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
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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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(Name
of Person(s) Filing Proxy Statement, if other than the
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Table of Contents
Notice of 2016 Annual
Meeting and Proxy Statement
Table of Contents
HECLA MINING COMPANY 6500 N. Mineral
Drive, Suite 200 Coeur dAlene, Idaho 83815-9408
208-769-4100 |
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NOTICE OF 2016 ANNUAL
MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the 2016
Annual Meeting of Shareholders (Annual Meeting) of Hecla Mining Company (we,
our, us, Hecla, or the Company) will be held in the Eric A. Johnston
Auditorium at the Northwest Museum of Arts & Culture, located at 2316 W.
1st Avenue, Spokane, Washington, on Thursday, May 19, 2016, at 10:00
a.m., Pacific Daylight Time, for the following purposes:
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1. |
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Elect three 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. |
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Approve amendments to
the Companys Certificate of Incorporation and Bylaws to remove certain
80% supermajority voting provisions; |
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3. |
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Approve amendments to
the Companys Certificate of Incorporation and Bylaws to permit
shareholders, under certain circumstances, to call special meetings of
shareholders; |
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4. |
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Ratify the Audit
Committees appointment of BDO USA, LLP as our independent registered
public accounting firm for 2016; |
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Approve, on an
advisory basis, the compensation of our named executive officers;
and |
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Transact such other
business as may properly come before the
meeting. |
The Board of Directors (Board) has fixed the
close of business on March 23, 2016 as the record date for the determination of
shareholders entitled to notice of, and to vote, at the Annual Meeting and at
any adjournment or postponement thereof (Record Date).
On or about April 4, 2016, we began mailing our
shareholders of record as of the Record Date, either a Notice of Internet
Availability of Proxy Materials (Notice) containing instructions on how to
access this Proxy Statement and our 2015 Annual Report (Proxy Materials)
online, or a printed copy of these Proxy Materials.
By Order of the Board of
Directors
Michael B. White
Corporate Secretary
April 4, 2016
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS
Important Notice Regarding the Availability of Proxy
Materials for the Annual Meeting to be held on May 19, 2016. This
Proxy Statement and Annual Report are available at
http://www.hecla-mining.com |
ii www.hecla-mining.com |
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125
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Table of Contents
A MESSAGE FROM YOUR
CHAIRMAN
Your Board is committed to fulfilling
its duties and to keeping the interests of our shareholders and employees
at the center of our priorities.
Ted Crumley, Chairman |
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Dear Fellow
Shareholder:
It is the responsibility of the Board to
maintain sound corporate governance practices and to oversee the Companys
strategic and operational activities in a manner that protects and creates
long-term shareholder value. Your Board is committed to fulfilling these duties
and to keeping the interests of our shareholders and employees at the center of
our priorities.
Corporate
Strategy
We are also committed to the Companys
strategic approach to creating shareholder value - consistent, long-lived
production that increases and improves over time. This means we need long-life
assets to profit from higher metals prices, strong geological understanding to
increase reserves, and operating expertise to reduce costs and lower
risks.
As the Company weathers the current
decline of metals prices, our strong financial position should enable us to
continue to grow the Company, and we are confident that we are well positioned
to create long-term shareholder value.
Governance
The Board, directly and through its
Corporate Governance and Directors Nominating Committee, seeks to maintain
corporate governance practices that are aligned with our strategic financial and
operational goals. We do this by conducting processes at least annually to
evaluate, optimize and update governance and practice guidelines.
Shareholder
Outreach
The Board places great value on the
feedback it receives from our current and potential shareholders, particularly
with respect to our executive compensation program, as we believe in maintaining
a high level of transparency in that area. One of the primary sources of
feedback is through our shareholder outreach efforts pursuant to which we elicit
the viewpoints of large shareholders and certain proxy advisory firms. In part
because of the feedback we have received through our shareholder outreach
efforts, we have implemented certain changes in our executive compensation
program. We believe those changes helped us obtain a favorable vote of 83% on
our say-on-pay proposal in 2015, which was 30% more favorable than our 2013
say-on-pay vote.
Our shareholder outreach program also
seeks to identify corporate governance matters that are of concern to our
shareholders, as well as the major proxy advisory firms.
During our shareholder outreach in 2015,
two corporate governance issues were discussed with our shareholders: (i) the
ability of shareholders to call special meetings, and (ii) the 80% supermajority
voting requirement on certain amendments to our Certificate of Incorporation and
Bylaws impacting special meetings. At our 2014 Annual Meeting, we asked
shareholders to vote on a proposal to amend our Certificate of Incorporation and
Bylaws to permit shareholders to call special meetings. Under our Certificate of
Incorporation, this change required the approval by holders of 80% of our
outstanding shares of common stock, yet we only received approval from 41%. We
are again including this proposal on the ballot for the Annual Meeting. In
addition, we are including another proposal to amend our Certificate of
Incorporation and Bylaws to change the required approval of amendments to the
Certificate of Incorporation and Bylaws relating to the calling of special
meetings from 80% to a two-thirds voting standard.
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2016 Proxy Statement iii |
Table of Contents
Board
Composition
In December 2015, we were saddened to
announce the passing of John H. Bowles, a director of the Company. John served
on the Board of Hecla for over nine years following his retirement as a partner
at PricewaterhouseCoopers LLP. He chaired the Audit Committee, and was also a
member of the Executive Committee and Health, Safety, Environmental and
Technical Committee. He leaves a long, distinguished legacy in our industry and
as a member of our Board for which we are eternally grateful.
Shareholders continue to express a genuine
and legitimate interest in finding effective ways to ensure that boards of directors are comprised of the right people, with
the right skills and qualifications, to effectively represent their interests.
The issue of Board composition and refreshment is a priority of our
shareholders, and we agree that refreshing the Board with new perspectives and
new ideas is critical to a well-functioning Board. Accordingly, we have been
actively pursuing new members.
In seeking new directors, the Board is
also very conscious of the benefits of diversity on the Board. We have sought
and continue to seek qualified candidates that would enhance our Boards
diversity.
Your participation and your votes are
important to the future of our Company. We encourage you to vote your shares in
accordance with the Boards recommendations. Details of the items to be voted
upon are provided throughout this Proxy Statement.
Ted Crumley
Chairman
iv www.hecla-mining.com |
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Table of Contents
A MESSAGE FROM THE
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
Persistence, perspective, and
position These are
the characteristics that will
enable the Company to grow and evolve even more in the next
century.
Phillips S. Baker, Jr.,
President and Chief Executive Officer |
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Dear Fellow
Shareholder:
On behalf of your entire Board and the
management team, I deeply appreciate your support and faith in our Company. I
also want to express my gratitude to our Board for its guidance and support as
we execute our strategy, which we expect to yield long-term shareholder value.
To all our employees, please accept my appreciation for your readiness to adapt,
your responsiveness, creativity and willingness to work together towards
attaining that success.
Our
Responsibility
At Hecla, our Integrated Corporate
Responsibility Policy (ICR) begins with the belief that a safe mine is a
productive mine each day, each shift, home safely. We will strive to guard the
health and safety of our employees and the community. Second, we will be
responsible environmental stewards and strive to minimize environmental effects
during exploration, development and operations and then reclaim our projects to
productive post-mining land uses. Third, we believe that by becoming responsive
to community needs, the Company builds trust and relationships that foster our
social license to operate. This encompasses taking a mutually-beneficial
approach to issues affecting the community, treating others with respect, and engaging in open and honest communication. Each
of these aspects will be fully integrated into our business planning as they are
considered key to our core business strategy and continued
profitability.
Our Strategy and
2015 Accomplishments
Our simple strategy is to explore, develop and operate
properties that have consistent, long-lived production that grows and whose margins improve over time.
Despite lower metals prices in 2015, we finished the year
strongly, with the most silver and silver equivalent production in our history. The Company also for the 10th consecutive year grew silver reserves to the most in our history despite using lower price assumptions. We ended the year
with $155 million of cash on the balance sheet, which was consistent with our expectations and using our
balance sheet strength to invest in expanding mine life and increasing production.
In 2015, our
key achievements included the following:
● |
silver equivalent production of 37.5 million ounces, the
highest in the Companys history;1 |
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silver production increased 5% to 11.6 million ounces, the
highest in the Companys history, at a cash cost, after by-product
credits, per silver ounce of
$5.85;2 |
● |
gold production increased 1% to 189,327 ounces, with 127,891
ounces produced at Casa Berardi at an average cash cost, after by-product
credits, per gold ounce of
$772;2 |
1 |
2015 silver equivalent
calculation is based on the following prices: $15.70 for silver, $1,160
for gold, $0.81 for lead, and $0.88 for zinc. |
2 |
Cash cost, after by-product
credits, per silver and gold ounce represents 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
measures, can be found in Appendix E 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). |
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2016 Proxy Statement v |
Table of Contents
● |
highest year-end proven and probable silver reserve levels in Company history for the 10th consecutive year
despite using $14.50/oz. silver
for the calculation. Gold
reserves remained unchanged
despite using $1,100/oz. for the calculation; |
● |
committed a significant level
of capital expenditures
(including lease additions,
capitalized interest, and other
non-cash items) of approximately
$160.7 million, including $60.0
million at Lucky Friday, $46.0 million
at Greens Creek, $35.3 million at Casa Berardi, and $4.6 million at San Sebastian; |
● |
performed exploration and pre-development activities during the year, drilling targets at our land packages in Alaska, Idaho, Quebec, and Mexico. Continued exploration success at our San Sebastian unit in Mexico which led to a return to production in
2015; |
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acquired Revett Mining Company, giving us ownership of the Rock Creek project in northwestern Montana; |
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operating cash flow of $106.4 million and adjusted EBITDA of $116.8
million;3 |
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made the decision to develop a mine at our San Sebastian unit in the third quarter of 2015 and commenced production there in the fourth quarter of 2015;
and |
● |
achieved the above milestones while
ending the year with a cash balance of $155.2 million as of December 31,
2015. |
Into the Future
2016 marks Heclas 125th anniversary. We believe our
strategy and accomplishments will give shareholders value in all price environments, both compared to peers and when metals
prices increase, and for what we hope is another 125 years.
We sincerely hope you will be able to
attend and participate in our Annual Meeting. 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.
Phillips S. Baker,
Jr.
President and Chief Executive
Officer
3 |
Adjusted EBITDA (earnings before
interest, taxes, depreciation, and amortization) is a measurement that is
a non-GAAP measurement. A reconciliation of this non-GAAP measure to net
income (loss), the most comparable GAAP measure, can be found in Appendix
E. |
vi www.hecla-mining.com |
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125
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Table of Contents
PROXY
STATEMENT
ANNUAL
MEETING OF SHAREHOLDERS
MAY 19, 2016
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125
Years |
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2016 Proxy Statement vii |
Table of Contents
viii www.hecla-mining.com |
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Table of Contents
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2016 Proxy
Statement ix |
Table of Contents
PROXY
STATEMENT SUMMARY
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.
Proposal 1 Election of Directors (page 9)
The Board and the Corporate Governance and
Directors Nominating Committee believe that the three director nominees
(Crumley, Rogers and Stanley) possess the necessary qualifications to provide
effective oversight of our business and quality advice and counsel to the
Companys management.
☑ |
The Board unanimously recommends a vote FOR each Director
Nominee |
Director Nominees
Recommended by the Board of Directors
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Name |
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Age |
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Director Since |
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Experience/Qualification |
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Independent (Yes/No) |
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Committee Memberships |
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Other
Current Public Directorships |
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Ted Crumley Board
Chairman |
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71 |
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1995 |
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Former Executive Vice
President and Chief Financial Officer of OfficeMax Incorporated |
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Yes |
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EC CC |
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None |
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Terry V.
Rogers |
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69 |
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2007 |
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Former Senior Vice
President and Chief Operating Officer of Cameco Corporation |
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Yes |
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HSET
(Chair) AC CC EC |
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Centerra Gold
Inc. |
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Charles B.
Stanley |
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57 |
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2007 |
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Chief Executive Officer,
President and Chairman of the Board of QEP Resources, Inc. |
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Yes |
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AC
(Chair) HSET CG&DNC |
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QEP Resources,
Inc. |
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Continuing Members of the
Board |
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Name |
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Age |
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Director Since |
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Experience/Qualification |
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Independent (Yes/No) |
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Committee Memberships |
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Other
Current Public
Directorships |
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Term Ending at the 2017
Annual Meeting |
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Phillips S. Baker,
Jr. |
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56 |
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2001 |
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President and Chief
Executive Officer of Hecla Mining Company |
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No |
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EC (Chair) |
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QEP Resources,
Inc. |
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Dr. Anthony P.
Taylor |
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74 |
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2002 |
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President, Chief Executive
Officer and Director of Selex Resources Ltd. |
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Yes |
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CG&DNC
(Chair) HSET CC |
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Caughlin
Preschool Co. |
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George R.
Johnson |
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67 |
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2016 |
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Former Senior Vice
President of Operations of B2Gold Corporation |
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Yes |
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AC HSET |
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None |
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Term Ending at
the 2018 Annual Meeting |
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George R.
Nethercutt, Jr. |
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71 |
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2005 |
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Chairman of The George
Nethercutt Foundation and Of Counsel for Lee & Hayes PLLC |
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Yes |
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CC
(Chair) CG&DNC |
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Washington
Policy Center; ARCADIS Corporation; Juvenile Diabetes Research
Foundation International |
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Stephen F.
Ralbovsky |
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62 |
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2016 |
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Former Partner with
PricewaterhouseCoopers LLP |
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Yes |
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AC CG&DNC |
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None |
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EC: Executive
Committee
AC: Audit Committee
CC: Compensation Committee
CG&DNC: Corporate Governance and Directors Nominating
Committee
HSET: Health, Safety, Environmental and Technical
Committee
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2016 Proxy Statement 1 |
Table of Contents
Proposal 2 Approval of
Amendments to the Companys Certificate of Incorporation and Bylaws to Remove
Certain 80% Supermajority Voting Provisions (page 25)
Our Certificate of Incorporation currently
requires the approval of 80% of shares outstanding in order to make certain
amendments to our Certificate of Incorporation and Bylaws affecting the ability
to call special meetings of shareholders. This provision would be revised
downward to a two-thirds vote requirement. If approved, the Company intends to take the remaining steps
required to implement the proposed amendments.
☑ |
The Board unanimously recommends a vote FOR this
Proposal |
Proposal 3 Approval of
Amendments to the Companys Certificate of Incorporation and Bylaws, Under
Certain Circumstances, to Permit Shareholders to Call Special Meetings of
Shareholders (page 28)
We are seeking the approval of our
shareholders to amend our Certificate of Incorporation and Bylaws to add a right
permitting shareholders who have held at least 25% net long position in our
outstanding common stock for at least 120 days to call special meetings of
shareholders, subject to the conditions set forth in our Bylaws. Establishing a
25% net long position threshold for the right to call a special meeting would
ensure that matters proposed for consideration have significant support
among our shareholders. If approved, the Company intends to take the remaining
steps required to implement the proposed amendments.
☑ |
The Board unanimously recommends a vote FOR this
Proposal |
Proposal 4 Ratification
of the Appointment of BDO USA, LLP as Independent Auditors (page
30)
The Audit Committee and the Board believe
that the continued retention of BDO USA, LLP to serve as the independent
registered public accounting firm for the calendar year ending December 31,
2016, is in the best interests of the Company and its shareholders. As a matter
of good corporate governance, shareholders are being asked to ratify the Audit Committees
selection of the independent auditor.
☑ |
The Board unanimously recommends a vote FOR this
Proposal |
Proposal 5 Advisory
Vote to Approve Executive Compensation (page 76)
The Company seeks a non-binding advisory
vote from its shareholders to approve the compensation of its named executive
officers (NEOs) as described in the Compensation Discussion and Analysis
section beginning on page 33 and the compensation tables beginning on page 61.
The Board values shareholders opinions and the Compensation Committee will take
into account the outcome of the advisory vote when considering future executive
compensation decisions.
☑ |
The Board unanimously recommends a vote FOR this
Proposal |
2
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Table of Contents
Governance Highlights
We are committed to good corporate
governance practices and believe that Proposals 2 and 3 are in the best
interests of our shareholders. We believe that it strengthens Board and
management accountability and helps build public trust in the Company. In
addition to Proposals 2 and 3 described on pages
25 and 28, the Corporate Governance and Related Matters section beginning on page 17 further
describes our current governance framework, which includes the following
highlights:
✓ |
7
independent directors (we appointed two new directors to our Board in March 2016) |
✓ |
Independent Chairman of the Board |
✓ |
Regular executive sessions of independent directors |
✓ |
Regular Board and committee self-evaluations |
✓ |
Anti-hedging and anti-pledging policies |
✓ |
Insider Trading Policy |
✓ |
Independent Audit, Compensation and Corporate Governance and Directors Nominating Committees |
✓ |
Risk
oversight by full Board and committees |
✓ |
Active
shareholder engagement |
✓ |
Rigorous share ownership guidelines for NEOs and
directors |
✓ |
Clawback Policy (in 2015, we amended our
incentive plans to include clawback
provisions) |
Shareholder Outreach
Over the last few years, we have
undertaken significant shareholder outreach efforts in order to elicit and
understand the concerns of our shareholders. In advance of our 2015 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 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. After implementing
certain changes in 2014 and 2015, our 2015 say-on-pay vote received 83% support.
The Compensation Committee believes the changes made in 2014 and 2015 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. The current frequency of shareholder advisory votes on
executive compensation is every year.
Once again, in advance of our 2016 Annual
Meeting, we engaged with our shareholders and others to seek their feedback. 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 and 2015. The results of this engagement and the Compensation
Committees ongoing efforts to ensure a strong alignment between executive pay
and Company performance, led the committee to make no substantive changes to its executive compensation program. However, in
December 2015, due to budget reductions for 2016, our Chief Executive Officers
(CEO) base salary was reduced by 20%, and all other NEOs base salary was
reduced by 10% effective through all of calendar year 2016. In addition, our
Boards annual cash payments were reduced by 10% through all of calendar year
2016.
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.
During our shareholder outreach in 2015,
two corporate governance issues were discussed with our shareholders: (i) the
ability of shareholders to call special meetings, and (ii) the 80% supermajority
voting requirement on certain amendments to our Certificate of Incorporation and
Bylaws impacting special meetings. At our 2014 Annual Meeting, we asked
shareholders to vote on a proposal to amend our Certificate of Incorporation and
Bylaws to permit shareholders, under certain circumstances, to call special
meetings. Under our Certificate of Incorporation, this change required the
approval by holders of 80% of our outstanding shares of common stock, yet we
only received approval from 41%. We are again submitting this proposal at this
years Annual Meeting. In addition, we are adding another proposal to amend our
Certificate of Incorporation and Bylaws to change the required approval of
certain amendments to the Certificate of Incorporation and Bylaws relating to
the ability to call a special meeting from 80% to a two-thirds voting
standard.
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2016 Proxy Statement 3 |
Table of Contents
Elements of
CEO Pay Mix for 2015 |
CEO Total Direct
Compensation
for 2015 - $3,373,250
✓ |
2015
Base Salary $605,000 (no increase since 2013). |
✓ |
Annual
Incentive Plan Payout $695,750 (115% of target). Paid 50% in cash and
50% in Hecla common stock. |
✓ |
Long-term Incentive Plan Payout $1,072,500. In February
2013, our CEO was awarded 8,250 units under our 2013-2015 Long-term
Incentive Plan. For 2015, the plan paid out $130.00 per unit. Paid 50% in
cash and 50% in Hecla common stock. |
✓ |
Restricted Stock Units In July 2015, our CEO was awarded
204,918 restricted stock units with a grant date fair value of $500,000
($2.44 per share), subject to a three-year vesting schedule (one-third in
June 2016, one-third in June 2017, and one-third in June 2018). |
✓ |
Performance-based Shares: In July 2015, our CEO
was awarded 204,918 performance-based shares with a grant date fair value
of $500,000 ($2.44 per share), the ultimate value of which is based on our
three-year TSR ranking in a peer group. |
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Key Compensation
Actions Taken in 2015 and 2016
Below is a brief summary of actions taken
by the Compensation Committee in 2015 and 2016. The compensation of our NEOs for
2015 is more fully described in the Compensation Discussion and Analysis section
of this Proxy Statement, starting on page 33 and in the compensation tables starting on
page 61.
Adoption of Clawback Provisions in our
Incentive Plans (page 52). In February
2013, the Compensation Committee adopted a clawback policy with respect to
incentive awards to executive officers. In December 2015, the Compensation
Committee amended its incentive plans (Annual Incentive Plan, Long-term
Incentive Plan, Key Employee Deferred Compensation Plan, and 2010 Stock
Incentive Plan) to each include a clawback provision.
Reduction in Base Salaries for the CEO
and other NEOs (page 54). Effective January
1, 2016, the Compensation Committee approved base salary reductions for our
NEOs. Our CEOs base salary was reduced by 20%, and all other NEOs base
salaries were reduced by 10%.
Reduction in Annual Cash Compensation
for our Board (page 16). The Compensation
Committee recommended and the Board approved a 10% reduction in our Boards
annual cash compensation in 2016.
Annual Incentive Plan (AIP) (page
43). For 2015, the quantitative corporate
performance factors were divided proportionally into three factors: production
(20%), adjusted EBITDA (20%) and cash (10%). For 2015, based on the assessment
by the Compensation Committee of the Companys overall performance on both
qualitative and quantitative measures under the AIP, the committee determined
Company performance to be at 115% of target. The 115% was measured by
quantitative achievement at 50%, qualitative achievement at 35%, and
discretionary at 30%.
2013 2015 Long-term Incentive Plan (LTIP)
(page 47). The 2013-2015 LTIP has a maximum potential unit value of $300. The Compensation Committee
assessed performance under the 2013-2015 LTIP as
follows:
|
Performance Measure |
|
Target |
|
Actual Performance |
|
% of Target |
|
Value Earned Per Unit |
|
|
Silver Reserve Growth |
|
30.0 silver oz. added
(millions) |
|
25.4 silver oz. added
(millions) |
|
85% |
|
$20.50 |
|
|
Production Growth |
|
54.1 silver oz. (millions) |
|
59.2 silver oz. (millions) |
|
109% |
|
$43.50 |
|
|
Cash Flow |
|
$848.49 cash flow (millions) |
|
$884.98 cash flow (millions) |
|
104% |
|
$31.50 |
|
|
Total Shareholder Return |
|
50% Hecla ranking vs. peers |
|
69.2% Hecla ranking vs.
peers |
|
138% |
|
$34.50 |
|
|
#4 Shaft Completion |
|
Shaft Completed by 2/15/16 |
|
10/26/16 completion date |
|
0% |
|
No Payout |
|
|
Total Earned Per Unit |
|
|
|
|
|
|
|
$130.00 |
|
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|
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Table of Contents
During the three-year period, performance
in production, cash flow generation, and Total Shareholder Return (TSR)
exceeded the target, and silver reserve growth exceeded the threshold, but was
below target, and #4 Shaft completion was below the threshold. As a result, with
a range in potential value per unit of $0 to $300, in February 2016, the Compensation Committee determined that the total
2013-2015 LTIP payout was $130.00 per unit. The Compensation Committee further
approved payout of the LTIP awards to be 50% in cash and 50% in Hecla common
stock issued under the 2010 Stock Incentive Plan.
2015 Summary Compensation and Realized
Compensation |
Set forth below is the 2015 compensation
for each NEO as determined under Securities and Exchange Commission (SEC)
rules. Total compensation, as reported in the Summary Compensation Table and
calculated under SEC rules, includes several items that are driven by accounting
and actuarial assumptions. Accordingly, it is not necessarily reflective of the
compensation our NEOs actually realized in 2015.
To supplement that disclosure we have added the W-2/T4 Realized Comp. column
to the right of the table below to compare our NEOs 2015 compensation as
determined under SEC rules with W-2/T4 income for 2015, which is the federally
taxable compensation our NEOs received in 2015 inclusive of vested stock and
exercised stock options, if any.
This supplemental table is not designed to
replace the Summary Compensation Table found on page 61, but rather to
provide additional, supplemental compensation disclosure.
2015 Summary Compensation and Realized
Compensation |
|
|
Name and
Principal Position |
|
Salary ($) |
|
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. |
|
605,000 |
|
1,727,174 |
|
1,768,250 |
|
599,477 |
|
15,900 |
|
4,715,801 |
|
|
4,116,324 |
|
2,777,810 |
|
|
President and CEO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James A. Sabala |
|
380,000 |
|
583,700 |
|
822,000 |
|
174,075 |
|
15,900 |
|
1,975,675 |
|
|
1,801,600 |
|
1,585,582 |
|
|
Senior Vice
President |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and CFO |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lawrence P. Radford |
|
380,000 |
|
556,694 |
|
890,000 |
|
105,114 |
|
15,900 |
|
1,947,708 |
|
|
1,842,594 |
|
1,480,083 |
|
|
Senior Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dr. Dean W. A. McDonald |
|
275,000 |
|
480,468 |
|
580,000 |
|
110,743 |
|
15,900 |
|
1,462,111 |
|
|
1,351,368 |
|
1,504,5582 |
|
|
Senior Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David C. Sienko |
|
250,000 |
|
289,933 |
|
397,000 |
|
36,365 |
|
15,900 |
|
989,198 |
|
|
952,833 |
|
900,897 |
|
|
Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General Counsel |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Don Poirier |
|
226,000 |
|
314,950 |
|
401,500 |
|
82,950 |
|
15,900 |
|
1,041,300 |
|
|
958,350 |
|
1,036,9022 |
|
|
Former Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate Development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1 |
The amounts reported in this
column include 2015 salary, vested stock received in 2015, equity and cash
portion of 2014 Annual Incentive, and equity and cash portion of 2012-2014
Long-term Incentive, which were paid in March 2015. Also includes
performance shares that vested in 2015 for Mr. Baker. |
2 |
Dr. McDonald and Mr. Poiriers
realized compensation is reflected in Canadian dollars as reported on
their T4. |
|
|
125
Years |
|
|
2016 Proxy Statement 5 |
Table of Contents
PROXY
STATEMENT
Board
of Directors Selection Process
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.
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 addresses 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 (or sooner when appropriate).
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 (i) continue to satisfy the committees criteria for membership on the
Board, (ii) the committee believes continue to make important contributions to
the Board, and (iii) 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.
6 www.hecla-mining.com |
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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 87. 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 87.
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 stock 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 development
of 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.
|
125
Years |
|
2016 Proxy Statement 7 |
Table of Contents
Selection of New Directors
in 2016 |
In December 2015, we were saddened to
announce the passing of one of our directors, John H. Bowles. After Mr. Bowles
passing, we reduced the size of the Board to six. After many discussions with
potential director candidates, and careful consideration, on March 1, 2016, the
Corporate Governance and Directors Nominating Committee recommended and the
Board approved an increase in the size of the Board from six to eight and
appointed two new directors to our Board.
Mr. Stephen F. Ralbovsky was appointed as
a Class II director (standing for election in 2018), filling a vacancy created
by the death of John H. Bowles. Mr. Ralbovsky is a certified public accountant
and was a partner with PricewaterhouseCoopers, LLP from February 1987 until his
retirement in June 2014. He has over 36 years experience in taxation, auditing
and accounting, where he specialized in the mining industry. The Corporate
Governance and Directors Nominating Committee and Board determined that Mr.
