Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange
Act of 1934 (Amendment No. )
Filed by the Registrant
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Definitive Proxy
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Definitive Additional
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Soliciting Material Pursuant to §240.14a-12 |
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Hecla Mining Company |
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(Name of Registrant as
Specified In Its Charter) |
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of Person(s) Filing Proxy Statement, if other than the
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Table of Contents
April 8, 2015
Dear Fellow Shareholders:
On behalf of your Board of Directors and
management, it is our pleasure to invite you to attend the Annual Meeting of
Shareholders of Hecla Mining Company to be held on Thursday, May 21, 2015, at
10:00 a.m., Eastern Daylight Time, at the offices of Lavery, de Billy, L.L.P.,
located at 1 Place Ville Marie, Suite 4000, Montreal, Quebec,
Canada. Driving directions to the offices of Lavery, de Billy can be found in the
back of this document.
This years Proxy Statement again
demonstrates our commitment to simplify and more effectively explain the matters
to be addressed at our Annual Meeting of Shareholders. Our Board of Directors
feels that it is important to provide you the information you are looking for
about the Company in a way that is easy to understand.
At the meeting, we will be electing two
members to our Board of Directors. We will also be considering ratification of
the selection of BDO USA, LLP as our independent registered public accountants,
and an advisory vote to approve executive compensation. In addition, we will
discuss Heclas 2014 performance and the outlook for 2015, and answer your
questions.
Your vote is very important to us and
to our business. Whether or not you plan to attend our Annual Meeting of
Shareholders, we urge you to vote your shares as soon as possible. Since a
majority of the outstanding shares of our common stock must be represented
either in person or by proxy to constitute a quorum for the conduct of business,
please promptly vote your shares by completing, signing, dating and returning
your proxy card in the envelope provided, or by Internet or telephone voting as
described in the Proxy Statement, the proxy card, or the Notice of Internet
Availability of Proxy Materials.
We sincerely hope you will be able to
attend and participate in our Annual Meeting of Shareholders. We welcome the
opportunity to meet with many of you and give you a firsthand report on our
progress, as well as express our appreciation for your confidence and support.
Your Board of Directors and management are committed to the continued success of
Hecla Mining Company, and the enhancement of your investment.
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Ted Crumley |
Phillips S. Baker, Jr. |
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Chairman of the Board |
President and Chief Executive
Officer |
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Table of Contents
PROXY
STATEMENT |
ANNUAL
MEETING OF SHAREHOLDERS |
May 21,
2015 |
Table of
Contents |
Table of Contents
Table of Contents
Table of Contents
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Hecla Mining
Company Notice of 2015 Annual Meeting of
Shareholders |
6500 N. Mineral Drive, Suite 200
Coeur
dAlene, Idaho 83815-9408
208-769-4100
NOTICE IS HEREBY GIVEN that the 2015
Annual Meeting of Shareholders of Hecla Mining Company will be held at the
offices of Lavery, de Billy, L.L.P., located at 1 Place Ville Marie, Suite 4000,
Montreal, Quebec, Canada, on Thursday, May 21, 2015, at 10:00 a.m., Eastern
Daylight Time, for the following purposes:
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1. |
Elect two nominees to
the Board of Directors, to serve for a three-year term or until their
respective successors are elected; |
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2. |
Ratify the Audit
Committees appointment of BDO USA, LLP as our independent registered
public accounting firm for 2015; |
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3. |
Approve, on an
advisory basis, the compensation of our named executive officers;
and |
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4. |
Transact such other business as may properly come before the
meeting. |
The Board of Directors (Board) has fixed
the close of business on March 27, 2015 as the record date for the determination
of shareholders entitled to notice of and to vote at the 2015 Annual Meeting of
Shareholders and at any adjournment or postponement thereof. We are not
currently aware of any other business to be brought before the 2015 Annual
Meeting of Shareholders. A list of shareholders eligible to vote at the meeting
will be available for examination by any shareholder for any purpose relevant to
the meeting during ordinary business hours for at least ten days prior to May
21, 2015, at Heclas corporate offices, located at 6500 N. Mineral Dr., Suite
200, Coeur dAlene, Idaho, and at the offices of Lavery, de Billy, L.L.P.,
located at 1 Place Ville Marie, Suite 4000, Montreal, Quebec, Canada.
We are pleased to take advantage of the
Securities and Exchange Commission rule allowing companies to furnish proxy
materials to shareholders over the Internet. We believe that this e-proxy
process lowers our costs and reduces the environmental impact related to the
mailing of materials associated with our 2015 Annual Meeting of Shareholders. On
or about April 8, 2015, we began mailing to certain shareholders a Notice of
Internet Availability of Proxy Materials containing instructions on how to
access our proxy materials and how to vote online. All other shareholders will
receive the proxy materials by mail.
By Order of the Board of
Directors
Michael B. White
Corporate Secretary
April 8, 2015
Hecla
Mining Company Notice of 2015 Annual Meeting and Proxy
Statement
Table of Contents
This summary highlights information
contained elsewhere in this Proxy Statement. This summary does not contain all
of the information that you should consider and you should read the entire Proxy
Statement before voting. For more complete information regarding the Companys
2014 performance, please review the Companys Annual Report on Form 10-K for the
year ended December 31, 2014.
2015 Annual Meeting of
Shareholders |
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10:00 a.m., Eastern Daylight
Time |
Time and
Date |
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Thursday, May 21, 2015 |
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Location |
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Lavery, de Billy, L.L.P. |
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1 Place Ville Marie |
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Suite 4000 |
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Montreal, Quebec, Canada |
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Items to be Voted
on |
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Proposal 1: Election of two directors
(Nethercutt and Bowles) (p. 17) |
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✓ Board
recommendation: FOR ALL NOMINEES |
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Proposal 2: Ratification of
appointment of BDO USA, LLP as our independent registered public
accounting firm for calendar year ending December 31, 2015 (p.
24) |
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✓ Board recommendation: FOR |
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Proposal 3: Advisory vote to approve
named executive officer compensation (p. 27) |
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✓ Board recommendation: FOR |
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Record
Date |
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March 27, 2015 |
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Shareholders of
Record |
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5,424 |
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About the
Company |
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Stock Symbol: HL |
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Stock Exchange:
NYSE |
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Shares Outstanding as of Record
Date: 369,990,632 |
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Registrar & Transfer Agent:
American
Stock Transfer & Trust Company (Phone: 1-800-937-5449) |
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Corporate Headquarters:
6500 N.
Mineral Dr., Suite 200, Coeur dAlene, Idaho 83815 |
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Corporate Website:
www.hecla-mining.com |
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Established in 1891, Hecla is headquartered
in Coeur dAlene, Idaho, and has a sister office in Vancouver, B.C. The
Companys common stock has been traded on the New York Stock Exchange for
50 years. |
Continues on next page ► |
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Hecla Mining Company Notice of 2015 Annual Meeting
and Proxy Statement |
1 |
Table of Contents
Corporate
Governance Highlights
The following table summarizes our Board
structure and key elements of our corporate governance framework:
Governance
Element |
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Comments |
Board
Independence |
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6 of our 7 directors are independent
under the New York Stock Exchange listing standards. Mr. Baker, our Chief
Executive Officer, is not independent. All members of the Audit,
Compensation and Corporate Governance and Directors Nominating Committees
are independent. |
Tenure of the
Independent Directors |
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8
years: |
Terry V. Rogers and Charles B.
Stanley |
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9 years: |
John H. Bowles |
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10 years: |
George R. Nethercutt,
Jr. |
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13 years: |
Dr. Anthony P. Taylor |
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20 years: |
Ted Crumley |
Independent Directors
Meetings |
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Our independent directors meet in
executive sessions after each regular board meeting without management
present, unless the independent directors request their
attendance. |
Meeting Attendance |
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All Directors attended all Board and
committee meetings in 2014. |
Board Leadership
Structure |
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Our Board is led by an independent
chair. |
Board Structure |
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Our Board is classified with three
classes. |
Share Ownership
Guidelines |
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To align director and executive
officer interests with those of our shareholders, we have share ownership
guidelines for executive officers and directors. Each of the executive
officers exceeds the guidelines for ownership of Hecla common shares, and
all directors, except for Mr. Crumley, exceed the guidelines for ownership
of Hecla common shares. |
Board Self-Assessments |
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Each year, the Board conducts a
self-evaluation of its performance and effectiveness. Additionally, each
committee conducts an annual self-evaluation of its
performance. |
Hedging/Pledging
Transactions Prohibited |
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We have an insider trading policy
that prohibits executive officers and directors from pledging, short sales
and hedging of shares of our common stock. |
Performance-Based Compensation |
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We rely heavily on performance-based
compensation for executive officers, including awards of performance-based
shares to our Chief Executive Officer. |
Clawback Policy |
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Our Board may require reimbursement
of incentive compensation and/or equity awarded to an executive officer if
we are required to restate our financial results due to material
non-compliance with financial reporting requirements. |
Advisory Vote on
Executive Compensation |
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We conduct an annual shareholder advisory
vote on named executive officer compensation. |
Related Party
Transactions |
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No executive officer or director was
involved in a related party transaction in 2014. |
Shareholder Rights Plan (Poison
Pill) |
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We do not have a shareholder rights
plan. |
Oversight of Risk |
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The Board as a whole exercises its
oversight responsibilities with respect to material risks we face,
including operational, financial, strategic, competitive, reputational,
legal and regulatory risks. The Board has delegated responsibility for the
oversight of specific risks to Board committees. |
Insider Trading Policy |
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We have a policy that prohibits all
executive officers and directors and certain other employees designated as
insiders from purchasing or selling any Company securities three weeks
before through two days after the release of any Form 10-Q or Form 10-K,
or at other specified times during the year while in possession of
material non-public information. |
Shareholder Proposals
under Rule 14a-8 |
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Shareholder proposals for
consideration for inclusion in our 2016 Proxy Statement pursuant to Rule
14a-8 of the Securities Exchange Act of 1934 must be delivered to us by
December 10, 2015. |
Proposals and Director Nominations
Submitted Pursuant to our Bylaws |
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Notice of shareholder proposals and director
nominees for consideration at our 2016 Annual Meeting of Shareholders must
be received by us no earlier than January 21, 2016, and no later than
February 20, 2016. |
We had a very good year in 2014, setting a
number of new records in our 124-year history, such as silver reserves, silver
production and silver equivalent production, and total revenue. Heclas net
income increased $42 million compared to 2013 despite lower metals prices.
Silver production was 11.1 million ounces and gold was 186,997 ounces, an
increase of 24% and
56% respectively over 2013, due
principally to a full year of ownership of Casa Berardi and production at Lucky
Friday, as well as Greens Creek having an excellent year. In addition, in 2014
we also achieved record sales of $501 million, a 31% increase over 2013,
adjusted EBITDA1 of $174.4 million, a 29% increase over
2013,
____________________
1 |
Adjusted EBITDA (earnings before
interest, taxes, depreciation, and amortization) is a measurement that is
not in accordance with U.S. Generally Accepted Accounting Principles
(GAAP). A reconciliation of this non-GAAP measure to net income (loss),
the most comparable GAAP measure, can be found in Appendix
A. |
2 Proxy Statement Summary
Table of Contents
Proxy Statement Summary
and our Total Shareholder Return ranking
for 2014 was second out of a peer group of 12 companies. Additional 2014 highlights
include the following:
● |
Cash and cash equivalents of
approximately $209.7 million at year-end, only $2.5 million less than 2013
year-end; |
● |
Operating cash flow of $83.1
million, a 212% increase over 2013, despite the final $55.4 million
payment to satisfy the Coeur dAlene Basin litigation
settlement; |
● |
Net income applicable to common
shareholders of $17.3 million compared to a loss of $25.7 million in
2013; |
● |
Cash costs, after by-product credits, per
ounce of silver and gold2 decreased by 30% and 15%, respectively
compared to 2013; |
● |
Silver equivalent production of 34.5 million ounces
for 2014, which is the highest in our history, and is
a 50% increase over 2013 and 142% increase over
2012 levels;3 |
● |
Lead and zinc production was 33% and 11% higher than
2013 production; and |
● |
Highest year-end proven and probable silver reserve levels
in our history and an increase for the ninth consecutive year despite lower silver
price assumptions. |
Once again we engaged in a shareholder
outreach program in order to hear and understand the issues that our
shareholders consider to be important. Members of our management team (excluding
named executive officers) sought meetings with each of our largest shareholders,
and ultimately met in one-on-one
discussions with shareholders holding over
10% of our common stock. We also engaged in one-on-one discussions with the two
major proxy advisory firms. The response was overwhelmingly supportive of the
changes we made in our executive compensation program in 2014. See further
discussions on pages 27, 29 and 46.
Key
Compensation Actions Taken in 2015 and 2014
The compensation of our named executive
officers for 2014 is more fully described in the Compensation Discussion and
Analysis section of this Proxy Statement, starting on page 44. The following
includes key issues discussed with shareholders and proxy advisory
services.
Pay Component |
Comments |
Elimination of Excise Tax
Gross-Up (p. 64) |
✓ |
In March 2015, the Compensation
Committee authorized amending the change in control agreements to
eliminate the excise tax gross-up provision for those named executive
officers whose agreements still had them. The amended agreements will
apply a Best Net After Tax Payment, which reduces the amount received by
the executive upon a change in control if the executive would receive a
greater after-tax benefit than he would receive if full severance benefits
were paid, taking into account all applicable taxes including any excise
tax. |
Elimination of Single Trigger
Equity Vesting (p. 73) |
✓ |
We amended existing agreements to
further clarify the double-trigger for equity vesting in a change in
control. |
Base Salary (p.
53) |
✓ |
There was no increase in base salary
for our Chief Executive Officer. |
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✓ |
We increased base salaries for our
Senior Vice President and Chief Financial Officer and Senior Vice
President Operations to better align pay to market
levels. |
Annual Incentive Plan (p.
54) |
✓ |
We amended the Annual Incentive
Plan, starting with the 2014 Annual Incentive Plan, in order for awards to
be more formulaic. |
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✓ |
There was no increase in incentive
opportunity for our Chief Executive Officer in 2014. |
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✓ |
We increased annual incentive
opportunities for our Senior Vice President and Chief Financial Officer,
and Senior Vice President Operations to better align pay to market
levels. |
Long-term Incentive Plan (p.
60) |
✓ |
We published performance goals for
all existing three-year plans under our Long-term Incentive
Plan. |
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✓ |
We increased the number of units
granted under the Long-term Incentive Plan for our Chief Executive
Officer, Senior Vice President and Chief Financial Officer, and Senior
Vice President Operations to better align pay to market levels, starting
with the 2014-2016 Long-term Incentive Plan
period. |
____________________
2 |
Cash cost, after by-product
credits, per ounce of silver and gold is a non-GAAP measurement, a
reconciliation of which to cost of sales and other direct production costs
and depreciation, depletion and amortization, the most comparable GAAP
measure, can be found in Appendix A under Reconciliation of Cash Cost,
Before By-product Credits and Cash Cost, After By-product Credits
(non-GAAP) to Cost of Sales and Other Direct Production Costs and
Depreciation, Depletion and Amortization
(GAAP). |
3 |
2014 silver equivalent calculation is based on the following prices: $19.08/oz. for silver, $1,266/oz. for gold, $0.95/lb. for lead, and $0.98/lb. for zinc. |
Continues on
next page ► |
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Hecla
Mining Company Notice of 2015 Annual Meeting and Proxy Statement |
3 |
Table of Contents
Pay Component |
Comments |
Performance-based Shares (awarded
to CEO only) (p. 58) |
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Based on a three-year Total
Shareholder Return (TSR). |
Equity Awards (p.
58) |
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There were no stock options awarded
in 2014. |
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✓ |
Restricted stock units represent
14.7% of the Chief Executive Officers long-term compensation and 23.7%
for all other named executive officers. Restricted stock units were
awarded with a three-year vesting schedule. |
Directors Compensation (p.
41) |
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We increased directors equity
grants from $46,000 to $61,000. |
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✓ |
We increased committee chair
retainers. |
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✓ |
We increased the Chairman of the
Boards annual retainer from $75,000 to
$90,000. |
Key
Elements of Chief Executive Officer Pay Mix for 2014
CHIEF EXECUTIVE OFFICER TOTAL DIRECT
COMPENSATION FOR 2014 - $3,908,538 |
✓2014 Base Salary - $605,000 (no increase in
2014).
✓Annual Incentive Plan Payout was $919,600 (152% of target).
For 2014, the Compensation Committee determined that Annual Incentive Plan
awards be paid 75% in cash and 25% in Hecla common stock issued under the
2010 Stock Incentive Plan.
✓Long-term Incentive Plan Payout was $1,383,938. In February
2012, our Chief Executive Officer was awarded 8,250 units under our 2012-2014 Long-term Incentive Plan. Based on the long-term achievements under
this plan period, the plan paid out $167.75 per unit. For 2014, the
Compensation Committee determined that the 2012-2014 Long-term Incentive
award be paid 75% in cash and 25% in Hecla common stock issued under the
2010 Stock Incentive Plan.
✓Restricted Stock Units In June 2014, our Chief Executive
Officer was awarded 151,515 restricted stock units with a grant date fair
value of $500,000 ($3.30 per share), subject to a three-year vesting
schedule (one-third in June 2015, one-third in June 2016, and one-third in
June 2017).
✓Performance-based Shares: Awarded 151,515 performance-based
shares with a grant date fair value of $500,000 ($3.30 per share), the
ultimate value of which is based on our three-year TSR ranking in a peer
group. |
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Base
Salary Annual Incentive (cash
portion) Long-term Incentive (cash portion) Annual and Long-term Incentive (equity portion) Restricted Stock
Units Performance-based Shares |
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2014
Summary Compensation and Realized Compensation
Set forth below is the 2014 compensation
for each named executive officer as determined under Securities and Exchange
Commission (SEC) rules. Total compensation, as reported in the Summary
Compensation Table and calculated under SEC rules, includes several items that
are driven by accounting and actuarial assumptions. Accordingly, it is not
necessarily reflective of the compensation our named executive officers actually
realized in 2014. To supplement that disclosure we have added the W-2/T4
Realized Comp. column to the right of the table below to compare our named
executive officers 2014 compensation as determined under SEC rules with W-2/T4
income for 2014, which is the federally taxable compensation our named executive
officers received in 2014 inclusive of vested stock and
exercised stock options, if any. This
supplemental table is not designed to replace the Summary Compensation Table
found on page 67, but rather to provide additional, supplemental compensation
disclosure. The differences between this supplemental table and the Summary
Compensation Table are (i) the supplemental table includes compensation related
to stock awards that became fully vested in 2014, whereas the Summary
Compensation Table includes compensation for stock awards as it is expensed for
financial accounting purposes; (ii) the supplemental table does not reflect the
FASB ASC Topic 718 expense associated with equity awards; (iii) the supplemental
table includes compensation related to bonuses that were paid in 2014, whereas
the Summary Compensation Table includes bonuses as they
4 Proxy
Statement Summary
Table of Contents
Proxy Statement Summary
are expensed for financial accounting
purposes; and (iv) the supplemental table does not include in compensation the
change in pension value and the Company matching contribution for individual
401(k) deferral. For more
information on total compensation as
calculated under SEC rules, see the narrative and footnotes accompanying the
Summary Compensation Table for 2014 on page 67.
2014 Summary Compensation and Realized
Compensation
Name
and Principal Position |
Salary ($) |
Stock Awards ($) |
Non-Equity Incentive
Plan Compensation ($) |
Change
in Pension Value and
Non- Qualified Deferred Compensation Earnings ($) |
All
Other Compensation ($) |
SEC Total ($) |
SEC
Total Without Change in Pension Value ($) |
W-2/T4 Realized Comp.1 ($) |
Phillips S.
Baker, Jr. President and
Chief Executive Officer |
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605,000 |
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1,438,288 |
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2,303,538 |
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164,099 |
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15,600 |
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4,526,525 |
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4,362,426 |
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2,546,415 |
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James A. Sabala Senior Vice President and
CFO |
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366,458 |
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887,623 |
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954,800 |
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279,690 |
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15,600 |
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2,504,171 |
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2,224,481 |
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1,424,758 |
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Lawrence P.
Radford Senior Vice President
Operations |
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366,458 |
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709,326 |
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886,775 |
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98,277 |
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15,600 |
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2,076,436 |
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1,978,159 |
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1,176,839 |
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Dr. Dean W. A.
McDonald Senior Vice President -
Exploration |
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275,000 |
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562,276 |
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721,875 |
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214,384 |
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15,600 |
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1,789,135 |
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1,574,751 |
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1,066,957 |
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David C.
Sienko Vice President General Counsel |
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250,000 |
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376,900 |
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543,725 |
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78,318 |
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15,600 |
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1,264,543 |
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1,186,225 |
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740,261 |
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Don Poirier Vice President Corporate Development |
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226,000 |
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412,820 |
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459,800 |
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165,348 |
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15,600 |
|
|
1,279,568 |
|
|
1,114,220 |
|
|
829,816 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1. |
The amounts reported in this
column include 2014 salary, vested stock received in 2014, and cash
portion of 2013 Annual Incentive and cash portion of 2011-2013 Long-term
Incentive, which were paid in 2014. |
Hecla Mining Company Notice of 2015 Annual Meeting
and Proxy Statement |
5 |
Table of Contents
IMPORTANT NOTICE REGARDING THE
AVAILABILITY OF PROXY MATERIALS FOR THE 2015 ANNUAL MEETING OF SHAREHOLDERS TO
BE HELD ON MAY 21, 2015
This Proxy Statement and the
accompanying Annual Report are available at:
http://www.hecla-mining.com
This Proxy Statement is being furnished by
the Board of Hecla Mining Company, a Delaware corporation (we, our, us,
Hecla, or the Company), to holders of shares of Heclas common stock, par
value $0.25 per share, in connection with the soliciting of proxies to be voted
at our Annual Meeting of Shareholders to be held on Thursday, May 21, 2015, at
10:00 a.m., Eastern Daylight Time, and any adjournment or postponement thereof
(Annual Meeting), for the purposes set forth in the accompanying Notice of
2015 Annual Meeting of Shareholders. The Annual Meeting will be held at the
offices of Lavery, de Billy, L.L.P., located at 1 Place Ville Marie, Suite 4000,
Montreal, Quebec, Canada.
If you held shares of our common stock on
March 27, 2015 (the Record Date), you are invited to attend the Annual Meeting
and vote on the proposals described in this Proxy Statement. However, you do not
need to attend the Annual Meeting to vote your shares. Instead, you may
complete, sign, date, and return the enclosed proxy card. You may also vote your
shares by proxy over the Internet or by telephone.
On or about April 8, 2015, we mailed to
our shareholders of record as of the close of business on the Record Date,
either a Notice of Internet Availability of Proxy Materials (Notice)
containing instructions on how to access this Proxy Statement and our 2014
Annual Report (Proxy Materials) online, or a printed copy of these Proxy
Materials.
Notice of
Electronic Availability of Proxy Materials
As permitted by SEC rules, we are making
these Proxy Materials available to certain shareholders electronically via the
Internet. The Notice contains instructions on how to access these Proxy
Materials and vote by proxy online. If you received a Notice by mail, you will
not receive a printed copy of the Proxy Materials in the mail. Instead, the
Notice instructs you on how to access and review all of
the important information contained in the
Proxy Materials. The Notice also instructs you on how you may submit your proxy
over the Internet or by telephone. If you received a Notice by mail and would
like to receive a printed copy of our Proxy Materials, you should follow the
instructions for requesting such materials contained in the
Notice.
Record
Date, Shares Outstanding and Quorum
If you were a holder of Hecla common stock
either as a shareholder of
record or as the beneficial owner of shares held in
street name as of the Record Date, you may vote your shares at the Annual
Meeting. As of the Record Date, 369,990,632 shares of common stock were
outstanding and entitled to vote at the Annual Meeting. Shares of our common
stock that are held by us in our treasury are not counted as shares outstanding
and will not be voted. Each shareholder has one vote for each share of common
stock held as of the Record Date.
A quorum must be present in order for
business to be conducted at the Annual Meeting. A quorum consists
of the presence at the Annual Meeting, in
person or represented by proxy, of a majority of the outstanding shares of our
common stock as of the Record Date. Shares represented by proxies marked
Abstain and broker non-votes are counted in determining whether a quorum is
present for the transaction of business at the Annual Meeting. A broker
non-vote occurs when a broker or other nominee holding shares for a beneficial
owner does not vote on a particular proposal because the broker or nominee does
not have discretionary voting power and has not received instructions from the
beneficial owner.
6
Proxy
Statement
Table of Contents
Proxy Statement
Voting
Matters and Vote Recommendation
Our Board recommends that you vote your
shares as follows:
Proposal No. |
Matter |
Board Vote Recommendation |
Page Reference (for more
detail) |
|
|
FOR EACH |
|
1 |
Election of two directors |
NOMINEE |
17 |
2 |
Ratification of appointment of BDO USA, LLP as auditors for
2015 |
FOR |
24 |
3 |
Approval of named executive officer compensation |
FOR |
27 |
Shareholder of Record versus Beneficial Owner
If, on the Record Date, your shares are registered directly
in your name with our transfer agent, American Stock
Transfer & Trust Company, you are considered, with
respect to those shares, the shareholder of record. As
a shareholder of record, you may vote in person at the
Annual Meeting or vote by proxy. Whether or not you
plan to attend the Annual Meeting, we urge you to fill out
and return the enclosed proxy card, or vote by telephone
or Internet, to ensure your vote is counted.
If, on the Record Date, your shares were held in an
account at a broker, bank, or other financial institution
or other nominee (we will refer to those organizations
collectively as broker), then you are
the beneficial owner of shares held in street name and these Proxy Materials
are being forwarded to you by your broker. The broker holding your account is
considered the shareholder of record for purposes of voting at the Annual
Meeting. As the beneficial owner, you have the right to direct your broker on
how to vote the shares in your account. As a beneficial owner, you are invited
to attend the Annual Meeting. However, since you are not a shareholder of
record, you may not vote your shares in person at the Annual Meeting unless you
request and obtain a valid proxy from your broker giving you the legal right to
vote the shares at the Annual Meeting.
Special
Note to Beneficial Holders of Shares of Common Stock
THE INFORMATION SET FORTH IN THIS SECTION
IS IMPORTANT TO MANY SHAREHOLDERS OF THE COMPANY, SINCE MANY SHAREHOLDERS HOLD
SHARES THROUGH THEIR BROKER OR OTHER NOMINEE AND DO NOT HOLD SHARES IN THEIR OWN
NAME.
Shareholders who do not hold their shares
in their own name (referred to in this Proxy Statement as beneficial
shareholders or beneficial owner) should note that only proxies submitted by
shareholders whose names appear on the Company records as the registered holders
of shares of common stock can be recognized and acted upon at our Annual
Meeting. If shares of common stock are listed
in an account statement provided to a shareholder by a broker, then in almost
all cases those shares of common stock will not be registered in the
shareholders name on the Company records and are most likely registered under
the names of the shareholders broker or an agent of that
broker. In the United States, the vast
majority of such shares are registered under the name of Cede & Co. as
nominee for The
Depository Trust Company (which acts as
depository for many U.S. brokerage firms and custodian banks), and in Canada,
under the name of CDS & Co. (the registration name for The Canadian
Depository for Securities Limited, which acts as nominee and custodian for many
Canadian brokerage firms).
Applicable regulatory policy requires
brokers to seek voting instructions from beneficial shareholders in advance of
shareholders meetings, unless a beneficial shareholder has waived the right to
receive meeting materials. Every broker has its own mailing procedures and
provides its own return instructions to clients, which should be carefully
followed by beneficial shareholders in order to ensure that their shares of
common stock are voted at our Annual Meeting. The form of proxy supplied to a
beneficial shareholder by its broker (or the agent of the broker) is similar to
the form of proxy provided to registered shareholders by us. However, its
purpose is limited to instructing the registered shareholder (the broker or
agent of the broker) how to vote on behalf of the beneficial shareholder. The
majority of brokers
Continues on next page ► |
|
|
|
Hecla Mining Company Notice of 2015 Annual Meeting
and Proxy Statement |
7 |
Table of Contents
now delegate responsibility for obtaining
instructions from clients to Broadridge Financial Solutions, Inc. (Broadridge)
in the United States and Canada. Broadridge typically applies a special sticker
to proxy forms, mails those forms to the beneficial shareholders, and the
beneficial shareholders return the proxy forms to Broadridge. Broadridge then
tabulates the results of all instructions received and provides appropriate
instructions on the voting of shares to be represented at our Annual Meeting.
A beneficial shareholder receiving a
Broadridge proxy cannot use that proxy to
vote shares of our common stock
directly at our Annual Meeting the proxy must be returned to Broadridge well
in advance of our Annual Meeting, in order to have the shares of common stock
voted.
Alternatively, a beneficial shareholder
may request in writing that his or her broker send to the beneficial shareholder
a legal proxy which would enable the beneficial shareholder to attend our Annual
Meeting and vote his or her shares of common stock.
The Notice containing instructions on how
to access these Proxy Materials electronically cannot be used to vote your
shares. The Notice does, however, provide instructions on how to vote by proxy
using the Internet, telephone, or by requesting and returning a paper proxy card
or voting instruction card.
If your shares are held in your name, you
have the right to vote in person at the Annual Meeting. If your shares are held
in a brokerage account or by another nominee, you are considered the beneficial
owner of shares held in street name. Since a beneficial owner is not the
shareholder of record, you may not vote these shares in person at the Annual
Meeting unless you obtain a legal proxy from your broker or nominee that holds
your shares, giving you the right to vote the shares at the Annual
Meeting.
Whether you hold shares directly as a
shareholder of record or beneficially in street name, you may vote without
attending the Annual Meeting. You may vote by granting a proxy or, for shares
held beneficially in street name, by submitting voting instructions to your
broker or nominee. In most cases, you will be able to do this by using the
Internet, by telephone, or by mail if you received a printed set of the Proxy
Materials.
To vote by mail:
● |
Mark, sign and date your proxy card;
and |
● |
Return your proxy card in the
enclosed postage-paid envelope. |
To vote by proxy over the
Internet:
● |
Have
your proxy card or Notice available; |
● |
Log
on to the Internet and visit the website noted on your proxy card or
Notice (www.proxyvote.com); |
● |
Follow the instructions provided;
and |
● |
Do not mail your proxy
card. |
To vote by proxy by
telephone:
● |
Have your proxy card
available; |
● |
Call the toll-free number listed on
your proxy card (1-800-690-6903); |
● |
Follow the recorded instructions;
and |
● |
Do not mail your proxy
card. |
To vote in person if you are a
registered shareholder of record:
● |
Attend our Annual Meeting; |
● |
Bring
a valid photo identification; and |
● |
Deliver your completed proxy card or ballot in
person. |
To vote in person if you hold your
shares in street name (through a broker, financial institution or other
nominee):
● |
Attend our Annual
Meeting; |
● |
Bring a valid photo identification;
and |
● |
Obtain from your broker a document
that allows you to vote the shares held for your benefit, attach that
document to your completed proxy card or ballot and deliver it in
person. |
To vote your 401(k) Plan
shares:
If you participate in the Hecla Mining
Company Capital Accumulation Plan and hold shares of our common stock in your
plan account as of the Record Date, you will receive a request for voting
instructions from the plan trustee (Vanguard) with respect to your plan
shares. You are entitled to direct Vanguard how to vote your plan shares. If you
do not provide voting instructions to Vanguard by 11:59 p.m., Eastern Daylight
Time, on May 20, 2015, the Hecla shares in your plan account will be voted by
Vanguard in the same proportion as the shares held by Vanguard for which voting
instructions have been received from other participants in the plan.
8
Proxy
Statement
Table of Contents
Proxy Statement
Representatives of Broadridge will receive
and tabulate proxies, act as independent Inspectors of Election, supervise the
voting, decide the validity of proxies, and certify their count of all votes and
ballots. Broadridge has been instructed that the vote of each shareholder must
be
kept confidential and may not be disclosed
(except in the event of legal proceedings or, in the event of a contested proxy
solicitation, to permit the solicitation of the votes of undecided
shareholders).
Votes
Required for the Proposals
Under New York Stock Exchange (NYSE)
rules, if your shares are held in street name and you do not indicate how you
wish to vote, your broker is only permitted to exercise its discretion to vote
your shares on certain routine matters. Proposal 1 (Election of Directors) and
Proposal 3 (Approval of Executive Compensation), are not routine matters,
whereas Proposal 2 (Ratification of Appointment of BDO USA, LLP) is a routine
matter. Accordingly, if you do not direct your broker how to vote for a director
in Proposal 1 or how to vote for Proposal 3, your broker is not permitted to
exercise discretion and is not permitted to vote your shares on such matters.
This is called a broker non-vote.
Proposal 1 - Election of
Directors. For more information on director
elections, see Proposal 1 Election of Directors beginning on
page 17.
Pursuant to our Bylaws, each director will be elected by a majority of votes
cast at the Annual Meeting, whether in person or by proxy. A properly executed
proxy card marked WITHHOLD with respect to the election of directors will not
be voted (and therefore will not be considered a vote cast) and will not count
FOR the nominee or nominees for which the vote was withheld. Any shares not
voted (whether by abstentions, broker non-votes or otherwise) have the same
impact as an instruction to withhold authority in the election of directors, and
will not affect the election of directors.
You may vote FOR the nominees for
election as directors, or you may WITHHOLD authority to vote for one or more
of the nominees.
Please note that this election of
directors is an uncontested election, meaning that there is only one candidate
for each of the two directorships to be elected at the Annual Meeting. In the
future, if an election for a board seat is contested at an annual or special
meeting, the candidate who receives the most FOR votes would be the winner of
the election (assuming a quorum is present at the meeting) because instructions
to withhold authority, abstention and broker non-votes are not considered to
be votes cast for purposes of determining
a majority vote under our Bylaws. As a result, all director elections under our
Bylaws are effectively determined in the same manner as would be the case under
a plurality voting standard.
Proposal 2 - Ratification of
Appointment of BDO USA, LLP. Under the
Sarbanes-Oxley Act of 2002, the Audit Committee has the sole authority to
appoint the independent registered public accounting firm for the Company.
However, the Board feels that it is important for the shareholders to approve
the selection of BDO USA, LLP. This proposal requires the affirmative vote of a
majority of votes cast at the Annual Meeting, whether in person or by proxy.
Abstentions or shares that are not voted are not counted as cast for this
purpose. The appointment of our independent registered public accounting firm
for calendar year 2015 is considered a routine matter and brokers that are not
directed how to vote are permitted to vote shares held in street name for their
clients on this item.
You may vote FOR, AGAINST, or
ABSTAIN on the proposal to ratify the appointment of BDO USA, LLP as our
independent registered public accounting firm for 2015.
Proposal 3 Approval of Named
Executive Officer Compensation. For more
information on approval of our executive compensation see Proposal 3 -
Approval of Named Executive Officer Compensation beginning on
page 27.
Please also review the Compensation Discussion and Analysis section beginning on
page 44 and compensation tables beginning on page 67. The advisory vote on executive
compensation requires the affirmative vote of a majority of votes cast at the
Annual Meeting, whether in person or by proxy. Abstentions or shares that are
not voted are not counted as cast for this purpose. Even though your vote is
advisory and therefore will not be binding on the Company, the Boards
Compensation Committee will review the voting results and take them into
consideration when making future decisions regarding executive
compensation.
Continues on next page ► |
|
|
|
Hecla Mining Company Notice of 2015 Annual Meeting
and Proxy Statement |
9 |
Table of Contents
You may vote FOR, AGAINST or ABSTAIN
on the proposal to approve the compensation of our named executive
officers.
Discretionary voting by proxies on
other matters. Aside from the election of two
directors, the ratification of the appointment of BDO USA, LLP, and the approval
of executive compensation, we do not know of any other proposal that may be
presented at the Annual Meeting.
However, if any other business is properly
presented at the Annual Meeting, your proxy gives authority to Phillips S.
Baker, Jr. and Michael B. White to vote on such matters at their discretion. No
other proposals have been timely submitted in accordance with our Bylaws, and we
are not aware of any matters other than those described in this Proxy Statement
that will be acted upon at the Annual Meeting.
A proxy is your legal appointment in a
written document of another person to vote the shares that you own in accordance
with your instructions. The person you appoint to vote your shares is also
called a proxy. We have designated Phillips S. Baker, Jr., our President and
Chief Executive Officer, and Michael B. White, our Corporate Secretary, as
proxies for the Annual Meeting.
When you sign the proxy card, you appoint
Phillips S. Baker, Jr. and Michael B. White as your representatives at the
Annual Meeting. As your representatives, they will vote your shares at the
Annual Meeting (including any adjournment or postponement) as you have
instructed them on your proxy card or, if no instruction is given, as set forth
in the following paragraph. With proxy voting, your shares will be voted whether
or not you attend the
Annual Meeting in person. Even if you plan
to attend the Annual Meeting, we urge you to complete, sign and return your
proxy card in advance of the Annual Meeting in case your plans
change.
Properly signed and dated proxies received
by us prior to or at the Annual Meeting will be voted as instructed on the
proxies or, in the absence of such instruction:
(i) |
FOR the election to the Board of George R. Nethercutt, Jr. and John H.
Bowles; |
(ii) |
FOR the ratification of the appointment of BDO USA, LLP, as our independent registered public accounting firm for
2015; and |
(iii) |
FOR approval of our named executive officers
compensation. |
If you are a shareholder of record, you
may revoke your proxy and change your vote at any time before your proxy is
voted at the Annual Meeting, in any of the following ways:
● |
By sending a written notice of
revocation to our Corporate Secretary, if such notice is received prior to
the vote at the Annual Meeting, at our principal executive
offices: |
Hecla Mining Company
Attn: Corporate
Secretary
6500 N. Mineral Drive, Suite 200
Coeur dAlene, ID
83815-9408
● |
By submitting a later-dated proxy to
our Corporate Secretary prior to the vote at the Annual Meeting;
or |
● |
By voting in person at the Annual
Meeting. |
If you hold your shares in street name,
you should contact your broker for information on how to revoke your voting
instructions and provide new voting instructions.
