envoy COMMUNICATIONS GROUP INC.
26 Duncan Street
Toronto, Ontario
M5V 2B9
Supplementary Mailing List Form
Return Card
National Policy No. 41 adopted by Canadian Securities Regulators allows an
exemption to the Corporation from sending unaudited interim financial
statements to shareholders. If you wish to receive the Corporation's
unaudited interim financial statements, you must complete this form and
forward it, either with your proxy or separately, to our transfer agent:
MONTREAL TRUST COMPANY OF CANADA
100 University Avenue
11th Floor
Toronto, Ontario
M5J 2Y1
* * * * *
The undersigned certifies that the undersigned is the owner of securities of
Envoy Communications Group Inc. and requests that the undersigned be placed on
the supplementary mailing list of Envoy Communications Group Inc. for its
interim financial statements.
Dated: Name
Address
Signature
Name and Title of Person Signing if
Different from Name Above
CUSIP: 293986105
envoy COMMUNICATIONS GROUP INC.
PROXY
SOLICITED BY THE MANAGEMENT OF THE CORPORATION
for the Annual and Special Meeting of Shareholders
This proxy is being solicited on behalf of the management of ENVOY
COMMUNICATIONS GROUP INC. (the "Corporation") in connection with the
annual and special meeting of shareholders (the "Meeting") of the
Corporation to be held on Tuesday, March 6, 2001 at 11:00 am (Toront
time) and any adjournment thereof.
The undersigned shareholder of the Corporation hereby appoints Geoffrey B.
Genovese of Toronto, Ontario or, failing him, John H. Bailey of
Mississauga, Ontario or instead of either of them _____________________
as proxy, with power of substitution to attend, vote and otherwise act for
the undersigned at the Meeting and at any adjournment thereof as follows:
(a) VOTE FOR (______) or WITHHOLD FROM VOTING (_______) (or, if not
specified, VOTE FOR) the election of the persons nominated as
directors to be elected by the shareholders as listed in the
Management Information Circular;
(b) VOTE FOR (______) or WITHHOLD FROM VOTING (______) (or, if not
specified, VOTE FOR) the appointment of KPMG LLP, Chartered
Accountants, as auditors of the Corporation for the ensuing year
and the granting of the authority to the directors of the
Corporation to fix the auditors= remuneration;
(c) VOTE FOR (______) or AGAINST (______) (or, if not specified, VOTE
FOR) the resolution approving the amendment to the Stock
Option/Stock Appreciation Right Plan, as described in the Management
Information Circular; and
(d) VOTE FOR (______) or AGAINST (______) (or, if not specified, VOTE FOR)
the resolution confirming the amendment to By-Law No. 1, as described
in the Management Information Circular;
and in their discretion to vote on amendments or variations to the matters
referred to above or to any other matters identified in the Notice of
Meeting or such other matters as may properly come before the Meeting
including any adjournment thereof. As at the date of the accompanying
Management Information Circular, management of the Corporation knows of no
such amendments, variations or other matters to come before the Meeting.
The undersigned hereby revokes any proxy previously given in respect of the
Meeting.
Each shareholder has the right to appoint a person (who need not be a
shareholder of the Corporation) other than the persons specified above to
attend and act on his or her behalf at the Meeting. Such right may be
exercised by inserting the name of the person to be appointed in the space
provided, or by completing another proper form of proxy.
DATED this __________ day of ________________, 2001.
________________________________________________
(Signature of Shareholder)
________________________________________________
(Name of Shareholder - Please Print)
Notes:
1. An undated proxy is deemed to bear the date it was mailed on behalf
of the management of the Corporation. A proxy must be executed by the
shareholder or his or her attorney duly authorized in writing.
2. To be effective, this form of proxy or another form of proxy must be
properly executed and returned in the enclosed envelope in order that
it is
received on or before 11:00 a.m. (Toronto time) on the second business day
preceding the Meeting or 48 hours (excluding Saturdays, Sundays and
holidays) preceding any adjournment of the Meeting.
ENVOY COMMUNICATIONS GROUP INC.
NOTICE OF ANNUAL AND SPECIAL MEETING
OF SHAREHOLDERS
to be held on
MARCH 6, 2001
and
MANAGEMENT INFORMATION CIRCULAR
JANUARY 26, 2001
ENVOY COMMUNICATIONS GROUP INC.
