The number of shares beneficially owned by the proposed nominees for directors, directly or indirectly, is based on information furnished by Computershare Investor Services Inc., the registrar and transfer agent of the Company, by the nominees themselves or from insider reports available on EDGAR at www.sec.gov.
The information as to principal occupation, business or employment and Common Shares beneficially owned or controlled is not within the knowledge of the management of the Company and has been furnished by the proposed nominees.
All of the proposed directors are residents of the United States of America.
To the best of the knowledge of the Company, no proposed director is, or has, within the 10 years before the date of this Information Circular, been a director, chief executive officer or chief financial officer of any company that,
was subject to an order that was issued while the proposed director was acting in the capacity as director, chief executive officer or chief financial officer; or
was subject to an order that was issued after the proposed director ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer.
No proposed director of the Company was, as at the date of the Information Circular, or has been within 10 years before the date of the Information Circular, a director or executive officer of any company (including Jewett-Cameron Trading Company Ltd.) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets.
No proposed director of the Company has, within the 10 years before the date of the information 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 the assets of the proposed director.
No proposed director of the Company has been subject to (i) any penalties or sanctions imposed by a court relating to securities legislation or by a security regulatory authority or has entered into a settlement agreement with a securities regulatory authority, or (ii) any penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable shareholder in deciding whether to vote for that proposed director.
The following table sets forth certain information regarding the beneficial ownership of the Company's common shares as of December 10, 2012 by:
Except as noted below, the Company believes that the beneficial shareholders of the Common Shares listed below, based on information furnished by such shareholders, have sole voting and investment power with respect to such Common Shares.
Based on information obtained from publicly filed insider reports and from the Company.
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's directors, executive officers and persons who own more than 10% of a registered class of the Company's securities to file with the SEC initial reports of ownership and reports of changes in ownership of Common Shares and other equity securities of the Company. Directors, executive officers and greater than 10% shareholders are required by SEC regulation to furnish the Company with copies of all Section 16(a) reports they file.
To the best of the Company's knowledge, based solely on a review of the Form 3 and Form 4, furnished to it during its most recently completed financial year, the Company believes that during the financial year ended August 31, 2012, its directors, executive officers and greater than 10% shareholders complied with all Section 16(a) filing requirements of the Securities Exchange Act of 1934.
DIRECTORS AND EXECUTIVE OFFICERS
The following table contains information regarding the members and nominees of the Board and the Executive Officers of the Company as of the Record Date:
|
|
|
|
Name
|
Age
|
Position
|
Position Held Since
|
Donald M. Boone
|
72
|
Director
President
Chief Executive Officer
Treasurer
|
July 1987
July 1987
July 1987
July 1987
|
Ralph E. Lodewick
|
77
|
Director
|
February 2008
|
Frank G. Magdlen
|
65
|
Proposed Director
|
New Nominee
|
Michael C. Nasser
|
66
|
Corporate Secretary
|
July 1987
|
Ted A. Sharp
|
64
|
Director
|
August 2004
|
Murray G. Smith
|
41
|
Chief Financial Officer
|
September 2009
|
Jeffrey G. Wade
|
71
|
Director
|
March 2007
|
All of the officers and nominated directors identified above have consented to act as officers and/or directors of the Company.
RELATIONSHIPS AMONG DIRECTORS OR EXECUTIVE OFFICERS
There are no family relationships amongst any of the existing directors or executive officers of the Company.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
During the period from December 12, 2011 and the date hereof, the Board held 7 directors meetings. All other matters which required board approval were unanimously consented to in writing by all of the directors of the Company.
Audit Committee
The Board has established an Audit Committee. The Audit Committee reports directly to the Board. The functions performed on behalf of the Board by the Audit Committee are summarized below.
The Audit Committee is responsible for recommending the appointment of independent accountants; reviewing the arrangement for and scope of the audit by independent accountants; reviewing the independence of the independent accountants; considering the adequacy of the system of internal accounting controls and reviewing any proposed corrective actions; reviewing and monitoring the Company's policies relating to ethics and conflicts of interests and discussing with management and the independent accountants the draft of annual and quarterly financial statements and other key accounting and/or reporting matters.
The Audit Committee is comprised of three directors, all of whom are considered independent directors: Ralph E. Lodewick, Ted A. Sharp and Jeffrey G. Wade. All members of the Audit Committee must meet the "independence" tests under National Instrument 52-110
Audit Committees
("
NI 52-110
"). Within the meaning of NI 52-110, each member of the Audit Committee is considered financial literate.
In the course of its oversight of the Company's financial reporting process, the directors have: (1) reviewed and discussed with management the audited financial statements for the year ended August 31, 2012; (2) received the auditor's report from Davidson & Company LLP, Chartered Accountants, independent auditors, on the matters required to be discussed by Statement on Auditing Standards No. 61, Communications with Audit Committees; (3) received the written disclosures and the letter from the auditors required by Independence Standards Board Statement No. 1, Independence Discussions with Audit Committee; and (4) considered whether the provision of non-audit services by the auditors is compatible with maintaining their independence and has concluded that it is compatible at this time.
Based on the Audit Committee's foregoing review and discussions, the Board has concluded that the audited financial statements should be included in the Annual Report on Form 10-K for the year ended August 31, 2012 and filed with the SEC.
Charter
The Company has adopted a charter (the
Charter
) of the Audit Committee of the Board, which is attached as Schedule A to this Information Circular.
Relevant Education and Experience
All of the current members of the Audit Committee have served as directors and senior officers on other boards under which they have faced the breadth and level of complexity of issues which can reasonably be expected to be raised by financial statements of this Company. In such capacities, the members of the Audit Committee have developed an understanding of the accounting principles used by the Company in the preparation of its financial statements and those principles used in connection with the accounting for estimates, accruals and reserves and of internal controls and procedures used in the processes for financial reporting.