If you hold your shares in the Hecla
Mining Company Capital Accumulation Plan, you may revoke your previously
provided voting instructions by filing with Vanguard either a written notice of
revocation or a properly executed proxy bearing a later date prior to the
deadline for voting plan shares. If you hold your Hecla shares outside of the
plan, you may vote those shares separately.
10
Proxy
Statement
Table of Contents
Proxy Statement
We will bear all costs and expenses
relating to the solicitation of proxies, including the costs of preparing,
assembling, printing, mailing and distributing these Proxy Materials. We have
hired Broadridge to assist us in mailing these Proxy Materials. Additionally, we
have retained Morrow & Co., LLC, 470 West Ave., Stamford, Connecticut to
assist in the solicitation of votes for an estimated fee of $8,000, plus
reimbursement of certain out-of-pocket expenses. Solicitations may be made
personally or by mail, facsimile, telephone, or via the
Internet. However, if you choose to access
the Proxy Materials over the Internet, you are responsible for any Internet
access charges you may incur. Arrangements will be made with brokerage firms and
other custodians, nominees and fiduciaries for forwarding solicitation materials
to the beneficial owners of the shares of common stock held by such persons, and
we will reimburse such brokerage firms, custodians, nominees and fiduciaries for
reasonable out-of-pocket expenses incurred by them in connection with such
activities.
Results
of the Annual Meeting
Preliminary voting results will be
announced at the Annual Meeting. We will publish final results in a Current
Report on Form 8-K that we expect to file with the SEC within four business days
of the Annual Meeting. After the Form 8-K is filed, you may obtain a copy by
visiting the SECs website at www.sec.gov, visiting our website
at www.hecla-mining.com or contacting our
Investor Relations Department by writing to Investor Relations Department, Hecla
Mining Company, 6500 N. Mineral Dr., Suite 200, Coeur dAlene, ID 83815-9408 or by
sending an email to hmc-info@hecla-mining.com.
Our Annual Report to Shareholders,
consisting of our Form 10-K for the year ended December 31, 2014, and other
information, is being made available to shareholders with this Proxy Statement.
Shareholders may obtain a copy of our Annual Report for the calendar year ended
December 31, 2014, without cost, by written or oral request to:
Hecla Mining Company
Attention:
Jeanne DuPont
6500 N. Mineral Drive, Suite 200
Coeur dAlene, Idaho
83815-9408
Telephone: 208-769-4100
You can also access our SEC filings,
including our Annual Reports on Form 10-K, and all amendments thereto, on the
SEC website at http://www.sec.gov/edgar.shtml or on our website at
http://www.hecla-mining.com.
Continues on next page ► |
|
|
|
Hecla Mining Company Notice of 2015 Annual Meeting
and Proxy Statement |
11 |
Table of Contents
Please contact our transfer agent, at the
phone number or address listed below, with questions concerning stock
certificates, dividend checks, transfer of ownership or other matters pertaining
to your stock account.
American Stock Transfer & Trust
Company
59 Maiden Lane
New York, NY 10038
800-937-5449 or
718-921-8275
Householding of Proxy Materials
Many brokerage firms, financial
institutions and transfer agents have instituted householding procedures for
beneficial owners and shareholders of record. Householding is when a single copy
of our Proxy Materials is sent to a household in which two or more shareholders
reside if they appear to be members of the same family. This practice is
designed to reduce duplicate mailings and save significant printing and postage
costs, as well as natural resources.
If you are a beneficial owner, you may
have received householding information from your broker, financial institution
or other nominee shareholder in the past. Please contact the shareholder of
record directly if you have questions, require additional copies of our Proxy
Materials, or wish to revoke your decision to household
and thereby receive multiple copies. You
should also contact the shareholder of record if you wish to institute
householding. These options are available to you at any time.
Shareholders of record who share an
address and would like to receive a separate copy of our Proxy Materials for
future annual meetings, or have questions regarding the householding process,
may contact our transfer agent, American Stock Transfer & Trust Company,
either by written request or by telephone at the address and telephone number
listed above. By contacting American Stock Transfer & Trust Company,
shareholders of record sharing an address can also request delivery of multiple
copies of our Proxy Materials in the future.
Electronic Delivery of Proxy Materials, Annual Reports, News
Releases and Documents Filed with the Securities and Exchange
Commission
If you are a shareholder of record, you
may request and consent to electronic delivery of future Proxy Materials by
following the instructions on your proxy card or by visiting our website at
http://www.hecla-mining.com under Investors and selecting the Annual Report
and Proxy Material icon and following the instructions. If your shares are held
in street name, please contact your broker and ask about the availability of
electronic delivery. If you select electronic delivery, we will discontinue
mailing the Proxy Materials to you beginning next year and you will be sent an
email message notifying you of the Internet address or addresses where you may
access the Proxy Materials. Your consent to electronic delivery will remain in
effect until you revoke it. If you selected electronic
delivery last year, we will not mail the
Proxy Materials to you this year and you will receive an email message with the
Internet address where you may access the Proxy Materials for the current year.
This process is designed to expedite shareholders receipt of Proxy Materials,
lower the cost of the Annual Meeting, and help conserve natural resources.
Shareholders may also elect to receive
notice of our filings with the SEC, annual reports and news releases by email.
You may sign up for this service by visiting our website at
http://www.hecla-mining.com and selecting the Email Updates icon on our home
page.
12 Proxy Statement
Table of Contents
Proxy Statement
Direct
Registration System and Investor Services
The Direct Registration System (DRS) is
a system that allows your Hecla shares to be held in your name in book-entry
form, without having a physical certificate issued. You retain full ownership of
your shares, and you have the same rights and privileges as holders of shares
held in certificate form. You may request a physical certificate at any time,
although it is generally easier and more efficient to maintain your shares in
non-certificated form. The benefits of DRS are:
● |
Provides accurate, quick and cost-efficient
transfers between our transfer agent and your broker/dealer; |
● |
Ensures secure electronic transfer of your
securities; |
● |
Reduces the risk with physical certificates
being processed, including turnaround delays, mail losses and risks
associated with stolen, forged or counterfeit certificates; |
● |
You will receive a periodic
annual statement from our transfer agent. Unlike a physical certificate,
if you lose the statement, it is easy to get another one;
and |
● |
It is generally safer to own your shares in
book-entry form because there are no certificates to be stolen, lost or
destroyed. There is also no need to rent a safe-deposit box or other safe
place to keep the certificates, and you do not have to send them in the
mail or insure them. |
You can contact our transfer agent,
American Stock Transfer & Trust Company, at the address and telephone number
listed above for more information on DRS.
Our transfer agent also offers expanded
online services through its affiliate, AST Investor Services, an online retail
investor portal. For example, it offers shareholders the ability to consolidate
positions in a single account.
For more information on this service,
contact AST Investor Services at 1-888-444-0057, or visit them on the Internet
at www.astinvestor.com, or through customer service at
Customerservice@astinvestor.com.
Hecla Mining
Company Notice of 2015 Annual Meeting and Proxy Statement 13
Table of Contents
|
Provisions of Heclas
Bylaws With Respect to Shareholder Proposals and Nominations for
Election as Directors |
You may submit proposals for consideration
at future annual shareholder meetings, including director nominations, as
follows:
Shareholder Proposals at the 2016 Annual Meeting of
Shareholders
Our Bylaws establish procedures governing
the eligibility of nominees for election to our Board, and the proposal of
business to be considered by our shareholders at an Annual Meeting of
Shareholders. For nominations or other business to be properly brought before an
Annual Meeting of Shareholders by a shareholder, the shareholder must have given
timely notice thereof in writing to our Corporate Secretary. To be timely, a
shareholders notice shall be delivered to our Corporate Secretary at our
principal executive offices located at 6500 N. Mineral Drive, Suite 200, Coeur
dAlene, Idaho 83815-9408, not less than 90 days nor more than 120 days prior to
the first anniversary of the preceding years Annual Meeting of Shareholders;
provided, however, that in the event the date of the Annual Meeting of Shareholders is
advanced by more than 30 days or delayed by more than 60 days from such
anniversary date, notice by the shareholder to be timely must be delivered not
earlier than the 120th day prior to such Annual Meeting of
Shareholders and not later than the close of business on the later of the
90th day prior to such Annual Meeting of Shareholders or the
10th day following the day on which public announcement of the date
of such meeting is first made. Adjournment of a meeting shall not commence a new
time period for giving shareholders notice as described above. Such
shareholders notice shall set forth:
|
(a) |
As to each person whom the
shareholder proposes to nominate for election or re-election as a
director, all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors in an
election contest, or is otherwise required, in each case pursuant to
Regulation 14A under the Securities and Exchange Act of 1934 (the
Exchange Act), as amended, and Rule 14a-11 thereunder, including such
persons written consent to being named in our Proxy Statement as a
nominee and to serve as a director if elected; |
|
(b) |
As to any other
business that the shareholder proposes to bring before the meeting, who
has not otherwise complied with the rules and regulations under the
Exchange Act for the inclusion of a shareholder proposal in our Proxy
Statement, a brief description of the business desired to be brought
before the meeting, the reasons for conducting such business at the
meeting, and any material interest in such business of such shareholder
and the beneficial owner, if any, on whose behalf the proposal is made;
and |
|
|
|
(c) |
As to the shareholder
giving the notice and the beneficial owner, if any, on whose behalf the
nomination or proposal is made: |
|
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|
(i) |
the name and address of such
shareholder, as they appear on the Companys books, and of such beneficial
owner; and |
|
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|
|
(ii) |
the class and number of Company
shares which are owned beneficially and of record by such shareholder or
beneficial owner. |
The applicable time period for timely
shareholder submissions pursuant to the above provisions for the 2016 Annual
Meeting of Shareholders is January 21, 2016 (the 120th day preceding
the anniversary of the 2015 Annual Meeting) to February 20, 2016 (the
90th day preceding such anniversary).
The chairman of the meeting shall have the
power and duty to determine whether a nomination or any business proposed to be
brought before the meeting was made in accordance with the procedures set forth
in the Bylaws and, if any proposed nomination or business is not in compliance
with the Bylaws, to declare that such defective proposal shall be disregarded.
The foregoing time limits also apply in determining whether notice is timely for
purposes of rules adopted by the SEC relating to the exercise of discretionary
voting authority.
14
Table of Contents
Provisions of Heclas Bylaws With Respect to
Shareholder
Proposals and Nominations for Election as
Directors
Shareholder Proposals to be Included
in Next Years Proxy Statement
In addition to the foregoing section,
we will comply with Rule 14a-8 under the Exchange Act with respect to any
shareholder proposals that meet that rules requirements. We will review
shareholder proposals intended to be included in our Proxy Statement for the
2016 Annual Meeting of Shareholders which are received by us at our principal
executive offices located at 6500 N. Mineral Drive, Suite 200, Coeur dAlene,
Idaho 83815-9408, no
later than December 10, 2015. Such
proposals must be submitted in writing and should be sent to the attention of
our Corporate Secretary.
You may contact the Corporate
Secretary at our principal executive offices for a copy of the relevant Bylaw
provisions regarding the requirements for making shareholder proposals and
nominating director candidates.
Identifying and Evaluating Nominees
for Directors
General Principles and
Procedures. The Corporate Governance and
Directors Nominating Committee uses a variety of methods for identifying and
evaluating nominees for director. The committee is responsible for ensuring that
the composition of the Board accurately reflects the needs of our business. In
the event vacancies are anticipated, or arise, the committee considers various
potential candidates for director. Candidates may come to the attention of the
committee through current Board members, professional search firms, shareholders
or other persons. Consideration of new director nominee candidates typically
involves a series of internal discussions, review of information concerning
candidates and interviews with selected candidates. The committee then
determines the best qualified candidates based on the established criteria and
recommends those candidates to the Board for election at the next annual meeting
of shareholders.
We hold the view that the continuing
service of qualified incumbents promotes stability and continuity in the
boardroom, contributing to the Boards ability to work as a collective body,
while giving us the benefit of familiarity and insight into our affairs that our
directors have accumulated during their tenure. Accordingly, the process for
identifying nominees reflects our practice of re-nominating incumbent directors
who continue to satisfy the committees criteria for membership on the Board,
who the committee believes continue to make important contributions to the
Board, and who consent to continue their service on the Board.
The committee reviews annually with
the Board the composition of the Board as a whole and recommends, if necessary,
measures to be taken so that the Board reflects the appropriate balance of
knowledge, experience, skills, expertise and diversity required for the Board as
a whole and contains at least the minimum number of independent directors
required by applicable laws and regulations.
Board members should possess such
attributes and experience as are necessary for the Board as a whole to contain a
broad range of personal characteristics, including diversity of backgrounds,
management skills, mining, accounting, finance and business experience.
Directors should be able to commit the requisite time for preparation and
attendance at regularly scheduled Board and committee meetings, as well as be
able to participate in other matters necessary to ensure good corporate
governance is practiced.
In general, and as more fully
outlined in our Bylaws and Corporate Governance Guidelines, in evaluating
director candidates for election to our Board, the committee will: (i) consider
if the candidate satisfies the minimum qualifications for director candidates as
set forth in the Corporate Governance Guidelines; (ii) consider factors that are
in the best interests of the Company and its shareholders, including the
knowledge, experience, integrity and judgment of each candidate; (iii) consider
the contribution of each candidate to the diversity of backgrounds, experience
and competencies which the Board desires to have represented, with such
diversity being considered among the other desirable attributes of the Board;
(iv) assess the performance of an incumbent director during the preceding term;
(v) consider each candidates ability to devote sufficient time and effort to
his or her duties as a director; (vi) consider a candidates independence and
willingness to consider all strategic proposals; (vii) consider any other
criteria established by the Board and any core competencies or technical
expertise necessary to manage and direct the affairs and business of the
Company, including, when applicable, to enhance the ability of committees of the
Board to fulfill their duties; and (viii) determine whether there exists any
special, countervailing considerations against nomination of the
candidate.
Continues on next page ► |
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Hecla Mining Company Notice of 2015 Annual Meeting
and Proxy Statement |
15 |
Table of Contents
The committee will consider persons
recommended by shareholders as nominees for election as directors. Our Bylaws
provide that any shareholder who is entitled to vote for the election of
directors at a meeting called for such purpose may nominate persons for election
to the Board by following the procedures set forth on page 14. Shareholders who wish
to submit a proposed nominee to the committee should send written notice to the
Corporate Governance and Directors Nominating Committee Chairman, c/o Corporate
Secretary, Hecla Mining Company, 6500 N. Mineral Drive, Suite 200, Coeur
dAlene, Idaho 83815-9408, within the time period set forth on
page 14.
The notification should set forth all information relating to the nominee that
is required to be disclosed in solicitations of proxies for elections of
directors pursuant to Regulation 14A under the Exchange Act, including the
nominees written consent
to being named in the Proxy Statement as a
nominee and to serving as a director if elected; the name and address of the
shareholder or beneficial owner making the nomination or on whose behalf the
nomination is being made; and the class and number of shares of the Company
owned beneficially and of record by such shareholder or beneficial owner. The
committee will consider shareholder nominees on the same terms as nominees
selected by the committee.
Regardless of how a candidate is brought
to the committee, qualified candidates are subjected to one or more interviews
with appropriate members of the Board. Chosen candidates are extended
invitations to join the Board. If a candidate accepts, he or she is formally
nominated.
Director Qualifications, Evaluation, and
Nomination
The committee believes that nominees for
election to the Board should also possess certain minimum qualifications and
attributes. The nominee must: (i) exhibit strong personal integrity, character
and ethics, and a commitment to ethical business and accounting practices; (ii)
not be involved in ongoing litigation with the Company or be employed by an
entity that is engaged in such litigation; and (iii) not be the subject of any
ongoing criminal investigations in the jurisdiction of the United States or any
state thereof, including investigations for fraud or financial misconduct. Our
Bylaws and Corporate Governance Guidelines provide that directors will not be
nominated for re-election after their 72nd birthday.
In connection with the director nominees
who are up for re-election at the Annual Meeting, the committee also considered
the nominees roles in: (i) overseeing the Companys efforts in complying with
its SEC disclosure requirements; (ii) assisting in improving the Companys
internal controls and disclosure controls;
(iii) assisting with the strategic plan of the Company; and (iv) working with
management to implement the strategic plan and mission statement. Directors are
expected to exemplify high standards of personal and professional integrity and
to constructively challenge management through their active participation and
questioning.
In addition to fulfilling the above
criteria, each nominee for election to the Board at the upcoming Annual Meeting
brings a strong and unique background and set of skills to the Board, giving the
Board as a whole competence and experience in a wide variety of areas, including
corporate governance, executive management, accounting, finance, mining, and
board service. The committee has reviewed the nominees overall service to the
Company during their terms, including the number of meetings attended, level of
participation and quality of performance.
16
Table of Contents
|
Proposal 1 Election of Directors |
Our current Bylaws require the Board to have not less than five nor more than nine members. The size of the Board may be increased or decreased within that range from time-to-time by resolution approved by the
affirmative vote of a majority of the Board. The current Board is composed of seven directors.
In accordance with our Certificate of Incorporation, the Board is divided into three classes. The terms of office of the directors in each class expire at different times. There are two directors whose terms will
expire at the 2015 Annual Meeting: Messrs. George R. Nethercutt, Jr. and John H. Bowles.
At a meeting held by the Corporate Governance and Directors Nominating Committee in February 2015, the committee determined that the two directors whose terms are expiring - Messrs. Nethercutt and Bowles - were
qualified candidates to stand for re-election at the Annual
Meeting, and the Board designated Messrs. Nethercutt and Bowles as nominees for re-election as directors of the Company, each for a three-year term expiring in 2018. Each nominee has accepted the nomination and agreed
to serve as a director if elected by the Companys shareholders.
It is intended that the proxies solicited hereby from our shareholders that do not provide voting instructions will be voted FOR the
election of George R. Nethercutt, Jr. and John H. Bowles. The Board knows of no reason why the nominees will be unable or unwilling to accept election. However, if any nominee becomes unable or is unwilling to accept election, the Board will either
reduce the number of directors to be elected or select substitute nominees submitted by the Corporate Governance and Directors Nominating Committee. If substitute nominees are selected, proxies that do not provide voting instructions will be
voted in favor of such nominees.
Director Qualifications and Biographical Information
Set forth below is biographical information for each of the director nominees, including the key qualifications, experience, attributes, and skills that led our Board to the conclusion that each of the director
nominees should serve as a director. There are no family relationships among any of our directors or executive officers.
Our Board includes individuals with strong backgrounds in executive leadership and management, accounting and finance, and Company and industry knowledge, and we believe that, as a group, they work effectively together
in overseeing our business. We believe that our directors hold themselves to the highest standards of integrity and that they are committed to representing the long-term best interests of our shareholders.
Continues on next page ► |
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Hecla Mining Company Notice of 2015 Annual Meeting
and Proxy Statement |
17 |
Table of Contents
Current
Nominees for Election to the Board Term Ending at the 2015 Annual
Meeting
If elected, the nominees will each serve
for a three-year term ending in 2018. The nominees are as follows:
|
|
George R. Nethercutt,
JR. Age 70 Director since 2005 Mr. Nethercutt has served as Chairman of The George Nethercutt
Foundation, a nonprofit student leadership and civics education charity,
since 2007, and was appointed Of Counsel for Lee & Hayes PLLC, a law
firm, in September 2010. He has been a board member of Washington Policy
Center, a public policy organization providing analysis on issues relating
to the free market and government regulation, since January 2005; board
member of ARCADIS Corporation, an international company providing
consultancy, engineering and management services, since May 2005; and
Board of Chancellors, Juvenile Diabetes Research Foundation International,
a charity and advocate of juvenile diabetes research worldwide, since June
2011. He was a Principal of Nethercutt Consulting LLC, a strategic
planning and consulting firm, from January 2007 to January 2012, and
served as a member on the board of IP Street, a software company, from May
2011 to January 2015. He also served as U.S. Chairman of the Permanent
Joint Board on Defense - U.S./Canada from April 2005 to December 2009;
Member, U.S. House of Representatives from 1995 to 2005; Member,
Subcommittee on Interior, Agriculture and Defense Appropriations from 1995
to 2005; Member, Committee on Science and Energy from 1998 to 2005; and
Vice Chairman, Defense Subcommittee on Appropriations from 2000 to 2004.
Mr. Nethercutt has also been a member of the Washington State Bar
Association since 1972.
Key
attributes, experience and skills: While serving as a U.S. Congressman, Mr. Nethercutts focus was on
natural resources policy, mining legislation and environmental policies on
public lands. Mr. Nethercutts extensive political background also
included working as a staff member in the U.S. Senate in Washington, D.C.,
where he focused on issues relating to oil and gas, natural resources,
mining and commerce. He served as chief of staff to a U.S. Senator from
Alaska, working on such issues as agriculture, fisheries, timber and
mining. Mr. Nethercutts consulting business consisted of representing
clients with mining and natural resources issues. He holds a Juris Doctor
degree which he used to gain experience and expertise in business, natural
resources and mining law. Our Corporate Governance and Directors
Nominating Committee and the Board believe that his experience in natural
resources, significant political background, and his significant board
experience make him an asset to the Board.
Hecla
Committees: ●Compensation (Chair) ●Corporate Governance and Directors
Nominating |
18
Table of Contents
|
Proposal 1 Election of
Directors |
|
|
|
|
John H. Bowles Age
69 Director since 2006 Mr. Bowles
was a Partner in PricewaterhouseCoopers LLP, an accounting firm, from
April 1976 until his retirement in June 2006. He has been a Director
Emeritus for Ducks Unlimited Canada, a national, private, non-profit
wetland conservation organization, since March 1996, and has served on the
audit committee for the Canadian Institute of Mining since May 2014. He
served as a Director of Mercator Minerals LTD., a copper, molybdenum and
silver mining company, from April 2011 to September 2014; Director of Boss
Power Corp., a mineral exploration company, from September 2007 to
November 2013; Treasurer, Mining Suppliers Association of British
Columbia, an association of providers of equipment, products and related
services to the British Columbia mining industry, from May 1999 to May
2012; and Director, HudBay Minerals Inc., a zinc, copper, gold and silver
mining company, from May 2006 to March 2009. He was appointed a Fellow of
the British Columbia Institute of Chartered Accountants in December 1997,
and appointed a Fellow of the Canadian Institute of Mining and Petroleum
in May 2003. In 2006, Mr. Bowles was named Mining Person of the Year by
the Mining Association of BC.
Key attributes,
experience and skills: Mr. Bowles is a
chartered accountant and served with one of the Big Four auditing firms,
where he specialized in the audits of public companies in the mining
industry. He previously served as a director for a mineral exploration
company, as well as a copper, molybdenum and silver producing company, and
a zinc, copper, gold and silver mining company. Our Corporate Governance
and Directors Nominating Committee and the Board believe that his
experience as an accountant and financial expertise, which qualify him as
an audit committee financial expert, and his significant board
experience make him an asset to the Board.
Hecla
Committees:
●Audit (Chair)
●Executive
●Health, Safety, Environmental and Technical
The Board
recommends that shareholders vote FOR the election of George R.
Nethercutt, Jr. and John H. Bowles |
Our directors whose terms are not expiring
this year follow. They will continue to serve as directors for the remainder of
their terms or until their respective successors are elected.
Continues on next page ► |
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Hecla Mining Company Notice of 2015 Annual Meeting and Proxy Statement |
19 |
Table of Contents
Continuing Members of the Board
Term Ending at the 2016 Annual Meeting
|
|
Ted Crumley Age
70 Director since 1995 Chairman of the Board since
2006 Mr. Crumley served as Executive Vice
President and Chief Financial of Officer of OfficeMax Incorporated, a
distributor of office products, from January 2005 until his retirement in
December 2005. He was also Senior Vice President of OfficeMax Incorporated
from November 2004 to January 2005; and Senior Vice President and Chief
Financial Officer of Boise Cascade Corporation, a manufacturer of paper
and forest products, from 1994 to 2004.
Key attributes, experience and
skills: Mr. Crumley has over 30 years
experience in management, finance and accounting in the natural resources
industry. He understands all aspects of our business, including the mining
elements. He has served on Heclas Board since 1995, making him the
longest serving member of the Board, and also holds the position of
Chairman of the Board. Our Corporate Governance and Directors Nominating
Committee and the Board believe that Mr. Crumleys substantial management
experience as an executive vice president, his financial expertise, and
his significant experience as a board member for Hecla, make him an asset
to the Board.
Hecla
Committees:
●Executive
●Compensation |
20
Table of Contents
|
Proposal 1 Election of
Directors |
|
|
|
|
Charles B. Stanley Age
56 Director since 2007 Mr.
Stanley has been Chief Executive Officer, President and Director of QEP
Resources, Inc., an independent natural gas and oil exploration and
production company, since May 2010. He was appointed Chairman of the Board
of QEP Resources, Inc. in May 2012. He also served as Chairman, Chief
Executive Officer, President and Director of QEP Midstream Partners, LP, a
master limited partnership that owns, operates, acquires and develops
midstream energy assets, from May 2013 to December 2014. He served as
Chief Operating Officer of Questar Corporation, a Western U.S. natural
gas-focused exploration and production, interstate pipeline and local
distribution company, from March 2008 to June 2010; Executive Vice
President and Director of Questar Corporation from February 2002 to June
2010; President and Chief Executive Officer, Questar Market Resources,
Inc., Wexpro Company, an exploration and production company that develops
and produces gas reserves, Questar Exploration and Production Company, an
oil and gas exploration and production company, Questar Gas Management
Company, a gas gathering and processing company and Questar Energy Trading
Company, a wholesale marketing and storage company, from February 2002 to
June 2010.
Key attributes, experience and
skills: Mr. Stanley has over 31 years
experience in the international and domestic upstream and midstream oil
and gas industry. He is a geologist with an extensive background in
natural resources and is familiar with the financial reporting,
disclosure, governance, and control requirements imposed on public
companies by various regulatory agencies because of his experience as an
executive officer of an SEC registrant. Our Corporate Governance and
Directors Nominating Committee and the Board believe that his experience
as a chief executive officer of a public company, his geology experience,
financial expertise, which qualify him as an audit committee financial
expert, and his significant public company board experience make him an
asset to the Board.
Hecla
Committees:
●Audit
●Corporate Governance and Directors Nominating
●Health, Safety, Environmental and
Technical |
Continues on next page ► |
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Hecla Mining Company Notice of 2015 Annual Meeting and Proxy Statement |
21 |
Table of Contents
|
|
Terry V. Rogers, C. Dir.,
H.R.C.C.C. Age 68 Director since 2007 Mr. Rogers served as Senior Vice President
and Chief Operating Officer of Cameco Corporation, a uranium producer,
from February 2003 until his retirement in June 2007. He is a former
President of Kumtor Operating Company, a gold producing company and a
subsidiary of Cameco Corporation, where he served from 1999 to 2003 and
has served on the Board of Directors of Cameco Gold Company and its
publicly traded successor Centerra Gold Inc., a gold mining company, since
February 2003.
Key attributes, experience and
skills: Mr. Rogers has over 30 years
experience in the mining industry where he held several executive
positions with major mining companies and their subsidiaries worldwide. He
has experience in operating mining projects, including being a mine
manager and overseeing all aspects of production, engineering, planning,
and administrative services. Mr. Rogers also has experience in open-cast,
open-pit and underground operations in coal, gold, and uranium mines
around the world. Mr. Rogers obtained the Chartered Director (C. Dir.)
designation from The Directors College (a joint venture of McMaster
University and The Conference Board of Canada) in March 2011. In 2013, Mr.
Rogers also obtained the Human Resources and Compensation Committee
Certified (H.R.C.C.C.) designation from The Directors College. Our
Corporate Governance and Directors Nominating Committee and the Board
believe that his experience in management and his extensive background in
open-cast, open-pit and underground operations, as well as his board
experience and certified designations, make him an asset to the
Board.
Hecla
Committees:
●Health, Safety, Environmental and Technical (Chair)
●Audit
●Compensation |
22
Table of Contents
|
Proposal 1 Election of
Directors |
|
|
Continuing Members of the Board
Term Ending at the 2017 Annual Meeting
|
|
Phillips S. Baker,
Jr. Age 55 Director since 2001 Mr. Baker has been our Chief Executive Officer since May 2003 and
has served as our President since November 2001. He has served as a
Director of QEP Resources, Inc., an independent natural gas and oil
exploration and production company, since May 2010, as well as serving as
a Director for Questar Corporation, a Western U.S. natural gas-focused
exploration and production, interstate pipeline and local distribution
company, from February 2004 through June 2010.
Key attributes, experience and
skills: As our Chief Executive Officer
for nearly twelve years and our President and a director since 2001, Mr.
Baker is very familiar with Hecla and all of our operations, and is unique
among our directors in his institutional knowledge of the Company. His
over 29 years experience with mining companies is a key component of our
Boards collective experience. Mr. Baker has served on the board of other
publicly held mining and natural resource companies and holds legal and
accounting degrees, each of which provides additional experience and
skills that are helpful to our Board. Our Corporate Governance and
Directors Nominating Committee and the Board believe that his extensive
experience in management and his knowledge of the Companys operations, as
well as his board experience, make him an asset to the Board.
Hecla
Committees:
●Executive (Chair) |
|
|
Dr. Anthony P.
Taylor Age 73 Director since 2002 Dr. Taylor has served as President, CEO and Director of Selex
Resources Ltd., a private Ontario Corporation engaged in mineral
exploration, since January 2012. Since October 2001, he has served as
President and Director of Caughlin Preschool Co., a private Nevada
corporation that operates a preschool, which he co-founded. He previously
served as Executive Chairman of Crown Gold Corporation, an exploration
company, from August 2010 to August 2012, after serving as Chief Executive
Officer and Director of Gold Summit Corporation, a public Canadian
minerals exploration company, from October 2003 to August 2010.
Key attributes, experience and
skills: Dr. Taylor has over 50 years
experience in the mining industry in all levels of exploration from a
field geologist to senior management for Cominco, Selection Trust, BP
Minerals and Gencor until 1996. Since then, he has led the formation of
three start-up mineral exploration companies based in Nevada. He has
extensive experience in lead, zinc, nickel, copper, diamond, gold and
silver exploration from his work in Europe, Australia, South Africa, and
North and South America. Our Corporate Governance and Directors
Nominating Committee and Board believe that his management experience and
his extensive background in geology and exploration make him an asset to
our Board.
Hecla
Committees:
●Corporate Governance and Directors Nominating (Chair)
●Health, Safety, Environmental and Technical
●Compensation |
Continues on next page ► |
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Hecla Mining Company Notice of 2015 Annual Meeting and Proxy Statement |
23 |
Table of Contents
|
Proposal 2 Ratification
of Appointment of BDO USA, LLP as the Companys Independent Registered
Public Accounting Firm for 2015 |
The Audit Committee has appointed BDO USA,
LLP (BDO), to serve as our independent registered public accounting firm for
2015, and the Board is submitting that appointment for ratification by our
shareholders. BDO has served as our independent registered public accounting
firm since 2001.
Representatives of BDO are expected to be
present at the Annual Meeting with the opportunity to make statements and
respond to appropriate questions from shareholders present at the
meeting.
Under the Sarbanes-Oxley Act of 2002, the
Audit Committee has the sole authority to appoint the independent registered
public accounting firm for the Company. However, we are asking our shareholders
to ratify the appointment of BDO as our independent registered public accounting
firm. Although ratification
is not required, the Board is submitting
the appointment of BDO to our shareholders for ratification because we value our
shareholders views on the Companys independent registered public accounting
firm, and as a matter of good corporate practice. In the event that our
shareholders fail to ratify the appointment, it will be considered as a
direction to the Board and to the Audit Committee to consider the appointment of
a different firm. Even if the appointment is ratified, the Audit Committee in
its discretion may select a different independent registered public accounting
firm at any time during the year if it determines that such change would be in
the best interest of the Company and our shareholders.
The Board recommends that shareholders
vote FOR the ratification of the appointment of BDO USA, LLP as our
independent registered public accounting firm for 2015.
Membership and Role of the
Audit Committee
The Audit Committee consists of John H.
Bowles (Chair), Terry V. Rogers, and Charles B. Stanley. Each member of the
committee satisfies the definition of independent director as established in
the NYSE listing standards and SEC rules. In addition, each member of the
committee is financially literate and the Board has determined that each member
of the committee qualifies as an audit committee financial expert as defined
by SEC rules.4 In addition to Hecla, Mr. Rogers serves on the audit
committee of one Canadian public company. Messrs. Bowles and Stanley do not
serve on the audit committee of any other public companies.
The committees principal functions are to
assist the Board in fulfilling its oversight responsibilities, and to
specifically review: (i) the integrity of our financial statements; (ii) the
independent auditors qualifications and independence;
(iii) the performance of our internal
auditor and the independent auditor; and (iv) our compliance with laws and
regulations, including disclosure controls and procedures. During 2014, the
committee worked with management, our internal auditor and our independent
auditor to address Sarbanes-Oxley Section 404 internal control requirements. The
committee met six times in 2014.
The committee acts under a written charter
as amended and restated effective December 8, 2014. You may obtain a copy of the
charter in the Company section of http://www.hecla-mining.com under
Corporate Governance.
____________________
4 |
Audit Committee financial
expert is defined as a person who has thorough: (i) education and
experience as a principal financial officer, principal accounting officer,
controller, public accountant, auditor or position performing similar
functions; (ii) experience actively supervising one or more such persons;
(iii) experience overseeing or assessing the performance of companies or
public accountants with respect to the preparation, auditing or evaluation
of financial statements; or (iv) other relevant experience and the
following attributes: (a) an understanding of Generally Accepted
Accounting Principles and financial statements; (b) the ability to assess
the general application of Generally Accepted Accounting Principles in
connection with the accounting for estimates, accruals, and reserves; (c)
experience preparing, auditing, analyzing or evaluating financial
statements that present a breadth and level of complexity of accounting
issues that are generally comparable to the breadth and complexity of
issues that can be reasonably expected to be raised by a companys
financial statements, or experience actively supervising one or more
persons engaged in such activities; (d) an understanding of internal
controls and procedures for financial reporting; and (e) an understanding
of audit committee functions. |
24
Table of Contents
Review of the Companys Audited
Financial Statements for the Calendar Year Ended December 31,
2014
The committee reviews our financial
reporting process on behalf of the Board. Management has the primary
responsibility for the financial statements, the reporting process and
maintaining an effective system of internal control over financial reporting.
Our independent auditors are engaged to audit and express opinions on the
conformity of our financial statements to accounting principles generally
accepted in the United States, and the effectiveness of our internal control
over financial reporting.
The committee has reviewed and discussed
the audited financial statements, together with the results of managements
assessment of the internal control over financial reporting, with management,
the internal auditor and the independent auditor. The committee has discussed
with the independent auditor the matters required to be discussed by Auditing
Standard No. 16 (Communications with Audit
Committees (AS 16)). In addition, the
committee has received the written disclosures and the letter from the
independent auditors required by applicable requirements of the Public Company
Accounting Oversight Board (PCAOB Ethics and Independence Rule 3526
(Communication with Audit Committees
Concerning Independence) for independent
auditor communications with audit committees concerning
independence, and has discussed with the
independent auditors the independent auditors independence. The committee meets
with the internal auditor and independent auditor, with and without management
present, to discuss the results of their examinations, their evaluations of our
internal controls, and the overall quality of our financial reporting. The
committee has considered whether the independent auditors provision of
non-audit services to us is compatible with the auditors
independence.
Based on the Audit Committees review and
discussions noted above, it recommended to the Board that our audited financial
statements be included in our Annual Report on Form 10-K for the calendar year
ended December 31, 2014, for filing with the SEC.
Respectfully submitted by
The Audit
Committee of the
Board of Directors
John H. Bowles, Chair
Terry V. Rogers
Charles B. Stanley
Hecla Mining Company Notice
of 2015 Annual Meeting and Proxy Statement 25
Table of Contents
Audit and Non-Audit
Fees
The following table represents fees for
professional audit services rendered by BDO for the audit of our annual
financial statements for the years ended December 31, 2014 and December 31,
2013, and fees for other services rendered by BDO during those
periods.
|
|
2014 |
|
2013 |
Audit Fees |
|
$ |
577,700 |
|
$ |
963,697 |
Audit Related Fees |
|
|
87,000 |
|
|
89,203 |
Tax Fees |
|
|
17,800 |
|
|
37,658 |
All Other Fees |
|
|
|
|
|
|
Total |
|
$ |
682,500 |
|
$ |
1,090,558 |
Audit Fees. Annual audit fees relate to services rendered in connection with the
annual audit of our consolidated financial statements, quarterly reviews of
financial statements included in our quarterly reports on Form 10-Q, and fees
related to the registration of securities with the SEC.
Audit Related Fees. Audit related fees consisted principally of fees for audits
of financial statements of employee benefit plans.
Tax Fees. Tax fees consisted of fees for tax consultation and tax compliance
services, tax planning and miscellaneous tax research.
All Other Fees. There were no other fees.
The Audit Committee considers whether the
provision of these services is compatible with maintaining BDOs independence,
and has determined such services for calendar years 2014 and 2013 were
compatible with such independence. All of the fees were pre-approved by the
committee. All of the services described above were approved by the committee
pursuant to paragraph (c)(7)(i)(B) of Rule 2-01 of Regulation S-X promulgated by
the SEC, to the extent that rule was applicable during calendar years 2014 and
2013.
Policy on Audit Committee
Pre-Approval of Audit and Non-Audit Services of Independent
Auditor
The Audit Committee is responsible for
appointing, setting compensation and overseeing the work of the independent
auditor. The committee has established a policy regarding pre-approval of all
audit and non-audit services provided by the independent auditor. On an ongoing
basis, management communicates specific projects and categories of services for
which advance approval of the committee is requested. The committee reviews
these requests and advises management if the committee approves the engagement
of the independent
auditor for specific projects. On a
periodic basis, management reports to the committee regarding the actual
spending for such projects and services compared to the approved amounts. The
committee may also delegate the ability to pre-approve audit and permitted
non-audit services to a subcommittee consisting of one or more committee
members, provided that any such pre-approvals are reported on at a subsequent
committee meeting.
