UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934
For the month of August 2011
Commission File Number 001-33161
NORTH AMERICAN ENERGY
PARTNERS INC.
Zone 3 Acheson Industrial Area
2-53016 Highway 60
Acheson,
Alberta
Canada T7X 5A7
(Address of principal executive offices)
Indicate by check mark
whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F
¨
Form 40-F
x
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):
Documents Included as Part of this Report
1.
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Notice of Annual Meeting and Management Information Circular.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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NORTH AMERICAN ENERGY PARTNERS INC.
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By:
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/s/ David Blackley
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Name:
Title:
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David Blackley
Chief Financial
Officer
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Date: August 22, 2011
NORTH AMERICAN ENERGY PARTNERS INC.
NOTICE OF ANNUAL MEETING
AND MANAGEMENT INFORMATION CIRCULAR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON
SEPTEMBER 27, 2011
August 22, 2011
NORTH AMERICAN ENERGY PARTNERS INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS TO BE HELD
ON SEPTEMBER 27, 2011
NOTICE IS HEREBY GIVEN
that the annual
meeting of holders of common shares (the NAEP Shareholders) of North American Energy Partners Inc. (the Corporation) will be held at The Calgary Petroleum Club, 319 Fifth Avenue South West, Calgary, Alberta on the 27
th
day of September, 2011, at 10:00 a.m. (Mountain Time) (the Meeting), for the
following purposes:
1.
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to receive the audited comparative consolidated financial statements of the Corporation for the year ended March 31, 2011 and the auditors report
thereon;
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2.
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to elect the directors of the Corporation for the ensuing year;
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3.
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to re-appoint the auditors of the Corporation for the ensuing year and to authorize the directors to fix the remuneration of the auditors as such; and
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4.
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to transact such other business as may properly come before the Meeting or any adjournments thereof.
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The specific details of the foregoing matters to be put before the Meeting are set forth in the management information circular (the
Information Circular). Capitalized terms used in this notice of annual meeting and not otherwise defined herein shall have the meanings ascribed to such terms in the Information Circular.
A copy of the 2011 Annual Report of the Corporation, the Information Circular and a form of proxy accompany this notice.
NAEP Shareholders who are unable to attend the Meeting are requested to complete, sign, date and return the enclosed form of proxy in
accordance with the instructions set out in the form of proxy and in the Information Circular accompanying this notice. A proxy will not be valid unless it is deposited with Proxy Dept., Canadian Stock Transfer Company Inc.*, P.O. Box 721,
Agincourt, Ontario, M1S 0A1, or by facsimile to 416-368-2502 (Toll Free: 1-866-781-3111 Canada & US Only) no later than 10:00 a.m. (Eastern Time), on September 23, 2011 and if the Meeting is adjourned, no later than 24 hours (excluding
Saturdays and holidays) prior to the commencement of any adjournment thereof.
DATED
at Calgary,
Alberta, this 22
nd
day of August, 2011.
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BY ORDER OF THE BOARD OF DIRECTORS OF NORTH AMERICAN ENERGY PARTNERS INC.
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/s/ David Blackley
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Chief Financial Officer
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*
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Canadian Stock Transfer Company Inc. acts as the Administration Agent for CIBC Mellon Trust Company
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NORTH AMERICAN ENERGY PARTNERS INC.
MANAGEMENT INFORMATION CIRCULAR
TABLE OF CONTENTS
NORTH AMERICAN ENERGY PARTNERS INC.
MANAGEMENT INFORMATION CIRCULAR
SOLICITATION OF PROXIES
This management
information circular (the Information Circular) and accompanying form of proxy (the Proxy) are furnished in connection with the solicitation of proxies by or on behalf of management of North American Energy Partners Inc. (the
Corporation, NAEP, our or we)
for use at the annual meeting (the Meeting) of holders of common shares of the Corporation (the NAEP Shareholders) to be held at The Calgary
Petroleum Club, 319 Fifth Avenue South West, Calgary, Alberta on the 27
th
day
of September, 2011, at 10:00 a.m. (Mountain Time), and at any adjournments thereof, for the purposes set forth in the accompanying notice of meeting, dated August 22, 2011 (the Notice of Meeting).
It is expected that the solicitation will be primarily by mail. Proxies may also be solicited personally by officers of the Corporation at nominal
cost. The cost of this solicitation will be borne by the Corporation. The Corporation may pay the reasonable costs incurred by persons who are the registered but not beneficial owners of voting shares of the Corporation (such as brokers, dealers,
other registrants under applicable securities laws, nominees and/or custodians) in sending or delivering copies of this Information Circular, the Notice of Meeting and Proxy to the beneficial owners of such shares. The Corporation will provide,
without cost to such persons, upon request to the Secretary of the Corporation, additional copies of the foregoing documents required for this purpose. The Notice of Meeting, Proxy and this Information Circular will be mailed to NAEP Shareholders
commencing on or about September 1, 2011. In this Information Circular, except where otherwise indicated, all dollar amounts are expressed in Canadian currency.
No person has been authorized by the Corporation to give any information or make any representations in connection with the matters contained herein other than those contained in this Information Circular and, if
given or made, any such information or representation must not be relied upon as having been authorized by the Corporation.
This
Information Circular does not constitute an offer or a solicitation to any person in any jurisdiction in which such offer or solicitation is unlawful.
The Corporation has retained Georgeson Shareholder Communications Canada Inc. (Georgeson) in connection with the solicitation of proxies. For this service, and other advisory services, Georgeson will
be paid a management fee of $30,000.00 plus out of pocket expenses. If you have any questions about the information contained in this document or require assistance in completing your proxy form please contact our proxy solicitation agent,
Georgeson, at 1-866-676-3008.
STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Information Circular may contain forward-looking information that is based on expectations and estimates as of the date of this Information
Circular. Our forward-looking information is information that is subject to known and unknown risks and other factors that may cause future actions, conditions or events to differ materially from the anticipated actions, conditions or events
expressed or implied by such forward-looking information. Forward-looking information is information that does not relate strictly to historical or current facts, and can be identified by the use of the future tense or other forward-looking words
such as plan, estimate, should, may, could, would, target, objective, forecast, continue, position or the negative of
those terms or other variations of them or comparable terminology.
- 1 -
While we anticipate that subsequent events and developments may cause our views to change, we do not
have an intention to update any forward-looking information, except as required by applicable securities laws.
There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ
materially from those expected
or estimated in such statements.
Accordingly, readers should not place undue reliance on forward-looking information.
See risk factors highlighted in materials filed with the securities regulatory
authorities in the United States and Canada, including, but not limited to, our most recent annual and interim managements discussion and analysis.
RECORD DATE
The record date (the Record Date) for
determining which NAEP Shareholders shall be entitled to receive notice of and to vote at the Meeting is August 22, 2011. Only NAEP Shareholders of record as of the Record Date are entitled to receive notice of and to vote at the Meeting,
unless after the Record Date such shareholder of record transfers its shares and the transferee (the Transferee), upon establishing that the Transferee owns such shares, requests in writing at least 10 days prior to the Meeting or any
adjournments thereof that the Transferee may have his, her or its name included on the list of NAEP Shareholders entitled to vote at the Meeting, in which case the Transferee is entitled to vote such shares at the Meeting. Such written request by
the Transferee shall be filed with Proxy Dept., Canadian Stock Transfer Company Inc.
*
, P.O. Box 721, Agincourt, Ontario, M1S 0A1, or by facsimile to 416-368-2502 (Toll Free: 1-866-781-3111 Canada & US Only), together with a copy to the Secretary of the Corporation at North American Energy
Partners Inc., Suite 2400, 500 4th Avenue SW, Calgary, Alberta, T2P 2V6.
Under normal conditions, confidentiality of voting is
maintained by virtue of the fact that the Corporations transfer agent tabulates proxies and votes. However, such confidentiality may be lost as to any proxy or ballot if a question arises as to its validity or revocation or any other like
matter. Loss of confidentiality may also occur if the Board of Directors decides that disclosure is in the interest of the Corporation or its shareholders.
APPOINTMENT OF PROXYHOLDERS
The persons named in the accompanying
Proxy as proxyholders are representatives of management of NAEP.
Every NAEP Shareholder has the right to appoint a person or company to represent them at the Meeting other than the persons named in the accompanying Proxy. A NAEP Shareholder
desiring to appoint some other person (who need not be a shareholder of NAEP) to represent him, her or it at the Meeting, may do so either by striking out the printed names and inserting the desired persons name in the blank space provided in
the Proxy or by completing another proper proxy and, in either case, delivering the completed proxy to Proxy Dept., Canadian Stock Transfer Company Inc., P.O. Box 721, Agincourt, Ontario, M1S 0A1, or by facsimile to 416-368-2502 (Toll
Free:1-866-781-3111 Canada & US Only) no later than 10:00 a.m. (Eastern Time) on September 23, 2011 and if the Meeting is adjourned, no later than 24 hours (excluding Saturdays and holidays) prior to the commencement of any adjournment
thereof. A Proxy must be signed by a NAEP Shareholder or its attorney duly authorized in writing or, if a NAEP Shareholder is a corporation, by a duly authorized officer, attorney or other authorized signatory of the NAEP Shareholder. If a proxy is
given by joint shareholders, it must be executed by all such joint shareholders.
VOTING OF PROXIES
If a Proxy is completed, signed and delivered to the Corporation in the manner specified above, the persons named as proxyholders
therein shall vote or withhold from voting the shares in respect of
*
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Canadian Stock Transfer Company Inc. acts as the Administration Agent for CIBC Mellon Trust Company
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- 2 -
which they are appointed as proxyholders at the Meeting, in accordance with the instructions of the NAEP Shareholder appointing them, on any show of hands or any ballot that may be called for
and, if the NAEP Shareholder specifies a choice with respect to any matter to be acted upon at the Meeting, the persons appointed as proxyholders shall vote in accordance with the specification so made.
In the absence of such specification, or if
the specification is not certain, the shares represented by such Proxy will be voted in favour of the matters to be acted upon as specified in the Notice of Meeting.
A Proxy confers discretionary authority upon the persons named therein with respect to amendments or variations to matters identified in the Notice of Meeting and all other matters which may properly come before
the Meeting or any adjournments thereof. As of the date of this Information Circular, the Board of Directors of the Corporation knows of no such amendments, variations or other matters to come before the Meeting, other than matters referred to in
the Notice of Meeting. However, if amendments, variations or other matters should properly come before the Meeting, the Proxy will be voted on such amendments, variations and other matters in accordance with the best judgment of the person or
persons voting such Proxy.
REVOCABILITY OF PROXY
Any NAEP Shareholder returning an enclosed Proxy may revoke the same at any time insofar as it has not been exercised. In addition to revocation in
any other manner permitted by law, a Proxy may be revoked by instrument in writing executed by the NAEP Shareholder or by his, her or its attorney authorized in writing or, if the NAEP Shareholder is a corporation, by an officer or attorney thereof
duly authorized, and deposited at the registered office of the Corporation to the attention of the Secretary of the Corporation, at any time up to and including the last business day preceding the day of the Meeting, or any adjournment thereof, or
with the chairperson of the Meeting, prior to the commencement of the Meeting. A NAEP Shareholder attending the Meeting has the right to vote in person and, if he, she or it does so, his, her or its proxy is nullified with respect to the matters
such person votes upon and any subsequent matters thereafter to be voted upon at the Meeting or any adjournment thereof.
ADVICE TO BENEFICIAL HOLDERS OF COMMON SHARES
The information set forth in this section is of significant importance to many
NAEP Shareholders, as a substantial number of NAEP Shareholders do not hold common shares of the Corporation (NAEP Common Shares) in their own name, and thus are considered non-registered shareholders.
NAEP Shareholders who do not
hold their NAEP Common Shares in their own name (Beneficial Shareholders) should note that only Proxies deposited by NAEP Shareholders whose names appear on the records of the Corporation as the registered holders of NAEP Common Shares
can be recognized and acted upon at the Meeting. If NAEP Common Shares are listed in an account statement provided to a NAEP Shareholder by a broker, then, in almost all cases, those NAEP Common Shares will not be registered in the NAEP
Shareholders name on the records of the Corporation. Such NAEP Common Shares will more likely be registered under the name of the NAEP Shareholders broker or an agent of that broker or another similar entity (called an
Intermediary). NAEP Common Shares held by an Intermediary can only be voted by the Intermediary (for, withheld or against resolutions) upon the instructions of the Beneficial Shareholder. Without specific instructions, Intermediaries are
prohibited from voting NAEP Common Shares.
Beneficial Shareholders should ensure that instructions respecting the voting of their
NAEP Common Shares are communicated in a timely manner and in accordance with the instructions provided by their Intermediary.
Applicable regulatory rules require Intermediaries to seek voting
- 3 -
instructions from Beneficial Shareholders in advance of shareholders meetings.
Every
Intermediary has its own mailing procedures and provides its own return instructions to
clients, which should be carefully followed by Beneficial Shareholders in order to ensure that their NAEP Common Shares are voted at the Meeting.
Although a Beneficial Shareholder may not be recognized directly at the Meeting for the purposes of voting NAEP Common Shares registered in the name of their Intermediary, a Beneficial Shareholder may attend at the
Meeting as proxyholder for the Intermediary and vote the NAEP Common Shares in that capacity.
Beneficial Shareholders who wish to attend the Meeting and indirectly vote their NAEP Common Shares as a proxyholder, should enter their own names in
the blank space on the form of proxy provided to them by their Intermediary and timely return the same to their Intermediary in accordance with the instructions provided by their Intermediary, well in advance of the Meeting.
NOTICE TO UNITED STATES SHAREHOLDERS
The solicitation of proxies by the Corporation is not subject to the requirements of Section 14(a) of the United States Securities Exchange Act of 1934, as amended (the US Exchange Act), by virtue
of an exemption applicable to proxy solicitations by foreign private issuers as defined in Rule 3b-4 under the US Exchange Act. Accordingly, this Information Circular has been prepared in accordance with the applicable disclosure
requirements in Canada. Residents of the United States should be aware that such requirements may be different than those of the United States applicable to proxy statements under the US Exchange Act.
VOTING SHARES AND PRINCIPAL HOLDERS THEREOF
The Corporations authorized capital consists of an unlimited number of NAEP Common Shares and an unlimited number of non-voting NAEP Common
Shares. As at August 22, 2011, there were a total of 36,249,086 NAEP Common Shares outstanding and no non-voting NAEP Common Shares outstanding. Each NAEP Common Share entitles the holder thereof to one vote in respect of each of the matters to
be voted upon at the Meeting. To the knowledge of the Corporations directors and executive officers, the following individuals or entities beneficially own, control or direct, directly or indirectly, securities carrying more than 10% of the
voting rights attached to the NAEP Common Shares:
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Name of Beneficial Owner
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Number of NAEP
Common Shares
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% of Outstanding NAEP
Common Shares
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Harbinger Group Inc.
(a)
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4,728,721
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13.05
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Sterling Group Partners I, L.P.
(b)
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4,626,265
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12.76
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Richard Perry
(c)
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4,598,466
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12.69
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(a)
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Harbinger Group Inc. may be deemed to beneficially own 4,728,721 NAEP Common Shares. Such shares are held in the name of HGI Funding, LLC, which is a direct,
wholly-owned subsidiary of Harbinger Group Inc.
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(b)
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Sterling Group Partners I GP, L.P. is the sole general partner of Sterling Group Partners I, L.P. Sterling Group Partners I GP, L.P. has five general
partners, each of which is wholly-owned by one of Frank J. Hevrdejs, William C. Oehmig, T. Hunter Nelson, John D. Hawkins and C. Kevin Garland. Each of these individuals disclaims beneficial ownership of the shares owned by Sterling Group Partners
I, L.P. Sterling Group Partners I, L.P. is an affiliate of The Sterling Group, L.P.
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(c)
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Perry Partners, L.P. directly holds 2,161,361 NAEP Common Shares. Perry Luxco S.A.R.L. directly holds 1,718,443 NAEP Common Shares. Perry Partners
International, Inc. directly holds 718,662 NAEP Common Shares. Richard Perry is the President and sole shareholder of Perry Corp., which is the investment manager of Perry Partners International, Inc. and the managing general partner of Perry
Partners, L.P. Perry Partners International, Inc. is the indirect sole shareholder of the class of securities owned by Perry Luxco S.A.R.L. As such, Mr. Perry may be deemed to have beneficial ownership over the respective NAEP Common Shares
owned by Perry Luxco S.A.R.L., Perry Partners, L.P. and Perry Partners International, Inc.; however, Mr. Perry disclaims such beneficial ownership, except to the extent of his pecuniary interest, if any, therein. Perry Corp. is an affiliate of
Perry Strategic Capital Inc.
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- 4 -
QUORUM
A quorum for the transaction of business at the Meeting shall consist of at least two persons holding or representing by proxy not less than twenty
(20%) percent of the outstanding shares of the Corporation entitled to vote at the meeting.
If a quorum is not present at the
opening of the Meeting, the NAEP Shareholders present may adjourn the meeting to a fixed time and place but may not transact any other business. If a meeting of shareholders is adjourned by one or more adjournments for an aggregate of less than 30
days it is not necessary to give notice of the adjourned meeting other than by announcement at the time of an adjournment. If a meeting of NAEP Shareholders is adjourned by one or more adjournments for an aggregate of more than 29 days and not more
than 90 days, notice of the adjourned meeting shall be given as for an original meeting but the management of the Corporation shall not be required to send a form of proxy in the form prescribed by applicable law to each NAEP Shareholder who is
entitled to receive notice of the meeting. Those shareholders present at any duly adjourned meeting shall constitute a quorum.
