UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington,
D.C
.
20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities
Exchange Act of 1934 (Amendment No.)
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
|
[ ]
|
Preliminary Proxy Statement
|
[ ]
|
Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
|
[X]
|
Definitive Proxy Statement
|
[ ]
|
Definitive Additional Materials
|
[ ]
|
Soliciting Material Pursuant to §240.14a-12
|
U.S. GEOTHERMAL INC.
(Name
of Registrant as Specified In Its Charter)
_____________________________________________________
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|
[X]
|
No fee required.
|
|
[ ]
|
Fee computed on table below per Exchange Act Rules
14a-6(i)(1) and 0-11.
|
|
|
|
|
(1)
|
Title of each class of securities to which transaction
applies:
|
|
|
|
|
(2)
|
Aggregate number of securities to which transaction
applies:
|
|
|
|
|
(3)
|
Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0- 11 (set forth the amount on
which the filing fee is calculated and state how it was
determined):
|
|
|
|
|
(4)
|
Proposed maximum aggregate value of
transaction:
|
|
|
|
|
(5)
|
Total fee paid:
|
|
|
|
[ ]
|
Fee paid previously with preliminary materials.
|
[ ]
|
Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of its
filing.
|
|
(1)
|
Amount Previously Paid:
|
|
|
|
|
(2)
|
Form, Schedule or Registration Statement No.:
|
|
|
|
|
(3)
|
Filing Party:
|
|
|
|
|
(4)
|
Date Filed:
|
|
|
|
May 25, 2017
Dear Shareholders:
You are cordially invited to join us for our 2017 annual
meeting of shareholders, which will be held on Thursday, July 6, 2017, at 10:00
a.m., MDT, at the U.S. Geothermal Inc. Corporate Office located at 390 E
Parkcenter Blvd, Suite 250 in Boise, Idaho. Holders of record of our common
stock as of May 8, 2017, are entitled to notice of and to vote at the meeting.
The Notice of Annual Meeting of Shareholders and the proxy
statement describe the business to be conducted at the meeting. We also will
report at the meeting on matters of current interest to our shareholders.
We hope you will be able to attend the meeting. However,
whether you plan to attend in person or not, please vote your shares in advance
to simplify our tally of the voting so as to not create a delay during our
shareholder meeting. You may submit your proxy vote by telephone or internet as
described in the following materials or by completing and signing the enclosed
proxy card and returning it in the envelope provided. If you decide to attend
the meeting and wish to change your proxy vote, you may do so automatically by
voting in person at the meeting.
If your shares are held in the name of a broker, trust, bank or
other nominee, you will need proof of ownership to be admitted to the meeting,
as described under How can I attend the meeting? in the proxy statement.
We look forward to seeing you at the annual meeting.
Sincerely,
/s/ Dennis J. Gilles
Dennis J. Gilles
Chief Executive Officer
-2-
May 25, 2017
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Date and Time:
|
Thursday, July 6, 2017, at 10:00 a.m. MDT
|
|
|
|
U.S. Geothermal Corporate Office
|
Place:
|
390 E Parkcenter Blvd, Suite 250
|
|
Boise, Idaho 83706
|
|
1.
|
The election of the seven directors named in
this proxy statement, each for a one- year term.
|
|
|
|
|
2.
|
The ratification of the selection of Moss Adams
LLP as our independent auditor for the fiscal year ending December 31,
2017.
|
|
|
|
Items of Business:
|
3.
|
Advisory vote on executive compensation as
described in this proxy statement.
|
|
|
|
|
4.
|
Advisory vote on the frequency of conducting an
advisory vote on executive compensation.
|
|
|
|
|
5.
|
Any other business that may properly be
considered at the meeting or any adjournment of the meeting.
|
Record Date:
|
You may vote at the meeting if you were a shareholder of
record at the close of business on May 8, 2017.
|
|
|
Voting by Proxy:
|
If you cannot attend the annual meeting in person, you
may vote your shares by telephone or internet by no later than 1:00 a.m.
Central time on July 5, 2017 (as directed on the enclosed proxy card), or
by completing, signing and promptly returning the enclosed proxy card by
mail. We encourage you to vote by telephone or internet in order to reduce
our mailing and handling expenses. If you choose to submit your proxy by
mail, we have enclosed an envelope for your use, which is prepaid if
mailed in the United States.
|
Important Notice Regarding the Availability of Proxy
Materials for the Shareholder Meeting to be held on July 6, 2017. The Proxy
Statement and Annual Report to Security holders are available at:
http://www.usgeothermal.com
.
By Order of the Board of Directors
/s/ Kerry D. Hawkley
Kerry D. Hawkley
Chief Financial Officer and Corporate
Secretary
-3-
PROXY STATEMENT
TABLE OF CONTENTS
-4-
PROXY STATEMENT
2017 ANNUAL MEETING OF
SHAREHOLDERS
TO BE HELD ON JULY 6, 2017
The Board of Directors of U.S. Geothermal Inc. is soliciting
proxies for use at the annual meeting of shareholders to be held on July 6,
2017, and at any adjournment of the meeting. This proxy statement and the
enclosed proxy card are first being made available to shareholders on or about
May 25, 2017.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
What is the purpose of the meeting?
At our annual meeting, shareholders will act upon the matters
outlined in the Notice of Annual Meeting of Shareholders. These matters include
the election of directors, the ratification of the selection of our independent
auditor, an advisory vote on executive compensation, and an advisory vote on the
frequency of conducting an advisory vote on executive compensation. Management
will report on our performance during the fiscal year ended December 31, 2016
after the annual meeting is concluded, responding to questions from
shareholders.
Who is entitled to vote at the meeting?
The Board has set May 8, 2017 as the record date for the annual
meeting. If you were a shareholder of record at the close of business on May 8,
2017, you are entitled to vote at the meeting.
As of the record date, 19,039,435 shares of our common stock
were issued and outstanding and, therefore, eligible to vote at the meeting.
What are my voting rights?
Holders of our common stock are entitled to one vote per share.
Therefore, a total of 19,039,435 votes are entitled to be cast at the meeting.
There is no cumulative voting.
How many shares must be present to hold the
meeting?
In accordance with our Bylaws, shares equal to at least
one-third of the voting power of our outstanding shares of common stock as of
the record date must be present at the meeting in order to hold the meeting and
conduct business. This is called a quorum. Your shares are counted as present at
the meeting if:
|
|
you are present and vote in person at the
meeting; or
|
|
|
|
|
|
you have properly submitted a proxy by mail,
telephone or internet.
|
How do I vote my shares?
If you are a shareholder of record as of the record date, you
can give a proxy to be voted at the meeting in any of the following ways:
|
|
over the telephone by calling a toll-free
number;
|
|
|
|
|
|
electronically, using the internet; or
|
|
|
|
|
|
by completing, signing and mailing the enclosed
proxy card.
|
-5-
The telephone and internet voting procedures have been set up
for your convenience. We encourage you to save corporate expense by submitting
your vote by telephone or internet. The procedures have been designed to
authenticate your identity, to allow you to give voting instructions, and to
confirm that those instructions have been recorded properly. If you are a
shareholder of record and you would like to submit your proxy by telephone or
internet, please refer to the specific instructions provided on the enclosed
proxy card. If you wish to submit your proxy by mail, please return your signed
proxy card to us before the annual meeting.
If you hold your shares in street name, you must vote your
shares in the manner prescribed by your broker or other nominee. Your broker or
other nominee has enclosed or otherwise provided a voting instruction card for
you to use in directing the broker or nominee how to vote your shares, and
telephone and internet voting is also encouraged for shareholders who hold their
shares in street name.
What is a proxy?
It is your designation of another person to vote stock you own.
That other person is called a proxy. If you designate someone as your proxy in a
written document, that document also is called a proxy or a proxy card. When you
designate a proxy, you also may direct the proxy how to vote your shares. We
refer to this as your proxy vote. Two executive officers, Douglas J. Glaspey
and Kerry D. Hawkley, have been designated as the proxies for our 2017 annual
meeting of shareholders.
What is a proxy statement?
It is a document that we are required to give you, in
accordance with regulations of the Securities and Exchange Commission (SEC),
when we ask you to designate proxies to vote your shares of our common stock at
a meeting of our shareholders. The proxy statement includes information
regarding the matters to be acted upon at the meeting and certain other
information required by SEC regulations and the rules of the NYSE MKT LLC (NYSE
MKT).
What is the difference between a shareholder of record
and a street name holder?
If your shares are registered directly in your name, you are
considered the shareholder of record with respect to those shares.
If your shares are held in a stock brokerage account or by a
bank, trust or other nominee, then the broker, bank, trust or other nominee is
considered to be the shareholder of record with respect to those shares.
However, you still are considered the beneficial owner of those shares, and your
shares are said to be held in street name. Street name holders generally
cannot vote their shares directly and must instead instruct the broker, bank,
trust or other nominee how to vote their shares using the voting instruction
card provided by it.
What does it mean if I receive more than one proxy
card?
If you receive more than one proxy card, it means that you hold
shares registered in more than one account. To ensure that all of your shares
are voted, sign and return each proxy card or, if you submit your proxy vote by
telephone or internet, vote once for each proxy card you receive.
Can I vote my shares in person at the
meeting?
If you are a shareholder of record, you may vote your shares in
person at the meeting by completing a ballot at the meeting. Even if you
currently plan to attend the meeting, we recommend that you also submit your
proxy as described above so that your vote will be counted in advance to avoid
delays at the meeting in case you later decide not to attend the meeting.
-6-
If you are a street name holder, you may vote your shares in
person at the meeting only if you obtain a signed letter or other document from
your broker, bank, trust or other nominee giving you the right to vote the
shares at the meeting.
What vote is required for the election of directors or
for the proposals to be approved?
Directors must be elected by a plurality of the votes of the
shares present in person or represented by proxy at the meeting and entitled to
vote on the election of directors. This means that those nominees receiving the
seven highest number of votes at the meeting will be elected, even if the votes
cast for each nominee do not constitute a majority of the votes of shares
present and entitled to vote.
The affirmative vote of a majority of the voting power of our
common stock present, entitled to vote and cast on the matter is required for
the ratification of the selection of our independent auditor, and approval, on
an advisory basis, of our executive compensation.
The affirmative vote of a majority of the voting power of our
common stock present, entitled to vote and cast on the matter is also required
with respect to the approval, on an advisory basis, of the frequency of advisory
votes on executive compensation. However, because this vote contains multiple
frequency options, and given that this vote is advisory and non-binding, if none
of the frequency options receive a majority of the votes, the option receiving
the greatest number of votes will be considered the frequency recommended by the
Companys shareholders.
While we intend to carefully consider the voting results of two
advisory votes, the final votes are not binding on us, the Board or the
Compensation and Benefits Committee. The Board and Compensation and Benefits
Committee value the opinions of all our shareholders and will consider the
outcome of these votes when making future decisions on executive compensation.
How are votes counted?
The following chart describes the proposals to be considered at
the meeting, the voting options, the votes required to elect directors and to
adopt each other proposal, and the manner in which votes will be counted:
Proposal
|
Voting Options
|
Vote Required
|
Effect of
Abstentions
|
Effect of Broker
Non-Votes
|
Election of directors
|
For or withhold
|
Elected by plurality of votes: nominees
receiving the seven highest number
of votes at the meeting will be
elected.
|
No effect.
|
No broker discretion to vote.
No effect.
|
Ratification of selection of
Moss Adams LLP
|
For, against or abstain
|
The affirmative vote of a majority of
the
shares of common stock cast.
|
No effect.
|
Brokers have discretion to vote.
|
Advisory vote on
executive compensation
|
For, against or abstain
|
The affirmative vote of a majority
of the
shares of common stock cast.
|
No effect.
|
No broker discretion to vote.
No effect.
|
Advisory vote on the frequency
of the advisory vote on
executive compensation.
|
One year, two years,
three years or
abstain.
|
The affirmative vote of a majority
of the
shares of common stock cast.
If none of the frequency options
receive a majority of the votes, the
option receiving the greatest
number
votes will be considered the frequency
recommended by the
Companys shareholders.
|
No effect.
|
No broker discretion to vote.
No effect.
|
-7-
If you submit your proxy but abstain from voting on one or more
matters, your shares will be counted as present at the meeting for the purpose
of determining a quorum. Shares not present at the meeting and shares voting
WITHHOLD or ABSTAIN have no effect on the election of director, the
ratification of the selection of our independent auditor, the advisory vote on
executive compensation or the advisory vote on the frequency of conducting
advisory votes on executive compensation..
If you hold your shares in street name and do not provide
voting instructions to your broker or other nominee, your shares will be treated
as broker non-votes and will not be voted on any proposal on which your broker
or other nominee does not have discretionary authority to vote under applicable
rules. If you hold your shares in street name, it is critical that you cast your
vote if you want it to count in the election of directors, the advisory vote on
executive compensation and the advisory vote on the frequency of conducting
advisory votes on executive compensation. In the past, if you held your shares
in street name and you did not indicate how you wanted your shares voted in the
election of directors, your broker or other nominee was allowed to vote those
shares on your behalf in the election of directors as they felt appropriate.
Recent changes in regulation were made to take away the ability of your broker
or other nominee to vote your uninstructed shares on a discretionary basis for
anything other than certain routine matters, which for purposes of this
meeting only includes the ratification of the appointment of auditors. Thus, if
you hold your shares in street name and you do not instruct your broker or other
nominee how to vote, no votes on such matters will be cast on your behalf except
with respect to the ratification of the auditor appointment. Shares that
constitute broker non-votes will be counted as present at the meeting for the
purpose of determining a quorum, but will not be considered entitled to vote at
the meeting. Broker non-votes will have no effect on the outcome for the
election of directors, the advisory vote on executive compensation or the
advisory vote on the frequency of conducting advisory votes on executive
compensation.
Who will count the votes?
Representatives of Computershare Investor Services, our
tabulation agent, will tabulate the votes.
How does the Board recommend that I vote?