26 Duncan Street
Toronto, Ontario
M5V 2B9
NOTICE OF ANNUAL AND SPECIAL MEETING
TAKE NOTICE that the Annual and Special Meeting of Shareholders of ENVOY
COMMUNICATIONS GROUP INC. (the "Corporation") will be held at Toronto
Stock Exchange Conference Centre, 130 King Street West, Street Level,
Toronto, Ontario, on Tuesday, March 6, 2001 at 11:00 a.m. (Toronto time)
for the following purposes:
(a) to receive the consolidated financial statements of the Corporation
for its fiscal year ended September 30, 2000 and the report of the
auditors thereon;
(b) to elect directors for the ensuing year;
(c) to appoint auditors for the ensuing year and to authorize the
directors to fix their remuneration;
(d) to consider and, if thought advisable, to approve, with or without
variation, Stock Option Plan Resolution (the full text of which is
set out in the accompanying Management Information Circular)
amending the Corporation's Stock Option/Stock Appreciation Right Plan
to increase the maximum number of shares to be reserved for issuance
under the Plan;
(e) to consider and, if thought advisable, to confirm, with or without
variation, By-Law Amendment Resolution (the full text of which is set out
in the accompanying Management Information Circular) amending General
By-Law No. 1 of the Corporation to increase the quorum at a meeting of
shareholders from 1% to 5% of the outstanding voting shares of the
Corporation; and
(f) to transact such other business as may properly come before the
Meeting or any adjournment thereof.
A Management Information Circular and form of proxy accompany this Notice.
Shareholders who are unable to attend the Meeting, or any adjournment
thereof, in person are requested to date and sign the enclosed form of
proxy. A proxy will not be valid unless it is deposited at the offices of
Montreal Trust Company of Canada, 100 University Avenue, 11th Floor,
Toronto, Ontario, M5J 2Y1 on or before 11:00 a.m. (Toronto time) on the
second business day preceding the Meeting or 48 hours (excluding Saturdays,
Sundays and holidays) before any adjournment of the Meeting.
* * * * *
DATED January 26, 2001.
By Order of the Board of Directors
____________________________
Geoffrey B. Genovese
President and Chief Executive Officer
ENVOY COMMUNICATIONS GROUP INC.
MANAGEMENT INFORMATION CIRCULAR
Solicitation of Proxies
This Management Information Circular is furnished in connection with the
solicitation of proxies by management of ENVOY COMMUNICATIONS GROUP INC.
(the "Corporation") for the Annual and Special Meeting of Shareholders
to be held at Toronto Stock Exchange Conference Centre, 130 King Street
West, Street Level, Toronto, Ontario, on Tuesday, March 6, 2001 at 11:00
a.m. (Toronto time) or any adjournment thereof (the "Meeting"). It is
expected that the solicitation will be primarily by mail, but proxies may
also be solicited personally, by advertisement or by telephone, by regular
employees of the Corporation without special compensation, or by the
Corporation's transfer agent, Montreal Trust Company of Canada, at nominal
cost. The cost of solicitation by management will be borne by the
Corporation.
Appointment of Proxies
If a shareholder cannot attend the Meeting but wishes to vote on the
resolutions, the shareholder should sign, date and deliver the enclosed
form of proxy to Montreal Trust Company of Canada, 100 University Avenue,
11th Floor, Toronto, Ontario, M5J 2Y1 on or before 11:00 a.m. (Toronto
time) on the second business day preceding the Meeting or 48 hours
(excluding Saturdays, Sundays and holidays) before any adjournment of the
Meeting. THE PERSONS NAMED IN THE ENCLOSED FORM OF PROXY ARE DIRECTORS
AND/OR OFFICERS OF THE CORPORATION. A SHAREHOLDER GIVING A PROXY CAN STRIKE
OUT THE NAMES OF THE NOMINEES PRINTED IN THE ACCOMPANYING FORM OF PROXY AND
INSERT THE NAME OF ANOTHER NOMINEE IN THE SPACE PROVIDED, OR THE SHAREHOLDER
MAY COMPLETE ANOTHER FORM OF PROXY. A proxy nominee need not be a shareholder
of the Corporation. A shareholder giving a proxy has the right to attend, or
appoint someone else to attend as his or her proxy, at the Meeting and the
proxy earlier submitted can be revoked in the manner described below under
"Revocability of Proxies".
Voting of Proxies
The shares represented by a properly executed proxy will be voted or
withheld from voting in accordance with the directions, if any, given in the
proxy. If the shareholder giving the proxy wishes to confer a discretionary
authority with respect to any item of business, then the space opposite the
item must be left blank. IF NO CHOICE IS SPECIFIED IN THE PROXY, AND THE
NOMINEE IS PROPOSED BY MANAGEMENT, THE NOMINEE WILL VOTE THE SHARES REPRESENTED
BY THE PROXY IN FAVOUR OF EACH ITEM LEFT BLANK. The enclosed form of proxy
confers discretionary authority upon the persons named in the proxy. The
discretionary authority so granted may be exercised with respect to amendments
or variations to matters which may properly come before the Meeting, unless the
shareholder deletes the discretionary authority from the proxy. As at the date
of this Management Information Circular, management of the Corporation is not
aware of any such amendment or variation or any other matter to come before the
Meeting other than those referred to in the accompanying Notice of Meeting.
However, if any other matters that are not now known to management should
properly come before the Meeting, the shares represented by proxies given in
favour of management nominees will be voted on such matters in accordance with
the best judgment of such nominees.
