SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
BATTLE MOUNTAIN GOLD COMPANY
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(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:
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
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[BATTLE MOUNTAIN LOGO]
NOTICE OF ANNUAL MEETING
APRIL 30, 1997
AND PROXY STATEMENT
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 30, 1997
TO THE STOCKHOLDERS OF
BATTLE MOUNTAIN GOLD COMPANY:
The annual meeting of stockholders of Battle Mountain Gold Company (the
"Company") will be held at the Doubletree Hotel at One Allen Center, 400
Dallas Street, Houston, Texas, on Wednesday, April 30, 1997, at 10:30 a.m.,
Houston time, for the following purposes:
1. To elect four directors;
2. To approve an amendment to the Restated Articles of Incorporation of
the Company to phase out the classification of the Board of Directors;
3. To approve the Amended and Restated 1994 Long-Term Incentive Plan;
4. To ratify the appointment of Price Waterhouse LLP as the independent
public accountants for the Company for 1997; and
5. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The Board of Directors has fixed the close of business on March 14, 1997,
as the record date for determining stockholders entitled to notice of and to
vote at the meeting.
You are cordially invited to attend the meeting; however, you are requested
to mark, sign, date and return the accompanying proxy as soon as possible.
By Order of the Board of Directors
Greg V. Etter
General Counsel and Secretary
March 28, 1997
333 Clay Street, 42nd Floor
Houston, Texas 77002
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[BATTLE MOUNTAIN LOGO]
PROXY STATEMENT
This Proxy Statement and the accompanying proxy card are being mailed to
stockholders beginning on or about March 28, 1997. They are furnished in
connection with the solicitation of proxies by the Board of Directors of Battle
Mountain Gold Company (the "Company") for use at the annual meeting of
stockholders to be held at the time and place and for the purposes set forth in
the accompanying notice. This annual meeting is the first to be held subsequent
to the July 1996 combination of the Company and Hemlo Gold Mines Inc. ("Hemlo
Gold"), an Ontario corporation that changed its name to Battle Mountain Canada
Ltd. ("BMC"). All of the common shares of BMC are owned by the Company.
Holders of Exchangeable Shares of BMC ("Exchangeable Shares") are entitled,
through a voting trust, to vote at the annual meeting.
In addition to the solicitation of proxies by mail, proxies may also be
solicited by telephone, telegram or personal interview by regular employees of
the Company. The Company has retained Georgeson & Company Inc. on customary
terms and at a fee estimated not to exceed $10,000, plus reasonable expenses, to
assist in soliciting proxies in the United States. The Company has also retained
The Proxy Solicitation Company Ltd. on customary terms and at a fee estimated
not to exceed approximately $13,000, plus reasonable expenses, to assist in
soliciting proxies in Canada in connection with the voting of the Exchangeable
Shares. The Company will pay all costs of soliciting proxies. The Company will
also reimburse brokers or other persons holding stock in their names or in the
names of their nominees for their reasonable expenses in forwarding proxy
material to beneficial owners of stock, in accordance with applicable
requirements of the Securities and Exchange Commission, New York Stock Exchange,
Canadian securities commissions and The Toronto Stock Exchange.
All duly executed proxies received prior to the meeting will be voted in
accordance with the choices specified thereon. As to any matter for which no
choice has been specified in a duly executed proxy, the Shares represented
thereby will be voted for the election as directors of the nominees listed
herein, for approval of the amendment to the Restated Articles of Incorporation
of the Company, for approval of the Amended and Restated 1994 Long-Term
Incentive Plan, for ratification of Price Waterhouse LLP as the Company's
independent public accountants for 1997 and, in the discretion of the persons
named in the proxy, in connection with any other business that may properly come
before the meeting. A stockholder giving a proxy may revoke it at any time
before it is voted at the meeting by filing with the Secretary of the Company at
the Company's address shown on the accompanying
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notice an instrument revoking the proxy, by delivering a duly executed proxy
bearing a later date or by appearing at the meeting and voting in person.
As of March 14, 1997, the record date for determining stockholders entitled
to vote at the meeting, there were 115,109,272 shares of common stock, par value
$0.10 per share, of the Company (the "Common Stock") outstanding and entitled
to vote at the meeting. As of the record date, there were also 114,566,404
shares of Exchangeable Shares outstanding and entitled to vote at the meeting
through the exercise by R-M Trust Company, a trust company existing under the
laws of Canada (the "Trustee"), of certain voting rights under a Voting,
Support and Exchange Trust Agreement dated July 19, 1996 (the "Voting
Agreement").
The Exchangeable Shares entitle holders to dividend and other rights
economically equivalent to Common Stock, including the right through the Voting
Agreement to vote at Company stockholder meetings, and are exchangeable at the
option of the holders into Common Stock on a one-for-one basis. The Trustee
holds one share of Special Voting Stock, par value $0.10 per share, of the
Company (the "Special Voting Stock") that is entitled to a number of votes at
meetings of holders of Common Stock equal to the number of Exchangeable Shares
outstanding from time to time held by persons other than the Company and certain
of its subsidiaries (those precluded from voting any Common Stock under
applicable Nevada law). Pursuant to the Voting Agreement, each holder of
Exchangeable Shares is entitled to instruct the Trustee as to the voting of the
number of votes attached to the Special Voting Stock represented by such
holder's Exchangeable Shares. The Trustee will exercise each vote attached to
the Special Voting Stock only as directed by the relevant holder, and in the
absence of instructions from a holder as to voting will not exercise such votes.
A holder may instruct the Trustee to give a proxy to such holder entitling the
holder to vote personally such holder's relevant number of votes or to grant to
the Company's management a proxy to vote such votes. The Trustee has furnished
(or caused the Company to furnish) this Proxy Statement and certain related
materials to the holders of Exchangeable Shares.
Together as of the record date, the shares of Common Stock and Special
Voting Stock (which is entitled to a number of votes based on the Exchangeable
Shares) represented 229,675,676 shares outstanding and entitled to vote at the
annual meeting (all such shares being referred to herein as "Shares," and all
holders thereof being referred to herein as "stockholders" of the Company).
The Common Stock and the Special Voting Stock vote together as a single
class. As to each matter presented to a vote of stockholders of the Company,
each Share of Common Stock is entitled to one vote and the one share of Special
Voting Stock is entitled to a number of votes equal to the number of
Exchangeable Shares outstanding from time to time held by persons other than the
Company and certain of its subsidiaries (those precluded from voting any Common
Stock under applicable Nevada law). The quorum requirement for transaction of
business at the meeting is the presence in person or by proxy of a majority of
the outstanding Shares. Shares represented by proxies that reflect abstentions
and Shares referred to as "broker non-votes" (I.E., Shares held by brokers or
nominees as to which instructions have not been received from the beneficial
owners or persons entitled to vote that the broker or nominee does not have
discretionary power to vote on a particular matter) will be treated as shares
that are present and entitled to vote for purposes of determining the presence
of a quorum.
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The Company's Annual Report to Stockholders, including financial
statements, for the year ended December 31, 1996, has been furnished prior to
the proxy materials being mailed to all stockholders. The Annual Report is not a
part of this proxy solicitation material.
ELECTION OF FOUR DIRECTORS AND DIRECTOR COMPENSATION
Unless contrary instructions are set forth in the proxy, it is intended
that the persons named in the proxy will vote all Shares represented by the
proxy for the election of Messrs. Bourne, Bumstead, Caspary and McCutcheon as
Class III directors. Messrs. Bourne, Bumstead, Caspary and McCutcheon are
presently members of the Board of Directors of the Company.
The Company's Restated Articles of Incorporation currently provide for the
classification of the Board of Directors into three classes having staggered
terms of three years each. The four directors elected at the annual meeting will
each serve for a term of three years ending in 2000. The Board of Directors is
proposing below under "Approval of Amendment to the Company's Restated Articles
of Incorporation" that the stockholders approve phasing out the classified
Board. If this proposal is approved, the four Class III directors elected at the
meeting will serve instead for a one-year term ending in 1998. Should any
nominee become unavailable for election, the Board of Directors of the Company
may designate another nominee, in which case the persons acting under duly
executed proxies will vote for the election of the replacement nominee.
Management is not aware of any circumstances likely to render any nominee
unavailable. Election of directors will be by a plurality of the votes cast.
Broker non-votes and abstentions will have no effect on the outcome of the
election.
The present terms of office of the eight directors named below whose terms
will continue after the meeting expire in either 1998 for Class I directors or
1999 for Class II directors, as indicated.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF THE FOUR
NOMINEES.
NOMINEES -- The following sets forth information concerning the four
nominees for election as Class III directors at the meeting, including
information as to each nominee's age as of March 14, 1997, position with the
Company and business experience during the past five years.
NAME, AGE AND BUSINESS EXPERIENCE
DOUGLAS J. BOURNE was Chairman of the Board and Chief
Executive Officer of the Company until his retirement in
April 1990. Mr. Bourne serves as Chairman of the Company's
[PHOTO OMITTED] Executive Committee and is a member of the Company's
Environmental Affairs and Ethics Committee. Mr. Bourne has
been a director of the Company since its formation. He is
74 years of age and is also a director of Potash
Corporation of Saskatchewan, Inc. (mining and processing
of potash and manufacture of fertilizers).
3
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DAVID L. BUMSTEAD joined Noranda Inc. (an integrated
natural resources company) in 1963 and assumed his current
position as Executive Vice President in 1995. Mr. Bumstead
serves as a director of Falconbridge Limited (mining of [PHOTO OMITTED]
nickel). Mr. Bumstead became a director in July 1996 by
being designated by Hemlo Gold in connection with the
combination and is a member of the Company's Finance and
Audit Committee. He is 55 years old.
DELO H. CASPARY has been engaged for more than five years
in managing his personal investments. He became a director
of the Company in 1985 and currently serves on the
Company's Environmental Affairs and Ethics Committee. Mr. [PHOTO OMITTED]
Caspary is also a director of Norwest Victoria Bank. He is
71 years old.
JAMES W. MCCUTCHEON, Q.C. is Counsel in Toronto to the law
firm of McCarthy Tetrault. Mr. McCutcheon became a
director in July 1996 by being designated by Hemlo Gold in
connection with the combination. He serves as Chairman of [PHOTO OMITTED]
the Company's Finance and Audit Committee. He is 60 years
old.
DIRECTORS WITH TERMS EXPIRING IN 1998 AND 1999 -- The following sets forth
information concerning the eight directors of the Company whose present terms
will continue until 1998 for Class I directors or 1999 for Class II directors,
including information as to each director's age as of March 14, 1997, position
with the Company and business experience during the past five years.
4
<PAGE>
NAME, AGE AND BUSINESS EXPERIENCE
ALEX G. BALOGH served as Chairman of Hemlo Gold Mines Inc.
from 1991 until its combination with the Company. He has
served as Deputy Chairman of the Board of Noranda Inc.
[PHOTO OMITTED] since October 1994 and has also served as President and
Chief Executive Officer of Noranda Minerals Inc. (an
integrated miner of base metals) since January 1991. Mr.
Balogh also serves as Chairman of Falconbridge Limited and
as a director of Strong Equipment Corporation. Mr. Balogh
became a director in July 1996 by being designated by
Hemlo Gold in connection with the combination, and his
present term expires in 1999 (Class II). Mr. Balogh serves
as Chairman of the Company's Environmental Affairs and
Ethics Committee. He is 64 years old.
IAN D. BAYER became President and Co-Chief Executive
Officer of the Company in July 1996 following the
combination with Hemlo Gold Mines Inc. and was named
[PHOTO OMITTED] President and Chief Executive Officer in February 1997. He
serves on the Executive Committee. Prior to joining the
Company, Mr. Bayer had served as Director and President
and Chief Executive Officer of Hemlo Gold since July 1991.
Mr. Bayer became a director of the Company in July 1996 by
being designated by Hemlo Gold in connection with the
combination, and his present term expires in 1999 (Class
II). He is 57 years old.
CHARLES E. CHILDERS has served as Chairman of the Board,
President and Chief Executive Officer of Potash
Corporation of Saskatchewan, Inc. since 1990. From 1987
[PHOTO OMITTED] through 1990, Mr. Childers served as President and Chief
Executive Officer of that corporation. He became a
director of the Company in 1993, and his present term
expires in 1999 (Class II). Mr. Childers serves on the
Company's Compensation and Stock Option Committee. He is
64 years old.
KARL E. ELERS is Chairman of the Board of the Company and
is a member of the Company's Executive Committee. Mr.
Elers retired from his executive officer position of
[PHOTO OMITTED] Chairman of the Board and Co-Chief Executive Officer at
the end of February 1997, a position he assumed in July
1996. From April 1990 through July 1996, he was Chairman
of the Board and Chief Executive Officer of the Company;
and from April 1988 until April 1990, he was President and
Chief Operating Officer of the Company. Mr. Elers became a
director in 1987, and his present term expires in 1999
(Class II). He is 58 years old.
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DAVID W. KERR has served as Chairman of the Board and
Chief Executive Officer of Noranda Inc. since April 1995.
From August 1990 until April 1995, he was Chief Executive
Officer of Noranda. Mr. Kerr became a director of the
Company in July 1996 by being designated by Hemlo Gold in [PHOTO OMITTED]
connection with the combination, and his present term
expires in 1998 (Class I). Mr. Kerr serves on the
Company's Compensation and Stock Option Committee. Mr.
Kerr is also a director of Novcen Energy Resources Ltd. He
is 53 years old.
MARY MOGFORD is co-owner of Mogford Campbell Associates, a
business and financial consulting firm in Ontario. Ms.
Mogford became a director in July 1996 by being designated
by Hemlo Gold in connection with the combination, and her [PHOTO OMITTED]
present term expires in 1998 (Class I). Ms. Mogford serves
on the Company's Compensation and Stock Option Committee.
She is 52 years old.
TED H. PATE was President and Chief Operating Officer of
the Company until his retirement in April 1988. Mr. Pate
became a director of the Company in 1985, and his present
term expires in 1998 (Class I). Mr. Pate serves on the [PHOTO OMITTED]
Company's Finance and Audit Committee. He is 70 years of
age.