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|
Proposal 3 Approval of
Named Executive Officer Compensation |
We are asking our shareholders to indicate
their support for the compensation of our named executive officers (NEOs) as
disclosed in this Proxy Statement. This advisory vote on executive compensation
proposal gives our shareholders the opportunity to express their views on the
compensation of our NEOs. This vote is not intended to address any specific item
of compensation, but rather the overall compensation of our NEOs and the
principles, policies and practices described in the Compensation Discussion and
Analysis beginning on page 44.
The vote is advisory and therefore not
binding on Hecla, the Compensation Committee or the Board. However, the Board
and the Compensation Committee value the
opinions of our shareholders and to the
extent there is any significant vote against the NEO compensation as disclosed
in this Proxy Statement, the Compensation Committee will carefully review and
consider the voting results when evaluating our executive compensation
program.
As described in the Compensation
Discussion and Analysis section of this proxy statement, the Compensation
Committee has structured our executive compensation program to achieve the
following key objectives:
Objective |
|
How Our Executive Compensation
Program Achieves this Objective |
|
Pay for Performance |
|
✓ |
Linking a significant portion of each NEOs targeted total
direct compensation - 67.5% for our CEO and at least 49.4% for other NEOs
to the achievement of performance goals. |
|
Alignment with Shareholders Interests |
|
✓ |
Establishing performance metrics under our Annual Incentive
Plan and Long-term Incentive Plan that are designed to focus executives on
the strategic objectives of the Company. |
|
Commitment to Compensation Best Practices |
|
✓ |
No
perquisites. |
|
|
|
✓ |
Clawback policy for incentive compensation awards. |
|
|
|
✓ |
Stock ownership requirements. |
|
|
|
✓ |
No
excise tax gross-up in Change in Control Agreements. |
|
|
|
✓ |
No
hedging or pledging. |
|
Attract and Retain Top Talent |
|
✓ |
Competing effectively for the highest
quality people who will determine our long-term success. |
|
Over the last few years, we have
undertaken significant shareholder outreach efforts in order to hear and
understand the concerns of our shareholders. In advance of our 2014 Annual
Meeting, a management team (excluding
NEOs) held one-on-one discussions with
shareholders holding over 15% of the Companys common stock and obtained
constructive feedback on our executive compensation program. The Compensation
Committee, with the assistance from
management and its compensation consultant, considered the opinions and specific
requests expressed during these meetings, as well as the analysis provided by
proxy advisory firms. As a result of this work and the committees ongoing
efforts to ensure a strong alignment between executive pay and Company
performance, the committee made the following changes to the executive
compensation program in 2014:
What we heard . .
. |
|
How we responded . .
. |
The Companys Annual Incentive
Plan permits too much discretion by the committee and does not include
enough metrics. Shareholders prefer
awards based on measurable improvements in performance against objective
metrics considered to be key drivers of value creation, such as return on
equity, earnings per share, or EBITDA. |
|
Modified the Annual Incentive
Plan, starting with the 2014 Annual
Incentive Plan, in an effort to achieve a more metric-based approach, with
less committee discretion. See Overview of our Compensation Decisions and
Results for 2014 on page
53. |
The Company doesnt publish
performance goals for existing three-year plans under its Long-term
Incentive Plan. In past years, we have
published performance goals only for the three-year plan that was
completed at the end of the prior year and the awards received under the
plan. |
|
We now publish performance goals
for all of our current three-year plans. We added a description for each of our current three-year plans
(2013-2015, 2014-2016, and 2015-2017). See Future Compensation Actions
on page 60. |
Continues on next page ► |
|
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Hecla Mining Company Notice of 2015 Annual Meeting and Proxy Statement |
27 |
Table of Contents
What we heard . .
. |
|
How we responded . .
. |
The Companys Change in Control
Agreements have a single-trigger for vesting of equity. Our Employment Agreements provided for a
double-trigger. But our stock plans provided for a
single-trigger. |
|
We amended our agreements in
February 2014, to further clarify the double-trigger. We chose not to amend the stock plans because we
believe the single-trigger is an appropriate benefit to employees other
than those who have Change in Control Agreements. We further amended the
agreements so they are now entitled Change in Control Agreements. See
Change in Control and Termination on page 73. |
Communications are not
transparent enough. Shareholders expect
an explicit and easily understood explanation of our program and its
outcomes in the Compensation Discussion and Analysis. |
|
We revised our Compensation
Discussion and Analysis. We have
overhauled the presentation of how we make pay decisions to increase
clarity. In addition, our new compensation framework is designed to be
easier to understand and more
transparent. |
After implementing these changes, our 2014
say-on-pay vote received 78.47% support. The committee believes the changes made
in 2014 impacted the vote because they were responsive to the feedback from
investors and proxy advisory firms, and enhanced the performance orientation of
our executive compensation program. Shareholders are urged to read the
Compensation Discussion and Analysis section of this Proxy Statement beginning
on page 44.
The current frequency of shareholder advisory votes on executive compensation is
every year.
We have continued our shareholder outreach
program, and in September 2014, we re-engaged with our shareholders. Our
management team (excluding NEOs) again held one-on-one discussions with shareholders
holding over 10% of the Companys common stock, as well as one-on-one
discussions with the proxy advisory firms. The response was overwhelmingly
supportive of the changes we made to our executive compensation program in 2014.
As a result of this engagement and the committees ongoing efforts to ensure a
strong alignment
between executive pay and Company
performance, the committee made the following change to the executive
compensation program in 2015:
● |
Eliminated excise tax gross-ups in
current Change in Control Agreements |
We are asking shareholders to approve the
following resolution at the 2015 Annual Meeting:
RESOLVED, that the compensation paid to
the Companys named executive officers, as disclosed pursuant to the
compensation disclosure rules of the Securities and Exchange Commission,
including the Compensation Discussion and Analysis, compensation tables and any
related material disclosed in the Proxy Statement, is hereby
APPROVED.
The Board recommends that
you vote FOR approval of the compensation of our NEOs.
28
Table of Contents
We believe that good corporate governance
practices reflect our values and support our strong strategic and financial
objectives and performance. Our corporate governance practices are generally
reflected in our Bylaws, Corporate Governance Guidelines, and committee
charters, which can be found at http://www.hecla-mining.com. The charters of
each committee spell out the committees roles and responsibilities assigned to
each by the Board.
In addition, the Board has established
policies and procedures that address matters such as chief executive officer
succession planning, transactions with related persons, risk oversight,
communications with the Board by shareholders and other interested parties, as
well as the independence and qualifications of our directors. This Corporate
Governance section provides insights into how the Board has implemented these
policies and procedures to benefit Hecla and our shareholders.
The Board welcomes and values the input of
our shareholders. Listening and responding to shareholders is important to the
Board and helps it in its ongoing review and analysis of our policies and
procedures in an effort to continue to act in the best interests of the Company
and our shareholders. In addition to seeking input on our compensation
practices, our shareholder outreach program seeks to identify corporate
governance matters that are of concern primarily to our shareholders, but also
to the major proxy advisory firms. Although we appreciate and consider the
positions expressed to us concerning corporate governance matters by certain
shareholders, and more generally by the proxy advisory
firms, we do not always agree with their
position or are otherwise unable to implement the requested change because of a
lack of support from our other shareholders. The latter case occurred in 2014
when we tried to amend our Bylaws to permit shareholders to call special
meetings. Under our Certificate of Incorporation, such a change required the
approval by holders of 80% of our outstanding shares of common stock, yet we
only received approval from 40%.
In some cases we believe that responding
as suggested would hinder the Company and be potentially counterproductive to
shareholder interests. Some examples of these suggestions include:
What we heard . .
. |
|
How we responded . .
. |
Exclusive Forum. Shareholders were concerned that we amended our Bylaws
to include an exclusive forum bylaw without seeking shareholder approval
of the amendment. |
|
We adopted this amendment as a
result of having recently been subject to nine different lawsuits,
including a putative class action lawsuit, filed in three different
jurisdictions, each of which related to the same underlying
facts. The nine lawsuits were
ultimately consolidated into four lawsuits, each of which was dismissed
with prejudice. Nevertheless, the lawsuits caused us to incur over
$500,000 in out of pocket expenses, much of which was the direct result of
having to litigate the same basic facts in three different jurisdictions.
The diversity in jurisdictions also caused undue distractions to our
management, and although each case was dismissed, subjected us to
unnecessary risks, including inconsistent outcomes and possible effects on
the ability to maintain certain insurance policies at reasonable rates. As
a result of the foregoing, our Board adopted this amendment in an effort
to address these potential risk and expense issues.
Exclusive forum provisions are
intended to discourage forum shopping by plaintiffs and the practice of
litigating similar or identical claims in multiple jurisdictions. The
benefits of such provisions to corporations can be significant. They
remove the need to hire multiple counsel and make filings in different
jurisdictions. They reduce the risk of inconsistent outcomes. And they
allow corporations to identify and approach courts that have particular
expertise in corporate matters, such as, for example, the Delaware Court
of Chancery. The exclusive forum bylaw only covers certain types of
litigation concerning Delaware law; it does not apply to any other types
of cases brought against us. |
Classified Board.
Some shareholders prefer a declassified
Board because it results in annual accountability for all
directors. |
|
We prefer a classified
board because it leads to (1) greater
stability and continuity (in that such directors offer more knowledge and
deeper counsel about the business based on their longer tenure), and (2)
protection against abusive takeover tactics. During periods of dramatic
change in the strategy of the Company, this stability and continuity is an
important benefit allowing the Company to accomplish the
changes. |
Continues on next page ► |
|
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Hecla Mining Company Notice of 2015 Annual Meeting and Proxy Statement |
29 |
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What we heard . . . |
|
How we responded . . . |
Board Independence.
In prior years, a few shareholders
expressed concern about our CEO and one of our directors sitting on each
others boards. |
|
Under Section 303A.02 of the NYSE
rules, Mr. Stanley passes all of the independence tests. Neither Mr. Stanley nor Mr. Baker sit on each others
compensation committee, and during Board discussions on CEO compensation,
Mr. Stanley abstains from voting. The Corporate Governance and Directors
Nominating Committee had extensive discussions and concluded that it was
beneficial for Mr. Baker to serve on another companys board despite the
time commitment required. Mr. Stanley and Mr. Baker sitting on each
others company boards enhance the benefit of the experience of board
service for another company. |
Tenure of Directors Seeking
Potential New Directors. The average
tenure is 10 years. Shareholders expect to see refreshment over time. Our
Chairman has served on the Board for 20 years. |
|
We believe that long service is
beneficial to the Company. We are
strongly opposed to a one-size-fits-all model of corporate governance and
believe that each board should consider its own circumstances. We believe
director term limits would prevent shareholders from keeping a companys
most valuable directors, forcing those directors into retirement
regardless of how acutely the company may need their unique experience and
skills. The mining industry requires a board that understands the options
available to the Company, is diligent in following the industry outside of
meetings and is available to meet on a regular basis. Good directors are
hard to find. There are a limited number of people that possess both the
management experience and industry knowledge required to serve capably as
public company directors. Antitrust and commercial considerations preclude
service by those aligned with competitors. Other commercial relationships
create the potential for related-party transactions that could impair
independence under stock exchange rules or proxy advisory firms more
restrictive independence standards. Companies limit or prohibit their
executives from serving on other companies boards, and directors can
serve on no more than a handful of boards to avoid proxy advisors
overboarding concerns.
With respect to our Chairman, Mr.
Crumley, we see a strategic advantage in having him serve as Chairman. He
has served on the Board for 20 years, but only served the last 9 years as
Chairman. Not only does he bring experience and historical context to the
vitality and growth of Hecla, he serves as an advisor to our Chief
Executive Officer. With his extensive corporate, financial, federal
regulatory, state of Idaho and natural resource experience, he has been
the ideal person to lead the Board. |
No women serving on the Board.
Some shareholders were concerned that
the Company did not have any women serving as directors on our
Board. |
|
We have directors approaching
retirement age and are continually seeking out new
directors. The Board is very conscious
of the benefits of diversity on the Board and has made efforts to seek
qualified candidates that add diversity, including women. However, as
explained above, there are a limited number of people that possess both
the management experience and industry knowledge required to serve capably
as public mining company directors, including women. See Identifying and
Evaluating Nominees for Directors (p. 15) and Director Qualifications,
Evaluation, and Nomination (p.
16). |
30
Table of Contents
Our Corporate Governance Guidelines
provide, among other things, that the Board will have a majority of directors
who meet the criteria for independence required by the NYSE. In determining
independence each year, the Corporate Governance and Directors Nominating
Committee affirmatively determines whether directors have any material
relationship with the Company. When assessing the materiality of a directors
relationship with the Company, the committee considers all relevant facts and
circumstances, not merely from the directors standpoint, but from that of the
persons or organizations with which the director has an affiliation. The
committee also reviews the frequency or regularity of services or transactions
between the Company and directors, whether the services or transactions are
being carried out at arms length in the ordinary course of business and whether
the services or transactions are being provided substantially on the same terms
to the Company as those prevailing at the time from unrelated parties for
comparable services or transactions. Material relationships can include
commercial, banking, industrial, consulting, legal, accounting, charitable and
familial relationships. To guide its determination of whether a director is
independent, the Board has adopted the following NYSE listing
standards:
A director will not be independent
if:
● |
the director is, or has been, within
the last three years, our employee, or an immediate family
member5 is, or has been within the last three years, an
executive officer6; |
● |
the director or an immediate family
member has received, during any twelve-month period within the last three
years, more than $120,000 in direct compensation from us, other than
director and committee fees and pension and other forms of deferred
compensation for prior service (provided such compensation is not
contingent in any way on continued service); |
● |
the director is: (i) a current
partner or employee of a firm that is our internal or external auditor;
(ii) the director has an immediate family member who is a current partner
of a firm that is our internal or external auditor and who personally
works on the Companys audit; (iii) the director has an immediate family
member who is a current employee of a firm that is our internal or
external auditor and who personally |
|
works on the Companys audit; or
(iv) the director or an immediate family member was within the last three
years a partner or employee of a firm that is our internal or external
auditor and personally worked on our audit within that time;
|
● |
the director or an immediate family
member is, or has been within the last three years, employed as an
executive officer of another company where any of our present executive
officers at the same time serves or served on that companys compensation
committee; or |
● |
the director is a current employee,
or an immediate family member is a current executive officer, of a company
that has made payments to, or received payments from, us for property or
services in an amount which, in any of the last three calendar years,
exceeds the greater of $1 million or 2% of such other companys
consolidated gross revenues. |
Pursuant to our Corporate Governance
Guidelines, the committee undertook its annual review of director independence
in February 2015. During this review, the committee considered transactions and
relationships between each director or any member of his immediate family and
Hecla and our subsidiaries and affiliates, including relationships described
below and any reported on page 38 under Certain Relationships and Related
Transactions. The committee also examined transactions and relationships
between directors or their affiliates and members of our senior management or
their affiliates. As provided in the Corporate Governance Guidelines, the
purpose of this review was to determine whether any such relationships or
transactions were inconsistent with a determination that the director is
independent.
Based upon an assessment of all facts and
circumstances known to the committee, including, among other things, a review of
questionnaires submitted by our directors, the committee and the Board
affirmatively determined that the following directors are independent of the
Company and its management under the standards set forth by the NYSE:
John H. Bowles |
Dr. Anthony P. Taylor |
Terry V. Rogers |
George R. Nethercutt, Jr. |
Charles B. Stanley |
Ted
Crumley |
____________________
5 |
An immediate family member
includes a persons spouse, parents, children, siblings, mothers- and
fathers-in-law, sons- and daughters-in-law, brothers- and sisters-in-law,
and anyone (other than domestic employees) who shares such persons
home. |
6 |
The term executive officer has
the same meaning specified for the term officer in Rule 16a-1(f) under
the Securities Exchange Act of 1934. |
Continues on next page ► |
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Hecla Mining Company Notice of 2015 Annual Meeting and Proxy Statement |
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Messrs. Stanley and Baker both serve as
members of the board of directors of QEP Resources, Inc., of which Mr. Stanley
is chief executive officer. The committee reviewed this relationship with the
Board, and the Board made the affirmative decision that this relationship did
not disqualify Mr. Stanley from being independent. Neither Mr. Baker nor Mr.
Stanley serve on the Compensation Committee of either Hecla or QEP Resources,
Inc.
Mr. Baker is our President and Chief
Executive Officer (CEO). As such, he cannot be deemed independent under the
NYSE listing standards.
Directors are expected to immediately
inform the Board of any material change in their circumstances or relationships
that may impact their independence.
There are currently no family
relationships between the directors or executive officers of Hecla.
While the Board has not adopted a formal
policy on diversity, the Companys Corporate Governance Guidelines provide that,
as a whole, the Board should include individuals with a diverse range of
experience to give the Board depth and breadth in the mix of skills represented.
The Board seeks to include an array of skills and experience in its overall
composition rather
than requiring every director to possess
the same skills, perspective, and interests. This guideline is implemented by
seeking to identify candidates who bring diverse skill sets, backgrounds, and
experiences, including ethnic and gender diversity, to the Board when director
candidates are needed.
Board
Leadership and Executive Sessions
Currently, the positions of CEO and
Chairman of the Board (Chairman) are held by separate persons. The Board
believes this structure is optimal for the Company at this time because it
allows the CEO to focus on leading the Companys business and operations, and
the Chairman to serve as a sounding board and advisor to the CEO, and to lead
the activities of the Board. The Board has also determined that having a
non-management director serve as Chairman is in the best interest of
shareholders. This structure ensures a greater role for the independent
directors in the oversight of the Company and it enhances the Boards
independence and, we believe, senior managements accountability to the
Board.
Mr. Ted Crumley chairs meetings of the
Board, as well as the executive sessions with independent members of the Board.
His duties include chairing annual meetings of shareholders, overseeing the
preparation of agendas
for Board meetings, preparing for
executive sessions of the Board and providing feedback to the CEO, staying
current on developments to determine when it may be appropriate to alert the
Board to significant pending developments, serving as a liaison between
independent directors and the CEO with respect to sensitive issues, and other
matters. Executive sessions of non-management directors are included on the
agenda for every regularly scheduled Board and committee meeting and during
2014, executive sessions were held at each regularly scheduled Board meeting.
The executive sessions are chaired by the Chairman. Our non-management directors
meet in executive sessions without management present, unless the non-management
directors request their attendance.
For the foregoing reasons we have
determined that our leadership structure is appropriate in the context of our
specific circumstances.
32
Table of Contents
In light of the critical importance of
executive leadership to the Companys success, the Compensation Committee is
charged with the responsibility of developing a process for identifying and
evaluating candidates to succeed our CEO and to report annually to the Board on
the status of the succession plan, including issues related to the preparedness
for the possibility of an emergency situation involving senior management and
assessment of the long-term growth and development of the senior management
team.
The CEO and Director of Human Resources
make a formal succession planning presentation to the Compensation Committee
annually. The Compensation Committee reviews recommended candidates for senior
management positions to see that qualified candidates are available for all
positions and that development plans are being utilized to strengthen the skills
and qualifications of the candidates. The criteria used when assessing the
qualifications of potential CEO successors include, among others, strategic
vision and leadership, operational excellence, financial management, executive
officer leadership development, ability to motivate employees, and an ability to
develop an effective working relationship with the Board.
In 2014, the Compensation Committee
conducted a full executive talent review of all named executive officers,
with an emphasis on CEO succession. In
connection with that review, the Compensation Committee identified potential
successors to the CEO.
In conjunction with the succession review,
management also reviewed potential successors for the top management roles
across Hecla. In connection with that review, we concluded that ready now
potential successors exist for approximately one-third of those roles, which
represents an increase in the level of readiness of our talent compared to
previous years. We created development plans for the potential successors who
were identified as being ready in one to two years or three to five years. By
the end of 2014, we had greater visibility into our talent pool and we used that
information to build the succession plans for the next tier of critical
roles.
Our Corporate Governance Guidelines also
provide that in the event of the death, resignation, removal or incapacitation
of the President and CEO, the Chairman will act as the President and CEO until
his successor is duly elected. In addition, our Corporate Governance Guidelines
and Bylaws provide that in the event of the death, resignation, removal or
incapacitation of our current Chairman, the President and CEO will act as the
Chairman until his successor is duly elected.
Role of
Board in Risk Oversight
Our management is responsible for
identifying and reviewing risks facing the Company, including, without
limitation, strategic, operational, financial, compensation and regulatory
risks, and meets regularly as part of such responsibility to review and discuss
the Companys risk exposure. The Board does not have a standing risk management
committee, but rather administers this oversight function directly through the
Board as a whole, as well as through various standing committees of the Board
that address risks inherent in their respective areas of oversight. In
particular, the Board is responsible for monitoring and assessing strategic risk
exposure. The Board and its committees periodically receive risk management
updates through business reports from management provided at meetings of the
Board or its committees throughout the year. Following consideration of the
information provided by management, the Board provides feedback and makes
recommendations, as needed, to help minimize the Companys risk exposure.
We also believe that our leadership
structure and the use of executive sessions as described above aids the Board in
risk oversight.
The Audit Committee is responsible for
considering and discussing major financial risk exposures and the steps
management has taken to monitor and control these exposures. The committee
regularly reviews and monitors compliance with securities and financial
regulations, in addition to overseeing the audit work performed on behalf of the
Company in the area of internal audit for compliance with the Sarbanes-Oxley
Act. The committee meets at least quarterly to review the major financial risk
exposures in connection with various matters, including the filing of quarterly
reports with the SEC.
The Corporate Governance and Directors
Nominating Committee monitors the effectiveness of the Companys Corporate
Governance Guidelines.
Continues on next page ► |
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The Compensation Committee assesses and
monitors whether any of the Companys compensation policies and programs have
the potential to encourage excessive risk-taking.
To the extent any risks identified by each
standing committee of the Board are material or otherwise merit discussion by
the whole Board, the respective committee
chairman will raise risks at the next
scheduled meeting of the Board.
For the foregoing reasons, we have
determined that our risk oversight is appropriate in the context of our specific
circumstances, risk management efforts, and the Boards administration of its
oversight function.
Each year, the Board conducts a
self-evaluation of its performance and effectiveness. As part of this process,
each director completes an evaluation form on specific aspects of the Boards
role, organization and meetings. The collective comments are then presented by
the chairman of the Corporate Governance and Directors Nominating Committee to
the whole Board. As part of the
evaluation, the Board assesses the
progress in the areas targeted for improvement a year earlier, and develops
actions to take to enhance the Boards effectiveness over the next year.
Additionally, each committee conducts an annual self-evaluation of its
performance through a similar process.
Shareholders or other interested parties
wishing to communicate with the Chairman or with the independent directors as a
group may do so by delivering or mailing the communication in writing to:
Chairman of the Board, c/o Corporate Secretary, Hecla Mining Company, 6500 N.
Mineral Drive, Suite 200, Coeur dAlene, Idaho 83815-9408. Concerns relating to
accounting, internal controls or auditing matters are immediately brought to the
attention of our internal auditor and
handled in accordance with procedures
established by the Audit Committee with respect to such matters. From time to
time, the Board may change the process by which shareholders may communicate
with the Board or its members. Please refer to our website at
http://www.hecla-mining.com under the tab entitled Company and then select the
tab entitled Corporate Governance for any changes in this process.
Electronic Access to Corporate Governance Documents
Our corporate governance documents are
available by accessing our website at http://www.hecla-mining.com under
the tab entitled Company and then selecting the tab entitled Corporate
Governance. These include:
● |
Corporate Governance
Guidelines; |
● |
Whistleblower
Policy; |
● |
Charters of the Audit, Compensation,
Corporate Governance and Directors Nominating and Health, Safety,
Environmental & Technical Committees of the
Board; |
● |
Code of Ethics for our Chief
Executive Officer and Senior Financial Officers; and |
● |
Code of Business Conduct and Ethics
for Directors, Officers and Employees. |
The information on our website is not
incorporated by reference into this Proxy Statement.
Shareholders may also request a free copy
of these documents from: Investor Relations, Hecla Mining Company, 6500 N.
Mineral Drive, Suite 200, Coeur dAlene, Idaho 83815-9408; (208)
769-4100.
34
Table of Contents
Corporate Governance
Guidelines
The Corporate Governance Guidelines
were adopted by the Board to ensure that the Board is independent from
management, that the Board adequately performs its function as the overseer of
management, and to help ensure that the interests of the Board and management
align with the interests of our shareholders.
In December 2014, the Corporate
Governance and Directors Nominating Committee and the Board amended the
Corporate Governance Guidelines to more precisely track statutory requirements
to improve its clarity and functionality, as well as to more closely match the
Companys practices.
Code of Business Conduct and
Ethics
We believe that operating with
honesty and integrity has earned trust from our shareholders, credibility within
our community, and dedication from our employees. Our directors, officers and
employees are required to abide by our Code of Business Conduct and Ethics to
ensure that our business is conducted in a consistently legal and ethical
manner. Our Code of Business Conduct and Ethics covers many topics, including
conflicts of interest, confidentiality, fair dealing, protection, proper use of
the Companys assets, and compliance with laws, rules and regulations. In
addition to the Code of Business Conduct and Ethics for directors, officers and
employees, our Chief Executive Officer, Chief Financial Officer and Controller
are also bound by a Code of Ethics for the Chief Executive Officer and Senior
Financial Officers.
The Corporate Governance and
Directors Nominating Committee has adopted procedures to receive, retain, and
react to complaints received regarding possible violations of the Code of
Business Conduct and Ethics, and to allow for the confidential and anonymous
submission by employees of concerns regarding possible violations of the Code of
Business Conduct and Ethics. Our employees may submit any concerns regarding
apparent violations of the Code of Business Conduct and Ethics to their
supervisor, our General Counsel, the Chairman of the Corporate Governance and
Directors Nominating Committee, or through an anonymous telephone
hotline.
The Audit Committee adopted a
Whistleblower Policy, which encourages our employees to report to appropriate
Company representatives, without fear of retaliation, certain accounting
information relating to possible fraud. Our employees may submit any concerns
regarding financial statement disclosures, accounting,
internal accounting controls or
auditing matters to the Audit Committee, our General Counsel, or through an
anonymous telephone hotline. The goal of this policy is to discourage illegal
activity and business conduct that damages Heclas reputation, business
interests, and our relationship with shareholders.
Stock Ownership Guidelines
In an effort to more closely align
the Companys non-management directors financial interests with those of the
shareholders, in June 2012, the Compensation Committee and Board adopted stock
ownership guidelines for our non-management directors. Under these guidelines,
each non-management director is encouraged to own shares of common stock (which
includes shares held under the Hecla Mining Company Stock Plan for Nonemployee
Directors) valued at three times
their annual cash retainer and should comply with the guidelines within five
years of the adoption of the guidelines.
Similarly, we believe that it is
important to encourage our executive officers to hold a material amount of our
common stock and to link their long-term economic interest directly to that of
our shareholders. To achieve
Continues on next page ► |
|
|
|
Hecla Mining Company Notice of 2015 Annual Meeting and Proxy Statement |
35 |
Table of Contents
this goal, in June 2012, the Company
established stock ownership guidelines for the Companys senior management. The
guidelines for the CEO are six times base salary, which should be achieved
within five years of the adoption of the guidelines. The guidelines for all
other executive officers are two times base salary, which
should be achieved within five years of
the adoption of the guidelines. Unvested shares of restricted stock units and
shares held directly are considered owned for purposes of the guidelines. Stock
ownership does not include unexercised stock options. See Executive Stock
Ownership as of December 31, 2014 on page 63.
Board
Meetings During 2014
During 2014, the Board held six meetings.
Each director attended all meetings of the Board and committees of the Board on
which he served. It is our policy that all directors are expected, absent
compelling circumstances, to prepare for, attend and participate in all Board
and
applicable committee meetings, and each
annual meeting of shareholders. All members of the Board attended last years
Annual Meeting of Shareholders, which was held in May 2014.
Committees of the Board and Committee Assignments
The Board has five standing committees:
Audit; Compensation; Corporate Governance and Directors Nominating; Health,
Safety, Environmental & Technical; and Executive. Information regarding
these committees is provided below. With the exception of the Executive
Committee, all remaining committees are composed entirely of independent
directors. The Compensation Committee charter was amended in August 2014. The
Audit, Corporate Governance and Directors Nominating and the Health, Safety,
Environmental and Technical Committee charters were amended in December 2014.
The charters of the Audit, Compensation,
Corporate Governance and Directors Nominating, and Health, Safety,
Environmental and Technical Committees are available on the Companys website at
http://www.hecla-mining.com under Company by selecting Corporate
Governance. You may also obtain copies of these charters by contacting the
Companys Investor Relations Department. The members of the Board on the date of
this Proxy Statement, and the committees of the Board on which they serve, are
identified below, along with the number of meetings held in
2014.
Executive Committee
Members |
|
Functions of the
Committee |
|
Meetings in
2014 |
Phillips S. Baker,
Jr., Chair John H. Bowles Ted Crumley |
|
■empowered with the same authority as the Board in the management of
our business, except for certain matters enumerated in our Bylaws or
Delaware law, which are specifically reserved to the whole
Board |
|
3 |
Audit Committee Members1,
2 |
|
Functions of the
Committee |
|
Meetings in
2014 |
John H. Bowles,
Chair Terry V. Rogers Charles B. Stanley |
|
■assist the Board in fulfilling its oversight
responsibilities
■review the integrity of our financial statements
■review the independent auditors qualifications and
independence
■review the performance of our internal auditor and the independent
auditor
■review our compliance with laws and regulations, including
disclosure controls and procedures
■please refer to Audit Committee Report on page 24 |
|
6 |
Compensation Committee
Members2 |
|
Functions of the
Committee |
|
Meetings in
2014 |
George R. Nethercutt,
Jr., Chair Ted Crumley Terry V. Rogers Dr. Anthony P.
Taylor |
|
■approve compensation levels and programs for the executive
officers, including the CEO
■administer our stock-based plans
■please refer to the Compensation, Discussion and Analysis on page
44 |
|
5 |
36
Table of Contents
Corporate Governance and
Directors Nominating Committee
Members2 |
|
Functions of the
Committee |
|
Meetings in
2014 |
Dr. Anthony P. Taylor,
Chair George R. Nethercutt, Jr. Charles B. Stanley |
|
■consider matters of corporate governance
■periodically review our Corporate Governance Guidelines and
corporate procedures to ensure compliance with laws and
regulations
■review any director candidates, including those nominated or
recommended by shareholders
■identify individuals qualified to become directors consistent with
criteria approved by the Board
■recommend to the Board the director nominees for the next annual
meeting of shareholders, any special meeting of shareholders, or to fill
any vacancy on the Board
■review the appropriateness of the size of the Board relative to its
various responsibilities
■recommend committee assignments and committee chairpersons for the
standing committees for consideration by the Board |
|
4 |
Health, Safety, Environmental
& Technical Committee Members |
|
Functions of the
Committee |
|
Meetings in
2014 |
Terry V. Rogers,
Chair John H. Bowles Charles B. Stanley Dr. Anthony P.
Taylor |
|
■review and monitor health, safety and environmental
policies
■review the implementation and effectiveness of compliance
systems
■review the effectiveness of health, safety and environmental
policies, systems and monitoring processes
■review audit results and updates from management with respect to
health, safety and environmental performance
■review emerging health, safety and environmental trends in
legislation and proposed regulations affecting the Company
■review the technical activities of the Company
■make recommendations to the Board concerning the advisability of
proceeding with the exploration, development, acquisition or divestiture
of mineral properties and/or operations |
|
4 |
1. |
The Board has
determined that each of the members of the Audit Committee is financially
literate and qualifies as an audit committee financial expert as defined
by SEC rules. |
2. |
Each member of the
Audit, Compensation, and Corporate Governance and Directors Nominating
Committee satisfy the definition of independent director as established
in the NYSE listing standards and SEC
rules. |
Hecla Mining Company Notice of 2015 Annual Meeting
and Proxy Statement |
37 |
Table of Contents
|
Certain Relationships and
Related Transactions |
We review all relationships and
transactions with related persons to determine whether such persons have a
direct or indirect material interest. Transactions with related persons are
those that involve our directors, executive officers, director nominees, greater
than 5% shareholders, immediate family members of these persons, or entities in
which one of these persons has a direct or indirect material interest.
Transactions that are reviewed as related party transactions by us are
transactions that involve amounts that would exceed $120,000 (the current
threshold required to be disclosed in the Proxy Statement under SEC regulations)
and certain other similar transactions. Pursuant to our Code of Business Conduct
and Ethics, employees and directors have a duty to report any potential
conflicts of interest to the appropriate level of management or to the Corporate
Governance and Directors Nominating Committee. We evaluate these reports along
with responses to our annual director and officer questionnaires for any
indication of possible related party transactions. Our legal staff is primarily
responsible for the development and implementation of processes and controls to
obtain information from the directors and executive officers with respect to
related party transactions. If a transaction is deemed by us to be a related
party transaction, the information regarding the transaction is discussed with
the Board. As required under the SEC rules, transactions that are determined to
be directly or indirectly material to Hecla or a related party are disclosed in
our Proxy Statement.
In December 2007, upon Board approval, we
created the Hecla Charitable Foundation (the Foundation). We have made and
intend to continue to make charitable contributions to the Foundation, which in
turn has provided and intends to continue to provide grants to other
organizations for charitable and educational purposes. Mr. James A. Sabala and
Dr. Dean W.A. McDonald (our Senior Vice President and Chief Financial Officer
and Senior Vice President Exploration, respectively) serve as directors of the
Foundation. In December 2007, our Board committed to make a contribution of
550,000 shares of our common stock to the Foundation. Since 2007, the Foundation
has sold 279,860 shares of our common stock. Cash contributions totaling $2.0
million and $1.5 million were made by the Company to the Foundation during 2011
and 2010, respectively. The funds from the sale of the shares and the additional
cash were put into various investment accounts. The Foundation is currently
operating in a self-sufficient manner. The Company gave no additional funds to
the Foundation during 2014. The Foundation holds 270,140 shares of our common
stock as of December 31, 2014. The value of those shares based on the closing
price of our common stock on the NYSE on December 31, 2014 ($2.79), was
$753,691. In 2014, the Foundation gave $320,071 in donations.
In 2014, we did not make any contribution
to any charitable organization in which a director served as an executive
officer, which exceeded the greater of $1 million or 2% of the charitable
organizations consolidated gross revenues.
38
Table of Contents
|
Security Ownership of
Certain Beneficial Owners and
Management |
The following table shows the number and
percentage of the shares of common stock beneficially owned by each current
director and each current executive officer of Hecla, and by all current
directors and executive officers as a group, as of March 27, 2015. On that date,
all of such persons together beneficially owned an aggregate
of less than one percent of the
outstanding shares of our common stock. Except as otherwise indicated, the
directors, nominees and officers have sole voting and investment power with
respect to the shares listed, including shares which the individual has the
right to acquire by exercising stock options but has not done
so.
|
|
|
|
Shares Beneficially
Owned |
|
|
Name of Beneficial
Owner |
|
Title of
Class |
|
Number |
|
Nature |
|
Percent of
Class |
Phillips S. Baker,
Jr. President and Chief Executive Officer |
|
|
|
1,578,5361 |
|
Direct2 |
|
|
|
|
|
301,201 |
|
RSU3 |
|
|
|
|
|
137,615 |
|
Vested Options4 |
|
|
|
|
|
173,983 |
|
Deferred Shares5 |
|
|
|
|
|
322,163 |
|
Performance Units6 |
|
|
|
Common |
|
2,513,498 |
|
|
|
* |
Dr. Dean W.A. McDonald Senior Vice President
Exploration |
|
|
|
229,733 |
|
Direct2 |
|
|
|
|
|
180,290 |
|
RSU3 |
|
|
|
|
|
38,226 |
|
Vested Options4 |
|
|
|
Common |
|
448,249 |
|
|
|
* |
Don Poirier Vice President - Corporate
Development |
|
|
|
179,848 |
|
Direct2 |
|
|
|
|
|
119,977 |
|
RSU3 |
|
|
|
|
|
30,581 |
|
Vested Options4 |
|
|
|
Common |
|
330,406 |
|
|
|
* |
Lawrence P. Radford Senior Vice President
Operations |
|
|
|
207,067 |
|
Direct2 |
|
|
|
|
|
211,724 |
|
RSU3 |
|
|
|
Common |
|
418,791 |
|
|
|
|
James A. Sabala Senior Vice President and
Chief Financial Officer |
|
|
|
209,7307 |
|
Direct2 |
|
|
|
|
|
206,535 |
|
RSU3 |
|
|
|
Common |
|
416,265 |
|
|
|
* |
David C. Sienko Vice President and General
Counsel |
|
|
|
138,990 |
|
Direct2 |
|
|
|
|
|
92,771 |
|
RSU3 |
|
|
|
|
|
30,581 |
|
Vested Options4 |
|
|
|
Common |
|
262,342 |
|
|
|
* |
John H. Bowles Director |
|
|
|
57,115 |
|
Direct2 |
|
|
|
|
|
40,192 |
|
Indirect8 |
|
|
|
Common |
|
97,307 |
|
|
|
* |
Ted Crumley Director |
|
|
|
68,115 |
|
Direct2 |
|
|
|
|
|
66,308 |
|
Indirect8 |
|
|
|
Common |
|
134,423 |
|
|
|
* |
George R. Nethercutt,
Jr. Director |
|
|
|
52,115 |
|
Direct2 |
|
|
|
|
|
41,607 |
|
Indirect8 |
|
|
|
Common |
|
93,722 |
|
|
|
* |
Terry V. Rogers Director |
|
|
|
52,115 |
|
Direct2 |
|
|
|
|
|
35,355 |
|
Indirect8 |
|
|
|
Common |
|
87,470 |
|
|
|
* |
Charles B. Stanley Director |
|
|
|
52,115 |
|
Direct2 |
|
|
|
|
|
35,355 |
|
Indirect8 |
|
|
|
Common |
|
87,470 |
|
|
|
* |
Dr. Anthony P.
