6-K

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16

under the Securities Exchange Act of 1934

April 14, 2022

Commission File Number 001-35203

 

 

THERATECHNOLOGIES INC.

(Translation of registrant’s name into English)

 

 

2015 Peel Street, Suite 1100

Montréal, Québec, Canada

H3A 1T8

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F  ☐            Form 40-F  ☒

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes  ☐            No  ☒

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes  ☐            No  ☒

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes  ☐            No  ☒

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-            .

 

 

 


THERATECHNOLOGIES INC.

 

Exhibit

  

Description

99.1    Notice of Annual Meeting of Shareholders Dated April 8, 2022
99.2   

Management Proxy Circular Dated April 8, 2022

99.3   

Form of Proxy


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

THERATECHNOLOGIES INC.
By:   /s/ Jocelyn Lafond
Name:    Jocelyn Lafond
Title:      Vice President, Legal Affairs

Date: April 14, 2022

EX-99.1

Exhibit 99.1

 

LOGO

 

 

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

 

 

To the shareholders of Theratechnologies Inc. (the “Corporation”):

NOTICE IS HEREBY GIVEN that an annual meeting of shareholders (the “Meeting”) of the Corporation will be held at the International Air Transport Association, 800 Square-Victoria, 11th floor, Montreal, Québec, on Tuesday, May 10, 2022 at 10:00 a.m. (Eastern Time) for the following purposes:

 

  (1)

to receive the consolidated financial statements for the fiscal year ended November 30, 2021, as well as the auditors’ report thereon;

 

 

  (2)

to elect directors for the ensuing year;

 

 

  (3)

to appoint auditors for the ensuing year and authorize the directors to set their compensation;

 

 

  (4)

to consider and, if deemed advisable, to pass Resolution 2022-1 (the text of which is attached as Appendix “A” to the accompanying Management Proxy Circular), with or without amendments, ratifying the amendments and the renewal of the shareholder rights plan of the Corporation which has been in force since February 10, 2010, the whole as described in the accompanying Management Proxy Circular;

 

 

  (5)

to consider and, if deemed advisable, to pass Resolution 2022-2 (the text of which is attached as Appendix “B” to the accompanying Management Proxy Circular), with or without amendments, approving amendments to the share option plan of the Corporation, the whole as described in the accompanying Management Proxy Circular; and

 

 

  (6)

to transact such other business as may properly come before the Meeting.

 

Only persons registered as shareholders on the records of the Corporation as of the close of business on April 5, 2022 are entitled to receive notice of, and to vote or act at, the Meeting. No person who becomes a shareholder after such date will be entitled to vote or act at the Meeting or any adjournment thereof.

A shareholder who is unable to attend the Meeting in person may appoint another person (who need not be a shareholder of the Corporation) to represent him or her at the Meeting by completing the enclosed form of proxy and returning same to the Corporate Secretary of the Corporation, c/o Computershare Trust Company of Canada, 1500 Robert-Bourassa Boulevard, 7th Floor, Montreal, Québec, Canada H3A 3S8, prior to 5:00 p.m. (Eastern Time) on May 6, 2022.

DATED at Montreal, Québec, Canada, April 8, 2022

 

  

BY ORDER OF THE BOARD OF DIRECTORS

  
  

(signed) Jocelyn Lafond

 

Jocelyn Lafond

Vice President, Legal Affairs, and Corporate Secretary

Theratechnologies Inc.

2015 Peel Street, 11th Floor

Montreal, Québec, Canada H3A 1T8

  
EX-99.2

Exhibit 99.2

 

 

LOGO

NOTICE OF ANNUAL MEETING

OF SHAREHOLDERS TO BE HELD ON

TUESDAY, MAY 10, 2022

AND

MANAGEMENT PROXY CIRCULAR

 

April 8, 2022

 


LOGO

 

 

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

 

 

To the shareholders of Theratechnologies Inc. (the “Corporation”):

NOTICE IS HEREBY GIVEN that an annual meeting of shareholders (the “Meeting”) of the Corporation will be held at the International Air Transport Association, 800 Square-Victoria, 11th floor, Montreal, Québec, on Tuesday, May 10, 2022 at 10:00 a.m. (Eastern Time) for the following purposes:

 

  (1)

to receive the consolidated financial statements for the fiscal year ended November 30, 2021, as well as the auditors’ report thereon;

 

 

  (2)

to elect directors for the ensuing year;

 

 

  (3)

to appoint auditors for the ensuing year and authorize the directors to set their compensation;

 

 

  (4)

to consider and, if deemed advisable, to pass Resolution 2022-1 (the text of which is attached as Appendix “A” to the accompanying Management Proxy Circular), with or without amendments, ratifying the amendments and the renewal of the shareholder rights plan of the Corporation which has been in force since February 10, 2010, the whole as described in the accompanying Management Proxy Circular;

 

 

  (5)

to consider and, if deemed advisable, to pass Resolution 2022-2 (the text of which is attached as Appendix “B” to the accompanying Management Proxy Circular), with or without amendments, approving amendments to the share option plan of the Corporation, the whole as described in the accompanying Management Proxy Circular; and

 

 

  (6)

to transact such other business as may properly come before the Meeting.

 

Only persons registered as shareholders on the records of the Corporation as of the close of business on April 5, 2022 are entitled to receive notice of, and to vote or act at, the Meeting. No person who becomes a shareholder after such date will be entitled to vote or act at the Meeting or any adjournment thereof.

A shareholder who is unable to attend the Meeting in person may appoint another person (who need not be a shareholder of the Corporation) to represent him or her at the Meeting by completing the enclosed form of proxy and returning same to the Corporate Secretary of the Corporation, c/o Computershare Trust Company of Canada, 1500 Robert-Bourassa Boulevard, 7th Floor, Montreal, Québec, Canada H3A 3S8, prior to 5:00 p.m. (Eastern Time) on May 6, 2022.

DATED at Montreal, Québec, Canada, April 8, 2022

 

  

BY ORDER OF THE BOARD OF DIRECTORS

  
  

(signed) Jocelyn Lafond

 

Jocelyn Lafond

Vice President, Legal Affairs, and Corporate Secretary

Theratechnologies Inc.

2015 Peel Street, 11th Floor

Montreal, Québec, Canada H3A 1T8

  


 

LOGO

 

 

MANAGEMENT PROXY CIRCULAR

 

 

 

The information contained in this management proxy circular (the “Circular”) is given as at April 8, 2022, except as otherwise noted. In this Circular, the symbol “$” refers to the American dollar and the symbol “CAN $” or “CAD” refers to the Canadian dollar.

 

 


TABLE OF CONTENTS

 

ITEM I.     INFORMATION RELATING TO VOTING

     1  

    1.

 

By Proxy

     1  

    2.

 

In Person

     4  

    3.

 

Voting Securities and Principal Holders

     4  

ITEM II.   SUBJECTS TO BE TREATED AT THE MEETING

     5  

    1.

 

Receipt of Financial Statements

     5  

    2.

 

Election of Directors

     5  

    3.

 

Appointment of Auditors

     23  

    4.

 

Shareholder Rights Plan

     24  

    5.

 

Amendments to Share Option Plan

     29  

    6.

 

Other Matters to be Acted Upon

     30  

ITEM III.  ENVIRONMENTAL, SOCIAL AND GOVERNANCE MATTERS

     31  

ITEM IV.  COMPENSATION

     32  

    1.

 

Compensation Discussion & Analysis

     32  

    2.

 

Summary Compensation Table

     46  

    3.

 

Incentive Plan Awards

     51  

    4.

 

Termination and Change of Control Provisions

     54  

    5.

 

Performance Graph

     60  

ITEM V.   CORPORATE GOVERNANCE DISCLOSURE

     62  

ITEM VI.  OTHER INFORMATION

     69  

    1.

 

Audit Committee Information

     69  

    2.

 

Shareholder Proposals

     70  

    3.

 

Additional Documentation

     70  

    4.

 

Approval by the Board

     71  

APPENDIX A RESOLUTION 2022-1 – SHAREHOLDER RIGHTS PLAN

     72  

APPENDIX B RESOLUTION 2022-2 – SHARE OPTION PLAN

     73  

SCHEDULE A TO APPENDIX B SHARE OPTION PLAN

     74  

APPENDIX C MANDATE OF THE BOARD OF DIRECTORS

     85  

APPENDIX D DIRECTOR ORIENTATION AND CONTINUING EDUCATION POLICY

     88  

APPENDIX E NOMINATING AND CORPORATE GOVERNANCE COMMITTEE CHARTER

     90  

APPENDIX F COMPENSATION COMMITTEE CHARTER

     94  

APPENDIX G AUDIT COMMITTEE CHARTER

     98  


ITEM I.           INFORMATION RELATING TO VOTING

 

You may vote your shares either through a proxy or in person at the annual meeting of shareholders (the “Meeting”) of Theratechnologies Inc. (the “Corporation” or “Theratechnologies”).

1.          By Proxy

Solicitation of Proxies

This Circular is provided in connection with the solicitation by management of the Corporation of proxies to be used at the Meeting of the Corporation to be held on Tuesday, May 10, 2022, at the time, place and for the purposes set forth in the attached Notice of Annual Meeting of Shareholders (the “Notice of Meeting”) and at any continuation of the Meeting after adjournment thereof.

It is expected that the solicitation of proxies will be made primarily by mail. However, officers or employees of the Corporation may also solicit proxies by telephone, telecopy, e-mail or in person. Our employees will receive no compensation for these services. The entire cost of solicitation will be borne by the Corporation. Pursuant to National Instrument 54-101 Communication with Beneficial Owners of Securities of a Reporting Issuer (“NI 54-101”), arrangements have been made with clearing agencies, brokerage houses and other financial intermediaries to forward proxy-related material to beneficial owners of common shares. See “Non-Registered Holders” below.

Terms of Proxy Grant

A registered shareholder who is unable to attend the Meeting in person is requested to complete and sign the enclosed form of proxy and to deliver it to Computershare Trust Company of Canada (“Computershare”) as per the instructions below. By completing the enclosed form of proxy, you appoint the persons proposed in that form to represent your interests and vote your shares on your behalf at the Meeting. The persons named in the enclosed form of proxy are directors or officers of the Corporation. However, you have the right to appoint a person (who need not be a shareholder) to represent you at the Meeting other than the persons designated in the form of proxy provided by the Corporation. To do this, you must insert such person’s name in the blank space provided in the enclosed form of proxy.

If you hold your shares through an intermediary (a stockbroker, a bank, a trust, a trustee, etc.), you are not a registered shareholder in the registry of shareholders of the Corporation held by Computershare. Therefore, you cannot vote your shares directly at the Meeting. If this is your situation, you will receive from your intermediary explanation as to how to appoint proxies and have them vote your shares. To ensure that your instructions are respected, you must deliver them to your intermediary within the prescribed deadline. See “Non-Registered Holders” below. For any questions, please contact your intermediary directly.

Proxy Voting

The persons named or appointed in the form of proxy will, on a show of hands or any ballot that may be called, vote (or withhold from voting) your shares in respect of which they are appointed as proxies in accordance with the instructions given in the form of proxy. In the absence of instructions, the voting rights attached to the shares referred to in your form of proxy will be exercised FOR the matters mentioned in the attached Notice of Meeting.

Furthermore, the enclosed form of proxy confers upon the proxy holder a discretionary power with respect to amendments or variations to matters identified in the Notice of Meeting and with respect to all other matters which may properly come before the Meeting, or any continuation after adjournment thereof. As at

 

   

INFORMATION RELATING TO VOTING

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MANAGEMENT PROXY CIRCULAR

   THERATECHNOLOGIES INC.


the date of this Circular, management of the Corporation knows of no such amendments, variations or other matters to be brought before the Meeting.

Delivery of Form of Proxy and Deadlines

If you hold your shares personally and are a registered shareholder in the registry of shareholders of the Corporation, please send the completed form of proxy to the Secretary of the Corporation, c/o Computershare Trust Company of Canada, 1500 Robert-Bourassa Boulevard, 7th Floor, Montreal, Québec H3A 3S8, prior to 5:00 p.m. (Eastern Time) on May 6, 2022 (unless you attend the Meeting in person). All shares represented by proper proxies accompanied by duly completed declarations received by Computershare at the latest on such date and prior to such time will be voted in accordance with your instructions as specified in the proxy form on any ballot that may be called at the Meeting.

If you hold your shares through an intermediary, please proceed as indicated in the documentation sent by your intermediary and within the deadlines specified therein. See “Non-Registered Holders” below. For any questions, please contact your intermediary directly.

Revocation of a Proxy

You may, at any time, including any continuation of the Meeting after adjournment thereof, revoke a proxy for any business with respect to which said proxy confers a vote that has not already been cast.

If you hold your shares personally and are a registered shareholder in the registry of shareholders of the Corporation, please send a written notice to revoke a proxy bearing your signature or that of your proxy (or a representative of your proxy if your proxy is a corporation) to the Corporate Secretary of the Corporation, c/o Computershare Trust Company of Canada, 1500 Robert-Bourassa Boulevard, 7th Floor, Montreal, Québec H3A 3S8, prior to 5:00 p.m. (Eastern Time) on May 6, 2022. You may also revoke a proxy in person at the Meeting by making a request to that effect to the Secretary of the Corporation.

If you hold your shares through an intermediary, please proceed as indicated in the documentation sent by your intermediary and within the deadlines specified therein. For any questions, please contact your intermediary directly.

Non-Registered Holders

The information set forth in this section should be reviewed carefully by the non-registered shareholders. Shareholders who do not hold their shares in their own name (“Beneficial Shareholders”) should note that only proxies deposited by shareholders whose names appear on the records maintained by the Corporation’s registrar and transfer agent as registered holders of shares will be recognized and acted upon at the Meeting. If shares are listed in an account statement provided to a shareholder by a broker, those shares will, in all likelihood, not be registered in the shareholder’s name. Such shares will more likely be registered under the name of the shareholder’s broker or an agent of that broker. In Canada, the vast majority of such shares are registered under the name of CDS & Co. (the registration name for CDS Clearing and Depository Services Inc., which acts as nominee for many Canadian brokerage firms). Shares held by brokers (or their agents or nominees) on behalf of a broker’s client can only be voted at the direction of the Beneficial Shareholder. Without specific instructions, brokers and their agents and nominees are prohibited from voting shares for the broker’s clients. Therefore, each Beneficial Shareholder should ensure that voting instructions are communicated to the appropriate person well in advance of the Meeting.

There are two categories of Beneficial Shareholders for the purposes of applicable securities regulatory policy in relation to the mechanism of dissemination to Beneficial Shareholders of proxy-related materials and other security holder materials and the request for voting instructions from such Beneficial Shareholders.

 

   

INFORMATION RELATING TO VOTING

   PAGE 2

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   THERATECHNOLOGIES INC.


Non-objecting beneficial owners (“NOBOs”) are Beneficial Shareholders who have advised their intermediary (such as brokers or other nominees) that they do not object to their intermediary disclosing ownership information to the Corporation, consisting of their name, address, e-mail address, securities holdings and preferred language of communication. Securities legislation restricts the use of that information to matters strictly relating to the affairs of the Corporation. Objecting beneficial owners (“OBOs”) are Beneficial Shareholders who have advised their intermediary that they object to their intermediary disclosing such ownership information to the Corporation.

In accordance with the requirements of NI 54-101, the Corporation is sending the Notice of Meeting, the Circular and a voting instruction form (the “Meeting Materials”) indirectly through intermediaries to all Beneficial Shareholders. NI 54-101 permits the Corporation, in its discretion, to obtain a list of its NOBOs from intermediaries and use such NOBO list for the purpose of distributing the Meeting Materials directly to, and seeking voting instructions directly from, such NOBOs. As a result, the Corporation is entitled to deliver the Meeting Materials to Beneficial Shareholders in two manners: (a) directly to NOBOs and indirectly through intermediaries to OBOs; or (b) indirectly to all Beneficial Shareholders through intermediaries. In accordance with the requirements of NI 54-101, the Corporation is sending the Meeting Materials indirectly through intermediaries to all Beneficial Shareholders. The cost of the delivery of the Meeting Materials by intermediaries to Beneficial Shareholders will be borne by the Corporation.

Although a Beneficial Shareholder may not be recognized directly at the Meeting for the purposes of voting shares registered in the name of his or her broker (or his or her broker’s agent), a Beneficial Shareholder may attend the Meeting as proxyholder for the registered shareholder and vote the shares as proxyholder for the registered shareholder by entering his or her own name in the blank space on the proxy form or voting instruction form provided to him or her by his or her broker (or his or her broker’s agent) and return it to that broker (or that broker’s agent) in accordance with the broker’s instructions (or the agent’s instructions).

Applicable securities regulatory policy requires intermediaries, on receipt of Meeting Materials that seek voting instructions from Beneficial Shareholders indirectly, to seek voting instructions from Beneficial Shareholders in advance of shareholder’s meetings on Form 54-101F7 (Request for Voting Instructions Made by Intermediary). Every intermediary/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 or any adjournment(s) thereof. Often, the form of request for voting instructions supplied to a Beneficial Shareholder by its broker is identical to the form of proxy provided to registered shareholders; however, its purpose is limited to instructing the registered shareholders on how to vote on behalf of the Beneficial Shareholder. Beneficial Shareholders who wish to appear in person and vote at the Meeting should be appointed as their own representatives at the Meeting in accordance with the directions of their intermediaries and Form 54-101F7. Beneficial Shareholders can also write the name of someone else whom they wish to attend at the Meeting and vote on their behalf. Unless prohibited by law, the person whose name is written in the space provided in Form 54-101F7 will have full authority to present matters to the Meeting and vote on all matters that are presented at the Meeting, even if those matters are not set out in Form 54-101F7 or this Circular.

The majority of brokers now delegate responsibility for obtaining instructions from clients to Broadridge Financial Solutions, Inc. (“Broadridge”). In forwarding the Meeting Materials to Beneficial Shareholders, Broadridge typically includes a voting instruction form in lieu of the form of proxy that some intermediaries employ. Beneficial Shareholders are requested to complete and return the voting instruction form to Broadridge by mail or facsimile. Alternatively, Beneficial Shareholders can call a toll-free telephone number to vote the shares held by them or access Broadridge’s dedicated voting website at https://proxyvote.com to deliver their voting instructions. Broadridge will then provide aggregate voting instructions to the Corporation’s transfer agent and registrar, which tabulates the results and provides appropriate instructions respecting the voting of shares to be represented at the Meeting or any

 

   

INFORMATION RELATING TO VOTING

   PAGE 3

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   THERATECHNOLOGIES INC.


adjournment(s) thereof. If you have any questions respecting the voting of shares held through a broker or other intermediary, please contact your broker or other intermediary for assistance.

All references to shareholders in this Circular, the enclosed form of proxy and the Notice of Meeting are to the registered shareholders unless specifically stated otherwise.

2.          In Person

If you hold your shares personally and are a registered shareholder in the registry of shareholders of the Corporation, you may present yourself on the date, at the time and place set forth in the Notice of Meeting and register with the representatives of Computershare who will be at the Meeting. You should then follow voting instructions given by the Chair of the Meeting.

If you hold your shares through an intermediary and you wish to vote your shares in person at the Meeting, please proceed as indicated in the documentation sent by your intermediary. For any questions, please contact your intermediary directly.

3.          Voting Securities and Principal Holders

As at April 5, 2022, there were 95,121,639 common shares (the “Common Shares”) of the Corporation issued and outstanding. The Common Shares are the only securities with respect to which a voting right may be exercised at the Meeting. Each Common Share entitles its holder to one vote with respect to the matters voted on at the Meeting.

Holders of Common Shares whose names are registered on the lists of shareholders of the Corporation as at 5:00 p.m. (Eastern time) on April 5, 2022, being the date fixed by the Corporation for determination of the registered holders of Common Shares who are entitled to receive Notice of the Meeting and to vote at the Meeting (the “Record Date”), will be entitled to exercise their voting rights attached to the Common Shares in respect of which they are so registered at the Meeting, or any continuation after adjournment thereof, if present or represented by proxy thereat.

To our knowledge, no person beneficially owns, or controls or directs control, directly or indirectly, over more than ten percent (10%) of the outstanding Common Shares of the Corporation.

 

   

INFORMATION RELATING TO VOTING

   PAGE 4

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   THERATECHNOLOGIES INC.


ITEM II.           SUBJECTS TO BE TREATED AT THE MEETING

 

1.        Receipt of Financial Statements

The consolidated financial statements for the fiscal year ended November 30, 2021 together with the auditors’ report thereon will be presented at the Meeting. The financial statements have already been mailed to you if you requested them, prior to the mailing of this Circular. The financial statements are also available as part of the Corporation’s filings on the SEDAR website at www.sedar.com and on the EDGAR website at www.sec.gov as an exhibit to our Form 40-F dated February 24, 2022. No vote is required on this matter.

2.          Election of Directors

Composition of the Board of Directors

The articles of the Corporation provide that the board of directors of the Corporation (the “Board”) must consist of a minimum of three (3) and a maximum of twenty (20) directors. The Board is currently comprised of nine (9) directors.

Advance Notice By-Law

On June 12, 2020, the Board adopted By-Law No. 4 (the “Advance Notice By-Law”). The Advance Notice By-Law was approved by the shareholders on July 16, 2020.

The purpose of the Advance Notice By-Law is to provide shareholders, directors and management of the Corporation with guidance on the nomination of directors. In particular, the Advance Notice By-Law sets a period of at least (30) days prior to the date of an annual meeting of shareholders, or of any postponement or adjournment thereof, at which directors are to be elected for the submission to the Corporation by shareholders of a notice of director nominations. It also sets forth the information that a shareholder must include in the notice for it to be valid.

The Advance Notice By-Law will allow the Corporation to receive adequate prior written notice of director nominations, as well as sufficient information on the nominees. The Corporation will thus be able to evaluate the proposed nominees’ qualifications and suitability to act as directors. It will also facilitate an orderly and efficient meeting process.

Majority Voting Policy

The Board adopted a majority voting policy (the “Majority Voting Policy”) regarding the election of directors pursuant to which a nominee for election as a director of the Corporation who receives a greater number of votes “withheld” than votes “for” will have to tender his/her resignation to the Board immediately following the meeting of shareholders at which the director was a nominee for election. The Board will determine whether to accept such resignation or not. The Board will make its decision and announce it in a press release within ninety (90) days following the meeting of shareholders. The director who tendered his/her resignation will not be part of any committee or Board deliberations pertaining to his/her resignation. The Majority Voting Policy only applies in circumstances involving an uncontested election of directors.

An “uncontested election of directors” means an election of directors in respect of which (i) the number of director nominees is the same as the number of directors proposed by management to be elected to the Board; (ii) no person other than those nominees who are part of the candidates proposed by management listed in a management circular is proposed at a meeting as a candidate for directorship; or (iii) no proxy materials are circulated in support of one or more nominees who are not part of the candidates proposed by management.

 

   

SUBJECTS TO BE TREATED AT THE MEETING

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   THERATECHNOLOGIES INC.


Nominees

All of the nominees mentioned below for the director positions of the Corporation are elected for a one-year term ending at the next annual meeting of shareholders or when his/her successor is elected, unless he/she resigns or the position becomes vacant as a result of death, dismissal or otherwise, prior to said meeting.

