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:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 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:
<PAGE>
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 27, 1998
TO THE STOCKHOLDERS OF
BATTLE MOUNTAIN GOLD COMPANY:
The Annual Meeting of Stockholders of Battle Mountain Gold Company, a
Nevada corporation (the "Company"), will be held at the Sheraton Centre, 123
Queen Street West, Toronto, Ontario, Canada, on Monday, April 27, 1998, at 11:30
a.m., Toronto time, for the following purposes:
1. To elect three Class I directors to serve for the applicable term of
office and until their successors are duly elected and qualified;
2. To approve the Company's 1997 Incentive Bonus Plan;
3. To ratify the appointment of Price Waterhouse LLP as the independent
public accountants for the Company for the 1998 fiscal year; and
4. To transact such other business as may properly come before the meeting
or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on March 10, 1998,
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 in person; however, to
assure your representation at the meeting, you are urged to mark, sign, date and
return the accompanying proxy as soon as possible in the postage-prepaid
envelope provided for that purpose.
By Order of the Board of Directors
Greg V. Etter
General Counsel and Secretary
March 16, 1998
333 Clay Street, 42nd Floor
Houston, Texas 77002
<PAGE>
PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS
This Proxy Statement and the accompanying proxy card are being mailed to
Stockholders (defined below) on or about March 16, 1998. 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 on April 27, 1998 at 11:30 a.m., Toronto, Canada time,
or at any adjournment or postponement thereof for the purposes set forth herein
and in the accompanying Notice of Annual Meeting of Stockholders. This Annual
Meeting is the second to be held subsequent to the July 1996 combination (the
"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 shares of common stock 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 of the Company.
VOTING AND SOLICITATION
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 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, the New York Stock Exchange, the 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 (defined below)
represented thereby will be voted for the election as directors of the nominees
listed herein, to approve the Company's 1997 Incentive Bonus Plan, for
ratification of Price Waterhouse LLP as the Company's independent public
accountants for 1998 and, in the discretion of the persons named in the proxy,
in connection with any other business that may properly come before the meeting.
The Exchangeable Shares issued in connection with the Combination entitle
holders to dividend and other rights economically equivalent to Common Stock
(defined below), including the right pursuant to a Voting, Support and Exchange
Trust Agreement dated July 19, 1996 (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 as of the Record
Date for each such meeting ("Exchange Votes") held by persons other than the
Company and certain of its subsidiaries (those subsidiaries 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
1
<PAGE>
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.
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 per share and the one share
of Special Voting Stock is entitled to the number of Exchange Votes determined
as of the Record Date for each Stockholder meeting. 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 (defined below). 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.
REVOCABILITY OF PROXIES
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 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.
RECORD DATE AND PRINCIPAL SHARE OWNERSHIP
As of March 10, 1998, the Record Date for determining Stockholders entitled
to vote at the meeting, there were 124,121,250 shares of common stock, par value
$0.10 per share, of the Company (the "Common Stock") outstanding and entitled
to vote at the Annual Meeting and 105,632,915 shares of Exchangeable Shares
outstanding and entitled to vote at the Annual Meeting through the exercise by
CIBC Mellon Trust Company, a trust company existing under the laws of Canada
(the "Trustee"), of certain voting rights under the Voting Agreement, for an
aggregate of 229,754,165 shares outstanding and entitled to vote at the Annual
Meeting (all shares being referred to herein as "Shares" and all holders
thereof being referred to as "Stockholders" of the Company).
The Company's Annual Report to Stockholders, including financial
statements, for the year ended December 31, 1997, accompanies the proxy
materials being mailed to all Stockholders. The Annual Report is not a part of
this proxy solicitation material.
REDUCTION IN THE NUMBER OF DIRECTORS
Prior to the Combination, the number of directors constituting the entire
Board of Directors of the Company was fixed at nine. Such number subsequently
was increased to twelve directors pursuant to the terms of the Combination. The
current Board of Directors, by a unanimous vote, has determined that it would be
more effective in the future and in the best interest of the Company to reduce
the size of the Board of Directors to ten to approximate the size of the Board
of Directors of the Company immediately prior to the Combination. Pursuant to
this reduction, one Class I position and one Class II position have been
eliminated. In order to facilitate such reduction in the number of directors,
Ted H. Pate (Class I) will not stand for relection at the expiration of his term
this year, and E. Courtney Pratt (Class II) has resigned effective March 15,
1998.
PROPOSAL ONE
ELECTION OF THREE DIRECTORS
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 Mr. Kerr, Ms. Mogford and Mr. Wise as Class I
directors. Mr. Kerr, Ms. Mogford and Mr. Wise are presently members of the Board
of Directors of the Company.
2
<PAGE>
The Company's Restated Articles of Incorporation provide for the
classification of the Board of Directors into three classes having staggered
terms of three years each. The three directors elected at the Annual Meeting
will each serve for a term of three years ending in 2001. 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 seven directors named below whose terms
will continue after this meeting expire in 1999 for Class II directors and in
2000 for Class III directors, as indicated.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF THE
THREE NOMINEES.
BACKGROUND OF NOMINEES
The following sets forth information concerning the three nominees for
election as Class I directors at the meeting, including information as to each
nominee's age as of March 10, 1998, position with the Company and business
experience during the past five years.
[PHOTO OF NOMINEE] DAVID W. KERR has served as Chief
Executive Officer of Noranda Inc. (an
integrated natural resources company
and the Company's principal
stockholder, "Noranda") since 1990
and as its President since November
1997. From April 1995 until November
1997, he also served as Chairman of
the Board of Noranda. Mr. Kerr became
a director of the Company in July
1996 by being designated by Hemlo
Gold in connection with the
Combination, and he serves on the
Company's Environmental, Safety and
Health Committee. Mr. Kerr is also a
director of Noranda and EdperBrascan
Corporation. He is 54 years old.
[PHOTO OF NOMINEE] MARY MOGFORD is co-owner of Mogford
Campbell Associates, a business and
financial consulting firm in Ontario.
She was formerly Ontario's Deputy
Minister of Treasury and Economics
(Finance) and Deputy Minister of
Natural Resources. Ms. Mogford became
a director in July 1996 by being
designated by Hemlo Gold in
connection with the Combination, and
she serves on the Company's Compensa-
tion and Stock Option Committee and
on the Company's Corporate Governance
and Nominating Committee. She is 53
years old.
[PHOTO OF NOMINEE] WILLIAM A. WISE has served as
President and Chief Executive Officer
of El Paso Energy Corporation (an
integrated energy company) since
January 1990 and as its Chairman of
the Board since January 1994. Mr.
Wise has been a director of the
Company since 1994, and he currently
serves as Chairman of the Company's
Compensation and Stock Option
Committee. He is 52 years old.
3
<PAGE>
BACKGROUND OF DIRECTORS WITH TERMS EXPIRING IN 1999 AND 2000
The following sets forth information concerning the seven directors of the
Company whose present terms will continue until 1999 for Class II directors or
2000 for Class III directors, including information as to each director's age as
of March 13, 1998, position with the Company and business experience during the
past five years.
IAN D. BAYER became President and [PHOTO OF NOMINEE]
Co-Chief Executive Officer of the
Company in July 1996 following the
Combination and was named 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 58 years old.
DOUGLAS J. BOURNE was Chairman of the [PHOTO OF NOMINEE]
Board and Chief Executive Officer of
the Company until his retirement in
April 1990. Mr. Bourne serves as
Chairman of the Company's Executive
Committee and is a member of the
Company's Environmental, Safety and
Health Committee. Mr. Bourne has been
a director of the Company since its
formation, and his present term
expires in 2000 (Class III). He is
also a director of Potash Corporation
of Saskatchewan, Inc. (mining and
processing of potash and manufacture
of fertilizers). He is 75 years old.
DAVID L. BUMSTEAD joined Noranda in [PHOTO OF NOMINEE]
1963 and assumed his current position
as Executive Vice President in 1995.
Prior to that, he served as Executive
Vice President, Marketing and Finance
of Noranda Minerals Inc. Mr. Bumstead
also has served as Chairman of Kerr
Addison Mines Limited and President
of Brenda Mines Ltd. since 1992. Mr.
