<PAGE>
ECHO BAY MINES LTD.
NOTICE OF ANNUAL GENERAL MEETING
OF SHAREHOLDERS
MAY 17, 2000
NOTICE IS HEREBY GIVEN that the Annual General Meeting of the shareholders of
Echo Bay Mines Ltd. will be held in the Carmichael/Jackson Room of the
Toronto Hilton Hotel, 145 Richmond Street West, Toronto, Ontario on
Wednesday, the 17th day of May 2000, at 9:30 in the morning, for the
following purposes:
1. to receive and consider the annual report containing financial
statements for the year ended December 31, 1999 together with the report
of the auditors thereon;
2. to elect directors;
3. to appoint auditors; and
4. to transact such other business as may properly come before the meeting
or any adjournment thereof.
Only shareholders of record at the close of business on March 28, 2000 will
be entitled to notice of the meeting.
DATED at Edmonton, Alberta, Canada this 3rd day of March 2000.
By Order of the Board,
Lois-Ann L. Brodrick
Vice President and Secretary
NOTE: IF YOU ARE UNABLE TO ATTEND IN PERSON, PLEASE FILL IN AND SIGN THE
ENCLOSED FORM OF PROXY AND RETURN IT TO THE SECRETARY OF THE
CORPORATION IN THE ENVELOPE PROVIDED.
<PAGE>
MANAGEMENT PROXY CIRCULAR
SOLICITATION OF PROXIES
THIS MANAGEMENT PROXY CIRCULAR IS FURNISHED IN CONNECTION WITH THE
SOLICITATION BY THE MANAGEMENT OF ECHO BAY MINES LTD. (THE "CORPORATION") OF
PROXIES TO BE USED AT THE ANNUAL GENERAL MEETING OF THE SHAREHOLDERS OF THE
CORPORATION TO BE HELD AT THE TIME AND PLACE AND FOR THE PURPOSES SET FORTH
IN THE FOREGOING NOTICE. This material was first sent to shareholders on or
about March 28, 2000. The Corporation will bear all costs in connection with
the printing and mailing of the enclosed materials as well as the cost of
solicitation of proxies. D. F. King & Company, Inc. will solicit proxies from
nominee accounts for a fee of U.S.$20,000 plus expenses. To the extent
necessary to assure adequate representation at the meeting, solicitation of
proxies may be made by directors, officers and regular employees of the
Corporation directly as well as by mail and by telephone.
APPOINTMENT AND REVOCATION OF PROXIES
The persons designated in the enclosed form of proxy are officers of the
Corporation. A SHAREHOLDER HAS THE RIGHT TO APPOINT A PERSON OTHER THAN THE
PERSONS DESIGNATED IN THE ACCOMPANYING FORM OF PROXY TO REPRESENT HIM AT THE
MEETING. THE PERSON NEED NOT BE A SHAREHOLDER. This right may be exercised
either by inserting in the space provided the name of the other person a
shareholder wishes to appoint or by completing another proper form of proxy.
Shareholders who wish to be represented at the meeting by proxy must deposit
their form of proxy prior to 5:00 o'clock in the afternoon local time on May
16, 2000 either at the principal office of the Corporation, 1210 Manulife
Place, 10180-101 Street, Edmonton, Alberta, Canada T5J 3S4 or at the office
of Montreal Trust Company of Canada, 151 Front Street West, Toronto, Ontario,
Canada M5J 2N1, or bring the proxy to the meeting and deliver it to the
Chairman or Secretary of the Corporation prior to the commencement of the
meeting.
A shareholder who has given a proxy has the right to revoke it at any
time by an instrument in writing executed by the shareholder or his attorney
authorized in writing or, if the shareholder is a corporation, under its
corporate seal or by an officer or attorney thereof duly authorized, and
deposited either at the principal office of the Corporation, 1210 Manulife
Place, 10180-101 Street, Edmonton, Alberta, Canada T5J 3S4 or at the office
of Montreal Trust Company of Canada, 151 Front Street West, Toronto, Ontario,
Canada M5J 2N1 addressed to the Secretary of the Corporation, c/o Montreal
Trust Company of Canada, at any time up to and including the last business
day preceding the day of the meeting, or any adjournment thereof, at which
the proxy is to be used, or with the Chairman or Secretary of the Corporation
on the day of the meeting, or any adjournment thereof.
VOTING SHARES AND PRINCIPAL HOLDERS THEREOF
On March 3, 2000, there were outstanding 140,607,145 common shares of
the Corporation, each of which carries the right to one vote. A quorum of
shareholders will be established at the meeting if the holders of a majority
of the shares entitled to vote at the meeting are present in person or
represented by proxy. Abstentions will be counted for quorum but for no other
purpose. A majority of the votes cast at the meeting in person or by proxy is
required for the approval of each matter being submitted to a vote of the
shareholders at the meeting.
Shareholders of record at the close of business on March 28, 2000 will
be entitled to vote at the meeting except to the extent they have transferred
the ownership of any of their shares after the record date and the transferee
of those shares has produced properly endorsed share certificates or has
otherwise established ownership of the shares and, in either case, has asked,
not later than May 8, 2000, to be included in the list of shareholders
entitled to vote at the meeting.
