OSK votes in favor of controversial option packageOsisko Mining shareholders vote in favor of controversial call option package
NIALL MCGEE - The Globe and Mail
JUNE 29, 2018
The shareholders of Osisko Mining Inc. voted in favor of a controversial stock option program on Friday, as its CEO said the company intended to move away from the options as a form of remuneration over time.
Prior to Friday's annual general meeting, Institutional Shareholder Services (ISS) advised shareholders of the junior mining company to vote against the package, citing concerns over its excessive cost and criticizing the lack of performance criteria for receiving options.
At Osisko, options are widely available to executives, directors and employees, and often constitute the lion's share of compensation. For example, CEO John Burzynski earned $ 3.15 million, with approximately $ 2.1 million in options, a salary of $ 500,000 and a bonus of $ 590,000. Independent director Sean Roosen received $ 743,000 last year, $ 688,000 in options and $ 55,000 in cash.
In an interview after the AGM, Burzynski said that 70 percent of the votes cast at Friday's AGM were in favor of the options plan, with 30 percent against. The threshold to cross was a majority.
Earlier this week, to ease some of ISS's concerns, Osisko announced that a portion of Mr. Burzynski's compensation will be paid in restricted stock units, based on certain performance measures. Osisko also announced that it would extend the vesting period for certain options for Mr. Burzynski to five years instead of three. Advocates of governance prefer a longer vesting period, as it encourages executives to focus on long-term growth over short-term gains. At a strike price of $ 3.46 per share, Mr. Burzynski's 2018 options are largely out of the money, with Osisko's shares trading around $ 1.75.
Mr. Burzynski stated that Osisko intends to move toward the payment of officers and directors in the restricted stock units over time, but indicated that he would likely continue to pay employees with options. Granting options is seen as a smart way to retain a valuable employee, he said.
Historically, stock options have been a popular compensation method in the mining sector, but more and more companies are opting for restricted stock units. Unlike options that may expire worthless, share units payable at the market value of the stock on a certain date generally retain some value.
Mr. Burzynski was part of the team that discovered, funded and developed Canadian Malartic in Quebec, which is now Canada's largest gold mine. Canadian Malartic was sold as part of a bidding war against Yamana Gold Inc. and Agnico Eagle Mines Ltd. in 2014 for $ 3.9 billion.
Osisko owns gold development assets in Quebec, which it hopes will one day become a mine.