purpose of the Plan is to provide the directors, officers
and key employees of, and certain other persons who provide services to the
Company and its subsidiaries with an opportunity to purchase shares of the
Company and benefit from any appreciation in the value of the Company’s shares.
This will provide an increased incentive for these individuals to contribute to
the future success and prosperity of the Company, thus enhancing the value of
the Company’s shares for the benefit of all the shareholders and increasing the
ability of the Company and its subsidiaries to attract and retain skilled and
motivated individuals in the service of the Company.
The proposed Plan is a “rolling” plan that provides that the
aggregate number of shares reserved for issuance under it, and all of the
Company’s other previously established and outstanding stock option plans or
grants, will not exceed 10% of the Company’s issued common shares at the time of
the grant of a stock option under the proposed Plan.
The proposed Plan provides that the option exercise price, as
determined by the Board of Directors with recommendations from the Company’s
Corporate Governance, Nomination and Compensation Committee, must not be less
than the closing price of the Company’s common shares on the TSXV on the day
immediately preceding the date of grant, less the applicable discount permitted
by the policies of the TSXV. The maximum term of the options granted under the
Plan is ten years from the date of grant; however the normal term of the options
is five years. The Board of Directors of the Company, with recommendations from
the Company’s Corporate Governance, Nomination and Compensation Committee, may
determine the limitation period during which an option may be exercised and,
notwithstanding that none may be required by the policies of the TSXV whether a
particular grant will have a minimum vesting period. In the event of resignation
or termination of an optionee, such optionee may exercise options held by such
optionee for a period of 90 days following the effective date of such
resignation or for a time as otherwise determined by a directors’ resolution at
the time of the grant of the options. In the event of an optionee’s death, the
stock option may be exercised by a qualified successor until the earlier of a
period of one year from the date of such death and the expiry date of the stock
option. Any amendment to the proposed Plan will require the approval of the TSXV
and may require shareholder approval.
The granting of stock options under the proposed Plan is
restricted as follows: (a) the number of options granted to a consultant in a
12-month period must not exceed 2% of the issued shares of the Company at the
time of grant of the stock option; and (b) the aggregate number of options
granted to employees involved in investor relations activities must not exceed
2% of the issued shares of the Company in any 12-month period, at the time of grant of the stock option.
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In accordance with the terms of the proposed Plan, it is
subject to its acceptance for filing by the Exchange and the approval of the
Company’s shareholders. Under the policies of the TSXV, if
a.
the grants of options under the proposed Plan to “insiders” of the Company,
together with all of the Company’s outstanding stock options, could result at
any time in:
i.
the number of shares reserved for issuance pursuant to stock options granted to
insiders of the Company exceeding 10% of the issued common shares of the
Company; or
ii.
the grant to insiders of the Company, within a 12-month period, of a number of
options exceeding 10% of the issued common shares of the Company; or
b.
the number of shares reserved for issuance pursuant to stock options granted to
any one optionee, within a 12-month period, exceeding 5% of the issued common
shares of the Company;
such shareholder approval must be “disinterested shareholder
approval”, but as the proposed Plan is restrictive as to these results,
disinterest shareholder approval of the proposed Plan is not required.
The policies of the TSXV and the terms of the proposed Plan
also provide that “disinterested shareholder approval” will be required for any
agreement to decrease the exercise price of options previously granted to
insiders of the Company but no such agreements are being brought before the
Meeting.
The term “disinterested shareholder approval” means approval by
a majority of the votes cast at the Meeting other than votes attaching to shares
of the Company beneficially owned by insiders of the Company to whom options may
be granted under the proposed Plan and associates of such persons. The term
“insiders” is defined in the Securities Act (British Columbia) and
generally includes directors and officers of the Company and its subsidiaries
and holders of greater than 10% of the voting securities of the Company. The
term “associates” is defined in the Securities Act (British Columbia).
If shareholder approval of the proposed Plan or a modified
version thereof is not obtained, the Company will not proceed to implement the
proposed Plan nor grant options under it. Even if approved, the directors may
determine not to proceed with the proposed Plan.
The proposed Plan will be available for inspection at the
Meeting. The directors recommend that the shareholders approve the proposed
Plan.
The person(s) designated by management of the Company in the
enclosed form of Proxy intend to vote FOR the adoption of the Stock Option Plan
Resolution.
STATEMENT OF EXECUTIVE COMPENSATION
Compensation Discussion & Analysis
Named Executive Officers
“CEO” means each individual who acted as chief executive
officer of the Company, or acted in a similar capacity, for any part of the most
recently completed financial year.
“CFO” means each individual who acted as chief financial
officer of the company, or acted in a similar capacity, for any part of the most
recently completed financial year.
“executive officer” means an individual who is a chair,
vice-chair or president of the Company, a vice-president in charge of a principal business unit, division or
function including sales, finance or production of the Company and an individual
who is performing a policy-making function in respect of the Company.