Management proposes that nine (9) directors be elected at the Meeting. Management does not contemplate that any of the nominees listed in the table below will be unable to fulfill his/her mandate as director.

The following table sets forth, for each nominee, the following information:

 

 

his/her name;

 

his/her age;

 

his/her municipality/city/province/state of residence;

 

his/her independence from the Corporation;

 

the date he/she became a director;

 

his/her principal occupation;

 

his/her biography;

 

his/her areas of expertise;

 

his/her memberships on the committees of the Board of the Corporation;

 

the number of Board and committee meetings attended in the fiscal year ended November 30, 2021 while acting as a director and committee member;

 

the number of Common Shares, deferred share units (“DSUs”), stock options, common share purchase warrants (“Warrants”) and convertible notes (“Notes”) held or controlled as at the date of this Circular;

 

his/her compliance with the Shareholding Policy as at November 30, 2021;

 

whether he/she acts as a director of other public companies; and

 

whether he/she acts as a director of a private organization involved in the healthcare industry.

Some of the information set out in the table below with respect to the nominees is not within the knowledge of the Corporation and was provided by each nominee. The information relating to the number of Common Shares, DSUs, stock options, Warrants and Notes held by the nominees in the table below is at the date of this Circular and is based exclusively on reports filed on the Canadian System for Electronic Disclosure by Insiders as at that date.

Unless instructions are given to withhold from voting with regard to the election of one or more nominees to act as directors, the persons whose names appear on the enclosed form of proxy will vote FOR the election of each of the nominees whose names are set out in the table below.

 

   

SUBJECTS TO BE TREATED AT THE MEETING

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   THERATECHNOLOGIES INC.


LOGO

 

Principal Occupation

  

Corporate Director

 

 

Joseph Arena was Vice President, Oncology Products, Global Regulatory Affairs at Pfizer, Inc. (“Pfizer”) between 2018 and 2021. In such a role, he managed a team that provided strategic global leadership to Medicine Teams for Pfizer’s portfolio in oncology. The group was responsible for regulatory strategy and registration of products globally. His tasks included providing guidance on the worldwide regulatory requirements for registration of new chemical entities and new claims, identification of pharmaceutical, toxicological and clinical developmental issues and problem resolution, overseeing the preparation of high quality, effective regulatory submissions, providing oversight and input for all communications agencies and leading scientific teams in direct negotiations with agencies on all issues of product development, product registration and labeling (including post-marketing surveillance).

 

 

Joseph Arena

Age: 67

Norristown, Pennsylvania,

USA

Independent

 

Prior to acting as Vice President, Oncology Products, Global Regulatory Affairs, he acted as Vice President, Cardiovascular and Metabolic Products, between 2016 and 2018 when he joined the Pfizer Worldwide Safety and Regulatory organization. In such a role, he managed a team that provided strategic global leadership to Medicine Teams for Pfizer’s portfolio in Cardiovascular and Metabolic Diseases. The group was responsible for regulatory strategy and registration of products globally.

 

 

Director since:

May 13, 2021

 

Areas of Expertise:

- Regulatory Affairs

- Drug Development

- Medical Education

- Management

 

Compliance with Shareholding Policy:

N.A.(1)

 

Other Public Company Directorship:

None

 

Private Healthcare

 

Prior to joining Pfizer, he was at Merck and Co. Inc. (“Merck”) where he held the role of Vice President, Therapeutic Area Lead Oncology, Immunology and in vitro Diagnostics from 2015 to 2016. His team provided global leadership to development teams for oncology and immunology products and in vitro diagnostics across the portfolio. The group was responsible for regulatory strategy and registration of Merck’s products globally with a focus on the United States, European Union, China and Japan.

 

Mr. Arena began his career as a research scientist in 1989 at Merck Research Laboratories in Rahway, New Jersey. In 1996, he moved to a position in Regulatory Affairs International focusing primarily on Merck’s cardiovascular products. He eventually assumed management and leadership roles with Regulatory Affairs International, including management of therapeutic areas in Diabetes, Neuroscience, Atherosclerosis and Cardiovascular.

 

Mr. Arena received his B.S. in Pharmacy from St. John’s University in Queens, New York. After four (4) years in community and hospital settings, he attended the University of Medicine and Dentistry of New Jersey and received a Ph.D. in Pharmacology, followed by a post-doctoral fellowship in the Physiology Department at the University of Rochester in New York.

Organization

Directorship:

None

 

Committee Membership and Meetings Attended in Fiscal Year 2021

  #   %
 

Board of Directors(2)

  6   100
 

 

Securities Held or Controlled

 

 

Common Shares

(#)

  

 

          DSU          

(#)

  

 

    Options    

(#)

 

 

    Warrants    

(#)

 

 

    Notes     (US$)

  7,500    Nil    14,170   Nil   Nil
 

 

Committees of the Board of Directors

 

N.A.

(1)

Mr. Arena did not have to comply with the shareholding policy as he was appointed during the fiscal year ending November 30, 2021.

(2)

Mr. Arena was appointed to the Board on May 13, 2021 and six (6) Board meetings were held subsequent to his appointment.

 

   

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   PAGE 7

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LOGO

 

Frank A. Holler

 

Age: 65

Summerland, B.C., Canada

Independent

Director since:

June 23, 2021

 

Areas of Expertise:

- Corporate Finance

- Life Sciences

- Management

 

Compliance with

Shareholding Policy:

N.A.(1)

Other Public Company

Directorship:

- Sernova Corp.; and

- Harvest One Cannabis Inc.

Private Healthcare

Organization

Directorship:

None

 

 

Principal Occupation

  

President and CEO, Ponderosa Capital Inc.

 

 

Frank A. Holler is currently the President & CEO of Ponderosa Capital Inc. He previously served as Chairman & CEO of BC Advantage Funds (VCC) Ltd., a venture capital firm investing in emerging technology companies in British Columbia.

 

 

He also served as President and CEO of Xenon Pharmaceuticals Inc. from 1999 to 2003 after having been President and CEO of ID Biomedical Corporation from 1991 to 1998. In addition, he was a founding director of Angiotech Pharmaceuticals.

 

 

Prior to working in biotechnology and healthcare, Mr. Holler was a Vice-President of Investment Banking with Merrill Lynch Canada and Wood Gundy Inc. (now CIBC World Markets).

 

 

Mr. Holler is a member of the board of directors of two additional public companies: Sernova Corp. in Ontario, Canada, and Harvest One Cannabis Inc. in British Columbia, Canada.

 

 

Mr. Holler holds an MBA and BA (Economics) from the University of British Columbia.

 

  Committee Membership and Meetings Attended in Fiscal Year 2021   #   %
 

Board of Directors(2)

  4   80
 

Audit Committee(3)

  1   100
 

Securities Held or Controlled

 

 

 

Common Shares

(#)

 

  

 

        DSU        

(#)

  

 

Options

(#)

 

 

Warrants

(#)

 

 

Notes

(US$)

  Nil    Nil    14,170   Nil   Nil
 

 

Committees of the Board of Directors

 

Member of the Audit Committee

 

    

 

 

(1)

Mr. Holler did not have to comply with the shareholding policy as he was appointed during the fiscal year ending November 30, 2021.

(2)

Mr. Holler was appointed to the Board on June 23, 2021 and five (5) Board meetings were held subsequent to his appointment

(3)

Mr. Holler was appointed to the Audit Committee on August 3, 2021 and one meeting of the Audit Committee was held subsequent to his appointment.

 

   

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LOGO

 

Gérald A. Lacoste

Age: 78

Ste-Adèle,

Québec, Canada

 

Independent

 

Director since:

February 8, 2006

 

Areas of Expertise:

- Securities and Market Regulation

- Corporate Governance

- Mergers & Acquisitions

 

Compliance with

Shareholding Policy:

Yes

Other Public Company

Directorship:

None

Private Healthcare

Organization

Directorship:

None

 

  

Principal Occupation                                         

  

Corporate Director

  

 

Gérald A. Lacoste, QC, is a retired lawyer with extensive experience in the fields of securities regulation, financing and corporate governance. He was previously Chairman of the Québec Securities Commission (now known as the Autorité des marchés financiers) and was also President and Chief Executive Officer of the Montreal Exchange. During his career, Mr. Lacoste acted as legal counsel to the Canadian Standing Senate Committee on Banking, Trade and Commerce, he chaired the Québec Advisory Committee on Financial Institutions, and was a member of the task force on the capitalization of life insurance companies in Québec. Mr. Lacoste has been a member of the North American Free Trade Agreement arbitration panel and is currently a corporate director. He holds a B.A. and a LL.L. from Université de Montréal and a LL. M. from University of London (University College).

  

Committee Membership and Meetings Attended in Fiscal Year 2021

   #    %
  

Board of Directors

   13    100
  

Audit Committee

   4    100
  

Nominating and Corporate Governance Committee

   5    100
  

 

Securities Held or Controlled

  

 

    Common Shares    

(#)

  

 

        DSU            

(#)  

  

 

        Options        

(#)

  

 

    Warrants    

(#)

  

 

  Notes  

(US$)

   100,000    21,936    84,174    Nil    45,000
  

 

Committees of the Board of Directors

  

Chair of Nominating and Corporate Governance Committee

  

Member of the Audit Committee

  

    

 

 

 

 

   

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LOGO

 

Paul Lévesque

Age: 58

Westmount,

Québec, Canada

 

Non-Independent

 

Director since:

April 6, 2020

Areas of Expertise:

- Pharmaceutical Industry

- Sales and Marketing - Management

- Human Resources

 

Compliance with Shareholding Policy:

N.A.

 

Other Public Company

Directorship:

None

 

Private Healthcare

Organization

Directorship:

None

 

 

Principal Occupation

  

President and Chief Executive Officer of the Corporation

 

 

Paul Lévesque has built an enviable reputation in the pharmaceutical industry both here and abroad. He is recognized for his track record at delivering growth.

 

Paul has worked in the research-based pharmaceutical industry since 1985. He started with Upjohn Canada and then joined Pfizer Canada in 1992. He went on to occupy increasingly senior positions within the organization including as Vice President of Marketing in Canada and in France, Country Manager for Canada, Chief Marketing Officer for the U.S. in Primary Care and as Regional President in Asia-Pacific for the innovative division of Pfizer.

 

He also assumed the role of Global President and General Manager for the Rare Disease Unit until he joined Theratechnologies on April 6, 2020.

 

Paul holds a BSc in biochemistry from Laval University and a Diploma in Management from McGill University.

 

Meetings Attended in Fiscal Year 2021

   #    %
 

Board of Directors

   13    100
 

 

Securities Held or Controlled

              
 

 

 Common Shares 

(#)

  

 

            DSU             

(#)

  

 

        Options        

(#)

  

 

    Warrants    

(#)

  

 

    Notes     (US$)

  111,200    Nil    1,134,728    20,000    Nil
 

 

Committees of the Board of Directors

 

N.A.

 

    

 

 

   

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LOGO

 

Gary Littlejohn

Age: 66

Lac-Tremblant-Nord,

Québec, Canada

 

Independent

 

Director since:

October 15, 2018

Areas of Expertise:

- Capital Markets

- Corporate Governance

- Corporate Finance

- Risk Management

 

Compliance with

Shareholding Policy:

Yes

 

Other Public Company

Directorship:

None

 

Private Healthcare

Organization

Directorship:

None

 

 

Principal Occupation

  

Corporate Director

 

From 2008 to 2015, Mr. Littlejohn held the position of CEO and then of advisor to the Chairman and Board Member of the Arab National Investment Company, also known as ANB Invest, in Riyadh, a subsidiary of Arab National Bank. Previously, he was Managing Director of investment banking at Desjardins Securities in Montreal, a position he took after serving six years as Executive Vice-president at Ecopia Biosciences. Mr. Littlejohn also occupied various senior positions in investment banking at TD Securities, Midland Walwyn, BMO Nesbitt Burns and National Bank Financial. He held the position of Interim CEO at Helix BioPharma from October 2015 to January 2016. Mr. Littlejohn also served on the Board of several corporations including Helix BioPharma, ANB Invest, Aegera Pharmaceuticals, Ecopia Biosciences and The Montreal Exchange. Mr. Littlejohn holds a B.A. (Honours Economics), a BCL and a MBA from McGill University. He also completed the Director Education Program provided by the Canadian Institute of Corporate Directors in 2015. He is a retired lawyer of the Quebec Bar.

 

Committee Membership and Meetings Attended in Fiscal Year 2021

       #            %    
 

Board of Directors

   13    100
 

Audit Committee

   4    100
 

Compensation Committee

   9    100
 

Securities Held or Controlled

      Common Shares     (#)   

            DSU             

(#)

  

    Options    

(#)

  

    Warrants    

(#)

  

        Notes        

(US$)

  19,060    10,937    46,928    Nil    Nil
 

Committees of the Board of Directors

 

Chair of Compensation Committee

 

Member of the Audit Committee

 

    

 

 

 

   

SUBJECTS TO BE TREATED AT THE MEETING

   PAGE 11

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  LOGO

 

Andrew Molson

Age: 54

Westmount, Québec, Canada

 

Independent

 

Director since:

October 16, 2020

 

Areas of Expertise:

- Communications

- Governance

 

Compliance with Shareholding Policy(1):

Yes

Other Public Company Directorship:

-  Molson Coors Beverage    Company; and

- Dundee Corporation

 

Private Healthcare Organization Directorship:

None

 

 

Principal Occupation                         

 

Corporate Director

 

Andrew Molson serves as chairman of AVENIR GLOBAL, an organization uniting seven strategic communications firms across Canada, the U.S., Europe and the Middle East. He is also chairman of Molson Coors Beverage Company and a member of the board of directors of Groupe Deschênes Inc., Dundee Corporation and the CH Group Limited Partnership, owner of Evenko and the Montreal Canadiens.

 

He previously served as a director of The Group Jean Coutu PJC Inc. from 2014 to 2018, as Chair of Molson Coors from May 2011 to May 2013 and as its Vice Chair from May 2009 to May 2011. Mr. Molson serves on several non-profit boards, including the Institute for Governance of Private and Public Organizations, Concordia University Foundation, the Québec Blue Cross, the Evenko foundation for emerging talent, the Montreal General Hospital Foundation and the Molson Foundation, a family foundation dedicated to the betterment of Canadian society.

 

Mr. Molson holds a Bachelor of Laws from Laval University (Quebec City). He also holds a Bachelor of Arts from Princeton University and a Master of Science in corporate governance and ethics from University of London (Birkbeck College).

 

   Committee Membership and Meetings Attended in Fiscal Year 2021   #   %
   Board of Directors(1)   12   92
   Securities Held or Controlled
 

Common Shares    

(#)

 

    DSU    

(#)

 

Options

(#)

 

    Warrants    

(#)

 

      Notes      

(US$)

  30,000   Nil   27,428   Nil   Nil
  Committees of the Board of Directors
 

  N.A.

 

    

(1)

Mr. Molson acquired more than 25% of the value he was required to acquire under the shareholding policy in the last fiscal year.

 

   

SUBJECTS TO BE TREATED AT THE MEETING

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LOGO

 

Dawn Svoronos

Age: 68

Hudson, Québec Canada

Independent

Director since:

April 8, 2013

Areas of Expertise:

- Pharmaceutical Industry

- Commercialization of Drug Products

Compliance with Shareholding Policy:

Yes

Other Public Company Directorship:

- Xenon Pharmaceuticals Inc.;

- PTC Therapeutics, Inc.;

- Global Blood Therapeutics, Inc.; and

- Adverum Biotechnologies, Inc.

Private Healthcare Organization Directorship:

- AgNovos Healthcare LLC; and

- Teresa Dellar Palliative Care

 

Principal Occupation

 

Corporate Director –

Chair of the Board of the Corporation

 

 

Ms. Dawn Svoronos worked in the commercial side of the business for the multinational pharmaceutical company Merck & Co. Inc., for 23 years, retiring in 2011. From 2009 to 2011, Ms. Svoronos was President of the Europe/Canada region for Merck and from 2006 to 2009 was President of Merck in Canada. Previously held positions with Merck include Vice-President of Asia Pacific and Vice-President of Global Marketing for the Arthritis, Analgesics and Osteoporosis franchise. Ms. Svoronos is a member of the board of directors of four other public companies: Xenon Pharmaceuticals Inc. in British Columbia, Canada, PTC Therapeutics, Inc. in New Jersey, U.S.A., Global Blood Therapeutics, Inc. in San Francisco, California, and Adverum Biotechnologies, Inc. in Redwood City, California.

 

Committee Membership and Meetings Attended in Fiscal Year 2021

  #   %
 

Board of Directors

  13   100
 

Compensation Committee

  9   100
 

Nominating and Corporate Governance Committee

  5   100
 

 

Securities Held or Controlled

      Common Shares             DSU             Options           Warrants               Notes        
  (#)   (#)   (#)   (#)   (US$)
  273,600   855   134,174   Nil   Nil
 

 

Committees of the Board of Directors

 

Member of Compensation Committee

 

Member of Nominating and Corporate Governance Committee

 

 

   

SUBJECTS TO BE TREATED AT THE MEETING

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LOGO

 

Alain Trudeau

Age: 62

Montréal, Québec, Canada

 

Independent

Director since:

 

October 15, 2020

 

Areas of Expertise:

- Accounting

- Finance governance

 

Compliance with Shareholding Policy:

Yes(1)

 

Other Public Company Directorship:

None

 

Private Healthcare Organization Directorship:

None

 

  Principal Occupation                                           

Corporate Director

 

 

A fellow of the Quebec Chartered Professional Accountant Order, Alain Trudeau has had a distinguished career at Ernst & Young from 1982 to 2019 where he held the position of Managing Partner, Assurance Services, for EY offices in the Province of Quebec from 2008 to 2019. He was also responsible for the audit of many publicly-traded companies.

 

He currently serves on the board of directors of the Montréal Inc. Foundation, the Institut de médiation et d’arbitrage du Québec (IMAQ) and Blue Bridge Trust Company Inc.

 

From 2008 to 2019, Mr. Trudeau was a lecturer at the Collège des administrateurs de sociétés de l’Université Laval in Quebec City.

 

Mr. Trudeau holds a Bachelor of Arts in Accounting from HEC Montréal.

 

 

Committee Membership and Meetings Attended in Fiscal Year 2021

  #   %
 

Board of Directors

  13   100
 

Audit Committee

  4   100
 

Compensation Committee(2)

  6   100
 

Securities Held or Controlled

 

    Common Shares    

(#)

 

        DSU        

(#)

 

        Options        

(#)

 

    Warrants    

(#)

 

      Notes      

(US$)

  19,300   18,218   27,428   2,500   Nil
 

Committees of the Board of Directors

 

Member of Audit Committee

Member of Compensation Committee

 

(1)

Mr. Trudeau acquired more than 25% of the value he was required to acquire under the shareholding policy in the last fiscal year.

(2)

Mr. Trudeau was appointed to the Compensation Committee on May 13, 2021 and six (6) meetings of the Compensation Committee were held subsequent to his appointment.

 

   

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LOGO

 

Dale MacCandlish Weil

Age: 66

Baie d’Urfé,

Québec, Canada

 

Independent

 

Director since:

May 16, 2017

 

Areas of Expertise:

- Healthcare Industry

-  Commercialization of Products

- Management

- Strategic Planning

 

Compliance with

Shareholding Policy:

Yes

 

Other Public Company

Directorship:

- Tetra Bio-Pharma Inc.

 

Private Healthcare

Organization

Directorship:

- Teresa Dellar Palliative Care Residence Foundation; and

- Alliance des Maisons de Soins Palliatifs du Québec

 

 

Principal Occupation

 

Corporate Director

 

 

Ms. Dale MacCandlish Weil has more than 35 years of experience in the commercialization, marketing, sale of consumer products and B2B services. From May 2018 to January 2020, Ms. Weil has been Managing Director of the Montreal Institute for Palliative Care (a branch of the Teresa Dellar Palliative Care Residence) and, in January 2020, she became Executive Director of the Teresa Dellar Palliative Care Residence and of the Montreal Institute for Palliative Care. She spent the prior 18 years of her career in management positions related to health care services such as distribution, pharmaceutical and retail pharmacy services. She worked with McKesson Canada Corporation (“McKesson”) since August 1999 where she occupied the position of Vice President and Senior Vice President for various divisions of McKesson. She acted in an advisory role to the President from May 2015 to February 2018. Prior to May 2015, she acted as Senior Vice President Retail Management Services with McKesson from July 2014 to May 2015 and, from November 2011 to June 2014, she acted as Senior Vice President, Integrated Health Care Solutions, Strategy and Business Development with McKesson. Ms. Weil is a member of the board of directors of Tetra Bio-Pharma Inc. in Ontario. Ms. Weil holds a Master’s in business administration from McGill University and has obtained her certification as a certified director after successfully completing the ICD Directors Education Program.

 

 

Committee Membership and Meetings Attended in Fiscal Year 2021

  #   %
 

Board of Directors

  13   100
 

Nominating and Corporate Governance Committee

  5   100
 

Securities Held or Controlled

      Common Shares                   DSU                       Options               Warrants             Notes      
  (#)   (#)   (#)   (#)   (US$)
  31,840   5,531   69,174   Nil   2,000
 

 

Committees of the Board of Directors

 

Member of Nominating and Corporate Governance Committee

 

 

   

SUBJECTS TO BE TREATED AT THE MEETING

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Directors Compensation

The Corporation has a compensation policy for its directors who are not employed on a full-time basis by the Corporation. Under the policy, directors are paid an annual retainer fee only. Annual retainer fees are paid quarterly on the first day of each calendar quarter. In addition, the Corporation’s compensation policy provides for the reimbursement of all reasonable expenses incurred by each director who are not employed on a full-time basis by the Corporation to attend meetings of the Board and meetings of the committees of the Board. Directors who are not employed on a full-time basis by the Corporation are also entitled to be granted options under the Option Plan (as defined below) as part of their annual compensation.

At a meeting of the Board of Directors held in December 2020, the Board reviewed and approved the recommendation of the Compensation Committee to maintain the same annual fee-based retainer portion of the compensation paid to each director who is not employed on a full-time basis by the Corporation as that paid to such directors for the fiscal year ended November 30, 2020. At such meeting, the value of the annual equity retainer portion was set at $28,092 and the Board agreed to reserve for issuance 106,064 options for all directors who are not employed on a full-time basis by the Corporation as the annual equity retainer portion for their work during the fiscal year ending November 30, 2021.

In order to determine the number of options to be granted to each director who is not employed on a full-time basis by the Corporation for the fiscal year ending on November 30, 2021, the Board used the Black-Scholes model to calculate the value of an option. The calculation was made as at December 1, 2020. The Black-Scholes model is the most widely adopted and used option model. These 106,064 options were not granted in December 2020 since the Corporation was in a “black-out” period. These options were granted on February 26, 2021.

The table below details the annual fee-based and annual equity-based compensation that was payable in the last fiscal year to the Corporation’s directors who were not employed on a full-time basis by the Corporation.

 

   

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Position at Board Level or

 

Committee Level

     Compensation for Fiscal Year 2021  

 

Effective January 1, 2021

       
     Annual

    Retainer(1)    

     Value in

    Stock Options(1)     

       
Annual Retainer to Chair of the Board            $132,434                      $28,092        
       
Annual Retainer to Board Members    $48,158      $28,092
       
Annual Retainer to Chair of the Audit Committee    $12,842      N.A.
       