Taylor Director |
|
|
|
28,000 |
|
Direct2 |
|
|
|
|
|
2,500 |
|
IRA |
|
|
|
|
|
59,769 |
|
Indirect8 |
|
|
|
Common |
|
90,269 |
|
|
|
* |
All
current directors, nominee directors and officers as a
group (12
individuals) |
|
Common |
|
4,980,212 |
|
|
|
1.3% |
* |
Represents beneficial ownership of
less than one percent, based upon 369,990,632 shares of our common stock
issued and outstanding as of March 27,
2015. |
Continues on next page ► |
|
|
|
Hecla Mining Company Notice of 2015 Annual Meeting
and Proxy Statement |
39 |
Table of Contents
1. |
Includes 223,642
shares held jointly with Mr. Bakers spouse, as to which Mr. Baker shares
voting and investment power. |
2. |
Direct means shares
held of record and any shares beneficially owned through a trust, broker,
financial institution, or other nominee, and with respect to which the
officer or director has sole or shared voting power. |
3. |
RSU means restricted
stock units awarded under the Key Employee Deferred Compensation Plan or
2010 Stock Incentive Plan that have not vested. See footnote 1 of the
Outstanding Equity Awards at Calendar Year-End for 2014on page
70. |
4. |
Vested Options mean
options granted under the 1995 Stock Incentive Plan and 2010 Stock
Incentive Plan, which are vested or will be exercisable within 60 days of
March 27, 2015. |
5. |
Deferred Shares
means stock that has vested or been awarded, but is deferred until a
distributable event under the terms of the Key Employee Deferred
Compensation Plan. |
6. |
Performance Units
means performance-based equity, based on a three-year TSR. See
Performance-based Shares on page 58 and Outstanding Equity Awards at
Calendar Year-End for 2014 table on page 70. |
7. |
Represents 209,730
shares held jointly with Mr. Sabalas spouse, as to which Mr. Sabala
shares voting and investment power. |
8. |
Indirect means
shares credited to each independent director, all of which are held
indirectly in trust pursuant to our Stock Plan for Nonemployee Directors.
Each director disclaims beneficial ownership of all shares held in trust
under the stock plan. See Compensation of Non-Management Directors on
page 41. |
To our knowledge, as of March 27, 2015,
the only beneficial owners (as such term is defined in Rule 13d-3 under the
Exchange Act) of more than 5% of our common stock entitled to vote at the Annual
Meeting are shown in the table below:
Title of Class |
|
Name & Address
of Beneficial Owner |
|
Amount & Nature
of Beneficial Ownership |
|
Percent
of Class |
Common |
|
Van Eck Associates
Corporation1 335 Madison Ave. 19th Floor New
York, NY 10017 |
|
50,431,126 |
|
13.6% |
Common |
|
The Vanguard Group, Inc.2 100 Vanguard
Blvd. Malvern, PA 19355 |
|
21,942,137 |
|
5.9% |
Common |
|
BlackRock, Inc.3 55 East 52nd Street New York,
NY 10022 |
|
20,326,367 |
|
5.4% |
1. |
Based solely on a Schedule 13G/A
filed on January 9, 2015, with the SEC by Van Eck Associates Corporation.
Van Eck Associates Corporation has sole voting and dispositive power with
respect to all shares. |
2. |
Based solely on a Schedule 13G/A
filed on February 10, 2015, with the SEC by The Vanguard Group, Inc. The
Vanguard Group, Inc. has sole voting power with respect to 537,194 shares,
shared dispositive power with respect to 501,522 shares, and sole
dispositive power with respect to 21,440,615 shares. |
3. |
Based solely on a Schedule 13G/A
filed on February 2, 2015, with the SEC by BlackRock, Inc. BlackRock, Inc.
has sole voting power with respect to 19,436,169 shares and sole
dispositive power with regard to 20,326,367
shares. |
|
Section 16(a) Beneficial
Ownership Reporting Compliance |
Section 16(a) of the Exchange Act requires
our directors, executive officers and holders of more than 10% of our common
stock to file with the SEC reports regarding their ownership and changes in
their ownership of our stock. These persons are required by the SEC to furnish
us with copies of all Section 16(a) forms they file.
Based solely on our review of copies of
such forms, or written representations from certain reporting persons that no
such forms were required, we believe that during the calendar year ended
December 31, 2014, all filing requirements applicable to our officers, directors
and greater than 10% owners of our common stock were complied with.
40
Table of Contents
|
Compensation Committee
Interlocks and Insider
Participation |
The members of the Compensation Committee
are set forth in the Compensation Committee Report. There are no members of
the Compensation Committee who were officers or employees of Hecla or any of our
subsidiaries
during the fiscal year, formerly were
officers of Hecla or any of our subsidiaries, or had any relationship otherwise
requiring disclosure under the proxy rules promulgated by the SEC or the
NYSE.
|
Compensation of
Non-Management Directors |
The Compensation Committee of the Board is
responsible for recommending to the Board the form and amount of compensation
for our non-management directors. The compensation program is designed to
provide pay that is competitive with directors in the Companys peer group,
which is described on page 48 of this Proxy Statement in the Compensation
Discussion and Analysis. It consists of a combination of cash retainers and
equity awards. The
committee periodically engages its
compensation consultant to review compensation of the Companys Board compared
to the Companys peer group. The following discussion of compensation applies
only to our non-management directors, and does not apply to Mr. Baker who, as an
employee of the Company, is compensated as an executive officer and does not
receive additional compensation for his service as a
director.
2014
Compensation Changes for Non-Management Directors
As a result of its periodic review of
Board compensation, in 2014, the Compensation Committee recommended and the Board
approved to:
● |
Increase the retainer
for the chairman from $75,000 to $90,000 to align with market data and the
role and responsibilities of the
chairman. |
● |
Increase the committee
chair retainers from $8,000 to $12,000 annually for the Audit and
Compensation Committee chairs. |
● |
Increase the committee
chair retainers from $4,000 to $8,000 annually for the Corporate
Governance and Directors Nominating and Health, Safety, Environmental and
Technical Committee chairs. |
● |
Increase the equity
award under the 2010 Stock Incentive Plan from $46,000 to
$61,000. |
Each non-management director receives an
annual cash retainer for his service on the Board in the amount of $66,000. The
Chairman of the Board receives an additional annual cash retainer in the amount
of $90,000. For service on Board committees or as chair of the committees: (i)
each non-management member of the Audit and Compensation Committees receives an
annual fee of $12,000; (ii) each non-management member of the Executive,
Corporate Governance and Directors Nominating, and Health Safety, Environmental
and Technical Committees receives an annual fee of $8,000; (iii) the committee
chair for each of the Audit
and Compensation Committees receives an
additional annual fee of $12,000; and (iv) the committee chair for each of the
Health, Safety, Environmental and Technical and Corporate Governance and
Directors Nominating Committees receives an additional annual fee of $8,000.
All of the above annual fees are paid in
quarterly installments. No other attendance fees are paid to the non-management
directors. The non-management directors do not receive stock options, non-equity
incentive plan compensation, or any other compensation, except as described
below.
Continues on next page ► |
|
|
|
Hecla Mining Company Notice of 2015 Annual Meeting
and Proxy Statement |
41 |
Table of Contents
In March 1995, we adopted the Hecla Mining
Company Stock Plan for Nonemployee Directors, which became effective following
shareholder approval on May 5, 1995. The plan was amended July 18, 2002,
February 25, 2004, May 6, 2005, December 10, 2007, and May 24, 2012. The plan
terminates July 17, 2017, and is subject to termination by the Board at any
time. Pursuant to the plan, on May 30 of each year, each non-management director
is credited with a number of shares determined by dividing $24,000 by the
average closing price for Heclas common stock on the NYSE for the prior
calendar year. Non-management directors joining the Board after May 30 of any
year are credited with a pro rata number of shares based upon the date they join
the Board. These shares are held in a grantor trust, the assets of which are
subject to the claims of our creditors, until delivered under the terms of the
plan. Delivery of the shares from the trust occurs upon the earliest of: (i)
death or disability; (ii) retirement from the Board; (iii) a cessation of the
directors service for any other reason; (iv) a change in control of the Company
(as defined in the plan); or (v) at the election of the director
at any time, provided, however, that
shares must be held in the trust for at least two years prior to delivery.
Subject to certain restrictions, directors may elect delivery of the shares on
such date or in annual installments thereafter over 5, 10 or 15 years. The
maximum number of shares of common stock which may be credited pursuant to the
plan is 1,000,000. As of December 31, 2014, there were 555,167 ungranted shares
remaining in the plan.
In February 2010, we adopted the 2010
Stock Incentive Plan for executive officers, employees, directors, and certain
consultants, which was approved by shareholders in June 2010, and became
effective on August 25, 2010. Pursuant to the 2010 Stock Incentive Plan,
directors may be awarded grants of stock options, restricted stock units,
restricted stock, or stock. In June 2014, the Compensation Committee recommended
that the Board award $61,000 of additional stock to the directors as part of
their compensation. The Board approved the additional award, and each of the
directors received 18,485 additional shares under the 2010 Stock Incentive Plan
in June 2014.
The Company covers directors under its
overall director and officer liability insurance policies, as well as
reimbursing them for travel, lodging, and meal expenses incurred in connection
with their attendance at Board and committee meetings, meetings of shareholders,
and for traveling to visit our operations. Directors are eligible, on the same
basis as Company employees, to participate in the Companys matching gift
program, pursuant to which
the Company matches contributions made to
qualifying nonprofit organizations. The aggregate annual limit per participant
is $5,000. Beyond these items, no other cash compensation was paid to any
non-management director.
As described more fully above, the
following chart summarizes the annual cash and equity compensation for our
non-management directors during 2014.
Non-Management Director Compensation for 2014
|
|
Fees |
|
|
|
|
|
|
|
|
|
|
Director |
|
Annual Retainer ($) |
|
Committee Meeting
Fees ($) |
|
Committee Chairman
Fees ($) |
|
Totals Fees Paid in
Cash ($) |
|
Stock Awards1 ($) |
|
All
Other Compensation2 ($) |
|
Total ($) |
Ted Crumley, Chairman |
|
|
148,500 |
|
|
20,000 |
|
|
0 |
|
|
|
168,500 |
|
|
|
18,2213 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61,0014 |
|
|
|
0 |
|
|
247,722 |
John H. Bowles |
|
|
66,000 |
|
|
28,000 |
|
|
10,000 |
|
|
|
104,000 |
|
|
|
18,2213 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61,0014 |
|
|
|
0 |
|
|
183,222 |
George R. Nethercutt,
Jr. |
|
|
66,000 |
|
|
20,000 |
|
|
10,000 |
|
|
|
96,000 |
|
|
|
18,2213 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61,0014 |
|
|
|
0 |
|
|
175,222 |
Terry V. Rogers |
|
|
66,000 |
|
|
32,000 |
|
|
6,000 |
|
|
|
104,000 |
|
|
|
18,2213 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61,0014 |
|
|
|
0 |
|
|
183,222 |
Charles B. Stanley |
|
|
66,000 |
|
|
28,000 |
|
|
0 |
|
|
|
94,000 |
|
|
|
18,2213 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61,0014 |
|
|
|
1,500 |
|
|
173,222 |
Dr. Anthony P. Taylor |
|
|
66,000 |
|
|
28,000 |
|
|
6,000 |
|
|
|
100,000 |
|
|
|
18,2213 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
61,0014 |
|
|
|
0 |
|
|
179,222 |
42
Table of Contents
|
Compensation of
Non-Management Directors |
|
|
1. |
The amounts shown in this column
represent the aggregate grant date fair value computed in accordance with
FASB ASC Topic 718. For a description of the assumptions used in valuing
the awards please see Note 9 to the Consolidated Financial Statements in
the Companys Annual Report on Form 10-K for the year ended December 31,
2014. |
2. |
Amounts in this column reflect
matching contributions under the Companys charitable matching gift
program. |
3. |
On May 30, 2014, each
non-management director received 6,578 shares of our common stock under
the terms of the Stock Plan for Nonemployee Directors. Based on our
closing stock price on the NYSE on May 30, 2014 ($2.77), the grant date
fair value for each block of 6,578 shares credited to Messrs. Crumley,
Bowles, Nethercutt, Rogers, Stanley and Taylor on May 30, 2014, was
$18,221. (The amounts do not reflect the actual amounts that may be
realized by the directors.) |
4. |
On June 25, 2014, each
non-management director received 18,485 shares of our common stock under
the terms of the 2010 Stock Incentive Plan. Based on our closing stock
price on the NYSE on June 25, 2014 ($3.30), the grant date fair value for
each block of 18,485 shares credited to Messrs. Crumley, Bowles,
Nethercutt, Rogers, Stanley and Taylor on June 25, 2014, was $61,001. (The
amounts do not reflect the actual amounts that may be realized by the
directors.) |
Share
Ownership Guidelines for Directors
In June 2012, the Compensation Committee
and Board adopted stock ownership guidelines for our non-management directors.
Under these guidelines, each non-management director is encouraged to own shares
of common stock (which includes shares held under the Hecla Mining Company Stock
Plan for Nonemployee Directors) valued at three times their annual cash retainer
and should comply with the guidelines
within five years of the adoption of the guidelines. As of December 31, 2014,
Messrs. Bowles, Nethercutt, Rogers, Stanley and Taylor are each in compliance
with the stock ownership guidelines. Mr. Crumley has until June 2017 to comply
with the guidelines.
Director Stock Ownership as of December 31,
2014
Director |
|
Annual Retainer ($) |
|
X Annual Retainer |
|
Total Value of Shares to
be Held ($) |
|
Shares
Held Directly (#) |
|
Shares Held in
Directors Trust1 (#) |
|
Total
Shares (#) |
|
Total Value of Shares
Held by Director at 12/31/14 ($2.79) ($) |
|
Meets Guidelines |
|
Bowles |
|
|
66,000 |
|
|
3x |
|
198,000 |
|
57,115 |
|
|
40,192 |
|
|
97,307 |
|
|
271,487 |
|
Yes |
|
Crumley |
|
|
156,000 |
|
|
3x |
|
468,000 |
|
68,115 |
|
|
66,308 |
|
|
134,423 |
|
|
375,040 |
|
No |
|
Nethercutt |
|
|
66,000 |
|
|
3x |
|
198,000 |
|
52,115 |
|
|
41,607 |
|
|
93,722 |
|
|
261,484 |
|
Yes |
|
Rogers |
|
|
66,000 |
|
|
3x |
|
198,000 |
|
52,115 |
|
|
35,355 |
|
|
87,470 |
|
|
244,041 |
|
Yes |
|
Stanley |
|
|
66,000 |
|
|
3x |
|
198,000 |
|
52,115 |
|
|
35,355 |
|
|
87,470 |
|
|
244,041 |
|
Yes |
|
Taylor |
|
|
66,000 |
|
|
3x |
|
198,000 |
|
30,500 |
2 |
|
59,769 |
|
|
90,269 |
|
|
251,851 |
|
Yes |
|
1. |
As of December 31, 2014, the
total amount of shares held in trust pursuant to the terms of the Stock
Plan for Nonemployee Directors by each of the above- named
directors. |
2. |
Includes 2,500 shares held in an
IRA by Dr. Taylor. |
Additional information regarding shares
held by the non-management directors is included in the Security Ownership of
Certain Beneficial Owners and Management table on page 39.
The Company has no current retirement plan
for non-management directors. Our Bylaws and Corporate Governance Guidelines
provide that directors will not be nominated for re-election after their
72nd birthday (this policy was waived in 2014 when Dr. Anthony P.
Taylor was nominated for re-election after his 72nd birthday). As of
December 31, 2014, the average age of members of our Board was approximately 65
and the average tenure of our Board was approximately 11 years.
Hecla Mining Company Notice of 2015 Annual Meeting
and Proxy Statement |
43 |
Table of Contents
|
Compensation Discussion
and Analysis |
Our Compensation Committee strives to
design a fair and competitive compensation program for executive officers that
will attract, motivate and retain highly qualified and experienced executives,
reward performance and provide incentives that are based on our performance,
with an overall emphasis to maximize our long-term shareholder value. Our
executive compensation program consists of several components, including base
salary, annual and long-term performance awards (paid in cash or equity), equity
awards, deferred compensation plan and retirement benefits. This Compensation
Discussion and Analysis (CD&A) provides information regarding our
compensation objectives, the relationship between the components of our
compensation program and our
objectives and factors considered by the
committee in establishing compensation levels for our NEOs. The NEOs who are
discussed throughout this CD&A and in the compensation tables
are:
Name |
Age |
Position |
Phillips S. Baker, Jr. |
55 |
President and Chief Executive Officer |
James A. Sabala |
60 |
Senior Vice President and Chief |
|
|
Financial Officer |
Lawrence P. Radford |
54 |
Senior Vice President Operations |
Dr.
Dean W.A. McDonald |
58 |
Senior Vice President Exploration |
David C. Sienko |
46 |
Vice President General Counsel |
Don Poirier |
56 |
Vice President Corporate |
|
|
Development |
Hecla is not only the largest and one of
the lowest-cost U.S. silver producers, but also a growing gold producer. We are
one of the oldest precious metals mining companies in North America. We own two
primary silver mines, Greens Creek in Alaska and Lucky Friday in Idaho, and the
Casa Berardi gold mine in Quebec. In addition to being a leading silver
producer, we remain dedicated to our strong safety, environmental, social and
community relations commitments.
In addition to our diversified silver and
gold operating and cash-flow generating base, we have a number of exploration
properties and pre-development properties in five world-class silver and gold
mining districts in the U.S., Canada, and Mexico, and an exploration office and
investments in early-stage silver exploration projects in Canada. With an active
exploration and pre-development
program, we have consistently grown our
reserve base for future production.
Our stock price is heavily influenced by
silver and gold prices, which fluctuate widely and are primarily
driven by economic, political and regulatory factors that are difficult to
predict and outside of our control.
In 2014, silver and gold prices continued
to be under pressure and were lower than in 2013. We believe the drop in the
prices was largely related to macroeconomic forces such as interest rates,
strength of the U.S. dollar and the lack of realized or anticipated inflation.
As the U.S. and other economies displayed signs of improvement, investor
preference appears to have trended away from commodity-based silver and gold
mining stocks toward potentially higher yields,
44
Table of Contents
|
Compensation Discussion and Analysis |
|
|
furthering the decline in silver and gold
industry market capitalization. As Heclas stock price is highly correlated and
dependent on silver and gold prices, we were not immune to the industry shift.
However, relative to our
peers, we performed above average
(70th percentile). The chart below shows the change in our share
price in 2014 compared to each of the companies in our peer
group.
Key Operating and Financial
Results
In 2014, we repositioned the business in a
challenging silver and gold price environment, aggressively reducing costs while
continuing to focus on safety and sustainability. During the year, we delivered
on our production targets, improved operational efficiencies and kept all key
projects on target and on budget.
The mining business requires long-term
planning and implementation of operating strategies over several years to
deliver successful operating and financial results. Accordingly, in the table
below and summary that follows, we set forth our key operating and financial
results for years 2014, 2013 and 2012.
|
|
|
As of and for
the Year Ended December 31, |
|
|
Key Results |
|
2014 |
|
2013 |
|
2012 |
|
|
Silver (ounces) produced |
|
11,090,506 |
|
8,919,728 |
|
|
6,394,235 |
|
|
Gold (ounces) produced |
|
|
186,997 |
|
|
119,989 |
|
|
|
55,496 |
|
|
Lead (tons) produced |
|
|
40,255 |
|
|
30,374 |
|
|
|
21,074 |
|
|
Zinc (tons) produced |
|
|
67,969 |
|
|
61,406 |
|
|
|
64,249 |
|
|
|
|
|
Sales of products |
|
$ |
500,781 |
|
$ |
382,589 |
|
|
$ |
321,143 |
|
|
Net
income (loss) |
|
$ |
17,824 |
|
$ |
(25,130 |
) |
|
$ |
14,954 |
|
|
Basic income (loss) per common share |
|
$ |
0.05 |
|
$ |
(0.08 |
) |
|
$ |
0.05 |
|
|
EBITDA7 |
|
$ |
151,532 |
|
$ |
69,130 |
|
|
$ |
76,373 |
|
|
Cash from operating activities (in millions) |
|
$ |
83.1 |
|
$ |
26.6 |
|
|
$ |
69.0 |
|
|
Cash and cash equivalents (in millions) |
|
$ |
209.7 |
|
$ |
212.2 |
|
|
$ |
191.0 |
|
____________________
7 |
Earnings before interest, taxes,
depreciation, and amortization (EBITDA) is a measurement that is not in
accordance with GAAP. EBITDA is used by management, and we believe is
useful to investors, for evaluating our operational performance. A
reconciliation of this non-GAAP measure to net income (loss), the most
comparable GAAP measure, can be found in Appendix
A. |
Continues on next page ► |
|
|
|
Hecla Mining Company Notice of 2015 Annual Meeting
and Proxy Statement |
45 |
Table of Contents
Despite lower metals prices in 2014
compared to 2013, we significantly improved our operating performance. Our
overall operating and financial results are more fully described in
Managements Discussion and Analysis of
Financial Conditions and Results of Operations in our Annual Report on Form 10-K filed with the SEC on February 18,
2015. Our 2014 results were strong relative to our 2013 results. In 2014, we
achieved the following:
● |
Produced 11.1 million ounces of
silver, a 24% increase over 2013, with a 30% decrease in cash cost, after
by-product credit per ounce of silver;8 |
● |
Produced 186,994 ounces of gold, a
56% increase over 2013, with a cash cost, after by-product credits, per
gold ounce of $826, a 13% reduction;8 |
● |
Increased lead and zinc production
by 33% and 11% respectively, over 2013 production; |
● |
Increased silver equivalent
production 50% over 2013 and 142% over 2012 levels to 34.5 million ounces,
the most in Heclas
history; |
● |
Increased year-end silver reserve
levels for the ninth consecutive year to the highest in Company history,
with silver reserves up 2%; |
● |
Generated operating cash flow of
$83.1 million, a 212% increase from 2013, inclusive of the $55.4 million
payment to satisfy the Coeur dAlene Basin litigation
settlement; |
● |
Ended the year with a cash balance
of $209.7 million, only $2.5 million less than 2013
year-end; |
● |
Increased sales of products 31% over
2013 to a Company record of $501 million; |
● |
Increased adjusted EBITDA 29% to
$174.4 million;9 |
● |
Increased diluted income per common
share from a loss of $0.08 in 2013 to a gain of $0.05 in 2014;
and |
● |
Increased net income applicable to
common shareholders from a loss of $25.7 million in 2013 to a gain of
$17.3 million in 2014. |
Shareholder Outreach and 2014 Advisory
Vote on Executive Compensation
Over the last few years we have undertaken
significant shareholder outreach efforts in an effort to hear and understand the
concerns of our shareholders. In response to shareholder concerns gleaned from
our shareholder outreach, we made changes to our executive compensation program
in 2014, and we believe as a result of those changes, last years say-on-pay
vote achieved over 78% support.
In advance of our 2015 Annual Meeting, we
continued to reach out to our shareholders. In September 2014, the chair of the
Compensation Committee contacted investors that collectively held over 44% of
our common stock. We also held one-on-one discussions with the two major proxy
advisory firms. The purpose of these meetings was to gain feedback on the
changes we made to our
executive compensation in 2014 and to
discuss any further concerns. A management team (excluding NEOs) held one-on-one
discussions with shareholders holding over 10% of our common stock, and obtained
constructive feedback on our executive compensation program. During our
discussions, all of the changes made to our executive compensation program in
2014 were well-received. In addition, we heard concern about the excise tax
gross-up provision in the change in control agreements with certain of our
executive officers (previously we had eliminated such provisions for any
executive officer joining the Company after 2011). As a result of this
engagement, the Compensation Committee has approved eliminating any remaining
excise tax gross-ups in our change in control agreements. See further discussion
on p. 73.
____________________
8 |
Cash cost, after by-product
credits, per ounce of silver and gold is a non-GAAP measurement, a
reconciliation of which to cost of sales and other direct production costs
and depreciation, depletion and amortization, the most comparable GAAP
measure, can be found on Appendix A under Reconciliation of Cash Cost,
Before By-product Credits and Cash Cost, After By-product Credits
(non-GAAP) to cost of Sales and Other Direct Production Costs and
Depreciation, Depletion and Amortization (GAAP). |
9 |
Adjusted EBITDA
(earnings before interest, taxes, depreciation, and amortization) is a
measurement that is not in accordance with GAAP. A reconciliation of this
non-GAAP measure to net income (loss), the most comparable GAAP measure,
can be found in Appendix A. |
46
Table of Contents
|
Compensation Discussion and Analysis |
|
|
Oversight and Determination of the
Executive Compensation Program
Role of the Compensation
Committee. The committee, consisting entirely
of independent members (Nethercutt, Crumley, Rogers and Taylor), has primary
responsibility for executive compensation decisions. The committee carries out
its responsibilities under a charter approved by the Board. In 2014, the
committee and the Board amended the committees charter to provide that the
committee has the authority to approve all executive compensation, including our
CEOs (but
not that of our independent directors, which remains decided by the full Board).
The committee receives information from Mercer (US) Inc. (Mercer), a wholly
owned subsidiary of Marsh & McLennan Companies, Inc., its independent
executive compensation consultant, and uses this information in making decisions
and conducting its annual review of the Companys executive compensation
program.
Role of Management. The committee considers input from the CEO in making
determinations regarding our executive compensation program and the individual
compensation of each executive officer (other than himself). As part of our
annual review process, the CEO reviews the performance of each member of the
executive team (other than himself), and their contribution to the overall
performance of the Company. Approximately mid-year, the CEO presents
recommendations to the committee regarding base salary adjustments, target
annual incentive awards, stock-based grants, and long-term performance unit
grants, based on a thorough analysis of relevant market compensation data
comparing Hecla with an applicable peer group within the mining industry. The
CEO and senior management also make recommendations to the committee regarding
our annual and long-term quantitative goals and annual qualitative goals for the
executive officers (other than the CEO), as well as recommendations regarding
the participation in our stock-based compensation plans and amendments to the
plans, as necessary.
Role of Compensation
Consultant. The committee independently seeks
and receives advice from independent compensation and benefits consultants,
which it believes is useful in conducting reviews of our compensation programs.
In addition to providing technical support and input on market practices, the
committees goal in using compensation and benefits consultants is to provide
external benchmark information for assessing compensation relative to our
compensation philosophy.
The committee sought advice and external
benchmarking information from Mercer
on a number of occasions in connection with
conducting reviews of our compensation
program. The committee has assessed
Mercers independence in light of SEC rules and NYSE listing standards, and has
determined that Mercers work does not raise any conflicts of interest or
independence concerns.
Mercer performs executive compensation
services solely on behalf of the committee, is engaged by and reports directly
to the committee, meets separately with the committee with no members of
management present, and consults with the committee chairman between meetings.
As described on page 48 under Market Analysis, Mercer assists the committee in
identifying the appropriate companies to be included in our peer group for
executive and director compensation and pay practices, and in benchmarking our
executive and director pay against the peer group each year.
In June 2014, Mercer performed a
competitive analysis and presented its findings and recommendations to the
committee. The competitive analysis provided detailed comparative data for each
executive officer position and assessed each component of pay, including base
salary, short- and long-term incentives and total target compensation, as well
as the mix of compensation between these pay elements. We compared this
information to our executives compensation by similarity of position. The
committee also reviewed our performance and carefully evaluated each executives
performance during the year against established goals, leadership qualities,
operational performance, business responsibilities, career with Hecla, current
compensation arrangements and long-term potential.
The committee has established procedures
that it considers adequate to ensure that Mercers advice to the committee
remains objective and is not influenced by Company management. These procedures
include: a direct reporting relationship between the Mercer consultant and the
committee; a provision in the committees engagement letter with Mercer
specifying the information and recommendations that can and cannot be shared
with management; an annual update to the committee on Mercers financial
relationship with Hecla, including a summary of the work performed for Hecla
during the preceding 12 months; and written assurances from Mercer that within
the Mercer organization, the Mercer consultant who performs services for Hecla
has a reporting relationship determined separately from Mercers other lines of
business and from its other work for Hecla.
Continues on next page ► |
|
|
|
Hecla Mining Company Notice of 2015 Annual Meeting
and Proxy Statement |
47 |
Table of Contents
The total amount of fees for executive
compensation consulting services Mercer provided to the committee in 2014 was
$106,039.
During 2014, management hired Mercer or
its affiliates to provide consulting services on our benefit plans, including
support under the Affordable Care Act. The total amount of fees for these
additional consulting services in 2014 was $149,538. The decision to engage
Mercer or its affiliates for these additional consulting services was made by
management, and neither the committee nor the Board approved these other
services.
Market Analysis. To attract and retain key executives, our goal is to provide
competitive compensation. We generally align our NEO total compensation to the
median of our peer companies and survey composite data. However, we allow total
compensation to exceed the median when our Company performance and individual
experience, responsibilities and performance warrant.
Central to the pay review process is the
selection of a relevant peer group. Because we operate in a global business that
is dominated by Canadian companies, our peer group reflects this with only six
U.S. companies among our peer group. The committee reviews and determines the
composition of our peer group on an annual basis, based on recommendations from
Mercer. In 2014, the committee, assisted by Mercer, removed three peers from the
2013 peer group (Eldorado Gold, Osisko Mining and Golden Star Resources), and
identified four new peers (Detour Gold, Tahoe Resources, Royal Gold and Thompson
Creek Metals). For 2014, Heclas peer group was made up of the following 16
companies, whose aggregate profile was comparable to Hecla in terms of size,
industry and competition for executive talent.
IAMGOLD Corporation
First Majestic
Silver Corp.
Detour Gold Corporation
Centerra Gold Inc.
New Gold Inc.
Stillwater Mining Company
Alamos Gold
Inc.
Tahoe Resources Inc.
AuRico Gold
Inc.
Silver Standard Resources
Inc.
Thompson Creek Metals Company
Pan American Silver Corporation,
Inc.
Coeur Mining Inc.
Allied Nevada Gold
Corp.
Royal Gold, Inc.
Endeavour Silver
Corp.
The peer group is composed entirely of
publicly held companies most of which are engaged in the business of mining
precious metals with revenue and market capitalization within a reasonable range
of Heclas. The 2014 peer group consists of companies with annual revenues
ranging from approximately $153 million to $1.1 billion (as of December 31,
2013) and market capitalization ranging from approximately $428 million to $4.2
billion (as measured at April 30, 2014). Compared to this peer group, Heclas
market cap is closer to the median of the peer group and all but three peer
companies are within two times Heclas market cap. We believe these peer
companies are appropriate because they are in the same industry, compete for
executive talent, have executives in positions similar to ours, and are
considered by the committee to be in an acceptable revenue range compared to
Hecla.
In making compensation decisions the
committee also reviews survey data provided by Mercer from the following mining
and general industry survey sources:
● |
Mercer US Mining Industry Corporate
Compensation Report |
● |
Mercer North America Mining Industry
CEO Compensation Report |
● |
Mercer US Executive Remuneration
Suite |
● |
Towers Watson Survey Report on Top
Management Compensation |
Base salaries are targeted between the
25th percentile and median (50th percentile), with
incentive opportunities that can provide above-median total compensation based
on performance. In 2014, target total direct compensation (base salary, short-
and long-term incentives) for our NEOs was between the median and the
75th percentile of both the peer group and survey data. Compensation
for individuals within this group may be positioned higher or lower than market
median where the committee believes appropriate, considering each executives
roles and responsibilities and experience in their position within Hecla.
Mercer provided the committee with a
report summarizing executive compensation levels at the 25th,
50th and 75th percentiles of the peer group and the survey
data for positions comparable to those held by each of our NEOs. The committee
also received an analysis from Mercer comparing the target total cash
compensation (base salary plus target annual incentive) and target total direct
compensation (base salary plus target annual incentive plus value of long-term
incentives) for each of the NEOs against these benchmarks. For retention and
competitive considerations, in comparison to the peer group data or survey data
applicable to each NEOs position, we target
48
Table of Contents
|
Compensation Discussion and Analysis |
|
|
each NEOs total cash compensation at the
median level and the total target compensation at or above the median level, and
deliver compensation above or below these levels when warranted by performance.
The committee suggests that the following
considerations be kept in mind regarding comparisons of our NEO compensation and
Company performance against external benchmarks:
● |
Standard industry classifications
and groupings of U.S. companies are not appropriate to determine Heclas
peers. There are very few public U.S.
mining companies that are involved in the precious metals business. Most
precious metals companies are in Canada with some employees who are U.S.
citizens. This means that most of Heclas true peers are excluded from the
U.S. industry classification. In addition, the limited number of U.S.
precious metals companies of comparable size to Hecla means that companies
from the broader material industry are substituted by some proxy
advisors for |
|
comparison purposes. The performance
of precious metal companies is often negatively correlated to the broader
industry, so benchmarking Heclas TSR
against chemical, construction
materials, base metals and forest products is simply not relevant in
determining relative performance. |
● |
Comparing Heclas TSR to other
companies over discrete time periods is imperfect. TSR is the primary measure used by proxy advisors in
comparing performance across companies. However, fairly measuring TSR for
one company during times of high stock price volatility, such as that
faced by Hecla and others in the precious metals industry over the past
year, can be an imperfect point of comparison since the selection of
starting and ending stock prices that are within several days or weeks of
one another can produce very different TSR results. Moreover, comparisons
with companies that are not in the same industry as Hecla, and therefore
not subject to precious metals price volatility and other prevailing
industry economic factors, are even more
problematic. |
Compensation Risk
Assessment
The committee does not believe our
compensation policies and practices create risks that are reasonably likely to
have a material adverse effect on Hecla. In 2014, with the assistance of Mercer,
the committee assessed the Companys compensation arrangements to determine if
their provisions and operation create undesired or unintentional risks of a
material nature. The committees determination is based on its assessment of the
balance of potential risk to potential reward. Although the committee reviewed
all compensation programs, it focused on the programs with variability of
payout, and the ability of a participant to directly affect payout, as well as
the controls on participant action and payout. Base salary and performance-based
compensation are generally uniform in design throughout the Company for all
levels of salaried employees. The Companys compensation policies and practices
start with base salary and annual incentive compensation, and are based on
similar performance criteria for each salaried employee. Long-term incentive and
equity compensation are applicable to specific employees in executive and
managerial positions as approved by the committee, with the same performance
criteria applied for all eligible participants.
Our compensation policies and practices
include risk mitigation features such as:
● |
balance among short- and long-term incentives, cash and equity, and
fixed and variable pay; |
● |
multiple performance
measures; |
● |
award caps; |
● |
clawbacks; |
● |
stock ownership and holding
guidelines; |
● |
anti-hedging policies;
and |
● |
limited change in control
benefits. |
Based on the foregoing, we believe that
our compensation policies and practices do not create inappropriate or
unintended significant risk to the Company as a whole. We also believe that our
incentive compensation arrangements provide incentives that: do not encourage
risk-taking beyond the Companys ability to effectively identify and manage
significant risks; are compatible with effective internal controls and risk
management practices of the Company; and are supported by the oversight and
administration of the committee with regard to executive compensation
programs.
Continues on next page ► |
|
|
|
Hecla Mining Company Notice of 2015 Annual Meeting
and Proxy Statement |
49 |
Table of Contents
Compensation Philosophy and
Objectives
We operate in a competitive and
challenging industry. Over the past decade, a worldwide mining boom has
significantly increased the demand for executives with mining-related skills and
experience. In addition, the supply of mining executives is very limited,
particularly in the United States. As a result, having a viable compensation
strategy is critical to our success.
Our compensation philosophy is to pay our
NEOs competitive levels of compensation that best reflect their individual
responsibilities and contributions to the Company, while providing incentives to
achieve our business and financial objectives. While comparisons to compensation
levels at companies in our peer group (discussed on pages 48 and 53) are helpful
in assessing the overall competitiveness of our compensation program, we believe
that our executive compensation program also must be internally consistent and
equitable in order for the Company to achieve our corporate
objectives.
The pay-for-performance philosophy of our
executive compensation programs described in this Proxy Statement plays a
significant role in our ability to produce strong operating, exploration,
strategic, and financial results. It enables us to attract and retain a highly
experienced and successful team to manage our business. Our pay programs
strongly support our business objectives and are aligned with the value provided
to our shareholders. Further, as an executives level of responsibility within
our organization increases, so does the percentage of total compensation that we
link to performance through the annual incentive and long-term incentive
programs, as well as share performance.
In setting policies and practices
regarding compensation, the guiding philosophy of the committee is
to:
● |
have compensation that is primarily at-risk and based
on performance of our stock, strategic objectives and
tactical activities; and |
● |
acquire, retain and motivate talented executives. |
The committee believes that a mix of both
cash and equity incentives is appropriate, as annual cash incentives reward
executives for achieving both short- and long-term
quantitative and qualitative goals, while
equity incentives align executives to shareholder interests. In determining the
amount of the cash and equity incentives, the committee considers each officers
total compensation on both a short- and long-term basis to assess the retention
and incentive value of his or her overall compensation.
The committee conducts its annual review
process near the end of each calendar year in order to align each executives
compensation awards with the Companys operational, financial and strategic
results for the calendar year.
