form6-k.htm
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
6-K
Report
of Foreign Private Issuer
Pursuant
to Rule 13a-16 or 15d-16 of
the
Securities Exchange Act of 1934
For
the month of,
|
April
|
|
2008
|
Commission
File Number
|
001-14620
|
|
|
Pan
American Silver Corp
|
(Translation
of registrant’s name into English)
|
1500-625
Howe Street, Vancouver BC Canada V6C 2T6
|
(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
40F:
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):
Indicate
by check mark whether by furnishing the information contained in this Form, the
registrant is also thereby furnishing the information to the Commission pursuant
to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
If
“Yes” is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82-_______________
DOCUMENTS INCLUDED AS PART OF THIS
REPORT
Document
|
|
|
|
1
|
Information
Circular, dated April 10, 2008
|
This
report on Form 6-K is incorporated by reference into all of the Registrant's
outstanding registration statements on Form F-10 and S-8 that have been filed
with the Securities and Exchange Commission.
Document
1
NOTICE
OF
2008
ANNUAL GENERAL MEETING
____________
INFORMATION
CIRCULAR
TABLE
OF CONTENTS
NOTICE
OF ANNUAL GENERAL MEETING
|
i
|
|
|
INFORMATION
CIRCULAR
|
1
|
Solicitation
of Proxies
|
1
|
Appointment
of Proxyholder
|
1
|
Revocation
of Proxy
|
2
|
Voting
by Non-Registered Shareholders
|
2
|
Voting
of Proxies
|
3
|
Exercise
of Discretion
|
3
|
Voting
Securities and Principal Holders of Voting Securities
|
4
|
Quorum
and Votes Necessary
|
4
|
Particular
Matters to be Acted Upon
|
4
|
Election of
Directors
|
4
|
Appointment
of Auditors
|
7
|
Approval of
2008 Stock Option and Stock Bonus Plan
|
7
|
Corporate
Governance
|
9
|
Composition
of the Board
|
9
|
Board
Committees
|
9
|
Summary of
Attendance of Directors
|
12
|
Code of
Ethical Conduct
|
13
|
Directors’
and Officers’ Liability Insurance
|
13
|
Executive
Compensation
|
14
|
Summary
Compensation Table
|
14
|
Long-Term
Incentive Plan
|
14
|
Stock
Options
|
15
|
Termination
of Employment, Change in Responsibilities and Employment
Contracts
|
17
|
Compensation
Committee
|
18
|
Report on
Executive Compensation
|
18
|
Compensation
of Directors
|
21
|
Equity
Compensation Plan Information
|
21
|
Performance
Graph
|
22
|
Interest
of Insiders in Material Transactions
|
22
|
Management
Contracts
|
22
|
Interest
of Certain Persons in Matters to be Acted Upon
|
23
|
Other
Matters
|
23
|
Additional
Information
|
23
|
Approval
of this Circular
|
23
|
|
|
APPENDIX
“A” – Corporate Governance Disclosure
|
A-1
|
APPENDIX
“B” – Proposed 2008 Stock Option and Stock Bonus Plan
|
B-1
|
APPENDIX
“C” – Proposed Resolution
|
C-1
|
PAN
AMERICAN SILVER CORP.
NOTICE
OF ANNUAL GENERAL MEETING
NOTICE
IS HEREBY GIVEN THAT the annual general meeting (the “Meeting”) of the shareholders
of PAN AMERICAN SILVER CORP. (the “Company”) will be held in the Pacific Room of
the Metropolitan Hotel, 645 Howe Street, Vancouver, British Columbia on Tuesday,
May 13, 2008 at 2:00 p.m. (Vancouver time) for the following
purposes:
1.
|
to
receive and consider the consolidated financial statements of the Company
for the financial year ended December 31, 2007, together with the
auditors’ report thereon;
|
2.
|
to
elect directors of the Company;
|
3.
|
to
reappoint Deloitte & Touche LLP, Chartered Accountants, as auditors of
the Company to hold office until the next annual general
meeting;
|
4.
|
to
authorize the directors of the Company to fix the remuneration to be paid
to the auditors of the Company;
|
5.
|
to
consider and, if thought appropriate, to pass an ordinary resolution
approving the adoption of the 2008 Stock Option and Stock Bonus Plan the
form of which is discussed under “Particular Matters to be Acted Upon –
Approval of 2008 Stock Option and Stock Bonus Plan” and the complete text
of which is set out in Appendix “B” to the attached Information Circular
for the Meeting;
|
6.
|
to
consider amendments to or variations of any matter identified in this
Notice of Meeting; and
|
7.
|
to
transact such further and other business that does not have a material
effect on the business of the Company as may be properly brought before
the Meeting or any and all adjournments
thereof.
|
Accompanying
this Notice of Meeting are: (i) an Information Circular; (ii) an
Instrument of Proxy and Notes thereto; and (iii) a reply card for use by
shareholders who wish to receive the Company’s interim and annual financial
statements and management’s discussion and analysis thereon.
If
you are a registered
shareholder and are unable to attend the Meeting in person, please date
and execute the accompanying form of proxy and deposit it with Computershare
Investor Services Inc., Attention: Stock Transfer Services, 100 University
Avenue, 9th Floor, Toronto,
Ontario, Canada, M5J 2Y1 not less than 48 hours (excluding Saturdays,
Sundays and holidays) prior to the Meeting or any adjournment
thereof.
If you are a non-registered
shareholder and receive these materials through your broker or through
another intermediary, please complete and return the materials in accordance
with the instructions provided to you by your broker or such other
intermediary. If you
are a non-registered shareholder and do not complete and return the materials in
accordance with such instructions, you may lose the right to vote at the
Meeting.
If
you have any questions about the procedures to be followed to qualify to vote at the Meeting or about obtaining and
depositing the required form of proxy, you should contact Computershare Investor
Services Inc. by telephone (toll free) at 1-800-564-6253.
This
Notice of Meeting, the Information Circular, the Instrument of Proxy and notes
thereto and the reply card are first being sent to shareholders of the Company
on or about April 10, 2008.
DATED
at Vancouver, British Columbia, this 10th
day of April, 2008.
|
BY
ORDER OF THE BOARD
|
|
|
|
|
|
/s/
ROBERT
PIROOZ |
|
|
Robert Pirooz,
|
|
General
Counsel, Secretary and Director
|
INFORMATION
CIRCULAR
Solicitation
of Proxies
This
Information Circular is furnished in connection with the solicitation by the management of
PAN AMERICAN SILVER CORP. (the “Company”) of proxies to be
voted at the annual general meeting of the shareholders of the Company to be
held at 2:00 p.m. (Vancouver time) on Tuesday, May 13, 2008, in the Pacific Room
of the Metropolitan Hotel, 645 Howe Street, Vancouver, British Columbia, and any
adjournments thereof (the “Meeting”).
Management’s
solicitation of proxies will be conducted by mail and may be supplemented by
telephone or other personal contact to be made without special compensation by
directors, officers and employees of the Company or by the Company’s registrar
and transfer agent. The Company may retain other persons
or companies to solicit proxies on behalf of management, in which event
customary fees for such services will be paid. All costs of
solicitation will be borne by the Company.
Unless
the context otherwise requires, references herein to “Pan American” mean the
Company and its subsidiaries. The principal executive office of the
Company is located at 1500 - 625 Howe Street, Vancouver, British Columbia,
Canada, V6C 2T6. The telephone number is (604) 684-1175 and the
facsimile number is (604) 684-0147. The Company’s website address is
www.panamericansilver.com. The information on that website is not
incorporated by reference into this Information Circular. The
registered and records office of the Company is located at 1200 Waterfront
Centre, 200 Burrard Street, Vancouver, British Columbia, Canada,
V7X 1T2.
Unless
otherwise indicated, all currency amounts stated in this Information Circular
are stated in the lawful currency of the United States.
The
date of this Information Circular is April 10, 2008, and it is first being sent
to shareholders on or about April 10, 2008. The Annual Information Form
disclosure required by Multilateral Instrument 52-110 – Audit
Committees (“MI 52-110”) can
be found in the Company’s Annual Information Form for the year ended December
31, 2007, under the heading “Audit Committee”, a copy of which is available on
the System for Electronic Document Analysis and Retrieval (“SEDAR”) at
www.sedar.com.
Appointment
of Proxyholder
The persons named in the accompanying form of proxy
for the Meeting are directors or officers of the Company, or
both. A shareholder
has the right to appoint some other person, who need not be a shareholder, to
represent the shareholder at the Meeting by striking out the names of the
persons designated in the accompanying form of proxy and by inserting that other
person’s name in the blank space
provided.
The
instrument appointing a proxyholder must be signed in writing by the
shareholder, or such shareholder’s attorney authorized in writing. If
the shareholder is a corporation, the instrument appointing a proxyholder must
be in writing signed by an officer or attorney of the corporation duly
authorized by resolution of the directors of such corporation, which resolution
must accompany such instrument.
An
instrument of proxy will only be valid if it is duly completed, signed, dated
and received at the office of the Company’s registrar and transfer agent,
Computershare Investor Services Inc., 100 University Avenue, 9th
Floor, Toronto, Ontario, Canada, M5J 2Y1, Attention: Stock Transfer
Department, not less than 48 hours (excluding Saturdays, Sundays and
holidays) before the time set for the holding of the Meeting, unless the
Chairman of the Meeting elects to exercise his discretion to accept proxies
received subsequently.
If
you have any questions about the procedures to be followed to vote at the
Meeting or about obtaining, completing and depositing the required form of
proxy, you should contact Computershare Investor Services Inc. by telephone
(toll free) at 1-800-564-6253.
Revocation
of Proxy
A
shareholder may revoke a proxy by delivering an instrument in writing executed
by the shareholder or by the shareholder’s attorney authorized in writing, or
where the shareholder is a corporation, by a duly authorized officer or attorney
of the corporation, either at the registered office of the Company at any time
up to and including the last business day preceding the day of the Meeting, or
with the consent of the Chairman of the Meeting on the day of the Meeting,
before any vote in respect of which the proxy is to be used shall have been
taken. A shareholder may also revoke a proxy by depositing another
properly executed instrument appointing a proxyholder bearing a later date with
the Company’s registrar and transfer agent in the manner described above, or in
any other manner permitted by law.
Voting
by Non-Registered Shareholders
Only
registered shareholders or persons they appoint as their proxyholders are
permitted to attend and/or vote at the Meeting. However, in many
cases, common shares in the capital of the Company (the “Shares”) beneficially owned by
a holder (a “Non-Registered
Holder”) are registered either:
|
(a)
|
in
the name of an intermediary (an “Intermediary”) that the
Non-Registered Holder deals with in respect of the Shares, such as a bank,
trust company, securities dealer or broker or trustee or administrator of
self-administered RRSPs, RRIFs, RESPs or similar plans;
or
|
|
(b)
|
in
the name of a depository (such as The Canadian Depository for Securities
Limited) of which the Intermediary is a
participant.
|
In accordance with the requirements of applicable
securities laws, the Company has distributed copies of the Notice of Meeting,
this Information Circular, the form of proxy, and the reply card for use by
shareholders who wish to receive the Company’s financial statements
(collectively, the “Meeting
Materials”) to the depositories and Intermediaries for
onward distribution to Non-Registered Holders.
Intermediaries
are required to forward Meeting Materials to Non-Registered Holders, unless a
Non-Registered Holder has waived the right to receive them. Very
often, Intermediaries will use service companies, such as ADP Canada or ADP, to
forward the Meeting Materials to Non-Registered
Holders. Non-Registered Holders who have not waived the right to
receive Meeting Materials will either:
|
(a)
|
receive,
as part of the Meeting Materials, a voting instruction form which must be
completed, signed and delivered by the Non-Registered Holder in accordance
with the directions provided by the Intermediary on the voting instruction
form (which may in some cases permit the completion of the voting
instruction form by telephone or through the internet);
or
|
|
(b)
|
be
given a form of proxy which has already been signed by the Intermediary
(typically by a facsimile, stamped signature), which is restricted to the
number of Shares beneficially owned by the Non-Registered Holder but which
is otherwise uncompleted. This form of proxy need not be signed
by the Non-Registered Holder. In this case, the Non-Registered
Holder who wishes to submit a proxy should otherwise properly complete
this form of proxy and deposit it as described
above.
|
The purpose of these procedures is to permit
Non-Registered Holders to direct the voting of the Shares they beneficially
own. Should a Non-Registered Holder who receives either a proxy or a
voting instruction form wish to attend and vote at the Meeting in person (or
have another person attend and vote on behalf of the Non-Registered Holder), the
Non-Registered Holder should strike out the names of the persons named in the
accompanying proxy and insert the Non-Registered Holder’s (or such other
person’s) name in the blank space provided or, in the case of a voting
instruction form, follow the corresponding instructions on the
form. In either
case, Non-Registered Holders should carefully follow the instructions of their
Intermediary or its service
company.
In
addition, there are two kinds of Non-Registered Holders - those who object to
their name being made known to the issuers of securities which they own (called
“OBOs”, for Objecting
Beneficial Owners) and those who do not object to the issuers of the securities
they own knowing who they are (called “NOBOs”, for Non-Objecting
Beneficial Owners). Until September 2002, issuers (including the Directors and
Officers of the Company) had no knowledge of the identity of any of their
beneficial owners including NOBOs. Subject to the provision of National
Instrument 54-101 – Communication
with Beneficial Owners of Securities of Reporting Issuers (“NI 54-101”); however, after
September 1, 2002 issuers could request and obtain a list of their NOBOs from
intermediaries via their transfer agents. Prior to September 1, 2004, issuers
could obtain this NOBO list and use it for specific purposes connected with the
affairs of the corporation, except for the distribution of proxy-related
materials directly to NOBOs. This was the first stage of the implementation of
NI 54-101. Effective for shareholder meetings taking place on or after September
1, 2004, issuers can obtain and use this NOBO list for distribution of
proxy-related materials directly (not via ADP) to NOBOs.
This is the second stage of the implementation of NI 54-101.
The
Company has decided to take advantage of those provisions of NI 54-101 that
permit it to directly deliver proxy-related materials to its NOBOs. As a result
NOBOs can expect to receive a scannable Voting Instruction Form (“VIF”) from our transfer agent,
Computershare Investor Services Inc. (“Computershare”). These VIFs
are to be completed and returned to Computershare in the envelope provided. In
addition, Computershare provides both telephone voting and internet voting
services, as described on the VIF itself which contain complete instructions.
Computershare will tabulate the results of the VIFs received from NOBOs and will
provide appropriate instructions at the Meeting with respect to the shares
represented by the VIFs they receive.
Voting
of Proxies
Shares represented
by properly executed proxies will be voted or withheld from voting in accordance
with the instructions of the shareholder on 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 represented by such proxies will be voted
accordingly. If no
choice is specified, the persons designated in the accompanying form of proxy
will vote FOR all matters proposed by management at the Meeting. If
for any reason the instructions of a shareholder in a proxy are uncertain as
they relate to the election of directors, the proxyholder will not vote the
Shares represented by that proxy for any
director.
Exercise
of Discretion
The
accompanying form of proxy when properly completed and delivered and not revoked
confers discretionary authority upon the persons appointed proxy thereunder to
vote with respect to amendments or
variations
of matters identified in the Notice of Meeting, and with respect to other
matters which may properly come before the Meeting. In the event that amendments
or variations to matters identified in the Notice of Meeting are properly
brought before the Meeting or any further or other business is properly brought
before the Meeting, it is the intention of the persons designated in the
accompanying form of proxy to vote in accordance with their best judgment on
such matters of business. At the date of this Information Circular,
management of the Company knows of no such amendment, variation or other matter
which may be presented to the Meeting.
Voting
Securities and Principal Holders of Voting Securities
The
Company is authorized to issue 200,000,000 common shares without par value of
which 80,768,381 fully paid and non-assessable Shares are issued and
outstanding as of April 2, 2008. The holders of Shares are entitled
to one vote for each Share held. The Company has no other classes of
voting securities.
Any
holder of record of Shares at the close of business on Wednesday, April 2, 2008
will be entitled to receive notice of the Meeting. Any such
shareholder who either personally attends the Meeting or has completed and
delivered a form of proxy in the manner and subject to the provisions described
above shall be entitled to vote or to have his or her Shares voted at the
Meeting. The failure of any shareholder to receive the Notice
of Meeting does not deprive such shareholder of his or her entitlement to vote
at the Meeting.
