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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K/A

Amendment No. 1

For the fiscal year ended December 31, 2014

OR

Commission File No. 0-17082

QLT Inc.

(Exact Name of Registrant as Specified in its Charter)

Registrant’s telephone number, including area code: (604) 707-7000

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes o  No x

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes o  No x

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months and (2) has been subject to such filing requirements for the past 90 days.  Yes x  No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.  Yes x  No o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o  No x

As of June 30, 2014, the aggregate market value of the common shares held by non-affiliates of the registrant (based on the last reported sale price of the common shares of U.S. $6.18, as reported on the NASDAQ Stock Market) was approximately U.S. $315,686,006.

As of April 15, 2015 the registrant had 51,255,700 outstanding common shares.

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QLT INC.

AMENDMENT NO. 1 TO ANNUAL REPORT ON FORM 10-K

DECEMBER 31, 2014

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EXPLANATORY NOTE

QLT Inc. (the “Company”) is filing this Amendment No. 1 to its Annual Report on Form 10-K, originally filed with the Securities and Exchange Commission on February 26, 2015 (the “Initial Filing”), solely for the purpose of amending and supplementing Part III of the Annual Report on Form 10-K. This amendment changes our Initial Filing by including information required by Part III
(Items 10, 11, 12, 13 and 14).

Except as contained herein, this Amendment No. 1 does not modify or update disclosures contained in the Initial Filing. This Amendment No. 1 should be read in conjunction with the Company’s other filings made with the Securities and Exchange Commission subsequent to the date of the Initial Filing.

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PART III

Item 10.                            Directors, Executive Officers and Corporate Governance

Background of Directors and Executive Officers

Set forth below are the name and age of each of our current directors and the positions held by him with us, his principal occupation and business experience during the last five years, and the year of the commencement of his term as a director or executive officer. Additionally, for each director, included below is information regarding the specific experience, qualifications, attributes and skills that contributed to the decision of the Board of Directors to nominate him for election as a director and the names of other publicly held companies of which he serves or has served as a director in the previous five years. There is no family relationship between any of our directors, director nominees or executive officers. Except as otherwise disclosed below, no director was selected as a director or nominee pursuant to any arrangement or understanding.

Directors

Jason M. Aryeh, age 46, is the Chairman of the Board and a Director of QLT (since 2012) and serves as the Chairman of the Corporate Governance and Nominating Committee. Currently, Mr. Aryeh is the Founder and Managing General Partner of JALAA Equities, LP (since 1997), a private hedge fund focused on the biotechnology and specialty pharmaceutical sector. Mr. Aryeh also serves on the Board of Directors of Ligand Pharmaceuticals Incorporated (“Ligand”) (since 2006), a public biotechnology company, CorMatrix Cardiovascular, Inc. (“CorMatrix”) (since 2010), a privately-held medical device company, and the Cystic Fibrosis Foundation’s Therapeutics Board (since 2011). Previously, Mr. Aryeh served as a Director of both Nabi Biopharmaceuticals, prior to its merger with Biota Pharmaceuticals, Inc. (“Biota”) in November 2012, and of Myrexis, Inc. (2011 to 2013), both of which are public biotechnology companies. Mr. Aryeh earned a B.A. in economics, with honors, from Colgate University, and is a member of the Omnicron Delta Epsilon Honor Society in economics.

The Board has concluded that Mr. Aryeh is well-qualified to serve on the Board and has the requisite qualifications, skills and perspectives stemming from his experience in the biotechnology and specialty pharmaceutical sector as a hedge fund manager and serving on the boards of publicly-traded companies. The Board believes that Mr. Aryeh’s strategic insight and in-depth understanding of health care trends and capital markets add significant value to the Board.

Dr. Geoffrey F. Cox, Ph.D., age 71, is a Director of QLT (since 2012) and Interim CEO (since October 23, 2014). Dr. Cox has extensive pharmaceutical and biotechnology experience holding a broad range of senior management and board positions with private and public companies. Dr. Cox remains the Principal of Beacon Street Advisors LLC (formed in 2013) which provides corporate, operational and organizational strategic advice and interim management support to life sciences companies, but is working full time for QLT. Previously, he was a partner with Red Sky Partners LLC, a life sciences consulting firm (from 2011 to 2013). Dr. Cox served as a Director (2000 to 2012) and the Non-Executive Chairman (2007 to 2012) of Nabi Biopharmaceuticals prior to its merger with Biota in 2012 and continues to serve as a Director of Biota, a public anti-infective drug development company. He also served as a Director of Gallus Biopharmaceuticals LLC (2011 to 2014), a biologics contract manufacturing and development company, and currently serves as a Director of Lakewood-Amedex LLC (since 2013), a company developing novel antibiotics and RNA silencing technology. Dr. Cox was Chairman, President and CEO of GTC Biotherapeutics Inc. (now rEVO Biologics) (2001 to 2010), a company focused on the development of recombinant therapeutic proteins, including proteins for the treatment of rare diseases, using transgenic animal production technology. Prior to 2001, Dr. Cox was Executive VP, Operations, of Genzyme Corporation and later Chairman, President and CEO of Aronex Pharmaceuticals Inc. Dr. Cox is a past Chairman and current member of the Board of the Massachusetts Biotechnology Council. He previously served on the Board of the Biotechnology Industries Association and as a member of its Health Governing and Emerging Companies Sections. Dr. Cox received a B.Sc. (Hons) in biochemistry from the University of Birmingham, UK, and a Ph.D. in biochemistry from the University of East Anglia, UK.

The Board has concluded that Dr. Cox is well-qualified to serve on the Board and has the requisite qualifications, skills and perspectives derived from his extensive leadership experience in the biopharmaceutical industry, including as a director and executive officer of publicly-traded biotechnology companies. The Board believes that Dr. Cox’s strategic consulting, operations and business development expertise as well as his scientific background bring significant value to the Board.

Dr. John W. Kozarich, Ph.D., age 65, is a Director of QLT (since 2012) and Chairman of the Scientific Review Committee. Dr. Kozarich has over 35 years of experience in academic and pharmaceutical research. Currently, Dr. Kozarich is also Chairman and President of ActivX Biosciences, Inc. (since 2001), a wholly-owned subsidiary of the international pharmaceutical company KYORIN Pharmaceutical Co., Ltd.; Director and Chairman of Ligand (since 2003 and 2007, respectively), a public biotechnology company; a Director of Retrophin, Inc. (since 2015), a public biopharmaceutical company ; and a Senior Scientific Advisor to KinDex Therapeutics, Inc. (since 2009), a privately-held company developing molecules that modulate key metabolic regulatory networks. Dr. Kozarich was previously a Director of Corium International, Inc. (2006 to 2015), a public transdermal drug delivery company.

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Dr. Kozarich is also an adjunct professor of chemical physiology at the Scripps Research Institute and previously held faculty positions at the University of Maryland and Yale University School of Medicine. He has authored over 150 primary scientific publications. Dr. Kozarich earned his B.S. in chemistry from Boston College (summa cum laude; Phi Beta Kappa), his Ph.D. in biological chemistry from the Massachusetts Institute of Technology, and was a National Institutes of Health postdoctoral fellow at Harvard University.

The Board has concluded that Dr. Kozarich is well-qualified to serve on the Board and has the requisite qualifications, skills and perspectives based on his academic achievements and international experience as an advisor, executive officer and director of biotechnology companies. The Board believes that Dr. Kozarich is well-versed in the challenges of research and development given his extensive academic and pharmaceutical research and leadership background in the life sciences, and provides the Board with invaluable insight into a broad range of issues that impact QLT’s research and development efforts.

Jeffrey A. Meckler, age 48, is a Director of QLT (since 2012), Chairman of the Compensation Committee and a member of the Audit and Risk and Corporate Governance and Nominating Committees. Mr. Meckler has over 20 years of experience in the life sciences sector. Currently, Mr. Meckler is the Interim CEO and a Director of Cocrystal Pharma, Inc. (since March 2015 and 2014, respectively), a virology focused life sciences company. In addition, Mr. Meckler is Managing Director of The Andra Group (since 2009), a life sciences consulting firm that assists clients with strategic planning and business development. He is also a Director of Retrophin, Inc. (since 2014), which is a public biopharmaceutical company. Previously, Mr. Meckler acted as a Director (2011 to 2012) and Interim-CEO (2011) of Cypress Bioscience Inc. after its acquisition by Royalty Pharma; a Director of ClearFarma USA (2010 to 2012), a private sustainable food supply research and development company; a Director of Kyalin Bioscience (2011 to 2012), a private company developing therapies for autistic spectrum disorder acquired by Retrophin, Inc.; an Investment Analyst with Ridgeback Capital Management (2007 to 2009); a Director of Alveolus Inc. (2007 to 2009), a private, coated stent company acquired by Merit Medical; and held a series of positions at Pfizer Inc. in Manufacturing Systems, Market Research, Business Development, Strategic Planning and Corporate Finance which included playing a significant role in acquisitions and divestitures (1990 to 2007). Mr. Meckler is the past President and continues to serve on the Board of Children of Bellevue, a non-profit organization focused on advocating and developing pediatric programs at Bellevue Hospital Center (since 2001) and is past President and continues to serve on the Alumni Board of the Carnegie Mellon Tepper School of Business (since 2009). Mr. Meckler received a B.S. in Industrial Management and M.S. in Industrial Administration from Carnegie Mellon University. In addition, Mr. Meckler received a J.D. from Fordham University School of Law.

The Board has concluded that Mr. Meckler is well-qualified to serve on the Board and has the requisite qualifications, skills and perspectives stemming from his extensive pharmaceutical and biotechnology industry, consulting and financial background. The Board believes that Mr. Meckler’s experience regarding strategic business development, operations and corporate finance opportunities as well as health care trends brings significant industry-specific insight to the Board.

Dr. Stephen L. Sabba, M.D., age 55, is a Director of QLT (since 2012), Chairman of the Audit and Risk Committee and a member of the Scientific Review and Compensation Committees. Currently, Dr. Sabba is also a Partner and Health Care Portfolio Manager at Knott Partners, LP (since 2006), an investment fund, and a Director of Ligand (since 2008), a public biotechnology company. Previously, he was a Partner and Director of Research with Kilkenny Capital Management (2001 to 2006), a Chicago-based hedge fund. Dr. Sabba received his medical degree from the New York University School of Medicine, and completed a residency in internal medicine and a fellowship in gastroenterology at the Veterans Administration Medical Center in New York City. He earned a Bachelor of Science degree with honors at Cornell University.

