<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)).
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
CANYON RESOURCES CORPORATION
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
----------------------------------
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11,
1) Title of each class of securities to which transaction
applies:
--------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
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4) Proposed maximum aggregate value of transaction:
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5) Total Fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
---------------------------------------------
2) Form, Schedule or Registration Statement No.:
---------------------------------------------
3) Filing Party:
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4) Date Filed:
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<PAGE> 2
CANYON RESOURCES CORPORATION
14142 Denver West Parkway, Suite 250
Golden, Colorado 80401
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 11, 1998
To Our Shareholders:
The Annual Meeting of Shareholders ("Meeting") of Canyon Resources
Corporation (the "Company"), a Delaware corporation, will be held at 3:00 p.m.
(Mountain daylight time) on Thursday, June 11, 1998, at the Denver West Marriott
Hotel, 1717 Denver West Blvd., Golden, Colorado, for the following purposes:
1. To elect two directors of the Company, each for a three-year term.
2. To amend the Company's 1982 Incentive Stock Option Plan to
increase the shares under the ISO Plan from 3,500,000 to
4,500,000.
3. To ratify the appointment of Coopers & Lybrand L.L.P. as the
Company's independent public accountants for 1998.
4. To consider and vote upon such other matters as may properly come
before the Meeting or any adjournment thereof.
Shareholders of record at the close of business on April 29, 1998, are
entitled to notice of and to vote at the Meeting. A list of the stockholders
entitled to vote at the Meeting shall be open to the examination of any
stockholder during ordinary business hours for a period of 10 days prior to the
Meeting at the Company's headquarters, 14142 Denver West Parkway, Suite 250,
Golden, Colorado.
The Board of Directors of the Company extends a cordial invitation to
all shareholders to attend the Meeting in person. Whether or not you plan to
attend the Meeting, please fill in, date, sign, and mail the enclosed proxy in
the return envelope as promptly as possible. Your proxy may be revoked by you at
any time prior to the Meeting. The prompt return of your completed proxy will
assist the Company in obtaining a quorum of shareholders for the Meeting, but
will not affect your ability to change your vote by subsequent proxy or by
attending the Meeting and voting in person. If you are unable to attend, your
written proxy will assure that your vote is counted.
By Order of the Board of Directors
Cheryl A. Martin
Corporate Secretary
Golden, Colorado
May 6, 1998
- --------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT NO MATTER HOW MANY SHARES YOU OWN
Please indicate your voting instructions on the enclosed proxy card,
date and sign it, and return it in the envelope provided, which is addressed for
your convenience. No postage is required if mailed in the United States.
PLEASE MAIL YOUR PROXY PROMPTLY
- --------------------------------------------------------------------------------
<PAGE> 3
CANYON RESOURCES CORPORATION
14142 Denver West Parkway, Suite 250
Golden, Colorado 80401
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
JUNE 11, 1998
This Proxy Statement is furnished to the shareholders of Canyon
Resources Corporation (the "Company"), a Delaware corporation, in connection
with the solicitation by and on behalf of the Company's Board of Directors (the
"Board") of proxies to be voted at the Annual Meeting of Shareholders
("Meeting") of the Company. The Meeting will be held on June 11, 1998, at 3:00
p.m. (Mountain daylight time) at the Denver West Marriott Hotel, 1717 Denver
West Blvd., Golden, Colorado, for the purposes set forth in the accompanying
Notice of Annual Meeting of Shareholders. Officers and regular employees of the
Company, without additional compensation, may solicit proxies personally or by
telephone if deemed necessary. Solicitation expenses will be paid by the
Company.
All proxies that are properly executed and received prior to the
Meeting will be voted at the Meeting. If a shareholder specifies how the proxy
is to be voted on any business to come before the Meeting, it will be voted in
accordance with such specification. If a shareholder does not specify how to
vote the proxy, it will be voted FOR the election of the two nominees for
director named in this Proxy Statement, FOR the approval of the amendment to the
ISO Plan, FOR the ratification of the appointment of Coopers & Lybrand L.L.P. as
the Company's auditors for 1998, and in the proxy holders' discretion on such
other business as may properly come before the Meeting. Any proxy may be revoked
by a shareholder at any time before it is actually voted at the Meeting by
delivering written notification to the Secretary of the Company, by delivering
another valid proxy bearing a later date, or by attending the Meeting and voting
in person.
This Proxy Statement and the accompanying proxy are first being sent to
shareholders on or about May 6, 1998. The Company will bear the cost of
preparing, assembling, and mailing the notice, Proxy Statement, and form of
proxy for the Meeting.
VOTING SECURITIES
All voting rights are vested exclusively in the holders of the
Company's common stock, $.01 par value (the "Common Stock"), with each share
entitled to one vote. Only shareholders of record at the close of business on
April 29, 1998, are entitled to notice of and to vote at the Meeting or any
adjournment. At the close of business on April 29, 1998, there were 46,107,074
shares of Common Stock issued and outstanding. A minimum of one-third of the
shares of Common Stock issued and outstanding must be represented at the
Meeting, in person or by proxy, in order to constitute a quorum. Cumulative
voting is not allowed for any purpose. Assuming a quorum is present, the two
nominees receiving the highest number of votes cast will be elected as
directors. The affirmative vote of the holders of the majority of the shares of
Common Stock represented at the Meeting in person or by proxy and entitled to
vote on the subject matter will be necessary to approve the amendment to the ISO
Plan and to ratify the appointment of the auditors.