To
the knowledge of the directors and senior officers of the Company, there are no
persons or companies who beneficially own, directly or indirectly, or exercise
control or direction over, more than ten percent of the issued and outstanding
Shares.
This
information was provided by management of the Company and
Computershare.
Quorum
and Votes Necessary
Under the Company’s articles of incorporation (the
“Articles”), a
quorum for the transaction of business at a general meeting is two individuals
who are shareholders, proxy holders representing shareholders or duly authorized
representatives of corporate shareholders personally present and representing
shares aggregating not less than 25% of the issued shares of the Company
carrying the right to vote at that meeting. In the event there is
only one shareholder, the quorum is one person personally present and being, or
representing by proxy, that shareholder, or in the case of a corporate
shareholder, a duly authorized representative of that
shareholder.
With respect to the proposed reappointment of the
Company’s auditors and the authorization of the board of directors of the
Company (the “Board”) to
fix the remuneration to be paid to the Company’s auditors, the Business
Corporations Act (British Columbia) requires that shareholders
approve the proposed actions by ordinary resolution. An ordinary
resolution means that the resolution must be approved by not less than a simple
majority of the votes cast by the shareholders of the Company who voted in
person or by proxy at the Meeting.
Particular
Matters to be Acted Upon
Election
of Directors
The
Board has determined that eight directors will be elected at the Meeting for the
ensuing year.
The
term of office of each of the present directors expires at the close of the
Meeting. Persons named below will be presented for election at the
Meeting as management’s nominees and the persons named in the accompanying form
of proxy intend to vote for the election of these nominees. In
the absence of instructions to the contrary, the accompanying form of proxy will
be voted “For” the nominees herein
listed. Management
does
not contemplate that any of these nominees will be unable to serve as a
director, but if that should occur for any reason prior to the Meeting, the
persons named in the accompanying form of proxy reserve the right to vote for
another nominee in their discretion, unless the shareholder has specified in the
accompanying form of proxy that such shareholder’s Shares are to be withheld
from voting on the election of directors. Each director elected will
hold office until the close of the next annual general meeting of the Company or
until his successor is elected or appointed, unless his office is earlier
vacated in accordance with the Articles of the Company or with the provisions of
the Business
Corporations Act (British Columbia).
The
following table sets out the names of management’s nominees for election as
directors, the municipality and province or state in which each is ordinarily
resident, all offices of the Company now held by each of them, each nominee’s
principal occupation, business or employment, the period of time for which each
nominee has served as a director of the Company and the number of shares of the
Company or any of its subsidiaries beneficially owned by each nominee, directly
or indirectly, or over which each nominee exercises control or direction as at
April 2, 2008. All of the proposed nominees were duly elected as
directors at the last Annual and Special Meeting of Shareholders held on April
30, 2007, with the exception of Mr. David C. Press who is management’s nominee
to serve as a director in place of Mr. John M. Willson who will retire from the
Board after many years of appreciated service.
|
|
Name,
Residence and Position
|
|
Principal
Occupation,
Business
or Employment
Director
Since 2003
|
|
Number
of
Shares
Held
|
|
|
|
|
|
|
|
|
|
Ross
J. Beaty
Vancouver,
B.C.
Canada
Chairman
|
|
Chairman
of the Company; formerly Chief Executive Officer of the
Company.
Director
of the Company since September 30, 1988.
|
|
1,802,622
Shares (5)
197,900
Options
|
|
|
|
|
|
|
|
|
|
Geoffrey
A. Burns(4)
North
Vancouver, B.C.
Canada
President,
Chief Executive Officer and Director
|
|
President
and Chief Executive Officer of the Company; formerly Chief Financial
Officer of Coeur d’Alene Mines Corporation.
Director
of the Company since July 1, 2003.
|
|
17,018
Shares
41,511
Options
|
|
|
|
|
|
|
|
|
|
William
A. Fleckenstein(3)(8)
Seattle,
Washington
USA
Director
|
|
President
of Fleckenstein Capital, Inc. (investment counselling firm).
Director
of the Company since May 9, 1997.
|
|
102,755
Shares(6)
30,438
Options
|
|
|
|
|
|
|
|
|
|
Michael
Larson(1)
Seattle,
Washington
USA
Director
|
|
Business
Manager of Cascade Investment, LLC (a private investment
company).
Director
of the Company since November 29, 1999.
|
|
2,612,894
Shares(7)
32,000
Options
|
|
|
Name,
Residence and Position
|
|
Principal
Occupation,
Business
or Employment
Director
Since 2003
|
|
Number
of
Shares
Held
|
|
|
|
|
|
|
|
|
|
Michael
J.J. Maloney
(1)(2)(3)
Seattle,
Washington
USA
Director
|
|
Private
Investor.
Director
of the Company from Sept. 25, 1995 to November 29, 1999; and re-elected
March 2, 2000 to present.
|
|
60,854
Shares
22,000
Options
|
|
|
|
|
|
|
|
|
|
Robert
P. Pirooz(4)
Vancouver,
B.C.
Canada
General
Counsel, Secretary, and Director
|
|
General
Counsel and Secretary of the Company; formerly General Counsel, and Group
Vice President with the BCR Group of Companies.
Director
of the Company since April 30, 2007.
|
|
2,454
Shares
37,078
Options
|
|
|
|
|
|
|
|
|
|
Paul
B. Sweeney(1)(2)
Surrey,
B.C.
Canada
Director
|
|
Executive
Vice-President Corporate Development of Plutonic Power Corporation;
formerly Vice President and Chief Financial Officer of Canico Resource
Corp.
Director
of the Company since August 5, 1999.
|
|
8,758
Shares
0
Options
|
|
|
|
|
|
|
|
|
|
David
C. Press
West
Vancouver, B.C. Canada
Nominated
as a Director
|
|
President,
Press Mining Consulting Inc.
Nominated
to serve as a director.
|
|
0 Shares
0 Options
|
(1)
|
Member
of the Audit Committee.
|
(2)
|
Member
of the Compensation Committee.
|
(3)
|
Member
of the Nominating and Governance
Committee.
|
(4)
|
Member
of the Health Safety & Environment
Committee.
|
(5)
|
160,000
of these Shares are held by Kestrel Holdings Ltd., a private company owned
by Mr. Beaty.
|
(6)
|
Mr.
Fleckenstein holds a portion of these Shares directly and exercises
control or direction over 101,300 Shares on behalf of the RTM
fund.
|
(7)
|
Mr.
Larson exercises control or direction over 2,600,000 Shares on behalf of
Cascade Investment LLC, however beneficial ownership of such shares is
specifically disclaimed.
|
(8)
|
Lead
Independent Director. As Lead Independent Director, Mr.
Fleckenstein holds in camera meetings with all independent directors of
the Board and reports back on those in camera meetings to the
Board.
|
The
information as to the municipality and province or state of residence, principal
occupation, business or employment and the number of shares beneficially owned
by each nominee or over which each nominee exercises control or direction set
out in the above table is not within the knowledge of the directors or senior
officers of the Company and has been furnished by the individual nominees as at
March 20, 2008.
Appointment
of Auditors
Unless
otherwise instructed, the accompanying form of proxy will be voted for: (a) the
reappointment of Deloitte & Touche LLP, Chartered Accountants, of Vancouver,
British Columbia, as the auditors of the Company to hold office until the close
of the next annual general meeting of the Company; and (b) the authorization of
the Board to fix the remuneration to be paid to the auditors of the
Company. Deloitte & Touche LLP were first appointed auditors of
the Company on October 26, 1993.
Approval
of 2008 Stock Option and Stock Bonus Plan
At
the Meeting, shareholders will be asked to consider and, if deemed advisable, to
pass an ordinary resolution to approve the adoption of the Company’s 2008 Stock
Option and Stock Bonus Plan (the “2008 Plan”). The
2008 Plan has the same form of the Stock Option and Stock Bonus Plan approved by
the shareholders of the Company on April 28, 2005 (the “2005 Plan”) other than the
following amendments to:
|
(a)
|
include
provisions which provide for an optional cashless exercise
mechanism. The cashless exercise mechanism is set out in
section 4.2 of the 2008 Plan, and provides that the exercise price for a
vested option may be satisfied by the holder of such option providing to
the Company for cancellation that number of other vested options having an
“in-the-money” value equal to the exercise price of the option to be
exercised;
|
|
(b)
|
change
the maximum amount of Shares issuable under the plan from a variable
amount, currently 10% of the issued and outstanding common shares in the
capital of the Company, to a fixed amount of 6,461,470 Shares, being 8% of
the current issued and outstanding common shares in the capital of the
Company;
|
|
(c)
|
include
provisions which provide, in the event of a take-over bid or change of
control, that 50% of an option holder’s unvested outstanding options will
vest and are conditionally exercisable until immediately before the
completion of the take-over bid or change of control, provided that: (i)
any options that are unvested or unexercised by the completion of the
take-over bid or change of control become null and void; and (ii) in the
event the take-over bid or change of control is not completed within 90
days of the proposed completion date the option holder will be refunded
any payments made to exercise the options, the exercised options will be
reissued, and the purported exercise of the options will be null and
void;
|
|
(d)
|
include
provisions which provide that, except where not permitted by the Toronto
Stock Exchange (the “TSX”), where an option
expires during a Black-Out Period (as defined below) or within ten
business days following the end of such Black-Out Period, the term of such
options will be extended to the end of day that is ten business days
following the end of the applicable Black-Out
Period;
|
|
(e)
|
provide
additional limitations so that the number of Shares issuable under the
2008 Plan, together with all of the Company’s other previously established
or proposed share compensation arrangements, within a one-year period
to: (i) insiders of the Company, in aggregate, shall not exceed
7% of the outstanding issue; (ii) any one optionee who is an insider (and
associates of such insider) shall not exceed 2% of the outstanding issue;
and (iii) any non-employee director, other than the Chairman, shall not
exceed an equity award value of $100,000 (other than as Shares granted or
taken in lieu of cash fees);
|
|
(f)
|
grant
to the Board the power and authority to make certain limited amendments to
the 2008 Plan or any option without shareholder approval,
including:
|
|
·
|
amendments
of a “housekeeping” nature, including any amendment for the purpose of
curing any ambiguity, error, inconsistency or omission in or from the 2008
Plan or any related option
agreement;
|
|
·
|
a
change to the vesting provisions of an
option;
|
|
·
|
extensions
to the term of an option held by a person (other than an insider of the
Company);
|
|
·
|
accelerating
the expiry date of an option; amending the definitions contained within
the 2008 Plan;
|
|
·
|
amending
or modifying the mechanics of the exercise of options (except with respect
to the requirement that full payment be received for the exercise of
options);
|
|
·
|
amendments
that are necessary to comply with the provisions of applicable laws or the
rules, regulations and policies of the
TSX;
|
|
·
|
amendments
relating to the administration of the 2008
Plan;
|
|
·
|
amendments
that are necessary to suspend or terminate the 2008 Plan;
and
|
|
·
|
any other amendment, whether fundamental or
otherwise, not requiring shareholder approval under applicable law
(including, without limitation, the rules, regulations, and policies
of the
TSX);
|
|
(g)
|
expressly require shareholder
approval for any of the following amendments to the 2008
Plan:
|
|
·
|
amendments that increase the
number of Shares
issuable under the 2008 Plan, except in certain circumstances as
contemplated in the 2008
Plan;
|
|
·
|
any reduction in the option price of an
option if the optionee is not an insider of the Company at the time of the
proposed amendment; and
|
|
·
|
amendments required to be
approved by
shareholders under applicable law (including, without limitation, pursuant
to the rules,
regulations and policies of the TSX and Nasdaq);
and
|
|
(h)
|
expressly require disinterested
shareholder approval for any of the following amendments to the 2008
Plan:
|
|
·
|
amendments to the 2008
Plan that could
result at any time in the number of Shares reserved for issuance under the Plan to
insiders of the Company exceeding 10% of the outstanding
issue;
|
|
·
|
any reduction in the option price
of an option if the optionee is an insider of the Company at the time of
the proposed amendment; and
|
|
·
|
amendments requiring
disinterested
shareholder approval under applicable law (including, without limitation,
pursuant to the rules, regulations and policies of the TSX and
Nasdaq).
|
“Black-Out
Period” means
a time when, pursuant to any policies of the Company, any securities
of the
Company may not be traded by certain persons as designated by the Company,
including any holder of options under the 2005 Plan or the 2008
Plan.
In
the absence of instructions to the contrary, the accompanying form of proxy will
be voted “For” this ordinary resolution.
The
text of the ordinary resolution to approve the adoption of the 2008 Plan is
annexed as Resolution No. 1 of Appendix “C” to this Information Circular
(the “Plan Amendment
Resolution”).
The
terms of the 2005 Plan are described under the heading “Executive Compensation –
Stock Option Plan”.
The
Board believes that the proposed adoption of the 2008 Plan is necessary and in
the best interests of the Company and its shareholders in order for the Company
and its subsidiaries to continue to attract and retain capable and experienced
directors, officers and employees, as well as to provide incentives to other key
service providers. The proposed adoption of the 2008 Plan is also
subject to regulatory approval by the TSX.
Corporate
Governance
The
Board is required to supervise the management of the business and affairs of the
Company. In February 1996 the Board adopted a formal written mandate
which defined its stewardship responsibilities. This mandate was
revised, amended and restated in April 2003, March 2005 and again in November
2005, in light of
the adoption of MI 52-110, National Instrument 58-101 - Disclosure
of Corporate Governance Practices (“NI 58-101”) and
National Instrument 58-201 - Corporate
Governance Guidelines (“NI 58-201” and, together
with NI 58-101, the “Corporate
Governance Disclosure Rules”) as well as the provisions of the Sarbanes-Oxley
Act of 2002 and the Nasdaq’s corporate governance requirements (the
“Nasdaq
rules”).
The
Board believes that good corporate governance is important to the effective
performance of the Company and plays a significant role in protecting
shareholders’ interests and maximizing shareholder value.
Both
the Corporate Governance Disclosure Rules and the Nasdaq rules have established
guidelines for effective governance of listed companies. The Board is
of the view that the Company’s system of corporate governance meets or exceeds
these guidelines.
The
Company’s corporate governance practices are compared with the NI 58-101
guidelines for effective corporate governance in Appendix “A” to this
Information Circular.
Composition
of the Board
The
Board currently consists of eight directors, five of whom, William A.
Fleckenstein, Michael Larson, Michael J.J. Maloney, Paul B. Sweeney, and John M.
Willson, qualify as independent directors under MI 52-110 and the Nasdaq rules,
and are independent of management and free from any interest and any business or
other relationship which could, or could reasonably be perceived to, materially
interfere with their ability to act in the best interests of the
Company. Mr. Willson is not standing for re-election at the Company’s
Meeting and will be replaced by David C. Press who will, if elected, qualify as
an independent director under MI 52-110. Geoffrey A. Burns and Robert P. Pirooz
are related directors who are not independent due to their management positions
with the Company. Ross J. Beaty is a related director because he was
a member of the Company’s executive within the past three years.
Board
Committees
The
Board has established four committees: the Audit Committee, the
Compensation Committee, the Health, Safety and Environment Committee and the
Nominating and Governance Committee. Each committee operates in
accordance with the Board’s formal written mandate which defines its stewardship
responsibilities. Committee members are appointed annually following
the Company’s annual general meeting.
The
following is a description of the composition and mandate for each of the
committees of the Board.
Audit
Committee
The
Audit Committee is composed of three directors, each of whom is an unrelated and
independent director for the purposes of the Corporate Governance Disclosure
Rules and all of whom are independent directors for purposes of the Nasdaq
rules. The Chairman of the Audit Committee is Paul B.
Sweeney. All members of the
Audit
Committee are financially literate. The Company considers “financial
literacy” to be the ability to read and understand a company’s fundamental
financial statements, including a company’s balance sheet, income statement and
a cash flow statement. Mr. Sweeney has significant employment
experience in finance and accounting - he previously served as the Chief
Financial Officer of Canico Resource Corp., Manhattan Minerals Corp. and Sutton
Resources Ltd. - and has the requisite professional certification in accounting,
as a member of the Certified General Accountants Association of British
Columbia, to meet the criteria of a financial expert within the meaning of
section 407 of the Sarbanes-Oxley
Act of 2002.