WILLIAM A. WISE has served as Chairman of the Board,
President and Chief Executive Officer of El Paso Energy
Corporation (an integrated energy company) since January
1994. From April 1989 through January 1990, Mr. Wise was [PHOTO OMITTED]
President and Chief Operating Officer of El Paso. He
became its Chief Executive Officer in January 1990. Mr.
Wise has been a director of the Company since 1994, and
his present term expires in 1998 (Class I). Mr. Wise
serves as Chairman of the Company's Compensation and Stock
Option Committee. He is 51 years old.
6
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DIRECTORS RESIGNING IN 1996 -- Jack R. Crosby, Rodney L. Gray and Kenneth
R. Werneburg, who had served as directors for 11, 3 and 6 years, respectively,
resigned from the Board of Directors in July 1996 in connection with the
Company's combination with Hemlo Gold and the designation of six new directors
to the Board by Hemlo Gold.
BOARD ORGANIZATION AND COMMITTEES -- The Company's Executive Committee is
composed of Messrs. Bourne (Chairman), Bayer and Elers. The Executive Committee
may exercise the powers of the Board of Directors at times when the Board is not
in session.
The Finance and Audit Committee of the Board is composed of Messrs.
McCutcheon (Chairman), Bumstead and Pate. The members of the Finance and Audit
Committee and the Compensation and Stock Option Committee of the Board of
Directors are not employees of the Company. The Finance and Audit Committee
provides oversight of the Company's performance in fulfilling its responsibility
to maintain an organization which is capable of conducting the financial
business of the Company and to maintain an internal control environment
necessary to conduct and properly report the Company's business. The Finance and
Audit Committee also recommends the appointment of independent public
accountants to conduct audits of the Company's financial statements, reviews
with the independent accountants the plan and results of the auditing engagement
and evaluates the independence of the accountants.
The Compensation and Stock Option Committee is composed of Messrs. Wise
(Chairman), Childers, Kerr and Mogford. The Compensation and Stock Option
Committee approves, or in some cases recommends to the Board, remuneration
arrangements and compensation plans involving the Company's directors, executive
officers and other key employees.
The Environmental Affairs and Ethics Committee of the Board of Directors of
the Company is composed of Messrs. Balogh (Chairman), Bourne and Caspary. The
Environmental Affairs and Ethics Committee oversees the Company's Code of
Ethical Business Conduct and environmental and legal compliance programs.
The Board of Directors does not have a standing nominating committee or
other committee performing a similar function. Nominations are determined by the
entire Board of Directors.
During 1996, the Board of Directors held seven meetings. During 1996, the
Finance and Audit Committee and the Compensation and Stock Option Committee each
met on three occasions, and the Environmental Affairs and Ethics Committee met
on one occasion. All directors attended at least 75 percent of the aggregate
number of meetings of the Board of Directors and the committees on which they
served.
COMPENSATION OF DIRECTORS -- Each director, other than those who are
regularly employed officers of the Company or its subsidiaries, receives a
director's fee of $15,000 per annum and an additional fee of $750 per day for
attendance at meetings of the Board or its committees. Directors are also
reimbursed for their travel and other expenses involved in attendance at Board
and committee meetings. Pursuant to the terms of the Company's 1988 Deferred
Income Stock Option Plan (the "DISOP"), a director may elect to receive a
non-qualified stock option in lieu of up to 100 percent of the director's fee
and per diem fees for attending Board or committee meetings. To participate, the
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director selects an option strike price at a discount from current market value
of the Common Stock and receives options on a number of shares such that the
aggregate discount is equal to the amount of fees forgone. Messrs. Pate and Wise
participated in the DISOP in 1996, acquiring options to purchase 15,000 shares
and 20,250 shares of Common Stock, respectively, at an exercise price of $9.85
per share. Under the Company's Nonqualified Stock Option Plan for Outside
Directors, individuals who become nonemployee directors of the Company are
automatically granted an initial option to purchase 5,000 shares of Common Stock
on the date they become nonemployee directors. On the date of the annual meeting
of each year following the grant of the initial option, each incumbent
nonemployee director is granted an additional option to purchase 1,500 shares of
Common Stock. Each option granted pursuant to the Nonqualified Stock Option Plan
for Outside Directors has an exercise price per share equal to the market value
of a share of Common Stock on the date the option is granted, and such options
are not exercisable until one year from the date of grant. Directors who are not
also executive officers are not eligible to participate in any other benefit
plan of the Company.
The Chairman of the Board, Mr. Elers, retired as an executive officer of
the Company on February 28, 1997 and entered into a Consulting Agreement with
the Company. Pursuant to the agreement, Mr. Elers will consult with and advise
the officers, directors and other representatives of the Company through the end
of 1997, subject to such term being shortened or extended by mutual agreement.
The Company will pay Mr. Elers $20,000 per month for his consulting services and
will also reimburse expenses (including meals, lodging, transportation,
automobile mileage, telephone and other out-of-pocket expenses) reasonably
incurred in the performance of such services. Although he is eligible to receive
the annual director's fee and per diem fees paid to non-employee directors, Mr.
Elers has waived his right to such fees through the end of 1997.
Shortly after his retirement, Mr. Elers was also elected as Chairman of the
Board of Directors of Crown Butte Resources Ltd., a publicly-traded Canadian
corporation of whose capital stock the Company owns 60 percent. As a director of
Crown Butte, Mr. Elers receives a director's fee of $6,000 per annum.
SECURITY OWNERSHIP -- Set forth in the table below is the total number of
Shares of Common Stock and Exchangeable Shares beneficially owned as of March
14, 1997 by each of the Company's directors and nominees, each of the executive
officers named in the Summary Compensation Table below (including those who have
retired from the Company), holders of more than 5 percent of the Shares and all
directors and executive officers as a group (including retirees). Except as
otherwise indicated, all such Shares are owned directly, and the indicated owner
has sole voting and investment power with respect to such Shares.
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NUMBER OF PERCENTAGE OF
NAME SHARES+ TOTAL SHARES+
- ------------------------------------- ---------- --------------
Ian Atkinson......................... 48,846(1) *
Alex G. Balogh....................... 65,247,526(2)(3) 28.4%
Ian D. Bayer......................... 129,598(4) *
Douglas J. Bourne.................... 146,040(5) *
David L. Bumstead.................... 65,247,526(2)(3) 28.4%
Delo H. Caspary...................... 52,500(2) *
Charles E. Childers.................. 13,500(6) *
Karl E. Elers........................ 474,077(2)(7) *
David W. Kerr........................ 65,249,006(3)(8) 28.4%
Joseph L. Mazur...................... 201,758(9) *
James W. McCutcheon.................. 5,000(2) *
Mary Mogford......................... 5,000(2) *
R. Dennis O'Connell.................. 57,855(10) *
Robert J. Quinn...................... 133,304(11) *
Ted H. Pate.......................... 79,646(12) *
Fred B. Reisbick..................... 93,688(13) *
Kenneth R. Werneburg................. 320,713(14) *
William A. Wise...................... 47,750(2) *
All directors and executive officers
as a group (26 persons)............ 67,279,234(15) 29.3%
Noranda, Inc......................... 65,242,526(16) 28.4%
- ------------
(+) Includes both Common Stock and Exchangeable Shares (which, through a voting
trust, vote with the Common Stock and are convertible into Common Stock on
a one-for-one basis).
* Less than 1%.
(1) Includes 2,226 shares of Exchangeable Shares held indirectly through a
savings plan and 46,620 shares of Common Stock or Exchangeable Shares
issuable upon the exercise of stock options acquired under a Hemlo Gold
option plan.
(2) Direct holdings consist of shares of Common Stock issuable upon the
exercise of stock options acquired under the Company's option plans.
(3) Includes 65,242,526 shares of Exchangeable Shares (or approximately 28% of
the Shares) beneficially owned by Noranda Inc. Although the director is an
executive officer, director or both of Noranda and may be deemed to be a
beneficial owner of these Shares, the director disclaims such beneficial
ownership.
(4) Includes 3,351 shares of Exchangeable Shares held indirectly through a
savings plan and 125,800 shares of Common Stock or Exchangeable Shares
issuable upon the exercise of stock options acquired under a Hemlo Gold
option plan.
(5) Includes 750 shares of Common Stock jointly owned by Mr. Bourne and his
wife, and 12,500 shares of Common Stock issuable upon the exercise of stock
options acquired under the Company's option plans.
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(6) Includes 11,000 shares of Common Stock issuable upon the exercise of stock
options acquired under the Company's option plans.
(7) Includes 388,111 shares of Common Stock issuable upon the exercise of stock
options acquired under the Company's option plans.
(8) Includes 5,000 shares of Common Stock issuable upon the exercise of stock
options acquired under the Company's option plans.
(9) Includes 161,922 shares of Common Stock issuable upon the exercise of stock
options acquired under the Company's option plans.
(10) Includes 47,900 shares of Common Stock issuable upon the exercise of stock
options acquired under the Company's option plans.
(11) Includes 126,327 shares of Common Stock issuable upon the exercise of stock
options acquired under the Company's option plans.
(12) Includes 73,500 shares of Common Stock issuable upon the exercise of stock
options acquired under the Company's option plans.
(13) Includes 84,272 shares of Common Stock issuable upon the exercise of stock
options acquired under the Company's option plans.
(14) Includes 278,300 shares of Common Stock issuable upon the exercise of stock
options acquired under the Company's option plans.
(15) Includes 4,688 shares of Exchangeable Shares held indirectly through a
savings plan, 1,325,316 shares of Common Stock issuable upon the exercise
of stock options acquired under the Company's option plans, 313,760 shares
of Common Stock or Exchangeable Shares issuable upon the exercise of stock
options acquired under a former Hemlo Gold option plan and 65,242,526
Exchangeable Shares beneficially owned by Noranda. If the Shares owned by
Noranda, as to which beneficial ownership is disclaimed, were excluded,
then the total number of Shares owned by the group would be 2,036,708 (or
0.9% of the Shares).
(16) Consists of Exchangeable Shares. The address of the holder is BCE Place,
181 Bay Street, Suite 4100, Toronto, Ontario M5J 2T3. These shares are
owned directly by Kerr Addison Mines Limited, which has filed a Schedule
13D with several other reporting persons: Noranda Inc. (its direct and
indirect 100 percent parent), Brenda Mines Ltd., Brascan Limited, Hees
International Bancorp Inc., The Edper Group Limited and Partners Limited.
All of these entities have the address shown above, except for Kerr Addison
Mines and Brenda Mines, whose address is One Adelaide Street East, Suite
2700, Toronto, Ontario, M5C 2Z6. The Exchangeable Shares vote through the
Voting Agreement (whose Trustee is R-M Trust Company, 393 University Ave.,
5th Floor, Toronto, Ontario M5G 2M7) covering the one share of Special
Voting Stock, as described in the introduction to this Proxy Statement.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE -- The table set forth below contains
information regarding compensation for services in all capacities to the Company
for 1996, 1995 and 1994 of (i) the two individuals who served as the chief
executive officer of the Company during 1996, (ii) the other four most highly
compensated executive officers of the Company at December 31, 1996, and (iii)
two additional individuals for whom disclosure would have been provided but for
the fact that they were not serving as executive officers at year-end. The
format and the information presented are as prescribed in rules of the
Securities and Exchange Commission.
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SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
-----------------------------------
AWARDS PAYOUTS
ANNUAL COMPENSATION ----------------------- ---------
---------------------------------- RESTRICTED SECURITIES LTIP ALL OTHER
NAME AND PRINCIPAL OTHER ANNUAL STOCK UNDERLYING PAYOUTS COMPENSATION
POSITION YEAR SALARY BONUS COMPENSATION AWARDS OPTIONS (1) (2)
- ------------------------------------- ---- --------- --------- ------------ ---------- ---------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Karl E. Elers(3) 1996 $ 365,031 $ 111,649 $-- -- 315,000 $ 471,436 $ 51,213
Chairman of the 1995 351,575 167,064 -- -- 57,200 579,962 82,823
Board and Co-Chief 1994 332,858 180,030 -- -- 53,700 -- 21,741
Executive Officer
Ian D. Bayer(4) 1996 253,835 126,620 -- -- 315,000 -- 62,740
President and Co-Chief 1995 194,210 46,610 -- -- 74,000 -- --
Executive Officer 1994 157,031 45,048 1,373 -- 44,400 -- --
Ian Atkinson(4) 1996 146,618 48,573 -- -- 152,000 -- 33,605
Senior Vice President -- 1995 95,273 23,400 5,178 -- 25,900 -- --
Exploration 1994 85,653 29,400 5,089 -- -- -- 67,723
R. Dennis O'Connell(5) 1996 200,819 50,055 -- -- 152,000 188,574 23,233
Executive Vice 1995 175,111 66,583 -- -- 24,500 232,552 21,463
President -- Finance and 1994 165,401 72,012 -- -- 23,400 -- 12,475
Chief Financial Officer
Robert J. Quinn(5) 1996 161,122 39,449 -- -- 99,000 167,892 18,359
Vice President, General 1995 154,041 58,557 -- -- 21,800 207,028 9,332
Counsel and Secretary 1994 147,259 66,114 -- -- 20,800 -- 6,192
Fred B. Reisbick(5) 1996 138,008 33,927 -- -- 99,000 132,045 18,103
Vice President -- 1995 128,456 48,843 -- -- 18,000 62,392 6,083
Exploration 1994 118,218 48,913 -- -- 16,400 -- 4,908
Kenneth R. Werneburg(5) 1996 301,989 33,753 -- -- -- 375,629 1,272,301
Former President and 1995 280,126 133,112 -- -- 45,600 462,268 54,832
Chief Operating Officer 1994 256,212 143,443 -- -- 42,800 -- 17,323
Joseph L. Mazur(5) 1996 168,554 15,844 -- -- -- 178,841 703,111
Former Vice President -- 1995 164,366 62,484 -- -- 23,200 219,790 40,679
Administration and 1994 156,863 68,295 -- -- 22,600 -- 12,308
Communications
</TABLE>
- ------------
(1) Amounts represent the cash and market value of Common Stock distributed in
respect of performance units granted under the Company's 1988 Long-Term
Performance Unit Plan and 1994 Long-Term Incentive Plan for the three-year
performance periods ended June 30, 1995 (1995 figures) and June 30, 1998
(1996 figures). The 1995 payments were in the form of cash and stock and
were paid half in 1995 and half in 1996. The 1996 payments were the result
of accelerated payments under change-in-control provisions. See
" -- Change-in-Control Arrangements."