Bumstead became a director in July
1996 by being designated by Hemlo
Gold in connection with the
Combination, and his present term
expires in 2000 (Class III). Mr.
Bumstead is a member of the Company's
Audit Committee. He is 56 years old.
DELO H. CASPARY has been engaged for [PHOTO OF NOMINEE]
more than five years in managing his
personal investments. He became a
director of the Company in 1985, and
his present term expires in 2000
(Class III). He currently serves on
the Company's Environmental, Safety
and Health Committee. He is 72 years
old.
4
<PAGE>
[PHOTO OF DIRECTOR] CHARLES E. CHILDERS has served as
Chairman of the Board, President and
Chief Executive Officer of Potash
Corporation of Saskatchewan, Inc.
(mining and processing of potash and
manufacture of fertilizers) since
1990. 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 Commit-
tee and on the Company's Corporate
Governance and Nominating Committee.
He is 65 years old.
[PHOTO OF DIRECTOR] KARL E. ELERS is the non-executive
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 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 59 years
old.
[PHOTO OF DIRECTOR] 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, and
his present term expires in 2000
(Class III). He serves as Chairman of
the Company's Audit Committee. Mr.
McCutcheon is also a director of
Noranda Inc. He is 61 years old.
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 Audit Committee (formerly known as the Finance and Audit Committee) of
the Board is composed of Messrs. McCutcheon (Chairman) and Bumstead, neither of
whom is an employee of the Company. The 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 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) and Childers and Ms. Mogford, none of whom is an employee of the
Company. 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, Safety and Health Committee (formerly known as the
Environmental Affairs and Ethics Committee) of the Board of Directors of the
Company is composed of Messrs. Caspary (Chairman),
5
<PAGE>
Bourne and Kerr. The Environmental, Safety and Health Committee oversees the
Company's environmental and legal compliance programs.
The Board of Directors recently formed a Corporate Governance and
Nominating Committee composed of Mr. Childers and Ms. Mogford. The Corporate
Governance and Nominating Committee was established to address issues related to
the composition of the Board and assist the Chairman of the Board in overseeing
the operation of the Board in discharging its mandate and responsibilities.
During 1997, the Board of Directors held seven meetings, the Audit
Committee and the Compensation and Stock Option each met on three occasions, and
the Environmental, Safety and Health Committee met on two occasions. All
directors with the exception of Mr. Wise 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 director selects an option strike price at a
discount from the then-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. Mr. Wise participated in the DISOP in 1997, acquiring an
option to purchase 20,250 shares of Common Stock at an exercise price of $6.075
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 consulted with and advised the
officers, directors and other representatives of the Company through the end of
1997. The Company paid Mr. Elers $20,000 per month for his consulting services
and reimbursed expenses (including meals, lodging, transportation, automobile
mileage, telephone and other out-of-pocket expenses) reasonably incurred in the
performance of such services. In 1998, Mr. Elers will receive a fee of $6,250
per month for his service as non-executive Chairman of the Board.
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
Set forth in the table below is the total number of Shares beneficially
owned as of March 10, 1998, by each of the Company's directors and nominees,
each of the executive officers named in the Summary Compensation Table below
(including one who retired from the Company during 1997), holders of more than 5
percent of the Shares and all directors and executive officers as a group
(including the retiree). 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.
6
<PAGE>
NUMBER OF PERCENTAGE
NAME SHARES OF CLASS+
- ------------------------------------- ---------- -----------
Ian Atkinson......................... 86,689(1) *
Ian D. Bayer......................... 209,367(2) *
Joseph J. Baylis..................... 75,608(3) *
Douglas J. Bourne.................... 147,540(4) *
David L. Bumstead.................... 65,249,026(5)(6) 28.4%
Delo H. Caspary...................... 54,000(5) *
Charles E. Childers.................. 15,000(7) *
Karl E. Elers........................ 519,831(8) *
Stan M. Haley........................ 30,664(9) *
David W. Kerr........................ 65,249,026(6)(10) 28.4%
John A. Keyes........................ 82,393(11) *
James W. McCutcheon.................. 6,500(5) *
Mary Mogford......................... 8,500(10) *
Ted H. Pate.......................... 96,146(12) *
E. Courtney Pratt.................... 65,247,526(6) 28.4%
William A. Wise...................... 69,500(5) *
All directors and executive officers
as a group (20 persons)............ 66,782,309(13) 29.1%
Noranda Inc.......................... 65,242,526(14) 28.4%
- ------------
(+) Includes Common Stock and Exchangeable Shares (which are convertible into
Common Stock on a one-for-one basis).
* Less than 1%
(1) Includes 2,233 shares of Exchangeable Shares held indirectly through a
savings plan; 40,700 shares of Common Stock or Exchangeable Shares issuable
upon the exercise of stock options acquired under a Hemlo Gold option plan;
and 43,000 shares of Common Stock issuable upon the exercise of stock
options acquired under the Company's option plans.
(2) Includes 3,377 shares of Exchangeable Shares held indirectly through a
savings plan; 125,800 shares of Common Stock or Exchangeable Shares
issuable upon the exercise of stock options acquired under a Hemlo Gold
option plan; and 79,000 shares of Common Stock issuable upon the exercise
of stock options acquired under the Company's option plans.
(3) Includes 38,480 shares of Common Stock or Exchangeable Shares issuable upon
the exercise of stock options acquired under a Hemlo Gold option plan; and
33,000 shares of Common Stock issuable upon the exercise of stock options
acquired under the Company's option plans.
(4) Includes 750 shares of Common Stock jointly owned by Mr. Bourne and his
wife, and 15,000 shares of Common Stock issuable upon the exercise of stock
options acquired under the Company's option plans.
(5) Direct holdings consist of shares of Common Stock issuable upon the
exercise of stock options acquired under the Company's option plans.
(6) Includes 65,242,526 shares of Exchangeable Shares (or approximately 28% of
the Shares) beneficially owned by Noranda. 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.
(7) Includes 12,500 shares of Common Stock issuable upon the exercise of stock
options acquired under the Company's option plans.
(8) Includes 431,111 shares of Common Stock issuable upon the exercise of stock
options acquired under the Company's option plans.
(9) Includes 30,000 shares of Common Stock issuable upon the exercise of stock
options acquired under the Company's option plans.
(10) Includes 6,500 shares of Common Stock issuable upon the exercise of stock
options acquired under the Company's option plans.
(FOOTNOTES CONTINUED ON NEXT PAGE)
7
<PAGE>
(11) Includes 160 shares of Exchangeable Shares held indirectly through a
savings plan; 38,480 shares of Common Stock or Exchangeable Shares issuable
upon the exercise of stock options acquired under a Hemlo Gold option plan;
and 43,000 shares of Common Stock issuable upon the exercise of stock
options acquired under the Company's options plans.
(12) Includes 90,000 shares of Common Stock issuable upon the exercise of stock
options acquired under the Company's option plans.
(13) Includes 5,770 shares of Exchangeable Shares held indirectly through a
savings plan, 997,345 shares of Common Stock issuable upon the exercise of
stock options acquired under the Company's option plans, 243,460 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 1,539,783 (or
0.7%).
(14) 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., EdperBrascan Corporation,
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
CIBC Mellon Trust Company, 393 University Ave., Lower Level, 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 1997, 1996 and 1995 of (i) the individual who served as the chief executive
officer of the Company during 1997, (ii) the other four most highly compensated
executive officers of the Company at December 31, 1997, and (iii) one additional
individual who served as Co-Chief Executive Officer for a portion of the year.
The format and the information presented are as prescribed in rules of the
Securities and Exchange Commission.