The
Audit Committee assists the Board in its oversight functions as they relate to
the integrity of the Company’s financial statements and accounting processes,
and the independent auditors qualifications and independence. In this
regard the Audit Committee has primary responsibility for the Company’s
financial reporting, accounting systems and internal controls. The
Audit Committee has the following duties and responsibilities: (a) assisting the
Board in fulfilling its responsibilities relating to the Company’s accounting
and reporting practices; (b) reviewing the audited financial statements of the
Company and recommending whether such statements should be approved by the
Board; (c) reviewing and approving unaudited interim financial statements of the
Company; (d) reviewing and approving the Company’s MD&A and any press
releases related to the annual and interim financial statements or any MD&A
before the Company discloses this information; (e) recommending to the Board the
firm of independent auditors to be nominated for appointment by shareholders at
each annual general meeting of the Company and, where appropriate, the removal
of the Company’s independent auditors; (f) recommending to the Board the
compensation to be paid to the independent auditors; (g) reviewing the audit
engagement and scope of audits to be conducted by the Company’s independent
auditors; (h) monitoring and evaluating the independence and performance of the
Company’s independent auditors; (i) overseeing the work of the Company’s
independent auditors, including the resolution of disagreements between
management and the independent auditors regarding financial reporting; (j)
pre-approving all non-audit services to be provided to the Company by its
independent auditors prior to the commencement of such services; (k) in
consultation with management and the independent auditors, reviewing the
integrity, adequacy and timeliness of the Company’s financial reporting and
internal control structure; (l) monitoring the Company’s compliance with legal
and regulatory requirements related to financial reporting and disclosure; (m)
discussing with management and the independent auditor the adequacy and
effectiveness of the Company’s financial accounting systems and internal control
procedures; (n) reviewing and approving the appointment of the Company’s chief
financial officer and key financial executives; (o) establishing procedures for
the receipt, retention, confidentiality and treatment of complaints received by
the Company regarding accounting, internal accounting controls or auditing
matters and the confidential, anonymous submission by employees of the Company
of concerns regarding questionable accounting or auditing matters; (p) annually
reviewing and reassessing the adequacy of the duties and responsibilities of the
Audit Committee set out in the Board’s formal written mandate; and (q) any other
matters that the Audit Committee feels are important to its mandate or that the
Board chooses to delegate to it. The Audit Committee is empowered to
instruct and retain independent counsel or other advisors, set the pay and
compensation for any such advisors and communicate directly with the independent
auditors, as it determines necessary to carry out its duties, at the expense of
the Company. Additional information relating to the Audit Committee is contained
in the Company’s Annual Information Form for the year ended December 31, 2007
under the heading “Audit Committee” and in Appendix “A”.
The
Audit Committee has prohibited the use of the Company’s independent auditors for
the following non-audit services:
·
|
bookkeeping
or other services related to the accounting records or financial
statements of the Company;
|
·
|
financial
information systems design and implementation, except for services
provided in connection with the assessment, design and implementation of
internal account controls and risk management
controls;
|
·
|
appraisal
or valuation services, fairness opinions or contribution-in-kind reports,
where the results of any valuation or appraisal would be material to the
Company’s financial statements or where the accounting firm providing the
appraisal, valuation, opinion or report would audit the
results;
|
·
|
internal
audit outsourcing services;
|
·
|
management
functions or human resources
functions;
|
·
|
broker-dealer,
investment advisor or investment banking
services;
|
·
|
expert
services unrelated to audits.
|
As
described above under the heading “Particular Matters to be Acted Upon –
Appointment of Auditors”, the auditors of the Company are Deloitte & Touche
LLP. Fees paid or accrued by the Company and its subsidiaries for
audit and other services provided by Deloitte & Touche LLP and its related
entities during the years ended December 31, 2007 and 2006 were as
follows:
|
Year
ended December 31,
2007
(CAD$)
|
|
Year
ended December 31,
2006
(CAD$)
|
|
|
|
|
Audit Fees
|
$1,331,800
|
|
$1,168,275
|
Audit Related Fees
|
nil
|
|
nil
|
Tax-Related Fees
|
$13,345
|
|
nil
|
Other Fees
|
nil
|
|
nil
|
Total:
|
$1,345,145
|
|
$1,168,275
|
_________________
The
Audit Committee approved all audit and non-audit services provided by Deloitte
& Touche LLP to the Company in 2007 and 2006.
Compensation
Committee
The
Compensation Committee is comprised of three directors, each of whom is an
independent director for the purposes of both the Corporate Governance
Disclosure Rules and the Nasdaq rules. The Chairman of the
Compensation Committee is John M. Willson. Mr. Willson is retiring from the
Board this year. It is the Board’s intention to appoint Michael J. J.
Maloney to replace Mr. Willson as the Chairman of the Compensation
Committee. The Compensation Committee reviews and makes
recommendations to the Board in respect of the overall compensation strategy,
salary and benefits, and succession planning, of the executive officers of the
Company. In addition, the Compensation Committee is responsible for
reviewing any agreements with executive officers that may address retirement,
termination of employment or special circumstances, and for the general
compensation structure, policies and incentive programs of the Company,
including the administration of the Company’s 2005 Plan, as defined above, and
for delivering an annual report to shareholders on executive
compensation. The Compensation Committee annually reviews and makes
recommendations to the Board for approval with respect to annual and long term
corporate goals and objectives relevant for determining the compensation for the
Chief Executive Officer, and annually reviews the performance of the Chief
Executive Officer relative to the goals and objectives established.
Health,
Safety and Environment Committee
The
Health, Safety and Environment Committee consists of three
directors. The Company believes that the Health, Safety and
Environment Committee should have management nominees because they are in the
best position
to
analyze any issues, as well as to effect and implement any desired changes or
policies. The Chairman of the Health, Safety and Environment
Committee is John M. Willson. Mr. Willson is retiring from the Board
this year. It is the Board’s intention to appoint Geoff Burns to
replace Mr. Willson as Chairman of the Health, Safety and Environment
Committee. The Company recognizes that proper care of the environment
and the health and safety of its employees is integral to its existence, its
employees, the communities in which is operates and all of its
operations. Accordingly, the Company has directed its operating
subsidiaries to conduct all operations in an environmentally ethical manner
having regard to local laws, requirements and policies (the “Global Statement”) and to the
Company’s Health and Safety Policy and Environmental Policy (the “HSE Policies”). The Company’s
operating subsidiaries have responsibility for compliance with the Global
Statement and the HSE Policies, and in connection therewith, are committed to,
inter
alia: (i) complying with applicable environmental laws and regulations of
the countries and regions in which they operate; (ii) exploring, designing,
constructing, operating and closing mining and processing operations by
utilizing effective and proven practices that minimize potentially harmful
environmental impacts; (iii) educating employees regarding environmental matters
and potential work environment hazards, and how to implement accident prevention
programs; (iv) conducting regular reviews and reporting findings to management
and the Board to ensure complete and transparent corporate wide knowledge of the
Company’s environmental performance; (v) ensuring that emergency response plans
are in place at each operation to protect against unforeseen events that may
harm the environment; (vi) developing, operating and auditing environmental
management systems at each of the Company’s operations that meet or exceed those
in use by other peer companies; (vii) providing a safe work environment by
minimizing and/or eliminating hazards; (viii) providing for audits of health and
safety programs; and (ix) developing and operating health and safety management
programs at each of the Company’s operations. The Health, Safety and Environment
Committee oversees audits made of all construction, exploitation, remediation
and mining activities undertaken by the Company’s operating subsidiaries, to
assess consistency with the Global Statement, HSE Policies and industry best
practices.
Nominating
and Governance Committee
The
Nominating and Governance Committee consists of two directors, each of whom is
an independent director for the purposes of both the Corporate Governance
Disclosure Rules and the Nasdaq rules. The Chairman of the Nominating
and Governance Committee is Michael J.J. Maloney. The Nominating and
Governance Committee: (i) oversees the effective functioning of the Board; (ii)
oversees the relationship between the Board and management of the Company; (iii)
ensures that the Board can function independently of management at such times as
is desirable or necessary; (iv) assists the Board in providing efficient and
effective corporate governance for the benefit of shareholders; (v) identifies
possible nominees for the Board; (vi) reviews the qualifications of possible
nominees for, and current members of, the Board; (vii) in conjunction with the
Chairman and President and Chief Executive Officer, ensures that new directors
are provided with an orientation and education program; (viii) evaluates the
performance of each individual director; and (ix) reviews the Company’s Code of
Ethical Conduct. The Nominating and Governance Committee also reviews
and makes recommendations to the Board with respect to: (i) the independence of
each director; (ii) the competencies, skills and experience that each existing
director should possess; (iii) the appropriate size and composition of the
Board; (iv) the appropriateness of the committees of the Board, their mandates
and responsibilities and the allocation of directors to the committees; (v) the
appropriateness of the terms of the mandate and responsibilities of the Board;
(iv) the compensation of the directors of the Company in light of time
commitments, comparative fees, risks and responsibilities; (v) the
directorships, if any, held by the Company’s directors and officers in other
corporations; and (vi) the Company’s corporate governance
disclosure.
Summary
of Attendance of Directors
The
following table sets out the attendance of directors at Board meetings and
meetings of the committees of the Board of which they were members during the
year ended December 31, 2007:
Director
|
|
Board
|
|
Audit
|
|
Compensation
|
|
Nominating
and
Governance
|
|
Health,
Safety and
Environment(1)
|
|
|
9
meetings
|
|
8
meetings
|
|
2
meetings
|
|
1
meeting
|
|
1
meeting
|
Ross
J. Beaty
|
|
9/9
|
|
-
|
|
-
|
|
-
|
|
-
|
Geoffrey
A. Burns
|
|
9/9
|
|
-
|
|
-
|
|
-
|
|
1/1
|
William
A. Fleckenstein
|
|
9/9
|
|
-
|
|
-
|
|
1/1
|
|
-
|
Michael
Larson
|
|
5/9
|
|
6/6(4)
|
|
-
|
|
-
|
|
-
|
Michael
J.J. Maloney
|
|
9/9
|
|
8/8
|
|
2/2
|
|
1/1
|
|
-
|
Paul
B. Sweeney
|
|
9/9
|
|
8/8
|
|
1/1(5)
|
|
-
|
|
-
|
John
M. Willson
|
|
9/9
|
|
2/2(4)
|
|
2/2
|
|
-
|
|
1/1
|
John
H. Wright
|
|
4/5(2)
|
|
-
|
|
-
|
|
-
|
|
-
|
Robert
P. Pirooz
|
|
4/4(3)
|
|
-
|
|
-
|
|
-
|
|
1/1
|
|
|
(1)
|
The
Health, Safety and Environment Committee consisted of all members of the
Board until April 30, 2007. On April 30, 2007 the
members of the Health, Safety and Environment Committee were changed to
include only Mr. Burns, Mr. Willson, and Mr.
Pirooz.
|
(2)
|
Mr.
Wright retired from the Board on April 30, 2007, and attended 4 out of 5
meetings of the Board which took place prior to his
retirement.
|
(3)
|
Mr.
Pirooz was elected as a director on April 30, 2007, and attended all 4
meetings of the Board which took place after his
election.
|
(4)
|
Mr.
Larson replaced Mr. Willson on the Audit Committee on April 30, 2007, and
attended all 6 meetings of the Audit Committee which took place after his
appointment.
|
(5)
|
Mr.
Sweeney was added to the Compensation Committee on April 30, 2007, and
attended the only meeting of the Compensation Committee which took place
after his addition.
|
Code
of Ethical Conduct
As
part of its stewardship responsibilities, in February of 2003, the Board adopted
formal “Standards of Ethical Conduct” which were designed to deter wrong-doing
and to promote honest and ethical conduct and full, accurate and timely
disclosure. These standards were revised, amended and restated as a “Code of
Ethical Conduct” (the “Code”) in November of 2005 in
light of the adoption of the Corporate Governance Disclosure Rules. The Code is
applicable to all of the Company’s directors, officers and
employees. The full text of the Code is available free of charge to
any person upon request from the General Counsel and Secretary of the Company at
1500 – 625 Howe Street, Vancouver, British Columbia, Canada, V6C 2T6,
Telephone: (604) 684-1175. The Board, through the Nominating and
Governance Committee, monitors compliance with the Code and is responsible for
the granting of any waivers from the Code to directors or executive
officers. Disclosure will be made by the Company of any waiver from
the requirements of the Code granted to the Company’s directors or executive
officers in the Company’s quarterly report that immediately follows the grant of
such waiver.
Directors’
and Officers’ Liability Insurance
The
Company maintains two Directors’ and Officers’ Liability Insurance Policies
covering a period of one year from August 31, 2007 (the “Policy Year”) with an
aggregate limit on liability of $25,000,000 to cover the directors
and officers of the Company and its subsidiaries, individually and as a
group. The insured company would bear the first $100,000 of any loss,
except in the cases of losses arising in connection with US securities related
claims where the insured company would bear the first $250,000 of any
loss.
The
Company paid aggregate premiums of $345,000 for such insurance for the Policy
Year.
Executive
Compensation
Summary
Compensation Table
The
following table sets forth a summary of the total compensation paid to, or
earned by, the Company’s Chief Executive Officer, Chief Financial Officer and
the three other most highly paid executive officers of the Company and any of
its subsidiaries (each a “Named Executive
Officer”) during the three most recently completed financial
years.
Summary Compensation Table(1),
(2)
|
|
Annual
Compensation $
|
|
Long-Term
Compensation
|
|
|
|
|
|
|
|
|
|
|
Awards
|
|
|
|
|
|
|
|
|
|
|
|
Name
and
Principal
Position
|
|
Year
|
|
Salary
|
|
Bonus
(3)
|
|
Other
Annual Compensation
|
|
Number
of Shares
Under
Option
Granted(3)
|
|
Number
of Bonus Shares Subject to Resale Restrictions(3)
|
|
All
Other
Compensation
$ (3)
|
Geoffrey
A. Burns
President
and Chief Executive Officer
|
|
2007
2006
2005
|
|
359,070
295,721
244,186
|
|
171,456
134,406
45,327
|
|
-
-
-
|
|
16,909
17,634
20,904
|
|
1,737
1,643
1,638
|
|
20,737
15,655
11,752
|
A.
Robert Doyle
Chief
Financial Officer
|
|
2007
2006
2005
|
|
226,977
218,419
177,767
|
|
79,244
75,682
42,664
|
|
-
-
-
|
|
8,016
10,656
12,174
|
|
824
993
954
|
|
9,831
9,460
6,844
|
Andrés
Dasso
Executive
Director of Pan American Silver Peru, S.A.
|
|
2007
2006
2005
|
|
280,000
247,250
201,600
|
|
79,625
97,210
42,310
|
|
-
-
-
|
|
9,267
12,770
14,248
|
|
952
1,190
1,098
|
|
12,217
12,187
8,467
|
Steven
Busby
Senior
Vice President, Project Development
|
|
2007
2006
2005
|
|
279,070
255,628
208,047
|
|
105,705
94,391
56,173
|
|
-
-
-
|
|
10,752
13,606
11,502
|
|
1,105
1,267
1,116
|
|
13,186
12,078
8,010
|
Michael
Steinmann
Senior
Vice President, Geology and Exploration
|
|
2007
2006
2005
|
|
241,860
208,977
168,372
|
|
98,831
105,287
36,832
|
|
-
-
-
|
|
9,319
11,123
7,862
|
|
957
1,036
616
|
|
11,428
9,874
4,861
|
(1)
|
Except
for Mr. Dasso, annual salary and bonus are paid to the Named Executive
Officers in Canadian dollars, and for the purposes of this table have been
converted to US currency at a CAD = 1 US Dollar exchange rate of
1.075.
|
(2)
|
Number
of options and bonus shares representing the period ended for 2007, 2006
and 2005 were issued on January 10, 2008, January 2, 2007 and January 3,
2006, respectively.
|
(3)
|
Bonuses
shown for 2007 are those earned in 2007, which were paid in cash during
the year or will be paid in 2008.
|
Long-Term
Incentive Plan
The
long-term incentive plan was approved by the Board on December 9, 2005 (the
“Long-Term Incentive
Plan”). No options, Shares or other securities are issued
under the Long-Term Incentive Plan. Under the terms of the Long-Term
Incentive Plan, guidance is provided regarding the grant of stock options and
Shares under the 2005 Plan to those holding senior management positions with the
Company.