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“NEO” or “Named Executive Officer” means each of
the following individuals:
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(a) |
a CEO; |
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(b) |
a CFO; |
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(c) |
each of the three most highly compensated executive
officers of the Company, including any of its subsidiaries, or the three
most highly compensated individuals acting in a similar capacity, other
than the CEO and CFO, at the end of the most recently completed financial
year whose total compensation was, individually, more than C$150,000 for
that financial year; and |
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(d) |
each individual who would be an NEO under (c) but for the
fact that the individual was neither an executive officer of the Company
or its subsidiaries, nor acting in a similar capacity, at the end of that
financial year . |
As at December 31, 2016, the Company’s Named Executive Officers
were: Thomas Patton (CEO and Executive Chairman of the Board), Gerald
Prosalendis (President and Chief Operating Officer), Steven Dischler
(consultant, former President and Chief Executive Officer) and Lei Wang
(CFO).
All currency references in this Statement of Executive
Compensation are in US dollars unless otherwise noted Canadian dollars are
referred as C$.
Corporate Governance, Nomination and Compensation
Committee
The Corporate Governance, Nomination and Compensation Committee
(the “Governance Committee”) of the Board was established to assist the Board in
fulfilling its responsibilities relating to compensation matters, including the
evaluation and approval of the Company’s compensation plans, policies and
programs.
One of the key roles of the Governance Committee is to assist
the directors of the Company in attracting, evaluating and retaining key senior
executive personnel through compensation and other appropriate performance
incentives. It is the Governance Committee’s responsibility to ensure that the
Company develops a compensation plan for its executive officers that is fair and
competitive and consistent with the best interests of the Company. The role of
management is to provide the Governance Committee with perspectives on the
business strategy and individual performance of senior executive personnel in
order to assist the Governance Committee in making recommendations regarding
compensation.
The Governance Committee reviews the performance of the
Company’s NEOs against established performance goals and criteria and makes
recommendations to the Board of the Company on appropriate compensation. Other
than with respect to the CEO, the Governance Committee also considers the
evaluations and recommendations of the CEO.
The Governance Committee has the responsibility for reviewing
compensation policies, programs and procedures for the Company’s NEOs, including
a review of any proposed awards of stock options or any other equity plans and
recommending same for approval by the full Board. The Governance Committee acts
pursuant to the Governance, Nomination and Compensation Committee Charter (the
“Governance Charter”) that has been approved by the Board of Directors.
The Governance Committee is composed of three directors, all of
whom are independent within the meaning of National Instrument 58-101, being
LeRoy Wilkes (Chair), Terrence Eyton and John Kerr. None of the members of the
Governance Committee is an officer, employee or former officer of the Company.
All of the members are experienced in matters of executive compensation and the
Board believes that the Committee collectively has the knowledge,
experience and background required to fulfill its mandate.
9
The Governance Committee Charter can be viewed on the Company’s
website at www.quaterra.com. The
Governance Committee reports to the Board of Directors which has final
accountability for the Company’s compensation policies and programs. The
Governance Committee also seeks the views of the CEO when reviewing compensation
for other executive officers because of his involvement with these officers. The
Company does not currently benchmark.
Role of the Chief Executive Officer
The Chief Executive Officer (“CEO”) completes a review of each
NEO’s performance. The CEO makes a recommendation to the Governance Committee on
compensation for each NEO which is taken into consideration by the Governance
Committee in completing its review and ultimate recommendations to the Board.
Objectives of the Compensation Program
The general objectives of the Company’s compensation strategy
are to:
| (a) |
compensate management in a manner that encourages and
rewards a high level of performance and outstanding results with a view to
increasing long term shareholder value; |
| |
|
| (b) |
provide a compensation package that is competitive with
other comparable mineral exploration companies to enable the Company to
attract and retain talent; and |
| |
|
| (c) |
ensure that the total compensation package is designed in
a manner that takes into account the Company’s present stage of
development and its available financial resources. The Company’s
compensation packages have been designed to provide a non -cash stock
option component in conjunction with a reasonable cash
salary. |
Salaries for the NEOs are determined by evaluating the
responsibilities inherent in the position held, and the individuals experience
and past performance, as well as by reference to the competitive marketplace for
management talent at other mineral exploration companies. Following the annual
general meeting of shareholders, the Governance Committee reviews actual
performance for the Company and the each of the NEOs for such year, including
the quality and measured progress of the Company’s exploration projects, raising
of capital and similar achievements.
Elements of Compensation
During 2016, the Company’s compensation program consisted of
two elements (i) cash and (ii) incentive stock options administered under the
Company’s stock option plan. The Company does not presently have a long-term
incentive plan. There is no policy or target regarding allocation between cash
and non- cash elements of the Company’s compensation program. The Board reviews
annually the total compensation package of each of the Company’s NEOs on an
individual basis, against the backdrop of the competitive landscape and the
compensation goals and objectives described above.
Salary - Base salaries for the NEOs for any given year
are reviewed by the Governance Committee at its meeting in June. Increases or
decreases in salary on a year over year basis are dependent on the Governance
Committee’s assessment of the performance of the Company and the particular NEO.
