UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

(RULE 14a-101)

SCHEDULE 14A INFORMATION

 

Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934

 

 

Filed by Registrant [X]

 

Filed by a Party other than the Registrant [  ]

 

Check the appropriate box:
[  ] Preliminary Proxy Statement
[  ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[  ] Definitive Additional Materials
[  ] Soliciting Material Under Rule 14a-12

 

NOVAGOLD RESOURCES INC.

(Name of Registrant as Specified In Its Charter)

 

 

___________________________________________________________

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

 

Payment of Filing Fee (Check the appropriate box):

 

[X] No fee required.
[  ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

  (1) Title of each class of securities to which transaction applies:
  (2) Aggregate number of securities to which transaction applies:
  (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
  (4) Proposed maximum aggregate value of transaction:
  (5) Total fee paid:

 

[  ] Fee paid previously with preliminary materials:
[  ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

  (1) Amount Previously Paid:
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  (4) Date Filed:

 

 

 

 

 

 

Notice Of

Annual and Special Meeting

Of Shareholders

&

Management

Information Circular

 

MEETING TO BE HELD MAY 12, 2021

NOVAGOLD RESOURCES INC.

 

 

 

 

 

 

Website: www.novagold.com

 

 

 

Dated March 25, 2021

 

 

 

 

 

 

 

NOVAGOLD RESOURCES INC.

NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS

 

 

Date: May 12, 2021
Time: 1:00 p.m. Pacific Time
Location:

Live Webcast at: www.virtualshareholdermeeting.com/NG2021

Record Date:

March 18, 2021

 

 

 

The purposes of the annual and special meeting (the “Meeting”) are to:

 

1. receive the Annual Report of the Directors of the Company (the “Directors”) containing the consolidated financial statements of the Company for the year ended November 30, 2020, together with the Report of the Auditors thereon;

 

2. elect Directors of the Company for the forthcoming year;

 

3. appoint the Auditors of the Company for the forthcoming year and to authorize the Directors through the Audit Committee to fix the Auditors’ remuneration;

 

4. consider and, if deemed advisable, pass a special resolution approving certain amendments to the Company’s Articles;

 

5. consider and, if deemed advisable, pass a non-binding resolution approving the compensation of the Company’s Named Executive Officers; and

 

6. transact such further and other business as may properly come before the Meeting or any adjournment thereof.

 

The specific details of the matters currently proposed to be put before the Meeting are set forth in the Circular accompanying and forming part of this Notice.

 

Only Shareholders of record at the close of business on March 18, 2021 are entitled to receive notice of the Meeting and to vote at the Meeting.

 

 

 

To assure your representation at the Meeting, please complete, sign, date and return your voted proxy which will be delivered to you separately, whether or not you plan to attend. Sending your proxy will not prevent you from voting in person at the Meeting.

 

All proxies completed by registered shareholders must be returned to the Company:

 

· by online proxy via the following website: www.proxyvote.com no later than May 10, 2021 at 4:00 p.m. Eastern time (1:00 p.m. Pacific time);

 

· by telephone by calling (800) 690-6903 and following the instructions, no later than May 10, 2021 at 4:00 p.m. Eastern time (1:00 p.m. Pacific time); or

 

· by requesting a paper copy of the proxy materials and mailing a completed proxy card to Broadridge at 51 Mercedes Way, Edgewood, NY 11717, Attn: Proxy Department, for receipt no later than May 10, 2021, at 4:00 p.m. Eastern time (1:00 p.m. Pacific time).

 

Non-registered shareholders whose shares are registered in the name of an intermediary should carefully follow voting instructions provided by the intermediary. A more detailed description on returning proxies by non-registered shareholders can be found on page 4 of the attached Circular.

 

Kingsdale Advisors (“Kingsdale”) is acting as the Company’s strategic shareholder advisor and proxy solicitation agent. If you have any questions, please contact Kingsdale in one of the following ways:

 

· call toll free in North America at 1-866-228-8818

 

· call collect from outside of North America at 416-867-2272, or

 

· send an email to Kingsdale at contactus@kingsdaleadvisors.com.

 

Your vote is important. We encourage you to vote promptly.

Internet and telephone voting are available through 4:00 p.m. Eastern Time on May 10, 2021.

 

By Order of the Board of Directors of

NOVAGOLD RESOURCES INC.

 

Gregory A. Lang

President and Chief Executive Officer

 

Vancouver, British Columbia

March 25, 2021

 

 

 

 

LETTER TO SHAREHOLDERS

 

Dear Fellow Shareholders,

 

We are pleased to invite you to NOVAGOLD’s 2021 Annual and Special Meeting of Shareholders.

 

Please read this Circular as it contains important, detailed information about the meeting agenda, who is eligible to vote, how to vote, the Director nominees, our governance practices, and compensation of our executives and Directors.

 

NOVAGOLD RESOURCES INC. (the “Company,” or “NOVAGOLD”) values engagement with our shareholders, whether at the annual meeting, at investment conferences, in one-on-one meetings, or via the Company’s electronic and social media communication channels. The Company’s Circular provides an important opportunity to reach every shareholder. This year, we thought it would be helpful to:

 

1. summarize the items in this Circular being presented to shareholders for their vote,

 

2. highlight NOVAGOLD’s corporate governance practices, and

 

3. describe the Company’s shareholder engagement program.

 

We are providing these materials in connection with the solicitation by the NOVAGOLD Board of Directors of proxies to be voted at our 2021 annual meeting of shareholders and at any adjournment or postponement of that meeting. The annual meeting of shareholders will be held in a virtual format on May 12, 2021 at 1:00 p.m. Pacific Time.

 

In light of COVID-19 and for the safety of our shareholders, employees, and other members of the community, our 2021 annual meeting of shareholders will be held in a virtual format only. Shareholders are encouraged to cast their vote in advance by proxy and participate from any geographic location with internet connectivity or by telephone. We believe this is an important step to enhancing accessibility to our annual meeting for all of our shareholders, reducing the carbon footprint of our activities, and is particularly important this year taking into account public health and safety considerations posed by COVID-19. Shareholders may view a live webcast of the annual meeting and registered shareholders and duly appointed proxyholders may submit questions digitally during the meeting at www.virtualshareholdermeeting.com/NG2021. Questions may also be submitted to management and the Board prior to the meeting via email at info@novagold.com.

 

MATTERS FOR SHAREHOLDER VOTING

 

At this year’s annual and special meeting, we are asking our shareholders to vote on the following matters:

 

Proposal 1: Election of Directors

 

The Board of Directors recommends a vote FOR the election of the director nominees named in this proxy statement. See pages 14-25 for further information on the nominees.

 

Proposal 2: Appointment of PricewaterhouseCoopers LLP as independent auditor for 2021

 

The Board of Directors recommends a vote FOR this proposal. See pages 9-10 for details.

 

 

 

Proposal 3: Approval of an Amendment and Restatement of the Company’s Articles

 

The Board of Directors recommends a vote FOR this proposal. See pages 10-13 for details.

 

Proposal 4: Advisory Approval of Executive Compensation

 

The Board of Directors recommends a vote FOR this proposal. See pages 13-14 for details.

 

The Board of Directors knows of no other matters to be presented for action at the annual meeting. If any matter is presented from the floor of the annual meeting, the individuals serving as proxies intend to vote on these matters in the best interest of all shareholders. Your signed proxy gives this authority to Gregory Lang or Tricia Pannier.

 

Please refer to the material on pages 3-6 for information about how to cast your vote, how to attend the meeting virtually, and other frequently asked questions.

 

GOVERNANCE HIGHLIGHTS

 

NOVAGOLD is committed to maintaining robust corporate governance practices. Strong corporate governance helps us achieve our performance goals and maintain the trust and confidence of our investors, employees, regulatory agencies and other stakeholders. Our corporate governance practices are described in more detail on pages 94-107 and on the Governance page of our website at www.novagold.com.

 

Director Independence

•       Eight of our ten nominees are independent

•       All of our key Board committees (Audit, Compensation, and Corporate Governance and Nominations) are composed exclusively of independent Directors

•       Our CEO is the only executive Director

Board Leadership

•       The positions of Chairman and CEO are separate

•       Our Board has appointed an independent Lead Director

Accountability and Shareholder Rights

•       Extensive shareholder engagement involved reaching out to holders of approximately 92% of our shares in 2020

•       All Directors stand for election annually

•       In uncontested elections, Directors must be elected by a majority of votes cast

•       Eligible shareholders may nominate Directors and submit other proposals for consideration at annual meetings; see "Shareholder Proposals" on pages 108-109 below for details on timing and other requirements for submitting shareholder proposals

Board Practices and Governance

•       Our Board regularly reviews its effectiveness

•       The independent Directors meet in executive session without the presence of management and the non-independent Directors immediately following each Board meeting

 

 

 

Share Ownership

•       In August 2020, our Board increased the share ownership requirements for our Directors and our CEO

•       Our Directors must hold at least $128,400 (3 times their annual retainer) worth of NOVAGOLD common stock within five years of joining the Board (increased from C$50,000)

•       Our CEO must, within five years of commencement of employment, hold NOVAGOLD common stock valued in an amount at least equal to five times his annual base pay (increased from three times his annual base pay)

•       Our CFO must, within five years of commencement of employment, hold NOVAGOLD common stock valued at an amount at least equal to two times his annual base pay

•       Hedging or pledging of NOVAGOLD stock is prohibited for Directors as well as employees

•       NOVAGOLD encourages its employees to be shareholders in the Company by making share-based compensation and employee stock purchase programs available to all employees

Board Oversight of Risk Management

•       Our Board reviews NOVAGOLD’s systematic approach to identifying and assessing risks faced by NOVAGOLD and its projects

•       See the following chart for a description of the Board’s allocation of risk assessment oversight

 

 

 

 

SHAREHOLDER ENGAGEMENT

 

Maintaining an active shareholder engagement program continues to be a high priority for the Company and is an integral part of our corporate governance practices. The Board Chair, CEO, and Vice President of Corporate Communications meet regularly with large shareholders, and the Company’s Corporate Communications team is very responsive to shareholder inquiries regardless of ownership level.

 

In 2020, NOVAGOLD placed calls to or met in person with all its shareholders owning 40,000 shares or more; in other words, NOVAGOLD contacted or attempted to contact its owners holding approximately 92% of the Company’s issued and outstanding Common Shares entitled to vote at NOVAGOLD’s 2020 annual meeting of shareholders. We plan to continue to regularly engage with our shareholders.

 

ENVIRONMENTAL, SOCIAL AND GOVERNANCE DISCLOSURES

 

One outcome from our 2020 shareholder engagement program is NOVAGOLD’s decision to prepare and publish a consolidated report of the Company’s environmental, social and governance (“ESG”) performance and goals. This information is maintained on our website at www.novagold.com/sustainability and will be updated regularly. We also plan to integrate an ESG report in our ‘year-in-review’ annual report. We hope you find this consolidated report useful and informative.

 

More information about NOVAGOLD can be found in the Annual Report on Form 10-K for the fiscal year ended November 30, 2020, which is available on the Company’s website at www.novagold.com, on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.

 

The Board and management team wish to thank you for your continued confidence in NOVAGOLD.

 

Sincerely,

 

Gregory A. Lang   Anthony P. Walsh
President and Chief Executive Officer   Independent Lead Director, Audit Committee Chair

 

 

 

INFORMATION REGARDING ORGANIZATION AND CONDUCT OF MEETING 1
Solicitation of Proxies 1
How to Vote 3
Exercise of Proxies 5
Voting Shares and Principal Holders Thereof 6
MATTERS TO BE ACTED UPON AT MEETING 6
Election of Directors 6
Appointment of Auditors 9
Report of the Audit Committee 10
Additional Matters to be Acted Upon 10
INFORMATION CONCERNING THE BOARD OF DIRECTORS, DIRECTOR NOMINEES, AND EXECUTIVE OFFICERS 14
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED SHAREHOLDER MATTERS 27
Interest of Certain Persons or Companies in Matters to be Acted Upon 30
compensation discussion & analysis 30
Overview 30
Compensation Governance 31
Risk Assessment of Compensation Policies and Practices 32
Statement of Executive Compensation 36
Executive Compensation Philosophy 36
Executive Compensation Objectives and Elements 37
Annual Compensation Decision-Making Process 39
Base Salary 46
Annual Incentive Plan 47
Stock-Based Incentive Plans (Long-Term Incentives) 57
Executive Share Ownership 60
Retirement Plans 60
Benefits 61
Advisory Vote on Executive Compensation 61
Compensation Committee Report 61
TABULAR DISCLOSURE OF EXECUTIVE COMPENSATION 62
Summary Compensation Table 62
Grants of Plan-Based Awards in Fiscal 2020 63
Outstanding Equity Awards at Fiscal Year-End 64
Option Exercises and Stock Vested in Fiscal 2020 64
Realized and Realizable Pay (Supplemental Table) 65
CEO Pay Ratio – 10.8 to 1 68
Performance Graph 69
Executive Employment Agreements 70
Potential Payments Upon Termination or Change of Control 73
Non-Executive DIRECTOR COMPENSATION 74
Non-Executive Director Compensation Table 75
Directors’ Share Ownership 77
Incentive Plan Awards 78
Value Vested or Earned During the Year 79
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS 80
Equity Compensation Plan Information 80
Stock Award Plan 82
Performance Share Unit Plan 86

 

  - i -  

 

Deferred Share Unit Plan 91
INDEBTEDNESS OF DIRECTORS AND OFFICERS 94
INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS 94
STATEMENT OF CORPORATE GOVERNANCE PRACTICES 94
Board of Directors 95
Board Diversity and Tenure 100
Board Service Policy 103
Insider Trading Policy 104
Anti-Corruption, Anti-Bribery, Anti-Fraud Policy 104
Anti-Hedging and Anti-Pledging Policy 104
Executive Compensation Clawback Policy 104
Human Rights Policy 104
Environmental, Social and Governance Matters 105
Climate Change and Carbon Footprint Considerations 106
Corporate Disclosure Policy 106
Other Board Committees – EHSS and Technical; Corporate Communications 106
Assessments 107
Majority Voting Policy 107
Shareholder Communication with the Board 107
Other Business 108
ADDITIONAL INFORMATION 108
OTHER MATERIAL FACTS 108
SHAREHOLDER PROPOSALS 108
HOUSEHOLDING 109
CERTIFICATE 110
APPENDIX A – AMENDED AND RESTATED ARTICLES 111

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  - ii -  

 

MANAGEMENT INFORMATION CIRCULAR

 

INFORMATION REGARDING ORGANIZATION AND CONDUCT OF MEETING

 

Solicitation of Proxies

 

THIS MANAGEMENT INFORMATION CIRCULAR (this “Circular”) IS FURNISHED IN CONNECTION WITH THE SOLICITATION OF PROXIES BY OR ON BEHALF OF THE MANAGEMENT AND THE BOARD OF DIRECTORS (THE “BOARD OF DIRECTORS” OR THE “BOARD”) OF NOVAGOLD RESOURCES INC. (“NOVAGOLD” or the “Company”) for use at the Annual and Special Meeting of the Shareholders (the “Shareholders”) of the Company to be held virtually at www.virtualshareholdermeeting/NG2021 on Wednesday, May 12, 2021 at 1:00 p.m. Pacific time (the “Meeting”) or at any adjournment thereof, for the purposes set forth in the accompanying Notice of Meeting. This Circular, the accompanying Notice of Meeting and the form of proxy were first made available to Shareholders on March 25, 2021.

 

Solicitation of proxies from registered Shareholders will primarily be by mail or courier, supplemented by telephone or other personal contact by employees or agents of the Company at nominal cost, and all costs thereof will be paid by the Company. The Company has retained the services of Kingsdale Advisors (“Kingsdale”) as its strategic shareholder advisor and proxy solicitation agent to assist the Company in soliciting proxies. The Company estimates the fees for Kingsdale associated with this year’s proxy solicitation will be C$50,000 plus disbursements.

 

There are two kinds of non-registered, or beneficial, Shareholders – those who object to their name being made known to the issuers of securities which they own (called “OBOs” for Objecting Beneficial Owners) and those who do not object to the issuers of the securities they own knowing who they are (called “NOBOs” for Non Objecting Beneficial Owners). In accordance with National Instrument 54-101 - Communication with Beneficial Owners of Securities of a Reporting Issuer (“NI 54-101”), the Company has elected to send the Notice of Meeting, this Circular and the related form of proxy or voting instruction form indirectly to the NOBOs and to the OBOs through their intermediaries. Unless required by the rules of the NYSE American, the Company does not intend to pay for intermediaries to forward to OBOs, under NI 54-101, the Notice Package (as defined below), and in the case of an OBO, the OBO will not receive these materials unless the OBO’s intermediary assumes the cost of delivery.

 

If you have any questions or need assistance completing your form of proxy or voting instruction form, please contact our strategic shareholder advisor and proxy solicitation agent, Kingsdale, toll free in North America at 1-866-228-8818, or call collect from outside North America at 416-867-2272, or by email at contactus@kingsdaleadvisors.com.

 

Notice and Access

 

The Company uses the “Notice and Access” provisions in securities laws that permit the Company to forego mailing paper copies of this Circular and proxy-related materials to Shareholders and instead make them available for review, print and download via the Internet. Registered and non-registered Shareholders have received a Notice Package (as defined below) but will not receive a paper copy of this Circular or the proxy-related materials unless they request such documents as described in the Notice Package.

 

In accordance with U.S. Securities and Exchange Commission (“SEC”) rules, the Company has distributed a notice (the “Notice Package”) in the form prescribed by SEC rules to the clearing agencies and intermediaries for onward distribution to non-registered Shareholders of the website location where non-registered Shareholders may access the Notice of Meeting, this Circular, the instrument of proxy (collectively, the “Meeting Materials”) and an annual report for the Company’s fiscal year ended November 30, 2020. Intermediaries are required to forward the Notice Package to non-registered Shareholders unless a non-registered Shareholder has waived the right to receive Meeting Materials. Typically, intermediaries will use a service company (such as Broadridge Financial Services Inc. (“Broadridge”)) to forward the Notice Package to non-registered Shareholders.

 

If you have any questions or need assistance completing your form of proxy or voting instruction form, please call Kingsdale Advisors at 1-866-228-8818 or email them at contactus@kingsdaleadvisors.com.

  - 1 -  

 

General

 

Unless otherwise specified, the information in this Circular is current as of March 10, 2021. Unless otherwise indicated, all references to “$” or “US$” in this Circular refer to United States dollars. References to “C$” in this Circular refer to Canadian dollars. The Bank of Canada exchange rate of a U.S. dollar to a Canadian dollar on November 30, 2020 was 1.2965.

 

Copies of the Meeting Materials, as well as the Company’s annual report containing the financial statements to be presented at the Meeting and related MD&A, can be obtained under the Company’s profile at www.sedar.com, at www.sec.gov, at www.novagold.com or by entering your 16-digit control number provided in your Notice Package at www.proxyvote.com.

 

Record Date and Quorum

 

The Board of Directors of the Company has fixed the record date for the Meeting as the close of business on March 18, 2021 (the “Record Date”). If a person acquires ownership of shares subsequent to the Record Date such person may establish a right to vote by delivering evidence of ownership of common shares of the Company (“Common Shares”) satisfactory to the Board and a request to be placed on the voting list to Blake, Cassels & Graydon LLP, the Company’s legal counsel, at Suite 2600, 595 Burrard Street, Three Bentall Centre, Vancouver, BC, V7X 1L3, Attention: Trisha Robertson. Subject to the above, all registered holders of Common Shares at the close of business on the Record Date will be entitled to vote at the Meeting. No cumulative rights are authorized, and dissenter’s rights are not applicable to any matters being voted upon. Each registered Shareholder will be entitled to one vote per Common Share.

 

Two or more persons present in person or by proxy representing at least 25% of the Common Shares entitled to vote at the Meeting will constitute a quorum at the Meeting.

