UNITED
STATES
|
SECURITIES AND EXCHANGE COMMISSION
|
Washington, D.C. 20549
|
|
SCHEDULE 14A
|
|
Proxy
Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
|
|
Filed by the Registrant
x
|
|
Filed by a Party other than the
Registrant
o
|
|
Check the appropriate box:
|
o
|
Preliminary Proxy Statement
|
o
|
Confidential, for
Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
|
x
|
Definitive Proxy Statement
|
o
|
Definitive Additional Materials
|
o
|
Soliciting Material Pursuant to Section
240.14a-11(c) or Section 240.14a-12
|
|
CREDO
PETROLEUM CORPORATION
|
(Name
of Registrant as Specified In Its Charter)
|
|
|
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
|
|
Payment of Filing Fee (Check the
appropriate box):
|
x
|
No fee required.
|
o
|
Fee computed on table below per
Exchange Act Rules 14a-6(i)(1) and 0-11
|
|
(1)
|
Title of each class of securities to
which transaction applies:
|
|
|
|
|
(2)
|
Aggregate number of securities to
which transaction applies:
|
|
|
|
|
(3)
|
Per unit price or other underlying
value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth
the amount on which the filing fee is calculated and state how it was
determined):
|
|
|
|
|
(4)
|
Proposed maximum aggregate value of
transaction:
|
|
|
|
|
(5)
|
Total fee paid:
|
|
|
|
o
|
Fee paid previously with preliminary
materials.
|
o
|
Check box if any part of the fee is
offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule and the date
of its filing.
|
|
(1)
|
Amount Previously Paid:
|
|
|
|
|
(2)
|
Form, Schedule or Registration
Statement No.
|
|
|
|
|
(3)
|
Filing Party:
|
|
|
|
|
(4)
|
Date Filed:
|
|
|
|
|
|
|
|
CREDO PETROLEUM CORPORATION
NOTICE OF ANNUAL MEETING OF
SHAREHOLDERS
To Be Held April 8, 2010
You are invited to attend or to be represented by proxy at the Annual
Meeting of Shareholders of Credo Petroleum Corporation, a Delaware corporation
(the Company or Credo), to be held at the Brown Palace Hotel,
321 Seventeenth Street, Denver, Colorado, 80202, on April 8, 2010 at
2:30 p.m., MDT, for the purposes set forth below.
1.
To elect three Class I
directors to serve until the 2013 Annual Meeting of Shareholders.
2.
To ratify the
appointment of the Companys independent registered public accounting firm,
Ernst & Young, LLP, for the fiscal year 2010.
3.
To transact such
other business as may properly come before the meeting and at all adjournments
thereof.
Shareholders of record at the close of business on February 12,
2010 are entitled to vote at the meeting and at all adjournments thereof. You are cordially invited to attend the
meeting in person.
Credos
proxy statement is attached. Financial
and other information concerning the Company is contained in the Annual Report
to Stockholders for the year ended October 31, 2009. Pursuant to rules promulgated by the
Securities and Exchange Commission (SEC), we have elected to provide access
to the Companys proxy materials both by sending you this full set of proxy
materials, including a proxy card, and by notifying you of the availability of
the proxy material on the Internet. This
proxy statement, the accompanying proxy card and the Companys 2009 Annual
Report to Stockholders are available at the Companys website at
www.credopetroleum.com. In addition, and
in accordance with SEC rules, you may access the proxy statement at
www.proxyvote.com, which does not have cookies that identify visitors to the
site.
Your
vote is important. Regardless of whether
you expect to attend the meeting in person, please vote your shares via the
Internet at www.proxyvote.com, in accordance with the instructions provided on
the website, or by completing, dating, signing and returning promptly the
enclosed proxy card in the accompanying envelope (which requires no postage if
mailed in the United States) in accordance with the instruction on the proxy
card. You may revoke your proxy at any
time before it is exercised by delivering written notice of revocation, by
substituting a new proxy executed at a later date, or by requesting, in person
at the stockholders meeting, that the proxy be returned.
