Corporate
Corporate Governance
ARGONAUT GOLD INC.
Corporate Governance Guidelines
Philosophy
Argonaut has been committed to good corporate governance since its formation in 2008. Our Board maintains open and direct communications with management on all the major strategic, investment, operating, and management decisions. The Corporation is best served by an informed and interactive Board which has free access to all levels of management and to all of its operations. Through Board meetings, Board agendas and background briefing materials, monthly operating and financial reports, and frequent informal conversations, management shares information with the Board about outstanding issues. The cumulative experience and expertise of our Directors enables the Board to bring sound business judgment to its decision making process. The independence of our Directors has been fostered in order to bring an outside perspective to its deliberations.
The Board
The Board has responsibility for the stewardship of the Corporation, including supervision of management of the business and affairs of the Corporation and our strategic planning process. The CEO and senior management are responsible for the management of our business, within the framework established by the Board and applicable law. The Board has developed and approved written position descriptions for the Chairman of the Board, the Chair of each Board Committee and the CEO of the Corporation.
Board Meetings
The Board historically meets a minimum of four times annually on an approved schedule. Regularly scheduled Board meetings are supplemented with telephonic meetings on specific issues, as needed.
All Directors are notified each year of the dates and locations of all regularly scheduled Board and Board Committee meetings for that year. Before each meeting, the Chairman of the Board of Directors (the "Chairman") and CEO develop a preliminary agenda and the Chairman, with consultation from other Directors, formalizes the agenda. All necessary background information for matters relevant to the agenda is delivered to each Director at least five days prior to the meeting.
Corporate Governance
The Board has established and follows a corporate governance program which is reviewed annually by the full Board. The following outlines our Corporate Governance Guidelines:
I. Chairman of the Board
The Chairman of the Board is nominated by the Compensation & Governance Committee and elected by a majority of the Directors. The roles of Chairman and of the President and CEO have been separated between two individuals, thus maintaining a formal separation between the Board and management. The Chairman presently is an unrelated, non-executive Director.
II. Board Size and Composition
The optimal number of Directors has currently been determined to be six, subject to annual review. The Board believes that this number is appropriate to ensure participation of Directors with complementary expertise in key areas of exploration, operations, legal, finance, and general management. Although experience with mining is valuable, it is not an essential qualification. The Board is large enough to provide the experience and maintain a committee structure. Annually, the Board reviews its size and composition and will adjust its size as necessary.
Not more than two Directors, nor greater than 1/3 of Board, whichever is less, may be inside Directors (i.e., Directors who are, or were within the previous five years, officers of the Corporation).
III. Director Independence
A majority of the Directors, and all members of the Board committees, must meet the criteria for independence required by the Toronto Stock Exchange any other applicable laws, rules and regulations, and the guidelines established by the Board. At present all Directors, except the CEO, and all members of the Board committees, are unrelated.
The Board has determined that an "unrelated director" means a director who is not a member of management and is free from any interest and any business, family or other relationship which could, or could reasonably be perceived to, materially interfere with the director's ability to act with a view to the best interests of the Corporation, other than interests and relationships arising from shareholdings in the Corporation. In accordance with Toronto Stock Exchange and applicable laws, rules and regulations, no director qualifies as "unrelated" unless the Board affirmatively determines that the director has no material relationship with the Corporation (either directly or as a partner, shareholder or officer, of an organization that has a relationship with the Corporation) other than as a director, or through interests and relationships arising from shareholdings in the Corporation. In addition:
A director shall not be unrelated if within the preceding three years:
a) the director was an employee, or an immediately family member of the director was an executive officer, of the Corporation;
b) the director or an immediate family member of the director received more than CDN$75,000 in direct compensation in any year, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent on continued service) from the Corporation;
c) the director was affiliated with, a partner of, or employed by, or an immediate family member of the director was affiliated with, a partner of, or employed in a professional capacity by, the Corporation's present or former internal or external auditor;
d) the director or an immediate family member of the director was employed as an executive officer of another company at any time where an executive of the Corporation served on the Compensation & Governance Committee of such other company;
e) the director was an employee or executive officer, or an immediate family member of the director was an executive officer of a company that made payments to, or received payments from, the Corporation for property or services in an amount which, in any single fiscal year exceeded the greater of CDN$1 million, or 2% of such other company's consolidated gross revenues; and
f) the director was an executive officer of a charitable organization that received contributions from the Corporation which, in any single fiscal year exceeded the greater of CDN$1 million, or 2% of such charitable organization's total annual charitable receipts.