Audit Committee Oversight
At no time since the commencement of the Company's most recently completed financial year was a recommendation of the Audit Committee to nominate or compensate an external auditor not adopted by the Board of Directors.
Pre-Approval Policies and Procedures
The Audit Committee has adopted specific policies and procedures for the engagement of non
-
audit services as described in the Companys Audit Committee Charter.
External Auditor Service Fees
The Audit Committee has reviewed the nature and amount of the non
-
audited services provided by Davidson & Company LLP, Chartered Accountants, to the Company to ensure auditor independence. Fees incurred for audit and non
-
audit services in the last two fiscal years for audit fees are outlined in the following table:
|
|
|
Nature of Services
|
Fees Paid to Auditor in Year Ended
August 31, 2012
|
Fees Paid to Auditor in Year Ended
August 31, 2011
|
Audit Fees
(1)
|
$90,350
|
$90,000
|
Audit-Related Fees
(2)
|
$Nil
|
$Nil
|
Tax Fees
(3)
|
$1,000
|
$1,000
|
All Other Fees
(4)
|
$24,750
|
$24,750
|
Total
|
$116,100
|
$115,750
|
(1)
Audit Fees
include fees necessary to perform the annual audit of the Companys consolidated financial statements. Audit Fees include fees for review of tax provisions and for accounting consultations on matters reflected in the financial statements. Audit Fees also include audit or other attest services required by legislation or regulation, such as comfort letters, consents, reviews of securities filings and statutory audits.
(2)
Audit-Related Fees
include services that are traditionally performed by the auditor. These audit-related services include employee benefit audits, due diligence assistance, accounting consultations on proposed transactions, internal control reviews and audit or attest services not required by legislation or regulation.
(3)
Tax Fees
include fees for all tax services other than those included in Audit Fees and Audit-Related Fees. This category includes fees for tax compliance, tax planning and tax advice. Tax planning and tax advice includes assistance with tax audits and appeals, tax advice related to mergers and acquisitions, and requests for rulings or technical advice from tax authorities.
(4)
All Other Fees
include all other non-audit services.
All Other Fees - Non-audit Services
Since the commencement of the Company's most recently completed financial year, the Audit Committee has approved all non-audit services provided by Davidson & Company LLP, Chartered Accountants, which non-audit services fees represented costs for the reviews of the Company's quarterly financial reporting on Form 10Q. The cost to the Company for each review of the Form 10Q was $8,250 for an aggregate total of $24,750.
COMPENSATION OF EXECUTIVE OFFICERS
Compensation Discussion and Analysis
Compensation
At the present time, the Company does not have a Compensation Committee and the board of directors (the "
Board
") as a whole performs the equivalent functions. As at the end of the financial year ended August 31, 2012, the Board was comprised of Donald M. Boone, Ralph E. Lodewick Ted A. Sharp and Jeffrey G. Wade. As disclosed herein, Donald M. Boone also serves as President, CEO and Treasurer of the Company and, as such, does not vote on any compensation payable to himself by the Company.
As in prior years, judgments regarding executive compensation for fiscal 2012 have been primarily based upon the Board's assessment of each executive officers leadership performance and their potential to enhance long-term shareholder value. The Board relies mostly on each director's business acumen and is not bound by rigid guidelines, formulas or short-term changes in the share price when determining the amount and mix of elements regarding compensation payable for each executive officer.
Key factors that affect the Board's overall decision include the nature and scope of the executive officers responsibilities, their effectiveness in leading the Company's initiatives to increase customer value as well as productivity and growth, ensure compliance with applicable state and federal laws and the ethics policies of the Company.
Based on all these factors, which the Board considers relevant in making its determination of compensation payable, and in light of the Company's strong financial and operating performance, the Board believes it has been in the shareholders best and long-term interests of the Company to ensure that the overall level of salary is commensurate with overall performance and in keeping with the Company's ability to retain key members of management team.
The Board's decisions concerning specific elements of fiscal 2012 compensation for individual executive officers, including the Chief Executive Officer, includes consideration of the executive officer's level of responsibility, their overall performance and current salary. As noted above, in all cases, the specific decisions involving the fiscal 2012 executive officer's compensation are ultimately based upon the Board's judgment about an individual executive officers performance, their potential for future contributions and, more importantly, whether each particular payment or award provides an appropriate incentive and recompense for a performance that will sustain and enhance long-term shareholder value.
The Board's determination for Mr. Boones remuneration as President, CEO and Treasurer was set many years ago. Mr. Boone's compensation has remained unchanged at his request and remains below the competitive rates paid to similar executives.
PERFORMANCE GRAPH
The Company has voluntarily delisted its Common Shares on the Toronto Stock Exchange on October 11, 2012. The Company is listed on the NASDAQ Capital Market (U.S.) under the symbol JCTCF. The following graph compares the annual percentage change in the Companys cumulative total shareholder return on its Common Shares with the cumulative total return on the S&P 500 Index (the
S&P 500
) and the S&P/TSX Composite Index (the
S&P/TSX Index
) over the period from August 31, 2007 through August 31, 2012. The graph illustrates the cumulative return on a $100 investment in Common Shares made on August 31, 2007 as compared with the cumulative return on a $100 investment in the S&P 500 and the S&P/TSX Index made on August 31, 2007. Any dividends declared on Common Shares are assumed to be reinvested. The performance of the Common Shares of the Company as set out in the graph below does not necessarily indicate future price performance.
|
|
|
|
|
|
|
|
2007
|
2008
|
2009
|
2010
|
2011
|
2012
|
JCTCF
|
100
|
80
|
64
|
75
|
100
|
111
|
S&P 500
|
100
|
87
|
69
|
71
|
83
|
95
|
|
|
|
|
|
|
|
|
2007
|
2008
|
2009
|
2010
|
2011
|
2012
|
JCT
|
100
|
80
|
72
|
79
|
91
|
111
|
S&P/TSX
|
100
|
101
|
80
|
87
|
93
|
87
|
Executive Compensation
In this section
Named Executive Officer
means the chief executive officer (the "
CEO
"), the chief financial officer (the "
CFO
") and each of the three most highly compensated executive officers, other than the CEO and CFO, who were serving as executive officers at the end of the most recently completed financial year and whose total compensation exceeds C$150,000 as well as any additional individuals for whom disclosure would have been provided except that the individual was not serving as an officer of the Company at the end of the most recently completed financial year end.