Ralbovsky was independent under the New York Stock Exchange listing standards.
The Board also appointed Mr. Ralbovsky to serve on the Audit Committee and the
Corporate Governance and Directors Nominating Committee.
Mr. George R. Johnson was appointed as a
Class I director (standing for election in 2017), to fill a resulting vacancy
when the Board increased the size of the Board from six to eight directors. Mr.
Johnson is a mining engineer and most recently served as Senior Vice President
of Operations at B2Gold Corporation from August 2009 until his retirement in May
2015. Mr. Johnson also held many positions with Hecla in the early 1980s
through 1999 and is very familiar with the Companys operations. He has over 45
years of foreign and domestic experience in underground and open-pit mine
construction and operations management. The Corporate Governance and Directors
Nominating Committee and Board determined that Mr. Johnson was independent under
the New York Stock Exchange listing standards. The Board also appointed Mr.
Johnson to serve on the Audit Committee and the Health, Safety, Environmental
and Technical Committee.
8
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125
Years |
|
Table of Contents
PROPOSAL 1 ELECTION OF
DIRECTORS |
PROPOSAL 1 ELECTION OF
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 three directors
whose terms will expire at the 2016 Annual Meeting: Ted Crumley, Terry V. Rogers
and Charles B. Stanley.
At a meeting held by the Corporate
Governance and Directors Nominating Committee in February 2016, the committee
determined that the three directors whose terms are expiring - Messrs. Crumley,
Rogers and Stanley - were qualified candidates to stand for re-election at the
Annual Meeting, and the Board designated Messrs. Crumley, Rogers and Stanley as
nominees for re-election as directors of the Company, each for a three-year term
expiring in 2019. 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 Ted Crumley, Terry V. Rogers and Charles B. Stanley. 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.
|
125
Years |
|
|
2016 Proxy Statement 9 |
Table of Contents
PROPOSAL 1 ELECTION OF
DIRECTORS |
Current Nominees for
Election to the Board Term Ending at the 2016 Annual
Meeting |
If elected, the nominees will each serve
for a three-year term ending in 2019. The nominees are as follows:
|
|
|
|
|
|
|
|
Ted
Crumley Former Executive Vice President and Chief Financial Officer
OfficeMax Incorporated Director since: 1995 Board
Chairman since 2006 Age:
71 Other
Directorships: None Hecla
Committees: |
|
|
|
● |
Executive |
|
|
|
|
● |
Compensation |
|
Mr. Crumley served as Executive Vice
President and Chief Financial 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.
Board Qualification and
Skills:
High Level of Financial
Experience: Substantial financial
experience gained from a long career with OfficeMax Incorporated and Boise
Cascade Corporation.
Senior Leadership/Executive Officer
Experience: Has over 30 years experience
in management, finance and accounting in the natural resources industry. Served
in numerous senior leadership positions, including Executive Vice President and
Chief Financial Officer of OfficeMax Incorporated and Senior Vice President and
Chief Financial Officer of Boise Cascade Corporation.
Significant Public Company Board
Experience: Over 20 years of service on
Heclas Board, including as Chairman since 2006.
Extensive Knowledge of the Companys
Business and Industry: With over 20
years of service on Heclas Board, Mr. Crumley understands all aspects of
our business, including the mining elements.
Designations: Holds a BA in Business Administration with a major in
Accounting.
|
|
|
|
|
|
|
|
Terry V. Rogers, C. Dir.,
H.R.C.C.C. Former Senior
Vice President and Chief Operating Officer Cameco
Corporation Director since: 2007 Age:
69 Other Directorships: Centerra Gold Inc. Hecla Committees: |
|
|
|
● |
Health, Safety, Environmental and
Technical (Chair) |
|
|
|
● |
Compensation |
|
|
|
● |
Audit |
|
|
|
|
● |
Executive |
|
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 Centerra Gold Inc., a gold mining company, since February
2003.
Board Qualification and
Skills:
High Level of Financial
Experience: Financial experience gained
from his senior leadership/executive officer experience with Cameco Corporation
and Kumtor Operating Company.
Senior Leadership/Executive Officer
Experience: Has experience in management
in the mining industry. Served in numerous senior leadership positions,
including Senior Vice President and Chief Operating Officer of Cameco
Corporation, and former President of Kumtor Operating Company (a subsidiary of
Cameco Corporation).
Significant Public Company Board
Experience: In addition to serving on the
Board of Hecla, has over 12 years of service on the Board of Centerra Gold Inc.,
including as independent lead director, chairman of the human resources and
compensation committee, and a member of the audit committee.
Extensive Knowledge of the Companys
Business and Industry: Over 30 years
experience in the mining industry, including, opencast, open-pit and underground
operations in coal, gold, and uranium mines around the world.
Certified
Designations: Obtained Chartered Director
(C. Dir.) designation from The Directors College in 2011, as well as the Human
Resources and Compensation Committee Certified (H.R.C.C.C.) designation from The
Directors College in 2013.
10
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125
Years |
|
Table of Contents
PROPOSAL 1 ELECTION OF
DIRECTORS |
|
|
|
|
|
|
|
|
Charles B.
Stanley Chief Executive
Officer, President and Chairman of the Board QEP Resources,
Inc. Director
since: 2007 Age: 57 Other
Directorships: QEP Resources,
Inc. Hecla
Committees: |
|
|
|
● |
Audit (Chair) |
|
|
|
● |
Health, Safety, Environmental and
Technical |
|
|
|
|
● |
Corporate Governance and Directors
Nominating |
|
Mr. Stanley has been Chief Executive
Officer and President 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; and Executive Vice President and Director of Questar
Corporation from February 2002 to June 2010.
Board Qualification and
Skills:
High Level of Financial
Experience: Substantial financial
experience gained from a long career with QEP Resources, Inc. and Questar
Corporation.
Extensive Senior
Leadership/Executive Officer Experience:
In addition to his current position as Chief Executive Officer and President of
QEP Resources, Mr. Stanley served in numerous other senior leadership positions,
including Chief Executive Officer and President of QEP Midstream Partners, LP,
and Chief Operating Officer of Questar Corporation.
Significant Public Company Board
Experience: In addition to serving on the
Board of Hecla, has served on the board of QEP Resources, Inc. the past 5 years
and as Chairman of the Board since 2012. Prior to serving on QEPs board, Mr.
Stanley served on the board of Questar Corporation. He also serves on the boards
of various natural gas industry trade organizations, including the American
Exploration and Production Council and Americas Natural Gas
Alliance.
Extensive Knowledge of the Companys
Business and Industry: Over 32 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.
Designations: Holds a B.S./MS in Geology.
|
The Board
recommends that shareholders vote FOR the election of Ted Crumley, Terry
V. Rogers and Charles B. Stanley |
|
125
Years |
|
|
2016 Proxy Statement 11 |
Table of Contents
PROPOSAL 1 ELECTION OF
DIRECTORS |
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 appointed or
elected.
Continuing Members of the
Board Term Ending at the 2017 Annual
Meeting |
|
|
|
|
|
|
|
|
Phillips S. Baker,
Jr. President and Chief
Executive Officer Director since: 2001 Age:
56 Other Directorships: QEP Resources, Inc. Hecla Committees: |
|
|
|
|
● |
Executive (Chair) |
|
Mr. Baker has been our CEO 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.
Board Qualification and
Skills:
High Level of Financial
Experience: Substantial financial
experience gained in his roles of President, CEO, and previously as Chief
Financial Officer and Chief Operating Officer of the Company.
Extensive Senior
Leadership/Executive Officer Experience:
In addition to serving as Heclas President and CEO, served as Chief Financial
Officer and Chief Operating Officer. Has 18 years management experience in the
mining industry.
Significant Public Company Board
Experience: In addition to serving on the
Board of Hecla, has served on the board of QEP Resources for 11 years. He serves
as chair of the audit committee and as a member of the governance committee for
QEP Resources, Inc.
Extensive Knowledge of the Companys
Business and Industry: Over 29 years
experience in the mining industry.
Designations: Holds J.D. degree (law) and is a Certified Public
Accountant.
|
|
|
|
|
|
|
|
Dr. Anthony P.
Taylor President, Chief
Executive Officer and Director Selex Resources
Ltd. Director
since: 2002 Age: 74 Other
Directorships: Caughlin Preschool
Co. Hecla
Committees: |
|
|
|
● |
Corporate Governance and Directors
Nominating (Chair) |
|
|
|
● |
Health, Safety, Environmental and
Technical |
|
|
|
|
● |
Compensation |
|
Dr. Taylor has served as President, Chief
Executive Officer 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, a public Canadian minerals 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.
Board Qualification and
Skills:
Extensive Knowledge of the Companys
Business and Industry: Over 51 years
experience in the mining industry in all levels of exploration from a field
geologist to senior management. 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.
Extensive Senior
Leadership/Executive Officer Experience:
Has extensive experience in management in the mining industry. Served in
numerous senior leadership positions, including Executive Chairman of Crown Gold
Corporation and Chief Executive Officer and Director of Gold Summit
Corporation.
Significant Public Company Board
Experience: Over 13 years of service on
Heclas Board.
Designations: Holds a Ph.D in Geology.
12
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Table of Contents
PROPOSAL 1 ELECTION OF
DIRECTORS |
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George R.
Johnson Former Senior Vice
President of Operations B2Gold Corporation Director since: 2016 Age: 67 Other
Directorships: None Hecla Committees: |
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● |
Health, Safety, Environmental and
Technical |
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● |
Audit |
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Mr. Johnson served as Senior Vice
President of Operations of B2Gold Corporation, a Canadian-based gold producing
company, from August 2009 until his retirement in May 2015. He is a former
Senior Vice President of Russian Operations of Kinross Gold Corporation, a
senior gold mining company, from March 2007 to August 2009, and Senior Vice
President of Operations of Bema Gold Corporation, a gold producing company, from
October 1999 to March 2007.
Board Qualification and
Skills:
Extensive Knowledge of the Companys
Business and Industry: Over 45 years of
foreign and domestic experience in underground and open-pit mine construction
and operations management. Served as Vice President Metal Mining for Hecla
from May 1996 to 1999 where he was responsible for performance of Heclas metals
division, including mines operated by Hecla and joint ventures with other
companies, exploration programs, business development, capital projects and
corporate technical services. He held various other positions with Hecla from
1983 to 1990, including as general manager of Heclas Lucky Friday mine from
July 1986 to February 1989; mine superintendent from November 1984 to June 1986,
and development foreman from October 1983 to 1984.
Senior Leadership/Executive Officer
Experience: Has extensive experience in
management in the mining industry. Served in numerous senior leadership
positions including Senior Vice President of Operations for B2Gold Corporation,
Senior Vice President of Russian Operations for Kinross Gold Corporation, and
Senior Vice President of Operations for Bema Gold Corporation.
Designations: Holds B.S. in mining engineering.
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2016 Proxy Statement 13 |
Table of Contents
PROPOSAL 1 ELECTION OF DIRECTORS |
Continuing Members of the
Board Term Ending at the 2018 Annual
Meeting |
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George R. Nethercutt,
Jr. Chairman of The George
Nethercutt Foundation and Of Counsel for Lee & Hayes
PLLC Director
since: 2005 Age: 71 Other
Directorships: Washington Policy
Center ARCADIS Corporation Juvenile Diabetes Research
Foundation International (Board of
Chancellors) Hecla Committees: |
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● |
Compensation (Chair) |
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● |
Corporate Governance and Directors
Nominating |
|
Mr. Nethercutt has served as Chairman of
The George Nethercutt Foundation, a non-profit 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.
Board Qualification and
Skills:
Extensive Knowledge of the Companys
Business and Industry: Served as a U.S.
Congressman and focused on natural resource policies, mining legislation and
environmental policies on public lands.
Extensive Government Leadership
Experience: Has extensive political
background, including 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. Served as chief of staff to a U.S. Senator from
Alaska, working on such issues as agriculture, fisheries, timber and mining. He
had his own consulting business which consisted of representing clients with
mining and natural resource issues.
Significant Public Company Board
Experience: Over 10 years of service on
Heclas Board.
Designations: Holds a J.D. degree (law) and is
a member of the Washington State Bar Association.
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Stephen F.
Ralbovsky Former Partner
with PricewaterhouseCoopers LLP Director since:
2016 Age:
62 Other Directorships: None Hecla Committees: |
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● |
Audit |
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● |
Corporate Governance and Directors
Nominating |
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Mr. Ralbovsky was a partner with
PricewaterhouseCoopers LLP, an accounting firm, from February 1987 until his
retirement in June 2014, where he concentrated his practice on public companies
operating in the mining industry. He previously served on the Board and as
Treasurer of the American Heart Association Arizona Affiliate, a non-profit
organization dedicated to fighting heart disease, from July 1991 to June 1995;
Board member (and President for one year) of Southwest Human Development, a
non-profit dedicated to early childhood development, from June 1990 to June
1996; and Advisory Board member of Diocese of Phoenix Catholic Cemeteries and
Mortuaries, a non-profit organization, from July 2009 to July 2012. Mr.
Ralbovsky is also a member of several organizations, including: AICPA, Arizona
Society of CPAs, National Mining Association, and Society for Mining, Metallurgy
and Exploration.
Board Qualification and
Skills:
High Level of Financial
Experience: Over 36 years experience in
taxation, auditing and accounting.
Extensive Knowledge of the Companys
Business and Industry: Over 36 years
experience in accounting, where he was heavily involved in the mining industry
with emphasis in global mining tax and royalty policy.
Extensive Senior Leadership
Experience: Has extensive experience in
leadership in the accounting industry. Served in numerous senior leadership
positions, including US Mining Leader, US Mining Tax Leader, Global Mining Tax
Leader and Tax Partner for PricewaterhouseCoopers LLP.
Designations: Holds a J.D. degree (law), BBA in Accounting, and is a
Certified Public Accountant.
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Table of Contents
COMPENSATION OF NON-MANAGEMENT
DIRECTORS |
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 37 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.
2015 Compensation Changes for
Non-Management Directors
As a result of its periodic review of
Board compensation, in 2015, the Compensation Committee recommended and the
Board approved an increase in the annual equity award under the 2010 Stock
Incentive Plan from $61,000 to $76,000.
Cash Compensation
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.
Equity Compensation
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 New York Stock Exchange
(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, 2015, there were 506,921 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 July 2015, the Compensation Committee recommended
that the Board award $76,000
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2016 Proxy Statement 15 |
Table of Contents
COMPENSATION OF NON-MANAGEMENT
DIRECTORS |
of additional stock to the directors as
part of their compensation. The Board approved the additional award, and each of
the directors received 31,148 additional shares under the 2010 Stock Incentive
Plan in July 2015.
As described more fully above, the
following chart summarizes the annual cash and equity compensation for our
non-management directors during 2015.
Non-Management Director Compensation for
2015
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Fees |
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Director |
|
Annual Retainer
($) |
|
Committee Meeting Fees
($) |
|
Committee Chairman Fees
($) |
|
Totals Fees Paid in Cash
($) |
|
Stock Awards1
($) |
|
All Other Compensation ($) |
|
Total ($) |
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Ted
Crumley, |
|
156,000 |
|
20,000 |
|
0 |
|
176,000 |
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25,0072
|
|
0 |
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277,008 |
|
|
Chairman |
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|
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76,0013 |
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John H. Bowles |
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66,000 |
|
28,000 |
|
12,000 |
|
106,000 |
|
25,0072 |
|
0 |
|
207,008 |
|
|
|
|
|
|
|
|
|
|
|
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76,0013 |
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|
|
|
|
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George R. Nethercutt, Jr. |
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66,000 |
|
20,000 |
|
12,000 |
|
98,000 |
|
25,0072 |
|
0 |
|
199,008 |
|
|
|
|
|
|
|
|
|
|
|
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76,0013 |
|
|
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Terry V. Rogers |
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66,000 |
|
32,000 |
|
8,000 |
|
106,000 |
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25,0072 |
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0 |
|
207,008 |
|
|
|
|
|
|
|
|
|
|
|
|
76,0013 |
|
|
|
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Charles B. Stanley |
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66,000 |
|
28,000 |
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0 |
|
94,000 |
|
25,0072 |
|
0 |
|
195,008 |
|
|
|
|
|
|
|
|
|
|
|
|
76,0013 |
|
|
|
|
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Dr. Anthony P. Taylor |
|
66,000 |
|
28,000 |
|
8,000 |
|
102,000 |
|
25,0072 |
|
0 |
|
203,008 |
|
|
|
|
|
|
|
|
|
|
|
|
76,0013 |
|
|
|
|
|
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, 2015. |
2 |
On May 29, 2015, each
non-management director received 8,041 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 29, 2015 ($3.11), the grant date
fair value for each grant of 8,041 shares credited to Messrs. Crumley,
Bowles, Nethercutt, Rogers, Stanley and Taylor on May 29, 2015, was
$25,007. (The amounts do not reflect the actual amounts that may be
realized by the directors.) |
3 |
On July 1, 2015, each
non-management director received 31,148 shares of our common stock under
the terms of the 2010 Stock Incentive Plan. Based on our closing stock
price on the NYSE on July 1, 2015 ($2.44), the grant date fair value for
each grant of 31,148 shares credited to Messrs. Crumley, Bowles,
Nethercutt, Rogers, Stanley and Taylor on July 1, 2015, was $76,001. (The
amounts do not reflect the actual amounts that may be realized by the
directors.) |
2016 Compensation Changes for
Non-Management Directors
Effective January 1, 2016, the
Compensation Committee recommended and the Board approved a 10% reduction in the
annual cash compensation paid to non-management directors in 2016.
Other
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.
Retirement Age
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, 2015, the average age of members of our Board was approximately 68 and the
average tenure of our Board was approximately 11 years. With the addition of two
new members to the Board in February 2016, the average age of members of our
Board is now approximately 67 and the average tenure of our Board is
approximately 8 years.
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Table of Contents
CORPORATE GOVERNANCE AND RELATED
MATTERS |
CORPORATE GOVERNANCE AND RELATED
MATTERS
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 Boards Role and Activities in
2015
Heclas Board acts as the ultimate
decision-making body of the Company and advises and oversees management, who are
responsible for the day-to-day operations and management of the Company. In
carrying out its responsibilities, the Board reviews and assesses Heclas
long-term strategy. During 2015, there were four meetings of the Board.
Directors are expected to make every effort to
attend the Annual Meeting, all Board meetings and the meetings of the committees
on which they serve. All members of the Board attended last years Annual
Meeting of Shareholders, which was held in May 2015. In 2015, each director
attended over 95% of the meetings of the Board and the committees of which he
was a member.
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
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 and other corporate governance matters.
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2016 Proxy
Statement 17 |
Table of Contents
CORPORATE GOVERNANCE AND RELATED
MATTERS |
The Compensation Committee assesses and
monitors whether any of the Companys compensation policies and programs have
the potential to encourage excessive risk-taking. In 2015, with the assistance
of Mercer (US) Inc. (Mercer), a wholly owned subsidiary of Marsh &
McLennan Companies, Inc. (a compensation consulting firm engaged by the
committee), the committee assessed the Companys compensation arrangements to
determine if their provisions and operation create undesired or unintentional
risks of a material nature. The committee found that our compensation policies
and practices do not create inappropriate or unintended significant risk to the
Company as a whole.
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 chair will raise risks at the next
scheduled meeting of the Board, or sooner if material.
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.
Director Independence
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
member4 is, or has been within the last three years, an
executive officer;5 |
● |
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. |
4 |
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. |
5 |
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, or any successor
rule. |
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125 Years |
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Table of Contents
CORPORATE GOVERNANCE AND RELATED
MATTERS |
Pursuant to our Corporate Governance
Guidelines, the committee undertook its annual review of director independence
in February 2016. 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 24 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:
Terry V. Rogers |
Dr. Anthony P. Taylor |
Charles B. Stanley |
George R. Nethercutt, Jr. |
Ted Crumley |
Stephen F. Ralbovsky |
George R. Johnson |
|
Messrs. Stanley and Baker both serve as
members of the board of directors of QEP Resources, Inc., of which Mr. Stanley
is also the 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 serves 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.
Family Relationships
There are currently no family
relationships between the directors or executive officers of Hecla.
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 meeting and during 2015, 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.
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2016 Proxy
Statement 19 |
Table of Contents
CORPORATE GOVERNANCE AND RELATED
MATTERS |
Board Self-Evaluation
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 chair 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.
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 committees are composed entirely of independent directors. With
the exception of the Executive Committee, the charters of each of the other
committees are available on the Companys website at http://www.hecla-mining.com
under Investors 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 2015.
In 2015, the Audit Committee consisted of
John H. Bowles (Chair), Charles B. Stanley, and Terry V. Rogers. After the
passing of Mr. Bowles in December 2015, the Corporate Governance and Directors
Nominating Committee and Board appointed Charles B. Stanley as the Chair and
also appointed Ted Crumley to the Audit
Committee. As of the filing of the Companys financial statements in its Annual
Report on Form 10-K for the year ended December 31, 2015, on February 23, 2016,
the committee members consisted of Charles B. Stanley (Chair), Ted Crumley and
Terry V. Rogers.
At a meeting held in February 2016, the
Corporate Governance and Directors Nominating Committee recommended and the
Board approved the appointment of George R. Johnson and Stephen F.
Ralbovsky to the Audit Committee, effective March 1, 2016. Mr. Johnson was also
appointed to the Health, Safety, Environmental and Technical Committee,
effective March 1, 2016. Mr. Ralbovsky was also appointed to the Corporate
Governance and Directors Nominating Committee, effective March 1,
2016.
At the effective time of the appointments
of Messrs. Johnson and Ralbovsky to the Audit Committee on March 1, 2016, Mr.
Crumley withdrew as a member of the Audit Committee.
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Executive Committee
Members |
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Functions of the
Committee |
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Meetings in
2015 |
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Phillips S. Baker, Jr., Chair Ted
Crumley Terry V. Rogers |
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●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 |
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None |
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Audit Committee
Members1, 2,
3 |
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Functions of the
Committee |
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Meetings in
2015 |
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Charles B. Stanley, Chair Terry
V. Rogers Ted Crumley4 George R. Johnson5 Stephen F. Ralbovsky5 |
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●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
31 |
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8 |
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CORPORATE GOVERNANCE AND RELATED
MATTERS |
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Compensation Committee
Members2 |
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Functions of the
Committee |
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Meetings in
2015 |
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George R. Nethercutt, Jr.,
Chair Ted Crumley Terry V. Rogers Dr. Anthony P.
Taylor |
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●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 33 |
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5 |
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Corporate
Governance and Directors Nominating Committee
Members2 |
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Functions of the
Committee |
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Meetings in
2015 |
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Dr. Anthony P. Taylor,
Chair George R. Nethercutt, Jr. Charles B. Stanley Stephen F.
Ralbovsky5 |
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●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 |
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4 |
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Health,
Safety, Environmental & Technical Committee Members |
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Functions
of the Committee |
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Meetings in
2015 |
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Terry V. Rogers, Chair Charles B.
Stanley Dr. Anthony P. Taylor George R.
Johnson5 |
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●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 |
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4 |
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1 |
The Board has determined that
each of the members of the Audit Committee is financially literate and
Messrs. Stanley, Rogers, Crumley and Ralbovsky each qualify 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
satisfies the definition of independent director as established in the
NYSE listing standards and SEC rules. |
3 |
Mr. Rogers serves on the audit
committee of one Canadian public company. During his tenure on the Audit
Committee, Mr. Crumley did not serve on the audit committee of any other
public company. Messrs. Stanley, Ralbovsky and Johnson do not serve on the
audit committee of any other public companies. |
4 |
Effective March 1, 2016, Mr.
Crumley withdrew from being a member of the Audit Committee. |
5 |
Messrs. Johnson and Ralbovsky
were appointed to these Committees effective March 1, 2016. |
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2016 Proxy
Statement 21 |
Table of Contents
CORPORATE GOVERNANCE AND RELATED
MATTERS |
Diversity Policy
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.
Director Communications
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 Investors and
then select the tab entitled Corporate Governance for any changes in this
process.
Succession Planning
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 as part of the process to identify and gauge the
availability of qualified candidates for those 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 2015, the Compensation Committee
conducted a full executive talent review of all NEOs, 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 2015, 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 a 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 Chairman until his successor is duly elected.
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CORPORATE GOVERNANCE AND RELATED
MATTERS |
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 Investors 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.
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
promote the conduct of our business 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 CEO, 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 Chair of the Corporate Governance and Directors Nominating
Committee, or through an anonymous telephone hotline.
Whistleblower
Policy
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.
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2016 Proxy Statement 23 |
Table of Contents
CORPORATE GOVERNANCE
AND RELATED MATTERS |
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 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, 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. 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 made 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 2015. The Foundation
holds 270,140 shares of our common stock as of December 31, 2015. The value of
those shares based on the closing price of our common stock on the NYSE on
December 31, 2015 ($1.89), was $510,565. In 2015, the Foundation gave
$331,575.13 in donations.
In 2015, we did not make any contribution
to any charitable organization of which a director served as an executive
officer, which exceeded the greater of $1 million or 2% of the charitable
organizations consolidated gross revenues.
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PROPOSAL 2 APPROVAL OF AMENDMENTS TO THE COMPANYS CERTIFICATE OF
INCORPORATION AND BYLAWS TO REMOVE CERTAIN 80% SUPERMAJORITY VOTING
PROVISIONS |
PROPOSAL 2 APPROVAL
OF AMENDMENTS TO THE COMPANYS CERTIFICATE OF INCORPORATION AND BYLAWS TO REMOVE
CERTAIN 80% SUPERMAJORITY VOTING PROVISIONS
Overview
There are certain provisions in our
Certificate of Incorporation (the Certificate)
and Bylaws that can only be revised through the affirmative vote of the holders
of at least 80% of the voting power of the then outstanding shares of our
capital stock entitled to vote generally in the election of directors. We refer
to these shares as Voting Stock and to this voting requirement as 80%
supermajority throughout this Proposal 2 and Proposal 3. Certain of these
provisions relate to the authority to call special meetings of shareholders, and
currently, only our Board has such authority.
We are seeking the approval of our
shareholders to amend our Certificate and Bylaws to remove those 80%
supermajority voting requirements that impact who may call special meetings of
shareholders, and replace them with two-thirds voting standards. We refer to
this lower voting requirement as two-thirds vote throughout this Proposal 2
and Proposal 3. If approved, this proposal would become effective upon the
filing of an amendment to our Certificate with the Secretary of State of
Delaware, which we intend to do promptly after the required shareholder approval
is obtained, at which time the related amendment to our Bylaws would also become
effective.
As described more fully below under
Proposal 3, in 2014, we sought the approval of our shareholders to amend the
Certificate and Bylaws to add a right permitting shareholders who have held at least a 25% net long position in our
outstanding common stock for at least 120 days to call special meetings of
shareholders, subject to the conditions set forth in our Bylaws (we refer to
this as the Special Meeting Proposal). In order to implement the Special
Meeting Proposal, an 80% supermajority vote of our shareholders was required.
The 80% supermajority vote was not obtained in 2014 and as a result we were
unable to implement the Special Meeting Proposal.