The following relationships shall not be considered to be material relationships that would impair a director's independence:
a) if a director is a director of an affiliate of the Corporation provided that the director, except for such relationship, would be considered to be unrelated with respect to both boards;
b) if a director is a director or an officer of another company which is indebted to the Corporation, or to which the Corporation is indebted, and the total amount of either company's indebtedness to the other is less than two percent of the total consolidated assets of the company he or she serves as a director or as an officer; and
c) if a director serves as an officer, director or trustee of a charitable organization and the Corporation's charitable contributions to the organization are less than the greater of CDN$1 million dollars or 2% of that organization's total annual charitable receipts.
If a Director or a firm affiliated with a Director performs legal, consulting or other advisory services for the Corporation, the amount of fees for such legal, consulting or advisory services payable to such Director and such Director's affiliated firm in any calendar year shall not exceed CDN$ 25,000 in the aggregate without the prior approval of the Audit Committee.
IV. Director Recruitment and Retirement
The Board's policy for identifying potential new Directors is to identify candidates that will provide the Board with members who have complementary and relevant backgrounds in any of the mining industry, international business, or matters relevant to the Corporation's operations.
Under By-laws, no Director who has served for 10 years as a Director (other than a Director who is a chief executive officer or former chief executive officer of the Corporation) is eligible for re-election or appointment as a Director.
V. Election and Appointment of Directors
By law, the Board proposes nominees for election to the Board each year in the proxy statement for the Annual General Meeting of Shareholders ("AGM"). Between AGM's, the Board may appoint additional or replacement Directors to serve until the next AGM, subject to the limitations of the Canada Business Corporations Act.
VI. Director Orientation and Continuing Education
An orientation process is conducted for all new Directors. The orientation consists of providing a new director with a copy of the Board of Directors' Reference Book, of meetings with the CEO, Corporate Secretary, and members of senior management, of attendance at one corporate public presentation to investors/analysts and of a visit to and operating review of each major operation. Each new Director will try to complete this process within the first 12 months following election. The Corporation provides directors with a comprehensive briefing of its business activities and finances and in addition, encourages directors to undertake training and education as to corporate governance matters, all at the expense of the Corporation.
VII. Committee Structure
The Board delegates certain of its powers to the Audit and Compensation & Governance Committees. Each Committee has a Charter, approved by the Board, that defines the scope of its duties and responsibilities. Each Committee reviews its Charter annually and recommends approval of appropriate charter amendments to the Board. Each Charter requires the Committee to evaluate its performance annually. The Audit and Compensation & Governance Committees are comprised of unrelated Directors only. Each outside Board member sits on at least one Committee. The frequency, length, and agendas of Committee meetings are determined by the Committee Chairman in consultation with Committee members and appropriate members of senior management. The Committee Chairman reports to the full Board on the matters undertaken at each Committee meeting. Any unrelated Director may attend any Committee meeting but has no vote on Committee business.
VIII. Sessions of Outside Directors
The Chairman presides over sessions of the outside Directors held during each regularly scheduled Board meeting, with neither inside Directors nor management present.
IX. Formal Evaluation of Chief Executive Officer
The Compensation & Governance Committee conducts an annual evaluation of the CEO which includes soliciting opinions from each Director. The results of the annual evaluation are discussed by the Chairman of the Compensation & Governance Committee and one other Director with the CEO, and then in a meeting with the all the outside members of the Board.
X. Succession Planning/Management Development
The CEO presents an annual report to the Compensation & Governance Committee on succession planning and the Corporation's program for management development. The Compensation & Governance Committee conducts its own independent deliberations and makes a recommendation to the Board.
XI. Access to Management and Independent Advisors
Directors are invited to have complete, unfettered access to management. Members of senior management normally attend portions of each regularly scheduled Board meeting. The Board may, when appropriate, obtain advice and assistance from outside advisors and consultants without prior approval of management.
