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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Definitive Additional
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Soliciting Material Pursuant to §240.14a-12
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HECLA MINING COMPANY
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(Name of Registrant as
Specified In Its Charter)
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(Name
of Person(s) Filing Proxy Statement, if other than the
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Table of Contents
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HECLA MINING COMPANY
PROXY
STATEMENT
2017 ANNUAL MEETING OF
SHAREHOLDERS
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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
2017 ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the 2017
Annual Meeting of Shareholders (Annual Meeting) of Hecla Mining Company (we,
our, us, Hecla, or the Company) will be held at the Fairmont Pacific Rim
Hotel, located at 1038 Canada Place, Vancouver, British Columbia, on Thursday,
May 25, 2017, at 10:00 a.m., Pacific Daylight Time, for the following
purposes:
1.
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Elect two nominees to the Board
of Directors, to serve for a three-year term or until their respective
successors are elected;
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2.
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Ratify the Audit Committees
appointment of BDO USA, LLP as our independent registered public
accounting firm for 2017;
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3.
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Approve, on an advisory basis,
the compensation of our named executive officers;
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4.
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Approve, on an advisory basis,
the frequency of our executive compensation approval vote;
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5.
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Approve our Amended and Restated
Hecla Mining Company Stock Plan for Nonemployee Directors, including to
increase to 3,000,000, the number of shares of common stock available for
issuance under such Plan;
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6.
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Approve an amendment to our
Certificate of Incorporation increasing the number of authorized shares of
our common stock from 500,000,000 to 750,000,000;
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7.
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Approve amendments to our
Certificate of Incorporation and Bylaws to remove certain 80%
supermajority voting provisions;
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8.
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Approve amendments to our
Certificate of Incorporation and Bylaws to permit shareholders to call
special meetings of shareholders under certain circumstances;
and
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9.
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Transact such other business as
may properly come before the meeting.
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The Board of Directors (Board) has fixed
the close of business on March 27, 2017 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 10, 2017, we began
mailing to 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 2016 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 10, 2017
NOTICE OF INTERNET AVAILABILITY
OF PROXY MATERIALS
Important Notice Regarding
the Availability of Proxy Materials for the Annual Meeting to be held on
May 25, 2017. This Proxy Statement and our 2016 Annual Report are
available at
http://www.hecla-mining.com
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2017 Proxy Statement
i
Table of Contents
PROXY
STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 25, 2017
ii
www.hecla-mining.com
Table of Contents
2017 Proxy Statement
iii
Table of Contents
iv
www.hecla-mining.com
Table of Contents
A MESSAGE FROM OUR
INDEPENDENT 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.
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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
Heclas Board operates under the premise
that we are elected by you, the shareholders, to oversee the long-term success
of our Company. We are the ultimate decision-making body of the Company, except
for those matters reserved to or shared with our shareholders, and we play a
critical role in strategic planning. Management is responsible for the
day-to-day operations and management of the Company.
We oversee and evaluate a very capable
management team that is focused on the growth of the Company. Over the years, we
have had to weather the financial markets and lower metal prices, but we believe
the Company made significant progress during those difficult times, which has
allowed us to prosper as the environment for mining companies improved in 2016.
In both good times and bad times, Hecla remains committed to the 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.
Governance
The Board, directly and through its
Corporate Governance and Directors Nominating Committee (Governance
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.
Your Board is committed to keeping up with
good corporate governance practices. In February 2017, the Board approved an
amendment to its Corporate Governance Guidelines to include a director
resignation policy. The policy provides that any director who is not elected by
a majority of votes cast shall tender his or her resignation to the Governance
Committee, which will then recommend to the Board whether to accept or reject
the resignation offer, and the Board will act on the Governance Committees
recommendation within ninety (90) days following certification of the election
results. Any director who tenders his or her resignation pursuant to this
provision will not participate in the proceedings of either the Governance
Committee or the Board with respect to his or her own resignation
offer.
Shareholder Outreach
One of our priorities is listening to the
views of our shareholders and considering them as we make decisions in the
boardroom. We accomplish this through ongoing outreach and engagement with our
shareholders. Through management, we engage with shareholders on a variety of
topics. Based on this engagement, we have made significant enhancements to the
Companys governance and compensation programs over the last several
years.
2017 Proxy Statement
v
Table of Contents
Board Composition and
Refreshment
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
forward-looking and strategic Board. At the same time, it is also important to
benefit from the valuable experience and familiarity that longer-serving
directors bring to the boardroom. The Board is also very conscious of the
benefits of diversity on the Board. Ensuring diverse perspectives, including a
mix of skills, experience and backgrounds, is key to effectively representing
the long-term interests of shareholders. Doing so is a top priority of the
Board. In just the last year and a half, three new directors have been appointed
to our Board. As a result, the average tenure for our directors has been reduced
and our Board now includes a woman director.
We remain committed to ensuring your Board
is composed of a highly capable and diverse group of directors, well-equipped to
oversee the success of the business and effectively represent the interests of
our shareholders. We will continue to seek qualified candidates that will
further 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
vi
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Table of Contents
A MESSAGE FROM OUR PRESIDENT
AND
CHIEF EXECUTIVE OFFICER
Our simple strategy is to explore, develop
and operate properties that have consistent, long-lived production that
grows and whose margins improve over time.
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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 as
it has throughout 2016 and into 2017. 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 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 being 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 is integrated
into our business planning as they are considered key to our core business
strategy and continued profitability.
Our Strategy and 2016
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.
At the heart of our strategy is
long-lived, low-cost mines: both our existing mines and acquiring assets with
the ability to be long-lived, making smart investments to further extend the
mine life, which in turn enables us to work toward lowering both operating and
capital costs and to take advantage of the metals price cycle.
Building around the core of long-lived,
low-cost mines are the four elements necessary to be successful. The first is
metals that we mine. While our focus is primarily on silver and gold, we
continue to produce a substantial amount of lead and zinc as by-products. The
recent acquisitions of Rock Creek and Montanore in northwestern Montana gives us
two of the largest undeveloped silver and copper deposits in North America. The
advantages of this diversity include multiple revenue streams, which lowers our
risk profile and provides a natural hedge with more stability and predictability
of revenues, enabling us to better run our business.
Second is our committed and talented
employees, many of whom have been with the Company for decades, who are working
together making our mines more safe, efficient and productive.
Third is financial discipline. During my
tenure as president and CEO we have issued a significant amount of equity only
three times: 2003, 2008-2009, and 2013 the latter two were to acquire new
assets (Greens Creek and Casa Berardi). Over the past several years we have seen
our production and reserves per share grow more than an average of our peers.
Combined with low-cost growth, this disciplined approach has also created
shareholder value.
Finally, our North American focused asset
portfolio takes advantage of low-risk, mining-friendly jurisdictions where, by
being responsive to community needs, weve built trust and relationships that
foster our social license to operate.
2017 Proxy Statement
vii
Table of Contents
In 2016, some of our key achievements included
the following:
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silver equivalent production of 46.1 million ounces, the
highest in the Companys history;
1
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a
48% increase in silver production to 17.2 million ounces, a record, with
cost of sales of $298.7 million, and cash cost after by-product credits,
per silver ounce of $3.10;
2
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a
24% increase in gold production to 233,929 ounces Company-wide, with
145,975 ounces produced at Casa Berardi; with cost of sales and other
direct production costs and depreciation, depletion and amortization of
$155.7 million and cash cost, after by-product credits, per gold ounce of
$764;
2
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cash provided by operating activities of $225.3 million, a 112%
increase compared to 2015;
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net income of $69 million and Adjusted EBITDA of $264.6
million, a 179% and 127% increase compared to
2015;
3
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achieved the above milestones while ending the year with a
cash, cash equivalents and short-term investments balance of $198.9
million as of December 31, 2016, an increase of $43.7 million during the
year;
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●
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commenced development of the East Mine Crown Pillar (EMCP)
open pit project at Casa Berardi, with processing of ore from EMCP that
began in July 2016;
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completed the #4 Shaft at Lucky Friday, the largest capital
project in our history, which started in 2008;
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acquisition of Mines Management, Inc.,
giving us ownership of the Montanore project, a very large silver/copper
project undergoing permitting in northwestern Montana;
and
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●
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the first hardrock mining company to receive independent
certification under CORESafety.
4
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We believe our strategy and
accomplishments have provided our shareholders with substantial share
value.
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
1
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2016 silver equivalent
calculation is based on the following prices: $17.10 (per oz.) for silver,
$1,248 (per oz.) for gold, $0.85 (per lb.) for lead, and $0.95 (per lb.)
for zinc.
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2
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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
measure, can be found in Appendix Funder
Reconciliation of Cost of Sales and Other Direct Production Costs
and Depreciation, Depletion and Amortization (GAAP) to Cash Cost, Before
By-product Credits Per Silver/Gold Ounce and Cash Cost Per Silver/Gold
Ounce, After By-product Credits (non-GAAP).
It is an important operating statistic that management utilizes to
measure each mines operating performance. It also allows the benchmarking
of performance of each mine versus those of our competitors. As a primary
silver mining company, management also uses the statistic on an aggregate
basis aggregating the Greens Creek, Lucky Friday and San Sebastian mines
to compare performance with that of other primary silver mining
companies. With regard to Casa Berardi, management uses cash cost, after
by-product credits, per gold ounce to compare its performance with other
gold mines. The statistic is also 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. In addition, the Company may use it when
formulating performance goals and targets under our incentive
program.
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3
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Adjusted EBITDA is a non-GAAP
measurement, a reconciliation of which to net income (loss), the most
comparable GAAP measure, can be found in Appendix Funder
Reconciliation of Net Income (Loss) (GAAP) to Adjusted EBITDA
(non-GAAP) to Net Income (Loss) (GAAP)
.
Adjusted EBITDA is a measure used by management to evaluate the Companys
operating performance but should not be considered an alternative to net
income (loss), or cash provided by operating activities as those terms are
defined by GAAP, and does not necessarily indicate whether cash flows will
be sufficient to fund cash needs. In addition, the Company may use it when
formulating performance goals and targets under our incentive
program.
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4
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CORESafety is a partnership led
by the members of the National Mining Association. It is an approach to
mining safety and health to prevent accidents before they happen using a
management system that involves leadership, management and assurance. Its
objective is to have zero fatalities and a 50 percent reduction in
minings injury rate within five years
(0:50:5).
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viii
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Table of Contents
This summary highlights information
contained elsewhere in this Proxy Statement. This summary does not contain all
the information you should consider and you should read the entire Proxy
Statement before voting. For more complete information regarding the Companys
2016 performance, please review our Annual Report on Form 10-K.
Admission
to Annual Meeting
Only record or beneficial owners of
Heclas common stock as of the Record Date, or a valid proxy or representative
of such shareholder, or an invited guest of management, may attend the
Annual Meeting in person. Any shareholder,
proxy
or representative who wishes to attend the Annual Meeting must present the
documentation described under General Information about the Meeting Rules for
Attending the Annual Meeting on page 97.
Proxy
Proposals
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Proposals
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Board Vote
Recommendation
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Page
Reference For
More Information
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Proposal 1
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Election of Two Class I Directors
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FOR
each Director Nominee
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11
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Proposal 2
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Ratification of BDO USA, LLP as the
Companys Independent Registered Public Accounting Firm for 2017
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FOR
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30
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Proposal 3
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Advisory Vote on Executive Compensation
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FOR
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75
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Proposal 4
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Advisory Vote on Frequency of Vote on
Executive Compensation
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1 YEAR
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76
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Proposal 5
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Approval of Amended and Restated Hecla Mining Company
Stock Plan for Nonemployee Directors, including to Increase to 3,000,000
the Number of Shares of Common Stock Available for Issuance under the
Hecla Mining Company Stock Plan for Nonemployee Directors
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FOR
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77
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Proposal 6
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Amendment to our Certificate of
Incorporation to Increase the Number of Authorized Shares
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FOR
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81
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Proposal 7
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Approval of Amendments to our Certificate of
Incorporation and Bylaws to Remove Certain 80% Supermajority Voting
Provisions
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FOR
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83
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Proposal 8
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Approval of Amendments to our Certificate of
Incorporation and Bylaws to Permit Shareholders to Call Special Meetings
of Shareholders Under Certain Circumstances
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FOR
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86
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2017 Proxy Statement
1
Table of Contents
Class I Director Nominees
to Serve Until the 2020 Annual Meeting
Our Board is composed of nine members
divided into three classes, with each class serving a term of three years. Our
director, Dr. Anthony P. Taylor, has reached the mandatory retirement age of 75
and will not be standing for re-election at the Annual Meeting. The size of the
Board is expected to be reduced to eight at the Annual Meeting.
The Board and the Governance Committee
believe the two director nominees (Baker and Johnson) possess the necessary
qualifications to provide effective oversight of our business and quality advice
and counsel to the Companys management.
The following table summarizes important
information about each director nominee standing for re-election to the Board
for a three-year term expiring in 2020.
Class I
Director Nominees
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Experience
and Qualifications
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Phillips S. Baker, Jr.
(age 57)
Director
since 2001
Chairman of the Executive Committee
Serves on one other
public company board
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Public company board
service
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CEO/administration and
operations
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Finance
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Industry and mining
experience
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Reputation in the
industry
●
Legal
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George R. Johnson
(age 68)
Independent
Director since 2016
Retired mining executive
Serves on one other
public company board
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Public company board
service
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Industry and mining
experience
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International
business
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Leadership/executive
officer experience
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Reputation in the
industry
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Mining
engineering
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Corporate Governance Highlights
We are committed to good corporate
governance practices and believe that Proposals 7 and 8 are in the best
interests of our shareholders. We believe that if passed they would enhance
Board and management accountability and help build public trust in the Company.
In addition to Proposals 7 and 8 described
beginning on pages 83 and 86, respectively, the
Corporate Governance and Related Matters
section beginning on page 18 further describes our current governance
framework, which includes the following highlights:
Shareholder Rights
Director
Resignation
Policy
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Directors who receive more Against
votes than For votes must tender their resignation to the Board for
consideration.
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No Poison Pill
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We do not have a shareholder rights plan (commonly
referred to as a poison pill).
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Majority Voting for
Director
Elections
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Directors are elected by a majority of votes cast, which
increases Board accountability to
shareholders.
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Board Structure
Governance
Policies
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Our Corporate Governance Guidelines provide
shareholders with information regarding the best practice principles of
our corporate governance program and Board framework.
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Board Refreshment
and
Tenure
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We added two new directors in 2016 and one new director
in 2017, thereby reducing the average tenure of the Board from 11 years to
approximately 9 years.
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90% Independent
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Eight of nine directors are independent, including the
Audit, Compensation, and Governance Committee members.
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Independent Chairman
of the
Board
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The positions of CEO and Chairman of the Board are held
by separate persons. The Board believes this structure is optimal for the
Company because it allows the CEO to focus on leading the Companys
business and operations, and the Chairman to focus on broader strategies
and leading the activities of the Board.
|
2
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Regular
Executive
Sessions of
Independent Directors
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Executive sessions of non-management
directors are included on the agenda for every regularly scheduled Board
meeting.
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Committee Governance
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Our Board committees have written charters that clearly
establish their respective roles and responsibilities, and are comprised
exclusively of independent directors. Committee composition and charters
are reviewed annually by our Board.
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Mandatory Retirement
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We have a mandatory director retirement age of 75, which
helps ensure regular refreshment of our Board.
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Annual
Performance
Evaluations
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Our Governance Committee oversees an annual performance
evaluation of our Board, while the Committees perform their own
self-evaluations on an annual basis.
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Access to Management
and
Experts
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Our Board and Committees have complete access to all
levels of management and can engage advisors at our expense, giving them
access to employees with direct responsibility for managing our Company
and experts to help them fulfill their oversight responsibilities on
behalf of our shareholders.
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Succession Planning
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Our Boards Compensation Committee and/or our full Board
reviews potential CEO and other senior executive successors annually to
develop our future leaders and ensure we can sustain business continuity,
if any of these key employees were to leave our
Company.
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Executive Compensation
Stock
Ownership
Guidelines
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We have rigorous share ownership guidelines
for our Section 16(b) officers and our directors.
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Annual Say-on-Pay
Vote
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Shareholders have the opportunity annually to cast an
advisory vote on our executive compensation. In Proposal 4 of this Proxy
Statement, the Board is recommending that the shareholders continue to
have the opportunity to cast an annual advisory vote on our executive
compensation.
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At-Risk, Performance-
Based
Compensation
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84% of CEO and 74% of NEO pay is at-risk
1
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Over 68% of total compensation for the CEO is performance-based and 54% of
total compensation for the other NEOs is performance-based.
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Stock Awards
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We grant restricted stock units to retain our senior
executives and align their interests with long-term interests of our
shareholders. The restricted stock units vest in equal amounts with annual
vesting dates over a three-year period.
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Change in
Control
Agreements
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Our change in control agreements are double-trigger and
contain no excise tax gross-up provision.
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Insider Trading Policy
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Our Insider Trading Policy prohibits all directors,
executive officers and certain other employees from purchasing or selling
any Company securities three weeks before through two days after the
public release of any of our periodic results, or at any other time during
the year while in possession of material non-pubic information about the
Company.
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Anti-hedging and Anti-
pledging
policies
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Our Insider Trading Policy provides that directors and
officers are prohibited from hedging or pledging any securities of the
Company.
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Clawback Policy
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Each of the Companys incentive plans (Annual Incentive
Plan, Long-term Incentive Plan, Key Employee Deferred Compensation Plan,
and 2010 Stock Incentive Plan) have clawback
provisions.
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1
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Pay at-risk refers to the
portion of an employees compensation that is variable, and therefore at-risk
of not being paid out. This at-risk pay is typically performance-based, and is
in contrast to the fixed pay (salary) that the NEO receives as a condition of
employment.
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Shareholder
Outreach
Over the last several years we have
undertaken significant shareholder outreach efforts in order to elicit and
understand the concerns of our shareholders. After implementing certain changes
in 2014 and 2015 to our executive compensation program, our 2016 say-on-pay vote
received 81% 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 2017 Annual
Meeting, we engaged with our shareholders and others to seek their feedback. We
held one-on-one discussions with shareholders holding over 50,000,000 shares of
our common stock, as well as a face-to-face discussion with one of the proxy
advisory firms. The response was overwhelmingly supportive to the changes we
made to
2017 Proxy Statement
3
Table of Contents
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 in 2016. However, in December 2015, due to budget
reductions for 2016, our Chief Executive Officers (CEO) base salary was
reduced by 20%, and all base salaries for other named executive officers
(NEOs) were reduced by 10%, effective through all of calendar year 2016. In
addition, our Boards annual cash payments were reduced by 10% through 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
and 2016, three corporate governance issues were discussed with our
shareholders: (i) the ability of shareholders to call special meetings, (ii) the
80% supermajority voting requirement to amend provisions in our Certificate of
Incorporation and Bylaws impacting special meetings, and (iii) the absence of a
director resignation policy.
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 certain circumstances. 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 again submitted this
proposal at last years Annual Meeting and only received approval from 47%. In
addition, last year we added another proposal to amend our Certificate of
Incorporation and Bylaws to change the required approval of certain amendments
to those documents relating to the ability to call a special meeting from 80% to
a two-thirds voting standard. This change also required the approval by holders
of 80% of our outstanding shares of common stock, and we only received approval
from 46%. In a continued effort to show our support of shareholder feedback, we
are again adding these two proposals to the ballot for shareholders to approve
at the 2017 Annual Shareholder Meeting.
In February 2017, the Board approved
amendments to our Corporate Governance Guidelines, which included a director
resignation policy. Any director who is not elected by a majority of the votes
cast, shall tender his or her resignation to the Governance Committee which will
then recommend to the Board whether to accept or reject the resignation offer,
and the Board will act on the Governance Committees recommendation within
ninety (90) days following certification of the election results. Any director
who tenders his or her resignation pursuant to this provision will not
participate in the proceedings of either the Governance Committee or the Board
with respect to his or her own resignation offer.
Key Compensation Actions Taken in
2016
Below is a brief summary of actions taken
by the Compensation Committee in 2016. The compensation of our NEOs for 2016 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.
Reduction in Annual Cash Compensation
for our Board
. Effective January 1, 2016, the
Compensation Committee recommended and the Board approved a 10% reduction in our
Boards annual cash compensation in 2016.
Reduction in Base Salaries for the CEO
and other NEOs
. 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%.
Annual Incentive Plan
(AIP)
. 2016 was the strongest year in
Heclas history, from a silver and silver equivalent production perspective, a
result driven by the tremendously successful San Sebastian mine, as well as
production at our other mines that exceeded our expectations. Silver production
increased by 48%, which drove our excellent financial performance, generating
cash provided by operating activities of $225.3 million, $264.6 million in
adjusted EBITDA, and adding $43.7 million cash and short-term investments to the
balance sheet, while reducing the net debt/EBITDA ratio by 60%. The life of our
San Sebastian mine was increased by more than a year and it provided cash,
provided by operating activities of $93.9 and $92.4 million in free cash flow in
2016.
5
These strong results were recognized by the market, and our
share price increased by 177% in 2016, significantly outpacing most of our
peers.
5
|
Free cash flow is a non-GAAP
measurement used by management to analyze cash flows generated from
operations. It is calculated as cash provided by operating activities
(GAAP) less additions to properties, plants, equipment and mineral
interests (GAAP). The Company believes free cash flow is also useful as
one of the bases for comparing the Companys performance with its
competitors. Although free cash flow and similar measures are frequently
used as measures of cash flows generated from operations by other
companies, the Companys calculation of free cash flow is not necessarily
comparable to such other similarly titled captions of other
companies.
|
4
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Table of Contents
For 2016, Company performance for
quantitative AIP purposes was determined by the Compensation Committee to be
150% of target. This result was comprised of 85% for quantitative measures
(listed below); 40% for qualitative factors; and 25% was
discretionary.
2016 AIP
Quantitative
Measure Results
|
|
Target
|
|
Actual
|
|
Performance
Value
|
Production
|
|
|
|
|
|
|
Silver equivalent
ounces
|
|
42.0 mm ozs.
|
|
46.5 mm ozs.
|
|
30%
|
Adjusted EBITDA
|
|
$255 mm
|
|
$264.6mm
|
|
17.5%
|
Cash and short-term investments
|
|
$100 mm
|
|
$198.9mm
|
|
30%
|
Work-related injury reduction
|
|
15%
|
|
25%
|
|
7.5%
|
Total Quantitative
|
|
|
|
|
|
85%
|
The Compensation Committee approved payout
of the AIP awards to be 75% cash and 25% in Hecla common stock issued under the
2010 Stock Incentive Plan. The AIP (qualitative and discretionary factors) is
more fully described in the
Compensation
Discussion and Analysis
section of this Proxy
Statement, starting on page 33.
2014-2016 Long-term Incentive Plan
(LTIP)
. The 2014-2016 LTIP had a maximum
potential unit value of $375. The Compensation Committee assessed performance
under the 2014-2016 LTIP as follows:
Performance
Measure
|
|
Target
|
|
Actual
Performance
|
|
% of
Target
|
|
Value Earned
Per Unit
|
Silver Reserve Growth
|
|
30.0 silver oz. added (millions)
|
|
Silver oz. decreased by 2.7 mm oz.
|
|
-9%
|
|
No
Payout
|
Production Growth
|
|
70.5 silver oz. (millions)
|
|
76.5 silver oz. (millions)
|
|
108%
|
|
$50.00
|
Cash Flow
|
|
$628.75 Cash Flow (millions)
|
|
$829.36 Cash Flow (millions)
|
|
132%
|
|
$75.00
|
Total Shareholder Return
|
|
60%
Hecla ranking vs. peers
|
|
92.9% Hecla ranking vs. peers
|
|
155%
|
|
$82.25
|
#4
Shaft Completion
|
|
Shaft Completed by 5/1/16
|
|
1/20/17 completion date
|
|
0%
|
|
No
Payout
|
Total Earned Per Unit
|
|
|
|
|
|
|
|
$207.25
|
During this three-year period, performance
in production exceeded the maximum threshold, and cash flow generation and TSR
components fell between target and the maximum threshold. The #4 Shaft
completion and silver reserve growth were each below the threshold. As a result,
with a range in potential value per unit of $0 to $375, in February 2017, the
Compensation Committee
determined that the total
2014-2016 LTIP payout was $207.25 per unit. The Compensation Committee further
approved payout of the LTIP awards to be 75% in cash and 25% in Hecla common
stock issued under the 2010 Stock Incentive Plan. The 2014-2016 LTIP is more
fully described in the
Compensation Discussion
and Analysis
section of this Proxy Statement,
starting on page 33.
2017 Proxy Statement
5
Table of Contents
CEO Total
Direct Compensation for 2016 - $4,360,375
|
✓
|
2016 Base Salary
$484,000 (20% reduction in 2016).
|
✓
|
Annual Incentive Plan
Payout
$907,500 (150% of target). Paid 75% in cash and 25% in common
stock.
|
✓
|
Long-term Incentive Plan
Payout
$1,968,875. In June 2014, our CEO was awarded 9,500 units
under our 2014-2016 Long-term Incentive Plan. For 2016, the plan paid out
$207.25 per unit. Paid 75% in cash and 25% in common stock.
|
✓
|
Restricted Stock Units
In June 2016, our CEO was awarded 113,636 restricted stock units with a
grant date fair value of $500,000 ($4.40 per share), subject to a
three-year vesting schedule (one-third in June 2017, one-third in June
2018, and one-third in June 2019).
|
✓
|
Performance-based
Shares:
In June 2016, our CEO was awarded 113,636 performance-based
shares with a grant date fair value of $500,000 ($4.40 per share), the
ultimate value of which is based on our three-year TSR ranking in a peer
group (payable in 2019).
|
|
|
2016 Summary
Compensation and Realized Compensation
|
Set forth on the following page is the
2016 compensation for each NEO as determined under Securities and Exchange
Commission (SEC) rules. Total compensation, as reported in the
Summary Compensation Table for 2016
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 2016. 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 2016 compensation as determined under
SEC rules with W-2/T4 income for 2016, which is the federally taxable (under the
U.S. and Canada) compensation our NEOs received in 2016 inclusive of vested
stock and exercised stock options, if any.
This supplemental table is not designed to
replace the
Summary Compensation Table for
2016
found on page 61, but rather to provide
additional, supplemental compensation disclosure.
The differences between this supplemental
table and the
Summary Compensation Table for
2016
are (i) the supplemental table includes
compensation related to stock awards that became fully vested in 2016, whereas
the
Summary Compensation Table for
2016
includes compensation for stock awards
as it is expensed for financial accounting purposes; (ii) the supplemental table
does not reflect the FASB ASC Topic 718 expense associated with equity awards;
(iii) the supplemental table includes compensation related to incentive
compensation that was paid in 2016, whereas the
Summary Compensation Table for 2016
includes incentive compensation as it is expensed for financial accounting
purposes; and (iv) the supplemental table does not include the change in pension
value and the Company matching contribution for individual 401(k) deferral. For
more information on total compensation as calculated under SEC rules, see the
narrative and footnotes accompanying the
Summary Compensation Table for 2016
on
page 61.
6
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Table of Contents
2016 Summary Compensation and Realized
Compensation
2016 Summary
Compensation
|
|
|
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.
|
|
484,000
|
|
2,074,935
|
|
2,876,375
|
|
924,335
|
|
15,900
|
|
6,375,545
|
|
|
5,451,210
|
|
1,897,266
|
2
|
President and CEO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lindsay A.
Hall*
|
|
156,750
|
|
344,999
|
|
326,027
|
|
13,146
3
|
|
9,200
|
|
850,122
|
|
|
836,976
|
|
204,622
|
4
|
Senior Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and CFO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lawrence P.
Radford
|
|
342,000
|
|
789,999
|
|
1,388,650
|
|
125,898
|
|
15,900
|
|
2,662,447
|
|
|
2,536,549
|
|
1,902,528
|
|
Senior Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dr. Dean W. A.
McDonald
|
|
247,500
|
|
589,999
|
|
882,600
|
|
196,766
3
|
|
15,900
|
|
1,932,765
|
|
|
1,735,999
|
|
1,777,226
|
4
|
Senior Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David C.
Sienko
|
|
225,000
|
|
352,500
|
|
723,775
|
|
82,310
|
|
15,900
|
|
1,399,485
|
|
|
1,317,175
|
|
853,950
|
|
Vice President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General Counsel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James A.
Sabala*
|
|
168,588
|
|
411,001
|
|
786,399
|
|
203,085
|
|
15,900
|
|
1,584,973
|
|
|
1,381,888
|
|
1,526,103
|
|
Former Senior Vice
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
President and CFO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
Mr. Hall started with the Company in July
2016, and Mr. Sabala retired in June 2016. Their compensation was prorated
accordingly for base salary and non-equity incentive plan
compensation.
|
1
|
The amounts reported in this column include
2016 salary, vested stock received in 2016, equity and cash portion of
2015 Annual Incentive, and equity and cash portion of 2013-2015 Long-term
Incentive, which were paid in March 2016. Also includes performance-based
shares that vested in 2016 for Mr. Baker.
|
2
|
Mr. Baker deferred all vested equity
received in 2016, except for performance-based vested shares received. See
Option Exercises and Stock Vested for 2016
on page 65.
|
3
|
As non U.S. citizens Mr. Hall and Dr.
McDonald are not participants in the Retirement Plan, or the unfunded
SERP. In lieu of participation in these plans, Mr. Hall and Dr. McDonald
are expected to receive a similar benefit as if they had participated in
these plans.
|
4
|
Dr. McDonald and Mr. Halls realized
compensation is reflected in Canadian dollars as reported on their
T4.
|
2017 Proxy Statement
7
Table of Contents
PROXY
STATEMENT
Board of Directors
Selection Process
Our 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. In December 2016,
the Board increased the size of the Board from eight members to nine members and
appointed one new director, effective as of January 1, 2017.
Identifying
and Evaluating Nominees for Directors
|
The Governance 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.
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. Recent additions to the Board
may provide new perspectives, while directors who have served for a number of
years bring experience, continuity, institutional knowledge, and insight into
the Companys business and industry. Directors with relevant business and
leadership experience can provide the Board a useful perspective on business
strategy and significant risks and an understanding of the challenges facing the
business. 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 and 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.
8
www.hecla-mining.com
Table of Contents
The committee will consider persons
recommended by shareholders as nominees for election as directors. Our Bylaws
provide 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 100. 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 100. 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 Securities Exchange Act of 1934, as amended
(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 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 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. In December
2016, the Board amended our Bylaws and Corporate Governance Guidelines to
provide that directors will not be nominated for re-election after their
75
th
birthday (previously the age limit was 72).
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, legal, 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.
2017 Proxy Statement
9
Table of Contents
Selection of
New Directors in 2016 and 2017
|
On March 1, 2016, the Governance Committee
recommended and the Board approved the appointment of two new directors to our
Board (Messrs. Ralbovsky and Johnson). Effective January 1, 2017, upon the
recommendation of the Governance Committee, the Board also appointed Catherine
Cassie J. Boggs as a new director to our Board.
Mr. Stephen F. Ralbovsky was appointed as
a Class II director (standing for election in 2018). 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 37 years
experience in taxation, auditing and accounting, where he specialized in the
mining industry. The Governance Committee and Board determined that Mr.
Ralbovsky was independent under the New York Stock Exchange listing standards.
