UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant ☑
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))
☑ Definitive Proxy Statement
☐ Definitive
Additional Materials
☐ Soliciting Material Pursuant to §
240.14a-12
MITEL NETWORKS CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box)
☑ No
fee required.
☐ Fee computed on table below per Exchange Act Rules
14a-6(i)(1)
and
0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction
applies:
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(3)
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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):
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(4)
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Proposed maximum aggregate value of transaction:
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(5)
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Total fee paid:
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☐
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Fee paid previously with preliminary
materials.
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☐
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Check box if any part of the fee is offset as provided by
Exchange Act
Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date
of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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MITEL NETWORKS CORPORATION
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
AND
MANAGEMENT
PROXY CIRCULAR
Dated April 21, 2017
For the Annual General Meeting of Shareholders to be held on May 15, 2017
M
ITEL
N
ETWORKS
C
ORPORATION
350 Legget Drive
Ottawa,
Ontario, Canada K2K 2W7
N
OTICE
O
F
T
HE
A
NNUAL
M
EETING
O
F
S
HAREHOLDERS
NOTICE IS HEREBY GIVEN
that an Annual Meeting (the
Meeting
)
of the shareholders of Mitel Networks Corporation (
Mitel
) will be held on
Monday, May 15, 2017 at The Brookstreet Hotel, 525 Legget Drive, Ottawa (Kanata), Ontario, Canada K2K 2W2, commencing at 4:00 p.m., Ottawa time
,
for the following purposes:
1.
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To place before the Meeting the consolidated financial statements for the year ended December 31, 2016
together with the auditors report.
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2.
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To elect directors for the ensuing year (
Annual Resolution No.
1
).
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3.
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To reappoint Deloitte LLP as our independent auditor (and, for purposes of U.S. securities laws, our
independent registered public accounting firm) and to authorize the directors to fix the auditors remuneration (
Annual Resolution No.
2
).
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4.
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To provide an advisory vote to approve executive compensation (
Annual Resolution
No.
3
).
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5.
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To provide an advisory vote to approve Mitels frequency
of say-on-pay
votes (
Resolution No.
4
).
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6.
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To consider and, if thought advisable, to pass, with or without variation, an ordinary resolution
(
Ordinary Resolution No.
1
) to approve Mitels 2017 Omnibus Incentive Plan.
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7.
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To consider, and if thought advisable, to pass, an ordinary resolution confirming an amendment to By-Law No.
1A of Mitel to increase the quorum requirement at any meeting of Mitels shareholders from 25% to 33 1/3 % (the
By-Law Ratification Resolution
).
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8.
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To transact such further and other business as may properly come before the Meeting or any adjournment
thereof.
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A copy of the full text of each of the proposed Annual Resolution No. 1, Annual Resolution No. 2,
Annual Resolution No. 3, Resolution No. 4, Ordinary Resolution No. 1 and the By-Law Ratification Resolution is attached as Schedule A, Schedule B, Schedule C, Schedule D, Schedule E and Schedule F respectively, to the proxy
circular that accompanies this notice. Any action on the items of business described above may be considered at the Meeting or at any adjournment or postponement of the Meeting. Please note that our proxy materials are also available through the
Internet at
http://investor.mitel.com
. In the interest of convenience to you and of minimizing the environmental impact associated with printing and mailing our proxy material and annual reports in the future, you may indicate your preference
for receiving all future materials electronically, by indicating as such in the manner provided for on the enclosed form of proxy or, for beneficial holders, on the voting instruction form.
The Board of Directors of Mitel has fixed a record date of March 21, 2017 for the Meeting. Accordingly, shareholders registered on the
books of Mitel at the close of business on March 21, 2017 are entitled to receive notice of the Meeting and are entitled to vote thereat. This notice of the Meeting, the proxy circular and the accompanying form of proxy are first being sent to
shareholders on or about April 21, 2017.
Shareholders of record attending the Meeting should be prepared to present
government-issued picture identification for admission. Shareholders owning common shares through a broker, bank, or other record holder should be prepared to present government-issued picture identification and evidence of share ownership as of the
record date, such as an account statement, voting instruction form issued by the broker, bank or other record holder, or other acceptable document, for admission to the Meeting.
Check-in
at the Meeting will
begin at 3:30 p.m., Ottawa time, and you should plan to allow ample time for
check-in
procedures.
As owners of Mitel, your vote is very important, regardless of the number of shares you own.
Whether or not you are able to attend the
Meeting in person, it is important that your shares be represented. We request that you vote as soon as possible
on-line
at
www.investorvote.com
or in writing by following the instructions noted on the form of proxy or, for beneficial shareholders, the voting
instruction form, included with this notice. Your form of proxy or voting instruction form, as applicable, must be received by 4:00 p.m., Ottawa time, two business days before the Meeting,
Thursday, May 11, 2017
. For specific information
regarding voting of your common shares, please refer to the section entitled
Voting of Proxies
in the accompanying proxy circular.
Thank you for your continued interest in Mitel.
DATED
at Ottawa, Ontario this 21st day of April, 2017.
BY ORDER OF THE BOARD OF DIRECTORS
Richard D. McBee, President and Chief Executive Officer
EXPLANATORY NOTE REGARDING THE CONTENT AND FORMAT OF THIS DOCUMENT
A copy of our annual report on Form
10-K
for the year ended December 31, 2016, which is referred
to as the Form
10-K,
is included in the materials mailed with this proxy circular and is also available at
http://investor.mitel.com
. You may also review and print the Form
10-K
and all exhibits from the website of the U.S. Securities and Exchange Commission, which is referred to as the SEC, at
www.sec.gov or from SEDAR at
www.sedar.com
. In addition, we will send a complete copy of the annual report on Form
10-K
(including all exhibits, if specifically requested), to any shareholder (without charge) upon written request addressed to: Investor Relations, Mitel Networks Corporation, 350 Legget Drive, Ottawa, Ontario,
Canada K2K 2W7. All of our public documents are filed with SEDAR and may be found on the following website:
www.sedar.com
.
Information on or accessible through our website is not incorporated into this proxy circular and you should not consider any information on, or that can be accessed through, our website as part of this proxy circular.
Additional financial information is contained in our audited consolidated financial statements for the year ended December 31, 2016 and
managements discussion and analysis of financial condition and results of operations for the year ended December 31, 2016. Copies of our financial statements and managements discussion and analysis of financial condition and results
of operations are included in our Form
10-K
and available upon request to Investor Relations, Mitel Networks Corporation, 350 Legget Drive, Ottawa, Ontario, Canada K2K 2W7.
In this proxy circular, we refer to Mitel Networks Corporation, the
Canada Business Corporations Act
corporation whose shares you own
(together with its subsidiaries, where applicable), as Mitel. Additionally, we sometimes refer to Mitel as we, us, our, our corporation, or the Corporation. References to
GAAP mean generally accepted accounting principles in the United States.
References to fiscal 2016, fiscal 2015 or fiscal 2014, mean the financial year ended December
31, 2016, December
31, 2015,
and December
31, 2014, respectively.
Unless indicated otherwise, all dollar amounts included in this proxy
circular are expressed in U.S. dollars.
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APPENDIX A MANDATE OF THE BOARD OF DIRECTORS
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69
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SCHEDULE A ANNUAL RESOLUTION NO. 1 ELECTION OF DIRECTORS
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SCHEDULE B ANNUAL RESOLUTION NO. 2 APPOINTMENT AND REMUNERATION OF AUDITORS
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SCHEDULE C ANNUAL RESOLUTION NO. 3 SAY ON PAY
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SCHEDULE D RESOLUTION NO. 4 FREQUENCY OF SAY ON PAY
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SCHEDULE E ORDINARY RESOLUTION NO. 1 2017 OMNIBUS INCENTIVE PLAN
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APPENDIX
E-1
2017 OMNIBUS INCENTIVE PLAN
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SCHEDULE F BY-LAW RATIFICATION RESOLUTION
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MITEL NETWORKS CORPORATION
350 Legget Drive
Ottawa,
Ontario
K2K 2W7
M
ANAGEMENT
P
ROXY
C
IRCULAR
April 21, 2017
A.
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INFORMATION ON VOTING AND PROXIES
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You are entitled to vote at the annual meeting if you were a holder of Mitel common shares at the close of business on March 21, 2017,
which is referred to as the record date. Each Mitel common share is entitled to one vote. On the record date, there were 122,788,211 Mitel common shares outstanding.
2.
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Solicitation of Proxies
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This proxy circular is furnished in connection with the solicitation of proxies by or on behalf of the management of Mitel, a corporation
governed by the
Canada
Business Corporations Act
, which is referred to as the
CBCA
, for use at the meeting to be held on
May 15, 2017
at The Brookstreet Hotel, 525 Legget Drive, Ottawa (Kanata), Ontario, K2K 2W2,
commencing at 4:00 p.m., Ottawa time, or any adjournment or adjournments thereof, for the purposes set out in the notice of the meeting, which is referred to as the notice of meeting, accompanying this proxy circular.
The enclosed proxy is being solicited by or on behalf of the management of Mitel and the cost of such solicitation will be borne by us
.
Mitel has retained Alliance Advisors, LLC to assist in the solicitation of proxies for a fee of U.S.$40,705 plus reasonable
out-of-pocket
expenses. It is expected that
the solicitation of proxies will be primarily by mail communication by our directors, officers or employees. Except as otherwise stated, the information contained in this proxy circular is given as of March 31, 2017.
3.
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Appointment of Proxies
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The persons named in the enclosed form of proxy or voting instruction form are directors or officers of Mitel. If you wish to appoint some
other person or company (who need not be a shareholder) to represent you at the meeting, you may do so by striking out the name of the persons named in the enclosed form of proxy or voting instruction form and inserting the name of your appointee in
the blank space provided or complete another form of proxy and, in either case, deliver the completed and signed form in the envelope provided by 4:00 p.m., Ottawa time, on May 11, 2017,
being two business days preceding the date of
the meeting (or 48 hours, exclusive of Saturdays, Sundays and statutory holidays, prior to the date any adjourned or postponed meeting is reconvened). It is the responsibility of the shareholder appointing some other person to represent the
shareholder to inform such person that he or she has been so appointed. The proxy or voting instruction form must be signed by the shareholder or the shareholders attorney authorized in writing or, if the shareholder is a corporation, by an
officer or attorney of that corporation, duly authorized.
Registered Shareholders
A registered shareholder is the person in whose name a share certificate is registered. If you are a registered shareholder, you are entitled
to vote your shares in one of two ways:
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2
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(a)
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Attend the meeting You may attend the meeting and vote in person. When you arrive at the meeting,
please register with Computershare Investor Services, Inc. and provide government-issued picture identification for admission. Whether or not you intend to attend the meeting, you are encouraged to vote by proxy (see (b) below).
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(b)
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By Proxy If you do not plan to attend the meeting in person, you may vote by proxy in one of two ways:
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i.
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By authorizing the management representatives of Mitel named in the proxy form to vote your Mitel common
shares. You may convey your voting instructions by:
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Internet Go to
www.investorvote.com
and follow the instructions.
You will need the 15 digit control number which is located on your proxy form; or
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Mail Complete the proxy form in full, sign and return it in the envelope provided by 4:00 p.m.,
Ottawa time, on
May 11, 2017,
being two business days preceding the date of the meeting (or 48 hours, exclusive of Saturdays, Sundays and statutory holidays, prior to the date any adjourned or postponed meeting is reconvened). The shares
represented by your proxy will be voted in accordance with your instructions as indicated on your form and on any ballot that may be called at the meeting.
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ii.
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You have the right to appoint some other person to attend the meeting and vote your Mitel common shares on
your behalf. You may do this either by:
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Internet Go to
www.investorvote.com
and follow the instructions.
You will need the 15 digit control number which is located on your proxy form; or
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Mail Print your appointees name in the blank space on the proxy form and indicate how you would
like to vote your Mitel common shares. Complete the proxy form in full, sign and return it in the envelope provided. Your proxyholder will decide how to vote on amendments or variations to the matters to be voted on at the meeting. Please ensure
your proxyholder attends the meeting as your shares will not be voted unless your proxyholder is in attendance.
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Non-Registered
Shareholders
Instead of being registered in your name, your shares may be registered
in the name of an intermediary (which is usually a bank, trust company, securities dealer or broker, or trustee or administrator of self-administered RRSPs, RRIFs, RESPs and similar plans). If your shares are registered in the name of an
intermediary, you are a
non-registered
shareholder.
Mitel has distributed copies of the notice of
meeting, this proxy circular and the form of proxy, which are referred to as the meeting materials, to intermediaries for distribution to
non-registered
shareholders. Unless you have waived your right to
receive the meeting materials, intermediaries are required to deliver them to you as a
non-registered
shareholder of Mitel and to seek your instructions regarding how to vote your shares. Typically, a
non-registered
shareholder will be given a voting instruction form which must be completed and signed by the
non-registered
shareholder in accordance with the instructions on
the form. The purpose of these procedures is to allow
non-registered
shareholders to direct the voting of those shares that they own but which are not registered in their own name.
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3
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As a
non-registered
shareholder, you may vote in
person at the meeting or by proxy in one of two ways.
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(a)
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Attend the meeting - On the voting instruction form you received from your intermediary, insert your name in
the blank space provided for the proxyholder appointment, and return it as instructed on the form to your intermediary. Do not complete the voting section of the form since you will vote in person at the meeting. Your form must be returned to your
intermediary well in advance of the meeting to enable your intermediary to provide your instructions to Computershare Investor Services, Inc. by 4:00 p.m., Ottawa time, two days before the meeting, being
May 11, 2017
(or 48 hours,
exclusive of Saturdays, Sundays and statutory holidays, prior to the date any adjourned or postponed meeting is reconvened), in order for you to attend the meeting to vote the shares covered by the form. When you arrive at the meeting, you should
advise the staff that you are a proxy appointee. If there is no space for appointing a proxyholder on the voting instruction form, you may have to indicate on the voting instruction form that you wish to receive a proxy form, and then return the
voting instruction form as instructed by your intermediary. The intermediary will mail a proxy form that you will need to complete, sign and return to Computershare Investor Services, Inc. by 4:00 p.m., Ottawa time, two days before the meeting,
being
May 11, 2017
(or 48 hours, exclusive of Saturdays, Sundays and statutory holidays, prior to the date any adjourned or postponed meeting is reconvened). When you arrive at the meeting, please register with Computershare Investor
Services, Inc. and provide government-issued picture identification and evidence of share ownership as of the record date, such as an account statement, voting instruction form issued by the broker, bank or other record holder, or other acceptable
document. Whether or not you intend to attend the meeting, you are encouraged to vote by proxy (see (b) below).
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(b)
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By Proxy - If you do not plan to attend the meeting in person, you may vote by proxy in one of two ways:
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i.
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By authorizing the management representatives of Mitel named in the voting instruction form accompanying this
proxy circular to vote your Mitel common shares. You may convey your voting instructions by:
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Internet Go to
www.proxyvote.com
and follow the instructions. You
will need the 12 digit control number which is located on your voting instruction form.
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Mail Complete the voting instruction form in full, sign and return it as instructed on the form to your
intermediary well in advance of the meeting to enable your intermediary to provide your instructions to Computershare Investor Services, Inc. by 4:00 p.m., Ottawa time, on
May 11, 2017,
being two business days preceding the date of
the meeting (or 48 hours, exclusive of Saturdays, Sundays and statutory holidays, prior to the date any adjourned or postponed meeting is reconvened). Your shares will be voted in accordance with your instructions as received by Computershare
Investor Services, Inc. on any ballot that may be called at the meeting.
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ii.
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You have the right to appoint some other person to attend the meeting and vote your Mitel common shares on
your behalf. You may do this either by:
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Internet Go to
www.proxyvote.com
and follow the instructions. You
will need the 12 digit control number which is located on your voting instruction form.
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Mail Print your appointees name in the blank space provided for the proxyholder appointment on
the voting instruction form and indicate how you would like to vote your Mitel common shares. Complete the proxy form in full, sign and return it as instructed on the form to your intermediary well in advance of the meeting to enable your
intermediary to provide your instructions to Computershare Investor Services, Inc. by 4:00 p.m., Ottawa time, on
May 11, 2017,
being two business days preceding the date of the meeting (or 48 hours, exclusive of Saturdays, Sundays
and statutory holidays, prior to the date any adjourned or postponed meeting is reconvened). If there is no space for appointing a proxyholder on the voting instruction form, you may have to indicate on the voting instruction form that you wish to
receive a proxy form, and then return the voting instruction form as instructed by your intermediary. The intermediary will mail a proxy form that you will need to complete, sign and return to Computershare Investor Services, Inc. by 4:00 p.m.,
Ottawa time, two days before the meeting, being
May 11, 2017
(or 48 hours, exclusive of Saturdays, Sundays and statutory holidays, prior to the date any adjourned or postponed meeting is reconvened). Your proxyholder will decide how to
vote on amendments or variations to the matters to be voted on at the meeting. Please ensure your proxyholder attends the meeting as your shares will not be voted unless your proxyholder is in attendance.
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Proxies returned by intermediaries as
non-votes
because the intermediary has not received instructions from the
non-registered
shareholder with respect to the voting of certain shares will be
treated as not entitled to vote on any matter before the meeting and will not be counted as having been voted in respect of any such matter. Shares represented by intermediary
non-votes
will,
however, be counted in determining whether there is a quorum present at the meeting.
A registered shareholder may change or revoke a proxy (i) by voting again on a later date, (ii) by depositing an instrument in
writing executed by the shareholder or by the shareholders attorney authorized in writing (or, if the shareholder is a corporation, by an authorized officer or attorney of such corporation authorized in writing) at the registered office of
Mitel at any time up to and including the last business day preceding the day of the meeting, or an adjournment thereof, at which such proxy is to be used, or with the Chairman of the meeting on the day of, but prior to commencement of, the meeting,
(iii) by attending and voting in person at the meeting, or (iv) in any other manner permitted by law. If an instrument of revocation is deposited with the Chairman of the meeting on the day of the meeting, the instrument will not be
effective with respect to any matter on which a vote has already been cast pursuant to such proxy. If the registered shareholder attends and votes in person at the meeting, the change or revocation will apply only to those matters on which the
registered shareholder casts a ballot at the meeting.
A
non-registered
shareholder may change or
revoke a voting instruction form that has been given to an intermediary at any time by providing new voting instructions to, or a written notice to, the intermediary or to the service company that the intermediary uses, in sufficient time for the
intermediary to act on it.
The form of proxy or voting instruction form accompanying this proxy circular affords a shareholder an opportunity to specify that the shares
registered in the shareholders name shall be voted FOR or AGAINST or WITHHELD in accordance with your instructions as indicated on your form of proxy.
In the absence of instructions, your shares will be voted FOR each of the matters to be
considered at the meeting.
Votes WITHHELD and abstentions are counted as present or represented for purposes of determining the presence or absence of a quorum at the meeting but are not included in the number of shares present or represented
and voting on each matter.
The form of proxy or voting instruction form accompanying this proxy circular confers discretionary authority
upon the nominees named in the enclosed form of proxy with respect to amendments or variations of matters identified in the notice of meeting or other matters which may properly come before the meeting. As of the date of this proxy circular,
management of Mitel knows of no amendment or variation of the matters referred to in the notice of meeting or other business that will be presented at the meeting. If any such matters should properly come before the meeting, management
representatives of Mitel named in the enclosed form will vote on those matters in accordance with his or her best judgment.
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6.
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Authorized Capital and Voting Shares
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The authorized capital of the Corporation consists of an unlimited number of Mitel common shares and an unlimited number of preferred shares,
issuable in series, which are referred to as the preferred shares. As of the record date, Mitel had 122,788,211 Mitel common shares issued and outstanding and no preferred shares issued and outstanding. Each Mitel common share carries one vote
in respect of each matter to be voted upon at the meeting. Only holders of outstanding Mitel common shares of record at the close of business on the record date will be entitled to vote at the meeting.
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7.
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Security Ownership of Certain Beneficial Owners and Management
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The following table sets forth information regarding the beneficial ownership of Mitel common shares as of
March 31, 2017 and shows the number of shares and percentage of outstanding Mitel common shares owned by:
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each person or entity who is known by us to own beneficially 5% or more of our Mitel common shares;
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each member of the Mitel Board;
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each of our named executive officers, each referred to as an NEO; and
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all members of our Board and our executive officers as a group.
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Beneficial ownership is determined in accordance with SEC rules, which generally attribute beneficial ownership of securities to each person
or entity who possesses, either solely or shared with others, the power to vote or dispose of those securities. These rules also treat as outstanding all shares that a person would receive upon exercise of stock options or warrants, or upon
conversion of convertible securities held by that person that are exercisable or convertible within 60 days of the determination date, which in the case of the following table is May 30, 2017. Shares issuable pursuant to exercisable or
convertible securities are deemed to be outstanding for computing the percentage ownership of the person holding such securities but are not deemed outstanding for computing the percentage ownership of any other person. The percentage of beneficial
ownership for the following table is based on 122,675,810 Mitel common shares outstanding as of March 31, 2017. To our knowledge, except as indicated in the footnotes to this table and pursuant to applicable community property laws, the persons
named in the table have sole voting and investment power with respect to all Mitel common shares shown as beneficially owned by them.
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Amount and Nature of
Beneficial Ownership
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Name and Address of Beneficial
Owner
(1)
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Number
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Percentage
of Class
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Five Percent Shareholders:
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Matthews Group
(2)
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Dr. Terence H. Matthews
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220,359
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0.2%
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Wesley Clover International Corporation
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6,738,590
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5.5%
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Total
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6,958,949
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5.7%
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Francisco Partners
Group
(3)
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Francisco Partners Management, LLC
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409,925
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0.3%
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Francisco Partners II (Cayman) LP
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62,470
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0.1%
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Francisco Partners Parallel Fund II, LP
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858
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0.0%
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Arsenal Holdco I S.a.r.l.
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6,281,568
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5.1%
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Arsenal Holdco II S.a.r.l.
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2,424,602
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|
2.0%
|
|
|
|
|
|
Benjamin H. Ball
|
|
|
8,974
|
|
|
|
0.0%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
9,188,397
|
|
|
|
7.5%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NWQ Investment Management
(4)
|
|
|
15,095,919
|
|
|
|
12.3%
|
|
|
|
|
|
Elliott Management
Corporation
(5)
|
|
|
12,248,059
|
|
|
|
10.0%
|
|
|
|
|
|
Turtle Creek Asset Management
Inc.
(6)
|
|
|
8,385,047
|
|
|
|
6.8%
|
|
|
|
|
|
Guardian Capital L.P.
(7)
|
|
|
6,891,479
|
|
|
|
5.6%
|
|
|
|
|
|
-
6
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature of
Beneficial Ownership
|
|
|
|
|
Name and Address of Beneficial
Owner
(1)
|
|
Number
|
|
|
Percentage
of Class
|
|
|
|
|
|
|
|
|
Executive Officers and Directors:
|
|
|
|
|
|
|
|
|
|
|
|
|
Benjamin H. Ball
(3)
|
|
|
9,188,397
|
|
|
|
7.5%
|
|
|
|
|
|
Martha H. Bejar
(8)
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
Peter D. Charbonneau
(9)
|
|
|
233,406
|
|
|
|
0.2%
|
|
|
|
|
|
Dr. Terence H.
Matthews
(2)
|
|
|
6,958,949
|
|
|
|
5.7%
|
|
|
|
|
|
Richard D. McBee
|
|
|
2,170,584
|
|
|
|
1.8%
|
|
|
|
|
|
John P. McHugh
|
|
|
212,974
|
|
|
|
0.2%
|
|
|
|
|
|
Sudhakar Ramakrishna
|
|
|
64,153
|
|
|
|
0.0%
|
|
|
|
|
|
David M. Williams
(10)
|
|
|
249,460
|
|
|
|
0.2%
|
|
|
|
|
|
Steven E. Spooner
(11)
|
|
|
491,304
|
|
|
|
0.4%
|
|
|
|
|
|
Graham Bevington
|
|
|
228,937
|
|
|
|
0.2%
|
|
|
|
|
|
Jon D. Brinton
|
|
|
182,713
|
|
|
|
0.1%
|
|
|
|
|
|
Thomas G. Lokar
|
|
|
127,310
|
|
|
|
0.1%
|
|
|
|
|
|
|
|
|
|
All directors and executive officers as a group (14 persons)
(12)
|
|
|
20,216,480
|
|
|
|
16.5%
|
|
|
|
|
|
(1)
|
Except as otherwise indicated, the address for each beneficial owner is c/o Mitel Networks Corporation, 350
Legget Drive, Ottawa, Ontario, Canada K2K 2W7.
|
(2)
|
The Matthews Group means Dr. Matthews and certain entities, including Wesley Clover
International Corporation (formerly Kanata Research Park Corporation which merged with Wesley Clover International Corporation on January 1, 2017), controlled by Dr. Matthews. Includes stock options to acquire 182,423 Mitel common shares
that are currently exercisable and 6,738,590 Mitel common shares owned by Wesley Clover International Corporation. Dr. Matthews has voting and investment power over the Mitel common shares owned by Wesley Clover International Corporation and
therefore beneficially owns the Mitel common shares held by Wesley Clover International Corporation. The address for the Matthews Group and Dr. Matthews is 390 March Road, Kanata, Ontario, Canada K2K 0G7.
|
(3)
|
The Francisco Partners Group means Francisco Partners Management, LLC and certain of its
affiliates. Includes 8,860,877 Mitel common shares and stock options to acquire 327,520 Mitel common shares that are exercisable. Benjamin Ball, a partner of Francisco Partners Management, LLC, has voting and investment power over the Mitel common
shares owned by each of Francisco Partners, Francisco Partners II (Cayman) LP , Francisco Partners Parallel Fund II, LP, Arsenal Holdco I S.a.r.l. and Arsenal Holdco II S.a.r.l. and therefore beneficially owns the Mitel common shares held by each of
these entities. Mr. Ball holds 8,974 Mitel common shares directly. The address for each of the Francisco Partners Group and Benjamin Ball is c/o Francisco Partners Management, LLC, One Letterman Drive, Building
C-Suite
410, San Francisco, California, 94129.
|
(4)
|
The number of shares is based on the shareholders Schedule 13G/A filed with the SEC on February 3,
2017. The address for NWQ Investment Management is 2049 Century Park East, 16
th
Floor, Los Angeles, CA, 90067.
|
(5)
|
The number of shares is based on the shareholders Schedule 13D/A filed on August 19, 2016. The
address for Elliott Management Corporation is 40 West 57
th
St., New York, New York, 10019.
|
(6)
|
The number of shares is based on the shareholders Schedule 13G/A filed with the SEC on February 14,
2017. The address for Turtle Creek Asset Management Inc. is 4 King Street West, Suite 1300, Toronto, Ontario, M5H 1B6.
|
(7)
|
The number of shares is based on the shareholders Schedule 13G filed with the SEC on February 14,
2017. The address for Guardian Capital LP is Commerce Court West, Suite 3100, PO Box 201, Toronto, Ontario, M4L 1E8.
|
(8)
|
Martha Bejar was appointed to the Board on March 10, 2017.
|
(9)
|
Of this total, 2,019 Mitel common shares are registered to Peter Charbonneau Trust #2, a trust of which
Mr. Charbonneau is the sole trustee, and 13,927 Mitel common shares are registered to Mr. Charbonneaus wife, Joan Charbonneau, for which he disclaims beneficial ownership. Includes options to acquire 185,185 Mitel common shares at
exercise prices ranging from $2.61 to $10.83.
|
(10)
|
Of this total, 2,300 Mitel common shares are registered to Mr. Williams wife, June Williams, for
which he disclaims beneficial ownership. Includes options to acquire 39,460 Mitel common shares at exercise prices ranging from $7.17 to $10.83.
|
(11)
|
Of this total, 5,100 Mitel common shares are registered to the Spooner Children Trust, a trust of which
Mr. Spooner is one of three trustees, 309,500 Mitel common shares issuable upon the exercise of options at exercise prices ranging from $3.80 to $10.11.
|
(12)
|
In calculating this total, the Mitel common shares held by Mr. Ball have been counted only once, as all
such shares are held by and through the Francisco Partners Group.
|
For the purpose of this table, which contains
information that is also included in our Form
10-K
filing for the year ended December 31, 2016, the term executive officer has the meaning ascribed to it under Rule 405 promulgated under the
U.S. Securities Act of 1933, as amended, which is referred to as the 1933 Act, and the term named executive officer, or NEO, has the meaning ascribed to it under Item 403(a)(3) of Regulation
S-K
promulgated under the 1933 Act. The information with respect to beneficial ownership of our directors, NEOs and executive officers is based upon information furnished by each director, NEO or executive officer or information contained in insider
reports made with the Canadian Securities Administrators.
-
7
-
B.
|
CORPORATE GOVERNANCE PRINCIPLES AND PRACTICES
|
Mitel is a Canadian reporting issuer and qualifies as a domestic issuer for purposes of the Exchange Act. Mitel common shares are listed on
the NASDAQ and on the TSX. As a result, we are subject to, and comply with, a number of legislative and regulatory corporate governance requirements, policies and guidelines, including those of the NASDAQ, TSX, the Canadian Securities Administrators
and the SEC.
In addition to compliance with governance requirements, Mitel and its management place significant emphasis on the structure
of the Mitel Board and the committees of the Mitel Board in order to promote effective corporate governance of the Corporation. We have adopted corporate governance guidelines, mandates for each of the Mitel Board, Audit Committee, Compensation
Committee, and Nominating and Corporate Governance Committee, as well as position descriptions for a chairman of the Mitel Board, a lead director and a Chief Executive Officer. Seven of our eight directors are independent. Our independent directors
meet regularly without the presence of management. Mitel has share ownership guidelines for its directors and executive officers.
We have
established a Global Business Ethics and Compliance Office headed by a Compliance Officer with assistance from the Legal Department and Internal Audit Department, who report directly to the Audit Committee. The responsibilities of the Compliance
Officer include (but are not limited to):
|
|
|
ensuring annual distribution and certification of our Code of Business Conduct to all of our employees,
directors, officers and representatives which requires each individual to certify their compliance with the Code of Business Conduct;
|
|
|
|
monitoring our ethics and business practices company-wide by coordinating audits, performance assessments and
providing training programs;
|
|
|
|
monitoring and promoting anonymous hotlines to report suspected violations; and
|
|
|
|
reporting to the Mitel Board and/or a Committee of the Mitel Board.
|
We have adopted an Insider Trading Policy for directors, officers and employees who may from time to time be in possession of material,
non-public
information.
Certain employees who are involved in the preparation and review of financial
statements and regulatory filings execute, on an annual basis, certifications in support of the certification obligations of the Chief Executive Officer and the Chief Financial Officer pursuant to the
Sarbanes Oxley Act of 2002
. The
certification process complements the due diligence process administered by us to support reporting obligations under the
Sarbanes Oxley Act of 2002
.
Our significant governance principles and practices, all of which are described below, are set forth in governance documentation available on
our website at
http://investor.mitel.com
. These include the Mandate for the Mitel Board of Directors, Audit Committee Charter, Compensation Committee Charter, Nominating and Corporate Governance Committee Charter, Corporate Governance
Guidelines and Code of Business Conduct. We will provide a copy of any of these governance documents to any person, without charge, who requests a copy in writing to Investor Relations, Mitel Networks Corporation, 350 Legget Drive, Ottawa, Ontario,
Canada K2K 2W7.
|
8.
|
Composition of the Mitel Board
|
The Mitel Board currently consists of eight members. The directors have approved a fixed number of
eight directors to be elected at the
meeting. Our articles of incorporation provide that the Mitel Board is to consist of a minimum of three and a maximum of fifteen directors as determined from time to time by the directors, and permit the directors to appoint additional directors in
accordance with the
CBCA
within any fixed number from time to time. Under the
CBCA
, one quarter of our directors must be resident Canadians as defined in the
CBCA
. Under the terms of a Shareholders Agreement among Mitel
and certain of its shareholders, certain shareholders are entitled to nominate collectively up to two directors and such shareholders have agreed to nominate our Chief Executive Officer to serve on the Board (see Interest of Management,
Nominees and Others in Material Transactions: Transactions Involving Related Parties: Shareholders Agreement). The Board regularly assesses the need for additional directors in order to ensure that the Mitel Board is composed of
individuals with diverse backgrounds, experience, competencies and independence as evaluated against criteria established from time to time by the Mitel Board.
-
8
-
|
9.
|
Independence and Other Considerations for Director Service
|
A majority (seven of eight) of our nominated directors are considered independent, as defined under the
NASDAQ rules and for purposes of Canadian securities laws. Our independent directors are Peter Charbonneau, Benjamin Ball, Martha Bejar, Terence Matthews, John McHugh, Sudhakar Ramakrishna and David Williams. For purposes of the NASDAQ rules, an
independent director means a person other than an executive officer or employee of the company or any other individual having a relationship which, in the opinion of the companys board, would interfere with the exercise of independent judgment
in carrying out the responsibilities of a director. A director is considered to be independent for the purposes of Canadian securities laws if the director has no direct or indirect material relationship to the company. A material relationship is a
relationship that could, in the view of the Mitel Board, be reasonably expected to interfere with the exercise of a directors independent judgment. Certain individuals, such as employees and executive officers of Mitel, are deemed by Canadian
securities laws to have material relationships with the Corporation.
The Audit Committee reviews related-party transactions on a
quarterly basis and has determined that relationships with companies affiliated with Dr. Matthews are not material and have been at
arms-length
and therefore the Mitel Board is satisfied that
Dr. Matthews is independent.
Our
non-independent
nominated director is Richard McBee. Our
Board determined that Richard McBee is
non-independent
as he is the Chief Executive Officer and President of the Corporation.
We have an independent chairman, separate from our Chief Executive Officer. The Corporation believes that this leadership structure, which
separates the Chairman and Chief Executive Officer roles, is appropriate at this time in light of the Corporations business and operating environment. As chairman, Dr. Matthews role is to promote the Mitel Boards effectiveness
in providing oversight to the Corporation. In particular, the chairman has the responsibility to:
|
|
|
preside over Board meetings in an efficient and effective manner that is compliant with governance policies
and procedures;
|
|
|
|
in conjunction with the Chief Executive Officer, communicate and maintain relationships with the Corporation,
its shareholders and other stakeholders;
|
|
|
|
set Board meeting agendas based on input from directors and senior management;
|
|
|
|
work cooperatively with the lead director in fulfilling the lead directors mandate and, in the event of
a conflict in their duties, yield to the lead director; and
|
|
|
|
carry out other duties, as requested by the Mitel Board or the Chief Executive Officer.
|
The Board has also appointed a lead independent director, Peter Charbonneau, who is referred to as the Lead Director. The responsibility of
our Lead Director is to provide additional independent leadership to the Mitel Board and to ensure that it functions in an independent and open manner. Together with the chairman of the Mitel Board, the Lead Director ensures that the Mitel Board
understands its responsibilities and communicates effectively with its subcommittees and with management. Our Lead Director is also chairman of our Nominating and Corporate Governance Committee, of which all of the members are independent. At the
regularly scheduled Nominating and Corporate Governance Committee meetings, the Lead Director ensures that the independent directors have
in-camera
discussions. There were four such
in-camera
meetings held during the year ended December 31, 2016.
-
9
-
The attendance record of each director of the Mitel Board for all board and board committee
meetings for the year ended December 31, 2016 is as follows:
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
Board and
Committee Attendance for FY2016
|
|
Board
Meetings (15
meetings)
|
|
Audit
Committee
Meetings
(7
meetings)
|
|
Compensation
Committee
Meetings (6
meetings)
|
|
Nominating and
Governance
Committee
Meetings (4
meetings)
|
Terence H. Matthews
|
|
100%
|
|
-
|
|
-
|
|
100%
|
Richard D. McBee
|
|
100%
|
|
-
|
|
-
|
|
-
|
Benjamin H. Ball
|
|
100%
|
|
-
|
|
100%
|
|
75%
|
Martha H. Bejar
(1)
|
|
-
|
|
-
|
|
-
|
|
-
|
Peter D. Charbonneau
|
|
100%
|
|
100%
|
|
-
|
|
100%
|
John P. McHugh
(2)
|
|
94%
|
|
100%
|
|
100%
(2)
|
|
100%
|
Sudhakar Ramakrishna
|
|
94%
|
|
100%
|
|
-
|
|
100%
|
David M. Williams
|
|
100%
|
|
-
|
|
100%
|
|
100%
|
(1) Martha Bejar was appointed to the Board on March 10, 2017.
(2) John McHugh was appointed to the Compensation Committee on June 23, 2016. Mr. McHugh attended 2 of 2 (100%) Compensation
Committee Meetings held from the date of his appointment.
At least quarterly, the independent directors hold meetings at which
non-independent
directors and management are not in attendance.
The Mitel Board permits, but does not
require, its directors to attend the Corporations annual meeting of shareholders. Mr. McBee and Dr. Matthews attended the 2016 annual meeting of shareholders.
|
10.
|
Mandate of the Mitel Board and Corporate Governance Guidelines
|
The mandate of the Mitel Board is to oversee corporate performance and to provide quality, depth and continuity of
management so that we can meet our strategic objectives. We have attached our board mandate as Appendix A to the proxy circular. In particular, the Mitel Board focuses its attention on the following key areas of responsibility:
|
|
|
appointing and supervising the Chief Executive Officer and other senior officers;
|
|
|
|
supervising strategy implementation and performance;
|
|
|
|
monitoring our financial performance and reporting;
|
|
|
|
identifying and supervising the management of the Corporations principal business risks;
|
|
|
|
monitoring the legal and ethical conduct of the Corporation;
|
|
|
|
maintaining shareholder relations; and
|
|
|
|
developing and supervising our governance strategy.
|
-
10
-
The Mitel Board discharges many of its responsibilities through its standing committees: the
Audit Committee, the Nominating and Corporate Governance Committee and the Compensation Committee. Other committees may be formed periodically by the Mitel Board to address specific issues that are not
on-going
in nature. The duties and responsibilities delegated to each of the standing committees are prescribed in the respective charter of each standing committee.