|
BY
ORDER OF THE BOARD OF DIRECTORS
|
|
|
|
|
|
/s/
Alford B. Neely
|
|
Alford
B. Neely
|
|
Secretary
|
February 25,
2010
Denver,
Colorado
CREDO PETROLEUM CORPORATION
1801 Broadway, Suite 900
,
Denver, Colorado 80202
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS, APRIL 8, 2010
GENERAL INFORMATION
Your proxy in the enclosed form is solicited by the Board of Directors
of Credo Petroleum Corporation for use at the Annual Meeting of Shareholders to
be held on Thursday, April 8, 2010 at 2:30 p.m., MDT, at the Brown
Palace Hotel, 321 Seventeenth Street, Denver, Colorado 80202, and at all
adjournments thereof. You may obtain
directions to the meeting by contacting us at (303) 297-2200. These proxy materials were first mailed to
shareholders on or about February 25, 2010.
Important
Notice Regarding the Availability of Proxy Materials for
the
Annual Meeting of Shareholders to be Held on April 8, 2010.
The Companys Notice, Proxy Statement and Annual
Report to Stockholders are available at: http://www.credopetroleum.com.
In addition, and in accordance with SEC rules, you may
also access the Notice and Proxy Statement and vote via the Internet at http://www.proxyvote.com,
which does not have cookies that identify visitors to the site.
Only shareholders of record at the close of business on February 12,
2010 will be entitled to vote at the meeting.
On that date, there were 10,158,022 shares of common stock outstanding
and entitled to vote, excluding 502,233 shares held in the Companys
treasury.
All shares represented by properly executed, unrevoked proxies timely
received in proper form will be voted in accordance with the directions specified
thereon. Any such proxy on which no
direction is specified will be voted in favor of the election of the nominees
named herein to the Board of Directors and for ratification of the appointment
of Ernst & Young LLP as the Companys independent registered
public accounting firm for fiscal 2010.
In addition, all proxies will be voted in accordance with the judgment
of the proxy holder with respect to any other matter which may properly come
before the meeting. Any shareholder
giving a proxy may revoke that proxy at any time before it is voted at the
meeting by executing a later dated proxy, by voting by ballot at the meeting,
or by filing an instrument of revocation with the Secretary of the Company
prior to the meeting.
The
Companys Annual Report on Form 10-K (the Annual Report), which includes
audited financial statements, is being mailed to shareholders of the Company
simultaneously with this Proxy Statement.
The Annual Report is not part of the Companys proxy soliciting
materials.
VOTING INFORMATION
The $.10 par value common stock of the Company is the only class of
capital stock outstanding. Each
outstanding share of common stock is entitled to one vote with respect to each
matter to be voted on by the shareholders, which vote may be given in person or
by proxy. Cumulative voting is not
permitted. A quorum, being
a majority of shares of outstanding common stock, is necessary in order
for business to be transacted at the meeting.
Abstentions and
1
broker non-votes represented by submitted proxies will be included in
the calculation of the number of the shares present at the meeting for the
purposes of determining a quorum. Broker
non-votes means shares held of record by a broker that are not voted because
the broker has not received voting instructions from the beneficial owner of
the shares and either lacks or declines to exercise the authority to vote the
shares in its discretion.
Proposal One.
Directors are elected by a plurality and the nominees
who receive the most votes will be elected. Proposal One is considered a routine matter
under NASDAQ rules but brokerage firms and nominees
DO NOT
have the authority to vote their customers unvoted shares on Proposal One or
to vote the customers shares if the customers have not furnished voting
instructions to their brokers within a specified period of time prior to the Annual
Meeting of Shareholders. Abstentions and
broker non-votes will not affect the outcome of the vote on Proposal One.
Proposal Two.
To be approved, the ratification of Ernst &
Young, LLP, as the Companys independent public accounting firm for fiscal year
2010 must receive the affirmative vote of the majority of the shares of common
stock present in person or by proxy at the Annual Meeting of Shareholders and
entitled to vote. Proposal Two is
considered a routine matter under NASDAQ rules and brokerage firms and
nominees
DO
have the authority to vote their
customers unvoted shares on Proposal Two or to vote the customers shares if
the customers have not furnished voting instructions within a specified period
of time prior to the Annual Meeting of Shareholders. Abstentions will have the effect of a vote
against Proposal Two. Broker non-votes will
not affect the outcome of the vote on Proposal Two.