When considering the base salaries of each of the Company’s NEOs, the Governance
Committee reviews the qualifications and performance of, and salaries paid to
executives of similar companies engaged in mining exploration and development.
Recommendations for executive salaries are made by the Governance Committee to
the full Board of Directors in consultation with the CEO.
10
Incentive Awards – The Governance Committee believes
that a significant portion of each NEO’s compensation should be in the form of
equity awards. Equity awards are made to the NEOs pursuant to the Company’s
stock option plan. The stock option plan provides for awards in the form of
stock options. The Committee has generally followed a practice of issuing stock
options to its NEOs on an annual basis in June of each year. The Committee
retains the discretion to make additional awards to NEOs at other times, in
connection with the initial hiring of a new executive, for retention purposes or
otherwise. In determining the amount of stock options to be issued, the
Governance Committee considers qualifications, performance, and option programs
of similar companies.
Perquisites and Other Personal Benefits – The Company’s
NEOs are not generally entitled to significant perquisites. The Company offers
health care benefits, but there are no other perquisites which account for a
material portion of the overall compensation paid to any NEO.
The board of directors did not consider the implications of the
risks associated with the Company’s compensation policies and practices. None of
the NEOs or directors are permitted to purchase financial instruments that are
designed to hedge or offset a decrease in market value of equity securities
granted as compensation or held, directly or indirectly, by such NEOs or
directors.
Employment Agreements, Termination and Change of Control
The Company has employment agreements with Thomas Patton,
Gerald Prosalendis, and Lei Wang. The Governance Committee believes that these
agreements will help to secure the continued employment and dedication of the
Company’s NEOs.
Thomas Patton – In January 2010, Dr. Thomas Patton
entered into an employment agreement with the Company and its subsidiary,
Quaterra Alaska, Inc. for a period of five years relating to his role as
President and CEO. On January 1, 2015 and January 1, 2016, Dr. Patton entered
into new employment agreements relating to his role as Chairman and on April 14,
2016 Dr. Patton stepped down as President and entered into an amended and
restated agreement relating to his role as CEO and Chairman. This agreement has
been renewed for an additional year. The employment agreements each have a one
year term but are otherwise substantially in the same form as his previous
agreement. Under the employment agreement, Dr. Patton is entitled to receive an
annual base salary of $150,000, which salary is to be reviewed annually with a
view to its increase, giving consideration to the Company’s financial position
and the scope of its activities. Dr. Patton may be eligible to participate in
future stock option grants. The Company may terminate the employment of Dr.
Patton only for breach of the employment agreement or for cause. Dr. Patton is
entitled to two months’ notice of such discharge. If Dr. Patton becomes disabled
and unable to perform his regular duties, he shall be entitled to receive his
full salary for two months. Upon a change of control, as defined in the
employment agreement, Dr. Patton has the right to terminate the employment
agreement and receive an amount of money equal to one hundred percent (100%) of
the compensation which would have been paid to the employee during the unexpired
terms of this agreement. If Dr. Patton terminated his employment agreement upon
a change of control, and assuming the triggering event took place on the last
business day of the Company’s most recently completed financial year, the
payment to Dr. Patton would be $43,750.
Gerald Prosalendis – On April 14, 2016, Mr. Prosalendis
entered into an employment agreement with the Company for a period of two years
whereby Mr. Prosalendis receives an annual salary of C$225,000. After three
months from the date of the employment agreement and every twelve months
thereafter, the CEO will conduct a performance review of Mr. Prosalendis which
shall include a general performance assessment and possible salary adjustments
or bonus payments. Mr. Prosalendis may be eligible to participate in future
stock option grants. The Company may terminate the employment of Mr. Prosalendis
only for breach of the employment agreement or for cause. Mr. Prosalendis is
entitled to two months’ notice of such discharge. If Mr. Prosalendis becomes
disabled and unable to perform his regular duties, he shall be entitled to
receive his full salary for two months. Upon a change of control, as defined in
the employment agreement, Mr. Prosalendis has the right to
terminate the employment agreement and receive an amount of money equal to his
annual salary for two years. If Mr. Prosalendis terminated his employment
agreement upon a change of control, and assuming the triggering event took place
on the last business day of the Company’s most recently completed financial
year, the payment to Mr. Prosalendis would be C$450,000.
11
Lei Wang – Effective January 1, 2017, Lei Wang entered
into an employment agreement with the Company for a period of one year, whereby
Ms. Wang is entitled to an annual salary of CAD$90,000. Upon the expiration of
one year following the date of the employment agreement, assuming the term is
extended by mutual agreement, and each year thereafter, the Company will review
Ms. Wang’s salary with a view to its increase, giving consideration to the
Company’s financial position and the scope of its activities. Ms. Wang may be
eligible to participate in future stock option grants. The Company may terminate
the employment of Ms. Wang only for breach of the employment agreement or for
cause. Ms. Wang is entitled to two months’ notice of such discharge. If Ms. Wang
becomes disabled and unable to perform her regular duties, she shall be entitled
to receive her full salary for two months. Upon a change of control, as defined
in the employment agreement, Ms. Wang has the right to terminate the employment
agreement and receive an amount of money equal to her annual salary for one
year. If Ms. Wang terminated her employment agreement upon a change of control,
and assuming the triggering event took place on the last business day of the
Company’s most recently completed financial year, the payment to Ms. Wang would
be C$90,000.