An abstention or withholding authority to vote will be counted as
present for determining whether the quorum requirement is satisfied. With
respect to the vote on any particular proposal, abstentions will be treated as
shares present and entitled to vote, and for purposes of determining the outcome
of the vote on any such proposal, shall have the same effect as a vote against
the proposal. A broker "non-vote" occurs when a nominee holding shares for a
beneficial holder does not have discretionary voting power and does not receive
voting
1
<PAGE> 4
instructions from the beneficial owner. Broker "non-votes" on a particular
proposal will not be treated as shares present and entitled to vote on the
proposal.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of April 29, 1998, with
respect to beneficial ownership of the Common Stock by each person known by the
Company to be the beneficial owner of more than 5% of its outstanding Common
Stock, by each director and nominee for director of the Company, by each
executive officer named in the table titled "Summary Compensation Table," which
appears elsewhere in this Proxy Statement, and by all officers and directors of
the Company as a group. Unless otherwise noted, each shareholder has sole
investment and voting power over the shares owned.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
NAME OF TYPE OF NUMBER OF PERCENT OF
BENEFICIAL OWNER OWNERSHIP SHARES CLASS
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Ryback Management Corporation Record and 3,124,900(1) 6.78%
Beneficial
Lloyd I. Miller, III Record and 2,598,645(2) 5.64%
Beneficial
Richard H. De Voto Record and 879,698(3) 1.9%
Beneficial
Gary C. Huber Record and 422,561(4) *
Beneficial
James E. Askew Record and 50,000(5) *
Beneficial
Leland O. Erdahl Record and 94,289(6) *
Beneficial
William C. Parks Record and 135,783(7) *
Beneficial
Robert L. Zerga Record and 50,000(8) *
Beneficial
John R. Danio Record and 163,301(9) *
Beneficial
All Officers & Directors as a Group Record and 1,938,132 4.1%
(9 persons) Beneficial
- ------------------------------------------------------------------------------------------------
</TABLE>
* Less than 1%
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<PAGE> 5
1 This number includes 2,487,400 shares held by Lindner Growth Fund, a
registered investment company, and 637,500 shares managed by Ryback
Management Corporation.
2 This number includes 937,136 shares in which Mr. Miller shares dispositive
and voting powers (i) as an adviser to the trustee of certain family trusts,
and/or (ii) which are held by his wife; and 1,661,509 shares of which he has
sole voting and dispositive power as (i) the custodian to accounts set up
under the Florida Uniform Gifts to Minors Act, (ii) the sole shareholder of
a subchapter S corporation, (iii) the trustee to certain family trusts, (iv)
the manager of a limited liability company and/or (v) the manager or the
general partner of a limited partnership.
3 This number includes (i) 9,719 shares owned of record; (ii) 560,628 shares
held by the Richard H. De Voto Trust No. 1; (iii) 351 shares held as
Co-Trustee of Trust for his mother; (iv) an option to purchase 59,000 shares
at an exercise price of $3.00 per share; (v) options to purchase 100,000
shares at an exercise price of $1.63 per share; (vi) an option to purchase
75,000 shares at an exercise price of $3.69 per share; (vii) an option to
purchase 25,000 shares at an exercise price of $2.00 per share; and (viii)
an option to purchase 50,000 shares at an exercise price of $2.19 per share.
4 This number includes (i) 207,561 shares owned of record; (ii) an option to
purchase 50,000 shares at an exercise price of $3.00 per share; (iii)
options to purchase 60,000 shares at an exercise price of $1.63 per share;
(iv) an option to purchase 50,000 shares at an exercise price of $3.69 per
share; (v) an option to purchase 20,000 shares at an exercise price of $2.00
per share; and (vi) an option to purchase 35,000 shares at an exercise price
of $2.19 per share.
5 This number is an option to purchase 50,000 shares at an exercise price of
$3.00 per share.
6 This number includes (i) 54,289 shares owned of record; (ii) an option to
purchase 10,000 shares at an exercise price of $2.19 per share; (iii) an
option to purchase 10,000 shares at an exercise price of $2.06 per share;
(iv) an option to purchase 10,000 shares at an exercise price of $3.31 per
share; and (v) an option to purchase 10,000 shares at an exercise price of
$3.00 per share.
7 This number includes (i) 75,783 shares owned of record; (ii) an option to
purchase 30,000 shares at an exercise price of $3.19 per share; (iii) an
option to purchase 10,000 shares at an exercise price of $2.06 per share;
(iv) an option to purchase 10,000 shares at an exercise price at $3.31 per
share; and (v) an option to purchase 10,000 shares at an exercise price of
$3.00 per share.
8 This number is an option to purchase 50,000 shares at an exercise price of
$3.00 per share.
9 This number includes (i) 8,301 shares owned of record; (ii) an option to
purchase 20,000 shares at an exercise price of $3.00 per share; (iii) an
option to purchase 25,000 shares at an exercise price of $1.63 per share;
(iv) an option to purchase 35,000 shares at an exercise price of $3.69 per
share; (v) an option to purchase 20,000 shares at an exercise price of $2.00
per share; and (vi) an option to purchase 30,000 shares at an exercise price
of $2.19 per share.
ELECTION OF DIRECTORS
The Company's Bylaws provided that the number of members of the Board
shall be six, divided into three classes. Cumulative voting in election of
directors is not permitted. Directors are elected by majority vote of the shares
represented at the Meeting.
Two Directors, Richard H. De Voto and Robert L. Zerga, have been
nominated for re-election at the Meeting. UNLESS AUTHORITY IS WITHHELD, IT IS
INTENDED THAT THE SHARES REPRESENTED BY THE PROXIES WILL BE VOTED FOR THESE TWO
DIRECTORS, EACH TO SERVE FOR A THREE- YEAR TERM OR UNTIL HIS RESPECTIVE
SUCCESSOR IS ELECTED AND QUALIFIED.
