UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by 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 Pursuant to Sec. 240.14a-12
ROYALE ENERGY, INC.
(Name of Registrant as Specified in its Charter)
Filed on Behalf of the Board of Directors
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
☒ No fee required.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
Royale Energy, Inc.
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TIME:
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9:00 a.m. Pacific Daylight Time
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PLACE:
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Royale Energy Inc.
1530 Hilton Head Rd
El Cajon, CA 92019
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Matters to be Voted on:
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1.
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Elect directors to serve for the ensuing year;
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2.
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Approve Weaver and Tidwell as independent auditor;
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3.
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Transact such other business as may properly come before the
meeting and any adjournment thereof.
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Who May Attend and Vote at the Meeting
Shareholders of record at the close of business on September 13,
2021, and valid proxy holders may attend and vote at the
meeting. If your shares are registered in the name of a
brokerage firm or trustee and you plan to attend the meeting,
please obtain from the firm or trustee a letter or other evidence
of your beneficial ownership of those shares to facilitate your
admittance to the meeting.
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By Order of the Board of Directors,
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Robert Vogel
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Chairman of the Board of Directors
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Date: September 29, 2021
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PROXY STATEMENT
Royale Energy’s board of directors solicits your proxy, using the
enclosed proxy card, for use at the annual meeting of shareholders
to be held November 12, 2021, and at any adjournment thereof. This
proxy statement has information about the annual meeting and was
prepared by Royale Energy’s management for the board of directors.
Your vote at the annual meeting is important to us. Please vote
your shares of common stock by completing the enclosed proxy card
and returning it to us in the enclosed envelope.
GENERAL INFORMATION
The only items of business which management intends to present at
the meeting are listed in the preceding Notice of Annual Meeting of
Shareholders and are explained in more detail on the following
pages. By returning your signed proxy, you authorize
management to vote your shares as you indicate on these items of
business and to vote your shares in accordance with management’s
best judgment in response to proposals initiated by others at the
meeting.
1) Changing or Revoking Your Proxy
Vote
You may revoke your signed proxy at any time before it is exercised
at the annual meeting. You may do this by advising Royale
Energy’s secretary in writing of your desire to revoke your proxy,
or by submitting a duly executed proxy bearing a later date. We
will honor the proxy card with the latest date. You may also
revoke your proxy by attending the annual meeting and indicating
that you wish to vote in person.
2) Who may Vote
Each shareholder of record at the close of business on September
13, 2021, is entitled, for each share then held, to one vote on
each proposal or item that comes before the annual meeting. (See
Proposal 1: Election of Directors.) On August 5,
2021, Royale Energy had outstanding 56,239,715 shares of common
stock entitled to vote at the meeting, and 2,260,347 shares of
Series B preferred, convertible to 22,603,470 shares of common,
entitled to vote at the meeting
3) Voting in
Person
Although we encourage you to complete and return your proxy to
ensure that your vote is counted, you can attend the annual meeting
and vote your shares in person.
4) How Your Votes are Counted
We will hold the annual meeting on November 12, 2021, if holders of
a majority of the shares of common stock entitled to vote either
sign and return their proxy cards or attend the meeting. If you
sign and return your proxy card, your shares will be counted to
determine whether we have a quorum even if you abstain or fail to
vote on any of the matters listed on the proxy card.
The shares represented by the proxies solicited by the board of
directors of the Company will be voted in accordance with your
directions as marked on your proxy ballot, but if you give no
directions, such shares will be voted (i) FOR the
election as directors of the nominees of the board of directors
named below; (ii) in the discretion of Johnny Jordan and Stephen M.
Hosmer (the proxies named on the proxy ballot) on any other
proposals to properly come before the annual meeting or any
adjournment(s) thereof.
5) Broker Votes
If, like most shareholders, your shares are held in a brokerage
account or by another nominee, you are considered the “beneficial
owner” of shares held in “street name,” and these proxy materials
are being forwarded to you by your broker or nominee (the “record
holder”) along with a voting instruction card. As the
beneficial owner, you have the right to direct your record holder
how to vote your shares, and the record holder is required to vote
your shares in accordance with your instructions. Your broker
is allowed to vote your shares only on certain “routine” proposals
or if you provide your broker with instructions on how to
vote. Brokers are prohibited from voting uninstructed shares
on “non-routine” proposals, including proposals for elections of
directors and on executive compensation related matters. If
you do not give your broker or nominee specific instructions, your
shares may not be voted on those matters and will not be considered
as present and entitled to vote with respect to those
matters. It is, therefore, important that you send in your
proxy with instructions on how to vote your shares (or that you
attend the meeting in person), to make sure that we have a quorum
present and voting at the shareholders’ meeting.
As the beneficial owner of shares, you are invited to attend the
Annual Meeting. Please note, however, that if you are a beneficial
owner whose shares are held in street name, you may not vote your
shares in person at the meeting unless you obtain a “legal proxy”
from the record holder that holds your shares. To vote shares
held in street name in person at the annual meeting, you should
contact your broker before the annual meeting to obtain a proxy
form in your name.
ABSTAINING IS THE SAME AS VOTING “NO”
If you mark “Abstain” with respect to any proposal on your proxy
ballot, your shares will be counted in the number of votes
cast. However, a vote to “Abstain” has the
same effect as voting “No.” Management requests that
you vote either “For” or “Against” on
each proposal to come before the meeting.
