Exhibit 99.1

 

MITEL NETWORKS CORPORATION

NOTICE OF THE ANNUAL MEETING OF SHAREHOLDERS

NOTICE IS HEREBY GIVEN that an Annual General Meeting (the “Meeting”) of the shareholders of Mitel Networks Corporation (“Mitel”) will be held on Wednesday, July 31, 2013 at The Brookstreet Hotel, 525 Legget Drive, Ottawa (Kanata), Ontario, Canada, K2K 2W2, commencing at 2:30 p.m., Ottawa time, for the following purposes:

 

1.	To place before the Meeting the consolidated financial statements for the fiscal year ended April 30, 2013 together with the auditor’s reports thereon.

 

2.	To elect directors for the ensuing year (“Annual Resolution No. 1”).

 

3.	To reappoint Deloitte LLP as our independent auditor (and, for purposes of U.S. securities laws, our independent registered public accounting firm) and to authorize the directors to fix the auditor’s remuneration (“Annual Resolution No. 2”).

To transact such further and other business as may properly come before the Meeting or any adjournment thereof.

A copy of the full text of each of the proposed Annual Resolution No. 1 and Annual Resolution No. 2 is attached as Schedule A and Schedule B respectively to the Proxy Circular that accompanies this Notice. Any action on the items of business described above may be considered at the Meeting or at any adjournment or postponement of the Meeting. Please note that our proxy materials are also available through the Internet at http://investor.mitel.com. In the interest of convenience to you and of minimizing the environmental impact associated with printing and mailing our proxy material and annual reports in the future, you may indicate your preference for receiving all future materials electronically, by indicating as such in the manner provided for on the enclosed proxy card or, for beneficial holders, on the voting instruction form.

Shareholders of record attending the Meeting should be prepared to present government-issued picture identification for admission. Shareholders owning common shares through a broker, bank, or other record holder should be prepared to present government-issued picture identification and evidence of share ownership as of the record date, such as an account statement, voting instruction form issued by the broker, bank or other record holder, or other acceptable document, for admission to the Meeting. Check-in at the Meeting will begin at 2:00 p.m., Ottawa time, and you should plan to allow ample time for check-in procedures.

As owners of Mitel, your vote is very important, regardless of the number of shares you own. Whether or not you are able to attend the Meeting in person, it is important that your shares be represented. We request that you vote as soon as possible on-line at www.investorvote.com or in writing by following the instructions noted on the proxy card or, for beneficial shareholders, the voting instruction form, included with this notice. Your proxy card or voting instruction form, as applicable, must be received by 5:00 p.m., Ottawa time, two days before the Meeting, Monday, July 29, 2013. For specific information regarding voting of your common shares, please refer to the section entitled “Voting of Proxies” in the accompanying Proxy Circular.

Thank you for your continued interest in Mitel.

DATED at Ottawa, Ontario this 20th day of June, 2013.

BY ORDER OF THE BOARD OF DIRECTORS

 

Richard D. McBee, President and Chief Executive Officer

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TABLE OF CONTENTS

 

						Page
A.		INFORMATION ON VOTING AND PROXIES					1
		1.		Who May Vote			1
		2.		Solicitation of Proxies			1
		3.		Appointment of Proxies			1
		4.		Revocation of Proxies			3
		5.		Voting of Proxies			4
		6.		Authorized Capital and Voting Shares			4
		7.		Security Ownership of Certain Beneficial Owners and Management			4
B.		CORPORATE GOVERNANCE PRINCIPLES AND PRACTICES					6
		8.		Applicable Governance Requirements and Guidelines			7
		9.		Composition of the Board			7
		10.		Independence and Other Considerations for Director Service			7
		11.		Mandate of the Board and Corporate Governance Guidelines			9
		12.		Ethical Business Conduct			9
		13.		Board Committees			10
		14.		Communication with the Board			12
C.		COMPENSATION DISCUSSION AND ANALYSIS					12
		15.		Director Compensation			12
		16.		Executive Officer Compensation			14
		17.		Stock Option and Other Compensation Plans			17
		18.		Employment Agreements, Termination and Change of Control			23
D.		INTEREST OF MANAGEMENT, NOMINEES AND OTHERS IN MATERIAL TRANSACTIONS					25
		19.		Transactions Involving Related Parties			25
		20.		Kanata Research Park Corporation			25
		21.		Other Parties Related to Dr. Matthews			26
		22.		Registration Rights			26
		23.		Shareholders’ Agreement			26
E.		BUSINESS TO BE TRANSACTED AT THE MEETING					28
		24.		Financial Statements			28
		25.		Annual Resolution No. 1 – Election of Directors			28
		26.		Annual Resolution No. 2 – Appointment and Remuneration of Auditors			31
F.		OTHER MATTERS					31

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EXPLANATORY NOTE REGARDING THE CONTENT AND FORMAT OF THIS DOCUMENT

Mitel qualifies as a foreign private issuer for purposes of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”). Instead of filing annual and periodic reports on forms available for foreign private issuers, we file an annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. As a Canadian corporation and foreign private issuer in the U.S. that is not subject to the requirements of Section 14(a) of the Exchange Act or Regulation 14A, our Management Proxy Circular (the “Proxy Circular” or the “Circular”) and related materials have been prepared in accordance with Canadian corporate and securities law requirements.

A copy of our annual report on Form 10-K for the year ended April 30, 2013 was mailed contemporaneously with this Proxy Circular and is also available at http://investor.mitel.com. You may also review and print the Form 10-K and all exhibits from the SEC’s website at www.sec.gov or from SEDAR at www.sedar.com. In addition, we will send a complete copy of the annual report on Form 10-K (including all exhibits, if specifically requested), to any shareholder (without charge) upon written request addressed to: Investor Relations, Mitel Networks Corporation, 350 Legget Drive, Ottawa, Ontario, Canada, K2K 2W7. All of our public documents are filed with SEDAR and may be found on the following website: www.sedar.com. Information on or accessible through our website is not incorporated into this Proxy Circular and you should not consider any information on, or that can be accessed through, our website as part of this Proxy Circular.

Additional financial information is contained in our audited consolidated financial statements for the year ended April 30, 2013 and management’s discussion and analysis of financial condition and results of operations for the year ended April 30, 2013. Copies of our financial statements and management’s discussion and analysis of financial condition and results of operations are available upon request to Investor Relations, Mitel Networks Corporation, 350 Legget Drive, Ottawa, Ontario, Canada, K2K 2W7.

In this Proxy Circular, we refer to Mitel Networks Corporation, the Canada Business Corporations Act corporation whose shares you own (together with its subsidiaries, where applicable), as “Mitel”. Additionally, we sometimes refer to Mitel as “we,” “us,” “our,” “our corporation,” or “the Corporation.” References to “GAAP” mean generally accepted accounting principles in the United States.

Unless indicated otherwise, all dollar amounts included in this Proxy Circular are expressed in U.S. dollars.

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MITEL NETWORKS CORPORATION

350 Legget Drive

Ottawa, Ontario

K2K 2W7

MANAGEMENT PROXY CIRCULAR

JUNE 20, 2013

 

A.	INFORMATION ON VOTING AND PROXIES

 

1.	Who May Vote

You are entitled to vote at the annual meeting if you were a holder of common shares (“Common Shares”) of Mitel Networks Corporation at the close of business on June 11, 2013. Each Common Share is entitled to one vote.

 

2.	Solicitation of Proxies

This Proxy Circular is furnished in connection with the solicitation of proxies by or on behalf of the management of Mitel, a corporation governed by the Canada Business Corporations Act (the “CBCA”), for use at the annual meeting, or any adjournment or adjournments of the meeting (the “Meeting”) of the shareholders of Mitel (each, a “Shareholder”) to be held on Wednesday, July 31, 2013 at The Brookstreet Hotel, 525 Legget Drive, Ottawa (Kanata), Ontario, K2K 2W2, commencing at 2:30 p.m., Ottawa time, for the purposes set out in the notice of the Meeting (the “Notice of Meeting”) accompanying this Proxy Circular.

The enclosed proxy is being solicited by or on behalf of the management of Mitel and the cost of such solicitation will be borne by us. It is expected that the solicitation of proxies will be primarily by mail communication by our directors, officers or employees. Except as otherwise stated, the information contained in this Proxy Circular is given as of June 7, 2013.

 

3.	Appointment of Proxies

The persons named in the enclosed form of proxy or voting instruction form are directors or officers of Mitel. If you wish to appoint some other person or company (who need not be a shareholder) to represent you at the Meeting, you may do so by striking out the name of the persons named in the enclosed form of proxy or voting instruction form and inserting the name of your appointee in the blank space provided or complete another form of proxy and, in either case, deliver the completed and signed form in the envelope provided by 5:00 p.m., Ottawa time, on Monday, July 29, 2013, being two business days preceding the date of the Meeting. It is the responsibility of the Shareholder appointing some other person to represent the Shareholder to inform such person that he or she has been so appointed. The proxy or voting instruction form must be signed by the Shareholder or the Shareholder’s attorney authorized in writing or, if the Shareholder is a corporation, by an officer or attorney of that corporation, duly authorized.

 

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Registered Shareholders

A registered Shareholder is the person in whose name a share certificate is registered. If you are a registered Shareholder, you are entitled to vote your shares in one of two ways:

 

(a)

Attend the Meeting – You may attend the Meeting and vote in person.

 

(b)

By Proxy - If you do not plan to attend the Meeting in person, you may vote by proxy in one of two ways:

 

i.

By authorizing the management representatives of Mitel named in the proxy form to vote your Common Shares. You may convey your voting instructions by:

 

•

Internet – Go to www.investorvote.com and follow the instructions. You will need the 15 digit control number which is located on your proxy form; or

 

•

Mail – Complete the proxy form in full, sign and return it in the envelope provided by 5:00 p.m., Ottawa time, on Monday, July 29, 2013 being two business days preceding the date of the Meeting. The shares represented by your proxy will be voted in accordance with your instructions as indicated on your form of proxy and on any ballot that may be called at the Meeting.

 

ii.

You have the right to appoint some other person to attend the Meeting and vote your Common Shares on your behalf. You may do this either by:

 

•

Internet – Go to www.investorvote.com and follow the instructions. You will need the 15 digit control number which is located on your proxy form; or

 

•

Mail – Print your appointee’s name in the blank space on the proxy form and indicate how you would like to vote your Common Shares. Complete the proxy form in full, sign and return it in the envelope provided. Your proxyholder will decide how to vote on amendments or variations to the matters to be voted on at the Meeting.

Non-Registered Shareholders

Your shares may not be registered in your name but in the name of an intermediary (which is usually a bank, trust company, securities dealer or broker, or trustee or administrator of self-administered RRSPs, RRIFs, RESPs and similar plans). If your shares are registered in the name of an intermediary, you are a non-registered Shareholder.

Mitel has distributed copies of the Notice of Meeting, this Circular and the form of proxy (collectively, the “Meeting Materials”) to intermediaries for distribution to non-registered Shareholders. Unless you have waived your right to receive the Meeting Materials, intermediaries are required to deliver them to you as a non-registered Shareholder of Mitel and to seek your instructions regarding how to vote your shares. Typically, a non-registered Shareholder will be given a voting instruction form which must be completed and signed by the non-registered Shareholder in accordance with the instructions on the form. The purpose of these procedures is to allow non-registered Shareholders to direct the voting of those shares that they own but which are not registered in their own name.

As a non-registered Shareholder, you may vote in person at the Meeting or by proxy in one two ways.

 

(a)

Attend the Meeting -

 

i.

If you hold a Share Ownership Statement, simply attend the Meeting and vote;

 

ii.

If you received a proxy form from your intermediary, insert your name in the blank space provided on the form, sign the proxy form if it is not signed by the intermediary and return the completed proxy form in the enclosed envelope. Your proxy form must be received by Computershare Investor

 

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Services, Inc. from your intermediary by 5:00 p.m. EST two days before the Meeting, being Monday, July 29, 2013, in order for you to attend the Meeting to vote the shares covered by the proxy form. When you arrive at the Meeting, you should advise the staff that you are a proxy appointee; or

 

iii.

If you received a voting instruction form, follow the instructions on it.

 

(b)

By Proxy - If you hold a Share Ownership Statement or if you received a proxy form from your intermediary and do not plan to attend the Meeting in person, you may vote by proxy in one of two ways:

 

i.

By authorizing the management representatives of Mitel named in the proxy form to vote your Common Shares. You may convey your voting instructions by:

 

•

Internet – Go to www.proxyvote.com and follow the instructions. You will need the 12 digit control number which is located on your proxy form.

 

•

Mail – Complete the proxy form in full, sign and return it in the envelope provided by 5:00 p.m., Ottawa time, on Monday, July 29, 2013 being two business days preceding the date of the Meeting. The shares represented by your proxy will be voted in accordance with your instructions as indicated on your form of proxy and on any ballot that may be called at the Meeting.

 

ii.

You have the right to appoint some other person to attend the Meeting and vote your Common Shares on your behalf. You may do this either by:

 

•

Internet – Go to www.proxyvote.com and follow the instructions. You will need the 12 digit control number which is located on your proxy form.

 

•

Mail – Print your appointee’s name in the blank space on the proxy form and indicate how you would like to vote your Common Shares. Complete the proxy form in full, sign and return it in the envelope provided. Your proxyholder will decide how to vote on amendments or variations to the matters to be voted on at the Meeting.