We also maintain the following pay
practices that we believe enhance our pay-for-performance philosophy and further
align our NEOs interests with those of shareholders:
We DO NOT Have these
Practices |
x |
Repricing of stock options |
x |
Perquisites |
x |
Excise tax
gross-ups |
We DO Have these
Practices |
✓ |
Incentive award metrics that are
objective and tied to Company performance |
✓ |
82% of CEO and 73% of NEO pay is
at-risk |
✓ |
Over 67% of total compensation for
the CEO is performance-based |
✓ |
49% of total compensation for NEOs
other than the CEO is performance-based and 24% is granted in equity
|
✓ |
100% of the CEOs annual incentive
compensation is tied solely to Company performance |
✓ |
56% of the NEOs long-term
incentive compensation is performance-based and delivers value only if
operational, strategic, financial, and other targets are met, which
contributes to sustained long-term corporate financial health and company
value. The value of the remaining 44% of the NEOs long-term incentive
compensation is in the form of time-based restricted stock units and
fluctuates with stock price |
✓ |
Stock ownership requirements for our
NEOs and directors |
✓ |
Compensation recoupment Clawback
policy |
✓ |
Double-trigger change in control
severance for NEOs |
✓ |
Equity awards that vest over a
three-year period to promote retention |
✓ |
Anti-hedging
policy |
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|
Compensation Discussion and
Analysis |
|
|
Elements
of Total Compensation
We have a multifaceted compensation
program. For the year ended December 31, 2014, our executive compensation
program consisted of the following elements:
BASE SALARY |
Objective: Provide a fixed level of cash compensation for
performing day-to-day responsibilities generally at less than median of
peers.
Key Features: Set in the middle of each year for the 12-month period
from July 1 to June 30.
Terms: Paid semi-monthly. |
INCENTIVE PAY |
Annual Incentive
Plan
Objective: Focus executives on achieving Companys short-term
goals, and the performance steps necessary to achieve longer-term
objectives.
Key Features: Based on corporate achievement of goals and individual
performance. Some goals are now quantitative, such as EBITDA and
production, and others are qualitative. Weighting is 50% quantitative
corporate performance facts, 25% qualitative/other goals (which may
include both (i) goals for specific NEOs and their related parts of our
business or Hecla as a whole, and (ii) other quantitative goals related to
specific NEOs and their related parts of our business or Hecla as a
whole), and 25% discretionary factor as determined by the
committee.
Terms: Determined by the committee and paid in a single payment
following the performance year. Awarded in the first quarter of each year.
Designed to be awarded in cash, but may be paid in equity.
Long-term Incentive
Plan
Objective: Focus executives on longer-term value creation as
determined by the specific targets of the plan.
Key Features: Based on corporate goals achieved over a three-year
performance period. A new three-year performance period begins each
calendar year and performance units are granted in the first half of each
year. Each three-year plan identifies key long-term objectives that are
expected to create long-term value for shareholders such as operating
performance, increasing production and resources, increasing shareholder
return, and developing significant capital programs.
Terms: Determined by the committee and paid in a single payment
following the three-year performance period. Awarded in the first quarter
of each year. Designed to be awarded in cash, but may be paid in equity
(in full or part). |
EQUITY |
Restricted Stock Units and Stock
Options
Objectives: Align managements interests with those of shareholders
and provide incentive for NEOs to remain with the Company for the long
term.
Key Features: Restricted stock unit awards are denominated in shares
and delivered in stock with a vesting schedule of three years for
NEOs. Stock option awards generally vest immediately with a five-year
expiration period.
Terms: Restricted stock units and stock options are granted in
the second quarter of each year. In recent years only restricted stock
unit awards have been made.
Performance-based Shares
Objectives: Provide
incentive for CEO to remain with the Company for the long-term and to
align CEOs interests with those of shareholders.
Key Features: Performance-based shares realize more value if the TSR
ranks high within its selected peer group.
Terms: Performance-based shares
are granted to the CEO in the second quarter of each year and are based on
a three-year TSR. |
KEY EMPLOYEE DEFERRED COMPENSATION
PLAN |
Objective: Increase exposure to the Company, while also providing a
tax deferral opportunity and encouraging financial planning.
Key Features: Allows for the voluntary deferral of base salary, annual
incentive pay, long-term incentive pay and restricted stock unit
payouts.
Terms: Generally, employee must make election in the previous
year to defer in the coming
year. |
BENEFITS |
Objectives: Attract and retain highly qualified
executives.
Key Features:
Participation in retirement plans,
company-paid health, dental and vision insurance, life insurance, and
accidental death and dismemberment insurance.
Terms: Same terms for all U.S. permanent full-time salaried
employees. |
Continues on next page ► |
|
|
|
Hecla Mining Company Notice of 2015 Annual Meeting
and Proxy Statement |
51 |
Table of Contents
Our executive compensation program
composed primarily of base salary, short- and long-term incentives, and equity
awards is intended to align the interests of our NEOs with the long-term
interests of our shareholders. The program is designed to
accomplish this by rewarding performance that results in an increase in the value of
our shareholders investment in Hecla. We believe that the
proportion of at-risk, performance-based
compensation should comprise a significant portion of executive pay.
The mix of compensation for our CEO and
other NEOs, which we believe is similar to our peer group, is shown
below.
2014 Target Compensation
Structure. The following table lists total
2014 target compensation for the NEOs.
|
NEO |
|
Base
Salary ($) |
|
Annual Incentive Target
Award ($) |
|
Long-term Incentive Plan
Target Award ($) |
|
Equity ($) |
|
Total ($) |
|
|
Baker |
|
605,000 |
|
605,000 |
|
|
1,187,500 |
|
|
1,000,0001 |
|
3,397,500 |
|
|
Sabala |
|
380,000 |
|
304,000 |
|
|
425,000 |
|
|
345,000 |
|
1,454,000 |
|
|
Radford |
|
380,000 |
|
304,000 |
|
|
425,000 |
|
|
335,000 |
|
1,444,000 |
|
|
McDonald |
|
275,000 |
|
220,000 |
|
|
325,000 |
|
|
300,000 |
|
1,120,000 |
|
|
Sienko |
|
250,000 |
|
150,000 |
|
|
237,500 |
|
|
154,000 |
|
791,500 |
|
|
Poirier |
|
226,000 |
|
135,600 |
|
|
256,250 |
|
|
200,000 |
|
817,850 |
|
1. |
Consists of $500,000 in restricted
stock units and $500,000 in performance-based
shares. |
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|
Compensation Discussion and
Analysis |
|
|
Individual base salaries and annual
incentive targets for the NEOs are based on the scope of each NEOs
responsibilities, individual performance and market data. At the beginning of
each year, we also define the key
strategic objectives each NEO is expected
to achieve during that year, which are evaluated and approved by the
committee.
Overview
of our Compensation Decisions and Results for 2014
Base Salary
Design. Pursuant to our market positioning policy, the committee targets base
salaries between the 25th percentile and median of Heclas peer group
for our NEOs. An individual NEOs base salary may be set above or below this
market range for that particular position, depending on the committees
subjective assessment of the individual NEOs experience, recent performance and
expected future contribution, retention concerns, and the recommendation of our
CEO (other than for himself). The committee does not use any type of
quantitative formula to determine the base salary level of any of the NEOs. The
committee reviews NEO salaries at least annually as part of its overall
competitive market assessment, as described above. Typically, the committee
makes annual salary adjustments in the middle of each year for the 12-month
period from July 1 to June 30.
Analysis and Decision. In June 2014, the committee reviewed a market analysis
prepared by Mercer. The base salary of the chief executive officer of each
company in our peer group, including Hecla, ranged from $350,000 to $856,000
with an average of $643,000 and a median of $646,000, based on data contained in
the most recently filed proxy statements of our peer group. The committee
determined that the base salary for Mr. Baker was comparable to the base
salaries of other chief executive officers in our peer group based on the data
contained in their most recently filed proxy statements, and therefore Mr.
Bakers salary was not increased.
The committee noted that the base salary
of chief financial officers of companies in our peer group, including Hecla,
ranged from $220,000 to $441,000 with an average of $366,000 and a median of
$376,000 based on the data contained in their most recently field proxy
statements. Based on these findings, the committee increased the base salary for
Mr. Sabala to $380,000.
The committee also noted that the base
salary of the top operations executives of companies in our peer group,
including Hecla, ranged from $310,000 to $680,000 with an average of $438,000
and a median of $427,000 based on the data contained in their most recently
filed proxy statements. Based on these findings, the committee increased the
base salary for Mr. Radford to $380,000.
The base salaries for Messrs. McDonald,
Sienko and Poirier remained unchanged as their salaries were comparable to the
base salaries of other executives in our peer group.
The current base salary for each NEO from
July 1, 2014, through June 30, 2015 is as follows:
Base Salary for NEOs |
|
NEO |
|
7/1/13 to
6/30/14 Salary ($) |
|
7/1/14 to
6/30/15 Salary ($) |
|
Percentage Increase (%) |
|
|
Phillips S. Baker, Jr. |
|
605,000 |
|
605,000 |
|
|
0 |
|
|
|
James A. Sabala |
|
355,000 |
|
380,000 |
|
|
7.1 |
|
|
|
Lawrence P. Radford |
|
355,000 |
|
380,000 |
|
|
7.1 |
|
|
|
Dr. Dean W.A. McDonald |
|
275,000 |
|
275,000 |
|
|
0 |
|
|
|
David C. Sienko |
|
250,000 |
|
250,000 |
|
|
0 |
|
|
|
Don Poirier |
|
226,000 |
|
226,000 |
|
|
0 |
|
|
Incentive Plans
Company Performance and Relationship to
NEO
Compensation. Our incentive compensation plans include the Hecla Mining
Company Annual Incentive Plan and the Hecla Mining Company Executive and Senior
Management Long-Term Performance Payment
Plan. The plans include performance measures of the most important factors we
believe contribute to Heclas sustained long-term success that can lead to
improved stock price performance.
Continues on next page ► |
|
|
|
Hecla Mining Company Notice of 2015 Annual Meeting
and Proxy Statement |
53 |
Table of Contents
Hecla Mining Company Annual Incentive
Plan (AIP).
Consistent with Heclas
pay-for-performance philosophy, substantially all salaried employees, including
our NEOs, are eligible to participate in the AIP. Late in the prior year, or
early in the current year, the committee approves a company-wide, short-term
incentive pool that is available for payment to salaried employees, including
the NEOs, the payment of which is based on Company performance during the prior
year.
AIP Components. In 2014, the AIP was amended to use a more formulaic approach
to awards, with less committee discretion. The AIP includes the following
components and relative weights:
● |
quantitative corporate performance factors comprising 50% of
the targeted award; |
● |
qualitative/other goals, normally comprising 25% of the
targeted award; and |
● |
a discretionary factor as determined by the committee,
normally comprising 25% of the targeted award. |
While each component can achieve two and a
half times the target (250%), the maximum total payout is limited to two times
the target award level (200%).
For 2014, the quantitative corporate
performance factor was divided equally into two parts: EBITDA and
production.
The EBITDA target was $145 million, a 56%
increase over 2013 EBITDA. Maximum payout was achieved if EBITDA was $250
million, which is $105 million more than target or 72% improvement in EBITDA.
There was no payout if EBITDA was less than $115 million.
EBITDA GOAL
METRICS |
2014 EBITDA
Result |
|
|
|
% Performance
Value |
|
$250mm |
|
|
Maximum |
|
|
62.5% |
|
|
$175mm |
|
|
|
|
|
50% |
|
|
$145mm |
|
|
Target |
|
|
25% |
|
|
$115mm |
|
|
Minimum |
|
|
10% |
|
|
< $115mm |
|
|
|
|
|
0% |
|
The production factor was based on our
disclosed estimated production for 2014. Achieving the midpoint of production
guidance, with gold converted to silver at a ratio of 60 to 1 would achieve the
minimum payout. To achieve target, production must be 7% better than our
disclosed estimated 2014 production. Maximum payout was attained if production
achieved 24 million ounces or 17% better than that estimate.
PRODUCTION GOAL METRICS 2014
Production in Silver Equivalent Ounces |
2014 Production
Result |
|
|
|
% Performance
Value |
|
24.0mm |
|
|
Maximum |
|
|
62.5% |
|
|
23.5mm |
|
|
|
|
|
50% |
|
|
22mm |
|
|
Target |
|
|
25% |
|
|
20.5mm |
|
|
Minimum |
|
|
10% |
|
|
< 20.5mm |
|
|
|
|
|
0% |
|
Target Opportunities. Each NEO has a target award opportunity expressed as a
percentage of base salary, along with minimum and maximum award levels. The
target award opportunities are determined based on the following: market
assessments and the committees market positioning policy; the individual NEOs
organization level, scope of responsibility and ability to impact Heclas
overall performance; and internal equity among the NEOs. Actual awards are paid
after the end of each annual performance period and can range from 0% to 200% of
the target awards, based on the committees assessment of our actual performance
and the individual NEOs goals. Having a maximum award cap reduces the
likelihood of windfalls to executives and encourages financial discipline. It is
also competitive with typical peer group practice.
For 2014, target AIP award opportunities
for the NEOs were as follows:
|
NEO |
|
Target Annual Incentive (%
of base salary) |
|
|
Phillips S. Baker, Jr. |
|
|
100% |
|
|
|
James A. Sabala |
|
|
80% |
|
|
|
Lawrence P. Radford |
|
|
80% |
|
|
|
Dr.
Dean W.A. McDonald |
|
|
80% |
|
|
|
David C. Sienko |
|
|
60% |
|
|
|
Don
Poirier |
|
|
60% |
|
|
The market analysis prepared by Mercer in
June 2014 indicated that annual incentives were generally at the median of peers
for Messrs. Baker, Sienko, Radford and Poirier and at the 75th
percentile of the survey data for Messrs. Sabala and McDonald.
Performance Measures. Our management develops proposed targets for each Company
performance measure based on a variety of factors, including historical
corporate performance, internal budgets, forecasts and growth targets, market
expectations and strategic objectives. The committee reviews the targets and
adjusts them, as it deems appropriate. The committee believes that linking
annual incentive awards to pre-established goals creates a performance-based
compensation
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|
Compensation Discussion and
Analysis |
|
|
strategy consistent with shareholder
interests. The committee also believes that incentive compensation targets
should be established to drive real and sustainable improvements in operating
performance and the strategic position of the Company.
2014 AIP Analysis and
Decisions. The committee reviewed the
performance versus the AIP goals on a quarterly basis. For 2014, based on the
assessment by the committee on the Companys overall performance on both
qualitative and quantitative measures under the AIP, the committee determined
Company performance to be at 123% of target (out of a possible range of
0-200%).
For 2014, Company performance for
quantitative AIP purposes was as follows:
|
2014 AIP Quantitative Measures |
|
Target |
|
Actual |
|
Performance Value |
|
|
Production |
|
|
|
|
|
|
|
|
Silver equivalent
ounces |
|
22.0 mm ozs. |
|
22.3 mm ozs. |
|
26% |
|
|
EBITDA |
|
$145 mm |
|
$148.1 mm |
|
26% |
|
As reflected in the table above, each of
the two parts comprising the quantitative corporate performance exceeded its
target, and therefore the committee determined that the quantitative factor
accounted for 52% of the target 2014 AIP award (out of a possible 0 to 100% of
the target 2014 award).
In addition to quantitative corporate
performance factors, our AIP has a component that is based on qualitative and
other goals relating not only to Hecla as a whole, but also for each NEO. This
component is targeted to account for 25% of the total AIP target award, but can
account for 0 to 62.5% of the target award.
For our 2014 AIP, qualitative objectives
for NEOs included those related to (i) safety, health and environment, (ii)
operations, (iii) financial condition, (iv) growth, (v) production, (vi)
development, (vii) exploration, (viii) legal, (ix) investor relations, (x) human
capital development, and (xi) government and community relations with
quantifiable targets where applicable. The specific objectives for each NEO are
chosen to reflect each NEOs individual responsibilities, with shared goals
where appropriate. While most of the goals are subjective in nature, to the
extent possible, objective and quantifiable targets are set in order to improve
accountability for results.
For 2014, the committee assessed
performance under this component at 21% of the target award (below the 25%
target and within the possible range of 0-62.5%). The committee based its
assessment on the following factors:
✓ |
the Companys safety and health performance
showed improvements with Lucky Friday remaining below the U.S. Mine Health
and Safety Administration (MSHA) underground national averages for all
injury rates, lost time rates, and citations (although not achieving its
target of being below the national average for medical treatment cases),
and Greens Creek remaining below the MSHA underground national averages
for all injury rates, medical treatment cases, and citations (although not
achieving its target of being below the national average for lost time
rates); |
✓ |
Casa Berardi showed a 20% improvement in
contractor safety rates; |
✓ |
significant progress was made in our rock
mechanics programs; |
✓ |
new high-grade, near-surface
resources have been defined at the San Sebastian development; |
✓ |
our common stock performed well
relative to peers in a difficult market; |
✓ |
senior leadership roles were
filled with high caliber candidates at each operation and at
corporate; |
✓ |
we made significant progress in
innovation in stoping methods; |
✓ |
we gained an agreement on
critical bonding requirements at Greens Creek through a cooperative effort
with environmental groups, and federal and state agencies; and |
✓ |
a two-year extension to our
revolving credit agreement was completed. |
The final component of our AIP is at the
discretion of the committee and it is targeted to account for 25% of the total
AIP target award, but can account for 0 to 62.5% of the target award. For 2014,
the committee determined the discretionary factor performance value to be at 50%
of the target award (above the 25% target and within the possible range of
0-62.5%). The committee based its assessment primarily on the following
significant performance results by Hecla in 2014:
✓ |
reported record sales of products of $501 million, which was a 31% increase from 2013; |
✓ |
achieved higher silver and gold production by
24% and 56%, respectively, compared to 2013; |
✓ |
generated $83.1 million in net cash flow from
operating activities, representing a 212% increase compared to 2013. This
improvement was in spite of lower precious metals prices and the final
payment in 2014 of $55.4 million in settlement of the Coeur dAlene Basin
litigation; |
Continues on next page ► |
|
|
|
Hecla Mining Company Notice of 2015 Annual Meeting
and Proxy Statement |
55 |
Table of Contents
✓ |
maintained a consistent level of overall proven
and probable reserves at December 31, 2014, with silver reserves
increasing by 2% and gold reserves decreasing by 1%, all in spite of lower
precious metals prices compared to 2013. The silver reserves as of
December 31, 2014 represent the highest level in the Companys
history; |
✓ |
performed a significant level of exploration
and predevelopment activities during the year, drilling targets at our
land packages in Alaska, Idaho, Quebec and |
|
Mexico. We further advanced our pre-development
project at the San Sebastian property in Mexico; |
✓ |
continued a scaling down of discretionary
capital, exploration, and pre-development expenditures initiated in 2013
to address the recent reduction in metals prices; and |
✓ |
achieved the above milestones while maintaining
a cash balance of $209.7 million as of December 31,
2014. |
Set forth in the table below is each NEOs
target award and actual award, which was paid 75% in cash and 25% in Hecla
common stock issued under the 2010 Stock Incentive Plan.
|
Name |
|
Base
Salary (12/31/14) ($) |
|
Base
Salary Factor (%) |
|
Target
Annual Incentive ($) |
|
% to
Target (%) |
|
Actual Award1 ($) |
|
Cash Received ($) |
|
Equity Received2 (#) |
|
Phillips S. Baker, Jr. |
|
605,000 |
|
|
100 |
|
|
605,000 |
|
|
152.00 |
|
|
919,600 |
|
|
689,700 |
|
|
|
69,456 |
|
|
James A. Sabala |
|
380,000 |
|
|
80 |
|
|
304,000 |
|
|
137.50 |
|
|
418,000 |
|
|
313,500 |
|
|
|
31,571 |
|
|
Lawrence P. Radford |
|
380,000 |
|
|
80 |
|
|
304,000 |
|
|
153.75 |
|
|
467,400 |
|
|
350,550 |
|
|
|
35,302 |
|
|
Dr.
Dean W.A. McDonald |
|
275,000 |
|
|
80 |
|
|
220,000 |
|
|
137.50 |
|
|
302,500 |
|
|
226,875 |
|
|
|
22,847 |
|
|
David C. Sienko |
|
250,000 |
|
|
60 |
|
|
150,000 |
|
|
150.00 |
|
|
225,000 |
|
|
168,750 |
|
|
|
16,994 |
|
|
Don
Poirier |
|
226,000 |
|
|
60 |
|
|
135,600 |
|
|
91.67 |
|
|
124,300 |
|
|
93,225 |
|
|
|
9,388 |
|
1. |
The amount reported in this
column was paid in cash and equity to the NEO and is also reported in the
Summary Compensation Table on page 67 under Non-Equity Incentive Plan
Compensation. |
2. |
The equity portion of the 2014
AIP award was determined by subtracting the cash portion from the total
award to determine the equity value, then dividing that by the closing
stock price of the Companys common stock on the NYSE on March 5, 2015
($3.31). |
Hecla Mining Company Executive and
Senior Management Long-Term Performance Payment Plan (LTIP). We use the LTIP to focus executives on meeting long-term
(three-year) corporate performance goals. The LTIP is also designed to attract
and retain executives in a highly competitive talent market. The committee takes
into account mining and general industry market practices, as well as the
objectives of the LTIP, when determining the terms and conditions of long-term
incentive goals, such as resource additions and cash flow generation.
Under the LTIP, a new performance period
begins each calendar year and runs for three years. The three-year performance
period recognizes that some value-creating activities require a significant
period of time to be implemented and for measurable results to accrue. Starting
a new plan period each year also gives the committee flexibility to adjust for
new business conditions, circumstances or priorities in setting the performance
metrics and goals for each three-year cycle. Performance units are assigned to
each NEO at the beginning of each three-year period, and provide the basis for
the amount of awards made to each NEO under the LTIP. Performance units are
designed to encourage management to deliver long-term value. Performance units
reinforce Heclas business strategy by clearly establishing our key performance
elements (e.g., reserve and resource growth, production growth, cash flow, and
relative TSR) and the associated long-term performance objectives that must be
met for us to be successful and create value for shareholders.
The 2012-2014 LTIP units have a target
value of $100 each. The 2013-2015 and 2014-2016 LTIP units have a target value
of $125 each, and the 2015-2017 LTIP units return to a target value of $100
each. Currently, the ultimate dollar value of each unit can range from $0 to
$375 depending on our performance compared to the goals approved by the
committee. The 2012-2014 and 2013-2015 LTIP each has a maximum potential unit
value of $300, while the 2014-2016 and 2015-2017 LTIPs have a maximum potential
value of $375 per unit. Performance units are paid out as soon as practicable
after the end of each performance period, upon approval by the committee. At the
discretion of the committee, the payouts may be in the form of cash, common
stock, restricted stock units, or a combination of these forms.
2012-2014 LTIP. The tables below summarize the performance unit valuation
ranges for reserve and resource growth, production growth, cash flow, and TSR
for the 2012-2014 plan periodthe four performance goals approved by the committee in February 2012. These are important goals for the following reasons:
● |
Silver equivalent reserve and resource
growth. Silver equivalent reserve and
resource growth remains a fundamental value creator. We
need to replace and add reserves and resources to extend mine lives and
grow production. This is critical to the achievement of our long-term
success. Reserves and resources includes the silver equivalent of gold and
base metals. |
56
Table of Contents
|
Compensation Discussion and
Analysis |
|
|
● |
Cash flow. The design of the cash flow goal
is identical to that contained in prior years since silver cost per ounce
and production are key elements in creating shareholder value. When used
in the context of our LTIP, cash flow is measured by comparing (i) the
actual cash cost, after by-product credits multiplied by actual
silver/gold production versus (ii) budgeted cash cost, after by-product
credits multiplied by the budgeted silver/gold production over a
three-year period. Cash cost, after by-product credits, a non-GAAP
measure, includes all direct and indirect operating cash costs related
directly to the physical activities of producing the primary metal,
including mining, processing and other plant costs, third-party refining
expense, on-site general and administrative costs, royalties and mining
production taxes, and offsets that amount by
the |
|
production value of all metals other than
the primary metal produced at each unit. |
● |
Silver production growth. One of the
most important components of value is demonstrable production
growth. |
● |
TSR. TSR provides a performance metric
relative to our peers. This objective differs from the other objectives
which are focused on activities that in an absolute sense should be value
drivers: resources, production, and cash flow. TSR measures the price
appreciation of our shares, including dividends paid during the
performance period, and thereby simulates the actual investment
performance of Hecla shares. Any payout is based on how Heclas TSR
performance compares to the TSR of the common shares of a group of our
peer companies. |
2012-2014 Performance Unit
Valuation
Silver Equivalent Reserve & Resource
Growth |
Ounce Target (millions) |
|
Additional Reserve (millions) |
|
Unit Value |
|
1,006 |
|
|
|
200 |
|
|
|
$ |
100.00 |
|
|
931 |
|
|
|
125 |
|
|
|
$ |
50.00 |
|
|
881 |
|
|
|
75 |
|
|
|
$ |
40.00 |
|
|
856 |
|
|
|
50 |
|
|
|
$ |
25.00 |
|
|
831 |
|
|
|
25 |
|
|
|
$ |
15.00 |
|
|
816 |
|
|
|
10 |
|
|
|
$ |
5.00 |
|
Cash Flow |
% of
Target |
|
Unit
Value |
|
115% |
|
|
|
$ |
50.00 |
|
|
110% |
|
|
|
$ |
42.50 |
|
|
105% |
|
|
|
$ |
32.50 |
|
|
100% |
|
|
|
$ |
25.00 |
|
|
95% |
|
|
|
$ |
22.50 |
|
|
90% |
|
|
|
$ |
20.00 |
|
|
85% |
|
|
|
$ |
17.50 |
|
|
80% |
|
|
|
$ |
15.00 |
|
|
75% |
|
|
|
$ |
12.50 |
|
|
70% |
|
|
|
$ |
10.00 |
|
|
65% |
|
|
|
$ |
7.50 |
|
|
60% |
|
|
|
$ |
0.00 |
|
Silver Production Growth |
Target (in mm
ozs.) |
|
Average Annual Target |
|
Unit
Value |
|
48.0 |
|
|
|
16.0 |
|
|
|
$ |
100.00 |
|
|
42.0 |
|
|
|
14.0 |
|
|
|
$ |
50.00 |
|
|
39.0 |
|
|
|
13.0 |
|
|
|
$ |
33.33 |
|
|
36.0 |
|
|
|
12.0 |
|
|
|
$ |
25.00 |
|
|
33.0 |
|
|
|
11.0 |
|
|
|
$ |
20.00 |
|
|
31.5 |
|
|
|
10.5 |
|
|
|
$ |
15.00 |
|
Total Shareholder Return |
%ile rank within Peer
Group Companies |
|
Unit
Value |
|
100% |
|
|
|
$ |
50.00 |
|
|
90% |
|
|
|
$ |
45.00 |
|
|
80% |
|
|
|
$ |
40.00 |
|
|
70% |
|
|
|
$ |
35.00 |
|
|
60% |
|
|
|
$ |
30.00 |
|
|
50% |
|
|
|
$ |
25.00 |
|
|
25% |
|
|
|
$ |
15.00 |
|
|
<25% |
|
|
|
$ |
0.00 |
|
2012-2014 LTIP Analysis and
Decisions. The committee assessed performance under the 2012-2014 LTIP as follows:
|
Performance Measure |
Target |
Actual
Performance |
% of
Target |
Value Earned Per
Unit Earned |
|
|
Silver Equivalent Reserve and Resource Growth |
50.0 silver oz. added (millions) |
476.1 (millions) |
952% |
$100.00 |
|
|
Cash Flow |
$826.16 Cash Flow (millions) |
$781.25 (millions) |
95% |
$22.25 |
|
|
Silver Production Growth |
36.0 silver oz. (millions) |
26.4 (millions) |
73% |
No Payout |
|
|
Total Shareholder Return |
50% Hecla ranking vs. peers |
90.9% |
182% |
$45.50 |
|
Continues on next page ► |
|
|
|
Hecla Mining Company Notice of 2015 Annual Meeting
and Proxy Statement |
57 |
Table of Contents
During this three-year period, performance
in reserve and resource growth exceeded the maximum, TSR exceeded the target,
and cash flow generation exceeded the threshold, but was below target.
Performance in production growth was below the threshold and did
not pay
out. As a result, with a range in potential value per unit of $0 to $300, in
March 2015 the committee determined that the total 2012-2014 LTIP payout is
$167.75 per unit. The committee and the Board further
approved payout of the LTIP awards to be
75% in cash and 25% in Hecla common stock issued under the 2010 Stock Incentive
Plan.
The following chart shows the number of
performance units awarded in 2012 to each NEO, the unit value achieved, the
total amount of the award (number of units x $167.75 = cash received), and the
amount of cash and number of shares received.
|
Name |
|
2012-2014 Performance
Units (#) |
|
Unit
Value ($) |
|
Total Amount
of Award1 ($) |
|
Cash
Received ($) |
|
Equity
Received2 (#) |
|
|
Phillips S. Baker, Jr. |
|
8,250 |
|
167.75 |
|
|
1,383,938 |
|
|
|
1,037,953 |
|
|
|
104,527 |
|
|
|
James A. Sabala |
|
3,200 |
|
167.75 |
|
|
536,800 |
|
|
|
402,600 |
|
|
|
40,544 |
|
|
|
Lawrence P. Radford |
|
2,500 |
|
167.75 |
|
|
419,375 |
|
|
|
314,531 |
|
|
|
31,675 |
|
|
|
Dr.
Dean W.A. McDonald |
|
2,500 |
|
167.75 |
|
|
419,375 |
|
|
|
314,531 |
|
|
|
31,675 |
|
|
|
David C. Sienko |
|
1,900 |
|
167.75 |
|
|
318,725 |
|
|
|
239,044 |
|
|
|
24,073 |
|
|
|
Don
Poirier |
|
2,000 |
|
167.75 |
|
|
335,500 |
|
|
|
251,625 |
|
|
|
25,340 |
|
|
1. |
The amount reported in this
column was paid in cash and equity to the NEO and is also reported in the
Summary Compensation Table on page 67 under Non-Equity Incentive Plan
Compensation. |
2. |
The equity portion of the
2012-2014 LTIP award was determined by subtracting the cash portion from
the total award to determine the equity value, then dividing that by the
closing stock price of the Companys common stock on the NYSE on March 5,
2015 ($3.31). |
Restricted Stock
Units. Restricted stock units (RSUs) are
granted to the NEOs under the Key Employee Deferred Compensation Plan and/or the
2010 Stock Incentive Plan. RSUs are used to retain our NEOs and align their
interests with the long-term interests of our shareholders. The committee
awarded each NEO RSUs in June 2014. The RSUs vest in three equal amounts with
vesting dates of June 25, 2015, June 25, 2016, and June 25, 2017. See Grants of
Plan-Based Awards for 2014 on page
69.
Prior to the grants made in 2014, all
outstanding and unvested RSU awards granted to employees were credited with
dividend equivalents on unvested RSUs to maintain the economic alignment between
the value of an RSU and the value of a share of Company common stock. Upon
payment of a dividend by the Company to its shareholders, an employee with an
outstanding RSU award was credited with a dollar amount equal to the dividend
that would have been paid if the shares subject to that award were vested shares
of common stock rather than unvested RSUs. These dividend equivalents were
paid to an employee only if and when the underlying RSUs vested. See footnotes
1, 2, 3 and 4 to the Option Exercises and Stock Vested for 2014 on
page 71.
In 2014, we granted RSUs to approximately
90 employees, including all NEOs
under the 2010 Stock Incentive Plan.
In December 2014, the committee amended
the 2010 Stock Incentive Plan and Key Employee Deferred Compensation Plan so
that any RSUs vesting after 2014 will no longer be credited with dividend
equivalents.
Performance-based
Shares. In June 2014, the committee and the
independent Board members granted 151,515 performance-based shares to our CEO,
with a grant date value of $500,000, comprising one-half of his total equity
awards in 2014. The value of these performance-based shares will be based on the
TSR of our common stock for the three-year period from January 1, 2014 through
December 31, 2016, based on the following percentile rank within a group of peer
companies:
|
Company TSR Rank Among
Peers |
|
TSR
Performance Multiplier |
|
|
50th percentile |
|
Threshold award at 50% of target |
|
|
60th
percentile |
|
Target award at grant value |
|
|
100th percentile |
|
Maximum award at 200% of target |
|
If Heclas performance is below the 50th percentile, the
award is zero. If Heclas performance is between the
50th and 100th percentile, the award is prorated. For
any award, the number of shares issued in 2017 at the
conclusion of the three-year performance period, will
be based on the grant date share price (June 25, 2014)
of $3.30.
Heclas TSR performance versus that of our
peer group will be based on the average share price over the last sixty (60)
calendar days prior to January 1, 2014, as the base price and average share
price the last sixty (60) calendar days of the three-year performance period to
determine relative share value performance and ranking among peers.
58
Table of Contents
|
Compensation Discussion and
Analysis |
|
|
For 2014, the industry peer group used for
purposes of the TSR performance-based award is the same as the one used by the
committee in determining executive compensation as described on
page 48.
On June 25, 2012, the committee and
independent members of the Board of Directors granted 107,759 performance-based
shares of Heclas common stock, which had a target value of $500,000 with the
potential of up to 200% of this target value
(subject to specific performance terms and conditions established for these
shares) to our CEO under the Key Employee Deferred Compensation Plan. These
performance-based shares were awarded based on the TSR of Hecla common stock for
the three-year period from January 1, 2012 through December 31, 2014, using the
following percentile rank within peer group companies:
● |
100th percentile rank = maximum
award at 200% of target |
● |
50th percentile rank = target award
at grant value |
● |
25th percentile rank = threshold
award at 50% of target |
To determine the relative share
performance, Heclas TSR performance versus that of peer group companies was
based on the average share price over the last sixty (60) calendar days prior to
January 1, 2012, as the base price and average share price the last sixty (60)
calendar days of the three-year performance period.
The following table shows the calculation
of the performance based-share results at the end of the three-year performance
period on December 31, 2014. Heclas TSR ranked 5th among the 12
peers based on TSR from 2012 through 2014, including dividends paid during that
period. Ranking 5th places Hecla at 63.6% among the peer companies,
which equates to an award value of $636,000, or 137,069 shares at the $4.64
closing price of Heclas common stock on June 25, 2012.
TOTAL SHAREHOLDER RETURN
January 1, 2012 through December 31, 2014 |
|
Peer Name |
|
Average Stock Price over
60-day period leading up to 1/1/2012 ($) |
|
Average Stock Price over
60-day period leading up to 12/31/14 ($) |
|
Dividends Paid (1/1/12
thru 12/31/14) ($) |
|
TSR
thru 12/31/14 (%) |
|
Rank (#) |
|
Payout ($) |
|
Stillwater Mining |
|
|
10.93 |
|
|
|
13.63 |
|
|
|
|
|
|
|
24.70 |
|
|
|
1 |
|
|
|
1,000,000 |
|
|
Alamos Gold |
|
|
16.29 |
|
|
|
7.87 |
|
|
|
0.62 |
|
|
|
-51.69 |
|
|
|
2 |
|
|
|
909,000 |
|
|
New Gold |
|
|
8.72 |
|
|
|
4.14 |
|
|
|
|
|
|
|
-52.52 |
|
|
|
3 |
|
|
|
818,000 |
|
|
Pan
American Silver |
|
|
24.56 |
|
|
|
10.865 |
|
|
|
1.175 |
|
|
|
-55.76 |
|
|
|
4 |
|
|
|
727,000 |
|
|
Hecla |
|
|
5.97 |
|
|
|
2.61 |
|
|
|
0.10 |
|
|
|
-56.28 |
|
|
|
5 |
|
|
|
636,000 |
|
|
Eldorado Gold |
|
|
16.62 |
|
|
|
6.49 |
|
|
|
0.29 |
|
|
|
-60.95 |
|
|
|
6 |
|
|
|
545,000 |
|
|
TARGET PAYOUT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,000 |
|
|
AuRico Gold |
|
|
9.29 |
|
|
|
3.59 |
|
|
|
0.14 |
|
|
|
-61.36 |
|
|
|
7 |
|
|
|
455,000 |
|
|
Centerra Gold |
|
|
19.92 |
|
|
|
5.24 |
|
|
|
0.48 |
|
|
|
-73.69 |
|
|
|
8 |
|
|
|
364,000 |
|
|
Coeur Mining |
|
|
27.01 |
|
|
|
4.39 |
|
|
|
|
|
|
|
-83.75 |
|
|
|
9 |
|
|
|
273,000 |
|
|
THRESHOLD PAYOUT |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
250,000 |
|
|
IAMGOLD |
|
|
19.01 |
|
|
|
2.77 |
|
|
|
0.50 |
|
|
|
-85.43 |
|
|
|
10 |
|
|
|
0 |
|
|
Golden Star Resources |
|
|
1.92 |
|
|
|
0.26 |
|
|
|
|
|
|
|
-86.46 |
|
|
|
11 |
|
|
|
0 |
|
|
Allied Nevada Gold |
|
|
33.80 |
|
|
|
1.21 |
|
|
|
|
|
|
|
-96.42 |
|
|
|
12 |
|
|
|
0 |
|
Stock Options. The ability to grant stock options under the 1995 Stock
Incentive Plan expired in May 2010. All outstanding stock options granted under
that plan are still exercisable until their expiration date (May 5, 2015). In
June 2010, our shareholders approved the 2010 Stock Incentive Plan. Any stock
options granted under this plan will be issued with an exercise price based on
the fair market value (the closing sales price of our common stock on the NYSE
on the date of grant).
In the past four years, we have not issued
any stock options to our NEOs (or any other employee). Before that time, we
granted stock options to key employees during the second quarter of the calendar
year and occasional grants to new employees upon hire.
Continues on next page ► |
|
|
|
Hecla Mining Company Notice of 2015 Annual Meeting
and Proxy Statement |
59 |
Table of Contents
Future
Compensation Actions
AIP. In March 2015, the
committee approved the 2015 AIP goals. The AIP factors were divided into the
following components, which may be modified by the committee from time to time,
including with respect to the relative weights:
● |
quantitative corporate performance
factors comprising 50% of the targeted award; |
● |
qualitative/other goals, normally
comprising 25% of the targeted award; and |
● |
a discretionary factor as determined
by the committee, normally comprising 25% of the targeted
award. |
While each component can achieve two and a
half times the target (250%), the maximum total payout is limited to two times
the target award level (200%).