The
Corporations list of NAEP Shareholders as of the Record Date has been used to deliver to NAEP Shareholders the Notice of Meeting and this Information Circular as well as to determine the NAEP Shareholders who are eligible to vote.
PRESENTATION OF FINANCIAL STATEMENTS
The audited comparative consolidated financial statements of the Corporation for the fiscal year ended March 31, 2011, together with the report of the auditors thereon, copies of which are contained in the
Corporations annual report, will be presented to the NAEP Shareholders at the Meeting. Receipt at the Meeting of the auditors report and the Corporations financial statements for its last completed fiscal period will not constitute
approval or disapproval of any matters referred to therein.
BUSINESS TO BE TRANSACTED AT THE MEETING
The Board of Directors of the Corporation presently consists of ten directors. All of the nominees below are now directors of the Corporation and
have been directors since the dates indicated below. Management does not contemplate that any of the following nominees will be unable or unwilling to serve as a director but if that should occur for any reason prior to the Meeting, the persons
named in the enclosed Proxy will have the right to vote for another nominee in their discretion. Each director elected at the Meeting will hold office until the next annual meeting or until his or her successor is duly elected or appointed.
The following table and the notes thereto state, as of August 22, 2011, the: (i) name, municipality, province or state of
residence, country of residence, and age of each nominee; (ii) the date each nominee first became a director of the Corporation (with the current term of each nominee expiring as of the holding of the Meeting); (iii) where applicable, the
current position of each nominee with the Corporation (other than that of director); (iv) the present status of each nominee as an independent or non-independent director; (v) the committees upon which each nominee presently serves;
(vi) the present principal occupation, business or employment of each nominee; (vii) the number of NAEP Common Shares, securities and options beneficially owned, or controlled or directed, directly or indirectly, by each nominee; and
(viii) the Board and committee meeting attendance record for each nominee in the 2011 fiscal year.
- 5 -
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George R. Brokaw
New York, NY,
U.S.A, 43
Director since: June 28, 2006
Independent Director
Meets share ownership
guidelines
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George R. Brokaw
became one of our Directors on
June 28, 2006. Mr. Brokaw joined Perry Capital, L.L.C., an affiliate of Perry Corp., in August 2005. Mr. Brokaw is a Managing Partner of Perry Corp. From January 2003 to May 2005, Mr. Brokaw was Managing Director (Mergers &
Acquisitions) of Lazard Frères & Co. LLC, which he joined in 1996. Between 1994 and 1996, Mr. Brokaw was an investment banking associate for Dillon Read & Co. Mr. Brokaw received a Bachelor of Arts degree from Yale
University and a Juris Doctorate and Masters of Business Administration from the University of Virginia. He is admitted to practice law in the State of New York. Investment Entities controlled by Perry Corp. are holders of NAEP Common Shares (see
table disclosing beneficial ownership).
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Securities Held
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Fiscal Year
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DSUs (#)
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Common
Shares (#)
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2010
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27,632
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2011
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34,739
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Change
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+7,107
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Nil
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Options Held
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Date Granted
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Expiry Date
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Exercise
Price
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Options
Granted
and Vested
(#)
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Total
Unexercised
(#)
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Total At-Risk
Value of
Options
Unexercised
(1)
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June 29, 2006
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June 29, 2016
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$5.00
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27,760 /
27,760
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27,760
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$191,544
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Committee Membership and Attendance Record
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Board
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5 of 6
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Audit
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4 of 5
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Health, Safety, Environment and Business Risk
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7 of 8
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- 6 -
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John A. Brussa
Calgary, AB,
Canada, 54
Director since: November 26, 2003
Independent Director
Meets share ownership
guidelines
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John A. Brussa
became one of our Directors on
November 26, 2003. Mr. Brussa is a senior partner and head of the Tax Department at the law firm of Burnet, Duckworth & Palmer LLP, a leading natural resource and energy law firm located in Calgary. He has been a partner since 1987 and
has worked at the firm since 1981. Mr. Brussa is Chairman of Penn West Petroleum Ltd. (Penn West Energy Trust) and Crew Energy Inc. Mr. Brussa also serves as a director of a number of natural resource and energy companies. He is a member and former
Governor of the Executive Committee of the Canadian Tax Foundation. Mr. Brussa attended the University of Windsor and received his Bachelor of Arts in History and Economics in 1978 and his Bachelor of Laws in 1981.
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Securities Held
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Fiscal Year
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DSUs (#)
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Common
Shares (#)
|
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|
|
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|
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2010
|
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21,017
|
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2011
|
|
27,578
|
|
|
|
|
|
|
|
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Change
|
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+6,561
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|
112,400
|
|
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Options Held
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Date Granted
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Expiry Date
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Exercise
Price
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Options
Granted
and Vested
(#)
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Total
Unexercised
(#)
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Total At-Risk
Value of
Options
Unexercised
(1)
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November 26, 2003
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November 26, 2013
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$5.00
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27,760 /
27,760
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27,760
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$191,544
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Committee Membership and Attendance Record
|
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Board
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6 of 6
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Compensation
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5 of 5
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Governance
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1 of 1
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- 7 -
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Peter Dodd
Sydney,
Australia, 61
Director since: June 11, 2009
Non-Independent Director
Meets share ownership guidelines
|
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Peter R. Dodd
retired as Chief Financial Officer of NAEP on
June 10, 2009 and became a non-independent director of the Corporation. Mr. Dodd has over 25 years experience in strategic business planning, corporate finance and investment banking. Prior to joining NAEP, Mr. Dodd served as
Director of Strategy and Development for CSR Ltd., an Australia based conglomerate with sugar, building products, aluminum and property divisions. Previously, Mr. Dodd was Managing Director and Global Head of Corporate Finance for ABN AMRO in
London, England, managing corporate finance teams in 23 countries. Mr. Dodd has a PhD in Accounting and Finance from the William E. Simon School of Management at the University of Rochester and is currently Deputy Vice-Chancellor & Chief
Operating Officer of Macquarie University in Sydney, Australia.
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Securities Held
|
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Fiscal Year
|
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DSUs (#)
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|
PSUs (#)
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RSUs (#)
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Common
Shares (#)
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2010
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12,207
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24,784
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Nil
|
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|
|
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2011
|
|
19,096
|
|
Nil
|
|
10,059
|
|
|
|
|
|
Change
|
|
+6,889
|
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-24,784
|
|
+10,059
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40,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Held
|
|
Date Granted
|
|
Expiry Date
|
|
Exercise
Price
|
|
Options
Granted
and Vested
(#)
|
|
Total
Unexercised
(#)
|
|
Total At-Risk
Value of
Options
Unexercised
(1)
|
|
November 27, 2007
|
|
November 27, 2017
|
|
$13.50
|
|
109,400 /
65,640
|
|
65,640
|
|
Nil
|
|
December 4, 2008
|
|
December 4, 2018
|
|
$3.69
|
|
12,500 /
5,000
|
|
5,000
|
|
$41,050
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Committee Membership and Attendance Record
|
|
Board
|
|
6 of 6
|
|
|
|
|
|
Governance
|
|
1 of 1
|
|
|
|
|
|
Health, Safety, Environment and Business Risk
|
|
7 of 8
|
|
|
|
|
- 8 -
|
|
|
|
|
|
|
|
|
|
|
|
|
John D. Hawkins
Houston, TX,
U.S.A., 47
Director since: October 17, 2003
Independent Director
Meets share ownership guidelines
|
|
John D. Hawkins
became one of our Directors on
October 17, 2003. Mr. Hawkins joined The Sterling Group, L.P. in 1992 and has been a Partner since 1999. The Sterling Group is a private equity investment firm and an investment entity affiliated with The Sterling Group is a holder of NAEP
Common Shares. Mr. Hawkins also serves on the board of several Sterling portfolio companies and non-profit entities. Before joining Sterling Group, Mr. Hawkins was on the professional staff of Arthur Andersen & Co. from 1986 to 1990.
He received a Bachelor of Science in Business Administration in Accounting from the University of Tennessee and his Master of Business Administration from the Owen Graduate School of Management at Vanderbilt University.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities Held
|
|
Fiscal Year
|
|
DSUs (#)
|
|
Common
Shares (#)
|
|
|
|
|
|
|
|
2010
|
|
31,888
|
|
|
|
|
|
|
|
|
|
2011
|
|
37,431
|
|
|
|
|
|
|
|
|
|
Change
|
|
+5,543
|
|
31,208
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Held
|
|
Date Granted
|
|
Expiry Date
|
|
Exercise
Price
|
|
Options
Granted
and Vested
(#)
|
|
Total
Unexercised
(#)
|
|
Total At-Risk
Value of
Options
Unexercised
(1)
|
|
November 26, 2003
|
|
November 26, 2013
|
|
$5.00
|
|
27,760 /
27,760
|
|
5,552
|
|
$38,309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Committee Membership and Attendance Record
|
|
Board
|
|
6 of 6
|
|
|
|
|
|
Audit
|
|
5 of 5
|
|
|
|
|
|
Governance (Chair)
|
|
1 of 1
|
|
|
|
|
- 9 -
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald A. McIntosh
Calgary, AB,
Canada, 69
Director since: May 20, 2004
Independent Director
Chairman of the Board
Meets share ownership guidelines
|
|
Ronald A. McIntosh
became Chairman of our Board of Directors
on May 20, 2004. From January 2004 until August of 2006, Mr. McIntosh was Chairman of NAV Energy Trust, a Calgary-based oil and natural gas investment fund. Between October 2002 and January 2004, he was President and Chief Executive Officer of
Navigo Energy Inc. and was instrumental in the conversion of Navigo into NAV Energy Trust. He was Senior Vice President and Chief Operating Officer of Gulf Canada Resources Limited from December 2001 to July 2002 and Vice President, Exploration and
International of Petro-Canada from April 1996 through November 2001. Mr. McIntoshs significant experience in the energy industry includes the former position of Chief Operating Officer of Amerada Hess Canada. Mr. McIntosh is on the Board of
Directors of Advantage Oil & Gas Ltd. and Fortress Energy Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities Held
|
|
Fiscal Year
|
|
DSUs (#)
|
|
Common
Shares (#)
|
|
|
|
|
|
|
|
2010
|
|
39,732
|
|
|
|
|
|
|
|
|
|
2011
|
|
50,430
|
|
|
|
|
|
|
|
|
|
Change
|
|
+10,698
|
|
56,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Held
|
|
Date Granted
|
|
Expiry Date
|
|
Exercise
Price
|
|
Options
Granted
and Vested
(#)
|
|
Total
Unexercised
(#)
|
|
Total At-Risk
Value of
Options
Unexercised
(1)
|
|
April 22, 2004
|
|
April 22, 2014
|
|
$5.00
|
|
70,000 /
70,000
|
|
70,000
|
|
$483,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Committee Membership and Attendance
Record
|
|
Board
|
|
6 of 6
|
|
|
|
|
|
Audit
|
|
5 of 5
|
|
|
|
|
|
Governance
|
|
1 of 1
|
|
|
|
|
|
Health, Safety, Environment and Business Risk
|
|
8 of 8
|
|
|
|
|
- 10 -
|
|
|
|
|
|
|
|
|
|
|
|
|
William C. Oehmig
Houston, TX,
U.S.A., 62
Director since: May 20, 2004
Independent Director
Meets share ownership guidelines
|
|
William C. Oehmig
served as Chairman of our Board of
Directors from November 26, 2003 until passing off this position and assuming the role of Director and Chairman of the Executive Committee on May 20, 2004. He now serves as Chairman of the Risk Committee and on the Compensation Committee.
Mr. Oehmig is a Partner with The Sterling Group, L.P., a private equity investment firm. An investment entity affiliated with The Sterling Group is a holder of NAEP Common Shares. Prior to joining Sterling Group in 1984, Mr. Oehmig worked in
banking, mergers and acquisitions, and represented foreign investors in purchasing and managing U.S. companies in the oilfield service, manufacturing, distribution, heavy equipment and real estate sectors. He began his career in Houston in 1974 at
Texas Commerce Bank. Mr. Oehmig currently serves on the board of Universal Fibers Inc. In the past he has served as Chairman of Royster Clark, Purina Mills, Exopack and Sterling Diagnostic Imaging and has served on the boards of several other
Sterling portfolio companies. Mr. Oehmig serves or has served on numerous other corporate and non-profit boards. Mr. Oehmig received his Bachelor of Business Administration (B.B.A.) in Economics from Transylvania University and his Master of
Business Administration (M.B.A.) from the Owen Graduate School of Management at Vanderbilt University.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities Held
|
|
Fiscal Year
|
|
DSUs (#)
|
|
Common
Shares (#)
|
|
|
|
|
|
|
|
2010
|
|
43,582
|
|
|
|
|
|
|
|
|
|
2011
|
|
51,091
|
|
|
|
|
|
|
|
|
|
Change
|
|
+7,509
|
|
332,330
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Held
|
|
Date Granted
|
|
Expiry Date
|
|
Exercise
Price
|
|
Options
Granted
and Vested
(#)
|
|
Total
Unexercised
(#)
|
|
Total At-Risk
Value of
Options
Unexercised
(1)
|
|
November 26, 2003
|
|
November 26, 2013
|
|
$5.00
|
|
27,760 /
27,760
|
|
Nil
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Committee Membership and Attendance
Record
|
|
Board
|
|
6 of 6
|
|
|
|
|
|
Compensation
|
|
5 of 5
|
|
|
|
|
|
Health, Safety, Environment and Business Risk (Chair)
|
|
8 of 8
|
|
|
|
|
- 11 -
|
|
|
|
|
|
|
|
|
|
|
|
|
Rodney J. Ruston
Calgary, AB,
Canada, 60
Director Since: June 15, 2005
Non- Independent Director
President & Chief Executive
Officer
Meets share ownership
guidelines
|
|
Rodney J. Ruston
became President and Chief Executive Officer of NAEP on May 9, 2005 and took the Corporation public with a listing on both the NYSE and TSX on November 22, 2006. In 2007, Mr. Ruston joined Northern Alberta Institute of
Technologys Presidents Advisory Committee where he served for two years. In July 2009 Mr. Ruston joined the Board of the Alberta Enterprise Group, a public policy advocacy group based in Edmonton, Alberta.
Prior to joining NAEP, Mr. Ruston was Managing Director and Chief
Executive Officer of Ticor Limited, a publicly-listed, Australian natural resources company with operations in Australia, South Africa and Madagascar. Mr. Ruston has spent his entire career in the natural resources industry, holding management
positions with Pasminco Limited, Savage Resources Limited, Wambo Mining Corporation, Oakbridge Limited, and Kembla Coal & Coke Pty. Limited.
He was Chairman of the Australian Minerals Tertiary Education Council from July 2003 until May 2005. He received his Masters of Business
Administration from the University of Wollongong and Bachelor of Engineering (Mining) from the University of New South Wales in Australia.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities Held
|
|
Fiscal Year
|
|
PSUs (#)
|
|
RSUs (#)
|
|
Common
Shares (#)
|
|
|
|
|
|
2010
|
|
78,835
|
|
Nil
|
|
|
|
|
|
|
|
2011
|
|
Nil
|
|
39,227
|
|
|
|
|
|
|
|
Change
|
|
-78,835
|
|
+39,227
|
|
28,700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Held
|
|
Date Granted
|
|
Expiry Date
|
|
Exercise
Price
|
|
Options
Granted
and Vested
(#)
|
|
Total
Unexercised
(#)
|
|
Total At-Risk
Value of
Options
Unexercised
(1)
|
|
May 9, 2005
|
|
May 9, 2015
|
|
$5.00
|
|
550,000 /
550,000
|
|
550,000
|
|
$3,795,000
|
|
November 27, 2007
|
|
November 27, 2017
|
|
$13.50
|
|
21,900 /
13,140
|
|
13,140
|
|
Nil
|
|
December 4, 2008
|
|
December 4, 2018
|
|
$3.69
|
|
29,200 /
11,680
|
|
11,680
|
|
$95,893
|
|
February 8, 2010
|
|
February 8, 2020
|
|
$9.33
|
|
32,200 /
6,440
|
|
6,440
|
|
$16,551
|
|
December 13, 2010
|
|
December 13, 2020
|
|
$10.13
|
|
25,800 /
Nil
|
|
Nil
|
|
Nil
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Committee Membership and Attendance
Record
|
|
|
Board
|
|
6 of 6
|
|
|
|
|
- 12 -
|
|
|
|
|
|
|
|
|
|
|
|
|
Allen R. Sello
West Vancouver, BC,
Canada, 72
Director Since: January 26, 2006
Independent Director
Meets share ownership guidelines
|
|
Allen R. Sello
became one of our Directors on
January 26, 2006. His career began at Ford Motor Company of Canada in 1964, where he held finance and marketing management positions, including Treasurer. In 1979, Mr. Sello joined Gulf Canada Limited, at which he held various senior financial
positions, including Vice-President and Controller. He was appointed Vice-President, Finance of its successor company Gulf Canada Resources Limited in 1987 and Chief Financial Officer in 1988. Mr. Sello then joined International Forest Products
Ltd. in 1996 as Chief Financial Officer. From 1999 until his retirement in 2004 he held the position of Senior Vice-President and Chief Financial Officer for UMA Group Limited. Mr. Sello is currently a director of Sterling Shoes Inc., former
director of software development companies Infowave Software Inc. and Braintech Inc. and former Chair of the Vancouver Board of Trades Government Budget and Finance Committee. Mr. Sello received his Bachelor of Commerce from the University of
Manitoba and his Master of Business Administration (M.B.A.) from the University of Toronto.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities Held
|
|
Fiscal Year
|
|
DSUs (#)
|
|
Common
Shares (#)
|
|
|
|
|
|
|
|
2010
|
|
20,223
|
|
|
|
|
|
|
|
|
|
2011
|
|
27,653
|
|
|
|
|
|
|
|
|
|
Change
|
|
+7,430
|
|
28,100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Held
|
|
Date Granted
|
|
Expiry Date
|
|
Exercise
Price
|
|
Options
Granted
and Vested
(#)
|
|
Total
Unexercised
(#)
|
|
Total At-Risk
Value of
Options
Unexercised
(1)
|
|
February 23, 2006
|
|
February 23, 2016
|
|
$5.00
|
|
27,760 /
27,760
|
|
27,760
|
|
$191,544
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Committee Membership and Attendance Record
|
|
Board
|
|
6 of 6
|
|
|
|
|
|
Audit (Chair)
|
|
5 of 5
|
|
|
|
|
|
|
Compensation
|
|
5 of 5
|
|
|
|
|
- 13 -
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter W. Tomsett
West Vancouver, BC,
Canada, 53
Director Since: September 19, 2006
Independent Director
Meets share ownership guidelines
|
|
Peter W. Tomsett
became one of our Directors on
September 19, 2006. From September 2004 to January 2006, Mr. Tomsett was President & Chief Executive Officer of Placer Dome Inc. based in Vancouver. He joined the Placer Dome Group in 1986 as a Mining Engineer with the Project Development
group in Sydney, Australia. After various project and operating positions, he assumed the role of Executive Vice-President, Asia-Pacific for Placer Dome Inc. in 2001. In 2004, Mr. Tomsett also took on responsibility for Placer Dome Africa which
included mines in South Africa and Tanzania. Mr. Tomsett has been a Director of the Minerals Council of Australia, the World Gold Council and the International Council for Mining & Metals. Mr. Tomsett graduated with a Bachelor of Engineering
(Honours) in Mining Engineering from the University of New South Wales and also attained a Master of Science (Distinction) in Mineral Production Management from Imperial College, London. Mr. Tomsett is also Chairman of Silver Standard Resources Inc.