(2) The amounts shown for 1996 consist of (a) the Company's contributions
(vested and unvested) under the Company's Savings Plan and a related
contribution equalization plan of $2,254 and $34,088 for Mr. Elers; $2,383
and $0 for Mr. Bayer; $4,500 and $11,699 for Mr. O'Connell; $4,137 and
$9,371 for Mr. Quinn; $4,500 and $5,540 for Mr. Reisbick; $4,500 and $24,711
for Mr. Werneburg; and $4,500 and $9,790 for Mr. Mazur; (b) the benefit to
the executive officer of the premiums paid by the Company during 1996 under
the Company's split-dollar life insurance program of $13,871 for Mr. Elers,
$16,979 for Mr. Bayer, $6,410 for Mr. Atkinson, $6,034 for Mr. O'Connell,
$3,861 for Mr. Quinn, $7,063 for Mr. Reisbick, $10,642 for Mr. Werneburg,
and $6,955 for Mr. Mazur; (c) a relocation allowance of $43,379 for Mr.
Atkinson; (d) payments of $1,000 to each of Messrs. Elers, O'Connell, Quinn
and Reisbeck in connection with a confirmation of the original intent of the
change-in-control provisions in their severance agreements and
11
<PAGE>
(e) severance payments of $1,232,448 to Mr. Werneburg and $681,866 to Mr.
Mazur. Whether Mr. Werneburg was entitled to receive the $1,232,488 paid to
him under his severance agreement and included under this column, or any
other compensation under his severance agreement, is currently the subject
of litigation between the Company and Mr. Werneburg. Mr. Werneburg claims
that he was entitled to receive the $1,232,488 that the Company has already
paid as well as an additional payment of approximately $690,000 that the
Company has not made. The Company disputes Mr. Werneburg's claims.
(3) Mr. Elers resigned his executive officer positions as Chairman of the Board
and Co-Chief Executive Officer and retired from the Company effective
February 28, 1997. He continues to serve the Company as the Chairman of the
Board of Directors.
(4) Dollar amounts for 1996 consist of a combination of U.S. and Canadian dollar
amounts. The Canadian dollar components have been converted to the U.S.
equivalent using the exchange rate on December 31, 1996 of US$1.00 =
C$1.3706. Dollar amounts for 1995 and 1994 are represented in U.S. dollars
using the exchange rates on December 31, 1995 and December 31, 1994 of
US$1.00 = C$1.3645 and US$1.00 = C$1.4010, respectively. Securities
Underlying Options include options awarded under a former Hemlo Gold stock
option plan. These figures have been converted based on a 1.48 exchange
ratio as if the options had been converted to Company options at the time of
grant.
(5) Messrs. O'Connell, Quinn and Reisbick resigned from the Company in the first
quarter of 1997. Messrs. Werneburg and Mazur resigned from the Company in
1996.
12
<PAGE>
OPTION GRANTS TABLE -- The following table shows, as to the executive
officers named in the Summary Compensation Table, information regarding stock
options granted pursuant to the Company's 1994 Long-Term Incentive Plan during
1996. All of such options have an exercise price at least equal to the market
price on the date of grant. Messrs. Werneburg and Mazur were not granted any
options in 1996.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------------
PERCENT OF
NUMBER OF TOTAL
SECURITIES OPTIONS GRANT DATE
UNDERLYING GRANTED TO EXERCISE PRESENT
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION VALUE
NAME GRANTED(1) 1996 SHARE DATE (2)
- ------------------------------------- ----------- ------------ --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Karl E. Elers........................ 79,000 7.98% $ 8.00 9/19/06 $ 362,057
236,000 15.02 10.42 9/19/06 956,272
Ian D. Bayer......................... 79,000 7.98 8.00 9/19/06 362,057
236,000 15.02 10.42 9/19/06 956,272
37,000 25.77 11.61(3) 2/8/01 159,951(3)
Ian Atkinson......................... 43,000 4.34 8.00 9/19/06 197,069
109,000 6.94 10.42 9/19/06 441,668
14,800 10.31 11.61(3) 2/8/01 63,990(3)
R. Dennis O'Connell.................. 43,000 4.34 8.00 9/19/06 197,069
109,000 6.94 10.42 9/19/06 441,668
Robert J. Quinn...................... 33,000 3.33 8.00 9/19/06 151,239
66,000 4.24 10.42 9/19/06 267,432
Fred B. Reisbick..................... 33,000 3.33 8.00 9/19/06 151,239
66,000 4.24 10.42 9/19/06 401,148
</TABLE>
- ------------
(1) On September 19, 1996, officers and certain key employees received options
to purchase a specified number of shares at $8.00 (the closing price of the
Common Stock on September 19, 1996) and a specified number of shares at
$10.42 (the average closing sales price for the three trading days preceding
March 11, 1996). The $8.00 options vest on September 19, 1997. The $10.42
options vest on September 19, 2003, except that vesting will be accelerated
in the case of the following: (1) if the closing sales price of the Common
Stock reaches $15.625 for twenty consecutive business days, the options will
become 50% exercisable, and (2) if the closing sales price of the Common
Stock reaches $20.8334 for twenty consecutive business days, the options
will become 100% exercisable. As a result of the resignations of Messrs.
O'Connell and Quinn, under the terms of their stock option agreements, the
options will expire 90 days from the dates Mr. O'Connell resigned (January
31, 1997) and Mr. Quinn resigned (February 7, 1997).
(2) Based on the Black-Scholes option pricing model adapted for use in valuing
executive stock options. The actual value, if any, an executive may realize
will depend on the excess of the stock price over the exercise price on the
date the option is exercised. There is no assurance the value realized by an
executive will be at or near the value estimated by the Black-Scholes model.
The assumptions used under that model include a volatility of 36.8 percent
based on one-year historical volatility of the Common Stock prior to the
grant date, a risk-free rate of return of 7.0 percent based on the ten-year
zero coupon treasury bond yield at the time of grant, a dividend
13
<PAGE>
yield of 0.6 percent based on the current dividend rate and an option term
equal to the full ten-year stated option term. The estimated grant date
value does not reflect any discount on account of vesting or forfeiture
provisions or prohibitions on transfer.
(3) These options were granted for shares of Hemlo Gold and converted into
options for Common Stock or Exchangeable Shares in connection with the
combination. The exercise prices are shown in Canadian dollars because no
conversion to U.S. dollars is made until exercise.
AGGREGATE OPTION EXERCISES AND YEAR-END VALUE TABLE -- The table set forth
below contains information with respect to (i) the unexercised options to
purchase Common Stock or in some cases Exchangeable Shares granted in 1996 and
prior years under the Company's 1994 Long-Term Incentive Plan, 1985 Stock Option
Plan, 1988 Deferred Income Stock Option Plan and a Hemlo Gold stock option plan
to the executive officers named in the Summary Compensation Table and held by
them at December 31, 1996 and (ii) the aggregate number of shares acquired by
such executive officers upon the exercise during 1996 of options to purchase
Common Stock.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS HELD AT IN-THE-MONEY OPTIONS AT
ACQUIRED DECEMBER 31, 1996 DECEMBER 31, 1996(1)
ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Karl E. Elers........................ 0 $ 0 388,111 315,000 $ 16,000 $ 0
Ian D. Bayer......................... 0 0 125,800 315,000 54,997 0
Ian Atkinson......................... 0 0 46,620 152,000 46,851 0
R. Dennis O'Connell.................. 15,000 73,125 106,300 152,000 0 0
Robert J. Quinn...................... 28,133 98,589 158,594 99,000 0 0
Fred B. Reisbick..................... 0 0 84,272 99,000 1,875 0
Kenneth R. Werneburg................. 0 0 278,300 0 14,500 0
Joseph L. Mazur...................... 16,200 41,229 161,922 0 3,750 0
</TABLE>
- ------------
(1) Based on the closing price of the Common Stock on the New York Stock
Exchange Composite Tape on December 31, 1996 ($6.875).
RETIREMENT PLAN AND SUPPLEMENTAL AGREEMENTS -- The Company maintains a
non-contributory tax-qualified retirement plan generally available to U.S.
salaried employees (the "Retirement Plan"). The Retirement Plan is a defined
benefit plan under which employer contributions are actuarially determined each
year and is administered by an Administrative Committee appointed by the Board
of Directors. The amount of an employee's retirement benefit is based on final
average compensation (as defined below) and is computed as follows: 1.1 percent
of final average compensation for each year of service, plus 0.6 percent of
final average compensation in excess of $10,000 per year for each year of
service up to a maximum of 35 years.
14
<PAGE>
The following table shows the estimated annual retirement benefits under
the Retirement Plan under the formula described above for eligible employees
(including officers) who retire at age 65 (normal retirement age) and have the
average compensation levels and years of service specified in the table. The
amounts listed in the table are payable for the life of the employee and are not
subject to any reduction for Social Security benefits or other offsetting
amounts.
PROJECTED RETIREMENT PLAN BENEFIT
AT AGE 65 WITH SERVICE OF
FINAL AVERAGE ----------------------------------------------------------
COMPENSATION(1) 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- --------------- ---------- ---------- ---------- ---------- ----------
$ 150,000 $ 37,350 $ 49,800 $ 62,250 $ 74,700 $ 87,150
175,000 43,725 58,300 72,875 87,450 102,025
200,000 50,100 66,800 83,500 100,200 116,900
225,000 56,475 75,300 94,125 112,950 131,755(2)
250,000 62,850 83,800 104,750 125,700(2) 146,650(2)
300,000 75,600 100,800 126,000(2) 151,200(2) 176,400(2)
350,000 88,350 117,800 147,250(2) 176,700(2) 206,150(2)
400,000 101,100 134,800(2) 168,500(2) 202,200(2) 235,900(2)
450,000 113,850 151,800(2) 189,750(2) 227,700(2) 265,650(2)
500,000 126,600(2) 168,800(2) 211,000(2) 253,200(2) 295,400(2)
600,000 152,100(2) 202,800(2) 253,500(2) 304,200(2) 354,900(2)
700,000 177,600(2) 236,800(2) 296,000(2) 355,200(2) 414,400(2)
800,000 203,100(2) 270,800(2) 338,500(2) 406,200(2) 473,900(2)
900,000 228,600(2) 304,800(2) 381,000(2) 457,200(2) 533,400(2)
1,000,000 254,100(2) 338,800(2) 423,500(2) 508,200(2) 592,900(2)
- ------------
(1) Final average compensation means the average of covered remuneration for the
five consecutive years, out of the ten years immediately preceding
retirement, in which the participant's covered remuneration was the highest.
Covered compensation includes salary, bonus and most other compensation paid
or deferred in the year (including performance unit payments under the
Company's 1988 Long-Term Performance Unit Plan and 1994 Long-Term Incentive
Plan but excluding amounts realized from restricted stock and stock
options). However, Section 401(a)(17) of the Internal Revenue Code of 1986,
as amended (the "Code") limits the annual compensation taken into account
for an employee under the Retirement Plan. The compensation limit imposed by
Section 401(a)(17) is $160,000 for 1997.
(2) Annual benefits under the Retirement Plan are limited to $125,000 for 1997
by Section 415 of the Code.
The Company has established the Supplemental Executive Retirement Plan
("SERP") for all of the executive officers in the Summary Compensation Table.
For all current executive officers who have not resigned or retired, the SERP
provides the benefit the executive would have received under the qualified
Retirement Plan in the absence of Code limits, less the amount of the
participant's benefit under the qualified Retirement Plan.
15
<PAGE>
At December 31, 1996, Mr. Bayer had 30 years of credited service and Mr.
Atkinson had 18 years of credited service. The SERP benefit for Mr. Bayer and
Mr. Atkinson will be reduced by the benefit payable under BMC's supplemental
retirement plan, such that the sum of the two benefits equal the SERP benefit.
The other individuals named in the Summary Compensation Table will receive the
following annual benefits under the Retirement Plan and SERP, respectively: Mr.
Elers, $30,734 and $129,259; Mr. Reisbick, $52,890 and $29,959; Mr. Werneberg,
$19,687 and $74,083; and Mr. Mazur, $57,165 and $98,304. Mr. O'Connell and Mr.
Quinn will receive SERP benefits under the prior SERP formula which provides for
monthly payments for 15 years beginning at age 65. The annual Retirement Plan
and SERP benefits, respectively, of $13,686 and $68,814 for Mr. O'Connell and $0
and $115,000 for Mr. Quinn, will begin December 1, 2001 for Mr. O'Connell and
January 1, 2021 for Mr. Quinn.
In early 1995, the Company established a split-dollar life insurance
program covering certain executive officers including those named in the Summary
Compensation Table. This program provides for life insurance coverage with a
death benefit of $1,500,000 for each of Mr. Elers and Mr. Bayer, $1,250,000 for
Mr. Werneburg and $750,000 each for Messrs. Atkinson, O'Connell, Quinn, Reisbick
and Mazur, with the executive to pay the term insurance portion of the premium
and the Company to pay the balance for at least 10 years until the executive
reaches at least age 65. The Company retains the right to terminate premium
payments under any executive officer's policy prior to the end of the specified
period in case of termination of employment, or otherwise upon six months'
notice. Upon death or other termination as to any executive officer, the Company
will be refunded the aggregate amount of the premium payments made by it in
respect of that officer's policy. Pursuant to change-in-control provisions under
the split-dollar life insurance program, the Company will continue to make
premium payments for each of Messrs. Elers, O'Connell, Quinn, Reisbick,
Werneburg and Mazur until each reaches at least age 65.
EMPLOYMENT AGREEMENTS -- The Company has employment agreements with Mr.