Donald M. Boone, the Company's CEO; Thomas Rice, the Company's CFO as at August 31, 2009 up to September 16, 2009; Murray Smith, the Company's CFO as at September 16, 2009; and Michael C. Nasser, the Company's Corporate Secretary are the
Named Executive Officers
of the Company for the purposes of the following disclosure. There are no other executive officers of the Company whose total compensation exceeded C$150,000 in the fiscal year ended August 31, 2012. The compensation paid to the Named Executive Officers during the Companys last three financial years ended August 31 is set out below:
Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
Name and Principal Position
|
Year
|
Salary
($)
|
Share-based awards ($)
|
Option-based awards
(1)
($)
|
Non-equity incentive plan compensation ($)
|
Pension value
($)
|
All other Compen-sation
($)
(2)
|
Total Compen-sation ($)
|
Annual incentive plans
($)
|
Long-term incentive plans
($)
|
Donald M. Boone
(3)
CEO
|
2012
2011
2010
|
$36,000
$36,000
$36,000
|
$ Nil
$ Nil
$ Nil
|
$ Nil
$ Nil
$ Nil
|
$ Nil
$ Nil
$ Nil
|
$ Nil
$ Nil
$ Nil
|
$ Nil
$ Nil
$ Nil
|
$1,440
$3,960
$2,841
|
$37,440
$39,960
$38,841
|
Michael C. Nasser
Corporate Secretary
|
2012
2011
2010
|
$177,000
$177,000
$177,000
|
$ Nil
$ Nil
$ Nil
|
$ Nil
$ Nil
$ Nil
|
$50,000
$60,000
$40,000
|
$ Nil
$ Nil
$ Nil
|
$ Nil
$ Nil
$ Nil
|
$2,400
$9,400
$7,141
|
$229,400
$246,400
$224,141
|
Murray Smith
CFO
|
2012
2011
2010
|
$87,000
$87,000
$87,000
|
$ Nil
$ Nil
$ Nil
|
$ Nil
$ Nil
$ Nil
|
$ Nil
$ Nil
$ Nil
|
$ Nil
$ Nil
$ Nil
|
$ Nil
$ Nil
$ Nil
|
$2,400
$6,090
$6,213
|
$89,400
$93,090
$93,213
|
Thomas Rice
Former CFO
(4)
|
2012
2011
2010
|
N/A
N/A
$13,462
|
N/A
N/A
$ Nil
|
N/A
N/A
$ Nil
|
N/A
N/A
$ Nil
|
N/A
N/A
$ Nil
|
N/A
N/A
$ Nil
|
N/A
N/A
$194
|
N/A
N/A
$13,656
|
(1)
The fair value of the option-based awards was determined on the grant date using the Black-Scholes option pricing model. The Company uses the Black-Scholes option pricing model because it is a widely used and generally accepted method of estimating the fair value of stock options for accounting purposes.
(2)
All other compensation includes contributions made on behalf of the Named Executive Officers to the Employee Stock Ownership Plan to Mr. Boone (August 31, 2012: $0; August 31, 2011: $2,520; August 31, 2010: $2,571), Mr. Nasser (August 31, 2012: $0; August 31, 2011: $7,000; August 31, 2010: $7,141), and Mr. Smith (August 31, 2012: $0; August 31, 2011: $6,090; August 31, 2010: $6,213) as well as contributions made to the 401(k) Plan to Mr. Boone (August 31, 2012: $1,440; August 31, 2011: $1,440; August 31, 2010: $270), Mr. Nasser (August 31, 2012: $2,400; August 31, 2011: $2,400; August 31, 2010: $0), and Mr. Smith (August 31, 2012: $2,400; August 31, 2011: $0; August 31, 2010: $0).
(3)
Donald M. Boone also serves or served as a director of the Company and receives compensation for services as a director, and that compensation has been included in the figures provided in this Summary Compensation Table. Amounts, if any, which relates to the director role are disclosed in subsequent footnotes hereunder.
(4)
Thomas Rice served as CFO from March 12, 2009 to September 16, 2009; Murray Smith was appointed CFO on September 16, 2009.
There was no other compensation paid to the Named Executive Officers during the most recently completed financial year ended August 31, 2012.
Outstanding Share-Based Awards and Option-Based Awards
The following tables provide information regarding all share-based and option-based awards outstanding as at August 31, 2012.
|
|
|
|
|
|
|
|
|
Option-based Awards
|
Share-based Awards
|
Name
(a)
|
Number of securities underlying unexercised options
(#)
(b)
|
Option exercise price
($)
(c)
|
Option expiration date
(d)
|
Value of unexercised in-the-money options
($)
(e)
|
Number of shares or units of shares that have not vested
(#)
(f)
|
Market or payout value of share-based awards that have not vested
($)
(g)
|
Donald M. Boone
CEO
|
Nil
|
$ Nil
|
N/A
|
N/A
|
Nil
|
$ Nil
|
Michael C. Nasser
Corporate Secretary
|
Nil
|
$ Nil
|
N/A
|
N/A
|
Nil
|
$ Nil
|
Murray G. Smith
CFO
|
Nil
|
$ Nil
|
N/A
|
N/A
|
Nil
|
$ Nil
|
Thomas Rice
Former CFO
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
Incentive Plan Awards - Value Vested or Earned During the Year
An "
incentive plan
" is any plan providing compensation that depends on achieving certain performance goals or similar conditions within a specified period. An "
incentive plan award
" means compensation awarded, earned, paid or payable under an incentive plan.