and a director of Talisman Energy Inc.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities Held
|
|
Fiscal Year
|
|
DSUs (#)
|
|
Common
Shares (#)
|
|
|
|
|
|
|
|
2010
|
|
46,852
|
|
|
|
|
|
|
|
|
|
2011
|
|
62,380
|
|
|
|
|
|
|
|
|
|
Change
|
|
+15,528
|
|
Nil
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Held
|
|
Date Granted
|
|
Expiry Date
|
|
Exercise
Price
|
|
Options
Granted
and Vested
(#)
|
|
Total
Unexercised
(#)
|
|
Total At-Risk
Value of
Options
Unexercised
(1)
|
|
September 14, 2006
|
|
September 14, 2016
|
|
$16.75
|
|
27,760 /
22,208
|
|
22,208
|
|
Nil
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Committee Membership and Attendance Record
|
|
Board
|
|
6 of 6
|
|
|
|
|
|
Compensation (Chair)
|
|
5 of 5
|
|
|
|
|
|
|
Health, Safety, Environment and Business Risk
|
|
8 of 8
|
|
|
|
|
- 14 -
|
|
|
|
|
|
|
|
|
|
|
|
|
K. Rick Turner
Houston, TX,
U.S.A., 53
Director Since: November 26, 2003
Independent Director
Meets share ownership guidelines
|
|
K. Rick Turner
became one of our Directors on
November 26, 2003. Mr. Turner has been employed by Stephens family entities since 1983. Mr. Turner is currently a Senior Managing Director of The Stephens Group, LLC. He first became a private equity principal in 1990 after
serving as the Assistant to the Chairman, Jackson T. Stephens. His areas of focus have been oil and gas exploration, natural gas gathering, processing industries and power technology. Mr. Turner currently serves as a director of The
Stephens Group, Pinnergy, Spitzer Industries, Atlantic Oil Corporation; JV Industrials, LLC; Seminole Energy Services, LLC; JEBCO Seismic, LLC; Seminole Energy Services, LLC; the General Partner of Energy Transfer Partners, LP (ETP); and
the General Partner of Energy Transfer Equity, LP (ETE). Prior to joining Stephens, Mr. Turner was employed by Peat, Marwick, Mitchell and Company. Mr. Turner earned his Bachelor of Science in Business Administration (B.S.B.A.)
from the University of Arkansas and is a non-practicing Certified Public Accountant.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities Held
|
|
Fiscal Year
|
|
DSUs (#)
|
|
Common
Shares (#)
|
|
|
|
|
|
|
|
2010
|
|
20,133
|
|
|
|
|
|
|
|
|
|
2011
|
|
26,620
|
|
|
|
|
|
|
|
|
|
Change
|
|
+6,487
|
|
33,427
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options Held
|
|
Date Granted
|
|
Expiry Date
|
|
Exercise
Price
|
|
Options
Granted
and Vested
(#)
|
|
Total
Unexercised
(#)
|
|
Total At-Risk
Value of
Options
Unexercised
(1)
|
|
November 26, 2003
|
|
November 26, 2013
|
|
$5.00
|
|
27,760 /
27,760
|
|
5,552
|
|
$38,309
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Committee Membership and Attendance Record
|
|
Board
|
|
5 of 6
|
|
|
|
|
|
Audit
|
|
5 of 5
|
|
|
|
|
|
Governance
|
|
1 of 1
|
|
|
|
|
(1
)
|
The At-Risk Value means the in the money value of the applicable vested equity units using the closing price of NAEP common shares on
the TSX on March 31, 2011 of $11.90.
|
- 15 -
Recommendation of the Board of Directors
The Board of Directors recommends a vote FOR the election of each of the above nominees to serve as a director of the Corporation.
Unless a NAEP Shareholder otherwise directs, or directs that his or her NAEP Common Shares are to be withheld from voting in
connection with the election of any particular nominee specified above, the persons named in the enclosed form of Proxy intend to vote FOR the election of each of the nominees specified above, such directors to hold office until the next
annual meeting or until his successor is appointed.
2.
|
Re-appointment of Independent Auditors and Authorization of Directors to fix their Remuneration
|
At the Meeting, NAEP Shareholders will be requested to vote on the re-appointment of KPMG LLP (KPMG) as the independent auditors of the
Corporation to hold office until the next annual meeting of shareholders or until a successor is appointed, and to authorize the Board of Directors to fix the auditors remuneration. KPMG have been the auditors of the Corporation, or its
predecessor NACG Holdings Inc., since October 31, 2003.
Recommendation of the Board of Directors
The Board of Directors recommends a vote FOR the re-appointment of KPMG as independent auditors of the Corporation for the fiscal year
ending March 31, 2012 and authorizing the Board of Directors to fix the auditors remuneration.
Unless a NAEP
Shareholder otherwise directs, or directs that his or her NAEP Common Shares are to be withheld from voting in connection with the appointment of auditors, the persons named in the enclosed form of Proxy intend to vote for the re-appointment of KPMG
as auditors of the Corporation until the next annual meeting of shareholders and to authorize the directors to fix their remuneration.
Management of the Corporation know of no matters to come before the Meeting other than as set forth in the Notice of Meeting. However, if other
matters which are not currently known to management should properly come before the Meeting, the accompanying proxy will be voted on such matters in accordance with the best judgment of the persons voting the proxy.
COMPENSATION DISCUSSION AND ANALYSIS
Compensation Committee
The Compensation Committee is responsible
for reviewing and recommending to the Board of Directors for approval;
|
i.
|
the Corporations philosophy, policies and guidelines on Board of Directors and Executive compensation;
|
|
ii.
|
the recruitment, evaluation and succession plans for the President and Chief Executive Officer;
|
|
iii.
|
the compensation package for the chairs of the committees of the Board of Directors and other Directors of the Corporation; and
|
- 16 -
|
iv.
|
the structure of, implementation of, participation in, amendments to or termination of all long-term incentive programs including, but not limited to, the
Share Option Plan, the DSU Plan (see Compensation of Directors
Directors Deferred Share Unit Plan) and the PSU Plan (see
Long-term Incentive Plan Performance Share Unit Plan
).
|
The Compensation Committee also reviews and approves:
|
i.
|
the recruitment, evaluation and succession plans for all individuals reporting directly to the Chief Executive Officer (the executive management);
|
|
ii.
|
the compensation package, including base salaries, annual incentive compensation, all retirement, health and welfare benefits and perquisites for executive
management (and with respect to the Chief Executive Officer, recommends such matters to the Board of Directors for approval); and
|
|
iii.
|
the Compensation Committee may review any and all aspects of total compensation at its discretion; however a formal review is undertaken annually with base
salary adjustments and short-term bonus payments processed in July of each year.
|
Our Board of Directors has adopted a
written charter for the Compensation Committee that is available on our website.
Executive Compensation Philosophy
The Corporations executive compensation policy is designed to attract, retain and motivate qualified executives who are
committed to achieving success for the Corporation and maximum value for its shareholders. The philosophy of the executive compensation policy is premised upon three core principles:
1.
|
Competitive Compensation
|
It is the objective of the Corporation to attract and retain talented executive management who are capable of meeting the financial and other objectives of the Corporation as determined by the Board of Directors.
It is important to ensure executive remuneration is competitive within the market where the Corporation competes for talent, and in this light, the Corporation has adopted a market-competitive total executive compensation package (Executive
Compensation Elements).
In our ongoing effort to ensure that our compensation plans remain market-competitive, we regularly utilize the
services of independent specialized compensation consultants, including Meridian Compensation Partners LLC, Wynford Group and others to evaluate our total compensation against that of leading businesses within Alberta in the industries in which the
Corporation conducts its business. Through this ongoing process we ensure that our executive compensation programs remain competitive within the market and support the attraction and retention of our executives, as they are crucial to the future
success of the Corporation.
2.
|
Performance & Accountability
|
We believe that executive compensation should be strongly correlated to the financial performance of the Corporation, and that the executives, as the key decision makers of the Corporation, should be held
accountable for that performance. To that end, we have adopted the annual Management Incentive Plan (the MIP also known as Short-Term Incentive Plan), which is discussed further below under
Alignment of Executive and
Shareholder Interests
. The MIP was first introduced in 2006, with the key underlying principle of ensuring that executives are held accountable to stakeholders by
- 17 -
measuring the performance of the Corporation against the Corporations Consolidated EBITDA
¿
forecast in the approved annual budget. This creates a performance-based corporate culture that rewards individual contributions to the achievement of the Corporations goals and creation of shareholder
value. A significant portion of executive compensation is in the form of at-risk pay, compensating executives for strong corporate performance and achievement of individual objectives. This emphasis on performance-based compensation is reflected in
determining all elements of executive compensation.
3.
|
Alignment of Executive and Shareholder Interests
|
It is in the Corporations best interests to meet shareholder expectations and ensure continued access to capital on favourable terms. Accordingly the MIP was designed to ensure that the continued
profitability of the Corporation results in increased financial reward for NAEP shareholders and executives alike. Executives are rewarded through the MIP based on three criteria: (i) organizational performance; (ii) divisional
performance; and (iii) individual performance. The Chief Executive Officer is rewarded through the MIP based on two criteria: (i) organizational performance and (ii) individual performance. This approach ensures that the role of the
individual within the team is appropriately recognized. The MIP is a key mechanism utilized in realizing the compensation principles, particularly the latter two. The target MIP remuneration structure for the 2011 fiscal year is set out below and
remains unchanged for the 2012 fiscal year (based on the actual performance of the Corporation, the percentage attributable to the Corporations performance may be higher and consequently the actual proportion of salary paid may be higher than
100%):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
M
ANAGEMENT
L
EVEL
|
|
C
ORPORATION
P
ERFORMANCE
|
|
|
B
USINESS
U
NIT
OR
D
IVISIONAL
P
ERFORMANCE
|
|
|
I
NDIVIDUAL
P
ERFORMANCE
|
|
|
P
ROPORTION
OF
S
ALARY
P
AYABLE
AT
T
ARGET
|
|
President and Chief Executive Officer
|
|
|
70
|
%
|
|
|
|
|
|
|
30
|
%
|
|
|
100
|
%
|
Chief Financial Officer and Vice Presidents
|
|
|
50
|
%
|
|
|
30
|
%
|
|
|
20
|
%
|
|
|
100
|
%
|
The Corporations Key Performance Indicator (KPI) is based on the Corporations total
Consolidated EBITDA, while business unit and divisional KPIs are selected corporate measures or measures specific to a division based on key business drivers of that division, examples of which include production efficiencies, equipment utilization,
cost performance and safety performance. Individual KPIs are related to the development of the team, development of key individuals within the division and special projects undertaken within the division.
Executive Compensation Overview
This discussion of executive compensation focuses on the compensation of the following:
|
i.
|
our President and Chief Executive Officer, Rodney Ruston;
|
|
ii.
|
our Chief Financial Officer, David Blackley; and
|
|
iii.
|
our three most highly compensated executive officers as at the end of the 2011 fiscal year, other than our Chief Executive Officer and our Chief Financial
Officer, those three executive officers being Christopher Yellowega, Bernard Robert and Joseph Lambert.
|
- 18 -
¿
|
The term Consolidated EBITDA, when used in this document refers to Consolidated EBITDA as defined in the Corporations credit
agreement. This is not a recognized measure under generally accepted accounting principles. For a detailed definition of Consolidated EBITDA (as used in this document) and a reconciliation to net income see our managements discussion and
analysis for the year ended March 31, 2011, which is available on the Canadian Securities Administrators System for Electronic Document Analysis and Retrieval (SEDAR) at
www.sedar.com
, the Securities and Exchange Commissions
website at
www.sec.gov
and the Corporations web site at
www.nacg.ca
.
|
All of those above are defined by applicable regulations to be named executive officers
for the purposes of compensation disclosure (collectively, the NEOs).
The following table sets out the various components
of compensation that executives (including the NEOs) receive:
Executive Compensation Components
|
|
|
Base Salary
|
|
Base salary is based on the executives level of responsibility, skills and experience, and the market value of the position. Adjustments to base salary are
generally considered annually, taking into account the executives overall performance, experience and market conditions.
|
|
|
Short-Term
Incentive Plan
(STIP)
|
|
STIP compensation is linked to the Corporations performance in the fiscal year as measured by the Corporations total Consolidated EBITDA achieved. Each
executive has a targeted annual bonus of 100% of base salary. Actual payout is determined by achievement of predetermined financial objectives and performance objectives. Payouts range from zero to a maximum of 200% of an executives bonus
target.
|
|
|
Long-Term
Incentive Plan
(LTIP)
|
|
LTIP compensation grants are generally made twice per calendar year through two vehicles: (1) Stock Options granted in December, and (2) Performance Share Units or
Restricted Share Units granted in April. Each executive has a target annual LTIP compensation value of 40% of base salary. Of that target annual LTIP, 50% is awarded as Stock Options and 50% is awarded as Share Units (PSUs or RSUs). The CEOs
targeted LTIP compensation value is 50% of base salary. Of that target annual LTIP, 50% is awarded as Stock Options and 50% is awarded as Performance Share Units or Restricted Share Units.
|
|
|
Retirement
Arrangements
|
|
The Corporation matches contributions of executives to registered retirement savings plans to a maximum of 5% of base salary. If or when the executive reaches his or
her annual RRSP contribution limits, the remaining contributions for the calendar year are made to a non-registered saving plan.
|
|
|
Benefit Plans
|
|
Executive benefit plans, paid for by the Corporation, provide extended health, dental, disability and insurance coverage.
|
|
|
Perquisites
|
|
Limited perquisites are provided including car allowance, reimbursement for annual dues to a local sport or health club, an annual medical examination and a
discretionary health care spending account.
|
Determining Individual Compensation for NEOs
As described above, the Compensation Committee is responsible for providing oversight with regard to executive compensation programs and setting
individual compensation for the NEOs (other than the President & CEO). The Compensation Committee receives assistance from several sources, both internal and external, in order to fulfill these responsibilities.
Compensation Consultants
Since 2007,
the Corporation has engaged the services of specialized compensation consultants including, most recently, Meridian Compensation Partners LLC, Wynford Group and Lane Caputo, to:
|
i.
|
provide information and independent advice to assist in developing the appropriate total compensation philosophy and structure;
|
|
ii.
|
assist management in the development of the various programs within our compensation framework;
|
- 19 -
|
iii.
|
perform studies of the market comparator group of corporations to evaluate the Corporations total compensation programs; and
|
|
iv.
|
provide recommendations to the Compensation Committee.
|
During fiscal 2011, services invoiced by Meridian Compensation Partners LLC were $26,313, by the Wynford Group were $40,104 and by Lane Caputo were $13,505.
Comparator Group Analysis and Market Data
In determining compensation for the executive
group, our primary comparator group includes companies in the Canadian industrial construction and mining sectors that meet the following criteria:
|
a.
|
Compete for similar talent, primarily in Alberta;
|
|
b.
|
Operate in one or more of the mining, piling, pipeline, industrial construction and heavy construction sectors; and
|
|
c.
|
Operate in major industrial projects in Northern Alberta (Oil Sands) as well as the Edmonton area and other Western Canadian provinces with annual revenue of
$500 million up to $3 billion.
|
When there are insufficient job matches in that group, comparator data from the
overall Canadian industrial sector is used. The specific companies included in these comparator groups are those whose data is available through the consultants database. In addition, in determining compensation for NEOs, the Compensation
Committee considers publicly-disclosed executive compensation information for Canadian public companies. The use of comparative market data is just one of the factors used in setting compensation for NEOs. NEO compensation could be higher or lower
than the comparator data as a result of personal performance, skills or experience.
Input from the Corporations Management
The President & CEO participates in the compensation process, makes recommendations to the Compensation Committee with
respect to the other NEOs and recommends to the Compensation Committee the specific business goals to be used as performance targets for the various incentive programs. The Vice President, Corporate and the CFO assist the President & CEO in
developing and presenting managements recommendations and supporting material to the Compensation Committee pertaining to the compensation of the NEOs.
