Charter of the Compensation and Corporate Governance Committee
Approved on November 27, 2012
1. The compensation and corporate governance committee (the “Committee”) is appointed by the board of directors (the “Board”) of Highland Copper Company Inc. (the “Company”) to assist the Board in fulfilling its responsibilities as they relate to:
(a) the development, adoption and oversight of the Company’s corporate governance systems, including the assessment of the effectiveness of the Board, its committees and individual directors, in compliance with all applicable legal requirements, stock exchange rules and accounting standards; and
(b) the establishment, administration, and evaluation of the Company’s compensation philosophy, policies and plans for directors, officers, and key employees, to ensure that the Company is competitive in its compensation arrangements and maintains its ability to attract and retain highly-qualified personnel.
2. The Committee will be composed of three or more directors, the majority of whom are independent, as determined by reference to the applicable rules and regulations of securities regulatory authorities and stock exchanges.
3. The Committee members will be appointed annually at the first meeting of the Board following the annual general shareholders meeting.
4. The chair of the Committee will be designated by the Board from among the Committee members.
5. The Committee will meet at least annually and otherwise at the discretion of the chair or a majority of its members.
6. A majority of the members of the Committee constitutes a quorum.
7. The time and place at which meetings of the Committee are to be held, and the procedures at those meetings, will be determined by the Committee. A meeting of the Committee may be called by notice given at least 48 hours in advance by means of telephone, facsimile, email, or other communication equipment, provided that no notice of a meeting will be necessary if all of the members are present either in person or by means of conference telephone, or if those absent have waived notice or otherwise indicated their consent to the holding of the meeting.
8. Committee members may participate in a meeting of the Committee by conference telephone or other communication equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this section will constitute presence in person at the meeting.
9. The Committee will keep minutes of its meetings which will be available for review by the Board.
10. The Committee may appoint any person, who need not be a member, to act as the secretary at any meeting.
11. The Committee may invite those officers, directors and employees of the Company and any other advisors and persons as it may see fit, from time to time, to attend at meetings of the Committee.
12. Any matters to be determined by the Committee will be decided by a majority of votes cast at a meeting of the Committee called for that purpose. Actions of the Committee may be taken by unanimous written consent of the members of the Committee and actions so taken will be effective as though they had been decided by a majority of votes.
13. The Committee will report its decisions to the Board at the next scheduled meeting of the Board, or earlier if the Committee deems necessary.
Resources and Authority
14. The Committee has the authority to:
(a) engage, at the expense of the Company, independent counsel and other experts or advisors as it determines necessary to carry out its duties;
(b) set and pay the compensation for any independent counsel and other experts and advisors retained by the Committee; and
(c) conduct any investigation appropriate to its responsibilities, and request any officer of the Company, or outside counsel for the Company, to attend a meeting of the Committee or to meet with any members of, or advisors to, the Committee.
15. The Committee’s responsibilities in respect of corporate governance generally include, but are not limited to the following:
(a) preparing and recommending to the Board for adoption a set of governance principles for the Company that are compliant with relevant statutory and stock exchange corporate governance requirements;
(b) keeping abreast of best corporate governance practices, both locally and internationally, through the review of peer group, mining industry and other relevant corporate governance systems reported through surveys and other sources;
(c) monitoring and periodically reviewing the effectiveness of the Company’s corporate governance policies, practices and procedures, including those dealing with risk management, corporate disclosure, fraud prevention and detection, and making recommendations to the Board for changes to the Company’s practices;
(d) reviewing the size and composition of the Board and its committees to ensure compliance with all regulatory requirements, including director independence requirements, and effective governance;
(e) recommending procedures to permit the Board to function with the proper degree of independence from management;
(f) recommending to the Board and annually implementing an appropriate evaluation process for the functioning and effectiveness of the Board, the other Board committees and their respective charters, and recommending to the Board any appropriate changes, including the creation and elimination of committees and the amendment of the committee charters, as the case may be;
(g) developing director orientation and continuing education programs for directors and management and thereafter periodically reviewing the effectiveness of such programs, which programs are intended to ensure that:
i. the responsibilities of the Board are understood by the directors and management, and that the boundaries between the Board and the management responsibilities are clearly understood and respected; and
ii. the resources available to the Board (in particular, timely and relevant delivery of information) are adequate to support its work;
(h) preparing and recommending to the Board, and thereafter monitoring and periodically reviewing a code of business conduct and ethics and policies on conflict of interests, insider trading and other related matters;
(i) reviewing and making recommendations to the Board regarding the adequacy of the Company’s directors’ and officers’ indemnity and insurance coverage; and
(j) reviewing and approving the annual disclosure relating to corporate governance contained in the annual information circular of the Company or as otherwise required pursuant to applicable securities laws and reviewing all corporate governance disclosure before it is publicly disclosed.
16. The Committee’s responsibilities in respect of compensation generally include, but are not limited to the following:
(a) reviewing and making recommendations to the Board with respect to the overall compensation strategy and policies for directors, officers and employees of the Company. As part of its review process, the Committee will review peer group and other mining industry compensation data available to it;
(b) reviewing and making recommendations to the Board with respect to the corporate goals and objectives relevant to the compensation of the senior executive officers, evaluating the performance of the senior executive officers in light of those goals and objectives, and recommending to the Board the compensation level of the senior executive officers based on this evaluation In setting the senior executive officers’ salaries, the Committee will take into consideration salaries paid to similar officers at similar companies in the mining industry. The senior executive officers’ contribution towards the Company’s achievement of business goals and objectives for the previous financial year will form the basis for the Committee’s recommendations concerning bonus or other performance recognition awards;
(c) reviewing and recommending the terms of any employment agreements, severance arrangements and change of control agreements/provisions with, and any special or supplemental benefits provided to, senior executive officers;
(d) providing oversight of management’s decisions concerning the appointment, promotion, performance and compensation of the Company’s senior executive officers and recommending annual salary adjustments and benefits for those officers;
(e) reviewing and making recommendations to the Board, as appropriate, in connection with the Company’s succession planning with respect to the senior executive officers;
(f) reviewing and recommending to the Board the compensation of the directors, including annual retainer, meeting fees, option grants and other benefits conferred upon the members of the Board;
(g) administering the Company’s incentive stock option plan, and any other equity–based plan the Company may adopt, in accordance with the terms of such plans, and making recommendations to the Board with respect to the Company’s incentive stock option plan and any other equity-based plan that is subject to Board approval; and
(h) reviewing and approving the annual disclosure relating to executive compensation contained in the annual information circular of the Company or as otherwise required pursuant to applicable securities laws and reviewing all executive compensation disclosure before it is publicly disclosed.
17. The role of the chair of the Committee is to:
(a) provide leadership to the Committee with respect to its functions as described in this charter and as otherwise may be appropriate, including overseeing the operation of the Committee;
(b) chair meetings of the Committee, unless not present, including in camera sessions, and report to the Board following each meeting of the Committee on the activities and any recommendations of the Committee;
(c) ensure that the Committee meets at least once per year and otherwise as considered appropriate;
(d) set the agenda for each meeting of the Committee, with input from other Committee members, the chairman of the Board, the lead director, if there is one, and any other appropriate persons and provide to the Committee appropriate information from management to enable the Committee to function effectively and fulfill its mandate;
(e) act as liaison and maintain communication with the chairman of the Board and the Board to co-ordinate input from directors and to optimize the effectiveness of the Committee; and
(f) perform such other duties as may be delegated to the chair by the Board from time to time.
18. The Committee will review and assess the adequacy of this charter from time to time and at least annually and submit any proposed revisions to the Board for approval.
19. The Committee will annually review its performance relative to this charter.
20. The Committee will perform any other activities consistent with this charter and applicable law, as the Committee or the Board deems necessary or appropriate.