You will vote on the following management proposals:
-8-
|
|
Election of seven directors: Douglas J. Glaspey, Ali G.
Hedayat, Randolph J. Hill, Paul A. Larkin, Leland L. Mink, James C.
Pappas, and John H. Walker.
|
|
|
|
|
|
Ratification of the selection of Moss Adams LLP as our
independent auditor for the fiscal year ending December 31, 2017.
|
|
|
|
|
|
Advisory vote on executive compensation as described in
this proxy statement.
|
|
|
|
|
|
Advisory vote on the frequency of conducting an advisory
vote on executive compensation.
|
The Board of Directors recommends that you vote
FOR
the
election of each of the nominees to the Board of Directors,
FOR
the
ratification of Moss Adams LLP as our independent auditor for the fiscal year
ending December 31, 2017,
FOR
the advisory approval of executive
compensation as described in this proxy statement, and
EVERY TWO YEARS
as
the frequency for future advisory votes on executive compensation.
What if I do not specify how I want my shares
voted?
If you are a shareholder of record and submit a signed proxy
card or submit your proxy by telephone or internet and do not specify how you
want to vote your shares, we will vote your shares:
|
|
FOR
the election of all of the director nominees
named above; and
|
|
|
|
|
|
FOR
the ratification of the selection of Moss
Adams LLP as our independent auditor for the fiscal year ending December
31, 2016.
|
|
|
|
|
|
FOR
the advisory approval of executive
compensation as described in this proxy statement.
|
|
|
|
|
|
EVERY TWO YEARS
as the frequency for future
advisory votes on executive compensation.
|
Can I change my vote after submitting my
proxy?
Yes. You may revoke your proxy and change your vote at any time
before your proxy is voted at the annual meeting. If you are a shareholder of
record, you may revoke your proxy and change your vote by submitting a
later-dated proxy by telephone, internet or mail, or by voting in person at the
meeting. Attending the meeting will not revoke your proxy unless you
specifically request to revoke it. To request an additional proxy card, or if
you have any questions about the annual meeting or how to vote or revoke your
proxy, you should write to Corporate Secretary, U.S. Geothermal Inc., 390 E
Parkcenter Blvd, Suite 250, Boise, ID 83706 or call (208) 424-1027.
Will my vote be kept confidential?
Yes. We have procedures to ensure that, regardless of whether
shareholders vote by mail, telephone, internet or in person, all proxies,
ballots and voting tabulations that identify shareholders are kept permanently
confidential, except as disclosure may be required by federal or state law or as
expressly permitted by a shareholder. We also have the voting tabulations
performed by an independent third party.
-9-
How can I attend the meeting?
You may be asked to present valid picture identification, such
as a drivers license or passport, before being admitted to the meeting. If you
hold your shares in street name, you also will need proof of ownership to be
admitted to the meeting. A recent brokerage statement or letter from your broker
or other nominee are examples of proof of ownership.
Please let us know whether you plan to attend the meeting by
marking the attendance box on the proxy card or responding affirmatively when
prompted during telephone or internet voting.
Who pays for the cost of proxy preparation and
solicitation?
We pay for the cost of proxy preparation and solicitation,
including the reasonable charges and expenses of brokerage firms, banks or other
nominees for forwarding proxy materials to street name holders.
We are soliciting proxies primarily by mail. In addition, our
directors, officers and regular employees may solicit proxies by telephone,
facsimile or personally. These individuals will receive no additional
compensation for their services other than their regular salaries.
What are the deadlines for submitting shareholder
proposals for the 2018 annual meeting?
In order for a shareholder proposal to be considered for
inclusion in our proxy statement and form of proxy for the 2018 annual meeting,
the written proposal must be received at our principal executive offices at 390
E Parkcenter Blvd, Suite 250, Boise, ID 83706, Attention: Corporate Secretary,
on or before January 25, 2018. If the date of our 2018 annual meeting is changed
by more than 30 calendar days from the anniversary of this years annual
meeting, then the deadline is a reasonable time before we begin to print and
mail proxy materials. All shareholder proposals must comply with SEC regulations
regarding the inclusion of shareholder proposals in company-sponsored proxy
materials.
Our Certificate of Incorporation provides that a shareholder(s)
holding, in aggregate, not less than 10% of our shares with voting rights, may
nominate a director for election at the annual meeting or may present from the
floor a proposal that is not included in the proxy statement if proper written
notice is received by our Corporate Secretary at our principal executive offices
in Boise, Idaho, not less than 40 days nor more than 60 days in advance of the
meeting. The notice must contain the specific information required by our
Certificate of Incorporation. You may request a copy of our Certificate of
Incorporation by contacting our Corporate Secretary at U.S. Geothermal Inc., 390
E Parkcenter Blvd, Suite 250, Boise, ID 83706, or by telephone at (208)
424-1027. We will not entertain any proposals or nominations at the annual
meeting that do not meet the requirements set forth in our Certificate of
Incorporation. If the stockholder does not also comply with the requirements of
Rule 14a-4(c)(2) under the Securities Exchange Act of 1934, as amended, we may
exercise discretionary voting authority under proxies that we solicit to vote in
accordance with our best judgment on any such stockholder proposal or
nomination.
How can I communicate with U.S. Geothermals Board of
Directors?
You or any other interested party may communicate with our
Board of Directors by sending a letter addressed to our Board of Directors,
non-management directors, Chairman of the Board or specified individual
directors to:
U.S. Geothermal Inc.
390 E
Parkcenter Blvd, Suite 250
Boise, ID 83706
-10-
Any such letters will be delivered to an independent director
or a specified director if so addressed. Letters relating to accounting matters
will also be delivered to our Chief Financial Officer for handling in accordance
with the Audit Committees policy on investigation of complaints relating to
accounting matters.
How can I elect to access proxy statements and annual
reports electronically instead of receiving paper copies through the
mail?
You can request electronic delivery if you are a shareholder of
record. In fact, we encourage you to request electronic delivery of these
documents if you are comfortable with the electronic format because it saves us
the expense of printing and mailing the materials to you and helps preserve
environmental resources. You can choose this option by:
|
|
following the instructions provided on your
proxy card or voter instruction form;
|
|
|
|
|
|
following the instructions provided when you
vote over the internet; or
|
|
|
|
|
|
going to
http://www.envisionreports.com/HTM
and following the
instructions provided.
|
If you choose to view future proxy statements and annual
reports over the internet, you will receive an e-mail message next year
containing a link to the internet website where you can access our proxy
statement and annual report. The e-mail also will include instructions for
voting over the internet. You may revoke this request at any time by following
the instructions at
http://www.envisionreports.com/HTM
. Your
election to view proxy materials online is permanent unless you revoke it later.
IMPORTANT INFORMATION REGARDING DELIVERY OF PROXY
MATERIALS
What is Notice
and Access?
|
In 2007, the SEC adopted amendments to the proxy rules
that changed how companies must provide proxy materials. Under the proxy
delivery rules, a company may select either of the following two options
for making proxy materials available to shareholders:
|
|
|
full set delivery option; or
|
|
|
|
|
|
notice only option.
|
A company may use a single method for all its shareholders, or
use full set delivery for some while adopting the notice only option for
others.
What is the full set
delivery option?
|
Under the full set delivery option, a company delivers
all proxy materials to its shareholders. This can be by mail or, if a
stockholder has previously agreed, electronically. In addition to
delivering proxy materials to shareholders, the company must post all
proxy materials on a publicly-accessible website (other than the SECs
website) and provide information to shareholders about how to access that
website.
|
-11-
What is the notice only
option?
|
Under the notice only option, a company must post all of
its proxy materials on a publicly-accessible website. However, instead of
delivering its proxy materials to shareholders, the company instead
delivers a Notice of Internet Availability of Proxy Materials which
outlines: (i) information regarding the date and time of the meeting of
shareholders as well as the items to be considered at the meeting; (ii)
information regarding the website where the proxy materials are posted;
and (iii) various means by which a stockholder can request paper or e-mail
copies of the proxy materials. The stockholder may request that the
company deliver paper copies of the proxy materials.
|
In connection with our 2017 Annual Meeting of Shareholders,
U.S. Geothermal has elected to use the full set delivery option for registered
holders and the notice only option for street name shareholders.
Additionally, U.S. Geothermal has posted its proxy materials at
www.usgeothermal.com.
Will U.S. Geothermal use
the notice
only
option in
the future?
|
Although U.S. Geothermal elected to use the full set
delivery option for registered shareholders and notice only option for
street name holders in connection with the 2017 Annual Meeting of
Shareholders, it may choose to use the notice only option for registered
shareholders in the future. We plan to evaluate the future possible cost
savings as well as the possible impact on stockholder participation as we
consider the future use of the notice only option.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Principal Shareholders
The following table sets forth certain information regarding
beneficial ownership of the Companys common stock, as of May 1, 2017 by each
person known by us to be the beneficial owner of more than 5% of the Companys
outstanding common stock. The percentage of beneficial ownership is based on
19,039,435 shares of the Companys common stock outstanding as of May 1, 2017.
|
|
Amount and Nature
|
|
|
|
|
Name and Address of Beneficial
Owner
|
|
of Beneficial
|
|
|
Percent of
|
|
|
|
Ownership
|
|
|
Class
|
|
JCP Investment Management, LLC
1177 West Loop South,
Suite 1650
Houston, TX 77027
|
|
2,854,948
|
(1)
|
|
14.99%
|
|
Bradley Louis Radoff
1177 West Loop South, Suite 1625
Houston, TX 77027
|
|
1,825,000
|
(2)
|
|
9.59%
|
|
Private Management Group,
Inc.
15635 Alton Parkway, Suite 400
Irvine, CA 92618
|
|
1,591,847
|
(3)
|
|
8.36%
|
|
(1)
|
As of September 30, 2016, based on information set forth
in a Schedule 13D/A filed with the SEC on October 3, 2016 by JCP
Investment Management, LLC (JCP Partners). Each of the persons listed
may be deemed to be a member of a Section 13(d) group that collectively
beneficially owns more than 10% of the Companys outstanding shares of
Common Stock, and each such person disclaims beneficial ownership of the
shares of Common Stock reported herein except to the extent of his or its
pecuniary interest therein. Includes 938,360 shares of
Common Stock owned directly by JCP Investment Partnership, LP (JCP
Partnership). Also includes 1,916,588 shares of Common Stock owned directly by
JCP Drawdown Partnership III, LP (JCP Drawdown III). JCP Partners, as the
general partner of each of JCP Partnership and JCP Drawdown III, may be deemed
the beneficial owner of the (i) 938,360 shares owned by JCP Partnership and (ii)
1,916,588 shares owned by JCP Drawdown III. JCP Investment Holdings, LLC (JCP
Holdings), as the general partner of each of JCP Partners, may be deemed the
beneficial owner of the (i) 938,360 shares owned by JCP Partnership and (ii)
1,916,588 shares owned by JCP Drawdown III. JCP Investment Holdings, LLC (JCP
Holdings), as the general partner of JCP Partners, may be deemed the beneficial
owner of the (i) 938,360 shares owned by JCP Partnership and (ii) 1,916,588
shares owned by JCP Drawdown III. JCP Investment Management, LLC (JCP
Management), as the investment manager of each of JCP Partnership and JCP
Drawdown III, may be deemed the beneficial owner of the (i) 938,360 shares owned
by JCP Partnership and (ii) 1,916,588 shares owned by JCP Drawdown III. James C.
Pappas, as the managing member of JCP Management and sole member of JCP
Holdings, may be deemed the beneficial owner of the (i) 938,360 shares owned by
JCP Partnership and (ii) 1,916,588 shares owned by JCP Drawdown III.
|
-12-
(2)
|
As of December 31, 2016, based on information set forth
in a Schedule 13G/A filed with the SEC on February 13, 2017 by Bradley
Louis Radoff, who has sole voting and dispositive power over 42,057 shares
of the Companys common stock and shared dispositive power over 1,782,943
shares under FMLP, Inc.
|
(3)
|
As of December 31, 2016, based on information set forth
in a Schedule 13G/A filed with the SEC on January 31, 2017 by Private
Management Group, Inc., which has sole voting and dispositive power over
1,591,847 shares of the Companys common stock.
|
Security Ownership of Management
Our executive officers and directors are encouraged to own our
common stock to further align their interests with our shareholders interests.