 

Voting Standards

 

Broker non-votes occur when a beneficial owner who holds company stock through a broker does not provide the broker with voting instructions as to any matter on which the broker is not permitted to exercise its discretion and vote without specific instruction. As a result, the broker will inform the inspector of election that it does not have the authority to vote on the matter with respect to those shares. Broker non-votes may exist in connection with the election of directors and all proposals other than the appointment of auditors.

 

The following chart describes the proposals to be considered at the meeting, the voting options, the vote required for each matter, and the manner in which votes will be counted:

 

If you have any questions or need assistance completing your form of proxy or voting instruction form, please call Kingsdale Advisors at 1-866-228-8818 or email them at contactus@kingsdaleadvisors.com.

 

  -2 -  

 

Matter Voting Options Required Vote Impact of Abstentions or Broker Non-Votes
Election of Directors For; Withhold

Plurality of votes – the nominees receiving the highest number of votes, up to ten, at the meeting will be elected*

No effect
Appointment of Auditors For; Withhold Simple majority of votes cast (only votes “for” are considered votes cast)

No effect

(Brokers are permitted to exercise their discretion and vote without specific instruction on this matter. Accordingly, there are no broker non-votes.)

Approval of Amended and Restated Articles For; Against; Abstain Special majority (at least two-thirds) of votes cast (only votes cast “for” and “against” are considered votes cast)

No effect

Approval of Non-Binding Advisory Vote on Executive Compensation

For; Against; Abstain Simple majority of votes cast (only votes “for” and “against” are considered votes cast) No effect

 

* In an uncontested election, if the number of votes “withheld” for any nominee exceeds the number of votes “for” the nominee, then the Majority Voting Policy requires that the nominee shall tender their written resignation to the Chair of the Board. See “Election of Directors” for a description of the Company’s Majority Voting Policy.

 

How to Vote

 

Registered Shareholders

 

Registered Shareholders can vote their shares before the meeting online at www.proxyvote.com, by calling the phone number included on the voting card, or by mailing a completed voting card. Registered Shareholders may also vote online during the virtual meeting at www.virtualshareholdermeeting.com/NG2021. Have the 16-digit control number from your voting materials available when casting your vote.

 

Shareholders who do not wish to attend the Meeting or do not wish to vote at the Meeting can vote by proxy. A registered Shareholder must return the completed proxy to the Company:

 

· by online proxy via the following website: www.proxyvote.com no later than May 10, 2021 at 4:00 p.m. Eastern time (1:00 p.m. Pacific time);

 

· by telephone by calling (800) 690-6903 and following the instructions, no later than May 10, 2021 at 4:00 p.m. Eastern time (1:00 p.m. Pacific time); or

 

 

If you have any questions or need assistance completing your form of proxy or voting instruction form, please call Kingsdale Advisors at 1-866-228-8818 or email them at contactus@kingsdaleadvisors.com.

 

  -3 -  

 

· by requesting a paper copy of the proxy materials and mailing a completed proxy card to Broadridge at 51 Mercedes Way, Edgewood, NY 11717, Attn: Proxy Department, for receipt no later than May 10, 2021, at 4:00 p.m. Eastern time (1:00 p.m. Pacific time).

 

The persons named in the form of proxy are officers or directors of the Company (“Directors”). Each Shareholder has the right to appoint a person or a company (who need not be a Shareholder) to attend and act for them and on their behalf at the Meeting other than the persons designated in the form of proxy. Such right may be exercised by striking out the names of the persons designated on the form of proxy and by inserting such appointed person’s name in the blank space provided for that purpose or by completing another form of proxy acceptable to the Board.

 

Non-Registered Shareholders

 

The information set forth in this section is of significant importance to many Shareholders of the Company, as a substantial number of Shareholders do not hold Common Shares in their own name. Shareholders who do not hold their Common Shares in their own name (i.e. non-registered or beneficial Shareholders) should note that only proxies deposited by Shareholders whose names appear on the records of the Company as the registered holders of Common Shares can be recognized and acted upon at the Meeting. If Common Shares are listed in an account statement provided to a Shareholder by a broker, then, in almost all cases, those Common Shares will not be registered in the Shareholder’s name on the records of the Company. Such Common Shares will more likely be registered under the name of the Shareholder’s broker or an agent of that broker. In Canada and the United States, the vast majority of such Common Shares are registered under the name of CDS & Co. (the registration name for The Canadian Depository for Securities, which acts as nominee for many Canadian brokerage firms) or Cede & Co. (operated by The Depository Trust Company), respectively. Common Shares held by brokers or their agents or nominees can only be voted upon the instructions of the non-registered Shareholder except in limited cases for certain “routine” matters. An example of a “routine” matter includes the appointment of the Auditors, which is considered the only “routine” matter to be voted upon at the Meeting. Otherwise, without specific instructions, a broker and its agents and nominees are prohibited from voting Common Shares for the broker’s clients, which is generally referred to as a “broker non-vote.” Therefore, non-registered Shareholders should ensure that instructions respecting the voting of their Common Shares are communicated to the appropriate person if such Shareholders want their votes to count on all matters to be decided at the Meeting.

 

Applicable regulatory policy requires intermediaries/brokers to seek voting instructions from non-registered Shareholders in advance of shareholders’ meetings. Every intermediary/broker has its own mailing procedures and provides its own return instructions to clients, which should be carefully followed by non-registered Shareholders in order to ensure that their shares are voted at the Meeting. Most brokers now delegate responsibility for obtaining instructions from clients to Broadridge.

 

Although a non-registered Shareholder may not be recognized directly at the Meeting for the purposes of voting Common Shares registered in the name of their broker (or an agent of the broker), a non-registered Shareholder may attend the Meeting as the proxyholder for a registered Shareholder and vote the Common Shares in that capacity. Non-registered Shareholders who wish to attend the Meeting and indirectly vote their Common Shares as the proxyholder for a registered Shareholder should follow the voting instructions provided by the broker, bank or other nominee.

 

NOVAGOLD may utilize the Broadridge QuickVote™ service to assist non-registered Shareholders with voting their Common Shares over the telephone. Alternatively, Kingsdale Advisors may contact such non-registered Shareholders to assist them with conveniently voting their Common Shares directly over the phone. If you have any questions about the Meeting, please contact Kingsdale Advisors by telephone at (866) 228-8818 (toll-free in North America) or (416) 867-2272 (collect outside North America) or by email at contactus@kingsdaleadvisors.com.

 

If you have any questions or need assistance completing your form of proxy or voting instruction form, please call Kingsdale Advisors at 1-866-228-8818 or email them at contactus@kingsdaleadvisors.com.

 

  -4 -  

 

Exercise of Proxies

 

On any ballot that may be called for, the Common Shares represented by a properly executed proxy given in favor of the person(s) designated in the form of proxy will be voted or withheld from voting in accordance with the instructions given on the form of proxy and, if the Shareholder specifies a choice with respect to any matter to be acted upon, the Common Shares will be voted accordingly. Where no choice is specified, the proxy will confer discretionary authority and will be voted in favor of all matters referred to on the form of proxy.

 

The proxy also confers discretionary authority to vote for, withhold or abstain from voting, or vote against, amendments or variations to matters identified in the Notice of Meeting and with respect to other matters not specifically mentioned in the Notice of Meeting but which may properly come before the Meeting. Management has no present knowledge of any amendments or variations to matters identified in the Notice of Meeting or any business other than that referred to in the accompanying Notice of Meeting which will be presented at the Meeting. However, if any other matters properly come before the Meeting, it is the intention of the management designees named in the proxy to vote in accordance with the recommendations of the Company’s management.

 

Proxies must be received by Broadridge no later than May 10, 2021 at 4:00 p.m. Eastern time (1:00 p.m. Pacific time). The time limit for deposit of proxies may be waived or extended by the Chair of the Meeting at their discretion, without notice.

 

Participating in the Annual Meeting

 

Due to health concerns posed by COVID-19, we are conducting a virtual Meeting so our Shareholders can safely participate from any geographic location with Internet connectivity.

 

· To participate in the Meeting, including to vote, Registered Shareholders must access the Meeting website at www.virtualshareholdermeeting.com/NG2021 and enter the 16-digit control number found on the voting materials provided to you with this Circular. Shareholders wishing to appoint themselves or another person as their proxyholder to vote at the virtual Meeting must complete the proxy appointment process by following the instructions provided on www.proxyvote.com or the instructions from their bank or broker. If you appoint someone else as your proxyholder, the online appointment process will enable you to set up your proxyholder’s login credentials for the Meeting. Shareholders and others may view the Meeting by logging in as a guest.

· Whether or not you plan to participate in the Meeting, it is important that your shares be represented and voted. We encourage you to access www.proxyvote.com or follow the instructions on your Notice of Internet Availability of Proxy Materials or proxy card to vote by telephone or mail in advance of the Meeting.

· Shareholders are able to submit appropriate questions during the Meeting through www.virtualshareholdermeeting.com/NG2021 which will be addressed in the question-and-answer session following the formal business portion of the Meeting. We will respond as practical to questions during the Meeting. Additionally, Shareholders may submit appropriate questions prior to the Meeting via email at info@novagold.com. Submitting questions ahead of the Meeting ensures thoughtful responses from management and the Board. Additional information regarding the rules and procedures for participating in the Meeting will be set forth in our Meeting rules of conduct, which Shareholders can view during the Meeting at the Meeting website.

· We encourage you to access the Meeting before it begins. Online check-in will be available at www.virtualshareholdermeeting.com/NG2021 approximately 15 minutes before the meeting starts on May 12, 2021.

 

If you have any questions or need assistance completing your form of proxy or voting instruction form, please call Kingsdale Advisors at 1-866-228-8818 or email them at contactus@kingsdaleadvisors.com.

 

  -5 -  

 

Revocation of Proxies

 

A Shareholder who has given a proxy may revoke it at any time insofar as it has not been exercised. In addition to any other manner permitted by law, a Shareholder who has given an instrument of proxy may revoke it before it is voted by: i) delivering a later-dated proxy, or ii) providing written notice to the Company’s legal counsel, Blake, Cassels & Graydon LLP, at Suite 2600, 595 Burrard Street, Three Bentall Centre, Vancouver, BC, V7X 1L3, Canada, Attention: Trisha Robertson, at any time up to and including the last business day preceding the Meeting at which the proxy is to be used, or any adjournment thereof. In the case of registered Shareholders, their previously delivered proxy may also be revoked before it is exercised by voting virtually at the Meeting.

 

Voting Shares and Principal Holders Thereof

 

As of March 10, 2021, the Company had 331,331,184 Common Shares issued and outstanding without nominal or par value. Each Common Share is entitled to one vote. Except as otherwise noted in this Circular, a simple majority of votes cast at the Meeting, whether in person or by proxy, will constitute approval of any matter submitted to a vote.

 

The following table sets forth certain information regarding the ownership of the Company’s Common Shares as of March 10, 2021, by each Shareholder known to the Company who beneficially owns, or exercises control or direction over, directly or indirectly, more than 5% of the outstanding Common Shares of the Company as of that date, based solely on such person’s most recent Schedules 13D or 13G or Form 4 filed with the SEC.

 

Name of Shareholder Number of Shares Beneficially Owned

Percentage of Outstanding

Voting Securities (3)

Electrum Strategic Resources LP (“Electrum”) (1) 84,569,479(2) 25.52%
FMR LLC 24,700,144    7.45%
Paulson & Co. Inc. 22,226,300    6.71%
BlackRock, Inc. 21,165,677    6.39%

 

(1) Dr. Thomas Kaplan (Chairman of the Board) and Igor Levental (a Director) also serve as the Chairman and Chief Executive Officer, and the President, respectively, of The Electrum Group LLC (“The Electrum Group”), a privately-held global natural resources investment management company which manages the portfolio of Electrum. Mr. Levental has no voting or dispositive power over shares of the Company held by Electrum and its affiliates.

(2) Includes 5,000,000 Common Shares held by affiliates of Electrum.

(3) As of March 10, 2021, the Company had 331,331,184 common shares issued and outstanding.

 

MATTERS TO BE ACTED UPON AT MEETING

 

Election of Directors

 

According to the Articles of the Company, the Board shall consist of not less than three and no more than such number of Directors to be determined by resolution of Shareholders. The number of Directors has been set at ten.

 

The proposed nominees in the list that follows, in the opinion of management, are well qualified to direct the Company’s activities for the ensuing year and have confirmed their willingness to serve as Directors, if elected. The term of office of each Director elected will be until the next annual meeting of the Shareholders of the Company or until a successor is elected or appointed, unless the Director’s office is vacated earlier, in accordance with the Articles of the Company and the provisions of the Business Corporations Act (British Columbia).

 

If you have any questions or need assistance completing your form of proxy or voting instruction form, please call Kingsdale Advisors at 1-866-228-8818 or email them at contactus@kingsdaleadvisors.com.

 

  -6 -  

 

The Board has adopted a Majority Voting Policy stipulating that Shareholders shall be entitled to vote in favor of, or withhold from voting for, each individual director nominee at a Shareholders’ meeting. If the number of Common Shares “withheld” for any nominee exceeds the number of Common Shares voted “for” the nominee, then, notwithstanding that such Director was duly elected as a matter of corporate law, the Director shall immediately tender their written resignation to the Chair of the Board. The Corporate Governance and Nominations Committee will consider such offer of resignation and will make a recommendation to the Board concerning the acceptance or rejection of the resignation. No Director who is required to tender their resignation pursuant to this policy shall participate in the Corporate Governance and Nominations Committee’s deliberations or recommendations or in the Board’s deliberations or determination. The Board must take formal action on the Corporate Governance and Nominations Committee’s recommendation within 90 days of the date of the applicable Shareholders’ meeting and shall announce its decision promptly by press release, including the reasons for its decision. The resignation will be effective when accepted by the Board. The Board will be expected to accept the resignations tendered pursuant to this policy absent exceptional circumstances. If the Board declines to accept a resignation tendered pursuant to this policy, it will include in the press release the reason or reasons for its decision. See “Statement of Corporate Governance Policies – Majority Voting Policy.”

 

In the absence of a contrary instruction, the person(s) designated in the form of proxy by the Company intend to vote FOR the election of the nominees whose names are set forth below. If, prior to the Meeting, any of the listed nominees shall become unavailable to serve, the persons designated in the proxy form will have the right to use their discretion in voting for a properly qualified substitute. Management does not contemplate presenting for election any person other than these nominees but, if for any reason management does present another nominee for election, the proxy holders named in the accompanying form of proxy reserve the right to vote for such other nominee at their discretion unless the Shareholder has specified otherwise in the form of proxy.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

If you have any questions or need assistance completing your form of proxy or voting instruction form, please call Kingsdale Advisors at 1-866-228-8818 or email them at contactus@kingsdaleadvisors.com.

 

  -7 -  

 

 

Name, Province or State and Country of Residence Age Independence Principal Occupation Director Since

2020 AGM Votes in Favor (9)

(%)

Meets Share Ownership Guidelines (10)

Dr. Elaine Dorward-King

Utah, USA (1) (3)

63 Independent Corporate Director 2020 96.74 No
Sharon Dowdall (1) (2)
Ontario, Canada
68 Independent Corporate Director 2012 98.82 Yes

Dr. Diane Garrett (2) (3)

Texas, USA

61 Independent President and CEO of Hycroft Mining Holding Corporation 2018 99.13 Yes

Dr. Thomas Kaplan (4)

New York, USA

58 Non- Independent Chairman and Chief Executive Officer of The Electrum Group 2011 99.26 Yes

Gregory Lang (3) (5)

Utah, USA

66 Non- Independent President and Chief Executive Officer of NOVAGOLD RESOURCES INC. 2012 99.80 Yes(8)

Igor Levental (2) (5)

Colorado, USA

65 Independent President of The Electrum Group 2010 98.22 Yes
Kalidas Madhavpeddi (1) (3)
Arizona, USA
65 Independent President of Azteca Consulting LLC 2007 98.68 Yes
Clynton Nauman (3) (6)
Washington, USA
72 Independent President and Chief Executive Officer of Alexco Resource Corp. 1999 98.89 Yes

Ethan Schutt (2) (5) (6)

Alaska, USA

47 Independent Chief Executive Officer of Alaska Native Resource Development, LLC, an Alaska Native Tribal Health Consortium company 2019 99.76 No
Anthony Walsh (1) (6) (7)
British Columbia, Canada
69 Independent Corporate Director 2012 99.48 Yes

 

(1) Member of the Compensation Committee.
(2) Member of the Corporate Governance and Nominations Committee.
(3) Member of the Environment, Health, Safety, Sustainability (“EHSS”) and Technical Committee.
(4) Chairman of the Board.
(5) Member of the Corporate Communications Committee.
(6) Member of the Audit Committee.

 

If you have any questions or need assistance completing your form of proxy or voting instruction form, please call Kingsdale Advisors at 1-866-228-8818 or email them at contactus@kingsdaleadvisors.com.

 

  -8 -  

 

(7) Independent Lead Director.
(8) Mr. Lang has met his share ownership requirements as President and Chief Executive Officer as of November 30, 2020. See “Executive Share Ownership” beginning on page 60 for details on share ownership guidelines for Executive Officers.
(9) See NOVAGOLD’s news release and Report of Voting Results filed on SEDAR May 15, 2020.
(10) Based on share ownership as of November 30, 2020. The Board adopted a policy requiring each Director to maintain a minimum holding of Common Shares and/or DSUs equal to $128,400. See “Directors' Share Ownership” beginning on page 77 for details on the number of securities beneficially owned, or controlled or directed, directly or indirectly, by each proposed Director.

 

Refer to the Section titled “Information Concerning the Board of Directors, Director Nominees, and Executive Officers” beginning on page 14 of this Circular for further information regarding the above Directors and Director nominees.

 

Appointment of Auditors

 

The independent auditors of the Company are PricewaterhouseCoopers LLP, Chartered Professional Accountants (“PwC”), located at 250 Howe Street, Suite 1400, Vancouver, British Columbia, Canada. PwC were last appointed auditors of the Company (“Auditors”) on May 14, 2020 by the Shareholders. The Shareholders will be asked at the Meeting to vote for the appointment of PwC as Auditors until the next annual meeting of the Shareholders of the Company or until a successor is appointed, at a remuneration to be fixed by the Directors through the Audit Committee. To the Company's knowledge, a representative from PwC will be present virtually at the Meeting and will be available to respond to appropriate questions. PwC will also be permitted to make a statement if it so desires.

 

Principal Accountant Fees and Services

 

PwC fees for the fiscal years ended November 30, 2020 and 2019 were as follows:

 

  Year Ended November 30
  2020 2019
Audit Fees (1) C$300,000 C$324,000
Audit Related Fees (2) Nil Nil
Tax Fees (3) Nil Nil
All Other Fees (4) 4,000 4,000
Total C$304,000 C$328,000
(1) “Audit Fees” are the aggregate fees billed or expected to be billed by PwC for the audit of the Company’s consolidated annual financial statements, reviews of interim financial statements and attestation services that are provided in connection with statutory and regulatory filings or engagements. Audit Fees in 2020 are lower than in 2019 primarily because no travel costs were incurred in 2020.
(2) “Audit-Related Fees” are fees charged by PwC for assurance and related services that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not reported under “Audit Fees.” This category comprises fees billed for review and advisory services associated with the Company’s financial reporting.
(3) “Tax Fees” are fees billed by PwC for tax compliance, tax advice and tax planning.
(4) “All Other Fees” are fees charged by PwC for services not described above. The fees billed by PwC in this category in 2019 and 2020 were for software licensing.