 

iii.

If you received a voting instruction form, follow the instructions on it.

Proxies returned by intermediaries as “non-votes” because the intermediary has not received instructions from the non-registered Shareholder with respect to the voting of certain shares will be treated as not entitled to vote on any matter before the Meeting and will not be counted as having been voted in respect of any such matter. Shares represented by intermediary “non-votes” will, however, be counted in determining whether there is a quorum present at the Meeting.

4. Revocation of Proxies

In addition to revocation in any other manner permitted by law, a Shareholder may revoke a proxy pursuant to subsection 148(4) of the CBCA by voting again on a later date by depositing an instrument in writing executed by the Shareholder or by the Shareholder’s attorney authorized in writing (or, if the Shareholder is a corporation, by an authorized officer or attorney of such corporation authorized in writing) at the registered office of Mitel at any time up to and including the last business day preceding the day of the Meeting at which such proxy is to be used, or with the Chairman of the Meeting on the day of, but prior to commencement of, the Meeting, or in any other manner permitted by law and, upon either of such deposits, such proxy shall be revoked. If the instrument of revocation is deposited with the Chairman of the Meeting on the day of the Meeting, the instrument will not be effective with respect to any matter on which a vote has already been cast pursuant to such proxy.

A non-registered Shareholder may revoke a voting instruction form that has been given to an intermediary at any time by written notice to the intermediary or to the service company that the intermediary uses, in sufficient time for the intermediary to act on it. In addition, a non-registered Shareholder may change his or her vote by attending the Meeting and voting in person, provided the non-registered Shareholder has followed one of the procedures outlined above under “Non-Registered Shareholders”.

 

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5. Voting of Proxies

The form of proxy accompanying this Circular affords a Shareholder an opportunity to specify that the shares registered in the Shareholder’s name shall be voted FOR or WITHHELD in accordance with your instructions as indicated on your form of proxy. In the absence of instructions, your shares will be voted FOR each of the matters to be considered at the Meeting. Votes WITHHELD and abstentions are counted as present or represented for purposes of determining the presence or absence of a quorum at the Meeting but are not included in the number of shares present or represented and voting on each matter.

The form of proxy accompanying this Circular confers discretionary authority upon the nominees named in the enclosed form of proxy with respect to amendments or variations of matters identified in the Notice of Meeting or other matters which may properly come before the Meeting. As of the date of this Circular, management of Mitel knows of no amendment or variation of the matters referred to in the Notice of Meeting or other business that will be presented at the Meeting. If any such matters should properly come before the Meeting, each nominee named in the enclosed form of proxy will vote on those matters in accordance with his or her best judgment.

6. Authorized Capital and Voting Shares

The authorized capital of the Corporation consists of an unlimited number of Common Shares and an unlimited number of Preferred Shares, issuable in series (the “Preferred Shares”). As of June 11, 2013 (the “Record Date”), Mitel had 53,702,749 Common Shares issued and outstanding and no Preferred Shares issued and outstanding. Each Common Share carries one vote in respect of each matter to be voted upon at the Meeting. Only holders of outstanding Common Shares of record at the close of business on the Record Date will be entitled to vote at the Meeting.

7. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information regarding the beneficial ownership of our Common Shares as of June 7, 2013 and shows the number of shares and percentage of outstanding Common Shares owned by:

 

•

each person or entity who is known by us to own beneficially 5% or more of our Common Shares;

 

•

each member of our Board;

 

•

each of our named executive officers (each, an “NEO”); and

 

•

all members of our Board and our executive officers as a group.

Beneficial ownership is determined in accordance with United States Securities and Exchange Commission (“SEC”) rules, which generally attribute beneficial ownership of securities to each person or entity who possesses, either solely or shared with others, the power to vote or dispose of those securities. These rules also treat as outstanding all shares that a person would receive upon exercise of stock options or warrants, or upon conversion of convertible securities held by that person that are exercisable or convertible within 60 days of the determination date, which in the case of the following table is August 6, 2013. Shares issuable pursuant to exercisable or convertible securities are deemed to be outstanding for computing the percentage ownership of the person holding such securities but are not deemed outstanding for computing the percentage ownership of any other person. The percentage of beneficial ownership for the following table is based on 53,702,749 Common Shares outstanding as of June 7, 2013. To our knowledge, except as indicated in the footnotes to this table and pursuant to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all Common Shares shown as beneficially owned by them.

 

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				Amount and Nature of Beneficial Ownership
Title of Class		Name and Address of Beneficial Owner (1)		Number				%
		Five Percent Shareholders:
Common Shares		Matthews Group (2)
		Dr. Terence H. Matthews			264,271				0.5	%
		Kanata Research Park Corporation (formerly Wesley Clover Corporation)			12,080,610				22.5	%
		Total			12,344,881				23.0	%
Common Shares		Francisco Partners Group (3)
		Francisco Partners Management, LLC			306,288				0.6	%
		Francisco Partners GP II Management (Cayman) Limited			62,470				0.1	%
		Francisco Partners GP III Management, LLC			858				0.0	%
		Arsenal Holdco I S.a.r.l.			14,508,268				27.0	%
		Arsenal Holdco II S.a.r.l.			5,589,278				10.4	%
		Total			20,467,162				38.0	%
Common Shares		Morgan Stanley Principal Investments, Inc. (4)			3,963,809				7.4	%
Common Shares		Wellington Management Company, LLP(5)			3,526,428				6.6	%
Common Shares		Executive Officers and Directors:
		Dr. Terence H. Matthews (2)			12,344,881				23.0	%
		Richard D. McBee			1,017,499				1.9	%
		Peter D. Charbonneau (6)			192,515				0.4	%
		Benjamin H. Ball (3)			20,467,162				38.0	%
		Andrew J. Kowal (3)			20,467,162				38.0	%
		Jean-Paul G. Cossart (7)			142,341				0.23	%
		John McHugh			122,876				0.2	%
		Henry L. Perret			165,224				0.3	%
		Steven E. Spooner (8)			186,820				0.4	%
		Graham Bevington			64,752				0.1	%
		Ronald G. Wellard			107,084				0.2	%
		Jon Brinton			33,895				0.1	%
		All directors and executive officers as a group (15 persons) (9)			34,942,383				65.0	%

 

(1)	Except as otherwise indicated, the address for each beneficial owner is c/o Mitel Networks Corporation, 350 Legget Drive, Ottawa, Ontario, Canada, K2K 2W7.

(2)

The “Matthews Group” means Dr. Matthews and certain entities, including Kanata Research Park Corporation, controlled by Dr. Matthews. Includes stock options to acquire 264,271 Common Shares that are currently exercisable and 12,080,610 Common Shares owned by Kanata Research Park Corporation. Dr. Matthews has voting and investment power over the Common Shares owned by Kanata Research Park Corporation and therefore beneficially owns the Common Shares held by Kanata Research Park Corporation. The address for the Matthews’ Group and Dr. Matthews is 350 Legget Drive, Kanata, Ontario, Canada K2K 2W7.

(3)

The “Francisco Partners Group” means Francisco Partners Management, LLC and certain of its affiliates. Includes 20,160,874 Common Shares and stock options to acquire 306,288 Common Shares that are exercisable. Benjamin Ball and Andrew Kowal, both partners of Francisco Partners Management, LLC, have voting and investment power over the Common Shares owned by each of Francisco Partners, Francisco Partners GP II Management (Cayman) Limited, Francisco Partners GP III Management, LLC, Arsenal Holdco I S.a.r.l. and Arsenal Holdco II S.a.r.l. and therefore beneficially own the Common Shares held by each of these entities. The address for each of the Francisco Partners Group, Benjamin Ball and Andrew Kowal is c/o Francisco Partners Management, LLC, One Letterman Drive, Building C-Suite 410, San Francisco, California, 94129.

(4)	The number of shares, 3,963,809 was reported in Form 13F filed with the SEC as at March 31, 2013. The address for Morgan Stanley Principal Investments, Inc. is 1585 Broadway, New York, New York, 10036.

 

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(5)	The number of shares, 3,526,428 was reported in Form 13F with the SEC as at March 31, 2013. The address for Wellington Management Company, LLP is 280 Congress Street, Boston, Massachusetts, 02210.

(6)

Of this total, 2,019 Common Shares are registered to Peter Charbonneau Trust #2, a trust of which Mr. Charbonneau is the sole trustee, and 13,927 Common Shares are registered to Mr. Charbonneau’s spouse, Joan Charbonneau. Mr. Charbonneau disclaims beneficial ownership of the 13,927 Common Shares registered to Joan Charbonneau. Includes options to acquire 161,293 Common Shares from us at exercise prices ranging from $2.61 to $6.50.

(7)	Includes options to acquire 142,341 Common Shares granted to Scivias s.a.r.l. at exercise prices ranging from $2.61 to $6.50. Mr. Cossart has voting and investment power over the Common Shares owned by Scivias s.a.r.l.

(8)	Of this total, 5,100 Common Shares are registered to the Spooner Children Trust, a trust of which Mr. Spooner is one of three trustees, and 135,417 Common Shares issuable upon the exercise of options at exercise prices ranging from $3.75 to $8.79.

(9)	In calculating this total, the Common Shares held by Mr. Ball and held by Mr. Kowal have been counted only once, as all such shares are held by and through the Francisco Partners Group.

For the purpose of this table, which contains information that is also included in our Form 10-K filing for the fiscal year ended April 30, 2013, the term “executive officer” has the meaning ascribed to it under Rule 405 promulgated under the U.S. Securities Act of 1933, as amended (the “1933 Act”). The information with respect to beneficial ownership is based upon information furnished by each director or executive officer or information contained in insider reports made with the Canadian Securities Administrators.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) requires directors, executive officers (as defined under the 1933 Act as noted above), and Shareholders owning more than 10% of a company’s outstanding shares (other than certain banks, investment funds and other institutions holding securities for the benefit of third parties or in customer fiduciary accounts), to file reports of ownership and changes of ownership with the SEC. Section 16(a) does not apply to Mitel because it is a foreign private issuer under U.S. securities laws. Our officers and directors and 10% shareholders are required to file reports of ownership of our Common Shares and changes of such ownership with the Canadian Securities Administrators. We believe that our directors and executive officers have made all required filings with Canadian Securities Administrators.

B. CORPORATE GOVERNANCE PRINCIPLES AND PRACTICES

Mitel is a Canadian reporting issuer and qualifies as a foreign private issuer for purposes of the Exchange Act. Our Common Shares are listed on the National Association of Securities Dealers Automated Quotations (“Nasdaq”) and on the Toronto Stock Exchange (“TSX”). As a result, we are subject to, and comply with, a number of legislative and regulatory corporate governance requirements, policies and guidelines, including those of the Nasdaq, TSX, the Canadian Securities Administrators and the SEC.

In addition to compliance with governance requirements, Mitel and its management place significant emphasis on the structure of the board of directors (the “Board”) and the committees of the Board in order to promote effective corporate governance of the Corporation. We have adopted corporate governance guidelines, mandates for each of the Board, Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee, as well as position descriptions for a chairman of the Board, a lead director and a Chief Executive Officer.

We have established a Global Business Ethics and Compliance Office headed by a Compliance Officer with assistance from the Legal Department and Internal Audit Department. The responsibilities of the Compliance Officer include (but are not limited to):

 

•

ensuring annual distribution and certification of our Code of Business Conduct to all of our employees, directors, officers and representatives which requires each individual to certify their compliance with the Code;

 

•

monitoring our ethics and business practices company-wide by coordinating audits, performance assessments and providing training programs;

 

•

monitoring and promoting anonymous hotlines to report suspected violations; and

 

•

reporting to the Board and/or a Committee of the Board.

 

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We have adopted an Insider Trading Policy for directors, officers and employees who may from time to time be in possession of material, non-public information.

Certain employees who are involved in the preparation and review of financial statements and regulatory filings execute, on an annual basis, certifications in support of the certification obligations of the Chief Executive Officer and the Chief Financial Officer pursuant to the Sarbanes Oxley Act of 2002. The certification process complements the due diligence process administered by us to support reporting obligations under the Sarbanes Oxley Act of 2002.

Our significant governance principles and practices, all of which are described below, are set forth in governance documentation available on our website at http://investor.mitel.com. These include the Mandate for the Board of Directors, Audit Committee Charter, Compensation Committee Charter, Nominating and Corporate Governance Committee Charter, Corporate Governance Guidelines and Code of Business Conduct. We will provide a copy of any of these governance documents to any person, without charge, who requests a copy in writing to Investor Relations, Mitel Networks Corporation, 350 Legget Drive, Ottawa, Ontario, Canada, K2K 2W7.

8. Applicable Governance Requirements and Guidelines

Rule 5620(c) of the Nasdaq’s corporate governance rules generally requires that a listed company’s by-laws provide for a quorum for any meeting of the holders of the company’s common shares of at least 33 1/3% of the company’s outstanding common shares. Rule 5605(d) of the Nasdaq’s corporate governance rules generally requires that the compensation of a listed company’s executive officers must be determined, or recommended to the board of directors for determination, either by independent directors constituting a majority of the board’s independent directors in a vote in which only independent directors participate or by a compensation committee comprised solely of independent directors. Rule 5605(e)(1) of the Nasdaq’s corporate governance rules generally requires that director nominees must be selected or recommended for the board of director’s selection either by independent directors constituting a majority of the board’s independent directors in a vote in which only independent directors participate or by a nominations committee comprised solely of independent directors.