Position Descriptions & Charters
The Mitel Board has developed and implemented a written position description for each of the Chairman, the Lead Director and the Chief
Executive Officer. Committees of the Mitel Board each have a committee charter that sets out the mandate of the committee, which includes the responsibilities of the chair of each committee.
Process for Recommending Candidates for Election to the Mitel Board of Directors
The Nominating and Corporate Governance Committee is responsible for, among other things, determining the criteria for membership to the Mitel
Board and recommending candidates for election to the Mitel Board. The criteria and process for evaluating and identifying the candidates that it recommends to the full Mitel Board for selection as director nominees are as follows:
|
|
|
The Nominating and Corporate Governance Committee regularly reviews the current composition and size of the
Mitel Board.
|
|
|
|
The Nominating and Corporate Governance Committee oversees an annual evaluation of the performance of the
Mitel Board as a whole and each Committee and evaluates the performance of individual members of the Mitel Board eligible for
re-election
at the annual meeting of the shareholders.
|
|
|
|
In its evaluation of the director candidates, including the members of the Mitel Board eligible for
re-election,
the committee seeks to achieve a balance of knowledge, experience and capability on the Mitel Board and considers:
|
|
○
|
|
the current size and composition of the Mitel Board and the needs of the Mitel Board and the respective
committees of the Mitel Board;
|
|
○
|
|
factors such as issues of character, judgement, diversity including gender diversity, age, expertise, business
experience, length of service, independence, other commitments and the like; and
|
|
○
|
|
such other factors as the Nominating and Corporate Governance Committee may consider appropriate.
|
|
|
|
In evaluating and identifying candidates, the Nominating and Corporate Governance Committee has the authority
to retain and terminate any third party search firm that is used to identify director candidates and has the authority to approve the fees and retention terms of any search firm.
|
|
|
|
After completing its review and evaluation of the director candidates, the Nominating and Corporate Governance
Committee recommends the director nominees to the full Mitel Board for selection.
|
|
|
|
The Nominating and Corporate Governance Committee may also consider recommendations for nomination from other
sources and interested parties, including Mitels officers, directors and shareholders. In considering these recommendations, the Nominating and Corporate Governance Committee utilizes the same standards described above, and considers the
current size and composition of the Board, and the needs of the Board and its committees. Shareholders who wish to submit any shareholder proposal which includes nominees for director, as permitted under the
CBCA
, may address their
shareholder proposal, including any notice on Schedule 14N, in writing to Mitel Networks Corporation, 350 Legget Drive, Kanata, ON, K2K 2W7, Attention: Corporate Secretary. In order for a shareholders director nominee to be included in
Mitels proxy materials for an annual general meeting of shareholders, such shareholder proposal must comply with applicable Canadian law and the rules and regulations of the SEC. We will consider such shareholder proposal (and any proposal
made pursuant to Rule
14a-8
of the Exchange Act) for inclusion in the proxy materials for the 2017 annual meeting only if our Corporate Secretary receives such proposal on or before the close of business on
Monday, March 27, 2017 (which is the deadline for submitting shareholder proposals under the
CBCA
).
|
-
11
-
Orientation and Continuing Education
Director orientation and continuing education is conducted by the Nominating and Corporate Governance Committee. All newly elected directors
are provided with a comprehensive orientation on our business and operations. This includes familiarization with our reporting structure, strategic plans, significant financial, accounting and risk issues, compliance programs, policies and
management and the external auditor. Existing directors are periodically updated in respect of these matters.
For the purposes of
orientation, new directors are given the opportunity to meet with members of the executive management team to discuss the Corporations business and activities. The orientation program is designed to assist the directors in fully understanding
the nature and operation of our business, the role of the Mitel Board and its committees, and the contributions that individual directors are expected to make.
Director Term Limits and Mechanisms of Board Renewal
The Mitel Board has determined that fixed term limits for directors should not be established. The Mitel Board is of the view that such a
policy would have the effect of forcing directors off the Mitel Board who have developed, over a period of service, increased insight into the Corporation and who, therefore, can be expected to provide an increasing contribution to the Mitel Board.
At the same time, the Mitel Board recognizes the value of some turnover in board membership to provide
on-going
input of fresh ideas and views. The Corporations director retirement policy
provides that a director may not be appointed or elected as a director once that person has reached 75 years of
age, unless the Mitel Board makes an exception to this policy. David Williams turned 75 on January 16, 2017. In light of his experience, qualifications and continuing commitment, the Mitel Board has approved an exception to our director
retirement policy. Accordingly, the Mitel Board has exercised its discretion to allow Mr. Williams to stand for
re-election
at the Meeting.
The Mitel Board has had some turnover during the last five years. Of the seven members who served as directors during the year ending
December 31, 2016, two directors joined the Mitel Board within the last five years.
|
|
|
Sudhakar Ramakrishna joined the Mitel Board on May 14, 2015, and
|
|
|
|
David Williams joined the Mitel Board on January 31, 2014.
|
In addition, Martha Bejar joined the Mitel Board on March 10, 2017.
Gender Diversity
Mitel and the Board
believe that diversity is important to ensure that Board members provide the necessary range of perspectives, experience and expertise required to achieve effective stewardship of the Corporation. The Board recognizes that gender diversity amongst
its board members and executive officers is a significant aspect of diversity and acknowledges the important role of women in contributing to diversity of perspective in the Boardroom and to the Corporation as a whole. On March 10, 2017, Mitel
appointed Martha Bejar to the Board. While education, executive and public company board experience, personal qualities, sector specific knowledge, and skill set (relative to other members of the Board), were the primary factors that the Nominating
and Corporate Governance Committee and the Board considered, gender was also a significant factor in the decision to appoint Ms. Bejar to the Board. The Mitel Board is committed to seeking further qualified female candidates as vacancies arise
amongst the current Directors and executive officers.
-
12
-
Currently, Mitel does not have a policy relating to the identification and nomination of
women directors. The Nominating and Corporate Governance Committee is mandated to review annually the competencies, skills and personal qualities applicable to candidates to be considered for nomination to the board. The objective of this review is
to maintain the composition of the Mitel Board in a way that provides, in the judgment of the Mitel Board, the best mix of skills and experience to provide for the overall stewardship of the Corporation. This review also takes into account the
desirability of maintaining a reasonable diversity of personal characteristics including gender, origin, age, and geographic residence, and ensures that appropriate efforts are made to include women in the list of candidates being considered for
nomination for a Board position.
The Mitel Board will continue to evaluate the appropriateness of adopting a formal board diversity policy in the future.
In identifying nominees for election by shareholders and candidates for executive officer positions, the Corporation does not target a
specific representation of women. Although Mitel does not currently have any female executive officers, gender diversity is one of several important factors that the Corporation takes into consideration in identifying qualified candidates to serve
as executive officers of Mitel. Mitel, by and through its management, makes all employment decisions based on merit and without discrimination on any prohibited ground including, but not limited to, gender, age, race, religion, place of origin,
sexual orientation, marital status, family status, or physical or mental handicap. Mitel will, however, continue to evaluate the appropriateness of adopting targets in the future.
|
11.
|
Code of Business Conduct
|
The Mitel Board has established the Code of Business Conduct, or Code which governs the conduct of the Mitel Board and Mitels
executives, employees, contractors and agents, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. As disclosed in our Current Report on Form
8-K
filed with the SEC on December 22, 2016, the Mitel Board approved and adopted an amendment to the Code on December 16, 2016. The Code was amended in order to comply with NASDAQ corporate governance
requirements that apply to Mitel commencing on January 1, 2017, as the Corporation was no longer eligible to rely upon NASDAQ foreign private issuer corporate governance exemptions after that date. The amendment to the Code did not result in
any explicit or implicit waiver of any provision of the Code in effect prior to the amendment. A copy of the Code, as amended, may be obtained, without charge, either
on-line
at
http://investor.mitel.com/governance.com
or, upon request, by contacting the Global Business Ethics and Compliance Office of the Corporation at 350 Legget Drive, Ottawa, Ontario, Canada, K2K 2W7, phone number:
613-592-2122.
Responsibility for ensuring compliance with the
Code of Business Conduct rests with our Global Business Ethics and Compliance Office, which is referred to as the Compliance Office, under the guidance of its director, who is also the general counsel of the Corporation. The Compliance Office
ensures that the Code of Business Conduct is distributed throughout the Corporation, monitors the ethics of our business practices, investigates potential breaches of the Code and engages in education on compliance with the Code of Business Conduct.
The Audit Committee periodically reviews the ethics monitoring conducted by the Compliance Office and updates the Code of Business Conduct as required. The chair of the Audit Committee reports the results of his or her reviews to the Mitel Board
following Audit Committee meetings and keeps the Mitel Board apprised of matters considered by the committee.
Directors are prohibited by
the Code of Business Conduct from engaging in transactions on our behalf in which that director has, or a family member of that director has, a substantial beneficial interest. Among other things, this means that a director may not hold a financial
interest in a customer, supplier or competitor of ours or our subsidiaries; notwithstanding this prohibition, a director may own $25,000 worth of stock or two percent of a publicly owned corporation, whichever is greater. Permission to deviate from
these rules must be obtained from the Mitel Board. Moreover, prior to commencing service on the Mitel Board, directors are required to disclose all potential conflicts of interest to the corporate secretary. If potential conflicts arise during a
directors tenure on the Mitel Board, such conflicts must be immediately disclosed to the corporate secretary. Where a conflict of interest exists, a director is required by statute to abstain from voting on the matter and, by corporate policy,
is also required to recuse him or herself from any discussion on any matter in respect of which a conflict of interest precludes the director from voting.
-
13
-
|
12.
|
The Role of the Mitel Board of Directors in Risk Oversight
|
Mitel believes that risk is inherent in innovation and the pursuit of long-term growth opportunities. Mitels
management is responsible for
day-to-day
risk management activities. The Mitel Board, acting directly and through its committees, is responsible for the oversight of
Mitels risk management. With the oversight of the Mitel Board, Mitel has implemented practices and programs designed to help manage the risks to which we are exposed in our business and to align risk-taking appropriately with our efforts to
increase shareholder value.
Mitels management has implemented an enterprise risk management, or ERM, program designed to work
across the business to identify, assess, govern and manage risks and Mitels response to those risks.
The Audit Committee, which
oversees our financial and risk management policies, receives regular reports on ERM from internal audit. The Audit Committee meets regularly with our chief financial officer, our independent auditor, the head of internal audit, and other members of
senior management to discuss our major financial risk exposures, financial reporting, internal controls, compliance risk, and key operational risks.
As part of the overall risk oversight framework, other committees of the Mitel Board also oversee certain categories of risk associated with
their respective areas of responsibility.
Each committee reports regularly to the full Mitel Board on its activities. In addition, the
Mitel Board participates in regular discussions among the Mitel Board and with Mitels senior management of many core subjects, including strategy, operations, finance, and legal and public policy matters, in which risk oversight is an inherent
element.
The Mitel Board has established three standing committees to assist it in carrying out its responsibilities: the Audit Committee, the
Compensation Committee and the Nominating and Corporate Governance Committee.
The Audit Committee
The Audit Committee is composed of three directors namely, Peter Charbonneau (Chairman), John McHugh and Sudhakar Ramakrishna. Peter
Charbonneau was appointed to the Audit Committee in February 2002, John McHugh was appointed in February 2014 and Sudhakar Ramakrishna was appointed in August 2015. The Mitel Board has determined that each of these directors meets the independence
requirements of the rules and regulations of the NASDAQ and the SEC and the independence requirements of Canadian securities rules. The Mitel Board has determined that each of these directors is financially literate. Peter Charbonneau (Chairman) has
been identified as an audit committee financial expert as such term is defined by applicable U.S. securities laws.
The Audit
Committee assists the Mitel Board in fulfilling its financial oversight obligations including responsibility for overseeing the integrity of our financial statements and accounting and financial process and the audits of our financial statements,
legal and regulatory compliance, auditor independence and qualification, the work and performance of our financial management, internal auditor and external auditor and for overseeing the systems of disclosure controls and procedures and the system
of internal controls regarding finance, accounting, legal compliance, risk management and ethics that management and the Mitel Board have established.
The Audit Committee has access to all books, records, facilities and personnel and may request any information about the Corporation as it may
deem appropriate. It also has the authority to retain and compensate special legal, accounting, financial and other consultants or advisors to advise the committee. The Audit Committee also reviews and approves related party transactions and
prepares reports for the Mitel Board on such related party transactions.
-
14
-
All members of the Audit Committee have experience reviewing financial statements and dealing
with related accounting and auditing issues. The members of the Audit Committee have the following relevant education and experience:
|
|
|
Peter Charbonneau
served as a general partner in Skypoint Capital Corporation, an early-stage
technology venture capital firm from 2001 to 2015. He previously served as the Chief Financial Officer and Chief Operating Officer of Newbridge Networks Corporation. Mr. Charbonneau currently sits on the audit committee for Teradici
Corporation. Mr. Charbonneau has also served as a director and audit committee member at other companies, including CBC/Radio Canada, Telus Corporation, BreconRidge Corporation, Cambrian Systems, Inc., CounterPath Corporation, March Networks
Corporation, ProntoForms Corporation and Jennerex, Inc. From 1977 to 1986, Mr. Charbonneau worked as an accountant at Deloitte LLP (as it is now known). Mr. Charbonneau holds a Bachelor of Science from the University of Ottawa, an MBA from
the University of Western Ontario and is a Fellow of the Chartered Professional Accountants of Ontario. Mr. Charbonneau also holds the ICD.D certification, having completed the Directors Education Program of the Institute of Corporate Directors
of Canada.
|
|
|
|
John McHugh
is the General Manager and Senior Vice President, Commercial Business Unit of NETGEAR, Inc.
Prior to his current role, Mr. McHugh was the Chief Marketing Officer for Brocade Communications Systems, Inc. Prior to that, Mr. McHugh held Vice President and General Manager roles at Nortel Networks and Hewlett-Packard. In his capacity
as an executive of each of these companies, Mr. McHugh has held leadership roles in research and development, marketing and manufacturing and has owned profit and loss responsibility for global business units driving business results through
reseller channel and service provider markets around the world. Mr. McHugh has over 18 years of experience in general management, including management of cash and capital usage, evaluating business opportunities and acquisitions with
significant capital structure and cash flow analysis. Mr. McHugh holds a Bachelor of Science degree in Electrical Engineering and in Computer Science from Rose-Hulman Institute of Technology.
|
|
|
|
Sudhakar Ramakrishna
is the CEO and a director of Pulse Secure, LLC, where he has overseen all aspects
of business strategy and execution since July 2015. Prior to his current role, Mr. Ramakrishna was the Senior Vice President and General Manager for the Enterprise and Service Provider Division of Citrix. He previously served as President of
Products and Services for Polycom and held senior leadership roles at Motorola, 3COM and U.S. Robotics. Mr. Ramakrishna holds a Masters degree in Computer Science from Kansas State and an MBA from Northwestern Universitys Kellogg
School of Management.
|
The Compensation Committee
The Mitel Board has established a compensation committee, the purpose of which is to assist the Mitel Board in establishing fair and
competitive compensation and performance incentive plans. The Compensation Committee is currently composed of three directors namely, Benjamin Ball (Chairman), John McHugh and David Williams. Benjamin Ball was appointed to the Compensation Committee
in October 2007, John McHugh was appointed in June 2016 and David Williams was appointed in March 2014. All members of the Compensation Committee qualify as outside directors within the meaning of Section 162(m) of the Internal Revenue
Code as amended (the Tax Code), qualify as
non-employee
directors within the meaning of Rule
16b-3
under the Exchange Act and are independent, as
determined by the Mitel Board in accordance with NASDAQ independence rules and Canadian securities rules including the Chairman who is responsible for the leadership of the committee and the fulfilment by the committee of its mandate. The
Compensation Committee is responsible for annually reviewing the compensation of our directors, our chief executive officer and certain other senior executives. To ensure an objective process for determining compensation, the Compensation Committee
considers a variety of
pre-determined,
objective criteria and consults with independent third party advisors. In each case, the Compensation Committee reviews the compensation received in the most recent
period and assesses its appropriateness in the context of the responsibilities and performance of the individuals and industry trends. On this basis, the Compensation Committee makes its annual compensation recommendations to the Mitel Board.
-
15
-
In addition to making compensation recommendations to the Mitel Board, the Compensation
Committee administers our 2006 Equity Incentive Plan and 2014 Equity Incentive Plan as well as the Mavenir Systems, Inc. 2005 Stock Plan, which is referred to as the 2005 Stock Plan, and the Mavenir Systems, Inc. 2013 Equity Incentive Plan, which is
referred to as the 2013 Equity Incentive Plan, inherited through acquisition, and may periodically recommend the adoption of other incentive compensation plans. The Compensation Committee also conducts annual reviews of our succession plan, reviews
our policies regarding loans to directors and senior officers and monitors and maintains our insider trading policy. To fulfill its mandate, the Compensation Committee is empowered to retain legal, accounting, financial and other professionals. It
is also entitled to full access to our books and records and may require our directors, officers and employees to provide information deemed necessary by the committee to fulfill its mandate.
The current members of the Compensation Committee have experience reviewing executive compensation. The members of the Compensation Committee
have the following relevant education and/or experience:
|
|
|
Benjamin Ball
is a partner of Francisco Partners Management, LLC, which is a leading private equity
firm focused exclusively on investing in the information technology market. Mr. Ball currently sits on the Compensation Committees for such private companies as Webtrends Inc. and Watchguard Technologies, Inc. Mr. Ball also served as a
director and compensation committee member at other companies including Foundation 9 Entertainment, Inc. and EF Johnson Technologies, Inc. Mr. Ball has been a director of these and other private companies where he has been responsible for
hiring and retaining corporate level executives for each company. Mr. Ball holds a Bachelor of Arts degree from Harvard College and an MBA from Stanford Graduate School of Business.
|
|
|
|
John McHugh
is the General Manager and Senior Vice President, Commercial Business Unit of NETGEAR, Inc.
Prior to his current role, Mr. McHugh was the Chief Marketing Officer for Brocade Communications Systems, Inc. Prior to that, Mr. McHugh held Vice President and General Manager roles at Nortel Networks and Hewlett-Packard. In his capacity
as an executive of each of these companies over the last 18 years, Mr. McHugh has reviewed, designed and implemented numerous compensation plans for a wide range of businesses.
|
|
|
|
David Williams
serves on the board of directors of several Canadian companies. Mr. Williams has
over 25 years of experience being directly or indirectly (CEO and CFO roles) responsible for the human resource function within large public and
non-public
corporations (Loblaw Companies Ltd., Shoppers Drug
Mart Corp. and Workplace Safety & Insurance Board). Mr. Williams also has extensive experience in the role and requirements of compensation committee members, having served on five public company and three
non-public
company boards. He was chair of the board of four of these and served various terms on the compensation committee for all of them. He has extensive experience in areas such as salary administration,
compensation reward programs, pension plan design and administration, labour relations, health and safety, succession planning, organizational design and transformation, and merger integrations. Mr. Williams is a graduate of the ICD Corporate
Governance College and is a member of the Chartered Professional Accountants of Ontario.
|
Compensation Committee Interlocks and
Insider Participation
There were no reportable interlocks or insider participation affecting the Corporations compensation
committee during the year ended December 31, 2016. None of our executive officers serves as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our board of
directors or compensation committee. None of the members of Mitels compensation committee is a current or former officer of Mitel. See Interest of Management, Nominees and Others in Material Transactions Transactions involving
Related Parties below for a description of related-person transactions.
-
16
-
The Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee is currently composed of five directors namely, Peter Charbonneau (Chairman), Benjamin Ball,
John McHugh, Sudhakar Ramakrishna and David Williams. The committee was formed in March 2010, at which time Peter Charbonneau, Benjamin Ball and John McHugh became members. David Williams was appointed in February 2014 and Sudhakar Ramakrishna was
appointed in August 2015. All of the members of the Nominating and Corporate Governance Committee, including the Chairman, are independent directors, as determined by the Mitel Board in accordance with NASDAQ independence rules and Canadian
securities rules, ensuring the committee receives diverse input into the Corporations board nomination process and functions independently.
The Nominating and Corporate Governance Committee assists the Mitel Board in identifying and/or recommending director candidates for election
at the next annual meeting of shareholders. The committee also oversees and assesses the functioning of the Mitel Board and the committees of the Mitel Board, and the implementation and assessment of effective corporate governance principles. The
committee conducts annual surveys of directors regarding effectiveness of the Mitel Board, the Chairman and each director, each committee and its chairman, and the individual directors. The committee also annually assesses the effectiveness of the
Mitel Board and each committee as a whole and makes recommendations to the Mitel Board.
|
14.
|
Director Compensation
|
Except as noted below, all
non-employee
directors receive role-based fees paid quarterly as set forth
below:
|
|
|
|
|
Annual service on the Mitel Board (other than Chair)
|
|
$
|
50,000
|
|
Annual service as Chair of the Mitel Board
|
|
$
|
125,000
|
|
Annual service as member of the Audit Committee (other than Chair)
|
|
$
|
15,000
|
|
Annual service as Chair of the Audit Committee
|
|
$
|
25,000
|
|
Annual service as a member of the Compensation Committee (other than Chair)
|
|
$
|
10,000
|
|
Annual service as Chair of the Compensation Committee
|
|
$
|
15,000
|
|
Annual service as a member of the Nominating and Corporate Governance Committee (other than
Chair)
|
|
$
|
8,000
|
|
Annual service as Chair of the Nominating and Corporate Governance Committee
|
|
$
|
12,000
|
|
|
|
|
|
|
Annual service on the Mitel Board
|
|
|
10,000 stock options, and
10,000 restricted stock units
|
|
Initial grant for new directors
|
|
|
45,000 stock options
|
|
A director is reimbursed for any
out-of-pocket
expenses incurred in connection with attending Mitel Board or committee meetings, as well as Canadian tax return preparation fees for
non-Canadian
directors.
Richard McBee, who is the Chief Executive Officer of Mitel, does not receive
annual service retainers or fees for serving as a director.
For the year ended December 31, 2016, each
non-employee
director could elect to receive the above retainers in cash, in the form of equity awards or a mix of both. Stock options and restricted stock units (RSUs) were granted pursuant to the 2014
Equity Incentive Plan.
The annual grants of stock options and RSUs cliff vest at the end of the calendar year. Upon vesting, the RSUs are
settled for Mitel common shares. Should a director leave before the end of the calendar year (other than for cause), vesting of the annual grants is
pro-rated
and the remaining unvested equity awards
terminate. The initial grant of 45,000 stock options vests in thirds each year on the anniversary of the date of grant. Fees paid in the form of equity incentives are split evenly in value between stock options, valued using the Black-Scholes
valuation methodology, and RSUs, valued using the closing price per Mitel common share on the NASDAQ on the date of grant. The strike price of each stock option is the closing price per Mitel common share on the NASDAQ on the date of grant.
-
17
-
There were
nil stock options exercised by directors during the year ended
December 31, 2016. There were 85,105 RSUs vested for directors during the year ended December 31, 2016.
The Compensation
Committee has reviewed directors compensation for the year ended December 31, 2016 and preceding years. In fiscal 2014, 2015 and 2016, the Compensation Committee retained Radford, a part of Aon Hewitt, a business unit of Aon plc
(Radford), for assistance to ensure that our director compensation packages remain competitive within our industry. For the 2017 equity-based incentive awards, Radford has recommended that we discontinue the granting of stock options for
non-employee
directors based on institutional investor preference for the use of other compensation vehicles such as RSUs only. This recommendation will be presented to the Compensation Committee for
consideration at our next fiscal (Q1) quarterly meeting to be held in May 2017. See Section 16 Executive Officer Compensation.
There are no loans or other indebtedness outstanding from the Corporation or any subsidiary to any of its directors, nor has any director
received any financial assistance from the Corporation or from any subsidiary.
In accordance with our Insider Trading Policy, directors
are prohibited from hedging or otherwise undermining their alignment with shareholder interests resulting from their holdings of Mitel common shares and equity compensation awards.
The following table sets forth a summary of compensation paid for the year ended December 31, 2016 to the
non-executive
directors:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Fees
earned
($)
|
|
|
Share-
based
awards ($)
(1)
|
|
|
Option-
based
awards
($)
(1)
|
|
|
Non-equity
incentive
plan
compensation
($)
|
|
Pension
value
($)
|
|
All other
compensation
($)
|
|
Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
Benjamin H. Ball
(2)
|
|
|
73,000
|
|
|
|
71,700
|
|
|
|
31,500
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
176,200
|
|
Peter D. Charbonneau
|
|
|
87,000
|
|
|
|
71,700
|
|
|
|
31,500
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
190,200
|
|
Terence H. Matthews
|
|
|
-
|
|
|
|
138,199
|
|
|
|
98,001
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
236,200
|
|
John P. McHugh
|
|
|
-
|
|
|
|
110,702
|
|
|
|
70,498
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
181,200
|
|
Sudhakar Ramakrishna
|
|
|
73,000
|
|
|
|
71,700
|
|
|
|
31,500
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
176,200
|
|
David Williams
|
|
|
68,000
|
|
|
|
71,700
|
|
|
|
31,500
|
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
171,200
|
|
|
(1)
|
The compensation value of share-based awards is based on the fair value of the award on the grant date which is
equal to the closing Mitel stock price on the same day. The grant-date fair value of awarded RSUs is expensed on a straight-line basis over the vesting period of the award. The compensation value of option-based awards is based on the fair value of
the award on the grant date using the Black-Scholes option-pricing model for each award. The grant-date fair value of awarded options is expensed on a straight-line basis over the employee service period, which is the vesting period of the award.
Assumptions used in the Black-Scholes option-pricing model are summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
2016
|
|
|
|
|
|
Risk-free interest rate
|
|
|
1.3%
|
|
|
|
|
|
Dividends
|
|
|
0.0
|
|
|
|
|
|
Expected volatility
|
|
|
52.6
|
|
|
|
|
|
Annual forfeiture rate
|
|
|
0.0
|
|
|
|
|
|
Expected life of the options
|
|
|
5 years
|
|
|
|
|
|
Weighted average fair value per option
|
|
|
$3.11
|
|
|
|
|
(2)
|
Stock options granted in connection with Mr. Ball acting as a director of the Corporation were granted to
Francisco Partners Management, LLC of which Mr. Ball is a partner.
|
|
(3)
|
Martha Bejar joined the Board on March 10, 2017.
|
-
18
-
For information regarding stock options and RSUs outstanding for directors, see the section
entitled Equity Incentive and Other Compensation Plans below.
Non-Employee
Director Share
Ownership
Mitels corporate governance policies include share ownership guidelines for
non-employee
directors and executives (see Executive Officer Compensation section below). These guidelines call for each
non-employee
director to own Mitel common shares
having a value equal to at least three times the regular annual cash retainer, with a five-year period to attain that ownership level. Executives and directors who do not hold the requisite number of Mitel common shares at the end of the applicable
period will be required to hold 100% of any shares received as a result of any equity awards granted to them (net of shares sold or withheld to pay the exercise price of stock options or sold to pay the withholding tax.) To facilitate share
ownership, part of the
non-employee
directors compensation is an annual grant of RSUs and stock options. The equity awards issued are granted under the 2014 Equity Incentive Plan. As previously noted,
for the 2017 equity-based incentive awards, Radford has recommended that we discontinue the granting of stock options for our non-employee directors, which recommendation will be presented to the Compensation Committee for consideration in May 2017.
|
15.
|
Communication with the Mitel Board
|
Shareholders or others may contact the Mitel Board by mail to:
The Board of Directors
c/o
the Corporate Secretarys Office
Mitel Networks Corporation
350 Legget Drive
Ottawa,
Ontario, Canada
K2K 2W7
C.
|
COMPENSATION DISCUSSION AND ANALYSIS
|
|
16.
|
Executive Officer Compensation
|
The following Compensation Discussion & Analysis, referred to as the CD&A, describes the philosophy, objectives and structure of
our 2016 executive compensation program. This CD&A is intended to be read in conjunction with the tables beginning on page 26, which provide further historical compensation information for our following NEOs:
|
|
|
|
|
Name
|
|
Title
|
|
|
Richard D. McBee
|
|
President & Chief Executive Officer
|
|
|
Steven E. Spooner
|
|
Chief Financial Officer
|
|
|
Graham Bevington
|
|
Executive Vice President and Chief Sales Officer
|
|
|
Thomas G. Lokar
|
|
Executive Vice President and Chief Human Resources Officer
|
|
|
Jon D. Brinton
|
|
Executive Vice President and General Manager, Mitel Cloud Services
|
|
|
-
19
-
Quick CD&A Reference Guide
|
|
|
|
|
|
|
|
|
Executive Summary
|
|
Section I
|
|
|
|
|
Compensation Decision-Making Process
|
|
Section II
|
|
|
|
|
Elements of Compensation
|
|
Section III
|
|
|
|
|
Key Executive Compensation Program Changes Commencing in 2017
|
|
Section IV
|
|
|
|
|
Additional Compensation Policies and Practices
|
|
Section V
|
|
|
Mitels compensation program for executive officers is designed to attract, retain, motivate and engage highly skilled and experienced
individuals who excel in their field. The objective of the program is to focus our executives on the key business factors that affect shareholder value. Our executives are provided incentives to pursue and achieve our key strategic business goals.
For executives, the compensation program is designed to link pay to performance and is structured to reward both annual and long-term Corporation performance while not encouraging excessive risk taking.
As described below in this CD&A, a substantial portion of our NEOs compensation is performance-based or is linked to the value of
our share price. Annual incentives are awarded based on the achievement of
pre-established
performance targets for the fiscal year. Our equity incentive awards are primarily in the form of RSUs, which align
payouts with our share price. Executives also received stock option awards in 2016 which only have value if our share price increases after the grant date. The Compensation Committee believes that the compensation awarded to our executive officers
for fiscal 2016 described below was appropriate in light of Mitels performance during the fiscal year.
This CD&A describes
Mitels compensation philosophy and programs generally, and explains the compensation paid to the CEO, CFO and the three most highly compensated executives (the NEOs). Our 2016 executive compensation program was substantially similar to our
program in 2015. This CD&A also describes key compensation program changes we have made for 2017.
The Compensation Committee is
currently composed of three directors namely, Benjamin Ball (Chairman), John McHugh and David Williams. Benjamin Ball was appointed to the Compensation Committee in October 2007, John McHugh was appointed in June 2016 and David Williams was
appointed in March 2014.
We believe that spreading compensation across the three primary components of base pay, short-term incentive
plans and long-term incentive plans achieves our compensation objectives:
|
✓
|
Aligns the interests of management and shareholders
|
|
✓
|
Promotes
Pay-for-Performance
|
|
✓
|
Provides competitive executive pay levels
|
|
✓
|
Balances fixed and
at-risk
compensation appropriately
|
|
✓
|
Balances short-term and long-term focus appropriately
|
-
20
-
|
|
|
|
|
|
|
|
|
Best Practices We Employ
|
|
|
|
Practices We Avoid
|
|
|
|
✓
|
|
Pay for performance pay aligned with both corporate and individual performance
|
|
X
No uncapped incentive award payments
X
Hedging and
short sales are not permitted
X
Incentive program designs are not highly leveraged and do
not encourage excessive risk taking
X
No option
re-pricing
permitted
X
No guaranteed
bonuses
X
No discounted stock options
X
No excessive
perquisites
|
✓
|
|
Utilize multiple performance metrics over multiple time periods for balance and to avoid undue focus
on any particular measure, and to discourage short-term risk-taking at the expense of long term results
|
|
✓
|
|
Performance metrics are directly tied to value creation for shareholders
|
|
✓
|
|
Pay at risk 55.1% of the 2016 total direct compensation for the CEO (at target) is
at-risk
pay variable, contingent and not guaranteed
|
|
✓
|
|
Executive and director stock ownership guidelines
|
|
✓
|
|
Compensation Committee is comprised entirely of independent directors
|
|
✓
|
|
Compensation Committee engages an independent consultant
|
|
✓
|
|
Compensation Committee regularly meets in executive session without management present
|
|
|
|
|
|
✓
|
|
Annual risk assessment of the compensation program
|
|
|
|
|
Executive Officers
The following table sets forth information with respect to our executive officers as of March 31, 2017. Unless otherwise indicated below,
the business address for each of our executive officers is 350 Legget Drive, Ottawa, Ontario, Canada K2K 2W7.
|
|
|
|
|
|
|
|
|
Name and
Place
of Residence
|
|
Age
|
|
Position
|
|
Executive
Officer Since
|
|
Principal Occupation
|
Richard
D. McBee Dallas, Texas, United States
|
|
53
|
|
President and Chief
Executive Officer and
Director
|
|
January 19, 2011
|
|
President and Chief
Executive Officer, Mitel
|
Steven E.
Spooner Ottawa, Ontario, Canada
|
|
58
|
|
Chief Financial Officer
|
|
June 20, 2003
|
|
Chief Financial Officer,
Mitel
|
Robert D.
Agnes North Plains, Oregon, United States
|
|
58
|
|
Executive Vice President and President, Enterprise Division
|
|
August 4, 2014
|
|
Executive Vice President and President, Enterprise Division
|
Graham G.
Bevington Frisco, Texas, United States
|
|
57
|
|
Executive Vice President
and Chief Sales Officer
|
|
June 28, 2006
|
|
Executive Vice President
and Chief Sales Officer, Mitel
|
-
21
-
|
|
|
|
|
|
|
|
|
Name and
Place
of Residence
|
|
Age
|
|
Position
|
|
Executive
Officer Since
|
|
Principal Occupation
|
Jon D.
Brinton Peoria, Arizona, United States
|
|
52
|
|
Executive Vice President
and General Manager,
Mitel Cloud Services
|
|
May 1, 2011
|
|
Executive Vice President and General Manager,
Mitel
Cloud Services, Mitel
|
Wesley D.
Durow Lucas, Texas, United States
|
|
51
|
|
Chief Marketing Officer
|
|
April 6, 2015
|
|
Chief Marketing Officer, Mitel
|
Thomas G.
Lokar Frisco, Texas, United States
|
|
50
|
|
Executive Vice President and Chief Human Resources Officer
|
|
January 13, 2014
|
|
Executive Vice President and Chief Human Resource Officer, Mitel
|
Richard D. McBee,
who brings more than 25 years of experience in
telecommunications to the Corporation, was appointed President and Chief Executive Officer in January 2011. Prior to joining the Corporation, Mr. McBee served as President of the Communications & Enterprise Group of Danaher
Corporation. In this role, he was responsible for annual sales derived from carrier, enterprise, and SMB markets via both direct sales and channel partners. Mr. McBee joined Danaher in 2007 as President, Tektronix Communications, following the
acquisition by Danaher of Tektronix. During his 15 years with Tektronix, he held a variety of positions including Senior Vice President and General Manager, Communications Business Unit; Senior Vice President of Worldwide Sales, Service and
Marketing; and Vice President of Marketing & Strategic Initiatives. Mr. McBee holds a Masters Degree in Business Administration from the Chapman School of Business and Economics and graduated from the United States Air Force
Academy with a Bachelor of Science in 1986. Mr. McBee serves on the board of the Metroplex Technology Business Council in Texas.
Steven E. Spooner
joined us in June 2003 as Chief Financial Officer. Mr. Spooner has more than 33 years
of experience in corporate finance, mergers and acquisitions, corporate governance, strategic business planning and operational leadership with companies in the high technology and telecommunications sectors. Between April 2002 and
June 2003, he was an independent management consultant for various technology companies. From February 2000 to March 2002, Mr. Spooner was President and Chief Executive Officer of Stream Intelligent Networks Corp., a competitive
access provider and supplier of
point-to-point
high speed managed bandwidth. From February 1995 to February 2000, Mr. Spooner served as Vice President and
Chief Financial Officer of CrossKeys Systems Corporation, a publicly traded company between 1997 and 2001. Prior to that, Mr. Spooner was Vice President Finance and Corporate Controller of SHL Systemhouse Inc., also a publicly traded company.
He held progressively senior financial management responsibilities at Digital Equipment of Canada Ltd. from 1984 to 1990 and at Wang Canada Ltd. from 1990 to 1992. Mr. Spooner previously served as the Chair of the Finance and Audit Committee
and was a member of the Executive Committee and Nominating Committee of The Ottawa Hospital Foundation from February 2006 to June 2016. He also previously served on the Board for Magor Communications Corporation from March 2013 to November 2015.
Mr. Spooner is an honours Commerce graduate of Carleton University. He is a member of the Chartered Professional Accountants of Ontario (successor of the Institute of Chartered Accountants of Ontario) and in 2011 was elected by the Institute as
a Fellow of the Institute in recognition of outstanding career achievements and leadership contributions to the community and to the profession and received his FCPA credentials in 2013. Mr. Spooner also holds the ICD.D certification, having
completed the Directors Education Program of the Institute of Corporate Directors of Canada.
-
22
-
Robert D. Agnes
is our Executive Vice President and President,
Enterprise Division, responsible for strengthening and growing this important foundational business. Prior to this role, Mr. Agnes was Executive Vice President and General Manager of Mitels Asia-Pacific Operations, focused on implementing
the companys strategy in this key geography. With more than 30 years in global telecommunications organizations, Mr. Agnes is a results-driven leader with deep experience successfully growing businesses. Mr. Agnes began his
career as a software engineer with Hamilton Standard, a subsidiary of United Technologies. He moved to a sales engineer position with Tektronix, Inc., in 1985. For the next 21 years, he held various roles with Tektronix, including leading several
key businesses. Among his leadership roles at Tektronix, Mr. Agnes was Vice President and General Manager of the companys video business, Vice President and General Manager of Tektronix Berlin, head of Sales and Operations in the Pacific
region, and Vice President of Strategic Initiatives. Prior to his career at Tektronix, Mr. Agnes was President of Asia-Pacific for Lectra S.A.; Senior Vice President of Worldwide Sales and Marketing for
X-Rite
America, Inc.; Senior Vice President, Worldwide Marketing; and President of Asia-Pacific for PartMiner Worldwide, Inc. Mr. Agnes earned his Associate of Science in Electrical Engineering
(ASEE) from Hartford State Technical College (Hartford, Connecticut), and a Bachelor of Science degree in Computer Science from the University of Connecticut School of Engineering. He also holds a Master of Business Administration (MBA) from George
Fox University (Newburg, Oregon).
