<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of
1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2)).
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
GOLDEN STAR RESOURCES LTD.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
---------------------------------
(Name of Person(s) Filing Proxy Statement if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11,
1) Title of each class of securities to which transaction
applies:
------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
------------------------------------------------------
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
------------------------------------------------------
<PAGE> 2
GOLDEN STAR RESOURCES LTD.
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Annual General Meeting of Shareholders of
Golden Star Resources Ltd. (the "Corporation") will be held at 11:30 am on
Tuesday, June 10, 1997, at the Toronto Hilton Hotel in Toronto, Ontario, Canada
for the following purposes:
1. to receive the report of the directors to the shareholders and the audited
financial statements of the Corporation for the year ended December 31,
1996, with the auditor's report thereon;
2. to elect directors for the ensuing year;
3. to appoint the auditor for the ensuing year and authorize the directors to
fix the auditor's remuneration;
4. to approve, ratify and confirm the Corporation's 1997 Stock Option Plan,
as more particularly described in the accompanying Management Proxy
Circular;
5. to transact such other business as may properly come before the meeting or
any adjournment of it.
The Board of Directors has fixed April 23, 1997 as the record date for the
determination of shareholders entitled to notice of and to vote at the Annual
General Meeting and at any adjournment thereof.
Particulars of the matters to be acted upon at the meeting are set out in the
accompanying Management Proxy Circular. The Corporation's 1996 Annual Report
containing the audited financial statements for the fiscal year ended December
31, 1996 also accompanies this Notice of Meeting.
SHAREHOLDERS WHO ARE UNABLE TO ATTEND THE MEETING IN PERSON ARE REQUESTED TO
DATE AND SIGN THE ENCLOSED PROXY FORM PROMPTLY AND RETURN IT IN THE
SELF-ADDRESSED ENVELOPE FOR RECEIPT BY 4:30 P.M. (TORONTO TIME) ON FRIDAY, JUNE
6, 1997. IF A SHAREHOLDER RECEIVES MORE THAN ONE PROXY FORM BECAUSE SUCH
SHAREHOLDER OWNS SHARES REGISTERED IN DIFFERENT NAMES OR ADDRESSES, EACH PROXY
FORM SHOULD BE COMPLETED AND RETURNED.
Dated this 29th day of April, 1997.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Louis O. Peloquin
Louis O. Peloquin
Vice President, General Counsel
and Secretary
<PAGE> 3
GOLDEN STAR RESOURCES LTD.
ANNUAL GENERAL MEETING OF SHAREHOLDERS
MANAGEMENT PROXY CIRCULAR
(PROXY STATEMENT AND INFORMATION CIRCULAR)
GENERAL INFORMATION
This Management Proxy Circular is furnished to the shareholders (the
"shareholders") of Golden Star Resources Ltd. (the "Corporation") by management
in connection with the solicitation of proxies to be voted at the annual
general meeting (the "Meeting") of the shareholders of the Corporation to be
held at the Toronto Hilton Hotel, in Toronto, Canada, at 11:30 am, on Tuesday,
June 10, 1997, and at any adjournment thereof, for the purposes set forth in
the accompanying Notice of Meeting.
PROXIES
SOLICITATION OF PROXIES
THE ENCLOSED PROXY IS SOLICITED BY AND ON BEHALF OF MANAGEMENT OF THE
CORPORATION. THE PERSONS NAMED IN THE ENCLOSED PROXY FORM ARE DIRECTORS AND
SENIOR OFFICERS OF THE CORPORATION. A SHAREHOLDER DESIRING TO APPOINT SOME
OTHER PERSON (WHO NEED NOT BE A SHAREHOLDER) TO REPRESENT HIM AT THE MEETING
MAY DO SO EITHER BY INSERTING SUCH OTHER PERSON'S NAME IN THE BLANK SPACE
PROVIDED IN THE PROXY FORM OR BY COMPLETING ANOTHER FORM OF PROXY. To be used
at the Meeting, the completed proxy form must be received by 4:30 p.m. (Toronto
time) on Friday, June 6, 1997, at the address set forth in the accompanying
return envelope (Attention: Proxy Department, The R-M Trust Company, PO Box
12005 STN. BRM B, Toronto, Ontario M7Y 2K5). Solicitation will be primarily by
mail, but some proxies may be solicited personally or by telephone by regular
employees or directors of the Corporation at a nominal cost. The cost of
solicitation by management of the Corporation will be borne by the Corporation.
This Management Proxy Circular and the accompanying proxy are expected to be
sent to the shareholders on or before April 30, 1997.
REVOCABILITY OF PROXIES
A shareholder who has given a proxy may revoke it either by (a) signing a proxy
bearing a later date and depositing the same at the registered office of the
Corporation at 19th floor, 885 West Georgia Street, Vancouver, British Columbia
V6C 3H4 prior to the close of business on the day preceding the date on which
the Meeting is to be held or any adjournment thereof, or with the chairman of
the Meeting before any votes in respect of which the proxy is to be used shall
have been taken; or (b) attending the Meeting in person and registering with
the scrutineers as a shareholder personally present.
VOTING OF PROXIES
A shareholder's instructions on his proxy form as to the exercise of voting
rights will be followed in casting such shareholder's votes. IN THE ABSENCE OF
ANY INSTRUCTIONS, THE PROXY AGENT NAMED ON THE PROXY FORM WILL CAST THE
SHAREHOLDER'S VOTES IN FAVOR OF THE PASSAGE OF THE RESOLUTIONS SET FORTH HEREIN
AND IN THE NOTICE OF MEETING.
The enclosed proxy form confers discretionary authority upon the persons named
therein with respect to (a) amendments or variations to matters identified in
the Notice of Meeting and (b) other matters which may properly come before the
Meeting or any adjournment thereof. At the time of printing of this Management
Proxy Circular, management of the Corporation knows of no such amendments,
variations or other matters to come before the Meeting other than the matters
referred to in the Notice of Meeting.
VOTING SHARES AND PRINCIPAL HOLDERS THEREOF
The Corporation has an authorized capital consisting of an unlimited number of
common shares (the "Common Shares") and an unlimited number of first preferred
shares (the "First Preferred Shares"). Only the Common Shares carry voting
rights at the Meeting with each Common Share carrying the right to one vote. As
of April 23, 1997, 26,622,636 Common Shares and no First Preferred Shares were
issued and outstanding. The Board of Directors of the Corporation (the "Board")
has fixed April 23, 1997, as the record date for the determination of
shareholders entitled to notice of and to vote at the Meeting and at any
adjournment thereof. The Corporation has caused to be prepared a list of the
holders of its Common Shares on such record date. Each shareholder named in the
list will be entitled to one vote at the Meeting for each Common Share shown
opposite such shareholder's name except to the extent
<PAGE> 4
that (a) such shareholder has transferred the ownership of such Common Share
after the date on which the list was prepared and (b) the transferee of such
Common Share produces a properly endorsed share certificate or otherwise
establishes that the transferee owns such Common Share and demands not later
than 10 days before the Meeting that the transferee's name be included in the
list in which case the transferee will be entitled to vote such Common Share at
the Meeting. A complete list of the shareholders entitled to vote at the
Meeting will be open to examination by any shareholder for any purpose germane
to the Meeting, during ordinary business hours for a period of 10 days prior to
the Meeting, at the office of The R-M Trust Company at Mall Level, 1177 West
Hastings Street, Vancouver, British Columbia V6E 2K3.
To the knowledge of the directors or senior officers of the Corporation as of
April 23, 1997, no person or entity beneficially owns, directly or indirectly,
or exercises control or direction over, shares carrying more than 10% of the
voting rights attached to the Corporation's issued and outstanding Common
Shares, as at the date hereof.
VOTES NECESSARY TO PASS RESOLUTIONS AT THE MEETING
Under the Corporation's By-Laws, the quorum for the transaction of business at
the Meeting consists of two persons present in person, each being a shareholder
entitled to vote thereat or a duly appointed proxyholder or representative for
a shareholder so entitled. Pursuant to the Canada Business Corporations Act
("CBCA") and the Corporation's By-Laws, directors must be elected and
resolutions referred to in the accompanying Notice of Meeting must be passed by
a majority of the votes cast by the shareholders who voted in respect of the
particular matter.
ANNUAL REPORT
The Annual Report for the fiscal year ended December 31, 1996, accompanies this
Management Proxy Circular. The consolidated financial statements of the
Corporation, the accompanying notes and report of the independent auditor, the
selected financial data for each of the years ended December 31, 1996, 1995 and
1994 and management's discussion and analysis of the Corporation's financial
condition and results of operations are included in the Annual Report.
APPOINTMENT OF AUDITOR
The persons named in the enclosed proxy form intend to vote for the appointment
of Coopers & Lybrand, Chartered Accountants, as auditor of the Corporation to
hold office until the next annual general meeting of shareholders and to
authorize the directors of the Corporation to fix the auditor's remuneration.
Coopers & Lybrand has been the auditor of the Corporation since May 16, 1992.
A representative of the firm of Coopers & Lybrand will be present at the
Meeting, will have an opportunity to make a statement if desired and will be
available to answer any questions shareholders may have with respect to the
financial statements of the Corporation for the fiscal year ended December 31,
1996.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the U.S. Securities Exchange Act of 1934 requires the
Corporation's executive officers, directors and persons who own more than ten
percent (10%) of the Corporation's Common Shares to file initial reports of
ownership and changes in ownership with the U.S. Securities and Exchange
Commission ("SEC"). These reports are also filed with the American Stock
Exchange.
Additionally, SEC regulations require that the Corporation identify any
individual for whom one of the referenced reports was not filed on a timely
basis during the most recent fiscal year or prior fiscal years. To the
Corporation's knowledge, based solely on review of reports furnished to it and
written representations that no other reports were required during and with
respect to the fiscal year ended December 31, 1996, all Section 16(a) filing
requirements applicable to its executive officers, directors and more than 10%
beneficial owners were complied with, except as follows: (a) Messrs. Jeffrey T.
Abbott, Gordon J. Bell, Carlos H. Bertoni, David K. Fagin and Hilbert N.
Shields each inadvertently filed a late report showing their receipt of bonus
shares; Dr. Jeffrey T. Abbott also filed two additional late reports: one
report showing the grant of stock options was filed one week late and one
report showing the sale of 1200 Common Shares was filed one month late; Messrs.
Pierre Gousseland and Robert Minto each inadvertently filed their initial Form
3 one month late; and Mr. Louis O. Peloquin inadvertently filed one report
showing the sale of 890 Common Shares two weeks late.
2
<PAGE> 5
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of April 11, 1997, with respect
to beneficial ownership of the Corporation's Common Shares by each person known
to the Corporation or its directors or senior officers to be the beneficial
owner of more than 5% of its outstanding Common Shares, by each director and
nominee for director of the Corporation, by each executive officer named in the
table titled "Summary Compensation Table" which appears elsewhere in this
Management Proxy Circular, and by all officers and directors of the Corporation
as a group. Unless otherwise noted, each shareholder has sole investment and
voting power over the Common Shares owned.
<TABLE>
<CAPTION>
==============================================================================================
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF COMMON SHARES PERCENT OF COMMON SHARES
BENEFICIALLY OWNED
==============================================================================================
<S> <C> <C>
Robertson Stephens & Company, Inc. 2,219,800(1)(2) 8.9%
555 California Street
San Francisco, CA 94104
- ----------------------------------------------------------------------------------------------
Snyder Capital Management Inc. 1,355,300(1)(3) 5.6%
350 California Street, Suite 1460
San Francisco, CA 94104
- ----------------------------------------------------------------------------------------------
Dawson Samberg Capital Management, Inc. 1,307,500(1) 5.07%
354 Pequot Avenue
Southport, CT 06490
- ----------------------------------------------------------------------------------------------
David A. Fennell(5),(6),(7) 1,246,652(4) 5.48%
- ----------------------------------------------------------------------------------------------
David K. Fagin(5),(6),(7) 1,006,519(4) 4.37%
- ----------------------------------------------------------------------------------------------
Jean-Pierre Lefebvre(6),(7) 289,500(4) 1.27%
1835 Sommet Trinite
St. Bruno, Quebec, Canada H3E 1J4
- ----------------------------------------------------------------------------------------------
Roger D. Morton(6),(7) 282,500(4) 1.24%
9039 Saskatchewan Dr.
Edmonton, Alberta, Canada T6G 2V2
- ----------------------------------------------------------------------------------------------
Gordon J. Bell(5),(6),(7) 188,783(4) *
- ----------------------------------------------------------------------------------------------
Carlos H. Bertoni(6),(7) 145,027(4) *
SIA Sul Trecho
3 no. 990
72100-030 Brasilia
DF Brasil
- ----------------------------------------------------------------------------------------------
Adrian W. Fleming(5),(6),(7) 130,500(4) *
- ----------------------------------------------------------------------------------------------
Richard A. Stark(6),(7) 112,000(4) *
340 Palmetto Point, John's Island
Vero Beach, FL 32963
- ----------------------------------------------------------------------------------------------
Hilbert N. Shields(6),(7) 91,127(4) *
c/o Golden Star Resources Ltd.
57 High Street, Kingston
Georgetown, Guyana, South America
- ----------------------------------------------------------------------------------------------
Donald F. Mazankowski(6),(7) 60,000(4) *
5238 45B Avenue
Vegreville, Alberta, Canada T9C 1S5
- ----------------------------------------------------------------------------------------------
Ernest C. Mercier(6),(7) 51,000(4) *
77 Strathallan Blvd.
Toronto, Ontario, Canada M5N 1S8
- ----------------------------------------------------------------------------------------------
Pierre Gousseland(6),(7) 42,000(4) *
4 Lafayette Court
Greenwich, CT 06830
- ----------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
- --------------------------------------------------- ---------------------------------- -----------------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER OF COMMON SHARES PERCENT OF COMMON SHARES
BENEFICIALLY OWNED
- --------------------------------------------------- ---------------------------------- -----------------------------------
<S> <C> <C>
Robert Minto(6),(7) 40,100(4) *
168 Bisley Street
Beaconsfield, Quebec, Canada H9W 1G9
- --------------------------------------------------- ---------------------------------- -----------------------------------
Directors and Executive Officers as a group 3,852,388(4) 16.7%
Includes Common Shares subject to options
exercisable within days of April 11, 1997(6),(7)
- --------------------------------------------------- ---------------------------------- -----------------------------------
</TABLE>
* Indicates less than one percent.
(1) This information was taken from the most current Schedule 13-G provided to
the Corporation by this beneficial owner.
(2) Does not include 275,000 Common Shares purchased on April 25, 1997.
(3) Does not include 1,250,000 Common Shares purchased on April 25, 1997.
