Cameco 2021 Management Proxy Circular
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What’s inside Message from the Chair of the Board and the CEO 1 ESG Content map 4 Notice of our 2021 annual meeting of shareholders 5 Management proxy circular 6 Business of the meeting 7 • Delivery of meeting materials 9 • Voting 9 About the nominated directors 17 • Director profiles • 2020 Meetings and attendance • Director compensation and share ownership Our board 32 • Board structure, composition and succession • Skills, attributes and experience • Board diversity • Board, committee and director assessments • Director development Our corporate governance 41 Key elements of our corporate governance 41 How the board operates 41 • Role of the board • Executive succession planning and leadership development • Internal controls Our expectations of directors 47 • Code of conduct and ethics • Serving on other boards • Board interlocks • Change in position Board independence standards 50 Stakeholder engagement 50 • Disclosure • Engagement with the investment community • Say on pay • How to engage with the board Voting results 53 Shareholder proposals 53 Advance notice by-law 53 Accessing our governance and other regulatory disclosure 53 Compliance 54 Governance guidelines 54 Board committees 55 • Committee responsibilities What’s inside • Committee membership • Committee chair rotation • Cross-committee attendance • Access to management and outside advisors • Committee reports Message from the Chair of Human Resources and 62 Compensation Committee Compensation discussion and analysis 65 Our 2020 named executive officers 66 Compensation governance 67 • Independent advice Compensation program risk management 68 • Clawback policy • Share ownership requirements • Anti-hedging policy Compensation program decision-making process 69 Our approach to executive compensation 70 • Compensation comparator group • Target compensation • Share ownership requirements Our executive compensation program aligns with our strategy and 72 ESG performance Compensation components overview 73 • Base salary • Short-term incentive (STI) plan • Long-term incentive (LTI) program • Performance share unit plan • Restricted share unit plan • Stock option plan • Pension • Benefits 2020 Performance and decisions 80 • Market context • Share performance and executive compensation • Base salary • Short-term incentive (STI) results and scorecard • PSU results and scorecard CEO compensation summary 89 • 2020 Key results • CEO compensation • CEO realized and realizable pay • Lookback • Share ownership What’s inside 2021 Compensation decisions 91 • Base salary • Short-term incentive (STI) • Long-term incentive (LTI) 2020 Compensation details 92 • Summary compensation table • Incentive plan awards • Options exercised and value realized during the year • Equity compensation plan information • Pension benefits • Loans to executives • Termination and change of control benefits Appendices 103 Message from the Chair of the Board and the CEO1 We are pleased to invite you to Cameco’s annual meeting of shareholders at 8:30 a.m. (CST) on May 6, 2021. The attached management proxy circular provides information about the business of the meeting, the voting process, this year’s nominated directors, our corporate governance practices, our approach to executive compensation and our 2021 compensation decisions. The board’s goal is to deliver long-term value to Cameco’s stakeholders. The board pays particular attention to strategy and value creation, ESG and risk oversight, board governance and management succession – all areas the board sees as fundamental to Cameco’s sustainability and future success. Decisive action to protect our people Challenges created by the COVID-19 pandemic affected every aspect of the Ian Bruce, Chair company in 2020, and Cameco’s management team took proactive measures to protect the health and well-being of Cameco’s workers, their families and their communities. The board was fully engaged with management as it acted quickly and carefully at the outset to protect Cameco’s workers and to help slow down the spread of the virus. When the pandemic was declared in March 2020, the majority of our corporate workforce quickly transitioned to physically distanced, work-from-home arrangements to keep people safe and prevent potential community spread of the virus. Our remote Cigar Lake operation in northern Saskatchewan was temporarily placed in safe care and maintenance and, at our fuel services division in Ontario, production was temporarily suspended at the Blind River refinery and UF6 plant in Port Hope. These measures ensured far fewer people were on site allowing us to achieve physical distancing wherever Tim Gitzel, CEO possible, and to put new COVID-19 safety protocols in place. Under the guidance of provincial re-opening plans, we implemented extensive new screening and protective measures at all our facilities. We continued to focus on protecting employees and our neighbouring communities as we restarted production. Despite restarting our Cigar Lake mine in September 2020, in response to increased case numbers in northern Saskatchewan and growing uncertainty about the availability of the required workforce, production was again suspended at the mine in mid-December 2020. We remain vigilant throughout our operations, and our COVID-19 screening and safety measures will be kept in place for the foreseeable future. We also continue to work closely with public health officials, particularly in the remote northern Saskatchewan region where we operate fly-in, fly-out facilities. We continued to pay all our employees during the periods of suspended production. Strategic focus The board is focused on Cameco’s strategic direction and risk oversight in order to help the company achieve its vision to energize a clean-air world. The board works closely with management, reviewing and discussing strategy at every regular board meeting and, in 2020, the board met an additional 10 times (either as formal 1 The message from the chair of the board and the CEO contains forward-looking information and is based upon the assumptions and subject to the material risks described at pages 2 through 4 of our 2020 management’s discussion and analysis (MD&A). Actual outcomes for future periods may be significantly different. 2021 MANAGEMENT PROXY CIRCULAR 1 meetings or update calls) to provide strategic oversight on various matters as the company navigated the challenges of the pandemic environment. Despite the disruptions, Cameco executed on all strategic fronts in 2020. Management continued to focus on preserving the value of Cameco’s lowest-cost assets, on maintaining a strong balance sheet, on protecting and extending the value of our contract portfolio and on efficiently managing the company in a low-price environment. Cameco is increasingly confident that the uranium market will undergo a transition, similar to what happened in the UF6 conversion market and is now benefitting the fuel services segment of Cameco’s business. The board and management are optimistic about the drivers of long-term growth in the nuclear industry and remain committed to taking the necessary steps to execute on Cameco’s strategy, self-manage risk and successfully navigate the market transition. We are also pleased that, following two lower court decisions in our favour, the Supreme Court of Canada has denied CRA’s appeal request and that the dispute for the 2003, 2005 and 2006 tax years are fully and finally resolved. Increasing populations and growing electricity demand around the world are driving the long-term fundamentals for nuclear. Momentum is also building for non-traditional uses of nuclear power. As countries and companies around the world are committing to net-zero carbon targets, there is increasing recognition that nuclear energy must play a central role in the shift to a low-carbon, climate resilient economy. Initiatives are underway at Cameco to improve efficiency and reduce costs across the organization. Several are geared towards innovation and accelerating the adoption of advanced digital and automation technologies. These initiatives will leave us well positioned, when the market turns, to advance toward achieving our vision to energize a clean-air world. Cameco is pursuing non-traditional markets for UO2 and fuel fabrication in its fuel services business. We have also been actively securing new contracts for reactor components to support refurbishment of Canadian nuclear reactors. We recently increased our interest, from 24% to 49%, in Global Laser Enrichment, a company testing a third-generation enrichment technology that, if successful, will use lasers to commercially enrich uranium. ESG and risk oversight Cameco has a mature enterprise risk management program with processes and controls to ensure we are appropriately monitoring, managing and mitigating risk. The board oversees Cameco’s strategic risks, and oversight of top-tier tactical and functional risks are allocated to specific board committees. In 2020, the board spent time discussing environmental, social and governance (ESG) matters and climate risks as well as various other risks that were heightened due to the COVID-19 pandemic. Cameco’s commitment to ESG matters is closely monitored by the board and its committees. A safe, healthy and rewarding workplace, a clean environment and supportive communities are all measures of success that are integrated into Cameco’s strategic plan and are used to set compensable targets for the management team. On the supportive communities’ front, we are especially proud of the work