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>
Ian D. Bayer(3) 1997 $ 353,884 $ 123,859 $ -- -- 97,000 -- $ 47,104
President and Chief 1996 253,835 126,620 -- -- 315,000 -- 62,740
Executive Officer 1995 194,210 46,610 -- -- 74,000 -- --
Ian Atkinson(3) 1997 212,330 59,452 -- -- 45,600 -- 21,723
Senior Vice President -- 1996 146,618 48,573 -- -- 152,000 -- 33,605
Exploration 1995 95,273 23,400 5,178 -- 25,900 -- --
Joseph J. Baylis(3)(4) 1997 161,315 45,168 -- -- 45,600 -- 39,291
Senior Vice President -- 1996 102,145 28,819 -- -- 99,000 -- --
Corporate Development 1995 92,708 28,948 -- -- 25,900 -- --
John A. Keyes(3) 1997 202,330 56,652 -- -- 45,600 -- 27,137
Senior Vice President -- 1996 138,271 46,124 -- -- 152,000 -- 14,377
Operations 1995 101,296 19,167 -- -- 25,900 -- --
Stanford M. Haley(5) 1997 146,172 40,928 -- -- 57,000 -- 22,816
Vice President --
Human Resources
Karl E. Elers(6) 1997 112,088 21,700 -- -- 1,500 -- 1,692,019
Former Chairman of the 1996 365,031 111,649 -- -- 315,000 471,436 65,634
Board and Co-Chief 1995 351,575 167,064 -- -- 57,200 579,962 97,244
Executive Officer
</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 Amended and Restated 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
(FOOTNOTES CONTINUED ON NEXT PAGE)
8
<PAGE>
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 1997 consist of (a) the Company's contributions
(vested and unvested) under the Company's Savings Plan and a related
contribution equalization plan of $4,800 and $7,785 for Mr. Bayer; $4,679
and $2,515 for Mr. Atkinson; $3,882 and $0 for Mr. Baylis; $4,638 and $2,147
for Mr. Keyes; $3,332 and $864 for Mr. Haley; and $4,843 and $598 for Mr.
Elers; (b) the benefit to the executive officer of the premiums paid by the
Company during 1997 under the Company's split-dollar life insurance program
of $22,345 for Mr. Bayer, $9,647 for Mr. Atkinson, $11,003 for Mr. Baylis,
$14,465 for Mr. Keyes, $15,074 for Mr. Haley, and $31,423 for Mr. Elers; (c)
the Company's payment of premiums on long-term disability insurance policies
of $12,174 for Mr. Bayer, $4,882 for Mr. Atkinson, $2,391 for Mr. Baylis,
$5,887 for Mr. Keyes, and $3,546 for Mr. Haley; (d) a relocation allowance
of $22,015 for Mr. Baylis and (e) a severance payment of $1,655,155 to Mr.
Elers.
(3) Dollar amounts for 1996 consist of a combination of U.S. and Canadian dollar
amounts. Dollar amounts for 1996 and 1995 are represented in U.S. dollars
using the exchange rates on December 31, 1996 and December 31, 1995 of
US$1.00 = C$1.3706 and US$1.00 = C$1.3645, 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.
(4) Dollar amounts for 1997 consist of a combination of U.S. and Canadian dollar
amounts. Dollar amounts for 1997 are represented in U.S. dollars using the
exchange rate on December 31, 1997 of US$1.00 = C$1.4293.
(5) Mr. Haley joined the Company in January 1997.
(6) Mr. Elers retired from 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 non-executive
Chairman of the Board of Directors. The options which Mr. Elers received
during 1997 were pursuant to the Company's Nonqualified Stock Option Plan
for Outside Directors.
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 Amended and Restated 1994 Long-Term
Incentive Plan during 1997. All of such options have an exercise price at least
equal to the market price on the date of grant. Mr. Elers was not granted an
employee option in 1997, but did receive a director option under the Company's
Nonqualified Stock Option Plan for Outside Directors.
<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) 1997 SHARE DATE (2)
- ------------------------------------- ----------- ------------ --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Ian D. Bayer......................... 97,000 9.9% 5.125 12/19/07 258,020
Ian Atkinson......................... 45,600 4.6 5.125 12/19/07 121,296
Joseph J. Baylis..................... 45,600 4.6 5.125 12/19/07 121,296
John A. Keyes........................ 45,600 4.6 5.125 12/19/07 121,296
Stanford M. Haley.................... 27,000 2.7 5.125 12/19/07 71,820
Stanford M. Haley.................... 30,000 3.1 6.25 1/6/07 79,800
</TABLE>
- ------------
(1) On December 19, 1997, officers and certain key employees received options to
purchase a specified number of shares at $5.125 (the closing price of the
Common Stock on December 19, 1997). The options vest 50% on December 19,
1998, and 100% on December 19, 1999. In addition, Mr. Haley received options
on January 6, 1997, which vested after one year.
(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 37.5 percent
based on two-year historical volatility of the Common Stock prior to the
grant date, a risk-free rate of return of 5.8 percent based on the ten-year
zero coupon treasury bond yield at the time of grant, a dividend yield of
1.0 percent based on the current dividend rate and an option term equal to
the full ten-year stated option term. The estimated grant date
9
<PAGE>
value does not reflect any discount on account of vesting or forfeiture
provisions or prohibitions on transfer.
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 1997 and prior
years under the Company's Amended and Restated 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, 1997, and (ii) the aggregate number of
shares acquired by such executive officers upon the exercise during 1997 of
options to purchase Common Stock or, in some cases, Exchangeable Shares.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
SHARES OPTIONS HELD AT IN-THE-MONEY OPTIONS AT
ACQUIRED DECEMBER 31, 1997 DECEMBER 31, 1997(1)
ON VALUE --------------------------- ---------------------------
NAME EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------- -------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Ian D. Bayer......................... 0 $ 0 204,800 333,000 $ 8,681 $ 60,625
Ian Atkinson......................... 5,920 9,852 83,700 154,600 5,064 28,500
Joseph J. Baylis..................... 2,960 4,927 71,480 111,600 5,064 28,500
John A. Keyes........................ 7,400 12,316 81,480 154,600 5,064 28,500
Stanford M. Haley.................... 0 0 30,000 27,000 0 16,875
Karl E. Elers........................ 0 0 429,600 236,000 0 0
</TABLE>
- ------------
(1) Based on the closing price of the Common Stock on the New York Stock
Exchange Composite Tape on December 31, 1997 ($5.75).
LONG-TERM INCENTIVE PLAN AWARDS TABLE -- The table set forth below contains
information with respect to long-term incentive plan awards granted during 1997
to the executive officers named in the Summary Compensation Table pursuant to
the Company's Amended and Restated 1994 Long-Term Incentive Plan. Units awarded
are denominated in dollars. The terms of each award provide that at the end of
the three-year performance period, the account of the participant will be
credited with a dollar amount, not to exceed $1.50 per unit. The amount credited
depends on the degree to which performance measures are achieved. The
performance measure for the 1997 awards is total stockholder return. The amounts
ultimately credited with respect to the 1997 awards are to be determined based
on actual results during the three-year period in relation to this target.
Payment of the award is to be made over the three-year period following the
performance period. Payments may be made in cash, Common Stock, or a combination
thereof, as determined by the Compensation and Stock Option Committee. The
Compensation and Stock Option Committee has discretion to adjust thresholds and
targets during a performance period to take into account special factors.
<TABLE>
<CAPTION>
PERFORMANCE OR ESTIMATED FUTURE PAYOUTS UNDER
OTHER PERIOD UNTIL NON-STOCK PRICE-BASED PLANS
NUMBER MATURATION -----------------------------------
NAME OF UNITS OR PAYOUT THRESHOLD TARGET MAXIMUM
- ------------------------------------- --------- ------------------ ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Ian D. Bayer......................... 682,900 January 1, 2000 $ 341,450 $ 682,900 $1,024,350
Ian Atkinson......................... 327,800 January 1, 2000 163,900 327,800 491,700
Joseph J. Baylis..................... 265,300 January 1, 2000 132,650 265,300 397,950
John A. Keyes........................ 312,200 January 1, 2000 156,100 312,200 468,300
Stanford M. Haley.................... 234,100 January 1, 2000 117,050 234,100 351,150
Karl E. Elers........................ 0 na 0 0 0
</TABLE>
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
10
<PAGE>
of final average compensation in excess of $10,000 per year for each year of
service up to a maximum of 35 years.
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.
<TABLE>
<CAPTION>
PROJECTED RETIREMENT PLAN BENEFIT
AT AGE 65 WITH SERVICE OF
FINAL AVERAGE ----------------------------------------------------------------
COMPENSATION(1) 15 YEARS 20 YEARS 25 YEARS 30 YEARS 35 YEARS
- --------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
$ 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)
</TABLE>
- ------------
(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 Amended and Restated 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 1998.