Graham G. Bevington
is our Executive Vice President and Chief Sales Officer
responsible for worldwide sales operations. Mr. Bevington has more than 25 years experience in the high-technology industry in sales and management positions. He has held several executive sales positions with the company and has been
responsible for Mitels growth and success in EMEA, Asia-Pacific and Central and Latin America. Mr. Bevington joined us in 2000 as Managing Director for EMEA. From 1997 until December 1999, he was Managing Director at DeTeWe Limited
and prior to that, Mr. Bevington was Sales Director at Shipton DeTeWe Limited from 1986 to 1997.
Jon D.
Brinton
is the Executive Vice President and General Manager Mitel Cloud Services, responsible for leading Mitels global cloud initiatives and Mitels U.S.-based communications services provider, Mitel NetSolutions. Mr. Brinton
joined the Corporation in 1999 through the acquisition of his own corporation, Network Services Agency, Inc. by
Inter-Tel
Technologies, Inc. (now known as Mitel Technologies, Inc.). Through the years,
Mr. Brinton has held various positions within the Corporation including: General Manager, Mitel Networks Solutions, Vice President of Networks Services, and President of Mitel NetSolutions, Inc. Mr. Brinton holds a Bachelor of Science
degree from Grand Canyon University.
Wesley D. Durow
joined us in April 2015 as Chief Marketing Officer as a
20-year
technology industry veteran with deep domain knowledge in cloud-based, real-time communications for both enterprises and service providers. Prior to joining Mitel, Mr. Durow was Vice President of Global
Marketing for Sonus Networks, Inc. Prior to that Mr. Durow was Chief Marketing Officer at Fonality, Inc. and served as Vice President and General Manager of Global Marketing for Avaya, Inc. Mr. Durow spent more than a decade with Nortel in
a number of leadership roles, including
end-to-end
marketing,
go-to-market,
and strategic
planning for their enterprise business. Mr. Durow began his career in advertising, helping to build brands for leading companies including American Airlines, Pace Picante Sauce, NationsBank (now Bank of America), The Dial Corporation and GTE
(now Verizon). Mr. Durow earned his Masters degree in Advertising from Northwestern University and his Bachelors degree in Marketing from the University of Northern Iowa.
Thomas G. Lokar
joined us in January 2014 as Executive Vice President and Chief Human Resources Officer. Mr. Lokar
has more than 18 years of experience in the technology sector and brings to the company deep expertise in organization effectiveness, talent management, and employee development from his previous time at several Fortune 500 companies. Prior to
joining the company, Mr. Lokar worked for Hewlett-Packard as Vice President of Human Resources for Enterprise Services, Global Outsourcing, and Application Services. Prior to that, he spent six years at AOL as Senior Vice President of HR
Products, Platforms, and Technology Development, before leaving to become president and
co-founder
of an online career management and talent management
start-up.
Mr. Lokar has also worked at Bristol Myers Squibb in leadership development, as well as seven years in management consulting. He holds a PhD in Industrial and Organizational Psychology from Kansas State University. He earned his BA from the
University of Detroit.
II.
|
Compensation Decision-Making Process
|
We set cash and equity compensation in part by considering compensation paid to executives at comparable companies. The Compensation Committee
reviews our executive officers overall compensation packages on an annual basis, and retains its exclusive power to determine all matters of executive compensation and benefits, although from time to time it seeks inputs and recommendations
from the CEO and Human Resources department. Our CEO does not make recommendations with respect to his own compensation or participate in the deliberations regarding the setting of his own compensation. The Compensation Committee reports to the
Mitel Board on the major items covered at each Compensation Committee meeting.
-
23
-
In determining executive compensation, the Compensation Committee also considers, among other
factors, the possible tax consequences to Mitel and to its executives. To maintain maximum flexibility in designing compensation programs, the Compensation Committee, while considering company tax deductibility as one of its factors in determining
compensation, will not limit compensation to those levels or types of compensation that are intended to be deductible. Further, the Compensation Committee considers the accounting consequences to Mitel of different compensation decisions;
however, this factor by itself does not drive compensation decisions.
Compensation Risk Oversight
The Compensation Committee has reviewed and discussed the concept of risk as it relates to Mitels compensation policies and it does not
believe that Mitels compensation policies encourage excessive or inappropriate risk taking. The Mitel Board and the Compensation Committee assess the risks associated with the structuring of our NEOs respective compensation arrangements
to ensure that none of the arrangements encourages a particular NEO or group of NEOs to take undue risk on behalf of the Corporation in order to maximize their respective compensation. The various elements of our NEO compensation packages are given
appropriate weighting to ensure that there is commonality across the NEOs compensation arrangements while structuring incentive arrangements for particular NEOs within their respective spheres of influence, whether based on the performance of
the Corporation as a whole or the performance of the region for which the NEO has responsibility.
The Compensation Committee has
concluded that the Corporations compensation policies and practices do not create risks that would have a material adverse effect on the Corporation.
Role of Consultants
Management also
retains independent compensation consultants from time to time to assist in determining executive compensation packages. The nature and scope of the services rendered by the consultants include:
|
|
|
assisting in identifying members of our peer group for comparison purposes;
|
|
|
|
helping to determine compensation levels at the peer group companies;
|
|
|
|
providing advice regarding executive compensation best practices and market trends;
|
|
|
|
assisting with the redesign of any compensation program, as needed;
|
|
|
|
preparing for and attending selected management or committee meetings; and
|
|
|
|
providing advice throughout the year.
|
The Compensation Committee retained Radford in 2015 to provide survey data and other benchmark information related to trends and competitive
practices for the director and executive compensation packages. In keeping with compensation industry practices, the 2015 data was aged 3% to adjust for market movement for 2016. As noted above under Director Compensation, Radford also
assisted the Corporation in reviewing our director compensation package. Radford was originally retained by the Corporation in April 2006. Executive and director compensation related fees billed by Radford to the Corporation during the year ended
December 31, 2016 were $163,324 (this included fees incurred for executive compensation work done relating to the proposed Polycom acquisition). None of the compensation committee members and none of our executive officers or directors have any
personal relationship with Radford. The Compensation Committee has determined that no conflicts of interest exist between the Corporation and Radford and has considered the independence of Radford in accordance with SEC and NASDAQ rules.
-
24
-
Peer Group
The reference market used to benchmark executive compensation is based on companies who operate in a similar industry segment, and survey
data. Mitels philosophy when setting base salaries, short term and long term incentives for its CEO and NEOs is to be mindful of that reference market and of the 50th percentile of that market. The Committee considers such reference market
information, but does not base its decisions on such information. The Committee also takes into account the CEOs and other NEOs individual performance and scope of responsibilities, as well as Corporation and business unit performance.
Our market positioning philosophy is aligned with our compensation philosophy ensuring that our compensation programs are competitive to market/peer companies and that compensation is closely tied to incentives.
For 2014 and 2015, the peer group consisted of the 17 companies listed below, of which three are Canadian and 14 are U.S. companies, operating
in the communications and computer networking industries:
|
|
|
|
|
|
|
|
ADTRAN, Inc.
|
|
Finisar Corporation
|
|
Plantronics, Inc.
|
|
|
|
Aruba Networks,
Inc.
|
|
Infinera Corporation
|
|
Polycom, Inc.
|
|
|
|
CAE Inc.
|
|
JDS Uniphase Corporation (now Viavi)
|
|
Riverbed Technology, Inc.
|
|
|
|
Ciena
Corporation
|
|
MacDonald, Dettwiler and Associates Ltd.
|
|
Super Micro Computer, Inc.
|
|
|
|
Constellation
Software Inc.
|
|
Netgear, Inc.
|
|
ViaSat, Inc.
|
|
|
|
Comtech
Telecommunications Inc.
|
|
NeuStar, Inc.
|
|
|
For 2016, the peer group consisted of the 20 companies listed below, of which two are Canadian and 18 are U.S.
companies, operating in the communications and computer networking industries. The change to our Peer Group from 2015 to 2016 primarily reflects changes within the existing peer group (through acquisitions for instance) and the addition of companies
that our Cloud Division competes against.
|
|
|
|
|
|
|
|
|
|
|
ADTRAN, Inc.
|
|
DH Corporation
|
|
Netgear, Inc.
|
|
ShoreTel
|
|
|
|
|
Broadsoft
|
|
Finisar Corporation
|
|
NeuStart, Inc.
|
|
Super Micro Computer, Inc.
|
|
|
|
|
Ciena
Corporation
|
|
Infinera Corporation
|
|
Plantronics, Inc.
|
|
Verint Systems
|
|
|
|
|
Constellation
Software Inc.
|
|
Interactive Intelligence Group
|
|
Polycom, Inc.
|
|
ViaSat, Inc.
|
|
|
|
|
Cornerstone
OnDemand
|
|
I2 Global
|
|
RingCentral
|
|
Viavi Solutions (JDS Uniphase)
|
In selecting this group of peers, the Corporation considered scoping criteria that are reflective of the size, scale and
complexity of Mitels businesses, including revenue, market capitalization, and headcount.
-
25
-
III.
|
Elements of Compensation
|
Compensation for executive officers is comprised primarily of three main components:
|
|
|
short-term incentive plans; and
|
|
|
|
long-term incentive plans.
|
We believe that our compensation program encourages our employees to remain focused on both our short-term and long-term goals. For example, our Annual
Incentive Plan measures performance on an annual basis, while our equity awards vest in installments over
3-4
years, which encourages our executives to focus on the long-term performance of the Corporation.
|
|
|
|
|
|
|
|
|
Pay Element
|
|
|
|
What it Does
|
|
|
|
Performance Measures
|
Base Salary
|
|
|
|
Provides competitive fixed pay to
help us attract and retain key talent
|
|
|
|
Job scope,
experience and market pay
|
|
|
|
Balances risk-taking concerns with pay for performance
|
|
|
|
|
|
|
|
Considers experience, expertise, individual performance and expected
contributions to the Corporation
|
|
|
|
|
Annual Management
Incentive Plan Awards
|
|
|
|
Provides an annual cash
incentive opportunity, earned based on the achievement of
pre-established
performance metrics
|
|
|
|
The Corporate measures established for 2016 awards include Adjusted EBITDA
1
for the Corporation
For certain NEOs, performance metrics included metrics related to divisional and regional
performance
|
|
|
|
Drives short-term performance
|
|
|
Performance Share Units and Restricted Stock
Units
|
|
|
|
PSUs and RSUs align the payout
with Corporation performance as indicated by Mitels stock price
|
|
|
|
Long-term stock price appreciation
Some awards vest based on achievement of targeted compound annual growth in stock price
|
|
|
|
Retains key talent
|
|
|
|
|
|
Fosters an environment focused on long-term growth
|
|
|
|
|
|
Directly ties the interests of our executives with those of long-term
shareholders
|
|
|
Stock Option Awards
|
|
|
|
Mitel is phasing out stock option awards as a key component of compensation to management
|
|
|
|
Long-term stock price appreciation
|
1
Adjusted EBITDA is a non-GAAP financial measure, as defined on page 28 of this proxy circular and on page 25 of Mitels Form 10-K.
-
26
-
Base Salaries
Individual salaries are determined by each officers experience, expertise, individual performance and expected contributions to the
Corporation. The Compensation Committee uses industry studies and comparables for reference purposes to assist in setting a range of base salaries for positions; however, these studies and comparables are only one factor that is reviewed in
determining base salary for each executive officer position. The Compensation Committee annually reviews each officers base salary and determines such salary based on the following factors:
|
|
|
Position and responsibility (takes into account promotions and any changes in role);
|
|
|
|
Job performance and expected future contributions;
|
|
|
|
Market factors (as described above); and
|
Upon concluding its 2016 review, the Compensation Committee determined to adjust base salaries as follows:
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
2014
($)
|
|
2015
($)
|
|
2016
($)
|
|
Adjustment for 2016
|
|
|
Richard D. McBee
|
|
700,000
|
|
775,000
|
|
813,750
|
|
5.0%
|
|
|
Steven E. Spooner
|
|
CAD 455,500
|
|
CAD 546,600
|
|
CAD 568,464
|
|
4.0%
|
|
|
Graham Bevington
|
|
GBP 198,275
|
|
375,600
|
|
390,000
|
|
3.8%
|
|
|
Thomas G. Lokar
|
|
300,000
|
|
321,000
|
|
335,000
|
|
4.4%
|
|
|
Jon D. Brinton
|
|
260,000
|
|
300,000
|
|
315,000
|
|
5.0%
|
|
|
In reviewing NEO compensation levels versus the market, it was determined that Mr. Spooners
benchmark required taking into account two factors. First, in addition to his responsibilities as CFO for Mitel, Mr. Spooner has responsibility for other areas outside of the normal duties of a CFO. Secondly, while Mr. Spooner is based in
Canada, it is essential that when benchmarking Mr. Spooner against the market that we consider the US competitive market as well based on the nature of Mitels operations.
Annual Management Incentive Plan
Mitel
utilizes annual cash incentive plan bonuses to reward the achievement of corporate objectives and to recognize individual performance. The amount of annual performance incentive or at risk component of an executive officers
compensation increases with the level of responsibility and impact that the executive officer has had and can have on overall performance. The Chief Executive Officer provides the Compensation Committee with an assessment of each executives
performance annually and provides input on the annual incentive plan achievement for each executive. Each named executive officers annual cash incentive award target was established as a percentage of base salary. Such target cash bonus
percentage was either negotiated and set forth in the NEOs employment agreement or otherwise established by the Compensation Committee. As displayed below, the annual performance incentive targets for the year ended December 31, 2016 for
the NEOs ranged between 65% and 125% of base salary, with NEOs eligible to receive up to 2 times their target award based on performance against
pre-established
financial metrics. The table below details the
potential payouts under the Annual Management Incentive Plan for our executives.
-
27
-
|
|
|
|
|
|
|
|
|
Name
|
|
Threshold Award
(% of Base Salary)
|
|
Target Award (%
of Base Salary)
|
|
Maximum Award
(% of Base Salary)
|
|
2016 Payout ($)
|
Rich McBee
|
|
50%
|
|
125%
|
|
200%
|
|
$696,773
|
Steven E. Spooner
|
|
50%
|
|
80%
|
|
200%
|
|
CAD$311,518
|
Graham Bevington
|
|
50%
|
|
75%
|
|
200%
|
|
$221,568
|
Thomas G. Lokar
|
|
50%
|
|
65%
|
|
150%
|
|
$183,454.
|
Jon D. Brinton
|
|
50%
|
|
65%
|
|
200%
|
|
$280,508
|
The targets for the financial objectives were established by our Compensation Committee and approved by the
Mitel Board. For 2016, our Compensation Committee determined that financial objectives for Messrs. McBee and Spooner would consist of Adjusted EBITDA
2
for the Corporation. For Mr. Bevington,
the financial objectives consisted of Enterprise Division Contribution Margin (70%) and Enterprise Division Revenue (30%). For Mr. Lokar, the financial objectives consisted of Adjusted
EBITDA
2
for the Corporation (50%) and Management By Objectives (50%). Management By Objectives consists of an assessment of individual performance based on performance against objectives approved
by the employees manager. Assessment of an individuals performance is not a formulaic process and judgement is exercised in determining the level of performance achieved. For Mr. Brinton, the financial objectives consisted of Cloud
Division Revenue (70%) and Cloud Division Contribution Margin (30%).
For 2016, the targets were established as follows:
|
|
|
|
|
|
|
|
|
Metric
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Actual
|
Adjusted EBITDA
2
($M USD)
|
|
$ 148.0
|
|
$ 185.0
|
|
$ 203.5
|
|
$ 161.6
|
Enterprise Division Revenue ($M USD)
|
|
$ 684.9
|
|
$ 856.1
|
|
$ 941.7
|
|
$ 838.1
|
Enterprise Division
Contribution Margin ($M USD)
|
|
$ 204.9
|
|
$ 256.1
|
|
$ 281.7
|
|
$ 221.9
|
Cloud Division Revenue ($M USD)
|
|
$ 118.4
|
|
$ 148.0
|
|
$ 162.8
|
|
$ 149.5
|
Cloud Division Contribution Margin ($M USD)
|
|
$ 3.8
|
|
$ 4.7
|
|
$ 5.2
|
|
$ 6.8
|
2
Adjusted EBITDA is a non-GAAP financial measure, as defined on page 28 of this proxy circular and on page 25 of Mitels Form 10-K.
Based on 2016 performance, each NEO earned between 68.5% and 137% of their target bonus.
-
28
-
Long-Term Incentive Plans
The Compensation Committee considers equity-based long-term incentive compensation to be a fundamental component of Mitels
executives compensation program. Our LTIP, effective 2017, now consists of two equity components time-based RSUs and, beginning in 2017, for NEOs and other executives reporting directly to the CEO, PSUs. The performance based stock
units have replaced stock options as an equity vehicle for our executives. We believe that grants of PSUs and RSUs under our equity incentive plans assist us in retaining employees and attracting critical key talent by providing them with an
opportunity to share in any increase in shareholder value. Additionally, we believe that the award of stock-based compensation and incentives is an effective way of aligning our executives interests with the goal of enhancing shareholder
value. As a result of the direct relationship between the value of an equity award and Mitels stock price, we believe that our equity awards motivate executives to manage Mitels business in a manner that is consistent with shareholder
interests, as well as align executives interests with the long-term interests of our shareholders. To that end, the time-based RSUs generally vest over 4 years, while PSUs vest only at the end of a three-year performance period if threshold
compound annual stock price growth is achieved. RSUs constitute 50% of the value of an award of stock-based compensation at the time of the award, and PSUs constitute the remaining 50%. Primary factors considered in granting equity stock awards and
determining the size of grants to executives are prior performance and their level of responsibility. Additionally, we may grant equity awards in order to attract new executive officers and to recognize job promotions.
The Chief Executive Officer recommends levels of equity awards including stock options and RSUs, and commencing in 2017, PSUs, for the NEOs to
the Compensation Committee based on skills, responsibilities and performance. Previous grants of equity awards are also taken into consideration. During the year ended December 31, 2016, the committee determined to grant 651,750 options to the
NEOs at a strike price and grant date fair value of $7.17 and $3.15 per share respectively and 533,250 RSUs at a grant date fair value of $7.17. The time-based RSUs granted in 2016 vest over 4 years (25% each year), while the option awards granted
for 2016 vest over 4 years also (1/16 every quarter). For our NEOs, the total equity grant in 2016 was split 33% in options and 67% in RSUs. The 2016 awards are reflected in the 2016 Executive Equity Awards table on page 38.
IV.
|
Key Executive Compensation Program Changes Commencing in 2017
|
To align executive compensation more closely with the Corporations operating and stock price performance, the Compensation Committee has
made several key changes to the design of the Corporations executive compensation program commencing in 2017. The Compensation Committee has retained Radford to assist in the review of and to make recommendations to the Compensation Committee
in respect of the component elements of the Corporations executive compensation program for 2017 and beyond. In reviewing and implementing a 2017 executive compensation program, the Compensation has taken into account governance best practices
and the policies and preferences of its shareholders. The Compensation Committee believes that the changes that have been made for 2017, together with certain risk mitigators previously adopted, have significantly strengthened pay for performance
alignment for the Corporations CEO and other NEOs.
Majority Performance-Based Long Term Incentives
. In
previous years, the Compensation Committee has granted equity-based long term incentives comprised of 67% RSUs and 33% stock options. To further enhance the performance-based portion of the executive compensation program, in 2017 the Corporation
introduced a stock-based performance element as a key component of its overall executive compensation program and shifted the programs structure to 50% PSUs and 50% RSUs. In addition, and as discussed further below, the Compensation Committee
continues to be mindful of the median of the competitive market in terms of long term equity-based incentives, and as a result PSU awards granted in 2017 will be made with this in mind. After careful consideration of various performance-based
options and alternatives, the performance measure for the PSUs under the 2017 program will be based on the compound annual growth rate, or CAGR, of the Corporations stock price at the end of a three-year performance period. The three year
target CAGR is 15%, and to receive a payout, the CEO and NEOs must be employed at the time of measurement, vesting and payout. The Compensation Committee believes that by expressly conditioning payout under a PSU grant on the achievement of
specified levels of stock price performance, this element of the executive compensation program now directly aligns the interests of the CEO and the other NEOs with the shareholders in respect of stock price growth.
Annual Performance-Based Short Term Cash Incentives
. To further tighten alignment between short term
incentive compensation and operating performance, the Compensation Committee has structured the CEOs short term incentive opportunity based on two key Corporation-wide metrics, namely, Adjusted EBITDA
3
(80%) and, new for 2017, revenue component (20%). The Compensation Committee also increased the minimum performance level necessary for the short term incentive to be earned, establishing the
threshold level at 95% of the targets. No changes have been made to the target percentages of base salary representing the short term incentive opportunity, and the committee has capped the maximum performance factor multiplier at 200%. Similarly,
for the NEOs, the Compensation Committee also tightened the alignment for the other NEOs by increasing the threshold level necessary for a payout from 80% to 85% of target for any measure based on Adjusted EBITDA
4
, revenue or margin. These changes to the short term incentive component serve to further tie payouts to the achievement of higher levels of certain key performance measures.
3
Adjusted EBITDA is a non-GAAP financial measure. Mitel defines Adjusted EBITDA as net income (loss),
adjusted for interest expense, income tax recovery, amortization and depreciation, special charges and restructuring costs, stock-based compensation, purchase accounting adjustments and goodwill as set out more fully on page 26 of Mitels Form
10-K. Management assesses performance on a reported basis and on an adjusted basis and considers both to be useful in its assessment.
4
Adjusted EBITDA is a non-GAAP financial measure, as discussed on page 28 of this proxy circular and on page 25 of Mitels Form 10-K.
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29
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Base Salaries
. The Compensation Committee has determined that there
will be no increases to the base salaries of the CEO or the other NEOs in 2017. As discussed above, the committee also did not increase target bonus opportunities. As a result, the target total cash compensation will remain unchanged from the prior
year. The Compensation Committee also took into account that base salaries among the CEO and NEOs generally approximate the 50
th
percentile of the market, with some variance by position and
individual responsibilities, and has determined to keep base salaries within that range.
Compensation-Setting
Considerations.
The Compensation Committee was mindful of the composite of the competitive benchmark compensation (see discussion below), and of the cash compensation paid to the executives of the competitive market group with
similar roles. However, while the committee continued its past practice of obtaining competitive, positional market data, this was not the driving factor in the determination of the total direct compensation for 2017. As a result, the Compensation
Committee has made pay decisions for the NEOs based on a variety of individual factors including prior year company, business unit and individual performance, and scope of responsibility.
Reference Sources for Competitive Compensation
. For 2017, the Compensation Committee reviewed the peer group of
companies and updated the list from the prior year in order to include cloud-based competitors and to replace peer companies that have merged or that have been acquired, for a total peer group composed of 20 (2 Canadian companies and 18 U.S.)
companies. The Corporation is positioned at the 56
th
percentile of the peer group in terms of revenues, and at the 30
th
percentile in terms of
operating income. In addition to the peer group of companies, the Compensation Committee also incorporated information from the Radford Global Technology Survey, and blended this information together to arrive at a composite of competitive market
compensation.
Risk Mitigating Factors
. To further enhance the alignment of the Corporations executive
compensation program with the interests of shareholders, the Corporation continues to enforce the following policies:
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Stock ownership guidelines for executive officers and directors. The CEO is required to hold 3.0x his base
salary, and the other NEOs are required to hold 1.5x their respective base salaries, to be achieved within a five year period. If the guidelines are not met within the prescribed time period, the CEO and the other NEOs must hold 100% of any shares
received through equity-based incentive awards (net of shares sold or withheld to pay the exercise price of stock options or sold to pay withholding tax) until the prescribed ownership levels are achieved. These guidelines reinforce the common
interest of shareholders and the CEO and executive officers with stock price performance.
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Prohibition on hedging and short sales of Corporation securities. This prevents Corporation insiders from
reducing their risk of stock ownership.
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Caps on payouts under both the long term and short term incentive programs. This is intended to limit the
possibility of excessive risk taking to the maximum set level.
|
The Compensation Committee believes that the changes
made to the Corporations 2017 executive compensation program, together with risk mitigators that the Corporation previously put in place, have substantially increased the pay for performance alignment of the program.
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30
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V.
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Additional Compensation Policies & Practices
|
Insider Trading Policy (including anti-hedging)
In accordance with our Insider Trading Policy, an NEO is not permitted to purchase financial instruments, including, for greater certainty,
prepaid variable forward contracts, equity swaps, collars, or units of exchange funds, that are designed to hedge or offset a decrease in market value of equity securities granted as compensation or held, directly or indirectly, by the NEO.
Executive Share Ownership Guidelines
Mitels corporate governance policies include share ownership guidelines for
non-employee
directors (as described in the Director Compensation section above) and executive officers. These guidelines are as follows:
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|
|
Role
|
|
Ownership Requirement (as a
multiple of base salary)
|
CEO
|
|
3x
|
All other executive officers
|
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1.5x
|
All executives have a five-year period to attain these ownership levels. Executives and directors who do not
hold the requisite number of Mitel shares at the end or the applicable period will be required to hold 100% of any shares received as a result of any equity awards granted to them (net of shares sold or withheld to pay the exercise price of stock
options or sold to pay the withholding tax). RSUs and options granted under Mitels equity compensation plans are not included when determining whether an executive satisfies the applicable minimum ownership guideline.
As of March 31, 2017, all executives were in compliance with their share ownership guideline in that they had either already attained or
they still have time left to achieve the required level of share ownership.
Performance Graph
The following graph compares the total cumulative return of a shareholder who invested $100 in Mitels common shares over the five-year
period ended December 31, 2016 compared to the total cumulative return of the NASDAQ Composite Indices and the NASDAQ Telecommunications Index.
-
31
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The NEO total compensation (as a group and as reported in the Summary Compensation Table) has not been
historically based on performance of the Corporations share price, however, the trend in the total compensation of the NEOs has generally corresponded to the trend shown in the performance graph, excluding the impact of individual performance
factors and increases in compensation due to promotion. Mitel has historically determined compensation and related adjustments annually based on a number of factors including market competitive rates, reviewing the compensation peer group annually
to ensure the comparators used to assess competitiveness are aligned in terms of business size, scope, and revenue. As the Corporation has completed acquisitions, the comparators have increased in size and complexity over time, resulting in
increased pay. Mitel has made adjustments to the CEO and executive team compensation taking into consideration the peer median each year, base salary, target incentives, and annual equity values. As such, reported values may not correspond with
share price movement as the size of equity grants reported in the Summary Compensation Table do not consider shareholder returns, but more importantly, the likely final value realized by an NEO is directly related to performance of the
Corporations share price; where the share price drops between the time of grant and when the equity vests, the value vesting reflects the lower share price, and can be significantly lower than the value granted and reported in the Summary
Compensation Table. Annual performance incentive targets for our NEOs has been primarily based on the financial performance of the Corporation in order to provide added incentive to our NEOs to focus on their respective roles within the Corporation
and their ability to continue to strengthen the Corporations performance (see
Annual or Short-term Incentive Plans above
). For key changes to our executive compensation program commencing in 2017, please see Section IV.
-
32
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Summary Compensation Table
The following table sets forth a summary of compensation paid during the year ended December 31, 2016, referred to in the table below as
2016, the year ended December 31, 2015, referred to in the table below as 2015, and during the year ended December 31, 2014 referred to in the table below as 2014:
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Name and
Principal
Position
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Year
|
|
Salary
($)
(1)
|
|
|
Bonus
($)
|
|
|
Share-
based
Awards
($)
(2)
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Option-
based
Awards
($)
(3)
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|
|
Non-equity
annual
incentive
plan
compensation
($)
|
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Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
(4)
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All Other
Compensation
($)
(5)
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Total
($)
|
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Richard D. McBee
President & Chief Executive Officer
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2016
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806,894
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542,636
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1,645,515
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|
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883,575
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696,773
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180,556
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4,755,949
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2015
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762,019
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2,262,525
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1,122,500
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654,900
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|
|
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25,950
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4,827,894
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2014
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696,154
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1,166,694
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1,172,500
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1,513,008
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|
|
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20,856
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4,569,212
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Steven E. Spooner
Chief Financial Officer
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2016
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414,905
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319,989
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967,950
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519,750
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235,196
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28,354
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2,486,144
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2015
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419,016
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905,010
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444,510
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218,782
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26,412
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2,013,730
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2014
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412,805
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|
|
|
|
|
|
|
349,806
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351,750
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481,593
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32,641
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1,628,595
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Graham Bevington
Executive Vice President and Chief Sales Officer
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2016
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387,508
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72,013
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483,975
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259,875
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253,295
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237,628
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26,981
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1,721,275
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2015
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356,994
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679,970
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333,607
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115,520
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(6)
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98,592
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1,584,683
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2014
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291,696
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116,265
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186,700
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221,530
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176,566
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127,369
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1,120,126
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Thomas G. Lokar
Chief Human Resources Officer
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2016
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332,577
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68,823
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435,578
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233,888
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183,454
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24,129
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1,278,449
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Jon D. Brinton
Executive Vice President and General Manager, Mitel Cloud Services
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2016
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312,369
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29,218
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290,385
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155,925
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280,508
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18,682
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1,087,087
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(1)
|
Compensation to Mr. Spooner is paid in Canadian dollars, but converted to U.S. dollars at the average rate for the relevant period. The Canadian dollar salaries for 2016, 2015, and 2014 are as follows:
2016C$549,543 2015C$530,837 and 2014C$453,143.
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Compensation to Mr. Bevington from January 1, 2015 to July 3 2015 was paid in British pounds sterling but converted to U.S. dollars at the average rate for the relevant period. The British pounds sterling
salary for 2015 and 2014 for Mr. Bevington is as follows: 2015£115,369 and 2014£176,300. Compensation for July 4, 2015 to December 31, 2015, and all of 2016 was paid in U.S. dollars.
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(2)
|
The compensation value of share-based awards is based on the fair value of the award on the grant date which is equal to the closing Mitel stock price on the same day. The grant-date fair value of awarded RSUs is
expensed on a straight-line basis over the vesting period of the award.
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(3)
|
The compensation value of option-based awards is based on the fair value of the award on the grant date using the Black-Scholes option-pricing model for each award commensurate with Topic 718. The grant-date fair value
of awarded options is expensed on a straight-line basis over the employee service period, which is the vesting period of the award. Assumptions used in the Black-Scholes option-pricing model are summarized as follows:
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33
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Year Ended December 31,
2016
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Year Ended December 31,
2015
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Year Ended December 31,
2014
|
Risk-free interest rate
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1.3%
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1.5%
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1.6%
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Dividends
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0.0
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0.0
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0.0
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Expected volatility
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52.0
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52.0
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55.0
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Annual forfeiture rate
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|
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10.0
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|
|
|
|
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10.0
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10.0
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Expected life of the options
|
|
|
|
|
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5 years
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|
|
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5 years
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5 years
|
Weighted average fair value per option
|
|
|
|
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|
$3.15
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|
|
|
|
|
$4.18
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|
|
|
|
|
$4.57
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(4)
|
Change in pension value is related to a defined benefit plan that was closed to new service in November 2012. Mitel has no deferred compensation earnings.
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(5)
|
For fiscal 2016, all other compensation includes contributions under defined contribution plan, car allowance, relocation assistance, tax equalization payment, and other perquisites and personal benefits, as set forth
in the table below.
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Name
|
|
|
|
|
Matching
contributions
under defined
contribution
plan
($)
|
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|
|
|
Car allowance
($)
|
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|
|
Relocation
assistance ($)
|
|
|
|
|
|
Tax equalization
payment ($)
|
|
|
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|
|
Other ($)
|
|
Richard D. McBee
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7,950
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18,000
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|
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|
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150,502
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4,104
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Steven E. Spooner
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14,714
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9,060
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4,580
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Graham Bevington
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8,383
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14,848
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3,750
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Thomas G. Lokar
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|
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|
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7,389
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8,000
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8,740
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Jon D. Brinton
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|
7,006
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8,000
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|
3,676
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|
(6)
|
For fiscal 2015, the change in the pension value was a decline of $57,306.
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Equity Incentive and Other Compensation Plans
2006 Equity Incentive Plan
The
2006 Equity Incentive Plan was established to assist in attracting, retaining and motivating employees, directors, officers and consultants through performance related incentives. The 2006 Equity Incentive Plan provided flexibility and choice in the
types of equity compensation awards, including options, deferred share units, RSUs, performance share units and other share-based awards. Prior to March 5, 2010, the 2006 Equity Incentive Plan provided that, unless otherwise determined by the
Compensation Committee,
one-quarter
of the Mitel common shares that an option holder is entitled to purchase become eligible for purchase on each of the first, second, third and fourth anniversaries of the
date of grant, and that options expire on the fifth anniversary of the date of grant. The 2006 Equity Incentive Plan was amended on March 5, 2010 such that, unless otherwise determined by the Compensation Committee, any options granted after
that date will vest as to
one-sixteenth
of the Mitel common shares that an option holder is entitled to purchase on the date which is three months after the date of grant and on each subsequent quarter, and
that options expire on the seventh anniversary of the date of grant. The 2006 Equity Incentive Plan provides that in no event may an option remain exercisable beyond the tenth anniversary of the date of grant.
As of the date hereof, options to acquire 3,990,589 Mitel common shares and restricted stock unit awards for 58,300 Mitel common shares were
granted and outstanding under the 2006 Equity Incentive Plan and options to acquire 3,661,771 Mitel common shares vested under the 2006 Equity Incentive Plan. During the year ended December 31, 2016, there were 70,150 vested RSUs under the 2006
Equity Incentive Plan. Effective May 8, 2014, new equity grants were made under the 2014 Equity Incentive Plan (described below). Shares subject to outstanding awards under the 2006 Equity Incentive Plan which lapse, expire or are forfeited or
terminated will no longer become available for grants under this plan.
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34
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2014 Equity Incentive Plan
The Corporation adopted the 2014 Equity Incentive Plan on May 8, 2014, which is referred to as the 2014 Equity Incentive Plan.
The 2014 Equity Incentive Plan provides that the Compensation Committee is authorized to determine the individuals to whom equity awards will
be granted, the number of Mitel common shares subject to equity grants and other terms and conditions of equity grants. Other than the number of shares available for grant under the 2014 Equity Incentive Plan and the term of the 2014 Equity
Incentive Plan, the 2014 Equity Incentive Plan is substantially similar to the 2006 Equity Incentive Plan, except that whereas no RSUs granted pursuant to the 2006 Equity Incentive Plan could vest and be payable after December 31 of the third
calendar year following the year of service for which the RSU was granted, under the 2014 Equity Incentive Plan the duration of the vesting period and other vesting terms applicable to the grant of RSUs is set out in the applicable Award Agreement
without any such restriction. In addition, the 2006 Equity Incentive Plan contained an evergreen provision in which the number of Mitel common shares authorized for issuance under the 2006 Equity Incentive Plan increased by 3% on each of
March 5, 2011, 2012 and 2013. In contrast, the number of Mitel common shares authorized for issuance under the 2014 Equity Incentive Plan is fixed at 8,900,000 Mitel common shares. The 2014 Equity Incentive Plan will expire no later than 2024.
As of the date hereof, options to acquire 2,455,879 Mitel common shares, RSUs for 3,516,911 Mitel common shares and performance share
units to acquire 894,000 Mitel common shares (if maximum performance is achieved) were granted and outstanding under the 2014 Equity Incentive Plan. During the year ended December 31, 2016, we granted options to acquire 919,806 Mitel common
shares and RSUs for 1,824,162 Mitel common shares under the 2014 Equity Incentive Plan and options to acquire 533,633 Mitel common shares vested under the 2014 Equity Incentive Plan. During the year ended December 31, 2016, there were 671,159
vested RSUs under the 2014 Equity Incentive Plan.
2017 Omnibus Incentive Plan
The Corporation intends to place before Shareholders at the Meeting, the 2017 Omnibus Incentive Plan (the 2017 Plan) for approval.
The 2017 Plan will have 10,000,000 Mitel common shares available for issuance through a variety of equity compensation awards including options, deferred share units, RSUs, performance share units and other share-based awards. In addition, the 2017
Plan includes provisions that are intended to allow Mitel to make cash bonus awards that could be eligible for a U.S. tax deduction under Section 162(m) of the Tax Code if the Compensation Committee so desires. See the description of the prior
Equity Incentive Plans immediately below and Business to be Transacted at the Meeting Ordinary Resolution No. 1 The 2017 Omnibus Incentive Plan below for further details on the 2017 Plan. No awards have been made under
this Plan.
Material Terms of the 2006 Equity Incentive Plan and the 2014 Equity Incentive Plan:
Terminations
Subject to certain
provisions relating to the termination of the participants employment, term of office or engagement with the Corporation by virtue of the participants death, disability or retirement, the 2006 Equity Incentive Plan and the 2014 Equity
Incentive Plan, which are collectively referred to as the Equity Incentive Plans, provide that:
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in respect of termination without cause, unless otherwise specified in the award agreement with the
participant, any options that are exercisable at the date of such termination may be exercised for a period of ninety (90) days after the termination date or for the remaining term of such option, whichever is lesser. Any options that are not
yet exercisable will immediately expire and be cancelled and any other awards that have not yet vested are immediately forfeited to the Corporation.
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in respect of a voluntary resignation of a participant (other than a director), all options, to the extent
they were exercisable at the date of such resignation, may be exercised for a period of thirty (30) days after the date of resignation or for the remaining term of such option, whichever is lesser. Any options that are not yet exercisable will
immediately expire and be cancelled and any other awards that have not yet vested are immediately forfeited to the Corporation.