3
<PAGE> 6
OFFICERS AND DIRECTORS
The following table lists the names, ages, and positions of the
executive officers and directors of the Company as of April 29, 1998. Directors
are divided into classes, each of which is elected to serve for three years,
with one class being elected each year. All officers have been appointed to
serve until their successors are elected and qualified. Additional information
regarding the business experience, length of time served in each capacity, and
other matters relevant to each individual is set forth below the table.
<TABLE>
<CAPTION>
DIRECTORS' TERMS
NAME AGE POSITION EXPIRE
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Richard H. De Voto 63 President, Director and 1998
Chairman of the Board
Gary C. Huber 46 Vice President-Finance 2000
and Director
James E. Askew 49 Director 2000
Leland O. Erdahl 69 Director 2000
William C. Parks 56 Director 1999
Robert L. Zerga 57 Director 1998
John R. Danio 47 Vice President-Operations
Richard T. Phillips 43 Treasurer
Cheryl A. Martin 45 Corporate Secretary
</TABLE>
DR. RICHARD H. DE VOTO was a founder of the Company and has been a
Director of the Company since its formation in 1979. Dr. De Voto served as
President of the Company from September 1979 to April 1985, and became President
again in April 1987. He is President of CR Montana Corporation, CR Briggs
Corporation, and CR International Corporation, each wholly owned subsidiaries of
the Company. Dr. De Voto is Professor Emeritus of Geology at the Colorado School
of Mines, where he taught from 1966 to 1987. Dr. De Voto was a founder of the
private Australian mining firm, Canyon Resources Proprietary Ltd., which later
became Delta Gold N.L., a publicly listed company of which he was a Director
from 1983 to 1989.
GARY C. HUBER was a founder of the Company and served as Secretary of
the Company from inception through June 1986, as Treasurer from 1980 through
December 1991, as Vice President from April 1985 to April 1987, and as Vice
President-Finance since April 1987. He was elected as a Director of the Company
in June 1985 and serves as President of CR Minerals Corporation, a wholly owned
subsidiary of the Company. Dr. Huber has been responsible for the financial
operations of the Company since its inception and currently directs the
Company's industrial minerals program.
4
<PAGE> 7
JAMES E. ASKEW has been a Director of the Company since June 1997. He
is currently the President of International Mining & Finance Corporation, a
venture capital and private investment group targeting gold and base-metal
opportunities internationally. From 1987, until it was merged with Ashanti
Goldfields Limited in October 1996, Mr. Askew was President and Managing
Director of Golden Shamrock Mines, Ltd. He currently serves as Chairman of the
Board of Opawica Explorations, Inc., and he serves as a Director of Ausdrill
Ltd., Nelson Gold Corporation Ltd., Carpenter Pacific Resources, EMGOLD Mining,
and Nord Resources Corp.
LELAND O. ERDAHL has been a Director of the Company since February
1986. He served as President and CEO of Stolar, Inc., a privately held service
and communication supply company for the mining industry, from July 1987 to
September 1991, and as President and CEO of Albuquerque Uranium Corporation, a
privately held company engaged in the production and sale of uranium from
November 1987 to January 1992. He is currently the Vice President and Chief
Financial Officer of Amax Gold Inc. Mr. Erdahl serves as a Director of Amax Gold
Inc., Hecla Mining Company, Uranium Resources, Inc., and Original Sixteen to One
Mine, Inc., all publicly held mineral resources companies, and as a trustee of a
group of John Hancock Mutual Funds, all publicly held investment entities.
WILLIAM C. PARKS has been a Director of the Company since February
1986. He is currently Executive Vice President and General Manager of R.A.
Pearson Company, a privately held company engaged in the design and manufacture
of packaging machinery. From August 1989 through December 1991, he was the
President of United Management Company, a company involved in providing
management consulting services to the mining, manufacturing, and transportation
industries.
ROBERT L. ZERGA has been a Director of the Company since March 1997.
From 1990 to 1995, he was Chief Executive Officer of Independence Mining Company
and Vice President of Minorco (USA), as well as Chairman of the Board of
Independence Mining Company and Director of Minorco (USA). From 1985 to 1989, he
was Executive Vice President & General Manager of Newmont Gold Company and also
a Director of Newmont Gold Company. Mr. Zerga currently serves as a Director of
Getchell Gold Corporation and also serves on the Business Advisory Board of
GeoBiotics, Inc.
JOHN R. DANIO was appointed Vice President-Operations of the Company in
September 1987, and has overall responsibility for the Company's mine
development and production operations. Prior to joining the Company, he operated
several open-pit gold mines and heap-leaching operations as Project Engineer and
Mine Manager. Mr. Danio is a registered professional engineer in the States of
Colorado and Nevada.
RICHARD T. PHILLIPS was appointed Treasurer of the Company in December
1991. Initially joining the Company as Controller in July 1991, he is
responsible for the Company's cash management, risk management, and financial
reporting functions. From 1988 to 1991, Mr. Phillips served as Controller for
Western Gold Exploration and Mining Company, a gold mining partnership between
Minorco and Inspiration Resources Corporation.
CHERYL A. MARTIN was appointed Corporate Secretary in December 1996.
Initially joining the Company as Director, Investor Relations in May 1994, she
continues in that capacity and is responsible for interaction with the
investment community and managing shareholder activities. From 1991 to 1994, Ms.
