UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant ☒
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))
☒ Definitive Proxy Statement
☐ Definitive Additional Materials
☐ Soliciting Material Under § 240.14a-12
COMSTOCK MINING INC.
(Name of Registrant as Specified in Its Charter)
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11. |
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Title of each class of securities to which transaction
applies: |
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Aggregate number of securities to which transaction
applies: |
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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): |
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Proposed maximum aggregate value of transaction: |
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Total fee paid: |
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Fee paid previously with preliminary materials. |
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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. |
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Amount Previously Paid: |
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Form, Schedule or Registration Statement No.: |
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Date Filed: |
COMSTOCK MINING INC.
117 American Flat Road
P.O. Box 1118
Virginia City, Nevada 89440
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of shareholders of
Comstock Mining Inc. will be held on November 18, 2020, at 9:00
a.m. Pacific Standard Time (“PST”), at the Brewery Arts Center, 449
W. King Street, Carson City, Nevada 89706, to:
1.Elect
the five named nominees to the Board of Directors for the ensuing
year or, if earlier, until their successors are duly elected and
qualified;
2.Ratify
the appointment of DeCoria, Maichel & Teague P.S. , as our
independent registered public accounting firm, for the fiscal year
ending December 31, 2020;
3.Approve
a non-binding advisory resolution for the compensation of our named
executive officers;
4.Approve
the Comstock Mining Inc. 2020 Equity Incentive Plan;
and
5.Conduct
any other business that may properly come before the meeting or any
adjournments or postponements thereof.
Holders of shares of Comstock Mining Inc. common stock of record at
the close of business on September 24, 2020, may vote at the
meeting.
The approximate mailing date of this notice, accompanying proxy
statement and proxy card is October 7, 2020.
UNLESS YOU PROVIDE SPECIFIC INSTRUCTIONS AS TO HOW TO VOTE, BROKERS
MAY NOT VOTE YOUR SHARES OF COMMON STOCK ON THE ELECTION OF
DIRECTORS OR THE NON-BINDING ADVISORY RESOLUTION RELATING TO THE
COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS OR THE COMSTOCK MINING
INC. 2020 EQUITY INCENTIVE PLAN.
This year, we are again making our Annual Meeting materials
accessible to our shareholders electronically, as permitted under
the “Notice and Access” rules approved by the Securities and
Exchange Commission. Shareholders that do not opt out of Notice and
Access will receive a Notice of Internet Availability of Proxy
Materials containing instructions on how to access Annual Meeting
materials via the internet. The Notice also provides instructions
on how to obtain paper copies if preferred.
To ensure your vote is counted, please vote your shares promptly by
completing, signing, dating and returning the enclosed proxy card
in the postage-paid envelope provided, or by telephone or Internet,
regardless of whether you plan on attending the
meeting.
If you are present at the meeting, you may supersede your proxy and
vote in person by ballot, even if you have already voted your proxy
by mail, telephone or Internet.
Seating at the meeting will be limited and available on a
first-come, first-served basis. To ensure that you have a seat,
please arrive early. Due to COVID 19 physical distancing
requirements, legal restrictions and limited space in the venue,
not all shareholders can be admitted.
By Order of the Board of Directors
October 7, 2020
PROXY STATEMENT
FOR ANNUAL MEETING OF SHAREHOLDERS
COMSTOCK MINING INC.
TO BE HELD November 18, 2020
APPROXIMATE DATE OF MAILING – October 7, 2020
This Proxy Statement (this “Proxy Statement”) sets forth certain
information about the accompanying proxy for the 2020 Annual
Meeting (the “Meeting”) of shareholders of Comstock Mining Inc., or
any adjournments or postponements thereof, for the purposes set
forth in the accompanying Notice of Annual Meeting. The Board of
Directors has designated the historic Brewery Arts Center, 449 W.
King Street, Carson City, Nevada 89706, as the place of the
Meeting. The Meeting will be called to order at 9:00 a.m., PST, on
November 18, 2020.
The Board of Directors solicits this proxy and urges you to vote
immediately. Unless the context otherwise indicates, references to
“Comstock,” “we,” “us,” “our” or “the Company” means Comstock
Mining Inc.
Our Annual Report on Form 10-K for the fiscal year ended
December 31, 2019 (the “Annual Report”), is being mailed
concurrently with this Proxy Statement to our shareholders. Our
Annual Report is not incorporated by reference into this Proxy
Statement and shall not be considered a part of this Proxy
Statement or soliciting materials, unless otherwise specifically
stated herein.
QUESTIONS AND ANSWERS FOR ANNUAL MEETING
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Q: |
Who is asking for my vote and why am I receiving this
document? |
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The Board of Directors asks that you vote on the matters listed in
the Notice of Annual Meeting of shareholders that are more fully
described in this Proxy Statement. |
We are providing this Proxy Statement and related proxy materials
to our shareholders in connection with the solicitation by the
Board of Directors of proxies to be voted at the Meeting. A proxy,
if duly executed and not revoked, will be voted in accordance with
the specific instructions noted on the proxy and, if it does not
contain specific instructions, will be voted in accordance with the
recommendations of the Board of Directors set forth in this Proxy
Statement.
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Who is entitled to vote? |
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You may vote if you owned shares of our common stock, par value
$0.000666 per share (“Common Stock”) on September 24, 2020, the
date established by the Board of Directors under Nevada law and our
by-laws for determining shareholders entitled to notice of and to
vote at the Meeting. On the record date, there were 34,440,766
outstanding shares of Common Stock. Each share of Common Stock is
entitled to one vote on each matter properly brought before the
Annual Meeting. |
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A proxy is your legal designation of another person to vote your
stock. If you designate someone in writing, that document is also
called a proxy or a proxy card. Messrs. William J. Nance and Leo M.
Drozdoff have been designated as proxies or proxy holders for the
Meeting. Proxies properly executed and received by our Secretary
prior to the Meeting and not revoked will be voted in accordance
with the terms thereof. |
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What is a voting instruction? |
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A voting instruction is the instruction form you receive from your
bank, broker or its nominee if you hold your shares of Common Stock
in street name. Shares are held in “street name” when a bank,
brokerage or its nominee holds such shares on behalf of a client. ·
The name that appears on the stock or bond certificate is that of
bank, brokerage or its nominee. The form instructs you on how to
direct your bank, broker or its nominee, as record holder, to vote
your shares. |
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What am I voting on at the Meeting? |
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You will be voting on the following matters at the
Meeting: |
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Election of the five named nominees to the Board of
Directors; |
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Ratification of DeCoria, Maichel & Teague P.S. as the Company’s
independent registered public accounting firm for the fiscal year
ending December 31, 2020; |
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Approval of a non-binding advisory resolution relating to the
compensation of our named executive officers; |
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Approval of the Comstock Mining Inc. 2020 Equity Incentive Plan;
and |
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Any other business that may properly come before the Meeting or any
adjournments or postponements thereof. |
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How many votes must be present to hold the Meeting? |
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In order for the Meeting to be conducted, one-third of the
outstanding shares of Common Stock, as of the record date, must be
represented in person or by proxy at the Meeting. This is referred
to as a quorum. Abstentions, withheld votes and shares held of
record by a bank, broker or its nominee (“broker shares”) that are
voted on any matter (including an abstention or withheld vote by
broker shares) are included in determining the number of votes
present. Broker shares that are not voted on any matter will not be
included in determining whether a quorum is present. |
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What vote is needed to elect directors? |
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The election of each nominee for director requires the affirmative
vote of the holders of a plurality of the shares of Common Stock
voted in the election of directors. |
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What vote is needed to ratify the appointment of DeCoria, Maichel
& Teague P.S. ? |
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The ratification of the appointment of DeCoria, Maichel &
Teague P.S. requires that the votes cast in favor exceed the votes
cast in opposition. |
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What vote is needed to approve the non-binding advisory resolution
for the compensation of our named executive officers? |
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The approval of the non-binding advisory resolution for the
compensation of our named executive officers requires that the
votes cast in favor exceed the votes cast in opposition. Because
your resolution is advisory, it will not bind the Company or the
Board of Directors. However, the Board of Directors will review and
consider the results of this vote for future executive compensation
decisions. |
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What vote is needed to approve the Comstock Mining Inc. 2020 Equity
Incentive Plan? |
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Approval of the Comstock Mining Inc. 2020 Equity Incentive Plan
requires that the votes cast in favor exceed the votes cast in
opposition. |
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What are the voting recommendations of the Board of
Directors? |
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The Board of Directors recommends that shareholders vote “FOR” all
of the proposed nominees for director, “FOR” the ratification of
the appointment of DeCoria, Maichel & Teague P.S. , “FOR” a
non-binding advisory resolution approving the compensation of our
named executive officers, and “FOR” the approval of the Comstock
Mining Inc. 2020 Equity Incentive Plan. |
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Registered shareholders (shareholders who hold Common Stock in
certificated form as opposed to through a bank, broker, or other
nominee) may vote in person at the Meeting or by proxy. Registered
shareholders may submit their proxies by completing, signing and
dating the enclosed proxy card and returning it in the enclosed
postage-paid envelope.
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Shareholders who hold Common Stock through banks, brokers or other
nominees (street name shareholders) who wish to vote at the Meeting
should be provided voting instructions on the instruction form
provided to them from the institution that holds their shares. If
this has not occurred, please contact the institution that holds
your shares. Street name shareholders may also be eligible to vote
their shares electronically by following the voting instructions
provided by the bank, broker or other nominee that holds the
shares, using either the toll-free telephone number or the Internet
address provided on the voting instruction form, or otherwise
complete, date and sign the voting instruction form and return it
promptly in the enclosed postage-paid envelope.
Shareholders who hold shares in street name are NOT permitted to
vote such share in person, unless the bank, broker or its nominee
has authorized such shareholders to act on behalf of the bank,
broker or nominee. To obtain such authorization, street name
shareholders will need to bring a valid “legal proxy.” You can
obtain a legal proxy by contacting your account representative at
the bank, broker or other similar organization through which you
hold your shares.
The deadline for votes received by mail is 5:00 p.m., PST, on
November 16, 2020.
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Can I attend the Meeting? |
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The Meeting is open to all holders of our Common Stock as of the
record date, September 24, 2020. However, space is limited and
seating at the Meeting will be available on a first-come,
first-served basis, following the State of Nevada’s COVID social
distancing guidelines. You may vote by attending the Meeting and
voting in person. Even if you plan to attend the Meeting, however,
we encourage you to vote your shares by proxy. We will not permit
cameras, recording devices or other electronic devices at the
Meeting. |
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Can I change or revoke my vote? |
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Any shareholder giving a proxy may change or revoke it at any time
before it is voted at the Meeting. A proxy can be changed or
revoked by: |
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delivering a later dated proxy, or written notice of revocation, to
our Secretary at the address listed under “Shareholder Proposals;”
or |
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appearing at the Meeting and voting in person. |
If you decide to vote by completing, signing, dating and returning
the enclosed proxy card, you should retain a copy of the proxy card
in the event that you decide later to change or revoke your proxy
at the Meeting. Your attendance at the Meeting will not itself
revoke a proxy.
If you are a shareholder whose stock is held in street name with a
bank, broker or other nominee, you must follow the instructions
found on the voting instruction form provided by the bank, broker
or other nominee, or contact your bank, broker or other nominee in
order to change or revoke your previously given proxy.
Shareholders who hold shares in street name are NOT permitted to
vote such share in person, unless the bank, broker or its nominee
has authorized such shareholders to act on behalf of the bank,
broker or nominee. To obtain such authorization, street name
shareholders will need to bring a valid “legal proxy.” You can
obtain a legal proxy by contacting your account representative at
the bank, broker or other similar organization through which you
hold your shares.
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Q: |
How will my shares be voted if I sign, date and return my proxy
card or voting instruction form, but do not provide complete voting
instructions with respect to each proposal? |
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Shareholders should specify their choice for each matter on the
enclosed proxy. If no specific instructions are given, it is
intended that all proxies that are signed and returned will be
voted
“FOR”
the election of all nominees for director,
“FOR”
the ratification of the appointment of DeCoria, Maichel &
Teague P.S. ,
“FOR”
a non-binding advisory resolution relating to the compensation of
our named executive officers, and
“FOR”
the approval of the Comstock Mining Inc. 2020 Equity Incentive
Plan. As to any other business that may properly come before the
Meeting, the persons named in the enclosed proxy card or voting
instruction will vote the shares of Common Stock represented by the
proxy in the manner as the Board of Directors may recommend, or
otherwise in the proxy holders’ discretion. The Board of Directors
does not presently know of any other such business.
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How will my shares be voted if I do not return my proxy card or my
voting instruction form? |
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It will depend on how your ownership of shares is
registered.
If you own your shares as a registered holder (meaning that your
shares are registered in your name with Equiniti, our transfer
agent), your shares will only be voted if Equiniti receives
specific voting instructions from you. Otherwise, your unvoted
shares will not be represented at the Meeting and will not count
toward the quorum requirement, which is explained under “Questions
and Answers For Annual Meeting — How many votes must be present to
hold the Meeting?” above, unless you attend the Meeting to vote
them in person.
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If you own your shares and they are held in street name (meaning
that your shares are registered in the name of your bank, broker or
other nominee), your bank, broker or other nominee may not vote
your shares in their discretion (with certain limited exceptions),
unless you have provided voting instructions to the bank, broker or
its nominee.
Under the rules of the NYSE American LLC (“NYSE American”), your
broker may vote your shares in their discretion on “routine
matters.” Based on the rules of the NYSE American, we believe that
the ratification of the appointment of DeCoria, Maichel &
Teague P.S. as our independent registered public accounting firm is
a routine matter for which brokerage firms may vote in their
discretion on behalf of their clients if no voting instructions are
provided. Therefore, if you are a shareholder whose shares of
Common Stock are held in street name with a bank, broker or other
nominee and you do not return your voting instruction form, your
bank, broker or other nominee may vote your shares on the
ratification of the appointment by the Audit and Finance Committee
of DeCoria, Maichel & Teague P.S. as our independent registered
public accounting firm.
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Where can I find the results of the Meeting? |
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We intend to announce preliminary voting results at the Meeting and
publish final results through a Current Report on Form 8-K that we
will file with the Securities and Exchange Commission (the “SEC”)
within four business days of the Meeting. |
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Who pays for the solicitation of proxies? |
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We will pay for the cost of the solicitation of
proxies. |
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Could other matters be decided at the Meeting? |
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A: |
As of the date of the mailing of this Proxy Statement, the Board of
Directors did not know of any other business that might be brought
before the Meeting. However, if any other matters should properly
come before the Meeting or any adjournment or postponement thereof,
it is the intention of the persons named in the accompanying proxy
to vote on such matters as they, in their discretion, may
determine. |
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Q: |
Where can I find the Company’s corporate governance
materials? |
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Our Corporate Governance Guidelines, including our independence
standards for members of the Board of Directors, our Code of
Conduct and Ethics and the charters of our Audit and Finance
Committee, Compensation Committee and Nominating and Governance
Committee, are available on our website at
http://www.comstockmining.com/about/corporate-governance and are
available in print to any shareholder upon request by contacting
our investor relations department. |
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How do I communicate with the Board of Directors?
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Shareholders and other interested persons may communicate with the
full Board of Directors, a specified committee of the Board of
Directors, or a specified individual member of the Board of
Directors, in writing, by mail addressed to: Comstock Mining Inc.,
P.O. Box 1118, Virginia City, Nevada 89440, Attention: Chairman of
the Nominating and Governance Committee. The Chairman of the
Nominating and Governance Committee and his duly authorized agents
are responsible for collecting and organizing shareholder
communications. Absent a conflict of interest, the Chairman of the
Nominating and Governance Committee is responsible for evaluating
the materiality of each shareholder communication and determining
whether further distribution is appropriate, and, if so, whether to
(1) the full Board of Directors, (2) one or more committees of the
Board of Directors, (3) one or more Board members and/or (4) other
individuals or entities.
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Important Notice Regarding the Availability of Proxy Materials for
the Shareholder Meeting to Be Held on November 18,
2020.
This Proxy Statement and our Annual Report on Form 10-K are both
available
free of charge on our website at
http://www.comstockmining.com/investors/financial-filings. In
addition, a copy of our Annual Report on Form 10-K is enclosed. We
will provide without charge to each person to whom this Proxy
Statement has been delivered, on the request of any such person,
additional copies of our Annual Report on Form 10-K. Requests
should be directed to our external relations department as
described below:
Comstock Mining Inc.
P.O. Box 1118
Virginia City, Nevada 89440
Attention: Mr. Zach Spencer, Director of External
Relations
Telephone: (775) 847-847-5272 ext.151
We also make available, free of charge, through our website, our
Annual Reports on Form 10-K for prior years, Quarterly Reports on
Form 10-Q, Current Reports on Form 8-K and amendments to those
reports filed or furnished pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 (the “Exchange Act”), as soon
as reasonably practicable after such documents are electronically
filed with, or furnished to, the SEC. The information on our
website is not, and shall not be deemed to be, a part of this Proxy
Statement or incorporated into any other filings we make with the
SEC.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Nominating and Governance Committee has unanimously recommended
to the Board of Directors, and the Board of Directors has
unanimously approved, the persons named below as nominees for
election to the Board of Directors at the Meeting. Each nominee has
consented to being named as such and to serve as such if elected.
Messrs. De Gasperis, Drozdoff, Marting, Merrill, and Nance each
presently serve as a director. Proxies will be voted for the
election of the persons named below (or if for any reason such
persons are unavailable, of such substitutes as the Board of
Directors may designate) as directors for the ensuing year. The
Board of Directors has no reason to believe that any of the
nominees will be unavailable. Each nominee who is elected will
serve as a director until his successor is elected at our 2021
annual meeting of shareholders or until his earlier resignation or
removal.
Set forth below is information concerning the age, principal
occupation, employment and directorships during the past five years
and positions with the Company of each nominee and director, and
the year in which he first became a director of the Company. Also
set forth below is a brief discussion of the specific experience,
qualifications, attributes or skills as of the date of this Proxy
Statement that led to the conclusion that each nominee and director
should serve as a director, in light of the Company’s business and
structure. The Nominating and Governance Committee of the Board of
Directors reviews at least annually the skills and characteristics
of new and existing directors, including diversity.
Corrado De Gasperis;
age 55; joined Comstock in April 2010, as Chief Executive Officer.
He has been a director since June 2011, and Executive Chairman
since September 2015. Mr. De Gasperis was also the President of the
Company from April 2010, until August 28, 2019. Mr. De Gasperis is
also a Director and the President of Sierra Springs Opportunity
Fund Inc. and a Director and Officer of Sierra Springs Enterprises
Inc., since July 2019, a strategic investee of Comstock Mining. He
brings more than 30 years of industrial, financial, project
management and operational metals and mining, manufacturing,
capital markets and board governance experience.
From 2006 to 2009, Mr. De Gasperis served as the Chief Executive
Officer of Barzel Industries Inc. (“Barzel”) and its predecessors.
Barzel operated a network of 15 steel-based manufacturing,
processing and distribution facilities in the United States and
Canada that offered a wide range of metal solutions to various
industries, from construction and industrial manufacturing to
transportation and mining. Mr. De Gasperis resigned from Barzel in
September 2009, after Barzel agreed to sell substantially all of
its assets in a planned transaction that was consummated in a sale
pursuant to Section 363 of the U.S. Bankruptcy Code following a
multiple party bidding process with suitors focused on both
in-court and out-of-court transactions. Barzel and substantially
all of its U.S. and Canadian subsidiaries were purchased for $65
million in cash.
From 1998 to 2006, Mr. De Gasperis held roles of increasing
responsibility at GrafTech International Ltd. (“GrafTech”), a
global manufacturer of industrial graphite and carbon-based
materials. From 2001 to 2006, he served as the Chief Financial
Officer, in addition to his duties as Vice President and Chief
Information Officer, which he assumed in 2000. From 1998 to 2000,
he served as the Controller of GrafTech and a leader of its
transformation and recapitalization.
From 1987 to 1998, Mr. De Gasperis was a Certified Public
Accountant with KPMG LLP, an international provider of financial
advisory and assurance services. As a Senior Assurance Manager in
the Manufacturing, Retail and Distribution Practice, he served
clients such as General Electric Company and Union Carbide
Corporation. KPMG announced his admittance, as a Partner, effective
July 1, 1998.
Mr. De Gasperis is a founding member and the Chairman of the Board
of Directors of the Comstock Foundation for History and Culture, a
tax-exempt organization under Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended (the "Internal Revenue Code"). He
is a board member and previously served as the Chairman of the
Virginia City Tourism Commission and is a member of the Northern
Nevada Development Authority. Mr. De Gasperis has served as a
director of GBS Gold International Inc., where he was Chairman of
the Audit and Governance Committee and the Compensation Committee
and a member of the Nominations and Advisory Committees. Mr. De
Gasperis holds a BBA from the Ancell School of Business at Western
Connecticut State University, with honors.