We are again proposing the Special Meeting
Proposal at our 2016 Annual Meeting of Shareholders. It is described in Proposal
3 below.
We believe that the 80% supermajority vote
requirement is an impediment to implementing the Special Meeting Proposal
because of the difficulty in getting the holders of that many shares to vote at
a shareholders meeting. If instead of the 80% supermajority provisions, the
required vote to implement the Special Meeting Proposal was two-thirds of the
Voting Stock, we believe the Special Meeting Proposal would have a better chance
to be approved by our shareholders. However, even with the change to the lower
two-thirds vote requirement, there is no assurance that the Special Meeting
Proposal will be approved by the required vote of our shareholders. See
Required Vote, Our Boards Recommendation and
Additional Information below.
Current Provisions in
Certificate and Bylaws
Currently, the Certificate states that
shareholders can alter, amend or repeal certain Bylaws relating to calling a
special meeting of shareholders, only if that action is approved by the
affirmative vote of the holders of at least 80% of the voting power of the then
outstanding shares of Voting Stock, voting together as a single class (this
supermajority voting provision is in Article V of the Certificate). Likewise,
the Certificate currently states that a supermajority vote of at least 80% of the voting power of the then outstanding Voting
Stock, voting together as a single class, is necessary to alter, amend or repeal
Article VII of the Certificate, which provides that special meetings of
shareholders can only be called by our Board. Finally, the Bylaws also contain a
similar provision regarding amending the provision therein concerning calling
special meetings of shareholders.
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2016 Proxy Statement 25 |
Table of Contents
PROPOSAL 2 APPROVAL OF AMENDMENTS TO THE COMPANYS CERTIFICATE OF
INCORPORATION AND BYLAWS TO REMOVE CERTAIN 80% SUPERMAJORITY VOTING
PROVISIONS |
Set forth below are the relevant
provisions of the Certificate and Bylaws:
ARTICLE V.
Bylaws
In furtherance and not in limitation of
the powers conferred by law, the Board is expressly authorized to make, repeal,
alter, amend and rescind the bylaws of the Corporation by a majority vote of the
entire Board at any regular or special meeting of the Board; provided, however that, notwithstanding anything contained
in this Certificate of Incorporation or the Bylaws of the Corporation to the
contrary, the affirmative vote of the holders of at least 80% of the voting
power of the then outstanding shares of Voting Stock, voting together as a
single class, shall be required to (i) alter, amend or repeal any provision of
the Bylaws which is substantially identical to and/or implements the last
sentence of Article IV or Articles VI, VII or VIII, of this Certificate of
Incorporation, or (ii) alter, amend or repeal any provision of this proviso to
Article V.
ARTICLE VII.
Actions by
Shareholders
Any action required or permitted to be
taken by the shareholders of the Corporation must be effected at a duly called
annual or special meeting of shareholders of the Corporation and may not be
effected by any consent in writing by such shareholders. Special meetings of shareholders of the Corporation may be
called only by the Board pursuant to a resolution approved by a majority of the
entire Board. Notwithstanding anything contained in this Certificate of
Incorporation to the contrary, the affirmative vote of the holders of at least
80% of the voting power of the then outstanding shares of Voting Stock, voting
together as a single class, shall be required to alter, amend or repeal this
Article VII.
ARTICLE VI.
Amendments
These Bylaws may be altered or repealed
and Bylaws may be made at any annual meeting of the shareholders or at any
special meeting thereof if notice of the proposed alteration or repeal of Bylaws
to be made be contained in the notice of such meeting, by the affirmative vote
of the holders of a majority of the total voting power of all outstanding shares
of the voting stock of the Corporation. These Bylaws may also be altered or
repealed and Bylaws may be made by the affirmative vote of a majority of the
Board of Directors, at any annual or regular meeting of the Board of Directors,
or at any special meeting of the Board of Directors if notice of the proposed
alteration or repeal, or Bylaws or Bylaws to be made, be contained in the notice
of such special meeting.
Notwithstanding anything contained
in these Bylaws to the contrary, the affirmative vote of the holders of at least
80% of the voting power of all of the shares of the capital stock of the
Corporation entitled to vote generally in the election of directors, voting
together as a single class, shall be required to alter, amend or repeal Section
4 or 6 of Article II, or Section 1, 2 or 3 of Article III, of these
Bylaws.
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PROPOSAL 2 APPROVAL OF AMENDMENTS TO THE COMPANYS CERTIFICATE OF
INCORPORATION AND BYLAWS TO REMOVE CERTAIN 80% SUPERMAJORITY VOTING
PROVISIONS |
Proposed Amendments to
Certificate and Bylaws
This Proposal 2 proposes to amend the
Certificate and Bylaws so that future amendments to certain provisions within
the Certificate and the Bylaws can be approved by a two-thirds vote of the
outstanding shares rather than an 80% supermajority vote. Specifically, in this
Proposal 2, we propose:
● |
to amend the supermajority voting
requirement in Article V of the Certificate by specifying that the
applicable threshold to amend the Bylaw provision relating to special
meetings of shareholders is two-thirds. As a result, any future action by
shareholders to alter, amend or repeal the Bylaw relating to calling a
special meeting of shareholders would require approval by the affirmative
vote of at least two-thirds of the voting power of the then outstanding
Voting Stock, voting together as a single
class; |
● |
to amend the supermajority voting
requirement in Article VII of the Certificate by replacing the
reference to 80 percent with
two-thirds, solely with respect to the provision in Article VII
concerning the ability to call special meetings of shareholders. As a
result, any future action by shareholders to alter, amend or repeal the
provisions in the Certificate relating to calling a special meeting of
shareholders would require approval by the affirmative vote of at least
two-thirds of the voting power of the then outstanding Voting Stock,
voting together as a single class; and |
● |
to amend the supermajority voting
requirement in Article VI of the Bylaws by specifying that with respect to
Section 4 of Article II of the Bylaws, the applicable vote threshold is
two-thirds to amend. As a result, any future action by shareholders to
alter, amend or repeal the Bylaw relating to calling a special meeting of
shareholders would require approval by the affirmative vote of at least
two-thirds of the voting power of the then outstanding Voting Stock,
voting together as a single class. |
Required Vote, Our
Boards Recommendation and Additional Information
Our Board is committed to good governance
practices and this Proposal 2 is the result of our Boards ongoing review of our
corporate governance principles. As part of that review, our Board recognizes
that the chances of obtaining shareholder approval of the Shareholder Meeting
Proposal described below in Proposal 3 in the future (if it is not approved at
the 2016 Annual Meeting) may be improved if the changes to the Certificate and
Bylaws described in this Proposal 2 are approved by our shareholders. Although
Proposal 2 and Proposal 3 will each require the affirmative vote of holders of
at least 80% of our outstanding shares of common stock, the approval of one of
these proposals is not conditioned on the other, and if Proposal 2 is passed but
Proposal 3 is not, then if in the future we again seek approval of the Special
Meeting Proposal, it would only need to be approved by the lower two-thirds vote
rather than the current 80% supermajority vote.
After receiving shareholder input and the
advice of management and outside advisors, our Board considered the relative
weight of the arguments in favor of and opposed to maintaining the supermajority
voting requirements described herein. As a result, and based upon the
recommendation of the Corporate Governance and Directors Nominating Committee,
our Board, at its meeting on February 20, 2016, approved and declared advisable and in our shareholders best interests, the
amendments to the Certificate and Bylaws described in this Proposal
2.
The above description is a summary, and is
qualified by and subject to the full text of the proposed amendments to our
Certificate and Bylaws, which are set forth in Appendix A and Appendix
B, respectively. Additions of text contained in the appendices are indicated
by underlining and deletions of text are indicated by strikeouts.
According to our current Certificate and
Bylaws, approval of this proposal requires the affirmative vote of holders of at
least 80% of our outstanding shares of common stock.
☑ |
Our Board recommends that shareholders vote FOR
the amendments to the Certificate of Incorporation and Bylaws to remove
certain 80% supermajority voting requirements and replace them with
two-thirds voting standards as described
above. |
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2016 Proxy Statement 27 |
Table of Contents
PROPOSAL 3 APPROVAL OF AMENDMENTS TO THE COMPANYS CERTIFICATE OF
INCORPORATION AND BYLAWS TO PERMIT SHAREHOLDERS, UNDER CERTAIN
CIRCUMSTANCES, TO CALL SPECIAL MEETINGS OF
SHAREHOLDERS |
PROPOSAL 3 APPROVAL
OF AMENDMENTS TO THE COMPANYS CERTIFICATE OF INCORPORATION AND BYLAWS TO PERMIT
SHAREHOLDERS, UNDER CERTAIN CIRCUMSTANCES, TO CALL SPECIAL MEETINGS OF
SHAREHOLDERS
Overview
We are seeking the approval of our
shareholders to amend our Certificate and Bylaws to add a right permitting
shareholders who have held at least 25% net long position in our outstanding
common stock for at least 120 days to call special meetings of shareholders,
subject to the conditions set forth in our Bylaws, as described below.
Currently, shareholders do not have the right to call special shareholder
meetings; only our Board can call such meetings. If approved, this proposal
would become effective upon the filing of an amendment to our Certificate with
the Secretary of State of Delaware, which we intend to do promptly after the
required shareholder approval is obtained, at which time the related amendment
to our Bylaws would also become effective.
We proposed these same amendments for
shareholder approval at our 2014 Annual Shareholder Meeting. While shareholders
owning almost 41% of our Voting Stock voted in favor of these amendments in
2014, the level of support was not sufficient to approve the amendments.
See Required Vote, Our Boards Recommendation
and Additional Information below. Because our Board continues to believe that these
amendments are appropriate, we are again asking shareholders to vote For these
proposed amendments. In addition, under Proposal 2, we are seeking the approval
of our shareholders to amend our Certificate and Bylaws to remove all 80%
supermajority voting requirements that impact who may call special meetings of
shareholders (other 80% supermajority voting requirements will be unaffected),
and replace them with two-thirds voting standards. If Proposal 2 is passed, we
believe it will improve the chances that (if Proposal 3 is not adopted at the
2016 Annual Meeting) an amendment permitting shareholders to call special
meetings of shareholders under certain circumstances, if proposed in the future,
would be adopted. However, even if Proposal 2 is approved by the required vote
of our shareholders, there is no assurance that this Proposal 3 will be approved
by the required vote of our shareholders. See Required Vote, Our Boards Recommendation and Additional
Information below.
Proposed Amendments to
Certificate and Bylaws
This Proposal 3 proposes to amend the
Certificate and Bylaws to implement the right of shareholders who have held at
least a 25% net long position in our outstanding common stock for at least 120
days to call special meetings of shareholders, subject to compliance with the
requirements set forth in our Bylaws, as proposed to be amended.
Our Board believes that establishing an
ownership threshold of at least 25% in order for a shareholder (or group of
shareholders) to request a special meeting strikes an appropriate balance between enhancing shareholder rights and avoiding
the situations that could arise if the threshold were set so low that a small
minority of shareholders, including shareholders with special interests, could
force the Company to incur the time and expense of convening a special meeting
to consider a matter of little or no interest to other shareholders. Organizing
and preparing for a special meeting involves significant attention of our Board
and management, which could divert their attention from performing their primary
functions: to oversee and operate our business in the best interests
of
28
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Table of Contents
PROPOSAL 3 APPROVAL OF AMENDMENTS TO THE COMPANYS CERTIFICATE OF
INCORPORATION AND BYLAWS TO PERMIT SHAREHOLDERS, UNDER CERTAIN
CIRCUMSTANCES, TO CALL SPECIAL MEETINGS OF
SHAREHOLDERS |
our shareholders. In addition, for every
special meeting of shareholders, the Company incurs significant costs. We will
continue to maintain our existing governance mechanisms that afford management
and our Board the ability to respond to proposals and concerns of all
shareholders, regardless of the level of share ownership.
Establishing a 25% net long position
threshold for the right to call a special meeting would ensure that matters
proposed for consideration have significant support among our shareholders. A
shareholders net long position is generally defined as the amount of common
stock in which the shareholder holds a positive (also known as long) economic
interest, reduced by the amount of common stock in which the shareholder holds a
negative (also known as short) economic interest. In addition, requiring that
shareholders must have held their stock for at least 120 days helps to ensure
that their economic interest in the Companys affairs is more than transitory.
Also during the required 120 day holding period, the Company will continue to
make disclosure through its statutory filings, which may provide shareholders
with information that might avoid an unnecessary call for special meetings of
shareholders.
The proposed amendment to our Bylaws
contains procedural and information requirements for shareholders to call a
special meeting, including, without limitation, that (i) no business may be
conducted at the special meeting except as set forth in the Companys notice of
meeting, (ii) a special meeting will not be held if similar business is to be
covered at an annual or special meeting called by the Board to be held within 90
days after the special meeting request is received by the Secretary, (iii) no
shareholder special meeting request may be made during the period commencing 90
days prior to the first anniversary of the date of the immediately preceding
annual meeting and ending on the date of the next annual meeting, (iv) a special
meeting request cannot cover business substantially similar to what was covered
at an annual or special meeting held not more than 120 days before the special
meeting request was received by the Secretary, (v) any shares beneficially owned
or held of record as of the date of the request and sold by the requesting
holder prior to the meeting will be treated as a revocation of the request to
the extent of the shares sold, and (vi) the requesting shareholders notice must
include information (as specified in the amendment to the Bylaws) as to the
business proposed to be conducted, as to each nominee (if applicable), and as to
the shareholder giving notice and the beneficial owner, if any, on whose behalf
the proposal is made.
Required Vote, Our
Boards Recommendation and Additional Information
Our Board is committed to good governance
practices and this Proposal 3 is the result of our Boards ongoing review of our
corporate governance principles. After receiving shareholder input and the
advice of management and outside advisors, our Board considered the relative
weight of the arguments in favor of and opposed to the ability of shareholders,
under certain circumstances, to call special meetings as described herein. As a
result, and based upon the recommendation of the Corporate Governance and
Directors Nominating Committee, our Board, at its meeting on February 20, 2016,
approved and declared advisable and in our shareholders best interests the
amendments to the Certificate and Bylaws described in this Proposal
3.
The above description is a summary, and is
qualified by and subject to the full text of the proposed amendments to our
Certificate and Bylaws, which are set forth in Appendix C and Appendix D, respectively. Additions of text
contained in the appendices are indicated by underlining and deletions of text
are indicated by strikeouts.
Our Board has approved this proposal, and
according to our current Certificate and Bylaws, approval of this proposal
requires the affirmative vote of holders of at least 80% of our outstanding shares
of common stock.
☑ |
Our Board recommends that shareholders vote FOR
the amendments to the Certificate of Incorporation and Bylaws to permit
shareholders, under certain circumstances, to call special meetings of
shareholders. |
|
125
Years |
|
|
2016 Proxy Statement 29 |
Table of Contents
PROPOSAL 4 RATIFICATION OF APPOINTMENT OF BDO USA, LLP AS THE
COMPANYS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR
2016 |
PROPOSAL 4
RATIFICATION OF APPOINTMENT OF BDO USA, LLP AS THE
COMPANYS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR
2016
The Audit Committee is directly
responsible for the appointment, compensation, retention and oversight of the
independent registered public accounting firm retained to audit our financial
statements. The committee appointed BDO USA, LLP (BDO) as the independent
registered public accounting firm for Hecla for the calendar year ending
December 31, 2016. BDO has been retained in that capacity since 2001. The
committee is aware that a long-tenured auditor may be believed by some to pose
an independence risk. To address these concerns, our committee:
● |
reviews all non-audit services and
engagements provided by BDO, specifically with regard to the impact on the
firms independence; |
● |
conducts a quarterly assessment of
BDOs service quality, and its working relationship with our management;
|
● |
conducts regular private meetings
separately with each of BDO and our management;
|
● |
interviews, and approves the
selection of, BDOs new lead engagement partner with each rotation; and
|
● |
at least annually obtains and
reviews a report from BDO describing all relationships between the
independent auditor and Hecla. |
The members of the committee believe that
the continued retention of BDO to serve as our independent registered public
accounting firm is in the best interests of Hecla and its
shareholders.
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 committee to consider the appointment of a
different firm. Even if the appointment is ratified, the 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.
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.
☑ |
The Audit Committee and Board recommend that
shareholders vote FOR the ratification of the appointment of BDO USA,
LLP as our independent registered public accounting firm for
2016. |
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125
Years |
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Table of
Contents
PROPOSAL 4 RATIFICATION OF APPOINTMENT OF BDO USA, LLP AS THE
COMPANYS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR
2016 |
Report of the Audit Committee
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 2015,
the committee worked with management, our internal auditor and our independent
auditor to address Sarbanes-Oxley Section 404 internal control requirements. The
committee met eight times in 2015.
The committee acts under a written charter
as amended on December 1, 2015. You may obtain a copy of the charter in the
Investors section of http://www.hecla-mining.com under Corporate Governance.
In performing its functions, the Audit
Committee:
● |
met with our internal auditor and
independent registered public accounting firm, with and without management
present, to discuss the overall scope and plans for their respective
audits, the results of their examinations and their evaluations of Heclas
internal controls; |
● |
reviewed and discussed with
management the audited financial statements included in our Annual
Report; |
● |
discussed with our independent
registered public accounting firm the matters required to be discussed by
the applicable Public Company Accounting Oversight Board (PCAOB)
standards; and |
● |
received the written disclosures and
the letter from our independent registered public accounting firm required
by applicable requirements of the PCAOB regarding the independent
registered accountants communication with the Audit Committee concerning
independence, and discussed with them matters relating to their
independence. |
Based on the review and discussions
described in this report, and subject to the limitations on the role and
responsibilities of the Audit Committee referred to above and in the Audit
Committee Charter, the committee recommended to the Board that the audited
financial statements be included in our Annual Report on Form 10-K for the
calendar year ended December 31, 2015, for filing with the SEC.
Respectfully submitted by
The Audit
Committee of the
Board of Directors
Charles B. Stanley,
Chairman6
Terry V. Rogers
Ted Crumley7
6 |
Mr. Stanley assumed the role of
chairman of the Audit Committee following the passing of John H. Bowles in
December 2015. |
7 |
Mr. Crumley was appointed to the
Audit Committee following the passing of Mr.
Bowles. |
|
125
Years |
|
|
2016 Proxy Statement 31 |
Table of
Contents
PROPOSAL 4 RATIFICATION OF APPOINTMENT OF BDO USA, LLP AS THE
COMPANYS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR
2016 |
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, 2015 and December 31,
2014, and fees for other services rendered by BDO during those
periods.
|
|
|
2015 |
|
|
2014 |
|
|
Audit Fees1 |
|
$698,500 |
|
|
$577,700 |
|
|
Audit Related
Fees2 |
|
87,000 |
|
|
87,000 |
|
|
Tax Fees3 |
|
3,600 |
|
|
17,800 |
|
|
All Other Fees |
|
|
|
|
|
|
|
Total |
|
$789,100 |
|
|
$682,500 |
|
1 |
Relates to services rendered in
connection with the annual audit of our consolidated financial statements,
quarterly reviews of financial statements included in our quarterly report
on Form 10-Q, and fees related to the registration of securities with the
SEC. |
2 |
Consisted principally of fees for
audits of financial statements of employee benefit plans. |
3 |
Consisted of fees for tax
consultation and tax compliance services, tax planning and miscellaneous
tax research. |
The committees current practice requires
pre-approval of all audit services and permissible non-audit services to be
provided by the independent registered public accounting firm. The committee
reviews each non-audit service to be provided and assesses the impact of the
service on the firms independence. On a periodic basis, management reports to
the committee regarding the actual spending for projects and services compared to the approved amounts. In addition, the
committee has delegated authority to grant certain pre-approvals to the
committee chair. Pre-approvals granted by the committee chair are reported
to the full committee at its next regularly scheduled meeting.
32 www.hecla-mining.com |
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125 Years |
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Table
of Contents
COMPENSATION DISCUSSION AND
ANALYSIS |
COMPENSATION DISCUSSION AND
ANALYSIS
Our Compensation Committee (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, a 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 |
|
Principal Position |
|
|
Phillips S. Baker, Jr. |
|
56 |
|
President and CEO |
|
|
James A. Sabala |
|
61 |
|
Senior Vice President and Chief Financial Officer |
|
|
Lawrence P. Radford |
|
55 |
|
Senior Vice President Operations |
|
|
Dr.
Dean W.A. McDonald |
|
59 |
|
Senior Vice President Exploration |
|
|
David C. Sienko |
|
47 |
|
Vice President General Counsel |
|
|
Don
Poirier |
|
57 |
|
Former Vice President Corporate Development |
|
Executive Summary
Hecla is a primary leading, low-cost
silver producer with operating silver mines in Alaska (Greens Creek), Idaho
(Lucky Friday), and Mexico (San Sebastian) and is a gold producer with an
operating mine (Casa Berardi) in Quebec, Canada. We also produce lead and zinc.
In addition to our diversified silver and gold operating cash-flow generating
base, we have a number of exploration properties and pre-development projects in
six world-class silver and gold mining districts in North America. 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. Silver, gold, and lead prices declined to annual
averages of $15.70, $1,160, and $0.81, respectively for 2015, from average
prices of $19.08 for silver, $1,266 for gold, and $0.95 for lead for 2014, and
$23.79 for silver, $1,410 for gold, and $0.97 for lead in 2013. Average prices
of zinc in 2015 decreased to $0.88 from $0.98 in 2014, and were slightly higher
than the average of $0.87 in 2013. The decrease
in metals prices negatively impacted our operating results in spite of increased
production of silver, gold, and zinc in 2015 compared to 2014.
In 2015, silver and gold prices continued
to be under pressure and were lower than in 2013 and 2014. We believe the drop
in the prices was largely related to macroeconomic forces such as interest rates
(actual and anticipated), 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,
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 slightly above average (54th percentile). The
chart below shows the change in our share price in 2015 compared to each of the
companies in our peer group.
|
125
Years |
|
|
2016 Proxy Statement 33 |
Table of
Contents
COMPENSATION DISCUSSION AND
ANALYSIS |
Key Operating and Financial
Results
In 2015, our business faced a
challenging silver and gold price environment. We aggressively reduced 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 2015, 2014 and 2013.
|
|
|
As of and for the Year Ended December
31, |
|
|
|
Key
Results |
|
|
2015 |
|
|
|
2014 |
|
|
2013 |
|
|
|
Silver (ounces) produced |
|
|
11,591,603 |
|
|
|
11,090,506 |
|
|
8,919,728 |
|
|
|
Gold (ounces) produced |
|
|
189,327 |
|
|
|
186,997 |
|
|
119,989 |
|
|
|
Lead (tons) produced |
|
|
39,965 |
|
|
|
40,255 |
|
|
30,374 |
|
|
|
Zinc (tons) produced |
|
|
70,073 |
|
|
|
67,969 |
|
|
61,406 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales of products |
|
$ |
443,567 |
|
|
$ |
500,781 |
|
$ |
382,589 |
|
|
|
Net
income (loss) |
|
$ |
(86,968 |
) |
|
$ |
17,824 |
|
$ |
(25,130 |
) |
|
|
Basic income (loss) per common share |
|
$ |
(0.23 |
) |
|
$ |
0.05 |
|
$ |
(0.08 |
) |
|
|
EBITDA8 |
|
$ |
107,316 |
|
|
$ |
151,532 |
|
$ |
69,130 |
|
|
|
Cash from operating activities (in millions) |
|
$ |
106.4 |
|
|
$ |
83.1 |
|
$ |
26.6 |
|
|
|
Cash and cash equivalents (in millions) |
|
$ |
155.2 |
|
|
$ |
209.7 |
|
$ |
212.2 |
|
|
8 |
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 E under Reconciliation of Non-GAAP Measures to
GAAP. |
34
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125
Years |
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Table of
Contents
COMPENSATION DISCUSSION AND
ANALYSIS |
Despite lower metals prices in 2015
compared to 2014, 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 23,
2016. Our 2015 results were strong relative to our 2014 results. In 2015, we
achieved the following:
● |
achieved record silver production at
11.6 million ounces, a 5% increase over 2014, the highest in the Companys
history, at a cash cost, after by-product credit per silver
ounce;9 |
● |
produced 189,327 ounces of gold, a
1% increase over 2014, with a cash cost, after by-product credits, per
gold ounce of $772;9 |
● |
increased zinc production by 3%
compared to 2014 production; |
● |
increased silver equivalent
production 9% over 2014 and 159% over 2013 levels to 37.5 million
ounces; |
● |
increased year-end silver reserve
levels for the tenth consecutive year to the highest in Company history,
with silver reserves up 2%; |
● |
achieved sales of products of $443.6
million, which was within 11% of our record sales in 2014 in spite of
lower average prices for all metals we produce; |
● |
made the decision to develop a
surface mine at our San Sebastian unit in the third quarter of 2015, and
commenced production there in the fourth
quarter; |
● |
acquired Revett Mining Company,
giving us ownership of the Rock Creek project in northwestern
Montana; |
● |
generated operating cash flow of
$106.4 million, a 28% increase from 2014 despite lower metals prices;
and |
● |
ended the year with a cash balance
of $155.2 million. |
Shareholder Outreach and 2015 Advisory
Vote on Executive Compensation
Over the last three years, we have
undertaken significant shareholder outreach efforts in an effort to elicit 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 2015, and we believe as a result of those
changes, last years say-on-pay vote achieved 83% support. We believe that open
dialogue with our shareholders and reflecting their feedback in our compensation
decisions was critical to our success in achieving such a high percentage of
support.
In 2015, and in advance of our 2016 Annual
Meeting, we continued to reach out to our shareholders. We contacted investors
that collectively held over 45% 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
2015 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. During our discussions, all of the changes made to our executive
compensation program in 2014 and 2015 were well-received. The one common issue
raised during our conversations was to see more pay-for-performance disclosure
in our Proxy Statement.
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
assistance from its independent executive compensation consultant, Mercer, and
uses this information in making decisions and conducting its annual review of
the Companys executive compensation program.
9 |
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
measures, can be found in Appendix E 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). |
|
125
Years |
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|
2016 Proxy Statement 35 |
Table of
Contents
COMPENSATION DISCUSSION AND
ANALYSIS |
Role of Independent 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 chair between meetings. As
described on page 37 under Benchmarking
Using Compensation Peer Groups, 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 July 2015, 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 among 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.
The total amount of fees for executive
compensation consulting services Mercer provided to the committee in 2015 was
$108,688.
During 2015, 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 2015 was $150,011. 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.
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 the CEO), 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.