 

Pre-Approval Policies and Procedures

 

All services to be performed by the Company’s Auditors must be approved in advance by the Audit Committee. The Audit Committee has considered whether the provision of services other than audit services is compatible with maintaining the Auditors’ independence and has adopted a charter governing its conduct. The charter is reviewed annually and requires the pre-approval of all auditing services and permitted non-audit services (including the fees and terms thereof) to be performed for the Company by its Auditors, subject to the de minimis exceptions for non-audit services as allowed by applicable law or regulation. The Audit Committee may form and delegate authority to subcommittees consisting of one or more members when appropriate, including the authority to grant pre-approvals of audit and permitted non-audit services, provided that decisions of such a subcommittee to grant pre-approvals shall be presented to the full Audit Committee at its next scheduled meeting. Pursuant to these procedures, all services and related fees reported were pre-approved by the Audit Committee.

 

If you have any questions or need assistance completing your form of proxy or voting instruction form, please call Kingsdale Advisors at 1-866-228-8818 or email them at contactus@kingsdaleadvisors.com.

 

  -9 -  

 

Report of the Audit Committee

 

The Audit Committee (referred to in this section as the “Committee”) reviewed and discussed with management and the Company's Auditors the audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended November 30, 2020. Management and PwC indicated that the Company’s consolidated financial statements were fairly stated in accordance with generally accepted accounting principles. The Committee discussed significant accounting policies applied by the Company in its financial statements, as well as alternative treatments. The Committee discussed with PwC matters covered by Public Company Accounting Oversight Board (PCAOB) standards, including PCAOB AS 16 Communication with Audit Committees and the Critical Audit Matters (CAM) reporting model required beginning with the Company’s fiscal year 2019 audit. In addition, the Committee reviewed and discussed management’s report on internal control over financial reporting and the related audits performed by PwC, which confirmed the effectiveness of the Company’s internal control over financial reporting. The Committee also discussed with PwC its independence from the Company and management, including the communications PwC is required to provide to the Committee under applicable PCAOB rules. PwC assigned a new partner to oversee the Company’s audit beginning with fiscal year 2018 in accordance with SEC rules requiring a change in audit partner every five years. The Committee considered the non-audit services provided by PwC to the Company and concluded that the auditors’ independence has been maintained. Based on the foregoing reviews and discussions, the Committee recommended to the Board that the audited financial statements be included in the Annual Report on Form 10-K for the year ended November 30, 2020, for filing with the SEC, which Annual Report is available on the Company’s website at www.novagold.com, under the Company’s profile on EDGAR at www.sec.gov, and on SEDAR at www.sedar.com. Finally, the Committee conducted a comprehensive review of PwC’s overall performance and determined PwC should serve as the Company’s Auditor for fiscal year 2021 and made such recommendation to the Board. The Board agreed and is asking Shareholders to approve PwC as the Company’s Auditor for fiscal year 2021.

 

Audit Committee of the Board

Anthony Walsh, Chair

Clynton Nauman

Ethan Schutt

 

In the absence of a contrary instruction, the person(s) designated in the form of proxy by the Company intend to vote FOR the appointment of PwC as auditors of the Company until the next annual meeting of Shareholders or until a successor is appointed, at a remuneration to be fixed by the Directors through the Audit Committee.

 

Additional Matters to be Acted Upon

 

Approval of Amended and Restated Articles

 

Shareholders are being asked to authorize the adoption of Amended and Restated Articles of the Company, which contain certain amendments (the “Amendments”) to the Company’s Articles as shown on Appendix “A” attached to this Circular. The Amended and Restated Articles will affect certain of the rights of Shareholders as they currently exist under the Articles. A discussion of the principal amendments to the Articles as shown on the Amended and Restated Articles attached to this Circular as Appendix “A” is set out below.

 

If you have any questions or need assistance completing your form of proxy or voting instruction form, please call Kingsdale Advisors at 1-866-228-8818 or email them at contactus@kingsdaleadvisors.com.

 

  -10 -  

 

Shareholder Entitlement to Certificate or Acknowledgement (Section 2.3)

 

Under the current Articles, each Shareholder is entitled, without charge, to (a) one share certificate representing the shares of each class or series of shares registered in the Shareholder’s name or (b) a non-transferable written acknowledgement of the Shareholder’s right to obtain such a share certificate, subject to certain conditions. The Board proposes to amend the Articles to exclude Shareholders from such entitlement if the Shareholders are the registered owners of “uncertificated shares” within the meaning of the Business Corporations Act (British Columbia) (“BCBCA”). The Amendment will provide the Company with flexibility in the event that the Company elects to use uncertificated shares and electronic record keeping in the future, although no such election is contemplated by the Company at this time.

 

Location of Meetings of Shareholders (Section 10.3)

 

The Board proposes to amend the Articles to clarify that the Company may hold a meeting of Shareholders in or outside the Province of British Columbia or at any place in or outside of Canada. The Amendment will provide the Company the flexibility to hold future meetings of Shareholders at its office in Salt Lake City, Utah.

 

Advance Notice of Meetings of Shareholders (Section 10.9)

 

The Board proposes to amend certain of the advance notice provisions in the Articles in order to align with best practice standards, including:

 

· Notice Period – Under the current Articles, a nominating Shareholder’s notice (a “Nominating Shareholder’s Notice”) must be given to the Company not less than 30 nor more than 65 days prior to the date of an annual general meeting of Shareholders or, in the event the meeting is less than 60 days after the date (the “Notice Date”) on which the first public announcement of the date of the meeting was made, a Nominating Shareholder’s Notice may be made not later than the close of business on the tenth day following the Notice Date.

 

The Amendments remove the 65 day maximum notice period and decrease the alternate threshold from 60 days after the Notice Date to 50 days after the Notice Date. In the case of a special meeting (which is not also an annual general meeting) of Shareholders called for the purpose of electing directors (whether or not called for other purposes), the Amendments increase the number of days in which a Nominating Shareholder’s Notice must be given from being not later than the close of business on the tenth day to not later than the close of business on the fifteenth day following the day on which the first public announcement of the date of the meeting was made.

 

To reflect the Company’s ongoing use of “notice-and-access”, which has an earlier timeline for providing proxy materials to Shareholders, the Amendments also stipulate that if the Company has given notice that it has implemented “notice-and-access”, the Nominating Shareholder’s Notice must be provided not less than 40 days rather than 30 days prior to the meeting of Shareholders.

 

The Amendments additionally remove the stipulation that in no event shall any adjournment, postponement, or reconvening of a meeting, or the announcement thereof commence a new time period for the giving of a Nominating Shareholder’s Notice.

 

· Form of Notice – Under the current Articles, to be in proper written form, a Nominating Shareholder’s Notice must set forth, among other things, the number of securities of each class of voting securities of the Company or any of its subsidiaries beneficially owned, or controlled or directed, directly or indirectly, by the nominating Shareholder or any joint actors, as of the record date for the meeting (if such date shall then have been made publicly available and shall have occurred) and as of the date of such notice. The Amendments remove this requirement as it goes beyond information that would be required under the BCBCA and applicable securities law.

 

· Information Required from Proposed Nominees – Under the current Articles, the Company may require any proposed nominee to furnish such other information as may be required by the Company to determine the eligibility of such proposed nominee to serve as an independent director of the Company or that would reasonably be expected to be material to a reasonable Shareholder’s understanding of the independence and/or qualifications, or lack thereof, of such proposed nominee. The Amendments refer instead to such other information as may be required by the BCBCA and applicable securities laws.

 

If you have any questions or need assistance completing your form of proxy or voting instruction form, please call Kingsdale Advisors at 1-866-228-8818 or email them at contactus@kingsdaleadvisors.com.

 

  -11 -  

 

Individuals Entitled to Preside as Chair and Selection of Alternate Chair (Section 11.9)

 

The Board proposes to amend the Articles to provide that, if the chair of the Board or the president of the Company is absent or unwilling to act as chair of a meeting of Shareholders, a vice president, if any, will be entitled to preside as chair. The Amendment will allow flexibility in the event that the chair of the Board or the president of the Company are not available to attend a meeting of Shareholders. In order to reflect the foregoing amendments, the Board also proposes to make other housekeeping amendments in Section 11.10 regarding selection of an alternate chair for a meeting of Shareholders.

 

Meeting and Voting by Telephone or Other Communications Medium (Section 11.24 and 11.13)

 

On April 21, 2020, the Government of British Columbia issued the Electronic Attendance at Corporate Meetings (COVID-19) Order (the “Order”) allowing companies that hold shareholder meetings under the Business Corporations Act (British Columbia), including NOVAGOLD, to hold hybrid meetings permitting attendance both in-person and by telephonic or other electronic means, or virtual meetings permitting attendance solely by telephonic or other electronic means. The Board proposes to amend the Articles to provide the Company with the flexibility to host such a hybrid or virtual meeting in future years without relying on the terms of the Order. Under the current Articles, a Shareholder or proxy holder may participate in a meeting of the Shareholders in person or by telephone only if all Shareholders or proxy holders participating in the meeting are able to communicate with each other and if all Shareholders or proxy holders who wish to participate in the meeting agree to such participation. The Amendments remove these requirements. Additionally, the Amendments provide that a meeting held entirely by means of telephonic, electronic or other communication facilities in accordance with the Articles shall be deemed to be held at the place where the registered office of the Company is located.

 

To facilitate any meeting of Shareholders held by telephonic, electronic or other communication facilities, the Amendments also provided that any vote by Shareholders may be held partly or entirely by means of a telephonic, electronic or other communication facility, if the Company makes available such a communication facility. The Amendments also make certain other housekeeping amendments to reflect the use of electronic voting.

 

Deemed Receipt of Mailing (Section 23.2)

 

Presently, the Articles are silent on when a record that is emailed to a person is deemed to have been received. The Board proposes to amend the Articles to state that a record that is emailed to an email address in accordance with the Articles is deemed to be received on the day it was emailed.

 

Amended and Restated Articles Resolution

 

At the Meeting, Shareholders will be asked to consider, and if deemed appropriate, to pass with or without variation, the following special resolution (the “Amended and Restated Articles Resolution”). To be effective, the following Amended and Restated Articles Resolution must be approved by 66 2/3% of the votes cast by Shareholders who are entitled to vote and are present in person or by proxy at the Meeting.

 

“BE IT RESOLVED, as a special resolution, that:

 

1. The current Articles of the Company be terminated;

 

2. The form of Articles attached as Appendix “A” to the management information circular dated March 25, 2021, be adopted as the Articles of the Company in substitution for, and to the exclusion of, the current Articles;

 

 

If you have any questions or need assistance completing your form of proxy or voting instruction form, please call Kingsdale Advisors at 1-866-228-8818 or email them at contactus@kingsdaleadvisors.com.

 

  -12 -  

 

3. The Company be authorised to revoke this special resolution and abandon or terminate the replacement of the current Articles if the Board deems it appropriate and in the best interests of the Company to do so without further confirmation, ratification or approval of the shareholders; and

 

4. Any one director or officer of the Company be and is hereby authorized and directed to do all such acts and things and to execute and deliver all such documents, instruments and assurances as in the opinion of such director or officer may be necessary or desirable to give effect to the foregoing resolutions.”

 

The Board has determined that the adoption of the Amended and Restated Articles is in the best interests of the Company and its Shareholders and accordingly, the Board recommends that Shareholders vote FOR the Amended and Restated Articles Resolution.

 

If the Shareholders do not approve the Amended and Restated Articles, the Company’s current Articles will remain as the Articles of the Company.

 

In the absence of a contrary instruction, the person(s) designated in the form of proxy by the Company intend to vote FOR the approval of the Amended and Restated Articles as disclosed in this Circular.

 

Non-Binding Advisory Vote on Executive Compensation

 

In accordance with Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Section 14A of the Exchange Act, the following proposal, commonly known as a “Say on Pay” proposal, gives our Shareholders the opportunity to vote to approve or not approve, on an advisory basis, the compensation received by Gregory Lang and David Ottewell (together, the “Named Executive Officers” or “NEOs”) during fiscal year 2020. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and our compensation philosophy, policies and practices, as disclosed under the “Compensation Discussion and Analysis” section of this Circular.

 

Our executive compensation program is designed to recruit and retain key individuals and reward them with compensation that has long-term growth potential while recognizing that the executives work as a team to achieve corporate results and should be rewarded accordingly. In order to align executive pay with both the Company’s performance and the creation of sustainable shareholder value, a significant portion of compensation paid to our NEOs is allocated to performance-based, short-term and long-term incentive programs to make executive pay dependent on the Company’s performance (also known as “at-risk compensation”). In addition, as an executive officer’s responsibility and ability to affect the financial results of the Company increases, the portion of their total compensation deemed “at-risk” increases. Shareholders are urged to read the “Compensation Discussion and Analysis” section of this Circular, which more thoroughly discusses how our compensation policies and procedures are aligned with our compensation philosophy.

 

We are asking our Shareholders to indicate their support for our NEO compensation as described in this Circular by voting FOR the following resolution:

 

If you have any questions or need assistance completing your form of proxy or voting instruction form, please call Kingsdale Advisors at 1-866-228-8818 or email them at contactus@kingsdaleadvisors.com.

 

  -13 -  

 

BE IT RESOLVED, as an ordinary resolution, that the compensation paid to the named executive officers in fiscal year 2020, as disclosed in the Company’s 2021 Circular pursuant to the SEC’s executive compensation disclosure rules (which disclosure includes the Compensation Discussion and Analysis, the compensation tables and the narrative discussion that accompanies the compensation tables), is hereby approved.

 

While we intend to carefully consider the voting results of this proposal, the final vote is advisory in nature and therefore not binding on us, our Board or the Compensation Committee. Our Board and Compensation Committee value the opinions of our Shareholders and will consider the outcome of this vote when making future compensation decisions for our NEOs. The Board believes that submitting the non-binding vote on compensation of the Company’s NEOs to Shareholders on an annual basis is appropriate for the Company and its Shareholders at this time.

 

In the absence of a contrary instruction, the person(s) designated in the form of proxy by the Company intend to vote FOR the approval of the non-binding resolution approving the compensation paid to the NEOs as disclosed in this Circular.

 

 

INFORMATION CONCERNING THE BOARD OF DIRECTORS, DIRECTOR NOMINEES, AND EXECUTIVE OFFICERS

 

The following table sets forth certain information with respect to our Directors, Director nominees and executive officers. The term for each Director expires at the next annual meeting of Shareholders or at such time as a qualified successor is appointed, upon ceasing to meet the qualifications for election as a director, upon death, upon removal by the Shareholders or upon delivery or submission to the Company of the Director's written resignation, unless the resignation specifies a later time of resignation. Each executive officer shall hold office until the earliest of the date the officer’s resignation becomes effective, the date a successor is appointed or the officer ceases to be qualified for that office, or the date the officer is terminated by the Board of Directors of the Company. The name, location of residence, age, and office held by each Director, Director nominee and executive officer, current as of March 10, 2020, has been furnished by each of them and is presented in the following table. Unless otherwise indicated, the address of each current Director, and executive officer in the table set forth below is care of NOVAGOLD, 201 South Main, Suite 400, Salt Lake City, Utah 84111, United States.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

If you have any questions or need assistance completing your form of proxy or voting instruction form, please call Kingsdale Advisors at 1-866-228-8818 or email them at contactus@kingsdaleadvisors.com.

 

  -14 -  

 

      Committee Memberships
Name and Municipality of Residence Position Held

Independent

 

AC CC CCC CGN EHSS

Dr. Elaine Dorward-King

Utah, USA

Age: 63, Director Since: 2020

Director      

Sharon Dowdall

Ontario, Canada

Age: 68, Director Since: 2012

Director     C  

Dr. Diane Garrett

Texas, USA

Age: 61, Director Since: 2017

Director      

Dr. Thomas Kaplan

New York, USA

Age: 58, Director Since: 2011

Board Chair            

Gregory Lang

Utah, USA

Age: 66, Director Since: 2012

Director, President and CEO        

Igor Levental

Colorado, USA

Age: 65, Director Since: 2010

Director     C  

Kalidas Madhavpeddi

Arizona, USA

Age: 65, Director Since: 2007

Director   C    

Clynton Nauman

Washington, USA

Age: 72, Director Since: 1999

Director       C

Ethan Schutt

Alaska, USA

Age: 47, Director Since: 2019

Director    

Anthony Walsh

British Columbia, Canada

Age: 69, Director Since: 2012

Director C      

David Ottewell

Arizona, USA

Age: 60, Officer Since: 2012

Vice President and CFO n/a n/a n/a n/a n/a n/a

 

C Committee Chair CCC Corporate Communications Committee
AC Audit Committee CGN Corporate Governance and Nominations Committee
CC Compensation Committee EHSS EHSS and Technical Committee

 

The Securities Held listed below for each Director nominee and NEO are as of November 30, 2020. Determination of whether each person meets the share ownership guidelines is determined by calculating the number of Common Shares and DSUs, if applicable, owned by each person, multiplied by the closing price of the Common Shares on November 30, 2020 on the NYSE American.

 

  -15 -  

 

Elaine Dorward-King, Ph.D.

 

Independent

 

Director Since 2020

 

 

 

Dr. Elaine Dorward-King has spent the majority of her career in mining, most recently serving as a non-executive director of four publicly listed mining companies. From March 2013 until June 2019, she served as Newmont Mining Corporation’s (“Newmont”) Executive Vice President of Sustainability and External Relations, and from June 2019 until January 2020 she served as Newmont’s Executive Vice President of Environmental, Social and Governance Strategy. Prior to joining Newmont, Dr. Dorward-King spent 20 years with Rio Tinto, one of the world’s largest diversified producers of metals and minerals, in general management and Environmental Health and Safety leadership roles. Dr. Dorward-King has over 30 years of leadership experience in creating and implementing sustainable development, safety, health and environmental strategy, and programs in mining, chemical, and engineering consulting sectors. Currently Dr. Dorward-King serves on the Board of Directors of Kenmare Resources plc, one of the world’s largest producers of mineral sands products, Great Lakes Dredge and Dock Company, LLC, the largest provider of dredging services in the United States, and Sibanye-Stillwater, a leading international precious metals mining company.

 

Dr. Dorward-King holds a bachelor’s degree from Maryville College and received a PhD in Analytical Chemistry from Colorado State University.

 

The Board has determined that Dr. Dorward-King should serve as a Director for the Company to benefit from her experience as an industry leader in the development and implementation of environmental health, safety and sustainability strategies, community relations, governmental affairs, external relations, and her experience as a senior mining executive.

 

Dr. Dorward-King’s principal occupation for the last five years has been serving as a non-executive director (December 2019 – present) and Executive Vice President, Sustainability and External Relations at Newmont (2013 – January 2020).

 

Areas of expertise include health, safety and sustainability, community relations, and corporate leadership.

 

Board / Committee Membership Overall Attendance 100% Securities Held Share Ownership Guidelines

Regular Meeting

Common Shares
#

DSUs
#

Value of Securities Held as of 11/30/2020

$

Total
$

% Met

Board

Compensation

EHSS & Technical

3/3 (1)
3/3 (1)

2/2 (1)

Nil 642 $6,394 $128,400 5% (2)

 

(1) Dr. Dorward-King was first elected as a Director on May 14, 2020 and was appointed to the Compensation Committee and EHSS & Technical Committee on the same date. She attended all Board, Compensation Committee, and EHSS & Technical Committee meetings held in fiscal 2020 after May 14, 2020.

 

(2) Dr. Dorward-King was first elected as a Director on May 14, 2020 and has until August 2025 to meet the Share Ownership Guidelines.

  

  -16 -  

 

Sharon Dowdall

 

Independent

 

Director Since 2012

 

 

 

Ms. Dowdall, a Director of the Company, worked in the mining industry for over 30 years. Ms. Dowdall served in senior legal capacities for Franco-Nevada Corporation (“Franco-Nevada”), a major gold-focused royalty company, and Newmont Mining Corporation, one of the world’s largest gold producers. During her 20-year tenure with Franco-Nevada, Ms. Dowdall served in various capacities, including Chief Legal Officer and Corporate Secretary and Vice President, Special Projects. Ms. Dowdall was one of the principals who transformed Franco-Nevada from an industry pioneer into one of the most successful precious metals enterprises in the world. Prior to joining Franco-Nevada, she practiced law as a partner with Smith Lyons in Toronto, a major Canadian legal firm specializing in natural resources. Ms. Dowdall is the recipient of the 2011 Canadian General Counsel Award for Business Achievement. She currently serves on the board of Olivut Resources Limited. Ms. Dowdall holds an Honours B.A. in Economics from the University of Calgary and an LLB, from Osgoode Hall Law School at York University. The Board has determined that Ms. Dowdall should serve as a Director due to her significant experience: as a natural resources lawyer, moving a precious-metals mining company from the development stage to the successful producer stage, and as a senior executive in a large international mining company.