(2) Annual benefits under the Retirement Plan are limited to $130,000 for 1998
by Section 415 of the Code.
The Company has established the Supplemental Executive Retirement Plan
("SERP") for all of its executive officers, including those named 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 Retirement Plan in the absence of Code limits, less the
amount of the participant's benefit under the Retirement Plan. The SERP credits
prior service with Noranda and its affiliates. For active employees,
participation in the SERP is contingent upon receipt by the Company of a waiver
and release from each participant with regard to any other supplemental unfunded
pension benefits such participant might have with the Company. Messrs. Bayer,
Atkinson, Baylis and Keyes had 29, 17, 13 and 24 years of credited service with
Noranda and its affiliates, respectively. The SERP benefit for Messrs. Bayer,
Atkinson, Baylis and Keyes will be reduced by the benefit payable under
Noranda's supplemental retirement plan (the "Noranda Plan"), such that the sum
of the two benefits equal the SERP benefit. Pursuant to change-in-control
provisions contained in the SERP in effect on the date of the Combination, Mr.
Elers was credited with four additional years of service under the SERP as a
result of the Combination. Mr. Elers received the following annual benefits
under the Retirement Plan and SERP, respectively: $30,917 and $132,918.
11
<PAGE>
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, and
$750,000 each for Messrs. Atkinson, Baylis, Keyes, and Haley, with the executive
to pay the term insurance portion of the premium during a specified period of at
least ten years and the Company to pay the balance as long as 10 years or until
the executive reaches 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 Mr. Elers until he reaches age 65.
EMPLOYMENT AGREEMENTS -- The Company has employment agreements with Messrs.
Bayer, Atkinson, Baylis and Keyes 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 -- During 1997, the Company performed a
comprehensive review of its change-in-control severance program and the
change-in-control provisions contained in other agreements, plans or programs of
the Company. Upon completion of this review, management made recommendations to
the Compensation and Stock Option Committee of the Board of Directors which
provided management with additional guidance regarding such change-in-control
program and provisions. As a result, the Company's change-in-control severance
program was modified with regard to a future change in control of the Company.
The Company adopted a new change-in-control severance plan in 1997
applicable to its executive officers which provides that, in the event
employment terminates (under the terms set forth below) as a result of a change
in control of the Company (as defined below), each such executive officer would
receive a cash payment equal to two times his or her annual compensation. The
covered officers under the plan would receive the payment as a result of
involuntary termination (other than for "cause") or for resignation due to
"good reason" within a period commencing 120 days prior to the change in
control and ending three years after the change in control. In order to be
eligible to receive a severance payment under the plan during the 120-day period
prior to the change in control, the Company must be contemplating such change in
control at the time of the executive officer's termination of employment. The
plan also provides for continuation of group life, medical and dental insurance
benefits (or equivalent thereof) for a period of 24 months after termination on
the same contributory basis as such benefits are provided to active employees of
the Company. Participation in this plan is contingent upon receipt by the
Company of a waiver and release from each executive officer with regard to any
other agreements such officer might have with the Company in connection with
change-in-control severance payments and benefits. The employment agreements
currently in effect for Messrs. Bayer, Atkinson, Baylis and Keyes contain
certain change-in-control severance benefit provisions. In order to participate
in the new change-in-control severance plan, these executive officers would be
required to waive their rights to their current change-in-control agreements.
In addition, under the Amended and Restated 1994 Long-Term Incentive Plan,
outstanding performance units which have not vested would become immediately
payable at the target value of $1.00 per unit pro-rated for the portion of the
performance period up to the date of the change in control. For outstanding
performance units that have vested but for which payment has not been made,
payment would be accelerated in the event of a change in control. The vesting of
stock options granted to executive officers under the Amended and Restated 1994
Long-Term Incentive Plan would also accelerate in the event of a change in
control.
After a change in control, the Company would be required to continue making
premium payments until the executive officer reaches age 65 under the
split-dollar life insurance program. In addition, such executive officers would
become fully vested under the SERP as a result of a change in control.
12
<PAGE>
The severance plan and other change-in-control plans, programs and
agreements include provisions for a reduction in payment to avoid payments that
are not deductible to the Company under Section 280G of the Internal Revenue
Code (the "Code") or are subject to an excise tax under Section 4999 of the
Code.
In connection with the foregoing change-in-control severance plan and other
change-in-control plans, programs and provisions, the Company has adopted a new
definition of "change in control." The new definition provides that a change
in control will occur if (i) any "person" (as such term is used in Sections
13(d) and 14(d)(2) of the Securities Exchange Act of 1934) except Noranda Inc.
is or becomes the "beneficial owner" (as defined in Rule 13d of the Securities
Exchange Act of 1934), directly or indirectly, of Company Securities
representing 30 percent or more of the combined voting power of the then
outstanding Company Securities; (ii) the first purchase of Company Securities
pursuant to a tender or exchange offer (other than a tender or exchange offer
made by the Company); (iii) the approval by the holders of Company Securities of
a reorganization, merger, combination or consolidation, a sale or disposition of
all or substantially all of the Company's assets or a plan of liquidation or
dissolution of the Company, unless in each case following the consummation of
such transaction more than 70 percent of the combined voting power of Company
Securities outstanding prior to such consummation will continue (as Company
Securities or as securities of a successor entity) to be beneficially owned,
directly or indirectly, by all or substantially all of the persons who were
beneficial owners immediately prior thereto in substantially the same
proportion; or (iv) during any period of two consecutive years, individuals who
at the beginning of such period constitute the Board of Directors of the Company
cease for any reason to constitute at least a majority thereof, provided that
any new director whose election or nomination for election by the holders of
Company Securities was approved in advance by a vote of at least two-thirds of
the directors then still in office who were directors at the beginning of the
period shall be considered as though such person were a director at the
beginning of the period. "Company Securities" shall mean the Common Stock of
the Company and the Exchangeable Shares of BMC taken together.
The Combination was deemed a change in control under the definition of
change in control in effect on the date of the Combination (see definition of
change in control below). In connection with the change in control, Mr. Elers
received certain change-in-control payments and benefits pursuant
change-in-control agreements which were in effect at that time. Prior to the
Combination, the Company had a severance agreement with Mr. Elers 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, Mr. Elers would
receive a cash payment equal to two times his annual compensation. This
agreement provided that Mr. Elers would receive the payment as a result of
involuntary termination within three years of the date of the change in control
or voluntary termination during a 120-day period commencing 120 days following
the date of the change in control. As a result of his voluntary termination of
employment in the first quarter of 1997 following the Combination, the Company
made a payment of $1,635,155 pursuant to Mr. Elers' agreement. This agreement
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 Amended and Restated 1994 Long-Term Incentive Plan (prior to being
amended and restated) contained provisions whereby outstanding performance units
became immediately payable at the target value of $1.00 per unit at the time of
the change in control resulting in payments in July 1996 as set forth in the
LTIP payouts column in the Summary Compensation Table. Options granted to Mr.
Elers under the Company's 1985 Stock Option Plan and Amended and Restated 1994
Long-Term Incentive Plan also contained provisions for acceleration of vesting
in the event of a change in control. Because all such options were vested on
July 19, 1996, the date of the Combination, no acceleration of vesting took
place. These agreements and plans also contained provisions for tax gross-up
payments, if applicable, designed to make Mr. Elers 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 Sections 280G and 4999
of the Code or otherwise. No such tax gross-up payment was made. In addition,
after the change in control, the Company will be required to continue making
premium payments until Mr. Elers reaches age 65 under the split-dollar life
insurance program described above. Further, under the SERP, Mr. Elers became
fully vested and received enhanced SERP benefits. For further information
13
<PAGE>
regarding split dollar and SERP benefits payable to Mr. Elers as a result of the
change in control, see "Retirement Plan and Supplemental Agreements" above.
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 stockholders 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.
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 1997. The report also discusses the Committee's basis
for the Chief Executive Officer's compensation for 1997 and corresponding
criteria for such compensation. Mr. Bayer was appointed President and Chief
Executive Officer of the Company on February 28, 1997 and was President and
Co-Chief Executive Officer prior to that. Mr. Elers resigned as Co-Chief
Executive Officer on February 28, 1997 but remained as the Company's
non-executive Chairman of the Board. This report discusses the basis for Mr.