Pursuant to the Nasdaq’s corporate governance rules, Mitel, as a foreign private issuer, has elected to comply with practices that are permitted under Canadian law in lieu of the provisions of Rule 5620(c), Rule 5605(d) and Rule 5605(e)(1). Our by-laws provide that a quorum of Shareholders is present at a meeting of Shareholders if the holders of at least 25% of the shares entitled to vote at the meeting are present in person or represented by proxy, provided that a quorum shall be not less than two persons. The Board determines the compensation of our executive officers, with the assistance of the Compensation Committee of the Board. The Nominating and Corporate Governance Committee of the Board is generally responsible for selecting director nominees, except that pursuant to the terms of the shareholders’ agreement among Francisco Partners Group and the Matthews Group effective at the closing of our initial public offering, each of them may nominate some members of the Board (See the discussion under the heading, “Shareholders Agreement”, in Section D of this Circular).

9. Composition of the Board

Mitel’s Board currently consists of eight members and the directors have approved a fixed number of eight directors to be elected at the Meeting. Our articles of incorporation provide that the Board is to consist of a minimum of three and a maximum of fifteen directors as determined from time to time by the directors, and permit the directors to appoint additional directors in accordance with the CBCA within any fixed number from time to time. Under the CBCA, one quarter of our directors must be resident Canadians as defined in the CBCA. The Board regularly assesses the need for additional directors in order to ensure that the Board is composed of individuals with diverse backgrounds, experience, competencies and independence as evaluated against criteria established from time to time by the Board.

10. Independence and Other Considerations for Director Service

Six of our nominated directors are considered “independent”, as defined under the Nasdaq rules and for purposes of Canadian securities laws. Our independent directors are Peter Charbonneau, Benjamin Ball, Andrew Kowal, Jean-Paul Cossart, John McHugh and Henry Perret. For purposes of the Nasdaq rules, an independent director means a person other than an executive officer or employee of the company or any other individual having a relationship

 

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which, in the opinion of the company’s Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. A director is considered to be independent for the purposes of Canadian securities laws if the director has no direct or indirect material relationship to the company. A material relationship is a relationship that could, in the view of the board, be reasonably expected to interfere with the exercise of a director’s independent judgment. Certain individuals, such as employees and executive officers of Mitel, are deemed by Canadian securities laws to have material relationships with the Corporation.

Our non-independent nominated directors are Richard McBee and Terence Matthews. Our Board determined that Richard McBee is non-independent due to his “insider” position as Chief Executive Officer and President of the Corporation. Terence Matthews, chairman of our board of directors, has also been determined to be a non-independent director by virtue of the fact that Mitel conducts significant business with several companies that Dr. Matthews either controls or has made a significant investment in. As chairman, Dr. Matthews’ role is to promote the Board’s effectiveness in providing oversight to the Corporation. In particular, the chairman has the responsibility to:

 

•

preside over Board meetings in an efficient and effective manner that is compliant with governance policies and procedures;

 

•

in conjunction with the Chief Executive Officer, communicate and maintain relationships with the Corporation, its shareholders and other stakeholders;

 

•

set Board meeting agendas based on input from directors and senior management;

 

•

work cooperatively with the lead director in fulfilling the lead director’s mandate and, in the event of a conflict in their duties, yield to the lead director; and

 

•

carry out other duties, as requested by the Board or the Chief Executive Officer.

For purposes of the Nasdaq rules and Canadian securities laws, Dr. Matthews is deemed not to be an independent director. Accordingly, we also have a lead director, Peter Charbonneau. The responsibility of the lead director is to provide independent leadership to the Board and to ensure that it functions in an independent and open manner. Together with the chairman of the Board, the lead director ensures that the Board understands its responsibilities and communicates effectively with its subcommittees and with management. Our Lead Director is also chairman of our Nominating and Corporate Governance Committee, of which all of the members are independent. At the regularly scheduled Nominating and Corporate Governance Committee meetings, the Lead Director ensures that the independent directors have in-camera discussions.

The attendance record of each director of the Board for all board meetings since May 1, 2012 is as follows:

 

Director		Attendance During Fiscal 2013
		Meetings Attended				Percentage
Dr. Terence H. Matthews			11 of 11				100	%
Richard D. McBee			11 of 11				100	%
Benjamin H. Ball			11 of 11				100	%
Peter D. Charbonneau			11 of 11				100	%
Jean-Paul Cossart			11 of 11				100	%
Andrew J. Kowal			10 of 11				91	%
John McHugh			11 of 11				100	%
Henry L. Perret			11 of 11				100	%

 

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11. Mandate of the Board and Corporate Governance Guidelines

The mandate of Mitel’s Board is to oversee corporate performance and to provide quality, depth and continuity of management so that we can meet our strategic objectives. In particular, our Board focuses its attention on the following key areas of responsibility:

 

•

appointing and supervising the Chief Executive Officer and other senior officers;

 

•

supervising strategy implementation and performance;

 

•

monitoring our financial performance and reporting;

 

•

identifying and supervising the management of the Corporation’s principal business risks;

 

•

monitoring the legal and ethical conduct of the Corporation;

 

•

maintaining shareholder relations; and

 

•

developing and supervising our governance strategy.

The Board discharges many of its responsibilities through its standing committees: the Audit Committee, the Nominating and Corporate Governance Committee and the Compensation Committee. Other committees may be formed periodically by the Board to address specific issues that are not on-going in nature. The duties and responsibilities delegated to each of the standing committees are prescribed in the respective charter of each standing committee.

Position Descriptions

The Board has developed and implemented a written position description for each of the chairman, the lead director and the Chief Executive Officer. Committees of the Board each have a committee charter that sets out the mandate of the committee, which includes the responsibilities of the chair of each committee.

Orientation and Continuing Education

Director orientation and continuing education is conducted by the Nominating and Corporate Governance Committee. All newly elected directors are provided with a comprehensive orientation on our business and operations. This includes familiarization with our reporting structure, strategic plans, significant financial, accounting and risk issues, compliance programs, policies and management and the external auditor. Existing directors are periodically updated in respect of these matters.

For the purposes of orientation, new directors are given the opportunity to meet with members of the executive management team to discuss the Corporation’s business and activities. The orientation program is designed to assist the directors in fully understanding the nature and operation of our business, the role of the Board and its committees, and the contributions that individual directors are expected to make.

12. Ethical Business Conduct

The Board has established the Code of Business Conduct, which governs the conduct of our Board, executives, employees, contractors and agents. A copy of the Code may be obtained by contacting the Mitel Global Business Ethics and Compliance Office and is also available on our website at http://investor.mitel.com.

Responsibility for ensuring compliance with the Code rests with our Global Business Ethics and Compliance Office (the “Compliance Office”), under the guidance of its director, who is also the general counsel of the Corporation. The Compliance Office ensures that the Code is distributed throughout the Corporation, monitors the ethics of our business practices, investigates potential breaches of the Code and engages in education on compliance with the Code. The Audit Committee periodically reviews the ethics monitoring conducted by the Compliance Office and updates the Code as required. The chair of the Audit Committee reports the results of his or her reviews to the Board following Audit Committee meetings and keeps the Board apprised of matters considered by the committee.

 

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Directors are prohibited by the Code from engaging in transactions on our behalf in which that director has, or a family member of that director has, a substantial beneficial interest. Among other things, this means that a director may not hold a financial interest in a customer, supplier or competitor of ours or our subsidiaries; notwithstanding this prohibition, a director may own $25,000 worth of stock or two percent of a publicly owned corporation, whichever is greater. Permission to deviate from these rules must be obtained from the Board. Moreover, prior to commencing service on our Board, directors are required to disclose all potential conflicts of interest to the corporate secretary. If potential conflicts arise during a director’s tenure on the Board, such conflicts must be immediately disclosed to the corporate secretary. Where a conflict of interest exists, a director is required by statute to abstain from voting on the matter and, by corporate policy, is also required to recuse him or herself from any discussion on any matter in respect of which a conflict of interest precludes the director from voting.

13. Board Committees

The Board has established three committees to assist it in carrying out its responsibilities: the Audit Committee, the Nominating and Corporate Governance Committee and the Compensation Committee.

The Audit Committee

The Audit Committee is composed of three directors namely, Peter Charbonneau (Chairman), Jean-Paul Cossart and Henry Perret. Peter Charbonneau was appointed to the Audit Committee in February 2002, Jean-Paul Cossart was appointed in July 2008 and Henry Perret was appointed in March 2010. The Board has determined that each of these directors meets the independence requirements of the rules and regulations of the Nasdaq and the SEC. The Board has determined that each of these directors is financially literate. Peter Charbonneau (Chairman) has been identified as an “audit committee financial expert” as such term is defined by applicable U.S. securities laws.

The Audit Committee assists the Board in fulfilling its financial oversight obligations including responsibility for overseeing the integrity of our financial statements, legal and regulatory compliance, auditor independence and qualification, the work and performance of our financial management, internal auditor and external auditor and for overseeing the systems of disclosure controls and procedures and the system of internal controls regarding finance, accounting, legal compliance, risk management and ethics that management and the Board have established.

The Audit Committee has access to all books, records, facilities and personnel and may request any information about the Corporation as it may deem appropriate. It also has the authority to retain and compensate special legal, accounting, financial and other consultants or advisors to advise the committee. The Audit Committee also reviews and approves related party transactions and prepares reports for the Board on such related party transactions.

All members of the Audit Committee have experience reviewing financial statements and dealing with related accounting and auditing issues. The members of the Audit Committee have the following relevant education and experience:

 

•

Peter Charbonneau is a general partner in Skypoint Capital Corporation, an early-stage technology venture capital firm. He previously served as the Chief Financial Officer and Chief Operating Officer of Newbridge Networks Corporation. Mr. Charbonneau currently chairs the audit committees for TrueContext Corporation (now ProntoForms Corporation) and CBC/Radio-Canada. He is a member of the audit committees for Teradici Corporation, Jennerex, Inc. and CounterPath. Mr. Charbonneau has also served as a director and audit committee member at other companies, including Telus Corporation, BreconRidge Corporation, March Networks Corporation and Cambrian Systems, Inc. From 1977 to 1986, Mr. Charbonneau worked as an accountant at Deloitte LLP (as it is now known). Mr. Charbonneau holds a Bachelor of Science from the University of Ottawa, an MBA from the University of Western Ontario and is a Fellow of the Institute of Chartered Accountants of Ontario.

 

•

Jean-Paul Cossart is an Associate Director of Infoteria sas of France, a company that provides technological coaching. Prior to his involvement with Infoteria, Mr. Cossart was Vice President Strategy and Marketing of Cofratel sa, a former subsidiary of France Telecom that provides PBX and

 

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LAN integration for the enterprise market. Mr. Cossart also held several positions at Alcatel sa and currently serves on the board of directors of DragonWave Inc., Benbria and Toushay, Inc. He was also a member of the executive committee of the French chapter of the Institute of Directors, United Kingdom. Mr. Cossart holds an Electronic Engineering degree from Supélec (Ecole Supérieure d’Electricité).

 

•

Henry Perret is the President and Chief Executive Officer of the Capital Area Food Bank of Texas. Previously, he was with Zarlink Semiconductor, where he was Senior Vice President and General Manager of the Communication Products Group. Mr. Perret has previously served as Chief Executive Officer and Chief Financial Officer for Legerity, Inc. and has held financial roles at Actel Corporation, Applied Materials, Inc., National Semiconductor Corporation, Raytheon Semiconductor and General Electric Company. Mr. Perret holds a Bachelor of Science Degree in Business Administration with a concentration in Accounting from San Jose State University.

The Compensation Committee

The Compensation Committee is currently composed of two directors namely, Benjamin Ball (Chairman) and John McHugh. Benjamin Ball was appointed to the Compensation Committee in October 2007, and John McHugh was appointed in March 2010. Both members of the Compensation Committee are independent, as determined by the Board in accordance with Nasdaq “independence” rules, including the Chairman who is responsible for the leadership of the committee and the fulfilment by the committee of its mandate.

The Compensation Committee assists the Board in discharging the Board’s oversight responsibilities relating to the compensation, development, succession and retention of the Chief Executive Officer and key employees and the establishment of fair and competitive compensation and performance incentive plans.

All current members of the Compensation Committee have experience reviewing executive compensation. The members of the Compensation Committee have the following relevant education and/or experience:

 

•

Benjamin Ball is a partner of Francisco Partners Management, LLC, which is a leading private equity firm focused exclusively on investing in the information technology market. Mr. Ball currently sits on the Compensation Committees for several private companies, such as Webtrends Inc., Watchguard Technologies, Inc., EF Johnson Technologies, Inc. and Foundation 9 Entertainment, Inc. Mr. Ball has been a director of these and other private companies where he has been responsible for hiring and retaining C-level executives for each company.

 

•

John McHugh is an Executive Consultant. Prior to his current role, Mr. McHugh was the Chief Marketing Officer for Brocade Communications Systems, Inc. Prior to that, Mr. McHugh held Vice President and General Manager roles at Nortel Networks and Hewlett-Packard Company. In his capacity as an executive of each of these companies over the last 15 years, Mr. McHugh has reviewed, designed and implemented numerous executive compensation plans for a variety of business scenarios.

The Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee is currently composed of six directors namely, Peter Charbonneau (Chairman), Benjamin Ball, Jean-Paul Cossart, Andrew Kowal, John McHugh and Henry Perret. The committee was formed and the members were each appointed in March, 2010. All of the members of the Nominating and Corporate Governance Committee are independent directors, as determined by the Board in accordance with Nasdaq “independence” rules, including the Chairman, ensuring the committee receives diverse input into the Corporation’s board nomination process and functions independently.

The Nominating and Corporate Governance Committee assists the Board in identifying and/or recommending director candidates for election at the next annual meeting of Shareholders. The committee also oversees and assesses the functioning of the Board and the committees of the Board, and the implementation and assessment of effective corporate governance principles. The committee conducts annual surveys of directors regarding effectiveness of the Board, the Chairman and each director, each committee and its chairman, and the individual directors. The committee also annually assesses the effectiveness of the Board and each committee as a whole and makes recommendations to the Board.

 

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14. Communication with the Board

Shareholders or others may contact the Board by mail to:

The Board of Directors

c/o the Corporate Secretary’s Office

Mitel Networks Corporation

350 Legget Drive

Ottawa, Ontario, Canada

K2K 2W7

C. COMPENSATION DISCUSSION AND ANALYSIS

15. Director Compensation

Except as noted below, from May 1, 2012 to October 31, 2012, all non-employee directors received the annual service retainers and fees for attending meetings set forth below:

 

Annual service on the Board (other than Chair)		$	25,000
Annual service as Chair of the Board		$	100,000
Annual service as member of the audit committee (other than Chair)		$	10,000
Annual service as Chair of the audit committee		$	15,000
Annual service as a member of other standing committees		$	7,500
Meeting fees (varies depending on whether in person, by phone and by Committee)		$	500 – $2,000
Annual service on the Board)			10,000 stock options
Initial grant for new directors			5,000 stock options

Effective November 1, 2012, the non-employee director compensation plan was changed to a strictly role-based approach, and fees are set forth below:

 

Annual service on the board of directors (other than Chair)		$	40,000
Annual service as Chair of the board of directors		$	115,000
Annual service as member of the audit committee (other than Chair)		$	15,000
Annual service as Chair of the audit committee		$	25,000
Annual service as a member of the compensation committee (other than Chair)		$	10,000
Annual service as Chair of the compensation committee		$	15,000
Annual service as a member of the nominating and corporate governance committee (other than Chair)		$	8,000
Annual service as Chair of the nominating and corporate governance committee		$	12,000
Annual service on the Board			10,000 stock options
Initial grant for new directors			5,000 stock options

Richard McBee, who is also our CEO, does not receive annual service retainers or fees for serving as a director.

In fiscal 2013, each director could elect to receive up to $20,000 of the above retainers and fees as cash. Effective fiscal 2014, each director may elect to receive up to $40,000 of the above retainers as cash. The remaining balance is to be received in the form of stock options. Stock options are granted pursuant to our 2006 Equity Incentive Plan.

In order to place a limit on the number of options to which a Director is entitled, when the closing price of the Corporation’s Common Shares on the Nasdaq on the date of grant is above $4.00 per share, the methodology of

 

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calculation for the number of stock options to be granted will continue to be the amount of fees owed divided by the Black-Scholes value of a stock option on the day of grant. However, when the closing price of the Company’s shares on the Nasdaq on the date of grant is $4.00 per share or less, each director will be granted the lesser of:

 

1)

The amount of fees owed divided by $1.82, which is the approximate Black-Scholes value of a stock option granted when the Corporation’s stock price is $4.00; and

 

2)

The amount of fees owed divided by the Black-Scholes value of a stock option on the day of grant.

The strike price of each stock option is the closing price per Common Share on the Nasdaq on the date of grant. There were 3,396 options exercised by directors during the fiscal year ended April 30, 2013.

The Compensation Committee has reviewed directors’ compensation for fiscal year 2013 and following years and, in fiscal 2012, retained Radford (an AON Consulting Company) (“Radford”) for assistance to ensure our director compensation package remains competitive within our industry. See Section 16 “Executive Officer Compensation”.

A director is reimbursed for any out-of-pocket expenses incurred in connection with attending board or committee meetings, as well as Canadian tax return preparation fees for non-Canadian directors.

There are no loans or other indebtedness outstanding from the Corporation or any subsidiary to any of its directors, nor has any director received any financial assistance from us or from any of our subsidiaries.

In accordance with our Insider Trading Policy, an NEO or director is not permitted to purchase financial instruments, including for greater certainty, prepaid variable forward contracts, equity swaps, collars, or units of exchange funds, that are designed to hedge or offset a decrease in market value of equity securities granted as compensation or held, directly or indirectly, by the NEO or director.

The following table sets forth a summary of compensation paid during the fiscal year ended April 30, 2013 to the non-executive directors:

 

Name		Fees earned ($)				Share- based awards ($)				Option- based awards ($)				Option- based awards ($)				Non- equity incentive plan awards ($)				Pension value ($)				All other compensation ($)				Total ($)
Benjamin H. Ball (1)			—				—				—				63,750				—				—				—				63,750
Peter D. Charbonneau			20,000				—				—				76,750				—				—				—				96,750
Jean-Paul Cossart (2)			20,000				—				—				56,875				—				—				—				76,875
Andrew J. Kowal (1)			—				—				—				53,750				—				—				—				53,750
Terence H. Matthews			—				—				—				114,750				—				—				—				114,750
John McHugh			—				—				—				64,250				—				—				—				64,250
Henry L. Perret			—				—				—				70,000				—				—				—				70,000
Norman Stout(3)			—				—				—				17,000				—				—				—				17,000
Donald Smith(4)			—				—				—				—				—				—				—				—

 

(1)	Stock options granted in connection with Mr. Ball and Mr. Kowal acting as directors of the Corporation were granted to Francisco Partners Management, LLC of which Mr. Ball and Mr. Kowal are partners.

(2)	Stock options granted in connection with Mr. Cossart acting as a director of the Corporation were granted to Scivias s.a.r.l., a company in which Mr. Cossart is a shareholder.

(3)	Mr. Stout did not stand for re-election at the last Annual General Meeting held in July, 2012.

(4)	Mr. Smith did not stand for re-election at the last Annual General Meeting held in July, 2012. Mr. Smith, our former CEO, did not receive any compensation for his role as a member of our board of directors.

 

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16. Executive Officer Compensation

Mitel’s compensation program for executive officers is designed to attract, retain, motivate and engage highly skilled and experienced individuals who excel in their field. The objective of the program is to focus our executives on the key business factors that affect shareholder value.

Compensation for executive officers is comprised primarily of three main components:

 

•

base salary;

 

•

annual or short-term incentive plans; and

 

•

long-term incentive plans.

We set cash and equity compensation based on compensation paid to executives at comparable companies. The Compensation Committee reviews our executive officers’ overall compensation packages on an annual basis.

We also retain independent compensation consultants from time to time to assist in determining executive compensation packages. The nature and scope of the services rendered by the consultants include:

 

•

assisting in identifying members of our peer group for comparison purposes;

 

•

helping to determine compensation levels at the peer group companies;

 

•

providing advice regarding executive compensation best practices and market trends;

 

•

assisting with the redesign of any compensation program, as needed;

 

•

preparing for and attending selected management or committee meetings; and

 

•

providing advice throughout the year.

In fiscal 2012, we retained Radford to provide us with survey data and other benchmark information related to trends and competitive practices in executive compensation. As noted above under “Director Compensation”, Radford also assisted the Corporation in reviewing our director compensation package. Radford was originally retained by the Corporation in April, 2006. Executive and director compensation related fees billed by Radford to the Corporation in fiscal years 2013 and 2012 were nil and $62,000, respectively. The reference market used to benchmark executive compensation included companies who operate in a similar industry segment. The comparable companies used to benchmark our executive compensation included Aastra Technologies Limited, ADTRAN, Inc., CAE Inc., Constellation Software Inc., Comtech Telecommunications Inc., Extreme Networks, Inc., F5 Networks, Inc., MacDonald, Dettwiler and Associates Ltd., Open Text Corporation, Plantronics, Inc., Polycom, Inc., Sierra Wireless Inc., Smart Technologies ULC, Tellabs, Inc. and ViaSat, Inc. The Compensation Committee set our executive officers’ total overall cash compensation at a level that was at or near the 50^th percentile of the cash compensation paid to executives with similar roles at comparable companies. Equity compensation was also targeted at the 50^th percentile of comparable companies.

The Compensation Committee applies the following criteria in determining or reviewing recommendations for compensation for executive officers in order to ensure an objective assessment of our executives’ compensation:

Base Salaries. Individual salaries are determined by each officer’s experience, expertise, performance and expected contributions to the Corporation. The Compensation Committee uses industry studies and comparables for reference purposes to assist in setting a range of base salaries for positions, however, these studies and comparables are only one factor that is reviewed in determining base salary for each executive officer position.

Annual or Short-Term Incentive Plans. Mitel utilizes cash bonuses to reward the achievement of corporate objectives and to recognize individual performance. The amount of annual performance incentive or “at risk” component of an executive officers’ compensation increases with the level of responsibility and impact that the executive officer has had and can have on overall performance. The Chief Executive Officer provides the Compensation Committee with an assessment of each executive’s performance annually.

 

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For the fiscal year ended April 30, 2013, the Corporation’s NEOs consisted of: Richard D. McBee, Chief Executive Officer and President; Steven E. Spooner, Chief Financial Officer; Graham Bevington, Executive Vice President International Sales, Service and Marketing; Ronald G. Wellard, Executive Vice President and General Manager, Mitel Communications; and Jon Brinton, General Manager, Mitel Network Solutions. In addition, Philip Keenan, our former Vice-President Sales, Service and Marketing, Americas, was an NEO up to the time of his departure in February, 2013. The annual performance incentive targets for the fiscal year ended April 30, 2013, for the NEOs ranged between 50% and 120% of base salary. The financial objectives for Mr. McBee, Mr. Spooner and Mr. Wellard consist of annual revenue and Adjusted EBITDA for the Corporation. The financial objectives for Mr. Bevington and Mr. Brinton include annual revenue and contribution margin for their respective regions. The targets for the financial objectives were established by our Compensation Committee and approved by the Board.

The Board and the Compensation Committee assess the risks associated with the structuring of our NEO’s respective compensation arrangements to ensure that none of the arrangements encourages a particular NEO or group of NEOs to take undue risk on behalf of the Corporation to maximize their respective compensation. The various elements of our NEO compensation packages are given appropriate weighting to ensure that there is commonality across the compensation arrangements of our NEOs while structuring incentive arrangements to incent particular NEOs within their respective spheres of influence, whether based on the performance of the Corporation as a whole or the performance of the region for which the NEO has responsibility.

Long-Term Incentive Plans. The Compensation Committee believes that equity based long-term incentive compensation is a fundamental component of Mitel’s executives’ compensation program. Grants of options under our equity incentive plans assist us in retaining employees and attracting critical key talent by providing them with an opportunity for capital investment in the Corporation. In addition, the granting of options ensures that the interests of our executive officers are aligned with those of our Shareholders. Options are granted primarily based on the extent of the individual’s responsibility and performance and are also granted to attract new executive officers and to recognize job promotions.

The Chief Executive Officer recommends levels of option grants for the NEOs to the Compensation Committee based on skills, responsibilities and performance. Previous grants of options are also taken into consideration. The Compensation Committee approves grants of options after discussion and analysis of the material provided to it.

Fiscal 2014 Compensation. There have been no changes made to our NEO’s compensation structure for fiscal 2014.

During the fiscal year ended April 30, 2013, there were 375,000 options granted to the NEOs at a strike price of $4.22 per share. During the fiscal year ended April 30, 2013, there were 5,000 options exercised by the NEOs, all at $3.75 per share. There are no loans or other indebtedness outstanding from us or from any of our subsidiaries to any of our executive officers nor has any executive officer received any financial assistance from us or any of our subsidiaries.

In accordance with our Insider Trading Policy, an NEO or director is not permitted to purchase financial instruments, including, for greater certainty, prepaid variable forward contracts, equity swaps, collars, or units of exchange funds, that are designed to hedge or offset a decrease in market value of equity securities granted as compensation or held, directly or indirectly, by the NEO or director

Performance Graph

The following graph compares the total cumulative return of a Shareholder who invested $100 in Mitel common shares at April 22, 2010 (the date Mitel became a public company (the “IPO Date”)) to April 30, 2013, with the total cumulative return of $100 on the S&P 500 and the Nasdaq Composite Indices since the IPO Date.

 

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		Apr 30/10				Apr 30/11				Apr 30/12				April 30/13
Mitel			85.10				37.80				33.93				25.00
S&P 500 Composite			98.20				112.80				115.66				132.18
Nasdaq Composite			97.70				114.10				120.93				132.14

The NEO compensation is not based on performance of the Corporation’s share price, and, therefore the NEO total compensation may not compare to the trend shown in the performance graph. Prior to fiscal 2012, our annual incentive plans for our NEOs were partially based on the financial performance of the Corporation. Annual performance incentive targets for our NEOs are primarily based on the financial performance of the Corporation in order to provide added incentive to our NEOs to focus on their respective roles within the Corporation and their ability to continue to strengthen the Corporation’s performance (see Annual or Short-term Incentive Plans above). We expect the same or similar criteria to be applied in respect of our NEOs for fiscal 2014.