As of March 3, 2000, based upon information available to the
Corporation, no one shareholder was the beneficial owner of more than five
percent of the common shares.
VOTING OF PROXIES
Common shares of the Corporation, represented by a valid proxy in favour
of the person or persons designated in the enclosed form of proxy, will be
voted on any ballot which may be called for in respect of matters referred to
in the accompanying notice of meeting and, where a choice with respect to any
matter to be acted upon has been specified in the proxy, the shares will be
voted in accordance with the specification so made. THE COMMON SHARES WILL BE
VOTED IN FAVOUR OF ANY MATTER FOR WHICH NO SPECIFICATION HAS BEEN MADE.
The enclosed form of proxy confers discretionary authority upon the
persons named therein with respect to amendments to the matters identified in
the notice of meeting and other matters that may properly come before the
meeting. Management is not aware of any amendments to matters identified in
the notice of meeting or of any other matters that are to be presented for
action to the meeting.
<PAGE>
ELECTION OF DIRECTORS
Under the articles of the Corporation, the Board of Directors may
consist of a minimum of three and a maximum of 15 directors. At present, the
Board consists of nine directors and the Board of Directors has fixed the
number of directors at nine for the term of office commencing with this
election. Management proposes to nominate and the persons named in the
enclosed form of proxy intend to vote for the election of the nine persons
named below, all of whom are already directors. Management does not
contemplate that any of the nominees will be unable to serve as a director.
Each director elected will hold office until the next annual general meeting
or until a successor is duly elected.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
NAME AND MUNICIPALITY DIRECTOR PRINCIPAL OCCUPATION AND BUSINESS DIRECTORSHIPS OF OTHER
OF RESIDENCE AGE SINCE EXPERIENCE WITHIN THE LAST FIVE YEARS PUBLIC CORPORATIONS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
JOHN NORMAN ABELL (1) 68 1980 Corporate director Stelco Inc.; AT Plastics Inc.
Ramsbury, Wilts., England
LATHAM CAWTHRA BURNS (1) 69 1980 Corporate director since June 1995;
Toronto, Ontario prior thereto Honorary Chairman,
Nesbitt Burns Inc. (investment dealers)
PIERRE CHOQUETTE (2) 57 1996 President and Chief Executive Officer, Methanex Corporation;
Torrance, Ontario Methanex Corporation (worldwide Gennum Corporation;
production and marketing of methanol) Telus Communications Inc.;
Stelco Inc.
JOHN GILRAY CHRISTY (2) 67 1980 Chairman, Chestnut Capital Corporation The Philadelphia Contributionship;
Wyndmoor, Pennsylvania (holding company) and corporate director The 1838 Bond Debenture Trading Fund
Limited
PETER CLARKE (1) 69 1993 Consultant - metals and mining industries
Nanoose Bay, British Columbia
ROBERT LEIGH LECLERC 55 1992 Chairman and Chief Executive Officer Minefinders Corporation Ltd.
Highlands Ranch, Colorado of the Corporation since April 1997;
Chairman of the Corporation from
May 1996 to April 1997; prior thereto
Chairman and Chief Executive Officer of
and partner in Milner Fenerty (barristers
and solicitors)
JOHN FREDERICK McOUAT (1) 66 1989 Chairman, Watts, Griffis and McOuat Cominco Ltd.; Euro Nevada Mining
Toronto, Ontario Limited (consulting geologists and Corporation Ltd.; Nevada Pacific
engineers) since January 1998; prior Gold Ltd.
thereto President, Watts, Griffis and
McOuat Limited
MONICA ELIZABETH SLOAN (2) 45 1994 Management consultant since September Ranger Oil Ltd.
Calgary, Alberta 1999; President, Kelman Technologies Inc.
from January 1998 to September 1999;
Management consultant from July 1997 to
December 1997; President, Telus Advanced
Communications from August 1995 to June
1997; prior thereto Assistant Vice President
Strategy Development, Telus Corporation
RICHARD GEOFFREY 69 1987 Corporate director Onex Corp.; Working Ventures
PENTLAND STYLES (2) Canadian Fund Inc.; The Geon
Toronto, Ontario Company
</TABLE>
(1) Member of the Audit Committee
(2) Member of the Compensation Committee
2
<PAGE>
MEETINGS AND COMPENSATION OF THE BOARD OF DIRECTORS
In 1999 the Board of Directors held six meetings. All directors, except
Mr. Leclerc, received an annual retainer fee of U.S.$12,500 and U.S.$500 for
attendance at each meeting of the Board of Directors and of each committee on
which they served. Committee chairmen received an additional annual fee of
U.S.$7,500. Mr. Leclerc receives meeting attendance fees but does not receive
an annual retainer fee. The committee chairmen were: Audit - Mr. Burns, and
Compensation - Mr. Christy.