Annual Retainer to Chair of the Compensation Committee    $9,632      N.A.
       
Annual Retainer to Chair of the Nominating and Corporate Governance Committee    $8,026      N.A.
       
Annual Retainer to Audit Committee Members    $6,421      N.A.
       
Annual Retainer to Compensation Committee Members    $3,210      N.A.
       
Annual Retainer to Nominating and Corporate Governance Committee Members    $3,210        N.A.

 

  (1)

These amounts were paid in CAD and were converted into U.S. dollars using the average exchange rate for the year ended November 30, 2021 where $1.00 = CAD 1.2459.

 

 

   

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The table below details all components of the compensation provided to the directors of the Corporation for the fiscal year ended November 30, 2021 and the value thereof. These amounts were paid in CAD and were converted into U.S. dollars using the average exchange rate for the year ended November 30, 2021 where $1.00 = CAD 1.2459.

 

Name  

Fees

 earned  

 

 Share-based  

awards(1)

 

Option-

based

awards(2) 

 

Non-equity

incentive

plan

compensation 

 

Pension 

value

  All other
compensation  
    Total    
 

($)

 

 

(#)

 

 

($)

 

 

($)

 

 

($)

 

 

($)

 

 

($)

 

 

($)

 

Joseph Arena(3)

    19,971         --   --   --   --   --   --     19,971      
                 

Sheila Frame(4)

    19,646     1,928   6,020   22,134   --   --   --     47,800  
                 

Frank Holler(5)

    21,136     --   --   --   --   --   --     21,136  
                 

Gérald A. Lacoste

    62,605     --   --   22,134   --   --   --     84,739  
                 

Paul Lévesque(6)

    --         --   --   --   --   --   --     --      
                 

Gary Littlejohn

    44,145     6,850   24,079   22,134   --   --   --     90,358  
                 
Dale MacCandlish Weil     51,368     --   --   22,134   --   --   --     73,502  
                 

Andrew Molson

    48,158     --   --   22,134   --   --   --     70,292  
                 

Paul Pommier(7)

    37,456     --   --   22,134   --   --   --     59,590  
                 

Dawn Svoronos

    138,855     --   --   22,134   --   --   --     160,989  
                 

Alain Trudeau

    14,448     14,131   48,158   22,134   --   --   --     84,740  

 

(1)

Share-based awards are composed of DSUs. DSUs are issued under the deferred share unit plan (the “DSU Plan”). See “Deferred Share Unit Plan” below.

 

 

(2)

Each director who was not employed on a full-time basis by the Corporation on December 2020 received 13,258 options having an aggregate value of $22,134. These options were issued on February 26, 2021, but at its December 2020 Board meeting, the Board determined the number of options to be issued based on the value of those options as at December 1, 2020 using the Black-Scholes model and this column indicates the value as at that date and not as at the date of grant. In applying the Black-Sholes model to determine the value of those options as at December 1, 2020, the following assumptions were used:

 

 

  (i)

Risk-free interest rate:                0.74%

 

  (ii)

Expected volatility:                    70.0%

 

  (iii)

Average option life in years:      8.5 years

 

  (iv)

Expected dividends:                   -

 

  (v)

Grant date share price:               CAD 2.96

 

  (vi)

Option exercise price:                CAD 2.96

 

  (vii)

Grant date fair value:                 CAD 2.08

On the date of grant of those options (February 26, 2021), the value of those options using the Black-Scholes model was determined using the following assumptions:

 

  (i)

Risk-free interest rate:               1.36%

 

  (ii)

Expected volatility:                   76.8%

 

  (iii)

Average option life in years:     8 years

 

  (iv)

Expected dividends:                  -

 

  (v)

Grant date share price:              CAD 3.93

 

  (vi)

Option exercise price:               CAD 3.93

 

   

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(vii) Grant date fair value:                 CAD 2.90

 

(3)

Mr. Arena became a director of the Corporation on May 13, 2021. All cash-based compensation related to Mr. Arena’s directorship is paid to JP Arena Regulatory Consulting, LLC (“Consulting”), a company controlled by Mr. Arena, under the terms of a consulting agreement entered into between the Corporation and Consulting with an effective date of May 13, 2021.

 

(4)

Ms. Frame ceased acting as a director of the Corporation on May 13, 2021.

 

(5)

Mr. Holler became a director of the Corporation on June 23, 2021.

 

(6)

No compensation was paid to Mr. Lévesque for acting as a director of the Corporation given his position as President and Chief Executive Officer of the Corporation.

 

(7)

Mr. Pommier ceased acting as a director of the Corporation on May 13, 2021.

Outstanding Option-Based Awards and Share-Based Awards

The table below details all outstanding option-based awards and outstanding share-based awards as at November 30, 2021 for each of the directors who is not an employee of the Corporation.

 

     Option-Based Awards   Share-Based Awards
Name  

Number of

securities

underlying

unexercised  

options

(#)

 

Option

exercise  

price

(CAD)

 

Option

expiration  

date

 

 

Value of

unexercised in-

the-money

options (1)

($)

 

Number of shares  

or units of

shares that have

not vested

(#)

 

Market or

payout value

of share-based  

awards that

have not

vested

($)

 

Market or

payout value of  

vested share-

based awards

not paid out or

distributed(2)

($)

               

Joseph Arena

  --   --   --   --   --   --   --
               

Sheila Frame

  10,600   3.22   2030.02.26     8,204   --   --   72,309
 

 

13,258

  3.93   2031.02.26     2,902   --   --    
               

Frank Holler

  --   --   --   --   --   --   --
               

Gérald A. Lacoste

  15,000   2.45   2026.07.12     20,638           72,194
 

 

15,000

  6.73   2027.05.16     --            
 

 

7,246

  9.56   2028.04.06     --            
 

 

8,900

  8.76   2029.02.26     --            
 

 

10,600

  3.22   2030.02.26     8,204            
 

 

13,258

  3.93   2031.02.26     2,902   --   --    
               
Gary Littlejohn   10,600   3.22   2030.02.26     8,204   --   --   22,544
 

 

13,258

  3.93   2031.02.26   2,902            
               
Andrew Molson   13,258   3.93   2031.02.26     2,902   --   --   --
               
Paul Pommier   15,000   2.45   2026.07.12     20,638           402,201
 

 

15,000

  6.73   2027.05.16     --            
 

 

7,246

  9.56   2028.04.06     --            
 

 

8,900

  8.76   2029.02.26     --            
 

 

10,600

  3.22   2030.02.26     8,204            
 

 

13,258

  3.93   2031.02.26     2,902   --   --    
               

Dawn Svoronos

  50,000   0.26   2023.05.29     105,377   --   --   2,814
 

 

15,000

  2.45   2026.07.12     28,267            
 

 

15,000

  6.73   2027.05.16     --            
 

 

7,246

  9.56   2028.04.06     --            
 

 

8,900

  8.76   2029.02.26     --            
 

 

10,600

  3.22   2030.02.26     8,204            
 

 

13,258

  3.93   2031.02.26     2,902   --   --    

 

   

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     Option-Based Awards   Share-Based Awards
Name  

Number of

securities

underlying

unexercised  

options

(#)

 

Option

exercise  

price

(CAD)

 

Option

expiration  

date

 

 

Value of

unexercised in-

the-money

options (1)

($)

 

Number of shares  

or units of

shares that have

not vested

(#)

 

Market or

payout value

of share-based  

awards that

have not

vested

($)

 

Market or

payout value of  

vested share-

based awards

not paid out or

distributed(2)

($)

Alain Trudeau

  13,258   3.93   2031.02.26     2,902   --   --   46,507

Dale MacCandlish Weil

  15,000   6.73   2027.05.16     --   --   --   18,203
 

 

7,246

  9.56   2028.04.06     --        
 

 

8,900

  8.76   2029.02.26     --        
 

 

10,600

  3.22   2030.02.26     8,204        
 

 

13,258

  3.93   2031.02.26     2,902   --   --    

 

(1)

The value of unexercised in-the-money options at fiscal year-end is the difference between the closing price of the Common Shares on the TSX on November 30, 2021 (CAD 4.21) and the respective exercise price of the options. These amounts were calculated in CAD and were converted into U.S. dollars using the exchange rate as at November 30, 2021 where $1.00 = CAD 1.2792.

 

 

(2)

Share-based awards are comprised of DSUs issued under the DSU Plan. The market or payout value of share-based awards that have vested as at November 30, 2021 is determined by multiplying the closing price of the Common Shares on the TSX as at November 30, 2021 (CAD 4.21) by the number of share-based awards held as at November 30, 2021. The actual payout value will vary based on the date on which the DSUs will be redeemed. The market value was calculated in CAD and was converted into U.S. dollars using the exchange rate as at November 30, 2021 where $1.00 = CAD 1.2792.

 

Incentive Plan Awards – Value Vested or Earned During the Year

The table below details the value vested or earned during the fiscal year ended November 30, 2021 under each incentive plan for each of the directors who is not an employee of the Corporation.

 

Name  

Option-based awards –

Value vested during the  year(1)  

($)

 

Share-based awards –

Value vested during the year(2)  

($)

 

Non-equity incentive

plan compensation –

Value earned during  

the year

($)

     
Joseph Arena   Nil   Nil   --
     

Sheila Frame(3)

  1,672   6,217   --
     

Frank Holler

  Nil   Nil   --
     

Gérald A. Lacoste

  1,672   Nil   --
     

Gary Littlejohn(4)

  1,672   24,208   --
     

Andrew Molson

  1,672   Nil   --
     

Paul Pommier

  1,672   Nil   --
     

Dawn Svoronos

  1,672   Nil   --
     

Alain Trudeau(5)

  1,672   48,785   --
     
Dale MacCandlish Weil   1,672   Nil   --

 

  (1)

All options granted to directors vest as at the date of grant and the exercise price of these options was the closing price of the Common Shares on February 25, 2021 on the TSX (CAD 3.93). On February 26, 2021, the date of grant of the options, the closing price of the Common Shares on the TSX was CAD 4.09. The value vested during the year was calculated in CAD and was converted into U.S. dollars using the exchange rate as at February 26, 2021 where $1.00 = CAD 1.2685.

 

 

   

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  (2)

Share-based awards are comprised of DSUs issued under the DSU Plan. 20,981 DSUs were issued in the last fiscal year. The value of share-based awards is determined by multiplying the closing price of the Common Shares on the TSX on the date(s) of grant by the number of share-based awards held as at such date since DSUs vest as at the date of grant. The value vested during the year was calculated in CAD and was converted into U.S. dollars using the exchange rate as at the date of grant. See notes (3), (4) and (5) below.

 

  (3)

Ms. Frame was granted 1,928 DSUs on February 26, 2021. On February 26, 2021, the closing price of the Common Shares on the TSX was CAD 4.09. As at February 26, 2021: $1.00 = CAD 1.2685.

 

 

  (4)

Mr. Littlejohn was granted 3,425 DSUs on July 27, 2021 and 3,425 DSUs on October 15, 2021. On July 27, 2021, the closing price of the Common Shares on the TSX was CAD 4.46 and, on October 15, 2021, the closing price of the Common Shares on the TSX was CAD 4.36. As at July 27, 2021 and as at October 15, 2021: $1.00 = CAD 1.2578 and $1.00 = CAD 1.2379, respectively.

 

 

  (5)

Mr. Trudeau was granted 3,856 DSUs on February 26, 2021, 6,850 DSUs on July 27, 2021 and 3,425 DSUs on October 15, 2021. On February 26, 2021, the closing price of the Common Shares on the TSX was CAD 4.09 and, as at that date, $1.00 = CAD 1.2685. On July 27, 2021, the closing price of the Common Shares on the TSX was CAD 4.46 and, as at that date, $1.00 = CAD 1.2578. On October 15, 2021, the closing price of the Common Shares on the TSX was CAD 4.36 and, as at that date, $1.00 = CAD 1.2379.

 

Directors and Executive Officers Shareholding Policy

In December 2010, the Board adopted a shareholding policy for its directors and executive officers (the “Shareholding Policy”) and the DSU Plan. The Shareholding Policy was suspended in April 2013.

In the 2017 fiscal year, the Board reinstated a revised DSU Plan for its directors and executive officers and a revised Shareholding Policy for its directors who are not employees of the Corporation. The revised Shareholding Policy requires that each newly appointed or elected director who is not an employee of the Corporation owns a number of Common Shares or DSUs having a value representing at least twice the value of his/her annual retainer to act as a Board member (three times for the Chair of the Board). Each director has four years to comply with the Shareholding Policy. Each director must acquire at least 25% of that value over each of those four years. The four year-period begins running from the fiscal year following the fiscal year during which an individual is newly appointed or elected as a director. The value is determined as at November 30 of each calendar year and is equal to the higher of the acquisition cost of a Common Share or DSUs and the fair market value of those Common Shares and DSUs as at November 30 of each year of such four-year period. Common Share value fluctuations do not require directors to purchase additional Common Shares or DSUs.

Mr. Arena and Mr. Holler did not have to comply with the Shareholding Policy in the last fiscal year since they were appointed directors during such fiscal year.

Directors’ Mandatory Retirement Policy

The Board has adopted a formal retirement policy in the context of its succession planning process. Under this policy, directors who are not employees of the Corporation who reach the age of 75 or who have been acting as directors for fifteen (15) consecutive years may not be nominees for re-election at the subsequent annual meeting of shareholders. Mr. Gérald A. Lacoste is grandfathered from this policy.

Restrictions on Trading of Securities

At its November 2021 Board meeting, the Board amended and restated its insider trading policy (the “Insider Policy”) regarding trades made in the Corporation’s securities.

The Insider Policy prohibits anyone in possession of material undisclosed information from trading in the securities of the Corporation as well as from disclosing to a third party such material undisclosed information (tipping). The Insider Policy also contains restrictions on all directors and executive officers from trading in the Corporation’s securities during certain periods of the year (“Black-Out Periods”). Regularly-scheduled

 

   

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Black-Out Periods usually begins on the day immediately following the end of a fiscal quarter and ends on and including the first trading day following the date of disclosure of the financial results for that quarter. Notwithstanding the foregoing, the Black-Out Periods should not prevent the Corporation from (i) granting stock options and other equity awards to the Corporation’s personnel as part of the yearly operational and planning and budget approval processes, as approved by the Board in accordance with applicable laws and regulations; (ii) automatic purchases or dispositions in accordance with applicable laws and regulations pursuant to any written automatic plan established by the Corporation prior to the relevant periods; and (iii) issuing DSUs to the Corporation’s non-employee directors in accordance with the DSU Plan, as may be amended and/or restated from time to time, and the compensation policies of the Board which may then be in effect.

The Insider Policy contains anti-hedging measures that prohibit directors, executive officers and certain other members of the Corporation’s personnel designated from time to time by the Corporation from engaging in (i) short-sales in the Corporation’s securities; (ii) derivative transactions in respect of the Corporation’s securities, including put and call options; or (iii) any other hedging or equity monetization transaction in which an individual’s economic interest and risk exposure in the Corporation’s securities is changed, including collars and forward sales contracts.

Finally, the Insider Policy prohibits directors, executive officers and certain other members of the Corporation’s personnel designated from time to time by the Corporation from engaging in speculative trading in short-term price fluctuations in the value of the Corporation’s securities.

Board Gender Diversity

In February 2017, the Board approved an amendment to the Charter of the Nominating and Corporate Governance Committee to embed in such Charter an obligation by the Nominating and Corporate Governance Committee to take into consideration gender diversity when the Committee recruits candidates for directorship. Gender diversity is now one of the criteria that the Committee will consider in recruiting a candidate to act as a director of the Corporation. The Board did not implement a final policy setting forth a target for gender diversity.

As at November 30, 2021, two (2) women, one of whom acting as Chair, comprised the Board of Directors. As at that date, women represented 25% of all independent Board members and 22% of all Board members. See “Item IV – Corporate Governance Disclosure” below.

Indebtedness of Directors

As at the date hereof, none of the directors of the Corporation and proposed nominee for election as director of the Corporation is indebted to the Corporation. During the last fiscal year of the Corporation, none of the directors of the Corporation was indebted to the Corporation.

Cease Trade Orders, Bankruptcies, Penalties or Sanctions

To the knowledge of management of the Corporation, except with respect to Mr. Frank Holler, no nominee (a) is, as at the date of the Circular, or has been within the ten (10) years before the date of the Circular, a director or executive officer of any company (including the Corporation) that, while that person was acting in that capacity, (i) 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 thirty consecutive days; (ii) was subject to an event that resulted, after the director or executive officer ceased to be a director or executive officer, in the company being 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 thirty consecutive days; or (iii) 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 was subject to or instituted any

 

   

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proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or (b) has, within the ten (10) years before the date of the Circular, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold his assets.

Mr. Frank Holler was previously the Chair and the Chief Executive Officer of BC Advantage Funds, or BCAF, a venture capital fund investing in emerging technology companies. On July 5, 2013, Allon Therapeutics Inc., or Allon, one of BCAF’s publicly traded portfolio companies in which Mr. Holler acted as a director, made a proposal to its creditors under the Bankruptcy and Insolvency Act (Canada) and a reorganization of its share structure was approved by the Supreme Court of British Columbia. Following this approval, all of Allon’s common shares were acquired by a third party and Allon’s common shares were delisted from the Toronto Stock Exchange on June 28, 2013. Mr. Holler ceased acting as a director of Allon effective July 16, 2013.

Mr. Frank Holler was also a director of Contech Enterprises Inc., or Contech, one of the privately held emerging technology companies forming part of the BCAF portfolio. On December 23, 2013, Contech made a proposal to its creditors under the Bankruptcy and Insolvency Act (Canada) and a reorganization of its share structure was approved by the Supreme Court of British Columbia on January 26, 2015. The proposal was intended to facilitate a financing by a new lender and a debt restructuring that, taken together, would enable Contech to carry on its business for the foreseeable future. On March 6, 2015, the Court of Appeal of British Columbia overturned the approval of the proposal by the Supreme Court and placed Contech into bankruptcy. Mr. Holler ceased acting as a director of Contech effective March 6, 2015.

3.          Appointment of Auditors

The Corporation’s auditors for the current fiscal year must be elected at the Meeting. The Corporation proposes the appointment of KPMG LLP, Chartered Professional Accountants from Montreal, who have been the Corporation’s auditors since 1993. They will hold office until the next annual meeting of shareholders, or until their successors are appointed. The table below sets forth the fees paid to the auditors of the Corporation for the fiscal years ended November 30, 2021 and 2020, respectively:

 

Fees

  

 

 

 

Fiscal Year Ended

November 30, 2021

(CAD

 

 

 

 

 

 

 

Fiscal Year Ended

November 30, 2020

(CAD

 

 

 

Audit Fees(1)

     639,382       497,667  

Audit-Related Fees(2)

     48,943       89,175  

Tax Fees(3)

     170,027       54,563  

Total:

     858,352       641,405  
  (1)

Refers to the aggregate fees billed by our external auditors for audit services, including interim reviews and work performed in connection with securities filings.

 
  (2)

Refers to the aggregate fees billed for professional services provided by our external auditors for translation and accounting consultations.

 
  (3)

Refers to the aggregate fees billed for professional services rendered by our external auditors for tax compliance, transfer pricing, tax advice and tax planning.

 

Unless instructions are given to withhold from voting with regard to the appointment of the auditors, the persons whose names appear on the enclosed form of proxy will vote FOR the appointment of KPMG LLP, Chartered Professional Accountants, as auditors of the Corporation, and to authorize that compensation for their services be determined by the Board.

 

   

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4.          Shareholder Rights Plan

On March 3, 2022, the Board approved the amendment and renewal of the Corporation’s shareholder rights plan and, on April 6, 2022, the Corporation and Computershare Trust Services of Canada entered into an amended and restated shareholder rights plan agreement (the “Rights Plan”).

The original shareholder rights plan was adopted by the Board on February 10, 2010 and ratified by the shareholders on March 25, 2010. It was first renewed on February 21, 2013 and ratified by the shareholders on May 24, 2013 and subsequently renewed on April 15, 2016 and April 10, 2019 and ratified by Shareholders on May 17, 2016 and May 15, 2019. It is scheduled to expire at the Meeting. For the Rights Plan to be amended and continue to be in effect after the Meeting, Resolution 2022-1 attached as Appendix “A” to this Circular must be approved by a majority of the votes cast, in person or by proxy, by the shareholders at the Meeting, except those who do not qualify as Independent Shareholders (as defined in the Rights Plan), the whole, subject to the approval of the Rights Plan by the TSX. On March 29, 2022, the TSX conditionally approved the Rights Plan, subject to the TSX’s usual conditions, including shareholder approval. The Corporation has determined that there is no shareholder who would not qualify as Independent Shareholder at the Meeting.

If Resolution 2022-1 is not passed, the Rights Plan will terminate at the close of business on May 10, 2022. If Resolution 2022-1 is passed, the Rights Plan will require reconfirmation by the Corporation’s shareholders at the annual meeting of shareholders to be held in 2025.

Purpose of the Rights Plan

The purpose of the Rights Plan is to ensure equal treatment of shareholders and to give adequate time for shareholders to properly assess the merits of a bid without undue pressure, and to allow competing bids to emerge. The Rights Plan is designed to give the Board time to consider alternatives, allowing shareholders to receive full and fair value for their shares. The Rights Plan was not renewed by the Board in response to any acquisition proposal and is not designed to secure the continuance in office of the current management or the directors of the Corporation. The renewal of the Rights Plan does not in any way lessen the duties of the directors to fully and fairly examine all bids which may be made to acquire the Common Shares of the Corporation and to exercise such duties with a view to the best interest of the shareholders and the Corporation.

Before deciding to amend and renew the Rights Plan, the Board of Directors considered the current shareholdings of the Corporation and the legislative framework in Canada governing takeover bids. To the Corporation’s knowledge, as described above under “Item I. – Information Relating to Voting – Voting Securities and Principal Holders”, no person holds more than 10% of all the outstanding Common Shares of the Corporation. Therefore, a person could acquire a de facto control of the Corporation through the purchase of a number of Common Shares that would represent a percentage of Common Shares below 50% by entering into private acquisition agreements without having to make an offer to all of the shareholders.

Under provincial securities legislation, a takeover bid generally means an offer to acquire voting or equity voting shares of a corporation that, together with shares already owned by the bidder and certain parties related thereto, amount to 20% or more of the outstanding shares of that class.

Under the legislative framework for takeover bids in Canada, as amended on May 9, 2016, shareholders may not be treated equally if an important number of Common Shares is acquired pursuant to a private agreement in which a small group of shareholders or a shareholder dispose of their Common Shares at a premium to market price, which premium is not shared with the other shareholders of the Corporation. In addition, a person may gradually accumulate Common Shares through stock exchange acquisitions which results in an

 

   

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acquisition of control of the Corporation, without payment of fair value for control or a fair sharing of a control premium amongst all shareholders. The Rights Plan addresses these concerns by applying to all acquisitions of 20% or more of the Common Shares of the Corporation, ensuring that shareholders receive equal treatment.