|
|
|
|
Name
(a)
|
Option-based
awards Value
vested during the
year
($)
(b)
|
Share-based awards Value
vested during the year
($)
(c)
|
Non-equity incentive plan
compensation Value earned
during the year
($)
(d)
|
Donald M. Boone
CEO
|
$ Nil
|
$ Nil
|
$ Nil
|
Michael C. Nasser
Corporate Secretary
|
$ Nil
|
$ Nil
|
$50,000
|
Murray G. Smith
CFO
|
$ Nil
|
$ Nil
|
$ Nil
|
Thomas Rice
Former CFO
|
N/A
|
N/A
|
N/A
|
Termination of Employment, Change in Responsibilities and Employment Contracts
There are no employment contracts between the Company and the Named Executive Officers except as described under the heading "Management Contracts".
There are no compensatory plans, contracts or arrangements between the Company and any Named Executive Officer, where the Named Executive Officer is entitled to receive more than C$50,000 from the Company, including periodic payments or instalments, in the event of:
(a)
the resignation, retirement or any other termination of employment of the Named Executive Officers employment with the Company;
(b)
a change of control of the Company; or
(c)
a change of the Named Executive Officers responsibilities following a change in control.
Pension Arrangements
The Company does not have any pension arrangements in place for the Named Executive Officers.
COMPENSATION OF DIRECTORS
The Company currently has four directors, one of which is also a Named Executive Officer. For a description of the compensation paid to the Company's Named Executive Officer(s) who also act as directors, see "
Summary Compensation Table
".
Other than as disclosed elsewhere in this Information Circular, no director of the Company who is not a Named Executive Officer has received, during the most recently completed financial year, compensation pursuant to:
(a)
any standard arrangement for the compensation of directors for their services in their capacity as directors, including any additional amounts payable for committee participation or special assignments;
(b)
any other arrangement, in addition to, or in lieu of, any standard arrangement, for the compensation of directors in their capacity as directors except for the granting of stock options; or
(c)
any arrangement for the compensation of directors for services as consultants or experts.
The Company may grant incentive stock options to directors and employees of the Company from time to time in accordance with the applicable securities legislation pursuant to British Columbia Securities Commission and the Ontario Securities Commission. As of December 10, 2012, the Company has no formal written stock option plan.
Director Compensation Table
The compensation paid to the directors, other than the Named Executive Officers, during the Companys most recently completed financial year is as set out below:
|
|
|
|
|
|
|
|
Name
(a)
|
Fees earned
($)
(b)
|
Share-based awards
($)
(c)
|
Option-based awards
($)
(d)
|
Non-equity incentive plan compensation
($)
(e)
|
Pension value
($)
(f)
|
All other compen-sation
($)
(g)
|
Total
($)
(h)
|
Ted A. Sharp
|
$3,100
|
$ Nil
|
$ Nil
|
$ Nil
|
$ Nil
|
$ Nil
|
$3,100
|
Jeffrey G. Wade
|
$3,100
|
$ Nil
|
$ Nil
|
$ Nil
|
$ Nil
|
$ Nil
|
$3,100
|
Ralph E. Lodewick
|
$3,100
|
$ Nil
|
$ Nil
|
$ Nil
|
$ Nil
|
$ Nil
|
$3,100
|
Narrative Discussion
Other than amounts already included in the above table, the Company has no arrangements, standard or otherwise, pursuant to which directors are compensated by the Company or its subsidiaries for their services in their capacity as directors, or for committee participation, involvement in special assignments or for services as consultant or expert during the most recently completed financial year or subsequently, up to and including the date of this Information Circular.
Incentive Plan Awards - Outstanding Share-Based Awards and Option-Based Awards
The following table sets forth information concerning all awards outstanding under incentive plans of the Company pursuant to which compensation that depends on achieving certain performance goals or similar conditions within a specified period, at the end of the most recently completed financial year, including awards granted before the most recently completed financial year, to each of the Directors who are not Named Executive Officers:
|
|
|
|
|
|
|
|
Option-based Awards
|
Share-based Awards
|
Director Name
(a)
|
Number of securities underlying unexercised options
(#)
(b)
|
Option exercise price
($)
(c)
|
Option expiration date
(d)
|
Value of unexercised in-the-money options
($)
(e)
|
Number of shares or units of shares that have not vested
(#)
(f)
|
Market or payout value of share-based awards that have not vested
($)
(g)
|
Ted A. Sharp
|
Nil
|
$ Nil
|
N/A
|
N/A
|
Nil
|
$ Nil
|
Jeffrey G. Wade
|
Nil
|
$ Nil
|
N/A
|
N/A
|
Nil
|
$ Nil
|
Ralph E. Lodewick
|
Nil
|
$ Nil
|
N/A
|
N/A
|
Nil
|
$ Nil
|
Incentive Plan Awards - Value Vested or Earned During the Year
The value vested or earned during the most recently completed financial year of incentive plan awards granted to Directors who are not Named Executive Officers are as follows:
|
|
|
|
Name
(a)
|
Option-based awards Value vested during the year
($)
(b)
|
Share-based awards Value vested during the year
($)
(c)
|
Non-equity incentive plan compensation Value earned during the year
($)
(d)
|
Ted A. Sharp
|
$ Nil
|
$ Nil
|
$ Nil
|
Jeffrey G. Wade
|
$ Nil
|
$ Nil
|
$ Nil
|
Ralph E. Lodewick
|
$ Nil
|
$ Nil
|
$ Nil
|
CORPORATE GOVERNANCE
General
National Instrument 58-101
Disclosure of Corporate Governance Practices
(
NI 58-101
) requires issuers to disclose the corporate governance practices that have been adopted according to guidance provided pursuant to National Policy 58-201
Corporate Governance Guidelines
(
NP 58-201
).