36 www.hecla-mining.com |
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125 Years |
|
Table of
Contents
COMPENSATION DISCUSSION AND
ANALYSIS |
Benchmarking Using Compensation Peer
Groups. 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 five 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 2015, the committee, assisted by
Mercer, removed one peer from the 2014 peer group (Allied Nevada Gold), and
identified two new peers (B2Gold and Primero). For 2015, Heclas peer group was
made up of the following 17 companies, whose aggregate profile was comparable to
Hecla in terms of size, industry and competition for executive talent.
|
Company |
|
Annual Revenue1 ($ millions
US) |
|
Market Cap1 ($ millions
US) |
|
Total Assets1 ($ millions
US) |
|
Corporate Location |
|
|
IAMGOLD Corporation |
|
1,008 |
|
1,019 |
|
4,223 |
|
Canada |
|
|
AuRico Gold Inc. |
|
291 |
|
828 |
|
2,282 |
|
Canada |
|
|
Centerra Gold Inc. |
|
763 |
|
1,229 |
|
1,629 |
|
Canada |
|
|
Pan
American Silver Corporation |
|
752 |
|
1,400 |
|
2,018 |
|
Canada |
|
|
New
Gold Inc. |
|
726 |
|
2,168 |
|
3,882 |
|
Canada |
|
|
Coeur Mining Inc. |
|
636 |
|
528 |
|
1,333 |
|
United States |
|
|
Stillwater Mining Company |
|
944 |
|
726 |
|
1,399 |
|
United States |
|
|
B2Gold Corp. |
|
487 |
|
1,501 |
|
2,119 |
|
Canada |
|
|
Alamos Gold Inc. |
|
170 |
|
910 |
|
880 |
|
Canada |
|
|
Detour Gold Corporation |
|
536 |
|
1,290 |
|
2,517 |
|
Canada |
|
|
Tahoe Resources Inc. |
|
350 |
|
2,053 |
|
976 |
|
United States |
|
|
Primero Mining |
|
275 |
|
622 |
|
915 |
|
Canada |
|
|
Silver Standard Resources Inc. |
|
300 |
|
405 |
|
986 |
|
Canada |
|
|
Thompson Creek Metals Company |
|
807 |
|
356 |
|
2,846 |
|
United States |
|
|
Royal Gold, Inc. |
|
237 |
|
4,916 |
|
2,892 |
|
United States |
|
|
Endeavour Silver Corp. |
|
197 |
|
223 |
|
266 |
|
Canada |
|
|
First Majestic Silver Corp. |
|
246 |
|
590 |
|
771 |
|
Canada |
|
|
Median |
|
487 |
|
910 |
|
1,629 |
|
|
|
|
Hecla Mining Company |
|
501 |
|
1,025 |
|
2,262 |
|
United States |
|
1 |
In $US millions as of year-end
2014. |
The peer group is composed entirely of
publicly held companies, most of which are engaged in the business of mining
precious metals with revenue, market capitalization and total assets within a
reasonable range of Heclas. We believe these peer companies are appropriate
because they are in the same industry, compete with us for executive talent,
have executives in positions similar to ours, and are considered by the
committee to be in an acceptable range of revenue, market capitalization and/or
total assets 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
Compensation Survey |
● |
Mercer Canadian Mining Industry
Compensation Survey |
● |
Mercer U.S. Premium Executive
Remuneration Suite (general industry) |
|
125
Years |
|
|
2016 Proxy Statement 37 |
Table of
Contents
COMPENSATION DISCUSSION AND
ANALYSIS |
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 2015, 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 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
consideration be kept in mind regarding comparisons of our NEO compensation and
Company performance against external benchmarks:
● |
Standard industry classifications
and groupings limited to U.S. companies alone 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 Total Shareholder Return
(TSR) against chemical, construction materials, base metals and forest
products companies 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, is even more
problematic. |
In 2015, the committee also approved a
separate peer group to be used specifically with regard to TSR. The TSR peer
group is as follows:
IAMGOLD Corporation |
AuRico Gold Inc.* |
First Majestic Silver Corp. |
Silver Standard Resources Inc. |
Detour Gold Corporation |
Centerra Gold |
Coeur Mining Inc. |
New Gold Inc. |
B2Gold Corp. |
Pan American Silver Corporation |
Primero Mining |
Alamos Gold Inc.* |
Tahoe Resources Inc. |
Endeavour Silver
Corp. |
* |
AuRico Gold and Alamos Gold
merged in 2015, and are now listed under Alamos Gold
Inc. |
38
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125
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Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS |
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 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 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 the interests of executives with those of
other shareholders. 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 |
|
|
✕ |
Repricing of stock options |
|
|
✕ |
Perquisites |
|
|
✕ |
Excise tax gross-ups |
|
|
We DO Have these Practices |
|
|
✓ |
Incentive award metrics that are objective and
tied to Company performance |
|
|
✓ |
81% of CEO and 71% of NEO pay is
at-risk |
|
|
✓ |
Over 65% of total compensation for the CEO is
performance-based |
|
|
✓ |
46% of total compensation for NEOs other than
the CEO is performance-based and 25% is granted in equity |
|
|
✓ |
100% of the CEOs annual incentive compensation
is tied solely to Company performance |
|
|
✓ |
Rigorous 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 |
|
|
125
Years |
|
|
2016 Proxy
Statement 39 |
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS |
Elements of Total Compensation
We have a multifaceted compensation
program. For the year ended December 31, 2015, 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: Base salary reviews are performed 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 quantitative, such as EBITDA and production,
and cash position, while 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 part 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 (in full or
part).
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). |
|
40 www.hecla-mining.com |
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125 Years |
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Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS |
|
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 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 longterm and to align CEOs interests with those of
shareholders.
Key Features: Performance-based shares realize more value the higher
the TSR ranks within the 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: Increased 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. |
|
|
125
Years |
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|
2016 Proxy
Statement 41 |
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS |
Total Compensation Mix
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.
2015 Target Compensation
Structure. The following table lists total
2015 target compensation for the NEOs, which remained unchanged from 2014 target
compensation with the exception of target LTIP which is decreased.
CEO Mix of Target Pay
Other NEO Mix of Target
Pay
|
NEO |
|
Base Salary ($) |
|
Annual Incentive Target Award
($) |
|
Long-term
Incentive Plan Target Award
($) |
|
Equity
($) |
|
Total
($) |
|
|
Baker |
|
605,000 |
|
605,000 |
|
950,000 |
|
1,000,0001 |
|
3,160,000 |
|
|
Sabala |
|
380,000 |
|
304,000 |
|
340,000 |
|
345,000 |
|
1,369,000 |
|
|
Radford |
|
380,000 |
|
304,000 |
|
340,000 |
|
335,000 |
|
1,369,000 |
|
|
McDonald |
|
275,000 |
|
220,000 |
|
260,000 |
|
300,000 |
|
1,055,000 |
|
|
Sienko |
|
250,000 |
|
150,000 |
|
190,000 |
|
154,000 |
|
744,000 |
|
|
Poirier |
|
226,000 |
|
135,600 |
|
205,000 |
|
200,000 |
|
766,600 |
|
1 |
Consists of $500,000
in restricted stock units and $500,000 in performance-based
shares. |
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.
42 www.hecla-mining.com |
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|
125 Years |
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Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS |
Overview of our Compensation Decisions and
Results for 2015
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 July 2015, the committee reviewed a market analysis
prepared by Mercer. The base salaries for all of our NEOs remained unchanged as
their salaries were comparable to the base salaries of other executives in our
peer group. Our NEOs base salaries have remained unchanged since July 1,
2014.
The following table shows base salaries
for all NEOs from July 1, 2014 through December 31, 2015:
Base Salary for NEOs July 1, 2014 through
December 31, 2015
|
NEO |
|
7/1/14
to 6/30/15 Salary ($) |
|
7/1/15
to 12/31/15 Salary ($) |
|
Percentage Increase (%) |
|
|
Phillips S. Baker, Jr. |
|
605,000 |
|
605,000 |
|
0 |
|
|
James A. Sabala |
|
380,000 |
|
380,000 |
|
0 |
|
|
Lawrence P. Radford |
|
380,000 |
|
380,000 |
|
0 |
|
|
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 |
|
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.
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%) with respect to the component, the maximum total
payout is limited to two times the target award level (200%).
|
125
Years |
|
|
2016 Proxy
Statement 43 |
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS |
For 2015, the quantitative corporate
performance factors were divided proportionally into three factors: production
(20%), adjusted EBITDA (20%) and cash (10%).
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 requires 32 million ounces. To achieve targeted
payout a 2% increase over 2014 silver equivalent production levels was
necessary, while the maximum payout requires a 7% increase.
Production Goal Metrics
2015 Production in Silver
Equivalent Ounces |
|
|
2015 Production Metrics |
|
|
|
% Performance Value |
|
|
37.0mm |
|
Maximum |
|
50 |
% |
|
|
36.0mm |
|
|
|
40 |
% |
|
|
35.0mm |
|
Target |
|
20 |
% |
|
|
32.0mm |
|
Minimum |
|
10 |
% |
|
|
<32.0mm |
|
|
|
0 |
% |
|
The adjusted EBITDA target was $155
million. Maximum payout is achieved if adjusted EDITDA is $170 million, which is
$15 million more than target or approximately 10% improvement in EBITDA. There
is no payout if EBITDA is less than $130 million.
Adjusted EBITDA Goal
Metrics
|
2015 Adjusted
EBITDA Metrics |
|
|
|
% Performance Value |
|
|
$170mm |
|
Maximum |
|
50 |
% |
|
|
$165mm |
|
|
|
40 |
% |
|
|
$155mm |
|
Target |
|
20 |
% |
|
|
$130mm |
|
Minimum |
|
10 |
% |
|
|
< $130mm |
|
|
|
0 |
% |
|
The cash position target is $175 million,
adjusted for acquisitions at year-end. Maximum payout is achieved if our cash
position at year-end is at or above $200 million, which was 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
Metrics |
|
|
|
Factor Value |
|
|
$200mm |
|
Maximum |
|
25 |
% |
|
|
$190mm |
|
|
|
20 |
% |
|
|
$175mm |
|
Target |
|
10 |
% |
|
|
$160mm |
|
Minimum |
|
5 |
% |
|
|
< $160mm |
|
|
|
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 achievement of
individual NEOs goals. Having a limit on our maximum award reduces the
likelihood of windfalls to executives and encourages financial discipline. It is
also competitive with typical peer group practice.
44 www.hecla-mining.com |
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125 Years |
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Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS |
For 2015, 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
July 2015 indicated that annual incentives were generally at the median of
peers.
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 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.
2015 AIP Analysis and
Decisions. The committee reviewed the
performance versus the AIP goals on a quarterly basis. For 2015, based on the
assessment by the committee of the Companys overall performance on both
qualitative and quantitative measures as well as relevant discretionary factors
under the AIP, the committee determined Company performance to be at 115% of
target (out of a possible range of 0-200%). The 115% measure was determined as
described below.
For 2015, Company performance for
quantitative AIP purposes was as follows:
|
2015 AIP
Quantitative Measure Results |
|
Target |
|
Actual |
Performance Value |
|
|
Production |
|
|
|
|
|
|
|
|
Silver
equivalent ounces |
|
35.0 mm ozs. |
|
37.5 mm ozs. |
50 |
% |
|
|
Adjusted EBITDA |
|
$155 mm |
|
$116.7 mm |
0 |
% |
|
|
Cash |
|
$175 mm |
|
$155.2 mm |
0 |
% |
|
As reflected in the table above, only the
production portion of the AIP was achieved and it exceeded the threshold
required for the maximum level. The adjusted EBITDA and cash performance factors
were both below threshold level. Therefore, the committee determined that the
quantitative factor accounted for 50% of the target 2015 AIP award (out of a
possible 0 to 125% of the target 2015 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 to 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 2015 AIP, qualitative objectives
for NEOs included those related to (i) safety, health and environment, (ii)
process improvement, (iii) operations, (iv) financial condition, (v) growth,
(vi) development projects, (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.
|
125
Years |
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2016 Proxy
Statement 45 |
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS |
For 2015, the committee assessed
performance under this component at 35% of the target award (above the 25%
target and within the possible range of 0-62.5%). The committee based its
assessment on the following factors:
✓ |
injury improvement target goals were
not universally met; however, year-on-year improvements were achieved at
Casa Berardi and with respect to Heclas overall rates. MSHA citations
were down significantly in 2015 compared to 2014, and were the lowest in
the last five years. The San Sebastian startup proceeded without
incident; |
✓ |
achieved 5% increase in silver
recovery at Greens Creek; |
✓ |
Greens Creek tailings project was
completed; |
✓ |
made the decision to develop a
surface mine at our San Sebastian unit in the third quarter of 2015 and
commenced production there in the fourth quarter;
|
✓ |
successful exploration program
helped to achieve the startup of the San Sebastian unit in 2015;
|
✓ |
successful resolution of legal
cases; |
✓ |
three new analysts initiated
coverage of the Company with an improved quality of analyst reporting and
increase in Buy ratings; |
✓ |
successful shareholder outreach
program helped to achieve a 83% favorable vote on say-on-pay; and
|
✓ |
achieved health benefit changes
reducing costs and ensuring ACA compliance. |
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 2015,
the committee determined the discretionary factor performance value to be at 30%
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 2015:
✓ |
Hecla stock performed well in 2015
relative to peers in a difficult market; |
✓ |
San Sebastian open-pit and milling
brought into production by year-end 2015 and produced 81,677 silver ounces
and 870 gold ounces in the fourth quarter of 2015;
|
✓ |
doubling of the San Sebastian silver
and gold resources; |
✓ |
Casa Berardis access of a newly
discovered high grade stope with an increase in mine
life; |
✓ |
Casa Berardi made substantial
progress advancing the East Mine Crown Pillar open-pit project, including
obtaining permitting in place for the project; |
✓ |
strong production performance at
Greens Creek offsetting shortfalls at Lucky Friday and to some degree at
Casa Berardi. Higher silver production at Greens Creek partially offset by
lower production at Lucky Friday; |
✓ |
acquisition and integration of
Revett Mining Company; |
✓ |
achieved higher silver and gold
production by 5% and 1% respectively, compared to 2014;
|
✓ |
increased overall proven and
probable reserves at December 31, 2015 compared to 2014, with silver
reserves increasing by 2% and overall reserves at year-end 2015
representing the highest level in the Companys history; and
|
✓ |
funding of the pension and
retirement plans using Hecla common shares, which avoided a $5 million
cash outflow in 2015. |
In addition to the strong performance
realized by our NEOs within their functional area and as part of the executive
team, each NEO made significant contributions to Heclas 2015
performance.
Messrs. Baker, Radford and McDonald were
instrumental in getting the San Sabastian mine into production by fourth quarter
2015. The Compensation Committee believes that the startup of the San Sebastian
mine was a tremendous accomplishment for the Company.
Mr. Radfords leadership was also
instrumental in developing the organization and acquiring the work force needed
to get the San Sebastian mine into production, achieving higher recoveries at
Greens Creek, reducing geotechnical risk in underground operations, advancing
the open-pit project at Casa Berardi, and combined operations achieving higher
production.
Dr. McDonald oversees the exploration
program that helped the Company make the decision to startup the San Sebastian
mine and continued to increase reserves.
Mr. Sabala was instrumental in managing
Heclas cash position in 2015, effectively managing working capital,
implementing creative methods for pension funding, taking a lead role in the
acquisition of Revett Mining Company, negotiating credit agreements and
improving capital market relationships.
46 www.hecla-mining.com |
|
|
125 Years |
|
COMPENSATION DISCUSSION AND
ANALYSIS |
Mr. Sienko was successful in resolving
several significant regulatory and legal cases involving environmental, health
and safety, and litigation issues, while also supporting acquisition activities
related to Revett Mining Company, and the funding of pension plans.
Mr. Poirier was instrumental in the
acquisition of Revett Mining Company, as well as the assessment of several
potential large scale acquisitions.
Set forth in the table below is each NEOs
target award and actual award, which was paid 50% in cash and 50% in Hecla
common stock issued under the 2010 Stock Incentive Plan.
|
Name |
Base
Salary (12/31/15) ($) |
|
Base Salary Factor (%) |
|
Target Annual Incentive ($) |
|
%
to Target1 (%) |
|
Actual Award2 ($) |
|
Cash Received ($) |
|
Equity Received3
(#) |
|
|
Phillips S. Baker, Jr. |
605,000 |
|
100 |
|
605,000 |
|
115 |
|
695,750 |
|
347,875 |
|
147,404 |
|
|
James A. Sabala |
380,000 |
|
80 |
|
304,000 |
|
125 |
|
380,000 |
|
190,000 |
|
80,508 |
|
|
Lawrence P. Radford |
380,000 |
|
80 |
|
304,000 |
|
165 |
|
500,000 |
|
250,000 |
|
105,932 |
|
|
Dr.
Dean W.A. McDonald |
275,000 |
|
80 |
|
220,000 |
|
110 |
|
242,000 |
|
121,000 |
|
51,271 |
|
|
David C. Sienko |
250,000 |
|
60 |
|
150,000 |
|
100 |
|
150,000 |
|
75,000 |
|
31,780 |
|
|
Don
Poirier |
226,000 |
|
60 |
|
135,600 |
|
99.56 |
|
135,000 |
|
67,500 |
|
28,602 |
|
1 |
The percentages listed for each
of the NEOs includes corporate achievement of goals and individual
performance. |
2 |
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 61 under Non-Equity Incentive Plan
Compensation. |
3 |
The equity portion of the 2015
AIP award was determined by subtracting the cash portion from the total
award to determine the equity value, then dividing that by the closing
price of the Companys common stock on the NYSE on February 19, 2016
($2.36). |
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 performance 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, #4 Shaft completion, 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 2013-2015 LTIP units have a target
value of $125 each. The 2013-2015 LTIP has a maximum potential unit value of
$300. 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.
2013-2015 LTIP. The tables below summarize the performance unit valuation
ranges for reserve growth, production growth, cash flow, #4 Shaft completion,
and TSR for the 2013-2015 plan period the five performance goals approved by
the committee in February 2013. These are important goals for the following
reasons:
● |
Silver equivalent reserve
growth. Silver equivalent reserve growth remains a fundamental value creator. We need to replace and add reserves to extend
mine lives and grow production. This is critical
to the achievement of our long-term
success. Reserves include the silver
equivalent of gold and base metals. |
● |
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, |
|
125
Years |
|
|
2016 Proxy Statement 47 |
COMPENSATION DISCUSSION AND ANALYSIS |
|
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: reserves, 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. |
● |
#4 Shaft
completion. In order to achieve
production growth at the Lucky Friday, it
is crucial that the #4 Shaft be completed
on schedule. |
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 |
|
|
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 |
|
|
Production
Growth |
|
|
Target (in mm
ozs.) |
Average Annual
Target (in mm
ozs.) |
|
Performance Unit
Value |
|
|
65.1 |
21.7 |
|
$50.00 |
|
|
56.1 |
18.7 |
|
$40.00 |
|
|
24.1 |
18.0 |
|
$25.00 |
|
|
51.6 |
17.2 |
|
$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 |
|
48 www.hecla-mining.com |
|
|
125
Years |
|
COMPENSATION DISCUSSION AND ANALYSIS |
2013-2015 LTIP Analysis and
Decisions. The committee assessed performance
under the 2013-2015 LTIP as follows:
|
Performance Measure |
|
Target |
|
Actual Performance |
|
% of Target |
|
Value Earned Per Unit |
|
|
Silver Reserve Growth |
|
30.0 silver oz. |
|
25.4 silver oz. |
|
85% |
|
$20.50 |
|
|
|
|
added (millions) |
|
added (millions) |
|
|
|
|
|
|
Production Growth |
|
54.1 silver oz. |
|
59.2 silver oz. |
|
109% |
|
$43.50 |
|
|
|
|
(millions) |
|
(millions) |
|
|
|
|
|
|
Cash Flow |
|
$848.49 cash |
|
$884.98 cash |
|
104% |
|
$31.50 |
|
|
|
|
flow (millions) |
|
flow (millions) |
|
|
|
|
|
|
Total Shareholder Return |
|
50% Hecla |
|
69.2% Hecla |
|
138% |
|
$34.50 |
|
|
|
|
ranking vs. peers |
|
ranking vs. peers |
|
|
|
|
|
|
#4 Shaft Completion |
|
Shaft Completed |
|
10/26/16 |
|
0% |
|
No Payout |
|
|
|
|
by
2/15/16 |
|
completion date |
|
|
|
|
|
|
Total Earned Per Unit |
|
|
|
|
|
|
|
$130.00 |
|
During this three-year period, performance
in production, cash flow generation, and TSR exceeded the target, and silver
reserve growth exceeded the threshold, but was below target, while #4 Shaft
completion was below the threshold. As a result, with a range in potential value
per unit of $0 to $300, in February 2016, the committee determined that the total 2013-2015 LTIP payout was $130.00 per unit. The
committee and the Board further approved payout of the LTIP awards to be 50% in
cash and 50% in Hecla common stock issued under the 2010 Stock Incentive
Plan.
The following chart shows the number of
performance units awarded in 2013 to each NEO, the unit value achieved, the
total amount of the award (number of units x $130.00 = amount received), and the
amount of cash and number of shares received.
|
Name |
|
2013-2015 Performance Units (#) |
|
Unit Value ($) |
|
Total Amount of
Award1 ($) |
|
Cash Received ($) |
|
Equity Received2 (#) |
|
|
Phillips S. Baker, Jr. |
|
8,250 |
|
130.00 |
|
1,072,500 |
|
536,250 |
|
227,225 |
|
|
James A. Sabala |
|
3,400 |
|
130.00 |
|
442,000 |
|
221,000 |
|
93,644 |
|
|
Lawrence P. Radford |
|
3,000 |
|
130.00 |
|
390,000 |
|
195,000 |
|
82,627 |
|
|
Dr.
Dean W.A. McDonald |
|
2,600 |
|
130.00 |
|
338,000 |
|
169,000 |
|
71,610 |
|
|
David C. Sienko |
|
1,900 |
|
130.00 |
|
247,000 |
|
123,500 |
|
52,331 |
|
|
Don
Poirier |
|
2,050 |
|
130.00 |
|
266,500 |
|
133,250 |
|
56,462 |
|
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 61 under Non-Equity Incentive
Plan Compensation. |
2 |
The equity portion of
the 2013-2015 LTIP award was determined by subtracting the cash portion
from the total award to determine the equity value, then dividing that by
the closing price of the Companys common stock on the NYSE on February
19, 2016 ($2.36). |
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 July 2015. The RSUs vest in three equal amounts with vesting dates of
June 21, 2016, June 21, 2017, and June 21, 2018. See Grants of Plan-Based
Awards for 2015 on page 63.
In December 2014, the committee amended
the 2010 Stock Incentive Plan and Key Employee Deferred Compensation Plan so
that any RSUs vesting after 2014 would no longer be credited with dividend
equivalents.
In 2015, we granted RSUs to 96 employees,
including all NEOs, under the 2010 Stock Incentive Plan.
|
125
Years |
|
|
2016 Proxy Statement 49 |
COMPENSATION DISCUSSION AND ANALYSIS |
Performance-based
Shares. In July 2015, the committee and the
independent Board members granted 204,918 performance-based shares to our CEO,
with a grant date value of $500,000, comprising one-half of his total equity
awards in 2015. 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, 2015 through December 31, 2017, 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 2018 at the conclusion of the
three-year performance period will be based on the grant date share price (July
1, 2015) of $2.44.
Heclas TSR performance versus that of our
peer group will be based on the average closing share price over the last sixty
(60) calendar days prior to January 1, 2015, as the base price, average closing
share price over the last sixty (60) calendar days of the three-year performance
period to determine relative share value performance and ranking among
peers.
For 2015, 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
38.
2013 2015 Performance-based Shares
Analysis and Decision
On June 21, 2013, the committee and
independent members of the Board of Directors granted 170,648 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,
2013 through December 31, 2015, 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 closing share price over the last sixty (60) calendar days
prior to January 1, 2013, as the base price, compared with the average closing
share price over the last sixty (60) calendar days of the three-year performance
period.
50 www.hecla-mining.com |
|
|
125
Years |
|
COMPENSATION DISCUSSION AND ANALYSIS |
The following table shows the calculation
of the performance-based share results at the end of the three-year performance
period on December 31, 2015. Heclas TSR ranked 5th among the 14
peers based on TSR from 2013 through 2015, including dividends paid during
that period. Ranking 5th places Hecla
at 69.2% among the peer companies, which equates to an award value of $692,000
or 236,177 shares at the $2.93 closing price of Heclas common stock on June 21,
2013.
|
TOTAL SHAREHOLDER RETURN January 1,
2013 through December 31, 2015 |
|
|
Peer
Name |
|
Average Stock Price
over 60-day period leading up
to 1/1/2013 ($) |
|
Average Stock Price
over 60-day period leading up
to 12/31/15 ($) |
|
Dividends
Paid (1/1/13 thru 12/31/15) ($) |
|
TSR
thru 12/31/15 (%) |
|
Rank (#) |
|
Payout ($) |
|
|
Centerra Gold |
|
9.33 |
|
7.69 |
|
0.48 |
|
-17.58 |
|
1 |
|
1,000,000 |
|
|
Stillwater Mining |
|
11.48 |
|
8.98 |
|
|
|
-21.78 |
|
2 |
|
923,000 |
|
|
Pan
American Silver |
|
19.16 |
|
8.16 |
|
1.28 |
|
-57.44 |
|
3 |
|
846,000 |
|
|
Silver Standard |
|
14.23 |
|
5.39 |
|
|
|
-62.12 |
|
4 |
|
769,000 |
|
|
Hecla |
|
5.79 |
|
2.00 |
|
0.04 |
|
-65.46 |
|
5 |
|
692,000 |
|
|
New
Gold |
|
10.57 |
|
3.12 |
|
|
|
-70.48 |
|
6 |
|
615,000 |
|
|
Endeavour Silver |
|
8.25 |
|
1.95 |
|
|
|
-76.36 |
|
7 |
|
538,000 |
|
|
TARGET PAYOUT |
|
|
|
|
|
|
|
|
|
|
|
500,000 |
|
|
Eldorado Gold |
|
13.99 |
|
3.30 |
|
0.16 |
|
-76.44 |
|
8 |
|
462,000 |
|
|
First Majestic Silver |
|
22.01 |
|
4.36 |
|
|
|
-80.19 |
|
9 |
|
385,000 |
|
|
Alamos Gold |
|
18.52 |
|
3.50 |
|
0.26 |
|
-81.10 |
|
10 |
|
308,000 |
|
|
THRESHOLD PAYOUT |
|
|
|
|
|
|
|
|
|
|
|
250,000 |
|
|
IAMGOLD |
|
12.31 |
|
1.62 |
|
0.13 |
|
-86.88 |
|
11 |
|
|
|
|
Coeur dAlene Mines |
|
24.09 |
|
2.59 |
|
|
|
-89.25 |
|
12 |
|
|
|
|
Golden Star Resources |
|
1.79 |
|
0.19 |
|
|
|
-89.39 |
|
13 |
|
|
|
|
Allied Nevada Gold |
|
30.30 |
|
0.00 |
|
|
|
-100.00 |
|
14 |
|
|
|
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 expired on 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 five 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 made occasional grants to new employees upon hire.
Other
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 participant, 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
|
125
Years |
|
|
2016 Proxy Statement 51 |
COMPENSATION DISCUSSION AND ANALYSIS |
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 2015 table on page 66.
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 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 Hecla Mining Company
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 75. 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 base salary plus any other
cash incentives up until July 1, 2013, after which only base salary plus
one-half of AIP compensation (no LTIP compensation is included).
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.
Clawback
Policy
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.
In December 2015, the Compensation
Committee amended each of its incentive plans (AIP, LTIP, KEDCP, and 2010 Stock
Incentive Plan) to include a clawback provision consistent with the Clawback
Policy.
