PGLC Pershing Gold Corp.

ITEM 11:  EXECUTIVE COMPENSATION

(1) Reflects the grant date fair value of the Company’s common stock calculated in accordance with FASB ASC Topic 718. For information regarding the assumptions used to compute grant date fair market value, see Note 2 to the Company’s Audited Consolidated Financial Statements included in the Company’s 2015 annual report on Form 10-K.

(2) Reflects increase in Mr. Alfers’ base salary from $350,000 per year to $425,000 per year on June 28, 2015.

(3) Reflects the grant date value based upon the probable outcome of performance conditions, consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date under FASB ASC Topic 718. Assuming the highest level of performance conditions will be achieved, the value of the award at the grant date was $4,095,000.

(4) Timothy Janke joined the Company as the Company’s Chief Operating Officer in August 2014, and his 2014 salary amount is a portion of his annual $100,000 salary pro-rated from his start date. Mr. Janke devotes approximately half of his time to serving as Chief Operating Officer. All Other Compensation includes $36,225 in consulting fees paid to Mr. Janke in 2014 prior to his appointment as Chief Operating Officer.

Agreements with Executive Officers

Stephen Alfers

We entered into an amended and restated employment agreement (the “Employment Agreement”) with Mr. Alfers on June 28, 2015 that provides that Mr. Alfers will serve as our Chief Executive Officer until December 31, 2018, subject to renewal. Pursuant to the terms of his Employment Agreement, Mr. Alfers will be entitled to a base salary of $425,000 per year, subject to adjustment. Mr. Alfers will also receive an annual bonus if the Company meets or exceeds certain criteria adopted by the Board.  The annual target bonus amount for Mr. Alfers shall equal 100% of his annualized base salary for that year if target levels of performance for that year are achieved, with greater or lesser amounts paid for performance above and below such target.

Upon Mr. Alfers’ termination without Cause (as defined in the Employment Agreement) or upon Mr. Alfers’ resignation for Good Reason (as defined in the Employment Agreement), in either case where such termination is outside of a Change in Control Period (as defined below and in the Employment Agreement), the Company shall pay to Mr. Alfers, in addition to any Accrued Obligations (as defined in the Employment Agreement), a lump sum payment in an amount equal to two (2) times the sum of (i) Mr. Alfers’ base salary plus (ii) the average of the actual bonus amounts paid to Mr. Alfers’ in the two years prior to termination. Additionally, any remaining unvested restricted shares of Company common stock granted to Mr. Alfers on February 9, 2012 in conjunction with his Original Employment Agreement (as defined below) would fully and immediately vest. Any other unvested equity awards shall be forfeited as of the date of termination (unless otherwise provided in the applicable award agreement or equity plan), and vested equity awards shall be treated as provided in the applicable award agreement or equity plan.

Upon Mr. Alfers’ termination without Cause within six months prior to or twenty four months following a Change in Control (as defined in the Employment Agreement and with such period to be referred to as a “Change in Control Period”) or upon Mr. Alfers’ resignation for Good Reason during a Change in Control Period, the Company shall pay to Mr. Alfers, in addition to any Accrued Obligations, a lump sum payment in an amount equal to two times the sum of (i) Mr. Alfers’ base salary plus (ii) the average of the actual bonus amounts paid to Mr. Alfers’ in the two years prior to termination. Additionally, any unvested equity awards that were granted prior to such Change in Control shall fully and immediately vest (unless otherwise provided in the applicable award agreement or equity plan).

Mr. Alfers’ bonus amounts are subject to claw-back rights in the event of certain restatements of the Company’s financial information for a period of 3 years.  

In connection with the Employment Agreement, Mr. Alfers was awarded restricted stock units pursuant to a Restricted Stock Unit Grant Agreement dated June 28, 2015 (the “RSU Agreement”). Under the terms of the RSU Agreement, Mr. Alfers was granted a total of 700,000 restricted stock units. The initial 300,000 restricted stock units (the “Initial RSUs”) are subject to vesting upon Mr. Alfers’ continuous employment through December 31, 2018 (“Employment Term End Date”). If Mr. Alfers’ employment is terminated prior to the Employment Term End Date (i) by the Company other than for Cause, (ii) by Mr. Alfers’ resignation for Good Reason (as defined in the Employment Agreement), or (iii) as a result of Mr. Alfers’ death or Disability (as defined in the Employment Agreement), all Initial RSUs shall become fully vested immediately prior to such termination. Such Initial RSUs shall also become fully vested upon a Change in Control (as defined in the Company’s 2013 Equity Incentive Plan). Each Initial RSU that becomes fully vested will entitle Mr. Alfers to receive one share of common stock as soon as practicable following the vesting event.