This proxy statement and the accompanying proxy form will be first
distributed on or about September 29, 2021, to shareholders
entitled to vote at the meeting.
ITEMS OF BUSINESS
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PROPOSAL
1: ELECTION
OF DIRECTORS
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Five directors will be elected to serve on our board of directors
until the next annual meeting of shareholders or until their
successors are elected and qualified.
a) The Director Nomination Process
All of the nominees for our board of directors were approved
unanimously by the three independent directors who serve on the
nomination committee and unanimously by the full board of
directors.
Three nominees for election to the board, Jonathan Gregory, Jeff
Kerns, and Johnny Jordan, have served on our board. One
nominee, Jonathan Gregory (our former Chief Executive Officer) was
elected to the board in 2014. One nominee became a director upon
completion of our merger with Matrix. One nominee, Johnny Jordan
(our current Chief Executive Officer) was appointed to the board in
January 2018 in anticipation of the merger between Royale and
Matrix Oil Management Corporation which closed in March 2018. Two
nominees, John Sullivan, and Chris Parada, are nominated for
election to the board for the first time. All nominees are
nominated for election for full one year terms.
b) Voting
The five nominees receiving the highest number of votes will be
elected. Signed proxies received will be voted for the
election of the nominees listed in this proxy statement, all of
whom have agreed to serve if elected. Should any of the
nominees become unavailable at the time of the meeting to accept
nomination or election as a director, the proxy holders named in
the enclosed proxy will vote for substitute nominees at their
discretion. Votes withheld for a nominee will not be
counted. Pursuant to the Company’s Bylaw 3.2, cumulative
voting for directors is not permitted.
c) Qualifications of Directors
Royale Energy has not established specific, minimum qualifications
for recommended nominees or specific qualities or skills for our
directors to possess. We have used a subjective process for
identifying nominees for director based on the judgment of our
board of our current needs. The nomination committee has received
suggested candidates from unaffiliated parties, however, we have
never received any officially designated nominations from
unaffiliated shareholders for new members of the board of
directors. The board has and will consider outside nominations
received in the future.
In selecting the 2021 nominees for director, the nomination
committee sought candidates who possess the highest personal and
professional ethics, integrity and values, and are committed to
representing the long-term interests of our stockholders. In
addition to reviewing a candidate’s background and accomplishments,
the committee reviewed candidates for director in the context of
the current composition of the board and the evolving needs of our
businesses. A majority of our nominees for election
as directors meet the standards of independence promulgated by
the NASDAQ Stock Market and the SEC. As required by the nomination
committee charter, the committee selects individuals as nominees
for their character, judgment, ethics, integrity, business
experience, and acumen, and the committee also seeks to ensure that
the board reflects a range of talents, ages, skills, diversity, and
expertise, particularly in the areas of accounting and finance
sufficient to provide sound and prudent guidance with respect to
the Company’s operations and interests. The board seeks to maintain
a diverse membership, but it does not have a separate policy on
diversity. The board also requires that its members be able to
dedicate the time and resources necessary to ensure the diligent
performance of their duties on the Company’s behalf, including
attending board and applicable committee meetings.
The following are some of the key qualifications and skills the
committee considered in evaluating the director nominees. The
individual biographies beginning on page 4 provide additional
information about each nominee’s specific experiences,
qualifications and skills.
Significant management experience. We believe that
directors with experience in management, including management of
private, public, or non-profit corporations provide the Company
with valuable insights. These individuals have a demonstrated
record of leadership qualities and a practical understanding of
organizations, processes, strategy, risk management, and the
methods to drive change and growth. Through their service as top
leaders at other organizations, they also have access to important
sources of market intelligence, analysis, and relationships that
benefit the Company.
Financial reporting experience. We believe that an
understanding of finance and financial reporting processes is
important for our directors. The Company measures its operating and
strategic performance by reference to financial targets. In
addition, accurate financial reporting and robust auditing are
critical to the Company’s success. Our nominees include a director
who qualifies as an audit committee financial expert, and we expect
all of our directors to be financially knowledgeable.
Industry experience. We seek to have directors with
experience as executives, directors, or other leadership positions
in the energy industry. These directors have valuable perspective
on energy industry business cycles and other issues specific to the
Company’s business.
Government experience. We seek directors with
governmental experience because the energy industry is heavily
regulated and is directly affected by actions and decisions of
federal, state, local, and other governmental agencies. The Company
recognizes the importance of working constructively with
governments, and directors with government experience offer
valuable insight in this regard.
d) Board Leadership and Risk
Oversight
We have separated the functions of chairman of the board and chief
executive officer.