The Rights Plan also addresses the use of “hard” lock-up agreements, whereby shareholders commit to tender their Common Shares to a takeover bid in lock-up agreements which are either irrevocable or revocable but subject to restrictive termination conditions. Such agreements could have the effect of deterring other potential bidders from bringing forward competing bids, particularly where the number of lock-up shares would make it difficult or unlikely for a competing bidder’s bid to achieve the 50% minimum tender requirement imposed by the takeover bid rules. The Rights Plan is designed to prevent these lock-up agreements that are not in the best interest of the Corporation and its shareholders and to encourage bidders to structure lock-up agreements so as to provide the locked-up shareholders reasonable flexibility to terminate such agreements to deposit their shares to a higher value bid or support another transaction offering greater value.

The issue of rights (the “Rights”) will not in any way adversely alter the financial condition of the Corporation and will not change the way in which shareholders trade their Common Shares. However, by permitting holders of Rights other than an “Acquiring Person” (as defined below) to acquire additional Common Shares of the Corporation at a discount to market value, the Rights may cause substantial dilution to a person or group that acquires 20% or more of the outstanding Common Shares other than by way of a “Permitted Bid” (as defined below). A potential bidder can avoid the dilutive features of the Rights Plan by making a bid that conforms to the requirements of a Permitted Bid.

The Corporation has reviewed the Rights Plan for conformity with current practices of Canadian companies with respect to shareholder protection rights plans and believe that the Rights Plan preserves the fair treatment of shareholders, is consistent with best Canadian corporate practices and addresses institutional investor guidelines.

Amendments to the Rights Plan

Following the Corporation’s review of current practices of Canadian companies with respect to shareholder protection rights plans, the Rights Plan contains certain proposed amendments, including:

 

  ·  

amendments to the definitions of “Beneficially Owned” and “Permitted Acquisition” to align those provisions with market standards;

 

  ·  

the inclusion of certain clarifications in respect of non-certificated securities, including those represented by book-entry form registration;

 

  ·  

the addition of provisions allowing the Board to take actions it deems appropriate to ensure the issuance and sale of securities under the Rights Plan complies with securities laws outside Canada and the United States; and

 

  ·  

certain other housekeeping and conforming changes.

The purpose and principal terms of the Rights Plan, including the proposed amendments, are set forth below in this Circular.

 

   

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Terms of the Rights Plan

The following is a summary of the principal terms of the Rights Plan and is provided subject to the terms and conditions thereof. A complete copy of the Rights Plan has been filed and is available on SEDAR at www.sedar.com.

Issue of Rights

In order to implement the rights plan in 2010, the Board authorized the Corporation to issue one right in respect of each Common Share outstanding as of 6:00 p.m. (Montreal time) on March 25, 2010 (the “Record Time”). One Right was also issued with each Common Share issued after March 25, 2010 and one Right will also continue to be issued and attached to each subsequently issued Common Share if the Rights Plan is approved by shareholders at the Meeting.

Rights-Exercise Privilege

The Rights will be separate from the Common Shares to which they are attached and will become exercisable at the time (the “Separation Time”) that is ten (10) business days after the earlier of: (i) the first date of public announcement that an “Acquiring Person” (as defined below) has become such; (ii) the date of commencement of, or first public announcement in respect of, a takeover bid which will permit an offeror to hold 20% or more of the Common Shares, other than by an acquisition pursuant to a takeover bid permitted by the Rights Plan (a “Permitted Bid” as defined below); (iii) the date upon which a Permitted Bid ceases to be a Permitted Bid; or (iv) such other date as may be determined in good faith by the Board.

The acquisition permitting a person (an “Acquiring Person”), including others acting jointly or in concert with such person, to hold 20% or more of the outstanding Common Shares, other than by way of a Permitted Bid, is referred to as a “Flip-in Event.” Any Rights held by an Acquiring Person on or after the earlier of the Separation Time or the first date of a public announcement (the “Common Share Acquisition Date”) by the Corporation or an Acquiring Person that an Acquiring Person has become such will become null and void upon the occurrence of a Flip-in Event. Ten (10) trading days (or such longer period as may be required to satisfy the requirements of applicable securities laws) after the occurrence of the Common Share Acquisition Date, each Right (other than those held by the Acquiring Person) will permit the holder to purchase for the exercise price that number of Common Shares determined as follows: a value of twice the exercise price divided by the “Market Price” (defined under the Rights Plan as being the average weighted trading price per Common Share for the 20 consecutive trading days through and including the trading day immediately preceding the relevant date) on the Common Share Acquisition Date. The exercise price under the Rights Plan has been set to three (3) times the Market Price. For instance, as at the close of business on April 8, 2022, the exercise price was CAD 9.24 per Right, subject to adjustment provisions described in the Rights Plan.

Upon the occurrence of a Flip-in Event and the separation of the Rights from the Common Shares, reported earnings per share on a fully diluted or non-diluted basis may be affected. Holders of Rights who do not exercise their Rights upon the occurrence of a Flip-in Event may suffer substantial dilution.

Permitted Lock-Up Agreements

A bidder may enter into lock-up agreements with the shareholders of the Corporation whereby such shareholders agree to tender their Common Shares to the takeover bid (the “Lock-up Bid”) without a Flip-in Event occurring. Any such agreement must be made available to the public and must permit or must have the effect to permit the shareholder to withdraw the Common Shares to tender to another takeover bid or to support another transaction that exceeds the value of the Lock-up Bid.

 

   

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Certificates and Transferability

Prior to the Separation Time, the Rights will be evidenced by a legend imprinted on certificates for Common Shares issued after the Record Time (or, if issued in book entry form, by the book entry form registration for the associated Common Shares). Rights are also attached to Common Shares outstanding on the Record Time, although share certificates will not bear such a legend. Prior to the Separation Time, Rights will not be transferable separately from the Common Shares. From and after the Separation Time, the Rights will be evidenced by Rights certificates (or separate book entry registration), which will be transferable and traded separately from the Common Shares.

“Permitted Bid” Requirements

A “Permitted Bid” is a takeover bid that does not trigger the exercise of Rights. A “Permitted Bid” is a bid that aims to acquire shares which, together with the other securities beneficially owned by the bidder, represent not less than 20% of the outstanding Common Shares and satisfies the following requirements:

 

  (i)

the bid is made by means of a takeover bid circular;

 

  (ii)

the bid must be made to all holders of Common Shares;

 

(iii)

the bid must be outstanding for a minimum period of 105 days or such shorter period that a take-over bid must remain open for deposits of securities, in the applicable circumstances, pursuant to Canadian securities laws;

 

(iv)

Common Shares and/or Convertible Securities tendered pursuant to the bid may not be taken up prior to the expiry of the period referred to in paragraph (iii) above and only if at such time more than 50% of the Common Shares and/or Convertible Securities held by the shareholders other than the bidder, its associates and affiliates, and persons acting jointly or in concert with such persons (the “Independent Shareholders”), have been tendered pursuant to the bid and not withdrawn;

 

(v)

if more than 50% of the Common Shares and/or Convertible Securities held by Independent Shareholders are tendered to the bid within the 105-day period, the bidder must make a public announcement of that fact and the bid must remain open for deposits of shares for an additional ten (10) business days from the date of such public announcement.

The Rights Plan allows for a competing Permitted Bid (a “Competing Permitted Bid”) to be made while a Permitted Bid is in existence. A Competing Permitted Bid must satisfy all the requirements of a Permitted Bid except that, as proposed to be amended, it must be outstanding for a minimum number of days as required under Canadian securities laws.

Waiver and Redemptions

The Board acting in good faith may, prior to a Flip-in Event, waive the dilutive effects of the Rights Plan in respect of a particular Flip-in Event that would result from a takeover bid made by way of takeover bid circular to all holders of Common Shares, in which event such waiver would be deemed also to be a waiver in respect of any other Flip-in Event. The Board may also waive the Rights Plan in respect of a particular Flip-in Event that has occurred through inadvertence, provided that the Acquiring Person that inadvertently triggered such Flip-in Event reduces its beneficial holdings to less than 20% of the outstanding Common Shares within 14 days or any other period that may be specified by the Board. At any time prior to the occurrence of a Flip-in Event, the Board may, subject to the prior approval of the holders of Common Shares, elect to redeem all, but not less than all, of the outstanding Rights at a price of $0.0001 per right.

 

   

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Exemption for Investment Managers

Investment managers (for client accounts), trust companies and pension funds (acting in their capacity as trustees and administrators) acquiring shares permitting them to hold 20% or more of the Common Shares are exempt from triggering a Flip-in Event, provided that they are not making, or are not part of a group making, a takeover bid.

Supplements and Amendments

The Corporation is authorized to make amendments to the Rights Plan to correct any clerical or typographical error or to maintain the validity of the Rights Plan as a result of changes in laws or regulations. Material amendments or supplements to the Rights Plan will require, subject to the regulatory authorities, the prior approval of the shareholders or, after the Separation Time, holders of Rights.

Canadian Income Tax Consequences of the Rights Plan

Under the Income Tax Act (Canada) (the “Tax Act”), while the matter may be debated, the issue of the Rights under the Rights Plan may be a taxable benefit, the fair market value of which must be included in the income of a recipient. The Corporation considers that the Rights, when issued, will have no or negligible monetary value, there being only a remote possibility that the Rights will ever be exercised. The Rights will be considered to have been acquired at no cost. The holder of Rights may realize income or be subject to withholding tax under the Tax Act if the Rights become exercisable, are exercised and are otherwise disposed of.

The information provided above is of a general nature and is not intended to constitute, nor should it be construed as, legal or tax advice to any particular holder of Common Shares. Such holders are advised to consult their own tax advisors regarding the consequences of acquiring, holding, exercising or otherwise disposing of their Rights, taking into account their own particular circumstances and applicable federal, provincial, territorial or foreign legislation.

Recommendation of the Board

At the Meeting, shareholders will be asked to consider and, if deemed appropriate, approve an ordinary resolution to amend and reconfirm the Rights Plan by passing Resolution 2022-1, substantially in the form of the resolution attached as Appendix “A” to this Circular. Resolution 2022-1 must be passed by a majority of the votes cast by shareholders entitled to vote who are represented in person or by proxy at the Meeting and who vote in respect of that resolution.

The Board considers the amendment and renewal of the Rights Plan to be appropriate and in the best interests of the Corporation and recommends that shareholders vote in favour of Resolution 2022-1 to approve the amendment and renewal of the Rights Plan.

In addition to the approval by the shareholders of the Corporation of the resolution to amend and reconfirm the Rights Plan, the Rights Plan is subject to the approval of the TSX.

Unless instructions are given to vote against, or withhold from voting on, Resolution 2022-1, the persons whose names appear in the enclosed form of proxy will vote FOR the passing of Resolution 2022-1.

 

   

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5.          Amendments to Share Option Plan

The share option plan (the “Option Plan”) was established on December 6, 1993 and was amended from time to time thereafter. The Option Plan currently provides for a fixed number of 7,700,000 Common Shares authorized to be issued thereunder, representing approximately 8.1% of the total number of issued and outstanding Common Shares as at April 5, 2022.

On March 3, 2022, following a review of the Option Plan by the Compensation Committee and the Board, the Board, upon a recommendation from the Compensation Committee, approved certain amendments to the Option Plan, subject to approval by the TSX and by the shareholders of the Corporation (the “2022 Option Plan”). The Board believes that those amendments will allow the Corporation to continue adequately carrying out its compensation program to attract, retain, motivate and reward qualified key personnel, and use options as a cost-effective incentive to align the interests of key personnel with those of shareholders of the Corporation, as well as clarify and align the terms and conditions of the Option Plan with current best governance and market practices for security-based compensation arrangements.

Amendments Requiring Shareholder Approval

In accordance with the requirements of the TSX and the provisions of the Option Plan, shareholder approval is required for certain amendments made to the Option Plan. At the Meeting, the Corporation will be seeking shareholder approval to amend the Option Plan, subject to the final approval of the TSX, to: (i) convert the Option Plan from a “fixed plan” to a “rolling plan”, whereby the maximum number of Common Shares which may be issued under the Option Plan (and under any other security-based compensation arrangements of the Corporation) will be changed from a fixed number of Common Shares to a number of Common Shares equal to 10% of all Common Shares issued and outstanding from time to time, on a non-diluted basis, and including a “reloading” or “evergreen” feature, so that when options are exercised, the number of Common Shares issuable will be replenished and exercised options will be available to be regranted in the future, and (ii) make changes to the amending provisions of the Option Plan to reflect changes made to the Option Plan described in subparagraph (i) above, better align with current best governance and market practices, and further limit the Board’s ability to make amendments without shareholder approval (the “Proposed Amendments”). In accordance with the requirements of the TSX, if the Proposed Amendments are approved by shareholders by the passing of Resolution 2022-2 at the Meeting, the unallocated options under the 2022 Option Plan will have to be reapproved by shareholders every three years thereafter due to the Option Plan henceforth being a “rolling plan”.

Other Amendments

The other amendments to the Option Plan approved by the Board on March 3, 2022, do not require shareholder approval (the “Additional Plan Amendments”, and, together with the Proposed Amendments, the “2022 Plan Amendments”), but are also subject to the final approval of the TSX and are set to come into force as at the date on which the shareholders of the Corporation will approve the Proposed Amendments.

A summary of the 2022 Plan Amendments, including the Proposed Amendments requiring shareholder approval, other than amendments of a clerical nature, along with a description of the principal terms and conditions of the Option Plan are described under the heading “Item IV – Compensation – Long-Term Incentive Programs – Description of Option Plan” below. Such summary and description do not purport to be exhaustive and are subject to and qualified in their entirety by the full text of the 2022 Option Plan, a copy of which is set out as Schedule “A” to Resolution 2022-2, attached as Appendix “B” to this Circular.

 

   

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Recommendation of the Board

Shareholders are being asked to consider and, if deemed advisable, to pass Resolution 2022-2, with or without amendments, to approve the Proposed Amendments to the Option Plan. Resolution 2022-2 is attached as Appendix “B” to this Circular and a copy of the 2022 Option Plan is attached as Schedule “A” to Resolution 2022-2. Resolution 2022-2 must be passed by an ordinary resolution of shareholders.

If Resolution 2022-2 to approve the Proposed Amendments to the Option Plan is passed by shareholders at the Meeting, the 2022 Plan Amendments will be effective and come into force as of May 10, 2022 and the Corporation will be able to grant options pursuant to the 2022 Option Plan. If Resolution 2022-2 is not passed by shareholders at the Meeting, none of the 2022 Plan Amendments will come into force and the Corporation will be able to grant options only pursuant to the Option Plan, without amendments.

For the reasons described above, the Board considers the Proposed Amendments to be appropriate and in the best interests of the Corporation. Therefore, the Board recommends that shareholders vote for the approval of Resolution 2022-2.

Unless instructions are given to vote against, or withhold from voting on, Resolution 2022-2, the persons whose names appear in the enclosed form of proxy will vote FOR the passing of Resolution 2022-2.

6.          Other Matters to be Acted Upon

The Corporation will consider and transact such other business as may properly come before the Meeting or any adjournment thereof. Management of the Corporation knows of no other matters to come before the Meeting other than those referred to in the Notice of Meeting. Should any other matters properly come before the Meeting, the Common Shares represented by the proxy solicited hereby will be voted on such matter in accordance with the best judgment of the persons voting the proxy.

The Corporation did not receive any proposals from shareholders within the time limits prescribed by the Act and, accordingly, none will be accepted at the Meeting, except as required under the Act.

 

   

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ITEM III.           ENVIRONMENTAL, SOCIAL AND GOVERNANCE MATTERS

 

In the last fiscal year, the Corporation retained, through its third-party service provider Syneos, a community liaison (the “Community Liaison”) team of four (4) people entirely dedicated to the pursuit of disease awareness and education for HIV patient groups. The Community Liaison team’s mission consisted in improving patient self-agency for their healthcare through the Corporation-developed tools specific to people living with HIV. The Community Liaison team engaged with over 100 HIV advocacy organizations across the United States leading to more than 200 educational programs (including educational events) via community partners. The Community Liaison team was present at over 100 community meetings and advisory councils to understand the needs of patients living with HIV at local and national levels. In addition, the Corporation implemented a U.S. nationwide monthly program forum bringing community-based advocates and leaders together to address key topics requested by the HIV community. All of the educational programs, tools and activities were done at no cost and equally with no regard to an organization’s or person’s resources.

 

   

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ITEM IV.

COMPENSATION

 

The compensation of the directors and the executive officers of the Corporation is reviewed by the compensation committee (the “Compensation Committee”). The Compensation Committee is currently comprised of three (3) independent directors, namely Gary Littlejohn, who has been acting as chair since August 7, 2019, Dawn Svoronos and Alain Trudeau. Mr. Trudeau was appointed a member of the Compensation Committee on May 13, 2021. For the fiscal year ended November 30, 2021, the Compensation Committee held nine (9) meetings. The mandate, obligations and duties of the Compensation Committee are described in Appendix “F” to this Circular.

1.            Compensation Discussion & Analysis

Objectives of the Compensation Program

Directors

The objectives of the compensation program of the Corporation (the “Compensation Program”) for directors of the Corporation aim at attracting and retaining directors.

Executive Officers

The objectives of the Compensation Program for the executive officers of the Corporation aim at attracting, retaining, motivating and rewarding executive officers. The Corporation is committed to an overall compensation policy that is competitive and drives business performance while taking into consideration shareholders’ interests.

What the Compensation Program is Designed to Reward

The Compensation Program is designed to reward executive officers for (i) implementing strategies, both in the short and the long term, to realize the business plan of the Corporation, (ii) meeting the annual objectives of the Corporation and those of each executive officer, and (iii) enhancing shareholder value.

The Compensation Program provides reasonable and competitive total executive compensation. Remuneration and incentive components are established to compete with remuneration practices of similar companies that are involved in the biopharmaceutical and pharmaceutical industries, as well as certain other companies involved in other industries where the skills and knowledge of an executive officer may be used. The Corporation tries to provide its executive officers with total compensation at the median level of these other companies. To that end, from time to time, the Compensation Committee retains independent compensation consultants to benchmark the Compensation Program made available to its directors and executive officers. See “Compensation Consultants” below.

In designing the Compensation Program of executive officers, the Compensation Committee assesses the short-term and long-term risks associated with such program. The Compensation Program tries to strike a balance between the attainment of short-term and long-term goals by providing executive officers with short-term incentive awards and long-term incentive awards. Recommendations made by the Compensation Committee with respect to the Compensation Program are reviewed by the Board to ensure a fair balance between the short-term and long-term compensation components. For the fiscal year ended November 30, 2021, the Board did not identify any risk arising from the Corporation’s Compensation Program, its policies and practices in determining compensation that are reasonably likely to have a material adverse effect on the Corporation.

 

   

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When and How Is Compensation Determined

Compensation is determined at the beginning of each fiscal year, usually in December. The Compensation Committee meets to determine and to recommend to the Board the base salary of executive officers for such fiscal year. During this meeting, the Compensation Committee also reviews the performance of the Corporation and the performance of each of its executive officers for the last completed fiscal year to determine whether an executive officer is entitled to the payment of a bonus. At such meeting, the Compensation Committee also assesses whether stock options should be granted to each executive officer and the number, if any. The determination by the Compensation Committee of (i) the annual base salary for the ensuing fiscal year; (ii) the payment of a bonus for the last completed fiscal year; and (iii) the grant (and number) of stock options for each executive officer is reviewed by the Board that has discretion to approve, disapprove or change the determination made by the Compensation Committee for each executive officer. The compensation of the President and Chief Executive Officer and of the Senior Vice President and Chief Financial Officer is reviewed by the Board.

From time to time, at such meeting the Compensation Committee will also discuss and review the compensation of the Board and its committees.

Elements of Compensation Program

The major elements of the Compensation Program are base salary, short-term performance reward program that takes the form of cash bonuses, and long-term incentive awards that take the form of stock option grants. Pursuant to the DSU Plan, DSUs may be issued to an executive officer if he/she elects to purchase some with all or part of their cash bonus, if any. See “Description of the Deferred Share Unit Plan” below.

Annual Base Salary

Base salaries for each of the executive officers are based on the experience, expertise and competencies of each executive officer, as well as on a review from time to time of annual salaries paid to persons holding the position and/or playing roles in other organizations similar to those played by the executive officers of the Corporation. Base salaries may also be based on reports from compensation consultants retained by the Corporation from time to time.

Performance Reward Program

The short-term performance reward program is designed to recognize the contribution of each executive officer in helping the Corporation achieve its corporate objectives and to increase its value. Usually, bonuses are paid based on the achievement of the Corporation’s annual corporate objectives and the achievement of an executive officer’s objectives. The Compensation Committee has discretion in recommending the payment of bonuses to an executive officer based on his/her overall performance. Corporate objectives are usually set by the Board early in the fiscal year. Although corporate objectives are determined early in the fiscal year, the Board has discretion to change these corporate objectives during the fiscal year to take into consideration certain events that can occur during such a year leading to a change in priorities.

Long-Term Incentive Programs

The long-term incentive programs of the Corporation for its directors and executive officers are comprised of the Option Plan and the DSU Plan.

Option Plan

The Option Plan was originally adopted on December 6, 1993, and subsequently amended from time to time, in order to attract, retain and motivate employees in key positions and align their interests with

 

   

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those of the Corporation’s shareholders by allowing optionees to participate in the increased value of the Common Shares. See “Description of the Option Plan” below for a description of the Option Plan as well as of the 2022 Plan Amendments, including the Proposed Amendments submitted to shareholders for approval at the Meeting.

The number of options granted under the Option Plan is determined on the basis of various factors, including: (i) the position held by each executive officer; (ii) the potential contribution of an executive officer in achieving the Corporation’s objectives; and (iii) the financial value of the options at the time of grant as part of the total compensation of an executive officer. When assessing whether stock options should be granted to an executive officer and the number to be granted, the Compensation Committee also factors in the number of stock options held by an executive officer, their vesting periods, expiry dates and exercise prices.

DSU Plan

The DSU Plan was adopted on December 10, 2010, and subsequently amended from time to time, in order to attract and retain directors and executive officers and better align the interests of the directors and executive officers with those of the shareholders in the creation of long-term value. See “Description of the Deferred Share Unit Plan” below for a description of the DSU Plan. DSUs can be granted by the Board as part of the compensation of executive officers. Executive officers can also purchase them once a year through the conversion of all or part of their cash bonus into DSUs. No DSUs were issued to the Corporation’s executive officers in the fiscal year ended November 30, 2021.

Compensation Consultant

In the fiscal year ended November 30, 2021, the Compensation Committee retained the services of PCI Compensation Consulting (“PCI”), an independent third-party consulting firm, for and on behalf of the Corporation, to assess the competitiveness of the total compensation paid to its executive officers against that paid to executive officers of certain other publicly-traded companies in Canada and in the United States.

PCI collected market data on the total compensation paid to executive officers of both publicly-traded Canadian and U.S. companies. All of the publicly-traded companies used as a reference point were selected after taking into consideration the following criteria:

 

  -  

biotechnology and drug manufacturing industries;

  -  

market capitalization between $100 million to $2 billion;

  -  

revenue, pipeline status, research and development expenses, number of employees, cash and cash equivalent.

The following Canadian companies were used as the main reference market (the “Reference Market”):

 

- Knight Therapeutics Inc.;

 

- Repare Therapeutics Inc.;

- HLS Therapeutics;

 

- Essa Pharma;

- Zymeworks Inc.;

 

- Sernova Corp.;

- Bellus Health Inc.;

 

- Aptose BioScience;

- Trillium Therapeutics Inc.;

 

- Milestone Pharmaceuticals Inc.