XII. Director Compensation
The Compensation & Governance Committee annually reviews the compensation of the Directors to ensure that it is competitive with comparable boards of directors and recommends changes to such compensation, as appropriate, to the Board for approval. Each director may elect to receive all or a part of his compensation in shares of the Corporation.
XIII. Director Share Ownership Guidelines
The Corporation requires that shares issued to the Directors as part of their compensation be held by the Director for a minimum of 2 years or 6 months after the Director leaves the Board, whichever is sooner.
XIV. Senior Executive Share Ownership Guidelines
Argonaut has compensated its senior management and key contributors with base salary, bonuses, and equity awards. Management compensation is reviewed at least annually by the Compensation & Governance Committee of the Board and adjusted based upon competitive industry data, corporate performance against goals and objectives, and individual performance.
The purpose of the Corporation's stock option and restricted shares plan is to develop the interest and incentive of eligible employees, officers and Directors in the Corporation's growth and development by giving an opportunity to purchase common shares, thereby advancing the interests of the Corporation, enhancing the value of the common shares for the benefit of all shareholders and increasing the ability of the Corporation to attract and retain skilled and motivated individuals.
The equity awards are made in accordance with the shareholder approved Argonaut Gold Inc. 2010 Share Incentive Plan. These equity awards could be in the form of shares, option awards, restricted shares or any other award as allowed under the approved company Share Incentive Plan. Awards may have a multiple year vesting requirement by management as determined by the Board of Directors. Consequently, senior management of the Corporation has a significant financial risk (or reward) based upon the ongoing performance of the Corporation. Accordingly, the Corporation has a requirement for minimum ongoing equity holdings by Corporate Officers equal to one and one half times their annual base salary.
XV. Extensions of Credit
No loan guarantee, financial assistance, or similar extension of credit will be made to officers of the Corporation without prior Board approval. It is the intent of the Corporation to make such loans only when business activity by the Corporation makes this necessary. In no case will the Corporation be permitted to hold shares of the Corporation as collateral security for a loan to an officer.
All such lending activity will be disclosed in the Corporation's annual disclosure filings.
XVI. Board of Directors Self Assessment
The Board conducts an annual self-assessment process under the auspices of the Chairman, through questionnaires provided to all Board members. The completed questionnaires are reviewed by the Board and changes in the corporate governance process are considered based on the results of the Board's review and analysis of the completed questionnaires. Pursuant to the self-assessment process, the Board reviews, among other matters, agenda items, meeting presentations, advance distribution of agendas and materials for Board meetings, interim communications to Directors, and access to and communications with senior management. The self assessment process also includes an evaluation of the Committees, the Chairman of the Board and an individual Director assessment.
Board Committees
The Corporation has two committees: Audit Committee and Compensation & Governance Committee. The Committee Charters are available at the Company's website at www.argonautgoldinc.com.
The Audit Committee, on behalf of the Board of Directors, has responsibility for: (a) reviewing the financial statements of the Corporation and recommending whether such statements should be approved by the Board of Directors; (b) appointing, retaining and terminating the independent auditors; (c) reviewing the scope of the audit to be conducted by the external and internal auditors of the Corporation; (d) reviewing the auditors' fees and assessing the performance of external and internal auditors and the nature and cost of other services provided by such auditors; (e) reviewing all public disclosure documents containing financial information before release; (f) reviewing all post-audit or management letters containing material recommendations of the external auditor and management's response in respect of any identified material weakness; and (g) having such other duties, powers and authorities as the Board of Directors may delegate to the Audit Committee from time to time. The members of the Audit Committee have the right, for the purpose of performing their duties, to inspect all the books and records of the Corporation and its affiliates, and to discuss such accounts and records and any matters relating to the financial position or condition of the Corporation with the auditors of the Corporation or its affiliates. The Audit Committee is composed of a minimum of 3 directors. Each member of the Audit Committee must be independent and financially literate; as such terms are defined in Multilateral Instrument 52-110 -- Audit Committees. Audit Committee members must meet the qualifications as set forth in the Corporation's Annual Information Form ("AIF") under Item 10, Audit Committee Member Qualifications.
