LONG RUN EXPLORATION LTD.
Notice of Annual Meeting of the Shareholders
To: The Shareholders of Long Run Exploration Ltd.
TAKE NOTICE that the Annual Meeting (the "Meeting") of the shareholders of Long Run Exploration Ltd.
(“Long Run”, the "Company" or the “Corporation”) will be held at The Westin Calgary, Mayfair Room, 320
th
th
- 4 Avenue S.W., Calgary, Alberta on the 7 day of May, 2015 at 9:00 a.m. (Calgary time) for the
following purposes:
1.
To receive the comparative financial statements of the Company for the year ended December 31,
2014, together with the auditors' report thereon;
2.
To fix the number of directors to be elected at the Meeting at eight;
3.
To elect the directors of the Company;
4.
To appoint auditors and to authorize the directors to fix their remuneration as such; and
5.
To transact such other business as may properly be brought before the Meeting or any adjournment
thereof.
The specific details of the matters proposed to be put before the Meeting are set forth in the Information
Circular – Proxy Statement which accompanies and forms part of this Notice.
Shareholders of the Company who are unable to attend the Meeting in person are requested to
date and sign the enclosed Instrument of Proxy and to mail it to or deposit it with CST Trust
Company, Suite 600, The Dome Tower, 333 - 7th Avenue S.W., Calgary, Alberta T2P 2Z1 or P.O.
Box 721, Agincourt, Ontario M1S 0A1 or by facsimile to (416) 368-2502 or toll free in Canada and
the United States to 1-866-781-3111. In order to be valid and acted upon at the Meeting, forms of
proxy must be received at the aforesaid address or fax not less than 48 hours (excluding
Saturdays, Sundays and holidays) before the time set for the holding of the Meeting or any
adjournment thereof.
Shareholders are cautioned that the use of the mail to transmit proxies is at each shareholder's
risk.
The Board of Directors of the Company has fixed the record date for the Meeting at the close of business
on March 31, 2015 (the "Record Date"). Shareholders of record as at the Record Date are entitled to
receive notice of the Meeting and to vote those shares included in the list of shareholders entitled to vote
at the Meeting prepared as at the Record Date, unless any such shareholder transfers shares after the
Record Date and the transferee of those shares, having produced properly endorsed certificates
evidencing such shares or having otherwise established that he or she owns such shares, demands, not
later than 10 days before the Meeting, that the transferee's name be included in the list of shareholders
entitled to vote at the Meeting, in which case such transferee shall be entitled to vote such shares at the
Meeting.
th
DATED at Calgary, Alberta, this 7 day of April, 2015.
BY ORDER OF THE BOARD OF DIRECTORS
(signed) "William E. Andrew"
William E. Andrew
Chair and Chief Executive Officer
LONG RUN EXPLORATION LTD.
INFORMATION CIRCULAR – PROXY STATEMENT
April 7, 2015
Long Run Exploration
LONG RUN EXPLORATION LTD.
Information Circular - Proxy Statement
Table of Contents
SOLICITATION OF PROXIES ...................................................................................................................... 2
BENEFICIAL HOLDERS OF SHARES ........................................................................................................ 2
VOTING BY INTERNET ............................................................................................................................... 3
REVOCABILITY OF PROXY ........................................................................................................................ 4
PERSONS MAKING THE SOLICITATION .................................................................................................. 4
EXERCISE OF DISCRETION BY PROXY ................................................................................................... 4
MATTERS TO BE ACTED UPON AT THE MEETING ................................................................................ 4
ELECTION OF DIRECTORS ............................................................................................................................ 4
APPOINTMENT OF AUDITORS ...................................................................................................................... 11
VOTING SHARES AND PRINCIPAL HOLDERS THEREOF .................................................................... 12
STATEMENT OF EXECUTIVE COMPENSATION .................................................................................... 12
COMPENSATION GOVERNANCE .................................................................................................................. 12
HUMAN RESOURCES COMMITTEE MANDATE ........................................................................................... 12
COMPOSITION OF THE HUMAN RESOURCES COMMITTEE.......................................................................... 13
COMPENSATION CONSULTANT OR ADVISOR ............................................................................................ 14
COMPENSATION DISCUSSION AND ANALYSIS............................................................................................... 14
COMPENSATION REVIEW PROCESS ........................................................................................................ 14
EXECUTIVE COMPENSATION PRINCIPLES ................................................................................................ 15
EXECUTIVE COMPENSATION ELEMENTS .................................................................................................. 15
RISK IMPLICATIONS ASSOCIATED WITH COMPENSATION POLICIES AND PRACTICES ................................... 23
PERFORMANCE GRAPH .......................................................................................................................... 24
SUMMARY ............................................................................................................................................. 25
SUMMARY EXECUTIVE COMPENSATION TABLE ............................................................................................ 25
INCENTIVE PLAN AWARDS .......................................................................................................................... 28
PENSION PLAN BENEFITS........................................................................................................................... 30
TERMINATION AND CHANGE OF CONTROL BENEFITS.................................................................................... 30
DIRECTOR COMPENSATION ................................................................................................................... 32
RESTRICTIONS ON PURCHASE OF FINANCIAL INSTRUMENTS ........................................................ 35
CORPORATE GOVERNANCE PRACTICES ............................................................................................ 35
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS .......................................................... 36
INTEREST OF MANAGEMENT AND INFORMED PERSONS IN MATERIAL TRANSACTIONS ........... 36
INTEREST OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE ACTED UPON ............... 36
ADDITIONAL INFORMATION ................................................................................................................... 36
OTHER MATTERS ..................................................................................................................................... 37
APPROVAL ................................................................................................................................................ 37
SCHEDULE A CORPORATE GOVERNANCE DISCLOSURE ................................................................. 38
2015 Information Circular - Proxy Statement
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Long Run Exploration
INFORMATION CIRCULAR – PROXY STATEMENT
For the Annual Meeting
to be held on May 7, 2015
SOLICITATION OF PROXIES
This Information Circular - Proxy Statement (the "Information Circular") is furnished in connection
with the solicitation of proxies by the management of LONG RUN EXPLORATION LTD. ("Long
Run", the "Company" or the “Corporation”) for use at the Annual Meeting of the shareholders of the
th
Company (the "Meeting") to be held on the 7 day of May, 2015 at 9:00 a.m. (Calgary time) at The Westin
th
Calgary, Mayfair Room, 320 - 4 Avenue S.W., Calgary, Alberta, and at any adjournment thereof, for the
purposes set forth in the Notice of Annual Meeting. Instruments of Proxy must be received by CST Trust
Company, Suite 600, The Dome Tower, 333 - 7th Avenue S.W., Calgary, Alberta T2P 2Z1 or P.O. Box
721, Agincourt, Ontario M1S 0A1 or by facsimile to (416) 368-2502 or toll free in Canada and the United
States to 1-866-781-3111 not later than 9:00 a.m. (Calgary time) on May 5, 2015 or not less than 48
hours (excluding Saturdays, Sundays and holidays) before the time for the holding of the Meeting or any
adjournment thereof.
The board of directors of the Company (the "Board") has fixed the record date for the Meeting at the close
of business on March 31, 2015 (the "Record Date"). Shareholders of the Company of record as at the
Record Date are entitled to receive notice of the Meeting and to vote those shares included in the list of
shareholders entitled to vote at the Meeting prepared as at the Record Date, unless any such shareholder
transfers shares after the Record Date and the transferee of those shares, having produced properly
endorsed certificates evidencing such shares or having otherwise established that he or she owns such
shares, demands, not later than 10 days before the Meeting, that the transferee's name be included in the
list of shareholders entitled to vote at the Meeting, in which case such transferee shall be entitled to vote
such shares at the Meeting.
Unless otherwise stated, the information contained in this Information Circular is given as at April 7, 2015.
The instrument appointing a proxy shall be in writing and shall be executed by the shareholder or the
shareholder's attorney authorized in writing or, if the shareholder is a corporation, under its corporate seal
or by an officer or attorney thereof duly authorized.
The persons named in the enclosed form of proxy are directors and/or officers of the Company.
Each shareholder has the right to appoint a proxy holder other than the persons designated, who
need not be a shareholder, to attend and to act for the shareholder at the Meeting. To exercise
such right, the names of the nominees of management should be crossed out and the name of the
shareholder's appointee should be legibly printed in the blank space provided.
BENEFICIAL HOLDERS OF SHARES
The information set forth in this section is provided to beneficial holders of common shares of the
Company ("Common Shares") who do not hold their Common Shares in their own name ("Beneficial
Shareholders"). Beneficial Shareholders should note that only proxies deposited by shareholders whose
names appear on the records of the Company as the registered holders of shares can be recognized and
acted upon at the Meeting. If shares are listed in an account statement provided to a Beneficial
Shareholder by a broker, then in almost all cases those shares will not be registered in the Beneficial
Shareholder's name on the records of the Company. Such shares will more likely be registered under the
name of the Beneficial Shareholder's broker or an agent of that broker. In Canada, the vast majority of
2015 Information Circular - Proxy Statement
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Long Run Exploration
such shares are registered under the name of CDS & Co. (the registration name for CDS Clearing and
Depository Services Inc., which acts as nominees for many Canadian brokerage firms). Shares held by
brokers or their nominees can only be voted (for or against resolutions) upon the instructions of the
Beneficial Shareholder. Without specific instructions, the broker/nominees are prohibited from voting
shares for their clients. The Company does not know for whose benefit the shares registered in the name
of CDS & Co. are held.
Applicable regulatory policy requires intermediaries and brokers to seek voting instructions from
Beneficial Shareholders in advance of shareholders' meetings. Every intermediary and broker has its own
mailing procedures and provides its own return instructions, which should be carefully followed by
Beneficial Shareholders in order to ensure that their 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 provides a scannable voting request form or applies a
special sticker to the proxy forms, mails those forms to the Beneficial Shareholders and asks Beneficial
Shareholders to return the voting request forms or proxy forms to Broadridge. Often Beneficial
Shareholders are alternatively provided with a toll-free telephone number to vote their shares or website
address where shares can be voted. Broadridge then tabulates the results of all instructions received and
provides appropriate instructions respecting the voting of shares to be represented at the Meeting. A
Beneficial Shareholder receiving a voting instruction request or a proxy with a Broadridge sticker
on it cannot use that instruction request or proxy to vote Common Shares directly at the Meeting
as the proxy must be returned as directed by Broadridge well in advance of the Meeting in order
to have the shares voted. Accordingly, it is strongly suggested that Beneficial Shareholders return
their completed instructions or proxies as directed by Broadridge well in advance of the Meeting.
Although a Beneficial Shareholder may not be recognized directly at the Meeting for the purposes of
voting Common Shares registered in the name of his or her broker (or agent of the broker), a Beneficial
Shareholder may attend at the Meeting as proxy holder for the registered shareholder and vote Common
Shares in that capacity. Beneficial Shareholders who wish to attend the Meeting and indirectly vote their
Common Shares as proxy holder for the registered shareholder should enter their own names in the
blank space on the form of proxy provided to them and return the same to their broker (or the broker's
agent) in accordance with the instructions provided by such broker (or agent), well in advance of the
Meeting.
CST Trust Company will, on behalf of the Company, provide the Notice of Meeting, this Information
Circular, Instruments of Proxy and any other proxy-related materials directly to "non-objecting beneficial
owners" for the purposes of National Instrument 54-101 – Communication with Beneficial Owners of
Securities of a Reporting Issuer.
VOTING BY INTERNET
Shareholders may submit their voting instructions through the internet at www.cstvotemyproxy.com.
Shareholders should have the form of proxy in hand when they access the web site. Shareholders will be
prompted to enter their 13 digit Control Number, which is located on the proxy form. If Shareholders vote
by internet, their vote must be received not later than 9:00 a.m. (Calgary time) on May 5, 2015 or 48
hours prior to the time of any adjournment of the Meeting (excluding Saturdays, Sundays and holidays).
The website may be used to appoint a proxy holder to attend and vote on a shareholder's behalf at
the Meeting and to convey a shareholder's voting instructions on the internet. Please note that if a
shareholder appoints a proxy holder and submits their voting instructions and subsequently
wishes to change their appointment, a shareholder may resubmit their proxy and/or voting
direction, prior to the deadline noted above. When resubmitting a proxy, the most recently
submitted proxy will be recognized as the only valid one, and all previous proxies submitted will
be disregarded and considered as revoked, provided that the last proxy is submitted by the
deadline noted above.
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Long Run Exploration
REVOCABILITY OF PROXY
A shareholder who has submitted a proxy may revoke it at any time prior to the exercise thereof. If a
person who has given a proxy attends personally at the Meeting at which such proxy is to be voted, such
person may revoke the proxy and vote in person. In addition to revocation in any other manner permitted
by law, a proxy may be revoked by an instrument executed by the shareholder or the shareholder's
attorney authorized in writing and deposited either at the registered office of the Company at any time up
to and including the last business day preceding the day of the Meeting, or any adjournment thereof, at
which the proxy is to be used, or with the Chairman of the Meeting on the day of the Meeting, or any
adjournment thereof, and upon either of such deposits, the proxy is revoked.
PERSONS MAKING THE SOLICITATION
The solicitation is made on behalf of the management of the Company. The costs incurred in the
preparation and mailing of the Instrument of Proxy, Notice of Annual Meeting and this Information Circular
will be borne by the Company. In addition to solicitation by mail, proxies may be solicited by personal
interviews, telephone or other means of communication and by directors, officers and employees of the
Company, who will not be specifically remunerated therefor.
EXERCISE OF DISCRETION BY PROXY
The Common Shares represented by proxy in favour of management nominees shall be voted on any
ballot at the Meeting and, where the shareholder specifies a choice with respect to any matter to be acted
upon, the Common Shares shall be voted on any ballot in accordance with the specification so made.
In the absence of such specification, the Common Shares will be voted in favour of the matters to
be acted upon. The persons appointed under the Instrument of Proxy furnished by the Company
are conferred with discretionary authority with respect to amendments or variations of those
matters specified in the Instrument of Proxy and Notice of Annual Meeting. At the time of printing
this Information Circular, management of the Company knows of no such amendment, variation or
other matter.
MATTERS TO BE ACTED UPON AT THE MEETING
Election of Directors
At the Meeting, shareholders will be asked to fix the number of directors to be elected at the Meeting at
eight members and to elect eight directors to hold office until the next annual meeting or until their
successors are elected or appointed. There are currently nine directors of the Company, each of whom
retires from office at the Meeting.
Unless otherwise directed, it is the intention of management to vote proxies in the accompanying form in
favour of an ordinary resolution fixing the number of directors to be elected at the Meeting at eight
members and in favour of the election as directors of the eight nominees hereinafter set forth:
William E. Andrew
Edward Chwyl
Dale A. Miller
William A. Stevenson
2015 Information Circular - Proxy Statement
John A. Brussa
Michael M. Graham
Bradley R. Munro
Stephen M. Yuzpe
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Long Run Exploration
Advance Notice By-Law
The Company's advance notice by-law, regarding advance notice of nominations of directors of the
Company (the "Advance Notice By-law"), which was approved at the annual and special meeting of
shareholders held on April 16, 2014 (the "2014 Meeting"), will apply to nominations of directors at the
Meeting. The purpose of the Advance Notice By-law is to provide shareholders, the Board and
management of the Corporation with a clear framework for director nominations to help ensure orderly
business at shareholder meetings.
Among other things, the Advance Notice By-law requires that a shareholder wishing to nominate a
candidate for election as a director of the Company at an annual meeting of shareholders must provide
notice to the Corporate Secretary of the Company not less than 30 days and not more than 65 days prior
to the date of the annual meeting; provided, however, that in the event that the annual meeting is to be
held on a date that is less than 50 days after the date on which the first public announcement of the date
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of the annual meeting was made, notice may be made not later than the close of business on the 10 day
following such public announcement. In the case of a special meeting of shareholders (which is not also
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an annual meeting), notice to the Company must be made not later than the close of business on the 15
day following the day on which the first public announcement of the date of the special meeting was
made.
The Advance Notice By-law also specifies the information and accompanying documentation that a
nominating shareholder must provide with respect to the nominating shareholder and the nominee for the
notice to be effective. No person nominated by a Shareholder will be eligible for election as a director of
the Corporation unless nominated in accordance with the provisions of the Advance Notice By-law. The
Board may, in its sole discretion, waive any requirement of the Advance Notice By-law.
A copy of the Advance Notice By-law is available on the Corporation's SEDAR profile at www.sedar.com.
Majority Voting Policy
The Board has adopted a majority voting policy, which provides that in respect of shareholder meetings
involving the uncontested election of directors, any nominee director who receives a greater number of
votes "withheld" from his or her election than votes "for" his or her election (a "majority withhold vote")
shall tender his or her resignation for consideration by the Board to the Chair of the Corporate
Governance Committee promptly following certification of the shareholder vote. If the Chair of the
Corporate Governance Committee receives a majority withhold vote, then he or she shall tender his or
her resignation to the Chair of the Board. The Corporate Governance Committee will promptly consider
the tendered resignation and recommend to the Board whether to accept or reject it. In determining
whether to recommend acceptance or rejection of the tendered resignation, the Corporate Governance
Committee will consider all factors it deems relevant including, without limitation: (a) the reasons, if
known, why shareholders "withheld" or were requested to "withhold" votes from the director; (b) the
director's length of service and qualifications; (c) the director's share ownership; (d) the director's
contributions to the Company; (e) the current mix of skills and attributes of the directors on the Board; (f)
the impact with respect to covenants in agreements or plans; and (g) legal requirements, policies or
guidelines (regulatory, securities or corporate laws, or stock exchange rules) for director numbers and
qualifications.
The Board will then consider the Corporate Governance Committee's recommendation not later than 90
days following the date of the shareholders' meeting at which the election occurred. In deciding whether
to accept or reject the tendered resignation, the Board will consider the factors considered by the
Corporate Governance Committee and any additional information and factors the Board believes to be
relevant. Promptly following the Board's decision, the Company will disclose that decision, including an
explanation of the process by which the decision was reached and, if applicable, the reasons for rejecting
the tendered resignation, in a press release. If the Board decides to accept the director's resignation, the
2015 Information Circular - Proxy Statement
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Long Run Exploration
Corporate Governance Committee will recommend to the Board whether to fill the resulting vacancy or to
continue with the reduced size of the Board.
The majority voting policy provides that any director who tenders his or her resignation pursuant to the
majority voting policy will not participate in the Corporate Governance Committee recommendation or the
Board consideration whether to accept or reject the tendered resignation. In the event that any director
who received a majority withhold vote does not tender his or her resignation in accordance with this
Policy, he or she shall not be re-nominated by the Board and shall not be entitled to any benefits
(financial or otherwise) of a director or past director of the Company.
The Board and the Corporate Governance Committee may adopt such procedures as it sees fit to assist
in its determinations under the majority voting policy.
Director Nominees
The names and residence of the persons nominated for election as directors, the number of voting
securities of the Company beneficially owned or controlled or directed, directly or indirectly, the number of
Options and Restricted Awards held, the offices held by each in the Company, the period served as
director and the principal occupation and background of each are set forth below. The information as to
the Common Shares, Options and Restricted Awards beneficially owned or controlled or directed, directly
or indirectly, is based upon information furnished to the Company by the nominees.
William E. Andrew
Calgary, Alberta, Canada
Chair and Chief Executive
Officer
Age
Director Since
Common Shares
Owned, Controlled
or Directed
62
October 23, 2012
615,079
Options
Restricted
Awards
501,000
165,000
Mr. Andrew is a professional engineer with over 35 years of experience in oil
and gas exploration and development focused in western Canada. After
starting his career with Shell Canada, Mr. Andrew worked for a number of
large multi-national oil companies gaining experience in drilling, completions,
production, evaluations and reservoir engineering. His management
experience includes increasing levels of responsibility in Canadian public
and private exploration companies. Prior to joining Guide Exploration Ltd.
(“Guide”) in mid-2011, he was Chief Executive Officer of a large Canadian
public oil and gas exploration company. He is active in the community as a
director of Ronald McDonald House of Southern Alberta, a director of the
Fathers of Confederation Buildings Trust, and a director of the Wind Energy
Institute of Canada. Mr. Andrew served as Chancellor of the University of
Prince Edward Island from 2005 to 2014.
Mr. Andrew has a Bachelor of Engineering degree from the Technical
University of Nova Scotia with a major in Mining.
2015 Information Circular - Proxy Statement
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Long Run Exploration
John A. Brussa
Calgary, Alberta, Canada
Member of:
‒ Reserves Committee
‒ Human Resources
(1)
Committee
Age
Director Since
Common Shares
Owned, Controlled
or Directed
58
December 13, 2007
989,841
Options
Restricted
Awards
50,000
45,000
Mr. Brussa has been a partner at the law firm of Burnet, Duckworth & Palmer
LLP since 1987 and is presently Vice-Chairman and head of its tax
department. Mr. Brussa practices tax law and is a former Governor of the
Canadian Tax Foundation. Mr. Brussa is the director of a number of private
and public companies in businesses which include exploration and
production, petroleum technology, manufacturing and natural gas marketing.
Mr. Brussa is a member of the Law Society of Alberta and holds a Bachelor
of Laws degree and a Bachelor of Arts degree from the University of
Windsor.
Edward Chwyl
Victoria, British Columbia,
Canada
Member of:
‒ Health, Safety &
Environment
(1)
Committee
‒ Reserves Committee
Age
Director Since
Common Shares
Owned, Controlled
or Directed
71
December 13, 2007
577,032
Options
Restricted
Awards
75,000
45,000
Mr. Chwyl is an independent businessman with over 35 years of experience
in the oil and natural gas business. He is the lead independent director of
Baytex Energy Corp. (previously Baytex Energy Ltd.) and has held such
position since February 17, 2009. Prior thereto, he was Chairman of the
Board of Directors of Baytex Energy Ltd. (Baytex Energy Trust) since 2003.
Mr. Chwyl is also a director of Kaisen Energy Corp., and U.S. Oil Sands Inc.
Mr. Chwyl holds a Bachelor of Science degree in Chemical Engineering and
a Master of Science degree in Petroleum Engineering.
2015 Information Circular - Proxy Statement
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Long Run Exploration
Michael M. Graham
Calgary, Alberta, Canada
Lead Director
Member of:
‒ Corporate Governance
Committee
‒ Human Resources
Committee
(1)
‒ Reserves Committee
Age
Director Since
Common Shares
Owned, Controlled
or Directed
55
October 23, 2012
230,000
Options
Restricted
Awards
125,000
45,000
Mr. Graham is an independent businessman with over 30 years of
experience in the oil and natural gas business. Mr. Graham served as
Executive Vice President & President Canadian Division with Encana
Corporation (“Encana”) until February 2012. Mr. Graham has held various
executive and management positions with Alberta Energy Company, Amber
Energy Inc. and Encana. He was a former member of the Board of
Governors for the Business Council of British Columbia and the Canadian
Association of Petroleum Producers. Mr. Graham is an independent director
of Strategic Oil and Gas Ltd.
Mr. Graham is a graduate of the University of Wyoming with a Bachelor of
Science degree in Petroleum Engineering and is a member of APEGA and
the Society of Petroleum Engineers.
Dale A. Miller
Calgary, Alberta, Canada
President & Chief
Operating Officer
Age
Director Since
Common Shares
Owned, Controlled
or Directed
54
October 23, 2012
231,876
Options
Restricted
Awards
501,000
150,000
Mr. Miller is a professional engineer with over 30 years of oil and natural gas
industry experience. Prior to joining Guide in mid-2011 he was Vice
President and Chief Operating Officer of an intermediate oil and gas
company, Pace Oil and Gas Ltd., from July 2010 to August 2011. Mr. Miller
held various executive and management positions with Midnight Oil
Exploration Ltd. from November 2009 to July 2010, Gibraltar Exploration Ltd.
from September 2003 to July 2009, as well as a large Canadian public oil
and gas exploration company from 1993 to 2003.
Mr. Miller is a graduate of the University of Tulsa with a Bachelor of Science
degree in Petroleum Engineering and is a Registered Professional Engineer
in Alberta.
2015 Information Circular - Proxy Statement
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Long Run Exploration
Bradley R. Munro
Saskatoon,
Saskatchewan, Canada
Member of:
‒ Audit Committee
‒ Corporate Governance
(1)
Committee
Age
Director Since
Common Shares
Owned, Controlled
or Directed
55
October 23, 2012
40,212
Options
Restricted
Awards
75,000
45,000
Mr. Munro is the President and Chief Executive Officer of Bittercreek Capital
Corporation, a private investment and consulting firm. Through Bittercreek
Capital Corporation, Mr. Munro was a contractor to GrowthWorks Capital
WV Ltd. and its affiliates in the role of Vice President, Investments from May
2006 to August 2009. Prior thereto, Mr. Munro was an employee of
GrowthWorks Capital Ltd. and its affiliates since September 1991. Mr. Munro
presently serves as a director of CERF Inc. (CERF Inc. combined with
Winalta Inc. in 2014) and Secure Energy Services Inc. and has extensive
experience in corporate finance and investment in the oil and gas and other
industries.
Mr. Munro holds a Bachelor of Commerce degree from the University of
Saskatchewan.
William A. Stevenson
Canmore, Alberta,
Canada
Member of:
(1)
‒ Audit Committee
‒ Corporate Governance
Committee
‒ Human Resources
Committee
Age
Director Since
Common Shares
Owned, Controlled
or Directed
59
May 21, 2014
16,000
Options
Restricted
Awards
Nil
45,000
Mr. Stevenson is a professional accountant with over 35 years of experience
at several large and intermediate North American oil and gas companies,
including Mobil Oil Company, Marathon Petroleum Corporation, and Encana
Corporation. Mr. Stevenson worked for Encana and its predecessor
company for the last 20 years in various management positions. Mr.
Stevenson was Executive Vice President and Chief Accounting Officer of
Encana from December 1, 2009 until retiring in November 2013. From 2004
to 2009, he was Vice President and Controller of Encana.
Mr. Stevenson is a Certified Management Accountant and a member of the
Society of Management Accountants of Alberta.
2015 Information Circular - Proxy Statement
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Long Run Exploration
Stephen M. Yuzpe
Toronto, Ontario, Canada
Member of:
‒ Health, Safety &
Environment
Committee
Age
Director Since
49
January 29, 2014
Common Shares
Owned, Controlled
or Directed
Nil
(2)
Options
Restricted
Awards
Nil
45,000
Mr. Yuzpe was named President and Chief Executive Officer of Sprott
Resource Corp. on October 21, 2013 and was appointed as a director of the
company on November 12, 2013. Mr. Yuzpe has over 15 years of executive
and financial management experience with public and private corporations.
Over his career, Mr. Yuzpe has developed specific expertise in financings,
restructurings, financial and internal reporting, strategic development and
business planning, corporate governance, investor relations, regulatory
compliance and treasury management. Prior to being appointed President
and Chief Executive Officer, Mr. Yuzpe served as the Chief Financial Officer
of Sprott Resource Corp. He is currently the chairman of One Earth Farms
Corp. Mr. Yuzpe is involved with Save the Children Canada, a charity
focused on youth at risk, and was previously the Treasurer, member of the
Executive Committee and Board of Directors of Street Kids International for
more than 10 years. Mr. Yuzpe is also a director of the York School, a notfor-profit independent day school.
Mr. Yuzpe holds a Bachelor of Science, Engineering (Mechanical) degree
from Queen’s University along with the Professional Engineering designation
(P.Eng.) and a Masters in Business Administration from the Richard Ivey
School of Business in London, Ontario. Mr. Yuzpe also holds a Chartered
Financial Analyst (CFA) designation and the ICD.D designation from the
Institute of Corporate Directors.
Notes:
(1)
(2)
(3)
(4)
(5)
Denotes chair of the committee.
Mr. Yuzpe is the President and Chief Executive Officer of Sprott Resource Corp., which, through its subsidiary
Sprott Resource Partnership, holds 23,000,000 Common Shares. See “Information Concerning the Company –
Voting Shares and Principal Holders Thereof”.
Ms. Newson, a current director of the Company whose term expires at the Meeting, has advised the Company
that she will not be standing for re-election as a director of the Company at the Meeting.
The Board intends to revisit the membership of the committees of the Board following the Meeting having regard
to, among other considerations, the skills and expertise of each director elected as a director of the Company at
the Meeting.
The director nominees do not own any of the Company's outstanding convertible unsecured subordinated
debentures.
Cease Trade Orders, Bankruptcies, Penalties or Sanctions
Other than as disclosed below, no proposed director is as at the date hereof, or has been:
(a) within 10 years of the date hereof, a director or chief executive officer or chief financial officer of
any company, including the Company, that:
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(i) while that person was acting in that capacity, was the subject of a cease trade or similar
order or an order that denied the relevant company access to any exemption under
securities legislation, for a period of more than 30 consecutive days (an "order");
(ii) was subject to an event that resulted in such company, after the director or executive
officer ceased to be a director, chief executive officer or chief financial officer of the
company, being the subject of an order which resulted from an event that occurred while
that person was acting in the capacity as a director, chief executive officer or chief
financial officer; or
(b) within 10 years of the date hereof, a director or executive officer of any company, including the
Company, that, while that person was acting in that capacity, or within a year of that person
ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating
to bankruptcy or insolvency or became subject to or instituted any proceedings, arrangement or
compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold its
assets; or
(c) has, within the 10 years before the date hereof, become bankrupt, made a proposal under any
legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceeding,
arrangement or compromise with creditors or had a receiver, receiver manager or trustee
appointed to hold the assets of the proposed director.
In addition, no proposed director has been subject to: (i) any penalties or sanctions imposed by a court
relating to securities legislation or by a securities regulatory authority or has entered into a settlement
agreement with a securities regulatory authority, or (ii) any other penalties or sanctions imposed by a
court or regulatory body that would likely be considered important to a reasonable security holder in
deciding whether to vote for a proposed director.
Mr. Munro presently serves as a director of CERF Inc. (CERF Inc. combined with Winalta, Inc. during
2014). Winalta Inc. and each of its subsidiaries, (collectively "Winalta") obtained creditor protection under
the Companies' Creditors Arrangement Act (Canada) (the "CCAA") pursuant to an order granted on April
26, 2010 by the Court of Queen's Bench of Alberta (the "Court"). Deloitte & Touche Inc. was appointed as
Winalta's monitor. The CCAA filing follows the receipt on March 31, 2010 by Winalta and its subsidiaries
of demands for payment and Notices of Intention to Enforce Security from Winalta's principal lender,
HSBC Bank of Canada. On October 22, 2010, Winalta received Court and creditor approval of a plan of
arrangement (the "Plan") pursuant to the CCAA under which it amalgamated with certain of its
subsidiaries and, effective October 29, 2010, emerged from CCAA protection to begin focused operations
on its oilfield services business. The board of directors maintained its usual role during the period while
Winalta was under CCAA protection and, together with management, was primarily responsible for
formulating the Plan for restructuring Winalta's affairs.
Mr. Brussa was formerly a director of Calmena Energy Services Inc. (a public oilfield service company)
("Calmena") which was placed in receivership on January 20, 2015. Mr. Brussa resigned as a director of
Calmena on June 30, 2014.
Appointment of Auditors
Unless otherwise directed, it is management's intention to vote the proxies in favour of an ordinary
resolution to re-appoint the firm of Ernst & Young LLP, Chartered Accountants, to serve as auditors of the
Company until the next annual meeting of the shareholders and to authorize the directors to fix their
remuneration as such. Ernst & Young LLP has been the Company’s auditors since October 23, 2012.
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VOTING SHARES AND PRINCIPAL HOLDERS THEREOF
As at April 7, 2015, there were 193,498,465 Common Shares issued and outstanding, each such share
carrying the right to one vote on a ballot at the Meeting. A quorum for the transaction of business at the
Meeting will be present if there are not less than two persons present at the Meeting holding or
representing by proxy not less than 5% of the shares entitled to be voted at the Meeting. The Board has
fixed the Record Date for the Meeting at the close of business on March 31, 2015.
To the knowledge of the directors and executive officers of the Company, as at April 7, 2015, no person
or company beneficially owned or controlled or directed, directly or indirectly, voting securities of the
Company carrying more than 10% of the voting rights attached to any class of voting securities of the
Company other than as set forth below:
Name and Address
Number of Voting Shares
Percentage of Class
(%)
Sprott Resource Partnership
Toronto, Ontario
23,000,000 Common Shares
11.9%
Franklin Resources, Inc.
San Mateo, California
35,044,100 Common Shares
18.1%
Note:
(1)
Based on information provided by, or in public filings made by, the above entities and as at the date
of the last public filing of information provided by such entities. Franklin Resources, Inc. has
disclaimed any beneficial ownership of the Common Shares which are held for funds and managed
accounts (the "Accounts") and has indicated in such public filings that each individual investment
manager maintains discretionary authority to exercise investment control or direction over the shares
held for the Accounts as beneficial owners.
STATEMENT OF EXECUTIVE COMPENSATION
Compensation Governance
Human Resources Committee Mandate
The mandate of the Human Resources Committee provides that the Human Resources Committee is
responsible for formulating recommendations to the Board in respect of compensation matters for
directors, officers and employees of the Company. Without limiting the generality of the foregoing, the
Human Resources Committee has the following duties:
(a) to review the compensation philosophy and remuneration policy for employees of the Company
and to recommend to the Board changes to improve the Company’s ability to recruit, retain and
motivate employees;
(b) to review and recommend to the Board the retainer and fees to be paid to members of the Board;
(c) to review and approve corporate goals and objectives relevant to the compensation of the Chief
Executive Officer ("CEO"), evaluate the CEO's performance in light of those corporate goals and
objectives, and determine (or make recommendations to the Board with respect to) the CEO's
compensation level based on such evaluation;
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(d) to review management's recommendations for proposed non-CEO officer compensation by way
of stock options, share purchase plans and other incentive compensation plans and equity based
plans or otherwise and determine if such recommendations are acceptable;
(e) to administer the stock option plan and other incentive plans of the Company approved by the
Board in accordance with its terms including the recommending to the Board (and if delegated
authority thereunder, approve) the grant of stock options and other incentive awards in
accordance with the terms thereof;
(f) to determine (or make recommendations to the Board with respect to) bonuses to be paid to
officers and employees of the Company and to establish targets or criteria for the payment of
such bonuses, if appropriate;
(g) review the disclosure as to compensation matters included in the information circular and proxy
statement of the Company as mandated by applicable securities laws including, without limitation,
the Compensation Discussion and Analysis included therein, prior to the Company publicly
disclosing the same; and
(h) considering the implications and the risks associated with the Company’s compensation policies
and practices.
The Human Resources Committee is required to be comprised of at least three directors of the Company
or such greater number as the Board may determine from time to time all of whom are required to be
"independent" (as such term is defined for purposes of National Policy 58-201 – Corporate Governance
Guidelines ("NP 58-201")). In addition, the Human Resources Committee is required to meet at least once
per year and at such other times as the Chair of the Human Resources Committee may determine.
Composition of the Human Resources Committee
The Human Resources Committee is comprised of John A. Brussa (Chair), Michael M. Graham and
William A. Stevenson, all of whom are independent directors for the purposes of NP 58-201.
Mr. Brussa has been and continues to act as a director of numerous public and private companies and
sits on the compensation committee of several of the public companies on which he serves. Mr. Brussa
has, as a result, been involved in compensation issues for companies similar in size, as well as larger and
smaller than that of Long Run.
Mr. Graham has garnered experience and expertise in determining the suitability of appropriate
compensation policies and practices through his previous position as the Executive Vice President &
President, Canadian Division of Encana where he was involved with, among other matters, the
recommendation and determination of the compensation program for numerous employees.
Mr. Stevenson has over 35 years of experience in the oil and gas industry. Mr. Stevenson’s direct
experience with compensation matters includes serving as the Executive Vice-President and Chief
Accounting Officer of Encana where he was involved with, among other things, the recommendation and
determination of the compensation program for employees across the organization.
The skills and experience possessed by members of the Human Resources Committee summarized
above assist and enable them to make decisions on the suitability of the Company’s compensation
policies and practices.
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Long Run Exploration
Compensation Consultant or Advisor
During 2014, the Company participated in the annual energy compensation survey conducted by Mercer
(Canada) Limited (“Mercer”), an independent compensation consulting firm. In addition, the Company
retained Mercer to provide an analysis of the Company’s executive and director compensation and to
finalize the long-term incentive program.
In 2013, the Company participated in Mercer's annual energy compensation survey. As well, Mercer
provided an analysis of the Company’s executive compensation and identified long-term incentive
alternatives, resulting in the formulation of the Restricted and Performance Award Incentive Plan.
The following sets forth the fees billed by Mercer in each of the last two completed financial years:
Executive compensation-related fees
(2)
All other fees
(1)
2014
$50,000
$nil
2013
$84,000
$nil
Notes:
(1)
(2)
(3)
Executive compensation-related fees are fees for services related to determining compensation for any of the
Corporation's directors and executive officers and in 2013 and 2014 included fees paid for services provided by
Mercer related to assistance in establishing the Restricted and Performance Incentive Plan Award Plan of the
Corporation and participation in the annual energy compensation survey.
Fees billed for all services other than executive compensation-related fees.
Mercer was first retained by the Company on August 20, 2012.
Compensation Discussion and Analysis
Compensation Review Process
When determining executive compensation, including the assessment of the competiveness of the
Company's compensation program, management and the Human Resources Committee review the
compensation practices of various companies within our peer group. These companies compete with
Long Run for executive talent, operate in a similar business environment, and may be of similar size,
scope and complexity. The Company's peer group is generally comprised of oil and gas exploration and
production companies competing for executive and employee talent whose production is in the range of
0.5 times to 2.0 times Long Run's 2014 average production of approximately 31,000 BOE/d. Given the
nature of the oil and gas industry, the companies reviewed for comparison purposes may change from
time to time as companies adopt new business models or are acquired, and as new companies become
publicly traded.
The Company's peer group for the year ended December 31, 2014 was comprised of: Advantage Oil &
Gas Ltd., Bellatrix Exploration Ltd., Birchcliff Energy Ltd., Bonavista Energy Corp., Crew Energy Inc.,
Legacy Oil Plus Gas Inc., Lightstream Resources Ltd., Nuvista Energy Ltd., Painted Pony Petroleum Ltd.,
Paramount Resources Ltd., Perpetual Energy Inc., Peyto Exploration & Development Corp., Surge
Energy Inc., Trilogy Energy Corp., Twin Butte Energy Ltd. and Whitecap Resources Inc.
In arriving at recommendations for executive compensation, including the assessment of the
competitiveness of the Company's compensation practices, compensation information reviewed includes
that available in the public domain, through private conversation and from widely available compensation
surveys. Information in respect to certain positions is also obtained through and during the competitive
hiring process for new executives. External compensation consultants may also be used.
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Executive Compensation Principles
The Company’s compensation program supports our commitment to delivering strong performance for
shareholders. Compensation policies are designed to attract, recruit and retain quality and experienced
people, and to motivate their performance in order to achieve the Company’s strategic objectives.
Compensation policies are designed to align the interests of executive officers and other employees with
the long term interests of the Company’s shareholders and to enhance share value. The Human
Resources Committee also recognizes that the executive compensation program must be sufficiently
flexible in order to adapt to unexpected developments in the oil and gas industry and the impact of
internal and market-related occurrences from time to time.
The Long Run executive team is comprised of our Vice Presidents (including Senior Vice Presidents), the
President and Chief Operating Officer and the Chair and Chief Executive Officer. The current components
of our executive compensation program include:

base salary;


short-term incentive compensation comprised of cash bonuses; and
long-term incentive compensation comprised of share options, restricted and performance
awards and the supplementary retention payment program.
Together, these components support our long-term strategy and are designed to address the following
key objectives of our compensation program:

align executive compensation with shareholder interests;

attract and retain highly qualified management;

focus performance by linking incentive compensation to the achievement of business objectives
and financial results; and

encourage retention of key executives for leadership succession.
Executive Compensation Elements
Base Salaries
The base salary component is intended to provide a fixed level of competitive pay that reflects each
executive officer's primary duties and responsibilities. It also provides a foundation upon which
performance-based incentive compensation elements are assessed and established. In setting base
compensation levels for executive officers, consideration is given to objective factors including level of
responsibility, experience and expertise, as well as subjective factors such as leadership.
Base salaries for 2014 for the employees and Vice Presidents of Long Run were
December 2013. The Human Resources Committee had considered recommendations
and Chief Executive Officer and the President and Chief Operating Officer, as well
regarding the Company’s peer group, as set forth in the 2013 Canada Mercer Total
Survey for the Energy Sector (the “Mercer Report”).
established in
from the Chair
as information
Compensation
The Chair and Chief Executive Officer recommended a base salary for the President and Chief Operating
Officer to the Human Resources Committee. In addition to information provided in the Mercer Report, the
Human Resources Committee consulted with other independent directors in respect of compensation for
the President and Chief Operating Officer, and for the Chair and Chief Executive Officer. Following its
review, the Human Resources Committee made a recommendation to the Board.
Base salaries for 2014 for executive officers were, in the view of the Board, established between the 50
th
and 75 percentile of the Company’s peer group.
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Short Term Incentive Plan
Commencing in 2013, the Human Resources Committee approved annual metrics and thresholds to be
used in the determination of short term incentive plan cash bonuses to be paid to employees, including
Vice Presidents of the Company. The bonuses are dependent upon the performance of both the
individual and the Company. The award of cash bonuses has not traditionally been targeted at
maintaining the Company’s cash compensation at any specific level relative to its peer group.
Potential on-target bonuses for Vice Presidents generally range from 50% to 75% of the individual’s
annual salary. The range may be pro-rated up or down depending upon the performance of the Company
against pre-determined performance measures. If the Company exceeds or falls below targeted
performance measures, the ranges will generally increase or decrease accordingly. The placement of the
individual within the bonus range is dependent upon an assessment of their performance by the Chair
and Chief Executive Officer and the President and Chief Operating Officer. The bonus paid to an
individual executive officer may exceed the general ranges where considered appropriate.
Company threshold, on-target and exceed-target performance metrics are established each year and
include both financial and non-financial items. For 2014, financial targets included relative shareholder
return, sustainability, finding and development costs, operating and general and administrative cost
targets. Non-financial measures included health and safety incidents and regulatory compliance as well
as a discretionary component.
For 2014, short term incentive plan bonuses totaling $3.1 million were paid to non-officer employees and
an aggregate $1.0 million was awarded to executive officers. The total payments to the Vice Presidents
equated to approximately 49% of the aggregate annualized base salaries of the Vice Presidents and were
paid in 2015.
Short term incentive plan bonuses paid to the Chair and Chief Executive Officer and the President and
Chief Operating Officer are not based on a specific formula, but are at the discretion of the Board or the
recommendation of the Human Resources Committee. Factors included in the determination of any
discretionary cash bonuses paid to the Chair and Chief Executive Officer and the President and Chief
Operating Officer may include execution of the Company’s business strategy, production volumes,
netbacks, capital efficiencies and health, safety and environment matters.
For 2014, the Chair and Chief Executive Officer was awarded a short term incentive plan cash bonus of
$200,000 and the President & Chief Operating Officer was awarded a short term incentive plan cash
bonus of $190,000. Both amounts were paid in March 2015.
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For 2014, the metrics and thresholds used in the determination of short term incentive plan cash bonuses
paid to employees and Vice Presidents of the Company are outlined in the table below. The Company's
actual performance achieved a score of 67%.
Metric
Threshold
Performance (50%)
Target
Performance (100%)
Exceed Target
Performance (150%)
Relative Shareholder Return
P25
P50
P75
Sustainability (1)
105%
100%
95%
FD&A (Proved plus Probable) (2)
$25.00 /BOE
$23.21 /BOE
$20.00 /BOE
General and Administrative Costs
$3.70 /BOE
$3.35 /BOE
$3.00 /BOE
Operating Costs
$14.20 /BOE
$13.20 /BOE
$12.20 /BOE
HS&E Incidents (3)
1.5 incidents /
MBOE/D / year
1.25 incidents / MBOE/D / year
<1.0 incidents / MBOE/D /
year
ERCB Compliance
10% Below Average
Industry Average
10% Above Average
Board Discretion
Notes:
(1)
(2)
(3)
(4)
Sustainability: Net capital expenditures (excluding acquisition costs related to the Deep Basin area) plus
dividends, divided by funds flow from operations. Funds flow from operations is calculated as cash flow from
operating activities before changes in non-cash working capital and abandonment expenditures.
Finding, Development and Acquisition Costs: Total exploration, development and acquisition (net of disposition)
costs plus the total change in future development costs divided by the total change in reserves, including reserve
revisions.
HS&E Incidents: Includes lost time injuries, restricted work, first aid, motor vehicle accidents.
The targets for 2014 were adjusted to give effect to the acquisitions completed during the year in the Deep Basin
area.
Short Term Discretionary Cash Incentive Plans
In addition to base salaries, the Company may periodically make discretionary cash incentive plan
payments to employees, including executive officers. Discretionary cash incentive plans would be
recommended to the Board for approval by the Human Resources Committee. No short term
discretionary cash incentive payments were made in 2014.
Long Term Incentives - Share Options
Options to purchase Common Shares ("Options") have been granted under the Company’s share option
plan ("Option Plan") in the past to directors, officers, employees of, and consultants to, the Company
(“Optionees”) and are intended to align the individual and shareholder interests by attempting to create a
direct link between compensation and shareholder return. Participation in the Option Plan rewards overall
corporate performance, as measured through the price of the Common Shares. In addition, the Option
Plan enables executive officers to develop and maintain a significant ownership position in the Company.
Options granted under the Option Plan have historically been awarded by the Board upon the
commencement of an individual's employment with the Company based on the level of responsibility
within the Company. Additional grants following the commencement of employment have also been made
periodically in the past to ensure that the number of Options granted to any particular individual was
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commensurate with their level of ongoing responsibility within the Company. In considering additional
grants, the Company evaluated the number of Options an individual had been granted, the exercise price
and value of the Options and the term remaining on those Options. The Chair and Chief Executive Officer
of the Company together with at least one member of the Human Resources Committee have the
authority to determine and make grants of Options to non-executive employees, consultants and other
service providers provided such grants to any one individual do not exceed 125,000 Options in any one
calendar year.
In 2014, the Company adopted the Restricted and Performance Award Incentive Plan. As a result, the
Company has not granted any Options since December 31, 2013. Options currently outstanding will
expire between December 1, 2017 and December 31, 2018.
The maximum number of Common Shares issuable on exercise of Options outstanding at any time shall
be limited, in the aggregate, to 10% of the issued and outstanding Common Shares. Any increase in the
issued and outstanding Common Shares (whether as a result of exercise of Options, or otherwise) will
result in an increase in the number of Common Shares that may be issued on exercise of Options
outstanding at any time. Options that are cancelled, terminated or expire prior to exercise of all or a
portion thereof shall result in the Common Shares that were reserved for issuance thereunder being
available for a subsequent grant of Options pursuant to the Option Plan.
The number of Common Shares issuable pursuant to Options granted under the Option Plan or any other
security based compensation arrangements of the Company to insiders at any time may not exceed 10%
of the outstanding Common Shares, and issued to insiders within any one year period may not exceed
10% of the outstanding Common Shares. In addition, the number of Common Shares issuable at any
time pursuant to Options to directors that are not officers or employees of the Company may not in the
aggregate exceed 2% of the outstanding Common Shares. Options granted under the Option Plan are
not assignable.
Options have a term not to exceed five years and, subject to the terms of the Option Plan, vest in such
manner as determined by the Board or a committee of the Board appointed from time-to-time to
administer the Option Plan (the Board or, if appointed, such committee is referred to as the "committee").
In the absence of any determination to the contrary, Options will vest and be exercisable as to one-third
on each of the first, second and third anniversaries of the date of grant, subject to the acceleration of
vesting at the discretion of the committee. If an Option is set to expire in seven business days following
the end of a "Black Out Period" (as such term is defined in the Option Plan and referred to herein as an
“Option Plan Black-Out Period”) and the Optionee is subject to an Option Plan Black-Out Period, the
expiry date of the Option shall be extended for seven business days following the Option Plan Black-Out
Period.
The exercise price of any Options granted will be determined by the committee at the time of grant,
provided that the exercise price shall not be less than the closing price of the Common Shares on the
Toronto Stock Exchange (“TSX”), or other stock exchange on which the Common Shares may be listed,
on the trading day immediately prior to the date of grant.
The Option Plan provides Optionees with an election, if permitted by the committee, for a cashless
exercise ("Cashless Exercise") of an Optionee's vested and exercisable Options. If an Optionee elects a
Cashless Exercise, the Optionee shall surrender its Options in exchange for the issuance by the
Company of that number of Common Shares equal to the number determined by dividing the Market
Price (as defined in the Option Plan and as calculated as at the date of exercise) into the difference
between the Market Price and the exercise price of such Option. In addition, the Option Plan also
provides that an Optionee has the right to make an offer (the "Surrender Offer") to the Company to
surrender any of the Options held by such person for an amount (not to exceed the fair market value)
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Long Run Exploration
specified therein by the Optionee and the Company may, but is not obligated to, accept the Surrender
Offer, subject to any regulatory approval required.
If an Optionee ceases to be a director, officer, or employee of, or service provider to, the Company for
any reason, the Optionee shall have a period of time, not in excess of six months, as prescribed at the
time of grant (12 months in the case of death), succeeding his ceasing to be a director, officer, employee
or service provider, to exercise Options held to the extent that the Optionee was entitled to exercise the
options at the date of such cessation. In the absence of any determination to the contrary, vested options
will cancel 60 days after the termination date.
In the case of a merger, amalgamation or certain other transactions or a takeover bid approved by the
Board of Directors, the Company has the right to satisfy any obligations to an Optionee in respect of any
unexercised Options by paying to the Optionee a cash amount equal to the difference between the
exercise price of all unexercised Options held and the fair market value of the securities to which the
Optionee would have been entitled to receive on exercise thereof.
Without the prior approval of the shareholders of the Company, as may be required by the TSX, the
Board may not: (i) make any amendment to the Option Plan to increase the percentage of Common
Shares issuable on exercise of outstanding Options at any time; (ii) reduce the exercise price of any
outstanding Options; (iii) extend the term of any outstanding Option beyond the original expiry date of
such Option; (iv) increase the maximum limit on the number of securities that may be issued to insiders;
(v) increase the maximum number of Common Shares issuable to directors who are not officers or
employees of the Company or its subsidiaries; (vi) make any amendment to the Option Plan to permit an
Optionee to transfer or assign Options to a new beneficial Optionee other than in the case of death of the
Optionee; or (vii) amend the restrictions on amendments that are provided in the Option Plan. Subject to
the restrictions set out above, the Board may amend or discontinue the Option Plan and Options granted
thereunder without shareholder approval; provided that an amendment to the Option Plan requiring
approval of any stock exchange on which the Common Shares are listed for trading may not be made
without approval of such stock exchange. In addition, no amendment to the Option Plan or Options Grant
pursuant to the Option Plan may be made without the consent of the Optionee, if it adversely alters or
impairs any Option previously granted to such Optionee.
The Company is authorized to issue Options up to an aggregate 10% of Common Shares outstanding.
Pursuant to the rules of the TSX, every three years all unallocated Options available for future grants
must be approved by a majority of the Corporation’s shareholders. As a result, the Company would be
required to seek re-approval of its unallocated Common Shares available for Option grants from
shareholders on or before May 29, 2015. Re-approval is not being sought at the Meeting.
Long Term Incentive - Bridge Payment
Grants under the Option Plan were not made during 2013, other than to new employees of the Company.
In January 2014, a bridge payment was made to employees, including executive officers, in lieu of a longterm incentive grant. Of the total bridge payments of $1.0 million, an aggregate $0.1 million was paid to
executive officers.
Grants under the Option Plan were not made during 2014. In January 2015, a bridge payment was made
to new employees hired during 2014, in lieu of a long-term incentive grant. The total value of the bridge
payment made to employees was approximately $350,000, of which no amount was paid to executive
officers.
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Long Run Exploration
Long Term Incentive - Supplementary Retention Payment Program
The transition to a dividend business model in 2014 suggested that the value associated with the Option
Plan was unlikely to be realized as intended over the life of the program, as the exercise price of Options
granted thereunder did not recognize the value of dividends paid on the underlying Common Shares. In
order to maintain the retention value of Options granted and to further align Option holders with holders of
Common Shares who were entitled to receive dividends declared by the Company, the Human
Resources Committee, after considering various alternatives, recommended to the Board the
establishment of the supplementary retention payment program (the “SRP”).
Cash payments to employees, including executive officers, under the SRP were at the sole discretion of
the Board and the Human Resources Committee. Payments to active employees, including executive
officers, would be made on April 30 and October 31 each year, until existing Options have expired.
Factors considered in the determination of SRP cash payments may include the number of unexercised
Options held by the employee on the payment dates and the dividends declared by the Company on its’
Common Shares.
During 2014, payments under the SRP totalled $2.6 million, of which a total of $0.7 million was paid to
executive officers.
Long Term Incentive - Restricted and Performance Award Incentive Plan
The Company adopted a Restricted and Performance Award Incentive Plan (“Incentive Plan”) during
2014, pursuant to which the Company may issue Restricted Awards and Performance Awards
(collectively “Incentive Awards”). The issuance of Common Shares from treasury pursuant to the
Incentive Plan was approved by shareholders of the Company at the 2014 Meeting. The Incentive Plan is
intended to align individual and shareholder interests by linking compensation to our Common Share
price. In addition, the payout multiplier applicable to Performance Awards is based on the achievement of
pre-defined corporate performance metrics, intended to further align individual and shareholder interests.
The first issuance of awards under the Incentive Plan occurred in January 2015 when the Company
granted 5.2 million Restricted Awards, of which 0.9 million were granted to executive officers.
The Incentive Plan is administered by the Board of Directors or by a committee appointed from time to
time by the Board of Directors (collectively the "Committee"). The Committee has the authority in its sole
discretion to administer the Incentive Plan, subject to the provisions of the plan.
Incentive Awards may be granted only to persons who are employees, officers or directors of the
Company or who are consultants or other service providers to the Company (collectively "Service
Providers"). In determining the grant of awards to individuals (the “Grantees”), the Committee may take
into account such factors as compensation data for comparable positions among companies in our peer
group; the duties, responsibilities, position and seniority of the Service Provider; the individual
contributions and potential contributions of the Service Provider to the success of the Company; bonus
payments to the Service Provider in respect of his or her individual contributions; the market price of the
Common Shares at the time the award is granted; other incentives currently held by the Grantee and the
terms thereof; and such other factors as the Committee considers relevant.
The Committee will designate awards as either "Restricted Awards" or "Performance Awards", as
applicable. Unless otherwise determined by the Committee, the payment dates of the underlying award
values will be one-third on each of the first, second and third anniversaries of the grant date. In each
case, the award value will be determined as at the applicable payment date. The expiry date of all
Incentive Awards is December 1 of the third calendar year following the calendar year in which the
awards were granted.
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Long Run Exploration
The award value applicable to an award is determined on a payment date by multiplying the number of
awards by the fair market value of the Common Shares. The fair market value is determined on the
applicable payment date as the volume-weighted average trading price of the Common Shares on the
TSX (or other stock exchange on which the Common Shares may be listed) for the five trading days
immediately preceding such date. Immediately prior to each payment date, the award value payable is
adjusted by multiplying the number of awards by an adjustment ratio, which adjust the number of awards
outstanding for dividends paid by the Company on its Common Shares. The award value payable
pursuant to Performance Awards is further adjusted by the payout multiplier applicable at the payment
date. Annually, the Committee will assess the performance of the Company to determine the Company’s
ranking. The resulting payout multiplier could range from 0 to 2.0 times.
The weighting of the individual measures used to determine the payout multiplier will be determined by
the Committee in its sole discretion having regard to the principal purposes of the Incentive Plan. The
Committee will determine whether the corporate performance measures apply annually or will be
averaged over subsequent years in respect of awards that do not vest until the second or third
anniversaries. The Committee will also determine performance measures applicable in respect of
payment dates that are impacted by a change of control or termination of the Grantee as a result of death
or other reasons.
On the payment date, the Company has the option of settling award values payable by payment in cash,
payment in Common Shares acquired in the open market or by payment in Common Shares issued from
the treasury of the Company. When the Company elects to pay any amounts in Common Shares, the
number of Common Shares to be delivered shall be equal to the award value divided by fair market value
of the Common Shares. If the determination of the number of Common Shares to be delivered results in
the issuance of a fractional Common Share, the number of Common Shares deliverable on the payment
date will be rounded down to the next whole number of Common Shares. No certificates representing
fractional Common Shares will be delivered pursuant to the Incentive Plan nor will any cash amount be
paid in lieu of a fractional interest. Should the Company elect to issue Common Shares in accordance
with the terms of the Incentive Plan the Grantee will not possess any incidents of ownership, including the
right to receive dividends and the right to exercise voting rights in respect of such Common Shares, until
the shares are issued.
Where a payment date occurs on a date when a Grantee is subject to a Black-Out Period, as defined in
the Incentive Plan, or within six trading days of the expiry of a Black-Out Period, the payment date will be
extended to the earlier of the expiry date and the sixth trading day following the expiry of the Black-Out
Period; provided that if the payment date is deemed to be the expiry date, then the payment shall be
made by way of cash and not Common Shares.
In the event of a change in control (as defined in the Incentive Plan) of the Company, the payment date
applicable to all outstanding Incentive Awards will be accelerated such that the award values remaining to
be paid will be paid immediately prior to the date upon which the change of control is completed.
The aggregate maximum number of Common Shares that are available to be issued from the treasury of
the Company pursuant to awards granted and outstanding under the Incentive Plan at any time shall not
exceed 5% of the aggregate number of issued and outstanding Common Shares. The number of
Common Shares that are available to be issued from the treasury of the Company to insiders at any time
under all share based compensation arrangements of the Company, including the Option Plan and the
Incentive Plan, shall not exceed 10% of the issued and outstanding Common Shares. The number of
Common Shares issued to insiders from the treasury of the Company within any one year period under all
share based compensation arrangements of the Company shall not exceed 10% of the issued and
outstanding Common Shares.
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Long Run Exploration
The number of Common Shares that are available to be issued from the treasury of the Company at any
time to non-management directors under all share based compensation arrangements, including the
Option Plan and the Incentive Plan, will be limited to a maximum of 1% of the issued and outstanding
Common Shares. The value of all share based compensation arrangements granted to any nonmanagement director during a calendar year, as calculated on the date of grant, shall not exceed
$100,000.
For purposes of the above calculations, it is assumed that all issued and outstanding Incentive Awards
will be settled by the issuance of Common Shares from treasury, notwithstanding the Company’s right to
settle the award in cash or by purchasing Common Shares on the open market, and a payout multiplier of
1.0 is assumed for Performance Awards.
For the purposes of the Incentive Plan, any increase in the issued and outstanding Common Shares will
result in an increase in the number of Common Shares that may be issued and any increase in the
number of awards granted will, upon exercise, make new grants available. Incentive Awards that are
cancelled, surrendered, terminated or expire prior to the final payment date, or in respect of which the
Company has not elected to issue Common Shares from treasury, shall result in such Common Shares
being available to be issued pursuant to the Incentive Plan.
Unless otherwise determined by the Committee or provided for in an Incentive Award agreement or any
written agreement or other agreement governing a Grantee's role as a service provider: (i) if a Grantee
ceases to be a Service Provider as a result of the Grantee's death, the outstanding award values for
which the payment date has not occurred shall be payable as of the cessation date; (ii) if a Grantee
ceases to be a Service Provider as a result of a voluntary resignation or termination for cause, effective
as of the cessation date, all outstanding Incentive Award agreements for which the payment date has not
occurred shall be terminated and all rights to receive payments thereunder shall be forfeited; and (iii) If a
Grantee ceases to be a Service Provider for any other reason, notwithstanding severance entitlements or
entitlement to notice or compensation in lieu thereof, all outstanding Incentive Award agreements for
which the payment date has not occurred shall be terminated and all rights to receive payment
thereunder shall be forfeited. In the case of non-management directors, a voluntary resignation or
voluntarily not standing for re-election as a director of the Company shall be treated as a voluntary
resignation, as described in (ii) above, and failing to be re-elected as a director of the Company by
shareholders shall be treated as any other termination as described under (iii).
In certain circumstances, including a change in the Common Shares through subdivision, consolidation,
reclassification grant of rights to all shareholders to purchase Common Shares at prices substantially
below the fair market value thereof, or the payment of a stock dividend on the Common Shares, or as a
result of any recapitalization, amalgamation, merger, arrangements, consolidation or other transaction
which is not a change of control under which the Common Shares are converted into or exchangeable for
other securities or property, the Board may, subject to any required stock exchange approval, make
adjustments to the Incentive Plan and to any awards outstanding considered appropriate in the
circumstances to prevent inappropriate diminishment or enlargement of the amounts to be paid to
Grantees hereunder.
Notwithstanding any other provision of the Incentive Plan and any applicable regulatory requirements, the
Committee reserves the right to make additional adjustments to amounts to be paid pursuant to Incentive
Awards if, in the sole discretion of the Committee, such adjustments are appropriate in the circumstances
having regard to the principal purposes of the Incentive Plan.
The Committee may not, without the approval of shareholders of the Company, make any amendments
to: (i) increase the percentage of Common Shares reserved for issuance pursuant to Incentive Awards in
excess of the limit prescribed in the Incentive Plan; (ii) increase the maximum limit on the number of
Common Shares that may be issued from treasury to insiders pursuant to the Incentive Plan; (iii) increase
2015 Information Circular - Proxy Statement
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Long Run Exploration
the maximum number of Common Shares that may be issued from treasury to non-management directors
pursuant to the Incentive Plan; (iv) extend the payment date of any Incentive Awards issued under the
Incentive Plan beyond the latest payment date specified in the Incentive Award agreement (other than as
permitted by the terms and conditions of the Incentive Plan) or extend the term beyond, or allow for
payment for all or any part of the Incentive Awards later than, the expiry date; (v) permit a Grantee to
transfer or assign Incentive Awards to a new beneficial holder other than for estate settlement purposes;
and (vi) change the amendment provisions of the Incentive Plan. Except as restricted by the foregoing,
the Committee may amend or discontinue the Incentive Plan or Incentive Awards granted thereunder at
any time without shareholder approval provided that any amendment to the Incentive Plan that requires
approval of any stock exchange on which the Common Shares are listed for trading may not be made
without approval of such stock exchange. In addition, no amendment to the Incentive Plan or Incentive
Awards granted pursuant to the Incentive Plan may be made without the consent of the Grantee, if it
adversely alters or impairs any Incentive Awards previously granted to such Grantee under the Incentive
Plan.
Pursuant to the rules of the TSX, the issuance of Common Shares from treasury in settlement of
Incentive Awards must be approved by the Corporation’s shareholders every three years. The Company
would be required to seek re-approval from shareholders on or before May 21, 2017.
Perquisites and Other Personal Benefits
Perquisites and other personal benefits are awarded as part of the compensation package to all
employees, including executive officers. All employees are eligible to participate in the Company’s
employee savings plan pursuant to which they can contribute up to 10% of their base salary which is
invested in investments selected by the employee. The Company currently matches the employee
contribution by a factor of 1.5 times, up to a maximum of 15% of base salary, which contribution is utilized
by a third party to purchase Common Shares of Long Run in the market for the benefit of the employee.
Prior to March 1, 2014, all contributions made by the Company on behalf of the employee vested
immediately. Subsequently, contributions made by the Company vest on the one-year anniversary of the
contribution date.
Risk Implications Associated with Compensation Policies and Practices
As described herein, the Company’s compensation program is administered by the Human Resources
Committee. In carrying out its mandate, the Human Resources Committee reviewed the elements of the
program to identify risks arising from policies and practices that are reasonably likely to have a material
adverse effect on the Company, as well as practices utilized to mitigate any such issues. The Human
Resources Committee concluded that the compensation programs and policies of the Company do not
encourage its senior executive officers to take inappropriate or excessive risks. This assessment was
based on a number of factors including the following:

The compensation program of the Company attempts to achieve a balance between cash and
equity compensation, is based on individual and corporate performance, and includes both
financial and non-financial targets. The overall program is market based and aligned with the
Company’s business plan and long-term strategies.

The Company’s compensation policies and practices are generally uniform throughout the
organization and there are no significant differences in the compensation structure among senior
executive officers.

Management, together with the Human Resources Committee, formulates a performance based
cash bonus plan utilizing metrics that are weighted and linked to the achievement of the
Company’s business goals. Both the targets and weighting of the various targets determines the
2015 Information Circular - Proxy Statement
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Long Run Exploration
amount payable under the plan. While the achievement of one target in isolation could create
short term risks, weighting with other factors is aimed at achieving the long-term goals of the
Company.

The cash bonus plan is based in part on a discretionary determination of each executive officer's
overall performance, including personal contributions to corporate performance. This allows the
Human Resources Committee and the Board to consider whether executive officers have
attempted to bolster short-term results at the expense of the long term success of the Company.

Incentive Awards vest over time, which should assist in mitigating short-term risk-taking potential.
Additionally, the award value in respect of the Performance Awards is determined, in part, with
reference to the payout multiplier. The payout multiplier is based on corporate performance,
measured against targets established by the Committee that may be financial and/or nonfinancial. These targets will be aligned with the Company’s business plan and long-term
strategies.

While Option holders do not have any money at risk in connection with Options granted, vesting
over a three year period mitigates short term risk-taking potential.
Performance Graph
Value of $100 Investment
The following graph compares the yearly change in the cumulative total shareholder return during the
period from December 31, 2010 to December 31, 2014 of a $100 investment in Common Shares, with the
cumulative total return of the S&P/TSX Composite Index and the S&P/TSX Capped Energy Index, for the
comparable period, assuming reinvestment of dividends where applicable.
$160
$140
$120
$100
$80
$60
$40
$20
$Dec 31, 2009
Dec 31, 2010
S&P/TSX Composite Index
Dec 31, 2011
Dec 31, 2012
Dec 31, 2013
S&P/TSX Capped Energy Index
Dec 31, 2014
Long Run Exploration Ltd.
Index
2009
2010
2011
2012
2013
2014
S&P/TSX Composite Index
100
118
107
115
130
144
S&P/TSX Capped Energy Index
100
112
95
91
103
86
LRE Common Shares
100
99
82
71
77
24
The Company’s compensation policies are designed to align the interests of employees and shareholders
and to enhance shareholder value. Certain compensation components are tied directly to the
performance of the Company’s share price, while others are influenced by individual performance and
corporate performance against a variety of financial and non-financial metrics. Our mix of compensation
elements recognizes that the price of our Common Shares may be affected by a variety of external
factors, including changes in commodity prices and general economic conditions. Decreases in global
commodity prices at the end of 2014 negatively impacted share prices of companies in the oil and natural
gas industry.
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Long Run Exploration
Executive compensation includes metrics and components tied directly to the performance of the
Company’s share price, including relative shareholder return (in the determination of cash bonuses) and
the value of Incentive Awards and Options. However, executive compensation also includes components
that are not dependent upon the Company’s share price. In setting base salaries consideration is given to
a variety of factors including primary duties and responsibilities, experience and expertise, and leadership
abilities. Short term incentives are based in part on performance metrics and thresholds which may not
necessarily track the changes in the price of the Common Shares. Additionally, the discretion of the
Human Resources Committee and the Board is a factor in determining executive compensation.
As a result of the foregoing, the trend in total return on investment charted for the Company in the
performance graph above does not correlate, in its entirety, to the total compensation paid to the
Company's executive officers. It is of note, however, that the 2014 short term incentive plan cash bonuses
were lower than the 2013 cash bonuses when the total return on both the S&P/TSX Capped Energy
Index and the Common Shares were also lower.
Summary
The Company’s compensation policies have allowed Long Run to attract and retain a team of motivated
employees working towards the common goal of enhancing shareholder value. The Human Resources
Committee and the Board will continue to review compensation policies to ensure that they are
competitive within the oil and natural gas industry and consistent with the performance of the Company.
Summary Executive Compensation Table
The following table sets forth information concerning compensation paid to our Named Executive Officers
(“NEOs”) for the year ended December 31, 2014. Our NEOs include those individuals who served as
Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO") during the year, as well as the three
most highly compensated executive officers, other than the CEO and CFO, whose total compensation
was more than $150,000.
OptionBased
Awards
Name and principal
position
(6)(7)
Non-equity incentive
plan compensation
Annual
LongIncentive
Term
Plans
Incentive
($)
Plans ($)
Year
William E. Andrew (1)
Chair and
Chief Executive
Officer
2014
2013
2012
350,000
275,000
50,068
Nil
Nil
686,370
200,000
325,000
275,000
154,058
13,750
Nil
Nil
Nil
Nil
64,330
44,776
6,579
768,388
658,526
1,018,017
Dale Miller (2)
President and Chief
Operating Officer
2014
2013
2012
350,000
325,000
60,548
Nil
Nil
686,370
190,000
300,000
275,000
154,058
16,250
Nil
Nil
Nil
Nil
64,330
51,818
8,410
758,388
693,068
1,030,328
Corine Bushfield (3)
Senior Vice President
and Chief Financial
Officer
2014
2013
2012
300,000
222,744
Nil
Nil
407,000
Nil
165,000
220,000
Nil
92,250
14,000
Nil
Nil
Nil
Nil
56,830
36,353
Nil
614,080
900,097
Nil
Dale Orton (4)
Senior Vice President,
Development
2014
2013
2012
300,000
275,000
47,740
Nil
Nil
345,240
165,000
220,000
195,000
77,490
13,750
Nil
Nil
Nil
Nil
56,830
45,568
6,839
599,320
554,318
594,819
Devin Sundstrom (5)
Vice President,
Production
2014
2013
2012
280,000
265,000
45,675
Nil
Nil
345,240
125,000
175,000
190,000
77,490
13,250
Nil
Nil
Nil
Nil
52,753
43,646
6,624
535,243
496,896
587,539
($)
2015 Information Circular - Proxy Statement
Pension
Value ($)
All Other
Total
Compensation Compensation
($)
($)
Salary
($)
Page 25
Long Run Exploration
Notes:
(1)
Mr. William Andrew was appointed as the Chair and Chief Executive Officer of the Company on
October 23, 2012. The 2014 Annual Incentive Plan amount represents a $200,000 bonus paid in
March 2015. The 2014 Long-Term Incentive Plan amount represents a supplementary retention plan
payment of $154,058. The 2014 All Other Compensation amount includes the Company’s matching
contribution on the employee savings plan of $52,500, and a parking benefit of $7,665. The 2013
Annual Incentive Plan amount represents a $325,000 bonus paid in March 2014. The 2013 LongTerm Incentive Plan amount represents a $13,750 bridge payment in January 2014. The 2013 All
Other Compensation amount included the Company’s matching contribution to employee savings
plan of $34,375 and a parking benefit of $7,308. The 2012 salary represents the amount paid from
October 23, 2012 to December 31, 2012. The 2012 Annual Incentive Plan amount represents cash
bonuses of $175,000 paid in March 2013 and $100,000 paid in October 2012. The 2012 All Other
Compensation amount includes the Company’s matching contribution to the employee savings plan
of $4,742.
(2)
Mr. Dale Miller was appointed as the President of the Company on October 23, 2012, and on
December 15, 2014 his title was changed to President and Chief Operating Officer. The 2014 Annual
Incentive Plan amount represents a $190,000 bonus paid in March 2015. The 2014 Long-Term
Incentive Plan amount represents a supplementary retention plan payment of $154,058. The 2014 All
Other Compensation amount includes the Company’s matching contribution on the employee savings
plan of $52,500 and a parking benefit of $7,665. The 2013 Annual Incentive Plan amount represents
a $300,000 bonus paid in March 2014. The 2013 Long-Term Incentive Plan amount represents a
$16,250 bridge payment in January 2014. The 2013 All Other Compensation amount includes the
Company’s matching contribution to employee savings plan of $40,625 and a parking benefit of
$7,308. The 2012 salary represents the amount paid from October 23, 2012 to December 31, 2012.
The 2012 Annual Incentive Plan amount represents cash bonuses of $175,000 paid in March 2013
and $100,000 paid in October 2012. The 2012 All Other Compensation amount includes the
Company’s matching contribution to the employee savings plan of $6,216.
(3)
Ms. Corine Bushfield was appointed as the Vice President, Finance and Accounting of the Company
on March 15, 2013, as Vice President, Finance and Chief Financial Officer on March 19, 2013, and
as Senior Vice President and Chief Financial Officer on December 15, 2014. The 2014 Annual
Incentive Plan amount represents a $165,000 bonus paid in March 2015. The 2014 Long-Term
Incentive Plan amount represents a supplementary retention plan payment of $92,250. The 2014 All
Other Compensation amount includes the Company’s matching contribution on the employee savings
plan of $45,000 and a parking benefit of $7,665. The 2013 salary represents the amount paid from
March 15, 2013 to December 31, 2013. Ms. Bushfield’s annual salary for 2013 was $280,000. The
2013 Annual Incentive Plan amount represents a $220,000 bonus paid in March 2014. The 2013
Long-Term Incentive Plan amount represents a $14,000 bridge payment in January 2014. The 2013
All Other Compensation amount includes the Company’s matching contribution to employee savings
plan of $29,274 and a parking benefit of $4,872.
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Long Run Exploration
(4)
Mr. Dale Orton was appointed as the Vice President, Engineering and Operations of the Company on
October 23, 2012, as Senior Vice President, Operations and Engineering on December 12, 2013, and
as Senior Vice President, Development on December 15, 2014. The 2014 Annual Incentive Plan
amount represents a $165,000 bonus paid in March 2015. The 2014 Long-Term Incentive Plan
amount represents a supplementary retention plan payment of $77,490. The 2014 All Other
Compensation amount includes the Company’s matching contribution on the employee savings plan
of $45,000 and a parking benefit of $7,665. The 2013 Annual Incentive Plan amount represents a
$220,000 bonus paid in March 2014. The 2013 Long-Term Incentive Plan amount represents a
$13,750 bridge payment in January 2014. The 2013 All Other Compensation amount includes the
Company’s matching contribution to employee savings plan of $34,375 and a parking benefit of
$7,308. The 2012 salary represents the amount paid from October 23, 2012 to December 31, 2012.
The 2012 Annual Incentive Plan amount represents cash bonuses of $135,000 paid in March 2013
and $60,000 paid in October 2012. The 2012 All Other Compensation amount includes the
Company’s matching contribution to the employee savings plan of $4,774.
(5)
Mr. Devin Sundstrom was appointed as the Vice President, Production of the Company on October
23, 2012. The 2014 Annual Incentive Plan amount represents a $125,000 bonus paid in March 2015.
The 2014 Long-Term Incentive Plan amount represents a supplementary retention plan payment of
$77,490. The 2014 All Other Compensation amount includes the Company’s matching contribution on
the employee savings plan of $42,000 and a parking benefit of $6,558. The 2013 Annual Incentive
Plan amount represents a $175,000 bonus paid in March 2014. The 2013 Long-Term Incentive Plan
amount represents a $13,250 bridge payment in January 2014. The 2013 All Other Compensation
amount includes the Company’s matching contribution to employee savings plan of $33,125 and a
parking benefit of $6,636. The 2012 salary represents the amount paid from October 23, 2012 to
December 31, 2012. The 2012 Annual Incentive Plan amount represents cash bonuses of $130,000
paid in March 2013 and $60,000 paid in October 2012. The 2012 All Other Compensation amount
includes the Company’s matching contribution to the employee savings plan of $4,567.
(6)
The 2013 value of the Option-Based Awards was obtained by multiplying the number of options
granted by the estimated fair value of the options determined on the date the options were granted,
using a Black-Scholes Option Pricing Model. This methodology was selected due to its acceptance as
an appropriate valuation model used by similar sized oil and gas companies. The following
assumptions were made for options granted to executive officers during 2013: risk-free interest rate of
1.1 – 1.4%; dividend yield of 0%; volatility factor of the market price of the Company’s Common
Shares of 42 – 43%; and expected option lives of two to four years. Options granted to Ms. Bushfield
in 2013 had an estimated average fair value of $1.36 per option.
(7)
The 2012 value of the Option-Based Awards was also obtained by multiplying the number of options
granted by the estimated fair value of the options determined on the date the options were granted,
using a Black-Scholes Option Pricing Model. The following assumptions were made for options
granted to the named executive officers listed above during 2012: risk-free interest rate of 1.1 – 1.2%;
dividend yield of 0%; volatility factor of the market price of the Company’s Common Shares of 43 –
45%; and expected option lives of two to four years. Options granted to Mr. Andrew, Mr. Miller, Mr.
Orton and Mr. Sundstrom in 2012 had an average estimated fair value of $1.37 per option.
2015 Information Circular - Proxy Statement
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Long Run Exploration
Incentive Plan Awards
Securities Authorized for Issuance Under Equity Compensation Plans
The following sets forth information in respect of securities authorized for issuance under the equity
compensation plans as at December 31, 2014.
Plan Category
Equity compensation plans
approved by security holders
Number of securities to
Number of securities remaining
be issued upon
Weighted average exercise
available for future issuance under
exercise of outstanding price of outstanding options equity compensation plans (excluding
options and rights
and rights
securities reflected in column (a))
(a) (1)
(b)
(c)(2)
8,879,300
Equity compensation plans not
approved by security holders
Total
8,879,300
$4.50
$4.50
9,674,923
9,674,923
Notes:
(1)
Represents the Options outstanding as of December 31, 2014. There were no Incentive Awards outstanding at
December 31, 2014.
(2)
As of December 31, 2014, there were 193,498,465 Common Shares issued and outstanding. The Option Plan
was last approved by shareholders on May 29, 2012. No further Options may be granted under the Option Plan
after May 29, 2015 unless and until the grant of unallocated Options is approved by shareholders as required by
the TSX. Pursuant to the Incentive Plan, the aggregate maximum number of Common Shares that are available
to be issued from treasury of the Company pursuant to Incentive Awards granted and outstanding thereunder at
any time shall not exceed 5% of the aggregate number of issued and outstanding Common Shares. The
Incentive Plan was last approved by shareholders of the Company on May 21, 2014.
As the Company is not seeking approval for the grant of unallocated Options at the Meeting and has advised it is
not granting any further Options unless and until it seeks shareholder approval for the grant of unallocated
Options, the total number of Common Shares remaining available for future issuance under equity compensation
plans set forth in Column (c) represents five percent of the issued and outstanding Common Shares as of
December 31, 2014 that may be issued pursuant to the Incentive Plan.
Executive Option-Based Awards Outstanding
The following table sets forth for each Named Executive Officer all option-based compensation awards
outstanding at the end of the year ended December 31, 2014. The Company did not have any sharebased awards outstanding at December 31, 2014.
2015 Information Circular - Proxy Statement
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Long Run Exploration
Option-Based Awards
Number of
securities
underlying
unexercised
Options
(#)
Option
exercise
price
($)
Option expiration date
William Andrew
501,000
4.49
December 1, 2017
Nil
Dale Miller
501,000
4.49
December 1, 2017
Nil
Corine Bushfield
300,000
4.53
March 29, 2018
Nil
Dale Orton
252,000
4.49
December 1, 2017
Nil
Devin Sundstrom
252,000
4.49
December 1, 2017
Nil
Name
Value of unexercised in-themoney Options (2)
($)
(1)
Notes:
(1)
(2)
(3)
Normal expiration date of the Options, which may be subject to extension, in accordance with the Option Plan in
the case of an Option Plan Black-Out Period.
Calculated based on the difference between the closing price of the Common Shares on December 31, 2014 of
$1.50 and the exercise price of the Options.
The initial grant of awards under the Incentive Plan was made on January 5, 2015. On January 5, 2015,
Restricted Awards were issued to Mr. Andrew (165,000 awards), Mr. Miller (150,000 awards), Ms. Bushfield
(126,000 awards), Mr. Orton (126,000 awards) and to Mr. Sundstrom (96,000 awards).
See "Statement of Executive Compensation – Compensation Discussion and Analysis" for discussion of
the process that the Company uses in the grant of Options and Incentive Awards.
Executive Option-Based Awards - Value Vested or Earned During the Year
The following table sets forth for each Named Executive Officer, the value of option-based awards which
vested during the year ended December 31, 2014 and non-equity incentive plan compensation earned in
such year. The Company did not have any share-based awards outstanding at December 31, 2014.
Option-Based Awards –
Value vested during the
year (1)
($)
Non-Equity Incentive Plan Compensation –
Value earned during the year (2)
($)
William Andrew
Nil
354,058
Dale Miller
Nil
344,058
77,000
257,250
Dale Orton
Nil
242,490
Devin Sundstrom
Nil
202,490
Name
Corine Bushfield
Notes:
(1)
The value of Options which vested during the year was calculated based on the difference between the closing
price of the Common Shares underlying the vested Option on the vesting date and the exercise price of the
vested Options.
(2)
The amounts shown for Non-Equity Incentive Plan Compensation represent cash bonuses and supplementary
retention plan payments earned for the year ended December 31, 2014. See "Statement of Executive
Compensation - Compensation Discussion and Analysis".
(3)
There were no share-based awards issued or outstanding during the year ending December 31, 2014. On
January 5, 2015, the Company granted Restricted Awards to Mr. Andrew (165,000 awards), Mr. Miller (150,000
2015 Information Circular - Proxy Statement
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Long Run Exploration
awards), Ms. Bushfield (126,000 awards), Mr. Orton (126,000 awards) and to Mr. Sundstrom (96,000 awards).
Each Restricted Award entitles the holder, upon vesting, to one Common Share, as adjusted in accordance with
the Incentive Plan, which may be paid to the holder thereof in Common Shares, cash or a combination thereof.
See "Statement of Executive Compensation – Compensation Discussion and Analysis – Executive
Compensation Elements – Long Term Incentive – Restricted and Performance Award Incentive Plan".
Pension Plan Benefits
The Company does not have a pension plan or similar benefit program.
Termination and Change of Control Benefits
Employment Agreements
Each of the executive officers is party to an employment agreement with the Company (collectively, the
"Employment Agreements"). Under the terms of the Employment Agreements, the executive officers are
entitled to participate in all benefit plans adopted by the Company for employees generally and executive
officers specifically, with all benefits of employment, including short and long term disability coverage, to
cease on cessation of employment, regardless of the reason thereof.
Termination Provisions
The Employment Agreements provide that the Company may terminate such agreements at any time for
just cause. In such case, the executive officer is entitled to payment of any pro rata salary earned but
unpaid through to the termination date, along with payment of any declared and unpaid bonus, vacation
pay and reimbursable expenses.
The Employment Agreements also provide that the Company may terminate such agreements without
just cause upon payment (the "Termination Payment") of a pro-rata amount of salary earned but unpaid
through to the termination date, a pro-rata bonus for the year in which termination occurs, along with
accrued and unused vacation pay, reimbursable expenses, and a retiring allowance (the "Retiring
Allowance"). The Retiring Allowance is equal to the executive officer’s then annual base salary, an
average of cash bonuses paid during the last two years times a factor, and a percentage of base salary
for loss of benefits coverage. In the case of the Vice Presidents, the factor is 1.5, and for the Chair and
Chief Executive Officer and the President and Chief Operating Officer, the factor is 2.0.
In addition, should there be a Change of Control (as defined in the Employment Agreements), and within
two years of the Change of Control an event or events that constitute Good Reason occurs, an executive
officer has the right, for a period of 90 days following the event, to elect to terminate their Employment
Agreement. Under such election the executive officer would be entitled to the Termination Payment,
including the Retiring Allowance. An event constituting Good Reason would include an adverse change
by the Company, without agreement of the executive officer, in any of the duties, powers, rights,
discretions, salary, titles, lines of reporting or location of employment, such that there is a change or
series of changes in the responsibilities and status of the executive officer taken as a whole, or other
reason which would constitute constructive dismissal.
In order to receive the Termination Payment, the executive officer is required to provide a release in
favour of the Company and its affiliates, in a form satisfactory to the Company acting reasonably. In the
event that an executive officer terminates the Employment Agreement as a result of a Change in Control,
the Employment Agreements require the executive officer to, at the written request of the Company,
continue employment with the Company for up to one month, at the executive officer’s current
compensation package, to assist in an orderly transition. The amount paid to an executive officer for the
transition period would not reduce the Termination Payment.
2015 Information Circular - Proxy Statement
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Long Run Exploration
Pursuant to the Employment Agreements, the executive officers have acknowledged that their duty of
fidelity will survive cessation of employment and have agreed to retain any confidential information in
confidence both during and after cessation of employment. The executive officers have also agreed,
under the terms of the Employment Agreements, that during the executive officer’s employment with the
Company and for a period of six months thereafter (regardless of the reason for cessation of
employment) not to directly or indirectly solicit, induce, encourage or otherwise interfere with any person
employed or contracted by the Company or its affiliates without the prior written consent of the Company.
Termination and Change of Control Payment Amounts
The following table sets forth the amounts that would have been payable to the Named Executive Officers
as of December 31, 2014 under the Employment Agreements in the various cases of termination:
Name
Triggering Event
William E. Andrew
Change of Control and Termination
Change of Control without Termination
Dale Miller
1,365,000
Change of Control and Termination
1,330,000
Termination by Corporation without Just Cause
Change of Control and Termination
Change of Control without Termination
Dale Orton
1,330,000
828,750
-
Termination by Corporation without Just Cause
828,750
Change of Control and Termination
828,750
Change of Control without Termination
Devin Sundstrom
-
Termination by Corporation without Just Cause
Change of Control without Termination
Corine Bushfield
($)
1,365,000
-
Termination by Corporation without Just Cause
828,750
Change of Control and Termination
729,000
Change of Control without Termination
Termination by Corporation without Just Cause
729,000
Notes:
(1)
(2)
(3)
There is no automatic acceleration of Options in the event of a change of control. Vesting of Options and the
acceleration of vesting is at the discretion of the Board. If Options were accelerated by the Board in the event of
a change of control, Options to purchase Common Shares would have been accelerated in respect of Mr.
Andrew (167,000), Mr. Miller (167,000), Ms. Bushfield (200,000), Mr. Orton (84,000) and Mr. Sundstrom
(84,000). None of the Options are "in-the-money" based on the difference between the closing price of the
Common Shares on December 31, 2014 of $1.50 and the exercise price of the Options.
In the case of resignation or termination by the Company for Just Cause (as defined in the applicable
Employment Agreement), the executive officers would be entitled to payment of any pro rata salary earned but
unpaid through to the termination date, along with any declared and unpaid bonus, vacation pay and
reimbursable expenses.
On January 5, 2015, Restricted Awards were issued to Mr. Andrew (165,000 awards), Mr. Miller (150,000
awards), Ms. Bushfield (126,000 awards), Mr. Orton (126,000 awards) and to Mr. Sundstrom (96,000 awards).
On a change of control, with or without termination, the payment date applicable to all outstanding Incentive
Awards is accelerated such that the award value remaining to be paid will be paid immediately prior to the date
at which the change of control is completed. In the event of termination of the Service Provider by the Company,
all outstanding Incentive Awards held by the Service Provider for which payment date has not occurred, are
terminated and all rights to receive payment thereunder are forfeited.
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Long Run Exploration
DIRECTOR COMPENSATION
Summary Director Compensation Table
The following table sets forth information concerning the compensation paid to the directors, other than
directors who are also Named Executive Officers, for the year ended December 31, 2014.
Fees
earned (1)(2)
($)
Sharebased
awards (3)
($)
Optionbased
awards (4)
($)
Non-equity
incentive plan
compensation
($)
Pension
value
($)
All other
compensation
($)
Total
($)
John A. Brussa
80,000
-
-
-
-
-
80,000
Edward Chwyl
80,000
-
-
-
-
-
80,000
20,000
-
-
-
-
-
20,000
60,000
-
-
-
-
-
60,000
Michael M. Graham
80,000
-
-
-
-
-
80,000
Bradley R. Munro
80,000
-
-
-
-
-
80,000
95,000
-
-
-
-
-
95,000
William A. Stevenson
51,578
-
-
-
-
-
51,578
Stephen M. Yuzpe
60,000
-
-
-
-
-
60,000
Name
Paul Dimitriadis
(5)
Jeffery E. Errico
(6)
Patricia M. Newson
(7)
Notes:
(1)
Amounts represent the fees earned by the directors of the Company during the year ended December 31, 2014.
In 2014, each of the non-management directors of the Company received an annual retainer of $80,000. Mr.
Stevenson receives an additional $15,000 per annum in his capacity as Chair of the Audit Committee. Ms.
Newson also received an additional $15,000 per annum during her tenure as Chair of the Audit Committee.
Directors may receive additional fees for serving on ad hoc committees of the Board from time to time as
determined by the Board, and are reimbursed for miscellaneous out-of-pocket expenses incurred in carrying out
their duties as directors.
(2)
The annual retainer for non-management directors of the Company was reduced for 2015 to $72,000. Mr.
Stevenson will receive an additional $15,000 as Chair of the Audit Committee.
(3)
There were no share-based awards issued or outstanding during the year ending December 31, 2014. On
January 5, 2015, each of the non-management directors was granted 45,000 Restricted Awards under the
Incentive Plan. Each Restricted Award entitles the holder, upon vesting, to one Common Share, as adjusted in
accordance with the Incentive Plan, which may be paid to the holder thereof in Common Shares, cash or a
combination thereof. See "Statement of Executive Compensation – Compensation Discussion and Analysis –
Executive Compensation Elements – Long Term Incentive – Restricted and Performance Award Incentive Plan".
(4)
Directors have historically been granted Options pursuant to the Option Plan when they joined the Board, or as
otherwise recommended by the Human Resources Committee and approved by the Board. In 2014 the
Company transitioned to a dividend business model. As a result, the Company has not granted any Options
since December 31, 2013. With the adoption of the Incentive Plan, the Company does intend to make additional
grants of Options under the Option Plan in 2015. The Option Plan will remain in place until such time as all
outstanding Options granted thereunder have been exercised, cancelled or expired. All Options currently
outstanding will expire between December 1, 2017 and December 31, 2018.
(5)
Mr. Dimitriadis resigned as a director of the Company on February 4, 2014. All of his Options expired
unexercised.
(6)
Mr. Errico resigned as a director of the Company on May 21, 2014. All of his Options expired unexercised.
(7)
Ms. Newson is not standing for re-election as a director at the Meeting.
2015 Information Circular - Proxy Statement
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Long Run Exploration
(8)
Mr. Andrew and Mr. Miller did not receive any compensation for acting in their capacities as directors in addition
to the compensation paid to them in their capacities as executive officers. See “Statement of Executive
Compensation - Summary Executive Compensation Table” above.
Director Option-Based Awards Outstanding
The following table sets forth, for each person who was a director of the Company during the last
completed financial year of the Company, other than directors who are also Named Executive Officers, all
option-based awards outstanding at the end of the year ended December 31, 2014. The Company did not
have any share-based awards outstanding at December 31, 2014.
Option-based Awards
Number of
securities
underlyingunexercised
Options
(#)
Option
exercise price
($)
Option expiration
date (1)
Value of
unexercised inthe-money
Options (2)
($)
John A. Brussa
50,000
4.37
January 30, 2018
Nil
Edward Chwyl
75,000
4.37
January 30, 2018
Nil
Paul Dimitriadis (3)
-
-
-
-
Jeffery E. Errico (4)
-
-
-
-
Michael M. Graham
125,000
4.49
December 1, 2017
Nil
Bradley R. Munro
75,000
4.49
December 1, 2017
Nil
Patricia M. Newson (5)
75,000
4.49
December 1, 2017
Nil
William A. Stevenson
-
-
-
-
Stephen M. Yuzpe
-
-
-
-
Name
Notes:
(1)
Normal expiration date of the Options, which may be subject to extension in accordance with the Option Plan in
the case of an Option Plan Black-Out Period.
(2)
Calculated based on the difference between the closing price of the Common Shares at December 31, 2014 of
$1.50 and the exercise price of the Options.
(3)
Mr. Dimitriadis resigned as a director of the Company on February 4, 2014. All of his Options expired
unexercised.
(4)
Mr. Errico resigned as a director of the Company on May 21, 2014. All of his Options expired unexercised.
(5)
Ms. Newson is not standing for re-election as a director at the Meeting.
(6)
On January 5, 2015, each of the non-management directors was granted 45,000 Restricted Awards under the
Incentive Plan. Each Restricted Award entitles the holder, upon vesting, to one Common Share, as adjusted in
accordance with the Incentive Plan, which may be paid to the holder thereof in Common Shares, cash or a
combination thereof. See "Statement of Executive Compensation – Compensation Discussion and Analysis –
Executive Compensation Elements – Long Term Incentive – Restricted and Performance Award Incentive Plan".
See “Statement of Executive Compensation - Incentive Plan Awards - Executive Option-Based Awards
Outstanding” and “Statement of Executive Compensation - Incentive Plan Awards - Executive Option-Based
Awards - Value Vested or Earned During the Year” above for information in respect of option-based awards for
Mr. Andrew and Mr. Miller.
(7)
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Long Run Exploration
Director Option-Based Awards - Value Vested or Earned During the Year
The following table sets forth for each director, other than directors who are also Named Executive
Officers, the value of option-based awards which vested during the year ended December 31, 2014 and
non-equity incentive plan compensation earned in such year. The Company did not have any sharebased awards outstanding at December 31, 2014.
Name
Option-Based Awards –
Value vested during the year
($) (1)
Non-Equity Incentive Plan Compensation –
Value earned during the year
($)
John A. Brussa
16,750
Nil
Edward Chwyl
16,750
Nil
Paul Dimitriadis (2)
Nil
Nil
(3)
Nil
Nil
Michael M. Graham
Nil
Nil
Bradley R. Munro
Nil
Nil
Patricia M. Newson (4)
Nil
Nil
William A. Stevenson
Nil
Nil
Stephen M. Yuzpe
Nil
Nil
Jeffery E. Errico
Notes:
(1)
The value of Options which vested during the year was calculated based on the difference between the closing
price of the Common Shares underlying the vested Option on the vesting date and the exercise price of the
vested Options.
(2)
Mr. Dimitriadis resigned as a director of the Company on February 4, 2014. All of his Options expired
unexercised.
(3)
Mr. Errico resigned as a director of the Company on May 21, 2014. All of his Options expired unexercised.
(4)
Ms. Newson is not standing for re-election as a director at the Meeting.
(5)
See “Statement of Executive Compensation - Incentive Plan Awards - Executive Option-Based Awards
Outstanding” and “Statement of Executive Compensation - Incentive Plan Awards - Executive Option-Based
Awards - Value Vested or Earned During the Year” above for information in respect of the option based awards
for Mr. Andrew and Mr. Miller.
Mandatory Share Ownership
The Board believes that in order to align the interests of the directors and the Chief Executive Officer of
the Company with those of the Company’s shareholders, share ownership by the directors and the Chief
Executive Officer is desirable. The Board has adopted share ownership guidelines for the directors and
the Chief Executive Officer of the Company. Directors are required to beneficially own, or control or direct,
directly or indirectly, 10,000 Common Shares and to maintain such ownership.
The Chief Executive Officer is required to beneficially own, or control or direct, directly or indirectly, that
number of Common Shares having a value of no less than two times his annual base salary, and to
maintain such ownership. For purposes of the foregoing, the value of the Common Shares held by the
Chief Executive Officer shall be the greater of: (i) the cost to the Chief Executive Officer of such shares;
and (ii) the number determined by multiplying the number of Common Shares so held by the weighted
average trading price of the Common Shares on the TSX for the most recently completed fiscal year.
Under the guidelines, an individual has three years from the date of election or appointment as a director
or Chief Executive Officer to acquire and hold the required number of Common Shares. As of the date of
2015 Information Circular - Proxy Statement
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Long Run Exploration
this Information Circular, the number of Common Shares held by each director and the Chief Executive
Officer, and the value thereof, is reported in the table below under "Directors' Equity Holdings".
Directors’ Equity Holdings
The following table sets out the equity ownership in the Company as at April 7, 2015 for each current
director:
Director
Common Shares Owned
William E. Andrew (1)
615,079
John A. Brussa
989,841
Edward Chwyl
577,032
Michael M. Graham
230,000
Dale A. Miller
231,876
Bradley R. Munro
40,212
Patricia M. Newson (2)
6,251
William A. Stevenson
16,000
Stephen M. Yuzpe (3)
Nil
Notes:
(1)
(2)
(3)
The cost of Mr. Andrew's Common Shares exceeds the value of two times his annual salary for 2015.
Ms. Newson is not standing for re-election as a director at the Meeting.
Mr. Yuzpe is the President and Chief Executive Officer of Sprott Resource Corp. which holds, through its
subsidiary Sprott Resource Partnership, 23,000,000 Common Shares. See "Information Concerning the
Company – Voting Shares and Principal Holders Thereof".
RESTRICTIONS ON PURCHASE OF FINANCIAL INSTRUMENTS
The Company’s Disclosure, Confidentiality and Trading Policy provides that directors, officers and
employees of the Company, shall not knowingly sell, directly or indirectly, a security of the Company if
such person selling such security does not own or has not fully paid for the security to be sold. In addition,
the Disclosure, Confidentiality and Trading Policy provides that directors, officers and employees of the
Company shall not, directly or indirectly, buy or sell a call or put in respect of a security of the Company
provided the foregoing shall not restrict the entering into of a derivative or similar transaction involving an
interest in or an economic interest in a security held by a director, officer or employee or a similar
transaction approved by the Corporate Governance Committee. Notwithstanding these prohibitions,
directors, officers and employees of the Company may sell a security which such person does not own if
such person owns another security convertible into the security sold or an option or right to acquire the
security sold and, within 10 days after the sale, such person: (i) exercises the conversion privilege, option
or right and delivers the security so associated to the purchaser; or (ii) transfers the convertible security,
option or right, if transferable to the purchaser.
CORPORATE GOVERNANCE PRACTICES
The Company's disclosure with respect to Corporate Governance Practices is set forth in Schedule "A"
hereto.
2015 Information Circular - Proxy Statement
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Long Run Exploration
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS
No director, executive officer, employee or former executive officer, director or employee of the Company
or any of its subsidiaries, or any associate of any such director, officer or employee is, or has been at any
time since the beginning of the most recently completed financial year of the Company, indebted to the
Company or any of its subsidiaries in respect of any indebtedness that is still outstanding, nor, at any time
since the beginning of the most recently completed financial year of the Company has, any indebtedness
of any such person been the subject of a guarantee, support agreement, letter of credit or other similar
arrangement or understanding provided by the Company or any of its subsidiaries.
INTEREST OF MANAGEMENT AND INFORMED PERSONS IN MATERIAL TRANSACTIONS
Other than as disclosed herein, there were no material interests, direct or indirect, of directors or
executive officers of the Company, of any shareholder who beneficially owns or controls or directs,
directly or indirectly, more than 10% of the outstanding Common Shares, or any other Informed Person
(as defined in National Instrument 51-102) or any known associate or affiliate of such persons, in any
transaction since the commencement of the most recently completed financial year of the Company or in
any proposed transaction which has materially affected or would materially affect the Company or any of
its subsidiaries.
On May 21, 2014, the Company and Sprott Resource Corp. announced the completion of a secondary
offering ("Secondary Offering") of 12.7 million Common Shares by Sprott Resource Corp. at a price of
$5.35 per Common Share, for gross proceeds of $67.7 million. Long Run received no proceeds from this
transaction and the total number of Common Shares outstanding did not change as a result of the
Secondary Offering. Immediately following the closing of the Secondary Offering, Sprott Resource Corp.
converted all of its non-voting convertible shares of the Company into 15.5 million Common Shares (the
"Conversion"). Upon completion of the Secondary Offering and the Conversion, Sprott Resource Corp.’s
ownership interest in Long Run was approximately 18.3%, comprised of a total of 23.0 million Common
Shares. As a result of additional issuances of Common Shares by the Company during 2014, Sprott
Resource Corp.’s ownership interest in Long Run as of December 31, 2014 amounted to approximately
11.9% of the outstanding Common Shares.
On April 30, 2014, the Company completed a public offering (the "Subscription Receipt Offering") of 23.5
million subscription receipts of the Company ("Subscription Receipts") at a price of $5.10 per Subscription
Receipt. Each Subscription Receipt was converted into one Common Share on May 30, 2014 in
connection with the Company's acquisition of certain assets located in the Deep Basin property area.
John Brussa, a director of the Company, acquired 20,000 Subscription Receipts under the Subscription
Receipt Offering.
INTEREST OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE ACTED UPON
Management of the Company is not aware of any material interest, direct or indirect, by way of beneficial
ownership of securities or otherwise, of any director or nominee for director, or executive officer of the
Company or anyone who has held office as such since the beginning of the Company’s last financial year
or of any associate or affiliate of any of the foregoing in any matter to be acted on at the Meeting other
than the election of directors.
ADDITIONAL INFORMATION
Additional information relating to the Company is available on SEDAR at www.sedar.com. Financial
information in respect of the Company and its affairs is provided in the Company’s annual audited
2015 Information Circular - Proxy Statement
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Long Run Exploration
comparative financial statements for the year ended December 31, 2014 and the related management's
discussion and analysis. Copies of the Company’s financial statements and related management's
discussion and analysis are available upon request from Corine Bushfield, Senior Vice President and
Chief
Financial
Officer
of
the
Company,
by
phone
at
(403) 261-6012
or
by
[email protected]. Also see "Audit Committee Information" in the Company’s Annual
Information Form for the year ended December 31, 2014 for information relating to the Audit Committee,
including its mandate and composition, as well as fees paid to the Company’s auditors.
OTHER MATTERS
Management knows of no amendment, variation or other matter to come before the Meeting other than
the matters referred to in the Notice of Annual Meeting. However, if any other matter properly comes
before the Meeting, the accompanying proxy will be voted on such matter in accordance with the best
judgment of the person or persons voting the proxy.
APPROVAL
The contents and sending of this Information Circular has been approved by the Board.
DATED: April 7, 2015.
2015 Information Circular - Proxy Statement
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Long Run Exploration
SCHEDULE A
Corporate Governance Disclosure
National Instrument 58-101, entitled "Disclosure of Corporate Governance Practices" ("NI 58-101")
requires that if management of an issuer solicits proxies from its security holders for the purpose of
electing directors, certain prescribed disclosure respecting corporate governance matters be included in
its management information circular. The TSX also requires listed companies to provide, on an annual
basis, the corporate governance disclosure which is prescribed by NI 58-101.
The prescribed corporate governance disclosure for the Company is that contained in Form 58-101F1
which is attached to NI 58-101 ("Form 58-101F1 Disclosure").
Set out below is a description of the Company’s current corporate governance practices, relative to the
Form 58-101F1 Disclosure.
1. Board of Directors
(a) Disclose the identity of directors who are independent.
The following six directors, who are currently directors of the Company, are independent (for
purposes of NI 58-101):
John A. Brussa
Michael M. Graham
Bradley R. Munro
Patricia M. Newson
William A. Stevenson
Stephen M. Yuzpe
Mr. Dimitriadis who served as a director during 2013 and resigned as a director on February 4,
2014 was also independent for the purposes of NI 58-101. Ms. Newson is not standing for reelection as a director at the Meeting.
(b) Disclose the identity of directors who are not independent, and describe the basis for that
determination.
Mr. Andrew is not independent as he is the Chair and Chief Executive Officer of the Company
and is compensated as such.
Mr. Chwyl is not independent as he served as the Executive Chairman of the Company during the
year ended December 31, 2012.
Mr. Miller is not independent as he is the President of the Company and is compensated as such.
Mr. Yuzpe is the President and Chief Executive Officer of Sprott Resource Corp. and Mr.
Dimitriadis was the Chief Operating Officer of Sprott Resource Corp. Sprott Resource Corp is a
principal shareholder of the Company, holding greater than 10% of the outstanding Common
Shares (See "Information Concerning the Company - Voting Shares and Principal Holders
Thereof"). However, the Board does not consider such a relationship to be a material relationship
which could reasonably be expected to interfere with the exercise of independent judgment for
the purposes of NI 58-101. Thus Mr. Yuzpe is considered and Mr. Dimitriadis was considered to
be independent for the purposes of NI 58-101. Any conflicts of interest that may arise as a result
of Sprott Resource Corp.'s ownership position will be dealt with by the Board on an ad hoc basis.
2015 Information Circular - Proxy Statement
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Long Run Exploration
Mr. Brussa is a partner of Burnet, Duckworth & Palmer, LLP ("BDP") which firm provides legal
services to, and receives fees from, the Company. However, the Board does not consider such
relationship to be a material relationship which could reasonably be expected to interfere with the
exercise independent judgment for the purposes of NI 58-101 as Mr. Brussa does not provide
legal advice to the Company or the Board, is not involved in any billing matters between BDP and
the Company and the Board does not consider that the fees payable by the Company to BDP
would reasonably be expected to interfere with Mr. Brussa's exercise of independent judgment.
(c) Disclose whether or not a majority of directors are independent. If a majority of directors are not
independent, describe what the board of directors (the board) does to facilitate its exercise of
independent judgement in carrying out its responsibilities.
A majority of the directors of the Company (six of nine) are independent. If all the proposed
nominees are elected, five of eight directors will be 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 current directors are presently directors of other issuers that are reporting issuers
(or the equivalent):
Name of Director
Name of Other Reporting Issuers
William E. Andrew
None
John A. Brussa
Argent Energy Ltd. (Administrator of Argent Energy Trust), Baytex Energy Corp.,
Cardinal Energy Ltd., Crew Energy Inc., Enseco Energy Services Corp., Just
Energy Group Inc., Pinecrest Energy Inc., RMP Energy Inc., Storm Resources
Ltd., TORC Oil & Gas Ltd., Twin Butte Energy Ltd., and Yoho Resources Inc.
Edward Chwyl
Baytex Energy Corp. and U.S. Oil Sands Inc.
Michael M. Graham
Strategic Oil and Gas Ltd.
Dale A. Miller
None
Bradley R. Munro
Secure Energy Services Inc. and CERF Inc.
Patricia M. Newson
Pattern Energy Group Inc.
William A. Stevenson
None
Stephen M. Yuzpe
Sprott Resource Corp.
(e) Disclose whether or not the independent directors hold regularly scheduled meetings at which
non-independent 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.
Normally, at the end of or during each meeting of the Board, the members of management of the
Company and the non-independent directors of the Company who are present at such meeting
typically leave the meeting in order for the independent directors to meet. Twelve such meetings
of independent directors have been held since the beginning of our most recently completed
financial year. In addition, other meetings of the independent directors may be held from time to
time if required.
2015 Information Circular - Proxy Statement
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Long Run Exploration
(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.
The Chair of the Board is William E. Andrew who is the Chief Executive Officer of the Company.
As a result, Mr. Andrew is not independent for the purposes of NI 58-101. The Board has
appointed Michael M. Graham as Lead Director. Among other things, the Lead Director is to
assist the Chair in endeavouring to ensure that Board leadership responsibilities are conducted in
a manner that will ensure that the Board is able to function independently of management. The
Lead Director is to consider, and allow for, when appropriate, the meeting of all independent
directors, so that Board meetings may take place without management being present. The Lead
Director is to endeavour to ensure that reasonable procedures are in place for directors to
engage outside advisors at the expense of the Company in appropriate circumstances, subject to
its prior approval and is to meet annually with each director to obtain insight as to where they
believe Board and its committees could operate more effectively.
(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.
The attendance record of each of the directors of the Company for meetings and committee
meetings held since January 1, 2014 is as follows:
Human
Resources
Committee
Meetings
Attended /
Held
Health,
Safety &
Environment
Committee
Meetings
Attended /
Held
Board
Meetings
Attended /
Held
Audit
Committee
Meetings
Attended /
Held
Reserves
Committee
Meetings
Attended /
Held
Corporate
Governance
Committee
Meetings
Attended /
Held
15/15
-
-
-
-
-
14/15
-
1/1
1/1
5/5
-
Edward Chwyl (2)
10/15
2/3
2/2
-
-
2/2
Paul Dimitriadis (3)
1/1
-
-
-
-
-
(4)
4/4
-
1/1
-
-
1/1
Michael M. Graham
15/15
-
2/2
2/2
5/5
-
Dale A. Miller
15/15
-
-
-
-
-
Bradley R. Munro
15/15
6/6
-
2/2
-
-
14/15
6/6
-
-
-
2/2
8/8
3/3
-
1/1
3/3
-
14/14
-
-
-
2/2
0/1
Name
William E. Andrew
John A. Brussa
(1)
Jeffery E. Errico
Patricia M. Newson
William A. Stevenson
Stephen M. Yuzpe (6)
(5)
Notes:
(1)
Mr. Brussa ceased to be a member of the Corporate Governance Committee and was appointed to the
Reserves Committee on July 23, 2014.
(2)
Mr. Chwyl ceased to be a member of the Audit Committee on July 23, 2014.
(3)
Mr. Dimitriadis resigned as a director of the Company and ceased to be a member of the Human Resources
Committee on January 28, 2014.
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(4)
Mr. Errico resigned as a director of the Company and ceased to be a member of the Reserves Committee
and the Health, Safety and Environment Committee on May 21, 2014.
(5)
Mr. Stevenson was elected as a director of the Company on May 21, 2014. He was appointed as a member
of the Audit Committee, Corporate Governance Committee and Human Resources Committee on July 23,
2014.
(6)
Mr. Yuzpe was appointed as a director of the Company and to the Human Resources Committee on
January 29, 2014. He ceased to be a member of the Human Resources Committee and was appointed to
the Health, Safety and Environment Committee on July 23, 2014.
(7)
The number of meetings held in the above table in respect of each director represents the meetings held
during the period during which the individual director was a member of the Board or the applicable
committee.
2. Board Mandate
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.
The mandate of the Board is attached hereto as Appendix A hereto.
3. Position Descriptions
(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 written position descriptions for the Chair of the Board, the Lead
Director, as well as the Chair of each of the committees of the Board.
(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 has developed a written position description for the Chief Executive 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.
While the Company does not currently have a formal orientation and education program for new
recruits to the Board, the Company has historically provided such orientation and education on an
informal basis. As new directors have joined the Board, management has provided these
individuals with corporate policies, historical information about the Company, as well as
information on the Company’s performance and its strategic plan, with an outline of the general
duties and responsibilities entailed in carrying out their duties. The Board believes that these
procedures have proved to be a practical and effective approach in light of the Company’s
particular circumstances, including the size of the Company, limited turnover of the directors, and
the experience and expertise of the members of the Board.
(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.
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No formal continuing education program currently exists for directors of the Company. The
Company, however, regularly provides the directors (at least on a quarterly basis) briefings and
an update on business, operations and affairs of the Company, including new and ongoing
prospects of the Company, the Company’s performance relative to its peers and other
developments related thereto that could have a significant impact on the Company’s operations
and results. Such updates are conducted by senior management with responsibility for the
various areas under discussion. In addition, from time to time, presentations and seminars are
provided to the Board on developments, examples of which include presentations on new
accounting pronouncements and rules, on capital markets and the Company’s position relative to
its peers. The Company also encourages directors to attend, enrol or participate in courses and
seminars dealing with financial literacy, corporate governance and related matters and has
agreed to pay the cost of certain of such courses.
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:
The Company has adopted a Code of Business Conduct and Ethics for directors, officers and
employees (the "Code").
(i) disclose how a person or company may obtain a copy of the code;
A copy of the Code may be obtained from Corine Bushfield, Senior Vice President and Chief
Financial Officer of the Company, by phone at (403) 261-6012, or at
[email protected] and is also available on SEDAR at www.sedar.com.
(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
The Board monitors compliance with the Code by requiring that each of the employees and
consultants of the Company affirm in writing on an annual basis his or her agreement to
abide by the Code, his or her ethical conduct during the year and disclosure with respect to
any conflicts of interest. In addition, management is required to provide reports on
compliance with the Code to the Board on a regular basis.
(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.
There have been no material change reports filed since the beginning of the Company’s most
recently completed financial year that pertain to any conduct of a director or executive officer
that constitutes a departure from the Code.
(b) Describe any steps the board takes to ensure directors exercise independent judgement in
considering transactions and agreements in respect of which a director or executive officer has a
material interest.
In accordance with the Business Corporations Act (Alberta), directors who are a party to, or are a
director or an officer of a person which is a party to, a material contract or material transaction or
a proposed material contract or proposed material transaction are required to disclose the nature
and extent of their interest and not to vote on any resolution to approve the contract or
transaction. In addition, in certain cases, an independent committee of the Board may be formed
to deliberate on such matters in the absence of the interested party.
(c) Describe any other steps the board takes to encourage and promote a culture of ethical business
conduct.
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In addition to the Code, the Board has also adopted a "Whistleblower Policy" wherein employees
and consultants of the Company are provided with the mechanics by which they may raise
concerns with respect to falsification of financial records, unethical conduct, harassment and theft
in a confidential, anonymous process.
6. Nomination of Directors
(a) Describe the process by which the board identifies new candidates for board nomination.
The Corporate Governance Committee is responsible for recommending suitable candidates for
nominees for election or appointment as director, and recommending the criteria governing the
overall composition of the Board and governing the desirable characteristics for directors. In
making such recommendations, the Corporate Governance Committee is to consider: (i) the
competencies and skills that the Board considers to be necessary for the Board, as a whole, to
possess; (ii) the competencies and skills that the Board considers each existing director to
possess; (iii) the competencies and skills that each new nominee will bring to the boardroom; and
(iv) whether or not each new nominee can devote sufficient time and resources to his or her
duties as a member of the Board.
In the past, when potential candidates have been identified, they are screened to ensure that they
possess the requisite qualities of integrity, areas of business and professional experience,
independence considerations and other skills. The other commitments of the potential candidates
are also considered to ensure that the candidate is able to fulfill his obligations as a member of
the Board. Potential candidates are identified through suggestions by members of the Board,
industry contacts and, in certain cases, professional search agencies.
The Corporate Governance Committee is also to review on a periodic basis the composition of
the Board to ensure that an appropriate number of independent directors sit on the Board, and
analyze the needs of the Board and recommend nominees who meet such needs.
(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 Corporate Governance Committee, which is responsible for nominating directors, is
comprised of only independent directors.
(c) If the board has a nominating committee, describe the responsibilities, powers and operation of
the nominating committee.
See item 6(a) above.
7. Compensation
(a) Describe the process by which the board determines the compensation for the issuer's directors
and officers.
See "Statement of Executive Compensation – Compensation Discussion and Analysis" in the
case of officers and "Director Compensation" in respect of directors.
(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 Human Resources Committee is comprised of three independent directors.
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(c) If the board has a compensation committee, describe the responsibilities, powers and operation
of the compensation committee.
See "Statement of Executive Compensation - Compensation Governance - Human Resources
Committee Mandate" in the body of this Information Circular.
8. Other Board Committees
If the board has standing committees other than the audit, compensation and nominating committees
identify the committees and describe their function.
Other than the Audit Committee and the Human Resources Committee, the Company has
established a Corporate Governance Committee (which also serves as the nominating committee),
Reserves Committee and Health, Safety and Environment Committee.
The Corporate Governance Committee acts as the nominating committee of the Company and
carries out the functions with respect thereto as described under item 6(a) above. In addition, the
Corporate Governance Committee is responsible for developing the approach of the Company in
matters concerning corporate governance including:
(i)
annually reviewing the mandates of the Board and its committees (including the terms of
reference for the Committee chair) and recommend to the Board such amendments to
those mandates as the Committee believes are necessary or desirable;
(ii)
considering and reviewing, and if thought fit, approving requests from directors or
committees of directors of the engagement of special advisors from time to time;
(iii)
preparing and recommending to the Board annually a statement of corporate governance
practices to be included in the Company’s annual report or information circular as required
by the TSX and any other regulatory authority;
(iv)
making recommendations to the Board as to which directors should be classified as
"independent" directors, "related" directors or "unrelated" directors pursuant to any such
report or circular;
(v)
reviewing on a periodic basis the composition of the Board and ensuring that an
appropriate number of independent directors sit on the Board, analyzing the needs of the
Board and recommending nominees who meet such needs;
(vi)
assessing, at least annually, the effectiveness of the Board as a whole, the committees of
the Board and the contribution of individual directors (including the competencies and skills
that each individual director is expected to bring to the Board), including considering the
appropriate size of the Board;
(vii)
recommending suitable candidates for nominees for election or appointment as directors,
and recommending the criteria governing the overall composition of the Board and
governing the desirable individual characteristics for directors and in making such
recommendations, the Committee should consider:
a. the competencies and skills that the Board considers to be necessary for the Board,
as a whole, to possess;
b. the competencies and skills that the Board considers each existing director to
possess;
c.
the competencies and skills each new nominee will bring to the boardroom; and
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d. whether or not each new nominee can devote sufficient time and resources to his or
her duties as a member of the Board;
(viii) as required, developing, for approval by the Board, an orientation and education program
for new recruits to the Board;
(ix)
to act as a forum for concerns of individual directors in respect of matters that are not
readily or easily discussed in a full Board meeting, including the performance of
management or individual members of management or the performance of the Board or
individual members of the Board;
(x)
developing and recommending to the Board for approval and periodically reviewing
structures and procedures designed to ensure that the Board can function effectively and
independently of management;
(xi)
making recommendations to the Board regarding appointments of corporate officers and
senior management;
(xii)
establishing, reviewing and updating periodically a Code of Business Conduct and Ethics
(the "Code") and ensuring that management has established a system to monitor
compliance with the Code; and
(xiii) reviewing management's monitoring of the Company’s compliance with the Code.
The Reserves Committee is responsible for various matters relating to reserves of the Company that
may be delegated to the Reserves Committee pursuant to National Instrument 51-101 (Standards of
Disclosure for Oil and Gas Activities) ("NI 51-101"), including:
(i)
reviewing the Company’s procedures relating to the disclosure of information with respect
to oil and gas activities, including reviewing its procedures for complying with its disclosure
requirements and restrictions set forth under applicable securities requirements;
(ii)
reviewing the Company’s procedures for providing information to the independent
evaluator;
(iii)
meeting, as considered necessary, with management and the independent evaluator to
determine whether any restrictions placed by management affect the ability of the evaluator
to report without reservation on the Reserves Data (as defined in NI 51-101) (the "Reserves
Data") and to review the Reserves Data and the report of the independent evaluator
thereon (if such report is provided);
(iv)
reviewing the appointment of the independent evaluator and, in the case of any proposed
change to such independent evaluator, determining the reason therefor and whether there
have been any disputes with management;
(v)
providing a recommendation to the Board as to whether to approve the content or filing of
the statement of the Reserves Data and other information that may be prescribed by
applicable securities requirements including any reports of the independent engineer and of
management in connection therewith;
(vi)
reviewing the Company’s procedures for reporting other information associated with oil and
gas producing activities; and
(vii)
generally reviewing all matters relating to the preparation and public disclosure of estimates
of the Company's reserves.
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The Health, Safety and Environment Committee (the "HS&E Committee") was constituted in order to
assist the Board in meeting its responsibilities in respect of: (a) Long Run's legal, industry and
community obligations pertaining to the areas of health, safety and environment; and (b) establishing
appropriate environment, health and safety policies and procedures and maintaining management
systems to implement such policies and to monitor compliance. The mandate of the HS&E
Committee requires the HS&E Committee to:
(i)
review of the Company’s internal control systems in the areas of health, safety and
environment and the Company’s strategies and policies regarding health, safety and
environment;
(ii)
review and recommend to the Board for approval:
(I) the HS&E Committee mandate and subsequent revisions; and
(II) fundamental policies pertaining to health, safety and environment having the
potential to impact the Company’s activities and strategies.
(iii)
review and report to the Board:
(I)
on the Company’s performance with respect to applicable laws, regulations and the
Company’s policies with respect to health, safety and the environment on a
quarterly basis;
(II)
on emerging trends, issues and regulations related to health, safety and the
environment that are relevant to the Company;
(III) the findings of any significant report by regulatory agencies, external health, safety
and environment consultants or auditors concerning the Company’s performance in
health, safety and environment and any necessary corrective measures taken to
address issues and risks with regards to the Company’s performance in the areas of
health, safety and environment that have been identified by Long Run, external
auditors or by regulatory agencies; and
(IV) the results of any review with management, outside accountants and legal advisors
of the implications of major corporate undertakings such as the acquisition or
expansion of facilities or decommission of facilities; and
(iv)
perform any other activities consistent with the Mandate of the HS&E Committee as the
HS&E Committee or the Board deems necessary or appropriate.
9. Assessments
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 Corporate Governance Committee is responsible by its terms of reference to evaluate the
effectiveness of the Board, committees and individual directors. The Corporate Governance
Committee evaluates Board effectiveness through its communications with Board members. The
Committee, with the participation of the Chair, may recommend changes to enhance Board
performance based on this communication as well as based on its review and assessment of the
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Board structure and individuals in relation to current industry and regulatory expectations. This
methodology has been both responsive and practical.
From time to time, the Corporate Governance Committee considers procedural or substantive
changes to increase the Board's effectiveness and whether a more formal assessment process
should be instituted given the size of the Company and intends to institute a more formalized Board
and director evaluation program in 2015.
10. Director Term Limits and Other Mechanisms of Board Renewal
Based on the recommendation of the Corporate Governance Committee, the Board has adopted a
Board and Management Diversity and Board Renewal Policy (the "Diversity and Renewal Policy"),
which includes mechanisms for ensuring Board renewal. As part of the Board’s renewal process
under the Diversity and Renewal Policy, the Corporate Governance Committee annually reviews the
skills and experience of the current directors of Long Run to assess whether the Board’s skills and
experience need to be strengthened in any area. In addition to considering the skills and experience
of the Board, the Corporate Governance Committee also assesses the knowledge and character of
all nominees to the Board and other factors such as independence of the directors to ensure that the
Board is operating effectively and independently of management.
The Board does not believe that fixed term limits or mandatory retirement ages are in the best interest
of Long Run. However, pursuant to the Diversity and Renewal Policy the Corporate Governance
Committee considers both the term of service and age of individual directors, the average term of the
Board as a whole and turnover of directors over the prior years when proposing nominees for election
of the directors of the Company. The Corporate Governance Committee considers the benefits of
regular renewal in the context of the needs of the Board at the time and the benefits of the
institutional knowledge of the Board members.
11. Policies Regarding the Representation of Women on the Board
The Diversity and Renewal Policy as adopted by the Board addresses the identification and
nomination of women directors of the Company.
The main principle of the Diversity and Renewal Policy is that Board nominations and executive
officer appointments should be made on the basis of the skills, knowledge, experience and character
of individual candidates and the requirements of the Board and management at the time. Long Run is
committed to a meritocracy and believes that considering the broadest group of individuals who have
the skills, knowledge, experience and character required to provide leadership needed to achieve our
business objectives, without reference to their age, gender, race, ethnicity or religion, is in the best
interests of Long Run and all of its stakeholders.
The Board recognizes the benefits of diversity within the Board and within management of Long Run
and, pursuant to the Diversity and Renewal Policy, the Board encourages the consideration of women
who have the necessary, skills, knowledge, experience and character when considering new potential
candidates for the Board.
To ensure the effectiveness of Diversity and Renewal Policy, the Corporate Governance Committee
will review the number of women considered or brought forward as potential nominees for Board
positions and the skills, knowledge, experience and character of any such women candidates relative
to other candidates to ensure that women candidates are being fairly considered relative to other
candidates. The Corporate Governance Committee will also review the number of women actually
appointed and serving on the Board to evaluate whether it is desirable to adopt additional
requirements or policies with respect to the diversity of the Board.
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12. Consideration of the Representation of Women in the Director Identification and Selection
Process
As a result of the Company’s commitment to meritocracy, 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. However, pursuant to the Diversity and Renewal Policy the Board encourages the
consideration of women who have the necessary, skills, knowledge, experience and character when
considering new potential candidates for the Board. The Corporate Governance Committee will also
review the number of women actually appointed and serving on the Board to evaluate whether it is
desirable to adopt additional requirements or policies with respect to the diversity of the Board.
13. Consideration Given to the Representation of Women in Executive Officer Appointments
As a result of the Company’s commitment to meritocracy, the level of representation of women in
executive officer positions is not considered when making executive officer appointments. However,
pursuant to the Diversity and Renewal Policy the Board encourages the consideration of women who
have the necessary, skills, knowledge, experience and character when considering new potential
candidates for executive officer positions. The Corporate Governance Committee will also review the
number of women actually appointed and serving as executive officers to evaluate whether it is
desirable to adopt additional requirements or policies with respect to the diversity of management.
14. Issuer’s Targets Regarding the Representation of Women on the Board and in Executive
Officer Positions
The Company has not imposed quotas or targets regarding the representation of women on the
Board and in executive officer positions. The Board believes that imposing quotas or targets
regarding the representation of women on the Board and in executive officer positions would
compromise the principles of meritocracy.
15. Number of Women on the Board and in Executive Officer Positions
There is presently one woman serving on the Board, Ms. Patricia Newson, which represents
approximately 11% of the number of directors on the Board. Ms. Newson has advised that, due to
other commitments, she will not be standing for re-election at the Meeting.
There are presently two women serving in executive officer positions at the Corporation, Ms. Corine
Bushfield, Senior Vice President and Chief Financial Officer and Ms. Jana King, Vice President,
Exploration, which represents approximately 30% of the number of executive officer positions at the
Corporation.
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APPENDIX A
MANDATE OF THE BOARD OF DIRECTORS
GENERAL
The Board of Directors (the "Board") of Long Run Exploration Ltd. (the "Corporation") is responsible for
the stewardship of the Corporation. In discharging its responsibility, the Board will exercise the care,
diligence and skill that a reasonably prudent person would exercise in comparable circumstances and will
act honestly and in good faith with a view to the best interests of the Corporation. In general terms, the
Board will:
1. in consultation with the chief executive officer of the Corporation (the "CEO"), define the principal
objectives of the Corporation;
2. supervise the management of the business and affairs of the Corporation with the goal of achieving
the Corporation's principal objectives as developed in association with the CEO;
3. discharge the duties imposed on the Board by applicable laws; and
4. for the purpose of carrying out the foregoing responsibilities, take all such actions as the Board
deems necessary or appropriate.
SPECIFIC
Executive Team Responsibility
1. Appoint the CEO and senior officers, approve their compensation, and monitor the CEO's
performance against a set of mutually agreed corporate objectives directed at maximizing
shareholder value.
2. In conjunction with the CEO, develop a clear mandate for the CEO, which includes a delineation of
management's responsibilities.
3. Establish processes as required that adequately provides for succession planning, including the
appointing, training and monitoring of senior management.
4. Establish limits of authority delegated to management.
Operational Effectiveness and Financial Reporting
1. Annual review and adoption of a strategic planning process and approval of the corporate strategic
plan, which takes into account, among other things, the opportunities and risks of the business.
2. Establish or cause to be established systems to identify the principal risks to the Corporation and that
the best practical procedures are in place to monitor and mitigate the risks.
3. Establish or cause to be established processes to address applicable regulatory, corporate, securities
and other compliance matters.
4. Establish or cause to be established an adequate system of internal control.
5. Establish or cause to be established due diligence processes and appropriate controls with respect to
applicable certification requirements regarding the Corporation's financial and other disclosure.
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6. Review and approve the Corporation's financial statements and oversee the Corporation's
compliance with applicable audit, accounting and reporting requirements.
7. Approve annual operating and capital budgets.
8. Review and consider for approval all amendments or departures proposed by management from
established strategy, capital and operating budgets.
9. Review operating and financial performance results relative to established strategy, budgets and
objectives.
Integrity/Corporate Conduct
1. Establish a communications policy or policies to ensure that a system for corporate communications
to all stakeholders exists, including processes for consistent, transparent, regular and timely public
disclosure, and to facilitate feedback from stakeholders.
2. Approve a Business Conduct & Ethics Practice for directors, officers and employees and monitor
compliance with the Practice and approve any waivers of the Practice for officers and directors.
3. To the extent feasible, satisfy itself as to the integrity of the CEO and other executive officers of the
Corporation and that the CEO and other executive officers create a culture of integrity throughout the
Corporation.
Board Process/Effectiveness
1. Attempt to ensure that Board materials are distributed to directors in advance of regularly scheduled
meetings to allow for sufficient review of the materials prior to the meeting. Directors are expected to
attend all meetings.
2. Engage in the process of determining Board member qualifications with the Corporate Governance
Committee including ensuring that a majority of directors qualify as independent directors pursuant to
National Instrument 58-101 Disclosure of Corporate Governance Practices (as implemented by the
Canadian Securities Administrators and as amended from time to time) and that the appropriate
number of independent directors are on each committee of the Board as required under applicable
securities rules and requirements.
3. Approve the nomination of directors.
4. Provide a comprehensive orientation to each new director.
5. Establish an appropriate system of corporate governance including practices to ensure the Board
functions independently of management.
6. Establish appropriate practices for the regular evaluation of the effectiveness of the Board, its
committees and its members.
7. Establish committees and approve their respective mandates and the limits of authority delegated to
each committee.
8. Review and re-assess the adequacy of the mandate of the committees of the Board on a regular
basis but not less frequently than on an annual basis.
9. Review the adequacy and form of the directors' compensation to ensure it realistically reflects the
responsibilities and risks involved in being a director.
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Each member of the Board is expected to understand the nature and operations of the Corporation's
business, and have an awareness of the political, economic and social trends prevailing in all countries or
regions in which the Corporation operates, or is contemplating potential operations.
Independent directors shall meet regularly without non-independent directors and management
participation.
The Board may retain persons having special expertise and may obtain independent professional advice
to assist it in fulfilling its responsibilities at the expense of the Corporation, as determined by the Board.
In addition to the above, adherence to all other Board responsibilities as set forth in the Corporation's
By-Laws, applicable policies and practices and other statutory and regulatory obligations, such as
issuance of securities, etc., is expected.
DELEGATION
1. The Board may delegate its duties to, and receive reports and recommendations from, any committee
of the Board.
2. Subject to terms of the Disclosure, Confidentiality and Trading Policy and other policies and
procedures of the Corporation, the Chairman of the Board and the Lead Director will act as a liaison
between stakeholders of the Corporation and the Board (including independent members of the
Board).
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