Revocability of Proxies
A shareholder who has given a proxy has the power to revoke it by an
instrument in writing signed by the shareholder, or the shareholder's
duly authorized attorney, delivered to the Registered Office of the
Corporation at 26 Duncan Street, Toronto, Ontario, M5V 2B9 at any time up
to and including the last business day preceding the day of the Meeting or
to the Chair of the Meeting on the day of the Meeting at any time prior to
its use, or by personal appearance at the Meeting prior to the hour of
commencement of the Meeting. A shareholder may also revoke a proxy in any
other manner permitted by law.
Interest of Certain Persons in Matters to be Acted Upon
No director or officer, past or present, nor any person on behalf of whom
this solicitation is made or any of their respective affiliates has any
interest, direct or indirect, in any matter to be acted upon at the
Meeting, except that such persons may be indirectly involved in the normal
business of the Meeting or the general affairs of the Corporation.
Voting Shares and Principal Shareholders
There are 21,219,950 common shares (the "Common Shares") of the Corporation
outstanding and entitled to vote at the Meeting. Each Common Share carries
one vote.
Any shareholder of record as at the close of business on January 26, 2001
is entitled to vote the Common Shares registered in his or her name at
that date except to the extent that such shareholder has subsequently
transferred any of such Common Shares and the transferee of those Common
Shares establishes his or her ownership of such Common Shares and demands,
not later than 10 days before the Meeting, that his or her name be included
in the list of shareholders entitled to vote at the Meeting. In such case,
the transferee is entitled to vote such Common Shares at the Meeting.
To the best of the knowledge of the directors and senior officers of the
Corporation, no shareholder holds, directly or indirectly, more than 10% of
the outstanding Common Shares of the Corporation except as follows:
Name Number of Common Shares Percentage
CDS & Co. 1 76.46%
P.O. Box 1038 Stn A
25 The Esplanade
Toronto, Ontario
M5W 1G5
Cede & Co. 1 13.07%
P.O. Box 29
Bowling Green Station
New York, NY
USA 10274
NOTE:
1 The individual beneficial owners of the Common Shares are not known by
the Corporation's management.
BUSINESS OF THE MEETING
Election of Directors
The following persons are proposed to be nominated at the Meeting for
election as directors. Each of the directors who is elected will hold
office until the next annual meeting of shareholders or until the successor
of such director is duly elected, unless such office is earlier vacated in
accordance with the Corporation's by-laws.
In the absence of a contrary instruction, the persons named in the enclosed
form of proxy intend to vote for the election as directors of the nominees
whose names are set forth below, each of whom has been a director since the
date indicated below opposite his name and each of whom has held the
position shown as his principal occupation for the last five years unless
otherwise indicated. Management does not contemplate that any of the nominees
will be unable to serve as a director, but if that should occur for any reason
prior to the Meeting, the persons named in the enclosed form of proxy reserve
the right to vote for another nominee in their discretion.
Name, Principal Date of Shares Beneficially Held
Present Office Occupation Becoming or Over Which Control or
Residence a Director Direction is Exercised 1
GEOFFREY B. GENOVESE President, July 26, 1991 978,206
President, CEO and Envoy
Director Toronto, Communications
Ontario Group Inc.
JOHN H. BAILEY 2,3 Lawyer April 28, 1994 30,000
Director/Secretary
Mississauga, Ontario
DAVID HULL 2,3 President January 13, 1995 82,300
Director Hull Life
Toronto, Ontario Insurance
Agencies Inc.
(an insurance
agency)
DONALD WATT Chairman of June 18, 1999 120,000
Director the Board, Watt
Toronto, Ontario International Inc.
DUNCAN SHIRREFF 3,4 Vice President November 2, 1998 1,000
Director & Director,
Toronto, Ontario Yorkton Securities
Inc.(a brokerage firm)
HUGH AIRD 2,5 Chairman, August 20, 1997 nil
Director DRIA Capital Inc.
Toronto, Ontario (a financial
consulting company)
TIMOTHY DELANEY Chief Executive
London, England Officer and Creative
Director, Leagas
Delaney Group Limited N/A nil
BRUCE HAINES
London, England Chairman, Leagas N/A nil
Delaney Group Limited
NOTE:
1 Information relating to shares beneficially owned or over which control
or direction is exercised, not being within the knowledge of the
Corporation, has been furnished by the respective nominee.
2 Member of the Audit Committee.
3 Member of the Compensation Committee.
4 Prior to joining Yorkton Securities Inc. in 2000, Mr. Shirreff was
Vice President of Thomson Kernaghan & Co. Ltd. since 1998, an
Investment Banker with Taurus Capital Markets Ltd. for part of 1998
and an Investment Banker with C.M. Oliver & Company Limited from 1993
to 1998.
5 Prior to joining DRIA Capital Inc. in 1998, Mr. Aird was Vice Chairman
of Merrill Lynch Canada Inc. (formerly Midland Walwyn Capital Inc.)
since 1996. Prior to joining Merrill Lynch Canada Inc. in 1996, Mr.
Aird was the Chairman of Trilon Financial Corp.
Appointment of Auditors
KPMG LLP was first appointed as auditors of the Corporation on March 30, 1999.
It is proposed that KPMG LLP be reappointed as auditors of the Corporation.