Summary Compensation Table – Named Executive Officers
The following table sets out information concerning the
compensation earned from the Company and any of the Company’s subsidiaries
during the financial year ended December 31, 2016 by the Company’s NEOs.
Name and principal
position |
Year |
Salary
($) |
Share-
based
awards
($) |
Option-
based
awards
($)(6) |
Non-equity incentive
plan compensation
($)
|
Pension
Value
($) |
All
other
compens-
ation
($) |
Total
compensation
($) |
Annual
Incentive
plans
|
Long-term
incentive
plans
|
Thomas Patton(1)
CEO
& Chairman
|
2016
2015
2014 |
150,000
150,000
150,000 |
N/A
N/A
N/A |
11,207
31,867
36,843 |
N/A
N/A
N/A |
N/A
N/A
N/A |
N/A
N/A
N/A |
Nil
Nil
Nil |
161,207
181,867
186,843 |
Gerald Prosalendis(2)
President & COO |
2016
|
119,531
|
N/A
|
26,897
|
N/A
|
N/A
|
N/A
|
Nil
|
146,428
|
Steven Dischler(3)
Former CEO
|
2016
2015
2014 |
135,000
208,333
250,000 |
N/A
N/A
N/A |
5,000
31,867
60,169 |
N/A
N/A
N/A |
N/A
N/A
N/A |
N/A
N/A
N/A |
Nil
Nil
Nil |
140,000
240,200
310,169 |
Lei Wang(4)
CFO |
2016
|
61,250
|
N/A
|
11,207
|
N/A
|
N/A
|
N/A
|
Nil
|
72,457
|
Scott Hean(5)
Former
CFO |
2015
2014 |
117,519
135,808 |
N/A
N/A |
15,934
21,237 |
N/A
N/A |
N/A
N/A |
N/A
N/A |
Nil
Nil |
133,453
157,045 |
| (1) |
Thomas Patton was appointed President and Chief Executive
Officer on September 2, 2015 (upon the resignation of Steven Dischler) and
resigned as President on April 14, 2016 (upon the appointment of Gerald
Prosalendis). Dr. Patton has served as Chairman since July 31,
2013. |
| (2) |
Gerald Prosalendis was appointed President and Chief
Operating Officer on April 14, 2016. |
| (3) |
Steven Dischler resigned as President and Chief Executive
Officer on September 2, 2015. |
| (4) |
Lei Wang was appointed CFO on January 1, 2016. |
| (5) |
Scott Hean resigned as CFO and his employment agreement
was cancelled effective December 31, 2015. |
| (6) |
The Company calculated the stock-based compensation costs
by using the Black -Scholes-Merton model assuming a risk free interest
rate of 0.60% (2015 – 0.48%; 2014 – 1.25%), a dividend yield of 0% (2015
& 2014 – 0%), the expected annual volatility of the Company’s share price of 141% (2015 – 143%;
2014 – 111%) and expected life of the option of 5 years (2015 & 2014 – 5
years). |
12
Narrative Discussion
Thomas Patton is paid an annual salary of $150,000 pursuant to
an employment agreement with the Company. Gerald Prosalendis is paid an annual
salary of C$225,000 pursuant to an employment agreement with the Company.
As President and CEO, Steven Dischler was paid an annual salary
of $250,000. Pursuant to a consulting agreement dated November 1, 2015 the
Company’s subsidiary, Singatse Peak Services LLC, pays Dischler Consulting LLC
$11,250 per month for professional services.
Pursuant to an employment agreement effective January 1, 2016,
Lei Wang was paid C$70,000 which was increased to C$90,000 on June 1, 2016.
Incentive Awards
The following table sets out information in respect of
outstanding option-based awards* for the financial year ended December 31, 2016,
for the Company’s NEOs.