The Board has concluded that Dr. Sabba is well-qualified to serve on the Board and has the requisite qualifications, skills and perspectives based on his capital markets and financial expertise gained from his experience working in the hedge fund and investment fund industries. The Board believes that Dr. Sabba’s deep understanding of the biotechnology industry, medicine and health care trends adds significant value to the Board.

John C. Thomas, Jr., age 61, is a Director of QLT (since 2012) and is a member of QLT’s Audit and Risk, Corporate Governance and Nominating and Compensation Committees. Mr. Thomas has more than 38 years of experience in a variety of financial and accounting positions, with the last 28 years spent in the medical, pharmaceutical and device fields. Currently, Mr. Thomas also serves as Chief Financial Officer, Secretary and Director of CorMatrix (since 2001), a privately-held medical device company, and as Chief Financial Officer, Secretary and Director of Motion Reality, Inc. (since 1991), a motion capture and simulation company. Since September 2013, Mr. Thomas has served on the Board of Medovex, Inc., a publicly-traded medical device company (MDVXU). In the past ten years, Mr. Thomas served as acting Chief Financial Officer for DemeRx, Inc. (2010 to 2011); as Chief Financial Officer for MRI Interventions, Inc. (1998 to 2010), MiMedx Group, Inc. (2007 to 2008) and DARA BioSciences (2003 to 2009); and as a director of MRI Interventions, Inc. (2004 to 2011) and DARA BioSciences (2012). Previously, Mr. Thomas also served as a Trustee and subsequently the Chairman of the Finance Committee of The Walker School, a private Pre-K through 12 grade school (1999 to 2012).

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Mr. Thomas is a Certified Public Accountant and graduated from the University of Virginia, McIntire School of Commerce with a Bachelor of Science in Commerce (with distinction) degree in 1975.

The Board has concluded that Mr. Thomas is well-qualified to serve on the Board and has the requisite qualifications, skills and perspectives based on his financial and development stage company expertise and service on the Boards of pharmaceutical and medical device companies. The Board believes that Mr. Thomas’ background and experience serving as Chief Financial Officer of a number of life sciences companies provides him with valuable perspective on financial management, performance and strategy for a biotechnology company such as QLT.

The Board also has determined that Mr. Thomas is an “audit committee financial expert” as defined under the rules of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”).

Executive Officers

Effective October 23, 2014, Dr. Geoffrey F. Cox was appointed Interim Chief Executive Officer of QLT. A summary of Dr. Cox’s experience and qualifications is set forth above under the Background of Directors and Executive Officers — Directors section above.

Effective January 26, 2015, Sukhi Jagpal, resigned from his role as Chief Financial Officer and Glen Ibbott was appointed Interim Chief Financial Officer of QLT.

Effective May 31, 2014, the employment of Dr. Alexander Lussow, QLT’s Senior Vice President of Business Development and Commercial Operations, was terminated in accordance with the terms of a letter agreement that was entered into with him on December 18, 2013.

W. Glen Ibbott

Interim Chief Financial Officer

Mr. Ibbott, age 52, is the Interim Chief Financial Officer of QLT (since January 2015).  Previously, Mr. Ibbott held senior finance positions with a number of U.S. and Canadian exchange-listed pharmaceutical and biotechnology companies. From 2010 to 2014, Mr. Ibbott served as Vice President of Finance (and CFO of Targeted Therapies) at Nordion Inc., a New York Stock Exchange and Toronto Stock Exchange (“TSX”)-listed global specialty health science company. From 2012 to 2014, Mr. Ibbott also served as Chairman of the Board of LCC Legacy, a private venture fund. From 2008 to 2010, Mr. Ibbott served as Corporate Controller of International Forest Products Ltd., a TSX-listed forest products company. Prior to 2008, Mr. Ibbott held senior finance and accounting positions at Angiotech Pharmaceuticals Inc., Aspreva Pharmaceuticals Corp., Inex Pharmaceuticals Corp., NetNation Communications Inc., and KPMG LLP.  In addition, Mr. Ibbott has served on the boards of various charitable organizations, including Children’s Hospital of Eastern Ontario (2012 to 2014), the Community Foundation of Ottawa (2012 to 2014) and the Mulgrave School (2009 to 2010).  Mr. Ibbott is a Canadian Chartered Accountant, a U.S. Certified Public Accountant, and has completed a Masters of Business Administration at Cornell University and a Masters of Business Administration at Queen’s University.

Section 16(a) Beneficial Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors and beneficial owners of more than 10% of a registered class of our equity securities to file reports of ownership on Form 3 and changes in ownership on Form 4 or 5 with the Securities and Exchange Commission (“SEC”). Such executive officers, directors and 10% beneficial owners are also required by SEC rules to furnish us with copies of all Section 16(a) reports they file.

To our knowledge, based solely on our review of the copies of such reports received by us or written representations from certain reporting persons that no Form 5s were required for such persons, we believe that during 2014 all Section 16(a) filing requirements applicable to our executive officers, directors and 10% beneficial owners were complied with.

Corporate Code of Ethics and Code of Exemplary Conduct

QLT has adopted a Code of Ethics which is applicable to all directors, officers and employees of QLT, as well as a Code of Exemplary Conduct which applies to the Chairman, directors, executive officers and all senior financial managers, internal legal counsel and human resources managers of QLT. The Code of Ethics and Code of Exemplary Conduct are available on QLT’s website at www.qltinc.com.

Audit Committee

The Company has a separately-designated standing Audit and Risk Committee which has been established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Audit and Risk Committee currently consists of Dr. Sabba (Chairman), Mr. Meckler

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and Mr. Thomas. The Board has adopted a written charter for the Audit and Risk Committee. A copy of the charter is available on QLT’s website at www.qltinc.com.

Each member of the Audit and Risk Committee is financially sophisticated, as defined by the Marketplace Rules of NASDAQ, and is financially literate, as defined by Canadian securities regulations, and as required by such rules, able to read and understand fundamental financial statements, including QLT’s consolidated balance sheet, consolidated statement of income and consolidated statement of cash flows. The Board has determined that John Thomas is an “audit committee financial expert” as defined in Item 407(d)(5) of Regulation S-K under the Exchange Act, and that all of our Audit and Risk Committee members are “independent,” as independence for audit committee members is defined by the NASDAQ, TSX and applicable U.S. and Canadian securities rules.

Item 11.                           Executive Compensation

Compensation Discussion and Analysis

On July 9, 2012, as a result of a comprehensive business and portfolio review by the Board, QLT announced a new corporate strategy and plans to restructure its operations in order to concentrate its resources on the clinical development programs related to its synthetic retinoid, QLT091001, for the treatment of certain inherited retinal diseases. In connection with the strategic restructuring of QLT, over the course of 2012 and 2013, QLT completed the sale of its Visudyne® business to Valeant Pharmaceuticals International, Inc. (“Valeant”) and the sale of its punctal plug drug delivery system to Mati Therapeutics Inc., and, as a result, significantly reduced its workforce by approximately 180 employees.

In connection with the restructuring and following the departure of QLT’s former President and Chief Executive Officer, the QLT Board of Directors formed the Executive Transition Committee composed of several directors (“ETC”) to perform the function of the Chief Executive Officer on an interim basis while the QLT Board of Directors determined the resources and management necessary to pursue QLT’s new strategy.

On October 23, 2014 Dr. Geoffrey F. Cox was appointed as Interim Chief Executive Officer, and the ETC was disbanded. During 2014, the ETC was comprised of Jeffrey A. Meckler and Dr. John Kozarich, with Jeffrey A. Meckler serving as Chairman. While Mr. Meckler was never employed as an officer or employee, nor was he compensated other than as a director, the Board considered him to be the Principal Executive Officer of QLT for the period January 1, 2014 to October 22, 2014 and he is therefore included in the compensation disclosure schedules below.

The Compensation Committee administers the compensation policies and programs for QLT’s named executive officers. A summary discussion of the 2014 named executive officer compensation actions taken by the Compensation Committee follows in this Compensation Discussion and Analysis report.

At QLT’s 2014 annual general meeting (“AGM”), its shareholders approved, in a non-binding advisory vote, the compensation of the Company’s named executive officers as disclosed in the Company’s proxy statement for its 2014 annual general meeting. The Compensation Committee considered this advisory vote in determining the compensation of our named executive officers for 2015 and will consider future shareholder advisory votes in setting future executive compensation.

Objectives of Our Compensation Program

The Compensation Committee evaluates and sets executive compensation consistent with our stated philosophy to provide a compensation package that attracts, retains and motivates executives and rewards business successes that have the potential to increase shareholder value. More specifically, the Compensation Committee seeks to:

·                  provide a total compensation program that is competitive with other companies in the pharmaceutical and biotechnology industries with which we compete for executive talent;

·                  place a significant portion of executive compensation at risk by linking cash incentive compensation to the achievement of pre-established corporate financial and operational performance objectives and other individual key objectives within the executive’s area of responsibility and by using equity as a key component of our compensation program;

·                  provide long-term incentive compensation that focuses executives’ efforts on building shareholder value by aligning their interests with those of our shareholders; and

·                  promote stability and retention of our management team.

Consistent with our performance-based philosophy, a significant portion of potential compensation is based upon performance and equity-based programs. These programs include awards that are based on our operational and financial performance and provide compensation in the form of cash, and equity-based incentive awards that are tied to both our short-term and long-term performance and achievement of goals. The performance-based bonus program rewards short-term performance; while our equity awards, coupled

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with our stock ownership guidelines, reward long-term performance and align the interests of management with those of our shareholders.