(4) Includes Common Shares subject to options exercisable within 60 days of
April 11, 1997 as follows: Carlos Bertoni 110,300; Gordon Bell 177,700;
David Fagin: 422,250; David Fennell: 112,650; Adrian Fleming: 130,500;
Pierre Gousseland 40,000; Jean-Pierre Lefebvre: 110,000; Donald
Mazankowski: 60,000; Ernest Mercier: 50,000; Robert Minto: 40,000; Roger
Morton: 110,000; Hilbert Shields: 85,300; Richard Stark: 100,000. As a
result of a plan of arrangement completed on March 14, 1995 between the
Corporation and its shareholders, upon exercise of each option to purchase
Common Shares granted prior to March 14, 1995, the holder thereof will, in
addition, be entitled to receive one-fifth of one Class B common share of
Guyanor Ressources S.A., a subsidiary of the Corporation ("Guyanor"), for
each Common Share acquired thereunder.
(5) Address is c/o Golden Star Resources Ltd., 1700 Lincoln Street, Suite 1950,
Denver, CO 80203.
(6) Guyanor, a company incorporated under the laws of France whose Class B
common shares are listed on the Toronto Stock Exchange (the "TSE"), is an
approximately 68% subsidiary of the Corporation. The following persons
beneficially own Class B shares of Guyanor, including Class B common
shares that may be acquired through options within 60 days of April 11,
1997 (figure in parentheses), as follows: Carlos Bertoni: 393,358
(386,800); David Fagin: 519,930 (397,258); David Fennell: 1,067,852
(824,552); Adrian Fleming: 93,750 (93,750); Pierre Gousseland: 85,000
(60,000); Jean-Pierre Lefebvre: 125,900 (70,000); Donald Mazankowski:
62,500 (50,000); Ernest Mercier: 45,000 (40,000); Robert Minto: 10,500
(10,000); Roger Morton: 150,700 (60,000); Hilbert Shields: 133,180
(76,800); Richard Stark: 68,000 (50,000) and directors and executive
officers as a group: 2,929,523 (2,284,362). This is in addition to the
shares mentioned in note 2 above.
(7) Pan African Resources Corporation ("PARC"), a corporation organized
under the laws of the Yukon Territory (Canada) whose common shares are
quoted on the Canadian Dealing Network, is an approximately 58% owned
subsidiary of the Corporation. The following persons beneficially own
common shares in the capital of PARC, and common shares subject to options
exercisable within 60 days of April 11, 1997 (figure in parentheses), as
follows: Carlos Bertoni: 48,832 (16,800); David Fagin: 103,800 (103,800);
David Fennell: 469,100 (369,000); Adrian Fleming: 301,100 (201,000);
Pierre Gousseland: 62,020 (10,000); Jean-Pierre Lefebvre: 70,000 (70,000);
Donald Mazankowski: 65,015 (50,000); Ernest Mercier: 65,015 (50,000);
Robert Minto: 10,000 (10,000); Roger Morton: 60,000 (60,000); Hilbert
Shields: 58,892 (16,850); Richard Stark: 90,030 (60,000) and directors and
executive officers as a group 1,559,130 (1,146,750).
ELECTION OF DIRECTORS
The nine persons named below are the nominees of management for election as
directors. Each elected director will hold office until the next annual meeting
of the shareholders or until his successor is elected or appointed pursuant to
relevant provisions of the By-Laws of the Corporation or the CBCA. It is the
intention of the persons named as proxyholders in the enclosed proxy form to
vote for the election to the Board of those persons hereinafter designated as
nominees for election as directors. The Board does not contemplate that any of
such nominees will be unable to serve as a director; however, if for any reason
any of the proposed nominees do not stand for election or are unable to serve
as such, PROXIES IN FAVOR OF MANAGEMENT DESIGNEES WILL BE VOTED FOR ANOTHER
NOMINEE IN THE DISCRETION OF THE PROXY AGENT UNLESS THE SHAREHOLDER HAS
SPECIFIED IN THE PROXY FORM THAT THE SHAREHOLDER'S COMMON SHARES ARE TO BE
WITHHELD FROM VOTING IN THE ELECTION OF DIRECTORS.
The following table sets forth the name of each of the persons proposed to be
nominated for election as a director; all positions and offices in the
Corporation presently held by him; his present principal occupation or
employment; if applicable, the date of his first
4
<PAGE> 7
appointment as a director; and his age. See "Security Ownership of Certain
Beneficial Owners and Management" for the number of Common Shares of the
Corporation that each nominee has advised are beneficially owned by him,
directly or indirectly, or over which control or direction is exercised.
<TABLE>
<CAPTION>
NAME AND POSITION WITH PRESENT AND PRINCIPAL OCCUPATION DATE OF FIRST AGE
CORPORATION APPOINTMENT AS
DIRECTOR
- ----------------------------------------- ------------------------------------------------------------ ------------------------
<S> <C> <C> <C>
DAVID K. FAGIN (2)(4) Chairman of the Board of Directors of the Corporation May 15, 1992(5) 59
Chairman of the Board
DAVID A. FENNELL President and Chief Executive Officer of the Corporation May 15, 1992(5) 44
President, Chief Executive
Officer and Director
PIERRE GOUSSELAND (3)(4) Self-Employed Business Consultant June 11, 1996 75
Director
JEAN-PIERRE LEFEBVRE (2)(3) President and Director, Lefebvre Daigneault Hamelin Inc. May 15, 1992(5) 65
Director
DONALD F. MAZANKOWSKI (2)(3)(4) Businessman and Professional Director June 20, 1994 61
Director
ERNEST C. MERCIER (2)(3) Businessman and Professional Director January 20, 1995 64
Director
ROBERT MINTO (1)(3)(4) Senior Vice President and General Manager, Operations, for September 1, 1996(5) 56
Director Kilborn SNC Lavalin Inc.
ROGER D. MORTON (3)(4) Professor Emeritus of Economic Geology, University of May 15, 1992(5) 61
Director Alberta; Consultant to mining companies
RICHARD A. STARK (2)(3) Retired Lawyer; Businessman and Fiduciary Trustee May 15, 1992(5) 76
Director
</TABLE>
- ----------------------------------------- -------------------------------------
(1) Dr. Robert Minto was for the first time appointed to the Board in
September 1996 following the resignation of Mr. Bernard Poznanski.
(2) Member of the Audit and Governance Committee.
(3) Member of the Compensation and Nominating Committee.
(4) Member of the Environmental Committee.
(5) May 15, 1992 represents the date of the Corporation's formation upon the
amalgamation of Golden Star Resources Ltd. ("Golden Star") and South
American Goldfields Inc. ("South American"). Messrs. Fagin, Fennell,
Lefebvre, Minto and Morton were, prior to the amalgamation, directors of
Golden Star serving since February 3, 1992, March 7, 1984, August 7, 1986,
October 31, 1986 and April 2, 1985, respectively.
Below is additional information concerning each of the individuals named in the
above table.
Mr. Fagin was President of Homestake Mining Company from May 1986 to July
1991. From July 1991 to February 1992, Mr. Fagin was an independent
businessman and from February to May 1992, Mr. Fagin was Chairman,
President and Chief Executive Officer of South American and Chairman and
Chief Executive Officer of Golden Star. From May 1992 until May 1, 1996,
Mr. Fagin was Chairman and Chief Executive Officer of the Corporation. On
May 1, 1996, Mr. Fagin resigned as Chief Executive Officer of the
Corporation. Mr. Fagin continues as non-executive Chairman of the Board.
Mr. Fennell was President of Golden Star from 1984 to May 1992 and from
November 30, 1990 to May 1992, was a director of South American. Since May
1992, Mr. Fennell has been President of the Corporation. In addition, on
May 1, 1996, Mr. Fennell was promoted to the position of Chief Executive
Officer of the Corporation.
5
<PAGE> 8
Mr. Gousseland was Chairman and Chief Executive Officer of AMAX,
Inc. from 1975 until 1986. Since May 13, 1994, Mr. Gousseland has been a
director of Guyanor. Since leaving AMAX, Inc., Mr. Gousseland has accepted
a number of corporate directorships and currently serves as a director of
Hanover Gold, Latin American Gold and Royal Gold, Inc.
Mr. Lefebvre has been a director and President of Lefebvre Daigneault
Hamelin Inc. (life insurance brokers and financial consultants) since
1966.
Mr. Mazankowski was a Member of Parliament of Canada from 1968 to 1993 and
was a member of the federal Canadian cabinet, holding at various times
during that period the following cabinet positions: Deputy Prime Minister,
Minister of Transport, Minister responsible for the Canadian Wheat Board,
President of the Treasury Board, Minister responsible for Privatization
and Regulatory Affairs, Minister of Agriculture and Minister of Finance.
Since retiring from politics in 1993, Mr. Mazankowski has accepted a
number of corporate directorships and currently serves as a director of
Power Group of Canada Companies Great West Life Assurance Company,
Investors Group, Weyerhauser Canada, Canadian Utilities Limited, Greyhound
Canada, Canada Brokerlink, Gulf Canada Resources and Shaw Communications
Inc.
Mr. Mercier was employed from 1970 to January 1993 by The Toronto-Dominion
Bank, most recently as Executive Vice President, Corporate & Investment
Banking and as Co-Chairman, Toronto-Dominion Securities Inc. Mr. Mercier
retired from The Toronto-Dominion Bank in 1993 and currently serves as a
director of Oxford Properties Group Inc., Camvec Ltd., Pencor Petroleum
Ltd. and Inter-City Products Ltd.
Dr. Minto has worked for the SNC-Lavalin Group since 1973. He has held
responsibilities as Vice-President Technology, Process Plants Division;
Vice-President Metallurgical Technologies, Industrial Division and
Vice-President, Mining and Metallurgy Division. Dr. Minto currently is the
Senior Vice-President, Kilborn SNC-Lavalin Inc., a company, owned 100% by
SNC-Lavalin Inc., that provides consulting, engineering and project
management services to the mining/minerals/metals sector worldwide.
Dr. Morton was a professor of Economic Geology at the University of
Alberta from 1967 until 1995. He is now Professor Emeritus at the
University of Alberta. Currently Dr. Morton serves as a director of Texas
Star Resources Inc., Roraima Gold Corporation, Solitario Resources,
Canadian Entech Research Corp., Takla Star Resources Ltd., International
Capri Ltd., Layfield Resources Ltd. and Arian Resources and acts as a
private consultant to mining companies.
Mr. Stark was an associate and partner in the New York law firm of
Milbank, Tweed, Hadley & McCloy from 1948 to 1990, and has been a
fiduciary trustee since 1980, and a managing partner in several real
estate ventures for more than 10 years.
There are no family relationships between any of the nominees, directors or
officers of the Corporation.
See "Statement of Corporate Governance Practices" for information on Board
committees and directors' meeting attendance.
EXECUTIVE OFFICERS
In addition to Mr. Fennell, the Corporation's executive officers are as
follows:
<TABLE>
<CAPTION>
==================================================================================================================================
NAME AGE PRESENT AND PRINCIPAL OCCUPATION FOR THE PAST FIVE YEARS
==================================================================================================================================
<S> <C> <C>
Jeffrey T. Abbott 55 President of Southern Star Resources Ltd. a wholly-owned subsidiary of the Corporation since
March 1995; prior thereto, Manager of the Latin America division of the Corporation from October
1994; prior thereto, Vice President of Homestake International & Minera Homestake Chile.
- ----------------------- ------- --------------------------------------------------------------------------------------------------
Gordon J. Bell 39 Vice President and Chief Financial Officer since November 1995; prior thereto, Vice President
and Director, RBC Dominion Securities Inc. from October 1994; Vice President RBC Dominion
Securities Inc. from December 1991 to October 1994.
- ----------------------- ------- --------------------------------------------------------------------------------------------------
Carlos H. Bertoni 45 Vice President, Exploration (Eastern Division) since October 1993 and prior thereto, Exploration
Manager. Mr. Bertoni joined Golden Star in 1988 as a Senior Geologist.
- ----------------------- ------- --------------------------------------------------------------------------------------------------
Adrian W. Fleming 49 Executive Vice President, Exploration since May 1996, President and Chief Executive Officer of
PARC since 1995 and of PARC subsidiary (Barbados) since 1994; Director of Barnu Pty Limited
(industrial minerals mining company) from 1990 to 1993.
- ----------------------- ------- --------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 9
<TABLE>
<CAPTION>
==================================================================================================================================
NAME AGE PRESENT AND PRINCIPAL OCCUPATION FOR THE PAST FIVE YEARS
==================================================================================================================================
<S> <C> <C>
Louis O. Peloquin 39 Vice President, General Counsel and Secretary since 1993; prior thereto, practiced law at
McCarthy Tetrault (law firm) from 1991 to June 1993.
- ----------------------- ------- --------------------------------------------------------------------------------------------------
Hilbert N. Shields 41 Vice President, Exploration (Western Division) since October 1993 and prior thereto, Exploration
Manager. Mr. Shields joined Golden Star in 1986 as Chief Geologist.
- ----------------------- ------- --------------------------------------------------------------------------------------------------
Richard A. Winters 34 Vice President, Corporate Development since August 1995; prior thereto Senior Analyst, Robertson
Stephens & Co. from August 1994; prior thereto Senior Engineer, Phelps Dodge Mining Co. from
January 1993 to August 1994; prior thereto Instructor Mineral Economics, Colorado School of Mines
from June 1991.
- ----------------------- ------- --------------------------------------------------------------------------------------------------
</TABLE>
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
The following table sets forth in summary form the compensation received during
each of the Corporation's last three complete fiscal years by the Chief
Executive Officer of the Corporation and by the four other most highly
compensated officers whose compensation exceeded CDN$100,000 during the fiscal
year ended December 31, 1996 (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
ANNUAL COMPENSATION LONG-TERM COMPENSATION (1)
----------------------------------- ----------------------------------
AWARDS
---------------------------------------------
NUMBER OF
SECURITIES
UNDERLYING NUMBER OF NUMBER OF
OPTIONS SECURITIES SECURITIES
GRANTED UNDERLYING UNDERLYING
OTHER BY THE OPTIONS OPTIONS ALL OTHER
SALARY BONUS ANNUAL CORPORATION GRANTED BY GRANTED BY COMPENSA-
NAME AND (US$) (US$) COMPENSA- (#) GUYANOR PARC TION
PRINCIPAL POSITION YEAR (2) (3) TION (US$) (8) (#) (#) (US$)
- --------------------------------------------------------------------------------------------- --------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
David K. Fagin 1996 246,000 40,000 37,743 25,000 110,000 120,000 25,684
Chairman (9) 1995 232,000 40,000 37,286(5) 125,000 300,000 0 23,837(10)
1994 221,000 40,000 15,557(5) 60,000 0 0 17,849(10)
- --------------------------------------------------------------------------------------------- --------------------------
David A. Fennell 1996 246,000 40,000 204,917 150,000 375,000 600,000 17,364
President and 1995 232,000 532,771(4) 38,342(5) 125,000 600,000 0 17,912(10)
Chief Executive 1994 221,000 40,000 49,936(5) 60,000 0 0 9,940(10)
Officer
- --------------------------------------------------------------------------------------------- --------------------------
Adrian W. Fleming 1996 230,000 0 (6) 150,000 125,000 300,000 0
Executive 1995 260,000 0 (6) 0 5,000 0 0
Vice-President, 1994 175,005 19,100 25,810(7) 30,000 0 0 0
Exploration
- --------------------------------------------------------------------------------------------- --------------------------
Carlos H. Bertoni 1996 185,000 0 (6) 25,000 50,000 30,000 0
Vice-President 1995 176,000 58,802(4) (6) 40,000 400,000 0 0
Exploration 1994 161,000 12,600 (6) 25,000 0 0 0
(Eastern Division)
- --------------------------------------------------------------------------------------------- --------------------------
Hilbert N. Shields 1996 185,000 0 (6) 25,000 50,000 35,000 0
Vice-President 1995 176,000 58,802(4) (6) 40,000 40,000 0 0
Exploration 1994 161,000 12,600 (6) 25,000 0 0 0
(Western Division)
- --------------------------------------------------------------------------------------------- --------------------------
Gordon J. Bell 1996 180,000 0 14,571 30,000 85,000 120,000 740(10)
Vice-President and 1995 28,038 30,000 (6) 250,000 25,000 0 0
Chief Financial 1994 N/A N/A N/A N/A N/A N/A N/A
Officer
- --------------------------------------------------------------------------------------------- --------------------------
</TABLE>
(1) There were no long-term incentive plan payouts during the periods
indicated.