Unless otherwise instructed, the persons named in the enclosed form of proxy
intend to vote for the appointment of KPMG LLP, as auditors of the Corporation
until the next annual general meeting of the Corporation, at a remuneration to
be fixed by the Directors.
SPECIAL BUSINESS
STOCK OPTION PLAN RESOLUTION - Amendment to the Corporation's Stock Option/Stock
Appreciation Right Plan
The ability to award stock options is a critical component in the compensation
philosophy of the Corporation to attract and retain the most qualified and
motivated workforce possible within the highly competitive global environment
in which the Corporation operates. The stock option program is designed to
provide participants with an owner perspective and to provide an incentive to
contribute to the growth of the Corporation. Management believes that the
maintenance of an effective stock option program is a critical element in the
success of the Corporation.
Listed company requirements of The Toronto Stock Exchange require shareholder
approval for any proposed material amendments to a company's stock option plan.
Accordingly, shareholders are being asked to consider an amendment to the
Corporation's Stock Option/Stock Appreciation Right Plan (the "Stock Option
Plan") whereby the maximum number of Common Shares to be reserved for issuance
under the Stock Option Plan will be increased by 3,000,000 Common Shares to
4,000,000 Common Shares. Shareholders first approved the Stock Option Plan
and the reservation of 2,000,000 Common Shares for issuance under the Stock
Option Plan at the Annual and Special Meeting of Shareholders held on November
14, 1997. An increase in the maximum number of Common Shares reserved for
issuance under the Stock Option Plan from 2,000,000 Common Shares to 3,000,000
was approved at the Annual and Special Meeting of Shareholders held on March
7, 2000.
After giving effect to the proposed amendment to the Stock Option Plan, the
total number of Common Shares which would be issued if (i) all outstanding
options were exercised under the Stock Option Plan (totalling 2,340,500
Common Shares) and (ii) all options available for grant under the Stock
Option Plan were granted and exercised (totalling 1,514,500 Common Shares),
would be equal to 18.46% of the Corporation's issued and outstanding share
capital as at September 30, 2000, excluding Common Shares (totalling
214,000 Common Shares) issued pursuant to the Stock Option Plan and the
Pre-Plan Options (as defined below under the heading Stock Option Plan)
over the preceding one-year period.
Shareholders will be asked to consider and to approve, with or without
variation, Stock Option Plan Resolution, the full text of which is attached
to this Management Proxy Circular, which resolution relates to an amendment
to the Stock Option Plan to increase the number of Common Shares reserved
for issuance thereunder to 4,000,000 Common Shares. To be effective, Stock
Option Plan Resolution requires approval by a majority of the votes cast by
shareholders that vote in respect of Stock Option Plan Resolution. For
purposes of calculating the majority required to pass Stock Option Plan
Resolution, votes cast by insiders and associates of insiders of the
Corporation who are eligible to receive options under the Stock Option Plan
will not be counted. In the case of the Corporation, this means that votes
cast by directors and officers and their respective associates will not be
counted for the purpose of calculating the simple majority required to pass
Stock Option Plan Resolution. To the Corporation's knowledge, there are
currently 1,915,608 votes that will not be counted for the purpose of
determining whether the required level of shareholder approval has been
obtained.
As previously noted, the ability to award stock options is a critical
component in the compensation philosophy of the Corporation to attract and
retain the most qualified and motivated workforce possible within the highly
competitive global environment in which the Corporation operates.
Management believes that the maintenance of an effective stock option program
is a critical element in the success of the Corporation. The Board of Directors
has determined that the increase in the number of Common Shares reserved for
issuance under the Stock Option Plan is in the best interests of the Corporation
and the shareholders and unanimously recommends that the shareholders vote in
favour of Stock Option Plan Resolution. Accordingly, in the absence of contrary
instructions, the persons named in the enclosed form of proxy intend to vote for
Stock Option Plan Resolution.
BY-LAW AMENDMENT RESOLUTION - Amendment to the Corporation's General By-Law No.1
In connection with its application for listing on NASDAQ, the Corporation was
requested to increase the quorum at a meeting of shareholders from 1% to 5%.
Shareholders will be asked to consider and to approve, with or without
variation, By-Law Amendment Resolution, the full text of which is attached to
this Management Proxy Circular, which resolution relates to an amendment to the
Corporation's General By-Law No. 1 to increase the quorum at a meeting of
shareholders from 1% to 5% of the outstanding voting shares of the Corporation.
To be effective, By-Law Amendment Resolution requires approval by a majority of
the votes cast by shareholders that vote in respect of By-Law Amendment
Resolution.
Other Matters
Save for the matters referred to in this Management Information Circular,
management of the Corporation knows of no other matters intended to be brought
before the Meeting. If any matters which are not now known to management shall
properly come before the Meeting, the proxy given pursuant to this solicitation
by management will be voted on such matters in accordance with the best
judgment of the person voting the proxy, in the event such discretionary
authority is provided in the proxy.
CORPORATE GOVERNANCE
The following describes the Corporation's corporate governance practices with
specific reference to the guidelines contained in the Report of the TSE
Committee on Corporate Governance in Canada (the "TSE Report").