The Board appointed Mr. Ralbovsky to serve on the Audit Committee and Governance
Committee.
Mr. George R. Johnson was appointed as a
Class I director (standing for election in 2017). Mr. Johnson is a mining
engineer and formerly 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 Governance Committee and Board
determined that Mr. Johnson was independent under the New York Stock Exchange
listing standards. The Board appointed Mr. Johnson to serve on the Audit
Committee and the Health, Safety, Environmental and Technical
Committee.
Ms. Catherine Cassie J. Boggs was
appointed as a Class II director (standing for election in 2018). Ms. Boggs is
an attorney and has served as General Counsel at Resource Capital Funds since
January 2011. She has over 35 years experience as a mining and natural
resources lawyer with experience in domestic and international mining projects.
The Governance Committee and Board determined that Ms. Boggs was independent
under the New York Stock Exchange listing standards. The Board appointed Ms.
Boggs to serve on the Audit Committee and Governance Committee.
10
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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 Class I
directors whose terms will expire at the 2017 Annual Meeting: Phillips S. Baker,
Jr., George R. Johnson and Dr. Anthony P. Taylor.
As of the 2017 Annual Meeting, Dr. Taylor
will have attained the mandatory retirement age of 75 and will not stand for
re-election. Dr. Taylor was elected to the Board by preferred shareholders in
May 2002. He has over 52 years experience in the mining industry in all levels
of exploration from a field geologist to senior management. The Board recognizes
and commends, with great appreciation, Dr. Taylors 15 years of invaluable and
devoted service to Hecla, and for his substantial contributions as a director of
the Company, as chairman of the Governance Committee and as a member of the
Health, Safety, Environmental and Technical Committee and Compensation Committee
of the Board.
At the May 2017, Annual Meeting, the size
of the Board is expected to be reduced from nine persons to eight
persons.
At a meeting held by the Governance
Committee in February 2017, the committee determined that the two remaining
directors whose terms are expiring - Messrs. Baker and Johnson - were qualified
candidates to stand for re-election at the Annual Meeting, and the Board
designated Messrs. Baker and Johnson as nominees for re-election as directors of
the Company, each for a three-year term expiring in 2020. 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 Phillips S. Baker, Jr. and George R. Johnson. 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 Governance Committee. If substitute
nominees are selected, proxies that do not provide voting instructions will be
voted in favor of such nominees.
Summary of Director
Qualifications and Experience
Director Qualifications
and
Experience
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Baker
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Boggs
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Crumley
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Johnson
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Nethercutt
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Ralbovsky
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Rogers
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Stanley
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Taylor
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Risk Management
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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, legal, accounting and
finance, and Company and industry knowledge, and we believe that, as a group,
they work effectively together in overseeing our business.
2017 Proxy Statement
11
Table of Contents
PROPOSAL 1 ELECTION OF
DIRECTORS
|
Current Class
I Nominees for Election to the Board Term Ending at the 2017 Annual
Meeting
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If elected, the nominees will each serve
for a three-year term ending in 2020. The nominees are as
follows:
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Phillips S. Baker, Jr.
President and Chief Executive Officer
Director since:
2001
Age:
57
Other Directorships:
QEP
Resources, Inc.
Hecla
Committees:
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Executive (Chairman)
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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. Mr. Baker has served as Vice Chairman of the Board for the National
Mining Association, a U.S. mining advocate and national trade organization that
represents the interests of mining businesses, since October 2015, and has been
a Board member since September 2010. He has also served as a Board member of the
National Mining Hall of Fame and Museum, a federally-chartered non-profit
national mining museum, since February 2012.
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 of the Company and other companies.
Extensive Senior
Leadership/Executive Officer Experience:
Has served as Heclas President and CEO for 13 years. Has 22 years of
executive and 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 7 years, and prior
to that served on the board of Questar Corporation for 6 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 30 years
experience in the mining industry.
Designations:
Mr. Baker received a Bachelor of Business Administration in
Accounting from Texas A&M University in 1981, and a law degree and Master of
Business Administration from the University of Houston in 1985. He became a
member of the State Bar of Texas in 1985, and received his Certified Public
Accountant designation in 1986 from the Texas State Board of Public
Accounting.
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 with B2Gold Corporation
Director since:
2016
Age:
68
Other Directorships:
B2Gold
Corporation
Hecla
Committees:
●
Health, Safety, Environmental and Technical
●
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 April 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. He has served on the Board of Directors of B2Gold
Corporation since March 2016.
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 in a variety of positions culminating as Vice
President Metal Mining for Hecla from 1983 to 1999.
Senior Leadership/Executive Officer
Experience:
Has extensive experience in
management in the mining industry.
Designations:
Mr. Johnson received a Bachelor of Science with a major in
Mining Engineering from the University of Washington in 1972.
|
The Board
recommends that shareholders vote FOR the election of Phillips S. Baker,
Jr. and George R. Johnson
|
2017 Proxy Statement
13
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 Class II
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:
72
Other Directorships:
Washington Policy Center ARCADIS Corporation Juvenile Diabetes
Research Foundation International (Board of Chancellors)
Hecla
Committees:
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Compensation (Chairman)
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Corporate Governance and Directors
Nominating
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Mr. Nethercutt has served as Chairman of
The George Nethercutt Foundation, a non-profit student leadership and civics
education charity, since 2005, and was appointed Of Counsel at 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.
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 11 years of service on
Heclas Board.
Designations:
Mr. Nethercutt received his
Bachelor of Arts in English from Washington State University in 1967, and a law
degree from Gonzaga University Law School in 1971. He has been a member of the
Washington State Bar Association since 1972.
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Stephen F. Ralbovsky
Founder
and Principal of Wolf Sky Consulting LLC
Director since:
2016
Age:
63
Other Directorships:
None
Hecla
Committees:
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Audit
●
Corporate Governance and Directors
Nominating
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Mr. Ralbovsky has been the Founder and
Principal of Wolf Sky Consulting LLC, a tax consulting firm, since June 2014.
Prior to that, he 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 is an adjunct faculty member at the University of Arizona. He previously
served as an 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 37 years experience in
taxation, auditing and accounting.
Extensive Knowledge of the Companys
Business and Industry:
Over 37 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:
Mr. Ralbovsky received a Bachelor of Business Administration
with a major in Accounting from Siena College in 1975. He also received a law
degree from Albany Law School in 1978. He is licensed in D.C. and Arizona as a
Certified Public Accountant.
14
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Table of Contents
PROPOSAL 1 ELECTION OF
DIRECTORS
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Catherine Cassie J. Boggs
General
Counsel at Resource Capital Funds
Director since:
2017
Age:
62
Other Directorships:
Funzeleo
Hecla
Committees:
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Audit
●
Corporate Governance and Directors
Nominating
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Ms. Boggs has been the General Counsel at
Resource Capital Funds, a mining-focused private equity firm, since January
2011. Prior to that, she served as Senior Vice President, Corporate Development
at Barrick Gold Corporation, a gold mining company, from January 2009 to
December 2010, and Vice President from July 2005 to 2008. Ms. Boggs was also an
international partner at Baker & McKenzie, a law firm, from July 2001 to
July 2005. She has been a board member of Funzeleo, a non-profit organization
that inspires and prepares youth for high-demand science and math-based careers,
since January 2016, as well as serving as a Board member and President of the
Rocky Mountain Mineral Law Foundation, a non-profit organization dedicated to
the study of laws and regulations relating to mining, oil and gas, energy,
public lands, water, environmental and international law, from July 2011 to July
2015.
Board Qualification and
Skills:
High Level of Legal
Experience:
Over 35 years experience as
an attorney, having practiced law in several U.S. and overseas
jurisdictions.
Extensive Knowledge of the Companys
Business and Industry:
Over 35 years
experience as a mining and natural resources lawyer with experience in domestic
and international mining projects.
Extensive Knowledge of Risk
Assessment:
In addition to managing all
legal affairs of Resource Capital Funds, she is responsible for legal due
diligence, country and political risk assessments, and participates in the
structuring and implementation of risk mitigation strategies.
Extensive Senior Leadership
Experience:
Has extensive experience in
leadership in the mining industry, having worked for Barrick Gold Company,
serving in a variety of leadership roles, including serving as the CEO of
Tethyan Copper Company, a gold and copper development project in Pakistan,
interim President of the African Business Unit, and as interim General Counsel
of African Barrick Gold (now known as Acacia Mining) in its formation and
initial public offering.
Designations:
Ms. Boggs received a Bachelor of Arts with a major in
Economics from University of Denver in May 1976. She received a Master of
Science in Resource Development from Michigan State University in December 1977,
and a law degree from the University of Denver College of Law in
1981.
2017 Proxy Statement
15
Table
of Contents
PROPOSAL 1 ELECTION OF
DIRECTORS
|
Continuing
Class III Members of the Board Term Ending at the 2019 Annual
Meeting
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Ted Crumley
Former
Executive Vice President and Chief Financial Officer OfficeMax
Incorporated
Director since:
1995
Board
Chairman since 2006
Age:
72
Other Directorships:
None
Hecla
Committees:
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Executive
●
Compensation
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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 21 years of
service on Heclas Board, including as Chairman since 2006.
Extensive Knowledge of the Companys Business and
Industry:
With over 21 years
of service on Heclas Board, Mr. Crumley understands all aspects of our
business, including the mining elements.
Designations:
Mr. Crumley received his Bachelor of Business Administration with a major
in Accounting from Idaho State University College of Business in
1969.
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Terry V. Rogers, C. Dir., H.R.C.C.C.
Former
Senior Vice President and Chief Operating Officer Cameco
Corporation
Director since:
2007
Age:
70
Other Directorships:
Centerra
Gold Inc.
Hecla
Committees:
●
Health, Safety, Environmental and Technical
(Chairman)
●
Compensation
●
Audit
●
Executive
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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 13 years of service on the Board of
Centerra Gold Inc., including as lead independent 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.
Designations:
Mr. Rogers received an Associate degree in Applied Science from the
Superior Technical Institute in Wisconsin in 1972. He also obtained a Chartered
Director (C. Dir.) designation from The Directors College in 2011, as well as a
Human Resources and Compensation Committee Certified (H.R.C.C.C.) designation
from The Directors College in 2013.
16
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Table
of Contents
PROPOSAL 1 ELECTION OF
DIRECTORS
|
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Charles B. Stanley
Chief
Executive Officer, President and Chairman of the Board QEP Resources,
Inc.
Director since:
2007
Age:
58
Other Directorships:
QEP
Resources, Inc.
Hecla
Committees:
●
Audit (Chairman)
●
Health, Safety, Environmental and Technical
●
Corporate Governance and Directors
Nominating
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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 6 years and as Chairman of the Board since 2012.
Prior to serving on QEPs board, Mr. Stanley served on the board of Questar
Corporation for 8 years. He has served 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 33 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:
Mr. Stanley received a Bachelor of Science degree in Geology in 1981, as
well as a Master of Science degree in Geology in 1983 from Virginia
Tech.
2017 Proxy Statement
17
Table of
Contents
CORPORATE GOVERNANCE AND
RELATED MATTERS
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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 2016
Heclas Board acts as the ultimate
decision-making body of the Company on certain fundamental matters and advises
and oversees management, who is 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 2016, there were five
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 2016.
In 2016, each director attended over 95% of the meetings of the Board and the
committees of which they are 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 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, operational and
reputational 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 (including financial
statements, financial systems, the financial
reporting process, compliance and auditing) 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 Governance Committee monitors the
effectiveness of the Companys Corporate Governance Guidelines and other
corporate governance matters.
The Compensation Committee assesses and
monitors whether any of the Companys executive compensation policies and
programs have the potential to encourage excessive risk-taking. In 2016, with
the assistance of Mercer (US) Inc. (Mercer), (a compensation consulting firm
engaged by the committee, which is a wholly owned subsidiary of Marsh &
McLennan Companies, Inc.), the committee assessed the Companys compensation
arrangements to determine if their provisions and operation create undesired or
unintentional risks of a material nature.
18
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Table of
Contents
CORPORATE GOVERNANCE AND
RELATED MATTERS
|
The committee found that our compensation
policies and practices do not create inappropriate or unintended significant
risk to the Company as a whole.
The Health, Safety, Environmental and
Technical Committee oversees the operational, reserve, and other technical
risks, environment, health and safety compliance of the Company, as well as
risks relating to public policy initiatives.
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 such risks at the
next scheduled meeting of the Board, or sooner if merited.
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 New York Stock Exchange
(NYSE). In determining independence each year, the Governance 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:
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the director is, or has been, within
the last three years, our employee, or an immediate family
member
6
is, or has been within the last three years, an
executive officer;
7
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●
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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);
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●
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the director is: (i) a current
partner or employee of a firm that is our internal or external auditor;
(ii) the director has an immediate family member who is a current partner
of a firm that is our internal or external auditor and who personally
works on the Companys audit; (iii) the director has an immediate family
member who is a current employee of a firm that is our internal or
external auditor and who personally works on the Companys audit; or (iv)
the director or an immediate family member was within the last three years
a partner or employee of a firm that is our internal or external auditor
and personally worked on our audit within that time;
|
●
|
the director or an immediate family
member is, or has been within the last three years, employed as an
executive officer of another company where any of our present executive
officers at the same time serves or served on that companys compensation
committee; or
|
●
|
the director is a current employee,
or an immediate family member is a current executive officer, of a company
that has made payments to, or received payments from, us for property or
services in an amount which, in any of the last three calendar years,
exceeds the greater of $1 million or 2% of such other companys
consolidated gross revenues.
|
Pursuant to our Corporate Governance
Guidelines, the committee undertook its annual review of director independence
in February 2017. 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 25 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,
6
|
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.
|
7
|
The term executive officer has
the same meaning specified for the term officer in Rule 16a-1(f) under
the Exchange Act, or any successor rule.
|
2017 Proxy Statement
19
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CORPORATE GOVERNANCE AND
RELATED MATTERS
|
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:
Ted Crumley
|
Stephen F. Ralbovsky
|
Catherine J. Boggs
|
Terry V. Rogers
|
George R. Johnson
|
Charles B. Stanley
|
George R. Nethercutt, Jr.
|
Dr. Anthony P.
Taylor
|
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 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.
Retirement
Age
The Company has no current retirement plan
for non-management directors. In December 2016, the Governance Committee
recommended, and the Board approved, amending our Bylaws and Corporate
Governance Guidelines to provide that directors will not be nominated for
re-election after their 75
th
birthday. Prior to this amendment, the
age was 72.
As of December 31, 2016, the average age
of members of our Board was approximately 67 and the average tenure of our Board
was approximately 10 years. With the addition of one new member to the Board in
January 2017, and the retirement of Dr. Taylor in May 2017, the average age of
members of our Board will be approximately 65 and the average tenure of our
Board will be approximately 8 years.
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.
If the individual elected as Chairman is
the CEO, the independent directors will elect an Independent Lead Director for a
one-year term. This would help ensure continued robust independent leadership of
the Board.
Currently, our Chairman, 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 independent directors
are included on the agenda for every regularly scheduled Board meeting and
during 2016, executive sessions were held at each regularly scheduled Board
meeting. The executive sessions are chaired by the Chairman. Our independent
directors meet in executive sessions without management present, unless the
independent 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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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 Governance 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 and Technical; and Executive. Information regarding these
committees is provided below. Except for the Executive Committee, all committees
are composed entirely of independent directors. The charters of each (other than
Executive) committee 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
2016.
Executive Committee Members
|
Functions of the
Committee
|
Meetings
in
2016
|
Phillips S. Baker, Jr., Chair
Ted
Crumley
Terry V. Rogers
|
●
empowered with the same
authority as the Board in the management of our business, except for
certain matters enumerated in our Bylaws and Delaware law, which are
specifically reserved to the whole Board
|
None*
|
|
|
|
Audit Committee
Members
1, 2,
3
|
Functions of the
Committee
|
Meetings
in
2016
|
Charles B. Stanley, Chair
Terry
V. Rogers
George R. Johnson
Stephen F. Ralbovsky
Catherine J.
Boggs
4
|
●
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 the Report of
the Audit Committee on page 31
|
6
|
|
|
|
Compensation Committee
Members
2
|
Functions of the
Committee
|
Meetings
in
2016
|
George R. Nethercutt, Jr.,
Chair
Ted Crumley
Terry V. Rogers
Dr. Anthony P.
Taylor
|
●
approve compensation levels and
programs for the executive officers, including the CEO
●
administer our stock-based
plans
●
please refer to the
Compensation Discussion and Analysis on page 33
|
5
|
*
|
The Executive Committee did act
by Unanimous Consent In lieu of Meeting once in
2016.
|
2017 Proxy Statement
21
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CORPORATE GOVERNANCE AND
RELATED MATTERS
|
Corporate Governance and Directors
Nominating Committee
Members
2
|
Functions of the Committee
|
Meetings
in
2016
|
Dr. Anthony P. Taylor,
Chair
George R. Nethercutt, Jr.
Charles B. Stanley
Stephen F.
Ralbovsky
Catherine J. Boggs
4
|
●
consider matters of
corporate governance
●
periodically review
our Corporate Governance Guidelines, Code of Business Conduct and Ethics,
and other corporate procedures to ensure compliance with laws and
regulations
●
review any director
candidates, including those nominated or recommended by
shareholders
●
identify individuals
qualified to become directors consistent with criteria approved by the
Board
●
recommend to the
Board the director nominees for the next annual meeting of shareholders,
any special meeting of shareholders, or to fill any vacancy on the
Board
●
review the
appropriateness of the size of the Board relative to its various
responsibilities
●
recommend committee
assignments and committee chairpersons for the standing committees for
consideration by the Board
|
4
|
|
|
|
Health, Safety, Environmental
and
Technical Committee Members
|
Functions of the
Committee
|
Meetings
in
2016
|
Terry V. Rogers, Chair
Charles B.
Stanley
Dr. Anthony P. Taylor
George R. Johnson
|
●
review the operational and exploration performance
●
review the
operational, reserve and other technical risks
●
review and monitor
health, safety and environmental policies
●
review the
implementation and effectiveness of compliance systems
●
review the effectiveness of health, safety and environmental policies,
systems and monitoring processes
●
review audit results
and updates from management with respect to health, safety and
environmental performance
●
review emerging
health, safety and environmental trends in legislation and proposed
regulations affecting the Company
●
review the technical
activities of the Company
●
make recommendations
to the Board concerning the advisability of proceeding with the
exploration, development, acquisition or divestiture of mineral properties
and/or operations
|
4
|
1
|
The Board has determined that
each of the members of the Audit Committee is financially literate and
Messrs. Stanley, Rogers 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
|
No members on the Audit Committee
serve on the audit committee of any other public companies.
|
4
|
Ms. Boggs was appointed to these
committees effective January 1, 2017.
|
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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
Considering 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. As part of the annual report, the committee
may also address issues related to the preparedness for the possibility of an
emergency situation involving senior management and an 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 receives reports
concerning development plans that are 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 2016, 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. In
2016, those potential successors were sent to specific leadership classes and
seminars for further training.
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.
2017 Proxy Statement
23
Table of Contents
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 and 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 2016, the Governance Committee and
the Board amended the Corporate Governance Guidelines to improve its clarity and
functionality, including with respect to the Companys evolving practices and
policies, and to amend the directors retirement age from 72 years to 75
years.
In February 2017, the Governance Committee
recommended and the Board approved further amendments to the Corporate
Governance Guidelines to include a director resignation policy. The policy
provides that any director who is not elected by a majority of votes cast, shall
tender his or her resignation to the Governance Committee. The Governance
Committee will recommend to the Board whether to accept or reject the
resignation offer, or whether other action should be taken. In determining
whether to recommend that the Board accept any resignation offer, the committee
will be entitled to consider all factors
believed relevant by the Governance Committees members. The Board will act on
the Governance Committees recommendation within ninety (90) days following
certification of the election results. In deciding whether to accept the
resignation offer, the Board will consider the factors considered by the
Governance Committee and any additional information and factors that the Board
believes to be relevant. If the Board accepts a directors resignation offer
pursuant to this process, the Governance Committee will recommend to the Board
and the Board will thereafter determine whether to fill such vacancy or reduce
the size of the Board. Any director who tenders his or her resignation pursuant
to this provision will not participate in the proceedings of either the
Governance Committee or the Board with respect to his or her own resignation
offer. If a directors resignation is not accepted by the Board, the director
shall continue to serve until the next annual meeting of shareholders or until
his or her successor is duly elected and qualified, or his or her earlier
resignation or removal. If a directors resignation is accepted by the Board,
then the Board, in its sole discretion, shall fill any resulting vacancy or
decrease the size of the Board.
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, 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.
24
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CORPORATE GOVERNANCE AND
RELATED MATTERS
|
The Governance 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 Governance Committee, or through an anonymous
telephone hotline.
In February 2017, the Governance Committee
recommended and the Board approved certain amendments to the Code of Business
Conduct and Ethics.
Whistleblower Policy
We have a Whistleblower Policy adopted by
our Audit Committee that 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.
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 Governance 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. Mr. James A. Sabala (our
former Senior Vice President and Chief Financial Officer) served as a director
of the Foundation until his retirement in June 2016. Mr. Phillips S. Baker, Jr.
and Dr. Dean W.A. McDonald (our Chief Executive Officer and our Senior Vice
President Exploration, respectively) serve as directors of the Foundation, and
Luther J. Russell (our Vice President External Affairs) serves as President
and as a director of the Foundation. In December 2007, our Board approved 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 2016. The Foundation holds
270,140 shares of our common stock as of December 31, 2016. The value of those
shares based on the closing price of our common stock on the NYSE on December
30, 2016 ($5.24), was $1,415,534. In 2016, the Foundation gave $433,530 in
donations.
In 2016, 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.
2017 Proxy Statement
25
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 independent members of the Board the form
and amount of compensation for our non-management directors. The independent
members of the Board consider the committees recommendation and make final
determination of non-management director compensation.
Compensation for non-management directors
is designed to reflect current market trends and developments with respect to
compensation of board members, and aligns with its philosophy toward executive
compensation with a higher proportion of compensation in equity. It consists
of a combination of cash retainers and equity awards.
Peer Group
Benchmarking
The committee periodically engages its
independent compensation consultant to benchmark director compensation against
the Company-selected peer group, which is the same group of companies the
committee uses to benchmark executive compensation (see page 38 for a list of
these companies). When considering non-management director compensation for
calendar year 2016, the committee reviewed and considered the results of a
benchmarking report prepared by the committees independent compensation
consultant. The report reviewed the Companys calendar year annual cash
retainers, fees for Board and committee
chairmanships, and the annualized present value of equity compensation for the
Company-selected peer group (primarily based on reported calendar year 2015
compensation or calendar year 2016 compensation, if disclosed). 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.
2016
Compensation Changes for Non-Management Directors
Due to the low prices of metals in 2015,
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.
In June 2016, the Compensation Committee
recommended, and the Board approved an increase in the annual cash retainer for
each non-management member of the Health, Safety, Environmental and Technical
Committee
from $8,000 to $12,000 annually. In
addition, the annual cash retainer for the committee chair of the Health,
Safety, Environmental and Technical Committee was increased from $8,000 to
$12,000. The increase was due to the committees recent increased
responsibilities in monitoring (i) health, safety and environmental policies,
(ii) compliance systems, (iii) safety audit results, and (iv) emerging health,
safety and environmental trends in legislation and proposed regulations
affecting the Company.
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COMPENSATION OF
NON-MANAGEMENT DIRECTORS
|
Components of Non-Management
Director Compensation
Compensation
Element
|
Value
1
|
Annual Board Retainer
|
$
|
66,000
|
Annual Board Chairman Retainer
|
$
|
90,000
|
Annual
Committee Retainer for:
●
Health, Safety, Environmental & Technical
Committee
●
Audit Committee
●
Compensation Committee
|
$
|
12,000
|
Annual
Committee Chairman Retainer for:
●
Health, Safety, Environmental & Technical
Committee
●
Audit Committee
●
Compensation Committee
|
$
|
12,000
|
Annual
Committee Retainer for:
●
Corporate Governance and Directors Nominating
Committee
●
Executive Committee
|
$
|
8,000
|
Annual
Committee Chairman Retainer for:
●
Corporate Governance and Directors Nominating
Committee
|
$
|
8,000
|
Annual Equity
|
$
|
100,000
|
1
|
The value of the cash retainers listed does not reflect
the 10% reduction taken in 2016 by the non-management directors. See the
table entitled
Non-Management Director
Compensation for 2016
on page 28, for
the amounts received in 2016, which reflect the 10%
reduction.
|
Annual cash retainers 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
herein.
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 is
currently scheduled to terminate July 17, 2017, and is subject to termination by
the Board at any time (see Proposal 5, beginning on page 77 for a description of
the proposal to amend and restate the plan). Pursuant to the current plan, on
May 30 of each year, each non-management director is credited with a number of
shares determined by dividing $24,000 by the average closing price for Heclas
common stock on the NYSE for the prior calendar year. Non-management directors
joining the Board after May 30 of any year are credited with a pro rata number
of shares based upon the date they join the Board. These shares are held in a
grantor trust, the assets of which are subject to the claims of our creditors,
until delivered under the terms of the plan. Delivery of the shares from the
trust occurs upon the earliest of: (i) death or disability; (ii) retirement from
the Board; (iii) a cessation of the directors service for any other reason;
(iv) a change in control of the Company (as defined in the plan); or (v) at the election of the director at any time,
provided, however, that shares must be held in the trust for at least two years
prior to delivery. Subject to certain restrictions, directors may elect delivery
of the shares on such date or in annual installments thereafter over 5, 10 or 15
years. The maximum number of shares of common stock which may be credited
pursuant to the plan is 1,000,000. As of December 31, 2016, there were 438,459
shares remaining available for issuance under 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. The Board receives an additional award of $76,000 in
common stock under the 2010 Stock Incentive Plan as part of their compensation.
In 2016, the Compensation Committee recommended and the Board approved the award
of 17,273 shares of common stock under the 2010 Stock Incentive Plan to each
non-management director.
2017 Proxy Statement
27
Table of Contents
COMPENSATION OF
NON-MANAGEMENT DIRECTORS
|
As described more fully on the previous
page, the following chart summarizes the annual cash and equity compensation for
our non-management directors during 2016.
Non-Management Director
Compensation for 2016
|
|
Fees
|
|
|
|
|
|
|
|
Director
|
|
Annual
Retainer
($)
|
|
Committee
Meeting
Fees
($)
|
|
Committee
Chairman
Fees
($)
|
|
Totals Fees
Paid in
Cash
($)
|
|
Stock
Awards
1
($)
|
|
|
All
Other
Compensation
2
($)
|
|
Total
($)
|
Ted Crumley, Chairman
|
|
140,400
|
|
20,700
|
|
0
|
|
161,100
|
|
37,376
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
76,001
|
4
|
|
0
|
|
274,477
|
George R.
Johnson
|
|
49,500
|
|
16,800
|
|
0
|
|
66,300
|
|
37,376
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
76,001
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,427
|
5
|
|
7,500
|
|
192,604
|
George R. Nethercutt, Jr.
|
|
59,400
|
|
18,000
|
|
10,800
|
|
88,200
|
|
37,376
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
76,001
|
4
|
|
0
|
|
201,577
|
Stephen F.
Ralbovsky
|
|
49,500
|
|
15,000
|
|
0
|
|
64,500
|
|
37,376
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
76,001
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,427
|
5
|
|
0
|
|
183,304
|
Terry V. Rogers
|
|
59,400
|
|
36,900
|
|
9,000
|
|
105,300
|
|
37,376
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
76,001
|
4
|
|
3,750
|
|
222,427
|
Charles B.
Stanley
|
|
59,400
|
|
27,000
|
|
10,800
|
|
97,200
|
|
37,376
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
76,001
|
4
|
|
0
|
|
210,577
|
Dr. Anthony P. Taylor
|
|
59,400
|
|
27,000
|
|
7,200
|
|
93,600
|
|
37,376
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
76,001
|
4
|
|
0
|
|
206,977
|
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,
2016.
|
2
|
Amounts in this column reflect
matching contributions under the Companys charitable matching gift
program.
|
3
|
On May 31, 2016, each
non-management director received 9,206 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 31, 2016 ($4.06), the grant date
fair value for each grant of 9,206 shares credited to Messrs. Crumley,
Johnson, Nethercutt, Ralbovsky, Rogers, Stanley and Taylor on May 31,
2016, was $37,376. (The amounts do not reflect the actual amounts that may
be realized by the directors.)
|
4
|
On June 7, 2016, each
non-management director received 17,273 shares of our common stock under
the terms of the 2010 Stock Incentive Plan. Based on our closing stock
price on the NYSE on June 7, 2016 ($4.40), the grant date fair value for
each grant of 17,273 shares credited to Messrs. Crumley, Johnson,
Nethercutt, Ralbovsky, Rogers, Stanley and Taylor on June 7, 2016, was
$76,001. (The amounts do not reflect the actual amounts that may be
realized by the directors.)
|
5
|
On March 3, 2016, Messrs. Johnson
and Ralbovsky were awarded 2,010 prorated 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 March 3, 2016 ($2.70), the grant date
fair value for each grant of 2,010 shares credited to Messrs. Johnson and
Ralbovsky on March 3, 2016, was $5,427. (The amounts do not reflect the
actual amounts that may be realized by the
directors.)
|
28
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Table of Contents
COMPENSATION OF
NON-MANAGEMENT DIRECTORS
|
2017 Compensation Changes for
Non-Management Directors
Effective January 1, 2017, the
Compensation Committee recommended and the Board approved the reinstatement of
the annual cash compensation paid to non-management directors to its full value
as described under Components of Non-Management Director Compensation on page
27.
At the Annual Meeting, we are asking our
shareholders to approve an amendment and restatement of the Hecla
Mining Company Stock Plan for Nonemployee Directors (Director
Stock Plan). If approved by shareholders, this will eliminate non-management
director participation in the 2010 Stock Incentive Plan, and all stock awards
will be solely awarded under the Director Stock Plan, beginning in 2017. See
page 77 for a full description of the Director Stock Plan.
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 Hecla Charitable
Foundation matches contributions made to qualifying nonprofit organizations.
Beyond these items, no other cash compensation was paid to any non-management
director.
2017 Proxy Statement
29
Table of Contents
PROPOSAL 2 RATIFICATION
OF THE APPOINTMENT OF BDO USA, LLP AS THE COMPANYS
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR 2017
|
PROPOSAL 2
RATIFICATION OF THE APPOINTMENT OF BDO USA, LLP AS THE COMPANYS INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR 2017
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, 2017. 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 governance 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 2017.
|
30
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Table of Contents
PROPOSAL 2 RATIFICATION
OF THE APPOINTMENT OF BDO USA, LLP AS THE COMPANYS
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR 2017
|
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 2016,
the committee worked with management, our internal auditor and our independent
auditor to address Sarbanes-Oxley Section 404 internal control requirements. The
committee met six times in 2016.
The committee acts under a written charter
as amended on December 4, 2016. 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, 2016, for filing with the SEC.
Respectfully submitted by
The Audit
Committee of the
Board of Directors
Charles B. Stanley, Chairman
Terry V.
Rogers
Stephen F. Ralbovsky
George R. Johnson
Catherine J.