The board of directors is responsible for oversight of our risk
management policies and procedures. We are exposed to a number of
risks including financial risks, strategic and operational risks,
and risks relating to regulatory and legal compliance. Our
financial condition, results of operations, and capital resources
are highly dependent upon the prevailing market prices of, and
demand for, crude oil and natural gas, which are beyond our
control. The board of directors reviews our business and financial
plans, which includes evaluating the objectives of, and risks
associated with, these plans. In addition, the audit committee
reviews and discusses with management our major financial risks and
the steps management has taken to monitor and control these risks,
including our internal control over financial reporting. Our
compensation committee strives to structure executive compensation
to align the interests of our executive officers with the long-term
interests of our shareholders and thus provides incentives to our
executives to manage risks appropriately.
e) Nominees for the Board of
Directors
Proxies solicited by the board of directors will be voted in favor
of each nominee unless shareholders specify otherwise in their
proxies. The following pages describe the nominees for
director, including their principal occupations for the past five
years, certain other directorships, age, and length of service as
director of Royale Energy. Membership on board committees,
attendance at board and committee meetings, and ownership of stock
in Royale Energy are indicated in separate sections following the
individual resumes of the nominees.
Each nominee has agreed to be named in this proxy statement and to
serve as a director if elected. The ages listed are as of
August 31, 2021.
Nominees for Director
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Name
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Age
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First Became Director or Executive Officer
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Position Held
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Johnny Jordan
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61
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January 2018
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Chief Executive Officer and Director
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Jonathan Gregory (1)
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57
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March 2014
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Director
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John Sullivan
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63
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Director
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Jeff Kerns
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64
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Director
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Chris Parada
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50
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Director
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| (1) |
Member of the compensation, nominations
and audit committees. |
The board has determined that nominees for director Jonathan
Gregory, John Sullivan, Chris Parada and Jeff Kerns qualify as
independent directors under NASDAQ rules.
The following summarizes the business experience of each director
and nominee for director.
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Name
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Start Date
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Position
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Johnny Jordan
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January 2019 to present
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Royale Energy Inc., CEO
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March 2018 to December 2018
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Royale Energy Inc., COO
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May 1999 to March 2018
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Matrix Oil Co, President
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Johnathan Gregory
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September 2015 to December 2018
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Royale Energy Inc., CEO
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March 2018 to present
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RMX Resources LLC., CEO
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Jeff Kerns
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July 2018 to present
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RMX Resources, Consultant
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1999 to July 2018
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Matrix Oil Co., Vice President
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Chris Parada
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2019 to present
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Counterpoint Consulting LLC, President
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May 2013 to April 2019
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Legacy Texas Bank, Managing Director - Head of Energy Finance
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John Sullivan
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May 2018 to present
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LTD Consulting Services, Principal
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July 2016 to May 2018
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Retired
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Jonathan Gregory – Director
Mr. Gregory became a director of Royale in March 2014 and served as
Royale’s chief executive officer from September 10, 2015, until
June 1, 2018. Prior to becoming Royale’s CEO, Mr. Gregory,
from March 2014 to July 2015, served as Chief Financial Officer and
Chief Business Development Strategist for Americo Energy Resources,
a private exploration and production company located in Houston,
Texas. Prior to serving as CFO of Americo Energy, Mr. Gregory was
CFO of J&S Oil & Gas, LLC, from April 2012 to February
2014. From December 2004 to April 2012, Mr. Gregory was head of the
energy lending group in Houston, Texas for Texas Capital Bank,
N.A. Mr. Gregory is presently CEO of RMX Resources, LLC
(“RMX”), a private Texas based oil and gas company with oil and gas
properties primarily located in California, in which, Royale holds
an equity interest. Mr. Gregory is also a Credit Advisor to Anvil
Capital Partners, a private debt capital provider to upstream
energy companies and serves on the advisory board of the Center for
Compassionate Leadership. Mr. Gregory graduated from Lamar
University in 1986 with a Bachelor’s degree in Finance.
Johnny Jordan – Chief Executive Officer and
Director
Mr. Jordan was appointed to the board in January 2018 and appointed
Chief Executive Officer effective January 1, 2019. Mr. Jordan is a
petroleum engineer with expertise in acquisitions, field economics
and reserves analysis, bank negotiations, reservoir and field
operations, and multi-team interaction. Mr. Jordan serves on the
board of RMX Resources LLC, the California Independent Petroleum
Association, and has served on the Board of Directors of Matrix.
Mr. Jordan has been active in the oil and gas industry since 1980
beginning as a floor hand on a well service rig. He has held
various staff and supervisory positions for Exxon, Mack Energy,
Enron Oil and Gas and Venoco Corporation. He was the team leader of
a multi-discipline team from 1992 to 1996 that added 455 BCF and 79
MMCFD through acquisitions (71 BCF) and field development (365
wells) in the Val Verde Basin in West Texas. Mr. Jordan has managed
acquisition evaluations in many of the oil and gas producing basins
in the US. He has coordinated field development for various
recovery mechanisms that include waterflood, tertiary flood, water
drive oil and gas reservoirs, and pressure depletion fields with
gas cap expansion or gravity drainage. Mr. Jordan received a B.S.
in Chemical Engineering from the University of Oklahoma in 1983 and
is currently a member of the Society of Petroleum Engineers and the
American Petroleum Institute.
John Sullivan – Nominee for Director
Mr. Sullivan has been nominated for election as a director. Mr.
Sullivan is a Principal of LTD Consulting Services LLC, which
provides consulting and management services to private and public
companies in the US and SE Asia. Previously, he held the position
of Sr. Director at MMI International, a privately held, global
supplier to the Data Storage, Aerospace and Oil and Gas industries.