Compensation Philosophy

We are engaged in a highly specialized and competitive industry. Success in this environment requires talented and motivated executives. The goal of our named executive officer compensation program is to attract, retain and motivate executives and reward business successes that have the potential to increase shareholder value. The Compensation Committee, which is composed of independent members of the Board, is responsible for implementing our executive compensation program and establishing corporate performance objectives and reviewing individual performance objectives that reward our named executive officers when those objectives are met. In considering executive compensation, the Compensation Committee strives to ensure that our total compensation program is competitive within the industry in which we operate, supports our overall strategy and objectives, reflects both risk and reward for our named executive officers and aligns our executive officers’ interests with those of our shareholders. The combination of base salary, annual incentives and long-term incentives that we provide to our named executive officers is designed to accomplish this.

The Compensation Committee obtains information from a number of sources, including North American surveys and reports on executive compensation in the biotechnology industry, as well as internally generated reports of executive compensation practices of a sub-group of biotechnology companies of similar size and market capitalization. To assist with its evaluation of executive compensation, the Compensation Committee has the authority to retain independent compensation consultants. The Compensation Committee has engaged Radford, an Aon Hewitt Company (“Radford”), to provide director and executive compensation assessments and recommendations to the Compensation Committee. Radford provides data on the compensation and relative performance of peer companies, provides opinions on the degree to which our compensation arrangements are consistent with market practices and our objectives, consults on other compensation matters as needed and, if applicable, recommends compensation guidelines and provides suggestions on program design. Additionally, a representative from Radford attends Compensation Committee meetings when requested by the Compensation Committee.

Compensation Governance and Advisors

We are committed to having strong governance standards with respect to our compensation programs, procedures and practices. The Compensation Committee has, among other things, retained Radford, an independent compensation consultant, which reports directly to the Compensation Committee. Our Compensation Committee has assessed the independence of Radford and has concluded that no conflict of interest exists with respect to the services that Radford performs for our Compensation Committee. Radford did not provide any services to the Company other than with respect to the services provided to the Compensation Committee as described below. Radford also informed the Compensation Committee that it was not aware of any conflict of interest with respect to the services that it provides to our Compensation Committee and the services that it provides to other clients.

Components of the Compensation Package

The Compensation Committee supports the core principle that there should be both consequences for underperformance and incentives for outstanding performance. This is achieved through the design of a compensation program in which both fixed and variable components comprise the “pay mix” for each executive officer.

There are three major elements to our executive compensation:

·                  Base salary;

·                  Variable performance-based compensation, consisting of annual cash bonuses based on an assessment of individual and corporate performance to pre-set goals and objectives; and

·                  Long-term incentives, consisting of annual grants of long-term stock options.

In addition, our executives are eligible to participate in the benefit plans generally available to all of our employees (as described in Health and Life Benefits below).

Determining Compensation

Compensation Consultant and Peer Group. In April 2014, the Compensation Committee engaged Radford to assist our Compensation Committee in establishing 2014 executive compensation that was competitive and consistent with best practices. In establishing executive officer base salaries for 2014, the Compensation Committee considered non-comparator group market data provided by Radford and other factors consistent with the Company’s compensation philosophy. Due to the lack of current proxy data at the time, the Compensation Committee determined that it was impractical to update the peer group used by the Company in 2013, notwithstanding the fact that the Company’s market capitalization had decreased significantly upon completion of a special cash distribution to shareholders in the amount of $200.0 million in June 2013 and the 2013 peer group was no longer relevant.  The

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following 14 public biotechnology companies located in North America comprised our 2013 peer group and were then considered comparable to QLT based on size (less than 100 employees), market capitalization (generally between $200 million and $1 billion), and stage of product pipeline (phase II/III companies conducting late stage clinical trials):

In connection with the appointment of Dr. Geoffrey Cox to interim CEO in October 2014, the Compensation Committee engaged Radford to provide market data and assist in determining compensation for Dr. Cox that was competitive and consistent with best practices. Due to the short term nature of Dr. Cox’s role as interim CEO, the Compensation Committee did not request Radford to provide a formal report to the Compensation Committee or update the Company’s peer group at that time.

In November 2014, the Compensation Committee requested that Radford update QLT’s peer group.  The following 19 public companies located in North America comprised our 2014 peer group and were considered comparable to QLT based on size (less than 100 employees), market capitalization (generally between $100 and $600 million), and stage of product pipelines (phase I/II development stage companies):

Base Salary

Annual base salary is designed to provide a competitive fixed rate of pay recognizing different levels of responsibility and performance within QLT. Actual salaries reflect the Compensation Committee’s consideration of numerous factors, including the individual named executive officer’s experience, length of service, position criticality, scope of responsibilities and performance. In determining whether to increase the base salary for a particular executive officer, the Compensation Committee considers a variety of factors, including the results of each executive officer’s individual goal achievement and overall performance, comparative survey data, along with the other elements of compensation received by our executive officers.

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Annual Cash Incentive Compensation

The Compensation Committee’s compensation philosophy for 2014 (other than with respect to Dr. Cox when he became Interim CEO in October 2014) included a pay-at-risk component under the annual cash incentive compensation program. The annual cash incentive award represents income at risk — it is only paid if and to the extent certain goals and objectives are met. The annual cash incentive compensation award that each executive officer is eligible to receive is based on a pre-determined target percentage of his or her base salary, determined in accordance with market data and taking into account scope and level of responsibility. The Compensation Committee also believes that the success of QLT is based, in part, on the achievements of the executive officers as a group and, therefore, the target annual award percentage is determined by considering competitive rates of incentive compensation for the executive officers as a group and not just on a position-specific basis.

When combined with base salaries, cash incentive awards are intended to provide the opportunity for an executive officer to achieve total cash compensation, when targeted levels of performance are achieved or exceeded, that is competitive with total compensation paid by other companies that have similar profiles and circumstances. QLT defines “total cash compensation” as base salary plus annual target bonus under its annual cash incentive compensation program. The Compensation Committee believes that, given the competitive industry, this pay-for-performance compensation strategy allows a biotechnology company of QLT’s position and size to competitively attract and retain talented executives while aligning the strategic interests of its executives and shareholders.

The amount of annual cash incentive compensation that our executive officers were eligible to receive for 2014 was as follows:

For 2013 and previous years, executive officers with individual goals could attain between 0% and 200% of their individual goals depending on their performance. However, the Compensation Committee had the ability and discretion to recognize additional factors and award bonuses outside of this range. Similarly, executive officers with corporate goals could attain between 0% and 200% of a corporate goal depending on the extent to which the goal was achieved. For 2014, the Board, following the recommendation of the Compensation Committee, determined that executive officers could generally attain between 0% and 100% of corporate and individual goals depending on their performance, with the potential to attain up to 125% under exceptional circumstances.

Annual Cash Compensation Review

In reviewing the annual compensation of Mr. Jagpal, QLT’s former Chief Financial Officer, in April 2014, Radford provided the Compensation Committee with comparative data for pre-commercial organizations with less than 150 employees and a market capitalization below $600 million.  As Dr. Lussow, QLT’s former Senior Vice President, Business Development and Commercial Operations, was expected to leave the organization in early 2014, the Compensation Committee did not request Radford to review his compensation.

Based on Radford’s review, the Compensation Committee determined that Mr. Jagpal’s base salary of C$250,000 (USD$226,388) and target annual award percentage of 35% were below the 25th percentile and at the 50th percentile of the survey data, respectively. For 2014, Mr. Jagpal’s base salary remained unchanged at C$250,000, however, he was granted a retention bonus of C$100,000 on July 17, 2014 payable on the later of 90 days following the completion of the proposed merger with Auxilium Pharmaceuticals, Inc. or February 28, 2015.  For more information, refer to the Employment Agreements, Post-Employment Compensation and Change in Control Arrangements—Employment Agreement with Sukhi Jagpal section below.

Establishing Goals

Individual Goals. Each year, the criteria for assessing an individual named executive officer’s performance are developed and reviewed by the Compensation Committee in consultation with the particular named executive officer. The individual goals are primarily objective and measurable, relate to the individual named executive officer’s area of responsibility and are designed to facilitate the achievement of our corporate goals.

Corporate Goals. Each year, the criteria for assessing QLT’s performance are: (i) developed by the Compensation Committee, (ii) approved by the Board, and (iii) communicated to the participants. In early 2014, on the recommendation of the Compensation Committee, the Board approved specific corporate goals for QLT to achieve. QLT’s corporate goals are described below and are weighted from 0-100% in relative allocation. For 2013 and previous years, however, the Compensation Committee had the discretion to recognize additional factors and achievements that it considered appropriate and assess the Company’s corporate goal achievement up to a maximum 200%. As noted above, for 2014, the Board, following the recommendation of the Compensation Committee,

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determined that executive officers could generally attain between 0% and 100% of corporate and individual goals depending on their performance, with the potential to attain up to 125% under exceptional circumstances

The following is a description of the 2014 corporate goals:

·                  Enhancing Shareholder Value: Complete a review of strategic alternatives, and if any such alternatives are approved by the Board of Directors and/or shareholders, as applicable, complete any related transaction.

·                  Synthetic Retinoid Program: Achieve specific milestones related to the regulatory and clinical development progress for the synthetic retinoid program, including: (i) the initiation of a pivotal trial for the treatment of Inherited Retinal Diseases such as Leber Congenital Amaurosis (“LCA”) and Retinitis Pigmentosa (“RP”), (ii) launching a patient registry for an orphan drug program, (iii) completion of a Phase IIa proof-of-concept clinical trial for patients with Impaired Dark Adaptation (“IDA”) with positive results, and (iv) completion of a licensing or collaboration transaction.

·                  Operational Activities: Enhance operating efficiencies based on organizational needs to enable achievement of 2014 operational objectives and resolve certain issues pertaining to the QCELLUS laser to facilitate the collection of the milestone payment owing from Valeant related to the receipt of the premarket approval application (“PMA”) supplement for the QCELLUS laser from the U.S. Food and Drug Administration (“FDA”) on September 26, 2013 (the “Laser Earn-Out Payment”).

Evaluating Goal Achievement

The Compensation Committee determines performance bonuses based on the results achieved as compared to targets established for a particular fiscal year. The Compensation Committee has the discretion to award bonuses that correspond to that level of achievement, or to modify the award payable if it believes a modification would be in the best interests of QLT and its shareholders. In performing its assessment, the Compensation Committee may also consider market, business or organizational factors that may have impacted achievement of a specific goal.

Achievement of Corporate Goals. In early 2015, the Compensation Committee considered the performance of QLT relative to the corporate objectives set in early 2014. Based on the assessment of QLT’s performance and achievements against the corporate goals, the Compensation Committee determined that QLT achieved 73.4% of its 2014 corporate objectives. The following chart illustrates the weighting and level of achievement of each of the 2014 corporate goals:

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In evaluating QLT’s performance against the goals established for 2014, and determining the extent to which those goals were successfully achieved, the Compensation Committee considered the following factors:

·                  Enhancing Shareholder Value: In June 2014, QLT entered into an Agreement and Plan of Merger (the “Merger Agreement”) among QLT, Auxilium Pharmaceuticals, Inc., a Delaware corporation (“Auxilium”), QLT Holding Corp., a Delaware corporation and a wholly owned subsidiary of QLT (“HoldCo”), and QLT Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of HoldCo (“AcquireCo”). The Merger Agreement contemplated a business combination, through a stock transaction, whereby AcquireCo would be merged with and into Auxilium and Auxilium would continue as the surviving corporation (the “Merger”). On the date of the closing of the Merger, Auxilium would have become an indirect wholly owned subsidiary of QLT (the “Combined Company”) and Auxilium stockholders would have received common shares representing approximately 76% of the Combined Company, subject to certain adjustments.

On October 8, 2014, the Merger Agreement terminated after Auxilium delivered a notice of termination to QLT informing QLT that Auxilium’s board of directors had reviewed an offer from Endo International plc to acquire all of the issued and outstanding shares of Auxilium (the “Endo Proposal”) and, after consulting with its financial advisors and external legal counsel, determined that the Endo Proposal was superior to the proposed merger with QLT. Due to this change in recommendation by Auxilium’s board of directors and in accordance with the termination provisions of the Merger Agreement, on October 9, 2014, Auxilium paid QLT a termination fee of $28.4 million (the “Termination Fee”). On October 22, 2014, pursuant to the terms of our financial advisory services agreement with Credit Suisse, QLT paid Credit Suisse a fee of $5.7 million in connection with the termination of the Merger Agreement. The financial advisory services agreement with Credit Suisse was subsequently terminated.

The Compensation Committee assigned 50% of the 2014 corporate goals to the Enhancing Shareholder Value goal. In determining the extent to which management had met this goal, the Compensation Committee acknowledged the extensive efforts undertaken by management to complete a review of strategic transactions, which ultimately resulted in the signing of the Merger Agreement. The Compensation Committee also noted that the termination of the Merger with Auxilium resulted from the Endo Proposal, an event beyond management’s control, and consequently determined that, in recognition of management’s efforts towards the transaction, QLT achieved 45% out of the targeted 50% with respect to this goal.

·                  Synthetic Retinoid Program: The following principal clinical and regulatory development objectives to advance the Company’s synthetic retinoid program were achieved in 2014:

·                  met with the FDA and EMA, including an end-of-phase II meeting with the FDA, in order to progress QLT091001 for the treatment of certain inherited retinal diseases toward pivotal trials;

·                  prepared to launch a central patient registry to identify and characterize patient status and then follow disease progression to track the natural history of the disease;

·                  completed the Phase IIa proof-of-concept study of QLT091001 for the treatment of Impaired Dark Adaptation.

The Compensation Committee assigned 40% to the Synthetic Retinoid Program goal. Despite our efforts to advance the program noted above, we did not complete a licensing or collaboration transaction or initiate a pivotal trial of QLT091001 for the treatment of inherited retinal disease in 2014. As a result, the Compensation Committee determined that we achieved 25.6% out of the targeted 40% with respect to this goal.

·                  Operational Activities: The following principal transitional and restructuring objectives were achieved in 2014:

·                  reviewed organizational needs to enhance operational efficiencies.

The Compensation Committee assigned 10% to the Operational Activities goal. Given that we did not favorably resolve issues pertaining to the QCELLUS laser or collect the Laser Earn-Out Payment, the Compensation Committee determined that we achieved 2.8% out of the targeted 10% with respect to this goal.

Achievement of Individual Goals and Total Cash Incentive Compensation. The extent to which individual goals have been achieved or exceeded is determined largely from the annual performance recommendations for each of the other named executive officers prepared by the Interim CEO, and approved by the Compensation Committee.

Chief Financial Officer. In 2014, individual goals were established for Mr. Jagpal, including goals related to (i) supporting potential strategic activities and (ii) effectively managing financial reporting and internal controls. Consistent with the severance terms of his employment agreement, Mr. Jagpal was assessed as having met but not exceeded each of these goals, to achieve, overall by percentage, 100% of his individual goals for 2014. Based upon the achievement of the corporate goals and his individual goals, and the relative weighting between them, Mr. Jagpal was awarded a cash incentive compensation amount for 2014 equal to CAD $85,148 (USD $77,106), which represented approximately 34% of his base salary for 2014.

Senior Vice President, Business Development and Commercial Operations. In 2014, individual goals were established for Dr. Lussow, including goals related to coordinating internal support efforts on certain strategic matters and collection of the Laser Earn-Out

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Milestone payment. Effective May 31, 2014, Dr. Lussow’s employment with QLT was terminated and he was entitled to the following cash incentive compensation payments under the terms of his June 30, 2006 Change of Control Agreement:

·               Upon termination, Dr. Lussow received a lump-sum payment of C$66,757 (US$64,813) pertaining to his 2014 bonus amount payable under QLT’s cash incentive compensation plan for the 2014 performance period. The payment was calculated as if all corporate and individual goals were achieved but not exceeded (pro-rated for actual months worked by Dr. Lussow during the 2014 calendar year).

·               Upon termination, Dr. Lussow received a lump-sum payment of C$240,325 (US$217,626), which represents an 18 month bonus entitlement following his termination date (calculated at the maximum cash incentive compensation entitlement that would otherwise have been paid during the severance period as if all corporate and individual goals for that year have been achieved but not exceeded).

Equity Awards

Equity compensation represents a significant portion of named executive officer total compensation at QLT. The amount and type of equity awards are intended to align QLT’s named executive officers’ interests with shareholder interests by increasing named executive officer compensation through sustained increases in the value of the Company’s common shares. These equity-based awards also serve as a retention incentive. In setting the equity compensation levels of the named executive officers, the Compensation Committee considers numerous factors, including market data, prior grants of stock options to the named executive officer, the level of responsibility and expected future contributions of the named executive officer, the performance of the named executive officer in the year, the total cash compensation level of the named executive officer, the fair value of long-term incentives awarded to executives in similar positions in a comparator group, and the ability of stock options to retain named executive officers.

QLT currently maintains one equity compensation plan, the QLT 2000 Incentive Stock Plan (as amended and restated, the “2000 Plan”), which provides for the issuance of stock options to directors, officers, employees and key consultants of QLT and its affiliates. Option grants are meant to directly link executive compensation to value creation for shareholders, and the amount (if any) each executive ultimately realizes from the options depends solely on the increase in value of common shares from the date of grant through the date of exercise. The 2000 Plan also provides for the issuance of restricted stock units (“RSUs”).

The 2000 Plan is administered by the Compensation Committee. The Compensation Committee or the Board of Directors (upon the recommendation of the Compensation Committee) is authorized to grant equity awards. Generally, except in the case of awards for new hires and specific circumstances described below, equity awards are decided once a year at a regularly scheduled meeting. With respect to certain new hires, the Interim CEO has limited authority to make a limited number of awards to new hires consistent with guidelines specified by the Board of Directors. Under the 2000 Plan, awards are deemed to be granted on the date that the Compensation Committee or the Board of Directors, as applicable, authorizes the grant or such later date as may be determined by the Compensation Committee or the Board of Directors, as applicable, at the time that the grant is authorized. All awards are granted after the market close on the date of grant and the exercise price of stock options will not be less than the closing price on the TSX on the date of grant. RSUs may be granted pursuant to the 2000 Plan with no consideration from the participant. RSUs are generally subject to vesting conditions, including continued employment. The Board of Directors did not grant any RSUs to employees during 2014.

Except as described below, all currently outstanding options granted to QLT’s named executive officers are exercisable for a term of ten years and vest in 36 equal monthly installments. In QLT’s view, monthly vesting over three years facilitates retention while also providing a program that is consistent with market practices to attract and retain talent. In addition, in the event of a change of control, the Board of Directors may, in its discretion, accelerate the vesting of all or a portion of any unvested options. These terms provide executives with certain financial incentives that enhance the Company’s ability to attract and retain key employees.

With the exception of new hires, the Board of Directors typically grants stock options to its executive officers annually, following each annual general meeting of shareholders. Upon his appointment to Interim CEO, Dr. Geoffrey Cox was awarded, upon recommendation by the Compensation Committee, 150,000 stock options. Unlike other options granted to QLT’s executive officers, these options vest in six monthly installments beginning on the first monthly anniversary of the date of grant and will expire, if unexercised, on the 90th day after the cessation of his service as an employee or director of QLT.

In December 2014, the Board of Directors, upon the recommendation of the Compensation Committee and following consultation with Radford, approved stock option grants to most of QLT’s employees to enhance motivation and retention in light of the Company’s reduced size, streamlined operations and termination of the Merger Agreement by Auxilium. Mr. Jagpal was not granted options given that he tendered his resignation on November 26, 2014.

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Principal Executive Officer

Mr. Meckler was the Chairman of the ETC from February 16, 2013 to October 22, 2014. No goals were set for Mr. Meckler and he was not awarded a bonus in connection with his role as Chairman of the ETC. It is the Board’s view that Mr. Meckler has been, since his initial appointment to the Board on June 4, 2012, an “independent” member of the Board and does not consider Mr. Meckler to have been an executive officer of QLT as a result of his role as Chairman of the ETC. However, the designation of Mr. Meckler as “Principal Executive Officer” of QLT for compensation reporting purposes from January 1, 2014 to October 22, 2014, the period in which he served as Chairman of the ETC, may create the appearance that Mr. Meckler served as an executive officer on behalf of QLT during such time. The inclusion of Mr. Meckler as a named executive officer is not intended to imply that he was at any time an executive officer of QLT, and should not be construed as such. Effective October 23, 2014, Dr. Geoffrey Cox assumed the position of “Principal Executive Officer” upon his appointment to Interim CEO. For additional information refer to the Independence of Directors section below in this Annual Report.

Minimum Share Ownership Guidelines for Executive Officers.

To further align our executives’ financial interests with those of our shareholders, the Board, on the recommendation of the Compensation Committee, has approved share ownership guidelines for executive officers, encouraging share ownership as follows within five years after the latest of: (i) September, 2009 (the date of the implementation of the share ownership guidelines by the Board); (ii) the date the executive officer is hired; and (iii) the date the executive officer assumes a new position as an executive officer:

·                  Chief Executive Officer: an amount equal to 1.5 times the CEO’s annual base salary; and

·                  Other named executive officers: an amount equal to 0.5 times the named executive officer’s annual base salary.

The value of QLT “in-the-money” vested stock options held by the executive is counted towards fulfilling the share ownership guidelines. The value of the shares owned for the purposes of fulfilling the share ownership guidelines is determined as the greater of the acquisition cost or the market value at the time of the determination. Compliance with the share ownership guidelines is evaluated on an annual basis by the Corporate Governance and Nominating Committee. These guidelines were not applied to Mr. Meckler as the former Chairman of the Executive Transition Committee. Assuming that Dr. Cox serves as Interim CEO for a short term period until the appointment of a permanent Chief Executive Officer, he will not be required to fulfill the share ownership guidelines set for the Chief Executive Officer. Given Mr. Jagpal’s appointment as an executive officer in 2013 and his departure in early 2015, he was not required to meet the guidelines.

Health and Life Benefits

Our named executive officers receive medical, dental, life insurance and other benefits generally made available to all of our employees.

Registered Retirement Savings Plan (RRSP) Matching Program

Our named executive officers resident in Canada are eligible, along with all other QLT employees resident in Canada, to participate in our registered retirement savings plan (“RRSP”) matching program. Under this program, we match the amount contributed by the named executive officer into his or her RRSP annually (or into QLT’s group RRSP Plan) up to 50% of the annual maximum amount allowable by the Canada Revenue Agency, less any applicable tax withholdings.

Tax and Accounting Consideration

The Board and the Compensation Committee generally consider the financial accounting and tax implications of their named executive officer compensation decisions. While QLT is not generally subject to tax in the United States, when applicable, the Compensation Committee and the Board will consider the potential future effects of Section 162(m) of the Internal Revenue Code on the compensation paid to our named executive officers. Section 162(m) disallows a tax deduction for any publicly-held corporation for individual compensation exceeding $1.0 million in any taxable year for the CEO and each of the other named executive officers
(other than the Chief Financial Officer), unless compensation is performance-based. The Compensation Committee, where it determines that Section 162(m) is applicable and it is reasonably practicable, will seek to qualify the variable compensation paid to our named executive officers for an exemption from the deductibility limitations of Section 162(m).

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Compensation Committee Report

The Compensation Committee has discussed and reviewed with management the Compensation Discussion and Analysis presented in this Annual Report on Form 10-K. Based on such review and discussions, the Compensation Committee has recommended to the Board that the Compensation Discussion and Analysis be included in this Annual Report on Form 10-K.

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Compensation of Executive Officers

Our executive officers are paid in Canadian dollars but, for reporting purposes only, their compensation is stated in the compensation tables below in U.S. dollars.

2014 Summary Compensation Table

The following table summarizes total compensation for the 2014, 2013, and 2012 fiscal years earned by QLT’s named executive officers. As discussed elsewhere in this Annual Report, Mr. Meckler, as Chairman of the Executive Transition Committee from February 16, 2013 through October 23, 2014, is included in this table because the Executive Transition Committee served the function of QLT’s CEO during such time. Because of this and solely for the reason of providing QLT’s shareholders with comprehensive disclosure in accordance with principles of transparency and good corporate governance, QLT has included Mr. Meckler as a named executive officer in the following tables. Mr. Meckler was not employed by QLT, nor compensated by QLT, other than as a director.

*                                          Note: Where amounts shown were paid or priced in Canadian dollars, amounts set out in the Summary Compensation Table reflect the U.S. dollar equivalent of those amounts, converted using an average of noon buying rates published by the Federal Reserve Bank of New York, for each respective year as follows:  2014 - US$1.00 = C$1.1043; 2013 - US$1.00 = C$1.0300 and 2012 - US$1.00 = C$0.9995.

(1)                                  Mr. Meckler served as Chairman of the ETC from February 16, 2013 until October 22, 2014. The ETC was disbanded on October 23, 2014.

(2)                                  Mr. Cox was appointed Interim CEO on October 23, 2014.

(3)                                  Mr. Jagpal was appointed Interim CFO on July 20, 2012 and CFO on February 27, 2013. His employment with QLT terminated on January 26, 2015 following his resignation.

(4)                                  Annual salaries were paid in Canadian dollars but are stated here in U.S. dollars for reporting purposes only. Dr. Cox’s 2014 base salary amount reflects the amount that he was paid from October 23, 2014, the date of his appointment to Interim CEO, to December 31, 2014. Dr. Lussow’s 2014 base salary amount represents base salary paid to him prior to his May 31, 2014 termination date. The year over year declines in Dr. Lussow’s annual base salary is due in part to the change in the Canadian to U.S. dollar exchange rates. Following Mr. Jagpal’s appointment to Chief Financial Officer on February 27, 2013, the QLT Board of Directors increased his annual base salary from C$192,500 to C$250,000. The year over year declines in Mr. Jagpal’s annual base salary are due in part to the change in the Canadian to U.S. dollar exchange rates.

(5)                                  Stock awards consist of Deferred Share Units (“DSUs”) and RSUs. DSUs vest in 36 successive and equal monthly installments beginning on the first day of the first month after the grant date. A vested DSU can only be settled by conversion to cash and is automatically converted after a director ceases to be a member of the Board of Directors unless the director is removed for just cause. RSUs vest in 3 successive and equal annual installments on the date of each of the first 3 annual general meetings held after the date of grant. Upon vesting, each RSU represents the right to receive one common share of QLT. In accordance with ASC Topic 718, RSUs and DSUs are reflected at fair value. The fair value of RSUs is measured based on the closing price of QLT’s shares on the TSX on the date of grant. In accordance with the DDSU Plan, the fair value of DSUs is measured based on the closing price of QLT’s shares on the TSX on the trading day immediately preceding the date of grant. For a discussion of the assumptions used in the valuation of the stock awards granted in each respective year, refer to QLT’s Form 10-K under Note 9 to the Consolidated Financial Statements for 2014.

(6)                                  On December 17, 2014, Mr. Meckler was granted 6,000 RSUs for his service as a member of the Board of Directors. No DSUs were granted to Mr. Meckler in 2014. The estimated fair value of each RSU as at the grant date was C$4.08 (US$3.69), which represents the closing price of QLT’s shares on the TSX on December 17, 2014 (see footnote 5 above for a description of the applicable fair value measurements).

(7)                                  On July 15, 2013, Mr. Meckler was granted 11,000 DSUs and 6,000 RSUs for his service as a member of the Board of Directors. The estimated fair value of each DSU and RSU as at the grant date was C$4.54 (US$4.41), which represents the closing price of QLT’s shares on the TSX on July 14, 2013 and July 15, 2013, respectively (see footnote 5 above for a description of the applicable fair value measurements).

(8)                                  Represents the grant date fair value of options granted calculated using the Black Scholes option pricing model, in accordance with ASC Topic 718 for share based payment transactions. For a discussion of the assumptions used in the valuation of the options granted in each respective year, refer to QLT’s Form 10-K under Note 9 to the Consolidated Financial Statements for 2014.

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(9)                                  Represents director fees earned or paid in cash in 2014. For a breakdown of these director fees, see the Directors Compensation section below.

(10)                            Amount reported consists of (i) contribution matching under QLT’s RRSP matching program of $10,989 and (ii) 2014 accrued vacation of $15,383, which was paid to Mr. Jagpal on January 30, 2015. For more detailed information on Mr. Japgal’s severance and termination benefits, which were paid to him on January 30, 2015 in connection with his resignation, refer to the Employment Agreement with Sukhi Jagpal section below.

(11)                            Amount reported consists of (i) contribution matching under QLT’s RRSP matching program of $11,563 and (ii) a payment of $7,356 for accrued vacation.

(12)                            Amount reported consists of (i) contribution matching under QLT’s RRSP matching program of $11,491 and (ii) the value of the acceleration of vesting of all of Mr. Jagpal’s stock options due to the change in control resulting from the election of the QLT Board of Directors at the 2012 annual general meeting, which was $20,377.

(13)                            Amount reported consists of (i) contribution matching under QLT’s RRSP matching program of $8,463, (ii) a severance and termination payment of $753,078, and (iii) a payment of $34,619 for accrued vacation. Dr. Lussow’s severance and termination amount of $753,078 consists of the following: a $435,253 (C$480,650) lump-sum severance payment, an 18 month bonus entitlement of $217,626 (C$240,325), $45,278 (C$50,000) for moving expenses, $41,107 (C$45,395) for health benefits, and $13,814 (C$15,254) for RRSP matching contributions. For more details about these components of Dr. Lussow’s severance and termination package, refer to the Employment Agreement with Alexander R. Lussow section below.

(14)                            Amount reported consists of contribution matching under QLT’s RRSP matching program of $11,563.

(15)                            Amount reported consists of (i) contribution matching under QLT’s RRSP matching program of $11,491 and (ii) the value of the acceleration of vesting of all of Dr. Lussow’s stock options due to the change in control resulting from the election of the QLT Board of Directors at the 2012 annual general meeting, which was $78,573.

Grants of Plan-Based Awards for the Fiscal Year Ended December 31, 2014

The following table provides certain information concerning each grant of an award made to a named executive officer in 2014.

*                                          Note: Where amounts shown were paid or priced in Canadian dollars, they have been converted to U.S. dollars for disclosure purposes using an average of 2014 noon buying rates published by the Federal Reserve Bank of New York: US$1.00 = C$1.1043.

(1)                                  Amounts represent the annual Target and Maximum for QLT’s cash incentive compensation program for 2014. There is no threshold minimum amount that could be paid as a bonus under QLT’s cash incentive compensation program for 2014.

(2)                                  As a director, Mr. Meckler did not participate in QLT’s cash incentive compensation program. In accordance with Dr. Cox’s employment agreement with QLT, he will not be paid any compensation under QLT’s cash incentive compensation program. As result, no annual Target or Maximum has been specified in the table above.

(3)                                  The amount actually paid under QLT’s cash incentive compensation program to Mr. Jagpal for 2014 was US$77,106 (C$85,148).

(4)                                  The amount actually paid under QLT’s cash incentive compensation program to Mr. Lussow for 2014 was US$60,452 (C$66,757), which was the pro-rated amount he received prior to his May 31, 2014 termination date. For more detailed information on Dr. Lussow’s severance and termination benefits, which were paid to him on May 30, 2014 in connection with his termination, refer to the Employment Agreement with Alexander R. Lussow section below.

(5)                                  Stock awards consist of RSUs and DSUs. On December 17, 2014, Mr. Meckler was granted 6,000 RSUs and no DSUs were granted in 2014. RSUs were fair valued at C$4.08 (US$3.69) per unit on the December 17, 2014 grant date.

(6)                                  Stock options granted on December 17, 2014 were priced at C$4.08 (US$3.69). These stock options vest and become exercisable in 36 successive and equal monthly installments from the grant date and have an expiration term of 10 years from the grant date. Stock options granted on October 29, 2014 were priced at C$4.47 (US$4.05). These stock options vested and became exercisable in 6 successive and equal monthly installments from the grant date and have an expiration term of 10 years from the grant date.

(7)                                  The grant date fair value of options granted was calculated using the Black-Scholes option pricing model in accordance with ASC Topic 718 for share-based payment transactions. For a discussion of the assumptions made in the valuations reflected in this column, see QLT’s Annual Report on Form 10-K under Note 9 to the Consolidated Financial Statements for 2014.

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Outstanding Equity Awards at 2014 Fiscal Year-End Table

The following table provides information concerning unexercised options, stock that has not vested, and equity incentive plan awards for each named executive officer outstanding as of December 31, 2014.

*              Note: Where amounts shown were paid or priced in Canadian dollars, they have been converted to U.S. dollars for disclosure purposes using an average of 2014 noon buying rates published by the Federal Reserve Bank of New York: US$1.00 = C$1.1043.

(1)           Stock options expiring on December 16, 2024 were granted on December 17, 2014 and vest and become exercisable in 36 successive and equal monthly installments from the grant date. Stock options expiring on July 14, 2023 were granted on July 15, 2013 and vest and become exercisable in 36 successive and equal monthly installments from the grant date. Stock options expiring on November 21, 2023 were granted on November 22, 2013 and vested and became exercisable in six successive and equal monthly installments from the grant date. Stock options expiring of October 28, 2024 were granted on October 29, 2014 and vest and become exercisable in six successive and equal monthly installments from the grant date.

(2)           All stock options were granted with an exercise price denominated in Canadian dollars. Exercise prices have been converted to U.S. dollars for disclosure purposes using an average of 2014 noon buying rates published by the Federal Reserve Bank of New York: US$1.00 = C$1.1043.

(3)           Represents the number of DSUs and RSUs that had not vested as at December 31, 2014. The DSUs vest in 36 successive and equal monthly installments beginning on the first day of the first month after the grant date. No DSUs were granted in 2014. DSUs can only be settled in cash. The RSUs vest in 3 successive and equal annual installments on the date of each of the first three annual general meetings of QLT held after the date of grant. Upon vesting, each RSU represents the right to receive one common share of QLT. On July 15, 2013, Dr. Cox was granted 11,000 DSUs and 6,000 RSUs. As at December 31, 2014, Dr. Cox has 7,944 unvested DSUs and 4,000 unvested RSUs. On July 15, 2013, Mr. Meckler was granted 11,000 DSU’s and 6,000 RSUs and on December 17, 2014 he was granted 6,000 RSUs. As at December 31, 2014, Mr. Meckler has 7,944 unvested DSUs and 10,000 unvested RSUs.

(4)           Amounts reflect the market value of unvested DSUs and RSUs calculated by multiplying the number of such unvested DSUs and RSUs by the C$4.63 (US$4.19) closing price of QLT’s shares on the TSX on December 31, 2014, the last trading day in 2014.

2014 Option Exercises and Stock Vested Table

The following table provides information with respect to vested stock awards and option exercises during 2014 by our named executive officers.

(1)                                  The value realized upon exercise is determined by multiplying (i) the closing price on the date of exercise, less the option exercise price, by (ii) the number of options exercised. All stock options were granted with an exercise price denominated in Canadian dollars. Exercise prices and sale prices have been converted to U.S. dollars for disclosure purposes using an average of 2014 noon buying rates published by the Federal Reserve Bank of New York: US$1.00 = C$1.1043.

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(2)                                  Stock awards consist of DSUs and RSUs. The DSUs vest in 36 successive and equal monthly installments beginning on the first day of the first month after the grant date. The RSUs vest in three successive and equal annual installments on the date of each of the first three annual general meetings of QLT held after the date of grant.

(3)                                  In July 2013, Mr. Meckler was granted 11,000 DSUs for his service as a member of the Board of Directors, of which 3,667 vested during 2014. In July 2012, Mr. Meckler was granted 11,000 DSUs for his service as a member of the Board of Directors, of which 3,667 vested during 2014. In December 2014, Mr. Meckler was also granted 6,000 RSUs, none of which were vested as at December 31, 2014. In July 2013, Mr. Meckler was also granted 6,000 RSUs, of which 2,000 vested on December 15, 2014 (i.e. QLT’s 2014 annual meeting date) and 2,000 shares were consequently issued.

(4)                                  In July 2013, Dr. Cox was granted 11,000 DSUs for his service as a member of the Board of Directors, of which 3,667 vested during 2014. In July 2012, Dr. Cox was granted 11,000 DSUs for his service as a member of the Board of Directors, of which 3,667 vested during 2014. In July 2013, Dr. Cox was also granted 6,000 RSUs, of which 2,000 vested on December 15, 2014 (i.e. QLT’s 2014 annual meeting date) and 2,000 shares were consequently issued.

(5)                                  The value of the DSUs realized upon vesting was determined by multiplying the closing price of QLT’s common shares at each month’s vesting date, by the number of DSUs vested. The value of the RSUs vested was determined by multiplying the closing price of QLT’s shares on the TSX on December 15, 2014, the date of the 2014 annual general meeting and vesting date, by the quantity of RSUs vested.

Pension Benefits and Nonqualified Deferred Compensation

We do not have any pension plans or nonqualified deferred compensation plans for our named executive officers.

Employment Agreements, Post-Employment Compensation and Change in Control Arrangements

We have entered into the agreements summarized below with our named executive officers.

Employment Agreement with Dr. Geoffrey F. Cox. On October 23, 2014, Dr. Cox entered into a six-month employment agreement with QLT to serve as the Company’s Interim Chief Executive Officer, which was extended for an additional six months on April 21, 2015. Dr. Cox is entitled to receive a base salary of US$40,000 per month, health-related benefits, paid vacation, and expense reimbursement in accordance with Company policies. Under the terms of Dr. Cox’s employment agreement, QLT is required to provide him with a tax equalization payment if the resulting Canadian taxes associated with his employment by QLT exceed the U.S. tax he would have been required to pay had his employment been entirely performed in the state of Massachusetts.  In connection with his employment, QLT also granted Dr. Cox options to purchase 150,000 common shares of QLT at an exercise price of C$4.47 (being the closing price of QLT’s common shares on the TSX on the date of the grant). The options vest monthly over 6 months and have a ten year expiration term. If during the six-month employment term Dr. Cox is either terminated without cause or there is a change of control followed by the termination of his employment, then the unvested portion of these options will vest immediately.  Following his termination, all vested and unexercised options will be exercisable for 90 days following the later of his termination date and the date that Dr. Cox ceases to be an employee or director of QLT. In the event that QLT terminates the employment of Dr. Cox prior to the end of his six-month employment term, other than for cause, he will be entitled to receive his full pay for the remainder of the six-month term. Following termination of employment, Dr. Cox will be bound by non-competition and non-solicitation terms, which prohibit him from participating in a competitive business or soliciting QLT’s customers or employees for a period of nine months following the termination of his employment with QLT. Dr. Cox continues to serve as a member of the Board, however, during the term of the employment agreement, he will not receive any director fees for such Board service.

Employment Agreement with Dr. Alexander R. Lussow. On June 30, 2006, Dr. Lussow entered into an employment agreement with QLT pursuant to which, during his employment, he was entitled to base salary, cash incentive compensation under our cash incentive compensation plan, participation in our 2000 Plan, and other health-related benefits and registered retirement savings plan employer matching contributions. Except as stated below, in the event that QLT terminated the employment of Dr. Lussow without cause, the employment agreement provided that he was entitled to (a) twelve months’ notice, plus one additional month of base salary for each year of service (to a maximum of 24 months in total), (b) payment of salary and bonus earned to the date of termination as if all corporate and individual goals for that year were achieved but not exceeded, (c) an amount to compensate him for lost benefits during the notice period, and (d) payment for outplacement counselling services to assist him in seeking alternative employment. Following termination of employment, Dr. Lussow is bound by the terms of a non-competition and non-solicitation agreement, which prohibits him from participating in a competitive business or soliciting our customers or employees for a period of one year following the termination of his employment.

Letter Agreement with Dr. Alexander R. Lussow.  Effective December 18, 2013, QLT entered into a letter agreement with Dr. Lussow, in which QLT, among other things, agreed to terminate Dr. Lussow on either March 31, 2014, April 30, 2014 or May 31, 2014, at QLT’s discretion and confirmed that, upon such termination, Dr. Lussow would be entitled to severance benefits under his change of control agreement dated June 30, 2006 between QLT and Dr. Lussow (the “2006 Change of Control Agreement”) as a result of the change of control that occurred at QLT’s 2012 annual general meeting of shareholders. Dr. Lussow agreed not to resign prior to such termination date and to perform his duties up to his termination date in a manner consistent with his then current performance. Dr. Lussow was terminated pursuant to the letter agreement effective May 31, 2014, and he received the severance benefits below:

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*                                          Note: The table above reflects the U.S. dollar equivalent of amounts that were paid in Canadian dollars. These amounts were converted using an average of 2014 noon buying rates published by the Federal Reserve Bank of New York US$1.00 = C$1.1043.

(1)                                  Upon termination, Dr. Lussow received a lump-sum severance payment of C$480,650 (US$435,253), which is equivalent to 18 months of base salary.

(2)                                  Upon termination, Dr. Lussow received a lump sum payment of C$66,757 (US$60,452) pertaining to his 2014 bonus amount payable under QLT’s cash incentive compensation plan for the 2014 performance period. The payment was calculated as if all corporate and individual goals were achieved but not exceeded (pro-rated for actual months worked by Dr. Lussow during the 2014 calendar year).

(3)                                  Upon termination, Dr. Lussow received a lump-sum payment of C$240,325 (US$217,626), which represents an 18 month bonus entitlement following his termination date (calculated at the maximum cash incentive compensation entitlement that would otherwise have been paid during the severance period as if all corporate and individual goals for that year have been achieved but not exceeded).

(4)                                  Upon termination, Dr. Lussow received RRSP matching contributions for the 18 month period following his termination date. As he participated in QLT’s RRSP program, the payment reflected above does not include his contributions up to the termination date, which were already paid prior to his termination date.

(5)                                  In accordance with the terms of the 2006 Change of Control Agreement, Dr. Lussow was entitled to continued benefit plan coverage with the exception of short-term disability, long-term disability and out of country travel coverage for a period of 30 days and, at his election, until a date not to exceed the 18 month severance period, to either continued benefit coverage or to compensation of 10% of base salary or any combination of the two. Upon termination, Dr. Lussow elected to receive the payment equivalent to 10% of his base salary following the initial 30 day period. He received a lump-sum payment of CAD $45,395 (US$41,107) in respect of this amount.

(6)                                  Upon termination, Dr. Lussow received a lump-sum payment of C$50,000 (US$45,278) for moving expenses.

Employment Agreement with Sukhi Jagpal.  On November 5, 2012, Mr. Jagpal entered into an amended and restated employment agreement with QLT, which was further amended on February 27, 2013. Based on the terms of the employment agreement (as amended), during his employment with QLT, Mr. Jagpal was entitled to base salary, cash incentive compensation under QLT’s cash incentive compensation plan, participation in the 2000 Plan, and other health-related benefits and registered retirement savings plan employer matching contributions. In the event that QLT terminated the employment of Mr. Jagpal without cause or Mr. Jagpal terminated his employment upon at least 60 days’ prior written notice, the employment agreement provided that he was entitled to (a) 12 months’ base salary in a lump sum payment at the time of termination, (b) payment of salary and bonus earned to the date of termination as if all individual goals for that year were achieved but not exceeded and all corporate goals, if any, would be calculated using the average percentage of the 3 years immediately preceding the year in which Mr. Jagpal’s employment was terminated, (c) provided that such continuation is approved by QLT’s insurance provider, continuation of health benefits with the exception of short-term disability, long-term disability and out of country travel coverage, for up to 12 months, or such earlier time as Mr. Jagpal commences an employment or consulting relationship with a third party, and (d) an amount equal to the RRSP matching payments Mr. Jagpal would otherwise have been eligible to receive until his termination date and from his termination date to the last day of his 12 month severance period. Following termination of employment, Mr. Jagpal is bound by the terms of a non-competition and non-solicitation agreement, which prohibits him from participating in a competitive business or soliciting QLT’s customers or employees for a period of two years following the termination of his employment. On July 17, 2014, QLT entered into a letter agreement with Mr. Jagpal providing for a retention bonus of C$100,000, payable to Mr. Jagpal on the later of 90 days following completion of the merger contemplated by the Merger Agreement or February 28, 2015, provided that (i) if the Merger Agreement was terminated by either Auxilium or QLT, the retention bonus would be payable to Mr. Jagpal on the later of 30 days from the

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termination date or February 28, 2015, and (ii) if Mr. Jagpal’s employment was terminated without cause, the retention bonus would be payable to Mr. Jagpal within 30 days from his termination of employment.

On November 26, 2014, Mr. Jagpal tendered his resignation and provided 60 days’ written notice to QLT. His employment ceased on January 26, 2015 and on January 30, 2015 he received certain severance and termination benefits in accordance with the terms of his employment agreement, which are summarized below. As Mr. Jagpal terminated his employment prior to February 28, 2015, he forfeited his entitlement to his retention bonus of C$100,000.

*                                          Note: The table above reflects the U.S. dollar equivalent of amounts that were paid in Canadian dollars. These amounts were converted using an average of 2014 noon buying rates published by the Federal Reserve Bank of New York US$1.00 = C$1.1043.

(1)                                  Upon his resignation, Mr. Jagpal received a lump-sum severance payment of C$250,000 (US$226,388), which is equivalent to 12 months of base salary.

(2)                                  Upon his resignation, Mr. Jagpal received a lump-sum payment of C$85,148 (US$77,106) pertaining to his 2014 bonus amount payable under QLT’s cash incentive compensation plan.

(3)                                  Upon his resignation, Mr. Jagpal received a lump-sum payment of C$5,840 (US$5,289) pertaining to his 2015 bonus amount payable under QLT’s cash incentive compensation plan for the 2015 performance period. The payment was calculated as if all individual goals were achieved but not exceeded and corporate goals were assessed based on the average percentage of the 3 preceding years. Mr. Jagpal’s 2015 bonus amount was pro-rated for the actual period he worked during the 2015 calendar year.

(4)                                  Upon his resignation, Mr. Jagpal received RRSP matching contributions for the 12 month period following his termination date. As he participated in QLT’s RRSP program, the payment reflected above does not include his contributions up to the resignation date, which were already paid prior to his resignation date.

(5)                                  Upon his resignation, Mr. Jagpal was not entitled to receive any benefit compensation payments given that he commenced employment with a third party immediately following his resignation.

Stock Options.  Stock options that have been awarded to a named executive officer are governed by the terms of the stock option agreements entered into between QLT and its named executive officers, which provide:

·                  In the event of retirement, unless otherwise determined by the Compensation Committee, (i) if the executive officer has worked with QLT for at least 20 years, or (ii) is at least 60 years of age and has worked continuously on behalf of QLT for at least five years, then all of his previously unvested stock options will vest, and all stock options will remain exercisable until the expiration date of the stock options. In the event of retirement where neither (i) or (ii) above is applicable, and the retiree has received the consent of the Compensation Committee, then the retiree’s stock options will immediately vest and will terminate upon the earlier of (a) 90 days following the retirement date, or (b) the expiration date of the stock option.

·                  In the event of death or termination due to disability, all previously unvested stock options of the named executive officer will vest, and all stock options will remain exercisable until the earlier of (a) twelve months following the date of death or termination due to disability of the named executive officer, or (b) the expiration date of the stock option.

·                  In the event of a termination of the named executive officer’s employment other than for cause, all vested stock options will remain exercisable until the earlier of (a) 90 days following his termination of service, or (b) the expiration date of the stock option.

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With the exception of the stock options granted to Mr. Meckler on November 22, 2013 and Dr. Cox on October 29, 2014, which provide for automatic acceleration upon a change of control, any accelerated vesting of stock options granted to named executive officers following a change of control will be at the QLT Board of Directors’ discretion.

Change of Control Agreements. Prior to the Company’s 2012 annual general meeting, the Company entered into separate change of control agreements with each of its named executive officers at the time, including Dr. Lussow. Other than Dr. Lussow, none of the Company’s named executive officers is a party to a change of control agreement.

Dr. Lussow’s 2006 Change of Control Agreement contained “double-trigger” change of control severance provisions, such that the change of control did not, by itself, trigger the severance entitlements. The 2006 Change of Control Agreement provided that, in the event of termination by QLT of Dr. Lussow’s employment without cause or by Dr. Lussow after a triggering event (as the terms “cause” and “triggering event” are defined in the agreement) within a period of 24 months following a change of control of QLT, he would receive a severance payment equal to 18 months’ base salary, the maximum RRSP matching contribution to which Dr. Lussow would otherwise be entitled during the severance period, amounts in lieu of certain other health and retirement benefits for the severance period, relocation expenses, outplacement counselling and an annual cash incentive compensation entitlement calculated at the target cash incentive compensation entitlement that would otherwise have been paid during the severance period. For more information, refer to the Employment Agreements, Post-Employment Compensation and Change in Control Arrangements—Letter Agreement with Dr. Alexander R. Lussow section above.

A change of control includes an event in which any person acquires 35% or more of the voting securities of QLT, the sale of all or substantially all of the assets of QLT (other than to an affiliate of QLT or to an entity in which our shareholders held 65% of the voting securities prior to the sale), a merger or other reorganization involving QLT in which the original shareholders of QLT own less than 65% of the resulting merged entity, or a change in the majority of the directors on the Board in any consecutive 24 month period or less such that a majority of the Board members ceases to comprise individuals who either have been (a) Board members continuously since the beginning of such period, or (b) appointed or nominated for election as Board members during such period by at least a majority of the Board members described in subsection (a) above who were still in office at the time the Board approved such appointment or nomination.

Potential Payments upon Termination or Change in Control. The amount of compensation payable to our named executive officers in the event of a termination of employment or a change of control is set forth in the tables below. The amounts in the tables below were calculated assuming the termination of the named executive officer’s employment occurred as of December 31, 2014.

Geoffrey F. Cox

*                                          Note: Where amounts were agreed upon under the applicable agreements in Canadian dollars, the 2014 amounts reflected above represent the U.S. dollar equivalent of those amounts converted using an average of 2014 noon buying rates published by the Federal Reserve Bank of New York: US$1.00 = C$1.1043.

(1)                              On July 15, 2013, Dr. Cox was granted 12,500 stock options for his service as a member of the Board. These stock options vest and become exercisable in 36 successive and equal monthly installments from the grant date and expire 10 years from the grant date. As at December 31, 2014, 5,903 of these options were vested and exercisable. The $481 value of these vested options was determined by multiplying the vested options by the difference between the exercise price of C$4.54 (US$4.11) and the C$4.63 (US $4.19) closing price of QLT’s shares on the TSX on December 31, 2014, the last trading day in 2014.

On October 29, 2014, Dr. Cox was granted 150,000 stock options upon his appointment to Interim CEO. These stock options vest and become exercisable in 6 successive and equal monthly installments from the grant date and expire 10 years from the grant date. As at December 31, 2014, 50,000 of these options

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were vested and exercisable. The $7,245 value of these vested stock options was determined by multiplying the number of vested stock options by the difference between the C$4.47 (US$4.05) exercise price and the C$4.63 (US$4.19) closing price of QLT’s shares on the TSX on December 31, 2014, the last trading day in 2014.

(2)                                  Stock awards consist of DSUs and RSUs. The DSUs vest in 36 successive and equal monthly installments beginning on the first day of the first month after the grant date. On July 15, 2013 and on July 10, 2012, Dr. Cox was granted 11,000 DSUs for each respective period. No DSUs were granted in 2014. As of December 31, 2014, 14,056 of Dr. Cox’s DSUs were vested and 7,944 were unvested. As at December 31, 2014, the value of Dr. Cox’s vested DSUs was $58,931 and the value of his unvested DSUs was $33,309 based on the C$4.64 (US$4.19) closing price of QLT’s shares on the TSX on December 31, 2014, the last trading day in 2014.

The RSUs vest in three successive and equal annual installments on the date of each of the first three annual general meetings of QLT held after the date of grant. On July 15, 2013, Dr. Cox was granted 6,000 RSUs for his service as a member of the Board. On December 15, 2014, 2,000 of Dr. Cox’s RSUs vested and he was issued 2,000 common shares. As of December 31, 2014, none of Dr. Cox’s remaining 4,000 RSUs were vested. As at December 31, 2014, the value of Dr. Cox’s unvested RSUs was $16,771 based on the C$4.64 (US$4.19) closing price of QLT’s shares on the TSX on December 31, 2014, the last trading day in 2014.

(3)                                  Under the terms of Dr. Cox’s employment agreement, he is required to provide 30 days of written notice to QLT in the event of his resignation. Upon satisfaction of the 30 day notice period, Dr. Cox is entitled to base salary for the shorter of (i) the 30 day notice period and (ii) either the period to the expiry of the original 6 month employment term or, if applicable, the expiry of the extended employment term. Assuming resignation on December 31, 2014, Dr. Cox is entitled to receive $40,000 of base salary, which represents his base salary for the 30 day notice period, and benefits of $3,411, which coincides with the 30 day notice period.

(4)                                  Under the terms of Dr. Cox’s employment agreement, there are no provisions with respect to retirement. However, if Dr. Cox did retire the severance benefits under the Resignation category would apply.

(5)                                  In the event of termination for cause, Dr. Cox would not be entitled to any advance notice of termination or pay in lieu thereof. In addition, all vested and unvested stock options, vested and unvested DSUs and unvested RSUs are subject to immediate cancellation.

(6)                                  If Dr. Cox is terminated without cause, under the terms of his employment agreement; he is entitled to receive $149,091, which represents his base salary pro-rated for the remainder of his six month term and his benefits coverage will cease on his termination date. Assuming termination without cause, under the terms of Dr. Cox’s October 29, 2014 stock option grant, the 100,000 of unvested options would be subject to immediate accelerated vesting, the value of which is estimated at $14,489 based on the difference between the C$4.47 (US$4.05) exercise price and the C$4.63 (US$4.19) closing price of QLT’s shares on the TSX on December 31, 2014. Assuming termination without cause, under the terms of Dr. Cox’s July 15, 2013 stock option grant, the 6,597 of unvested options will expire upon the cessation of service. Under the terms of Dr. Cox’s RSU agreement, all unvested RSUs are subject to automatic cancellation without further QLT consideration in the event of termination without cause.  Furthermore, all vested DSUs would be subject to cash payout, the value of which is estimated at $58,931 based on the December 31, 2014 closing TSX share price, and unvested DSUs will be cancelled immediately.

(7)                                  If Dr. Cox is terminated due to disability, under the terms of his employment agreement; he is entitled to receive $149,091, which represents his base salary pro-rated for the remainder of his six month term and his benefits coverage will cease on his termination date. Upon termination due to disability, all unvested options are subject to immediate accelerated vesting. The value of Dr. Cox’s 106,597 unvested options as at December 31, 2014 are $15,026 based on the difference between the respective exercise prices and the C$4.63 (US$4.19) closing price of QLT’s shares on the TSX on December 31, 2014. In addition, all unvested RSUs and DSUs are subject to immediate accelerated vesting in the event of termination due to disability. The value of Dr. Cox’s unvested RSUs and DSUs as at December 31, 2014 was $50,079 (see above for an explanation of calculated amounts).

(8)                                  In the event of death, Dr. Cox’s estate would be entitled to receive his base salary up to the date of death and an amount equal to 10% of his base salary for the period from the date of death to the expiry of his 6 month employment term (in lieu of benefits coverage for his eligible dependents). Given that the date of death is assumed to be December 31, 2014 for the purposes of this analysis, no amounts would be outstanding in respect of his base salary. The value of the benefits coverage payment is estimated at $12,714. Upon death, all 106,597 unvested options are subject to immediate accelerated vesting. The value of Dr. Cox’s unvested options as at December 31, 2014 are $15,026 based on the difference between the respective exercise prices and the C$4.63 (US$4.19) closing price of QLT’s shares on the TSX on December 31, 2014. In addition, all unvested RSUs and DSUs are subject to immediate accelerated vesting in the event of death. The value of Dr. Cox’s unvested RSUs and DSUs as at December 31, 2014 was $50,079 (see above for an explanation of calculated amounts).

(9)                                  Under the terms of Dr. Cox’s employment agreement, there are no provisions with respect to termination upon a change of control. However, if Dr. Cox was terminated following a change of control, the severance benefits under the Termination other than for Cause category would apply. In the event of termination due to a change of control, the 100,000 of unvested stock options under Dr. Cox’s October 29, 2014 grant would be subject to immediate accelerated vesting, the value of which is estimated at $14,489 on December 31, 2014 (see above for explanation of the calculated amount). In contrast, the 6,597 unvested options under Dr. Cox’s July 15, 2013 grant would not be subject to acceleration. As such, the $538 value of these unvested options has not been reflected under the Termination other than for Cause category above.  All unvested RSUs and DSUs are subject to immediate accelerated vesting upon termination in connection with a change of control. The value of Dr. Cox’s unvested RSUs and DSUs as at December 31, 2014 was $50,079 (see above for an explanation of calculated amounts).

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Jeffrey A. Meckler

*                                          Note: Where amounts were agreed upon under the applicable agreements in Canadian dollars, the amounts for 2014 set out above represent the U.S. dollar equivalent of those amounts converted using an average of 2014 noon buying rates published by the Federal Reserve Bank of New York: US$1.00 = C$1.1043.

(1)                                  On July 15, 2013 and December 17, 2014, Mr. Meckler was granted 12,500 for each respective period for his service as a member of the Board. These stock options vest and become exercisable in 36 successive and equal monthly installments from the grant date and expire 10 years from the grant date. On November 22, 2013, Mr. Meckler was granted 225,000 stock options for his service as Chairman of the Executive Transition Committee. These stock options vested and became exercisable in 6 successive and equal monthly installments from the grant date and expire 10 years from the grant date. As at December 31, 2014, 230,903 of Mr. Meckler’s stock options were vested and exercisable. The value of the vested stock options was determined by multiplying the number of “in-the-money” vested stock options by the difference between the applicable exercise prices and the C$4.63 (US$4.19) closing price of QLT’s shares on the TSX on December 31, 2014, the last trading day in 2014. As of December 31, 2014, 225,000 of Mr. Meckler’s options were “out-of-the-money” and are therefore not included in the table above.

(2)                                  In the event of death and termination due to the inability to act, all 19,097 of unvested stock options are subject to immediate accelerated vesting. The $6,763 value of such accelerated vested stock options was determined by multiplying the unvested stock options as at December 31, 2014 by the difference between the applicable exercise prices and the C$4.63 (US$4.19) closing price of QLT’s shares on the TSX on December 31, 2014, the last trading day in 2014.

(3)                                  The vesting provisions applicable to the unvested portion of the options granted to Mr. Meckler on July 15, 2013 and December 17, 2014 are subject to accelerated vesting at the Board’s discretion. As a result, the $6,763 value of these 19,097 unvested options is not reflected under the Termination upon a Change of Control of QLT category above. The value of these unvested stock options was calculated by multiplying the number of unvested stock options by the difference between the exercise price and the C$4.63 (US$4.19) closing price of QLT’s shares on the TSX on December 31, 2014, the last trading day in 2014.

(4)                                  Stock awards consist of DSUs and RSUs. The DSUs vest in 36 successive and equal monthly installments beginning on the first day of the first month after the grant date. The RSUs vest in three successive and equal annual installments on the date of each of the first three annual general meetings of QLT held after the date of grant. In December 2014, Mr. Meckler was granted 6,000 RSUs for his services as member of the Board. In July 2013, Mr. Meckler was granted 11,000 DSUs and 6,000 RSUs for his services as member of the Board. In July 2012, Mr. Meckler was granted 11,000 DSUs for his services as a member of the Board. As of December 31, 2014, Mr. Meckler has 14,056 vested DSUs, 7,944 unvested DSUs, and 10,000 unvested and outstanding RSUs. On December 15, 2014, 2,000 of Mr. Meckler’s RSUs vested and 2,000 shares were concurrently issued.

(5)                                  As at December 31, 2014, the value of Mr. Meckler’s vested stock awards were determined by multiplying the number of vested DSUs and RSUs by the closing price of QLT’s shares on the TSX on December 31, 2014, the last trading day in 2014, which was C$4.63 (US$4.19).

(6)                                  In the event of a change in control, death or termination due to the inability to act, Mr. Meckler’s unvested stock awards are subject to immediate accelerated vesting. The value of such accelerated vested awards was determined by multiplying the number of unvested DSUs and RSUs by the closing price of QLT’s shares on the TSX on December 31, 2014, the last trading day in 2014, which was C$4.63 (US$4.19).

(7)                                  In the event of termination for cause, all vested and unvested stock options, vested and unvested DSUs and unvested RSUs are subject to immediate cancellation.

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Sukhi Jagpal