| |
Option-based Awards |
Share-based Awards |
Name
|
Number of
securities
underlying
unexercised
options (#)
|
Option
exercise
price
(C$)
|
Option expiration
date
|
Value of
unexercised
in-the-
money
options
($)(1)
|
Number
of shares
or
units
of shares
that
have not
vested
(#) |
Market or
payout
value of
share-based
awards that
have not
vested
($) |
Market or
payout value
of vested
share-based
awards not
paid out or
distributed
($) |
Thomas Patton
|
160,000
450,000
400,000
400,000
400,000
250,000 |
$0.45
$0. 16
$0. 10
$0. 05
$0. 13
$0.065 |
June 28, 2017
September 19, 2018
June
25, 2019
December 31, 2019
July 16, 2020
April 14, 2021 |
Nil
Nil
Nil
8,000
Nil
2,500 |
N/A
|
N/A
|
N/A
|
Gerald
Prosalendis
|
80,000
10,000
25,000
100,000
150,000
600,000 |
$0.45
$0. 16
$0. 10
$0. 05
$0. 13
$0.065 |
June 28, 2017
September 19, 2018
June
25, 2019
March 26, 2020
July 16, 2020
April 14, 2021 |
Nil
Nil
Nil
2,000
Nil
6,000 |
N/A
|
N/A
|
N/A
|
Steven Dischler
|
160,000
900,000
400,000
400,000
400,000
125,000 |
$0.45
$0. 16
$0. 10
$0. 05
$0.13
$0.065 |
June 28, 2017
September 19, 2018
June
25, 2019
December 31, 2019
July 16, 2020
April 14, 2021 |
Nil
Nil
Nil
8,000
Nil
1,250 |
N/A
|
N/A
|
N/A
|
| Lei Wang |
250,000 |
$0.065 |
April 14, 2021 |
2,5000 |
N/A |
N/A |
N/A |
| (1) |
“In -the-money options” means the excess of the market
value of the Company’s shares at the Company’s most recently completed
financial year on December 31, 2016 over the exercise price of the
options. The last trading price of the Company’s shares on the TSX Venture
Exchange on December 31, 2016 was C$0.075. |
| |
|
| * |
Until a stock option has been exercised and the stock
sold, the NEO does not receive any cash proceeds from the option and,
accordingly, the amount shown is only the deemed “paper gain” of the
option. |
Incentive plan awards – value vested or earned during the
year
The following table summarizes the value of each incentive plan
award vested or earned by each NEO
13
during the Company’s most recently completed financial year.
Name |
Option-based awards
– Value
vested during
the year (1)
($)
|
Share-based awards
– Value
vested during
the year (1)
($)
|
Non-equity incentive plan
compensation – Value earned
during the year
($) |
| Thomas Patton |
Nil |
Nil |
Nil |
| Gerald Prosalendis |
Nil |
Nil |
Nil |
| Steven Dischler |
Nil |
Nil |
Nil |
| Lei Wang |
Nil |
Nil |
Nil |
| (1) |
“Value vested during the year” means the aggregate dollar
value that would have been realized if the options under the option- based
award had been exercised on the vesting date. This amount is calculated by
determining the difference between the market price of underlying
securities at exercise and the exercise or base price of the options under
the option-based award on the vesting date. |
Pension Plan Benefits
The Company does not provide retirement benefits for its
directors or executive officers.
Director Compensation
The Company’s independent directors’ compensation program
revolves around three key areas:
- Recruiting and retaining qualified individuals to serve as members of our
board of directors and contribute to our overall success;
- Aligning the interests of the board members with those of our shareholders
by requiring directors to hold a minimum number of shares and to compensation
in the form of option based awards and cash; and
- Offering competitive compensation by positioning director compensation in
relation to companies that are comparable in size and in a similar business.
The directors’ compensation package provides for the fees below
to be paid to non-executive directors:
| Annual Retainer |
(C$) |
| Independent director |
10,000 |
| Audit Committee Chair |
7,500 |
| Other Committee Chairs |
5,000 |
Below is a summary of total compensation paid to the Directors
(excluding NEOs) during 2016:
Name
|
Fees
earned
(C$) |
Share-
based
awards
(C$) |
Option-
based
awards
(C$)(1) |
Non-equity
incentive plan
compensation
(C$) |
Pension
value
(C$) |
All other
compensation
(C$) |
Total
(C$) |
| John Kerr |
15,000 |
Nil |
12,000 |
Nil |
N/A |
Nil |
27,000 |
| LeRoy Wilkes |
15,000 |
Nil |
12,000 |
Nil |
N/A |
Nil |
27,000 |
| Terrence Eyton |
17,500 |
Nil |
12,000 |
Nil |
N/A |
Nil |
29,500 |
| (1) |
The Company calculated the stock-based compensation costs
by using the Black-Scholes-Merton model assuming a risk free interest rate
of 0.60%, a dividend yield of nil%, the expected annual volatility of the
Company’s share price of 141% and expected life of the option of 5
years. |
14
Outstanding share-based awards and option-based awards
The following table summarizes the outstanding share-based
awards and option-based awards to the Non-Named Executive Officer Directors as
at the Company’s most recently completed financial year.