Mandate of the Board
The Board of Directors (the "Board") holds meetings whenever appropriate to
oversee the conduct of the Corporation's business and monitor and evaluate the
day-to-day management of the Corporation. With respect to risk management
activities, the Board is presented, at each meeting, reports on operations,
financial status, material contracts and litigation.
In addition to the Board's statutory responsibilities under the Business
Corporations Act of Ontario, the Board's "stewardship" responsibilities include
the following:
(a) assessing the principal risks arising from or incidental to the business
activities of the Corporation;
(b) appointing all senior executives of the Corporation and, through the
Compensation Committee of the Board, developing and implementing the
executive compensation policies and reviewing the performance of senior
executives with reference to the Corporation's policies, stated budget
and other objectives;
(c) overseeing the Corporation's policies regarding public communications,
investor relations and shareholder communications; and (d) monitoring
and assessing, through the Audit Committee of the Board, the scope,
implementation and integrity of the Corporation's internal information,
audit and control systems.
The Corporation has delegated the responsibility for monitoring the
effectiveness of the Corporation's international information systems to the
Audit Committee of the Board. The Audit Committee is also responsible for
reviewing and appraising the soundness, adequacy and application of financial
and other operating controls, determining the extent of compliance with
established policies, plans and procedures and ascertaining the reliability
and timeliness of management data developed within the organization.
Composition of the Board
The articles of the Corporation provide that there shall be a Board of not less
than 3 or more than 10 directors. There are currently six directors of the
Corporation, two of whom are "inside" or "related" directors and four of whom
are "outside" and "unrelated" directors (as such terms are defined in the TSE
Report). The Board intends to periodically examine its size and constitution
to ensure responsible corporate governance and effective corporate management.
Governing Committees
The directors have established the Audit Committee and the Compensation
Committee to focus resources and expertise in certain areas of the Board's
mandate.
The Board has delegated to the Audit Committee of the Board responsibility for
ensuring management has designed and implemented an effective management system
and for reviewing internal information, audit, control and management systems.
The Audit Committee is comprised of three directors, all of whom are "outside"
directors. The Audit Committee is responsible for reviewing the Corporation's
annual consolidated financial statements and reporting to the Board in
connection therewith. The Audit Committee is also responsible for monitoring
the Corporation's internal controls and information gathering systems and
dealing with the Corporation's external auditors. On February 22, 2000, the
Audit Committee adopted a formal written audit committee charter which
specifies the auditor's accountability to the Board and the authority and
responsibilities of the Audit Committee.
The Compensation Committee is comprised of three directors, all of whom are
"outside" directors. The Compensation Committee reviews, administers and
monitors the Corporation's executive compensation plans, policies and
programs, including the compensation of all executive officers and, if
requested by the President, reviews the compensation of any other officer or
senior employee.
The Board has not, as yet, established a Corporate Governance Committee as
recommended in the TSE Report and believes that the matters ordinarily
considered by such a committee are effectively administered by the Board's
"outside" and "unrelated" directors. Although, at present, the Board has
determined this to be the most practical approach to responsible corporate
governance, the Board will continue to evaluate this determination as
circumstances dictate.
Expectations of the Board
The Board expects management of the Corporation to report to the Board in a
comprehensive, accurate and timely fashion on the business and affairs of the
Corporation generally and on specific matters that it considers to have
material consequences for the Corporation and its shareholders. Management is
expected to continually develop and review the Corporation's strategic plan to
make the decisions necessary to give effect to the plan; to adhere to the
Corporations' operational policies; and to monitor the Corporation's financial
performance in comparison to the annual budget, with the ultimate goal of
enhancing shareholder value.
Shareholder Communication
The objective of the Corporation's shareholder communication policy is to ensure
open and timely exchange of information relating to the Corporation's business,
affairs and performance, subject to the requirements of applicable securities
legislation and other statutory and contractual obligations limiting the
disclosure of such information. Information material to the Corporation's
business is released through news wire services, the general media, telephone
conferences and shareholder mailings, thereby ensuring timely dissemination.
Additionally, individual queries, comments or suggestions can be made at any
time directly to the Corporation's secretarial department located at its head
office.
EXECUTIVE COMPENSATION
Summary Executive Compensation
The following table sets forth all compensation for the fiscal years ended
September 30, 1998, 1999 and 2000 paid to the President and Chief Executive
Officer of the Corporation and the four other most highly compensated officers
who served as executive officers of the Corporation (the "Named Executive
Officers"):
Annual Compensation Long Term Compensation
Awards Payouts
Name Year Salary Bonus Other Securities Restricted LTIP All Other
and ($) ($) Annual Under Shares or Payouts Compensation
Principal Compensation Option/ Restricted ($) ($)
Position ($) SARs Share Units
Granted ($)
(#)
Geoffrey B.2000 300,000 nil 175,0005 150,000 nil nil nil
Genovese 1999 300,000 nil 250,0005 100,000 nil nil nil
President 1998 150,000 nil 175,0005 200,000 nil nil nil
and C.E.O.