In 1994 the Corporation established a director equity plan which
provides for the grant of options to permit eligible directors to acquire
common shares of the Corporation. Eligible directors are neither officers nor
employees of the Corporation and options may be granted according to a
formula which calls for grants annually on the date of the Corporation's
annual meeting of shareholders with the final grants made in 1998.
COMMITTEES OF THE BOARD OF DIRECTORS
The Audit Committee reviews the annual financial statements and the
annual audit with the Corporation's independent auditors and also reviews
quarterly financial information which is published and disseminated to
shareholders. The Compensation Committee reviews the performance and
recommends the compensation of corporate officers and makes grants under the
employee share incentive plan. During 1999 the Audit Committee met four times
and the Compensation Committee twice. Mr. Choquette attended fewer than 75
percent of the aggregate of the total number of meetings of the Board of
Directors and the total number of meetings held by all committees of the
Board on which he served.
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
The Toronto Stock Exchange requires companies listed on that exchange to
disclose their approach to corporate governance in their annual reports or
information circulars and make the disclosure with reference to published
guidelines (the "Guidelines"). The following discusses the Corporation's
adherence to the Guidelines.
MANDATE OF THE BOARD OF DIRECTORS
The Board of Directors is responsible for managing the business and
affairs of the Corporation, participates in strategic planning and reviews
and approves operating plans. The Board identifies the principal risks of the
business and ensures they are effectively monitored and controlled. The Board
is responsible for corporate governance generally and for specific tasks such
as selecting a chief executive officer, assessing that individual's
performance and replacing that individual if appropriate. It is also
responsible for all key executive appointments and for setting equitable
compensation for these and other executives.
The Board ensures there is a sound basis for making key business
decisions, facilitates realization of corporate goals and ensures compliance,
to the greatest extent possible, with sound safety and environmental
standards.
In all instances the Board must ensure that the interests of
shareholders, creditors, employees and the communities in which the
Corporation operates are properly served. The Board must be able and willing
to take action, separate from management, on issues which by law or practice
require independent thought and action. In all of this the Board has a duty
to be certain the Corporation acts in a lawful, ethical and responsible
manner.
COMPOSITION OF THE BOARD
The Guidelines require the Corporation to address the extent to which
the Board has a majority of unrelated directors and the basis for reaching
this conclusion. An "unrelated director" is defined as a director who is
independent of management 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 Corporation. Of the present nine directors, eight are
unrelated. Each of them has business and other interests entirely unrelated
to those of the Corporation other than interests arising from holding shares
of the Corporation. The only related director is Mr. Leclerc, who is employed
by the Corporation. Although Mr. McOuat is a principal in a firm which from
time to time provides consulting services to the Corporation, the amount of
business done for the Corporation does not represent a material percentage of
that firm's gross annual revenue and Mr. McOuat is considered unrelated.
INDEPENDENT FUNCTIONING OF THE BOARD
The positions of chairman and chief executive officer have been combined
since April 1997. The Board believes the Corporation is well served and the
independence of the Board from management is not compromised by the combined
role. The Board has only nine members, one of which is the chairman, and at
its meetings often considers matters with the chairman being the only member
of management present. If required to deal effectively with a situation, the
Board will excuse the chairman during discussions. The Corporation's by-laws
provide that any two directors may call a meeting of the Board at any time
for any purpose.
The Board allows each director to seek the advice of independent experts,
if deemed appropriate.
3
<PAGE>
BOARD COMMITTEES
The Board has an Audit and a Compensation Committee and their mandates
are described at page 3 of this management proxy circular. All members of
each committee are unrelated, outside directors. The Board believes the
challenges facing the Corporation should receive the attention of the full
Board and no other committees are required. Functioning as a full Board,
rather than several committees, allows management to have the advantage of
the collective wisdom of all members of the Board. As well, management is
encouraged to consult Board members informally on matters not requiring a
formal Board meeting and on which a specific Board member has expertise.
Realizing the responsibility for selection of board nominees remains
that of the Board, a nominating committee is considered unnecessary. The
Board searches for and recruits new directors. From time to time the Board
reviews its compliance with the Guidelines and other relevant corporate
governance requirements and evaluates its own effectiveness.
DECISIONS REQUIRING PRIOR APPROVAL BY THE BOARD
Prior Board approval is required for sales of securities of the
Corporation, incurring debt except under approved credit arrangements with
banks and financial institutions, and employment and compensation
arrangements for officers of the Corporation. Board approval is also required
for any material transaction and for capital expenditures in excess of
U.S.$2,500,000.
SHAREHOLDER FEEDBACK
Shareholders are encouraged to convey their concerns to management. They
may do so by writing to the Corporation's Investor Relations Department.
THE BOARD'S EXPECTATIONS OF MANAGEMENT
The Board expects management to conduct the business of the Corporation
in keeping with the strategies and operating plans adopted by the Board.
Management is also expected to assess the potential of properties to become
profitable commercial producers of gold and other metals, and to develop
plans, arrange financing and hire and train capable staff in order to bring
these properties into production. At the same time, management is expected to
effectively manage the mines that today provide essentially all of the
Corporation's cash flow.