Insider Trading
Policy
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.
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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 67.
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 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 take into account certain
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,
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2016 Proxy Statement 53 |
COMPENSATION DISCUSSION AND ANALYSIS |
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 2015, Mr. Baker, our President and CEO,
and Mr. Radford, our Senior Vice President Operations, earned amounts subject
to Section 162(m) in excess of $1 million, therefore a portion of each of those
officers total compensation is not deductible by Hecla.
Section 409A of the Internal Revenue
Code. Section 409A imposes additional
significant taxes in the event that an executive officer or director receives
deferred compensation that does not satisfy the requirements of Section 409A.
We believe that we have designed and operated our plans to appropriately comply
with Section 409A.
Future Compensation
Actions
Base Salaries for 2016.
In December 2015, due to budget reductions for 2016, our
CEOs base salary was reduced by 20%, and all other NEOs base salary was
reduced by 10%, effective through all of calendar year 2016.
Base Salary for NEOs for
2016
|
NEO |
1/1/16 to 12/31/16 Salary ($) |
|
Percentage Decrease (%) |
|
|
Phillips S. Baker, Jr. |
484,000 |
|
20 |
|
|
James A. Sabala |
342,000 |
|
10 |
|
|
Lawrence P. Radford |
342,000 |
|
10 |
|
|
Dr.
Dean W.A. McDonald |
247,500 |
|
10 |
|
|
David C. Sienko |
225,000 |
|
10 |
|
|
Don
Poirier1 |
0 |
|
|
|
1 Mr. Poirier retired at the
end of 2015.
2016 AIP. In February 2016, the committee approved the 2016 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 2016 AIP, the quantitative
corporate performance factors are divided proportionally into four factors:
adjusted EBITDA (15%), production (15%), cash (15%) and work-related injury rate
reduction (5%).
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ANALYSIS |
The adjusted EBITDA target is $150
million. Maximum payout is achieved if adjusted EBITDA is $225 million, which is
$75 million more than target. There is no payout if adjusted EBITDA is less than
$100 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
|
2016 Adjusted EBITDA Metrics |
|
|
% Performance
Value |
|
|
$225mm |
Maximum |
|
30 |
% |
|
|
$185mm |
|
|
20 |
% |
|
|
$150mm |
Target |
|
15 |
% |
|
|
$135mm |
Minimum |
|
10 |
% |
|
|
<$100mm |
|
|
0 |
% |
|
The production factor converts gold, lead
and zinc to silver equivalent at a ratio of 78 oz. silver to 1 oz. gold, 19.0
lb. lead to 1 oz. silver, and 20.7 lb. zinc to 1 oz. silver. Our production
target requires that we achieve 42.6 million silver equivalent ounces. Maximum
payout is attained if production achieves 44 million ounces. The threshold
payout requires production of 39 million ounces, below which no payout is
earned. Achievement of target requires a 9% increase over 2015 silver equivalent
production, while achievement of the maximum payout requires a 15%
increase.
Production Goal Metrics
2016 Production in Silver
Equivalent Ounces |
|
2016 Production
Metrics |
|
|
|
% Performance
Value |
|
|
44.0mm |
|
Maximum |
|
30 |
% |
|
|
43.0mm |
|
|
|
20 |
% |
|
|
42.0mm |
|
Target |
|
15 |
% |
|
|
40.0mm |
|
Minimum |
|
10 |
% |
|
|
<39.0mm |
|
|
|
0 |
% |
|
The cash target is $100 million in cash on
hand at December 31, 2016. Maximum payout is achieved if our cash position at
year-end is at or above $155 million, which is the cash position at the
beginning of 2016. The threshold payout level is $75 million, below which no
payout is earned.
Cash Goal Metrics
|
2016 Cash Metrics |
|
|
|
% Performance
Value |
|
|
$155mm |
|
Maximum |
|
30 |
% |
|
|
$120mm |
|
|
|
20 |
% |
|
|
$100mm |
|
Target |
|
15 |
% |
|
|
$85mm |
|
Minimum |
|
10 |
% |
|
|
<$75mm |
|
|
|
0 |
% |
|
|
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2016 Proxy Statement 55 |
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS |
The work-related injury rate reduction
target is a reduction in injury rates of 15% at year-end 2016 from 2015 results.
Maximum payout is achieved if there is a 35% reduction in injury rates at
year-end. The threshold payout level is 5%, below which no payout is
earned.
Work-Related Injury Rate Reduction
Metrics
|
2016 AIFR
Metrics |
|
|
|
% Performance
Value |
|
|
35% |
|
Maximum |
|
10 |
% |
|
|
25% |
|
|
|
7.5 |
% |
|
|
15% |
|
Target |
|
5 |
% |
|
|
5% |
|
Minimum |
|
2.5 |
% |
|
|
<5% |
|
|
|
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, investor relations, industry visibility,
human capital development and government and community affairs.
Outstanding LTIPs. In an effort to be more transparent in our executive
compensation program, we provide the current three-year LTIPs that are
outstanding.
In February 2014, the committee approved
the 2014-2016 LTIP, which has a target unit value of $125. 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; and |
● |
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, 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.
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 |
|
|
Silver Equivalent Production
Growth |
|
|
Target (in mm ozs.) |
Average Annual Target (in mm ozs.) |
|
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 |
|
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COMPENSATION DISCUSSION AND ANALYSIS |
|
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 |
|
|
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 |
|
In March 2015, the committee approved the
2015-2017 LTIP, which has a target unit value of $100. The 2015-2017 LTIP has
the same factors as the 2014-2016 LTIP, with the exception of the #4 Shaft
completion metric, which was 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, 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 |
|
|
Silver Equivalent (includes
Gold) Production Growth |
|
|
Target (in mm ozs.) |
Average Annual Target (in mm ozs.) |
|
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 |
|
|
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2016 Proxy Statement 57 |
Table of Contents
COMPENSATION DISCUSSION AND ANALYSIS |
|
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 |
|
|
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 |
|
In February 2016, the committee approved
the 2016-2018 LTIP, which has a target unit value of $100. The 2016-2018 LTIP
has the same factors as the 2015-2017 LTIP, with a maximum potential payout of
$375 per unit.
2016-2018 Performance Unit
Valuation
|
Silver Equivalent (includes
Gold) Reserve Growth |
|
|
Ounce Target (millions) |
|
Additional Reserve (millions) (replacement in
situ) |
|
Unit Value |
|
|
423 |
|
100 (184) |
|
$ |
100.00 |
|
|
363 |
|
40
(124) |
|
$ |
50.00 |
|
|
353 |
|
30
(114) |
|
$ |
25.00 |
|
|
323 |
|
0
(84) |
|
$ |
5.00 |
|
|
|
|
|
Cash
Flow |
|
|
% of
Target |
|
|
|
Unit
Value |
|
|
115% |
|
|
|
$ |
100.00 |
|
|
110% |
|
|
|
$ |
50.00 |
|
|
105% |
|
|
|
$ |
35.00 |
|
|
100% |
|
|
|
$ |
25.00 |
|
|
90% |
|
|
|
$ |
15.00 |
|
|
Silver Equivalent (includes
Gold) Production Growth |
|
|
Target (in mm ozs.) |
|
Average Annual Target (in mm ozs.) |
|
Unit
Value |
|
|
93.0 |
|
31.0 |
|
$ |
75.00 |
|
|
89.5 |
|
29.5 |
|
$ |
50.00 |
|
|
87.0 |
|
29.0 |
|
$ |
25.00 |
|
|
84.0 |
|
28.0 |
|
$ |
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 |
|
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Table of Contents
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER
PARTICIPATION |
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.
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2016 Proxy Statement 59 |
Table of Contents
COMPENSATION COMMITTEE REPORT |
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, 2015.
Respectfully submitted
by |
The Compensation
Committee of the |
Board of
Directors |
|
George R. Nethercutt, Jr.,
Chair |
Ted Crumley |
Terry V. Rogers |
Dr. Anthony P.
Taylor |
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Table of Contents
COMPENSATION OF NAMED EXECUTIVE
OFFICERS |
COMPENSATION OF NAMED EXECUTIVE
OFFICERS
Summary Compensation Table for
2015
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,
2015.
|
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. |
|
2015 |
|
605,000 |
|
|
|
1,727,174 |
6 |
|
|
|
1,768,250 |
|
599,477 |
|
15,900 |
7 |
|
4,715,801 |
|
|
President and CEO |
|
2014 |
|
605,000 |
|
|
|
1,438,288 |
|
|
|
|
2,303,538 |
|
164,099 |
|
15,600 |
|
|
4,526,525 |
|
|
|
|
2013 |
|
575,208 |
|
|
|
1,073,874 |
|
|
|
|
1,497,375 |
|
692,922 |
|
15,300 |
|
|
3,854,679 |
|
|
James A. Sabala |
|
2015 |
|
380,000 |
|
|
|
583,700 |
|
|
|
|
822,000 |
|
174,075 |
|
15,900 |
7 |
|
1,975,675 |
|
|
Senior Vice President |
|
2014 |
|
366,458 |
|
|
|
887,623 |
|
|
|
|
954,800 |
|
279,690 |
|
15,600 |
|
|
2,504,171 |
|
|
and
CFO |
|
2013 |
|
341,458 |
|
|
|
344,999 |
|
|
|
|
825,750 |
|
268,474 |
|
15,300 |
|
|
1,795,981 |
|
|
Lawrence P. Radford |
|
2015 |
|
380,000 |
|
|
|
556,694 |
|
|
|
|
890,000 |
|
105,114 |
|
15,900 |
7 |
|
1,947,708 |
|
|
Senior Vice President |
|
2014 |
|
366,458 |
|
|
|
709,326 |
|
|
|
|
886,775 |
|
98,277 |
|
15,600 |
|
|
2,076,436 |
|
|
Operations |
|
2013 |
|
341,458 |
|
|
|
300,000 |
|
|
|
|
589,950 |
|
91,197 |
|
15,300 |
|
|
1,337,905 |
|
|
Dr. Dean W. A.
McDonald9 |
|
2015 |
|
275,000 |
|
|
|
480,468 |
|
|
|
|
580,000 |
|
110,743 |
|
15,900 |
8 |
|
1,462,111 |
|
|
Senior Vice President - |
|
2014 |
|
275,000 |
|
|
|
562,276 |
|
|
|
|
721,875 |
|
214,384 |
|
15,600 |
|
|
1,789,135 |
|
|
Exploration |
|
2013 |
|
279,443 |
|
|
|
300,000 |
|
|
|
|
455,400 |
|
183,417 |
|
16,210 |
|
|
1,234,470 |
|
|
David C. Sienko |
|
2015 |
|
250,000 |
|
|
|
289,933 |
|
|
|
|
397,000 |
|
36,365 |
|
15,900 |
7 |
|
989,198 |
|
|
Vice President and |
|
2014 |
|
250,000 |
|
|
|
376,900 |
|
|
|
|
543,725 |
|
78,318 |
|
15,600 |
|
|
1,264,543 |
|
|
General Counsel |
|
2013 |
|
241,875 |
|
|
|
154,001 |
|
|
|
|
387,900 |
|
60,693 |
|
15,300 |
|
|
859,769 |
|
|
Don Poirier9 |
|
2015 |
|
226,000 |
|
|
|
314,950 |
|
|
|
|
401,500 |
|
82,950 |
|
15,900 |
8 |
|
1,041,300 |
|
|
Vice President |
|
2014 |
|
226,000 |
|
|
|
412,820 |
|
|
|
|
459,800 |
|
165,348 |
|
15,600 |
|
|
1,279,568 |
|
|
Corporate Development |
|
2013 |
|
233,080 |
|
|
|
199,999 |
|
|
|
|
370,620 |
|
130,940 |
|
16,210 |
|
|
950,849 |
|
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 2013, 2014 and 2015, 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, 2015. Please see the
Grants of Plan-Based Awards for 2015 table on page 63 for more
information about the awards granted in
2015. |
|
125
Years |
|
|
2016 Proxy Statement 61 |
Table of Contents
COMPENSATION OF NAMED EXECUTIVE
OFFICERS |
4 |
This
column represents the cash performance payments awarded and earned by the
NEOs for the calendar years 2013, 2014 and 2015 under our AIP and for the
LTIP plan periods 2011-2013, 2012-2014 and 2013-2015. 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 2012-2014 LTIP awards were
paid 75% in cash and 25% in equity. The 2015 AIP and the 2013-2015 LTIP
awards were paid 50% in cash and 50% 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 (#) |
|
|
|
|
Baker |
|
2015 |
|
695,750 |
|
2013-2015 |
|
8,250 |
|
130.00 |
|
1,072,500 |
|
1,768,250 |
|
|
884,125 |
|
374,629 |
* |
|
|
|
|
|
2014 |
|
919,600 |
|
2012-2014 |
|
8,250 |
|
167.75 |
|
1,383,938 |
|
2,303,538 |
|
|
1,727,653 |
|
173,983 |
|
|
|
|
|
|
2013 |
|
544,500 |
|
2011-2013 |
|
8,250 |
|
115.50 |
|
952,875 |
|
1,497,375 |
|
|
684,750 |
|
237,610 |
|
|
|
|
Sabala |
|
2015 |
|
380,000 |
|
2013-2015 |
|
3,400 |
|
130.00 |
|
442,000 |
|
822,000 |
|
|
411,000 |
|
174,153 |
* |
|
|
|
|
|
2014 |
|
418,000 |
|
2012-2014 |
|
3,200 |
|
167.75 |
|
536,800 |
|
954,800 |
|
|
716,100 |
|
72,115 |
|
|
|
|
|
|
2013 |
|
479,250 |
|
2011-2013 |
|
3,000 |
|
115.50 |
|
346,500 |
|
825,750 |
|
|
283,125 |
|
158,662 |
|
|
|
|
Radford |
|
2015 |
|
500,000 |
|
2013-2015 |
|
3,000 |
|
130.00 |
|
390,000 |
|
890,000 |
|
|
445,000 |
|
188,559 |
* |
|
|
|
|
|
2014 |
|
467,400 |
|
2012-2014 |
|
2,500 |
|
167.75 |
|
419,375 |
|
886,775 |
|
|
665,081 |
|
66,977 |
|
|
|
|
|
|
2013 |
|
399,375 |
|
2011-2013 |
|
1,650 |
|
115.50 |
|
190,575 |
|
589,950 |
|
|
215,625 |
|
109,452 |
|
|
|
|
McDonald |
|
2015 |
|
242,000 |
|
2013-2015 |
|
2,600 |
|
130.00 |
|
338,000 |
|
580,000 |
|
|
290,000 |
|
122,881 |
* |
|
|
|
|
|
2014 |
|
302,500 |
|
2012-2014 |
|
2,500 |
|
167.75 |
|
419,375 |
|
721.875 |
|
|
541,406 |
|
54,522 |
|
|
|
|
|
|
2013 |
|
247,500 |
|
2011-2013 |
|
1,800 |
|
115.50 |
|
207,900 |
|
455,400 |
|
|
193,125 |
|
76,689 |
|
|
|
|
Sienko |
|
2015 |
|
150,000 |
|
2013-2015 |
|
1,900 |
|
130.00 |
|
247,000 |
|
397,000 |
|
|
198,500 |
|
84,110 |
* |
|
|
|
|
|
2014 |
|
225,000 |
|
2012-2014 |
|
1,900 |
|
167.75 |
|
318,725 |
|
543,725 |
|
|
407,794 |
|
41,067 |
|
|
|
|
|
|
2013 |
|
180,000 |
|
2011-2013 |
|
1,800 |
|
115.50 |
|
207,900 |
|
387,900 |
|
|
165,000 |
|
65,175 |
|
|
|
|
Poirier |
|
2015 |
|
135,000 |
|
2013-2015 |
|
2,050 |
|
130.00 |
|
266,500 |
|
401,500 |
|
|
200,750 |
|
85,064 |
* |
|
|
|
|
|
2014 |
|
124,300 |
|
2012-2014 |
|
2,000 |
|
167.75 |
|
335,500 |
|
459,800 |
|
|
344,850 |
|
34,728 |
|
|
|
|
|
|
2013 |
|
162,720 |
|
2011-2013 |
|
1,800 |
|
115.50 |
|
207,900 |
|
370,620 |
|
|
157,800 |
|
62,228 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Shares were valued based on the closing price of Heclas
common stock on the NYSE on February 19, 2016 ($2.36).
|
5 |
The
amounts reported in this column for 2015 are changes between December 31,
2014 and December 31, 2015 in the actuarial present value of the
accumulated pension benefits. None of the amounts reported in this column
are above-market nonqualified deferred compensation earnings. |
6 |
Includes: (i) restricted stock units (204,918) granted to Mr. Baker
on July 1, 2015; and (ii) performance-based shares (204,918) awarded to
Mr. Baker on July 1, 2015. See Performance-based Shares on page 50
for a description of the performance-based shares. |
7 |
These
amounts are Heclas matching contributions made under Heclas Capital
Accumulation Plan for the NEOs. |
8 |
These
amounts are for retirement contributions made on behalf of Dr. McDonald
and Mr. Poirier. Canadian employees are excluded from participation in the
Hecla Capital Accumulation Plan. Dr. McDonald and Mr. Poirier are paid in
Canadian funds. The amounts reported are in U.S. dollars based on the
applicable exchange rates as reported in The Wall Street Journal from
time-to-time. |
9 |
Dr.
McDonald and Mr. Poirier receive their compensation in Canadian funds. The
amounts reported for Dr. McDonald and Mr. Poirier are in U.S. dollars
based on the applicable exchange rates as reported in The Wall Street Journal from time-to-time during this time
period. |
62
www.hecla-mining.com |
|
|
125
Years |
|
Table of
Contents
COMPENSATION OF NAMED EXECUTIVE
OFFICERS |
The following table shows all plan-based
awards granted to the NEOs during 2015.
Grants of Plan-Based Awards for
2015
|
|
|
|
|
Long-Term Performance Plan Units (#) |
|
Estimated Future Payouts Under Non-Equity Incentive
Plan
Awards |
|
|
Estimated Future Payouts Under Equity Incentive
Plan
Awards |
|
Other Stock Awards: Number of Shares of Stock or Units (#) |
|
Closing Market Price on Date of Grant ($) |
|
Grant Date Fair Value of Stock and Option Awards1 ($) |
|
|
Name |
|
Grant Date |
|
|
Threshold ($) |
|
Target ($) |
|
Maximum ($) |
|
|
Threshold (#) |
|
Target (#) |
|
Maximum (#) |
|
|
|
|
|
Phillips S. Baker, Jr. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Shares2 |
|
3/5/15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
173,983 |
|
3.31 |
|
575,884 |
|
|
Restricted
Stock3 |
|
7/1/15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
204,918 |
|
2.44 |
|
500,000 |
|
|
Performance
Shares |
|
7/1/15 |
|
|
|
|
|
|
|
|
|
|
102,4594 |
|
204,9184 |
|
409,8364 |
|
|
|
2.44 |
|
651,290 |
|
|
LTIP5 |
|
|
|
9,500 |
|
0 |
|
1,187,500 |
|
3,562,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP6 |
|
|
|
|
|
0 |
|
605,000 |
|
1,210,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James A. Sabala |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Shares2 |
|
3/5/15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
72,115 |
|
3.31 |
|
238,701 |
|
|
Restricted
Stock3 |
|
7/1/15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
141,393 |
|
2.44 |
|
344,999 |
|
|
LTIP5 |
|
|
|
3,400 |
|
0 |
|
425,000 |
|
1,275,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP6 |
|
|
|
|
|
0 |
|
304,000 |
|
608,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lawrence P. Radford |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Shares2 |
|
3/5/15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66,977 |
|
3.31 |
|
221,694 |
|
|
Restricted
Stock3 |
|
7/1/15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
137,295 |
|
2.44 |
|
335,000 |
|
|
LTIP5 |
|
|
|
3,400 |
|
0 |
|
425,000 |
|
1,275,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP6 |
|
|
|
|
|
0 |
|
304,000 |
|
608,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dr. Dean W.A. McDonald |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Shares2 |
|
3/5/15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
54,522 |
|
3.31 |
|
180,468 |
|
|
Restricted
Stock3 |
|
7/1/15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
122,950 |
|
2.44 |
|
300,000 |
|
|
LTIP5 |
|
|
|
2,600 |
|
0 |
|
325,000 |
|
975,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP6 |
|
|
|
|
|
0 |
|
300,000 |
|
600,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David C. Sienko |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Shares2 |
|
3/5/15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
41,067 |
|
3.31 |
|
135,932 |
|
|
Restricted
Stock3 |
|
7/1/15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
63,115 |
|
2.44 |
|
154,001 |
|
|
LTIP5 |
|
|
|
1,900 |
|
0 |
|
237,500 |
|
712,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP6 |
|
|
|
|
|
0 |
|
150,000 |
|
300,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Don Poirier |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Shares2 |
|
3/5/15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
34,728 |
|
3.31 |
|
114,950 |
|
|
Restricted
Stock3 |
|
7/1/15 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
81,967 |
|
2.44 |
|
200,000 |
|
|
LTIP5 |
|
|
|
2,050 |
|
0 |
|
256,250 |
|
768,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP6 |
|
|
|
|
|
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 common
stock shares awarded on March 5, 2015 to all NEOs under the terms of the
2010 Stock Incentive Plan. These shares were awarded as part of the 2014
AIP and 2012-2014 LTIP awards, of which 25% was paid in
equity. |
3 |
Represents the number of RSUs
granted on July 1, 2015, to the NEOs under the terms of the 2010 Stock
incentive Plan. The restrictions lapse for one-third of the RSUs on June
21, 2016, one-third on June 21, 2017, and one-third on June 21, 2018, 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 July 1, 2015 ($2.44). |
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)
awarded to Mr. Baker under the 2010 Stock Incentive Plan. Determination of
the actual number of these performance-based shares to be received by Mr.
Baker will be on the basis of the TSR of Hecla common stock for the
three-year period from January 1, 2015 through December 31, 2017, 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 a comparison of the average share price over the last 60 calendar
days prior to January 1, 2015, as the base price, and the 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. |
|
125
Years |
|
|
2016 Proxy Statement 63 |
Table of
Contents
COMPENSATION OF NAMED EXECUTIVE
OFFICERS |
5 |
Represents the potential value of
the payout for each NEO under the 2015-2017 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 33. Dollar amounts shown are valued as follows on a per unit
basis: Threshold, $0; Target, $125; and Maximum, $375. As reflected in the
Summary Compensation Table, awards were paid out in March 2016 for the
three-year period 2013-2015. Awards were paid 50% in cash and 50% in
Heclas common stock issued under the 2010 Stock Incentive
Plan. |
6 |
Represents the potential value of
the payout for each NEO under the 2015 AIP described on page 43. The
total payout to each NEO under the 2015 AIP is described in footnote 4 to
the Summary Compensation Table on page 61. Awards were paid 50% in
cash and 50% in Heclas common stock issued under the 2010 Stock Incentive
Plan. |
The following table provides information
on the current holdings of stock awards by the NEOs. This table includes
unvested RSUs, and performance-based shares. There were no unexercised stock
options held by any NEO at year-end.
Outstanding Equity Awards at Calendar
Year-End for 2015
|
|
|
Option Awards |
|
|
Stock Awards |
|
|
Name |
|
Number of
Securities Underlying Unexercised Options (#) Exercisable |
|
Number of
Securities Underlying Unexercised Options (#) Unexercisable |
|
Option Exercise Price ($) |
|
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 12/31/152 ($) |
|
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that have Not Vested (#) |
|
|
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested3 ($) |
|
|
Phillips S. Baker, Jr. |
|
|
|
|
|
|
|
|
|
|
|
|
362,811 |
|
685,713 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
151,515 |
4 |
|
286,363 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
204,918 |
5 |
|
387,295 |
|
|
James A. Sabala |
|
|
|
|
|
|
|
|
|
|
|
|
121,228 |
|
229,121 |
|
|
|
|
|
|
|
Lawrence P. Radford |
|
|
|
|
|
|
|
|
|
|
|
|
265,101 |
|
501,041 |
|
|
|
|
|
|
|
Dr. Dean W. A. McDonald |
|
|
|
|
|
|
|
|
|
|
|
|
217,686 |
|
411,427 |
|
|
|
|
|
|
|
David C. Sienko |
|
|
|
|
|
|
|
|
|
|
|
|
111,747 |
|
211,202 |
|
|
|
|
|
|
|
Don Poirier |
|
|
|
|
|
|
|
|
|
|
|
|
145,124 |
|
274,284 |
|
|
|
|
|
|
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 Unvested Restricted Stock
Units |
|
|
|
Vesting
Date |
|
Baker |
|
Sabala* |
|
Radford |
|
McDonald |
|
Sienko |
|
Poirier |
|
|
|
6/21/16 |
|
56,883 |
|
39,249 |
|
34,130 |
|
34,130 |
|
17,520 |
|
22,753 |
|
|
|
6/21/16 |
|
68,306 |
|
47,131 |
|
45,765 |
|
40,983 |
|
21,038 |
|
27,322 |
|
|
|
6/25/16 |
|
50,505 |
|
34,848 |
|
33,838 |
|
30,303 |
|
15,556 |
|
20,202 |
|
|
|
8/5/16 |
|
|
|
|
|
26,000 |
|
|
|
|
|
|
|
|
|
6/21/17 |
|
68,306 |
|
|
|
45,765 |
|
40,983 |
|
21,038 |
|
27,322 |
|
|
|
6/25/17 |
|
50,505 |
|
|
|
33,838 |
|
30,303 |
|
15,556 |
|
20,202 |
|
|
|
6/21/18 |
|
68,306 |
|
|
|
45,765 |
|
40,984 |
|
21,039 |
|
27,323 |
|
|
|
Total |
|
362,811 |
|
121,228 |
|
265,101 |
|
217,686 |
|
111,747 |
|
145,124 |
|
|
* |
Mr. Sabala is retiring effective June
13, 2016. Mr. Sabala will not receive any RSUs that vest in 2017 or
2018. |
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, 2015, which was $1.89. |
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, 2015, which was
$1.89. |
4 |
Award of performance-based
shares, the value of which will be determined on the basis of the TSR of
Hecla common stock for the three-year period from January 1, 2014 through
December 31, 2016. |
5 |
Award of performance-based
shares, the value of which will be determined on the basis of the TSR of
Hecla common stock for the three-year period from January 1, 2015 through
December 31, 2017. |
64
www.hecla-mining.com |
|
|
125
Years |
|
Table of
Contents
COMPENSATION OF NAMED EXECUTIVE
OFFICERS |
The following table shows information
concerning the exercise of stock options and the number of stock awards that
vested during calendar year 2015 for each of the NEOs, and the value realized on
the exercise of options and vesting of stock awards during calendar year 2015.