The following table sets forth certain information regarding beneficial
ownership of the Companys common stock, as of May 1, 2017, by each of our
directors, director nominees, Named Executive Officers (as defined below) and
directors and executive officers as a group. The percentage of beneficial
ownership is based on 19,039,435 shares of the Companys common stock
outstanding as of May 1, 2017.
|
|
Amount and
|
|
|
|
|
|
|
Nature
|
|
|
|
|
Name of Beneficial Owner
|
|
of Beneficial
|
|
|
Percent of
|
|
|
|
Ownership
|
|
|
Class
|
|
Dennis J. Gilles
|
|
683,061
|
(1)
|
|
3.59%
|
|
Douglas J. Glaspey
|
|
298,454
|
(2)
|
|
1.57%
|
|
Kerry D. Hawkley
|
|
143,928
|
(3)
|
|
*
|
|
Ali G. Hedayat
|
|
134,167
|
(4)
|
|
*
|
|
Randolph J. Hill
|
|
10,333
|
(5)
|
|
*
|
|
Paul A. Larkin
|
|
133,440
|
(6)
|
|
*
|
|
Leland L. Mink
|
|
84,866
|
(7)
|
|
*
|
|
James C. Pappas
|
|
2,865,281
|
(8)
|
|
15.05%
|
|
John H. Walker
|
|
83,245
|
(9)
|
|
*
|
|
Jonathan Zurkoff
|
|
134,218
|
(10)
|
|
*
|
|
|
|
|
|
|
|
|
All directors and executive
officers as a group (10 persons)
|
|
4,570,993
|
(11)
|
|
24.01%
|
|
*
|
Less than 1% of the Companys outstanding common
stock
|
(1)
|
Includes 458,116 options exercisable within 60 days of
May 1, 2017.
|
(2)
|
Includes 166,840 options exercisable within 60 days of
May 1, 2017.
|
(3)
|
Includes 108,598 options exercisable within 60 days of
May 1, 2017.
|
-13-
(4)
|
Includes 4,167 options exercisable within 60 days of May
1, 2017.
|
(5)
|
Includes 10,333 options exercisable within 60 days of May
1, 2017.
|
(6)
|
Includes 82,636 options exercisable within 60 days of May
1, 2017.
|
(7)
|
Includes 60,137 options exercisable within 60 days of May
1, 2017.
|
(8)
|
Includes 10,333 options exercisable within 60 days of May
1, 2017.
|
(9)
|
Includes 65,970 options exercisable within 60 days of May
1, 2017.
|
(10)
|
Includes 104,714 options exercisable within 60 days of
May 1, 2017.
|
(11)
|
Includes 1,071,844 options exercisable within 60 days of
May 1, 2017.
|
-14-
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires
our executive officers and directors, and persons who own more than 10% of a
registered class of our equity securities, to file initial reports of ownership
and reports of changes in ownership of our securities with the SEC. Executive
officers, directors and greater than 10% shareholders are required to furnish us
with copies of these reports. Except as set forth below, based solely on our
review of the Section 16(a) reports furnished to us with respect to the fiscal
year ended December 31, 2016 and written representations from the executive
officers and directors and greater than 10% shareholders, we believe that all
Section 16(a) filing requirements applicable to our executive officers,
directors and greater than 10% shareholders were satisfied. A Form 4 for
Randolph Hill was filed one day late due to a delay in the issuance of his EDGAR
codes by the SEC.
-15-
PROPOSAL 1ELECTION OF DIRECTORS
The Board of Directors is currently composed of eight
directors: Dennis J. Gilles, Douglas J. Glaspey, Ali G. Hedayat, Randolph J.
Hill, Paul A. Larkin, Leland L. Mink, James C. Pappas and John H. Walker. The
majority of the Board, made up of Mr. Hedayat, Mr. Hill, Mr. Larkin, Dr. Mink,
Mr. Pappas and Mr. Walker, satisfy the applicable independence requirements of
NYSE MKT, and National Instrument 58-101, Disclosure of Corporate Governance
Practices and Multilateral Instrument 52-110, Audit Committees. Mr. Gilles and
Mr. Glaspey do not satisfy such independence requirements based on their
employment as executive officers of the Company. The Board has one class of
members that is elected at each annual shareholders meeting to hold office until
the next annual shareholders meeting or until their successors have been duly
elected and qualified. The number of director positions has been reduced to
seven effective upon the election of the directors at the annual meeting.
The Board of Directors proposes the following nominees for
election as directors to hold office until the annual meeting of shareholders to
be held in 2018 or until their successors, if any, have been duly elected and
qualified. Each of the nominees has agreed to serve as a director if
elected.
|
|
Douglas J. Glaspey
|
|
|
Ali G. Hedayat
|
|
|
Randolph J. Hill
|
|
|
Paul A. Larkin
|
|
|
Leland L. Mink
|
|
|
James C. Pappas
|
|
|
John H. Walker
|
If, for any reason, any nominee becomes unable to serve before
the election, the persons named as proxies will vote your shares for a
substitute nominee selected by the Board of Directors.
Information Concerning Director Nominees and Executive
Officers
Douglas J. Glaspey
:
Age 64, is the
co-founder, President and Chief Operating Officer and a director of the Company.
He has served as a director of the Company since March 2000, President of the
Company since September 2011, and Chief Operating Officer of the Company since
December 2003. Mr. Glaspey served from March 2000 until December 2004 as the
President and Chief Executive Officer for the TSX Venture Exchange (TSX-V)
listed U.S. Cobalt Inc. until the acquisition of Geo-Idaho in December 2003. He
also served as a director and the Chief Executive Officer of Geo-Idaho from
February 2002 until the acquisition of Geo-Idaho in December 2003. During his
career in the mining industry, he has held operating positions with ASARCO,
Earth Resources Company, Asamera Minerals, Atlanta Gold Corporation and Twin
Gold Corporation. Mr. Glaspey has 38 years of operating and management
experience. He holds a Bachelor of Science in Mineral Processing Engineering and
an Associate of Science in Engineering Science. His experience includes public
company financing and administration, production management, planning and
directing resource exploration programs, preparing feasibility studies and
environmental permitting. He has formed and served as an executive officer of
several private resource development companies in the United States, including
Drumlummon Gold Mines Corporation and Black Diamond Corporation. He is currently
a director of TSX-V listed Thunder Mountain Gold, Inc., which is also quoted on
the OTC Bulletin Board. Mr. Glaspeys qualifications to serve as a director of
the Company include his over 38 years of experience in the natural resource
industry and his many years of senior management and director experience.
Ali G. Hedayat:
Age 41, serves as a director of
the Company effective February 1, 2017. Mr. Hedayat is the founder and Managing
Director of Maryana Capital in Toronto, Canada. He previously co-founded Edoma
Capital in London (2010-2012), was a Partner at Indus Capital
in London (2013-2015), and worked for the Goldman Sachs Group (1997-2010) in New
York and London as a Managing Director and Co-head of Americas Principal
Strategies. Mr. Hedayat serves as a Director for Restaurant Brands International
Inc. since July 2016, and has previously served as a Director for companies in
the cable, pharmaceutical and media industries. Mr. Hedayat holds a Bachelor of
Commerce degree, with honors, earning a double major in Finance and Economics
from McGill University. His qualifications to serve as a Director of the Company
include over 20 years of investment banking experience with an emphasis in
power, utilities, and distressed debt and equity in European, North American and
Latin American markets.
-16-
Randolph J. Hill:
Age 61, serves as a director of
the Company effective September 30, 2016. Mr. Hill is a corporate lawyer with
Stoel Rives (2016 to present) with significant experience in corporate
governance, mergers and acquisitions, energy and infrastructure development,
project financing, and EPC, design-build and management and operations
contracting, and also serves as Chair of the Idaho Energy Resources Authority
and a member of the Board of Governors of the Andrus Center for Public Policy at
Boise State University. He has previously worked as Chief Legal Officer for a
major division of AECOM (2004-2016; previously Washington Group International
and then URS through successive mergers), as General Counsel and then President
and CEO for Ida-West Energy (1993-2004), and as a corporate lawyer at a premier
Wall Street law firm. He has previously served as a director for the Boise Metro
Chamber of Commerce (one year as Chair), the Idaho Association of Commerce and
Industry, and the Womens and Childrens Alliance (four years as President). Mr.
Hill holds a law degree from Georgetown University Law Center and a bachelors
degree from George Washington University. Mr. Hills qualifications to serve as
a director of the Company include his many years of senior management, legal and
energy industry experience.
Paul Larkin
:
Age 66
,
serves as a
director of the Company, a position he has held since March 2000. He served as
Secretary of the Company from March 2000 until December 2003, and has served as
Chairman of the Audit Committee from 2003 to present. He also served as a
director and the Secretary-Treasurer of Geo-Idaho from February 2002 until its
acquisition in December 2003. Since 1983, Mr. Larkin has also been the President
of the New Dawn Group, an investment and financial consulting firm located in
Vancouver, British Columbia, and a director and officer of various TSX-V listed
companies. New Dawn is primarily involved in corporate finance, merchant banking
and administrative management of public companies. Mr. Larkin held various
accounting and banking positions for over a decade before founding New Dawn in
1983, and currently serves on the boards of the following companies which are
listed on the TSX-V: Esrey Energy Ltd., Condor Resources Ltd., Tyner Resources
Ltd. Gstaad Capital Corp., Westbridge Energy Corp., and Velocity Minerals Ltd.
Mr. Larkins qualifications to serve as a director of the Company include his
many years of senior leadership and management experience in corporate finance,
merchant banking and administrative management of public companies.
Dr. Leland Roy Mink
:
Age 76
,
serves as a director of the Company, a position he has held since November
2006. Dr. Mink holds a PhD in Geology from the University of Idaho and is
currently self-employed as President of Mink GeoHydro Inc conducting consulting
activities in hydrogeology and geothermal resource evaluations. He served as
Program Director for the Geothermal Technologies Program at the U.S. Department
of Energy (DOE) from February 2003 to October 2006. Prior to working for the
DOE, Dr. Mink was the Vice President of Exploration for the Company from June
2002 to February 2003. He has also worked for Morrison-Knudsen Corporation,
Idaho Bureau of Mines and Geology and Idaho Water Resources Research Institute.
Dr. Mink serves on the Geothermal Resources Board of Directors and is a member
of the Geothermal Energy Association. His qualifications to serve as a director
of the Company include his many years of senior leadership and management
experience in the geothermal energy industry.
James C. Pappas
: Age 35, serves as a director of
the Company effective September 30, 2016. Mr. Pappas founded JCP Investment
Management in Houston in June 2009 and is the Managing Member and owner of the
Firm. Since January 2015, Mr. Pappas has served as a director of Jamba, Inc., a
leading health and wellness brand and the leading retailer of freshly squeezed juice, where
he is also a member of each of the Nominating and Corporate Governance Committee
and the Audit Committee. Mr. Pappas also currently serves as a director of Tandy
Leather Factory, Inc., a specialty retailer and wholesale distributor of leather
and leather related products. Previously, Mr. Pappas served on the Board of
Directors of The Pantry, Inc., has also served as Chairman of the Board of
Directors of Morgans Foods, and has also served as a director of Samex Mining
Corp. From 2005 until 2007, Mr. Pappas worked for The Goldman Sachs Group, Inc.
in their Investment Banking / Leveraged Finance Division. As part of the Goldman
Sachs Leveraged Finance Group, Mr. Pappas advised private equity groups and
corporations on appropriate leveraged buyout, recapitalization and refinancing
alternatives. Prior to Goldman Sachs, Mr. Pappas worked at Banc of America
Securities, the investment banking arm of Bank of America, where he focused on
Consumer and Retail Investment Banking, providing advice on a wide range of
transactions including mergers and acquisitions, financings, restructurings and
buy-side engagements. Mr. Pappas received a BBA in Information Technology, and a
Masters in Finance from Texas A&M University. His qualifications to serve as
a director of the Company includes his years of investment banking and director
experience.
-17-
John H. Walker
:
Age 68, is a director and
the Chairman of the Board of Directors of the Company. He has held that position
since December 2003. He was a Managing Director of Kensington Capital Partners
Ltd until his retirement in May 2017 and a National Director of Trout Unlimited
Canada. Mr. Walker has a 38 year history in urban planning, energy security and
power plant development in Ontario and internationally as well as experience on
both public and private sector boards. Mr. Walker was a founding director of the
Greater Toronto Airports Authority in 1992 and chaired the first Planning and
Development Committee of the Board which provided oversight in the construction
of CDN$4.4 billion terminal complex at Toronto Pearson Airport completed in
2004. He was instrumental in the development of a 117 megawatt cogeneration
power plant at Toronto Pearson Airport which commenced operations in 2005.
Additionally, he was a founding Director of the Borealis Infrastructure Fund
which is now owned by Ontario Municipal Employee Retirement System (OMERS). Mr.
Walker has worked in the financial services community as an investment banker
with Loewen Ondaatje McCutcheon and has served on the Board of Directors of
Sheridan College Institute of Technology and Advanced Learning. His background
includes 10 years at Ontario Hydro where he was responsible for site selection,
alternative energy and international market development. Mr. Walker has also
acted as a senior advisor to Falconbridge on the Koniambo project, a CDN$3
billion nickel smelter, mine, power plant and port project in New Caledonia. Mr.
Walker advises corporations on matters related to infrastructure and energy
development and acts as a developer of power plants. Mr. Walker is a Registered
Professional Planner in the Province of Ontario and a member of the Canadian
Institute of Planners. Mr. Walker has a BSc. from Springfield College and a
Masters of Environmental Studies (Urban and Regional Planning) from York
University. Mr. Walkers qualifications to serve as a director of the Company
include his many years of senior leadership and management experience in
international business development.
Additional Executive Officers Who are Not Nominees to the
Board.
Dennis J. Gilles:
Age 58, has served as the Chief
Executive Officer since April 2013 and a director of the Company since September
2011. Mr. Gilles also recently served as a Director and Executive Board Officer
of the Geothermal Resource Council. Mr. Gilles is a senior executive with 30
years of experience in the management, operations, maintenance, engineering,
construction and administration of power and petrochemical plants and their
related facilities. Mr. Gilles primary activities have included the
identification, evaluation and acquisition of existing renewable projects or
portfolios, as well as heading development of new green-field opportunities.
During his 23 year career with Calpine Corporation as Senior Vice President, Mr.
Gilles managed the Companys geothermal portfolio of 750 megawatts at the
Geysers geothermal field where he was instrumental in consolidating the majority
of the ownership interests into a single entity. Mr. Gilles was part of the
expansion and growth of Calpine Corporation from the very first megawatt to what
is now the largest independent power producer in the United States. Mr. Gilles
holds a Masters of Business Administration and a Bachelor of Science in
Mechanical Engineering.
-18-
Kerry D. Hawkley:
Age 63, serves as the Chief
Financial Officer and Corporate Secretary of the Company. He has served as the
Companys controller since July 2003, and became CFO as of January 1, 2005. From
July 2003 to December 2004, he also provided consulting services to Triumph Gold
Corp. From 1998 to June 2003, Mr. Hawkley served as controller, director and
treasurer of LB Industries. Mr. Hawkley has over 40 years of experience in all
areas of accounting, finance and administration. He holds Bachelor of Business
Administration degrees in Accounting and Finance. He started his career as an
internal auditor with Union Pacific Corporation and has held various accounting
management positions in the oil and gas, truck leasing, mining and energy
industries.
Jonathan Zurkoff:
Age 60, serves as the Treasurer
and Executive Vice President of the Company, a position he has held since
September 2011. From January 2009 to May 2009, Mr. Zurkoff served as a financial
consultant to the Company. He then served as the Vice President Finance of the
Company from June 2009 until September 2011. Mr. Zurkoff served as CFO of
Tamarack Resorts from 2004 to 2008. Mr. Zurkoff has over 25 years of experience
in engineering, construction, and all phases of project development with an
emphasis on project and corporate finance. Mr. Zurkoff holds a Masters of
Business Administration, a Masters of Science in Groundwater Hydrology, and a
Bachelor of Science in Geology. Mr. Zurkoff has held positions in Tamarack
Resort (CFO), Process Technologies (CFO & COO), and Morrison Knudsen
Corporation (now URS).
The election of each director nominee requires such nominee
receiving one of the seven highest number of votes cast FOR a nominees
election.
The Board of Directors recommends a vote FOR the election
of each of the seven nominated directors. Proxies will be voted FOR the
election of each of the seven nominees unless otherwise specified.
CORPORATE GOVERNANCE
Our Board of Directors and management are dedicated to
exemplary corporate governance. Good corporate governance is vital to the
continued success of U.S. Geothermal Inc. Our Board of Directors has adopted the
U.S. Geothermal Inc. Code of Business Conduct and Ethics to provide a corporate
governance framework for our directors and management to effectively pursue U.S.
Geothermal Inc.s objectives for the benefit of our shareholders. The Board
annually reviews and updates these guidelines and the charters of the Board
committees in response to evolving best practices and the results of annual
Board and committee evaluations. Our Code of Business Conduct and Ethics and
Board committee charters can be found at
http://
www.usgeothermal.com
by clicking on About Us.
Shareholders may request a free printed copy of our Code of Business Conduct and
Ethics and Board committee charters from our Corporate Secretary at 390 E
Parkcenter Blvd, Suite 250, Boise, Idaho 83706, or by contacting him at
info@usgeothermal.com
, or by calling (208) 424-1027. We will post any
amendments to the Code of Business Conduct and Ethics at that location on our
website. In the unlikely event that the Board of Directors approves any sort of
waiver to the Code of Business Conduct and Ethics for our executive officers or
directors, information concerning such waiver will also be posted at that
location on our website. No waivers were granted during the fiscal year ended
December 31, 2016. In addition to posting information regarding amendments and
waivers on our website, the same information will be included in a Current
Report on Form 8-K within four business days following the date of the amendment
or waiver, unless website posting of such amendment or waiver satisfies
applicable NYSE MKT listing rules.
Board Structure and Committee Composition
According to our Bylaws, the business and affairs of our
Company are to be managed by and under the direction of a Board of Directors.
The Board may exercise all powers not expressly given to our stockholders through our Certificate of Incorporation, Bylaws, or as
required by law. Our guidelines provide that the Board will review the Companys
long-term strategic plans and the major challenges faced by the Company in
executing its strategy. The Chairman of the Board is responsible for
establishing the agenda for each Board meeting. Each Board member is free to
suggest the inclusion of items on the agenda and to raise subjects at any Board
meeting that are not on the agenda for the meeting.
-19-
John H. Walker currently serves as the Chairman of the Board of
U.S. Geothermal, while Dennis J. Gilles currently serves as Chief Executive
Officer. The Board has no policy with respect to the separation of the offices
of Chairman of the Board and Chief Executive Officer, and if they are to be
separate, whether the Chairman of the Board should be selected from the
non-employee directors or be an employee. If the Chairman of the Board is also
an employee of the Company, he or she is referred to as the Executive Chairman.
The Board believes that the issue of the separation of these positions should be
considered periodically as part of the succession planning process. Based on
these principles, the Board may determine that it is appropriate in the future
to combine the roles of Chairman of the Board and Chief Executive Officer. The
Board does believe, however, that if the roles of Chief Executive Officer and
the Chairman of the Board are combined, sound governance practices require a
strong countervailing governance structure that includes, among other things,
the appointment of a Lead Independent Director with a broad set of duties.
When a Lead Independent Director is appointed, the Lead
Independent Directors duties shall include, at a minimum (i) presiding at all
meetings of the Board at which the Chairman is not present, including executive
sessions of independent directors, (ii) serving as a liaison between the
Chairman and the independent directors, (iii) approving Board meeting schedules
to assure that there is sufficient time for discussion of all agenda items, (iv)
having authority to call meetings of the independent directors, and (v) if
requested by major shareholders, ensuring he or she is available for
consultation and direct communication.
We believe that our current Board leadership structure
efficiently addresses the present needs of our Company, and allows our Board to
fulfill its role in exercising effective, independent oversight of our
management on behalf of our stockholders. Our Board further believes that we
have in place effective structures, processes and arrangements to ensure that
the work of our Board is completed in a manner that maintains the highest
standards of corporate governance, independence and leadership, as well as
continued accountability of management.
As of the date of this proxy statement, our Board of Directors
is comprised of eight (8) directors and maintains the following three standing
committees: Audit Committee; Compensation and Benefits Committee; and Nominating
and Corporate Governance Committee. Each of these committees has a written
charter approved by the Board.
Director Independence
Our Board has adopted certain standards to assist it in
assessing the independence of each of our directors. Absent other material
relationships with the Company, a director of the Company who otherwise meets
the independence qualifications of NYSE MKT listing standards may be deemed
independent by the Board of Directors after consideration of all of the
relationships between the Company, or any of our subsidiaries, and the director,
or any of his or her immediate family members (as defined in NYSE MKT listing
standards), or any entity with which the director or any of his or her immediate
family members is affiliated by reason of being a partner, officer or a
significant shareholder thereof. Examples of the NYSE MKT standards on
independence include:
|
|
A director is not independent if the director is, or has
been within the last three years, an employee of the Company, or an
immediate family member is, or has been within the last three years, an
executive officer of the Company;
|
-20-
|
|
A director is not independent if the director has
received, or has an immediate family member who has received, during any
twelve-month period within the last three years, more than $120,000 in
direct compensation from the Company;
|
|
|
|
|
|
A director is not independent if the director, or an
immediate family member, is a partner or an employee of the Companys
internal or external audit firms;
|
|
|
|
|
|
A director is not independent if 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 the
Companys executive officers also served on the compensation committee of
the other company; or
|
|
|
|
|
|
A director is not independent if 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
the Company for property or services in an amount which, in any of the
past three years, exceeds the greater of $1 million or 2% of the Companys
consolidated gross revenue.
|
In assessing the independence of our directors, our full Board
carefully considered all of the business relationships between the Company and
our directors or their affiliated companies. This review was based primarily on
responses of the directors to questions in a questionnaire regarding employment,
business, familial, compensation and other relationships with the Company and
our management. Normal course business, relationships arising solely from a
directors membership in the same professional, social, fraternal or religious
association or organization, or ownership of less than 5% in equity or
partnership interests would not affect a directors independence. By itself,
ownership of greater than 5% interests also does not necessarily bar director
independence. The NYSE MKT also imposes additional standards for independence
for members of the Audit Committee and Compensation and Benefits Committee.
Our Board of Directors has determined that each of our
directors other than Dennis J. Gilles and Douglas J. Glaspey has no material
relationship with U.S. Geothermal Inc. and is independent in accordance with the
criteria described above. Mr. Gilles is not independent because he is the Chief
Executive Officer of the Company. Mr. Glaspey is not independent because he is
the President and Chief Operating Officer of the Company.
Each of our Audit, Nominating and Corporate Governance and
Compensation and Benefits Committees is composed only of independent directors
as determined in accordance with the rules of the NYSE MKT.
Board Qualifications and Selection Process
Director Qualification Standards
. The Company will only
consider as candidates for director individuals who possess the highest personal
and professional ethics, integrity and values, and who are committed to
representing the long-term interests of our shareholders. The Nominating and
Corporate Governance Committee also considers issues of diversity, such as
diversity of gender, race and national origin, education, professional
experience and differences in viewpoints and skills. The Nominating and
Corporate Governance Committee does not have a formal policy on Board diversity;
however, the Nominating and Corporate Governance Committee believes that it is
important for Board members to represent diverse viewpoints. In evaluating
candidates for nomination as a director of the Company, the Nominating and
Corporate Governance Committee considers a wide variety of criteria, including
current or recent experience as a chief executive officer of a public company or
as a leader of another major complex organization; business and financial
expertise; geography; experience as a director of a public company; gender and
ethnic diversity on the Board; independence; and general criteria such as
ethical standards, independent thought, practical wisdom and mature judgment. In
addition, directors must be willing to devote sufficient time to carrying out
their duties and responsibilities effectively, and should be committed to
serving on the Board for an extended period of time.
-21-
One or more of our directors must possess the education or
experience required to qualify as an audit committee financial expert, as
defined by the applicable rules of the SEC.
Director Nominee Selection Process
. The selection
process for director candidates includes the following steps: (1) identification
of director candidates by the Nominating and Corporate Governance Committee
based upon suggestions from current directors and executives and recommendations
received from shareholders; (2) possible engagement of a director search firm to
provide names and biographies of director candidates for the Nominating and
Corporate Governance Committees consideration; (3) interviews of candidates by
the Nominating and Corporate Governance Committee members; (4) reports to the
Board by the Nominating and Corporate Governance Committee on the selection
process; (5) recommendations by the Nominating and Corporate Governance
Committee; and (6) formal nomination by the Board for inclusion in the slate of
directors at the annual shareholders meeting. Director candidates recommended by
shareholders are given the same consideration as candidates suggested by
directors and executive officers. A shareholder seeking to recommend a
prospective candidate for the Nominating and Corporate Governance Committees
consideration should submit the candidates name and sufficient written
information about the candidate to permit a determination by the Nominating and
Corporate Governance Committee whether the candidate meets the director
selection criteria set forth in our Nominating and Corporate Governance
Committee Charter to the Corporate Secretary of the Company at the address
listed in this proxy statement. The Nominating and Corporate Governance
Committee regularly reviews the director nomination procedures to assess the
effectiveness of its policies.
Board Meetings and Committees
The Board of Directors conducts its business through meetings
of the Board and the following standing committees: Audit, Nominating and
Corporate Governance, and Compensation and Benefits. The standing committees
regularly report on their deliberations and actions to the full Board. Each of
the standing committees has the authority to engage outside experts, advisors
and counsel to the extent it considers appropriate to assist the committee in
its work. Each of the standing committees has adopted and operates under a
written charter which can be found at
http:///www.usgeothermal.com
by
clicking on About Us. Shareholders may request a free printed copy of any of
these charters from our Corporate Secretary by contacting him at
info@usgeothermal.com
or by calling (208) 424-1027.
The Board of Directors held five meetings during the fiscal
year ended December 31, 2016. Each director attended at least 75% of the total
meetings of the Board and Board committees on which the director served during
the fiscal year. The following table shows the membership of each Board
committee.
Committee
Membership
|
Name
|
|
Audit
|
|
Nominating and
Corporate
Governance
|
|
Compensation and
Benefits
|
|
|
|
|
|
|
|
Ali G. Hedayat
|
|
√
|
|
|
|
|
|
|
|
|
|
|
|
Randolph J. Hill
|
|
√
|
|
|
|
Chair
|
|
|
|
|
|
|
|
Paul A. Larkin
|
|
Chair & Financial Expert
|
|
√
|
|
|
|
|
|
|
|
|
|
Leland L. Mink
|
|
√
|
|
√
|
|
|
|
|
|
|
|
|
|
James C. Pappas
|
|
|
|
Chair
|
|
√
|
|
|
|
|
|
|
|
John H. Walker
|
|
√
|
|
|
|
√
|
-22-
Audit Committee
The primary function of the Audit Committee is to assist the
Board in fulfilling its financial oversight responsibilities by reviewing the
financial reports and other financial information provided by the Company to
regulatory authorities and shareholders, the Companys systems of internal
controls regarding finance and accounting and the Companys auditing, accounting
and financial reporting processes. Consistent with this function, the Audit
Committee will encourage continuous improvement of, and should foster adherence
to, the Companys policies, procedures and practices at all levels. The Audit
Committees primary duties and responsibilities are to:
|
|
serve as an independent and objective party to monitor
the Companys financial reporting and internal control system and review
the Companys financial statements;
|
|
|
|
|
|
review and appraise the performance of the Companys
external auditors; and
|
|
|
|
|
|
provide open avenues of communication among the Companys
auditors, financial and senior management and the Board.
|
Composition
The Audit Committee shall be comprised of at least three
directors as determined by the Board, each of whom shall be free from any
relationship that, in the opinion of the Board, would interfere with the
exercise of his or her independent judgment as a member of the Audit Committee
and shall satisfy the independence, financial literacy, expertise and experience
requirements under applicable securities laws and the rules of the NYSE MKT. At
least one member of the Audit Committee shall have accounting or related
financial management expertise. All members of the Audit Committee that are not
financially literate will work towards becoming financially literate to obtain a
working familiarity with basic finance and accounting practices. For the
purposes of the Audit Committees Charter, the definition of financially
literate is the ability to read and understand a set of financial statements
that present a breadth and level of complexity of accounting issues that are
generally comparable to the breadth and complexity of the issues that can
presumably be expected to be raised by the Companys financial statements. The
members of the Audit Committee shall be elected by the Board at its first
meeting following the annual shareholders meeting. Unless a Chair is elected by
the full Board, the members of the Audit Committee may designate a Chair by a
majority vote of the full Audit Committee membership. All members of the Audit
Committee meet the applicable independence, financial literacy, expertise and
experience requirements under applicable securities laws and the rules of the
NYSE MKT. Mr. Larkin has been determined to be the audit committee financial
expert.