The remaining 400,000 restricted stock units (the “Performance RSUs”) are subject to vesting upon the attainment of certain performance-based milestones set forth in the RSU Agreement and shall become fully vested upon a Change in Control. For each fully vested Performance RSU, Mr. Alfers will be entitled to receive one share of common stock upon the earlier of December 31, 2018, Mr. Alfers’ separation from service or death, or a 409A Change in Control (as defined in the RSU Agreement), all as set forth in the RSU Agreement.

On February 5, 2015, the Company and Mr. Alfers entered into a Third Amendment to the Restricted Stock Agreement dated May 13, 2013, as amended on December 23, 2013 and June 11, 2014 (as amended, the “Restricted Stock Agreement”).  Pursuant to this amendment, the vesting of 72,098 shares of restricted stock, of a total of 216,251 restricted shares that were granted pursuant to the Restricted Stock Agreement, was deferred from June 18, 2015 to March 14, 2016.  

On February 5, 2015, the Company and Mr. Alfers entered into a Third Amendment to the Amended and Restated Restricted Stock Agreement dated May 13, 2013, as amended on December 23, 2013 and June 11, 2014 (as amended, the “Amended and Restated Restricted Stock Agreement”).  Pursuant to this amendment, the vesting of 20,514 shares of restricted stock, of a total of 61,527 restricted shares that were granted pursuant to the Amended and Restated Restricted Stock Agreement, was deferred from June 18, 2015 to March 14, 2016. 

On February 5, 2015, the Company and Mr. Alfers entered into a Third Amendment to the Executive Employment Agreement dated February 9, 2012, as amended on February 8, 2013 and December 23, 2013 (as amended, the “Original Employment Agreement”). Pursuant to this amendment, the vesting of 166,667 shares of restricted stock, of a total of 666,667 restricted shares that were granted pursuant to the Original Employment Agreement, was deferred from February 9, 2015 to February 9, 2016. The Original Employment Agreement was superseded by the Employment Agreement.

Debra Struhsacker

We entered into an offer letter with Ms. Struhsacker on September 23, 2013 pursuant to which Ms. Struhsacker was hired to serve as the Company’s Corporate Vice President and is entitled to an annual base salary, subject to adjustment at the sole discretion of the Chief Executive Officer with the approval of the Board of Directors. In September 2014, Ms. Struhsacker was promoted to Senior Vice President.

In connection with the offer letter we entered into with Ms. Struhsacker, we also entered into a severance compensation agreement with Ms. Struhsacker on September 19, 2013. Upon a Qualifying Termination (as defined in the severance compensation agreement) occurring on or within twelve months following a Change in Control (as defined in the severance compensation agreement), we are required to pay Ms. Struhsacker a lump-sum severance payment equal to one and a half times the sum of (i) Ms. Struhsacker’s base salary, plus (ii) the greater of Ms. Struhsacker’s Annual Bonus Amount or Ms. Struhsacker’s Assumed Bonus Amount (both as defined in the severance compensation agreement).

On February 6, 2015, the Company and Ms. Struhsacker entered into a First Amendment to the Restricted Stock Grant Agreement dated February 12, 2013 (the “Struhsacker Restricted Stock Grant Agreement”). Pursuant to this amendment, the vesting of 13,889 shares of restricted stock, of a total of 41,667 restricted shares that were granted pursuant to the Struhsacker Restricted Stock Grant Agreement, was deferred from February 12, 2015 to February 12, 2016. 

On December 10, 2015, the Company and Ms. Struhsacker entered into a First Amendment to the Restricted Stock Grant Agreement dated December 11, 2014 (the “Struhsacker 2014 RSG Agreement”). Pursuant to this First Amendment, the vesting of 4,908 shares of restricted stock, of a total of 14,723 restricted shares that were granted pursuant to the Struhsacker 2014 RSG Agreement, was deferred from December 11, 2015 to March 14, 2016.