The following table sets forth a summary of compensation paid during the fiscal year ended April 30, 2013 to our NEOs:

Summary Compensation Table

 

Name and Principal Position		Year				Salary ($)(1)				Non-equity annual incentive plan ($)				Option- based Awards ($)(2)				Pension Value ($)(3)				All Other Compensation ($)				Total($)
Richard D. McBee			2013				660,000				509,752				191,000				—				18,000				1,378,752
Chief Executive Officer (4)			2012				600,000				414,472				—				—				18,000				1,032,472
			2011				190,154				100,000				4,634,577				—				5,538				4,930,269
Steven E. Spooner			2013				436,185				247,360				191,000				4,477				11,958				890,980
Chief Financial Officer (5)			2012				423,215				294,327				225,000				4,352				11,950				958,844
			2011				398,947				—				111,079				3,989				11,592				525,607
Graham Bevington			2013				243,258				187,156				57,300				22,167				20,640				530,521
Executive Vice President International Sales (6)			2012				207,038				171,214				75,000				18,012				16,550				487,814
			2011				205,391				148,026				133,295				18,958				17,344				523,014
Ronald G. Wellard			2013				331,314				128,190				124,150				3,384				7,972				595,010
Executive Vice President, General Manager, Mitel Communications Solutions (7)			2012				308,698				161,362				150,000				3,167				7,966				631,193
			2011				317,336				—				133,295				3,173				10,722				464,526

 

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Name and Principal Position		Year				Salary ($)(1)				Non-equity annual incentive plan ($)				Option- based Awards ($)(2)				Pension Value ($)(3)				All Other Compensation ($)				Total($)
Jon Brinton			2013				225,000				132,218				57,300				—				6,480				420,998
General Manager Mitel Network Solutions (8)			2012				195,000				119,801				37,000				—				6,480				361,981
			2011				180,000				138,538				31,080				—				6,240				355,858
Phil Keenan			2013				264,614				165,185				95,500				—				485,439				1,010,738
Former Executive Vice President Sale, Service and Marketing Americas (9)			2012				230,770				40,000				75,000				—				8,000				538,697
			2011				160,000				85,453				55,600				—				5,000				306,053

 

(1)	Fiscal 2011 salary for Mr. Spooner, Mr. Bevington and Mr. Wellard includes the effect of the voluntary reduced work program, which ran from February 2009 to April 2011.

Compensation to Mr. Spooner and Mr. Wellard is paid in Canadian dollars, but converted to U.S. dollars at the average rate for the relevant period. The Canadian dollar salaries for 2013, 2012 and 2011 are as follows: Mr. Spooner (2013 – C$437,701, 2012 – C$425,000, 2011 – C$378,439) and Mr. Wellard (2013 – C$332,466, 2012 – C$310,000, 2011 – C$293,531).

Compensation to Mr. Bevington is paid in British pounds sterling but converted to U.S. dollars at the average rate for the relevant period. The British pounds sterling earnings, base and commission, for 2013, 2012 and 2011 for Mr. Bevington are as follows: 2013 - £154,000, 2012 - £130,000, 2011 - £123,094.

(2)	Except for 515,175 inducement options granted to Mr. McBee in fiscal 2011, all other options were granted under the 2006 Equity Incentive Plan.

(3)	Pension value for Mr. Spooner and Mr. Wellard consists of contributions to defined contribution plan. Pension value for Mr. Bevington consists of contributions under a defined benefit plan up to November 2012, and contributions to a defined contribution plan thereafter.

(4)	Mr. McBee joined the Corporation as a director and CEO in January 2011. Mr. McBee does not receive compensation in his role as a director. All Other Compensation for Mr. McBee is in respect of a car allowance.

(5)	All Other Compensation for Mr. Spooner is in respect of a car allowance.

(6)	All Other Compensation for Mr. Bevington is in respect of a car allowance.

(7)	All Other Compensation for Mr. Wellard is primarily in respect of a car allowance.

(8)	All Other Compensation for Mr. Brinton is in respect of a car allowance.

(9)	All Other Compensation for Mr. Keenan includes $6,769, $8,000 and $5,000 in fiscal 2013, 2012 and 2011, respectively, in respect of a car allowance and $478,670 in respect of severance relating to his February 2013 departure.

17. Stock Option and Other Compensation Plans

2006 Equity Incentive Plan

The Corporation adopted an employee stock option plan on September 7, 2006 (the “2006 Equity Incentive Plan”).

The 2006 Equity Incentive Plan provides that the Compensation Committee has the authority to determine the individuals to whom options will be granted, the number of Common Shares subject to option grants and other terms and conditions of option grants. Prior to March 5, 2010, the 2006 Equity Incentive Plan provided that, unless otherwise determined by the Compensation Committee, one-quarter of the Common Shares that an option holder is entitled to purchase become eligible for purchase on each of the first, second, third and fourth anniversaries of the date of grant, and that options expire on the fifth anniversary of the date of grant. The 2006 Equity Incentive Plan was amended on March 5, 2010 such that, unless otherwise determined by the Compensation Committee, any options granted after that date will vest as to one-sixteenth of the Common Shares that an option holder is entitled to purchase on the date which is three months after the date of grant and on each subsequent quarter, and that options expire on the seventh anniversary of the date of grant. The 2006 Equity Incentive Plan provides that in no event may an option remain exercisable beyond the tenth anniversary of the date of grant.

The 2006 Equity Incentive Plan provides flexibility and choice in the types of equity compensation awards, including options, deferred share units, restricted stock units, performance share units and other share-based awards. The principal purpose of the 2006 Equity Incentive Plan is to assist us in attracting, retaining and motivating employees, directors, officers and consultants through performance related incentives.

 

17

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The initial aggregate number of Common Shares that could be issued under the 2006 Equity Incentive Plan and all other security-based compensation arrangements of the Corporation was 5,600,000 Common Shares (the “Initial Option Pool”) provided that an additional number of Common Shares of up to three percent of the number of Common Shares then outstanding may be added to such Initial Option Pool each year for three years starting on March 5, 2011. Effective on each of March 5, 2011 and March 5, 2012, the Compensation Committee approved a 3% increase to the Initial Option Pool such that the total aggregate number of Common Shares that may be issued under the 2006 Equity Incentive Plan and all other security-based compensation arrangements of the Corporation was 8,796,294. Upon listing the Corporation’s Common Shares on the TSX on June 27, 2012, the 3% increase became automatic in accordance with the terms of the 2006 Equity Incentive Plan. Therefore, effective March 5, 2013, the 3% increase brought the total number of Common Shares available for issue under the 2006 Equity Incentive Plan and all other security-based compensation arrangements of the Corporation to 10,406,469. Common Shares subject to outstanding awards under the 2006 Equity Incentive Plan which lapse, expire or are forfeited or terminated and will, subject to plan limitations, again become available for grants under this plan.

As of June 7, 2013, options to acquire 5,863,267 Common Shares were issued and outstanding under the 2006 Equity Incentive Plan. During fiscal 2013, we issued options to acquire 946,589 Common Shares under the 2006 Equity Incentive Plan and 1,732,832 options to acquire Common Shares vested under the 2006 Equity Incentive Plan.

Inducement Options

On January 19, 2011, Richard McBee was granted 515,175 stock options as a component of his employment compensation. These stock options were granted as an inducement material to his entering into employment with Mitel and will vest on the same vesting schedule as options granted under the 2006 Equity Incentive Plan. The grant of the options was approved by all of the independent directors of the board in reliance on Nasdaq Listing Rule 5635(c)(4), which exempts employment inducement grants from the general requirement of the Nasdaq Listing Rules that equity-based compensation plans and arrangements be approved by Shareholders. These options are outside of the pool of stock options available for grant under the 2006 Equity Incentive Plan and all other security-based compensation arrangements. As of June 7, 2013, all of these options were outstanding.

Total Options Outstanding

As of June 7, 2013, options to acquire 6,378,442 Common Shares under the 2006 Equity Inventive Plan and inducement options granted to Mr. McBee were issued and outstanding, representing in the aggregate approximately 12% of the Corporation’s outstanding Common Shares.

The following table sets out information in respect of our 2006 Equity Incentive Plan as of April 30, 2013:

 

Plan Category(1)		Number of Securities to be issued upon exercise of outstanding options (a)				Weighted average exercise price of outstanding options (b)				Number of securities remaining available for future issuance  under equity compensation plans (excluding securities reflected in column (a)) (c)
2006 Equity Incentive Plan			5,927,051			$	5.15				3,574,064	(2)

 

(1)	The 2006 Equity Incentive Plan has been approved by Mitel Shareholders.

(2)

The aggregate number of Common Shares that may be issued under the 2006 Equity Incentive Plan and all other security-based compensation arrangements is 9,501,115 Common Shares. For three years, commencing in 2011, and ending in fiscal 2013, additional Common Shares of up to three percent of the number of our Common Shares then outstanding could be added to the Initial Option Pool. The 3% increase in each of the first two years was at the discretion of the Compensation Committee. Upon listing of our Common Shares on the TSX on June 27,2012, the third and final 3% increase became automatic in accordance with the terms of the 2006 Equity Incentive Plan. Accordingly, on March 5, 2011, our Compensation Committee approved an increase in the number of Common Shares issuable by 1,588,298 Common Shares, on March 5, 2012, our Compensation Committee approved an increase up to 1,607,996 Common Shares. On March 5, 2013, the option pool was automatically increased by 1,610,175 Common Shares for a total of up to 10,406,469 Common Shares.

 

18

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Options Outstanding for Executive Officers and Directors

The following table sets forth information regarding options for the purchase of Common Shares outstanding as of April 30, 2013 to our directors and NEOs. The closing price of the Common Shares on April 30, 2013 was $3.50 per share.

 

Name		Number of securities underlying unexercised options(1)				Vested Options				Unvested Options				Option Exercise Price				Option Expiration Date				Value of unexercised in- the-money options				Market or payout value of share- based awards that have not vested
Terence H. Matthews			9,914				9,914				—			$	3.75				8-Oct-13			$	—			$	—
Chairman			9,438				7,078				2,360			$	3.75				9-Jul-14			$	—			$	—
			69,549				52,161				17,388			$	3.75				24-Sep-14			$	—			$	—
			52,295				52,295				—			$	6.50				16-Sep-17			$	—			$	—
			12,124				12,124				—			$	4.00				7-Jul-18			$	—			$	—
			20,500				20,500				—			$	3.29				7-Sep-18			$	4,305.00			$	—
			17,350				17,350				—			$	3.05				23-Dec-18			$	7,807.50			$	—
			17,350				17,350				—			$	3.44				7-Mar-19			$	1,041.00			$	—
			18,338				18,338				—			$	4.22				26-Jun-19			$	—			$	—
			18,450				18,450				—			$	2.61				6-Sep-19			$	16,420.50			$	—
			18,038				18,038				—			$	3.06				6-Dec-19			$	7,936.72			$	—
			18,313				18,313							$	3.94				7-Mar-20			$	—			$	—
Peter C. Charbonneau			4,741				4,741				—			$	3.75				8-Oct-13			$	—			$	—
Vice Chairman			19,253				14,439				4,814			$	3.75				9-Jul-14			$	—			$	—
			19,126				14,344				4,782			$	3.75				24-Sep-14			$	—			$	—
			32,668				32,668				—			$	6.50				16-Sep-17			$	—			$	—
			20,441				20,441				—			$	4.00				7-Jul-18			$	—			$	—
			10,083				10,083				—			$	3.29				7-Sep-18			$	2,117.43			$	—
			8,756				8,756				—			$	3.05				23-Dec-18			$	3,940.20			$	—
			8,756				8,756				—			$	3.44				7-Mar-19			$	525.36			$	—
			10,550				10,550				—			$	4.22				26-Jun-19			$	—			$	—
			10,544				10,544				—			$	2.61				6-Sep-19			$	9,384.16			$	—
			10,819				10,819				—			$	3.06				6-Dec-19			$	4,760.36			$	—
			10,338				10,338				—			$	3.94				7-Mar-20			$	—			$	—
Benjamin H. Ball			8,529				8,529				—			$	3.75				8-Oct-13			$	—			$	—
Director (2)			29,446				22,084				7,362			$	3.75				9-Jul-14			$	—			$	—
			46,945				35,208				11,737			$	3.75				24-Sep-14			$	—			$	—
			62,200				62,200				—			$	6.50				16-Sep-17			$	—			$	—
			28,336				28,336				—			$	4.00				7-Jul-18			$	—			$	—
			21,250				21,250				—			$	3.44				7-Sep-18			$	4,462.50			$	—
			18,819				18,819				—			$	3.05				23-Dec-18			$	8,468.55			$	—
			18,131				18,131				—			$	3.44				7-Mar-19			$	1,087.86			$	—
			22,343				22,343				—			$	4.22				26-Jun-19			$	—			$	—
			21,569				21,569				—			$	2.61				6-Sep-19			$	19,196.41			$	—
			20,194				20,194				—			$	3.06				6-Dec-19			$	8,885.36			$	—
			20,263				20,263				—			$	3.94				7-Mar-20			$	—			$	—