For the 2015 AIP, the quantitative
corporate performance factors are divided proportionally into three factors:
adjusted EBITDA (20%), production (20%) and cash (10%).
The adjusted EBITDA target is $155
million. Maximum payout is achieved if adjusted EBITDA is $170 million, which is
$15 million more than target or about 10% improvement in adjusted EBITDA. There
is no payout if adjusted EBITDA is less than $130 million. Further, this
component of the AIP will not assume fixed metals prices. For AIP purposes,
adjusted EBITDA is defined as our earnings before interest, taxes,
depreciation, and amortization, with additional adjustments for items which we
believe are not indicative of the Companys ongoing operations.
ADJUSTED EBITDA GOAL
METRICS |
2015 Adjusted EBITDA
Result |
|
% Performance
Value |
$170mm |
Maximum |
50% |
$165mm |
|
40% |
$155mm |
Target |
20% |
$130mm |
Minimum |
10% |
<$130mm |
|
0% |
The production factor converts gold, lead
and zinc to silver equivalent at a ratio of 71 oz. silver to 1 oz. gold, 19.2
lb. lead to 1 oz. silver, and 17.25 lb. zinc to 1 oz. silver. Our production
target requires that we achieve 35 million silver equivalent ounces. Maximum
payout is attained if production achieves 37 million ounces. The minimum payout
is 32 million ounces. Target requires a 2% increase over 2014 silver equivalent
production, while the maximum payout requires a 7% increase.
PRODUCTION GOAL
METRICS 2015 Production in
Silver Equivalent Ounces |
2015 Production
Result |
|
%
Performance Value |
37.0mm |
Maximum |
50% |
36.0mm |
|
40% |
35.0mm |
Target |
20% |
32.0mm |
Minimum |
10% |
<32.0mm |
|
0% |
The cash portion target is $175 million in
cash on hand at December 31, 2015, adjusted for acquisitions at year-end.
Maximum payout is achieved if cash position at year-end is at or above $200
million, which is the cash position at the beginning of 2015. The threshold
payout level is $160 million, below which no payout is earned.
CASH GOAL
METRICS |
2015 Cash
Result |
|
% Performance
Value |
$200mm |
Maximum |
25% |
$190mm |
|
20% |
$175mm |
Target |
10% |
$160mm |
Minimum |
5% |
<$160mm |
|
0% |
The qualitative/other goals are
recommended by management, approved by the committee, and cover the areas of
safety and health, operations, financial and cost controls, development
projects, exploration, growth, legal, investors, industry visibility, human
capital development and government and community affairs.
LTIP. In an effort to be
more transparent in our executive compensation program, we provide the current
three-year LTIPs that are outstanding.
2013-2015 LTIP
In February 2013, the committee approved
the 2013-2015 LTIP. The 2013-2015 LTIP has three major changes from the
completed 2012-2014 LTIP (see page 56 for a description of the 2012-2014
Long-term Incentive Plan):
● |
Silver reserve growth, instead of
silver equivalent reserve and resource growth; |
● |
Production growth, instead of
silver production growth; and |
● |
A new metric for the #4 Shaft
completion was added, bringing the total performance targets to five, but
keeping the total maximum potential payout of $300 per
unit. |
60
Table of Contents
|
Compensation Discussion and
Analysis |
|
|
2013-2015 Performance Unit Valuation
Silver Reserve
Growth |
Ounce
Target (millions) |
Additional
Reserve (millions) |
Unit
Value |
250 |
100 |
$ |
100.00 |
|
200 |
50 |
$ |
50.00 |
|
180 |
30 |
$ |
25.00 |
|
160 |
10 |
$ |
5.00 |
|
Production
Growth |
Target (in mm
ozs.) |
Average Annual
Target |
Unit
Value |
65.1 |
21.7 |
$ |
50.00 |
|
56.1 |
18.7 |
$ |
40.00 |
|
54.1 |
18.0 |
$ |
25.00 |
|
51.6 |
17.2 |
$ |
10.00 |
|
Cash
Flow |
% of
Target |
Unit
Value |
115% |
$ |
50.00 |
|
110% |
$ |
42.50 |
|
105% |
$ |
32.50 |
|
100% |
$ |
25.00 |
|
95% |
$ |
22.50 |
|
90% |
$ |
20.00 |
|
85% |
$ |
17.50 |
|
80% |
$ |
15.00 |
|
75% |
$ |
12.50 |
|
70% |
$ |
10.00 |
|
65% |
$ |
7.50 |
|
60% |
$ |
0.00 |
|
#4 Shaft
Completion |
100% Completion
Date |
Unit
Value |
6/30/15 |
$50.00 |
12/31/15 |
$25.00 |
2/15/16 |
$10.00 |
Total Shareholder
Return |
%ile rank within
Peer Group Companies |
Unit
Value |
|
100% |
|
$ |
50.00 |
|
|
90% |
|
$ |
45.00 |
|
|
80% |
|
$ |
40.00 |
|
|
70% |
|
$ |
35.00 |
|
|
60% |
|
$ |
30.00 |
|
|
50% |
|
$ |
25.00 |
|
|
25% |
|
$ |
15.00 |
|
|
<25% |
|
$ |
0.00 |
|
2014-2016 LTIP
In February 2014, the committee approved
the 2014-2016 LTIP. The 2014-2016 LTIP has three major changes from the
2013-2015 LTIP:
● |
Silver equivalent reserve growth
includes gold converted to silver equivalent at 60 to 1, instead of silver
resource growth; |
● |
Because controlling costs
currently is a major focus of investors in precious metals companies, the
cash flow metric payout is achieved only if cash flow is at least 80% of
target compared to 65% of target for the 2013-2015 plan, and maximum
payout is 50% higher than the 2013-2015 plan if 115% of target is
realized; and |
● |
With relative TSR, a minimum
payout is only achieved if share performance is as good as or better than
50% of our peers. The target payout of $25 requires performance at 60% of
our peers, compared to 50% in the 2013-2015 plan, and having the best
performance pays four times target ($100) compared to two times target
($50) in the 2013-2015 plan. |
Except as noted above, the 2014-2016 LTIP
includes the same components as the 2013-2015 LTIP, and increases the maximum
potential payout from $300 to $375 per unit.
Continues on next page ► |
|
|
|
Hecla Mining Company Notice of 2015 Annual Meeting
and Proxy Statement |
61 |
Table of Contents
2014-2016 Performance Unit
Valuation
Silver Equivalent Reserve Growth |
Ounce
Target (millions) |
Additional
Reserve (millions) (replacement in situ) |
Unit
Value |
400 |
|
103 (191) |
|
|
$ |
100.00 |
|
337 |
|
40 (128) |
|
|
$ |
50.00 |
|
327 |
|
30 (118) |
|
|
$ |
25.00 |
|
307 |
|
10 (98) |
|
|
$ |
5.00 |
|
Cash
Flow |
% of
Target |
Unit
Value |
115% |
$75.00 |
110% |
$50.00 |
105% |
$35.00 |
100% |
$25.00 |
95% |
$22.50 |
90% |
$20.00 |
85% |
$17.50 |
80% |
$15.00 |
#4 Shaft
Completion |
100% Completion
Date |
Unit
Value |
12/31/15 |
$50.00 |
5/1/16 |
$25.00 |
After 8/1/16 |
$ 0.00 |
Silver
Equivalent Production Growth |
Target (in mm
ozs.) |
Average Annual
Target |
Performance Unit
Value |
75.0 |
25.0 |
|
$ |
50.00 |
|
72.0 |
24.0 |
|
$ |
40.00 |
|
70.5 |
23.5 |
|
$ |
25.00 |
|
68.0 |
22.6 |
|
$ |
10.00 |
|
Total Shareholder Return |
%ile rank within Peer
Group Companies |
Unit
Value |
100% |
|
$ |
100.00 |
|
90% |
|
$ |
75.00 |
|
80% |
|
$ |
50.00 |
|
70% |
|
$ |
35.00 |
|
60% |
|
$ |
25.00 |
|
50% |
|
$ |
15.00 |
|
<50% |
|
$ |
0.00 |
|
2015-2017 LTIP
In March 2015, the committee approved the
2015-2017 LTIP. The 2015-2017 LTIP has the same factors as the 2014-2016 LTIP,
with the exception of the #4 Shaft completion metric, which is removed as the
project nears completion. The only other factor that is different from the
2014-2016 LTIP is as follows:
● |
Silver equivalent reserve and
resource growth includes gold converted to silver equivalent at 71 to
1. |
Except as noted above, the 2015-2017 LTIP
includes the same components as the 2014-2016 LTIP, with a maximum potential
payout of $375 per unit.
2015-2017 Performance Unit
Valuation
Silver Equivalent
(includes Gold) Reserve Growth |
Ounce
Target (millions) |
Additional
Reserve (millions) (replacement in situ) |
Unit
Value |
420 |
|
100 (175) |
|
|
$ |
100.00 |
|
360 |
|
40 (115) |
|
|
$ |
50.00 |
|
350 |
|
30 (105) |
|
|
$ |
25.00 |
|
320 |
|
0 (75) |
|
|
$ |
5.00 |
|
Cash
Flow |
% of
Target |
Unit
Value |
115% |
|
$ |
100.00 |
|
110% |
|
$ |
50.00 |
|
105% |
|
$ |
35.00 |
|
100% |
|
$ |
25.00 |
|
95% |
|
$ |
22.50 |
|
90% |
|
$ |
20.00 |
|
85% |
|
$ |
17.50 |
|
80% |
|
$ |
15.00 |
|
Silver Equivalent (includes Gold) Production
Growth |
Target (in mm
ozs.) |
Average Annual
Target |
Performance Unit Value |
82.5 |
27.5 |
|
$ |
75.00 |
|
78.5 |
26.2 |
|
$ |
50.00 |
|
77.0 |
25.7 |
|
$ |
25.00 |
|
74.5 |
24.8 |
|
$ |
10.00 |
|
Total Shareholder Return |
%ile rank within Peer
Group Companies |
Unit
Value |
100% |
|
$ |
100.00 |
|
90% |
|
$ |
75.00 |
|
80% |
|
$ |
50.00 |
|
70% |
|
$ |
35.00 |
|
60% |
|
$ |
25.00 |
|
50% |
|
$ |
15.00 |
|
<50% |
|
$ |
0.00 |
|
62
Table of Contents
|
Compensation Discussion and
Analysis |
|
|
Guidelines and Timing of Equity
Awards. We have no program, plan or practice
to time the grant of stock-based awards relative to the release of material
non-public information or other corporate events. All equity grants to executive
officers are approved by the committee at regularly scheduled meetings or, in
limited cases involving key recruits or promotions, by a special meeting or
unanimous written consent. The grant date is the meeting date or a fixed, future
date specified at the time of the grant. Under the terms of our 2010 Stock
Incentive Plan, the fair market value is the closing stock price of our common
stock on the NYSE on the date of grant. In addition, the committee typically
makes equity grants to NEOs in the first half of the year.
Stock Ownership Policy. We believe that it is important to encourage our executive
officers to hold a material amount of our common stock in order to link their
long-term economic interest directly to that of our shareholders.
To achieve this goal, in June 2012, the
committee developed stock ownership guidelines for the NEOs. The stock ownership
guideline established for the NEOs (except the President and CEO) is two times
annual base salary, which should be achieved within five years of the adoption
of the guidelines. The stock ownership guideline established for the President
and CEO is six times annual base salary, to be achieved within five years of
adoption of the guidelines.
The following table summarizes the NEOs
stock ownership guidelines and each NEOs status thereunder. As of December 31, 2014, all
NEOs met the guidelines based on the closing market price of our common stock on
the NYSE as of December 31, 2014 ($2.79). In our calculations, we include
shares directly held and unvested RSUs. We do not include unexercised stock
options or performance-based shares.
Executive Stock Ownership as of December 31,
2014
NEO |
|
Annual
Base Salary ($) |
|
X Annual
Base Salary |
|
Total Value of Shares to be
Held ($) |
|
Shares
Held Directly (#) |
|
Unvested RSUs (#) |
|
Total
Shares (#) |
|
Total Value of Shares Held by
NEO at 12/31/14 ($2.79) ($) |
|
Meets Guidelines
|
Baker |
|
605,000 |
|
6x |
|
|
3,630,000 |
|
|
|
1,441,467 |
|
|
|
301,201 |
|
|
|
1,742,668 |
|
|
|
4,862,044 |
|
|
Yes |
Sabala |
|
380,000 |
|
2x |
|
|
760,000 |
|
|
|
162,841 |
|
|
|
206,535 |
|
|
|
369,376 |
|
|
|
1,030,559 |
|
|
Yes |
Radford |
|
380,000 |
|
2x |
|
|
760,000 |
|
|
|
163,524 |
|
|
|
211,724 |
|
|
|
375,248 |
|
|
|
1,046,942 |
|
|
Yes |
McDonald |
|
275,000 |
|
2x |
|
|
550,000 |
|
|
|
200,182 |
|
|
|
180,290 |
|
|
|
380,472 |
|
|
|
1,061,517 |
|
|
Yes |
Sienko |
|
250,000 |
|
2x |
|
|
500,000 |
|
|
|
112,874 |
|
|
|
92,771 |
|
|
|
205,645 |
|
|
|
573,750 |
|
|
Yes |
Poirier |
|
226,000 |
|
2x |
|
|
452,000 |
|
|
|
161,025 |
|
|
|
119,977 |
|
|
|
281,002 |
|
|
|
783,996 |
|
|
Yes |
Nonqualified Deferred Compensation
Plan. We maintain the Key Employee Deferred
Compensation Plan (the KEDCP), a nonqualified deferred compensation plan,
under which participants may defer all or a portion of their annual base salary,
performance-based compensation awarded under our AIP and LTIP and
RSUs granted under the 2010 Stock Incentive Plan.Participants may elect to
have their deferred base salary and AIP or LTIP awards valued based on Hecla
common stock and credited to a stock account.Deferred RSUs are credited to a
stock account.The KEDCP provides for discretionary matching contributions on
base salary, AIP and LTIP amounts deferred to a stock account and discretionary
company contributions that are credited to a participants stock account.The
deferral features promote alignment of the interests of participants with those
of our shareholders. Investment accounts are credited monthly with an amount
based on the prime rate for corporate borrowers. Participants receive distributions from
their accounts only upon separation from service with us, a fixed date or
schedule selected by the participants, death, disability, an
unforeseeable emergency or a change in
control, as these events are defined under Section 409A of the Internal Revenue
Code.The amounts deferred are unfunded and unsecured obligations of Hecla,
receive no preferential standing, and are subject to the same risks as any of
our other general obligations.Additional details about the KEDCP are described
in the narrative accompanying the Nonqualified Deferred Compensation for 2014
table on page 72.
Benefits. We provide our employees with a benefits package that is designed to
attract and retain the talent needed to manage Hecla. As part of that, all U.S.
salaried employees, including the NEOs, are eligible to participate in the Hecla
Mining Company Qualified Retirement Plan (the Retirement Plan), the Capital
Accumulation Plan (a 401(k) plan, which includes matching contributions by Hecla
up to 6%), health, vision and dental coverage, various company-paid insurance
plans, and paid time off, including vacations and holidays. All Canadian
salaried employees, including
Continues on next page ► |
|
|
|
Hecla Mining Company Notice of 2015 Annual Meeting
and Proxy Statement |
63 |
Table of Contents
NEOs, are eligible to participate in a
similar benefits package.NEOs are eligible to receive certain additional
benefits, as described below.The committee intends for the type and value of
such benefits offered to be competitive with general market
practices.
Nonqualified Defined Benefit Plan.
Under the Retirement Plan, upon normal
retirement, each participant is eligible to receive a monthly benefit equal to a
certain percentage of final average annual earnings for each year of credited
service. Additional details about the Retirement Plan are in the narrative
accompanying the Pension Benefits table that is included in this Proxy
Statement on page 80. Under Heclas unfunded Supplemental Excess Retirement Plan, the
amount of any benefits not payable under the
Retirement Plan by reason of the
limitations imposed by the Internal Revenue Code and/or the Employee Retirement
Income Security Act, and the reduction of benefits, if any, due to a deferral of
salary made under our KEDCP, will be paid out of our general funds to any
employee who may be adversely affected.The Retirement Plan and Supplemental
Excess Retirement Plan define earnings for purposes of the plans to include
salary plus any other cash incentives.
Personal Benefits. We do not provide company-paid cars, country club
memberships, or other similar perquisites to our executives.The only material
personal benefit provided by Hecla is a relocation benefit, which is offered as
needed to meet specific recruitment needs.
At its February 2013 meeting, the
Compensation Committee adopted a clawback policy with respect to incentive
awards to executive officers.The policy provides that in the event of a
restatement of our financial results as a result of material non-compliance with
financial reporting requirements, the Board will review incentive compensation
that was paid to our current and former executive officers under the Companys
AIP and LTIP (or any successor plans) based solely on the achievement of
specific corporate financial goals (Incentive Award) during the period of the
restatement.If any Incentive Award would have been lower had it been calculated
based on the Companys restated financial
results, the Board will, as it deems appropriate, seek to recover from any
executive whose conduct is determined by the Board to be the cause or partial
cause of the restatement, any portion of an Incentive Award paid in excess of
what would have been paid based on the restated financial results.The policy
does not apply in any situation where a restatement is not the result of
material non-compliance with financial reporting requirements, such as any
restatement due to a change in applicable accounting rules, standards or
interpretations, a change in segment designations or the discontinuance of an
operation.
Our insider trading policy prohibits all
directors, executive officers (as defined under Section 16 of the Exchange Act)
and certain other employees designated as insiders from purchasing or selling
any Company securities three weeks before through two days after the public
release of any of our periodic results (including the filing of any
Form 10-Q or Form 10-K), or at any other
time during the year while in possession of material non-public information
about the Company.In addition, directors and officers are prohibited from
short-term trading, short sales, options trading, trading on margin, hedging or
pledging any securities of the Company.
Change in
Control Agreements
We have entered into a change in control
agreement (CIC Agreement) with each of our NEOs. Under the terms of our CIC
Agreements, the CEO and the other NEOs are entitled to payments and benefits
upon the occurrence of specified events, including termination of employment
(with or without cause) following a change in control of the Company. The
specific terms of these arrangements, as well as an estimate of the compensation
that would have been payable had they been triggered
as of fiscal year-end, are described in
detail in the section entitled Change in Control and Termination on
page 73.
The termination of employment provisions
of the CIC Agreements were entered into to address competitive concerns when the
NEOs were recruited to Hecla by providing these individuals with a fixed amount
of compensation that would offset the risk of leaving
64
Table of Contents
|
Compensation Discussion and
Analysis |
|
|
their prior employer or foregoing other
opportunities to join the Company. At the time of entering into these
arrangements, the committee considered the aggregate potential obligations of
the Company in the context of the desirability of hiring the individual and the
expected compensation upon joining Hecla.
In March 2015, the committee approved an
amendment to the CIC Agreement with each of our NEOs to eliminate the excise tax
gross-up provision and to include a provision for a Best Net After Tax
Payment, which reduces the amount received by the NEO upon a change in control
if the NEO would receive a greater after-tax benefit than he would receive if
full several benefits were paid, taking into account all applicable taxes
including any excise tax.
The committee believes that these CIC
Agreements are important for a number of reasons, including providing reasonable
compensation opportunities in the unique circumstances of a change in control
that are not provided by other elements of our compensation program. Further,
change in control benefits, if structured appropriately, serve to minimize the
distraction caused by a potential transaction and reduce the risk that key
executives will
leave Hecla before a transaction closes.
The committee also believes that these agreements motivate the executives to
make decisions that are in the best interests of our shareholders in the event
of a pending change in control. These agreements provide executives with the
necessary job stability and financial security during a change in control
transaction and the subsequent period of uncertainty to help them stay focused
on managing Hecla rather than on their own personal employment situation. The
committee believes that all of these objectives serve our shareholders
interests. The committee also believes that change in control provisions are an
essential component of the executive compensation program and are necessary to
attract and retain senior talent in the highly competitive talent market in
which we compete.
The change in control provisions were
developed by the Company and the committee based on market and industry
competitive practices. The Company and the committee periodically review the
benefits provided under the CIC Agreements to ensure that they serve our
interests in retaining our key executives, are consistent with market and
industry practice, and are reasonable.
Tax and
Accounting Considerations
Our compensation programs are affected by
each of the following:
Accounting for Stock-Based
Compensation. We also take into account
certain other requirements of GAAP in determining changes to policies and
practices for our stock-based compensation programs.
Section 162(m) of the Internal Revenue
Code. Section 162(m) of the Internal Revenue
Code of 1986, as amended (Code Section 162(m)) provides that compensation in
excess of $1 million paid to the CEO or to any other NEO (other than the chief
financial officer) of a public company will not be deductible for federal income
tax purposes unless such compensation is paid pursuant to one of the enumerated
exceptions set forth in Code Section 162(m).
Our primary objective in designing and
administering our compensation policies is to support and encourage the
achievement of our strategic goals and to enhance long-term shareholder value.
We also believe that it is important to preserve flexibility in administering
compensation programs. For these and other reasons, the committee has determined
that it will not necessarily seek to limit executive compensation to the amount
that will
be fully deductible under Code Section
162(m). Further, although we received shareholder approval for our 2010 Stock
Incentive Plan at our 2010 Annual Meeting, there is no assurance that such
approval satisfied or continues to satisfy the shareholder approval requirements
under Code Section 162(m) necessary for amounts awarded under that plan to be
fully deductible by Hecla. As a result of the foregoing, amounts awarded or paid
under any of our compensation programs, including salaries, annual incentive
awards, performance awards, stock options and RSUs, may not qualify as
performance-based compensation that is excluded from the limitation on
deductibility.
The committee will continue to monitor
developments and assess alternatives for preserving the deductibility of
compensation payments and benefits to the extent reasonably practicable, as
determined by the committee to be consistent with our compensation policies and
in the best interests of the Company and our shareholders.
In 2014, Mr. Baker, our President and
Chief Executive Officer, earned amounts subject to Section 162(m) in excess of
$1 million, therefore a portion of his total compensation is not deductible by
Hecla.
Continues on next page ► |
|
|
|
Hecla Mining Company Notice of 2015 Annual Meeting
and Proxy Statement |
65 |
Table of Contents
Section 409A of the Internal Revenue
Code. Section 409A imposes additional
significant taxes in the event that an executive officer or director receives
deferred compensation that does not satisfy the requirements
of Section 409A. We believe that we have
designed and operated our plans to appropriately comply with Section
409A.
|
Compensation Committee
Report |
The Compensation Committee has reviewed
and discussed the Compensation Discussion and Analysis with Heclas management
and its independent compensation consultant. Based on its review and
discussions, the committee recommended to the Board, and the Board has approved,
the Compensation Discussion and Analysis included in this Proxy Statement and
incorporated by reference in Heclas Annual Report on Form 10-K for the year
ended December 31, 2014.
Respectfully submitted
by
The Compensation Committee of
the
Board of Directors
George R. Nethercutt, Jr., Chairman
Ted
Crumley
Terry V. Rogers
Dr. Anthony P. Taylor
66
Table of Contents
Summary Compensation Table for
2014
The following compensation tables provide
information regarding the compensation of our CEO, CFO, and four other NEOs who
were the most highly compensated in the calendar year ended December 31, 2014
(NEOs).
|
Name and
Principal Position |
|
Year |
|
Salary1 ($) |
|
Bonus2 ($) |
|
Stock Awards3 ($) |
|
Option Awards3 ($) |
|
Non-Equity Incentive
Plan Compensation4 ($) |
|
Change
in Pension Value
and Non-Qualified Deferred Compensation Earnings5 ($) |
|
All
Other Compensation ($) |
|
Total ($) |
|
|
Phillips S. Baker, Jr. |
|
2014 |
|
605,000 |
|
|
|
|
1,438,288 |
8 |
|
0 |
|
|
2,303,538 |
|
|
|
164,099 |
|
|
|
15,600 |
6 |
|
4,526,525 |
|
|
President and Chief |
|
2013 |
|
575,208 |
|
|
|
|
1,073,874 |
|
|
0 |
|
|
1,497,375 |
|
|
|
692,922 |
|
|
|
15,300 |
|
|
3,854,679 |
|
|
Executive Officer |
|
2012 |
|
522,917 |
|
|
|
|
979,305 |
|
|
0 |
|
|
1,355,000 |
|
|
|
1,059,514 |
|
|
|
15,000 |
|
|
3,931,736 |
|
|
James A.
Sabala |
|
2014 |
|
366,458 |
|
|
|
|
887,623 |
|
|
0 |
|
|
954,800 |
|
|
|
279,690 |
|
|
|
15,600 |
6 |
|
2,504,171 |
|
|
Senior Vice
President |
|
2013 |
|
341,458 |
|
|
|
|
344,999 |
|
|
0 |
|
|
825,750 |
|
|
|
268,474 |
|
|
|
15,300 |
|
|
1,795,981 |
|
|
and CFO |
|
2012 |
|
313,750 |
|
|
|
|
327,000 |
|
|
0 |
|
|
552,050 |
|
|
|
254,701 |
|
|
|
15,000 |
|
|
1,462,501 |
|
|
Lawrence P. Radford |
|
2014 |
|
366,458 |
|
|
|
|
709,326 |
|
|
0 |
|
|
886,775 |
|
|
|
98,277 |
|
|
|
15,600 |
6 |
|
2,076,436 |
|
|
Senior Vice |
|
2013 |
|
341,458 |
|
|
|
|
300,000 |
|
|
0 |
|
|
589,950 |
|
|
|
91,197 |
|
|
|
15,300 |
|
|
1,337,905 |
|
|
President Operations |
|
2012 |
|
313,750 |
|
|
|
|
222,000 |
|
|
0 |
|
|
360,980 |
|
|
|
38,823 |
|
|
|
15,000 |
|
|
950,553 |
|
|
Dr. Dean W. A.
McDonald9 |
|
2014 |
|
275,000 |
|
|
|
|
562,276 |
|
|
0 |
|
|
721,875 |
|
|
|
214,384 |
|
|
|
15,600 |
7 |
|
1,789,135 |
|
|
Senior
Vice |
|
2013 |
|
279,443 |
|
|
|
|
300,000 |
|
|
0 |
|
|
455,400 |
|
|
|
183,417 |
|
|
|
16,210 |
|
|
1,234,470 |
|
|
President - Exploration |
|
2012 |
|
242,444 |
|
|
|
|
294,000 |
|
|
0 |
|
|
337,840 |
|
|
|
200,307 |
|
|
|
15,000 |
|
|
1,089,591 |
|
|
David C. Sienko |
|
2014 |
|
250,000 |
|
|
|
|
376,900 |
|
|
0 |
|
|
543,725 |
|
|
|
78,318 |
|
|
|
15,600 |
6 |
|
1,264,543 |
|
|
Vice President and |
|
2013 |
|
241,875 |
|
|
|
|
154,001 |
|
|
0 |
|
|
387,900 |
|
|
|
60,693 |
|
|
|
15,300 |
|
|
859,769 |
|
|
General Counsel |
|
2012 |
|
224,167 |
|
|
|
|
154,000 |
|
|
0 |
|
|
279,460 |
|
|
|
47,176 |
|
|
|
15,000 |
|
|
719,803 |
|
|
Don Poirier9 |
|
2014 |
|
226,000 |
|
|
|
|
412,820 |
|
|
0 |
|
|
459,800 |
|
|
|
165,348 |
|
|
|
15,600 |
7 |
|
1,279,568 |
|
|
Vice President
|
|
2013 |
|
233,080 |
|
|
|
|
199,999 |
|
|
0 |
|
|
370,620 |
|
|
|
130,940 |
|
|
|
16,210 |
|
|
950,849 |
|
|
Corporate Development |
|
2012 |
|
210,411 |
|
|
|
|
193,000 |
|
|
0 |
|
|
292,000 |
|
|
|
149,824 |
|
|
|
15,000 |
|
|
860,235 |
|
1. |
Salary amounts include both base
salary earned and paid in cash during the fiscal year listed. |
2. |
In accordance with SEC rules, the
Bonus column will only disclose discretionary cash bonus awards. In each
of 2012, 2013 and 2014, there were no discretionary cash bonuses awarded
to any NEO. |
3. |
The amounts shown in the Stock
Awards column and the Option Awards column represent the aggregate
grant date fair value computed in accordance with FASB ASC Topic 718. For
a description of the assumptions used in valuing the awards, please see
Note 9 to the Consolidated Financial Statements in the Companys Annual
Report on Form 10-K for the year ended December 31, 2014. Please see the
Grants of Plan-Based Awards for 2014 table on page 69 for more
information about the awards granted in 2014. |
Hecla Mining Company Notice
of 2015 Annual Meeting and Proxy Statement 67
Table of Contents
4. |
This column represents the cash
performance payments awarded and earned by the NEOs in the calendar year
2012 under our AIP and LTIP plan period 2010-2012. The 2013 AIP and
2011-2013 LTIP awards were paid 50% in cash and 50% in equity up to target
level payout, with any portion above target also paid in the form of RSUs
that vested in August 2014. The 2014 AIP and the 2012-2014 LTIP awards
were paid 75% in cash and 25% in Heclas common stock issued under the
2010 Stock Incentive Plan. The awards for each of the plan years are as
follows: |
|
|
Name |
|
Year |
|
AIP Award ($) |
|
LTIP
Plan Period |
|
LTIP Units (#) |
|
Unit Value ($) |
|
LTIP Award ($) |
|
Total AIP and
LTIP ($) |
|
Total AIP and
LTIP Paid in Cash ($) |
|
Total AIP and
LTIP Paid in Shares (#) |
|
|
|
|
2014 |
|
919,600 |
|
2012-2014 |
|
|
8,250 |
|
|
|
167.75 |
|
|
|
1,383,938 |
|
|
|
2,303,538 |
|
|
|
1,727,653 |
|
|
|
173,983 |
* |
|
|
Baker |
|
2013 |
|
544,500 |
|
2011-2013 |
|
|
8,250 |
|
|
|
115.50 |
|
|
|
952,875 |
|
|
|
1,497,375 |
|
|
|
684,750 |
|
|
|
237,610 |
|
|
|
|
|
2012 |
|
605,000 |
|
2010-2012 |
|
|
7,500 |
|
|
|
100.00 |
|
|
|
750,000 |
|
|
|
1,355,000 |
|
|
|
1,355,000 |
|
|
|
0 |
|
|
|
|
|
2014 |
|
418,000 |
|
2012-2014 |
|
|
3,200 |
|
|
|
167.75 |
|
|
|
536,800 |
|
|
|
954,800 |
|
|
|
716,100 |
|
|
|
72,115 |
* |
|
|
Sabala |
|
2013 |
|
479,250 |
|
2011-2013 |
|
|
3,000 |
|
|
|
115.50 |
|
|
|
346,500 |
|
|
|
825,750 |
|
|
|
283,125 |
|
|
|
158,662 |
|
|
|
|
|
2012 |
|
292,050 |
|
2010-2012 |
|
|
2,600 |
|
|
|
100.00 |
|
|
|
260,000 |
|
|
|
552,050 |
|
|
|
552,050 |
|
|
|
0 |
|
|
|
|
|
2014 |
|
467,400 |
|
2012-2014 |
|
|
2,500 |
|
|
|
167.75 |
|
|
|
419,375 |
|
|
|
886,775 |
|
|
|
665,081 |
|
|
|
66,977 |
* |
|
|
Radford |
|
2013 |
|
399,375 |
|
2011-2013 |
|
|
1,650 |
|
|
|
115.50 |
|
|
|
190,575 |
|
|
|
589,950 |
|
|
|
215,625 |
|
|
|
109,452 |
|
|
|
|
|
2012 |
|
269,280 |
|
2010-2012 |
|
|
917 |
|
|
|
100.00 |
|
|
|
91,700 |
|
|
|
360,980 |
|
|
|
360,980 |
|
|
|
0 |
|
|
|
|
|
2014 |
|
302,500 |
|
2012-2014 |
|
|
2,500 |
|
|
|
167.75 |
|
|
|
419,375 |
|
|
|
721,875 |
|
|
|
541,406 |
|
|
|
54,522 |
* |
|
|
McDonald |
|
2013 |
|
247,500 |
|
2011-2013 |
|
|
1,800 |
|
|
|
115.50 |
|
|
|
207,900 |
|
|
|
455,400 |
|
|
|
193,125 |
|
|
|
76,689 |
|
|
|
|
|
2012 |
|
177,840 |
|
2010-2012 |
|
|
1,600 |
|
|
|
100.00 |
|
|
|
160,000 |
|
|
|
337,840 |
|
|
|
337,840 |
|
|
|
0 |
|
|
|
|
|
2014 |
|
225,000 |
|
2012-2014 |
|
|
1,900 |
|
|
|
167.75 |
|
|
|
318,725 |
|
|
|
543,725 |
|
|
|
407,794 |
|
|
|
41,067 |
* |
|
|
Sienko |
|
2013 |
|
180,000 |
|
2011-2013 |
|
|
1,800 |
|
|
|
115.50 |
|
|
|
207,900 |
|
|
|
387,900 |
|
|
|
165,000 |
|
|
|
65,175 |
|
|
|
|
|
2012 |
|
149,460 |
|
2010-2012 |
|
|
1,300 |
|
|
|
100.00 |
|
|
|
130,000 |
|
|
|
279,460 |
|
|
|
279,460 |
|
|
|
0 |
|
|
|
|
|
2014 |
|
124,300 |
|
2012-2014 |
|
|
2,000 |
|
|
|
167.75 |
|
|
|
335,500 |
|
|
|
459,800 |
|
|
|
344,850 |
|
|
|
34,728 |
* |
|
|
Poirier |
|
2013 |
|
162,720 |
|
2011-2013 |
|
|
1,800 |
|
|
|
115.50 |
|
|
|
207,900 |
|
|
|
370,620 |
|
|
|
157,800 |
|
|
|
62,228 |
|
|
|
|
|
2012 |
|
132,000 |
|
2010-2012 |
|
|
1,600 |
|
|
|
100.00 |
|
|
|
160,000 |
|
|
|
292,000 |
|
|
|
292,000 |
|
|
|
0 |
|
|
* |
Shares were valued
based on the closing price of Heclas common stock on the NYSE on March 5,
2015 ($3.31). |
|
|
5. |
The amounts reported in this
column are changes between December 31, 2013 and December 31, 2014 in the
actuarial present value of the accumulated pension benefits. None of the
amounts reported in this column are above-market nonqualified deferred
compensation earnings. |
6. |
These amounts are Heclas
matching contributions made under Heclas Capital Accumulation Plan for
the NEOs. |
7. |
These amounts are for retirement
contributions made on behalf of Dr. McDonald and Mr. Poirier. Canadian
employees are excluded from participation in the Hecla Capital
Accumulation Plan. Dr. McDonald and Mr. Poirier are paid in Canadian
funds. The amounts reported are in U.S. dollars based on the applicable
exchange rates as reported in The Wall
Street Journal from
time-to-time. |
8. |
Includes: (i) restricted stock
units (151,515) granted to Mr. Baker on June 25, 2014; and (ii)
performance-based shares (151,515) awarded to Mr. Baker on June 25, 2014.
See Performance-based Shares on page 58 for a description of the
performance-based shares. |
9. |
Dr. McDonald and Mr. Poirier
receive their compensation in Canadian funds. The amounts reported for Dr.
McDonald and Mr. Poirier are in U.S. dollars based on the applicable
exchange rates as reported in The Wall
Street Journal from time-to-time during
this time period. |
68
Table of Contents
The following table shows all plan-based
awards granted to the NEOs during 2014.
Grants of Plan-Based Awards for
2014
|
|
|
Grant Date |
|
Long-Term Performance Plan
Units (#) |
|
Estimated Future Payouts Under Non-Equity
Incentive Plan Awards |
|
Estimated Future Payouts Under Equity Incentive Plan
Awards4 |
|
Other Stock Awards: Number of Shares of Stock or
Units (#) |
|
Closing Market Price on Date
of Grant ($) |
|
Grant Date Fair Value
of Stock and Option Awards1 ($) |
|
|
Name |
|
|
|
Threshold ($) |
|
Target ($) |
|
Maximum ($) |
|
Threshold ($) |
|
Target ($) |
|
Maximum ($) |
|
|
|
|
|
Phillips S. Baker, Jr. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock2 |
|
3/3/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
237,610 |
|
3.42 |
|
812,626 |
|
|
Restricted Stock3 |
|
6/25/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
151,515 |
|
3.30 |
|
500,000 |
|
|
Performance Shares4 |
|
6/25/14 |
|
|
|
|
|
|
|
|
|
75,758 |
|
151,515 |
|
303,030 |
|
|
|
3.30 |
|
125,662 |
|
|
LTIP6 |
|
|
|
9,500 |
|
0 |
|
1,187,500 |
|
3,562,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP7 |
|
|
|
|
|
0 |
|
605,000 |
|
1,210,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James A.
Sabala |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock2 |
|
3/3/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
158,662 |
|
3.42 |
|
542,624 |
|
|
Restricted Stock5 |
|
6/25/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
104,545 |
|
3.30 |
|
344,999 |
|
|
LTIP6 |
|
|
|
3,400 |
|
0 |
|
425,000 |
|
1,275,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP7 |
|
|
|
|
|
0 |
|
304,000 |
|
608,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lawrence P. Radford |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock2 |
|
3/3/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
109,452 |
|
3.42 |
|
374,326 |
|
|
Restricted Stock5 |
|
6/25/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101,515 |
|
3.30 |
|
335,000 |
|
|
LTIP6 |
|
|
|
3,400 |
|
0 |
|
425,000 |
|
1,275,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP7 |
|
|
|
|
|
0 |
|
304,000 |
|
608,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dr. Dean W.A.