The Compensation & Governance Committee has responsibility for: (a) recommending the compensation of the CEO to the Board of Directors and approving the compensation of the other officers of the Corporation; (b) exercising the powers conferred on it by the Board of Directors with respect to option and share purchase plans; and (c) reviewing annually, or more often if it deems appropriate, succession plans for key executives, performance appraisals (having regard to the criteria referred to under "Executive Annual Incentive Plan"), development of senior officers, senior management organization and reporting structure, contingency plans in the event of the unexpected disability of key executives, and performance and funding of pensions and other benefits. The Compensation & Governance Committee is composed of a minimum of 3 independent directors.
The Board of Directors is responsible to: (a) identify and recommend individuals for nomination as members of the Board and its committees; (b) develop and recommend to the Board of Directors corporate governance principles applicable to the Corporation; and (c) undertake such other duties as the Board of Directors may choose from time to time.
As additional members join the Board of Directors and as the needs of the Corporation change, the Board of Directors will review the need for, and establish as appropriate, additional committees.
Code of Ethics and Business Conduct Guidelines
The Corporation maintains a written Code of Ethics and Business Conduct Guidelines (the "Code") for all Directors, executive officers and employees, requiring adherence to high standards of personal and corporate conduct. All Directors, all U.S. employees and all managers at non-U.S. locations of the Corporation annually acknowledge (in writing) adherence to the Code and Guidelines. The Corporation's Code and Guidelines are available for review at www.argonautgoldinc.com, and are also filed with the Canadian Securities Administrators in the SEDAR filing system.
Employees who know of violations of the Code or Guidelines are obligated to report them to management, to the Chairman of the Board, Corporate Compensation & Governance Committee, to the Corporation's legal counsel or directly to the Corporation's Chief Operating Officer (the "COO"). The COO is responsible for ensuring the Code is properly implemented and monitored. It is the Corporation's policy and intent that, except for knowingly reporting false accusations, every employee may report Code, policy or law violations without fear of retaliation.
This statement of corporate governance practices has been developed and approved by the Board of Directors.
Additional Corporate Committee Charters and Board Mandate
Argonaut Board Mandate
Argonaut Gold Compensation and Governance Committee
Argonaut Gold Audit Committee
Revised 30 Dec 2009
Corporate Governance Guidelines
Philosophy
Argonaut has been committed to good corporate governance since its formation in 2008. Our Board maintains open and direct communications with management on all the major strategic, investment, operating, and management decisions. The Corporation is best served by an informed and interactive Board which has free access to all levels of management and to all of its operations. Through Board meetings, Board agendas and background briefing materials, monthly operating and financial reports, and frequent informal conversations, management shares information with the Board about outstanding issues. The cumulative experience and expertise of our Directors enables the Board to bring sound business judgment to its decision making process. The independence of our Directors has been fostered in order to bring an outside perspective to its deliberations.
The Board
The Board has responsibility for the stewardship of the Corporation, including supervision of management of the business and affairs of the Corporation and our strategic planning process. The CEO and senior management are responsible for the management of our business, within the framework established by the Board and applicable law. The Board has developed and approved written position descriptions for the Chairman of the Board, the Chair of each Board Committee and the CEO of the Corporation.
Board Meetings
The Board historically meets a minimum of four times annually on an approved schedule. Regularly scheduled Board meetings are supplemented with telephonic meetings on specific issues, as needed.
All Directors are notified each year of the dates and locations of all regularly scheduled Board and Board Committee meetings for that year. Before each meeting, the Chairman of the Board of Directors (the "Chairman") and CEO develop a preliminary agenda and the Chairman, with consultation from other Directors, formalizes the agenda. All necessary background information for matters relevant to the agenda is delivered to each Director at least five days prior to the meeting.
Corporate Governance
The Board has established and follows a corporate governance program which is reviewed annually by the full Board. The following outlines our Corporate Governance Guidelines:
I. Chairman of the Board
The Chairman of the Board is nominated by the Compensation & Governance Committee and elected by a majority of the Directors. The roles of Chairman and of the President and CEO have been separated between two individuals, thus maintaining a formal separation between the Board and management. The Chairman presently is an unrelated, non-executive Director.