(2) The dollar value of base salary (cash and non-cash) earned.
7
<PAGE> 10
(3) The dollar value of bonuses (cash and non-cash) earned. The 1996 bonuses
were declared January 1, 1997, the 1995 bonuses were declared December 29,
1995 and the 1994 bonuses were declared in February 1995.
(4) Included in 1995 bonus amounts are special one time stock bonuses granted
to Messrs. Fennell, Shields and Bertoni pursuant to the Corporation's
Employees' Stock Bonus Plan. On February 1, 1995, 75,000 bonus Common
shares were issued to Mr. David A. Fennell and 10,000 bonus Common Shares
were issued to each of Messrs. Bertoni and Shields. Mr. Fennell's bonus
Common Shares resulted in bonus compensation of US$492,771 being recorded
in 1995. In respect of Messrs. Bertoni and Shields, two-thirds of the
bonus Common Shares, resulting in bonus compensation of US$43,802 being
recorded for each of Messrs. Bertoni and Shields, were distributed in 1995
pursuant to a specific distribution schedule with the remaining one-third
distributed on March 1, 1996.
(5) Pertains to deemed taxable benefit of interest free loans from the
Corporation. See "Indebtedness of Directors and Officers."
(6) Other annual compensation, including perquisites and other personal
benefits, securities or property, did not exceed 10% of the total of the
annual salary and bonus, if applicable.
(7) This amount is in respect of amounts reimbursed for relocation expenses.
(8) Upon exercise of the options granted prior to March 14, 1995, the holder
will, in addition, be entitled to receive one-fifth of one Class B share
of Guyanor for each Common Share acquired.
(9) Mr. Fagin was Chief Executive Officer of the Corporation until May 1996.
(10) These amounts are in respect of premiums paid for life insurance for the
benefit of these executives.
Employment Contracts and Termination Arrangements
In 1992, the Corporation entered into an employment contract with Mr. David
Fagin. On February 10, 1997, Mr. Fagin's employment contract was amended and
restated. Pursuant to Mr. Fagin's amended and restated employment contract
expiring on December 31, 1997, Mr. Fagin is paid a base salary of US$258,300
per year. Mr. Fagin is also entitled to receive a performance bonus of
US$40,000. The Corporation has to pay for insurance policies on the life of Mr.
Fagin until July 1, 1997. Mr. Fagin will serve as the non-executive Chairman of
the Corporation's Board of Directors until the Meeting.
In 1992, the Corporation entered into an employment contract with Mr. David
Fennell which is effective until December 31, 1997. Pursuant to his employment
contract, Mr. Fennell is paid a minimum base salary of US$180,000 per year,
with annual increases (thereto which commenced January 1, 1993) as the Board
may from time to time determine, provided that such increases be no less than
the greater of the percentage change in the U.S. Consumer Price Index over the
past year, and 5%. Mr. Fennell is also entitled to receive an annual
performance bonus based upon satisfactory performance as measured against
objective standards. The amount of any annual performance bonus which would
exceed US$30,000 may be payable in Common Shares. The Corporation also pays for
two insurance policies on the life of Mr. Fennell, each in the amount of US$1
million, with the benefits under one policy being payable to the Corporation
and the second payable to Mr. Fennell's designated beneficiary. If the
Corporation should terminate Mr. Fennell's employment without cause, the
Corporation would have to pay Mr. Fennell, in lieu of notice, an amount equal
to the greater of (a) three times Mr. Fennell's base salary (with annual
increments) at the time of termination, plus US$90,000 as deemed performance
bonuses, or (b) three times the aggregate cash compensation received by Mr.
Fennell from the Corporation during the preceding 12 months.
On August 1, 1996, the Corporation entered into an employment contract with Mr.
Adrian Fleming. The contract is for a three-year term ending on August 1, 1999.
Under the contract, Mr. Fleming is paid a minimum base salary of US$200,000 per
year. The employment contract will be automatically extended from year to year
after the expiration of the term unless Mr. Fleming or the Corporation elect to
terminate the contract in accordance with the terms and condition of the
contracts. The Corporation may terminate Mr. Fleming's employment without cause
upon payment of a lump sum equal to the salary, bonus and benefits to which Mr.
Fleming would have been entitled for a period of twelve months after such
termination. If Mr. Fleming's employment is terminated upon the occurrence of a
change in control of the Corporation, he would be entitled to receive payment
of a lump sum equal to his salary, bonus and benefits for a period of twelve
months after such termination. Pursuant to this contract, the employment
agreement dated May 5, 1994 between PARC and Mr. Fleming was terminated.
On November 6, 1995, the Corporation entered into an employment contract with
Mr. Gordon Bell. Mr. Bell's employment contract is for a three-year term ending
on November 6, 1998. Mr. Bell is paid a minimum base salary of US$180,000 per
year. The employment contract will be automatically extended from year to year
after the expiration of the term unless Mr. Bell or the Corporation elect to
terminate the contract in accordance with the terms and condition of the
contracts. The Corporation may terminate Mr. Bell's employment without cause
upon payment of a lump sum equal to the salary, bonus and benefits to which Mr.
Bell would have been entitled for a period of twelve months after such
termination. If Mr. Bell's employment is terminated upon the occurrence of a
change in control of the Corporation, he would be entitled to receive payment
of a lump sum equal to the salary, bonus and benefits to which he would have
been entitled for a period of twelve months.
8
<PAGE> 11
The Corporation also has employment contracts with each of Messrs. Carlos
Bertoni and Hilbert Shields. These two contracts dated as of January 1, 1994
are for three-year terms with be automatic renewals from year to year after the
expiration of the term unless either Messrs. Bertoni and Shields or the
Corporation elect to terminate the contract in accordance with the terms and
condition of the contracts. Under the contracts, each of Messrs. Bertoni and
Shields are paid a minimum base salary of US$125,000 per year. As Messrs.
Bertoni and Shields are based in South America, each is also entitled to a
living allowance of US$36,000 per year. The initial term of these two contracts
expired on December 31, 1996. The contracts were automatically extended for an
additional year until December 31, 1997. The Corporation may terminate either
of Mr. Bertoni's or Mr. Shields' employment without cause on twelve months'
written notice. If either Mr. Bertoni or Mr. Shields' employment is terminated
upon the occurrence of a change in control of the Corporation he would be
entitled to receive his salary and benefits for a period of twelve months.
Report on Executive Compensation
The Compensation and Nominating Committee (the "Compensation Committee"),
presently consisting of Messrs. Lefebvre, Gousseland, Mazankowski, Mercier,
Minto, Morton and Stark, all non-employee directors, has responsibility for
approving compensation arrangements for all executive officers of the
Corporation and its controlled subsidiaries (subject to the approval of the
Board of Directors of such subsidiaries). Cash and benefits compensation is
provided for in employment agreements which have been negotiated and entered
into with the Chairman, the President and Chief Executive Officer and the
Vice-Presidents of the Corporation. The terms of the agreement with the
President and Chief Executive Officer were determined prior to the formation of
the Compensation Committee. At the time the agreements with the Vice-Presidents
were entered into, the Compensation Committee considered the compensation
levels for the Vice-Presidents to be comparable to those of other public gold
exploration companies. Subsequent adjustments have reflected, among other
things, merit, cost of living and special living conditions. Executive salaries
are reviewed by the Compensation Committee on a yearly basis and are set for
individual executive officers based on the level of responsibility, scope and
complexity of the executive's position and a subjective evaluation of each
individual role and performance in advancing the successful development of the
Corporation, the officer's performance, the Corporation's performance and a
comparison of salary ranges for executives of other similar companies in the
mining industry.
Because the Corporation is in an early stage mineral development business, the
Compensation Committee considers an essential element of its compensation
arrangements for executive officers to consist of options to purchase Common
Shares and stock bonuses in order to provide appropriate incentive for
individual and group effort. In determining the amount of stock options and
stock bonuses to be granted, the Compensation Committee considers, among other
things, the officer's position, salary, and previous and anticipated
accomplishments.
Submitted by the Compensation Committee:
Jean-Pierre Lefebvre (Chairman)
Pierre Gousseland
Donald Mazankowski
Ernest Mercier
Robert Minto
Roger D. Morton
Richard A. Stark
COMPENSATION OF DIRECTORS
Directors' Fees
During the year ended December 31, 1996, the Corporation paid a total of
US$71,000 to its non-employee directors in respect of Board and committee
participation. The non-employee directors of the Corporation are each paid an
amount of US$12,000 per year. During the year ended December 31, 1996, Mr.
Richard A. Stark was paid a further US$12,000 as Chairman of the Audit and
Governance Committee. The non-employee directors are also reimbursed for
transportation and other out-of-pocket expenses reasonably incurred for
attendance at Board and committee meetings and in connection with the
performance of their duties as directors.
9
<PAGE> 12
Stock Options
The Corporation's Non-Discretionary Directors' Stock Option Plan, as amended
(the "Directors' Plan"), which is limited to non-employee directors of the
Corporation, provides for the grant of options, on an automatic basis, as of
the date such directors first become non-employee directors, provided that,
within the previous year, such directors were not granted any other stock
options by the Corporation. The number of Common Shares so granted is currently
set at 40,000 Common Shares. In addition, on each anniversary of his
appointment to the Board, a non-employee director is entitled to receive an
automatic stock option to purchase 10,000 Common Shares. The total number of
Common Shares that may be reserved for issuance to any one non-employee
director may not exceed 5% of the issued and outstanding Common Shares from
time to time. 510,000 Common Shares were reserved for issuance under
outstanding options granted under the Directors' Plan as of April 23, 1997.
All options granted under the Directors' Plan vest immediately after they have
been granted, subject to certain restrictions under United States securities
laws. See "Stock Incentives" for other particulars of the Directors' Plan which
are the same as the Employees' Stock Option Plan. See "Approval of the 1997
Stock Option Plan" for a description of the proposed 1997 Stock Option Plan
being submitted for shareholders' approvals. If the new plan is approved and
the necessary regulatory approvals obtained, the Directors' Plan will be
terminated.
The non-employee directors of the Corporation because they are not employed by
Guyanor are not eligible to participate in Guyanor's Stock Option Plan.
Therefore, the Corporation has granted to its non-employee directors options to
purchase Class B shares of Guyanor from the Class B shares that the Corporation
owns. In December 1996, each non-employee director received an option to
purchase 10,000 Class B shares of Guyanor. The term of each option is 10 years
and the exercise price CDN$9.20 per share. Mr. Jean-Pierre Lefebvre, Dr. Roger
Morton and Mr. Richard Stark each also received another option to purchase an
additional 10,000 Class B shares as compensation for his services as Chairman
of the Compensation and Nominating Committee, the Environmental Committee and
the Audit and Governance Committee, respectively, of the Board. The term of the
options is 10 years and the exercise price CDN$9.20 per share. The options
vested immediately.
The following table sets forth information with respect to options granted to
the Corporation's non-employee directors as a group under the Directors' Plan
as well as options granted by the Corporation to purchase Guyanor Class B
shares and options granted by PARC to purchase common shares of PARC during the
financial year ended December 31, 1996.
OPTION GRANTS DURING LAST FISCAL YEAR
(ALL $ AMOUNTS IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
===================================================================================================================================
GROUP MARKET VALUE OF
----------------------- SECURITIES UNDER SECURITIES UNDERLYING
NON-EXECUTIVE DIRECTORS OPTIONS GRANTED EXERCISE OR BASE PRICE OPTIONS ON THE DATE OF
AS A GROUP (7 PERSONS) (#) ($/SECURITY) GRANT ($/SECURITY) EXPIRATION DATE
===================================================================================================================================
<S> <C> <C> <C> <C> <C>
10,000 9.50 9.50 January 30, 2006
30,000 22.75 22.75 May 16, 2006
Corporation 40,000 19.00 19.00 June 11, 2006
Company 10,000 19.00 19.00 June 20, 2006
Whose 40,000 24.40 24.40 September 1, 2006
Shares are ---------------------------------------------------------------------------------------------- ----------------------
Subject of
Options Guyanor 100,000 9.20 9.20 December 10, 2006
Granted ---------------------------------------------------------------------------------------------- ----------------------
PARC 210,000 0.985 0.985 February 7, 2001
100,000 0.65 0.65 December 10, 2001
- ------------------------------------------------------------------------------------------------------------ ----------------------
</TABLE>
10
<PAGE> 13
The following table sets forth information with respect to the exercise during
the financial year ended December 31, 1996, by the non-employee directors as a
group, of options granted under the Directors' Plan, options granted by the
Corporation to acquire Guyanor Class B shares or options granted by PARC to
acquire common shares of PARC as well as the value of their outstanding options
as of December 31, 1996.
AGGREGATED OPTION EXERCISES DURING LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
(ALL $ AMOUNTS IN CANADIAN DOLLARS)
<TABLE>
<CAPTION>
=================================================================================================================================
VALUE OF UNEXERCISED IN-
UNEXERCISED OPTIONS AT THE-MONEY OPTIONS AT
GROUP FY-END FY-END ($)
- ----------------------- SECURITIES ACQUIRED ON AGGREGATE VALUE (#) EXERCISABLE/
NON-EXECUTIVE DIRECTORS EXERCISE REALIZED EXERCISABLE/ UNEXERCISABLE
AS A GROUP (7 PERSONS) (#) ($) UNEXERCISABLE (2)
=================================================================================================================================
<S> <C> <C> <C> <C> <C>
Company Corporation 20,000 370,760 500,000 Exercisable(1) 2,972,050 Exercisable(1)
Whose
Shares are ---------------------------------------------------------------------------------------------------------------------
Subject of Guyanor 20,000 314,900 290,000 Exercisable 1,292,500 Exercisable
Options 4,000(3) 71,380
Granted ---------------------------------------------------------------------------------------------------------------------
PARC 0 0 310,000 Exercisable 4,000 Exercisable
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Upon exercise of stock options granted prior to March 14, 1995, the holder
will, in addition, be entitled to receive one-fifth of one Class B share
of Guyanor for each Common Share acquired.