McDonald |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock2 |
|
3/3/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
76,689 |
|
3.42 |
|
262,276 |
|
|
Restricted Stock5 |
|
6/25/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
90,909 |
|
3.30 |
|
300,000 |
|
|
LTIP6 |
|
|
|
2,600 |
|
0 |
|
325,000 |
|
975,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP7 |
|
|
|
|
|
0 |
|
300,000 |
|
600,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David C. Sienko |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock2 |
|
3/3/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
65,175 |
|
3.42 |
|
222,899 |
|
|
Restricted Stock5 |
|
6/25/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
46,667 |
|
3.30 |
|
154,001 |
|
|
LTIP6 |
|
|
|
1,900 |
|
0 |
|
237,500 |
|
712,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP7 |
|
|
|
|
|
0 |
|
150,000 |
|
300,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Don
Poirier |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock2 |
|
3/3/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock5 |
|
6/25/14 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62,228 |
|
3.42 |
|
212,820 |
|
|
LTIP6 |
|
|
|
2,050 |
|
0 |
|
256,250 |
|
768,750 |
|
|
|
|
|
|
|
60,606 |
|
3.30 |
|
200,000 |
|
|
AIP7 |
|
|
|
|
|
0 |
|
135,600 |
|
271,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1. |
We account for
equity-based awards in accordance with the requirements of FASB ASC Topic
718, pursuant to which we recognize compensation expense of
performance-based share awards to an employee based on the fair value of
the award on the grant date. Compensation expense of restricted stock and
RSU awards to an employee is based on the stock price at grant date. The
compensation expense for restricted stock and RSUs is recognized over the
vesting period. |
2. |
Represents the number
of RSUs granted on March 3, 2014 to all NEOs under the terms of the 2010
Stock Incentive Plan. These RSUs were awarded as part of the 2013 AIP and
2011-2013 LTIP awards, of which 50% was paid in equity in the form of RSUs
that vested on August 26, 2014. |
3. |
Represents the number
of RSUs granted on June 25, 2014 to Mr. Baker under the terms of the
KEDCP. The restrictions lapse for one-third of the RSUs on June 25, 2015,
one-third on June 25, 2016, and one-third on June 25, 2017, at which time
the units are converted into shares of our common stock. |
4. |
Represents the number
of performance-based shares of Hecla common stock, having a target value
of $500,000 with the potential of up to 200% of this target value (subject
to specific performance terms and conditions established for these shares)
to Mr. Baker under the KEDCP. Award of these performance-based shares will
be on the basis of TSR of Hecla common stock for the three-year period
from January 1, 2014 through December 31, 2016, based on the following
percentile rank within peer group companies: |
● |
100th percentile rank = maximum award at 200% of target |
● |
60th percentile rank = target award at grant value |
● |
50th percentile rank = threshold award at 50% of target
|
● |
Heclas TSR performance versus that of peer
group companies will be based on average share price over the last 60
calendar days prior to January 1, 2014, as
the base price, and average share price the last 60 calendar days of the
three-year performance period, plus dividends, to determine relative share value performance and ranking among
peers |
5. |
Represents the number
of RSUs granted on June 25, 2014, to the NEOs under the terms of the 2010
Stock Incentive Plan to Messrs. Sabala, Radford, McDonald, Sienko and
Poirier. The restrictions lapse for one-third of the RSUs on June 25,
2015, one-third on June 25, 2016, and one-third on June 25, 2017, at which
time the units are converted into shares of our common stock. The grant
date fair value of the RSUs is the number of restricted shares multiplied
by the closing price of the Company common stock on the grant date of
$3.30. |
|
Continues on next page ► |
|
|
|
Hecla Mining Company Notice of 2015 Annual Meeting and Proxy Statement |
69 |
Table of Contents
6. |
Represents the potential value of
the payout for each NEO under the 2014-2016 LTIP period if the threshold,
target or maximum goals are satisfied for all performance measures. The
potential payouts are performance-driven and therefore completely at risk.
The business measurements and performance goals for determining the payout
are described in the Compensation Discussion and Analysis beginning on
page 44. Dollar amounts shown in this column are valued as follows:
Threshold, $0; Target, $125; and Maximum, $375. As reflected in the
Summary Compensation Table, awards were paid out in March 2015 for the
three-year period 2012-2014. Awards were paid 75% in cash and 25% in
Heclas common stock issued under the 2010 Stock Incentive
Plan. |
7. |
Represents the potential value of
the payout for each NEO under the 2014 AIP described on page 54. The total
payout to each NEO under the 2014 AIP is described in footnote 4 to the
Summary Compensation Table on page 68. Awards were paid 75% in cash and
25% in Heclas common stock issued under the 2010 Stock Incentive
Plan. |
The following table provides information
on the current holdings of stock option and stock awards by the NEOs. This table
includes unexercised vested stock option awards, unvested RSUs, and
performance-based shares. The stock option exercise prices shown were determined
by using the mean between the highest and lowest reported sales prices of our
common stock on the NYSE on the date of grant.
Outstanding Equity Awards at Calendar Year-End
for 2014
|
|
Option
Awards |
|
Stock
Awards |
Name |
|
Number
of Securities Underlying Unexercised Options (#) Exercisable |
|
Number
of Securities Underlying Unexercised Options (#) Unexercisable |
|
Option Exercise Price ($) |
|
Option Grant Date |
|
Option Expiration Date |
|
Number of Shares or
Units of Stock That Have Not Vested1 (#) |
|
Market Value of Shares or Units of Stock That Have
Not Vested as of 12/31/142 ($) |
|
Equity Incentive Plan Awards: Number of Unearned Shares,
Units or Other Rights that have
Not Vested (#) |
|
Equity Incentive Plan Awards: Market or Payout Value of
Unearned Shares, Units or Other Rights That Have
Not Vested3 ($) |
Phillips S. Baker,
Jr. |
|
137,615 |
|
|
|
|
5.52 |
|
|
5/5/10 |
|
5/5/15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
301,201 |
|
840,351 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
170,6484 |
|
476,108 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
151,5155 |
|
422,727 |
James A. Sabala |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
206,535 |
|
576,233 |
|
|
|
|
Lawrence P. Radford |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
211,724 |
|
590,710 |
|
|
|
|
Dr. Dean W. A. McDonald |
|
38,226 |
|
|
|
|
5.52 |
|
|
5/5/10 |
|
5/5/15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
180,290 |
|
503,009 |
|
|
|
|
David C.
Sienko |
|
15,000 |
|
|
|
|
4.735 |
|
|
1/29/10 |
|
1/29/15 |
|
|
|
|
|
|
|
|
|
|
|
30,581 |
|
|
|
|
5.52 |
|
|
5/5/10 |
|
5/5/15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
92,771 |
|
258,831 |
|
|
|
|
Don Poirier |
|
30,581 |
|
|
|
|
5.52 |
|
|
5/5/10 |
|
5/5/15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
119,977 |
|
334,736 |
|
|
|
|
1. |
The following table
shows the dates on which the restricted stock units in the outstanding
equity awards table vest and the corresponding number of shares, subject
to continued employment through the vest date. |
|
|
|
|
|
Number of Shares Vesting |
|
Vesting
Date |
|
Baker |
|
Sabala |
|
Radford |
|
McDonald |
|
Sienko |
|
Poirier |
|
|
6/25/15 |
|
35,920 |
|
23,492 |
|
15,949 |
|
21,121 |
|
|
11,064 |
|
13,865 |
|
|
6/21/15 |
|
56,883 |
|
39,249 |
|
34,130 |
|
34,130 |
|
|
17,520 |
|
22,753 |
|
|
6/25/15 |
|
50,505 |
|
34,849 |
|
33,839 |
|
30,303 |
|
|
15,555 |
|
20,202 |
|
|
6/21/16 |
|
56,883 |
|
39,249 |
|
34,130 |
|
34,130 |
|
|
17,520 |
|
22,753 |
|
|
6/25/16 |
|
50,505 |
|
34,848 |
|
33,838 |
|
30,303 |
|
|
15,556 |
|
20,202 |
|
|
8/5/16 |
|
|
|
|
|
26,000 |
|
|
|
|
|
|
|
|
|
6/25/17 |
|
50,505 |
|
34,848 |
|
33,838 |
|
30,303 |
|
|
15,556 |
|
20,202 |
|
|
Total |
|
301,201 |
|
206,535 |
|
211,724 |
|
180,290 |
|
|
92,771 |
|
119,977 |
|
2. |
The market value of
the RSUs is based on the closing market price of our common stock on the
NYSE as of December 31, 2014, which was $2.79. |
3. |
The market value of
the performance-based shares is based on the closing market price of our
common stock on the NYSE as of December 31, 2014, which was
$2.79. |
4. |
Award of
performance-based shares, the value of which will be determined on the
basis of TSR of Hecla common stock for the three-year period from January
1, 2013 through December 31, 2015. |
5. |
Award of
performance-based shares, the value of which will be determined on the
basis of TSR of Hecla common stock for the three-year period from January
1, 2014 through December 31, 2016. |
70
Table of Contents
The following table shows information
concerning the exercise of stock options and the number of stock awards that
vested during calendar year 2014 for each of the NEOs, and the value realized on
the exercise of options and vesting of stock awards during calendar year
2014.
Option Exercises and Stock Vested for
2014
|
|
Option Awards |
|
|
|
Stock Awards |
|
Name |
|
Number of Shares
Acquired on Exercise (#) |
|
Value Realized
on Exercise ($) |
|
|
|
Number of
Shares Acquired on Vesting (#) |
|
Value
Realized on Vesting ($) |
|
Phillips S. Baker,
Jr. |
|
|
|
|
|
|
|
56,4071 |
|
|
201,373 |
|
|
|
|
|
|
|
|
|
57,0542 |
|
|
188,278 |
|
|
|
|
|
|
|
|
|
36,4643 |
|
|
120,331 |
|
|
|
|
|
|
|
|
|
238,1604 |
|
|
771,638 |
|
|
James A. Sabala |
|
|
|
|
|
|
|
21,1521 |
|
|
75,513 |
|
|
|
|
|
|
|
|
|
39,3682 |
|
|
129,914 |
|
|
|
|
|
|
|
|
|
23,8473 |
|
|
78,695 |
|
|
|
|
|
|
|
|
|
159,0294 |
|
|
515,254 |
|
|
Lawrence P.
Radford |
|
|
|
|
|
|
|
26,7281 |
|
|
95,419 |
|
|
|
|
|
|
|
|
|
34,2322 |
|
|
112,966 |
|
|
|
|
|
|
|
|
|
16,1903 |
|
|
53,427 |
|
|
|
|
|
|
|
|
|
109,7054 |
|
|
355,444 |
|
|
Dr. Dean W.A. McDonald |
|
|
|
|
|
|
|
19,0371 |
|
|
67,962 |
|
|
|
|
|
|
|
|
|
34,2322 |
|
|
112,966 |
|
|
|
|
|
|
|
|
|
21,4413 |
|
|
70,755 |
|
|
|
|
|
|
|
|
|
76,8664 |
|
|
249,046 |
|
|
David C.
Sienko |
|
|
|
|
|
|
|
10,2951 |
|
|
36,753 |
|
|
|
|
|
|
|
|
|
17,5732 |
|
|
57,991 |
|
|
|
|
|
|
|
|
|
11,2313 |
|
|
37,062 |
|
|
|
|
|
|
|
|
|
65,3264 |
|
|
211,656 |
|
|
Don Poirier |
|
|
|
|
|
|
|
11,9871 |
|
|
42,794 |
|
|
|
|
|
|
|
|
|
22,8222 |
|
|
75,313 |
|
|
|
|
|
|
|
|
|
14,0753 |
|
|
46,448 |
|
|
|
|
|
|
|
|
|
62,3724 |
|
|
202,085 |
|
|
1. |
The NEOs were granted
these RSUs on June 24, 2011, under the terms of the 2010 Stock Incentive
Plan. On March 14, 2014, the restrictions lapsed and each NEO received his
units in the form of shares of our common stock. The shares vested at the
price of $3.57, which was the closing sales price of our common stock on
the NYSE on March 14, 2014. Under the terms of the 2010 Stock Incentive
Plan, the RSUs accrued dividends until they vested which were paid in the
form of shares. |
|
|
|
|
|
Name |
# of Shares Vested |
|
# of Dividend Equivalent
Shares Earned |
|
Baker |
54,870 |
|
1,537 |
|
Sabala |
20,576 |
|
576 |
|
Radford |
26,000 |
|
728 |
|
McDonald |
18,519 |
|
518 |
|
Sienko |
10,014 |
|
281 |
|
Poirier |
11,660 |
|
327 |
|
2. |
The NEOs were granted
these RSUs on June 21, 2013. On June 21, 2014, the restrictions lapsed and
each NEO received his units in the form of shares of our common stock. The
shares vested at the price of $3.30, which was the closing sales price of
our common stock on the NYSE on June 21, 2014. Under the terms of the 2010
Stock Incentive Plan, the RSUs accrued dividends until they vested which
were paid in the form of shares. |
|
|
|
|
|
Name |
# of Shares
Vested |
|
#
of Dividend Equivalent Shares Earned |
|
Baker |
56,882 |
|
172 |
|
Sabala |
39,249 |
|
119 |
|
Radford |
34,129 |
|
103 |
|
McDonald |
34,129 |
|
103 |
|
Sienko |
17,520 |
|
53 |
|
Poirier |
22,753 |
|
69 |
|
Continues on next page ► |
|
|
|
Hecla Mining Company Notice of 2015 Annual Meeting and Proxy Statement |
71 |
Table of Contents
3. |
The NEOs were granted
these RSUs on June 25, 2012. On June 25, 2014, the restrictions lapsed and
each NEO received his units in the form of shares of our common stock. The
shares vested at the price of $3.30, which was the closing sales price of
our common stock on the NYSE on June 25, 2014. Under the terms of the
KEDCP, the RSUs accrued dividends until they vested which were paid in the
form of shares. |
|
|
|
|
|
Name |
# of Shares
Vested |
|
#
of Dividend Equivalent Shares Earned |
|
Baker |
35,920 |
|
544 |
|
Sabala |
23,491 |
|
356 |
|
Radford |
15,948 |
|
242 |
|
McDonald |
21,121 |
|
320 |
|
Sienko |
11,063 |
|
168 |
|
Poirier |
13,865 |
|
210 |
|
4. |
The NEOs were granted
these RSUs on March 3, 2014, as part of their 2013 AIP and 2011-2013 LTIP
being paid 50% in equity. On August 26, 2014, the restrictions lapsed and
each NEO received his units in the form of shares of our common stock. The
shares vested at the price of $3.24, which was the closing sales price of
our common stock on the NYSE on August 26, 2014. Under the terms of the
2010 Stock Incentive Plan, the RSUs accrued dividends until they vested
and which were paid in the form of shares. |
|
|
|
|
|
Name |
# of Shares
Vested |
|
#
of Dividend Equivalent Shares Earned |
|
Baker |
237,610 |
|
550 |
|
Sabala |
158,662 |
|
367 |
|
Radford |
109,452 |
|
253 |
|
McDonald |
76,689 |
|
177 |
|
Sienko |
65,175 |
|
151 |
|
Poirier |
62,228 |
|
144 |
|
The table below provides information on
the nonqualified deferred compensation of the NEOs in 2014.
Nonqualified Deferred Compensation for
20141
Name |
|
Executive
Stock Contributions in Last FYE (#) |
|
Registrant Contributions
in Last FYE ($) |
|
Aggregate Earnings
in Last FYE ($) |
|
Aggregate Withdrawals/ Distributions ($) |
|
Aggregate Balance of
Stock at Last FYE (#) |
|
Phillips
S. Baker, Jr. |
|
|
|
|
|
|
|
|
|
|
|
James A. Sabala |
|
|
|
|
|
|
|
|
|
|
|
Lawrence
P. Radford |
|
|
|
|
|
|
|
|
|
|
|
Dr. Dean W. A.
McDonald2 |
|
|
|
|
|
|
|
|
|
|
|
David C.
Sienko |
|
|
|
|
|
|
|
|
|
|
|
Don Poirier2 |
|
|
|
|
|
|
|
|
|
|
|
1. |
No compensation was
deferred by NEOs in 2014. |
2. |
Canadian employees are
not eligible to participate in our deferred compensation
plan. |
Pursuant to the Companys KEDCP,
executives and key employees, including the NEOs, may defer all or a portion of
their base salary, awards earned under the LTIP and AIP, and any RSUs granted under
the 2010 Stock Incentive Plan. Deferral elections are made by the individual
generally in the prior year for amounts to be earned or granted in the following
year. Base salary, AIP and LTIP amounts deferred under the KEDCP are credited to
either an investment account or a stock account at the participants election.
Amounts credited to an investment account are valued in cash, credited with
deemed interest, and distributed with deemed interest in cash upon a
distributable event. RSUs awarded under the 2010 Stock Incentive Plan and
deferred by a participant are credited to a stock account. Amounts credited to
the
stock account of a participant are valued
based upon our common stock and are delivered to the participant in shares of
our common stock upon a distributable event.
The KEDCP also provides for corporate
matching amounts where the participants elect to have their base salary, AIP or
LTIP awards credited to a stock account. Matching contributions are also valued
based on our common stock and distributed upon a distributable event in stock.
The ability to defer compensation promotes alignment of the participants with
our common shareholders. It also provides for corporate discretionary
allocations of amounts valued based upon our common stock and credited to a
stock account.
72
Table of Contents
As of the end of the last day of each
calendar month, an additional amount is credited to the investment account of
the participant equal to the product of (i) the average daily balance of the
investment account for the month, multiplied by (ii) the annual prime rate for
corporate borrowers quoted at the beginning of the quarter by The Wall Street Journal (or
such other comparable interest rate as the Compensation Committee may designate
from time to time).
The amounts credited to the investment or
stock account of a participant under the KEDCP are distributable or payable
within 75 days of the earliest to occur of the following distribution events:
(i) the date on which the participant separates from service with us, with the
distribution delayed for six months for certain specified employees; (ii)
disability as defined in Section 409A of the Internal Revenue Code; (iii) the
participants death; (iv) a fixed date or fixed schedule selected by the
participant at the time the deferral election was made;
(v) an unforeseeable emergency, as
defined in Section 409A of the Internal Revenue Code; (vi) a change in control
of the Company, as defined in regulations issued by the Internal Revenue
Service; and (vii) termination of the KEDCP.
The KEDCP is at all times considered to be
entirely unfunded both for tax purposes and for purposes of Title I of the
Employee Retirement Income Security Act of 1974, as amended, and no provision
will at any time be made with respect to segregating our assets for the payment
of any amounts under the KEDCP. Any funds that may be invested for purposes of
fulfilling our promises under the KEDCP are for all purposes to be part of our
general assets and available to general creditors in the event of a bankruptcy
or insolvency of the Company. Nothing contained in the KEDCP will constitute a
guarantee by us that any funds or assets will be sufficient to pay any benefit
under the KEDCP.
Change in Control and
Termination
We have a change in control
agreement (CIC Agreement) with our NEOs (Messrs. Baker, Sabala, McDonald,
Poirier, Radford and Sienko).
The CIC Agreements were entered into on
February 21, 2014 upon the recommendation to the Board by the Compensation
Committee and were approved by the Board on the basis of such recommendation.
The CIC Agreements provide that each of the NEOs shall serve in such executive
position as the Board may direct. The CIC Agreements become effective only upon
a change in control of the Company (the date of such change in control is
referred to as the Effective Date). The term of employment under the CIC
Agreements is three years from the Effective Date (except for Mr. Radford who
has a term of two years from the Effective Date). Any CIC Agreements entered
into with newly hired executives will contain an employment term of two years
from the Effective Date. The CIC Agreements automatically extend for an additional year on
each anniversary date of the agreements unless we give notice of nonrenewal 60
days prior to the anniversary date. Under the CIC Agreements, a change in
control is, with certain limitations, deemed to occur if: (i) an individual or
entity (including a group under Section 13d-3 of the Exchange Act) becomes the
beneficial owner of 20% or more of either the then outstanding shares of common
stock of the Company or the combined voting power of the then outstanding voting
securities of the Company entitled to vote generally in the election of
directors; (ii) as the result of a tender offer,
merger, proxy fight or similar
transaction, the persons who were previously directors of the Company cease to
constitute a majority of the Board; (iii) consummation of the sale of all, or
substantially all, of the assets of the Company (with certain
limitations)occurs; or (iv) the approval of a plan of dissolution or
liquidation.
The CIC Agreements are intended to ensure,
among other things that, in the event of a change in control, each NEO will
continue to focus on adding shareholder value. We seek to accomplish this by
assuring that each NEO continues to receive payments and other benefits
equivalent to those he was receiving at the time of a change in control for the
duration of the employment term under of the CIC Agreement. The CIC Agreements
also provide that should an NEOs employment be terminated either (i) by the NEO
for good reason, or (ii) by the Company (other than for cause or disability)
after the Effective Date of the CIC Agreement, he would receive from us a
lump-sum defined amount generally equivalent to three times the aggregate of his
then annual base salary rate and his highest annual incentive prior to the
Effective Date. For Mr. Radford and any other CIC Agreements entered into after
February 21, 2014, the lump-sum defined amount is generally equivalent to two
times.
The NEOs would also be entitled to
lump-sum payments representing the difference in pension and supplemental
retirement benefits to which they would be entitled on
Continues on next page ► |
|
|
|
Hecla Mining Company Notice of 2015 Annual Meeting and Proxy Statement |
73
|
Table of Contents
(i) the date of actual termination, and
(ii) the end of the three-year (or two-year where applicable) employment period
under the CIC Agreements. We would also maintain such NEOs participation in all
benefit plans and programs (or provide equivalent benefits if such continued
participation was not possible under the terms of such plans and programs).
An NEO whose employment has terminated
would not be required to seek other employment in order to receive the defined
benefits.
In March 2015, the Compensation Committee
approved an amendment to each CIC Agreement
eliminating the excise tax gross-up provision
and adding a Best Net After Tax Payment, which reduces the amount received by
the NEO upon a change in control if the NEO would receive a greater after-tax
benefit than he would if full severance benefits were paid, taking into account
all applicable taxes including any excise tax. See Payments Made Upon a Change
in Control below.
The table starting on page 76 reflects the
amount of compensation to each of the NEOs in the event of termination of such
NEOs employment under the terms of the NEOs CIC Agreement. That table also
shows the amount of compensation payable to each NEO upon voluntary termination;
involuntary not for cause termination; for cause termination; termination
following a change in control; and in the event of disability or death of the
NEO. The amounts shown assume that such termination was effective as of December
31, 2014, and thus include amounts earned through such time, and are estimates
of the amounts which would be paid out to the NEOs upon their termination. The
actual amounts to be paid out can only be determined at the time of such NEOs
separation from Hecla.
Payments Made Upon
Termination. For voluntary and involuntary
not for cause terminations, NEOs may receive: (i) a prorated portion of
short-term performance compensation; (ii) any amounts due under matured
long-term performance compensation plans; (iii) one month of health and welfare
benefits; and (iv) any earned, but unused vacation. Neither of these
terminations would impact their vested retirement plans and the 401(k) match
would be deposited in their accounts.
Payments Made Upon
Retirement. The NEOs could receive a prorated
portion of any short-term performance compensation and a prorated portion of any
long-term compensation in effect at the time of their retirement. They would
also receive one month of health and welfare benefits and any earned but unused
vacation, and the 401(k) match would be deposited in their accounts. As of
December 31, 2014, Mr. Baker was the only NEO that qualified for early or
regular retirement.
Payments Made Upon Death or Disability.
Upon death or disability, the NEOs would
receive a prorated portion of any short-term performance compensation, as well
as a prorated portion of any long-term compensation plans in which the NEO was a
participant. In both cases, retirement would be reduced in accordance with the
terms of the plans and, in the case of death, the surviving spouse or other
beneficiary would receive the payments. They would also receive one month of
health and welfare benefits and any accrued, but unused vacation and the 401(k)
match would be deposited in their accounts.
Payments Made Upon a Change in Control.
If a change in control occurs as defined in
the NEOs CIC Agreements, they would be eligible for a prorated portion of any
short-term performance compensation and a prorated portion of any long-term
performance compensation as though they had been employed for an additional
three years. They would also receive three years of health and welfare benefits
and disability and life insurance premiums would be paid. In addition to any
earned, but unused vacation, they would be eligible for up to $20,000 in
outplacement assistance and the 401(k) match would be deposited in their
accounts. Payment would be as if they had been employed for an additional two
years for the CIC Agreement with Mr. Radford and any other CIC Agreements
entered into after February 21, 2014.
The CIC Agreements provide for specified
payments and other benefits if the NEOs employment is terminated either (i) by
the NEO for good reason, or (ii) by Hecla or its successor other than for cause,
death or disability, within the three years (two years for Mr. Radford)
following a change in control, or prior to a change in control if it can be
demonstrated that the termination was related to a potential change in control.
These payments and benefits include the following:
● |
all accrued
obligations; |
● |
a lump-sum payment equal to three
times the sum of the NEOs then annual base salary and the NEOs highest
annual and long-term incentive payment for the three years prior to the
change in control, with multiples of two years for the CIC Agreement with
Mr. Radford and any other CIC Agreement entered into after February 21,
2014; |
● |
a lump-sum payment equal to the
difference in the Retirement Plan and Supplemental Plan benefits to which
the NEO would be entitled on (i) the date of actual termination, and (ii)
three years later, with two years later for the CIC Agreement with Mr.
Radford and any other CIC Agreement entered into after February 21, 2014;
and |
● |
for Messrs. Baker, Sabala, McDonald,
Sienko and Poirier, the continued participation for three years in all of
Heclas benefits plans and programs to which
|
74
Table of Contents
|
the NEO would be entitled on the
date of the change in control (or provision of equivalent benefits if such
continued participation was not possible under the terms of such plans and
programs), or two years in the case of Mr. Radford and any other CIC
Agreement entered into after February 21,
2014. |
In addition, the CIC
Agreements in conjunction with our equity compensation plans provide for immediate
vesting of all stock options and restricted stock awards in the event of a
change in control and the NEO is terminated without cause or leaves for good
reason (i.e., a double trigger). In such a situation, the LTIP would also pay
out a prorated award based on target performance, regardless of actual
performance. However, this payment directly
offsets the cash severance payment by the
same amount. These plan provisions are intended to recognize the value of the
NEOs long-term contribution to Hecla and not affect management decisions
following termination.
In March 2015, the Compensation Committee
approved an amendment to each CIC Agreement eliminating the excise tax gross-up
provision and adding a Best Net After Tax Payment, which reduces the amount
received by the NEO upon a change in control if the NEO would receive a greater
after-tax benefit than he would receive if full severance benefits were paid,
taking into account all applicable taxes including any excise tax.
Continues on next page ► |
|
|
|
Hecla Mining Company Notice of 2015 Annual Meeting and Proxy Statement |
75 |
Table of Contents
Potential Payments Upon Termination or Change
in Control
|
Executive Benefits
and Payments Upon Termination |
|
Voluntary Termination on 12/31/14 ($) |
|
Involuntary Not For
Cause Termination on 12/31/14 ($) |
|
For
Cause Termination on 12/31/14 ($) |
|
Termination Following a Change
in Control on 12/31/14 ($) |
|
Disability on 12/31/14 ($) |
|
Death on 12/31/14 ($) |
|
|
Phillips S. Baker, Jr. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term Performance Compensation |
|
919,600 |
|
919,600 |
|
|
|
2,758,800 |
1 |
919,600 |
|
919,600 |
|
|
Stock Options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock |
|
|
|
|
|
|
|
840,351 |
|
|
|
|
|
|
Long-term Performance Compensation |
|
1,383,938 |
|
1,383,938 |
|
1,383,938 |
|
4,151,814 |
2 |
2,250,600 |
|
2,250,600 |
|
|
Benefits & Perquisites: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plans3 |
|
3,531,964 |
|
3,531,964 |
|
3,531,964 |
|
6,174,833 |
|
6,784,308 |
|
4,479,742 |
|
|
Deferred Compensation4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health and Welfare Benefits5 |
|
1,614 |
|
1,614 |
|
1,614 |
|
58,104 |
|
1,614 |
|
1,614 |
|
|
Disability Income6 |
|
|
|
|
|
|
|
|
|
959,750 |
|
|
|
|
Life Insurance Benefits7 |
|
|
|
|
|
|
|
11,103 |
|
|
|
325,000 |
|
|
Change in Control Payment8 |
|
|
|
|
|
|
|
1,815,000 |
|
|
|
|
|
|
Earned Vacation Pay9 |
|
46,536 |
|
46,536 |
|
46,536 |
|
46,536 |
|
46,536 |
|
46,536 |
|
|
Outplacement |
|
|
|
|
|
|
|
20,000 |
|
|
|
|
|
|
Total |
|
5,883,652 |
|
5,883,652 |
|
4,964,052 |
|
15,876,541 |
|
10,962,408 |
|
8,023,092 |
|
|
James A.
Sabala |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
Performance Compensation |
|
418,000 |
|
418,000 |
|
|
|
1,437,750 |
1 |
418,000 |
|
418,000 |
|
|
Stock
Options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock |
|
|
|
|
|
|
|
576,233 |
|
|
|
|
|
|
Long-term
Performance Compensation |
|
536,800 |
|
536,800 |
|
536,800 |
|
1,610,400 |
2 |
876,800 |
|
876,800 |
|
|
Benefits &
Perquisites: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement
Plans3 |
|
1,076,457 |
|
1,076,457 |
|
1,076,457 |
|
2,006,038 |
|
1,171,039 |
|
822,394 |
|
|
Deferred
Compensation4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health and
Welfare Benefits5 |
|
1,190 |
|
1,190 |
|
1,190 |
|
42,840 |
|
1,190 |
|
1,190 |
|
|
Disability
Income6 |
|
|
|
|
|
|
|
|
|
559,937 |
|
|
|
|
Life
Insurance Benefits7 |
|
|
|
|
|
|
|
11,103 |
|
|
|
325,000 |
|
|
Change in
Control Payment8 |
|
|
|
|
|
|
|
1,140,000 |
|
|
|
|
|
|
Earned
Vacation Pay9 |
|
21,922 |
|
21,922 |
|
21,922 |
|
21,922 |
|
21,922 |
|
21,922 |
|
|
Outplacement |
|
|
|
|
|
|
|
20,000 |
|
|
|
|
|
|
Total |
|
2,054,369 |
|
2,054,369 |
|
1,636,369 |
|
6,866,286 |
|
3,048,888 |
|
2,465,306 |
|
|
Lawrence P. Radford |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term Performance Compensation |
|
467,400 |
|
467,400 |
|
|
|
934,800 |
1 |
467,400 |
|
467,400 |
|
|
Stock Options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock |
|
|
|
|
|
|
|
590,710 |
|
|
|
|
|
|
Long-term Performance Compensation |
|
419,375 |
|
419,375 |
|
419,375 |
|
838,750 |
2 |
732,707 |
|
732,707 |
|
|
Benefits & Perquisites: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plans3 |
|
231,114 |
|
231,114 |
|
231,114 |
|
408,363 |
|
390,562 |
|
254,983 |
|
|
Deferred Compensation4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health and Welfare Benefits5 |
|
1,614 |
|
1,614 |
|
1,614 |
|
38,736 |
|
1,614 |
|
1,614 |
|
|
Disability Income6 |
|
|
|
|
|
|
|
|
|
1,018,159 |
|
|
|
|
Life Insurance Benefits7 |
|
|
|
|
|
|
|
7,402 |
|
|
|
325,000 |
|
|
Change in Control Payment8 |
|
|
|
|
|
|
|
760,000 |
|
|
|
|
|
|
Earned Vacation Pay9 |
|
21,922 |
|
21,922 |
|
21,922 |
|
21,922 |
|
21,922 |
|
21,922 |
|
|
Outplacement |
|
|
|
|
|
|
|
20,000 |
|
|
|
|
|
|
Total |
|
1,141,425 |
|
1,141,425 |
|
674,025 |
|
3,620,683 |
|
2,632,364 |
|
1,803,626 |
|
76
Table of Contents
|
Executive Benefits
and Payments Upon Termination |
|
Voluntary Termination on 12/31/14 ($) |
|
Involuntary Not For
Cause Termination on 12/31/14 ($) |
|
For
Cause Termination on 12/31/14 ($) |
|
Termination Following a Change
in Control on 12/31/14 ($) |
|
Disability on 12/31/14 ($) |
|
Death on 12/31/14 ($) |
|
|
Dr. Dean W.A.
McDonald |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
Performance Compensation |
|
302,500 |
|
302,500 |
|
|
|
907,500 |
1 |
302,500 |
|
302,500 |
|
|
Stock
Options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock |
|
|
|
|
|
|
|
503,099 |
|
|
|
|
|
|
Long-term
Performance Compensation |
|
419,375 |
|
419,375 |
|
419,375 |
|
1,258,125 |
2 |
679,375 |
|
679,375 |
|
|
Benefits &
Perquisites: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement
Plans3 |
|
879,528 |
|
879,528 |
|
879,528 |
|
1,468,151 |
|
1,115,670 |
|
763,248 |
|
|
Deferred
Compensation4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health and Welfare
Benefits5 |
|
244 |
|
244 |
|
244 |
|
8,784 |
|
244 |
|
244 |
|
|
Disability
Income6 |
|
|
|
|
|
|
|
|
|
468,102 |
|
|
|
|
Life Insurance
Benefits7 |
|
|
|
|
|
|
|
7,811 |
|
|
|
189,000 |
|
|
Change in Control
Payment8 |
|
|
|
|
|
|
|
825,000 |
|
|
|
|
|
|
Earned Vacation
Pay9 |
|
15,865 |
|
15,865 |
|
15,865 |
|
15,865 |
|
15,865 |
|
15,865 |
|
|
Outplacement |
|
|
|
|
|
|
|
20,000 |
|
|
|
|
|
|
Total |
|
1,617,512 |
|
1,617,512 |
|
1,315,012 |
|
5,014,335 |
|
2,581,756 |
|
1,950,232 |
|
|
David C. Sienko |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term Performance Compensation |
|
225,000 |
|
225,000 |
|
|
|
675,000 |
1 |
225,000 |
|
225,000 |
|
|
Stock Options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock |
|
|
|
|
|
|
|
258,831 |
|
|
|
|
|
|
Long-term Performance Compensation |
|
318,725 |
|
318,725 |
|
318,725 |
|
956,175 |
2 |
508,725 |
|
508,725 |
|
|
Benefits & Perquisites: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plans3 |
|
216,433 |
|
216,433 |
|
216,433 |
|
348,182 |
|
613,720 |
|
369,383 |
|
|
Deferred Compensation4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health and Welfare Benefits5 |
|
492 |
|
492 |
|
492 |
|
17,712 |
|
492 |
|
492 |
|
|
Disability Income6 |
|
|
|
|
|
|
|
|
|
1,329,856 |
|
|
|
|
Life Insurance Benefits7 |
|
|
|
|
|
|
|
9,531 |
|
|
|
251,000 |
|
|
Change in Control Payment8 |
|
|
|
|
|
|
|
750,000 |
|
|
|
|
|
|
Earned Vacation Pay9 |
|
14,423 |
|
14,423 |
|
14,423 |
|
14,423 |
|
14,423 |
|
14,423 |
|
|
Outplacement |
|
|
|
|
|
|
|
20,000 |
|
|
|
|
|
|
Total |
|
775,073 |
|
775,073 |
|
550,073 |
|
3,049,854 |
|
2,692,216 |
|
1,369,023 |
|
|
Don
Poirier |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
Performance Compensation |
|
124,300 |
|
124,300 |
|
|
|
488,160 |
1 |
124,300 |
|
124,300 |
|
|
Stock
Options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock |
|
|
|
|
|
|
|
334,736 |
|
|
|
|
|
|
Long-term
Performance Compensation |
|
335,500 |
|
335,500 |
|
335,500 |
|
1,006,500 |
2 |
540,500 |
|
540,500 |
|
|
Benefits &
Perquisites: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement
Plans3 |
|
627,530 |
|
627,530 |
|
627,530 |
|
1,036,687 |
|
921,430 |
|
615,533 |
|
|
Deferred
Compensation4 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health and Welfare
Benefits5 |
|
244 |
|
244 |
|
244 |
|
8,784 |
|
244 |
|
244 |
|
|
Disability
Income6 |
|
|
|
|
|
|
|
|
|
548,912 |
|
|
|
|
Life Insurance
Benefits7 |
|
|
|
|
|
|
|
8,663 |
|
|
|
226,000 |
|
|
Change in Control
Payment8 |
|
|
|
|
|
|
|
678,000 |
|
|
|
|
|
|
Earned Vacation
Pay9 |
|
13,038 |
|
13,038 |
|
13,038 |
|
13,038 |
|
13,038 |
|
13,038 |
|
|
Outplacement |
|
|
|
|
|
|
|
20,000 |
|
|
|
|
|
|
Total |
|
1,100,612 |
|
1,100,612 |
|
976,312 |
|
3,594,568 |
|
2,148,424 |
|
1,519,615 |
|
1. |
Represents three times
the highest annual incentive payment paid in the last three years for
Messrs. Baker, Sabala, McDonald, Sienko and Poirier. Represents two times
the highest annual incentive payment paid in the last three years for Mr.