Martin served as Manager of Investor Relations for Sharon Resources, Ltd., a
publicly traded oil and gas company, and from 1989 to 1991 she was Director,
Investor Relations for Sindor Resources, Inc., a development-stage copper mining
company. She currently serves on the Board of Directors of the Denver Gold
Group, a not-for-profit organization which sponsors institutional mining
investment programs.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
(the "SEC"). Officers,
5
<PAGE> 8
directors and greater than ten percent shareholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on its review of the copies of such forms received by it,
or written representations from certain reporting persons, the Company believes
that, during the fiscal year ended December 31, 1997, all filing requirements
applicable to its officers, directors and greater than ten percent beneficial
owners were met.
BOARD MEETINGS AND COMMITTEES
During the Company's 1997 fiscal year, the Board met six times. All of
the Directors were present for 75% or more of the meetings of the Board and
committees upon which they served that were held during their individual
incumbencies.
The Company's Audit Committee ("Audit Committee") is comprised of
Messrs. Erdahl, Parks and Zerga, all independent Directors of the Company. The
Audit Committee recommends the selection and re-appointment of the Company's
independent certified public accountants to the Board and reviews the proposed
scope, content, and results of the audit performed by the accountants, and any
reports and recommendations made by them. The Audit Committee held two meetings
in 1997.
The Company's Compensation Committee ("Compensation Committee") is
currently comprised of Messrs. Askew, Erdahl, and Parks, with Dr. De Voto as a
non-voting member. The Compensation Committee reviews and makes recommendations
to the Board concerning the salaries paid to the Company's officers. The
Compensation Committee held three meetings in 1997.
The Company has no nominating or executive committee.
EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. James E. Askew, Leland O. Erdahl, William C. Parks, and Richard H.
De Voto currently serve as the Compensation Committee for the Board. Dr. De
Voto, the President of the Company, is a non-voting member of the Compensation
Committee. During 1997, Mr. Christopher M. T. Thompson, a former director, was
also a member of this Committee. Other than Dr. De Voto, no committee member is
an officer or employee of the Company or any of its subsidiaries.
REPORT OF THE COMPENSATION COMMITTEE ON
EXECUTIVE COMPENSATION
OVERALL POLICY
Salary compensation of the Company's executive officers is determined
by the Board. The Compensation Committee is responsible for considering specific
information and making recommendations to the full Board. The Compensation
Committee is comprised of three outside directors appointed annually by the
Board. The Compensation Committee's consideration of and recommendations
regarding executive compensation are guided by a number of factors described
below. The objectives of the Company's total executive compensation package are
to attract and retain the best possible executive talent, to provide an economic
framework to motivate the Company's executives to achieve goals consistent with
the Company's business strategy, to provide an identity between executive and
shareholder interests through stock option plans, and to provide a compensation
package that recognizes an executive's individual results and contributions in
addition to the Company's overall business results.
6
<PAGE> 9
In making recommendations concerning executive compensation, the
Committee reviews individual executive compensation, corporate performance,
stock price appreciation, and total return to shareholders for the Company as
well as a peer group of public North American gold-mining companies. The peer
group of companies used for compensation analysis includes many of the selected
peer group identified in the Performance Graph set forth below.
The Compensation Committee recommends to the Board compensation levels
for the President (Chief Executive Officer) and other officers of the Company.
In reviewing individual performance of executives whose compensation is detailed
in this Proxy Statement, the Compensation Committee takes into account the views
of Richard H. De Voto, the Company's Chief Executive Officer and non-voting
member of the Committee.
SALARIES
The key elements of the Company's executive compensation consist of
base salary, an incentive compensation plan, and stock options. The Board acts
on salary levels of officers and on the incentive compensation plan, and the
Compensation Committee makes recommendations on employee stock option awards.
Salaries for executive officers are determined by evaluating the
responsibilities of the position held and the experience of the individual, and
by reference to the competitive marketplace for executive talent, including a
comparison of salaries for comparable positions at other similar mining
companies.
The salary levels of the Chief Executive Officer and other officers of
the Company for the following calendar year are generally established by the
Board at its December meeting. Specific individual performance and overall
corporate or business segment performance are reviewed in determining the
compensation level of each individual officer. In a particular business unit,
such unit's financial, operating, cost containment, and productivity results are
also considered. The Compensation Committee, where appropriate, also considers
other performance measures, such as increase in market share, safety,
environmental awareness, and improvements in relations with shareholders,
employees, the public, and government regulators.
1997 was a very difficult year for the Company and for the gold mining
industry, as a whole. Gold prices plummeted and gold stock prices followed suit.
The Compensation Committee and the Board did consider that the Company was
successful in (i) achieving commercial production and a substantial increase in
reserves at Briggs in spite of having to overcome difficult operating problems,
(ii) acquiring 100% ownership of the McDonald Project, and (iii) expansion of
the industrial minerals business. However, it was still a difficult year.
The Compensation Committee believes that the Chief Executive Officer,
as well as the other officers of the Company, are strongly motivated and
dedicated to the growth in shareholder value of the Company. The Compensation
Committee further believes that the Chief Executive Officer, as well as the
other officers of the Company, are receiving salary compensation in the
mid-range of peer-group levels and that their performance incentives are heavily
based on their personal shareholding and/or incentive stock options in the
Company. Because of the pricing problems facing the gold industry and the
Company, as well as the necessity to devote a great deal of time and effort to
correct the crushing problems at Briggs, minor increases in base annual cash
compensation were granted to the officers of the Company in 1997. Stock options
were, however, granted to officers with the view that such awards align their
interest directly with that of the shareholders.
INCENTIVE COMPENSATION PLAN
The Company's Board of Directors is committed to providing a strong
incentive compensation opportunity to encourage and reward superior performance.
