<PAGE>
[LOGO]
Notice of Annual Meeting
April 30, 1999
and Proxy Statement
<PAGE>
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 30, 1999
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 New York Helmsley Hotel, 212
East 42nd Street, New York, New York, U.S.A., on Friday, April 30, 1999, at
12:00 p.m., New York time, for the following purposes:
1. To elect three Class II directors to serve for the applicable term of
office and until their successors are duly elected and qualified;
2. To ratify the appointment of PricewaterhouseCoopers LLP as the
independent public accountants for the Company for the 1999 fiscal year;
and
3. 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 19, 1999, 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
[SIGNATURE]
Greg V. Etter
Vice President, General Counsel
and Secretary
March 25, 1999
333 Clay Street, 42nd Floor
Houston, Texas 77002
<PAGE>
[LOGO]
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 25, 1999. 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 30, 1999 at The New York Helmsley Hotel, 212
East 42nd Street, New York, New York, U.S.A. at 12:00 p.m. New York 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 third 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 has 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
This proxy is being solicited by the Board of Directors of the Company. In
addition to the solicitation of proxies by mail or other written communication,
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, for ratification of PricewaterhouseCoopers LLP as the Company's
independent public accountants for 1999 and at 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 those subsidiaries of the Company precluded from voting any Common
Stock under applicable Nevada law. Pursuant to the Voting Agreement, each holder
of Exchangeable Shares is entitled to instruct the Trustee as to the voting of
the number of votes attached to the Special Voting Stock represented by such
holder's Exchangeable Shares. The Trustee will exercise each vote attached to
the Special Voting Stock only as directed by the relevant holder, and in the
absence of instructions from a holder as to voting will not exercise such votes.
A holder may instruct the Trustee to give a proxy to such holder entitling the
holder to vote personally such holder's relevant number of votes or to grant to
the Company's management a proxy to vote such votes. The
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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 all as
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
The Board of Directors has fixed March 19, 1999 as the record date (the
"Record Date") for determining stockholders entitled to vote at the Annual
Meeting. Only stockholders of record as of the close of business on the Record
Date are entitled to vote at the Annual Meeting. As of March 19, 1999, the
Record Date for determining Stockholders entitled to vote at the meeting, there
were 127,966,985 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 148,194,939 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 276,161,924 shares
outstanding and entitled to vote at the Annual Meeting (all shares being
entitled to vote are 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, 1998, accompanies the proxy materials being
mailed to all Stockholders. The Annual Report is not a part of this proxy
solicitation material.
PROPOSAL NUMBER 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 Messrs. Bayer, Childers and Elers as Class II directors. Messrs.
Bayer, Childers and Elers are presently members of the Board of Directors of the
Company (the "Board").
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 2002. Should any nominee
become unavailable for election, the Board 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
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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 2000 for Class III directors and in
2001 for Class I 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 II directors at the meeting, including information as to each
nominee's age as of March 19, 1999, position with the Company and business
experience during the past five years.
IAN D. BAYER is the President and Chief Executive Officer of
the Company as of February 1997. Prior to that date, Mr.
Bayer had served as President and Co-Chief Executive Officer
since July 1996 following the Combination. He serves on the
Executive Committee. Prior to joining the Company, Mr. Bayer
had served as a Director and the 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.
He is 59 years old.
[PHOTO]
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. Mr. Childers serves on the Company's
Compensation and Stock Option Committee and on the Company's
Corporate Governance and Nominating Committee. He is 66
years old.
[PHOTO]
KARL E. ELERS is the non-executive Chairman of the Board of
the Company and is a member of the Company's Executive
Committee, the Company's Audit Committee, and the Company's
Environmental, Safety and Health 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.
He is 60 years old.
[PHOTO]
3
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BACKGROUND OF DIRECTORS WITH TERMS EXPIRING IN 2000 AND 2001
The following sets forth information concerning the seven directors of the
Company whose present terms will continue until 2000 for Class III directors or
2001 for Class I directors, including information as to each director's age as
of March 19, 1999, position with the Company and business experience during the
past five years.
DOUGLAS J. BOURNE was Chairman of the Board and Chief
Executive Officer of the Company until his retirement in
April 1990. Mr. Bourne serves as Chairman of the Company's
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 1985 when the Company
was incorporated, 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 76 years old.