Chris 2000 215,000 nil nil nil nil nil nil
Stavenjord 1999 215,000 nil nil nil nil nil nil
President 1998 150,000 nil nil 200,000 nil nil nil
and
Creative
Director,
The
Communique
Group Inc.4
Brian 2000 350,000 nil nil nil Nil nil nil
Goodall 19991 350,000 nil nil 100,000 nil nil nil
President,1998 --- --- --- --- --- --- ---
Hampel
Stefanides,
Inc.
Edwin 2000 225,000 nil nil nil Nil nil nil
Matthews 1999 225,000 nil nil nil nil nil nil
Vice 19982 75,000 nil nil 150,000 --- --- ---
President,
Integration
J. Joseph 2000 195,800 40,000nil 50,000 Nil nil nil
Leeder 19993 131,250 nil nil 200,000 nil nil nil
Vice 1998 --- --- --- --- --- --- ---
President
and Chief
Financial
Officer
NOTE:
1 Mr. Goodall became an executive officer of the Corporation's subsidiary,
Hampel Stefanides, Inc., on November 6, 1998. Mr. Goodall's compensation
is stated and paid in United States dollars. On January 24, 2001, the
Bank of Canada noon rate of exchange for the conversion of one United
States dollar into Canadian dollars was 1.5124 (Cdn $1.00 equals US
$0.6612).
2 Mr. Matthews joined the Corporation on June 1, 1998. Mr. Matthews ceased
to be employed by the Corporation as of October, 2000.
3 Mr. Leeder joined the Corporation on November 15, 1998.
4 Mr. Stavenjord ceased to be employed by The Communique Group Inc. as of
October, 2000.
5 This amount was paid to a corporation related to Mr. Genovese and
includes $75,000 as an annual management fee and the balance as a fee
for successful completion of acquisitions by the Corporation.
The Corporation does not provide any pension, retirement plan or other
remuneration for its directors or officers that constitutes an expense to the
Corporation, nor are there any plans or arrangements in respect of compensation
received or that may be received by executive officers in the Corporation's
most recently completed or current fiscal year to compensate such officers in
the event of the termination of employment or a change in control of the
Corporation.
Stock Option Plan
The Corporation has established a Stock Option Plan pursuant to which options to
purchase Common Shares and stock appreciation rights ("SARs") may be granted to
directors, officers, employees or certain consultants to the Corporation or any
of its subsidiaries, as determined by the Board, at prices to be fixed by the
directors, subject to limitations imposed by any Canadian stock exchange on
which the Common Shares are listed for trading and any other regulatory
authority having jurisdiction in such matters. The Common Shares subject to
each option shall become purchasable at such time or times as may be
determined by the directors. SARs may only be granted in conjunction with an
option and, when exercised, entitle the holder to receive an amount equal in
value to the excess of the market value of the Common Shares over the price of
the related option.
The excess amount is payable in Common Shares having a market value equal to
such excess. Options are non-assignable and non-transferable by the
option-holder and shall be exercisable during the option-holder's lifetime
only by the option-holder. SARs are non-transferable and terminate when the
related option terminates.
The maximum number of Common Shares currently reserved (prior to approval of
Stock Option Plan Resolution attached to this Management Proxy Circular) for
issuance upon exercise of options under the Stock Option Plan is 3,000,000
Common Shares. As at September 30, 2000, options to purchase 2,340,500 Common
Shares have been granted and are outstanding under the Stock Option Plan,
options to purchase 145,000 Common Shares have been exercised under the Stock
Option Plan and options to purchase 606,000 Common Shares have been forfeited
or cancelled under the Stock Option Plan. There are no SARs outstanding under
the Stock Option Plan. The aggregate number of Common Shares reserved for
issuance to any one individual under the Stock Option Plan may not exceed 5%
of the issued and outstanding Common Shares.
Prior to the adoption of the Stock Option Plan, options to purchase Common
Shares were issued to employees, directors and consultants to the Corporation
and options to purchase 805,000 Common Shares (the "Pre-Plan Options") were
outstanding at the date of the adoption of the Stock Option Plan. Pre-Plan
Options have been exercised to purchase 639,000 Common Shares, options to
purchase 166,000 Common Shares have been forfeited or cancelled under the
Pre-Plan Options and no Pre-Plan Options to purchase Common Shares remain
unexercised.
Options Granted During Most Recent Fiscal Year
The following table sets forth options granted under the Stock Option Plan to
the Named Executive Officers of the Corporation in the most recently
completed fiscal year:
Name Shares Percentage Date of Grant Exercise Price Market Value Expiry Date
Under of Total ($/Security) of Shares
Options Options Underlying
Granted Granted to Options on
(#) Employees in Date of Grant
Financial Year ($/Security)
Geoffrey
B.
Genovese 150,000 1 19.38% March 31, 2000 $7.40 $7.40 March 30, 2005
Joseph
Leeder 50,000 2 6.46% March 31, 2000 $7.40 $7.40 March 30, 2005
NOTE:
1 These options vest immediately.
2 These options vest at the rate of ? on each of the first three
anniversaries of the date of the grant.