Radford. |
2. |
Represents three times
the highest long-term incentive payment paid in the last three years for
Messrs. Baker, Sabala, McDonald, Sienko and Poirier. Represents two times
the highest long-term incentive payment paid in the last three years for
Mr. Radford. |
3. |
Reflects the estimated
lump-sum present value of qualified and nonqualified retirement plans to
which the NEO would be entitled. Mr. Baker is the only NEO that qualified
for early or regular retirement on December 31, 2014, under our retirement
plan. |
4. |
Reflects the lump-sum
present value held in the NEOs account under our KEDCP as of December 31,
2014. |
5. |
Reflects
the estimated lump-sum value of all future premiums, which will continue
to be paid by the Company on behalf of Messrs. Baker, Sabala, McDonald,
Sienko and Poirier under our health and welfare benefit plans for three
years upon change in control and for one month otherwise. Reflects the
estimated lump-sum value of all future premiums, which will continue to be
paid by the Company on behalf of Mr. Radford under our health and welfare
benefit plans for two years upon change in control and for one month
otherwise. |
6. |
Reflects
the estimated lump-sum present value of all future payments, which the NEO
would be entitled to receive under our disability program. |
7. |
Reflects
the estimated lump-sum value of the cost of coverage for life insurance
provided by us to the NEO; provided, however, that the amount reflected
under the heading Death reflects the estimated present value of the
proceeds payable to the NEOs beneficiaries upon his death. |
8. |
Represents three times annual base salary for Messrs. Baker,
Sabala, McDonald, Sienko and Poirier. Represents two times annual base
salary for Mr. Radford. |
9. |
Represents lump-sum payment of earned vacation time
accrued. |
Continues on next page ► |
|
|
|
Hecla Mining Company Notice of 2015 Annual Meeting and Proxy Statement |
77 |
Table of Contents
|
Equity Compensation Plan
Information |
As of December 31, 2014, the Company has
three equity incentive compensation plans that have been approved by the
shareholders under which shares of the Companys
common stock have been authorized for
issuance to directors, officers, employees, and consultants. All outstanding
awards relate to our Common Stock.
|
|
Number of Securities To Be
Issued Upon Exercise of Outstanding Options, Warrants and
Rights |
|
Weighted-Average Exercise
Price of Outstanding Options, Warrants and
Rights |
|
Number of
Securities Remaining Available For Future Issuance Under Equity
Compensation Plans |
Equity Compensation Plans Approved by Security
Holders: |
|
|
|
|
|
|
|
|
|
|
|
|
2010 Stock Incentive Plan |
|
|
|
|
|
|
N/A |
|
|
|
15,414,727 |
|
1995 Stock Incentive Plan1 |
|
|
259,342 |
|
|
|
5.47 |
|
|
|
|
|
Stock Plan for Nonemployee Directors |
|
|
|
|
|
|
N/A |
|
|
|
555,167 |
|
Key Employee Deferred Compensation Plan |
|
|
|
|
|
|
N/A |
|
|
|
676,992 |
|
Equity Compensation Plans Not Approved by Security
Holders |
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
259,342 |
|
|
|
5.47 |
|
|
|
16,646,886 |
|
1. |
The 1995 Stock Incentive Plan
expired on May 5, 2010. No additional stock options or restricted stock
can be granted under this plan. However all outstanding stock options and
restricted stock granted under this plan will continue to be governed by
the provisions of the plan. |
Retirement Plan
Our NEOs participate in the Hecla Mining
Company Qualified Retirement Plan (the Retirement Plan), which covers
substantially all of our employees, except for certain hourly employees who are
covered by separate plans. Contributions to the Retirement Plan, and the related
expense or income, are based on general actuarial calculations and, accordingly,
no portion of our contributions, and related expenses or income, is specifically
attributable to our officers. We also have an unfunded Supplemental Excess
Retirement Plan adopted in November 1985 (the SERP) under which the amount of
any benefits not payable under the Retirement Plan by reason of the limitations
imposed by the Internal Revenue Code and/or the Employee Retirement Income
Security Act, as amended (the Acts), and the loss, if any, due to a deferral
of salary made under our KEDCP and/or our 401(k) Plan will be paid out of our
general funds to any employee who may be adversely affected. Under the Acts, the
current maximum annual pension benefit payable by the Retirement Plan to any
employee
is $210,000, subject to specified
adjustments, and is calculated using earnings not in excess of $260,000. Upon
reaching the normal retirement age of 65, each participant is eligible to
receive annual retirement benefits in monthly installments for life equal to,
for each year of credited service, 1% of final average annual earnings (defined
as the highest average earnings of such employee for any 36 consecutive calendar
months during the final 120 calendar months of service) up to the applicable
covered compensation level (which level is based on the Social Security maximum
taxable wage base) and 1.75% of the difference, if any, between final average
annual earnings and the applicable covered compensation level. The Retirement
Plan and SERP define earnings for purposes of the plans to be a wage or salary
for services of employees inclusive of any bonus or special pay including gain-sharing programs, contract miners bonus pay and the equivalent, except that on
or after July 1, 2013, earnings are defined as base salary or wages for
personal services and elective deferrals plus
78
Table of
Contents
(i) elective deferrals not includable in
the gross income of the Employee under Code Sections 125, 132(f)(4), 402(e)(3),
402(h), 403(b) and 457, (ii) one-half (1/2) of any performance based or annual
incentive bonus, (iii) one-half (1/2) of any safety incentive award, (iv) paid
time off, other than pay while on disability leave, (v) any post-employment
payment for services performed during the course of employment that would have
been paid to the Employee prior to the severance from employment if the Employee
had continued in employment with an
Employer, and (vi) compensation for
overtime at the Employees regular rate of pay.
The following table shows estimated
aggregate annual benefits under our Retirement Plan and the SERP payable upon
retirement to a participant who retires in 2014 at age 65 having the years of
service and final average annual earnings as specified. The table assumes Social
Security covered compensation levels as in effect on January 1, 2014.
Estimated Annual Retirement
Benefits
Final Average Annual
Earnings |
|
Years of Credited
Service |
|
|
|
|
|
5 |
|
10 |
|
15 |
|
20 |
|
25 |
|
30 |
|
35 |
|
|
$ |
100,000 |
|
|
$ |
6,028 |
|
$ |
12,055 |
|
$ |
18,083 |
|
$ |
24,110 |
|
$ |
30,138 |
|
$ |
36,165 |
|
$ |
42,193 |
|
|
|
150,000 |
|
|
|
10,403 |
|
|
20,805 |
|
|
31,208 |
|
|
41,610 |
|
|
52,013 |
|
|
62,415 |
|
|
72,818 |
|
|
|
200,000 |
|
|
|
14,778 |
|
|
29,555 |
|
|
44,333 |
|
|
59,110 |
|
|
73,888 |
|
|
88,665 |
|
|
103,443 |
|
|
|
250,000 |
|
|
|
19,153 |
|
|
38,305 |
|
|
57,458 |
|
|
76,610 |
|
|
95,763 |
|
|
114,915 |
|
|
134,068 |
|
|
|
300,000 |
|
|
|
23,528 |
|
|
47,055 |
|
|
70,583 |
|
|
94,110 |
|
|
117,638 |
|
|
141,165 |
|
|
164,693 |
|
|
|
350,000 |
|
|
|
27,903 |
|
|
55,805 |
|
|
83,708 |
|
|
111,610 |
|
|
139,513 |
|
|
167,415 |
|
|
195,318 |
|
|
|
400,000 |
|
|
|
32,278 |
|
|
64,555 |
|
|
96,833 |
|
|
129,110 |
|
|
161,388 |
|
|
193,665 |
|
|
225,943 |
|
|
|
450,000 |
|
|
|
36,653 |
|
|
73,305 |
|
|
109,958 |
|
|
146,610 |
|
|
183,263 |
|
|
219,915 |
|
|
256,568 |
|
|
|
500,000 |
|
|
|
41,028 |
|
|
82,055 |
|
|
123,083 |
|
|
164,110 |
|
|
205,138 |
|
|
246,165 |
|
|
287,193 |
|
|
|
550,000 |
|
|
|
45,403 |
|
|
90,805 |
|
|
136,208 |
|
|
181,610 |
|
|
227,103 |
|
|
272,415 |
|
|
317,818 |
|
|
|
600,000 |
|
|
|
49,778 |
|
|
99,555 |
|
|
149,333 |
|
|
199,110 |
|
|
248,888 |
|
|
298,665 |
|
|
348,443 |
|
|
|
650,000 |
|
|
|
54,153 |
|
|
108,305 |
|
|
162,458 |
|
|
216,610 |
|
|
270,763 |
|
|
324,915 |
|
|
379,068 |
|
|
|
700,000 |
|
|
|
58,528 |
|
|
117,055 |
|
|
175,583 |
|
|
234,110 |
|
|
292,638 |
|
|
351,165 |
|
|
409,693 |
|
|
|
750,000 |
|
|
|
62,903 |
|
|
125,805 |
|
|
188,708 |
|
|
251,610 |
|
|
314,513 |
|
|
377,415 |
|
|
440,318 |
|
|
|
800,000 |
|
|
|
67,278 |
|
|
134,555 |
|
|
201,833 |
|
|
269,110 |
|
|
336,388 |
|
|
403,665 |
|
|
470,943 |
|
|
|
850,000 |
|
|
|
71,653 |
|
|
143,305 |
|
|
214,958 |
|
|
286,610 |
|
|
358,263 |
|
|
429,915 |
|
|
501,568 |
|
|
|
900,000 |
|
|
|
76,028 |
|
|
152,055 |
|
|
228,083 |
|
|
304,110 |
|
|
380,138 |
|
|
456,165 |
|
|
532,193 |
|
|
|
950,000 |
|
|
|
80,403 |
|
|
160,805 |
|
|
241,208 |
|
|
321,610 |
|
|
402,013 |
|
|
482,415 |
|
|
562,818 |
|
|
|
1,000,000 |
|
|
|
84,778 |
|
|
169,555 |
|
|
254,333 |
|
|
339,110 |
|
|
423,888 |
|
|
508,665 |
|
|
593,443 |
|
Benefits listed in the pension table are
not subject to any deduction for Social Security or other offset amounts. As of
December 31, 2014, the following executive officers have completed the indicated
number of full years of credited service: P. Baker, 13 years; J. Sabala, 6
years; L. Radford, 3 years; D. McDonald, 8 years; D. Sienko, 4 years; and D.
Poirier, 7 years.
Continues on next page ► |
|
|
|
Hecla Mining Company Notice of 2015 Annual Meeting and Proxy Statement |
79 |
Table of Contents
The following table shows pension
information under the Hecla Mining Company Retirement Plan and the SERP for the
NEOs as of December 31, 2014. The terms and conditions for participation in, and
payments from these plans are described above under Retirement Plan. The
actuarial present value of accumulated benefit is
determined using the same assumptions used
for financial reporting purposes except that retirement age is assumed to be the
normal retirement age of 65, or the current age if eligible for early
retirement. These assumptions are described in the pension footnotes to our
financial statements included in our Annual Report on Form
10-K.
|
Name |
|
Plan Name |
|
Number of Years Credited
Service (#) |
|
Present Value
of Accumulated Benefit ($) |
|
Payments During
Last Calendar Year ($) |
|
|
|
|
Hecla Mining Company
Retirement Plan |
|
|
13 |
|
|
|
347,310 |
|
|
|
|
|
Phillips S. Baker,
Jr. |
|
Hecla Mining Company
Supplemental Excess |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plan |
|
|
|
|
|
|
3,184,654 |
|
|
|
|
|
|
|
Hecla Mining Company Retirement
Plan |
|
|
6 |
|
|
|
266,623 |
|
|
|
|
|
James A. Sabala |
|
Hecla Mining Company Supplemental
Excess |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plan |
|
|
|
|
|
|
809,834 |
|
|
|
|
|
|
|
Hecla Mining Company
Retirement Plan |
|
|
3 |
|
|
|
93,640 |
|
|
|
|
|
Lawrence P.
Radford |
|
Hecla Mining Company
Supplemental Excess |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plan |
|
|
|
|
|
|
137,474 |
|
|
|
|
|
|
|
Hecla Mining Company Retirement
Plan |
|
|
8 |
|
|
|
296,181 |
|
|
|
|
|
Dr. Dean W.A. McDonald |
|
Hecla Mining Company Supplemental
Excess |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plan |
|
|
|
|
|
|
583,347 |
|
|
|
|
|
|
|
Hecla Mining Company
Retirement Plan |
|
|
4 |
|
|
|
101,391 |
|
|
|
|
|
David C. Sienko |
|
Hecla Mining Company
Supplemental Excess |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plan |
|
|
|
|
|
|
115,042 |
|
|
|
|
|
|
|
Hecla Mining Company Retirement
Plan |
|
|
7 |
|
|
|
242,460 |
|
|
|
|
|
Don Poirier |
|
Hecla Mining Company Supplemental
Excess |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plan |
|
|
|
|
|
|
385,070 |
|
|
|
|
As of the date of this Proxy Statement,
the Board is not aware of any matters that will be presented for action at the
Annual Meeting other than those described above.
However, should other business properly be
brought before the Annual Meeting, the proxies will be voted thereon at the
discretion of the persons acting thereunder.
By Order of the Board of
Directors
Michael B. White
Corporate Secretary
April 8, 2015
80
Table of
Contents
Reconciliation of Non-GAAP Measures
to GAAP
Reconciliation of Earnings Before
Interest, Taxes, Depreciation, and Amortization (non-GAAP) to Net Income (Loss)
(GAAP)
The non-GAAP measure of earnings before
interest, taxes, depreciation, and amortization (EBITDA) is calculated as net
income (loss) before the following items: interest expense, income tax provision
(benefit), and depreciation, depletion, and amortization expense. Management
believes that, when presented in conjunction with comparable GAAP measures,
EBITDA is useful to investors in evaluating our operating performance. The table
below presents reconciliations between the non-GAAP measure EBITDA to the GAAP
measure of net income (loss) for the years ended December 31, 2014, 2013 and
2012 (in thousands).
|
|
|
Year ended December
31, |
|
|
|
|
2014 |
|
2013 |
|
2012 |
|
|
Net income (loss) (GAAP) |
|
$ |
17,824 |
|
|
$ |
(25,130 |
) |
|
$ |
14,954 |
|
|
Interest expense, net of amount
capitalized(1) |
|
|
26,775 |
|
|
|
21,689 |
|
|
|
2,427 |
|
|
Income tax provision (benefit) |
|
|
(5,240 |
) |
|
|
(9,795 |
) |
|
|
8,879 |
|
|
Depreciation, depletion, and amortization |
|
|
112,173 |
|
|
|
82,366 |
|
|
|
50,113 |
|
|
EBITDA |
|
$ |
151,532 |
|
|
$ |
69,130 |
|
|
$ |
76,373 |
|
(1) |
On April 12, 2013, we completed
an offering of $500 million in aggregate principal amount of our Senior
Notes due May 1, 2021 (the Notes), and issued additional Notes in 2014
to fund one of our defined benefit pension plans. See Note 6 of Notes to Consolidated Financial Statements
in our Form 10-K for the calendar year ended December 31, 2014, for more information. The Notes bear
interest at a rate of 6.875% per year from the date of original issuance
or from the most recent payment date to which interest has been paid or
provided for. Interest on the Notes is payable on May 1 and November 1 of
each year, commencing November 1, 2013. |
Reconciliation of Adjusted EBITDA
(non-GAAP) to Net Income (Loss) (GAAP)
The non-GAAP measure of Adjusted earnings
before interest, taxes, depreciation and amortization (Adjusted EBITDA) is
calculated as net income before the following items: interest expense, income
tax provision (benefit), depreciation, depletion, and amortization expense,
exploration expense, pre-development expense, interest and other income
(expense), gains and losses on derivative contracts, provisional price gains and
losses, provisions for closed operations expense, stock-based compensation, and
unrealized losses on investments. Management believes that, when presented in
conjunction with comparable GAAP measures, Adjusted EBITDA is useful to
investors in evaluating our operating performance. The following table
reconciles net income (loss) to Adjusted EBITDA (in thousands):
|
|
Year Ended |
|
|
|
December 31, 2014 |
|
|
Net income (loss) |
|
$ |
17,824 |
|
|
|
|
Plus: Interest expense, net of amount
capitalized |
|
|
26,775 |
|
|
|
|
Plus/(Less): Income taxes |
|
|
(5,240 |
) |
|
|
|
Plus: Depreciation, depletion and amortization |
|
|
111,134 |
|
|
|
|
Plus: Exploration expense |
|
|
17,698 |
|
|
|
|
Plus: Pre-development expense |
|
|
1,969 |
|
|
|
|
Plus/(Less): Foreign exchange (gain) loss |
|
|
(11,535 |
) |
|
|
|
Less: Gains on derivative contracts |
|
|
(9,134 |
) |
|
|
|
Plus/(Less): Provisional price (gains)/losses |
|
|
2,277 |
|
|
|
|
Plus: Provision for closed operations and environmental
matters |
|
|
10,215 |
|
|
|
|
Plus: Stock-based compensation |
|
|
9,494 |
|
|
|
|
Plus: Unrealized losses on investments |
|
|
3,224 |
|
|
|
|
Plus/(Less): Other |
|
|
(286 |
) |
|
|
|
Adjusted EBITDA |
|
$ |
174,415 |
|
|
|
Continues on next page ► |
|
|
|
Hecla Mining Company Notice of 2015 Annual Meeting and Proxy Statement |
A-1 |
Table of
Contents
Reconciliation of Cash Cost, Before
By-product Credits and Cash Cost, After By-product Credits (non-GAAP) to Cost of
Sales and Other Direct Production Costs and Depreciation, Depletion and
Amortization (GAAP)
The tables below present reconciliations
between the non-GAAP measures of Cash Cost, Before By-product Credits and Cash
Cost, After By-product Credits to the GAAP measure of cost of sales and other
direct production costs and depreciation, depletion and amortization for our
operations for the year ended December 31, 2014 (in thousands, except costs per
ounce).
Cash Cost, After By-product Credits is an
important operating statistic that we utilize to measure each mines operating
performance. It also allows us to benchmark the performance of each of our mines
versus those of our competitors. As a primary silver mining company, we also use
the statistic on an aggregate basis - aggregating the Greens Creek and Lucky
Friday mines, but not Casa Berardi, which is a primary gold mine - to compare
our performance with that of other primary silver mining companies. Similarly,
the statistic is useful in identifying acquisition and investment opportunities
as it provides a common tool for measuring the financial performance of other
mines with varying geologic, metallurgical and operating
characteristics.
Cash Cost, Before By-product Credits
include all direct and indirect operating cash costs related directly to the
physical activities of producing metals, including mining, processing and other
plant costs, third-party refining expense, on-site general and administrative
costs, royalties and mining production taxes. By-product credits include
revenues earned from all metals other than the primary metal produced at each
unit. Cash Cost, After By-product Credits, per Ounce, provides management and
investors an indication of operating cash flow, after consideration of the
average price, received from production. Management also uses this measurement
for the comparative monitoring of performance of our mining operations
period-to-period from a cash flow perspective. Cash Cost, After By-product
Credits, per Ounce is a measure developed by precious metals companies
(including the Silver Institute) in an effort to provide a uniform standard for
comparison purposes. There can be no assurance, however, that our reporting of
this non-GAAP measure is the same as that reported by other mining
companies.
The Casa Berardi section below reports
Cash Cost, After By-product Credits, per Gold Ounce for the production of gold,
its primary product, and by-product revenues earned from silver, which is a
by-product at Casa Berardi. Only costs and ounces produced relating to units
with the same primary product are combined to represent Cash Cost, After
By-product Credits, per Ounce. Thus, the gold produced at our Casa Berardi unit
is not included as a by-product credit when calculating Cash Cost, After
By-product Credits, per Silver Ounce for the total of Greens Creek and Lucky
Friday, our combined silver properties.
A-2
Table of
Contents
As depicted in the Total, Greens Creek and
Lucky Friday Unit tables below, by-product credits comprise an essential element
of our silver unit cost structure distinguishing our silver operations due to
the polymetallic nature of their orebodies. By-product credits included in our
presentation of Cash Cost, After By-product Credits, per Silver
Ounce include:
|
|
|
Total, Greens Creek and Lucky Friday
Units |
|
|
In thousands (except per ounce
amounts) |
|
Year ended December 31, |
|
|
|
|
2014 |
|
2013 |
|
2012 |
|
|
By-product value, all silver properties: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Zinc |
|
|
$ |
95,701 |
|
|
|
$ |
77,616 |
|
|
|
$ |
84,087 |
|
|
|
Gold |
|
|
|
61,871 |
|
|
|
|
66,907 |
|
|
|
|
75,860 |
|
|
|
Lead |
|
|
|
66,082 |
|
|
|
|
48,973 |
|
|
|
|
30,969 |
|
|
|
Total by-product credits |
|
|
$ |
223,654 |
|
|
|
$ |
193,496 |
|
|
|
$ |
190,916 |
|
|
|
|
|
|
|
By-product credits per silver ounce, all silver
properties |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Zinc |
|
|
$ |
8.65 |
|
|
|
$ |
8.71 |
|
|
|
$ |
13.15 |
|
|
|
Gold |
|
|
|
5.59 |
|
|
|
|
7.51 |
|
|
|
|
11.86 |
|
|
|
Lead |
|
|
|
5.97 |
|
|
|
|
5.50 |
|
|
|
|
4.85 |
|
|
|
Total by-product
credits |
|
|
$ |
20.21 |
|
|
|
$ |
21.72 |
|
|
|
$ |
29.86 |
|
|
By-product credits included in our
presentation of Cash Cost, After By-product Credits, per Gold Ounce for our Casa
Berardi Unit include:
|
Casa Berardi
Unit(3) |
In thousands (except per ounce
amounts) |
Year ended
December 31, |
|
2014 |
2013 |
Silver by-product
value |
$ 464 |
$ 262 |
Silver by-product credits per gold
ounce |
$3.62 |
$4.19 |
Cost of sales and other direct production
costs and depreciation, depletion and amortization is the most comparable
financial measure calculated in accordance with GAAP to Cash Cost, After
By-product Credits. The sum of the cost of sales and other direct production
costs and depreciation, depletion and amortization for our operating units in
the tables below is presented in our Consolidated Statement of Operations and
Comprehensive Income (Loss) (in thousands) included in our audited financial
statements which are included in our Annual Report on Form 10-K for the calendar
year ended December 31, 2014.
|
|
Total, Greens
Creek and Lucky Friday Units |
|
|
In thousands (except per ounce
amounts) |
Year ended
December 31, |
|
|
|
2014 |
|
2013 |
|
2012 |
|
|
Cash Cost, Before By-product Credits(1) |
$ |
276,842 |
|
|
$ |
254,460 |
|
|
$ |
208,178 |
|
|
|
By-product credits |
|
(223,654 |
) |
|
|
(193,496 |
) |
|
|
(190,916 |
) |
|
|
Cash Cost, After By-product Credits |
|
53,188 |
|
|
|
60,964 |
|
|
|
17,262 |
|
|
|
Divided by silver ounces produced |
|
11,065 |
|
|
|
8,907 |
|
|
|
6,394 |
|
|
|
Cash Cost, Before
By-product Credits, per Silver Ounce |
|
25.02 |
|
|
|
28.56 |
|
|
|
32.55 |
|
|
|
By-product credits
per silver ounce |
|
(20.21 |
) |
|
|
(21.72 |
) |
|
|
(29.85 |
) |
|
|
Cash Cost, After
By-product Credits, per Silver Ounce |
$ |
4.81 |
|
|
$ |
6.84 |
|
|
$ |
2.70 |
|
|
|
Reconciliation to GAAP: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Cost, After
By-product Credits |
$ |
53,188 |
|
|
$ |
60,964 |
|
|
$ |
17,262 |
|
|
|
Depreciation,
depletion and amortization |
|
72,936 |
|
|
|
63,098 |
|
|
|
43,522 |
|
|
|
Treatment
costs |
|
(82,639 |
) |
|
|
(76,824 |
) |
|
|
(73,355 |
) |
|
|
By-product
credits |
|
223,654 |
|
|
|
193,496 |
|
|
|
190,916 |
|
|
|
Change in product
inventory |
|
(1,649 |
) |
|
|
(246 |
) |
|
|
(1,381 |
) |
|
|
Reclamation and
other costs |
|
2,046 |
|
|
|
2,100 |
|
|
|
663 |
|
|
|
Cost of sales and
other direct production costs and depreciation, |
|
|
|
|
|
|
|
|
|
|
|
|
|
depletion and
amortization (GAAP) |
$ |
267,536 |
|
|
$ |
242,588 |
|
|
$ |
177,627 |
|
|
Continues on next page ► |
|
|
|
Hecla Mining Company Notice of 2015 Annual Meeting and Proxy Statement |
A-3 |
Table of
Contents
|
|
Greens Creek
Unit |
|
|
In thousands (except per ounce
amounts) |
Year ended
December 31, |
|
|
|
2014 |
|
2013 |
|
2012 |
|
|
Cash Cost, Before by-Product
Credits(1) |
$ |
199,247 |
|
|
$ |
203,496 |
|
|
$ |
208,178 |
|
|
|
By-product credits |
|
(176,650 |
) |
|
|
(170,563 |
) |
|
|
(190,916 |
) |
|
|
Cash Cost, After By-product Credits |
|
22,597 |
|
|
|
32,933 |
|
|
|
17,262 |
|
|
|
Divided by silver ounces produced |
|
7,826 |
|
|
|
7,448 |
|
|
|
6,394 |
|
|
|
Cash Cost,
Before By-product Credits, per Silver Ounce |
|
25.46 |
|
|
|
27.32 |
|
|
|
32.55 |
|
|
|
By-product
credits per silver ounce |
|
(22.57 |
) |
|
|
(22.90 |
) |
|
|
(29.85 |
) |
|
|
Cash Cost,
After By-product Credits, per Silver Ounce |
$ |
2.89 |
|
|
$ |
4.42 |
|
|
$ |
2.70 |
|
|
|
Reconciliation to GAAP: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Cost,
After By-product Credits |
$ |
22,597 |
|
|
$ |
32,933 |
|
|
$ |
17,262 |
|
|
|
Depreciation,
depletion and amortization |
|
63,505 |
|
|
|
55,265 |
|
|
|
43,522 |
|
|
|
Treatment
costs |
|
(63,313 |
) |
|
|
(67,341 |
) |
|
|
(73,355 |
) |
|
|
By-product
credits |
|
176,650 |
|
|
|
170,563 |
|
|
|
190,916 |
|
|
|
Change in
product inventory |
|
(1,706 |
) |
|
|
159 |
|
|
|
(1,381 |
) |
|
|
Reclamation and
other costs |
|
1,949 |
|
|
|
1,947 |
|
|
|
663 |
|
|
|
Cost of sales
and other direct production costs and depreciation, |
|
|
|
|
|
|
|
|
|
|
|
|
|
depletion and
amortization (GAAP) |
$ |
199,682 |
|
|
$ |
193,526 |
|
|
$ |
177,627 |
|
|
|
|
Lucky Friday
Unit(2) |
|
|
In thousands (except per ounce
amounts) |
Year ended
December 31, |
|
|
|
2014 |
|
2013 |
|
2012 |
|
|
Cash Cost, Before By-product
Credits(1) |
$ |
77,595 |
|
|
$ |
50,964 |
|
|
$ |
|
|
By-product credits |
|
(47,004 |
) |
|
|
(22,933 |
) |
|
|
|
|
Cash Cost, After By-product Credits |
|
30,591 |
|
|
|
28,031 |
|
|
|
|
|
Divided by silver ounces produced |
|
3,239 |
|
|
|
1,459 |
|
|
|
|
|
Cash Cost,
Before By-product Credits, per Silver Ounce |
|
23.95 |
|
|
|
34.93 |
|
|
|
|
|
By-product
credits per silver ounce |
|
(14.51 |
) |
|
|
(15.72 |
) |
|
|
|
|
Cash Cost,
After By-product Credits, per Silver Ounce |
$ |
9.44 |
|
|
$ |
19.21 |
|
|
$ |
|
|
Reconciliation to GAAP: |
|
|
|
|
|
|
|
|
|
|
|
Cash Cost,
After By-product Credits |
$ |
30,591 |
|
|
$ |
28,031 |
|
|
$ |
|
|
Depreciation,
depletion and amortization |
|
9,431 |
|
|
|
7,833 |
|
|
|
|
|
Treatment
costs |
|
(19,326 |
) |
|
|
(9,482 |
) |
|
|
|
|
By-product
credits |
|
47,004 |
|
|
|
22,933 |
|
|
|
|
|
Change in
product inventory |
|
57 |
|
|
|
(405 |
) |
|
|
|
|
Reclamation and
other costs |
|
97 |
|
|
|
153 |
|
|
|
|
|
Cost of sales
and other direct production costs and depreciation, |
|
|
|
|
|
|
|
|
|
|
|
depletion and
amortization (GAAP) |
$ |
67,854 |
|
|
$ |
49,063 |
|
|
$ |
|
|
|
Casa Berardi
Unit(3) |
|
|
In thousands (except ounce and per ounce
amounts) |
Year ended
December 31, |
|
|
|
2014 |
|
2013 |
|
2012 |
|
|
Cash Cost, Before By-product
Credits(1) |
$ |
106,438 |
|
|
$ |
59,717 |
|
|
$ |
|
|
By-product credits |
|
(464 |
) |
|
|
(262 |
) |
|
|
|
|
Cash Cost, After by-product credits |
|
105,974 |
|
|
|
59,455 |
|
|
|
|
|
Divided by gold ounces produced |
|
128,244 |
|
|
|
62,532 |
|
|
|
|
|
Cash Cost,
Before By-product Credits, per Gold Ounce |
|
829.97 |
|
|
|
954.98 |
|
|
|
|
|
By-product
credits per gold ounce |
|
(3.62 |
) |
|
|
(4.19 |
) |
|
|
|
|
Cash Cost,
After By-product Credits, per Gold Ounce |
$ |
826.35 |
|
|
$ |
950.79 |
|
|
$ |
|
|
Reconciliation to GAAP: |
|
|
|
|
|
|
|
|
|
|
|
Cash Cost,
After By-product Credits |
$ |
105,974 |
|
|
$ |
59,455 |
|
|
$ |
|
|
Depreciation,
depletion and amortization |
|
38,198 |
|
|
|
18,030 |
|
|
|
|
|
Treatment
costs |
|
(564 |
) |
|
|
(268 |
) |
|
|
|
|
By-product
credits |
|
464 |
|
|
|
262 |
|
|
|
|
|
Change in
product inventory |
|
3,151 |
|
|
|
(3,766 |
) |
|
|
|
|
Reclamation and
other costs |
|
820 |
|
|
|
142 |
|
|
|
|
|
Cost of sales
and other direct production costs and depreciation, |
|
|
|
|
|
|
|
|
|
|
|
depletion and
amortization (GAAP) |
$ |
148,043 |
|
|
$ |
73,855 |
|
|
$ |
|
A-4
Table of
Contents
|
|
Total, All
Locations |
|
|
In thousands |
Year ended
December 31, |
|
|
|
2014 |
|
2013 |
|
2012 |
|
|
Reconciliation to GAAP: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash Cost, After By-product Credits |
$ |
159,162 |
|
|
$ |
120,419 |
|
|
$ |
17,262 |
|
|
|
Depreciation, depletion and amortization |
|
111,134 |
|
|
|
81,128 |
|
|
|
43,522 |
|
|
|
Treatment costs |
|
(83,203 |
) |
|
|
(77,092 |
) |
|
|
(73,355 |
) |
|
|
By-product credits |
|
224,118 |
|
|
|
193,758 |
|
|
|
190,916 |
|
|
|
Change in product inventory |
|
1,502 |
|
|
|
(4,012 |
) |
|
|
(1,381 |
) |
|
|
Suspension-related costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
Reclamation and other costs |
|
2,867 |
|
|
|
2,242 |
|
|
|
663 |
|
|
|
Cost of sales and other
direct production costs and depreciation, |
|
|
|
|
|
|
|
|
|
|
|
|
|
depletion and amortization (GAAP) |
$ |
415,580 |
|
|
$ |
316,443 |
|
|
$ |
177,627 |
|
|
(1) |
Includes all direct and indirect operating costs related
directly to the physical activities of producing metals, including mining,
processing and other plant costs, third-party refining and marketing
expense, on-site general and administrative costs, royalties and mining
production taxes, after by-product revenues earned from all metals other
than the primary metal produced at each unit. |
(2) |
Various accidents and other events resulted in temporary
suspensions of production at the Lucky Friday unit during 2011 and
throughout 2012. See the Lucky Friday Segment section in our Form 10-K for the calendar year ended December 31, 2014, for further
discussion. As a result, Cash Cost, Before By-product Credits and Cash
Cost, After By-product Credits, Per Silver Ounce are not presented for
2012. Care-and-maintenance, mine rehabilitation, investigation, and other
costs incurred during the suspension periods not related to production
have been excluded from Cash Cost, Before By-product Credits and the
calculation of Cash Cost, After By-product Credits, Per Silver Ounce
produced. |
(3) |
On June 1, 2013, we completed the
acquisition of Aurizon Mines Ltd., which gave us 100% ownership of the
Casa Berardi mine in Quebec, Canada. The information presented reflects
our ownership of Casa Berardi commencing as of that date. See Note 15 of
Notes to Consolidated Financial Statements in our Form 10-K for the calendar year ended December 31, 2014, for more information.
The primary metal produced at Casa Berardi is gold, with a by-product
credit for the value of silver production. |
Hecla Mining Company Notice of 2015 Annual Meeting and Proxy Statement |
A-5 |
Table of
Contents
|
|
|
|
Meeting to be held at:
Lavery, de Billy, L.L.P. 1 Place
Ville Marie Suite 4000 Montreal, Quebec,
Canada
For directions contact (514)
871-1522 |
Table of Contents
HECLA MINING COMPANY
6500 N. MINERAL DRIVE,
SUITE 200
COEUR D'ALENE, ID 83815
VOTE BY INTERNET -
www.proxyvote.com
Use the Internet to
transmit your voting instructions and for electronic delivery of information up
until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date.
Have your proxy card in hand when you access the web site and follow the
instructions to obtain your records and to create an electronic voting
instruction form.
ELECTRONIC DELIVERY OF
FUTURE PROXY MATERIALS
If you would like
to reduce the costs incurred by our company in mailing proxy materials, you can
consent to receiving all future proxy statements, proxy cards and annual reports
electronically via e-mail or the Internet. To sign up for electronic delivery,
please follow the instructions above to vote using the Internet and, when
prompted, indicate that you agree to receive or access proxy materials
electronically in future years.
VOTE BY PHONE -
1-800-690-6903
Use any touch-tone
telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time
the day before the cut-off date or meeting date. Have your proxy card in hand
when you call and then follow the instructions.
VOTE BY
MAIL
Mark, sign and date your proxy card
and return it in the postage-paid envelope we have provided or return it to Vote
Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY
11717.
TO VOTE, MARK BLOCKS BELOW IN BLUE
OR BLACK INK AS FOLLOWS: |
|
|
M82769-P61843 |
|
KEEP THIS PORTION FOR YOUR
RECORDS |
|
|
DETACH AND RETURN THIS PORTION
ONLY |
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND
DATED. |
HECLA MINING COMPANY |
|
For All |
|
Withhold All |
|
For All Except |
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE "FOR" THE ELECTION OF THE NOMINEES FOR DIRECTOR LISTED
IN ITEM 1 AND "FOR" PROPOSALS 2 AND 3 |
|
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|
1. |
ELECTION OF
DIRECTORS |
|
☐ |
|
☐ |
|
☐ |
|
Nominees: |
|
|
|
|
|
|
|
|
|
|
|
|
01) |
George R.
Nethercutt, Jr. |
|
02) |
John H.
Bowles |
|
|
|
|
|
|
|
|
|
|
|
To withhold authority to vote for any
individual nominee(s), mark For All Except and write the number(s) of
the nominee(s) on the line below. |
|
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For |
|
Against |
|
Abstain |
2. |
|
PROPOSAL to ratify and approve the
selection of BDO USA, LLP, as independent auditors of the Company for the
calendar year ending December 31, 2015. |
|
☐ |
|
☐ |
|
☐ |
|
|
|
|
|
|
|
|
|
3. |
|
Advisory resolution to approve executive
compensation. |
|
☐ |
|
☐ |
|
☐ |
|
|
|
|
|
|
|
|
|
4. |
|
In their discretion on all other
business that may properly come before the meeting or any adjournment or
adjournments thereof. |
|
|
|
|
|
|
|
|
|
|
|
|
|
This proxy will be voted as specified. If no specification
is made, this proxy will be voted FOR the election of the two nominees for
Director and FOR the approval of Proposals 2 and 3. This proxy also
delegates discretionary authority to vote with respect to any other
business which may properly come before the meeting or any adjournment or
postponement thereof. |
|
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|
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|
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|
IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE PLEASE MARK,
SIGN, DATE, AND PROMPTLY RETURN THE PROXY CARD USING THE ENCLOSED
ENVELOPE. |
|
|
|
|
|
|
|
Please sign exactly
as your name(s) appear(s) hereon. When signing as attorney, executor,
administrator, or other fiduciary, please give full title as such. Joint
owners should each sign personally. All holders must sign. If a
corporation or partnership, please sign in full corporate or partnership
name by authorized officer. |
|
|
|
|
|
|
|
|
|
Signature [PLEASE SIGN
WITHIN BOX] |
Date |
|
Signature (Joint Owners) |
Date |
|
|
Table of Contents
Important Notice Regarding the
Availability of Proxy Materials for the Annual Meeting:
The Notice and Proxy Statement and
Annual Report are available at www.proxyvote.com.
HECLA MINING COMPANY
6500 N. Mineral Drive, Suite 200
Coeur
d'Alene, Idaho 83815-9408
ANNUAL MEETING OF
SHAREHOLDERS
May 21, 2015
PROXY SOLICITED ON
BEHALF OF THE BOARD OF DIRECTORS
THE BOARD OF
DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE NOMINEES FOR DIRECTOR
LISTED IN ITEM 1 AND "FOR" PROPOSALS 2 AND 3
The
undersigned, revoking any previous proxies, hereby appoints PHILLIPS S. BAKER,
JR. and MICHAEL B. WHITE, and each of them, proxies of the undersigned, with
full power of substitution, to attend the Company's Annual Meeting of
Shareholders on May 21, 2015, and any adjournments or postponements thereof, and
there to vote the undersigned's shares of common stock of the Company on the
matters listed on the reverse side as described in the Board of Directors Proxy
Statement for such meeting, a copy of which has been received by the
undersigned.
Continued and to
be signed on reverse side
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