II. Board Size and Composition
The optimal number of Directors has currently been determined to be six, subject to annual review. The Board believes that this number is appropriate to ensure participation of Directors with complementary expertise in key areas of exploration, operations, legal, finance, and general management. Although experience with mining is valuable, it is not an essential qualification. The Board is large enough to provide the experience and maintain a committee structure. Annually, the Board reviews its size and composition and will adjust its size as necessary.
Not more than two Directors, nor greater than 1/3 of Board, whichever is less, may be inside Directors (i.e., Directors who are, or were within the previous five years, officers of the Corporation).
III. Director Independence
A majority of the Directors, and all members of the Board committees, must meet the criteria for independence required by the Toronto Stock Exchange any other applicable laws, rules and regulations, and the guidelines established by the Board. At present all Directors, except the CEO, and all members of the Board committees, are unrelated.
The Board has determined that an "unrelated director" means a director who is not a member of management and is free from any interest and any business, family or other relationship which could, or could reasonably be perceived to, materially interfere with the director's ability to act with a view to the best interests of the Corporation, other than interests and relationships arising from shareholdings in the Corporation. In accordance with Toronto Stock Exchange and applicable laws, rules and regulations, no director qualifies as "unrelated" unless the Board affirmatively determines that the director has no material relationship with the Corporation (either directly or as a partner, shareholder or officer, of an organization that has a relationship with the Corporation) other than as a director, or through interests and relationships arising from shareholdings in the Corporation. In addition:
A director shall not be unrelated if within the preceding three years:
a) the director was an employee, or an immediately family member of the director was an executive officer, of the Corporation;
b) the director or an immediate family member of the director received more than CDN$75,000 in direct compensation in any year, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent on continued service) from the Corporation;
c) the director was affiliated with, a partner of, or employed by, or an immediate family member of the director was affiliated with, a partner of, or employed in a professional capacity by, the Corporation's present or former internal or external auditor;
d) the director or an immediate family member of the director was employed as an executive officer of another company at any time where an executive of the Corporation served on the Compensation & Governance Committee of such other company;
e) the director was an employee or executive officer, or an immediate family member of the director was an executive officer of a company that made payments to, or received payments from, the Corporation for property or services in an amount which, in any single fiscal year exceeded the greater of CDN$1 million, or 2% of such other company's consolidated gross revenues; and
f) the director was an executive officer of a charitable organization that received contributions from the Corporation which, in any single fiscal year exceeded the greater of CDN$1 million, or 2% of such charitable organization's total annual charitable receipts.
The following relationships shall not be considered to be material relationships that would impair a director's independence:
a) if a director is a director of an affiliate of the Corporation provided that the director, except for such relationship, would be considered to be unrelated with respect to both boards;
b) if a director is a director or an officer of another company which is indebted to the Corporation, or to which the Corporation is indebted, and the total amount of either company's indebtedness to the other is less than two percent of the total consolidated assets of the company he or she serves as a director or as an officer; and
c) if a director serves as an officer, director or trustee of a charitable organization and the Corporation's charitable contributions to the organization are less than the greater of CDN$1 million dollars or 2% of that organization's total annual charitable receipts.
If a Director or a firm affiliated with a Director performs legal, consulting or other advisory services for the Corporation, the amount of fees for such legal, consulting or advisory services payable to such Director and such Director's affiliated firm in any calendar year shall not exceed CDN$ 25,000 in the aggregate without the prior approval of the Audit Committee.
IV. Director Recruitment and Retirement
The Board's policy for identifying potential new Directors is to identify candidates that will provide the Board with members who have complementary and relevant backgrounds in any of the mining industry, international business, or matters relevant to the Corporation's operations.
Under By-laws, no Director who has served for 10 years as a Director (other than a Director who is a chief executive officer or former chief executive officer of the Corporation) is eligible for re-election or appointment as a Director.
V. Election and Appointment of Directors
By law, the Board proposes nominees for election to the Board each year in the proxy statement for the Annual General Meeting of Shareholders ("AGM"). Between AGM's, the Board may appoint additional or replacement Directors to serve until the next AGM, subject to the limitations of the Canada Business Corporations Act.