Bayer and Mr. Atkinson under which the Company will pay the executive an amount
of severance equal to the amount he would have been entitled to under Ontario
law if before July 19, 1999 he is either terminated (other than for "cause")
or resigns due to "good reason."
CHANGE-IN-CONTROL ARRANGEMENTS -- The Company had severance agreements with
each of Messrs. Elers, O'Connell, Quinn, Reisbick, Werneburg and Mazur which
generally provided that, in the event employment terminated (under the terms set
forth below) as a result of a change-in-control of the Company, each such
executive officer would receive a cash payment equal to two times his annual
compensation. Messrs. Bayer and Atkinson, as former Hemlo Gold officers, were
not covered by these change-in-control severance agreements. The covered
officers, under the agreements, would receive the payment as a result of
involuntary termination within three years of the date of the change of control
or voluntary termination during a 120-day period commencing 120 days following
the date of the change of control. As a result of the termination of employment
of all such covered officers in 1996 and the first quarter of 1997 following the
combination with Hemlo Gold, the Company made payments under these agreements as
follows: $1,547,619 for Mr. Elers, $762,161 for Mr. O'Connell, $610,006 for Mr.
Quinn, $420,239 for Mr. Reisbick, $1,232,448 for Mr. Werneburg and $648,313 for
Mr. Mazur. For a description of litigation between the Company and Mr. Werneburg
concerning his
16
<PAGE>
severance agreement, see footnote 2 to the Summary Compensation Table. The
agreements also provided for continuation of group life, medical and dental
insurance benefits for a period of 30 months after termination on the same
contributory basis as such benefits are provided to active employees of the
Company. In addition, the 1994 Long-Term Incentive Plan contained provisions
whereby outstanding performance units became immediately payable at the target
value of $1.00 per unit at the time of the change of control, resulting in
payments in July 1996 to the covered executive officers as set forth in the LTIP
payouts column in the Summary Compensation Table. Under the original intent of
the 1994 Long-Term Incentive Plan and the severance agreements, as confirmed by
Board resolutions in February 1997 and by an administrative interpretation
issued by the Compensation and Stock Option Committee in February 1997, such
LTIP payments are not considered part of annual compensation for purposes of
computing any change-in-control severance benefits under any severance
agreements with the Company's executive officers. Options granted to these
officers under the Company's 1985 Stock Option Plan and 1994 Long-Term Incentive
Plan also contained provisions for acceleration of vesting in the event of a
change of control. Because all such options were vested on July 19, 1996, the
date the Company and Hemlo Gold combined, no acceleration of vesting took place.
These agreements and plans also contained provisions for tax gross-up payments,
if applicable, designed to make the officers whole against any excise or other
tax above the rate ordinarily applicable that is occasioned by the
change-in-control payments, pursuant to the provisions of Section 280G and 4999
of the Internal Revenue Code or otherwise. No such tax gross-up payments were
made. In addition, after the change-in-control, the Company will be required to
continue making premium payments until the officer reaches age 65 under the
split-dollar life insurance program described above. Further, under the SERP,
such executive officers became fully vested and were credited with four
additional years of benefit accrual. For further information regarding
split-dollar and SERP benefits payable to covered officers as a result of the
change of control, see " -- Retirement Plan and Supplemental Agreements." The
definition of change-in-control in the foregoing agreements generally provided
that such a change occurs if (i) a person or group becomes the beneficial owner
of 30 percent or more of the Company's outstanding voting securities, (ii) a
tender offer, merger or other business combination or a contested election
results in a change in the composition of a majority of the Board of Directors,
(iii) a merger or consolidation results in less than 70 percent of the
outstanding voting securities of the surviving or resulting corporation being
owned by former shareholders of the Company (other than parties to the merger or
consolidation or their affiliates), (iv) a tender offer is consummated for 30
percent or more of the Company's outstanding voting securities or (v) the
Company transfers all or substantially all of its assets to another corporation
not a wholly-owned subsidiary of the Company.
Messrs. Bayer and Atkinson have agreements with the Company that provide
that each such executive officer would receive severance benefits substantially
similar to the benefits described above in the event of a future
change-in-control of the Company. The Company is currently performing a
comprehensive review of its change-in-control severance program and the
change-in-control provisions expected to be contained in other agreements, plans
and programs.
17
<PAGE>
COMPENSATION AND STOCK OPTION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committee of the Board of Directors of
the Company (the "Committee") has furnished the following report on the
Company's executive compensation program. The report describes the Committee's
compensation policies applicable to the Company's executive officers and
includes a discussion of the specific relationship of corporate performance to
executive compensation for 1996. The report also discusses the Committee's bases
for the Co-Chief Executive Officers' compensation for 1996 and corresponding
criteria for such compensation.
The Company combined with Hemlo Gold on July 19, 1996, pursuant to the
terms and provisions of a combination agreement entered into between the parties
on March 11, 1996 (the "Combination Agreement"). The effects of this
combination on the Company's executive compensation program in 1996 were
significant. Pursuant to the terms of the Combination Agreement, two Co-Chief
Executive Officers were appointed on July 19, 1996 -- Messrs. Elers (Chairman
and Co-Chief Executive Officer) and Bayer (President and Co-Chief Executive
Officer). Subsequent to Messrs. Elers and Bayer's appointments, Mr. Elers
resigned as Co-Chief Executive Officer effective February 28, 1997 and became
the Company's non-executive Chairman of the Board. On the same date, Mr. Bayer
was appointed President and Chief Executive Officer for the Company. A new slate
of other executive officers of the Company was also appointed on July 19, 1996
comprising selected officers from both the Company and Hemlo Gold. In addition,
the make-up of the Committee changed on July 19, 1996, at which time Mr. Jack R.
Crosby resigned from the Board of Directors and the Committee, and Mr. David W.
Kerr and Ms. Mary Mogford were appointed to the Board of Directors and to the
Committee. Following closing of the combination, Mr. William A. Wise, Chairman
of the Committee, and Mr. Charles E. Childers remained on the Board of Directors
and on the Committee. Both for practical reasons and pursuant to the terms of
the Combination Agreement, significant executive compensation decisions were
postponed until the Committee's September 19, 1996 meeting, at which time the
newly-constituted Committee made base salary adjustments as well as approved
stock option grants under the Company's 1994 Long-Term Incentive Plan.
I. COMPENSATION POLICIES
The objectives of the Company's executive compensation policies are to
provide its executives with a competitive total compensation package and to link
compensation to the achievement of the long-term business objectives of the
newly-combined Company and the enhancement of stockholder value. The Committee
also considers subjective factors in its evaluation of the performance of the
Chief Executive Officer and senior executive officers, such as leadership,
strategic vision and organization development efforts that result in
strengthening efficiency, effectiveness and competitive advantage, which are
considered critical to the achievement of long-term strategic objectives and the
success of the Company.
The Committee's focus on long-term objectives in setting the parameters of
the Company's executive compensation program results from the long lead time
factors inherent in the strategic decisions of an international precious metals
company which produces primarily one commodity,
18
<PAGE>
gold. These long-term objectives include, among others, increasing reserves,
annual production, stock price, and total return to shareholders, while
maintaining low cash production costs.
In determining compensation policy for the newly-combined Company, the
Committee examined compensation policies of both the Company and Hemlo Gold. The
Committee focused on the fact that the combined Company was a U.S. publicly
traded company which was added to the Standard & Poors 500 Index as a result of
the combination. The headquarters of the combined Company remained in Houston,
Texas. It was noted that Messrs. Bayer and Atkinson relocated from Hemlo Gold's
headquarters in Toronto, Ontario to Houston. So, as a general proposition, the
Committee examined compensation policy in light of current executive
compensation practices for similarly-situated publicly traded companies in the
United States.
II. EXECUTIVE COMPENSATION COMPONENTS
The Company's executive compensation program is composed of fixed and
performance-based compensation. The fixed component is the executive officer's
base salary, and the performance-based component is comprised of productivity
bonuses, long-term performance awards and awards of restricted stock and stock
options.
BASE SALARY
The Committee determines the annual base salary of the Chief Executive
Officer and other senior executive officers based primarily on the basis of
competitive salary rates for peer companies. With regard to senior executive
officers' salaries other than the Chief Executive Officer, the Committee reviews
comparative data concerning peer companies prepared by compensation consultants
and, in making its determinations, takes into account the recommendations of the
Chief Executive Officer. With regard to the Chief Executive Officer's salary,
the Committee reviews similar survey information from compensation consultants
as to peer group executives in comparable positions, but does not receive a
recommendation from management. The comparative salary studies are performed
both on the basis of the peer companies included in the gold peer index used in
the five-year performance graph presented below and on the basis of companies
included in published industry surveys. Base salary levels are generally
targeted at the median level in relation to the peer group companies. Effective
in August 1996, the Committee approved a 3.2 percent increase in the base salary
of Mr. Elers and a 80.3 percent increase in the base salary of Mr. Bayer, and
increases ranging from 4.3 percent to 96.1 percent for other senior executive
officers. The significant percentage increases in the base salary of Mr. Bayer
and other former Hemlo Gold senior executive officers who were appointed as
executive officers of the combined Company resulted primarily from the disparity
of general compensation practices in Canada from those in the United States and
from the enhanced status of the combined Company as a result of the combination.
After giving effect to the 1996 salary increases, the Committee believes, based
on advice from compensation consultants, that the base salaries of the Co-Chief
Executive Officers and other senior executive officers were within the median
range in relation to the peer group companies. The Committee generally considers
and adjusts salary levels annually.
PRODUCTIVITY BONUS
Under the Company's Productivity Bonus Plan, cash bonuses may be provided
to employees, including executive officers. Target bonus amounts for the
executive officers vary and range from 50
19
<PAGE>
percent of base salary paid during a semi-annual performance period for the
Chief Executive Officer to 40 percent of base salary for the senior executive
officers. Based on advice from compensation consultants, the Company believes
these targeted amounts are generally at the median level in relation to annual
bonuses for the peer group companies referred to above. A bonus multiplier
calculation is made in which the target bonus amounts are multiplied by a factor
equal to the quotient obtained by dividing the Company's actual net cash flows
from operating activities during the bonus period by the target net cash flows
from operating activities based on the Company's currently approved budget. The
Committee has discretion to adjust items in the multiplier analysis which it
deems to be unusual or otherwise warrant special consideration in applying the
analysis to the determination of bonuses. The bonus amounts resulting from
multiplying the target bonus amounts by the quotient derived from the multiplier
analysis are subject to a maximum of twice the target bonus amounts. The
Committee has discretion whether or not to approve bonus payments, even if
called for by the multiplier analysis.
Based on the results of the Productivity Bonus Plan cash flow multiplier
analysis for the first half of 1996, the Committee determined to pay a bonus of
approximately 47 percent of the level targeted for the first half. Based on the
results of the analysis for the second half of 1996, the Committee determined to
pay a bonus of approximately 75 percent of the level targeted for the second
half of 1996. The aggregate 1996 bonuses for the Co-Chief Executive Officers and
other named officers are shown in the Bonus column of the Summary Compensation
Table. The Co-Chief Executive Officers' 1996 bonuses were determined by applying
the cash flow multiplier analysis to each of their targeted bonus amounts on the
same basis as the other officers. Because of the combination of the Company Plan
with Hemlo Gold on July 19, 1996, Messrs. Bayer and Atkinson were eligible to
receive a bonus under the Company's Executive Productivity Bonus Plan only for
the second half of 1996. In addition, Messrs. Bayer and Atkinson were
participants in Hemlo Gold's Annual Incentive Bonus Plan for 1996. Under the
Annual Incentive Plan, cash bonuses may be provided to employees, including
executive officers. The plan applied to executive, corporate and exploration
staff and senior positions at mine and development sites. The plan is designed
to encourage employees to strive for continuous improvement and innovation. An
annual incentive is provided in addition to base salary to give employees an
opportunity to earn an annual cash award based on the degree to which the
employee meets his or her individual performance objectives and overall
corporate performance for the year. The Annual Incentive Plan is designed to
reward employees based on the above factors over which they and their co-workers
have effective control. The size of the award depends primarily on individual
performance in relation to an employee's objectives for the year and team
performance in attaining corporate objectives. Target awards are established for
each position at a competitive level. All targets and objectives are set at the
beginning of each year. Additional bonuses or exploration bonuses may also be
earned. The Committee determined that the appropriate bonus amount to pay
Messrs. Bayer and Atkinson and other senior executive officers of the Company
who were former Hemlo Gold officers would be based on (i) 50 percent of what
such officers would have received under the Hemlo Gold Annual Incentive Bonus
Plan for all of 1996 plus (2) the bonus for second half of 1996 generally
payable to officers under the Company's Executive Productivity Bonus Plan. As a
result of this determination, the aggregate 1996 bonuses for Messrs. Bayer and
Atkinson under both
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the Company's Executive Productivity Bonus Plan and Hemlo Gold's Annual
Incentive Plan are shown in the Bonus column of the Summary Compensation Table.
LONG-TERM PERFORMANCE UNITS
Long-term performance units may be granted under the 1994 Long-Term
Incentive Plan in order to provide executive officers and key employees with
incentives to achieve long-term objectives of the Company. The terms of the
awards granted in 1994 provide for payment of a dollar value (not to exceed
$1.50 per unit) if the Company achieves specified long-term objectives during
the course of a three-year performance period. Payments, if any, are made
following the conclusion of the performance period.
Prior to the combination with Hemlo Gold, under the 1994 Long-Term
Incentive Plan and a predecessor plan, units have been granted every two years
(most recently in 1994), with the number of units granted to the Chief Executive
Officer and the senior executive officers being determined by formula. Each of
the then Chief Executive Officer and the then President has been granted a
number of units which is equal to the dollar amount of 62.5 percent of his
projected two-year salary. For senior executive officers, the number has been
based on 50 percent of their projected two-year salary. These percentages have
been evaluated by the Company's compensation consultants based on a competitive
analysis of manufacturing and services companies and the percentages have been
determined to be generally at the median level. This is a different group of
companies from that utilized for base salary and productivity bonus as a result
of limited data available for long-term incentive compensation plans of
companies in the latter group.