SECURITY OWNERSHIP
The following table shows equity securities of the Corporation
beneficially owned as of March 3, 2000 by all directors of the Corporation,
the Chief Executive Officer and the next four most highly compensated
executive officers of the Corporation, and directors and executive officers
of the Corporation as a group.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
AMOUNT AND NATURE OF OPTIONS TO ACQUIRE COMMON SHARES
BENEFICIAL OWNERSHIP AS OF OF THE CORPORATION EXERCISABLE
BENEFICIAL OWNER MARCH 3, 2000 WITHIN 60 DAYS OF MARCH 3, 2000
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
John N. Abell 10,000 19,725
Lois-Ann L. Brodrick - 19,634
Latham C. Burns 2,000 19,725
Pierre Choquette 2,500 4,875
John G. Christy 42,553 19,725
Peter Clarke 18,500 168,895
Donald C. Ewigleben 400 103,004
Robert L. Leclerc 10,000 412,278
Jerry L. J. McCrank 5,000 45,331
John F. McOuat 2,791 13,225
Monica E. Sloan 1,500 18,100
R. Geoffrey P. Styles 2,000 19,725
Tom S. Q. Yip 300 41,314
Directors and executive officers as a group 1,006,602(1)(2)(3)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents 0.7 percent of the outstanding common shares of the Corporation.
(2) Includes 909,058 common shares which directors and officers have the right
to acquire within 60 days of March 3, 2000.
(3) No individual director or officer owns common shares of the Corporation
representing 1.0 percent or more of the number of outstanding shares.
4
<PAGE>
LIABILITY INSURANCE
The Corporation has purchased liability insurance and has, in addition,
agreed to indemnify directors and officers of the Corporation against all
costs, charges and expenses reasonably incurred by them in respect of certain
proceedings to which they may be made party by reason of their status as
directors or officers of the Corporation. The indemnification is extended to
directors and officers provided they have acted honestly and in good faith
with a view to the best interests of the Corporation and, in the case of a
criminal or administrative action or proceeding that is enforced by a
monetary penalty, on the condition the director or officer had reasonable
grounds for believing his conduct was lawful. The amount of the premium paid
in respect of directors and officers as a group was U.S.$113,500; the policy
coverage is U.S.$35,000,000 per claim and in aggregate in any policy year.
The first U.S.$500,000 of expense for the Corporation per claim is not
covered by the policy.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table below shows the compensation of the Chief Executive Officer
and the next four most highly compensated executive officers for each of the
Corporation's last three completed fiscal years or, where an individual was
not an executive officer for the last three completed fiscal years, for those
fiscal years in which the individual was an executive officer.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
LONG-TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------------------
SHARE ALL OTHER
SALARY BONUS OPTION COMPENSATION
NAME/PRINCIPAL POSITION YEAR (U.S.$) (U.S.$) AWARDS (#) (U.S.$)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ROBERT L. LECLERC 1999 350,000 - 300,000 24,000(1)
Chairman and Chief Executive Officer 1998 363,462 318,202 160,110 28,601
1997 350,000 305,760 225,000 20,999
- -----------------------------------------------------------------------------------------------------------------------------------
DONALD C. EWIGLEBEN 1999 155,967 - 80,000 9,358(2)
Vice President, Environmental and Public Affairs 1998 161,965 147,368 35,674 9,106
1997 155,988 77,984 48,708 7,799
- -----------------------------------------------------------------------------------------------------------------------------------
JERRY L. J. MCCRANK 1999 152,824 - 80,000 9,169(2)
Vice President, Operations 1998 112,192 152,603 41,171 6,732
- -----------------------------------------------------------------------------------------------------------------------------------
TOM S. Q. YIP 1999 141,991 - 80,000 7,808(2)
Vice President, Finance and Chief Financial Officer 1998 111,635 125,164 24,588 6,698
1997 107,058 103,375 29,004 6,246
- -----------------------------------------------------------------------------------------------------------------------------------
LOIS-ANN L. BRODRICK 1999 135,706 - 80,000 8,142(2)
Vice President and Secretary 1998 95,040 125,164 20,933 5,702
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Represents the annual employer contributions to the Corporation's
retirement savings and defined contribution plans ($21,000) and fees for
attendance at meetings of the Board of Directors ($3,000).
(2) Represents the annual employer contributions to the Corporation's
retirement savings and defined contribution plans.
5
<PAGE>
EXECUTIVE CASH INCENTIVE PLAN
The Corporation has an executive cash incentive plan (the "ECIP") under
which certain officers are eligible to receive, in addition to their base
salary, incentive compensation if certain performance objectives related to
the Corporation's annual operating plan as well as certain performance
standards considered applicable to the participant have been met. There were
no payments made under the ECIPfor 1999.
SHARE OPTIONS
The Corporation has adopted a share incentive plan which provides for
the grant of options to purchase common shares to officers and employees. The
number of common shares currently authorized under the plan is 13,000,000.
The exercise price of all options granted to date has been 100 percent of the
market value of the common shares on the date of each grant. Options may be
granted for a term of not more than ten years and must be granted at no less
than 100 percent of fair market value on the date of grant. The exercise
price must be paid in full at the time of exercise of an option and may be
paid either in cash or by the surrender or delivery to the Corporation of
common shares.