Aggregate Options Exercised During Most Recent Fiscal Year
The following table sets out for Named Executive Officers information relating
to options exercised by them during the most recent fiscal year and the value of
unexercised options held by them as at the end of the most recent fiscal year.
Name Number of Aggregate Unexercised Value of Unexercised
Shares Acquired Value Options at In-the Money Options
on Exercise Realized FY-End (#) at FY-End ($)
($) Exercisable/ Exercisable/
Unexercisable Unexercisable 1
Geoffrey B. Nil Nil 450,000/nil 1,213,500/nil
Genovese
Christopher Nil Nil 100,000/100,000 453,000/453,000
Stavenjord
Brian Nil Nil 25,000/75,000 103,750/311,250
Goodall
Edwin Nil Nil 100,000/50,000 440,000/220,000
Matthews
Joseph Nil Nil 66,666/183,334 199,997/437,502
Leeder
NOTE:
1 The closing price of the Common Shares of the Corporation on The Toronto
Stock Exchange on September 29, 2000 was $8.15.
Employment Contracts and Termination Agreements
The Corporation or its wholly owned subsidiary, The Communique Group Inc.
("Communique") or Hampel Stefanides, Inc. ("Hampel"), has entered into
employment contracts with the Named Executive Officers.
Geoffrey B. Genovese has agreed to act as the Corporation's President
and Chief Executive Officer at an annual base salary of $375,000 plus
performance bonuses up to a maximum of $325,000. This agreement provides for
a severance payment equivalent to the total remuneration and other compensation
paid to Mr. Genovese and his management company during the 24 month period
preceding termination, if Mr. Genovese's employment is terminated by the
Corporation.
Christopher Stavenjord has agreed to act as Communique's President and Creative
Director at an annual base salary of $215,000. This agreement provides for a
severance payment equivalent to his base salary for a period of 12 months, if
Mr. Stavenjord's employment is terminated by the Communique. Mr. Stavenjord
ceased to be employed by Communique as of October, 2000.
Brian Goodall has agreed to act as Hampel's President at an annual base salary
of US$350,000. This agreement has a fixed term of 4 years ending on September
30, 2002.
Edwin Matthews has agreed to act as the Corporation's Vice President,
Integration at an annual base salary of $225,000. This agreement provides for
a severance payment equivalent to his base salary for a period of 15 months,
if Mr. Matthews' employment is terminated by the Corporation. Mr. Matthews
ceased to be employed by the Corporation as of October, 2000.
Joseph Leeder has agreed to act as the Corporation's Chief Financial Officer at
an annual base salary of $200,000, together with a discretionary bonus. This
agreement provides for a severance payment equivalent to his base salary for a
period of three months for each year of employment (to a maximum of six months),
if Mr. Leeder's employment is terminated by the Corporation, and for a period of
twelve months, if Mr. Leeder's employment is terminated by the Corporation
within six months of a change of control of the Corporation.
Stephen Miller became Vice President, Corporate Development of the Corporation
on October 16, 2000. Mr. Miller's agreement provides for an annual base salary
of $170,000, together with a discretionary bonus, and a severance payment
equivalent to his base salary for a period of two months, if his employment is
terminated by the Corporation during the first four months of employment, four
months, if his employment is terminated by the Corporation during the next eight
months of employment, and six months, if his employment is terminated by the
Corporation after one year of employment.
Composition of the Compensation Committee
The Corporation established a Compensation Committee in December, 1997. The
Compensation Committee is comprised of its Chairman, Duncan Shirreff (an
outside, unrelated director), David Hull (an outside, unrelated director) and
John H. Bailey (an outside director and legal counsel to the Corporation).
The Compensation Committee is responsible for the review, administration and
monitoring of the Corporation's executive compensation plans, policies and
programs, including the compensation of all executive officers and, if
requested by the President, the review of the compensation of any other
officer or senior employee.
Report on Executive Compensation
During the fiscal year ended September 30, 2000, the Corporation's executive
compensation program was intended to be consistent with the Corporation's
business plans, strategies and goals while taking into account various factors
and criteria including competitive factors and the Corporation's performance.
The Corporation's executive compensation program was intended to provide an
appropriate overall compensation package that would permit the Corporation to
attract and retain highly qualified and experienced senior executives and to
encourage superior performance by the Corporation. The Corporation's
compensation policies were intended to motivate individuals to achieve and then
to award compensation based on corporate and individual results. Compensation
ranges designed to recognize level of responsibility, experience and performance
were based on survey data compiled by external consultants periodically examined
to ensure that the compensation awarded by the Corporation was competitive and
adequate.
The compensation of the executive officers consists of a base salary and
participation in the Corporation's Stock Option Plan. Individual performance is
recognized by measuring the achievement of specific objectives that are related
to concrete, measurable elements in each executive officer's performance and/or
functional area of responsibility. Base salary accounted for approximately 100%
of cash compensation. Base salary levels were based on responsibility,
experience, knowledge and on internal equity criteria and external pay
practices. The Stock Option Plan is intended to provide long term rewards
linked directly to the market value of the Common Shares of the Corporation.