| |
Option-based Awards |
Share-based Awards |
Name
|
Number of
securities
underlying
unexercised
options (#)
|
Option
exercise
price
(C$)
|
Option expiration
date
|
Value of
unexercised
in-the-
money
options
(C$)(1)
|
Number
of shares
or units
of shares
that
have not
vested
(#) |
Market or
payout
value of
share-based
awards that
have not
vested
($) |
Market or
payout value
of vested
share-based
awards not
paid out or
distributed
($) |
John Kerr
|
80,000
180,000
200,000
200,000
200,000 |
$0.45
$0.16
$0.10
$0.13
$0.065 |
June 28, 2017
September 19,
2018
June 25, 2019
July 16, 2020
April 14, 2021 |
Nil
Nil
Nil
Nil
2,000 |
N/A
|
N/A
|
N/A
|
LeRoy Wilkes
|
80,000
180,000
200,000
200,000
200,000 |
$0.45
$0.16
$0.10
$0.13
$0.065 |
June 28, 2017
September 19,
2018
June 25, 2019
July 16, 2020
April 14, 2021 |
Nil
Nil
Nil
Nil
2,000 |
N/A
|
N/A
|
N/A
|
Terrence Eyton
|
100,000
200,000
200,000 |
$0.05
$0.13
$0.065 |
March 26, 2020
July 16,
2020
April 14, 2021 |
2,500
Nil
2,000 |
N/A
|
N/A
|
N/A
|
| (1) |
“In-the-money options” means the excess of the market
value of the Company’s shares at the Company’s most recently completed
financial year on December 31, 2016 over the exercise price of the
options. The last trading price of the Company’s shares on the TSX Venture
Exchange on December 31, 2016 was $0.075. |
Incentive plan awards – value vested or earned during the
year
The following table summarizes the value of each incentive plan
award vested or earned by each Non- Named Executive Officer Director during the
Company’s most recently completed financial year.
Name
|
Option-based awards
– Value
vested during
the year(1)
($)
|
Share-based awards
– Value
vested during
the year(1)
($)
|
Non-equity incentive plan
compensation – Value earned
during the year
($) |
| John Kerr |
Nil |
N/A |
N/A |
| LeRoy Wilkes |
Nil |
N/A |
N/A |
| Terrence Eyton |
Nil |
N/A |
N/A |
| (1) |
“Value vested during the year” means the aggregate dollar
value that would have been realized if the options under the option-based
award had been exercised on the vesting date. This amount is calculated by
determining the difference between the market price of underlying
securities at exercise and the exercise or base price of the options under
the option-based award on the vesting date. |
Securities Authorized for Issuance under Equity Plans
The following table sets out the number of the Company’s shares
to be issued and remaining available for future issuance under the Company’s
Incentive Stock Option Plan at the end of the Company’s most recently completed
financial year:
15
Plan Category
|
Number of Securities to
be
issued upon exercise
of outstanding options
(a) |
Weighted-average
exercise
price of
outstanding options
(b) |
Number of securities remaining
available for future issuance
under incentive stock
option
plans (excluding securities
reflected in
column (a))
(c) |
| Stock Option Plan approved by security holders |
15,710,000 |
C$0.16 |
3,637,941 |
| Equity compensation plans not approved by security holders
|
N/A |
N/A |
N/A |
| Total |
15,710,000 |
|
3,637,941 |
INDEBTEDNESS TO COMPANY OF DIRECTORS AND EXECUTIVE
OFFICERS
No director or executive officer, or any proposed director or
any associate of any of them, is or, since the beginning of the last completed
financial year of the Company, was indebted to the Company, or has been the
subject of a guarantee, support agreement, letter of credit or other similar
arrangement or understanding provided by the Company.
INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS
No insider of the Company, no management proposed nominee for
election as a director of the Company and no associate or affiliate of any of
these persons, has any material interest, direct or indirect, in any transaction
since the commencement of the Company's last financial year or in any proposed
transaction, which, in either case, has materially affected or will materially
affect the Company or any of its subsidiaries other than as disclosed under the
heading "Executive Compensation".
MANAGEMENT CONTRACTS
There are no management functions of the Company, which are, to
any substantial degree, performed by a person other than the directors or
executive officers of the Company.
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
The Company’s corporate governance disclosure obligations are
set out in National Instrument 58-101 – Disclosure of Corporate Governance
Practices (the “National Instrument”), National Policy 58-201 – Corporate Governance Guidelines and National Instrument
52-110 – Audit Committees. These instruments set out a series of
guidelines and requirements for effective corporate governance, collectively the
“Guidelines”. The National Instrument requires the Company to disclose its
approach to corporate governance with reference to Guidelines.
Composition of the Board
The Board currently consists of five directors. The National
Instrument defines an independent director as a director who has no direct or
indirect material relationship with the Company. A “material relationship” is in
turn defined as a relationship which could, in the view of the Board of
Directors, be reasonably expected to interfere with such member’s independent
judgment. The Board of Directors considers the factual circumstances of each
director in the context of Guidelines.
The Board has determined that three (3) directors are
independent for purposes of the Board members as provided in National Instrument
58-101. There are two (2) who are not independent for purposes of the Board
members as provided in National Instrument 58-101. The Board has concluded that
Dr. Thomas Patton and Mr. Gerald Prosalendis are not “independent” by virtue of
their roles as executive officers of the Company. See Composition of the Board
below.