On December 10, 2015, the Company and Ms. Struhsacker entered into a First Amendment to the Restricted Stock Grant Agreement dated December 16, 2013 (the “Struhsacker December 2013 RSG Agreement”). Pursuant to this Agreement, the vesting of 1,852 shares of restricted stock, of a total of 5,556 restricted shares that were granted pursuant to the Struhsacker December 2013 RSG Agreement, was deferred from December 16, 2015 to March 14, 2016.

On December 10, 2015, the Company and Ms. Struhsacker entered into a Second Amendment to the Restricted Stock Grant Agreement dated February 12, 2013, as amended by the First Amendment dated February 6, 2015 (the “Struhsacker February 2013 RSG Agreement”). Pursuant to this amendment, the vesting of 13,889 shares of restricted stock, of a total of 41,667 restricted shares that were granted pursuant to the Struhsacker February 2013 RSG Agreement, was deferred from February 12, 2016 to February 12, 2017.

Timothy Janke

We entered into an offer letter with Mr. Janke on August 27, 2014 pursuant to which Mr. Janke will devote approximately half of his time as the Company’s Chief Operating Officer and will be paid an annual salary , subject to adjustment at the sole discretion of the Chief Executive Officer with the approval of the Board of Directors. In the event of Mr. Janke’s termination other than for Cause or his resignation for Good Reason (as those terms are defined in the offer letter) during the three-year period following Mr. Janke’s start date of August 29, 2014, or in the event of Mr. Janke’s termination for Cause or his resignation for Good Reason within 12 months following a Change of Control (as such term is defined in the offer letter) that occurs within three years of his start date, Mr. Janke will be entitled to a severance payment from the Company equal to one and a half times Mr. Janke’s base salary and bonus.

On February 6, 2015, the Company and Mr. Janke entered into a First Amendment to the Restricted Stock Grant Agreement dated February 12, 2013 (the “Janke Restricted Stock Grant Agreement”). Pursuant to this amendment, the vesting of 5,556 shares of restricted stock, of a total of 16,668 restricted shares that were granted pursuant to the Janke Restricted Stock Grant Agreement, was deferred from February 12, 2015 to February 12, 2016.   

On December 10, 2015, the Company and Mr. Janke entered into a First Amendment to the Restricted Stock Grant Agreement dated December 11, 2014 (the “Janke 2014 RSG Agreement”). Pursuant to this First Amendment, the vesting of 14,167 shares of restricted stock, of a total of 42,500 restricted shares that were granted pursuant to the Janke 2014 RSG Agreement, was deferred from December 11, 2015 to March 14, 2016.

On December 10, 2015, the Company and Mr. Janke entered into a First Amendment to the Restricted Stock Grant Agreement dated December 16, 2013 (the “Janke December 2013 RSG Agreement”). Pursuant to this Agreement, the vesting of 5,556 shares of restricted stock, of a total of 16,668 restricted shares that were granted pursuant to the Janke December 2013 RSG Agreement, was deferred from December 16, 2015 to March 14, 2016.

On December 10, 2015, the Company and Mr. Janke entered into a Second Amendment to the Restricted Stock Grant Agreement dated February 12, 2013, as amended by the First Amendment dated February 6, 2015 (the “Janke February 2013 RSG Agreement”). Pursuant to this amendment, the vesting of 5,556 shares of restricted stock, of a total of 16,668 restricted shares that were granted pursuant to the Janke February 2013 RSG Agreement, was deferred from February 12, 2016 to February 12, 2017.

Eric Alexander

We entered into a revised offer letter with Mr. Alexander on November 21, 2012, amended on February 8, 2013, pursuant to which Mr. Alexander joined the Company as our Vice President Finance and Controller and is entitled to an annual base salary of $175,000, subject to adjustments at the sole discretion of the Chief Executive Officer with the approval of the Board of Directors. In addition, in connection with his appointment as the Company’s Principal Financial Officer and Principal Accounting Officer, the Company granted Mr. Alexander 11,112 shares of restricted stock, vesting over three years. The amendment deferred vesting of certain of the restricted shares, of which 3,704 vested in equal tranches on March 14, 2014 and November 30, 2014, and a final tranche of 3,704 shares vested on November 30, 2015, subject to acceleration under certain events, including upon a Change in Control as defined in the Company’s 2012 Equity Incentive Plan.