 

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Jean-Paul Cossart			2,858				2,858				—			$	3.75				8-Oct-13			$	—			$	—
Director (3)			18,121				13,590				4,531			$	3.75				9-Jul-14			$	—			$	—
			15,649				11,736				3,913			$	3.75				24-Sep-14			$	—			$	—
			27,499				27,499				—			$	6.50				16-Sep-17			$	—			$	—
			17,481				17,481				—			$	4.00				7-Jul-18			$	—			$	—
			9,250				9,250				—			$	3.29				7-Sep-18			$	1,942.50			$	—
			8,069				8,069				—			$	3.05				23-Dec-18			$	3,631.05			$	—
			8,069				8,069				—			$	3.44				7-Mar-19			$	484.14			$	—
			9,895				9,895				—			$	4.22				26-Jun-19			$	—			$	—
			10,819				10,819				—			$	2.61				6-Sep-19			$	9,628.91			$	—
			10,131				10,131				—			$	3.06				6-Dec-19			$	4,457.64			$	—
			8,413				8,413				—			$	3.94				7-Mar-20			$	—			$	—
Andrew Kowal			8,529				8,529				—			$	3.75				8-Oct-13			$	—			$	—
Director (2)			29,446				22,084				7,362			$	3.75				9-Jul-14			$	—			$	—
			46,945				35,208				11,737			$	3.75				24-Sep-14			$	—			$	—
			62,200				62,200				—			$	6.50				16-Sep-17			$	—			$	—
			28,336				28,336				—			$	4.00				7-Jul-18			$	—			$	—
			21,250				21,250				—			$	3.29				7-Sep-18			$	4,462.50			$	—
			18,819				18,819				—			$	3.05				23-Dec-18			$	8,468.55			$	—
			18,131				18,131				—			$	3.44				7-Mar-19			$	1,087.86			$	—
			22,343				22,343				—			$	4.22				26-Jun-19			$	—			$	—
			21,569				21,569				—			$	2.61				6-Sep-19			$	19,196.41			$	—
			20,194				20,194				—			$	3.06				6-Dec-19			$	8,885.36			$	—
			20,263				20,263				—			$	3.94				7-Mar-20			$	—			$	—
John McHugh			33,276				33,276				—			$	6.50				16-Sep-17			$	—			$	—
Director			12,124				12,124				—			$	4.00				7-Jul-18			$	—			$	—
			12,167				12,167				—			$	3.29				7-Sep-18			$	2,555.07			$	—
			9,238				9,238				—			$	3.05				23-Dec-18			$	4,157.10			$	—
			10,200				10,200				—			$	3.44				7-Mar-19			$	612.00			$	—
			11,008				11,008				—			$	4.22				26-Jun-19			$	—			$	—
			12,675				12,675				—			$	2.61				6-Sep-19			$	11,280.75			$	—
			11,713				11,713				—			$	3.06				6-Dec-19			$	5,153.72			$	—
			10,475				10,475				—			$	3.94				7-Mar-20			$	—			$	—
Henry L. Perret			34,376				34,376				—			$	6.50				16-Sep-17			$	—			$	—
Director			16,776				16,776				—			$	4.00				7-Jul-18			$	—			$	—
			12,583				12,583				—			$	3.29				7-Sep-18			$	2,642.43			$	—
			10,819				10,819				—			$	3.05				23-Dec-18			$	4,868.55			$	—
			10,819				10,819				—			$	3.44				7-Mar-19			$	649.14			$	—
			12,513				12,513				—			$	4.22				26-Jun-19			$	—			$	—
			13,569				13,569				—			$	2.61				6-Sep-19			$	12,076.41			$	—
			12,606				12,606				—			$	3.06				6-Dec-19			$	5,546.64			$	—
			11,163				11,163				—			$	3.94				7-Mar-20			$	—			$	—
Richard D. McBee			500,000	(4)			—				500,000			$	5.16				19-Jan-16			$	—			$	—
Chief Executive Officer			1,500,000	(6)			843,748				656,252			$	5.16				19-Jan-18			$	—			$	—
			100,000				18,750				81,250			$	4.22				26-Jun-19			$	—			$	—
Steven E. Spooner			33,334	(5)			16,667				16,667			$	3.75				12-Mar-14			$	—			$	—
Chief Financial Officer			25,000				17,187				7,813			$	8.79				15-Jul-17			$	—			$	—
			150,000				65,625				84,375			$	4.00				7-Jul-18			$	—			$	—
			100,000				18,750				81,250			$	4.22				26-Jun-19			$	—			$	—

 

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Graham Bevington			16,668	(5)			8,334				8,334			$	3.75				12-Mar-14			$	—			$	—
Executive Vice President			30,000				20,625				9,375			$	8.79				15-Jul-17			$	—			$	—
International Sales			50,000				21,875				28,125			$	4.00				7-Jul-18			$	—			$	—
			30,000				5,625				24,375			$	4.22				26-Jun-19			$	—			$	—
Jon Brinton			5,000				3,750				1,250			$	3.75				9-Jul-14			$	—			$	—
General Manager			7,000				4,812				2,188			$	8.79				15-Jul-17			$	—			$	—
Mitel Networks Solutions			20,000				8,750				11,250			$	4.00				7-Jul-18			$	—			$	—
			30,000				5,625				24,375			$	4.22				26-Jun-19			$	—			$	—
Ronald G. Wellard			16,668	(5)			8,334				8,334			$	3.75				9-Jul-14			$	—			$	—
Executive Vice President,			30,000				20,625				9,375			$	8.79				15-Jul-17			$	—			$	—
General Manager			100,000				43,750				56,525			$	4.00				7-Jul-18			$	—			$	—
Mitel Communications			65,000				12,187				52,813			$	4.22				26-Jun-19			$	—			$	—
Solutions
Philip B. Keenan			16,986				12,250				4,486			$	6.50				8-Feb-14			$	—			$	4,486
Former Executive Vice President, Sales			32,326				21,875				10,451			$	4.00				8-Feb-14			$	—			$	10,451
Service and Marketing			20,253				9,375				10,868			$	4.22				8-Feb-14			$	—			$	10,868
Americas

 

(1)	Each stock option award was granted pursuant to our 2006 Equity Incentive Plan or, in the case of Mr. McBee, as an inducement (as described in note 6 below). All of these stock options are unexercised.

(2)	The stock options granted to Francisco Partners Management, LLC have been reflected next to the names of Mr. Ball and Mr. Kowal, who are partners of Francisco Partners Management, LLC. An aggregate of 318,025 options have been granted to Francisco Partners Management, LLC.

(3)	Stock options granted in connection with Mr. Cossart acting as a director of the Corporation were granted to Scivias S.a.r.l., a company in which Mr. Cossart is a Shareholder.

(4)

Represents performance-based stock options granted under the 2006 Equity Incentive Plan. The stock options vest as follows: 25% of the options vest on the trigger date and the remainder vest monthly over an 18-month period following the trigger date. The trigger date is defined as the date that is one month following the month in which the five-day average trading price of the Common Shares on the Nasdaq is equal to or greater than $16.80 per share. All unexercised options expire on the earlier of 24 months after the trigger date or five years from the date of grant.

(5)

Represents performance-based stock options granted under the 2006 Equity Incentive Plan. The stock options vest as to 12.5% on each of the first, second, third and fourth anniversaries from the date of grant. The remaining 50% vest as follows: 12.5% of the options vest on the trigger date and the remainder vest monthly over an 18-month period following the issue date. The trigger date is defined as the date that is one month following the month in which the five-day average trading price of the Common Shares on the Nasdaq is equal to or greater than $16.80 per share. All unexercised options expire on the earlier of 24 months after the trigger date or five years from the date of grant.

(6)

515,175 of the stock options granted to Mr. McBee as a component of his employment compensation, have been granted as an inducement, material to his entering into employment with us. These inducement options will vest on the same vesting schedule as options granted under the 2006 Equity Incentive Plan. These options are outside of the pool of stock options available for grant under the 2006 Equity Incentive Plan and all other security-based compensation arrangements of the Corporation.

Incentive Plan Awards – Value Vested or Earned During the Year

The following table lists, with respect to each of our NEOs and directors, the value of all option-based and share-based awards that have vested, and all non-equity incentive plan compensation earned, during the fiscal year ended April 30, 2013.

 

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Name		Option-based awards - Value vested during the year ($)(1)						Non-equity incentive plan compensation - Value earned during the year ($)(2)
Richard D. McBee			—			509,752
Steven E. Spooner			16,458			247,360
Ronald G. Wellard			10,792			128,190
Graham Bevington			5,667			187,156
Jon Brinton			2,875						132,218
Philip B. Keenan			5,125						165,185
Benjamin H. Ball			4,859			—
Peter D. Charbonneau			3,177			—
Jean-Paul Cossart			2,990			—
Andrew J. Kowal			4,859			—
Terence H. Matthews			1,558			—
John McHugh			16,434			—
Henry L. Perret			17,623			—

 

(1)	Represents the total value of options that vested in fiscal 2013. The values were calculated using the closing price of our Common Shares on the date the options vested (or if the option vested on a non-trading day, the next day that the shares traded.).

(2)	Represents the total value of annual cash incentive awards for fiscal 2013. These amounts are also reported in the Summary Compensation Table.

Pension and Retirement Plans

The Corporation maintains defined contribution pension plans that cover substantially all of our employees. We contribute to defined contribution pension plans based on a percentage, as specified in each plan, of a participating employee’s pensionable earnings.

The following table sets forth, for each of our NEOs, information regarding defined contribution pension plan amounts credited to or earned by each of them during or as at the end of fiscal year 2013.

Defined Contribution Plan Table 

 

Name				Accumulated value at start of year $ (1)		Compensatory $				Non- compensatory $				Accumulated value at year end $
Richard D. McBee		—					—				—				—
Steven E. Spooner		71,421					4,477				4,122				80,020
Ronald G. Wellard		34,800					3,384				3,069				41,253
Graham Bevington		—					10,693				14,766				25,459
Philip B. Keenan		—					—				—				—
Jon Brinton		—					—				—				—

 

(1)	The accumulated value at the start of fiscal 2013 may vary from the accumulated value at the end of the fiscal 2012 due to the fluctuation in foreign exchange rates.

 

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There were no material accrued obligations at the end of fiscal 2013 pursuant to our defined contribution pension plans.

We currently maintain a defined benefit pension plan for certain of our past and present employees in the United Kingdom. The plan was closed to new employees in June 2001. The plan was closed to new service in November 2012. The defined benefit plan provides pension benefits based on length of service up to November 2012 and final average earnings. The pension costs are actuarially determined using the projected benefits method pro-rated on services and management’s best estimate of the effect of future events. Pension plan assets are valued at fair value. As of April 30, 2013, the $242.9 million projected benefit obligation exceeded the fair value of the defined benefit plan assets of $152.4 million, resulting in a pension liability of $90.5 million.

Defined Benefits Plan Table

 

Name

Number of years credited service

Annual benefits payable

Accrued obligation at start of fiscal year $

Compensatory change $

Non- compensatory change $

Accrued obligation at fiscal year end $

At year end $

At age 65 $

Graham Bevington

13 years

39,590

39,590

642,724

5,427

121,602

769,753

For the purposes of the pension plan in the United Kingdom, the age of retirement is 65 years. There are provisions for early retirement starting at 55 years with the benefit decreasing for each of the years retired before 65 years. This value is determined by the plan actuary. There is no policy for granting additional years of service or additional credit of service. In November 2012, the defined benefit plan was closed to new service. Since November 2012, Mr. Bevington receives amounts under a defined contribution plan, as disclosed above.

18. Employment Agreements, Termination and Change of Control

Employment Agreements

Richard D. McBee. Rich McBee is employed as our CEO. Effective as of January 13, 2011, we executed an Employment Agreement with Mr. McBee. Mr. McBee is employed for an indefinite term, subject to termination in accordance with the terms of his employment agreement. If Mr. McBee’s employment is terminated by us without cause, or if, in the event of a “change of control” (as such term is defined in his employment agreement) of the Corporation we either terminate Mr. McBee’s employment without cause or Mr. McBee ends his employment relationship with us, in either case within 12 months of such change of control, he will receive a severance payment totaling 24 months’ salary and bonus compensation (paid over a 24-month period), plus benefit continuation and, except in the event of a change of control, continued vesting of options for the same period. For fiscal 2013, Mr. McBee received an annual base salary of $660,000, stock options, a monthly car allowance of $1,500, fuel and maintenance reimbursement for one vehicle and he participated in our standard employee benefit plans. Mr. McBee was also entitled to receive an annual targeted bonus payment of 120% of base salary,dependent upon the achievement of business goals and subject to the approval of the compensation committee of our Board. Mr. McBee’s employment agreement contains provisions addressing confidentiality, non-disclosure, non-competition and ownership of intellectual property.