The Board believes that good corporate governance improves corporate performance and ultimately benefits all Shareholders. The Canadian Securities Administrators (the
CSA
) have adopted NP 58-201, which provides non-prescriptive guidelines on corporate governance practices for reporting issuers. In addition, the CSA has implemented NI 58-101, which prescribes certain disclosure by reporting issuers of its corporate governance practices. This section sets out the Companys approach to corporate governance and addresses the Companys compliance with NI 58-101.
The Company is also subject to the requirements of the U.S. Sarbanes-Oxley Act and the requirements of NASDAQ as well as comparable requirements under Canadian provincial securities legislation, including those relating to the certification of financial and other information prepared by or under the direction of the Companys chief executive officer and chief financial officer; oversight of the Companys external auditors; enhanced independence criteria for audit committee members, the pre-approval of permissible non-audit services to be performed by the Companys external auditors; and the establishment of procedures for the anonymous submission of complaints regarding the Companys accounting practices (commonly known as whistleblower procedures). The Company has established a Whistleblower Policy which was adopted by the Board on April 10, 2008. Details of the Whistleblower Policy are posted under the heading, Investor Relations on the Company's website at
www.jewettcameron.com
.
The Board believes that sound corporate governance practices are essential to the effective, efficient and prudent operation of the Company and for the enhancement of shareholder value. It is anticipated that the frequency of Board meetings may be increased and the nature of the agenda items may be changed depending upon the state of the Companys affairs and in light of opportunities and risks which the Company may face. The directors are kept abreast of the Companys operations at Board meetings as well as through updates, reports and discussions with management.
Pursuant to the requirements of NI 58-101, the Company is required to provide disclosure in this Information Circular of its corporate governance practices in accordance with Form 58-101F1, which are as follows.
Board of Directors
Within the meaning of NI 58-201, a majority of the members of the Companys current Board are considered "independent". Mr. Lodewick, Mr. Sharp and Mr. Wade are considered independent. Mr. Magdlen is a proposed director and if elected, Mr. Magdlen will also be considered independent. To encourage active participation from its independent members, the Board facilitates candid communication at Board meetings through open discussions and by prompting independent members for input on all issues brought before the Board.
The remaining member of the Board, Mr. Boone, is considered not independent as he is also an officer of the Company. Further, Mr. Boone acts as the Chair of the Board. As Chair, Mr. Boone is responsible for the oversight of all Board meetings and, in his duties, he provides strong leadership to the Board and the management thereof; he acts as a liaison between the Board and the Company's management and he represents himself on behalf of the Company to external groups.
The Board provides leadership for its independent directors by ensuring that they understand their responsibilities and those of management and by encouraging the Board to work as a cohesive team.
During the most recently completed financial year, none of the existing directors or proposed directors of the Company were directors of any other reporting issuers.
The following table summarizes the attendance record of each director for each meeting of the directors from December 12, 2011 until December 10, 2012:
|
|
|
Name
|
Number of Meetings Attended
|
Percentage of Meetings
|
Donald M. Boone
|
7
|
100%
|
Ralph E. Lodewick
|
7
|
100%
|
Ted A. Sharp
|
7
|
100%
|
Jeffrey G. Wade
|
5
|
71%
|
During the past financial year ended August 31, 2012 and up to December 10, 2012, the Board also passed, by unanimous consent, written resolutions on 6 occasions executed by all of the directors.
Board Mandate
At the present time, the Board does not have a written mandate. The Board is responsible for the general supervision and management of the Company and its business. Throughout the year, the Board discharges its responsibilities directly or through its only standing committee, the Audit Committee. The Board meets on a regular basis during which it reviews current business operations, corporate governance procedures and the financial results of the Company.
Position Descriptions
The Board has not yet prepared written descriptions for the positions of Chair of the Board and the Chief Executive Officer. The Chair of the Board presides over all meetings of the directors and shareholders, initiates the calling of directors' meetings and sets the agenda for directors' meetings as well as acts as a liaison between the Board and other members of management. The Chief Executive Officers primary role is to manage the Company in an effective, efficient and forward-looking way, to fulfill the priorities, goals and objectives as determined by the Board and within the context of the Company's plans, and responsibilities, with a view to increasing shareholder value. The Chief Executive Officer reports directly and is responsible to the Board.
Further, the Board has not yet adopted position descriptions for the chair of the Audit Committee. However, the chair of the Audit Committee is responsible on an informal basis for ensuring that an agenda is set for each applicable Audit Committee meeting and that the Audit Committee properly discharges its mandate.
Orientation and Continuing Education
The Board is responsible for establishing measures in connection with the orientation of new Board members regarding the role of the Board, its directors, any applicable committees of the Board and the nature and operation of the Companys business. From time to time, the Board will consider making recommendations regarding the provision of continuing education for its Board members.
Code of Business Conduct and Ethics
The Company and the Board are committed to maintaining the highest standards of business conduct and ethics. Toward this end, the Board has adopted a formal code of business conduct and ethics for its directors and officers (the "
Code of Ethics
"), which reflects the business practices and principles of behaviour that support this commitment and in respect of which it monitors compliance. The Code of Ethics is available under the heading, Investor Relations on the Company's website at
www.jewettcameron.com
. A copy of the Code of Ethics is also available upon request from the Companys head office, North Plains, Oregon. Since its implementation on April 10, 2008, there have been no material deviations from the Code of Ethics which may require the filing of a material change report.
Nomination of directors
The Board is comprised of a majority of independent directors and is responsible for, amongst other things, the identification of new candidates for nomination to the Board. Presently, the Board analyzes the needs of the Board when a vacancy arises and identifies and recommends potential candidates for consideration as Board members. In order to encourage an objective nomination process, the Board may from time to time seek outside assistance. The Board has no standing nominating committee.