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in respect of termination of employment or services for cause of a participant (or for a breach of fiduciary
duty in the case of a director), any options and any other awards held by the participant, whether or not exercisable at the termination date, will immediately expire and be cancelled.
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35
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in respect of termination of a directors appointment (other than for breach of fiduciary duty), the
Compensation Committee may permit the exercise of all options held by such director, whether or not exercisable at the termination date and provide for the vesting of any or all other awards held by the director on the termination date.
|
Other specific provisions apply upon the death of a holder of deferred share units of the Corporation.
Eligibility
Persons eligible to receive
awards under the Equity Incentive Plans are employees and directors of Mitel and its subsidiaries, as well as other individuals, as determined by the Compensation Committee, who perform services for Mitel or a subsidiary in the capacity of a
consultant.
Participation Limits
The number of Mitel common shares issuable under the Equity Incentive Plans to persons who are reporting insiders (as defined in Part VI of
the TSX Company Manual), at any time, under all security-based compensation arrangements of the Corporation, cannot exceed 10% of issued and outstanding Mitel common shares. The number of Mitel common shares issued under the Equity Incentive Plans
to such insiders, within any one year period, under all security-based compensation arrangements of the Corporation, cannot exceed 10% of Mitels issued and outstanding Mitel common shares.
Exercise Price of Options
The exercise
price per share for each option issued under the Equity Incentive Plans may not be less than 100% of the closing price of the Mitel common shares on the trading day immediately preceding the date of grant.
Change of Control
The Equity Incentive
Plans provide that, unless otherwise determined by the Compensation Committee or the Mitel Board, any options outstanding immediately prior to the occurrence of a Change in Control (as defined in the Equity Incentive Plans) but which are not then
exercisable, shall terminate and be cancelled upon the occurrence of a Change in Control and shall be of no further force or effect. Unless otherwise determined by the Mitel Board or the Compensation Committee, any vested outstanding options that
are
in-the-money
shall be cashed out as of the date of such Change in Control or other date as determined by the Compensation Committee or the Mitel Board. The Mitel
Board or Compensation Committee shall also have the right to provide for the acceleration of vesting of any outstanding options or to provide for the conversion or exchange of any option into or for options, right or other securities in any entity
participating in or resulting from the Change of Control.
In addition, unless otherwise determined by the Compensation Committee or the
Mitel Board, any unvested or unearned restricted share units, deferred share units, performance share units or other share-based awards outstanding immediately prior to the occurrence of a Change in Control shall terminate and be cancelled. The
Board or the Compensation Committee shall, however, have the right to accelerate the vesting or determine that any restricted share units, deferred share units, performance share units or other share-based awards outstanding immediately prior to the
occurrence of Change in Control shall become fully vested and fully earned upon the occurrence of such event.
Assignment
Subject to certain exercise rights for options held by a participant upon death, disability or retirement, no assignment or transfer of any
awards, whether voluntary, involuntary, by operation of law or otherwise is permitted. Notwithstanding the foregoing, an eligible participant may transfer an award (other than an award of incentive stock options) to a permitted assign and an award
of incentive stock options may only be transferred by will or by the law of descent and distribution.
-
36
-
Amendments to the Equity Incentive Plans
The Mitel Board may, without notice or shareholder approval, at any time, amend the Equity Incentive Plans, provided that such amendment does
not alter or impair any rights or increase any obligations with respect to an award previously granted under the Equity Incentive Plans, unless consented to by the affected participant. Specifically, the Mitel Board may amend the Equity Incentive
Plans without shareholder notice or approval for the following amendments:
|
|
|
Amend the general vesting provisions of an award;
|
|
|
|
Amend the general term of an option provided that no option held by an insider may extend beyond its original
expiry date and no option may be exercised beyond the tenth anniversary of the date of grant;
|
|
|
|
Amend any of the provisions contained in article 9 (Termination of Employment) of the Equity Incentive Plans;
|
|
|
|
Add covenants of the Corporation for the protection of directors, employees and consultants;
|
|
|
|
Amend any provision as may be necessary or desirable with respect to matters that may be expedient to make
such amendment in the Mitel Boards good faith opinion; and
|
|
|
|
Change or correct any provision required to cure or correct any ambiguity, defect, inconsistent provision,
clerical omission, mistake or manifest error.
|
|
|
|
Notwithstanding the above, none of the following amendments shall be made to the Equity Incentive Plans
without approval of the TSX and the NASDAQ, to the extent such approval is required, and the approval of shareholders in accordance with the requirements of such exchange(s):
|
|
|
|
Increase the number of Mitel common shares issuable under the Equity Incentive Plans (except in connection
with a Change in Control or pursuant to the provisions of the Equity Incentive Plan);
|
|
|
|
Increase the number of Mitel common shares issuable to insiders (except in connection with a Change in Control
or pursuant to the provisions of the Equity Incentive Plans);
|
|
|
|
Increase the number of Mitel common shares issuable to directors;
|
|
|
|
Amend the exercise period of any options held by insiders;
|
|
|
|
Extend the expiration of an option beyond ten (10) years from the date of grant;
|
|
|
|
Reduce the exercise price of any options held by insiders (except in connection with the purposes of
maintaining option value in connection with a Change in Control);
|
|
|
|
Add any form of financial assistance available to a participant;
|
|
|
|
Permit options or rights under the Equity Incentive Plans to be transferred other than for normal estate
settlement purposes;
|
|
|
|
Amend the amendment section of the Equity Incentive Plans; and
|
|
|
|
Make any other amendments which the applicable exchange rules require shareholder approval.
|
-
37
-
Inducement Options
On January 19, 2011, Richard McBee was granted stock options to acquire 515,175 Mitel common shares as a component of his employment
compensation. These stock options were granted as an inducement material to his entering into employment with Mitel and will vest on the same vesting schedule as options granted under the 2006 Equity Incentive Plan. These options are outside of the
pool of stock options available for grant under the 2006 Equity Incentive Plan, the 2014 Equity Incentive Plan and all other security-based compensation arrangements.
Total Equity Awards Outstanding
As of the date hereof, options to acquire 7,172,481 Mitel common shares, RSUs to acquire 3,575,211 Mitel common shares and performance share
units to acquire 894,000 Mitel common shares (if maximum performance is achieved) were granted and outstanding under the following Plans: 2005 Stock Plan, 2013 Equity Incentive Plan, 2006 Equity Incentive Plan and 2014 Equity Inventive Plan. There
were also inducement options to acquire 515,175 Mitel common shares. In aggregate the total outstanding equity awards represents approximately 9.8% of the Corporations outstanding Mitel common shares.
The following table sets out information in respect of our 2005 Stock Plan and 2013 Equity Incentive Plan and the Corporations 2006
Equity Incentive Plan, and 2014 Equity Incentive Plan and inducement options as of December 31, 2016, and also aggregates plans approved by Mitel shareholders collectively and all of the plans not approved by Mitel shareholders collectively:
|
|
|
|
|
|
|
|
|
Plan Category
|
|
Number of Securities
to be issued upon
exercise of
outstanding options
(a)
|
|
Weighted average exercise price of outstanding options
(b)
|
|
Number of Securities
to be issued upon
vesting of restricted
stock units
(c)
|
|
Number of securities remaining available
for future issuance
under equity compensation plans (excluding securities reflected in column (a) and (c))
(d)
|
2005 Stock Plan
|
|
104,203
|
|
$ 2.38
|
|
N/A
|
|
N/A
|
2006 Equity Incentive Plan
|
|
4,253,181
|
|
$ 6.20
|
|
121,800
|
|
N/A
|
Inducement options
(1)
|
|
515,175
|
|
$ 5.16
|
|
N/A
|
|
N/A
|
2013 Equity Incentive Plan
|
|
927,344
|
|
$ 8.14
|
|
N/A
|
|
N/A
|
2014 Equity Incentive Plan
(2)
|
|
2,489,992
|
|
$ 8.55
|
|
3,013,144
|
|
5,503,136
|
Plans approved by Mitel Shareholders
|
|
6,743,173
|
|
$ 7.07
|
|
3,134,944
|
|
4,691,206
|
Plans not approved by Mitel Shareholders
|
|
1,546,722
|
|
$ 6.76
|
|
N/A
|
|
N/A
|
|
(1)
|
The 515,175 inducement options remain outstanding as of March 31, 2017.
|
|
(2)
|
The aggregate number of Mitel common shares that may be issued under the 2014 Equity Incentive Plan is 8,900,000.
|
-
38
-
Grant of Plan-Based Awards
2016 Executive Equity Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Grant
Date
|
|
|
Estimated Future Payouts Under Non-
Equity Incentive Plan Award
|
|
|
Estimated Future Payouts Under Equity Incentive Plan Award
|
|
|
All Other
Stock
Awards:
Number
of Shares
Of Stock
or Units
(#)
|
|
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
|
|
|
Exercise or
Base Price
of Option
Awards
($/Sh)
|
|
|
Grant Date
Fair Value
($)
|
|
|
|
|
Threshold ($)
|
|
|
|
Target
($)
|
|
|
|
Max ($)
|
|
|
Threshold
(#)
|
|
Target
(#)
|
|
Max
(#)
|
|
|
|
|
Richard D. McBee
|
|
|
|
|
406,875
|
|
|
|
1,017,188
|
|
|
|
1,627,500
|
|
|
|
|
none
|
|
none
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
229,500
|
|
|
|
|
|
|
7.17
|
|
|
1,645,515
|
|
|
|
3/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
280,500
|
|
|
7.17
|
|
|
883,575
|
|
Steven E. Spooner
|
|
|
|
|
214,595
|
|
|
|
343,352
|
|
|
|
858,380
|
|
|
|
|
none
|
|
none
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
135,000
|
|
|
|
|
|
|
7.17
|
|
|
967,950
|
|
|
|
3/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
165,000
|
|
|
7.17
|
|
|
519,750
|
|
Graham Bevington
|
|
|
|
|
195,000
|
|
|
|
292,500
|
|
|
|
780,000
|
|
|
|
|
none
|
|
none
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
67,500
|
|
|
|
|
|
|
7.17
|
|
|
483,975
|
|
|
|
3/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
82,500
|
|
|
7.17
|
|
|
259,875
|
|
Thomas G. Lokar
|
|
|
|
|
167,500
|
|
|
|
217,750
|
|
|
|
502,500
|
|
|
|
|
none
|
|
none
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60,750
|
|
|
|
|
|
|
7.17
|
|
|
435,578
|
|
|
|
3/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
74,250
|
|
|
7.17
|
|
|
233,888
|
|
Jon D. Brinton
|
|
|
|
|
157,500
|
|
|
|
204,750
|
|
|
|
630,000
|
|
|
|
|
none
|
|
none
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
40,500
|
|
|
|
|
|
|
7.17
|
|
|
290,385
|
|
|
|
3/1/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49,500
|
|
|
7.17
|
|
|
155,925
|
|
Outstanding Equity Awards at Fiscal
Year-End
The following table sets forth information regarding stock options for the purchase of Mitel common shares outstanding as of December 31,
2016 to our directors and NEOs. The closing price of the Mitel common shares on the NASDAQ on December 31, 2016 was $6.80 per share.
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Number of
securities
underlying
unexercised
options
(#)
exercisable
|
|
Number of
securities
underlying
unexercised options
(#) unexercisable
|
|
Number of
securities
underlying
unexercised
unearned options
(#)
|
|
Option
Exercise
Price ($)
|
|
|
Option
Expiration
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Terence H. Matthews
|
|
18,038
|
|
|
|
|
|
|
3.06
|
|
|
6-Dec-19
|
Chairman
|
|
18,313
|
|
|
|
|
|
|
3.94
|
|
|
7-Mar-20
|
|
|
18,313
|
|
|
|
|
|
|
3.80
|
|
|
1-Jul-20
|
|
|
16,190
|
|
|
|
|
|
|
4.64
|
|
|
5-Sep-20
|
|
|
10,146
|
|
|
|
|
|
|
9.58
|
|
|
12-Dec-20
|
|
|
9,329
|
|
|
|
|
|
|
8.79
|
|
|
5-Feb-21
|
|
|
9,281
|
|
|
|
|
|
|
10.83
|
|
|
20-May-21
|
|
|
9,281
|
|
|
|
|
|
|
9.96
|
|
|
14-Aug-21
|
|
|
9,816
|
|
|
|
|
|
|
9.96
|
|
|
13-Nov-21
|
|
|
3,585
|
|
|
|
|
|
|
9.70
|
|
|
5-Mar-22
|
|
|
10,000
|
|
|
|
|
|
|
8.94
|
|
|
14-May-22
|
|
|
4,220
|
|
|
|
|
|
|
8.94
|
|
|
14-May-22
|
-
39
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Number of
securities
underlying
unexercised
options
(#)
exercisable
|
|
Number of
securities
underlying
unexercised options
(#) unexercisable
|
|
Number of
securities
underlying
unexercised
unearned options
(#)
|
|
Option
Exercise
Price ($)
|
|
|
Option
Expiration
Date
|
|
|
4,542
|
|
|
|
|
|
|
8.30
|
|
|
12-Aug-22
|
|
|
4,307
|
|
|
|
|
|
|
8.75
|
|
|
11-Nov-22
|
|
|
5,278
|
|
|
|
|
|
|
7.17
|
|
|
4-Mar-23
|
|
|
|
|
10,000
|
|
|
|
|
7.17
|
|
|
4-Mar-23
|
|
|
5,674
|
|
|
|
|
|
|
6.74
|
|
|
26-May-23
|
|
|
4,723
|
|
|
|
|
|
|
8.12
|
|
|
10-Aug-23
|
|
|
5,713
|
|
|
|
|
|
|
6.62
|
|
|
9-Nov-23
|
Peter D. Charbonneau
|
|
32,668
|
|
|
|
|
|
|
6.50
|
|
|
16-Sep-17
|
Lead Director
|
|
20,441
|
|
|
|
|
|
|
4.00
|
|
|
7-Jul-18
|
|
|
10,083
|
|
|
|
|
|
|
3.29
|
|
|
7-Sep-18
|
|
|
8,756
|
|
|
|
|
|
|
3.05
|
|
|
23-Dec-18
|
|
|
8,756
|
|
|
|
|
|
|
3.44
|
|
|
7-Mar-19
|
|
|
10,550
|
|
|
|
|
|
|
4.22
|
|
|
26-Jun-19
|
|
|
10,544
|
|
|
|
|
|
|
2.61
|
|
|
6-Sep-19
|
|
|
10,819
|
|
|
|
|
|
|
3.06
|
|
|
6-Dec-19
|
|
|
10,338
|
|
|
|
|
|
|
3.94
|
|
|
7-Mar-20
|
|
|
10,338
|
|
|
|
|
|
|
3.80
|
|
|
1-Jul-20
|
|
|
6,782
|
|
|
|
|
|
|
4.64
|
|
|
5-Sep-20
|
|
|
4,960
|
|
|
|
|
|
|
9.58
|
|
|
12-Dec-20
|
|
|
4,778
|
|
|
|
|
|
|
8.79
|
|
|
5-Feb-21
|
|
|
4,682
|
|
|
|
|
|
|
10.83
|
|
|
20-May-21
|
|
|
4,682
|
|
|
|
|
|
|
9.96
|
|
|
14-Aug-21
|
|
|
4,854
|
|
|
|
|
|
|
9.96
|
|
|
13-Nov-21
|
|
|
1,154
|
|
|
|
|
|
|
9.70
|
|
|
5-Mar-22
|
|
|
10,000
|
|
|
|
|
|
|
8.94
|
|
|
14-May-22
|
|
|
|
|
10,000
|
|
|
|
|
7.17
|
|
|
4-Mar-23
|
Francisco Partners
|
|
62,200
|
|
|
|
|
|
|
6.50
|
|
|
16-Sep-17
|
Benjamin H. Ball/
|
|
28,336
|
|
|
|
|
|
|
4.00
|
|
|
7-Jul-18
|
Director
(2)
|
|
21,250
|
|
|
|
|
|
|
3.29
|
|
|
7-Sep-18
|
|
|
18,819
|
|
|
|
|
|
|
3.05
|
|
|
23-Dec-18
|
|
|
18,131
|
|
|
|
|
|
|
3.44
|
|
|
7-Mar-19
|
|
|
22,343
|
|
|
|
|
|
|
4.22
|
|
|
26-Jun-19
|
|
|
21,569
|
|
|
|
|
|
|
2.61
|
|
|
6-Sep-19
|
|
|
20,194
|
|
|
|
|
|
|
3.06
|
|
|
6-Dec-19
|
|
|
20,263
|
|
|
|
|
|
|
3.94
|
|
|
7-Mar-20
|
|
|
20,263
|
|
|
|
|
|
|
3.80
|
|
|
1-Jul-20
|
|
|
8,588
|
|
|
|
|
|
|
4.64
|
|
|
5-Sep-20
|
|
|
7,061
|
|
|
|
|
|
|
9.58
|
|
|
12-Dec-20
|
|
|
6,909
|
|
|
|
|
|
|
8.79
|
|
|
5-Feb-21
|
|
|
6,828
|
|
|
|
|
|
|
10.83
|
|
|
20-May-21
|
|
|
6,828
|
|
|
|
|
|
|
9.96
|
|
|
14-Aug-21
|
|
|
6,972
|
|
|
|
|
|
|
9.96
|
|
|
13-Nov-21
|
|
|
966
|
|
|
|
|
|
|
9.70
|
|
|
5-Mar-22
|
|
|
10,000
|
|
|
|
|
|
|
8.94
|
|
|
14-May-22
|
|
|
10,000
|
|
|
|
|
|
|
8.94
|
|
|
14-May-22
|
|
|
|
|
10,000
|
|
|
|
|
7.17
|
|
|
4-Mar-23
|
David M. Williams
|
|
9,721
|
|
|
|
|
|
|
10.83
|
|
|
20-May-21
|
Director
|
|
4,595
|
|
|
|
|
|
|
9.96
|
|
|
14-Aug-21
|
|
|
4,850
|
|
|
|
|
|
|
9.96
|
|
|
13-Nov-21
|
|
|
294
|
|
|
|
|
|
|
9.70
|
|
|
5-Mar-22
|
|
|
10,000
|
|
|
|
|
|
|
8.94
|
|
|
14-May-22
|
|
|
|
|
10,000
|
|
|
|
|
7.17
|
|
|
4-Mar-23
|
Sudhakar Ramakrishna
|
|
7,500
|
|
|
|
|
|
|
8.94
|
|
|
14-May-22
|
Director
|
|
15,000
|
|
30,000
|
|
|
|
|
8.94
|
|
|
14-May-22
|
|
|
|
|
10,000
|
|
|
|
|
7.17
|
|
|
4-Mar-23
|
John P. McHugh
|
|
9,238
|
|
|
|
|
|
|
3.05
|
|
|
23-Dec-18
|
-
40
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Number of
securities
underlying
unexercised
options
(#)
exercisable
|
|
Number of
securities
underlying
unexercised options
(#) unexercisable
|
|
Number of
securities
underlying
unexercised
unearned options
(#)
|
|
Option
Exercise
Price ($)
|
|
|
Option
Expiration
Date
|
Director
|
|
10,200
|
|
|
|
|
|
|
3.44
|
|
|
7-Mar-19
|
|
|
11,008
|
|
|
|
|
|
|
4.22
|
|
|
26-Jun-19
|
|
|
12,675
|
|
|
|
|
|
|
2.61
|
|
|
6-Sep-19
|
|
|
11,713
|
|
|
|
|
|
|
3.06
|
|
|
6-Dec-19
|
|
|
10,475
|
|
|
|
|
|
|
3.94
|
|
|
7-Mar-20
|
|
|
10,475
|
|
|
|
|
|
|
3.80
|
|
|
1-Jul-20
|
|
|
9,213
|
|
|
|
|
|
|
4.64
|
|
|
5-Sep-20
|
|
|
6,356
|
|
|
|
|
|
|
9.58
|
|
|
12-Dec-20
|
|
|
6,071
|
|
|
|
|
|
|
8.79
|
|
|
5-Feb-21
|
|
|
6,215
|
|
|
|
|
|
|
10.83
|
|
|
20-May-21
|
|
|
6,215
|
|
|
|
|
|
|
9.96
|
|
|
14-Aug-21
|
|
|
6,508
|
|
|
|
|
|
|
9.96
|
|
|
13-Nov-21
|
|
|
1,964
|
|
|
|
|
|
|
9.70
|
|
|
5-Mar-22
|
|
|
10,000
|
|
|
|
|
|
|
8.94
|
|
|
14-May-22
|
|
|
2,316
|
|
|
|
|
|
|
8.94
|
|
|
14-May-22
|
|
|
2,493
|
|
|
|
|
|
|
8.30
|
|
|
12-Aug-22
|
|
|
2,364
|
|
|
|
|
|
|
8.75
|
|
|
11-Nov-22
|
|
|
2,897
|
|
|
|
|
|
|
7.17
|
|
|
4-Mar-23
|
|
|
|
|
10,000
|
|
|
|
|
7.17
|
|
|
4-Mar-23
|
|
|
3,114
|
|
|
|
|
|
|
6.74
|
|
|
26-May-23
|
|
|
2,592
|
|
|
|
|
|
|
8.12
|
|
|
10-Aug-23
|
|
|
3,565
|
|
|
|
|
|
|
8.12
|
|
|
10-Aug-23
|
Richard D. McBee
|
|
892,575
|
|
|
|
|
|
|
5.16
|
|
|
19-Jan-18
|
President and Chief Executive Officer
|
|
515,175
|
|
|
|
|
|
|
5.16
|
|
|
19-Jan-18
|
|
|
56,250
|
|
|
|
|
|
|
4.22
|
|
|
26-Jun-19
|
|
|
46,937
|
|
14,063
|
|
|
|
|
3.80
|
|
|
1-Jul-20
|
|
|
156,250
|
|
93,750
|
|
|
|
|
10.11
|
|
|
3-Apr-21
|
|
|
109,375
|
|
140,625
|
|
|
|
|
9.70
|
|
|
5-Mar-22
|
|
|
52,593
|
|
227,907
|
|
|
|
|
9.70
|
|
|
4-Mar-23
|
Steven E. Spooner
|
|
25,000
|
|
|
|
|
|
|
8.79
|
|
|
15-Jul-17
|
Chief Financial Officer
|
|
18,750
|
|
|
|
|
|
|
4.22
|
|
|
26-Jun-19
|
|
|
12,500
|
|
9,375
|
|
|
|
|
3.80
|
|
|
1-Jul-20
|
|
|
100,000
|
|
100,000
|
|
|
|
|
5.73
|
|
|
9-Oct-20
|
|
|
46,875
|
|
28,125
|
|
|
|
|
10.11
|
|
|
3-Apr-21
|
|
|
43,312
|
|
55,688
|
|
|
|
|
9.70
|
|
|
5-Mar-22
|
|
|
30,937
|
|
134,063
|
|
|
|
|
7.17
|
|
|
4-Mar-23
|
Graham Bevington
|
|
30,000
|
|
|
|
|
|
|
8.79
|
|
|
15-Jul-17
|
Executive Vice President,
|
|
9,375
|
|
|
|
|
|
|
4.22
|
|
|
26-Jun-19
|
Chief Sales Officer
|
|
30,000
|
|
|
|
|
|
|
3.80
|
|
|
1-Jul-20
|
|
|
24,375
|
|
5,625
|
|
|
|
|
10.11
|
|
|
3-Apr-21
|
|
|
15,625
|
|
9,375
|
|
|
|
|
9.96
|
|
|
14-Aug-21
|
|
|
8,437
|
|
6,563
|
|
|
|
|
9.70
|
|
|
5-Mar-22
|
|
|
32,506
|
|
41,794
|
|
|
|
|
7.17
|
|
|
4-Mar-23
|
|
|
15,468
|
|
67,032
|
|
|
|
|
7.17
|
|
|
4-Mar-23
|
Thomas G. Lokar
|
|
58,437
|
|
26,563
|
|
|
|
|
8.79
|
|
|
5-Feb-21
|
Chief Human Resources Officer
|
|
18,331
|
|
23,569
|
|
|
|
|
9.70
|
|
|
5-Mar-22
|
|
13,921
|
|
60,329
|
|
|
|
|
7.17
|
|
|
4-Mar-23
|
Jon D. Brinton
|
|
7,000
|
|
|
|
|
|
|
8.79
|
|
|
15-Jul-17
|
Executive Vice President and General Manager, Mitel Cloud Services
|
|
20,000
|
|
|
|
|
|
|
4.00
|
|
|
7-Jul-18
|
|
30,000
|
|
|
|
|
|
|
4.22
|
|
|
26-Jun-19
|
|
24,375
|
|
5,625
|
|
|
|
|
3.80
|
|
|
1-Jul-20
|
|
15,625
|
|
9,375
|
|
|
|
|
10.11
|
|
|
3-Apr-21
|
|
18,331
|
|
23,569
|
|
|
|
|
9.70
|
|
|
5-Mar-22
|
|
9,281
|
|
40,219
|
|
|
|
|
7.17
|
|
|
4-Mar-23
|
-
41
-
(1)
|
Stock option awards were granted pursuant to the 2006 Equity Incentive Plan or the 2014 Equity Incentive Plan.
In the case of Mr. McBee, a portion of the options were granted as an inducement (as described in note 3 below); all of these stock options have not been exercised to date.
|
(2)
|
The stock options granted to Francisco Partners Management, LLC include options granted in lieu of director
fees to Mr. Ball.
|
(3)
|
515,175 of the stock options granted to Mr. McBee as a component of his employment compensation, have been
granted as an inducement, material to his entering into employment with us in 2011. These inducement options will vest on the same vesting schedule as options granted under the 2006 Equity Incentive Plan. These options are outside of the pool of
stock options available for grant under the 2006 Equity Incentive Plan, the 2014 Equity Incentive Plan and all other security-based compensation arrangements of the Corporation, and were granted in accordance with the NASDAQ rules permitting
inducement option grants to the Chief Executive Officer in certain circumstances.
|
(4)
|
Martha Bejar joined the Board on March 10, 2017.
|
Restricted Stock Units Outstanding for Executive Officers and Directors
The following table sets forth information regarding RSUs for Mitel common shares granted as of December 31, 2016 to our directors and
NEOs. The closing price of the Mitel common shares on the NASDAQ on December 31, 2016 was $6.80 per share.
|
|
|
|
|
|
|
|
|
Name
|
|
Number of
shares or units
of shares that
have not
vested (#)
|
|
Market or
payout value
of share-
based awards
that have not
vested ($)
|
|
Equity
incentive plan
awards:
number of
unearned
shares, units or
other rights
that have not
vested (#)
|
|
Equity
incentive plan
awards: market
or payout
value of
unearned
shares, units or
other rights
that have not
vested ($)
|
|
|
|
|
|
Richard D.
McBee
President and Chief Executive Officer
|
|
462,138
|
|
3,142,538
|
|
|
|
|
|
|
|
|
|
Steven E.
Spooner
Chief Financial Officer
|
|
222,275
|
|
1,511,470
|
|
|
|
|
|
|
|
|
|
Graham G.
Bevington
Executive Vice President and Chief Sales Officer
|
|
125,825
|
|
855,610
|
|
|
|
|
|
|
|
|
|
Thomas G.
Lokar
Executive Vice President and Chief Human Resources Officer
|
|
90,375
|
|
614,550
|
|
|
|
|
|
|
|
|
|
Jon D. Brinton
|
|
|
|
|
|
|
|
|
Executive Vice President and
General Manager, Mitel Cloud Services
|
|
75,875
|
|
515,950
|
|
|
|
|
|
|
|
|
|
Benjamin H.
Ball
fbo Francisco Partners
(1)
Director
|
|
10,000
|
|
68,000
|
|
|
|
|
|
|
|
|
|
Peter D.
Charbonneau
Director
|
|
10,000
|
|
68,000
|
|
|
|
|
|
|
|
|
|
Terence H.
Matthews
Director
|
|
10,000
|
|
68,000
|
|
|
|
|
-
42
-
|
|
|
|
|
|
|
|
|
Name
|
|
Number of
shares or units
of shares that
have not
vested (#)
|
|
Market or
payout value
of share-
based awards
that have not
vested ($)
|
|
Equity
incentive plan
awards:
number of
unearned
shares, units or
other rights
that have not
vested (#)
|
|
Equity
incentive plan
awards: market
or payout
value of
unearned
shares, units or
other rights
that have not
vested ($)
|
|
|
|
|
|
John P.
McHugh
Director
|
|
10,000
|
|
68,000
|
|
|
|
|
|
|
|
|
|
Sudhakar
Ramakrishna
Director
|
|
10,000
|
|
68,000
|
|
|
|
|
|
|
|
|
|
David M.
Williams
Director
|
|
10,000
|
|
68,000
|
|
|
|
|
|
(1)
|
Stock option grants to Mr. Ball in lieu of director fees were granted directly to Francisco Partners
Management, LLC, of which Mr. Ball is a partner.
|
Incentive Plan Awards Option Exercises and
Stock Vested
The following table lists, with respect to each of our NEOs and directors, the value of all option-based and share-based
awards that have been exercised and all
non-equity
incentive plan compensation vested during the year ended December 31, 2016.
|
|
|
|
|
|
|
|
|
Name
|
|
Option Awards
|
|
Stock Awards
|
|
Number of
Shares
Acquired on
Exercise (#)
|
|
Value
realized on
exercise ($)
(1)
(2)
|
|
Number of
Shares
Acquired on
Vesting (#)
|
|
Value
realized on
vesting ($)
(1)
(2)
|
|
|
|
|
|
Richard D. McBee
|
|
|
|
|
|
87,162
|
|
615,622
|
|
|
|
|
|
Steven E. Spooner
|
|
|
|
|
|
31,975
|
|
213,913
|
|
|
|
|
|
Graham G. Bevington
|
|
|
|
|
|
20,400
|
|
146,268
|
|
|
|
|
|
Thomas G. Lokar
|
|
|
|
|
|
9,875
|
|
70,804
|
|
|
|
|
|
Jon D. Brinton
|
|
|
|
|
|
12,750
|
|
91,418
|
|
|
|
|
|
Benjamin H. Ball, fbo Francisco Partners
(3)
|
|
|
|
|
|
20,000
|
|
143,400
|
|
|
|
|
|
Peter D. Charbonneau
|
|
|
|
|
|
10,000
|
|
66,900
|
|
|
|
|
|
Terence H. Matthews
|
|
|
|
|
|
21,244
|
|
153,322
|
|
|
|
|
|
John P. McHugh
|
|
|
|
|
|
16,361
|
|
112,955
|
|
|
|
|
|
Sudhakar Ramakrishna
|
|
|
|
|
|
7,500
|
|
50,175
|
|
|
|
|
|
David M. Williams
|
|
|
|
|
|
10,000
|
|
66,900
|
-
43
-
(1)
|
Represents the total value of options that vested during the year ended December 31, 2016. The values were
calculated using the closing price of our Mitel common shares on the NASDAQ on the date the options vested (or if the option vested on a
non-trading
day, the next trading day).
|
(2)
|
Stock options granted to board members vested immediately upon grant where equity is elected in lieu of cash
while Annual Awards cliff vest at the end of the fiscal year in which they are granted.
|
(3)
|
Stock option grants to Mr. Ball in lieu of director fees were granted directly to Francisco Partners
Management, LLC, of which Mr. Ball is a partner.
|
(4)
|
Martha Bejar joined the Board on March 10, 2017.
|
Pension and Retirement Plans
The Corporation maintains defined contribution pension plans that cover substantially all of our employees. We contribute to defined
contribution pension plans based on a percentage, as specified in each plan, of a participating employees pensionable earnings.
The
following table sets forth, for each of our NEOs, information regarding defined contribution pension plan amounts credited to or earned by each of them during or as at the end of the year ended December 31, 2016.
Defined Contribution Plan Table
|
|
|
|
|
|
|
|
|
Name
|
|
Accumulated
value at start of
year $
|
|
Compensatory $
|
|
Non-
compensatory
(1)
$
|
|
Accumulated
value at year end
$
|
|
|
|
|
|
|
|
|
|
Richard
D. McBee
|
|
9,962
|
|
7,950
|
|
2,108
|
|
20,020
|
Steven E.
Spooner
|
|
98,998
|
|
14,714
|
|
26,329
|
|
140,041
|
Graham G.
Bevington
|
|
189,902
|
|
8,383
|
|
(4,561)
|
|
193,724
|
Thomas G.
Lokar
|
|
12,359
|
|
7,389
|
|
1,381
|
|
21,129
|
Jon D.
Brinton
|
|
109,948
|
|
7,006
|
|
6,264
|
|
123,218
|
(1)
|
Includes the effect of plan market value and foreign exchange, where applicable.
|
There were no material accrued obligations at the end of the year ended December 31, 2016 pursuant to our defined contribution pension
plans.
We currently maintain a defined benefit pension plan for certain of our past and present employees in the United Kingdom. The plan
was closed to new employees in June 2001. The plan was closed to new service in November 2012. The defined benefit plan provides pension benefits based on length of service up to November 2012 and final average earnings. The pension costs are
actuarially determined using the projected benefits method
pro-rated
on services and managements best estimate of the effect of future events. Pension plan assets are valued at fair value. As of
December 31, 2016, the $248.0 million projected benefit obligation exceeded the fair value of the defined benefit plan assets of $168.4 million, resulting in a pension liability of $79.6 million.
Pension Benefits
|
|
|
|
|
|
|
|
|
Name
|
|
Plan Name
|
|
Number of
year
credited
service
|
|
Present
value
of
accumulated
benefit ($)
|
|
Payments
during last
fiscal year
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Graham G.
Bevington
|
|
Mitel Networks Limited Family Security Plan
|
|
13 years
|
|
886,546
|
|
|
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44
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For the purposes of the pension plan in the United Kingdom, the age of retirement is 65
years. There are provisions for early retirement starting at 55 years with the benefit decreasing for each of the years retired before 65 years. This value is determined by the plan actuary. There is no policy for granting additional years of
service or additional credit of service. In November 2012, the defined benefit plan was closed to new service. Since November 2012, Mr. Bevington receives amounts under a defined contribution plan, as disclosed above.
Assumed Plans
On April 29, 2015,
in connection with the acquisition of Mavenir, the Corporation adopted the 2005 Stock Plan and the 2013 Equity Incentive Plan.
2005 Stock Plan
The 2005 Stock Plan provided flexibility and choice in the types of equity compensation awards, including options, deferred share
units, RSUs, performance share units and other share-based awards. Various vesting schedules were granted under the plan and were determined at the time of the original grant date. The 2005 Stock Plan provides that in no event may an option remain
exercisable beyond the tenth anniversary of the date of grant.
As of the date hereof, options to acquire 84,899 Mitel common shares
and no RSUs were outstanding under the 2005 Stock Plan. As of the year ended December 31, 2016, 55,724 options had vested under the 2005 Stock Plan. Common shares subject to outstanding awards under the 2005 Stock Plan which lapse, expire,
terminate or are forfeited will no longer become available for grant under the 2005 Stock Plan.
2013 Equity Incentive Plan
The 2013 Equity Incentive Plan provided flexibility and choice in the types of equity compensation awards, including options, deferred share
units, RSUs, performance share units and other share-based awards. Various vesting schedules were granted under the plan and were determined at the time of the original grant date. The 2013 Equity Incentive Plan provides that in no event may an
option remain exercisable beyond the tenth anniversary of the date of grant.
As of the date hereof, options to acquire 641,114 Mitel
common shares and no RSUs were outstanding under the 2013 Equity Incentive Plan. As of the year ended December 31, 2016, 386,676 options had vested under the 2013 Equity Incentive Plan. Mitel common shares subject to outstanding awards under
the 2013 Equity Incentive Plan which lapse, expire, terminate or are forfeited will no longer become available for grants under the 2013 Equity Incentive Plan.
On February 28, 2017, Mitel completed the sale of its Mobile Division (formerly Mavenir Systems, Inc.) to the parent company
of Xura, Inc. As of February 28, 2017, a total of 1,004,929 Mitel common shares were subject to options granted to Mitel employees of the Mobile Division under the 2005 Stock Plan and 2013 Equity Incentive Plan. In connection with the
sale, all unvested options immediately expired and were cancelled and all vested options (representing 658,419 Mitel common shares) held by Mobile Division employees must be exercised by May 28, 2017 after which such options shall be cancelled.
As a result, and as of the date hereof, 83,649 Mitel common shares remain subject to options granted under the 2005 Stock Plan and 2013 Equity Incentive Plan to employees who remained with Mitel after the sale.
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45
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17.
|
Employment Agreements, Termination and Change of Control
|
Employment Agreements
Richard D. McBee.
Rich McBee is employed as our CEO and President. Effective as of January 13, 2011, we executed an Employment
Agreement with Mr. McBee. Mr. McBee is employed for an indefinite term, subject to termination in accordance with the terms of his employment agreement. If Mr. McBees employment is terminated by us without cause, or if, in the
event of a change of control (as such term is defined in his employment agreement) of the Corporation we either terminate Mr. McBees employment without cause or Mr. McBee ends his employment relationship with us, in
either case within 12 months of such change of control, he will receive a severance payment totaling 24 months salary and bonus compensation (such monthly bonus compensation being 1/36 of the aggregate bonus compensation received by
Mr. McBee during the three most recently completed fiscal years), paid over a
24-month
period, plus benefit continuation and, except in the event of a change of control, continued vesting of options for
the same period. In the event of a change of control, all equity based compensation becomes 100% fully vested and payable, and any performance-based targets shall be deemed to have been satisfied at 100%. For the year ended December 31, 2016,
Mr. McBee received a base salary of $813,750, equity awards, a monthly car allowance of $1,500, fuel and maintenance reimbursement for one vehicle and he participated in our standard employee benefit plans. Mr. McBee was also entitled to
receive an annual targeted bonus payment of 125% of base salary, dependent upon the achievement of business goals and subject to the approval of the Compensation Committee. Mr. McBees employment agreement contains provisions addressing
confidentiality,
non-disclosure,
non-competition
and ownership of intellectual property.