Corporate objectives are to build a team-driven environment which will result in
increased mineral production, cash flow and profitability by means of
development of current reserves and discovery of new mineral deposits. On
January 1, 1997, a performance-driven, variable pay Incentive Compensation Plan
was implemented by the Board, designed to measure and reward executive officer's
performance based on several key performance indicators. The indicators used to
measure performance include
7
<PAGE> 10
(1) annual share price change compared to a peer group of companies, (2) cash
flow, (3) net income per share, (4) ounces of gold produced, (5) total mineable
(profitable) ounces of gold reserves, (6) successful completion of merger and/or
acquisition transactions, and (7) discretionary critical behavior as determined
by the President.
The Board of Directors feels that by moving from a "fixed" base pay
compensation structure to a structure with more emphasis on "variable" incentive
pay, a corporate environment will be created which is goal- oriented,
results-driven, profit-focused, time sensitive and entrepreneurial.
STOCK OPTIONS
Under the Company's 1982 Incentive Stock Option Plan as amended ("ISO
Plan"), which was approved by shareholders, stock options are granted to the
Company's key employees, including the individuals whose compensation is
detailed in this Proxy Statement. The Compensation Committee sets the size of
the stock option grants based on factors, including competitive compensation
data, similar to those used to determine salaries.
Stock options are intended to align the interests of the executives
with those of the shareholders. All stock options granted from the ISO Plan are
granted with an exercise price equal to the market price of the Common Stock on
the date of grant and are generally exercisable over a 2-5 year period. This
approach is designed to provide executive incentive for creation of additional
shareholder value over the long term since the benefit of the option awards
cannot be realized unless stock price appreciation occurs.
CONCLUSION
The Company's executive compensation is linked to individual and
corporate performance and stock price appreciation. The Compensation Committee
intends to continue the policy of linking executive compensation to corporate
performance and returns to shareholders, recognizing that the ups and downs of
the business cycle, and in particular the depressed gold prices, from time to
time may result in an imbalance for a particular period.
This Report has been provided by the Compensation Committee.
James E. Askew(1)
Leland O. Erdahl(1)
William C. Parks(1)
Richard H. De Voto(2)
1 Member of Compensation Committee
2 Non-voting member of Compensation Committee
COMPENSATION OF OFFICERS
The following tables show compensation during the fiscal years ended
December 31, 1997, 1996, and 1995, and option grants and option exercises during
the fiscal year ended December 31, 1997, of those persons who were, at December
31, 1997 (i) the Chief Executive Officer and (ii) the two other most highly
compensated executive officers of the Company whose total compensation exceeded
$100,000.
8
<PAGE> 11
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
=====================================================================================================
Name and Annual Long-term All Other
Principal Position Year Compensation Compensation Compensation
------------------------------- ($)*
Awards
----------
Salary Securities
($) Underlying
Options
(#)
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Richard H. De Voto 1997 200,000 155,000 4,800
President, CEO 1996 197,500 45,000 4,500
1995 190,000 75,000 4,500
Gary C. Huber 1997 152,250 75,000 4,567
Vice President- 1996 150,438 40,000 4,500
Finance 1995 145,000 55,000 3,988
John R. Danio 1997 127,500 15,000 3,825
Vice President- 1996 125,625 25,000 3,769
Operations 1995 120,000 50,000 3,600
=====================================================================================================
</TABLE>
* Amounts included in All Other Compensation were paid pursuant to the Company's
401(k) plan.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
=============================================================================================================================
Potential Realizable Value at
Assumed Annual Rates of
INDIVIDUAL GRANTS Stock Price Appreciation
for Option Term
- -----------------------------------------------------------------------------------------------------------------------------
Number of Securities Percent of Total
Underlying Options Options Granted to Exercise or Expiration
Name Granted Employees in Fiscal Base Price Date
(#) Year 1997 ($/Sh) 5% ($) 10% ($)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Richard H. De Voto 155,000(1) 30.3% 1.19 12/10/02 50,832 112,325
Gary C. Huber 75,000(1) 14.7% 1.19 12/10/02 24,596 54,351
John R. Danio 15,000(1) 2.9% 1.19 12/10/02 4,919 10,870
=============================================================================================================================
</TABLE>
1 Options were granted on December 11, 1997, and first become exercisable after
the second anniversary of the date of grant. The options were granted at an
exercise price equal to the Common Stock closing price as quoted on AMEX on
the grant date.
9
<PAGE> 12
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
========================================================================================
Number of Securities Underlying Value of Unexercised
Name Unexercised Options at FY-End In-The-Money Options at FY-
(#) End ($)(1)
----------------------------------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Richard H. De Voto 309,000 256,000 0 0
Gary C. Huber 215,000 115,000 0 0
John R. Danio 155,000 40,000 0 0
========================================================================================
</TABLE>
(1) Based on the closing price of $1.13 of the Common Stock as quoted on
AMEX December 31, 1997.
SHAREHOLDER RETURN PERFORMANCE GRAPH
The following graph shows the cumulative total shareholder return on the
Company's Common Stock for the period December 31, 1992, through December 31,
1997, compared to the cumulative total return of three other stock market
indices: 1) the AMEX Market Value Index, 2) an index comprised of a group of
peer companies engaged in precious metal mining, and 3) the Standard and Poor's
Gold Index.