(2) For all unexercised options held as of December 31, 1996, the aggregate
dollar value of the excess of the market value of the shares underlying
those options over the exercise price of those unexercised options. On
December 31, 1996, the closing price of the Common Shares was CDN$18.05 on
the TSE, the closing price of the Guyanor Class B share was CDN$9.25 on
the TSE and the closing price of PARC common shares was CDN$0.69 on the
Canadian Dealing Network ("CDN"). On April 15, 1997, the closing price of
the Common Shares was CDN$11.65 per share on the TSE, the closing price of
the Guyanor Class B share was CDN$4.00 on the TSE and the closing price of
the PARC common shares was CDN$0.42 on the CDN.
(3) Guyanor Class B shares obtained through the exercise of the Corporation's
stock options granted prior to March 14, 1995 (see footnote (1)).
STOCK INCENTIVES
STOCK OPTION PLANS
The Corporation has an Employees' Stock Option Plan (the "Employees' Plan") and
the Directors' Plan (collectively, the "Stock Option Plans") for employees
(including executive officers and consultants) and non-employee directors,
respectively, which were first approved in May of 1992 by the shareholders of
each of Golden Star and South American for use by the Corporation upon
amalgamation. Certain amendments to the Stock Option Plans were approved in
1994, 1995 and 1996 by the shareholders of the Corporation.
The Employees' Plan is administered by the Compensation Committee, an
independent committee of the Board, and provides for the grant of options to
officers, key employees and employee-directors and consultants of the
Corporation or any of its subsidiaries. The vesting schedule of options issued
pursuant to the Employees' Plan is specified by the Compensation Committee at
the time of grant of the option and may be accelerated by the Compensation
Committee in certain circumstances. Provision is also made in the Employees'
Plan for interest-free non-recourse loans to employee participants. The loans
are secured by a pledge to the Corporation of the optioned Common Shares and
are repayable prior to the earliest of the date which is five years from the
date of the loan, ten years from the date of grant of the particular option and
30 days after the optionee ceases to be employed by the Corporation for any
reason other than death.
The Directors' Plan is administered by the Board and provides for automatic
grant of options to non-employee directors, as set forth under "Compensation to
Directors - Stock Options".
Options granted pursuant to either Stock Option Plan are non-assignable and are
exercisable for a period of 10 years. The aggregate maximum number of Common
Shares which the Corporation could at any time reserve for issuance under the
Stock Option Plans or other stock incentive arrangements cannot currently
exceed in the aggregate 4,539,494 Common Shares, i.e., 3,591,994 Common
11
<PAGE> 14
Shares for the Employees' Plan, 627,500 Common Shares for the Directors' Plan
and 320,000 Common Shares for the Corporation's Stock Bonus Plan. See "Stock
Bonus Plan". The number of Common Shares reserved for issuance to any one
person pursuant to options may not exceed that permitted by the rules and
policies of the stock exchanges on which the Common Shares are listed. As of
the date hereof, only the TSE has imposed limits on the number of Common Shares
that may be reserved for issuance upon exercise of stock options. Under the
rules and policies of the TSE, a corporation may not reserve for issuance to
any one person upon exercise of stock options more than 5% of the Outstanding
Issue (as defined hereinafter). For this purpose, "Outstanding Issue" means the
number of shares of the applicable class outstanding on a non-diluted basis,
subject to any applicable adjustments provided for in Section 628 to 630 of the
TSE's policies. The total number of Common Shares that may be reserved at any
time under the Stock Option Plans and under the Stock Bonus Plan for issuance
to insiders of the Corporation is limited to 10% of the Outstanding Issue and
no more than 5% of the Outstanding Issue could be issued to any one insider in
a one-year period. The exercise price of the options granted under the Stock
Option Plans is the market price of the Common Shares on the date of grant.
The shareholders at the Meeting are being asked to approve a new plan, the 1997
Stock Option Plan. If the new plan is approved and necessary regulatory
approvals obtained, the Employees' Plan and Directors' Plan will be terminated
(see "Approval of the 1997 Stock Option Plan" for description of the proposed
plan). The outstanding options granted under the Employees' Plan and Directors'
Plan will be assumed under the 1997 Stock Option Plan and will not otherwise be
adversely affected by such termination. As of April 23, 1997, 2,919,898 Common
Shares were received for issuance with respect to outstanding options granted
under the Employees' Plan and the Directors' Plan.
STOCK OPTION GRANTS
The following table sets forth information concerning grants of stock options
made by the Corporation, Guyanor and PARC during the fiscal year ended December
31, 1996 to the Named Executive Officers. Information is set forth for options
to purchase Common Shares granted by the Corporation under the Employees' Plan,
options to purchase Class B shares of Guyanor granted by Guyanor under its
stock option plan and options to purchase common shares granted by PARC under
its stock option plan.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
==============================================================================================================================
INDIVIDUAL GRANTS GRANT VALUE
==============================================================================================================================
MARKET VALUE
OF SECURITIES
NUMBER OF % OF TOTAL UNDERLYING
NAME OF OPTIONEE SECURITIES OPTIONS OPTIONS ON
AND COMPANY UNDERLYING GRANTED TO EXERCISE OR THE DATE OF
WHOSE SHARES ARE OPTIONS EMPLOYEES IN BASE PRICE GRANT GRANT DATE
SUBJECT OF OPTIONS GRANTED FINANCIAL (CDN$/ (CDN$/ PRESENT VALUE
GRANTED (#) YEAR SECURITY) SECURITY) EXPIRATION DATE (1)
- ---------------------- ------------------ ----------------- -------------- ---------------- ---------------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Gordon J. Bell
Corporation 30,000 3.48 18.45 18.45 December 18, 2006 300,771
Guyanor 75,000 5.79 3.30 3.30 February 21, 2006 158,693
Guyanor 15,000 1.16 9.20 9.20 December 10, 2006 89,064
PARC 100,000 5.24 0.99 0.99 February 7, 2001 72,850
PARC 25,000 1.31 0.65 0.65 December 10, 2007 12,095
- ---------------------- ------------------ ----------------- -------------- ---------------- ---------------------- -----------
Carlos H. Bertoni
Corporation 25,000 2.90 18.45 18.45 December 18, 2006 250,643
Guyanor 40,000 3.09 3.30 3.30 February 21, 2006 84,636
Guyanor 10,000 0.77 9.20 9.20 December 10, 2006 59,376
PARC 10,000 0.52 0.99 0.99 February 7, 2001 7,285
PARC 20,000 1.05 0.65 0.65 December 10, 2007 9,676
- ---------------------- ------------------ ----------------- -------------- ---------------- ---------------------- -----------
David K. Fagin
Corporation 25,000 2.90 18.45 18.45 December 18, 2006 250,643
Guyanor 100,000 7.72 3.30 3.30 February 21, 2006 211,590
Guyanor 10,000 0.77 9.20 9.20 December 10, 2006 59,376
PARC 100,000 5.24 0.99 0.99 February 7, 2001 72,850
PARC 20,000 1.05 0.65 0.65 December 10, 2007 9,676
- ---------------------- ------------------ ----------------- -------------- ---------------- ---------------------- -----------
</TABLE>
12
<PAGE> 15
<TABLE>
<CAPTION>
==============================================================================================================================
INDIVIDUAL GRANTS GRANT VALUE
==============================================================================================================================
MARKET VALUE
OF SECURITIES
NUMBER OF % OF TOTAL UNDERLYING
NAME OF OPTIONEE SECURITIES OPTIONS OPTIONS ON
AND COMPANY UNDERLYING GRANTED TO EXERCISE OR THE DATE OF
WHOSE SHARES ARE OPTIONS EMPLOYEES IN BASE PRICE GRANT GRANT DATE
SUBJECT OF OPTIONS GRANTED FINANCIAL (CDN$/ (CDN$/ PRESENT VALUE
GRANTED (#) YEAR SECURITY) SECURITY) EXPIRATION DATE (1)
- ---------------------- ------------------ ----------------- -------------- ---------------- ---------------------- -----------
<S> <C> <C> <C> <C> <C> <C>
David A. Fennell
Corporation 150,000 17.40 18.45 18.45 December 18, 2006 1,503,855
Guyanor 300,000 23.15 3.30 3.30 February 21, 2006 634,770
Guyanor 75,000 5.79 9.20 9.20 December 10, 2006 445,320
PARC 500,000 26.21 0.99 0.99 February 7, 2001 364,250
PARC 100,000 5.24 0.65 0.65 December 10, 2007 48,380
- ---------------------- ------------------ ----------------- -------------- ---------------- ---------------------- -----------
Adrian W. Fleming
Corporation 150,000 17.40 22.80 22.80 May 9, 2006 1,878,180
Guyanor 10,000 0.77 3.30 3.30 February 21, 2006 21,159
Guyanor 125,000 9.65 12.40 12.40 May 15, 2006 1,007,300
PARC 300,000 15.73 0.99 0.99 February 7, 2001 218,550
- ---------------------- ------------------ ----------------- -------------- ---------------- ---------------------- -----------
Hilbert N. Shields
Corporation 25,000 2.90 18.45 18.45 December 18, 2006 250,643
Guyanor 40,000 3.09 3.30 3.30 February 21, 2006 84,636
Guyanor 10,000 0.77 12.40 12.40 December 10, 2006 59,376
PARC 15,000 0.79 0.99 0.99 February 7, 2001 10,928
PARC 20,000 1.05 0.65 0.65 December 10, 2007 9,676
- ---------------------- ------------------ ----------------- -------------- ---------------- ---------------------- -----------
</TABLE>
(1) Based on the Black-Scholes option pricing model, a widely recognized
method of valuing options. The following assumptions were used in
determining the value of the options using the model:
<TABLE>
<CAPTION>
Corporation Guyanor PARC
----------- ------ ----
<S> <C> <C> <C>
Expected Volatility 55% 73% 93%
Risk Free Interest Rate 6.14% to 6.58% 5.5% to 6.39% 5.25% to 5.93%
Expected Lives 5 years 5 years 5 years
Annual Dividend Rate 0% 0% 0%
Forfeiture Rate 1.5% 0% 0%
</TABLE>
The expected volatility of share prices was based on the two-year historic
daily stock prices adjusted for non-recurring past experiences. The risk
free interest used was the interest rate on U.S. Zero Coupon Bonds with
time to maturity approximately equal to the options expected time to
exercise. Neither the Corporation, Guyanor or PARC have paid dividends in
the past. The actual value, if any, that an executive may realize will
depend on the excess of the stock price over the exercise price on the
date the option is exercised. Consequently, there is no assurance the
value realized by an executive will be at or near the value estimated by
the Black-Scholes model. The model is used for valuing market traded
options and is not directly applicable to valuing stock options granted
under the Corporation's, Guyanor's and PARC's option plans, which options
are non-transferable.
13
<PAGE> 16
STOCK OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table sets forth information concerning each exercise of stock
options to purchase Common Shares, Class B shares of Guyanor or common shares
of PARC during the fiscal year ended December 31, 1996 by the Named Executive
Officers and the fiscal year-end value of unexercised options held by the Named
Executive Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
- ---------------------------- ---------------- -------------------- -------------------------------- -------------------------------
COMMON
NAME OF OPTIONEE AND SHARES AGGREGATE VALUE VALUE OF UNEXERCISED
COMPANY WHOSE ACQUIRED ON REALIZED NUMBER OF SECURITIES IN-THE-MONEY OPTIONS AT FISCAL
SHARES ARE SUBJECT OF EXERCISE (CDN$) UNDERLYING UNEXERCISED OPTIONS YEAR END (CDN$)
OPTIONS GRANTED (#) (1) AT FISCAL YEAR END (3)
=================================================================
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Gordon J. Bell
Corporation 0 N/A 177,700 102,300 1,954,725 962,775
Guyanor 1,949 18,419 45,401 67,650 244,486 346,583
PARC 0 N/A 42,500 82,500 340 660
- -----------------------------------------------------------------------------------------------------------------------------------
Carlos H. Bertoni
Corporation 0 N/A 110,300(2) 29,700(2) 786,756 137,544
Guyanor 50,000 645,000 241,600 158,400 1,640,120 1,100,880
PARC 0 N/A 16,800 13,200 272 528
- -----------------------------------------------------------------------------------------------------------------------------------
David K. Fagin
Corporation 100,000 1,624,000 397,250(2) 57,750(2) 3,203,005 429,825
Guyanor 9,742 100,609 235,258 165,000 1,570,295 1,100,550
PARC 0 N/A 40,800 79,200 272 528
- -----------------------------------------------------------------------------------------------------------------------------------
David A. Fennell
Corporation 480,100 8,531,530 112,650(2) 140,250(2) 467,565 314,738
Guyanor 1,948 20,118 527,552 445,500 3,468,547 2,596,275
PARC 0 N/A 204,000 396,000 1,360 2,640
- -----------------------------------------------------------------------------------------------------------------------------------
Adrian W. Fleming
Corporation 0 N/A 70,800 109,200 36,630 18,870
Guyanor 5,000 53,250 57,500 82,500 59,500 0
PARC 0 N/A 102,000 198,000 0 0
- -----------------------------------------------------------------------------------------------------------------------------------
Hilbert. N. Shields
Corporation 25,000 365,625 85,300(2) 29,700(2) 473,006 100,716
Guyanor 0 N/A 50,400 39,600 273,040 251,460
PARC 0 N/A 11,900 23,100 272 528
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) With respect to options exercised during the Corporation's fiscal year
ended December 31, 1996, the dollar value of the difference between the
option exercise price and the market value of the shares under option
purchased on the date of the exercise of the options.
(2) Upon exercise of options granted prior to March 14, 1995, the holder will,
in addition, be entitled to receive one-fifth of one Class B share of
Guyanor for each Common Share acquired. Mr. Fagin obtained an additional
20,000 Class B shares of Guyanor through the exercise of options granted
by the Corporation prior to March 14, 1995. Mr. Fennell obtained an
additional 87,520 Class B shares of Guyanor through the exercise of
options granted by the Corporation prior to March 14, 1995. Mr. Shields
obtained an additional 5,000 Class B shares of Guyanor through the
exercise of options granted by the Corporation prior to March 14, 1995.