Compensation
The Company currently does not have a compensation committee of the Board. The Board as a whole is responsible for, among other things, making recommendations regarding the appropriate level of compensation payable to the Companys directors and executive officers. The process by which the Board determines executive compensation is set out under "
Compensation of Executive Officers
". Regarding compensation payable to Mr. Boone, Mr. Boone excuses himself from all discussions on executive compensation payable to the Chief Executive Officer.
During the most recently completed financial year ended August 31, 2012, the Company paid a cash consideration to certain directors of the Company for director's services during the financial year ended August 31, 2012: Ralph E. Lodewick, $3,100 (August 31, 2011: $3,700), Ted A. Sharp, $3,100 (August 31, 2011: $3,700) and Jeffrey G. Wade, $3,100 (August 31, 2011: $2,400). The Company has no standard arrangement pursuant to which directors are compensated by the Company for the provision of services in their capacity as directors, except for the granting of incentive stock options, from time to time, in accordance with the policies of the Toronto Stock Exchange. The Company has granted no incentive stock options to directors, including directors who are Named Executive Officers (as defined herein) during the most recently completed financial year ended August 31, 2012 (August 31, 2011: 0).
Board Assessments
The Chair of the Board will provide oversight on the evaluation of the Board, and of its committees as applicable. The Chair will receive comments from all directors and reports to the Board, as necessary. All directors are free to make suggestions on the improvement of the Boards practices at any time and are encouraged to do so.
On an annual basis, the Chair of the Board is responsible for reviewing the requisite skills and characteristics of prospective Board members as well as the composition of the Board as a whole.
Other Board Committees
The Board has no other standing committees other than the Audit Committee.
Assessments
The Board monitors the adequacy of information given to directors, communication between the Board and management, and the strategic direction and processes of the Board and its committees.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
Employee Stock Ownership Plan
Effective August 31, 1995, the Company established an Employee Stock Ownership Plan (the "
ESOP
") pursuant to the
Employee Retirement Income Security Act
of 1974 (United States) for the benefit of all U.S. employees who were employed by the Company on August 31, 1995 and whom had at least 1,000 hours with the Company during fiscal 1995. The establishment of the ESOP resulted in the Company forming a trust, which in turn purchased from the Company's treasury 202,500 Common Shares at a price of C$2.22 per share on August 31, 1995.
The ESOP covers all eligible U.S. employees who are employed by the Company on August 31 of each year and who have at least 1,000 hours with the Company in the twelve months preceding that date. The ESOP grants to participants in the ESOP certain ownership rights in, but not possession of, the Common Shares of the Company held by the Trustee of the Plan. The Companys CEO is the sole Trustee for the ESOP. Common Shares may be allocated annually to participants in the ESOP pursuant to a prescribed formula. The amount of Common Shares allocated to each employee is equal to the employee's portion of the Company's overall payroll expressed in percentage terms. There are no un-funded liabilities.
On February 17, 2003, shareholders approved the issuance of up to 225,000 common shares from treasury to the ESOP.
The ESOP compensation expense for the following five financial years ended August 31 was:
|
|
|
|
|
2008
|
2009
|
2010
|
2011
|
2012
|
$158,700
|
$164,118
|
$146,677
|
$141,518
|
$0
|
The ESOP shares allocated for the following five financial years ended August 31 were:
|
|
|
|
|
2008
|
2009
|
2010
|
2011
|
2012
|
419,968
|
414,598
|
349,456
|
224,939
|
0
|
The Named Executive Officers are participants in the ESOP. As at the financial year ended August 31, 2012, no Common Shares were credited to the accounts of Mr. Boone (August 31, 2011: 0), Mr. Nasser (August 31, 2011: 0), and Mr. Smith (August 31, 2011: 0) with the ESOP. As at the financial year ended August 31, 2012, $0 was credited to Mr. Boone's account (August 31, 2011: $2,520), $0 to Mr. Nasser's account (August 31, 2011: $7,000), and $0 to Mr. Smith's account (August 31, 2011: $6,090).
Beginning in the financial year ended August 31, 2008, the compensation expense associated with the ESOP has been invested on behalf of the plan participants in the Vanguard Star Fund, which is a low cost, broadly diversified mutual fund that owns both stocks and bonds. This move by the Company was designed to provide plan participants with some degree of diversification in their ownership stake in the ESOP. During fiscal 2011 and 2012, all of the Companys shares held by the ESOP were sold, with the majority repurchased by the Company and cancelled under the 10b5-1 share repurchase plans. Effective June 30, 2012, the ESOP has been terminated, subject to the approval of the Internal Revenue Service. No further contributions shall be made to the ESOP. Upon receipt of approval from the Internal Revenue Service, the remaining assets shall be distributed to the participants pursuant to the terms of the Plan.
|
|
|
|
Plan Category
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
(a)
|
Weighted-average exercise price of outstanding options, warrants and rights
(b)
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
(c)
|
Equity compensation plans approved by securityholders
|
N/A
|
N/A
|
N/A
|
Equity compensation plans not approved by securityholders
|
N/A
|
N/A
|
N/A
|
Total
|
N/A
|
N/A
|
N/A
|
401(k) Plan
The Company has a deferred compensation 401(k) plan (the "
401(k) Plan
") to allow for a non-elective discretionary contribution based on the first $60,000 of eligible income.
The Companys aggregate contribution to the 401(k) Plan for the following five financial years each ended August 31, was:
|
|
|
|
|
2008
|
2009
|
2010
|
2011
|
2012
|
$73,895
|
$64,105
|
$75,366
|
$53,432
|
$186,906
|
There are no un-funded liabilities.