The
Long-Term Incentive Plan was designed to create a sense of ownership by the key
employees of the Company and to link the compensation of such employees with the
performance of the Company. This plan
provides
a formula for calculating an incentive target award for each eligible employee
of the Company. Targets are based on an employee’s salary and are
directly dependent on an employee’s responsibilities and contribution with
regard to the long-term performance of the Company.
Stock
Options
The
2005 Plan, which governs the Company’s issuance of stock options and bonus
shares, was established by the Board on March 31, 2005 (and approved by
shareholders on April 28, 2005) and is given effect in conjunction with the
Company’s Long-Term Incentive Plan. The 2005 Plan contemplates (i)
the granting of options to purchase Shares and/or (ii) the direct issuance of
bonus Shares to executive officers, directors and “Service Providers” of the
Company. A “Service Provider” is defined as: (a) an
employee of the Company or any of its subsidiaries; (b) any other person or
company engaged to provide ongoing management or consulting services for the
Company or for any entity controlled by the Company; or (c) any person who is
providing ongoing management or consulting services to the Company or to any
entity controlled by the Company indirectly through a company that is a Service
Provider.
The
purpose of granting such options and/or bonus shares is to assist the Company in
attracting, retaining and motivating executive officers, directors and Service
Providers and to more closely align the personal interests of such executive
officers, directors and Service Providers to those of the
shareholders. The 2005 Plan is intended to be competitive with the
benefit programs of other companies in the mining industry.
The
2005 Plan complies with the rules set forth for such plans by the TSX and
Nasdaq.
The term of any options granted under the 2005 Plan
will be at the discretion of the Board, but will not be in excess of ten years
in accordance with the rules and policies of any stock exchange or securities
market on which Shares are listed. Any grant of options under the
2005 Plan will be within the discretion of the Board. In addition,
the 2005 Plan gives authority to the Board, in its sole discretion, to allot,
issue and deliver up to a total of 50,000 common bonus Shares in each calendar
year. The maximum number of Shares which may be issued pursuant to options
granted or bonus Shares issued under the 2005 Plan may be equal to, but will not
exceed at any time, 10% of the total number of the issued and outstanding common
shares in the capital of the Company as of the grant-date on a non-diluted
basis. In addition, the number of Shares which may be reserved for
issuance pursuant to options granted to insiders of the Company under the 2005
Plan, together with all of the Company’s other previously established or
proposed share compensation arrangements, in aggregate, shall not at any time
exceed 10% of the total number of issued and outstanding Shares in
the capital of the Company on a non-diluted basis. The number of
Shares which may be issuable to any one optionee under the 2005 Plan together
with all of the Company’s other previously established or proposed share
compensation arrangements, shall not exceed 5% of the total number of issued and
outstanding common shares in the capital of the Company on a non-diluted basis.
In addition, the number of Shares which may be issuable under the 2005 Plan,
together with all the Company’s other previously established or proposed share
compensation arrangements, within a one year period: (i) to insiders of the
Company in aggregate, shall not exceed 10% of the outstanding issue; and (ii) to
one optionee who is an insider of the Company or any associates of such insider,
shall not exceed 5% of the outstanding issue. The exercise price of
options granted under the 2005 Plan will be set as the weighted average trading
price of Shares on the TSX or Nasdaq, as the Board may select, for the five
trading days (in which at least one board lot of the Shares were traded) prior
to the date the option was granted. Under the 2005 Plan, options are
non-assignable and non-transferable. The options granted under the
2005 Plan will terminate on the earlier of the expiry date of the options or
30 days after termination of employment, office or the date the individual
ceases to be a Service Provider, where the reason for termination of the
individual was otherwise than for cause or by reason of death or
disability. In the event of termination for cause, the options
granted under the 2005 Plan will terminate immediately upon the date which the
individual ceases to be a director, officer or Service Provider. In
the event the individual ceases to be a director, officer or Service Provider
due to death or disability, the options granted under the 2005 Plan will
terminate upon the earlier of the expiry date and
12 months after the date of death or
disability. The 2005 Plan also contains an adjustment mechanism to
alter, as appropriate, the option price or number of shares issuable under the
2005 Plan upon a share reorganization, corporate reorganization or other such
event not in the ordinary course of business which alters share price or number
of Shares outstanding. As at April 2, 2008 there were options
outstanding under the 2005 Plan to acquire up to 646,245 Shares which represents
0.8% of the Company’s non-diluted share capital. Under the 2005 Plan
the Company has reserved 5,514,829 Shares for issuance upon the exercise of
options. If the adoption of the 2008 Plan is approved, these Shares
will be rolled into the 2008 Plan. Thus, upon approval of the 2008
Plan, the Company will only be reserving an additional 946,641 Shares for issuance upon the exercise of options or
as bonus Shares under the 2008 Plan.
The
Company provides no financial assistance to facilitate the purchase of Shares to
directors, officers or employees who hold options granted under the 2005
Plan.
The
following table sets forth information concerning options granted in respect of
the Company’s common shares to the Named Executive Officers during the Company’s
most recently completed financial year. No stock appreciation rights
are outstanding and it is currently intended that none be issued.
Option
Grants During the Most Recently Completed Financial Year
Name
|
|
Number
of Securities Under Option
|
|
%
of Total Options Granted to Employees in Financial
Year
|
|
Conversion/Exercise
Price (1)
|
|
Market
Value of Securities Underlying Options on the Date of Grant
($/Securities)(2)
|
|
Expiry
Date
|
|
|
|
|
|
|
|
|
|
|
|
Geoffrey
A. Burns
President
and Chief Executive Officer
|
|
17,634
|
|
11%
|
|
28.41
|
|
29.58
|
|
Jan
2, 2012
|
A.
Robert Doyle
Chief
Financial Officer
|
|
10,656
|
|
6.7%
|
|
28.41
|
|
29.58
|
|
Jan
2, 2012
|
Andres
Dasso
Executive
Director of Pan American Silver Peru, S.A.
|
|
12,770
|
|
8%
|
|
28.41
|
|
29.58
|
|
Jan
2, 2012
|
Steven
Busby
Senior
Vice President, Project Development
|
|
13,606
|
|
8.6%
|
|
28.41
|
|
29.58
|
|
Jan
2, 2012
|
Michael
Steinmann
Senior
Vice President, Geology and Exploration
|
|
11,123
|
|
7%
|
|
28.41
|
|
29.58
|
|
Jan
2, 2012
|
(1)
|
The
weighted average trading price of the Company’s Common shares on the TSX
on the 5 trading days prior to the date of grant. Dollar
amounts are in Canadian dollars.
|
(2)
|
The
TSX closing price on January 2, 2007. Dollar amounts are in
Canadian dollars.
|
The
following table sets forth information concerning the exercise of options for
common shares in the Company under the 2005 Plan during the financial year ended
December 31, 2007 and the value at December 31, 2007 of unexercised
in-the-money options under the 2005 Plan held by each of the Named Executive
Officers.
Option
Exercises During the Most Recently Completed Financial Year
Name
|
|
Securities
Acquired
on
Exercise
|
|
Aggregate
Realized
Value
($)(1)
|
|
Unexercised
Options at Financial Year End
Exercisable/
Unexercisable
|
|
Value
of Unexercised in- the-Money Options at Financial Year End
Exercisable
($)/
Unexercisable
($)(1)(2)
|
|
|
|
|
|
|
|
|
|
Geoffrey
A. Burns
President
and Chief Executive Officer
|
|
20,000
|
|
395,600
|
|
6,968/31,570
|
|
90,236/296,503
|
A.
Robert Doyle
Chief
Financial Officer
|
|
40,000
|
|
700,700
|
|
4,058/18,772
|
|
52,551/175,219
|
Andres
Dasso
Executive
Director of Pan American Silver Peru, S.A.
|
|
Nil
|
|
Nil
|
|
14,004/26,777
|
|
211,594/280,535
|
Steven
Busby
Senior
Vice President, Project Development
|
|
50,000
|
|
1,223,930
|
|
4,749/23,105
|
|
61,500/212,540
|
Michael
Steinmann
Senior
Vice President, Geology and Exploration
|
|
28,233
|
|
425,544
|
|
16/19,222
|
|
207/185,630
|
(1)
|
Dollar
amounts are in Canadian dollars.
|
(2)
|
The
last closing board lot sale price of Common Shares on the TSX as at
December 31, 2007 was CAD $34.99.
|
Termination
of Employment, Change in Responsibilities and Employment Contracts
Of
the Named Executive Officers, Geoffrey A. Burns, the Company’s President and
Chief Executive Officer; Robert Doyle, the Company’s Chief Financial Officer;
Michael Steinmann, the Company’s Senior Vice-President of Geology and
Exploration; and Steven L. Busby, the Company’s Senior Vice President of Project
Development are currently engaged under employment contracts. Each of these
contracts is for an indefinite term and each provides for a base salary (as may
be adjusted annually by such amount as the Board determines upon recommendation
by the Compensation Committee), discretionary bonus, grant of stock options,
vacation time, and various benefits including life, disability, medical and
dental insurance. Each contract further provides for reimbursement of reasonable
employment related expenses, including a one-time reimbursement for moving
expenses. In addition to these terms, the employment contract of
Geoffrey A. Burns provided for a signing bonus and the use of a parking stall.
The employment contracts also provide for termination payments in certain
circumstances. In the event of termination without just cause, all
four of the employment contracts provide for a termination payment equal to one
year’s annual salary (and in the case of Geoffrey A. Burns, plus one month’s
salary for each fully completed year of continuous employment with the Company,
not to exceed two times annual salary; and in the case of Michael Steinmann, a
lump sum payment equal to his annual salary plus benefits for a period of nine
months). For Steven L. Busby, his contract further provides that if
he provides at least one month notice of resignation, and exercises his right to
resign within three months of any person acquiring 50% of the outstanding Shares
or acquiring sufficient Shares to replace the majority of the Company’s Board
with such person’s nominees, he is entitled to a termination payment equal to
one years’ annual salary together with benefits for a twelve-month period. For
Geoffrey A. Burns, his contract provides that a resignation within 6 months of
any person acquiring 50% of the outstanding Shares or acquiring sufficient
Shares to replace the majority of the Company’s Board with such person’s
nominees entitles him to a termination payment equal to two years’ annual salary
together with benefits for a twelve-month period. For A. Robert
Doyle, his contract provides that a resignation under these
same
circumstances entitles him to a termination payment equal to one year’s annual
salary together with benefits for a twelve-month period and the vesting of all
options granted, upon the effective date of resignation, after a change in
control.
Compensation
Committee
The
Company has a Compensation Committee comprised of the following independent
directors: John M. Willson, Paul B. Sweeney and Michael J.J.
Maloney. The Chairman of the Compensation Committee is John M.
Willson. Mr. Willson is retiring from the Board this
year. Mr. Maloney will be replacing Mr. Willson as Chairman of the
Compensation Committee. The duties and responsibilities of the Compensation
Committee are set out in this Information Circular under the heading “Corporate
Governance - Board Committees – Compensation Committee”.
Report
on Executive Compensation
The
Company’s compensation structure is designed to reward performance and to be
competitive with the compensation arrangements of other Canadian mining
companies with international operations of similar size and
scope. The structure complies with the Company’s statement of
Compensation Philosophy which was adopted in February 2005. Each
executive officer’s position is evaluated to establish skill requirements and
level of responsibility and this evaluation provides a basis for internal and
external comparisons of positions. In addition to industry
comparables, the Board and the Compensation Committee consider a variety of
factors when determining both compensation policies and programs and individual
compensation levels. These factors include the long-term interests of
the Company and its shareholders, overall financial and operating performance of
the Company and the Board’s and the Compensation Committee’s assessment of each
executive’s individual performance and contribution towards meeting corporate
objectives. Executive officer compensation is composed of four major
components: base salary, participation in the Company’s Annual
Incentive Plan (the “AIP”), participation in the
Long-Term Incentive Plan and extended group benefits.
Base
Salary
Base
salary ranges are determined following a review of market data for similar
positions in Canadian mining companies with international operations of
comparable size and scope. The salary for each executive officer’s
position is then determined having regard for the incumbent’s responsibilities,
individual performance factors, overall corporate performance, potential for
advancement, and the assessment of the Board and the Compensation Committee of
such matters as are presented by management. For 2007, the Company
increased the base salary of a number of its executive officers, including the
President and CEO, Senior Vice President, Mining Operations, Senior Vice
President, Project Development, Senior Vice President, Geology and Exploration
and the Chief Financial Officer, in recognition of the Company’s continued
growth in silver reserves and resources, the strong performance of the Company’s
share price and in light of recent compensation trends among comparable resource
companies. See “Compensation Committee Practices” below for
additional information on the use of Hay Group Limited as
consultants.
Annual
Incentive Plan
The
second component of the executive officers’ compensation is an annual cash bonus
earned under the guidelines of the Company’s AIP. The payment of the
AIP is based upon the Company’s performance as compared to a set of annual
objectives that have been pre-determined and approved by the
Board. These objectives include targets for production, costs,
earnings, safety, reserve growth and project advancement and are tied directly
to the Company’s annual budget, which is also approved by the
Board. In addition, there are individual targets set for each
executive officer based on each position’s relative responsibilities,
accountabilities and contribution to achieving and surpassing the Company’s
annual objectives. Each AIP participant will have an established target for
his/her annual incentive pay which may be adjusted on an annual basis as
required. The target for each participant is
determined
by virtue of his or her position and the influence that position can have on the
Company’s annual performance, and ranges from 15% to 50% of the individual's
annual base salary. Annual objectives are developed for the Company, and the
individual. The relative importance of each is identified by the weight assigned
to the objective. The objectives are typically of a short-term (one year or
less) nature. Objectives will be of three kinds: broad company objectives,
department or property objectives, and individual objectives. For
2007, the Company paid in early 2008 an aggregate cash bonus of $1.6 million to
36 senior managers and executive officers of the Company and certain of its
subsidiaries predominantly in consideration of the Company’s accomplishments in
project development through feasibility and construction efforts including the
construction of the Alamo Dorado Mine, and successes in exploration, which
replaced all ounces mined and increased total proven and probable
reserves. In addition, in 2007 the Company generated positive cash
flow and net income significantly above budget. Performance targets relating to
production per share, budgeted production, and safety objectives, were not
met. The weight assigned to each of these Company performance measure
objectives was either 5%, 10% or 15%, with multiplying performance factors
ranging from 0 to 2.00. For individual performance, each individual’s
personal objectives are evaluated at the end of the year and a performance level
and corresponding factor is applied to each. Performance factors are based on an
objective evaluation of the results or, if appropriate, a subjective evaluation.
The performance levels are designed to force clear definitions of what results
are expected and to provide consistency in evaluating results. At the
completion of the performance period, if 100% of the goal is achieved, the
performance factor is 1.00; if 200% or more of the goal is met, the performance
factor is 2.0. If a significant portion of the objective is achieved
(80-99%), the employee may receive a performance factor rating
0.50. Achieving anything below 80% of an objective receives a
performance factor of 0.
AIP
payments are determined on the basis of Company and individual performance. In
2007, 50% of the AIP payment was based on Company performance and 50% was based
on individual performance with the exception of the Chief Executive Officer
whose AIP payment was based 100% on Company performance. The ratio may be
adjusted from year to year by the Compensation Committee, depending on the level
of Company, departmental or individual focus desired.
For
2007, the Company’s performance rating was 95.5%.
The
individual performance ratings for the named executive group ranged from 67% to
138%.
Long-Term
Incentive Plan
The
third component of the executive officers’ compensation is the granting of stock
options and issuance of bonus Shares. The Compensation Committee or
the Board, subject to approval by regulatory authorities, may from time to time
grant stock options and bonus Shares to senior managers and executive
officers. This is intended to help attract and retain employees by
providing them with an opportunity to participate in the future success of the
Company and to align the interest of the employee with those of the Company and
its shareholders.