The Compensation Committee of the Board of Directors exercises its
judgment as to eligibility for participation in the plan and the amount of
any particular grant. It also determines the date on which each option shall
become exercisable and may provide that options shall be exercisable in
installments. The Committee may in its sole discretion accelerate the time at
which any option may be exercised in whole or in part. Such discretion may be
exercised in any circumstances deemed appropriate by the Committee including,
but without limitation, the threat (actual or perceived) of a take-over bid
for voting control of the Corporation.
At March 3, 2000 options to purchase a total of 5,491,684 common shares
were outstanding with an average exercise price per common share of Can.$8.83.
The following table shows option grants in the last fiscal year to the
Chief Executive Officer and the next four most highly compensated executive
officers.
Option Grants in Last Fiscal Year
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
INDIVIDUAL GRANTS GRANT DATE VALUE
- -------------------------------------------------------------------------------------------------------------
PERCENT OF TOTAL
OPTIONS GRANTED EXERCISE OR GRANT DATE
OPTIONS TO EMPLOYEES BASE PRICE PRESENT VALUE
NAME GRANTED (#) IN FISCAL YEAR (CAN.$/SH)(1) EXPIRATION DATE U.S.$(2)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Robert L. Leclerc 300,000 25.6 2.55 Nov. 1, 2009 322,761
- -------------------------------------------------------------------------------------------------------------
Donald C. Ewigleben 80,000 6.8 2.55 Nov. 1, 2009 86,070
- -------------------------------------------------------------------------------------------------------------
Jerry L. J. McCrank 80,000 6.8 2.55 Nov. 1, 2009 86,070
- -------------------------------------------------------------------------------------------------------------
Tom S. Q. Yip 80,000 6.8 2.55 Nov. 1, 2009 86,070
- -------------------------------------------------------------------------------------------------------------
Lois-Ann L. Brodrick 80,000 6.8 2.55 Nov. 1, 2009 86,070
- -------------------------------------------------------------------------------------------------------------
</TABLE>
(1) All grants under the share incentive plan were made for a ten year period
at the closing price for the shares as published by The Toronto Stock
Exchange on the date of grant. The Compensation Committee of the Board of
Directors determines the date on which each option shall become exercisable
and has decided that the options shall become exercisable as to 25 percent
on the first anniversary of the date of grant and a further 25 percent on
each of the second, third and fourth anniversaries of the date of grant.
(2) The Black-Scholes option valuation model has been used to estimate the fair
value of options granted, assuming a weighted average option life of six
years, a risk-free interest rate of 6.25 percent, a dividend yield of zero
percent and a volatility factor of 60 percent. Values were calculated in
Can.$ and converted to U.S.$ using the exchange rate on the date of grant
(Can.$1.4683=U.S.$1.00).
6
<PAGE>
The following table shows aggregated option exercises in the last fiscal
year and year-end option values for the Chief Executive Officer and the next
four most highly compensated executive officers of the Corporation.
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-end Option Values
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
VALUE OF UNEXERCISED
NUMBER OF UNEXERCISED IN-THE-MONEY OPTIONS
OPTIONS AT FISCAL YEAR-END AT FISCAL YEAR-END (U.S.$)(1)
- --------------------------------------------------------------------------------------------------------------------
SHARES VALUE
ACQUIRED ON REALIZED
NAME EXERCISE (#) (U.S.$) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert L. Leclerc - - 412,278 488,832 - -
- --------------------------------------------------------------------------------------------------------------------
Donald C. Ewigleben - - 102,704 124,166 - -
- --------------------------------------------------------------------------------------------------------------------
Jerry L. J. McCrank - - 45,331 114,772 - -
- --------------------------------------------------------------------------------------------------------------------
Tom S. Q. Yip - - 41,314 106,563 - -
- --------------------------------------------------------------------------------------------------------------------
Lois-Ann L. Brodrick - - 19,634 99,499 - -
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) At the end of the last completed fiscal year, no unexercised options were
in the money.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
AGREEMENTS
Mr. Leclerc and the Corporation have entered into a contract which is
for an indefinite term and provides for certain lump sum payments if the
Corporation terminates Mr. Leclerc's employment on less than two years'
written notice or demotes him and he voluntarily resigns within 60 days
thereof. If a change of control of the Corporation is followed by a
termination of Mr. Leclerc's employment under specified circumstances, Mr.
Leclerc shall be paid a cash payment equal to three times the total of his
annual base salary plus bonus under the executive cash incentive plan. The
specified circumstances include (i) the Corporation's termination of Mr.
Leclerc's employment within two years of a change of control or (ii) a
voluntary resignation by Mr. Leclerc for "good reason" within one year of a
change of control. The expression "good reason" is defined to include any one
of four acts of employer constructive dismissal: the assignment of lower
level status or responsibility, a reduction in base salary, a requirement to
relocate, or a change in employee participation in or benefits under the
Corporation's benefit plans. Additionally, in the final 30 days of the
one-year period referred to above, Mr. Leclerc may resign for any reason, or
no reason at all, and be entitled forthwith to the cash payment calculated as
specified above.