The contributions for the following Named Executive Officers for the following five financial years ended August 31 were:
|
|
|
|
|
|
Name
|
2008
|
2009
|
2010
|
2010
|
2012
|
Donald M. Boone
|
$1,080
|
$1,080
|
$270
|
$1,440
|
$1,440
|
Michael C. Nasser
|
$3,000
|
$3,000
|
$ Nil
|
$2,400
|
$2,400
|
Thomas Rice
(1)
|
N/A
|
$1,890
|
$194
|
N/A
|
N/A
|
Murray G. Smith
|
N/A
|
N/A
|
$ Nil
|
$ Nil
|
$2,400
|
(1)
Messrs. Rice and Smith all served in the capacity of CFO of the Company. Mr. Rice was CFO from March 2009 to September 2009 and Mr. Smith was appointed CFO in September 2009.
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS
Except as set out below, no director, executive officer, employee or former director, executive officer or employee of the Company was indebted to the Company as at the date hereof or at any time during the most recently completed financial year of the Company.
An employee, other than a director or executive officer, is indebted to one subsidiary of the Company in the aggregate amount of $20,000. The indebtedness is not related to the purchase of securities.
INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS
An
informed person
means: (a) a director or executive officer of the Company; (b) a director or executive officer of a person or company that is itself an informed person or subsidiary of the Company; (c) any person or company who beneficially owns, directly or indirectly, voting securities of the company or who exercises control or direction over voting securities of the Company or a combination of both carrying more than 10% of the voting rights other than voting securities held by the person or company as underwriter in the course of a distribution; and (d) the Company itself, if and for so long as it has purchased, redeemed or otherwise acquired any of its shares.
Since the commencement of the Companys most recently completed financial year, no informed person of the Company, nominee for director or any associate or affiliate of an informed person or nominee, had any material interest, direct or indirect, in any transaction, in any transaction or any proposed transaction which has materially affected or would materially affect the Company or any of its subsidiaries.
MANAGEMENT CONTRACTS
There are no other management functions of the Company or any of its subsidiaries which are to any substantial degree performed other than by the directors or executive officers of the Company or its subsidiaries.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR FIXING THE NUMBER OF DIRECTORS AT FOUR AND A VOTE FOR FOUR OUT OF THE FIVE MANAGEMENT NOMINEES FOR THE BOARD OF DIRECTORS OF THE COMPANY UP AND UNTIL THE CONCLUSION OF THE NEXT ANNUAL GENERAL MEETING OF SHAREHOLDERS.
PROPOSAL THREE
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
Shareholders will be requested to vote to ratify the re-appointment of Davidson & Company LLP, Chartered Accountants, of 1200 609 Granville Street, P.O. Box 10372, Pacific Centre, Vancouver, British Columbia, as independent auditors for the Company and to authorize the directors to fix their remuneration.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE RE-APPOINTMENT OF DAVIDSON & COMPANY LLP, CHARTERED ACCOUNTANTS, AS JEWETT-CAMERON'S INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING AUGUST 31, 2013 AND TO AUTHORIZE THE DIRECTORS TO FIX THE REMUNERATION OF SAID AUDITORS.
PROPOSAL FOUR
RATIFICATION OF ACTS AND DEEDS OF DIRECTORS
Shareholders will be requested to confirm, ratify and approve all acts, deeds and business done by, and the proceedings of, the directors and officers of the Company on behalf of the Company during the preceding year.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF ALL ACTS, DEEDS AND BUSINESS DONE BY, AND PROCEEDINGS OF, THE DIRECTORS AND OFFICERS OF THE COMPANY ON BEHALF OF THE COMPANY DURING THE PRECEDING YEAR.
PROPOSAL FIVE
PERMITTED AMENDMENTS TO OR VARIATIONS OF
Shareholders will be requested to consider any permitted amendments to or variations of any matter identified in the accompanying Notice, which may arise and be permitted by the Chair, at the Chair's discretion.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF ANY PERMITTED AMENDMENTS TO OR VARIATIONS OF ANY MATTER IDENTIFIED IN THE NOTICE.
PROPOSAL SIX
OTHER MATTERS
The Company knows of no other matters that are likely to be brought before the Meeting. If, however, other matters not presently known or determined properly come before the Meeting, the persons named as Proxyholders on the accompanying Proxy or their substitutes will vote such Proxy with respect to such matters in accordance with their discretion.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF VOTING ON ANY OTHER MATTERS THAT MAY COME PROPERLY BEFORE THE MEETING AT THE DISCRETION OF THE PROXYHOLDERS.
PROPOSALS OF SHAREHOLDERS
Meeting Materials sent to Beneficial Shareholders who have not waived the right to receive Meeting Materials are accompanied by a Voting Instruction Form (
VIF
). This VIF is provided instead of a Proxy. By returning the VIF in accordance with instructions as provided on it, a Non-Registered Shareholder is able to instruct the Registered Shareholder how to vote on behalf of the Non-Registered Shareholder. VIFs, whether provided by the Company or by an Intermediary, should be completed and returned in accordance with the specific instructions noted on the VIF.
In either case, the purpose of this procedure is to permit Non-Registered Shareholders to direct the voting of the shares which they beneficially own.
Non-Registered Shareholders receiving a VIF cannot use that form to vote common shares directly at the Meeting - Non-Registered Shareholders should carefully follow the instructions set out in the VIF including those regarding when and where the VIF is to be delivered.
Should a Non-Registered Shareholder who receives a VIF wish to attend the Meeting or have someone else attend on their behalf, the Non-Registered Shareholder may request a legal proxy as set forth in the VIF, which will grant the Non-Registered Shareholder or their nominee the right to attend and vote at the Meeting.
Proposals which shareholders wish to be considered for inclusion in the Information Circular and proxy card for the 2014 Annual General Meeting of Shareholders must be received by the Corporate Secretary of the Company on or before August 31, 2013, and must comply with the requirements of Rule 14a-8 under the Securities Exchange Act of 1934, as amended, and Division 7 of Part 5 of the
Business Corporations Act
(British Columbia).