 

Ms. Dowdall joined the Board in April 2012.

 

Ms. Dowdall has been retired since 2012. During the last five years she has served, and continues to serve, as a member of the board of Olivut Resources Limited. Ms. Dowdall was a member of the board of Foran Mining Corporation from February 2011 until May 28, 2019.

 

Areas of expertise include legal, corporate governance, finance, investment, valuation, securities, human resources, corporate strategy, corporate leadership, and mining industry.

 

Board / Committee Membership Overall Attendance 100% Securities Held Share Ownership Guidelines

Regular Meeting

Common Shares
#

DSUs
#

Value of Securities Held as of 11/30/2020

$

Total
$

% Met

Board

Compensation

Governance & Nominations (Chair)

6/6
7/7

6/6

Nil 34,806 $346,668 $128,400 270%

 

 

 

 

 

 

 

 

 

  -17 -  

 

Diane Garrett, Ph.D.

 

Independent

 

Director Since 2018

 

 

Dr. Garrett, a Director of the Company, is the President and CEO of Hycroft Mining Holding Corporation (“Hycroft”), owner operator of the gold-silver Hycroft Mine in Northern Nevada. She has more than 20 years of senior management and financial expertise in natural resources. Prior to joining Hycroft, Dr. Garrett was the President and CEO of Nickel Creek Platinum Corp. (“NCP”). Before that, Dr. Garrett held the position of President and CEO of Romarco Minerals Inc. (“Romarco”), taking the multi-million-ounce Haile Gold Mine project from discovery to construction. Prior to that, she held numerous senior positions in public mining companies including VP of Corporate Development at Dayton Mining Corporation and VP of Corporate Development at Beartooth Platinum Corporation. Early in her career, Dr. Garrett was the Senior Mining Analyst and Portfolio Manager in the precious metals sector with US Global Investors. Dr. Garrett received her Ph.D. in Engineering and her Masters in Mineral Economics from the University of Texas at Austin. The Board has determined that Dr. Garrett should serve as a Director due to her significant experience: permitting, developing, and constructing gold mines, moving a precious-metals mining company from the development stage to the successful producer stage, as a senior executive in mining companies, and her technical expertise.

 

Dr. Garrett currently serves as the President and CEO of Hycroft and has held that position since September 2020. She also currently serves as a director of Hycroft. From June 2016 until September 2020, Dr. Garrett served as a director and as President and CEO of NCP. Dr. Garrett served as the President, CEO and as a director of Romarco from November 2002 until October 2015. Romarco was acquired by OceanaGold in 2015, at which time Dr. Garrett became a director and consultant to OceanaGold before joining NCP in June 2016. Dr. Garrett also served as Chair of the board of directors of Revival Gold from January 2018 until December 31, 2019.

 

Areas of expertise include engineering, mining, finance and corporate leadership.

 

Board / Committee Membership

Overall Attendance 100% Securities Held Share Ownership Guidelines

Regular Meeting

Common Shares
#

DSUs
#

Value of Securities Held as of 11/30/2020

$

Total
$

% Met

Board

EHSS & Technical
Governance & Nominations

6/6
4/4

6/6

7,100 7,753 $147,936 $128,400 115%

 

 

  -18 -  

 

Thomas Kaplan, Ph.D.

 

Non-Independent

 

Director Since 2011

 

 

 

Dr. Kaplan is Chairman of the Board of the Company and is also Chairman, Chief Investment Officer and Chief Executive Officer of The Electrum Group, a privately held global natural resources investment management company which manages the portfolio of Electrum. Electrum and its affiliates are collectively the largest Shareholder of the Company. Dr. Kaplan is an entrepreneur and investor with a track record of both creating and unlocking shareholder value in public and private companies. Dr. Kaplan served as Chairman of Leor Exploration & Production LLC, a natural gas exploration and development company founded by Dr. Kaplan in 2003. In 2007, Leor’s natural gas assets were sold to EnCana Oil & Gas USA Inc., a subsidiary of Encana Corporation, for $2.55 billion. Dr. Kaplan holds Bachelors, Masters and Doctoral Degrees in History from Oxford University. The Board has determined that Dr. Kaplan should serve as the Director and Chairman to gain from his experience as a developer of and investor in mining companies and oil and gas companies, as well as his significant beneficial ownership in the Company.

 

Dr. Kaplan’s principal occupation is Chairman and Chief Executive Officer of The Electrum Group. From March 2011 to January 2018, Dr. Kaplan served as the Chairman and Chief Investment Officer of The Electrum Group. In January 2018, Dr. Kaplan became the Chairman, Chief Investment Officer and Chief Executive Officer of The Electrum Group. Dr. Kaplan served as Chair of the Board of Sunshine Silver Mines Corporation (now known as Gatos Silver, Inc.), a privately held company, from January 2020 through October 2020.

 

Areas of expertise include: finance, mergers and acquisitions, mining industry.

 

Board / Committee Membership Overall Attendance
100%
Securities Held Share Ownership Guidelines

Regular Meeting

Common Shares
#

DSUs
#

Value of Securities Held as of 11/30/2020

$

Total
$

% Met

Board (Chair) 6/6 218,495 (3) 72,016 $2,893,490 128,400 2,253%

 

(3) See description of Electrum’s holdings and Dr. Kaplan’s relationship with Electrum under “Voting Shares and Principal Holders Thereof.”

 

 

  -19 -  

 

Gregory Lang

 

Non-Independent

 

Director Since 2012

 

 

 

Mr. Lang is President and Chief Executive Officer of the Company. Mr. Lang has over 35 years of diverse experience in mine operations, project development and evaluation, including time as President of Barrick Gold North America, a wholly-owned subsidiary of Barrick Gold Corporation (“Barrick”). Mr. Lang held progressively responsible operating and project development positions over his 10-year tenure with Barrick and, prior to that, with Homestake Mining Company and International Corona Corporation, both of which are now part of Barrick. He holds a Bachelor of Science in Mining Engineering from the University of Missouri-Rolla and is a Graduate of the Stanford University Executive Program. The Board has determined that Mr. Lang should continue to serve as a Director to gain his insight as an experienced mine engineer, as well as his expertise in permitting, developing and operating large-scale assets, and as a successful senior executive of other large gold-mining companies.

 

Mr. Lang served as the President of Barrick Gold North America until December 2011 and has served as the Company’s President and Chief Executive Officer since January 2012.

 

During the most recent five years, Mr. Lang has served, and continues to serve, as a director of Trilogy Metals Inc. He served as a director of Sunward Resources Limited until June 2015.

 

Areas of expertise include: mining operations, mine development and evaluation, mine permitting, corporate leadership and mining industry.

 

Board / Committee Membership Overall Attendance 100% Securities Held Share Ownership Guidelines
Regular Meeting Common Shares
#
DSUs
#

PSUs

#

Value of Common Shares Held as of 11/30/2020 $ Total
$
% Met
Board
EHSS & Technical
Corporate Communications
6/6
4/4
2/2
1,822,382 Nil 777,800 $18,150,925 $3,914,000 464% (4)

 

(4) Mr. Lang has exceeded his share ownership requirement as President and Chief Executive Officer as of November 30, 2020 based upon an amount equal to five times his annual salary as of November 30, 2020. See “Executive Share Ownership” for details on the share ownership guidelines applicable to Mr. Lang. PSUs are not included in determining whether an NEO meets the Share Ownership Guidelines.

 

 

 

 

 

 

 

 

 

  -20 -  

 

Igor Levental

 

Independent

 

Director Since 2010

 

 

 

Mr. Levental, a Director of the Company, is President of The Electrum Group, a privately held global natural resources investment management company which manages the portfolio of Electrum. Electrum and its affiliates are collectively the largest Shareholder of the Company. Mr. Levental has more than 30 years of international experience in the mining industry and has held senior positions with major mining companies including Homestake Mining Company and International Corona Corporation. Mr. Levental is a Professional Engineer with a BSc in Chemical Engineering and an MBA from the University of Alberta. The Board has determined that Mr. Levental should serve as a Director for the Company to benefit from his extensive experience as an executive of large mining companies.

 

Mr. Levental’s primary occupation during the last five years has been President of The Electrum Group. Mr. Levental also currently serves as a director of Gatos Silver, Inc., formerly known as Sunshine Silver Mines Corporation, a position he has held since March 2019. During the most recent five years, Mr. Levental served as a director of Gabriel Resources Limited until June 2016, as a director of Trilogy Metals Inc. until June 2016, and as a director of Taung Gold International Limited until September 2017.

 

Areas of expertise include: corporate development, finance, mergers and acquisitions, corporate governance and mining industry.

 

Board / Committee Membership Overall Attendance 100% Securities Held Share Ownership Guidelines

Regular Meeting

Common Shares
#

DSUs
#

Value of Securities Held as of 11/30/2020

$

Total
$

% Met

Board
Governance & Nominations

Corporate Communications (Chair)

6/6
6/6
2/2

99,999 47,928 $1,473,353 $128,400 1,147%

 

 

 

 

 

 

 

 

 

 

  -21 -  

 

Kalidas Madhavpeddi

 

Independent

 

Director Since 2007

 

 

 

Mr. Madhavpeddi, a Director of the Company, has 40 years of international experience in corporate strategy, mergers and acquisitions, government relations, marketing, mining engineering and capital. He is currently the President of Azteca Consulting LLC, an advisory firm to the metals and mining sector, a position he has held since 2006. From 2010 to 2018 he was CEO of China Molybdenum, a HK listed global producer of copper, gold, cobalt, phosphates, niobium and molybdenum. His extensive career in the mining industry includes over 25 years at Phelps Dodge Corporation (now Freeport-McMoRan), as Senior Vice President and contemporaneously the President of Phelps Dodge Wire & Cable. Mr. Madhavpeddi is an alumnus of the Indian Institute of Technology, Madras, India; the University of Iowa and the Harvard Business School. The Board has determined that Mr. Madhavpeddi should serve as a Director to benefit from his long-term experience in the mining industry working as an executive in global corporate development, exploration, mergers and acquisitions, joint ventures and finance.

 

Mr. Madhavpeddi currently serves as a director of Dundee Precious Metals (since February 1, 2021), Glencore plc (since February 4, 2020) and Trilogy Metals Inc. (since 2012). Mr. Madhavpeddi previously served as the CEO of China Molybdenum from September 2008 until April 2018, as Chairman of the Board of Namibia Rare Earths from 2010 until 2016, and as a director of Capstone Mining from 2012 until April 2019.

 

Areas of expertise include: corporate strategy, mergers and acquisitions, mining operations, exploration and capital, marketing and sales, corporate leadership and human resources/compensation.

 

Board / Committee Membership Overall Attendance
100%
Securities Held Share Ownership Guidelines

Regular Meeting

Common Shares
#

DSUs
#

Value of Securities Held as of 11/30/2020

$

Total
$

% Met

Board
Compensation (Chair)

EHSS

6/6
7/7

4/4

80,404 39,656 $1,195,798 $128,400 931%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  -22 -  

 

Clynton Nauman

 

Independent

 

Director Since 1999

 

 

 

Mr. Nauman, a Director of the Company, is the Chief Executive Officer of Alexco Resource Corp. and Asset Liability Management Group ULC. He was formerly President of Viceroy Gold Corporation and Viceroy Minerals Corporation and a director of Viceroy Resource Corporation, positions he held from February 1998 until February 2003. Previously, Mr. Nauman was the General Manager of Kennecott Minerals from 1993 to 1998. Mr. Nauman has over 35 years of diversified experience in the mining industry ranging from exploration and business development to operations and business management in the precious metals, base metals and coal sectors. The Board has determined that Mr. Nauman should serve as a Director to gain from his significant experience as a senior mining executive working in the areas of environment, engineering and operations.

 

Mr. Nauman’s principal occupation for the last five years has been CEO of Alexco Resource Corp. and of Asset Liability Management Group ULC. Mr. Nauman has served as a director of Alexco Resource Corp. since 2006.

 

Areas of expertise include: environmental, geology, exploration, operations, mining industry and corporate leadership.

 

Board / Committee Membership Overall Attendance
100%
Securities Held Share Ownership Guidelines

Regular Meeting

Common Shares
#

DSUs
#

Value of Securities Held as of 11/30/2020

$

Total
$

% Met

Board
Audit

EHSS & Technical (Chair)

6/6
4/4

4/4

129,445 39,656 $1,684,246 $128,400 1,312%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  -23 -  

 

Ethan Schutt

 

Independent

 

Director Since 2019

 

 

 

Mr. Schutt, a Director of the Company, is the CEO of Alaska Native Resource Development, LLC, an Alaska Native Tribal Health Consortium (ANTHC) company. ANTHC provides health services for Alaska Native people, as well as training, health education, disease and injury prevention, and rural water and sewer construction. In his current role, Mr. Schutt provides coordination and support to ensure proper prioritization and alignment of ANTHC resources. Previously Mr. Schutt served as the Chief of Staff of ANTHC. ANTHC provides health services for Alaska Native people, as well as training, health education, disease and injury prevention, and rural water and sewer construction. Prior to joining ANTHC, Mr. Schutt first served as General Counsel, and later became the Senior Vice President of Land and Energy Development, for Cook Inlet Region Inc. (CIRI). CIRI is an Alaska Native Claims Settlement Act (ANCSA) corporation dedicated to the economic and social well-being of its Alaska Native shareholders with resources generated from its lands and businesses. As CIRI’s Senior Vice President of Land and Energy Development, he led a team of professionals that managed CIRI’s ANCSA lands including the exploration and leasing of those lands for oil and gas, mineral, and other natural resource development. He also directed CIRI’s efforts in developing renewable and alternative energy projects. Mr. Schutt previously served as a member of the board of Doyon, Limited and served as General Counsel for Tanana Chiefs Conference. Mr. Schutt is an expert on ANCSA lands and resources and currently teaches a class on the topic at the University of Alaska Anchorage. Mr. Schutt holds a Bachelor of Science degree with honors in mathematics from Washington State University and a Juris Doctor degree from Stanford Law School. The Board has determined that Mr. Schutt should serve as a Director to gain from his experience working on Alaska Native health matters, his experience as a senior resource development executive, his legal, corporate governance and external communications expertise, and his expert understanding and knowledge of ANCSA and of Alaska.

 

Mr. Schutt’s principal occupations for the last five years have been CEO of Alaska Native Resource Development, LLC (2020-present), Chief of Staff of ANTHC (2018 – 2020), and Senior Vice President, Land and Energy Development of CIRI (2008 – 2018). Mr. Schutt also serves as a Board Trustee of the Alaska Permanent Fund Corporation

 

Areas of expertise include: resource development, health and sustainability, legal, communications, corporate leadership, corporate governance, ANCSA and doing business in Alaska.

 

Board / Committee Membership

Overall Attendance
100%
Securities Held Share Ownership Guidelines

Regular Meeting

Common Shares
#

DSUs
#

Value of Securities Held as of 11/30/2020

$

Total
$

% Met

Board
Audit

Corporate Communications

Governance & Nominations

6/6

4/4

2/2

2/2 (5)

Nil 3,097 $30,846 $128,400 24% (6)

 

(5) Mr. Schutt was appointed to the Corporate Governance & Nominations Committee on May 14, 2020. He attended all Corporate Governance & Nominations Committee meetings held in fiscal 2020 after May 14, 2020.

 

(6) Mr. Schutt was appointed to the Board in May 2019 and has until August 2025 to meet the Share Ownership Guidelines.

 

 

 

 

 

 

 

 

 

 

 

 

 

  -24 -  

 

Anthony Walsh, CA

 

Independent

 

Director Since 2012

 

 

 

Mr. Walsh, a Director of the Company, has over 20 years of international experience in the field of exploration, mining and development. He was previously the President and CEO of Sabina Gold & Silver Corp. (“Sabina”) (2008-2011). Prior to joining Sabina, Mr. Walsh was President and CEO of Miramar Mining Corporation (1999-2007), Vice-President and CFO of Miramar Mining Corporation (1995-1999), the Senior Vice-President and CFO of a computer leasing company (1993-1995), and the CFO and Senior Vice-President, Finance of International Corona Mines Ltd., a major North American gold producer (1989-1992). From 1985 to 1989 he was Vice-President, Finance of International Corona Mines Ltd., and from 1973 to 1985 Mr. Walsh held various positions at Deloitte, Haskins & Sells, a firm of Chartered Accountants. Mr. Walsh graduated from Queen's University (Canada) in 1973 and became a member of The Canadian Institute of Chartered Accountants in 1976. Mr. Walsh joined the Board on March 19, 2012. The Board has determined that Mr. Walsh should serve as a Director to benefit from his experience as a senior executive in a variety of global mining companies and international accounting firms, as well as his expertise in finance, international accounting, corporate leadership and corporate governance.

 

Mr. Walsh has been retired since 2011, but currently serves as a director of Sabina and Dundee Precious Metals Ltd. Mr. Walsh previously served on the board of TMX Group Inc. (May 2012- May 2018), Avala Resources Ltd., (July 2010 - April 2016), Quaterra Resources Ltd. (June 2012 – March 2015), Dunav Resources Limited (July 2010 - March 2013), and on the board of Stornoway Diamonds Limited (September 2004 - November 2012).

 

Areas of expertise include corporate development, finance, accounting, mergers and acquisitions, corporate governance, corporate regulation, mining industry, and corporate leadership.

 

Board / Committee Membership Overall Attendance 100% Securities Held Share Ownership Guidelines

Regular Meeting

Common Shares
#

DSUs
#

Value of Securities Held as of 11/30/2020

$

Total
$

% Met

Board
Audit (Chair)

Compensation

6/6
4/4

7/7

Nil 34,806 $346,668 $128,400 270%

 

 

 

 

 

 

 

 

 

 

 

 

  -25 -  

 

David Ottewell

 

Vice President and Chief

Financial Officer

 

Officer Since 2012

 

Mr. Ottewell joined the Company on November 13, 2012, as its Vice President and Chief Financial Officer. In this role, Mr. Ottewell is responsible for all aspects of the Company’s financial management. Mr. Ottewell is a highly accomplished financial executive, with over 30 years of mining industry experience. Prior to joining the Company, he served as Vice President and Controller for Newmont Mining Corporation where he was employed since 2005, and prior to that, had a 16-year career with Echo Bay Mines Ltd., a prominent precious metals mining company with multiple operations in the Americas. Mr. Ottewell holds a Bachelor of Commerce degree from the University of Alberta and is a member of the Chartered Professional Accountants of Alberta.

 

Areas of expertise include: global accounting and finance, corporate disclosure, financial regulation, and mining industry.

 

 

 

 

Securities Held

Share Ownership Guidelines
Common Shares
#
PSUs
#

Value of Common Shares Held as of 11/30/2020

$

Total
$
% Met
619,024 268,400 $6,165,479 $834,400 739% (7)

 

(7) Mr. Ottewell has exceeded his share ownership requirement as Vice President and Chief Financial Officer as of November 30, 2020 based upon an amount equal to two times his annual salary as of November 30, 2020. See “Executive Share Ownership” for details on the share ownership guidelines applicable to Mr. Ottewell. PSUs are not included in determining whether an NEO meets the Share Ownership Guidelines.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  -26 -  

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED SHAREHOLDER MATTERS

 

The following table sets forth certain information regarding the beneficial ownership of the Common Shares as of March 10, 2021 by:

 

· the Company’s NEOs;

 

· the Company’s Directors and nominees;

 

· all of the Company’s executive officers and Directors as a group; and

 

· each person who is known by the Company to beneficially own more than 5% of the Company’s issued and outstanding Common Shares.