Option Exercises and Stock Vested for
2015
|
|
|
Option
Awards1 |
|
Stock
Awards |
|
|
Name |
|
Number of
Shares Acquired on Exercise (#) |
|
Value Realized
on Exercise ($) |
|
Number of
Shares Acquired on Vesting (#) |
|
|
Value Realized on
Vesting ($) |
|
|
Phillips S. Baker, Jr. |
|
|
|
|
|
173,983 |
2,7 |
|
|
|
|
|
|
|
|
|
|
137,069 |
3 |
|
636,000 |
|
|
|
|
|
|
|
|
56,883 |
4,7 |
|
|
|
|
|
|
|
|
|
|
35,920 |
5 |
|
101,294 |
|
|
|
|
|
|
|
|
50,505 |
6,7 |
|
|
|
|
James A. Sabala |
|
|
|
|
|
72,115 |
2 |
|
238,701 |
|
|
|
|
|
|
|
|
39,249 |
4 |
|
112,645 |
|
|
|
|
|
|
|
|
23,491 |
5 |
|
66,245 |
|
|
|
|
|
|
|
|
34,849 |
6 |
|
98,274 |
|
|
Lawrence P. Radford |
|
|
|
|
|
66,977 |
2 |
|
221,694 |
|
|
|
|
|
|
|
|
34,130 |
4 |
|
97,953 |
|
|
|
|
|
|
|
|
15,948 |
5 |
|
44,973 |
|
|
|
|
|
|
|
|
33,839 |
6 |
|
95,426 |
|
|
Dr. Dean W.A. McDonald |
|
|
|
|
|
54,522 |
2 |
|
180,468 |
|
|
|
|
|
|
|
|
34,130 |
4 |
|
97,953 |
|
|
|
|
|
|
|
|
21,121 |
5 |
|
59,561 |
|
|
|
|
|
|
|
|
30,303 |
6 |
|
85,454 |
|
|
David C. Sienko |
|
|
|
|
|
41,067 |
2 |
|
135,932 |
|
|
|
|
|
|
|
|
17,520 |
4 |
|
50,282 |
|
|
|
|
|
|
|
|
11,063 |
5 |
|
31,198 |
|
|
|
|
|
|
|
|
15,555 |
6 |
|
43,865 |
|
|
Don Poirier |
|
|
|
|
|
34,728 |
2 |
|
114,950 |
|
|
|
|
|
|
|
|
22,753 |
4 |
|
65,301 |
|
|
|
|
|
|
|
|
13,865 |
5 |
|
39,099 |
|
|
|
|
|
|
|
|
20,202 |
6 |
|
56,970 |
|
1 |
There were no stock options
exercises in 2015. All remaining stock options expired in May
2015. |
2 |
The NEOs were awarded common
stock on March 5, 2015, as part of their 2014 AIP and 2012-2014 LTIP being
paid 25% in equity. The shares were awarded at the price of $3.31, which
was the closing sales price of our common stock on the NYSE on March 5,
2015. |
3 |
Performance-based shares received
in March 2015 based on the TSR of Hecla common stock for the three-year
period from January 1, 2012 through December 31, 2014. The share price was
determined by using the closing price of Heclas common stock on the NYSE
on June 25, 2012 ($4.64), the date of grant of the performance-based
shares. |
4 |
The NEOs were granted these RSUs
on June 21, 2013. On June 21, 2015, 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 $2.87, which was the closing sales price of our
common stock on the NYSE on June 22, 2015. |
5 |
The NEOs were granted these RSUs
on June 25, 2012. On June 25, 2015, 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 $2.82, which was the closing sales price of our
common stock on the NYSE on June 25, 2015. |
6 |
The NEOs were granted these RSUs
on June 25, 2014. On June 25, 2015, 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 $2.82, which was the closing sales price of our
common stock on the NYSE on June 25, 2015. |
7 |
Mr. Baker deferred the shares
into his stock account under the terms of the KEDCP. He may not receive
the shares until a Distributable Event, as defined under the KEDCP, and
will not realize value until the shares are distributed to
him. |
|
125
Years |
|
|
2016 Proxy Statement 65 |
Table of
Contents
COMPENSATION OF NAMED EXECUTIVE
OFFICERS |
The table below provides information on
the nonqualified deferred compensation of the NEOs in 2015.
Nonqualified Deferred Compensation for
20151
|
Name |
|
Executive Stock Contributions in Last
FYE2 (#) |
|
Registrant Contributions in Last
FYE ($) |
|
Aggregate Earnings in Last
FYE ($) |
|
Aggregate Withdrawals/ Distributions ($) |
|
Aggregate Balance of Stock at Last
FYE (#) |
|
|
Phillips S. Baker, Jr. |
|
299,488 |
|
|
|
|
|
|
|
299,488 |
|
|
James A. Sabala |
|
|
|
|
|
|
|
|
|
|
|
|
Lawrence P. Radford |
|
|
|
|
|
|
|
|
|
|
|
|
Dr.
Dean W. A. McDonald3 |
|
|
|
|
|
|
|
|
|
|
|
|
David C. Sienko |
|
|
|
|
|
|
|
|
|
|
|
|
Don
Poirier3 |
|
|
|
|
|
|
|
|
|
|
|
1 |
No cash compensation was deferred
by NEOs in 2015. |
2 |
Vested stock deferred into the
KEDCP in 2015. |
3 |
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, and 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 into a company stock account promotes
alignment of the interests of participants with those of our common
shareholders. It also provides for corporate discretionary allocations of
amounts valued based upon our common stock and credited to a stock
account.
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.
66 www.hecla-mining.com |
|
|
125 Years |
|
Table of
Contents
COMPENSATION OF NAMED EXECUTIVE
OFFICERS |
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).
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 on next page.
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 13(d)(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 hereafter, 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 (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.
The table starting on page 69 reflects
the amount of compensation payable 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, 2015, 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.
|
125
Years |
|
|
2016 Proxy Statement 67 |
Table of
Contents
COMPENSATION OF NAMED EXECUTIVE
OFFICERS |
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, 2015, Mr. Baker was the only NEO that qualified for early or
regular retirement from the Hecla Mining Company Retirement Plan.
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 payments 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 for
such three year period. 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 the NEO had
been employed for an additional two years under the CIC Agreement with Mr.
Radford and any other CIC Agreements entered into hereafter.
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 under the CIC Agreement
with Mr. Radford and any other CIC Agreement entered into
hereafter; |
● |
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 (two years later under the CIC Agreement with Mr.
Radford and any other CIC Agreement entered into hereafter);
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 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 hereafter. |
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 that, following a
change in control, 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 permit management decisions to be made
without undo concern about possible termination following a change in
control.
68 www.hecla-mining.com |
|
|
125 Years |
|
Table of
Contents
COMPENSATION OF NAMED EXECUTIVE
OFFICERS |
Potential Payments Upon Termination or
Change in Control
|
Executive Benefits and Payments Upon
Termination |
|
Voluntary Termination on 12/31/15 ($) |
|
Involuntary Not For Cause Termination on
12/31/15 ($) |
|
For
Cause Termination on 12/31/15 ($) |
|
Termination Following a Change in Control on
12/31/15 ($) |
|
Disability on 12/31/15 ($) |
|
Death
on 12/31/15 ($) |
|
|
Phillips S. Baker,
Jr. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
Performance Compensation |
|
695,750 |
|
695,750 |
|
|
|
2,758,800 |
1 |
|
695,750 |
|
695,750 |
|
|
Stock
Options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock |
|
|
|
|
|
|
|
685,713 |
|
|
|
|
|
|
|
Long-term
Performance Compensation |
|
1,072,500 |
|
1,072,500 |
|
1,072,500 |
|
4,151,814 |
2 |
|
2,022,500 |
|
2,022,500 |
|
|
Benefits &
Perquisites: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement
Plans3 |
|
4,131,441 |
|
4,131,441 |
|
4,131,441 |
|
6,862,316 |
|
|
6,923,561 |
|
4,579,218 |
|
|
Deferred
Compensation4 |
|
566,032 |
|
566,032 |
|
566,032 |
|
566,032 |
|
|
566,032 |
|
566,032 |
|
|
Health and Welfare
Benefits5 |
|
1,513 |
|
1,513 |
|
1,513 |
|
54,462 |
|
|
1,513 |
|
1,513 |
|
|
Disability
Income6 |
|
|
|
|
|
|
|
|
|
|
740,329 |
|
|
|
|
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 |
|
6,513,772 |
|
6,513,772 |
|
5,818,022 |
|
16,971,776 |
|
|
10,996,221 |
|
8,236,549 |
|
|
James A. Sabala |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
Performance Compensation |
|
380,000 |
|
380,000 |
|
|
|
1,437,750 |
1 |
|
380,000 |
|
380,000 |
|
|
Stock
Options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock |
|
|
|
|
|
|
|
229,121 |
|
|
|
|
|
|
|
Long-term
Performance Compensation |
|
442,000 |
|
442,000 |
|
442,000 |
|
1,610,400 |
2 |
|
782,000 |
|
782,000 |
|
|
Benefits
& Perquisites: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement
Plans3 |
|
1,250,532 |
|
1,250,532 |
|
1,250,532 |
|
2,245,585 |
|
|
1,275,181 |
|
899,095 |
|
|
Health and Welfare
Benefits5 |
|
1,051 |
|
1,051 |
|
1,051 |
|
37,833 |
|
|
1,051 |
|
1,051 |
|
|
Disability
Income6 |
|
|
|
|
|
|
|
|
|
|
418,489 |
|
|
|
|
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 |
|
2,095,505 |
|
2,095,505 |
|
1,715,505 |
|
6,753,714 |
|
|
2,878,643 |
|
2,409,068 |
|
|
Lawrence P.
Radford |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
Performance Compensation |
|
500,000 |
|
500,000 |
|
|
|
1,000,000 |
1 |
|
500,000 |
|
500,000 |
|
|
Stock
Options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock |
|
|
|
|
|
|
|
501,041 |
|
|
|
|
|
|
|
Long-term
Performance Compensation |
|
390,000 |
|
390,000 |
|
390,000 |
|
838,750 |
2 |
|
730,000 |
|
730,000 |
|
|
Benefits & Perquisites: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement
Plans3 |
|
336,228 |
|
336,228 |
|
336,228 |
|
497,606 |
|
|
544,166 |
|
355,787 |
|
|
Health and Welfare
Benefits5 |
|
1,513 |
|
1,513 |
|
1,513 |
|
36,308 |
|
|
1,513 |
|
1,513 |
|
|
Disability
Income6 |
|
|
|
|
|
|
|
|
|
|
779,908 |
|
|
|
|
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 |
|
1,249,663 |
|
1,249,663 |
|
749,663 |
|
3,683,029 |
|
|
2,577,509 |
|
1,934,222 |
|
|
125
Years |
|
|
2016 Proxy Statement 69 |
Table of
Contents
COMPENSATION OF NAMED EXECUTIVE
OFFICERS |
|
Executive Benefits and Payments Upon
Termination |
|
Voluntary Termination on 12/31/15 ($) |
|
Involuntary Not For Cause Termination on
12/31/15 ($) |
|
For
Cause Termination on 12/31/15 ($) |
|
Termination Following a Change in Control on
12/31/15 ($) |
|
Disability on 12/31/15 ($) |
|
Death
on 12/31/15 ($) |
|
|
Dr. Dean W.A.
McDonald |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
Performance Compensation |
|
242,000 |
|
242,000 |
|
|
|
907,500 |
1 |
|
242,000 |
|
242,000 |
|
|
Stock
Options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock |
|
|
|
|
|
|
|
411,427 |
|
|
|
|
|
|
|
Long-term
Performance Compensation |
|
338,000 |
|
338,000 |
|
338,000 |
|
1,258,125 |
2 |
|
598,000 |
|
598,000 |
|
|
Benefits &
Perquisites: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement
Plans3 |
|
990,271 |
|
990,271 |
|
990,271 |
|
1,643,021 |
|
|
1,186,681 |
|
813,909 |
|
|
Health and
Welfare Benefits5 |
|
388 |
|
388 |
|
388 |
|
13,968 |
|
|
388 |
|
388 |
|
|
Disability
Income6 |
|
|
|
|
|
|
|
|
|
|
363,769 |
|
|
|
|
Life Insurance
Benefits7 |
|
|
|
|
|
|
|
7,674 |
|
|
|
|
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 |
|
1,586,524 |
|
1,586,524 |
|
1,344,524 |
|
5,102,580 |
|
|
2,406,703 |
|
1,859,162 |
|
|
David C. Sienko |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
Performance Compensation |
|
150,000 |
|
150,000 |
|
|
|
675,000 |
1 |
|
150,000 |
|
150,000 |
|
|
Stock
Options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock |
|
|
|
|
|
|
|
211,202 |
|
|
|
|
|
|
|
Long-term
Performance Compensation |
|
247,000 |
|
247,000 |
|
247,000 |
|
956,175 |
2 |
|
437,000 |
|
437,000 |
|
|
Benefits & Perquisites: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement
Plans3 |
|
252,798 |
|
252,798 |
|
252,798 |
|
380,971 |
|
|
702,777 |
|
423,004 |
|
|
Health and
Welfare Benefits5 |
|
447 |
|
447 |
|
447 |
|
16,097 |
|
|
447 |
|
447 |
|
|
Disability
Income6 |
|
|
|
|
|
|
|
|
|
|
952,799 |
|
|
|
|
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 |
|
664,668 |
|
664,668 |
|
514,668 |
|
3,033,399 |
|
|
2,257,446 |
|
1,275,874 |
|
|
Don
Poirier |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
Performance Compensation |
|
135,000 |
|
135,000 |
|
|
|
488,160 |
1 |
|
135,000 |
|
135,000 |
|
|
Stock
Options |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock |
|
|
|
|
|
|
|
274,284 |
|
|
|
|
|
|
|
Long-term
Performance Compensation |
|
266,500 |
|
266,500 |
|
266,500 |
|
1,006,500 |
2 |
|
471,500 |
|
471,500 |
|
|
Benefits &
Perquisites: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement
Plans3 |
|
710,480 |
|
710,480 |
|
710,480 |
|
1,183,558 |
|
|
992,656 |
|
664,225 |
|
|
Health and
Welfare Benefits5 |
|
388 |
|
388 |
|
388 |
|
13,968 |
|
|
388 |
|
388 |
|
|
Disability
Income6 |
|
|
|
|
|
|
|
|
|
|
425,116 |
|
|
|
|
Life Insurance
Benefits7 |
|
|
|
|
|
|
|
8,500 |
|
|
|
|
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 |
|
1,125,406 |
|
1,125,406 |
|
990,406 |
|
3,686,008 |
|
|
2,037,698 |
|
1,510,151 |
|
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, 2015, under our retirement
plan. |
70
www.hecla-mining.com |
|
|
125
Years |
|
Table of Contents
COMPENSATION OF NAMED EXECUTIVE
OFFICERS |
4 |
Reflects the lump-sum present
value of shares held in Mr. Bakers stock account under our KEDCP, based
on the Companys closing stock price on the NYSE on December 31, 2015
($1.89). |
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 a
termination following a 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 a termination
following a 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. |
|
|
125
Years |
|
|
2016 Proxy
Statement 71 |
Table of Contents
EQUITY COMPENSATION PLAN INFORMATION |
EQUITY COMPENSATION
PLAN INFORMATION
As of December 31, 2015, 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 |
|
11,975,936 |
|
|
Stock Plan for Nonemployee
Directors |
|
|
|
N/A |
|
506,921 |
|
|
Key Employee Deferred Compensation
Plan |
|
|
|
N/A |
|
638,911 |
|
|
Equity Compensation Plans Not Approved
by |
|
|
|
|
|
|
|
|
Security Holders |
|
|
|
|
|
|
|
|
Total |
|
|
|
|
|
13,121,768 |
|
72
www.hecla-mining.com |
|
|
125
Years |
|
Table of Contents
OTHER
BENEFITS
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 $265,000. 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 (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.
|
125
Years |
|
|
2016 Proxy
Statement 73 |
Table of Contents
The following table shows estimated
aggregate annual benefits under our Retirement Plan and the SERP payable upon
retirement to a participant who retires in 2015 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, 2015.
Estimated Annual
Retirement Benefits
|
Final
Average |
|
|
Years of Credited Service |
|
|
Annual
Earnings |
|
|
5 |
|
|
10 |
|
|
15 |
|
|
20 |
|
|
25 |
|
|
30 |
|
|
35 |
|
|
|
$ |
100,000 |
|
$ |
5,931 |
|
$ |
11,862 |
|
$ |
17,792 |
|
$ |
23,723 |
|
$ |
29,654 |
|
$ |
35,585 |
|
$ |
41,515 |
|
|
|
|
150,000 |
|
|
10,306 |
|
|
20,612 |
|
|
30,917 |
|
|
41,223 |
|
|
51,529 |
|
|
61,835 |
|
|
72,140 |
|
|
|
|
200,000 |
|
|
14,681 |
|
|
29,362 |
|
|
44,042 |
|
|
58,723 |
|
|
73,404 |
|
|
88,085 |
|
|
102,765 |
|
|
|
|
250,000 |
|
|
19,056 |
|
|
38,112 |
|
|
57,167 |
|
|
76,223 |
|
|
95,279 |
|
|
114,335 |
|
|
133,390 |
|
|
|
|
300,000 |
|
|
23,431 |
|
|
46,862 |
|
|
70,292 |
|
|
93,723 |
|
|
117,154 |
|
|
140,585 |
|
|
164,015 |
|
|
|
|
350,000 |
|
|
27,806 |
|
|
55,612 |
|
|
83,417 |
|
|
111,223 |
|
|
139,029 |
|
|
166,835 |
|
|
194,640 |
|
|
|
|
400,000 |
|
|
32,181 |
|
|
64,362 |
|
|
96,542 |
|
|
128,723 |
|
|
160,904 |
|
|
193,085 |
|
|
225,265 |
|
|
|
|
450,000 |
|
|
36,556 |
|
|
73,112 |
|
|
109,667 |
|
|
146,223 |
|
|
182,779 |
|
|
219,335 |
|
|
255,890 |
|
|
|
|
500,000 |
|
|
40,931 |
|
|
81,862 |
|
|
122,792 |
|
|
163,723 |
|
|
204,654 |
|
|
245,585 |
|
|
286,515 |
|
|
|
|
550,000 |
|
|
45,306 |
|
|
90,612 |
|
|
135,917 |
|
|
181,223 |
|
|
226,529 |
|
|
271,835 |
|
|
317,140 |
|
|
|
|
600,000 |
|
|
49,681 |
|
|
99,362 |
|
|
149,042 |
|
|
198,723 |
|
|
248,404 |
|
|
298,085 |
|
|
347,765 |
|
|
|
|
650,000 |
|
|
54,056 |
|
|
108,112 |
|
|
162,167 |
|
|
216,223 |
|
|
270,279 |
|
|
324,335 |
|
|
378,390 |
|
|
|
|
700,000 |
|
|
58,431 |
|
|
116,862 |
|
|
175,292 |
|
|
233,723 |
|
|
292,154 |
|
|
350,585 |
|
|
409,015 |
|
|
|
|
750,000 |
|
|
62,806 |
|
|
125,612 |
|
|
188,417 |
|
|
251,223 |
|
|
314,029 |
|
|
376,835 |
|
|
439,640 |
|
|
|
|
800,000 |
|
|
67,181 |
|
|
134,362 |
|
|
201,542 |
|
|
268,723 |
|
|
335,904 |
|
|
403,085 |
|
|
470,265 |
|
|
|
|
850,000 |
|
|
71,556 |
|
|
143,112 |
|
|
214,667 |
|
|
286,223 |
|
|
357,779 |
|
|
429,335 |
|
|
500,890 |
|
|
|
|
900,000 |
|
|
75,931 |
|
|
151,862 |
|
|
227,792 |
|
|
303,723 |
|
|
379,654 |
|
|
455,585 |
|
|
531,515 |
|
|
|
|
950,000 |
|
|
80,306 |
|
|
160,612 |
|
|
240,917 |
|
|
321,223 |
|
|
401,529 |
|
|
481,835 |
|
|
562,140 |
|
|
|
|
1,000,000 |
|
|
84,681 |
|
|
169,362 |
|
|
254,042 |
|
|
338,723 |
|
|
423,404 |
|
|
508,085 |
|
|
592,765 |
|
Benefits listed in the pension table are
not subject to any deduction for Social Security or other offset amounts. As of
December 31, 2015, the following executive officers have completed the indicated
number of full years of credited service: P. Baker, 14 years; J. Sabala, 7
years; L. Radford, 4 years; D. McDonald, 9 years; D. Sienko, 5 years; and D.
Poirier, 8 years.
74
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125
Years |
|
Table of Contents
Pension
Benefits
The following table shows pension
information under the Hecla Mining Company Retirement Plan and the SERP for the
NEOs as of December 31, 2015. 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 ($) |
|
Payments During Last Calendar
Year ($) |
|
|
Phillips S.
Baker, Jr. |
|
Hecla Mining
Company Retirement Plan |
|
14 |
|
415,383 |
|
|
|
|
|
|
Hecla Mining
Company Supplemental Excess |
|
|
|
|
|
|
|
|
|
|
Retirement Plan |
|
|
|
3,716,058 |
|
|
|
|
James A. Sabala |
|
Hecla Mining Company Retirement Plan |
|
7 |
|
316,695 |
|
|
|
|
|
|
Hecla Mining Company Supplemental Excess |
|
|
|
|
|
|
|
|
|
|
Retirement Plan |
|
|
|
933,837 |
|
|
|
|
Lawrence P.
Radford |
|
Hecla Mining
Company Retirement Plan |
|
4 |
|
125,114 |
|
|
|
|
|
|
Hecla Mining
Company Supplemental Excess |
|
|
|
|
|
|
|
|
|
|
Retirement Plan |
|
|
|
211,114 |
|
|
|
|
Dr. Dean W.A. McDonald |
|
Hecla Mining Company Retirement Plan |
|
9 |
|
341,029 |
|
|
|
|
|
|
Hecla Mining Company Supplemental Excess |
|
|
|
|
|
|
|
|
|
|
Retirement Plan |
|
|
|
649,242 |
|
|
|
|
David C.
Sienko |
|
Hecla Mining
Company Retirement Plan |
|
5 |
|
121,159 |
|
|
|
|
|
|
Hecla Mining
Company Supplemental Excess |
|
|
|
|
|
|
|
|
|
|
Retirement Plan |
|
|
|
131,639 |
|
|
|
|
Don Poirier |
|
Hecla Mining Company Retirement Plan |
|
8 |
|
280,758 |
|
|
|
|
|
|
Hecla Mining Company Supplemental Excess |
|
|
|
|
|
|
|
|
|
|
Retirement Plan |
|
|
|
429,722 |
|
|
|
|
125
Years |
|
|
2016 Proxy
Statement 75 |
Table of Contents
PROPOSAL 5 APPROVAL OF NAMED EXECUTIVE OFFICER
COMPENSATION |
PROPOSAL 5 APPROVAL
OF NAMED EXECUTIVE OFFICER COMPENSATION
The Board believes strongly that the
Companys current executive compensation program is right for the Company and
our shareholders at the current time. The Companys current executive
compensation program is described in detail in the section of this Proxy
Statement entitled Compensation Discussion and Analysis starting on page
33, as well as in the compensation tables starting on page 61. The
Companys executive compensation program is designed to attract, retain, and
motivate talented individuals who possess the executive experience and the
leadership skills needed by the Company in order to maintain and increase
shareholder value. The Company seeks to provide executive compensation that is
competitive with that provided by companies in our peer group within the mining
industry. The Company also seeks to provide both near-term and long-term
financial incentives to our executives that reward them for good performance and
achieving financial results and strategic objectives that are expected to
contribute to increased long-term shareholder value.
Underlying these incentives is a strong
philosophy of pay for performance that forms the foundation of decisions
regarding the compensation of our NEOs. This compensation philosophy, which has
been consistent over many years, is designed to align the interests of our NEOs
with the interests of our shareholders and is central to our ability to attract,
retain and motivate executive leaders to guide the Company through market
challenges over the long-term.
The Company has demonstrated consistent
strong financial performance both in the short-term and in the long-term. The
Company believes that its NEOs have contributed significantly to these
achievements. Their tenure with the Company ranges from 5 years to 14 years,
providing the Company with consistent, steady and experienced leadership that
has been able to guide the Company to consistent strong financial performance
over multi-year periods.
The Board strongly believes in the
effectiveness and appropriateness for the Company of its executive compensation
program. The Company believes this confidence is shared by its shareholders, as
evidenced by the favorable vote of 83% of its shareholders on the similar
proposal presented at last years annual meeting. The Companys compensation
practices did not change materially from calendar year 2014 to calendar year
2015 and the Board hopes that the shareholders will continue to believe in the
effectiveness and appropriateness of the Companys executive compensation
program, and will express that belief through a favorable vote on this proposal
at this Annual Meeting.
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.
We are asking shareholders to approve the
following resolution at the 2016 Annual Meeting:
RESOLVED, that the compensation paid to the Companys named executive
officers, as disclosed pursuant to Item 402 of Regulation S-K, described in the
Compensation Discussion and Analysis, Summary Compensation Table for 2015, and
the related compensation tables and narrative in the Proxy Statement for the
Companys 2016 Annual Shareholders Meeting, is hereby APPROVED.
☑ |
The Board recommends that you
vote FOR approval of the compensation of our named executive
officers. |
76
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Table of Contents
STOCK OWNERSHIP INFORMATION |
STOCK OWNERSHIP
INFORMATION
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 Compensation 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 Compensation Committee typically
makes equity grants to NEOs in the first half of the year.
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 and the 2010 Stock Incentive Plan) valued at three times their annual
cash retainer and should comply with the guidelines within five years of the
adoption of the guidelines. Any directors appointed or elected after June 2012
are required to achieve their expected value requirement within five years of
their appointment or election to the Board.
In the event a non-management directors
cash retainer increases, he or she will have three years from the date of the
increase to acquire any additional shares needed to meet these
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 this goal, in June 2012, the Compensation Committee and Board 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. Any executive
officer employed after June 2012 is required to achieve his or her expected
value requirement within five years of the date that the executive officer
assumes his or her position. If an NEO becomes subject to a greater ownership
amount due to a promotion or an increase in base salary, the NEO is expected to
meet the higher ownership threshold within three years.
Because of fluctuations in the Companys
stock price, in February 2016, the Compensation Committee and the Board of
Directors amended the stock ownership guidelines to provide a valuation
methodology that consists of valuing the shares held by using the average
closing price of the Companys common stock on the NYSE for the previous
calendar year. Because share prices of all companies are subject to market
volatility, the Board believes that it would be unfair to require an executive
or Board member to buy more shares simply because Heclas stock price drops. In
the event there is a significant decline in Heclas stock price that causes an
executives or Board members holdings to fall below the applicable threshold,
the executives or Board members will not be required to purchase additional
shares to meet the threshold, but they may not sell or transfer any shares until
the threshold has again been achieved. The stock ownership guidelines also
provide that if any executive or Board member falls below their required
holdings, they shall have three years to achieve the required ownership
level.
The following tables summarize the
non-management directors and NEOs stock ownership guidelines and their status
as of December 31, 2015, based on the average closing price of our common stock
on the NYSE for calendar year 2015 ($2.6071). As of December 31, 2015, all NEOs
met the guidelines. In the calculations for our NEOs, we include shares directly
held and unvested RSUs. We do not include unexercised stock options or
performance-based shares.