The Committee, in its sole discretion, selects performance measures
designed to provide the Chief Executive Officer and senior executive officers
incentives to achieve selected long-term objectives of the Company. These
measures take the form of thresholds and targets and may include, among others,
such factors as targeted increases in shareholders' equity, cash flow, return on
equity, return on assets, share price, reserve and production growth, and cost
of production. The Committee can also specify the achievement of a strategic
corporate goal as a performance threshold. The Committee can select different
performance measures for different performance periods and has discretion to
adjust performance measures in any year during a performance period if, in the
Committee's judgment, such performance measures have been affected by special
factors (including material changes in accounting policies or practices,
material acquisitions or disposition of property or other unusual items).
At the end of a performance period, the performance measures are used to
calculate a multiplier which, when multiplied by the number of performance units
awarded to a participant at the beginning of the period, determines the dollar
value of an award. The multiplier component is part of the plan design
implemented with the assistance of the Company's compensation consultants.
One-half of the dollar amount credited to the account of a participant is paid
to the participant as soon as practicable after the end of that performance
period, and the balance is paid one year later. Payments may be made in the form
of cash, shares of Common Stock or Exchangeable Shares or a combination of cash
and Shares, as determined by the Committee.
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<PAGE>
On June 30, 1995, a three-year performance period ended under the
predecessor of the current plan. The performance measure for the period,
originally established in 1992, was consolidated cash flow return on net capital
employed in relation to business plan targets. Based on this performance
measure, the Committee authorized a payout value of $1.418 per unit to be paid
50 percent in stock and 50 percent in cash in two annual installments. The
payout amounts for the performance period ending in 1995 are shown in the 1995
LTIP Payouts column of the Summary Compensation Table. Mr. Elers' payout amount
was determined on the same basis as the other participants. Messrs. Bayer and
Atkinson, as former Hemlo Gold executive officers, were not participants during
the three-year-performance period ended June 30, 1995, and therefore received no
payment thereunder.
As a result of the combination of the Company with Hemlo Gold in July 1996,
outstanding performance units granted in July 1994 under the 1994 Long-Term
Incentive Plan became immediately payable at the target value of $1.00 per unit
pursuant to certain change-in-control provisions. See "Change-In-Control
Arrangements" above.
In February 1997, the Committee, subject to receiving stockholder approval,
amended and restated the Company's 1994 Long-Term Incentive Plan. The Committee
approved granting units every three years instead of every two years. The
Committee also approved a single performance factor for the three-year
performance period. The new performance factor would involve comparing the
Company's total shareholder return against a group of its peers over the
performance period. The new performance criterion is further described under
"Approval of Amended and Restated 1994 Long-Term Incentive Plan." The new
performance period commenced January 1, 1997 and ends on December 31, 1999.
RESTRICTED STOCK AWARDS
The Committee periodically grants the Chief Executive Officer, senior
executive officers and other key employees restricted stock awards under the
1994 Long-Term Incentive Plan. Shares of restricted stock may not be sold,
assigned, transferred, pledged or otherwise encumbered or disposed of during a
restricted period. The Committee determines the length of the restricted period.
No grants of restricted stock were made to executive officers in 1996.
STOCK OPTION AWARDS
On September 19, 1996, the Committee authorized two sets of stock option
grants to the Co-Chief Executive Officers, senior executive officers and other
key employees under the 1994 Long-Term Incentive Plan. The first set of options
was priced at the fair market value on the date of grant, and the options will
vest on the first anniversary of the grant date. The second set of options was
performance based stock options which would vest in one-half increments only in
the event the Company's met certain performance criteria, but in no event later
than seven years. These performance-based options have a strike price equal to
the average closing sales price of the Company's common stock for the three
trading days prior to the announcement by the Company of its proposed
combination with Hemlo Gold. The performance-based pricing formula work as
follows: subject to a minimum six-month vesting period, the performance options
will become 50 percent exercisable if the Company's Common Stock reaches 150
percent of the strike price for 20 consecutive business days and 100 percent
exercisable if the Company's Common Stock reaches 200 percent of the strike
price
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<PAGE>
for 20 consecutive business days. The number of shares for the first set of
options was determined based on a target percentage of the executive's base
salary at the date of grant and an estimated future value of the option. The
target percentages were determined based on the same competitive analysis as
base salary and productivity bonus and, based on advice from compensation
consultants, were generally at the median level compared to the peer group
companies.
The number of performance-based stock options was developed relative to the
Company's annual long-term incentive opportunity in such a way as to represent a
significant one-time gain opportunity in the event certain stock price
performance levels are achieved.
III. POLICY WITH RESPECT TO THE $1 MILLION DEDUCTIBILITY LIMIT
Provisions of the Internal Revenue Code limit deductibility for federal
income tax purposes of compensation in excess of $1 million for certain
executive officers (those named in the Summary Compensation Table who are
executive officers on the last day of the applicable tax year). Exemptions from
the deductibility limit exist for certain performance-based compensation. Mr.
Elers' compensation in 1996 that exceeded $1 million was deductible under the
Internal Revenue Code provisions; however, a portion of Mr. Werneburg's
compensation was not. Mr. Werneburg's unusually high level of compensation in
1996 was primarily due to certain payments made to him in connection with the
change-in-control resulting from the Company's combination with Hemlo Gold and
his retirement from the Company. While the Company does not presently anticipate
that the payment of compensation in the next few years will be in excess of that
which is deductible (especially since stock option grants can be structured so
as to qualify for the performance-based exclusion from the deductibility limit),
the Committee has recommended to management that the performance criteria for
the granting of performance units under the Company's 1994 Long-Term Incentive
Plan beginning for grants in 1997 be structured so as to be exempt from the
deductibility limit under the provisions of the Internal Revenue Code. (See
"Amendment to the Company's 1994 Long-Term Incentive Plan.") Awards under the
Company's current Productivity Bonus Plan do not qualify for the
performance-based exclusion. The Committee intends to monitor the applicability
of the deductibility limit provisions on an ongoing basis.
IV. SUMMARY
The Committee believes that the Company's executive compensation program is
competitive with compensation programs of similarly situated companies and
provides the Company's Chief Executive Officer and senior executive officers
with the appropriate incentives to achieve the Company's long-term goals.
COMPENSATION AND STOCK OPTION COMMITTEE
William A. Wise (Chairman)
Charles E. Childers
David W. Kerr
Mary Mogford
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. McCutcheon is Counsel to the law firm of McCarthy Tetrault in Toronto,
Ontario. His law firm was retained by Hemlo Gold in connection with the
combination with the Company, and the firm continues to perform legal services
for BMC.
John A. Keyes, the Company's Senior Vice President -- Operations, received
an interest-free loan on his principal residence from Hemlo Gold in November
1995. The largest amount outstanding under the loan during 1996 was $113,819,
and as of March 14, 1997, $103,458 was outstanding.
Noranda Inc. beneficially owned approximately 44 percent of Hemlo Gold's
outstanding common stock prior to the consummation of the combination with the
Company in July 1996. As a result of the combination, Noranda became the
Company's largest stockholder. As of March 14, 1997, Noranda owned 65,242,526
Exchangeable Shares, or approximately 28.4 percent of the aggregate outstanding
Shares of Common Stock and Exchangeable Shares.
In connection with the combination, the Company agreed to provide Noranda
and Kerr Addison Mines Limited with registration rights under U.S. law and
secondary cooperation rights under Canadian law with respect to its Exchangeable
Shares and the Common Stock issuable in exchange therefor. These rights include
up to five "demand" and an unlimited number of "piggyback" registrations.
Noranda pays all of its underwriting discounts and commissions and fees of
separate legal counsel. The Company pays all other expenses for the first demand
registration and for any piggyback registrations that are not completed, with
Noranda paying its pro rata share of expenses in other cases.
Noranda processes certain of the ore from the Company's Silidor mine in
Quebec for which charges paid by the Company amounted to approximately $700,000
in 1996. Noranda provides the Company with certain technical, data processing
and research services for which charges paid by the Company amounted to
approximately $600,000 in 1996.
Pursuant to a Marketing Services Agreement, Noranda acted as sales agent
until April 1, 1996 in selling refined gold bullion, arranging hedging
transactions and generally assisting in other marketing services. The Company
paid Noranda fees of approximately $40,000 under this agreement in 1996.
The Company holds investments in affiliated companies of Noranda that at
December 31, 1996 were carried on the Company's books at their cost of $11.8
million. The Company received dividends on these investments in the aggregate
amount of $700,000 in 1996.
Until withdrawing in December 1996, the Company participated in a
short-term investment pool with Noranda and other affiliated companies of
Noranda. The pool was operated to provide participating companies with the
opportunity to invest or borrow funds on a short-term demand basis, with
interest and charges at market rates. Net interest received from the investment
pool amounted to $700,000 in 1996. The Company had no amounts on deposit with or
borrowings from the investment pool at December 31, 1996.
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
The line graph set forth below represents a comparison of the yearly
percentage change in the cumulative total stockowner return on the Common Stock
with (i) the cumulative total return of the S&P 500 Index, (ii) the Company's
former gold peer index (which includes Amax Gold Inc., Echo
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Bay Mines Ltd., Homestake Mining Company, Lac Minerals Ltd. (through December
31, 1993) and Pegasus Gold, Inc.) and (iii) a new gold peer index that the
Company began using in 1997. As a result of the combination with Hemlo Gold,
which significantly increased the size of the Company, the Company believes it
is now appropriate to compare its performance with that of a new peer group:
Barrick Gold Corp., Newmont Mining, Placer Dome Inc., Echo Bay Ltd., Santa Fe
Pacific Gold Corp. and Homestake Mining. The line graph is based on the
assumption that the value of the investment in Common Stock, the S&P 500 Index
and the gold peer indices was $100 on December 31, 1991, and that all dividends
were reinvested. The component companies in the peer group indices are weighted
according to their respective market capitalizations at the end of each year.
Lac Minerals Ltd. was dropped from the return calculation of the former peer
group as of January 1, 1994 as a result of its being acquired during 1994, and
the then market value attributable to it was assumed to be reinvested in the
other four companies in such index.
25
<PAGE>
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
BATTLE MOUNTAIN GOLD, S&P 500 INDEX, NEW GOLD PEER INDEX,
AND FORMER GOLD PEER INDEX
Assumes $100 Invested on December 31, 1991.
[LINEAR GRAPH PLOTTED FROM DATA IN TABLE BELOW]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
BMG.................................. $ 100 $ 66.12 $ 131.50 $ 143.54 $ 111.52 $ 90.66
S&P 500.............................. 100 107.60 118.40 120.00 165.00 202.70
New Peer Group....................... 100 91.17 164.17 145.47 151.60 141.24
Former Peer Group.................... 100 71.57 131.68 127.95 125.44 115.22
</TABLE>
APPROVAL OF AMENDMENT TO THE COMPANY'S RESTATED ARTICLES OF INCORPORATION
The Company's Restated Articles of Incorporation (the "Articles")
currently provide for the classification of the Board of Directors into three
classes having staggered terms of three years each. The Board believes that it
is in the best interests of the Company and its stockholders to phase out the
classified Board and to permit the stockholders to elect all directors annually.
The Board believes that this will give stockholders the opportunity to review
the performance of the entire Board of Directors on a year-to-year basis and to
make the directors more accountable to stockholders.
In order to phase out the Board's classification into three classes, the
Board has adopted a resolution proposing to amend the Company's Articles. The
proposed amendment provides that the Board will continue to be divided into
classes until the annual meeting of stockholders to be held in 1999. Directors
serving in Class III to be elected at the annual meeting covered by this Proxy
Statement (Messrs. Bourne, Bumstead, Caspary and McCutcheon), as well as those
serving in Class I,
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<PAGE>
last elected at the 1995 annual meeting or subsequently appointed to serve in
the class (Mr. Kerr, Ms. Mogford and Messrs. Pate and Wise), will serve for a
term ending on the annual meeting to be held in 1998. The Directors serving in
Class II, last elected at the 1996 annual meeting or subsequently appointed to
serve in the class (Messrs. Balogh, Bayer, Childers and Elers), will serve for a
term ending on the annual meeting to be held in 1999. Each director elected at
the 1998 and 1999 annual meetings will be elected for a one year term. Should
the Board, pursuant to its powers under the Articles, fill any vacancies that
occur on the Board (either as the result of an increase in the number of
directors or due to death, resignation, disqualification, removal or otherwise)
prior to the 1999 annual meeting, the director appointed to such vacancy shall
serve in the class and for the term to which he is appointed. Beginning with the
1999 annual meeting, the classification of the Board will cease.
The amendment to be considered by the stockholders in connection with this
proposal is attached to this Proxy Statement as Appendix A. Approval of this
proposal requires the affirmative vote of both (i) at least 80% of the voting
power of the voting stock of the Company (which means a favorable vote is
required of at least 183,740,541 Shares out of 229,695,676 total outstanding
Shares eligible to vote) and (ii) the holders of at least a majority of the
voting power of the voting stock of the Company exclusive of all the voting
stock of the Company beneficially owned, directly or indirectly, by any
corporation, person or entity that is the beneficial owner of 5% or more of the
outstanding shares of any class or series of voting stock of the Company, which
exclusion applies only to Noranda Inc. and the 65,242,526 votes it is entitled
to cast (which means a favorable vote is required of at least 82,216,576 Shares
out of the total of 164,433,150 Shares eligible to vote under these
requirements). Abstentions, broker non-votes, and Shares for which neither the
Trustee (with respect to Exchangeable Shares) nor the Company (with respect to
the Common Stock) receive voting instructions will have the same effect as a
vote against this proposal. If this proposal is not approved, then the directors
will continue to serve in the classes and for the terms described above under
"Election of Four Directors and Director Compensation." If this proposal is
approved, the Company intends to file the necessary documents with the Secretary
of State of the State of Nevada promptly after the annual meeting, and the
amendment to the Articles will become effective upon such filing.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF THIS
PROPOSAL.