The peer group of North American mining companies includes data from
ten companies, all of which are listed on NASDAQ, AMEX, or NYSE. The ten
companies are: Alta Gold Co., Bema Gold Corporation, Coeur d'Alene Mines
Corporation, Crown Resources Corporation, Dakota Mining Corporation, Dayton
Mining Corporation, Glamis Gold Ltd., Hecla Mining Company, Sunshine Mining and
Refining Company, and Vista Gold Corp. The Standard and Poor's Gold Index
includes data from five large North American gold mining companies: Barrick Gold
Corporation, Battle Mountain Gold Company, Homestake Mining Company, Newmont
Gold Company, and Placer Dome Inc.
<TABLE>
<CAPTION>
=======================================================================================================================
TOTAL RETURN ANALYSIS 12/31/92 12/31/93 12/30/94 12/29/95 12/31/96 12/31/97
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Canyon Resources $100 $232 $ 89 $139 $150 $ 64
- -----------------------------------------------------------------------------------------------------------------------
S&P Gold $100 $183 $ 148 $167 $165 $ 109
- -----------------------------------------------------------------------------------------------------------------------
Amex Market Value $100 $120 $ 109 $137 $146 $ 177
- -----------------------------------------------------------------------------------------------------------------------
Peer Group $100 $189 $ 149 $126 $114 $ 53
=======================================================================================================================
</TABLE>
o Assumes initial investment of $100.
10
<PAGE> 13
COMPENSATION OF DIRECTORS
During 1997, the Company paid its Directors who are not officers,
employees, or otherwise retained by the Company an annual Director's fee of
$5,000, plus $1,000 for each attended meeting of the Board ($250 for each
telephonic meeting) and $500 for each Compensation and Audit Committee meeting.
The Chairman of the Audit Committee received an additional $2,000 of
compensation. The Company reimburses its Directors for expenses incurred in
attending meetings.
During 1997, Leland O. Erdahl and William C. Parks, current directors,
and George W. Holbrook, Jr. and Christopher M. T. Thompson, directors during
1997, were each granted options to purchase 10,000 shares of common stock under
the Company's Non-Qualified Stock Option Plan. The options were granted at an
exercise price of $3.00 per share, the closing market price of the Company's
common stock on the date of the grant. The options are exercisable as of June 5,
1998, and expire on June 4, 2002. In addition, as newly appointed Directors,
James E. Askew and Robert L. Zerga were each granted options to purchase common
stock under the Company's Non-Qualified Stock Option Plan. Mr. Askew was granted
an option to purchase 50,000 shares at an exercise price of $3.00 per share, the
closing market price of the Company's common stock on the date of the grant. The
options are exercisable as of June 5, 1998, and expire on June 4, 2002. Mr.
Zerga was granted options as follows: a) an option to purchase 40,000 shares at
an exercise price of $3.00 per share, exercisable as of March 20, 1998, expiring
March 19, 2002; and b) an option to purchase 10,000 shares at an exercise price
of $3.00 per share, exercisable as of June 5, 1998, expiring June 4, 2002. The
exercise price of $3.00 per share represents the closing market price of the
Company's common stock on the date of the grant.
CHANGE IN CONTROL ARRANGEMENT
The Company has entered into employment agreements with certain
executive employees, including Messrs. De Voto, Huber, Danio, Phillips and Ms.
Martin which are only effective in the event of a "change in control" of the
Company, as defined in the employment agreements. Upon the occurrence of such a
change in control, the Company has agreed to continue the executives' employment
and the executives have agreed to remain in the Company's employ for a period
ranging from six to twenty-four months after such change in control (the
"Employment Period"). During the Employment Period, the executive shall receive
an annual base salary at least equal to twelve times the highest monthly base
salary paid to the executive by the Company during the twelve-month period
immediately preceding the month in which the change of control occurs. Further,
under the agreement, the executive may terminate the employment agreement for
"good reason." If terminated for good reason, the executive is entitled to
receive any accrued obligations to such executive plus the executive's salary
payable for the remainder of the Employment Period. "Good reason" is defined in
the agreement to include: (i) a significant diminution of the executive's
duties, (ii) a failure of the Company to pay salary and other amounts due under
the agreement, (iii) requiring the executive to move beyond a 20 mile radius of
the Company's principal office, (iv) an unauthorized termination of the
executive, or (v) failure of the Company to require any successor company to
honor the provisions of the employment agreement.
PROPOSAL TO AMEND THE COMPANY'S
INCENTIVE STOCK OPTION PLAN
On March 19, 1998, the Company's Board of Directors unanimously
approved a resolution to place before the shareholders a vote to amend the
Company's 1982 Incentive Stock Option Plan (the "ISO Plan") to increase the
shares under the ISO Plan from 3,500,000 to 4,500,000. The ISO Plan was adopted
by the Board of Directors on April 12, 1982, and subsequently approved by the
shareholders of the Company. The ISO Plan currently authorizes the issuance of
options for an aggregate, from the date of inception, of up to 3,500,000 shares
of authorized and unissued Company common stock. At April 29, 1998, the closing
price of the Company's common stock as reported in the AMEX market was $1.06 per
share.
11
<PAGE> 14
Because, as of April 29, 1998, only 385,986 of the present 3,500,000
share authorization remain available for option grants, and because the Board of
Directors believes that the purposes for which the ISO Plan was adopted and
approved remain valid and will contribute to the long-term success of the
Company, the Board of Directors recommends that the shareholders approve an
increase of options under the ISO Plan from 3,500,000 to 4,500,000 shares.
Accordingly, the Board of Directors recommends to the shareholders of the
Company that they vote FOR the proposed amendment to increase the number of
shares subject to issuance under the ISO Plan from 3,500,000 to 4,500,000
shares.