(3) For all unexercised options held as of December 31, 1996, the aggregate
dollar value of the excess of the market value of the shares underlying
those options over the exercise price of those unexercised options. On
December 31, 1996, the closing price of the Common Shares was CDN$18.05 on
the TSE, the closing price of the Guyanor Class B share was CDN$9.25 on
the TSE and the closing price of PARC common shares was CDN$0.69 on the
CDN. On April 15, 1997, the closing price of the Common Shares was
CDN$11.65 on the TSE, the closing sale price of the Guyanor Class B share
was CDN$4.00 on the TSE and the closing price of PARC common shares was
CDN$0.42 on the CDN.
14
<PAGE> 17
STOCK BONUS PLAN
In December 1992, the Corporation established an Employees' Stock Bonus Plan
(the "Bonus Plan") for any full-time or part-time employee (whether or not a
director) of the Corporation or any of its subsidiaries who has rendered
meritorious services that contributed to the success of the Corporation or any
of its subsidiaries. The Bonus Plan provides that a specifically designated
committee of the Board (currently the Compensation Committee) may grant bonus
Common Shares on terms that the Compensation Committee may determine, within
the limitations of the Bonus Plan and subject to the rules of applicable
regulatory authorities. The maximum number of Common Shares issuable under the
Bonus Plan is limited to 320,000 Common Shares. In addition, in any calendar
year such reservation is limited to 1% of the total number of Common Shares
which were issued and outstanding at the end of the preceding fiscal year (with
no more than 0.5% being issuable to insiders of the Corporation).
A total of 18,342 Common Shares were issued under the Bonus Plan in 1996. The
18,342 bonus Common Shares were issued on January 1, 1996, to the Named
Executive Officers, Messrs. Bell, Bertoni, Fagin and Shields, in the amounts of
4,683, 2,927, 7,805 and 2,927, respectively.
INDEBTEDNESS OF DIRECTORS AND OFFICERS
At April 15, 1997, the total amount of indebtedness outstanding to the
Corporation which was entered into in connection with a purchase of securities
of the Corporation by directors and officers of the Corporation was
CDN$5,409,005. The following table sets forth information with respect to
indebtedness incurred by any director or officer of the Corporation in
connection with an acquisition by such officer or director of Common Shares.
The loans indicated were granted pursuant to the Employees' Plan. See "Stock
Incentives - Stock Option Plans" for a description of the terms of the loans.
TABLE OF INDEBTEDNESS OF DIRECTORS, EXECUTIVE OFFICERS
AND SENIOR OFFICERS UNDER SECURITIES PURCHASE PROGRAMS
<TABLE>
<CAPTION>
- ----------------------- ----------------------- ----------------------- --------------------- ----------------------- ------------
FINANCIALLY ASSISTED
LARGEST AMOUNT SECURITIES PURCHASES
OUTSTANDING DURING DURING THE
THE FINANCIAL YEAR AMOUNT FINANCIAL YEAR
ENDED OUTSTANDING AS AT ENDED
NAME AND INVOLVEMENT OF ISSUER DECEMBER 31, 1996 APRIL 15, 1997 DECEMBER 31, 1996 SECURITY FOR
PRINCIPAL POSITION OR SUBSIDIARY (CDN$) (CDN$) (#) INDEBTEDNESS
(a) (b) (c) (d) (e) (f)
- ----------------------- ----------------------- ----------------------- --------------------- ----------------------- ----------
<S> <C> <C> <C> <C> <C>
David K. Fagin Lender 966,000 966,000 100,000 Common
Chairman Shares
- ----------------------- ----------------------- ----------------------- --------------------- ----------------------- ----------
David A. Fennell Lender 4,359,932 4,340,566 480,100 Common
President and Chief Shares
Executive Officer
- ----------------------- ----------------------- ----------------------- --------------------- ----------------------- ----------
Carlos H. Bertoni Lender 56,250 -0- -0- Common
Vice-President Shares
Exploration (Eastern
Division)
- ----------------------- ----------------------- ----------------------- --------------------- ----------------------- ----------
Richard A. Winters Lender 102,439 102,439 11,220 Common
Vice-President, Shares
Corporate Development
- ----------------------- ----------------------- ----------------------- --------------------- ----------------------- ----------
</TABLE>
15
<PAGE> 18
At April 15, 1997, the total amount of indebtedness outstanding to the
Corporation which was entered into other than in connection with a purchase of
securities of the Corporation by directors and officers of the Corporation was
US$174,419. The following table sets forth information with respect to such
indebtedness.
TABLE OF INDEBTEDNESS OF DIRECTORS, EXECUTIVE OFFICERS AND SENIOR OFFICERS
OTHER THAN UNDER SECURITIES PURCHASE PROGRAMS
<TABLE>
<CAPTION>
- ----------------------------------------- ------------------------------ ------------------------------ -----------------------
LARGEST AMOUNT
OUTSTANDING DURING THE AMOUNT OUTSTANDING AS AT
INVOLVEMENT OF ISSUER OR FINANCIAL YEAR ENDED APRIL 15, 1997
NAME AND PRINCIPAL POSITION SUBSIDIARY DECEMBER 31, 1996 (US$)
(US$)
(a) (b) (c) (d)
- ----------------------------------------- ------------------------------ ------------------------------ -----------------------
<S> <C> <C> <C>
Jeffrey T. Abbott 1 Lender 125,000 126,487
President of Southern Star Resources
Ltd.
- ----------------------------------------- ------------------------------ ------------------------------------------------------
Gordon J. Bell 2 Lender 175,000 20,241
Vice President and Chief Financial
Officer
- ----------------------------------------- ------------------------------ ------------------------------------------------------
David K. Fagin 3 Lender 600,253 -0-
Chairman
- ----------------------------------------- ------------------------------ ------------------------------------------------------
Adrian W. Fleming 4 Lender 300,000 -0-
Executive Vice-President, Exploration
- ----------------------------------------- ------------------------------ ------------------------------------------------------
Louis O. Peloquin 5 Lender 27,223 27,691
Vice-President, General Counsel and
Secretary
- ----------------------------------------- ------------------------------ ------------------------------------------------------
Hilbert N. Shields 6 Lender 15,574 -0-
Vice-President, Exploration (Western
Division)
- ----------------------------------------- ------------------------------ ------------------------------------------------------
</TABLE>
1. The loan to Mr. Abbott was made for the purpose of purchasing a residence
at the time of his relocation to Denver, Colorado. The loan bears interest
at the prime rate and is repayable on August 21, 1997.
2. The loan to Mr. Bell was made for the purpose of purchasing a residence at
the time of his relocation to Denver, Colorado. The loan bears interest at
the prime rate and is repayable on December 21, 1997.
3. The loan to Mr. Fagin was made for the purpose of assisting him with the
payment of taxes incurred in relation with the exercise of stock options
granted by the Corporation. The loan bore interest at the prime rate.
4. The loan to Mr. Fleming was made for the purpose of purchasing a residence
at the time of his relocation to Denver, Colorado and did not bear
interest.
5. The loan to Mr. Peloquin was made for the purpose of purchasing a
residence at the time of his relocation to Denver, Colorado. The loan
bears interest at the prime rate and is repayable in August 1997.
6. The loan to Mr. Shields was made for the purpose of acquiring a property
adjacent to his resident in Guyana. The loan bore interest at the prime
rate plus 1%.
PERFORMANCE GRAPH
The following graph shows the cumulative total shareholder return on the Common
Shares for the fiscal years ended December 31, 1992 through 1996, together with
the total shareholder return of the TSE 300 Total Return Index and the TSE Gold
and Precious Metals Index. The graph assumes an initial investment of US$100 at
May 15, 1992, the date of the Corporation's formation upon the
16
<PAGE> 19
amalgamation of Golden Star and South American. Because the Corporation did not
pay dividends on its Common Shares during the measurement period, the
calculation of the cumulative total shareholder return on the Common Shares
does not include dividends.
[GRAPHIC]
<TABLE>
<CAPTION>
===============================================================================================================================
5/15/92 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
===============================================================================================================================
S> <C> <C> <C> <C> <C> <C>
GOLDEN STAR RESOURCES LTD.
DOLLAR VALUE 100 198.63 671.23 420.55 231.05 724.20
ANNUAL RETURN 98.63% 571.23% 320.55% 131.05% 624.20%
- -------------------------------------------------------------------------------------------------------------------------------
TSE GOLD AND PRECIOUS METALS INDEX
DOLLAR VALUE 100 106.23 216.49 193.97 210.71 228.70
ANNUAL RETURN 6.23% 116.49% 93.97% 110.71% 128.70%
- -------------------------------------------------------------------------------------------------------------------------------
TSE 300 TOTAL RETURN INDEX
DOLLAR VALUE 100 95.39 123.03 119.97 134.20 168.75
ANNUAL RETURN -4.61% 23.03% 19.97% 34.20% 68.75%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain directors and officers of the Corporation are and may continue to be
involved in the mining and mineral exploration industry through their direct
and indirect participation in corporations, partnerships or joint ventures
which are potential competitors. Situations may arise in connection with
potential acquisitions and investments where the other interests of these
directors and officers may conflict with the interests of the Corporation. As
required by law, each of the directors of the Corporation is required to
disclose any potential conflict of interest and to act honestly, in good faith
and in the best interests of the Corporation.
Except as otherwise disclosed herein, since January 1, 1996, no insider of the
Corporation, nor any associate or affiliate of an insider, has had any material
interest in any transaction or proposed transaction which has materially
affected or would materially affect the Corporation or any of its subsidiaries,
nor has any director of the Corporation been involved, directly or indirectly,
in any business or professional relationship with the Corporation in connection
with the provision by the director or the Corporation of property, services or
financing to the other.
Dr. Robert Minto, a director of the Corporation, is currently Senior
Vice-President Kilborn SNC-Lavalin Inc. ("Kilborn SNC-Lavalin"). Kilborn
SNC-Lavalin is an international engineering firm which has provided certain
services to the Corporation in 1996. The Corporation paid to Kilborn
SNC-Lavalin approximately US$65,000 during 1996.
Mr. Poznanski, a partner of Koffman Birnie & Kalef, a law firm based in
Vancouver, Canada, which has served as the Corporation's principal Canadian
legal counsel for several years served as a director of the Corporation from
June 11, 1996 to September 1, 1996.
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
The Corporation's Board and senior management consider good corporate
governance to be central to the effective and efficient operation of the
Corporation, and the well-being of the Corporation and its shareholders. The
corporate governance statement described below has been approved by the Board.
17
<PAGE> 20
MANDATE OF BOARD
The Board is required to supervise the management of the business and affairs
of the Corporation. It establishes overall policies and standards for the
Corporation. The directors are kept informed of the Corporation's operations at
meetings of the Board and its Committees and through reports and analyses and
discussions with management. The Board normally meets once a month in person or
by telephone conference, with additional meetings being held as needed. In
1996, there were six meetings in person and five meetings by telephone
conference. Each director attended more than 82% of the meetings of the Board.
At least one meeting each year includes key personnel from exploration
operations in South America and Africa. These meetings are sometimes held at
regional office locations and include visits by the Board to exploration sites.
Following is a summary of how the Board handles matters pertaining to strategic
planning, risk management, succession planning, communication and control
systems.
1. Each year the Board reviews planning assumptions and budgets for the year.
Because the areas of exploration, the priorities and available funds
change constantly, it is not realistic to formulate long range plans other
than to select general geographic areas and the types of exploration to be
pursued.
2. The Board and the Audit and Governance Committee seek to identify
principal risks of the Corporation's business which are wide ranging
because of the nature of the Corporation's business, including risks
associated with operating in developing countries, maintaining control of
the Corporation's assets and funds, political risks, exchange controls,
environmental risks, government regulation problems, title uncertainties,
civil unrest, to name only a few.
3. While the Corporation is relatively small, the Board considers succession
planning is satisfactory for all management positions other than the
President and Chief Executive Officer where replacement at this time could
require outside recruitment.
4. The Board has provided for shareholder communication through the
Corporation's Investor Relations Department and through adopted policies.
DECISIONS REQUIRING BOARD APPROVAL
The Board considers that certain decisions are sufficiently important that
management should seek prior approval of the Board. The Board has adopted
Policies on Corporate Control with respect to annual budgets, financial and
budget reporting, activities reporting, acquisitions and dispositions of
assets, joint ventures, spending authorities, contracts and investment banking
services. Therefore, in addition to those matters which must by law be approved
by the Board, the Board approves, among other things, the terms of acquisitions
and dispositions of the mineral properties of the Corporation and its
subsidiaries as well as joint venture agreements on such properties. Operating
and capital budgets also require the Board's approval. The Board receives
monthly reports on business developments and full Board meetings are held to
review and approve the corporate activities. Finally, because of its relatively
small size, the Board is very flexible and management has been able to liaise
regularly with the Board to seek approval for activities which management felt
advisable including any activities outside the normal course of business of the
Corporation.
COMPOSITION OF THE BOARD AND INDEPENDENCE FROM MANAGEMENT
Mr. Fagin was until May 1, 1996, Chief Executive Officer of the Corporation. He
then became non-executive Chairman of the Board and has indicated that he will
resign that position as of June 10, 1997. The Board will consider designating a
new Chairman at that time. If re-elected at the Meeting, Mr. Fagin will
continue to serve as a Director. Mr. Fagin will remain an employee of the
Corporation until December 31, 1997. David Fennell, the President and Chief
Executive Officer of the Corporation, is a member of the Board. The other seven
members of the Board are unrelated or outside members with no other affiliation
with the Corporation, except for Dr. Roger Morton. Dr. Morton, a recently
appointed Professor Emeritus of Economic Geology at the University of Alberta,
was a founder and for a brief period a Vice President of one of the
Corporation's predecessor corporations.
The Board considers that its present size of nine members and its present
composition to be appropriate and effective for the business being undertaken.
The non-management members have a variety of experiences and skills, including
in the areas of government, banking, geology, mining, financial planning and
law. No formal program has been adopted to date to assess Board members
individually or the effectiveness of the Board as a whole or of its Committees.
The education of new members is managed informally through furnishing records
and reports and through meeting with executives as desired.
The Board periodically reviews the adequacy and form of compensation of
directors in relation to the responsibilities and risks involved in being an
effective director. In addition to modest cash compensation, the directors
receive options under the Directors'
18
<PAGE> 21
Plan and have also received options on shares of the Corporation's two publicly
traded subsidiaries. The Board believes the emphasis on compensation through
options is particularly appropriate in a resource business where increasing
shareholder value is perhaps the only relevant measure of progress.
BOARD COMMITTEES
Audit and Governance Committee
The integrity of the Corporation's internal controls and management information
system is monitored through the Audit and Governance Committee (the "Audit
Committee") and through expenditure control policies established by the Board.
The Audit Committee is currently composed of Messrs. Stark (Chairman), Fagin,
Lefebvre, Mazankowski and Mercier. The Audit Committee meets with the financial
officers of the Corporation and the independent auditors to review and inquire
into matters affecting financial reporting, the systems of internal accounting
and financial controls and procedures and the audit procedures and audit plan.