ANNUAL REPORT ON FORM 10-K
A copy of the Company's combined Annual Report to Shareholders and Annual Report on Form 10-K for the year ended August 31, 2012 accompanies this Information Circular. Additional copies will be furnished upon request and without charge to Beneficial Shareholders or Registered Shareholders by contacting Investor Relations, c/o Jewett-Cameron Trading Company Ltd., PO Box 1010, North Plains, Oregon USA 97133.
ADDITIONAL INFORMATION
Additional information relating to the Company is available on SEDAR at
www.sedar.com
or EDGAR at
www.sec.gov
.
Financial information on the Company is provided in the Company's comparative financial statements and the accompanying management's discussion and analysis for the most recently completed financial year ended August 31, 2012. Printed copies of the Company's financial statements and the accompanying management's discussion and analysis may be obtained upon request from the Company, PO Box 1010, North Plains, Oregon, USA 97133, and are available for online viewing through the Company's SEDAR profile at
www.sedar.com
or on the SEC database at
www.sec.gov
.
CERTIFICATE
The foregoing contains no untrue statement of a material fact and does not omit to state a material fact that is required to be stated or that is necessary to make a statement not misleading in the light of the circumstances in which it was made.
Dated at Vancouver, British Columbia, this 10
th
day of December, 2012.
/s/ Donald M. Boone
Donald M. Boone
President, CEO and Treasurer
SCHEDULE A
JEWETT-CAMERON TRADING COMPANY LTD.
(the
Company
)
AUDIT COMMITTEE CHARTER
Purpose of the Committee
The purpose of the Audit Committee (the Committee) of the Board of the Company is to provide an open avenue of communication between management, the Companys independent auditors and the Board and to assist the Board in its oversight of:
(a)
the integrity, adequacy and timeliness of the Companys financial reporting and disclosure practices;
(b)
the Companys compliance with legal and regulatory requirements related to financial reporting; and
(c)
the independence and performance of the Companys independent auditors.
The Committee shall also perform any other activities consistent with this Charter, the Companys Articles and governing laws as the Committee or Board deems necessary or appropriate.
The Committee shall consist of at least three directors. Members of the Committee shall be appointed by the Board and may be removed by the Board in its discretion. The members of the Committee shall elect a Chair from among their number. A majority of the members of the Committee must not be officers or employees of the Company or of an affiliate of the Company. The quorum for a meeting of the Committee is a majority of the members who are not officers or employees of the Company or of an affiliate of the Company. With the exception of the foregoing quorum requirement, the Committee may determine its own procedures.
The Committees role is one of oversight. Management is responsible for preparing the Companys financial statements and other financial information and for the fair presentation of the information set forth in the financial statements in accordance with generally accepted accounting principles (GAAP). Management is also responsible for establishing internal controls and procedures and for maintaining the appropriate accounting and financial reporting principles and policies designed to assure compliance with accounting standards and all applicable laws and regulations.
The independent auditors responsibility is to audit the Companys financial statements and provide their opinion, based on their audit conducted in accordance with generally accepted auditing standards, that the financial statements present fairly, in all material respects, the financial position, results of operations and cash flows of the Company in accordance with GAAP.
The Committee is responsible for recommending to the Board the independent auditors to be nominated for the purpose of auditing the Companys financial statements, preparing or issuing an auditors report or performing other audit, review or attest services for the Company, and for reviewing and recommending the compensation of the independent auditors. The Committee is also directly responsible for the evaluation of and oversight of the work of the independent auditors. The independent auditors shall report directly to the Committee.
Authority and Responsibilities
In addition to the foregoing, in performing its oversight responsibilities the Committee shall:
1.
Monitor the adequacy of this Charter and recommend any proposed changes to the Board.
2.
Review the appointments of the Companys Chief Financial Officer and any other key financial executives involved in the financial reporting process.
3.
Review with management and the independent auditors the adequacy and effectiveness of the Companys accounting and financial controls and the adequacy and timeliness of its financial reporting processes.
4.
Review with management and the independent auditors the annual financial statements and related documents and review with management the unaudited quarterly financial statements and related documents, prior to filing or distribution, including matters required to be reviewed under applicable legal or regulatory requirements.
5.
Where appropriate and prior to release, review with management any news releases that disclose annual or interim financial results or contain other significant financial information that has not previously been released to the public.
6.
Review the Companys financial reporting and accounting standards and principles and significant changes in such standards or principles or in their application, including key accounting decisions affecting the financial statements, alternatives thereto and the rationale for decisions made.
7.
Review the quality and appropriateness of the accounting policies and the clarity of financial information and disclosure practices adopted by the Company, including consideration of the independent auditors judgment about the quality and appropriateness of the Companys accounting policies. This review may include discussions with the independent auditors without the presence of management.
8.
Review with management and the independent auditors significant related party transactions and potential conflicts of interest.
9.
Pre-approve all non-audit services to be provided to the Company by the independent auditors.
10.
Monitor the independence of the independent auditors by reviewing all relationships between the independent auditors and the Company and all non-audit work performed for the Company by the independent auditors.
11.
Establish and review the Companys procedures for the:
(a)
receipt, retention and treatment of complaints regarding accounting, financial disclosure, internal controls or auditing matters; and
(b)
confidential, anonymous submission by employees regarding questionable accounting, auditing and financial reporting and disclosure matters.
12.
Conduct or authorize investigations into any matters that the Committee believes is within the scope of its responsibilities. The Committee has the authority to retain independent counsel, accountants or other advisors to assist it, as it considers necessary, to carry out its duties, and to set and pay the compensation of such advisors at the expense of the Company.
13.
Perform such other functions and exercise such other powers as are prescribed form time to time for the audit committee of a reporting company in Parts 2 and 4 of Multilateral Instrument 52-110 of the Canadian Securities Administrators, the Business Corporations Act (British Columbia) and the Articles of the Company.