Steven E. Spooner.
Steve Spooner is employed as our CFO, reporting to our President and CEO. Effective as of March 12, 2010, we
executed an Amended and Restated Employment Agreement with Mr. Spooner under which he is employed for an indefinite term, subject to termination in accordance with its terms. If Mr. Spooners employment is terminated by us without
cause, or if, in the event of a change of control (as such term is defined in his employment agreement) of the Corporation we either terminate Mr. Spooners employment without cause or Mr. Spooner ends his employment
relationship with us, in either case within 12 months of such change of control, he will receive a severance payment totaling 18 months salary and bonus compensation (such monthly bonus compensation being 1/36 of the aggregate bonus
compensation received by Mr. Spooner during the three most recently completed fiscal years), paid over an
18-month
period, plus benefit continuation and, except in the event of a change of control,
continued vesting of options for the same period. In the event of a change of control, all equity based compensation becomes 100% fully vested and payable, and any performance-based targets shall be deemed to have been satisfied at 100%. Upon death
or disability, Mr. Spooner is entitled to a lump sum payment of one years total salary plus bonus and, in addition, accelerated vesting of 25% of any remaining unvested options. For the year ended December 31, 2016, Mr. Spooner
received a base salary of C$568,464, equity awards, a monthly car allowance of C$1,000, fuel and maintenance reimbursement for one vehicle and he participated in our standard employee benefit plans. Mr. Spooner is also entitled to receive an
annual bonus payment in an amount determined by the Compensation Committee, in its sole discretion. Mr. Spooners employment agreement contains provisions addressing confidentiality,
non-disclosure,
non-competition
and ownership of intellectual property.
Graham G. Bevington.
Graham Bevington is
employed as our Executive Vice President and Chief Sales Officer, reporting to our President and CEO. Mr. Bevington is employed for an indefinite term, subject to termination in accordance with the terms of his employment letter agreement, as
amended. If Mr. Bevingtons employment is terminated by us without cause, or if, in the event of a change of control (as such term is defined in his employment agreement) of the Corporation we either terminate
Mr. Bevingtons employment without cause or Mr. Bevington ends his employment relationship with us, in either case within 12 months of such change of control, he will receive a severance payment totaling 16 months
salary and bonus compensation (such monthly bonus compensation being 1/36 of the aggregate bonus compensation received by Mr. Bevington during the three most recently completed fiscal years), paid in a lump sum. In the event
Mr. Bevingtons employment is terminated by us without cause, or by Mr. Bevington for good reason (as such term is defined in his employment agreement), within 12 months of a change of control (as such term is
defined in his employment agreement), all equity based compensation shall become 100% fully vested upon the change of control, and any performance-based targets shall be deemed to have been satisfied at 100%. For the year ended December 31,
2016, Mr. Bevington received a base salary of $390,000, equity awards and he participated in our standard employee benefit plans. Mr. Bevington is also entitled to receive an annual bonus payment related to his achievement of defined
targets. Mr. Bevingtons employment agreement contains provisions addressing confidentiality,
non-disclosure,
non-competition
and ownership of intellectual
property.
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46
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Thomas G. Lokar
Thomas Lokar is employed as our Chief Human Resources Officer.
Mr. Lokar is employed for an indefinite term, subject to termination in accordance with the terms of his employment agreement. If Mr. Lokars employment is terminated by us without cause, or if, in the event of a change of
control (as such term is defined in his employment agreement) of the Corporation we either terminate Mr. Lokars employment without cause or Mr. Lokar ends his employment relationship with us, in either case within
12 months of such change of control, he will receive a severance payment totaling 12 months salary and bonus compensation (such monthly bonus compensation being 1/36 of the aggregate bonus compensation received by Mr. Lokar
during the three most recently completed fiscal years), paid in a lump sum. In the event Mr. Lokars employment is terminated by us without cause, or by Mr. Lokar for good reason (as such term is defined in his employment
agreement), within 12 months of a change of control (as such term is defined in his employment agreement), all equity based compensation shall become 100% fully vested upon the change of control, and any performance-based targets shall
be deemed to have been satisfied at 100%. For the year ended December 31, 2016, Mr. Lokar received a base salary of $335,000, equity awards, a yearly car allowance of $8,000, and he participated in our standard employee benefit plans.
Mr. Lokar was also eligible to receive an annual variable,
at-risk
payment of 65% of base salary. Mr. Lokars employment agreement contains provisions addressing confidentiality,
non-disclosure,
non-competition
and ownership of intellectual property.
Jon D. Brinton
Jon Brinton is employed as our Executive Vice President & General Manager, Mitel Cloud Services.
Mr. Brinton is employed for an indefinite term, subject to termination in accordance with the terms of his employment agreement. If Mr. Brintons employment is terminated by us without cause, or if, in the event of a change of
control (as such term is defined in his employment agreement) of the Corporation we either terminate Mr. Brintons employment without cause or Mr. Brinton ends his employment relationship with us, in either case within
12 months of such change of control, he will receive a severance payment totaling 12 months salary and bonus compensation (such monthly bonus compensation being 1/36 of the aggregate bonus compensation received by Mr. Brinton
during the three most recently completed fiscal years), paid in a lump sum. In the event Mr. Brintons employment is terminated by us without cause, or by Mr. Brinton for good reason (as such term is defined in his
employment agreement), within 12 months of a change of control (as such term is defined in his employment agreement), all equity based compensation shall become 100% fully vested upon the change of control, and any performance-based
targets shall be deemed to have been satisfied at 100%. For the year ended December 31, 2016, Mr. Brinton received a base salary of $315,000, equity awards, a yearly car allowance of $8,000, and he participated in our standard employee
benefit plans. Mr. Brinton was also eligible to receive an annual variable,
at-risk
payment of 65% of base salary. Mr. Brintons employment agreement contains provisions addressing
confidentiality,
non-disclosure,
non-competition
and ownership of intellectual property.
Potential Payments upon Termination or Change of Control
Information regarding payments to our NEOs in the event of a termination or a change in control may be found in the table below. This table
sets forth the estimated amount of payments each NEO would be entitled to receive upon the occurrence of the indicated event, assuming that the event occurred on December 31, 2016 and using average exchange rates for the year ended
December 31, 2016. The salary payments are calculated based on the salaries stated in the employment agreements of each NEO as of December 31, 2016. Amounts potentially payable under plans which are generally available to all salaried
employees, such as health, life and disability insurance, are excluded from the table. Actual payments made at any future date may vary, including the amount the NEO would have accrued under the applicable benefit or compensation plan as well as the
price of the Mitel common shares.
In the event of retirement, resignation or termination for cause, no salary, benefits or other
compensation is payable to a NEO beyond the last effective date of employment and the NEO would only be entitled to exercise equity that had already vested or would continue to vest in accordance with the terms of their employee agreement and
consistent with the plan under which they were granted, and no incremental payments or benefits are payable. In the event of death or disability, a pro rata portion of the next instalment of any equity award due to vest shall immediately vest, based
on the number of days elapsed since the last instalment vested compared to the period from the last vesting date to the next vesting date (or if none have vested, the date of grant). Had an NEO died or if their employment had been terminated due to
disability on December 31, 2016, the incremental value the NEO would have received was: Richard D. McBee ($nil), Steven E. Spooner ($975,462), Graham Bevington ($nil), Thomas G. Lokar ($nil) and Jon D. Brinton ($nil).
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47
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Potential Payments upon Termination or Change of Control
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Termination without Cause
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Change of Control
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Name
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|
Salary and
Bonus ($)
(1) (2)
|
|
Equity Vesting
($)
(3)
(4)
|
|
Salary and Bonus
($)
(1) (2)
|
|
Equity Vesting
($)
(3) (4)
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Richard
D. McBee
(5)
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3,899,045
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2,636,835
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|
3,899,045
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5,809,873
|
|
|
|
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Steven E.
Spooner
(5)
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1,258,195
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301,250
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|
1,258,195
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1,844,283
|
|
|
|
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|
Graham
Bevington
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|
669,800
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114,188
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502,350
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970,585
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Thomas G.
Lokar
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579,482
|
|
|
|
579,482
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614,550
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|
|
|
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Jon D.
Brinton
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|
513,164
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|
206,525
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|
513,164
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|
740,950
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(1)
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See Section 16 Summary Compensation Table for the salary and bonus payments used in
calculating payments on termination without cause or change of control.
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(2)
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In addition, upon termination without cause or a change of control resulting in termination, each NEO would be
entitled to:
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benefit continuation during the severance or notice periods, as applicable, or where not available, a cash
payment
in-lieu,
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a payment equal to car allowance over the applicable period, and
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in respect of pension, an amount equal to the employer contribution over the applicable period.
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In the event of a change of control without termination, each NEO would only be entitled to the indicated
payments under Change of Control Equity Vesting. No payments for salary or bonus would be payable.
(3)
|
The amounts related to stock options and other equity awards are based upon the fair market value of the Mitel
common shares of $6.80 per share as reported on the NASDAQ on December 30, 2016, the last trading day of the Corporations year ended December 31, 2016.
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(4)
|
Upon a change of control, all vested options are paid out at the change of control price. The amounts related
to stock options and other equity awards are based upon a value of the Mitel common shares of $6.82 per share (change of control price), which is the highest per share price in the 5 trading days prior to December 31, 2016 as reported on the
NASDAQ, as required by the 2006 Equity Incentive Plan and the 2014 Equity Incentive Plan.
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(5)
|
Upon a change of control, all equity based compensation for Mr. McBee and Mr. Spooner becomes 100%
fully vested and payable, and any performance-based targets shall be deemed to have been satisfied at 100%. In all other circumstances following a change of control, an amount is only payable if the employee is terminated either by Mitel without
cause within twelve months of the change of control, or by the employee for good reason within twelve months of the change of control.
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Compensation Committee Report
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis contained in this proxy circular with
management of Mitel and, based on such review and discussion, the compensation committee recommended to the Mitel Board that the information set forth under Compensation Discussion and Analysis below be included in this proxy circular.
Respectfully submitted,
Compensation Committee
Benjamin H. Ball, Chair
John P.
McHugh
David M. Williams
D.
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ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
|
Mitels compensation program for executive officers is designed to attract, retain, motivate and engage highly skilled and experienced
individuals who excel in their field. The objective of the program is to focus our executives on the key business factors that affect shareholder value. Mitel believes that its compensation programs are consistent with those objectives, and are in
the best interest of shareholders. Detailed disclosure of our executive compensation program is provided under Compensation Discussion and Analysis starting on page 18 and the compensation tables and accompanying narrative disclosure.
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48
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The Mitel Board has adopted a policy to hold a
non-binding
advisory vote to approve executive compensation as disclosed in the management information circular at each annual meeting. This shareholder vote forms an important part of the ongoing process of
engagement between shareholders and the Mitel Board on executive compensation. Last year, approximately 91% of the shareholder votes cast on this proposal were voted in favor of the proposal.
At the meeting, shareholders will have an opportunity to vote to approve executive compensation through consideration of the following
advisory resolution:
Resolved, on an advisory basis and not to diminish the role and responsibilities of the board of directors,
that the shareholders approve the executive compensation disclosed in the management proxy circular delivered in advance of the 2016 annual meeting of shareholders of the Corporation.
Approval of this resolution will require that it be passed by a majority of the votes cast by shareholders in person and by proxy. Because
your vote is advisory, it will not be binding upon the Mitel Board. However, the compensation committee will take into account the results of the vote when considering future executive compensation arrangements.
THE BOARD OF DIRECTORS OF MITEL RECOMMENDS THAT YOU VOTE FOR THE ADVISORY RESOLUTION TO APPROVE EXECUTIVE COMPENSATION DISCLOSED IN THIS MANAGEMENT PROXY
CIRCULAR.
The named proxyholders, if named as proxy, intend to vote the common shares represented by such proxy for approval of the
advisory resolution to approve Mitels executive compensation, unless the shareholder has directed in the proxy that such common shares be voted against it or such shareholder abstains from voting.
E.
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ADVISORY VOTE ON FREQUENCY OF SAY ON PAY VOTES
|
As described in section D above, in accordance with the requirements of Section 14a of the Exchange Act and the related rules of the SEC, our
shareholders have the opportunity to cast an advisory vote to approve the compensation of our named executive officers. This Resolution No. 4 affords shareholders the opportunity to cast an advisory vote on how often we should include a
say-on-pay
proposal in our proxy materials for future annual shareholder meetings or any special shareholder meeting for which we must include executive compensation
information in the proxy statement for that meeting (a
say-on-pay
frequency proposal). At the meeting, shareholders will have an opportunity to vote to have
the
say-on-pay
vote every year, every two years, or every three years through the consideration of the following advisory resolution:
Resolved, on an advisory basis and not to diminish the role and responsibilities of the board of directors, that the shareholders
determine whether the preferred frequency of an advisory vote on the executive compensation of the Corporations NEOs as set forth in the Corporations proxy statement should be every one year, two years, or three years.
A plurality of the votes cast for Resolution No. 4 will determine the shareholders preferred frequency for holding an advisory vote
on executive compensation. This means that the option for holding an advisory vote every one year, two years, or three years receiving the greatest number of votes will be considered the preferred frequency of the shareholders.
THE BOARD OF DIRECTORS OF MITEL RECOMMENDS THAT YOU VOTE TO HOLD SAY ON PAY VOTES EVERY YEAR (AS OPPOSED TO EVERY TWO OR THREE YEARS).
The named proxyholders, if named as proxy, intend to vote the common shares represented by such proxy for approval to hold an advisory vote on
executive compensation every one year, unless the shareholder abstains from voting or has directed in the proxy that such common shares be voted in favor of holding an advisory vote on executive compensation every two years or three years.
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49
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F.
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INTEREST OF MANAGEMENT, NOMINEES AND OTHERS IN MATERIAL TRANSACTIONS
|
|
18.
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Review, Approval or Ratification of Transactions Involving Related Parties
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The Audit Committee of the Mitel Board has adopted written standards and procedures regarding transactions
involving related parties, which are set forth in the Audit Committee Charter. The Audit Committee considers related party transactions as any transaction in which the Corporation was or is to be a participant and the amount involved
exceeds US$120,000, and in which any related person (as defined in Item 404(a) of Regulation
S-K)
had or will have a direct or indirect material interest. The Audit Committee reviews and approves related party
transactions between the Corporation and persons or entities that are deemed to be related parties to the Corporation to ensure that the terms are fair and reasonable to the Corporation and to ensure that corporate opportunities are not usurped. The
Audit Committee provides a report to the Mitel Board that includes:
|
|
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a summary of the nature of the relationship with the related party and the significant commercial terms of the
transaction, such as price and total value;
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the parties to the transaction;
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an outline of the benefits to the Corporation of the transaction;
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whether terms are at market and whether they were negotiated at arms length; and
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|
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for related party transactions involving our officers or directors, whether there has been any loss of a
corporate opportunity.
|
Since January 1, 2016, Mitel has been involved in the following related party transactions.
Wesley Clover International Corporation
We lease our Ottawa-based headquarters facilities from Wesley Clover International Corporation (formerly Kanata Research Park Corporation),
390 March Road, Ottawa, ON, K2K 0G7, a corporation wholly-owned by our chairman Dr. Matthews.
We negotiated a lease in October 2010
under terms and conditions that management believes reflected then-current market rates. The initial term of the lease was five years and three months ending on February 15, 2016 and could be renewed at our option for an additional five years.
However, in November 2013, we amended the lease for our Ottawa-based headquarter facilities, which, among other things, extended the term of the lease for an additional five years, two months, expiring on April 30, 2021. We have also been
granted an option to extend the lease term for an additional five-year period, at then-current market rates.
The lease contains property
reinstatement terms which have not been accrued at this time as the amount is not estimable. The lease contains certain changes in the rental rate over the term of the lease. During the year, we recorded lease payments for base rent and operating
costs of $4.6 million. At December 31, 2016, balances payable relating to the lease totaled nil.
Other Parties Related to Dr. Matthews
We have entered into technology transfer, technology licensing and distribution agreements with certain companies related to
Dr. Matthews under terms reflecting what management believes were prevailing market conditions at the time the agreements were entered into. These companies develop technology that we integrate with, distribute or sell alone or as part of our
own products. In the normal course of business, we may enter into purchase and sale transactions with other companies related to Dr. Matthews under terms reflecting what management believes are then-prevailing market conditions.
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50
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We made sales to and purchases from other companies related
to Dr. Matthews, arising in the normal course of business, of $1.5 million and $3.4 million, respectively, for the year. The balances receivable and payable at December 31, 2016 as a result of these transactions
were $0.3 million and $0.8 million, respectively.
Shareholders Agreement
We, Francisco Partners Management, LLC, Francisco Partners GP II Management (Cayman) Limited and Francisco Partners GP III Management, LLC,
which are referred to as the Francisco Partners Group, and Dr. Terence H. Matthews and Wesley Clover International Corporation (formerly known as Kanata Research Park Corporation which was formerly known as Wesley Clover Corporation),
which are referred to as the Matthews Group, are parties to a shareholders agreement, or the Shareholders Agreement, which became effective at the closing of our IPO. As at March 31, 2017, each of the Matthews Group and Francisco
Partners Group beneficially owned less than 10% of the Mitel common shares of the Corporation. All of the provisions of the Shareholders Agreement are expressly subject to any requirements as to governance imposed by applicable securities laws
and by any exchange on which our securities are listed. The Shareholders Agreement covers matters as set forth below.
Board Nomination
Rights
The terms of the Shareholders Agreement provide that so long as the Francisco Partners Group beneficially owns at
least 15% of our outstanding Mitel common shares, the Francisco Partners Group may nominate three members of our board of directors; that so long as the Francisco Partners Group beneficially owns at least 10% of our outstanding Mitel common shares,
the Francisco Partners Group may nominate two members of our board of directors; and that so long as the Francisco Partners Group beneficially owns at least 5% of our outstanding Mitel common shares, the Francisco Partners Group may nominate one
member of our board of directors. The Shareholders Agreement also provides that so long as the Matthews Group beneficially owns at least 10% of our outstanding Mitel common shares, the Matthews Group may nominate two members of our board of
directors; and that so long as the Matthews Group beneficially owns at least 5% of our outstanding Mitel common shares, the Matthews Group may nominate one member of our board of directors. As of March 31, 2017, the Francisco Partners Group and
the Matthews Group each held less than 10% of the outstanding Mitel common shares of the Corporation and each is therefore entitled to nominate one member of our board of directors. Further, each of the Francisco Partners Group and the Matthews
Group, to the extent they beneficially own at least 5% of our outstanding Mitel common shares, will nominate our Chief Executive Officer to serve as a member of our board of directors.
Committee Representation
The
Shareholders Agreement provides that, for so long as the Francisco Partners Group beneficially owns at least 10% of our outstanding Mitel common shares, unless prohibited by U.S. federal securities laws or the NASDAQ rules, the Francisco
Partners Group is entitled to designate one member of each committee of our board of directors, other than our audit committee. As of March 31, 2017, the Francisco Partners Group hold less than 10% of the outstanding Mitel common shares of the
Corporation.
Special Approval Rights of the Francisco Partners Group
The Shareholders Agreement provides that we may not take certain significant actions, such as acquisitions and mergers, incurrence of
certain debt, declaration of dividends and amendments to our organizational documents, without the approval of the Francisco Partners Group if the Francisco Partners Group owns at least 15% of our outstanding common shares. As of March 31,
2017, the Francisco Partners Group hold less than 15% of the outstanding Mitel common shares of the Corporation.
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19.
|
Section 16(a) Beneficial Ownership Reporting Compliance
|
Section 16(a) of the Exchange Act requires directors, executive officers (as defined under the 1933 Act as
noted above), and shareholders owning more than 10% of any class of a companys outstanding equity shares (other than certain banks, investment funds and other institutions holding securities for the benefit of third parties or in customer
fiduciary accounts) to file reports of ownership and changes of ownership with the SEC. As of January 1, 2017, we are required to comply with Section 16(a) because we are no longer eligible to rely upon foreign private issuer exemptions
under U.S. securities laws and NASDAQs corporate governance rules.
Based solely upon its review of the copies of such forms it
received, or written representations from certain reporting persons for whom no such forms were required, the Corporation is aware of no late Section 16(a) filings.
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51
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G.
|
BUSINESS TO BE TRANSACTED AT THE MEETING
|
The consolidated financial statements of the Corporation for the year ended December 31, 2016 have been provided to shareholders on Form
10-K,
which is included with these proxy materials and is available on our website at
http://investor.mitel.com
,
as well as at
www.sec.gov
and
www.sedar.com
.
In accordance with the provisions of the
CBCA
, the financial statements will not be the subject of any vote at the meeting.
Audit Committee Report
The Audit Committee assists the Mitel Board in fulfilling its financial oversight obligations
including responsibility for overseeing the integrity of our financial statements and accounting and financial process and the audits of our financial statements, legal and regulatory compliance, auditor independence and qualification, the work and
performance of our financial management, internal auditor and external auditor and for overseeing the systems of disclosure controls and procedures and the system of internal controls regarding finance, accounting, legal compliance, risk management
and ethics that management and the Mitel Board have established.
The Audit Committee has:
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|
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Reviewed and discussed the audited consolidated financial statements with management and with Deloitte LLP,
Mitels independent registered public accounting firm;
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Discussed with Deloitte LLP the matters required to be discussed by AS No. 1301, Communications
with Audit Committees, as adopted by the Public Company Accounting Oversight Board;
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|
|
Received the written disclosures and the letter from Deloitte LLP required by applicable requirements of the
Public Company Accounting Oversight Board regarding Deloitte LLPs communications with the Audit Committee concerning independence, and has discussed with Deloitte LLP its independence; and
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|
|
Based upon these discussions and review, the Audit Committee recommended to the Board of Directors that the
audited financial statements be included in Mitels Annual Report on Form
10-K
for the fiscal year ended December 31, 2016 for filing with the U.S. Securities and Exchange Commission.
|
Respectfully submitted by the members of the Audit Committee of the Board of Directors.
Peter D. Charbonneau
John P.
McHugh
Sudhakar Ramakrishna
|
21.
|
Annual Resolution No. 1 Election of Directors
|
The articles of the Corporation provide for a board of directors of not less than three directors and not more than
15 directors to be elected annually, with the fixed number of directors within such range authorized by the directors of the Corporation from time to time. The directors of the Corporation have fixed the number of directors at eight and there are
eight directors being nominated. Each director who is elected will hold office until the next annual meeting of shareholders, or until a successor is duly elected or appointed, unless the office is earlier vacated in accordance with the
by-laws
of the Corporation, the
CBCA
or the Shareholders Agreement (as defined and discussed above under the heading Interest of Management, Nominees and Others in Material Transactions).
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52
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Eight of eight nominees proposed for election in this proxy circular are currently incumbent
directors. Pursuant to the Shareholders Agreement, the Mitel Board must be comprised of no more than ten members with the Francisco Partners Group entitled to nominate one director to the Mitel Board as long as it beneficially owns more than
5% of the outstanding Mitel common shares and the Matthews Group entitled to nominate one director to the Mitel Board as long as it beneficially owns more than 5% of the outstanding Mitel common shares. Terence H. Matthews is the nominee of the
Matthews Group and Benjamin Ball is the nominee of the Francisco Partners Group. In addition, as long as each of the Francisco Partners Group and the Matthews Group beneficially owns at least 5% of the outstanding Mitel common shares, they have
agreed to nominate the Chief Executive Officer of the Corporation to the Mitel Board. The parties to the Shareholders Agreement have also agreed to act and vote from time to time so that, on any election of directors by the shareholders of the
Corporation, the nominees of the Francisco Partners Group and the Matthews Group and the Chief Executive Officer (or equivalent) are elected.
Majority
Vote for Directors
We have adopted a majority voting policy for the election of directors. If a director standing for election or
re-election
receives more
withheld
votes (a
Majority Withheld Vote
) than
for
votes, he or she must offer to resign. Directors other than those who received a Majority Withheld Vote
at the same meeting will consider whether to accept or reject the resignation. The Mitel Board will announce its decision by way of press release within 90 days of the meeting.
The persons named in the form of proxy will, unless a shareholder has instructed that the Mitel common shares it represents be WITHHELD
from voting in respect of the election of directors or unless someone else is appointed as proxy holder, be voted FOR the election of the nominees for director listed below.
In the event a nominee is unable or unwilling to serve, an event that
management has no reason to believe will occur, the persons named in the form of proxy will vote for a substitute nominee in accordance with his or her best judgment.
The following table sets forth the name and age of each person nominated for election as a director; the period or periods of service as a
director; the principal occupation, business or employment, and all positions with the Corporation and any significant affiliate of ours, within the preceding five years, as well as the number of shares beneficially owned or over which control or
direction is exercised. All nominees currently serve as directors of the Corporation.
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53
-
|
|
|
|
|
Name and Municipality of Residence
|
|
Principal
Occupations
|
|
Shares Beneficially
Owned or Controlled
(1)
|
Dr. Terence H. Matthews
Ottawa, Ontario, Canada
Age: 73
Director since February 16, 2001
|
|
Chairman, Wesley Clover International Corporation; Chairman of the Board of March Networks Corporation from June 2000 to April 2012; Chairman and/or Director
of a number of other companies.
|
|
6,776,526 Mitel common shares
|
|
|
|
|
Richard D. McBee
Dallas, Texas, U.S.A.
Age: 53
Director since January 19, 2011
|
|
Chief Executive Officer and
President of the Corporation since January 2011. Prior to joining the Corporation, President of the Communications & Enterprise Group of Danaher Corporation since 2007.
|
|
267,647 Mitel common shares
|
|
|
|
|
|
Benjamin H. Ball
San Francisco, California, U.S.A.
Age: 51
Director since October 23, 2007; Chair of the Compensation Committee; Member of the Nominating and Corporate Governance Committee
|
|
Managing Director of Francisco Partners L.P. since August 1999.
|
|
8,860,877
(2)
|
Martha H. Bejar
Medina, Washington, U.S.A.
Age: 54
Director since March 10, 2017
|
|
Co-Founder
of Red Bison Advisory Group, LLC established in January, 2014. Until December 2015, CEO and Director of Flow
Mobile. Prior to that Chairperson/CEO of Wipro Infocrossing Cloud Computing Services (A Wipro Company). Prior to Wipro, Corporate Vice President for Communications at Microsoft and before Microsoft, Ms. Bejar held various executive positions at
Nortel Networks reporting to the CEO, including president of the Caribbean and Latin America (CALA) region.
|
|
-
|
Peter D.
Charbonneau
Ottawa, Ontario, Canada
Age: 63
Director since February 16, 2001; Chair of the Audit Committee; Chair of the Nominating and Corporate Governance Committee
|
|
Independent Corporate Director. Served as a General Partner of Skypoint Capital Corporation from January 2001 to 2015.
|
|
48,221 Mitel common shares
|
-
54
-
|
|
|
|
|
Name and Municipality of Residence
|
|
Principal
Occupations
|
|
Shares Beneficially
Owned or Controlled
(1)
|
John P. McHugh
San Jose, California, U.S.A.
Age: 56
Director since March 12, 2010; Member of the Audit Committee, Compensation Committee and of the Nominating and Corporate Governance Committee
|
|
General Manager and Senior Vice President, Commercial Business Unit at NETGEAR, Inc. since July 2013; prior to that, he was Chief Marketing Officer of Brocade
Communications; prior to that, he was Vice President and General Manager of Nortel Networks Limiteds Enterprise Network Solutions Business Unit.
|
|
51,766 Mitel common shares
|
Sudhakar Ramakrishna
Saratoga, California, U.S.A.
Age: 49
Director since May 14, 2016; Member of the Audit Committee; Nominating and Corporate Governance Committee
|
|
Chief Executive Officer for Pulse Secure LLC since July 2015; prior
to that Senior Vice President and General Manager of Enterprise and Service Provider Division at Citrix Systems Inc. since March 2013; prior to that, he served as President, Products and Services from February 2012 to March 2013 at Polycom Inc.
Mr. Ramakrishna also served as Executive Vice President , General Manager, Unified Communications Solutions and Chief Development Officer at Polycom Inc. from February 2011 to February, 2012 and as Senior Vice President and General Manager,
Unified Communications Products and Chief Development Officer from October 2010 to February 2011. Prior to joining Polycom, Mr. Ramakrishna served as Corporate Vice President and General Manager for Wireless Broadband Access Solutions and
Software at Motorola, Inc., from May 2007 to October 2010.
|
|
16,653 Mitel common shares
|
David M. Williams
Toronto, Ontario, Canada
Age: 75
Director since January 31, 2014;
Member of the Compensation Committee and the Nominating and Corporate Governance Committee
|
|
Independent Corporate Director of several Canadian companies including Presidents Choice Bank, Chairman of Morrison Lamothe Inc. and lead Director of
Mattamy Homes Corporation. Interim President and Chief Executive Officer of Shoppers Drug Mart Corporation from February 2011 to November 2011.
|
|
210,000 Mitel common shares
|
(1)
|
Certain spouses of nominees own Mitel common shares. For
more information see Security Ownership of Certain Beneficial Owners and Management. The relevant nominees disclaim beneficial ownership of such Mitel common shares.
|
(2)
|
Certain funds managed by Francisco Partners LLC, of which
Mr. Ball is a Principal, own or control, directly or indirectly, 8,851,903 Mitel common shares and Mr. Ball owns 8,974 Mitel common shares directly. For more information, see Security Ownership of Certain Beneficial Owners and
Management.
|
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55
-
Dr.
Terence H. Matthews
is our founder, our
Chairman and a shareholder. Dr. Matthews has been a member of our board of directors since February 16, 2001 and has been an investor of Mitel Corporation
(re-named
Zarlink Semiconductor Inc. and
acquired by Microsemi Corporation) for over 34 years. In 1972, he
co-founded
Mitel Corporation and served as its President until 1985 when British Telecommunications plc bought a controlling interest in
the company. In 2001, companies controlled by Dr. Matthews purchased a controlling interest in Mitel Corporations communications systems division and the Mitel trademarks from Mitel Corporation. Between 1986 and 2000,
Dr. Matthews founded Newbridge Networks Corporation and served as its Chief Executive Officer and Chairman. Dr. Matthews is also the founder and Chairman of Wesley Clover International Corporation, an investment group, with offices in the
United Kingdom and Canada, that invests in a broad range of next-generation technology companies, real estate and hotels and resorts. In addition, Dr. Matthews is currently Chairman, or serves on the board of directors, of a number of high
technology companies including CounterPath Corporation, ProntoForms Corporation, Solace Systems Inc. and Benbria Corporation. Dr. Matthews holds an honors degree in electronics from the University of Wales, Swansea and is a Fellow of the
Institute of Electrical Engineers and of the Royal Academy of Engineering. He has been awarded honorary doctorates by several universities, including the University of Wales, Glamorgan and Swansea, and Carleton University in Ottawa. In 1994, he was
appointed an Officer of the Order of the British Empire, and in the 2001 Queens Birthday Honours, he was awarded a Knighthood. In 2011, he was appointed Patron of the Cancer Stem Cell Research Institute at Cardiff University.
Peter D. Charbonneau
is an independent corporate director of several companies. Mr. Charbonneau served as a
General Partner at Skypoint Capital Corporation, an early-stage technology venture capital firm, a position he held from January 2001 to March 2015. From June 2000 to December 2000, Mr. Charbonneau was an Executive Vice President
of March Networks Corporation. Mr. Charbonneau was appointed to our board of directors on February 16, 2001. Prior to his involvement with March Networks Corporation, Mr. Charbonneau spent 13 years at Newbridge Networks
Corporation acting in numerous capacities including as Chief Financial Officer, Executive Vice President, President and Chief Operating Officer and Vice Chairman. He also served as a member of Newbridge Networks Corporations board of directors
between 1996 and 2000. Mr. Charbonneau currently serves on the board of directors of Teradici Corporation. Mr. Charbonneau holds a Bachelor of Science degree from the University of Ottawa and an MBA from University of Western Ontario. He
has been a member of the Chartered Professional Accountants of Ontario (and its predecessor, the Institute of Chartered Accountants of Ontario) since 1979 and in June 2003 was elected by the Institute as a Fellow of the Institute in recognition
of outstanding career achievements and leadership contributions to the community and to the profession. Mr. Charbonneau also holds the ICD.D certification, having completed the Directors Education Program of the Institute of Corporate
Directors of Canada.
Benjamin H. Ball
is a founding partner of Francisco Partners Management, LLC, which is a
leading private equity firm focused exclusively on investing in the information technology market. Mr. Ball focuses primarily on investments in the communications and hardware systems sectors. Mr. Ball was appointed to our board of
directors on October 23, 2007. He also serves on the board of directors of Cross Match Technologies, Inc., Source Photonics, Inc., WatchGuard Technologies, Inc., Metaswitch Networks, Inc. and WebTrends, Inc. Prior to founding Francisco
Partners, Mr. Ball was a Vice President with TA Associates where he led private equity investments in the software, semiconductor and communications segments. Earlier in his career, Mr. Ball worked for AEA Investors, a New York-based
private equity firm, and also for the consulting firm of Bain & Company. Mr. Ball holds a Bachelor of Arts degree from Harvard College and an MBA from Stanford Graduate School of Business.
Martha H. Bejar
was appointed to our board of directors on March 10, 2017. Ms. Bejar is
co-Founder
of Red Bison Advisory Group, LLC established in January 2014. Red Bison is a company that identifies opportunities with proven enterprises in China, the Middle East, and the United States, and creates
dynamic partnerships focused in two sectors; natural resources, and information, communication, technology (ICT). Ms. Bejar serves on the board of directors at CenturyLink Inc., Humm Kombucha LLC, and UniumWiFi Inc. Ms. Bejar is
a member of the Presidents Advisory Group at EastWest Institute in New York, and a Board Trustee at Rainiers Scholars in Seattle. Most recently, Ms. Bejar served on the Board of Polycom, Inc. from October 2013 to September 2016 when the
company was sold. Until December 2015, Ms. Bejar held the position of CEO and Director of Flow Mobile. Prior to joining Flow Mobile, Ms. Bejar was Chairperson/CEO of Wipro Infocrossing Cloud Computing Services (A Wipro Company).
Prior to Wipro, Ms. Bejar was Corporate Vice President for Communications at Microsoft responsible for service and content providers, addressing the specific needs of wireline and wireless telecommunications companies, cable operators, hosting
service providers, and media and entertainment companies. Before Microsoft, Ms. Bejar held various executive positions at Nortel Networks reporting to the CEO, including president of the Caribbean and Latin America (CALA) region. Ms. Bejar
is the recipient of numerous industry awards including; top fifty Hispanic women in the United States by Hispanic Inc. Business Magazine, and the Hispanic Business Medias award for the 2008 Woman of the Year and the Visionary Award from LISTA
(Latinos in Information Sciences and Technology Association). Ms. Bejar received an Advanced Management Program degree from Harvard University Business School. She graduated Cum Laude with a Bachelor of Science degree in Industrial Engineering
from the University of Miami and also graduated Cum Laude with MBA from Nova Southeastern University.
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56
-
John P. McHugh
was appointed to our board of directors on
March 12, 2010. Mr. McHugh is an enterprise networking industry veteran with over 30 years of related experience. Since July 2013, Mr. McHugh has been the Senior Vice President of NETGEAR Inc., a company providing networking, storage
and media solutions to consumers, small businesses and service providers. Mr. McHugh is the General Manager of the Commercial Business Unit where he is responsible for SMB networking product marketing, research and development, strategic
planning and business development. Prior to this role, Mr. McHugh was the Chief Marketing Officer for Brocade Communications Systems, Inc., a public company which offers data center networking and
end-to-end
enterprise and service provider networking solutions. Previously, Mr. McHugh was Vice President and General Manager of Nortel Networks Limiteds Enterprise Network Solutions Business Unit
and oversaw the restructuring and divestiture of that organization from Nortel. He also served briefly as a consultative executive at Silver Lake Management, L.L.C. where he worked on technology and company evaluations. Mr. McHugh also had a
26-year
career at Hewlett-Packard Co., where he held a variety of executive management positions including Vice President and Worldwide General Manager of HP ProCurve Networking. Mr. McHugh was responsible for
global operations, sales, channels, marketing, research and development, strategic planning and business development. Mr. McHugh holds a Bachelor of Science in Electrical Engineering and Computer Science from the Rose-Hulman Institute of
Technology.
Sudhakar Ramakrishna
was appointed to the board on May 14, 2015. He is Chief Executive Officer
for Pulse Secure LLC, where he has overseen all aspects of business strategy and execution since July 2015. Mr. Ramakrishna brings nearly 25 years of experience across the cloud, mobility, networking, security and collaboration markets. Prior
to joining Pulse Secure, Mr. Ramakrishna served as the Senior Vice President and General Manager for the Enterprise and Service Provider Division of Citrix where he had profit and loss responsibility for approximately a $2.5 billion
portfolio of virtualization, cloud networking, mobile platforms and cloud services solutions. Prior to Citrix, he was at Polycom and was President of Products and Services. Mr. Ramakrishna has also held senior leadership roles at Motorola, 3COM
and US Robotics. Mr. Ramakrishna is also a member of the board of directors at Tely Labs. Mr. Ramakrishna earned his Masters degree in Computer Science from Kansas State, and an MBA from Northwestern Universitys Kellogg School
of Management.
David M. Williams
was appointed to the board of directors in January 2014. Mr. Williams
is an independent corporate director of several Canadian companies. Mr. Williams served as Interim President and Chief Executive Officer of Shoppers Drug Mart Corporation from February 2011 to November 2011. Prior to this, he served as
President and Chief Executive Officer of the Ontario Workplace Safety and Insurance Board and held senior executive and finance roles with George Weston Limited and Loblaw Companies Limited, including a term as Chief Financial Officer of Loblaw
Companies Limited. Mr. Williams is a director of Presidents Choice Bank, Mattamy Homes Corporation and Morrison Lamothe Inc. Mr. Williams is a graduate of the ICD Corporate Governance College and is a member of the Chartered
Professional Accountants of Ontario.
Cease Trade Orders, Bankruptcies, Penalties or Sanctions.
Skypoint Capital Corporation invests in new ventures that may involve risks. As a result, Mr. Charbonneau was a director of Metconnex
Inc., which went into receivership in 2006 (he resigned in June 2007) and was a director of Trellia Networks Corporation, which filed a proposal under the Canadian Bankruptcy and Insolvency Act that was accepted by the Courts in February 2011 (he
resigned in November 2011).
Mr. McHugh took a position as Vice President and General Manager of the Enterprise Data Networking
Product Unit for Nortel Networks in December 2008. In January 2009, Nortel Networks filed for Chapter 11 bankruptcy protection in Canada, the United States and the United Kingdom.
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57
-
No other director has, in the past 10 years, been an officer or director of a company that
has become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or was subject to or instituted any proceedings, or made a compromise with creditors or had a receiver, receiver manager or trustee appointed to hold
its assets.
None of the directors have been a director or officer of a company in the last 10 years that is or was subject to a cease
trade order, an order similar to a cease trade order or an order that denied such company access to any exemption under securities legislation.
None of the directors have, in the last 10 years, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency,
or become subject to or instituted any proceedings.
None of the directors have been subject to any penalties or sanctions imposed by a
court relating to securities legislation or by a securities regulatory authority or have entered into a settlement agreement with a securities regulatory authority or any other penalties or sanctions imposed by a court or regulatory body.
|
22.
|
Annual Resolution No. 2 Appointment and Remuneration of Auditors
|
Appointment of Auditors
On the recommendation of the Audit Committee, management proposes to present a resolution (
Annual
Resolution
No.
2
) to appoint Deloitte LLP, Chartered Professional Accountants, Ottawa, Ontario, as auditors of the Corporation for the fiscal year ending December 31, 2017 to hold office until the close of the next annual
meeting of shareholders and to authorize the directors to determine and fix the remuneration of the auditors. Deloitte LLP was first appointed auditors of the Corporation on December 4, 2001.
Deloitte LLP representatives are expected to attend the Meeting. They will have an opportunity to make a statement if they desire to do so and
will be available to respond to appropriate shareholder questions.
Remuneration of Auditors
In the past, the Audit Committee has negotiated with the auditors of the Corporation on an arms length basis for the purpose of
determining the fees to be paid to the auditors. Such fees have been based upon the complexity of the matters in question and the time incurred by the auditors. Management believes that the fees negotiated in the past with the auditors of the
Corporation were reasonable in the circumstances and would be comparable to fees charged by other auditors providing similar services.
Deloitte LLP is our external auditor. Fees billed by Deloitte LLP to the Corporation for the year ended December 31, 2016 and the
year ended December 31, 2015 are set forth below.
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
Audit Fees
|
|
$
|
2,438,000
|
|
|
$
|
1,978,000
|
|
|
|
|
Audit-related Fees
|
|
|
67,000
|
|
|
|
61,000
|
|
|
|
|
Tax Fees
|
|
|
59,000
|
|
|
|
126,000
|
|
|
|
|
All other
fees
|
|
|
160,000
|
|
|
|
126,000
|
|
|
|
|
Total
|
|
|
2,724,000
|
|
|
|
2,291,000
|
|
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58
-
Audit fees relate to professional services rendered for the audit of our annual consolidated financial statements and, as required, the
unconsolidated statutory financial statements of certain of our subsidiaries. Audit fees include professional services related to quarterly reviews of our consolidated financial statements. The aggregate fees billed for professional services
rendered by Deloitte LLP for the fiscal years ended December 31, 2016 and December 31, 2015 for the audit of our consolidated annual financial statements and the reviews of the financial statements included in our Forms
10-Q,
or services that are normally provided by Deloitte LLP in connection with statutory and regulatory filings or engagements in 2016 and 2015, were $2,438,000 and $1,978,000, respectively.
Audit-related fees billed by Deloitte LLP primarily relate to the defined contribution pension plan in Canada and the defined benefit pension
plan in the United Kingdom. It also includes fees for accounting consultation, advisory services and the pass-through cost of regulatory fees. The aggregate fees billed for audit-related services rendered by Deloitte LLP during the fiscal year ended
December 31, 2016 that are reasonably related to the performance of the audit or review of our financial statements and are not included in Audit Fees above were approximately $67,000. The aggregate fees billed by Deloitte LLP
during the fiscal year ended December 31, 2015 for these audit-related services were approximately $61,000.
Tax fees relate to assistance with tax compliance, expatriate tax return preparation, tax planning and various tax advisory services. The
aggregate fees billed for tax services rendered by Deloitte LLP during the fiscal years ended December 31, 2016 and December 31, 2015 were $59,000 and $126,000, respectively.
All other fees include other
non-audit
services, including services provided relating to
the Polycom transaction during 2016, and the Mavenir acquisition during 2015. The aggregate fees billed for all other services rendered by Deloitte LLP during the fiscal years ended December 31, 2016 and December 31, 2015 that are not
included in Audit Fees, Audit Related Fees or Tax Fees above were approximately $160,000 and $126,000 respectively.
Pre-approval
Policies and Procedures
From time to time, management recommends to and requests approval from the audit committee for audit and
non-audit
services to be provided by our auditors. The audit committee considers such requests on a quarterly basis and, if acceptable,
pre-approves
such audit and
non-audit
services. During such deliberations, the audit committee assesses, among other factors, whether the services requested would be considered prohibited services as contemplated by the SEC, and
whether the services requested and the fees related to such services could impair the independence of the auditors. Since the implementation of our audit committee
pre-approval
process in December 2003, all
audit and
non-audit
services rendered by our auditors have been
pre-approved
by our audit committee.
The persons named in the form of proxy will, unless a shareholder has instructed that the shares it represents be WITHHELD from voting in
respect of the appointment of auditors or someone else is appointed as proxy holder, be voted FOR the reappointment of Deloitte LLP as auditors of the Corporation and to authorize the directors to determine and fix the remuneration of the auditors.
|
23.
|
Annual Resolution No. 3 Say on Pay
|
The Mitel Board has adopted a policy to hold a
non-binding
advisory vote on approving executive
compensation as disclosed in the management information circular at each annual meeting, which disclosure includes the disclosure under Compensation Discussion and AnalysisExecutive Officer Compensation, the compensation tables and
the narrative discussion following the compensation tables. This shareholder vote forms an important part of the ongoing process of engagement between shareholders and the Mitel Board on executive compensation. At the meeting, shareholders will have
an opportunity to vote to approve executive compensation (
Annual Resolution No.
3
).
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59
-
The persons named in the form of proxy will, unless a Shareholder has instructed that the
shares it represents be voted AGAINST or such Shareholder ABSTAINS from voting to approve Mitels executive compensation or someone else is appointed as proxy holder, be voted FOR approving Mitels approach to executive compensation.
|
24.
|
Resolution No. 4 Frequency of Say on Pay Votes
|
As described in Annual Resolution No. 3 above, in accordance with the requirements of Section 14A of the
Exchange Act and the related rules of the SEC, our shareholders have the opportunity to cast an advisory vote to approve the compensation of our named executive officers. This Resolution No. 4 affords shareholders the opportunity to cast an
advisory vote on how often we should include a
say-on-pay
proposal in our proxy materials for future annual shareholder meetings or any special shareholder meeting for
which we must include executive compensation information in the proxy statement for that meeting (a
say-on-pay
frequency proposal). At the meeting,
shareholders will have the opportunity to vote to have the
say-on-pay
vote every year, every two years, or every three years.
It is expected that the next vote on a
say-on-pay
frequency
proposal will occur at the 2023 annual meeting of shareholders.
Shareholders may cast their advisory vote to conduct advisory votes on executive compensation every 1 Year, 2 Years, or 3 Years, or
Abstain. The persons named in the form of proxy will, unless a shareholder ABSTAINS from voting in respect of the frequency of a say on pay vote, or has instructed that the shares it represents be voted for 2 YEARS or 3 YEARS, be voted
to approve the frequency of a say on pay vote every 1 YEAR.
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60
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|
25.
|
Ordinary Resolution No. 1 The 2017 Omnibus Incentive Plan
|
We are asking shareholders to approve our 2017 Omnibus Incentive Plan (the
2017 Plan
). As of the
date hereof, our board of directors approved the 2017 Plan, subject to shareholder approval at the annual meeting.
Awards have been
made under the 2014 Plan that cover 8,108,008 shares of the 8,900,000 shares that were available under that Plan. Some of these have been exercised or settled, and the remaining awards that are still outstanding as of the date hereof are 6,339,790.
As of April 21, 2017 760,359 shares remained available from the 2014 share Pool. If the 2017 Plan is approved by shareholders, then any un-awarded shares from the 2014 share pool will not be used and will not be available for awards.
Rather than amending the 2014 Equity Incentive Plan to extend the term and to replenish the pool of Mitel common shares available for future
awards, the Corporation wishes to adopt the 2017 Omnibus Incentive Plan, as described below.
In considering the approval of the 2017 Plan, we ask our
shareholders to note the following important features:
|
|
|
Share Pool
: 10,000,000 Mitel common shares will be reserved for issuance under
the 2017 Plan, which represents approximately 8.2% of our outstanding shares as of the date hereof.
|
Prior Plan Pool
: We will no longer grant awards under our 2014 Equity Incentive Plan, if the 2017 Omnibus Incentive
Plan is approved by the Shareholders, which means that any remaining share pool under that plan will not be available for issuance.
Adjustments to Pool
: The 2017 Plan has a fixed number of shares available for issuance. It does not contain an
evergreen provision, and only certain types of
add-backs
would result in shares
re-entering
the pool.
|
|
|
Exercise Price
. Options must be granted with an exercise price that is not less than 100% of the fair
market value on the date of grant. Repricing of stock options is expressly prohibited.
|
|
|
|
Double Trigger
. A change in control does not result in automatic vesting of awards under the 2017 Plan,
unless the Board provides otherwise.
|
|
|
|
Vesting
: Imposes a minimum vesting schedule so that at least 95% of the awards under the Plan (other
than vested elective deferrals) do not have any vesting before the first year.
|
|
|
|
A New Type of Award
: The 2017 Plan includes provisions to allow the Committee to award cash performance
compensation, in a manner that could be eligible for deduction under Section 162(m) of the Tax Code, if the Committee so decides.
|
Section 162(m) of the Tax Code places a limit of $1,000,000 on the amount of compensation that Mitel may deduct in any one year with respect
to certain executive officers. The Committee has the ability, through the use of the 2017 Plan, subject to shareholder approval, to grant awards that qualify as performance-based compensation exempt from that $1,000,000 limitation but,
in order to maintain flexibility in compensating executive officers in a manner designed to promote varying corporate goals, we have not adopted a policy requiring all compensation to be deductible, and have in the past and will in the future make
grants of compensation that do not qualify to be exempt from the $1,000,000 limitation when the Committee believes that it is appropriate to meet its compensation objectives.
We believe the 2017 Plan strikes the right balance between providing management the proper flexibility to manage the business with a longer
term approach while practicing good corporate governance around our equity strategy. Our management, with oversight from our Compensation Committee, continues to enhance our governance practices for equity. This includes, but is not limited to, the
management of the three year average burn rate, which is below Institutional Shareholder Services Inc.s (ISSs) benchmark for our industry classification.
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61
-
We believe that the adoption of the 2017 Plan is in the best interests of our company and
shareholders because of the continuing need to provide equity-based incentives to attract and retain the most qualified personnel, and cash-based performance compensation that would be eligible for U.S. tax deduction. We arrived at 10,000,000 Mitel
common shares reserved for issuance under the 2017 Plan by forecasting the number of shares likely needed for newly hired employees as well as ongoing awards to our current employees, executives and members of our board of directors and potential
acquisition activity. Accordingly, we expect that the number of shares available under the 2017 Plan will provide us with enough shares for equity awards for the next three to four years.
The 2017 Plan will serve as an important part of this practice and is a critical component of the overall compensation package that we offer
to recruit, retain and motivate our employees. The use of equity compensation has historically been, and will continue to be, a key element of our overall compensation philosophy at Mitel. In addition, equity awards provide our employees an
opportunity to acquire or increase their ownership stake in us, and we believe this aligns their interests with those of our shareholders, creating strong incentives to grow shareholder value driven by our future growth and success.
The 2017 Equity Incentive Plan, has been submitted for TSX approval subject to shareholder approval. The following is a summary of the 2017
Omnibus Incentive Plan and is qualified in its entirety by the full text of the 2017 Omnibus Incentive Plan, a copy of which is included as Appendix
E-1
to this Circular.
2017 Plan Summary
Participation
Current full-time or part-time employees of the Corporation or a subsidiary (approximately 3,283 persons), directors of the Corporation
(approximately eight persons) and individual or consultant companies (none at this time) are eligible to participate in the 2017 Plan subject to the terms and conditions set forth in the 2017 Omnibus Incentive Plan, a copy of which is included as
Appendix
D-1
to Schedule D of this proxy statement.
Shares Subject to the 2017 Omnibus Incentive Plan
The maximum number of Mitel common shares available for issuance under the 2017 Plan is fixed at 10,000,000 Mitel common shares, which
represents approximately 8.2% of the issued and outstanding Mitel common shares of the Corporation as of the date hereof. The number of Mitel common shares issuable to insiders under the 2017 Plan and all other security-based compensation
arrangements cannot exceed 10% of the issued and outstanding Mitel common shares at any time. The number of Mitel common shares issued to insiders within any one year period under the 2017 Plan and all other security-based compensation arrangements
cannot exceed 10% of the issued and outstanding Mitel common shares. In addition, the plan includes further individual award limits:
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No participant may receive awards covering in excess of 2,500,000 Mitel common shares in any calendar year
(which represents approximately 2.0% of our outstanding shares as of the date hereof).
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No
non-employee
director may receive a grant of cash and awards, in
the aggregate with a grant date value in excess of $400,000 during any calendar year, provided however that a
non-employee
director who is newly elected as a director shall be eligible to receive a grant of
cash and awards with a value in the aggregate up to $700,000 in such in such initial year; and provided further that any advance election by a director to defer cash retainer into deferred share units do not count against these limits).
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The maximum amount that can be paid in any calendar year to any participant pursuant to a cash performance
compensation award shall be $5,000,000.
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If any Mitel common shares subject to an award are forfeited, cancelled, exchanged or
surrendered, or if an award terminates or expires without a distribution of Mitel common shares to the participant, the Mitel common shares with respect to the award shall, to the extent of any such forfeiture, cancellation, exchange, surrender,
termination or expiration, again be available for awards under the 2017 Plan. Mitel common shares that are exchanged by a participant or withheld by the Corporation for full or partial payment for an award shall not be available for subsequent
awards under the Plan.
Any awards that have previously been granted pursuant to the 2014 Equity Incentive Plan or the 2006 Equity
Incentive Plan but that have not yet vested or been exercised will continue to be governed by the original applicable plan until their expiration or termination. As of the date hereof, the Board has not granted any awards under the 2017 Plan.
Administration of the 2017 Plan.
The
2017 Plan will be administered by the Board in its discretion. The Board may, from time to time, delegate its powers under the 2017 Plan to a committee (the Committee ). To the extent required for employees subject to Section 162(m) of
the Tax Code, as amended from time to time, the Committee will be composed of two or more directors of Mitel, each of whom is an outside director to comply with the applicable requirements of Section 162(m) of the Tax Code and
Section 16 of the U.S. Securities Act of 1934.
The Board will determine which employees, directors, officers or consultants are
eligible to receive awards under the 2017 Plan. In addition, the Board will interpret the 2017 Plan and may adopt administrative rules, regulations, procedures and guidelines governing the 2017 Plan or any awards granted under the 2017 Plan as it
deems to be appropriate.
Types of Awards
All of the awards described below are subject to the conditions, limitations, restrictions, exercise price, vesting and forfeiture provisions
determined by the Committee, in its sole discretion, subject to such limitations provided in the 2017 Plan. In addition, subject to the limitations provided in the 2017 Plan and in accordance with applicable law, the Committee may accelerate or
defer the vesting or payment of awards, cancel or modify outstanding awards, and waive any condition imposed with respect to awards or Mitel common shares issued pursuant to awards.
Non-Qualified
Stock Options
An award of a
non-qualified
stock option grants a participant the right to purchase a
certain number of Mitel common shares during a specified term in the future, after a vesting period, at an exercise price equal to at least 100% of the Fair Market Value (as defined below) of our Mitel common shares on the grant date. The Fair
Market Value of Mitel common shares as of a particular date shall generally mean the closing price per Common Share on the national securities exchange on which the Mitel common shares are principally traded on such date (or if the Mitel
common shares did not trade on an exchange on such day, the average bid and ask prices of such Mitel common shares at the closing of trading on such day). Currently, our Mitel common shares are principally traded on the NASDAQ.
Unless otherwise specified by the Board or the Committee at the time of granting an option and except as otherwise provided in
the 2017 Plan, each option will vest and be exercisable as to
one-quarter
of the Mitel common shares which are subject to the option, beginning on the first anniversary of the date of grant and thereafter in
subsequent
one-sixteenth
portions quarterly on each subsequent three-month anniversary of the date of grant.
The exercise price of an option must be fully paid with cash.
Subject to any Black Out Period (as defined below), each option granted will expire on the 7th anniversary of the date of
grant. The Committee shall have the authority to condition the grant or vesting of an option upon the attainment by the participant of specified performance goals or such other factors as the Committee may determine in its sole discretion.
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Incentive Stock Options
An incentive stock option is a stock option that meets the requirements of Section 422 of the Code and is designated as
such in the applicable award agreement with the participant.
Where an option is granted to a participant who owns shares
representing more than 10% of the voting power of all classes of shares of the Corporation, its parent or one of its subsidiaries, any incentive stock option granted must have a term of not more than five years and have an exercise price which is at
least 110% of the Fair Market Value of the Mitel common shares subject to the option. In addition, if the aggregate Fair Market Value of the Mitel common shares (as of the grant date) for which incentive stock options are exercisable for the first
time by a participant during any calendar year exceeds $100,000, such excess will be treated as
non-qualified
stock options.
Deferred Share Units
A deferred share unit is a unit equivalent in value to a Common Share credited by means of a bookkeeping entry in the books of
the Corporation and payable by the Corporation at a future date. The Committee may grant deferred share units to employees, directors and officers of Mitel. Distribution of deferred share units will be settled by a lump sum payment in cash equal to
the number of deferred share units on the participants account. At the Committees option, the Corporation may settle the deferred share units in Mitel common shares.
Restricted Share Units
A restricted share unit is a right to receive cash or Mitel common shares that does not vest until after a specified period of
time, or satisfaction of other vesting conditions as determined by the Committee, and which may be forfeited if the conditions to vesting are not met.
Performance Share Units
A performance share unit is a right, denominated or payable in cash, Mitel common shares or other securities or property and
which will confer on the holder rights valued as determined by the Committee. A performance share unit is payable to, or exercisable by, the holder upon the achievement of certain performance goals established by the Committee. The initial value of
a performance share unit will be established by the Committee on the date of grant and to the extent related to Mitel common shares, other securities or other property will initially be equal to 100% of the Fair Market Value of a Common Share or the
fair market value of such other security or property as determined by the Board on the grant date. The performance goals to be achieved during any performance period, the length of any performance period, the amount of any performance share unit
granted, the termination of a participants employment and the amount of any payment or transfer made pursuant to any performance share unit will be determined by the Committee and by the other terms and conditions of any performance share
unit.
Other Share-Based Awards
The Committee may, subject to the provisions of the 2017 Plan and applicable law, grant other share-based awards to any
director, officer or consultant, other than those described above. Such awards are to be denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, Mitel common shares (including securities
convertible into Mitel common shares).
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Performance Compensation Awards
A performance compensation award is a cash bonus, designated by the Committee as a performance compensation award in order to
qualify such award as performance-based compensation under Section 162(m). The Committee will designate within the first 90 days of a performance period (or or, if longer or shorter, within the maximum period allowed under Section 162(m)
of the Code) which participants will be eligible, the length of the performance period, the types of performance goals and the measurement criteria which will be used to establish the performance goals. A Participant shall be eligible to receive
payment in respect of a Performance Compensation Award only to the extent that the measurement factors established by the Committee as applied against the Performance Goals determines that all or some portion of such Participants Performance
Compensation Award has been earned for the Performance Period, as certified by the committee.
Vesting
The 2017 Plan provides that 95% of awards granted must have a vesting schedule of at least one year. This restriction does not apply to
elective deferrals of vested cash compensation, for example, elective deferred share units.
Black Out Periods
The 2017 Plan provides that if an option expires during or immediately after the period of time during which the Corporation has imposed
trading restrictions on insiders (a Black Out Period ), the expiration of such options shall be extended until ten (10) business days following the expiration of the Black Out Period, provided that in no event will the exercise
period of an option exceed ten (10) years from the date of grant.
Adjustments
The 2017 Plan provides that the Board may make appropriate equitable adjustments to the number of Mitel common shares available under the Plan
or that may be acquired on the vesting of an outstanding award or the exercise of any outstanding options, the exercise price of any outstanding options and/or the terms of any other award in order to preserve proportionately the rights and
obligations of the participants holding such awards. These changes are to be made to reflect changes in Mitels capital structure including a subdivision, consolidation in Mitel common shares or any similar capital reorganization, a payment of
a stock dividend (other than a stock dividend that is in lieu of a cash dividend), or any other change in the capitalization of Mitel that does not constitute a Change in Control (as defined in the 2017 Plan) that would warrant an adjustment to be
made.
Terminations
Subject to
certain provisions relating to the termination of the participants employment, term of office or engagement with the Corporation by virtue of the participants death, disability or retirement, the 2017 Plan provides that:
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In respect of termination without cause, unless otherwise specified in the award agreement with the
participant, any options that are exercisable at the date of such termination may be exercised for a period of ninety (90) days after the termination date or for the remaining term of such option, whichever is lesser. Any options that are not
yet exercisable will immediately expire and be cancelled and any other awards that have not yet vested are immediately forfeited to the Corporation.
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In respect of a voluntary resignation of a participant (other than a director), all options, to the extent
they were exercisable at the date of such resignation, may be exercised for a period of thirty (30) days after the date of resignation or for the remaining term of such option, whichever is lesser. Any options that are not yet exercisable will
immediately expire and be cancelled and any other awards that have not yet vested are immediately forfeited to the Corporation.
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In respect of termination of employment or services for cause of a participant, any options and any other
awards held by the participant, whether or not exercisable at the termination date, will immediately expire and be cancelled.
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In respect of termination of a directors appointment for a breach of such directors fiduciary
duty, then all options held by such director, whether or not exercisable, shall immediately expire and are cancelled and any other award held by such director are immediately forfeited to the Corporation on the termination date.
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In respect of termination of a directors appointment (other than for death, disability or breach of
fiduciary duty), the Committee may permit the exercise of all options held by such director, whether or not exercisable at the termination date and provide for the vesting of any or all other awards held by the director on the termination date.
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In respect of termination of a directors appointment (other than for breach of fiduciary duty), the
Committee may permit the exercise of all options held by such director, whether or not exercisable at the termination date and provide for the vesting of any or all other awards held by the director on the termination date.
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Upon the death or disability of a participant, the 2017 Plan provides that:
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The executor or administrator of the participants estate may exercise a number of options equal to the
sum of:
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(A) all vested options held by such participant; and
(B) the number of options due to vest on the next installment multiplied by a fraction, the numerator of which is the number
of days that have elapsed since the date of vesting of the last instalment of options (or, if none have vested, the date of grant) to the termination date and the denominator of which is the number of days between the date of vesting and the last
instalment of the options (or, if none have vested, the date of grant) and the date of vesting of the next instalment of options.
The right to exercise such options terminates the earlier of: (i) the date that is twelve months from the termination
date; and (ii) the date on which the exercise period of the particular option expires and, subject to (B) above, all options held by the participant which are not exercisable at the termination date immediately expire and are cancelled on
the termination date.
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Except for any performance compensation awards granted under the plan, a portion of the next instalment of any
other awards due to vest shall immediately vest, such portion to equal the number of awards next due to vest multiplied by a fraction the numerator of which is the number of days that have elapsed since the date of vesting of the last instalment of
the awards (or if none have vested, the date of grant) to the termination date and the denominator of which is the number of days between the date of vesting of the last instalment of the awards (or if none have vested, the date of grant) and the
date of vesting of the next instalment of the awards. Subject to the foregoing, all awards held by the participant which are not vested at the termination date are immediately forfeited to the Corporation on the termination date.
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Other specific provisions apply upon the death and disability of a holder of deferred share units of the Corporation.
Change of Control
The 2017 Plan
provides that, if the Corporation is subject to a corporate transaction that results in a change in control, outstanding awards are subject to the applicable agreement of merger or sale, which may provide for assumption of awards, replacement of
outstanding options and other awards with a cash incentive, or cancellation of awards with or without consideration.
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Generally, awards and options do not automatically vest upon a change in control (no
single-trigger). The Board or the Committee shall, however, have the right provide in an individual agreement or at any time after grant, to accelerate the vesting or determine that any options, restricted share units, deferred share units,
performance share units or other share-based awards outstanding immediately prior to the occurrence of Change in Control shall become fully vested and fully earned upon the occurrence of such event.
Assignment
Subject to certain exercise
rights for options held by a participant upon death, disability or retirement, no assignment or transfer of any awards, whether voluntary, involuntary, by operation of law or otherwise is permitted. Notwithstanding the foregoing, an Eligible
Participant may transfer an award (other than an award of incentive stock options) to a permitted assign and an award of incentive stock options may only be transferred by will or by the law of descent and distribution.
Amendments to the 2017 Plan
Subject to
stock exchange rules, the Board may, without notice or shareholder approval, at any time, amend the 2017 Plan, provided that such amendment does not materially alter or impair any rights or increase any obligations with respect to an award
previously granted under the 2017 Plan, unless consented to by the affected participant. Specifically, the Board may amend the 2017 Plan without shareholder notice or approval for the following amendments:
a) Amend the general vesting provisions of an award, including accelerating the vesting
conditions in situations addressing Change in Control, Corporation Transaction, death, Disability or certain terminations of service, based on such factors as the Board may determine,
b) Amend the general term of an option provided that no option held by an insider may
extend beyond its original expiry date and no option may be exercised beyond the tenth anniversary of the date of grant;
c) Amend any of the provisions contained in article 9 (Termination of Employment) of the
2017 Plan;
d) Add covenants of the Corporation for the protection of directors,
employees and consultants;
e) Amend any provision as may be necessary or desirable
with respect to matters that may be expedient to make such amendment in the Boards good faith opinion; and
f) Change or correct any provision required to cure or correct any ambiguity, defect,
inconsistent provision, clerical omission, mistake or manifest error.
Notwithstanding the above, none of the following amendments shall be made to the
2017 Plan without approval of the TSX and the Nasdaq, to the extent such approval is required, and the approval of shareholders in accordance with the requirements of such exchange(s):
a) Increase the number of Mitel common shares issuable under the 2017 Plan (except adjustments in
connection with a Change in Control or pursuant to the provisions of the 2017 Plan);
b) Increase the number of Mitel common shares issuable to insiders (except adjustments in
connection with a Change in Control or pursuant to the provisions of the 2017 Plan);
c) Increase the number of Mitel common shares issuable to directors;
d) Amend the exercise period of any options held by insiders;
e) Extend the expiration of an option beyond ten (10) years from the date of grant;
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f) Reduce the exercise price of any options held
by insiders (except in connection with the purposes of maintaining option value in connection with a Change in Control)
g) Add any form of financial assistance available to a participant;
h) Permit options or rights under the 2017 Plan to be transferred other than for normal estate
settlement purposes;
i) Amend the amendment section of the 2017 Plan; and
j) Make any other amendments which the applicable exchange rules require shareholder approval.
Financial Assistance
No financial
assistance is being provided to participants by Mitel to facilitate the purchase of securities under the 2017 Omnibus Incentive Plan.
Recommendation
of the Board of Directors
At the Meeting, shareholders will be asked to consider and, if deemed appropriate, to adopt the 2017
Omnibus Incentive Plan by passing Ordinary Resolution No
.
1, substantially in the form of the resolution set forth in Schedule E to this Circular. Ordinary Resolution No. 1 must be approved by a majority of the votes cast by
shareholders entitled to vote who are represented in person or by proxy at the Meeting who vote in respect of such resolution. Should the 2017 Omnibus Incentive Plan not be approved, the 2017 Omnibus Incentive Plan will not be adopted.
The Board considers the 2017 Omnibus Incentive Plan to be in the best interests of the Corporation and recommends that shareholders vote in
favour Ordinary Resolution No. 1. The persons named in the form of proxy will, unless a Shareholder has instructed that the shares it represents be voted AGAINST or such Shareholder ABSTAINS from voting on our 2017 Omnibus Incentive Plan or
someone else is appointed as proxy holder, be voted in favour of Mitels 2017 Omnibus Incentive Plan.
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26.
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By-Law Ratification Resolution Ratification of Amendment to Bylaws
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On December 16, 2016, the Mitel Board approved and adopted an amendment to By-Law No. 1A of the Corporation (the
By-Laws), being a by-law relating generally to the transaction of the business and affairs of the Corporation, effective as of December 16, 2016. The amendment increases the number of shares necessary to constitute a quorum at any
meeting of the Corporations shareholders from 25% to 33 1/3%. The By-Laws were amended in order to comply with corporate governance requirements of NASDAQ that applied to the Corporation commencing on January 1, 2017, as the Corporation
was no longer eligible to rely upon NASDAQ foreign private issuer corporate governance exemptions thereafter.
Section 8.8 of the By-Laws
previously provided that:
8.8 Quorum
A quorum of shareholders is present at a meeting of shareholders if the holders of 25% of the shares entitled to vote at the
meeting are present in person or represented by proxy, provided that a quorum shall not be less than two persons. A quorum need not be present throughout the meeting provided a quorum is present at the opening of the meeting.
Following the amendment by the Board, Section 8.8 of the By-Laws reads as follows:
8.8 Quorum
A quorum of shareholders is present at a meeting of shareholders if the holders of not less than 33 1/3% of the shares
entitled to vote at the meeting are present in person or represented by proxy, provided that a quorum shall not be less than two persons. A quorum need not be present throughout the meeting provided a quorum is present at the opening of the
meeting.
No other amendments to the By-Laws have been made.
Under the
CBCA
, the directors are required to submit the amendment of the By-Laws to the shareholders at the next meeting of
shareholders, and the shareholders may confirm, reject or amend the amendment. A resolution confirming the amendment of the
By-Laws
must be passed by a majority of the votes cast by shareholders in person or
by proxy at the meeting.
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If the amendment to the By-Laws is rejected by the shareholders, the amendment ceases to be
effective and the Corporation will fail to satisfy NASDAQ listing requirements. If shareholders amend the amendment at the meeting and confirm the amended By-Laws, the By-Laws will continue in effect in the form so confirmed.
The persons named in the form of proxy will, unless a Shareholder has instructed that the shares it represents be voted AGAINST or such
Shareholder ABSTAINS from voting to confirm the amendment to the By-Laws or someone else is appointed as proxy holder, be voted FOR confirming the amendment to the By-Laws to increase the quorum requirement from 25% to 33 1/3%.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports and other information with the SEC. You can obtain copies from the SEC or the CSA, through the
SECs or the CSAs websites at the addresses indicated above, or from Mitel by requesting them in writing or by telephone at the following address and telephone number:
By Mail:
Mitel Networks Corporation
350 Legget Drive
Ottawa, Ontario,
Canada K2K 2W7
Telephone: (613)
592-2122
These documents are available from Mitel without charge, excluding any exhibits to them. You can also find information about Mitel at their
Internet websites at
www.mitel.com
. Information contained on the website does not constitute part of this proxy circular.
Management of the Corporation knows of no amendment or variation to the matters referred to in the notice of meeting and of no other business
to be brought before the meeting. If any amendment, variation or other business is properly brought before the meeting, the form of proxy confers discretion on the persons named on the form of proxy to vote on any amendment or variation of the
matters referred to in the notice of Meeting or any other business in accordance with their best judgment.
The
CBCA
provides
that, in certain circumstances, eligible shareholders are entitled to submit to the Corporation notice of a matter that such shareholder proposes to raise at a meeting of shareholders. The final date by which we must receive such a proposal,
including any shareholder proposal which includes nominees for director and any proposal made pursuant to Rule
14a-8
of the Exchange Act, to be raised at our next annual meeting of shareholders (subsequent to
this meeting) is January 22, 2018. Any eligible shareholder who may wish to exercise this right should carefully consider whether they are eligible to make such a proposal, and comply with the relevant provisions of the
CBCA
and the
rules and regulation of the SEC.
I.
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APPROVAL BY THE BOARD OF DIRECTORS
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The contents and the distribution of this proxy circular have been approved by the Mitel Board.
DATED April 21, 2017 on behalf of the Mitel Board.
Richard McBee
Richard D. McBee
Chief
Executive Officer and President
Ottawa, Ontario, Canada
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APPENDIX A
MITEL NETWORKS CORPORATION
(the
Company)
MANDATE OF THE BOARD OF DIRECTORS
Statutory Power of the Board
The board
of directors is elected by the shareholders of the Company and has the statutory power and obligation to supervise the management of the Company. The role of the board is primarily one of stewardship. Although directors are elected by shareholders,
a directors duty is owed first and foremost to the Company and not to a particular constituency.
Fiduciary Duty and Duty of Care
The boards fundamental relationship with the Company is guided by a fiduciary principle that requires each director to act honestly and
in good faith with a view to the best interests of the Company. In exercising their powers and discharging their duties, every director must exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable
circumstances. These principles require a director to put the Companys interests first, avoid conflicts of interest and avoid exploiting business opportunities of the Company for self-interest purposes. This mandate is not intended to expand
upon the standards of conduct prescribed under statutory or regulatory requirements for directors of a corporation.
The board may
designate the officers of the Company, specify their duties and delegate to them powers to manage the day to day business and affairs of the Company. In addition, the board discharges its responsibilities through standing committees such as the
audit committee, the nominating and governance committee and the compensation committee and may also periodically form special committees to address specific issues of a more short-term nature. The duties and responsibilities delegated to standing
committees of the board are prescribed in the charters for such standing committees.
Additionally, absent actual knowledge to the
contrary, the board shall be entitled to rely on (i) the integrity of those persons or organizations within or outside the Company from which it receives information, (ii) the accuracy of the financial and other information provided by
such person or organization, and (iii) representations made by management and such persons or organizations in relation to any services provided by such persons or organizations to the Company and its subsidiaries.
Primary Board Roles
The boards
primary roles are to oversee corporate performance and to oversee the quality, depth and continuity of management to meet the Companys strategic objectives. The board will focus its attention on the following key responsibilities:
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Appoint and oversee the Chief Executive Officer and other senior officers.
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The board will appoint, monitor and evaluate the performance of the chief executive officer and key employees, settle the
terms of employment of the chief executive officer and key employees, with input from the compensation committee, approve organizational changes and require that adequate planning is undertaken for management training, development and succession.
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Oversee strategy implementation and performance.
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The board will review and evaluate a strategic planning process developed by management and will provide guidance regarding
the process. The board will monitor managements implementation of the process and provide ongoing advice on strategic planning matters for the Company. The board will provide guidance regarding changes required to improve corporate performance
in terms of profitability, growth and competitive strength. The board will approve, at least on an annual basis, a business plan for the Company which takes into account, among other things, the opportunities and risks of the business.
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Monitor the financial performance of the Company and other financial reporting matters.
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The board will approve the audited financial statements and interim financial statements of the
Company, and the notes thereto and the managements discussion and analysis accompanying such financial statements and such other financial reports as the board, with input from the audit committee, is required to approve from time to time in
accordance with applicable securities laws and the rules of any stock exchange on which the Companys securities are listed for trading.
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Identify and oversee management of principal business risks.
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The board will, among other actions, require periodic reports from management describing the Companys programs and
systems for identifying financial and other business risks and for managing such risks and protecting corporate assets such as intellectual property, confidential information, physical property and employees. The board will provide advice to
management regarding any changes or improvements necessary or desirable to improve the Companys management of its principal business risks.
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Monitor the legal and ethical performance of the Company.
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The board will seek assurances that the Company adheres to and complies with applicable laws and legal standards and ensure
that processes and policies are established and communicated to management and other employees to encourage appropriate attention to legal compliance issues, including compliance with contractual obligations and claims against the Company, as well
as timely reporting of significant legal matters to the board.
The board will seek assurances from the chief executive
officer, the Corporate Counsel and management that the companys business is conducted in a manner that reflects strict adherence to the Code of Business Conduct and core corporate values and that the chief executive officer and management
create a culture of integrity throughout the Company.
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Maintain shareholder relations.
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The board will seek assurances from management that the Company makes complete, accurate and timely disclosure of material
information and complies with disclosure requirements prescribed in securities legislation. The board will prepare and adopt a communication and disclosure policy by which the Company communicates directly to shareholders or indirectly to
shareholders through the financial press, analysts, employees and other corporate stakeholders and regulatory authorities with regard to the plans, decisions, prospects and financial results of the Company and receives feedback from such
stakeholders.
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Develop and oversee the Companys approach to governance.
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The board will develop, adopt and periodically evaluate the Companys performance against corporate governance guidelines
and practices that are applicable to the Company and will require reports from the nominating and governance committee as to the committees activities regarding the Companys corporate governance practices. The board, either directly or
through the Nominating and Corporate Governance Committee, will oversee regular assessments of the effectiveness and contribution of the board, its committees and individual directors.
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Oversee internal control and management information systems.
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The board will review periodic reports describing the Companys internal control systems and management information
systems and provide advice on changes required to improve the adequacy of the systems as well as oversee the Companys compliance with applicable audit, accounting and financial reports and requirements.
The Boards Commitment
The board
undertakes to maintain an independent view of the Companys strategic direction, the chief executive officer and management. The board will continually seek to improve its effectiveness by:
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creating an atmosphere of intellectual honesty and promoting a culture of integrity within the Company and
adherence to core corporate values;
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preparing for and attending board meetings and promoting open, constructive and critical dialogue among board
members and between board members and management;
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keeping up to date on the Company, its business, principal risks and strategy, and engaging in dialogue inside
and outside the boardroom on substantive issues;
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stating questions and concerns regarding the Company, its business, principal risks or other matters or issues
as they arise;
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sharing perspectives, experience and judgment with and providing guidance and strategic direction to
management;
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continually assessing managements operational performance in executing the Companys business plan
and evaluating the adequacy of controls in audit and performance;
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declaring any conflicts of interest, real or perceived;
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continually seeking ways to assess and improve overall board performance; and
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adhering to this mandate and reviewing and reassessing the adequacy of the mandate at least annually.
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A-1
SCHEDULE A
ANNUAL RESOLUTION NO. 1
RESOLVED
AS A RESOLUTION OF THE SHAREHOLDERS OF MITEL NETWORKS CORPORATION (THE
CORPORATION
) THAT:
The following persons are elected as directors of the Corporation until the next annual meeting of shareholders or until their successor is
elected:
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Benjamin H. Ball
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Martha H. Bejar
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Peter D.
Charbonneau
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Terence H. Matthews
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Richard D. McBee
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John P. McHugh
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Sudhakar
Ramakrishna
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David M. Williams
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B-1
SCHEDULE B
ANNUAL RESOLUTION NO. 2
RESOLVED
AS A RESOLUTION OF THE SHAREHOLDERS OF MITEL NETWORKS CORPORATION (THE
CORPORATION
) THAT:
Deloitte LLP are appointed the auditors of the Corporation until the close of the next annual meeting of the shareholders, or until a
successor is appointed, at such remuneration as may be determined by the directors, and the directors are authorized to fix such remuneration.
C-1
SCHEDULE C
ANNUAL RESOLUTION NO. 3
RESOLVED, ON AN ADVISORY BASIS AND NOT TO DIMINISH THE ROLE AND RESPONSIBILITIES OF THE BOARD OF DIRECTORS,
AS A RESOLUTION OF THE
SHAREHOLDERS OF MITEL NETWORKS CORPORATION (THE
CORPORATION
) THAT:
The shareholders approve the executive compensation
disclosed in the management proxy circular delivered in advance of the 2017 annual meeting of shareholders of the Corporation.
D-
1
SCHEDULE D
RESOLUTION NO. 4
RESOLVED, ON AN ADVISORY BASIS AND NOT TO DIMINISH THE ROLE AND
RESPONSIBILITIES OF THE BOARD OF DIRECTORS,
AS A RESOLUTION OF THE SHAREHOLDERS OF MITEL NETWORKS CORPORATION (THE
CORPORATION
) THAT:
The shareholders determine whether the preferred frequency of an advisory vote on the executive compensation of the Corporations NEOs as
set forth in the Corporations proxy statement should be every one year, two years, or three years.
E-1
SCHEDULE E
ORDINARY RESOLUTION NO. 1
WHEREAS:
|
A.
|
Mitel Network Corporation (the
Corporation
) proposes to adopt the 2017 Omnibus Incentive
Plan to assist the Corporation in attracting, retaining and motivating key employees, directors, officers and consultants through performance related incentives, thereby advancing the interests of the Corporation and its shareholders.
|
RESOLVED AS AN ORDINARY RESOLUTION OF THE SHAREHOLDERS OF THE CORPORATION THAT:
|
1.
|
The 2017 Omnibus Incentive Plan of the Corporation, in the form annexed as Appendix
E-1
hereto, as summarized in the management information circular of the Corporation dated April 21, 2017 and subject to such additions, amendments, deletions, supplements or alterations to the 2017 Omnibus
Incentive Plan as may be approved by the board of directors of the Corporation prior to the meeting of shareholders on May 15, 2017, is hereby ratified, approved and adopted.
|
|
2.
|
A total of 10,000,000 common shares in the capital of the Corporation be and is hereby authorized to be
reserved for issuance pursuant to the 2017 Omnibus Incentive Plan.
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|
3.
|
Any director or officer of the Corporation be and is hereby authorized to do such things and to sign, execute
and deliver all documents that such director and officer may, in their discretion, determine to be necessary in order to give full effect to the intent and purpose of this resolution.
|
|
4.
|
Notwithstanding the approval of the matters provided for herein, the board of directors of the Corporation is
hereby authorized, without further approval of the shareholders of the Corporation, to revoke this resolution for any reason, at any time before the action approved by this resolution becomes effective.
|
E-1-1
APPENDIX
E-1
MITEL NETWORKS CORPORATION
2017 Omnibus Incentive Plan
May 15, 2017
E-1-2
Mitel Networks Corporation
2017 Omnibus Incentive Plan
ARTICLE I
PURPOSE
The purpose of this Plan is to assist the Company in attracting, retaining and motivating key employees, directors, officers and consultants
through performance related incentives, thereby advancing the interests of the Company and its shareholders.
ARTICLE II
INTERPRETATION
When used herein, unless the context otherwise requires, the following terms have the indicated meanings, respectively:
Affiliate
means a corporation or other entity that, directly or through one or more intermediaries,
controls, is controlled by or is under common control with, the Company;
Award
means any Option,
Restricted Share Unit, Deferred Share Unit, Performance Share Unit, Performance Compensation Awards or Other Share-Based Award granted under this Plan;
Award Agreement
means a signed, written agreement between a Participant or a Director Participant and the
Company evidencing the terms and conditions on which an Award has been granted under this Plan;
Black Out
Period
means the period of time during which the Company has imposed trading restrictions on its Insiders;
Board
means the board of directors of the Company;
Business Day
means a day, other than a Saturday or Sunday, on which the principal commercial banks in New
York City, New York are open for commercial business during normal banking hours;
Change in Control
means the happening of any of the following events:
|
(i)
|
A change in the composition of the Board over a period of twelve consecutive months or less such that a
majority of the Board members ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who either (A) have been Board members continuously since the beginning of such period or (B) have been
elected or nominated for election as Board members during such period by at least a majority of the Board members described in clause (A) who were still in office at the time the Board approved such election or nomination;
|
E-1-3
|
(ii)
|
The acquisition, directly or indirectly, by any person or related group of persons (other than the Company or
a person that directly or indirectly controls, is controlled by, or is under common control with, the Company) of beneficial ownership (within the meaning of Rule
13d-3
under the
Exchange Act
) of
securities of the Company representing more than 35% of the total combined voting power of the Companys then outstanding securities pursuant to a tender or exchange offer made directly to the Companys shareholders which the Board does
not recommend such shareholders accept.
|
|
(iii)
|
A Corporate Transaction.
|
|
(iv)
|
Notwithstanding the foregoing, in the case of an Award that constitutes
non-qualified
deferred compensation subject to section 409A of the Code, the definition of Change in Control set forth above shall not apply, and the term Change in Control shall
instead mean a change in the ownership or effective control of the Company or in the ownership of a substantial portion of the assets of the Company within the meaning of section 409A(a)(2)(A)(v) of the Code and the
regulations and guidance issued thereunder, but only to the extent this substitute definition is necessary in order for the Award to comply with the requirements prescribed by section 409A of the Code.
|
Corporate Transaction
means:
|
(i)
|
the consummation of a merger or consolidation of the Company with or into another entity or any other
corporate reorganization, if more than 50% of the combined voting power of the continuing or surviving entitys securities outstanding immediately after such merger, consolidation or other reorganization is owned by persons who were not
shareholders of the Company immediately prior to such merger, consolidation or other reorganization; or
|
|
(ii)
|
the sale, assignment or other transfer of all or substantially all of the assets of the Company to a Person
other than a Subsidiary of the Company;
|
Code
means the U.S. Internal Revenue Code of
1986, as amended from time to time, and the regulations promulgated under it;
Common Shares
means the
common shares in the capital of the Company and any other securities of the Company or any Affiliate or any successor that may be so designated by the Committee;
Committee
has the meaning set forth in Section 3.2 of this Plan;
Company
means Mitel Networks Corporation;
Consultant Participant
means an individual or a consultant company, other than an Employee Participant or a
Director Participant that:
|
(i)
|
is engaged to provide services to the Company or a Subsidiary other than services provided in relation to a
distribution of securities of the Company or a Subsidiary;
|
|
(ii)
|
provides the services under a written contract with the Company or a Subsidiary; and
|
|
(iii)
|
spends or will spend a significant amount of time and attention on the affairs and business of the Company or
a Subsidiary,
|
and includes a Consultant Participants Permitted Assigns. For the purposes of this
definition,
consultant company
means, with respect to an individual consultant, either (i) a company of which the individual consultant is an employee or shareholder; or (ii) a partnership of which the individual
consultant is an employee or partner;
E-1-4
Covered Employee
shall have the meaning set forth in
Section 162(m)(3) of the
Code;
Data
has the meaning set forth in Section 12.13 of this Plan;
Date of Grant
means, for any Award, the date specified by the Committee at the time it grants the Award
(which, for greater certainty, shall be no earlier than the date on which the Committee meets for the purpose of granting such Award) or if no such date is specified, the date upon which the Award was granted;
Deferred Share Unit
or
DSU
means a unit equivalent in value to a Common Share, credited
by means of a bookkeeping entry in the books of the Company in accordance with Article 5;
Director
Participant
means a director of the Company who is not an employee of the Company or a Subsidiary and includes a Director Participants Permitted Assigns;
Directors Option
means an Option granted to a Director Participant;
Disabled
or
Disability
occurs when the Participant or Director Participant is entitled
to receive payments under the Companys long-term disability insurance plan, if one is in effect for such Participant at the time. If there is no long term disability insurance plan in effect, then Disability shall occur when the Participant or
Director Participant is unable to perform his duties hereunder as a result of illness or mental or physical injury for a period of at least 180 days, as determined in accordance with procedures established by the Committee for purposes of this Plan;
Distribution Date
means (i) in the case of a Director Participant, the date
on which the Director Participant ceases to be a member of the Board or, in the case of a Participant, the Termination Date (the
Separation Date
); or (ii) such later date as elected by the Participant or Director Participant
provided that in no event shall a Participant or Director Participant be permitted to elect a date which is later than the last Business Day of the calendar year following the calendar year in which the Separation Date occurs. An election for a
Distribution Date described in (ii) above will only be valid if it is delivered to the Corporate Secretary of the Company prior to the Separation Date in the form prescribed for such purposes by the Company, provided that such election may not
be made by a Participant or Director Participant who is a U.S. Taxpayer;
Employee Participant
means a
current full-time or part-time employee of the Company or a Subsidiary (other than a Director Participant or a Consultant Participant) and includes an Employee Participants Permitted Assigns;
Exchange Act
means the United States Securities Exchange Act of 1934, as amended from time to time;
Exercise Notice
means a notice in writing, in the form acceptable to the Company, signed by a Participant
or a Director Participant holding an Option and stating the Participants or Director Participants intention to exercise a particular Option;
Exercise Price
means the price at which a Common Share may be purchased pursuant to the exercise of an
Option;
Exercise Period
means the period of time during which an Option granted under this Plan may be
exercised (provided however that the Exercise Period may not exceed 10 years from the relevant Date of Grant);
E-1-5
Fair Market Value
means, with respect to any Common Share
at a particular date, the closing price on the Nasdaq Global Market or, if the Common Shares are also listed on the Toronto Stock Exchange, the market or exchange where the majority of the trading volume and value of the Common Shares occurs on such
date (or if such Common Shares did not trade on such exchange on such day, the closing price on the most recent trading day); provided that in the event that such Common Shares are not then listed on such stock exchange, the Fair Market Value shall
be determined based on the closing price of such Common Shares on any stock exchange in Canada or the United States on which such Common Shares are then listed on the particular date (or if such Common Shares did not trade on such exchange on such
day, the closing price on the most recent trading day ); and further provided that in the event that such Common Shares are not then listed on any stock exchange in Canada or the United States, the Fair Market Value shall be determined by the Board
in its sole discretion;
Incentive Stock Option
means an option granted under Section 4.6 of the
Plan that meets the requirements of Section 422 of the Code or any successor provision and is designated as such in the applicable Award Agreement;
Individual Optionee
means an Optionee who is an individual or the individual of which the Optionee is a
Permitted Assign, as the case may be;
Insider
has the meaning set forth in the TSX Rules;
NI
45-106
means National Instrument
45-106
Prospectus and Registration Exemptions of the Canadian Securities Administrators, as amended from time to time;
Non Qualified Stock Option
means an option granted under Article 4 of the Plan that is
not intended to be or does not meet the requirements of an Incentive Stock Option. Any stock option granted by the Committee that is not designated as an Incentive Stock Option in the applicable Award Agreement will be deemed a Non Qualified Stock
Option;
Option
means a right to purchase Common Shares under this Plan;
Optionee
means a Participant or a Director Participant who holds one or more Options under this Plan;
Optionees Employer
means the Company or such Subsidiary as is or, if the Optionee has ceased to be
employed by the Company or such Subsidiary, was the Optionees Employer;
Other Share-Based Award
means any right granted under Section 8.1 of this Plan;
Participant
means an Employee
Participant or a Consultant Participant but not a Director Participant;
Performance Compensation Award
means the Award described in Section 7.5;
E-1-6
Performance Goals
means performance
goals based on one or more of the following criteria: (i) earnings including operating income, earnings before or after taxes, earnings before or after interest, depreciation, amortization, or extraordinary or special items or book value per
share (which may exclude nonrecurring items); (ii)
pre-tax
income or
after-tax
income; (iii) earnings per Common Share (basic or diluted); (iv) operating profit;
(v) revenue, revenue growth or rate of revenue growth; (vi) return on assets (gross or net), return on investment, return on capital, or return on equity; (vii) returns on sales or revenues; (viii) operating expenses;
(ix) stock price appreciation or cumulative annual stock price appreciation; (x) cash flow, free cash flow, cash flow return on investment (discounted or otherwise), net cash provided by operations, or cash flow in excess of cost of
capital; (xi) implementation or completion of critical projects or processes; (xii) economic value created; (xiii) cumulative earnings per share growth; (xiv) operating margin or profit margin; (xv) Common Share price or
total shareholder return; (xvi) cost targets, reductions and savings, productivity and efficiencies; (xvii) strategic business criteria, consisting of one or more objectives based on meeting specified market penetration, geographic
business expansion, customer satisfaction, employee satisfaction, human resources management, supervision of litigation, information technology, and goals relating to acquisitions, divestitures, joint ventures and similar transactions, and budget
comparisons; (xviii) personal professional objectives, including any of the foregoing performance goals, the implementation of policies and plans, the negotiation of transactions, the development of long term business goals, formation of joint
ventures, research or development collaborations, and the completion of other corporate transactions; and (xix) any combination of, or a specified increase in, any of the foregoing. Where applicable, the Performance Goals may be expressed in
terms of attaining a specified level of the particular criteria or the attainment of a percentage increase or decrease in the particular criteria, and may be applied to one or more of the Company, a Subsidiary, or a division or strategic business
unit of the Company, or may be applied to the performance of the Company relative to a market index, a group of other companies or a combination thereof, all as determined by the Committee. The Performance Goals may include a threshold level of
performance below which no payment will be made (or no vesting will occur), levels of performance at which specified payments will be made (or specified vesting will occur), and a maximum level of performance above which no additional payment will
be made (or at which full vesting will occur). The Committee is authorized at any time during the first 90 days of a Performance Period (or, if longer or shorter, within the maximum period allowed under Section 162(m) of the Code), or at any time
thereafter (but only to the extent the exercise of such authority after such period would not cause the Performance Compensation Awards or Performance Share Unit Awards granted to any Covered Employee to fail to qualify as performance-based
compensation under Section 162(m) of the Code), in its sole and absolute discretion, to adjust or modify the calculation of a Performance Goal for such Performance Period in order to prevent the dilution or enlargement of the rights of
Participants based on the following events: (a) asset write-downs; (b) the effect of changes in tax laws, accounting principles, or other laws or regulatory rules affecting reported results; (c) any reorganization and restructuring
programs; (d) extraordinary nonrecurring items as described in Accounting Principles Board Opinion No. 30 (or any successor or pronouncement thereto) and/or in managements discussion and analysis of financial condition and results of
operations appearing in the Companys annual report to shareholders for the applicable year; (e) acquisitions or divestitures; (f) any other specific unusual or nonrecurring events, or objectively determinable category thereof;
(g) foreign exchange gains and losses; (h) a change in the Companys fiscal year;
E-1-7
Performance Period
means the one or more periods of time
not less than one fiscal quarter in duration, as the Committee may select, over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participants right to and the payment of a Performance
Compensation Award or Performance Share Unit.
Performance Share Unit
or
PSU
means any right granted
under Section 7.1 of the Plan;
Permitted Assign
has the meaning assigned to that term in NI
45-106;
Person
includes an individual, sole proprietorship,
partnership, unincorporated association, unincorporated syndicate, unincorporated organization, trust, body corporate, and a natural person in his or her capacity as trustee, executor, administrator or other legal representative;
Plan
means this Mitel Networks Corporation 2017 Omnibus Incentive Plan, as amended from time to time;
Re-Price
means any of the following (or any other action that has
the same effect as any of the following): (1) changing the terms of an Award to lower its exercise price (other than on account of capital adjustments resulting from share splits, etc., as described in Section 11.2 hereof), (2) any
other action that is treated as a repricing under generally accepted accounting principles, and (3) repurchasing for cash or canceling an Award in exchange for another Award at a time when its exercise price is greater than the Fair Market
Value of the underlying Stock, unless the cancellation and exchange occurs in connection with an event set forth in Article 10.
E-1-8
Restricted Share Unit
or
RSU
means a right to receive cash or a Common Share granted, as determined by the Committee, under Section 6.1 of this Plan;
Securities Act
means the United States Securities Act of 1933, as amended from time to time;
Security Based Compensation Arrangement
has the meaning given to that term in the TSX Rules;
Subsidiary
means any corporation (other than the Company) in an unbroken chain of corporations beginning
with the Company if each of the corporations other than the last corporation in the unbroken chain owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such
chain
Termination Date
means, in the case of a Participant or Director Participant whose employment or
term of office or engagement with the Company or an Affiliate terminates:
|
(i)
|
by reason of the Participants or Director Participants death, the date of death; or
|
|
(ii)
|
for any reason whatsoever other than death, the later of:
|
|
(A)
|
in the case of a Participant, the last day of the minimum statutory notice period, if any, to which that
Participant is entitled upon such termination pursuant to applicable employment and/or labour standards legislation;
|
|
(B)
|
the date designated by the Company or the Affiliate, as the case may be, as the last day of the
Participants or Director Participants employment or term of office or engagement with the Company or the Affiliate, as the case may be; and
|
provided that in the case of termination by reason of voluntary resignation by the Participant or Director Participant, such
date shall not be earlier than the date that notice of resignation was received from such Participant or Director Participant;
|
(iii)
|
the date of consummation of a sale, divestiture,
spin-off,
or other
similar transaction with respect to a Company Affiliate where such Participant is employed by or provides services to such Company Affiliate as at the date of the consummation, unless the Participants employment or service is transferred to
another entity that would constitute a Company Affiliate immediately following such transaction.
|
and
Termination Date
in any such case specifically does not mean the date on which any period of contractual or common law notice, reasonable notice, salary continuation or deemed employment that the Company or the Affiliate, as the
case may be, may be required at law to provide to a Participant would expire;
E-1-9
TSX Rules
means Part VI of the
Company Manual of the Toronto Stock Exchange, as amended from time to time; and
U.S. Taxpayer
shall
mean a Participant or Director Participant who is a U.S. citizen, U.S. permanent resident or U.S. tax resident for purposes of the Code.
|
(a)
|
Whenever the Board or, where applicable, the Committee is to exercise discretion in the administration of this
Plan, the term discretion means the sole and absolute discretion of the Board or the Committee, as the case may be.
|
|
(b)
|
As used herein, the terms Article, Section, Subsection and
clause mean and refer to the specified Article, Section, Subsection and clause of this Plan, respectively.
|
|
(c)
|
Words importing the singular include the plural and vice versa and words importing any gender include any
other gender.
|
|
(d)
|
Whenever any payment is to be made or action is to be taken on a day which is not a Business Day, such payment
shall be made or such action shall be taken on the next following Business Day.
|
|
(e)
|
In this Plan, a Person is considered to be
controlled
by a Person if:
|
|
(i)
|
in the case of a Person,
|
|
(A)
|
voting securities of the first-mentioned Person carrying more than 50% of the votes for the election of
directors are held, directly or indirectly, otherwise than by way of security only, by or for the benefit of the other Person; and
|
|
(B)
|
the votes carried by the securities are entitled, if exercised, to elect a majority of the directors of the
first-mentioned Person;
|
|
(ii)
|
in the case of a partnership that does not have directors, other than a limited partnership, the
second-mentioned Person holds more than 50% of the interests in the partnership; or
|
|
(iii)
|
in the case of a limited partnership, the general partner is the second-mentioned Person.
|
E-1-10
ARTICLE III
ADMINISTRATION
Subject to Section 3.2, this Plan will be administered by the Board and the Board has sole and complete authority, in its discretion, to:
|
(a)
|
determine the individuals to whom grants under the Plan may be made;
|
|
(b)
|
make grants of Awards under the Plan relating to the issuance of Common Shares (including any combination of
Options, Deferred Share Units, Restricted Share Units, Performance Share Units or Other Share-Based Awards) in such amounts, to such Persons and, subject to the provisions of this Plan, on such terms and conditions as it determines including without
limitation:
|
|
(i)
|
the time or times at which Awards may be granted;
|
|
(ii)
|
the conditions under which:
|
|
(A)
|
Awards may be granted to Participants or Director Participants; or
|
|
(B)
|
other Awards may be forfeited to the Company,
|
including any conditions relating to the attainment of specified Performance Goals;
|
(iii)
|
the Exercise Price, and/or price to be paid by a Participant or Director Participant in connection with the
granting of Awards;
|
|
(iv)
|
the time or times when each Option becomes exercisable and, subject to Section 4.3, the duration of the
Exercise Period;
|
|
(v)
|
whether restrictions or limitations are to be imposed on the Common Shares issuable pursuant to grants of
Awards, and the nature of such restrictions or limitations, if any; and
|
|
(vi)
|
any acceleration of exercisability or vesting, extending the post-termination exercise period of Options (but
not beyond the original expiry date) or waiver of termination regarding any Award, in situations addressing Change in Control, Corporation Transaction, death, Disability or certain terminations of service, based on such factors as the Board may
determine;
|
|
(c)
|
interpret this Plan and adopt, amend and rescind administrative guidelines and other rules and regulations
relating to this Plan; and
|
|
(d)
|
make all other determinations and take all other actions necessary or advisable for the implementation and
administration of this Plan.
|
The Boards determinations and actions within its authority under this Plan are
conclusive and binding on the Company and all other Persons. The
day-to-day
administration of the Plan may be delegated to such officers and employees of the Company or
of a Subsidiary as the Board determines.
E-1-11
3.2
|
Delegation to Committee
|
To the extent permitted by applicable law and the Companys articles, the Board may, from time to time, delegate to a committee (the
Committee
) of the Board all or any of the powers conferred on the Board under the Plan. In connection with such delegation, the Committee will exercise the powers delegated to it by the Board in the manner and on the terms
authorized by the Board. Any decision made or action taken by the Committee arising out of or in connection with the administration or interpretation of this Plan in this context is final and conclusive. Notwithstanding any such delegation or any
reference to the Committee in this Plan, the Board may also take any action and exercise any powers that the Committee is authorized to take or has power to exercise under this Plan. To the extent applicable in respect of certain Awards granted to a
Participant who is a Covered Employee, such Committee shall be composed of not less than two directors of the Company, neither of whom shall be employees of the Company or its Affiliates and each of whom shall otherwise be outside
directors for the purposes of Section 162(m) of the Code. Further, to the extent the Company wishes to have a Qualified Plan as defined in Rule
16b-3(b)(4),
such Committee shall be composed
of not less than two directors of the Company, each of whom are
non-employee
directors for purposes of Section 16 of the Exchange Act and Rule
16b-3
thereunder.
All Participants and Director Participants are eligible to participate in the Plan, subject to subsections 9.1(e) and 9.2(g). Eligibility to
participate does not confer upon any Participant or Director Participant any right to receive any grant of an Award pursuant to the Plan. The extent to which any Participant or Director Participant is entitled to receive a grant of an Award pursuant
to the Plan will be determined in the sole and absolute discretion of the Committee, provided however that the following restrictions shall also apply to this Plan, together with all other Security Based Compensation Arrangements of the Company:
|
(a)
|
the number of Common Shares issuable to Insiders, at any time, under all Security Based Compensation
Arrangements, shall not exceed 10% of issued and outstanding Common Shares; and
|
|
(b)
|
the number of Common Shares issued to Insiders, within any one year period, under all Security Based
Compensation Arrangements, shall not exceed 10% of issued and outstanding Common Shares.
|
If the Company repurchases
Common Shares for cancellation such that the tests in Section 3.3(a) or (b) are not met following such repurchase, this shall not constitute
non-compliance
under the Plan for any Awards then outstanding.
3.4
|
Total Common Shares Available/Share Limits
|
|
(a)
|
Subject to Section 3.4(b), the aggregate number of Common Shares that may be issued for all purposes pursuant
to the Plan must not exceed 10,000,000 Common Shares. No grant may be made under the Plan if such grant would result in the issuance of Common Shares in excess of the above-noted limit. From within the aggregate number of Common Shares above, the
aggregate number of Common Shares that may be issued for purposes of the grant of Incentive Stock Options pursuant to the Plan must not exceed 10,000,000 Common Shares.
|
E-1-12
|
(b)
|
For purposes of computing the total number of Common Shares available for grant under the Plan, Common Shares
subject to any Award (or any portion thereof) that has expired or is forfeited, cancelled or otherwise terminated prior to the issuance or transfer of such Common Shares and Common Shares subject to an Award (or portion thereof) that is settled in
cash in lieu of settlement in Common Shares shall again be available for grant under the Plan. In addition, Shares that are exchanged by a Participant or withheld by the Company as full or partial payment in connection with the exercise or
settlement of an Option shall not be available for subsequent Awards under the Plan.
|
|
(c)
|
Individual Award Limits
|
|
(i)
|
Subject to adjustment pursuant to Article 11, no Participant shall receive a grant of Awards covering, in the
aggregate in excess of 2,500,000 shares (including shares issuable pursuant to Options) during any calendar year.
|
|
(ii)
|
Subject to adjustment pursuant to Article 11, no Director Participant shall receive a grant of cash and
Awards, in the aggregate with a grant date value in excess of $400,000 U.S. dollars during any calendar year, provided however that a
non-employee
director who is newly elected as a director shall be eligible
to receive a grant of cash and Awards with a value in the aggregate up to $700,000 U.S. dollars in such in such initial year; and provided further that any advance election by a Director Participant to receive an Award of DSUs instead of cash for
director fees shall not count against such limit.
|
|
(iii)
|
The maximum amount that can be paid in any calendar year to any Participant pursuant to a cash Performance
Compensation Award described in Section 7.5 shall be $5,000,000 U.S dollars.
|
All grants of Awards under this Plan will be evidenced by Award Agreements. Award Agreements will be subject to the applicable provisions of
this Plan and will contain such provisions as are required by this Plan and any other provisions that the Committee may direct. Any one officer of the Company is authorized and empowered to execute and deliver, for and on behalf of the Company, an
Award Agreement to each Participant or Director Participant granted an Award pursuant to this Plan.
Each Participant or Director Participant will, when requested by the Company, sign or acknowledge and deliver all such documents relating to
the granting of Awards or exercise of Options which the Company deems necessary or desirable, and shall be deemed to have accepted such award by electronic acknowledgement through the stock plan administration procedures established by the Company.
E-1-13
3.7
|
Non-transferability
of Awards
|
Subject to Section 9.1, Awards granted under this Plan may only be exercised during the lifetime of the Participant or Director
Participant by such Participant or Director Participant personally. No assignment or transfer of Awards, whether voluntary, involuntary, by operation of law or otherwise, vests any interest or right in such Awards whatsoever in any assignee or
transferee (except that a Participant or Director Participant may transfer Awards (other than Incentive Stock Options) to Permitted Assigns in a manner consistent with applicable tax and securities laws) and immediately upon any assignment or
transfer, or any attempt to make the same, such Awards will terminate and be of no further force or effect. Further, an Incentive Stock Option shall not be transferrable other than by will or by the law of descent and distribution and shall be
exercisable during the life time of the Participant, only by the Participant. If any Participant or Director Participant has transferred Awards to a corporation pursuant to this Section 3.7, such Awards will terminate and be of no further force
or effect if at any time the transferor should cease to own all of the issued shares of such corporation.
3.8
|
Minimum Vesting Requirements.
|
Notwithstanding any provision of the Plan to the contrary, the Committee shall not award more than 5% of the total common Shares available
pursuant to Section 3.4 pursuant to Awards that are scheduled to vest in less than 12 months of the date of grant, subject, in each case, to the Committees authority under the Plan to vest Awards earlier, as the Committee deems
appropriate as permitted by Section 3.1(b) hereof. This Section 3.8 shall not apply to awards of DSUs received by a Participant pursuant to an advance election by a Director to receive an Award of DSUs instead of cash for vested director fees
or an advance election by an Employee Participant to receive an Award of DSUs instead of vested cash compensation.
ARTICLE IV
GRANT OF OPTIONS
The Committee may, from time to time, subject to the provisions of this Plan and such other terms and conditions as the Committee may
prescribe, grant Options to any Participant or any Director Participant.
The Exercise Price will be as determined by the Committee but in any event will be no less than the Fair Market Value on the Date of Grant.
The Committee may not
Re-Price
outstanding Options unless there is approval by the Company shareholders.
Subject to any accelerated termination as permitted by the Committee or as otherwise set forth in this Plan, each Option, unless otherwise
specified by the Committee, expires on the seventh (7
th
) anniversary of the Date of Grant (provided that if such expiry would otherwise be during or immediately after a Black Out Period, then the
expiry shall be extended until ten (10) Business Days following the expiration of the Black Out Period); provided that in no event will the Exercise Period of an Option exceed ten (10) years from its Date of Grant.
The Committee shall have the authority to condition the grant or vesting of Options upon the attainment of specified Performance Goals, or
such other factors (which may vary as between Options) as the Committee may determine in its sole discretion.
E-1-14
Unless otherwise specified by the Committee at the time of granting an Option and reflected in an Award Agreement, and except as otherwise
provided in this Plan, each Option will vest and be exercisable as to
one-quarter
of the Common Shares which are subject to such Option, on the date which is twelve months after the Date of Grant, and
thereafter,
one-sixteenth
of such original quantity of Common Shares will vest quarterly on each subsequent three-month anniversary of the Date of Grant, the final
one-
sixteenth of such Common Shares to vest on the fourth (4
th
) anniversary of the Date of Grant.
Once an instalment vests and becomes exercisable, it remains exercisable until expiration or termination of the Option, unless otherwise
specified by the Committee in connection with the grant of such Option or otherwise as specified herein. Each Option may be exercised at any time or from time to time, in whole or in part, for up to the total number of Common Shares with respect to
which it is then exercisable. The Committee has the right to accelerate the date upon which any instalment of any Option becomes exercisable.
Subject to the provisions of this Plan and any Award Agreement, Options shall be exercised by means of a fully completed Exercise Notice
delivered to the Company.
4.5
|
Payment of Exercise Price
|
The Exercise Notice must be accompanied by payment in full of the Exercise Price in respect of the Common Shares to be purchased. The Exercise
Price must be fully paid by cash, certified cheque, bank draft or money order payable to the Company. No Common Shares will be issued or transferred until full payment therefor has been received by the Company. As soon as practicable after receipt
of any Exercise Notice and full payment of the Exercise Price, the Company will issue such Common Shares to the Participant or Director Participant, as the case may be.
4.6
|
Incentive Stock Options
|
The following provisions will apply only to Incentive Stock Options granted under the Plan:
|
(a)
|
No Incentive Stock Option may be granted to any Employee Participant who, at the time such Option is granted,
(i) is not an employee of the Company or a Subsidiary or (ii) owns securities possessing more than ten percent (10%) of the total combined voting power of all classes of securities of the Company or of any Subsidiary, except that with
respect to provision (ii) hereof such an Option may be granted to such an Employee if, at the time the Option is granted, the exercise price is at least one hundred ten percent (110%) of the Fair Market Value of the Common Shares subject to the
Option, and the Option by its terms is not exercisable after the expiration of five (5) years from the Date of Grant; and
|
E-1-15
|
(b)
|
To the extent that the aggregate Fair Market Value of the Common Shares with respect to which Incentive Stock
Options (without regard to this subsection) are exercisable for the first time by any individual during any calendar year (under all plans of the Company and its Affiliates) exceeds U.S. $100,000, such Options will be treated as Non Qualified Stock
Options. This subsection will be applied by taking Options into account in the order in which they were granted. If some but not all Options granted on any one day are subject to this subsection, then such Options will be apportioned between
Incentive Stock Option and Non Qualified Stock Option treatment in such manner as the Committee will determine. The maximum number of Common Shares that may be issued under Incentive Stock Options granted under the Plan shall be equal to the number
of Common Shares available for issuance pursuant to Section 3.4 of the Plan.
|
4.7
|
Special Rule Applicable to U.S. Taxpayers
|
With respect to Options granted to Participants or Director Participants who are U.S. Taxpayers, Common Shares shall constitute stock of
the service recipient within the meaning of Section 409A of the Code if such Participant or Director Participant performs services for any Affiliate that is at least fifty percent (50%) owned by the Company.
ARTICLE V
GRANT OF
DEFERRED SHARE UNITS
5.1
|
Number of Deferred Share Units
|
The Committee may, from time to time, subject to the provisions of this Plan and such other terms and conditions as the Committee may
prescribe, grant Deferred Share Units to any Participant or Director Participant.
All Deferred Share Units received by a Participant or
Director Participant shall be credited to an account maintained for the Participant or the Director Participant on the books of the Company, as of the Date of Grant. The award of Deferred Share Units for a calendar year to a Participant or Director
Participant shall be evidenced by an Award Agreement or such other documentation pursuant to Company practices.
5.2
|
Distribution of Deferred Share Units
|
A Participant or Director Participant shall receive, on the Distribution Date, a lump sum payment in cash equal to the number of Deferred
Share Units recorded in the Participants or Director Participants account on the Distribution Date multiplied by the Fair Market Value, less any applicable withholding taxes. At the option of the Committee, the Company may settle the
Deferred Share Units in Common Shares. Upon payment in full of the value of the Deferred Share Units, whether in cash or in Common Shares, the Deferred Share Units shall be cancelled.
E-1-16
5.3
|
Death of Participant Prior to Distribution
|
Upon the death of a Participant or Director Participant prior to the distribution of the Deferred Share Units credited to the account of such
Participant or Director Participant under the Plan, a cash payment shall be made to the estate of such Participant or Director Participant on or about the sixtieth (60
th
) day after the death of
the Participant or Director Participant or on a later date elected by the Participants or Director Participants estate, in the form prescribed for such purposes by the Company and delivered to the Corporate Secretary no later than twenty
(20) days after the Company is notified of the death of the Participant or Director Participant, provided that such date is no later than the last Business Day of the calendar year following the calendar year in which the Participant or
Director Participant dies. Notwithstanding the foregoing, and to the extent necessary to comply with the requirements of Section 409A of the Code, upon the death of a Participant or a Director Participant who is a U.S. Taxpayer, such cash payment
shall be made on the thirtieth (30
th
) day after such Participants or Director Participants death or as soon as practicable thereafter and no subsequent deferral of the payment may be
made. Such cash payment shall be equivalent to the amount which would have been paid to the Participant or Director Participant pursuant to and subject to Section 5.2, calculated on the basis that the day on which the Participant or Director
Participant dies, or the date elected by the estate, as applicable, is the Distribution Date. Upon payment in full of the value of all of the Deferred Share Units that become payable under this Section 5.3, the Deferred Share Units shall be
cancelled.
ARTICLE VI
GRANT OF RESTRICTED SHARE UNITS
The Committee may, from time to time, subject to the provisions of this Plan and such other terms and conditions as the Committee may
prescribe, grant RSUs to any Participant or any Director Participant.
The Committee shall have the authority to condition the grant of RSUs upon the attainment of specified Performance Goals, or such other
factors (which may vary as between awards of RSUs) as the Committee may determine in its sole discretion.
The Committee shall have the authority to determine at the time of grant, in its sole discretion subject to this Plan, the duration of the
vesting period and other vesting terms applicable to the grant of RSUs, which terms shall be set out in the applicable Award Agreement.
Unless otherwise specified in the Award Agreement, as soon as practicable following the expiry of the applicable vesting period, or at such
later date as may be determined by the Committee in its sole discretion, a share certificate representing the Common Shares issuable pursuant to the RSUs shall be registered in the name of the Participant or Director Participant, or as the
Participant or Director Participant may direct, subject to applicable securities laws.
E-1-17
ARTICLE VII
PERFORMANCE SHARE UNITS
7.1
|
Grant of Performance Share Units
|
The Committee may, from time to time, subject to the provisions of this Plan and such other terms and conditions as the Committee may
prescribe, grant Performance Share Units to any Participant. Each Performance Share Unit will consist of a right, (i) denominated or payable in cash, Common Shares, other securities or other property, and (ii) which will confer on the
holder thereof rights valued as determined by the Committee and payable to, or exercisable by, the holder of the Performance Share Unit, in whole or in part, upon the achievement of such Performance Goals during such Performance Periods as the
Committee will establish.
7.2
|
Value of Performance Share Units
|
The initial value of a Performance Share Unit will be established by the Committee at the Date of Grant and, to the extent related to Common
Shares, other securities or other property will initially be equal to 100% of the Fair Market Value of a Common Share or the fair market value (as determined by the Board) of such other security or such other property on the Date of Grant.
7.3
|
Terms of Performance Share Units
|
Subject to the terms of the Plan and any applicable Award Agreement, the Performance Goals to be achieved during any Performance Period, the
length of any Performance Period, the amount of any Performance Share Unit granted, the termination of a Participants employment and the amount of any payment or transfer to be made pursuant to any Performance Share Unit will be determined by
the Committee and by the other terms and conditions of any Performance Share Unit.
The Committee will issue Performance Goals within the first 90 days of a Performance Period (or, if longer or shorter, within the maximum
period allowed under Section 162(m) of the Code). The Performance Goals may be based upon the achievement of Company-wide, divisional or individual goals, or any other basis determined by the Committee. Notwithstanding the foregoing, to the extent
deemed desirable by the Committee, in the case of a Covered Employee, the Committee shall establish only the Performance Goals of the type set forth in Section 2.1.
7.5
|
Performance Compensation Awards
|
The Committee shall have the authority, at the time of grant of any Award described in this Plan (other than Options granted
with an exercise price equal to or greater than the Fair Market Value per share of Common Share on the Grant Date), to determine whether such Award shall be qualified performance-based compensation under Section 162(m) of the Code. In
addition, the Committee shall have the authority to make an Award of a cash bonus to any Participant and designate such Award as a Performance Compensation Award in order to qualify such Award as performance-based compensation under
Section 162(m) of the Code.
E-1-18
The Committee will, in its sole discretion, designate within the first 90 days of a Performance Period (or, if longer or
shorter, within the maximum period allowed under Section 162(m) of the Code) which Participants will be eligible to receive Performance Compensation Awards in respect of such Performance Period. However, designation of a Participant eligible to
receive an Award hereunder for a Performance Period shall not in any manner entitle the Participant to receive payment in respect of any Performance Compensation Award for such Performance Period. The determination as to whether such Participant
becomes entitled to payment in respect of any Performance Compensation Award shall be decided solely in accordance with the provisions of this Section 7.5. Moreover, designation of a Participant eligible to receive an Award hereunder for a
particular Performance Period shall not require designation of such Participant eligible to receive an Award hereunder in any subsequent Performance Period and designation of one person as a Participant eligible to receive an Award hereunder shall
not require designation of any other person as a Participant eligible to receive an Award hereunder in such period or in any other period.
|
(c)
|
Discretion of Committee with Respect to Performance Compensation Awards
|
With regard to a particular Performance Period, the Committee shall have full discretion to select the length of such
Performance Period (provided any such Performance Period shall be not less than one fiscal quarter in duration), the type(s) of Performance Compensation Awards to be issued, the measurement criteria that will be used to establish the Performance
Goal(s), the kind(s) and/or level(s) of the Performance Goal (s) that is (are) to apply to the Company. Within the first 90 days of a Performance Period (or, if longer or shorter, within the maximum period allowed under Section 162(m) of the
Code), the Committee shall, with regard to the Performance Compensation Awards to be issued for such Performance Period, exercise its discretion with respect to each of the matters enumerated in the immediately preceding sentence of this Section
7.5(c) and record the same in writing.
|
(d)
|
Payment of Performance Compensation Awards
|
|
(i)
|
Condition to Receipt of Payment
|
Unless otherwise provided by the Committee, a Participant must be employed by the Company on the date of payment to be
eligible for payout in respect of a Performance Compensation Award for such Performance Period.
A Participant shall be eligible to receive payment in respect of a Performance Compensation Award only to the extent that the
measurement factors established by the Committee as applied against the Performance Goals determines that all or some portion of such Participants Performance Compensation Award has been earned for the Performance Period.
E-1-19
Following the completion of a Performance Period, the Committee shall review and certify in writing whether, and to what
extent, the Performance Goals for the Performance Period have been achieved and, if so, calculate and certify in writing the amount of the Performance Compensation Awards earned for the period based upon the Performance Formula. The Committee shall
then determine the actual size of each Participants Performance Compensation Award for the Performance Period and, in so doing, may apply Negative Discretion in accordance with
Section
7.
1.1(d)(iv)
hereof, if and when it deems appropriate.
In determining the actual size of an individual Performance Compensation Award for a Performance Period, the Committee may
reduce or eliminate the amount of the Performance Compensation Award earned under the Performance Goals in the Performance Period through the use of Negative Discretion if, in its sole judgment, such reduction or elimination is appropriate. The
Committee shall not have the discretion to (A) grant or provide payment in respect of Performance Compensation Awards for a Performance Period if the Performance Goals for such Performance Period have not been attained or (B) increase a
Performance Compensation Award above the maximum amount payable under
Section 1.1(d)(vi)
of the Plan.
|
(v)
|
Timing of Award Payments
|
Performance Compensation Awards granted for a Performance Period shall be paid to Participants as soon as administratively
practicable following completion of the certifications required by this Section 7.5.
ARTICLE VIII
OTHER SHARE-BASED AWARDS
8.1
|
Other Share-Based Awards
|
The Committee may, from time to time, subject to the provisions of this Plan and such other terms and conditions as the Committee may
prescribe, grant Other Share-Based Awards to any Participant. Each Other Share-Based Award will consist of a right (1) which is other than an Award or right described in Article 4, 5, 6 or 7 above and (2) which is denominated or payable
in, valued in whole or in part by reference to, or otherwise based on or related to, Common Shares (including, without limitation, securities convertible into Common Shares) as are deemed by the Committee to be consistent with the purposes of the
Plan; provided, however, that such right will comply with applicable law. Subject to the terms of the Plan and any applicable Award Agreement, the Committee will determine the terms and conditions of Other Share-Based Awards. Common Shares or other
securities delivered pursuant to a purchase right granted under this Section 8.1 will be purchased for such consideration, which may be paid by such method or methods and in such form or forms, including, without limitation, cash, Common
Shares, other securities, other Awards, other property, or any combination thereof, as the Committee will determine.
E-1-20
ARTICLE IX
TERMINATION OF EMPLOYMENT
Subject to Section 5.3, and unless otherwise specified in an Award Agreement, if a Participant or Director Participant dies or becomes
Disabled while an employee, officer or director of or consultant to the Company or an Affiliate:
|
(a)
|
the executor or administrator of the Participants or Director Participants estate or the
Participant or Director Participant, as the case may be, may exercise Options of the Participant or Director Participant. The number of Options exercisable shall equal:
|
|
(i)
|
the number of Options that were exercisable at the Termination Date; plus
|
|
(ii)
|
a portion of the next instalment of the Options due to vest equal to the number of Options next due to vest
multiplied by a fraction the numerator of which is the number of days elapsed since the date of vesting of the last instalment of the Options (or if none have vested, the Date of Grant) to the Termination Date and the denominator of which is the
number of days between the date of vesting of the last instalment of the Option (or if none have vested, the Date of Grant) and the date of vesting of the next instalment of the Option;
|
|
(b)
|
the right to exercise such Options terminates on the earlier of: (i) the date that is twelve months after
the Termination Date; and (ii) the date on which the Exercise Period of the particular Option expires. Subject to subsection (a), any Options held by the Participant or Director Participant that are not yet exercisable at the Termination Date
immediately expire and are cancelled on the Termination Date;
|
|
(c)
|
except for Performance Compensation Awards, a portion of the next instalment of any other Awards due to vest
shall immediately vest, such portion to equal the number of Awards next due to vest multiplied by a fraction the numerator of which is the number of days elapsed since the date of vesting of the last instalment of the Awards (or if none have vested,
the Date of Grant) to the Termination Date and the denominator of which is the number of days between the date of vesting of the last instalment of the Awards (or if none have vested, the Date of Grant) and the date of vesting of the next instalment
of the Awards;
|
|
(d)
|
subject to subsection (c), any other Awards held by the Participant or Director Participant that are not yet
vested at the Termination Date are immediately forfeited to the Company on the Termination Date; and
|
|
(e)
|
such Participants or Director Participants eligibility to receive further grants of Awards under
the Plan ceases as of the Termination Date.
|
9.2
|
Termination of Employment or Services
|
|
(a)
|
Where a Participants or Director Participants employment or term of office or engagement with the
Company or an Affiliate terminates by reason of the Participants death or Disability or, in the case of a Director Participant, the Director Participants death or Disability, then the provisions of Section 9.1 will apply.
|
E-1-21
|
(b)
|
Where a Participants employment or term of office or engagement terminates by reason of a
Participants resignation, then unless otherwise specified in the Award Agreement, any Options held by the Participant that are exercisable at the Termination Date continue to be exercisable by the Participant until the earlier of: (A) the
date that is 30 days after the Termination Date; and (B) the date on which the Exercise Period of the particular Option expires. Any Options held by the Participant that are not yet exercisable at the Termination Date immediately expire and are
cancelled on the Termination Date, and any other Awards held by the Participant that are not yet vested at the Termination Date are immediately forfeited to the Company on the Termination Date.
|
|
(c)
|
Where a Participants employment or term of office or engagement terminates by reason of termination by
the Company or an Affiliate without cause (as determined by the Committee in its sole discretion) (whether such termination occurs with or without any or adequate notice or reasonable notice, or with or without any or adequate compensation in lieu
of such notice), then, unless otherwise specified in the Award Agreement, any Options held by the Participant that are exercisable at the Termination Date continue to be exercisable by the Participant until the earlier of: (A) the date that is
90 days after the Termination Date; and (B) the date on which the Exercise Period of the particular Option expires. Any Options held by the Participant that are not yet exercisable at the Termination Date immediately expire and are cancelled on
the Termination Date, and any other Awards held by the Participant that are not yet vested at the Termination Date are immediately forfeited to the Company on the Termination Date.
|
|
(d)
|
Where a Participants employment or term of office or engagement is terminated by the Company or an
Affiliate for cause (as determined by the Committee in its sole discretion), or, in the case of a Consultant Participant, for breach of contract (as determined by the Committee in its sole discretion), then any Options held by the Participant at the
Termination Date (whether or not exercisable) immediately expire and are cancelled on the Termination Date, and any other Awards held by the Participant at the Termination Date (whether or not vested) are immediately forfeited to the Company on the
Termination Date.
|
|
(e)
|
Where a Director Participants term of office is terminated for breach by the Director Participant of his
or her fiduciary duty to the Company (as determined by the Committee in its sole discretion), then any Options held by the Director Participant at the Termination Date (whether or not exercisable) immediately expire and are cancelled on the
Termination Date, and any other Awards held by the Director Participant at the Termination Date (whether or not vested) are immediately forfeited to the Company on the Termination Date.
|
E-1-22
|
(f)
|
Where a Director Participants term of office terminates for any reason other than death or Disability of
the Director Participant or a breach by the Director Participant of his or her fiduciary duty to the Company (as determined by the Committee in its sole discretion), the Committee or the Board may, in its sole discretion, at any time prior to or
following the Termination Date, (A) permit the exercise of any or all Options held by the Director Participant, whether or not exercisable at the Termination Date, in the manner and on the terms authorized by the Board, provided that neither
the Committee nor the Board shall, in any case, authorize the exercise of an Option pursuant to this Section beyond the date on which the Exercise Period of the particular Option expires; and (B) provide for the vesting of any or all other
Awards held by a Director Participant on the Termination Date.
|
|
(g)
|
The eligibility of a Participant or Director Participant to receive further grants under the Plan ceases as of
the date that the Company or an Affiliate, as the case may be, provides the Participant or Director Participant with written notification that the Participants employment or term of office, or the Director Participants term of office, as
the case may be, is terminated, notwithstanding that such date may be prior to the Termination Date.
|
|
(h)
|
Unless the Committee, in its sole discretion, otherwise determines, at any time and from time to time, Awards
are not affected by a change of employment arrangement within or among the Company or a Subsidiary for so long as the Participant continues to be an employee of the Company or a Subsidiary, including without limitation a change in the employment
arrangement of a Participant whereby such Participant becomes a Director Participant.
|
9.3
|
Incentive Stock Options
|
Notwithstanding anything to the contrary in this Article 9, in the case of an Incentive Stock Option, any Incentive Stock Options held by a
U.S. Taxpayer that are exercisable at the Termination Date continue to be exercisable by the U.S. Taxpayer until the earlier of: (A) the date that is three months after the Termination Date; (B) the date on which the Exercise Period of the
particular Incentive Stock Option expires; or (C) any shorter post-Termination Date exercise period as is set forth in this Article 9 or in the U.S. Taxpayers Award Agreement.
ARTICLE X
CHANGE IN
CONTROL
10.1
|
Corporate Transaction/Change in Control
|
|
(a)
|
Corporate Transaction
. In the event that the Company is a party to a Corporate Transaction, outstanding
Awards shall be subject to the applicable agreement of merger, reorganization, or sale of assets. Such agreement may provide, without limitation, for
|
|
i.
|
the continuation of an outstanding Award by the Company (if the Company is the surviving corporation),
|
|
ii.
|
the assumption or substitution of outstanding Options, or other Awards by the surviving corporation or its
parent, except that the exercise price and the number and nature of shares issuable upon exercise of any such Option, will be adjusted appropriately pursuant to Section 424(a) of the Code,
|
|
iii.
|
the assumption of outstanding Award Agreements by the surviving corporation or its parent,
|
E-1-23
|
iv.
|
the replacement of outstanding Options, and other Awards with a cash incentive program of the surviving
corporation which preserves the spread existing on the unvested portions of such outstanding Awards at the time of the transaction and provides for subsequent payout in accordance with the same vesting provisions applicable to those Awards,
|
|
v.
|
or for the cancellation of outstanding Options, and other Awards, with or without consideration,
|
in all cases without the consent of the Participant.
|
(b)
|
Acceleration
. The Committee may determine, at the time of grant of an Award or thereafter, that in the
event of a Change of Control, such Award shall become fully or partially vested as to all Common Shares subject to such Award.
|
|
(c)
|
Dissolution
. To the extent not previously exercised or settled, Options, and other Awards shall
terminate immediately prior to the dissolution or liquidation of the Company.
|
If a Participant or Director Participant is entitled to receive payments that would qualify as excess parachute payments under
Section 280G of the Code, those payments shall be reduced by the necessary amount so that the Participant or Director Participant is not subject to excise tax under Section 4999 of the Code if such reduction would result in the Participant or
Director Participant receiving a greater
after-tax
payment. If a reduction is necessary, cash payments shall first be reduced, beginning with the payment that is scheduled to be paid the latest and continuing
to reduce earlier scheduled payments, followed by reduction in full value Share Awards, and then Options.
ARTICLE XI
SHARE CAPITAL ADJUSTMENTS
The existence of any Awards does not affect in any way the right or power of the Company or its shareholders to make, authorize or determine
any adjustment, recapitalization, reorganization or any other change in the Companys capital structure or its business, or any amalgamation, combination, arrangement, merger or consolidation involving the Company, to create or issue any bonds,
debentures, Common Shares or other securities of the Company or to determine the rights and conditions attaching thereto, to effect the dissolution or liquidation of the Company or any sale or transfer of all or any part of its assets or business,
or to effect any other corporate act or proceeding, whether of a similar character or otherwise, whether or not any such action referred to in this Section would have an adverse effect on this Plan or on any Award granted hereunder.
E-1-24
11.2
|
Reorganization of Companys Capital
|
Should the Company effect a subdivision or consolidation of Common Shares or any similar capital reorganization or a payment of a stock
dividend (other than a stock dividend that is in lieu of a cash dividend), or should any other change be made in the capitalization of the Company, amalgamation, combination, arrangement, merger or other transaction or reorganization involving the
Company and occurring by exchange of Common Shares, by sale or lease of assets or otherwise, in each case that does not constitute a Change in Control then: (a) the number of Common Shares that may be acquired on the vesting of outstanding
Awards or the exercise of any outstanding Options; and/or (b) the Exercise Price of any outstanding Options; and/or (c) the terms of any Other Award in order to preserve proportionately the rights and obligations of the Participants or
Director Participants holding such Awards, shall be proportionately adjusted, subject to any required action by the Board or the stockholders of the Company and in compliance with applicable securities laws, and the number of Common Shares issuable
under the Plan shall be correspondingly adjusted.
11.3
|
Immediate Exercise of Awards
|
Where the Board determines that the steps provided in Sections 11.2 would not preserve proportionately the rights, value and obligations of
the Participants or Director Participants holding such Awards in the circumstances or otherwise determines that it is appropriate:
|
(a)
|
the Board may permit the immediate exercise of any outstanding Options that are not otherwise exercisable, and
the immediate vesting of any unvested Awards; and
|
|
(b)
|
if the Board takes the step contemplated in (a) above, the Board may also authorize the Company, to the
extent permitted under applicable laws, to
|
offer to purchase any Options from any Participant or Director Participants
for a price equal to the difference between the Fair Market Value of the underlying Common Shares and the Exercise Price of the Options.
11.4
|
Issue by Company of Additional Shares
|
Except as expressly provided in this Article 11, neither the issue by the Company of shares of any class or securities convertible into or
exchangeable for shares of any class, nor the conversion or exchange of such shares or securities, affects, and no adjustment by reason thereof is to be made with respect to: (a) the number of Common Shares that may be acquired as a result of a
grant of Awards or upon the exercise of any outstanding Options; or (b) the Exercise Price of any outstanding Options.
No fractional Common Shares will be issued on the exercise of an Option or the grant of an Award. Accordingly, if, as a result of any
adjustment under Section 11.2 a Participant or Director Participant would become entitled to a fractional Common Share, the Participant or Director Participant has the right to acquire only the adjusted number of full Common Shares and no
payment or other adjustment will be made with respect to the fractional Common Shares which shall be disregarded.
E-1-25
ARTICLE XII
MISCELLANEOUS PROVISIONS
The Company is not obligated to grant any Awards, issue any Common Shares or other securities, make any payments or take any other action if,
in the opinion of the Board, in its sole discretion, such action would constitute a violation by a Participant, Director Participant or the Company of any provision of any applicable statutory or regulatory enactment of any government or government
agency or the requirements of any stock exchange upon which the Common Shares may then be listed.
12.2
|
Participants Entitlement
|
Except as otherwise provided in this Plan, Options (whether or not exercisable) and other Awards previously granted under this Plan are not
affected by any change in the relationship between, or ownership of, the Company and an Affiliate. For greater certainty, all grants of Awards remain valid and all Options remain valid and exercisable in accordance with the terms and conditions of
this Plan and are not affected by reason only that, at any time, an Affiliate ceases to be an Affiliate.
The granting or vesting of each Award and exercise of each Option granted under this Plan is subject to the condition that if at any time the
Committee determines, in its discretion, that the satisfaction of withholding tax or other withholding liabilities is necessary or desirable in respect of such grant, vesting or exercise, such exercise is not effective unless such withholding has
been effected to the satisfaction of the Committee. In such circumstances, the Committee may require that the withholding tax obligation be satisfied by any of the following methods or by a combination of such methods:
|
(a)
|
the tendering by the Participant or Director Participant of cash payment to the Company in an amount less than
or equal to the total withholding tax obligation; or
|
|
(b)
|
permitting the Participant to direct the Company to withhold from the Common Shares otherwise due to the
Participant or Director Participant such number of Common Shares having a Fair Market Value, determined as of the date the withholding tax obligation arises, less than or equal to the amount of the total withholding tax obligation in the relevant
jurisdiction; or
|
|
(c)
|
the withholding by the Company from any cash payment otherwise due to the Participant or Director Participant
such amount of cash as is less than or equal to the amount of the total withholding tax obligation;
|
provided, however,
that the sum of any cash so paid or withheld and the Fair Market Value of any Common Shares so withheld is sufficient to satisfy the total withholding tax obligation. Any such additional payment is due no later than the date on which any amount with
respect to the Award or exercised Option is required to be remitted to the relevant tax authority by the Company or an Affiliate, as the case may be.
E-1-26
12.4
|
Rights of Participant
|
No Participant or Director Participant has any claim or right to be granted an Award (including, without limitation, an Option granted in
substitution for any Option that has expired pursuant to the terms of this Plan) and the granting of any Award is not to be construed as giving a Participant or Director Participant a right to remain as an employee, consultant or director of the
Company or an Affiliate. No Participant or Director Participant has any rights as a shareholder of the Company in respect of Common Shares issuable on the exercise of any Option or issuable pursuant to any other Award until the allotment as a book
entry representing the delivery or the issuance to such Participant or Director Participant of certificates representing such Common Shares.
12.5
|
Other Incentive Awards
|
The Committee shall have the right to grant other incentive awards based upon Common Shares under this Plan to Participants or Director
Participants in accordance with applicable laws and regulations and subject to regulatory approval, including without limitation the approval of the Toronto Stock Exchange and Nasdaq (to the extent the Company has any securities listed on the
particular exchange), having such terms and conditions as the Committee may determine, including without limitation the grant of Common Shares based upon certain conditions and the grant of securities convertible into Common Shares.
The Plan will terminate on the earliest of: (i) the date upon which no further Common Shares remain available for issuance under the Plan
and no Options or other Awards remain outstanding; and (ii) the acceleration of the vesting, if any, of Options and other Awards pursuant to Section 10.1 upon the occurrence of a Change in Control, unless renewed for such further period
and upon such terms and conditions as the Committee may determine, but in all events the Plan will automatically terminate on May 15, 2027, being the tenth anniversary of the effective date of the Plan.
|
(a)
|
Subject to the rules and policies of any stock exchange on which the Common Shares are listed and applicable
law, the Board may, without notice or shareholder approval, at any time or from time to time, amend the Plan for the purposes of:
|
|
(i)
|
making any amendments to the general vesting provisions of each Option, PSU, RSU or other Award, including
accelerating the vesting conditions in situations addressing Change in Control, Corporation Transaction, death, Disability or certain terminations of service, based on such factors as the Board may determine;
|
|
(ii)
|
making any amendments to the general term of each Option provided that no Option held by an Insider may be
extended beyond its original expiry date, and no Option may be exercised after the tenth (10th) anniversary of the Date of Grant;
|
|
(iii)
|
making any amendments to the provisions set out in Article 9;
|
E-1-27
|
(iv)
|
making any amendments to add covenants of the Company for the protection of Participants or Director
Participants, as the case may be, provided that the Board shall be of the good faith opinion that such additions will not be materially prejudicial to the rights or interests of the Participants or Director Participants, as the case may be;
|
|
(v)
|
making any amendments not inconsistent with the Plan as may be necessary or desirable with respect to matters
or questions which, in the good faith opinion of the Board, having in mind the best interests of the Participants and Director Participants, it may be expedient to make, including amendments that are desirable as a result of changes in law in any
jurisdiction where a Participant or Director Participant resides, provided that the Board shall be of the opinion that such amendments and modifications will not be materially prejudicial to the interests of the Participants and Director
Participants; or
|
|
(vi)
|
making such changes or corrections which, on the advice of counsel to the Company, are required for the
purpose of curing or correcting any ambiguity or defect or inconsistent provision or clerical omission or mistake or manifest error, provided that the Board shall be of the opinion that such changes or corrections will not be prejudicial to the
rights and interests of the Participants or Director Participants.
|
|
(b)
|
Subject to Section 10.1, the Board shall not materially alter or impair any rights or increase any
obligations with respect to an Award previously granted under the Plan without the consent of the Participant or Director Participant, as the case may be.
|
|
(c)
|
Notwithstanding any other provision of this Plan, none of the following amendments shall be made to this Plan
without approval of the Toronto Stock Exchange and Nasdaq (to the extent such consent is required and the Company has any securities listed on the particular exchange) and the approval of shareholders in accordance with the requirements of such
exchange(s):
|
|
(i)
|
amendments to the Plan which would increase the number of Common Shares issuable under the Plan, except
pursuant to the provisions in the Plan, including Section 11.2, which permit the Board to make adjustments in the event of transactions affecting the Company or its capital;
|
|
(ii)
|
amendments to the Plan which would increase the number of Common Shares issuable to Insiders, except in
connection with a Change in Control or pursuant to the provisions in the Plan, including Sections 11.2, which permit the Board to make adjustments in the event of transactions affecting the Company or its capital;
|
|
(iii)
|
amendments to the Plan which would increase the number of Common Shares issuable to Director Participants
under the Plan, otherwise than in accordance with the terms of this Plan;
|
|
(iv)
|
amendments that would extend the Exercise Period of any Options held by Insiders, beyond the Exercise Period
otherwise determined in accordance with this Plan (except the automatic extension of Options which otherwise would expire during or immediately after a Blackout Period as provided in this Plan);
|
E-1-28
|
(v)
|
amendments that would extend the expiry of an Option to be beyond ten years from its date of grant;
|
|
(vi)
|
amendments that would reduce the Exercise Price of any Options held by Insiders (for this purpose, a
cancellation or termination of an Option of a Participant or Director Participant prior to its expiry date for the purpose of reissuing an Option to the same Participant or Director Participant within three (3) months of such cancellation or
termination with a lower exercise price shall be treated as an amendment to reduce the exercise price of an Option), except for the purpose of maintaining Option value in connection with a Change in Control or pursuant to the provisions in the Plan,
including Sections 11.2, which permit the Board to make adjustments in the event of transactions affecting the Company or its capital;
|
|
(vii)
|
the addition of any form of financial assistance to a Participant or Director Participant;
|
|
(viii)
|
amendments that would permit Options or rights under the Plan to be transferred other than for normal estate
settlement purposes;
|
|
(ix)
|
amendments to this Section 12.7; and
|
|
(x)
|
amendments for which the applicable exchange rules require shareholder approval.
|
Any amendment that would cause an Award held by a U.S. Taxpayer to fail to comply with Section 409A of the Code shall be null and void
ab
initio
.
12.8
|
Section 409A of the Code
|
This Plan will be construed and interpreted to be exempt from the requirements of Section 409A of the Code, however, to the extent that Awards
are not so exempt, then Awards will be construed and interpreted to comply with Section 409A of the Code to the extent required to avoid the imposition of the additional tax under Section 409A of the Code. The Company reserves the right to
amend this Plan to the extent it reasonably determines is necessary in order to preserve the intended tax consequences of this Plan in light of Section 409A of the Code and any regulations or guidance under that section. In no event will the Company
be responsible if Awards under this Plan result in adverse tax consequences to a U.S. Taxpayer under Section 409A of the Code. Notwithstanding any provisions of the Plan to the contrary, in the case of any specified employee within the
meaning of Section 409A of the Code who is a U.S. Taxpayer, distributions of
non-qualified
deferred compensation under Section 409A of the Code made in connection with a separation from service
within the meaning set forth in Section 409A of the Code may not be made prior to the date which is six months after the date of separation from service (or, if earlier, the date of death of the U.S. Taxpayer). Any amounts subject to a delay in
payment pursuant to the preceding sentence shall be paid as soon practicable following such
six-month
anniversary of such separation from service.
E-1-29
12.9
|
Requirement of Notification of Election Under Section 83(b) of the Code
|
If a Participant or Director Participant, in connection with the acquisition of Common Shares under the Plan, is permitted under the terms of
the Award Agreement to make the election permitted under Section 83(b) of the Code (i.e., an election to include in gross income in the year of transfer the amounts specified in Section 83(b) of the Code notwithstanding the continuing transfer
restrictions) and the Participant or Director Participant makes such an election, the Participant or Director Participant shall notify the Company of such election within ten (10) days of filing notice of the election with the Internal Revenue
Service, in addition to any filing and notification required pursuant to regulations issued under Section 83(b) of the Code.
12.10
|
Requirement of Notification Upon Disqualifying Disposition Under Section 421(b) of the Code
|
If any Participant shall make any disposition of Common Shares issued pursuant to the exercise of an Incentive
Stock Option under the circumstances described in Section 421(b) of the Code (relating to certain disqualifying dispositions), such Participant shall notify the Company of such disposition within ten (10) days thereof.
Every member of the Board will at all times be indemnified and saved harmless by the Company from and against all costs, charges and expenses
whatsoever including any income tax liability arising from any such indemnification, that such member may sustain or incur by reason of any action, suit or proceeding, taken or threatened against the member, otherwise than by the Company, for or in
respect of any act done or omitted by the member in respect of this Plan, such costs, charges and expenses to include any amount paid to settle such action, suit or proceeding or in satisfaction of any judgment rendered therein.
12.12
|
Participation in the Plan
|
The participation of any Participant or Director Participant in the Plan is entirely voluntary and not obligatory and shall not be interpreted
as conferring upon such Participant or Director Participant any rights or privileges other than those rights and privileges expressly provided in the Plan. In particular, participation in the Plan does not constitute a condition of employment or
engagement nor a commitment on the part of the Company to ensure the continued employment or engagement of such Participant or Director Participant. The Plan does not provide any guarantee against any loss which may result from fluctuations in the
market value of the Common Shares. The Company does not assume responsibility for the income or other tax consequences for the Participants and Director Participants and they are advised to consult with their own tax advisors.
E-1-30
12.13
|
Participant Information and Consent to Data Transfer
|
Each Participant shall provide the Company with all information (including personal information) required by the Company in order to
administer the Plan. By participating in the Plan, the Participant explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Participants personal data by and among, as applicable, the
Company, any Affiliate and any third party administrator retained by the Company for the exclusive purpose of implementing, administering and managing the Plan and all entitlements under the Plan. The Participant understands that the Company and/or
Affiliates hold certain personal information, including, but not limited to, the Participants name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any
shares or directorships held in the Company, the Affiliates and details of any entitlements under the Plan, for the purpose of implementing, administering and managing the Plan (collectively,
Data
). The Participant understands
that Data may be transferred to any third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in the Participants country or elsewhere, and that the recipients country
may have different data privacy laws and protections from the Participants country. The Participant understands that he or she may have the right, if residing in a particular jurisdiction to request a list with the names and addresses of any
potential recipients of the Data by contacting the local human resources representative. The Participant authorizes the recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing,
administering and managing the awards granted under the Plan. The Participant understands that Data will be held only as long as is necessary to implement, administer and manage the Participants entitlements under the Plan and comply with
applicable laws. The Participant understands that he or she may have the right, if residing in a particular jurisdiction, at any time, to view Data, request additional information about the storage and processing of Data, require any necessary
amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing his or her local human resources representative. The Participant understands, however, that refusing or withdrawing his or her consent
may affect the Participants ability to participate in the Plan. For more information on the consequences of the Participants refusal to consent or withdrawal of consent, the Participant understands that he or she may contact the
applicable local human resources representative.
E-1-31
12.14
|
International Participants
|
With respect to Participants or Director Participants who reside or work outside Canada and the United States, the Board may, in its sole
discretion, amend, or otherwise modify, without shareholder approval, the terms of the Plan or Awards with respect to such Participants or Director Participants in order to conform such terms with the provisions of local law, and the Committee may,
where appropriate, establish one or more
sub-plans
to reflect such amended or otherwise modified provisions.
12.15
|
Clawback or Recoupment Policy
|
All Awards shall be subject to clawback or recoupment pursuant to any compensation clawback or recoupment policy adopted by the Board or
required by law during the term of Participants employment or other service with the Company that is applicable to executive officers, employees, directors or other service providers of the Company, and in addition to any other remedies
available under such policy and applicable law, may require the cancellation of outstanding Awards and the recoupment of any gains realized with respect to Awards.
This Plan becomes effective on a date to be determined by the Board.
This Plan is created under and is to be governed, construed and administered in accordance with the laws of the Province of Ontario and the
laws of Canada applicable therein.
F-
1
SCHEDULE F
BY-LAW RATIFICATION RESOLUTION
RESOLVED AS A RESOLUTION OF THE SHAREHOLDERS OF MITEL NETWORKS CORPORATION (THE
CORPORATION
) THAT:
The amendment to By-Law No. 1A of the Corporation, as adopted and approved by the Corporations board of directors on December 16,
2016, is hereby confirmed, without amendment.
000001
Mr A Sample Designation (if any) Add1
Add2 add3 add4 add5 add6
8th Floor, 100 University Avenue Toronto, Ontario M5J 2Y1 www.computershare.com
Security Class
123
Holder Account Number
C1234567890 XXX
Form of Proxy - Annual General Meeting to be held on May 15, 2017
This Form of Proxy is
solicited by and on behalf of Management.
Notes to proxy
1. Every holder has the right to appoint some other person or company of their choice, who need not be a holder, to attend and act on their behalf at the
meeting or any
adjournment or postponement thereof. If you wish to appoint a person or company other than the persons whose names are printed herein, please insert
the name of
your chosen proxyholder in the space provided (see reverse).
2. If the securities are registered in the name of more than one owner (for example, joint ownership, trustees, executors, etc.), then all those registered
should sign this proxy. If you are
voting on behalf of a corporation or another individual you must sign this proxy with signing capacity stated, and you may be
required to provide documentation evidencing your power
to sign this proxy.
3. This proxy should be signed in the exact manner as the name(s) appear(s) on the proxy.
4. If this proxy is not dated, it will be deemed to bear the date on which it is mailed by Management to the holder.
5. The securities represented by this proxy will be voted as directed by the holder, however, if such a direction is not made in respect of any matter, this
proxy will be voted
as recommended by Management.
6. The securities represented by this proxy will be voted in favour or withheld from voting or voted against each of the matters described
herein, as applicable, in accordance with the
instructions of the holder, on any ballot that may be called for and, if the holder has speci?ed a choice with
respect to any matter to be acted on, the securities will be voted accordingly.
7. This proxy confers discretionary authority in respect of
amendments or variations to matters identi?ed in the Notice of Meeting or other matters that may properly come before the
meeting or any adjournment or
postponement thereof.
8. This proxy should be read in conjunction with the accompanying proxy statement and other
documentation provided by Management.
9. To vote by mail complete this proxy form in full, sign and return it in the envelope
provided by 4:00 p.m., Ottawa time, on May 11, 2017.
Proxies submitted must be received by 4:00 p.m., Eastern Time, on May 11, 2017.
VOTE USING THE TELEPHONE OR INTERNET 24 HOURS A DAY 7 DAYS A WEEK!
To Vote Using the
Telephone To Vote Using the InternetTo Receive Documents Electronically
Call the number listed BELOW from a touch toneGo to the
following web site: You can enroll to receive future securityholder
telephone. www.investorvote.comcommunications electronically by
visiting
1-866-732-VOTE
(8683) Toll
Free Smartphone?www.investorcentre.com and clicking at the
bottom of the page.
Scan the QR code to vote now.
If you vote by telephone or the Internet,
DO NOT mail back this proxy.
Voting by mail may be the only method for securities held in the name of a corporation or securities being voted on behalf of another
individual.
Voting by mail or by Internet are the only methods by which a holder may appoint a person as proxyholder other than the Management nominees named on
the reverse of this proxy.
Instead of mailing this proxy, you may choose one of the two voting methods outlined above to vote this proxy.
To vote by telephone or the Internet, you will need to provide your CONTROL NUMBER listed below.
CONTROL NUMBER 123456789012345
CPUQC01.E.INT/000001/i1234
01B81B
MR SAM SAMPLE C1234567890
XXX 123
Appointment of Proxyholder
I/We, being holder(s) of Mitel Networks Corporation hereby appoint:
Richard McBee or, failing him, Steven Spooner, or failing him, Gregory Hiscock
Print the name of the person you are appointing if this person is someone OR other than the Management Nominees listed herein.
as my/our proxyholder with full power of substitution and to attend, act and to vote for and on behalf of the shareholder in accordance with the following direction (or if no
directions have been given, as the proxyholder sees t) and all other matters that may properly come before the Annual General Meeting of shareholders of Mitel Networks Corporation to be held at The Brookstreet Hotel, 525 Legget Drive, Kanata,
Ontario K2K 2W2 on May 15, 2017 at 4:00 p.m. and at any adjournment or postponement thereof.
1. Number of Directors
The Board recommends you vote FOR the following resolution:
To set the number of Directors at
eight.
2. Election of Directors
For Against Abstain
The Board recommends you vote FOR the following nominees:
For Withhold
01. Dr. Terence H. Matthews 04. Martha H. Bejar 07. Sudhakar Ramakrishna
02. Richard
D. McBee 05. Peter D. Charbonneau 08. David M. Williams
For Withhold
03.
Benjamin H. Ball
06. John P. McHugh
3. Appointment of Auditors
The Board recommends you vote FOR the following resolution:
Reappointment of Deloitte LLP as
Auditors of the Corporation for the ensuing year and authorizing the Directors to ? x their remuneration.
4. Advisory Vote for Executive Compensation
The Board recommends you vote FOR the following resolution:
An advisory
(non-binding)
resolution to approve executive compensation.
1 Year
5. Advisory Vote for Frequency of
Say-on-Pay
Votes
The Board recommends you vote 1 YEAR for the following resolution:
An advisory
(non-binding)
resolution for the shareholders to determine whether the preferred frequency of an advisory vote on the executive compensation of the Corporations NEOs as set forth in the Corporations
proxy statement should be every one year, two years, or three years.
6. Ordinary Resolution No. 1
The Board recommends you vote FOR the following resolution:
A resolution to approve the 2017
Omnibus Incentive Plan of the Corporation, as more particularly described in the accompanying management information circular.
7. Rati? cation of Amendment to
By-Laws
The Board recommends you vote FOR the following resolution:
A resolution to con? rm the amendment to
By-Law
No. 1A of the Corporation, as approved and adopted by the Board on December 16, 2016,
to increase the quorum requirement of any meeting of the Corporations shareholders from 25% to 33 1/3%.
Authorized Signature(s) This section must be
completed for your instructions to be executed.
I/We authorize you to act in accordance with my/our instructions set out above. I/We hereby revoke any proxy
previously given with respect to the Meeting. If no voting instructions are indicated above, this Proxy will be voted as recommended by Management.
Signature(s)
Interim Financial Statements Mark this box if you would like to receive Interim Financial Statements and accompanying Managements Discussion and
Analysis by mail.
Annual Financial Statements Mark this box if you would NOT like to receive the Annual Financial Statements and accompanying
Managements Discussion and Analysis by mail.
If you are not mailing back your proxy, you may register online to receive the above ? nancial report(s) by mail
at www.computershare.com/mailinglist.
NMWQ 219917 XXXX A R 2 999999999999
01B82B
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