Leo M. Drozdoff;
age 55; director since February 2018. Mr. Drozdoff has extensive
experience in Nevada’s mining industry, including engineering,
legislation, environmental regulation, economic development and
historical preservation. He most recently served as the Director of
the Nevada Department of Conservation and Natural Resources from
2010 to 2016, and was a Cabinet member reporting to two Nevada
Governors, where Mr. Drozdoff oversaw 900 state employees
responsible for mining, environmental protection, water resources,
forestry, state parks, state lands and the State of Nevada’s
Historic Preservation Office.
Mr. Drozdoff also served as lead Administrator of Nevada’s Division
of Environmental Protection from October 2004 to April 2010, and
from 1998 to 2001as Bureau Chief over Water Control and Mining
Regulation from 1996 to 1998, two of the most critical Nevada
mining regulatory bureaus. He also chaired the Nevada Public
Employee Benefits Program Board, overseeing the benefits of over
30,000 public employees, retirees and their families.
Mr. Drozdoff graduated from Bucknell University with a Bachelor of
Science degree in Civil Engineering and he holds an MBA degree with
an emphasis in management from the University of Nevada,
Reno.
Walter A. Marting Jr.,
age 73; director since April 2018. Mr. Marting is
the Founder and Managing Member of CereCare, LLC, dba Brain Health
Restoration, a firm focused on providing breakthrough
rehabilitation treatment for individuals, including numerous
veterans suffering from brain disease, traumatic brain injury and
related substance use disorders—most commonly alcoholism and opioid
addictions.
Mr. Marting is also an experienced mining executive, having started
his mining career with Amax Inc., working there from 1975 to 1984.
He held positions of increasing responsibility at Amax starting as
a shift boss at Amax’s largest underground and open pit molybdenum
mine, Climax Molybdenum, and later becoming head of worldwide
strategic planning for all of Amax’s new properties. He was
appointed Vice President of Finance and Administration for Amax
Europe in 1982 and had responsibility for all of Amax’s treasury
and financial operations at Amax’s European headquarters in Paris,
France. He also consolidated and oversaw all of Amax’s metal
trading for
molybdenum, tungsten, copper, coal and iron ore in Paris. Amax
eventually was acquired by Freeport-McMoRan, the largest molybdenum
producer in the world.
In 1984, Mr. Marting became the Chairman and CEO of Lucky Chance
Mining Co., a Nevada-based junior gold mining firm that
successfully reopened and restarted production at the famed 16-1
Mine
in Allegheny, CA. More recently, Mr. Marting served as a as a
merchant banker with JFP Holdings, Inc., a US firm based in
Beijing, China which has overseen a wide portfolio of cross-border
merger and acquisition transactions.
Mr. Marting graduated from Yale University in 1969, with a BA in
English and holds an MBA from Harvard Business School. Mr. Marting
is also a Navy veteran, including service as a member of the US
Navy SEAL Team Two.
Judd B. Merrill;
age 49; director since September 2020. Mr. Merrill is currently
Chief Financial Officer of Aqua Metals, Inc. since November 2018.
Aqua Metals is reinventing lead recycling with its patented and
patent-pending AquaRefining™ technology. These systems reduce
environmental impact and scale lead acid recycling production
capacity to meet the growing demand for lead-driven innovations in
batteries, solar, wind, and grid scale energy storage.
Mr. Merrill has extensive mining industry experience. Prior to
joining Aqua Metals, Mr. Merrill was the Director of
Finance/Accounting at Klondex Mines Ltd., a Nevada based
international mining company. Before its acquisition by Hecla,
Klondex was a $500 million, publicly traded company listed on the
New York and the Toronto Stock Exchanges. From 2011 to 2017,
Mr. Merrill was employed by Comstock Mining Inc. with financials
positions of increasing responsibility, including Chief Financial
Officer and Corporate Secretary. Mr. Merrill was instrumental in
establishing financial processes and driving efficiencies, and
managing and
maintaining the Company’s liquidity and efficient access to the
capital markets. He worked directly with bankers, lenders,
investment funds and major shareholders related to the company’s
capital management Mr. Merrill previously worked as a controller at
Fronteer Gold Inc. and as an assistant controller at Newmont Mining
Corp., where he acquired and developed strong financial planning,
cost management, treasury and cash management
experience.
Mr. Merrill began his career at Deloitte & Touche LLP and spent
six years working in broad financial accounting, reporting,
auditing, internal control, and corporate financial
activities.
Mr. Merrill holds a Bachelor of Science in Accounting from Central
Washington University and a Masters of Business Administration from
the University of Nevada, Reno, and is a Certified Public
Accountant.
William J. Nance;
age 76; director since October 2005. Mr. Nance also serves as the
Chairman of the Audit and Finance, Compensation and Nominating and
Governance Committees. He is the President and CEO of Century Plaza
Printers, Inc., a company he founded in 1979. He has also served as
a consultant in the acquisition and disposition of commercial real
estate.
Mr. Nance is a Certified Public Accountant and, from 1970 to 1976,
was employed by Kenneth Leventhal & Company where he
specialized in the area of REITS, restructuring of real estate
companies, mergers and acquisitions, and most phases of real estate
development and financing. Mr. Nance has been a Director of The
InterGroup Corporation since 1984 and of Santa Fe Financial
Corporation and Portsmouth Square, Inc. since May
1996.
He holds a Bachelor’s degree in Business Administration from
California State University in Los Angeles. Mr. Nance has extensive
management experience within a wide range of businesses and brings
more than 35 years of public company director
experience.
The Board of Directors recommends that shareholders vote “FOR” all
of the nominees listed above.
CORPORATE GOVERNANCE PRINCIPLES AND BOARD MATTERS
Corporate Governance
We are managed under the direction of the Board of Directors, which
has adopted Corporate Governance Guidelines to set forth certain
corporate governance practices. The Corporate Governance Guidelines
are available on our website at
http://www.comstockmining.com/about/corporate-governance. The
information contained on our website is not part of this Proxy
Statement.
These guidelines cover such matters as purpose and powers,
composition, meetings, procedures, required responsibilities and
discretionary activities which our Board of Directors or the
appropriate committee should periodically consider undertaking.
Each committee is authorized to exercise all power of our Board of
Directors with respect to matters within the scope of its
charter.
The Corporate Governance Guidelines require, among other things,
that:
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a majority of the directors shall be independent within the NYSE
American listing standards;
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if a member of the Audit and Finance Committee simultaneously
serves on an audit committee of more than three public companies,
our Board of Directors must determine that such service would not
impair the ability of such member to effectively serve on the Audit
and Finance Committee; |
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our Board of Directors shall meet in regular sessions at least four
times annually (including telephonic meetings and the annual
retreat described below); and |
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our Board of Directors may have an annual retreat with executive
officers where there will be a full review of financial statements
and financial disclosures, long-term strategies, plans and risks,
and current developments in corporate governance. |
Our Corporate Governance Guidelines and committee charters are not
intended to, and do not, expand or increase the duties, liabilities
or responsibilities of any director under any circumstance beyond
those that a director would otherwise have under applicable laws,
rules and regulations in the absence of such Governance Guidelines
or charters.
Independence of Directors
The Board of Directors has determined that Messrs. Drozdoff,
Marting, Merrill and Nance are all “independent” directors within
the listing standards of the NYSE American and the independence
standards of our Corporate Governance Guidelines. Messrs. Drozdoff,
Marting and Nance are also independent within the standards set
forth in Rule 10A-3 of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”).
Generally, in order for a director to be considered “independent”
by the Board of Directors, he or she must (1) be free of any
relationship that, applying the rules of the NYSE American, would
preclude a finding of independence and (2) not have any
relationship (either directly or as a partner, shareholder or
officer of an organization) with us or any of our affiliates or any
executive officer of us or any of our affiliates (exclusive of
relationships based solely upon investment) that would interfere
with the exercise of independent judgment in carrying out the
responsibilities of a director. On an annual basis, each director
and executive officer is obligated to disclose any transactions
with the Company and any of its subsidiaries in which a director or
executive officer, or any member of his or her immediate family,
have a direct or indirect material interest. In evaluating the
materiality of any such relationship, the Board of Directors takes
into consideration whether disclosure of the relationship would be
required by the proxy rules under the Exchange Act. If disclosure
of the relationship is required, the Board of Directors must make a
determination that the relationship is not material as a
prerequisite to finding that the director is
“independent.”
Board of Directors Meetings
The Board of Directors meets on a regularly scheduled basis during
the year to review significant developments affecting us and to act
on matters requiring Board of Directors’ approval, and may hold
special meetings between scheduled meetings when appropriate.
During 2019, the Board of Directors and its committees held 12
meetings of all the committees of the Board of Directors on which
the directors then served. The directors attended 100% of the
aggregate of (1) the total number of meetings of all committees of
the Board of Directors on which the director then served and (2)
the total number of meetings of the Board of
Directors.
Board of Directors Leadership Structure and Role in Risk
Oversight
The Company is led by Corrado De Gasperis, who has served as
Executive Chairman of the Board since September 2015, and Chief
Executive Officer since April 2010.
The Board of Directors believes that the current Board leadership
structure, in which the roles of Chairman and Chief Executive
Officer are held by one person, is appropriate for the Company and
its shareholders at this time. The current Board leadership
structure is believed to be appropriate because it demonstrates to
our employees, suppliers, customers, and other shareholders that
the Company is under strong leadership, with a single person
setting the tone and having primary responsibility for managing the
Company’s operations. The Board will continue to reexamine our
corporate governance policies and leadership structure on an
ongoing basis to ensure that they continue to meet the Company’s
needs. The Company will review these policies and may adopt a
different approach in the future if circumstances warrant a
change.
The Board is responsible for overseeing risk management and
receives periodic reports from management. Management and the Board
are focused on the vision for the Company, and enhancing
shareholder value, management and strategic planning and oversight
of Company operations. We believe that our directors provide
effective oversight of the risk management function, especially
through dialogue between the Board and our management.
Executive Officers
The Company had three executive officers during 2019. Mr. De
Gasperis, the Executive Chairman and Chief Executive Officer of the
Company, who serves as the Company’s principal executive officer
and principal financial officer. Timothy D. Smith was hired as the
Company’s Chief Accounting Officer and Treasurer effective October
23, 2017, until August 30, 2019, when the position was eliminated.
Juan Carlos Giron Jr., CFA, was hired as the Company's Chief
Financial Officer and President, effective September 1, 2019, until
February 28, 2020, when he left the Company to pursue other
opportunities.
Code of Conduct and Ethics
The Code of Conduct and Ethics applies to all employees, including
senior executives, and all directors. It is intended, at a minimum,
to comply with the listing standards of the NYSE American, the
Sarbanes-Oxley Act of 2002 and the SEC rules adopted thereunder.
Only our Board or the Audit and Finance Committee may waive the
provisions of our Code of Conduct and Ethics for executive officers
and directors. Our Code of Conduct and Ethics constitutes a code of
ethics for purposes of Item 406 of Regulation S-K, and is posted on
our website at www.comstockmining.com.
No Hedging or Short Selling
Our securities trading policy applies to all of our directors,
officers and employees and restricts trading in our securities
while in possession of material nonpublic information. The policy
also prohibits our directors, officers, employees and their
designees from engaging in hedging, short sales and other trading
techniques that offset any decrease in market value of our equity
securities.
Board Committees
The Board has established three standing committees (the Audit and
Finance Committee, the Compensation Committee and the Nominating
and Governance Committee) and periodically establishes other
committees, in each case so that certain important matters can be
addressed in greater depth than may be possible in a meeting of the
entire Board. Under the committee charters described below, members
of the three standing committees must be independent directors
within the meaning of the listing standards of the NYSE American.
Further, members of the Audit and Finance Committee must be
independent directors within the meaning of the Sarbanes-Oxley Act
of 2002 and Rule 10A-3 under the Exchange Act, must satisfy the
expertise requirements of the listing standards of the NYSE
American and must include at least one “audit committee financial
expert” within the meaning of SEC rules. Our Board has determined
that the three standing committees currently consist of members who
satisfy such requirements.
Audit and Finance Committee
The Audit and Finance Committee assists our Board in discharging
and performing its duties and responsibilities with respect to the
financial affairs of the Company.
Without limiting the scope of such activities, the Audit and
Finance Committee has responsibility to, among other
things:
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select, retain, determine appropriate compensation of (and provide
for payment of such compensation), evaluate and, as appropriate,
terminate and replace the independent registered public accounting
firm; |
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review and, as appropriate, approve, prior to commencement, all
audit and non-audit services to be provided by the independent
registered public accounting firm; |
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review regularly with management, the director of internal audits,
where applicable, and the independent registered public accounting
firm any audit problems or difficulties and management’s responses
thereto; |
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resolve or direct the resolution of all material disagreements
between management and the independent registered public accounting
firm regarding accounting and financial reporting; |
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review with management and the independent registered public
accounting firm, among other things, all reports delivered by the
independent registered public accounting firm with respect to
critical accounting policies and practices used or to be used,
alternative treatments of financial information available under
generally accepted accounting principles and other material written
communications between the independent registered public accounting
firm and management; |
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review with management major issues regarding auditing, accounting,
internal control and financial reporting principles, policies and
practices and regulatory and accounting initiatives, and
presentation of financial statements, and major issues as to the
adequacy of the internal controls and any special audit steps
adopted in light of material control deficiencies; |
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meet at least once annually with management and the independent
registered public accounting firm in separate sessions; |
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review, prior to filing with the SEC, all annual and quarterly
reports (and all interim reports on Form 8-K to be filed that
contain financial disclosures of similar scope and magnitude as
annual reports and quarterly reports); |
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assess at least annually the adequacy of codes of conduct,
including codes relating to ethics, integrity, conflicts of
interest, confidentiality, public disclosure and insider trading
and, as appropriate, adopt changes thereto; |
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direct the establishment and maintenance of procedures for the
receipt and retention of, and the treatment of, complaints received
regarding accounting, internal control or auditing matters;
and |
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direct the establishment and maintenance of procedures for the
confidential and anonymous submission by employees of concerns
regarding questionable accounting or auditing matters. |
Members of the Audit and Finance Committee are William Nance
(Chair), Leo Drozdoff and Walter Marting Jr. The Board has
determined that each member of the Audit and Finance Committee
meets the financial literacy requirements of the NYSE American and
SEC, and that no members of the Audit and Finance Committee violate
the prohibition on serving as an Audit and Finance Committee member
due to having participated in the preparation of our financial
statements at any time during the past three years. William Nance
qualifies as an “audit
committee financial expert” as that term is defined in the rules
and regulations of the SEC, and therefore meets the NYSE American
financial sophistication requirement for at least one Audit and
Finance Committee member. The designation of William Nance as an
“audit committee financial expert” does not impose on him any
duties, obligations or liability that are greater than those that
are generally imposed on him as a member of our Audit and Finance
Committee and the Board, and his designation as an “audit committee
financial expert” pursuant to this SEC requirement does not affect
the duties, obligations or liability of any other member of our
Audit and Finance Committee or the Board.
Compensation Committee
The Compensation Committee assists our Board in discharging and
performing its duties with respect to management compensation,
succession planning, employee relations and employee benefits, plan
administration and director compensation.
Without limiting the scope of such activities, the Compensation
Committee shall, among other things:
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review and approve annually the goals and objectives relating to
the compensation of the Chief Executive Officer, evaluate the
performance of the Chief Executive Officer in light of such goals
and objectives and annually determine the compensation of the Chief
Executive Officer based on such evaluation; |
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review and approve, as appropriate, annually the compensation of
the other executive officers and directors and review compensation
of other members of senior management and other employees
generally; |
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assess organizational systems and plans, including those relating
to management development and succession planning; |
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administer stock-based compensation plans and assess compensation
arrangements, plans, policies and programs and benefit and welfare
plans and programs; and |
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review the Compensation Discussion and Analysis for inclusion in
the annual proxy statements or annual report, as the case may
be. |
Members of the Compensation Committee are Leo Drozdoff (chair) and
William Nance, each of whom satisfies the independence requirements
of NYSE American and SEC rules and regulations. Each member of our
Compensation Committee is a non-employee director, as defined
pursuant to Rule 16b-3 promulgated under the Exchange Act, and an
outside director, as defined pursuant to Section 162(m) of the
Internal Revenue Code.
Compensation Committee Interlocks and Insider
Participation
No member of the Compensation Committee was at any time an officer
or employee of the Company, nor is any member of the Compensation
Committee related to any other member of the Compensation
Committee, any other member of the Board of Directors or any
executive officer of the Company. No executive officer of the
Company served as a director or member of the compensation
committee of another entity, one of whose executive officers is a
member of the Company’s Compensation Committee.
The Nominating and Governance Committee
The Nominating and Governance Committee assists our Board in
discharging and performing its duties and responsibilities with
respect to nomination of directors, selection of committee members,
assessment of performance of our Board and other corporate
governance matters. Without limiting the scope of such activities,
the Nominating and Governance Committee shall, among other
things:
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review candidates for nomination for election as directors
submitted by directors, officers, employees and shareholders;
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review at least annually the current directors of our Board to
determine whether such individuals are independent under the
listing standards of the NYSE American and the SEC rules under the
Sarbanes-Oxley Act of 2002 (and non-employee directors (as defined
under Exchange Act Rule 16b-3) and outside directors (as defined
under Internal Revenue Code Section 162 (m))). |
Members of the Nominating and Governance Committee are William
Nance (chair) and Walter Marting Jr., each of whom satisfies the
independence requirements of NYSE American and SEC rules and
regulations.
The charter of the Nominating and Governance Committee sets for the
minimum qualifications to serve as a director. As set forth in such
charter, each director and nominee should have the following skills
and characteristics:
1. Have high personal standards:
a. Integrity;
b. Honesty; and
c. Desire to make full disclosure of all present and future
conflicts of interest.
2. Have the ability to make informed business
judgments;
3. Have literacy in financial and business matters;
4. Have the ability to be an effective team member;
5. Have a commitment to active involvement and an ability to give
priority to the Company; a member of the Audit and Finance
Committee should serve on no more than three public company audit
committees;
6. Have no affiliations with competitors;
7. Have achieved high levels of accountability and success in his
or her given fields;
8. Have no geographic travel restrictions;
9. Have an ability and willingness to learn the Company’s
business;
10. Preferably have experience in the Company’s business or in
professional fields (i.e. finance, accounting, law or banking) or
in other industries or as a manager of international businesses so
as to have the ability to bring new insight, experience or contacts
and resources to the Company;
11. Preferably have a willingness to make a personal substantive
investment in the Company;
12. Preferably have no direct affiliations with major suppliers or
vendors; and
13. Preferably have previous public company board experience
together with good references.
Shareholders may communicate with the full Board of Directors
(including shareholder nominations), a specified committee of the
Board of Directors or a specified individual member of the Board of
Directors in writing by mail addressed to Comstock Mining Inc.,
P.O. Box 1118, Virginia City, Nevada 89440, Attention: Chairman of
the Nominating and Governance Committee. The Chairman of the
Nominating and Governance Committee and his or her duly authorized
agents are responsible for collecting and organizing shareholder
communications. Absent a conflict of interest, the Chairman of the
Nominating and Governance Committee is responsible for evaluating
the materiality of each shareholder communication and determining
whether further distribution is appropriate, and, if so, whether to
(1) the full Board of Directors, (2) one or more committee members,
(3) one or more Board members and/or (4) other individuals or
entities.
There will not be any difference between the manner in which the
committee evaluates a nominee recommended by a shareholder and the
manner in which the committee evaluates any other nominee. Please
note that Mr. De Gasperis was elected as a director of the Company
in 2011, pursuant to the terms of his employment
agreement.
Attendance at Annual Meeting
We expect all directors and nominees to attend the annual meeting
of shareholders each year. All five directors attended the
Company’s 2019 Annual Meeting.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Board of Directors has adopted a written related person
transaction policy that governs the review, approval or
ratification of covered related person transactions. The Audit and
Finance Committee manages this policy. The policy generally
provides that we may enter into a related person transaction only
if:
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the Audit and Finance Committee approves or ratifies such
transaction in accordance with the guidelines set forth in the
policy and the transaction is on terms comparable to those that
could be obtained in arm’s length dealings with an unrelated third
party; or |
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the transaction is approved by the disinterested members of the
Board of Directors; or |
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the transaction involves compensation approved by the Compensation
Committee. |
DELINQUENT SECTION 16(A) REPORTS
Based solely on our review of the forms required by Section 16(a)
of the Exchange Act that have been received by us, we believe there
has been compliance with all filing requirements applicable to our
officers, directors and beneficial owners of greater than 10% of
our Common Stock, except that no Form 4 was filed during the year
by John V. Winfield despite the Schedule 13D filing made by Mr.
Winfield on September, 20 2019, which indicated that he owned 15.8%
of the outstanding shares of the Company.
STOCK OWNERSHIP
The following table sets forth, as of September 24, 2020, the total
number of shares owned beneficially by each of our directors,
officers and key employees, individually and as a group, and the
present owners of 5% or more of any class of our voting equity
securities.
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Name and Address(a)
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Amount and nature of beneficial ownership |
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Percent of class(b)
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Winfield Group |
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Common Stock |
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3,335,439 |
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9.68% |
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DP Shore Family Trust
550 W. Plumb Lane, #B432
Reno, NV 89509
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Common Stock |
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1,757,577 |
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5.10% |
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Officers, Directors and Nominees |
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Corrado De Gasperis |
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Common Stock |
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150,000 |
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(d) |
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William J. Nance |
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Common Stock |
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97,000 |
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* |
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Leo M. Drozdoff |
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Common Stock |
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121,240 |
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* |
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Judd Merrill |
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Common Stock |
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100 |
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* |
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Walter A. Marting Jr. |
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Common Stock |
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90,000 |
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* |
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All directors and executive officers as a group |
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Common Stock |
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458,340 |
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1.33% |
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* Less than 2%
(a) Unless otherwise indicated, the business
address of each person named in the table is c/o of Comstock Mining
Inc., P.O. Box 1118, 117 American Flat Road, Virginia City, NV
89440.
(b) Applicable percentage of ownership is
based on 34,440,766 shares of common stock outstanding as of
September 24, 2020 together with all applicable options and
warrants for such stockholder. Beneficial ownership is determined
in accordance with the rules of the SEC, and includes voting and
investment power with respect to shares. Shares of our common stock
subject to options, warrants or other convertible securities
exercisable within 60 days after September 24, 2020 are deemed
outstanding for computing the percentage ownership of the person
holding such options, warrants or other convertible securities, but
are not deemed outstanding for computing the percentage of any
other person. Except otherwise noted, the named beneficial owner
has the sole voting and investment power with respect to the shares
of common stock shown.
(c) Mr. Winfield is the President, Chief
Executive Officer and Chairman of the Board of The InterGroup
Corporation, Santa Fe Financial Corporation and Portsmouth Square,
Inc. and may be deemed to share voting and dispositive power over
shares of the Company’s securities owned by each of The InterGroup
Corporation, Santa Fe Financial Corporation and Portsmouth Square,
Inc. Mr. Winfield has sole voting power over shares of the
Company’s securities held by Northern Comstock. The 3,335,439
shares of the Company’s common stock beneficially owned by Mr.
Winfield includes (i) 557,517 shares of the Company’s common stock
held directly by Mr. Winfield, (ii), 190,007 shares of the
Company’s common stock held by InterGroup, (iii) 355,516 shares of
the Company’s common stock held by Portsmouth, (iv) 181,330 shares
of the Company’s common stock held by Santa Fe, (vi) 2,051,069
shares of the Company’s common stock held by Northern
Comstock.
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Amount and nature of beneficial ownership |
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John Winfield |
557,517 |
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The InterGroup Corporation |
190,007 |
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Portsmouth Square Inc. |
355,516 |
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Santa Fe Financial Corporation |
181,330 |
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Northern Comstock LLC |
2,051,069 |
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Total |
3,335,439 |
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(d) Includes options to acquire 50,000
shares of common stock. Among 100,000 shares owned, 41,820 shares
have been pledged as security to an unrelated third
party.
CHANGE IN ACCOUNTANTS
Effective September 23, 2020, our Audit Committee approved the
decision to change independent registered public accounting firms
and we dismissed Deloitte & Touche, LLP (“Deloitte”). On
September 23, 2020, we retained DeCoria, Maichel & Teague P.S.
as our new independent registered public accounting firm to audit
our consolidated financial statements for the year ended December
31, 2020.
Deloitte’s audit reports on the Company’s consolidated financial
statements as of and for the fiscal years ended December 31, 2019,
and December 31, 2018, did not contain an adverse opinion or a
disclaimer of opinion and were not qualified or modified as to
uncertainty, audit scope or accounting principles.
During the two most recent years preceding our dismissal of
Deloitte and the subsequent interim period through June 30, 2020,
we had no "disagreements" (as defined in Item 304(a)(1)(iv) of
Regulation S-K and the related instructions thereto) with Deloitte
on any matter of accounting principles or practices, financial
statement disclosure or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Deloitte,
would have caused Deloitte to make reference in connection with its
report to the subject matter of the disagreement during its audit
for such years. During the two most recent years preceding our
discharge of Deloitte and the subsequent interim period through
June 30, 2020, there were no "reportable events" (as defined in
Item 304(a)(1)(v) of Regulation S-K and the related instructions
thereto).
During the two years ended December 31, 2019, December 31, 2018,
and through the period ended June 30, 2020, we did not consult with
DeCoria, Maichel & Teague P.S. with respect to (i) the
application of accounting principles to a specified transaction,
either completed or proposed, the type of audit opinion that might
be rendered on our financial statements, and neither a written
report nor oral advice was provided to us that DeCoria, Maichel
& Teague P.S. concluded was an important factor considered by
us in reaching a decision as to any accounting, auditing or
financial reporting issue, or (ii) any other matter that was the
subject of a disagreement or a reportable event (each as defined
above).
We have previously provided Deloitte with a copy of the foregoing
disclosure and requested that Deloitte furnish us with a letter
addressed to the Securities and Exchange Commission stating whether
or not Deloitte agrees with the above statements and, if not,
stating the respects in which it does not agree. A copy of the
letter, dated September 25, 2020, furnished by Deloitte in response
to that request, was filed as Exhibit 16.1 to the Company’s Current
Report on Form 8-K dated September 23, 2020, and such letter stated
that it had agreed with the statements concerning Deloitte
contained therein.
THE AUDIT AND FINANCE COMMITTEE REPORT
The Audit and Finance Committee of the Board of Directors is
composed of three independent directors and operates under a
written charter adopted by the Board of Directors. The Audit and
Finance Committee approves the selection of our independent
registered public accounting firm.
Management is responsible for our disclosure controls, internal
controls and the financial reporting process. The independent
registered public accounting firm is responsible for performing an
independent audit of our consolidated financial statements in
accordance with the standards of the Public Company Accounting
Oversight Board (United States) and for issuing a report thereon.
The Audit and Finance Committee’s primary responsibility is to
monitor and oversee these processes and to report thereon to the
Board of Directors. In this context, the Audit and Finance
Committee has met privately with management and Deloitte &
Touche LLP, our independent registered public accounting firm.
Deloitte & Touche LLP has had unrestricted access to the Audit
and Finance Committee.
The Audit and Finance Committee has discussed with Deloitte &
Touche LLP the matters required to be discussed by the Statement on
Auditing Standards No. 61, as amended (AICPA, Professional
Standards, Vol. 1, AU Section 380), as adopted by the Public
Company Accounting Oversight Board in Rule 3200T, including the
scope of the auditor’s responsibilities and whether there are any
significant accounting adjustments or any disagreements with
management.
The Audit and Finance Committee also has received the written
disclosures and the letter from Deloitte & Touche LLP required
by applicable requirements of the Public Company Accounting
Oversight Board regarding the independent accountant’s
communications with the Audit and Finance Committee concerning
independence, and has discussed with Deloitte & Touche LLP that
firm’s independence from the Company.
The Audit and Finance Committee has reviewed and discussed the
consolidated financial statements with management and Deloitte
& Touche LLP. Based on this review and these discussions, the
representation of management that the consolidated financial
statements were prepared in accordance with generally accepted
accounting principles, and the report of Deloitte & Touche LLP
to the Audit and Finance Committee, the Audit and Finance Committee
recommended that the Board of Directors include the audited
consolidated financial statements in our Annual Report on Form 10-K
for the year ended December 31, 2019, filed with the
SEC.
The Audit and Finance Committee also reviews with management and
the independent registered public accounting firm the results of
that firm’s review of the unaudited financial statements that are
included in our quarterly reports on Form 10-Q.
Fees Billed by our Auditors
The Audit and Finance Committee reviews the fees charged by our
independent registered public accounting firm. During the fiscal
years ended December 31, 2019, and December 31, 2018, we
were billed the following fees set forth below in connection with
services rendered by that firm to us.
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2019 |
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2018 |
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Deloitte & Touche LLP |
|
Deloitte & Touche LLP |
Audit Fees |
$299,036 |
|
$213,752 |
Tax Fees |
14,264 |
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27,305 |
Audit-Related Fees |
56,323 |
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— |
Total
fees
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$369,623 |
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$241,057 |
Audit Fees.
Audit fees include professional services rendered by Deloitte &
Touche LLP for the audit of our annual financial statements and the
reviews of the financial statements included in our quarterly
reports on Form 10-Q. This category also includes fees for audits
provided in connection with statutory filings or services that
generally only the principal auditor reasonably can provide to a
client, implementation of new financial and accounting reporting
standards and consents and assistance with and review of documents
filed with the SEC.
Audit-Related Fees.
Audit-related fees include consultation on valuations, significant
transactions and consents.
Tax Fees.
Tax fees include original and amended tax returns, studies
supporting tax return amounts as may be required by Internal
Revenue Service regulations, claims for refunds, assistance with
tax audits and other work directly affecting or supporting the
payment of taxes.
Audit and Finance Committee Pre-Approval Policy
The charter of our Audit and Finance Committee provides that the
duties and responsibilities of our Audit and Finance Committee
include the pre-approval of all audits, audit-related, tax, and
other services permitted by law or applicable SEC regulations
(including fee and cost ranges) to be performed by our independent
auditor. Any pre-approved services that will involve fees or costs
exceeding pre-approved levels will also require specific
pre-approval by the Audit and Finance Committee. Unless otherwise
specified by the Audit and Finance Committee in pre-approving a
service, the pre-approval will be effective for the 12-month period
following pre-approval. The Audit and Finance Committee will not
approve any non-audit services prohibited by applicable SEC
regulations or any services in connection with a transaction
initially
recommended by the independent auditor, the purpose of which may be
tax avoidance and the tax treatment of which may not be supported
by the Internal Revenue Code and related regulations.
To the extent deemed appropriate, the Audit and Finance Committee
may delegate pre-approval authority to the Chairman of the Audit
and Finance Committee or any one or more other members of the Audit
and Finance Committee provided that any member of the Audit and
Finance Committee who has exercised any such delegation must report
any such pre-approval decision to the Audit and Finance Committee
at its next scheduled meeting. The Audit and Finance Committee will
not delegate to management the pre-approval of services to be
performed by the independent auditor.
Our Audit and Finance Committee requires that our independent
auditor, in conjunction with our Chief Executive Officer, be
responsible for seeking pre-approval for providing services to us
and that any request for pre-approval must inform the Audit and
Finance Committee about each service to be provided and must
provide detail as to the particular service to be provided. Our
Audit and Finance Committee Chair and Audit and Finance Committee
financial expert is William Nance.
THE AUDIT AND FINANCE COMMITTEE
William J. Nance, Chairman
Leo M. Drozdoff
Walter A. Marting Jr.
September 24, 2020
PROPOSAL NO. 2
RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit and Finance Committee has appointed DeCoria, Maichel
& Teague P.S. , an independent registered public accounting
firm, as our independent registered public accounting firm for the
fiscal year ending December 31, 2020. A representative of DeCoria,
Maichel & Teague P.S. is expected to be present at the Meeting
with an opportunity to make a statement and to be available to
respond to appropriate questions. A representative from Deloitte
& Touche LLP is not expected to be present at the
Meeting.
DeCoria, Maichel & Teague P.S.’s principal function is to audit
the consolidated financial statements of the Company and its
subsidiaries and, in connection with that audit, to review certain
related filings with the SEC and to conduct limited reviews of the
financial statements included in our quarterly reports on Form
10-Q.
Appointment of our independent registered public accounting firm is
not required to be submitted to a vote of the shareholders of the
Company for ratification by our by-laws or otherwise. However, the
Board of Directors is submitting the appointment of DeCoria,
Maichel & Teague P.S. to the shareholders for ratification as a
matter of good corporate practice. If the shareholders do not
ratify the appointment, the Audit and Finance Committee will
reconsider whether to retain the firm. In such event, the Audit and
Finance Committee may retain DeCoria, Maichel & Teague P.S. ,
notwithstanding the fact that the shareholders did not ratify the
appointment or may select another qualified, independent accounting
firm without resubmitting the matter to shareholders. Even if the
appointment is ratified, the Audit and Finance Committee reserves
the right, in its discretion, to select a different accounting firm
at any time during the year if it determines that such a change
would be in the best interests of the Company and its shareholders.
Under the Sarbanes-Oxley Act of 2002 and the rules of the SEC
promulgated thereunder, the Audit and Finance Committee is solely
responsible for the appointment, compensation and oversight of the
work of our independent registered public accounting
firm.
The Board of Directors and Audit and Finance Committee recommend
that shareholders vote “FOR” ratification of the appointment
of
DeCoria, Maichel & Teague P.S.
as our independent registered public accounting firm for the fiscal
year ending December 31, 2020.
COMPENSATION DISCUSSION AND ANALYSIS
This compensation discussion and analysis explains the material
elements of the compensation for our named executive
officers.
The Company’s philosophy is to align total compensation of its
employees, including the named executive officers, with
performance-based incentives for the achievement of the Company’s
goals, and most importantly, creating sustainable wealth. The
adoption and implementation of compensation programs are intended
to support that philosophy and the interest of the Company and its
shareholders by providing appropriate forms of performance-based
cash and stock-based compensation alternatives that strengthen the
ability of the Company to attract and motivate employees and others
who focus their efforts and abilities on realizing the Company’s
specific objectives, and are in a position to impact the financial
and operational performance of the Company.
What are our compensation principles?
The Compensation Committee (for purposes of this Compensation
Discussion and Analysis section, the “Committee”) designs and
oversees the Company’s compensation policies and approves
compensation for our named executive officers. Our goal is to
create compensation plans directly linked to specific performance
that enhances shareholder value. We strive to align the interests
of shareholders with those of employees at all levels of the
organization. Our focus is on achieving sustainable results through
the systematic and methodical implementation of our strategic plan.
These principles are inherently long-term in nature. To accomplish
this, our plans are designed to:
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Support our business strategy - We align our programs with business
strategies focused on long-term growth and enhanced shareholder
value. Our compensation plans allow our executives to share in that
wealth creation, based on specific performance objectives, and
support an environment that promotes improvement and breakthrough
performance. |
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Pay for Performance - Substantially all of our executive pay has
historically been dependent upon the achievement of specific
corporate performance goals and this remains a foundational
principal for our future compensation plans. As a result,
individual performance as it relates to compensation is only
relevant insofar as it advances the goals of the Company. Our plans
will result in realizing higher compensation when goals are met and
lower and possibly no compensation when goals are partially met or
not met. |
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Pay Competitively - We establish compensation levels that are
designed to meet or exceed the needs of our employees. We also
assess them against companies that we believe compete with us for
human capital. In this context, we believe we are more than
competitive with those competing companies. |
What are our compensation objectives?
Central to the Company’s goal of wealth creation is the achievement
of predictable, sustainable growth of throughput (that is, the rate
at which our system generates cash). Accordingly, it is important
to the Company that measurements that conflict with future
throughput-based performance are eliminated from decision-making or
minimized (for example, when required by law). Additionally, we
seek to use Statistical Process Control (SPC) on the most critical,
interdependent processes to promote stability and predictability in
our operations.
In designing our compensation plans, our overreaching objectives
are to:
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Drive superior throughput-based financial performance - we design
programs that encourage our executives to achieve or exceed goals
and share in that value creation. |
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Attract, retain and motivate the right people in the right role,
within the broader system design - we require independent and
interdependent performance and allow our executives to share in the
value created based on the system’s performance. |
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Align our executives with shareholders’ long-term interests by
building the opportunity for significant ownership of Company stock
through our compensation programs, vesting only on the systems
achievement of value enhancing performance objectives. |
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Focus on full alignment to the goal of the system, our executives
vest only when the systems objectives and goals are achieved. The
objectives and the vesting do not vary from the rest of program
participants. |
Our compensation plans are intended to serve both named executive
officers and employees generally. Accordingly, we currently offer
two components of compensation as explained below:
Base Compensation.
Base compensation should both reflect the Company’s appreciation of
the employee’s competencies (with some but not absolute
consideration to the market’s valuation of those competencies) and
meet the needs of the employee for stability. The objective should
be that base compensation is not only enough to meet the basic
needs for employees and their families, but is also enough to take
the issue of money-as-a-motivator off the table.
Stock-based Compensation.
We acknowledge the risk that certain stock-based compensation
programs could fail to completely satisfy the compensation
principles previously described because the various
instruments typically used (options, warrants, time-based grants,
etc.) may not present real or timely correlation to performance
and, in particular, performance against a precisely defined goal
and duration. However, we believe that stock-based compensation
tied to the achievement of precise goals and the Company’s
strategic plan does provide meaningful rewards for stable,
measurable progress. Accordingly, we adopted a shareholder
approved, equity incentive plan that includes performance-based
vesting.
The following is a summary of the principal features of the 2011
Equity Incentive Plan (the “2011 Plan”) and its operation and is
qualified by reference to the full text of the 2011
Plan.
Any employee of Comstock or a subsidiary of Comstock providing
services to Comstock or any of its subsidiaries who is specifically
identified by the Committee, and any non-employee director of
Comstock or any of its subsidiaries is eligible to receive awards
under the 2011 Plan. All of our employees and non-employee
directors are eligible to participate in the 2011 Plan.
Historically, awards under the 2011 Plan have been made to our
senior officers, managers, and technical and professional
personnel.
The maximum number of shares of the Company’s Common Stock that may
be delivered pursuant to awards granted under the 2011 Plan is
6,000,000 shares of Common Stock. No more than 6,000,000 shares of
Common Stock may be issued under the 2011 Plan or transferred upon
exercise or settlement of incentive stock options. Any shares
subject to an award under the 2011 Plan that are forfeited or
terminated, expire unexercised, lapse or are otherwise canceled in
a manner such that the shares of Common Stock covered by such award
are not issued may be used again for awards under the 2011
Plan.
As of December 31, 2019, 453,840 shares remained available for
issuance under the 2011 Plan, of which 453,800 of such remaining
available awards were granted to directors and employees in May of
2020.
In addition, if a change in control of the Company (as defined in
the 2011 Plan) occurs, then any outstanding granted but unvested
shares would vest immediately and, following the date on which the
participant’s employment is terminated by the Company without cause
or following the participant’s disability, the portion of any
outstanding award that would vest upon achieving the next defined
objective would vest at the time of termination. There are no
unvested awards outstanding under the current plan. The Company is
planning a new grant aligned with its current business plan,
focusing on the next three years.
Who are our named executive officers?
The Company’s named executive officers for 2019 were:
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Name |
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Title |
Corrado De Gasperis |
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Exec. Chairman & CEO |
Juan Carlos Giron Jr. |
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President & CFO |
Timothy D. Smith |
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CAO & Secretary |
How do we assure that our compensation program keeps our named
executive officers focused on long-term success?
We assure that our compensation programs keep our named executive
officers focused on the long-term success of the Company by making
a substantial portion of their long-term pay subject to the
achievement of specific, longer-term, strategic, company-wide
performance objectives and by granting stock-based awards with
vesting criteria fully linked with those, longer term, measurable
strategic objectives. Moreover, the value of such stock-based
awards will likely only increase based on the long-term performance
of the Company as compared to other investment
alternatives.
How is competitiveness established?
The Committee structures executive compensation so that targeted
total cash compensation and longer-term stock-based compensation
opportunities are competitive with comparable positions at
companies that we compete with for human capital, basically mining
and construction-type companies based in Nevada. When considering
what is competitive for the Company, the Committee considered the
complexity of starting up a new, industrial mine, the breakthroughs
required for success, the entrepreneurial and team building
competencies needed, the complexities of the regulatory and
political environments and the extensive interdependencies required
with all stakeholders, including the people required for operating
the system. The Company does not use benchmarking against a peer
group or otherwise.
In setting 2019, base salaries, target total cash compensation and
target total direct compensation, the Committee considered the
potential value creation inherent in our stated objectives, the
time period required for achieving those objectives and the
associated risks.
How is compensation established for our named executive
officers?
The Committee does not rely exclusively on existing market data in
establishing target levels of compensation. The Committee also does
not employ a rigid or formulaic process to set pay levels, but
does
utilize market data as one of many tools to assist the Committee.
In setting compensation levels, the Committee considers the
following factors:
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each executive’s competency; |
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each executive’s scope of responsibility and impact on the
Company’s performance; |
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internal equity - an executive’s compensation relative to his or
her peers in the system; and |
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the CEO’s recommendations for his senior team. |
Each of our named executive officers’ performance is evaluated in
light of our overall financial performance and the advancement of
our strategic objectives approved by the Committee and the Board of
Directors. For 2019, as in past years, the Committee structured a
compensation package for our named executive officers comprised of
base salary and benefits coupled with long-term incentives
(stock-based grants), which we believe provided an appropriate mix
of financial security, wealth sharing.
Annual Compensation: Base Salaries
Base salary provides our named executive officers with a basic
level of financial security and supports the Committee’s objectives
in attracting and retaining top talent. Base salary increases for
other named executive officers (other than our CEO) are recommended
by our CEO and are reviewed and approved by the
Committee.
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Executive Officer |
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2019 Annual
Base Salary
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Corrado De Gasperis |
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$288,000 |
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Juan Carlos Giron Jr. |
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200,000 |
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Timothy D.
Smith 110,000
The Committee is satisfied that each of the named executive
officers’ salary is reasonable and appropriate.
Why did the Committee choose the performance metrics for the 2011
Equity Plan?
At the time the stock awards were granted, the Committee chose to
align the vesting of stock awards directly to the achievement of
the established goal of the strategic plan, namely, the responsible
development of
gold and silver resources, permitting and bringing those resources
into production that was approved by the Board in April 2010.
Accordingly, the restricted stock only vested upon the achievement
of the stated objectives. If the objectives were not achieved, the
stock grant would not vest. In 2013, the Company achieved
production rates in excess of the stated objectives and qualified
for, and the Committee authorized, the vesting of the correlating
shares, exactly as described when the Company achieved those
specific intermediate objectives. For the remaining, unachieved
objectives, all of the unvested grants expired during 2016 and
2017. There are currently no granted, outstanding, unvested shares.
The Company granted 453,800 of the 453,840 remaining available
awards under the 2011 Equity Plan to directors and employees in May
of 2020.
Benefits
The Company provides named executive officers with the same
benefits provided to other Comstock employees namely, health and
dental insurance (Company pays a portion of the
costs).
Post Termination Payments
We believe that we should provide reasonable severance benefits if
an executive’s position is eliminated in the event of a change in
control or, in the absence of a change in control, in certain other
circumstances. It is our belief that the interests of shareholders
are best served if our senior management is focused on the
performance of the Company without the distraction and uncertainty
that the lack of such protection would invite. We also believe that
providing these benefits helps to facilitate the recruitment of
talented executives, and that, relative to the overall value of any
potential transaction, these potential benefits are appropriately
sized.
The employment agreement for Mr. De Gasperis includes a severance
arrangement. For additional information with respect to this
arrangement, please see “Employment, Retirement and Severance Plans
and Agreements.”
ADDITIONAL INFORMATION
We believe this additional information may assist you in better
understanding our compensation practices and
principles.
Role of the Compensation Committee and the CEO
The Committee, consisting entirely of independent Directors, is
responsible for executive compensation. As part of the
compensation-setting process each year, the Committee meets
periodically with the CEO to review the Company’s progress toward
its stated strategic objectives and receives comments from members
of the Board of Directors. The CEO recommends to the Committee the
compensation amounts for each of our named executive officers,
other than himself.
While the Committee will ask for advice and recommendations from
the CEO, the Committee is responsible for executive compensation
and as such:
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Sets named executive officer base salaries; |
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Reviews the business and financial plan and progress toward
strategic goals, performance measures and action plans for our
business, which are reviewed by, and subject to approval of, the
entire Board of Directors; |
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Reviews annual and long-term performance against goals and
objectives; |
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Reviews contractual agreements and benefits, including supplemental
retirement and any payments which may be earned upon termination,
and makes changes as appropriate; |
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Reviews incentive plan designs, ensures alignment and modifications
as appropriate; and |
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Reviews total compensation to ensure compensation earned by named
executive officers is fair and reasonable relative to corporate and
individual performance. |
The Committee is authorized to retain compensation consultants or
advisors, but does not presently do so. Any such consultant or
advisor selected by the Committee would only be selected if the
Committee determined that such consultant or advisor is independent
from our management pursuant to SEC and NYSE American
standards.
Deductibility of Compensation
In determining the total compensation of each named executive
officer, the Committee considers the tax deductibility of
compensation. The Committee believes it is generally in the
interests of the Company and our shareholders to provide
compensation that is tax deductible by the Company. While the
Committee intends that compensation be deductible, there may be
instances where potentially non-deductible compensation is
justifiably provided to reward executives consistent with our
compensation philosophy for each compensation element.
Advisory Vote on Executive Compensation
As required by the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 and the rules and regulations promulgated by
the SEC pursuant thereto, we included a proposal for a non-binding
advisory resolution approving the compensation of our named
executive officers for 2018, in our proxy statement for our 2019
annual meeting of shareholders. The proposal was supported by
shareholders with approval in excess of 81.6% 27,098,499 votes in
favor and 6,123,283votes against.
The Committee considered the results of the advisory vote in
reviewing our executive compensation program, noting the high level
of shareholder support, and elected to continue the same principles
and objectives in determining the types and amounts of compensation
to be paid to our named executive officers in 2020. The Committee
will continue to focus on responsible executive compensation
practices that attract, motivate and retain high performance
executives, reward those executives for the achievement of
long-term performance and support our other executive compensation
objectives.
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis section of this Proxy
Statement with management and, based on such review and discussion,
recommended to the Board of Directors that it be included in this
Proxy Statement.
COMPENSATION COMMITTEE
Leo M. Drozdoff, Chair
William J. Nance
September 24, 2020
EXECUTIVE COMPENSATION
The following table sets forth, for the periods indicated, the
total compensation for services provided by the person who served
as our principal executive officer (CEO) during 2019, the person
who served as our principal financial officer (CFO) during 2019,
and the person who served as our chief accounting officer (CAO)
during 2019.
SUMMARY COMPENSATION AND NAMED EXECUTIVE OFFICERS
TABLE
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Name and Principal Position |
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Year |
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Salary
($)
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Stock Awards
($)
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Option Awards |
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Non-equity incentive Plan Compensation |
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Non-qualified deferred Compensation Earnings |
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All other compensation |
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Total
($)
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Corrado De Gasperis(1)
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2019 |
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$ |
288,000 |
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— |
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— |
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— |
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— |
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84,052 |
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$ |
372,052 |
President and Chief Executive Officer |
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2018 |
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288,000 |
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— |
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— |
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— |
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— |
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— |
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288,000 |
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2017 |
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288,000 |
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288,000 |
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2016 |
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311,342 |
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— |
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— |
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— |
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— |
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— |
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311,342 |
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Juan Carlos Giron Jr. |
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2019 |
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63,692 |
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63,692 |
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President and Chief Financial Officer
(2)
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Timothy D. Smith |
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2019 |
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82,682 |
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82,682 |
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Chief Accounting Officer and Secretary(3)
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2018 |
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110,000 |
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— |
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— |
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— |
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— |
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1,634 |
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111,634 |
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2017 |
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19,002 |
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— |
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— |
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— |
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— |
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— |
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19,002 |
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(1)
Mr. De Gasperis was hired to serve as the
Chief Executive Officer and President of the Company effective
April 21, 2010 and was appointed Executive Chairman in September
2015. Mr. De Gasperis has also served as the Principal Financial
Officer since April 21, 2010. Mr. De Gasperis’ salary was
voluntarily reduced from $360,000 to $288,000 during 2016 in
conjunction with the Company's efforts to reduce administrative
expenses. All other reflects $65,000 in special recognition awards
and $19,052 in personal time off (PTO) values paid, not
taken.
(2)
Mr. Giron Jr. was hired to serve as the
President and Chief Financial Officer effective September 1, 2019,
and served in that capacity until February, 2020, when he left the
Company to pursue other opportunities. On March 19, 2020, the
Company entered into a severance agreement with Mr. Giron. Pursuant
to the terms of the severance agreement, Mr. Giron is entitled to
receive four months of severance compensation at the rate he was
previously paid.
(3)
Mr. Smith was hired to serve as the Chief
Accounting Officer effective October 23, 2017. His position was
eliminated August 30, 2019.
(4)
All other compensation includes amounts
paid in current year for pay-out of unused PTO.
The terms of Mr. De Gasperis’ employment agreement is described in
detail in Employment, Retirement and Severance Plans and Agreements
below.
Current Equity Compensation Program
In 2011, the Company adopted the 2011 Plan.
For a description of the 2011 Plan, please see “Compensation
Discussion and Analysis - Stock-Based Compensation.” The 2011 Plan
replaced the equity plans previously adopted by the Company,
including, without limitation, those adopted in 2005 and
2006.
As of December 31, 2019, 3,730,800 shares have been issued and
outstanding under the program and 453,840 remained available for
future issuances under the 2011 Plan, and the Company
granted
453,800 of the remaining available awards under the 2011 Equity
Plan to directors and employees in May of 2020.
Employment, Retirement and Severance Plans and
Agreements
Corrado De Gasperis Employment Agreement
Mr. De Gasperis was hired to serve as our Chief Executive Officer
and President effective April 21, 2010. In connection with his
employment, the Company entered into an Employment Agreement with
Mr. De Gasperis, which also provided for his election as a director
upon closing of the recapitalization and the capital raise
transactions in 2010.
Term.
The agreement’s original term ended on April 21, 2014, but is
automatically extended for additional one-year periods unless
notice of termination is provided. If a “change in control” of the
Company (as defined in the agreement) occurs with less than three
years, then the term will be extended to three years beyond the
date of the change in control.
Salary and Other Benefits.
Under the agreement, Mr. De Gasperis is entitled to an annual base
salary of $360,000. In 2016, Mr. De Gasperis voluntarily agreed to
reduce his annual salary to $288,000. Mr. De Gasperis is entitled
to participate in each of our medical, pension or other employee
benefit plans generally available to employees. Mr. De Gasperis is
also entitled to participate in any of our incentive or
compensation plans. The agreement also requires us to adopt a
profit-sharing plan whereby 10% of net cash profits before
principal payments of indebtedness and investments in fixed assets
will be set aside for semi-annual payments to employees, no less
than 35% of which shall be payable to Mr. De Gasperis. The profit
sharing plan has not yet been established.
Equity Awards.
The Company was required to adopt an equity incentive plan. The
Board adopted and the shareholders approved the 2011 Plan, in June
2011 and award grants were made in 2011, and
thereafter.
Any unvested shares within that program expired in 2016 and 2017.
The 2011 Plan had 453,840 shares available for granting future
awards as of December 31, 2019, and 453,800 of the remaining
available awards under the 2011 Equity Plan were granted to
directors and employees in May of 2020.
Rights on Termination of Employment.
If Mr. De Gasperis’ employment is terminated without “cause,” if
his employment is terminated due to his “disability” or if he
resigns for “good reason” (each term as defined in his agreement),
subject to his executing a release in our favor, Mr. De Gasperis
shall be entitled to:
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a lump sum payment of all accrued amounts due to him through the
date of his termination; |
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continued base salary for twelve months (or thirty-six months if
the termination is during the three-year period following a change
in control); and |
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continuation of health and life insurance benefits for the longer
of the period during which base salary is payable following
termination or 18 months (unless he is entitled to participate in
the health plan of a new employer). |
If Mr. De Gasperis’ employment is terminated due to his death, his
estate is entitled to the benefits (other than continued life
insurance coverage) outlined above.
Upon a termination of Mr. De Gasperis’ employment for cause or his
resignation without good reason, he shall be entitled to a lump sum
payment of all amounts due to him through the date of his
termination.
Non-Compete.
The agreement prohibits Mr. De Gasperis from competing with us
during the term of his employment and for one year
thereafter.
Changes of Control.
As referenced under the caption “Compensation Discussion and
Analysis - Stock-Based Compensation,” if a change in control of the
Company (as defined in the 2011 Plan) occurs, then the shares of
restricted stock granted to the named executive would vest
immediately and, following the date on which the named executive
officer’s employment is terminated by the Company without cause or
following his disability, the portion of the award that would vest
upon achieving the next objective shall vest at the time of
termination. For purposes of the 2011 Plan, change in control
occurs, generally, on the following:
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the date on which any person or group becomes the beneficial owner
of 40% or more of the then issued and outstanding Common Stock or
voting securities of the Company (not including securities held by
our employee benefit plans or related trusts or certain
acquisitions by John Winfield and his affiliates); |
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the date on which any person or group acquires the right to vote on
any matter, by proxy or otherwise, with respect to 40% or more of
the then issued and outstanding Common Stock or voting securities
of the Company (not including securities held by our employee
benefit plans or related trusts or certain acquisitions by John
Winfield and his affiliates); |
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the date, at the end of any two-year period, on which individuals,
who at the beginning of such period were directors of the Company,
or individuals nominated or elected by a vote of two-thirds of such
directors or directors previously so elected or nominated, cease to
constitute a majority of our Board; |
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the date on which shareholders of the Company approve a complete
liquidation or dissolution of the Company; or |
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the date on which we consummate certain reorganizations, mergers,
asset sales or similar transactions.
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Equity Compensation Plan Information
The following table sets forth information with respect to our
Common Stock that may be issued upon the exercise of stock options
under our incentive stock option plans as of December 31,
2019.
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Plan Category |
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(a) Number of Securities to Be Issued Upon Exercise of Outstanding
Options, Warrants, and Rights |
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(b) Weighted- Average Exercise Price of Outstanding Options,
Warrants, and Rights |
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(c) Number of Securities Remaining Available for Future Issuance
Under Equity Compensation Plans (Excluding Securities Reflected in
Column (a)) |
Equity Compensation Plans Approved by Shareholders
(1)
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N/A |
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N/A |
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453,840 |
_____________
(1)The
equity compensation plans approved by shareholders only include the
2011 Plan, under which 453,840 shares remained available for
issuance as of December 31, 2019, and 453,800 of the remaining
available awards under the 2011 Equity Plan were granted to
directors and employees in May of 2020.
COMPENSATION OF DIRECTORS
The following table summarizes the directors’ cash compensation for
2019:
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Fees Earned or Paid in Cash ($)
(1)
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Name
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Fees earned or paid in cash ($)
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Stock awards ($)
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Option awards ($)
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Non-equity incentive plan compensation ($)
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Nonqualified deferred compensation earnings
($)
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All other compensation ($)
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Total
($)
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(a)
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(b)
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(c)
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(d)
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(e)
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(f)
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(g)
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(h)
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William
Nance
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$24,000
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__
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__
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__
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__
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__
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$24,000
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Leo
Drozdoff
(2)
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24,000
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__
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__
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__
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__
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__
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24,000
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Walter A. Marting Jr.
(2)
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24,000
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__
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__
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__
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__
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__
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24,000
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J. Clark Gillam
(2) (3)
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24,000
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__
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__
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__
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__
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__
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24,000
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96,000 |
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(1)
No payment included interest.
(2)
Mr. Drozdoff, Mr. Marting and Mr. Gillam joined in February, March
and May, 2018, respectively.
(3)
Mr. Gillam resigned on September 20, 2020. Mr. Gillam was a
designee of a former creditor of the
Company. The debt of such creditor was repaid on August 11,
2020.
PROPOSAL NO. 3
NON-BINDING PROPOSAL TO APPROVE THE COMPENSATION OF OUR EXECUTIVE
OFFICERS
SEC rules adopted pursuant to the recently enacted Dodd-Frank Wall
Street Reform and Consumer Protection Act of 2010, or the
Dodd-Frank Act, enable our shareholders to vote to approve, on an
advisory (non-binding) basis, the compensation of our named
executive officers as disclosed in this Proxy Statement in
accordance with the SEC’s rules. This proposal, commonly known as
“Say on Pay,” gives shareholders the opportunity to approve, reject
or abstain from voting on the proposed resolution regarding our
fiscal year 2019 executive compensation program. At our 2017 Annual
Meeting, a majority of our shareholders voted to annually advise us
on a Say on Pay proposal, and the Board of Directors determined
that the Company will hold an annual shareholder advisory vote on
executive compensation. This non-binding, advisory vote on the
frequency of Say on Pay must be held at least once every six
years.
For the reasons stated below, we are requesting your approval of
the following non-binding advisory resolution:
“RESOLVED, that the compensation paid to the Company’s named
executive officers, as disclosed pursuant to Item 402 of Regulation
S-K, including the Compensation Discussion and Analysis,
compensation tables and narrative discussion is hereby
APPROVED.”
The compensation of our named executive officers and our
compensation philosophy policies are comprehensively described in
the Compensation Discussion and Analysis and the Compensation of
Executive Officers sections, and the accompanying tables (including
all footnotes) and narrative of this Proxy Statement.
The Compensation Committee designs our compensation policies for
our named executive officers to create executive compensation
arrangements that are linked both to the creation of long-term
growth, shareholder value and companywide performance, and are
competitive with peer companies of similar complexity and encourage
stock ownership by our senior management. Based on its review of
the total compensation of our named executive officers for fiscal
year 2019, the Compensation Committee believes that the total
compensation for each of the named executive officers is reasonable
and effectively achieves the designed objectives of driving
superior business and financial performance, attracting, retaining
and motivating our people, aligning our executives with
shareholders’ long-term interests, focusing on the long-term and
creating balanced program elements that encourage aligned,
systemic, sustainable performance.
Neither the approval nor the disapproval of this resolution will be
binding on us or the Board of Directors or will be construed as
overruling a decision by us or the Board of Directors. Neither the
approval nor the disapproval of this resolution will create or
imply any change to our fiduciary duties or create or imply any
additional fiduciary duties for us or the Board of Directors.
However, the Compensation Committee values the opinions that our
shareholders express in their votes and will consider the outcome
of the vote when making future executive compensation decisions, as
it deems appropriate.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE TO APPROVE
THE FOLLOWING NON-BINDING ADVISORY RESOLUTION RELATING TO THE
COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS.
“RESOLVED, that the Company’s shareholders APPROVE, on a
non-binding advisory basis, the compensation paid to the Company’s
named executive officers as disclosed in this Proxy Statement
pursuant to the SEC’s compensation disclosure rules, including the
Compensation Discussion and Analysis, compensation tables and
narrative discussion.”
PROPOSAL NO. 4
APPROVAL OF THE COMSTOCK MINING INC. 2020 EQUITY INCENTIVE
PLAN
The following is a description of the material features of the
Comstock Mining Inc. 2020 Equity Incentive Plan. This description
is qualified in its entirety by reference to the full text of the
Comstock Mining Inc. 2020 Equity Incentive Plan, a copy of which is
attached to this proxy statement as Appendix A.
Summary
Our shareholders are being asked to approve the Comstock Mining
Inc. 2020 Equity Incentive Plan (the "Equity Incentive Plan") which
will be used to award incentive cash and equity compensation to our
board of directors, employees and consultants. If approved by our
shareholders, the Equity Incentive Plan will replace the equity
plans previously adopted by the Company, including without
limitation, the equity incentive plan adopted in 2011 (the
“Existing Plan”), which will be frozen and remain in effect only to
the extent of awards existing under the Existing Plan as of the
date the shareholders approve the Equity Incentive Plan (no future
awards under the Existing Plan will be made after shareholder
approval of the Equity Incentive Plan). Both our Compensation
Committee (our “Committee”) and Board of Directors (our “Board”)
have approved the Equity Incentive Plan, subject to shareholder
approval at the annual meeting.
This plan provides up to 1.8 million shares for equity awards, and
terminates once all awards have been issued, unless our Board
terminates it prior to that date. The Company granted a gross
amount of 453,800 equity awards in fiscal year 2020. No equity
awards were granted in fiscal years 2017, 2018 or 2019. The equity
awards granted in fiscal year 2020 represent 1.3% of the Company’s
issued and outstanding shares as of the record date.
General
Upon adoption by shareholders at the annual meeting, the Equity
Incentive Plan will authorize 1.8 million shares of our common
stock for issuance as awards. Awards under the Equity Incentive
Plan may be in the form of cash, stock options, stock appreciation
rights, restricted stock, restricted stock units, performance share
awards or other equity-based awards. If an award expires,
terminates or is forfeited without the issuance of shares, then
such shares will again be available for grant under the Equity
Incentive Plan. However, shares subject to an award under the
Equity Incentive Plan shall not again be made available for
issuance or delivery under the Equity Incentive Plan if such shares
are (a) shares tendered in payment of an option, (b) shares
delivered or withheld by the Company to satisfy any tax withholding
obligation, or (c) shares covered by a stock-settled stock
appreciation right or other awards that were not issued upon the
settlement of the award. Adjustments will be made in the aggregate
number of shares that may be issued under the Equity Incentive Plan
in the event of a change affecting shares of our common stock, such
as a stock dividend or split, recapitalization, reorganization, or
merger. The maximum number of shares of common stock
vesting during a single fiscal year to any director shall not
exceed a total value of $100,000. As of September 24, 2020, the
closing price of a share of our common stock was
$1.09.
Administration and Term.
Our Committee will administer the Equity Incentive Plan, including
the power to determine when to grant awards; which eligible
participants will receive awards; whether the award will be an
option, stock appreciation right, restricted stock, restricted
stock unit, cash award or other equity-based award; whether awards
will be subject to performance goals; and the number of shares or
units to be allocated to each award. Our Committee may impose terms
and conditions of each award, including, without limitation, the
exercise price and medium of payment and vesting provisions and may
impose such other restrictions and requirements as it may deem
appropriate.
The Equity Incentive Plan will terminate once all shares reserved
for issuance have been issued, unless our Board terminates it prior
to that date. Awards existing after the termination date will
continue to be governed by the terms and conditions of the Equity
Incentive Plan.
Eligibility.
All present and future employees, directors and consultants are
eligible to receive awards under the Equity Incentive Plan if
selected for participation by our Compensation Committee. As of
September 24, 2020, 12 employees, 5 directors and no consultants
were eligible to receive awards under the Equity Incentive
Plan.
Restricted Stock and Restricted Stock Units.
Restricted stock and restricted stock units issued pursuant to the
Equity Incentive Plan are subject to the following general
restrictions: (1) if an escrow arrangement is used, the participant
shall not be entitled to delivery of the stock certificate; (2) the
shares shall be subject to the restrictions on transferability set
forth in the award agreement; (3) the shares shall be subject to
forfeiture to the extent provided in the applicable award
agreement; and (4) to the extent such shares are forfeited, the
stock certificates shall be returned to the Company and all rights
of the participant to such shares and as a shareholder with respect
to such shares shall terminate without further obligation on the
part of the Company. Our Committee is also authorized to impose
other terms on restricted stock or restricted stock units,
including additional events of forfeiture. Our Committee will
establish the terms and conditions upon which the restrictions on
those shares or units will lapse. Our Committee may at any time, in
its sole discretion, accelerate the time at which any or all
restrictions will lapse or remove any and all
restrictions.
Participants holding shares of restricted stock may exercise full
voting rights with respect to those shares and are entitled to
receive all dividends and other distributions paid with respect to
those shares, provided that any cash dividends and stock dividends
with respect to restricted stock shall be withheld by the Company
for the participant’s account. Participants holding restricted
stock units do not possess any voting rights with respect to those
units, but may be entitled to receive a payment equal to all
dividends and other distributions paid with respect to the shares
underlying those units if and as so provided in the related award
agreement upon settlement of such restricted stock unit. Restricted
stock units may be settled by the Company in the form of shares of
company common stock, cash, or a fixed combination of both, as
determined by our Committee.
Stock Options.
Options granted under the Equity Incentive Plan may be incentive
stock options (qualifying for favorable income tax treatment under
Section 422 of the Internal Revenue Code of 1986, as amended) or
non-qualified stock options. The option price for any option
awarded under the plan may not be less than 100% (or, in the case
of an incentive stock option granted to a 10% shareholder, 110%) of
the fair market value of our common stock on the date of the grant.
Our Committee determines any vesting requirement for option awards.
Payment of the option exercise price may be made in cash or as
otherwise provided in an option award or by separate action of our
Committee. The maximum term of any option granted under the plan is
ten years.
Stock Appreciation Rights.
Our Committee may award stock appreciation rights under the Equity
Incentive Plan and impose terms and conditions on the time or times
when such stock appreciation rights may be exercised as it deems
appropriate. When the stock appreciation right is exercisable, the
holder may surrender to us all or a portion of the unexercised
stock appreciation right and receive in exchange an amount equal to
the difference between (i) the fair market value on the date of
exercise of the common stock covered by the surrendered portion of
the stock appreciation right and (ii) the exercise price specified
in the stock appreciation right award agreement. Our obligation
arising upon exercise of a stock appreciation right may be paid in
the company's common stock or in cash, or in any combination of the
two, as our Committee may determine. Stock appreciation rights may
only be exercised at the times specified by our Committee. To date,
no stock appreciation rights have been granted under the expiring
equity incentive plan.
Performance Goals.
Our Committee will make the vesting or exercisability of any award
contingent on the achievement of the following performance goals
over the next three years AND an expected growth in valuation. Our
Committee has reviewed the strategic plans and evaluated the major
intermediate objectives associated with achieving the goal of
delivering $500 million in shareholder equity value, (that is, at
least $12 per share) by:
Establish and Grow the value of our mineral
properties:
•Establish
the Dayton Resource area’s maiden, stand-alone mineral resource
estimate;
•Expand
the Dayton-Spring Valley Complex through exploration drilling and
geophysical modelling;
•Develop
the expanded Dayton-SV Complex toward full economic feasibility,
supporting a decision to mine;
•Entitle
the Dayton-SV Complex with geotechnical, metallurgical,
environmental studies and permitting; and
•Validate
the Comstock NSR Royalty portfolio (Lucerne Mine, Occidental Lode,
Comstock Lode, etc.).
Commercialize a Global, ESG-compliant, Profitable, Mercury
Remediation System:
•Establish
the technical efficacy of the Comstock Mercury System, protect the
intellectual property;
•Deploy
and Operate the first international mercury remediation project by
deploying the Company’s second and third mercury remediation
systems, into the Philippines; and
•Identify,
evaluate and prioritize a pipeline of potential mercury remediation
projects and deploying the third and fourth mercury remediation
projects, producing extended, superior cash flow
returns.
Monetize non-strategic assets and build a quality
organization:
•Monetize
our third-party, junior mining securities responsibly, for $15
million+;
•Monetize
our non-mining assets for $12.75 million, excluding the Gold Hill
Hotel;
•Grow
the value of our Opportunity Zone investments to over $30 million;
and
•Deploy
a systemic organization, capable of accelerating growth and
handling complexity.
These criteria relate specifically to the Company’s goal,
three-year strategic plan, and the intermediate objectives leading
to creating and delivering $500 million of value to shareholders
and positioning the Company for more significant growth beyond
2023. The criteria extends to one or more of its subsidiaries,
joint ventures, investees and/or one or more of its affiliates, or
any combination of the foregoing, and may be applied on an absolute
basis and/or be relative to one or more peer group companies or
indices, or any combination thereof, all as our Committee shall
determine.
Change-in-Control.
Upon a change in control of our Company, our Committee may in its
discretion and upon at least 10 days’ advance notice to the
affected persons, cancel any outstanding awards and pay to the
holder thereof, in cash or stock, or any combination thereof, the
value of such awards based upon the price per share of common stock
received or to be received by other shareholders of the Company in
the event. Our Committee may also accelerate the vesting of any
award at the time of the change in control. However, our Board or
our Committee may provide for alternative treatment for some or all
awards at its discretion. A change of control will be deemed to
have occurred in any of the following:
•The
direct or indirect sale, transfer, conveyance or other disposition
(other than by way of merger or consolidation), in one or a series
of related transactions, of all or substantially all of the
properties or assets of the Company and its subsidiaries, taken as
a whole, to any person that is not a subsidiary of the
Company;
•The
incumbent directors cease for any reason to constitute the Board’s
majority;
•The
consummation of a complete liquidation or dissolution of the
Company;
•The
acquisition by any person of beneficial ownership of 20% or more
(on a fully diluted basis) of either (i) the then outstanding
shares of common stock of the Company, taking into account as
outstanding for this purpose such common stock issuable upon the
exercise of options or warrants, the conversion of convertible
stock or debt, and the exercise of any similar right to acquire
such common stock or (ii) the combined voting power of the then
outstanding voting securities of the Company entitled to vote
generally in the election of directors;
•The
consummation of a reorganization, merger, consolidation, statutory
share exchange or similar form of corporate transaction involving
the Company that requires the approval of the Company’s
shareholders, whether for such transaction or the issuance of
securities in the transaction (a “Business Combination”),
unless
immediately following such Business Combination: (i) more than 50%
of the total voting power of (A) the entity resulting from such
Business Combination (the “Surviving Company”), or (B) if
applicable, the ultimate parent entity that directly or indirectly
has beneficial ownership of sufficient voting securities eligible
to elect a majority of the members of the board of directors (or
the analogous governing body) of the Surviving Company (the “Parent
Company”), is represented by the outstanding Company voting
securities that were outstanding immediately prior to such Business
Combination (or, if applicable, is represented by shares into which
the outstanding Company voting securities were converted pursuant
to such Business Combination), and such voting power among the
holders thereof is in substantially the same proportion as the
voting power of the outstanding Company voting securities among the
holders thereof immediately prior to the Business Combination; (ii)
no person (other than any employee benefit plan sponsored or
maintained by the Surviving Company or the Parent Company) is or
becomes the beneficial owner, directly or indirectly, of 50% or
more of the total voting power of the outstanding voting securities
eligible to elect members of the board of directors of the Parent
Company (or the analogous governing body) (or, if there is no
Parent Company, the Surviving Company); and (iii) at least a
majority of the members of the board of directors (or the analogous
governing body) of the Parent Company (or, if there is no Parent
Company, the Surviving Company) following the consummation of the
Business Combination were board members at the time of the board’s
approval of the execution of the initial agreement providing for
such Business Combination.
Transferability of Awards.
No options granted under the Equity Incentive Plan may be sold,
transferred, pledged, or otherwise disposed of, other than by will
or by the laws of descent and distribution and all options are
exercisable during the participant's lifetime only by such
participant or, if permissible under applicable law, by the
participant's guardians or legal representatives, except that our
Committee, in its discretion, may permit the transfer of awards to
a family member or trust for no consideration. A participant may,
by delivering written notice to the Company, in a form satisfactory
to the Company, designate a third party who, in the event of the
death of the participant, shall thereafter be entitled to exercise
an award.
Re-pricing Prior Awards.
Our Committee may modify the purchase price or exercise price of
any outstanding award, provided that if the modification effects a
repricing, shareholder approval shall be required before the
repricing is effective.
Federal Income Tax Information.
The following is a general summary of the current federal income
tax treatment of awards that would be authorized to be granted
under the Equity Incentive Plan, based upon the current provisions
of the Internal Revenue Code of 1986, as amended, and regulations
promulgated thereunder. As the rules governing the tax treatment of
such awards are technical in nature, the following discussion of
tax consequences is necessarily general in nature and does not
purport to be complete. In addition, statutory provisions are
subject to change, as are their interpretations, and
their
application may vary in individual circumstances. This discussion
does not address the tax consequences under applicable state and
local law.
Incentive Stock Options.
A participant generally will not recognize income on the grant or
exercise of an incentive stock option. However, the difference
between the exercise price and the fair market value of the stock
on the date of exercise is an adjustment item for purposes of the
alternative minimum tax. If a participant disposes of the stock
received upon the exercise of an incentive stock option within
certain specified periods (a “disqualifying disposition”), the
participant will recognize ordinary income on the exercise of such
incentive stock option in the same manner as on the exercise of a
non-qualified stock option, as described below.
Non-qualified Stock Options and Stock Appreciation Rights.
A participant generally is not required to recognize income on the
grant of a non-qualified stock option or a stock appreciation
right. Instead, ordinary income generally is required to be
recognized on the date the non-qualified stock option or stock
appreciation right is exercised. In general, the amount of ordinary
income required to be recognized is (i) in the case of a
non-qualified stock option an amount equal to the excess, if any,
of the fair market value of the shares on the exercise date over
the exercise price and (ii) in the case of a stock appreciation
right, the amount of cash and/or the fair market value of any
shares received upon exercise.
Restricted Stock.
Unless a participant who receives an award of restricted stock
makes an election under Section 83(b) of the Internal Revenue Code
of 1986, as amended, as described below, the participant generally
is not required to recognize ordinary income on the award of
restricted stock. Instead, on the date the restrictions lapse and
the shares vest (that is, become transferable and no longer subject
to forfeiture), the participant will be required to recognize
ordinary income in an amount equal to the excess, if any, of the
fair market value of the shares on that date over the amount paid,
if any for those shares. If a participant makes a Section 83(b)
election to recognize ordinary income on the date the shares are
awarded, the amount of ordinary income required to be recognized is
an amount equal to the excess, if any, of the fair market value of
the shares on the date awarded over the amount paid, if any for
those shares. In that case, the participant will not be required to
recognize additional ordinary income when the restrictions lapse
and the shares vest.
Restricted Stock Units.
A participant generally is not required to recognize income on the
grant of a restricted stock unit. In general, on the date the units
are paid, the participant will be required to recognize ordinary
income in an amount equal to the cash and/or the fair market value
of the units on that date shares received as payment.
Company Common Stock.
A participant generally is required to recognize income on the date
of grant of company common stock based on the fair value of the
stock received.
Gain or Loss on Sale or Exchange of Shares.
In general, gain or loss from the sale or exchange of shares
granted under the Equity Incentive Plan will be treated as capital
gain or loss, provided that the shares are held as capital assets
at the time of the sale or exchange.
Deductibility by Us.
We generally are not allowed a deduction in connection with the
grant or exercise of an incentive stock option. However, if a
participant is required to recognize income as a result of a
disqualifying disposition, we will be entitled to a deduction equal
to the amount of ordinary income so recognized. In the case of a
non-qualified stock option, a stock appreciation right, restricted
stock, restricted stock unit or common stock, in general, we will
be allowed a deduction in an amount equal to the amount of ordinary
income recognized by a participant, provided that certain income
tax reporting requirements are satisfied. However, due to Internal
Revenue Code Section 162(m), we are unable to take a deduction for
compensation (including awards granted under the Equity Incentive
Plan) paid to our named executive officers (and any other employees
considered “covered employees” under Internal Revenue Code Section
162(m)) that is in excess of $1 million.
Modification of Equity Incentive Plan.
Our Board may amend, alter, or terminate the Equity Incentive Plan
as it deems advisable, provided that our shareholders must approve
any amendment that is required to be approved by shareholders under
the Internal Revenue Code, law, or stock exchange listing
requirements. Awards granted under the Equity Incentive Plan may be
amended, provided, however, any amendment which would constitute an
impairment of the rights under any award granted before amendment
of the Equity Incentive Plan requires that the Company request the
consent of the participant and the participant consents in
writing.
New Plan Benefits.
Because Equity Incentive Plan awards are subject to the discretion
of our Committee, the benefits and amounts that will be received or
allocated in the future under the Equity Incentive Plan, as well as
amounts that would have been received in the last fiscal year had
the Equity Incentive Plan been in effect, are not
determinable.
Vote Required.
In order to be adopted, the Equity Incentive Plan must be approved
by the affirmative vote of a majority of shares present and
entitled to vote at the meeting. Abstentions will have the same
effect as votes cast against the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” PROPOSAL
4
SHAREHOLDER PROPOSALS
A shareholder desiring to make a proposal to be acted upon at the
2021 Annual Meeting of shareholders must present such proposal to
our Secretary at P.O. Box 1118, Virginia City, Nevada 89440. Unless
the Company changes the date of its Annual Meeting for next year
more than 30 days from this year's meeting, the deadline for
submitting shareholder proposals to be considered for inclusion in
the Company’s 2020 proxy statement is 120 calendar days before
September 24, 2021. Shareholder proposals submitted after May 27,
2021 will be considered untimely, and will not be considered for
inclusion in the Company’s 2021 proxy statement. However, if the
Company’s Annual Meeting is changed by more than 30 days from the
date of this year's meeting, then the deadline is a reasonable time
before the Company begins to print and send its proxy
materials.
In addition, our bylaws provide that a shareholder desiring to
submit a proposal to be voted on at next year’s annual meeting,
including nominating persons for election as directors, may submit
such proposals by delivering written notice to our Secretary. Such
notice generally must be delivered within 10 business days of the
date on which the Company sends to the shareholders written notice
of the Company’s Annual Meeting.
The shareholder’s notice must include:
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the shareholder’s name and mailing address; |
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the date, time and place of the meeting (and type) to which the
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the nature of the matter (and for an election of director(s), the
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any other information required to ensure that shareholders entitled
to vote on such matter have a clear understanding of the
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The requirements found in our bylaws are separate from, and in
addition to, the SEC requirements that a shareholder must meet to
have a proposal included in our Proxy.
CERTAIN MATTERS RELATING TO PROXY MATERIALS AND
ANNUAL REPORTS
Notice and Access
We have elected to provide access to our proxy materials over the
internet under the Securities and Exchange Commission’s “notice and
access” rules. We believe that providing our proxy materials over
the internet increases the ability of our shareholders to connect
with the information they need, while reducing the environmental
impact associated with the printing and delivery of
materials.
Electronic Access of Proxy Materials and Annual
Reports
This Proxy Statement and our Annual Report on Form 10-K are
available on our website at www.comstockmining.com. Shareholders
can elect to access future proxy statements and annual reports over
the Internet instead of receiving paper copies in the mail.
Providing these documents over the Internet will reduce our
printing and postage costs and the number of paper documents
shareholders would otherwise receive. We will notify shareholders
who consent to accessing these documents over the Internet when
such documents will be available. Once given, a shareholder’s
consent will remain in effect until such shareholder revokes it by
notifying us otherwise at Secretary, Comstock Mining Inc., P.O. Box
1118, Virginia City, Nevada 89440. Shareholders of record voting by
mail can choose this option by marking the appropriate box on the
proxy card included with this Proxy Statement and shareholders of
record voting by telephone or over the Internet can choose this
option by following the instructions provided by telephone or over
the Internet, as applicable. Beneficial owners whose shares are
held in street name should refer to the information provided by the
institution that holds such beneficial owner’s shares and follow
the instructions on how to elect to access future proxy statements
and annual reports over the Internet, if this option is provided by
such institution. Paper copies of these documents may be requested
in writing from Comstock Mining Inc., P.O. Box 1118, Virginia City,
Nevada 89440 or by telephone: (775) 847-5272 ext. 151, Attn: Zach
Spencer.
“Householding” of Proxy Materials and Annual Reports for Record
Owners
The SEC rules permit us, with your permission, to deliver a single
proxy statement and annual report to any household at which two or
more shareholders of record reside at the same address. Each
shareholder will continue to receive a separate proxy card. This
procedure, known as “householding,” reduces the volume of duplicate
information you receive and helps to reduce our expenses.
Shareholders of record voting by mail can choose this option by
marking the appropriate box on the proxy card included with this
Proxy Statement and shareholders of record voting by telephone or
over the Internet can choose this option by following the
instructions provided by telephone or over the Internet, as
applicable. Once given, a shareholder’s consent will remain in
effect until such shareholder revokes it by notifying our Secretary
as described above. If you revoke your consent, we will begin
sending you individual copies of future mailings of these documents
within 30 days after we receive your revocation notice.
Shareholders of record who elect to participate in householding may
also request a separate copy of future proxy statements and annual
reports by contacting our investor relations department as
described above.
Separate Copies for Beneficial Owners
Institutions that hold shares in street name for two or more
beneficial owners with the same address are permitted to deliver a
single proxy statement and annual report to that address. Any such
beneficial owner can request a separate copy of this Proxy
Statement or the Annual Report on Form 10-K by contacting our
investor relations department as described above. Beneficial owners
with the same address who receive more than one proxy statement and
Annual Report on Form 10-K may request delivery of a single proxy
statement and Annual Report on Form 10-K by contacting our investor
relations department as described above.
OTHER MATTERS
The Board of Directors is not aware of any other matters for
presentation or action at the Meeting other than as set forth in
this Proxy Statement. If any other matters properly come before the
Meeting, or any adjournment or postponement thereof, the person or
persons voting the proxies will vote them in accordance with their
best judgment.
By Order of the Board of Directors
APPENDIX A
COMSTOCK MINING INC. 2020 EQUITY INCENTIVE PLAN
1. Purpose; Eligibility.
1.1 General Purpose. The name of this plan
is the Comstock Mining Inc. 2020 Equity Incentive Plan (the
“Plan”). The purposes of the Plan are to (a) enable Comstock Mining
Inc., a Nevada corporation (the “Company”), and any Affiliate to
incent specific performance over the next three to five years,
attract and retain the types of Employees, Consultants and
Directors who will contribute to the Company’s long range success;
(b) provide incentives that align the interests of Employees,
Consultants and Directors with those of the shareholders of the
Company; and (c) promote the success of the Company’s
business.
1.2 Eligible Award Recipients. The persons
eligible to receive Awards are the Employees, Consultants and
Directors of the Company and its Affiliates and such other
individuals designated by the Committee who are reasonably expected
to become Employees, Consultants and Directors after the receipt of
Awards.