VI. Director Orientation and Continuing Education
An orientation process is conducted for all new Directors. The orientation consists of providing a new director with a copy of the Board of Directors' Reference Book, of meetings with the CEO, Corporate Secretary, and members of senior management, of attendance at one corporate public presentation to investors/analysts and of a visit to and operating review of each major operation. Each new Director will try to complete this process within the first 12 months following election. The Corporation provides directors with a comprehensive briefing of its business activities and finances and in addition, encourages directors to undertake training and education as to corporate governance matters, all at the expense of the Corporation.
VII. Committee Structure
The Board delegates certain of its powers to the Audit and Compensation & Governance Committees. Each Committee has a Charter, approved by the Board, that defines the scope of its duties and responsibilities. Each Committee reviews its Charter annually and recommends approval of appropriate charter amendments to the Board. Each Charter requires the Committee to evaluate its performance annually. The Audit and Compensation & Governance Committees are comprised of unrelated Directors only. Each outside Board member sits on at least one Committee. The frequency, length, and agendas of Committee meetings are determined by the Committee Chairman in consultation with Committee members and appropriate members of senior management. The Committee Chairman reports to the full Board on the matters undertaken at each Committee meeting. Any unrelated Director may attend any Committee meeting but has no vote on Committee business.
VIII. Sessions of Outside Directors
The Chairman presides over sessions of the outside Directors held during each regularly scheduled Board meeting, with neither inside Directors nor management present.
IX. Formal Evaluation of Chief Executive Officer
The Compensation & Governance Committee conducts an annual evaluation of the CEO which includes soliciting opinions from each Director. The results of the annual evaluation are discussed by the Chairman of the Compensation & Governance Committee and one other Director with the CEO, and then in a meeting with the all the outside members of the Board.
X. Succession Planning/Management Development
The CEO presents an annual report to the Compensation & Governance Committee on succession planning and the Corporation's program for management development. The Compensation & Governance Committee conducts its own independent deliberations and makes a recommendation to the Board.
XI. Access to Management and Independent Advisors
Directors are invited to have complete, unfettered access to management. Members of senior management normally attend portions of each regularly scheduled Board meeting. The Board may, when appropriate, obtain advice and assistance from outside advisors and consultants without prior approval of management.
XII. Director Compensation
The Compensation & Governance Committee annually reviews the compensation of the Directors to ensure that it is competitive with comparable boards of directors and recommends changes to such compensation, as appropriate, to the Board for approval. Each director may elect to receive all or a part of his compensation in shares of the Corporation.
XIII. Director Share Ownership Guidelines
The Corporation requires that shares issued to the Directors as part of their compensation be held by the Director for a minimum of 2 years or 6 months after the Director leaves the Board, whichever is sooner.
XIV. Senior Executive Share Ownership Guidelines
Argonaut has compensated its senior management and key contributors with base salary, bonuses, and equity awards. Management compensation is reviewed at least annually by the Compensation & Governance Committee of the Board and adjusted based upon competitive industry data, corporate performance against goals and objectives, and individual performance.
The purpose of the Corporation's stock option and restricted shares plan is to develop the interest and incentive of eligible employees, officers and Directors in the Corporation's growth and development by giving an opportunity to purchase common shares, thereby advancing the interests of the Corporation, enhancing the value of the common shares for the benefit of all shareholders and increasing the ability of the Corporation to attract and retain skilled and motivated individuals.
The equity awards are made in accordance with the shareholder approved Argonaut Gold Inc. 2010 Share Incentive Plan. These equity awards could be in the form of shares, option awards, restricted shares or any other award as allowed under the approved company Share Incentive Plan. Awards may have a multiple year vesting requirement by management as determined by the Board of Directors. Consequently, senior management of the Corporation has a significant financial risk (or reward) based upon the ongoing performance of the Corporation. Accordingly, the Corporation has a requirement for minimum ongoing equity holdings by Corporate Officers equal to one and one half times their annual base salary.
XV. Extensions of Credit
No loan guarantee, financial assistance, or similar extension of credit will be made to officers of the Corporation without prior Board approval. It is the intent of the Corporation to make such loans only when business activity by the Corporation makes this necessary. In no case will the Corporation be permitted to hold shares of the Corporation as collateral security for a loan to an officer.
All such lending activity will be disclosed in the Corporation's annual disclosure filings.