Responsibilities and Duties
To fulfill its responsibilities and duties, the Committee
shall:
Documents/Reports Review
(a)
|
Review and update the Audit Committees Charter
annually.
|
|
|
(b)
|
Review the Companys financial statements, managements
discussion and analysis (MD&A) and any annual and interim earnings,
press releases before the Company publicly discloses this information and
any reports or other financial information (including quarterly financial
statements), which are submitted to any governmental body, or to the
public, including any certification, report, opinion, or review rendered
by the external auditors.
|
-23-
Meetings
The Audit Committee shall meet at least four times annually
,
or more frequently as circumstances dictate. As part of its job to foster
open communication, the Audit Committee will meet at least annually with the
Chief Financial Officer and the external auditors in separate sessions. The
Audit Committee held four meetings during the fiscal year ended December 31,
2016.
Nominating and Corporate Governance Committee
The primary objective of the Nominating & Corporate
Governance Committee of U.S. Geothermal Inc. is to assist the Board in
fulfilling its oversight responsibilities by (a) identifying individuals
qualified to become Board and Board Committee members and recommending that the
Board select director nominees for appointment or election to the Board; and (b)
developing and recommending to the Board corporate governance guidelines for the
Company and making recommendations to the Board with respect to corporate
governance practices.
The Nominating & Corporate Governance Committee shall meet
as many times as the Committee deems necessary to carry out its duties
effectively, but not less frequently than three times per year. The chair of the
Committee shall ensure that the agenda for each upcoming meeting of the
Committee is circulated to each member of the Committee and to the other
directors in advance of such meeting.
The Nominating & Corporate Governance Committee reviews and
makes recommendations to the Board regarding our corporate governance principles
and processes, including policies related to director retention, resignation and
retirement. The Nominating & Corporate Governance Committee also manages the
performance review process for our current directors, recommends new directors,
recommends qualified members of the Board for membership on committees, conducts
a preliminary assessment of the independence of all Board members, reviews
charters of all Board committees, reviews and evaluates succession plans for
executive officers, oversees the evaluation of management, and makes
recommendations to the Board regarding any shareholder proposals. All of the
Nominating & Corporate Governance Committee members meet the applicable
independence requirements of NYSE MKT. The Nominating & Corporate Governance
Committee held four meetings during the fiscal year ended December 31, 2016.
Compensation and Benefits Committee
The Compensation and Benefits Committee is appointed annually
by the Board to discharge the Board's responsibilities relating to compensation
and benefits of the executive officers of the Company. The goals of the
committee are to attract, retain and motivate our executive officers by
providing appropriate levels of compensation and benefits while taking into
consideration, among such other factors as it may deem relevant, the Company's
performance, shareholder returns, the value of similar incentive awards to
executive officers at comparable companies and the awards given to the executive
officers in past years. The main categories of compensation available to the
committee are base salary, discretionary annual performance bonuses, stock
option grants, restricted stock awards, and insurance reimbursements.
The Company competes with a variety of companies for our
executive-level employees. The Compensation and Benefits Committee uses base
salary to compensate the executive officers for services rendered as well as for
motivation and retention purposes. Base salaries are intended to be competitive
for companies of similar size and purpose, also taking into consideration
individual factors such as experience, tenure, institutional knowledge and
qualifications. Base salaries are reviewed annually to determine whether they
are consistent with our overall compensation objectives. In considering
increases in base salary, the Compensation and Benefits Committee reviews
individual and corporate performance, market and industry conditions, and the
Companys overall financial health.
-24-
The Compensation and Benefits Committee may grant annual
performance bonuses as a reward for achievement of individual and corporate
short-term goals. Any grant of an annual performance bonus is discretionary and
the amount is determined after a recommendation from the CEO with input from
other executive officers. Bonus amounts are dependent upon our financial and
operational performance as well as the completion of specific milestone events
by the individual executive officer.
Generally, the Compensation and Benefits Committee grants stock
options to all employees, including executive officers, annually after
completion of our annual financial reports. Stock options are granted with an
exercise price equal to the market value of our common stock on the date of the
grant, and typically with a term of five years. The timing of the stock option
grant is not coordinated with the release of material non-public information and
is typically in the first or second fiscal quarter. The options typically vest
25% on the date of grant, and another 25% each six months thereafter. During the
fiscal year ended December 31, 2016, stock option grants to executive officers
represented approximately 47% of the total stock option grants to all employees.
Our executive officers do not receive any material incremental
benefits that are not otherwise available to all of our employees. Our health
and dental insurance plans are the same for all employees.
The Compensation and Benefits Committee also reviews and makes
recommendations to the Board on an annual basis with respect to the adequacy and
form of compensation and benefits of independent directors, including directors
equity incentive plan(s) and any other incentive compensation plans and
equity-based plans. Recommendations are made after a determination of time
commitments required of the independent directors.
As of April 1, 2011, independent directors are compensated
$30,000 per year and reimbursed for all Company-related expenses. Effective
1/1/2014, independent directors also receive additional compensation for
chairing a Board committee (Board and Audit $5,000, all other $2,500), and are
paid for in person meetings attended ($1,500) and for Board and committee
telephone calls attended ($400).
All of the Compensation and Benefits Committee members meet the
applicable independence requirements of the NYSE MKT. The Compensation and
Benefits Committee held four meetings during the fiscal year ended December 31,
2016.
Compensation Committee Report
The Compensation and Benefits Committee has reviewed and
discussed with management the Companys Compensation Discussion and Analysis
included herein. Based on such review and discussions, the Compensation and
Benefits Committee has recommended to the Board of Directors that the
Compensation Discussion and Analysis be included in the Companys Proxy
Statement.
|
Randolph J. Hill
|
|
James C. Pappas
|
|
John H. Walker
|
Standard for Election of Directors
Our Bylaws provide that directors will be elected by a
plurality of the votes of the shares present in person or represented by proxy
at the meeting and entitled to vote on the election of directors. This means
that those nominees receiving the seven highest number of votes at the meeting
will be elected, even if the votes cast for each nominee do not constitute a
majority of the votes present and entitled to vote.
-25-
Executive Sessions of the Board
Our non-employee directors meet in executive session at each
regular meeting of the Board without the chief executive officer or any other
member of management present, and the independent directors meet alone on an
annual basis. The Chairman of the Board presides at all of these sessions.
Director Policies
Policy Regarding Service on Other Boards
. Our Board of
Directors does not have a policy that restricts our directors from serving on
the board of directors of other publicly traded companies unless the Board
determines that such service will impair their service on the U.S. Geothermal
Board or could represent a conflict of interest.
Policy Regarding Attendance at Annual Meetings
. We
encourage, but do not require, our Board members to attend the annual meeting of
shareholders. Last year, Messrs. Gilles, Glaspey, Hill, Larkin, Mink, Pappas and
Walker attended the annual shareholders meeting.
EXECUTIVE COMPENSATION
Compensation Discussion and Analysis
Our compensation philosophy is to structure compensation awards
to members of our executive management that directly align their personal
interests with those of our shareholders. Our executive compensation program is
intended to attract, motivate, reward and retain the management talent required
to achieve our corporate objectives and increase shareholder value, while at the
same time making the most efficient use of shareholder resources. This
compensation philosophy puts a strong emphasis on pay for performance, and uses
equity awards as a significant component in order to correlate the long-term
growth of shareholder value with managements most significant compensation
opportunities.
The three primary components of total direct compensation for
our senior executives are:
|
|
base salary;
|
|
|
annual cash incentive bonus opportunity; and
|
|
|
stock options and restricted stock.
|
The relative weighting of the three components of compensation
is designed to strongly reward long-term performance, by heavily emphasizing the
proportion of long-term equity compensation.
The Compensation and Benefits Committee is appointed annually
by the Board of Directors to discharge the Boards responsibilities relating to
compensation and benefits of the executive officers of our Company. The goals of
the committee are to attract, retain and motivate our executive officers by
providing appropriate levels of compensation and benefits while taking into
consideration, among such other factors as it may deem relevant, our Companys
performance, shareholder returns, the value of similar incentive awards to
executive officers at comparable companies and the awards given to the executive
officers in past years. The main categories of compensation available to the
committee are base salary, discretionary annual performance bonuses, stock
option grants, restricted stock awards, and insurance reimbursements.
We compete with a variety of companies for our executive-level
employees. The Compensation and Benefits Committee uses base salary to
compensate the executive officers for services rendered. Base salaries are
intended to be competitive for companies of similar size and purpose, also
taking into consideration individual factors such as experience, tenure,
institutional knowledge and qualifications. An informal review of several public junior resource development companies was completed to
provide the committee with comparative compensation information. The committee
looked at Alterra, Calpine, Ormat, Chesapeake, Algonquin Power, Boralex,
Caribbean Utilities, Maxim Power, Etrion, and Atlantic Power, who are involved
in either geothermal development, mineral exploration, electrical power
generators or other similar activities. Base salaries are reviewed annually to
determine whether they are consistent with our overall compensation objectives.
In considering increases in base salary, the Compensation and Benefits Committee
reviews individual and corporate performance, market and industry conditions,
and our overall financial health.
-26-
While the Company does not attach a weighting to the various
components of executive compensation, the Compensation and Benefits Committee
attempts to pay a competitive salary (retention) to its executives while
providing long-term incentive to the executives through equity awards
(ownership/reward) in order to align their interest with the long-term
progression of the Company as a whole. Our Chief Executive Officer and
Compensation and Benefits Committee perform an informal annual review of
compensation practices of similar sized companies to educate themselves of the
general parameters (levels and types of compensation) for executive
compensation. They do not, however, benchmark the various components of pay. The
review highlights areas of our executive pay package that may not be consistent
with compensation practices at similar sized companies and provides the
committee with knowledge of the compensation landscape for its executives.
The Compensation and Benefits Committee may grant annual
performance bonuses as a reward for achievement of individual and corporate
short-term goals. Any grant of an annual performance bonus is discretionary and
the amount is determined after a recommendation from the CEO with input from
other executive officers. Bonus amounts are dependent upon our financial and
operational performance as well as the completion of specific milestone events
by the individual executive officer.
Generally, the Compensation and Benefits Committee grants stock
options to all employees, including executive officers, for motivation and
retention purposes annually after completion of our annual financial reports.
Stock options are granted with an exercise price equal to the market value of
our common stock on the date of the grant, and typically with a term of five
years. The timing of the stock option grant is not coordinated with the release
of material non-public information and is typically occurs during the second
fiscal quarter. The options typically vest 25% on the date of grant, and another
25% each six months thereafter. During the fiscal year ended December 31, 2016,
stock option grants to executive officers represented approximately 45% of the
total stock option grants to all employees. During the year ended December 31,
2016, stock option grants to executive officers represented approximately 47% of
the total stock option grants to all employees. We do not have a formal
procedure for determining factors to consider when making grants. The committee
uses an informal review of similar sized companies engaged in natural resource
development to assist in determining the appropriate levels of stock option.
In 2015, the last year in which we conducted our advisory say
on pay resolution, the percentage of votes cast For our advisory say on pay
resolution to approve our executive compensation was 88.4% . The Board and the
Compensation and Benefits Committee considered the results of the advisory vote
and no significant changes have been made to the executive compensation programs
based on the 2015 say on pay results.
Our executive officers do not normally receive any material
incremental benefits that are not otherwise available to all of our employees.
Our health, dental and vision insurance plans are the same for all employees.
Gilles Employment Agreement
Effective April 19, 2013, Dennis J. Gilles entered into an
employment agreement as the Companys Chief Executive Officer. The initial term
of employment was from April 19, 2013 until the earlier of April 18, 2015 or
termination of employment in accordance with the terms of the employment
agreement. The employment agreement automatically renewed at the end of the initial term,
and automatically renews at the end of each subsequent term, for an additional
one year term unless either the Company or Mr. Gilles gives written notice of
non-renewal to the other party at least 90 days prior to expiration of the
then-current term. Effective January 9, 2017, the Company and Mr. Gilles entered
into an amendment to the employment agreement to extend the current term by
three months, such that the current term ends on July 18, 2017. No other terms
of the employment agreement were amended. On April 19, 2017, the Company
provided a notice of non-renewal to Mr. Gilles.
-27-
The Company has agreed to pay to Mr. Gilles an annual base
salary of $375,000, which increased to $410,000 on April 19, 2014 and will
remain in place as a minimum annual base salary during all successive periods
under the employment agreement. Until the earlier of expiration or termination
of the employment agreement, the Company has agreed to provide Mr. Gilles, at
the Companys expense, a $1,000,000 life insurance policy that names the Gilles
Family Trust as the beneficiary in the event of the death of Mr. Gilles. Mr.
Gilles will be eligible to earn annual bonuses with the target amount being 100%
of his annual base salary payable in a combination of cash and restricted shares
of the Companys common stock, provided that no more than one-half of the annual
bonus will be paid in the form of restricted shares. The actual bonus amount
will be subject to the discretion of the Companys board of directors and its
Compensation and Benefits Committee. Mr. Gilles and his immediate family will be
eligible to participate in the Companys employee health insurance, dental
insurance, retirement plan 401(k) and any other employee benefit plans in
accordance with the terms and conditions of such plans. Mr. Gilles is entitled
to five weeks of vacation within each 12-month period under the employment
agreement. Subject to certain limitations and conditions, the Company will also
reimburse Mr. Gilles for all reasonable expenses incurred in connection with his
employment and the cost of travel between the Companys office in Boise, Idaho
and his home.
The Company may terminate Mr. Gilles employment at any time
for cause upon at least 15 days notice. In such event, Mr. Gilles will only
be entitled to compensation through the date of termination. Mr. Gilles may
terminate his employment at any time without good reason (which is defined in
the employment agreement) upon 60 days notice. Mr. Gilles will be paid his
salary through the date designated in the notice, plus payment for unused
vacation days granted or accrued and reimbursement for expenses incurred through
the date of termination.
In the event Mr. Gilles employment is terminated by the
Company without cause or by Mr. Gilles for good reason, Mr. Gilles will be
entitled to receive a lump sum payment equal to one and one-half (1.5) times the
sum of his base salary ($410,000) plus annual target bonus. In addition, any
unvested stock options to acquire shares of the Companys common stock and any
unvested restricted shares of the Companys common stock held by Mr. Gilles as
of the termination date that would have vested within18 months following such
termination date had Mr. Gilles employment continued will become fully vested.
Mr. Gilles also will receive a lump sum cash payment equal to 24 times the
Companys contribution to the monthly cost of the medical and dental benefits
provided to Mr. Gilles under the employment agreement.
In the event Mr. Gilles employment is terminated by the
Company without cause or by Mr. Gilles for good reason within 12 months
following a change of control (which is defined in the employment agreement)
or a change of control occurs within 12 months following such termination, Mr.
Gilles will receive total severance payments equal to three (3) times the sum of
his base salary ($410,000) plus annual target bonus. In addition, any unvested
stock options to acquire shares of the Companys common stock and any unvested
restricted shares of the Companys common stock held by Mr. Gilles as of the
termination date that would have vested within 18 months following such
termination date had Mr. Gilles employment continued will become fully vested.
Any vested stock options held by Mr. Gilles will remain exercisable until the
expiration of the original term of such option. If such termination occurs
within 12 months following a change of control, Mr. Gilles will receive a lump
sum cash payment equal to 36 times the Companys contribution to the monthly
cost of the medical and dental benefits provided to Mr. Gilles under the
employment agreement.
-28-
The Company has agreed to defend and indemnify Mr. Gilles in
connection with legal claims, lawsuits, cause of action or liabilities asserted
against him arising out of or related to his employment with the Company and to
provide Mr. Gilles with an advance for any expenses in connection with such
defense and/or indemnification. The employment agreement also includes covenants
by Mr. Gilles with respect to the treatment of confidential information,
non-competition and non-solicitation, and provides for equitable relief in the
event of breach.
Glaspey Employment Agreement
The Company has entered into an employment agreement with
Douglas J. Glaspey as the Companys President and Chief Operating Officer. The
initial term of employment was from July 1, 2013 until the earlier of June 30,
2015 or termination of employment in accordance with the terms of the employment
agreement. The employment agreement automatically renewed at the end of the
initial term, and automatically renews at the end of each subsequent term, for
an additional one year term unless either the Company or Mr. Glaspey gives
written notice of non-renewal to the other party at least 60 days prior to
expiration of the then-current term.
The Company has agreed to pay to Mr. Glaspey compensation of
$224,180 per annum, to grant to Mr. Glaspey cash or stock bonus and/or stock
options in such amount and under such conditions as may be determined by the
Companys board of directors, to provide to Mr. Glaspey (and his immediate
family) such medical, dental and related benefits as are available to other
employees of the Company, to provide to Mr. Glaspey reasonable life insurance
and accidental death coverage (with the proceeds payable to Mr. Glaspeys estate
or specified family member), and to provide to Mr. Glaspey such 401(k)
retirement benefit as is available to other employees of the Company. In
addition, the Company will reimburse Mr. Glaspey for reasonable expenses
incurred in connection with the performance of his duties under the employment
agreement. Mr. Glaspey is entitled to a paid vacation of five weeks within each
12 month period under the terms of the employment agreement.
The employment agreement may be terminated by the Company
without notice, payment in lieu of notice, severance payments, benefits, damages
or other sums for causes which include failure to perform his duties in a
competent and professional manner, appropriation of corporate opportunities or
failure to disclose a material conflict of interest, a plea of guilty to, or
conviction of, an indictable offense which may not be further appealed, fraud,
dishonesty, illegality or gross incompetence, failure to disclose material facts
concerning business interests or other employment that are relevant to his
employment with the Company, refusal to follow reasonable and lawful directions
of the Company, breach of fiduciary duty, and material breach under, or gross
negligence in connection with his employment under, the employment agreement.
Otherwise, the Company may terminate the employment agreement upon one months
written notice and Mr. Glaspey may terminate the employment agreement upon 60
days written notice.
In the event that Mr. Glaspeys employment is terminated
without cause by the Company or for good reason by Mr. Glaspey, and in the
event that a change of control has occurred within the 12 months prior to the
termination, Mr. Glaspey is entitled to receive compensation equal to 24 monthly
installments of his normal compensation on the 30
th
day after the
date of termination (which sum would be currently $448,360). The terms cause,
good reason and change of control are defined in the employment agreement.
The Company has agreed to defend and indemnify Mr. Glaspey in
connection with legal claims, lawsuits, cause of action or liabilities asserted
against him arising out of or related to his employment with the Company and to
provide Mr. Glaspey with an advance for any expenses in connection with such
defense and/or indemnification. The employment agreement also includes covenants
by Mr. Glaspey with respect to the treatment of confidential information,
non-competition and non-solicitation, and provides for equitable relief in the
event of breach.
-29-
Hawkley Employment Agreement
The Company has entered into an employment agreement with Kerry
D. Hawkley as the Companys Chief Financial Officer. The initial term of
employment was from July 1, 2013 until the earlier of June 30, 2015 or
termination of employment in accordance with the terms of the employment
agreement. The employment agreement automatically renewed at the end of the
initial term, and automatically renews at the end of each subsequent term, for
an additional one year term unless either the Company or Mr. Hawkley gives
written notice of non-renewal to the other party at least 60 days prior to
expiration of the then-current term.
The Company has agreed to pay to Mr. Hawkley compensation of
$182,962 per annum, to grant to Mr. Hawkley cash or stock bonus and/or stock
options in such amount and under such conditions as may be determined by the
Companys board of directors, to provide to Mr. Hawkley (and his immediate
family) such medical, dental and related benefits as are available to other
employees of the Company, and to provide to Mr. Hawkley such 401(k) retirement
benefit as is available to other employees of the Company. In addition, the
Company will reimburse Mr. Hawkley for reasonable expenses incurred in
connection with the performance of his duties under the employment agreement.
Mr. Hawkley is entitled to a paid vacation of five weeks within each 12 month
period under the terms of the employment agreement.
The employment agreement may be terminated by the Company
without notice, payment in lieu of notice, severance payments, benefits, damages
or other sums for causes which include failure to perform his duties in a
competent and professional manner, appropriation of corporate opportunities or
failure to disclose a material conflict of interest, a plea of guilty to, or
conviction of, an indictable offense which may not be further appealed, fraud,
dishonesty, illegality or gross incompetence, failure to disclose material facts
concerning business interests or other employment that are relevant to his
employment with the Company, refusal to follow reasonable and lawful directions
of the Company, breach of fiduciary duty, and material breach under, or gross
negligence in connection with his employment under, the employment agreement.
Otherwise, the Company may terminate the employment agreement upon one months
written notice and Mr. Hawkley may terminate the employment agreement upon 60
days written notice.
In the event that Mr. Hawkleys employment is terminated
without cause by the Company or for good reason by Mr. Hawkley, and in the
event that a change of control has occurred within the 12 months prior to the
termination, Mr. Hawkley is entitled to receive compensation equal to 18 monthly
installments of his normal compensation on the 30
th
day after the
date of termination (which sum would be currently $274,443). The terms cause,
good reason and change of control are defined in the employment agreement.
The Company has agreed to defend and indemnify Mr. Hawkley in
connection with legal claims, lawsuits, cause of action or liabilities asserted
against him arising out of or related to his employment with the Company and to
provide Mr. Hawkley with an advance for any expenses in connection with such
defense and/or indemnification. The employment agreement also includes covenants
by Mr. Hawkley with respect to the treatment of confidential information,
non-competition and non-solicitation, and provides for equitable relief in the
event of breach.
Zurkoff Employment Agreement
The Company has entered into an amendment to the employment
agreement with Jonathan Zurkoff as the Companys Executive Vice President,
Finance. The employment agreement, as amended five times, is effective December
31, 2010, and will remain in effect until March 31, 2018 unless earlier
terminated in accordance with its terms.
-30-
The Company has agreed to pay to Mr. Zurkoff compensation of
$160,000 per annum pursuant to the employment agreement. This salary may be
adjusted annually on the anniversary date of the employment agreement and is
currently $195,840 per annum. The Company has also agreed to provide to Mr.
Zurkoff such 401(k) retirement benefit as is available to other employees of the
Company, and to provide to Mr. Zurkoff (and his immediate family) such medical,
dental and related benefits as are available to other employees of the Company.
In addition, the Company will reimburse Mr. Zurkoff for reasonable expenses
incurred in connection with the performance of his duties under the employment
agreement. Mr. Zurkoff is entitled to a paid vacation of 20 days within each 12
month period under the terms of the employment agreement.
The employment agreement may be terminated by the Company
without notice, payment in lieu of notice, severance payments, benefits, damages
or other sums for causes which include failure to perform his duties in a
competent and professional manner, appropriation of corporate opportunities or
failure to disclose a material conflict of interest, a plea of guilty to, or
conviction of, an indictable offense which may not be further appealed, fraud,
dishonesty, illegality or gross incompetence, failure to disclose material facts
concerning business interests or other employment that are relevant to his
employment with the Company, refusal to follow reasonable and lawful directions
of the Company, breach of fiduciary duty, and material breach under, or gross
negligence in connection with his employment under, the employment agreement.
Otherwise, either party may terminate the employment agreement upon one months
written notice.
In the event that Mr. Zurkoffs employment is terminated
without cause by the Company or for good reason by Mr. Zurkoff, and in the
event that a change of control has occurred within the 12 months prior to the
termination, Mr. Zurkoff is entitled to receive compensation equal to 18 monthly
installments of his normal compensation on the 30
th
day after the
date of termination (which sum would be currently $293,760). The terms cause,
good reason and change of control are defined in the employment agreement.
The employment agreement also includes covenants by Mr. Zurkoff
with respect to the treatment of confidential information and non-competition,
and provides for equitable relief in the event of breach.
-31-
Summary Compensation Table
The following table shows the compensation for the last three
years awarded to or earned by our principal executive officer, principal
financial officer and each of our two other most highly compensated executive
officers (collectively, our Named Executive Officers), comprising all of the
executive officers of the Company.
Name and
principal
position(s)
|
Year
Ended
|
Salary
(1)
($)
|
Bonus
(2)
($)
|
Option
Awards
(3)
($)
|
Stock
Awards
(4)
($)
|
All other
compensation
(5)
($)
|
Total
($)
|
|
|
|
|
Dennis J. Gilles,
Chief
Executive
Officer
|
12/31/14
|
399,500
|
150,000
|
167,378
|
105,000
|
3,406
|
825,284
|
12/31/15
|
410,000
|
102,500
|
114,524
|
156,000
|
2,750
|
785,774
|
12/31/16
|
398,961
|
75,000
|
194,679
|
162,500
|
2,110
|
833,250
|
|
Douglas J. Glaspey,
President and
Chief Operating Officer
|
12/31/14
|
220,000
|
22,000
|
92,058
|
0
|
1,035
|
335,093
|
12/31/15
|
220,000
|
0
|
85,113
|
14,000
|
1,035
|
320,148
|
12/31/16
|
202,441
|
9,000
|
77,888
|
0
|
1,035
|
290,364
|
|
Kerry D. Hawkley,
Chief Financial
Officer
|
12/31/14
|
178,282
|
17,500
|
73,228
|
0
|
0
|
269,010
|
12/31/15
|
179,375
|
8,969
|
40,317
|
11,351
|
0
|
240,012
|
12/31/16
|
182,065
|
10,000
|
53,923
|
19,200
|
0
|
265,188
|
|
Jonathan Zurkoff,
Treasurer and
Executive Vice President
|
12/31/14
|
192,000
|
20,000
|
69,729
|
0
|
0
|
281,729
|
12/31/15
|
192,000
|
9,600
|
32,754
|
12,973
|
0
|
247,327
|
12/31/16
|
194,880
|
8,000
|
47,821
|
16,800
|
0
|
267,501
|
(1)
|
Dollar value of base salary (cash and non-cash) earned by
the Named Executive Officer during the fiscal year. Certain executives
took time off without pay during 2016.
|
(2)
|
Dollar value of bonus (cash and non-cash) earned by the
Named Executive Officer during the fiscal year.
|
(3)
|
Stock options are valued at the grant date in accordance
with FASB ASC Topic 718.
|
(4)
|
Stock awards (restricted shares) are valued at grant
date.
|
(5)
|
Other compensation consists of all other compensation not
disclosed in another category.
|
-32-
Outstanding Equity Awards at Fiscal Year-End
The following table shows the unexercised stock options,
unvested restricted stock, and other equity incentive plan awards held at the
year ended December 31, 2016 by our Named Executive Officers.
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Market Value of
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Shares or Units
|
|
|
Shares or Units of
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
Option
|
|
|
of Stock That
|
|
|
Stock That Have
|
|
|
|
Options
|
|
|
Options
(1)
|
|
|
Exercise Price
|
|
|
Expiration
|
|
|
Have Not Vested
|
|
|
Not Vested
|
|
Name
|
|
(#) Exercisable
|
|
|
(#) Unexercisable
|
|
|
($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)
|
|
Dennis J. Gilles
|
|
16,666
|
|
|
0
|
|
|
1.86
|
|
|
8/24/17
|
|
|
0
|
|
|
0
|
|
Douglas J. Glaspey
|
|
15,000
|
|
|
0
|
|
|
1.86
|
|
|
8/24/17
|
|
|
0
|
|
|
0
|
|
Dennis J. Gilles
|
|
208,333
|
|
|
0
|
|
|
2.10
|
|
|
4/19/23
|
|
|
0
|
|
|
0
|
|
Douglas J. Glaspey
|
|
25,000
|
|
|
0
|
|
|
2.76
|
|
|
7/22/18
|
|
|
0
|
|
|
0
|
|
Kerry D. Hawkley
|
|
20,833
|
|
|
0
|
|
|
2.76
|
|
|
7/22/18
|
|
|
0
|
|
|
0
|
|
Jonathan Zurkoff
|
|
20,833
|
|
|
0
|
|
|
2.76
|
|
|
7/22/18
|
|
|
0
|
|
|
0
|
|
Dennis J. Gilles
|
|
66,666
|
|
|
0
|
|
|
4.44
|
|
|
4/2/19
|
|
|
0
|
|
|
0
|
|
Douglas J. Glaspey
|
|
36,666
|
|
|
0
|
|
|
4.44
|
|
|
4/2/19
|
|
|
0
|
|
|
0
|
|
Kerry D. Hawkley
|
|
29,166
|
|
|
0
|
|
|
4.44
|
|
|
4/2/19
|
|
|
0
|
|
|
0
|
|
Jonathan Zurkoff
|
|
29,166
|
|
|
0
|
|
|
4.44
|
|
|
4/2/19
|
|
|
0
|
|
|
0
|
|
Douglas J. Glaspey
|
|
63,333
|
|
|
0
|
|
|
2.88
|
|
|
5/15/20
|
|
|
0
|
|
|
0
|
|
Kerry D. Hawkley
|
|
30,000
|
|
|
0
|
|
|
2.88
|
|
|
5/15/20
|
|
|
0
|
|
|
0
|
|
Jonathan Zurkoff
|
|
26,666
|
|
|
0
|
|
|
2.88
|
|
|
5/15/20
|
|
|
0
|
|
|
0
|
|
Dennis J. Gilles
|
|
75,000
|
|
|
0
|
|
|
3.18
|
|
|
6/26/20
|
|
|
0
|
|
|
0
|
|
Douglas J. Glaspey
|
|
21,667
|
|
|
21,666
|
|
|
4.02
|
|
|
3/31/21
|
|
|
4,166
|
|
|
16,750
|
|
Kerry D. Hawkley
|
|
15,000
|
|
|
15,000
|
|
|
4.02
|
|
|
3/31/21
|
|
|
3,888
|
|
|
15,633
|
|
Jonathan Zurkoff
|
|
15,000
|
|
|
15,000
|
|
|
4.02
|
|
|
3/31/21
|
|
|
3,333
|
|
|
13,400
|
|
Dennis J. Gilles
|
|
51,667
|
|
|
51,666
|
|
|
4.26
|
|
|
4/11/21
|
|
|
30,833
|
|
|
131,350
|
|
(1)The $4.02 options unexercisable at
December 31, 2016 will fully vest on September 30, 2017.
The $4.26 options unexercisable at December 31,
2016 will fully vest on October 11, 2017.
-33-
Grants of Plan-Based Awards
The following table summarizes the grants of equity and
non-equity plan-based awards for the fiscal year ended December 31, 2016 to our
Named Executive Officers.
|
|
|
|
|
All Other Option
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
Securities
|
|
|
Exercise or Base
Prices of
|
|
|
Grant Date Fair Value
of Stock
|
|
Name
|
|
Grant Date
|
|
|
Underlying Options (#)
(1)
|
|
|
Option Awards ($/Sh)
|
|
|
and Option Awards ($)
(2)
|
|
Dennis J. Gilles,
Chief
Executive Officer
|
|
4/11/16
|
|
|
103,333
|
|
|
4.26
|
|
|
194,679
|
|
Douglas J Glaspey,
Chief Operating
Officer
|
|
3/31/16
|
|
|
43,333
|
|
|
4.02
|
|
|
77,888
|
|
Kerry D Hawkley,
Chief
Financial Officer
|
|
3/31/16
|
|
|
30,000
|
|
|
4.02
|
|
|
53,923
|
|
Jonathan Zurkoff,
Executive VP and
Treasurer
|
|
3/31/16
|
|
|
30,000
|
|
|
4.02
|
|
|
47,821
|
|
|
(1)
|
Represents stock options granted in 2016 under the
Companys 2009 Stock Incentive Plan.
|
|
(2)
|
Stock options are valued at the grant date in accordance
with FASB ASC Topic 718.
|
Option Exercises and Stock Vested
The following table summarizes information with respect to
stock option awards exercised and restricted stock and restricted stock unit
awards vested during fiscal 2016 for each of the executive officers named in the
Summary Compensation Table.
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of Shares
|
|
|
|
|
|
Number of Shares
|
|
|
|
|
|
|
Acquired on
|
|
|
Value Realized on
|
|
|
Acquired on
|
|
|
Value Realized on
|
|
|
|
Exercise
|
|
|
Exercise
|
|
|
Vesting
|
|
|
Vesting
|
|
Name
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dennis J. Gilles
|
|
16,666
|
|
|
23,645
|
|
|
32,232
|
|
|
102,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Douglas J. Glaspey
|
|
16,666
|
|
|
36,854
|
|
|
0
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kerry D. Hawkley
|
|
16,666
|
|
|
44,970
|
|
|
6,666
|
|
|
19,200
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jonathan Zurkoff
|
|
25,000
|
|
|
71,320
|
|
|
5,833
|
|
|
16,800
|
|
Potential Payments upon Termination or
Change-in-Control
Payments Made Upon Termination Absent a
Change-in-Control
. Except with respect to Mr. Gilles, if the employment of
any of our Named Executive Officers is voluntarily or involuntarily terminated,
no additional payments or benefits will accrue or be paid to him, other than
what the officer has accrued and is vested in under the benefit plans. A
voluntary or involuntary termination will not trigger an acceleration of the
vesting of any outstanding stock options or shares of restricted stock.
-34-
In the event Mr. Gilles employment is terminated by the
Company without cause or by Mr. Gilles for good reason, Mr. Gilles will be
entitled to receive a lump sum payment equal to one and one-half (1.5) times the
sum of his base salary ($410,000) plus annual target bonus. In addition, any
unvested stock options to acquire shares of the Companys common stock and any
unvested restricted shares of the Companys common stock held by Mr. Gilles as
of the termination date that would have vested within 18 months following such
termination date had Mr. Gilles employment continued will become fully vested.
Mr. Gilles will also receive a lump sum cash payment equal to 24 times the
Companys contribution to the monthly cost of the medical and dental benefits
provided to Mr. Gilles under the employment agreement. No payments are due if
Mr. Gilles if terminated for cause.
The following table describes the estimated potential payments
and benefits under the Companys compensation and benefit plans and contractual
agreements to which Mr. Gilles would have been entitled if a termination of
employment without cause or for good reason occurred on December 31, 2016.
Name
|
Payments ($)
|
Benefits ($)
|
Change of Control Total
($)
|
Dennis J. Gilles
|
1,230,000
|
20,747
|
1,250,747
|
Potential Payments upon Change-in-Control
. We have
entered into employment agreements with Messrs. Gilles, Glaspey, Hawkley and
Zurkoff which provide for change-in-control payments.
Mr. Gilles employment agreement provided that in the event Mr.
Gilles employment is terminated by the Company without cause or by Mr. Gilles
for good reason within 12 months following a change of control (which is
defined in the employment agreement) or a change of control occurs within 12
months following such termination, Mr. Gilles will receive total severance
payments equal to three (3) times the sum of his base salary ($410,000) plus
annual target bonus. In addition, any unvested stock options to acquire shares
of the Companys common stock and any unvested restricted shares of the
Companys common stock held by Mr. Gilles as of the termination date that would
have vested within 18 months following such termination date had Mr. Gilles
employment continued will become fully vested. Any vested stock options held by
Mr. Gilles will remain exercisable until the expiration of the original term of
such option. If such termination occurs within 12 months following a change of
control, Mr. Gilles will receive a lump sum cash payment equal to 36 times the
Companys contribution to the monthly cost of the medical and dental benefits
provided to Mr. Gilles under the employment agreement.
Mr. Glaspeys employment agreement provides that if within
twelve months following a change of control Mr. Glaspeys employment is
terminated either by the Company without cause, or by Mr. Glaspey for good
reason, then Mr. Glaspey will be entitled to a lump-sum payment consisting of
(a) his prorated base salary through the date of termination, (b) a payment
equal to 24 times his monthly base salary at termination, and (c) employee
medical and dental coverage for 24 months or until Mr. Glaspey commences
alternate employment, whichever comes first, subject to certain limitations and
conditions. The terms cause, good reason and change-in-control are defined
in the agreements.
Mr. Hawkleys employment agreement provides that if within
twelve months following a change of control Mr. Hawkleys employment is
terminated either by the Company without cause, or by Mr. Hawkley for good
reason, then Mr. Hawkley will be entitled to a lump-sum payment consisting of
(a) his prorated base salary through the date of termination, (b) a payment
equal to 18 times his monthly base salary at termination, and (c) employee
medical and dental coverage for 18 months or until Mr. Hawkley commences
alternate employment, whichever comes first, subject to certain limitations and
conditions. The terms cause, good reason and change-in-control are defined
in the agreements.
-35-
Mr. Zurkoffs employment agreement provides that if within
twelve months following a change of control Mr. Zurkoffs employment is
terminated either by the Company without cause, or by Mr. Zurkoff for good
reason, then Mr. Zurkoff will be entitled to a lump-sum payment consisting of
(a) his prorated base salary through the date of termination, (b) a payment
equal to 18 times his monthly base salary at termination, and (c) employee
medical and dental coverage for 18 months or until Mr. Zurkoff commences
alternate employment, whichever comes first, subject to certain limitations and
conditions. The terms cause, good reason and change-in-control are defined
in the agreements.
The following table describes the total estimated potential
payments and benefits under the Companys compensation and benefits plans and
contractual agreements to which the Named Executive Officers would have been
entitled if a termination of employment without cause or by the employee for
good reason and a change of control occurred on December 31, 2016.
Name
|
Change of Control
Salary ($)
|
Change of Control
Benefits ($)
|
Change of Control
Total ($)
|
Dennis J. Gilles
|
2,460,000
|
31,121
|
2,491,121
|
Douglas J. Glaspey
|
448,360
|
24,257
|
472,617
|
Kerry D. Hawkley
|
274,443
|
17,913
|
292,356
|
Jonathan Zurkoff
|
293,760
|
16,527
|
310,287
|
-36-
DIRECTOR COMPENSATION
The following table summarizes the compensation paid to our
directors during the year ended December 31, 2016.
Name
|
Fees
earned
or
paid in
cash
($)
|
Stock
awards
($)
|
Option
awards
(1)
($)
|
Non-equity
incentive
plan
compens-
ation
($)
|
Nonqualified
deferred
compensa-
tion earnings
($)
|
All other
compensa-
tion
($)
|
Total
($)
|
John H. Walker
|
50,700
|
0
|
29,956
|
0
|
0
|
0
|
80,656
|
|
Paul A. Larkin
|
53,100
|
0
|
29,956
|
0
|
0
|
0
|
83,056
|
|
Leland L. Mink
|
40,300
|
0
|
23,965
|
0
|
0
|
0
|
64,265
|
|
Randolph J. Hill
|
12,250
|
0
|
29,430
|
0
|
0
|
0
|
41,680
|
|
James C. Pappas
|
11,850
|
0
|
29,430
|
0
|
0
|
0
|
41,280
|
(1)
|
Stock options are valued at the grant date in accordance
with FASB ASC Topic 718.
|
Directors who are not otherwise remunerated per an employment
agreement are paid $7,500 per quarter, $1,500 per face-to-face meetings, $400
per telephone meetings, $2,500-$5,000 per annum as committee heads, and are
eligible to receive awards under our equity compensation plans. Directors who
are also officers do not receive any compensation for serving in the capacity of
director. However, all directors are reimbursed for their out-of-pocket expenses
in attending meetings.
Securities Authorized for Issuance under Equity Compensation
Plans
The following table sets forth the number of securities
authorized for issuance under the Companys equity compensation plans as of
December 31, 2016.
Equity
Compensation Plan Information
|
Plan category
|
Number of securities
to
be issued upon exercise
of
outstanding
options,
warrants
and rights
(a)
|
Weighted-average
exercise
price of
outstanding options,
warrants
and rights
(b)
|
Number of securities
remaining available for
future
issuance under
equity compensation
plans
(excluding securities
reflected in column (a))
(c)
|
Equity compensation plans
approved by security holders
|
1,824,664
|
$3.38
|
1,020,903
|
Equity compensation plans
not approved by
security holders
|
Nil
|
Nil
|
Nil
|
Total
|
1,824,664
|
$3.38
|
1,020,903
|
-37-
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Related Person Transactions
U.S. Geothermal Inc. has written procedures for reviewing
transactions between U.S. Geothermal Inc. and its directors, executive officers,
nominees for director, their immediate family members and entities with which
they have a position or relationship. These procedures are intended to determine
whether any such related person transaction impairs the independence of a
director or presents a conflict of interest on the part of a director or
executive officer. The Board is responsible for reviewing and approving any
related party transactions. The Board considers relevant facts and circumstances
in determining whether or not to approve or ratify such a transaction, such as:
(i) the nature of the related persons interest in the transaction; (ii) the
terms of the transaction; (iii) the relative importance (or lack thereof) of the
transaction to the Company; (iv) the materiality and character of the related
persons interest, including any actual or perceived conflict of interest; and
(v) any other matters the Board deems appropriate. Based on its consideration of
all of the relevant facts and circumstances, the Board decides whether or not to
approve such transactions and approves only those transactions that are deemed
to be in the overall best interests of the Company.
Since January 1, 2016, there have been no financial
transactions, arrangements or relationships (including any indebtedness or
guarantee of indebtedness) in which the Company or any of its subsidiaries, was
or is to be a participant, and the amount involved exceeds $120,000 and in which
a director, an executive officer, nominee for director, any immediate family
member of a director, executive officer or nominee for director, a beneficial
owner of more than 5% of the Companys outstanding common stock or any immediate
family member of the beneficial owner, had or will have a direct or indirect
material interest.
None of the directors or officers of the Company, or any
associate of any director or officer, is a party adverse to the Company or any
of its affiliates or has a material interest adverse to the Company or any of
its subsidiaries.
Other than as disclosed in this Proxy Statement, none of the
directors or officers of the Company, no proposed nominee for election as a
director of the Company, none of the persons who have been directors or officers
of the Company at any time since January 1, 2016 and no associate or affiliate
of any of the foregoing has any material interest, direct or indirect, in any
matter to be acted upon at the meeting.