In this role, he oversaw the sales and global operations for the
Precision Forming Group, a division of MMI, with $250M in annual
sales.
Prior to this, as Director of Operations, COO and President, he
spent eleven years with Intri-Plex Technologies Inc., a leading
design, engineering and manufacturing company to the Data Storage,
Semi-conductor and Medical industries. In his various roles, he led
the development and implementation of strategic sales and operating
initiatives that resulted in significant top and bottom line
growth. Overseeing the expansion of the business from a domestic
manufacturing company to an international supplier of precision
components with manufacturing facilities located in the US and SE
Asia.
Previously, as COO and President of KR Precision Public Co. Ltd., a
publicly held, global supplier of precision mechanical components,
John was instrumental in transforming a small privately held
company from a niche supplier to a publicly held industry leader
listed on the SET 50.
John began his career in 1980 as an entrepreneur, spending ten
years as a small business owner in the security and life safety
industry. He grew his company organically and through acquisition,
diversified its offerings and expanded its geographic footprint
prior to it being acquired by ADT International in, a global leader
in security and life safety industry, in 1990.
Jeff Kerns – Nominee for Director
Mr. Kerns was a founding partner of Matrix Oil Corp in 1999, which
merged with Royale Energy, Inc. nearly 20 years later in 2018. As a
director and officer of Matrix, Mr. Kerns participated in growing
the Company from zero production to owning and operating nearly 500
bbls of oil per day. Mr. Kerns was involved in all aspects of the
Company’s growth, but his primary focus was day to day
operations.
Mr. Kerns started in the oil and gas business over 40 years ago as
a roughneck in North Dakota working on rigs that drilled through
the now famous Bakken Shale heading for deeper targets. Prior to
Matrix Oil Corp, Mr. Kerns has held various staff and supervisory
positions with Mobil Oil Corp (now ExxonMobil) and Venoco Inc, a
small independent company headquartered in Santa Barbara, CA. He
also gained broad skills working for many years as a consultant in
the oil and gas business.
Mr. Kerns is a registered Professional Engineer in the state of CA.
He received a BS degree from Stanford University in 1979. He served
as an elected public official for 10 years on the local sanitary
district board of directors as well as serving as a past president
of a local Rotary International club and president of the San
Joaquin Chapter of the American Petroleum Institute and has
maintained a long term affiliation with SPE.
Chris Parada – Nominee for Director
Mr. Parada has been nominated for election as a director. Mr.
Parada currently serves as Vice President of Business Development
for Finergy Capital/EnRes Resources, an alternative investment fund
providing structured capital solutions to upstream oil and gas
companies. Additionally, Mr. Parada serves as President of
CounterPoint Consulting, LLC, which he founded in 2019.
Counterpoint provides a variety of consulting and contract CFO/VP
Finance services to upstream and midstream clients. Prior to
joining Finergy/EnRes, Mr. Parada served as Managing Director at
TenOaks Energy Advisors from April 2020 to February 2021. Prior to
2019, Mr. Parada was an energy banker for over 25 years, most
recently, as Managing Director – Head of Energy Finance for
LegacyTexas Bank (2013-2019) where he started and built the Energy
Finance team for LegacyTexas. While at LegacyTexas, Mr. Parada and
the team successfully closed over $1.5 billion in transactions
while he managed a team of seven professionals. Over the course of
his career in banking, Mr. Parada has originated, led and
syndicated several direct and multibank credit facilities of
$10-$500 million. Mr. Parada graduated in 1993 from Texas A&M
University with a B.B.A. in Finance.
Audit Committee
The board has appointed an audit committee to assist the board of
directors in carrying out its responsibility as to the independence
and competence of the Company’s independent public accountants. In
accordance with the rules of NASDAQ for listed companies, all
members of the audit committee are independent members of the board
of directors. The audit committee operates pursuant to
an audit committee charter which has been adopted by the board of
directors to define the committee’s responsibilities. A
copy of the audit committee charter is posted on our website,
www.royl.com. From his election in 2018 and in 2019, the
board determined Robert Vogel qualified as an “audit committee
financial expert” as defined in Regulation S-K Item 407(d)(5) of
the Securities and Exchange Commission.
In 2020, the members of the audit committee were Mel Riggs, Thomas
Gladney and Karen Kerns.
Number of Meetings Held in 2020: 4
All committee members attended all committee meetings in 2020.
Compensation Committee
Purpose: To review and make recommendations to the board of
directors on setting the salaries of the company’s officers and the
compensation to be paid to members of the board of directors who
are not employees of the Company. The compensation committee
operates pursuant to a committee charter adopted by the board of
directors, a copy of which is posted on our website,
www.royl.com.
In 2020, the members of the compensation committee were Karen
Kerns, Robert Vogel and Thomas Gladney.
Number of Meetings Held in 2020: 0
No Compensation Committee Interlocks
No compensation committee interlocks as defined in SEC Regulation
S-K, Item 407(e)(4) existed between committee members or executive
officers of Royale and any other entity during 2020.
Nomination Committee
Purpose: To review and make recommendations to the board of
directors concerning the nominees proposed for election of
directors at the annual meeting of directors. The
Nomination Committee operates pursuant to a committee charter which
is posted on our website, www.royl.com.
For 2020, the members of the nomination committee were Thomas
Gladney, Robert Vogel and Karen Kerns.