The Audit Committee also recommends to the Board the auditors to be appointed
and approves their compensation. In addition, the Audit Committee recommends to
the Board for approval the annual financial statements, the annual report and
certain other documents required by regulatory authorities. The Audit Committee
authorizes and monitors corporate conduct, compliance and disclosure policies.
The Audit Committee recently completed a review of the Corporation's compliance
procedures, resulting, among other things, in the designation of the
Corporation's General Counsel as Corporate Compliance Officer reporting to the
Audit Committee. In connection with risk assessment, the Audit Committee
reviews the nature and adequacy of insurance coverages. The Audit Committee is
also responsible for corporate governance matters. The Audit Committee met
twice in person during 1996; one member missed one meeting.
Compensation and Nominating Committee
The Compensation Committee is currently composed of Messrs. Lefebvre
(Chairman), Gousseland, Mazankowski, Mercier, Minto, Morton and Stark. The
Compensation Committee supervises the selection, evaluation and compensation of
top executives, sets corporate-wide policy with respect to compensation and
benefits, and administers the Employees' Plan and the Bonus Plan. The
Compensation Committee also establishes descriptions, definitions and limits to
management's authorities and approves objectives and goals for top management
in general terms. In addition, the Compensation Committee is responsible for
identifying and proposing to the Board new nominees for the Board. The
Compensation Committee met two times in 1996, once in person and once by
conference telephone; one member missed one meeting.
Environmental Committee
The Environmental Committee is currently composed of Messrs. Morton (Chairman),
Fagin, Gousseland, Mazankowski and Minto. The Committee is responsible for the
identification, monitoring and managing of environmental risks. The Board has
retained outside consultants to assist in discharging this responsibility,
including an environmental audit. The Committee met once in 1996.
Shareholder Relations and Feedback
The Corporation communicates regularly with its shareholders. The Vice
President, Corporate Development, and the Manager, Investor Relations are
responsible for shareholder communications and investor relations. Together,
they respond to all shareholder inquiries promptly. To date, the Corporation
believes all shareholder inquiries have been dealt with in a satisfactory
manner.
APPROVAL OF THE 1997 STOCK OPTION PLAN
DESCRIPTION OF THE 1997 STOCK OPTION PLAN
As a result of recent changes in U.S. securities laws, the Board has decided to
adopt a new stock option plan, the 1997 Stock Option Plan. Under the proposed
new plan, the Employees' Plan and the Directors' Plan were combined into one
plan. The approval by the Board of the 1997 Stock Option Plan is subject to
shareholders and regulatory approvals. If such approvals are obtained, the
Employees' Plan and the Directors' Plan will be terminated and outstanding
options granted thereunder will be assumed under the 1997 Stock Option Plan. As
of April 23, 1997, 2,919,898 Common Shares were reserved for issuance with
respect to outstanding options granted under the Employees' Plan and the
Directors' Plan.
A summary of the material provisions of the 1997 Stock Option Plan is set forth
below. This summary is not complete and is qualified in its entirety by the
terms of the 1997 Stock Option Plan attached hereto as Exhibit A.
19
<PAGE> 22
The purpose of the 1997 Stock Option Plan is to provide certain key employees,
consultants and directors of the Corporation and certain subsidiaries an
incentive to maintain and to enhance the long-term performance of the
Corporation through the acquisition of Common Shares pursuant to the exercise
of stock options. The Plan consists of two components: (i) a discretionary
component, under which options may be granted to employees, consultants and
directors (including non-employee directors), and (ii) a non-discretionary
component, under which options are automatically granted, on an annual basis,
to non-employee directors. Currently, there are approximately 110 key employees
(including executive officers), 8 non-employee directors and approximately 5
consultants of the Corporation and its subsidiaries that are eligible to
receive options under the 1997 Stock Option Plan.
The 1997 Stock Option Plan is administered by a committee (the "Committee")
appointed by the Board consisting of at least two directors each of whom is
intended to qualify as a "non-employee director" and an "outside director"
within the meaning of Rule 16b-3 of the Securities Exchange Act of 1934, as
amended, and section 162(m) of the Internal Revenue Code of 1986, as amended
(the "Code"), respectively, except that with respect to options granted to
non-employee directors, the 1997 Stock Option Plan is administered by the
Board. The Committee or the Board, as the case may be, has the authority,
subject to the terms of the 1997 Stock Option Plan, to determine when and to
whom to make grants under the 1997 Stock Option Plan, the number of shares to
be covered by the grants, the terms of options granted and the exercise price
of options, and to prescribe, amend and rescind rules and regulations relating
to the 1997 Stock Option Plan. Under the terms of the 1997 Stock Option Plan,
only options that are not "incentive stock options" within the meaning of
section 422 of the Code may be granted.
Subject to certain other limitations, the maximum number of shares that are
currently reserved for issuance under the 1997 Stock Option Plan is 5,600,000
including the number of shares for outstanding options under the existing
Employees' Plan and Directors' Plan that will be assumed under the 1997 Stock
Option Plan. The exact number of shares will be determined on the date the new
plan will become effective. Currently, the number of shares reserved for
issuance for outstanding options is 2,919,898. The maximum number of shares
that may be issued to any optionee in any one calendar year is 400,000.
Under the terms of the non-discretionary component of the 1997 Stock Option
Plan, each person who is first elected, appointed or otherwise first becomes a
non-employee director (an "Eligible Director") generally will be granted an
option to purchase 40,000 Common Shares as of the date on which such person
first becomes an Eligible Director (an "Initial Option"), and each such person
who remains an Eligible Director will generally receive an option to purchase
10,000 Common Shares (an "Annual Option") on each anniversary date of such
person becoming an Eligible Director. With respect to any non-discretionary
option, each option will be exercisable for a period of 10 years from the date
of the grant. Each Initial Option and Annual Option vests and becomes fully
exercisable on the date of grant.
Options granted under the discretionary component of the 1997 Stock Option Plan
will be exercisable over a period determined by the committee in its
discretion, but not to exceed 10 years from the date of grant, and the exercise
price of an option may not be less than the fair market value of the Common
Shares on the date of grant. In additional, such options are subject to vesting
conditions established by the Committee or the Board, as the case may be, and
provided in a separate option agreement evidencing the grant of such option.
In the event of an optionee's termination of employment or service prior to the
time all or any portion or an option vests, such option, to the extent not
vested, shall terminate. If an Eligible Director's service terminates, any
unexercised portion of an Initial Option or Annual Option automatically becomes
null and void at the time of the earlier to occur of (i) the option expiration
date, and (ii) one year from the date the Eligible Director's service so
terminates. With respect to any discretionary option, except as otherwise
provided by the Committee or the Board, as the case may be, if the employment
of an optionee terminates for any reason (other than by reason of death), the
option generally will expire 30 days following such termination. If the
optionee dies while employed (or within the 30-day period referred to the
preceding sentence), all outstanding options, to the extent then vested, may be
exercised within one year after the optionee's date of death by the person or
persons to whom the optionee's rights pass. In no case may options be exercised
later than the expiration date specified in the grant. Options may be
transferred by a optionee only by will or by the laws of descent and
distribution, and during his or her lifetime may be exercised only by the
optionees.
Options granted under the 1997 Stock Option Plan are deemed exercised upon (i)
delivery of written notice to the Corporation of the decision to exercise and
(ii) tender of full payment (A) by certified or official bank check, or (B) by
way of the proceeds of an interest-free loan from the Corporation. Provision is
made in the 1997 Stock Option Plan for interest-free non-recourse loans to
employee participants. The loans are secured by a pledge to the Corporation of
the optioned Common Shares and are repayable prior to the earliest of the date
which is five years from the date of the loan, ten years from the date of grant
of the particular option and 30 days after the optionee ceases to be employed
by the Corporation for any reason other than death.
20
<PAGE> 23
The exercise price and the number of shares to be purchased by an optionee upon
the exercise of an option will be adjusted by the Committee, or the Board, as
the case may be, in accordance with the terms of the 1997 Stock Option Plan in
connection with the occurrence of certain corporate events or changes to the
Common Shares.
The 1997 Stock Option Plan provides that it will terminate, unless earlier
terminated as provided therein, on the tenth anniversary of its approval. The
1997 Stock Option Plan provides that it generally may be amended or terminated
at any time by the Board; provided, however, that any such amendment or
termination shall be subject to any necessary stock exchange, regulatory or
shareholder approval. In addition, no amendment to an option may adversely
affect the rights under such option without the consent of the optionee.
Options granted under the Employees' Plan
All Named Executive Officers as a group received in 1996 options to purchase a
total of 405,000 Common Shares. All employees, including all officers who are
not Named Executive Officers, received 457,250 options in 1996. To date,
options to purchase 34,000 Common Shares have been granted in 1997 to Named
Executive Officers or employees.
Options granted under the Directors' Plan
All directors as a group received in 1996 options to purchase a total of
130,000 Common Shares. To date, an option to purchase 10,000 Common Shares has
been granted in 1997 to a director.
New Plan Benefits
Set forth below are the benefits that will be received in fiscal year 1997
(other than discretionary options which are not determinable) if the 1997 Stock
Option Plan is approved by the shareholders:
<TABLE>
<CAPTION>
NUMBER OF SHARES OF COMMON SHARE
NON-EXECUTIVE DIRECTORS AS A GROUP DOLLAR VALUE (1) UNDERLYING OPTIONS
<S> <C> <C>
CDN$1,015,000 70,000
</TABLE>
(1) Dollar Value of the underlying
shares based on closing price on
the TSE of CDN$14.50 on April 11,
1997. The actual dollar value of
the underlying shares to be granted
will be determined by the stock
price on the date of each grant.
U.S. Federal Income Tax Consequences of Participation in the 1997
Stock Option Plan
The following summary of the U.S. Federal income tax consequences of the grant
and exercise of non-qualified and incentive stock options awarded under the
1997 Stock Option Plan, and the disposition of shares purchased pursuant to the
exercise of such stock options, is intended to reflect the current provisions
of the Code and the regulations thereunder. This summary is not intended to be
a complete statement of applicable law, nor does it address foreign, state and
local tax considerations.
No income will be realized by an optionee upon grant of a non-qualified stock
option. Upon exercise of a non-qualified stock option, the optionee will
generally recognize ordinary compensation income in an amount equal to the
excess, if any, of the fair market value of the underlying stock over the
option exercise price (the "Spread") at the time of exercise. The Spread will
be deductible by the Corporation for federal income tax purposes subject to the
possible limitations on deductibility under sections 280G and 162(m) of the
Code of compensation paid to executives designated in those sections. The
optionee's tax basis in the underlying shares acquired by exercise of a
non-qualified stock option will be equal to the sum of the exercise price plus
the Spread. Upon sale of the shares received by the optionee upon exercise of
the non-qualified stock option, any gain or loss is generally long-term or
short-term capital gain or loss, depending on the holding period. The
optionee's holding period for shares acquired pursuant to the exercise of a
non-qualified stock option will begin on the date of exercise of such option.
Pursuant to Section 16(b) of the Exchange Act, the grant of an option (and not
its exercise) to a person who is subject to the reporting and short-swing
profit provisions under section 16 of the Exchange Act (a "Section 16 Person")
begins the six-month period of potential short-swing liability. The taxable
event for the exercise of an option that has been outstanding at least six
months ordinarily will be the date of exercise. If an option is exercised by a
Section 16 Person within six months after the date of grant, however,
21
<PAGE> 24
taxation ordinarily will be deferred until the date which is six months after
the date of grant, unless the person has filed a timely election pursuant to
section 83(b) of the Code to be taxed on the date of exercise. Pursuant to a
recent amendment to the rules under Section 16(b) of the Exchange Act, the six
month period of potential short-swing liability may be eliminated if the option
grant (i) is approved in advance by the Corporation's board of directors (or a
committee composed solely of two or more non-employee directors) or (ii)
approved in advance, or subsequently ratified by, the Corporation's
shareholders no later than the next annual meeting of shareholders.
Consequently, the taxable event for the exercise of an option that satisfies
either of the conditions described in clauses (i) or (ii) above will be the
date of exercise.
The foregoing constitutes a brief summary of the principal federal income tax
consequences of the transactions based on current federal income tax laws. This
summary is not intended to be exhaustive and does not describe state, local or
foreign tax consequences. Optionees in the 1997 Stock Option Plan are urged to
consult their own tax advisors with respect to the consequences of their
participation in the 1997 Stock Option Plan.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS APPROVAL OF THE 1997 STOCK OPTION
PLAN BY THE SHAREHOLDERS. UNLESS OTHERWISE INSTRUCTED, SIGNED PROXIES WHICH ARE
RETURNED IN A TIMELY MANNER WILL BE VOTED IN FAVOR OF THE ADOPTION OF THE 1997
STOCK OPTION PLAN.
1998 SHAREHOLDER PROPOSALS
To be eligible for inclusion in the Corporation's proxy statement, shareholder
proposals for the 1998 Annual Meeting of Shareholders must be received at the
Corporation's corporate office, 1700 Lincoln Street, Suite 1950, Denver,
Colorado 80227, Attention: Corporate Secretary, on or before January 1, 1998.
AVAILABILITY OF DOCUMENTS
The following documents, filed with various securities commissions or similar
authorities in various provinces of Canada, may be obtained by shareholders of
the Corporation on request without charge from the Secretary of Golden Star
Resources Ltd., One Norwest Center, 1700 Lincoln Street, Suite 1950, Denver,
Colorado, USA 80203 (Tel.: (303) 830-9000; Toll Free: (800) 553-8436):
a) Annual Information Form of the Corporation on Form 10-K for the year
ended December 31, 1996, together with any document, or the pertinent
pages of any document, incorporated by reference in the Annual
Information Form;
b) comparative audited consolidated financial statements of the
Corporation and the notes thereto as at and for the fiscal years ended
December 31, 1996, 1995 and 1994, together with the report of the
auditor thereon (which are all included in the Annual Report of the
Corporation accompanying this Management Proxy Circular); and
c) the Corporation's Management Proxy Circular dated May 7, 1996 for
its 1996 annual general meeting of shareholders held on June 11, 1996.
OTHER MATTERS
Management of the Corporation is not aware of any other matters to come before
the Meeting other than as set forth in the Notice of the Meeting. If any other
matter properly comes before the Meeting, it is the intention of the persons
named in the enclosed proxy form to vote the shares represented thereby in
accordance with their best judgment on such matter.
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DIRECTORS' APPROVAL
The contents and the sending of this circular to holders of the Common Shares,
to each director of the Corporation, to the auditor of the Corporation and to
the appropriate regulatory authorities have been approved by the directors of
the Corporation. This circular contains no untrue statement of a material fact
and does not omit to state a material fact that is required to be stated or
that is necessary to make a statement not misleading in the light of the
circumstances in which it was made.
DATED as of the 29th day of April, 1997.