Each of the other named executive officers has entered into an
employment contract for an indefinite term. The contracts provide for certain
lump sum payments if the Corporation terminates the individual's employment
on less than one year's written notice or the individual is demoted and
voluntarily resigns within 60 days thereof. In all other respects, the
employment contracts are identical to Mr. Leclerc's contract.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors was established in
1983 and has always been comprised of outside directors. Among other
activities, the Committee sets guidelines for executive compensation and
recommends compensation for executive officers of the Corporation. The
Committee makes the final determination of recipients of share options and
the amount of the awards. For other significant components of executive
compensation, the Committee recommends action to the full Board of Directors.
In all cases the directors have acted upon Compensation Committee
recommendations without modification in any material way.
The following report is submitted by the undersigned directors in their
capacity as the Compensation Committee of the Board. Neither this report nor
the Performance Graph following it shall be deemed incorporated by reference
into any filing under the Securities Act of 1933 or under the Securities
Exchange Act of 1934.
COMPENSATION PHILOSOPHY
The Corporation's policy on compensation attempts to show consistent
application for all executive officers, with variations given to differences
in the level of responsibility or the nature of the functions performed by
particular
7
<PAGE>
individuals. The goals of the compensation program include creating a
relationship between business objectives and performance which will encourage
the creation of value for shareholders. No particular attempt is made to
differentiate the chief executive officer for compensation purposes. The
Committee views the chief executive officer as one member of the senior
management team and applies compensation criteria evenly to the team members.
The Committee recognizes that management of a precious metal producer
must take the initiative in identifying and developing properties which will
be of long-term benefit and create value for shareholders. At the same time,
properties which are in production must be judiciously managed, with metal
production carefully planned and delivered for sale at an efficient cost for
each ounce produced. Management has limited control over the prices at which
gold and silver are sold but does attempt to secure prices for future
production using prudent hedging techniques.
Regardless of the stage of property activity, management must also be
mindful of the need to maintain a safe work environment. The failure to do
better than standard in this area should result in a deduction from
compensation otherwise payable. In addition, management must take steps to
ensure the development of ore reserves and to plan for mining these reserves
efficiently and with due regard for cost, safety and environmental concerns.
COMPENSATION COMPONENTS AND PERFORMANCE MEASURES
In evaluating executive compensation for 1999, the Committee adopted a
plan comprising a mix of base compensation (salary), cash bonus and share
options. In the past the Committee reviewed competitor practices and used
data obtained in respect of other North American precious metal producers to
assist in setting compensation. For 1999, competitor practices were
considered but the Committee recognized that senior management had been
reduced significantly and roles and objectives changed.
For the financial year ended December 31, 1999 the following summarizes
executive compensation recommended by the Committee and approved by the Board
of Directors.
SALARY - For the salary component, the Committee decided there would be
salary increases for three of the executive officers named in the Summary
Compensation Table who were executive officers at the end of the previous
financial year. The increases reflected significant additions to their areas
of direct responsibility.
BONUS - At the beginning of 1999, the Committee decided that executives
could earn a bonus, in part based on performance measured against objective
criteria and in part based on whether specific achievements had been made
outside the ordinary course of business. As to the objective test, the target
established by the Committee was that the net debt of the Corporation would,
at year end, not exceed $70 million. While the short and long term
liabilities at December 31, 1999 amounted to $53.3 million, the Committee
also considered other facts, including the reality that no reserves were
added in replacement of those consumed through mining.
The Committee recognized that the five executive officers had met a
difficult challenge in 1999, prudently managing the financial resources of
the Corporation through a period of low gold prices and keeping net debt
down. The Committee was pleased with management's performance on the
financial and operating fronts but concurred in the judgment of the Chairman
and Chief Executive Officer that the accomplishments were more in the nature
of meeting ordinary course of business requirements. Accordingly, the
Committee decided that no bonus would be paid to executives in 1999.
SHARE OPTIONS - The share option component of executive compensation was
set as a function of base salary and the price for the Corporation's common
shares measured at 100 percent of market on the date of grant. Share option
grants were generally made in accordance with this formula and for the
reasons described above. The numbers of shares covered by option grants to
the named executive officers are set out in the Summary Compensation Table
and the Table of Option Grants shown at pages 5 and 6.
LIMITATION ON DEDUCTIBILITY OF COMPENSATION
Section 162(m) of the Internal Revenue Code limits the deductibility of
compensation for each of the Chief Executive Officer and the four other
highest paid executive officers to $1,000,000 per year (subject to certain
exceptions). None of the Corporation's officers receive annual compensation
in excess of the maximum deductible amount. If, because of competitive
factors and individual performance, the Committee should determine that it is
appropriate to pay one or more executive officers in excess of the annual
maximum deductible amount it will consider establishing performance criteria
that will allow the Corporation to avail itself of all appropriate tax
deductions.