Number of Meetings Held in 2020: 2
f) Executive Compensation
As of December 31, 2018, the Board appointed Johnny Jordan, then
current President and Chief Operating Officer, to serve as Chief
Executive Officer of the Company. Mr. Jordan also remains as the
President and Chief Operating Officer of the Company.
Mr. Jordan will continue to be compensated in accordance with his
employment agreement with the Company dated October 10, 2018 and
effective March 1, 2018, a copy of which was attached as Exhibit
10.2 to the Company’s Form S-8 filed October 29, 2018 (“Jordan
Employment Agreement”). Pursuant to the terms of his employment
agreement, Mr. Jordan’s base salary is $250,000 per year, subject
to adjustment as set forth therein Mr. Jordan is also eligible for
a discretionary annual bonus under the Company’s bonus plan, as
determined in the sole and absolute discretion of the Compensation
Committee. His employment terms included other standard employment,
compensation and confidentiality provisions.
The Employment Agreement included severance provisions that apply
upon certain terminations of employment. As a condition to the
payment of any severance benefit described below, the Company may
require the named executive officer to execute and not revoke a
release of claims in favor of the Company. The Employment Agreement
also contained certain restrictive covenants, including the
obligation not to compete against the Company and a confidentiality
requirement. In the event the named executive officer violates
these restrictive covenants, the Company may cease paying all
severance benefits to the named executive officer and may recover
an amount equal to any severance benefits previously paid to the
named executive officer under the Employment Agreement.
If the named executive officer’s employment was terminated by the
Company other than for cause or termination by the named executive
officer in the event of a change of control, the Employment
Agreement provide that (1) (i) Mr. Jordan will receive payment in a
lump sum of 18 months’ accrued base salary and (2) the Company will
pay its portion of COBRA continuation coverage, as well as pay
certain costs of continuing medical coverage for Mr. Jordan up to 2
years’, after the expiration of the maximum required period under
COBRA; and (3) all granted but unvested awards under the Company’s
Long Term Incentive Plan shall immediately vest and related
restrictions shall be waived.
If a change of control had occurred and the named executive
officer’s employment is terminated without cause, or by the named
executive officer with good reason during the period beginning 12
months following the change of control (the “change of control
period”), the named executive officers are entitled to the same
severance benefits described above, except that the lump sum
payment will be: (a) 2 years’ accrued salary and (b) target annual
bonus.
The Employment Agreement provide that in the event of a termination
of employment by the Company for cause or by the named executive
officer without good reason, the named executive officer will be
entitled to accrued but unpaid base salary and benefits through the
date of termination but will forfeit any other compensation from
the Company.
The Employment Agreement also contained customary confidentiality
and non-solicitation provisions. The non-solicitation provisions of
the Employment Agreement prohibit the named executive officers from
soliciting for employment any employee of the Company or any person
who was an employee of the Company. This prohibition applies during
the named executive officer’s employment with the Company and for
up to one year following the termination of his employment and
extends to offers of employment for his own account or benefit or
for the account or benefit of any other person, firm or entity,
directly or indirectly.
Additionally, our equity award agreements under which we have
granted restricted stock awards, stock appreciate rights awards and
stock option awards contain provisions providing for accelerated
vesting upon the death or disability of the named executive
officer, upon termination of employment by the Company without
cause or termination of employment by the named executive officer
for “good reason” and upon a change in control of the Company.
The following table summarizes the compensation of the chief
executive officer, chief financial officer and the one other most
highly non-executive employees (the “named executives and
employees”) of Royale and its subsidiaries during the past three
years.
|
Year
|
|
Year
|
|
Salary (3)
|
|
|
Bonus
|
|
|
Option
Awards (1)
|
|
|
All Other
Compensation
|
|
|
Total
Compensation (2)
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Johnny Jordan (5)
|
|
2020
|
|
$ |
255,769 |
|
|
|
|
|
|
|
|
|
|
$ |
7,500 |
|
|
$ |
263,269 |
|
|
(CEO)
|
|
2019
|
|
$ |
255,769 |
|
|
|
|
|
|
|
|
|
|
$ |
0 |
|
|
$ |
255,769 |
|
|
|
|
2018
|
|
$ |
213,141 |
|
|
|
|
|
|
|
|
|
|
$ |
0 |
|
|
$ |
213,141 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Jonathan Gregory (4)
|
|
2020
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
2019
|
|
$ |
0 |
|
|
|
|
|
|
|
|
|
|
$ |
0 |
|
|
$ |
0 |
|
|
|
|
2018
|
|
$ |
72,909 |
|
|
|
|
|
|
|
|
|
|
$ |
9,583 |
|
|
$ |
82,492 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald Hosmer
|
|
2020
|
|
$ |
185,177 |
|
|
$ |
49,554 |
|
|
|
|
|
|
$ |
18,930 |
|
|
$ |
253,661 |
|
|
(Business Development)
|
|
2019
|
|
$ |
189,344 |
|
|
$ |
95,193 |
|
|
|
|
|
|
$ |
18,930 |
|
|
$ |
303,467 |
|
|
|
|
2018
|
|
$ |
236,331 |
|
|
|
|
|
|
|
|
|
|
$ |
18,930 |
|
|
$ |
255,261 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen Hosmer
|
|
2020
|
|
$ |
230,192 |
|
|
|
|
|
|
|
|
|
|
$ |
18,906 |
|
|
$ |
249,098 |
|
|
(CFO)
|
|
2019
|
|
$ |
230,192 |
|
|
|
|
|
|
|
|
|
|
$ |
18,906 |
|
|
$ |
249,098 |
|
|
|
|
2018
|
|
$ |
230,192 |
|
|
|
|
|
|
$ |
64,954 |
|
|
$ |
18,750 |
|
|
$ |
313,896 |
|
| (1) |
On October 10, 2018, the company entered
into an agreement to issue Mr. Hosmer 250,000 options to purchase
common stock previously approved by the Board of Directors with an
exercise price of $0.31. These options were granted for a period of
ten years with a maturity date of October 9, 2028. |
| (2) |
All other compensation consists of
matching contributions to the Company’s simple IRA plan, except for
Donald H. Hosmer and Stephen M. Hosmer, who also received a $12,000
car allowance. This category also includes Board fees for Mr.
Gregory. |
| (3) |
Salary represents either direct payroll
or common stock paid in lieu of taking a cash salary. |
| (4) |
Mr. Gregory served as CEO of the Company
during 2016, 2017 and part of 2018. Mr. Gregory resigned from the
CEO position with the execution of the RMX joint venture. |
| (5) |
Mr. Jordan became CEO of the Company in
January 2019. Mr. Jordan joined the Company upon the merger with
the Matrix entities on March 7, 2018. |
Stock Options and Equity Compensation; Outstanding Equity Awards
at Fiscal Year End
The following table presents the number of unexercised options at
the 2020 year end for each named executive officer. No
unvested stock awards were outstanding at the end of 2020.
|
Options
|
|
Name
|
|
Number of
securities underlying
unexercised options (1)
exercisable
|
|
Number of
securities underlying
unexercised options (1)
unexercisable
|
|
Option
exercise
price ($)
|
|
Option
expiration
date
|
| |
|
|
|
|
|
|
|
|
|
|
|
Stephen M. Hosmer
|
|
|
250,000
|
(1)
|
|
|
$
|
0.31
|
|
10/09/2028
|
| (1) |
On October 10, 2018, the Board of
Directors of Royale granted Mr. Stephen M. Hosmer 250,000 options
to purchase common stock at an exercise price of $0.31 per share.
These options expire on October 9, 2028. |
Compensation Committee Report
Our executive compensation committee has reviewed and discussed the
following Compensation Discussion and Analysis with management and,
based on its discussion and review, has recommended that the
Compensation Discussion and Analysis be included in this proxy
statement.
Members of the Compensation Committee:
Thomas M. Gladney, Karen Kerns (Chair), and Robert Vogel
All members of the compensation committee are independent members
of the Board of Directors.
Compensation Discussion and Analysis
Our executive compensation policy is designed to motivate, reward
and retain the key executive talent necessary to achieve our
business objectives and contribute to our long-term success. Our
compensation policy for our executive officers focuses primarily on
determining appropriate salary levels and performance-based cash
bonuses.
The elements of executive compensation at Royale consist mainly of
cash salary and, if appropriate, a cash bonus at
year-end. The compensation committee makes
recommendations to the board of directors annually on the
compensation of the three top executives: Johnny Jordan,
Chief Executive Officer, Donald H. Hosmer, Business Development and
Stephen M. Hosmer, Chief Financial Officer.
Royale does not provide extensive personal benefits to its
executives beyond those benefits, such as health insurance, that
are provided to all employees. Donald Hosmer and Stephen
Hosmer each receive an annual car allowance.
Policy
The compensation committee’s primary responsibility is making
recommendations to the board of directors relating to compensation
of our officers. The committee also makes
recommendations to the board of directors regarding employee
benefits, our defined benefit plans, defined contribution plans,
and stock based plans.
Determination
To determine executive compensation, the committee reviews our
compensation programs, performance of the company, duties and
responsibilities of the officers and discusses the performance of
the company. Compensation is compared to other similarly situated
companies within the industry. The committee makes recommendations
to the board of directors regarding compensation levels. Executive
compensation has remained flat due to recent economic
circumstances. The committee does not employ compensation
consultants to make recommendations on executive compensation.
Compensation Elements
Base. Base salaries for our executive officers
are established based on the scope of their responsibilities,
taking into account competitive market compensation paid by our
peers. Base salaries are reviewed annually. The salaries we paid to
our most highly paid executive officers for the last three years
are set forth in the Summary Compensation Table included under
Executive Compensation.
Bonus. The compensation committee meets annually
to determine the quantity, if any, of the cash bonuses of executive
officers. The amount granted is based, subjectively,
upon the company’s stock price performance, earnings, revenue,
reserves and production. The committee does not use
quantifiable metrics for these criteria; but rather uses each in
balance to assess the strength of the company’s
performance. The committee believes that formulaic
approaches to cash incentives can foster an unhealthy balance
between short-term and long-term goals. Cash bonuses
paid to executive officers are listed in the table above.
Compensation of Directors
In 2020, board members or committee members accrued or received
fees for attendance at board meetings or committee meetings during
the year. In addition to cash payments, common stock was
issued in lieu of compensation or reimbursements. Royale
also reimbursed directors for the expenses incurred for their
services.
The following table describes the compensation paid to our
directors who are not also named executives for their services in
2020.
|
Name
|
|
Fees paid in
Cash or
Common Stock
|
|
|
Stock
awards
|
|
|
Option
awards
|
|
|
All Other
Compensation
|
|
|
Total
|
|
|
Mel G. Riggs
|
|
$ |
44,000 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
44,000 |
|
|
Thomas M. Gladney
|
|
$ |
44,000 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
44,000 |
|
|
Karen Kerns
|
|
$ |
44,000 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
44,000 |
|
|
Robert Vogel
|
|
$ |
44,000 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
44,000 |
|
|
Jonathan Gregory
|
|
$ |
33,000 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
33,000 |
|
Preferred Stock
Royale has one class of Series B convertible preferred stock
outstanding which, became entitled to vot on March 1, 2020, and is
immediately convertible to shares of common stock at the option of
the shareholder. The number of shares of common stock
issuable upon conversion of the preferred is included in the table
of securities ownership.
h) Certain Relationships and Related
Transactions
Michael McCaskey and Jeffrey Kerns, each former directors of
Royale, have consulting agreements to provide services as directed
and at the discretion of the company. Jeff Kerns is a nominee
director, and also a former director, with whom we have had a
consulting agreement to provide services as directed and at the
discretion of the company.
Code of Business Conduct and Ethics
We have adopted a code of business conduct and ethics for our
directors and executive officers. The code is posted on our
website, www.royl.com.
|
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE IN FAVOR
OF ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR.
|
As required by the Sarbanes-Oxley Act of 2002, our Audit Committee
is directly responsible for appointment, compensation, retention
and oversight of the Company’s independent auditors. We are asking
the shareholders to approve the Audit Committee’s recommendation
Weaver and Tidwell as independent auditors to audit the financial
statements of the Company for the 2021 fiscal year. If the
shareholders fail to ratify the appointment of the auditors, our
Audit Committee will take that into consideration in determining
whether to continue the auditing engagement.
Weaver and Tidwell was engaged as independent auditors of the
Company on May 28, 2021. The amounts paid to our independent
auditors for the years 2020 and 2019 are provided below under Other
Information – Independent Auditors – Auditors’ Fees.
No representatives of Weaver and Tidwell are expected to be present
at the annual meeting. Although the audit committee has the sole
responsibility to appoint the auditors as required under the
Securities Exchange Act of 1934, the audit committee welcomes the
comments of shareholders and will reconsider the decision whether
to appoint Moss Adams LLP as auditors if the shareholders fail to
approve their appointment.
|
PROPOSAL 3: OTHER MATTERS
|
At the date of mailing of this proxy statement, we are not aware of
any business to be presented at the annual meeting other than those
items previously discussed. The proxy being solicited by the
board of directors provides authority for the proxy holders, Johnny
Jordan and Stephen M. Hosmer, to use their discretion to vote on
such other matters as may lawfully come before the meeting,
including matters incidental to the conduct of the meeting, and any
adjournment thereof.
OTHER INFORMATION
a) Independent Auditors –
Auditors’ Fees
Moss Adams LLP served as the independent auditors to audit the
Company’s financial statements for the fiscal year ended December
31, 2020 and 2019. The aggregate fees billed for the years ended
December 31, 2020 and 2019 are as follows, respectively:
|
|
|
2020
|
|
|
2019
|
|
|
Audit fees (1)
|
|
|
270,375 |
|
|
|
381,075 |
|
|
Audit Related Fees
|
|
|
|
|
|
|
|
|
|
Tax fees (2)
|
|
|
|
|
|
|
|
|
|
All other fees (3)
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
270,375 |
|
|
|
381,075 |
|
| (1) |
Audit fees are fees for professional
services rendered for the audit of Royale Energy’s annual financial
statements, reviews of financial statements included in the
company’s Forms 10-Q, and reviews of documents filed with the U.S.
Securities and Exchange Commission. |
| |
|
| (2) |
Tax fees consist of tax planning,
consulting and tax return reviews. |
| |
|
| (3) |
Other fees consist of work on
registration statements under the Securities Act of 1933. |
The audit committee of Royale Energy has adopted policies for the
pre-approval of all audit and non-audit services provided by the
company’s independent auditor. The policy requires
pre-approval by the audit committee of specifically defined audit
and non-audit services. Unless the specific service has
been previously pre-approved with respect to that year, the audit
committee must approve the permitted service before the independent
auditor is engaged to perform it.
No representatives of Moss Adams LLP are expected to be present at
the annual meeting. Although the audit committee has the sole
responsibility to appoint the auditors as required under the
Securities Exchange Act of 1934, the committee welcomes any
comments from shareholders on auditor selection or
performance. Comments may be sent to the audit committee
chair, Mel Riggs, in care of Royale Energy’s executive office, 1530
Hilton Head Rd, Suite 205, El Cajon, California 92019.