16
| Director Nominees |
Independent |
Non-Independent |
Reason for Non Independence
|
| Thomas Patton |
|
X |
CEO and Chairman of the Board
|
| Gerald Prosalendis |
|
X |
President and COO |
| John Kerr |
X |
|
|
| LeRoy Wilkes |
X |
|
|
| Terrence Eyton |
X |
|
|
Participation of Directors in Other Reporting Issuers
Certain of the Company’s directors are directors of other
reporting issuers, as set out in the following table:
| Director |
Reporting Issuer |
| John Kerr |
• Bravada Gold Corporation |
• Eureka Resources Inc. |
| |
• Canyon Copper Corp. |
|
| LeRoy Wilkes |
• Sabina Gold & Silver Corp. |
• Athena Silver Corporation |
| |
• Copper Mesa Mining
Corporation |
|
| |
(Formerly Ascendant Copper Corporation) |
|
Orientation and Continuing Education
Board members are provided with a policy and procedure manual
and have access to technical data and financial information 24 hours a day
through an internet-based software support system, essentially an electronic
Boardroom. The Company does not provide formal continuing education to its Board
members, but does encourage them to communicate with management, auditors and
technical consultants. Board members are also encouraged to participate in
industry related conferences, meetings and educational events.
Ethical Business Conduct
The Board has adopted a Code of Business Conduct and Ethics
(the “Code”) that can be viewed at www.quaterra.com. The Code addresses honesty and
integrity, fair dealing, discrimination and harassment, safety and security, and
honest and accurate record keeping. The Code also addresses Ethical Business
Conduct for financial managers.
Audit Committee
The Audit Committee is responsible for assisting directors to
meet their responsibilities; providing better communication between directors
and external auditors; enhancing the independence of the external auditor;
increasing the credibility and objectivity of financial reports; and
strengthening the role of the directors facilitating in-depth discussions among
directors, management and the external auditor. The Audit Committee is
responsible for the appointment, compensation, retention and oversight of the
external auditor, as well as the pre-approval of all non-audit services provided
by the external auditor, and for directing the auditor’s examination into
specific areas of the Company’s business. A full version of the Audit Committee
Charter is available at www.quaterra.com.
Composition of the Audit Committee
The Audit Committee is comprised of three directors of the
Company: Terrence Eyton (Chair), John Kerr and LeRoy Wilkes, all of whom are
independent and financially literate within the meaning of NI 52-110.
17
To be considered to be independent, a member of the audit
committee must not have any direct or indirect “material relationship” with the
Company. A material relationship is a relationship which could, in the view of
the board of directors of the Company, reasonably interfere with the exercise of
a member’s independent judgment. To be considered financially literate, a member
of the audit committee must have the ability to read and understand a set of
financial statements that present a breadth and level of complexity of
accounting issues that are generally comparable to the breadth and complexity of
the issues that can reasonably be expected in the Company’s financial
statements.
Mr. Eyton graduated from Lakehead University in 1967 in
Business Administration. He obtained his Chartered Accountant designation in
1971 and was elected to Fellowship of the Institute of Chartered Accountants in
1983. He completed the Institute of Corporate Directors program in 2008 and
obtained the designation of ICD.D. Mr. Eyton practiced the profession of
accounting in both public practice and corporate entities. Currently Mr. Eyton
is a Director and Chair of the Audit Committee for Quaterra Resources Inc. Mr.
Eyton has also served as a director and chair of audit committees for other
reporting issuers including, Sabina Gold and Silver Corp; Southern Silver
Exploration Corp; Homestake Resource Corporation; Bravada Gold Corporation and
Potash North Resource Corp. Mr. Eyton is currently retired from active
employment and considered financially literate.
Mr. Kerr graduated from the University of British
Columbia in 1964 with a BASc degree in Geological Engineering. Mr. Kerr has sat
on several public company Boards and Audit Committees. In his positions, he
would be responsible for receiving financial information relating to his Company
and obtaining an understanding of the balance sheet, income statement and
statement of cash flows and how these statements are integral in assessing the
financial position of the Company and its operating results. Mr. Kerr is
considered financially literate.
Mr. Wilkes was President of Washington Group
International’s mining business unit where he was responsible for the operating
and financial performance of the unit’s international operations in the coal,
metals and industrial minerals markets. He has 38 years of mining experience in
the precious metals, coal industrial metals, and base metals mining and
processing. Prior to joining the Washington Group International, Mr. Wilkes
served as executive vice-president and chief operating officer of Santa Fe
Pacific Gold Corporation of Albuquerque, New Mexico from 1988 to 1995. Mr.
Wilkes also previously served as executive vice-president of Washington
Corporation of Missoula, Montana, responsible for merger and acquisition
activities. He earlier served as vice-president and general manager of Kennecott
Ridgeway Mining Company of Ridgeway, South Carolina, and director of business
development of Anaconda Minerals Co. of Denver, Colorado. He has held management
and supervisory positions at surface and underground mines producing molybdenum,
copper, limestone, lead silver and zinc. Mr. Wilkes has a degree in mining
engineering from the Montana School of Mines. Mr. Wilkes also serves as a
director and chairman of the Board of Sabina Gold & Silver Corp. Mr. Wilkes
is considered financially literate.