The ISO Plan was adopted and approved in order that certain employees
of the Company or its subsidiaries could be given an inducement to acquire a
proprietary interest in the Company, to gain an added incentive to advance the
interests of the Company, and to remain in the Company's employ. The Board of
Directors believes that the ISO Plan has been an increasingly effective tool in
the past few years in hiring and keeping quality management, professional and
staff personnel. Recently, the Board of Directors, through the Stock Option
Committee, has expanded the use of stock options to offer options as an
incentive at the time of hiring of management personnel and to offer options to
a greater number of employees besides those in upper management of the Company.
At the present time, the number of executive officers participating in the ISO
Plan is 5, while the total number of employees participating is 47.
The Company has no pension or retirement plan, other than a modest
salary deferral plan established under the provisions of Section 401(k) of the
Internal Revenue Code. Under the provisions of that plan, the Company matches up
to the first three (3) percent of salary elected to be deferred by the employee,
which matching contribution vests in increments over a period of five years.
Salaries paid by the Company are not among the highest in the industry and
historically have been low by industry standards, particularly during times when
the capital resources of the Company were low. While the Company does provide
certain other benefits in addition to salary, the Board of Directors believes
that the liberal and flexible use of Stock Options is an integral and important
component of the compensation afforded by the Company to its management and
employees and is essential to maintaining quality management within the Company.
As of April 29, 1998, only 385,986 options remained available for
issuance under the ISO Plan out of the 3,500,000 options authorized; 2,179,200
options had been granted that were currently outstanding under the Plan; and a
total of 777,696 shares had previously been issued pursuant to the Plan.
Currently, no options may be granted under the ISO Plan after July 8,
2000. If the amendment to the ISO Plan is adopted, the life of the Plan is
automatically extended and options may be granted under the Plan until March 19,
2008. By its terms, the ISO Plan may be amended or discontinued by the Board of
Directors at any time, except with respect to any options then outstanding;
provided that without shareholder approval, no amendment may change the
aggregate number of shares that may be issued under the ISO Plan, the
designation or class of employees eligible to receive options, or remove the
administration of the ISO Plan from a committee appointed by the Board of
Directors to administer the ISO Plan. Options granted under the ISO Plan are
intended to qualify as "incentive stock options" under Section 422A of the
Internal Revenue Code and to meet the provisions of Rule 16b-3 of the Securities
Exchange Act of 1934.
A "disinterested" committee appointed by the Board of Directors (the
"Committee") administers the ISO Plan and, among other things, designates which
eligible persons will receive options, the number of shares to be covered by
each option, the time during which each option may be exercised, and any
conditions to exercise. Options granted under the ISO Plan may not have a term
longer than ten years or an exercise price of less than 100% of the fair market
value of the Company's stock on the date of grant (110% if the optionee owns
more than ten percent of the total voting shares of the Company). The ISO Plan
does not establish criteria to be followed by the Committee in determining the
size of any option granted, but, rather, leaves such determination to the
Committee's discretion.
Subject to the limitations of the ISO Plan and the specific grant in
issue, options granted under the ISO Plan are exercisable for a period of up to
ten years. Most of the options issued under the ISO Plan may not
12
<PAGE> 15
be exercised until two years following the grant date, or such later time as the
option grant determines; provided that this limitation may not apply to the
exercise of an option pursuant to the terms of the relevant grant upon the
optionee's death or total and permanent disability. Most of the options issued
under the ISO Plan must be exercised within five years from the date of grant.
Notice of exercise of options under the ISO Plan must be in writing. An
option under the ISO Plan can be exercised in whole or in part and the purchase
price for the optioned shares must be paid in cash or certified funds; provided
that payment may be made by delivery of other shares of common stock of the
Company having a fair market value equal to the option price if the Committee
specifically permits an employee to do so and includes such right in the
employee's option agreement.
The following table summarizes the presently outstanding options issued
pursuant to the ISO Plan as of April 29, 1998:
<TABLE>
<CAPTION>
=======================================================================================================
Name or Group Number
- -------------------------------------------------------------------------------------------------------
<S> <C>
Richard H. De Voto, President, CEO 574,000
Gary C. Huber, Vice President - Finance 330,000
John R. Danio, Vice President - Operations 195,000
All current executive officers as a group 1,889,000
All current directors, who are not executive officers -0-
All employees, excluding executive officers 302,200
Persons owning more than 5% of outstanding options:
Richard H. De Voto 574,000
Gary C. Huber 330,000
John R. Danio 195,000
Robert Benbow 177,500
Richard T. Phillips 115,000
Arlen C. Cornett 114,200
Each of the two nominees for director:
Richard H. De Voto 574,000
Robert L. Zerga -0-
=======================================================================================================
</TABLE>
FEDERAL INCOME TAX CONSEQUENCES
An optionee will not be deemed to receive any income at the time an
incentive stock option is granted or exercised, although the exercise may give
rise to alternative tax liability for the optionee. If an optionee does not
dispose of the shares acquired on exercise of an incentive stock option within
the two-year period beginning on the day after the day of the grant of the
option or within the one-year period beginning on the day after the day of the
transfer of the shares to the optionee, the gain (if any) on a subsequent sale
(i.e., the
13
<PAGE> 16
excess of the proceeds received over the option price) will be long term capital
gain and any loss the optionee may sustain on such sale will be long term
capital loss.
If the optionee disposes of the shares within the two-year or one-year
period referred to above, the disposition is a "disqualifying disposition," and
the optionee will generally realize ordinary income taxable as compensation in
the year of the disqualifying disposition to the extent of the excess of the
fair market value of the shares on the date of purchase over the option price,
and the balance, if any, will be long term or short term capital gain depending,
generally, on whether the shares were held more than one year after the
incentive stock option was exercised. To the extent the optionee recognizes
compensation income with respect to a disqualifying disposition, the Company
will be entitled to a corresponding deduction, subject to general rules relating
to reasonableness of compensation.
