104 South Michigan Avenue
Suite 900
Chicago, Illinois 60603
Dear Fellow Stockholder:
I am pleased to invite you to join our Board of Directors, executives, employees and your fellow stockholders at our 2016 Annual Meeting of Stockholders. The meeting will take place at 104 S. Michigan Avenue, Second Floor Auditorium, Chicago, Illinois 60603, on Tuesday, May 10, 2016, at 9:30 a.m., local time. The attached notice and proxy statement provide information about the business to be conducted at the meeting.
Enhanced Disclosures
We are continually trying to improve our proxy statement to make it clearer and more concise. Our goal is to provide you with a better understanding of our corporate governance and compensation policies and focus your attention on important changes that have been made since last year. Many of these improvements and changes were influenced by feedback we received from you, our stockholders. Detailed information about the qualifications of our directors, and why we believe they are the right people to guide our Company, starts on page 10. We have also enhanced our Compensation Discussion and Analysis beginning on page 32 to more clearly explain how our incentive compensation programs relate directly to the Company’s strategy and how they are aligned with stockholders. Many enhancements were made this year to ensure that pay is directly linked to Company performance and stockholders’ interests.
2015 Performance
We made tremendous progress during the past year to reposition and strengthen the Company in response to the challenge of ongoing declines in silver and gold prices. We are building momentum and are enthusiastic about our trajectory and outlook.
| ■ | Industry-leading cost reductions: We significantly lowered our costs of producing silver and gold ounces through a variety of ongoing initiatives. In addition to operating cost reductions, we also drastically cut non-operating costs such as corporate overhead, which is down more than 40% over the past two years. We expect our costs to decline further as we continue optimizing our mine plans, mining higher-grade silver and gold, and capturing the benefit of other efficiency and processing enhancement opportunities. |
| ■ | Successful acquisitions: We completed two significant acquisitions in 2015: the Wharf gold mine, located in South Dakota, and the San Miguel silver-gold project, located next to our Palmarejo mine in Mexico. The addition of Wharf has had an immediate, positive impact on our costs and cash flow, and both acquisitions have contributed to a significant increase in Company-wide reserves, adding high-quality, long-term sources of gold and silver production and cash flow to our portfolio. |
| ■ | Positive exploration results: As a result of focusing exploration around our existing operations where the likelihood of success is higher and the impact of new discoveries can be realized quicker, we announced new high-grade discoveries at our Palmarejo, Kensington, and Rochester mines. These new discoveries carry higher overall grades of silver and gold, which we believe will lead to higher-margin production and cash flow in the future. |
Alignment with Stockholders
Despite the progress we made during 2015 in repositioning the Company for long-term success, the impact of falling silver and gold prices led to a disappointing share price performance for our stockholders. As a result, and in response to feedback from our stockholder engagement efforts, our Compensation Committee took action to ensure the linkage and alignment between executive compensation and our stockholders is strong. The CEOs base salary is the same for the third consecutive year, annual incentive payouts for 2015 were sharply reduced compared to the prior year, and the level of equity grants made in 2016 was significantly diminished. As a result of negative 53% annualized total stockholder return (TSR) over the last three years, total realizable CEO pay was 43% below grant date pay for the same period, including a 78% decrease in equity compensation value. Our Compensation Committee took the additional step of exercising negative discretion to further cut annual incentive payouts to our executive officers for 2015.
Continued Outreach and Engagement
We appreciate the opportunity to engage with our stockholders about corporate governance, executive compensation, and critical issues facing the Company. We are committed to continuing these engagement efforts to increase transparency and to ensure that the different perspectives and issues of importance to our stockholders are understood and addressed appropriately.
Your vote is important to us. We encourage you to promptly vote your shares by submitting your proxy on the Internet or by telephone, or by completing, signing, dating and returning your proxy card. Instructions on how to vote begin on page 8. If you have any questions about the voting process, please contact our transfer agent at (800) 359-8554.
Thank you for being a Coeur stockholder. We hope you can join us on May 10 at our 2016 Annual Meeting of Stockholders.
Respectfully,
Mitchell J. Krebs
President, Chief Executive Officer and Director
Chicago, Illinois
March 29, 2016