Boggs
2017 Proxy Statement
31
Table of
Contents
PROPOSAL 2 RATIFICATION
OF THE APPOINTMENT OF BDO USA, LLP AS THE COMPANYS
INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM FOR 2017
|
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,
2016, and fees for other services rendered by BDO during those
periods.
|
|
2016
|
2015
|
Audit Fees
1
|
|
$
|
762,425
|
$
|
698,500
|
Audit Related Fees
2
|
|
|
87,000
|
|
87,000
|
Tax
Fees
3
|
|
|
|
|
3,600
|
All
Other Fees
|
|
|
|
|
|
Total
|
|
$
|
849,425
|
$
|
789,100
|
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
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Table of
Contents
COMPENSATION DISCUSSION AND
ANALYSIS
|
COMPENSATION DISCUSSION AND
ANALYSIS
Our Compensation Committee strives to
design a fair and competitive compensation program for executive officers that
will attract, motivate and retain highly qualified and experienced executives,
reward performance and provide incentives 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.
|
|
57
|
|
President and CEO
|
Lindsay A. Hall
|
|
61
|
|
Senior Vice President and Chief Financial
Officer
|
Lawrence P. Radford
|
|
56
|
|
Senior Vice President Operations
|
Dr.
Dean W.A. McDonald
|
|
60
|
|
Senior Vice President Exploration
|
David C. Sienko
|
|
48
|
|
Vice President General Counsel
|
James A. Sabala*
|
|
62
|
|
Former Senior Vice President and Chief Financial
Officer
|
*
|
Mr. Sabala retired in June
2016.
|
Executive Summary
Hecla is a leading primary 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 in Quebec, Canada (Casa Berardi). We also produce lead and zinc. In
addition to our diversified silver and gold operating cash-flow mines, we have a
number of exploration properties and pre-development projects in seven silver
and gold mining districts in North America. With an active exploration and
pre-development program, we have generally grown our reserve base for future
production.
Our success in 2016 was the result of
decisions taken over the past several years to invest in our business. The past
three years have witnessed extraordinary volatility in the mining industry and
for silver-focused companies in particular. Through the down-cycle we continued
to build up our production capacity with the successful startup of the very
profitable San Sebastian mine, the development of the open pit at Casa Berardi,
and the construction of the #4 Shaft at Lucky Friday, which is now operational.
We generated organic growth at a time when most of our peers were cutting their
business and selling assets. While Heclas stock price is highly correlated with
silver prices and not immune to industry trends, Hecla increased its value in
2016. Heclas Total Shareholder Return (TSR) significantly outperformed silver
and key silver company indices and ended 2016 in the top quartile of our silver
competitors.
We believe this share price performance
was a result of the operational and strategic improvements realized during the
year as summarized in the following sections.
Our philosophy is to operate mines safely
by promoting a deeply-rooted value-based culture, leveraging mining skills
developed over the Companys long history and by innovating new practices. We
are proud to be the first hardrock mine to be certified under the National
Mining Associations CORESafety system. We believe very strongly that the future
of mining lies in productivity increases, and one of the best ways to increase
productivity and safety is by automating the mining tasks allowing the miners to
move away from the mining face, and in some cases, operate the machinery from
surface, or have machinery that operates by itself. High speed wireless data
transfer is being used to improve communication, monitoring and data collection.
This information helps management make better decisions, and enables both
tele-remote and autonomous equipment operation. We have begun introducing
automated drilling, tele-remote mucking, automated hauling trucks and battery
powered equipment in some of our operations. Although mostly on a trial basis,
we can see the benefits that this innovation brings and are excited for the
potential transformation they will enable in the future. In addition, we have
invested in mill improvements and other innovations that we expect will yield
significant returns over the long-term for relatively modest
investments.
2017 Proxy Statement
33
Table of
Contents
COMPENSATION DISCUSSION
AND ANALYSIS
|
Key Operating and Financial
Results
Throughout 2016 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. We finished 2016 strongly,
setting record silver and silver equivalent production for the year with the
robust performance at all our mines, driving record sales and more than doubling
EBITDA over the last year.
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 2016, 2015 and 2014.
|
|
As of and for the Year Ended December 31,
|
Key Results
|
|
2016
|
|
2015
|
|
|
2014
|
Silver (ounces) produced
|
|
|
17,177,317
|
|
|
11,591,603
|
|
|
|
11,090,506
|
Gold (ounces) produced
|
|
|
233,929
|
|
|
189,327
|
|
|
|
186,997
|
Lead (tons) produced
|
|
|
42,472
|
|
|
39,965
|
|
|
|
40,255
|
Zinc (tons) produced
|
|
|
68,516
|
|
|
70,073
|
|
|
|
67,969
|
|
Sales of products
|
|
$
|
645,957
|
|
$
|
443,567
|
|
|
$
|
500,781
|
Net
income (loss)
|
|
$
|
69,547
|
|
$
|
(86,968
|
)
|
|
$
|
17,824
|
Basic income (loss) per common share
|
|
$
|
0.18
|
|
$
|
(0.23
|
)
|
|
$
|
0.05
|
EBITDA
8
|
|
$
|
236,184
|
|
$
|
107,316
|
|
|
$
|
151,532
|
Cash from operating activities (in millions)
|
|
$
|
225.3
|
|
$
|
106.4
|
|
|
$
|
83.1
|
Cash, cash equivalents and short-term investments (in
millions)
|
|
$
|
198.9
|
|
$
|
155.2
|
|
|
$
|
209.7
|
Our overall operating and financial
results are more fully described in
Managements Discussion and Analysis of Financial Condition and Results
of Operations
in our Annual Report on Form
10-K filed with the SEC on February 23, 2017. Our 2016 results were strong
relative to our 2015 results. In 2016, we achieved the following:
●
|
reported sales of $646.0 million,
which was a new record and 29% higher than our previous record in 2014
despite lower average prices for all metals we produce compared to that
year;
|
●
|
silver equivalent production of 46.1
million ounces, the highest in the Companys history;
9
|
●
|
a 48% increase in silver production
to 17.2 million ounces, a record, with cost of sales and other direct
production costs and depreciation, depletion and amortization of $298.7
million, and cash cost after by-product credits per silver ounce of $3.10;
10
|
●
|
a 24% increase in gold production to
233,929 ounces Company-wide, with 145,975 ounces produced at Casa Berardi
with cost of sales and other direct production costs and depreciation,
depletion and amortization of $155.7 million and cash cost, after
by-product credits, per gold ounce of $764;
10
|
●
|
net income of $69 million and
Adjusted EBITDA of $264.6 million, a 179% and 127% increase compared to
2015;
11
|
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 F under
Reconciliation of Net Income (Loss) (GAAP) to Earnings
Before Interest, Taxes, Depreciation, and Amortization (non-GAAP) to Net
Income (Loss) (GAAP)
.
|
9
|
2016 silver equivalent
calculation is based on the following prices: $17.10 (per oz.) for silver,
$1,248 (per oz.) for gold, $0.85 (per lb.) for lead, and $0.95 (per lb.)
for zinc.
|
10
|
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
measure, can be found in Appendix F under
Reconciliation of Cost of Sales and Other Direct Production Costs
and Depreciation, Depletion and Amortization (GAAP) to Cash Cost, Before
By-product Credits Per Silver/Gold Ounce and Cash Cost Per Silver/ Gold
Ounce, After By-product Credits (non-GAAP).
It is an important operating statistic that management utilizes to
measure each mines operating performance. It also allows the benchmarking
of performance of each mine versus those of our competitors. As a primary
silver mining company, management also uses the statistic on an aggregate
basis aggregating the Greens Creek, Lucky Friday and San Sebastian mines
to compare performance with that of other primary silver mining
companies. With regard to Casa Berardi,
management uses cash cost, after by-product credits, per gold ounce to
compare its performance with other gold mines. The statistic is also
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.
In addition, the Company may use it when formulating performance goals and
targets under our incentive program.
|
11
|
Adjusted EBITDA is a non-GAAP
measurement, a reconciliation of which to net income (loss), the most
comparable GAAP measure, can be found in Appendix F under
Reconciliation
of Net Income (Loss) (GAAP) to Adjusted EBITDA (non-GAAP) to Net Income
(Loss) (GAAP)
. Adjusted EBITDA is a measure used by management to evaluate
the Companys operating performance but should not be considered an
alternative to net income (loss), or cash provided by operating activities
as those terms are defined by GAAP, and does not necessarily indicate
whether cash flows will be sufficient to fund cash needs. In addition, the
Company may use it when formulating performance goals and targets under
our incentive program.
|
34
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Table of
Contents
COMPENSATION DISCUSSION
AND ANALYSIS
|
●
|
achieved the above milestones while
ending the year with a cash, cash equivalents and short-term investments
balance of $198.9 million as of December 31, 2016, an increase of $43.7
million during the year;
|
●
|
completed the #4 Shaft at Lucky
Friday, the largest capital project in our history, which started in 2008;
|
●
|
commenced development of the East
Mine Crown Pillar (EMCP) open pit project at Casa Berardi, with
processing of ore from EMCP that began in July 2016;
|
●
|
acquisition of Mines Management,
Inc., giving us ownership of the Montanore project, a very large
silver/copper project undergoing permitting in northwestern Montana;
|
●
|
the first hardrock mining company to
receive independent certification under CORESafety;
12
and
|
●
|
our stock price rose 177% in
2016.
|
The charts below show the change in our
share price in 2016 and in 2015 compared to each of the companies in our peer
group.
2016 Stock Price
2015 Stock Price
12
|
CORESafety is a partnership led
by the members of the National Mining Association. It is an approach to
mining safety and health to prevent accidents before they happen using a
management system that involves leadership, management and assurance. Its
objective is to have zero fatalities and a 50 percent reduction in
minings injury rate within five years
(0:50:5).
|
2017 Proxy Statement
35
Table of
Contents
COMPENSATION DISCUSSION
AND ANALYSIS
|
Shareholder Outreach and 2016 Advisory
Vote on Executive Compensation
Over the last several 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 81% 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 2016, and in advance of our upcoming
2017 Annual Meeting, we continued to reach out to our shareholders. 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. We held one-on-one discussions with
shareholders holding over 50,000,000 shares of our common stock, and held a
face-to-face discussion with one of the two major proxy advisory firms. During
our discussions, all of the changes made to our compensation program in 2014 and
2015 were well-received. A common issue raised during our conversations was to
see more pay-for-performance disclosure in our Proxy Statement under the terms
of our Annual Incentive Plan (AIP). We are consistently trying to improve our
compensation disclosures including with respect to
pay-for-performance.
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.
Role of Independent Compensation
Consultant
. 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.
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. The Mercer consultants who worked with the committee, are
both principals of Mercer, and include Tracy Bean, project manager and Raphael
Katsman.
Pursuant to a written agreement dated
February 8, 2016, between Mercer and the Compensation Committee, below are the
material aspects of the services the committee
asked Mercer to perform with respect to executive compensation and
related matters in 2016:
●
|
evaluate the competitiveness of the
total direct compensation package provided to Heclas executive officers;
and specifically, to compare Heclas current executive officer
compensation with compensation provided to executives in similar roles in
comparable organizations;
|
●
|
review updated information regarding
Heclas executive compensation program and the positions to be
benchmarked, including organization charts, position descriptions, current
total compensation and other relevant data;
|
●
|
review last years peer group to
determine if the included companies continue to be appropriate and if any
additional companies should be considered for inclusion;
|
●
|
collect and analyze compensation
data from the most recent proxy filings of the peer group and from the
survey sources and summarize the market pay data by the 25
th
,
50
th
and 75
th
percentile levels and compare Heclas
executive compensation levels to the proxy and survey data separately;
|
●
|
analyze the year-over-year change in
compensation levels for Hecla compared to each market data source;
|
●
|
analyze Heclas long-term incentive
and equity practices compared to peers;
|
●
|
prepare a report to the Compensation
Committee summarizing their methodology, findings and overall
recommendations;
|
36
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COMPENSATION DISCUSSION
AND ANALYSIS
|
●
|
assist the committee in meeting its
obligation to issue a Compensation Committee Report recommending inclusion
of the CD&A in the proxy statement; and
|
●
|
provide ongoing advice and
consultation throughout the year to assist the committee, including
attendance at committee meetings, if
needed.
|
In addition to providing technical support
and input on market practices, the committees goal in using a compensation and
benefits consultant is to provide external benchmark information for assessing
compensation relative to our compensation philosophy. As described under
Benchmarking Using Compensation Peer
Groups
, Mercer assisted 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.
In June 2016, 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 consultants who perform services for Hecla
have 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 2016 was
$70,359.
During 2016, 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 2016 was $146,028. 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 NEO (other than the CEO). As part of our annual review
process, the CEO reviews the performance of each NEO (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 quantitative and qualitative goals, and
annual long-term goals for the NEOs (other than the CEO), as well as
recommendations regarding the participation in our stock-based compensation
plans and amendments to the plans, as necessary.
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 75
th
percentile of our peer companies and
survey composite data. However, we allow total compensation to exceed the
75
th
percentile 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 2016, the committee made no changes to the peer group, apart from
removing AuRico Gold due to the merger of AuRico Gold with and into Alamos
Gold.
In 2016, Heclas peer group was made up of
the following 16 companies, whose aggregate profile was comparable to Hecla in
terms of size, industry and competition for executive talent.
2017 Proxy Statement
37
Table of
Contents
COMPENSATION DISCUSSION
AND ANALYSIS
|
Company
|
|
Annual
Revenue
1
($ millions US)
|
|
Market
Cap
1
($ millions US)
|
|
Total
Assets
1
($ millions US)
|
|
Corporate
Location
|
IAMGOLD Corporation
|
|
917
|
|
559
|
|
3,251
|
|
Canada
|
Centerra Gold Inc.
|
|
624
|
|
1,124
|
|
1,661
|
|
Canada
|
Pan
American Silver Corporation
|
|
675
|
|
986
|
|
1,715
|
|
Canada
|
New
Gold Inc.
|
|
713
|
|
1,181
|
|
3,676
|
|
Canada
|
Coeur Mining Inc.
|
|
646
|
|
375
|
|
1,332
|
|
United States
|
Stillwater Mining Company
|
|
726
|
|
1,037
|
|
1,282
|
|
United States
|
B2Gold Corp.
|
|
554
|
|
946
|
|
2,024
|
|
Canada
|
Alamos Gold Inc.
|
|
355
|
|
844
|
|
2,462
|
|
Canada
|
Detour Gold Corporation
|
|
563
|
|
1,780
|
|
2,443
|
|
Canada
|
Tahoe Resources Inc.
|
|
520
|
|
1,969
|
|
2,002
|
|
United States
|
Primero Mining
|
|
291
|
|
374
|
|
925
|
|
Canada
|
Silver Standard Resources Inc.
|
|
375
|
|
419
|
|
872
|
|
Canada
|
Thompson Creek Metals Company
2
|
|
494
|
|
45
|
|
2,376
|
|
United States
|
Royal Gold, Inc.
|
|
278
|
|
2,394
|
|
2,917
|
|
United States
|
Endeavour Silver Corp.
|
|
184
|
|
145
|
|
114
|
|
Canada
|
First Majestic Silver Corp.
|
|
219
|
|
509
|
|
790
|
|
Canada
|
Median
|
|
537
|
|
895
|
|
1,859
|
|
|
Hecla Mining Company
|
|
444
|
|
715
|
|
2,222
|
|
United States
|
1
|
In $US millions as of year-end
2015.
|
2
|
Thompson Creek Metals Company was
acquired by Centerra Gold in 2016.
|
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.
During our shareholder outreach, many of
our largest shareholders have informed us that they consider our peer group to
be the most relevant and appropriate for compensation and performance
benchmarking purposes. The peer group selected last year by Glass-Lewis included
14 of our 17 selected peers. The peer group selected by Institutional
Shareholder Services (ISS) included only 4 of our 17 selected peers. The rest
of the peer group selected by ISS contained U.S. based companies in the
agricultural product, forest products, industrial and specialty chemicals, metal
powders, coatings, paper and other industries companies and industries whose
market fundamentals are different from the precious metals mining industry. We
understand that ISSs internal policies prohibit its selection of Canadian
companies (which account for eleven of our peers), and require that Hecla be
compared to companies having only similar revenue instead of similar market
capitalization or total assets. We believe that a fair
compensation peer group, in terms of both industry profile and size,
cannot be selected for Hecla without including Canadian companies.
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)
|
Base salaries are targeted between the
25
th
percentile and median (50
th
percentile), with
incentive opportunities that can provide above-median total compensation based
on performance. Compensation for NEOs within this group may be positioned higher
or lower than the 75
th
percentile 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 25
th
,
50
th
and 75
th
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
38
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COMPENSATION DISCUSSION
AND ANALYSIS
|
comparing the target total cash
compensation (base salary plus target annual incentive) and target total direct
compensation (base salary plus target annual incentive plus the value of
long-term target 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 direct compensation
at or above the median level, and deliver compensation above or below these
levels when warranted by performance.
In 2016, target total direct compensation
(base salary, short- and long-term incentives) for our NEOs was between the
median and the 75
th
percentile of both the peer group and survey
data.
In 2016, 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
|
|
First Majestic Silver Corp.
|
Silver Standard
|
|
Centerra Gold
|
Resources Inc.
|
|
|
Detour Gold Corporation
|
|
New Gold Inc.
|
Pan American
|
|
Coeur Mining Inc.
|
Silver Corporation
|
|
|
B2Gold Corp.
|
|
Alamos Gold Inc.
|
Primero Mining
|
|
Endeavour Silver Corp.
|
Tahoe Resources Inc.
|
|
|
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 compensation
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 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 our
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.
2017 Proxy Statement
39
Table of Contents
COMPENSATION DISCUSSION
AND ANALYSIS
|
We also maintain (or avoid) 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
|
✓
|
84%
of CEO and 74% of NEO pay is at-risk
|
✓
|
Over
68% of total compensation for the CEO is
performance-based
|
✓
|
54%
of total compensation for NEOs other than the CEO is
performance-based
|
✓
|
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
and anti-pledging
policies
|
Elements of Total
Compensation
We have a multifaceted compensation
program. For the year ended December 31, 2016, 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.
|
40
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Table of Contents
COMPENSATION DISCUSSION
AND ANALYSIS
|
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 achievement of the Company goals and individual
performance. Some goals are quantitative, such as EBITDA, production, and
cash position, while others are qualitative. Weighting is 50% quantitative
corporate performance goals, 25% qualitative/other goals, 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 half 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).
|
EQUITY
|
Restricted Stock
Units
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.
Terms:
Restricted stock units are granted between May and
August of each year. In recent years, only restricted stock unit awards
have been made.
Performance-based
Shares
Objectives:
Provide incentive for CEO to remain with the Company for
the long term and to align CEOs interests with those of
shareholders.
Key Features:
Performance-based shares realize more value the higher
the TSR ranks within the selected peer group and have no value if the
share performance doesnt exceed 50%.
Terms:
Performance-based shares are granted to the CEO in the
second quarter of each year and are based on a three-year
TSR.
|
2017 Proxy Statement
41
Table of Contents
COMPENSATION DISCUSSION
AND ANALYSIS
|
KEY EMPLOYEE DEFERRED COMPENSATION
PLAN
|
Objective:
Increased exposure to the Company to the extent deferred
compensation is tied to the value of Hecla stock, 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, partial 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.
|
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.
2016 Target Compensation
Structure.
The following table lists total
2016 target compensation for the NEOs (including the reduction in base salaries
for calendar year 2016). Even though base salaries were reduced, it did not
affect the annual incentive target award, which was based on base salaries
without the reductions.
CEO Mix of Target
Pay
Other NEO Mix of Target
Pay
42
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Table of Contents
COMPENSATION DISCUSSION
AND ANALYSIS
|
NEO
|
|
Base
Salary
1
($)
|
|
Annual Incentive
Target
Award
2
($)
|
|
Long-term Incentive
Plan
Target Award
($)
|
|
Equity
($)
|
|
Total
($)
|
Baker
|
|
484,000
|
|
605,000
|
|
950,000
|
|
1,000,000
|
3
|
3,039,000
|
Hall
|
|
342,000
|
|
380,000
|
4
|
420,000
|
5
|
345,000
|
|
1,487,000
|
Radford
|
|
342,000
|
|
380,000
|
|
340,000
|
|
345,000
|
|
1,407,000
|
McDonald
|
|
247,500
|
|
275,000
|
|
260,000
|
|
300,000
|
|
1,082,500
|
Sienko
|
|
225,000
|
|
175,000
|
|
190,000
|
|
154,000
|
|
744,000
|
Sabala
|
|
342,000
|
|
380,000
|
4
|
340,000
|
5
|
0
|
|
1,062,000
|
1
|
Base salaries (with reductions)
for calendar year 2016.
|
2
|
Annual Incentive Target Award was
not affected by the base salary reductions in 2016. It is based on
pre-reduction base salary amounts.
|
3
|
Consists of $500,000 in
restricted stock units and $500,000 in performance-based
shares.
|
4
|
Messrs. Hall and Sabalas 2016
Annual Incentive Target Awards were prorated due to Mr. Sabalas
retirement in June 2016, and Mr. Hall joining the Company in July 2016.
See the footnotes accompanying the
Summary Compensation Table for 2016
on page 61.
|
5
|
Messrs. Hall and Sabalas
2014-2016 Long-term Incentive Target Awards were prorated due to Mr.
Sabalas retirement in June 2016, and Mr. Hall joining the Company in July
2016. See the footnotes accompanying the
Summary Compensation Table for 2016
on page 61.
|
Individual base salaries and annual
incentive targets for the NEOs are based on the scope of each NEOs
responsibilities, individual performance and market data. At the beginning of
each year, we also define the key
strategic
objectives each NEO is expected to achieve during that year, which are evaluated
and approved by the committee.
Overview of our
Compensation Decisions and Results for 2016
Design
. Pursuant to our market positioning policy, the committee targets base
salaries between the 25
th
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 previously described.
Typically, the committee makes annual salary adjustments in the middle of each
year for the 12-month period from July 1 to June 30.
Analysis and Decision
. In June 2016, the committee reviewed a market analysis
prepared by Mercer. The base salaries of our NEOs have remained unchanged since
July 1, 2014. However, due to low prices of metals in 2015, the Compensation
Committee reduced our NEOs salaries by 10% for calendar year 2016, and our
CEOs salary was reduced by 20% for calendar year 2016.
The following table shows base salaries
for all NEOs from July 1, 2014 through December 31, 2016:
Base Salary for NEOs July
1, 2014 through December 31, 2016
NEO
|
|
7/1/14 to 12/31/15
Salary
($)
|
|
1/1/16 to 12/31/16
Salary
($)
|
|
Percentage
Decrease
(%)
|
Phillips S. Baker, Jr.
|
|
605,000
|
|
484,000
|
|
(20)
|
Lindsay A. Hall
|
|
0
|
|
342,000
|
1
|
(10)
|
Lawrence P. Radford
|
|
380,000
|
|
342,000
|
|
(10)
|
Dr. Dean W.A. McDonald
|
|
275,000
|
|
247,500
|
|
(10)
|
David C. Sienko
|
|
250,000
|
|
225,000
|
|
(10)
|
James A. Sabala
|
|
380,000
|
|
342,000
|
2
|
(10)
|
1.
|
Mr. Halls base salary was set at
$380,000 in July 2016 when he joined the Company, but with the
understanding that he would take a 10% reduction for the remainder of
calendar year 2016. Between July 2016 and December 2016, Mr. Hall earned
$156,750. See
Summary Compensation Table
for 2016
on page 61.
|
2.
|
Mr. Sabalas salary was set at
$380,000 in June 2015, but effective January 1, 2016, the Compensation
Committee approved a 10% reduction in base salary for all NEOs. Mr. Sabala
retired in June 2016. Between January 2016 and June 2016, Mr. Sabala
earned $168,588. See
Summary
Compensation Table for 2016
on page
61.
|
2017 Proxy Statement
43
Table of Contents
COMPENSATION DISCUSSION
AND ANALYSIS
|
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 amount 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.
|
Each component can achieve two times the
target (200%) with respect to the component, with the maximum total payout
limited to two times the target award level (200%).
For 2016, the quantitative corporate
performance factors were divided into four factors (including weighting):
production (15%), adjusted EBITDA (15%), cash (15%), and work-related injury
rate reduction (5%).
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 required that we achieve 42 million silver equivalent ounces. Maximum
payout is attained if production achieves 44 million ounces. The minimum payout
required 40 million ounces. To achieve targeted payout a 9% increase over 2015
silver equivalent production levels was necessary, while the maximum payout
required a 15% increase.
Production Goal
Metrics
2016 Production in Silver
Equivalent Ounces
|
2016 Production
Metrics
|
|
|
|
% Performance
Value
|
44.0 mm
|
|
Maximum
|
|
30%
|
43.0 mm
|
|
|
|
20%
|
42.0
mm
|
|
Target
|
|
15
%
|
40.0 mm
|
|
|
|
10%
|
<39.0 mm
|
|
|
|
0%
|
The adjusted EBITDA target was $255
million. Maximum payout is achieved if adjusted EDITDA was $300 million. There
is no payout if adjusted EBITDA was less than $148 million.
Adjusted EBITDA Goal Metrics
2016 Adjusted
EBITDA Metrics
|
|
|
|
% Performance
Value
|
$300 mm
|
|
Maximum
|
|
30%
|
$275 mm
|
|
|
|
20%
|
$
255
mm
|
|
Target
|
|
15
%
|
$200 mm
|
|
|
|
10%
|
< $148 mm
|
|
|
|
0%
|
The cash position target is $100 million.
Maximum payout is achieved if our cash position at year-end is at or above $200
million. The threshold payout level is $85 million, below which no payout is
earned.
44
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Table of Contents
COMPENSATION DISCUSSION
AND ANALYSIS
|
Cash Goal Metrics
2016 Cash Metrics
|
|
|
|
Factor Value
|
$200 mm
|
|
Maximum
|
|
30%
|
$150 mm
|
|
|
|
20%
|
$
100 m
m
|
|
Target
|
|
15%
|
$85 mm
|
|
|
|
10%
|
< $75 mm
|
|
|
|
0%
|
The work-related injury rate reduction
target is 15% at year-end. Maximum payout is achieved if our work-related injury
rate is met at 35%. The threshold payout level is 5% reduction, below which no
payout is earned.
Work-Related Injury Rate
Reduction
2016 AIFR Results
|
|
|
|
Factor Value
|
35%
|
|
Maximum
|
|
10%
|
25%
|
|
|
|
7.5%
|
15%
|
|
Target
|
|
5%
|
5%
|
|
|
|
2.5%
|
<5%
|
|
|
|
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 an 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.
For 2016, target AIP award opportunities
for the NEOs were as follows:
NEO
|
|
Target Annual Incentive
(% of base
salary)
|
Phillips S. Baker, Jr.
|
|
100%
|
Lindsay A. Hall*
|
|
100%
|
Lawrence P. Radford
|
|
100%
|
Dr. Dean W.A. McDonald
|
|
100%
|
David C. Sienko
|
|
70%
|
James A. Sabala*
|
|
80%
|
*
|
Messrs. Hall and Sabalas AIP
awards were prorated for 2016, due to Mr. Sabala retiring in June 2016,
and Mr. Hall joining the Company in July 2016.
|
The market analysis prepared by Mercer in
June 2016 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.
2017 Proxy Statement
45
Table of Contents
COMPENSATION DISCUSSION
AND ANALYSIS
|
2016 AIP Analysis and
Decisions
. The committee reviewed the
performance versus the AIP goals on a quarterly basis. For 2016, based on the
assessment by the committee of the Companys overall performance on both
quantitative and qualitative measures as well as relevant discretionary factors
under the AIP, the committee determined Company performance to be at 150% of
target (out of a possible range of 0-200%).
For 2016, Company performance for AIP was
150%, which was comprised of 85% related to the quantitative factors (30% for
Production, 17.5% for Adjusted EBITDA, 30% for Cash, and 7.5% for Work-related
injury reduction); 40% for qualitative factors; and 25% for
discretionary.
2016 AIP Quantitative Measure Results
|
|
Maximum
|
|
Target
|
|
Minimum
|
|
Actual
|
|
Performance
Value
|
Production
|
|
|
|
|
|
|
|
|
|
|
Silver equivalent
ounces
|
|
44.0 mm ozs.
|
|
42.0 mm ozs.
|
|
40 mm ozs.
|
|
46.5 mm ozs.
|
|
30.0%
|
Adjusted EBITDA
|
|
$300 mm
|
|
$255 mm
|
|
$200 mm
|
|
$264.6 mm
|
|
17.5%
|
Cash and short-term investments
|
|
$200 mm
|
|
$100 mm
|
|
$85 mm
|
|
$198.9 mm
|
|
30.0%
|
Work-related injury reduction
|
|
35%
|
|
15%
|
|
5%
|
|
25%
|
|
7.5%
|
Total Quantitative
|
|
|
|
|
|
|
|
|
|
85.0%
|
As reflected in the table above,
production and cash generation each achieved the maximum level, while Adjusted
EBITDA and work-related injury reduction goals exceeded target
levels.
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 50% of the target award.
For our 2016 AIP, qualitative objectives
for NEOs included those related to (i) strategy, (ii) succession planning, (iii)
safety, health and environment, (iv) process improvement and innovation, (v)
operations, (vi) financial condition, (vii) human capital development, (viii)
acquisitions, (ix) mine life extension exploration and reserve growth, (x)
investor relations, (xi) government and community relations, and (xii) legal.
While most of the goals are subjective in nature, to the extent possible,
objective and quantifiable targets are set in order to improve accountability
for results.
For 2016, the committee assessed
performance under this component at 40% of the target award. The committee based
its assessment on the following factors:
✓
|
acquired Mines
Management, Inc., giving us ownership of the Montanore project in
northwestern Montana;
|
✓
|
acquired 50% interest
in the Casa Berardi Joint Venture from Tahoe Resources, whereby the
Company now holds a 100% interest in the land surrounding the mining lease
at Casa Berardi;
|
✓
|
extended milling
access at San Sebastian through the end of 2018;
|
✓
|
added three new
directors;
|
✓
|
provided leadership
training for 10 key employees;
|
✓
|
reduced the number of
significant and substantial citations issued by the Mine Safety and Health
Administration from 2015 levels;
|
✓
|
continued the investor
outreach program and met with one proxy advisory firm;
|
✓
|
received successful
decisions in all three civil lawsuits related to the 2011 incidents at one
of the operations;
|
✓
|
received dismissals in
all three putative class action claims filed in connection with the Mines
Management acquisition;
|
✓
|
successfully
transitioned executive positions at corporate for Vice President
Corporate Development and Senior Vice President Chief Financial Officer,
as well as the Vice President and General Manager position at our Greens
Creek mine and Vice President and General Manager position at our San
Sebastian operation;
|
✓
|
sponsored multiple
events celebrating Heclas 125
th
anniversary, gaining more recognition for the Company;
and
|
✓
|
added two new analysts
for Hecla coverage.
|
46
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Table of Contents
COMPENSATION DISCUSSION
AND ANALYSIS
|
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 50% of the target award. For 2016,
the committee determined the discretionary factor performance value to be at 25%
of the target award. The committee based its assessment primarily on the
following significant performance results by Hecla in 2016:
✓
|
Hecla stock performed well in
2016 relative to peers;
|
✓
|
hosted an Investor Day in Toronto
and New York to increase understanding of the quality of our assets, which
we believe was successful in that our shares outperformed our peers over
the following two months;
|
✓
|
our Greens Creek mine became the
first hard rock mine to receive independent certification under
CORESafety;
|
✓
|
EMCP pit at Casa Berardi became
fully operational, increasing mill throughput and gold
production;
|
✓
|
successfully resolved three
environmental matters;
|
✓
|
#4 Shaft at Lucky Friday was
completed by year-end;
|
✓
|
reduced operating costs by $22
million from our approved 2016 budget;
|
✓
|
higher production and metals
prices resulted in cash provided by operating activities of $225.3
million;
|
✓
|
achieved a new production record
for the third year in a row;
|
✓
|
extended mine life at San
Sebastian and Greens Creek;
|
✓
|
production at San Sebastian
exceeded expectations throughout the year; and
|
✓
|
continued implementing new
technologies at all our mines.
|
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 2016
performance.