 

Unless otherwise indicated, the Shareholders listed possess sole voting and investment power with respect to the shares shown. The Company’s Directors and NEOs do not have different voting rights from other Shareholders.

 

Name Business Address Amount and Nature of Beneficial Ownership (1) Percentage of Class (2)

Gregory Lang

President & CEO, Director

201 South Main, Suite 400

Salt Lake City, Utah 84111

USA

4,965,862 (3) 1.50%

David Ottewell

Vice President & CFO

201 South Main, Suite 400

Salt Lake City, Utah 84111

USA

1,035,307 (4) *

Thomas Kaplan

Chairman of the Board

535 Madison Avenue, 12th Floor
New York, NY 10022

USA

85,129,713 (5) 25.69%

Elaine Dorward-King

Director

201 South Main, Suite 400

Salt Lake City, Utah 84111

USA

1,770 (6) *

Sharon Dowdall

Director

400 Burrard Street, Suite 1860

Vancouver, BC V6C 3A6

Canada

304,269 (7) *

Diane Garrett

Director

201 South Main, Suite 400

Salt Lake City, Utah 84111

USA

194,948 (8) *

Igor Levental

Director

201 South Main, Suite 400

Salt Lake City, Utah 84111

USA

416,524 (9) *

Kalidas Madhavpeddi

Director

201 South Main, Suite 400

Salt Lake City, Utah 84111

USA

 

388,655 (10) *

 

  -27 -  

 

 

Name Business Address Amount and Nature of Beneficial Ownership (1) Percentage of Class (2)

Clynton Nauman

Director

201 South Main, Suite 400

Salt Lake City, Utah 84111

USA

437,696 (11) *

Ethan Schutt

Director

201 South Main, Suite 400

Salt Lake City, Utah 84111

USA

55,659 (12) *

Anthony Walsh

Lead Director

400 Burrard Street, Suite 1860

Vancouver, BC V6C 3A6

Canada

264,269 (13) *

All Directors,

nominees and

executive officers as

a group (14 persons)

  11,144,441 29.05%
Electrum Strategic Resources LP

535 Madison Avenue, 12th Floor
New York, NY 10022

USA

84,569,479 (14) 25.52%
FMR LLC

245 Summer Street

Boston, MA 02210

USA

24,700,144 (15) 7.45%
Paulson & Co. Inc.

1251 Avenue of the Americas New York, NY 10020

USA

22,226,300 (16) 6.71%
BlackRock, Inc. 55 East 52nd Street New York, NY 10055 21,165,677 (17) 6.39%
(1) Under applicable U.S. securities laws, a person is considered to be the beneficial owner of securities they own (or certain persons whose ownership is attributed to them) or securities that the person can acquire within 60 days, including upon the exercise of options, warrants or convertible securities.
(2) Based on 331,331,184 Common Shares outstanding as of March 10, 2021, and includes any Common Shares deemed to be beneficially owned pursuant to options that are exercisable within 60 days of March 10, 2021.
(3) Includes 2,987,200 stock options exercisable within 60 days of March 10, 2021.
(4) Includes 322,741 stock options exercisable within 60 days of March 10, 2021.
(5) Includes 84,569,479 Common Shares held by Electrum and an affiliate. Dr. Kaplan is the Chairman and Chief Executive Officer of The Electrum Group and thereby may be deemed to have shared voting and investment power over such shares. Dr. Kaplan disclaims beneficial ownership in such shares except to the extent of a minor pecuniary interest. Also includes 267,467 stock options exercisable within 60 days of March 10, 2021.
(6) includes 0 stock options exercisable within 60 days of March 10, 2021.
(7) Includes 268,334 stock options exercisable within 60 days of March 10, 2021.
(8) Includes 178,967 stock options exercisable within 60 days of March 10, 2021.
(9) Includes 267,467 stock options exercisable within 60 days of March 10, 2021.
(10) Includes 267,467 stock options exercisable within 60 days of March 10, 2021.
(11) Includes 267,467 stock options exercisable within 60 days of March 10, 2021.
(12) Includes 51,434 stock options exercisable within 60 days of March 10, 2021.
(13) Includes 228,334 stock options exercisable within 60 days of March 10, 2021.
(14) According to a Schedule 13D/A filed with the SEC on December 31, 2012, each of Electrum, The Electrum Group, Electrum Global Holdings LP, TEG Global GP Ltd, Leopard Holdings LLC and GRAT Holdings LLC have shared voting and dispositive power over 79,569,479 Common Shares. In addition, GRAT Holdings LLC has sole voting and dispositive power over 5,000,000 Common Shares. Electrum Global Holdings LP is the owner of all limited partnership interests of Electrum and all of the equity interests of Electrum Strategic Management LLC, the general partner of Electrum. TEG Global GP Ltd is the sole general partner of, and The Electrum Group is the investment adviser to, Electrum Global Holdings LP. The Electrum Group possesses voting and investment power with respect to assets of Electrum, including indirect investment discretion with respect to the Common Shares held by Electrum. GRAT Holdings LLC indirectly controls Electrum through Leopard Holdings LLC. The investment committee of GRAT Holdings LLC exercises voting and investment decisions on behalf of GRAT Holdings LLC. The address listed in such filing of Leopard Holdings LLC and GRAT Holdings LLC is 535 Madison Avenue, 12th Floor, New York, New York 10022 and the address listed in such filing of the Electrum Group, Electrum Global Holdings LP and TEG Global GP Ltd is 700 Madison Ave., 5th Floor, New York, New York 10065. Thomas Kaplan, Chairman of the Board of Directors of the Company, is also Chairman and Chief Executive Officer of The Electrum Group. Mr. Kaplan disclaims beneficial ownership in the Electrum shares except to the extent of a minor pecuniary interest.
(15) According to a Schedule 13G/A filed with the SEC on February 8, 2021, FMR LLC has sole voting power over 3,462,678 of the shares and sole dispositive power over 24,700,144 of the shares. Various persons have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of the shares. No one other person’s interest in the shares is more than 5% of the outstanding shares of the Company.

 

 

 

  -28 -  

 

 

(16) According to a Schedule 13G/A filed with the SEC on February 16, 2021, Paulson & Co. Inc. has sole voting and dispositive power over all such shares.
(17) According to a Schedule 13G filed with the SEC on January 29, 2021, BlackRock, Inc. has sole voting power over 20,552,048 of the shares and sole dispositive power over 21,165,677 of the shares. Various persons have the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of the shares. No one other person’s interest in the shares is more than 5% of the outstanding shares of the Company.

 

* Percentage of Common Shares beneficially owned or over which control or direction is exercised is less than 1%.

 

As of March 10, 2021, there were approximately 594 registered holders of the Company’s Common Shares.

 

The Company has no knowledge of any other arrangements, including any pledge by any person of the Company’s securities, the operation of which may at a subsequent date result in a Change of Control of the Company.

 

Meetings of the Board and Board Member Attendance at the Annual Meeting

 

During the fiscal year ended November 30, 2020, the Board held seven meetings. None of the incumbent Directors attended fewer than 75% of the aggregate of the total number of Board meetings and meetings of the committees on which each Director serves.

 

Board members are not required to attend the annual general meeting; however, the following ten Directors attended the Company’s annual meeting of shareholders held on May 14, 2020 via webcast and/or teleconference: Elaine Dorward-King (nominee at the time), Sharon Dowdall, Diane Garrett, Thomas Kaplan, Gregory Lang, Igor Levental, Kalidas Madhavpeddi, Clynton Nauman, Ethan Schutt and Anthony Walsh.

 

Legal Proceedings

 

Neither the Company nor any of its property is currently subject to any material legal proceedings or other adverse regulatory proceedings. We do not currently know of any material legal proceedings against us or our subsidiaries involving our Directors, proposed Directors, executive officers or Shareholders of more than 5% of our voting shares, affiliates of the Company, or any associate of any such Director, executive officer, affiliate of the Company or Shareholder, or any material interest adverse to the Company or our subsidiaries. None of our Directors, proposed Directors or executive officers has, during the past ten years, been involved in any material bankruptcy, criminal or securities law proceedings.

 

Cease Trade Order, Bankruptcy, Penalties and Sanctions

 

No proposed director of the Company is, as of the date hereof or was within 10 years before the date hereof, a director, chief executive officer or chief financial officer of any company (including the Company) that:

 

(a) was subject to a cease trade order, an order similar to a cease trade order or 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, that was issued while the director or executive officer was acting in the capacity as director, chief executive officer or chief financial officer; or

 

(b) was subject to a cease trade order, an order similar to a cease trade order or an order that denied the relevant company access to any exemption under securities legislation, for a period of more than 30 consecutive days, that was issued after the director or executive officer ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer.

 

No proposed director of the Company:

 

(a) is, as of the date hereof or was within 10 years before the date hereof, 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; or

 

  -29 -  

 

(b) has, within 10 years before the date hereof, 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.

 

No proposed director of the Company has been subject to:

 

(a) 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

 

(b) 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.

 

Family and Certain Other Relationships

 

There are no family relationships among the members of the Board or the members of senior management of the Company. There are no arrangements or understandings with customers, suppliers or others, pursuant to which any member of the Board or member of senior management was selected. As of March 10, 2021, Electrum held 84,569,479 Common Shares, representing approximately 25.52% of the Company’s issued and outstanding shares. Pursuant to the Unit Purchase Agreement dated December 31, 2008 between the Company and Electrum, the Company provided Electrum with the right to designate an observer at all meetings of the Company’s Board and any committee thereof so long as Electrum and its affiliates hold not less than 15% of the Company’s Common Shares. Electrum designated Igor Levental as its observer at the Company’s Board meetings. In July 2010, the Company appointed Igor Levental as a Director of the Company. In November 2011, Dr. Thomas Kaplan was appointed the Chairman of the Company’s Board. Dr. Kaplan is also the Chairman and Chief Executive Officer of The Electrum Group.

 

Interest of Certain Persons or Companies in Matters to be Acted Upon

 

Except as described in this Circular, no (i) person who has been a Director or executive officer of the Company at any time since the beginning of the Company’s last financial year, (ii) proposed nominee for election as a Director, or (iii) associate or affiliate of any of the foregoing persons, has any material interest, direct or indirect, in any matter to be acted upon at the Meeting.

 

compensation discussion & analysis

 

Overview

 

The following section of the Circular presents information regarding the design, governance, and implementation of the Company’s compensation program. The Compensation Committee (referred to in this section as the “Committee”) regularly reviews executive compensation.

 

During 2012, the Company implemented a fundamental restructuring which repositioned the Company as a pure gold play focused on permitting and developing its 50%-owned Donlin Gold property, one of the world's largest known undeveloped open-pit gold deposits. The restructuring included the spinout of the Company’s non-core properties into Trilogy Metals Inc. (formerly known as NovaCopper Inc.) to the Company’s Shareholders, the hiring of Gregory Lang as President and CEO, and his recruitment of a new executive team with demonstrated experience in permitting, engineering, building and operating large, open-pit gold mines in remote locations.

 

  -30 -  

 

Because of Donlin Gold’s unique attributes and the Company’s relationships with major international mining companies, the compensation program was designed to attract, retain, and incentivize individuals who have experience with complex, large-scale development properties and in senior management roles with large international mining companies.

 

The Board and management believe that every employee should be an owner of the Company because ownership is fundamental to aligning management’s and employees’ interests with those of Shareholders. As a result, share-based compensation is an important component of the Company’s compensation program. In August 2020, based on a recommendation from the Committee after a routine review of the Company’s executive and director compensation programs, the Board amended the Company’s share ownership guidelines to increase the minimum holding requirements for Directors and the President and CEO. The Directors’ minimum share ownership requirement increased from an amount equivalent to C$50,000 to three times the Directors’ annual retainer, or $142,800. The President and CEO’s minimum share ownership requirement increased from an amount equivalent to three times his annual base pay to five times his annual base pay.

 

In addition, the Company is committed to aligning management compensation with Shareholder interests through performance-based compensation. As Donlin Gold is in the development stage, the Company is not able to use typical operating company metrics (e.g., revenues, operating cash flow, production, costs, net income) as the basis for the performance-based components of its compensation program. The Committee worked extensively with management and with its compensation consultant, Mercer (Canada) Limited (“Mercer” or the “Compensation Consultant”), to define criteria for all aspects of the Company’s 2020 compensation program, including the performance-based compensation.

 

NOVAGOLD employees were instrumental in the achievement of important milestones relative to Donlin Gold in fiscal year 2020, including:

 

(i) Completed the Donlin Gold 2020 drill program on time and under budget, despite a six week pause to put a COVID-19 management plan into place,

 

(ii) Made significant advances in the Donlin Gold permitting program, including obtaining a second extension of the air quality permit, issuance of public notice of the project’s proposed water rights, and the submission of draft project trust fund agreements to the State of Alaska,

 

(iii) Continued to assist with Donlin Gold’s community outreach planning and execution, including the completion of three friendship agreements with the Yukon-Kuskokwim (Y-K) villages of Nikolai, Crooked Creek and Sleetmute, and

 

(iv) Completed six community development projects in the Y-K region, including the distribution of food and personal protective equipment (PPE) to villages locked down in response to COVID-19, and a waste backhaul event that Donlin Gold co-sponsored with the Association of Village Council Presidents, Yukon-Kuskokwim Health Corporation and Orutsararmiut Native Corporation that removed 45,000 pounds of hazardous and electronic waste from Y-K communities.

 

Compensation Governance

 

The Committee is a standing committee of the Board and is appointed by and reports to the Board, with a mandate to assist the Board in fulfilling its oversight responsibilities related to the:

 

· appointment, performance evaluation, and compensation of the Company's CEO and other executive officers of the Company;

 

· succession planning relating to the CEO, other executive officers and other key employees, including appointments, reassignments, and terminations;

 

· compensation structure for the CEO and other executive officers including annual, mid-term and long-term incentive plans involving share issuances or share awards;

 

  -31 -  

 

· determination of Director compensation; and

 

· share ownership guidelines for the CEO, other executive officers, and Directors.

 

The charter of the Committee is available at www.novagold.com under the Governance tab. More information regarding the responsibilities and operation of the Committee and the process by which compensation is determined are discussed starting on page 36 in “Statement of Executive Compensation” and on page 74 under the heading “Non-Executive Director Compensation”.

 

For the year ended November 30, 2020, the Committee consisted of four independent Directors: Kalidas Madhavpeddi (Chair), Elaine Dorward-King, Sharon Dowdall and Anthony Walsh. All current members of the Committee are non-executive Directors of the Company and satisfy all applicable independence standards of the NYSE American. The Committee met seven times in the fiscal year ended November 30, 2020. More information regarding the qualifications of each of the members of the Committee is provided in “Information Concerning the Board of Directors, Director Nominees, and Executive Officers” above.

 

Compensation Committee’s Relationship with its Independent Compensation Consultant

 

The Committee has directly engaged Mercer to provide specific support to the Committee in determining compensation for the Company’s officers and Directors, including during the most recently completed fiscal year. Such analysis and advice from the Compensation Consultant includes, but is not limited to, executive compensation policy (for example, the choice of companies to include in the Peer Group (as defined below) and compensation philosophy), total compensation benchmarking for the NEOs, and incentive plan design. In addition, this support has also consisted of: (i) the provision of general market observations throughout the year with respect to market trends and compensation governance issues; (ii) the provision of benchmark market data; and (iii) attendance at Committee meetings. Decisions made by the Committee, however, are the responsibility of the Committee and may reflect factors and considerations other than the information and recommendations provided by the Compensation Consultant. In addition to this mandate, the Compensation Consultant provides general employee compensation consulting services to the Company; however, these services are limited in size and scope and are of significantly lesser value than those provided related to executive officer and Director compensation.

 

The Committee Chair pre-approves a Statement of Work provided by the Compensation Consultant prior to the start of the annual executive officer and Director compensation reviews, or any other special project. The Statement of Work confirms the work that the Compensation Consultant is asked to complete and the associated fees. The Committee has assessed the independence of the Compensation Consultant pursuant to SEC rules and concluded that the Compensation Consultant’s work for the Committee does not raise any conflict of interest. The Committee regularly assesses the performance of the Compensation Consultant and may, from time to time, determine that obtaining competitive proposals is appropriate.

 

The fees paid to the Compensation Consultant for services performed in fiscal year 2020 were C$58,100 to assist the Committee in developing the Company’s compensation policies and programs. No other fees were paid to the Compensation Consultant for services provided to the Committee during the fiscal year ended November 30, 2020. In fiscal year 2019, Mercer was paid C$60,800 to perform similar services. The Compensation Consultant is a wholly owned subsidiary of Marsh & McLennan Companies, Inc. (MMC). Marsh Risk & Insurance Services (“Marsh”), an MMC affiliate, provides insurance broker services to the Company. The engagement of Marsh did not require or receive approval of the Board or the Committee. During the year ended November 30, 2020, Marsh billed the Company $164,890 for insurance brokerage services. With respect to the engagement of Mercer, the Committee considered various factors that may impact the independence of Mercer, including the amounts payable to Mercer and Marsh as described above, and whether any other relationships existed between Mercer or Marsh, on the one hand, and any executive officer of the Company or any member of the Board, on the other hand, and the Committee determined that a conflict of interest did not exist.

 

Risk Assessment of Compensation Policies and Practices

 

Annually, the Committee conducts a risk assessment of the Company’s compensation policies and practices as they apply to all employees, including all executive officers. The design features and performance metrics of the Company’s cash and stock-based incentive programs, along with the approval mechanisms associated with each, are evaluated to determine whether any of these policies and practices would create risks that are reasonably likely to have a material adverse effect on the Company.

 

  -32 -  

 

Checklist of Compensation Practices

 

WHAT WE DO

WHAT WE DON’T DO

✓    Base the vast majority of pay on performance; most compensation is therefore at-risk x    No repricing or exchange of underwater stock options
   
✓    Align pay and performance x    No special change of control provisions for executives
   
✓    Establish rigorous Company goals for annual incentive program x    No excessive perquisites
   
✓    Prohibit hedging and pledging of Company stock x    No special tax gross ups
   
✓    Include “double trigger” change of control provisions in equity plans x    No guaranteed annual salary increases or bonuses
   
✓    Apply Clawback Policy to annual incentive program and equity awards x    No plans that encourage excessive risk-taking

 

As part of the review, the following characteristics of the Company’s compensation policies and practices were noted as being characteristics that the Company believes reduce the likelihood of risk-taking by the Company’s employees, including the Company’s officers and non-officers:

 

· The Company’s compensation mix is balanced among fixed components such as salary and benefits, and variable components such as an annual incentive program opportunity and long-term performance-based incentives, including PSUs and stock options.

 

· The Committee, under its charter, has the authority to retain any advisor it deems necessary to fulfill its obligations and has engaged the Compensation Consultant. The Compensation Consultant assists the Committee in reviewing executive compensation and provides advice to the Committee on an as-needed basis.

 

· The annual incentive program for the executive management team, which includes each of the NEOs, is approved by the Board. Individual payments are based on a combination of quantitative and qualitative metrics, as well as discretionary factors. More information about the annual incentive program goals can be found on pages 39-55 of this Circular.

 

· Stock-based awards for all employees are recommended by the Committee and approved by the Board.

 

· The Board approves the compensation for the President and CEO based upon a recommendation by the Committee, which is comprised entirely of independent Directors.

 

· The nature of the business in which the Company operates requires some level of risk-taking to acquire reserves and to develop mining operations in the best interest of all stakeholders. Consequently, the executive compensation policies and practices have been designed to encourage actions and behaviors directed toward increasing long-term value while limiting incentives that promote excessive risk-taking.

 

  -33 -  

 

Based on this assessment, the Committee concluded that the Company’s compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on the Company.