ADVICE TO BENEFICIAL HOLDERS OF SHARES OF
COMMON STOCK
THE INFORMATION SET FORTH IN THIS SECTION IS OF
SIGNIFICANT IMPORTANCE TO MANY SHAREHOLDERS OF OUR COMPANY, AS A SUBSTANTIAL
NUMBER OF SHAREHOLDERS DO NOT HOLD SHARES IN THEIR OWN NAME.
Shareholders who do not hold their
shares in their own name (referred to in this Proxy Statement as beneficial
shareholders) should note that only proxies submitted by shareholders whose
names appear on the records of our Company as the registered holders of shares
of common stock can be recognized and acted upon at our annual meeting. If
shares of common stock are listed in an account statement provided to a
shareholder by a broker, then in almost all cases those shares of common stock
will not be registered in the shareholders name on the records of our Company
and are most likely registered under the names of the shareholders broker or
an agent of that broker. In the United
States, the vast majority of such shares are registered under the name of Cede &
Co. as nominee for The Depository Trust Company (which acts as depository for
many U.S. brokerage firms and custodian banks), and in Canada, under the name
of CDS & Co. (the registration name for The Canadian Depository for
Securities Limited, which acts as nominee and custodian for many Canadian
brokerage firms). Beneficial
shareholders should ensure that instructions respecting the voting of their
shares of common stock with respect to the election of directors are
communicated to the appropriate person, as without specific instructions,
brokers/nominees are prohibited from voting shares for their clients.
Applicable regulatory policy requires
intermediaries/brokers to seek voting instructions from beneficial shareholders
in advance of shareholders meetings, unless the beneficial shareholders have
waived the right to receive meeting materials.
Every intermediary/broker has its own mailing procedures and provides
its own return instructions to clients, which should be carefully followed by
beneficial shareholders in order to ensure that their shares of common stock
are voted at our annual meeting. The Form of
Proxy supplied to a beneficial shareholder by its broker (or the agent of the
broker) is similar to the Form of Proxy provided to registered
shareholders by our Company. However,
its purpose is limited to instructing the registered shareholder (the broker or
agent of the broker) how to vote on behalf of the beneficial shareholder. The majority of brokers now delegate responsibility
for obtaining instructions from clients to Broadridge Financial Solutions, Inc.
(Broadridge) (formerly, ADP Investor Communication Services in the United
States and Independent Investor Communications Company in Canada). Broadridge typically applies a special
sticker to proxy forms, mails those forms to the beneficial shareholders and
the beneficial shareholders return the proxy forms to Broadridge. Broadridge then tabulates the results of all
instructions received and provides appropriate instructions respecting the
voting of shares to be represented at our annual meeting.
A beneficial shareholder
receiving a Broadridge proxy cannot use that proxy to vote shares of common
stock directly at our annual meeting - the proxy must be returned to Broadridge
well in advance of our annual meeting in order to have the shares of common
stock voted.
2
Alternatively, a beneficial
shareholder may request in writing that his or her broker send to the beneficial
shareholder a legal proxy which would enable the beneficial shareholder to
attend our annual meeting and vote his or her shares of common stock.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The only persons known to own of record or beneficially more than 5% of
the Companys common stock as of February 12, 2010 are set forth
below. As of February 12, 2010
there were 10,158,022 shares of common stock outstanding.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Title
of Class
|
|
Name And Address
Of Beneficial Owner
|
|
Amount
And Nature Of
Beneficial Ownership
|
|
Percent
Of Class
|
|
Common
Stock
|
|
James
T. Huffman(1)
|
|
|
|
|
|
|
|
6919
S. Steele Street
|
|
|
|
|
|
|
|
Centennial,
Colorado 80122
|
|
748,555
|
|
7.1
|
%
|
Common
Stock
|
|
RCH
Energy Opportunity Fund II, LP(2)
|
|
|
|
|
|
|
|
200
Crescent Court, Suite 1060
|
|
|
|
|
|
|
|
Dallas,
TX 75201
|
|
1,150,000
|
|
11.1
|
%
|
Common
Stock
|
|
RCH
Energy Opportunity Fund III, LP(2)
|
|
|
|
|
|
|
|
200
Crescent Court, Suite 1060
|
|
|
|
|
|
|
|
Dallas,
TX 75201
|
|
687,000
|
|
6.6
|
%
|
(1)
Mr. Huffman
is the Chairman of the Board of Directors and was the Companys Chief Executive
Officer through January 15, 2010.
Includes 58,563 shares that are related to options currently
exercisable, or exercisable within 60 days of, February 12, 2010 and
404,406 shares owned by members of Mr. Huffmans immediate family, who
retain investment and voting power.
(2)
This disclosure
is based on a Schedule 130 filed by Robert J. Raymond on behalf of RR Advisors,
LLC, RCH Energy Opportunity Fund II GP, L.P., RCH Energy Opportunity Fund II,
L.P., RCH Energy Opportunity Fund III GP, L.P. and RCH Energy Opportunity Fund
III, L.P. with the SEC on July 14, 2008.
Robert J. Raymond and RR Advisors, LLC possess shared voting and
dispositive power over the RCH Energy Opportunity Fund II, LP and RCH
Energy Opportunity Fund III, LP shares.
The
following table, based in part upon information supplied by officers, directors
and principal stockholders, sets forth certain information known to the Company
with respect to beneficial ownership of the Companys common stock as of February 12,
2010, by (i) each Named Executive Officer (see Executive Compensation
Summary Compensation Table), (ii) each director of the Company, and (iii) all
directors and executive officers of the Company as a group. Except as otherwise indicated, each person
has sole voting and investment power with respect to all shares shown as
beneficially owned, subject to community property laws where applicable. Voting power is the power to vote or direct
the voting of securities, and investment power is the power to dispose of or
direct the disposition of securities.
3
Security Ownership of Management
Title
of Class
|
|
Name of Beneficial Owner
|
|
Amount
And Nature Of
Beneficial
Ownership
|
|
Percent
Of Class
|
|
Common Stock
|
|
Clarence
H. Brown(1) (4)
|
|
91,080
|
|
0.9
|
%
|
Common Stock
|
|
Oakley
Hall(1) (2)
|
|
120,000
|
|
1.2
|
%
|
Common Stock
|
|
James
T. Huffman(1) (3)
|
|
748,555
|
|
7.3
|
%
|
Common Stock
|
|
W.
Mark Meyer
(5)
|
|
0
|
|
0.0
|
%
|
Common Stock
|
|
Alford
B. Neely(1)
|
|
15,000
|
|
0.1
|
%
|
Common Stock
|
|
John
A. Rigas(5)
|
|
0
|
|
0.0
|
%
|
Common Stock
|
|
H.
Leigh Severance(6)
|
|
196,885
|
|
2.3
|
%
|
Common Stock
|
|
William
F. Skewes
|
|
70,301
|
|
0.7
|
%
|
Common Stock
|
|
Marlis
E. Smith, Jr.(7)
|
|
47,462
|
|
0.5
|
%
|
Common Stock
|
|
All
Directors and Officers as a Group (nine persons)
|
|
1,289,283
|
|
12.7
|
%
|
(1)
Includes the following shares
subject to stock options which are currently exercisable, or exercisable within
60 days of February 12, 2010: Mr. Brown - 29,250 shares; Mr. Hall
- 20,000 shares; Mr. Huffman - 58,563 shares; Mr. Neely -
15,000 shares.
(2)
Mr. Halls shares are
held in the name of Sanos Investment Partnership, an entity over which Mr. Hall
has voting and dispositive power..
(3)
Includes 404,406 shares owned
by members of Mr. Huffmans immediate family, who retain investment and
voting power.
(4)
Mr. Browns shares are
held in the name of a trust, of which he is a beneficiary.
(5)
Mr. Meyer and Mr. Rigas
are partners in RCH Energy Opportunity Fund II, LP and RCH Energy Opportunity
Fund III, LP. The two funds, combined,
hold 1,837,000 shares or 18.0% of the Companys common stock. Based on Schedule 13D filed on July 14,
2008, Robert J. Raymond and RR Advisors, LLC have voting and dispositive
power of the 1,837,000 RCH Energy Opportunity Fund II, LP and RCH
Energy Opportunity Fund III, LP shares.
(6)
Mr. Severance was
elected to the Board in November, 2008.
(7)
Mr. Smith was elected to
the Board in April, 2009. He was
subsequently elected as President and Chief Executive Officer, effective January 16,
2010.
DIRECTORS AND OFFICERS
Election of Directors (Item 1 on Proxy Card)
The Companys
Certificate, as amended, classifies members of the Board of Directors into
three classes having staggered terms of three years each. The Board of Directors consists of eight
directors, including six independent directors, who have particular expertise
in areas considered essential to the Companys businessnamely land, petroleum
engineering, legal, accounting and investments.
The
Board of Directors has affirmatively determined that Clarence H. Brown, Oakley
Hall, William F. Skewes, W. Mark Meyer, John A. Rigas and H. Leigh
Severance, who comprise a majority of the Board of Directors, are independent
directors in accordance with NASDAQ standards.
Messrs. Huffman and Smith are not independent under NASDAQ
standards.
The directors elected to the Board of Directors in Class I at the
2010 Annual Meeting of Shareholders will serve until the 2013 Annual Meeting of
Shareholders and until their successors are duly elected and qualified. Class III and Class II directors
will continue to serve until the 2011 and 2012 Annual Meetings of Shareholders,
respectively, or until their successors are duly elected and qualified.
4
The Class I nominees named below are presently members of the Board
of Directors. Unless your proxy contains
contrary instructions, it will be voted FOR the nominees. Should the nominees become unable to serve,
which is not anticipated, the proxy will vote for such substitute nominees as
recommended by the Board of Directors.
Any vacancy occurring in a class following the election of that class
may be filled by the remaining members of the Board of Directors. A director selected to fill a vacancy in a class
will hold office for a term expiring at the Annual Meeting of Shareholders at
which the term of that class expires or until a successor is duly elected and
qualified.
The following table sets forth certain information with respect to each
nominee and each director whose term of office will continue after the meeting.
Information Concerning Director
Nominees and Continuing Directors
Name,
Age, Position
with Company
and Term as Director
|
|
Business Experience and Directorships
in Other Public or Investment Companies
|
|
|
|
CLASS I
- NOMINEES FOR ELECTION AT THE 2010 ANNUAL MEETING
WHOSE TERMS WILL EXPIRE AT THE 2013 ANNUAL
MEETING
|
|
|
|
Oakley Hall
Age: 63; Director
since 2000
|
|
Mr. Hall
has been an independent businessman and investor since July 2000 in the
oil and gas industry. Previously,
Mr. Hall was an audit partner with the accounting firm of
PricewaterhouseCoopers.
|
|
|
|
William F. Skewes
Age: 64; Director
since 1980
|
|
Mr. Skewes
has been an attorney in private practice since April 1988. From 1977 until April 1988,
Mr. Skewes was a partner in the Denver law firm of Kelly,
Stansfield & ODonnell.
|
|
|
|
Marlis E. Smith, Jr.
Age: 49; Director since April, 2009; President and Chief Executive Officer
since January 16, 2010
|
|
Mr. Smith
was appointed President and CEO of Credo Petroleum effective
January 16, 2010. He is
President of SmithCo Properties, Inc from 1987 and Managing Partner of
Smith/Drummond Holding, LLP from 1999, and through these two companies, Mr. Smith
is an investor in many oil and gas wells throughout the Mid-continent and
Rocky Mountain regions of the United States.
|
|
|
|
CLASS III
DIRECTORS WHOSE TERMS WILL EXPIRE AT THE 2011 ANNUAL MEETING
|
|
|
|
John A. Rigas
Age 46; Director
since July 2008
|
|
Mr. Rigas
has been Vice President, since June 2007, of RR Advisors, LLC and
Partner of RCH Energy Opportunity Fund II, LP and RCH Energy Opportunity Fund
III, LP, E&P equity investment funds.
From January 2006 until May 2007, Mr. Rigas was an
independent business development consultant for various oil and gas
companies. From April 2003 until
December 2005, Mr. Rigas was a Principal in Odyssey Energy Capital
I, LP, managing a portfolio of oil and gas mezzanine loans.
|
|
|
|
H.
Leigh Severance
Age 71; Director
since November 2008
|
|
Mr. Severance
has owned Severance Capital Management, a portfolio management company, since
1984. Prior to 1984,
Mr. Severance was employed by Cambiar Investors, Inc., an
independent Denver-based investment advisory firm. Previously, he served as portfolio manager
of Founder Growth Fund, portfolio manager of J.M. Hartwell and Company, and
as a securities analyst for the endowment fund at the University of
Rochester. Mr. Severance was
elected by the Board in November 2008.
|
5
CLASS II
DIRECTORS WHOSE TERMS WILL EXPIRE AT THE 2012 ANNUAL MEETING
|
|
|
|
James T. Huffman
Age: 62; Director and Chairman of the Board since 1980, Chief Executive
Officer from 1980 through January 15, 2010
|
|
Mr. Huffman was a founder of the Company in 1978 and has been the
Chairman of the Board of Directors since 1980. He was Chief Executive Officer from 1980
until his retirement on January 15, 2010.
|
|
|
|
Clarence H. Brown
Age: 75; Director since 2000
|
|
Mr. Brown has been an independent businessman and oil operator
since December 2000. From 1989
until December 2000, Mr. Brown was an Executive Vice President,
Chief Operating Officer and member of the Board of Directors for Columbus
Energy, Inc. Prior to 1989, Mr. Brown
was the Chairman of the Board of Directors and Chief Executive Officer of
Kimbark Oil and Gas Company.
|
|
|
|
W. Mark Meyer
Age: 47; Director since July 2008
|
|
Mr. Meyer has been President, since April 2007, of RR
Advisors, LLC and Principal of RCH Energy Opportunity Fund II, LP and RCH
Energy Opportunity Fund III, LP, E&P equity investment funds. From August 2005 until March 2007,
Mr. Meyer was a Portfolio manager for CastleArk Management. From January 2001 until July 2005,
Mr. Meyer was Director of Simmons & Company, Intl and a Senior
Equity Research Analyst in the E&P sector.
|
Information Concerning Other
Executive Officers and Significant Employees
In
addition to the directors and executive officer listed above, during fiscal
year 2009 the following persons have been executive officers or significant
employees as defined by Securities and Exchange Commission regulations. Mr. Neely is the Companys only other
executive officer.
Name
|
|
Position
|
|
Age
|
|
Work Experience
|
Alford
B. Neely
|
|
Chief
Financial Officer and Secretary since July 2008
|
|
64
|
|
Mr. Neely
served as the Companys Manager of Regulatory Compliance from July 2006
until July 2008, and was the Companys Vice President and Chief
Financial Officer from April 1998 through April 2000. From April 2000 to July 2006,
Mr. Neely was a principal in his familys business, and served as the
principal owner and general manager.
|
|
|
|
|
|
|
|
Kenneth
J. DeFehr
|
|
Manager-Petroleum
Engineering since October 1990
|
|
60
|
|
Prior
to joining the Company, from 1982 until 1990, Mr. DeFehr was a Senior
Reservoir Engineer for Axem Resources, Inc. Prior to that, Mr. DeFehr was a
Reservoir Engineer for Phillips Petroleum Company. Mr. DeFehr is a Registered
Professional Engineer.
|
|
|
|
|
|
|
|
Torie
A. Vandeven
|
|
Manager-Geology
and Exploration since August 1999
|
|
55
|
|
Prior
to joining the Company, from 1997 to 1998, Ms. Vandeven was a Regional
Geologist for Key Production Company. From 1995 to 1997, Ms. Vandeven
was a Senior Staff Geologist and from 1998 to 1999, a Regional Exploitation
Geologist for Amoco Production Company. Prior to 1995, Ms. Vandeven was
a Senior Staff Geologist for Santa Fe Minerals, Inc. Ms. Vandeven
is a Certified Petroleum Geologist.
|
6
Information Concerning Meetings
of the Board of Directors and Board Committees
The
Board of Directors met five times in person and held seven telephonic meetings
during fiscal 2009. All directors
attended more than 75% of Board and committee meetings. It is Company policy that Board members
attend the Annual Meeting of Shareholders unless health, family or other
important personal matters prohibit such attendance. All members of the Board
of Directors attended the Companys 2009 Annual Meeting of Shareholders.
The
Board of Directors has an Executive Committee consisting of Messrs. Hall,
Huffman and Skewes. Mr. Hall and Mr. Skewes
are independent directors in accordance with NASDAQ standards. The Executive Committee did not meet during
fiscal 2009. There are no standing
Compensation or Nominating Committees because such matters are considered by
the entire Board of Directors or by the Executive Committee. The Directors believe that, due to its size
and composition, either the full Board or the Executive Committee is capable
and qualified to fulfill the function of a separate Nominating Committee or
Compensation Committee.