Steven E. Spooner. Steve Spooner is employed as our CFO, reporting to our President and CEO. Effective as of March 12, 2010, we executed an Amended and Restated Employment Agreement with Mr. Spooner under which he is employed for an indefinite term, subject to termination in accordance with its terms. If Mr. Spooner’s employment is terminated by us without cause, or if, in the event of a “change of control” (as such term is defined in his employment agreement) of the Corporation we either terminate Mr. Spooner’s employment without cause or Mr. Spooner ends his employment relationship with us, in either case within 12 months of such change of control, he will receive a severance payment totaling 18 months’ salary and bonus compensation (paid over an 18-month period), plus benefit continuation and, except in the event of a change of control, continued vesting of options for the same period. Upon death or disability, Mr. Spooner is entitled to a lump sum payment of one year’s total salary plus bonus and, in addition, accelerated vesting of 25% of any remaining unvested options. For fiscal 2013, Mr. Spooner received an annual base salary of C$438,000, stock options, a monthly car allowance of C$1,000, fuel

 

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and maintenance reimbursement for one vehicle and he participated in our standard employee benefit plans. Mr. Spooner is also entitled to receive an annual bonus payment in an amount determined by the Compensation Committee of our Board, in its sole discretion. Mr. Spooner’s employment agreement contains provisions addressing confidentiality, non-disclosure, non-competition and ownership of intellectual property.

Graham Bevington. Graham Bevington is employed as our Executive Vice President International Sales, reporting to our President and CEO. Mr. Bevington is employed for an indefinite term, subject to termination in accordance with the terms of his employment letter agreement, as amended. If Mr. Bevington is terminated without cause, he will receive a severance payment totaling a minimum of six months’ notice of termination. For fiscal 2013, Mr. Bevington received an annual base salary of £154,000, stock options, a monthly car allowance of £866, fuel and maintenance reimbursement for one vehicle and he participated in our standard employee benefit plans. Mr. Bevington is also entitled to receive an annual bonus payment related to his achievement of defined targets. Mr. Bevington’s employment agreement contains provisions addressing confidentiality, non-disclosure, non-competition and ownership of intellectual property.

Ronald G. Wellard. Ron Wellard is employed as our Executive Vice President, General Manager, Mitel Communications Solutions, reporting to the President and CEO. Effective as of March 12, 2010, we executed an Amended and Restated Employment Agreement with Mr. Wellard. Mr. Wellard is employed for an indefinite term, subject to termination in accordance with the terms of his employment agreement, as amended. If Mr. Wellard’s employment is terminated by us without cause, or if, in the event of a “change of control” (as such term is defined in his employment agreement) of the Corporation we either terminate Mr. Wellard’s employment without cause or Mr. Wellard ends his employment relationship with us for “Good Reason” (as that term is defined in his employment agreement), in either case within 12 months of such change of control, he will receive a severance payment totaling 12 months’ salary and bonus compensation (paid over an 12-month period), plus benefit continuation and, except in the event of a change of control, continued vesting of options for the same period. Upon death or disability, Mr. Wellard is entitled to a lump sum payment of one year’s total salary plus bonus and, in addition, accelerated vesting of 25% of any remaining unvested options. In fiscal 2013, Mr. Wellard received an annual base salary of C$333,000, stock options, an annual car allowance of C$8,000, fuel and maintenance reimbursement for one vehicle and he participates in our standard employee benefit plans. Mr. Wellard is also entitled to receive an annual bonus payment in an amount determined by the compensation committee of our Board, in its sole discretion. Mr. Wellard’s employment agreement contains provisions addressing confidentiality, non-disclosure, non-competition and ownership of intellectual property.

Jon Brinton. Jon Brinton is employed as our General Manager, Mitel Network Solutions, reporting to the President and CEO. Mr. Brinton receives an annual salary of $225,000, stock options, an annual car allowance of $6,480, fuel and maintenance reimbursement for one vehicle, and is also entitled to receive an annual bonus payment related to his achievement of defined targets.

Philip B. Keenan. Philip Keenan was employed as our Executive Vice President Sales, Service, Marketing Americas until his departure in February 2013. Up to the time of his departure, Mr. Keenan received an annual base salary of $285,000, stock options, an annual car allowance of $8,000, fuel and maintenance reimbursement for one vehicle and participated in our standard employee benefit plans. Mr. Keenan’s employment agreement contained provisions addressing confidentiality, non-disclosure, non-competition and ownership of intellectual property. In connection with his departure, Mr. Keenan began receiving salary continuation (including an amount in lieu of bonus), benefit continuation and continued vesting of options for 12 months.

Information regarding payments to our NEOs in the event of a termination or a change in control may be found in the table below. This table sets forth the estimated amount of payments each NEO would be entitled to receive upon the occurrence of the indicated event, assuming that the event occurred on April 30, 2013 and using average exchange rates for fiscal 2012. The salary payments are calculated based on the salaries stated in the employment agreements of each NEO as of April 30, 2013. Amounts potentially payable under plans which are generally available to all salaried employees, such as health, life and disability insurance, are excluded from the table. Actual payments made at any future date may vary, including the amount the NEO would have accrued under the applicable benefit or compensation plan as well as the price of the common shares.

In the event of retirement, resignation or termination for cause, no salary, benefits or other compensation is payable to a NEO beyond the last effective date of employment and the NEO would only be entitled to exercise options that had already vested or would continue to vest in accordance with the plan under which they were granted.

 

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Potential Payments upon Termination or Change of Control

 

		Termination without Cause								Change of Control
Name		Salary and Bonus(1) (2)				Equity Vesting(5)				Salary and Bonus(1)(2)				Equity Vesting(6)
Richard D. McBee		$	2,375,504			$	—			$	2,375,504			$	—
Steven E. Spooner		$	1,399,960			$	—			$	1,399,960			$	—
Graham Bevington (3)		$	236,611			$	—			$	236,611			$	—
Ronald G. Wellard		$	470,060			$	—			$	470,060			$	—
Jon Brinton(4		$	—			$	—			$	—			$	—

 

(1)	See Section 16 – “Summary Compensation Table” for the salary and bonus payments used in calculating payments on termination without cause or change of control.

(2)	In addition, upon termination without cause or a change of control resulting in termination, each NEO would be entitled to:

•

benefit continuation during the severance or notice periods, as applicable, or where not available, a cash payment in-lieu,

•

a payment equal to car allowance over the applicable period, and

•

in respect of pension, an amount equal to the employer contribution over the applicable period.

In the event of a change of control without termination, each NEO would only be entitled to the indicated payments under “Change of Control” – “Equity Vesting”. No payments for salary or bonus would be payable.

(3)

Mr. Bevington is not subject to the terms and conditions of an executive employment agreement. Payments for salary and bonus are based on the terms of a letter agreement which specifies that each party must provide not less than six months notice of termination of employment, or such longer period as may be provided for pursuant to the Employment Protection (Consolidation) Act 1978.

(4)	Mr. Brinton is not subject to the terms and conditions of an executive employment agreement. Therefore, termination payments are based on local laws and legislation of the relevant jurisdiction of employment of Mr. Brinton.

(5)	The amounts related to stock options and other equity awards are based upon the fair market value of the common shares of $3.50 per share as reported on the Nasdaq on April 30, 2013, the last trading day of the Corporation’s fiscal year.

(6)

Upon a change of control, all vested options are paid out at the change of control price. The amounts related to stock options and other equity awards are based upon a value of the common shares of $3.73 per share (change of control price), which is the highest per share price in the 5 trading days prior to April 30, 2013 as reported on the Nasdaq, as required by the plan under which the specific stock options or awards were granted.

D. INTEREST OF MANAGEMENT, NOMINEES AND OTHERS IN MATERIAL TRANSACTIONS

19. Transactions Involving Related Parties

The Audit Committee of the Board reviews and approves related party transactions between the Corporation and persons or entities that are deemed to be related parties to the Corporation to ensure that the terms are fair and reasonable to the Corporation and to ensure that corporate opportunities are not usurped. The Audit Committee provides a report to the Board that includes:

 

•

a summary of the nature of the relationship with the related party and the significant commercial terms of the transaction, such as price and total value;

 

•

the parties to the transaction;

 

•

an outline of the benefits to the Corporation of the transaction;

 

•

whether terms are at market and whether they were negotiated at arm’s length; and

 

•

for related party transactions involving our officers or directors, whether there has been any loss of a corporate opportunity.

20. Kanata Research Park Corporation (KRPC)

We lease our Ottawa-based headquarters facilities from KRPC, a corporation wholly-owned by our chairman, Dr. Matthews. We negotiated the lease in the second quarter of fiscal 2011 under terms and conditions that management believes reflected then-current market rates. The lease has an initial term of five years and three months ending on February 15, 2016 and can be renewed at our option for an additional five years. The lease

 

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contains property reinstatement terms which have not been accrued at this time as the amount is not estimable. The lease contains certain changes in the rental rate over the term of the lease. During fiscal 2013, we recorded lease payments for base rent and operating costs of $4.4 million. At April 30, 2013, balances payable relating to the lease totaled nil.

21. Parties Related to Dr. Matthews (“Matthews Group”)

We have entered into technology transfer, technology licensing and distribution agreements with certain companies related to Dr. Matthews under terms reflecting what management believes were prevailing market conditions at the time the agreements were entered into. These companies develop technology that we integrate with, distribute or sell alone or as part of our own products. In the normal course of business, we may enter into purchase and sale transactions with other companies related to Dr. Matthews under terms reflecting what management believes are then-prevailing market conditions.

We paid $1.0 million for the option to invest in a company based in India, over which company the Matthews Group has significant influence. Sales to and purchases from this company, arising in the normal course of business, were $0.3 million and $0.7 million, respectively for the year ended April 30, 2013. In addition, we made sales to and purchases from other companies related to the Matthews Group, arising in the normal course of business, of $1.1 million and $0.7 million, respectively, for the year ended April 30, 2013. The balances receivable and payable at April 30, 2013 as a result of all of these transactions were $1.0 million and $0.8 million, respectively.

22. Registration Rights

In connection with the financing of the acquisition of Inter-Tel in 2007, the Corporation entered into a registration rights agreement dated August 16, 2007 with a number of its Shareholders, including the Francisco Partners Group, Morgan Stanley Principal Investments Inc., EdgeStone, Dr. Matthews and Wesley Clover Corporation (now known as Kanata Research Park Corporation). The registration rights agreement (the “Registration Rights Agreement”) was amended and restated as of the date of closing of our initial public offering. The Registration Rights Agreement provides for the registration of the shares held by such Shareholders under the securities laws of the United States and/or the qualification for distribution of the shares held by such Shareholders under the securities laws of the provinces and territories of Canada. Mr. Ball and Mr. Kowal are both partners of Francisco Partners Management, LLC. Dr. Matthews is the Chairman of the Board.

23. Shareholders’ Agreement

Mitel, the Francisco Partners Group and the Matthews Group, are parties to a shareholders’ agreement (the “Shareholders’ Agreement”) which became effective at the closing of our initial public offering. The Shareholders’ Agreement covers matters of corporate governance, restrictions on transfer of Common Shares and information rights.

Board Nomination Rights

Pursuant to the terms of the Shareholders’ Agreement, the Francisco Partners Group is entitled to nominate three members of the Board, the Matthews Group is entitled to nominate two members of the Board, and the number of directors is to consist of no more than 10 members. The Shareholders’ Agreement provides that so long as the Francisco Partners Group beneficially owns at least 15% of our outstanding Common Shares, the Francisco Partners Group may nominate three members of the Board; that so long as the Francisco Partners Group beneficially owns at least 10% of our outstanding Common Shares, the Francisco Partners Group may nominate two members of the Board; and that so long as the Francisco Partners Group beneficially owns at least 5% of our outstanding Common Shares, the Francisco Partners Group may nominate one member of the Board. The Shareholders’ Agreement also provides that so long as the Matthews Group beneficially owns at least 10% of our outstanding Common Shares, the Matthews Group may nominate two members of the Board; and that so long as the Matthews Group beneficially owns at least 5% of our outstanding Common Shares, the Matthews Group may nominate one member of the Board. The Shareholders’ Agreement also provides that each of the Francisco Partners Group and the Matthews Group, to the extent they beneficially own at least 5% of our outstanding Common Shares, will nominate our Chief Executive Officer to serve as a member of the Board. The Francisco Partners Group and the Matthews Group will lose its

 

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respective right to nominate any Board members upon such party holding or controlling less than 5% of our outstanding Common Shares. Each of the Francisco Partners Group and the Matthews Group agree to vote their shares in favour of the election or removal of the other party’s nominees.

Committee Representation

The Shareholders’ Agreement provides that, for so long as the Francisco Partners Group beneficially owns at least 10% of our outstanding Common Shares, unless prohibited by U.S. federal securities laws or the Nasdaq rules, the Francisco Partners Group is entitled to designate one member of each committee of the Board, other than the Audit Committee.

Special Approval Rights of the Francisco Partners Group

The Shareholders’ Agreement provides that the Corporation may not take certain significant actions without the approval of the Francisco Partners Group, so long as the Francisco Partners Group owns at least 15% of our outstanding Common Shares. These actions include:

 

•

amendments to the Corporation’s articles or by-laws;

 

•

issuance of any securities that are senior to the Common Shares in respect of dividend, liquidation preference or other rights and privileges;

 

•

issuance of equity securities or rights, options or warrants to purchase equity securities, with certain exceptions where we issue securities pursuant to our 2006 Equity Incentive Plan, in connection with acquisitions that involve the issuance of less than $25 million of our securities, upon the conversion of currently outstanding warrants, as consideration paid to consultants for services provided to us, or in connection with technology licensing or other non-equity interim financing transactions;

 

•

declaring or paying any dividends or making any distribution or return of capital, whether in cash, in stock or in specie, on any equity securities;

 

•

incurring, assuming or otherwise becoming liable for debt obligations, incurring additional indebtedness in connection with our leasing program, or incurring up to $50 million in new indebtedness;

 

•

mergers, acquisitions, sales of assets or material subsidiaries, or the entering into any joint venture, partnership or similar arrangement that have a value of more than $25 million per such transaction;

 

•

any change in the number of directors that comprise the Board;

 

•

an amalgamation, merger or other corporate reorganization by the Corporation with or into any other corporation (other than a short-form amalgamation with a wholly-owned subsidiary); or an agreement to sell or sale of all or substantially all of our assets or other transaction that has the effect of a change of control of the Corporation; and

 

•

any liquidation, winding up, dissolution or bankruptcy or other distribution of our assets to our Shareholders.