The
Company’s Long-Term Incentive Plan provides guidance regarding the grant of
options and bonus Shares to those holding senior and corporate management
positions. The Long-Term Incentive Plan provides a formula for
calculating the annual Long-Term Incentive Plan target for each eligible
employee, based on a percentage of base salary. 75% of the Long-Term Incentive
Plan payout will be made available as options and the remaining 25% will be made
available as Shares. The Long-Term Incentive Plan is based on individual
performance measures and targets, and is reviewed
annually. Participation is limited to key management positions having
responsibility for influencing the policy and strategy of the
Company. In the past, options were generally granted to newly hired
executive officers at the time of their initial employment. The
Company had placed strong reliance on stock options in terms of the total
compensation of its executive officers in keeping with overall compensation
trends in the Canadian mining industry and to conserve the Company’s cash.
However, since the implementation of the Long-Term Incentive Plan in 2005, the
practice of granting options upon hire has been curtailed.
The
fourth component of the executive officers’ compensation is extended group
benefits. The Company makes available an array of quality group
benefit alternatives to address employee health and other needs, and those of
their dependents.
Compensation
Committee Practices
The
Company’s compensation practices will be regularly monitored by the Compensation
Committee and will be modified as required, to ensure the Company maintains its
competitiveness and that it appropriately recognizes growth and change within
the organization. The Company utilized Hay Group Limited (“Hay”) to assist in
determining executive compensation. Detailed job descriptions have
been prepared and are updated for each of the senior management positions in the
Company. Hay evaluates each position against appropriate, comparable
and consistent data utilizing its proprietary point system. Hay then
awards a point value to each position and the position and corresponding point
value are compared annually to Hay’s Mining Review Compensation survey
data. The survey utilizes compensation data from mining companies in
Canada with comparable positions. Based on this market data,
recommendations are submitted to the Compensation Committee to review and if
appropriate adjust base salaries, AIP targets and Long-Term Incentive Plan
targets. The Compensation Committee then makes recommendations for
changes to executive compensation to the Board.
Mr.
Geoffrey A. Burns, the President and Chief Executive Officer of the Company, has
a current base salary of $465,166 that was approved by the Compensation
Committee to be effective March 1, 2008. In 2007, Mr. Burns’ total compensation
consisted of $359,070 in base salary, $171,456 in AIP bonus, and $236,986 in
Long-Term Incentive Plan compensation.
The
base salary compensation for Mr. Burns is determined on the basis of a review of
market data for similar positions in Canadian mining companies with
international operations of comparable size and scope. The Annual
Incentive Plan compensation paid to Mr. Burns is based on achieving certain
corporate goals and objectives which are set at the start of each year and
approved by the Board of Directors. There are three categories of
annual corporate objectives. The first category represent metrics
that should contribute to an increase in shareholder value and include
increasing the Company’s silver production per share and increasing the
Company’s proven and probable silver reserves per share. The second
category is focussed on growth and measures exploration success and the
development and construction progress in the Company’s major new mining
projects. The third category measures operating performance and
includes annual targets for silver production, cash costs per ounce, earnings,
cash flow from operating activities and health and safety
performance. The targets for each component are set such that they
are greater than the Company’s internally approved budget. For the
year ended December 31, 2007, the Compensation Committee determined that Mr.
Burns’ performance against the corporate objectives was 95.5% for the purposes
of calculating his AIP bonus. The Long-Term Incentive Plan
equity-based compensation paid to Mr. Burns was determined by the Compensation
Committee’s annual review of Mr. Burns' personal performance, as measured
against pre-established evaluation criteria which includes, commitment,
initiative, knowledge, leadership, teamwork and communications. In
2007 Mr. Burns scored 73 out of a possible 80 points for his personal
performance which entitled him to a Long-Term Incentive Plan payment of 66% of
his annual base salary.
John
M. Willson
Michael
J.J. Maloney
Paul
B. Sweeney
Compensation
of Directors
Other
than the Chairman, each non-executive director of the Company receives annual
compensation, starting on the date of the annual general meeting at which he or
she is elected or re-elected as a director and ending on the date immediately
prior to the date of the Company’s next annual general meeting, of
either:
|
(i)
|
common
shares in the capital of the Company having a value of $70,000 based on
the 10-day weighted average of the Company’s common stock on the Nasdaq
National Market immediately prior to the annual general meeting;
or
|
|
(ii)
|
options
to purchase common shares in the capital of the Company having a value of
$70,000, according to the Black-Scholes formula. The exercise price of
such options will be equal to the weighted average trading price of the
Company’s common stock on the Nasdaq National Market on the five trading
days (on which at least one board lot of the common shares was traded)
prior to the annual general meeting. The options will vest immediately and
will expire ten years after the date on which they were
granted.
|
In
2007, each non-executive director elected to receive common shares in the
capital of the Company pursuant to subsection (i) above. In addition to the
annual compensation amount, a non-executive chair of the Nominating and
Governance Committee, Compensation Committee or Health, Environment and Safety
Committee receives a $3,000 cash fee annually and each non-executive director on
those same committees receives a $1,000 cash fee for each
committee meeting attended. The non-executive chair of the Audit
Committee receives a $10,000 cash fee annually and each other non-executive
director on the Audit Committee receives a $4,000 cash fee for each
committee meeting attended. The lead director receives a
$10,000 cash fee annually. All non-Canadian resident directors also
receive the cost of their Canadian tax filings as part of their
compensation.
In
2007, the Chairman received an annual fee of $93,023, paid in Shares, plus
$74,418 to cover the administrative costs of running the Chairman’s
office.
The
Company reimburses its directors for reasonable out-of-pocket expenses related
to their attendance at meetings or other expenses incurred for corporate
purposes.
The
Nominating and Governance Committee will review the compensation of directors in
2008.
Equity
Compensation Plan Information
The
following table sets forth information concerning the issuance of Shares under
the 2005 Plan for the financial year ended December 31, 2007.
Plan
Category
|
|
Number
of securities to be issued upon exercise of outstanding
options,
warrants
and rights
(a)
|
|
Weighted-average
exercise price of outstanding options, warrants and rights
(b)
|
|
Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in
column(a))
(c)
|
Equity
compensation plans approved by securityholders
|
|
620,559
|
|
$18.52
|
|
5,670,556(1)
|
Total:
|
|
620,559
|
|
$18.52
|
|
5,670,556
|
(1)
|
10% of the Company’s outstanding
issue as at December 31, 2007 less options outstanding as at December 31,
2007.
|
Performance
Graph
The
following graph compares the yearly percentage change in the Company’s
cumulative total shareholder return on its Shares with the cumulative total
return of the S&P TSX Composite Index, for the financial years ended
December 31, 2007, 2006, 2005, 2004, 2003, and 2002.
|
|
|
|
Pan
American Silver Corp. Closing Price
|
|
Base
|
|
S&P TSX
Composite
|
|
Base
|
|
|
|
|
|
|
|
|
|
December 31, 2002
|
|
$ 12.28
|
|
100.00
|
|
6,615
|
|
100.00
|
December 31, 2003
|
|
$ 18.46
|
|
150.33
|
|
8,221
|
|
124.28
|
December
31, 2004
|
|
$ 19.23
|
|
156.60
|
|
9,247
|
|
139.79
|
December
31, 2005
|
|
$ 21.91
|
|
178.42
|
|
11,272
|
|
170.40
|
December
30, 2006
|
|
$ 29.40
|
|
239.41
|
|
12,908
|
|
195.13
|
December
29, 2007
|
|
$ 34.99
|
|
284.93
|
|
13,833
|
|
209.13
|
Interest
of Insiders in Material Transactions
No
insider of the Company and no associate or affiliate of any insider has or has
had any material interest, direct or indirect, in any transaction since the
commencement of the Company’s last completed financial year, or in any proposed
transaction, which in either such case has materially affected or will
materially affect the Company.
Management
Contracts
Management
functions of the Company are not, to any substantial degree, performed by a
person other than the directors or senior officers of the Company through
consulting contracts. Mr. Robert P. Pirooz, the Company’s General
Counsel and Secretary, provides certain management services to the Company
through a private company,
controlled
by him, Iris Consulting Limited. In this regard, the Company paid
Iris Consulting Limited, through which Mr. Pirooz provides his services, $0.1
million for management and administrative services in 2007.
Interest
of Certain Persons in Matters to be Acted Upon
Except
as disclosed herein, no director or executive officer of the Company, nor any
associate or affiliate of any of the foregoing persons, has any material
interest, direct or indirect, by way of beneficial ownership of Shares or
otherwise, in any matter to be acted on at the Meeting other than the election
of directors.
Other
Matters
Management
of the Company knows of no other matters which will be brought before the
Meeting, other than those referred to in the Notice of
Meeting. Should any other matters, which do not have a material
effect on the business of the Company, properly come before the Meeting, the
Shares represented by the proxies solicited hereby will be voted on those
matters in accordance with the best judgment of the persons voting such
proxies.
Additional
Information
Additional
information relating to the Company is available on SEDAR at
www.sedar.com. The Company’s financial information is provided in its
comparative financial statements and management’s discussion and analysis
(“MD&A”) for the
most recently completed financial year. Copies of the financial
statements and MD&A are available upon request to the Controller or the
Secretary of the Company at 1500 – 625 Howe Street, Vancouver, British Columbia,
Canada, V6C 2T6.
Copies
of the above documents will be provided free of charge to shareholders of the
Company. The Company may require the payment of a reasonable charge
from any person or Company who is not a shareholder of the Company and who
requests a copy of any such document.
Approval
of this Circular
The
contents of this Information Circular have been approved by the directors of the
Company and its mailing has been authorized by the directors of the Company
pursuant to resolutions passed as at March 20, 2008.
DATED at Vancouver, British Columbia, this 10th
day of April, 2008.
|
BY ORDER OF
THE BOARD |
|
|
|
|
|
/s/ Robert
Pirooz |
|
Robert
Pirooz, |
|
General
Counsel and Secretary |
APPENDIX
“A”
CORPORATE
GOVERNANCE DISCLOSURE OF
PAN
AMERICAN SILVER CORP.
Governance Disclosure Guidelines
under National Instrument 58-101 Disclosure of
Corporate Governance Practices
|
Comments
|
1. Board of
Directors
|
|
(a)
Disclose the identity
of directors who are independent.
|
The
following members of the board of directors (the “Board”) of Pan American
Silver Corp. (the “Company”) proposed for nomination as directors are
considered to be “independent”, within the meaning of the Corporate
Governance Disclosure Rules:
William
A. Fleckenstein – independent
Michael
Larson – independent
Michael
J.J. Maloney – independent
Paul
B. Sweeney – independent
David
C. Press – independent
|
(b)
Disclose the identity
of directors who are not independent, and describe the basis for that
determination.
|
§
|
Ross
J. Beaty – not independent – member of the executive of the Company from
1994 to 2006
|
§
|
Geoffrey
A. Burns – not independent – current President and CEO of the
Company
|
§
|
Robert
Pirooz – not independent – current General Counsel and Secretary of the
Company
|
(c)
Disclose whether or
not a majority of directors are independent. If a majority of directors
are not independent, describe what the Board does to facilitate its
exercise of independent judgment in carrying out its
responsibilities.
|
A
majority of the Company’s directors are independent - Five of the eight
persons nominated as directors qualify as independent directors for the
purposes of the Corporate Governance Disclosure Rules and the Nasdaq
rules.
|
(d)
If a director is
presently a director of any other issuer that is a reporting issuer (or
the equivalent) in the same jurisdiction or a foreign jurisdiction,
identify both the director and the other issuer.
|
§
|
Ross Beaty – member of the board
of directors and Co-Chairman of Western Copper Corp. Chair and
member of the board of directors of Global Copper
Corp.
|
§
|
Michael Larson – member of the
board of trustees of Western Asset/Claymore US Treasury Inflation
Protected Securities Fund and Western Asset/Claymore US Treasury Inflation
Protected Securities Fund (II).
|
§
|
Robert Pirooz - member of the
board of directors of Global Copper Corp., and Rodinia Minerals
Inc.
|
§
|
Paul Sweeney – member of the board
of directors of
|
Governance Disclosure Guidelines
under National Instrument 58-101 Disclosure of
Corporate Governance Practices
|
Comments
|
|
|
|
|
Newgold Inc., Pacific Rim Mining
Corp. and Polaris Minerals Corporation.
|
§
|
John M. Willson – member of the
board of directors of Harry Winston Diamond Corp., Finning International
Inc. and Nexen Inc.
|
(e)
Disclose whether or
not the independent directors hold regularly scheduled meetings at which
non-independent directors and members of management are not in attendance.
If the independent directors hold such meetings, disclose the number of
meetings held since the beginning of the issuer’s most recently completed
financial year. If the independent directors do not hold such meetings,
describe what the Board does to facilitate open and candid discussion
among its independent directors.
|
At the beginning of each regularly
scheduled board of directors meeting, the independent members of the Board
hold in camera meetings at which non-independent directors and members of
management are not in attendance.
|
(f)
Disclose whether or
not the chair of the Board is an independent director. If the Board has a
chair or lead director who is an independent director, disclose the
identity of the independent chair or lead director, and describe his or
her role and responsibilities. If the Board has neither a chair that is
independent nor a lead director that is independent, describe what the
Board does to provide leadership for its independent
directors.
|
Ross J. Beaty is the Chair of the
Board and is not independent. William Fleckenstein, an
independent director, has been appointed lead director. Michael J.J.
Maloney, an independent director, is the Chairman of the Nominating and
Governance Committee.
The Board has adopted a position
description for the lead director, which was recommended for adoption by
the Board by the Nominating and Governance Committee. The lead director’s
primary responsibility is to ensure that the Board functions independent
of management and to act as principal liaison between the independent
directors and the Chief Executive Officer. The “Mandate of the
Lead Director” was attached as Schedule “A” to the Company’s 2006
Information Circular and filed on SEDAR. The lead director
holds in camera meetings at each Board meeting with all independent
directors and then reports to the Board or makes
demands.
|
(g)
Disclose the
attendance record of each director for all Board meetings held since the
beginning of the issuer’s most recently completed financial
year.
|
For the financial year ended
December 31, 2007, the Board held nine Board meetings. The
attendance records of each of the directors for the most recently
completed financial year are set out on page 12 of the Information
Circular.
|
Governance Disclosure Guidelines
under National Instrument 58-101 Disclosure of
Corporate Governance Practices
|
Comments
|
|
|
2. Board
Mandate
|
|
Disclose the text of the Board’s
written mandate. If the Board does not have a written mandate, describe
how the Board delineates its role and
responsibilities.
|
The Board has adopted a formal
written mandate which defines its stewardship responsibilities. The terms of the Board of
Directors Mandate are attached hereto as Schedule “A”.
|
3. Position
Descriptions
|
|
(a)
Disclose whether or
not the Board has developed written position descriptions for the chair
and the chair of each Board committee. If the Board has not developed
written position descriptions for the chair and/or the chair of each Board
committee, briefly describe how the Board delineates the role and
responsibilities of each such position.
|
The
Board has adopted a written position description for the chair of the
Board, titled “Mandate of the Chairman of the Board” which was attached as
Schedule “C” to the Company’s 2006 Information Circular and filed on
SEDAR.
As
the Chairman of the Board is not independent, a lead director has been
appointed and given a mandate (see 1(f) above).
The chair of each committee has
been provided with a mandate for the committee and has accepted leadership
responsibilities for ensuring fulfilment of the applicable mandate. Each
chair is sufficiently skilled through education and experience to lead the
respective committee.
|
(b)
Disclose whether or
not the Board and CEO have developed a written position description for
the CEO. If the Board and CEO have not developed such a position
description, briefly describe how the Board delineates the role and
responsibilities of the CEO.
|
The
Board has adopted a written position description for the chief executive
officer, titled “Mandate of the Chief Executive Officer” which was
attached as Schedule “D” to the Company’s 2006 Information Circular and
filed on SEDAR.
|
4. Orientation and Continuing
Education
|
|
(a)
Briefly describe what
measures the Board takes to orient new directors regarding (i) the role of the Board, its
committees and its directors, and (ii) the nature and operation of the
issuer’s business.
|
Each
new director, on joining the Board, is given an outline of the nature of
the Company’s business, its corporate strategy, current issues within the
Company, the expectations of the Company concerning input from directors
and the general responsibilities of the Company’s
directors. Each new director is given a board manual which
includes all Board policies and mandates. New directors are required to
meet with management of the Company to discuss and better understand the
business of the Company and will be advised by counsel to the Company of
their legal obligations as directors of the Company. Directors
have been and will continue to be given tours of the Company’s mines and
development sites to give such directors additional insight into the
Company’s business.
|
(b)
Briefly describe what
measures, if any, the Board takes to provide continuing education for its
directors. If the Board does not provide continuing
education,
|
Directors
have been and will continue to be given tours of the Company’s silver
mines and development sites to give such directors additional insight into
the Company’s business.
|
Governance Disclosure Guidelines
under National Instrument 58-101 Disclosure of
Corporate Governance Practices
|
Comments
|
|
|
describe how the Board ensures
that its directors maintain the skill and knowledge necessary to meet
their obligations as directors.
|
In addition, the General
Counsel of the Company has the responsibility of circulating to the Board
members new and evolving corporate governance developments applicable to
directors of public companies with respect to their conduct, duties and
responsibilities.
|
5. Ethical Business
Conduct
|
|
(a)
Disclose whether or
not the Board has adopted a written code for the directors, officers and
employees. If the Board has adopted a written code: (i) disclose how a person or company
may obtain a copy of the code; (ii) describe how the Board monitors
compliance with its code, or if the Board does not monitor compliance,
explain whether and how the Board satisfies itself regarding compliance
with its code; and (iii) provide a cross-reference to any
material change report filed since the beginning of the issuer’s most
recently completed financial year that pertains to any conduct of a
director or executive officer that constitutes a departure from the
code.
|
As
part of its stewardship responsibilities, the Board has approved a formal
“Code of Ethical Conduct” (the “Code”) that is designed to deter
wrong-doing and to promote honest and ethical conduct and full, accurate
and timely disclosure. The Code is applicable to all the
Company’s directors, officers and employees. The Board monitors
compliance with the Code and is responsible for the granting of any
waivers from these standards to directors or executive
officers. Disclosure will be made by the Company of any waiver
from these standards granted to the Company’s directors or executive
officers in the Company’s quarterly report that immediately follows the
grant of such waiver.
There
has been no conduct of a director or executive officer that constitutes a
departure from the Code, and no material change report in that respect has
been filed.
|
(b)
Describe any steps
the Board takes to ensure directors exercise independent judgment in
considering transactions and agreements in respect of which a director or
executive officer has a material interest.
|
Directors must disclose to the
General Counsel any instances in which they perceive they have a material
interest in any matter being considered by the Board; and if it is
determined there is a conflict of interest, or that a material interest is
held, the conflict must be disclosed to the Board. In addition, the
interested Board member must refrain from voting and exit the meeting
while the transaction at issue is being considered by the
Board.
|
(c)
Describe any other
steps the Board takes to encourage and promote a culture of ethical
business conduct.
|
The Company’s Nominating and
Governance Committee is responsible for setting the standards of business
conduct contained in the Code and for overseeing and monitoring compliance
with the Code. The Code also sets out mechanisms for the reporting of
unethical conduct.
The Board sets the tone for
ethical conduct throughout the Company by considering and discussing
ethical considerations when reviewing the corporate transactions of the
Company.
|
6. Nomination of
Directors
|
|
(a)
Describe the process
by which the Board identifies new candidates for Board
nomination.
|
All
members of the Board are tasked with recommending individuals they believe
are suitable candidates for the Board. The Nominating and Governance
Committee identifies, reviews the qualifications of and recommends to the
Board possible
|
Governance Disclosure Guidelines
under National Instrument 58-101 Disclosure of
Corporate Governance Practices
|
Comments
|
(b)
Disclose whether or
not the Board has a nominating committee composed entirely of independent
directors. If the Board does not have a nominating committee composed
entirely of independent directors, describe what steps the Board takes to
encourage an objective nomination process.
(c)
If the Board has a
nominating committee, describe the responsibilities, powers and operation
of the nominating committee.
|
nominees
for election or re-election to the Board at each annual general meeting of
the Company and identifies, reviews the qualifications of and recommends
to the Board possible candidates to fill vacancies on the Board between
annual general meetings. The Nominating and Governance
Committee also annually reviews and makes recommendations to the Board
with respect to the composition of the Board.
All
members of the Nominating and Governance Committee are outside,
non-management and independent directors in accordance with the Corporate
Governance Disclosure Rules and the Nasdaq Rules.
The
Nominating and Governance Committee oversees the effective functioning of
the Board and annually reviews and makes recommendations to the Board with
respect to: (i) the composition of the Board; (ii) the appropriateness of
the committees of the Board, their mandates and responsibilities and the
allocation of directors to such committees; and (iii) the appropriateness
of the terms of the mandate and responsibilities of the
Board.
|
7. Compensation
|
|
(a)
Describe the process
by which the Board determines the compensation for the issuer’s directors
and officers.
(b)
Disclose whether or
not the Board has a compensation committee composed entirely of
independent directors. If the Board does not have a compensation committee
composed entirely of independent directors, describe what steps the Board
takes to ensure an objective process for determining such
compensation.
(c)
If the Board has a
compensation committee, describe the responsibilities, powers and
operation of the compensation committee.
(d)
If a compensation
consultant or advisor has, at any time since the beginning of the issuer’s
most recently completed financial year, been retained to assist in
determining compensation for any of the issuer’s directors and officers,
disclose the identity of the consultant or advisor and briefly summarize
the mandate for which they have been retained. If the consultant or
advisor has been retained to perform any
|
The
Company’s Director of Human Resources and the Compensation Committee
reviews overall compensation policies, compares them to the overall
industry, and makes recommendations to the Board on the compensation of
executive officers.
The
Compensation Committee is comprised of three directors, each of whom is an
independent director for the purposes of the Corporate Governance
Disclosure Rules and the Nasdaq rules. The Chairman of the
Compensation Committee is John M. Willson. Mr.
Willson is retiring from the Board. Michael J. J. Maloney will
replace Mr. Willson as Chairman of the Compensation
Committee.
The
Compensation Committee determines the salary and benefits of the executive
officers of the Company, determines the general compensation structure,
policies and programs of the Company, administers the Company’s Annual
Incentive Plan, Long-Term Incentive Plan and Stock Option and Stock Bonus
Plan, and delivers an annual report to shareholders on executive
compensation.
In
addition, the Compensation Committee reviews and makes recommendations to
the Board for approval with respect to the annual and long term corporate
goals and objectives relevant to determining the compensation of the
President and CEO and the
|
Governance Disclosure Guidelines
under National Instrument 58-101 Disclosure of
Corporate Governance Practices
|
Comments
|
other work for the issuer, state
that fact and briefly describe the nature of the work.
|
Chairman
of the Board.
|
8. Other Board
Committees
|
|
If the Board has standing
committees other than the audit, compensation and nominating committees,
identify the committees and describe their function.
|
The
Board also has a Health, Safety and Environment Committee which consists
of three directors. The Company recognizes that proper care of
the environment is integral to its existence, its employees, the
communities in which it operates and all of its operations. The
Health, Safety and Environment Committee ensures that an audit is made of
all construction, remediation and active mines. The results of such audits
are reported to the Health, Safety and Environment Committee as is the
progress on any significant remediation efforts. The Health, Safety and
Environment Committee ensures that strict policies with respect to the
health and safety of its employees are in place at each of its operations
and that such policies are enforced.
|
9. Assessments
|
|
Disclose whether or not the board,
its committees and individual directors are regularly assessed with
respect to their effectiveness and contribution. If assessments are
regularly conducted, describe the process used for the assessments. If
assessments are not regularly conducted, describe how the board satisfies
itself that the board, its committees, and its individual directors are
performing effectively.
|
The
Chairman of the Board and the CEO are assessed each year on the basis of
the objectives set out by the Board for their respective positions, their
individual performance throughout the year and their ability to execute on
long-term strategy. The Chairman and the CEO are assessed first by the
Compensation Committee and then by the Board as a whole.
The
Board has also appointed a Nominating and Governance Committee, which
proposes and makes recommendations to the Board with respect to: (i) the
composition of the Board; (ii) the appropriateness of the committees of
the Board, their mandates and responsibilities and the allocation of
directors to such committees; and (iii) the appropriateness of the terms
of the mandate and responsibilities of the Board. During 2005, the
Nominating and Governance Committee, in consultation with the entire
Board, undertook to formally establish the roles and responsibilities of
each of the Lead Director, the Chairman of the Board and the CEO and
determine against what criteria each such position should be
assessed.
In
2006, the Nominating and Governance Committee developed a process to
assess the Board as a whole and the committees of the
Board. The performance assessment of the Board and each
Committee of the Board is based on information and feedback obtained from
director evaluation questionnaires provided to each
director. Each director is asked to complete and return the
assessment questionnaire to the Lead Director on a confidential
basis. The Lead director may discuss the
completed
|
Governance Disclosure Guidelines
under National Instrument 58-101 Disclosure of
Corporate Governance Practices
|
Comments
|
|
questionnaires
with individual directors where clarification is required. The
evaluation process focuses on Board and committee performance, and also
asks for peer feedback and suggestions or comments regarding the
performance of the Chair of each committee and the Lead
Director. The Lead Director reports the results of the
performance assessments to the Board.
The
Board and the Nominating and Governance Committee have formally assessed
the effectiveness of each member of the Board, and have determined that
each Board member is significantly qualified through their current or
previous professions. Each member fully participates in each
meeting having in all cases been specifically canvassed for their
input.
|
SCHEDULE “A”
PAN
AMERICAN SILVER CORP.
(the
“Company”)
BOARD
OF DIRECTORS MANDATE
STEWARDSHIP
RESPONSIBILITY
A.
|
Subject
to the Memorandum and Articles of the Company and applicable law, the
Board of Directors of the Company (the “Board”) has a responsibility for
the stewardship of the Company, including the responsibility
to:
|
(i)
|
supervise
the management of and oversee the conduct of business of the
Company;
|
(ii)
|
provide
leadership and direction to
management;
|
(iii)
|
evaluate
management;
|
(iv)
|
set
policies appropriate for the business of the Company;
and
|
(v)
|
approve
corporate strategies and goals.
|
BOARD
COMPOSITION AND MEETINGS
A.
|
A
majority of the Board shall be unrelated to the
Company.
|
For
the purposes of this Mandate, an “unrelated director” means a director who is
independent of the management of the Company and is free from any interest and
any business or other relationship which could, or could reasonably be perceived
to, materially interfere with the director’s ability to act with a view to the
best interests of the Company, other than interests and relationships arising
from shareholdings.
B.
|
The
directors will be elected each year by the shareholders of the Company at
the annual general meeting of shareholders. The Nominating and
Governance Committee will recommend to the full Board nominees for
election to the Board and the Board will propose a slate of nominees to
the shareholders for election as directors for the ensuing
year.
|
C.
|
Immediately
following each annual general meeting, the Board
shall:
|
(i)
|
elect
a Chairman of the Board and, when desirable, a lead director of the Board,
and establish their duties and
responsibilities;
|
(ii)
|
appoint
the President and CEO of the Company and establish their duties and
responsibilities;
|
(iii)
|
on
the recommendation of the CEO, appoint the senior officers of the Company
and approve the senior management structure of the
Company;
|
(iv)
|
appoint
a nominating and governance committee, an audit committee, a compensation
committee and a health, safety and environment committee;
and
|
(v)
|
approve
the mandate, duties and responsibilities of each committee of the board of
directors;
|
D.
|
The
Board shall be responsible for monitoring the performance of the President
and CEO, and for determining the compensation of the President and
CEO.
|
E.
|
From
time to time, the Board may appoint special committees to assist the Board
in connection with specific
matters.
|
F.
|
The
Board shall meet not less than four times during each year and will
endeavour to hold one meeting in each financial quarter. The Board will
also meet at any other time at the call of the Chairman of the Board or,
subject to the Memorandum and Articles of the Company, of any
director.
|
POSITION
DESCRIPTIONS
A.
|
The
Board will ensure the Company has management of the highest
calibre. This responsibility is carried out primarily
by:
|
(i)
|
appointing
the President as the Company’s business leader and developing criteria and
objectives against which the Board will assess, on an ongoing basis, the
President’s performance;
|
(ii)
|
developing
position descriptions for the Chairman of the Board and the chair of each
board committee and, with the CEO, developing position descriptions for
the President and CEO, and regularly assessing those appointed individuals
against such descriptions; and
|
(iii)
|
developing
and approving corporate objectives which the CEO is responsible for
meeting, and assessing the CEO against these
objectives.
|
B.
|
A
principal responsibility of the Chairman of the Board will be to manage
and act as the chief administrative officer of the Board with such duties
and responsibilities as the Board may establish from time to time. The
Chairman of the Board need not be independent of
management.
|
C.
|
The
principal duties and responsibilities of the lead director will be as
established by the Board from time to time. The lead director will be
independent of management.
|
D.
|
The
Board will ensure that proper limits are placed on management’s
authority.
|
STRATEGIC
PLANNING PROCESS AND RISK MANAGEMENT SYSTEM
A.
|
The
Board is responsible for adopting, supervising and providing guidance on
the strategic planning process and approving a strategic plan which takes
into account, among other things, the opportunities and risks of the
Company’s business.
|
B.
|
The
President and senior management team will have direct responsibility for
the ongoing strategic planning process and the establishment of long term
goals for the Company, which are to be reviewed and approved not less than
annually by the Board.
|
C.
|
The
Board will have a continuing understanding of the principal risks
associated with the business, largely through continuous communication
with management. The Board will ensure the implementation of appropriate
systems to manage any such risks.
|
D.
|
The
Board will provide guidance to the President and senior management team
with respect to the Company’s ongoing strategic plan. The Board
is responsible for monitoring the success of management in implementing
the approved strategies and goals.
|
INTERNAL
CONTROLS AND MANAGEMENT INFORMATION SYSTEMS
A.
|
Through
the President and CEO, management will establish systems to ensure that
appropriate and responsible levels of internal controls are in place for
the Company. The confidence of the Board in the ability and integrity of
management is the paramount control
mechanism.
|
COMMUNICATIONS
POLICY
A.
|
The
Board will monitor and review annually the policies and procedures that
are in place to provide for effective communication by the Company with
its shareholders and with the public generally,
including:
|
(i)
|
effective
means to enable shareholders to communicate with senior management and the
Board; and
|
(ii)
|
effective
channels by which the Company will interact with analysts and the
public.
|
B.
|
The
Board will approve the content of the Company’s major communications to
shareholders and the investing public, including interim and annual
reports, the Management Information Circular, the Annual Information Form,
any prospectuses that may be issued and significant press
releases.
|
C.
|
The
Board will maintain a Corporate Disclosure Policy which summarizes its
policies and practices regarding disclosure of material information to
investors, analysts and the media.
|
SUCCESSION
PLANNING
A.
|
The
Board will keep in place, and review regularly, adequate and effective
succession plans for the Chairman, President and senior management
personnel (including appointing, training and monitoring senior
management).
|
BOARD
INDEPENDENCE
A.
|
The
Board will provide for the independent functioning of the Board. The Board
will implement appropriate structures and procedures to ensure that the
Board can function independently of management at such times as is
desirable or necessary through:
|
(i)
|
the
recruitment of strong, independent directors, who shall compose a majority
of the Board;
|
(ii)
|
the
appointment of a committee of directors independent of
management;
|
(iii)
|
the
appointment of a lead director who is not a member of management;
and
|
(iv)
|
the
institution of regular meetings of independent directors at every
quarterly Board meeting, without the presence of management and which is
chaired by the lead director.
|
B.
|
All
directors will have open access to the Company’s senior
management.
|
C.
|
The
Board encourages individual directors to make themselves available for
consultation with management outside Board meetings in order to provide
specific advice and counsel on subjects where such directors have special
knowledge and experience.
|
NEW
DIRECTOR ORIENTATION AND CONTINUING EDUCATION
A.
|
The
Nominating and Governance Committee, in conjunction with the Chairman and
President, is responsible for ensuring that new directors are provided
with an orientation and education
program.
|
B.
|
The
details of the orientation of each new director will be tailored to that
director’s individual needs and areas of
interest.
|
C.
|
The
Board will assist the Nominating and Governance Committee in establishing
and maintaining an ongoing director education
program.
|
GENERAL
OBLIGATIONS
A.
|
Approve
all capital plans and establish priorities for the allocation of funds to
ongoing operations and capital
projects.
|
B.
|
Approve
all single expenditure items proposed by the Company exceeding $2,000,000
not provided for in any approved capital
plan.
|
C.
|
Approve
any policy for hedging and forward sales of silver and/or base
metals.
|
D.
|
Approve
any policy for management of foreign currency
risk.
|
E.
|
Approve
the annual budget.
|
F.
|
Attend,
prepare for and be actively involved in regular Board meetings and, if
applicable, Board committee
meetings.
|
G.
|
Develop
the Company’s approach to corporate governance, including developing a set
of corporate governance principles and guidelines that are specifically
applicable to the Company.
|
H.
|
Adopt
and monitor, through the Nominating and Governance Committee, a formal
code of business ethics that will govern the behaviour of directors,
officers and employees of the Company, and, in appropriate circumstances,
grant waivers from such code of business
conduct.
|
INDEPENDENT
ADVISORS
A.
|
The
Board and any committees may at any time retain outside financial, legal
or other advisors at the expense of the Company. Any director may, subject
to the approval of the Chairman of the Board, retain an outside advisor at
the expense of the Company.
|
APPENDIX
“B”
PAN
AMERICAN SILVER CORP.