Bayer's compensation in 1997 but does not discuss the basis for Mr. Elers'
executive compensation in 1997 because the basis for Mr. Elers' 1997
compensation is discussed in the Committee's Report on Executive Compensation in
the Company's Proxy Statement for the year ended December 31, 1996.
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
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, gold. These long-term objectives
include, among others, increasing reserves, annual production, stock price, and
total return to stockholders, while maintaining low cash production costs.
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 incentive
bonuses, stock options and long-term performance units.
BASE SALARY
The Committee determines the annual base salary of the Chief Executive
Officer and other senior executive officers based primarily on 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
14
<PAGE>
peer group executives in a comparable position, 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 1997, the Committee, after receiving advice and information from
compensation consultants, approved a 2.9 percent increase in the base salary of
Mr. Bayer, and increases ranging from 2.9 percent to 8.8 percent for other
senior executive officers. After giving effect to the 1997 salary increases, the
Committee believes, based on advice from compensation consultants, that the base
salaries of the Chief Executive Officer and other senior executive officers are
within the median range in relation to the peer group companies. The Committee
generally considers and adjusts salary levels annually.
1997 INCENTIVE BONUS PLAN
During 1997, the Company adopted the 1997 Incentive Bonus Plan (the
"Plan"), effective January 1, 1997. The Plan replaces the prior Executive
Productivity Bonus Plan. Beginning in 1998, the Plan is intended to qualify
bonuses as "performance-based" compensation for purposes of Section 162(m) of
the Code so that the bonuses continue to be deductible by the Company without
regard to the deduction limit otherwise imposed by Section 162(m). The Plan has
been designed to meet Section 162(m) requirements for pre-established objective
performance goals and Stockholder approval in connection with bonuses for 1998
and thereafter. The Plan is further described under "Proposal 2 -- Approval of
the 1997 Incentive Bonus Plan." The Plan is not intended to qualify under
Section 162(m) for any bonuses paid for 1997.
Under the Plan, the bonus period for bonuses which are payable in cash is
the calendar year. Payment of bonuses under the Plan will be made as soon as
practicable in the year following the bonus period once it is determined that
the performance objectives for such period were achieved. Performance objectives
for the Chief Executive Officer and the next four highest compensated officers
(the "Restricted Officers") will be required to comply with the requirements
of Section 162(m). The Committee is the plan administrator with respect to
determining participation and performance objectives for the Restricted Officers
in any given bonus period. Such determination will be made prior to the
beginning of a bonus period or at such other time allowed by the Code. The
Committee shall establish the performance objectives for the bonus period based
on a relative or absolute measure of any one or more of the business criteria
set forth in the Plan. For more information regarding such business criteria,
see "Proposal Two -- Approval of the 1997 Incentive Bonus Plan." The Committee
shall set forth the target level of performance, and bonus amounts will be based
on actual performance compared to the target level. The maximum bonus payable
under the Plan to any participant for any bonus period is one million dollars
($1,000,000). The Committee can, in its sole discretion, reduce the amount of
any bonus.
For 1997, the Committee established target award percentages for the
executive officers at a range varying from 50 percent of base salary paid during
1997 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 under Base Salary.
The Committee established a Company threshold performance level based on the
ratio of the Company's actual cash flow compared to its targeted cash flow. Once
the threshold was met, the Company then considered the following additional
performance objectives: gold production, reserve growth, safety, progress on
projects and environmental performance. Based on the results of the Company's
performance in 1997, the Committee has determined that the Company has met the
threshold performance objective and attained the necessary additional
performance objectives for the 1997 bonus period to make bonus awards under the
Plan. Although the attainment of all performance targets was not required, all
such performance targets were evaluated to determine the bonus awards actually
made. The Committee's determination of the Chief Executive Officer's bonus is
based on overall Company performance. With regard to the Company's senior
executive officers, the Committee's determination of such officers' bonuses is
based upon individual performance as well as overall Company performance.
Bonuses paid to the Chief Executive Officer and to the listed senior executive
officers are set forth in the Bonus column in the Summary Compensation Table.
15
<PAGE>
1994 LONG-TERM INCENTIVE PLAN
The Amended and Restated 1994 Long-Term Incentive Plan ("LTIP") provides
for awards designed to provide executives with incentives to achieve long-term
business objectives of the Company. The LTIP provides for the grant of any or
all of the following types of awards: stock options, stock appreciation rights
and stock and cash awards including long-term performance unit awards. Payment
of awards may be made in cash, Common Stock, Exchangeable Shares or combinations
thereof, as determined by the Committee.
The LTIP 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 LTIP and adopt rules, regulations and guidelines for carrying out the LTIP.
The aggregate number of shares of Common Stock or Exchangeable Shares that
may be awarded pursuant to the LTIP 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 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. See discussion of BMC's 1997
Long-Term Incentive Plan below. The number of shares of Common Stock or
Exchangeable Shares that may be awarded pursuant to the LTIP is subject to
adjustment upon the occurrence of certain events.
In 1997, the Board of Directors adopted and the Stockholders approved
changes to the LTIP which are designed to (i) allow certain awards 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 LTIP.
In 1997, the Board of Directors of Battle Mountain Canada Ltd. adopted the
Battle Mountain Canada Ltd. 1997 Long-Term Incentive Plan ("BMC LTIP"). The
BMC LTIP was adopted in order to provide stock based awards to Canadian based
employees of the Company in Exchangeable Shares, which are Canadian securities
traded on The Toronto Stock Exchange. See "Voting and Solicitation" for a
discussion of the relationship between the Company's Common Stock and BMC's
Exchangeable Shares. The BMC LTIP is intended to act as a Canadian "mirror"
plan to the LTIP in connection with the Company's capital structure, which
includes both Common Stock and Exchangeable Shares. The BMC LTIP was adopted to
effect the intent of the LTIP to provide awards in Exchangeable Shares as
reflected in the amendments and restatement of the LTIP approved by the
Stockholders in connection with the Combination. Pursuant to legal advice that
the Company could not issue Exchangeable Shares under the LTIP, a function
reserved to the Company's affiliate BMC, the BMC LTIP was adopted. The aggregate
number of Exchangeable Shares available for awards under the BMC LTIP is
2,500,000. Any award under the BMC LTIP will reduce the number of shares
available for issuance under the LTIP. The Board of Directors of BMC administers
the BMC LTIP. The procedure by which awards are granted under the BMC LTIP
involves a recommendation by the Committee of an award to selected Canadian
based employees to the Board of Directors of BMG. The Board of Directors of BMC
then takes appropriate action.
STOCK OPTION AWARDS
On December 19, 1997, the Committee authorized a stock option grant to the
Chief Executive Officer, senior executive officers and other key employees under
the LTIP. The options were priced at the fair market value on the date of grant,
and the options will vest 50% on the first anniversary of the grant date and
100% on the second anniversary of the grant date. The number of shares
underlying the 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 using the same competitive
analysis as base salary and bonuses and, based on advice from compensation
consultants, were generally at the median level compared to the peer group
companies.
16
<PAGE>
LONG-TERM PERFORMANCE UNITS
Long-term performance units may be granted under the LTIP in order to
provide executive officers and key employees with incentives to achieve
long-term objectives of the Company. The terms of the awards provide for the
payment of a dollar value 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.
In 1997, the LTIP was amended to provide a single performance criteria in
connection with the grant of long-term performance units based on the comparison
of total stockholder return where the total stockholder return on the Common
Stock is ranked against that of the common stock of the peer group companies
named under "Stockholder Return Performance Presentation" below. The total
stockholder return will be measured over a performance period from January 1,
1997 through December 31, 1999. The maximum amount payable to any individual for
this performance period is for the Chief Executive Officer, $1,100,000; for any
other officers, $500,000 and for other key employees, $350,000.
Under the LTIP, units are granted every three years. The Committee approved
a grant of units in 1997 for the performance period beginning January 1, 1997
and ending December 31, 1999. The number of units granted to the Chief Executive
Officer and the senior executive officers is determined by formula. The Chief
Executive Officer was granted a number of units which is equal to the dollar
amount of 62.5 percent of his projected three-year salary. For senior executive
officers, the number of units was based on 50 percent of their projected
three-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 incentive bonus comparisons as a result of limited data
available for long-term incentive compensation plans of the peer group
companies.