In connection with the offer letter we entered into with Mr. Alexander, we also entered into a severance compensation agreement with Mr. Alexander on November 21, 2012, which was amended on November 19, 2015. Pursuant to the severance agreement, as amended, Mr. Alexander will be entitled to receive certain benefits if he incurs a separation from service (as defined in the severance agreement) during the term of the severance agreement that is initiated by the Company for any reason other than Cause, death, or Disability (as such terms are defined in the severance agreement) or is initiated by Mr. Alexander for Good Reason (as defined in the severance agreement). These benefits depend on whether the separation occurs prior to or after a Change in Control (as defined in the severance agreement). If the separation occurs prior to a Change in Control, the Company shall pay Mr. Alexander a lump-sum severance payment equal to Mr. Alexander’s base salary plus the average of the annual cash bonuses paid to Mr. Alexander in the two years prior to separation. If the separation occurs within 12 months following a Change in Control, the Company shall pay Mr. Alexander a lump-sum severance payment equal to (x) 1.125 times (y) the sum of (a) Mr. Alexander’s base salary plus (b) the greater of (i) the average annual cash bonus paid to Mr. Alexander in the two years prior to separation or (ii) the target bonus amount established for Mr. Alexander in the fiscal year in which the separation occurs or, if none, an amount equal to 80% of Mr. Alexander’s base salary. The severance agreement expires by its terms on December 31, 2016.

On February 6, 2015, the Company and Mr. Alexander entered into a First Amendment to the Restricted Stock Grant Agreement dated February 12, 2013 (the “Alexander Restricted Stock Grant Agreement”). Pursuant to this amendment, the vesting of 18,519 shares of restricted stock, of a total of 55,556 restricted shares that were granted pursuant to the Alexander Restricted Stock Grant Agreement, was deferred from February 12, 2015 to February 12, 2016. 

On December 10, 2015, the Company and Mr. Alexander entered into a First Amendment to the Restricted Stock Grant Agreement dated December 11, 2014 (the “Alexander 2014 RSG Agreement”). Pursuant to this First Amendment, the vesting of 1,667 shares of restricted stock, of a total of 5,000 restricted shares that were granted pursuant to the Alexander 2014 RSG Agreement, was deferred from December 11, 2015 to March 14, 2016.

On December 10, 2015, the Company and Mr. Alexander entered into a First Amendment to the Restricted Stock Grant Agreement dated December 16, 2013 (the “Alexander December 2013 RSG Agreement”). Pursuant to this Agreement, the vesting of 3,704 shares of restricted stock, of a total of 11,112 restricted shares that were granted pursuant to the Alexander December 2013 RSG Agreement, was deferred from December 16, 2015 to March 14, 2016.

On December 10, 2015, the Company and Mr. Alexander entered into a Second Amendment to the Restricted Stock Grant Agreement dated February 12, 2013, as amended by the First Amendment dated February 6, 2015 (the “Alexander February 2013 RSG Agreement”). Pursuant to this amendment, the vesting of 18,518 shares of restricted stock, of a total of 55,556 restricted shares that were granted pursuant to the Alexander February 2013 RSG Agreement, was deferred from February 12, 2016 to February 12, 2017. 

Indemnification Agreements

In 2013 and 2014, the Company entered into indemnification agreements with its directors and executive officers providing for indemnification against all expenses, judgments, fines and amounts paid in settlement incurred by such indemnitee in connection with any threatened, pending or completed action, suit, alternative dispute resolution mechanism or proceeding to which indemnitee was or is a party or is threatened to be made a party by reason of the fact that indemnitee is or was a director, officer, employee or agent of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another enterprise, to the fullest extent permitted by Nevada law. The indemnification agreements also provide for the advancement of expenses (including attorneys’ fees) incurred by the indemnitee in connection with any action, suit, alternative dispute resolution mechanism or proceeding (subject to the terms and conditions set forth therein). The indemnification agreements contain certain exclusions, including proceedings initiated by the indemnitee unless such advancement is specifically approved by a majority of our disinterested directors. The Company expects that it will enter into similar indemnification agreements with any new directors and executive officers.

Outstanding Equity Awards at Fiscal Year-End

The following table provides information on the holdings of equity awards of our named executive officers at December 31, 2015. This table includes unexercised and unvested options and equity awards. Vesting schedules are subject to acceleration or forfeiture in certain circumstances, including a change of control.