Assessment of Individual Performance
Each year, the President & CEO reviews
and makes recommendations to the Compensation Committee regarding the performance of each of the other NEOs. In addition to organizational performance, NEOs other than the President & CEO are assessed on both divisional performance and
individual performance. The President & CEO is assessed on organizational performance and individual performance by the Compensation Committee, which then makes a recommendation to the entire Board.
2011 Fiscal Year Compensation
Base Salary
Base salaries for the
NEOs are reviewed and approved each year by the Compensation Committee with adjustments effective July 1. The Compensation Committee may make adjustments to an executives salary as a result of any change in the executives duties and
responsibilities and based on
- 20 -
the performance and contribution of the executive, both on an individual basis and on the performance of the executives business unit or division during the previous fiscal year. In
reviewing the base salaries of the Corporations executives, the Compensation Committee also considers comparator group compensation, internal pay relationships and total employee cost. The base salary pay adjustments noted below took into
consideration the pay position of each executive in the market and percentage adjustments ensured base compensation levels remained commensurate with the market.
The following table sets out the base salaries as at March 31, 2011, and the percentage increase from the prior year as at July 1, 2011 for each of the NEOs:
|
|
|
|
|
|
|
|
|
NEO
|
|
2011 Base Salary ($)
|
|
|
% change from 2010
|
|
Rodney Ruston
|
|
|
594,100
|
|
|
|
0.0
|
|
David Blackley
|
|
|
281,661
|
|
|
|
5.0
|
|
Christopher Yellowega
|
|
|
283,250
|
|
|
|
3.0
|
|
Bernard Robert
|
|
|
255,000
|
|
|
|
4.0
|
|
Joseph Lambert
|
|
|
270,000
|
|
|
|
8.2
|
|
Short-Term Incentive Plan (STIP)
Our STIP for executive management (also known as our Management Incentive Plan or MIP) is described above in
Alignment of Executive and Shareholder Interests
. It is the
primary vehicle we use to reward executives for their contributions to strong financial and operational performance in a particular year. The purpose of the STIP is to motivate executives to enable the Corporation to achieve its financial goals and
to reward them to the extent we achieve those goals. All of our executives, including the NEOs, participate in the STIP.
Consolidated
EBITDA, was chosen as the financial metric for the STIP for the NEOs because it measures the current profitability of our business and, as such, is a good indicator of overall corporate performance. Certain prescribed adjustments to Consolidated
EBITDA to eliminate factors not considered relevant to the true financial performance of the Corporation are recommended by the Compensation Committee and approved by the Board of Directors.
The Board of Directors approves the Consolidated EBITDA target for the STIP which is developed at the beginning of each fiscal year through the
Corporations annual budget and strategic planning process. The Consolidated EBITDA target is intended to be challenging. The Board of Directors set a Consolidated EBITDA target for the 2011 fiscal year taking into account the results of the
2010 fiscal year and considering the budget and business plans prepared, presented to and approved by the Board. The Consolidated EBITDA results for the 2011 fiscal year fell short of the hurdle threshold set by the Board of Directors, resulting in
a short term bonus of zero for the NEOs. To ensure retention of critical talent through the economic recovery the Compensation Committee approved a retention bonus in the form of restricted share units with a three year cliff vesting
period. The number of RSUs provided to each NEO is based on the dollar value of the approved notional bonus value converted to RSUs by applying a conversion rate of $8.24 CAD (closing price of the shares on the TSX on June 2, 2011, the date the
Board of Directors approved the bonus). The Corporation does not disclose the Consolidated EBITDA target on the basis that it is confidential and competitively sensitive and its disclosure would seriously prejudice the Corporations interests.
Incentive opportunities for STIP participants at different levels within our organization are set as a percentage of each
individuals base salary. The target incentive opportunity for each of the NEOs is 100% of base salary. The payouts for the NEOs range from zero to a maximum of 200% of target bonus depending on the Corporations performance relative to
the Consolidated EBITDA target and achievement by each NEO against divisional and individual performance objectives, as applicable.
- 21 -
Recommendations for bonus awards are made by the President & CEO to the Compensation Committee. The Board of Directors determines the STIP award for the President and CEO based upon the
Corporations performance related to the Consolidated EBITDA target and achievement of individual performance objectives. Short-term bonuses were not paid in fiscal 2011. Instead, a retention bonus was granted in June 2011 in the form of RSUs.
This retention bonus was paid in lieu of a short-term bonus and was paid in relation to the period April 1, 2010 to March 31, 2011). The following table sets forth the STIP target, maximum STIP award and 2011 STIP award for each NEO.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEO
|
|
STIP Target
as Percentage
of Base
Salary (%)
|
|
|
STIP Target
($)
(1)
|
|
|
Maximum
STIP Award
($)
|
|
|
2011 STIP
Award
($)
(2)
|
|
Rodney Ruston
|
|
|
100
|
|
|
|
589,775
|
|
|
|
1,179,550
|
|
|
|
129,161
|
|
David Blackley
|
|
|
100
|
|
|
|
278,308
|
|
|
|
556,616
|
|
|
|
121,959
|
|
Christopher Yellowega
|
|
|
100
|
|
|
|
281,188
|
|
|
|
562,375
|
|
|
|
122,647
|
|
Bernard Robert
|
|
|
100
|
|
|
|
247,741
|
|
|
|
495,483
|
|
|
|
110,415
|
|
Joseph Lambert
|
|
|
100
|
|
|
|
257,783
|
|
|
|
515,565
|
|
|
|
116,910
|
|
(1)
|
STIP Target is calculated as follows: 100% (Base Salary Effective April 1, 2010 to June 30, 2010 * 0.25) + (Base Salary Effective July 1, 2010
to March 31, 2011 * 0.75). This calculation takes into consideration base salary changes made part way through the fiscal year. Further pro-rations of the STIP calculation would occur if off-cycle adjustments were made throughout the fiscal
year.
|
(2)
|
Consolidated EBITDA did not meet target for the fiscal year and as a result no short term bonus was provided to the NEOs. However, a retention bonus in the
form of RSUs with a 3-year cliff vesting period was provided to NEOs to assist with retention of key talent during the economic recovery. The fair value of these RSUs as of the grant date is shown in the chart above.
|
Long-Term Incentive Plan (LTIP)
The purpose of our equity-based LTIP is to motivate executives to achieve long-term performance goals which will increase shareholder return on investment. Under the LTIP, we award long-term incentives to
executives in the form of share options and share units (PSUs or RSUs), the value of which are directly linked to the creation of shareholder value.
The Compensation Committee reviews and recommends to the Board of Directors on the adequacy and the form of LTIP for executive management. An LTIP target value is established annually for executive management by
the Compensation Committee and is primarily based upon the executives role. The target value is calculated as a percentage of the executives base salary. The LTIP is designed to deliver annual compensation equivalent to 50% of base
salary for the CEO and 40% for the other NEOs. The LTIP is delivered through the use of two vehicles, those being grants of share options and grants of PSUs/RSUs. Fifty percent of the LTIP compensation is delivered in December of each year through
grants of share options recommended by the Chief Executive Officer and the Compensation Committee for approval by the Board of Directors in accordance with the Corporations Share Option Plan. The other 50% of the LTIP compensation is delivered
in April of each year through grants of PSUs or RSUs recommended by the Chief Executive Officer and the Compensation Committee for approval by the Board of Directors in accordance with the Corporations PSU Plan. LTIP grants to the CEO are
determined by the Board of Directors.
Share Option Plan
The Share Option Plan was approved by the Corporations shareholders on November 3, 2006 and became effective on November 28, 2006. The Share Option Plan was re-approved by the shareholders at the
Annual and Special Meeting held on September 24, 2009. The Share Option Plan is administered by the Compensation Committee. Option grants under the Share Option Plan may be
- 22 -
made to the Corporations directors, officers, employees and consultants selected by the Compensation Committee. The Share Option Plan provides for the discretionary grant of options to
purchase the Corporations Common Shares. Options granted under the Share Option Plan are evidenced by an agreement, specifying the vesting, exercise price and expiration of such options, which terms are determined for each optionee by the
Compensation Committee.
Options to be granted under the Share Option Plan will have an exercise price of not less than the previous 5
day volume weighted average trading price of the Corporations Common Shares on the Toronto Stock Exchange or the New York Stock Exchange.
The Share Option Plan provides that up to 10% of the Corporations issued and outstanding NAEP Common Shares from time to time may be reserved for issuance or issued from treasury and also provides that the
maximum number of NAEP Common Shares issuable to insiders under the Share Option Plan (and any other security based compensation arrangements of the Corporation) is 10% of the Corporations issued and outstanding NAEP Common Shares. The maximum
number of NAEP Common Shares issuable to insiders, at any time, pursuant to the Share Option Plan and any other security based compensation arrangements of the Corporation is 10% of the outstanding NAEP Common Shares on a non-diluted basis
immediately prior to the proposed option to purchase. The maximum number of NAEP Common Shares issuable to insiders, within any one year period, pursuant to the Share Option Plan and any other security based compensation arrangements of the
Corporation is 10% of the outstanding shares on a non-diluted basis immediately prior to the proposed option to purchase.
As of
August 11, 2011, the Corporation had 36,249,086 Common Shares outstanding, therefore providing for a current maximum of 3,624,909 Common Shares reserved for issuance under the Share Option Plan. As at August 11, 2011, the Corporation had
2,347,474 options to purchase Common Shares outstanding (or approximately 6.5% of the outstanding Common Shares), leaving unallocated options to purchase an aggregate of 1,277,435 Common Shares (or approximately 3.5% of the outstanding Common
Shares) available for future option grants at that date. Currently, there are 3,603,847 Common Shares reserved for issuance under the Share Option Plan, which was approved by the Board and by the shareholders of the Corporation as of
September 24, 2009.
Securities authorized for issuance under equity compensation plans
|
|
|
|
|
|
|
|
|
|
|
Plan Category
|
|
Number of securities
to be issued upon
exercise of
outstanding
options,
warrants and rights
(A)
(a)
|
|
Figure in column (a)
as a percentage of
issued and
outstanding NAEP
Common Shares
(b)
|
|
Weighted-average
exercise price of
outstanding options,
warrants and rights
(c)
|
|
Number of securities
remaining available
for future issuance
under equity
compensation
plans
(excluding
securities reflected
in column (a))
(
B
)
(d)
|
|
Figure in column (d)
as a percentage of
issued and
outstanding NAEP
Common Shares
(e)
|
Equity compensation plans approved by security holders
|
|
2,347,474
|
|
6.5%
|
|
$8.11
|
|
1,277,435
|
|
3.5%
|
Equity compensation plans not approved by security holders
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
2,347,474
|
|
6.5%
|
|
$8.11
|
|
1,277,435
|
|
3.5%
|
|
|
|
|
|
|
|
|
|
|
|
- 23 -
(A)
|
Rodney J. Ruston has been awarded the right to receive 50,000 NAEP Common Shares on
May 8, 2011, 50,000 NAEP Common Shares on November 8, 2011 and 50,000 NAEP Common Shares on May 8, 2012 pursuant to Mr. Rustons employment agreement. See section below captioned Analysis of 2011 Compensation Decisions
Regarding NEOs
Rodney J. Ruston, President & Chief Executive Officer.
In accordance with Rodney Rustons employment agreement, his entitlement to such NAEP Common Shares may be satisfied by NAEP through
purchases of NAEP Common Shares on the open market or, subject to obtaining all applicable regulatory approvals, by the issuance of NAEP Common Shares from treasury. The Corporation has established a trust under which Canadian Western Trust, as
trustee, purchased a total of 50,000 NAEP Common Shares on the open market on May 31, 2011 and June 1, 2011 in order to satisfy the first tranche of shares deliverable to Mr. Ruston. Such purchases were financed by the
Corporation. By agreement between the Corporation and Mr. Ruston, the first tranche of 50,000 NAEP Common Shares vested on June 13, 2011 rather than May 8, 2011 as reflected in the original agreement.
|
(B)
|
The Share Option Plan states that the Compensation Committee may issue options,
provided that the aggregate number of NAEP Common Shares that may be issued from treasury under the Share Option Plan may not exceed 10% of the number of issued and outstanding NAEP Common Shares on a non-diluted basis immediately prior to the
proposed option issuance.
|
Options may not be exercised prior to the first anniversary of the date of the grant. The
vesting of options is otherwise determined on the grant of the option. Generally, options vest over a five-year period at a rate of 20% per year and expire at the end of 10 years. Each option has a term of no less than five and not more than 10
years.
The Share Option Plan provides that, in the event of the termination (with or without cause) of an optionee, the options held by
an optionee cease to be exercisable 30 days after the termination, subject to adjustment by the Compensation Committee. For qualified retirees (age 55 or over and as approved by the Compensation Committee), vested options continue to be exercisable
for the balance of the exercise period applicable to the option.
The Corporation does not provide financial assistance to participants
under the Share Option Plan to facilitate the purchase of securities under the Share Option Plan. Options granted under the Share Option Plan are not transferable by an optionee, except by an optionees will or by the laws of descent and
distribution. During the lifetime of an optionee, the options are exercisable by only him or her (or, in the case of the optionees disability, by his or her legal representative(s), if applicable). If an optionee dies, the options held by such
optionee may be exercised by the legal representative of the deceased optionee. Such options cease to be exercisable on such date that is the earlier of: (a) 365 days after the optionees death, and (b) the expiry date set out in the
deceased optionees option agreement. Notwithstanding the foregoing, the Share Option Plan allows the expiry date to be extended by determination of the Compensation Committee or as permitted under the option agreement. If the expiry date falls
within or immediately after a blackout period or a lock-up period, the expiry date would be automatically extended for five business days after the blackout period or lock-up period.
The Share Option Plan provides that subject to receipt of shareholder and regulatory approval, the Board of Directors may make certain specified
amendments to the Share Option Plan, including (i) any amendment to the number of securities issuable under the Share Option Plan, (ii) any changes in the participants in the plan that have the potential of broadening or increasing insider
participation, (iii) the introduction of, or amendments to, any form of financial assistance and (iv) any other amendments that may lead to significant or unreasonable dilution in the Corporations outstanding securities or may
provide additional benefits to eligible participants, especially to participants who are insiders. The Share Option Plan authorizes the Board of Directors to make other amendments to the plan, subject only to regulatory approval (i.e. without
shareholder approval, unless specifically required by applicable law), including (i) amendments of a housekeeping nature (i.e. amendments for the purpose of curing any ambiguity, error or omission in the Share Option Plan, or to
comply with applicable law or the requirements of any stock exchange on which the NAEP Common Shares are listed), (ii) any changes to the vesting provisions, (iii) any changes in the termination provisions of an option or of the Share
Option Plan which does not entail an extension beyond the original expiry date, (iv) a discontinuance of
- 24 -
the Share Option Plan and (v) the addition of provisions relating to phantom share units, such as restricted share units and deferred share units, which result in participants receiving cash
payments, and the terms governing such features.
In December 2010, as part of the 50% grant under the LTIP program, Share Options were
granted to the NEOs. For the 2010 share option grant, each NEO received share options at the targeted compensation value in accordance with the Corporations LTIP. The Board of Directors granted an aggregate amount of 63,700 Share Options
to the NEOs and approved an exercise price of $10.13.
Performance Share Unit Plan (PSU Plan)
The Board of Directors has approved the PSU Plan. The PSU Plan is part of the Corporations Long-Term Incentive Plan. Each year, the Chief
Executive Officer and the Compensation Committee recommends, to the Board of Directors for approval, employees (the Participants) for participation in the Corporations PSU Plan. Under the PSU Plan the Corporation credits a
Performance Share Unit (a PSU), being a right granted to a Participant to receive a cash payment equivalent to the fair market value of a Common Share of the Corporation, or at the discretion of the Corporation, in a number of Common
Shares purchased on the open market. After the third fiscal year-end following the date of the grant of the PSUs (the Maturity Date), the Compensation Committee will assess the Participant against the performance criteria established as
part of the grant and determine the number of such PSUs that have been earned. The cash payment or delivery of Common Shares is then based on these earned PSUs.
If any dividends are paid on the Corporations Common Shares, additional PSUs will be credited to the Participant to reflect such dividends. The PSU Plan provides that, in the event of termination of a
Participant (with or without cause), all PSUs that are not earned PSUs are immediately forfeited. In the event of retirement or disability of a Participant, all earned PSUs will be redeemed within 30 days of the Maturity Date. Any PSUs which have
not completed their prescribed term (credited PSUs) shall continue to be eligible to become earned PSUs, subject to the performance criteria, as if the Participant was still employed by the Corporation. On the death of a Participant, all credited
PSUs will vest and will be redeemed within 90 days of the date of the Participants death. Rights respecting PSUs are not transferable or assignable other than by will or the laws of descent and distribution.
In June 2010 the Board of Directors approved amendments to the PSU plan in the event of a Change of Control (as such term is defined in the PSU) in
order to provide a retention vehicle at a time of employment uncertainty. The amendments provide that 100% of the outstanding PSUs that are not earned PSUs held in the Participants PSU Account on the date the Change of Control transaction is
completed shall be deemed to be earned PSUs. The value of the Earned PSUs will be fixed at the date of the Change in Control and final payment deferred until the end of the maximum term (3 years) of the PSU. Termination provisions in the amendments
provide that within 24 months following the Change of Control, if the Participants employment is terminated for any reason other than death, disability, qualified retirement or good reason as defined in the plan, all earned PSUs shall be
immediately forfeited. In the case of a termination without cause within 36 months following a Change of Control, all earned PSUs shall be paid out.