APPROVAL OF AMENDED AND RESTATED 1994 LONG-TERM INCENTIVE PLAN
The Board of Directors through its Compensation and Stock Option Committee
(the "Committee" as used in this section) has adopted amendments to and a
restatement of the Company's Amended and Restated 1994 Long-Term Incentive Plan
(the "Original Plan") and is submitting such amended and restated plan (the
"Restated Plan") to the stockholders for approval. The Restated Plan is
attached to this Proxy Statement as Appendix B. Approval of this proposal
requires the affirmative vote of a majority of the Shares presented in person or
by proxy and casting votes on the proposal at the annual meeting. Broker
non-votes and abstentions will have no effect on the outcome of this proposal.
If approved by stockholders, the Restated Plan will be effective as of January
1, 1997.
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<PAGE>
The Original Plan was adopted in 1994 and approved by the Company's
stockholders at the annual meeting held in 1994. In connection with the
combination with Hemlo Gold in July 1996, the Company amended and restated the
Original Plan to increase the number of shares of Common Stock authorized for
issuance under the plan from 4,000,000 to 10,000,000 and to provide that stock
options and other stock awards thereunder could include awards relating to
Exchangeable Shares as well as Common Stock. The Company's stockholders approved
the amended and restated plan at the annual meeting held in 1996.
In order to retain the flexibility to design incentives for officers and
key employees to achieve long-term objectives of the Company, the Committee has
adopted the Restated Plan. The principal changes contained in the Restated Plan
are designed to (i) allow certain awards to continue to be deductible to the
Company by meeting the requirements of qualified performance-based compensation
under Section 162(m) of the Code, (ii) eliminate previously permitted tax
gross-up payments relating to excise taxes pursuant to the parachute tax
provisions of Section 4999 of the Code, (iii) allow the Committee to reduce
awards to avoid payments that are not deductible to the Company under Section
280G of the Code or are subject to an excise tax under Section 4999 of the Code
and (iv) clarify the creditor status of participants under the Restated Plan.
See the "Compensation and Stock Option Committee Report on Executive
Compensation" above for a description of awards that have been made previously
under the Original Plan, as well as awards made effective January 1, 1997 that
are conditioned on the approval of the Restated Plan by stockholders..
A summary of the proposed changes is set forth below, followed by a summary
description of the entire Restated Plan. Such summaries are qualified in their
entirety by reference to the full text of the Restated Plan attached as Appendix
B.
SUMMARY OF CHANGES
SECTION 162(M) -- The Original Plan was not specifically designed to meet
the requirements of Section 162(m). The section generally disallows a tax
deduction by the Company for certain compensation over $1 million paid, or
otherwise taxable, to executive officers named in the Summary Compensation Table
and employed by the Company at the end of the applicable year. However, Section
162(m) does not subject qualifying "performance-based compensation" to the
deduction limit if certain requirements are met.
The Original Plan met these requirements for the granting of stock options
or stock appreciation rights by requiring an exercise price no lower than the
grant date market price of the underlying stock and limiting the number of
shares of underlying stock that may be granted to any participant during any
three-year period to no more than 12.5 percent of the aggregate number of shares
of Common Stock and Exchangeable Shares reserved for issuance under the plan.
For a performance unit award to qualify as performance based-compensation,
additional provisions are now included in the Restated Plan to (i) provide that
such award is payable on the attainment of objective performance goals
established and administered by the Committee, (ii) provide that the Committee
must certify in writing prior to payment of the award that the performance goals
have been met and (iii) specify the class of
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<PAGE>
persons eligible, the maximum amount payable to any individual and the
performance criteria to be used by the Committee in establishing the specific
performance goals.
The Restated Plan reflects a change to provide that the class of eligible
employees is comprised of all officers, along with other employees who hold
positions of responsibility and whose performance, in the judgment of the
Committee, can have a significant effect on the success of the Company.
In addition to the maximum amounts described above that can be awarded to
any participant in the form of stock options and stock appreciation rights, the
Restated Plan reflects a change to provide that for the specified performance
unit award, the maximum amount payable to any individual for the first
performance period (as described below) is for the Chief Executive Officer,
$875,000; for any Senior Vice President, $500,000; for other officers, $355,000
and for other key employees, $205,000.
The Restated Plan has been amended to provide that the performance criteria
to be used by the Committee shall be based on comparisons of total shareholder
return where the total shareholder return on the Common Stock is ranked against
that of the common stock of the peer group companies named under "Stockholder
Return Performance Presentation" above. The total shareholder return is
measured over a January 1, 1997 - December 31, 1999 performance period and a
January 1, 2000 - December 31, 2002 performance period. In ranking total
shareholder return, $100 is assumed to be invested at the average stock price on
the principal national securities exchange in the U.S. for the first 10 days of
the performance period, all dividends are assumed to be reinvested, and ending
shares are valued at such average stock price for the last 10 days of the
performance period. If any of the peer group companies ceases to have common
stock traded on a national securities exchange in the U.S., the following
companies will replace such company in the order listed: TVX Gold, Amax Gold and
Pegasus Gold. If a replacement company is utilized, its total shareholder return
will be calculated for the full performance period, and that of the replaced
company will not be utilized for any portion of the period.
The Restated Plan also reflects a change to require that the committee of
the Board of Directors that administers the Restated Plan be composed solely of
two or more outside directors and be constituted to permit the Plan to comply
with both the requirements of Treasury Regulation 1.162-27(e)(3) (which
implements Section 162(m) of the Code and requires each member of the Committee
to be an "outside director" as defined in the regulation) and Rule 16b-3
(which requires each member to be a "Non-Employee Director" as defined
therein). The Company believes that the Compensation and Stock Option Committee
as currently constituted fulfills these requirements.
ELIMINATION OF TAX GROSS-UP PROVISIONS -- The Restated Plan reflects a
change to eliminate the Original Plan's provision that allowed awards to provide
for a tax gross-up payment to a participant if a change in control of the
Company results in the participant owing an excise tax or other tax above the
rate ordinarily applicable pursuant to the parachute tax provisions of Section
4999 of the Code or otherwise.
COMMITTEE DISCRETION TO REDUCE AWARDS -- The Restated Plan also reflects a
change to grant the Committee additional discretion to structure awards so that
they are reduced if necessary to eliminate characterization as "parachute
payments" that are subject to an excise tax under Section 4999 of the Code and
are not deductible to the Company under Section 280G of the Code.
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<PAGE>
Both of these changes relating to the tax effects of parachute payments are
intended to give the Committee the flexibility to design awards that are the
most tax-effective to the Company.
CLARIFICATION OF CREDITOR STATUS OF PARTICIPANTS -- In order to clarify the
creditor status of participants in the Restated Plan (which is an "unfunded
plan" under Section 451 of the Code), certain model language promulgated by the
IRS has been substituted for language with substantially the same meaning in the
Original Plan. Participants have the status of general unsecured creditors of
the Company and the Restated Plan constitutes a mere promise by the Company to
make payments in the future.
SUMMARY OF THE RESTATED PLAN
In addition to the provisions already summarized above, the Restated Plan
contains the following material provisions.
GENERAL -- The aggregate number of shares of Common Stock or Exchangeable
Shares that may be awarded pursuant to the Restated Plan will not exceed
10,000,000, of which not more than 2,500,000 shares of Common Stock or
Exchangeable Shares are available for awards other than stock options and stock
appreciation rights granted at an exercise or strike price not less than fair
market value on the date of grant. Shares of Common Stock and Exchangeable
Shares will count against the foregoing 10,000,000 and 2,500,000 share limits on
an equal basis. The number of shares of Common Stock or Exchangeable Shares that
may be awarded pursuant to the Restated Plan is subject to adjustment upon the
occurrence of certain events.
The Restated Plan is administered by the Committee, which has authority (i)
to select employees to receive awards, (ii) to determine the timing, form,
vesting, amount or value and term of awards, and the conditions and limitations,
if any, subject to which awards will be made and become payable and (iii) to
interpret the Restated Plan and adopt rules, regulations and guidelines for
carrying out the Restated Plan. The Committee may delegate certain of its duties
under the Restated Plan to senior officers of the Company.
The Restated Plan provides for the grant of any or all of the following
types of awards: stock options, stock appreciation rights and stock and cash
awards, which include performance unit awards discussed in more detail above.
Stock options may be incentive stock options that comply with Section 422 of the
Code.
Payment of awards may be made in cash, Common Stock, Exchangeable Shares or
combinations thereof, as determined by the Committee.
The Board of Directors may amend, modify, suspend or terminate the Restated
Plan for the purpose of meeting or addressing any changes in legal requirements
or for any other purpose permitted by law except that (i) no amendment or
alteration that would impair the rights under any award previously granted will
be made without the award holder's consent and (ii) no amendment or alteration
will be effective prior to approval by the Company's stockholders to the extent
such approval is then required pursuant to Rule 16b-3 in order to preserve the
applicability of any exemption provided by such rule to any award then
outstanding (unless the holder of such award consents) or to the extent
stockholder approval is otherwise required by applicable legal requirements.
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TAX TREATMENT -- The holder of a nonqualified stock option will recognize
no taxable income as a result of the grant of a stock option or stock
appreciation right. Upon the exercise of the stock option or stock appreciation
right, however, the holder of a nonqualified stock option or stock appreciation
right will recognize taxable ordinary income in an amount equal to the
difference between the fair market value of the shares of Common Stock or
Exchangeable Shares on the date of exercise and the exercise or purchase price
(or in the case of relinquishment in an amount equal to the sum of the cash
received and the fair market value of the shares of Common Stock or Exchangeable
Shares or award received determined on the date of exercise) and,
correspondingly, the Company will be entitled to an income tax deduction for
such amount.
Upon the exercise of an incentive stock option, the stock option holder
generally will not recognize taxable income by reason of the exercise, and the
Company normally will not be entitled to any income tax deduction. If the stock
option holder disposes of the shares acquired upon the exercise of an incentive
stock option after satisfaction of certain minimum holding periods any gain
realized will be capital gain. Gain attributable to post-exercise appreciation
of stock acquired upon the exercise of nonqualified or incentive stock option
will be capital gain if the stock option holder has held the shares as a capital
asset and for more than one year. If a stock option holder disposes of the
shares acquired upon the exercise of an incentive stock option within the
minimum holding periods, the stock option holder would recognize ordinary
income, and the Company would be entitled to a commensurate income tax deduction
(except with respect to post-exercise appreciation).
A participant under the Restated Plan who has been granted an award of
restricted shares of Common Stock or Exchangeable Shares will not realize
taxable income at the time of the grant, and the Company will not be entitled to
a tax deduction at the time of the grant, unless the participant makes an
election to be taxed at the time of the award. When the restrictions lapse, the
participant will recognize taxable income in an amount equal to the excess of
the fair market value of the shares of Common Stock or Exchangeable Shares at
such time over the amount, if any, paid for such shares. The Company will be
entitled to a corresponding tax deduction. Dividends paid to the participant
during the restriction period will also be compensation income to the
participant and deductible as such by the Company. The holder of a restricted
stock award may elect to be taxed at the time for grant of the restricted stock
award on the market value of the shares of Common Stock or Exchangeable Shares,
in which case (i) the Company will be entitled to a deduction at the same time
and in the same amount, (ii) dividends paid to the participant during the
restriction period will be taxable as dividends to him and not deductible by the
Company, and (iii) there will be no further federal income tax consequences when
the restrictions lapse.
NEW PLAN BENEFITS -- The allocation of future awards under the Restated
Plan is not currently determinable as such allocation is dependent upon future
decisions to be made by the Committee in its sole discretion, subject to the
applicable provisions of the Restated Plan. In February 1997, the Committee made
certain awards of performance units conditioned on the approval of the Restated
Plan by stockholders that are effective as of January 1, 1997. Messrs. Werneburg
and Mazur had retired and Messrs. O'Connell, Quinn and Reisbick had announced
their pending retirements from the Company prior to the awards. Mr. Elers
retired subsequent to the awards, resulting in the forfeiture of his performance
units. No directors who were not executive officers received any awards.
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NEW PLAN BENEFITS
AMENDED AND RESTATED 1994 LONG-TERM INCENTIVE PLAN
DOLLAR
NAME AND POSITION VALUE(1) NUMBER OF UNITS
- ------------------------------------- ------------- ----------------
Elers(2)............................. $-- 725,800
Bayer................................ -- 582,900
Atkinson............................. -- 327,800
Executive Officer Group.............. -- 3,156,700
Non-Executive Officer Employee
Group................................ -- 1,968,700
- ------------
(1) Not determinable until the end of the performance period on December 31,
1999. The maximum amount payable to each individual based on his office with
the Company is set forth above under " -- Summary of Changes -- Section
162(m)."
(2) Subsequently retired, resulting in the forfeiture of these performance
units.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF THIS
PROPOSAL.
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Finance and Audit Committee of the Board of Directors has approved and
recommends the appointment of Price Waterhouse LLP as independent public
accountants to conduct an audit of the Company's financial statements for the
fiscal year ending December 31, 1997. Ratification of the appointment of the
accountants is being sought in order to give stockholders the opportunity to
express their opinion on the matter. Ratification will require the affirmative
vote of the holders of a majority of the votes cast. Accordingly, abstentions
and broker non-votes will have no effect on the determination of the outcome of
the vote. Should ratification not be obtained, the Board of Directors would
expect to reconsider the appointment.
Members of Price Waterhouse LLP are expected to attend the meeting and, if
present, be available to answer appropriate questions which may be asked by
stockholders. Such members will also have an opportunity to make statements at
the meeting if they desire to do so.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Based solely upon a review of Forms 3, 4 and 5 submitted to the Company
during and with respect to 1996 and written representations from certain
reporting persons that no Forms 5 were required from such persons, the Company
believes that all of the directors and officers of the Company have timely filed
their respective Forms 3, 4 or 5 required by Section 16(a) of the Securities
Exchange Act during 1996 or prior years.
OTHER BUSINESS
Management does not intend to bring any business before the meeting other
than the matters referred to in the accompanying notice. If, however, any other
matters properly come before the meeting, it is intended that the persons named
in the accompanying proxy will vote pursuant to the proxy in accordance with
their best judgment on such matters to the extent permitted by applicable
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law and regulations. The discretionary authority includes matters which the
Board of Directors does not know are to be presented at the meeting by others
and any proposals of stockholders omitted from the proxy material pursuant to
Rule 14a-8 of the Securities and Exchange Commission.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Company's 1997
annual meeting, and otherwise eligible, must be received by the Company (at the
address indicated in the accompanying notice) no later than November 30, 1997 to
be included in the Company's proxy material and form of proxy relating to that
meeting.