(1) The market value of stock awards is calculated at $3.51 per share, the closing price of our common stock December 31, 2015.

(2) Includes 300,000 restricted stock units which vest on December 31, 2018 and 400,000 restricted stock units that vest upon the attainment of certain performance-based milestones.

(3) Includes 4,908 shares vesting on December 11, 2016; 1,852 shares vesting on December 16, 2016; 5,333 restricted stock units vesting on December 23, 2016; 13,889 shares vesting on February 12, 2017; 4,907 shares vesting on December 11, 2017; and 5,333 restricted stock units vesting on December 23, 2017.

(4) Includes 14,167 shares vesting December 11, 2016; 5,556 shares vesting December 16, 2016; 3,083 restricted stock units vesting on December 23, 2016; 5,556 shares vesting February 12, 2017; 14, 166 shares vesting December 11, 2017; and 3,083 restricted stock units vesting on December 23, 2017.

(5) Includes 1,667 shares vesting on December 11, 2016; 3,704 shares vesting on December 16, 2016; 2,250 restricted stock units vesting on December 23, 2016; 18,518 shares vesting on February 12, 2017; 1,666 shares vesting on December 11, 2017; and 2,250 restricted stock units vesting on December 23, 2017. 

(1) Amount represents pro rata portion of Mr. Morrison’s $35,000 annual retainer for service as the chair of the Technical Committee for the period from November 4, 2015 through June 8, 2016, which retainer was paid in 2015, and $2,250 in hourly fees for service provided to the Technical Committee earned in 2015 but paid in 2016.

(2) Amount represents grant date fair market value calculated pursuant to FASB ASC Topic 718 of 55,556 restricted stock units when granted on June 8, 2015, vesting in equal thirds on June 8, 2016, June 8, 2017 and June 8, 2018. See footnote (1) to the Summary Compensation Table on page 6 of this first amendment to the Company’s annual report on Form 10-K/A for additional information regarding this calculation.

(3) Amount represents fees for consulting services provided to the Company prior to the formation of the Audit Committee in June 2015, but does not include $3,000 in such consulting fees earned in 2014 but paid in 2015.

(4) Amount represents grant date fair market value calculated pursuant to FASB ASC Topic 718 of (a) 5,556 restricted stock units when granted on June 9, 2015, vesting in equal thirds on June 9, 2016, June 9, 2017 and June 9, 2018, and valued at $33,000; and (b) 12,500 restricted stock units granted on December 9, 2015, which were fully vested on the date of grant, and valued at $45,750. See footnote (1) to the Summary Compensation Table on page 6 of this first amendment to the Company’s annual report on Form 10-K/A for additional information regarding this calculation.

(5) The amount shown includes consulting fees paid to a consulting firm controlled by Mr. Karr prior to his appointment to the Board of Directors in June 2015.

(6) Amount represents grant date fair market value calculated pursuant to FASB ASC Topic 718 of 5,556 restricted stock units when granted on June 9, 2015, vesting in equal thirds on June 9, 2016, June 9, 2017 and June 9, 2018. See footnote (1) to the Summary Compensation Table on page 6 of this first amendment to the Company’s annual report on Form 10-K/A for additional information regarding this calculation.

Our directors who are also our employees receive no fees for board service. Mr. Alfers is the only director who is also an employee. The compensation for all non-employee directors includes a $25,000 annual cash retainer and a $1,000 cash fee for attendance at each Board meeting. Directors receive a $1,000 cash fee for attendance at all committee meetings, and the chairs of the Technical, Audit, Compensation and Corporate Governance and Nominating committees receive annual cash retainers of $35,000, $15,000, $10,000 and $7,500 respectively. Retainers paid to committee chairs in 2015 were pro-rated according to the amount of time the committee was in existence in 2015. Non-employee directors on the Technical Committee receive a fee of $150 per hour up to a maximum of $1,000 per day for Technical Committee service that occurs other than at a meeting of the Technical Committee. Non-employee directors also receive annual grants of restricted stock units, vesting on the first anniversary of the grant date, and equal in value when granted to $50,000. This annual grant was not awarded for 2015. For each vested restricted stock unit, the non-employee director is entitled to receive one unrestricted share of common stock upon termination of the director’s service on our Board of Directors. Our directors are also eligible to receive other equity awards, including stock options, under our equity incentive plans, as determined from time to time by the Board of Directors.