In June 2014, the Compensation Committee
recommended and the Board approved increases to cash retainers for the Chairman
of the Board, and for each chair of the committees. Due to these increases in
2014, Mr. Crumley has until June 2017 to comply with the stock ownership
guidelines. In the calculations for our non-management directors, we include
shares directly held and shares held under the Hecla Mining Company Stock Plan
for Nonemployee Directors.
|
125
Years |
|
|
2016 Proxy
Statement 77 |
Table of Contents
STOCK OWNERSHIP INFORMATION |
Non-Management Director
Stock Ownership as of December 31, 2015
|
Director |
|
Annual Retainer ($) |
|
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 ($2.6071) ($)2 |
|
Meets Guidelines |
|
|
Bowles |
|
66,000 |
|
3x |
|
198,000 |
|
88,263 |
|
48,233 |
|
136,496 |
|
355,859 |
|
Yes |
|
|
Crumley |
|
156,000 |
|
3x |
|
468,000 |
|
99,263 |
|
74,349 |
|
173,612 |
|
452,624 |
|
No |
|
|
Nethercutt |
|
66,000 |
|
3x |
|
198,000 |
|
83.263 |
|
49,648 |
|
132,911 |
|
346,512 |
|
Yes |
|
|
Rogers |
|
66,000 |
|
3x |
|
198,000 |
|
83,263 |
|
43,396 |
|
126,659 |
|
330,213 |
|
Yes |
|
|
Stanley |
|
66,000 |
|
3x |
|
198,000 |
|
83,263 |
|
43,396 |
|
126,659 |
|
330,213 |
|
Yes |
|
|
Taylor |
|
66,000 |
|
3x |
|
198,000 |
|
56,648 |
3 |
67,810 |
|
124,458 |
|
324,474 |
|
Yes |
|
1 |
As of December 31, 2015, 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 |
The value of shares held is
determined by using the average closing price of the Companys common
stock for the previous calendar year on the NYSE, which for 2015 was
$2.6071. |
3 |
Includes 2,500 shares held in an
IRA by Dr. Taylor. |
Executive Stock Ownership
as of December 31, 2015
|
NEO |
|
Annual Base Salary ($) |
|
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 12/31/15 ($2.6071)1 ($) |
|
Meets Guidelines |
|
|
Baker |
|
605,000 |
|
6x |
|
3,630,000 |
|
1,925,770 |
|
362,811 |
|
2,288,581 |
|
5,966,560 |
|
Yes |
|
|
Sabala |
|
380,000 |
|
2x |
|
760,000 |
|
261,472 |
|
250,338 |
|
511,810 |
|
1,334,340 |
|
Yes |
|
|
Radford |
|
380,000 |
|
2x |
|
760,000 |
|
255,371 |
|
265,101 |
|
520,472 |
|
1,356,923 |
|
Yes |
|
|
McDonald |
|
275,000 |
|
2x |
|
550,000 |
|
276,103 |
|
217,686 |
|
493,789 |
|
1,287,357 |
|
Yes |
|
|
Sienko |
|
250,000 |
|
2x |
|
500,000 |
|
167,788 |
|
111,747 |
|
279,535 |
|
728,776 |
|
Yes |
|
|
Poirier |
|
226,000 |
|
2x |
|
452,000 |
|
210,644 |
|
145,124 |
|
355,768 |
|
927,523 |
|
Yes |
|
1 |
Average closing price of Heclas
common stock on the NYSE for calendar year
2015. |
Additional information regarding shares
held by the non-management directors and our NEOs is included in the Security
Ownership of Certain Beneficial Owners and Management table on the following
page.
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 23, 2016. 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.
78
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125
Years |
|
Table of Contents
STOCK
OWNERSHIP INFORMATION |
|
|
|
|
|
Shares Beneficially
Owned |
|
|
|
|
Name of
Beneficial Owner |
|
Title of
Class |
|
Number |
|
Nature |
|
Percent
of Class |
|
|
Phillips S. Baker, Jr. |
|
|
|
1,862,4591 |
|
Direct2 |
|
|
|
|
President and
CEO |
|
|
|
362,811 |
|
RSU3 |
|
|
|
|
|
|
|
|
674,117 |
|
Deferred Shares4 |
|
|
|
|
|
|
|
|
356,433 |
|
Performance
Units5 |
|
|
|
|
|
|
Common |
|
3,255,820 |
|
|
|
* |
|
|
Dr. Dean W.A. McDonald |
|
|
|
340,370 |
|
Direct2 |
|
|
|
|
Senior Vice President
Exploration |
|
|
|
217,686 |
|
RSU3 |
|
|
|
|
|
|
Common |
|
558,056 |
|
|
|
* |
|
|
Don Poirier |
|
|
|
295,708 |
|
Direct2 |
|
|
|
|
Former Vice President Corporate
Development |
|
|
|
145,124 |
|
RSU3 |
|
|
|
|
|
|
Common |
|
440,832 |
|
|
|
* |
|
|
Lawrence P. Radford |
|
|
|
377,650 |
|
Direct2 |
|
|
|
|
Senior Vice President Operations |
|
|
|
265,101 |
|
RSU3 |
|
|
|
|
|
|
Common |
|
642,751 |
|
|
|
* |
|
|
James A. Sabala |
|
|
|
374,3426 |
|
Direct2 |
|
|
|
|
Senior Vice President and Chief Financial
Officer |
|
|
|
250,338 |
|
RSU3 |
|
|
|
|
|
|
Common |
|
624,680 |
|
|
|
* |
|
|
David C. Sienko |
|
|
|
221,369 |
|
Direct2 |
|
|
|
|
Vice President and General Counsel |
|
|
|
111,747 |
|
RSU3 |
|
|
|
|
|
|
Common |
|
333,116 |
|
|
|
* |
|
|
Ted Crumley |
|
|
|
99,263 |
|
Direct2 |
|
|
|
|
Director |
|
|
|
74,349 |
|
Indirect7 |
|
|
|
|
|
|
Common |
|
173,612 |
|
|
|
* |
|
|
George R. Johnson |
|
|
|
|
|
|
|
|
|
|
Director |
|
Common |
|
2,010 |
|
Indirect7 |
|
* |
|
|
Stephen F. Ralbovsky |
|
|
|
|
|
|
|
|
|
|
Director |
|
Common |
|
2,010 |
|
Indirect7 |
|
* |
|
|
George R. Nethercutt, Jr. |
|
|
|
83,263 |
|
Direct2 |
|
|
|
|
Director |
|
|
|
49,648 |
|
Indirect7 |
|
|
|
|
|
|
Common |
|
132,911 |
|
|
|
* |
|
|
Terry V. Rogers |
|
|
|
83,263 |
|
Direct2 |
|
|
|
|
Director |
|
|
|
43,396 |
|
Indirect7 |
|
|
|
|
|
|
Common |
|
126,659 |
|
|
|
* |
|
|
Charles B. Stanley |
|
|
|
83,263 |
|
Direct2 |
|
|
|
|
Director |
|
|
|
43,396 |
|
Indirect7 |
|
|
|
|
|
|
Common |
|
126,659 |
|
|
|
* |
|
|
Dr. Anthony P. Taylor |
|
|
|
54,148 |
|
Direct2 |
|
|
|
|
Director |
|
|
|
2,500 |
|
IRA |
|
|
|
|
|
|
|
|
67,810 |
|
Indirect7 |
|
|
|
|
|
|
Common |
|
124,458 |
|
|
|
* |
|
|
All current directors, nominee directors and
officers as a group |
|
|
|
|
|
|
|
|
|
|
(15
individuals) |
|
Common |
|
6,754,617 |
|
|
|
____% |
|
* |
Represents beneficial ownership of
less than one percent, based upon ___________ shares of our common stock issued and
outstanding as of March 23, 2016. |
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 2015 on page 64. |
4 |
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. |
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Table of Contents
STOCK
OWNERSHIP INFORMATION |
5 |
Performance Units
means performance-based equity, based on a three-year TSR. See
Performance-based Shares on page 50 and Outstanding Equity
Awards at Calendar Year-End for 2015 table on page 64. |
6 |
All shares are held
jointly with Mr. Sabalas spouse, as to which Mr. Sabala shares voting and
investment power. |
7 |
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 15. |
To our knowledge, as of March 23, 2016,
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 |
|
47,063,834 |
|
_____ |
% |
|
|
|
|
666 Third Ave.
19th Floor |
|
|
|
|
|
|
|
|
|
New York, NY 10017 |
|
|
|
|
|
|
|
Common |
|
The Vanguard
Group, Inc.2 |
|
25,273,086 |
|
_____ |
% |
|
|
|
|
100 Vanguard
Blvd. |
|
|
|
|
|
|
|
|
|
Malvern, PA 19355 |
|
|
|
|
|
|
|
Common |
|
BlackRock,
Inc.3 |
|
20,427,903 |
|
_____ |
% |
|
|
|
|
55 East
52nd Street |
|
|
|
|
|
|
|
|
|
New York, NY 10055 |
|
|
|
|
|
|
1 |
Based solely on a
Schedule 13G/A filed on February 11, 2016, 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 11, 2016, with the SEC by The Vanguard
Group, Inc. The Vanguard Group, Inc. has sole voting power with respect to
469,494 shares, shared voting power with respect to 45,100 shares, sole
dispositive power with respect to 24,778,664 shares, and shared
dispositive power with respect to 494,422 shares. |
3 |
Based solely on a
Schedule 13G/A filed on January 26, 2016, with the SEC by BlackRock, Inc.
BlackRock, Inc. has sole voting power with respect to 19,560,312 shares
and sole dispositive power with regard to 20,427,903
shares. |
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SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE |
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, 2015, all filing requirements applicable to our officers, directors
and greater than 10% owners of our common stock were complied with.
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GENERAL
INFORMATION ABOUT THE MEETING |
GENERAL INFORMATION
ABOUT THE MEETING
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, _________________ 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.
Votes Required for the
Proposals
Under NYSE rules, if our 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), Proposal 2 (Approval of
Amendments to the Companys Certificate of Incorporation and Bylaws to Remove
Certain 80% Supermajority Voting Provisions), Proposal 3 (Approval of Amendments
to the Companys Certificate of Incorporation and Bylaws, Under Certain
Circumstances, to Permit Shareholders to Call Special Meetings), and Proposal 5
(Approval of Executive Compensation), are not routine matters, whereas
Proposal 4 (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 Proposals 2, 3 and 5, 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. 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 court 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.
Proposal 2 Approval of Amendments to
the Companys Certificate of Incorporation and Bylaws to Remove Certain 80%
Supermajority Voting Provisions. Approval of
this proposal requires the affirmative vote of 80% of our outstanding shares of
common stock. Abstentions and broker non-votes have the effect of a vote against
this proposal.
Proposal 3 Approval of Amendments to
the Companys Certificate of Incorporation and Bylaws, Under Certain
Circumstances, to Permit Shareholders to Call Special Meetings of
Shareholders. Approval of this proposal
requires the affirmative vote of 80% of our outstanding shares of common stock.
Abstentions and broker non-votes have the effect of a vote against this
proposal.
Proposal 4 Ratification of the
Appointment of BDO USA, LLP as Independent Auditors. 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.
Proposal 5 Advisory Vote to Approve
Executive Compensation. 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.
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GENERAL
INFORMATION ABOUT THE MEETING |
Proxies
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 persons you appoint to vote your shares are also
called proxies. We have designated Phillips S. Baker, Jr., our President and
CEO, 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.
Proxies Submitted but
not Voted
If you properly sign and return your proxy
card or complete your proxy via the telephone or Internet, your shares will be
voted as you direct. If you sign and return your proxy but do not specify how
you want your shares voted they will be voted FOR the election of all nominees
for Director as set forth under Election of Directors, FOR the amendments to
the Companys Certificate of Incorporation and Bylaws to remove certain 80% supermajority voting provisions, FOR the amendments
to the Companys Certificate of Incorporation and Bylaws to permit shareholders,
under certain circumstances, to call special meetings of shareholders, FOR
ratification of the appointment of the independent registered public
accountants, and FOR the advisory vote on executive compensation,
Methods of
Voting
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
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2016 Proxy Statement 83 |
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GENERAL
INFORMATION ABOUT THE MEETING |
(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 18, 2016, 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.
Deadline for
Voting
The deadline for voting by telephone or
electronically is 11:59 p.m., Eastern Time, on May 18, 2016. If you are a
registered shareholder and attend the meeting, you may deliver your completed
proxy card in person. Street name shareholders
who wish to vote at the meeting will need to obtain a proxy form from the
institution that holds their shares.
Revoking a
Proxy
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.
Costs of
Solicitation
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.
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GENERAL
INFORMATION ABOUT THE MEETING |
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.
Annual
Report
Our Annual Report to Shareholders,
consisting of our Form 10-K for the year ended December 31, 2015, 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, 2015, 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 https://www.sec.gov/edgar.shtml or on our website at
http://www.hecla-mining.com.
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.
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2016 Proxy Statement 85 |
Table of Contents
GENERAL
INFORMATION ABOUT THE MEETING |
Electronic Delivery of
Proxy Materials, Annual Reports, News Releases and Documents Filed with the
Securities and Exchange Commission
We want to communicate with you in the way
that is most convenient for you. You may choose to receive either a full set of
printed materials which will include an Annual Report, Proxy Statement, and
proxy card (Proxy Materials) or an email with instructions for how to view
the materials and vote online. 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, selecting Annual Reports, and
then selecting Electronic Proxy Request. 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 under Investors and selecting Subscribe for
Updates.
Shareholder
List
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 19, 2016, at Heclas corporate
offices, located at 6500 N. Mineral Dr., Suite 200, Coeur dAlene, Idaho, and at
the offices of Paine Hamblen LLP, located at 717 West Sprague Avenue, Suite
1200, Spokane, Washington.
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PROVISIONS OF HECLAS BYLAWS WITH RESPECT TO
SHAREHOLDER PROPOSALS AND NOMINATIONS FOR ELECTION AS
DIRECTORS |
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 2017 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, if the
shareholder 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: |
|
|
|
(i) |
|
the name and address of such
shareholder, as they appear on the Companys books, and of such beneficial
owner; and |
|
|
|
(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 2017 Annual
Meeting of Shareholders is January 19, 2017 (the 120th day preceding
the anniversary of the 2016 Annual Meeting) to February 18, 2017 (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.
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2016 Proxy Statement 87 |
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
2017 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 5, 2016.
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.
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OTHER BUSINESS
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 4, 2016
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2016 Proxy Statement 89 |
Table of Contents
APPENDIX A
Certificate of Incorporation
ARTICLE V
Bylaws
In furtherance and not in limitation of
the powers conferred by law, the Board is expressly authorized to make, repeal,
alter, amend and rescind the Bylaws of the Corporation by a majority vote of the
entire Board at any regular or special meeting of the Board; provided, however
that, notwithstanding anything contained in this Certificate of Incorporation or
the Bylaws of the Corporation to the contrary, the affirmative vote of the
holders of at least 80% of the voting power of the then outstanding shares of
Voting Stock, voting together as a single class, shall be required to (i) alter,
amend or repeal any provision of the Bylaws which is substantially identical to
and/or implements the last sentence in Section 4 of Article IV, or
Articles VI, VII (subject to the proviso at the end of this sentence) or
VIII, of this Certificate of Incorporation, or (ii) alter, amend or repeal any
provision of this proviso to Article V; further provided that,
notwithstanding anything contained in this Certificate of Incorporation or the
Bylaws of the Corporation to the contrary, the affirmative vote of the holders
of at least 66.67% of the voting power of the then outstanding shares of Voting
Stock, voting together as a single class, shall be required to (i) alter, amend
or repeal any provision of the Bylaws which is substantially identical to and/or
implements the last sentence of Article VII of this Certificate of
Incorporation, or (ii) alter, amend or repeal this further proviso to Article
V.
ARTICLE VII.
Actions by
Shareholders
Any action required or permitted to be
taken by the shareholders of the Corporation must be effected at a duly called
annual or special meeting of shareholders of the Corporation and may not be
effected by any consent in writing by such shareholders. Special meetings of
shareholders of the Corporation may be called only by the Board pursuant to a
resolution approved by a majority of the entire Board. Except as set forth in
the final sentence of this Article VII, and N
notwithstanding anything else contained in this Certificate of Incorporation to
the contrary, the affirmative vote of the holders of at least 80% of the voting
power of the then outstanding shares of Voting Stock, voting together as a
single class, shall be required to alter, amend or repeal this Article VII.
Notwithstanding anything contained in this Certificate of Incorporation to
the contrary, the affirmative vote of the holders of at least 66.67% of the
voting power of the then outstanding shares of Voting Stock, voting together as
a single class, shall be required to alter, amend or repeal the second and final
sentences of this Article VII.
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APPENDIX B
BYLAWS
ARTICLE VI.
Amendments
These Bylaws may be altered or repealed
and Bylaws may be made at any annual meeting of shareholders or at any special
meeting thereof if notice of the proposed alteration or repeal of Bylaws to be
made be contained in the notice of such meeting, by the affirmative vote of the
holders of a majority of the total voting power of all outstanding shares of the
voting stock of the Corporation. These bylaws may also be altered or repealed
and Bylaws may be made by the affirmative vote of a majority of the Board of
Directors, at any annual or regular meeting of the Board of Directors, or at any
special meeting of the Board of Directors if notice of the proposed alteration
or repeal, or Bylaw or Bylaws to be made,, be contained in the notice of such
special meeting.
Notwithstanding anything contained in
these Bylaws to the contrary, (i) the affirmative vote of the holders of at
least 80% of the voting power of all of the shares of the capital stock of the
Corporation entitled to vote generally in the election of directors, voting
together as a single class, shall be required to alter, amend or repeal Section
4, (subject to clause (ii) below) or 6 of Article II, Section 1, 2 or 3
of Article III, of these Bylaws, and (ii) notwithstanding the foregoing, the
affirmative vote of the holders of at least 66.67% of the voting power of all of
the shares of the capital stock of the Corporation entitled to vote generally in
the election of directors, voting together as a single class, shall be required
to alter, amend or repeal the first sentence of Section 4 of Article II of these
Bylaws.
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APPENDIX C
CERTIFICATE OF INCORPORATION
ARTICLE VII.
Actions by
Shareholders
Any action required or permitted to be
taken by the shareholders of the Corporation must be effected at a duly called
annual or special meeting of shareholders of the Corporation and may not be
effected by any consent in writing by such shareholders. Special meetings of
shareholders of the Corporation may be called only by the Board pursuant to a
resolution approved by a majority of the entire Board, except as otherwise
permitted by the Bylaws of the Corporation. Notwithstanding anything
contained in this Certificate of Incorporation to the contrary, the affirmative
vote of the holders of at least 80% of the voting power of the then outstanding
shares of Voting Stock, voting together as a single class, shall be required to
alter, amend or repeal this Article VII.
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APPENDIX D
BYLAWS
ARTICLE II.
Meetings of
Shareholders
Section 1. Annual Meetings. Annual
meetings of shareholders for the election of directors and for such other
business as may be stated in the notice of the meeting, shall be held at such
place, either within or without the State of Delaware, and at such time and date
as the Board of Directors by resolution, shall determine and as set forth in the
notice of the meeting. In the event the Board of Directors fails so to determine
the time, date and place of meeting, the annual meeting of shareholders shall be
held at the principal executive office of the Corporation at 10:00 a.m. on the
first Wednesday in May. If the date of the annual meeting shall fall upon a
legal holiday, the meeting shall be held on the next succeeding business day.
The annual meeting may be adjourned by the chairman of the meeting from time to
time and place to place. At any adjourned annual meeting the Corporation may
transact any business which might have been transacted at the original annual
meeting. The Board of Directors acting by resolution may postpone and reschedule
any previously scheduled annual meeting of shareholders upon public notice or
disclosure given prior to the date previously scheduled for such meeting of
shareholders.
Section 2. Voting. Each shareholder
who is entitled to vote pursuant to the terms of the Certificate of
Incorporation and these Bylaws, or who is entitled to vote pursuant to the laws
of the State of Delaware, shall be entitled to vote in person or by proxy, but
no proxy shall be voted after three years from its date unless such proxy
provides for a longer period. All elections for directors and all other
questions shall be decided by majority vote except as otherwise provided by the
Certificate of Incorporation, these Bylaws or the laws of the State of
Delaware.
A complete list of the shareholders
entitled to vote at any meeting of shareholders at which directors are to be
elected, arranged in alphabetical order, with the address of each, and the
number of shares held by each, shall be open to the examination of any
shareholder, for any purpose germane to the meeting, during ordinary business
hours, for a period of at least ten days prior to the meeting, either at a place
within the city where the meeting is to be held, which place shall be specified
in the notice of the meeting, or if not so specified, at the place where the
meeting is to be held. The list shall also be produced and kept at the time and
place of the meeting during the whole time thereof, and may be inspected by any
shareholder who is present.
The CEO shall appoint three Inspectors of
Election prior to each meeting of shareholders. Upon his or her appointment,
each such Inspector shall take and sign an oath faithfully to execute the duties
of Inspector at such meeting with strict impartiality and to the best of his or
her ability. Such Inspectors shall determine the number of shares outstanding,
the voting power of each such share, the number of shares present at the meeting
and whether a quorum is present at such meeting. The Inspectors shall receive
votes and ballots and shall determine all challenges and questions as to the
right to vote and shall thereafter count and tabulate all votes and ballots and
determine the result. Such Inspectors shall do such further acts as are proper
to conduct the elections of directors and the vote on other matters with
fairness to all shareholders. The Inspectors shall make a certificate of the
results of the elections of directors and the vote on other matters. No
Inspector shall be a candidate for election as a director of the Corporation nor
shall any such candidate be appointed an Inspector.
Section 3. Quorum. Except as
otherwise required by law, by the Certificate of Incorporation or by these
Bylaws, the presence, in person or by proxy, of shareholders holding a majority
of the voting power of the outstanding stock of the Corporation shall constitute
a quorum at all meetings of the shareholders. In case a quorum shall not be
present at any meeting, a majority in interest of the shareholders entitled to
vote thereat, present in person or by proxy or the chairman of the meeting,
shall have the power to adjourn the meeting from time to time, without notice
other than announcement at the meeting, until the requisite amount of stock
entitled to vote shall be present; provided, however, that if such adjournment
is for more than thirty days, or if after such adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each shareholder of record entitled to vote at
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such adjourned meeting. At any such
adjourned meeting at which the requisite amount of stock entitled to vote shall
be represented, any business may be transacted which might have been transacted
at the meeting as originally noticed; but only those shareholders entitled to
vote at the meeting as originally noticed shall be entitled to vote at any
adjournment or adjournments thereof unless the Board of Directors shall have
fixed a new record date for such adjournment or adjournments pursuant to Section
4 of Article V of these Bylaws.
Section 4. Special
Meetings.
(A) General.
Special meetings of shareholders may be
called only by (i) the Board of Directors pursuant to a resolution approved by a
majority of the entire Board of Directors, or (ii) solely to the extent
required by Section 4(B), the Secretary of the Corporation. Special meetings
of shareholders may be held at such place, either within or without the State of
Delaware, and at such time and date as shall be stated in the notice of the
meeting. The special meeting may be adjourned by the chairman of the special
meeting from time to tie and place to place. At any adjourned special meeting
the Corporation may transact any business which might have been transacted at
the original special meeting. The Board of Directors acting by resolution
approved by a majority of the entire Board of Directors may postpone and
reschedule any previously scheduled special meeting of shareholders upon public
notice or disclosure given prior to the date previously scheduled for such
meeting of shareholders.
(B) Shareholder Requested Special
Meetings.
|
(1) |
Special meetings of the shareholders (each a
Shareholder Requested Special Meeting) shall be called by the Secretary
upon the written request of a shareholder (or a group of shareholders
formed for the purpose of making such request) who or which has held at
least 25% Net Long Beneficial Ownership (as defined below) of the
outstanding common stock of the Corporation continuously for at least 120
days as of the date of submission of the request (the Requisite
Percent). Compliance by the requesting shareholder or group of
shareholders with the requirements of this section and related provisions
of these bylaws shall be determined in good faith by the Board of
Directors, which determination shall be conclusive and binding on the
Corporation and the shareholders. |
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Net Long Beneficial Ownership (and its correlative
terms), when used to describe the nature of a shareholders ownership of
common stock of the Corporation, shall mean those shares of common stock
of the Corporation as to which the shareholder in question possesses (x)
the sole power to vote or direct the voting, (y) the sole economic
incidents of ownership (including the sole right to profits and the sole
risk of loss), and (z) the sole power to dispose of or direct the
disposition. The number of shares calculated in accordance with clauses
(x), (y) and (z) shall not include any shares (1) sold by such shareholder
in any transaction that has not been settled or closed, (2) borrowed by
such shareholder for any purposes or purchased by such shareholder
pursuant to an agreement to resell or (3) subject to any option, warrant,
derivative or other agreement or understanding, whether any such
arrangement is to be settled with shares of common stock of the
Corporation or with cash based on the notional amount of shares subject
thereto, in any such case which has, or is intended to have, the purpose
or effect of (A) reducing in any manner, to any extent or at any time in
the future, such shareholders rights to vote or direct the voting and
full rights to dispose or direct the disposition of any of such shares or
(B) offsetting to any degree gain or loss arising from the sole economic
ownership of such shares by such shareholder. |
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(2) |
A request for a Shareholder Requested Special Meeting
must be signed by the Requisite Percent of the record holders (or their
duly authorized agents) and be delivered to the Secretary at the principal
executive offices of the Corporation by registered mail, return receipt
requested. |
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Such request shall (A) set forth a statement of the
specific purpose or purposes of the meeting and the matters proposed to be
acted on at such special meeting, (B) bear the date of signature of each
shareholder (or duly authorized agent) signing the request, (C) include
(w) the name and address, as they appear in the Corporations stock
ledger, of each shareholder signing such request (or on whose behalf the
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Special Meeting Request is
signed), (x) the class, if applicable, and the number of shares of common
stock of the Corporation that are owned of record and beneficially by each
such shareholders, (y) documentary evidence of such shareholders record
and beneficial ownership of such stock and (z) a certification from each
such shareholder that the shareholders signing the request in the
aggregate satisfy the Net Long Beneficial Ownership requirement of these
Bylaws, (D) set forth all information relating to each such shareholder
(and if the matter proposed to be acted on at such special meeting
involves the election of directors, each person whom the shareholder
proposes to nominate for election) that must be disclosed in solicitations
of proxies for election of directors in an election contest (even if an
election contest is not involved), or is otherwise required, in each case,
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended (the Exchange Act), (E) describe any material interest of each
such shareholder in the specific purpose or purposes of the meeting, and
(F) include an acknowledgement by each shareholder and any duly authorized
agent that any disposition of shares of common stock of the Corporation as
to which such shareholder has Net Long Beneficial Ownership as of the date
of delivery of the special meeting request and prior to the record date
for the proposed meeting requested by such shareholder shall constitute a
revocation of such request with respect to such shares. In addition, the
shareholder and any duly authorized agent shall promptly provide any other
information reasonably requested by the Corporation to allow it to satisfy
its obligations under applicable law. |
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Any requesting shareholder may
revoke a request for a special meeting at any time by written revocation
delivered to the Secretary at the principal executive offices of the
Corporation. If, following such revocation at any time before the date of
the Shareholder Requested Special Meeting, the remaining requests are from
shareholders holding in the aggregate less than the Requisite Percent, the
Board of Directors, in its discretion, may cancel the Shareholder
Requested Special Meeting. |
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(3) |
Notwithstanding the foregoing,
the Secretary shall not be required to call a special meeting of
shareholders if (A) the request for such special meeting does not comply
with this Section 4(B), (B) the Board of Directors has called or calls an
annual or special meeting of shareholders to be held not later than ninety
(90) days after the date on which a valid request has been delivered to
the Secretary (the Delivery Date), (C) the request is received by the
Secretary during the period commencing ninety (90) days prior to the first
anniversary of the date of the immediately preceding annual meeting and
ending on the date of the next annual meeting, D) the request contains an
identical or substantially similar item (a Similar Item) to an item that
was presented at any meeting of shareholders held within one hundred and
twenty (120) days prior to the Delivery Date (and, for purposes of this
clause (D) the election of directors shall be deemed a Similar Item with
respect to all items of business involving the election or removal of
directors), (E) the request relates to an item of business that is not a
proper subject for action by the shareholders of the Corporation under
applicable law, or (F) the request was made in a manner that involved or
would involve a violation of Regulation 14A under the Exchange Act or
other applicable law. |
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(4) |
Any Shareholder Requested Special
Meeting shall be held at such date, time and place within or without the
state of Delaware as may be fixed by the Board of Directors; provided,
however, that the date of any Shareholder Requested Special Meeting shall
be not more than sixty (60) days after the record date for such meeting
(the Meeting Record Date), which shall be fixed in accordance with
Article V, Section 4 of these Bylaws, provided that, in no event shall the
Meeting Record Date be more than twenty (20) days after the date on which
a valid request for a Shareholder Requested Special Meeting, which
complies with the requirements of this section and related provisions of
these Bylaws, is delivered to the Secretary of the Corporation. In fixing
a date and time for any Shareholder Requested Special Meeting, the Board
of Directors may consider such factors as it deems relevant within the
good faith exercise of business judgment, including, without limitation,
the nature of the matters to be considered, the facts and circumstances
surrounding any request for the special meeting and any plan of the Board
of Directors to call an annual meeting or a special
meeting. |
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(5) |
Business transacted at any
Shareholder Requested Special Meeting shall be limited to the purpose(s)
stated in the request; provided, however, that nothing herein shall
prohibit the Corporation from submitting additional matters to a vote of
the shareholders at any Shareholder Requested Special
Meeting. |
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Section 5. Notice of Meetings.