By Order of the Board of Directors
Ian D. Bayer
President and Chief Executive Officer
March 28, 1997
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APPENDIX A
PROPOSED AMENDMENT TO RESTATED ARTICLES OF INCORPORATION
OF BATTLE MOUNTAIN GOLD COMPANY
Article FIFTH, Section 2 of the Restated Articles of Incorporation of
Battle Mountain Gold Company shall be amended to read in its entirety as
follows:
"2. ORGANIZATION OF THE BOARD OF DIRECTORS. (a) The number of
Directors that shall constitute the whole Board of Directors of the
Corporation shall not be less than three nor more that twelve as specified
from time to time in, or pursuant to, the Bylaws of the Corporation, except
in the case of any increase in the number of Directors by reason of any
provision entitling the holders of any one or more series of Preferred
Stock, voting as a class, to elect additional Directors in specified
circumstances.
(b) Prior to the annual meeting of stockholders to be held in 1999,
the Board of Directors is divided into three classes, Class I, Class II and
Class III. Such classes shall be as nearly equal in number of Directors as
possible. The Class I Directors and the Class III Directors shall serve for
a term ending on the annual meeting to be held in 1998, at which time their
successors shall be elected for a term expiring at the annual meeting next
ensuing. The Class II directors shall serve for a term ending on the annual
meeting to be held in 1999, at which time their successors shall be elected
for a term expiring at the annual meeting next ensuing.
(c) Beginning with the annual meeting of stockholders to be held in
1999, the Board of Directors shall not be divided into classes, and each
Director elected at each annual meeting of stockholders shall be elected to
hold office for a term expiring at the annual meeting next ensuing.
(d) The foregoing notwithstanding, each Director shall serve until
his successor shall have been duly elected and qualified unless he shall
resign, become disqualified, disabled or shall otherwise be removed."
<PAGE>
APPENDIX B
AMENDED AND RESTATED
1994 LONG-TERM INCENTIVE PLAN
OF
BATTLE MOUNTAIN GOLD COMPANY
1. OBJECTIVES. The 1994 Long-Term Incentive Plan (the "Plan") of Battle
Mountain Gold Company, a Nevada corporation (the "Company"), as amended and
restated as of January 1, 1997, is designed to retain key executives and reward
them for making major contributions to the success of the Company and its
Subsidiaries (as hereinafter defined). These objectives are to be accomplished
by making awards under the Plan and thereby providing Participants (as
hereinafter defined) with a proprietary interest in the growth and performance
of the Company and its Subsidiaries.
2. DEFINITIONS. As used herein, the terms set forth below shall have the
following respective meanings:
"Award" means the grant of any form of stock option, stock
appreciation right, stock award or cash award, whether granted singly, in
combination or in tandem, to a Participant pursuant to any applicable
terms, conditions and limitations as the Committee may establish in order
to fulfill the objectives of the Plan.
"Award Agreement" means a written agreement between the Company and
a Participant that sets forth the terms, conditions and limitations
applicable to an Award.
"Board" means the Board of Directors of the Company.
"BMC" means Battle Mountain Canada Ltd., an Ontario corporation.
"BMC Shares" means the Exchangeable Shares of BMC.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Committee" means such committee of the Board as is designated by
the Board to administer the Plan. The Committee shall be comprised solely
of two or more outside directors and shall be constituted to permit the
Plan to comply with the requirements of Treasury Regulation 1.162-27(e)(3)
and Rule 16b-3.
"Common Stock" means the Common Stock, par value $0.10 per share, of
the Company.
"Director" means an individual serving as a member of the Board.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"Fair Market Value" of the Common Stock means, as of a particular
date, (i) if the shares of Common Stock are listed on a national securities
exchange, the closing sales price per share of Common Stock on the
consolidated transaction reporting system for the principal such national
securities exchange in the United States on that date, or, if there shall
have been no such sale so
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reported on that date, on the last preceding date on which such a sale was
so reported, (ii) if the shares of Common Stock are not so listed but are
quoted in the NASDAQ National Market System, the closing sales price per
share of Common Stock on the NASDAQ National Market System on that date,
or, if there shall have been no such sale so reported on that date, on the
last preceding date on which such sale was so reported or (iii) if the
Common Stock is not so listed or quoted, the mean between the closing bid
and asked price on that date, or, if there are no quotations available for
such date, on the last preceding date on which such quotations shall be
available, as reported by NASDAQ, or, if not reported by NASDAQ, by the
National Quotation Bureau, Inc.
"Fair Market Value" of the BMC Shares means, as of a particular
date, (i) if the BMC Shares are listed on the Toronto Stock Exchange or, if
not then listed on the Toronto Stock Exchange, on any other recognized
stock exchange in Canada, the closing sales price per share on the
principal such exchange as of such date, or if there shall have been no
sale as reported on that date, on the last preceding date on which a sale
was so reported, (ii) if the BMC Shares are not so listed but are quoted on
an over-the-counter market, the closing sales price per share of BMC Shares
on such market on that date, or, if there shall have been no such sale
reported on that date, on the last preceding date on which such a sale was
so reported or (iii) if the BMC Shares are not so listed or quoted, the
mean between the closing bid and asked price on that date, or, if there are
no quotations available for such date, on the last preceding date on which
such quotations shall be available, as reported by The Canadian Dealing
Network.
"Participant" means an employee of the Company or any of its
Subsidiaries to whom an Award has been made under this Plan.
"Performance Unit Award" means the performance unit award described
in paragraph 7(b)(ii) and (iii).
"Restricted Officers" means the Chief Executive Officer of the
Company and the four highest compensated officers (other than the Chief
Executive Officer) as defined in Treasury Regulation 1.162-27(c)(2).
"Rule 16b-3" means Rule 16b-3 promulgated under the Exchange Act, or
any successor rule.
"Subsidiary" means any corporation of which the Company directly or
indirectly owns shares representing more than 50% of the voting power of
all classes or series of capital stock of such corporation which have the
right to vote generally on matters submitted to a vote of the stockholders
of such corporation.
3. ELIGIBILITY. Employees of the Company and its Subsidiaries eligible
for an Award under this Plan are all officers, along with other employees who
hold positions of responsibility and whose performance, in the judgement of the
Committee, can have a significant effect on the success of the Company and its
Subsidiaries.
4. COMMON STOCK AVAILABLE FOR AWARDS. There shall be available for Awards
granted wholly or partly in Common Stock or BMC Shares (including rights or
options which may be exercised for or
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settled in Common Stock or BMC Shares) during the term of this Plan an aggregate
of 10,000,000 shares of Common Stock or BMC Shares. Notwithstanding the
foregoing, not more than an aggregate of 2,500,000 shares of Common Stock or BMC
Shares shall be available for Awards other than stock options and stock
appreciation rights granted at an exercise or strike price not less than the
Fair Market Value on the date of grant. Shares of Common Stock or BMC Shares
shall count against the foregoing 10,000,000 share and 2,500,000 share limits on
an equal basis. The Board and the appropriate officers of the Company shall from
time to time take whatever actions are necessary to file required documents with
governmental authorities and stock exchanges and transaction reporting systems
to make shares of Common Stock or BMC Shares available for issuance pursuant to
Awards. Common Stock or BMC Shares related to Awards that are forfeited or
terminated, expire unexercised, are settled in cash in lieu of Stock or in a
manner such that all or some of the shares covered by an Award are not issued to
a Participant, or are exchanged for Awards that do not involve Common Stock or
BMC Shares, shall immediately become available for Awards hereunder. The
Committee may from time to time adopt and observe such procedures concerning the
counting of shares against the Plan maximum as it may deem appropriate under
Rule 16b-3.
5. ADMINISTRATION. This Plan shall be administered by the Committee,
which shall have full and exclusive power to interpret this Plan and to adopt
such rules, regulations and guidelines for carrying out this Plan as it may deem
necessary or proper. The Committee shall exercise its powers in the best
interests of the Company and in keeping with the objectives of the Plan. Unless
otherwise provided in an Award Agreement with respect to a particular award, the
Committee may, in its discretion, provide for the extension of the
exercisability of an Award, accelerate the vesting or exercisability of an
Award, eliminate or make less restrictive any restrictions contained in an
Award, waive any restriction or other provision of this Plan or an Award or
otherwise amend or modify an Award in any manner this is either (i) not adverse
to the Participant holding such Award or (ii) consented to by such Participant.
The Committee may correct any defect or supply any omission or reconcile any
inconsistency in this Plan or in any Award in the manner and to the extent the
Committee deems necessary or desirable to carry it into effect. Any decision of
the Committee in the interpretation and administration of this Plan shall lie
within its sole and absolute discretion and shall be final, conclusive and
binding on all parties concerned. No member of the Committee or officer of the
Company to whom it has delegated authority in accordance with the provision of
paragraph 6 of this Plan shall be liable for anything done or omitted to be done
by him or her, by any member of the Committee or by any officer of the Company
in connection with the performance of any duties under this Plan, except for his
or her own willful misconduct or as expressly provided by statute.
6. DELEGATION OF AUTHORITY. The Committee may delegate to the Chief
Executive Officer and to other senior officers of the Company its duties under
this Plan pursuant to such conditions or limitations as the Committee may
establish, except that the Committee may not delegate to any person the
authority to grant Awards to, or take other action with respect to, Participants
who are subject to Section 16 of the Exchange Act.
7. AWARDS. The Committee shall determine the type or types of Awards to
be made to each Participant under this Plan. Each Award made hereunder shall be
embodied in an Award Agreement, which shall contain such terms, conditions and
limitations as shall be determined by the Committee in
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its sole discretion and shall be signed by the Participant and by the Chief
Executive Officer, the Chief Operating Officer, a Senior Vice President, or any
Vice President of the Company for and on behalf of the Company. Awards may
consist of those listed in this paragraph 7 and may be granted singly, in
combination or in tandem. Awards may also be made in combination or in tandem
with, in replacement of, or as alternatives to, grants or rights under this Plan
or any other employee plan of the Company or any of its Subsidiaries, including
the plan of any acquired entity. Any Award may provide of the granting or
issuance of additional, replacement or alternative Awards upon the occurrence of
specified events, including the exercise of the original Award. An Award may
provide for acceleration of vesting or any payment made to a Participant under
this Plan in the event of a change of control of the Company, and for reduction
as necessary to eliminate a parachute payment which is not deductible to the
Company under Section 280G of the Code and is subject to an excise tax under
Section 4999 of the Code.
(a) STOCK OPTION AND STOCK APPRECIATION RIGHT. An Award may consist of a
right to purchase a specified number of shares of Common Stock or BMC Shares at
a specified price that is not less than the greater of (i) the Fair Market Value
of the Common Stock or BMC Shares, as applicable, on the date of grant and (ii)
in the case of a right to purchase Common Stock, the par value of the Common
Stock on the date of grant. A stock option may be in the form of an incentive
stock option ("ISO") which, in addition to being subject to applicable terms,
conditions and limitations established by the Committee, complies with Section
422 of the Code. An Award may consist of a right to receive a payment, in cash
or Common Stock, equal to the excess of the Fair Market Value or other specified
valuation of a specified number of shares of Common Stock or BMC Shares on the
date the stock appreciation right ("SAR") is exercised over a specified strike
price as set forth in the applicable Award Agreement. No Participant may be
granted, during any 3-year period, Awards consisting of stock options or stock
appreciation rights exercisable for more than 12.5 percent of the aggregate
shares of Common Stock and BMC Shares reserved for issuance under the Plan.
(b) STOCK AND CASH AWARDS.
(i) IN GENERAL. An Award may consist of Common Stock or BMC Shares
or cash or both, or may be denominated in units of Common Stock or BMC
Shares. All or part of any such Award may be subject to conditions
established by the Committee, and set forth in the Award Agreement, which
may include, but are not limited to, continuous service with the Company
and its Subsidiaries, achievement of specified business objectives,
increases in specified indices, attaining specified growth rates, and other
comparable measurements of performance. Such Awards may be based on Fair
Market Value or other specified valuations. The certificates evidencing
shares of Common Stock or BMC Shares issued in connection with a stock
award shall contain appropriate legends and restrictions describing the
terms and conditions of the restrictions applicable thereto.
(ii) PERFORMANCE UNIT AWARD: BUSINESS CRITERIA. A Performance Unit
Award may be payable in Common Stock or cash, or a combination of these, on
the attainment of performance goals based on comparisons of total
shareholder return. In making the comparison, the total shareholder return
on Common Stock is ranked against that of the common stock of the peer
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group of companies consisting of Barrick Gold Corp., Newmont Mining, Placer
Dome Inc., Echo Bay Mines Ltd., Santa Fe Pacific Gold Corp., and Homestake
Mining ("Component Companies"). The total shareholder return is measured
over the performance period. The first performance period begins January 1,
1997 and ends December 31, 1999. The second performance period begins
January 1, 2000 and ends December 31, 2002. In ranking total shareholder
return, $100 is assumed to be invested at the average stock price on the
principal national securities exchange in the United States for the first
10 days of the performance period, all dividends are assumed to be
reinvested, and ending shares are valued at such average stock price for
the last 10 days of the performance period. If any Component Company ceases
to have common stock on a national securities exchange of the United
States, the following companies will replace such company in the order
listed: TVX Gold, Amax Gold, and Pegasus Gold. If a replacement company is
utilized, its total shareholder return will be calculated for the full
performance period, and that of the replaced company will not be utilized.