Pre-approved Policies and Procedures
All non-audited services are pre-approved by the Audit
Committee. Before approval is given, the Audit Committee examines the
independence of the external auditors in relation to the services to be provided
and assesses the reasonableness of the fees to be charged for such services.
External Auditor Service Fees
Financial Year
Ending
|
Audit
Fees(1)
|
Audit
Related
Fees(2) |
Tax Fees
|
All other Fees
|
Total
|
| December 31, 2016 |
C$42,500 |
$Nil |
$Nil |
$Nil |
C$42,500 |
| December 31, 2015 |
C$64,000 |
$Nil |
C$2,500 |
$Nil |
C$66,500 |
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| (1) |
The aggregate audit fees include the audit of the
Company’s consolidated financial statements and the audit of
ICFR. |
| (2) |
The aggregate fees billed for audit related services that
are reasonably related to the performance of the audit of the Company’s
consolidated financial statements, which are not included under the
heading “Audit Fees” |
Corporate Governance, Nomination and Compensation Committee
The Corporate Governance, Nomination and Compensation Committee
(“Governance Committee”) is appointed by and acts on behalf of the Board of
Directors. The Governance Committee acts pursuant to the Corporate Governance
Nomination Compensation Committee Charter (the “Governance Charter”) that has
been approved by the board of directors. The Governance Charter can be viewed on
the Company’s website at www.quaterra.com. The Governance Committee is
responsible for:
| |
1) |
developing and recommending to the Board a set of
corporate governance guidelines applicable to the Company and for
periodically reviewing such guidelines; |
| |
|
|
| |
2) |
identifying individuals qualified to become Board
members; |
| |
|
|
| |
3) |
recommending that the Board select the director nominees
for the next annual meeting of shareholders; |
| |
|
|
| |
4) |
overseeing the Board’s annual evaluation of its
performance, and |
| |
|
|
| |
5) |
reviewing and recommending to the Board on major
compensation plans, policies and programs of the Company. The Governance
Committee approves the compensation of named executive officers and
certain senior management, takes specific actions with respect to such
compensation and has oversight responsibility over the Company’s
management development programs, performance assessment of senior
executives and succession planning. |
The members of the Governance Committee are LeRoy Wilkes
(Chair), Terrence Eyton and John Kerr, all of whom are independent directors,
applying the definition set out in Section 1.4 of National Instrument 52-110.
Safety, Health, Security and Environment Committee
The Company has a Safety, Health, Security and Environment
Committee (the “SHSE Committee”) that consists of John Kerr (Chair), Thomas
Patton and Terrence Eyton.
The SHSE Committee has been established to assist the Board in
fulfilling its responsibilities relating to health, safety, security and the
environment. The SHSE Charter can be viewed on the Company’s website at www.quaterra.com. The responsibilities of the
Committee are as follows:
- reviewing and recommending, as appropriate, changes to the safety, health,
security and environmental policies of the Company;
- monitor the status of compliance with the Company policies and applicable
laws and regulations in the areas of safety, health, security and environment
based on written reports from management;
- review, at least semi-annually, the performance of the Company in the area
of safety, health, security and environment;
- the event of the occurrence of a material safety, health, security or
environmental incident where the occurrence is required to be reported to the
appropriate authorities, the committee will receive and review as soon as
practicable a report from management detailing the nature of the incident and
describing the remedial action being taken; and
19
- periodically report to the Board of Directors on safety, health, security
and environment issues affecting the Company.
MANAGEMENT IS NOT AWARE OF ANY OTHER MATTER TO COME BEFORE THE
MEETING OTHER THAN AS SET FORTH IN THE NOTICE OF MEETING. IF ANY OTHER MATTER
PROPERLY COMES BEFORE THE MEETING, IT IS THE INTENTION OF THE MANAGEMENT
APPOINTEES TO VOTE THE SHARES REPRESENTED BY THE FORM OF PROXY ACCOMPANYING THIS
INFORMATION CIRCULAR ON ANY BALLOT THAT MAY BE CALLED FOR IN ACCORDANCE WITH
THEIR BEST JUDGMENT ON SUCH MATTER.
ADDITIONAL INFORMATION
Additional information relating to the Company can be found at
www.sedar.com and at the
Company’s website at www.quaterra.com.
A copy of the following documents may be obtained, without charge, upon request
to the Company at Suite 1100, 1199 West Hastings Street, Vancouver, B.C., V6E
3T5, Telephone: (604) 681-9059, Fax: (604) 641-2740:
| |
(a) |
the comparative financial statements of the Company for
the financial year ended December 31, 2016 together with the accompanying
report of the auditor thereon and related Management’s Discussion and
Analysis and any interim financial statements of the Company for periods
subsequent to December 31, 2016 and related Management’s Discussion and
Analysis; and |
| |
|
|
| |
(b) |
this Information Circular. |
BY ORDER OF THE BOARD OF DIRECTORS
OF QUATERRA
RESOURCES INC.
“Thomas Patton”
Thomas Patton
Chief Executive Officer
20