- Oncolytics Biotech.

 

The following U.S. companies, not part of the Reference Market, were used as a reference point only:

 

- Karyopharm Therapeutics Inc.;

 

- Bicycle Therapeutics;

 

   

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- MacroGenics, Inc.;

 

- Aspira Women’s Health, Inc.;

- CytomX Therapeutics, Inc.;

 

- Cardiff Oncology, Inc.;

- Jounce Therapeutics, Inc.;

 

- Fennec Pharmaceuticals;

- G1 Therapeutics;

 

- DBV Technologies.

- Epizyme, Inc.

 

The review conducted by PCI and their report provided to the Compensation Committee led the Compensation Committee to recommend to the Board to make certain adjustments to the annual basic salary of certain executive officers of the Corporation for the ensuing fiscal year ending on November 30, 2022 and to substantially increase the long-term incentive compensation paid to the executive officers. The report concluded that the number of stock options granted to executive officers of the Corporation was substantially below the number of stock options granted to executive officers of companies forming part of the Reference Market and, as a result, part of the long-term incentive compensation paid to the executive officer of the Corporation was below the long-term incentive compensation paid by companies forming part of the Reference Market. For the fiscal year ended November 30, 2021, the Corporation’s Option Plan burn rate was 1.26% whereas the average burn rate of the companies forming part of the Reference Market was 5.2% for 2020 with the median being 3.7%.

Except for compensation services provided to the Corporation, PCI has not provided other services to the Corporation and, to the knowledge of the Corporation, to any of its directors and executive officers.

All services provided to the Corporation by compensation consultants must be approved by the Compensation Committee or the Board.

The table below details the aggregate fees billed to the Corporation for the two most recently completed fiscal years by the compensation consultant retained during these periods to assist in the determination of compensation for any of the Corporation’s directors and/or executive officers:

 

Name

  Fees  

Fiscal year ended

November 30, 2021

 

Fiscal year ended

November 30, 2020

     

PCI

  Executive Compensation – Related Fees   CAD 49,170   Nil
     
    All Other Fees   Nil   Nil

Determination of Total Compensation Paid to Executive Officers in the Fiscal Year Ended November 30, 2021

Annual Base Salary

The annual base salary of each executive officer for the fiscal year ended November 30, 2021 was determined at the December 2020 Compensation Committee and Board meetings.

The adjustments to the executive officers’ annual base salaries were based on the forecasted increase in the cost of living.

Performance Reward Program

For the fiscal year ended November 30, 2021, except for the President and Chief Executive Officer, the payment of bonuses was based as to 60% on the achievement of corporate objectives and as to 40% on

 

   

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the achievement of individual objectives. The achievement of financial targets and corporate milestones each accounted for 30% of the corporate objectives.

Financial targets were based as to 15% on the attainment of pre-determined consolidated revenues and as to 15% on the attainment of pre-determined earnings before interest, taxes, depreciation and amortization (“EBITDA”). EBITDA is a non IFRS financial measure that the Corporation has been using quarterly in the last fiscal year to assess its operating performance. EBITDA, as calculated by the Corporation, allows the Corporation to exclude variations caused by certain adjustments that could potentially distort the analysis of trends in its business. The financial targets are not disclosed since the Corporation did not provide any financial guidance in the last fiscal year. The Corporation’s corporate milestones are not disclosed for competitive reasons.

For the President and Chief Executive Officer, the corporate objectives were weighed as to 80% on the achievement of corporate objectives and as to 20% on the achievement of personal objectives. The achievement of financial targets were weighed as follows: (i) 20% on the attainment of pre-determined consolidated revenues; (ii) 20% on the attainment of pre-determined EBITDA; and (iii) 40% on the completion of the strategic objectives defined at the beginning of the last fiscal year.

The table below details the payout percentage based on the attainment of the pre-determined consolidated revenues and pre-determined EBITDA:

 

 

Bonus Payment

   

Pre-determined Consolidated Revenue  Target

               Pre-determined EBITDA            
     

Achievement

(%)

 

Payment

(%)

 

Achievement

(%)

 

Payment

(%)

     

>100

  110   >100   110
     

95-100

  100   89-100   100
     

90-95

  95   78-89   95
     

85-90

  90   67-78   90
     

80-85

  85   56-67   85

The achievement of the individual objectives of each executive officer was left at the discretion of the Compensation Committee based on an initial assessment made by the President and Chief Executive Officer whereas the achievement of the individual objectives of the President and Chief Executive Officer was left at the discretion of the Board.

Both the Board and Compensation Committee believe that discretion is a valid component in their assessment of the achievement of the Corporation’s corporate objectives and in the achievement of an individual’s objectives, especially when unplanned events occur during a fiscal year.

Discretion allows the Board and the Compensation Committee to review the achievement of all objectives set forth at the beginning of a fiscal year and to assess such objectives against all other activities carried out during the year to meet such objectives. In addition, discretion is afforded to the President and Chief Executive Officer to assess the capacity of each executive officer to adapt, react, respond and act in the best interests of the Corporation when unplanned events occur. However, in order to avoid too large a discretion to the President and Chief Executive Officer and limit potential bias in the determination of the performance of an executive officer’s overall performance, all

 

   

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recommendations made by the President and Chief Executive Officer are reviewed by the Compensation Committee.

At the November 2021 Compensation Committee and Board meetings, both the Compensation Committee and the Board determined that all of the Corporation’s objectives had been fully met, especially in the context of the ongoing COVID-19 pandemic. As a result, the Compensation Committee recommended the payment of bonuses to executive officers and the Board endorsed such recommendation for all executive officers, including the President and Chief Executive Officer.

The table below details for each of the President and Chief Executive Officer, the Senior Vice President and Chief Financial Officer and the three most highly compensated executive officers of the Corporation (the “Named Executive Officers”), the maximum percentage of their annual base salary which may be paid as bonus, the maximum bonuses that each of them may receive and the actual bonus paid or earned for the fiscal year ended November 30, 2021. All amounts were paid in Canadian dollars and were converted into U.S. dollars using the average exchange rate for the fiscal year ended November 30, 2021 where $1.00 = CAD 1.2459, except for Mr. Walshe, as detailed in notes 1 and 2 in the table below, and for Mr. Leasure who received his compensation in U.S. dollars.

 

       
     Maximum

Percentage of

Annual Base

Salary Payable

as Bonus

   Maximum

Target

Bonus

   Bonus Paid

Name

   (%)    ($)    ($)

Paul Lévesque,

President and Chief Executive Officer

   75    481,905    480,059

Philippe Dubuc,

Senior Vice President and Chief Financial Officer

   40    109,440    112,946

Conor Walshe(1),

General Manager,

Theratechnologies Europe Limited

   40    120,996 (2)    68,704

Christian Marsolais,

Senior Vice President and Chief Medical Officer

   40    98,206    110,110

John Leasure(3),

Global Commercial Officer

   40    83,054    85,545

 

  (1)

Conor Walshe’s annual base salary was set at 254,108 Euros, or $302,490. His annual base salary was converted into U.S. dollars based on the average exchange rate during the fiscal year ended November 30, 2021 where €1 = $1.1904.

 
  (2)

Mr. Walshe was entitled to receive 101,643 Euros as maximum bonus payment and he received 57,715 Euros. His maximum target bonus and the bonus paid were converted into U.S. dollars based on the average exchange rate during the fiscal year ended November 30, 2021 where €1 = $1.1904.

 
  (3)

John Leasure joined Theratechnologies U.S., Inc. as Global Commercial Officer on March 29, 2021 and his annual base salary of $305,000 was prorated to $207,635.

 

 

   

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Long-Term Incentive Programs

As part of its Compensation Program and relying on the PCI report, the Compensation Committee recommended to the Board that all executive officers be granted stock options. The number of stock options recommended to the Board to be granted was primarily based on the report prepared by PCI. However, despite the conclusion contained in the PCI report with respect to the low number of stock options granted to executive officers as long-term compensation, the Board elected to stagger over the course of approximately two to three years the increase in the number of stock options to be granted to its executive officers in order to be at the median of the companies forming part of the Reference Market.

For the fiscal year ended November 30, 2021, at its November meeting, the Board determined that it was in the best interests of the Corporation to grant stock options to its executive officers and an aggregate of 1,254,743 stock options and an equivalent number of Common Shares were reserved for future issuance to its executive officers.

The number of options to be granted to each executive officer was determined based on the value of an option as at November 11, 2021 using the Black-Scholes model. Consistent with the terms of the Insider Policy, these options were granted on December 1, 2021. The number of options granted on that date remained the same as those determined in November 2021 since the assessment in value that each executive officer would be entitled to receive had been made on that date. See “Summary Compensation Table” below for a description of the stock options granted.

Description of the Option Plan

The Option Plan is designed to attract, retain, motivate and reward the services of key personnel. The persons eligible to receive options under the Option Plan are the directors, senior executives and key employees of the Corporation and its subsidiaries, as well as consultants who work on behalf of the Corporation.

The Option Plan currently provides for a fixed number of 7,700,000 Common Shares authorized to be issued thereunder, representing approximately 8.1% of the total number of issued and outstanding Common Shares as at April 5, 2022.

2022 Plan Amendments

On March 3, 2022, following a review of the Option Plan by the Compensation Committee and the Board, and upon recommendation of the Compensation Committee, the Board approved the 2022 Plan Amendments to the Option Plan, subject to approval by the TSX and approval of the Proposed Amendments by the shareholders of the Corporation. Below is a summary of the 2022 Plan Amendments, which summary does not purport to be exhaustive and is subject to and qualified in its entirety by the full text of the 2022 Option Plan, a copy of which is set out in Schedule “A” to Appendix “B” to this Circular.

If the Proposed Amendments are approved by the shareholders at the Meeting, the 2022 Plan Amendments would come into effect as of May 10, 2022, and the Option Plan would be amended to, aside from modifications which are of a clerical nature:

 

  (a)

provide that the maximum number of Common Shares that may be issued under the 2022 Option Plan, and any other security-based compensation arrangement of the Corporation, be fixed at 10% of the issued and outstanding Common Shares, on a non-diluted basis, as calculated on the date of grant of options;

 

   

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  (b)

provide that the vesting period of option grants be set “by default” to 1/3 on each of the first, second and third anniversaries of the date of grant, unless otherwise determined by the Board;

 

  (c)

provide that optionees may elect to undertake a “cashless exercise” of their options with the assistance of a broker, whereby the broker may sell on the open market a number of Common Shares issued as a result of the optionee’s exercise, as is necessary to raise and pay the Corporation an amount equal to the aggregate exercise price of those options;

 

  (d)

for option grants made on or after May 10, 2022, provide that if, prior to the expiry date of his or her options, an optionee other than a non-employee director ceases to be an employee or consultant other than for Cause (as defined in the 2022 Option Plan) or death, such optionee’s unexercised vested options as at the Date of Termination of Employment (as defined in the 2022 Option Plan) be exercisable at any time until the earlier of (i) twelve (12) months following the Date of Termination of Employment, and (ii) the expiry date of such options;

 

  (e)

for option grants made on or after May 10, 2022, provide that if, prior to the expiry date of his or her options, an optionee that is a non-employee director ceases to be a director of the Corporation, other than for Cause (as defined in the 2022 Option Plan) or death, such optionee’s unexercised vested options as at the date on which such optionee ceased to act as director be exercisable at any time until the earlier of (i) twelve (12) months following the date such director ceased to hold office, and (ii) the expiry date of such options;

 

  (f)

for option grants made on or after May 10, 2022, provide that if, prior to the expiry date of his or her options, an optionee ceases to be a director, employee or consultant for Cause (as defined in the 2022 Option Plan), (i) all unexercised options of such optionee, whether vested or unvested, be forfeited, cancelled and terminated as at the Date of Termination (as defined in the 2022 Option Plan), or, in the case of a director, the date on which he or she ceased to hold office, unless otherwise determined by the Board, and (ii) such optionee forfeit and repay the Corporation any compensation, gain or other value realized on the vesting, exercise or settlement of options or the sale of Common Shares acquired in respect of such options, since the date of first occurrence of the events, actions or facts that gave rise to the termination for Cause;

 

  (g)

provide that options can be exercised, with the Corporation’s prior approval, by an optionee’s retirement savings trust, registered retirement savings plans or registered retirement income fund, if the optionee is and remains the annuitant;

 

  (h)

amend the amending provisions of the Option Plan, so that the amending provisions of the 2022 Option Plan include the following changes:

 

  i.

remove, from the list of amendments the Board may make without seeking shareholder approval, any amendments to the financing terms of a loan made to an optionee to exercise his or her options;

 

  ii.

modify the amending provisions requiring the approval of a majority of the voting shareholders of the Corporation present at a duly called meeting of shareholders so that:

 

  i.

shareholder approval be required for any increase to the fixed maximum percentage of Common Shares or a change from a fixed maximum percentage of Common Shares to a fixed maximum number;

 

   

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  ii.

shareholder approval be required for the reduction of the exercise price of options for Insiders (as defined in the 2022 Option Plan) only;

 

  iii.

shareholder approval be required for the cancellation and reissue of any and all options to the same individual, and not only those made within a six-month period as was previously specified in the Option Plan;

 

  iv.

shareholder approval be required for the removal or increase of limits to the number of options that may be granted to Insiders (as defined under the 2022 Option Plan); and

 

  v.

shareholder approval be required for any amendments to the amending provisions of the 2022 Option Plan, and not only for amendments to the amending provisions requiring shareholder approval;

 

  iii.

changes to clarify, and align with best governance and market practices, circumstances in which the vote of Insiders shall not be included when amendments to the 2022 Option Plan require shareholder approval; and

 

  iv.

other clerical and housekeeping changes; and

 

  (i)

include “clawback” provisions, pursuant to which the Board may, without consent of the Corporation, as it relates to options granted on or after May 10, 2022:

 

  i.

cancel options of an optionee which (A) has engaged in or engages in activity that is in conflict with or adverse to the interests of the Corporation or its subsidiaries, including fraud or conduct having contributed to financial restatements or irregularities, or (B) violates a non-competition, non-solicitation, non-disparagement or non-disclosure covenant with the Corporation or its subsidiaries, or if an optionee is terminated for Cause (as defined in the 2022 Option Plan); and

 

  ii.

determine that such optionee must forfeit any compensation, gain or other value realized on the vesting, exercise or settlement or transfer of options or Common Shares acquired in respect of such options, and repay such amounts to the Corporation.

The amendments set out in paragraphs (a) and (h) above are the Proposed Amendments to the Option Plan and are subject to shareholder approval at the Meeting.

If the Proposed Amendments are approved by shareholders at the Meeting, the 2022 Plan Amendments (and therefore the 2022 Option Plan) will only apply to grants made on or after May 10, 2022. All outstanding options granted prior to that date shall continue to be governed by the Option Plan currently in place.

If the Proposed Amendments are not approved by shareholders at the Meeting, none of the 2022 Plan Amendments will come into force and the Corporation will be able to grant options only pursuant to the Option Plan, without amendments.

 

   

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Characteristics of the Option Plan

The summary below is a description of the Option Plan in effect as at November 30, 2021 and as currently in place prior to give effect to the 2022 Plan Amendments. For a summary of the 2022 Plan Amendments, please refer to the heading “2022 Plan Amendments” above.

The Board administers the Option Plan, provided that the Board may, from time to time, solicit and/or accept recommendations regarding the Option Plan made by the Compensation Committee. The Board has discretion to designate the optionees and determine the number of Common Shares underlying these options, the vesting period, the exercise price and the expiry date of each option, as well as all other related matters, the whole in compliance with the terms of the Option Plan and applicable legislative provisions established by securities regulatory authorities. The Board is not bound by the recommendations made by the Compensation Committee with respect to the abovementioned matters. Options granted to executive officers generally vest as to 33 1/3% on each anniversary of the date of option grant starting twelve (12) months after the date of grant.

Subject to the terms and conditions of the Option Plan and to compliance with the rules set forth by regulatory authorities, the Board can terminate the Option Plan or make the following amendments without seeking shareholder approval:

 

  (a)

amendments of a “housekeeping” or ministerial nature including, without limiting the generality of the foregoing, any amendment for the purpose of curing any ambiguity, error or omission in the Plan or to correct or supplement any provision of the Option Plan that is inconsistent with any other provision of the Option Plan;

 

  (b)

amendments necessary to comply with the provisions of applicable law (including, without limitation, the rules, regulations and policies of the TSX and/or NASDAQ);

 

  (c)

amendments necessary in order for options to qualify for favorable treatment under applicable taxation laws;

 

  (d)

amendments respecting administration of the Option Plan;

 

  (e)

any amendment to the vesting provisions of the Option Plan or any option, it being understood that in the event of the amendment to the vesting provisions of an option, the Board shall not be under any obligation to amend the vesting provisions of any other option;

 

  (f)

any amendment which reduces the exercise price or purchase price of an option held by an optionee who is not an Insider (as defined in the Option Plan) of the Corporation;

 

  (g)

any amendment to the early termination provisions of the Option Plan or any option, whether or not such option is held by an Insider, provided such amendment does not entail an extension beyond the original expiry date;

 

  (h)

any amendment to the financing terms of a loan made to an optionee to exercise his/her options;

 

  (i)

the addition or modification of a cashless exercise feature, payable in cash or Common Shares;

 

  (j)

amendments necessary to suspend or terminate the Option Plan; and

 

  (k)

any other amendment, whether fundamental or otherwise, not requiring shareholder approval under applicable law or the Option Plan.

 

   

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The following amendments require the approval of a majority of the voting shareholders of the Corporation:

 

  (a)

any increase in the number of Common Shares that may be issued under the Option Plan;

 

  (b)

the reduction of the exercise price of options or the cancellation and reissue of options to the same individual within a period of six (6) months;

 

  (c)

the extension of the period of time pursuant to which options may be exercised;

 

  (d)

the extension of the Blackout Expiration Term (as defined in the Option Plan);

 

  (e)

any transfer and assignment of options other than in accordance with the Option Plan;

 

  (f)

the removal or increase of limits to the number of options that may be granted to non-employee directors; and

 

  (g)

any amendment to the amending provisions requiring shareholder approval of the Option Plan.

Unless otherwise determined by the Board, the options granted pursuant to the Option Plan may be exercised within a maximum period of ten (10) years following the date of grant, subject to applicable optionee termination provisions. The Option Plan provides that if the expiry date of an option falls during, or within ten (10) business days after the end of, a period imposed by the Corporation prohibiting the trading of securities of the Corporation, the term of the option is automatically extended to the end of the day on the tenth (10th) business day after the end of such restriction period.

The Option Plan provides that the exercise price at which the options may be granted cannot be less than the “market price” (as defined in the Option Plan). Options are generally granted to Canadian and non-U.S. resident optionees with an exercise price equal to the closing price of the Common Shares on the TSX on the last trading day immediately preceding the date of grant. For U.S. resident optionees, options are generally granted with an exercise price equal to the closing price of the Common Shares on the U.S. NASDAQ Stock Market on the last trading day immediately preceding the date of grant. The Corporation does not provide any financial assistance to optionees.

The options granted in accordance with the Option Plan cannot be transferred, assigned or subject to any form of alienation, sale, pledge, hypothec or other encumbrance, except by will or other means in the event of the death of an optionee.

The Option Plan provides that the number of Common Shares set aside for the exercise of options by one individual may not represent more than 5% of the issued and outstanding Common Shares. Further, the number of Common Shares that may be issued to insiders, at any time, under all security-based compensation arrangements of the Corporation, cannot exceed 10% of the issued and outstanding Common Shares, and the number of Common Shares issued to insiders, within any one-year period, under all security-based compensation arrangements, cannot exceed 10% of the issued and outstanding Common Shares. The Option Plan also provides that the total number of Common Shares set aside for the exercise of options to each non-employee director within any one-year period cannot exceed a value of CAD 100,000, and an aggregate value of CAD 150,000 under all security-based compensation arrangements.

 

   

COMPENSATION

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The Option Plan further provides that:

 

  (a)

in the event an optionee’s employment is terminated, other than for death, prior to the expiry date of his or her options, the optionee may exercise any or all unexercised vested options at any time until the earlier of (i) twelve (12) months following the date of termination of employment of the optionee, and (ii) the expiry date of such options;

 

  (b)

in the event an optionee that is a non-employee director ceases to act as a director of the Corporation, other than for death, the optionee may exercise any or all unexercised vested options at any time until the earlier of (i) twelve (12) months following the public disclosure of the quarterly financial statements of the Corporation made after the date such director ceased to act as such, and (ii) the expiry date of such options; and

 

  (c)

in the event of the death of an optionee, the optionee’s legal representative may exercise any or all unexercised options that are vested on the date of the optionee’s death at any time until the earlier of (i) twelve (12) months following the optionee’s death, and (ii) the expiry date of such options.

During the fiscal year ended November 30, 2021, 1,160,439 options were granted under the Option Plan. As at April 5, 2022, there were 5,077,449 issued and outstanding options under the Option Plan which, if all exercised, would result in the issuance of 5,077,449 Common Shares, or 5.3% of all the issued and outstanding Common Shares as at that date. In addition to those 5,077,449 options outstanding under the Option Plan, on April 15, 2020, the Corporation issued to the current President and Chief Executive Officer, 487,421 options as an inducement to enter into an employment agreement with the Corporation to act as President and Chief Executive Officer (the “Inducement Options”), which, if all exercised, would result in the issuance of 487,421 Common Shares, or 0.5% of all the issued and outstanding Common Shares as at April 5, 2022. See “Inducement Options” below. Therefore, as at April 5, 2022, the aggregate issued and outstanding options amounted to 5,564,870, which, if all exercised, would result in the issuance of 5,564,870 Common Shares, or 5.8% of all the issued and outstanding Common Shares as at that date.

As at April 5, 2022, there were 1,959,201 options remaining available for grants under the Option Plan which, if granted and exercised, would result in the issuance of 1,959,201 Common Shares, or 2.1% of all the issued and outstanding Common Shares as at that date.

The following table sets forth the information regarding the equity compensation plan of the Corporation as at November 30, 2021. As at November 30, 2021, the number of Common Shares issued and outstanding amounted to 95,121,639.

 

       
Plan Category   

Number of Securities

to be Issued upon

Exercise of Outstanding
Options (% of Issued and
Outstanding Share Capital)

  

Weighted-Average

Exercise Price of

Outstanding Options

  

Number of Securities

Remaining Available

for Future Issuance

under Equity
Compensation Plan

(% of Issued &
Outstanding Share
Capital)

       

Equity Compensation Plan

Approved by Shareholders

  

2,783,596

(2.93%)

   $3.14   

4,251,404

(4.47%)

       

Equity Compensation Plans

Not Approved by

Shareholders

   --    --    --

 

   

COMPENSATION

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   THERATECHNOLOGIES INC.


       
Plan Category   

Number of Securities

to be Issued upon

Exercise of Outstanding
Options (% of Issued and
Outstanding Share Capital)

  

Weighted-Average

Exercise Price of

Outstanding Options

  

Number of Securities

Remaining Available

for Future Issuance

under Equity
Compensation Plan

(% of Issued &
Outstanding Share
Capital)

Total

  

2,783,596

(2.93%)

   $3.14   

4,251,404

(4.47%)

In addition to the options issued under the equity compensation plan of the Corporation described in the table above, as at November 30, 2021, there were 487,421 Inducement Options outstanding with an exercise price of CAD 2.87, which, if all exercised, would result in the issuance of 487,421 Common Shares, which represented 0.5% of the issued and outstanding share capital of the Corporation as at that date.