Mr. Bakers performance is based 100% on
corporate performance. The Company had an outstanding year under Mr. Bakers
guidance, including strong share performance, increased metals production, and
cash flow growth. As Mr. Bakers performance is based on corporate performance,
the committee assessed Mr. Bakers AIP to be 150% of target.
Mr. Radfords leadership was also
instrumental in developing the organization, including acquiring the work force
needed to operate the San Sebastian mine at full production throughout the year,
achieving higher metal recoveries at Greens Creek, reducing geotechnical risk in
the underground operations, advancing the EMCP open-pit project at Casa Berardi
and the combined operations achieving higher production than the prior year. The
committee assessed Mr. Radfords AIP to be at 180% of target.
Dr. McDonald oversees the exploration
program for the Company and was instrumental in developing the resource model
that will extend Greens Creeks life of mine to 2027, as well as having a
successful drilling program at Casa Berardi, that has shown the potential for
another open-pit mine. The committee assessed Mr. McDonalds AIP to be at 125%
of target.
Mr. Sabala and his successor, Mr. Hall,
were both instrumental in managing Heclas cash position in 2016, effectively
managing working capital, negotiating credit agreements and improving capital
market relationships. Mr. Sabala retired in June 2016, and Mr. Hall joined the
Company in July 2016. The committee felt that there was a smooth transition
between Messrs. Sabala and Hall, and the committee assessed AIP for Mr. Sabala
to be at 115% of target, and 120% at target for Mr. Hall, both of which were
prorated.
Mr. Sienko was successful in resolving
several significant regulatory and legal matters involving environmental, health
and safety, and other civil litigation issues, while also supporting the
acquisition of Mines Management, and the funding of our pension plans. The
committee assessed Mr. Sienkos AIP to be at 189% of target.
2017 Proxy Statement
47
Table of Contents
COMPENSATION DISCUSSION
AND ANALYSIS
|
Set forth in the table below is each NEOs
target award and actual award, which was paid 75% in cash and 25% in Hecla
common stock issued under the 2010 Stock Incentive Plan.
Name
|
|
Base Salary
1
($)
|
|
Base
Salary
Factor
(%)
|
|
Target
Annual
Incentive
($)
|
|
% to
Target
2
(%)
|
|
Actual
Award
3
($)
|
|
|
Cash
Received
($)
|
|
Equity
Received
4
(#)
|
Phillips S. Baker, Jr.
|
|
605,000
|
|
100
|
|
605,000
|
|
150
|
|
907,500
|
|
|
680,625
|
|
34,323
|
Lindsay A. Hall
|
|
380,000
|
|
100
|
|
380,000
|
|
120
|
|
205,200
|
5
|
|
153,900
|
|
7,761
|
Lawrence P. Radford
|
|
380,000
|
|
100
|
|
380,000
|
|
180
|
|
684,000
|
|
|
513,000
|
|
25,870
|
Dr. Dean W.A. McDonald
|
|
275,000
|
|
100
|
|
275,000
|
|
125
|
|
343,750
|
|
|
257,813
|
|
13,001
|
David C. Sienko
|
|
250,000
|
|
70
|
|
175,000
|
|
189
|
|
330,000
|
5
|
|
247,500
|
|
12,481
|
James A. Sabala
|
|
380,000
|
|
80
|
|
304,000
|
|
115
|
|
209,000
|
|
|
156,750
|
|
7,905
|
1
|
AIP targets are based on
unreduced base salaries.
|
2
|
The percentages listed for each
of the NEOs includes corporate achievement of goals and individual
performance.
|
3
|
The amount reported in this
column was paid in cash and equity to the NEO and is also reported in
the
Summary Compensation Table for
2016
on page 61 under Non-Equity
Incentive Plan Compensation.
|
4
|
The equity portion of the 2016
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 21, 2017
($6.61).
|
5
|
Messrs. Hall and Sabalas AIP
awards were prorated for 2016, due to Mr. Sabala retiring in June 2016,
and Mr. Hall joining the Company in July 2016.
|
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
considers 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 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 2014-2016 LTIP units have a maximum
potential value of $375. 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.
2014-2016 LTIP
. The tables below summarize the performance unit valuation
ranges for reserve growth, production growth, cash contribution, #4 Shaft
completion, and TSR for the 2014-2016 plan period the five performance goals
approved by the committee in February 2014. 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. In this context, 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, 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
|
48
www.hecla-mining.com
Table of Contents
COMPENSATION DISCUSSION
AND ANALYSIS
|
|
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 (enhanced by #4 Shaft completion), and cash
contribution. TSR measures the price appreciation of our stock, including
dividends paid during the performance period, and thereby simulates the
actual investment performance of Hecla stock. Any payout is based on how
Heclas TSR performance compares to the TSR of the common stock of a group
of our peer companies.
|
●
|
#4
Shaft completion
. To achieve production
growth at the Lucky Friday, it was important that the #4 Shaft be
completed on schedule.
|
2014-2016 Performance Unit
Valuation
Silver Equivalent Reserve
Growth
|
Ounce Target
(millions)
|
|
Total
Additional
Reserve (millions)
(replacement
in
situ)
|
|
Unit
Value
|
400
|
|
103 (191)
|
|
$
|
100.00
|
337
|
|
40
(128)
|
|
$
|
50.00
|
327
|
|
30
(118)
|
|
$
|
25.00
|
307
|
|
10
(98)
|
|
$
|
5.00
|
Cash
Flow
|
% of
Target
|
|
Unit
Value
|
115
|
%
|
|
|
$
|
75.00
|
110
|
%
|
|
|
$
|
50.00
|
105
|
%
|
|
|
$
|
35.00
|
100
|
%
|
|
|
$
|
25.00
|
95
|
%
|
|
|
$
|
22.50
|
90
|
%
|
|
|
$
|
20.00
|
85
|
%
|
|
|
$
|
17.50
|
80
|
%
|
|
|
$
|
15.00
|
#4 Shaft
Completion
|
100% Completion
Date
|
|
Unit
Value
|
12/31/15
|
|
$
|
50.00
|
5/1/16
|
|
$
|
25.00
|
After 8/1/16
|
|
$
|
0.00
|
Silver Equivalent Production
Growth
|
Target
(in mm
ozs.)
|
|
Average
Annual
Target
(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
|
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
|
2017 Proxy Statement
49
Table of Contents
COMPENSATION DISCUSSION
AND ANALYSIS
|
2014-2016 LTIP Analysis and
Decisions.
The committee assessed performance
under the 2014-2016 LTIP as follows:
Performance Measure
|
|
Target
|
|
Actual
Performance
|
|
%
of
Target
|
|
Value
Earned
Per Unit
|
Silver Reserve Growth
|
|
30.0 silver oz.
added (millions)
|
|
Silver oz.
decreased by
2.7 mm oz.
|
|
-9
|
%
|
|
No Payout
|
Production Growth
|
|
70.5 silver oz.
(millions)
|
|
76.5 silver oz.
(millions)
|
|
108
|
%
|
|
$50.00
|
Cash Flow
|
|
$628.75 cash
flow (millions)
|
|
$829.36 cash
flow (millions)
|
|
132
|
%
|
|
$75.00
|
Total Shareholder Return
|
|
60% Hecla
ranking vs. peers
|
|
92.9% Hecla
ranking vs. peers
|
|
155
|
%
|
|
$82.25
|
#4 Shaft Completion
|
|
Shaft Completed
by 5/1/16
|
|
1/20/17
completion date
|
|
0
|
%
|
|
No Payout
|
Total Earned Per Unit
|
|
|
|
|
|
|
|
|
$207.25
|
During this three-year period, performance
in production exceeded the maximum threshold, and cash flow generation and TSR
components fell between target and the maximum threshold. The #4 Shaft
completion and silver reserve growth were each below the threshold. As a result,
with a range in potential value per unit of $0 to $375, in February 2017, the committee determined that the total 2014-2016
LTIP payout was $207.25 per unit. The committee and the Board further approved
payout of the LTIP awards to be 75% in cash and 25% in Hecla common stock issued
under the 2010 Stock Incentive Plan.
The following chart shows the number of
performance units awarded in 2014 to each NEO, the unit value achieved, the
total amount of the award (number of units x $207.25 = amount received), and the
amount of cash and number of shares received.
Name
|
|
2014-2016
Performance
Units
(#)
|
|
Unit Value
($)
|
|
Total Amount
of
Award
1
($)
|
|
Cash
Received
($)
|
|
Equity
Received
2
(#)
|
Phillips S. Baker, Jr.
|
|
9,500
|
|
207.25
|
|
1,968,875
|
|
1,476,656
|
|
74,466
|
Lindsay A. Hall
|
|
583
3
|
|
207.25
|
|
120,827
|
|
90,620
|
|
4,570
|
Lawrence P. Radford
|
|
3,400
|
|
207.25
|
|
704,650
|
|
528,488
|
|
26,651
|
Dr. Dean W.A. McDonald
|
|
2,600
|
|
207.25
|
|
538,850
|
|
404,138
|
|
20,380
|
David C. Sienko
|
|
1,900
|
|
207.25
|
|
393,775
|
|
295,331
|
|
14,893
|
James A. Sabala
|
|
2,786
3
|
|
207.25
|
|
577,399
|
|
433,049
|
|
21,838
|
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 for 2016
on page 61 under Non-Equity Incentive Plan
Compensation.
|
2
|
The equity portion of the 2014-2016 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 21, 2017
($6.61).
|
3
|
Messrs. Hall and Sabalas 2014-2016 LTIP units were
prorated due to Mr. Sabala retiring in June 2016 and Mr. Hall joining the
Company in July 2016.
|
Restricted Stock Units
. Restricted stock units (RSUs) are granted to the NEOs
under the Key Employee Deferred Compensation Plan and/or the 2010 Stock
Incentive Plan. RSUs are used to retain our NEOs and align their interests with
the long-term interests of our shareholders. The committee awarded each NEO RSUs
in June 2016. The RSUs vest in three equal amounts with vesting dates of June
21, 2017, June 21, 2018, and June 21, 2019. See
Grants of Plan-Based Awards for 2016
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 2016, we granted RSUs to 89 employees,
including all NEOs, under the 2010 Stock Incentive Plan.
Performance-based
Shares
. In June 2016, the committee and the
independent Board members granted 113,636 performance-based shares to our CEO,
with a grant date value of $500,000, comprising one-half of his total equity
award in 2016. 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, 2016 through
December 31, 2018, based on the following percentile rank within a group of peer
companies:
50
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Table of Contents
COMPENSATION DISCUSSION
AND ANALYSIS
|
Company TSR Rank Among Peers
|
|
TSR Performance Multiplier
|
50
th
percentile
|
|
Threshold award at 50% of
target
|
60
th
percentile
|
|
Target award at grant value
|
100
th
percentile
|
|
Maximum award at 200% of
target
|
If Heclas performance is below the
50
th
percentile, the award is zero. If Heclas performance is between
the 50
th
and 100
th
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 (June
7, 2016) of $4.40.
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, 2016, as the base price and 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 2016, the industry peer group used for
purposes of the TSR performance-based award is listed on page 39.
2014 2016 Performance-based Shares
Analysis and Decision
. On June 25, 2014, the
committee and independent members of the Board of Directors granted 151,515
performance-based shares of Heclas common stock
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, 2014, as the base price, compared with the average closing
share price over the last sixty (60) calendar days of the three-year performance
period (ending December 31, 2016).
The following table shows the calculation
of the performance-based share results at the end of the three-year performance
period on December 31, 2016. Heclas TSR ranked 2
nd
among the 13
companies in the peer group based on TSR from 2014 through 2016, including
dividends paid during that period. Ranking 2
nd
places Hecla at 92.9%
among the peer companies, which equates to an award value of $911,250 or 276,136
shares at the $3.30 closing price of Heclas common stock on June 25,
2014.
TOTAL SHAREHOLDER RETURN
January 1, 2014 through December 31, 2016
|
Peer Name
|
|
Average Stock
Price
over 60-day
period leading up to
1/1/2014
($)
|
|
Average Stock
Price
over 60-day
period leading up to
12/31/16
($)
|
|
Dividends
Paid
(1/1/14 thru
12/31/16)
($)
|
|
TSR
thru
12/31/16
(%)
|
|
Rank
(#)
|
|
Payout
($)
|
Detour Gold
|
|
4.76
|
|
17.77
|
|
|
|
273.32
|
|
1
|
|
1,000,000
|
Hecla
|
|
2.91
|
|
6.00
|
|
0.03
|
|
107.22
|
|
2
|
|
911,250
|
Centerra Gold
|
|
3.58
|
|
6.65
|
|
0.44
|
|
98.04
|
|
3
|
|
821,250
|
Pan
American Silver
|
|
10.77
|
|
16.15
|
|
0.83
|
|
57.61
|
|
4
|
|
732,500
|
Silver Standard
|
|
6.20
|
|
9.70
|
|
|
|
56.45
|
|
5
|
|
642,500
|
Royal Gold
|
|
45.99
|
|
68.14
|
|
2.42
|
|
53.42
|
|
6
|
|
533,750
|
TARGET PAYOUT
|
|
|
|
|
|
|
|
|
|
|
|
500,000
|
Endeavour Silver
|
|
3.88
|
|
5.17
|
|
|
|
33.25
|
|
7
|
|
463,750
|
First Majestic Silver
|
|
10.35
|
|
11.26
|
|
|
|
8.79
|
|
8
|
|
375,000
|
THRESHOLD PAYOUT
|
|
|
|
|
|
|
|
|
|
|
|
250,000
|
IAMGOLD
|
|
4.05
|
|
3.75
|
|
|
|
-7.41
|
|
9
|
|
|
Coeur dAlene Mines
|
|
10.80
|
|
9.87
|
|
|
|
-8.61
|
|
10
|
|
|
New
Gold
|
|
5.45
|
|
4.94
|
|
|
|
-9.36
|
|
11
|
|
|
Stillwater Mining
|
|
51.82
|
|
42.20
|
|
|
|
-18.56
|
|
12
|
|
|
Tahoe Resources
|
|
17.40
|
|
9.75
|
|
0.14
|
|
-43.16
|
|
13
|
|
|
Alamos Gold
|
|
12.50
|
|
6.57
|
|
0.08
|
|
-46.80
|
|
14
|
|
|
Allied Nevada*
|
|
|
|
|
|
|
|
-100.00
|
|
15
|
|
|
*
Allied Nevada filed for Chapter 11
bankruptcy and was delisted in 2015.
|
2017 Proxy Statement
51
Table of Contents
COMPENSATION DISCUSSION
AND ANALYSIS
|
Stock Options.
In the past six years, we have not issued any stock options to
our NEOs (or any other employee). Any stock options granted under the 2010 Stock
Incentive
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).
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 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 2016
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 Retirement Plan (the Retirement Plan), the Capital
Accumulation Plan (a 401(k) plan, which includes matching contributions by Hecla
up to 6%), health, vision, dental coverage, 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.
Other Qualified and Nonqualified
Benefit Plans
. Under the Retirement Plan,
upon normal retirement, each participant is eligible to receive a monthly
benefit equal to a certain percentage of final average annual earnings for each
year of credited service. Additional details about the Retirement Plan are in
the narrative accompanying the
Pension
Benefits
table on page 74. Under Heclas
unfunded Supplemental Excess Retirement Plan, the amount of any benefits not
payable under the Retirement Plan because 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 is included (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 a 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 and to the extent it deems
appropriate, including with respect to intent or level of culpability of the
relevant individual(s), seek to recover from any executive officer, 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
52
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Table of Contents
COMPENSATION DISCUSSION
AND ANALYSIS
|
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 our incentive plans (AIP, LTIP, KEDCP, and 2010 Stock
Incentive Plan) to include a clawback provision consistent with the clawback
policy described above.
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.
Change in Control Agreements
We have entered into change in control
agreements (CIC Agreements) 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.
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. For example, recently the agreements were
amended to eliminate double trigger and excise tax gross-up provisions,
replacing them with single trigger and best net after tax payment provisions
instead.
2017 Proxy Statement
53
Table of Contents
COMPENSATION DISCUSSION
AND ANALYSIS
|
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 generally 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 would be fully deductible under Code Section 162(m). Further, although we
received shareholder approval for our 2010 Stock Incentive Plan at our 2010
Annual Meeting, there is no assurance that such approval satisfied or
continues to satisfy the shareholder approval
requirements under Code Section 162(m) necessary for amounts awarded under that
plan to be fully deductible by Hecla. As a result of the foregoing, amounts
awarded or paid under any of our compensation programs, including salaries,
annual incentive awards, performance awards, stock options and RSUs, may not
qualify as performance-based compensation that is excluded from the limitation
on deductibility.
The committee will continue to monitor
developments and assess alternatives for preserving the deductibility of
compensation payments and benefits to the extent reasonably practicable, as
determined by the committee to be consistent with our compensation policies and
in the best interests of the Company and our shareholders.
In 2016, Mr. Baker, our President and CEO,
and Mr. Radford, our Senior Vice President Operations, earned amounts subject
to Section 162(m) in excess of $1 million, therefore a portion of each of those
officers total compensation is not deductible by Hecla.
Section 409A of the Internal Revenue
Code
. Section 409A imposes additional
significant taxes in the event that an executive officer or director receives
deferred compensation that does not satisfy the requirements of Section 409A.
We believe that we have designed and operated our plans appropriately to comply
with Section 409A.
Future Compensation Actions
Base Salaries for 2017
Due to the low prices of metals in 2015,
the Compensation Committee approved salary reductions for calendar year 2016.
Our CEOs base salary was reduced by 20%, and other NEOs base salary was
reduced by 10%. Effective January 1, 2017, base salary reductions ceased and are
in effect through or about June 30, 2017. Base salaries are reviewed
mid-year.
NEO
|
|
1/1/17 to
6/30/17
Salary
($)
|
Phillips S. Baker, Jr.
|
|
605,000
|
Lindsay A. Hall
|
|
380,000
|
Lawrence P. Radford
|
|
380,000
|
Dr. Dean W.A. McDonald
|
|
275,000
|
David C. Sienko
|
|
250,000
|
54
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Table of Contents
COMPENSATION DISCUSSION
AND ANALYSIS
|
In February 2017, the committee approved
the 2017 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, comprising
25% of the targeted award; and
|
●
|
a discretionary factor as determined
by the committee, comprising 25% of the targeted
award.
|
Each component can achieve two times the
target with respect to the component, with the maximum total payout limited to
two times the target award level (200%).
Quantitative Goals
The 2017 AIP is like the 2016 AIP except
one quantitative goal was eliminated, cash, and the Adjusted EBITDA goal have
been changed by including a capital component in the measure. For the 2017 AIP,
the quantitative corporate performance factors are divided into three factors
(including weighting): production (20%), EBITDA less capital (20%), and all
injury frequency rate reduction (10%).
The production factor converts gold, lead
and zinc to silver equivalent at a ratio of 71 oz. silver to 1 oz. gold, 16.4
lb. lead, and 13.3 lb. zinc. Our production target requires that we achieve 46.5
million silver equivalent ounces. Maximum payout is attained if production
achieves 48.5 million ounces. The minimum payout is achieved if production is
greater than 43.5 million ounces.
Production Goal Metrics
2017 Production in Silver
Equivalent Ounces (includes all metals)
|
2017 Production
Metrics
|
|
|
|
% Performance
Value
|
|
48.5mm
|
|
Maximum
|
|
40
|
%
|
47.5mm
|
|
|
|
30
|
%
|
46.5mm
|
|
Target
|
|
20
|
%
|
44.5mm
|
|
|
|
10
|
%
|
<43.5mm
|
|
|
|
0
|
%
|
The minimum threshold for the EBITDA less
capital goal is $60 million. The maximum threshold is $135 million.
EBITDA Less Capital Goal
Metrics
2017 EBITDA
Less Capital Metrics
|
|
|
|
% Performance
Value
|
|
$135mm
|
|
Maximum
|
|
40
|
%
|
$115mm
|
|
|
|
30
|
%
|
$100mm
|
|
Target
|
|
20
|
%
|
$60mm
|
|
|
|
10
|
%
|
< $60mm
|
|
|
|
0
|
%
|
The All Injury Frequency Rate (AIFR)
reduction target is 15% at year-end, which achieves the long-term goal. The 2016
AIFR was 3.42. A 15% reduction results in a rate of 2.91 as the target. A 35%
reduction results in a rate of
2.22, which is as
the maximum threshold. A reduction of less than 5%, or a 2017 AIFR rate of 3.25,
would result in no payout.
2017 Proxy Statement
55
Table of Contents
COMPENSATION DISCUSSION
AND ANALYSIS
|
All Injury Frequency Rate
Reduction
2017 AIFR Metrics
|
|
|
% Performance
Value
|
35%
|
Maximum
|
|
20%
|
25%
|
|
|
15%
|
15%
|
Target
|
|
10%
|
5%
|
|
|
5%
|
<5%
|
|
|
0%
|
Qualitative Goals
The qualitative/other goals are
recommended by management, approved by the committee, and cover the areas of
safety and health, environmental, technology and innovation, continuous
improvement, operations, financial and cost controls, employee development,
benefit plans, acquisitions, mine life extension, exploration and reserve
growth, investor relations, government and community affairs, legal, and
internal affairs.
Outstanding LTIP Periods
Below we provide the current three-year
LTIP periods that are outstanding.
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, except for the #4 Shaft completion
metric, which was removed as the project neared 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.
|
The 2015-2017 LTIP has a maximum potential
payout of $375 per unit, the same as the 2014-2016 LTIP.
2015-2017 Performance Unit
Valuation
Silver Equivalent (includes
Gold)
Reserve Growth
|
Ounce
Target
(millions)
|
Additional Reserve
(millions)
(replacement in situ)
|
|
Unit
Value
|
420
|
100 (175)
|
|
$
|
100.00
|
360
|
40
(115)
|
|
$
|
50.00
|
350
|
30
(105)
|
|
$
|
25.00
|
320
|
0
(75)
|
|
$
|
5.00
|
|
Cash
Flow
|
% of
Target
|
|
|
Unit
Value
|
115%
|
|
|
$100.00
|
110%
|
|
|
$
|
50.00
|
105%
|
|
|
$
|
35.00
|
100%
|
|
|
$
|
25.00
|
95%
|
|
|
$
|
22.50
|
90%
|
|
|
$
|
20.00
|
85%
|
|
|
$
|
17.50
|
80%
|
|
|
$
|
15.00
|
Silver Equivalent (includes
Gold)
Production Growth
|
Target
(in mm
ozs.)
|
Average
Annual
Target
(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
|
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
|
56
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Table of Contents
COMPENSATION DISCUSSION
AND ANALYSIS
|
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
|
2017 Proxy Statement
57
Table of Contents
COMPENSATION DISCUSSION
AND ANALYSIS
|
In February 2017, the committee approved
the 2017-2019 LTIP, which has a target unit value of $100. The 2017-2019 LTIP
has four factors, three of which are repeat factors from the 2016-2018 LTIP,
with a maximum potential payout of $375 per unit. The three factors include:
silver equivalent reserve growth (gold is converted into silver equivalent at a
ratio of 71 to 1), silver equivalent production growth (includes silver and
gold, but not base metals), and total shareholder return. The fourth factor is
mine site operating cash flow less capital, which replaces the cash flow goal
from previous plans.
2017-2019 Performance Unit
Valuation
Silver Equivalent (includes
Gold)
Reserve Growth
|
Ounce
Target
(millions)
|
Additional Reserve
(millions)
(replacement in situ)
|
|
Unit
Value
|
405.6
|
90
(175)
|
|
$
|
75.00
|
375.6
|
60
(145)
|
|
$
|
50.00
|
345.6
|
30
(115)
|
|
$
|
25.00
|
315.6
|
0
(85)
|
|
$
|
5.00
|
|
Mine Site
Operating Cash
Flow Less Capital
|
Cash Target
(millions)
|
|
|
Unit
Value
|
$375
|
|
|
$
|
100.00
|
$350
|
|
|
$
|
50.00
|
$300
|
|
|
$
|
25.00
|
$250
|
|
|
$
|
5.00
|
Silver Equivalent (includes
Gold)
Production Growth
|
Target
(in mm
ozs.)
|
Average
Annual
Target
(in mm ozs.)
|
|
Unit
Value
|
100.0
|
33.3
|
|
$
|
100.00
|
96.0
|
32.0
|
|
$
|
75.00
|
93.0
|
31.0
|
|
$
|
50.00
|
90.0
|
30.0
|
|
$
|
25.00
|
85.0
|
28.3
|
|
$
|
10.00
|
|
Total Shareholder
Return
|
%ile rank
within Peer Group Companies
|
|
Unit
Value
|
100%
|
|
|
$
|
100.00
|
90%
|
|
|
$
|
90.00
|
80%
|
|
|
$
|
75.00
|
70%
|
|
|
$
|
50.00
|
60%
|
|
|
$
|
30.00
|
50%
|
|
|
$
|
25.00
|
< 50%
|
|
|
$
|
0.00
|
58
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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.
2017 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, 2016.
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
|
60
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Table of Contents
COMPENSATION OF NAMED
EXECUTIVE OFFICERS
|
COMPENSATION OF NAMED EXECUTIVE
OFFICERS
Summary Compensation Table for
2016
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,
2016.
Name and Principal
Position
|
Year
|
Salary
1
($)
|
Bonus
2
($)
|
Stock
Awards
3
($)
|
Option
Awards
3
($)
|
Non-Equity
Incentive Plan
Compensation
4
($)
|
Change in
Pension
Value and
Non-Qualified
Deferred
Compensation
Earnings
5
($)
|
|
All Other
Compensation
($)
|
|
Total
($)
|
Phillips S. Baker, Jr.
|
2016
|
484,000
|
|
2,074,935
6
|
|
2,876,375
|
924,335
|
|
15,900
|
8
|
6,375,545
|
President and CEO
|
2015
|
605,000
|
|
1,727,174
|
|
1,768,250
|
599,477
|
|
15,900
|
|
4,715,801
|
|
2014
|
605,000
|
|
1,438,288
|
|
2,303,538
|
164,099
|
|
15,600
|
|
4,526,525
|
Lindsay A.
Hall
10
|
2016
|
156,750
|
|
344,999
|
|
326,027
|
13,146
|
7
|
9,200
|
9
|
850,122
|
Senior Vice
President
|
2015
|
0
|
|
0
|
|
0
|
0
|
|
0
|
|
0
|
and CFO
|
2014
|
0
|
|
0
|
|
0
|
0
|
|
0
|
|
0
|
Lawrence P. Radford
|
2016
|
342,000
|
|
789,999
|
|
1,388,650
|
125,898
|
|
15,900
|
8
|
2,662,447
|
Senior Vice President
|
2015
|
380,000
|
|
556,694
|
|
890,000
|
105,114
|
|
15,900
|
|
1,947,708
|
Operations
|
2014
|
366,458
|
|
709,326
|
|
886,775
|
98,277
|
|
15,600
|
|
2,076,436
|
Dr. Dean W. A.
McDonald
10
|
2016
|
247,500
|
|
589,999
|
|
882,600
|
196,766
|
7
|
15,900
|
9
|
1,932,765
|
Senior Vice President
-
|
2015
|
275,000
|
|
480,468
|
|
580,000
|
110,743
|
|
15,900
|
|
1,462,111
|
Exploration
|
2014
|
275,000
|
|
562,276
|
|
721,875
|
214,384
|
|
15,600
|
|
1,789,135
|
David C. Sienko
|
2016
|
225,000
|
|
352,500
|
|
723,775
|
82,310
|
|
15,900
|
8
|
1,399,485
|
Vice President and
|
2015
|
250,000
|
|
289,933
|
|
397,000
|
36,365
|
|
15,900
|
|
989,198
|
General Counsel
|
2014
|
250,000
|
|
376,900
|
|
543,725
|
78,318
|
|
15,600
|
|
1,265,543
|
James A. Sabala
|
2016
|
168,588
|
|
411,001
|
|
786,399
|
203,085
|
|
15,900
|
8
|
1,584,973
|
Former Senior
Vice
|
2015
|
380,000
|
|
583,700
|
|
822,000
|
174,075
|
|
15,900
|
|
1,975,675
|
President and CFO
|
2014
|
366,458
|
|
887,623
|
|
954,800
|
279,690
|
|
15,600
|
|
2,504,171
|
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 2014, 2015 and 2016, 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, 2016. Please see the
Grants of Plan-Based Awards for 2016
table on page 63 for more information
about the awards granted in 2016.
|
2017 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
2014, 2015 and 2016 under our AIP and for the LTIP plan periods 2012-2014,
2013-2015 and 2014-2016. The 2014 AIP and 2012-2014 LTIP awards were paid
75% in cash and 25% in common stock. The 2015 AIP and 2013-2015 LTIP
awards were paid 50% in cash and 50% in common stock. The 2016 AIP and
2014-2016 LTIP awards were paid 75% in cash and 25% in common stock. 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
|
|
2016
|
|
907,500
|
|
2014-2016
|
|
9,500
|
|
207.25
|
|
1,968,875
|
|
2,876,375
|
|
|
2,157,281
|
|
108,789
|
*
|
|
|
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
|
|
Hall
|
|
2016
|
|
205,200
|
|
2014-2016
|
|
583
|
(i)
|
207.25
|
|
120,827
|
|
326,027
|
|
|
244,520
|
|
12,331
|
*
|
|
|
2015
|
|
0
|
|
2013-2015
|
|
0
|
|
0
|
|
0
|
|
0
|
|
|
0
|
|
0
|
|
|
|
2014
|
|
0
|
|
2012-2014
|
|
0
|
|
0
|
|
0
|
|
0
|
|
|
0
|
|
0
|
|
Radford
|
|
2016
|
|
684,000
|
|
2014-2016
|
|
3,400
|
|
207.25
|
|
704,650
|
|
1,388,650
|
|
|
1,041,488
|
|
52,521
|
*
|
|
|
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
|
|
McDonald
|
|
2016
|
|
343,750
|
|
2014-2016
|
|
2,600
|
|
207.25
|
|
538,850
|
|
882,600
|
|
|
661,950
|
|
33,381
|
*
|
|
|
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
|
|
Sienko
|
|
2016
|
|
330,000
|
|
2014-2016
|
|
1,900
|
|
207.25
|
|
393,775
|
|
723,775
|
|
|
542,831
|
|
27,374*
|
|
|
|
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
|
|
Sabala
|
|
2016
|
|
209,000
|
|
2014-2016
|
|
2,786
|
(i)
|
207.25
|
|
577,399
|
|
786,399
|
|
|
589,799
|
|
29,743
|
*
|
|
|
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
|
|
*
|
The number of shares was determined
based on the closing price of Heclas common stock on the NYSE on February
21, 2017 ($6.61).
|
(i)
|
Messrs. Hall and Sabalas 2014-2016
LTIP units were prorated due to Mr. Sabala retiring in June 2016, and Mr.
Hall joining the Company in July 2016.
|
5
|
The amounts reported in this
column for 2016 are changes between December 31, 2015 and December 31,
2016 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) 374,629 shares
received as part of 2015 AIP and 2013-2015 LTIP awards on February 19,
2016; (ii) restricted stock units (113,636) granted to Mr. Baker on June
7, 2016; and (iii) performance-based shares (113,636) awarded to Mr. Baker
on June 7, 2016. See Performance-based Shares on page 51 for a description
of the performance-based shares.
|
7
|
As non U.S. citizens, Mr. Hall
and Dr. McDonald are not participants in the Retirement Plan, or the
unfunded SERP. In lieu of participation in these plans, Mr. Hall and Dr.
McDonald are expected to receive a similar benefit as if they had
participated in these plans.
|
8
|
These amounts are Heclas
matching contributions for the NEOs made under Heclas Capital
Accumulation Plan.
|
9
|
These amounts are for retirement
contributions made on behalf of Dr. McDonald and Mr. Hall. Canadian
employees are excluded from participation in the Hecla Capital
Accumulation Plan. Dr. McDonald and Mr. Hall 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.
|
10
|
Dr. McDonald and Mr. Hall receive
their compensation in Canadian funds. The amounts reported for Dr.
McDonald and Mr. Hall 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
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Table of Contents
COMPENSATION OF NAMED
EXECUTIVE OFFICERS
|
The following table shows all plan-based
awards granted to the NEOs during 2016.
Grants of Plan-Based Awards for
2016
|
|
|
|
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
Awards
1
($)
|
Name
|
|
Grant
Date
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
|
Threshold
(#)
|
|
Target
(#)
|
|
Maximum
(#)
|
Phillips S. Baker, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares
2
|
|
2/19/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
374,629
|
|
2.36
|
|
884,124
|
Restricted Stock
3
|
|
6/7/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
113,636
|
|
4.40
|
|
499,998
|
Performance Shares
|
|
6/7/16
|
|
|
|
|
|
|
|
|
|
|
56,818
5
|
|
113,636
5
|
|
227,272
5
|
|
|
|
4.40
|
|
690,813
|
LTIP
6
|
|
|
|
9,500
|
|
0
|
|
1,187,500
|
|
3,562,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP
7
|
|
|
|
|
|
0
|
|
605,000
|
|
1,210,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lindsay A. Hall
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock
4
|
|
7/18/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,377
|
|
6.23
|
|
344,999
|
LTIP
6
|
|
|
|
4,200
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP
7
|
|
|
|
|
|
0
|
|
525,000
|
|
1,575,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
380,000
|
|
760,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lawrence P. Radford
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares
2
|
|
2/19/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
188,559
|
|
2.36
|
|
444,999
|
Restricted Stock
3
|
|
6/7/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
78,409
|
|
4.40
|
|
345,000
|
LTIP
6
|
|
|
|
4,200
|
|
0
|
|
525,000
|
|
1,575,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP
7
|
|
|
|
|
|
0
|
|
380,000
|
|
760,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dr.
Dean W.A. McDonald
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Shares
2
|
|
2/19/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
122,881
|
|
2.36
|
|
289,999
|
Restricted
Stock
3
|
|
6/7/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
68,182
|
|
4.40
|
|
300,000
|
LTIP
6
|
|
|
|
3,000
|
|
0
|
|
375,000
|
|
1,125,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP
7
|
|
|
|
|
|
0
|
|
275,000
|
|
550,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David C. Sienko
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common Shares
2
|
|
2/19/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
84,110
|
|
2.36
|
|
198,500
|
Restricted Stock
3
|
|
6/7/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000
|
|
4.40
|
|
154,000
|
LTIP
6
|
|
|
|
2,400
|
|
0
|
|
300,000
|
|
900,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AIP
7
|
|
|
|
|
|
0
|
|
175,000
|
|
350,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James A. Sabala
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
Shares
2
|
|
2/19/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
174,153
|
|
2.36
|
|
411,001
|
AIP
7
|
|
|
|
|
|
0
|
|
380,000
|
|
760,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 shares
of common stock awarded on February 19, 2016 to each of the NEOs under the
terms of the 2010 Stock Incentive Plan. These shares were awarded as part
of the 2015 AIP and 2013-2015 LTIP awards, of which 50% was paid in
equity.
|
3
|
Represents the number of RSUs
granted on June 7, 2016, to the NEOs (except for Mr. Hall) under the terms
of the 2010 Stock Incentive Plan. The restrictions lapse for one-third of
the RSUs on June 21, 2017, one-third on June 21, 2018, and one-third on
June 21, 2019, 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 RSUs
multiplied by the closing price of the Company common stock on the grant
date of June 7, 2016 ($4.40).
|
4
|
Represents the number of RSUs
granted to Mr. Hall on July 18, 2016, under the terms of the 2010 Stock
Incentive Plan. The restrictions lapse for one-third of the RSUs on June
21, 2017, one-third on June 21, 2018, and one-third on June 21, 2019, 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 RSUs multiplied by the
closing price of the Company common stock on the grant date of July 18,
2016 ($6.23).
|
5
|
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 based on the TSR of Hecla common stock for the three-year
period from January 1, 2016 through December 31, 2018, based on the
following percentile rank within peer group
companies:
|
●
|
100
th
percentile rank = maximum award at 200% of target;
|
●
|
60
th
percentile rank = target award at grant value;
|
●
|
50
th
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, 2016, 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.
|
2017 Proxy Statement
63
Table of Contents
COMPENSATION OF NAMED
EXECUTIVE OFFICERS
|
6
|
Represents the potential value of
the payout for each NEO under the 2016-2018 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, $375.
|
7
|
Represents the potential value of
the payout for each NEO under the 2016 AIP described on page 44. The total
payout to each NEO under the 2016 AIP is described in footnote 4 to
the
Summary Compensation Table for
2016
on page 62. Awards were paid 75%
in cash and 25% in Heclas common stock issued under the 2010 Stock
Incentive Plan.
|
The following table provides information
on the current holdings of stock awards by the NEOs. This table includes
unvested RSUs, and unvested performance-based shares. There were no unexercised
stock options held by any NEO at year-end.
Outstanding Equity
Awards at Calendar Year-End for 2016
|
Option
Awards
|
Stock
Awards
|
Name
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Option
Exercise
Price
($)
|
Option
Grant
Date
|
Option
Expiration
Date
|
Number of
Shares
or
Units
of
Stock
That
Have
Not
Vested
1
(#)
|
Market
Value
of
Shares or
Units of
Stock That
Have Not
Vested as
of
12/30/16
2
($)
|
Equity
Incentive
Plan Awards:
Number
of
Unearned
Shares, Units
or Other
Rights that
have
Not
Vested
(#)
|
Equity
Incentive
Plan Awards:
Market or
Payout
Value
of Unearned
Shares, Units
or Other Rights
That Have
Not
Vested
3
($)
|
Phillips S. Baker, Jr.
|
|
|
|
|
|
300,753
|
1,575,946
|
|
|
|
|
|
|
|
|
|
|
204,918
4
|
1,073,770
|
|
|
|
|
|
|
|
|
113,636
5
|
595,453
|
Lindsay A. Hall
|
|
|
|
|
|
55,377
|
290,175
|
|
|
Lawrence P. Radford
|
|
|
|
|
|
203,777
|
1,067,791
|
|
|
Dr. Dean W. A. McDonald
|
|
|
|
|
|
180,451
|
945,563
|
|
|
David C. Sienko
|
|
|
|
|
|
92,632
|
485,392
|
|
|
James A. Sabala*
|
|
|
|
|
|
0
|
0
|
|
|
*
|
Mr. Sabala retired in June 2016. All
outstanding RSUs with vesting dates after June 2016, were
forfeited.
|
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
|
Hall
|
Radford
|
McDonald
|
Sienko
|
6/21/17
|
106,184
|
18,459
|
71,902
|
63,711
|
32,704
|
6/25/17
|
50,505
|
|
33,838
|
30,303
|
15,556
|
6/21/18
|
106,185
|
18,459
|
71,901
|
63,710
|
32,705
|
6/21/19
|
37,879
|
18,459
|
26,136
|
22,727
|
11,667
|
Total
|
300,753
|
55,377
|
203,777
|
180,451
|
92,632
|
2
|
The market value of the RSUs is
based on the closing market price of our common stock on the NYSE as of
December 30, 2016, which was $5.24.
|
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 30, 2016, which was
$5.24.
|
4
|
Award of performance-based
shares, the value of which will be determined based on the TSR of Hecla
common stock for the three-year period from January 1, 2015 through
December 31, 2017.
|
5
|
Award of performance-based
shares, the value of which will be determined based on the TSR of Hecla
common stock for the three-year period from January 1, 2016 through
December 31, 2018.
|
64
www.hecla-mining.com
Table of Contents
COMPENSATION OF NAMED
EXECUTIVE OFFICERS
|
The following table shows information
concerning the exercise of stock options and the number of stock awards that
vested during calendar year 2016 for each of the NEOs, and the value realized on
the exercise of options and vesting of stock awards during calendar year
2016.
Option Exercises and
Stock Vested for 2016
|
|
Option
Awards
1
|
|
Stock
Awards
|
Name
|
|
Number of
Shares
Acquired on Exercise
(#)
|
|
Value Realized
on
Exercise
($)
|
|
Number of
Shares
Acquired on Vesting
(#)
|
|
|
Value Realized
on
Vesting
($)
|
Phillips S. Baker, Jr.
|
|
|
|
|
|
374,629
|
2,3
|
|
|
|
|
|
|
|
|
236,177
|
4
|
|
691,999
|
|
|
|
|
|
|
56,883
|
5,3
|
|
|
|
|
|
|
|
|
68,306
|
6,3
|
|
|
|
|
|
|
|
|
50,505
|
7,3
|
|
|
Lindsay A. Hall
|
|
|
|
|
|
|
|
|
|
Lawrence P. Radford
|
|
|
|
|
|
188,559
|
2
|
|
444,999
|
|
|
|
|
|
|
34,130
|
5
|
|
156,657
|
|
|
|
|
|
|
45,765
|
6
|
|
210,061
|
|
|
|
|
|
|
33,838
|
7
|
|
159,715
|
|
|
|
|
|
|
26,000
|
8
|
|
169,000
|
Dr. Dean W.A.
McDonald
|
|
|
|
|
|
122,881
|
2
|
|
289,999
|
|
|
|
|
|
|
34,130
|
5
|
|
156,657
|
|
|
|
|
|
|
40,984
|
6
|
|
188,117
|
|
|
|
|
|
|
30,303
|
7
|
|
143,030
|
David C. Sienko
|
|
|
|
|
|
84,110
|
2
|
|
198,500
|
|
|
|
|
|
|
17,520
|
5
|
|
80,417
|
|
|
|
|
|
|
21,039
|
6
|
|
96,569
|
|
|
|
|
|
|
15,556
|
7
|
|
73,424
|
James A. Sabala
|
|
|
|
|
|
174,153
|
2
|
|
411,001
|
|
|
|
|
|
|
39,249
|
5
|
|
180,153
|
|
|
|
|
|
|
47,131
|
6
|
|
216,331
|
|
|
|
|
|
|
34,848
|
7
|
|
164,483
|
1
|
There were no stock options exercised in 2016. All
remaining stock options expired in May 2015.
|
2
|
The NEOs were awarded common stock on February 19, 2016,
as part of their 2015 AIP and 2013-2015 LTIP being paid 50% in common
stock. The shares were awarded at the price of $2.36, which was the
closing sales price of our common stock on the NYSE on February 19,
2016.
|
3
|
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. The shares are included in
the
Nonqualified Deferred Compensation
for 2016
table on page 66.
|
4
|
Performance-based shares received in March 2016 based on
the TSR of Hecla common stock for the three-year period from January 1,
2013 through December 31, 2015. The share price was determined by using
the closing price of Heclas common stock on the NYSE on June 21, 2013
($2.93), the date of grant of the performance-based shares.
|
5
|
The NEOs were granted these RSUs on June 21, 2013. On
June 21, 2016, 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
$4.59, which was the closing sales price of our common stock on the NYSE
on June 21, 2016.
|
6
|
The NEOs were granted these RSUs on July 1, 2015. On
June 21, 2016, 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
$4.59, which was the closing sales price of our common stock on the NYSE
on June 21, 2016.
|
7
|
The NEOs were granted these RSUs on June 25, 2014. On
June 25, 2016, 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
$4.72, which was the closing sales price of our common stock on the NYSE
on June 25, 2016.
|
8
|
Mr. Radford was granted 26,000 RSUs on October 19, 2011.
On August 5, 2016, the restrictions lapsed and Mr. Radford received his
units in the form of shares of our common stock. The shares vested at a
price of $6.50, which was the closing sales price of our common stock on
the NYSE on August 5, 2016.
|
2017 Proxy Statement
65
Table of Contents
COMPENSATION OF NAMED
EXECUTIVE OFFICERS
|
The table below provides information on
the nonqualified deferred compensation of the NEOs in 2016.
Nonqualified Deferred
Compensation for 2016
1
Name
|
Executive Stock
Contributions in
Last
FYE
2
(#)
|
Registrant
Contributions in
Last
FYE
($)
|
Aggregate
Earnings in
Last
FYE
($)
|
Aggregate
Withdrawals/
Distributions
($)
|
Aggregate
Balance of Stock at
Last
FYE
(#)
|
Phillips S. Baker, Jr.
|
550,323
|
39,098
|
|
|
888,909
|
Lindsay A. Hall
3
|
|
|
|
|
|
Lawrence P. Radford
|
|
|
|
|
|
Dr.
Dean W. A. McDonald
3
|
|
|
|
|
|
David C. Sienko
|
|
|
|
|
|
James A. Sabala
|
|
|
|
|
|
1
|
No cash compensation was deferred by NEOs in
2016.
|
2
|
Vested stock deferred into the KEDCP in
2016.
|
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, awards earned under the LTIP and AIP (including common
stock), and any RSUs granted under the 2010 Stock Incentive Plan (our CEO may
also defer any performance-based awards under the KEDCP). Deferral elections are
made by the individual generally in the year prior to the beginning of the plan
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 and
other common stock awarded (performance-based shares) 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
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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, Hall, McDonald, Radford and
Sienko). Mr. Sabalas CIC Agreement terminated at the time of his retirement in
June 2016.
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 Messrs. Radford and Hall who each have 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 Messrs. Radford and Hall, 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, 2016, and thus include amounts earned through such time, and
are estimates of the amounts which would be paid out to the NEOs upon their
termination. The actual amounts to be paid out can only be determined at the
time of such NEOs separation from Hecla.
Payments Made Upon
Termination.
For voluntary and involuntary
not for cause terminations, NEOs may receive: (i) a prorated portion of
short-term performance compensation; (ii) any amounts due under matured
long-term performance compensation plans; (iii) one month of health and welfare
benefits; and (iv) any earned, but unused vacation. Neither of these
terminations would impact their vested retirement plans and the 401(k) match
would be deposited in their accounts.
Payments Made Upon
Retirement.
The NEOs could receive a prorated
portion of any short-term performance compensation and a prorated portion of any
long-term compensation in effect at the time of their retirement. They would
also receive one month of health and welfare
2017 Proxy Statement
67
Table of Contents
COMPENSATION OF NAMED
EXECUTIVE OFFICERS
|
benefits and any earned but unused
vacation, and the 401(k) match would be deposited in their accounts. As of
December 31, 2016, Mr. Baker was the only NEO that qualified for early or
regular retirement from the qualified 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 Messrs.
Radford and Hall 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 Messrs. Radford and
Hall) 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 Messrs.
Radford and Hall 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 Messrs.
Radford and Hall and any other CIC Agreement entered into hereafter);
and
|
●
|
for Messrs. Baker, McDonald and
Sienko, the continued participation for three years in all of Heclas
benefit 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 Messrs. Radford and Hall 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 to permit management decisions to be made
without undo concern about possible termination following a change in
control.
68
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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
12/31/16
($)
|
|
Involuntary
Not For
Cause
Termination
on
12/31/16
($)
|
|
For
Cause
Termination on
12/31/16
($)
|
|
Termination
Following a
Change in
Control
on
12/31/16
($)
|
|
Disability
on
12/31/16
($)
|
|
Death
on
12/31/16
($)
|
|
Phillips S. Baker, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
Performance Compensation
|
|
907,500
|
|
907,500
|
|
|
|
2,722,500
|
1
|
907,500
|
|
907,500
|
|
Stock
Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock
|
|
|
|
|
|
|
|
1,669,223
|
|
|
|
|
|
Long-term
Performance Compensation
|
|
1,968,875
|
|
1,968,875
|
|
1,968,875
|
|
5,906,625
|
2
|
2,918,875
|
|
2,918,875
|
|
Benefits &
Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement
Plans
3
|
|
5,055,776
|
|
5,055,776
|
|
5,055,776
|
|
8,046,663
|
|
7,399,889
|
|
4,997,208
|
|
Deferred
Compensation
4
|
|
4,657,883
|
|
4,657,883
|
|
4,657,883
|
|
4,657,883
|
|
4,657,883
|
|
4,657,883
|
|
Health and Welfare
Benefits
5
|
|
1,470
|
|
1,470
|
|
1,470
|
|
52,920
|
|
1,470
|
|
1,470
|
|
Disability
Income
6
|
|
|
|
|
|
|
|
|
|
925,246
|
|
|
|
Life Insurance
Benefits
7
|
|
|
|
|
|
|
|
11,103
|
|
|
|
325,000
|
|
Change in Control
Payment
8
|
|
|
|
|
|
|
|
1,452,000
|
|
|
|
|
|
Earned Vacation
Pay
9
|
|
37,230
|
|
37,230
|
|
37,230
|
|
37,230
|
|
37,230
|
|
37,230
|
|
Outplacement
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
Total
|
|
12,628,734
|
|
12,628,734
|
|
11,721,234
|
|
24,576,147
|
|
16,848,093
|
|
13,845,166
|
|
Lindsay A. Hall
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term Performance Compensation
|
|
205,200
|
|
205,200
|
|
|
|
410,400
|
1
|
205,200
|
|
205,200
|
|
Stock
Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
|
|
|
|
|
|
|
|
290,175
|
|
|
|
|
|
Long-term Performance Compensation
|
|
120,827
|
|
120,827
|
|
120,827
|
|
241,654
|
2
|
365,789
|
|
365,789
|
|
Benefits &
Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plans
3
|
|
13,146
|
|
13,146
|
|
13,146
|
|
75,857
|
|
13,186
|
|
9,384
|
|
Health
and Welfare Benefits
5
|
|
388
|
|
388
|
|
388
|
|
9,312
|
|
388
|
|
388
|
|
Disability Income
6
|
|
|
|
|
|
|
|
|
|
323,958
|
|
|
|
Life
Insurance Benefits
7
|
|
|
|
|
|
|
|
5,904
|
|
|
|
250,000
|
|
Change
in Control Payment
8
|
|
|
|
|
|
|
|
684,000
|
|
|
|
|
|
Earned
Vacation Pay
9
|
|
26,307
|
|
26,307
|
|
26,307
|
|
26,307
|
|
26,307
|
|
26,307
|
|
Outplacement
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
Total
|
|
365,868
|
|
365,868
|
|
160,668
|
|
1,763,609
|
|
934,828
|
|
857,068
|
|
Lawrence P. Radford
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
Performance Compensation
|
|
684,000
|
|
684,000
|
|
|
|
1,368,000
|
1
|
684,000
|
|
684,000
|
|
Stock
Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock
|
|
|
|
|
|
|
|
1,067,791
|
|
|
|
|
|
Long-term
Performance Compensation
|
|
704,650
|
|
704,650
|
|
704,650
|
|
1,409,300
|
2
|
1,071,314
|
|
1,071,314
|
|
Benefits &
Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement
Plans
3
|
|
462,126
|
|
462,126
|
|
462,126
|
|
639,723
|
|
676,244
|
|
451,377
|
|
Health and Welfare
Benefits
5
|
|
1,022
|
|
1,022
|
|
1,022
|
|
24,528
|
|
1,022
|
|
1,022
|
|
Disability
Income
6
|
|
|
|
|
|
|
|
|
|
1,016,965
|
|
|
|
Life Insurance
Benefits
7
|
|
|
|
|
|
|
|
7,402
|
|
|
|
325,000
|
|
Change in Control
Payment
8
|
|
|
|
|
|
|
|
684,000
|
|
|
|
|
|
Earned Vacation
Pay
9
|
|
19,731
|
|
19,731
|
|
19,731
|
|
19,731
|
|
19,731
|
|
19,731
|
|
Outplacement
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
Total
|
|
1,871,529
|
|
1,871,529
|
|
1,187,529
|
|
5,240,475
|
|
3,469,276
|
|
2,552,444
|
|
2017 Proxy Statement
69
Table of Contents
COMPENSATION OF NAMED
EXECUTIVE OFFICERS
|
Executive Benefits
and
Payments Upon Termination
|
|
Voluntary
Termination on
12/31/16
($)
|
|
Involuntary
Not For
Cause
Termination
on
12/31/16
($)
|
|
For
Cause
Termination on
12/31/16
($)
|
|
Termination
Following a
Change in
Control
on
12/31/16
($)
|
|
Disability
on
12/31/16
($)
|
|
Death
on
12/31/16
($)
|
|
Dr. Dean W.A. McDonald
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term
Performance Compensation
|
|
343,750
|
|
343,750
|
|
|
|
1,031,250
|
1
|
343,750
|
|
343,750
|
|
Stock
Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted
Stock
|
|
|
|
|
|
|
|
945,563
|
|
|
|
|
|
Long-term
Performance Compensation
|
|
538,850
|
|
538,850
|
|
538,850
|
|
1,616,550
|
2
|
812,182
|
|
812,182
|
|
Benefits &
Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement
Plans
3
|
|
1,187,037
|
|
1,187,037
|
|
1,187,037
|
|
1,928,675
|
|
1,306,470
|
|
916,590
|
|
Health and Welfare
Benefits
5
|
|
388
|
|
388
|
|
388
|
|
13,968
|
|
388
|
|
388
|
|
Disability
Income
6
|
|
|
|
|
|
|
|
|
|
395,718
|
|
|
|
Life Insurance
Benefits
7
|
|
|
|
|
|
|
|
7,538
|
|
|
|
189,000
|
|
Change in Control
Payment
8
|
|
|
|
|
|
|
|
742,200
|
|
|
|
|
|
Earned Vacation
Pay
9
|
|
19,038
|
|
19,038
|
|
19,038
|
|
19,038
|
|
19,038
|
|
19,038
|
|
Outplacement
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
Total
|
|
2,089,063
|
|
2,089,063
|
|
1,745,313
|
|
6,324,782
|
|
2,877,546
|
|
2,280,948
|
|
David C. Sienko
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term Performance Compensation
|
|
330,000
|
|
330,000
|
|
|
|
990,000
|
1
|
330,000
|
|
330,000
|
|
Stock
Options
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Restricted Stock
|
|
|
|
|
|
|
|
485,392
|
|
|
|
|
|
Long-term Performance Compensation
|
|
393, 775
|
|
393,775
|
|
393,775
|
|
1,181,325
|
2
|
600,440
|
|
600,440
|
|
Benefits &
Perquisites:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plans
3
|
|
335,108
|
|
335,108
|
|
335,108
|
|
478,254
|
|
834,347
|
|
511,298
|
|
Health
and Welfare Benefits
5
|
|
438
|
|
438
|
|
438
|
|
15,768
|
|
438
|
|
438
|
|
Disability Income
6
|
|
|
|
|
|
|
|
|
|
1,417,481
|
|
|
|
Life
Insurance Benefits
7
|
|
|
|
|
|
|
|
8,559
|
|
|
|
225,000
|
|
Change
in Control Payment
8
|
|
|
|
|
|
|
|
675,000
|
|
|
|
|
|
Earned
Vacation Pay
9
|
|
12,981
|
|
12,981
|
|
12,981
|
|
12,981
|
|
12,981
|
|
12,981
|
|
Outplacement
|
|
|
|
|
|
|
|
20,000
|
|
|
|
|
|
Total
|
|
1,072,302
|
|
1,072,302
|
|
742,302
|
|
3,867,279
|
|
3,195,687
|
|
1,680,157
|
|
James A. Sabala*
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
Mr. Sabala retired in June 2016, at
which time his Change in Control Agreement terminated.
|
1
|
Represents three times the highest
annual incentive payment paid in the last three years for Messrs. Baker,
McDonald and Sienko. Represents two times the highest annual incentive
payment paid in the last three years for Messrs. Radford and
Hall.
|
2
|
Represents three times the highest
long-term incentive payment paid in the last three years for Messrs.
Baker, McDonald and Sienko. Represents two times the highest long-term
incentive payment paid in the last three years for Messrs. Radford and
Hall.
|
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, 2016, under our retirement
plan.
|
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 30, 2016
($5.24).
|
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, McDonald and Sienko 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 Messrs. Radford and Hall 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, McDonald and Sienko. Represents two times annual
base salary for Messrs. Radford and Hall.
|
9
|
Represents lump-sum payment of earned
vacation time accrued.
|
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EQUITY COMPENSATION PLAN
INFORMATION
|
EQUITY COMPENSATION
PLAN INFORMATION
As of December 31, 2016, 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
|
8,302,326
|
Stock Plan for
Nonemployee Directors
|
|
N/A
|
438,459
|
Key Employee Deferred
Compensation Plan
|
|
N/A
|
511,303
|
Equity Compensation Plans Not Approved
by
|
|
|
|
Security Holders
|
|
|
|
Total
|
|
|
9,252,088
|
2017 Proxy Statement
71
Table of Contents
OTHER BENEFITS
Retirement Plan
With the exception of our NEOs who are
Canadian citizens, and certain hourly employees who are covered by separate
plans, our NEOs participate in the Hecla Mining Company Qualified Retirement
Plan (the Retirement Plan). 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.
72
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The following table shows estimated
aggregate annual benefits under our Retirement Plan and the SERP payable upon
retirement to a participant who retires in 2016 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, 2016.
Estimated Annual
Retirement Benefits
Final
Average
|
|
Years of Credited
Service
|
Annual
Earnings
|
|
5
|
|
10
|
|
15
|
|
20
|
|
25
|
|
30
|
|
35
|
$
|
100,000
|
|
$
|
5,839
|
|
$
|
11,677
|
|
$
|
17,516
|
|
$
|
23,354
|
|
$
|
29,193
|
|
$
|
35,031
|
|
$
|
40,870
|
|
150,000
|
|
|
10,214
|
|
|
20,427
|
|
|
30,641
|
|
|
40,854
|
|
|
51,068
|
|
|
61,281
|
|
|
71,495
|
|
200,000
|
|
|
14,589
|
|
|
29,177
|
|
|
43,766
|
|
|
58,354
|
|
|
72,943
|
|
|
87,531
|
|
|
102,120
|
|
250,000
|
|
|
18,964
|
|
|
37,927
|
|
|
56,891
|
|
|
75,854
|
|
|
94,818
|
|
|
113,781
|
|
|
132,745
|
|
300,000
|
|
|
23,339
|
|
|
46,667
|
|
|
70,016
|
|
|
93,354
|
|
|
116,693
|
|
|
140,031
|
|
|
163,370
|
|
350,000
|
|
|
27,714
|
|
|
55,427
|
|
|
83,141
|
|
|
110,854
|
|
|
138,568
|
|
|
166,281
|
|
|
193,995
|
|
400,000
|
|
|
32,089
|
|
|
64,177
|
|
|
86,266
|
|
|
128,354
|
|
|
160,443
|
|
|
192,531
|
|
|
224,620
|
|
450,000
|
|
|
36,464
|
|
|
72,927
|
|
|
109,391
|
|
|
145,854
|
|
|
182,318
|
|
|
218,781
|
|
|
255,245
|
|
500,000
|
|
|
40,839
|
|
|
81,677
|
|
|
122,516
|
|
|
163,354
|
|
|
204,193
|
|
|
245,031
|
|
|
285,870
|
|
550,000
|
|
|
45,214
|
|
|
90,427
|
|
|
135,641
|
|
|
180,854
|
|
|
226,068
|
|
|
271,281
|
|
|
316,495
|
|
600,000
|
|
|
49,589
|
|
|
99,177
|
|
|
148,766
|
|
|
198,354
|
|
|
247,943
|
|
|
297,531
|
|
|
347,120
|
|
650,000
|
|
|
53,964
|
|
|
107,927
|
|
|
161,891
|
|
|
215,854
|
|
|
269,818
|
|
|
323,781
|
|
|
377,745
|
|
700,000
|
|
|
58,339
|
|
|
116,677
|
|
|
175,016
|
|
|
233,354
|
|
|
291,693
|
|
|
350,031
|
|
|
408,370
|
|
750,000
|
|
|
62,714
|
|
|
125,427
|
|
|
188,141
|
|
|
250,854
|
|
|
313,568
|
|
|
376,281
|
|
|
438,995
|
|
800,000
|
|
|
67,089
|
|
|
134,177
|
|
|
201,266
|
|
|
268,354
|
|
|
335,443
|
|
|
402,531
|
|
|
469,620
|
|
850,000
|
|
|
71,464
|
|
|
142,927
|
|
|
214,391
|
|
|
285,854
|
|
|
357,318
|
|
|
428,781
|
|
|
500,245
|
|
900,000
|
|
|
75,839
|
|
|
151,677
|
|
|
227,516
|
|
|
303,354
|
|
|
379,193
|
|
|
455,031
|
|
|
530,870
|
|
950,000
|
|
|
80,214
|
|
|
160,427
|
|
|
240,641
|
|
|
320,854
|
|
|
401,068
|
|
|
481,281
|
|
|
561,495
|
|
1,000,000
|
|
|
84,589
|
|
|
169,177
|
|
|
253,766
|
|
|
338,354
|
|
|
422,943
|
|
|
507,531
|
|
|
592,120
|
Benefits listed in the pension table are
not subject to any deduction for Social Security or other offset
amounts.
As of December 31, 2016, the
following executive officers have completed the indicated number of full years
of credited service: P. Baker, 15 years; J. Sabala, 8 years; L. Radford, 5
years; D. McDonald, 10 years; D. Sienko, 6 years; and L. Hall, 0
years.
2017 Proxy Statement
73
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, 2016. 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
|
|
15
|
|
516,073
|
|
|
|
|
Hecla Mining Company Supplemental
Excess
|
|
|
|
|
|
|
|
|
Retirement Plan
|
|
|
|
4,539,703
|
|
|
Lindsay A.
Hall
1
|
|
Hecla Mining Company
Retirement Plan
|
|
0
|
|
13,146
|
|
|
|
|
Hecla Mining Company
Supplemental Excess
|
|
|
|
|
|
|
|
|
Retirement Plan
|
|
|
|
|
|
|
Lawrence P. Radford
|
|
Hecla Mining Company Retirement
Plan
|
|
5
|
|
174,594
|
|
|
|
|
Hecla Mining Company Supplemental
Excess
|
|
|
|
|
|
|
|
|
Retirement Plan
|
|
|
|
287,532
|
|
|
Dr. Dean W.A.