At the end of a performance period, the total stockholder return
performance measure will be used to calculate a multiplier which, when
multiplied by the number of performance units awarded to a participant,
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-third of the dollar amount credited to the account of a
participant will be paid to the participant as soon as practicable after the end
of the performance period, with the balance paid equally over the next two
years. Payments may be made in the form of cash, shares of Common Stock or a
combination of cash and Common Stock, as determined by the Committee. The Chief
Executive Officer's payout amount will be determined by the Committee on the
same basis as the other participants.
As a result of the Combination, outstanding performance units granted in
July 1994 under the LTIP became immediately payable in July 1996 at the target
value of $1.00 per unit pursuant to certain change-in-control provisions. See
Summary Compensation Table and "Change-in-Control Arrangements" above. 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. Messrs. Bayer, Atkinson, Baylis, Keyes and Haley
were not participants during the three-year performance period ended June 30,
1995 or in connection with the grant of units in July 1994, and therefore
received no payment thereunder.
III. POLICY WITH RESPECT TO THE $1 MILLION DEDUCTIBILITY LIMIT
Section 162(m) of the Code was enacted in 1993 and generally affects the
Company's federal income tax deduction for compensation paid to the Company's
Chief Executive Officer and four other highest paid executive officers. To the
extent compensation is "performance-based" within the meaning of Section
162(m), the Section's limitations will not apply. In 1997, the Board of
Directors adopted, and the Stockholders approved, amendments to and restatement
of the LTIP to allow certain awards to be
17
<PAGE>
deductible to the Company by meeting the requirements of Section 162(m). The
Committee has recommended to management that the performance criteria for the
payment of awards under the Company's 1997 Incentive Bonus Plan for awards
payable for 1998 and thereafter be structured so as to be exempt from the
deductibility limit under Section 162(m). See "Proposal Two -- Approval of the
Company's 1997 Incentive Bonus Plan." Awards under the 1997 Incentive Bonus
Plan for 1997 do not qualify for the performance-based exclusion. While the
Company does not presently anticipate that the payment of compensation will be
in excess of that which is deductible under Section 162(m) in the near term, the
Committee has recommended the changes to the aforementioned plans to provide
appropriate compensation when certain performance goals have been achieved,
which compensation qualifies for deduction under Section 162(m).
IV. SUMMARY
The Committee believes, after receiving advice and information from
compensation consultants, 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
Mary Mogford
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, 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 loan was subsequently replaced with an interest-free loan with the
Company in November 1996. The largest amount outstanding under the loan during
1997 was $105,597, and as of February 28, 1998, $96,963 was outstanding.
Noranda beneficially owned approximately 44 percent of Hemlo Gold's
outstanding common stock prior to the consummation of the Combination. As a
result of the Combination, Noranda became the Company's largest Stockholder. As
of March 10, 1998, 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.
The Company holds investments in affiliated companies of Noranda that at
December 31, 1997 were carried on the Company's books at their cost of $12.4
million. The Company received dividends on these investments in the aggregate
amount of $400,000 in 1997.
18
<PAGE>
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 the (i) cumulative total return of the S&P 500 Index, and (ii) the
Company's gold peer index (which includes Barrick Gold Corporation, Newmont
Mining, Placer Dome Inc., Echo Bay Mines Ltd., Homestake Mining and TVX Gold).
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, 1992, and that all dividends were reinvested. The component companies in the
peer group index are weighted according to their respective market
capitalizations at the end of each year. Santa Fe Pacific Gold Corporation was
dropped from the return calculation of the peer group, as a result of its being
acquired during 1997, and replaced with TVX Gold.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
BATTLE MOUNTAIN GOLD, S&P 500 INDEX AND GOLD PEER INDEX
Assumes $100 Invested on December 31, 1992.
<TABLE>
<CAPTION>
1992 1993 1994 1995 1996 1997
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
BMG.................................. 100.0 198.89 217.09 168.66 137.11 115.61
S&P 500.............................. 100.0 110.06 111.52 153.39 188.59 251.49
Peer Group........................... 100.0 190.39 155.44 178.59 177.12 110.24
</TABLE>
PROPOSAL TWO
APPROVAL OF THE COMPANY'S 1997 INCENTIVE BONUS PLAN
In 1993, the Code was amended by the addition of Section 162(m), which
limits the tax deduction available to a company with respect to compensation
paid to certain executive officers, unless the compensation qualifies as
"performance based." The Board of Directors believes that in light of Section
162(m), it was desirable to adopt an incentive bonus plan to provide for
objective performance goals, and to submit the plan for Stockholder approval.
This would enable the executive's bonus to qualify as "performance based"
compensation for purposes of Section 162(m), and thereby continue to be
deductible by the Company without regard to the deduction limit otherwise
imposed by such Section. The Board of Directors through its Compensation and
Stock Option Committee (the "Committee" as used in this section) has adopted
the 1997 Incentive Bonus Plan (the "Plan") and is submitting the Plan to the
Stockholders for approval. The Plan is attached to this Proxy Statement as
Appendix A. Approval of this proposal requires the affirmative vote of a
majority of the Shares represented 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, although
the Plan is effective as of January 1, 1997, for purposes of Section 162(m), the
bonuses will qualify as "performance based" as of January 1, 1998.
19
<PAGE>
The following is a general summary of the 1997 Incentive Bonus Plan and is
qualified in its entirety by the full text thereof which is attached to this
Proxy Statement as Appendix A.
PURPOSE. The purpose of the 1997 Incentive Bonus Plan is to increase
incentives for employees to attain and maintain high standards of performance,
to attract and retain employees of outstanding competence and ability, to
stimulate the active interest of employees in the development and financial
success of the Company, to further the aligning of interests of employees with
those of the Stockholders and to reward employees for outstanding performance
when certain objectives are achieved.
ADMINISTRATION. The Plan Administrator will interpret the Plan, prescribe,
amend, and rescind rules relating to it, select eligible participants, and take
all other actions necessary for its administration, which actions will be final
and binding upon all participants. The "Plan Administrator" means (1) the
Committee with respect to determining participation and performance objectives
for the Chief Executive Officer and the Company's four highest compensated
officers other than the Chief Executive Officer ("Restricted Officers"); and
(2) subject to the Committee and the requirements of Section 162(m) of the Code,
the Chief Executive Officer of the Company with respect to all other
administration under the Plan.
COMPLIANCE WITH SECTION 162(M). For Bonus Periods (the calendar year)
beginning on or after January 1, 1998, the Plan will be administered to comply
with Section 162(m) of the Code and regulations promulgated thereunder, and if
any Plan provision is later found not to be in compliance with Section 162(m),
the provision will be deemed modified as necessary to meet the requirements of
Section 162(m). Notwithstanding anything in the Plan to the contrary, the Plan
Administrator, in its absolute discretion, may bifurcate the Plan so as to
restrict, limit, or condition the applicability of any provision of the Plan to
Restricted Officers without so restricting, limiting, or conditioning the Plan
with respect to other participants.
SELECTION OF PARTICIPANTS. For each Bonus Period, the Plan Administrator
will determine in writing the participants who will be eligible to receive a
bonus for such period. All employees of the Company (approximately 1,810
persons) are potentially eligible to participate in the Plan. For Bonus Periods
beginning on or after January 1, 1998, the Plan Administrator will make such
determination of participants prior to the commencement of the Bonus Period, or
at such other time as permitted by Section 162(m) of the Code and regulations
thereunder.