XVI. Board of Directors Self Assessment
The Board conducts an annual self-assessment process under the auspices of the Chairman, through questionnaires provided to all Board members. The completed questionnaires are reviewed by the Board and changes in the corporate governance process are considered based on the results of the Board's review and analysis of the completed questionnaires. Pursuant to the self-assessment process, the Board reviews, among other matters, agenda items, meeting presentations, advance distribution of agendas and materials for Board meetings, interim communications to Directors, and access to and communications with senior management. The self assessment process also includes an evaluation of the Committees, the Chairman of the Board and an individual Director assessment.
Board Committees
The Corporation has two committees: Audit Committee and Compensation & Governance Committee. The Committee Charters are available at the Company's website at www.argonautgoldinc.com.
The Audit Committee, on behalf of the Board of Directors, has responsibility for: (a) reviewing the financial statements of the Corporation and recommending whether such statements should be approved by the Board of Directors; (b) appointing, retaining and terminating the independent auditors; (c) reviewing the scope of the audit to be conducted by the external and internal auditors of the Corporation; (d) reviewing the auditors' fees and assessing the performance of external and internal auditors and the nature and cost of other services provided by such auditors; (e) reviewing all public disclosure documents containing financial information before release; (f) reviewing all post-audit or management letters containing material recommendations of the external auditor and management's response in respect of any identified material weakness; and (g) having such other duties, powers and authorities as the Board of Directors may delegate to the Audit Committee from time to time. The members of the Audit Committee have the right, for the purpose of performing their duties, to inspect all the books and records of the Corporation and its affiliates, and to discuss such accounts and records and any matters relating to the financial position or condition of the Corporation with the auditors of the Corporation or its affiliates. The Audit Committee is composed of a minimum of 3 directors. Each member of the Audit Committee must be independent and financially literate; as such terms are defined in Multilateral Instrument 52-110 -- Audit Committees. Audit Committee members must meet the qualifications as set forth in the Corporation's Annual Information Form ("AIF") under Item 10, Audit Committee Member Qualifications.
The Compensation & Governance Committee has responsibility for: (a) recommending the compensation of the CEO to the Board of Directors and approving the compensation of the other officers of the Corporation; (b) exercising the powers conferred on it by the Board of Directors with respect to option and share purchase plans; and (c) reviewing annually, or more often if it deems appropriate, succession plans for key executives, performance appraisals (having regard to the criteria referred to under "Executive Annual Incentive Plan"), development of senior officers, senior management organization and reporting structure, contingency plans in the event of the unexpected disability of key executives, and performance and funding of pensions and other benefits. The Compensation & Governance Committee is composed of a minimum of 3 independent directors.
The Board of Directors is responsible to: (a) identify and recommend individuals for nomination as members of the Board and its committees; (b) develop and recommend to the Board of Directors corporate governance principles applicable to the Corporation; and (c) undertake such other duties as the Board of Directors may choose from time to time.
As additional members join the Board of Directors and as the needs of the Corporation change, the Board of Directors will review the need for, and establish as appropriate, additional committees.
Code of Ethics and Business Conduct Guidelines
The Corporation maintains a written Code of Ethics and Business Conduct Guidelines (the "Code") for all Directors, executive officers and employees, requiring adherence to high standards of personal and corporate conduct. All Directors, all U.S. employees and all managers at non-U.S. locations of the Corporation annually acknowledge (in writing) adherence to the Code and Guidelines. The Corporation's Code and Guidelines are available for review at www.argonautgoldinc.com, and are also filed with the Canadian Securities Administrators in the SEDAR filing system.
Employees who know of violations of the Code or Guidelines are obligated to report them to management, to the Chairman of the Board, Corporate Compensation & Governance Committee, to the Corporation's legal counsel or directly to the Corporation's Chief Operating Officer (the "COO"). The COO is responsible for ensuring the Code is properly implemented and monitored. It is the Corporation's policy and intent that, except for knowingly reporting false accusations, every employee may report Code, policy or law violations without fear of retaliation.
This statement of corporate governance practices has been developed and approved by the Board of Directors.
Additional Corporate Committee Charters and Board Mandate
Argonaut Board Mandate
Argonaut Gold Compensation and Governance Committee
Argonaut Gold Audit Committee
Revised 30 Dec 2009