1.3 Available Awards. Awards that may be
granted under the Plan include: (a) Incentive Stock Options, (b)
Non-qualified Stock Options, (c) Stock Appreciation Rights, (d)
Restricted Awards, (e) Performance Share Awards, (f) Cash Awards,
and (g) Other Equity-Based Awards.
2. Definitions.
“Affiliate” means a corporation or other entity that, directly or
through one or more intermediaries, controls, is controlled by or
is under common control with, the Company.
“Applicable Laws” means the requirements related to or implicated
by the administration of the Plan under applicable state corporate
law, United States federal and state securities laws, the Code, any
stock exchange or quotation system on which the shares of Common
Stock are listed or quoted, and the applicable laws of any foreign
country or jurisdiction where Awards are granted under the
Plan.
“Award” means any right granted under the Plan, including an
Incentive Stock Option, a Non-qualified Stock Option, a Stock
Appreciation Right, a Restricted Award, a Performance Share Award,
a Cash Award or an Other Equity-Based Award.
“Award Agreement” means a written agreement, contract, certificate
or other instrument or document evidencing the terms and conditions
of an individual Award granted under the Plan which may, in the
discretion of the Company, be transmitted electronically to any
Participant. Each Award Agreement shall be subject to the terms and
conditions of the Plan.
“Beneficial Owner” has the meaning assigned to such term in Rule
13d-3 and Rule 13d-5 under the Exchange Act, except that in
calculating the beneficial ownership of any particular Person, such
Person shall be deemed to have beneficial ownership of all
securities that such Person has the right to acquire by conversion
or exercise of other securities, whether such right is currently
exercisable or is exercisable only after the passage of time. The
terms “Beneficially Owns” and “Beneficially Owned” have a
corresponding meaning.
“Board” means the Board of Directors of the Company, as constituted
at any time.
“Cash Award” means an Award denominated in cash that is granted
under Section 10 of the Plan.
“Cause” means:
With respect to any Participant, unless the
applicable Award Agreement states otherwise:
(a) If the Participant is a party to an employment or service
agreement with the Company or its Affiliates and such agreement
provides for a definition of Cause, the definition contained
therein; or
(b) If no such agreement exists, or if such agreement does not
define Cause: (i) the commission of, or plea of guilty or no
contest to, a felony or a crime involving moral turpitude or the
commission of any other act involving willful malfeasance or
material fiduciary breach with respect to the Company or an
Affiliate; (ii) conduct that brings or is reasonably likely to
bring the Company or an Affiliate negative publicity or into public
disgrace, embarrassment, or disrepute; (iii) gross negligence or
willful misconduct with respect to the
Company or an Affiliate; (iv) material violation of state or
federal securities laws; or (v) material violation of the Company’s
written policies or codes of conduct, including written policies
related to discrimination, harassment, performance of illegal or
unethical activities, and ethical misconduct.
The Committee, in its absolute discretion, shall determine the
effect of all matters and questions relating to whether an Employee
has been discharged for Cause.
“Change in Control”
(a) The direct or indirect sale, transfer,
conveyance or other disposition (other than by way of merger or
consolidation), in one or a series of related transactions, of all
or substantially all of the properties or assets of the Company and
its subsidiaries, taken as a whole, to any Person that is not a
subsidiary of the Company;
(b) The Incumbent Directors cease for any reason to constitute at
least a majority of the Board;
(c) The date which is 10 business days prior to the consummation of
a complete liquidation or dissolution of the Company;
(d) The acquisition by any Person of Beneficial Ownership of 20% or
more (on a fully diluted basis) of either (i) the then outstanding
shares of Common Stock of the Company, taking into account as
outstanding for this purpose such Common Stock issuable upon the
exercise of options or warrants, the conversion of convertible
stock or debt, and the exercise of any similar right to acquire
such Common Stock (the “Outstanding Company Common Stock”) or (ii)
the combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”); provided,
however, that for purposes of this Plan, the following acquisitions
shall not constitute a Change in Control: (A) any acquisition by
the Company, (B) any acquisition by any employee benefit plan
sponsored or maintained by the Company or any subsidiary, or (C)
any acquisition which complies with clauses, (i), (ii) and (iii) of
subsection (e) of this definition; or
(e) The consummation of a reorganization, merger, consolidation,
statutory share exchange or similar form of corporate transaction
involving the Company that requires the approval of the Company’s
shareholders, whether for such transaction or the issuance of
securities in the transaction (a “Business Combination”), unless
immediately following such Business Combination: (i) more than 50%
of the total voting power of (A) the entity resulting from such
Business Combination (the “Surviving Company”), or (B) if
applicable, the ultimate parent entity that directly or indirectly
has beneficial ownership of sufficient voting securities eligible
to elect a majority of the members of the board of directors (or
the analogous governing body) of the Surviving Company (the “Parent
Company”), is represented by the Outstanding Company Voting
Securities that were outstanding immediately prior to such Business
Combination (or, if applicable, is represented by shares into which
the Outstanding Company Voting Securities were converted pursuant
to such Business Combination), and such voting power among the
holders thereof is in substantially the same proportion as the
voting power of the Outstanding Company Voting Securities among the
holders thereof immediately prior to the Business Combination; (ii)
no Person (other than any employee benefit plan sponsored or
maintained by the Surviving Company or the Parent Company) is or
becomes the Beneficial Owner, directly or indirectly, of 50% or
more of the total voting power of the outstanding voting securities
eligible to elect members of the board of directors of the Parent
Company (or the analogous governing body) (or, if there is no
Parent Company, the Surviving Company); and (iii) at least a
majority of the members of the board of directors (or the analogous
governing body) of the Parent Company (or, if there is no Parent
Company, the Surviving Company) following the consummation of the
Business Combination were Board members at the time of the Board’s
approval of the execution of the initial agreement providing for
such Business Combination.
“Code” means the Internal Revenue Code of 1986, as it may be
amended from time to time. Any reference to a section of the Code
shall be deemed to include a reference to any regulations
promulgated thereunder.
“Committee” means the Compensation Committee of the Board, or if
such committee does not exist, a committee of one or more members
of the Board appointed by the Board to administer the Plan in
accordance with Section 3.3 and Section 3.4.
“Common Stock” means the common stock, $0.000666 par value per
share, of the Company, or such other securities of the Company as
may be designated by the Committee from time to time in
substitution thereof.
“Company” means Comstock Mining Inc., a Nevada corporation, and any
successor thereto.
“Consultant” means any individual or entity which performs bona
fide services to the Company or an Affiliate, other than as an
Employee or Director, and who may be offered securities
registerable pursuant to a registration statement on Form S-8 under
the Securities Act.
“Continuous Service” means that the Participant’s service with the
Company or an Affiliate, whether as an Employee, Consultant or
Director, is not interrupted or terminated. The Participant’s
Continuous Service shall not be deemed to have terminated merely
because of a change in the capacity in which the Participant
renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the
Participant renders such service, provided that there is no
interruption or termination of the Participant’s Continuous
Service; provided further that if any Award is subject to Section
409A of the Code, this sentence shall only be given effect to the
extent consistent with Section 409A of the Code. For example, a
change in status from an Employee of the Company to a Director of
an Affiliate will not constitute an interruption of Continuous
Service. The Committee or its delegate, in its sole discretion, may
determine whether Continuous Service shall be considered
interrupted in the case of any leave of absence approved by that
party, including sick leave, military leave or any other personal
or family leave of absence. The Committee or its delegate, in its
sole discretion, may determine whether a Company transaction, such
as a sale or spin-off of a division or subsidiary that employs a
Participant, shall be deemed to result in a termination of
Continuous Service for purposes of affected Awards, and such
decision shall be final, conclusive and binding.
“Deferred Stock Units (DSUs)” has the meaning set forth in Section
8.1(b) hereof.
“Director” means a member of the Board.
“Disability” means, unless the applicable Award Agreement says
otherwise, that the Participant is unable to engage in any
substantial gainful activity by reason of any medically
determinable physical or mental impairment; provided, however, for
purposes of determining the term of an Incentive Stock Option
pursuant to Section 6.10 hereof, the term Disability shall have the
meaning ascribed to it under Section 22(e)(3) of the Code. The
determination of whether an individual has a Disability shall be
determined under procedures established by the Committee. Except in
situations where the Committee is determining Disability for
purposes of the term of an Incentive Stock Option pursuant to
Section 6.10 hereof within the meaning of Section 22(e)(3) of the
Code, the Committee may rely on any determination that a
Participant is disabled for purposes of benefits under any
long-term disability plan maintained by the Company or any
Affiliate in which a Participant participates.
“Disqualifying Disposition” has the meaning set forth in Section
17.11.
“Effective Date” shall mean the date that the Company’s
shareholders approve this Plan.
“Employee” means any person, including an Officer or Director,
employed by the Company or an Affiliate; provided, that, for
purposes of determining eligibility to receive Incentive Stock
Options, an Employee shall mean an employee of the Company or a
parent or subsidiary corporation within the meaning of Section 424
of the Code. Mere service as a Director or payment of a director’s
fee by the Company or an Affiliate shall not be sufficient to
constitute “employment” by the Company or an
Affiliate.
“Exchange Act” means the Securities Exchange Act of 1934, as
amended.
“Fair Market Value” means, as of any date, the value of the Common
Stock as determined below. If the Common Stock is listed on any
established stock exchange or a national market system, including
without limitation, the NYSE American LLC, New York Stock Exchange
or the Nasdaq Stock Market, the Fair Market Value shall be the
closing price of a share of Common Stock (or if no sales were
reported the closing price on the date immediately preceding such
date) as quoted on such exchange or system on the day of
determination, as reported. In the absence of an established market
for the Common Stock, the Fair Market
Value shall be determined in good faith by the Committee and such
determination shall be conclusive and binding on all
persons.
“Fiscal Year” means the Company’s fiscal year.
“Good Reason” means, unless the applicable Award Agreement states
otherwise:
(a) If an Employee or Consultant is a party
to an employment or service agreement with the Company or its
Affiliates and such agreement provides for a definition of Good
Reason, the definition contained therein; or
(b) If no such agreement exists or if such agreement does not
define Good Reason, the occurrence of one or more of the following
without the Participant’s express written consent, which
circumstances are not remedied by the Company within thirty (30)
days of its receipt of a written notice from the Participant
describing the applicable circumstances (which notice must be
provided by the Participant within ninety (90) days of the
Participant’s knowledge of the applicable circumstances): (i) any
material, adverse change in the Participant’s duties,
responsibilities, authority, title, status or reporting structure;
(ii) a material reduction in the Participant’s base salary or bonus
opportunity; or (iii) a geographical relocation of the
Participant’s principal office location by more than fifty (50)
miles.
“Grant Date” means the date on which the Committee adopts a
resolution, or takes other appropriate action, expressly granting
an Award to a Participant that specifies the key terms and
conditions of the Award or, if a later date is set forth in such
resolution, then such date as is set forth in such
resolution.
“Incentive Stock Option” means an Option that is designated by the
Committee as an incentive stock option within the meaning of
Section 422 of the Code and that meets the requirements set out in
the Plan.
“Incumbent Directors” means individuals who, on the Effective Date,
constitute the Board, provided that any individual becoming a
Director subsequent to the Effective Date whose election or
nomination for election to the Board was approved by a vote of at
least two-thirds of the Incumbent Directors then on the Board
(either by a specific vote or by approval of the proxy statement of
the Company in which such person is named as a nominee for Director
without objection to such nomination) shall be an Incumbent
Director. No individual initially elected or nominated as a
director of the Company as a result of an actual or threatened
election contest with respect to Directors or as a result of any
other actual or threatened solicitation of proxies by or on behalf
of any person other than the Board shall be an Incumbent
Director.
“Non-Employee Director” means a Director who is a “non-employee
director” within the meaning of Rule 16b-3.
“Non-qualified Stock Option” means an Option that by its terms does
not qualify or is not intended to qualify as an Incentive Stock
Option.
“Officer” means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.
“Option” means an Incentive Stock Option or a Non-qualified Stock
Option granted pursuant to the Plan.
“Optionholder” means a person to whom an Option is granted pursuant
to the Plan or, if applicable, such other person who holds an
outstanding Option.
“Option Exercise Price” means the price at which a share of Common
Stock may be purchased upon the exercise of an Option.
“Other Equity-Based Award” means an Award that is not an Option,
Stock Appreciation Right, Restricted Stock, Restricted Stock Unit,
or Performance Share Award that is granted under Section 10 and is
payable by delivery of Common Stock and/or which is measured by
reference to the value of Common Stock.
“Participant” means an eligible person to whom an Award is granted
pursuant to the Plan or, if applicable, such other person who holds
an outstanding Award.
“Performance Goals” means, for a Performance Period, the vesting or
exercisability of any award is, in part, contingent on the
achievement of the following performance objectives over the next
three years and, in part, on the targeted growth in the Company’s
valuation, per share. Our Committee has reviewed the strategic
plans and evaluated the major intermediate objectives associated
with achieving the goal of delivering $500 million in shareholder
equity value, (representing at least $12 per share),
by:
1.Establishing
the Dayton Resource areas maiden, stand-alone gold and silver
resource estimate corroborated by an SK-1300 compliant technical
report;
2.Expanding
the Dayton and Spring Valley with higher gold and silver resources
estimates, and publishing an expanded third party, SK-1300
compliant report;
3.Developing
the expanded Dayton Complex with a preliminary economic feasibility
(PEA) assessment, and publishing an SK-1300 compliant
report;
4.Developing
the expanded Dayton Complex toward full economic feasibility, with
preliminary net present valuations and publishing an SK-1300
compliant report;
5.Establishing
efficacy of the Comstock commercial pilot mercury remediation
system, proving the effectiveness of removing mercury and the
efficiency or extracting gold from the mercury
amalgam;
6.Deploying
the first international mercury remediation project with the
Company’s second and third mercury remediation systems, into the
Philippines, cleaning the soils and producing sand, gravel and gold
revenues, and establishing cash flows that fully recoup the
Company’s investment and continue producing cash flow
thereafter;
7.Deploying
the third mercury remediation project, recouping the investment
continue producing cash flow thereafter;
8.Deploying
the fourth mercury remediation project, recouping the investment
continue producing cash flow thereafter;
9.Establish
the Comstock Royalty portfolio (Lucerne, Occidental, Gold Hill,
Eclipse, et al) with supporting resource estimates and technical
reports and estimated values;
10.Monetize
the third-party junior mining securities (that is, the Tonogold
Note receivable and Eclipse equities) responsibly, for at least $15
million;
11.Support
and expand the value of our Opportunity Zone properties and
investments;
12.Monetize
the non-mining assets for at least $12.75 million, excluding Gold
Hill Hotel;
13.Expand
the institutional and ESG-keen shareholder base; and
14.Develop
a system organization, that is project and goal driven, capable of
handling complexity, maintaining liquidity, growing revenue and
sustained positive cash flow with transparent, timely,
well-controlled financial reporting to all
stakeholders.
These performance objectives relate specifically to the Company’s
three-year strategic plan, its goal, and the intermediate
objectives leading to creating and delivering at least $500 million
of value to shareholders, representing at least $12 per share. The
criteria extends to one or more of its subsidiaries, joint
ventures, investees and/or one or more of its affiliates, or any
combination of the foregoing, and may be applied on an absolute
basis and/or be relative to one or more peer group companies or
indices, or any combination thereof, all as our Compensation
Committee shall determine.
“Performance Period” means the one or more periods of time, as the
Committee may select, over which the attainment of one or more
Performance Goals will be measured for the purpose of determining a
Participant’s right to and the payment of a Performance Share Award
or a Cash Award.
“Performance Share Award” means any Award granted pursuant to
Section 9 hereof.
“Performance Share” means the grant of a right to receive a number
of actual shares of Common Stock or share units based upon the
performance of the Company during a Performance Period, as
determined by the Committee.
“Permitted Transferee” means: (a) a member of the Optionholder’s
immediate family (child, stepchild, grandchild, parent, stepparent,
grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive
relationships), any person sharing the Optionholder’s household
(other than a tenant or employee), a trust in which these persons
have more than 50% of the beneficial interest, a foundation in
which these persons (or the Optionholder) control the management of
assets, and any other entity in which these persons (or the
Optionholder) own more than 50% of the voting interests; (b) third
parties designated by the Committee in connection with a program
established and approved by the Committee pursuant to which
Participants may receive a cash payment or other consideration in
consideration for the transfer of a Non-qualified Stock Option; and
(c) such other transferees as may be permitted by the Committee in
its sole discretion.
“Person” means a person as defined in Section 13(d)(3) of the
Exchange Act.
“Plan” means this Comstock Mining Inc. 2020 Equity Incentive Plan,
as amended and/or amended and restated from time to
time.
“Restricted Award” means any Award granted pursuant to Section
8.
“Restricted Period” has the meaning set forth in Section
8.
“Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or
any successor to Rule 16b-3, as in effect from time to
time.
“Securities Act” means the Securities Act of 1933, as
amended.
“Stock Appreciation Right” means the right pursuant to an Award
granted under Section 7 to receive, upon exercise, an amount
payable in cash or shares equal to the number of shares subject to
the Stock Appreciation Right that is being exercised multiplied by
the excess of (a) the Fair Market Value of a share of Common Stock
on the date the Award is exercised, over (b) the exercise price
specified in the Stock Appreciation Right Award
Agreement.
“Stock for Stock Exchange” has the meaning set forth in Section
6.4.
“Substitute Award” has the meaning set forth in Section
4.5.
“Ten Percent Shareholder” means a person who owns (or is deemed to
own pursuant to Section 424(d) of the Code) stock possessing more
than 10% of the total combined voting power of all classes of stock
of the Company or of any of its Affiliates.
“Total Share Reserve” has the meaning set forth in Section
4.1.
3. Administration.
3.1 Authority of Committee. The Plan shall
be administered by the Committee. Subject to the terms of the Plan,
the Committee’s charter and Applicable Laws, and in addition to
other express powers and authorization conferred by the Plan, the
Committee shall have the authority:
(a) to construe and interpret the Plan and
apply its provisions;
(b) to promulgate, amend, and rescind rules
and regulations relating to the administration of the
Plan;
(c) to authorize any person to execute, on
behalf of the Company, any instrument required to carry out the
purposes of the Plan;
(d) to delegate its authority to one or more
Officers of the Company with respect to Awards that do not involve
“insiders” within the meaning of Section 16 of the Exchange
Act;
(e) to determine when Awards are to be
granted under the Plan and the applicable Grant Date;
(f) from time to time to select, subject to
the limitations set forth in this Plan, those eligible Award
recipients to whom Awards shall be granted;
(g) to determine the number of shares of
Common Stock to be made subject to each Award;
(h) to determine whether each Option is to
be an Incentive Stock Option or a Non-qualified Stock
Option;
(i) to prescribe the terms and conditions of
each Award, including, without limitation, the exercise price and
medium of payment and vesting provisions, and to specify the
provisions of the Award Agreement relating to such
grant;
(j) to determine the target number of
Performance Shares to be granted pursuant to a Performance Share
Award, the performance measures that will be used to establish the
Performance Goals, the Performance Period(s) and the number of
Performance Shares earned by a Participant;
(k) to amend any outstanding Awards,
including for the purpose of modifying the time or manner of
vesting, or the term of any outstanding Award; provided, however,
that if any such amendment impairs a Participant’s rights or
increases a Participant’s obligations under his or her Award or
creates or increases a Participant’s federal income tax liability
with respect to an Award, such amendment shall also be subject to
the Participant’s consent;
(l) to determine the duration and purpose of
leaves of absences which may be granted to a Participant without
constituting termination of their employment for purposes of the
Plan, which periods shall be no shorter than the periods generally
applicable to Employees under the Company’s employment
policies;
(m) to make decisions with respect to
outstanding Awards that may become necessary upon a change in
corporate control or an event that triggers anti-dilution
adjustments;
(n) to interpret, administer, reconcile any
inconsistency in, correct any defect in and/or supply any omission
in the Plan and any instrument or agreement relating to, or Award
granted under, the Plan; and
(o) to exercise discretion to make any and
all other determinations which it determines to be necessary or
advisable for the administration of the Plan.
The Committee also may modify the purchase price or the exercise
price of any outstanding Award, provided that if the modification
effects a repricing, shareholder approval shall be required before
the repricing is effective.
3.2 Committee Decisions Final. All decisions
made by the Committee pursuant to the provisions of the Plan shall
be final and binding on the Company and the Participants, unless
such decisions are determined by a court having jurisdiction to be
arbitrary and capricious.