Options were granted under the Stock Option Plan based on the level of executive
responsibility and compensation practices at competitive market rates.
Compensation for the Chief Executive Officer was intended to reflect a fair
evaluation of overall performance and was intended to be competitive with levels
of compensation of comparable corporations. The analysis of the CEO's
performance was based on actual performance, performances relative to
anticipated plans and the effectiveness and appropriateness of strategies
designed to address those factors.
Presented by the Board of Directors.
Geoffrey B. Genovese
John H. Bailey
David Hull
Hugh Aird
Duncan Shirreff
Donald Watt
Performance Graph
The following graph compares the Corporation's cumulative total shareholder
return (assuming an investment of $100 on October 1, 1995) on the Common Shares
of the Corporation during the period October 1, 1995 to October 1, 2000 with the
cumulative return of the TSE 300 Stock Index during the same period. Dividends
declared on Common Shares of the Corporation are assumed to be reinvested. The
common share price performance as set out in the graph does not necessarily
indicate future price performance.
Comparison of Cumulative Total Return Between
Common Shares and TSE 300 Index
1995 through 2000
For the Fiscal Year 1995 1996 1997 1998 1999 2000
Corporation $100.00 $176.00 $269.60 $319.20 $528.00 $652.00
TSE 300 $100.00 $117.66 $155.52 $120.05 $153.02 $229.10
The Common Share price performance reflects the 5-for-1 share consolidation
effective December 17, 1995.
Compensation of Directors
Certain directors, who are not employees of the Corporation, are compensated for
their services as directors through a combination of retainer fees and meeting
attendance fees. Each of Messrs. Aird, Shirreff and Hull received a fee of
$500.00 for each Board and Committee meeting attended. In addition, each of
Messrs Aird and Shirreff received an annual retainer of $10,000.00 in
recognition of his additional duties as Chair of a Committee. No compensation
was paid to the other directors for their services as directors.
The Corporation maintains liability insurance for the benefit of the directors
and officers of the Corporation and its subsidiaries against liability incurred
by them in their respective capacities. The current annual policy limit is
$10,000,000. Under the policy, individual directors and officers are reimbursed
for losses incurred in their capacities as such, subject to a deductible of
$250,000 for securities claims suits arising in the United States and $50,000
for all other claims. The deductible is the responsibility of the Corporation.
The annual premium of $95,000 was paid by the Corporation.
Indebtedness of Directors and Senior Officers
Other than as set out below, since the beginning of the last completed fiscal
year there has been no indebtedness to the Corporation or its subsidiaries by
any director, officer, proposed nominee for election as a director or
associate of any such person.
Christopher Stavenjord of Mississauga, Ontario, formerly the President and
Creative Director of Communique, was indebted to that company for $200,000 in
connection with the purchase of a residence by Mr. Stavenjord. This loan was
payable, without interest, on March 28, 2008 and was secured by a mortgage on
the residence.
Subsequent to the Corporation's fiscal year end, this loan was repaid in full
upon Mr. Stavenjord ceasing to be employed by Communique.
DIRECTORS' APPROVAL
The contents and the sending of this Management Information Circular have been
approved by the directors of the Corporation.
DATED January 26, 2001.
______________________
Geoffrey B. Genovese
President and Chief Executive Officer
STOCK OPTION PLAN RESOLUTION - Amendments to the Corporation's Stock
Option/Stock Appreciation Right Plan
RESOLVED that the number of Common Shares of the Corporation reserved for
issuance under the Stock Option/Stock Appreciation Right Plan of the
Corporation, as at March 6, 2001, as more particularly described in the
Corporation's Management Information Circular dated January 26, 2001, is
hereby increased to 4,000,000.
BY-LAW AMENDMENT RESOLUTION - Amendment to the Corporation's General By-Law No.1
WHEREAS the directors of the Corporation, by resolution passed on May 2, 2000,
did amend By-Law No. 1 of the Corporation by deleting, in its entirety, Section
10.25 thereof and by substituting therefor the following:
10.25 Quorum. At any meeting of shareholders, two individuals present in person,
each of whom is either a shareholder entitled to attend and vote at such meeting
or the proxyholder of such a shareholder appointed by means of a valid proxy,
shall be a quorum for the choice of a chairman (if required) and for the
adjournment of the meeting. For all other purposes, a quorum for any meeting of
shareholders (unless a greater number of shareholders and/or a greater number
of shares are required by the Act or by the Articles or the by-laws) shall be
two individuals present in person, each of whom is either a shareholder entitled
to attend and vote at such meeting or the proxyholder of such a shareholder
appointed by means of a valid proxy, holding or representing by proxy not less
than 5% of the total number of the issued shares of the Corporation for the time
being enjoying voting rights at such meeting. No business shall be transacted at
any meeting of shareholders while the requisite quorum is not present.
RESOLVED that the said amendment to By-Law No. 1 is hereby confirmed.