NOTICE OF MEETING
AND
MANAGEMENT INFORMATION CIRCULAR
WITH RESPECT TO
AN ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD:
AT CENTRIUM PLACE
332 – 6TH AVENUE SOUTH WEST
CALGARY, ALBERTA
IN THE
CONFERENCE CENTRE
(MEZZANINE LEVEL)
ON THURSDAY, MAY 5, 2016
AT 2:00 P.M. (CALGARY TIME)
March 10, 2016
TABLE OF CONTENTS
NOTICE OF MEETING
1
PERFORMANCE GRAPH
23
GENERAL INFORMATION
Annual Meeting Date and Location
Date of Information
Outstanding Shares and Principal Holders
2
2
2
2
COMPENSATION GOVERNANCE
Risk Alignment of Compensation Program
24
25
SUMMARY COMPENSATION TABLE
27
VOTING INFORMATION
Voting
Record Date
Quorum
Proxy Voting
Exercise of Discretion by Proxyholders
Registered Shareholder Voting
Beneficial Shareholder Voting
3
3
3
3
3
3
3
4
REPORTED VS REALIZABLE COMENSATION TABLE
28
BUSINESS OF THE MEETING
Financial Statements
Election of Directors
Appointment of Auditor
Other Business
5
5
5
5
5
DIRECTOR NOMINEES
Individual Director and Majority Voting Policy
Advance Notice Requirement
Director Biographies
6
7
7
8
COMPENSATION DISCUSSION & ANALYSIS
Executive Summary
Executive Compensation Program
2015 Compensation
Peer Group
Elements of Compensation Program
Pay Mix
CEO Compensation
Base Salary
Share Incentive Plan
Stock Option Plan
Cash Bonus Plan
Discretionary Cash Bonus
INCENTIVE PLAN AWARDS TO NAMED EXECUTIVE
OFFICERS
Outstanding Share-based Awards and
Option-based Awards
Incentive Plan Awards – Value Vested or
Earned During the Year
14
14
15
16
17
18
19
19
20
20
21
22
22
29
30
DETAILED DESCRIPTION OF
COMPENSATION PLANS
Stock Option Plan
Equity Compensation Plan Information
Share Incentive Plan
Cash Bonus Plan
30
30
32
32
33
EMPLOYMENT AGREEMENTS AND
TERMINATION/CHANGE OF CONTROL
AGREEMENTS
33
ANTI-HEDGING POLICY
33
INDEBTEDNESS OF DIRECTORS AND OFFICERS
33
DIRECTOR COMPENSATION
Director Compensation Table
Incentive Plan Awards to Directors
Director Assessment
34
35
36
37
Share Ownership/Hold Period Requirements
37
CORPORATE GOVERNANCE
38
ADDITIONAL INFORMATION
38
Schedule A – Statement of Corporate Governance Practices
Schedule B – Board Mandate
-i-
29
A-1
B-1
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
An annual meeting (the "Meeting") of the holders ("Shareholders") of Common Shares of Trilogy Energy Corp.
("Trilogy") will be held in the Conference Centre, Centrium Place, 332 – 6th Avenue S.W., Calgary, Alberta, on
Thursday, May 5, 2016, at 2:00 p.m. Calgary time, for the following purposes:
1.
to receive the audited consolidated financial statements of Trilogy for the fiscal year ended
December 31, 2015, and the independent auditor’s report thereon;
2.
to elect the directors of Trilogy;
3.
to appoint the auditor of Trilogy; and
4.
to transact such other business as may properly come before the Meeting and any adjournment or
adjournments of the Meeting.
The accompanying Management Information Circular provides detailed information relating to the matters to be
dealt with at the Meeting.
Shareholders are encouraged to vote in advance by completing the enclosed form of proxy. Detailed instructions
on how to complete and return proxies are provided on pages 3 to 4 of the accompanying Management
Information Circular. To be effective, the completed form of proxy must be received by our transfer agent and
registrar, Computershare Trust Company of Canada ("Computershare"), in person or by mail to 9th Floor, 100
University Avenue, Toronto, Ontario, M5J 2Y1, Attention: Proxy Department prior to 2:00 p.m. Calgary time on May 3,
2016.
Shareholders may also vote their shares by telephone or through the Internet using the procedures described in the
enclosed form of proxy.
Shareholders of record as at the close of business on March 22, 2016 will be entitled to receive notice of and to
attend and vote at the Meeting.
BY ORDER OF THE BOARD OF DIRECTORS
OF TRILOGY ENERGY CORP.
(signed) "Gail L. Yester"
Corporate Secretary
Calgary, Alberta, Canada
March 10, 2016
-1-
MANAGEMENT INFORMATION CIRCULAR
On May 5, 2016, Trilogy Energy Corp. (“Trilogy”, the “Company”, the “Corporation”, “our” or “we”) will be holding
an annual meeting (the “Meeting”) of the holders (the “Shareholders”) of common shares of Trilogy (“Common
Shares”). This Management Information Circular (the "Circular") is provided in connection with the solicitation of
proxies by the management ("Management") of Trilogy, for use at the Meeting and at all adjournments of the
Meeting.
Proxies are generally being solicited by mail but may also be solicited by newspaper publication, in person or by
telephone, fax, electronic transmission or communication by directors, officers, employees or agents of Trilogy. All
costs of the solicitation will be paid by Trilogy.
We encourage you to exercise your vote using any of the voting methods described in this Circular.
GENERAL INFORMATION
Annual Meeting Date and Location
2:00 p.m. Thursday, May 5, 2016
Conference Centre (Mezzanine Level) Centrium Place
332 – 6th Avenue S.W., Calgary, Alberta
Date of Information
The information in this Circular is as of March 10, 2016, unless otherwise noted.
Outstanding Shares and Principal Holders
As at March 10, 2016, 126,089,712 shares of Trilogy (“Trilogy Shares”) were issued and outstanding. Of these,
105,253,850 are Common Shares (voting shares) and 20,835,862 are non-voting shares (“Non-Voting Shares”). To the
knowledge of the directors and officers of Trilogy, no person or company beneficially owns, directly or indirectly, or
has control or direction over Common Shares carrying more than ten percent (10%) of the voting rights attached to
all of the issued and outstanding Common Shares as of March 10, 2016 other than those held or controlled directly or
indirectly by Clayton H. Riddell, Trilogy’s Chairman, Paramount Resources Ltd. (“Paramount”) and Invesco Canada
Ltd., as set out in the table below. All of the Non-Voting Shares are beneficially owned or controlled by Clayton H.
Riddell and Paramount, as set out in the table below. The information as to shares beneficially owned is not within the
knowledge of Trilogy and has been derived from sources available to Trilogy.
Owned/Controlled By
Clayton H. Riddell
Paramount Resources Ltd.
Invesco Canada Ltd.
Total
Number of
Common
Shares
27,969,991
12,755,845
11,153,473
51,879,309
Percent of
Common
Shares
26.57
12.12
10.60
49.29
Number of
Non-Voting
Shares
14,447,372
6,388,490
0
20,835,862
Percent of
Non-Voting
Shares
69.34
30.66
0
100
Percent of
Total
Shares
33.64
15.18
8.85
57.67
100% of the Non-Voting Shares are beneficially owned or controlled by two
insiders. As a result, Shareholders other than these two insiders hold approximately
51.2% of the equity of Trilogy but approximately 61.3% of the voting rights. If
beneficial ownership of Non-Voting Shares is transferred to non-related parties
through a sale by Mr. Riddell or Paramount in the market or otherwise, such NonVoting Shares automatically convert into Common Shares (voting shares).
Accordingly, non-insiders do not and will not own any Non-Voting Shares.
See the section entitled "Description of Share Capital" in Trilogy’s annual information form for the year ended
December 31, 2015 for a description of the rights, privileges, restrictions and conditions attaching to the Common
Shares and the Non-Voting Shares, which section is incorporated by reference herein.
-2-
VOTING INFORMATION
Voting
The record date for the Meeting is March 22, 2016 (the “Record Date”). If you are a registered holder of Common
Shares as of the close of business on the Record Date, you are entitled to receive notice of, and to attend and vote
at the Meeting. You will be entitled to vote your Common Shares at the Meeting except to the extent that:
(a)
you have transferred the ownership of any such Common Shares after the Record Date; and
(b)
the transferee of those Common Shares produces properly endorsed share certificates or otherwise
establishes that they own the Common Shares and demands not later than 10 days before the Meeting that
their name be included on the list of Shareholders entitled to vote at the Meeting, in which case the
transferee is entitled to vote those Common Shares at the Meeting.
When any Common Share is held jointly by two or more persons, any one of them who is present at the Meeting may
in the absence of the other(s) vote at the Meeting in respect of such Common Share. If, however, more than one of
them shall be present at the Meeting, in person or by proxy, they shall vote as one on the Common Shares jointly held
by them.
Each Common Share is entitled to one vote. A simple majority of votes (50% plus one vote) is required to approve all
of the known matters to come before the Meeting.
Quorum
A quorum for the transaction of business is two individuals present in person, each being a Shareholder or proxyholder
entitled to vote at the Meeting who together own or represent at least 25% of the votes entitled to be cast at the
Meeting.
Proxy Voting
You can indicate on your proxy how you want your proxyholder to vote your Common Shares or you can let your
proxyholder decide for you. If you specify how you want your Common Shares voted, then your proxyholder must
vote in accordance with your instructions. In the absence of specific instructions, your proxyholder can vote your
Common Shares as he or she sees fit. If you appoint Mr. Clayton H. Riddell of Calgary, Alberta, or failing him, Mr.
James H. T. Riddell also of Calgary, Alberta, and do not specify how you want your Common Shares to be voted, your
Common Shares will be voted as follows:
Election of each Management nominee as a director
FOR
Appointment of auditors
FOR
Exercise of Discretion by Proxyholders
The enclosed form of proxy confers discretionary authority upon the persons named therein with respect to
amendments or variations to matters identified in the Notice of Meeting and to any other matters which may properly
come before the Meeting. At the time of printing this Circular, Management knows of no such amendment, variation
or matter to come before the Meeting other than the matters referred to above. If other matters do properly come
before the Meeting, your proxyholder will vote on them using his or her best judgment unless such discretionary
authority is not given.
Registered Shareholder Voting
If your Common Shares are held in your name and you have a share certificate, then you are a registered
Shareholder. You may vote in person at the Meeting, by proxy, by telephone, or by Internet. For further instructions,
see the enclosed proxy.
Voting in Person
If you plan to attend the Meeting and vote your Common Shares in person, do not complete the enclosed proxy
form. When you arrive at the Meeting, register with Computershare and your vote at the Meeting will be counted.
Voting by Proxy
Whether or not you attend the Meeting, you may also vote your Common Shares by proxy. If you choose to vote by
proxy, you may use the enclosed proxy or complete another proper instrument of proxy. The persons named in the
enclosed proxy are Management of Trilogy. You may appoint some other person to be your proxyholder at the
Meeting by inserting that person’s name in the blank space provided in the enclosed form of proxy or by completing
-3-
another proper instrument of proxy. Your votes can only be counted if the person you appointed attends the Meeting
and votes on your behalf. Whether you appoint the persons named in the enclosed proxy or another person to be
your proxyholder, you must deliver the completed and executed proxy to Trilogy’s transfer agent, Computershare
Trust Company of Canada, Ninth Floor, 100 University Avenue, Toronto, Ontario M5J 2Y1, Attention: Proxy
Department no later than 2:00 p.m. (Calgary time) on May 3, 2016 or, if the Meeting is adjourned, at least 48 hours
(excluding weekends and holidays) before the time set for the Meeting to resume. The time limit for deposit of
proxies may be waived or extended by the Chair of the Meeting at his or her discretion without notice. If you have
voted by proxy, you may not vote in person at the Meeting unless you revoke your proxy.
Revoking Your Proxy
You may revoke your proxy any time before it is acted upon by:
(a)
signing a new proxy bearing a later date and delivering same to Trilogy’s registered office or to
Computershare, at the above addresses, at least 48 hours (excluding weekends and holidays) prior to the
commencement of the Meeting or any adjournment of the Meeting; or
(b)
depositing written notice of revocation at Trilogy’s registered office or to Computershare, at the above
address, at any time up to and including the last business day proceeding the day of the Meeting or any
adjournment thereof, or delivering it to the Chairman of the Meeting at the Meeting; or
(c)
attending and voting at the Meeting.
Beneficial Shareholder Voting
If your Common Shares are held in the name of a nominee (usually a bank, trust company, securities broker or other
financial institution) then you are a beneficial Shareholder. You may vote in person at the Meeting as proxy for the
registered holder of your Common Shares or by providing voting instructions to the registered holder of your Common
Shares via mail, telephone or Internet. For further instructions, see the enclosed voting instruction form.
Voting in Person
If you plan to attend the Meeting and vote your Common Shares in person as proxyholder for the registered holder of
your Common Shares, insert your name on the voting instruction form and follow the applicable instructions on the
voting instruction form. When you arrive at the Meeting, register with Computershare and your vote at the Meeting
will be counted, provided the proxy is in good order.
Voting Instructions
Applicable regulatory policy requires intermediaries/brokers to seek voting instructions from beneficial Shareholders in
advance of Shareholders’ meetings. Every intermediary/broker has its own mailing procedures and provides its own
return instructions to its clients. Follow these instructions carefully in order to ensure that your Common Shares are
voted at the Meeting. The majority of brokers now delegate responsibility for obtaining instructions from clients to
Broadridge Financial Solutions, Inc. (“Broadridge”). Broadridge typically mails a scannable voting instruction form in
lieu of the form of proxy. The beneficial Shareholder is requested to complete and return the voting instruction form
to Broadridge by mail or facsimile, or alternatively, to vote via the Internet or by calling a toll-free telephone number
to convey his or her voting instructions. Broadridge then tabulates the results of all instructions received and provides
appropriate instructions to Computershare respecting the voting of Common Shares to be represented at the
Meeting. A beneficial Shareholder receiving a voting instruction form cannot use that voting instruction form to vote
Common Shares directly at the Meeting as the voting instruction form must be returned as directed by Broadridge or
the nominee well in advance of the Meeting in order to have the Common Shares voted.
-4-
BUSINESS OF THE MEETING
The business of the Meeting is: (1) the placing before the Shareholders of the audited consolidated financial
statements of Trilogy for fiscal 2015 and the auditor’s report thereon; (2) the election of the board of directors of
Trilogy (the "Board"); (3) the appointment of the auditor of Trilogy, to hold office until the next annual meeting of
Shareholders; and (4) any other business to properly come before the Meeting. Management knows of no other
business to be considered at the Meeting.
1. Financial Statements
The consolidated financial statements of Trilogy for the year ended December 31, 2015, together with the auditor’s
report on those statements, will be placed before the Meeting and mailed to Shareholders.
2. Election of Directors
Shareholders will be asked at the Meeting to pass a resolution electing eight directors of Trilogy. The nominees are:
CLAYTON H. (CLAY) RIDDELL
JAMES H. T. (JIM) RIDDELL
M. H. (MICK) DILGER
WILFRED A. (WILF) GOBERT
ROBERT M. (BOB) MACDONALD
R. K. (KEITH) MACLEOD
E. MITCHELL (MITCH) SHIER
DONALD F. (DON) TEXTOR
In the absence of instructions to the contrary, the persons named in the accompanying form of proxy intend to vote
FOR the election of each of the above nominees as a director of Trilogy.
See further information under "DIRECTOR NOMINEES" and the section titled "CORPORATE GOVERNANCE".
3. Appointment of Auditor
PricewaterhouseCoopers LLP has been the auditor of Trilogy since February 25, 2005. The total fees paid to
PricewaterhouseCoopers LLP for professional services rendered from January 1, 2015 to December 31, 2015
amounted to $229,210, attributable as follows:
Audit Services – audit and quarterly reviews for year ending
December 31, 2015
Audit-Related Services (1)
6,000
Other (2)
28,210
Total
(1)
(2)
$195,000
$ 229,210
Audit-Related Fees consist of fees billed for assurance and related services that are reasonably related to the performance of
the audit or review of Trilogy’s financial statements and are not reported under the heading "Audit Services".
Fees incurred with respect to assistance and advice regarding internal controls.
Trilogy’s consolidated financial statements as at and for the year ended December 31, 2015 were audited by
PricewaterhouseCoopers LLP, which is independent in accordance with the Rules of Professional Conduct as outlined
by the Institute of Chartered Accountants of Alberta.
In the absence of instructions to the contrary, the persons named in the accompanying form of proxy intend to vote
FOR the appointment of PricewaterhouseCoopers LLP as the auditor of Trilogy until the next annual meeting of
Shareholders.
4. Other Business as May Properly Come Before the Meeting
Management knows of no matters to come before the Meeting other than the matters referred to in this Circular. If
any matters which are not known as of the date of this Circular should properly come before the Meeting, proxies will
be voted on such matters in accordance with the best judgment of the person holding such proxy.
-5-
DIRECTOR NOMINEES
Trilogy is required by its Articles of Incorporation to have a minimum of three and a maximum of eleven directors.
Directors are elected each year at the annual meeting of Shareholders. Trilogy’s Articles permit the Board, between
annual meetings of the Shareholders, to appoint one or more additional directors (but no more than 1/3 of the
number of directors who held office at the expiration of the last annual meeting of the Shareholders of Trilogy).
By resolution on March 3, 2016, the Board fixed the number of directors to be elected at the Meeting at eight. Please
see below for information on the nominees for election at the Meeting. The Board and Management have
concluded that each nominee is well qualified to serve on Trilogy’s Board and that the Board is the appropriate size
for effectiveness and appropriately composed to permit a diversity of views and to manage the Board committees.
Management intends to nominate for election and, in the absence of contrary instructions, the persons named in the
accompanying form of proxy intend to vote for, as directors of Trilogy, each of the persons whose names are set forth
below. Management does not contemplate that any of the proposed nominees will be unable to serve as a director.
However, if for any reason any of the proposed nominees withdraw from standing for election or are unable to serve,
proxies in favour of Management designees will be voted for another nominee in their discretion unless the
Shareholder has specified in his or her proxy that his or her Common Shares are to be withheld from voting on the
election of directors.
All proposed nominees have consented to be named in this Circular to stand for election and to serve as directors if
elected. Each director elected will hold office until the close of the next annual meeting of Shareholders. The
following sets out various information with respect to each proposed nominee including, among other things, a brief
biography for each proposed nominee, the period during which each proposed nominee has served as a director of
Trilogy, the Board and committee positions held, his attendance record in 2015 and the number of Common Shares
and options that each proposed nominee has advised Trilogy that he beneficially owns, directly or indirectly, or over
which he exercises control or direction.
In addition to the skills and experience of each individual nominee, relevant factors and Board-initiated corporate
governance standards relating to Board composition include but are not limited to the following:











Because the Chairman of the Board is an insider and is related to the Chief Executive Officer, a lead director
has been appointed and has been charged with well-defined responsibilities to facilitate the functioning of
the Board independent of Management. The position of Lead Director is rotated from time to time.
62.5% (almost two thirds) of the Board is independent.
Each of the Audit Committee, Reserves Committee, Compensation Committee and Nominating
Subcommittee of the Corporate Governance Committee are comprised entirely of independent directors.
An in camera meeting, absent inside directors, is held at the end of every meeting of the Board of Directors
and its committees.
A formal evaluation of the Chief Executive Officer’s performance is conducted by the Corporate
Governance Committee each year and the results are considered by the Compensation Committee when
making determinations regarding CEO compensation. They are also reported to the full Board.
The Board, Board committees, committee chairs and individual members of the Board are evaluated by
each director each year and the results are reported to the full Board.
Each of Trilogy’s current directors has attained the mandatory share ownership requirement.
Each of Trilogy’s directors has demonstrated commitment to his duties and responsibilities on Trilogy’s Board,
as evidenced by the near perfect attendance record of all nominees at Board and Committee meetings
during 2015.
Directorships on other public issuers are limited or, in the case of Mr. Clayton Riddell and Mr. James Riddell,
are held primarily in connection with boards of issuers which were spun-out from Paramount, and/or in which
they and/or Paramount continue to maintain or have a significant equity interest.
In conjunction with the wealth of knowledge of and experience with Trilogy’s business and assets possessed
by Trilogy’s Chairman of the Board, Mr. Clayton Riddell, the substantial equity stake held or controlled by him
strengthens alignment of Board, Company and Shareholder interests.
Although the authorized share capital of the Corporation includes Non-Voting Shares, no Shareholders other
than Mr. Clayton Riddell and Paramount own such shares. If beneficial ownership of any Non-Voting Share is
transferred to non-related parties of Mr. Riddell and Paramount, such Non-Voting Share will automatically
convert to Common Shares (voting shares).
-6-
Individual Director Voting and Majority Voting Policy
Shareholders are entitled to vote for or withhold their vote for each nominee on an individual basis, and the Board
has adopted a policy whereby if a director does not receive a majority (50% + 1) of “for” as opposed to “withhold”
votes at any uncontested meeting where directors are to be elected, such director must immediately tender his or
her resignation to the Board. The remaining Board members shall determine, within 90 days after the date of the
shareholders’ meeting, whether or not to accept the resignation (and shall be required to accept the resignation
absent exceptional circumstances).
Advance Notice Requirement
At the Annual Meeting of Shareholders of the Corporation held on May 9, 2013, the Shareholders approved
amendments to the Corporation’s By-laws to include an advance notice requirement (the "Advance Notice
Requirement") for Shareholders wishing to nominate their own directors at an annual or special Shareholders' meeting.
The Advance Notice Requirement was added to the Company's By-laws to facilitate an orderly and efficient director
nomination process by ensuring that all Shareholders receive adequate notice of director nominations and sufficient
information in respect of all nominees so that the proposed nominees' qualifications and suitability as directors can be
evaluated and an informed vote cast for the election of directors. The Advance Notice Requirement fixes deadlines
for submitting director nominations to the Company prior to any annual or special meeting of Shareholders where
directors are to be elected and sets forth the information that a Shareholder must include in their nominations in order
for it to be valid. In the case of an annual Shareholders' meeting, the deadlines for notice of a Shareholder’s director
nominations are not less than 30 days and not more than 65 days prior to the meeting; provided, however, if the first
public notice of an annual Shareholders' meeting is given less than 50 days prior to the meeting date, Shareholders
must provide notice of their nominations by close of business on the 10th day following the announcement of the
meeting. In the case of a special meeting (which is not also an annual meeting) called for the purpose of electing
directors, Shareholders must provide notice of their nominations by close of business on the 15th day following first
public announcement of the special Shareholders' meeting.
-7-
DIRECTOR BIOGRAPHIES
The following pages set out the names of the proposed nominees for election as Directors of Trilogy. The Board of
Directors has determined that with the exception of Mr. Clayton H. Riddell, Mr. James H.T. Riddell and Mr. E. Mitchell
Shier, all of the Director nominees are independent within the meaning of National Instrument 58-101 Disclosure of
Corporate Governance Practice of the Canadian Securities Administrators.
CLAYTON H. RIDDELL (10)
Chairman of the Board
Chairman of Paramount Resources
Ltd.
Calgary, Alberta, Canada
Age 78
Director since April 1, 2005
Clay Riddell is the Executive Chairman of the Board of Paramount Resources
Ltd. (a petroleum and natural gas exploration and development company),
where he has been an executive officer since 1978. Until May 2015 he was
also the Chief Executive Officer of Paramount. He is also a director and
Executive Chairman of the Board of Perpetual Energy Inc. and a director of
Tourmaline Oil Corp. (both of which are public oil and gas exploration and
development companies).
Mr. Riddell graduated from the University of Manitoba with a Bachelor of
Science (Honours) degree in Geology and is currently a member of the
Association of Professional Engineers and Geoscientists of Alberta, the
Canadian Society of Petroleum Geologists and the American Association of
Petroleum Geologists. He received the J.C. Sproule Memorial Plaque from the
Canadian Institute of Mining (1994), the Stanley Slipper Gold Medal from the
Canadian Society of Petroleum Geologists (1999), an Honorary Doctor of
Science degree from the University of Manitoba (2004), an honorary Doctor of
Laws from Carleton University (2014), and Outstanding Explorer award from the
American Association of Petroleum Geologists (2004). In 2006, Mr. Riddell was
inducted to the Calgary Business Hall of Fame and in 2008 he was made an
Officer of the Order of Canada. Mr. Riddell received the Fraser Institute’s T.
Patrick Boyle Founder’s Award in 2012 and in 2015 he was inducted into the
Canadian Petroleum Hall of Fame.
2015 Trilogy Meeting Attendance:
Board of Directors
2015 AGM Voting Results:
Percentage of Votes For:
Percentage of Votes Against:
Trilogy Securities Held or Controlled (9):
Common Shares:
27,969,991
Non-Voting Shares:
14,447,372
Total Shares:
42,417,363
Options:
856,700
Total Equity Value (11):
$162,458,500
Minimum Share Ownership Requirement (11):
Attained
Other Public Boards:
Paramount Resources Ltd.*
Perpetual Energy Inc.*
5/5 (100%)
99.31%
0.69%
*Perpetual Energy Inc. and Trilogy were spun-out from Paramount, in which Mr. Riddell is
an executive officer and major shareholder. Mr. Riddell and/or Paramount continue to
retain a significant equity interest in these companies.
-8-
JAMES H. T. RIDDELL (8) (10)
Chief Executive Officer
Jim Riddell has held the office of Chief Executive Officer of Trilogy since inception
and until May 2010 he was also Trilogy’s President. In 2015, he was appointed
Chief Executive Officer of Paramount, where he has also been President since
President and Chief Executive June 2002 and a director since 2000. From May 1991 until June 2002, he held
Officer, Paramount Resources Ltd.
various positions with Paramount.
Calgary, Alberta, Canada
Age 49
Mr. Riddell is also a director of Strategic Oil & Gas Ltd. and Marquee Energy Ltd.
Director Since February 25, 2005
(both of which are public oil and gas exploration and development companies)
and Big Rock Brewery Inc. (a public company which produces and markets
beer).
Mr. Riddell graduated from Arizona State University with a Bachelor of Science
degree in Geology (1989) and from the University of Alberta with a Master of
Science degree in Geology (1993). He is a member of the Canadian Society of
Petroleum Geologists and the American Association of Petroleum Geologists.
2015 Trilogy Meeting Attendance:
Board of Directors
2015 AGM Voting Results:
Percentage of Votes For:
Percentage of Votes Against:
Trilogy Securities Held or Controlled:
Common Shares:
Options:
Total Equity Value (11):
Minimum Share Ownership Requirement (11):
Other Public Boards:
Paramount Resources Ltd.*
Strategic Oil & Gas Ltd.**
Marquee Energy Ltd.**
Big Rock Brewery Inc.
5/5 (100%)
99.88%
0.12%
570,688
1,566,700
$2,185,735
Attained
* Trilogy was spun-out from Paramount, in which Mr. Riddell is an executive officer.
** As a result of divestitures to Strategic Oil & Gas Ltd. and Marquee Energy Ltd. in
exchange for shares, Paramount has a significant equity interest in each of these
companies.
Mr. Riddell and/or Paramount continue to retain a significant equity interest in these
companies.
M. H. (MICK) DILGER(2)(3)(6)
President and Chief Executive
Officer, Pembina Pipeline
Corporation
Calgary, Alberta, Canada
Age 51
Director Since May 18, 2005
Mick Dilger is President and Chief Executive Officer and a director of Pembina
Pipeline Corporation (a Canadian energy infrastructure corporation). He was
appointed CEO in January, 2014. Before that, he was Pembina’s President
and Chief Operating Officer (February 2012 to December 2013), Chief
Operating Officer (November 2008 to February 2012) and Vice President,
Business Development (2005 to 2008).
Before joining Pembina, Mr. Dilger worked as a senior executive in various
finance and business development positions in oil and gas and infrastructure
companies, ranging from companies in the initial capitalization phase, to
subsidiaries of multi-national corporations, including Nova Corporation and
TransCanada Pipelines Limited. His expertise includes corporate and strategic
development, acquisitions and divestitures, and finance and business
development.
Mr. Dilger is a chartered accountant since 1989 and holds a Bachelor of
Commerce degree from the University of Calgary. He sits on the board of the
Canadian Energy Pipeline Association.
2015 Trilogy Meeting Attendance:
Board of Directors
EH& S Committee (Chair)
Audit Committee
2015 AGM Voting Results:
Percentage of Votes For:
Percentage of Votes Against:
Trilogy Securities Held or Controlled:
Common Shares:
Options:
Total Equity Value (11):
Minimum Share Ownership Requirement (11):
Other Public Boards:
Pembina Pipeline Corporation
-9-
4/5 ( 80%)
2/2 (100%)
4/4 (100%)
99.93%
0.07%
66,000
91,000
$252,780
Attained
WILFRED A. GOBERT(1) (4) (5)
Independent Businessman
Calgary, Alberta, Canada
Age 67
Director since Nov 15 2006
Wilf Gobert is an independent businessman. Until his retirement in 2006, he
was Vice-Chair of Peters & Co. Limited (an investment firm specializing in the
Canadian oil and gas industry), a position he held since 2002, and was a
member of its board of directors and its executive committee. Prior thereto,
he joined Peters & Co. Limited in 1979 as Managing Director, Research and
throughout his career at the firm, his responsibilities included research analysis
of integrated oil companies and oil and gas producers.
Mr. Gobert serves on the board of directors of Gluskin Sheff + Associates Ltd.
(a Canadian independent wealth management firm), Canadian Natural
Resources Limited (a public oil and gas exploration and production
company), as well as a number of not-for-profit boards. He is Senior Fellow,
Energy Studies, Centre for Energy Policy Studies with The Fraser Institute and
co-chair of the Fort Calgary MAKE History Capital Campaign.
Mr. Gobert holds a Master of Business Administration (Finance) from McMaster
University (1976), a Bachelor of Science degree (Mathematics) from the
University of Windsor, Ontario (1971) and a Chartered Financial Analyst (CFA)
designation.
2015 Trilogy Meeting Attendance:
Board of Directors
Compensation Committee (Chair)
Corporate Governance Committee (Chair)
Nominating Sub-committee (Chair)
2015 AGM Voting Results:
Percentage of Votes For:
Percentage of Votes Against:
Trilogy Securities Held or Controlled:
Common Shares:
Options:
Total Equity Value (11):
Minimum Share Ownership Requirement (11):
Other Public Boards:
Canadian Natural Resources Limited
Gluskin Sheff + Associates Ltd.
ROBERT M. MACDONALD(2) (3) (4)(5)
Independent Businessman and
Corporate Director
Calgary, Alberta, Canada
Age 70
Director since April 1 2005
5/5 (100%)
1/1 (100%)
2/2 (100%)
1/1 (100%)
76.13%
23.87%
78,899
93,000
$302,183
Attained
Bob MacDonald is an oil and gas banking professional with 13 years’
experience as a corporate director and 27 years’ experience as a senior
officer of several Canadian chartered banks, including 18 years in Alberta and
nine years in the United States.
He has expertise in oil and gas
banking/financing, having handled and provided advisory services on
strategic alternatives for senior and bridge debt structuring, project financing,
mezzanine debt structuring, portfolio management, credit risk management,
financial analysis and loan re-structuring. From 1998 to 2003, he was Director,
Oil & Gas, and Commercial Banking with CIBC World Markets Inc. (a global
investment banking firm). From 1993 to 1998, Mr. MacDonald was Vice
President, Oil & Gas Group with CIBC.
Mr. MacDonald graduated from the University of Saskatchewan (Regina
Campus) in 1975 with a Bachelor of Business Administration degree (major in
Economics and Finance and minor in Accounting). He is a Fellow of the
Institute of Canadian Bankers and has completed the academic requirements
for the Director Education Program of the Institute of Corporate Directors.
2015 Trilogy Meeting Attendance:
Board of Directors
Audit Committee (Chair)
Corporate Governance Committee
Nominating Sub-committee
2015 AGM Voting Results:
Percentage of Votes For:
Percentage of Votes Against:
Trilogy Securities Held or Controlled:
Common Shares:
Options:
Total Equity Value (11):
Minimum Share Ownership Requirement (11):
Other Public Boards:
None
- 10 -
5/5 (100%)
4/4 (100%)
2/2 (100%)
1/1 (100%)
99.91%
0.09%
10,500
93,000
$40,215
Attained
R. KEITH MACLEOD(1) (2) (3) (6)
Independent Businessman and
Corporate Director
Calgary, Alberta, Canada
Age 57
Director since May 8 2014
Keith MacLeod is professional engineer with more than 30 years' experience in
the oil and gas industry in Alberta. Until June 2014, he was a director, partner
and CEO of Sproule (a worldwide petroleum consulting firm), which he first
joined in 1979.
Mr. MacLeod has expertise in the areas of reservoir
engineering, property and corporate reserves/resource evaluations,
acquisitions and divestitures, NI 51-101 and SEC oil and gas disclosure
regulations, arbitration, litigation, and investment advice. He has lectured at
the University of Calgary and to the petroleum industry.
Mr. MacLeod received a B.S. (Honors) in Mining Engineering in 1984 from the
Montana College of Mineral Science and Technology (Butte, Montana) and
had previously received a diploma in Technology in Mineral Science in 1978
from the College of Cape Breton (Sydney, Nova Scotia).
He is a director of Manitok Energy Inc., (a public oil and gas exploration and
production company). Mr. MacLeod is also a member of the Association of
Professional Engineers and Geoscientists of Alberta (APEGA), the Society of
Petroleum Evaluation Engineers (SPEE) and the Society of Petroleum Engineers
(SPE) and has participated in numerous committees of those organizations. He
is also a Director of Vershuren Centre for Sustainability in Energy and the
Environment, a Canadian research centre at Cape Breton University in Sydney,
Nova Scotia.
2015 Trilogy Meeting Attendance:
Board of Directors
Audit Committee
Compensation Committee
EH&S Committee
2015 AGM Voting Results:
Percentage of Votes For:
Percentage of Votes Against:
Trilogy Securities Held or Controlled:
Common Shares:
Options:
Total Equity Value (11):
Minimum Share Ownership Requirement (11):
Other Public Boards:
Manitok Energy Inc.
5/5 (100%)
4/4 (100%)
1/1 (100%)
2/2 (100%)
82.48%
17.52%
12,000
64,500
$45,960
Attained
E. MITCHELL SHIER(4) (6)
Mitch Shier is General Counsel, Corporate Secretary and Manager, Land of
Paramount, positions he has held since November 2008. Prior to joining
General
Counsel,
Corporate Paramount, Mr. Shier practiced oil and gas and commercial law for seven
Secretary & Manager, Land,
years as a partner with a national law firm. Prior to 2002, Mr. Shier practiced as
Paramount Resources Ltd.
a partner with other major law firms in Calgary. He has over 30 years of legal
Calgary, Alberta, Canada
experience with an emphasis on mergers and acquisitions and energy and
Age 58
environmental law.
Director since April 1 2005
Mr. Shier obtained his Bachelor of Science degree from the University of
Calgary in 1981, his Bachelor of Laws from the University of Alberta in 1984 and
his Master of Laws in Environmental and Natural Resources Law from the
University of Calgary in 1994. He is currently on the board of directors of Alaris
Royalty Corp. (a Canadian public company that provides alternative
financing to private businesses).
2015 Trilogy Meeting Attendance:
Board of Directors
EH&S Committee
Corporate Governance Committee
2015 AGM Voting Results:
Percentage of Votes For:
Percentage of Votes Against:
Trilogy Securities Held or Controlled:
Common Shares:
Options:
Total Equity Value (11):
Minimum Share Ownership Requirement (11):
Other Public Boards:
Alaris Royalty Corp.
- 11 -
5/5 (100%)
2/2 (100%)
2/2 (100%)
99.14%
0.86%
2,200
93,000
$8,426
Attained
DONALD F. TEXTOR(1) (7)
Portfolio
Manager,
Dorset
Energy Fund
New York, U.S.A.
Age 69
Director since April 1 2005
Donald Textor is portfolio manager with Dorset Energy Fund, an investment
management and advisory firm. Previously, he was a Partner and Managing
Director of Goldman Sachs until his retirement in 2001.
Mr. Textor serves on the board of directors for EOG Resources, Inc., one of the
largest independent oil and gas producers in the United States, and is a
member of EOG’s Audit Committee and Compensation Committee.
Mr. Textor is a member of the National Association of Petroleum Investment
Analysts. He graduated from Lehigh University in Bethlehem, Pennsylvania with
a Bachelor of Arts degree in International Relations.
2015 Trilogy Meeting Attendance:
Board of Directors
Compensation Committee
2015 AGM Voting Results:
Percentage of Votes For:
Percentage of Votes Against:
Trilogy Securities Held or Controlled:
Common Shares:
Options:
Total Equity Value (11):
Minimum Share Ownership Requirement (11):
Other Public Boards:
EOG Resources, Inc.
5/5 (100%)
1/1 (100%)
82.45%
17.55%
243,399
93,000
$932,218
Attained
Notes to Director Nominee Information:
(1) Member of the Compensation Committee.
(2) Member of the Audit Committee.
(3) Member of the Reserves Committee. In 2015, the Board of Directors of Trilogy created a Reserves Committee with a mandate to
review Trilogy’s externally disclosed oil and gas reserve estimates including reviewing the qualifications of, and procedures used
by, the independent engineering firm responsible for evaluating Trilogy’s reserves. This mandate was previously held by the Audit
Committee.
(4) Member of the Corporate Governance Committee.
(5) Member of the Nominating Sub-committee.
(6) Member of the Environmental, Health & Safety Committee.
(7) Lead Director.
(8) Mr. James Riddell was a director of Sonde Resources Corp., a public oil and gas company, within one year of it becoming
bankrupt. Mr. Riddell was also a director of Great Prairie Energy Services Inc. within one year of a receiver-manager being
appointed to hold and manage its assets, undertakings and properties.
(9) Of these 27,969,991 Common Shares, 12,791,266 are held by Warner Investment Holdings Ltd. and 12,730,963 are held by
Dreamworks Investment Holdings Ltd., in both of which C.H. Riddell is the controlling shareholder. Warner Investment Holdings
Ltd. also holds 14,447,372 Non-Voting Shares. Paramount, an associate of Clayton Riddell, owns or controls 12,755,845 Common
Shares and 6,388,490 Non-Voting Shares.
(10) Messrs. C.H. Riddell and J.H.T. Riddell are directors and executive officers of Paramount. From 1992 to 2008, Paramount was the
general partner of T.T.Y. Paramount Partnership No. 5 ("TTY"), a limited partnership, which was an unlisted reporting issuer in
certain provinces of Canada. TTY was established in 1980 to conduct oil and gas exploration and development but had not
carried on active operations since 1984 and had only nominal assets. A cease trade order against TTY was issued by the
Québec Securities Commission in 1999 for failing to file the June 30, 1998 interim financial statements in Québec. The cease
trade order was revoked on April 9, 2008. TTY was dissolved on July 21, 2008.
(11) Trilogy has a share ownership policy requiring each of its directors to acquire, within three years of the date of (i) becoming a
director; or (ii) the date of the policy, whichever is later, Common Shares having a value equal to at least three times such
directors’ annual base retainer, and to hold such Common Shares during such director’s tenure (see Share Ownership/Hold
Period Requirements on page 37 of this Circular for more information). Total Equity Value is calculated based on the Trilogy
Shares beneficially owned by the director nominee, directly or indirectly, multiplied by the closing trading price of the Shares on
March 10, 2016, being $3.83 per Share. The Total Equity Value reflects all equity held by the nominees other than their stock
options.
- 12 -
Competency Matrix
The Board, through the Corporate Governance Committee, has developed a competency matrix to ensure that the
members of the Board, through their knowledge, business expertise and experience, meet the needs of the Board.
The following table identifies some of the skills, expertise and other factors considered as part of the competency
matrix developed by the Corporate Governance Committee, and lists some of the relevant expertise acquired by
the director nominees in industries in which they have worked or otherwise been involved and/or through their
experience as directors:
Board Experience
CEO Experience
Clayton
Riddell


James
Riddell


M.H. (Mick)
Dilger


Wilfred
Gobert

Robert
MacDonald

R. Keith
MacLeod


E. Mitchell
Shier

Donald
Textor

Strategic Planning
Operations













Project
Management
Governance
Accounting/
Finance
Executive
Compensation
Government/
Public Policy
Human Resources










































Legal


Director Independence
Almost two thirds of the members of the Board are independent. All of the members of the Audit Committee, the
Compensation Committee, the Reserves Committee and the Nominating Subcommittee of the Corporate
Governance Committee are independent. A majority of the members of the Corporate Governance and
Environmental, Health & Safety Committees are independent.
Director Nominee
Independent
Non-Independent
Reason for Non-Independence
Clayton Riddell

Familial relationship with CEO of Trilogy
James Riddell
M.H. (Mick) Dilger

CEO of Trilogy

Wilfred Gobert

Robert MacDonald

R. Keith MacLeod
E. Mitchell Shier


Executive officer of Paramount Resources Ltd.
Donald Textor

Board Interlocks
The following table sets out interlocking board memberships of Trilogy’s directors.
Company
Paramount Resources Ltd.
Director
Clayton Riddell
James Riddell
Committee Membership
None
Environmental, Health & Safety
- 13 -
COMPENSATION DISCUSSION AND ANALYSIS
Executive Summary
2015 was an extremely challenging year for the oil and gas industry. Commencing in the latter half of 2014, global
over-supply of crude oil, natural gas and related products, the refusal of the Organization of Petroleum Exporting
Countries to employ production quotas and a slowdown in growth in the Chinese economy all contributed, along
with other factors, to a collapse in commodity prices and depressed conditions in the North American oil and gas
industry. The adverse impact of such low prices and industry conditions on Trilogy, along with virtually all other
industry participants, was profound.
Management first took steps to respond to these conditions in November 2014, when it announced the suspension of
dividend payments to its Shareholders. As commodity prices continued to deteriorate, they swiftly and dramatically
impacted Trilogy’s revenues and severely reduced its available capital, resulting in key 2015 corporate goals
becoming unattainable. In particular, the necessity to reduce capital spending in 2015 stalled the further
development of the Company’s Kaybob Montney and Duvernay assets and led to a decrease in the Company’s
daily production volumes.
Early in 2015, the commodity price environment led Management to shift from a growth model to focusing on living
within cash flow and reducing costs in virtually all facets of the Company’s business. Under the leadership of the CEO
and the executive team and with the full support of the Board, the Company implemented a near-term strategy to
reduce capital expenditure levels by targeting only those projects that were strategic and/or met Trilogy’s return
requirements, lower operating costs and reduce its General & Administrative Costs.
In response to the impact of these external conditions on Trilogy’s business, revenues and cash flow, the
Compensation Committee and the Board approved the CEO’s recommendation to reduce fixed pay (such as base
salary and benefits) for the named executive officers (“NEOs”), in favour of an increased weighting on variable (or
“at risk”) pay in the form of stock options that only pay out if and when the value of Trilogy’s Common Shares
increases.
The following reductions to NEO, other employee and director compensation were made during 2015 and are
expected to continue throughout 2016:







Salary reductions averaging 10% for NEOs (5% company-wide for other employees);
Additional salary reductions for NEOs whose compensation packages were restructured towards variable
compensation;
Salaries rolled back and frozen for 2016;
No bonuses granted to NEOs during the year under either the SIP or the Discretionary Cash Bonus Plan;
17 mandatory unpaid days off from May through September 2015 for the NEOs and other employees,
resulting in an additional annualized salary reduction of approximately 6.5%;
33% reduction to RRSP contributions; and
15% reduction to annual retainer and fees paid to directors.
Notwithstanding the degree to which the external conditions described above shaped Trilogy’s compensation
determinations during 2015, Trilogy continues to believe that its executive compensation philosophy and program
effectively compensate its CEO and other NEOs based on both corporate and individual performance and that the
program administered by Trilogy strongly aligns the interests of Trilogy’s executives with the Company’s Shareholders.
The Compensation Committee maintains discretion to adjust compensation, whether positive or negative, as
necessary for circumstances beyond the NEO’s control. In 2015, Trilogy’s NEOs were compensated for their individual
contributions to Trilogy’s ongoing business and the execution of the Company’s near-term strategy, but at reduced
levels that were weighted towards variable pay, thereby aligning their compensation with overall corporate
performance and shareholder returns. The strong link between NEO realizable compensation and shareholder
returns is evidenced by the “Reported vs. Realizable Compensation” table on page 28 of this Circular, which shows
that the aggregate realizable compensation for Trilogy’s NEOs in 2015 was less than 32% of total reported
compensation for the year, and the “Total Return Performance Graph” on page 23 of this Circular, which illustrates
that NEO compensation has trended upward or downward in close correlation with Trilogy’s Total Shareholder Return
(“TSR”) over the last five years.
In this Circular, Trilogy describes its compensation program, the objectives of the program and what it is designed to
reward, each element of compensation and why the Company chooses to use that element. The compensation
paid to each of the NEOs during 2015 is also described below, along with an explanation as to how the
Compensation Committee and the Board determined the compensation.
- 14 -
Executive Compensation Program
Trilogy’s compensation program has the following key objectives:



enabling the Company to attract, motivate and retain a highly qualified workforce and management team;
rewarding corporate financial and operational results as well as individual performance; and
aligning the interests of executives and Shareholders.
The program is intended to compensate executives for the knowledge and skill that they bring to their position and
day-to-day duties, and also to provide rewards beyond salary for performance, leadership, innovation and
significant contributions toward reaching Trilogy’s corporate financial and operating goals. It is designed to be
competitive with other Canadian oil and gas companies of similar size or operations. All of our employees have
some portion of their compensation at risk, meaning it is tied to both individual and corporate performance. The
proportion of total compensation tied to corporate performance increases as the level and scope of responsibilities
increase.
Trilogy’s overall corporate goal is to create long term value for its Shareholders through growing production and
reserves profitably, safely and in compliance with applicable laws and regulations. NEO performance is assessed
relative to the execution of objectives that increase long-term value to Trilogy’s Shareholders. Corporate
performance is measured against industry metrics, and each NEOs’ individual contributions and performance are
assessed in the context of those metrics. At the same time, the Company’s compensation philosophy allows for
compensation based on substantial progress having been made toward these key goals, to recognize where
circumstances beyond Trilogy’s control are at play, or where it believes a NEO’s contributions should be recognized
on other grounds.
Three primary elements comprise Trilogy’s compensation program: base salary; grants of Common Shares under the
Share Incentive Plan (the “SIP”); and annual grants of options under the Company’s Stock Option Plan (the “Option
Plan”). The Cash Bonus Plan has been discontinued on a go forward basis subject to payment, over the next three
years, of decreasing residual amounts accrued under the Plan prior to its discontinuance. Through a combination of
these short- and long-term incentives, the Company seeks to align compensation for executives with the overall longterm business goals of Trilogy and the investment objectives of its Shareholders. Compensation is determined based
on, and is intended to reward, executives’ performance and contribution to meeting these goals and objectives.
Typically, the compensation paid to a NEO during a given year reflects corporate results and the NEO’s individual
performance in both that year and the prior year. In determining salaries and SIP grants, the Compensation
Committee considers corporate results and individual performance in the prior year. In determining grants under the
Option Plan, the Committee considers corporate results and individual contributions both in the current year and in
the prior year.
Some of the factors that ensure that executive compensation at Trilogy is aligned with the interests of the Company’s
Shareholders are as follows:









Trilogy’s Chairman, its CEO and Paramount (in which the Chairman and CEO own a significant number of
voting shares) collectively own or control approximately 49.28% of Trilogy Shares;
A large component of Trilogy executives’ pay is at risk, with the CEO’s pay being 100% at risk in 2015;
As evidenced by the “Reported vs. Realizable Compensation Table” on page 28 of this Circular, the Option
Plan and the SIP, which comprise a major portion of NEO compensation, are particularly tied to the
performance of the Company and its Shares;
Except for a portion of the options granted in 2015, options typically vest over four to five years, with no
vesting in the first year of the grant. There is no automatic vesting on change of control. Options held by the
executives cannot be repriced without Shareholder approval, which has never been sought;
The primary bonus plan of the Company (the SIP) is not paid in cash, but rather is granted in Common Shares
of Trilogy that vest in three tranches over two years. There is no automatic vesting on change of control;
NEOs do not receive any significant perquisites, pensions or termination payments;
Discretionary cash bonus payments are not common and are not a key component of NEO compensation.
They were not paid in any of the three most recently completed financial years;
Trilogy has a policy prohibiting executives from using derivatives or other financial instruments to retain legal
ownership of their shares while reducing their exposure to changes in the share price; and
Trilogy also has a policy against extending credit to any officer.
- 15 -
2015 Compensation
Trilogy’s NEOs for the year ended December 31, 2015 include the following individuals:





Clayton Riddell, Chairman of the Board;
James Riddell, Chief Executive Officer or “CEO”;
John Williams, President & Chief Operating Officer;
Michael Kohut, Chief Financial Officer; and
Gail Yester, General Counsel & Corporate Secretary.
The Compensation Committee believes that the compensation paid to Trilogy’s CEO and other NEOs in 2015 was
appropriate having regard, on the one hand, to the low commodity price environment and depressed industry
conditions during the year, which negatively affected Trilogy’s corporate performance and Share price and, on the
other hand, Trilogy’s many achievements during the year as described below.
Trilogy’s fundamental objective over the last few years has been to increase the overall value of the Company (and,
as a result, the value of its Common Shares) by continuing to develop its Montney oil and gas and Duvernay shale
assets and to increase production and replace reserves while keeping operating costs and finding and development
costs as low as possible. The Duvernay prospect in particular is a multi-year exploration and development play that
requires the investment of large amounts of capital over time to delineate the nature, extent and commerciality of
the play. Trilogy has dedicated significant resources and capital to further its knowledge base in these assets and
has made meaningful progress in improving drilling and completion techniques and reducing well costs. The
Company had expected to continue investing capital in the Montney and Duvernay plays in 2015 to increase
production and capital efficiency, replace reserves and further solidify Trilogy’s position in the Duvernay shale play.
However, given the collapse in commodity prices that started in 2014 and continued throughout 2015, Trilogy
adjusted its capital spending program downward to the level required to maintain its land base and participate only
in those operations that were strategic and/or met Trilogy’s return requirements and those that were necessary for
health, safety or environmental reasons. This in turn reduced the Company’s ability to grow and increase production
and in fact production was shut in where it was deemed uneconomic to produce.
During 2015, the Company implemented and executed its near-term strategy of reducing costs and living within cash
flow while nonetheless achieving the following key objectives, which were considered by the Compensation
Committee in determining CEO and other NEO compensation in 2015:












Capital expenditures were held at $80.1 million for the year, excluding acquisitions and dispositions;
Notwithstanding the downward pressure on capital expenditures and drilling activity, Trilogy was able to
maintain average daily production at just under 28,000 Boe/d as compared to initial guidance of 30,000
Boe/d (revised to 28,000 Boe/d in Q3 2015);
Trilogy added 14.6 MMBoe of proved reserves and 37.5 MMBoe of proved plus probable reserves, including
technical revisions;
The Company replaced 144% of 2015 produced reserves when compared to total proven reserve additions
and 370% when compared to proved plus probable reserves;
By continuing its focus on lowering operating costs, year-end operating costs were $9.18, below 2015
guidance of $9.50/Boe and down from $10.09/Boe in 2014;
Finding and development costs were $20.13/Boe for total proved reserves and $14.09/Boe for proved plus
probable reserves (as compared to $24.82/Boe and $20.78/Boe, respectively, in 2014);
Trilogy completed the sale of certain Duvernay assets and other non-core assets at very favourable
valuations, for net proceeds of approximately $160.5 million. The Company also entered into various
transactions to rationalize its Duvernay rights and further solidify its largely contiguous land position in the
Kaybob Duvernay play;
Lower rates were negotiated with the majority of the Company’s contractors and service providers;
Trilogy entered into offsetting oil purchase financial instrument contracts, effectively securing approximately
$19.4 million, expected to be received over the 2016 year;
By focusing on living within cash flow, cutting costs and reducing General & Administrative costs, including
company-wide reductions to wages and benefits, the Company was able to largely maintain its key staff
and avoid layoffs;
Trilogy settled a dispute with Canada Revenue Agency relating to the CRA’s objection to the tax
consequences in connection with Trilogy’s conversion in 2010 from an income trust to a corporation; and
Reducing net debt by $207 million and renegotiating Trilogy’s credit facility agreement with its lenders. These
measures preserved liquidity on its revolving credit facility, providing undrawn capacity of approximately
$200 million as at December 31, 2015.
- 16 -
As noted above, 2015 was an extraordinary year, in which base salaries and benefits were significantly reduced. The
Compensation Committee determined that the NEOs who receive a salary from Trilogy should continue to do so for
performance of their day-to-day duties, but at reduced rates in conjunction with the Company’s cost-cutting
measures. Mr. Clayton Riddell and Mr. James Riddell are not paid a salary by Trilogy. The salaries of Messrs. Williams
and Kohut and Ms. Yester were reduced by approximately 10% over the year and their compensation was
restructured for 2015 to place greater emphasis on variable compensation versus fixed compensation.
While no bonuses were awarded to any of the NEOs under either the SIP or the Discretionary Cash Bonus Plan in 2015
despite the Company’s many achievements during the year, the Committee did approve grants of options under
the Company’s Stock Option Plan to each of the NEOs in recognition of their individual contributions to Trilogy’s longterm objectives during 2014 and 2015 and to further incentivize these individuals to continue to find creative ways of
ensuring Trilogy’s sustainability in the near-term and positioning Trilogy for a robust recovery in the medium and long
term. The Company continues to believe that stock options are the most effective way to motivate executives to
achieve the goals set out by the Company as they provide a direct link between individual NEO performance and
future Company performance and, in turn, the value of Trilogy Shares in the hands of its Shareholders. In making
these option grants, the Committee considered the 2015 achievements set out above and also considered 2014 the
Company’s achievements including the following:









Important advances were made by the Company for the long-term development of its Duvernay shale
assets, including improved completion and production technologies and best practices for lowering capital
costs, maximizing recoveries and generating better economic returns from the play;
Trilogy added 30.9 MMBoe of proved reserves (34% oil and NGLs) and 47.4 MMBoe of proved plus probable
reserves (35% oil and NGLs), including technical revisions;
The Company replaced 241% of 2014 produced reserves when compared to total proved reserve additions,
and 370% when compared to proved plus probable reserves;
The Company’s Reserve Life Index on a proved plus probable basis increased to 10.9 years in 2014 as
compared to 8.4 years in 2013;
Finding and development costs were $24.82/Boe for total proved reserves and $20.78/Boe for proved plus
probable reserves;
Annual production increased by 2% over 2013, to an average of 35,104 Boe/d.
Annual operating costs were $10.09/Boe, down from $10.82/Boe in 2013;
Annual operating netback of $31.03/Boe (up from $26.09/Boe in 2013), resulting in a recycle ratio of 1.49
times for proved plus probable reserves; and
Trilogy secured fractionation and transportation capacity critical to Trilogy’s long term growth strategy.
Trilogy’s Compensation Committee believes that the compensation paid to Trilogy’s CEO and other NEOs in 2015 was
appropriate considering the achievements set out above but having regard to the significant adverse effect of the
commodity price environment on Trilogy’s ability to achieve its financial and operational goals during the year and
the resultant significant decrease in the value of Trilogy Shares. The proactive measures taken by Trilogy in 2015 with
regard to NEO compensation were aligned with Shareholder returns, as is evident from the “Total Return Performance
Graph” on page 23 of this Circular. This graph illustrates how the compensation paid to Trilogy’s NEOs has generally
tracked Shareholders’ cumulative returns over the five year period set out in the graph and has steeply declined
along with Trilogy’s TSR since 2013. In addition, the “Reported vs. Realizable Compensation Table” on page 28 of this
Circular, which compares the total reported compensation for Trilogy’s NEOs over each of 2013, 2014 and 2015 with
the total realizable compensation over that same period, demonstrates the alignment of the NEOs’ realizable
compensation with total Shareholder returns.
Peer Group
Trilogy competes for executive talent with a wide range of Canadian exploration and development companies, but
in particular with other intermediate sized entities. Included in this group are the following 15 peer companies:
Advantage Oil & Gas Corp.
ARC Resources Ltd.
Baytex Energy Corp.
Bellatrix Exploration Ltd.
Birchcliff Energy Ltd.
Bonavista Energy Corp.
Crew Energy Inc.
Enerplus Corp.
Lightstream Resources Ltd.
NuVista Energy Ltd.
Paramount Resources Ltd.
Pengrowth Energy Corp.
Petyo Exploration & Dev. Corp.
Tourmaline Oil Corp.
Whitecap Resources Ltd.
Trilogy believes these companies comprise an appropriate peer group to base compensation comparisons upon
having regard to a number of attributes, including asset base, operations, production volumes, revenue, market
capitalization and enterprise value:
- 17 -
Production Volumes
(Boe/d)
Peer 75th Percentile
Peer Median
Peer 25th Percentile
Trilogy
Trilogy 2015 Percentile
Rank
Trilogy 2014 Percentile
Rank
81,689
49,997
34,344
27,775
18th Percentile
Trailing 12-month
Revenue
($ Millions)
$1,180
$711
$349
$268
12th Percentile
December 31
Market Capitalization
($ Millions)
$1,955
$650
$563
$461
17th Percentile
December 31
Enterprise Value
($ Millions)
$3,100
$2,207
$1,409
$995
15th Percentile
34th Percentile
39th Percentile
31st Percentile
33rd Percentile
Although Trilogy’s 2015 percentile ranking on the above metrics puts the Company in a lower quartile within the peer
group than in 2014 (when Trilogy was closer to the 50th percentile on each of the metrics), the Compensation
Committee believes that overall, the peer group remains a suitable comparison group and that these are the
companies Trilogy is most directly competing with for employees and executives. Trilogy will continue to review the
peer group and monitor its continued appropriateness over time.
Trilogy considers the compensation paid to the NEOs in this peer group as one factor in determining annual
compensation, taking into account other considerations, including differences in the nature of Trilogy’s business plan,
growth prospects and other measures of overall performance. In relation to the annual return of the compensation
peer group in 2015, Trilogy ranked slightly below the median for 1-year and 5-year TSR (-54% versus the peer median
of -48% for 1-year TSR and -21% versus the peer median of -19% for 5-year TSR) and below the 25th percentile for 3year TSR (-49% versus the peer median of -18%).
Elements of Compensation Program
The following chart describes the award type, objective and key features of the four elements of Trilogy’s
compensation program. See “Detailed Description of Trilogy Compensation Plans” on page 30 for further information
on each of these elements of compensation.
Compensation
Element
Base Salary
Share Incentive
Plan
Award Type
Salary
Share-based
award
Objective
Provide a fixed level of cash
compensation for performing day-to-day
responsibilities to NEOs other than the
Chairman and CEO who receive no
salary
Reward performance in previous year,
while spreading payment out over two
years to increase stake in Trilogy and
encourage retention
Key Features
Competitive with industry peers
Mercer Survey used as general guide
Salaries for NEOs were significantly reduced
in 2015
Long-term bonus plan, granted based on
performance in the previous year
Stock participation arrangement
Performance-based grants of Common
Shares, generally vesting over two years.
Competitive with industry peers
No grants to NEOs in 2015
Option Plan
Discretionary
Cash Bonus
Option-based
award
Non-equity
incentive plan
Align performance with Common Share
price
Align Management interests with those of
Shareholders
Encourage retention
Encourage exceptional contributions of
employees and executives
Long-term stock incentive
Competitive with industry peers
Option awards vest rateably over several
years
See pages 21 and 22 of this Circular for 2015
option grants
Discretionary awards for exceptional
performance; not considered a primary
component of compensation.
None paid in the three most recently
completed financial years
- 18 -
Pay Mix
While Trilogy’s salary program for executive officers is competitive, the intention is for the majority of these officers’
compensation to be derived from variable compensation, which is aligned most closely with Shareholders’
investments as reflected in the price of a Common Share on the public market. This is accomplished mainly through
the Option Plan and the SIP.
The following chart shows the relative mix of actual fixed and variable compensation received by the NEOs for fiscal
2015 based on the total compensation set out for each of them in the “Summary Compensation Table” on page 27
of this Circular. Fixed compensation includes base salary and RRSP contribution; variable compensation includes SIP
grants, Option grants and residual payments under the Cash Bonus Plan.
CEO Compensation
The above chart shows that a significant amount of the compensation of each of the NEOs is variable.
Compensation for Mr. James Riddell, Trilogy’s CEO, is 100% at risk, meaning all of his compensation is linked to Trilogy’s
performance and the success of its business. Mr. Riddell does not receive a salary from Trilogy. His compensation is
generally in the form of:
(1) the grant of Common Shares under the SIP (which is based on corporate performance as well as the CEO’s
performance in the previous year and is tied to the value of Trilogy’s Common Shares on the TSX);
(2) annual grants of options under the Option Plan (which are tied to the value of Trilogy’s Common Shares on
the TSX and which, other than the grants made in 2015, typically vest over four to five years); and
(3) until January 2019, residual payments under the Cash Bonus Plan (which were dependent upon the
Company’s ability to pay dividends to its Shareholders and also grants of options to the CEO which, in turn, are
determined as a result of corporate and individual performance). In December 2014 the Cash Bonus Plan was
discontinued on a go forward basis subject to payment, in decreasing amounts over the next four years, of
decreasing amounts accrued under the Plan prior to its discontinuance.
In 2015, the CEO did not receive an award under the SIP in light of the Company’s near-term strategy to reduce costs.
His compensation consisted of: (1) grants of options under the Option Plan (see Stock Option Plan on Pages 21 and 22
of this Circular); and (2) a residual payment under the Cash Bonus Plan (see the Summary Compensation Table on
Page 27 of this Circular). This compensation was awarded to the CEO in recognition of his leadership role in initiating
and executing the Company’s near-term strategy of living within cash flow by lowering capital expenditures and
reducing costs in all aspects of Trilogy’s business. It was also in recognition of his role in the corporate achievements
set out on pages 16 and 17 of this Circular. As set out in the Summary Compensation Table, the CEO’s 2015 reported
compensation was approximately one-third of his 2014 reported compensation. His total realizable compensation
was approximately 16.2% of his total reported compensation.
- 19 -
Base Salary
NEO
Clayton Riddell
James Riddell
John Williams
Michael Kohut
Gail Yester
Jan 1 2013
$0
$0
$336,000
$325,000
$236,000
Base Salaries
Jan 1 2014
$0
$0
$351,000
$340,000
$250,000
Jan 1 2015
$0
$0
$365,000
$355,000
$265,000
Jan 1 2016
$0
$0
$333,500
$323,000
$237,500
Note: The numbers included for 2015 in the above table do not include additional salary decreases as a
result of the mandated unpaid days during the year.
The base salary component of Trilogy’s executive compensation is intended to provide a fixed level of cash
compensation to executives for performing day-to-day responsibilities. It is designed to reward executives for
providing the services within their job descriptions in a competent, professional manner and for demonstrating
leadership within their respective departments and within Trilogy in general. Trilogy strives to provide base salaries
that are competitive within the Canadian oil and gas industry because it believes base salaries are a significant
factor in attracting and retaining talented leaders who will be focused on Trilogy’s operations, finances and assets.
In approving salaries for employees and NEOs, the Company utilizes the Mercer Survey as a general guide and relies
on the expertise and experience of its Compensation Committee members. The Mercer Survey provides
comparative compensation information, including salary ranges and salary increase budgets for specific positions
within different types and sizes of Canadian companies based on various factors such as duties typically associated
with these positions and the qualifications, educational background, years and areas of relevant experience
customarily required for such positions.
In December 2014, the Compensation Committee approved an average salary increase of 5% for each of the
salaried NEOs for 2015. However, as part of Trilogy’s cost-cutting measures during 2015 due to the severe impact of
low commodity prices, the base salaries of the salaried NEOs were reduced. In April 2015, the previously approved
salary increases for Messrs. Williams and Kohut and Ms. Yester were reversed and the base salaries paid to these
NEOs were rolled back to their 2014 levels. In addition, the compensation packages for Messrs. Williams and Kohut
were further restructured for 2015 to significantly decrease fixed compensation and increase variable compensation
for these executives, such that Mr. Williams’ and Mr. Kohut’s salaries were further reduced for the balance of 2015 by
27% and 100%, respectively. In November 2015, each of Messrs. Williams and Kohut and Ms. Yester further
participated in a company-wide 5% salary cut and a freeze on 2016 salaries. Going into 2016, the base salary for
each of the salaried NEOs remained below or about the same as 2013 levels.
Mr. Clayton Riddell and Mr. James Riddell do not receive a salary from Trilogy.
Share Incentive Plan ("SIP")
The SIP is Trilogy’s primary bonus plan, designed to reward employees and officers who have met or exceeded their
goals and shown exceptional performance contributing to the success of Trilogy, as well as to encourage investment
and ownership of Common Shares and retention of employees and executives. As distinguished from most other
annual bonus plans, SIP grants are not paid in immediately available cash; rather, they are in the form of
performance-based entitlements to Common Shares purchased at market price through the TSX, of which one third
vests at the time of the grant, one third vests on the first anniversary date of the grant, and one third vests on the
second anniversary of the grant. Trilogy believes this delayed vesting feature discourages NEOs from focussing on
short-term targets that may not be sustainable over time. As the value of Common Shares increases, the value of the
SIP awards also increases, thereby aligning NEOs’ interests with those of Trilogy’s Shareholders. As the CEO does not
receive a salary from Trilogy and already has significant shareholdings in the Company, his SIP grant is fully vested at
the time of the grant. The Chairman of the Board historically has not received SIP grants.
The awards are made annually, based on corporate and individual performance targets in the prior year. The
number of Common Shares awarded under the SIP to each NEO is calculated based on a combined corporate
target and individual target as determined by the CEO and the Compensation Committee.
Corporate performance targets are established each year in reference to various operational metrics selected to
determine corporate performance. In reviewing Trilogy’s performance against these metrics, the Compensation
- 20 -
Committee may also consider other factors such as economic, business and industry conditions; operational and
other issues and circumstances that are beyond the control of the NEOs; and the Company’s overall environmental,
health and safety record during the year. The individual component of SIP grants is assigned based on the duties
and responsibilities of the NEO, job performance and the officer’s contribution to Trilogy’s overall financial and
operational success as evaluated by the CEO and the Compensation Committee.
In determining and
recommending awards under the SIP, the Compensation Committee also has discretion to evaluate NEOs’
performance in the context of external factors as well as the absolute progress of the Company during the year
relative to its overall long term goals.
By April 2015, the severity of the impact of the fall in crude oil and natural gas prices was apparent and efforts were
already underway to preserve cash flow wherever possible. Accordingly, no grants under the SIP were made to any
of the NEOs, including the CEO, in 2015. Please refer to “Incentive Plan Awards – Value Vested or Earned During the
Year” table on page 30 of this Circular for Common Shares that vested from SIP awards previously granted to Messrs.
Williams and Kohut and Ms. Yester in 2013 and 2014.
Dividends and other income, if any, received by the custodian on Common Shares while they are held in Trilogy are
paid out annually to the participants in the SIP as of December 30 of each year on a pro rata basis. No such
payments were received in respect of 2015 by the NEOs.
See "Share Incentive Plan" under "INCENTIVE PLAN AWARDS" for further information on the significant elements of the
SIP.
Stock Option Plan ("Option Plan")
The Option Plan has been chosen as the primary long-term incentive plan of Trilogy because the Compensation
Committee believes its features instill an important sense of ownership, promote retention and, together with the
other elements of Trilogy’s executive compensation program, provide an appropriate blend of short- and long-term
incentives. It is designed to reward those who are responsible for the management, growth and value appreciation
of Trilogy. An important element of the Option Plan is that vesting periods are generally lengthy, typically four or five
years, which Trilogy believes helps to incentivize long-term corporate value creation, vision and stewardship and
align the interests of the NEOs with those of Trilogy’s Shareholders. Through these lengthy vesting periods, the Option
Plan also supports long-term retention of valuable employees.
NEOs are eligible for grants of options at the time of employment and thereafter in annual option grants. Factors
considered in determining grants include the experience, responsibilities and performance of the individual,
corporate performance, the individual’s performance and perceived value to Trilogy in the future, and, in the case
of the CEO and the Chair of the Board, their management expertise and leadership qualities. In approving grants of
options, the Compensation Committee (or in the case of the CEO, the Board) also takes into account previous grants
of option-based awards and the other elements of compensation received by the grantee. The grant or exercise
price is the volume weighted average trading price of Common Shares on the TSX for the five completed trading
days immediately prior to the date of the grant, which is the date of the applicable Compensation Committee
meeting or resolution, as the case may be.
The Compensation Committee believes stock options are the most effective form of compensation in terms of
incentivizing executive officers and senior employees to continually strive to increase the long-term Share
performance of the Company. During 2015, the NEOs were granted the options set out below in recognition of
personal performance in 2014 and 2015 year-to-date as set out on pages 16 and 17 of this Circular as well as the
achievement of the Corporation’s 2015 strategy of living within cash flow and cutting costs, and as an incentive to
improving the market value of Trilogy’s Common Shares. The compensation package for Messrs. Williams and Kohut
was further restructured to place a greater emphasis on variable pay as compared to base salary, resulting in larger
Option grants to them than in past years.
- 21 -
The following table summarizes the 2015 Option grants to the NEOs. These grants represented 51.42% of the total
option grants made by the Company in 2015. They also represented 1.47% of the outstanding Common Shares and
1.23 % of the outstanding Trilogy Shares (Common and Non-Voting) as at December 31, 2015:
NEO
Date of Grant
Options Granted
Option Exercise Price
($)
Clayton Riddell
November 27, 2015
176,700
$4.49
James Riddell
April 15, 2015
November 27, 2015
250,000
266,700
$7.38
$4.49
John Williams
April 15, 2015
November 27, 2015
April 15, 2015
November 27, 2015
117,350
216,700
210,300
158,400
$7.38
$4.49
$7.38
$4.49
April 15, 2015
November 27, 2015
44,400
108,400
$7.38
$4.49
Michael Kohut
Gail Yester
These options were granted under Trilogy’s Stock Option Plan on April 15, 2015 and November 27, 2015. Eighty
percent (80%) of the options granted in April 2015 are vested and the remaining twenty percent (20%) will vest on
October 19, 2016. Twenty percent (20%) of the options granted in November 2015 are vested; the remaining eighty
percent (80%) will vest in four equal tranches from October 19, 2016 through October 19, 2019.
See the Summary Compensation Table on page 27 of this Circular as well as "Trilogy Stock Option Plan" under
"INCENTIVE PLAN AWARDS" for a full description of the significant terms of the Option Plan.
Cash Bonus Plan
The Cash Bonus Plan was discontinued on a go forward basis effective December 2014. However, previously
accrued payments under the plan will continue to be paid out annually over the next three years. Accordingly,
each of the NEOs received a payment for 2015 under the Cash Bonus Plan, as shown in "Long-Term Non-Equity
Incentive Plans" (Column f2) of the SUMMARY COMPENSATION TABLE, below.
See "Cash Bonus Plan" under "INCENTIVE PLAN AWARDS" for further information on the significant elements of the Cash
Bonus Plan.
Discretionary Cash Bonus
The Compensation Committee, based on the recommendation of the CEO, has occasionally granted discretionary
cash bonus payments to NEOs (excluding the Chair of the Board and the CEO), to reward executives who have
demonstrated extraordinary performance and/or played a major role in the successful completion of critical projects
and transactions that have contributed to the success of the Company. These bonuses are extraordinary awards
and are not considered to be a primary component of Trilogy’s compensation program.
No discretionary cash bonus was paid to any of the NEOs in any of the three most recently completed financial years.
- 22 -
PERFORMANCE GRAPH
The following graph illustrates a Shareholder’s cumulative return from January 4, 2011 through December 31, 2015,
assuming an initial investment in the Company of $100 with all dividends on Common Shares reinvested in additional
Common Shares, compared to the S&P/TSX Composite Total Return Index and the S&P/TSX Oil & Gas Exploration &
Production GICS Sub Industry Total Return Index. The graph also shows changes in total compensation granted to
Trilogy’s NEOs over the same period.
Total Return Performance Graph
400
Trilogy Total Return
350
S&P/TSX Composite Total Return Index
S&P/TSX Oil & Gas Exploration & Production GICS
Sub Industry Total Return Index
300
NEO COMPENSATION
250
200
150
100
50
0
4-Jan-11
30-Dec-11
31-Dec-12
31-Dec-13
31-Dec-14
31-Dec-15
4-Jan-11
30-Dec-11
31-Dec-12
31-Dec-13
31-Dec-14
31-Dec-15
Trilogy Total Return
100
311
245
236
69
32
S&P/TSX Composite Total Return Index
100
92
98
111
123
112
S&P/TSX Oil & Gas Exploration & Production
GICS Sub Industry Total Return Index
100
82
72
82
64
44
NEO COMPENSATION
100
273
279
202
146
75
* Trilogy total return data acquired through the TSX Historical Data Access (HDA) website.
Trilogy believes that compensation for its NEOs for the five year period ending December 31, 2015, has generally
tracked Trilogy’s Total Shareholder Return (“TSR”) during the same period, taking into consideration the fact that
each year, a significant portion of NEO compensation reflects performance during the prior year.
The graph and chart above show an increase in NEO compensation during 2011, when the Company significantly
increased its annual production and began a strategic shift in the composition of its production base to provide the
Company with greater exposure to premium priced oil and natural gas liquids. It also successfully negotiated the Aux
Sable Natural Gas Liquids Recovery Agreement, providing additional value for the natural gas liquids in Trilogy’s gas
stream. Thus, compensation in 2011 and 2012 recognized those achievements, with the SIP grants in 2012 reflecting a
highly successful 2011.
In 2012 and 2013, notwithstanding significant advances by the Company in both the Montney oil and gas pools and
the emerging Duvernay shale play, Total Returns during those years reflected operational challenges such as well
performance and unexpected delays in infrastructure and expansion projects required to increase production from
Trilogy’s Kaybob Montney oil pool as well as commodity price volatility.
Trilogy NEO compensation was
commensurate with these events, decreasing by approximately 27% during 2013 as compared to 2012 as a reflection
of 2012 and 2013 performance.
- 23 -
Similarly, in 2014, despite the significant progress made by Trilogy in furthering the development of the Kaybob
Montney oil and gas pools and the Duvernay shale play, public guidance misses as a result of infrastructure outages,
well performance and, toward the end of the year, the collapse of the global oil price and lower natural gas prices
resulted in a significant decrease in Trilogy’s TSR as compared to 2013. NEO compensation in 2014 also decreased
significantly (by approximately 28%) as compared to the prior year. In 2014, the compensation paid to each of the
NEOs under the SIP and the Option Plan was significantly reduced as compared to 2013.
From the latter half of 2014 and through 2015, Trilogy, along with virtually all public oil and gas producers, saw the
trading value of its Common Shares steeply decline, resulting in a sharp drop in its TSR. Trilogy’s Compensation
Committee notes that these returns reflect the low commodity pricing and the severely depressed conditions in the
oil and gas industry over the last eighteen months, demonstrated in the graph above by the decrease in TSR of the
S&P/TSX Oil & Gas Exploration & Production GICS Sub Industry Total Return Index (the “Oil and Gas Index”) over the
same period. Given the unique circumstances in the oil and gas industry over the last two years, Trilogy believes this
Index to be the most appropriate Index to compare to given that it measures the equity performance of only oil and
gas exploration and production companies, versus the S&P/TSX Composite Total Return Index, which measures equity
performance across a wide range of issuers and industries. Trilogy’s near-term strategy of reducing expenditures and
living within cash flow limited its ability to advance its Montney oil and gas assets and its Duvernay shale play during
the year. This, together with higher debt levels, likely also contributed to its TSR performance in 2015.
Trilogy’s Compensation Committee believes the Company’s executive compensation program has been prudent
and reasonable and is closely aligned with changes in the Company’s TSR, as evidenced by the line graph depicted
above. Please also refer to the “Reported vs. Realizable Compensation Table” on page 28 of this Circular, which
compares the aggregate reported compensation of Trilogy’s NEOs in each of 2013, 2014 and 2015 with their
aggregate realizable compensation for these years.
COMPENSATION GOVERNANCE
Operating under the Compensation Committee Charter, the Compensation Committee assists the Board in its
oversight responsibilities in relation to compensation and general human resources policies and guidelines. The
Committee is responsible for recommending to the Board compensation policies and general human resources
policies and guidelines concerning employee compensation and benefits, including executive compensation,
benefit and incentive plans. The Committee also approves proposed personnel changes involving officers reporting
to the Chief Executive Officer, and is responsible to ensure the Company has in place a process to provide for the
orderly succession of all executive positions, including the CEO role. Succession planning is on the Compensation
Committee work plan in April of each year, and is also discussed, from time to time, at Board meetings and in
camera discussions.
In addition to ad hoc or informal meetings throughout the year, the Committee typically meets at least twice each
year: in December to approve compensation for the following calendar year and annual option grants; and in April,
after the previous year’s corporate results are known, to approve grants under the Company’s SIP.
Trilogy’s Compensation Committee is comprised of three members, all of whom are independent directors. Each of
Mr. Wilf Gobert (Chair), Mr. Donald Textor and Mr. R. Keith MacLeod is well qualified to serve on Trilogy’s
Compensation Committee, having many years of experience with executive performance and compensation, either
in their own businesses or on compensation committees of other issuers, or both.
Wilfred A. (Wilf) Gobert – Chair
Mr. Gobert has been involved in the oil and gas industry in Calgary since 1976, working with Peters & Co. Limited
since 1979. When he retired from Peters & Co. Limited in 2006, Mr. Gobert was its Vice Chairman and through such
role had significant involvement in compensation programs and practices for staff and executives. In addition to his
B.Sc. (Honours) in Mathematics, Mr. Gobert received his Masters’ in Business Administration (MBA) with a major in
Finance, and holds a Chartered Financial Analyst (CFA) designation. He is also a member of the compensation
committee of Canadian Natural Resources Limited (a major Canadian oil and gas producer listed on both the TSX
and the NYSE). Mr. Gobert is an independent director.
- 24 -
Donald F. (Don) Textor
Since 2001, Mr. Textor’s principal occupation is Portfolio Manager of Dorset Energy Fund. He is solely responsible for
determining compensation of employees of Dorset Energy Fund. Until 2001, Mr. Textor was also a partner and
managing director at Goldman Sachs. Mr. Textor also serves on the compensation committee of EOG Resources, Inc.
(a major U.S. oil and gas producer which trades on the NYSE). Mr. Textor is an independent director.
R. K. (Keith) MacLeod
Mr. MacLeod is a professional engineer with more than thirty years of experience in the oil and gas industry. As CEO
and/or President of Sproule for seven years, Mr. MacLeod was instrumental in compensation programs and awards
for officers and employees. He is also a member of the Compensation Committee of the board of directors of
Manitok Energy Inc. Mr. MacLeod is an independent director.
All forms of compensation for Trilogy’s NEOs are granted according to the following process:

Compensation for Named Executive Officers other than the CEO and the Chairman of the Board: The
performance of Messrs. Williams and Kohut and Ms. Yester is assessed by the CEO and the Compensation
Committee in relation to their contributions to Trilogy’s short-, medium- and long-term goals. The
Compensation Committee determines compensation for these NEOs based upon the recommendations of
the CEO.

Compensation for Chief Executive Officer: A formal evaluation of the CEO is conducted by the Corporate
Governance Committee with the members of the Board (excluding Mr. Clayton Riddell, Mr. James Riddell
and Mr. E. Mitchell Shier) with respect to the CEO’s performance, management expertise, experience and
contributions to Trilogy’s performance over the previous year. The results of the evaluation are then
communicated to the Compensation Committee for its review as it assesses the CEO’s compensation. In
addition to Trilogy’s financial and operational results for the year, the Compensation Committee considers
the progress Trilogy made toward its goals and external factors relevant to the natural resource industry and
the economy in general. Based on those assessments, the Compensation Committee grants compensation
to the CEO after consultation with the independent members of the Board. The CEO does not receive a
salary from Trilogy, but receives annual grants under the Option Plan and the SIP and residual payments
under the now discontinued Cash Bonus Plan.

Compensation for Chair of the Board: The effectiveness of the Chair of the Board is evaluated each year as
part of the annual Board evaluation and assessment process. Mr. Clayton Riddell does not receive a salary
or SIP grants. The Compensation Committee approves grants of options under the Option Plan to Mr.
Clayton Riddell in recognition of his involvement in the management and strategic decisions of the
Company. He also receives residual payments under the now discontinued Cash Bonus Plan.
Trilogy participates in the annual Mercer Total Compensation Survey for the Energy Sector (the “Mercer Survey”),
from which Trilogy obtains compensation market data specific to Trilogy’s industry, and also participates in industry
human resources groups such as the Calgary Exchange Group (“CEG”). Each year, Trilogy’s Human Resources
Department provides comparative data to the CEO and the President and Chief Operating Officer. In addition to
relying on the expertise and experience of the Compensation Committee, Trilogy utilizes information and data
collected by these sources, other industry sources and other strategic management and research companies to
keep current on compensation of executives in similarly sized companies within Trilogy’s industry and make informed
decisions about Trilogy’s compensation programs.
Risk Alignment of Compensation Plans and Practices
Management, the Board and Board Committees regularly identify and assess the key risks to Trilogy’s business,
including those related to compensation, and the steps Trilogy takes or ought to take to manage and mitigate those
risks. Risk management oversight is communicated by each Committee to the Board and Management through
regular reports at Board meetings. Trilogy’s Compensation Committee has considered the implications of the
Company’s compensation policies and practices on risk taking by employees and executives, the practices the
Company uses to identify and mitigate such risks, and whether any identified risks are reasonably likely to have a
material adverse effect on the Company or its business. The Compensation Committee has reviewed Trilogy’s
compensation policies and practices and did not identify any risks that are reasonably likely to have a material
adverse effect on Trilogy or its business under any of its compensation plans. The Committee concluded that Trilogy’s
compensation policies and practices should not encourage excessive or inappropriate risk taking by employees or
NEOs. Key practices that Trilogy employs to mitigate these risks include:
- 25 -












100% of the CEO’s pay and a significant portion of other NEOs’ compensation is “at risk”;
A balanced compensation program of short and long-term compensation;
Trilogy’s key compensation plans are long-term incentive plans:

The SIP, unlike annual bonus plans of most of Trilogy’s competitors that are paid out immediately in
cash, is paid out in performance-based Common Shares that vest in three tranches over two years
for all NEOs other than the CEO (and the Chairman who does not receive SIP grants).

Under the Option Plan, vesting typically occurs over a four or five year period with no options vesting
for almost one year after the grant. This motivates NEOs to achieve long-term, sustainable goals
versus short-term goals;
Awards under the SIP and the Option Plan are generally only granted annually in reasonable numbers in
accordance with Trilogy’s own compensation practices and caps. Option grants are subject always to the
maximum number of total outstanding options permitted by the TSX and approved by the Shareholders. TSX
rules prohibit repricing or extending the term of options granted to insiders without Shareholder approval;
Discretionary cash bonus payments are occasional and are tied to material contributions in a particular year;
No cash bonuses have been paid to NEOs in the last three fiscal years;
Except in the case of death or retirement, unvested SIP awards terminate immediately upon cessation of the
NEO’s relationship with Trilogy. Unvested option grants terminate immediately upon cessation of the
relationship and, except in the case of death or retirement, vested options terminate within three days of
termination of employment;
Upon a change of control, vesting of options is not automatic but is in the discretion of the Board;
NEOs are not provided with significant perquisites that are not generally available to all employees;
Trilogy has adopted a policy that prohibits directors and officers from entering into arrangements that are
designed to hedge or offset a decrease in the market value of equity securities granted as compensation;
Trilogy has adopted a policy against directly or indirectly loaning funds to exercise options or acquire Trilogy
Shares and typically does not permit cash surrenders, resulting in minimal drain on cash flow;
Trilogy’s directors, including the CEO, must acquire and hold Common Shares having a value equal to at
least three times directors’ annual base retainer, and to hold such Shares during his or her tenure. Each of
Trilogy’s directors has acquired the requisite number of Common Shares under this policy; and
Trilogy does not have employment agreements or other agreements which include provisions dealing with
termination, retirement, resignation, severance or change of control rights upon termination of employment
or office with any employee, officer or director, including the CEO.
- 26 -
SUMMARY COMPENSATION TABLE
The following table sets out information concerning the compensation awarded to, earned by, paid to, or payable
to the NEOs for services performed for Trilogy in the year ended December 31, 2015.
Name and
principal
occupation
(a)
Year
Salary
($)
Sharebased
awards(2)
($)
Optionbased
awards
($)(3) (4)
(b)
(c)
(d)
(e)
Non-equity incentive
plan compensation
($)
Pension
value
($)
All other
compensation
($)
Total
compensation
($)
(f)
(g)
(h)
(i)
Annual
incentive
plans (5)
(f1)
Clayton Riddell(1)
Chair of the Board
2015
2014
2013
Nil
Nil
Nil
James Riddell (1)
CEO
2015
2014
2013
Nil
Nil
Nil
John Williams
President and
COO
2015
2014
2013
Michael Kohut
CFO
Gail Yester
Corporate
Secretary
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
Nil
Nil
Nil
Longterm
incentive
plans(6)
(f2)
289,788
507,215
1,202,129
Nil
Nil
Nil
134,400
228,350
253,950
N/A
N/A
N/A
32,500 (7)
31,750 (7)
33,000 (7)
456,688
767,315
1,489,079
Nil
2,202,525
2,940,700
892,388
845,359
1,202,129
Nil
Nil
Nil
172,200
370,941
340,850
N/A
N/A
N/A
Nil
13,711 (8)
3,162 (8)
1,064,588
3,432,535
4,486,841
210,781
351,120
336,000
Nil
92,400
96,000
568,965
676,287
1,202,129
Nil
Nil
Nil
134,400
270,475
244,800
N/A
N/A
N/A
15,323(8)
26,185 (8)
13,765 (8)
929,469
1,416,467
1,892,694
2015
2014
2013
109,017
339,631
325,000
Nil
89,377
93,000
642,522
507,215
1,001,774
Nil
Nil
Nil
94,500
181,250
153,050
N/A
N/A
N/A
7,764(8)
26,081 (8)
13,455 (8)
853,803
1,143,554
1,586,279
2015
2014
2013
235,134
250,000
236,000
Nil
64,901
67,500
258,584
338,144
601,064
Nil
Nil
Nil
67,200
143,625
135,795
N/A
N/A
N/A
16,928(8)
19,346 (8)
13,028 (8)
577,845
816,016
1,053,387
Notes:
Messrs. Clayton Riddell and James Riddell hold executive offices with Trilogy and devote substantial time to Trilogy's business, but
they are not paid a salary by Trilogy for their services.
Includes the grant date fair value of awards granted under the SIP (Trilogy’s primary bonus plan) in 2013 and 2014. No awards were
granted to NEOs under the SIP in 2015. Please refer to the table Incentive Plan Awards – Value Vested or Earned During the Year on
Page 30 for the final one-third of Common Shares granted under the 2013 SIP grant and the second one-third of Common Shares
granted under the 2014 SIP grant to each of Messrs. Williams and Kohut and Ms. Yester. For Mr. James Riddell, all of the Common
Shares granted under his SIP in 2013 and 2014 vested on the grant date. Mr. Clayton Riddell does not currently participate in the SIP.
The amounts included represent the grant date fair value of options granted under Trilogy’s Stock Option Plan during the year. The
NEOs were granted options under Trilogy’s Stock Option Plan on April 15, 2015 and November 27, 2015. Eighty percent (80%) of the
options granted in April 2015 are vested and the remaining twenty percent (20%) will vest on October 19, 2016. Twenty percent
(20%) of the options granted in November 2015 are vested; the remaining eighty percent (80%) will vest in four equal tranches from
October 19, 2016 through October 19, 2019.
With respect to the options granted in April 2015, grant date fair value has been calculated using a trinomial model in accordance
with IFRS 2 Share-based Payments. Significant inputs and assumptions into the model were as follows: dividend yield (percent) –
0%,; expected volatility (percent) – 49.67%; risk-free interest rate (percent) – 0.56%; and expected life of option (years) – 2.0 years.
For options granted in November 2015, grant date fair value has been calculated using a trinomial model in accordance with IFRS 2
Share-based Payments. Significant inputs and assumptions into the model were as follows: dividend yield (percent) – 0%; expected
volatility (percent) – 51.97%; risk-free interest rate (percent) 0.89%; and expected life of option (years) - 4.9 years. In both cases, this
methodology was chosen to be consistent with the methodology used for the grant date fair value of the option-based awards in
Trilogy’s financial statements. The grant date fair value resulting from the use of these formulae is to a large degree a function of
the historical volatility in the trading price of the Common Shares.
No Discretionary Cash Bonus amounts were paid to any of the NEOs in the three most recently completed financial years.
The amounts included represent cash payments received by the NEO under the now discontinued Cash Bonus Plan with reference
to dividends in respect to vested, unexercised options as of December 31, 2013, December 31, 2014 and December 31, 2015.
The amount shown represents $32.500 paid to Clayton H. Riddell for Board and committee meeting attendance and Board
honorarium in 2015 ($31,750 for 2014 and $33,000 for 2013).
The amounts shown for Messrs. Kohut and Williams and Ms. Yester include a contribution by Trilogy to their RRSP, calculated
according to a formula based on their base salary. This contribution is a benefit to all employees and officers of Trilogy other than
Mr. C. H. Riddell and Mr. J. H. T. Riddell, who do not earn a salary from Trilogy. In November 2015, the formula was reduced by 33%,
- 27 -
from 7.5% to 5.0% of the salary of such employee or officer up to a maximum of 100% of the maximum RRSP contribution level set by
the Canada Revenue Agency. For Messrs. Williams and Kohut, the amount contributed in 2015 was $15,333 and $7,764 respectively
and for Ms. Yester the amount was $16,928. For 2014, the amount contributed was $24,270 for each of Mr. Williams and Mr. Kohut
and $18,032 for Ms. Yester. In 2013, the amount contributed for each of these NEOs was $11,910. For 2013 and 2014, the amount
shown for Mr. James Riddell and the remainder of the amounts shown for the other NEOs (excluding Mr. Clayton Riddell) represents
pro rata payment with respect to dividends on unvested Common Shares and income held in Trilogy’s account for the SIP at the
end of the year. No such pro rata payments were made for 2015. No NEO received perquisites, including property or other
personal benefits not generally available to all employees that are in the aggregate worth $50,000 or more or more than 10% of
their total salary for the applicable year.
REPORTED VS REALIZABLE COMPENSATION TABLE
The following table provides further information and context in respect of realizable, as opposed to reported,
compensation of Trilogy’s NEOs by comparing the aggregate reported compensation of the NEOs (as set out in the
“Summary Compensation Table” above and used in the “Total Performance Return Graph” on page 23) for each of
2013, 2014 and 2015 with the aggregate realizable compensation for each of those years. The table illustrates how
the NEOs’ realizable compensation in these years differed from NEO reported compensation as a result of the
significant decrease in the realizable value of the options granted to the NEOs. The table demonstrates the degree
to which NEO compensation has trended downward along with the material decreases to share prices as a result of
the decline in commodity prices since mid-2014.
Options, which represent a significant portion of Trilogy’s executive compensation, are closely aligned with Trilogy’s
Share price. In the Summary Compensation Table, the reported value of the entire grant of options made during
each of 2013, 2014 and 2015 is included, calculated for both vested and unvested options based on the grant date
fair value of those options using a trinomial model in accordance with IFRS 2 Share-based Payments. In comparison,
the table below shows the “in the money” value of the options granted to the NEOs in these years calculated as of
December 31, 2015 (as set out in the table “Outstanding Share Based Awards and Option Based Awards” on page 29
of this Circular).
In 2015, the aggregate reported compensation for Trilogy’s NEOs was just over half of the aggregate reported
compensation for 2014, and the aggregate realizable compensation for the NEOs was less than 32% of the
aggregate reported compensation as compared to 62% in the prior year.
2015
$
2014
$
2013
$
Reported
Realizable
Reported
Options (1)
2,652,247
0
2,874,220
SIP awards
0
0
2,449,203
Base Pay
554,932
554,932
940,751
940,751
897,000
897,000
Cash Bonus Plan
602,700
602,700
1,194,641
1,194,641
1,128,445
1,128,445
0
0
0
0
0
0
Discretionary Bonus
All other
Total
Realizable as % of
Reported Pay
Realizable
0
2,449,203
Reported
Realizable
5,209,225
0
3,197,200
3,197,200
72,514
72,514
117,073
117,073
76,410
76,410
3,882,393
1,230,146
7,575,888
4,701,668
10,508,280
5,299,055
31.69%
62.06%
50.43%
Notes:
(1)
The closing price of a Common Share on the TSX on December 31, 2015 of $3.66 was below the exercise price of all options
granted to the NEOs in 2015 ($7.38 and $4.49), 2014 ($10.39) and 2013 ($26.88). None of the options granted in any of
these years has been exercised by the NEOs.
- 28 -
INCENTIVE PLAN AWARDS TO NAMED EXECUTIVE OFFICERS
Outstanding Share-based Awards and Option-based Awards
Name
Number of
securities
underlying
unexercised
options
(#)
(a)
Option-based Awards(1)
Option
Option
exercise
expiration
price
date
($)
Value of
unexercised
in-the-money
options (3)
Number of
shares or
units of
shares that
have not
vested
(#)
($)
Share-based Awards(2)
Market or
Market or
payout value
payout value
of shareof vested
based
share-based
awards that
awards not
have not
paid out or
vested (3)
distributed
($)
($)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
176,700
150,000
150,000
200,000
150,000
30,000
266,700
250,000
250,000
150,000
250,000
200,000
200,000
4.49
10.39
26.88
28.27
38.74
12.15
4.49
7.38
10.39
26.88
28.27
38.74
12.15
Apr 30/20
Apr 30/20
Apr 30/19
Apr 30/18
Apr 30/17
Apr 30/16
Apr 30/20
Apr 30/17
Apr 30/20
Apr 30/19
Apr 30/18
Apr 30/17
Apr 30/16
Nil
Nil
Nil
Nil
Nil
Nil
-
-
-
-
-
-
-
-
216,700
117,350
200,000
150,000
200,000
150,000
150,000
4.49
7.38
10.39
26.88
28.27
38.74
12.15
Apr 30/20
Apr 30/17
Apr 30/20
Apr 30/19
Apr 30/18
Apr 30/17
Apr 30/16
Nil
Nil
Nil
Nil
Nil
Nil
1,049
-
3,839
-
-
Michael Kohut
158,400
210,300
150,000
125,000
150,000
100,000
100,000
4.49
7.38
10.39
26.88
28.27
38.74
12.15
Apr 30/20
Apr 30/17
Apr 30/20
Apr 30/19
Apr 30/18
Apr 30/17
Apr 30/16
Nil
Nil
Nil
Nil
Nil
Nil
1,014
-
3,711
-
-
Gail Yester
108,400
44,400
100,000
75,000
100,000
75,000
75,000
4.49
7.38
10.39
26.88
28.27
38.74
12.15
Apr 30/20
Apr 30/17
Apr 30/20
Apr 30/19
Apr 30/18
Apr 30/17
Apr 30/16
Nil
Nil
Nil
Nil
Nil
Nil
Nil
736
-
2,694
-
-
-
-
Clayton Riddell
James Riddell
John Williams
Nil
Nil
Nil
Nil
Nil
Nil
Notes:
(1)
Awards of options to purchase Common Shares under Trilogy’s Stock Option Plan.
(2)
Includes the final one-third of the 2013 grant and two-thirds of the 2014 grant of Common Shares under the SIP. For Mr. James
Riddell, all of the Common Shares granted under the SIP in 2013 and 2014 vested on the grant date. Mr. Clayton Riddell
currently does not participate in the SIP.
(3)
Based upon the trading price of $3.66 for a Common Share on the TSX on December 31, 2015 in respect of all vested and
unvested options and SIP shares.
- 29 -
Incentive Plan Awards – Value Vested or Earned During the Year
Name
Option-based awards – Value
vested during the year(1)
($)
Share-based awards – Value
vested during the year(2)
($)
Non-equity incentive plan
compensation – Value earned
during the year (3)
($)
(a)
(b)
(c)
(d)
7,068
N/A
134,400
James Riddell
123,168
0
172,200
John Williams
61,476
15,771
134,400
Michael Kohut
100,971
15,269
94,500
Gail Yester
24,316
11,085
67,200
Clayton Riddell
Notes:
(1)
Represents the aggregate value that would have been realized if the NEO’s options vested during the year had been
exercised on the vesting dates, computed by determining the difference between the market price of the underlying shares
available to be exercised and the exercise price of the options on the vesting date, based on the closing price of a Common
Share on the TSX of $8.13 on April 15, 2015, $4.69 on November 27, 2015, and $4.76 on October 19, 2015. Please refer to the
“Reported vs. Realizable Compensation Table” on page 28 of this Circular, which compares the aggregate reported
compensation of Trilogy’s NEOs in each of 2013, 2014 and 2015 with their aggregate realizable compensation for these years.
(2)
The amounts in this column represent the value of Common Shares that vested during 2015 under the SIP program. No SIP
grants were made to any of the NEOs in 2015. For Messrs. Williams and Kohut and Ms. Yester, the amounts included represent
the value of one-third of Common Shares granted under the SIP in each of 2013 and 2014 that vested in 2015. The value of
the vested and unvested Common Shares granted to these NEOs in 2013 and 2014 is also included in Share-based Awards
for each of those years in the Summary Compensation Table, above. For the CEO, all Common Shares granted under the SIP
in 2013 and 2014 vested during those years. The amounts included above represent the aggregate dollar value realized
upon vesting of share-based awards, computed by multiplying the number of Common Shares by the market value of the
underlying Common Shares on the vesting date, based on a five day weighted average trading price. Mr. Clayton Riddell
currently does not participate in the SIP.
(3)
The amounts shown represent cash payments received under the now discontinued Cash Bonus Plan (as previously shown in
Column f2 – Long-Term Non-equity Incentive Plan payments - of the Summary Compensation Table).
DETAILED DESCRIPTION OF TRILOGY COMPENSATION PLANS
Stock Option Plan
On February 4, 2010, the Unitholders of the Trust approved a new Stock Option Plan for Trilogy post-Conversion. The
Option Plan was adopted by the Board on January 5, 2010. The terms of the Option Plan are substantially the same
as the terms of the Trust Unit Option Plan of the Trust prior to the Conversion. Following the Conversion, all rights to
acquire Trust Units under the Trust Unit Option Plan became rights to acquire Common Shares on a one-for-one basis.
The Option Plan is administered by the Board and the Compensation Committee (all of the members of which are
independent) or, at the discretion of the Board, any other duly authorized committee of the Board. Directors, officers
and employees of Trilogy and its subsidiaries may be granted options to purchase Common Shares under the Option
Plan. The purpose of the Option Plan is to provide effective long-term incentives to the directors, officers and
employees of Trilogy and its subsidiaries and to reward them on the basis of the long-term Common Share trading
price performance. Options hold no value if the trading price of Common Shares does not appreciate. By this
approach, optionee and Shareholder interests are closely aligned.
The aggregate number of Common Shares that may be subject to all outstanding options at the time of the grant,
together with the aggregate number of Common Shares issuable by Trilogy in connection with any other
compensation arrangement involving the issuance of Common Shares from the treasury of Trilogy, shall not exceed
10% of the outstanding Common Shares at that time. The number of Common Shares reserved for issuance at any
time to insiders under the Option Plan, when combined with the number of Common Shares issuable pursuant to any
other security based compensation arrangement, may not exceed 10% of the outstanding Common Shares. In
addition, there may not be issued to insiders on exercise of options, within a one-year period, a number of Common
Shares that, when combined with any other issuances of Common Shares under any other security based
- 30 -
compensation arrangement, will exceed 10% of the total issued and outstanding Common Shares immediately prior
to the grant.
The Board, the Compensation Committee or any other duly authorized committee of the Board shall determine the
number of Common Shares subject to each option, the exercise price of each option, the expiration date of each
option and the extent to which each option is exercisable from time to time during the term of the option. The
exercise price of any option shall not be lower than the volume weighted average trading price of Common Shares
on the TSX for the five completed trading days immediately prior to the date of the grant of the option. No financial
assistance is provided by Trilogy or any of its subsidiaries to facilitate the exercise of options by holders. An option will
not be exercisable for a period exceeding ten years. Options are non-transferrable and non-assignable. Options do
not automatically vest in the event of a change of control.
At the discretion of the Board, vested options may be surrendered for an amount equal to the excess, if any, net of
any amounts required to be withheld under applicable legislation, of the volume weighted average trading price of
Common Shares on the TSX for the five trading days immediately prior to the date the options are surrendered (the
"VWAP") multiplied by the number of Common Shares represented by the options surrendered, over the aggregate
exercise price of the surrendered options (the "Cash Settlement Amount"). Alternatively, at the discretion of the
Board, vested options may be surrendered for the number of Common Shares determined by dividing the net Cash
Settlement Amount by the VWAP, and rounding down to the next highest whole number. In no circumstances will
either the optionholder or Trilogy, at any time, be obligated to surrender options or accept the surrender of options,
as the case may be.
The Option Plan may be amended, suspended or discontinued by the Board at any time provided that no such
amendment may adversely alter or impair any option previously granted without the consent of the holder thereof.
Any amendment to the Option Plan is subject to the approval of the TSX and Shareholders. However, the Board may
approve amendments relating to the Option Plan or to options, without further approval of the Shareholders,
including, without limitation, to the extent that such amendment: (a) is for the purpose of curing any ambiguity, error
or omission in the Option Plan or to correct to supplement any provision of the Option Plan that is inconsistent with
any other provision of the Option Plan; (b) is necessary to comply with applicable law or stock exchange rules; (c) is
respecting administration and eligibility for participation under the Option Plan; (d) changes the terms and conditions
on which options may be or have been granted pursuant to the Option Plan including the re-pricing of such options
and changes to the vesting provisions and term; (e) alters, extends or accelerates the terms of vesting applicable to
any Option; (f) changes the termination provisions of an option, provided that the change does not entail an
extension beyond the original expiry date of such option; (g) amends or modifies the mechanics of exercise of
options; (h) determines the adjustment provisions pursuant to the Option Plan; (i) permits a subsidiary of Trilogy to
grant options of Trilogy; or (j) is an amendment of a "housekeeping" nature; provided that in the case of any
alteration, amendment or variance referenced to in paragraph (a) or (b) above, the alteration, amendment or
variance does not: (k) amend the number of Common Shares issuable under the Option Plan; (l) add any form of
financial assistance by Trilogy for the exercise of any option; (m) result in a material or unreasonable dilution in the
number of outstanding Common Shares or any material benefit to an eligible optionee; or (n) change the class of
eligible participants to the Option Plan which would have the potential of broadening or increasing participation by
insiders of Trilogy. Without limiting the generality of the foregoing, but subject to any required approval of any
regulatory authority or stock exchange, the Board may amend the exercise price, the option term (which in no event
shall exceed 10 years for the date of grant) and the termination provisions of options granted pursuant to the Option
Plan, without Shareholder approval, provided that if the Board proposes to increase the number of Common Shares
issuable under the Option Plan, amend the provision relating to amendments which can be made without
Shareholder approval or reduce the exercise price or extend the terms of options granted to insiders of the Company
pursuant to the Option Plan (unless the extension is pursuant to any Black-Out Expiration Term that may be in effect),
such amendments will require Shareholder approval.
- 31 -
Equity Compensation Plan Information (1)
Plan Category
Trilogy Option Plan approved
by security holders
Equity compensation plans
not approved by security
holders
Number of
Common Shares to
be issued upon
exercise of
outstanding Options
Weighted average
exercise price of
outstanding Options
Number of Common
Shares remaining
available for future
issuance under Option
Plan
10,344,960
$18.10
180,425
None
None
None
Note:
(1) All information is as at December 31, 2015.
As of March 10, 2016, a total of 10,320,960 Common Shares are issuable upon exercise of currently outstanding
options and 204,425 Common Shares remain available for future issuance under the Option Plan, representing
approximately 9.81% and 0.19%, respectively, of the issued and outstanding Common Shares. Of the currently
outstanding options, 5,318,500 are exercisable. The majority of these options will vest at various times in 2016 through
2020.
Share Incentive Plan
Trilogy adopted the SIP (formerly the Unit Incentive Plan, or “UIP”) on April 10, 2006. All officers and permanent
employees of Trilogy are eligible to receive awards under the SIP, although the Chair of the Board has not been
granted SIP awards to date and Trilogy has no current intention to do so. The SIP is administered by the
Compensation Committee.
The SIP is a share-based incentive plan in that it involves a grant of Common Shares that have been purchased on
the open market rather than an issuance from treasury. The objectives of the plan are: (1) to strengthen the ability of
Trilogy to attract and retain qualified officers and employees; (2) to encourage the acquisition of Common Shares by
employees and officers through the granting of Common Share Rights (rather than cash) as bonuses in respect of
services rendered by the employees and officers in a particular service year; and (3) to focus officers and employees
of Trilogy on operating and financial performance and the total long-term return for Shareholders by providing an
increased incentive to contribute to Trilogy’s growth and profitability. It is designed to reward performance in the
immediately preceding calendar year.
The Compensation Committee (all of the members of which are independent) determines the number of Common
Share Rights to be awarded to grantees. Trilogy provides an independent custodian with the funds required to
purchase the requisite number of Common Shares. The custodian purchases the required Common Shares through
the facilities of the TSX and holds them in trust for the grantees until the applicable vesting dates. None of Trilogy, the
Board, the Compensation Committee or the CEO has any direct or indirect control over the time, price, amount and
manner of such purchases of Common Shares or the choice of broker through which the purchases are to be made.
Grants to the CEO of Common Share Rights under the SIP vest immediately. Grants to all other officers and
employees vest as follows: one-third vests immediately on the grant date, one-third on the first anniversary of the
grant date and the final one-third on the second anniversary of the grant date. If a service provider’s right to
unvested Common Share Rights terminates, Trilogy may either retain the applicable Common Shares and use them
toward the following year’s grant or instruct the custodian to liquidate the excess Common Shares through the
facilities of the TSX and pay the cash proceeds to Trilogy. While unvested Common Shares are held in trust by the
custodian, dividends (if any) and other income are accumulated in trust. Such dividends and proceeds are paid out
by the custodian at the end of the first and second year of each grant, and upon vesting of the final one-third of
each grant, to the participants in each grant on a pro-rata basis. Dividends (if any) on forfeited Common Shares
(when a participant ceases to be an employee or officer) are included in this payment. Share Rights under the SIP
do not automatically vest in the event of a change of control.
- 32 -
Cash Bonus Plan (Now Discontinued)
Under the Cash Bonus Plan, a cash payment is payable to the NEOs on January 15th of each year (“Payment Date”),
calculated with reference to dividends paid to Shareholders and options held by the NEO under the Option Plan.
The amount of the payment varies in direct correlation to the amount of dividends paid on Trilogy Shares and the
number of options an NEO holds and was granted, which in turn are both determined as a result of corporate and
individual performance. The Compensation Committee believes this incentivizes Trilogy’s executives to maximize the
dividends paid to the holders of Trilogy Shares. Payment is also conditional upon the participant still being an
employee, officer or director of Trilogy on Payment Date.
The Cash Bonus Plan has been discontinued subject to payment, over the next three years, of the residual amounts
accrued under the Plan prior to its discontinuance. These amounts are calculated in reference to dividends paid to
Shareholders prior to the December 2014 discontinuance of the dividend and will be paid in decreasing amounts on
January 15 of 2017, 2018 and 2019.
EMPLOYMENT AGREEMENTS AND TERMINATION/CHANGE OF CONTROL AGREEMENTS
Trilogy does not have employment agreements or other agreements which include provisions dealing with
termination, retirement, resignation, severance or change of control rights upon termination of employment or office
with any employee, officer or director, including the CEO. Accordingly, all rights or entitlements of the NEOs with
respect to termination, retirement, resignation or a change of control are, in the case of severance rights, governed
by the common law, and in the case of their SIP awards and option grants, governed by the applicable provisions of
the SIP and the Option Plan.
Under the Option Plan, unvested options terminate immediately upon termination of the relationship between Trilogy
and the employee or director except in the case of death or retirement. Vested options may be exercised by the
personal representative of a deceased employee or director within six months of death. Vested options may be
exercised within 60 days of retirement. In all other cases, vested options must be exercised within three days of
termination of the relationship. The Board may, in its discretion, accelerate vesting of options upon takeover bid,
change of control, liquidation, dissolution or upon failure to re-elect the Board of Trilogy.
Under the SIP, unvested rights to Common Shares terminate immediately upon termination of the relationship
between Trilogy and the employee except in the case of death, in which case vesting is accelerated, and
retirement, in which case vesting continues according to the Plan. The Board may, in its discretion, accelerate
vesting of options upon takeover bid, change of control, liquidation, dissolution or upon failure to re-elect the Board
of Trilogy.
ANTI-HEDGING POLICY
Trilogy has adopted a policy that prohibits directors and officers from purchasing or writing financial instruments such
as puts, calls, prepaid variable forward contracts, equity swaps, collars or units of exchange funds that are designed
to hedge or offset a decrease in the market value of equity securities granted as compensation to such directors or
officers or held, directly or indirectly, by them.
INDEBTEDNESS OF DIRECTORS AND OFFICERS
Trilogy has adopted a policy against directly or indirectly extending or maintaining credit, or arranging for the
extension of credit, in the form a person loan, to or for any director or officer.
- 33 -
DIRECTOR COMPENSATION
The directors of Trilogy (excluding the CEO, who does not receive compensation in his capacity as a director) receive
an annual retainer for serving as a director of Trilogy and as chair of a committee, if applicable, and fees for each
Board, committee and Shareholder meeting attended in person or by telephone and each resolution approved in
writing in lieu of a meeting. All such fees are approved by the Board and are paid in quarterly instalments. The
directors are also reimbursed for their reasonable expenses for attending meetings.
In November 2015, in conjunction with the reductions in compensation for the NEOs, the Board approved a 15%
reduction in the annual retainer and fees paid to the directors of the Corporation. The following table sets out the
annual retainer/fees prior to and following the November 2015 reduction:
Retainers:
All Directors
Additional for Chair of Board
Additional Retainer for Committee Chairs:
Audit Committee Chair
Other Committee Chairs
Attendance Fees:
Board, Shareholder and Committee Meetings
Resolution Fees:
Approving resolutions in lieu of meeting
Fiscal 2015
Approved for 2016
($)
20,000
5,000
($)
17,000
4,250
15,000
5,000
12,750
4,250
1,250
1,065
500
425
In fiscal 2015, the annual fees paid to Trilogy’s directors were as follows:
Retainer
Attendance Fees
Wilfred Gobert
Board
($)
20,000
20,000
20,000
Committee
Member
($)
-
Board/Committee
Chair
($)
5,000
5,000
15,000
Board/
Shareholder
Meetings
($)
7,500
5,000
7,500
Committee
Meetings
($)
7,500
5,000
Resolutions
Approved
($)
500
-
Total
Paid
($)
32,500
38,000
47,500
Robert
MacDonald
20,000
-
15,000
7,500
8,750
500
51,750
20,000
20,000
20,000
-
2,500
-
7,500
7,500
6,250
8,750
5,000
1,250
500
-
39,250
32,500
27,500
Name
Clayton Riddell
James Riddell
M.H. (Mick) Dilger
R. Keith MacLeod
E. Mitchell Shier
Donald Textor
The directors of Trilogy are eligible to receive grants of options to acquire Common Shares under the Option Plan, as
may be determined from time to time by the CEO, and approved by the Compensation Committee. Newly
appointed or elected directors receive their initial grant upon joining the Board. Thereafter, directors are eligible for
grants of options annually. Such grants are limited in number. In 2015, each non-management director received
19,500 options. The aggregate number of options granted to non-management directors in 2015 was 117,000,
representing only 0.11% of the Common Shares and .009% of the Trilogy Shares outstanding as of December 31, 2015.
See information under "Common Share Option Plan" in the "COMPENSATION DISCUSSION AND ANALYSIS – Elements of
Compensation" and "INCENTIVE PLAN AWARDS".
Directors are also entitled to receive a cash payment under the Cash Bonus Plan. As this Plan was discontinued on a
go forward basis in December 2014, compensation paid to non-management directors under the Plan will be limited
to the payment of previously accrued amounts under the Plan over the next four years. See information in "Cash
Bonus Plan" in the "COMPENSATION DISCUSSION AND ANALYSIS – Elements of Compensation" and "INCENTIVE PLAN
AWARDS".
Directors, other than the CEO, do not receive awards under Trilogy’s SIP.
- 34 -
The following table sets out all compensation awarded to, earned by, paid to, or payable to each director of Trilogy
excluding Mr. Clayton Riddell and Mr. James Riddell during the year ended December 31, 2015. For information on
compensation paid to Messrs. Clayton. Riddell and James Riddell, see the SUMMARY COMPENSATION TABLE above.
Name
Fees
earned
(a)
M.H. (Mick) Dilger
($)
(b)
38,000
DIRECTOR COMPENSATION TABLE
ShareOptionNon-equity
based
based
incentive plan
awards
awards(1) (2) compensation(3)
($)
($)
($)
(c)
(d)
(e)
N/A
31,980
14,070
Pension
value
All other
compensation
Total
($)
(f)
N/A
($)
(g)
Nil
(h)
84,050
($)
Wilfred Gobert
Robert
MacDonald
R. Keith MacLeod
47,500
N/A
31,980
14,070
N/A
Nil
93,550
51,750
N/A
31,980
14,070
N/A
Nil
97,800
39,250
N/A
31,980
1,470
N/A
Nil
72,700
E. Mitchell Shier
32,500
N/A
31,980
14,070
N/A
Nil
78,550
Donald Textor
27,500
N/A
31,980
14,070
N/A
Nil
73,550
Notes:
(1)
(2)
(3)
Grant date fair value of options granted under Common Share Option Plan. The directors other than the Chair of the
Board and the CEO were granted options to acquire an aggregate of 117,000 Common Shares during the year ended
December 31, 2015. These grants represented .011% of the outstanding Common Shares as at December 31, 2015.
Twenty percent (20%) of the options granted during the year vested immediately and the remaining eighty percent (80%)
will vest in four equal vestings in October of each of year from 2016 through 2019.
For 2015, grant date fair value has been calculated using a trinomial model in accordance with IFRS 2 Share-based
Payments. Significant inputs and assumptions into the model were as follows: dividend yield (percent) – 0%,; expected
volatility (percent) – 51.97%; risk-free interest rate (percent) 0.89%; and expected life of option (years) - 4.9 years. This
methodology was chosen to be consistent with the methodology used for grant date fair value of option-based awards in
Trilogy’s financial statements. The grant date fair values resulting from the use of this formula is to a large degree a
function of the historical volatility in the trading price of the Common Shares.
The amounts included represent cash payments received by the directors under the now discontinued Cash Bonus Plan.
- 35 -
Incentive Plan Awards to Directors
Outstanding Share-based Awards and Option-based Awards
Option-based Awards(1)
Share-based Awards
Market or
Market or
payout
payout value of
value of
vested shareNumber of
sharebased awards
shares or
based
not paid out or
units of
awards that
distributed
shares that
have not
have not
vested
($)
vested
(#)
($)
Number of
securities
underlying
unexercised
options
Option
exercise
price
(#)
($)
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
M.H. (Mick) Dilger
19,500
15,000
12,500
15,000
15,000
14,000
4.49
10.39
26.88
28.27
38.74
12.15
Apr 30/20
Apr 30/20
Apr 30/19
Apr 30/18
Apr 30/17
Apr 30/16
Nil
Nil
Nil
Nil
Nil
Nil
-
-
-
Wilfred Gobert
19,500
15,000
12,500
15,000
15,000
16,000
4.49
10.39
26.88
28.27
38.74
12.15
Apr 30/20
Apr 30/20
Apr 30/19
Apr 30/18
Apr 30/17
Apr 30/16
Nil
Nil
Nil
Nil
Nil
Nil
-
-
-
Robert
MacDonald
19,500
15,000
12,500
15,000
15,000
16,000
4.49
10.39
26.88
28.27
38.74
12.15
Apr 30/20
Apr 30/20
Apr 30/19
Apr 30/18
Apr 30/17
Apr 30/16
Nil
Nil
Nil
Nil
Nil
Nil
-
-
-
R. Keith MacLeod
19,500
15,000
30,000
4.49
10.39
29.97
Apr 30/20
Apr 30/20
Apr 30/19
Nil
Nil
Nil
-
-
-
E. Mitchell Shier
19,500
15,000
12,500
15,000
15,000
16,000
4.49
10.39
26.88
28.27
38.74
12.15
Apr 30/20
Apr 30/20
Apr 30/19
Apr 30/18
Apr 30/17
Apr 30/16
Nil
Nil
Nil
Nil
Nil
Nil
-
-
-
Donald Textor
19,500
15,000
12,500
15,000
15,000
16,000
4.49
10.39
26.88
28.27
38.74
12.15
Apr 30/20
Apr 30/20
Apr 30/19
Apr 30/18
Apr 30/17
Apr 30/16
Nil
Nil
Nil
Nil
Nil
Nil
-
-
-
Name
Notes:
(1)
(2)
Option
expiration
date
Value of
unexercised
in-the-money
options (2)
($)
Awards of options to purchase Common Shares under Trilogy’s Stock Option Plan. See "Trilogy Stock Option Plan" under
"COMPENSATION DISCUSSION AND ANALYSIS – Elements of Compensation Program" and "INCENTIVE PLAN AWARDS".
Based upon the trading price of $3.66 for a Common Share on the TSX on December 31, 2015 in respect of all vested and
unvested options.
- 36 -
Incentive Plan Awards – Value Vested or Earned During the Year
Name
(a)
Option-based awards –
Value vested during the
year(1)
($)
Share-based awards – Value
vested during the year
($)
Non-equity incentive plan
compensation – Value
earned during the year (2)
($)
(b)
(c)
(d)
M.H. (Mick) Dilger
780
N/A
14,070
Wilfred Gobert
780
N/A
14,070
Robert MacDonald
780
N/A
14,070
R. Keith MacLeod
780
N/A
1,470
E. Mitchell Shier
780
N/A
14,070
Donald Textor
780
N/A
14,070
Notes:
(1) Represents the aggregate value that would have been realized if the director’s options vested during the year had been
exercised on the vesting date, computed by determining the difference between the market price of the underlying shares
available to be exercised and the exercise price of the options on the vesting date, based on the closing price of a Common
Share on the TSX on October 19, 2015 of $4.76.
(2) The amounts shown represent cash payments received under the now discontinued Cash Bonus Plan (as previously shown in
Column (e) – Directors’ Compensation Table).
Director Assessment
Trilogy’s Board, Board committees, the Chair of the Board, the Chair of each committee, the Lead Director and
individual directors are assessed annually through a process conducted by the Corporate Governance Committee.
The purpose is to identify areas where effectiveness can be improved or enhanced, and to assess the contributions
of each member of the Board. Each November, a formal evaluation questionnaire is provided to each director to
complete on a confidential basis. The questionnaire solicits open ended comments as well as responses to specific
questions to evaluate, among other things, the size and structure of the Board and each of its committees, the
knowledge, understanding and diversity of the directors, the effectiveness of the Chair of the Board, the Chair of
each committee and the Lead Director, the effectiveness of each committee, preparation for meetings including
the setting of agendas and the adequacy and timeliness of information provided to the Board and committees,
overall Board operations, ability to function independently of Management, and includes a self- assessment. A peer
review component is included in the evaluation, whereby each director is asked to answer a series of questions
evaluating the skills, performance and contributions of the other Board members. Responses and recommendations
are tabulated by the Corporate Secretary and communicated to the Corporate Governance Committee, who in
turn reports the responses to the Compensation Committee (for consideration in determining CEO compensation)
and to the Board for discussion and further action, as appropriate.
In addition to the detailed evaluation and assessment mentioned above, each Board committee conducts regular
reviews and assessments of its effectiveness, including compliance with its charter and its role, duties and
responsibilities and submits a report to the Board for consideration and recommendations.
Share Ownership/Hold Period Requirements
Trilogy’s directors must acquire and hold Common Shares having a value equal to at least three times the annual
base retainer paid to a director, and to hold such Common Shares during his or her tenure. Once a director acquires
the requisite number of Common Shares, such director has attained compliance with the policy and the number of
Common Shares required to be held is not subject to readjustment by reason of increases or decreases in the market
price of a Common Share. Each of Trilogy’s directors has attained compliance with this policy.
As Trilogy’s CEO, James Riddell, is not paid an annual base retainer in his capacity as a director, his share ownership
requirement is based on the annual base retainer of the other directors. As of March 10, 2016, he holds 570,688
Common Shares, or approximately 37 times the requisite number of Common Shares required to be held under this
policy based on an annual retainer of $20,000 and a closing price of a Common Share on the TSX on March 10, 2016
of $3.83.
- 37 -
CORPORATE GOVERNANCE
Trilogy is committed to implementing best practices in corporate governance. The Corporate Governance
Committee provides a focus on corporate governance that seeks to enhance Trilogy's performance and ensure, on
behalf of all stakeholders, that Trilogy has an effective corporate governance regime.
The Corporate Governance Committee is presently comprised of Wilfred Gobert (Chair), Robert MacDonald and
Mitchell Shier. A majority of the members are independent within the meaning of independence set out in National
Instrument 58-101 Disclosure of Corporate Governance Practices. A Nominating Subcommittee of the Corporate
Governance Committee has been established. This Subcommittee, in consultation with the Board, is responsible for
considering the appropriate size of the Board, establishing criteria for Board membership having regard to the
competencies and skills that the Board, as a whole, should possess, and identifying and proposing candidates for
nomination to the Board. Mr. Shier does not participate in this Subcommittee, as it is entirely comprised of
independent directors.
In developing its approach to governance, the Committee has given consideration to applicable legislation, Trilogy’s
by-laws, the organization, structure and ownership of Trilogy as well as to existing policies reflecting Trilogy's values.
Trilogy was established during a period of significant regulatory focus on corporate governance and developed its
approach to corporate governance with a view to ensuring compliance with the regulatory initiatives that have
been adopted. The information required by National Instrument 58-101 is set out in Schedule A to this Circular, and
the Mandate of the Board is set out in Schedule B. The information required by National Instrument 52-110 Audit
Committees is included in Trilogy's annual information form dated March 3, 2016 (the "AIF") under the heading "Audit
Committee Information" and the Audit Committee Charter is set out in Appendix C to the AIF.
ADDITIONAL INFORMATION
If you are a registered Shareholder, a copy of our 2015 annual report will be mailed to you on or about April 7, 2016,
unless you asked not to receive it. If you (i) do not wish to receive our annual report next year; or (ii) wish to receive
our interim reports but currently do not, please fill out and return the card that is enclosed with this package. If you
are a beneficial Shareholder and you did not return the card sent out last year to request a copy, an annual report
has not been forwarded to you. If you wish to receive our annual and/or interim reports next year, please fill out and
return the card enclosed with this package.
Additional information about Trilogy, including financial information, is provided in Trilogy’s financial statements and
Management’s discussion and analysis for the year ended December 31, 2015, as well as Trilogy’s latest annual
information form. These documents, together with our annual report and this Circular can be accessed online at
www.trilogyenergy.com or, along with all documents publicly filed by Trilogy, on SEDAR at www.sedar.com. You may
also request a copy free of charge from G. L. Yester, General Counsel and Corporate Secretary, at Suite 1400, 332 –
6th Avenue S.W., Calgary, Alberta, T2P 0B2.
- 38 -
SCHEDULE A
TRILOGY ENERGY CORP.
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
Disclosure Requirement
Our Corporate Governance Practices
1.
Board of Directors
a.
Disclose the
independent.
are
M.H. (Mick) Dilger, Wilfred Gobert, Robert MacDonald, R.
Keith MacLeod and Donald Textor are independent in
accordance with the meaning of independence set out in
National Instrument 58-101 Disclosure of Corporate
Governance Practices ("NI 58-101"). Robert MacDonald,
M.H. (Mick) Dilger and R. Keith MacLeod, all of the
members of the Audit Committee and the Reserves
Committee, are also independent as that term is defined in
National Instrument 52-110 Audit Committees.
b.
Disclose the identity of directors who are not
independent, and describe the basis for that
determination.
Clayton Riddell, James Riddell and E. Mitchell Shier are not
independent. Clayton Riddell is not independent because
he is the Chairman of the Board and he has a familial
relationship with the Chief Executive Officer (the "CEO") of
Trilogy. James Riddell is not independent because he is
the CEO of Trilogy. E. Mitchell Shier is not independent
because he is an executive officer of Paramount
Resources Ltd.
c.
Disclose whether or not a majority of directors is
independent. If a majority of directors is not
independent, describe what the board of
directors does to facilitate its exercise of
independent judgment in carrying out its
responsibilities.
Greater than a majority (62.5%, or almost two thirds) of the
directors are independent.
d.
If a director is presently a director of any other
issuer that is a reporting issuer (or the equivalent) in
a jurisdiction or a foreign jurisdiction, identify both
the director and the other issuer.
The following directors are also directors of the reporting
issuers (or the equivalent) set out beneath their names:
identity
of
directors
who
Clayton Riddell
Paramount Resources Ltd.*
Perpetual Energy Inc.*
*Perpetual Energy Inc. and Trilogy were spun-out from
Paramount Resources Ltd., in which Mr. Riddell is an
executive officer and major shareholder. Mr. Riddell
and/or Paramount Resources Ltd. continue to retain a
significant equity interest in these companies.
James Riddell
Paramount Resources Ltd. *
Big Rock Brewery Inc.
Strategic Oil & Gas Ltd.*
Marquee Energy Ltd.*
* Trilogy was spun-out from Paramount Resources Ltd., in
which Mr. Riddell is an executive officer. Paramount
Resources Ltd. continues to retain a significant equity
interest in Trilogy. As a result of divestitures to Strategic
Oil & Gas Ltd. and Marquee Energy Ltd. in exchange
for shares, Paramount has a significant equity interest in
both of those companies as well.
M. H. (Mick) Dilger
Pembina Pipeline Corporation
R. Keith MacLeod
Manitok Energy Inc.
Donald F. Textor
EOG Resources, Inc.
E. Mitchell Shier
Alaris Royalty Corp.
Wilfred A. Gobert
Gluskin Sheff + Associates Inc.
Canadian Natural Resources Limited
A-1
Disclosure Requirement
Our Corporate Governance Practices
e.
Disclose whether or not the independent directors
hold regularly scheduled meetings at which nonindependent
directors
and
members
of
Management are not in attendance.
If the
independent directors hold such meetings,
disclose the number of meetings held since the
beginning of the issuer's most recently completed
financial year. If the independent directors do not
hold such meetings, describe what the board
does to facilitate open and candid discussion
among its independent directors.
In conjunction with each Board meeting, the independent
directors hold meetings at which non-independent
directors and members of Management are not in
attendance. Five such meetings were held during fiscal
2015. The Audit Committee, Corporate Governance
Committee, EH&S Committee, Compensation Committee
and Nominating Subcommittee also meet without nonindependent Management being present at each of their
regularly scheduled committee meetings.
In 2015, the
Audit Committee had four such meetings and each of the
Corporate Governance Committee, and the EH&S
Committee had two such meetings. The Compensation
Committee had one meeting, as its November 2015
business was discussed at the full Board level.
The
Nominating Subcommittee had one such meeting. The
Reserves Committee, which was established in 2015,
commenced formal meetings in 2016. The members of this
Committee
also
meet
without
non-independent
Management.
f.
Disclose whether or not the chair of the board is
an independent director. If the board has a chair
or lead director who is an independent director,
disclose the identity of the independent chair or
lead director, and describe his or her role and
responsibilities. If the board has neither a chair
that is independent nor a lead director that is
independent, describe what the board does to
provide leadership for its independent directors.
Mr. Clayton Riddell, the Chairman of the Board, is not an
independent director. Mr. Donald Textor is Lead Director,
to assist the Board in fulfilling its duties effectively, efficiently
and, when necessary, independently of Management of
Trilogy. The Lead Director’s responsibilities include, among
other things, ensuring that the differences between the
responsibilities of the Board and Management are
understood by the Board and Management, ensuring the
Board has adequate resources to support its decisionmaking requirements, ensuring a process is in place to
monitor legislation and best practices, assisting and
providing input to the Chairman of the Board on
preparation of agendas for Board meetings as required,
ensuring that independent directors have adequate
opportunity to meet to discuss issues without Management
present, acting as a liaison between the independent
directors and Management as required, and chairing
meetings as required. The Lead Director chairs the sessions
that are held without Management present following each
regularly scheduled Board meeting.
g.
Disclose the attendance record of each director
for all board meetings held since the beginning of
the issuer's most recently completed financial
year.
2.
Board Mandate
a.
Disclose the text of the board's written mandate. If the
board does not have a written mandate, describe how
the board delineates its role and responsibilities.
A-2
Board
Meeting
Attended
Committee
Meetings
Attended
Clayton Riddell
James Riddell
M. H. (Mick) Dilger
Wilfred Gobert
Robert MacDonald
R. Keith MacLeod
E. Mitchell Shier
Donald Textor
5 of 5
5 of 5
4 of 5
5 of 5
5 of 5
5 of 5
5 of 5
5 of 5
n/a
n/a
6 of 6
4 of 4
7 of 7
7 of 7
4 of 4
1 of 1
Total Attendance Rate
97.5 %
100%
The Mandate of the Board is attached as Schedule B.
3.
Position Description
a.
Disclose whether or not the board has developed
written position descriptions for the chair and the chair
of each board committee. If the board has not
developed written position descriptions for the chair
and/or the chair of each board committee, briefly
describe how the board delineates the role and
responsibilities of each such position.
The Board has developed position descriptions for the
Chairman of the Board, the chair of each Board
committee and the Lead Director.
b.
Disclose whether or not the board and CEO have
developed a written position description for the CEO. If
the board and CEO have not developed such a
position description, briefly describe how the board
delineates the role and responsibilities of the CEO.
The Board and CEO have developed a position
description for the CEO as well as the President, Chief
Operating Officer and Chief Financial Officer.
4.
Orientation and Continuing Education
a.
Briefly describe what measures the board takes to orient
new directors regarding:
(i) the role of the board, its committees and its
directors, and
(ii) the nature and operation of the issuer's business.
The Corporate Governance Committee has been
assigned the responsibility of ensuring there is in place an
education and comprehensive orientation program for
new members of the Board and a continuing education
program for all directors.
That Committee has
developed a Corporate Governance Manual, which is
provided to assist new and existing Board members in
understanding the role of the Board and its committees
and the contribution individual Board members are
expected to make. Among other things, the Corporate
Governance Manual contains the history and structure of
Trilogy, its Board and committees, Trilogy’s governance
philosophy, mandates, charters, policies and codes as
well as copies of applicable National Instruments and
Policies relating to corporate governance standards. It
also contains annual work plans for the Board and each
of its committees. These documents and the Corporate
Governance Manual are reviewed and updated on a
regular basis.
New directors are made aware of the nature and
operation of the business of Trilogy through interviews
with the Chairman and/or CEO. Orientation may also
involve meetings with other members of senior
Management, during which the new member is briefed
on Trilogy and its current business issues. A detailed
review of Trilogy’s operations is presented to the Board at
least twice each year, with ongoing updates from the
Chief Executive Officer at meetings and through monthly
updates and other communications on an ongoing
basis. The orientation process also involves direct visits to
Trilogy’s
field
operations
and
facilities,
where
appropriate.
A-3
b.
Briefly describe what measures, if any, the board takes
to provide continuing education for its directors. If the
board does not provide continuing education, describe
how the board ensures that its directors maintain the skill
and knowledge necessary to meet their obligations as
directors.
5.
Ethical Business Conduct
a.
Disclose whether or not the board has adopted a
written code for the directors, officers and employees.
If the board has adopted a written code:
(i) disclose how a person or company may obtain a
copy of the code;
Directors are provided with available information that will
facilitate the maintenance of their industry knowledge
and professional skills. Directors are continuously updated
on the business operations of Trilogy at Board meetings,
particularly through the semi-annual sessions to review
operations, field trips, where appropriate, and through
regular communications from Management.
These
updates are conducted by senior Management and
other invited Trilogy employees and include discussions
on strategic issues affecting Trilogy and any other
developments that could materially affect Trilogy’s
business. Directors are also updated on developments in
best corporate governance practices through reports
from the Corporate Governance Committee and from
Management. A member of the Corporate Governance
Committee (Mr. MacDonald) maintains an active
membership in the Institute of Corporate Directors.
Directors share information obtained at seminars and
other
director
education
programs.
Significant
developments in legislation, policy or case law are
discussed at Board and applicable committee meetings.
Directors are updated on changes to financial reporting
requirements through presentations from Trilogy’s
auditors, either at regularly scheduled Audit Committee
meetings or at special meetings arranged for the Board
for that purpose.
The Board has adopted a written Code of Business
Conduct for all directors, officers, employees and
consultants and a Code of Ethics for the CEO, President,
CFO and senior financial supervisors. Both documents
are
available
on
Trilogy's
website
at
www.trilogyenergy.com and on SEDAR. In addition,
each director has a copy of the Corporate Governance
Manual which sets out the standard of conduct
expected of directors as does the Disclosure and Insider
Trading Policy of Trilogy. The Board has also adopted a
Whistleblower Policy.
Should anyone wish a hard copy of the Code of Business
Conduct or the Code of Ethics, they may be obtained
free of charge on request from G. L. Yester, Corporate
Secretary, at 1400, 332 – 6th Avenue S.W., Calgary,
Alberta T2P 0B2.
A-4
(ii) describe how the board monitors compliance with
its code, or if the board does not monitor compliance,
explain whether and how the board satisfies itself
regarding compliance with its code; and
Each director, officer, employee and consultant receives
a copy of the Code of Business Conduct, or is required to
access an electronic copy of the Code of Business
Conduct, on commencing his or her association with
Trilogy and is asked to certify that the Code of Business
Conduct has been read and understood and that the
Code of Business Conduct has and will be complied with.
Officers and employees must also certify that to their
knowledge and belief, after due inquiry, no employee or
consultant under their direct control or supervision is in
violation of the Code of Business Conduct. Trilogy
monitors compliance by annually providing all directors,
officers, directors, employees and consultants with a
copy of the Code of Business Conduct and receiving
from such recipients a certificate confirming their
continued compliance with the Code of Business
Conduct. The General Counsel is responsible for the
recertification process and reports to the Board each
year upon its completion.
Trilogy also believes its
Whistleblower process assists in ensuring compliance by
providing an avenue for serious non-compliance to be
reported anonymously and dealt with appropriately.
(iii) provide a cross-reference to any material change
report filed since the beginning of the issuer's most
recently completed financial year that pertains to any
conduct of a director or executive officer that
constitutes a departure from the code.
No material change reports have been filed by Trilogy
during the 2015 financial year relating to a director's or
executive officer's departure from either the Code of
Business Conduct or the Code of Ethics.
b.
Describe any steps the board takes to ensure directors
exercise independent judgment in considering
transactions and agreements in respect of which a
director or executive officer has a material interest.
Directors and officers must disclose all interests and
relationships of which the director or officer is aware
which may give rise to a material conflict of interest.
Directors are also required to disclose any actual or
potential personal interest in a matter on which the
Board is making a decision and withdraw from the
deliberations. In addition, the Board Mandate provides
that directors have the responsibility to act honestly and
in good faith with a view to the best interests of Trilogy.
c.
Describe any other steps the board takes to encourage
and promote a culture of ethical business conduct.
All directors, officers, employees and consultants are
provided with a copy of the Code of Business Conduct
which stresses that directors, officers, employees and
consultants are expected and required to adhere to the
highest ethical standards. Directors, officers, employees
and consultants are asked to certify their review of and
compliance with the provisions of the Code of Business
Conduct and, both initially and on an ongoing basis, any
actual or potential conflict of interest situations they are
in. Trilogy has also adopted a Disclosure and Insider
Trading Policy which provides additional guidance on
legal and ethical conduct required of all directors,
officers, employees and consultants of Trilogy and its
affiliates. This Policy is available on Trilogy’s website at
www.trilogyenergy.com or may be requested from G. L.
Yester, General Counsel and Corporate Secretary at
1400, 332 – 6th Avenue S.W., Calgary, Alberta, T2P 0B2.
A-5
6.
Nomination of Directors
a.
Describe the process by which the board identifies new
candidates for board nomination.
The Nominating Subcommittee of the Corporate
Governance Committee is responsible, in conjunction
with the Chairman of the Board, for identifying new
candidates for nomination to the Board and
recommending them to the Board when appropriate.
Upon there being a vacancy on the Board or a
determination having been made that the Board should
be expanded, the Nominating Subcommittee will meet
to review whether there are particular competencies
needed by the Board and to set forth the criteria in the
selection process. The Subcommittee will also determine
whether any of the members are aware of potential
candidates and will also review the advisability of
securing independent consultants to assist in the search.
Once a suitable candidate or candidates are identified,
the Subcommittee will meet with the Chairman for input,
after which time, the candidate or candidates will be
presented to the Board. The Board will discuss the
competencies of the various candidates and, if
applicable, identify one or more to be approached. The
Board will also determine which Board member should
make the contact after which that member will report
back to the Board.
b.
Disclose whether or not the board has a nominating
committee composed entirely of independent
directors. If the board does not have a nominating
committee composed entirely of independent
directors, describe what steps the board takes to
encourage an objective nomination process.
The nominating function is performed by the Nominating
Subcommittee
of
the
Corporate
Governance
Committee.
The Subcommittee is comprised of
independent directors Wilfred Gobert and Robert
MacDonald. Mr. E. Mitchell Shier, who is a member of
the Corporate Governance Committee, is not
considered independent and does not participate in or
attend Nominating Subcommittee meetings. When there
is a vacancy on the board, the Board is open to referrals
from all directors and the status of the search for a
director is openly discussed at Board meetings.
c.
If the board has a nominating committee, describe the
responsibilities, powers and operation of the nominating
committee.
The Nominating Subcommittee of the Corporate
Governance Committee is responsible for considering
the appropriate size of the Board with a view to
facilitating effective decision-making, establishing the
criteria
for
Board
membership,
assessing
the
competencies and skills of each existing director and
any new nominees with a view to achieving
competencies and skills that the Board as a whole should
possess, and proposing candidates for election or reelection.
A-6
7.
Compensation
a.
Describe the process by which the board determines
the compensation for the issuer's directors and officers.
The Compensation Committee considers and, after
reasonable consultation with all other independent
directors of the Corporation, approves the annual salary,
bonus and other benefits, direct and indirect, of the
Chief Executive Officer and all other designated officers
in the Corporation (in the latter case after considering
the recommendations of the Chief Executive Officer), all
in accordance with the Corporation’s compensation
policies and general human resources policies and
guidelines concerning employee compensation and
benefits, and with such compensation to realistically
reflect the responsibilities and risks of such positions. In the
case of the CEO, the Compensation Committee also
relies on the performance assessment which the
Corporate Governance Committee conducts annually
with respect to the CEO.
The Compensation Committee also evaluates the
implications of Trilogy’s compensation policies and
practices on risk taking by employees and executives,
the practices the Company uses to identify and mitigate
such risks, and whether any identified risks are reasonably
likely to have a material adverse effect on Trilogy or its
business.
The Corporate Governance Committee Charter provides
that the Corporate Governance Committee will
periodically review the adequacy and form of
compensation of directors to ensure that the level of
compensation realistically reflects the responsibilities and
risks involved in being an effective director and report
and make recommendations to the Board accordingly.
b.
Disclose whether or not the board has a compensation
committee composed entirely of independent
directors. If the board does not have a compensation
committee composed entirely of independent
directors, describe what steps the board takes to ensure
an
objective
process
for
determining
such
compensation.
The Compensation Committee is comprised entirely of
independent members. Trilogy participates in an annual
compensation survey conducted by independent
consultants encompassing, inter alia, executive
compensation. This survey examines the salary, benefits
and other incentive programs in effect with other oil and
gas issuers operating in Canada.
c.
If the board has a compensation committee, describe
the responsibilities, powers and operation of the
compensation committee.
In addition to the compensation responsibilities discussed
in 7 a. above, the Compensation Committee also
ensures that Trilogy has programs in place to attract and
develop Management of the highest caliber and to
ensure orderly succession of Management; implements
and administers compensation and general human
resources policies and guidelines concerning executive
compensation, contracts, stock option and other
incentive plans, and proposed personnel changes
involving officers reporting to the CEO; reviews Trilogy's
policies and programs relating to benefits; receives the
CEO's
recommendations
relating
to
annual
compensation policies and budgets for all employees,
reviews Trilogy's compensation policies and overall
labour relations strategy; reports to the Board on the
Committee’s recommendations with regard to comp
ensation of the CEO; and develops a calendar of annual
activities to be undertaken by the Committee.
A-7
8.
Other Board Committees
a.
If the board has standing committees other than the
audit, compensation and nominating committees,
identify the committees and describe their function.
The function of the Audit Committee is to assist the Board
in the discharge of its responsibilities relating to
accounting principles, reporting practices and internal
controls as well as to oversee the work of the external
auditors. The Audit Committee is also responsible for
identifying and monitoring the principal risks that could
impact the financial reporting of the Corporation.
The main functions of the Compensation Committee are
described in 7 above and under the section titled
“Compensation Governance.”
The function of the Nominating Subcommittee (a
subcommittee
of
the
Corporate
Governance
Committee) is described in 6 above.
The Board has three additional standing committees: the
Reserves Committee, the Environmental, Health & Safety
Committee and the Corporate Governance committee.
The Reserves Committee is responsible for reviewing
Trilogy’s procedures relating to the disclosure of
information with respect to oil and gas activities,
including its procedures for complying with the
requirements of National Instrument 51-101 Standards of
Disclosure for Oil and Gas Activities, It reviews the
appointment of the independent engineering firm
responsible for evaluating Trilogy's reserves, the reserves
data and the report of the reserves evaluator prior to
making recommendations to the Board with respect
thereto.
The purpose of the Environmental, Health and Safety
Committee is to review and monitor the environmental,
health and safety policies and activities of Trilogy and its
subsidiaries and to ensure that there are appropriate
systems in place to manage the environmental, health
and safety risks associated with the operations of the
Company and its subsidiaries.
The mandate of the Corporate Governance Committee
is to provide a focus on corporate governance that will
enhance corporate performance, and to ensure on
behalf of the Board and the Shareholders of the
Company that Trilogy’s corporate governance system
reflects high standards of governance and is effective in
the discharge of its obligations to the Company’s
stakeholders.
A-8
9.
Assessments
a.
Disclose whether or not the board, its committees and
individual directors are regularly assessed with respect
to their effectiveness and contribution. If assessments
are regularly conducted, describe the process used for
the assessments.
If assessments are not regularly
conducted, describe how the board satisfies itself that
the board, its committees, and its individual directors
are performing effectively.
The Board is responsible for making regular assessments
of its effectiveness as well as the effectiveness and
contribution of each Board committee and each
individual director.
The Corporate Governance
Committee establishes and administers a process
(including a review by the full Board and discussion with
Management) for assessing the effectiveness of the
Board as a whole and the Board committees.
Trilogy’s Board, Board committees, the Chair of the
Board, the Chair of each committee, the Lead Director
and individual directors are assessed annually through a
process conducted by the Corporate Governance
Committee. The purpose is to identify areas where
effectiveness can be improved or enhanced, and to
assess the contributions of each member of the Board.
Each November, a formal evaluation questionnaire is
provided to each director to complete on a confidential
basis. The questionnaire solicits open ended comments
as well as responses to specific questions to evaluate,
among other things, the size and structure of the Board
and each of its committees, the knowledge,
understanding and diversity of the directors, the
effectiveness of the chair of the Board, the chair of each
committee and the Lead Director, the effectiveness of
each committee, preparation for meetings including the
setting of agendas and the adequacy and timeliness of
information provided to the Board and committees,
overall
Board
operations,
ability
to
function
independently of Management, and includes a selfassessment.
A peer review component is included in the evaluation,
whereby each director will be asked to answer a series of
questions evaluating the skills, performance and
contributions of the other Board members.
Responses and recommendations are tabulated by the
Corporate Secretary and communicated to the
Corporate Governance Committee, which in turn reports
the responses to the Board for discussion and further
action, as appropriate.
In addition to the detailed evaluation and assessment
mentioned above, each Board committee conducts
regular reviews and assessments of its performance,
including compliance with its charter and its role, duties
and responsibilities and submits a report to the Board for
consideration and recommendations.
A-9
10.
Director Term Limits and Other Mechanisms of Board
Renewal
a.
Disclose whether or not the issuer has adopted term
limits for the directors on its board or other mechanisms
of board renewal and, if so, include a description of
those director term limits or other mechanisms of board
renewal. If the issuer has not adopted director term
limits or other mechanisms of board renewal, disclose
why it has not done so.
Trilogy has not adopted term limits for the directors on its
Board or other prescriptive mechanisms of board
renewal.
The Board considers its main objective in this area to be
recruiting and maintaining knowledgeable, experienced
directors with an appropriate mix of skills and expertise as
well as good character and a high level of integrity, with
the goal of having a highly competent and well-rounded
Board. It believes that greater experience on the Board
only increases individual directors’ ability to operate
effectively and independent of Management and to
add value to the Corporation.
Practically, board renewal is handled through annual
assessments of the Board, its committees, committee
chairs and individual directors, in which the Board
regularly evaluates each individual member of the Board
and the Board as a whole, in order to assess whether any
changes are required and whether there are any areas
of board competence that require improvement.
Further, each time a director retires from the Board, a
review of the existing skill set, expertise and background
of the departing director and the remaining Board
members informs the selection of a new director so as to
ensure the members have a diverse background and
that full complement of skillsets is on the Board at all
times.
11. Policies Regarding the Representation of Women on the
Board
a.
b.
Disclose whether the issuer has adopted a written policy
relating to the identification and nomination of women
directors. If the issuer has not adopted such a policy,
disclose why is has not done so.
If an issuer has adopted a policy referred to in (a),
disclose the following in respect of the policy:
i.
a short summary of its objectives and key
provisions,
ii.
the measures taken to ensure that the policy
has been effectively implemented,
iii.
iv.
The Board has not adopted a written policy relating to
identification and a nomination of women directors.
Trilogy is committed to the belief that it is in the best
interests of Trilogy and its Shareholders to select from a
wide and diverse group of individuals with the skills,
knowledge, experience and character required to
provide the leadership and range of expertise necessary
for Trilogy to achieve its business objectives, without
reference to gender, quotas or targets.
annual and cumulative progress by the issuer
in achieving the objectives of the policy, and
whether and, if so, how the board or its
nominating
committee
measures
the
effectiveness of the policy.
12. Consideration of the Representation of Women in the
Director Identification and Section Process
a.
Disclose whether, and, if so, how the board or
nominating committee considers the level of
representation of women on the board in identifying
and nominating candidates for election or re-election
to the board. If the issuer does not consider the level of
representation of women on the board in identifying
and nominating candidates for election or re-election
to the board, disclose the issuer’s reasons for not doing
so.
A-10
As a result of Trilogy’s approach to selecting from a wide
and diverse group of qualified individuals, the level of
representation of women on the Board is not considered
in identifying and nominating candidates for election or
re-election to the Board.
13. Consideration Given to the Representation of Women in
Executive Officer Appointments
a.
Disclose whether and, if so, how the issuer considers the
level of representation of women in executive officer
positions when making executive officer appointments.
If the issuer does not consider the level of representation
of women in executive officer positions when making
executive officer appointments, disclose the issuer’s
reasons for not doing so.
As with representation of women on the Board, as a
result of Trilogy’s approach to selecting from a wide and
diverse group of qualified individuals, the level of
representation of women on the executive team is not
considered in making executive officer appointments.
14. Issuer’s Targets Regarding the Representation of Women
on the Board and in Executive Officer Positions
a.
For purposes of this Item, a “target” means a number or
percentage, or a range of numbers or percentages,
adopted by the issuer of women on the issuer’s board
or in executive officer positions of the issuer by a specific
date.
b.
Disclose whether the issuer has adopted a target
regarding women on the issuer’s board. If the issuer has
not adopted a target, disclose why it has not done so.
c.
Disclose whether the issuer has adopted a target
regarding women in executive officer positions of the
issuer. If the issuer has not adopted a target, disclose
why it has not done so.
d.
If the issuer has adopted a target referred to in either
(b) or (c), disclose:
i.
the target, and
ii.
the annual and cumulative progress of the
issuer in achieving the target.
The Board of Trilogy has not adopted a target regarding
women on its Board. Because Trilogy is committed to
selecting from the widest possible pool of qualified
individuals for any Board appointment, it does so without
reference to quotas or targets.
The Board of Trilogy has not adopted a target regarding
women on its executive management team. Because
Trilogy is committed to selecting from the widest pool of
qualified individuals for any executive appointment, it
does so without reference to quotas or targets.
15. Number of Women on the Board and in Executive
Officer Positions
a.
Disclose the number and proportion (in percentage
terms) of directors on the issuer’s board who are
women.
b.
Disclose the number and proportion (in percentage
terms) of executive officers of the issuer, including all
major subsidiaries of the issuer, who are women.
A-11
0/8 (0%) of the directors on the Board of Trilogy are
women.
1/5 (20%) of the executive officers of Trilogy are women.
SCHEDULE B
TRILOGY ENERGY CORP.
BOARD OF DIRECTORS
MANDATE
A.
INTRODUCTION
The Board of Directors (the “Board”) of Trilogy Energy Corp. (the “Corporation”) has the responsibility for the overall
stewardship of the conduct of the business of the Corporation and its subsidiaries and the activities of management of the
Corporation, which is responsible for the day-to-day conduct of the business of the Corporation. Where the context requires,
references to the "Corporation" refer collectively to the Corporation and all direct and indirect subsidiaries of the Corporation.
The Board's fundamental objectives are to enhance and preserve long-term shareholder value, to ensure the Corporation
meets its obligations on an ongoing basis and that the Corporation operates its business in a reliable and safe manner. In
performing its functions, the Board should also consider the legitimate interests of other stakeholders such as employees, customers
and communities may have in the Corporation. In overseeing the conduct of the business, the Board, through the Chief Executive
Officer, shall set the standards of conduct for the Corporation.
B.
PROCEDURES AND ORGANIZATION
The Board operates by delegating certain of its powers to management and by reserving certain powers to itself. The
Board retains the responsibility for managing its own affairs including selecting its Chair, nominating candidates for election to the
Board, constituting committees of the Board and determining Director compensation. Subject to the Articles and By-Laws of the
Corporation and the Business Corporations Act (Alberta) (the "Act"), the Board may constitute, seek the advice of and delegate
powers, duties and responsibilities to committees of the Board.
C.
DUTIES AND RESPONSIBILITIES
The Board's principal duties and responsibilities fall into a number of categories which are outlined below.
1.
Legal Requirements
(a)
The Board has the responsibility to ensure that legal requirements have been met and documents and
records have been properly prepared, approved and maintained;
(b)
The Board has the responsibility to:
(i)
manage the business and affairs of the Corporation;
(ii)
act honestly and in good faith with a view to the best interests of the Corporation;
(iii) to exercise the care, diligence and skill that a reasonable, prudent trustee would exercise in
comparable circumstances; and
(iv) act in accordance with its obligations contained in the Act and the regulations thereto, the
Corporation's Articles and By-Laws, securities legislation of each province and territory of
Canada, and other relevant legislation and regulations;
(c)
The Board has the responsibility for considering the following matters as a full Board which shall not be
delegated to management or to a committee of the Board:
(i)
any submission to the shareholders of the Corporation of a question or matter requiring the
approval of the shareholders;
(ii)
the filling of a vacancy among the directors or in the office of auditor;
(iii) the issuance of securities of the Corporation;
(iv) the declaration of dividends of the Corporation;
(v)
the purchase, redemption or any other form of acquisition of securities issued by the
Corporation;
(vi) the payment of a commission to any person in consideration of his/her purchasing or agreeing
to purchase securities of the Corporation from the Corporation or from any other person, or
procuring or agreeing to procure purchasers for any such shares;
(vii) the approval of management proxy circulars of the Corporation;
(viii) the approval of the annual financial statements of the Corporation, the Corporation's
management discussion and analysis and annual information form; and
(ix) the adoption, amendment or repeal of By-Laws of the Corporation.
B-1
2.
Independence
The Board has the responsibility to ensure that appropriate structures and procedures are in place to facilitate the
Board to function independently of management. In this regard, the Board shall consist of a majority of "independent
directors"i, as that term is defined in Section 1.4 of National Instrument 52-110, Audit Committees or such guidelines as may
hereafter replace the same. The independent board members should
hold separate, regularly scheduled meetings at
which non-independent directors and members of management are not in attendance.
3.
Strategy Determination
The Board has the responsibility to ensure there are long-term goals and a strategic planning process in place for
the Corporation and to participate with management directly or through its committees in developing and approving, as
required, the mission of the business of the Corporation and the strategic plan by which it proposes to achieve its goals,
which strategic plan takes into account, among other things, the opportunities and risks of the Corporation’s business.
4.
Managing Risk
The Board has the responsibility to understand the principal risks of the business in which the Corporation is
engaged, to achieve a proper balance between risks incurred and the potential return to shareholders, and to ensure
there are appropriate systems in place which effectively monitor and manage those risks with a view to the long-term
viability of the Corporation.
5.
Division of Responsibilities
The Board has the responsibility to:
(a)
appoint and delegate responsibilities to committees where appropriate to do so; and
(b)
develop position descriptions for:
(i)
the Chair of the Board;
(ii)
the Chief Executive Officer;
(iii) the President and Chief Operating Officer; and
(iv) the Chief Financial Officer.
6.
Appointment, Training and Monitoring Senior Management
The Board has the responsibility:
7.
(a)
to appoint the Chief Executive Officer, to monitor and assess the Chief Executive Officer's performance,
to determine and approve the Chief Executive Officer's compensation, and to provide advice and
counsel in the execution of the Chief Executive Officer's duties;
(b)
to approve the appointment and remuneration of all other designated corporate officers, acting upon
the advice of the Chief Executive Officer;
(c)
to the extent feasible, to satisfy itself as to the integrity of the Chief Executive Officer and other
corporate officers and that the Chief Executive Officer and other corporate officers create a culture of
integrity throughout the organization;
(d)
to ensure that adequate provision has been made to train and develop management and for the
orderly succession of management; and
(e)
to ensure that management is aware of the Board's expectations of management.
Policies, Procedures and Compliance
The Board has the responsibility:
8.
(a)
to ensure that the Corporation and its affiliates operate at all times within applicable laws and
regulations and to the highest ethical and moral standards;
(b)
to approve and monitor compliance with significant policies and procedures by which the Corporation
and its affiliates are operated;
(c)
to ensure the Corporation and its affiliates sets high environmental standards in its operations and is in
compliance with environmental laws and legislation; and
(d)
to ensure the Corporation and its affiliates has in place appropriate programs and policies for the health
and safety of its employees in the workplace.
Reporting and Communication
The Board has the responsibility:
B-2
9.
(a)
to ensure the Corporation has in place policies and programs to enable the Corporation to
communicate effectively with its shareholders, other stakeholders and the public generally;
(b)
to ensure that the financial performance of the Corporation is adequately reported to shareholders,
other security holders and regulators on a timely and regular basis;
(c)
to ensure that the financial results are reported fairly and in accordance with generally accepted
accounting standards;
(d)
to ensure the timely reporting of any other developments that have a significant and material impact
on the value of the Corporation;
(e)
to report annually to shareholders on its stewardship of the affairs of the Corporation for the preceding
year; and
(f)
to develop appropriate measures for receiving shareholder feedback.
Monitoring and Acting
The Board has the responsibility:
1
1.4
(1)
(2)
(3)
(4)
(5)
(6)
(7)
(8)
(a)
to monitor the Corporation's progress towards it goals and objectives and to revise and alter its direction
through management in response to changing circumstances;
(b)
to take action when performance falls short of its goals and objectives or when other special
circumstances warrant;
(c)
to ensure that the Corporation has implemented adequate internal control and management
information systems which ensure the effective discharge of its responsibilities; and
(d)
to make regular assessments of the Board's effectiveness, as well as the effectiveness and contribution
of each Board Committee and each individual director, which responsibility has been delegated to the
Corporate Governance Committee in conjunction with the Chairman of the Board.
Meaning of Independence -An audit committee member is independent if he or she has no direct or indirect material relationship with the issuer.
For the purposes of subsection (1), a “material relationship” means a relationship which could, in the view of the issuer's board of directors, be
reasonably expected to interfere with the exercise of a member's independent judgment.
Despite subsection (2), the following individuals are considered to have a material relationship with an issuer:
(a)
an individual who is, or has been within the last three years, an employee or executive officer of the issuer:
(b)
an individual whose immediate family member is, or has been within the last three years, an executive officer of the issuer;
(c)
an individual who:
(i)
is, a partner of a firm that is the issuer’s internal or external auditor;
(ii)
is an employee of that firm; or
(iii)
was within the last three years a partner or employee of that firm and personally worked on the issuer’s audit within that time.
(d)
an individual whose spouse, minor child or stepchild, or child or stepchild who shares a home with the individual:
(i)
is a partner of the firm that is the issuer’s internal or external auditor;
(ii)
is an employee of that firm and participates in its audit, assurance or tax compliance (but not tax planning) practice; or
(iii)
was within the last three years a partner or employee of that firm and personally worked on the issuer’s audit within that time;
(e)
an individual who, or whose immediate family member, is or has been within the last three years, an executive officer of an entity if any
of the issuer's current executive officers serves or served at the same time on the entity's compensation committee; and
(f)
an individual who received, or whose immediate family member who is employed as an executive officer of the issuer received, more
than $75,000 in direct compensation from the issuer during any 12 month period within the last three years.
Despite subsection (3), an individual will not be considered to have a material relationship with the issuer solely because:
(a)
he or she had a relationship identified in subsection (3) if that relationship ended before March 30, 2004; or
(b)
he or she had a relationship identified in subsection (3) by virtue of subsection (8) if that relationship ended before June 30, 2005.
For the purposes of clauses (3)(c) and (3)(d), a partner does not include a fixed income partner whose interest in the firm that is the internal or
external auditor is limited to the receipt of fixed amounts of compensation (including deferred compensation) for prior service with that firm if the
compensation is not contingent in any way on continued service.
For the purposes of clause (3)(f), direct compensation does not include:
(a)
remuneration for acting as a member of the board of directors or of any board committee of the issuer; and
(b)
the receipt of fixed amounts of compensation under a retirement plan (including deferred compensation) for prior service with the issuer
if the compensation is not contingent in any way on continued service.
Despite subsection (3) an individual will not be considered to have a material relationship with the issuer solely because the individual or his or her
immediate family member: (a) has previously acted as an interim chief executive officer of the issuer; or (b) acts, or has previously acted, as a chair
or vice-chair of the board of directors or of any board committee of the issuer on a part-time basis.
For the purpose of section 1.4, an issuer includes a subsidiary entity of the issuer and a parent of the issuer.
B-3