OTHER REMARKS
In summary, the Committee believes it is important to compensate
officers on a basis which reflects industry practice but which also considers
corporate objectives and performance. Base salaries are established by
reference to competitor practice, and the Corporation tends to pay its
executives at an average rate compared with other North American precious
metal producers of equal size. The cash bonus plan is aligned to short-term
objectives and performance. The Corporation's
8
<PAGE>
share incentive plan is used as a long-term compensation technique and aligns
management's objectives with those of the shareholders. Monitoring reserves
is an ongoing discipline and the Corporation relies on its executives to
build reserves over time and facilitate future production and other long term
goals designed to create value for the shareholders.
The Committee is of the view that the compensation practices followed
for 1999 have achieved an equitable balance between compensating executives
and managing the business of the Corporation for all shareholders.
John Gilray Christy, Chairman
Pierre Choquette, Monica E. Sloan, R. Geoffrey P. Styles
PERFORMANCE GRAPH
The following graph, expressed in U.S. dollars, compares over five years
the percentage change in the cumulative return to a holder of common shares
in the Corporation with the cumulative performance of the S & P 500 Index,
The Toronto Stock Exchange Gold Index and the price of gold. The graph
assumes an investment of U.S.$100 on December 31, 1994 and the reinvestment
of dividends paid during the five year period.
[GRAPH]
<TABLE>
<CAPTION>
ECHO BAY LONDON PM TSE S&P LONDON BASE YEAR C$ TSE BASE YEAR
YEAR COMMON FIX GOLD 500 PM FIX COMPARISON GOLD COMPARISON
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1994 100.0 100.0 100.0 100.0 383 100.0 13,463 100.0
1995 97.2 101.0 109.4 137.6 387 101.0 14,732 109.4
1996 63.4 96.3 84.0 169.2 369 96.3 11,303 84.0
1997 23.3 76.4 47.4 225.6 293 76.4 6,379 47.4
1998 16.8 74.6 44.0 290.1 286 74.6 5,921 44.0
1999 11.4 75.7 36.2 351.1 290 75.7 4,875 36.2
</TABLE>
9
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
GENERAL
John F. McOuat is a director, officer and shareholder of Watts, Griffis
and McOuat Limited ("WGM") which, from time to time, performs professional
consulting services for the Corporation and affiliates. In 1991 certain
affiliates of WGM sold their working interest in the Alaska-Juneau property
to the Corporation for cash and other consideration. Notwithstanding the
Corporation's decision to proceed no further with development of the
Alaska-Juneau property and write it off, the Corporation was obligated to
continue making annual payments of Can.$500,000 to the WGM affiliates. The
final payment was made on January 27, 2000. The interest of Mr. McOuat and
members of his immediate family in this transaction, whether direct or
indirect, is approximately 30 percent.
INDEBTEDNESS OF MANAGEMENT
The Corporation has made loans available to certain persons employed by
the Corporation or an affiliate to assist with employee relocation. The loans
are for five years with an interest rate of nine percent per annum but for
the first three years the interest is rebated to the employee. At the end of
three years, interest at the lower of nine percent or the applicable federal
rate for short-term loans determined pursuant to the U.S. Internal Revenue
Code will be payable monthly until maturity. At maturity the loans may be
renegotiated for a further five-year period.
The following table shows, in United States dollars, the particulars of
indebtedness by officers in excess of U.S.$60,000 for the period January 1,
1999 to March 3, 2000:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
BALANCE
MAXIMUM OUTSTANDING AT
NAME CAPACITY NATURE OF LOAN BALANCE IN PERIOD MARCH 3, 2000 INTEREST RATE
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
R. L. Leclerc Chairman Housing $140,134 $140,134 9.00
- ---------------------------------------------------------------------------------------------------
</TABLE>
APPOINTMENT OF AUDITORS
The persons named in the enclosed form of proxy intend to vote for the
appointment of Ernst & Young as the auditors of the Corporation to hold
office until the next annual meeting of shareholders. Ernst & Young have been
the auditors of the Corporation since 1985. One or more members of the
auditors will attend the meeting, have an opportunity to make a statement,
and be available to respond to appropriate questions.
1999 ANNUAL REPORT
The annual report for the year 1999, including financial statements and
other information with respect to the Corporation, has been mailed to each
shareholder. Additional copies of the annual report may be obtained by
writing to the Corporation.
2001 ANNUAL MEETING
Proposals of shareholders intended to be presented at the next annual
meeting must be received by the Corporation for inclusion in its Management
Proxy Circular on or before February 16, 2001.
The contents and the sending of this Management Proxy Circular have been
approved by the directors of the Corporation.
Dated at Edmonton, Alberta, Canada this 3rd day of March 2000.
Lois-Ann L. Brodrick
Vice President and Secretary
10
<PAGE>
ECHO BAY MINES LTD.
1210 Manulife Place
10180-101 Street
Edmonton, Alberta, Canada
T5J 3S4
<PAGE>
ECHO BAY MINES LTD.