The following table sets forth the information regarding the burn rate of the Option Plan for the fiscal years ended November 30, 2021, 2020 and 2019, respectively. The burn rate reflects the potential dilutive effect of equity grants on the Corporation’s outstanding equity over a certain period of time. The calculation below was made pursuant to Section 613(p) of the TSX Company Manual.

 

       
     2021     2020     2019  
       

Burn Rate(1)

   1.26%     0.78%(2)     0.53%  

 

  (1)

Total options granted under the Option Plan during the applicable fiscal year / weighted average number of Common Shares during this applicable fiscal year.

 

 

  (2)

Excludes the 487,421 Inducement Options granted during the fiscal year ended November 30, 2020. These Inducement Options represented a burn rate of 0.6% for that year.

 

Description of the Deferred Share Unit Plan

On December 10, 2010, the Board adopted the DSU Plan for the benefit of its directors and executive officers (the “Beneficiaries”).

The goal of the DSU Plan is to increase the Corporation’s ability to attract and retain high-quality individuals to act as directors or executive officers and better align the interests of the directors and executive officers with those of the shareholders of the Corporation in the creation of long-term value. The DSU Plan was also adopted to promote equity-based ownership in the Corporation.

Under the terms of the DSU Plan, Beneficiaries who are directors (including the Chair) are entitled to elect to receive all or part of their annual retainer as Board member in DSUs. The election is done on a quarterly basis. Beneficiaries who act as executive officers are entitled to elect to receive all or part of their annual cash bonus, if any, in DSUs.

The value of a DSU (the “DSU Value”) is equal to the average closing price of the Common Shares on the TSX on the date on which a Beneficiary determines that he desires to purchase or redeem DSUs and during the four previous trading days. Beneficiaries who act as directors have to elect to receive DSUs as complete or partial consideration of their annual retainer to act as Board members prior to each calendar quarter. Beneficiaries who act as executive officers are required to elect to purchase DSUs within 48 hours after having been notified of their annual cash bonus, if any.

 

   

COMPENSATION

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DSUs may only be redeemed when a Beneficiary ceases to act as a director or an executive officer of the Corporation. On the date a Beneficiary ceases to act as a director or executive officer (the “Redemption Date”), the Beneficiary is entitled to send a notice to the Corporation (the “Redemption Notice”) specifying the date on which the DSUs will be redeemed (the “Payment Date”). The Payment Date must be no earlier than five (5) business days after the date on which the Corporation receives the Redemption Notice and no later than November 30 of the year following the Redemption Date. If a Beneficiary does not send a Redemption Notice prior to November 15 in the year following the Redemption Date, the DSU Plan provides that a Beneficiary will be deemed to have sent, and the Corporation received, a Redemption Notice on November 15 of that year. On the Payment Date, the Corporation must provide a Beneficiary with an amount in cash equal to the DSU Value as at the Payment Date. No Common Share is issued under the DSU Plan.

Beneficiaries may not sell, transfer or otherwise assign their DSUs or any rights associated therewith other than by will or in accordance with legislation regarding the vesting and partition of successions.

The Board administers the DSU Plan and the DSU Plan provides that the Board may delegate all or part of its obligations to the Compensation Committee or to any other committee of the Board.

To protect against fluctuations in DSU Value, the Corporation enters into cash settled forward contracts with an independent third party such that, upon a Payment Date, the Corporation is not exposed to the appreciation of the price of its Common Shares. The execution of such contracts requires the signature of two of the following executive officers: the President and Chief Executive Officer, the Vice President, Finance, and the Vice President, Legal Affairs, and Corporate Secretary.

During the fiscal year ended November 30, 2021, 22,909 DSUs were issued to directors.

Description of the Stock Appreciation Rights Plan

On October 4, 2018, the Board adopted a stock appreciation rights plan (the “SAR Plan”) for the benefit of its consultants (the “Eligible Participants”) and those of its subsidiaries.

The goal of the SAR Plan is to increase the interest in the Corporation’s welfare of those consultants who share a responsibility for the growth of the business of the Corporation and its subsidiaries, to incentivize such consultants to continue their services with the Corporation, to reward those consultants for the performance of their services and to attract and retain highly qualified persons to provide services to the Corporation as consultants.

The Board administers the SAR Plan and has the authority to delegate the administration of the SAR Plan to a committee or a plan administrator. On October 4, 2018, the Board delegated the administration of the SAR Plan to the President and Chief Executive Officer of the Corporation. As a delegate, the President and Chief Executive Officer has the discretion to designate the Eligible Participants and to determine the number of SARs to be granted (after consulting the Chair of the Board), the vesting period and the expiry date of each SAR. The President and Chief Executive Officer also has the authority to interpret and take such other actions as he deems advisable in order to administer the terms of the SAR Plan.

Under the terms of the SAR Plan, Eligible Participants are being granted stock appreciation rights (“SAR”) entitling them to receive cash equal to the difference between the SAR price and the market value of the Corporation’s Common Shares when the SARs are redeemed. The SAR Plan is non-dilutive. The SAR price is equal to the closing price of the Common Shares on the TSX on the last trading day preceding the date of grant. SARs may not be granted for a period longer than ten (10) years and SARs are not assignable or transferable, except by will or by the laws of succession.

 

   

COMPENSATION

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Termination of the services of an Eligible Participant for cause voids all SARs granted to an Eligible Participant. If an Eligible Participant ceases to provide services to the Corporation or its subsidiaries for reasons other than for death or for cause, all unvested SARs, if any, shall become void and all vested SARs may be exercised within a period of one hundred eighty (180) days following the date of termination, unless they expire prior to such 180-day period. In the case of death of an Eligible Participant, all vested SARs may be exercised by the liquidator, executor or administrator of the estate of the Eligible Participant within twelve (12) months from the death of the Eligible Participant, unless they expire prior to such 12-month period. All unvested SARs on the date of an Eligible Participant’s death become void.

The SAR Plan contains other usual provisions regarding its amendments and compliance with foreign regulations when Eligible Participants are non-Canadian.

During the fiscal year ended November 30, 2021, 75,000 SARs were granted to Eligible Participants. As of the date of this Circular, 115,000 SARs are issued and outstanding.

Inducement Options

In addition to the long-term incentive program described above, the Board may, from time to time, in compliance with the rules of the TSX and the U.S. NASDAQ stock market, grant options to induce an individual to enter into an employment agreement with the Corporation.

2.            Summary Compensation Table

The table below details the compensation paid to the Named Executive Officers listed above, for the fiscal years ended November 30, 2020, 2019 and 2018, when applicable. Except as described in the notes below, these amounts were paid or calculated in Canadian dollars and were converted into U.S. dollars using the average exchange rate for the fiscal year ended November 30, 2021 ($1.00 = CAD 1.2459), for the fiscal year ended November 30, 2020 ($1.00 = CAD 1.3441) and for the fiscal year ended November 30, 2019 ($1.00 = CAD 1.3292).

 

   

COMPENSATION

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                           Non-equity incentive
plan compensation ($)
                
               

Name and principal

position

 

    Year        

 

 

Salary 

($)

 

 

 

Share-
based
awards 

($)

 

Option-based
 awards(1)(2)(3)  

($)

           
  Annual
 Incentive 
plans
   Long-term 
Incentive
plans
   

Pension
 value(4) 

($)


 

 

  All other
 compensation(5) 
($)
  Total
 compensation 
($)

Paul Lévesque
President and Chief
Executive Officer

  2021    

2020    

   

642,541

378,546

 

(8)  

  --

--

     795,880(6)

1,128,648(9)

  480,059  
281,900  
  117,572(7)

--

   

22,337

20,223

 

 

  --

--

  2,058,389
1,809,317

Philippe Dubuc
Senior Vice President
and Chief Financial
Officer

  2021    
2020    
2019     
   

280,646
252,807
248,275
 
 
 
  --

--

--

     310,053(10)

   113,313(11)

   124,137(12)

  112,946  
  65,730  
  75,235  
  --

--

--

   

11,169

10,129

  9,969

 

 

 

  --

--

--

     714,814
   441,979
    457,615

Conor Walshe
General Manager, Theratechnologies
Europe Limited

  2021    
2020    
2019     
   

302,490

278,644

195,932

(13)   

(17)  

(21)  

  --

--

--

     137,900(14)

     98,007(18)

   235,035(22)

  68,704(15)

91,862(19)
80,294(23)

  --

--

--

   

30,133

27,864

19,593

(16)   

(20)  

(24)  

  --

--

--

     539,227
   496,377
    530,854

Christian Marsolais
Senior Vice President
and Chief Medical Officer

  2021    
2020    
2019     
   

273,598
246,459
236,989
 
 
 
  --

--

--

     311,053(25)

   147,309(26)

   372,412(27)

  110,110  
110,817  
  94,796  
  --

--

--

   

11,169

  6,234

  9,969

 

 

 

  --

--

--

     705,930
   510,819
    714,166

John Leasure(28)
Global Commercial Officer,
Theratechnologies U.S., Inc.

  2021         207,635 (29)     --       314,959(30)     85,545     --         --     --      608,139

 

(1)

Fiscal Year 2021: 21,515 stock options were granted to Mr. John Leasure on July 27, 2021 and a total of 923,123 options were reserved for future issuance to the Named Executive Officers at a Board meeting held in November 2021. The 923,123 options reserved for future issuance were granted on December 1, 2021 as part of the long-term incentive compensation program of the Corporation. The value of the options set forth in this column represents the aggregate value of the options reserved for issuance in November 2021 and was determined based on the Black-Scholes model as at November 15, 2021 as described below. In November 2021, both the Compensation Committee and the Board relied on such value to determine the number of options to reserve for future issuance to the Named Executive Officers. That value was converted into U.S. dollars as at November 15, 2021 where $1.00 = CAD 1.2517

The 21,515 stock options granted to Mr. Leasure on July 27, 2021 were issued with an exercise price denominated in U.S. dollars and the value of those options as at that date was determined using the Black-Scholes model with the following assumptions:

  

(i)

    

Risk-free interest rate:

  

1.116%

 
  

(ii)

    

Expected volatility:

  

70.00%

 
  

(iii)

    

Average option life in years:

  

8 years

 
  

(iv)

    

Expected dividends:

    --  
  

(v)

    

Grant date share price:

  

$3.48

 
  

(vi)

    

Option exercise price:

  

$3.48

 
  

(vii)

    

Grant date fair value:

  

$2.41

 

The value of the option-based awards as at November 15, 2021 was determined using the Black-Scholes model with the following assumptions:

  

(i)

    

Risk-free interest rate:

  

1.720%

 
  

(ii)

    

Expected volatility:

  

52.55%

 
  

(iii)

    

Average option life in years:

  

8 years

 
  

(iv)

    

Expected dividends:

    --  
  

(v)

    

Grant date share price:

  

CAD 4.30

 
  

(vi)

    

Option exercise price:

  

CAD 4.30

 
  

(vii)

    

Grant date fair value:

  

CAD 2.47

 

The 923,123 options were not granted in November 2021. These options were granted on December 1, 2021 and

 

   

COMPENSATION

   PAGE 47

MANAGEMENT PROXY CIRCULAR

   THERATECHNOLOGIES INC.


their value, as at that date, using the Black-Scholes model, was determined using the following assumptions, except with respect to the 133,333 options granted to Mr. Leasure:

  

(i)

    

Risk-free interest rate:

  

1.97%

 
  

(ii)

    

Expected volatility:

  

52.54%

 
  

(iii)

    

Average option life in years:

  

8 years

 
  

(iv)

    

Expected dividends:

    --  
  

(v)

    

Grant date share price:

  

CAD 4.21

 
  

(vi)

    

Option exercise price:

  

CAD 4.21

 
  

(vii)

    

Grant date fair value:

  

CAD 2.43

 

The 133,333 options granted to Mr. Leasure on December 1, 2021 were issued with an exercise price denominated in U.S. dollars and the value of those options as at that date was determined using the Black-Scholes model with the following assumptions:

  

(i)

    

Risk-free interest rate:

  

1.47%

 
  

(ii)

    

Expected volatility:

  

53.50%

 
  

(iii)

    

Average option life in years:

  

8 years

 
  

(iv)

    

Expected dividends:

    --  
  

(v)

    

Grant date share price:

  

$3.30

 
  

(vi)

    

Option exercise price:

  

$3.30

 
  

(vii)

    

Grant date fair value:

  

$1.90

 

 

(2)

Fiscal Year 2020: A total of 538,325 options were reserved for future issuance to the Named Executive Officers at the Board meeting held in December 2020. The 538,325 options reserved for future issuance were granted on February 26, 2021 as part of the long-term incentive compensation program. The value of the options set forth in this column represents the aggregate value of the options reserved for issuance in December 2020 and was determined based on the Black-Scholes model as at November 30, 2020 as described below. In December 2020, both the Compensation Committee and the Board relied on such value to determine the number of options to reserve for future issuance to the Named Executive Officers.

The value of the option-based awards as at November 30, 2020 was determined using the Black-Scholes model with the following assumptions:

  

(i)

    

Risk-free interest rate:

  

0.74%

 
  

(ii)

    

Expected volatility:

  

70.0%

 
  

(iii)

    

Average option life in years:

  

8.5 years

 
  

(iv)

    

Expected dividends:

    --  
  

(v)

    

Grant date share price:

  

CAD 2.96

 
  

(iv)

    

Option exercise price:

  

CAD 2.96

 
  

(vii)

    

Grant date fair value:

  

CAD 2.08

 

The 538,325 options were not granted in December 2020 because the Corporation was in a blackout period. These options were granted on February 26, 2021 and their value, as at that date, using the Black-Scholes model, was determined using the following assumptions:

  

(i)

    

Risk-free interest rate:

  

1.36%

 
  

(ii)

    

Expected volatility:

  

76.8%

 
  

(iii)

    

Average option life in years:

  

8 years

 
  

(iv)

    

Expected dividends:

    --  
  

(v)

    

Grant date share price:

  

CAD 3.93

 
  

(vi)

    

Option exercise price:

  

CAD 3.93

 
  

(vii)

    

Grant date fair value:

  

CAD 2.90

 

 

(3)

Fiscal Year 2019: A total of 83,000 options were granted to two of the Named Executive Officers of the Corporation on May 17, 2019 and a total of 190,000 options were reserved for future issuance to the Named Executive Officers at the Board meeting held in December 2019. The 190,000 options reserved for future issuance were granted on February 26, 2020 as part of the long-term incentive compensation program of the Corporation. The value of the options set forth in this column represents the aggregate value of the options granted in May 2019 and reserved for issuance in December 2019. The value of the options reserved for issuance in December 2019 was determined based on the Black-Scholes model as at November 30, 2019 as described below. In December 2019, both the Compensation Committee and the Board relied on such value to determine the number of options to reserve for future issuance to the Named Executive Officers. The value set forth in this column excludes the value of the options granted on February 26, 2019 since the value of those options was presented in the Corporation’s management proxy circular dated April 12, 2019.

The value of the option-based awards as at May 17, 2019 was determined using the Black-Scholes model with the

 

   

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following assumptions:

  

(i)

    

Risk-free interest rate:

  

1.688%

 
  

(ii)

    

Expected volatility:

  

55.40%

 
  

(iii)

    

Average option life in years:

  

8 years

 
  

(iv)

    

Expected dividends:

    --  
  

(v)

    

Grant date share price:

  

CAD 6.13

 
  

(vi)

    

Option exercise price:

  

CAD 6.13

 
  

(vii)

    

Grant date fair value:

  

CAD 3.65

 

The value of the option-based awards as at November 30, 2019 was determined using the Black-Scholes model with the following assumptions:

  

(i)

    

Risk-free interest rate:

  

1.889%

 
  

(ii)

    

Expected volatility:

  

79.90%

 
  

(iii)

    

Average option life in years:

  

10 years

 
  

(iv)

    

Expected dividends:

    --  
  

(v)

    

Grant date share price:

  

CAD 4.06

 
  

(vi)

    

Option exercise price:

  

CAD 4.06

 
  

(vii)

    

Grant date fair value:

  

CAD 3.30

 

The 190,000 options were not granted in December 2019 because the Corporation was in a blackout period. These options were granted on February 26, 2020 and their value, as at that date, using the Black-Scholes model, was determined using the following assumptions:

  

(i)

    

Risk-free interest rate:

  

1.22%

 
  

(ii)

    

Expected volatility:

  

77%

 
  

(iii)

    

Average option life in years:

  

8.5 years

 
  

(iv)

    

Expected dividends:

    --  
  

(v)

    

Grant date share price:

  

CAD 3.22

 
  

(vi)

    

Option exercise price:

  

CAD 3.22

 
  

(vii)

    

Grant date fair value:

  

CAD 2.42

 

 

(4)

Pension value consists of the amount of the contribution made by the Corporation to a Named Executive Officer’s registered retirement savings plan. The Corporation has a group-RRSP for all of its employees under which the Corporation matches every dollar invested by an employee in such group-RRSP but up to three percent (3%) of the annual base salary of each employee, except with respect to (i) Executive Officers where the Corporation’s contribution is not subject to such three percent (3%) limit and (ii) Mr. Paul Lévesque. Under the terms of Mr. Lévesque’s employment agreement, the Corporation agreed to contribute on an annual basis to Mr. Lévesque’s RRSP to the fullest amount permissible under Canadian laws. Also, Mr. Walshe’s employment agreement provides that Theratechnologies Europe Limited will make a contribution equal to 10% of Mr. Walshe’s monthly salary in his personal retirement savings account if he makes a monthly contribution equivalent to 5% of his monthly salary in such account. Mr. John Leasure was employed by Theratechnologies U.S., Inc. and no retirement savings plan was provided for employees of this subsidiary in the last fiscal year

 

(5)

All other compensation includes perquisites and other form of compensation (such as retention or signing bonuses) not described in the other columns. Perquisites for each Named Executive Officer have not been included since they do not meet the prescribed threshold of the lesser of CAD 50,000 and 10% of each of the respective Named Executive Officer’s salary in the last fiscal year.

 

(6)

Represents the value of the 404,000 options reserved for issuance in November 2021 and granted on December 1, 2021.

 

(7)

On December 21, 2020, the Corporation and Paul Lévesque entered into a retention bonus agreement (the “Retention Agreement”) pursuant to which the Corporation agreed to pay Mr. Paul Lévesque the amount of $352,716 in three (3) equal installments of $117,572 over a three (3) year period on each anniversary date of his employment date (April 6, 2020) with the Corporation. The first payment of $117,572 was made in April 2021. The Retention Agreement was entered into, among other things, as a result of the role Mr. Lévesque was asked to take on with the departure of the then current chief commercial officer of the Corporation. In order to be eligible to receive the additional installments under the retention Agreement, Mr. Lévesque must be acting as President and Chief Executive Officer of the Corporation on April 6, 2022 and April 6, 2023. The Retention Agreement may be terminated at any time by the Corporation at its sole discretion. Termination of the Retention Agreement does not trigger termination of Mr. Lévesque’s employment agreement. The Retention Agreement further provides that all payments made to Mr. Lévesque are refundable to the Corporation if any of the following events occurs prior to the payment of all amounts under the Retention Agreement: (i) he terminates his employment on his own volition (other than in the event such termination is made within 12 months following the occurrence of a change of control of the Corporation); or (ii) his employment is terminated by the Corporation for serious reasons. Mr. Lévesque shall be under no obligation to refund any of the amounts received under the Retention Agreement if: (i) he is terminated by the Corporation without a

 

   

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serious reason; (ii) his employment is terminated as a result of his death; (iii) his employment is terminated as a result of his incapacity to fulfill his position as President and Chief Executive Officer of the Corporation arising from long-term disability; or (iv) the Corporation terminates the Retention Agreement.

 

(8)

Mr. Paul Lévesque’s annual base salary for the fiscal year ended November 30, 2020 was set at CAD 775,000. This amount was prorated to reflect Mr. Paul Lévesque’s period of employment between April 6, 2020 and November 30, 2020. The amount of CAD 509,712 was paid in Canadian dollars and converted into U.S. dollars using the average exchange rate for that period where $1.00 = CAD 1.3465.

 

(9)

Represents the value of the 487,421 options granted on April 15, 2020 as inducement to enter into his employment agreement and the value of the 243,307 options reserved for issuance in December 2020 and granted on February 26, 2021. See note (2) above for the value of the 243,307 options. The value of the 487,421 options granted on April 15, 2020 was determined using the Black-Scholes model with the following assumptions:

  

(i)

    

Risk-free interest rate:

  

0.64%

 
  

(ii)

    

Expected volatility:

  

79.40%

 
  

(iii)

    

Average option life in years:

  

8.5 years

 
  

(iv)

    

Expected dividends:

    --  
  

(v)

    

Grant date share price:

  

CAD 2.87

 
  

(vi)

    

Option exercise price:

  

CAD 2.87

 
  

(vii)

    

Grant date fair value:

  

CAD 2.18

 

The value of those options was converted into U.S. dollars using the exchange rate on April 15, 2020 where $1.00 = CAD 1.4115.

Represents also the value of the 243,307 options reserved for issuance in December 2020 and granted on February 26, 2021. The value of those options was converted into U.S. dollars using the average exchange rate between April 6, 2020 and November 30, 2020 where $1.00 = CAD 1.3465.

 

(10)

Represents the value of the 157,895 options reserved for issuance in November 2021 and granted on December 1, 2021.

 

(11)

Represents the value of the 73,233 options reserved for issuance in December 2020 and granted on February 26, 2021.

 

(12)

Represents the value of the 50,000 options reserved for issuance in December 2019 and granted on February 26, 2020.

 

(13)

Conor Walshe’s annual base salary was set at 254,108 Euros, or $302,490. His annual base salary was converted into U.S. dollars based on the average exchange rate during the fiscal year ended November 30, 2021 where €1 = $1.1904.

 

(14)

Represents the value of the 70,000 options reserved for issuance in November 2021 and granted on December 1, 2021.

 

(15)

Mr. Walshe’s bonus amounted to 57,715 Euros. His bonus was converted into U.S. dollars based on the average exchange rate during the fiscal year ended November 30, 2021 where €1 = $1.1904.

 

(16)

The value of the contribution was 25,313 Euros. This value was converted into U.S. dollars based on the average exchange rate during the fiscal year ended November 30, 2021 where €1 = $1.1904

 

(17)

Conor Walshe’s annual base salary was set at 246,000 Euros or $278,644. His annual base salary was converted into U.S. dollars based on the average exchange rate during the fiscal year ended November 30, 2020 where €1 = $1.1327.

 

(18)

Represents the value of the 63,333 options reserved for issuance in December 2020 and granted on February 26,2021.

 

(19)

Mr. Walshe’s bonus amounted to 81,100 Euros. His bonus was converted into U.S. dollars based on the average exchange rate during the fiscal year ended November 30, 2020 where €1 = $ 1.1327.

 

(20)

The value of the contribution was 24,600 Euros. This value was converted into U.S. dollars based on the average exchange rate during the fiscal year ended November 30, 2020 where €1 = $ 1.1327.