McDonald
1
|
|
Hecla Mining Company
Retirement Plan
|
|
10
|
|
414,981
|
|
|
|
|
Hecla Mining Company
Supplemental Excess
|
|
|
|
|
|
|
|
|
Retirement Plan
|
|
|
|
772,056
|
|
|
David C. Sienko
|
|
Hecla Mining Company Retirement
Plan
|
|
6
|
|
163,127
|
|
|
|
|
Hecla Mining Company Supplemental
Excess
|
|
|
|
|
|
|
|
|
Retirement Plan
|
|
|
|
171,981
|
|
|
James A. Sabala
|
|
Hecla Mining Company
Retirement Plan
|
|
8
|
|
368,125
|
|
|
|
|
Hecla Mining Company
Supplemental Excess
|
|
|
|
|
|
|
|
|
Retirement Plan
|
|
|
|
1,082,979
|
|
|
1
|
As non U.S. citizens, Mr. Hall and Dr. McDonald are not
participants in the Retirement Plan, or the unfunded SERP. In lieu of
participation in these plans, Mr. Hall and Dr. McDonald are expected to
receive a similar benefit as if they had participated in these
plans.
|
74
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PROPOSAL 3 APPROVAL OF
NAMED EXECUTIVE OFFICER COMPENSATION
|
PROPOSAL 3 APPROVAL
OF NAMED EXECUTIVE OFFICER COMPENSATION
Our Board, pursuant to Section 14A of the
Securities Exchange Act of 1934, seeks your vote to approve, on an advisory
basis, the compensation of our NEOs as set forth under the heading
Compensation Discussion and Analysis
beginning on page 33 and in the accompanying compensation
tables beginning on page 61, and related material. 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 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 our NEOs have contributed significantly to these
achievements. Their tenure with the Company ranges from approximately one year
to 15 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 of our executive compensation program. We
believe this confidence is shared by our shareholders, as evidenced by the
favorable vote of 81% of our shareholders on the proposal to approve NEO
compensation presented at last years annual meeting. Our compensation practices
did not substantially change from calendar year 2016 to calendar year 2017 and
the Board hopes our shareholders will continue to believe in the effectiveness
and appropriateness of our 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 the Company, 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 2017 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 2016, and the related compensation tables and narrative
in the Proxy Statement for the Companys 2017 Annual Shareholders Meeting, is
hereby APPROVED.
|
The Board
recommends that you vote FOR approval of the compensation of our
NEOs.
|
2017 Proxy Statement
75
Table of Contents
PROPOSAL 4 ADVISORY VOTE ON THE
FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE
COMPENSATION
|
PROPOSAL 4 ADVISORY
VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE
COMPENSATION
The Company is providing shareholders with
the opportunity to vote, on a non-binding, advisory basis, for their preference
as to how frequently to cast future advisory votes on the compensation of our
NEOs (commonly referred to as Say-on-Pay). Shareholders may indicate whether
they would prefer that the Company conduct future advisory votes on executive
compensation once every one, two or three years (commonly referred to as
Say-on-Frequency).
At our 2011 annual meeting, shareholders
voted for annual say-on-pay advisory votes on NEO compensation. The Company has
held advisory say-on-pay votes on the compensation of our NEOs at every
subsequent annual meeting. We are required to hold a Say-on-Frequency vote every
six years.
The Board has determined that an advisory
vote on executive compensation that occurs every year is the most appropriate
alternative for the Company and recommends shareholders vote for a one-year
interval for the advisory vote on executive compensation.
The Board recommends an annual advisory
vote on executive compensation because it allows for frequent input from our
shareholders on our compensation philosophy, policies and practices. Similarly,
any shareholder concerns about our executive compensation program can be
expressed through a vote without having to wait two or three years. In addition,
the Board considered survey data on our institutional shareholders preferences,
which reflected an annual advisory vote to approve the NEOs
compensation.
The vote on the frequency of the advisory
vote on executive compensation is advisory and not binding on the Company, the
Board, or the Compensation Committee.
The Company recognizes shareholders may
have different views as to the best approach for the Company. The Board and the
Compensation Committee will consider the outcome of the vote; however, when
considering the frequency of future advisory votes on executive compensation,
the Board may decide it is in the best interests of our shareholders and the
Company to hold an advisory vote on executive compensation more or less
frequently than the frequency receiving the most votes cast by our shareholders.
Also, in accordance with applicable law, shareholders will have the opportunity
to recommend the frequency of future advisory votes on executive compensation at
least once every six years.
Shareholders may cast a vote on the
preferred voting frequency by selecting the option of one year, two years, or
three years (or abstain) when voting in response to the following
resolution:
RESOLVED, that the shareholders
determine, on an advisory basis, whether the preferred frequency of an advisory
vote on the executive compensation of the Companys NEOs should be every one
year, every two years, or every three years.
The frequency option one year, two
years, or three years that receives the most votes FOR of all votes cast on
the proposal will be the frequency option approved by the
shareholders.
|
The Board
recommends an advisory vote on executive compensation be held
annually.
|
76
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PROPOSAL 5 APPROVAL OF
AMENDMENT AND RESTATEMENT OF STOCK PLAN FOR NONEMPLOYEE
DIRECTORS
|
PROPOSAL 5 APPROVAL
OF AMENDMENT AND RESTATEMENT OF STOCK PLAN FOR NONEMPLOYEE
DIRECTORS
Overview
The Hecla Mining Company Stock Plan for
Nonemployee Directors (the Director Stock Plan) originally became effective
following shareholder approval on May 5, 1995. The Director Stock Plan was
subsequently amended, in each instance with the approval of our shareholders, on
July 18, 2002, February 25, 2004, May 6, 2005, December 10, 2007, and May 24,
2012.
We are now asking our shareholders to
approve an amendment and restatement of the Director Stock Plan, which amendment
and restatement was approved by the Board on February 21, 2017 (subject to
shareholder approval), and which would, among other things:
●
|
extend the expiration date of the plan to May 15,
2027;
|
●
|
eliminate nonemployee director
participation in the 2010 Stock Incentive Plan (and have nonemployee
directors receive stock awards solely under the Director Stock
Plan);
|
●
|
limit the events that constitute a
Change in Control (as defined below) under the plan;
|
●
|
increase the maximum number of
shares available for issuance under the plan by 2,000,000, from 1,000,000
currently (of which 434,776 remain available) to 3,000,000 (corresponding
with the termination of the nonemployee directors participation in the
2010 Stock Incentive Plan);
|
●
|
limit the amount of compensation
that may be paid to a nonemployee director in a calendar year, under
the
plan and all other Company director
compensation arrangements; and
|
●
|
place the powers and authorities
related to administration of the plan with the
Board.
|
The Director Stock Plan is intended to
help us attract and retain qualified persons to serve as nonemployee directors
of the Company and to solidify the common interests of those directors and our
shareholders in enhancing the value of our common stock. We believe that the
Director Stock Plan is an important tool in attracting and maintaining qualified
persons to serve on the Board and that it effectively aligns the interests of
Board members with those of our shareholders.
As of February 21, 2017, 434,776 shares of
common stock remained reserved for issuance to nonemployee directors under the
Director Stock Plan. On February 21, 2017, the Board approved, subject to
shareholder approval, an amendment of the Director Stock Plan that would make
available 3,000,000 shares of common stock be issued under the Director Stock
Plan and affect the other changes described above.
If our shareholders approve the amended
and restated Director Stock Plan, it will remain in effect until May 15, 2027,
unless it is terminated earlier by the Board. If our shareholders do not approve
the amended and restated Director Stock Plan, it will expire on July 17,
2017.
Description of Amended
and Restated Director Stock Plan
The following is a summary of the
principal features of the Director Stock Plan, as amended and restated. This
summary, however, does not purport to be a complete description of all the
provisions of the Director Stock Plan. A copy of the Director Stock Plan is
attached to this Proxy Statement as Appendix A.
Credit of
Shares
The Director Stock Plan provides that each
nonemployee director of the Company will be credited a stock retainer on
September 30 of each year in addition to any annual cash retainer paid to the
director. Currently, we have eight nonemployee directors on the Board.
Nonemployee
directors are members of the Board
who are not full-time employees of the Company or any subsidiary. Under the
Director Stock Plan, beginning in 2017, on September 30 of each year, each
nonemployee director will be credited a number of shares of our common stock
determined
2017 Proxy Statement
77
Table of Contents
PROPOSAL 5 APPROVAL OF AMENDMENT
AND RESTATEMENT OF STOCK PLAN FOR NONEMPLOYEE
DIRECTORS
|
by dividing the annual retainer payable to
the director for service on the Board for that year, by the average closing
price of our common stock on the NYSE for the prior calendar year. The Director
Stock Plan does not permit our
nonemployee
directors to receive awards under any other equity compensation plan of the
Company or any affiliate while participating in the Director Stock
Plan.
Contributions to the
Trust
A minimum of 25% of the annual stock
retainer under the Director Stock Plan will be contributed to a grantor trust
established by the Company. Each director may elect, prior to the first day of
the applicable year, to have a greater percentage contributed to the grantor
trust for that year. The remaining portion of the stock retainer will be
transferred to the nonemployee director as soon as practicable after the
applicable September 30. The trust shares will be held together with any
dividends and distributions with respect thereto, until they are delivered in
accordance with the terms of the Director Stock Plan. The assets of the trust
will remain subject to the claims of our creditors.
Nonemployee directors who join the Board
after
September 30 of any year will be credited
with a pro rata grant of shares when they join the Board. A minimum of 25% of
their stock retainers for that year will be contributed to the trust. Each
director may elect, within 30 days after becoming a participant in the Director
Stock Plan, to have a greater percentage contributed to the grantor trust for
that year. The remaining portion will be transferred to these directors as soon
as practicable after they become members of the Board.
Delivery of Trust
Shares
Under the Director Stock Plan, the shares
held in the trust will be delivered to the nonemployee director on (or beginning
on) the earliest to occur of: (1) death; (2) disability; (3) retirement from the
Board; (4) a cessation of the nonemployee directors Board service for any other
reason; (5) a change in control of the Company; or (6) a specified date elected
by the director that is at least two years after the stock retainer is credited
to the director.
Subject to certain restrictions,
nonemployee directors may elect delivery of their trust shares under the
Director Stock Plan in annual installments over 5, 10 or 15 years
if the delivery event is death, disability or retirement. If
the delivery event is normal cessation from Board service, a change in control
of the Company or a specified date, all trust shares will be delivered in one
lump sum. Upon delivery, a nonemployee director will receive the trust shares
plus (1) any dividends and distributions that the nonemployee director would
have received with respect to the trust shares if such shares had been delivered
at the time they were credited, and (2) interest at a rate equal to our cost of
funds on all such distributions from the date they would have been received
through the date of delivery.
Change in
Control
Under the Director Stock Plan, a change in
control occurs if (1) a person or entity acquires 50% or more of either the fair
market value of the outstanding common stock of the Company or the combined
voting power of the outstanding voting securities entitled to vote in an
election of directors (subject to certain exclusions); (2) a person or entity
acquires 30% or more of the combined voting power of the Company during a
12-month period (subject to certain exclusions); (3) a majority of the incumbent
directors are replaced during any 12-month period by directors whose appointment
is not endorsed by a majority of the incumbent
directors; or (4) a person acquires assets of the Company during a 12-month
period that have a total gross fair market value of at least 40% of the gross
fair market value of all of the assets of the Company (subject to certain
exclusions). If an amount or benefit under the Director Stock Plan is considered
deferred compensation under Internal Revenue Code Section 409A and would be
affected by a change in control, the amount or benefit is subject to the change
in control also constituting a change in control event under Section
409A.
Number of Authorized
Shares
If the amended and restated Director Stock
Plan is approved by our shareholders, the maximum number of shares of our common
stock that may be issued under
the plan will be
3,000,000. In the event of any change in the common stock by reason of any stock
dividend, split, split-up, split-off, spin-off, combination of
shares,
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PROPOSAL 5 APPROVAL OF
AMENDMENT AND RESTATEMENT OF STOCK PLAN FOR NONEMPLOYEE
DIRECTORS
|
exchange of shares, an offering of
warrants or rights to purchase common stock at a price below its fair market
value, reclassification, recapitalization, reorganization, reincorporation,
merger, consolidation or other change
in
capitalization, appropriate adjustment will be made by the Board in the number
and kind of shares subject to the Director Stock Plan.
Annual Director
Compensation Limit
Under the Director Stock Plan, the maximum
value of stock retainers credited during any calendar year to any nonemployee
director, taken together with any cash fees and the value of any awards granted
pursuant to any other
equity compensation plan of
the Company or an affiliate, may not exceed (i) $900,000 for the Chair of the
Board and (ii) $675,000 for each nonemployee director other than the Chair of
the Board.
Administration
The Director Stock Plan will be
administered by the Board. The Board will have the full power and authority to
take all actions and make all determinations required or provided for under the
Director Stock Plan and to take all other actions that the Board may deem
necessary or appropriate for the administration of the plan. All actions by the
Board
under the Director Stock Plan will be in
the Boards sole discretion and will be final, binding and conclusive. The Board
may delegate its responsibilities and authority under the Director Stock Plan to
the Compensation Committee or such other committee as it deems
appropriate.
Term, Amendment and
Termination
If the amended and restated Director Stock
Plan is approved by our shareholders, it will remain in effect until May 15,
2027, unless it is terminated earlier by the Board. If the amended and restated
Director Stock Plan is not so approved it will expire July 17, 2017. The Board
may from time to time amend or suspend the Director Stock Plan without further
approval of our shareholders, unless the Board determines that shareholder
approval is required. In addition, the plan may
not be amended without shareholder approval to the extent such approval is
otherwise required by law or agreement, or stock exchange rule. The Board may
terminate the Director Stock Plan at any time subject to Section 409A. No
amendment or suspension of the Director Stock Plan may, without the consent of
the affected director, materially impair the rights or obligations of the
director.
Federal Income Tax
Consequences
The following is a brief summary of the
U.S. federal income tax consequences of the Director Stock Plan generally
applicable to the Company and to participants in the plan who are subject to
U.S. federal taxes. The summary is based on the Internal Revenue Code,
applicable Treasury Regulations and administrative and judicial interpretations
thereof, each as in effect on the date of this Proxy Statement, and is,
therefore, subject to future changes in the law, possibly with retroactive
effect. The summary is general in nature and does not purport to be legal or tax
advice. Furthermore, the summary does not address issues relating to any U.S.
gift or estate tax consequences or the consequences of any state, local or
foreign tax laws.
A nonemployee director generally will
recognize taxable income upon the delivery of shares to the director
under the Director Stock Plan. The amount of
income generally will equal the fair market value of the shares delivered,
measured on the date the nonemployee director recognizes the compensation
income. Dividends and other distributions that are made with respect to plan
awards prior to delivery of shares will also be taxed as compensation income to
the nonemployee directors when received by them, as will any interest paid
thereon. The Company, in computing its federal income tax, will generally be
entitled to compensation deductions at the same times and in the same amounts as
the nonemployee directors recognize taxable compensation income.
For more information about the Director
Stock Plan and payments made thereunder, please see Compensation of
Non-Management Directors beginning on page 26.
2017 Proxy Statement
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PROPOSAL 5 APPROVAL OF AMENDMENT
AND RESTATEMENT OF STOCK PLAN FOR NONEMPLOYEE
DIRECTORS
|
New Plan
Benefits
The following table shows the dollar
values that the individuals and groups referred to below will receive in 2017 if
the Director Stock Plan is approved by the Companys shareholders at this Annual
Meeting (based on the $100,000 annual retainer payable to nonemployee directors of the Company as of the Record
Date, which annual retainer amount is subject to change). Executive officers,
employee directors and employees of the Company are not eligible to participate
in the Director Stock Plan.
New Plan
Benefits
Name and
Position
|
Dollar
Value
|
|
Number of
Shares
|
Phillips S. Baker, Jr., President and CEO
|
$0
|
|
|
Lindsay A. Hall, Senior Vice President and CFO
|
$0
|
|
|
Lawrence P. Radford, Senior Vice President -
Operations
|
$0
|
|
|
Dr.
Dean W.A. McDonald, Senior Vice President - Exploration
|
$0
|
|
|
David C. Sienko, Vice President - General
Counsel
|
$0
|
|
|
Executive group
|
$0
|
|
|
Non-Executive Director Group
|
$100,000
1
|
|
2
|
Non-Executive Officer Group
|
$0
|
|
|
1
|
Represents the amount to be
received by each nonemployee director based on the annual retainer payable
as of the Record Date. The aggregate value of annual awards to all
nonemployee directors under the Director Stock Plan will depend on (1) the
amount of the annual retainer payable to such directors on September 30 of
each year and (2) the number of such directors in office on September 30
of each year, both of which are subject to change. If the Director Stock
Plan is approved by the Companys shareholders at the 2017 Annual Meeting,
and the amount of the annual retainer payable to nonemployee directors and
the number of such directors remains unchanged from the Record Date, the
aggregate value of awards to all nonemployee directors for 2017 would be
$800,000.
|
2
|
On September 30, 2017, each
nonemployee director will be credited a number of shares of our common
stock determined by dividing the annual retainer payable to nonemployee
directors on such date (which annual retainer currently is $100,000) by
the average closing price of our common stock on the NYSE for the prior
calendar year.
|
|
The Board
recommends shareholders vote FOR the approval of the Amended and
Restated Hecla Mining Company Stock Plan for Nonemployee Directors in
substantially the same form as included in Appendix A to this Proxy
Statement.
|
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PROPOSAL 6 APPROVAL OF
THE AMENDMENT TO OUR CERTIFICATE OF INCORPORATION INCREASING THE NUMBER OF
AUTHORIZED SHARES OF OUR COMMON STOCK
|
PROPOSAL 6
APPROVAL OF THE AMENDMENT TO OUR CERTIFICATE OF INCORPORATION INCREASING THE
NUMBER OF AUTHORIZED SHARES OF OUR COMMON STOCK
The Board believes that it is in the
Companys best interest to approve a proposal to amend our Certificate of
Incorporation to increase the number of authorized shares of common stock from
500,000,000 to 750,000,000. The terms, including the par value, of the common
stock will remain unchanged.
As of March 27, 2017, 395,826,290 of our
500,000,000 currently authorized shares of common stock were issued
and outstanding. Of the remaining authorized shares of common
stock, 9,759,530 shares in the aggregate were reserved for issuance in
connection with: (i) our stock-based compensation plans; and (ii) conversion of
our outstanding Series B Cumulative Preferred Stock. As of March 27, 2017,
157,816 shares of our 5,000,000 currently authorized shares of preferred stock
were issued and outstanding.
Reasons for
the Proposed Increase in Authorized Capital
The purpose of the proposed amendment is
to allow us to have a sufficient number of shares of authorized and unissued
common stock to be used for such corporate purposes as may, from time to time,
be considered advisable by the Board. Having such shares available for issuance
in the future will give Hecla greater flexibility and will allow the shares to
be issued as determined by the Board without the expense and delay of a special
meeting of our shareholders to approve the additional authorized capital stock.
The corporate purposes for which we may
issue
common stock could include, without limitation, acquisitions of other companies
or assets, exchange offers for debt or other equity, new equity offerings to
raise capital, stock splits, paying stock dividends, and providing incentives to
employees, officers and directors pursuant to our various stock plans or in
connection with the adoption of additional stock-based incentive plans, such as
the amended and restated Stock Plan for Nonemployee Directors (See Proposal 5).
The Board will determine the terms of any issuance of additional
shares.
Possible
Effects of the Proposed Amendment
The increase in our authorized common
stock will not have any immediate effect on the rights of existing shareholders.
To the extent that the additional authorized shares are issued in the future,
such shares will have a dilutive effect on the voting power and percentage
equity ownership of our existing shareholders and, depending on the price at
which they are issued, may have a dilutive effect on both the book value and
market value of shares owned by our existing shareholders. The holders of our
common stock have no preemptive rights to subscribe for or purchase any
additional shares of our common stock that may be issued in the
future.
We have not proposed the increase in the
authorized number of shares with the intention of using the additional
shares for anti-takeover purposes, although we
could theoretically use the additional shares to make it more difficult or to
discourage an attempt to acquire control of the Company because the issuance of
such additional shares could be used to dilute the stock ownership or voting
rights of a person seeking to obtain control of us.
No further action or authorization by our
shareholders would be necessary prior to the issuance of the additional shares
authorized by the proposed amendment to our Certificate of Incorporation unless
required in a particular transaction by applicable provisions of the Certificate
of Incorporation, law or by the regulations of a stock exchange or other
regulatory agency. Therefore, there may be instances where we have a sufficient
number of
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PROPOSAL 6 APPROVAL OF THE
AMENDMENT TO OUR CERTIFICATE OF INCORPORATION INCREASING THE NUMBER OF
AUTHORIZED SHARES OF OUR COMMON STOCK
|
authorized but unissued shares to engage
in a transaction, but we would still need shareholder approval to enter into the
transactions.
We do not have any current plans,
agreements or understandings for stock issuances which in the aggregate would
involve the use of a number of shares that exceeds the amount currently
authorized but unissued.
On February 21, 2017, the Board
unanimously adopted resolutions setting forth the proposed amendment to our
Certificate of Incorporation declaring its advisability and directing that the
proposed amendment be submitted to the shareholders for their approval at the
Annual Meeting. If adopted by the shareholders, the amendment will become
effective upon filing of an appropriate amendment to our Certificate of
Incorporation with the Delaware Secretary of State.
The full text of the proposed revised
Section 1 of Article IV of our Certificate of Incorporation is set forth as
follows:
ARTICLE IV.
Capital Stock
Section 1.
Authorized Capital Stock
. The Corporation will be
authorized to issue two classes of shares of Capital Stock to be designated,
respectively, Preferred Stock and Common Stock; the total number of shares
of Capital Stock which the Corporation shall have authority to issue is
755,000,000; the total number of shares of Preferred Stock shall be 5,000,000,
and each such share shall have a par value of $0.25; the total number of shares
of Common Stock shall be 750,000,000, and each such share shall have a par value
of $0.25.
|
The Board
recommends shareholders vote FOR the amendment to our Certificate of
Incorporation increasing the number of authorized shares of common
stock.
|
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PROPOSAL 7 APPROVAL OF
AMENDMENTS TO OUR CERTIFICATE OF INCORPORATION AND BYLAWS TO REMOVE
CERTAIN 80% SUPERMAJORITY VOTING PROVISIONS
|
PROPOSAL 7
APPROVAL OF AMENDMENTS TO OUR 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 7 and Proposal 8. 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 7
and Proposal 8. 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 2016 Annual Shareholder Meeting. While shareholders
owning almost 46% of our Voting Stock voted in favor of these amendments in
2016, the level of support was not sufficient to approve the amendments. See
Required Vote, Our Boards Recommendation and
Additional Information
on page 85. Because
our Board of Directors continues to believe that these amendments are
appropriate, we are again asking shareholders to vote For these proposed
amendments.
As described more fully under Proposal 8
on page 86, in 2014 and 2016, 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 or 2016, and as a result, we were unable to implement
the Special Meeting Proposal.
We are again proposing the Special Meeting
Proposal at our 2017 Annual Meeting of Shareholders. It is described in Proposal
8 on page 86.
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
on page 87.
2017 Proxy Statement
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PROPOSAL 7 APPROVAL OF AMENDMENTS
TO OUR CERTIFICATE OF INCORPORATION AND BYLAWS TO REMOVE CERTAIN 80%
SUPERMAJORITY VOTING PROVISIONS
|
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 at least an
80% supermajority vote (this supermajority voting provision is in Article V of
the Certificate). Likewise, the Certificate currently states that at least an
80%
supermajority vote 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.
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 Bylaw 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 7 APPROVAL OF
AMENDMENTS TO OUR CERTIFICATE OF INCORPORATION AND BYLAWS TO REMOVE
CERTAIN 80% SUPERMAJORITY VOTING PROVISIONS
|
Proposed
Amendments to Certificate and Bylaws
This Proposal 7 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 7, we propose:
●
|
to amend the 80% 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 80% 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 80% 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 7 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 on page 86 in Proposal 8 in the future (if it is not approved
at the 2017 Annual Meeting) may be improved if the changes to the Certificate
and Bylaws described in this Proposal 7 are approved by our shareholders.
Although Proposal 7 and Proposal 8 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 7 is
passed but Proposal 8 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 80%
supermajority voting requirements described herein. As a result, and based upon
the recommendation of the Governance Committee,
our Board, at its meeting on February 21, 2017, approved and declared
advisable and in our shareholders best interests, the amendments to the
Certificate and Bylaws described in this Proposal 7.
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 B
and
Appendix
C
, 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.
|
2017 Proxy Statement
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PROPOSAL 8 APPROVAL OF AMENDMENTS
TO OUR CERTIFICATE OF INCORPORATION AND BYLAWS TO PERMIT SHAREHOLDERS TO
CALL SPECIAL MEETINGS OF SHAREHOLDERS UNDER CERTAIN
CIRCUMSTANCES
|
PROPOSAL 8
APPROVAL OF AMENDMENTS TO OUR CERTIFICATE OF INCORPORATION AND BYLAWS TO
PERMIT SHAREHOLDERS TO CALL SPECIAL MEETINGS OF
SHAREHOLDERS UNDER CERTAIN
CIRCUMSTANCES
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 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, 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 and 2016 Annual Shareholder Meetings. While
shareholders owning almost 41% and 47% of our Voting Stock voted in favor of
these amendments in 2014 and 2016, respectively, the level of support was not
sufficient to approve the amendments. See
Required Vote, Our Boards Recommendation and Additional
Information
on page 87. 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 7, 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 7 is passed, we believe it will improve the chances that
an amendment permitting shareholders to call special meetings of shareholders
under certain circumstances, if proposed in the future, would be adopted (if
Proposal 8 is not adopted at the 2017 Annual Meeting). However, even if Proposal
7 is approved by the required vote of our shareholders, there is no assurance
that this Proposal 8 will be approved by the required vote of our shareholders.
See
Required Vote, Our Boards Recommendation
and Additional Information
on page
87.
Proposed
Amendments to Certificate and Bylaws
This Proposal 8 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
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PROPOSAL 8 APPROVAL OF
AMENDMENTS TO OUR CERTIFICATE OF INCORPORATION AND BYLAWS TO PERMIT
SHAREHOLDERS TO CALL SPECIAL MEETINGS OF SHAREHOLDERS UNDER CERTAIN
CIRCUMSTANCES
|
could divert their attention from
performing their primary functions: to oversee and operate our business in the
best interests of 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 8 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
to call special meetings under certain circumstances as described herein. As a
result, and based upon the recommendation of the Governance Committee, our
Board, at its meeting on February 21, 2017, approved and declared advisable and
in our shareholders, best interests the amendments to the Certificate and
Bylaws described in this Proposal 8.
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 D
and
Appendix E
, 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 shareholders vote FOR the amendments to the Certificate of
Incorporation and Bylaws to permit shareholders to call special meetings
of shareholders under certain
circumstances.
|
2017 Proxy Statement
87
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
of any award is determined by the closing stock price of our common stock on the
NYSE on the date of grant or a fixed, future date specified at the time of
grant. In addition, the Compensation Committee typically makes equity grants to
NEOs in the first half of the year.
Stock
Ownership Guidelines
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 required 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 within five years of their appointment to the Board. Any directors
appointed or elected after June 2012 are expected 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, and for the
other executive officers, two times base salary. These guidelines shall be
achieved by the later of (i) June 2017 or (ii) five years after the executive
officer is hired to such position. Unvested RSUs and shares held directly are
considered owned for
purposes of the guidelines.
If an executive officer becomes subject to a greater ownership amount due to a
promotion or an increase in base salary, he or she shall meet the higher
ownership requirement within three years.
Because of fluctuations in the Companys
stock price, in February 2016, the Compensation Committee and the Board 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 generally
may not sell or transfer any shares until the threshold has again been
achieved.
The following tables summarize the
non-management directors and NEOs stock ownership guidelines and their status
as of December 31, 2016, based on the average closing price of our common stock
on the NYSE for calendar year 2016 ($4.5919). As of December 31, 2016, all NEOs
met the guidelines. In the calculations for our NEOs, we include shares directly
held and unvested RSUs. We do not include unexercised stock options or unvested
performance-based shares.
88
www.hecla-mining.com
Table of Contents
STOCK OWNERSHIP
INFORMATION
|
Non-Management Director Stock
Ownership as of December 31, 2016
Director
1
|
|
Annual
Retainer
($)
|
|
X
Annual
Retainer
|
|
Total Value
of Shares to
be
Held
($)
|
|
Shares
Held
Directly
(#)
|
|
Shares
Held
in
Directors
Trust
2
(#)
|
|
Total
Shares
(#)
|
|
Total Value of
Shares Held
by
Director
($4.5919)
3
($)
|
|
Meets
Guidelines
|
Crumley
|
|
156,000
|
|
3x
|
|
468,000
|
|
116,536
|
|
83,555
|
|
200,091
|
|
918,798
|
|
Yes
|
Johnson
4
|
|
66,000
|
|
3x
|
|
198,000
|
|
17,273
|
|
11,216
|
|
28,489
|
|
130,819
|
|
No
|
Nethercutt
|
|
66,000
|
|
3x
|
|
198,000
|
|
60,536
|
|
58,854
|
|
119,390
|
|
548,227
|
|
Yes
|
Ralbovsky
4
|
|
66,000
|
|
3x
|
|
198,000
|
|
17,273
|
|
11,216
|
|
28,489
|
|
130,819
|
|
No
|
Rogers
|
|
66,000
|
|
3x
|
|
198,000
|
|
100,536
|
|
52,602
|
|
153,138
|
|
703,194
|
|
Yes
|
Stanley
|
|
66,000
|
|
3x
|
|
198,000
|
|
100,536
|
|
52,602
|
|
153,138
|
|
703,194
|
|
Yes
|
Taylor
|
|
66,000
|
|
3x
|
|
198,000
|
|
30,000
|
|
77,016
|
|
107,016
|
|
491,407
|
|
Yes
|
1
|
Catherine J. Boggs joined the
Board effective as of January 1, 2017, and thus is not reflected in this
table.
|
2
|
As of December 31, 2016, 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.
|
3
|
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 2016 was
$4.5919.
|
4
|
Messrs. Johnson and Ralbovsky
joined the Board in March 2016 and have until March 2021 to comply with
the guidelines.
|
Executive Stock Ownership as of
December 31, 2016
NEO
|
|
Annual
Base
Salary
($)
|
|
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
12/31/16
($4.5919)
1
($)
|
|
Meets
Guidelines
|
Baker
|
|
605,000
|
|
6x
|
|
3,630,000
|
|
2,375,476
|
2,3
|
|
300,753
|
|
2,676,229
|
|
12,288,976
|
|
Yes
|
Hall
4
|
|
380,000
|
|
2x
|
|
760,000
|
|
0
|
|
|
55,377
|
|
55,377
|
|
254,286
|
|
No
|
Radford
|
|
380,000
|
|
2x
|
|
760,000
|
|
367,113
|
3
|
|
203,777
|
|
570,890
|
|
2,621,470
|
|
Yes
|
McDonald
|
|
275,000
|
|
2x
|
|
550,000
|
|
295,502
|
|
|
180,451
|
|
475,953
|
|
2,185,529
|
|
Yes
|
Sienko
|
|
250,000
|
|
2x
|
|
500,000
|
|
251,962
|
3
|
|
92,632
|
|
344,594
|
|
1,582,341
|
|
Yes
|
1
|
Average closing price of Heclas
common stock on the NYSE for calendar year 2016.
|
2
|
Includes 888,909 shares deferred
under the KEDCP.
|
3
|
Includes Hecla Mining Company
common shares held in their 401(k) account.
|
4
|
Mr. Hall joined the Company in
July 2016. He has five years from the date of hire to comply with the
guidelines.
|
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 executive officer of Hecla, and by all current directors and
executive officers as a group, as of March 27, 2017. On that date, all such
persons together beneficially owned an aggregate of 1.5% 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, but has not done so.