3.3 Delegation. The Committee or the Board
may delegate administration of the Plan to a committee or
committees of one or more members of the Board, and the term
“Committee” shall apply to any person or persons to whom such
authority has been delegated. The Committee shall have the power to
delegate to a subcommittee any of the administrative powers the
Committee is authorized to exercise (and references in this Plan to
the Committee shall thereafter be to the subcommittee), subject,
however, to such resolutions, not inconsistent with the provisions
of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and reconstitute the
Committee by a majority vote of the Board. The members of the
Committee shall be appointed by and serve at the pleasure of the
Board. From time to time, the Board may increase or decrease the
size of the Committee, add additional members to, remove members
(with or without cause) from, appoint new members in substitution
therefor, and fill vacancies, however caused, in the Committee. The
Committee shall act pursuant to a vote of the majority of its
members or, in the case of a Committee comprised of only two
members, the unanimous consent of its members, whether present or
not, or by the written consent of the majority of its members and
minutes shall be kept of all of its meetings and copies thereof
shall be provided to the Board. Subject to the limitations
prescribed by the Plan and the Board, the Committee may establish
and follow such rules and regulations for the conduct of its
business as it may determine to be advisable.
3.4 Committee Composition. Except as
otherwise determined by the Board, the Committee shall consist
solely of two or more Non-Employee Directors. The Board shall have
discretion to determine whether or not it intends to comply with
the exemption requirements of Rule 16b-3. However, if the Board
intends to satisfy such exemption requirements, with respect to any
insider subject to Section 16 of the Exchange Act, the
Committee shall be a compensation committee of the Board that at
all times consists solely of two or more Non-Employee Directors.
Within the scope of such authority, the Board or the Committee may
delegate to a committee of one or more members of the Board who are
not Non-Employee Directors the authority to grant Awards to
eligible persons who are not then subject to Section 16 of the
Exchange Act. Nothing herein shall create an inference that an
Award is not validly granted under the Plan in the event Awards are
granted under the Plan by a compensation committee of the Board
that does not at all times consist solely of two or more
Non-Employee Directors.
3.5 Indemnification. In addition to such
other rights of indemnification as they may have as Directors or
members of the Committee, and to the extent allowed by Applicable
Laws, the Committee shall be indemnified by the Company against the
reasonable expenses, including attorney’s fees, actually incurred
in connection with any action, suit or proceeding or in connection
with any appeal therein, to which the Committee may be party by
reason of any action taken or failure to act under or in connection
with the Plan or any Award granted under the Plan, and against all
amounts paid by the Committee in settlement thereof (provided,
however, that the settlement has been approved by the Company,
which approval shall not be unreasonably withheld) or paid by the
Committee in satisfaction of a judgment in any such action, suit or
proceeding, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such Committee did
not act in good faith and in a manner which such person reasonably
believed to be in the best interests of the Company, or in the case
of a criminal proceeding, had no reason to believe that the conduct
complained of was unlawful; provided, however, that within 60 days
after the institution of any such action, suit or proceeding, such
Committee shall, in writing, offer the Company the opportunity at
its own expense to handle and defend such action, suit or
proceeding.
4. Shares Subject to the Plan.
4.1 Subject to adjustment in accordance with
Section 14, no more than 1,800,000 shares of Common Stock shall be
available for the grant of Awards under the Plan (the “Total Share
Reserve”). Any shares of Common Stock granted in connection with
Options and Stock Appreciation Rights shall be counted against this
limit as one (1) share for everyone (1) Option or Stock
Appreciation Right awarded. Any shares of Common Stock granted in
connection with Awards other than Options and Stock Appreciation
Rights shall be counted against this limit as two (2) shares of
Common Stock for everyone (1) share of Common Stock granted in
connection with such Award. During the terms of the Awards, the
Company shall keep available at all times the number of shares of
Common Stock required to satisfy such Awards.
4.2 Shares of Common Stock available for
distribution under the Plan may consist, in whole or in part, of
authorized and unissued shares, treasury shares or shares
reacquired by the Company in any manner.
4.3 The maximum number of shares of Common
Stock subject to Awards vesting during any single Fiscal Year to
any Director shall not exceed a total value of $100,000
(calculating the value of any Awards based on the grant date fair
value for financial reporting purposes).
4.4 Any shares of Common Stock subject to an
Award that expires or is canceled, forfeited, or terminated without
issuance of the full number of shares of Common Stock to which the
Award related will again be available for issuance under the Plan.
Any shares of Common Stock that again become available for future
grants pursuant to this Section 4.4 shall be added back as one (1)
share if such shares were subject to Options or Stock Appreciation
Rights and as two (2) shares if such shares were subject to other
Awards. Notwithstanding anything to the contrary contained herein:
shares subject to an Award under the Plan shall not again be made
available for issuance or delivery under the Plan if such shares
are (a) shares tendered in payment of an Option, (b) shares
delivered or withheld by the Company to satisfy any tax withholding
obligation, or (c) shares covered by a stock-settled Stock
Appreciation Right or other Awards that were not issued upon the
settlement of the Award.
4.5 Awards may, in the sole discretion of
the Committee, be granted under the Plan in assumption of, or in
substitution for, outstanding awards previously granted by an
entity acquired by the Company or with which the Company combines
(“Substitute Awards”). Substitute Awards shall not be counted
against the Total Share Reserve. Subject to applicable stock
exchange requirements, available shares under a
shareholder-approved plan of an entity directly or indirectly
acquired by the Company or with which the
Company combines (as appropriately adjusted to reflect such
acquisition or transaction) may be used for Awards under the Plan
and shall not count toward the Total Share Limit.
5. Eligibility.
5.1 Eligibility for Specific Awards.
Incentive Stock Options may be granted only to Employees. Awards
other than Incentive Stock Options may be granted to Employees,
Consultants and Directors and those individuals whom the Committee
determines are reasonably expected to become Employees, Consultants
and Directors following the Grant Date.
5.2 Ten Percent Shareholders. A Ten Percent
Shareholder shall not be granted an Incentive Stock Option unless
the Option Exercise Price is at least 110% of the Fair Market Value
of the Common Stock on the Grant Date and the Option is not
exercisable after the expiration of five years from the Grant
Date.
6. Option Provisions. Each Option granted
under the Plan shall be evidenced by an Award Agreement. Each
Option so granted shall be subject to the conditions set forth in
this Section 6, and to such other conditions not inconsistent with
the Plan as may be reflected in the applicable Award Agreement. All
Options shall be separately designated Incentive Stock Options or
Non-qualified Stock Options at the time of grant, and, if
certificates are issued, a separate certificate or certificates
will be issued for shares of Common Stock purchased on exercise of
each type of Option. Notwithstanding the foregoing, the Company
shall have no liability to any Participant or any other person if
an Option designated as an Incentive Stock Option fails to qualify
as such at any time or if an Option is determined to constitute
“nonqualified deferred compensation” within the meaning of Section
409A of the Code and the terms of such Option do not satisfy the
requirements of Section 409A of the Code. The provisions of
separate Options need not be identical, but each Option shall
include (through incorporation of provisions hereof by reference in
the Option or otherwise) the substance of each of the following
provisions:
6.1 Term. Subject to the provisions of
Section 5.2 regarding Ten Percent Shareholders, no Incentive Stock
Option shall be exercisable after the expiration of up to 10 years
from the Grant Date. The term of a Non-qualified Stock Option
granted under the Plan shall be determined by the Committee;
provided, however, no Non-qualified Stock Option shall be
exercisable after the expiration of 10 years from the Grant
Date.
6.2 Exercise Price of an Incentive Stock
Option. Subject to the provisions of Section 5.2 regarding Ten
Percent Shareholders, the Option Exercise Price of each Incentive
Stock Option shall be not less than 100% of the Fair Market Value
of the Common Stock subject to the Option on the Grant Date.
Notwithstanding the foregoing, an Incentive Stock Option may be
granted with an Option Exercise Price lower than that set forth in
the preceding sentence if such Option is granted pursuant to an
assumption or substitution for another option in a manner
satisfying the provisions of Section 424(a) of the
Code.
6.3 Exercise Price of a Non-qualified Stock
Option. The Option Exercise Price of each Non-qualified Stock
Option shall be not less than 100% of the Fair Market Value of the
Common Stock subject to the Option on the Grant Date.
Notwithstanding the foregoing, a Non-qualified Stock Option may be
granted with an Option Exercise Price lower than that set forth in
the preceding sentence if such Option is granted pursuant to an
assumption or substitution for another option in a manner
satisfying the provisions of Section 409A of the Code.
6.4 Consideration. The Option Exercise Price
of Common Stock acquired pursuant to an Option shall be paid, to
the extent permitted by applicable statutes and regulations, either
(a) in cash or by certified or bank check at the time the Option is
exercised or (b) in the discretion of the Committee, upon such
terms as the Committee shall approve, the Option Exercise Price may
be paid: (i) by delivery to the Company of other Common Stock, duly
endorsed for transfer to the Company, with a Fair Market Value on
the date of delivery equal to the Option Exercise Price (or portion
thereof) due for the number of shares being acquired, or by means
of attestation whereby the Participant identifies for delivery
specific shares of Common Stock that have an aggregate Fair Market
Value on the date of attestation equal to the Option Exercise Price
(or portion thereof) and receives a number of shares of Common
Stock equal to the difference between the number of shares thereby
purchased and the number of identified attestation shares of Common
Stock (a “Stock for Stock Exchange”); (ii) a “cashless” exercise
program established with a broker; (iii) by reduction in
the
number of shares of Common Stock otherwise deliverable upon
exercise of such Option with a Fair Market Value equal to the
aggregate Option Exercise Price at the time of exercise; (iv) by
any combination of the foregoing methods; or (v) in any other form
of legal consideration that may be acceptable to the Committee.
Unless otherwise specifically provided in the Option, the exercise
price of Common Stock acquired pursuant to an Option that is paid
by delivery (or attestation) to the Company of other Common Stock
acquired, directly or indirectly from the Company, shall be paid
only by shares of the Common Stock of the Company that have been
held for more than six months (or such longer or shorter period of
time required to avoid a charge to earnings for financial
accounting purposes). Notwithstanding the foregoing, during any
period for which the Common Stock is publicly traded (i.e., the
Common Stock is listed on any established stock exchange or a
national market system) an exercise by a Director or Officer that
involves or may involve a direct or indirect extension of credit or
arrangement of an extension of credit by the Company, directly or
indirectly, in violation of Section 402(a) of the Sarbanes-Oxley
Act of 2002 shall be prohibited with respect to any Award under
this Plan.
6.5 Transferability of an Incentive Stock
Option. An Incentive Stock Option shall not be transferable except
by will or by the laws of descent and distribution and shall be
exercisable during the lifetime of the Optionholder only by the
Optionholder. Notwithstanding the foregoing, the Optionholder may,
by delivering written notice to the Company, in a form satisfactory
to the Company, designate a third party who, in the event of the
death of the Optionholder, shall thereafter be entitled to exercise
the Option.
6.6 Transferability of a Non-qualified Stock
Option. A Non-qualified Stock Option may, in the sole discretion of
the Committee, be transferable to a Permitted Transferee, upon
written approval by the Committee to the extent provided in the
Award Agreement. If the Non-qualified Stock Option does not provide
for transferability, then the Non-qualified Stock Option shall not
be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the
Optionholder only by the Optionholder. Notwithstanding the
foregoing, the Optionholder may, by delivering written notice to
the Company, in a form satisfactory to the Company, designate a
third party who, in the event of the death of the Optionholder,
shall thereafter be entitled to exercise the Option.
6.7 Vesting of Options. Each Option may, but
need not, vest and therefore become exercisable in periodic
installments that may, but need not, be equal. The Option may be
subject to such other terms and conditions on the time or times
when it may be exercised (which may be based on performance or
other criteria) as the Committee may deem appropriate. The vesting
provisions of individual Options may vary. No Option may be
exercised for a fraction of a share of Common Stock. The Committee
may, but shall not be required to, provide for an acceleration of
vesting and exercisability in the terms of any Award Agreement upon
the occurrence of a specified event.
6.8 Termination of Continuous Service.
Unless otherwise provided in an Award Agreement or in an employment
agreement the terms of which have been approved by the Committee,
in the event an Optionholder’s Continuous Service terminates (other
than upon the Optionholder’s death or Disability), the Optionholder
may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise such Option as of the date of termination)
but only within such period of time ending on the earlier of (a)
the date three months following the termination of the
Optionholder’s Continuous Service or (b) the expiration of the term
of the Option as set forth in the Award Agreement; provided that,
if the termination of Continuous Service is by the Company for
Cause, all outstanding Options (whether or not vested) shall
immediately terminate and cease to be exercisable. If, after
termination, the Optionholder does not exercise his or her Option
within the time specified in the Award Agreement, the Option shall
terminate.
6.9 Extension of Termination Date. An
Optionholder’s Award Agreement may also provide that if the
exercise of the Option following the termination of the
Optionholder’s Continuous Service for any reason would be
prohibited at any time because the issuance of shares of Common
Stock would violate the registration requirements under the
Securities Act or any other state or federal securities law or the
rules of any securities exchange or interdealer quotation system,
then the Option shall terminate on the earlier of (a) the
expiration of the term of the Option in accordance with Section 6.1
or (b) the expiration of a period after termination of the
Participant’s Continuous Service that is three months after the end
of the period during which the exercise of the Option would be in
violation of such registration or other securities law
requirements.
6.10 Disability of Optionholder. Unless
otherwise provided in an Award Agreement, in the event that an
Optionholder’s Continuous Service terminates as a result of the
Optionholder’s Disability, the Optionholder may exercise his or her
Option (to the extent that the Optionholder was entitled to
exercise such Option as of the date of termination), but only
within such period of time ending on the earlier of (a) the date 12
months following such termination or (b) the expiration of the term
of the Option as set forth in the Award Agreement. If, after
termination, the Optionholder does not exercise his or her Option
within the time specified herein or in the Award Agreement, the
Option shall terminate.
6.11 Death of Optionholder. Unless otherwise
provided in an Award Agreement, in the event an Optionholder’s
Continuous Service terminates as a result of the Optionholder’s
death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date of
death) by the Optionholder’s estate, by a person who acquired the
right to exercise the Option by bequest or inheritance or by a
person designated to exercise the Option upon the Optionholder’s
death, but only within the period ending on the earlier of (a) the
date 12 months following the date of death or (b) the expiration of
the term of such Option as set forth in the Award Agreement. If,
after the Optionholder’s death, the Option is not exercised within
the time specified herein or in the Award Agreement, the Option
shall terminate.
6.12 Incentive Stock Option $100,000
Limitation. To the extent that the aggregate Fair Market Value
(determined at the time of grant) of Common Stock with respect to
which Incentive Stock Options are exercisable for the first time by
any Optionholder during any calendar year (under all plans of the
Company and its Affiliates) exceeds $100,000, the Options or
portions thereof which exceed such limit (according to the order in
which they were granted) shall be treated as Non-qualified Stock
Options.
7. Stock Appreciation Rights. Each Stock
Appreciation Right granted under the Plan shall be evidenced by an
Award Agreement. Each Stock Appreciation Right so granted shall be
subject to the conditions set forth in this Section 7, and to such
other conditions not inconsistent with the Plan as may be reflected
in the applicable Award Agreement.
7.1 Term The term of a Stock Appreciation
Right granted under the Plan shall be determined by the Committee;
provided, however, no Stock Appreciation Right shall be exercisable
later than the tenth anniversary of the Grant Date.
7.2 Vesting
Each Stock Appreciation Right may, but need not, vest and therefore
become exercisable in periodic installments that may, but need not,
be equal. The Stock Appreciation Right may be subject to such other
terms and conditions on the time or times when it may be exercised
as the Committee may deem appropriate. The vesting provisions of
individual Stock Appreciation Rights may vary. No Stock
Appreciation Right may be exercised for a fraction of a share of
Common Stock. The Committee may, but shall not be required to,
provide for an acceleration of vesting and exercisability in the
terms of any Stock Appreciation Right upon the occurrence of a
specified event.
8. Restricted Awards A Restricted Award is
an Award of actual shares of Common Stock (“Restricted Stock”) or
hypothetical Common Stock units (“Restricted Stock Units”) having a
value equal to the Fair Market Value of an identical number of
shares of Common Stock, which may, but need not, provide that such
Restricted Award may not be sold, assigned, transferred or
otherwise disposed of, pledged or hypothecated as collateral for a
loan or as security for the performance of any obligation or for
any other purpose for such period (the “Restricted Period”) as the
Committee shall determine. Each Restricted Award granted under the
Plan shall be evidenced by an Award Agreement. Each Restricted
Award so granted shall be subject to the conditions set forth in
this Section 8, and to such other conditions not inconsistent with
the Plan as may be reflected in the applicable Award
Agreement.
8.1 Restricted Stock and Restricted Stock
Units
(a) Each Participant granted Restricted
Stock shall execute and deliver to the Company an Award Agreement
with respect to the Restricted Stock setting forth the restrictions
and other terms and conditions applicable to such Restricted Stock.
If the Committee determines that the Restricted Stock shall be held
by the Company or in escrow rather than delivered to the
Participant pending the release of the applicable
restrictions, the Committee may require the Participant to
additionally execute and deliver to the Company (A) an escrow
agreement satisfactory to the Committee, if applicable and (B) the
appropriate blank stock power with respect to the Restricted Stock
covered by such agreement. If a Participant fails to execute an
agreement evidencing an Award of Restricted Stock and, if
applicable, an escrow agreement and stock power, the Award shall be
null and void. Subject to the restrictions set forth in the Award,
the Participant generally shall have the rights and privileges of a
shareholder as to such Restricted Stock, including the right to
vote such Restricted Stock and the right to receive dividends;
provided that, any cash dividends and stock dividends with respect
to the Restricted Stock shall be withheld by the Company for the
Participant’s account, and interest may be credited on the amount
of the cash dividends withheld at a rate and subject to such terms
as determined by the Committee. The cash dividends or stock
dividends so withheld by the Committee and attributable to any
particular share of Restricted Stock (and earnings thereon, if
applicable) shall be distributed to the Participant in cash or, at
the discretion of the Committee, in shares of Common Stock having a
Fair Market Value equal to the amount of such dividends, if
applicable, upon the release of restrictions on such share and, if
such share is forfeited, the Participant shall have no right to
such dividends.
(b) The terms and conditions of a grant of
Restricted Stock Units shall be reflected in an Award Agreement. No
shares of Common Stock shall be issued at the time a Restricted
Stock Unit is granted, and the Company will not be required to set
aside funds for the payment of any such Award. A Participant shall
have no voting rights with respect to any Restricted Stock Units
granted hereunder. The Committee may also grant Restricted Stock
Units with a deferral feature, whereby settlement is deferred
beyond the vesting date until the occurrence of a future payment
date or event set forth in an Award Agreement (“Deferred Stock
Units”). At the discretion of the Committee, each Restricted Stock
Unit or Deferred Stock Unit (representing one share of Common
Stock) may be credited with an amount equal to the cash and stock
dividends paid by the Company in respect of one share of Common
Stock (“Dividend Equivalents”). Dividend Equivalents credited to a
Participant’s account and attributable to any particular Restricted
Stock Unit or Deferred Stock Unit (and earnings thereon, if
applicable) shall be distributed in cash or, at the discretion of
the Committee, in shares of Common Stock having a Fair Market Value
equal to the amount of such Dividend Equivalents and earnings, if
applicable, to the Participant upon settlement of such Restricted
Stock Unit or Deferred Stock Unit and, if such Restricted Stock
Unit or Deferred Stock Unit is forfeited, the Participant shall
have no right to such Dividend Equivalents.
8.2 Restrictions
(a) Restricted Stock awarded to a
Participant shall be subject to the following restrictions until
the expiration of the Restricted Period, and to such other terms
and conditions as may be set forth in the applicable Award
Agreement: (A) if an escrow arrangement is used, the Participant
shall not be entitled to delivery of the stock certificate; (B) the
shares shall be subject to the restrictions on transferability set
forth in the Award Agreement; (C) the shares shall be subject to
forfeiture to the extent provided in the applicable Award
Agreement; and (D) to the extent such shares are forfeited, the
stock certificates shall be returned to the Company, and all rights
of the Participant to such shares and as a shareholder with respect
to such shares shall terminate without further obligation on the
part of the Company.
(b) Restricted Stock Units and Deferred
Stock Units awarded to any Participant shall be subject to (A)
forfeiture until the expiration of the Restricted Period, and
satisfaction of any applicable Performance Goals during such
period, to the extent provided in the applicable Award Agreement,
and to the extent such Restricted Stock Units or Deferred Stock
Units are forfeited, all rights of the Participant to such
Restricted Stock Units or Deferred Stock Units shall terminate
without further obligation on the part of the Company and (B) such
other terms and conditions as may be set forth in the applicable
Award Agreement.
(c) The Committee shall have the authority
to remove any or all of the restrictions on the Restricted Stock,
Restricted Stock Units and Deferred Stock Units whenever it may
determine that, by reason of changes in Applicable Laws or other
changes in circumstances arising after the date the Restricted
Stock or Restricted Stock Units or Deferred Stock Units are
granted, such action is appropriate.