PROPOSED
2008 STOCK OPTION AND STOCK BONUS PLAN
1. PURPOSE
OF THE PLAN
Pan
American Silver Corp. (the “Company”) hereby establishes a stock option plan for
directors, officers and Service Providers (as defined below) of the Company and
its subsidiaries, to be known as the “Pan American Silver Corp. 2008 Stock
Option and Stock Bonus Plan” (the “Plan”). The purpose of the Plan is
to give to directors, officers and Service Providers, as additional
compensation, the opportunity to participate in the progress of the Company
by: (i) granting to such individuals options, exercisable over
periods of up to ten years as determined by the board of directors of the
Company, to buy shares of the Company at a price equal to the volume weighted
average trading price on the five trading days prior to the date the option is
granted; or (ii) issuing to such individuals common shares in the capital of the
Company.
2. DEFINITIONS
In
this Plan, the following terms shall have the following meanings:
“Associate”
means an associate as defined in the Securities
Act (British Columbia).
“Black-Out
Period” means a time when, pursuant to any policies of the Company, any
securities of the Company may not be traded by certain persons as designated by
the Company, including any Optionee.
“Black-Out
Expiration Term” means the period of time that commences with the end of a
Black-Out Period and ends ten business days following the end of the Black-Out
Period.
“Board”
means the board of directors of the Company.
“Bonus
Shares” has the meaning ascribed thereto in section 7.1 of this
Plan.
“Change
of Control Transaction” has the meaning ascribed thereto in section 8.1 of this
Plan.
“Company”
means Pan American Silver Corp. and its successors.
“Disability”
means any disability with respect to an Optionee which the Board, in its sole
and unfettered discretion, considers likely to prevent permanently the Optionee
from:
|
(a)
|
being
employed or engaged by the Company, its subsidiaries or another employer,
in a position the same as or similar to that in which he was last employed
or engaged by the Company or its subsidiaries;
or
|
|
(b)
|
acting
as a director or officer of the Company or its
subsidiaries.
|
“Disinterested
Shareholder Approval” means disinterested shareholder approval as defined in the
policies of the Toronto Stock Exchange.
“Exchanges”
means the Toronto Stock Exchange and the Nasdaq National Market, and, if
applicable, any other stock exchange or securities market on which the Shares
are listed.
“Expiry
Date” means the date set by the Board under section 3.1 of this Plan,
representing the last date on which an Option may be exercised.
“Grant
Date” means the date specified in an Option Agreement as the date on which an
Option is granted.
“Insider”
means:
|
(a)
|
an
insider as defined in the Securities
Act (British Columbia), other than a person who is an insider
solely by virtue of being a director or senior officer of a subsidiary of
the Company; and
|
|
(b)
|
an
Associate or Affiliate of any person who is an insider under subsection
(a).
|
“Market
Price” of Shares at any date means the volume weighted average trading price of
the Shares on the Toronto Stock Exchange or the Nasdaq National Market as
selected by the Board or, if the Shares are listed on neither the Toronto Stock
Exchange nor the Nasdaq National Market, such other stock exchange or securities
market on which Shares are listed as is selected by the Board, on the five
trading days (on which at least one board lot of the Shares was traded) prior to
such date.
“Notice
of Disposition” means the notice, in substantially the form attached hereto as
Schedule B, whereby an Optionee notifies the Company of its intention to use the
cashless manner of exercise of vested Options in accordance with the provisions
of section 4.2 of this Plan.
“Option”
means an option to purchase Shares granted pursuant to this Plan.
“Option
Agreement” means an agreement, in substantially the form attached hereto as
Schedule A, whereby the Company grants to an Optionee an
Option.
“Option
Price” means the price per Share specified in an Option Agreement, adjusted from
time to time in accordance with the provisions of section 6 of this
Plan.
“Option
Shares” means the aggregate number of Shares which an Optionee may purchase
under an Option.
“Optionee”
means each of the directors, officers and Service Providers granted an Option
pursuant to this Plan and their heirs, executors and
administrators.
“Plan”
means this Pan American Silver Corp. 2008 Stock Option and Stock Bonus
Plan.
“Service
Provider” means:
|
(a)
|
an
employee of the Company or any of its
subsidiaries;
|
|
(b)
|
any
other person or company engaged to provide ongoing management or
consulting services for the Company or for any entity controlled by the
Company; and
|
|
(c)
|
any
person who is providing ongoing management or consulting services to the
Company or to any entity controlled by the Company indirectly through a
company that is a Service Provider under subsection (b)
above.
|
“Shares”
means the common shares in the capital of the Company as constituted on the date
of this Plan provided that, in the event of any adjustment pursuant to
section 6 of this Plan, “Shares” shall thereafter mean the shares or other
property resulting from the events giving rise to the adjustment.
“Take-Over
Bid” has the meaning ascribed thereto in section 8.1 of this Plan.
“Unissued
Option Shares” means the number of Shares, at a particular time, which have been
allotted for issuance upon the exercise of an Option but which have not been
issued, as adjusted from time to time in accordance with the provisions of
section 6 of this Plan, such adjustments to be cumulative.
3. GRANT OF
OPTIONS
3.1 Option
Terms. The Board may from time to time authorize the issue of
Options to directors, officers and Service Providers of the Company and any of
its subsidiaries. The Option Price under each Option shall be the
Market Price on the Grant Date. The Expiry Date for each Option shall
be set by the Board at the time of issue of the Option and shall not be more
than ten years from the Grant Date. Any Options which are
terminated or expire will be available for re-granting under the
Plan. Options shall be non-assignable and non-transferable, and
subject to such vesting provisions as the Board in their sole discretion shall
determine.
3.2 Black-Out
Period. Notwithstanding section 3.1 of the Plan and except
where not permitted by the Exchanges, where an Option expires during a Black-Out
Period or during the Black-Out Expiration Term, the term of such Option will be
extended to the end of the applicable Black-Out Expiration Term.
3.3 Limits
on Shares Issuable on Exercise of Options and on the Grant of Bonus
Shares. The maximum number of Shares which may be issuable pursuant to
Options granted or Bonus Shares issued under the Plan shall be 6,461,470, or
such additional amount as may be approved by the shareholders of the
Company. The number of Shares issuable to any one Optionee under the
Plan, together with all of the Company’s other previously established or
proposed share compensation arrangements, shall not exceed 5% of the total
number of issued and outstanding common shares in the capital of the Company on
a non-diluted basis. The number of Shares which may be issued to
Insiders under the Plan, together with all of the Company’s other previously
established or proposed share compensation arrangements, in aggregate, shall not
at any time exceed 10% of the total number of issued and outstanding common
shares in the capital of the Company on a non-diluted basis. The
number of Shares which may be issuable under the Plan, together with all of the
Company’s other previously established or proposed share compensation
arrangements, within a one-year period:
|
(a)
|
to
Insiders in aggregate, shall not exceed 7% of the outstanding
issue;
|
|
(b)
|
to
any one Optionee who is an Insider and any Associates of such Insider,
shall not exceed 2% of the outstanding issue;
and
|
|
(c)
|
to
any non-employee director, other than the Chairman of the Board, shall not
exceed an equity award value of $100,000 (other than Options or Bonus
Shares granted or taken in lieu of cash
fees).
|
For
the purposes of this section, Option Shares and Bonus Shares issued pursuant to
an entitlement granted prior to the Optionee or recipient of the Bonus Shares
becoming an Insider may be excluded in determining the number of Shares issuable
to Insiders. For the purposes of subsections (a) and (b) above,
“outstanding issue” is determined on the basis of the number of common shares in
the capital of the Company that are outstanding immediately prior to the Option
Share or Bonus Share issuance in question, excluding common shares in the
capital of the Company issued pursuant to share compensation arrangements prior
to such one-year period.
3.4 Option
Agreements. Each Option shall be confirmed by the execution of
an Option Agreement. Each Optionee shall have the option to purchase
from the Company the Option Shares at the time and in the manner set out in the
Plan and in the Option Agreement applicable to that Optionee. The
execution of an Option Agreement shall constitute conclusive evidence that it
has been completed in compliance with this Plan.
4. EXERCISE
OF OPTION
4.1 Manner
of Exercise - Cash Exercise for Vested Options. Subject to the
vesting and other terms of this Plan and the Option Agreement governing any
specific Options, an Option may be exercisable by the Optionee delivering to the
Company a notice specifying the number of Shares in respect of which the Option
is exercised together with payment in full of the Option Price for each such
Share. Upon the Company’s receipt of such notice and payment there
will be a binding contract for the issue of the Option Shares in respect of
which the Option is exercised, upon and subject to the provisions of the
Plan. Delivery of the Optionee’s cheque payable to the Company in the
amount of the Option Price shall constitute payment of the Option Price unless
the cheque is not honoured upon presentation in which case:
|
(a)
|
the
Option shall not have been validly exercised;
and
|
|
(b)
|
the
Option shall no longer be exercisable unless the Board determines
otherwise.
|
4.2 Manner
of Exercise – Cashless Exercise for Vested Options. If
a holder of an Option so desires, such holder may, subject to the vesting and
other terms of this Plan and the Option Agreement governing any specific
Options, elect to dispose of an Option in exchange for a payment of Shares (the
“Share Payment”), and in lieu of the method described in section 4.1 above, by
delivering to the Company a notice that the Optionee wishes to rely on the
“cashless exercise” provisions of this section 4.2 and a fully completed Notice
of Disposition.
The
Share Payment will be satisfied by issuance to the Optionee of that number of
Shares determined in accordance with the following formula:
A x (X
– Y)
X
Where:
A is
the number of vested Options tendered for disposition pursuant to the Notice of
Disposition
X is
the Market Price of the Shares on the date of the Notice of
Disposition
Y is
the Option Price of the unexercised vested Options in
question
In
the event that an Optionee delivers a Notice of Disposition under this section
4.2 and it is later determined that such Optionee does not hold a sufficient
number of unexercised vested Options to deliver the Share Payment in accordance
with the requirements above, such notice shall be deemed to be void in its
entirety and of no further force or effect. Subject to the foregoing,
upon the Company’s receipt of such Notice of Disposition there will be a binding
contract for the issue of the Shares in respect of the Share Payment, upon and
subject to the provisions of the Plan. Upon such issuance of Shares
by the Company, the number of unexercised vested Options to be disposed of in
exchange for the Share payment shall be deemed to be cancelled without any
further action by the Company or the Optionee and will be not available for
further granting.
4.3 General
Rule. Subject to section 4.4 of this Plan, an Option may
be exercised to purchase any number of Shares up to the number of Unissued
Option Shares at any time after the Grant Date up to 5:00 p.m. (Vancouver time)
on the Expiry Date.
4.4 Termination
of Affiliation. If an Optionee ceases to be a director,
officer or Service Provider of the Company or its subsidiaries, each Option held
by the Optionee shall be exercisable in respect of that number of Option Shares
that have vested pursuant to the terms of the Option Agreement governing such
Option as follows:
|
(a)
|
Resignation
or Ceasing to Hold Office. If the Optionee, or in the
case of an Option granted to any Optionee who satisfies the definition of
Service Provider set out in section 2 of this Plan, the Optionee’s
employer, ceases to be employed or engaged by the Company and any of its
subsidiaries (including by way of voluntary resignation or retirement as a
director, officer or Service Provider), each Option held by the Optionee
shall be exercisable in respect of that number of Option Shares that have
vested pursuant to the terms of the Option Agreement governing such Option
at any time up to but not after the earlier of the Expiry Date of that
Option and the date which is 30 days after the Optionee ceases to be
a director, officer or Service
Provider;
|
|
(b)
|
Death. Notwithstanding
subsection 4.4(a) of this Plan, if the Optionee ceases to be a
director, officer or Service Provider of the Company and any of its
subsidiaries due to death or Disability or, in the case of an Optionee
that is a company, the death or Disability of the person who provides
management or consulting services to the Company or to any entity
controlled by the Company, each Option held by the Optionee shall be
exercisable in respect of that number of Option Shares that have vested
pursuant to the terms of the Option Agreement governing such Option at any
time up to but not after the earlier of the Expiry Date of that Option and
the date which is 12 months after the date of death or Disability;
and
|
|
(c)
|
For
Cause. Notwithstanding subsection 4.4(a) of this Plan,
if the Optionee, or, in the case of an Option granted to an Optionee who
satisfies the definition of Service Provider set out in section 2 of this
Plan, the Optionee’s
employer:
|
|
(i)
|
ceases
to be employed or engaged by the Company and any of its subsidiaries for
cause, as that term is interpreted by the courts of the jurisdiction in
which the Optionee or Optionee’s employer is employed or
engaged;
|
|
(ii)
|
ceases
to be a director, officer or Service Provider of the Company and any of
its subsidiaries by order of any securities commission, recognized stock
exchange, or any regulatory body having jurisdiction to so order;
or
|
|
(iii)
|
ceases
to be eligible to hold office as a director of the Company and any of its
subsidiaries under the provisions of the applicable corporate
statute,
|
each
Option held by the Optionee shall be exercisable in respect of that number of
Option Shares that have vested pursuant to the terms of the Option Agreement
governing such Option at any time up to but not after the earlier of the Expiry
Date of that Option and the date on which the Optionee ceases to be a director,
officer or Service Provider.
4.5 Exclusion
From Severance Allowance, Retirement Allowance or Termination
Settlement. If the Optionee, or, in the case of an Option
granted to an Optionee who falls under the definition of Service Provider set
out in section 2 of this Plan, the Optionee’s employer, retires, resigns or is
terminated from employment or engagement
with
the Company and any of its subsidiaries, the loss of the right to purchase
Shares pursuant to section 4.4 of this Plan shall not give rise to any right to
damages and shall not be included in the calculation of nor form any part of any
severance allowance, retiring allowance or termination settlement of any kind
whatever in respect of such Optionee.
4.6 Amendment
of Options by the Board. Notwithstanding subsections 4.4(a)
and 4.4(c) of this Plan and in addition to section 5 below, the Board reserves
the right to amend the terms of an Option granted to any Optionee, or, in the
case of an Option granted to an Optionee who falls under the definition of
Service Provider set out in section 2 of this Plan, the Optionee’s employer, if
such party resigns or is terminated from employment or engagement with the
Company and any of its subsidiaries or such other circumstances as the Board
sees fit. The Board shall be entitled, but in no way obligated, to
amend the number of Option Shares which an Optionee may purchase under an
Option, the Expiry Date of an Optionee’s Option and the Option
Price.
4.7 Amendment
of Options of Insiders by the Board. Notwithstanding sections
4.6, 5.1, 5.2 and 5.3 and subject to section 8 of this Plan, the Board will not
amend the terms of any option held by an Insider without first receiving the
requisite shareholder approval.
5. AMENDMENT
PROCEDURE
5.1 Amendment
Procedure
The
Company retains the right to amend or terminate the terms and conditions of the
Plan or Option Agreement, as applicable, by resolution of the Board (the
“Amendment Procedure”). Any amendment to the Plan shall take effect
only with respect to Options granted after the effective date of such amendment,
provided that it may apply to any outstanding Options with the mutual consent of
the Company and the Optionees to whom such Options have been granted. Without
limiting the generality of the foregoing, the Board may use the Amendment
Procedure without seeking shareholder approval when:
|
(a)
|
altering, extending or
accelerating the terms and conditions of vesting of any
Options;
|
|
(b)
|
accelerating the Expiry Date of
Options;
|
|
(c)
|
amending the definitions contained within the
Plan;
|
|
(d)
|
amending or modifying the
mechanics of exercise of Options as set forth in Section 4, provided
however, payment in full of the Option Price for the Shares shall not be
so amended or modified;
|
|
(e)
|
effecting amendments of a “housekeeping” or ministerial nature including,
without limiting the generality of the foregoing, any amendment for the
purpose of curing any ambiguity, error, inconsistency or omission in or
from the Plan or any Option
Agreement;
|
|
(f)
|
effecting amendments necessary to comply
with the provisions of applicable laws (including, without limitation, the
rules, regulations and policies of the
Exchanges);
|
|
(g)
|
effecting amendments respecting
the administration of the
Plan;
|
|
(h)
|
effecting amendments necessary to suspend or terminate
the Plan; and
|
|
(i)
|
any other amendment, whether
fundamental or otherwise, not requiring shareholder approval under
applicable law (including, without limitation, the rules, regulations, and
policies of the Exchanges).
|
5.2 Shareholder
Approval
Shareholder
approval will be required for the following types of
amendments:
|
(a)
|
amendments that increase the
number of Shares issuable under the Plan, except such increases by
operation of Section 6 of the
Plan;
|
|
(b)
|
any reduction in the Option Price of an Option if the
Optionee is not an Insider at the time of the proposed amendment;
and
|
|
(c)
|
amendments required to be approved
by shareholders under applicable law (including, without limitation,
pursuant to the rules, regulations and policies of the
Exchanges).
|
5.3 Disinterested
Shareholder Approval
Disinterested
Shareholder Approval will be required for the following types of
amendments:
|
(a)
|
amendments to the Plan that could
result at any time in the number of Shares reserved for
issuance under the
Plan to Insiders exceeding 10% of the outstanding
issue;
|
|
(b)
|
any reduction in the Option Price
of an Option if the Optionee is an Insider at the time of the proposed
amendment; and
|
|
(c)
|
amendments requiring Disinterested
Shareholder Approval under applicable law (including,
without limitation, pursuant to the rules, regulations and policies of the
Exchanges).
|
6. ADJUSTMENT
OF OPTION PRICE AND NUMBER OF OPTION SHARES
6.1 Share
Reorganization. Whenever the Company issues Shares to all or
substantially all holders of Shares by way of a stock dividend or other
distribution, or subdivides all outstanding Shares into a greater number of
Shares, or combines or consolidates all outstanding Shares into a lesser number
of Shares (each of such events being herein called a “Share Reorganization”)
then effective immediately after the record date for such dividend or other
distribution or the effective date of such subdivision, combination or
consolidation, for each Option:
|
(a)
|
the
Option Price will be adjusted to a price per Share which is the product
of:
|
|
(i)
|
the
Option Price in effect immediately before that effective date or record
date; and
|
|
(ii)
|
a
fraction the numerator of which is the total number of Shares outstanding
on that effective date or record date before giving effect to the Share
Reorganization, and the denominator of which is the total number of Shares
that are or would be outstanding immediately after such effective date or
record date after giving effect to the Share Reorganization;
and
|
|
(b)
|
the
number of Unissued Option Shares will be adjusted by multiplying (i) the
number of Unissued Option Shares immediately before such effective date or
record date by (ii) a fraction which is the reciprocal of the fraction
described in subsection (a)(ii).
|
6.2 Special
Distribution. Subject to the prior approval of the Exchanges,
whenever the Company issues by way of a dividend or otherwise distributes to all
or substantially all holders of Shares:
|
(a)
|
shares
of the Company, other than the
Shares;
|
|
(b)
|
evidences
of indebtedness;
|
|
(c)
|
any
cash or other assets, excluding cash dividends (other than cash dividends
which the Board has determined to be outside the normal course);
or
|
|
(d)
|
rights,
options or warrants,
|
then
to the extent that such dividend or distribution does not constitute a Share
Reorganization (any of such non-excluded events being herein called a “Special
Distribution”), and effective immediately after the record date at which holders
of Shares are determined for purposes of the Special Distribution, for each
Option the Option Price will be reduced, and the number of Unissued Option
Shares will be correspondingly increased, by such amount, if any, as is
determined by the Board in its sole and unfettered discretion to be appropriate
in order to properly reflect any diminution in value of the Shares as a result
of such Special Distribution.
6.3 Corporate
Organization. Whenever there is:
|
(a)
|
a
reclassification of outstanding Shares, a change of Shares into other
shares or securities, or any other capital reorganization of the Company,
other than as described in sections 6.1 or 6.2 of this
Plan;
|
|
(b)
|
a
consolidation, merger or amalgamation of the Company with or into another
corporation resulting in a reclassification of outstanding Shares into
other shares or securities or a change of Shares into other shares or
securities; or
|
|
(c)
|
a
transaction whereby all or substantially all of the Company’s undertaking
and assets become the property of another
corporation;
|
(any
such event being herein called a “Corporate Reorganization”) the Optionee will
have an option to purchase (at the times, for the consideration, and subject to
the terms and conditions set out in the Plan) and will accept on the exercise of
such option, in lieu of the Unissued Option Shares which he would otherwise have
been entitled to purchase, the kind and amount of shares or other securities or
property that he would have been entitled to receive as a result of the
Corporate Reorganization if, on the effective date thereof, he had been the
holder of all Unissued Option Shares.
6.4 No
Fractional Shares. No fractional Shares shall be issued upon
the exercise of the Options and accordingly, if as a result of a Share
Reorganization or Corporate Reorganization, an Optionee would become entitled to
a fractional Share, such Optionee shall have the right to purchase only the next
lowest whole number of Shares and no payment or other adjustment will be made
with the fractional interest so disregarded. Additionally, no lots of
Shares in an amount less than 500 Shares shall be issued upon the exercise of
the Option unless such amount of Shares represents the balance left to be
exercised under the Option.
7. BONUS
SHARES
7.1 Allotment
and Issuance. Subject to section 3.3(c) of this Plan, the
Board shall have the power and authority in its sole and absolute discretion, to
allot, issue and deliver in such amounts as the Board in its sole and absolute
discretion deems fit, as fully paid and non-assessable shares in the capital of
the Company, up to a total of 50,000 common shares (“Bonus Shares”), in each
calendar year, to those directors, officers and Service Providers of the Company
or any of its subsidiaries whom the Board, in its sole and absolute discretion,
deems to have provided extraordinary contributions to the advancement of the
Company.
7.2 Consideration. The
Bonus shares will be issued in consideration of the fair value of the
extraordinary contribution of the Company by the recipient as determined by the
Board, in its discretion, and shall be issued at a deemed price determined by
the Board at the time of issuance of such Bonus Shares, but such price shall not
be less than the Market Price on the day on which the Bonus Shares are
issued. No Bonus Shares shall be issued at a time when it is unlawful
to fix the price for such Bonus Shares.
7.3 Board
Discretion. Nothing in this Plan shall require the issue or
distribution of any Bonus Shares in any given year or the distribution to any
particular person of Bonus Shares at any time. The receipt by a
recipient in any year of Bonus Shares shall not create any entitlement to a
receipt of Bonus Shares by such recipient in any other year. No
person shall have any right to receive a distribution Bonus Shares in a year,
whether or not other persons receive Bonus Shares in such other
year. The pool of Bonus Shares available for any given year, if not
distributed, shall cease to be available at the end of such year and shall not
accumulate or be available for any succeeding year. The Bonus Shares
available for distribution in any year will be included for the purposes of
calculating the amounts set out in section 3.3 of this Plan.
8.
SIGNIFICANT
EVENTS AFFECTING THE COMPANY
8.1
Take-Over
Bids and Merger Transactions
In
the event of a bona fide third-party offer for Shares pursuant to which an
offeror offers to purchase all or substantially all of the Shares of the
Corporation (a “Take-Over Bid”), or a merger, consolidation, amalgamation or
other transaction pursuant to which the Corporation is not the surviving entity
(together with a Take-Over Bid, a “Change of Control Transaction”), and in the
absence of the surviving entity’s assumption of outstanding awards made under
the Plan, the following rules shall apply:
(a) all
vested Options held by an Optionee as of the completion date will be exercisable
by the Optionee until the time immediately prior to the completion of such
Change of Control Transaction;
(b) the
vesting provisions governing 50% of all unvested
Options held by an Optionee as of the completion date shall be accelerated and
such Options will be Conditionally Exercisable by the Optionee for a period
beginning on the date which is 21 days prior to the anticipated closing date of
the Change of Control Transaction described above and ending immediately prior
to the completion of such Change of Control Transaction. Option
Shares issuable pursuant to Conditionally Exercisable Options will be issued
immediately prior to the closing of the Change of Control Transaction;
and
(c) all
other unvested Options shall become null and void upon completion of the
transaction described above.
For
the purposes of this section 8 of the Plan, “Conditionally Exercisable” means,
in the event a Change of Control Transaction is not completed within 90 days of
the proposed completion date for such transaction, the Optionee will be refunded
the Option Price paid to exercise such Optionee’s Options, such Options will be
reissued, and the purported exercise of such Options will be null and void ab
initio.
9.
MISCELLANEOUS
9.1 Form of
Notice. A notice given to the Company shall be in writing,
signed by the Optionee and delivered to the Secretary of the
Company.
9.2 Right
to Employment. Neither this Plan nor any of the provisions
hereof shall affect in any way the Optionee’s right to continued employment with
the Company or its subsidiaries or the Company’s right to terminate such
employment.
9.3 Amendment
and Waiver. Subject to pre-clearance with the Toronto Stock
Exchange and any other prior regulatory approval where required, the Company may
from time to time amend any provisions of the Plan, but no such amendment can
impair any of the rights of any Optionee under any Option then outstanding and
any material amendment to the Plan or increase in the maximum number of Shares
which may be issuable under the Plan as set out in section 3.2 of this Plan will
require the approval of shareholders of the Company.
9.4 No
Assignment. No Optionee may assign any of his rights under the
Plan.
9.5 Conflict. In
the event of any conflict between the provisions of this Plan and an Option
Agreement, the provisions of this Plan shall govern.
9.6 Time of
Essence. Time is of the essence of this Plan and of each
Option Agreement. No extension of time will be deemed to be or to
operate as a waiver of the essentiality of time.
9.7 Entire
Agreement. This Plan and the Option Agreement sets out the
entire agreement between the Company and the Optionees relative to an Option and
supersedes all prior agreements, undertakings and understandings, whether oral
or written.
SCHEDULE
A
PAN AMERICAN SILVER
CORP.
2008 STOCK OPTION AND STOCK
BONUS PLAN
OPTION
AGREEMENT
This
Option Agreement is entered into between Pan American Silver Corp. (“the
Company”) and the Optionee named below pursuant to the Pan American Silver Corp.
2008 Stock Option and Stock Bonus Plan (the “Plan”), a copy of which is attached
hereto, and confirms that:
|
(a)
|
on
_________________, ______ (the “Grant Date”);
|
|
(b)
|
________________________________
(the “Optionee”);
|
|
(c)
|
was
granted the option to purchase ____________ Common Shares (the “Option
Shares”) of the Company;
|
|
(d)
|
for
the price (the “Option Price”) of $__________ per share;
|
|
(e)
|
which
will become exercisable up to, but not after ___________, _____ (the
“Expiry Date”), as follows:
|
|
|
(i)
|
up
to ____________ Option Shares after ______________;
|
|
|
(ii)
|
up
to ____________ Option Shares after ______________;
|
|
|
(iii)
|
up
to ____________ Option Shares after ______________; and
|
|
|
(iv)
|
up
to ____________ Option Shares after ______________,
|
all
on terms and subject to the conditions set out in the Plan.
By
signing this Option Agreement, the Optionee acknowledges that the Optionee has
read and understands the Plan and agrees to the terms and conditions of the Plan
and this Option Agreement.
IN
WITNESS WHEREOF the parties hereto have executed this Option Agreement as of the
_____ day of ______________, _________.
|
|
PAN
AMERICAN SILVER CORP.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By:
|
|
Signature
of Optionee
|
|
|
Authorized
Signatory
|
|
|
|
|
|
|
By:
|
|
|
|
|
Authorized
Signatory
|
SCHEDULE
B
PAN AMERICAN SILVER
CORP.
2008 STOCK OPTION AND STOCK
BONUS PLAN
NOTICE OF
DISPOSITION
TO:
|
The
Administrator, Stock Option Plan
PAN
AMERICAN SILVER CORP.
1500
- 625 Howe Street
Vancouver,
British Columbia, Canada
V6C 2T6
|
The
undersigned hereby irrevocably gives notice, pursuant to the PAN AMERICAN SILVER
CORP. (the “Company”) 2008 Stock Option and Stock Bonus Plan (the “Plan”), of
the disposition of (cross out the inapplicable item):
(a)
|
all
of the Options; or
|
(b)
|
_____________________of
the Options;
|
which
are the subject of the Option Agreement attached hereto.
The
undersigned hereby elects pursuant to section 4.2 of the Plan to dispose of the
above-mentioned Options to the Company and directs the Company to issue the a
certificate evidencing the whole number of Shares to which the undersigned is
entitled based on the formula set out in section 4.2 of the Plan and directs the
Company to issue such certificate in the name of the undersigned and to mail
such certificate to the undersigned at the following address:
DATED
the ____ day of ___________________, 20___.
_______________________________
Signature of Optionee
APPENDIX
“C”
PAN
AMERICAN SILVER CORP.
PROPOSED
RESOLUTION
Resolution
Ordinary
resolution of the Meeting approving the adoption of the Company’s 2008 Stock
Option and Stock Bonus Plan.
“WHEREAS:
|
A.
|
The
Company wishes to adopt a new Stock Option and Stock Bonus Plan (the
“2008 Plan”),
subject to requisite shareholder and regulatory approval, substantially in
the form attached to the Company’s Information Circular as Appendix “B”;
and
|
|
B.
|
The
substantial changes reflected in the 2008 Plan, as compared to the
Company’s 2005 Stock Option and Stock Bonus Plan (the “2005 Plan”) are set out
in the Company’s Information Circular.
|
|
1.
|
The
adoption of the 2008 Plan allowing for the issuance of a maximum of
6,461,470 common shares of the Company, substantially as set out in
Appendix “B” to the Company’s Information Circular, is hereby approved and
confirmed;
|
|
2.
|
All
outstanding options and common shares available for issuance under the
2005 Plan be transferred to the 2008
Plan;
|
|
3.
|
Any
one of a group consisting of the directors and officers of the Company be
and is hereby authorized, for and on behalf of the Company, to do all acts
and things, to settle the form of, execute, under the Company’s common
seal or otherwise, and deliver all documents and instruments, to give all
notices and to deliver, file with regulatory authorities or otherwise, and
distribute, al documents and information which may, in the opinion of such
person, be necessary or desirable to implement to this ordinary resolution
and the matters authorized hereby, such determination to be conclusively
evidenced by the execution and delivery of such document or instrument and
the taking of any such action.”
|
Suite
1500 – 625 Howe Street
Vancouver,
B.C.
Canada V6C
2T6
Tel :
604.684.1175
Fax :
604.684.0147
www.panamericansilver.com
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.
|
PAN AMERICAN SILVER
CORP
|
|
(Registrant)
|
Date:
|
|
April
10, 2008
|
|
By:
|
/s/ Robert Pirooz
|
|
Name:
|
Robert
Pirooz
|
Title:
|
General
Counsel, Secretary and Director
|