THE SHARES OF COMMON STOCK REPRESENTED BY THE PROXIES IN THE
ACCOMPANYING FORM WILL BE VOTED "FOR" THE AMENDMENT TO THE INCENTIVE STOCK
OPTION PLAN UNLESS A CONTRARY DIRECTION IS INDICATED.
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board has appointed Coopers & Lybrand L.L.P. to audit the Company's
financial statements prepared in connection with the submittal of the Company's
Report on Form 10-K for the fiscal year ending December 31, 1998. The Board
recommends that the shareholders ratify that appointment. Coopers & Lybrand
L.L.P. has audited the Company's financial statements since inception.
The Company has requested representatives of Coopers & Lybrand L.L.P.
to be present at the Meeting, will make available to such representatives an
opportunity to make a statement if they so desire, and expects them to be
available to respond to appropriate questions.
THE SHARES OF COMMON STOCK REPRESENTED BY THE PROXIES IN THE
ACCOMPANYING FORM WILL BE VOTED "FOR" THE RATIFICATION OF THE APPOINTMENT OF
INDEPENDENT PUBLIC ACCOUNTANTS UNLESS A CONTRARY DIRECTION IS INDICATED.
SHAREHOLDER PROPOSALS
Proposals by shareholders of the Company to be presented at the 1999
Annual Meeting of Shareholders must be received by the Company no later than
January 6, 1999, to be included in the Company's Proxy Statement and proxy for
that meeting. The proponent must be a record or beneficial owner entitled to
vote on his or her proposal at the next Annual Meeting and must continue to own
such security entitling him or her to vote through that date on which such
meeting is held. The proponent must own 1% or more of the outstanding shares or
$1,000.00 in value of the Company's Common Stock and must have owned such shares
for one year in order to present a shareholder proposal to the Company.
ANNUAL REPORT
The Annual Report to Shareholders concerning the operation of the
Company during the fiscal year ended December 31, 1997, including certified
financial statements for the year then ended, has been enclosed with this Proxy
Statement. The Annual Report is not incorporated in this Proxy Statement and is
not to be considered a part of the soliciting material.
14
<PAGE> 17
OTHER MATTERS
The Board knows of no other special business to be presented at the
Meeting. If other matters properly come before the Meeting, the persons named in
the accompanying form of proxy intend to vote on such other matters in
accordance with their best judgement.
AVAILABILITY OF ANNUAL REPORT ON FORM 10-K
UPON A WRITTEN REQUEST, THE COMPANY WILL PROVIDE, WITHOUT CHARGE, A
COPY OF ITS ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31,
1997, TO EACH SHAREHOLDER OF RECORD OR TO EACH SHAREHOLDER WHO OWNED COMMON
STOCK OF THE COMPANY LISTED IN THE NAME OF A BANK OR BROKER, AS NOMINEE, AT THE
CLOSE OF BUSINESS ON APRIL 29, 1998. ANY REQUEST BY A SHAREHOLDER FOR THE
COMPANY'S ANNUAL REPORT ON FORM 10-K SHOULD BE MAILED TO THE COMPANY'S
SECRETARY, C/O CANYON RESOURCES CORPORATION, 14142 DENVER WEST PARKWAY, SUITE
250, GOLDEN, COLORADO 80401.
By Order of the Board of Directors
Cheryl A. Martin
May 6, 1998 Corporate Secretary
15
<PAGE> 18
PROXY CANYON RESOURCES CORPORATION PROXY
14142 Denver West Parkway, Suite 250
Golden, Colorado 80401
The undersigned holder of Common Stock acknowledges receipt of Notice of an
Annual Meeting of Shareholders of Canyon Resources Corporation, hereby appoints
Gary C. Huber and Leland O. Erdahl, or either of them, as Proxies, each with the
power to appoint a substitute, and hereby authorizes them to represent and to
vote, as designated below, all shares of Common Stock of Canyon Resources
Corporation held of record by the undersigned on April 29, 1998, at the Annual
Meeting of Shareholders to be held on June 11, 1998, or at any adjournment
thereof, with respect to the following:
1. ELECTION OF DIRECTORS - Nominees:
Richard H. De Voto Robert L. Zerga
/ / FOR all nominees (except as specifically listed below) / / WITHHOLD
AUTHORITY to vote for all nominees
INSTRUCTIONS: To withhold authority to vote for any individual nominee, write
the nominee's name in the space provided below. IF AUTHORITY IS NOT EXPRESSLY
WITHHELD, IT SHALL BE DEEMED GRANTED.
- -------------------------------------------------------------------------------
2. APPROVAL OF AMENDMENT TO INCENTIVE STOCK OPTION PLAN
/ / FOR / / AGAINST / / ABSTAIN
3. RATIFICATION OF THE APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
/ / FOR / / AGAINST / / ABSTAIN
This Proxy is solicited on behalf of the Board of Directors and may be revoked
prior to its exercise. This Proxy, when properly executed, will be voted as
directed above by the undersigned shareholders. If no direction is made, it will
be voted FOR the nominees named in Item 1, FOR the approval of amendment to
incentive stock option plan in Item 2, and FOR the Ratification of the
appointment of the independent public accountants in Item 3, and in the Proxies'
discretion on such other business as may properly come before the Meeting.
Date:
--------------------------------------
-------------------------------------------
Signature
-------------------------------------------
Signature if held jointly
(Please sign EXACTLY as your name appears on your stock certificate(s).
If more than one name appears because of joint ownership, all joint
owners should sign.)