B Annual Report
An annual report to shareholders on Form 10-K for the year ended
December 31, 2020, accompanies this proxy statement.
c) Method and Cost of Soliciting Proxies
The accompanying proxy is being solicited on behalf of the board of
directors of Royale Energy. The expense of preparing,
printing and mailing the form of proxy and the material used in the
solicitation thereof will be borne by Royale Energy. Proxies
may be solicited by officers, directors, and employees of Royale
Energy in person, or by mail, courier, telephone or
facsimile. In addition, Royale Energy has paid approximately
$9,000 to Broadridge for mailing and proxy vote reporting
services.
d) Section 16(a) Beneficial Ownership
Reporting Requirement
Section 16(a) of the Securities Exchange Act of 1934 and Securities
and Exchange Commission regulations require that Royale Energy’s
directors, certain officers, and greater than 10 percent
shareholders file reports of ownership and changes in ownership
with the SEC and the NASD and furnish Royale Energy with copies of
all such reports they file. Based solely upon a review of the
copies of the forms furnished to Royale Energy, or representations
from certain reporting persons that no reports were required,
Royale Energy believes that no persons failed to file required
reports on a timely basis for 2020.
e) Additional Information
Other reports that we file with the SEC may also be obtained from
the SEC’s website, www.sec.gov.
f) Proposals by Shareholders –
2022
Any proposal by a shareholder to be submitted for inclusion in
proxy soliciting material for the 2022 annual shareholders meeting
must be received by the corporate secretary of Royale Energy no
later than February 28, 2022.
g) Other Matters
No proposals have been received from shareholders for inclusion in
the proxy statement or action at this annual meeting.
Management does not know of any matter to be acted upon at the
meeting other than the matters above described. However, if
any other matter should properly come before the meeting, the proxy
holders named in the enclosed proxy will vote the shares for which
they hold proxies in their discretion. Your vote at the
annual meeting is important to us. Please vote your shares of
common stock by completing the enclosed proxy card and returning it
to us in the enclosed envelope.
| |
|
By Order of the Board of Directors,
|
| |
|
|
|
Date: September 29, 2021
|
|
Robert Vogel
|
| |
|
Chairman of the Board
|
ANNUAL MEETING OF SHAREHOLDERS OF
ROYALE ENERGY, INC.
November 12, 2021
e-Consent makes it easy to go paperless. With e-Consent, you can
quickly access your proxy material, statements and other eligible
documents online, while reducing costs, clutter and paper waste.
Enroll today via www.astfinancial.com to enjoy online access.
NOTICE OF INTERNET AVAILABILITY OF PROXY
MATERIAL:
The Notice of Meeting, proxy statement and proxy card
are available at www.sec.gov
Please sign, date and mail
your proxy card in the
envelope provided as soon
as possible.
Please detach along perforated line and mail in the envelope
provided.
|
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE
|
X
|
|
1. To elect the nominees described in the proxy
statement accompanying this notice as members of Royale’s board of
directors, each for a term of one year, expiring at the later of
the 2021 annual meeting of shareholders or upon a successor being
elected and qualified.
|
|
|
|
☐ FOR ALL NOMINEES
☐ WITHHOLD AUTHORITY FOR ALL NOMINEES
☐ FOR ALL EXCEPT
(see instructions below)
|
NOMINEES
O Jonathan Gregory
O Johnny Jordan
O Jeff Kerns
O John Sullivan
O Chris Parada
|
In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the Annual Meeting. This
proxy when properly executed will be voted as directed herein by
the undersigned shareholder. If no direction is made, this proxy
will be voted FOR ALL NOMINEES in Proposal 1.
|
|
|
INSTRUCTIONS: To withhold authority to vote for
any individual nominee(s), mark “FOR ALL EXCEPT” and fill in
the circle next to each nominee you wish to withhold. As shown
here: ●
|
|
|
|
2. To ratify the selection of Weaver and
Tidwell
☐ FOR
|
☐ AGAINST
|
☐ ABSTAIN
|
|
3. To transact such other business as may properly
come before the Annual Meeting and any adjournments
thereof.
|
|
|
|
☐ FOR
|
☐ AGAINST
|
☐ ABSTAIN
|
|
To change the address on your account, please check the box at
right and indicate your new address in the address space above.
Please note that changes to the registered name(s) on the account
may not be submitted via this
method. ☐
|
|
|
| |
|
|
|
|
|
|
|
Signature of Shareholder
|
Date
|
|
|
Note: Please sign exactly as your name or names appear on
this Proxy. When shares are held jointly, each holder should sign.
When signing as executor, administrator, attorney, trustee or
guardian, please give full title as such. If the signer is a
corporation, please sign full corporate name by duly authorized
officer, giving full title as such. If signer is a partnership,
please sign in partnership name by authorized person.
|
ROYALE ENERGY, INC.
PROXY FOR ANNUAL MEETING OF SHAREHOLDERS November 12,
2021
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints Johnny Jordan and Stephen Hosmer as
Proxies with the power to appoint their substitutes, and
hereby authorizes them to represent and to vote, as designated
below, all the shares of common stock of Royale Energy, Inc. held
on record by the undersigned on September 13, 2021, at the Annual
Meeting of Shareholders to be held at the office of the company,
1530 Hilton Head Rd, El Cajon, CA 92019 on November 12, 2021 at
9:00 a.m., Pacific Daylight Time.
(Continued and to be signed on the reverse side)
Royale Energy (QB) (USOTC:ROYL)
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