2017 Proxy Statement
89
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.
|
|
|
|
1,469,596
1
|
|
Direct
|
2
|
|
|
|
President and CEO
|
|
|
|
16,998
|
|
401(k)
Plan
|
|
|
|
|
|
|
|
|
300,753
|
|
RSU
|
3
|
|
|
|
|
|
|
|
1,273,834
|
|
Deferred
|
4
|
|
|
|
|
|
|
|
318,554
|
|
Performance-based
|
5
|
|
|
|
|
|
Common
|
|
3,379,735
|
|
|
|
|
*
|
|
Robert D. Brown
|
|
|
|
33,715
|
|
Direct
|
2
|
|
|
|
Vice President Corporate
Development
|
|
|
|
45,455
|
|
RSU
|
3
|
|
|
|
|
|
Common
|
|
79,170
|
|
|
|
|
*
|
|
Lindsay A. Hall
|
|
|
|
12,331
|
|
Direct
|
2
|
|
|
|
Senior Vice President and Chief Financial
Officer
|
|
|
|
55,377
|
|
RSU
|
3
|
|
|
|
|
|
Common
|
|
67,708
|
|
|
|
|
*
|
|
Dr. Dean W.A. McDonald
|
|
|
|
312,960
|
|
Direct
|
2
|
|
|
|
Senior Vice President
Exploration
|
|
|
|
180,451
|
|
RSU
|
3
|
|
|
|
|
|
Common
|
|
493,411
|
|
|
|
|
*
|
|
Lawrence P. Radford
|
|
|
|
385,984
6
|
|
Direct
|
2
|
|
|
|
Senior Vice President Operations
|
|
|
|
15,196
|
|
401(k)
Plan
|
|
|
|
|
|
|
|
|
203,777
|
|
RSU
|
3
|
|
|
|
|
|
Common
|
|
604,957
|
|
|
|
|
*
|
|
David C. Sienko
|
|
|
|
268,508
|
|
Direct
|
2
|
|
|
|
Vice President and General
Counsel
|
|
|
|
1,471
|
|
401(k) Plan
|
|
|
|
|
|
|
|
|
92,632
|
|
RSU
|
3
|
|
|
|
|
|
Common
|
|
362,611
|
|
|
|
|
*
|
|
Catherine J. Boggs
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
|
|
3,683
|
|
Indirect
|
7
|
|
|
|
|
|
Common
|
|
3,683
|
|
|
|
|
*
|
|
Ted Crumley
|
|
|
|
116,536
|
|
Direct
|
2
|
|
|
|
Director
|
|
|
|
83,555
|
|
Indirect
|
7
|
|
|
|
|
|
Common
|
|
200,091
|
|
|
|
|
*
|
|
George R. Johnson
|
|
|
|
17,273
|
|
Direct
|
2
|
|
|
|
Director
|
|
|
|
11,216
|
|
Indirect
|
7
|
|
|
|
|
|
Common
|
|
28,489
|
|
|
|
|
*
|
|
Stephen F. Ralbovsky
|
|
|
|
17,273
|
|
Direct
|
2
|
|
|
|
Director
|
|
|
|
11,216
|
|
Indirect
|
7
|
|
|
|
|
|
Common
|
|
28,489
|
|
|
|
|
*
|
|
George R. Nethercutt, Jr.
|
|
|
|
60,536
|
|
Direct
|
2
|
|
|
|
Director
|
|
|
|
58,854
|
|
Indirect
|
7
|
|
|
|
|
|
Common
|
|
119,390
|
|
|
|
|
*
|
|
Terry V. Rogers
|
|
|
|
100,536
|
|
Direct
|
2
|
|
|
|
Director
|
|
|
|
52,602
|
|
Indirect
|
7
|
|
|
|
|
|
Common
|
|
153,138
|
|
|
|
|
*
|
|
Charles B. Stanley
|
|
|
|
100,536
|
|
Direct
|
2
|
|
|
|
Director
|
|
|
|
52,602
|
|
Indirect
|
7
|
|
|
|
|
|
Common
|
|
153,138
|
|
|
|
|
*
|
|
Dr. Anthony P. Taylor
|
|
|
|
30,000
|
|
Direct
|
2
|
|
|
|
Director
|
|
|
|
77,016
|
|
Indirect
|
7
|
|
|
|
|
|
Common
|
|
107,016
|
|
|
|
|
*
|
|
All current directors, nominee directors and officers as
a group
|
|
|
|
|
|
|
|
|
|
|
(14 individuals)
|
|
Common
|
|
5,781,026
|
|
|
|
|
1.5
|
%
|
90
www.hecla-mining.com
Table of Contents
STOCK OWNERSHIP
INFORMATION
|
*
|
Represents
beneficial ownership of less than one percent, based upon 395,826,290
shares of our common stock issued and outstanding as of March 27,
2017.
|
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 KEDCP or 2010 Stock Incentive Plan that have not
vested. See footnote 1 of the
Outstanding Equity Awards at Calendar Year-End for 2016
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 KEDCP.
|
5
|
Performance-based Shares means
performance-based equity, based on a three-year TSR. See
Performance-based Shares
on page 51 and
Outstanding Equity
Awards at Calendar Year-End for 2016
table on page 64.
|
6
|
All shares are jointly held with
Mr. Radfords spouse, as to which Mr. Radford 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
26.
|
To our knowledge, as of March 27, 2017,
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
|
|
Dimensional Fund Advisors
LP
1
|
|
33,140,890
|
|
8.4
|
%
|
|
|
Building One
|
|
|
|
|
|
|
|
6300 Bee Cave Rd.
|
|
|
|
|
|
|
|
Austin, TX 78746
|
|
|
|
|
|
Common
|
|
The Vanguard Group,
Inc.
2
|
|
30,385,638
|
|
7.8
|
%
|
|
|
100 Vanguard
Blvd.
|
|
|
|
|
|
|
|
Malvern, PA 19355
|
|
|
|
|
|
Common
|
|
BlackRock, Inc.
3
|
|
24,740,122
|
|
6.3
|
%
|
|
|
55 East 52
nd
Street
|
|
|
|
|
|
|
|
New
York, NY 10055
|
|
|
|
|
|
Common
|
|
Van Eck Associates
Corporation
4
|
|
23,577,634
|
|
6.0
|
%
|
|
|
666 Third Ave.
9
th
Floor
|
|
|
|
|
|
|
|
New York, NY 10017
|
|
|
|
|
|
1
|
Based solely on a Schedule 13G/A
filed on February 8, 2017, with the SEC by Dimensional Fund Advisors LP.
Dimensional Fund Advisors LP has sole voting power with respect to
32,712,893 shares and sole dispositive power with regard to 33,140,890
shares.
|
2
|
Based solely on a Schedule 13G/A
filed on February 13, 2017, with the SEC by The Vanguard Group, Inc. The
Vanguard Group, Inc. has sole voting power with respect to 460,380 shares,
shared voting power with respect to 66,071 shares, sole dispositive power
with respect to 29,879,375 shares, and shared dispositive power with
respect to 506,263 shares.
|
3
|
Based solely on a Schedule 13G/A
filed on January 24, 2017, with the SEC by BlackRock, Inc. BlackRock, Inc.
has sole voting power with respect to 23,882,776 shares and sole
dispositive power with regard to 24,740,122 shares.
|
4
|
Based solely on a Schedule 13G/A
filed on February 13, 2017, with the SEC by Van Eck Associates
Corporation. Van Eck Associates Corporation has sole voting and
dispositive power with respect to all shares.
|
2017 Proxy Statement
91
Table of Contents
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.
To our knowledge, 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, 2016, all filing requirements applicable to our
officers, directors and greater than 10% owners of our common stock were timely
satisfied, with the exception of a (i) Form 3 for Robert D. Brown, filed on
March 3, 2016, relating to his appointment on January 4, 2016, which was due to
an administrative error, and (ii) Form 4 for George R. Nethercutt, Jr., filed on
July 13, 2016, which was due to late notice received regarding a sale of stock
on July 1, 2016.
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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, 395,826,290 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.
Broker
Non-Votes
A broker non-vote occurs when a broker
or other nominee who holds shares in street name for a client returns a proxy
but provides no instruction as to how shares should be voted on a particular
non-routine matter. The Dodd-Frank Act and stock exchange rules prevent
brokers from casting votes on non-routine matters.
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 2 (Ratification of Appointment of BDO USA, LLP) and
Proposal 6 (Approval of Amendment to the Companys Certificate of Incorporation
to Increase Authorized Shares) are routine matters. Proposal 1 (Election of
Directors), Proposal 3 (Approval of Named Executive Officer Compensation),
Proposal 4 (Approval of Say-on-Frequency), Proposal 5 (Approval of Amendment and
Restatement of Director Stock Plan), Proposal 7 (Approval of Amendments to the
Companys Certificate of Incorporation and Bylaws to Remove Certain 80%
Supermajority Voting Provisions), and Proposal 8 (Approval of Amendments to the
Companys Certificate of Incorporation and Bylaws to Permit Shareholders to Call
Special Meetings Under Certain Circumstances), are non-routine matters.
Accordingly, if you do not direct your broker how to vote for a director in
Proposal 1 or how to vote for Proposals 3, 4, 5, 7 and 8, 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 the affirmative vote of a majority of votes cast at
the Annual Meeting, whether
in person or by
proxy. Under a majority of votes cast standard, the shares voted for a nominee
must exceed the number voted against that nominee. Shareholders may vote
for, against or abstain with respect to this proposal. Abstentions and
broker non-votes are not counted as votes cast, and thus will have no effect on
the outcome of the vote. A properly executed proxy card marked AGAINST with
respect to the election of directors will have an effect on the outcome of the
vote. If the votes cast against an incumbent director exceeds the number of
votes cast for the director, the director will not be elected, will remain on
the board as a holdover director and must stand for election at the next annual
meeting of shareholders, absent his or her earlier resignation or removal. See
Corporate Governance and Related
Matters
and
Corporate Governance Guidelines
on
page 24 for a description of our director resignation policy.
You may vote FOR, AGAINST, or
ABSTAIN on the nominees for election as directors.
Proposal 2 Ratification of the
Appointment of BDO USA, LLP as Independent Auditors.
Under the Sarbanes-Oxley Act of 2002, the Audit Committee has the sole
authority to appoint the independent registered public accounting firm for the
Company. However, the Board feels that it is important for the shareholders to
approve the selection
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of BDO USA, LLP. This proposal requires
the affirmative vote of a majority of votes cast at the Annual Meeting, whether
in person or by proxy. Abstentions and broker non-votes are not counted as votes
cast, and thus will have no effect on the outcome of the vote. Votes marked
against will have an effect on the outcome of the vote. The appointment of our
independent registered public accounting firm for calendar year 2017 is
considered a routine matter and brokers that are not directed how to vote are
permitted to vote shares held in street name for their customers on this
proposal.
You may vote FOR, AGAINST, or
ABSTAIN on the proposal to ratify the appointment of BDO USA, LLP as our
independent registered public accounting firm for 2017.
Proposal 3 Advisory Vote to Approve
Executive Compensation.
For more information
on approval of our executive compensation see Proposal 3 Advisory Vote to
Approve Executive Officer Compensation beginning on page 75. The advisory vote
on executive compensation will require the affirmative vote of a majority of
votes cast at the Annual Meeting, whether in person or by proxy. Under a
majority of votes cast standard, the shares voted for Proposal 3 must exceed
the number voted against Proposal 3 for the proposal to be approved.
Abstentions and broker non-votes are not counted as votes cast for this purpose
and will have no effect on the outcome of the vote. Votes marked against will
have an effect on the outcome of the vote. Even though your vote is advisory and
therefore will not be binding on the Company, the Boards Compensation Committee
will review the voting results and take them into consideration when making
future decisions regarding executive compensation.
You may vote FOR, AGAINST OR ABSTAIN
on the proposal to approve the compensation of our named executive
officers.
Proposal 4 Advisory Vote on the
Frequency of Future Advisory Votes on Executive Compensation
. The frequency of the advisory vote on executive compensation
receiving the greatest number of votes (every one year, every two years, or
every three years) will be considered the frequency recommended by shareholders.
Abstentions and broker non-votes will not affect the outcome of voting on this
proposal. Even though your vote is advisory and therefore will not be binding on
the Company, the Board will review the voting results and take them into
consideration when making future decisions regarding the frequency of the
advisory vote on executive compensation.
You may vote to have the advisory vote
held every ONE, TWO or THREE years, or you may ABSTAIN.
Proposal 5 Approval of the Amendment
and Restatement of the Hecla Mining Company Stock Plan for Nonemployee
Directors.
This proposal requires the
affirmative vote of a majority of votes cast at the Annual Meeting, whether in
person or by proxy. Under a majority of votes cast standard, the shares voted
for Proposal 5 must exceed the number voted against Proposal 5 for the
proposal to be approved. Abstentions not voted are not counted as cast for this
purpose and will have no effect on the outcome of the vote. Votes marked
against will have an effect on the outcome of the vote.
You may vote FOR, AGAINST OR ABSTAIN
on the proposal to approve the amended and restated Hecla Mining Company Stock
Plan for Nonemployee Directors.
Proposal 6 Approval of the Amendment
to our Certificate of Incorporation Increasing the Number of Authorized Shares
of our Common Stock.
Adoption of the proposed
amendment to our Certificate of Incorporation increasing the number of
authorized shares of our common stock will require the affirmative vote of the
holders of a majority of outstanding shares of common stock entitled to vote
thereon. Abstentions will have the effect of a vote against the proposal. A
broker holding shares in street name may vote on this routine proposal in the
absence of instructions from the beneficial owner. If a broker does not exercise
this authority, it will have the effect of a vote against the
proposal.
You may vote FOR, AGAINST OR ABSTAIN
on the proposal to approve the amendment to our Certificate of Incorporation
Increasing the Number of Authorized Shares of our Common Stock.
Proposal 7 Approval of Amendments to
our 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.
You may vote FOR, AGAINST OR ABSTAIN
on the proposal to approve the amendments to our Certificate of Incorporation
and Bylaws to Remove Certain 80% Supermajority Voting Provisions.
Proposal 8 Approval of Amendments to
our Certificate of Incorporation and Bylaws to Permit Shareholders to Call
Special Meetings of Shareholders Under Certain Circumstances.
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.
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You may vote FOR, AGAINST OR ABSTAIN
on the proposal to approve the amendments to our Certificate of Incorporation
and Bylaws to Permit Shareholders to Call Special Meetings of Shareholders Under
Certain Circumstances.
Discretionary voting by proxies on
other matters.
Aside from the: (i) election
of two directors; (ii) ratification of the appointment of BDO USA, LLP; (iii)
approval of executive compensation; (iv) advisory vote on Say-on-Frequency; (v)
approval of amended and restated Hecla Mining Company Stock Plan for Nonemployee
Directors; (vi) approval of amendment to our Certificate of Incorporation
increasing authorized shares; (vii) approval of
amendments to our Certificate of Incorporation and Bylaws to remove
certain 80% supermajority voting provisions; and (viii) approval of amendments
to our Certificate of Incorporation and Bylaws to permit shareholders to call
special meetings of shareholders under certain circumstances, we do not know of
any other proposal that may be presented at the Annual Meeting. However, if any
other business is properly presented at the Annual Meeting, your proxy gives
authority to Phillips S. Baker, Jr. and Michael B. White to vote on such matters
at their discretion. No other proposals have been timely submitted in accordance
with our Bylaws and we are not aware of any matters other than those described
in this Proxy Statement that will be acted upon at the Annual
Meeting.
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 (i) the election of all
nominees for Director as set forth under Election of Directors; (ii)
ratification of the appointment of the independent registered public
accountants; (iii) the advisory vote on executive compensation; (iv) a frequency
vote on executive compensation of One Year; (v) the amended and
restated
Hecla Mining Company Stock Plan on
Nonemployee Directors; (vi) the increase in authorized shares of our outstanding
common stock; (vii) the amendments to the Companys Certificate of Incorporation
and Bylaws to remove certain 80% supermajority voting provisions; and (viii) the
amendments to the Companys Certificate of Incorporation and Bylaws to permit
shareholders to call special meetings of shareholders under certain
circumstances.
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.
|
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To vote by proxy over the
Internet:
●
|
Have your proxy card or Notice available;
|
●
|
Log on to the Internet and visit the website noted on your
proxy card or Notice (www.proxyvote.com);
|
●
|
Follow the instructions provided; and
|
●
|
Do not mail your proxy
card.
|
To vote by proxy by
telephone:
●
|
Have your proxy card available;
|
●
|
Call the toll-free number listed on your proxy card
(1-800-690-6903);
|
●
|
Follow the recorded instructions; and
|
●
|
Do not mail your proxy
card.
|
To vote in person if you are a
registered shareholder of record:
●
|
Attend our Annual Meeting;
|
●
|
Bring a valid photo identification; and
|
●
|
Deliver your completed proxy card or ballot in
person.
|
To vote in person if you hold your
shares in street name (through a broker, financial institution or other
nominee):
●
|
Attend our Annual Meeting;
|
●
|
Bring a valid photo identification; and
|
●
|
Obtain from your broker a
document that allows you to vote the shares held for your benefit, attach
that document to your completed proxy card or ballot and deliver it in
person.
|
To vote your 401(k) Plan
shares:
If you participate in the Hecla Mining
Company Capital Accumulation Plan and hold shares of our common stock in your
plan account as of the Record Date, you will receive a request for voting
instructions from the plan trustee (Vanguard) with respect to your plan
shares. You are entitled to direct Vanguard how to vote your plan shares. If you
do not provide voting instructions to Vanguard by 11:59 p.m., Eastern Daylight
Time, on May 24, 2017, 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 Daylight Time, on May 24, 2017. 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.
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Rules for Attending the Annual
Meeting
Only a record or beneficial owner of
Heclas common stock as of the Record Date, the close of business on March 27,
2017, or a valid proxy or representative of such shareholder, may attend the
Annual Meeting in person, and they must comply with the admission requirements
below. Guests of shareholders will not be admitted to the Annual Meeting.
If you do not comply with the requirements set
forth below you will not be admitted to the Annual Meeting.
All attendees must register at the
registration desk and present appropriate documentation at the registration desk
prior to being admitted to the meeting, which includes:
●
|
Valid Photo Identification.
Any registered shareholder, beneficial (street name)
shareholder, or valid proxy or representative of such shareholder, must
present a valid, current form of government-issued photo identification,
such as a drivers license or passport, that matches the name on the
documentation described below.
|
●
|
Proof of
Ownership.
|
○
|
If you hold shares in
street name
(such as through a broker or bank), then
you must present proof of ownership, such as a brokerage statement or
letter from your bank or broker, demonstrating that you held our common
stock as of the Record Date.
|
○
|
If you hold shares in
registered form
, your record holders ownership as
of the Record Date must be verified on the list of registered shareholders
maintained by our transfer agent.
|
●
|
Proof of Representation.
If you are a representative of a shareholder, then you
must present valid legal documentation that demonstrates your authority to
represent that shareholder.
We
reserve the right to limit the number of representatives who may represent
a shareholder at the meeting.
|
●
|
Proof of Valid
Proxy.
|
○
|
If you hold a proxy to vote shares at the Annual Meeting for a shareholder who holds shares in street name
(such as through a broker or a bank), then you must present:
|
■
|
Valid photo identification as described
above;
|
■
|
A written legal proxy from the
broker or bank holding shares to the street name holder that is assignable
and
signed by the street name holder; and
|
■
|
Proof of ownership, such as a brokerage
statement or letter from the bank or broker, demonstrating that the street
name holder who appointed you legal proxy held Hecla common stock as of
the Record Date.
|
○
|
If you hold a proxy to vote shares at the Annual Meeting for a shareholder who is a registered shareholder holder,
then
|
■
|
You must present valid photo
identification as described above;
|
■
|
You must provide a written legal proxy to you
signed by the registered shareholder; and
|
■
|
The registered shareholders ownership as of
the Record Date must be verified on the list of registered shareholders
maintained by our transfer agent.
|
For the safety of attendees, all boxes,
handbags and briefcases are subject to inspection upon registration. Cameras
(including cell phones with photographic capabilities), audio/video recording
devices and other electronic devices are not permitted at the
meeting.
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 Sodali LLC, 470 West Ave., Stamford, Connecticut to assist
in the solicitation of votes for an estimated fee of $9,000, 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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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, 2016, 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, 2016, 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 below. 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.
American Stock Transfer & Trust
Company
6201 15
th
Avenue
Brooklyn, New York 11219
Telephone:
1-800-937-5449
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
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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 25, 2017, at Heclas
corporate
offices, located at 6500 N. Mineral Dr., Suite 200, Coeur dAlene, Idaho, and at
our offices in Vancouver, at Hecla Canada Ltd., Suite 970, 800 W. Pender St.,
Vancouver, British Columbia, Canada.
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PROVISIONS OF OUR BYLAWS WITH RESPECT
TO SHAREHOLDER PROPOSALS AND NOMINATIONS FOR ELECTION AS DIRECTORS
|
PROVISIONS OF OUR 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 2018 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
120
th
day prior to such Annual Meeting of Shareholders and not later
than the close of business on the later of the 90
th
day prior to such
Annual Meeting of Shareholders or the 10
th
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 Exchange Act 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 2018 Annual
Meeting of Shareholders is January 26, 2018 (the 120
th
day preceding
the anniversary of the 2017 Annual Meeting) to February 25, 2018 (the
90
th
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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PROVISIONS OF OUR BYLAWS WITH RESPECT
TO SHAREHOLDER PROPOSALS AND NOMINATIONS FOR ELECTION AS DIRECTORS
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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
2018 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 11,
2017. 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.
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.
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By
Order of the Board of Directors
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Michael B. White
Corporate
Secretary
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April 10, 2017
2017 Proxy Statement
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APPENDIX A
HECLA MINING COMPANY STOCK PLAN
FOR
NONEMPLOYEE DIRECTORS
1.
Name of Plan
. This plan shall be known
as the Hecla Mining Company Stock Plan for Nonemployee
Directors
and is hereinafter referred to as the Plan.
2.
Purpose of Plan
. The purpose of the
Plan is to enable Hecla Mining Company, a Delaware corporation (the Corporation), to attract and retain
qualified persons to serve as members of the Corporations Board of Directors
(the Board) from time to time (each, a Director), to enhance the equity
interest of Directors in the Corporation and to solidify the common interests of
Directors and stockholders of the Corporation (Stockholders) in enhancing the
value of the Corporations common stock, par value $0.25 per share (the Common
Stock). The Plan seeks to encourage the highest level of Director performance
by providing Directors with a proprietary interest in the Corporations
performance and progress by crediting them with shares of Common Stock annually
in satisfaction of their annual retainer.
3.
Effective Date and Term
. The Plan shall
be effective as of February 21, 2017 (the Effective Date) (the date that it
was approved by the Board), and shall remain in effect until (a) May 15, 2027 if
approved by the Stockholders at the 2017 Annual Meeting of Stockholders, or (b)
July 17, 2017 if not so approved by the Stockholders.
4.
Eligible Participants
. Each Director
who is not a full-time employee of the Corporation or any of its affiliates
(Nonemployee Director) shall be a
participant (Participant) in the Plan. Each credit of shares of Common Stock
pursuant to the Plan shall be evidenced by a written agreement duly executed and
delivered by or on behalf of the Corporation and a Participant, if such an
agreement is required by the Corporation to ensure compliance with applicable
laws and regulations. Following the Effective Date, no Participant shall be
eligible to receive awards under any other equity compensation plan of the
Corporation or an affiliate while a Participant in the Plan.
5.
Credit of Shares
. (a) Commencing as of
the Effective Date, in satisfaction of the annual retainer payable to each
Participant for service on the Board (the
Annual Retainer), each Participant shall be credited with shares of Common
Stock subject to applicable restrictions set forth in Section 6 below with
respect to payment. Subject to Section 5(b) below, each Participant shall be
credited each year for service on the Board with a number of shares of Common
Stock determined by dividing the amount of the Annual Retainer for the
applicable year by the average closing price for the Common Stock on the New
York Stock Exchange (or if not listed on such exchange on any other national
securities exchange on which the shares of Common Stock are listed) for the
prior calendar year (the Stock Retainer). The Stock Retainer for each year
shall be credited as of September 30 of each year during the term of the Plan,
commencing as of the Effective Date. A minimum of 25% of each Stock Retainer (or
a greater percentage up to 100% if the Participant so elects prior to the first
day of the year in which the applicable Stock Retainer is to be credited) shall
be contributed to a grantor trust established by the Corporation pursuant to
Section 6(g) below and subject to its terms (the Trust Shares). The portion of
the applicable Stock Retainer that is not contributed to a grantor trust shall
be transferred to the Participant as soon as administratively practicable
following the applicable September 30.
(b) Any person who becomes a Nonemployee
Director following September 30 of any year during the term of the Plan, whether
by appointment or election as a Director or by change in status from a full-time
employee, shall be credited, on becoming a Nonemployee Director, with a portion
of the compensation to be paid to such Participant until the Corporations next
Annual Meeting of Stockholders, with a number of shares of Common Stock equal to
the product of the number of shares determined pursuant to Section 5(a) above
times a fraction, the numerator of which is the number of full weeks remaining
until September 30 of the following year and the denominator of which is 52;
provided that no fractional shares shall be credited and the number of shares of
Common Stock to be credited pursuant to this Section 5(b) shall be rounded up to
the next whole number. A minimum of 25% of any Stock Retainer payable pursuant
to this Section 5(b) (or a greater percentage up to 100% if the Participant so
elects within 30 days after becoming a Participant in the Plan (or such other
time period permitted under Section 409A (Section 409A) of the Internal
Revenue
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Code of 1986, as amended)) shall be Trust
Shares and any portion the applicable Stock Retainer that is not contributed to
a grantor trust shall be transferred to the Participant as soon as
administratively practicable following the time the Participant becomes a
Nonemployee Director.
6.
Delivery of Trust Shares
. (a) The Trust
Shares, together with the Dividend Equivalent Amount (as defined in Section 6(c) below) with respect thereto,
shall be delivered to the Participant or the Participants estate or legal
guardian in shares of Common Stock on, or beginning on, the Delivery Date (as
defined in Section 6(b) below), in accordance with this Section 6.
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(b)
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The Delivery Date means the first
date upon which one of the following events
occurs:
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(i)
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Death of the Participant;
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(ii)
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Disability
of the Participant as defined in Section 6(f) below;
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(iii)
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Retirement of the Participant from
service as a Director in accordance with the Corporations By-Laws then in
effect;
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(iv)
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Cessation of service as a Director for any reason other than those
specified in clauses (i), (ii) or (iii) immediately above;
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(v)
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Change in Control as defined in Section 8 below;
or
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(vi)
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At a specified date at least 24 months after the applicable Stock
Retainer is credited pursuant to an election made by the Participant prior
to the first day of the year in which the applicable notional shares of
Common Stock are credited to the Participant under Section 5
above.
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(c) The Dividend Equivalent Amount with
respect to any Trust Shares means (i) the amount of cash, plus the fair market
value as determined by the Board on the date of distribution of any property,
other than stock of the Corporation, plus (ii) any shares of stock of the
Corporation, in each case which the Participant would have received as dividends
or other distributions with respect to the Trust Shares, if the Trust Shares had
been delivered to the Participant as shares of Common Stock at the time they
were credited to the Participant under this Plan, plus (iii) interest on the
amount described in clauses (i) plus (ii) at a rate equal to the Corporations
cost of funds, from the date or date(s) such dividends or other distributions
would have been received through the date the Trust Shares are
delivered.
(d) If a Participants Delivery Date is
described in clause (iv) (normal cessation of service), clause (v) (Change in
Control) or clause (vi) (specified date) of Section 6(b) above, all Trust Shares
and all Dividend Equivalent Amounts with respect thereto shall be delivered at
one time, as soon as practicable after the Delivery Date. If a Participants
Delivery Date is described in clause (i) (death), clause (ii) (Disability) or
clause (iii) (retirement) of Section 6(b) above, the Trust Shares and the
Dividend Equivalent Amounts with respect thereto shall be delivered at one time,
as soon as practicable after the Delivery Date, unless the Participant has in
effect a valid Installment Delivery Election pursuant to Section 6(e) below to
have the Trust Shares and Dividend Equivalent Amounts delivered in yearly
installments over five, 10 or 15 years (the Applicable Delivery Period). If
the Participant does have in effect a valid Installment Delivery Election, then
the Trust Shares, together with the Dividend Equivalent Amounts with respect
thereto, shall be delivered in equal yearly installments over the Applicable
Delivery Period, with the first such installment being delivered on the first
anniversary of the Delivery Date; provided, that if in order to equalize such
installments, fractional shares would have to be delivered, such installments
shall be adjusted by rounding to the nearest whole share. If any Trust Shares
and Dividend Equivalent Amounts of a Participant are to be delivered after the
Participant has died or become legally incompetent, they shall be delivered to
the Participants estate or legal guardian, as the case may be, in accordance
with the foregoing schedules; provided, that if the Participant dies with a
valid Installment Delivery Election in effect, and the legal representatives of
the Participants estate so request, the Board may (but shall not be obligated
to) deliver all remaining undelivered Trust Shares and Dividend Equivalent
Amounts to the Participants estate immediately. References to the Participant
in this Plan shall be deemed to refer to the Participants estate or legal
guardian, where appropriate.
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(e) An Installment Delivery Election
means a written election by a Participant, on such form as may be prescribed by
the Board, to receive delivery of Trust Shares and Dividend Equivalent Amounts
in installments over a period of five, 10 or 15 years, as more fully described
in Section 6(d) above. Once made, an Installment Delivery Election may be
superseded by another Installment Delivery Election. However, in order for any
initial or superseding Installment Delivery Election to be valid, it must be
received by the Corporation prior to the first day of the year in which the
applicable shares of Common Stock are credited to the Participant under Section
5. In the case of multiple Installment Delivery Elections and/or revocations by
any Participant, the most recent valid Installment Delivery Election or
revocation in effect as of the Delivery Date shall be controlling. No Delivery
Elections once made can be accelerated and any elections to further defer
Delivery Elections must be made in accordance with the following:
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(i)
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Such election
will not take effect until 12 months after the election is
made;
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(ii)
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Any subsequent election other
than under Section 6(b)(i) or Section 6(b)(ii) above must be for a period
of at least 5 years from the date such Delivery Election issuance would
otherwise have been made under the Plan; and
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(iii)
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With respect to any Delivery
Election issuance to be made at a specified time or pursuant to a fixed
schedule pursuant to an election at the time of such initial deferral,
such election must be made at least 12 months prior to the date of the
first scheduled Delivery Election issuance under such initial
election.