PERFORMANCE OBJECTIVES. For each Bonus Period:
(a) With respect to all participants for the Bonus Period beginning
January 1, 1997, and with respect to all participants other than
Restricted Officers of Bonus Periods beginning January 1, 1998: (i)
the Plan Administrator will establish the performance objectives
before the bonus is paid; and (ii) the performance objective
selected may be a relative or absolute measure of any one or more
of the Business Criteria (discussed below), or may be one or more
measures of individual employee performance, or may be a
combination of these;
(b) With respect to participants who are Restricted Officers for Bonus
Periods beginning on or after January 1, 1998: (i) the Plan
Administrator will establish the performance objective in writing
prior to the commencement of the Bonus Period, or at such other
time as permitted by Section 162(m) of the Code and regulations
thereunder, and (ii) the performance objective selected shall be
relative or absolute measure of any one or more of the Business
Criteria; and
(c) The performance objectives will, subject to Bonus Certification
discussed below, state in terms of a formula the method for
computing the amount of bonus payable to the participant. The
formula will set the target level of performance required for the
Performance Objective to determine whether the Performance
Objective has been obtained. Under the formula, the bonus may vary
in direct proportion to the level of performance of the Performance
Goal as compared with the target. The formula may consist of
alternative formulas, where the Plan Administrator may select one
alternative before the bonus is paid.
BUSINESS CRITERIA. The following Business Criteria may apply to a business
unit, one or more separately incorporated entities, or the Company as a whole.
The Business Criteria are (1) operating
20
<PAGE>
income, (2) net income, (3) pre-tax income, (4) debt reduction, (5) earnings per
share, (6) safety, (7) cash flow, (8) return on investment, (9) return on
capital, (10) revenue, (11) return on equity, (12) total shareholder return,
(13) return on assets, (14) gold production, (15) reserve growth, (16)
environmental performance, and (17) progress on projects.
BONUS CERTIFICATION. For Bonus Periods beginning on or after January 1,
1998, the Plan Administrator will certify in writing prior to payment of the
bonus that the Performance Objective has been attained and the bonus is payable.
With respect to Committee certification, approved minutes of the meeting in
which the certification is made will be treated as written certification.
MAXIMUM BONUS PAYABLE. The maximum bonus payable under the Plan to any
participant for any Bonus Period is one million dollars ($1,000,000).
DISCRETION TO REDUCE REWARDS. The Plan Administrator, in its sole and
absolute discretion, may reduce the amount of any reward otherwise payable to a
participant.
ACTIVE EMPLOYMENT REQUIREMENT. A bonus will be paid for a Bonus Period
only to a participant who is actively employed by the Company (or on approved
vacation) throughout the Bonus Period and who is employed by the Company on the
date the bonus is paid. To the extent consistent with the deductibility of
awards under Section 162(m) of the Code and regulation thereunder, the Plan
Administrator may in its sole discretion grant a bonus for the Bonus Period to a
participant who is first employed or who is promoted to position eligible to
become a participant under the Plan during the Bonus Period, who is transferred
to or from a location where the Plan is in effect, who is on sick leave, family
or medical leave (U.S.) or parental leave (Canada), or whose employment is
terminated during the Bonus Period because of the participant's retirement with
entitlement to immediate pension benefits under the Company's retirement plan,
death, or because of total and permanent disability as that or a similar term is
defined in the Company's generally applicable long-term disability insurance
policy. In such cases of partial active employment, bonus will be based on
salary paid during the Bonus Period.
STOCKHOLDER APPROVAL. No bonus will be payable under the Plan to
Restricted Officers for Bonus Periods on or after January 1, 1998, unless the
Plan is disclosed to or approved by the Stockholders in accordance with Section
162(m) of the Code and regulations thereunder.
AMENDMENT AND TERMINATION OF THE PLAN. The Committee may amend or
terminate the Plan at any time, except that no amendment or termination shall be
made which would impair the rights of any participant to a bonus which would be
payable were the participant to terminate employment on the effective date of
such amendment or termination, unless the participant consents to such amendment
or termination.
21
<PAGE>
The following table sets forth the amounts that were paid out under the
Plan for fiscal year 1997. It is not possible at this time to predict what
amounts, if any, are to be paid out under the Plan for fiscal year 1998.
NAME AND PRINCIPAL POSITION DOLLAR VALUE ($)
- ------------------------------------- -----------------
Ian D. Bayer
President and Chief Executive
Officer............................ 123,859
Ian Atkinson
Senior Vice
President -- Exploration........... 59,452
Joseph J. Baylis
Senior Vice President -- Corporate
Development........................ 45,168
John A. Keyes
Senior Vice
President -- Operations............ 56,652
Stanford M. Haley
Vice President -- Human
Resources.......................... 40,928
Karl E. Elers
Former Chairman of the Board and
Co-Chief Executive Officer......... 21,700
All executive officers as a group.... 479,988
All non-executive directors as a
group.............................. 0
All non-executive employees as a
group.............................. 711,692
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF THIS
PROPOSAL.
PROPOSAL THREE
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The 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, 1998. 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 Annual 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.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF THIS
PROPOSAL.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of Forms 3, 4 and 5 submitted to the Company
during and with respect to 1997 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 1997.
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 law
and regulations. The discretionary authority includes matters which the Board of
Directors does not know are to be presented at
22
<PAGE>
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 1999
annual meeting, and otherwise eligible, must be received by the Company (at the
address indicated in the accompanying notice) no later than November 16, 1998,
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 16, 1998
23
<PAGE>
APPENDIX A
BATTLE MOUNTAIN GOLD COMPANY
1997 INCENTIVE BONUS PLAN
1. PURPOSE. The Battle Mountain Gold Company 1997 Incentive Bonus Plan is
intended to increase incentives for employees to attain and maintain the highest
standards of performance, to attract and retain employees of outstanding
competence and ability, to stimulate the active interest of employees in the
development and financial success of the Company, to further the identity of
interests of employees with those of the Company's shareholders generally and to
reward employees for outstanding performance when certain objectives are
achieved.
2. DEFINITIONS. As used herein, the terms set forth below shall have the
following respective meanings:
"Board" means the Board of Directors of Battle Mountain Gold
Company.
"Bonus" means the award payable under this Plan.
"Bonus Period" means the calendar year beginning on or after the
Effective Date with respect to which the Bonus is paid.
"Business Criteria" means the business criteria listed in paragraph
7 of this Plan.
"Committee" means the Compensation and Stock Option Committee of the
Board, which shall be constituted at all times so as to meet the outside
director requirements of Section 162(m) of the Code.
"Company" means Battle Mountain Gold Company and its subsidiaries.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"Effective Date" means January 1, 1997.
"Participant" means, with respect to a Bonus Period, the employees
of the Company selected by the Plan Administrator to be eligible to receive
a Bonus for such Bonus Period as provided in paragraph 5 of this Plan, who
may include Restricted Officers, other officers of the Company, and other
employees of the Company.
"Performance Objective" means the performance objective or
objectives established pursuant to paragraph 6 of the Plan.
"Plan" means the Battle Mountain Gold Company 1997 Incentive Bonus
Plan.
"Plan Administrator" means (1) the Committee with respect to
determining participation and Performance Objectives for Restricted
Officers; and (2) subject to the Committee and the requirements of Section
162(m) of the Code, the Chief Executive Officer of the Company with respect
to all other administration under the Plan.
"Restricted Officers" means the Chief Executive Officer of Battle
Mountain Gold Company and its four highest compensated officers (other than
the Chief Executive Officer) as defined in Treasury Regulation
1.162-27(c)(2).
3. ADMINISTRATION. The Plan Administrator shall interpret the Plan,
prescribe, amend, and rescind rules relating to it, select eligible
Participants, and take all other actions necessary for its administration, which
actions shall be final and binding upon all Participants.
4. COMPLIANCE WITH SECTION 162(M). For Bonus Periods beginning on or
after January 1, 1998, the Plan shall be administered to comply with Section
162(m) of the Code and regulations promulgated thereunder, and if any Plan
provision is later found not to be in compliance with Section 162(m) of the
Code, the provision shall be deemed modified as necessary to meet the
requirements of Section 162(m) of the Code. Notwithstanding anything in the Plan
to the contrary, the Plan Administrator, in its absolute discretion, may
bifurcate the Plan so as to restrict, limit, or condition the applicability of
any provision of
A-1
<PAGE>
the Plan to Restricted Officers without so restricting, limiting, or
conditioning the Plan with respect to other Participants.
5. SELECTION OF PARTICIPANTS. For each Bonus Period, the Plan
Administrator shall determine in writing the Participants who shall be eligible
to receive a Bonus for such Period. For Bonus Periods beginning on or after
January 1, 1998, the Plan Administrator shall make such determination of
Participants prior to the commencement of the Bonus Period, or at such other
time as permitted by Section 162(m) of the Code and regulations thereunder.