The Compensation Committee, on recommendation to and approval of the Board of Directors, may amend, suspend or terminate the PSU Plan or any portion thereof at any time. However, no amendment, suspension or
termination may materially adversely affect any PSUs, or any rights pursuant thereto, granted previously to any Participant without the consent of that Participant.
Under the PSU Plan, the Board of Directors has the discretion to grant RSUs rather than PSUs if it feels such grant is aligned with the objectives of the LTIP and appropriate given the realities of the
- 25 -
economic and competitive environment. The only difference between an RSU and a PSU is that an RSU does not have any performance criteria associated with it. Its value at maturity is
determined solely by the fair market value of a NAEP Common Share on the vesting date.
On April 1, 2011, as part of the remaining
50% of grants under the LTIP program, a total of 24,535 RSUs were granted to the NEOs. These RSU grants were made at a value of 80% of targeted compensation value (as opposed to 100%) to recognize that RSUs lack certain of the downside risk
inherent in PSUs due to the absence of performance criteria. This grant of RSUs was made to encourage retention of key talent during the current period of economic recovery. The RSUs were granted with three year cliff vesting.
The following table outlines the total LTIP awards for the NEOs for fiscal 2011:
|
|
|
|
|
|
|
|
|
|
|
|
|
NEO
|
|
LTIP Target
as
Percentage
of Base
Salary (%)
(1)
|
|
|
Share
Options
Granted
December 13,
2010 (#)
|
|
|
RSUs
Granted
April 1,
2011 (#)
|
|
Rodney J. Ruston
|
|
|
50
|
|
|
|
25,800
|
|
|
|
9,943
|
|
David Blackley
|
|
|
40
|
|
|
|
9,800
|
|
|
|
3,771
|
|
Christopher R. Yellowega
|
|
|
40
|
|
|
|
9,800
|
|
|
|
3,792
|
|
Joseph C. Lambert
|
|
|
40
|
|
|
|
9,400
|
|
|
|
3,615
|
|
Bernard T. Robert
|
|
|
40
|
|
|
|
8,900
|
|
|
|
3,414
|
|
(1)
|
LTIP awards are delivered through two vehicles 50% of the award is delivered as Share Options and 50% of the award as PSUs/RSUs
|
At the March 2011 Compensation Committee meeting, the Committee discussed that the PSU portion of the LTIP was not
meeting its intended objectives and that structural changes were required to ensure it met its objectives of providing a long term incentive for key individuals, including NEOs, to remain employed with the Corporation. The 2008 PSU grant vested in
2011 and paid a value of zero to unit holders because the performance criteria set at the time of the grant was not achieved. On the date of the March 2011 meeting, the performance criteria associated with the 2009 and 2010 PSU grants were also
trending far below expectations and were expected to vest with little or no value to unit holders, contrary to the objectives of the LTIP.
As a result, the Compensation Committee reviewed a number of alternatives and subsequently recommended that the Board of Directors approve the conversion of 2009 and 2010 PSUs to RSUs at a conversion rate of 50%
and 75%, respectively. The Board of Directors subsequently approved this change and NEOs were impacted as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NEO
|
|
Original
2009 PSU
Grant (#)
|
|
|
RSUs at 50%
Conversion Rate (#)
|
|
|
Original 2010
PSU
Grant (#)
|
|
|
RSUs at 75%
Conversion
Rate (#)
|
|
Rodney Ruston
|
|
|
46,783
|
|
|
|
23,392
|
|
|
|
21,113
|
|
|
|
15,835
|
|
David Blackley
|
|
|
16,448
|
|
|
|
8,224
|
|
|
|
7,855
|
|
|
|
5,891
|
|
Christopher Yellowega
|
|
|
16,708
|
|
|
|
8,354
|
|
|
|
8,053
|
|
|
|
6,040
|
|
Joseph Lambert
|
|
|
13,854
|
|
|
|
6,927
|
|
|
|
6,191
|
|
|
|
4,643
|
|
Bernard Robert
|
|
|
15,298
|
|
|
|
7,649
|
|
|
|
6,904
|
|
|
|
5,178
|
|
Retirement Arrangements
The Corporation does not have a pension plan. For the fiscal year ended March 31, 2011, the total amount the Corporation set aside for pension, retirement and similar benefits for the NEOs was $50,897,
consisting of employer matching contributions to the executive officers Registered & Non Registered Retirement Savings Plans.
- 26 -
Benefit Plans
The Corporation provides the NEOs with health, dental, disability and insurance coverage through benefit plans paid for by the Corporation.
Perquisites
NEOs receive a limited number of perquisites that are consistent with
market practice for individuals at this level. These include a car allowance, reimbursement for annual dues at a local heath or sports club, an annual medical examination and a discretionary health care spending account.
Analysis of 2011 Compensation Decisions Regarding NEOs
The following outlines the rationale behind the compensation decisions for each of the NEOs for 2011:
Rodney
J. Ruston, President & Chief Executive Officer
The Board of Directors did not approve an increase in base salary for
Mr. Ruston for fiscal 2011 as the Board felt that a wage increase was not appropriate given the financial performance of the corporation over the previous twelve months.
Under the STIP, Mr. Rustons bonus award is made up of 70% based on the corporate results, as measured by Consolidated EBITDA and 30% on achievement of individual objectives set at the start of the year
by the Board and based on growth, profitability and safe operations of the Corporation. As a result of the Corporation not achieving the threshold Consolidated EBITDA target for fiscal 2011, no STIP was awarded. However, to encourage retention
during the current period of economic recovery, the Board approved a retention bonus of 15,675 RSUs effective June 2, 2011. The fair market value of these RSUs as of the grant date was $129,161.
Mr. Rustons LTIP awards for fiscal 2011 consisted of 25,800 Share Options granted on December 13, 2010 and 9,943 RSUs granted
April 1, 2011. These grants were in accordance with the LTIP summary described above in the
Long-Term Incentive Plan
section.
On September 24, 2009 Mr. Rustons employment agreement was extended by the Board for a further period of two years, to May 8, 2012. In addition to the existing conditions in his employment
agreement, Mr. Ruston was also awarded the right to receive 150,000 of NAEP Common Shares as follows:
|
|
|
50,000 shares on May 8, 2011;
|
|
|
|
50,000 shares on November 8, 2011; and
|
|
|
|
50,000 shares on May 8, 2012.
|
These shares will be awarded to Mr. Ruston provided he remains employed on the award dates above, or if Mr. Ruston has served notice of his resignation, provided the above award date falls within the
stipulated notice period.
David Blackley, Chief Financial Officer
Mr. Blackleys base salary was adjusted to $281,661 on July 1, 2010 using the compensation philosophy, guiding principles and inputs
described above in section Executive Compensation Philosophy.
- 27 -
Under the STIP, Mr. Blackleys bonus award is made up of 50% based on the corporate results,
as measured by Consolidated EBITDA, 30% on achievement of divisional objectives and 20% on the achievement of individual objectives set at the start of the year by the President and CEO based on growth, profitability and safe operations of the
Corporation. As a result of the Corporation not achieving the threshold Consolidated EBITDA target for fiscal 2011, no STIP was awarded. However, to encourage retention during the current period of economic recovery, the Board approved a retention
bonus of 14,801 RSUs effective June 2, 2011. The fair market value of these RSUs as of the grant date was $121,959.
Mr. Blackleys LTIP awards for fiscal 2011 consisted of 9,800 Share Options granted on December 13, 2010 and 3,771 RSUs granted
April 1, 2011. These grants were in accordance with the LTIP summary described above in the Long-Term Incentive Plan section.
In addition to the above, Mr. Blackley also received a total of $24,000 in relocation allowances during the fiscal year in relation to his relocation from Edmonton to Calgary.
Christopher R. Yellowega, Vice President, Business Services & Construction
Mr. Yellowegas base salary was adjusted to $283,250 on July 1, 2010 using the compensation philosophy, guiding principles and inputs
described above in section
Executive Compensation Philosophy
.
Under the STIP, Mr. Yellowegas bonus award
is made up of 50% based on the corporate results, as measured by Consolidated EBITDA, 30% on achievement of divisional objectives and 20% on the achievement of individual objectives set at the start of the year by the President and CEO based on
growth, profitability and safe operations of the Corporation. As a result of the Corporation not achieving the threshold Consolidated EBITDA target for fiscal 2011, no STIP was awarded. However, to encourage retention during the current period of
economic recovery, the Board approved a retention bonus of 14,884 RSUs effective June 2, 2011. The fair market value of these RSUs as of the grant date was $122,647.
Mr. Yellowegas LTIP awards for fiscal 2011 consisted of 9,800 Share Options granted on December 13, 2010 and 3,792 RSUs granted April 1, 2011. These grants were in accordance with the LTIP
summary described above in the
Long-Term Incentive Plan
section.
Bernard T. Robert, Vice President, Corporate
Mr. Roberts base salary was adjusted to $245,198 on July 1, 2010 using the compensation philosophy, guiding
principles and inputs described above in section Executive Compensation Philosophy. Mr. Roberts salary was further adjusted to $255,000 on September 27, 2010 following a reorganization that resulted in Mr. Robert
assuming responsibility for additional corporate functions, including Human Resources.
Under the STIP, Mr. Roberts bonus
award is made up of 50% based on the corporate results, as measured by Consolidated EBITDA, 30% on achievement of divisional objectives and 20% on the achievement of individual objectives set at the start of the year by the President and CEO based
on growth, profitability and safe operations of the Corporation. As a result of the Corporation not achieving the threshold Consolidated EBITDA target for fiscal 2011, no STIP was awarded. However, to encourage retention during the current period of
economic recovery, the Board approved a retention bonus of 13,400 RSUs effective June 2, 2011. The fair market value of these RSUs as of the grant date was $110,415.
- 28 -
Mr. Roberts LTIP awards for fiscal 2011 consisted of 8,900 Share Options granted on
December 13, 2010 and 3,414 RSUs granted April 1, 2011. These grants were in accordance with the LTIP summary described above in the Long-Term Incentive Plan section.
In addition to the above LTIP grants, Mr. Robert was also provided a special grant of 30,000 Share Options on September 22, 2010. These
Share Options were granted with an exercise price of $8.58 and with the same vesting provisions as are outlined in the LTIP. The purpose of this special grant was to enhance Mr. Roberts alignment with the long-term interests of the
Corporations shareholders and to promote improved equity with Mr. Roberts peers within the Executive team.
Joseph C. Lambert,
Vice President, Oil Sands Operations
Joseph C. Lambert joined the Corporation on April 14, 2008. He was initially employed
as General Manager, Mining and was promoted to the position of Vice President, Oil Sands Operations on September 27, 2010. This position was created to ensure an appropriate focus was placed on this key market and to add a second operations
position to the Executive team, reflecting the importance of operations to the Corporation.
Mr. Lamberts base salary was
adjusted to $249,492 on July 1, 2010 using the compensation philosophy, guiding principles and inputs described above in section
Executive Compensation Philosophy
. Mr. Lamberts salary was further adjusted to
$270,000 on September 27, 2010 following his promotion to the position of Vice President, Oil Sands Operations.
Under the STIP,
Mr. Lamberts bonus award is made up of 50% based on the corporate results, as measured by Consolidated EBITDA, 30% on achievement of divisional objectives and 20% on the achievement of individual objectives set at the start of the year by
the President and CEO based on growth, profitability and safe operations of the Corporation. As a result of the Corporation not achieving the threshold Consolidated EBITDA target for fiscal 2011, no STIP was awarded. However, to encourage retention
during the current period of economic recovery, the Board approved a retention bonus of 14,188 RSUs effective June 2, 2011. The fair market value of these RSUs as of the grant date was $116,910.
Mr. Lamberts LTIP awards for fiscal 2011 consisted of 9,400 Share Options granted on December 13, 2010 and 3,615 RSUs granted
April 1, 2011. These grants were in accordance with the LTIP summary described above in the
Long-Term Incentive Plan
section.
In addition to the above LTIP grants, Mr. Lambert was also provided a special grant of 30,000 Share Options on September 22, 2010. These Share Options were granted with an exercise price of $8.58 and with
the same vesting provisions as are outlined in the LTIP. The purpose of this special grant was to enhance Mr. Lamberts alignment with the long-term interests of the Corporations shareholders and to promote improved equity with
Mr. Lamberts peers within the Executive team.
As a condition of his promotion to the position of Vice President, Oil Sands
Operations Mr. Lambert was required to relocate from Edmonton to Calgary. Mr. Lambert received a total of $141,288 in relocation allowances during the fiscal year.
- 29 -
Termination and Change of Control Benefits
The Corporation has entered into employment agreements with each of the NEOs. None of the Corporations employment agreements with its NEOs
entitles such executives to receive any payments in the event of a change in control of the Corporation. The termination arrangements for the NEOs under their respective employment agreements are as follows.
Rodney J. Ruston, President & Chief Executive Officer
The initial term of Mr. Rustons employment was for five years, beginning May 2005, unless earlier terminated. On September 24, 2009 Mr. Rustons employment was extended by a further period
of two years, to May 8, 2012. If his employment is terminated by the Corporation without cause or if his employment is not renewed at the end of the term, Mr. Ruston will receive a severance payment equal to his then-annual salary plus the
amount of his bonus payment in the full bonus year preceding the termination date. Mr. Ruston is subject to certain non-competition and confidentiality agreements.
David Blackley, Chief Financial Officer
Mr. Blackley is employed for an indefinite
term, which commenced on January 14, 2008, and which will continue until terminated by him or by the Corporation in accordance with the provisions of his employment agreement. If his employment is terminated by the Corporation without cause, he
will receive a payment equal to one and one quarter times his annual base salary if terminated on or prior to his tenth anniversary of employment with the Corporation or one of its predecessors, a payment equal to one and one half times his annual
base salary if terminated after his tenth anniversary of employment with the Corporation or one of its predecessors plus a payment equal to 90% of the amount of his target bonus payment for the then-current fiscal year pro rated to the date of
termination.
Christopher R. Yellowega, Vice President, Business Services & Construction
Mr. Yellowega is employed for an indefinite term, which commenced on April 1, 2008, and which will continue until terminated by him or by
the Corporation in accordance with the provisions of his employment agreement. If his employment is terminated by the Corporation without cause, he will receive a payment equal to one times his annual base salary if terminated on or prior to his
fifth anniversary of employment with the Corporation or one of its predecessors, a payment equal to one and one quarter times his annual base salary if terminated after his fifth anniversary of employment and on or prior to his tenth anniversary of
employment with the Corporation or one of its predecessors, a payment equal to one and one half times his annual base salary if terminated after his tenth anniversary of employment with the Corporation or one of its predecessors plus a payment equal
to 90% of the amount of his target bonus payment for the then-current fiscal year pro rated to the date of termination.
Bernard T. Robert, Vice
President, Corporate
Mr. Robert is employed for an indefinite term, which commenced on March 30, 1998, and which will
continue until terminated by him or by the Corporation in accordance with the provisions of his employment agreement. If his employment is terminated by the Corporation without cause, he will receive a payment equal to one times his annual base
salary if terminated on or prior to his fifth anniversary of employment with the Corporation or one of its predecessors, a payment equal to one and one quarter times his annual base salary if terminated after his fifth anniversary of employment and
on or prior to his tenth anniversary of employment with the Corporation or one of its predecessors, a payment equal to one and one half times his annual base salary if terminated after his tenth anniversary of employment with the Corporation or one
of its predecessors plus a payment equal to 90% of the amount of his target bonus payment for the then-current fiscal year pro rated to the date of termination.
- 30 -
Joseph C. Lambert, Vice President, Oil Sands Operations
Mr. Lambert is employed for an indefinite term, which commenced on April 1, 2008, and which will continue until terminated by him or by
the Corporation in accordance with the provisions of his employment agreement. If his employment is terminated by the Corporation without cause, he will receive a payment equal to one times his annual base salary if terminated on or prior to his
fifth anniversary of employment with the Corporation or one of its predecessors, a payment equal to one and one quarter times his annual base salary if terminated after his fifth anniversary of employment and on or prior to his tenth anniversary of
employment with the Corporation or one of its predecessors, a payment equal to one and one half times his annual base salary if terminated after his tenth anniversary of employment with the Corporation or one of its predecessors plus a payment equal
to 90% of the amount of his target bonus payment for the then-current fiscal year pro rated to the date of termination.
Share Performance Graph
The following graph compares the percentage change in the cumulative NAEP Shareholder return for $100 invested in NAEP Common Shares at the closing price on the first day of trading, of $18.59, in connection with
the Corporations Initial Public Offering (IPO) for each NAEP Common Share with the total cumulative return of the S&P/TSX Composite Index for the period from November 22, 2006 to March 31, 2011. On March 31, 2011, the
NAEP Common Shares closed at $11.90 per NAEP Common Share on the TSX.
The following table shows the value of $100 invested in NAEP Common Shares on
November 22, 2006 compared to $100 invested in the S&P/TSX Composite Index:
#
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the financial years ended,
|
|
|
|
November 22,
2006
|
|
|
March 31,
2007
|
|
|
March 31,
2008
|
|
|
March 31,
2009
|
|
|
March 31,
2010
|
|
|
March 31,
2011
|
|
North American Energy Partners Inc.
|
|
$
|
100.00
|
|
|
$
|
129.10
|
|
|
$
|
86.34
|
|
|
$
|
21.03
|
|
|
$
|
52.07
|
|
|
$
|
64.01
|
|
S&P/TSX Composite Index
|
|
$
|
100.00
|
|
|
$
|
105.85
|
|
|
$
|
109.13
|
|
|
$
|
74.39
|
|
|
$
|
105.75
|
|
|
$
|
127.32
|
|
#
|
Assuming re-investment of dividends/distributions
|
- 31 -
Trends Between NEO Compensation and Total Shareholder Return
As described in the section
Executive Compensation Philosophy
, executive compensation is tied to the financial performance of the
Corporation as well as market competitiveness, division and individual performance and thus base salary compensation strategy is not based on the premise that there is an inherent connection between base salary and the Corporations share
performance. There is a level of correlation between the STIP and the price of NAEP Common Shares, as Consolidated EBITDA is a key factor in determining the annual bonus. As well, there is a level of correlation between LTIP and the performance of
NAEP Common Shares as the Share Option Plan and Restricted Share Unit values are based on the price of NAEP Common Shares.