None of the nominees for election as a director of the Company
is, or was within the ten years prior to the date hereof, a director or
executive officer of any company that, while that person was acting in such
capacity, or within a year of that person ceasing to act in such capacity,
became bankrupt, made a proposal under any legislation relating to bankruptcy or
insolvency or was subject to or instituted any proceedings, arrangements or
compromise with creditors or had a receiver, receiver manager or trustee
appointed to hold its assets.
AUDIT COMMITTEE REPORT AND PAYMENT OF FEES TO
AUDITORS
Audit Committee Report
The Audit Committee of the Board of Directors is responsible
for assisting the Board in monitoring the integrity of the financial statements
of the Company, compliance by the Company with legal and regulatory
requirements, and the independence and performance of the Companys internal and
external auditors.
-38-
The consolidated financial statements of the Company for the
fiscal year ended December 31, 2016, were audited by Moss Adams LLP, independent
auditor for the Company.
As part of its activities, the Audit Committee has:
|
1.
|
Reviewed and discussed with management the audited
financial statements of the Company;
|
|
|
|
|
2.
|
Discussed with the independent auditor the matters
required to be discussed under Statement on Auditing Standards No. 61, as
amended (Communications with Audit Committees);
|
|
|
|
|
3.
|
Received the written disclosures and letter from the
independent auditor required by applicable requirements of the Public
Company Accounting Oversight Board regarding the independent auditors
communications with the audit committee concerning independence;
|
|
|
|
|
4.
|
Discussed with the independent auditor the independent
auditors independence; and
|
|
|
|
|
5.
|
Verified that the Company has maintained, in all material
respects, effective internal control over financial reporting as of
December 31, 2016, based on criteria established in
Internal Control -
Integrated Framework
issued by the Committee of Sponsoring
Organizations of the Treadway Commission
(COSO-2013).
|
Based on the review and discussions
referred to above, the Audit Committee recommended to the Board of Directors
that the audited consolidated financial statements of the Company for the fiscal
year ended December 31, 2016, be included in the Companys Annual Report on Form
10-K filed with the SEC.
Audit Committee of the Board of Directors of U.S. Geothermal
Inc.
Ali G. Hedayat
Randolph J. Hill
Paul A. Larkin
Leland L. Mink
John H. Walker
Audit Fees
The aggregate fees billed to the Company by the Companys
principal accountant for the year ended December 31, 2016 and 2015 for annual
financial statements and reviews of financial statements included in the
Companys Quarterly Report on Forms 10-Q totaled $298,228 and $314,574;
respectively.
Audit-Related Fees
The fees billed to the Company by the Companys principal
accountant for the financial statement audits of the Companys five subsidiaries
(three in 2015) Idaho USG Holdings LLC and Oregon USG Holdings LLC, USG Oregon
LLC, USG Nevada LLC and Raft River Energy I LLC for the years ended December 31,
2016 and 2015 were $76,000 and $51,000; respectively.
Tax Fees
The Company was not billed for any fees by the Companys
principal accountant for either of the years ended December 31, 2016 and 2015
for professional services rendered for tax compliance, tax advice or tax
planning.
-39-
All Other Fees
The fees billed to the Company by the Companys principal
accountant for any other services during year ended December 31, 2016 and 2015
were $9,885 and none, respectively.
Administration of Engagement of Independent
Auditor
The Audit Committee is responsible for appointing, setting
compensation for and overseeing the work of our independent auditor. The Audit
Committee has established a policy for pre-approving the services provided by
our independent auditor in accordance with the auditor independence rules of the
SEC. This policy requires the review and pre-approval by the Audit Committee of
all audit and permissible non-audit services provided by our independent auditor
and an annual review of the financial plan for audit fees.
All of the services provided by our independent auditor for the
years ended December 31, 2016 and 2015, including services related to the
Audit-Related Fees and All Other Fees described above, were approved by the
Audit Committee under its pre-approval policies.
-40-
PROPOSAL 2RATIFICATION OF SELECTION OF AUDITOR
The Company engaged Moss Adams LLP, certified public
accountants, as the principal accountant to audit the Companys financial
statements effective March 31, 2015. Moss Adams LLP replaced MartinelliMick
PPLC, which resigned as the Companys principal accountant effective March 31,
2015. While we are not required to do so, we are submitting the selection of
Moss Adams LLP to serve as our independent auditor for the fiscal year ending
December 31, 2017, for ratification in order to ascertain the views of our
shareholders on this appointment. If the selection is not ratified, the Audit
Committee will reconsider its selection. Representatives of Moss Adams LLP are
not expected to be present at the annual meeting.
As previously disclosed in a Form 8-K filed on April 6, 2015,
the reports of MartinelliMick on the consolidated financial statements of the
Company for the fiscal years ended December 31, 2014 and 2013 did not contain an
adverse opinion or disclaimer of opinion, and were not qualified or modified as
to uncertainty, audit scope, or accounting principle. During the two fiscal
years ended December 31, 2014 and 2013 and through March 31, 2015, (1) there
were no disagreements (as described in Item 304(a)(1)(iv) of Regulation S-K)
with MartinelliMick on any matters of accounting principle or practices,
financial statement disclosure or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of MartinelliMick, would have
caused MartinelliMick to make reference thereto in its report on the financial
statements for such periods, and (2) there were no reportable events (as
described in Item 304(a)(1)(v) of Regulation S-K). On March 31, 2015, the Audit
Committee approved the appointment of Moss Adams LLP as the Companys
independent registered public accounting firm for the year ending December 31,
2015. During the two fiscal years ended December 31, 2014 and 2013 and through
March 31, 2015, the Company did not consult with Moss Adams on any matter or
events set forth in Item 304(a)(2) of Regulation S-K.
Recommendation of the Board
The Board of Directors recommends a vote FOR the
ratification of the selection of Moss Adams LLP as the independent auditor of
U.S. Geothermal Inc. and its subsidiaries for the fiscal year ending December
31, 2017.
-41-
PROPOSAL 3- ADVISORY VOTE ON EXECUTIVE COMPENSATION
In accordance with Section 14A of the Securities Exchange Act
of 1934, as amended, and Section 951 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act, we are seeking an advisory, non-binding shareholder
vote to approve the compensation of our Named Executive Officers disclosed in
the Compensation Discussion and Analysis section, compensation tables and
narrative discussion in this proxy statement for the 2017 annual meeting.
Our executive compensation program and compensation paid to our
named executive officers are described on pages 26-36 of this proxy statement.
Our compensation programs are overseen by the Compensation and Benefits
Committee and reflect our philosophy to pay all of our employees, including our
named executive officers, in ways that support three primary business
objectives:
|
|
Attract and retain the best talent.
|
|
|
|
|
|
Support our culture of teamwork, innovation and
performance.
|
|
|
|
|
|
Align employee interests with long-term stockholder
interests in the overall success of US Geothermal.
|
To help achieve these objectives, we structure our named
executive officers compensation to reward the achievement of short-term and
long-term strategic and operational goals.
You may vote FOR or AGAINST the following resolution, or
you may ABSTAIN. Approval of the resolution requires the affirmative FOR
vote of a majority of the shares present in person or represented by proxy at
the annual meeting and entitled to vote thereon.
Resolved, that the shareholders of
U.S. Geothermal Inc. approve the compensation awarded to U.S. Geothermal Inc.s
named executive officers, as disclosed pursuant to Item 402 of Regulation S-K,
including the Compensation Discussion and Analysis, compensation tables, and
narrative disclosures included in the proxy statement for U.S. Geothermal Inc.s
2017 annual meeting.
Because the vote on this proposal is advisory in nature, it
will not be binding on or overrule any decisions by the Board of Directors, will
not create or imply any additional fiduciary duty on the part of the Board of
Directors, and will not restrict or limit the ability of shareholders to make
proposals for inclusion in proxy materials related to executive compensation.
The Compensation and Benefits Committee will take into account the outcome of
the vote when considering future compensation arrangements for our named
executive officers.
Recommendation of the Board
The Board of Directors recommends a vote FOR the approval
of the foregoing resolution on executive compensation.
-42-
PROPOSAL 4- ADVISORY VOTE ON THE FREQUENCY OF FUTURE
ADVISORY VOTES ON EXECUTIVE COMPENSATION
In accordance with Section 14A of the Securities Exchange Act
of 1934, as amended, and Section 951 of the Dodd-Frank Wall Street Reform and
Consumer Protection Act, shareholders have an opportunity to cast an advisory
non-binding vote on whether the Company should conduct future advisory votes on
the compensation of its named executive officers every one, two or three years.
Our compensation program is designed and administered by the
Compensation and Benefits Committee of the Board of Directors, which is composed
entirely of independent directors and carefully considers many different
factors, as described in the Compensation Discussion and Analysis, in order to
provide appropriate compensation for our executives. While the Board of
Directors believes that the Compensation and Benefits Committee and the Board of
Directors are in the best position to determine executive compensation, the
Board of Directors appreciates and values shareholders views. The Board of
Directors has determined that an advisory vote on executive compensation every
two years is the best approach for the Company based on a number of
considerations, including the following:
|
|
a two-year cycle will provide investors sufficient time
to evaluate the effectiveness of our short- and long-term compensation
strategies and the related business outcome of the Company;
|
|
|
|
|
|
many large shareholders rely on proxy advisory firms for
vote recommendations. We believe holding advisory votes on executive
compensation every two years, rather than annually, helps proxy advisory
firms provide more detailed and thorough analyses and recommendations;
|
|
|
|
|
|
a two-year vote cycle gives the Board of Directors and
the Compensation and Benefits Committee sufficient time to thoughtfully
respond to shareholders sentiments and to implement any necessary changes
to our executive compensation policies and procedures;
|
|
|
|
|
|
rules of the NYSE MKT require the Company, with certain
exceptions, to seek shareholder approval for new equity compensation plans
and material revisions thereto. This requirement provides our shareholders
with the opportunity, under certain circumstances, to provide additional
feedback on important matters involving executive compensation even in
years when no advisory votes on executive compensation is scheduled to
occur; and
|
|
|
|
|
|
the Board of Directors will continue to engage with our
shareholders on executive compensation during the period between advisory
votes on executive compensation. As discussed in the Questions and Answers
section of this proxy statement, shareholders may communicate directly
with the Board of Directors, including on issues of executive
compensation.
|
You may vote to conduct an advisory vote on executive
compensation every THREE YEARS, every TWO YEARS or every ONE YEAR, or you
may ABSTAIN.
Because the vote on this proposal is advisory in nature, it
will not be binding on or overrule any decisions by the Board of Directors, will
not create or imply any additional fiduciary duty on the part of the Board of
Directors, and will not restrict or limit the ability of shareholders to make
proposals for inclusion in proxy materials related to executive compensation.
The Compensation and Benefits Committee will take into account the outcome of
the vote when considering future compensation arrangements for our named
executive officers.
Recommendation of the Board
The Board of Directors recommends a vote to conduct an
advisory vote on executive compensation every TWO YEARS.
-43-
ANNUAL REPORT TO SHAREHOLDERS AND FORM 10-K
Our Annual Report to Shareholders, including financial
statements for the fiscal year ended December 31, 2016, accompanies this proxy
statement. The Annual Report to Shareholders is also available on our website at
www.usgeothermal.com. Copies of our Annual Report on Form 10-K, which are on
file with the SEC, are available to any shareholder who submits a request in
writing to U.S. Geothermal Inc., 390 E Parkcenter Blvd, Suite 250, Boise, Idaho
83706. Copies of any exhibits to the Form 10-K are also available upon written
request and payment of a fee covering our reasonable expenses in furnishing the
exhibits.
HOUSEHOLDING OF PROXY MATERIALS
The SEC has adopted rules that permit companies and
intermediaries such as brokers to satisfy delivery requirements for proxy
statements and annual reports with respect to two or more shareholders sharing
the same address by delivering a single proxy statement or annual report, as
applicable, addressed to those shareholders. This process, which is commonly
referred to as householding, potentially provides extra convenience for
shareholders and cost savings for companies. Although we do not household for
our registered shareholders, some brokers household U.S. Geothermal Inc. proxy
materials and annual reports, delivering a single proxy statement and annual
report to multiple shareholders sharing an address unless contrary instructions
have been received from the affected shareholders. Once you have received notice
from your broker that they will be householding materials to your address,
householding will continue until you are notified otherwise or until you revoke
your consent. If, at any time, you no longer wish to participate in householding
and would prefer to receive a separate proxy statement or annual report, or if
you are receiving multiple copies of either document and wish to receive only
one, please notify your broker. We will deliver promptly upon written or oral
request a separate copy of our annual report and/or proxy statement to a
shareholder at a shared address to which a single copy of either document was
delivered. For copies of either or both documents, shareholders should write to
U.S. Geothermal Inc., 390 E Parkcenter Blvd, Suite 250, Boise, Idaho 83706, or
call (208) 424-1027.
OTHER MATTERS
We do not know of any other matters that may be presented for
consideration at the annual meeting. If any other business does properly come
before the annual meeting, the persons named as proxies on the enclosed proxy
card will vote as they deem in the best interests of U.S. Geothermal Inc.
/s/ Kerry D. Hawkley
|
|
Kerry D. Hawkley
|
Chief Financial Officer and Corporate Secretary
|
|
Dated: May 25, 2017
|
-44-
LOCATION OF U.S. GEOTHERMAL INC. ANNUAL MEETING OF
SHAREHOLDERS
Thursday, July 6, 2017 at 10:00 a.m. MDT
U.S. Geothermal
Corporate Office
390 E Parkcenter Blvd, Suite 250
Boise, Idaho
Beneficial owners of common stock held in street name by a
broker, bank or other nominee will need proof of ownership to be admitted to the
meeting. A recent brokerage statement or a letter from your broker, bank or
other nominee is an example of proof of ownership.
-45-
Hythiam (AMEX:HTM)
Historical Stock Chart
From Mar 2024 to Apr 2024
Hythiam (AMEX:HTM)
Historical Stock Chart
From Apr 2023 to Apr 2024