6. PERFORMANCE OBJECTIVE. For each Bonus Period:
(a) With respect to all Participants for the Bonus Period beginning
January 1, 1997, and with respect to all Participants other than Restricted
Officers of Bonus Periods beginning January 1, 1998: (i) the Plan
Administrator shall establish the Performance Objective before the Bonus is
paid; and (ii) the Performance Objective selected may be a relative or
absolute measure of any one or more of the Business Criteria, or may be any
one or more measures of individual employee performance, or may be a
combination of these.
(b) With respect to Participants who are Restricted Officers for
Bonus Periods beginning on or after January 1, 1998: (i) the Plan
Administrator shall establish the Performance Objective in writing prior to
the commencement of the Bonus Period, or at such other time as permitted by
Section 162(m) of the Code and regulations thereunder; and (ii) the
Performance Objective selected shall be a relative or absolute measure of
any one or more of the Business Criteria.
(c) The Performance Objective shall, subject to paragraph 8 below,
state in terms of a formula the method for computing the amount of Bonus
payable to the Participant. The formula shall set the target level of
performance required for the Performance Objective to determine whether the
Performance Objective has been attained. Under the formula, the Bonus may
vary in direct proportion to the level of performance of the Performance
Goal as compared with the target. The formula may consist of alternative
formulas, where the Plan Administrator may select one alternative before
the Bonus is paid.
7. BUSINESS CRITERIA. The following Business Criteria may apply to a
business unit, one or more separately incorporated entities, or the Company as a
whole. The Business Criteria are:
Operating Income Net Income
Pre-Tax Income Debt Reduction
Earnings Per Share Safety
Cash Flow Return on Investment
Return on Capital Revenue
Return on Equity Total Shareholder Return
Return on Assets Gold Production
Reserve Growth Environmental Performance
Progress on Projects
The above terms shall have the same meaning as in the Company's financial
statements, or if the terms are not used in the Company's financial statements,
as applied pursuant to generally accepted accounting principles, or as used in
the industry, as applicable.
8. BONUS CERTIFICATION. For Bonus Periods beginning on or after January
1, 1998, the Plan Administrator shall certify in writing prior to payment of the
Bonus that the Performance Objective has been attained and the Bonus is payable.
With respect to Committee certification, approved minutes of the meeting in
which the certification is made shall be treated as written certification.
9. MAXIMUM BONUS PAYABLE. The maximum Bonus payable under this Plan to
any Participant for any Bonus Period shall be one million dollars ($1,000,000).
10. DISCRETION TO REDUCE AWARDS. The Plan Administrator, in its sole and
absolute discretion, may reduce the amount of any award otherwise payable to a
Participant.
A-2
<PAGE>
11. ACTIVE EMPLOYMENT REQUIREMENT. Except as provided below, Bonus shall
be paid for a Bonus Period only to a Participant who is actively employed by the
Company (or on approved vacation) throughout the Bonus Period and who is
employed by the Company on the date the Bonus is paid. To the extent consistent
with the deductibility of awards under Section 162(m) of the Code and
regulations thereunder, the Plan Administrator may in its sole discretion grant
a Bonus for the Bonus Period to a Participant who is first employed or who is
promoted to a position eligible to become a Participant under this Plan during
the Bonus Period, who is transferred to or from a location where this Plan is in
effect, who is on sick leave, Family or Medical Leave (U.S.) or Parental Leave
(Canada), or whose employment is terminated during the Bonus Period because of
the Participant's retirement with entitlement to immediate pension benefits
under the Company's retirement plan, death, or because of total and permanent
disability as that or a similar term is defined in the Company's generally
applicable long term disability insurance policy. In such cases of partial
active employment, Bonus will be based on salary paid during the Bonus Period.
12. PAYMENT OF BONUS. A Bonus shall be paid to the Participant for the
Bonus Period as provided in this Plan. The Company shall pay the Bonus to the
Participant in a single cash payment as soon as administratively practicable
after the Bonus Period and after the Plan Administrator certifies that the Bonus
is payable as provided in paragraph 8. In the event of the Participant's
incompetency, the Company in its sole discretion may pay any Bonus to the
Participant's guardian or directly to the Participant. In the event of the
Participant's death, any Bonus shall be paid to the Participant's spouse or, if
there is no surviving spouse, the Participant's estate. Payments under this
paragraph shall operate as a complete discharge of the Plan Administrator and
the Company. The Company shall deduct from any Bonus paid under the Plan the
amount of any taxes required to be withheld by the federal or any state or local
government.
13. STOCKHOLDER APPROVAL. No Bonus shall be payable under this Plan to
Restricted Officers for Bonus Periods on or after January 1, 1998, unless the
Plan is disclosed to and approved by the shareholders of Battle Mountain Gold
Company in accordance with Section 162(m) of the Code and regulations
thereunder.
14. LIMITATION OF RIGHTS. Nothing in this Plan shall be construed to (a)
give any employee of the Company any right to be awarded any Bonus other than
that set forth herein, as determined by the Plan Administrator; (b) give a
Participant any rights whatsoever with respect to shares of common stock of the
Company; (c) limit in any way the right of the Company to terminate an
employee's employment with the Company at any time; (d) give a Participant or
any other person any interest in any fund or in any specific asset or assets of
the Company; or (e) be evidence of any agreement or understanding, express or
implied, that the Company will employ an employee in any particular position or
at any particular rate of remuneration.
15. NONASSIGNMENT. The right of a Participant to the payment of any Bonus
under the Plan may not be assigned, transferred, pledged, or encumbered, nor
shall such right or other interests be subject to attachment, garnishment,
execution, or other legal process.
16. AMENDMENT OR TERMINATION OF THE PLAN. The Committee may amend or
terminate the Plan at any time, except that no amendment or termination shall be
made which would impair the rights of any Participant to a Bonus which would be
payable were the Participant to terminate employment on the effective date of
such amendment or termination, unless the Participant consents to such amendment
or termination.
17. GOVERNING LAW. The Plan shall be governed by the laws of the State of
Texas.
A-3
<PAGE>
IN WITNESS WHEREOF, Battle Mountain Gold Company has caused this document,
titled "Battle Mountain Gold Company 1997 Incentive Bonus Plan," to be
executed by its duly authorized officer on this day of , 199 .
BATTLE MOUNTAIN GOLD COMPANY:
By: __________________________________
STANFORD M. HALEY
VICE PRESIDENT, HUMAN RESOURCES
A-4
<PAGE>
PROXY
BATTLE MOUNTAIN GOLD COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD WEDNESDAY, APRIL 27, 1998
The undersigned hereby appoints Greg V. Etter, Stan M. Haley and Jeffrey L.
Powers, jointly and severally, proxies, with full power of substitution and with
discretionary authority, to represent and to vote, as designated on the reverse
side hereof, all shares of Common Stock which the undersigned is entitled to
vote at the 1998 annual meeting of stockholders of Battle Mountain Gold Company,
or any adjournment or postponement thereof.
This proxy when properly executed will be voted in the manner directed
herein by the undersigned stockholder.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSALS 1, 2 AND 3.
---
(Continued and to be signed and dated on other side)
- --------------------------------------------------------------------------------
1. Election of Directors
FOR all nominees [ ] WITHHOLD AUTHORITY to vote [ ] EXCEPTIONS [ ]
listed below for all nominees listed
below.
Nominees: David W. Kerr, Mary Mogford, William A. Wise
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
MARK THE "EXCEPTIONS" BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE
PROVIDED BELOW.)
Exceptions __________________________________________________________________
2. Approval of the 1997 Incentive Bonus Plan.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. PROPOSAL TO RATIFY THE APPOINTMENT of Price Waterhouse LLP as the independent
public accountants for the Company for 1998.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
4. In their discretion, the proxies are authorized to vote upon any other
business as may properly come before the annual meeting.
Change of Address and/
or Comments Mark Here [ ]
(In signing as Attorney, Administrator,
Executor, Guardian, Trustee or Corporate
Officer, please add your title as such.)
Date: __________________________________
________________________________________
(Signature of Stockholder)
________________________________________
(Signature of Stockholder)
VOTES MUST BE INDICATED (X) IN [X]
BLACK OR BLUE INK.
SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE
