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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

Filed by the Registrant  x                              Filed by a Party other than the Registrant  ¨

Check the appropriate box:

QLT INC.

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

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May 10, 2013

To the Shareholders of QLT Inc.

I am pleased to invite you to attend the Annual General and Special Meeting (the “Annual Meeting”) of shareholders of QLT Inc. (“QLT”) to be held on Friday, June 14, 2013 at 6:00 AM (Pacific Time)/9:00 AM (Eastern Time) at Delamar Greenwich Harbor, 500 Steamboat Road, Greenwich, Connecticut, USA to allow you to meet the Directors.

The attached Notice of Annual Meeting and Proxy Statement provide details of the business to be conducted at the Annual Meeting. The Notice of Annual Meeting and Proxy Statement, the Instrument of Proxy (or voting information form), and the Annual Report on Form 10-K are first being mailed to shareholders on or about May 21, 2013. A copy of QLT’s Annual Report on Form 10-K is enclosed.

Your vote is very important to us. Whether or not you plan to attend our Annual Meeting, please communicate your vote in accordance with the instructions in the Proxy Statement and the enclosed Instrument of Proxy (or voting information form).

Thank you for your continued support of QLT and I look forward to seeing you at the Annual Meeting on June 14, 2013.

Sincerely,

QLT Inc.

“Jeffrey A. Meckler”

Jeffrey A. Meckler,

Chairman, Executive Transition Committee

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QLT Inc.

887 Great Northern Way, Suite 101

Vancouver, British Columbia, V5T 4T5

Notice of Annual General and Special Meeting of Shareholders to be held June 14, 2013

NOTICE IS HEREBY GIVEN that the Annual General and Special Meeting (the “Annual Meeting”) of shareholders of QLT Inc. (“QLT” or the “Company”) will be held at Delamar Greenwich Harbor, 500 Steamboat Road, Greenwich, Connecticut, USA, on Friday, June 14, 2013 at 6:00 AM (Pacific Time)/9:00 AM (Eastern Time) for the following purposes, each of which is described in more detail in the accompanying Proxy Statement (the “Proxy Statement”):

You are entitled to receive notice of and attend the Annual Meeting, and may vote at the Annual Meeting, if you were a shareholder of QLT at the close of business on May 10, 2013, which we refer to as the “record date.” If you were a registered shareholder on May 10, 2013 and you are unable to attend the Annual Meeting in person, you may vote by proxy on the matters to be considered at the Annual Meeting. Please read the notes accompanying the Instrument of Proxy enclosed with these materials and then follow the instructions for voting by proxy contained in this Proxy Statement. If on May 10, 2013, your shares in QLT were held of record in your brokerage firm, securities dealer, trust company, bank or another similar organization, you may vote at the Annual Meeting if you complete a voting information form received from that organization issued in your name and carefully follow any instructions that are provided to you in connection with that voting information form, or if you follow the instructions contained in this Proxy Statement for submitting another form of written documentation to appoint yourself, or your nominee, as a proxyholder.

In order for it to be voted at the Annual Meeting, a proxy must be received (whether delivered by mail, telephone or Internet) by no later than 6:00 AM (Pacific Time)/9:00 AM (Eastern Time) on Wednesday, June 12, 2013 by our registrar and transfer agent, Computershare Investor Services Inc., Attn: Proxy Department, 100 University Avenue, 9th Floor, Toronto, Ontario, M5J 2Y1, telephone number: 1-866-732-VOTE (8683), website: www.investorvote.com. The Chairman of the Annual Meeting may determine, in his sole discretion, to accept or reject an Instrument of Proxy that is delivered in person to the Chairman at the Annual Meeting as to any matter in respect of which a vote has not already been cast.

DATED at Vancouver, British Columbia, this 10^th day of May, 2013.

BY ORDER OF THE BOARD OF DIRECTORS

“Jeffrey A. Meckler”

Chairman, Executive Transition Committee

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Shareholders to be held on June 14, 2013:

This Proxy Statement and our Annual Report for the fiscal year ended December 31, 2012 are available at www.qltinc.com by clicking on “2013 Proxy Materials and Annual Report” or directly at:
http://phx.corporate-ir.net/phoenix.zhtml?c=67181&p=irol-proxy.

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ATTACHMENT

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QLT INC.

887 Great Northern Way, Suite 101

Vancouver, British Columbia, V5T 4T5

PROXY STATEMENT FOR

ANNUAL GENERAL AND SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD ON JUNE 14, 2013

We are providing you this Notice of Annual General and Special Meeting and Proxy Statement, together with the enclosed Instrument of Proxy, because our Board of Directors and management are soliciting your proxy to vote at our Annual General and Special Meeting of shareholders to be held on Friday, June 14, 2013 (the “Annual Meeting”). This Proxy Statement contains information about the matters being voted on at the Annual Meeting and important information about QLT. Unless otherwise stated, information in this Proxy Statement is given as of May 10, 2013. As many of our shareholders are expected to be unable to attend the Annual Meeting in person, proxies are solicited by mail, to give each shareholder an opportunity to vote on all matters that will properly come before the Annual Meeting. QLT intends to mail this Proxy Statement and accompanying Instrument of Proxy or voting information form (“VIF”), as applicable, on or about May 21, 2013 to all shareholders of record as of the close of business on May 10, 2013, which we refer to as the “record date.”

We use a number of abbreviations in this Proxy Statement. We refer to the company as “QLT” or “the Company,” “we,” “us” or “our” and to our board of directors as the “Board” or the “Board of Directors.” The term “proxy solicitation materials” includes this Proxy Statement and the enclosed Instrument of Proxy or VIF, as applicable. References to “2012” and “2013” mean our 2012 fiscal year which began on January 1, 2012 and ended on December 31, 2012 and our 2013 fiscal year which began on January 1, 2013 and will end on December 31, 2013, respectively. Our Annual General and Special Meeting of Shareholders to be held on Friday, June 14, 2013 is referred to as the “Annual Meeting” or the “Meeting.” References in this Proxy Statement to the Annual Meeting include any adjournment or postponement of the Annual Meeting.

QUESTIONS AND ANSWERS ABOUT THIS PROXY STATEMENT

AND OUR ANNUAL MEETING

Why did I receive this Proxy Statement?

You are receiving these proxy materials from us because you owned common shares of QLT at the close of business on the record date. When you vote using the Instrument of Proxy, you appoint Messrs. Jason M. Aryeh or, failing him, Jeffrey A. Meckler, as your representative at the Annual Meeting. Messrs. Aryeh and Meckler will vote your shares at the Annual Meeting as you have instructed them on the Instrument of Proxy. This way, your shares will be voted whether or not you attend the Annual Meeting. Even if you plan to attend the Annual Meeting, it is a good idea to vote by proxy in advance of the Annual Meeting in case your plans change. You have the right to appoint another person to attend and act on your behalf at the Annual Meeting other than the persons named in the enclosed Instrument of Proxy. To exercise this right, you should strike out the names of the persons named in the Instrument of Proxy and insert the name of your nominee in the blank space provided. A person appointed as a proxy holder need not be a shareholder of QLT.

Can I access the proxy materials on the Internet?

Yes. This Proxy Statement and our Annual Report for the fiscal year ended December 31, 2012 are available on our website at www.qltinc.com by clicking “2013 Proxy Materials and Annual Report” or directly at:
http://phx.corporate-ir.net/phoenix.zhtml?c=67181&p=irol-proxy.

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What is the date, time and place of the Annual Meeting?

The Annual Meeting will be held at Delamar Greenwich Harbor, 500 Steamboat Road, Greenwich, Connecticut, USA, on Friday, June 14, 2013 at 6:00 AM (Pacific Time)/9:00 AM (Eastern Time).

Who is entitled to vote at the Annual Meeting?

Only shareholders of record at the close of business on the record date may vote at the Annual Meeting. On a show of hands every shareholder present in person has one vote, and on a poll every shareholder present in person or by proxy has one vote for each QLT common share registered in the shareholder’s name. There are no other classes of voting securities other than the common shares. Cumulative voting is not permitted.

What am I voting on at the Annual Meeting?

At the Annual Meeting, shareholders will be asked to vote on the following items of business:

QLT does not know of any business or proposals to be considered at the Annual Meeting other than those set out in this Proxy Statement. If any other business is proposed and properly presented at the Annual Meeting, the proxies received from our shareholders give the proxy holders the authority to vote on the matter at their discretion. The proxy holders intend to vote the shares they represent as directed by our Board.

How does the Board recommend that I vote?

Our Board believes the election of our seven nominees to the Board and the appointment of Deloitte LLP as our independent auditors are in the best interests of QLT and our shareholders and, accordingly, recommends that each shareholder vote such shareholder’s shares “FOR” each of the director nominees and “FOR” the approval of Deloitte LLP as our independent auditors for 2013. Our Board also recommends that each shareholder vote such shareholder’s shares “FOR” the approval of the Reduction of Capital and the Cash Distribution; “FOR” the approval of the compensation of our named executive officers, as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the U.S. Securities and Exchange Commission (the “SEC”); and “FOR” the approval of the Restated Plan.

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What vote is required to approve each proposal?

Broker Non-Votes and Abstentions. Common shares that are represented by “broker non-votes” (i.e., common shares held by a bank, broker or other holder of record holding shares for a beneficial owner that are represented at the Annual Meeting but with respect to which the bank, broker or other holder of record is not empowered to vote on a particular proposal) and common shares held by holders who abstain from voting (or vote “withhold”) on any matter will have no effect on the legal outcome of the matter, but are included for quorum purposes. We encourage all shareholders that hold shares through a bank, broker or other holder of record to provide voting instructions to such parties well in advance of the Annual Meeting to ensure that their shares are voted at the Annual Meeting.

Election of Directors. For Proposal No. 1, under the Business Corporations Act (British Columbia) (the “BCA”), directors are entitled to be elected by a plurality of the votes cast at the Annual Meeting. This means that the seven nominees with the most votes for election will be elected. You may choose to vote, or withhold your vote, separately for each nominee director.

Approval of Reduction of Capital. For Proposal No. 2, the proposed Reduction of Capital and resulting Cash Distribution, the affirmative vote of two-thirds of the common shares voted at the Annual Meeting will be required for approval.

Appointment of Auditors. For Proposal No. 3, the appointment of Deloitte LLP as auditors and authorization of the Board to fix the remuneration to be paid to the auditors, the affirmative vote of a majority of the common shares voted at the Annual Meeting will be required for approval.

Advisory Vote on the Compensation of Named Executive Officers. For Proposal No. 4, the compensation of our named executive officers, as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the SEC, the affirmative vote of a majority of the common shares voted at the Annual Meeting will be required for approval, on an advisory basis. Because your vote is advisory, it will not be binding on the Board, the Compensation Committee or QLT. However, the Compensation Committee and the Board will review the voting results and take them into consideration when making future decisions about executive compensation.

Approval of the Amended and Restated QLT 2000 Incentive Stock Plan. For Proposal No. 5, the approval of the Restated Plan, the affirmative vote of a majority of the common shares voted at the Annual Meeting will be required for approval. In order to comply with the requirements of the Toronto Stock Exchange (“TSX”), the Restated Plan must be approved by a resolution of the disinterested shareholders (being the approval of all of the shareholders of QLT other than insiders of QLT who may receive securities under the Restated Plan). Accordingly, the votes attached to the 196,278 common shares held by persons who do not qualify as disinterested shareholders (representing approximately 0.4% of the issued and outstanding common shares as at May 10, 2013) will not be counted for the purpose of determining whether the required level of shareholder approval has been obtained for the resolution approving the Restated Plan.

Who may attend the Annual Meeting?

All QLT shareholders are invited to attend the Annual Meeting, including shareholders whose shares are held by their brokerage firm or another similar organization, or who otherwise do not hold their common shares in their own name (referred to herein as “Beneficial Shareholders”). Beneficial Shareholders fall into two categories - those who object to their identity being known to the issuers of securities which they own (“OBOs”) and those who do not object to their identity being made known to the issuers of the securities which they own (“NOBOs”). Beneficial Shareholders should note that only proxies deposited by shareholders who appear on the records maintained by QLT’s registrar and transfer agent as registered

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holders of common shares will be recognized for the purposes of attending and voting at the Annual Meeting. If common shares are listed in an account statement provided to a Beneficial Shareholder by a broker, then those common shares will, in all likelihood, not be registered in the shareholder’s name. Such common shares will more likely be registered under the name of the shareholder’s broker or an agent of that broker. Without specific instructions, brokers and their agents and nominees are prohibited from voting shares for the broker’s clients. Therefore, each Beneficial Shareholder should ensure that voting instructions are communicated to the appropriate person well in advance of the Annual Meeting.

Although a Beneficial Shareholder may not be recognized directly at the Annual Meeting for the purposes of voting common shares registered in the name of such shareholders’ broker, a Beneficial Shareholder may attend the Annual Meeting as proxyholder for the registered shareholder and vote the common shares in that capacity. A Beneficial Shareholder who wishes to attend the Annual Meeting and to vote their common shares as proxyholder for the registered shareholder, should enter their own name in the blank space on the VIF and return the same to their broker (or the broker’s agent) in accordance with the instructions provided by such broker. Alternatively, National Instrument 54-101 - Communication with Beneficial Owners of Securities of a Reporting Issuer (“NI 54-101”) allows a Beneficial Shareholder to submit to the applicable intermediary any document in writing that requests that the Beneficial Shareholder, or a nominee of the Beneficial Shareholder, be appointed as proxyholder. If such a request is received, the applicable intermediary must arrange, without expense to the Beneficial Shareholder, to appoint such Beneficial Shareholder or its nominee as a proxyholder and to deposit that proxy within the time specified in this Proxy Statement, provided that the intermediary receives such written instructions from the Beneficial Shareholder at least one business day prior to the time by which proxies are to be submitted at the Annual Meeting, with the result that such a written request must be received by 6:00 AM (Pacific Time)/9:00 AM (Eastern Time) on the day which is at least three business days prior to the Annual Meeting.

What is the quorum for the Annual Meeting?

The authorised share structure of QLT is comprised of 500,000,000 common shares and 5,000,000 First Preference shares, of which, there were 50,896,595 common shares of QLT issued and outstanding on the record date. All common shares in the capital of the Company carry the right to one vote. At least (i) two shareholders, (ii) two proxy holders representing two shareholders, or (iii) one shareholder and a proxy holder representing another shareholder entitled to vote at the Annual Meeting, present in person at the beginning of the Annual Meeting and collectively holding or representing by proxy in the aggregate not less than 33 ¹/₃% of the issued and outstanding QLT common shares as of the record date, will constitute a quorum for the Annual Meeting. To the knowledge of the directors and executive officers of QLT, as of the record date, the only persons or companies that beneficially own, control or direct, directly or indirectly, 10% or more of QLT’s common shares are Axial Capital Management, LLC which, as evidenced by public filings, owns 8,865,036 common shares, representing approximately 17.4% of the issued and outstanding common shares, and NB Public Equity K/S which, as evidenced by public filings, owns 7,447,626 common shares, representing approximately 14.6% of the issued and outstanding common shares.

How do I vote?

Carefully read and consider the information contained or incorporated by reference in this Proxy Statement. You should also determine whether you hold your shares directly in your name as a registered shareholder or through a broker or other nominee, because this will determine the procedure that you must follow in order to vote. If you are a registered shareholder of QLT (that is, if your shares are registered in your name, as opposed to being held through a broker or other intermediary), you may vote in any of the following ways:

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All votes made by proxy must be received (whether delivered by mail, telephone or Internet) no later than Wednesday, June 12, 2013 at 6:00 AM (Pacific Time)/9:00 AM (Eastern Time).

If you are a Beneficial Shareholder, then you will have received this material from your broker or the intermediary seeking your instructions as to how you wish your shares to be voted. In that case, follow the instructions given to you by your broker or the other intermediary. Existing Canadian regulatory policy requires brokers and other intermediaries to seek voting instructions from Beneficial Shareholders in advance of shareholder meetings. The various brokers and other intermediaries have their own mailing procedures and provide their own return instructions to clients, which should be carefully followed by Beneficial Shareholders in order to ensure that their common shares are voted at the Annual Meeting. The form of proxy supplied to a Beneficial Shareholder by its broker (or the agent of the broker) is substantially similar to the Instrument of Proxy provided directly to registered shareholders by QLT. However, its purpose is limited to instructing the registered shareholder (i.e., the broker or agent of the broker) how to vote on behalf of the Beneficial Shareholder. A Beneficial Shareholder who receives a VIF from its broker or other intermediary cannot use that form to vote common shares directly at the Annual Meeting. The VIFs must be returned to your broker or other intermediary (or instructions respecting the voting of common shares must otherwise be communicated to your broker or other intermediary) well in advance of the Annual Meeting in order to have the common shares voted. If you have any questions respecting the voting of common shares held through a broker or other intermediary, please contact that broker or other intermediary for assistance.

The Notice of Meeting, Proxy Statement, Instrument of Proxy and VIF, as applicable, are being provided to both registered shareholders and Beneficial Shareholders. Subject to the provisions of NI 54-101, issuers may request and obtain a list of their NOBOs from intermediaries directly or via their transfer agent and may obtain and use the NOBO list for the distribution of proxy-related materials directly to such NOBOs.

QLT has distributed copies of the Notice of Meeting, Proxy Statement and VIF to intermediaries for distribution to NOBOs. Unless you have waived your right to receive the Notice of Meeting, Proxy Statement and VIF, intermediaries are required to deliver them to you as a NOBO of QLT and to seek your instructions on how to vote your common shares.

QLT’s OBOs can expect to be contacted by their brokers or their broker’s agents. QLT will assume the costs associated with the delivery of the Notice of Meeting, Proxy Statement and VIF, as set out above, to OBOs by intermediaries.

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The Chairman may determine, in his sole discretion, to accept or reject an Instrument of Proxy that is delivered in person to the Chairman at the Annual Meeting as to any matter in respect of which a vote has not already been cast. You have the right to appoint another person to attend and act on your behalf at the Annual Meeting other than the persons named in the enclosed Instrument of Proxy. To exercise this right, you should strike out the names of the persons named in the Instrument of Proxy and insert the name of your nominee in the blank space provided. A person appointed as a proxy holder need not be a shareholder of QLT. A Beneficial Shareholder should follow the instructions set out above in the section entitled “Who may attend the Annual Meeting?” in connection with appointing another person to attend and act for it at the Annual Meeting.

How will proxies be exercised?

The proxy holder will vote or withhold from voting according to instructions in the Instrument of Proxy on any ballot that may be called for and for which a choice has been specified. If you properly return your Instrument of Proxy, but do not include instructions on how to vote, your shares will be voted “FOR” the election of the seven nominees for election to the Board as set out in this Proxy Statement, “FOR” the approval of the Reduction of Capital and the Cash Distribution; “FOR” the approval of the appointment of Deloitte LLP as our independent auditors for the ensuing year and the authorization of the Board to fix the remuneration to be paid to the auditors, “FOR” the approval of the compensation of our named executive officers, as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the SEC, and “FOR” the proposal to approve the Restated Plan.

The Instrument of Proxy also confers upon the proxy holder discretionary authority to vote all shares represented by the proxy with respect to amendments or variations to matters identified in the Notice of Meeting and any other matter that properly comes before the Annual Meeting. We know of no such amendment, variation or other matter that is to be presented for action at the Annual Meeting. However, if any other matters which are not now known to us should properly come before the Annual Meeting, the proxies will be voted, or not voted, by the proxy holder in his or her discretion.

What does it mean if I receive more than one set of proxy materials?

You may receive more than one set of proxy materials because you own QLT common shares that are registered under different names. For example, you may own some shares directly as a shareholder of record and other shares through a broker, or you may own shares through more than one broker. In these situations, you will receive multiple sets of proxy materials. It is necessary for you to vote all of the Instruments of Proxy according to the instructions contained in this Proxy Statement and to follow the instructions for any alternative voting procedures you receive in order to vote all of the shares you own. Each Instrument of Proxy you receive will come with its own prepaid return envelope. If you vote by mail, please make sure you return each Instrument of Proxy in the return envelope that accompanies that Instrument of Proxy.

Can I change my vote after I have voted?

You may revoke your proxy at any time before it is exercised at the Annual Meeting. A proxy may be revoked by voting in person at the Annual Meeting, by an instrument in writing stating that the proxy is revoked and signed and delivered as follows, or in any other manner provided by law. In order to revoke your proxy:

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If your shares are held in the name of an intermediary such as a brokerage firm, securities dealer, trust company, bank or other nominee institution, you may change your vote by submitting new voting instructions to your intermediary, as applicable. You will need to contact your brokerage firm, securities dealer, trust company, bank or other nominee institution to learn how to make that change.

Who will tabulate the votes?

Our transfer agent, Computershare, will tabulate votes cast by proxy by an automated system. Votes cast by proxy or in person at the Annual Meeting will be counted by the persons appointed by us to act as scrutineer for the Annual Meeting.

Who pays the cost of the proxy solicitation?

We will pay the cost of soliciting these proxies, including the printing, handling and mailing of the proxy materials. Copies of these materials will be given to brokerage firms, securities dealers, trust companies, banks and other institutions that hold our shares that are beneficially owned by others. We will reimburse these brokerage firms, securities dealers, trust companies, banks and other institutions for their reasonable out-of-pocket expenses in forwarding proxy materials to beneficial owners of our shares. Proxies may be solicited by certain directors, officers and employees of QLT personally or by telephone, mail, facsimile or e-mail. No additional compensation will be paid to directors, officers or other QLT employees for soliciting proxies. In addition, we may engage external proxy solicitation services to solicit proxies from brokers, banks and other institutional holders and from beneficial owners and individual holders of record of common shares. In the event we engage such proxy solicitation services, we anticipate that the services would be provided at a standard fee and on other typical commercial terms.

How can shareholders submit proposals for QLT’s 2014 Annual Meeting?

Under the U.S. securities laws, the deadline for submitting shareholder proposals for inclusion in the Company’s proxy statement and form of proxy for the Company’s 2014 Annual Meeting of Shareholders is January 21, 2014. Proposals must be sent to our registered office at 2600 Oceanic Plaza, 1066 West Hastings Street, Vancouver, British Columbia, V6E 3X1.

Under the BCA, a proposal for a matter for consideration at the 2014 Annual Meeting of Shareholders must be received at our registered office at the address above on or before March 14, 2014. For a proposal under the BCA to be valid, it must be in writing, accompanied by the requisite declarations and signed by the submitter and qualified shareholders who at the time of signing are the registered or beneficial owners of shares that, in the aggregate, (i) constitute at least 1% of the issued shares of QLT that have the right to vote at general meetings, or (ii) have a fair market value in excess of $2,000. For the submitter or a qualified shareholder to be eligible to sign the proposal, that shareholder must have been the registered or beneficial owner of QLT shares that carry the right to vote at general meetings for an

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uninterrupted period of at least two years before the date the proposal is signed, among other requirements.

SIGNIFICANT CHANGES IN THE COMPANY DURING 2012

2012 was a transformative year for the Company. In June 2012 the composition of our Board of Directors completely changed when, following a proxy contest at the annual general meeting of shareholders held on June 4, 2012 (the “2012 AGM”), all directors who were in office at the beginning of the year, being Robert L. Butchofsky, C. Boyd Clarke, Bruce L.A. Carter, Peter A. Crossgrove, Kathryn E. Falberg, Ian J. Massey, Joseph L. Turner and L. Jack Wood (collectively, the “Previous Board”) were either not re-elected to the Board at the 2012 AGM or resigned shortly thereafter, and a new Board of Directors being Dr. Vicente Anido, Jr., Jason M. Aryeh, Dr. Geoffrey F. Cox, Dr. John W. Kozarich, Dr. Stephen L. Sabba, Jeffrey A. Meckler and John C. Thomas, Jr. (collectively, the “Current Board”) was elected, or in the case of Dr. Anido, appointed shortly thereafter, and continue in office.

On July 9, 2012, as a result of a comprehensive business and portfolio review by the Current Board, the Company announced a new corporate strategy and plans to restructure our operations in order to concentrate our resources on our clinical development programs related to our synthetic retinoid, QLT091001, for the treatment of certain inherited retinal diseases. During the remainder of 2012 in connection with the strategic restructuring of the Company, we sold our Visudyne^® business to Valeant Pharmaceuticals International, Inc. and entered into an option agreement for the sale of our punctal plug drug delivery system to Mati Therapeutics Inc. We also completed a significant reduction in force of approximately 178 employees, or 83% of our work force.

As a result of the restructuring, only one of the named executive officers of the Company in June 2012, Alexander R. Lussow, Senior Vice President, Business Development & Commercial Operations, remained an executive officer of the Company at year end. Sukhi Jagpal, who is now our Chief Financial Officer, was our only other employed named executive officer at the end of 2012. Mr. Jagpal was originally appointed as Interim Chief Financial Officer on July 20, 2012 and was subsequently appointed as Chief Financial Officer on February 27, 2013.

Effective August 2, 2012, in connection with the departure of Robert Butchofsky, the Company’s former President and Chief Executive Officer, the Board formed an Executive Transition Committee (the “ETC”) composed of its Chairman, Jason M. Aryeh, and directors Dr. Vicente Anido, Jr., Jeffrey A. Meckler and Dr. John W. Kozarich, to lead the Company on an interim basis while the Board determines the resources and management necessary to pursue the Company’s new strategy. Mr. Aryeh served as Chairman of the ETC until February 2013 when the ETC was restructured and Mr. Aryeh stepped down from his role on the Committee and Mr. Meckler became Chairman of the Committee. At the same time, Dr. Anido also stepped off the ETC. While Mr. Aryeh was never employed as an employee or compensated other than as a director or considered by the Board to be an executive officer of the Company, he is included in the compensation disclosure schedules below as a Principal Executive Officer of the Company. However, he is not otherwise treated as a named executive officer and has not acted in that role.

In addition to Mr. Butchofsky, the other named executive officers whose service to the Company ceased during 2012 were Cameron R. Nelson, who acted as Senior Vice President, Finance and Chief Financial Officer until July 20, 2012; Linda M. Lupini, who acted as Senior Vice President, Human Resources and Organizational Development until December 14, 2012; and Christopher Muller, who acted as Chief Commercial Officer of our wholly-owned subsidiary, QLT Ophthalmics, Inc. until July 20, 2012.

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CORPORATE GOVERNANCE

Overview of Our Corporate Governance Principles

We believe that effective and transparent corporate governance is critical to our long-term success and our ability to create value for our shareholders. We review our corporate governance policies, monitor emerging developments in corporate governance and update our policies and procedures when our Board determines that it would benefit QLT and our shareholders to do so.

We maintain a corporate governance page on our website that includes key information about our corporate governance, including our Code of Ethics and Code of Exemplary Conduct and the charters for the Audit and Risk, Corporate Governance and Nominating, Compensation, and Scientific Review Committees of our Board, all of which can be found at www.qltinc.com by clicking on “Corporate Governance” under “Investors.” The charter of the Audit and Risk Committee is also available on SEDAR at www.sedar.com. The documents noted above will also be provided without charge to any shareholder who requests them. Any changes to these documents, and any waivers granted by us with respect to our Code of Ethics, will be posted on our website.

We also monitor our corporate governance policies and practices to maintain compliance with the provisions of the Sarbanes-Oxley Act of 2002, rules of the SEC, National Instrument 58-101 - Disclosure of Corporate Governance Guidelines, National Policy 58-201 - Corporate Governance Guidelines, Multilateral Instrument 52-110 - Audit Committees, the Marketplace Rules of The NASDAQ Stock Market (“NASDAQ”), and the policies of the TSX (collectively, the “Governance Guidelines”). Our policies and practices meet or exceed the Governance Guidelines.

Disclosure Practices

QLT has in place disclosure controls and procedures to ensure QLT meets its information disclosure obligations on a timely basis. These disclosure controls and procedures are evaluated on an ongoing basis, not less than quarterly, to ensure the controls and procedures allow QLT to accomplish this objective. To implement and review our disclosure controls and procedures, current management of QLT established a Disclosure Practices Committee. The disclosure controls and procedures include procedures for ensuring prompt and effective communication of any material or reportable event to the appropriate executives, and also for designating those individuals within QLT responsible for preparing, reviewing and approving the content of any disclosure.

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 and all executive officers and all senior financial managers, internal legal counsel and human resources managers of QLT. As further described in the charter of the Audit and Risk Committee (available on our website at www.qltinc.com), the Audit and Risk Committee is responsible for monitoring compliance with the Code of Ethics and Code of Exemplary Conduct, and, together with the Board, reviewing and, if determined appropriate, updating the Codes annually.

Our Audit and Risk Committee and our management review and discuss with the Board from time to time the effectiveness of our Code of Ethics and our Code of Exemplary Conduct and any areas or systems that may be further improved. QLT has not been required to, and has not, filed a material change report that pertains to any conduct of any of our directors or executive officers that constitutes a departure from these codes.

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QLT complies with the provisions of the BCA that deal with conflict of interest situations. QLT, through directors’ and officers’ questionnaires and other systems, also gathers and monitors relevant information in relation to potential conflicts of interest that a director or officer may have.

The Code of Ethics and Code of Exemplary Conduct are available on QLT’s website at www.qltinc.com. QLT will also post on its website any amendments to those codes or waivers of compliance by directors or executive officers. In 2012, there were no such amendments made or waivers granted.

Mandate of the Board and the Chairman of the Board

Our Board is responsible for the supervision of the management of the business and affairs of QLT, the stewardship of QLT and the enhancement of shareholder value. The Board has adopted a written Mandate, which is applicable to all directors, and which has formalized its position on corporate governance. The Board has also developed a written position description for the Chairman of the Board, which is detailed in the Mandate of the Chairman of the Board and described below under the heading “Board Leadership Structure”. The Mandate of the Board and the Mandate of the Chairman of the Board are incorporated herein by reference and are available on our website at www.qltinc.com and on SEDAR at www.sedar.com or copies will be provided without charge to any shareholder who requests them by writing to “QLT Investor Relations,” 887 Great Northern Way, Suite 101, Vancouver, British Columbia, Canada, V5T 4T5. The Corporate Governance and Nominating Committee of the Board is charged with reviewing and ensuring that good corporate governance practices and the Mandate of the Board are followed. The Corporate Governance and Nominating Committee is also responsible for reviewing and, if determined appropriate, updating the Mandate of the Board.

The Board has not developed a written description of the chief executive officer (the “CEO”) or the ETC, which is currently performing the function of the CEO on an interim basis while the Board determines the resources and management necessary to pursue the Company’s new strategy. Under the Board’s written Mandate it is responsible for developing a succession plan for the CEO, and for discussing with the CEO succession plans for other senior management personnel. The CEO, or until a permanent CEO is appointed, the ETC, is responsible for recommending and then implementing the corporate strategy approved by the Board and for managing QLT’s business with the objective of meeting the corporate goals. At such times as QLT has a permanent CEO, the Board reviews, approves and documents in writing the annual corporate goals and objectives that the CEO is responsible for meeting each year, and the Board, together with the Compensation Committee, will assess the CEO’s performance against those goals.

Our Board is currently kept informed of QLT’s business through open discussions with the members of the ETC and key members of management. Our Board also keeps itself informed by reviewing documents, such as detailed periodic management reports and quarterly financial statements, by attending presentations made during Board meetings and through periodic reports given to the full Board from each of QLT’s committees. Our directors have access to all books, records and reports upon request, and members of management are available at all times to answer any questions.

Role of the Board in Risk Oversight

The Board is actively involved in overseeing risk management for QLT. In accordance with our Mandate of the Board, the Board, as a whole, oversees the development and application of policies regarding corporate governance, and is responsible for adopting the corporate strategies and plans for QLT’s business, identifying the principal risks of QLT’s business and ensuring the implementation of the appropriate systems to manage these risks, overseeing the integrity of QLT’s internal controls and management information systems and maintaining a continuing dialogue with senior management in order to ensure QLT’s ability to respond to changes, both internal and external, which may affect its

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business operations from time to time. This oversight is also conducted through committees of the Board. The Board receives full reports from each committee Chairman regarding the committee’s consideration and actions. The oversight responsibility of the Board and its committees is enabled by management reporting processes that are designed to provide visibility to the Board about the identification, assessment and management of critical risks. These areas of focus include financial reporting, compliance, compensation and operations, as summarized below.

The Audit and Risk Committee reviews and discusses with management significant financial risks and the actions management has taken to monitor and mitigate potential exposures. The Audit and Risk Committee also assesses other areas of enterprise risk exposure as determined by the Board from time to time, and QLT’s policies with respect to risk assessment and risk management.

The Corporate Governance and Nominating Committee oversees risk management as it relates to, among other things, the development and assessment of our corporate governance framework, board and Chairman succession, including board and committee nominations, membership and standards, and potential conflicts of interest.

The Compensation Committee oversees risk management as it relates to our compensation plans, policies and practices in connection with structuring our executive compensation programs and reviewing our incentive compensation programs for other employees. This includes a review of our material compensation policies and practices under which the Compensation Committee concluded that these policies and practices are not reasonably likely to have a material adverse effect on QLT.

The Scientific Review Committee reviews management’s direction and investment in QLT’s research, development and technology initiatives to ensure that the scientific strategy and its implementation are consistent with and support the strategic and business objectives of QLT. The Scientific Review Committee works with management to identify operational risks with respect to current and future research and development programs and products and technology in which QLT is investing its research and development efforts.

The Strategic Action Committee participates in the planning process with QLT’s executive officers and the ETC, and provides guidance to management and the Board with respect to the strategic direction of QLT and potential strategic transactions. The Strategic Action Committee and the ETC work with management to identify and evaluate risks with respect to the strategic direction of QLT and potential strategic transactions.

Board Leadership Structure

We operate under a corporate governance structure where the Chairman of the Board and the CEO are separate positions held by different individuals. Due to the demands of each position, we believe separating these roles enhances the ability of each to discharge his duties and fosters more accountability. In connection with the August 2, 2012 departure of Robert Butchofsky, QLT’s former President and CEO, the Board formed the ETC to perform the function of a CEO on an interim basis while the Board determines the resources and management necessary to pursue the Company’s new strategy.

The ETC was initially composed of Directors Jason M. Aryeh (Chairman of the Board and the ETC), Dr. Vicente Anido, Jr., Dr. John W. Kozarich and Jeffrey A. Meckler. On February 16, 2013, the ETC was reconstituted to be composed of Dr. Kozarich and Mr. Meckler, with Mr. Meckler serving as Chairman of the ETC. Mr. Aryeh continues to serve as Chairman of the Board. Under this revised committee structure, the Chairman of the Board ceased to be a member of the ETC. The Board of Directors believes that all of its members, including past and current members of the ETC, are independent.

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We expect to maintain separate positions for the Chairman and the CEO once we have appointed a permanent CEO, because we believe that having the Board operate under the leadership and direction of a Board member who is independent from management provides the Board with the most appropriate mechanism to fulfill its oversight responsibilities.

Board Attendance at Annual Meeting

It is a policy of the Board to encourage directors to attend regular Board meetings, Board committee meetings on which they serve and each annual general meeting of the shareholders. In 2012, two members of the Previous Board, Messrs. Boyd Clarke and Robert L. Butchofsky, attended the annual general meeting. It is anticipated that all director nominees will attend our 2013 Annual Meeting.

Decisions Requiring Prior Approval of the Board

In addition to matters that must, by law or by the Articles of QLT, be approved by the Board, management is required to seek approval from the Board for major transactions, for any single expense that exceeds certain specified dollar values, and for certain transactions with related persons. Additional information relating to transactions with related persons is set forth below in this Proxy Statement under the heading “Executive Compensation - Review, Approval or Ratification of Transactions with Related Persons”.

Orientation and Continuing Education Programs

It is the intention of the Board that as and when a new Board nominee is appointed, the Board will ensure that a full program of orientation and education is provided for the nominee, including, but not limited to, provision of a complete corporate history, copies of past minutes of meetings of the Board and the Mandate of the Board, and information regarding our business and operations. The Corporate Governance and Nominating Committee is responsible for reviewing the current orientation and education program and recommending and initiating improvements to this program as warranted. As part of the ongoing commitment of the Board to effective governance and director continuing education, our directors are encouraged to periodically attend accredited courses on current trends in corporate governance and other relevant areas.

Outside Advice

Each of the Audit and Risk Committee, the Compensation Committee, the Corporate Governance and Nominating Committee and the Strategic Action Committee has the authority to engage external advisors as set forth in each of their respective charters. The Scientific Review Committee is also authorized to engage independent consultants with the approval of the Chairman of the Board.

Director and Officer Liability Insurance

We maintain directors’ and officers’ liability insurance coverage through a policy covering QLT and its subsidiaries. This insurance provides coverage for indemnity payments made by QLT to our directors and officers as required or permitted by law for losses, including legal costs, incurred by our directors and officers in their capacity as such. This policy also provides coverage directly to individual directors and officers if they are not indemnified by QLT. The insurance coverage for our directors and officers has customary exclusions, including those acts determined to be uninsurable under law, deliberately fraudulent or dishonest, or that have resulted in personal profit or advantage.

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Minimum Share Ownership Guidelines for Directors

The Board believes it to be in the best interests of our shareholders to specify a minimum level of equity holdings in QLT by each independent director to further align the interests of our Board and shareholders. As a result, following consultation with Radford, an Aon Hewitt company (“Radford”), the independent compensation advisor to our Compensation Committee, we adopted share ownership guidelines for our independent directors. Under these guidelines, independent directors are encouraged to acquire (if not already held) common shares of QLT as follows:

Holdings of vested in-the-money stock options and vested deferred share units (referred to as “DSUs”) are counted towards fulfilling the guidelines. According to Radford, the implementation of share ownership guidelines instituted by the Board is consistent with Institutional Shareholder Services’ best practices.

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. As all of the members of the Current Board were initially elected or appointed to serve as directors of QLT on or after the 2012 AGM, only Jason M. Aryeh and Jeffrey A. Meckler have satisfied the guidelines to date. All of the members of the Current Board intend to satisfy the ownership guideline within five years from their respective initial appointments.

Our share ownership guidelines for executive officers are described below in this Proxy Statement under the heading “Compensation Discussion and Analysis.”

Director Nomination Process

To assist with director nominations, the Board has designated a standing committee, the Corporate Governance and Nominating Committee, as being responsible for reviewing and recommending nominees to the Board. In evaluating prospective nominees, the Corporate Governance and Nominating Committee looks for the following minimum qualifications: strong business acumen, previous experience as an executive or director with successful companies, the highest standards of integrity and ethics, and a willingness and ability to make the necessary time commitment to diligently perform the duties of a director. In evaluating prospective nominees, the Corporate Governance and Nominating Committee also takes into account shareholder support of prospective nominees in previous director elections of the Company. Nominees are selected with a view to the best interests of QLT as a whole. All nominations proposed by the Corporate Governance and Nominating Committee must receive the approval of the Board.

The Board prefers a mix of experience among its members to maintain a diversity of viewpoints and ensure that the Board can achieve its objectives. In searching for a new director, the Corporate Governance and Nominating Committee identifies particular areas of specialization that it considers beneficial, in addition to the general qualifications, having regard to the skill sets of the other members of the Board.

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Although we do not have a formal diversity policy, to foster and maintain a diversity of viewpoints, backgrounds and experience on the Board, the Corporate Governance and Nominating Committee evaluates the mix of skills and experience of the directors and assesses nominees and potential candidates in the context of the current composition of the Board and the requirements of QLT. In accordance with its charter, the Corporate Governance and Nominating Committee considers, among other things, the following in recommending candidates for election to the Board: (i) personal and professional integrity, ethics and values, (ii) experience in corporate management, such as serving as an officer or former officer of a publicly-held company, and a general understanding of marketing, finance, product development and other elements relevant to the success of a publicly-traded company in today’s business environment, (iii) experience in the biotechnology industry in Canada and the United States, (iv) experience as a board member of another publicly-held company, (v) academic or therapeutic expertise in an area of QLT’s operations and (vi) practical and mature business judgment, including the ability to make independent and analytical inquiries.

The Corporate Governance and Nominating Committee may retain the assistance of a recruiting firm to assist it in identifying and recruiting candidates that possess the desired qualifications. The Corporate Governance and Nominating Committee may also involve other members of the Board or other Board committees to assist it with the recruitment of new directors. Potential nominees and their respective references are interviewed extensively in person before any nomination is endorsed by that Board committee.

The Board will also consider any director nominees proposed by shareholders. Shareholders may submit nominations to the Board by addressing a communication to the Chairman of the Corporate Governance and Nominating Committee and providing sufficient information to the Corporate Governance and Nominating Committee to permit it to conduct an assessment of the qualifications of the proposed nominee, including biographical information about the candidate and his or her professional experience, confirmation of the candidate’s willingness to serve as a director, and complete contact information for the candidate and the nominating shareholder. The methods by which a shareholder may communicate with the Corporate Governance and Nominating Committee are set out on QLT’s website at www.qltinc.com. As a matter of policy, the Corporate Governance and Nominating Committee is committed to giving due and fair consideration to proposed nominations submitted by shareholders using the same criteria and processes as other nominations that come before it.

Independence of Directors

To ensure QLT maintains good and objective governance, the Board strives to maintain strong independence from management. In determining whether directors are independent, each year the Board considers and discusses the nature and materiality of all direct or indirect relationships between each director nominee and QLT, including any family or business relationships. Under the applicable Canadian and United States securities laws, a relationship is considered material where that relationship could, in the view of the Board, reasonably interfere with the exercise of the director’s independent judgment. A director who also serves as CEO of a company would be considered a non-independent director of that company under applicable Canadian and United States securities laws.

Jason M. Aryeh served as the Chairman of the ETC during 2012. Mr. Aryeh resigned as Chairman of the ETC on February 16, 2013, and Jeffrey A. Meckler was appointed as Chairman of the ETC on the same date. The Board has carefully considered whether serving as Chairman or a member of the ETC, the mandate of which is to perform the function of the CEO of QLT on an interim basis while the Board determines the resources and management necessary to pursue the Company’s new strategy, would interfere with the exercise of such director’s independent judgment. The Board has determined that neither serving as a member of or Chairman of the ETC has, at any time, interfered with the exercise of independent judgment by either any of the members of the ETC or any Chairman of the ETC, and that, as

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a result, the relevant “independence” test under the applicable Canadian and United States securities laws has been met. In making this determination, the Board, among other things, considered the role of the ETC and the division of responsibility among the members, the role of the Chairman of the ETC, the means and amounts by which the Chairman and the other members of the ETC are remunerated for serving as such, the lack of agreements with the Company or terms of service regarding service on the ETC, the fact that all of the members of the ETC are subject to annual election as directors, and the distinction in manner and degree of compensation and benefits between the ETC and the Company’s past and current employed executive officers, among other factors.

As a result, and in connection with a review of the nature and materiality of all direct or indirect relationships between each director and QLT, the Board has determined that all seven members of the Current Board are “independent”, and have been since their respective appointments to the Board.

The Chairman of the ETC is considered the Principal Executive Officer of QLT solely for SEC reporting purposes and the purposes of certifying certain SEC disclosure documents. While, as described above, it is the Board’s view that Mr. Aryeh has been since his initial appointment to the Board on June 4, 2012 and continues to be as of the date of this Proxy Statement, qualified as an independent director of QLT under Canadian and US securities laws, his designation as “Principal Executive Officer” of QLT solely for SEC reporting purposes during the period in 2012 in which he served as Chairman of the ETC may create the appearance that Mr. Aryeh was an executive officer of QLT during such time. Mr. Aryeh was not an executive officer of the Company, but rather the ETC as a whole served the function of the principal executive of the Company. We do not believe that listing all four members of the ETC during 2012 as executive officers in this Proxy Statement would provide useful disclosure to shareholders. Therefore, we have included only Mr. Aryeh as a named executive officer in this Proxy Statement.

Additionally, six of the seven members of the Previous Board were considered “independent”, including the Chairman of the Previous Board, Mr. Boyd Clarke. Mr. Butchofsky was not considered “independent” since he was also the President and CEO of QLT during the time he served as a director in 2012.

Executive Session of Independent Directors

The independent members of the Board meet without management and non-independent directors (if any) present during a session of periodic Board meetings (unless the independent directors determine such a session is not required).

Independence of Committee Members

Each director or former director who served as a member of each of the Audit and Risk Committee, the Compensation Committee, and the Corporate Governance and Nominating Committee during 2012 was “independent” within the meaning ascribed to that term in Multilateral Instrument 52-110 - Audit Committees and the Marketplace Rules of NASDAQ.

Audit Committee Financial Expert

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 C. Thomas, Jr. 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.

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Compensation Committee Interlocks and Insider Participation

Prior to the 2012 AGM, L. Jack Wood, Ian J. Massey and Bruce L.A. Carter were members of the Compensation Committee. Following the 2012 AGM, Vicente Anido, Jr., Geoffrey F. Cox and John C. Thomas, Jr. were appointed to the Compensation Committee and continue to serve in that role. None of the members of the Compensation Committee during 2012 is or was previously an officer or employee of QLT or has any relationships requiring disclosure under Item 404 of Regulation S-K promulgated by the SEC.

Except as described below, none of QLT’s executive officers served during 2012 as a member of the compensation committee or board of directors of any entity that had one or more executive officers serving as a member of our Compensation Committee or Board. John C. Thomas, Jr. is a director and a member of the Compensation and Audit and Risk Committees of the Company. Mr. Thomas is also a director and Chief Financial Officer of CorMatrix Cardiovascular, Inc., a privately-held medical device company (“CorMatrix”). In 2012, CorMatrix did not have a compensation committee of its board of directors. Jason M. Aryeh, as a member of the board of directors of CorMatrix (including in 2013 as a member of its Compensation Committee once formed), participates in compensation decisions about Mr. Thomas and CorMatrix’s other executive officers. Mr. Aryeh is our Chairman of the Board and until February 2013 served as Chairman of the ETC. Mr. Aryeh receives no compensation from QLT other than for his service as a director of the Company.

The director nominees are also directors of the following publicly traded companies:

Communicating with the Board of Directors

Any shareholder or interested party who wishes to communicate with the Board or any specific director, the Chairman of the Board, or committee members, may write to:

QLT Inc.

Attn: Board of Directors

887 Great Northern Way, Suite 101

Vancouver, British Columbia, V5T 4T5

Canada

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Depending on the subject matter of the communication, the corporate secretary will:

Shareholders and other interested persons may submit concerns regarding accounting matters by following the instructions for making a report published in the Corporate Governance subsection of the Investor Relations section of our website.

Board of Directors and Board Committees

The Previous Board held 5 meetings (in person or by teleconference) during 2012. The Current Board held 13 meetings (in person or by teleconference) during 2012. Since all of the members of the Current Board are independent, all of the meetings held by the Current Board in 2012 were meetings at which only independent directors were present.

Each director of the Current Board attended at least 75% of the aggregate of (1) the total number of meetings of the Current Board, and (2) the total number of meetings held by all committees of the Current Board on which such director served during 2012.

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Set forth below is a summary of Previous Board and Current Board attendance during 2012:

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The Board has a standing Audit and Risk Committee, Corporate Governance and Nominating Committee, Compensation Committee, and Scientific Review Committee. In addition, from time to time, the Board establishes special committees to assist the Board in respect of certain matters. In 2012, the Board established the Transition Committee and its successor committee, the Strategic Action Committee, as well as the ETC, to assist the Board during the transition period from the Previous Board to the Current Board, and the change in composition of the executive officers of QLT, following the 2012 AGM, as more fully described in this Proxy Statement under the heading “Significant Changes in the Company During 2012”. Set forth below is a chart indicating, by committee, each committee’s members as at the end of the 2012 fiscal year, key functions and the total number of committee meetings held in 2012 (including meetings held by committees of the Previous Board):

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Committee Chairmen

The Board has not developed written position descriptions for the Chairman of each of the committees of the Board. The Chairman of each committee has accepted leadership responsibilities of the committee

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including setting the agenda for and chairing the meetings, liaising with management as appropriate, as well as for ensuring fulfillment of the mandate set out in the charters of the committees.

COMPENSATION OF DIRECTORS

2012 Independent Director Compensation Program

Overview

The compensation program for our independent directors is intended to fairly compensate them for the time and effort required of a director based upon the size and complexity of our business, as well as, through an equity component of the program, to further align the interests of our independent directors with those of our shareholders. The amount and form of director compensation is reviewed periodically by the Compensation Committee, with any resulting recommendations made to the Board, to ensure that such compensation realistically reflects the responsibilities and risks of being an effective director. To assist in its evaluation of director compensation, the Compensation Committee has the authority to retain independent compensation consultants.

Our independent directors receive cash and equity-based compensation for their service on the Board.

Cash Compensation

The cash compensation component of our program includes annual Board and Committee member or Chairman position retainers, meeting attendance fees, and fees paid for attending to Board or Committee business other than for attendance at a meeting. Directors are also eligible for reimbursement of their expenses incurred in connection with attendance at Board meetings in accordance with our policies. Director retainers and fees are paid to the Current Board monthly in arrears.

In 2012, the fees paid to the members of the Current Board, all of whom are independent directors, were as follows:

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Equity-Based Compensation

In addition to cash compensation, our independent directors also receive equity-based compensation to ensure that their interests are fully aligned with those of our shareholders.

We maintain a Directors’ Deferred Share Unit Plan, which we refer to as the “DDSU Plan.” Under the DDSU Plan, at the discretion of the Board, independent directors have received all of their equity-based compensation in the form of deferred share units, or “DSUs,” each of which has a value equal to the price of our common shares on the TSX. A DSU is convertible only into cash (no shares are issued), and can only be converted after the independent director ceases to be a member of the Board. The DSUs vest monthly over 36 months from the first month after the date of grant.

The value of a DSU, when converted to cash, will be equivalent to the market value of a QLT common share at the time the conversion takes place. We do not have a history of paying dividends on our common shares; however, if dividends ever are paid on our common shares, an independent director’s DSU account will be credited with dividends at the same rate.

The Compensation Committee’s objective in granting DSUs to independent directors is to provide a reasonable, market-based incentive for directors to deliver increased value to shareholders. Based in part on advice received from Radford, the Compensation Committee and the Board have concluded that DSUs are an effective way to align the interests of the independent directors with those of the shareholders, without resulting in additional share dilution to shareholders. In July, 2012, following his appointment at the 2012 AGM, each member of the Current Board was granted an initial grant of 3,500 DSUs and an annual grant of 7,500 DSUs for an aggregate of 11,000 DSUs, except Jason M. Aryeh, the Chairman of

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the Board, who received an initial grant of 7,000 DSUs and an annual grant of 15,000 DSUs for an aggregate of 22,000 DSUs.

Our directors are also eligible to receive stock options under the QLT 2000 Incentive Stock Option Plan (the “2000 Plan”); however, no stock options were granted under the 2000 Plan to our directors in 2012.

The following table provides information regarding the compensation of our independent directors for 2012.

2012 Director Compensation

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PROPOSAL NO. 1

ELECTION OF DIRECTORS

Information Regarding Director Nominees

The names of the nominees and certain information about them are set forth below:

There is no family relationship between any of our directors, director nominees or executive officers. The number of common shares owned by each of the nominees for election as a director is set forth under “Security Ownership of Certain Beneficial Owners and Management” in this Proxy Statement.

Jason M. Aryeh is the Chairman of the Board and a Director of QLT (since 2012) and serves as the Chairman of both its Corporate Governance and Nominating Committee and its Strategic Action Committee. Currently, Mr. Aryeh is also 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 (since 2006), a public biotechnology company (“Ligand”), CorMatrix Cardiovascular (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. Mr. Aryeh’s strategic insight and in-depth understanding of health care trends and capital markets add significant value to the Board.

Dr. Vicente Anido, Jr., Ph.D. is a Director of QLT (since 2012) and serves as a member of its Audit and Risk, Corporate Governance and Nominating, Compensation and Scientific Review Committees. Currently, Dr. Anido also serves as a Director of Depomed, Inc. (since 2013), a public pharmaceutical company and the Chairman of the Board of Directors of Aerie Pharmaceuticals (since 2013), a privately-held clinical stage pharmaceutical company focused on developing products to treat glaucoma. Previously, Dr. Anido served as President, Chief Executive Officer and a Director of Ista Pharmaceuticals (2001 to 2012) prior to its acquisition by Bausch & Lomb and as a director of Apria Healthcare, Inc., a public company that provides home healthcare products and services and medical equipment. Dr. Anido

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received a B.S. in Pharmacy and M.S. in Pharmaceutical Sciences from West Virginia University and a Ph.D. in Pharmacy Administration from the University of Missouri - Kansas City.

The Board has concluded that Dr. Anido is well-qualified to serve on the Board and has the requisite qualifications, skills and perspectives derived from managing and serving on the boards of publicly-traded healthcare companies. Through his tenure as President and CEO of Ista Pharmaceuticals, Dr. Anido gained valuable management and leadership skills, and brings to the Board seasoned tactical, operational and pharmaceutical industry-specific experience in sales and marketing, business development, pharmaceutical product development and equity and debt transactions.

Dr. Geoffrey F. Cox, Ph.D. is a Director of QLT (since 2012) and serves as Chair of its Compensation Committee and a member of its Corporate Governance and Nominating Committee. Dr. Cox has over 35 years of pharmaceutical and biotechnology experience holding a broad range of senior management and board positions with private and public companies. Currently, Dr. Cox is a Partner with Red Sky Partners LLC (since 2011) which provides corporate development, product strategy and leadership support to life sciences companies. 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 on the Board of Biota, a public anti-infective drug development company. He is also a Director of Gallus Biopharmaceuticals LLC (since 2011), a biologics contract manufacturing and development company. 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 of Genzyme Corporation and later Chairman, President and CEO of Aronex Pharmaceuticals Inc. Dr. Cox is the immediate past Chairman of the Board of the Massachusetts Biotechnology Council and 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. 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. is a Director of QLT (since 2012) and is the Chair of its Scientific Review Committee and a member of its Executive Transition 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.; Chairman of Ligand (since 2003), a public biotechnology company; a Director of Corium International, Inc. (since 2006), a privately-held transdermal drug delivery 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 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 an NIH 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. Dr. Kozarich is well-versed in the

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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 is a Director of QLT (since 2012) and is the Chair of QLT’s Executive Transition Committee and a member of QLT’s Strategic Action Committee. Mr. Meckler has over 20 years of experience in the life sciences sector. Currently, Mr. Meckler is also the Managing Director of The Andra Group (since 2009), a life sciences consulting firm that assists clients with strategic planning and business development. 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; 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 healthcare industry, consulting and financial background. Mr. Meckler’s perspectives regarding strategic business development, operational and financial opportunities as well as health care trends bring significant industry-specific insight to the QLT board.

Dr. Stephen L. Sabba, M.D. is a Director of QLT (since 2012) and serves as Chair of its Audit and Risk Committee and a member of its Scientific Review and Strategic Action 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. Dr. Sabba’s deep understanding of the biotechnology industry, medicine and health care trends add significant value to the Board.

John C. Thomas, Jr. is a Director of QLT (since 2012) and is a member of QLT’s Audit and Risk and Compensation Committees. Mr. Thomas has more than 38 years of experience in a variety of financial and accounting positions, with the last 27 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. 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

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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). 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 companies. Mr. Thomas’ educational 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 of a biotechnology company such as QLT.

Vote Required and Board of Directors’ Recommendation

Under the BCA, directors are elected by a plurality of the votes cast at the Annual Meeting. This means that the seven nominees with the most votes for election would be elected.

The Board unanimously recommends that shareholders vote “FOR” the election of all seven nominees for director.

Majority Voting Policy

The TSX has adopted amendments to its policies which require listed companies to disclose whether they have adopted a “majority voting” policy for the election of directors at uncontested shareholders’ meetings and, if not, explain their practices for electing directors and why they have not adopted a “majority voting” policy. If adopted, a “majority voting” policy would require a director of the Company to offer his or her resignation if the director receives more “withheld” votes than “for” votes at any uncontested meeting of shareholders at which directors are elected, including the Annual Meeting.

After due consideration, the Board of Directors determined not to adopt a “majority voting” policy at this time. In evaluating whether to adopt this policy, both the Corporate Governance and Nominating Committee of the Company and the Current Board considered numerous factors, including the Current Board’s “open door” policy with shareholders and frequent conversations with shareholders regarding their questions, thoughts and suggestions, the fact that the Company’s shareholders were able to elect a shareholder-nominated slate of directors at the 2012 AGM, and the Current Board’s belief, based upon frequent discussions with shareholders, that it enjoys continued strong support from shareholders for the Current Board’s members, policies and practices.

In addition, pursuant to applicable corporate and securities laws and the Company’s policies, there are several mechanisms available to shareholders that wish to put forward alternative nominees for election, including submitting candidate nominations to the Company’s Corporate Governance and Nominating Committee. See “Director Nomination Process” and “How can shareholders submit proposals for QLT’s 2014 Annual Meeting?” for additional information.

Although the Current Board believes that the Company’s director election voting policy is appropriate at this time, it will continue to evaluate this and other policies as part of its ongoing commitment to best practices in corporate governance. In this regard, the Current Board will continue to actively engage in discussion with its shareholders on corporate governance issues in general, and monitor evolving market practices regarding director election and “majority voting” policies in particular, and will continue to comply with all applicable TSX policies in connection with this matter.

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth the common shares in QLT’s authorized share structure beneficially owned by (1) each of our current directors and director nominees, (2) each of our named executive officers listed in the Summary Compensation Table below, (3) all of our directors, director nominees and executive officers as a group, and (4) all persons known by us to beneficially own more than 5% of our outstanding voting shares. We have determined the beneficial ownership shown on this table in accordance with the rules of the SEC and the applicable Canadian securities regulators. Under those rules, shares are considered beneficially owned if held by the person indicated, or if such person, directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise has or shares the power to vote, to direct the voting of and/or to dispose of or to direct the disposition of such security. Except as otherwise indicated in the accompanying footnotes, beneficial ownership is shown as of May 10, 2013.

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For additional information on our equity compensation plan, and our common shares that may be issued upon the exercise of options and other rights granted to employees, consultants or directors under our existing equity compensation plan, see our Form 10-K which is available on our website at www.qltinc.com and SEDAR at www.sedar.com.

EXECUTIVE COMPENSATION

The following sets forth information about our employed named executive officers as of May 10, 2013. The executive officers listed below serve in their respective capabilities at the discretion of our Board of Directors.

Sukhi Jagpal

Chief Financial Officer

Mr. Jagpal, age 39, is the Chief Financial Officer of QLT (since February 2013). Previously, since 2003 Mr. Jagpal has held positions of increasing responsibility in Finance at QLT, including Corporate Controller (January 2006 to December 2008 ), Director, Finance and Corporate Controller (January 2009 to December 2010 ) and Senior Director, Finance and Corporate Controller (2011 to 2012), until his appointment as Interim Chief Financial Officer in July 2012. Prior to joining QLT, Mr. Jagpal held finance and accounting positions with Pivotal Corporation, 360networks inc., and KPMG LLP. Mr. Jagpal is a Chartered Accountant, a Chartered Business Valuator, and holds a Masters of Business Administration from Cornell University - S.C. Johnson Graduate School of Management and a Masters of Business Administration from Queens University.

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Alexander R. Lussow, Ph.D.

Senior Vice President, Business Development & Commercial Operations

Dr. Lussow, age 51, is the Senior Vice President, Business Development and Commercial Operations of QLT (since 2008) and is responsible for QLT’s business development activities, including product licensing, acquisitions and strategic partnering opportunities, as well as QLT’s product manufacturing and supply chain. Previously, Dr. Lussow served as QLT’s Vice President, Business Development (2006 to 2008). Prior to joining QLT, Dr. Lussow served as Chief Business Officer and Vice President of Business Development at Gryphon Therapeutics (2001 to 2004) where he was responsible for the licensing of the company’s products, the formation of strategic alliances, corporate communications and fundraising. Dr. Lussow has broad experience in biotechnology management consulting, advising on venture financing, strategic business planning and licensing transactions with several biotechnology companies. Dr. Lussow received his BSc at McGill University in Montreal and his Ph.D. in immunology at the University of Geneva, Switzerland. He has been an adjunct professor of pharmacology at the University of North Carolina, USA and has worked extensively for the World Health Organization (WHO) in West Africa.

Compensation Discussion and Analysis

2012 was a transformative year for the Company. In June 2012 the composition of our Board of Directors completely changed when, following a proxy contest, all members of the Previous Board were either not re-elected to the Board at the 2012 AGM or resigned, and the Current Board was elected and continued in office. As a result, the membership of all committees of the Board, including the Compensation Committee, changed entirely in June 2012.

Also at the 2012 AGM, our shareholders voted, in a non-binding advisory vote, against the compensation of the named executive officers as of the date of the 2012 AGM as follows: 15,496,170 shares were voted for the proposal, 21,328,839 shares were voted against the proposal, 2,444,588 shares withheld votes, and 3,014,880 shares were counted as non-votes. The Compensation Committee has reviewed the results of the shareholder advisory vote on executive compensation. In light of the fact that the vote was obtained in the context of a contested election of directors, the Committee cannot determine whether the vote against the compensation of QLT’s executive officers should be primarily understood as a vote against the incumbent Board of Directors or disagreement with the Company’s executive compensation practices. However, notwithstanding the significant changes in the Company and its management since the 2012 AGM, the reconstituted Compensation Committee takes note of the advisory vote and intends to continue to evaluate and modify, as appropriate, the executive compensation practices of the Company.

On July 9, 2012, as a result of a comprehensive business and portfolio review by our Board of Directors, the Company announced a new corporate strategy and plans to restructure our operations in order to concentrate our resources on our clinical development programs related to our synthetic retinoid, QLT091001, for the treatment of certain inherited retinal diseases. During the remainder of 2012 in connection with the strategic restructuring of the Company, we sold our Visudyne^® business to Valeant Pharmaceuticals International, Inc. and entered into an option agreement for the sale of our punctal plug drug delivery system to Mati Therapeutics Inc. We also completed a significant reduction in force of approximately 178 employees, or 83% of our work force.

As a result of the restructuring, only one of the named executive officers of the Company in June 2012, Alexander R. Lussow, Senior Vice President, Business Development & Commercial Operations, remained an executive officer of the Company at year end. Sukhi Jagpal, who was appointed Interim Chief Financial Officer July 2012, was our only other employed named executive officer at the end of 2012. Mr. Jagpal was appointed Chief Financial Officer of the Company on February 27, 2013.

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Effective August 2, 2012, in connection with the departure of Robert Butchofsky, the Company’s former President and Chief Executive Officer, the Current Board formed an Executive Transition Committee composed of its Chairman, Jason M. Aryeh, and directors Dr. Vicente Anido, Jr., Jeffrey Meckler and Dr. John W. Kozarich, to lead the Company while the Board determines the resources and management necessary to pursue the Company’s new strategy. Mr. Aryeh served as Chairman of the Executive Transition Committee until February 2013 when the Executive Transition Committee was restructured and Mr. Aryeh stepped down from his role on the Committee and Mr. Meckler became Chairman of the Committee. At the same time, Dr. Anido also stepped off the Executive Transition Committee. While Mr. Aryeh was never employed as an employee or compensated other than as a director or considered by the Current Board to be an executive officer of the Company, he is included in the compensation disclosure schedules below as a Principal Executive Officer of the Company. However, he is not otherwise treated as a named executive officer and has not acted in that role. See information provided in this Proxy Statement under the heading “Independence of Directors” for further information.

In addition to Mr. Butchofsky, the other named executive officers whose service to the Company ceased during 2012 were Cameron R. Nelson, who acted as Senior Vice President, Finance and Chief Financial Officer until July 20, 2012; Linda M. Lupini, who acted as Senior Vice President, Human Resources and Organizational Development until December 14, 2012; and Christopher Muller, who acted as Chief Commercial Officer of our wholly-owned subsidiary, QLT Ophthalmics, Inc. until July 20, 2012.

The Compensation Committee administers the compensation policies and programs for our named executive officers. A summary discussion of the 2012 named executive officer compensation actions taken by the Compensation Committee follows below in this Compensation Discussion and Analysis report. In reviewing this report, it is important to understand that while the Current Board of Directors and new Compensation Committee made numerous management and personnel changes and compensation decisions following the 2012 AGM, much of the compensation that was received by named executive officers in 2012 was paid pursuant to contractual agreements and policies approved or implemented by the Previous Board of Directors and previous Compensation Committee.

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:

Consistent with our performance-based philosophy, a significant portion of potential compensation is based upon performance- and equity-

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

Compensation Governance and Consultant

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.

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 ensures 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 periodically engaged 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 program designs. Additionally, a representative from Radford attends Compensation Committee meetings when requested by the Compensation Committee.

Components of the Compensation Package

At the foundation of the Compensation Committee’s strategy is the principle that there should be both consequences for underperformance and incentives for outstanding performance. This is achieved through a compensation program that emphasizes fixed and variable components which make up the “pay mix” for each executive officer.

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There are three major elements to our executive compensation:

In addition, our executives are eligible to participate in the benefit plans generally available to all of our employees and to receive an annual executive medical screening consultation (as described in “Health and Life Benefits” below).

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

Determining Compensation

Compensation Consultant and Peer Group. In March 2012, the previous Compensation Committee engaged Radford to provide market data and a comprehensive executive compensation assessment intended to help inform our Compensation Committee in establishing 2012 executive compensation. The comparator group selected was considered comparable to QLT in early 2012 in size (50 to 300 employees), revenue (generally less than $200 million), market capitalization (generally less than $1 billion), and stage of product pipeline (small commercial biotechnology / specialty pharmaceuticals with products on market). The following 14 public biotechnology companies in the Radford 2010 Global Life Sciences Survey of biotechnology and life-sciences entities, located in North America, comprised our 2012 comparator group for both our director and executive officer compensation review:

In considering the market data provided by Radford, the Compensation Committee uses the percentiles or range of percentiles described below from the comparative data as a reference point in determining the amount and mix of compensation for our named executive officers. The Compensation Committee also considered many other factors in determining compensation, consistent with the Company’s compensation philosophy. The result of the Compensation Committee’s review of 2012 executive compensation is described below.

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Base Salary

Annual base salary is designed to provide a competitive fixed rate of pay recognizing different levels of responsibility and performance within QLT. Base salaries for our named executive officers are benchmarked against the base salaries paid to executives with similar roles at the companies within our comparator group using the 50th percentile and the 75th percentile as reference points. 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 named executive officer, the Compensation Committee considers numerous factors, including the results of each named executive officer’s individual goal achievement and overall performance, comparative survey data for equivalent executive positions in our comparator group, along with the other elements of compensation received by our named executive officers.

On March 5, 2012, the Previous Board, following the recommendation of the previous Compensation Committee, increased the base salary of Ms. Linda M. Lupini, Senior Vice President, Human Resources and Organizational Development, by 10%, retroactive to January 1, 2012. In increasing the base salary of Ms. Lupini, the previous Compensation Committee and the Previous Board considered the executive compensation benchmarking data presented by Radford, as well as the executive’s performance and scope and level of responsibility. Ms. Lupini’s salary increase put her base salary above the 75th percentile of the Company’s comparator group for base salaries.

Mr. Muller joined the Company in April 2012 as Chief Commercial Officer of QLT Ophthalmics, Inc. According to survey data of equivalent positions at that time, Mr. Muller’s 2012 base salary was positioned near the 25^th percentile. In approving Mr. Muller’s base salary, the previous Compensation Committee considered a number of factors, including the other components of his compensation package and the limited scope of his commercial responsibilities for 2012.

Following the departure of Cameron R. Nelson, our former Chief Financial Officer, on July 20, 2012, Mr. Jagpal was appointed Interim Chief Financial Officer. In light of his increased responsibilities, in November 2012, the Current Board increased Mr. Jagpal’s base salary to $192,500, retroactive to July 20, 2012, reflecting a 10% increase from his former position as Senior Director, Finance and Corporate Controller. According to Radford survey data, the increase placed Mr. Jagpal’s base salary below the 25^th percentile for Chief Financial Officer positions, which the current Compensation Committee determined to be appropriate largely based on the interim nature of the position at that time.

Annual Cash Incentive Compensation

The previous Compensation Committee’s compensation philosophy for 2012 included a pay-at-risk component under our 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 that each named executive officer is eligible to receive is based on a pre-determined target percentage of his or her base salary, determined in accordance with practices of our comparator group and taking into account scope and level of responsibility. The Compensation Committee also believes that the success of the Company is based in part on the achievements of the named executive officers as a group and, therefore, the target annual award percentage is determined by considering competitive rates of incentive compensation for the named executive officers as a group and not just on a position-specific basis.

The target annual award percentage of base salary for each named executive officer was reviewed in March 2012 by the previous Compensation Committee using the 75th percentile of our comparator group as a reference point. When combined with base salaries, cash incentive awards in 2012 were intended to

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provide the opportunity for a named executive officer to achieve total cash compensation, when targeted levels of performance are achieved or exceeded, exceeding the 50th percentile of our comparator group. We define “total cash compensation” as base salary plus annual target bonus under our annual cash incentive compensation program. The Compensation Committee believes that, given our competitive industry, this pay-for-performance compensation strategy allows a biotechnology company in QLT’s position and size to competitively attract and retain talented executives while aligning the strategic interests of our executives and shareholders.

Following a review of each of the named executive officer’s scope and level of responsibility within QLT, on March 5, 2012, the Previous Board, following the recommendation of the previous Compensation Committee, adjusted the target annual award percentage for its Senior Vice Presidents and its Chief Financial Officer from 45% to 50% of base salary. Following a review of Radford comparative survey data, in April 2012, upon the recommendation of the previous Compensation Committee, the Previous Board fixed Mr. Muller’s target annual award percentage at 50% of base salary, which reflected a target annual bonus at the 75^th percentile of our comparator group, and Mr. Muller’s total cash compensation at the 25^th percentile of our comparator group.

With the exception of Mr. Japgal, who was appointed Interim Chief Financial Officer in July 2012, the amount of annual cash incentive compensation that our executive officers were eligible to receive for 2012 as determined by the Previous Board in March 2012 was as follows:

Mr. Jagpal’s target annual award percentage of base salary was fixed by the Board in November 2012 at 25% of base salary. According to Radford survey data, the target incentive for Mr. Jagpal as Interim Chief Financial Officer for 2012 falls around the 25^th percentile for Chief Financial Officer positions.

Executive officers with individual goals may attain between 0% and 200% of their individual goals depending on their performance, although the Compensation Committee has the discretion to recognize additional factors and award bonuses outside of this range. Executive officers with corporate goals may attain between 0% and 200% of a corporate goal depending on the extent to which the goal is achieved.

Establishing Goals

Individual Goals. In 2012, the criteria for assessing an individual named executive officer’s performance (other than that of the former CEO) was developed by the former CEO in consultation with the particular named executive officer and reviewed by the previous Compensation Committee. The individual goals were primarily objective and measurable, related to the individual named executive officer’s area of responsibility and were designed to facilitate the achievement of our corporate goals. 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 CEO or, currently, the Chairman of the ETC, and approved by the Compensation Committee. Cash incentive compensation for the former CEO for 2012 was to have been determined based solely on achievement of the corporate goals as approved by the Previous Board.

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Initial 2012 Corporate Goals. On March 5, 2012, on the recommendation of the previous Compensation Committee, the Previous Board approved the following specific 2012 corporate goals for QLT that had been initially developed by our former CEO in consultation with management and the previous Compensation Committee:

The corporate goals included base corporate goals which measure from 0 – 100% achievement and certain bonus goals which add up to an additional 55%. The Compensation Committee, however, has the discretion to recognize additional factors and assess QLT’s corporate goal achievement up to a maximum 200%. In determining whether QLT’s corporate goals have been achieved beyond 100% and up to a possible 200%, the Compensation Committee can consider factors and achievements it considers appropriate, including, but not limited to, the bonus corporate goals.

Revised 2012 Corporate Goals. Beginning with the issuance of the Company’s press release on July 9, 2012, the Company’s Current Board of Directors refocused the Company on the following new corporate goals:

The Committee noted that while the Compensation Committee and the Current Board had not formally revised the 2012 corporate and individual executive goals in order to align the annual cash incentive

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awards with the new corporate goals and the new individual responsibilities given to the remaining executives, in assessing the performance of management for bonus plan purposes the Compensation Committee has discretion to recognize additional factors in assessing the Company’s corporate goal achievement and each person’s individual goal achievement. The Compensation Committee also noted that it has discretion to determine between 0% and 200% achievement of both corporate and individual goals. The Compensation Committee exercised its discretion and assessed the Company’s 2012 corporate performance against the revised corporate goals announced in the Company’s July 9, 2012 press release and each executive’s individual 2012 performance against the new responsibilities given to such executive following the adoption of the new corporate goals.

Achievement of Corporate and Individual Goals. The restructured Compensation Committee discussed the difficulties that the remaining employees and executives faced in their efforts to achieve the new corporate goals while the Company was in the midst of a transformative restructuring and reduction in force. The Compensation Committee also noted that all of the executives who had left the Company in connection with the reduction in force received severance pay pursuant to their change of control agreements with the Company that, in addition to a lump sum base salary payment for the applicable severance period, included amounts equal to full achievement of their annual cash incentive awards (as if all base corporate and individual goals were achieved but not exceeded) for the periods they were employed. The Compensation Committee considered these factors and the achievements of the Company in 2012, and concluded that the Company had achieved, partially achieved, or exceeded achievement of each of the above-noted new corporate goals, such that overall, the Company had achieved 100% of the corporate goals for cash incentive plan purposes.

The Compensation Committee also reviewed a recommendation made by the ETC for 2012 individual goal achievements and bonus assessment for the Company’s two remaining executive officers, Dr. Lussow, Senior Vice President, Business Development and Commercial Operations, and Mr. Jagpal, Chief Financial Officer. The Compensation Committee determined that Dr. Lussow achieved 150% of his individual goals, which resulted in a 2012 total incentive cash payment to Dr. Lussow of $180,244, and Mr. Jagpal achieved 175% of his individual goals, which resulted in a 2012 total incentive cash payment to Mr. Jagpal, based on his salary of $192,500, of $66,172.

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 our named executive officers’ interests with shareholder interests, increasing named executive officer compensation derived from sustained increases in the value of our common stock. These equity-based awards also serve as a retention incentive. In setting the equity compensation levels of our named executive officers, the Compensation Committee considers numerous factors, including the 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 our comparator group, and the ability of stock options to retain named executive officers.

QLT currently maintains one equity compensation plan, the 2000 Plan, as discussed under “Securities Authorized for Issuance under Equity Compensation Plans” below in this Proxy Statement, 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 our shares from the date of grant through the date of exercise. An amended and restated 2000 Plan is included for approval of the shareholders at this year’s Annual Meeting. As

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proposed, the amended and restated 2000 Plan would provide for the issuance of restricted stock units (RSUs).

Our Board has adopted a policy for granting equity awards to all employees, including our executive officers. Pursuant to that policy, and as was our practice in the past, only our Board or the Compensation Committee are authorized to grant equity awards and, except in the case of awards for new hires, equity awards will be decided once a year at a regularly scheduled meeting. Under the 2000 Plan, all stock option grants are approved after the market close and the exercise price of stock options will not be less than the closing price on the TSX on the date of grant.

All currently outstanding options granted to our named executive officers are exercisable for a term of five years and vest in 36 equal monthly instalments. In our 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 a named executive officer’s employment is terminated without cause (other than due to a change of control), 50% of the options then unvested will automatically vest. Whether or not the executive officer’s employment with us continues following a change of control of QLT, 100% of the then unvested options will vest upon the occurrence of a change of control of QLT. These terms provide our executives with certain financial security that enhances our ability to attract and retain key employees.

With the exception of new hires, the Board typically grants stock options to its executive officers annually, following each annual general meeting of shareholders. Mr. Muller joined the Company in 2012 prior to the 2012 AGM and, following a review of benchmarking data from Radford by the previous Compensation Committee and the Previous Board, received a stock option grant of 250,000 stock options, reflecting a grant below the 75^th percentile of our comparator group.

In connection with the election of the Current Board at the 2012 AGM, and the change in composition of the executive officers following the 2012 AGM, the current Compensation Committee determined not to recommend the grant of stock options until such time as the Company was able to execute on the Current Board’s corporate goals and strategies and the new Compensation Committee received advice from compensation consultants respecting appropriate compensation for executives of QLT given the change in the size and strategy of QLT. With the exception of Mr. Muller, QLT did not grant any options to its executive officers in 2012.

Severance Payments and Benefits to Named Executive Officers

The four named executive officers who left the Company following the change in our Board of Directors at the 2012 AGM, Messrs. Butchofsky, Nelson and Muller, and Ms. Lupini, all received benefits under their change of control agreements with the Company entitling them to a severance payment equal to 24 months’ base salary in the case of Mr. Butchofsky, 18 months’ base salary in the case of Mr. Nelson and Ms. Lupini, and 12 months’ base salary in the case of Mr. Muller. Messrs. Butchofsky and Nelson and Ms. Lupini also received the maximum Registered Retirement Savings Plan matching contribution to which the executive officer would otherwise be entitled during the severance period, amounts in lieu of certain other health benefits for the severance period, rights to reimbursement for outplacement counselling, annual cash incentive compensation entitlement calculated at the target cash incentive compensation entitlement that would otherwise have been paid during the severance period, the target cash incentive compensation for the portion of the year prior to termination of employment and, except for Ms. Lupini, entitlement to relocation expense reimbursement. Mr. Muller received rights to reimbursement for outplacement counselling and costs for continuing health benefits coverage under QLT’s group health, dental and vision plans for up to a twelve month period, and the target cash incentive compensation for the portion of the year prior to termination of employment. See below “Post-Employment Compensation and Change in Control Arrangements”.

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Under their stock option agreements with QLT, the unvested options granted to all of our named executive officers also vested upon the change of control of the Company at the 2012 AGM.

Dr. Lussow and Mr. Jagpal are also entitled to severance benefits under their employment and other agreements with the Company. See below “Post-Employment Compensation and Change in Control Arrangements”.

All of the change of control and severance benefits discussed above that the named executive officers received in 2012 or are entitled to receive under their existing agreements were approved by the previous Compensation Committee and Previous Board of Directors.

Chairman of Executive Transition Committee (Principal Executive Officer)

Mr. Aryeh served as the Chairman of the ETC from August 2, 2012 to February 16, 2013. No goals were set for Mr. Aryeh 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. Aryeh has been since his initial appointment to the Current Board on June 4, 2012 and continues to be as of the date of this Proxy Statement an “independent” member of the Current Board and does not consider Mr. Aryeh to be an executive officer of QLT. However, his internal designation as “Principal Executive Officer” of QLT during the period in 2012 in which he served as Chairman of the ETC may create the appearance that Mr. Aryeh performed certain executive officer functions on behalf of QLT during such time. The inclusion of Mr. Aryeh 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. See information in this Proxy Statement under the heading “Independence of Directors”.

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 previous Board); (ii) the date the executive officer is hired; and (iii) the date the executive officer assumes a new position as an executive officer:

The value of QLT in-the-money vested stock options held by the executives 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. As of May 10, 2013, Dr. Lussow had satisfied the guidelines. Mr. Jagpal is progressing toward satisfying 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. In addition, our named executive officers may participate in a screening and disease prevention program, under which our named executive officers and their immediate family members are eligible to obtain a full medical and disease prevention evaluation each year reimbursed by QLT as a taxable benefit and subject to certain fee caps agreed upon by QLT with the external benefit provider.

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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 generally QLT is not 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 our CEO and each of the other named executive officers (other than our 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).

Compensation of Executive Officers

2012 Summary Compensation Table

The following table summarizes total compensation for the 2012, 2011 and 2010 fiscal years earned by our named executive officers. As discussed above under “Independence of Directors”, Mr. Aryeh, as Chairman of the ETC from June 4, 2012 through February 16, 2013, is included in this table because the four-person ETC served the function of the Company’s CEO during such time. Because of this and solely for the reason of providing our shareholders with comprehensive disclosure in accordance with principles of transparency and good corporate governance, we have included Mr. Aryeh as a named executive officer in the following tables. Mr. Aryeh was neither employed by QLT nor compensated by QLT other than as a director.

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Grants of Plan-Based Awards for the Fiscal Year Ended December 31, 2012

The following table provides certain information concerning each grant of an award made to a named executive officer in 2012.