8.3 Restricted Period. With respect to
Restricted Awards, the Restricted Period shall commence on the
Grant Date and end at the time or times set forth on a schedule
established by the Committee in the applicable Award Agreement. No
Restricted Award may be granted or settled for a fraction of a
share of
Common Stock. The Committee may, but shall not be required to,
provide for an acceleration of vesting in the terms of any Award
Agreement upon the occurrence of a specified event.
8.4 Delivery of Restricted Stock and
Settlement of Restricted Stock Units Upon the expiration of the
Restricted Period with respect to any shares of Restricted Stock,
the restrictions set forth in Section 8.2 and the applicable Award
Agreement shall be of no further force or effect with respect to
such shares, except as set forth in the applicable Award Agreement.
If an escrow arrangement is used, upon such expiration, the Company
shall deliver to the Participant, or his or her beneficiary,
without charge, the stock certificate evidencing the shares of
Restricted Stock which have not then been forfeited and with
respect to which the Restricted Period has expired (to the nearest
full share) and any cash dividends or stock dividends credited to
the Participant’s account with respect to such Restricted Stock and
the interest thereon, if any. Upon the expiration of the Restricted
Period with respect to any outstanding Restricted Stock Units, or
at the expiration of the deferral period with respect to any
outstanding Deferred Stock Units, the Company shall deliver to the
Participant, or his or her beneficiary, without charge, one share
of Common Stock for each such outstanding vested Restricted Stock
Unit or Deferred Stock Unit (“Vested Unit”) and cash equal to any
Dividend Equivalents credited with respect to each such Vested Unit
in accordance with Section 8.1(b) hereof and the interest thereon
or, at the discretion of the Committee, in shares of Common Stock
having a Fair Market Value equal to such Dividend Equivalents and
the interest thereon, if any; provided, however, that, if
explicitly provided in the applicable Award Agreement, the
Committee may, in its sole discretion, elect to pay cash or part
cash and part Common Stock in lieu of delivering only shares of
Common Stock for Vested Units. If a cash payment is made in lieu of
delivering shares of Common Stock, the amount of such payment shall
be equal to the Fair Market Value of the Common Stock as of the
date on which the Restricted Period lapsed in the case of
Restricted Stock Units, or the delivery date in the case of
Deferred Stock Units, with respect to each Vested
Unit.
8.5 Stock Restrictions Each certificate
representing Restricted Stock awarded under the Plan shall bear a
legend in such form as the Company deems appropriate.
9. Performance Share Awards Each Performance
Share Award granted under the Plan shall be evidenced by an Award
Agreement. Each Performance Share Award so granted shall be subject
to the conditions set forth in this Section 9, and to such other
conditions not inconsistent with the Plan as may be reflected in
the applicable Award Agreement. The Committee shall have the
discretion to determine: (i) the number of shares of Common Stock
or stock-denominated units subject to a Performance Share Award
granted to any Participant; (ii) the Performance Period applicable
to any Award; (iii) the conditions that must be satisfied for a
Participant to earn an Award; and (iv) the other terms, conditions
and restrictions of the Award set forth in the Award
Agreement.
9.1 Earning Performance Share Awards The
number of Performance Shares earned by a Participant will depend on
the extent to which the performance goals established by the
Committee are attained within the applicable Performance Period, as
determined by the Committee.
10. Other Equity-Based Awards and Cash
Awards. The Committee may grant Other Equity-Based Awards, either
alone or in tandem with other Awards, in such amounts and subject
to such conditions as the Committee shall determine in its sole
discretion. Each Other Equity-Based Award shall be evidenced by an
Award Agreement and shall be subject to such conditions, not
inconsistent with the Plan, as may be reflected in the applicable
Award Agreement. The Committee may grant Cash Awards in such
amounts and subject to such Performance Goals, other vesting
conditions, and such other terms as the Committee determines in its
discretion. Cash Awards shall be evidenced in such form as the
Committee may determine.
11. Securities Law Compliance. Each Award
Agreement shall provide that no shares of Common Stock shall be
purchased or sold thereunder unless and until (a) any then
applicable requirements of state or federal laws and regulatory
agencies have been fully complied with to the satisfaction of the
Company and its counsel and (b) if required to do so by the
Company, the Participant has executed and delivered to the Company
a letter of investment intent in such form and containing such
provisions as the Committee may require. The Company shall use
reasonable efforts to seek to obtain from each regulatory
commission or agency having jurisdiction over the Plan such
authority as may be required to grant Awards and to issue and sell
shares of Common Stock upon exercise of the Awards; provided,
however, that this undertaking shall not
require the Company to register under the Securities Act the Plan,
any Award or any Common Stock issued or issuable pursuant to any
such Award. If, after reasonable efforts, the Company is unable to
obtain from any such regulatory commission or agency the authority
which counsel for the Company deems necessary for the lawful
issuance and sale of Common Stock under the Plan, the Company shall
be relieved from any liability for failure to issue and sell Common
Stock upon exercise of such Awards unless and until such authority
is obtained.
12. Use of Proceeds from Stock. Proceeds
from the sale of Common Stock pursuant to Awards, or upon exercise
thereof, shall constitute general funds of the
Company.
13. Miscellaneous.
13.1 Acceleration of Exercisability and
Vesting. The Committee shall have the power to accelerate the time
at which an Award may first be exercised or the time during which
an Award or any part thereof will vest in accordance with the Plan,
notwithstanding the provisions in the Award stating the time at
which it may first be exercised or the time during which it will
vest.
13.2 Shareholder Rights. Except as provided
in the Plan or an Award Agreement, no Participant shall be deemed
to be the holder of, or to have any of the rights of a holder with
respect to, any shares of Common Stock subject to such Award unless
and until such Participant has satisfied all requirements for
exercise of the Award pursuant to its terms and no adjustment shall
be made for dividends (ordinary or extraordinary, whether in cash,
securities or other property) or distributions of other rights for
which the record date is prior to the date such Common Stock
certificate is issued, except as provided in Section 14
hereof.
13.3 No Employment or Other Service Rights.
Nothing in the Plan or any instrument executed or Award granted
pursuant thereto shall confer upon any Participant any right to
continue to serve the Company or an Affiliate in the capacity in
effect at the time the Award was granted or shall affect the right
of the Company or an Affiliate to terminate (a) the employment of
an Employee with or without notice and with or without Cause or (b)
the service of a Director pursuant to the By-laws of the Company or
an Affiliate, and any applicable provisions of the corporate law of
the state in which the Company or the Affiliate is incorporated, as
the case may be.
13.4 Transfer; Approved Leave of Absence.
For purposes of the Plan, no termination of employment by an
Employee shall be deemed to result from either (a) a transfer of
employment to the Company from an Affiliate or from the Company to
an Affiliate, or from one Affiliate to another, or (b) an approved
leave of absence for military service or sickness, or for any other
purpose approved by the Company, if the Employee’s right to
reemployment is guaranteed either by a statute or by contract or
under the policy pursuant to which the leave of absence was granted
or if the Committee otherwise so provides in writing, in either
case, except to the extent inconsistent with Section 409A of the
Code if the applicable Award is subject thereto.
13.5 Withholding Obligations. To the extent
provided by the terms of an Award Agreement and subject to the
discretion of the Committee, the Participant may satisfy any
federal, state or local tax withholding obligation relating to the
exercise or acquisition of Common Stock under an Award by any of
the following means (in addition to the Company’s right to withhold
from any compensation paid to the Participant by the Company) or by
a combination of such means: (a) tendering a cash payment; (b)
authorizing the Company to withhold shares of Common Stock from the
shares of Common Stock otherwise issuable to the Participant as a
result of the exercise or acquisition of Common Stock under the
Award, provided, however, that no shares of Common Stock are
withheld with a value exceeding the maximum amount of tax required
to be withheld by law; or (c) delivering to the Company previously
owned and unencumbered shares of Common Stock of the
Company.
14. Adjustments Upon Changes in Stock. In
the event of changes in the outstanding Common Stock or in the
capital structure of the Company by reason of any stock or
extraordinary cash dividend, stock split, reverse stock split, an
extraordinary corporate transaction such as any recapitalization,
reorganization, merger, consolidation, combination, exchange, or
other relevant change in capitalization occurring after the Grant
Date of any Award, Awards granted under the Plan and any Award
Agreements, the exercise price of Options and Stock Appreciation
Rights, the Performance Goals to which Performance Share Awards and
Cash
Awards are subject, the maximum number of shares of Common Stock
subject to all Awards stated in Section 4 will be equitably
adjusted or substituted, as to the number, price or kind of a share
of Common Stock or other consideration subject to such Awards to
the extent necessary to preserve the economic intent of such Award.
In the case of adjustments made pursuant to this Section 14, unless
the Committee specifically determines that such adjustment is in
the best interests of the Company or its Affiliates, the Committee
shall, in the case of Incentive Stock Options, ensure that any
adjustments under this Section 14 will not constitute a
modification, extension or renewal of the Incentive Stock Options
within the meaning of Section 424(h)(3) of the Code and in the case
of Non-qualified Stock Options, ensure that any adjustments under
this Section 14 will not constitute a modification of such
Non-qualified Stock Options within the meaning of Section 409A of
the Code. Any adjustments made under this Section 14 shall be made
in a manner which does not adversely affect the exemption provided
pursuant to Rule 16b-3 under the Exchange Act. The Company or the
Committee shall give each Participant notice of an adjustment
hereunder and, upon notice, such adjustment shall be conclusive and
binding for all purposes.
15. Effect of Change in
Control.
15.1 Unless otherwise provided in an Award
Agreement, notwithstanding any provision of the Plan to the
contrary:
(a) In the event of a Participant’s
termination of Continuous Service without Cause or for Good Reason
during the 24-month period following a Change in Control,
notwithstanding any provision of the Plan or any applicable Award
Agreement to the contrary, all outstanding Options and Stock
Appreciation Rights shall become immediately exercisable with
respect to 100% of the shares subject to such Options or Stock
Appreciation Rights, and/or the Restricted Period shall expire
immediately with respect to 100% of the outstanding shares of
Restricted Stock or Restricted Stock Units as of the date of the
Participant’s termination of Continuous Service.
(b) With respect to Performance Share Awards
and Cash Awards, in the event of a Participant’s termination of
Continuous Service without Cause or for Good Reason, in either
case, within 24 months following a Change in Control, all
Performance Goals or other vesting criteria will be deemed achieved
at 100% of target levels and all other terms and conditions will be
deemed met as of the date of the Participant’s termination of
Continuous Service.
To the extent practicable, any actions taken by the Committee under
the immediately preceding clauses (a) and (b) shall occur in a
manner and at a time which allows affected Participants the ability
to participate in the Change in Control with respect to the shares
of Common Stock subject to their Awards.
15.2 In addition, in the event of a Change
in Control, the Committee may in its discretion and upon at least
10 days’ advance notice to the affected persons, cancel any
outstanding Awards and pay to the holders thereof, in cash or
stock, or any combination thereof, the value of such Awards based
upon the price per share of Common Stock received or to be received
by other shareholders of the Company in the event. In the case of
any Option or Stock Appreciation Right with an exercise price (or
SAR Exercise Price in the case of a Stock Appreciation Right) that
equals or exceeds the price paid for a share of Common Stock in
connection with the Change in Control, the Committee may cancel the
Option or Stock Appreciation Right without the payment of
consideration therefor.
15.3 The obligations of the Company under
the Plan shall be binding upon any successor corporation or
organization resulting from the merger, consolidation or other
reorganization of the Company, or upon any successor corporation or
organization succeeding to all or substantially all of the assets
and business of the Company and its Affiliates, taken as a
whole.
16. Amendment of the Plan and
Awards.
16.1 Amendment of Plan. The Board at any
time, and from time to time, may amend or terminate the Plan.
However, except as provided in Section 14 relating to adjustments
upon changes in Common Stock and Section 16.3, no amendment shall
be effective unless approved by the shareholders of the Company to
the extent shareholder approval is necessary to satisfy any
Applicable Laws. At the time of such amendment, the Board shall
determine, upon advice from counsel, whether such amendment will be
contingent on shareholder approval.
16.2 Shareholder Approval. The Board may, in
its sole discretion, submit any other amendment to the Plan for
shareholder approval.
16.3 Contemplated Amendments. It is
expressly contemplated that the Board may amend the Plan in any
respect the Board deems necessary or advisable to provide eligible
Employees, Consultants and Directors with the maximum benefits
provided or to be provided under the provisions of the Code and the
regulations promulgated thereunder relating to Incentive Stock
Options or to the nonqualified deferred compensation provisions of
Section 409A of the Code and/or to bring the Plan and/or Awards
granted under it into compliance therewith.
16.4 No Impairment of Rights. Rights under
any Award granted before amendment of the Plan shall not be
impaired by any amendment of the Plan unless (a) the Company
requests the consent of the Participant and (b) the Participant
consents in writing.
16.5 Amendment of Awards. The Committee at
any time, and from time to time, may amend the terms of any one or
more Awards; provided, however, that the Committee may not affect
any amendment which would otherwise constitute an impairment of the
rights under any Award unless (a) the Company requests the consent
of the Participant and (b) the Participant consents in
writing.
17. General Provisions.
17.1 Forfeiture Events. The Committee may
specify in an Award Agreement that the Participant’s rights,
payments and benefits with respect to an Award shall be subject to
reduction, cancellation, forfeiture or recoupment upon the
occurrence of certain events, in addition to applicable vesting
conditions of an Award. Such events may include, without
limitation, breach of non-competition, non-solicitation,
confidentiality, or other restrictive covenants that are contained
in the Award Agreement or otherwise applicable to the Participant,
a termination of the Participant’s Continuous Service for Cause, or
other conduct by the Participant that is detrimental to the
business or reputation of the Company and/or its
Affiliates.
17.2 Clawback. Notwithstanding any other
provisions in this Plan, the Company may cancel any Award, require
reimbursement of any Award by a Participant, and effect any other
right of recoupment of equity or other compensation provided under
the Plan in accordance with any Company policies that may be
adopted and/or modified from time to time (“Clawback Policy”). In
addition, a Participant may be required to repay to the Company
previously paid compensation, whether provided pursuant to the Plan
or an Award Agreement, in accordance with the Clawback Policy. By
accepting an Award, the Participant is agreeing to be bound by the
Clawback Policy, as in effect or as may be adopted and/or modified
from time to time by the Company in its discretion (including,
without limitation, to comply with applicable law or stock exchange
listing requirements).
17.3 Other Compensation Arrangements.
Nothing contained in this Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to
shareholder approval if such approval is required; and such
arrangements may be either generally applicable or applicable only
in specific cases.
17.4 Sub-Plans. The Committee may from time
to time establish sub-plans under the Plan for purposes of
satisfying securities, tax or other laws of various jurisdictions
in which the Company intends to grant Awards. Any sub-plans shall
contain such limitations and other terms and conditions as the
Committee determines are necessary or desirable. All sub-plans
shall be deemed a part of the Plan, but each sub-plan shall apply
only to the Participants in the jurisdiction for which the sub-plan
was designed.
17.5 Deferral of Awards. The Committee may
establish one or more programs under the Plan to permit selected
Participants the opportunity to elect to defer receipt of
consideration upon exercise of an Award, satisfaction of
performance criteria, or other event that absent the election would
entitle the Participant to payment or receipt of shares of Common
Stock or other consideration under an Award. The Committee may
establish the election procedures, the timing of such elections,
the mechanisms for payments of, and accrual of interest or other
earnings, if any, on amounts, shares or other consideration so
deferred, and such other terms, conditions, rules and procedures
that the Committee deems advisable for the administration of any
such deferral program.
17.6 Unfunded Plan. The Plan shall be
unfunded. Neither the Company, the Board nor the Committee shall be
required to establish any special or separate fund or to segregate
any assets to assure the performance of its obligations under the
Plan.
17.7 Delivery. Upon exercise of a right
granted under this Plan, the Company shall issue Common Stock or
pay any amounts due within a reasonable period of time thereafter.
Subject to any statutory or regulatory obligations the Company may
otherwise have, for purposes of this Plan, 30 days shall be
considered a reasonable period of time.
17.8 No Fractional Shares. No fractional
shares of Common Stock shall be issued or delivered pursuant to the
Plan. The Committee shall determine whether cash, additional Awards
or other securities or property shall be issued or paid in lieu of
fractional shares of Common Stock or whether any fractional shares
should be rounded, forfeited or otherwise eliminated.
17.9 Other Provisions. The Award Agreements
authorized under the Plan may contain such other provisions not
inconsistent with this Plan, including, without limitation,
restrictions upon the exercise of Awards, as the Committee may deem
advisable.
17.10 Section 409A. The Plan is intended to
comply with Section 409A of the Code to the extent subject thereto,
and, accordingly, to the maximum extent permitted, the Plan shall
be interpreted and administered to be in compliance therewith. Any
payments described in the Plan that are due within the “short-term
deferral period” as defined in Section 409A of the Code shall not
be treated as deferred compensation unless Applicable Laws require
otherwise. Notwithstanding anything to the contrary in the Plan, to
the extent required to avoid accelerated taxation and tax penalties
under Section 409A of the Code, amounts that would otherwise be
payable and benefits that would otherwise be provided pursuant to
the Plan during the six (6) month period immediately following the
Participant’s termination of Continuous Service shall instead be
paid on the first payroll date after the six-month anniversary of
the Participant’s separation from service (or the Participant’s
death, if earlier). Notwithstanding the foregoing, neither the
Company nor the Committee shall have any obligation to take any
action to prevent the assessment of any additional tax or penalty
on any Participant under Section 409A of the Code and neither the
Company nor the Committee will have any liability to any
Participant for such tax or penalty.
17.11 Disqualifying Dispositions. Any
Participant who shall make a “disposition” (as defined in Section
424 of the Code) of all or any portion of shares of Common Stock
acquired upon exercise of an Incentive Stock Option within two
years from the Grant Date of such Incentive Stock Option or within
one year after the issuance of the shares of Common Stock acquired
upon exercise of such Incentive Stock Option (a “Disqualifying
Disposition”) shall be required to immediately advise the Company
in writing as to the occurrence of the sale and the price realized
upon the sale of such shares of Common Stock.
17.12 Section 16. It is the intent of the
Company that the Plan satisfy, and be interpreted in a manner that
satisfies, the applicable requirements of Rule 16b-3 as promulgated
under Section 16 of the Exchange Act so that Participants will be
entitled to the benefit of Rule 16b-3, or any other rule
promulgated under Section 16 of the Exchange Act, and will not be
subject to short-swing liability under Section 16 of the Exchange
Act. Accordingly, if the operation of any provision of the Plan
would conflict with the intent expressed in this Section 17.12,
such provision to the extent possible shall be interpreted and/or
deemed amended so as to avoid such conflict.
17.13 Beneficiary Designation. Each
Participant under the Plan may from time to time name any
beneficiary or beneficiaries by whom any right under the Plan is to
be exercised in case of such Participant’s death. Each designation
will revoke all prior designations by the same Participant, shall
be in a form reasonably prescribed by the Committee and shall be
effective only when filed by the Participant in writing with the
Company during the Participant’s lifetime.
17.14 Expenses. The costs of administering
the Plan shall be paid by the Company.
17.15 Severability. If any of the provisions
of the Plan or any Award Agreement is held to be invalid, illegal
or unenforceable, whether in whole or in part, such provision shall
be deemed modified to the extent, but only to the extent, of such
invalidity, illegality or unenforceability and the remaining
provisions shall not be affected thereby.
17.16 Plan Headings. The headings in the
Plan are for purposes of convenience only and are not intended to
define or limit the construction of the provisions
hereof.
17.17 Non-Uniform Treatment. The Committee’s
determinations under the Plan need not be uniform and may be made
by it selectively among persons who are eligible to receive, or
actually receive, Awards. Without limiting the generality of the
foregoing, the Committee shall be entitled to make non-uniform and
selective determinations, amendments and adjustments, and to enter
into non-uniform and selective Award Agreements.
18. Effective Date of Plan. The Plan shall
become effective as of the Effective Date.
19. Termination or Suspension of the Plan.
The Plan shall terminate automatically on the tenth (10th)
anniversary date of the Effective Date. No Award shall be granted
pursuant to the Plan after such date, but Awards theretofore
granted may be exercised in accordance with their terms beyond that
date. The Board may suspend or terminate the Plan at any earlier
date pursuant to Section 16.1 hereof. No Awards may be granted
under the Plan while the Plan is suspended or after it is
terminated.
20. Choice of Law. The law of the State of
Nevada shall govern all questions concerning the construction,
validity and interpretation of this Plan, without regard to such
state’s conflict of law rules.