All of the provisions of the Shareholders’ Agreement are expressly subject to any requirements as to governance imposed by applicable securities laws and by any exchange on which our securities are listed.

 

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Information Rights

So long as any party to the Shareholders’ Agreement holds at least 10% of our outstanding Common Shares, such Shareholder will have the right to receive from the Corporation monthly consolidated financial results, copies of all other financial statements, reports or projections, and material information provided to our lenders, and such additional information regarding its financial position or business as such Shareholder reasonably requests.

Restrictions on Transfer of our Common Shares

Until such time as a party to the Shareholders’ Agreement holds less than 5% of our outstanding Common Shares, Common Shares held by such Shareholder shall only be transferrable pursuant to (i) a tag-along or drag-along sale, (ii) a permitted transferee and among the parties to the Shareholders’ Agreement, (iii) transfers in broker’s sales in accordance with Rule 144 under the Securities Act (including its volume and manner of sale limitations) and (iv) pursuant to a registration statement provided for in the Registration Rights Agreement.

The Francisco Partners Group, so long as it owns or controls at least 10% of our outstanding Common Shares, is entitled to drag the other parties to the Shareholders’ Agreement into a non-affiliated change of control transaction if 50.1% of our outstanding Common Shares have voted in favour of that transaction or tendered into it. Notwithstanding the foregoing, the Francisco Partners Group’s drag along rights do not apply at any time that the Matthews Group owns or controls a greater percentage of our outstanding Common Shares than the Francisco Partners Group.

Also, until such time as the Francisco Partners Group has sold or transferred $281.3 million of Common Shares pursuant to a registration statement or no longer owns at least 10% of our outstanding Common Shares, the Matthews Group may not sell or transfer more than an aggregate of $50 million of Common Shares (measured in gross proceeds and taking into account sales made under Rule 144 under the Securities Act) pursuant to a registration statement. This provision expires automatically on April 27, 2015.

E. BUSINESS TO BE TRANSACTED AT THE MEETING

24. Financial Statements

The consolidated financial statements of the Corporation for the fiscal year ended April 30, 2013 have been provided to the Shareholders as part of our 2013 Annual Report on Form 10-K, which is included with these proxy materials and is available on our website at http://investor.mitel.com, as well as at www.sec.gov and www.sedar.com. In accordance with the provisions of the CBCA, the financial statements will not be the subject of any vote at the Meeting.

25. Annual Resolution No. 1 – Election of Directors

The articles of the Corporation provide for a board of directors of not less than three directors and not more than 15 directors to be elected annually, with the fixed number of directors within such range authorized by the directors of the Corporation from time to time. The directors of the Corporation have fixed the number of directors at eight and there are eight directors being nominated. Each director who is elected will hold office until the next annual meeting of Shareholders, or until a successor is duly elected or appointed, unless the office is earlier vacated in accordance with the by-laws of the Corporation, the CBCA or the Shareholders’ Agreement (as defined and discussed above under the heading “Interest of Management, Nominees and Others in Material Transactions”).

Each of the nominees proposed for election in this proxy circular is currently an incumbent director. Pursuant to the Shareholders’ Agreement, the Board must be comprised of no more than ten members with the Francisco Partners Group entitled to nominate three directors to the Board as long as it beneficially owns more than 15% of the outstanding Common Shares and the Matthews Group entitled to nominate two directors to the Board as long as it beneficially owns more than 10% of the outstanding Common Shares. In addition, as long as each of the Francisco Partners Group and the Matthews Group beneficially owns at least 5% of the outstanding Common Shares, they have agreed to nominate the Chief Executive Officer of the Corporation to the Board. Francisco Partners currently has two nominees, being Benjamin H. Ball and Andrew J. Kowal. Terence H. Matthews and Peter D. Charbonneau

 

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are nominees of the Matthews Group. The parties to the Shareholders’ Agreement agreed, among other matters, to act and vote from time to time so that, on any election of directors by the Shareholders of the Corporation, the nominees of the Francisco Partners Group and the Matthews Group and the Chief Executive Officer (or equivalent) are elected.

Majority Vote for Directors

We have adopted a majority voting policy for the election of directors. If a director standing for election or re-election receives more withheld votes (a “Majority Withheld Vote”) than for votes, he must offer to resign. Directors other than those who received a Majority Withheld Vote at the same meeting will consider whether to accept or reject the resignation. The Board will announce its decision by way of press release within 90 days of the meeting.

The persons named in the form of proxy will, unless a Shareholder has instructed that the Common Shares it represents be WITHHELD from voting in respect of the election of directors or unless someone else is appointed as proxy holder, be voted FOR the election of the nominees for director listed below. In the event a nominee is unable or unwilling to serve, an event that management has no reason to believe will occur, the persons named in the form of proxy will vote for a substitute nominee in accordance with his or her best judgment.

The following table sets forth the name of each person nominated for election as a director; the period or periods of service as a director; the principal occupation, business or employment, and all positions with the Corporation and any significant affiliate of ours, within the preceding five years, as well as the number of shares beneficially owned or over which control or direction is exercised. All of the listed nominees currently serve as directors of the Corporation.

 

Name and Municipality of Residence		Principal Occupation		Shares Beneficially Owned or Controlled(1)
Dr. Terence H. Matthews Ottawa, Ontario, Canada   Director since: February 16, 2001		Chairman of the Board of the Corporation since February 2001; Chairman of the Board of March Networks Corporation from June 2000 to April 2012; Chairman and/or Director of a number of other companies.		12,080,610 Common Shares
Richard D. McBee Dallas, Texas, U.S.A.   Director since: January 19, 2011		Chief Executive Officer and President of the Corporation since January, 2011. Prior to joining the Corporation, President of the Communications & Enterprise Group of Danaher Corporation since 2007; prior to that he held various positions with Tektronix over a fifteen year period.		55,000 Common Shares
Benjamin H. Ball San Francisco, California, U.S.A.   Director since: October 23, 2007; Chair of the Compensation Committee; Member of the Nominating and Corporate Governance Committee		Managing Director of Francisco Partners L.P. since August 1999.		— (2)
Peter D. Charbonneau Ottawa, Ontario, Canada   Director since: February 16, 2001; Chair of the Audit Committee; Chair of the Nominating and Corporate Governance Committee		General Partner of Skypoint Capital Corporation since January 2001.		31,222 Common Shares

 

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Name and Municipality of Residence		Principal Occupation		Shares Beneficially Owned or Controlled(1)
Jean-Paul G. Cossart Versailles, France   Director since: October 23, 2007; Member of the Audit Committee and of the Nominating and Corporate Governance Committee		Associate Director of Infoteria sas of France since 2004.		—
Andrew J. Kowal San Francisco, California, U.S.A.   Director since: July 2, 2009; Member of the Nominating and Corporate Governance Committee		Principal of Francisco Partners L.P. since 2001.		—  (2)
John P. McHugh Newcastle, California, U.S.A.   Director since: March 12, 2010; Member of the Compensation Committee and of the Nominating and Corporate Governance Committee		Executive Consultant since October 2012; prior to that he was Chief Marketing Officer of Brocade Communications; prior to that he was Vice President and General Manager of Nortel Networks Limited’s Enterprise Network Solutions Business Unit.		—
Henry L. Perret Austin, Texas, U.S.A.   Director since: March 12, 2010; Member of the Audit Committee and of the Nominating and Corporate Governance Committee		President and Chief Executive Officer of the Capital Area Food Bank of Texas; from 2007 to 2010, he was Senior Vice President and General Manager of the Communication Products Group of Zarlink Semiconductor; prior to that he held the position of President and Chief Executive Officer for Legerity, Inc. from 2003 to 2007.		30,000

 

(1)	Certain spouses of nominees own Shares. The relevant nominees disclaim beneficial ownership of such Common Shares.

(2)	Certain funds managed by Francisco Partners II, L.P., of which Mr. Ball and Mr. Kowal are Principals, own or control, directly or indirectly, 20,160,873 Common Shares.

Cease Trade Orders, Bankruptcies, Penalties or Sanctions.

Skypoint Capital Corporation invests in new ventures that may involve risks. As a result, Mr. Charbonneau was a director of Metconnex Inc., which went into receivership in 2006 and was a director of Trellia Neworks Corporation, which filed a proposal under the Canadian Bankruptcy and Insolvency Act that was accepted by the Courts in February, 2011.

Similarly, Francisco Partners L.P. invests in new ventures in early stages which involves risk and, as a result, Mr. Kowal served as a director of MagnaChip Semiconductor LLC which filed for bankruptcy protection in the U.S. Bankruptcy Court of the District of Delaware in June, 2009.

Mr. McHugh took a position as Vice President and General Manager of the Enterprise Data Networking Product Unit for Nortel Networks in December, 2008. In January, 2009, Nortel Networks filed for Chapter 11 bankruptcy protection in Canada, the United States and the United Kingdom.

 

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No other director has, in the past 10 years, been an officer or director of a company that has become 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.

None of the directors have been a director or officer of a company in the last 10 years that is or was subject to a cease trade order, an order similar to a cease trade order or an order that denied such company access to any exemption under securities legislation.

None of the directors have, in the last 10 years, 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 their assets.

None of the directors have been subject to any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or have entered into a settlement agreement with a securities regulatory authority or any other penalties or sanctions imposed by a court or regulatory body.

26. Annual Resolution No. 2 – Appointment and Remuneration of Auditors

Appointment of Auditors

On the recommendation of the Audit Committee, management proposes to present a resolution (“Annual Resolution No. 2”) to appoint Deloitte LLP, Chartered Accountants, Ottawa, Ontario, as auditors of the Corporation for the fiscal year ending April 30, 2014 to hold office until the close of the next annual meeting of Shareholders and to authorize the directors to determine and fix the remuneration of the auditors. Deloitte LLP were first appointed auditors of the Corporation on December 4^th, 2001.

Remuneration of Auditors

In the past, the Audit Committee has negotiated with the auditors of the Corporation on an arm’s length basis for the purpose of determining the fees to be paid to the auditors. Such fees have been based upon the complexity of the matters in question and the time incurred by the auditors. Management believes that the fees negotiated in the past with the auditors of the Corporation were reasonable in the circumstances and would be comparable to fees charged by other auditors providing similar services.

The persons named in the form of proxy will, unless a Shareholder has instructed that the shares it represents be WITHHELD from voting in respect of the appointment of auditors or someone else is appointed as proxy holder, be voted FOR the appointment of Deloitte LLP as auditors of the Corporation and to authorize the directors to determine and fix the remuneration of the auditors.

F. OTHER MATTERS

Management of the Corporation knows of no amendment or variation to the matters referred to in the Notice of Meeting and of no other business to be brought before the Meeting. If any amendment, variation or other business is properly brought before the Meeting, the form of proxy confers discretion on the persons named on the form of proxy to vote on any amendment or variation of the matters referred to in the notice of Meeting or any other business in accordance with their best judgment.

The CBCA provides that, in certain circumstances, eligible Shareholders are entitled to submit to the Corporation notice of a matter that such Shareholder proposes to raise at a meeting of Shareholders. The final date by which we must receive such a proposal to be raised at our next annual meeting of Shareholders (subsequent to this meeting) is March 22, 2014. Any eligible Shareholder who may wish to exercise this right should carefully consider whether they are eligible to make such a proposal, and comply with the relevant provisions of the CBCA.

 

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CERTIFICATE

The contents and the distribution of this Circular have been approved by the Board of Directors of the Corporation.

DATED June 20, 2013 on behalf of the Board of Directors.

“Richard McBee”

Richard D. McBee

Chief Executive Officer and President

Ottawa, Ontario, Canada

 

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SCHEDULE A

ANNUAL RESOLUTION NO. 1

RESOLVED AS A RESOLUTION OF THE SHAREHOLDERS OF MITEL NETWORKS CORPORATION THAT:

The following persons are elected as directors of the Corporation until the next annual meeting of Shareholders or until their successor is elected:

 

Benjamin H. Ball		Peter D. Charbonneau
Jean-Paul G. Cossart		Andrew J. Kowal
Terence H. Matthews		Richard D. McBee
John P. McHugh		Henry L. Perret

 

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SCHEDULE B

ANNUAL RESOLUTION NO. 2

RESOLVED AS A RESOLUTION OF THE SHAREHOLDERS OF MITEL NETWORKS CORPORATION THAT:

Deloitte LLP are appointed the auditors of the Corporation until the close of the next annual meeting of the Shareholders, or until a successor is appointed, at such remuneration as may be determined by the directors, and the directors are authorized to fix such remuneration.

 

34