BY ORDER OF THE BOARD OF DIRECTORS
/s/Louis O. Peloquin
Louis O. Peloquin
Vice President, General Counsel
and Secretary
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EXHIBIT A
GOLDEN STAR RESOURCES LTD.
1997 STOCK OPTION PLAN
1. PURPOSE
1.1 The purpose of the 1997 Stock Option Plan (the "Plan") is to advance
the interests of Golden Star Resources Ltd. (the "Corporation") by
encouraging equity participation in the Corporation by selected key
employees, consultants and directors of the Corporation or
subsidiaries of the Corporation through the acquisition of common
shares without par value ("Shares") in the Corporation. Any reference
herein to the Corporation or any subsidiary of the Corporation shall
be deemed to refer to any predecessor or successor corporation
thereto.
It is the further purpose of this Plan to permit the granting of
awards that will constitute performance-based compensation for certain
executive officers, as described in section 162(m) of the United
States Internal Revenue Code of 1986, as amended (the "Code"), and
regulations promulgated thereunder.
As of the effective date of the Plan, the 1992 Employees' Stock Option
Plan and the 1992 Non-Discretionary Directors' Stock Option Plan
(collectively, the "1992 Plans") will be terminated subject to the
assumption under the Plan of outstanding options granted under the
1992 Plans.
2. ADMINISTRATION OF THE PLAN
2.1 The Plan will be administered by a specifically designated independent
committee ("Independent Committee") of the Board of Directors of the
Corporation (the "Board of Directors"), except that with respect to
options granted to non-employee directors of the Corporation, the
Board of Directors shall serve as the Committee, and, where
applicable, any reference herein to the Independent Committee shall be
deemed to refer to the Board of Directors. The Independent Committee
shall consist of such two or more directors of the Corporation as the
Board of Directors may designate from time to time, all of whom shall
be and remain directors of the Corporation. To the extent necessary to
comply with Code section 162(m) or Rule 16b-3 under the Securities
Exchange Act of 1934 (the "Exchange Act"), as amended ("Rule 16b-3"),
each member of the Independent Committee shall be intended to be an
"outside director" within the meaning of Code section 162(m) or a
"non-employee director" within the meaning of Rule 16b-3. The
Independent Committee is authorized to interpret and to implement the
Plan and all Plan agreements and may from time to time amend or
rescind rules and regulations required for carrying out the Plan. The
Independent Committee shall have the authority to exercise all of the
powers granted to it under the Plan, to make any determination
necessary or advisable in administering the Plan and to correct any
defect, supply any omission and reconcile any inconsistency in the
Plan. Any such interpretation or construction of any provision of the
Plan shall be final and conclusive. Notwithstanding the foregoing, the
Board of Directors may resolve to administer the Plan with respect to
all of the Plan or certain participants and/or awards made or to be
made under the Plan. To the extent that the Board of Directors
determines to administer the Plan, all references herein to the
Independent Committee shall be deemed to refer to the Board of
Directors.
All administrative costs of the Plan shall be paid by the Corporation.
No member of the Independent Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any
option granted under it.
3. PARTICIPATION
3.1 Options may be granted under the Plan to persons who are directors or
key employees (including officers, whether or not directors, and
part-time employees) of, or independent consultants to, the
Corporation or any of its subsidiaries who, by the nature of their
positions or jobs, are in the opinion of the Independent Committee in
a position to contribute to the success of the Corporation or any of
its subsidiaries or who, by virtue of their length of service to the
Corporation or to any of its subsidiaries are, in the opinion of the
Independent Committee, worthy of special recognition. Designation of a
participant in any year shall not require the designation of such
person to receive an option in any other year. The Independent
Committee shall consider such factors as it deems pertinent in
selecting participants and in determining the amount and terms of
their respective options.
Options shall also be granted to non-employee directors of the
Corporation in accordance with Section 11 of the Plan.
3.2 Subject to applicable regulatory approval, options may also be granted
under the Plan in exchange for outstanding options granted by the
Corporation, whether such outstanding options are granted under the
Plan, under any other stock option plan of the Corporation or under
any stock option agreement with the Corporation. Options granted under
the 1992 Plans which are outstanding upon the effectiveness of the
Plan will be assumed and will be deemed to be governed by the Plan as
of such date.
3.3 Options may also be granted under the Plan in substitution for
outstanding options of another corporation in connection with a plan
of arrangement, amalgamation, merger, consolidation, acquisition of
property or shares, or other reorganization between or involving such
other corporation and the Corporation or any of its subsidiaries.
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4. NUMBER OF SHARES RESERVED UNDER THE PLAN
4.1 The number of Shares reserved for issuance under the Plan is limited
as follows:
(a) the maximum number of Shares issuable pursuant to the
exercise of options granted under the Plan shall be 5,600,000
(including such number of Shares issuable upon exercise of
options granted under the 1992 Plans as of the effective date
of the Plan) provided, however, if, after the effective date
of the Plan, any Shares covered by an option granted under
the Plan, or to which such an option relates, are forfeited,
or if an option has expired, terminated or been canceled for
any reason whatsoever (other than by reason of exercise),
then the Shares covered by such option shall again be, or
shall become, Shares with respect to which options may be
granted hereunder;
(b) the number of Shares that may be reserved from time to time
under the Plan for issuance to Insiders (as defined below) of
the Corporation shall be limited to that number which is
equal to the difference between (i) 10% of the outstanding
number of Shares from time to time, and (ii) the number of
Shares that are reserved for issuance to Insiders pursuant to
stock options granted under other stock option plans or
arrangements of the Corporation;
(c) the total number of Shares issuable within any one-year
period to all Insiders of the Corporation pursuant to the
exercise of vested options granted under the Plan or pursuant
to any other share compensation arrangements of the
Corporation shall not exceed 10% of the Outstanding Issue;
(d) the total number of Shares reserved for issuance to any one
optionee pursuant to options granted under the Plan or other
stock option plans or arrangements of the Corporation shall
not exceed 5% of the outstanding number of Shares from time
to time; and
(e) the total number of Shares issuable within any one-year
period to an Insider and, if applicable, such Insider's
"associates" (as defined under the Securities Act (Ontario)
pursuant to the exercise of vested options granted under the
Plan or any other share compensation arrangements of the
Corporation shall not exceed 5% of the Outstanding Issue.
"Insiders" has the meaning set forth in the Toronto Stock Exchange's
policy issued March 22, 1994 entitled "Employee Stock Option and Stock
Purchase Plans, Options for Services and Related Matters."
"Outstanding Issue", for the purposes of the Plan, is determined on
the basis of the number of Shares that are outstanding immediately
prior to the Shares issuance in question, excluding Shares issued
pursuant to the Plan or the Corporation's other share compensation
arrangements over the preceding one-year period. The maximum number of
Shares set forth in Section 4.1(a) shall be appropriately adjusted in
the event of any subdivision or consolidation of the Shares or in the
discretion of the Independent Committee, to reflect any other
corporate event or change in the Shares.
5. NUMBER OF OPTIONED SHARES PER OPTIONEE
5.1 Subject to Section 4.1 hereof, the maximum number of Shares subject to
options granted to any one participant under the Plan in any one
calendar year shall not exceed 400,000 (subject to adjustment in the
event of any subdivision or consolidation of the Shares). Subject to
these limitations and Section 11, however, the determination regarding
the number of optioned Shares that may be granted to each optionee
pursuant to an option will be made by the Independent Committee and
will take into consideration the optionee's present and potential
contribution to the success of the Corporation.
6. PRICE
6.1 The exercise price per optioned Share shall be determined by the
Independent Committee at the time the option is granted, but such
price shall not be less than the fair market value per Share on the
date of grant. For the purposes of the Plan, "fair market value" per
Share shall mean the closing price of the Shares on the stock exchange
or other market on which the Shares principally traded on the day
immediately preceding the date of grant.
7. EXERCISE OF OPTIONS
7.1 The period during which an option may be exercised (the "Option
Period") shall be determined by the Independent Committee at the time
the option is granted and may be up to 10 years from the date the
option is granted, except as the same may be reduced pursuant to the
provisions of Sections 8 and 9 hereof and except as provided in
Section 11 hereof.
7.2 In order to ensure that the Corporation will receive the benefits
contemplated in exchange for the options granted hereunder, no option
shall be exercisable until it has vested. Subject to Section 11.1
hereof, the vesting schedule for each option shall be specified in an
option agreement as provided for in Section 12 hereof; provided,
however, that the Independent Committee shall have the right with
respect to any one or more optionees to accelerate the time at which
an option may be exercised. Notwithstanding the foregoing provisions
of this Section 7.2, if there is a Change of Control, as defined
below, then all options outstanding shall become immediately
exercisable.
For purposes of this Plan, a "Change of Control" shall mean the
occurrence of any of the following: (i) the sale, lease, transfer,
conveyance or other disposition, in one or a series of related
transactions, of all or substantially all of the assets of the
Corporation to any "person" or "group" (as such terms are used in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act), (ii) any person
or group, is or becomes the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that a person shall be
deemed to have "beneficial
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ownership" of all shares that any such person has the right to
acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of more than 50% of the
total voting power of the voting stock of the Corporation, including
by way of merger, consolidation or otherwise or (iii) during any
period of two consecutive years, individuals who at the beginning of
such period constituted the Board of Directors (together with any new
directors whose election by such Board of Directors whose nomination
for election by the shareholders of the Corporation was approved by a
vote of a majority of the directors of the Corporation, then still in
office, who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the Board of
Directors, then in office.
7.3 Options shall be exercisable, either all or in part, at any time after
vesting. If less than all of the Shares included in the vested
portion of any option are purchased, the remainder may be purchased,
subject to the option's terms, at any subsequent time prior to the
expiration of the Option Period.
7.4 Except as set forth in Sections 8 and 9 hereof, no option may be
exercised unless the optionee is at the time of such exercise an
employee or director of, or consultant to, the Corporation or any of
its subsidiaries and shall have continuously served in any one or
more of such capacities since the grant of the option. Absence on
leave, with the approval of the Independent Committee, shall not be
considered an interruption of service for any purpose of the Plan.
7.5 The exercise of any option will be contingent upon receipt by the
Corporation of payment for the full purchase price of the Shares
being purchased in cash by way of certified cheque or bank draft or
by way of proceeds of any loan made by the Corporation to the
optionee pursuant to Section 10 hereof. No optionee or his or her
legal representatives, legatees or distributees will be, or will be
deemed to be, a holder of any Shares subject to an option under the
Plan, unless and until certificates for such Shares are issued to
him, her or them under the terms of the Plan.
7.6 No option granted under the Plan shall be an "incentive stock option"
within the meaning of Code section 422.
8. TERMINATION OF EMPLOYMENT
8.1 Except as provided in Section 11 hereof, if an optionee ceases to be
employed by, or provide services to, the Corporation or any of its
subsidiaries for any reason (other than death), or shall receive
notice from the Corporation or any of its subsidiaries of the
termination of his or her employment or services (such optionee being
referred to in this Section 8.1 as a "Former Optionee"), the Former
Optionee may only exercise each option held, to the extent that it
has vested and not been exercised before such termination, until the
earlier of:
(a) the date which is 30 days after the Former Optionee
ceased to be employed by, or provide services to, the
Corporation or any of its subsidiaries; and
(b) the expiry of the Option Period for the option (the "Option
Expiry Date");
provided, however, that:
(c) if the Former Optionee continues to be a director of the
Corporation or any of its subsidiaries after such termination
of employment, each option held will continue to be
exercisable until the earlier of:
(i) the date which is 12 months after the Former
Optionee ceases to be such a director for any
reason (other than death), and
(ii) the Option Expiry Date, and
(d) each option held may continue to be exercisable for such
longer period than that provided for in this Section 8.1 if
and as may be determined by the Independent Committee and any
such determination by the Independent Committee may be made
retroactively effective in order to reinstate the
effectiveness of an option held by a Former Optionee that is
otherwise rendered unexercisable pursuant to the other
provisions of this Section 8.1; provided, however, that any
such determination by the Independent Committee shall be
subject to the following:
(i) such determination shall be made within three months
after the date that the Former Optionee ceased to be
employed by, or provide services to, the Corporation
or any of its subsidiaries;
(ii) such determination shall be subject to applicable
regulatory approvals; and
(iii) such longer exercise period determined by the
Independent Committee for any option shall not
extend beyond the Option Expiry Date for such
option.
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9. DEATH OF OPTIONEE
9.1 In the event of the death of an optionee while in service or in the
post-termination period described in Section 8, each option
theretofore granted to him or her shall be exercisable until the
earlier of:
(a) the expiry of the period within which the option may be
exercised after such death, which period may be up to one
year after such death and is to be specified in his or her
option agreement, and
(b) the Option Expiry Date;
provided, however, that the option is only exercisable in such event:
(c) by the person or persons to whom the optionee's rights under
the option shall pass by the optionee's will or by the laws
of descent and distribution, and
(d) to the extent that the option has vested and not been
exercised prior to the Optionee's death.
10. LOANS TO EMPLOYEES
10.1 An interest free loan will be made available to optionees who are
employees of the Corporation or any of its subsidiaries at the time
the loan is made, the proceeds of which loan may only be used directly
for the exercise of options granted under the Plan to the optionee.
The optionee shall pledge the subject shares as security for timely
repayment of the loan and the Corporation's sole recourse for
repayment and recovery of the loan shall be against the pledged
shares. Until the loan is repaid, the pledged shares will be held by a
trustee designated by the Corporation. The term of the loan shall be
five years from the date of the loan, provided that the due date for
the loan shall not in any event extend beyond that date which is ten
years from the date of grant of the particular option, and, provided
further, that the loan shall be repaid within 30 days of the earlier
of the date upon which the optionee ceases to be an employee of the
Corporation or any of its subsidiaries for any reason (other than
death), or the date upon which the optionee receives notice from the
Corporation or any of its subsidiaries of the termination of his or
her employment. If the option has not been exercised by the optionee
prior to his or her death, the loan provisions shall not be available
for the exercise of the option pursuant to Section 9 hereof after his
or her death.
11. AUTOMATIC GRANTS TO NON-EMPLOYEE DIRECTORS
11.1 Each person who becomes a non-employee director of the Corporation
will automatically be granted, as of the date such person first
becomes a non-employee director, an option to purchase 40,000 Shares,
provided that, within the one year prior to the date he or she became
a non-employee director, he or she had not been granted any other
stock option by the Corporation (or an affiliate). On each anniversary
a person became a non-employee director of the Corporation if he or
she continues to be a non-employee director of the Corporation, he or
she will automatically be granted, as of the anniversary date, an
option to purchase 10,000 Shares. For purposes of this Section 11, a
non-employee director is any person who is a member of the Board of
Directors and who is not an employee or consultant of the Corporation
or any of its subsidiaries. All options granted under this Section
11.1 shall be exercisable for a period of 10 years from the date the
option is granted (except as provided in Section 11.3) and shall vest
immediately upon grant.
11.2 Notwithstanding the provisions for automatic grants of options set
forth in section 11.1 hereof, if any particular automatic grant of an
option would violate the requirements of Section 4.1 or 5.1 hereof,
then the grant of such option shall be postponed until such time as
when the option may be granted without any violation of Section 4.1 or
5.1 hereof.
11.3 With respect to options granted under this Section 11, if an optionee
shall cease to be a director of the Corporation for any reason (other
than death), he or she may exercise each option held, to the extent
that it has vested and not been exercised, until the earlier of:
(a) the date which is 12 months after the optionee ceases to be a
director; and
(b) the expiry of the Option Period for the option (the "Option
Expiry Date").
12. OPTION AGREEMENT
12.1 Upon the grant of an option to an optionee, the Corporation and the
optionee shall enter into an option agreement setting out the number
of optioned Shares granted to the optionee and incorporating the terms
and conditions of the Plan and any other requirements of regulatory
bodies having jurisdiction over the securities of the Corporation and
such other terms and conditions as the Independent Committee may
determine are necessary or appropriate, subject to the Plan's terms.
13. ADJUSTMENT IN SHARES SUBJECT TO THE PLAN
13.1 The option exercise price and the number of Shares to be purchased by
an optionee upon the exercise of an option will be adjusted, with
respect to the then unexercised portion thereof, by the Independent
Committee from time to time (on the basis of such advice as the
Independent Committee considers appropriate, including, if considered
appropriate by the Independent Committee, a certificate of auditors of
the Corporation) in the event and in accordance with the provisions
and rules set out in this Section 13. Any dispute that arises at any
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time with respect to any adjustment pursuant to such provisions and
rules will be conclusively determined by the Independent Committee,
and any such determination will be binding on the Corporation, the
optionee and all other affected parties.
(a) In the event that a dividend is declared upon the Shares
payable in Shares (other than in lieu of dividends paid in
the ordinary course), the number of Shares then subject to
any option shall be adjusted by adding to each such Share the
number of Shares which would be distributable thereon if such
Share had been outstanding on the date fixed for determining
shareholders entitled to receive such stock dividend.
(b) In the event that the outstanding Shares are changed into or
exchanged for a different number or kind of Shares or other
securities of the Corporation or of another corporation,
whether through an arrangement, amalgamation or other similar
procedure or otherwise, or a share recapitalization,
subdivision or consolidation, then there shall be substituted
for each Share subject to any option the number and kind of
Shares or other securities of the Corporation or another
corporation into which each outstanding Share shall be so
changed or for which each such Share shall be exchanged.
(c) In the event that there is any change, other than as
specified above in this Section 13, in the number or kind of
outstanding Shares or of any securities into which such
Shares shall have been changed or for which they shall have
been exchanged, then, if the Independent Committee, in its
sole discretion, determines that such change equitably
requires an adjustment to be made in the number or kind of
Shares, such adjustment shall be made by the Independent
Committee and be effective and binding for all purposes.
(d) In the event that the Corporation distributes by way of a
dividend, or otherwise, to all or substantially all holders
of Shares, property, evidences of indebtedness or shares or
other securities of the Corporation (other than Shares) or
rights, options or warrants to acquire Shares or securities
convertible into or exchangeable for Shares or other
securities or property of the Corporation, other than as a
dividend in the ordinary course, then, if the Independent
Committee, in its sole discretion, determines that such
action equitably requires an adjustment in the option
exercise price or number of Shares subject to any option, or
both, such adjustment shall be made by the Independent
Committee and shall be effective and binding for all
purposes.
13.2 In the case of any such substitution or adjustment as provided for in
this Section 13, the exercise price in respect of each option for each
Share covered thereby prior to such substitution or adjustment will be
proportionately and appropriately varied, such variation shall
generally require that the number of Shares or securities covered by
the option after the relevant event multiplied by the varied option
exercise price be equal to the number of Shares covered by the option
prior to the relevant event multiplied by the original option exercise
price.
13.3 No adjustment or substitution provided for in this Section 13 shall
require the Corporation to issue a fractional share in respect of any
option. Fractional shares shall be eliminated.
13.4 The grant of an option shall not affect in any way the right or power
of the Corporation to effect adjustments, reclassifications,
reorganizations, arrangements or changes of its capital or business
structure, or to amalgamate, merge, consolidate, dissolve or
liquidate, or to sell or transfer all or any part of its business or
assets.
14. TRANSFERABILITY
14.1 All benefits, rights and options accruing to any optionee in
accordance with the terms and conditions of the Plan shall not be
assignable other than as specifically provided in Section 9 in the
event of the death of the optionee. During the lifetime of an
optionee, all benefits, rights and options shall not be transferable
and may only be exercised by the optionee.
15. EMPLOYMENT
15.1 Nothing contained in the Plan shall confer upon any optionee any right
with respect to employment or continuance of employment with, or the
provision of services to, the Corporation or any of its subsidiaries,
or interfere in any way with the right of the Corporation or any of
its subsidiaries to terminate the optionee's employment or services at
any time. Participation in the Plan by an optionee is voluntary.
16. RECORD KEEPING
16.1 The Corporation shall maintain a register in which shall be recorded:
(a) the name and address of each optionee; and
(b) the number of Shares subject to an option granted to an
optionee and the number of Shares subject to the option
remaining outstanding.
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17. SECURITIES REGULATION AND TAX WITHHOLDING
17.1 Where the Independent Committee determines it is necessary or
desirable to effect exemption from registration or distribution of the
Shares under securities laws applicable to the securities of the
Corporation, an optionee shall be required, upon the acquisition of
any Shares pursuant to the Plan, to acquire the Shares with investment
intent (i.e., for investment purposes) and not with a view to their
distribution, and to present to the Independent Committee an
undertaking to that effect in a form acceptable to the Independent
Committee. The Board of Directors and the Independent Committee may
take such other action or require such other action or agreement by
such optionee as may from time to time be necessary to comply with
applicable securities laws. This provision shall in no way obligate
the Corporation to undertake the registration or qualification of any
options or the Shares under any securities laws applicable to the
securities of the Corporation.
17.2 The Board of Directors and the Corporation may take all such measures
as they deem appropriate to ensure that the Corporation's obligations
under the withholding provisions under income and tax laws applicable
to the Corporation and other provisions of applicable laws are
satisfied with respect to the issuance of Shares pursuant to the Plan
or the grant or exercise of options under the Plan.
17.3 Issuance, transfer or delivery of certificates for Shares purchased
pursuant to the Plan may be delayed, at the discretion of the
Independent Committee, until the Independent Committee is satisfied
that the applicable requirement of securities and income tax laws have
been met.
18. AMENDMENT AND TERMINATION
18.1 The Board of Directors reserves the right to amend or to terminate the
Plan at any time if and when it is advisable in the absolute
discretion of the Board of Directors; provided, however, that no such
amendment or termination shall adversely affect any outstanding
options granted under the Plan without the consent of the optionee.
Furthermore, to the extent any amendment would require shareholder
approval under Code section 162(m), such amendment shall be effective
upon the required approval of the shareholders of the Corporation. Any
amendment to the Plan shall also be subject to any necessary approvals
of any stock exchange or regulatory body having jurisdiction over the
securities of the Corporation and, where applicable, shareholders
approval.
18.2 Subject to regulatory approval, where applicable, the Independent
Committee may waive any conditions or rights under, amend any terms
of, or alter, suspend, discontinue, cancel or terminate, any option
theretofore granted, prospectively or retroactively; provided,
however, that any such waiver, amendment, alteration, suspension,
discontinuance, cancellation or termination that would impair the
rights of any optionee or any holder or beneficiary of any option
theretofore granted shall not to that extent be effective without the
consent of the affected optionee, holder or beneficiary.
19. NO REPRESENTATION OR WARRANTY
19.1 The Corporation makes no representation or warranty as to the future
market value of any Shares issued in accordance with the provisions of
the Plan.
20. NECESSARY APPROVALS
20.1 The obligation of the Corporation to issue and to deliver any Shares
in accordance with the Plan is subject to any necessary or desirable
approval of any regulatory authority having jurisdiction over the
securities of the Corporation. If any Shares cannot be issued to any
optionee for whatever reason, the obligation of the Corporation to
issue such Shares shall terminate and any option exercise price paid
to the Corporation shall be returned to the optionee.
21. GENERAL PROVISIONS
21.1 Nothing contained in the Plan shall prevent the Corporation or any
subsidiary thereof from adopting or continuing in effect other
compensation arrangements, which may, but need not, provide for the
grant of options (subject to shareholder approval if such approval is
required), and such arrangements may be either generally applicable or
applicable only in specific cases.
21.2 The validity, construction, and effect of the Plan and any rules and
regulations relating to the Plan and any option agreement shall be
determined in accordance with the laws of the State of New York.
21.3 If any provision of the Plan or any option is or becomes or is deemed
to be invalid, illegal, or unenforceable in any jurisdiction or as to
any person or option, or would disqualify the Plan or any option under
any law deemed applicable by the Independent Committee, such provision
shall be construed or deemed amended to conform to the applicable
laws, or if it cannot be construed or deemed amended without, in the
determination of the Independent Committee, materially altering the
intent of the Plan or the option, such provision shall be stricken as
to such jurisdiction, person or option and the remainder of the Plan
and any such option shall remain in full force and effect.
21.4 Neither the Plan nor any option shall create or be construed to create
a trust or separate fund of any kind or a fiduciary relationship
between the Corporation or any subsidiary thereof and an optionee or
any other person.
21.5 Headings are given to the Sections of the Plan solely as a convenience
to facilitate reference. Such headings shall not be deemed in any way
material or relevant to the construction or interpretation of the Plan
or any provision thereof.
29
<PAGE> 32
22. TERM OF THE PLAN
22.1 The Plan shall be effective as of the date of its approval by the
shareholders of the Corporation, subject to receipt of all necessary
regulatory approvals.
22.2 No option shall be granted under the Plan after June 10, 2007. Unless
otherwise expressly provided in the Plan or in an applicable option
agreement, any option granted hereunder may, and the authority of the
Board of Directors or the Independent Committee to amend, alter,
adjust, suspend, discontinue, or terminate any such option or to waive
any conditions or rights under any such option shall, continue after
June 10, 2007.
30
<PAGE> 33
GOLDEN STAR RESOURCES LTD.
ANNUAL GENERAL MEETING OF SHAREHOLDERS - JUNE 10, 1997
PROXY
THIS PROXY IS SOLICITED BY MANAGEMENT OF THE CORPORATION
The undersigned holder of common shares in the capital stock of Golden Star
Resources Ltd. (the "Corporation") hereby nominates and appoints David K.
Fagin, Chairman of the Board of the Corporation, or failing him, David A.
Fennell, President and Chief Executive Officer of the Corporation, or instead
of them or any of them, ________________________________, as the proxy of the
undersigned to attend, act and vote in respect of all common shares registered
in the name of the undersigned at the Annual General Meeting of shareholders of
the Corporation to be held at 11:30 a.m. on Tuesday, June 10, 1997 at the
Toronto Hilton Hotel in Toronto, Ontario, and at any and all adjournments
thereof. Without limiting the general powers hereby conferred, the said proxy
is directed to vote as follows upon the following matters:
1. TO ELECT THE FOLLOWING PERSONS AS DIRECTORS OF THE CORPORATION:
DAVID K. FAGIN FOR WITHHOLD
------ -----
DAVID A. FENNELL FOR WITHHOLD
------ -----
PIERRE GOUSSELAND FOR WITHHOLD
------ -----
JEAN-PIERRE LEFEBVRE FOR WITHHOLD
------ -----
DONALD F. MAZANKOWSKI FOR WITHHOLD
------ -----
ERNEST C. MERCIER FOR WITHHOLD
------ -----
ROBERT MINTO FOR WITHHOLD
------ -----
ROGER D. MORTON FOR WITHHOLD
------ -----
RICHARD A. STARK FOR WITHHOLD
------ -----
2. TO APPOINT COOPERS & LYBRAND AS THE AUDITOR OF THE CORPORATION AND TO
AUTHORIZE THE BOARD OF DIRECTORS TO FIX THE AUDITOR'S REMUNERATION:
FOR WITHHOLD
----- -----
3. TO APPROVE, RATIFY AND CONFIRM THE CORPORATION'S 1997 STOCK OPTION
PLAN, AS SET FORTH IN EXHIBIT A TO THE ACCOMPANYING MANAGEMENT PROXY
CIRCULAR;
FOR AGAINST
----- -----
The undersigned hereby revokes any instrument of proxy heretofore
given with reference to the said meeting or any adjournment thereof.
The proxyholder may in his discretion vote with respect to amendments
or variations to matters identified in the Notice of Meeting or to other
matters which may properly come before the meeting or any adjournment thereof.
DATED this day of , 1997.
---- ----
- ------------------------ ----------------------------------
Signature Name of shareholder (Please Print)
-------------------------------
-------------------------------
Address
(PLEASE SEE NOTES ON REVERSE SIDE)
<PAGE> 34
NOTES
1. The shares represented by this proxy will be voted in accordance with the
instructions given herein. IF NO CHOICE IS SPECIFIED HEREIN, OR IF ANY
INSTRUCTIONS GIVEN ARE NOT CLEAR, THE SHARES SHALL BE VOTED AS IF THE
SHAREHOLDER HAD SPECIFIED AN AFFIRMATIVE VOTE, ALL IN THE SAME MANNER AND
TO THE SAME EXTENT AS THE SHAREHOLDER COULD DO IF THE SHAREHOLDER WERE
PERSONALLY PRESENT AT THE MEETING.
2. A SHAREHOLDER HAS THE RIGHT TO APPOINT A PERSON (WHO NEED NOT BE A
SHAREHOLDER) OTHER THAN THE PERSON DESIGNATED IN THIS PROXY TO ATTEND AND
ACT FOR THE SHAREHOLDER AND ON THE SHAREHOLDER'S BEHALF AT THE MEETING.
Such right may be exercised by printing in the space provided the name of
the person to be appointed, in which case only the person so named may vote
the shares at the meeting.
3. This proxy will not be valid unless it is dated and signed by the
shareholder or the shareholder's attorney authorized in writing or, if the
shareholder is a corporation, by a duly authorized officer or attorney of
the corporation, and ceases to be valid one year from its date. If the
proxy is executed by an attorney for an individual shareholder or by an
officer or an attorney of a corporate shareholder, the instrument so
empowering the officer or attorney, as the case may be, or a notarial copy
thereof, must accompany the proxy instrument.
4. To be effective, the instrument of proxy must be received by 4:30 p.m.
(Toronto time) on Friday, June 6, 1997 at the address set forth in the
accompanying return envelope (Attention: Proxy Department, The R-M Trust
Company, P.O. Box 12005 STN. BRM B, Toronto, Ontario M7Y 2K5).