 

(21)

Conor Walshe’s annual base salary was set at 240,000 Euros when he joined the Corporation on March 19, 2019. The amount was prorated and represents his annual base salary earned between March 19, 2019 and November 30, 2019. The amount of 175,692 Euros was converted into U.S. dollars using the average exchange rate for the period between March 19, 2019 and November 30, 2019 where €1 = $1.1152.

 

(22)

Represents the value of the 50,000 options granted on May 17, 2019 as part of Mr. Walshe’s employment agreement and the value of the 40,000 options reserved for issuance in December 2019 and granted on February 26, 2020. See note (3) above for the value of the 50,000 options granted on May 17, 2019 and the value of the 40,000 options reserved for issuance in December 2019 and granted on February 26, 2020.

The value of the 50,000 options was converted into U.S. dollars using the exchange rate on May 17, 2019 where $1.00 = CAD 1.3458.

The value of the 40,000 options reserved for issuance in December 2019 and granted on February 26, 2020 was converted into U.S. dollars using the average exchange rate between March 19, 2019 and November 30, 2019 where $1.00 = CAD 1.3276.

 

   

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(23)

Mr. Walshe’s bonus amounted to 72,000 Euros. His bonus was converted into U.S. dollars using the average exchange rate between March 19, 2019 and November 30, 2019 where €1 = $1.1152.

 

(24)

The value of the contribution was 17,569 Euros. The value was converted into U.S. dollars using the average exchange rate between March 19, 2019 and November 30, 2019 where €1 = $1.1152.

 

(25)

Represents the value of the 157,895 options reserved for issuance in November 2021 and granted on December 1, 2021.

 

(26)

Represents the value of the 95,192 options reserved for issuance in December 2020 and granted on February 26, 2021.

 

(27)

Represents the value of the 150,000 options reserved for issuance in December 2019 and granted on February 26, 2020.

 

(28)

John Leasure joined Theratechnologies U.S., Inc. as Global Commercial Officer on March 29, 2021.

 

(29)

John Leasure’s annual base salary was set at $305,000. The amount was prorated and represents his annual base salary earned between March 29, 2021 and November 30, 2021.

 

(30)

Represents the value of the 21,515 options granted on July 27, 2021 as inducement to enter into his employment agreement and the value of the 133,333 options reserved for issuance in November 2021 and granted on December 1, 2021. See note (1) for the value of the 21,515 options granted on July 27, 2021 and the value of the 133,333 options reserved for issuance in November 2021 and granted on December 1, 2021.

3.            Incentive Plan Awards

Outstanding Option-Based Awards and Share-Based Awards

During the fiscal year ended November 30, 2021, no DSUs were issued to the Named Executive Officers and 496,580 options to purchase Common Shares were granted to the Named Executive Officers. The table below details the outstanding option-based awards and share-based awards as at November 30, 2021 for each of the Named Executive Officers. These amounts were calculated in CAD and were converted into U.S. dollars using the exchange rate as at November 30, 2021 where $1.00 = CAD 1.2792.

 

   

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      Option-Based Awards   Share-Based Awards(1)
           
  Name  

Number of

securities

underlying

 unexercised  

options

(#)

 

Option

exercise price

(CAD)(2)

 

Option

 expiration  

date

 

Value of

  unexercised  

in-the-

money

options(3)

($)

 

Number of

shares or

units of

   shares that   

have not

vested

(#)

 

Market or

  payout value  

of share-

based

awards that

have not

vested

($)

 

Market or

  payout value  

of vested

share-based

awards not

paid out or

distributed(4)

($)

Paul Lévesque
President and Chief Executive Officer

   

487,421

243,307

(5) 

(6) 

  2.87

3.93

  2030.04.15 

2031.02.26 

  170,195

--

  --   --   --

Philippe Dubuc
Senior Vice President and Chief Financial Officer

    175,000     2.01   2026.04.04    300,969   --   --   --
    40,000     5.96   2027.04.07    --          
    28,986     9.56   2028.04.06    --          
    33,300     8.76   2029.02.26    --          
   

50,000

73,233

(7) 

(8) 

  3.22

3.93

  2030.02.26 

2031.02.26 

    12,898

--

           

Conor Walshe
General Manager, Theratechnologies Europe Limited

   

50,000

40,000

63,333

(9) 

(10) 

(11)     

  6.13

3.22

3.93

  2029.05.17 

2030.02.26 

 2031.02.26

  --

  10,318

--

  --   --   --

Christian Marsolais
Senior Vice President and Chief Medical Officer

    125,000     0.38   2022.12.20    374,257   --   --   20,773(12)
    50,000     2.01   2026.04.04      85,991          
    40,000     5.96   2027.04.07    --          
    28,986     9.56   2028.04.06    --          
    33,300 (13)    8.76   2029.02.26    --          
    50,000 (14)    3.22   2030.02.26      12,898          
   

100,000

95,192

(15) 

(16) 

  3.22

3.93

  2030.02.26 

2031.02.26 

  --

--

           

John Leasure
Global Commercial Officer Theratechnologies U.S., Inc.

    21,515 (17)    3.48   2031.07.27    --   --   --   --

 

(1)

Share-based awards are comprised of DSUs issued under the DSU Plan.

 

 

(2)

The exercise price of the options granted to John Leasure is expressed in U.S. dollars.

 

 

(3)

The value of unexercised in-the-money options is determined by multiplying the difference between the exercise price of the options and the closing price of the Common Shares on the TSX on November 30, 2021 (CAD 4.21) by the number of options held and vested as at November 30, 2021.

 

 

(4)

The market or payout value of share-based awards that have vested as at November 30, 2021 is determined by multiplying the closing price of the Common Shares on the TSX on November 30, 2021 (CAD 4.21) by the number of share-based awards held as at November 30, 2021. DSUs may only be redeemed when a Beneficiary leaves his/her position with the Corporation.

 

 

(5)

162,473 options vested on April 15, 2021. 162,474 will vest on April 15, 2022 and 162,474 will vest on April 15, 2023. Therefore, as at November 30, 2021, 324,948 options could not be exercised.

 

 

(6)

These options will vest as to 81,102 on February 26, 2022, 81,102 as to February 26, 2023 and 81,103 on February 26, 2024. Therefore, as at November 30, 2021, none of these options could be exercised.

 

 

(7)

16,667 options vested on February 26, 2021. 16,667 options will vest on February 26, 2022 and on February 26, 2023. Therefore, as at November 30, 2021, 33,334 options could not be exercised.

 

 

(8)

These options will vest in equal tranches of 24,111 on February 26, 2022, February 26, 2023 and February 26, 2024, respectively. Therefore, as at November 30, 2021, none of these options could be exercised.

 

 

(9)

16,666 options vested on May 17, 2020 and 16,667 options vested on May 17, 2021. 16,667 options will vest on May 17, 2022. Therefore, as at November 30, 2021, 16,667 options could not be exercised.

 

 

(10)

13,333 options vested on February 26, 2021. 13,333 options will vest on February 26, 2022 and 13,334 options will

 

 

   

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vest on February 26, 2023. Therefore, as at November 30, 2021, 26,667 options could not be exercised.

 

(11)

These options will vest in equal tranches of 21,111 on February 26, 2022, February 26, 2023 and February 26, 2024, respectively. Therefore, as at November 30, 2021, none of these options could be exercised.

 

 

(12)

Represents 6,312 DSUs granted on December 15, 2010.

 

 

(13)

11,100 options vested on February 26, 2020 and February 26, 2021, respectively. 11,100 options will vest on February 26, 2022. Therefore, as at November 30, 2021, 11,100 options could not be exercised.

 

 

(14)

16,666 vested on February 26, 2021. 16,667 options will vest on February 26, 2022 and 16,667 will further vest on February 26, 2023. Therefore, as at November 30, 2021, 33,334 options could not be exercised.

 

 

(15)

These options will become fully vested on February 26, 2023 after it was determined in October 2021 that the condition precedent to the acquisition of these options had been met. Such condition precedent required that the U.S. Food and Drug Administration approves the protocol for the Phase 3 clinical trial using tesamorelin for the treatment of non-alcoholic steatohepatitis in the general population before December 31, 2021. As at November 30, 2021, none of these options could be exercised.

 

 

(16)

These options will vest as to 31,730 on February 26, 2022, 31,731 on February 26, 2023 and 31,731 on February 26, 2024. Therefore, as at November 30, 2021, none of these options could be exercised .

 

 

(17)

These options will vest as to 7,171 on July 27, 2022, 7,172 on July 27, 2023 and 7,172 on July 27, 2024. Therefore, as at November 30, 2021, none of these options could be exercised.

 

 

Incentive

Plan Awards – Value vested or earned during the year

The table below shows the value vested or earned during the fiscal year ended November 30, 2021 under each incentive plan for each of the Named Executive Officers.

 

       

Name

   Option-based awards- 

Value vested during

the year (1)

($)

  Share-based awards- 

Value vested

during the year

($)

   Non-equity incentive 

plan compensation-

Value earned

during the year (2)

($)

Paul Lévesque
President and Chief Executive Officer

   Nil   Nil    480,059

Philippe Dubuc
Senior Vice President and Chief Financial Officer

   Nil   Nil    112,946

Conor Walshe
General Manager Theratechnologies Europe Limited

   Nil   Nil      68,704(3)

Christian Marsolais
Senior Vice President and Chief Medical Officer

   Nil   Nil    110,110

John Leasure
Global Commercial Officer Theratechnologies U.S., Inc.

   Nil   Nil      85,545(4)

 

(1)

The value is determined by assuming that the options that vested during the financial year would have been exercised on their vesting date if they were in-the-money on that date. The value corresponds to the difference between the closing price of the Common Shares on the TSX or the NASDAQ on the vesting date and the exercise price of the options on that date.

 

 

(2)

Except as detailed in the notes below, the value was calculated in Canadian dollars and converted into U.S. dollars using the average exchange rate for the fiscal year ended November 30, 2021 where $1.00 = CAD 1.2459.

 

 

(3)

This amount was paid in Euros and was converted into U.S. dollars based on the average exchange rate during the fiscal year ended November 30, 2021 where €1 = $1.1904.

 

 

(4)

John Leasure is paid in U.S. dollars and no conversion was applied to the amount he received.

 

 

   

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4.            Termination and Change of Control Provisions

Below is a summary of the employment agreements of each of the Named Executive Officers together with a table detailing the value of the severance payment that would be payable by the Corporation to each of them pursuant to his employment agreement if one of the events described in the table had occurred on November 30, 2021. Except with respect to Mr. John Leasure and except as disclosed in the notes to the tables below, the amounts set forth in the tables below under “Severance” were calculated in CAD and were converted into U.S. dollars using the average exchange rate for the fiscal year ended November 30, 2021, where $1.00 = CAD 1.2459, and the amounts set forth in the tables below under “Value of Stock Options” and “Value of Share-Based Awards” were calculated in CAD and were converted into U.S. dollars using the exchange rate as at November 30, 2021 where $1.00 = CAD 1.2792.

Paul Lévesque

President and Chief Executive Officer

The Corporation entered into an employment agreement for an indeterminate term with Mr. Paul Lévesque on March 1, 2020. Mr. Lévesque’s employment agreement provides for the payment of an annual base salary of CAD 775,000, subject to review on an annual basis by the Board, and the payment of an annual bonus of 75% of his annual base salary conditional upon his attainment of annual objectives set by the Board. The employment agreement also provided that he would be entitled to receive a number of options on the Commencement Date. On April 15, 2020, he was granted 487,421 options. See “Inducement Options” above. In addition, Mr. Lévesque’s employment agreement provides that he is entitled to participate in any incentive program developed by the Board or any committee thereof and, as such, to receive up to 100% of the value of his annual base salary in the form of options. Mr. Lévesque agreed to non-competition, non-solicitation, non-disclosure and assignment of intellectual property provisions in favour of the Corporation. The Corporation agreed to provide limited financial assistance to Mr. Lévesque with respect to tax advice, the close-out of his lease in New York and his relocation to Montreal. The Corporation also agreed to fund Mr. Lévesque’s Canadian registered retirement savings plan up to the full amount prescribed under applicable laws. Mr. Lévesque can terminate his employment agreement at any time upon four (4) weeks prior written notice to the Corporation. The Corporation can terminate Mr. Lévesque’s employment agreement with cause. The termination of Mr. Lévesque’s employment agreement by the Corporation without just and sufficient cause will entitle Mr. Lévesque to receive an amount equal to eighteen (18) months of his then annual base salary plus an amount equal to 150% of his annual bonus target, calculated at a rate of 75% of his then annual base salary. In the event of a “Change of Control” of the Corporation resulting in the termination of Mr. Lévesque’s employment without just and sufficient cause occurring within twenty-four (24) months of such “Change of Control”, Mr. Lévesque will be entitled to receive (i) 200% of his annual base salary, (ii) 200% of his annual bonus target calculated at a rate of 75% of his then annual base salary, and (iii) the cash value of his benefits calculated over a twenty-four-month period preceding his termination following such “Change of Control”. All of his unvested options will also become vested. In the event of the termination of the employment agreement by Mr. Lévesque, at his sole discretion, within a twelve-month period following the occurrence of a “Change of Control” of the Corporation, Mr. Lévesque will be entitled to receive (i) 100% of his annual base salary, (ii) 100% of his annual bonus target calculated on his then annual base salary, and (iii) the cash value of his benefits calculated over a twelve-month period preceding his termination following such “Change of Control”. All of his unvested options will also become vested. In Mr. Lévesque’s employment agreement, a “Change of Control” is defined as the acquisition by a third party, acting alone or in concert with one or more persons, by way of takeover, merger, amalgamation, arrangement or other similar transactions, of (i) more than forty percent (40%) of the Common Shares of the Corporation or (ii) more than forty percent (40%) of the economic value of the Corporation.

 

   

COMPENSATION

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   THERATECHNOLOGIES INC.


Events

     Severance    

($)

    Value of Stock 

Options(1)

($)

    Value of share- 

based awards (2)

($)

       

Retirement (3)

   Nil    170,195    Nil
       

Termination of Employment without Just Cause (4)

   1,686,670    170,195    Nil
       

Termination of Employment in the event of a Change of Control(4)

   2,337,125    563,845    Nil
       

Voluntary Resignation in the event of a Change of Control(4)

   1,168,562    563,845    Nil
       

Voluntary Resignation (3)

   Nil    170,195    Nil

 

(1)

The value assumes that upon the occurrence of an event, all in-the-money vested options (except in the case of a termination resulting from a Change of Control where all of his options become vested) would be exercised. The value is the difference between the closing price of the Common Shares on the TSX on November 30, 2021 (CAD 4.21) and the exercise price of each vested option as at that date. 162,473 options with an exercise price of CAD 2.87 vested on April 15, 2021.

 

 

(2)

Mr. Lévesque does not hold any share-based awards.

 

 

(3)

Under the Option Plan, the termination of a person’s employment with the Corporation entitles him to exercise his vested options over a one-year period after the termination date.

 

 

(4)

In the event of a Change of Control, all of Mr. Lévesque’s options become vested. The value is the difference between the closing price of the Common Shares on the TSX on November 30, 2021 (CAD 4.21) and the exercise price of each vested option as at that date.

 

Philippe Dubuc

Senior Vice President and Chief Financial Officer

The Corporation entered into an employment agreement for an indeterminate term with Mr. Philippe Dubuc on February 24, 2016. In addition to his base salary, Mr. Dubuc was entitled to receive 125,000 stock options of the Corporation vesting as to 41,666 on the first and second anniversary date of the date of grant with the remaining 41,668 vesting on the third anniversary date of the date of grant. These options were granted on April 4, 2016. Mr. Dubuc is eligible to participate in the Corporation’s benefits program and is eligible to receive an annual bonus of up to 40% of his annual base salary based on attainment of objectives set annually by the President and Chief Executive Officer. Mr. Dubuc is also entitled to receive options under the Option Plan and is eligible to participate in any incentive program developed by the Board or any committee thereof. Under the terms of his agreement, Mr. Dubuc agreed to non-competition, non-solicitation, non-disclosure and assignment of intellectual property provisions in favour of the Corporation. If the Corporation terminates Mr. Dubuc’s employment without just and sufficient cause or further to an internal reorganization, he will receive an amount equal to twelve (12) months of his annual base salary (excluding bonus and the value of other benefits to which he is entitled). In the event of a “Change of Control” resulting in the termination of Mr. Dubuc’s employment without just and sufficient cause within twelve (12) months of such “Change of Control”, his employment agreement provides for an indemnity equal to the higher of (i) the value of the time-period related to the reasonable notice to be provided to Mr. Dubuc under applicable civil law and (ii) twelve (12) months of his annual base salary and 100% of his targeted annual bonus. In Mr. Dubuc’s agreement, a “Change of Control is defined as the acquisition by a third party, acting alone or in concert with one or more persons, by way of takeover bid, merger, amalgamation, arrangement or other similar transactions, of at least 40% of the outstanding voting securities of the Corporation. In Mr. Dubuc’s agreement, the sale of all or substantially all of the assets of the Corporation is also deemed a “Change of Control”.

 

   

COMPENSATION

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Events

     Severance    

($)

    Value of Stock 

Options(1)

($)

    Value of share- 

based awards (2)
($)

       

Retirement (3)

   Nil    313,867    Nil
       

Termination of Employment without Just Cause (3)

   280,646    313,867    Nil
       

Termination of Employment without Just Cause in the event of a Change of Control(4)

   392,904    355,695    Nil
       

Voluntary Resignation in the event of a Change of Control(3)

   Nil    355,695    Nil
       

Voluntary Resignation (3)

   Nil    313,867    Nil

 

(1)

The value assumes that upon the occurrence of an event, all in-the-money vested options would be exercised. The value is the difference between the closing price of the Common Shares on the TSX on November 30, 2021 (CAD 4.21) and the respective exercise price of each vested option as at November 30, 2021.

 

 

(2)

Mr. Dubuc does not hold any share-based awards.

 

 

(3)

Under the Option Plan, the termination of a person’s employment with the Corporation entitles him to exercise his vested options over a one-year period after the termination date.

 

 

(4)

Assumes that Mr. Dubuc receives twelve (12) months of his annual base salary and 100% of his targeted bonus over his twelve (12) month annual base salary. In computing the value of the options in the event of a Change of Control, the Corporation assumed that all unvested options would vest as per the terms of Section 5.5 of the Option Plan and that all vested options having an exercise price lower than the closing price of the Common Shares on the TSX on November 30, 2021 (CAD 4.21) would be exercised.

 

Conor Walshe

General Manager, Theratechnologies Europe Limited

The Corporation, through its wholly-owned Irish-based subsidiary, Theratechnologies Europe Limited (“Thera Europe”), entered into an employment agreement with Mr. Conor Walshe on February 6, 2019 for an indeterminate term. Under the terms of the agreement, Mr. Walshe acts as General Manager of Thera Europe. Mr. Walshe’s first working day with Thera Europe was on March 19, 2019. His annual base salary was set at €240,000. In addition to his annual base salary, Mr. Walshe’s employment agreement provided for his entitlement to receive 50,000 options under the Option Plan. These options were granted on May 17, 2019 and vest as to 33.3% on the first, second and third anniversary date of the date of grant. The exercise price per option was set at $6.13 and they have a ten-year term. Mr. Walshe is eligible to participate in Thera Europe’s benefit programs and is eligible to receive an annual bonus equal to 40 % of his annual base salary based on attainment of objectives set annually by the Chair of the Board of Thera Europe. Under the terms of his agreement, Mr. Walshe agreed to non-competition, non-solicitation, non-disclosure and assignment of intellectual property provisions in favor of Thera Europe. Both Thera Europe and Mr. Walshe are entitled to terminate the employment agreement without cause upon ninety (90) days prior written notice to the other. The Corporation is entitled to terminate the employment agreement immediately for the causes set forth in the employment agreement. In the event there occurs an “Acquisition of Control” of the Corporation, the acquisition by a third party of more than 50% of the voting rights of Thera Europe or the sale of all or substantially all of the assets of the Corporation or of Thera Europe (collectively, a “Liquidity Event”) and Mr. Walshe’s employment with Thera Europe is terminated within twelve (12) months following the occurrence of a Liquidity Event, Mr. Walshe will be entitled to receive twelve (12) months of his annual base salary and 100% of his targeted annual bonus. In Mr. Walshe’s agreement, an “Acquisition of Control” is defined as the acquisition by a third party, acting alone or in concert with one or more persons, of at least 40% of the outstanding voting securities of the Corporation. Mr. Walshe shall have no claim against Thera Europe if his employment is terminated by reason of the liquidation of Thera Europe for the purposes of amalgamation or reconstruction to the extent he is offered employment with any entity resulting from such amalgamation or reconstruction on terms and conditions which, taken as a whole, are not substantially less favorable than the terms and conditions of his employment agreement.

 

   

COMPENSATION

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Events

     Severance    

($)

    Value of Stock 

Options(1)

($)

    Value of share- 

based awards (2)
($)

       

Retirement

   Nil    10,318    Nil
       

Termination of Employment without Just Cause (3)

     75,623    10,318    Nil
       

Termination of Employment without Just Cause in the event of a Liquidity Event(4)

   423,486    44,820    Nil
       

Voluntary Resignation in the event of a Liquidity Event(4)

   Nil    44,820    Nil
       

Voluntary Resignation

   Nil    10,318    Nil

 

(1)

The value assumes that upon the occurrence of an event, all in-the-money vested options would be exercised. The value is the difference between the closing price of the Common Shares on November 30, 2021 on the TSX (CAD 4.21) and the exercise price of each vested option as at November 30, 2021. As at November 30, 2021, 13,333 vested options had an exercise price of CAD 3.22.

 

 

(2)

Mr. Walshe does not hold any share-based awards.

 

 

(3)

Under his employment agreement, Mr. Walshe is entitled to receive a ninety (90) day prior notice for termination of his employment agreement without cause. The amount set forth under “Severance” represents three (3) months of his annual base salary (€63,527) converted into Canadian dollars using the average exchange rate for the fiscal year ended November 30, 2021 where €1 = $1.1904. Under the Option Plan, the termination of a person’s employment with the Corporation entitles him to exercise his vested options over a one-year period after the termination date.

 

 

(4)

The amount set forth under “Severance” represents twelve (12) months of his annual base salary (€254,108) and 100% of his targeted bonus over his twelve (12) month annual base salary (€101,643) converted into Canadian dollars using the average exchange rate for the fiscal year ended November 30, 2021 where €1= $1.1904. In computing the value of the options in the event of a Liquidity Event, the Corporation assumed that all unvested options would vest as per the terms of Section 5.5 of the Option Plan and that all vested options having an exercise price lower than the closing price of the Common Shares on November 30, 2021 on the TSX (CAD 4.21) would be exercised.