PLEASE PUT MY NAME ON THE ECHO BAY SUPPLEMENTAL MAILING LIST. 278751102
Name:
________________________________________________________________________________
Street: Suite or Apt.No.:
________________________________________________________________________________
City: Province/State: Postal/Zip Code:
REMOVE PERFORATED SIDES, FOLD DOWN AND SEAL TO MAKE SELF ADDRESSED ENVELOPE
PROXY
ECHO BAY MINES LTD.
ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO BE HELD ON THE 17TH DAY OF MAY 2000
The undersigned shareholder of Echo Bay Mines Ltd. appoints Robert Leigh
Leclerc, or failing him Lois-Ann L. Brodrick or instead of them or either of
them __________________________ as proxy of the undersigned with full power of
substitution, to attend, vote and otherwise act for and on behalf of the
undersigned in respect of all matters that may come before the Annual General
Meeting of Shareholders to be held on the 17th day of May 2000, and at any
adjournment of the meeting, with the same power the undersigned would have if
the undersigned were present at the meeting, or any adjournment of the meeting
and without limiting the generality of the foregoing, the proxy is directed to
vote or refrain from voting as specified.
1. to vote FOR / / or WITHHOLD vote / / on the election of the following
persons as directors: John Norman Abell, Latham Cawthra Burns, Pierre
Choquette, John Gilray Christy, Peter Clarke, Robert Leigh Leclerc, John
Frederick McOuat, Monica Elizabeth Sloan and Richard Geoffrey Pentland
Styles, and;
2. to vote FOR / / or WITHHOLD vote / / on the appointment of Ernst & Young
as auditors.
_________________________________________________________
DATED: 2000
___________________________________________________________________________
SIGNATURE OF SHAREHOLDER
(1) IF A SHAREHOLDER SPECIFIES A CHOICE WITH RESPECT TO ANY OF THE MATTERS,
THE SHARES REPRESENTED BY THE PROXY WILL BE VOTED FOR OR WITHHELD FROM
VOTING IN RESPECT OF THE MATTER ON ANY BALLOT THAT MAY BE CALLED FOR.
WITH RESPECT TO THE ELECTION OF DIRECTORS, A SHAREHOLDER MAY WITHHOLD
AUTHORITY TO VOTE FOR A PARTICULAR NOMINEE, BUT VOTE FOR THE ELECTION OF
THE OTHER NOMINEES BY LINING THROUGH OR OTHERWISE STRIKING OUT THE NAME
OF ANY PARTICULAR NOMINEE AND CHECKING THE "VOTE FOR" BOX.
(2) IF THIS PROXY IS NOT DATED IN THE PROVIDED SPACE, IT WILL BE DEEMED TO
BEAR THE DATE ON WHICH IT IS MAILED BY THE PERSON MAKING THE
SOLICITATION.
INSTRUCTIONS:
If you are unable to attend the Annual General Meeting of Shareholders in
person, please fill in and sign the proxy (above) and return it in this
resealable self addressed envelope.
1. THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
AND THE MANAGEMENT OF THE CORPORATION.
2. If a shareholder wishes to be represented at the
meeting by proxy, the proxy must be dated and
executed by the shareholder or the shareholder's
attorney authorized in writing or, if the
shareholder is a corporation, under its corporate
seal or by an officer or attorney of the corporation
duly authorized.
3. UNLESS OTHERWISE INDICATED, THIS PROXY WILL BE VOTED
FOR THE ELECTION OF DIRECTORS AND FOR THE
APPOINTMENT OF AUDITORS. This form of proxy confers
discretionary authority with respect to any
amendments to matters identified in the notice of
meeting or other matters that may properly come
before the meeting.
4. A SHAREHOLDER HAS THE RIGHT TO APPOINT A PERSON
OTHER THAN THE PERSONS DESIGNATED IN THIS FORM OF
PROXY TO ATTEND AND ACT ON BEHALF OF THE SHAREHOLDER
AT THE MEETING. THE PERSON NEED NOT BE A
SHAREHOLDER. This right may be exercised either by
inserting in the space provided the name of the
person or by completing another proper form of proxy.
REMOISTEN THIS GLUE STRIP, FOLD AND SEAL THIS SELF
ADDRESSED ENVELOPE
<PAGE>
NOTICE TO SHAREHOLDERS OF ECHO BAY MINES LTD.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Within a month of each quarter end, Echo Bay issues a detailed news
release on the operating results. Shareholders may access highlights of this
news release within minutes of its release through services such as Dow Jones
and Reuters or Echo Bay (www.echobay.com). A copy of the press release will be
available on the Echo Bay Internet site within 24 hours of release.
- -------------------------------------------------------------------------------
If you wish to receive the quarterly financial statements of
Echo Bay Mines Ltd. please complete and return this card with
the proxy or detach and return to:
ECHO BAY MINES LTD.
C/O MONTREAL TRUST COMPANY OF CANADA,
8TH FLOOR, 151 FRONT STREET WEST,
TORONTO, ONTARIO M5J 2N1.
- -------------------------------------------------------------------------------
IF THIS CARD IS NOT RETURNED, YOU WILL NOT RECEIVE QUARTERLY FINANCIAL
STATEMENTS.