[PHOTO]
DAVID L. BUMSTEAD joined Noranda Inc. (an integrated natural
resources company and the Company's largest stockholder,
"Noranda") in 1963 and assumed his current position as
Executive Vice President of Noranda 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 as 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 57 years old.
[PHOTO]
DELO H. CASPARY has been engaged for more than five years in
managing his personal investments. He became a director of
the Company in 1985, and his present term expires in 2000
(Class III). He currently serves as Chairman of the
Company's Environmental, Safety and Health Committee. He is
73 years old.
[PHOTO]
DAVID W. KERR has served as Chief Executive Officer of
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 Compensation and Stock Option Committee. Mr.
Kerr is also a director of Noranda and EdperBrascan
Corporation, and his present term expires in 2001 (Class I).
He is 55 years old.
[PHOTO]
4
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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 and as a member of the Company's Corporate
Governance and Nomination Committee. Mr. McCutcheon is also
a director of Noranda. He is 62 years old.
[PHOTO]
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 her
present term expires in 2001 (Class I). She serves as
Chairman of the Company's Corporate Governance and
Nominating Committee and on the Company's Compensation and
Stock Option Committee. She is 54 years old.
[PHOTO]
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 his present term expires in 2001
(Class I). He currently serves as Chairman of the Company's
Compensation and Stock Option Committee. He is 53 years old.
[PHOTO]
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 of the Board is composed of Messrs. McCutcheon
(Chairman), Bumstead and Elers, none 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 of the Board is composed of
Messrs. Wise (Chairman), Childers and Kerr 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 outside directors, executive officers
and other key employees.
5
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The Environmental, Safety and Health Committee of the Board is composed of
Messrs. Caspary (Chairman), Bourne and Elers. The Environmental, Safety and
Health Committee oversees the Company's health, safety and environmental
policies and compliance programs.
The Corporate Governance and Nominating Committee of the Board is composed
of Ms. Mogford (Chairman) and Messrs. Childers and McCutcheon. The Corporate
Governance and Nominating Committee addresses issues related to the composition
of the Board and assists the Chairman of the Board in overseeing the operation
of the Board in discharging its mandate and responsibilities. Holders of Common
Stock who wish to nominate persons for election to the Board of Directors must
comply with the provisions of the Company's Bylaws described below under
"Nominations and Stockholder Proposals."
During 1998, the Board of Directors held four meetings, the Environmental,
Safety and Health Committee and the Compensation and Stock Option Committee each
met on three occasions, the Audit Committee and the Corporate Governance and
Nominating Committee each met on two occasions, and the Executive Committee met
on one occasion. All directors attended at least 75 percent of the aggregate
number of meetings of the Board of Directors and the committees on which they
served.
COMPENSATION OF DIRECTORS
Effective October 27, 1998, each director, other than those who are
regularly employed officers of the Company or its subsidiaries, receives a
director's fee of $20,000 per annum and an additional fee of $1,000 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 1998, acquiring an option to purchase 20,250 shares
of Common Stock at an exercise price of $4.46 per share. Under the Company's
Nonqualified Stock Option Plan for Outside Directors, as amended on February 2,
1999, individuals who become nonemployee directors of the Company are
automatically granted an initial option to purchase 10,000 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 5,000 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 then current
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. In 1998, Mr. Elers received a fee of
$3,333 per month for his service as the non-executive Chairman of the Board.
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SECURITY OWNERSHIP OF DIRECTORS,
EXECUTIVE OFFICERS AND CERTAIN BENEFICIAL OWNERS
Set forth in the table below is the total number of shares of Common Stock
beneficially owned as of March 19, 1999, by each of the Company's directors and
nominees, each of the executive officers named in the Summary Compensation Table
below, holders of more than 5 percent of the shares and all directors and
executive officers as a group. 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.