Written notice, stating the place, date and time of any annual or special
meeting of shareholders, and the general nature of the business to be considered
thereat, shall be given to each shareholder entitled to vote at such meeting at
his address as it appears on the records of the Corporation, not less than ten
nor more than sixty days before the date of the meeting.
Section 6. Shareholder Action. Any
action required or permitted to be taken by the shareholders of the Corporation
must be effected at a duly called annual or special meeting of shareholders of
the Corporation and may not be effected by any consent in writing by such
shareholders.
Section 7. Chairman of a Meeting.
At each meeting of the shareholders the Chairman of the Board, or if he shall be
absent therefrom, the President, or if he shall be absent therefrom, another
officer of the Corporation chosen by the Board of Directors, shall act as
chairman of the meeting or preside thereat.
Section 8.
(A) Annual Meetings of
Shareholders.
|
(1) |
Nominations of persons for election to the Board of
Directors of the Corporation and the proposal of business to be considered
by the shareholders may be made at an annual meeting of shareholders (a)
pursuant to the Corporations notice of meeting, (b) by or at the
direction of the Board of Directors or (c) by any shareholder of the
Corporation who was a shareholder of record at the time of giving of
notice provided for in this By-Law, who is entitled to vote at the meeting
and who complied with the notice procedures set forth in this
By-Law. |
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(2) |
For nominations or other business to be properly brought
before an annual meeting by a shareholder pursuant to clause (c) of
paragraph (A)(1) of this By-Law, the shareholder must have given timely
notice thereof in writing to the Secretary of the Corporation. To be
timely, a shareholders notice shall be delivered to the Secretary of the
Corporation at the principal executive offices of the Corporation not less
than 90 days nor more than 120 days prior to the first anniversary of the
preceding years annual meeting; provided, however, that in the event that
the date of the annual meeting 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 so delivered not earlier than the 120th
day prior to such annual meeting and
not later than the close of business on the later of the 90th
day prior to such annual meeting or
the 10th day following the day
on which public announcement of the date of such meeting is first made. In
no event shall the public announcement of an adjournment of an annual
meeting commence a new time period for the giving of a 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 reelection 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 Exchange Act of 1934, as
amended (the Exchange Act) and Rule 14a-11 thereunder (including such
persons written consent to being named in the proxy statement as a
nominee and to serving as a director if elected); (b) as to any other
business that the shareholder proposes to bring before the meeting, 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; (c) as to the
shareholder giving the notice and the beneficial owner, if any, on whose
behalf of the nomination or proposal is made (i) the name and address of
such shareholder, as they appear on the Corporations books, and of such
beneficial owner and (ii) the class and number of shares of the
Corporation which are owned beneficially and of record by such shareholder
and such beneficial owner. |
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(3) |
Notwithstanding anything in the second sentence of
paragraph (A)(2) of this By-Law to the contrary, in the event that the
number of directors to be elected to the Board of Directors of the
Corporation is increased and there is no public announcement naming all of
the nominees for Director or specifying the size of the increased Board of
Directors made by the Corporation at least 100 days prior to the first
anniversary of the preceding years annual meeting, a shareholders notice
required by this By-Law shall also be considered timely, but only with
respect to nominees for any new positions created by such increase, if it
shall be |
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delivered to the Secretary of the
Corporation at the principal executive offices of the Corporation not later than
the close of business on the 10th day following the day on which such public
announcement is first made by the Corporation.
(B) Special Meetings of
Shareholders. Only such business shall be conducted at a special meeting of
shareholders as shall have been brought before the meeting pursuant to the
Corporations notice of meeting. Nominations of persons for election to the
Board of Directors may be made at a special meeting of shareholders at which
directors are to be elected pursuant to the Corporations notice of meeting (1)
by or at the direction of the Board of Directors or (2) provided that
the Board of Directors has determined that directors shall be elected at such
special meeting, by any shareholder of the Corporation who is a
shareholder of record at the time of giving of notice provided for in this
By-Law, who shall be entitled to vote at the meeting and who (y) in the case
of a special meeting of shareholders called pursuant to clause (i) of the first
sentence of Section (4)(A) of Article II of these Bylaws, complies with the
notice procedures set forth in this By-Law, or (z) in the case of a
Shareholder Requested Special Meeting, complies with the requirements set forth
in section 4(B) of Article II of these Bylaws. In the event the Corporation
calls a special meeting of shareholders for the purpose of electing one or more
directors, any such shareholder may nominate a person or persons (as the case
may be), for election to such position(s) as specified in the Corporations
notice of meeting, if (i) in the case of a special meeting of shareholders
called pursuant to clause (i) of the first sentence of Section (4)(A) of Article
II of these Bylaws, the shareholders notice required by paragraph (A)(2) of
this By-Law shall be delivered to the Secretary at the principal executive
offices of the Corporation not earlier than the 120th day prior to
such special meeting and not later than the close of business on the later of
the 90th day prior to such special meeting or the 10th day
following the day on which public announcement is first made of the date of the
special meeting and of the nominees proposed by the Board of Directors to be
elected at such meeting, or (ii) in the case of a Shareholder Requested
Special Meeting, the shareholder complies with the requirements set forth in
Section 4(b) of Article II of these Bylaws. In no event shall the public
announcement of an adjournment of a special meeting commence a new time period
for the giving of a shareholders notice as described above.
(C) General.
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(1) |
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Only such persons who are
nominated in accordance with the procedures set forth in this By-Law shall
be eligible to serve as directors and only such business shall be
conducted at a meeting of shareholders as shall have been brought before
the meeting in accordance with the procedures set forth in this By-Law.
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 this
By-Law and, if any proposed nomination or business is not in compliance
with this By-Law, to declare that such defective proposal shall be
disregarded. |
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(2) |
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For purposes of this By-Law,
public announcement shall mean disclosure in a press release reported by
the Dow Jones News Service, Associated Press or comparable national news
service or in a document publicly filed by the Corporation with the
Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of
the Exchange Act. |
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(3) |
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Notwithstanding the foregoing
provision of this By-Law, a shareholder shall also comply with all
applicable requirements of the Exchange Act with respect to the matters
set forth in this By-Law. Nothing in this By-Law shall be deemed to affect
any rights of (i) shareholders to request inclusion of the proposals in
the Corporations proxy statement pursuant to Rule 14a-8 under the
Exchange Act or (ii) the holders of any series of Preferred Stock to elect
directors under specified circumstances. |
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APPENDIX
E
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, 2015, 2014 and 2013 (in thousands).
|
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Year ended December 31, |
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|
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2015 |
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|
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2014 |
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|
|
2013 |
|
Net
income (loss) (GAAP) |
|
$ |
(86,968 |
) |
|
$ |
17,824 |
|
|
$ |
(25,130 |
) |
Interest expense, net of amount
capitalized1 |
|
|
25,389 |
|
|
|
26,775 |
|
|
|
21,689 |
|
Income tax provision (benefit) |
|
|
56,310 |
|
|
|
(5,240 |
) |
|
|
(9,795 |
) |
Depreciation, depletion, and amortization |
|
|
112,585 |
|
|
|
112,173 |
|
|
|
82,366 |
|
EBITDA |
|
$ |
107,316 |
|
|
$ |
151,532 |
|
|
$ |
69,130 |
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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, 2015, 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. |
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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 loss before the following items: interest expense, income tax
provision, depreciation, depletion, and amortization expense, exploration
expense, pre-development expense, acquisition costs, foreign exchange gains,
gains on derivative contracts, provisional price gains, provisions for closed
operations expense, stock-based compensation,
unrealized losses on investments, interest and other income, and loss on sale of
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 (loss) to Adjusted
EBITDA (in thousands):
|
|
Year Ended December 31, 2015 |
|
Net
(loss) |
|
$ |
(86,968 |
) |
Plus: Interest expense, net of amount capitalized |
|
|
25,389 |
|
Plus: Income taxes |
|
|
56,310 |
|
Plus: Depreciation, depletion and amortization |
|
|
111,489 |
|
Plus: Exploration expense |
|
|
17,745 |
|
Plus: Pre-development expense |
|
|
4,213 |
|
Plus: Acquisition costs |
|
|
2,162 |
|
(Less): Foreign exchange (gain) |
|
|
(24,551 |
) |
Less: Gains on derivative contracts |
|
|
(8,252 |
) |
(Less): Provisional price (gains) |
|
|
(634 |
) |
Plus: Provision for closed operations and environmental
matters |
|
|
12,036 |
|
Plus: Stock-based compensation |
|
|
5,425 |
|
Plus: Unrealized losses on investments |
|
|
3,333 |
|
(Less): Other |
|
|
(872 |
) |
Adjusted EBITDA |
|
$ |
116,825 |
|
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, 2015 (in thousands, except costs per
ounce and gold ounces produced).
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, Lucky Friday
and San Sebastian 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
|
125
Years |
|
|
2016 Proxy Statement E-2 |
Table of Contents
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, Lucky Friday and San Sebastian, our combined silver properties.
As depicted in the Total, Greens Creek,
Lucky Friday and San Sebastian 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 Byproduct Credits, per Silver
Ounce include:
|
|
Total, Greens Creek. Lucky Friday and San Sebastian
Units |
In thousands (except per ounce amounts) |
|
Year ended December
31, |
|
|
2015 |
|
2014 |
|
2013 |
By-product value, all silver properties: |
|
|
|
|
|
|
|
|
|
Zinc |
|
$ |
87,383 |
|
$ |
95,7016 |
|
$ |
77,616 |
Gold |
|
|
59,019 |
|
|
61,871 |
|
|
66,907 |
Lead |
|
|
55,955 |
|
|
66,082 |
|
|
48,973 |
Total by-product
credits |
|
$ |
202,357 |
|
$ |
223,654 |
|
$ |
193,496 |
|
By-product credits per silver ounce, all silver
properties |
|
|
|
|
|
|
|
|
|
Zinc |
|
$ |
7.56 |
|
$ |
8.65 |
|
$ |
8.71 |
Gold |
|
|
5.10 |
|
|
5.59 |
|
|
7.51 |
Lead |
|
|
4.84 |
|
|
5.97 |
|
|
5.50 |
Total by-product
credits |
|
$ |
17.50 |
|
$ |
20.21 |
|
$ |
21.72 |
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 Unit3 |
In thousands (except per ounce amounts) |
|
Year ended December
31, |
|
|
2015 |
|
2014 |
|
2013 |
Silver by-product value |
|
457 |
|
464 |
|
262 |
Silver by-product credits per gold ounce |
|
3.57 |
|
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 (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, 2015.
E-3 www.hecla-mining.com |
|
|
125
Years |
|
Table of Contents
|
|
Total, Greens Creek, Lucky Friday and San Sebastian
Units |
In thousands (except per ounce amounts) |
|
Year ended December
31, |
|
|
2015 |
|
|
2014 |
|
|
2013 |
|
Cash Cost, Before By-product
Credits1 |
|
$ |
269,971 |
|
|
$ |
276,842 |
|
|
$ |
254,460 |
|
By-product credits |
|
|
(202,357 |
) |
|
|
(223,654 |
) |
|
|
(193,496 |
) |
Cash Cost, After By-product Credits |
|
|
67,614 |
|
|
|
53,188 |
|
|
|
60,964 |
|
Divided by silver ounces produced |
|
|
11,562 |
|
|
|
11,065 |
|
|
|
8,907 |
|
Cash Cost,
Before By-product Credits, per Silver Ounce |
|
|
23.35 |
|
|
|
25.02 |
|
|
|
28.56 |
|
By-product
credits per silver ounce |
|
|
(17.50 |
) |
|
|
(20.21 |
) |
|
|
(21.72 |
) |
Cash Cost,
After By-product Credits, per Silver Ounce |
|
$ |
5.85 |
|
|
$ |
4.81 |
|
|
$ |
6.84 |
|
Reconciliation to GAAP: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash Cost,
After By-product Credits |
|
$ |
67,614 |
|
|
$ |
53,188 |
|
|
$ |
60,964 |
|
Depreciation,
depletion and amortization |
|
|
67,815 |
|
|
|
72,936 |
|
|
|
63,098 |
|
Treatment
costs |
|
|
(80,239 |
) |
|
|
(82,639 |
) |
|
|
(76,823 |
) |
By-product
credits |
|
|
202,357 |
|
|
|
223,654 |
|
|
|
193,496 |
|
Change in
product inventory |
|
|
1,632 |
|
|
|
(1,649 |
) |
|
|
(246 |
) |
Reclamation and
other costs |
|
|
1,319 |
|
|
|
2,046 |
|
|
|
2,100 |
|
Cost of sales
and other direct production costs and |
|
|
|
|
|
|
|
|
|
|
|
|
depreciation,
depletion and amortization (GAAP) |
|
$ |
260,498 |
|
|
$ |
267,536 |
|
|
$ |
242,589 |
|
|
|
Greens Creek Unit |
In thousands (except per ounce amounts) |
|
Year ended December
31, |
|
|
2015 |
|
|
2014 |
|
|
2013 |
|
Cash Cost, Before by-Product
Credits1 |
|
$ |
196,443 |
|
|
$ |
199,247 |
|
|
$ |
203,496 |
|
By-product credits |
|
|
(163,394 |
) |
|
|
(176,650 |
) |
|
|
(170,563 |
) |
Cash Cost, After By-product Credits |
|
|
33,049 |
|
|
|
22,597 |
|
|
|
32,933 |
|
Divided by silver ounces produced |
|
|
8,452 |
|
|
|
7,826 |
|
|
|
7,448 |
|
Cash Cost,
Before By-product Credits, per Silver Ounce |
|
|
23.24 |
|
|
|
25.46 |
|
|
|
27.32 |
|
By-product
credits per silver ounce |
|
|
(19.33 |
) |
|
|
(22.57 |
) |
|
|
(22.90 |
) |
Cash Cost,
After By-product Credits, per Silver Ounce |
|
$ |
3.91 |
|
|
$ |
2.89 |
|
|
$ |
4.42 |
|
Reconciliation to GAAP: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash Cost,
After By-product Credits |
|
$ |
33,049 |
|
|
$ |
22,597 |
|
|
$ |
32,933 |
|
Depreciation,
depletion and amortization |
|
|
56,553 |
|
|
|
63,505 |
|
|
|
55,265 |
|
Treatment
costs |
|
|
(63,284 |
) |
|
|
(63,313 |
) |
|
|
(67,341 |
) |
By-product
credits |
|
|
163,394 |
|
|
|
176,650 |
|
|
|
170,563 |
|
Change in
product inventory |
|
|
4,222 |
|
|
|
(1,706 |
) |
|
|
(159 |
) |
Reclamation and
other costs |
|
|
1,342 |
|
|
|
1,949 |
|
|
|
1,947 |
|
Cost of sales
and other direct production costs and depreciation, |
|
|
|
|
|
|
|
|
|
|
|
|
depletion and
amortization (GAAP) |
|
$ |
195,276 |
|
|
$ |
199,682 |
|
|
$ |
193,526 |
|
|
125
Years |
|
|
2016 Proxy Statement E-4 |
Table of Contents
|
|
Lucky Friday Unit |
In thousands (except per ounce amounts) |
|
Year ended December
31, |
|
|
2015 |
|
|
2014 |
|
|
2013 |
|
Cash Cost, Before By-product
Credits1 |
|
$ |
72,052 |
|
|
$ |
77,595 |
|
|
$ |
50,964 |
|
By-product credits |
|
|
(38,035 |
) |
|
|
(47,004 |
) |
|
|
(22,933 |
) |
Cash Cost, After By-product Credits |
|
|
34,017 |
|
|
|
30,591 |
|
|
|
28,031 |
|
Divided by silver ounces produced |
|
|
3,028 |
|
|
|
3,239 |
|
|
|
1,459 |
|
Cash Cost,
Before By-product Credits, per Silver Ounce |
|
|
23.79 |
|
|
|
23.95 |
|
|
|
34.93 |
|
By-product
credits per silver ounce |
|
|
(12.56 |
) |
|
|
(14.51 |
) |
|
|
(15.72 |
) |
Cash Cost,
After By-product Credits, per Silver Ounce |
|
$ |
11.23 |
|
|
$ |
9.44 |
|
|
$ |
19.21 |
|
Reconciliation to GAAP: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash Cost,
After By-product Credits |
|
$ |
34,017 |
|
|
$ |
30,591 |
|
|
$ |
28,031 |
|
Depreciation,
depletion and amortization |
|
|
11,262 |
|
|
|
9,431 |
|
|
|
7,833 |
|
Treatment
costs |
|
|
(16,915 |
) |
|
|
(19,326 |
) |
|
|
(9,482 |
) |
By-product
credits |
|
|
38,035 |
|
|
|
47,004 |
|
|
|
22,933 |
|
Change in
product inventory |
|
|
(1,154 |
) |
|
|
57 |
|
|
|
(405 |
) |
Reclamation and
other costs |
|
|
(23 |
) |
|
|
97 |
|
|
|
153 |
|
Cost of sales
and other direct production costs and depreciation, |
|
|
|
|
|
|
|
|
|
|
|
|
depletion and
amortization (GAAP) |
|
$ |
65,222 |
|
|
$ |
67,854 |
|
|
$ |
49,063 |
|
|
|
San Sebastian
Unit2 |
In thousands (except per ounce amounts) |
|
Year ended December
31, |
|
|
2015 |
|
|
2014 |
|
2013 |
Cash Cost, Before By-product
Credits1 |
|
$ |
1,476 |
|
|
$ |
|
|
$ |
|
By-product credits |
|
|
(928 |
) |
|
|
|
|
|
|
Cash Cost, After By-product credits |
|
|
548 |
|
|
|
|
|
|
|
Divided by silver ounces produced |
|
|
82 |
|
|
|
|
|
|
|
Cash Cost,
Before By-product Credits, per Silver Ounce |
|
|
18.07 |
|
|
|
|
|
|
|
By-product
credits per silver ounce |
|
|
(11.36 |
) |
|
|
|
|
|
|
Cash Cost,
After By-product Credits, per Silver Ounce |
|
$ |
6.71 |
|
|
$ |
|
|
$ |
|
Reconciliation to GAAP: |
|
|
|
|
|
|
|
|
|
|
Cash Cost,
After By-product Credits |
|
$ |
548 |
|
|
$ |
|
|
$ |
|
Treatment
costs |
|
|
(40 |
) |
|
|
|
|
|
|
By-product
credits |
|
|
928 |
|
|
|
|
|
|
|
Change in
product inventory |
|
|
(1,436 |
) |
|
|
|
|
|
|
Cost of sales
and other direct production costs and depreciation, |
|
|
|
|
|
|
|
|
|
|
depletion and
amortization (GAAP) |
|
$ |
|
|
|
$ |
|
|
$ |
|
E-5 www.hecla-mining.com |
|
|
125
Years |
|
Table of Contents
|
|
Casa Berardi Unit3 |
In thousands (except ounce and per ounce
amounts) |
|
Year ended December
31, |
|
|
2015 |
|
|
2014 |
|
|
2013 |
|
Cash Cost, Before By-product Credits1 |
|
$ |
99,129 |
|
|
$ |
106,438 |
|
|
$ |
59,717 |
|
By-product credits |
|
|
(457 |
) |
|
|
(464 |
) |
|
|
(262 |
) |
Cash Cost, After by-product credits |
|
|
98,672 |
|
|
|
105,974 |
|
|
|
59,455 |
|
Divided by gold ounces produced |
|
|
127,891 |
|
|
|
128,244 |
|
|
|
62,532 |
|
Cash Cost, Before
By-product Credits, per Gold Ounce |
|
|
775.11 |
|
|
|
829.97 |
|
|
|
954.98 |
|
By-product credits
per gold ounce |
|
|
(3.57 |
) |
|
|
(3.62 |
) |
|
|
(4.19 |
) |
Cash Cost, After
By-product Credits, per Gold Ounce |
|
$ |
771.54 |
|
|
$ |
826.35 |
|
|
$ |
950.79 |
|
Reconciliation to GAAP: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash Cost, After
By-product Credits |
|
$ |
98,672 |
|
|
$ |
105,974 |
|
|
$ |
59,455 |
|
Depreciation,
depletion and amortization |
|
|
43,674 |
|
|
|
38,198 |
|
|
|
18,030 |
|
Treatment
costs |
|
|
(670 |
) |
|
|
(564 |
) |
|
|
(268 |
) |
By-product
credits |
|
|
457 |
|
|
|
464 |
|
|
|
262 |
|
Change in product
inventory |
|
|
1,970 |
|
|
|
3,151 |
|
|
|
(3,766 |
) |
Reclamation and
other costs |
|
|
455 |
|
|
|
820 |
|
|
|
142 |
|
Cost of sales and
other direct production costs and depreciation, depletion |
|
|
|
|
|
|
|
|
|
|
|
|
and amortization
(GAAP) |
|
$ |
144,558 |
|
|
$ |
148,043 |
|
|
$ |
73,855 |
|
|
|
Total, All Locations |
In thousands |
|
Year ended December
31, |
|
|
2015 |
|
|
2014 |
|
|
2013 |
|
Reconciliation to GAAP: |
|
|
|
|
|
|
|
|
|
|
|
|
Cash Cost, After By-product Credits |
|
$ |
166,286 |
|
|
$ |
159,162 |
|
|
$ |
120,419 |
|
Depreciation, depletion and amortization |
|
|
111,489 |
|
|
|
111,134 |
|
|
|
81,128 |
|
Treatment costs |
|
|
(80,909 |
) |
|
|
(83,203 |
) |
|
|
(77,092 |
) |
By-product credits |
|
|
202,814 |
|
|
|
224,118 |
|
|
|
193,758 |
|
Change in product inventory |
|
|
3,602 |
|
|
|
1,502 |
|
|
|
(4,012 |
) |
Reclamation and other costs |
|
|
1,774 |
|
|
|
2,867 |
|
|
|
2,242 |
|
Cost of sales and other direct production
costs and depreciation, depletion |
|
|
|
|
|
|
|
|
|
|
|
|
and
amortization (GAAP) |
|
$ |
405,056 |
|
|
$ |
415,580 |
|
|
$ |
316,443 |
|
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 |
Commercial production began at
the San Sebastian unit in the fourth quarter of 2015. See the
San Sebastian Segment section of our Form 10-K for the calendar year ended
December 31, 2015 for further discussion. |
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, 2015, for more information. The
primary metal produced at Casa Berardi is gold, with a by-product credit
for the value of silver production. |
|
125
Years |
|
|
2016 Proxy Statement E-6 |
Table of Contents
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Except |
|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE
NOMINEES FOR DIRECTOR LISTED IN ITEM 1 AND "FOR" PROPOSALS 2, 3, 4 AND
5 |
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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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1. |
ELECTION OF
DIRECTORS |
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Nominees: |
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01) |
Ted Crumley |
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02) |
Terry V. Rogers |
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03) |
Charles B.
Stanley |
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For |
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Against |
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Abstain |
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2. |
PROPOSAL to approve amendments to the Company's
Certificate of Incorporation and Bylaws to remove certain 80%
supermajority voting provisions. |
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3. |
PROPOSAL to approve amendments to the Company's
Certificate of Incorporation and Bylaws to permit shareholders to call
special meetings of shareholders. |
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4. |
PROPOSAL to ratify and approve the selection of BDO USA,
LLP, as independent auditors of the Company for the calendar year ending
December 31, 2016. |
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5. |
Advisory resolution to approve executive
compensation. |
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6. |
In their discretion on all other business that may
properly come before the meeting or any adjournment or adjournments
thereof. |
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This proxy will
be voted as specified. If no specification is made, this proxy will be
voted FOR the election of the three nominees for Director and FOR the
approval of Proposals 2, 3, 4 and 5. 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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IF YOU HAVE NOT VOTED VIA THE
INTERNET OR TELEPHONE PLEASE MARK, SIGN, DATE, AND PROMPTLY RETURN THE
PROXY CARD USING THE ENCLOSED ENVELOPE. |
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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. |
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Signature [PLEASE SIGN WITHIN
BOX] |
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Date |
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Signature (Joint
Owners) |
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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
Eric A. Johnston
Auditorium
Northwest Museum of Arts & Culture
2316 W. 1st
Avenue
Spokane, Washington
ANNUAL MEETING OF SHAREHOLDERS
May
19, 2016
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, 3, 4 AND 5
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 19, 2016, and any
adjournments or postponements thereof, and there to vote the undersigned's
shares of Common Stock of the Company on the following matters as described in
the Board of Directors Proxy Statement for such meeting, a copy of which has
been received by the undersigned.
This Proxy will be voted as
specified. If no specification is made, this Proxy will be voted FOR the
election of the three nominees for Director and FOR the approval of Proposals 2,
3, 4 and 5. 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.
Continued and to be signed on reverse
side
This regulatory filing also includes additional resources:
hecla_pre14a.pdf
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