 

Employees of NOVAGOLD, including NEOs, and Directors are not permitted to purchase financial instruments, including, for greater clarity, prepaid variable forward contracts, equity swaps, collars, or units of exchange funds that are designed to hedge or offset a decrease in market value of equity securities granted as compensation or held, directly or indirectly, by the employee or Director. Additionally, the Company does not permit any employees or Directors to pledge Company securities to secure personal debts or loans.

 

Peer Group for 2020 Executive Compensation Planning

 

The Committee retained the Compensation Consultant to assist the Committee in determining appropriate levels for each of the three main components of total direct compensation for the Company’s Directors and NEOs for fiscal year 2020. The Compensation Consultant’s work encompasses a review of the Company’s executive compensation philosophies relative to a comparable group of mining companies using the publicly available filings of these peer companies.

 

A compensation peer group of mining companies was developed using the following selection criteria:

 

· Canadian and/or U.S. listed companies;
· market capitalization and/or total assets similar to the Company;
· gold, diversified metals and mining, or precious metals/minerals industry;
· complexity of operation/business strategy relative to the Company; and
· experienced, full-time executive team.

 

The Company considers the above selection criteria to be relevant because it results in a group of companies in our industry that are similar in size by market capitalization and/or assets, operating jurisdictions and/or stage of development.

 

During August 2019, based upon considerations of the selection criteria, stage of development and operating jurisdictions, the following peer group companies were selected based upon the company data below as of July 31, 2019, which was near the time the Company’s 2020 peer group was selected. The Company’s 2020 peer group below (collectively, the “Peer Group”) reflects the following changes from the 2019 peer group: i) the addition of Pan American Silver Corporation, B2Gold Corporation and OceanaGold Corporation, and ii) the removal of Kirkland Lake Gold Ltd. (market cap too large), Tahoe Resources Inc. (acquired by Pan American Silver), and Guyana Goldfields Inc. (market cap too low).

 

All values in C$ millions (1)

Company Name Market Cap. (2) Total Assets (3) Revenue (3) GICS Description (4) Primary Mining Location(s)

1-yr TSR

(5)

%

3-yr TSR (5)

%

5-yr TSR (5)

%

Pan American Silver Corp. $4,420 $4,429 $1,051 Silver Mexico, Americas, Canada 1% -5% 7%
B2Gold Corp. $4,398 $3,366 $1,576 Gold Burkino Faso, Côte d’Ivoire 35% 2% 8%
Detour Gold Corp. $3,529 $3,298 $1,026 Gold Canada 58% -16% 10%
Alamos Gold Inc. $3,491 $4,277 $822 Gold Canada, Mexico, Turkey, US 26% -9% N/A
Centerra Gold Inc. $3,255 $3,745 $1,718 Gold Int’l. 91% 13% 15%

 

 

  -34 -  

 

 

Company Name Market Cap. (2) Total Assets (3) Revenue (3) GICS Description (4) Primary Mining Location(s)

1-yr TSR

(5)

%

3-yr TSR (5)

%

5-yr TSR (5)

%

Pretium Resources Inc. $2,744 $2,087 $564 Gold Canada 39% -1% 14%
SSR Mining Inc. $2,638 $2,084 $582 Gold Americas 63% 6% 16%
OceanaGold Corporation $2,365 $2,658 $954 Gold Philippines, New Zealand, US -5% -6% 4%
IAMGOLD Corporation $2,307 $5,131 $1,318 Gold Int’l. -32% -10% 4%
Torex Gold Resources Inc. $1,494 $1,595 $661 Gold Mexico 80% -14% 3%
Coeur Mining, Inc. $1,394 $2,175 $790 Gold Int’l. -28% -32% -10%
MAG Silver Corp. $1,391 $282 $0 Silver Mexico 32% -8% 10%
Hecla Mining Company $1,229 $3,463 $735 Silver Canada, Mexico, US -37% -33% -10%
Seabridge Gold Inc. $1,181 $426 $0 Gold Canada 25% 3% 14%
New Gold Inc. $1,106 $2,813 $814 Gold Australia, Mexico, Canada, US 20% -34% -22%
TMAC Resources Inc. $703 $1,201 $213 Gold Canada -13% -27% N/A
NOVAGOLD RESOURCES INC. $2,754 $327 $0 Gold Canada, US 52% -2% 15%
Percentile Rank 65% 8% -     75% 69% 85%

Data source: Mercer

 

(1) Financial figures in U.S. dollars have been converted to CAD using the Bank of Canada 2018 average exchange rate: $1.000 USD = $1.297 CAD.
(2) Market capitalization as of July 31, 2019.
(3) Trailing 12-month revenue and most recently reported total assets.
(4) S&P/JP Morgan Chase Global Industry Classification Code (GICS).
(5) TSR denotes annualized Total Shareholder Return or change in share price adjusted for dividends for the 1, 3 and 5-year periods ended July 31, 2019.

 

Relative to the Peer Group, NOVAGOLD’s market capitalization was at the 65th percentile, and its asset value was at the 8th percentile as of July 31, 2019, which was near the August 2019 date when the Peer Group for 2020 executive compensation was selected.

 

Peer Group for 2021 Executive Compensation Planning

 

The Committee followed a similar process for the selection of the peer group for 2021 executive compensation planning in the second half of fiscal year 2020. The 2021 peer group is as follows:

 

  -35 -  

 

 

Alamos Gold Inc.

Hecla Mining Company

Pan American Silver
B2Gold Corp.

IAMGOLD Corporation

Pretium Resources Inc.
Centerra Gold Inc. MAG Silver Corporation Seabridge Gold Inc.
Coeur Mining Inc. New Gold Inc.

SSR Mining Inc.

Equinox Gold Corporation

OceanaGold Corp.

Torex Gold Resources Inc.

 

Changes in the 2021 peer group from the 2020 peer group are:

 

1. the removal of:

 

a. Detour Gold (acquired by Kirkland Lake Gold whose market cap was too large relative to NOVAGOLD’s at time of review)
b. TMAC Resources (market cap too low; acquisition pending at time of review), and

 

2. the addition of Equinox Gold Corp.

 

Statement of Executive Compensation

 

This Compensation Discussion and Analysis describes and explains the significant elements of the Company’s executive compensation program which were implemented during fiscal year 2020 to attract, retain, and incentivize the Company’s NEOs.

 

The Company’s NEOs during fiscal 2020 were:

 

· Mr. Gregory Lang, President and CEO (CEO); and

 

· Mr. David Ottewell, Vice President and CFO (CFO).

 

Executive Compensation Philosophy

 

NOVAGOLD has a pay-for-performance philosophy and the compensation programs of the Company are designed to attract and retain executive officers with the talent and experience necessary for the success of the Company. As directed by the Committee, the Company has a compensation philosophy to pay above the median of its Peer Group companies to attract and retain above average executive talent.

 

Why We Pay Above Median

 

Factors which influence this policy include the size and scale of the Company’s flagship Donlin Gold project, which is in an extremely remote location and is much larger, and likely more complex, than any asset owned by our Peer Group companies. Our executive compensation program acknowledges that managing these resources requires an executive team with extensive experience and skills in advancing significant deposits into production. Additionally, the Company works with senior mining partners as it advances its complex, large-scale project and needs to attract and retain executives with specialized skills, knowledge, and experience which come from working for and with large mining companies. Such skills and knowledge include the areas of geology, engineering, logistical planning, preparation of feasibility studies, permitting, regulation, mine construction and operation, government and community affairs, compliance, marketing, finance, and accounting.

 

As part of its 2020 executive compensation planning, the Committee also referred to the compensation paid by senior mining companies to their incumbents in positions comparable to those held by the Company’s NEOs. Although not included in the Peer Group, the Committee also referenced the compensation packages of Barrick Gold Corporation, Newmont Goldcorp Corporation (now known as Newmont Corporation), Kirkland Lake Gold Ltd., and Kinross Gold Corporation, as: (i) the NEOs have all previously worked for at least one of those senior mining companies, ii) to measure the competitiveness of the Company’s compensation programs, and (iii) the Committee considers those companies to be competitors for the Company’s executive talent. No changes to the Company’s compensation programs were made as a result of the supplemental review of the compensation programs of these senior mining companies. Ultimately, the Peer Group companies were selected to reflect the fact that the Company’s assets are in the development stage.

 

  -36 -  

 

Our Annual Compensation Review Process

 

The Committee evaluates each officer position to establish skill requirements and levels of responsibility. The Committee, after referring to market information provided by its independent Compensation Consultant, Mercer, and after considering the CEO’s recommendations for compensation of the Company’s other officers, makes recommendations to the Board regarding compensation for the officers. The Company regularly meets with its major Shareholders to discuss a variety of matters relevant to the Company. At the request of the Committee, the Company includes the issue of executive compensation in such discussions and provides feedback from the Shareholders to the Committee.

 

The Committee believes that the Company’s executive compensation program structure has been successful in achieving the goals set out in the Committee’s compensation philosophy, namely attracting and retaining above-average executive talent who have worked for and with large mining companies, and who have specialized skills, knowledge and experience necessary to advance the Company’s substantial and complex Donlin Gold project. As such, the executive compensation program targets remained unchanged from 2019 to 2020. The Committee currently targets NEO compensation as follows:

 

· Base Salary – 62.5th percentile of the Peer Group companies (as defined in the “Peer Group” section above);

 

· Total Cash Compensation (base salary & annual incentive) – 62.5th percentile of the Peer Group companies; and

 

· Total Direct Compensation (base salary, annual incentive & long-term incentive compensation) – 75th percentile of the Peer Group companies.

 

Executive Compensation Objectives and Elements

 

In establishing compensation objectives for the NEOs, the Committee seeks to accomplish the following goals:

 

· Recruit and subsequently retain highly qualified executive officers by offering overall compensation that is competitive with that offered for comparable positions at Peer Group companies;
     
  · Incentivize executives to achieve important corporate and individual performance objectives and reward them when such objectives are met; and

 

· Align the interests of executive officers with the long-term interests of Shareholders through participation in the Company’s stock-based compensation plans.

 

During 2020, the Company’s executive compensation package consisted of the following principal components: base salary, annual incentive cash bonus, various welfare plan benefits, 401(k) retirement account (“401(k)”), including employer matching funds for U.S. NEOs, and long-term incentives in the form of stock options and Performance Share Units (PSUs).

 

The following table summarizes the different elements of the Company’s total compensation package for all employees, including the NEOs:

 

  -37 -  

 

Compensation Element Objective Key Feature Compensation Element “At-Risk”
Base Salary Provide a fixed level of cash compensation for performing day-to-day responsibilities. Base salary bands were created and are reviewed annually based on the 62.5th percentile of the Peer Group market data for base salary. Actual increases are based on individual performance. No
Annual Incentive Plan Reward for short-term achievement of corporate and individual goals. Cash payments based on a formula. Each NEO has a target opportunity based on the 62.5th percentile of the Peer Group market data for total cash. Actual payout depends on performance against annual corporate and individual goals. Yes
Stock Options Align executives’ interests with those of Shareholders, encourage retention and reward long-term Company performance. Calculations for awards are based on targets for each NEO determined by targeting the 75th percentile of the Peer Group market data for total direct compensation. Stock option grants vest over three years and have a five-year term. Yes
Performance Share Units Align executives’ interests with those of Shareholders, encourage retention and reward long-term Company performance. Calculations for grant amounts are based on targets for each NEO determined by targeting the 75th percentile of the Peer Group market data for total direct compensation. PSU grants cliff vest at the end of a three-year performance period and actual payout, if any, depends upon performance against corporate goals as established by the Board at the time of grant. Yes
Employee Share Purchase Plan Encourage ownership in the Company through the regular purchase of Company shares from the open market. Employees may contribute up to 5% of base salary and the Company matches 50% of the employee’s contribution. No

 

 

  -38 -  

 

Compensation Element Objective Key Feature Compensation Element “At-Risk”

Retirement Plans

 

 

Provide retirement savings.

401(k) – Company matches 100% of the U.S. employee’s contribution up to 5% of base salary, subject to applicable IRS limitations.

RRSP – Company matches 100% of the Canadian employee’s contribution up to 5% of base salary, subject to applicable CRA limitations.

No
Welfare Plan Benefits Provide security to employees and their dependents pertaining to health and welfare risks. Coverage includes medical, dental and vision benefits, short- and long-term disability insurance, life and AD&D insurance and an employee assistance plan. No

 

 

Annual Compensation Decision-Making Process

 

Each year, the executive team establishes goals for the upcoming year that include key priorities and initiatives. The CEO presents these goals to the Committee and Board for consideration and approval.

 

The Company’s fiscal year 2021 corporate goals and weightings include:

 

ADVANCE DONLIN GOLD TOWARD CONSTRUCTION/PRODUCTION DECISION:

50% WEIGHT

 

Advance Donlin Gold permits and approvals (15%)

Threshold

(~70-90% rating)

Finalize state pipeline right-of-way (secure reissuance); finalize water right adjudications.

 

Target

(~90-110% rating)

Finalize state pipeline right-of-way (secure reissuance); finalize water right adjudications; finalize BLM 17B easements (delayed due to COVID-19); obtain Susitna Fish and Game Refuge (SFGR) permits (2 total)

 

Maximum

(~110-150% rating)

Target items plus: obtain third extension to air quality permit (expires end of 2021). Obtaining a third extension of an air quality permit is uncommon in Alaska and nationally. An extension is preferable to starting with a new permit application. Restart dam safety certificate application work

 

 

  -39 -  

 

Existing Permits (25%)

Threshold

(~70-90% rating)

N/A - no payout for threshold

 

 

Target

(~90-110% rating)

No successful appeals of any issued project permits/approvals

 

 

Maximum

(~110-150% rating)

 

No outstanding appeals of any issued project permits/approvals

 

 

Donlin Gold Engineering Studies (20%)

Threshold

(~70-90% rating)

N/A-no payout for threshold

 

 

Target

(~90-110% rating)

Complete 2021 work program approved by Barrick and NOVAGOLD (i.e., mine closure, tailings, and pipeline de-risking studies; additional metallurgical test work)

 

Maximum

(~110-150% rating)

 

Achieve target goal objectives and commence pre-work for feasibility study

 

Donlin Gold Resource Model (30%)

Threshold

(~70-90% rating)

Develop updated resource model; design model confirmation drill program

 

 

Target

(~90-110% rating)

Complete model confirmation drill program

 

 

Maximum

(~110-150% rating)

Finish target goal ahead of schedule with similar scope and improved meters/day productivity or accomplish more scope (i.e., additional meters and/or holes) due to improved productivity

 

 

Donlin Gold technical report update (10%)

Threshold

(~70-90% rating)

N/A - no payout for threshold

 

 

Target

(~90-110% rating)

Work with Wood Canada to complete update of Donlin Gold technical report

 

 

Maximum

(~110-150% rating)

N/A - no payout for maximum

 

 

 

  -40 -  

 

 

MAINTAIN/INCREASE SUPPORT FOR THE DONLIN GOLD PROJECT AMONG NATIVE ENTITIES AND OTHER STAKEHOLDERS:

25% WEIGHT

 

Increase Level and Geographic Footprint of Donlin Gold Project Support in Y-K Region (65%)

Threshold

(~70-90% rating)

No increase in the net number of villages/groups in Y-K region with opposing resolutions

 

Target

(~90-110% rating)

No increase in the net number of villages/groups in Y-K region with opposing resolutions. Sign friendship agreements with 4 more villages (already secured Crooked Creek, Nikolai and Sleetmute in 2020)

 

Maximum

(~110-150% rating)

No increase in the net number of villages/groups in Y-K region with opposing resolutions. Sign friendship agreements with 6 more villages, including at least one opposed to the project

 

 

Complete DGLLC Stakeholder Investment and Community Development Projects at Regional and State-Wide Level (35%)

Threshold

(~70-90% rating)

With Donlin Gold and Barrick, identify and finish at least 4 community investment/development projects in Y-K region. Sponsor and engage in at least 4 of the following initiatives to maintain and build upon relationships with key stakeholders: (1) Iditarod, (2) Skiku, (3) Elder-mentor program, (4) Alaska EXCEL, (5) Bethel search and rescue, (6) Aniak Fire Rescue, (7) Bethel Basketball tournament, and (8) Campfire village programs support

 

Target

(~90-110% rating)

No increase in the net number of villages/groups in Y-K region with opposing resolutions. Sign friendship agreements with 4 more villages (already secured Crooked Creek, Nikolai and Sleetmute in 2020)

With Donlin Gold and Barrick, identify and finish at least 6 community investment/development projects in Y-K region, including at least one project in Bethel. Sponsor and engage in at least 6 of the following initiatives to maintain and build upon relationships with key stakeholders: (1) Iditarod, (2) Skiku, (3) Elder-mentor program, (4) Alaska EXCEL, (5) Bethel search and rescue, (6) Aniak Fire Rescue, (7) Bethel Basketball tournament, and (8) Campfire village programs support

 

Maximum

(~110-150% rating)

With Donlin Gold and Barrick, identify and finish at least 8 community investment/development projects in Y-K region, including at least one project in Bethel. One project must be a regional, multi-partner program that includes at least 3 key stakeholders. Sponsor and engage in all of the following initiatives to maintain and build upon relationships with key stakeholders: (1) Iditarod, (2) Skiku, (3) Elder-mentor program, (4) Alaska EXCEL, (5) Bethel search and rescue, (6) Aniak Fire Rescue, (7) Bethel Basketball tournament, and (8) Campfire village programs support

 

 

  -41 -  

 

 

PROMOTE A STRONG SAFETY, SUSTAINABILITY AND ENVIRONMENTAL CULTURE:

10% WEIGHT

 

 

Maintain Strong Safety Focus at Donlin Gold (40%)

Threshold

(~70-90% rating)

No lost-time incidents.  Medical incident Rate of 2.5 to 3.5, not including non-work-related medical incidents or pre-existing conditions

Target

(~90-110% rating)

No lost-time incidents, Medical incident rate of 1.5 to 2.5, not including non-work-related medical incidents or pre-existing conditions

 

Maximum

(~110-150% rating)

No lost-time incidents, Medical incident rate of <1.5, not including non-work-related medical incidents or pre-existing conditions

 

 

Environmental (25%)

Threshold

(~70-90% rating)

No spills to water. No more than 4 spills of greater than 10 gallons each to land

Target

(~90-110% rating)

No spills to water. No more than 2 spills to land of greater than 10 gallons each to land. No citations for non-compliance with any permits from any issuing governmental agency

 

Maximum

(~110-150% rating)

Complete target goals plus:  Zero to no more than 1 spill of 10 gallons to land

 

Environmental, Social, Governance (ESG) and Sustainability Report (35%)

Threshold

(~70-90% rating)

Establish common reporting framework with Barrick for Donlin Gold; develop reporting format for initial NOVAGOLD ESG and Sustainability report for website

Target

(~90-110% rating)

Establish common reporting framework with Barrick for Donlin Gold; develop reporting format for initial NOVAGOLD ESG and Sustainability report for website and annual report; publish by April 2021

 

Maximum

(~110-150% rating)

Complete target goals plus: develop method for quarterly updates of ESG and Sustainability metrics on website going forward (in print format annually)

 

 

MAINTAIN A FAVORABLE REPUTATION OF THE COMPANY AND ITS PROJECTS

AMONG SHAREHOLDERS:

10% WEIGHT

 

Shareholder Engagement (20%)

Threshold

(~70-90% rating)

Proxy circular shareholder engagement campaign results in 60% eligible voter turnout at AGM

 

Target

(~90-110% rating)

Proxy circular shareholder engagement campaign results in 70% eligible voter turnout at AGM and at least 80% of votes cast in support of each AGM proposal

 

Maximum

(~110-150% rating)

Proxy circular shareholder engagement campaign results in 80% eligible voter turnout at AGM and at least 85% of votes cast in support of each AGM proposal

 

 

 

  -42 -  

 

IR Program and Outreach (80%)

Threshold

(~70-90% rating)

Reach out to 100% of top 20 shareholders* during the year and engage with 70%. Maintain 12 out of 20 top shareholders* and attract 2 additions to the holders who hold greater than 0.5 million shares

 

Target

(~90-110% rating)

Reach out to 100% of top 20 shareholders* during the year and engage with 80%. Maintain 14 or more out of 20 top shareholders* and attract 3 or more additions to the holders who hold greater than 0.5 million shares

 

Maximum

(~110-150% rating)

Reach out to 100% of top 20 shareholders* during the year and engage with 90%. Maintain 17 or more out of 20 top shareholders* and attract 3 or more additions to the holders who hold greater than 0.75 million shares

 

*20 top shareholders does not include passive index funds or custodial funds

 

MANAGE COMPANY TREASURY EFFECTIVELY AND EFFICIENTLY;

STREAMLINE CORPORATE STRUCTURE:

5% WEIGHT

 

Company Budget (25%)

Threshold

(~70-90% rating)

Complete 2021 over budget by no more than 5% excluding payroll

 

 

Target

(~90-110% rating)

Complete 2021 on budget

 

 

Maximum

(~110-150% rating)

Complete 2021 under budget by 5% or better excluding payroll

 

 

 

Streamline Corporate Structure (45%)

Threshold

(~70-90% rating)

 

[Descriptions redacted]

Target

(~90-110% rating)

 

 

Maximum

(~110-150% rating)

 

 

 

Streamline Corporate Structure (5%)

Threshold

(~70-90% rating)

 

[Descriptions redacted]

Target

(~90-110% rating)

 

 

Maximum

(~110-150% rating)

 

 

 

 

  -43 -  

 

Maintain Effective Internal Controls Over Financial Reporting (25%)

Threshold

(~70-90% rating)

 

No material weaknesses

Target

(~90-110% rating)

 

No material weaknesses and no unresolved significant deficiencies at year end

 

Maximum

(~110-150% rating)

 

No material weaknesses and no significant deficiencies identified

 

Achievement of the foregoing strategic goals will be measured at the end of fiscal 2021 by assessing completion of the underlying tactical goals. Based upon the level of completion of the goals, performance ratings are determined for the Company by the Board and for each of the NEOs by the Committee. These Company and individual performance ratings are used in making decisions and calculations related to base salary increases and annual incentive payments.

 

The Board can exercise discretion in determining the appropriate performance rating for the Company and for the executive officers based on their evaluation of performance against goals set at the beginning of the year. The size of any payment or award is dependent on the Company and the individual performance ratings as determined by the Committee and Board. The ratings can range from 0% to 150%, with 100% representing achievement of the target goal and 150% representing the maximum allowable rating for exceeding the target goal.

 

The Committee makes a recommendation to the Board regarding the NEOs’ base salary and annual incentive payments. Stock option and PSU grants for NEOs are also approved by the Board and are based upon a fixed long-term incentive target for each NEO expressed as a percentage of the NEO’s base salary.

 

Base salary increases, if granted, are effective January 1 of each year and annual incentive payments are usually made shortly after the end of the fiscal year, which concludes each year on November 30.

 

The chart below illustrates the 2020 targeted and actual pay mix for the CEO and other NEO. The actual 2020 pay mix is based on compensation earned in fiscal year 2020; however, the annual incentive amounts and long-term incentive amounts earned in 2020 were paid or awarded after the close of fiscal year 2020. The NEOs’ target pay mix remains unchanged from fiscal year 2020 to fiscal year 2021.

 

 

 

  -44 -  

 

 

2020 TARGET PAY MIX

 

 

2020 ACTUAL PAY MIX

 

 

 

Compensation Elements

 

After compiling information based on salaries, bonuses and other types of cash and equity-based compensation programs obtained from the public disclosure records of the Peer Group, the Compensation Consultant reported its findings and made recommendations to the Committee regarding compensation targets for Directors and NEOs.

 

The Committee has set the following compensation targets for the Company’s NEOs for the 2021 fiscal year, which were unchanged from fiscal year 2020:

 

 

  -45 -  

 

· CEO

 

o Base Salary – 62.5th percentile of Peer Group
o Annual Incentive Target – 100% of base salary
o Long Term Incentive Target – 375% of base salary

 

· CFO

 

o Base Salary – 62.5th percentile of Peer Group
o Annual Incentive Target – 80% of base salary
o Long Term Incentive Target – 250% of base salary

 

In addition, our NEOs receive compensation in the form of Company-paid health and welfare benefits (medical, dental, vision, life, AD&D, short-term and long-term disability insurance) and a Company match on 401(k) and Employee Stock Purchase Plan contributions, which benefits are offered on par to all employees. Our NEOs are entitled to one paid executive physical per year, and Mr. Lang receives an auto allowance. The foregoing items of NEO compensation are reflected in the Summary Compensation Table on page 62 of this Circular.

 

Base Salary

 

Salaries for officers are determined by evaluating the responsibilities inherent in the position held and each individual’s experience and past performance, as well as by reference to the competitive marketplace for management talent at the Peer Group companies. The Committee refers to market information provided by the Compensation Consultant on an annual basis. The Compensation Consultant matches the executives to those individuals performing similar functions at the Peer Group companies. For the 2020 fiscal year, the Company set the 62.5th percentile of this market data as a target for base salaries.

 

As explained in the section "Executive Compensation Philosophy" above, the Company targets base salaries above the median of salaries paid by the Peer Group companies to assist in attracting and retaining the highly experienced people that the Company needs to be successful.

 

If an NEO is fully competent in their position, the NEO will be paid between 95% and 105% of the guidepost. Developing NEOs are generally paid between 80% and 94% of the guidepost and NEOs who are highly experienced and consistently perform above expectations can be paid between 106% and 120% of the guidepost. The Company most recently updated its compensation guideposts for all employees during 2019 with the assistance of Mercer. The Compensation Committee reviewed and approved the guideposts for the NEOs in March 2019.

 

 

  -46 -  

 

 

NEO Base Salary Compared to Salary Band Guideposts

 

NEO 2020 Base Salary Compared to Salary Band Guidepost Reason
Gregory Lang

Above:

114% of guidepost

Mr. Lang’s base salary is above the salary range guidepost for his role and level due to his past experience and current performance. Specifically, Mr. Lang brings his previous experience as President of Barrick Gold North America, his mine engineering and operations experience, his good reputation in the industry, and his excellent relationships with the Company’s stakeholders.
David Ottewell

At:

101% of guidepost

Mr. Ottewell’s base salary has reached the salary range guidepost for his role and level as he has now served as the Company’s VP and CFO for eight years. His current and past performance has been excellent, and his previous experience as the Vice President and Controller for Newmont Mining Corporation prepared him for the additional responsibilities incumbent upon the Vice President and CFO position at the Company.

 

Base Salaries for 2021

 

The Board agreed with the Committee’s recommendations and approved the following base salaries to be effective as of January 1, 2021 for Mr. Lang and Mr. Ottewell:

 

NEO Title 2020 Base Salary 2021 Base Salary % Change
Gregory Lang President & CEO $782,800 $806,300 3.0%
David Ottewell VP & CFO $417,200 $433,100 3.8%

 

Annual Incentive Plan

 

At the end of each fiscal year, the Committee reviews individual performance and Company performance against the goals set by the Company for such fiscal year. The assessment of whether the Company’s goals for the year have been met includes, but is not limited to, considering the quality and measured progress at the Company’s development stage projects, strong safety record, protection of the Company’s treasury, corporate alliances and similar achievements.

 

Annual Incentive Payment for 2020

 

Annual incentive awards for 2020 were based on performance relative to goals set at the beginning of fiscal year 2020. Performance is measured in two areas: company and individual. The ratings can range from 0% to 150%, with 100% representing achievement of the target goal and 150% representing the maximum allowable rating for exceeding the target goal.

 

  -47 -  

 

Discussions around Company goals for the following year commence during strategy sessions that usually begin in the fall of the preceding year. The NEOs, the other officers and some managers are involved in the strategy sessions. These Company goals are reviewed and approved by the Committee and Board. Individual goals flow down from the Company goals to ensure that everyone’s efforts are aligned with the goals and linked to the success of the Company.

 

The Company also focuses on setting goals around its core values which include safety, sustainability, accountability, communication, empowerment, integrity, respect, and teamwork.

 

The 2020 Company goals included:

 

ADVANCE DONLIN GOLD TOWARD CONSTRUCTION/PRODUCTION DECISION:

45% WEIGHT

 

Advance Donlin Gold permits and approvals (25%)

Threshold

(~70-90% rating)

Secure second extension of air quality permit; BLM to conduct field work for processing 17B easement plan; Water Rights – obtain concurrence from ADNR on an adjudication schedule for the permanent water rights for the mine.

 

Target

(~90-110% rating)

Threshold items plus: obtain Susitna Flats Game Refuge (SFGR) Special Use Permit; complete management agreement with the State for a trust fund.

 

Maximum

(~110-150% rating)

Target items plus: BLM to complete processing of 17B easements; Water Rights – ADNR issues public notice for adjudication for the permanent water rights for the mine.

 

Achievement Description

Second extension of air quality permit secured; BLM field work for 17B easement postponed-no site visit in 2020 due to COVID-19; request in to ADNR to set adjudication schedule for water rights, proposed water rights issued for public comment by ADNR in November; SFGR Special Use Permit substantially complete; draft trust fund agreements provided to State, and structure has been agreed upon with State.

 

Achievement Rating 100%

 

Existing Permits (25%)

Threshold

(~70-90% rating)

 

 

 

Target

(~90-110% rating)

No successful appeals of any issued project permits/approvals

 

 

Maximum

(~110-150% rating)

No outstanding appeals of any issued project permits/approvals

 

Achievement Description

State pipeline ROW administrative appeal outstanding and revised draft out for 60-day public comment in September, reissued lease authorization expected in H1 2021. State 401 Certification decision expected in Q2 2021.

 

Achievement Rating 100%

 

 

  -48 -  

 

Donlin Gold Tailings Dam (field program, design, engineering, etc.) (5%)

Threshold

(~70-90% rating)

Wrap up laboratory test work for samples collected during 2019 program and organize data collection for future development of the dam safety design packages

 

Target

(~90-110% rating)

Recommence field work for dam safety certificates

 

 

Maximum

(~110-150% rating)

Recommence field work for dam safety certificates and commence preliminary design package and detailed design package work

 

Achievement Description

Interim report on work done to date is complete. Remainder of tailings dam work on hold pending completion of model confirmation drill program. Target goal as currently written was not achievable in 2020 due to pandemic-caused delay in work

 

Achievement Rating 90%

 

Donlin Gold Drill Program (45%)

Threshold

(~70-90% rating)

Commence 2020 model confirmation drill program

 

 

Target

(~90-110% rating)

Complete total budgeted program of Phase 1 (model confirmation) and Phase 2a (shallow high-grade extension) consisting of 80 holes and 22,000 meters on time and on budget. Roughly running from March to October 2020. Number of holes and meters subject to modification pending success as program advances

 

Maximum

(~110-150% rating)

Finish target goal ahead of schedule with similar scope and improved m/d productivity or accomplish more scope (i.e., Additional meters and/or holes) due to improved productivity

 

Achievement Description

Drill program commenced in February 2020, paused in April 2020, recommenced late May 2020. More than 80 holes completed on budget in September 2020 despite delay in work caused by pandemic. High-quality information being gleaned from program

 

Achievement Rating 140%

 

 

  -49 -  

 

MAINTAIN/INCREASE SUPPORT FOR THE DONLIN GOLD PROJECT

AMONG NATIVE ENTITIES AND OTHER STAKEHOLDERS:

25% WEIGHT

 

Increase Level and Geographic Footprint of Donlin Gold Project Support in Y-K Region (75%)

Threshold

(~70-90% rating)

No increase in the net number of villages/groups in Y-K region with opposing resolutions

 

Target

(~90-110% rating)

No increase in the net number of villages/groups in Y-K region with opposing resolutions. Sign friendship agreements with 3 villages, including at least one opposed to the project.

 

Maximum

(~110-150% rating)

No increase in the net number of villages/groups in Y-K region with opposing resolutions. Sign friendship agreements with 5 villages, including at least two opposed to the project.

 

Achievement Description

Projects listed in original goal description were chosen pre-pandemic. Some adjustments due to COVID-19 were made to reflect priorities that arose due to the pandemic.

 

No increase or decrease in net number of villages/groups in Y-K region with opposing resolution to date. No ability to travel to region due to pandemic hampered progress on original goal. Completed signing of three friendship agreements, one of which is with Sleetmute, a village opposing the project. Friendship agreements also signed with Nikolai and Crooked Creek. The friendship agreements afford a more feasible, long-term and sustainable approach to continuing to build cooperative relationships with specific villages despite any leadership changes.

 

Achievement Rating 80%

 

 

 

 

  -50 -  

 

 

Complete DGLLC Stakeholder Investment and Community Development Projects at Regional and State-Wide Level (25%)

Threshold

(~70-90% rating)

Identify and finish at least 3 community investment/development projects in Y-K region. Provide for at least 3 of the following sponsorships: (1) Skiku, (2) Elder-mentor program, (3) Alaska EXCEL, (4) Bethel search and rescue, (5) water/winter safety.

 

Target

(~90-110% rating)

Identify and finish at least 4 community investment/development projects in Y-K region, including at least one project in Bethel. Provide for at least 4 of the following sponsorships: (1) Skiku, (2) Elder-mentor program, (3) Alaska EXCEL, (4) Bethel search and rescue, and (5) water/winter safety program.

 

Maximum

(~110-150% rating)

Identify and finish at least 6 community investment/development projects in Y-K region, including at least one project in Bethel. One project must be a regional, multi-partner program that includes at least 3 key stakeholders. Provide for all of the following sponsorships: (1) Skiku, (2) Elder-mentor program, (3) Alaska EXCEL, (4) Bethel search and rescue, (5) water/winter safety program.

 

Achievement Description

Projects listed in original goal description were chosen pre-pandemic. Some adjustments due to COVID-19 were made to reflect priorities that arose due to the pandemic. Mine site tours were not feasible due to pandemic-related travel restrictions.

 

Completed more than 5 development projects and 1 additional project specific to Bethel.

 

Funded all 4 designated community sponsorships, plus 2 additional sponsorships.

 

Achievement Rating 130%

 

PROMOTE A STRONG SAFETY, SUSTAINABILITY AND ENVIRONMENTAL CULTURE:

15% WEIGHT

 

Maintain strong safety focus at Donlin Gold (50%)

Threshold

(~70-90% rating)

No lost-time incidents. Medical incident Rate of 2.5 to 3.5, not including non-work-related medical incidents or pre-existing conditions.

 

Target

(~90-110% rating)

No lost-time incidents. Medical incident rate of 1.5 to 2.5, not including non-work-related medical incidents or pre-existing conditions.

 

Maximum

(~110-150% rating)

No lost-time incidents. Medical incident rate of <1.5, not including non-work-related medical incidents or pre-existing conditions.

 

Achievement Description

 

No lost-time incidents in 2020. Medical incident rate of 1.27.

 

Achievement Rating 110%

 

 

  -51 -  

 

Environmental (25%)

Threshold

(~70-90% rating)

No spills to water. No more than 4 spills of greater than 10 gallons each to land.

 

Target

(~90-110% rating)

No spills to water. No more than 2 spills to land of greater than 10 gallons each to land.

 

Maximum

(~110-150% rating)

No spills to water. No more than 1 spill of 10 gallons to land.

 

 

Achievement Description

 

No spills to water in 2020. No spills greater than 10 gallons to land in 2020.

 

Achievement Rating 120%

 

Environmental (25%)

Threshold

(~70-90% rating)

 

 

Target

(~90-110% rating)

No citations for non-compliance with any permits from any issuing governmental agency

 

Maximum

(~110-150% rating)

 

 

Achievement Description

 

No citations for non-compliance in 2020

 

Achievement Rating 100%

 

 

 

  -52 -  

 

MAINTAIN A FAVORABLE REPUTATION OF THE COMPANY AND ITS PROJECTS AMONG SHAREHOLDERS:

10% WEIGHT

 

Shareholder Engagement (20%)

Threshold

(~70-90% rating)

Proxy circular shareholder engagement campaign results in 60% eligible voter turnout at AGM.

 

Target

(~90-110% rating)

Proxy circular shareholder engagement campaign results in 70% eligible voter turnout at AGM and at least 80% of votes cast in support of each AGM proposal.

 

Maximum

(~110-150% rating)

Proxy circular shareholder engagement campaign results in 80% eligible voter turnout at AGM and at least 85% of votes cast in support of each AGM proposal.

 

Achievement Description

82.02% eligible voter turnout

All directors received at least 96.74%

Auditors 98.67%

Stock Award Plan 94.75%

PSU Plan 96.06%

DSU Plan 97.19%

Say on Pay 87.35%

Annual Say on Frequency 99.05%

 

Achievement Rating 130%

 

IR Program and Outreach (80%)

Threshold

(~70-90% rating)

Reach out to 100% of top 20 shareholders during the year and engage with 70%. Maintain 12 out of 20 top shareholders and attract 2 additions to the holders who hold greater than 0.5 million shares.

 

Target

(~90-110% rating)

Reach out to 100% of top 20 shareholders during the year and engage with 80%. Maintain 14 or more out of 20 top shareholders and attract 3 or more additions to the holders who hold greater than 0.5 million shares.

 

Maximum

(~110-150% rating)

Reach out to 100% of top 20 shareholders during the year and engage with 90%. Maintain 16 or more out of 20 top shareholders and attract 4 or more additions to the holders who hold greater than 0.5 million shares.

 

Achievement Description

Reached out to 100% of top 20 shareholders and met with 95% of the top holders. Maintained 18 of the Company’s top 20 shareholders and attracted 6 new shareholders who purchased more than 0.5 million shares during 2020.

 

Achievement Rating 125%

 

 

  -53 -  

 

MANAGE COMPANY TREASURY EFFECTIVELY AND EFFICIENTLY;

STREAMLINE CORPORATE STRUCTURE:

5% WEIGHT

 

Company Budget (50%)

Threshold

(~70-90% rating)

Complete 2020 over budget by no more than 5% excluding payroll

 

 

Target

(~90-110% rating)

Complete 2020 on budget

 

 

Maximum

(~110-150% rating)

Complete 2020 under budget by 5% or better excluding payroll

 

 

Achievement Description

On budget excluding expenses related to litigation against short seller

 

Achievement Rating 80%

 

Streamline Corporate Structure (45%)

Threshold

(~70-90% rating)

[Descriptions redacted]

 

 

Target

(~90-110% rating)

 

 

 

Maximum

(~110-150% rating)

 

 

 

Achievement Description

 

 

Achievement Rating 90%

 

Streamline Corporate Structure (5%)

Threshold

(~70-90% rating)

[Descriptions redacted]

 

 

Target

(~90-110% rating)

 

 

 

Maximum

(~110-150% rating)

 

 

 

Achievement Description

 

 

Achievement Rating 90%

 

 

 

 

  -54 -  

 

The Committee and Board determined that overall the 2020 Company goals were successfully achieved at the levels as described above, and the resulting Company rating was 109%, calculated as follows:

 

Goal Category Category Weight Achievement by Category Weighted Achievement by Category
Donlin Gold 45% 117.5% 52.88%
Maintain/Increase Support for Donlin Gold 25% 92.5% 23.13%
Safety/Environment 15% 110.0% 16.50%
Favorable Reputation 10% 126.0% 12.60%
Manage Treasury/Streamline Corporate Structure 5%  85.0% 4.25%
Totals: 100%   109.35%

 

 

The formula for determining NEO annual incentive payments each year is as follows:

 

 

STEP 1:

 

Company Performance

Rating multiplied by 80%

 

(A x B)

 

PLUS

Individual Performance

Rating multiplied by 20%

 

(C x D)

 

   

The sum of Step 1 is

multiplied by:

 

 
STEP 2:

The NEO’s annual

incentive target (%)

 

E

 

MULTIPLIED BY

The NEO’s annual

base salary ($)

 

F

 

 

 

The Company performance component is weighted more heavily than the individual performance component in the formula above for each of the NEOs due to the level of influence the NEOs are expected to have over the Company’s performance.

 

NEO Individual Performance Ratings

 

In establishing the individual performance ratings for 2020, the Committee considered the following factors with respect to each of the NEOs.

 

  -55 -  

 

NEO Fiscal Year 2020 Individual Performance Rating 2020 Performance Highlights
    Commendable leadership of NOVAGOLD’s executive team as they responded to the COVID-19 pandemic.
       
    Lead effort to implement work from home safety measures to protect NOVAGOLD and Donlin Gold office employees.
       
Gregory Lang 124% Worked with Donlin Gold LLC to implement a successful COVID-19 Management Plan to protect workers at the Donlin Gold camp.
       
    Provided direct support to Donlin Gold LLC to ensure completion of Donlin Gold 2020 drill program on time and under budget despite one-month delay due to COVID-19 pandemic.
       
    Facilitated a continued good working relationship with Barrick, co-owner of Donlin Gold.
       
    Lead role in safeguarding the Company’s treasury, ending fiscal 2020 on budget, excluding unexpected litigation expenses.
       
David Ottewell 130% Primarily responsible for establishment of IT systems that led to a seamless and successful transition to work from home safety measures for NOVAGOLD employees in response to the COVID-19 pandemic.
       
    Worked to ensure continued strong internal controls over financial reporting and to reinforce Company cybersecurity controls while employees work remotely.
       

 

  -56 -  

 

 

The NEOs’ annual incentive payment for fiscal 2020 performance was paid in fiscal 2021. The following table describes the 2020 annual incentive payment calculation for NEOs based on performance in 2020 applying the annual incentive calculation formula above to the columns below as follows:

 

((A x B) + (C x D)) x (E x F) = G

 

  A B C D E F G
nEO 2020 Company 2020 Individual Annual Incentive Target (as a % of annual base salary) 2020 Annual Base Salary 2020 Annual Incentive payment
Weight Performance Rating

 

 

Weight

 

Performance Rating
Gregory Lang 80% 109% 20% 124% 100% $782,800 $876,736
David Ottewell 80% 109% 20% 130% 80% $417,200 $377,816

 

The foregoing table shows the actual annual incentive payment made to each NEO for their performance in 2020 in column G. The table in the section titled "Grants of Plan-Based Awards" below displays the target and maximum annual incentive payouts available to each NEO for fiscal year 2020.

 

Stock-Based Incentive Plans (Long-Term Incentives)

 

Stock-based grants are generally awarded to officers at the commencement of their employment and periodically thereafter. Annual grants of stock options and/or PSUs are made based on a target percentage of base salary for each NEO. The purpose of granting stock options and/or PSUs is to assist the Company in compensating, attracting, retaining, and motivating directors, officers, employees, and consultants of the Company, and to closely align the personal interests of such persons to those of the Shareholders. These equity vehicles were chosen because the Company believes that these vehicles best incentivize the team to focus their efforts on increasing Shareholder value over the long-term.

 

The Committee targeted the 75th percentile of the total direct compensation data provided by the Compensation Consultant for the NEOs. The Company uses two different plans for stock-based grants for its NEOs: the Stock Award Plan (stock options) and the PSU Plan. The percentage of stock options versus PSUs granted is determined by the Committee for each grant. The Company’s Stock Award Plan was adopted on May 11, 2004, and the PSU Plan was adopted on May 26, 2009. The Stock Award Plan is for the benefit of the officers, Directors, employees and consultants of the Company or any subsidiary company, and the PSU Plan is for the benefit of the officers, employees and consultants of the Company or any subsidiary company.

 

Stock options granted to the NEOs pursuant to the Stock Award Plan for performance in 2020 have a five-year life and vest over three years: 1/3 on the first anniversary of the grant date, 1/3 on the second anniversary of the grant date, and 1/3 on the third anniversary of the grant date. PSUs granted to the NEOs pursuant to the PSU Plan as of the date hereof have a three-year performance period between the grant date and the maturity date when a vesting determination is made.

 

  -57 -  

 

On March 17, 2020, the Board approved an amendment to reduce the number of shares subject to the Stock Award Plan, to effect certain other U.S. tax related updates as a result of the Tax Cuts and Jobs Act of 2017 (the “TCJA”), and to modify the definition of Fair Market Value in the Stock Award Plan. The amendment (i) reduced the aggregate number of shares to be delivered upon the exercise of all awards granted under the Stock Award Plan from a maximum of 10% of the issued and outstanding shares of the Company at the time of grant to a maximum of 8%, on a non-diluted basis, (ii) removed the ability to grant new awards that qualify as performance-based compensation under Section 162(m) of the U.S. Internal Revenue Code, as amended, as a result of the repeal of the exemption for qualified performance-based compensation for grants made after the date of repeal, and (iii) removed the reference to using the last recorded sale of a board lot of Common Shares the day immediately preceding the date in question from the definition of Fair Market Value, leaving the closing price of the Common Shares the day immediately preceding the date in question as the predominant method of determining Fair Market Value. This amendment to the Stock Award Plan was submitted to the TSX for approval, and conditional approval was obtained on March 19, 2020. This amendment to the Stock Award Plan was approved by the Shareholders on May 14, 2020.

 

On March 17, 2020, the Board approved an amendment to the PSU Plan to effect certain other U.S. tax related updates as a result of the TCJA, and to modify the definition of Market Value in the PSU Plan. The amendment (i) removed the ability to grant new awards that qualify as performance-based compensation under Section 162(m) of the U.S. Internal Revenue Code, as amended, as a result of the repeal of the exemption for qualified performance-based compensation for grants made after the date of repeal, and (ii) removed the reference to using the sale of a board lot of Common Shares from the definition of Market Value, leaving the arithmetic average of the closing price of the Common Shares on the applicable stock exchange for the five trading days preceding the applicable date as the predominant method of determining Market Value. This amendment to the PSU Plan was submitted to the TSX for approval, and conditional approval was obtained on March 19, 2020. This amendment to the PSU Plan was approved by the Shareholders on May 14, 2020.

 

The value of each NEO’s long-term incentive (LTI) award is calculated as follows:

 

The NEO’s annual base salary ($) MULTIPLIED BY LTI Target %

 

Half of the resulting LTI award value is then divided by the Black-Scholes value of the Company’s Common Shares at fiscal year-end to arrive at the number of stock options to be granted. Inputs used in the Black-Scholes valuation model include the Company’s historical stock price to determine the stock’s volatility, the expected life of the option, which is based on the average length of time similar option grants in the past have remained outstanding prior to exercise, and the vesting period of the grant.

 

The remaining half of the LTI award value is divided by the closing price of the Company’s Common Shares on the NYSE American at fiscal year-end to determine the number of PSUs to be granted.

 

The Board of Directors approved the grant of 540,500 stock options and 199,800 PSUs in aggregate to Mr. Lang and Mr. Ottewell effective December 1, 2020, in recognition of their performance during fiscal year 2020. These grants comprise 50% of each NEO’s LTI award value in stock options and 50% in PSUs.

 

  -58 -  

 

The PSUs granted to the NEOs on December 1, 2020 will mature in three years on or about December 1, 2023. The Committee anticipates that future PSU grants to the NEOs will mature over three years. The number of PSUs vesting for each NEO granted for 2020 performance will be based on the Company’s Common Share price performance relative to the share price performance of the S&P/TSX Global Gold Index between the PSU grant date and December 1, 2023 (the “Performance Period”). The Committee has determined that applying other types of performance criteria to the PSUs based upon Company revenues or production targets is inappropriate at this time as the Company’s assets are in the development stage. The Company’s share price performance over the Performance Period will be converted to a percentage relative to the share price performance of the S&P/TSX Global Gold Index over the same Performance Period. The table below sets out the adjustment factors for determining the number of PSUs that will vest on or shortly after the maturity date upon the Committee’s certification of the Company’s share price performance relative to that of the S&P/TSX Global Gold Index over the applicable Performance Period:

 

Company’s Share Price Return Relative to the S&P/TSX Global Gold Index Over the Performance Period PSU Vest %*
Greater than 25% 150%
25% 150%
20% 140%
15% 130%
10% 120%
5% 110%
0% 100%
-5% 90%
-10% 80%
-15% 70%
-20% 60%
-25% 50%
Less than -25% Payout subject to Board discretion
*In the event the Company’s share price return is negative over the Performance Period, vesting shall be capped at 100%.

 

Stock options granted to the NEOs in fiscal year 2021 based on performance in fiscal year 2020 represented approximately 0.16% of the total Common Shares issued and outstanding as of November 30, 2020. PSUs granted to the NEOs in fiscal year 2021 based on performance in fiscal year 2020 represented approximately 0.06% of the total Common Shares issued and outstanding as of November 30, 2020. Stock options granted to all Company Directors, employees, and service providers in fiscal year 2021 based on performance in fiscal year 2020 represented approximately 0.37% of the total Common Shares issued and outstanding as of November 30, 2020. PSUs granted to all Company employees and service providers in fiscal year 2021 based on performance in fiscal year 2020 represented approximately 0.10% of the total Common Shares issued and outstanding as of November 30, 2020.

 

The following table describes the long-term incentive awards to NEOs granted in fiscal 2021 based on performance in fiscal 2020:

 

NEO

Long-term Incentive Target

(as a % of Base Pay)

%

Stock Option Grant

#

Stock Option Grant as % of Total Shares Outstanding (1)

%

Stock Option exercise Price

$

 

PSU Grant

#

PSU Grant as % of Total Shares Outstanding (1)

%

Gregory Lang 375 398,800 0.12 9.96 147,400 0.04
David Ottewell 250 141,700 0.04 9.96 52,400 0.02

 

(1) As of November 30, 2020, the Company had a total of 330,411,589 Common Shares issued and outstanding.

 

  -59 -  

 

 

Executive Share Ownership

 

In order to align the interests of the Company’s senior executives with those of its Shareholders, the Company first implemented share ownership guidelines for its senior executives in April 2009 and updated them for the President and CEO effective August 12, 2020. Under the guidelines, a senior executive can satisfy the applicable share ownership requirement by holding Common Shares. Stock options and unvested PSUs do not count toward this requirement. Pursuant to the guidelines, senior executives must meet their share ownership requirements within five years of becoming a senior executive or within three years of any change to the executive’s share ownership requirements. There are no equity holding period requirements.

 

For the President and CEO, the share ownership requirement is that amount equal to the value of five times his annual base salary. In the case of the CFO, the share ownership requirement is that amount equal to the value of two times his annual base salary and, in the case of other executives, one times their annual base salary. Upon meeting the share ownership requirement, an executive is deemed to have met the share ownership requirement going forward, regardless of changes in the price of a Common Share, so long as: (i) the executive’s share ownership does not drop below the number of shares held at the time they first met the share ownership requirement, and (ii) the applicable share ownership requirement remains the same. Executives are not permitted to purchase financial instruments, including, for greater certainty, prepaid variable forward contracts, equity swaps, collars, or units of exchange funds that are designed to hedge or offset a decrease in market value of equity securities granted as compensation or held, directly or indirectly, by the executive. Executives are also not permitted to pledge Company securities to secure personal debts or loans.

 

Fiscal Year End NEO Share Ownership

 

The following table outlines the aggregate value of the Common Shares held by each NEO employed by the Company as of November 30, 2020.

 

 

 

NEO

 

 

Eligible Share Holdings (Common Shares)

#

 

Share Ownership Guidelines

Requirement

$

 

 

Proportion of Requirement Met (1)

%

 

Gregory Lang 1,822,382 5 X base salary 3,914,000 (2) 464
David Ottewell 619,024 2 X base salary 834,400 (3) 739

 

(1) Based on the closing Common Share price on the NYSE American on November 30, 2020 of $9.96.
(2) Based on Mr. Lang’s annual salary effective January 1, 2020. Mr. Lang has until January 1, 2025 to meet the share ownership requirement equal to $3,914,000. Mr. Lang received a subsequent annual salary increase effective January 1, 2021 and has until January 1, 2026 to meet the share ownership requirement associated with his 2021 annual salary.
(3) Based on Mr. Ottewell’s annual salary effective January 1, 2020. Mr. Ottewell has until January 1, 2025 to meet the share ownership requirement equal to $834,400. Mr. Ottewell received a subsequent annual salary increase effective January 1, 2021 and has until January 1, 2026 to meet the share ownership requirement associated with his 2021 annual salary.

 

Retirement Plans

 

The purpose of the Company’s retirement plans is to assist eligible employees with accumulating capital toward their retirement savings. The Company has a RRSP plan for Canadian employees, whereby employees may contribute a portion of their base pay and receive a dollar-for-dollar match from the Company of up to 5% of their base pay, subject to CRA limitations. The Company has a 401(k) retirement savings plan for U.S. employees whereby they may contribute a portion of their pay and receive a dollar-for-dollar match from the Company of up to 5% of their pay, subject to IRS limitations.

 

  -60 -  

 

Benefits

 

The Company’s benefit programs provide employees with health and welfare benefits. The programs consist of medical, dental, vision, life, disability and accidental death and dismemberment insurance, and an employee assistance plan. The only benefits that NEOs receive beyond those provided to other employees is eligibility for a paid annual executive physical, and Mr. Lang receives an auto allowance.

 

Advisory Vote on Executive Compensation

 

In accordance with Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Section 14A of the Exchange Act, the Company is asking you pursuant to this Circular to consider and, if deemed advisable, pass a non-binding resolution approving the compensation of the Company’s NEOs as disclosed herein (the “Executive Compensation Resolution”). See the “Non-Binding Advisory Vote on Executive Compensation” section under Additional Matters to be Acted Upon on page 10 in this Circular. At the Company’s annual meeting of shareholders held on May 14, 2020, approximately 87% of votes cast indicated approval of an advisory say-on-pay proposal with respect to the 2019 fiscal year compensation of the Company’s NEOs.

 

Compensation Committee Report

 

The Committee has reviewed and discussed with management the Company's Compensation Discussion and Analysis included herein. Based on such review and discussions, the Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company's Annual Report on Form 10-K for the year ended November 30, 2020 and the Company's Circular for the year ended November 30, 2020.

 

Submitted by the following members of the Compensation Committee of the Board of Directors:

 

  Kalidas Madhavpeddi, Chair
  Elaine Dorward-King
  Sharon Dowdall
  Anthony Walsh

 

  -61 -  

 

TABULAR DISCLOSURE OF EXECUTIVE COMPENSATION

 

 

Summary Compensation Table

 

The summary compensation table below sets out NEO compensation, including annual salary earned, incentive awards granted, and all other compensation earned, during the fiscal years ended November 30, 2020, 2019 and 2018. Additional information on the components of the total compensation package, including a discussion of the proportion of each element to total compensation, is discussed above under "Compensation Discussion & Analysis".

 

Name and

Principal Position

 

Fiscal Year

 

Salary
$

Stock

Awards (1)
$

Option

Awards (2)
$

Non-Equity

Incentive Plan Compensation (3)

$

All Other

Compensation (4)
$

Total

Compensation
$

Gregory Lang, President and CEO

2020

2019

2018

 

 

780,900

759,975

759,700

 

 

1,417,142

1,423,899

1,431,574

 

 

1,425,388

1,420,554

1,424,359

 

 

876,736

828,400

935,350

 

 

51,272

50,752

50,441

 

 

4,551,438

4,483,580

4,601,424

  

 

David Ottewell, Vice President and CFO

2020

2019

2018

  

 

416,183

404,042

392,392

 

 

503,303

491,632

477,449

 

 

506,456

490,523

475,149

 

 

377,816

357,696

381,538

 

 

25,576

26,863

24,420

 

 

1,829,334

1,770,756

1,750,948

 

 

(1) Amounts are based on the grant date fair value, calculated in accordance with FASB Accounting Standards Codification Topic 718, Compensation — Stock Compensation (“ASC 718”), utilizing the assumptions discussed in Note 12 to the Company’s consolidated financial statements for the fiscal year ended November 30, 2020.
(2) Amounts are based on the grant date fair value, calculated in accordance with ASC 718, utilizing the assumptions discussed in Note 12 to the Company’s consolidated financial statements for the fiscal year ended November 30, 2020. Option-based awards granted during the years ended November 30, 2018, 2019 and 2020 include vested and unvested amounts.
(3) Annual incentive payments were made subsequent to fiscal year-end.
(4) Amounts in fiscal year 2020 include:
· For Mr. Lang, $14,229 in 401(k) Company matching contributions, $19,523 in ESPP Company matching contributions, $670 in Company-paid life insurance premiums, $15,000 for auto allowance and $1,850 for a Company-paid executive physical.
· For Mr. Ottewell, $14,229 in 401(k) Company matching contributions, $10,405 in ESPP Company matching contributions and $942 in Company-paid life insurance premiums.

 

 

 

 

 

  -62 -  

 

 

Grants of Plan-Based Awards in Fiscal 2020

 

The following table provides information related to plan-based awards granted to our NEOs during fiscal year 2020 based on performance in fiscal 2019.

 

Grants of Plan-Based Awards

NEO

 

Grant Date

 

Estimated Future
Payouts Under
Non-Equity
Incentive Plan
Awards (1)
Estimated Future
Payouts Under
Equity
Incentive Plan
Awards (2)

All Other Stock Awards: Number

of Shares of Stock

or Units

#

 

All Other
Option Awards: Number of Securities Underlying Options (3)

#

 

Exercise or Base Price of Option Awards
$/Sh

 

Grant Date Fair Value of Stock and Option Awards (4)

$

 

Target

$

 

Maximum
$

 

Target
#

 

Maximum
#

 

Gregory Lang 01-Dec-2019     204,700 307,050 - 546,000 6.96 2,842,530
  782,800 1,174,200     - - - -
David Ottewell 01-Dec-2019     72,700 109,050 - 194,000 6.96 1,009,760
  333,760 500,640     - - - -

 

(1) Annual Incentive Plan estimated payments based upon performance targets for fiscal year 2020. The Annual Incentive Plan does not provide a threshold or minimum payout.
(2) The performance criteria for Performance Share Unit Awards granted December 1, 2019 will be measured and paid out in December 2022, depending upon the level of achievement during the performance period. The PSU Plan does not provide a threshold or minimum payout.
(3) Grants under the Stock Award Plan.

(4) Amounts are based upon the grant date fair value, calculated in accordance with ASC 718, utilizing the assumptions discussed in Note 12 to the Company’s consolidated financial statements for the fiscal year ended November 30, 2020.

 

No stock option awards were re-priced during fiscal year 2020.

 

 

 

  -63 -  

 

 

Outstanding Equity Awards at Fiscal Year-End

 

The following table sets out information concerning all option-based and share-based awards outstanding for each NEO as of November 30, 2020.

 

NEO

 

Option-Based Awards (1) Share-Based Awards

Number of Securities Underlying Unexercised Options

#

Exercisable

 

Number of

Securities

Underlying

Unexercised

Options

#

Unexercisable

 

Option Exercise Price

 

Option

Expiration

Date

 

Value of Unexercised in-the-money

Options (2)

$

 

Number

of

Unearned Shares,

Units or

Other

Rights

that have

not

Vested

#

 

Market or

Payout Value

of Unearned Shares,

Units or

Other Rights

that have not Vested (3)

$

 

Gregory Lang 1,111,800 - $4.58 30-Nov-2021 5,981,484    
698,267 349,133 $3.85 30-Nov-2022 6,399,614    
323,000 646,000 $3.67 30-Nov-2023 6,095,010    
- 546,000 $6.96 30-Nov-2024 1,638,000    
          185,000 1,842,600 (4)
          388,100 3,865,476 (5)
          204,700 2,038,812 (6)
David Ottewell 182,934 116,466 $3.85 30-Nov-2022 1,829,334    
111,534 223,066 $3.67 30-Nov-2023 2,104,634    
- 194,000 $6.96