<TABLE>
<CAPTION>
NUMBER OF PERCENTAGE OF
NAME SHARES CLASS (+)
- ----------------------------------------------------- ---------- -------------
<S> <C> <C> <C>
Ian Atkinson......................................... 108,744 (1) *
Ian D. Bayer......................................... 212,306 (2) *
Joseph J. Baylis..................................... 99,142 (3) *
Douglas J. Bourne.................................... 149,790 (4) *
David L. Bumstead.................................... 65,250,526 (5)(6) 28.4%
Delo H. Caspary...................................... 60,500 (5) *
Charles E. Childers.................................. 16,500 (7) *
Karl E. Elers........................................ 465,053 (8) *
Stanford M. Haley.................................... 43,500 (9) *
David W. Kerr........................................ 65,252,006 (6)(10) 28.4%
John A. Keyes........................................ 104,442 (11) *
James W. McCutcheon.................................. 8,000 (5) *
Mary Mogford......................................... 10,000 (10) *
William A. Wise...................................... 91,250 (5) *
All directors and executive officers as a group (20
persons)........................................... 66,671,476 (12) 29.0%
Noranda Inc.......................................... 65,242,526 (13) 28.4%
</TABLE>
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(+) Includes Common Stock and Exchangeable Shares (which are convertible into
Common Stock on a one-for-one basis).
* Less than 1%
(1) Includes 2,244 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
65,800 shares of Common Stock issuable upon the exercise of stock options
acquired under the Company's option plans.
(2) Includes 3,406 of Exchangeable Shares held indirectly through a savings
plan; 81,400 shares of Common Stock or Exchangeable Shares issuable upon
the exercise of stock options acquired under a Hemlo Gold option plan; and
127,500 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
55,800 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 15,500 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 14,000 shares of Common Stock issuable upon the exercise of stock
options acquired under the Company's option plans.
(8) Includes 388,300 shares of Common Stock issuable upon the exercise of stock
options acquired under the Company's option plans.
(9) Includes 43,500 shares of Common Stock issuable upon the exercise of stock
options acquired under the Company's option plans.
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(10) Includes 8,000 shares of Common Stock issuable upon the exercise of stock
options acquired under the Company's option plans.
(11) Includes 162 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 65,800 shares of Common Stock issuable upon the exercise of stock
options acquired under the Company's option plans.
(12) Includes 5,811 shares of Exchangeable Shares held indirectly through a
savings plan, 914,950 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 1,428,946 (or
0.6%).
(13) 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 Noranda Inc., which has filed a Schedule 13D with several
other reporting persons: Kerr Addison Mines Limited, Brenda Mines Ltd.,
EdperBrascan Corporation, and EdparPartners 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 1998,
1997, and 1996 of (i) the individual who served as the chief executive officer
of the Company during 1998, and (ii) the other four most highly compensated
executive officers of the Company at December 31, 1998. 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
ANNUAL COMPENSATION ------------------------ PAYOUTS
------------------------------------- RESTRICTED SECURITIES ---------
OTHER ANNUAL STOCK UNDERLYING LTIP
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION AWARDS OPTIONS PAYOUTS
- ------------------------------- --------- --------- --------- --------------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Ian D. Bayer (2)............... 1998 $ 369,615 $ 120,125 $ 4,420 -- 139,700 --
President and 1997 353,884 123,859 -- -- 97,000 --
Chief Executive Officer 1996 253,835 126,620 -- -- 315,000 --
Ian Atkinson (2)............... 1998 221,768 59,761 5,920 -- 66,900 --
Senior Vice President -- 1997 212,330 59,452 -- -- 45,600 --
Exploration 1996 146,618 48,573 -- -- 152,000 --
Joseph J. Baylis (2)(3)........ 1998 188,460 49,000 3,420 -- 66,900 --
Senior Vice President -- 1997 161,315 45,168 -- -- 45,600 --
Corporate Development 1996 102,145 28,819 -- -- 99,000 --
John A. Keyes (2).............. 1998 210,614 54,759 5,420 -- 66,900 --
Senior Vice President -- 1997 202,330 56,652 -- -- 45,600 --
Operations 1996 138,271 46,124 -- -- 152,000 --
Stanford M. Haley (4).......... 1998 158,845 41,300 3,446 -- 43,500 --
Vice President -- 1997 146,172 40,928 -- -- 57,000 --
Human Resources
<CAPTION>
ALL OTHER
COMPENSATION
NAME AND PRINCIPAL POSITION (1)
- ------------------------------- -------------
<S> <C>
Ian D. Bayer (2)............... $ 53,711
President and 47,104
Chief Executive Officer 62,740
Ian Atkinson (2)............... 29,651
Senior Vice President -- 21,723
Exploration 33,605
Joseph J. Baylis (2)(3)........ 26,289
Senior Vice President -- 39,291
Corporate Development --
John A. Keyes (2).............. 33,401
Senior Vice President -- 27,137
Operations 14,377
Stanford M. Haley (4).......... 28,760
Vice President -- 22,816
Human Resources
</TABLE>
- ----------------
(1) The amounts shown for 1998 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 $10,004 for Mr. Bayer; $4,771
and $3,666 for Mr. Atkinson; $4,800 and $2,199 for Mr. Baylis; $4,800 and
$3,218 for Mr. Keyes; and $4,800 and $190 for Mr. Haley; (b) the benefit to
the executive officer of the premiums paid by the Company during 1998 under
the Company's split-dollar life insurance program of $26,733 for Mr. Bayer,
$13,916 for Mr. Atkinson, $16,801 for Mr. Baylis, $19,496 for Mr. Keyes, and
$20,224 for Mr. Haley;
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(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) and a subsidy of
$2,416 for Mr. Atkinson representing interest owing and outstanding on a
mortgage.
(2) Dollar amounts for 1996 consist of a combination of U.S. and Canadian dollar
amounts. Dollar amounts for 1996 are represented in U.S. dollars using the
exchange rate on December 31, 1996 of US$1.00 = C$1.3706. 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.
(3) 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.
(4) Mr. Haley joined the Company in January 1997.
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 1998. All of such options have an exercise price at least
equal to the market price on the date of grant.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-------------------------------------------------------------------
NUMBER OF
SECURITIES PERCENT OF
UNDERLYING TOTAL OPTIONS GRANT DATE
OPTIONS GRANTED TO EXERCISE PRESENT
GRANTED EMPLOYEES IN PRICE PER EXPIRATION VALUE
NAME (1) 1998 SHARE DATE (2)
- ------------------------------------------ ----------- --------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Ian D. Bayer.............................. 139,700 15.0% $ 5.56 10/27/08 $ 480,568
Ian Atkinson.............................. 66,900 7.3 5.56 10/27/08 230,136
Joseph J. Baylis.......................... 66,900 7.3 5.56 10/27/08 230,136
John A. Keyes............................. 66,900 7.3 5.56 10/27/08 230,136
Stanford M. Haley......................... 43,500 4.7 5.56 10/27/08 149,640
</TABLE>
- --------------
(1) On October 27, 1998, officers and certain key employees received options to
purchase a specified number of shares at $5.56 (the closing price of the
Common Stock on October 27, 1998). The options vest 50% on October 27, 1999,
and 100% on October 27, 2000.
(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 53.5 percent
based on two-year historical volatility of the Common Stock prior to the
grant date, a risk-free rate of return of 4.9 percent based on the ten-year
zero coupon treasury bond yield at the time of grant, a dividend yield of
0.9 percent based on the 1998 dividend rate and an option term equal to the
full ten-year stated option term. The estimated grant date value does not
reflect any discount on account of vesting or forfeiture provisions or
prohibitions on transfer.
9
<PAGE>
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 1998 and prior
years under the Company's Amended and Restated 1994 Long-Term Incentive 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, 1998, and (ii) the aggregate
number of shares acquired by such executive officers upon the exercise during
1998 of options to purchase Common Stock or, in some cases, Exchangeable Shares.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-MONEY
OPTIONS HELD AT DECEMBER
31, 1998 OPTIONS AT DECEMBER 31, 1998 (1)
SHARES ACQUIRED VALUE -------------------------- ----------------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---------------------------- ----------------- ------------- ----------- ------------- --------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Ian D. Bayer................ 0 $ 0 253,300 424,200 $ 0 $ 0
Ian Atkinson................ 0 0 106,500 198,700 0 0
Joseph J. Baylis............ 0 0 94,280 155,700 0 0
John A. Keyes............... 0 0 104,280 198,700 0 0
Stanford M. Haley........... 0 0 43,500 57,000 0 0
</TABLE>
- --------------
(1) Based on the closing price of the Common Stock on the New York Stock
Exchange Composite Tape on December 31, 1998 ($4.1250).
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 U.S. 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 the Company's total stockholder
return ranked against that of a peer group of companies. 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 the 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 NON-STOCK PRICE-BASED PLANS
NUMBER OF UNTIL MATURATION -----------------------------------
NAME 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
</TABLE>
10
<PAGE>
RETIREMENT PLAN AND SUPPLEMENTAL AGREEMENTS -- The Company maintains a
non-contributory tax-qualified retirement plan generally available to U.S.
salaried employees (the "Retirement Plan"). The Retirement Plan is a defined
benefit plan under which employer contributions are actuarially determined each
year and is administered by an Administrative Committee appointed by the Board
of Directors. The amount of an employee's retirement benefit is based on final
average compensation (as defined below) and is computed as follows: 1.1 percent
of final average compensation for each year of service, plus 0.6 percent of
final average compensation in excess of $10,000 per year for each year of
service up to a maximum of 35 years.
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 83,800 104,750 125,700 146,650(2)
300,000 75,600 100,800 126,000 151,200(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 1999.
(2) Annual benefits under the Retirement Plan are limited to $130,000 for 1999
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
11
<PAGE>
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.
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 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.
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 -- The Company's change-in-control severance
plan applicable to its executive officers provides that, in the event employment
terminates (under the terms set forth below) as a result of a change-in-control
of the Company, each such executive officer would receive a cash payment equal
to two times his annual compensation. 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.
In connection with the foregoing change-in-control severance plan and other
change-in-control plans, programs and provisions, a "change-in-control" will
occur upon (i) any person except Noranda becoming the beneficial owner 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
12
<PAGE>
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 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 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 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.
COMPENSATION AND STOCK OPTION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation and Stock Option Committee of the Board (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 1998. The
report also discusses the Committee's basis for the Chief Executive Officer's
compensation for 1998 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.
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.
13
<PAGE>
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 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 1998, the Committee, after receiving advice and information from
compensation consultants, approved a 6.9% percent increase in the base salary of
Mr. Bayer, and increases ranging from 2.1% percent to 9.3% percent for other
senior executive officers. After giving effect to the 1998 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
The 1997 Incentive Bonus Plan (the "Plan"), effective January 1, 1997,
replaced the prior Executive Productivity Bonus Plan. Under the Plan, the bonus
period for cash bonuses 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.
The Committee is the plan administrator with respect to determining
participation and performance objectives in any given bonus period. The
Committee establishes 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. The Committee sets the target level of performance, and bonus
amounts are 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).
For 1998, the Committee established target award percentages for the
executive officers at a range varying from 50 percent of base salary paid during
1998 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.
With respect to the 1998 bonus, the Committee established that the threshold
performance objective be based on the Company's actual cash flow divided by the
Company's targeted cash flow set forth in the Company's Business Plan for 1998.
The resulting quotient is then multiplied by two (2) to arrive at the applicable
multiplier which, when multiplied by the participant's target award percentage
of salary, determines the maximum dollar value of the bonus award. The Committee
then considers additional performance objectives such as gold production,
reserve growth, safety, progress on projects, environmental performance, and
cost control and based on actual performance results, makes appropriate
adjustments to the bonus award. 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. The Committee can, in its sole discretion, reduce the
amount of any bonus. 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.
14
<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 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. 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, and makes awards based on
the recommendation of the Committee.
STOCK OPTION AWARDS
On October 27, 1998, 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. Stock option grants made to the Chief Executive Officer and to the
listed senior executive officers in 1998 are set forth in the Options Grants
Table.
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
15
<PAGE>
during the course of a three-year performance period. Payments, if any, are made
following the conclusion of the performance period.
The LTIP provides 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.
III. POLICY WITH RESPECT TO THE $1 MILLION DEDUCTIBILITY LIMIT
Section 162(m) of the Code ("Section 162(m)") 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 1996 and
1998, the Board of Directors adopted, and the stockholders approved, certain
Company compensation plans which were structured to qualify as performance-based
compensation under Section 162(m). In addition to requiring and encouraging
stock ownership by Company executives, these plans are designed to allow the
Compensation and Stock Option Committee to provide appropriate compensation when
certain performance goals have been achieved. The Compensation and Stock Option
Committee awards under these plans during 1998 are intended to qualify as
performance-based compensation under Section 162(m). It is possible under
certain circumstances that some portion of the compensation paid to the
Company's Chief Executive officer and other executive officers will not meet the
standards of deductibility under Section 162(m). 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 Compensation and
Stock Option Committee reserves the right to award compensation which does not
qualify as performance-based under Section 162(m) if it determines that such
awards are necessary to provide a competitive compensation package to attract
and retain qualified executive talent.
16
<PAGE>
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
David W. Kerr
Mary Mogford
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Mr. McCutcheon is Counsel to the law firm of McCarthy Tetrault in Toronto,
Ontario. This law firm was retained by Hemlo Gold in connection with the
Combination, and the firm continues to perform legal services for the Company
and 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
1998 was $93,343, and as of February 28, 1999, $80,008 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 19, 1999, 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, 1998 were carried on the Company's books at their cost of $11.3
million. The Company received dividends on these investments in the aggregate
amount of $500,000 in 1998.
17
<PAGE>
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
The 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 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, 1993, 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.
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN
BATTLE MOUNTAIN GOLD, S&P 500 INDEX AND GOLD PEER INDEX
Assumes $100 invested on December 31, 1993
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
TOTAL SHAREHOLDER RETURNS
<S> <C> <C> <C> <C> <C> <C>
Company Name / Index Dec-93 Dec-94 Dec-95 Dec-96 Dec-97 Dec-98
BATTLE MTN GOLD CO $100.00 $109.15 $84.80 $68.94 $58.13 $41.57
S&P 500 INDEX $100.00 $101.32 $139.40 $171.40 $228.59 $293.91
PEER GROUP $100.00 $86.79 $102.60 $112.56 $86.56 $82.17
</TABLE>
INDEXED RETURNS
YEARS ENDING
<TABLE>
<CAPTION>
COMPANY NAME/INDEX DEC 93 DEC 94 DEC 95 DEC 96 DEC 97 DEC 98
<S> <C> <C> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------
BATTLE MTN GOLD CO 100.0 109.15 84.80 68.94 58.13 41.57
S&P 500 INDEX 100.0 101.32 139.40 171.40 228.59 293.91
PEER GROUP 100.0 86.79 102.60 112.56 86.56 82.17
</TABLE>
PROPOSAL NUMBER TWO
APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board has approved and recommends the ratification of the appointment of
PricewaterhouseCoopers LLP as independent public accountants to conduct an audit
of the Company's financial statements for the fiscal year ending December 31,
1999. 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.
18
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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 would expect to reconsider the appointment.
Members of PricewaterhouseCoopers 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 1998 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 1998.
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 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.
NOMINATIONS AND STOCKHOLDER PROPOSALS
Holders of Common Stock may nominate one or more persons for election to the
Board of Directors only if written notice of such intent to make nominations has
been given 90 days in advance of an annual meeting of stockholders. Such notice
of intent to make a nomination must be accompanied by the consent of the nominee
and must comply with certain provisions set forth in Section 4 of the Company's
Bylaws. If the nomination notice does not comply with the Company's Bylaws, it
may be disregarded.
Proposals of Stockholders intended to be presented at the Company's 2000
annual meeting, and otherwise eligible, must be received by the Company (at the
address indicated in the accompanying notice) no later than November 25, 1999,
to be included in the Company's proxy material and form of proxy relating to
that meeting.
By Order of the Board of Directors
[SIGNATURE]
Ian D. Bayer
President and Chief Executive Officer
March 25, 1999
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<PAGE>
PROXY
BATTLE MOUNTAIN GOLD COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD FRIDAY,
APRIL 30, 1999
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 1999 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 PORPOSALS 1 AND 2.
(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: Ian D. Bayer, Charles E. Childers, Karl E. Elers
(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. PROPOSAL TO RATIFY THE APPOINTMENT of PricewaterhouseCoopers LLP as the
independent public accountants for the Company for 1999.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. 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.)
<PAGE>
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.