 

Christian Marsolais

Senior Vice President and Chief Medical Officer

The Corporation entered into an employment agreement for an indeterminate term with Mr. Christian Marsolais on April 13, 2007. His agreement was subsequently amended on May 23, 2012 and July 17, 2012. An amended and restated employment agreement was entered into on December 21, 2012 between Mr. Marsolais and the Corporation. The amended and restated employment agreement was entered into to reflect Mr. Marsolais’ new position as Senior Vice President, Medical Affairs, to set its targeted bonus rate at 40%, to revise and add new restrictive covenants in favour of the Corporation and to amend his severance payment conditions in the event the Corporation terminates his employment without just and sufficient cause. In addition to his base salary, Mr. Marsolais is entitled to the Corporation’s benefits program and is eligible to receive an annual bonus based on attainment of objectives set annually by the President and Chief Executive Officer. Mr. Marsolais is also entitled to receive options under the Option Plan and is eligible to participate in any incentive program developed by the Board or any committee thereof. Under the terms of his agreement, Mr. Marsolais agreed to non-competition, non-solicitation, non-disclosure, standstill and assignment of intellectual property provisions in favour of the Corporation. If the Corporation terminates Mr. Marsolais’ employment without just and sufficient cause, he will receive an amount equal to eighteen (18) months of his annual base salary (excluding bonus and the value of other benefits to which he is entitled). In the event of a “Change of Control” resulting in the termination of Mr. Marsolais’ employment without just and sufficient cause within twelve (12) months of such “Change of Control”, his employment agreement provides for an indemnity equal to the higher of (i) the value of the time period related to the reasonable notice to be provided to Mr. Marsolais under applicable civil law and (ii) eighteen (18) months of his annual base salary and 100% of his targeted annual bonus. In Mr. Marsolais’ agreement, a “Change of Control is defined as the acquisition by a third party, acting

 

   

COMPENSATION

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alone or in concert with one or more persons, by way of takeover bid, merger, amalgamation, arrangement or other similar transactions, of at least 40% of the outstanding voting securities of the Corporation. In Mr. Marsolais’ agreement, the sale of all or substantially all of the assets of the Corporation is also deemed a “Change of Control”.

 

Events

     Severance    

($)

    Value of Stock 

Options(1)

($)

    Value of share- 

based awards(2)

($)

       

Retirement(3)

   Nil    473,146    20,773
       

Termination of Employment without Just Cause (3)

   410,397    473,146    20,773
       

Termination of Employment without Just Cause in the event of a Change of Control(4)

   519,836    597,172    20,773
       

Voluntary Resignation in the event of a Change of Control(3)

   Nil    597,172    20,773
       

Voluntary Resignation(3)

   Nil    473,146    20,773

 

(1)

The value assumes that upon the occurrence of an event, all in-the-money vested options would be exercised. The value is the difference between the closing price of the Common Shares on the TSX on November 30, 2021 (CAD 4.21) and the exercise price of each vested option as at November 30, 2021.

 

 

(2)

The value of the share-based awards assumes that upon the occurrence of an event, all DSUs are redeemed. The value of share-based awards is determined by multiplying the number of DSUs held as at November 30, 2021 (6,312) by the closing price of the Common Shares on the TSX on November 30, 2021 (CAD 4.21).

 

 

(3)

Under the Option Plan, the termination of a person’s employment with the Corporation entitles him to exercise his vested options over a one-year period after the termination date.

 

 

(4)

Assumes that Mr. Marsolais receives eighteen (18) months of his annual base salary and 100% of his targeted bonus over his twelve (12) month annual base salary. In computing the value of the options in the event of a Change of Control, the Corporation assumed that all unvested options would vest as per the terms of Section 5.5 of its Option Plan and that all vested options having an exercise price lower than the closing price of the Common Shares on the TSX on November 30, 2021 (CAD 4.21) would be exercised.

 

John Leasure

Global Commercial Officer, Theratechnologies U.S., Inc.

The Corporation, through its wholly-owned subsidiary Theratechnologies U.S., Inc. (“Thera US”), entered into an employment agreement with Mr. John Leasure on March 23, 2021 for an indeterminate term Under the terms of the agreement, Mr. Leasure acts as Global Commercial Officer for Thera US, the Corporation and the Corporation’s subsidiaries. Mr. Leasure’s first working day with Thera US was on March 29, 2021. His annual base salary was set at $305,000. In addition to his annual base salary, Mr. Leasure’s employment agreement provided for his entitlement to receive a number of stock options under the Option Plan representing approximately 15% of his annual basic salary. These options were granted on July 27, 2021, and vest as to 33.3% on the first, second and third anniversary date of the date of grant. The exercise price per option was set at $3.48 and these options have a ten-year term. Mr. Leasure is eligible to receive an annual bonus equal to 40 % of his annual base salary based on the attainment of objectives set annually by the President and Chief Executive Officer of Thera US and by the Board of the Corporation. The payment of an annual bonus is subject to clawback provisions requiring Mr. Leasure to repay to Thera US the last bonus he was paid in the event of violations of certain U.S. Food and Drug Administration rules or other laws applicable to the commercialization of pharmaceutical products in the United States. Under the terms of his agreement, Mr. Leasure is also entitled to participate in equity-based incentive plans that Thera US or the Corporation may implement from time to time. His employment agreement provides that he is entitled to receive a number of stock options of the Corporation, if and when granted by the Board of the Corporation under the Option Plan, representing a target value between 20% to 45% of his annual base salary. Mr. Leasure is entitled to participate in Thera US’ social benefits comprised of disability and death-in-service benefits, health insurance and a retirement savings plan. For the fiscal year ended November 30, 2021, Thera US did

 

   

COMPENSATION

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not have a retirement savings plan. However, when such a plan will be set-up, Thera US will match the contribution of Mr. Leasure into such plan on a-dollar-for-dollar basis equal to the lower of: (i) three percent of Mr. Leasure’s annual base salary; and (ii) the maximum allowed under applicable laws. Mr. Leasure agreed to non-competition, non-solicitation and non-disclosure obligations and to the assignment to Thera US of any intellectual property created, discovered or made while in the employment or service of Thera US, the Corporation or any of the Corporation’s subsidiaries. Both Thera US and Mr. Leasure are entitled to terminate the employment agreement at will; provided that Mr. Leasure provides Thera US with a termination notice within a certain period of time. In the event Thera US terminates the employment agreement for cause, Thera US sole obligation will be to pay Mr. Leasure all earned but unpaid wages though the date of termination as well as other unpaid expenses incurred in the course of his duties while employed by Thera US (the “Accrued Amounts”). In the event Thera US terminates the employment agreement of Mr. Leasure without “cause” (as defined in the agreement), or if Mr. Leasure terminates his employment agreement for “good reasons” (as defined in the agreement), and such termination occurs prior to March 29, 2026, Thera US shall pay Mr. Leasure the Accrued Amounts and a severance payment equal to one month of Mr. Leasure then annual base salary per year of employment. Beginning on March 29, 2026, in the event Thera US terminates the employment agreement of Mr. Leasure without cause, or if Mr. Leasure terminates his employment agreement for “good reasons”, then Thera US shall pay Mr. Leasure the Accrued Amounts and 100% of his annual basic salary. In the event there occurs a “Change of Control” of Thera US and Thera US terminates the employment agreement of Mr. Leasure without cause within twelve (12) months from the date of the “Change of Control”, or if Mr. Leasure terminates his employment agreement for “good reasons” within such twelve-month period, Thera US shall pay Mr. Leasure the Accrued Amounts and an amount equal to 100% of his annual basic salary. In Mr. Leasure’s agreement, a “Change of Control” is defined as any change of control in fact or in law, including any purchase, sale, transfer, disposition or other transactions, of any nature whatsoever, and whether carried out singly, in combination or as part of a series of transactions, pursuant to or as a result of which (i) any person or group of persons acting together or in concert shall acquire, hold or exercise, whether directly or indirectly, rights over more than forty percent (40%) of the outstanding common shares of Thera US, or which entitle the holder(s) thereof to more than seventy-five percent (75%) of the economic value of the Corporation; or (ii) those individuals who, as at the date immediately preceding the date of the “Change of Control” constitute the board of directors of Thera US (hereinafter called the “Incumbent Board”), cease for any reason to constitute at least a majority of the board of directors after the date of the “Change of Control”.

 

       

Events

     Severance    

($)

    Value of Stock 

Options(1)

($)

    Value of share- 

based awards(2)

($)

       

Retirement(3)

   Nil    Nil    Nil
       
Termination of Employment by Thera U.S. without Cause or termination by Mr. Leasure for Good Reasons(3)      25,417    Nil    Nil
       
Termination of Employment by Thera U.S. in the event of a Change of Control    305,000    Nil    Nil
       

Voluntary Resignation in the event of a Change of Control

   Nil    Nil    Nil
       

Voluntary Resignation(3)

   Nil    Nil    Nil

 

(1)

The value assumes that upon the occurrence of an event, all in-the-money vested options would be exercised. The value is the difference between the closing price of the Common Shares on November 30, 2021 on the NASDAQ ($3.30) and the exercise price of each vested option as at November 30, 2021.

 

 

(2)

Mr. Leasure does not hold any share-based awards.

 

 

(3)

Under the Option Plan, the termination of a person’s employment with the Corporation entitles him to exercise his vested options over a one-year period after the termination date.

 

 

   

COMPENSATION

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5.            Performance Graph

The following graph compares a cumulative annual total shareholder return on a CAD 100 investment in the Common Shares between December 1, 2016 and November 30, 2021 against a cumulative total shareholder return on the S&P/TSX Composite Index assuming that all dividends are reinvested (“S&P/TSX”), the NASDAQ Composite Index (“NCI”), the NASDAQ Biotechnology Index (“NBI”) and the aggregate compensation paid to named executive officers (as they then were) over the same period.

 

LOGO

 

                 2016                  2017                  2018                  2019                  2020                  2021  

 

 

 Theratechnologies

     100.0        227.9        268.9        133.1        98.4        138.0  

 S&P / TSX Composite Index

     100.0        106.5        100.8        113.0        114.0        137.0  

 Amex Biotechnology Index (BTK)

     100.0        132.8        148.7        156.3        172.1        166.9  

 NASDAQ Biotechnology (NBI)

     100.0        115.5        119.7        131.1        159.0        167.3  

 Compensation

     100.0        156.4        124.7        142.3        254.7        254.7  

 

 

The trend shown in the above performance graph indicates that, since December 1, 2016, the annual total shareholder return (“TSR”) on a CAD 100 investment in the Common Shares outperformed the S&P/TSX Composite Index, the BTK and the NBI.

The value of the total compensation received by the Named Executive Officers over the past five years, as they then were, compared to the TSR fluctuated as follows:

 

   

between December 1, 2016 and November 30, 2017, the TSR grew by 128% while the total compensation grew by 51%;

   

between December 1, 2017 and November 30, 2018, the TSR grew by 18% while the total compensation decreased by 20%;

 

   

COMPENSATION

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between December 1, 2018 and November 30, 2019, the TSR decreased by 50% while the total compensation decreased by 13%;

   

between December 1, 2019 and November 30, 2020, the TSR decreased by 26% while the total compensation grew by 86%; and

   

between December 1, 2020 and November 30, 2021, the TSR grew by 40% while the total compensation decreased by 9%.

 

   

COMPENSATION

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ITEM V.

CORPORATE GOVERNANCE DISCLOSURE

 

The Board considers corporate governance to be important to the effective operations of the Corporation and to ensure that the Corporation is managed so as to optimize shareholder value. The Nominating and Corporate Governance Committee is responsible for examining the Corporation’s needs in this regard and addressing all issues that may arise from its practices. This Committee ensures that the Corporation’s corporate governance practices comply with Regulation 58-101 respecting Disclosure of Corporate Governance Practices (Québec) and oversees their disclosure according to the guidelines described in Policy Statement 58-201 to Corporate Governance Guidelines (Québec) (hereinafter collectively referred to as the “Regulation”).

The table below details the corporate governance requirements under the Regulation and the position of the Corporation vis-à-vis each of them.

 

   

CORPORATE GOVERNANCE DISCLOSURE REQUIREMENT

   COMMENTS
     

1.

  

(a)   Disclose the identity of directors who are independent.

  

“Independence” is defined in Section 1.4 of Regulation 52-110 respecting Audit Committees. After review of the definition of “independence”, the Nominating and Corporate Governance Committee determined that the following directors were “independent” within the meaning of the Regulation in the last fiscal year:

-   Joseph Arena;

-   Frank Holler;

-   Gérald A. Lacoste;

-   Gary Littlejohn;

-   Dale MacCandlish Weil;

-   Andrew Molson;

-   Dawn Svoronos; and

-   Alain Trudeau.

 

In addition, the Nominating and Corporate Governance Committee determined that the following nominees proposed for election at the Meeting are “independent” within the meaning of the Regulation:

-   Joseph Arena;

-   Frank Holler;

-   Gérald A. Lacoste;

-   Gary Littlejohn;

-   Dale MacCandlish Weil;

-   Andrew Molson;

-   Dawn Svoronos; and

-   Alain Trudeau.

     
    

(b)   Disclose the identity of directors who are not independent, and describe the basis for that determination.

  

In reviewing the definition of “independence” under Section 1.4 of Regulation 52-110 respecting Audit Committees the Nominating and Corporate Governance Committee determined that Mr. Paul Lévesque, the President and Chief Executive Officer of the Corporation, was not “independent” in the last fiscal year given his position with the Corporation. Mr. Paul Lévesque is a nominee proposed for election at the Meeting. If elected as a director at the Meeting, Mr. Lévesque will not be “independent” within the meaning of the Regulation as a result of his position with the Corporation.

     
    

(c)   Disclose whether or not a majority of the 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 judgment in carrying out its responsibilities.

  

Eight (8) of the nine (9) directors were independent from the Corporation in the last fiscal year.

 

Eight (8) of the nine (9) nominees proposed for election to the Board are independent.

 

   

CORPORATE GOVERNANCE DISCLOSURE

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(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.

  

Dawn Svoronos, the Chair of the Board, is a director of PTC Therapeutics, Inc., Xenon Pharmaceuticals Inc., Global Blood Therapeutics, Inc., and Adverum Biotechnologies, Inc.

 

Dale MacCandlish Weil is a director of Tetra Bio-Pharma Inc.

   
    

(e)   Disclose whether or not the independent directors hold regularly scheduled meetings at which members of management are not in attendance. If the independent directors hold such meetings, disclose the number of meetings held during the last fiscal year ended November 30, 2021. If the independent directors do not hold such meetings, describe what the Board does to facilitate open and candid discussion among its independent directors.

  

As a matter of routine, the Chair of the Board assesses with the other independent directors after each meeting of the Board whether a meeting without the non-independent director is required.

 

There were five (5) meetings of the independent directors in the financial year ended November 30, 2021.

 

The committees of the Board are composed of independent directors and, whenever non-independent directors attend the committee meetings, the chair of the committee assesses with the independent directors after each meeting of the committee whether a meeting without the non-independent director is required.

   
    

(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 this independent, describe what the Board does to provide leadership for its independent directors.

  

The Chair of the Board, Dawn Svoronos, is independent.

 

The Chair of the Board’s role and responsibilities consist in:

 

-   Representing the Corporation vis-à-vis shareholders and members of the public;

-   Preparing the agendas for all Board meetings;

-   Presiding over each Board meeting and shareholders meeting;

-   Coordinating with the chairs of the Board committees on topics to be discussed at committee meetings;

-   Following-up with the President and Chief Executive Officer of the Corporation on material matters occurring in the normal course of business of the Corporation;

-   Assessing the circumstances requiring the holding of special meetings of the Board; and

-   Following-up with committee chairs on topics discussed at Board meetings.

   
    

(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.

  

See the information in the tables provided for each nominee under “Election of directors – Nominees”.

   

2.

  

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.

  

See Appendix “C” attached to this Circular.

   

3.

  

(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 not developed written position descriptions for the Chair of the Board and the chair of each Board committee. The persons acting as Chair of the Board and chairs of Board committees have the experience and expertise necessary to assess the role they must play in the context of a public company. See Section 1 (f) above

for a description of the role and responsibilities of the Chair of the Board.

 

The role and responsibilities of the chair of each Board committee consist in:

 

-   Preparing the agendas for each Committee meeting;

-   Presiding over each committee meeting;

-   Following-up on matters discussed at committee meetings, if and when necessary; and

-   Reporting to the Chair of the Board and the Board.

 

   

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(b)   Disclose whether or not the Board and CEO have developed a written position description for the CEO. If the Board and CEO have not developed such a position description, briefly describe how the Board delineates the role and responsibilities of the CEO.

  

The Board and the CEO have not developed a written position description for the CEO. However, the Board set the following expectations with respect to the role and responsibilities of the individual currently holding the position of President and Chief Executive Officer:

-   Representing the Corporation vis-à-vis shareholders and members of the public;

-   Implementing and driving the Corporation’s strategy;

-   Understanding of the biopharmaceutical and pharmaceutical industry on a global basis (sales, marketing and market access);

-   Supervising the activities related to the commercialization of the Corporation’s products in the United States, Europe and Canada;

-   Supervising the activities related to research and development programs;

-   Canvassing the potential acquisition or in-licensing of new products and supervising the negotiation of agreements related to such transactions;

-   Overseeing the control of expenses;

-   Having leadership skills;

-   Understanding of finance;

-   Ensuring compliance with an ethical conduct;

-   Reporting to the Board; and

-   Maintaining good relationships with shareholders, employees and members of the public.

 

All activities conducted by the Corporation that are not conducted in the “normal course of business” of the Corporation are discussed with the Board. The Chair of the Board has frequent communications with the President and Chief Executive Officer and is aware of situations that do not qualify as “normal course of business”.

   

4.

 

(a)   Briefly describe what measures the Board takes to orient new members regarding:

 

the role of the Board, its committees and its Directors, and

 

the nature and operation of the issuer’s business.

 

  

The Board has a “Director Orientation and Continuing Education Policy” in place for new directors. For a description of this policy, see Appendix “D” to this Circular.

   
        

(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.

  

The Board oversees continuing education that is provided to the directors. Continuing education is provided in the following form:

-   Articles and books on topics relating to the Corporation’s business, competitors, corporate governance and regulatory matters are provided to directors;

-   At Board meetings, members of management are invited to present on business activities;

-   Consultants offer seminars on various topics relating to the business of the Corporation;

-   Directors attending conferences or seminar addressing relevant topics to the Corporation;

-   Providing directors with published research reports written by healthcare analysts.

   

5.

      

(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 Board has adopted a Code of Ethics (the “Code”) and a policy against corruption of civil servants pursuant to the Foreign Corrupt Practices Act (United States) (the “Policy”). More recently, on March 3, 2022, the Board amended and restated the Code.

   
      

(i) disclose how a person may obtain the code;

 

(ii)  describe how the Board monitors compliance with its code, or if the Board does not monitor compliance, explain whether and how the

  

The Code and the Policy are available on the website of the Corporation at www.theratech.com under the section “Investors-Corporate Governance – Corporate Documents”.

 

The Board monitors compliance with the Code by requiring that all directors, employees and executive officers certify on a yearly basis that they have read, understood and agreed to be bound by the Code. The

 

   

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Board satisfies itself regarding compliance with its code; and

 

(iii)  provide a cross-reference to any material change report filed since the beginning of the issuer’s most recently completed financial year ended that pertains to any conduct of a director or executive officer that constitutes a departure from the code.

  

Board will also require that the certification encompasses the Policy. The Board also relies on management to report any conduct that is contrary to the Code to the Chair of the Board or the Chair of the Nominating and Corporate Governance Committee.

 

The Corporation has not filed any material change report pertaining to any conduct of a director or executive officer that departs from the Code in the last fiscal year.

   
    

(b)   Describe any steps the Board takes to ensure directors exercise independent judgment in considering transactions and agreements in respect of which a director or executive officer has a material interest.

  

The Board does not take any particular steps to ensure directors exercise independent judgment in considering transactions and agreements in respect of which a director or executive officer has a material interest. The Board relies on the loyalty, integrity and honesty of its directors to for the disclosure of any interest a director has or may have in a transaction or agreement. Corporate laws, the general by-laws of the Corporation and the Code require that a director discloses any interest he/she may have or has in any transaction or agreement. In the event a director has any such interest, the director will be asked to leave the Board or committee meeting during which discussions regarding the transaction or agreement will take place. The director will not be entitled to vote on any resolution regarding such transaction or agreement.

   
    

(c)   Describe any other steps the Board takes to encourage and promote a culture of ethical business conduct.

  

Other than having adopted the Code and planning on conducting seminars in the current fiscal year on the Policy for all of its directors, officers, employees and those of its subsidiaries, the Board does not take any other particular step to encourage and promote a culture of ethical business conduct. It relies on the honesty and loyalty of each individual and the consequences an individual would suffer if his/her ethical business conduct was inadequate.

   

6.  

  

(a)   Describe the process by which the Board identifies new candidates for Board nomination.

  

The Nominating and Corporate Governance Committee of the Board is responsible to identify new candidates for Board nomination.

The identification of new candidates is undertaken after the Board has assessed the needs of the Corporation and the expertise at the Board level to meet those needs. The identification of new candidates may be done in different ways:

 

-   Knowledge by a Board member of one or more persons having the skills, experience, time and commitment required to act as directors of the Corporation; or

 

-   Retaining the services of a third party specialized in the recruitment of directors.

 

Prior to retaining any individual to act as director of the Corporation, the individual is met by the Chair of the Board and other Board members. In addition, the individual’s background is reviewed.

   
    

(b)   Disclose whether or not the Board has a nominating committee composed entirely of independent Directors. If the Board does not have a nominating committee composed entirely of independent directors, describe what steps the Board takes to encourage an objective nomination process.

  

The Nominating and Corporate Governance Committee was comprised of three (3) independent directors in the fiscal year ended November 30, 2021, namely:

-   Gérald A. Lacoste (chair);

-   Dale MacCandlish Weil; and

-   Dawn Svoronos.

   
    

(c)   If the Board has a nominating committee, describe the responsibilities, powers and operations of the nominating committee.

  

The responsibilities, powers and operation of the Nominating and Corporate Governance Committee are described in Appendix “E” to this Circular.

   

7.

  

(a)   Describe the process by which the Board determines the compensation for the issuer’s directors and officers.

  

The Board has delegated to the Compensation Committee the evaluation and assessment of the compensation of the Corporation’s directors and executive officers.

 

   

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The Compensation Committee reviews, among other things, the compensation of the Corporation’s executive officers for the ensuing fiscal year and assesses the performance of each executive officer on a yearly basis against the Corporation’s annual objectives and each executive officer’s personal objectives to determine whether an executive officer is entitled to a bonus in the form of cash for his/her services and/or the grant of stock options. The Compensation Committee has the power to retain the services of third parties to help in the determination of the annual compensation of an executive officer. Where the Compensation Committee does not retain the services of a third party, the Compensation Committee may review publicly available information regarding the compensation of executive officers holding a position similar to the position under review or purchase such information from third parties. The Compensation Committee will also take into consideration publicly available information relating to the average percentage increase in a particular year of the compensation generally paid to executive officers.

 

The Compensation Committee reviews, from time to time, the compensation of the directors and members of the Board committees. The Compensation Committee has the power to retain the services of third parties to assist its members determining the compensation of directors and committee members.

 

The Compensation Committee makes recommendations to the Board on the compensation to be paid to executive officers and directors and the Board has complete discretion to accept, reject or amend any recommendation made by the Compensation Committee.

   
    

(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.

 

(c)   If the Board has a compensation committee, describe the responsibilities, powers and operation of the compensation committee.

  

The Corporation has a Compensation Committee comprised of independent directors only. The Compensation Committee is currently comprised of the following three (3) independent directors: