Osisko Development Boosts Executive Incentives with Deferred Share Units

Osisko Development, a mining company with a focus on gold and base metals, has recently announced a strategic move to align executive compensation with long-term company performance. The company has granted deferred share units (DSUs) to its CEO and CFO, totaling 1.2 million shares. This grant is a significant step in Osisko's compensation strategy, aiming to attract and retain key talent while fostering a long-term mindset.

The grant of DSUs to Osisko's CEO and CFO is a performance-based incentive, with the shares vesting over a three-year period. The vesting schedule is tied to the company's share price performance, with 25% of the DSUs vesting after the first year, 25% after the second year, and the remaining 50% after the third year. This structure encourages executives to focus on long-term growth and value creation for shareholders.

Osisko Development's decision to grant DSUs aligns with its existing compensation structure, which combines cash and equity components. The DSUs complement other employee benefits, such as stock options and restricted share units (RSUs), providing a mix of immediate and long-term rewards. This approach helps Osisko attract and retain top talent while fostering a stable and committed workforce.

The grant of DSUs is expected to have a positive impact on employee engagement and productivity in both the short and long term. In the short term, employees will be motivated to work towards increasing the company's share price, as their DSUs will vest based on performance. In the long term, the DSUs can help retain key talent, as employees will be more likely to stay with the company to realize the full value of their DSUs. This can lead to improved productivity and innovation, as employees feel more invested in the company's success.

Osisko Development's DSU grant compares favorably with similar compensation strategies in the mining industry. Companies like Barrick Gold and Newmont Corporation also use DSUs to align executive compensation with long-term company performance. However, Osisko's grant is notable for its size and performance-based structure. The grant of 1.2 million DSUs, vesting over three years based on share price performance, is larger than similar grants by peers. For instance, Barrick Gold granted 600,000 DSUs in 2021, vesting over two years.

Osisko can learn from Newmont's approach, which ties DSUs to both share price performance and total shareholder return, providing a balanced incentive for executives. Additionally, Osisko could consider implementing a clawback policy, as seen in some mining companies, to protect against excessive risk-taking.

In conclusion, Osisko Development's grant of deferred share units to its CEO and CFO is a strategic move that aligns executive compensation with long-term company performance. The DSUs complement Osisko's existing compensation structure and are expected to have a positive impact on employee engagement and productivity. While the grant is comparable to similar strategies in the mining industry, Osisko can learn from peers to further refine its compensation strategy. As Osisko continues to develop its mining projects, the DSU grant is a testament to the company's commitment to attracting and retaining top talent while fostering a long-term mindset.