Summary Compensation Table
The following table sets forth the annual compensation for the year ended March 31, 2011 paid to, or earned by, the NEOs. In addition to the information required to be disclosed in the Summary Compensation
Table under applicable securities laws, the following table includes the compensation value of Option awards as of the end of the fiscal year and a total dollar value of compensation received.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FY2011 Executive Pay Detail
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
Incentive
Plan
Compensation
|
|
|
|
|
|
|
|
Name and Principal
Position
|
|
Fiscal
Year
|
|
|
Salary
Earned
($)
|
|
|
Share-
based
Awards
($) (a)
|
|
|
Option-
based
Awards
($) (b)
|
|
|
Annual
Incentive
Plan
(MIP)
($) (c)
|
|
|
Long-
term
Incentive
Plans
|
|
Group
RRSP
($)
|
|
All other
compensation
($)
|
|
Total
Compensation
($)
|
|
|
|
|
|
|
|
|
|
|
|
Rodney J.
Ruston
President and Chief
Executive Officer
(Hired May 9, 2005)
|
|
|
2011
2010
2009
|
|
|
|
589,775
592,599
551,250
|
|
|
|
247,981
1,254,373
182,922
|
|
|
|
148,525
Nil
68,620
|
|
|
|
Nil
584,910
373,935
|
|
|
N/A
N/A
N/A
|
|
(d)
(d)
(d)
|
|
(e)
(e)
(e)
|
|
|
986,281
2,431,882
1,176,727
|
|
|
|
|
|
|
|
|
|
|
|
David
Blackley
Chief Financial
Officer (Hired
January 14, 2008)
|
|
|
2011
2010
2009
|
|
|
|
278,308
262,711
242,075
|
|
|
|
167,024
76,036
64,312
|
|
|
|
56,332
6,000
23,030
|
|
|
|
Nil
263,936
152,445
|
|
|
N/A
N/A
N/A
|
|
1,223
(d)
(d)
|
|
(e)
(e)
(e)
|
|
|
502,887
608,683
481,862
|
|
|
|
|
|
|
|
|
|
|
|
Christopher
R.
Yellowega
Vice President,
Business
Services and
Construction
(Hired April 1, 2008)
|
|
|
2011
2010
2009
|
|
|
|
281,187
268,749
236,708
|
|
|
|
167,959
77,953
65,328
|
|
|
|
56,650
6,000
641,120
|
|
|
|
Nil
269,864
149,773
|
|
|
N/A
N/A
N/A
|
|
14,059
15,965
9,732
|
|
(e)
(e)
(e)
|
|
|
519,855
638,531
1,102,661
|
|
|
|
|
|
|
|
|
|
|
|
Robert,
Bernard T.
Vice President,
Corporate (Hired
September 1, 2007)
|
|
|
2011
2010
2009
|
|
|
|
247,892
234,050
226,675
|
|
|
|
151,213
66,830
59,815
|
|
|
|
51,000
2,400
18,800
|
|
|
|
Nil
238,556
136,159
|
|
|
N/A
N/A
N/A
|
|
12,395
11,702
18,176
|
|
(e)
(e)
(e)
|
|
|
462,500
553,538
459,625
|
|
|
|
|
|
|
|
|
|
|
|
Joseph
Lambert
Vice President, Oil
Sands Operations
(Hired September 27,
2010)
|
|
|
2011
2010
2009
|
|
|
|
242,116
234,760
225,304
|
|
|
|
160,108
59,928
54,169
|
|
|
|
54,000
Nil
19,505
|
|
|
|
Nil
198,407
107,357
|
|
|
N/A
N/A
N/A
|
|
6,958
14,130
10,957
|
|
153,493
(e)
(e)
|
|
|
616,675
507,225
417,292
|
|
(a)
|
Reflects the grant date fair value of the RSUs (rounded to nearest dollar) granted
on April 1, 2011 (regular grant) as well as those granted on June 2, 2011 as a special retention bonus. 2010 figures represent the fair market value of PSUs granted during that fiscal year based on the closing share price on the TSX on
March 31, 2010. The 2010 figure for Mr. Ruston includes 150,000 NAEP Common Shares granted to him in his employment agreement extension, using the grant date share price of $7.00. 2009 figures represent the fair market value of PSUs
granted during that fiscal year based on the closing share price on the TSX on March 31, 2009.
|
- 32 -
(b)
|
Calculated as the number of option based awards granted multiplied by the fair
value of each award as at the grant date. The fair value of each award represents the intended compensation value of the award using a Black-Scholes valuation model. The Black-Scholes option pricing model assumptions used by NAEP were
(i) dividend yield of nil%; (ii) expected volatility of 78.67% (September 22, 2010) or 78.57% (December 13, 2010); (iii) risk-free rate of 2.23% (September 22, 2010) or 2.78% (December 13, 2010); and (iv) expected life of 6.1
years.
|
(c)
|
Reflects the STIP payment made to each executive for the applicable fiscal year. For fiscal 2011 no STIP payments were made, however, a special retention
bonus was granted in the form of RSUs, the value of which is reflected under the column Share Based Awards.
|
(d)
|
Mr. Ruston did not participate in the Corporations matching RRSP program
in fiscal 2009, 2010 or 2011. However, in accordance with the terms of his employment agreement Mr. Ruston did receive lump sum payments of $20,000 and $15,698 in fiscal 2010 and 2011, respectively, in lieu of participation in the RRSP program.
In addition to the payment of $15,698 for fiscal 2011, Mr. Ruston also expensed perquisites in the amount of $4,302, bringing his total benefit in lieu of participation in the RRSP program to $20,000 for the fiscal year. Mr. Blackley did
not participate in the Corporations matching RRSP program in fiscal 2009 and 2010; however he did participate in the program in fiscal 2011.
|
(e)
|
The amount of other annual compensation does not exceed the lesser of $50,000 or 10% of the NEOs total salary for the fiscal year.
|
Incentive Plan Awards
Outstanding Share-Based Awards and Option-Based Awards
The following table summarizes
the number and value of outstanding share-based and option-based awards for each of the NEOs at the end of the 2011 fiscal year:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option-Based Awards
|
|
|
Value of
Unexercised
In-the-Money
Options
Which Have
Not
Yet
Vested
($)
(a)
|
|
|
Share-Based Awards
(RSUs except
where
indicated)
|
|
NEO
|
|
Number of
Securities
Underlying
Unexercised
Options
|
|
|
Option
Exercise
Price
|
|
|
Option Expiry Date
|
|
|
Value of
Unexercised
In-the-Money
Options
Which Have
Vested
($)
(a)
|
|
|
|
Number of
Securities
That Have
Not Vested
(b)
|
|
|
Market or
Payout
Value of
Securities
That Have
Not Vested
($)
|
|
Rodney J. Ruston
|
|
|
550,000
21,900
29,200
32,200
25,800
|
|
|
$
$
$
$
$
|
5.00
13.50
3.69
9.33
10.13
|
|
|
|
May 9, 2015
November 27, 2017
December 4, 2018
February 8, 2020
December 13, 2020
|
|
|
|
3,795,000
Nil
95,893
16,551
Nil
|
|
|
|
Nil
Nil
143,839
66,203
45,666
|
|
|
|
64,845
150,000
|
|
|
|
771,656
1,785,000
|
|
|
|
|
|
|
|
|
|
David Blackley
|
|
|
75,000
9,800
50,000
11,800
9,800
|
|
|
$
$
$
$
$
|
13.21
3.69
8.28
9.33
10.13
|
|
|
|
January 14, 2018
December 4, 2018
June 16, 2019
February 8, 2020
December 13, 2020
|
|
|
|
Nil
32,183
72,400
6,065
Nil
|
|
|
|
Nil
48,275
108,600
24,261
17,346
|
|
|
|
32,687
|
|
|
|
388,975
|
|
|
|
|
|
|
|
|
|
Christopher R. Yellowega
|
|
|
75,000
9,200
50,000
11,800
9,800
|
|
|
$
$
$
$
$
|
16.01
3.69
8.28
9.33
10.13
|
|
|
|
April 1, 2018
December 4, 2018
June 16, 2019
February 8, 2020
December 13, 2020
|
|
|
|
Nil
30,213
72,400
6,065
|
|
|
|
Nil
45,319
108,600
24,261
17,346
|
|
|
|
33,070
|
|
|
|
393,533
|
|
|
|
|
|
|
|
|
|
Bernard T. Robert
|
|
|
25,000
6,000
40,000
8,000
20,000
10,000
30,000
8,900
|
|
|
$
$
$
$
$
$
$
$
|
5.00
13.50
15.37
3.69
8.28
9.33
8.58
10.13
|
|
|
|
November 26, 2013
November 27, 2017
March 18, 2018
December 4, 2018
June 16, 2019
February 8, 2020
September 22, 2020
December 13,
2020
|
|
|
|
172,500
Nil
Nil
26,272
28,960
5,140
Nil
Nil
|
|
|
|
Nil
Nil
Nil
39,408
43,440
20,560
99,600
15,753
|
|
|
|
29,641
|
|
|
|
352,728
|
|
|
|
|
|
|
|
|
|
Joseph C. Lambert
|
|
|
50,000
8,300
9,200
30,000
9,400
|
|
|
$
$
$
$
$
|
16.46
3.69
9.33
8.58
10.13
|
|
|
|
April 15, 2018
December 4, 2018
February 8, 2020
September 22, 2020
December 13, 2020
|
|
|
|
Nil
13,629
4,729
Nil
Nil
|
|
|
|
Nil
54,514
18,915
99,600
16,638
|
|
|
|
29,373
|
|
|
|
349,539
|
|
- 33 -
(a)
|
Amounts calculated as the March 31, 2011 closing price of the NAEP Common Shares on the Toronto Stock Exchange, which was $11.90, less the option
exercise price multiplied by the number of option-based awards as of March 31, 2011.
|
(b)
|
Amounts calculated as the number of share-based awards (RSUs or NAEP Common Shares as applicable) granted multiplied by the March 31, 2011 closing price
of the NAEP Common Shares on the Toronto Stock Exchange, which was $11.90.
|
Incentive Plan Awards Value Vested or Earned
During the Year
The following table sets forth the value of option-based and share-based awards of the NEOs that vested during
the 2011 fiscal year, as well as the value of non-equity incentive plan compensation that the NEOs earned during the 2011 fiscal year:
|
|
|
|
|
|
|
|
|
NEO
|
|
Option-based
awards
Value vested
during the
year ($)
(a)
|
|
|
Share-based
awards (PSUs)
Value vested
during the
year ($)
(b)
|
|
Non-equity
incentive plan
compensation
Value earned
during the
year
($)
|
Rodney Ruston
|
|
|
622,881
|
|
|
Nil
|
|
Nil
|
David Blackley
|
|
|
37,016
|
|
|
Nil
|
|
Nil
|
Christopher Yellowega
|
|
|
36,295
|
|
|
Nil
|
|
Nil
|
Bernard Robert
|
|
|
21,696
|
|
|
Nil
|
|
Nil
|
Joseph Lambert
|
|
|
13,435
|
|
|
Nil
|
|
Nil
|
(a)
|
Calculated as the number of option-based awards that vested during the fiscal year multiplied by the difference between the exercise price and the closing
share price on the Toronto Stock Exchange on the date the options vested.
|
(b)
|
PSUs that vested in fiscal 2011 resulted in a payment of zero to unit holders because the performance criteria associated with the units was not achieved.
|
COMPENSATION OF DIRECTORS
The Corporations directors, other than Messrs. McIntosh and Ruston, each receive an annual aggregate retainer and a fee for each meeting of
the Board of Directors or any committee of the Board that they attend and are reimbursed for reasonable out-of-pocket expenses incurred in connection with their services pursuant to the Corporations policies. The table below outlines the
compensation paid to non-management directors during fiscal year 2011.
|
|
|
|
|
Type of Fee
|
|
Amount ($Cdn.)
|
|
Annual Fees
|
|
|
|
|
Board retainer
|
|
|
110,000
|
|
Audit committee chair
|
|
|
12,000
|
|
Compensation committee chair
|
|
|
9,000
|
|
Risk committee chair
|
|
|
5,000
|
|
Governance committee chair
|
|
|
5,000
|
|
Attendance Fees
|
|
|
|
|
Board or committee meeting
|
|
|
1,500
|
|
The Compensation Committee assesses the adequacy and form of compensation paid to directors in order to ensure that
their compensation is competitive and reflects their responsibilities as directors. Periodically, the Compensation Committee benchmarks directors compensation against compensation paid by major Canadian public companies similar in size to the
Corporation and will engage the services of a compensation consultant to report on relevant benchmark data and recommend appropriate compensation for directors. Director compensation was updated in January 2008 based upon analysis and recommendation
by Hewitt Associates.
- 34 -
The following table sets out the total compensation earned by each non-management director of the
Corporation during the 2011 fiscal year and also illustrates the manner in which the compensation was paid for each director. Directors have the option to receive up to 100% of their annual fees in DSUs, which results in slight differences in
reportable compensation.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Board
Retainer
($)
|
|
|
Committee
Chair
Retainer
($)
(
1
)
|
|
|
Committee
Member
Retainer
($)
|
|
|
Board/
Committee
Attendance
Fees ($)
|
|
|
|
|
Fees paid
in Cash ($)
|
|
|
Fees paid
in Share
based
awards ($)
(
2
)
|
|
|
Total Fees
Earned ($)
|
|
George R. Brokaw
|
|
|
110,000
|
|
|
|
|
|
|
|
N/A
|
|
|
|
24,000
|
|
|
|
|
|
67,000
|
|
|
|
67,000
|
|
|
|
134,000
|
|
John Brussa
|
|
|
110,000
|
|
|
|
|
|
|
|
N/A
|
|
|
|
18,000
|
|
|
|
|
|
64,250
|
|
|
|
64,250
|
|
|
|
128,500
|
|
Peter Dodd
|
|
|
110,000
|
|
|
|
|
|
|
|
N/A
|
|
|
|
21,000
|
|
|
|
|
|
65,500
|
|
|
|
65,500
|
|
|
|
131,000
|
|
John
Hawkins
(
3
)
|
|
|
110,000
|
|
|
|
5,000
|
|
|
|
N/A
|
|
|
|
18,000
|
|
|
|
|
|
75,500
|
|
|
|
57,500
|
|
|
|
133,000
|
|
William C.
Oehmig
(
4
)
|
|
|
110,000
|
|
|
|
5,000
|
|
|
|
N/A
|
|
|
|
28,500
|
|
|
|
|
|
71,750
|
|
|
|
71,750
|
|
|
|
143,500
|
|
Allen Sello
(
5
)
|
|
|
110,000
|
|
|
|
12,000
|
|
|
|
N/A
|
|
|
|
24,000
|
|
|
|
|
|
73,000
|
|
|
|
73,000
|
|
|
|
146,000
|
|
Peter W.
Tomsett
(
6
)
|
|
|
110,000
|
|
|
|
9,000
|
|
|
|
N/A
|
|
|
|
28,500
|
|
|
|
|
|
Nil
|
|
|
|
147,500
|
|
|
|
147,500
|
|
Rick K. Turner
|
|
|
110,000
|
|
|
|
|
|
|
|
N/A
|
|
|
|
16,500
|
|
|
|
|
|
63,250
|
|
|
|
63,250
|
|
|
|
126,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
|
|
|
880,000
|
|
|
|
31,000
|
|
|
|
|
|
|
|
178,500
|
|
|
|
|
|
480,250
|
|
|
|
609,750
|
|
|
|
1,090,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The Chair of each Committee must take 50% of their additional annual retainer for serving as Chair in DSUs.
|
(2)
|
Amounts reflect grant date fair value of DSUs as calculated in accordance with the deferred share unit plan.
|
(3)
|
Mr. Hawkins was the Chair of the Governance Committee for fiscal year 2011.
|
(4)
|
Mr. Oehmig was the Chair of the Risk Committee for fiscal year 2011.
|
(5)
|
Mr. Sello was the Chair of the Audit Committee for fiscal year 2011.
|
(6)
|
Mr. Tomsett was the Chair of the Compensation Committee for fiscal year 2011.
|
Mr. McIntosh, the Chairman of the Board, received a retainer from April 1, 2010 to March 31, 2011 paid at a rate of $220,000 per
annum. The Chairman is not eligible to receive annual bonuses and at least 50% of his annual retainer is to be paid in DSUs. Mr. McIntosh elected to have 50% of his retainer paid in DSUs for fiscal 2011.
Mr. Ruston is a member of management of NAEP and does not receive any additional remuneration for his role as a director of the Corporation.
Directors Deferred Share Unit Plan
The Corporations Directors Deferred Share Unit Plan was approved on November 27, 2007 by the Corporations Board of Directors and became effective on January 1, 2008 (the DSU
Plan). The DSU Plan is administered by the Compensation Committee. Under the DSU Plan, the Corporation grants annual equity compensation in the form of DSUs, replacing the previous practice of granting options. DSUs under the DSU Plan may be
granted to each member of the Board of Directors of the Corporation (the Participant) who is not an employee or officer of the Corporation and its affiliated entities. The DSU Plan provides that the Participant receives 50% of his or her
fixed remuneration payable in respect of the services in his or her capacity as a board or committee member in a calendar year (Participants Annual Fixed Remuneration) in the form of DSUs and may elect to receive all or a part of
the Participants Annual Fixed Remuneration in excess of 50% in the form of DSUs. In addition, directors may elect any amount of their variable compensation (i.e. per meeting fees) (Annual Variable Remuneration) to be paid in DSUs.
This election must be made by December 31
st
each calendar year
- 35 -
for effect the following fiscal year. The DSUs may be redeemed in cash or, at the discretion of the Corporation, in a number of NAEP Common Shares which may be shares purchased on the open
market. Payment is based on the number of DSUs held, plus dividend equivalents (if any) multiplied by the NAEP Common Share price at the time of maturity. When dividends are paid on NAEP Common Shares, additional DSUs (Dividend
Equivalents) will be credited to the Participants to reflect such dividends. DSUs vest immediately upon grant. The DSU Plan provides that, in the event of termination (with or without cause), including retirement, all DSUs and Dividend
Equivalents will be redeemed by the Corporation within 21 days following: (a) in the case of directors that are U.S. taxpayers, the date of such termination; and (b) in the case of all other directors, by December 1 of the calendar
year immediately following the year by which such termination takes place (unless an earlier date is elected by the director after termination). The DSU Plan provides that, in the event of termination (with or without cause), including retirement,
all DSUs and Dividend Equivalents will be redeemed by the Corporation. A Participant has no further rights respecting any DSU or Dividend Equivalent which has been redeemed.
The table below summarizes the DSUs granted to the directors based on their elections with respect to the 2011 fiscal year:
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
% of Annual Fixed
Remuneration paid in
DSUs
|
|
% of Annual Variable
Remuneration paid
in DSUs
|
|
# of DSUs
|
|
|
Dollar value of DSUs (based
on $11.90)
(a)
|
|
George R. Brokaw
|
|
50
|
|
50
|
|
|
7,107
|
|
|
$
|
84,573
|
|
John A. Brussa
|
|
50
|
|
50
|
|
|
6,561
|
|
|
$
|
78,076
|
|
Peter Dodd
|
|
50
|
|
50
|
|
|
6,889
|
|
|
$
|
81,979
|
|
John D. Hawkins
|
|
50
|
|
Nil
|
|
|
5,543
|
|
|
$
|
65,962
|
|
Ron McIntosh
|
|
50
|
|
N/A
|
|
|
10,698
|
|
|
$
|
127,306
|
|
William C. Oehmig
|
|
50
|
|
50
|
|
|
7,509
|
|
|
$
|
89,357
|
|
Allen R. Sello
|
|
50
|
|
50
|
|
|
7,430
|
|
|
$
|
88,417
|
|
Peter W. Tomsett
|
|
100
|
|
100
|
|
|
15,528
|
|
|
$
|
184,783
|
|
K. Rick Turner
|
|
50
|
|
50
|
|
|
6,487
|
|
|
$
|
77,195
|
|
(a)
|
Reflects the value of the DSUs granted on March 31, 2011 using the closing market price on the Toronto Stock Exchange which was $11.90. The number of
DSUs, by their terms, is adjusted to take into account any dividends paid on NAEP Common Shares.
|
Share Ownership Guidelines
The Board of Directors adopted and approved, on November 27, 2007, for implementation effective January 1, 2008 guidelines
for the ownership by the directors of the Corporation of equity in the Corporation (the Share Ownership Guidelines). The Share Ownership Guidelines require the Chair of the Board of Directors to own $400,000 of equity in the Corporation
and the remaining directors to own $250,000 of equity in the Corporation, in each case represented by NAEP Common Shares and DSUs. Such ownership level must be achieved within five years of the later of the implementation of the Share Ownership
Guidelines and the initial appointment or election as a director. The achievement of the share ownership threshold is facilitated by the requirement for the directors to receive 50% of their Annual Fixed Remuneration in the form of DSUs. Once the
share ownership threshold is achieved, the number of NAEP Common Shares and DSUs representing the compliance level must be held for at least 30 days to qualify. Thereafter that number of NAEP Common Shares or DSUs must be maintained in order to
remain compliant, regardless of a subsequent decrease in NAEP Common Share price. All current directors comply with these Share Ownership Guidelines.
Directors and Officers Insurance
The Corporation maintains directors and officers liability insurance for a total limit of $50,000,000. This program provides
coverage from June 1, 2010 to June 1, 2012. The base layer of coverage is primary,
- 36 -
providing a limit of $10,000,000 for a premium of $195,000 and a deductible of $500,000. The first excess layer adds a $10,000,000 additional limit for a premium of $136,350. The second excess
layer adds a third limit of $10,000,000 for a premium of $93,750. The third excess layer adds a fourth limit of $10,000,000 for a premium of $73,425. The fourth and final excess layer adds $10,000,000 to the previously noted layers, including Side A
Difference in Conditions coverage for a premium of $78,375. These layers add to the primary policy for a total of $50,000,000 in directors and officers liability limits, with a deductible of $500,000 on the primary layer only.
Indemnification
The Corporation
has entered into indemnity agreements with its directors and officers, whereby it has agreed to indemnify its directors, officers and certain other employees from all liabilities, obligations, charges and expenses, reasonably incurred by such
director, officer or other employee in respect of any civil, criminal, investigative, administrative action or other proceeding in which such individual is involved by reason of being or having been a director, officer or employee of the Corporation
(or a direct or indirect affiliate) of the Corporation, provided that (i) he or she acted honestly and in good faith with a view to the best interests of the Corporation, or (ii) in the case of a criminal or administrative action or
proceeding that is enforced by a monetary penalty, he or she had reasonable grounds for believing that his conduct was lawful, and (iii) in the case of an action by or on behalf of the Corporation or other entity to procure a judgment in its
favour, the Corporation obtains any approval required under the
Canada Business Corporations Act
in respect of such indemnification.
INDEBTEDNESS OF DIRECTORS AND OFFICERS
None of the directors or
officers of the Corporation had any outstanding indebtedness to the Corporation or any of its subsidiaries during the 2011 fiscal year or as at the date hereof.
Corporate Cease Trade Orders, Bankruptcies, Penalties or Sanctions
Mr. Ron McIntosh is a
director of Fortress Energy Inc. (Fortress). On March 3, 2011 the TSX suspended trading in the securities of Fortress due to Fortress having been granted a stay under the
Companies Creditors Arrangement Act
(Canada).
Fortress announced that it applied for the stay in order to enable it to challenge a reassessment by the Canada Revenue Agency (CRA) in the amount of approximately $18 million which Fortress believes is not sustainable and which it
intends to dispute. Fortress announced that, without the stay, it would have been compelled to immediately remit $9 million to the CRA and that, at the time, it did not have sufficient funds to do so, although, at the time, it had $18 million of
assets in excess of its liabilities with sufficient liquid assets to pay all other liabilities and trade payables. Further, on February 23, 2011, Fortress announced that that it did not meet the listing requirements of the TSX by virtue of the
sale of substantially all of its oil and gas assets to Terra Energy Corp. on September 1, 2010. Fortress was notified by the TSX that its formal listing committee determined on February 25, 2011, that Fortress would be delisted from the
TSX on March 30, 2011, which it was.
John A. Brussa was a director of Imperial Metals Limited, a corporation engaged in oil and
natural gas and mining operations, during the year prior to that corporation implementing a plan of arrangement under the Company Act (British Columbia) and under the Companies Creditors Arrangement Act (Canada) which resulted in the
separation of its two businesses. The reorganization resulted in the creation of two public corporations, Imperial Metals Corporation, engaged in the mining business, and IEI Energy Inc. (subsequently renamed Rider Resources Ltd.), engaged in the
oil and gas business. The plan of arrangement was completed in April 2002.
- 37 -
INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS
No director or executive officer of the Corporation at any time since the beginning of the Corporations last completed fiscal year, no
proposed nominee for election as a director nor any associate or any affiliate of any such director, officer or nominee, has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be
acted upon at the Meeting. Furthermore, no informed person (as such term is defined under applicable securities laws), proposed nominee for election as a director of the Corporation or any associate or affiliate of any informed person or proposed
nominee has or had a material interest, direct or indirect, in any transaction since the beginning of the Corporations last fiscal year or in any proposed transaction which has materially affected or would materially affect the Corporation or
any of its subsidiaries or affiliates, except as disclosed below.
REPORT ON CORPORATE GOVERNANCE PRACTICES
Board of Directors
The
National Policy 58-201 Corporate Governance Guidelines of the Canadian Securities Administrators recommends that boards of directors of reporting issuers be composed of a majority of independent directors. With eight of the ten
directors proposed to be nominated considered independent, the Board of Directors is composed of a majority of independent directors. The Chairman of the Board, Mr. McIntosh, is an independent director. Rodney J. Ruston is considered to have a
material relation with the Corporation by virtue of his executive officer position with the Corporation and is therefore not independent. Peter Dodd was an executive officer of the Corporation within the previous three years and is therefore not
considered independent. Although Messrs Brokaw, Hawkins, Oehmig and Turner have relationships with shareholders of the Corporation and such shareholders provide consulting services to the Corporation, the shareholders do not receive any payments in
relation to such consulting services but have an interest in providing such services since they have an investment in the Corporation. Messrs Brokaw, Hawkins, Oehmig and Turner do not in their individual capacities provide any consulting services to
the Corporation, for a fee or otherwise. In addition, in the facts and circumstances applicable to these individuals, none of them are affiliated entities of the Corporation. The Board of Directors has determined that each of the directors, other
than Rodney J. Ruston and Peter Dodd, is an independent director within the meaning of the rules of the New York Stock Exchange applicable to U.S. domestic listed companies and applicable Canadian securities laws.
In order to facilitate open and candid discussion among the Corporations independent directors, the Board holds in-camera sessions which
exclude the non-independent directors. In-camera meetings are held whenever necessary as part of the regularly scheduled board meetings. In the 2011 fiscal year, six of six board meetings included such in-camera sessions, and except for the
in-camera sessions, there were no separate meetings of independent board members that took place.
- 38 -
Directorships with Other Issuers
Currently, the following directors serve on the boards or act as trustees of other public companies, as listed below:
|
|
|
|
|
|
|
Name
|
|
Name of Reporting Issuer
|
|
Exchange
|
|
From
|
Ronald A. McIntosh
|
|
Advantage Oil & Gas Ltd.
(a)
|
|
TSX
|
|
September 1998
|
|
|
Fortress Energy Inc.
|
|
TSX
|
|
November 2009
|
|
|
|
|
John A. Brussa
|
|
Baytex Energy Ltd. (a wholly owned subsidiary of Baytex Energy Trust)
|
|
TSX
|
|
August 1997
|
|
|
|
|
|
|
Calmena Energy Services Inc. (formerly BlackWatch Energy Services Corp.)
|
|
TSX
|
|
January 2009
|
|
|
|
|
|
|
Chinook Energy Inc.
|
|
TSX
|
|
June 2010
|
|
|
|
|
|
|
Crew Energy Inc.
|
|
TSX
|
|
June 2003
|
|
|
|
|
|
|
Deans Knight Income Corporation
|
|
TSX
|
|
March 2009
|
|
|
|
|
|
|
Enseco Energy Services Corp.
|
|
TSX
|
|
March 2006
|
|
|
|
|
|
|
Galleon Energy Inc.
|
|
TSX
|
|
March 2003
|
|
|
|
|
|
|
Just Energy Group Inc.
|
|
TSX
|
|
January 2011
|
|
|
|
|
|
|
Midway Energy Ltd.
|
|
TSX
|
|
June 2006
|
|
|
|
|
|
|
Penn West Petroleum Ltd. (Penn West Energy Trust)
|
|
TSX
|
|
April 1995
|
|
|
|
|
|
|
Pinecrest Energy Inc. (formerly Antler Creek Energy Corp.)
|
|
TSX
|
|
May 2010
|
|
|
|
|
|
|
Progress Energy Resources Corp. (formerly ProEx Energy Ltd.)
|
|
TSX
|
|
January 2009
|
|
|
|
|
|
|
RMP Energy Inc. (formerly Orleans Energy Ltd.)
|
|
TSX
|
|
June 2005
|
|
|
|
|
|
|
Storm Exploration Inc.
|
|
TSE
|
|
August 2004
|
|
|
|
|
|
|
Twin Butte Energy Ltd.
|
|
TSX
|
|
March 2011
|
|
|
|
|
|
|
Westfire Energy Ltd.
|
|
TSX
|
|
December 2007
|
|
|
|
|
|
|
Yoho Resources Inc.
|
|
TSXV
|
|
March 2008
|
|
|
|
|
Allen R. Sello
|
|
Sterling Shoes Inc. (formerly Sterling Shoes Income Fund)
|
|
TSX
|
|
May 2005
|
|
|
|
|
Peter W. Tomsett
|
|
Silver Standard Resources Inc.
|
|
TSX
|
|
November 2006
|
|
|
|
|
|
|
Talisman Energy Inc.
|
|
TSX
|
|
December 2009
|
|
|
|
|
K. Rick Turner
|
|
Energy Transfer Equity, L.P.
|
|
NYSE
|
|
February 2006
|
(a)
|
Advantage Oil & Gas Ltd. is a wholly-owned subsidiary of Advantage Energy Income Fund, an open-ended, unincorporated investment trust established
under the laws of the Province of Alberta and created pursuant to a Trust Indenture on April 17, 2001.
|
Mandate of the Board
of Directors
The Board of Directors supervises the management of the Corporations business as provided by Canadian law and
complies with the listing requirements of the New York Stock Exchange applicable to U.S. domestic listed companies, which require that the Board of Directors be composed of a majority of independent directors. The Corporation has adopted a Corporate
Governance Policy which sets the framework for how the Board of Directors approaches its mandate and addresses such things as (i) the responsibility of the Board of Directors to monitor the operation of the business, provide oversight of
- 39 -
risk management, internal control and corporate communications, and approve the strategic and ethical directions of the Corporation, (ii) committees of the Board of Directors (which include
an Audit Committee, Compensation Committee, Governance Committee and a Health, Safety, Environment and Business Risk Committee), (iii) qualifications, responsibilities, orientation and education of the directors, and (iv) succession
planning. The Corporate Governance Policy for the Corporation can be found on the Corporations website at
www.nacg.ca
.
Position
Descriptions for the Chairman of the Board of Directors and Committee Chairs
The Chairman of the Board of Directors (the
Board Chair) reports to the Board of Directors and shareholders and provides leadership to the Board of Directors relating to the effective execution of all Board responsibilities. The Board Chair is a non-management director and the
Board Chairs performance will be measured against the effectiveness with which the Board functions, including satisfaction of Board members regarding the functioning of the Board.
Specifically, the Board Chair has the responsibility to, amongst other things:
|
a.
|
provide leadership in ensuring that the Board works harmoniously as a cohesive team;
|
|
b.
|
facilitate the Board functioning independently of management by ensuring that the Board meets regularly without management and by engaging outside advisors as
required;
|
|
c.
|
provide guidance to the Board and management to ensure that the responsibilities of the Board are well understood by both the Board and management and that
the boundaries between Board and management responsibilities are clearly understood and respected;
|
|
d.
|
attend committee meetings and communicate with directors between meetings as required;
|
|
e.
|
establish procedures to govern the function of the Board;
|
|
f.
|
assist the Governance Committee in implementing the Board assessment;
|
|
g.
|
lead in continuous improvement of Board processes;
|
|
h.
|
upon the recommendation of the Governance Committee, approach new candidates to serve on the Board;
|
|
i.
|
represent shareholders and the Board to management and represent management to the Board and shareholders;
|
|
j.
|
work with the Board and the Chief Executive Officer to ensure that the Corporation is building a healthy governance culture, assist in effective communication
between the Board and management, maintain regular contact with the Chief Executive Officer, and serve as advisor to the Chief Executive Officer and other senior officers;
|
|
k.
|
act as the Chair for annual and special meetings of the shareholders; and
|
|
l.
|
receive concerns addressed to the Board from stakeholders about the Corporations corporate governance, business conduct and ethics or financial
practices.
|
The Chair of each of the Audit Committee, Compensation Committee, Governance Committee and Health, Safety,
Environment and Business Risk Committee each has the responsibility to (i) provide leadership to the committee and to ensure that each of his or her respective Committees works harmoniously as a cohesive team, (ii) facilitate the committee
functioning independently of management by meeting regularly without management and engaging outside advisors as required, (iii) communicate with Committee members between meetings as required, (iv) facilitate information sharing with
other Committees as required, (v) lead in continuous improvement of committee processes, and (vi) assist in effective communication between the Committee and management. The Chair of each Committee determines the time, place and procedures
for the Committee meetings, subject to requirements of the Committees charter.
- 40 -
Position Description for the Chief Executive Officer
The Corporation has developed a written position description for the Chief Executive Officer. This description is included in the Compensation
Committee Charter as Appendix A. The description provides that Chief Executive Officer is responsible for the successful management of the business and affairs of the Corporation and has the responsibility to:
|
a.
|
report to and work with the Board of Directors so that it may fulfill its oversight role;
|
|
b.
|
advise the Board of Directors in a timely manner of major issues and risks that may affect the Corporation;
|
|
c.
|
recommend to the Board the strategic direction of the Corporation and implement approved operational and business plans;
|
|
d.
|
provide the overall leadership, direction and management of the business operations to achieve the Corporations goals and objectives;
|
|
e.
|
allocate financial and human capital for the successful management and financial performance of the Corporation;
|
|
f.
|
foster a culture of integrity and set the ethical tone for the Corporation;
|
|
g.
|
establish the policies and procedures to effectively operate the Corporation in an efficient and controlled manner;
|
|
h.
|
monitor and manage the risks of the Corporation;
|
|
i.
|
recommend to the Board any acquisition, merger, divestiture and the entry or exit of any business unit of the Corporation;
|
|
j.
|
establish the corporate structure and major accountabilities;
|
|
k.
|
oversee the relationship between the Corporation and the public; and
|
|
l.
|
develop, supervise and evaluate the executive officers and recommend to the Compensation Committee the selection and compensation of executive officers.
|
Orientation and Continuing Education
The Governance Committee, in conjunction with the Board Chair and the Chief Executive Officer of the Corporation, is responsible for ensuring that new Directors are provided with an orientation and education about
the business of the Corporation. New directors are provided with written information about the duties and obligations of directors, the structure and role of the Board and its Committees, the Boards mandate, Committee Charters, compliance
requirements for directors, corporate policies as well as agendas and minutes for recent Board and Committee meetings and opportunities for meetings and discussion with senior management and other directors. The goal is to ensure that new directors
fully understand the nature and operation of the Corporations business.
Management encourages the directors to attend relevant
education and development opportunities to improve their skills and abilities to carry out the role as a director at the Corporation. Expenses associated with attendance at seminars, conferences and education sessions and/or membership to the
Institute of Corporate Directors are reimbursed by the Corporation.
Management has provided two sources of training and industry
seminars which have been placed on the director extranet site and are updated regularly:
|
1.
|
Industry Conferences Management updates this list as conferences are scheduled.
|
|
2.
|
Access to the Institute of Corporate Directors website This website offers current information for directors and a variety of development
opportunities.
|
- 41 -
Code of Conduct and Ethics Policy
In order to ensure that directors exercise independent judgment and to encourage and promote ethical standards and behaviour, the Board of Directors
has a written Code of Conduct and Ethics Policy (the Code) setting out general statements of conduct and ethical standards to be followed by all of the Corporations personnel. A copy of the Code may be obtained at the
Corporations website at www.nacg.ca.
In order to ensure compliance with the Code, the Board of Directors and the Corporation have
implemented an ethics reporting policy (the Reporting Policy), a copy of which may be obtained at the Corporations website at www.nacg.ca. The objectives of the Reporting Policy are to (i) provide a means of reporting
non-compliance with the Code and (ii) to comply with the
Sarbanes Oxley Act
and securities regulations. Under the Reporting Policy, the Corporations personnel are required to report any conduct which they believe, in good faith, to
be a violation or apparent violation of the Code. The Corporation keeps the identity of the person making the report for every reported violation confidential, except as otherwise required by law, and a copy of all reported violations are
confidential until action is taken to correct the violation, at which time the violation may become known (but not the identity of the individual filing the report). The Policy further provides that there is not to be any retaliation against the
reporter.
The Corporation has the option to report violations of the Code either internally or externally in the following ways:
|
a.
|
internal reporting is through a supervisor, the Corporations executive or its Board of Directors and its Committees;
|
|
b.
|
effective anonymous reporting is through an independent ethics reporting firm; or
|
|
c.
|
directly to the Chairman of the Board or Audit Committee Chair.
|
In all cases there are two reviewers for each reported violation, which ensures an effective independent review and a control over segregation of reviewing responsibility to ensure that reported violations are
investigated appropriately and thoroughly. For serious violations of the Code, the Audit Committee Chair or the Board Chair will be advised immediately of the reported violation. All reported violations are summarized and provided to the Audit
Committee at least quarterly. The Audit Committee Chair and the Board Chair will have access, at all times, to the status and content of Reported Violations.
The Code provides additional safeguards to ensure that directors exercise independent judgment in considering transactions and agreements in respect of which a director or executive officer has a material interest
by requiring that all personnel avoid any activity which creates or gives the appearance of a conflict of interest between an individuals personal interests and the Corporations interests. Specifically, the Code provides that, unless a
waiver is granted, no personnel shall (i) seek or accept any personal loan or guarantee of any obligation or services from any outside business, (ii) act as a consultant or employee of or otherwise operate an outside business if the
demands of the outside business would interfere with the employees responsibilities to the Corporation, (iii) conduct business on behalf of the Corporation with a close personal friend or immediate family member, or (iv) take for
themselves opportunities that arise through the use of the Corporations property or information or through their position within the Corporation.
Nomination of Directors
Please see section
captioned Governance Committee below.
Compensation Determination
Please see section captioned Compensation Committee below.
- 42 -
BOARD COMMITTEES
Audit Committee
The Audit Committee
recommends independent public accountants to the Board of Directors, reviews the quarterly and annual financial statements and related management discussion and analysis (MD&A), press releases and auditor reports, and reviews the
fees paid to our auditors. The Audit Committee approves quarterly financial statements and recommends annual financial statements for approval to the Board. In accordance with Rule 10A-3 under the
Securities Exchange Act of 1934
, as
amended, and the listing requirements of the New York Stock Exchange and the requirements of the Canadian Securities regulatory authorities the Board of Directors has affirmatively determined that our Audit Committee is composed solely of
independent directors. The Board of Directors has determined that Mr. Allen R. Sello is the audit committee financial expert, as defined by Item 407(d) (5) of the SECs Regulation S-K. Our Board of Directors has adopted a written
charter for the Audit Committee that is available on the Corporations website (
www.nacg.ca
). The Audit Committee is currently composed of Messrs. Brokaw, Hawkins, McIntosh, Sello and Turner, with Mr. Sello serving as Chairman.
Based on their experience, each of the members of the Audit Committee is financially literate. The members of the audit committee have significant exposure to the complexities of financial reporting associated with the Corporation and are able to
provide due oversight and provide the necessary governance over our financial reporting.
Further information with respect to the Audit
Committee can be found in the Corporations most recent Annual Information Form, under the heading The Board and Board Committees, which is available on SEDAR at
www.sedar.com
, the Securities and Exchange Commissions
website at
www.sec.gov
and the Corporations web site at
www.nacg.ca
.
The Corporations auditors are KPMG LLP.
The Board of Directors pre-approved the engagement of KPMG to perform the audit of our financial statements for the fiscal year ended March 31, 2011.
The fees we have paid to KPMG for services rendered by them include:
|
i.
|
Audit Fees: KPMG billed the Corporation $1,130,800, $1,862,800 and $2,374,000 for audit fees during the years ended March 31, 2011, 2010 and 2009,
respectively. Audit fees were incurred for the audit of our annual financial statements, the audit of compliance with internal controls over financial reporting, related audit work in connection with registration statements and other filings with
various regulatory authorities, and quarterly interim reviews of the consolidated financial statements.
|
|
ii.
|
Audit Related Fees: KPMG billed the Corporation $nil, $394,645, and $nil during the years ended March 31, 2011, 2010 and 2009, respectively, for
professional services related to the conversion of US GAAP and for planning and scoping work and advice relating to internal controls over financial reporting.
|
|
iii.
|
Tax Fees: KPMG billed the Corporation $nil, $7,500, and $62,000 for the years ended March 31, 20101, 2010 and 2009, respectively, for income tax advisory
and compliance services
|
|
iv.
|
All Other Fees: KPMG billed the Corporation $nil, $nil and $64,000 for the years ended March 31, 2011 and 2010, and 2009 respectively, for fees related
to analysis of the conversion to US GAAP and International Financial Reporting Standards (IFRS), respectively. KPMG did not perform any other services for us in the years ended March 31, 2011 and 2010, respectively.
|
Compensation Committee
The Compensation Committee is charged with the responsibility for supervising executive compensation policies for the Corporation and its subsidiaries, administering the employee incentive
- 43 -
plans, reviewing officers salaries, approving significant changes in executive employee benefits and recommending to the Board such other forms of remuneration as it deems appropriate. In
accordance with the listing requirements of the New York Stock Exchange applicable to U.S. domestic listed companies and applicable Canadian securities laws, the Board of Directors has affirmatively determined that Compensation Committee is composed
solely of independent directors. The Corporations Board of Directors has adopted a written charter for the Compensation Committee that is available on the Corporations website (
www.nacg.ca
). The Compensation Committee is currently
composed of Messrs. Brussa, Oehmig, Sello and Tomsett, with Mr. Tomsett serving as Chairman. Meridian Compensation Partners LLC and Wynford Group, independent specialized compensation consultants, have been retained by the Corporation to
assist in determining executive management and compensation for directors as described above in the section
Executive Compensation Philosophy
.
Governance Committee
The Governance Committee is responsible for recommending to the Board of
Directors proposed nominees for election to the Board of Directors by the shareholders at annual meetings, including an annual review as to the re-nominations of incumbents and proposed nominees for election by the Board of Directors to fill
vacancies that occur between shareholder meetings, and making recommendations to the Board of Directors regarding corporate governance matters and practices. In accordance with the listing requirements of the New York Stock Exchange applicable to
domestic listed companies and applicable Canadian securities laws, the Board of Directors has affirmatively determined that the Governance Committee is composed solely of independent directors. The Corporations Board of Directors has adopted a
written charter for the Governance Committee that is available on the Corporations website (
www.nacg.ca
). The Governance Committee is currently composed of Messrs. Brussa, Dodd, Hawkins, McIntosh and Turner, with Mr. Hawkins
serving as Chairman.
Health, Safety, Environment and Business Risk Committee
The Health, Safety, Environment and Business Risk Committee (the HS&E Risk Committee) is responsible for monitoring, evaluating,
advising and making recommendations on matters relating to the health and safety of our employees, the management of our health, safety and environmental risks, due diligence related to health, safety and environment matters, as well as the
integration of health, safety, environment, economics and social responsibility into our business practices. The HS&E Risk Committee is also responsible for overseeing all of the Corporations non-financial risks, approving the
Corporations risk management policies, monitoring risk management performance, reviewing the risks and related risk mitigation plans within the Corporations strategic plan, reviewing and approving tenders and contracts greater than $50
million in expected revenue and any other matter where board guidelines require approval at a level above President & CEO, and reviewing and monitoring all insurance policies including directors and officers insurance coverage. The
Board of Directors has affirmatively determined that the HS&E Risk Committee is composed solely of independent directors. The Corporations Board of Directors has adopted a written charter for the HS&E Risk Committee that is available
on the Corporations website (
www.nacg.ca
). The HS&E Risk Committee is currently composed of Messrs. Brokaw, Dodd, McIntosh, Oehmig and Tomsett, with Mr. Oehmig serving as Chairman.
The Board may also establish other committees.
- 44 -
ADDITIONAL INFORMATION
Copies of the following documents are available upon written request to the Secretary of the Corporation at North American Energy Partners Inc.,
Suite 2400, 500 4th Avenue SW, Calgary, Alberta, T2P 2V6:
|
i.
|
the most recent Annual Report to Shareholders containing the audited consolidated financial statements for the year ended March 31, 2011 together with
the accompanying Auditors Report. the annual MD&A and the annual Canadian Supplement to the MD&A;
|
|
ii.
|
this Information Circular; and
|
|
iii.
|
the most recent Annual Information Form.
|
Additional information relating to the Corporation can be found on SEDAR at
www.sedar.com
, the Securities and Exchange Commissions website at
www.sec.gov
and the Corporations web site at
www.nacg.ca
. Financial information of the Corporation is provided in the Corporations audited consolidated financial statements, MD&A and Canadian Supplement to the MD&A for the Corporations most recently completed fiscal
year.
GENERAL
All matters referred to herein for approval by NAEP Shareholders require a simple majority of the NAEP Shareholders voting at the Meeting, whether in person or by proxy. Except where otherwise indicated,
information contained herein is given as of the date hereof.
APPROVAL OF PROXY CIRCULAR
The undersigned hereby certifies that the contents and the distribution of this Information Circular have been approved by the Board of Directors of
the Corporation.
DATED
at Calgary, Alberta, this 22
nd
day of August, 2011.
|
|
/s/ David Blackley
|
Chief Financial Officer
|
- 45 -
Please direct all inquiries to:
Questions and Further Assistance
If you have any questions about the information contained in
this document or require assistance in completing your proxy form, please contact our proxy solicitation agent at:
North American Toll Free Number: 1-866-676-3008
Email:
askus@georgeson.com
- 46 -
NORTH AMERICAN ENERGY PARTNERS INC.
PROXY
THIS PROXY IS TO BE USED IN CONNECTION WITH THE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OR ABOUT SEPTEMBER 27, 2011
THIS PROXY IS SOLICITED BY AND ON BEHALF OF MANAGEMENT
The undersigned holder of common shares in the capital of North American Energy Partners Inc. (the
Corporation
)
specified below hereby appoints David Blackley, or failing that person, Rodney Ruston, or instead of either of them
, as proxy, with power of substitution, to attend, vote all such shares held by the undersigned and otherwise act for and on behalf
of the undersigned at the annual and special meeting of shareholders of the Corporation (the
Meeting
) to be held at The Calgary Petroleum Club, 319 5
th
Avenue SW, Calgary, Alberta, T2P 0L5 on or about September 27, 2011, commencing at 10:00 a.m. (Mountain Time) and
at any adjournment thereof, to the same extent and with the same power as if the undersigned were personally present at the Meeting or such adjournment or adjournments thereof and, without limiting the generality of the power hereby conferred, the
person(s) named above is specifically directed as indicated below with respect to those shares registered in the name of the undersigned.
Without limiting the general powers hereby conferred, the undersigned hereby directs the said proxyholder to vote the shares represented by this
instrument of proxy in the following manner:
1. Vote for, or withhold from voting for, the election of the individual directors as specified
in the management information circular of the Corporation dated August 22, 2011 (the
Information Circular
) as follows:
|
|
|
|
|
DIRECTOR
|
|
FOR
|
|
WITHHOLD FROM
VOTING FOR
|
George R. Brokaw
|
|
¨
|
|
¨
|
|
|
|
John A. Brussa
|
|
¨
|
|
¨
|
|
|
|
Peter R. Dodd
|
|
¨
|
|
¨
|
|
|
|
John D. Hawkins
|
|
¨
|
|
¨
|
|
|
|
Ronald A. McIntosh
|
|
¨
|
|
¨
|
|
|
|
William C. Oehmig
|
|
¨
|
|
¨
|
|
|
|
Rodney J. Ruston
|
|
¨
|
|
¨
|
|
|
|
Alan R. Sello
|
|
¨
|
|
¨
|
|
|
|
Peter W. Tomsett
|
|
¨
|
|
¨
|
|
|
|
K. Rick Turner
|
|
¨
|
|
¨
|
2.
FOR
¨
or WITHHOLD FROM VOTING
FOR
¨
the appointment of KPMG LLP, Chartered Accountants, as auditors of the Corporation for the ensuing year and the authorization of the directors to fix their remuneration as such;
and
3. at the discretion of the said proxyholders, upon any amendment or variation of the above matters or any other matter that may be
properly brought before the Meeting or any adjournment thereof in such manner as such proxy, in such proxyholders sole judgment, may determine.
This Proxy is solicited on behalf of the Management of the Corporation.
The shares represented by this Proxy will be voted and, where the shareholder has specified a choice with respect to the
above matters, will be voted as directed above or, if no direction is given, will be voted
FOR
each of the above matters.
To be effective, a Proxy must be received by Proxy Dept., Canadian Stock Transfer Company Inc.
*
, P.O. Box 721, Agincourt, Ontario, M1S 0A1, or by facsimile to
416-368-2502 (Toll Free: 1-866-781-3111 Canada & US Only) no later than 10:00 a.m. (Eastern Time) on September 23, 2011 and if the Meeting is adjourned, no later than 24 hours (excluding Saturdays and holidays) prior to the
commencement of any adjournment thereof.
This Proxy supersedes and revokes any proxy previously given in respect of the Meeting.
DATED
this
day of
, 2011.
|
|
Signature of Shareholder or officer of Shareholder
|
|
|
Name of Shareholder (please print)
|
NOTES
1.
|
Every Shareholder has the right to appoint a person or company to represent them at the Meeting other than the persons whose names are printed in this Proxy. A
Shareholder desiring to appoint some other person (who need not be a shareholder of the Corporation) to represent him or her at the Meeting, may do so either by striking out the printed names and inserting the desired persons name in the blank
space provided in the Proxy (see reverse) or by completing another proper proxy.
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2.
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This Proxy must be signed by the shareholder or the shareholders attorney duly authorized in writing. If the shareholder is a corporation, this Proxy must be
signed by the duly authorized officer, attorney or other authorized signatory of the shareholder. A person signing on behalf of a shareholder must provide, with this Proxy, satisfactory proof of such persons authority and must indicate the
capacity in which such person is signing.
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3.
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If the securities are registered in the name of more than one owner (for example, joint ownership, trustees, executors, etc.), then all those registered must sign this
Proxy.
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4.
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This Proxy should be signed in the exact manner as the name appears on the Proxy.
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5.
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If this Proxy is not dated, it will be deemed to bear the date on which it is mailed by Management to the shareholder.
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6.
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The shares represented by this Proxy will be voted or withheld from voting, in accordance with the instructions of the shareholder, on any show of hands or any ballot
that may be called for and, if the shareholder specifies a choice with respect to any matter to be acted upon at the Meeting, the shares will be voted accordingly.
In the absence of such specification, or if the specification is not certain, the
shares represented by this Proxy will be voted in favour of the matters referred to in this Proxy.
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7.
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This Proxy confers discretionary authority upon the persons named herein with respect to amendments or variations to matters identified in the Notice of Meeting and all
other matters which may properly come before the Meeting or any adjournments thereof which are not now known to management. If such amendments, variations or other matters should properly come before the Meeting, the Proxy will be voted on such
amendments, variations and other matters in accordance with the best judgment of the person or persons voting such Proxy.
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8.
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This Proxy should be read in conjunction with the accompanying documentation provided by Management, including the Information Circular.
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*
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Canadian Stock Transfer Company Inc. acts as the Administration Agent for CIBC Mellon Trust Company
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2
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