(iii) PERFORMANCE UNIT AWARD: AMOUNT. At the beginning of each
performance period, a number of performance units is assigned to each
Participant based on his or her compensation and annual targeted award
level. At the end of the performance period, a value is assigned to each
performance unit based on attainment of the performance goals described in
paragraph 7(b)(ii) above, and this value is multiplied by the Participant's
number of units to determine the amount of the Participant's Performance
Unit Award. Payments are made over the three-year period following the
performance period. The maximum Performance Unit Award payable to a
Participant for the first performance period is as follows:
Chief Executive Officer.............. $ 875,000
Senior Vice President................ 500,000
Other Officers....................... 355,000
Other Key Employees.................. 205,000
8. PAYMENT OF AWARDS.
(A) GENERAL. Payment of Awards may be made in the form of cash,
Common Stock, BMC Shares or any combinations thereof and may include such
restrictions as the Committee shall determine, including in the case of
Common Stock or BMC Shares, restriction on transfer and forfeiture
provisions. As used herein, "Restricted Stock" means shares of Common
Stock or BMC Shares that are restricted or subject to forfeiture
provisions.
(b) DEFERRAL. With the approval of the Committee, payments may be
deferred, either in the form of installments or a future lump sum payment.
The Committee may permit selected Participants to elect to defer payments
of some or all types of Awards in accordance with procedures established by
the Committee. Any deferred payment, whether elected by the Participant or
specified in the Award Agreement or by the Committee, may be forfeited if
and to the extent that the Award Agreement so provides.
(c) DIVIDENDS AND INTEREST. Dividends or dividend equivalent rights
may be extended to and made part of any Award denominated in Common Stock
or BMC Shares or units of
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Common Stock or BMC Shares, subject to such terms, conditions and
restrictions as the Committee may establish. The Committee may also
establish rules and procedures for the crediting of interest on deferred
cash payments and dividend equivalents for deferred payment denominated in
Common Stock or BMC Shares or units of Common Stock or BMC Shares.
(d) SUBSTITUTION OF AWARDS. At the discretion of the Committee, a
Participant may be offered an election to substitute an Award for another
Award or Awards of the same or different type.
9. CODE SECTION 162(M) PROVISIONS APPLICABLE TO RESTRICTED
OFFICERS. Awards under this Plan to Restricted Officers are intended to come
within the exception to the nondeductibility of compensation exceeding
$1,000,000 for qualified performance-based compensation under Treasury
Regulation 1.162-27(e), unless otherwise provided in the Award Agreement. Any
ambiguities or inconsistencies in the construction of this Plan shall be
interpreted to give effect to this intention, and if any provision of the Plan
is found not to be in compliance with such Regulation, such provision shall be
null and void to the extent required to permit the Award to be considered
qualified performance-based compensation. Therefore, notwithstanding anything in
this Plan to the contrary, the requirements of Treasury Regulation Section
1.162-27(e) for qualified performance-based compensation further limits Awards
intended to meet the requirements of Code Section 162(m). Thus, for example, the
Committee shall not increase the amount of a Performance Unit Award to a
Restricted Officer, and shall not accelerate or defer payment of a Performance
Unit Award to a Restricted Officer unless the payment is discounted or
increased, respectively, based on reasonable interest rates as provided in such
Regulation. No other plan, arrangement or agreement shall be contingent upon
failure to attain the performance goal on which the Performance Unit Award is
based, such that the Restricted Officer receives part or all of the Award
regardless of whether the performance goal is attained, except that the Award
may be payable upon death, disability or change of ownership or control, even
though the performance goal has not been attained and the early payment would
not be qualified performance based compensation. The payment to a Restricted
Officer of any dividend equivalent on a stock option or stock appreciation right
shall not be contingent on the exercise of an option, and any canceled option
shall continue to count against the maximum number of shares for which options
may be granted to the Restricted Officer under the Plan. Repricing of stock
options granted to Restricted Officers after Award shall be treated as
cancellation of the prior Award and grant of a new Award. The Committee shall
certify in writing prior to payment to a Restricted Officer of a Performance
Unit Award that the performance goal has been satisfied.
10. STOCK OPTION EXERCISE. The price at which shares of Common Stock or
BMC Shares may be purchased under a stock option shall be paid in full at the
time of exercise in cash or, if permitted by the Committee, by means of
tendering Common Stock or BMC Shares or surrendering another Award, including
Restricted Stock, valued at Fair Market Value on the date of exercise, or any
combination thereof. The Committee shall determine acceptable methods of
tendering Common Stock or other Awards to exercise a stock option as it deems
appropriate. If permitted by the Committee, payment may be made by successive
exercises by the Participant. The Committee may provide for loans from the
Company to permit the exercise or purchase of Awards and may provide for
procedures to permit the exercise or purchase of Awards by use of the proceeds
to be received from
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the sale of Common Stock issuable pursuant to an Award. Unless otherwise
provided in the applicable Award Agreement, in the event shares of Restricted
Stock are tendered as consideration for the exercise of a stock option, a number
of the shares issued upon the exercise of the stock option, equal to the number
of shares of Restricted Stock used as consideration therefor, shall be subject
to the same restrictions as the Restricted Stock so submitted as well as any
additional restrictions that may be imposed by the Committee.
11. TAX WITHHOLDING. The Company shall have the right to deduct
applicable taxes from any Award payment and withhold, at the time of delivery or
vesting of cash or shares of Common Stock or BMC Shares under the Plan, an
appropriate amount of cash or number of shares of Common Stock or BMC Shares or
a combination thereof for payment of taxes required by law or to take such other
action as may be necessary in the opinion of the Company to satisfy all
obligations for withholding of such taxes. The Committee may also permit
withholding to be satisfied by the transfer to the Company of shares of Common
Stock or BMC Shares theretofore owned by the holder of the Award with respect to
which withholding is required. If shares of Common Stock or BMC Shares are used
to satisfy tax withholding, such shares shall be valued based on the Fair Market
Value thereof when the tax withholding is required to be made.
12. AMENDMENT, MODIFICATION, SUSPENSION OR TERMINATION. The Board may
amend, modify, suspend or terminate this Plan for the purpose of meeting or
addressing any changes in legal requirements or for any other purpose permitted
by law except that (i) no amendment or alteration that would impair the rights
of any Participant under any Award previously granted to such Participant shall
be made without such Participant's consent and (ii) no amendment or alteration
shall be effective prior to approval by the Company's stockholders to the extent
such approval is then required pursuant to Rule 16b-3 in order to preserve the
applicability of any exemption provided by such rule to any Award then
outstanding (unless the holder of such Award consents) or to the extent
stockholder approval is otherwise required by applicable legal requirements.
13. TERMINATION OF EMPLOYMENT. Upon termination of employment by a
Participant, any unexercised, deferred or unpaid Awards shall be treated as
provided in the specific Award Agreement evidencing the Award. In the event of
such a termination, the Committee may, in its discretion, provide for the
extension of the exercisability of an Award, accelerate the vesting or
exercisability of an Award, eliminate or make less restrictive any restrictions
contained in an Award, waive any restriction or other provision of this Plan or
any Award or otherwise amend or modify the Award in any manner that is either
(i) not adverse to such Participant or (ii) consented to by such Participant.
14. ASSIGNABILITY. Unless otherwise determined by the Committee and
provided in the Award Agreement, no Award or any other benefit under the Plan
constituting a derivative security within the meaning of Rule 16a-1(c) under the
Exchange Act shall be assignable or otherwise transferable except by will or the
laws of descent and distribution or pursuant to a qualified domestic relations
order as defined by the Code or Title I of the Employee Retirement Income
Security Act, or the rules thereunder. The Committee may prescribe and include
in applicable Award Agreements other restrictions on transfer. Any attempted
assignment of an Award or any other benefit under this Plan in violation of this
paragraph 14 shall be null and void.
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15. ADJUSTMENTS.
(a) The existence of outstanding Awards shall not affect in any
manner the right or power of the Company or its stockholders or of BMC to
make or authorize any or all adjustments, recapitalizations,
reorganizations or other changes in the capital stock of the Company or its
business or any merger or consolidation of the Company, or any issue of
bonds, debentures, preferred or prior preference stock (whether or not such
issue is prior to, on a parity with or junior to the Common Stock) or the
dissolution or liquidation of the Company, or any sale or transfer of all
or any part of its assets or business, or any other corporate act or
proceeding of any kind, whether or not of a character similar to that of
the acts or proceedings enumerated above.
(b) In the event of any subdivision or consolidation of outstanding
shares of Common Stock or BMC Shares or declaration of a dividend payable
in shares of Common Stock or BMC Shares or capital reorganization or
reclassification or other transaction involving an increase or reduction in
the number of outstanding shares of Common Stock or BMC Shares, the
Committee may adjust proportionally (i) the number of shares of Common
Stock and BMC Shares reserved under the Plan and covered by outstanding
Awards denominated in Common Stock or units of Common Stock or BMC Shares;
(ii) the exercise or other price in respect of such Awards; and (iii) the
appropriate Fair Market Value and other price determinations for such
Awards. In the event of any consolidation or merger of the Company with
another corporation or entity or the adoption by the Company of a plan of
exchange affecting the Common Stock or BMC Shares or any distribution to
holders of Common Stock or BMC Shares of securities or property (other than
normal cash dividends or dividends payable in Common Stock or BMC Shares),
the Committee shall make such adjustments or other provisions as it may
deem equitable, including adjustments to avoid fractional shares, to give
proper effect to such event. In the event of a corporate merger,
consolidation, acquisition of property or stock, separation, reorganization
or liquidation, the Committee shall be authorized to issue or assume stock
options, regardless of whether in a transaction to which Section 424(a) of
the Code applies, by means of substitution of new options for previously
issued options or an assumption of previously issued options, or to make
provision for the acceleration of the exercisability of, or lapse of
restrictions with respect to, Awards and the termination of unexercised
options in connection with such transaction.
16. RULE 16-B RESTRICTIONS. No shares of Common Stock or BMC Shares or
other form of payment shall be issued with respect to any Award unless the
Company shall be satisfied based on the advice of its counsel that such issuance
will be in compliance with applicable federal and state securities laws. It is
the intent of the Company that this Plan comply with Rule 16b-3 with respect to
persons subject to Section 16 of the Exchange Act unless otherwise provided
herein or in an Award Agreement, that any ambiguities or inconsistencies in the
construction of this Plan be interpreted to give effect to such intention, and
that if any provision of the Plan is found not be in compliance with Rule 16b-3,
such provision shall be null and void to the extent required to permit this Plan
to comply with Rule 16b-3. Certificates evidencing shares of Common Stock or BMC
Shares delivered under this Plan may be subject to such stop transfer orders and
other restrictions as the Committee may deem
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advisable under the rules, regulations and other requirements of the Securities
and Exchange Commission, any securities exchange or transaction reporting system
upon which shares of Common Stock or BMC Shares are then listed and any
applicable federal and state securities law. The Committee may cause a legend or
legends to be placed upon any such certificates to make appropriate reference to
such restrictions.
17. UNFUNDED PLAN. Insofar as it provides for Awards of cash, Common
Stock or BMC Shares or rights thereto, this Plan shall be unfunded. Although
bookkeeping accounts may be established with respect to Participants who are
entitled to cash, Common Stock or BMC Shares or rights thereto under this Plan,
any such accounts shall be used merely as a bookkeeping convenience. The Company
shall not be required to segregate any assets that may at any time be
represented by cash, Common Stock or BMC Shares or rights thereto, nor shall
this Plan be construed as providing for such segregation, nor shall the Company
nor the Board nor the Committee be deemed to be a trustee of any cash, Common
Stock or BMC Shares or rights thereto to be granted under this Plan. Insofar as
it provides for Awards of cash, Common Stock or BMC Shares or rights thereto,
Participants have the status of general unsecured creditors of the Company and
the Plan constitutes a mere promise by the Company to make payments in the
future.
18. GOVERNING LAW. This Plan and all determinations made and actions
taken pursuant hereto, to the extent not otherwise governed by mandatory
provisions of the Code or the Securities laws of the United States, shall be
governed by and construed in accordance with the laws of the State of Nevada.
B-9
<PAGE>
PROXY
BATTLE MOUNTAIN GOLD COMPANY
ANNUAL MEETING OF STOCKHOLDERS -- APRIL 30, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned holder of Common Stock of Battle Mountain Gold Company
(the "Company") hereby appoints Greg V. Etter, Stan M. Haley and Jeffrey L.
Powers, or any one of them, his or her proxies with full power of
substitution, to vote at the Annual Meeting of Stockholders of the Company to
be held on April 30, 1997, at 10:30 a.m., Houston time, at the Doubletree
Hotel, One Allen Center, 400 Dallas Street, Houston, Texas, and at any
adjournment thereof, the number of votes which the undersigned would be
entitled to cast if personally present on all matters coming before the
meeting.
1. Election of directors for a term expiring in 2000:
[ ] FOR [ ] WITHHOLD AUTHORITY
all nominees listed below to vote for all nominees
(except as marked below) listed below
Douglas J. Bourne David L. Bumstead
Delo H. Caspary James W. McCutcheon, Q.C.
2. Proposal to approve an amendment to the Restated Articles of Incorporation
of the Company to phase out the classified Board of Directors.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. Proposal to approve the Amended and Restated 1994 Long-Term Incentive
Plan.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
4. Proposal to ratify the appointment of Price Waterhouse LLP as the
Company's independent accountants for the fiscal year ending December 31,
1997.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
5. To consider and take action, in accordance with their best judgment, upon
any other matter which may properly come before the meeting or any
adjournment thereof.
All as more particularly described in the proxy statement dated March 28,
1997 relating to such meeting, receipt of which is hereby acknowledged.
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE, DRAW A LINE
THROUGH OR STRIKE OUT THAT NOMINEE'S NAME AS SET FORTH ABOVE.
(CONTINUED AND TO BE SIGNED ON OTHER SIDE)
(CONTINUED FROM OTHER SIDE)
This proxy when properly executed will be voted in the manner directed
herein by the undersigned shareholder. If no direction is made, this proxy
will be voted FOR the nominees listed in Proposal 1 and FOR Proposals 2, 3
and 4.
___________________________________
___________________________________
Signature of Shareholder(s)
Please sign your name exactly as
name appears hereon. Joint owners
must each sign. When signing as
attorney, executor, administrator,
trustee or guardian, please give
your full title as it appears
herein.
Dated: ______________________, 1997
PLEASE MARK, SIGN, DATE AND RETURN IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES.