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(f) Disability shall mean (i) the
Participant is unable to engage in any substantial gainful activity by reason of
any medically determinable physical or mental impairment that can be expected to
result in death or can be expected to last for a continuous period of not less
than 12 months, (ii) the Participant is, by reason of any medically determinable
physical or mental impairment that can be expected to result in death or can be
expected to last for a continuous period of not less than 12 months, receiving
income replacement benefits for a period of not less than three months under an
accident and health plan covering service providers of the Corporation or (iii)
any other definition provided under Section 409A. Unless otherwise provided by
the Board, in the event that the timing of payments under the Plan (that would
otherwise be considered deferred compensation subject to Section 409A) would
be accelerated upon the occurrence of a Disability, no such acceleration shall
be permitted unless the Disability also satisfies the definition of disability
pursuant to Section 409A.
(g) The Corporation has created a grantor
trust (the Trust) to assist it in accumulating the shares, cash and other
property needed to fulfill its obligations under this Section 6. On each date
when a Stock Retainer is credited to a Participant, the Corporation shall
contribute Trust Shares to the Trust. However, Participants shall have no
beneficial or other interest in the Trust and the assets thereof, and their
rights under the Plan shall be as general creditors of the Corporation,
unaffected by the existence or nonexistence of the Trust, except that deliveries
of Trust Shares and payments of cash and other property to Participants from the
Trust shall, to the extent thereof, be treated as satisfying the Corporations
obligations under this Section 6.
7.
Share Certificates; Voting and Other
Rights
. The certificates for shares delivered to a Participant or the trustee of
the Trust, if any (the Trustee), pursuant to Section 6 above shall be issued
in the name of the Participant or the Trustee, as the case may be, and the
Participant or the Trustee, as the case may be, shall be entitled to all rights
of a Stockholder with respect to Common Stock for all such shares issued in his
name, including the right to vote the shares; provided, however, that the
Participant or the Trustee, as the case may be, shall not receive dividends and
other distributions paid or made with respect to such shares in addition to the
Dividend Equivalent Amounts.
8.
Change in Control
. A Change in
Control shall be deemed to have occurred if any of the following events shall
have happened:
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(i)
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An acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of
1934, as amended (the Exchange Act)) (a Person) (including in
connection with a merger, consolidation, purchase or acquisition of Common
Stock, or similar business transaction) of beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or
more of either (1) the fair market value of then outstanding shares of
Common Stock of the
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Corporation (the
Outstanding Corporation Common Stock) or (2) the combined voting power
of the then outstanding voting securities of the Corporation entitled to
vote generally in the election of Directors (the Outstanding Corporation
Voting Securities); excluding, however, the following: (1) any
acquisition directly from the Corporation, other than an acquisition by
virtue of the exercise of a conversion privilege unless the security being
so converted was itself acquired directly from the Corporation; (2) any
acquisition by the Corporation (other than an increase in the percentage
of Common Stock owned by a Person caused as a result of a transaction in
which the Corporation acquires its Common Stock in exchange for property);
(3) any acquisition by any employee benefit plan (or related trust)
sponsored or maintained by the Corporation or any corporation controlled
by the Corporation; (4) any acquisition of additional beneficial ownership
in Common Stock by a Person that is already considered to own more than
50% of more of the total fair market value or total voting power of the
Corporation; or (5) any transaction in which the Common Stock of the
Corporation does not remain outstanding after the transaction;
or
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(ii)
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An acquisition by any
Person (including in connection with a merger, consolidation, purchase or
acquisition of Common Stock, or similar business transaction) of
beneficial ownership of 30% or more of the combined voting power of the
Corporation during a 12-month period; excluding, however, the following:
(1) any acquisition directly from the Corporation, other than an
acquisition by virtue of the exercise of a conversion privilege unless the
security being so converted was itself acquired directly from the
Corporation; (2) any acquisition by the Corporation (other than an
increase in the percentage of Common Stock owned by a Person caused as a
result of a transaction in which the Corporation acquires its Common Stock
in exchange for property); (3) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Corporation or any
corporation controlled by the Corporation; or (4) any acquisition of
additional beneficial ownership in Common Stock by a Person that is
already considered to own more than 30% of more of the total voting power
of the Corporation; or
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(iii)
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A change in the
composition of the Board such that a majority of the Directors (such
Directors shall be hereinafter referred to as the Incumbent Directors)
are replaced during any 12-month period by Directors whose appointment or
election is not endorsed by a majority of the Incumbent Directors before
the date of the appointment or election; or
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(iii)
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An acquisition by any
Person of assets from the Corporation, during a 12-month period, that have
a total gross fair market value equal to or more than 40% of the total
gross fair market value of all the assets of the Corporation immediately
before such acquisition or acquisitions; excluding, however, an
acquisition by any Person that is an entity controlled by the shareholders
of the Corporation immediately after the transfer (within the meaning of
Section 409A).
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Notwithstanding any provision of this
definition to the contrary, in the event that any amount or benefit under the
Plan constitutes deferred compensation under Section 409A and the settlement of
or distribution of such amount or benefit is to be triggered by a Change in
Control, then such settlement or distribution shall be subject to the event
constituting the Change in Control also constituting a change in control event
under Section 409A.
9.
General Restrictions
. (a)
Notwithstanding any other provision of the Plan or agreements made pursuant
thereto, the Corporation shall not be required to issue or deliver any
certificate or certificates for shares of Common Stock under the Plan prior to
fulfillment of all the following conditions:
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(i)
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Listing or approval
for listing upon notice of issuance of such shares on The New York Stock
Exchange, or such other securities exchange as may at the time be the
principal market for the Common Stock;
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(ii)
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Any registration or
other qualification of such shares of the Corporation under any state or
federal law or regulation, or maintaining in effect any such registration
or other qualification which the Board shall deem necessary or advisable;
and
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(iii)
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Obtaining any other consent,
approval or permit from any state or federal governmental agency which the
Board shall determine to be necessary or
advisable.
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(b) Nothing contained in the Plan shall
prevent the Corporation from adopting other or additional compensation
arrangements for the Participants.
(c) The Corporation shall not be required
to issue or deliver any shares of Common Stock under the Plan if such issuance
or delivery would constitute a violation of any provision of any law or
regulation of any governmental authority.
10.
Shares Available
. (a) Subject to
Section 11 below, the maximum number of shares of Common Stock which may be
credited as Stock Retainers pursuant to the Plan is (i) 1,000,000 as of the
Effective Date, and (ii) 3,000,000 as of the Corporations 2017 Annual Meeting
of Stockholders, subject to the approval of the Stockholders at the 2017 Annual
Meeting. Shares of Common Stock issuable under the Plan shall be taken from
authorized but unissued shares or from treasury shares of the Corporation as
shall from time to time be necessary for issuance pursuant to the
Plan.
(b) The maximum value of Stock Retainers
credited during any calendar year to any Nonemployee Director, taken together
with any cash fees paid to such Nonemployee Director for Board service during
the calendar year and the value of awards granted to the Nonemployee Director
under any other equity compensation plan of the Corporation or an affiliate
during the calendar year, shall not exceed the following in total value
(calculating the value of any Stock Retainers or other equity compensation plan
awards based on the grant date fair value for financial reporting purposes): (i)
$900,000 for the Chair of the Board and (ii) $675,000 for each Nonemployee
Director other than the Chair of the Board; provided, however, that awards
granted to Nonemployee Directors upon their initial election to the Board or the
board of directors of an affiliate shall not be counted against the limits under
this paragraph.
11.
Change in Capital Structure
. Subject
to any required action by the Stockholders, in the event of any change in the
Common Stock effected without receipt of consideration by the Corporation,
whether by reason of any stock dividend, stock split, split-up, split-off,
spin-off, combination of shares, exchange of shares, warrants or rights offering
to purchase Common Stock at a price below its fair market value,
reclassification, recapitalization, reorganization, reincorporation, merger,
consolidation or other change in capitalization, appropriate adjustment shall be
made by the Board in the number and kind of shares subject to the Plan and any
other relevant provisions of the Plan, in order to prevent dilution or
enlargement of Participants rights under the Plan.
12.
Administration; Amendment
. (a) The
Board shall have such powers and authorities related to the administration of
the Plan as are consistent with the Corporations certificate of incorporation
and bylaws and applicable law. The Board shall have the power and authority to
delegate its responsibilities hereunder to its Compensation Committee or such
other committee as determined by the Board (the Committee), which shall have
full authority to act in accordance with its charter (as in effect from time to
time), and with respect to the power and authority of the Board to act
hereunder, all references to the Board shall be deemed to include a reference to
the Committee, unless such power or authority is specifically reserved by the
Board. Except as may be required by applicable law, regulatory requirement or
the certificate of incorporation or the bylaws of the Corporation, the Board
shall have full power and authority to take all actions and to make all
determinations required or provided for under the Plan, and shall have full
power and authority to take all such other actions and make all such other
determinations that the Board deems to be necessary or appropriate to the
administration of the Plan. All actions, determinations and decisions by the
Board or the Committee under the Plan shall be in the sole discretion of the
Board (or the Committee, as applicable) and shall be final, binding and
conclusive on all persons.
(b) The Board may, at any time and from
time to time, amend or suspend the Plan. An amendment shall be contingent on
approval of the Stockholders to the extent stated by the Board, required by
applicable law or required by applicable securities exchange listing
requirements. No amendment or suspension of the Plan shall, without the consent
of the affected Participant, materially impair rights or obligations of such
Participant.
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(c) The Board may terminate the Plan at
any time subject to the requirements of Section 409A.
13.
Grandfathered Amounts
. Notwithstanding
anything in this Plan to the contrary, any amounts accrued and vested by
Participants under the Plan prior to January 1, 2005 will be paid under the
terms of the Plan as then in effect.
14.
Miscellaneous
. (a) Nothing in the Plan
shall be deemed to create any obligation on the part of the Board to nominate
any Director for reelection by the Stockholders or to limit the rights of the
Stockholders to remove any Director.
(b) The Corporation shall have the right
to require, prior to the issuance or delivery of any shares of Common Stock
pursuant to the Plan, payment by a Participant of any taxes required by law with
respect to the issuance or delivery of such shares.
15.
Section 409A
. (a) Notwithstanding any
provision of the Plan to the contrary, it is intended that the provisions of the
Plan comply with Section 409A, and all provisions of the Plan shall be construed
and interpreted in a manner consistent with the requirements for avoiding taxes
or penalties under Section 409A. Each Participant is solely responsible and
liable for the satisfaction of all taxes and penalties that may be imposed on or
in respect of such Participant in connection with the Plan (including any taxes
and penalties under Section 409A), and the Corporation shall not have any
obligation to indemnify or otherwise hold any Participant (or beneficiary)
harmless from any or all such taxes or penalties. With respect to any amount
under the Plan that is considered deferred compensation subject to Section
409A, references in the Plan to termination of employment (and substantially
similar phrases) shall mean separation from service within the meaning of
Section 409A. For purposes of Section 409A, each of the payments that may be
made under the Plan is designated as a separate payment.
(b) Notwithstanding anything in the Plan
to the contrary, if a Participant is a specified employee within the meaning
of Section 409A, no payments under the Plan that are deferred compensation
subject to Section 409A and that would otherwise be payable upon the
Participants separation from service (as defined in Section 409A) shall be
made to such Participant prior to the date that is six months after the date of
such Participants separation from service or, if earlier, the date of the
Participants death. Following any applicable six-month delay, all such delayed
payments will be paid in a single lump sum on the earliest date permitted under
Section 409A that is also a business day.
16.
Governing Law
. The Plan and all
actions taken thereunder shall be governed by and construed in accordance with
the laws of the State of Delaware.
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APPENDIX B
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
n
otwithstanding 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 C
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 D
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 E
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.
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(1)
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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)
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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
Shareholder Special Meeting Request is signed), (x) the class, if
applicable, and the number of shares of common
stock
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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)
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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)
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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)
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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.
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(A)
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Annual Meetings of Shareholders.
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(1)
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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)
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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 120
th
day prior to such annual meeting and not later than the close of
business on the later of the 90
th
day prior to such annual meeting or the 10
th
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)
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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 10
th
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 120
th
day prior to
such special meeting and not later than the close of business on the later of
the 90
th
day prior to such special meeting or the 10
th
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.
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(C)
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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
F
Reconciliation of
Non-GAAP Measures to GAAP
Reconciliation of Net
Income (Loss) (GAAP) to 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 GAAP measure of net income (loss) to
the non-GAAP measure EBITDA to the GAAP measure of net income (loss) for the
years ended December 31, 2016, 2015 and 2014 (in thousands).
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Year ended December
31,
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2016
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2015
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2014
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Net
income (loss) (GAAP)
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$
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69,547
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$
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(86,968
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)
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$
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17,824
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Interest expense, net of amount
capitalized
1
|
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21,796
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25,389
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26,775
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Income tax provision (benefit)
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27,428
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56,310
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(5,240
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)
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Depreciation, depletion, and amortization
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117,413
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112,585
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112,173
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EBITDA
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$
|
236,184
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$
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107,316
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$
|
151,532
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1
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On April 12, 2013, we completed an offering of $500
million in aggregate principal amount of our Senior Notes due May 1, 2021
(the Notes), and issued additional Notes in 2014 to fund one of our
defined benefit pension plans. See
Note
6 of Notes to Consolidated Financial Statements
in our Form 10-K for the calendar year ended December
31, 2016, for more information. The Notes bear interest at a rate of
6.875% per year from the date of original issuance or from the most recent
payment date to which interest has been paid or provided for. Interest on
the Notes is payable on May 1 and November 1 of each year, commencing
November 1, 2013.
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Reconciliation of Net Income (Loss)
(GAAP) to Adjusted EBITDA (non-GAAP) to Net Income (Loss)
(GAAP)
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The non-GAAP measure of Adjusted earnings
before interest, taxes, depreciation and amortization (Adjusted EBITDA) is
calculated as net loss before the following items: interest expense, income tax
provision, depreciation, depletion, and amortization expense, exploration
expense, pre-development expense, acquisition costs, foreign exchange gains,
gains on derivative contracts, provisional price gains, provisions for closed
operations expense, stock-based compensation,
unrealized losses on investments, interest and other income, and loss on sale of
investments. Management believes that, when presented in conjunction with
comparable GAAP measures, Adjusted EBITDA is useful to investors in evaluating
our operating performance. The following table reconciles net (loss) to Adjusted
EBITDA (in thousands):
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Year Ended
December
31,
2016
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Net
(loss)
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$
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69,547
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Plus: Interest expense, net of amount capitalized
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21,796
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Plus: Income taxes
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27,428
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Plus: Depreciation, depletion and amortization
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115,468
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Plus: Exploration expense
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14,720
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Plus: Pre-development expense
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3,137
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Plus: Acquisition costs
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2,695
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Plus: Foreign exchange loss
|
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2,926
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Less: Gains on derivative contracts
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(4,423
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)
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Plus: Provisional price losses
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918
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Plus: Provision for closed operations and environmental
matters
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4,813
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Plus: Stock-based compensation
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5,932
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Plus: Unrealized losses on investments
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177
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Less: Other
|
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(507
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)
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Adjusted EBITDA
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$
|
264,627
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Reconciliation of Cost of Sales and Other
Direct Production Costs and Depreciation, Depletion and Amortization
(GAAP) to Cash Cost, Before By-product Credits Per Silver/Gold Ounce and
Cash Cost Per Silver/Gold Ounce, After By-product Credits
(non-GAAP)
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The tables below present reconciliations
between the GAAP measure of cost of sales and other direct production costs and
depreciation, depletion and amortization to the non-GAAP measures of Cash Cost
per Silver/Gold Ounce, Before By-product Credits and Cash Cost, After By-product
Credits per Silver/Gold Ounce for our operations for the year ended December 31,
2016 (in thousands, except costs per ounce and gold ounces produced).
Cash Cost, After By-product Credits per
Silver/Gold Ounce 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 per
Silver/Gold Ounce 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
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unit. Cash Cost, After By-product Credits,
per Silver/Gold Ounce, provides management and investors an indication of
operating cash flow, after consideration of the average price, received from
production. Management also uses this measurement for the comparative monitoring
of performance of our mining operations period-to-period from a cash flow
perspective. Cash Cost, After By-product Credits, per Silver/Gold 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 By-product Credits, per Silver
Ounce include:
|
|
Total, Greens Creek. Lucky
Friday
and San Sebastian Units
|
In thousands (except per ounce amounts)
|
|
|
Year ended
December 31,
|
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
By-product value, all silver properties:
|
|
|
|
|
|
|
|
|
|
Zinc
|
|
$
|
92,277
|
|
$
|
87,383
|
|
$
|
95,701
|
Gold
|
|
|
99,905
|
|
|
59,019
|
|
|
61,871
|
Lead
|
|
|
62,989
|
|
|
55,955
|
|
|
66,082
|
Total by-product credits
|
|
$
|
255,171
|
|
$
|
202,357
|
|
$
|
223,654
|
|
By-product credits per silver ounce, all silver
properties
|
|
|
|
|
|
|
|
|
|
Zinc
|
|
$
|
5.38
|
|
$
|
7.56
|
|
$
|
8.65
|
Gold
|
|
|
5.83
|
|
|
5.10
|
|
|
5.59
|
Lead
|
|
|
3.67
|
|
|
4.84
|
|
|
5.97
|
Total by-product credits
|
|
$
|
14.88
|
|
$
|
17.50
|
|
$
|
20.21
|
By-product credits included in our
presentation of Cash Cost, After By-product Credits, per Gold Ounce for our Casa
Berardi Unit include:
|
|
Casa Berardi
Unit
|
In thousands (except per ounce amounts)
|
|
Year ended
December 31,
|
|
|
|
2016
|
|
|
2015
|
|
|
2014
|
Silver by-product value
|
|
$
|
572
|
|
$
|
457
|
|
$
|
464
|
Silver by-product credits per gold ounce
|
|
$
|
3.92
|
|
$
|
3.57
|
|
$
|
3.62
|
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, 2016.
F-3
www.hecla-mining.com
Table of Contents
|
|
Total, Greens Creek, Lucky
Friday
and San Sebastian Units
|
In thousands (except per ounce amounts)
|
|
Year ended
December 31,
|
|
|
|
2016
|
|
|
|
2015
|
|
|
|
2014
|
|
Cost of sales and other direct production
costs and depreciation,
|
|
$
|
298,740
|
|
|
$
|
260,498
|
|
|
$
|
267,536
|
|
depletion and amortization (GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization
|
|
|
(68,156
|
)
|
|
|
(67,815
|
)
|
|
|
(72,936
|
)
|
Treatment costs
|
|
|
84,535
|
|
|
|
80,239
|
|
|
|
82,639
|
|
Change in product inventory
|
|
|
(1,429
|
)
|
|
|
(1,632
|
)
|
|
|
1,649
|
|
Reclamation and other costs
|
|
|
(5,406
|
)
|
|
|
(1,319
|
)
|
|
|
(2,046
|
)
|
Cash Cost, Before By-product Credits
2
|
|
|
308,284
|
|
|
|
269,971
|
|
|
|
276,842
|
|
By-product credits
|
|
|
(255,171
|
)
|
|
|
(202,357
|
)
|
|
|
(223,654
|
)
|
Cash Cost, After By-product Credits
|
|
|
53,113
|
|
|
|
67,614
|
|
|
|
53,188
|
|
Divided by silver ounces produced
|
|
|
17,144
|
|
|
|
11,562
|
|
|
|
11,065
|
|
Cash Cost, Before By-product Credits, per Silver
Ounce
|
|
|
17.98
|
|
|
|
23.35
|
|
|
|
25.02
|
|
By-product credits per silver ounce
|
|
|
(14.88
|
)
|
|
|
(17.50
|
)
|
|
|
(20.21
|
)
|
Cash Cost, After By-product Credits, per Silver
Ounce
|
|
$
|
3.10
|
|
|
$
|
5.85
|
|
|
$
|
4.81
|
|
|
|
|
Greens Creek
Unit
|
In thousands (except per ounce amounts)
|
|
Year ended
December 31,
|
|
|
|
2016
|
|
|
|
2015
|
|
|
|
2014
|
|
Cost of sales and other
direct production costs and depreciation, depletion
|
|
$
|
191,297
|
|
|
$
|
195,276
|
|
|
$
|
199,682
|
|
and amortization (GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization
|
|
|
(52,564
|
)
|
|
|
(56,553
|
)
|
|
|
(63,505
|
)
|
Treatment costs
|
|
|
62,754
|
|
|
|
63,284
|
|
|
|
63,313
|
|
Change in product inventory
|
|
|
(1,866
|
)
|
|
|
(4,222
|
)
|
|
|
1,706
|
|
Reclamation and other costs
|
|
|
(2,327
|
)
|
|
|
(1,342
|
)
|
|
|
(1,949
|
)
|
Cash Cost, Before By-product Credits
2
|
|
|
197,294
|
|
|
|
196,443
|
|
|
|
199,247
|
|
By-product credits
|
|
|
(161,782
|
)
|
|
|
(163,394
|
)
|
|
|
(176,650
|
)
|
Cash Cost, After By-product Credits
|
|
|
35,512
|
|
|
|
33,049
|
|
|
|
22,597
|
|
Divided by silver ounces produced
|
|
|
9,254
|
|
|
|
8,452
|
|
|
|
7,826
|
|
Cash Cost, Before By-product Credits, per Silver
Ounce
|
|
|
21.32
|
|
|
|
23.24
|
|
|
|
25.46
|
|
By-product credits per silver ounce
|
|
|
(17.48
|
)
|
|
|
(19.33
|
)
|
|
|
(22.57
|
)
|
Cash Cost, After By-product Credits, per Silver
Ounce
|
|
$
|
3.84
|
|
|
$
|
3.91
|
|
|
$
|
2.89
|
|
2
|
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.
|
2017 Proxy Statement
F-4
Table of Contents
|
|
Lucky Friday
Unit
|
In thousands (except per ounce amounts)
|
|
Year ended
December 31,
|
|
|
|
2016
|
|
|
|
2015
|
|
|
|
2014
|
|
Cost of sales and other direct production
costs and depreciation,
|
|
$
|
76,210
|
|
|
$
|
65,222
|
|
|
$
|
67,854
|
|
depletion and amortization (GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization
|
|
|
(11,810
|
)
|
|
|
(11,262
|
)
|
|
|
(9,431
|
)
|
Treatment costs
|
|
|
20,277
|
|
|
|
16,915
|
|
|
|
19,326
|
|
Change in product inventory
|
|
|
(1,162
|
)
|
|
|
1,154
|
|
|
|
(57
|
)
|
Reclamation and other costs
|
|
|
(822
|
)
|
|
|
23
|
|
|
|
(97
|
)
|
Cash Cost, Before By-product
Credits
2
|
|
|
82,693
|
|
|
|
72,052
|
|
|
|
77,595
|
|
By-product credits
|
|
|
(50,722
|
)
|
|
|
(38,035
|
)
|
|
|
(47,004
|
)
|
Cash Cost, After By-product Credits
|
|
|
31,971
|
|
|
|
34,017
|
|
|
|
30,591
|
|
Divided by silver ounces produced
|
|
|
3,596
|
|
|
|
3,028
|
|
|
|
3,239
|
|
Cash Cost, Before By-product Credits, per Silver
Ounce
|
|
|
23.00
|
|
|
|
23.79
|
|
|
|
23.95
|
|
By-product credits per silver ounce
|
|
|
(14.11
|
)
|
|
|
(12.56
|
)
|
|
|
(14.51
|
)
|
Cash Cost, After By-product Credits, per Silver
Ounce
|
|
$
|
8.89
|
|
|
$
|
11.23
|
|
|
$
|
9.44
|
|
|
|
|
San Sebastian
Unit
3
|
In thousands (except per ounce amounts)
|
|
Year ended
December 31,
|
|
|
|
2016
|
|
|
|
2015
|
|
|
|
2014
|
|
Cost of sales and other direct production
costs and depreciation,
|
|
$
|
31,233
|
|
|
$
|
|
|
|
$
|
|
|
depletion and amortization (GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization
|
|
|
(3,782
|
)
|
|
|
|
|
|
|
|
|
Treatment costs
|
|
|
1,504
|
|
|
|
40
|
|
|
|
|
|
Change in product inventory
|
|
|
1,599
|
|
|
|
1,436
|
|
|
|
|
|
Reclamation and other costs
|
|
|
(2,257
|
)
|
|
|
|
|
|
|
|
|
Cash Cost, Before By-product
Credits
2
|
|
|
28,297
|
|
|
|
1,476
|
|
|
|
|
|
By-product credits
|
|
|
(42,667
|
)
|
|
|
(928
|
)
|
|
|
|
|
Cash Cost, After By-product credits
|
|
|
(14,370
|
)
|
|
|
548
|
|
|
|
|
|
Divided by silver ounces produced
|
|
|
4,294
|
|
|
|
82
|
|
|
|
|
|
Cash Cost, Before By-product Credits, per Silver
Ounce
|
|
|
6.59
|
|
|
|
18.07
|
|
|
|
|
|
By-product credits per silver ounce
|
|
|
(9.94
|
)
|
|
|
(11.36
|
)
|
|
|
|
|
Cash Cost, After By-product Credits, per Silver
Ounce
|
|
$
|
(3.35
|
)
|
|
$
|
6.71
|
|
|
$
|
|
|
2
|
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.
|
3
|
Commercial production began at
the San Sebastian unit in the fourth quarter of 2016. See the
San Sebastian Segment
section of our Form 10-K for the calendar year ended
December 31, 2016 for further discussion.
|
F-5
www.hecla-mining.com
Table of Contents
|
|
Casa Berardi
Unit
|
In thousands (except ounce and per ounce
amounts)
|
|
Year ended
December 31,
|
|
|
|
2016
|
|
|
|
2015
|
|
|
|
2014
|
|
Cost of sales and other direct production
costs and depreciation,
|
|
$
|
155,711
|
|
|
$
|
144,558
|
|
|
$
|
148,043
|
|
depletion and amortization (GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization
|
|
|
(47,312
|
)
|
|
|
(43,674
|
)
|
|
|
(38,198
|
)
|
Treatment costs
|
|
|
1,264
|
|
|
|
670
|
|
|
|
564
|
|
Change in product inventory
|
|
|
2,890
|
|
|
|
(1,970
|
)
|
|
|
(3,151
|
)
|
Reclamation and other costs
|
|
|
(459
|
)
|
|
|
(455
|
)
|
|
|
(820
|
)
|
Cash Cost, Before By-product
Credits
2
|
|
|
112,094
|
|
|
|
99,129
|
|
|
|
106,438
|
|
By-product credits
|
|
|
(572
|
)
|
|
|
(457
|
)
|
|
|
(464
|
)
|
Cash Cost, After by-product credits
|
|
|
111,522
|
|
|
|
98,672
|
|
|
|
105,974
|
|
Divided by gold ounces produced
|
|
|
145,975
|
|
|
|
127,891
|
|
|
|
128,244
|
|
Cash Cost, Before By-product Credits, per Gold
Ounce
|
|
|
767.90
|
|
|
|
775.11
|
|
|
|
829.97
|
|
By-product credits per gold ounce
|
|
|
(3.92
|
)
|
|
|
(3.57
|
)
|
|
|
(3.62
|
)
|
Cash Cost, After By-product Credits, per Gold
Ounce
|
|
$
|
763.98
|
|
|
$
|
771.54
|
|
|
$
|
826.35
|
|
|
|
|
Total, All
Locations
|
In thousands
|
|
Year ended
December 31,
|
|
|
|
2016
|
|
|
|
2015
|
|
|
|
2014
|
|
Reconciliation to GAAP:
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales and other direct production
costs and depreciation,
|
|
$
|
454,451
|
|
|
$
|
405,056
|
|
|
$
|
415,580
|
|
depletion and amortization (GAAP)
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization
|
|
|
(115,468
|
)
|
|
|
(111,489
|
)
|
|
|
(111,134
|
)
|
Treatment costs
|
|
|
85,799
|
|
|
|
80,909
|
|
|
|
83,203
|
|
By-product credits
|
|
|
(255,743
|
)
|
|
|
(202,814
|
)
|
|
|
(224,118
|
)
|
Change in product inventory
|
|
|
1,461
|
|
|
|
(3,602
|
)
|
|
|
(1,502
|
)
|
Reclamation and other costs
|
|
|
(5,865
|
)
|
|
|
(1,774
|
)
|
|
|
(2,867
|
)
|
Cash Cost, After By-product Credits
|
|
$
|
164,635
|
|
|
$
|
166,286
|
|
|
$
|
159,162
|
|
2
|
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.
|
2017 Proxy Statement
F-6
Table of Contents
|
MEETING TO BE HELD AT:
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Canada
For directions contact (604)
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|
Table of
Contents
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1B
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George R.
Johnson
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☐
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☐
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☐
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The Board of Directors recommends you
vote FOR proposals 2 and 3.
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For
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Against
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Abstain
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2.
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PROPOSAL to
ratify and approve the selection of BDO USA, LLP, as independent auditors
of the Company for the calendar year ending December 31, 2017.
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☐
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☐
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☐
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3.
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Advisory
resolution to approve executive compensation.
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☐
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☐
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☐
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The Board of Directors recommends you vote 1 YEAR on the following
proposal:
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1
year
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2
years
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3
years
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Abstain
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4.
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Advisory
vote on frequency of executive compensation vote.
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☐
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☐
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☐
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☐
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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.
The Board of Directors recommends you
vote FOR proposals 5, 6, 7 and 8.
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For
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Against
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Abstain
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5.
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PROPOSAL to
approve the Amended and Restated Hecla Mining Company Stock Plan for
nonemployee Directors, including to increase to 3,000,000 the number of
shares of common stock available for issuance under the Amended and
Restated Hecla Mining Company Stock Plan for nonemployee
Directors.
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☐
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☐
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☐
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6.
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PROPOSAL to
approve the amendment to the Certificate of Incorporation of the Company
increasing the number of authorized shares of common stock of the Company
from 500,000,000 to 750,000,000.
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☐
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☐
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☐
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7.
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PROPOSAL to
approve amendments to the Company's Certificate of Incorporation and
Bylaws to remove certain 80% supermajority voting provisions.
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☐
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☐
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☐
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8.
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PROPOSAL to
approve amendments to the Company's Certificate of Incorporation and
Bylaws to permit shareholders to call special meetings of shareholders in
certain circumstances.
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☐
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☐
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☐
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NOTE:
In their discretion on all other business that may properly come
before the meeting or any adjournment or adjournments thereof.
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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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Date
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Table of
Contents
Important Notice Regarding the
Availability of Proxy Materials for the Annual Meeting:
The Notice & Proxy Statement and Annual Report are
available at
www.proxyvote.com
HECLA MINING COMPANY
FAIRMOUNT
PACIFIC RIM HOTEL
1038 CANADA PLACE,
VANCOUVER, BRITISH COLUMBIA, CANADA
ANNUAL MEETING OF SHAREHOLDERS
May
25, 2017
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 "FOR"
PROPOSALS 2, 3, 5, 6, 7 AND 8, AND "1 YEAR" FOR PROPOSAL 4.
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 25, 2017, 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
two nominees for Director, FOR the approval of Proposals 2, 3, 5, 6, 7 and 8,
and 1 year for proposal 4.. 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
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