The
Audit Committee of the Board of Directors has three members: Mr. Hall, a retired CPA; Mr. Brown,
a former oil company executive and Mr. Skewes, an attorney in private
practice. The Audit Committee met seven
times during fiscal 2009. Mr. Hall is a retired CPA and is a retired
PricewaterhouseCoopers audit partner. He
is Chairman of the Audit Committee and is qualified as an audit committee
financial expert under the applicable Securities and Exchange Commission
rules. Messrs. Hall, Brown and
Skewes are independent directors in accordance with NASDAQ standards.
Consideration of Director Nominees
Shareholder
Nominees
If
a shareholder wishes to recommend a nominee for the Board of Directors, the
shareholder should write to the Corporate Secretary of the Company at:
|
CREDO
Petroleum Corporation
|
|
1801
Broadway, Suite 900
|
|
Denver,
Colorado 80202
|
Shareholders
should specify the name and address of the nominee and the qualifications of
such nominee for membership on the Board of Directors. All such recommendations will be brought to
the attention of the Companys Board of Directors.
Evaluating
Nominees for Director
Nominations
for open positions on the Board of Directors may come from a variety of sources
including business contacts of current and former directors or officers, the
use of a professional search firm selected by the Board of Directors and
shareholder nominations, all of whom are evaluated on the same basis. In evaluating such nominations, the Board of
Directors will seek to achieve a balance of knowledge, skills and experience on
the Board. Each nominee will be
considered based on the need or desire to fill existing vacancies or expand the
size of the Board and otherwise to select nominees that best suit the Companys
needs.
Director
Qualifications
Director
candidates will be evaluated based on criteria developed by the Board of
Directors from time to time for each individual vacancy. Qualifications that will be considered for
all nominees include, but are not limited to:
·
the ability of the prospective nominee to
represent the interests of the Companys
shareholders;
·
the prospective nominees personal and
professional experience and expertise;
·
the prospective nominees standards of
integrity, commitment and independence of thought and judgment; and
·
the prospective nominees ability to dedicate
sufficient time, energy and attention to the performance of his or her duties.
7
Certain Relationships and Related Transactions
Transactions with Related Persons
Mr. Marlis
E. Smith, Jr., a member of the Companys Board of Directors since April 2009
and the Companys President and Chief Executive Officer since January 16,
2010, has participated as an independent third party working interest owner in
numerous oil and gas wells operated by Credo. During Credos fiscal year
ended October 31, 2009, Mr. Smith owned interests in fifty four
such properties. During that period, he received approximately $304,000
in oil and gas revenues and paid approximately $300,000 in drilling costs and
operating expenses related to such interests. He also owns interests in
numerous wells which are operated by third parties and in which Credo also owns
an interest.
Review, Approval or Ratification of Transactions with
Related Persons
The
Board of Directors recognizes that transactions between the Company and certain
related persons present a heightened risk of conflicts of interest. In order to ensure that the Company acts in
the best interest of its stockholders, the Board of Directors has delegated the
review and approval of related party transactions to the Audit Committee. Any related party transaction required to be
disclosed in accordance with applicable SEC regulations must be reviewed and
approved by the Audit Committee. In
reviewing a proposed transaction, the audit committee must (i) satisfy
itself that it has been fully informed as to the related partys relationship
and interest and the material facts of the proposed transaction and (ii) consider
all of the relevant facts and circumstances available to the committee. After its review, the Audit Committee will
only approve or ratify transactions that are fair to the Company and not
inconsistent with the best interests of the Company and its stockholders.
Compensation Discussion and
Analysis
Overview
of Compensation Committee
The
Board of Directors (excluding Mr. Huffman with respect to Chief Executive
Officer compensation and benefits) acting as the Compensation Committee (the Compensation
Committee) is responsible for establishing and administering a general
compensation policy and program for the Company. The Compensation Committee possesses powers
of administration under the Companys employee benefit plans, including the
stock option plan, key employee retention plan and other employee benefit
plans. Subject to the provisions of
those plans, the Compensation Committee determines the individuals eligible to
participate in the plans, the extent of such participation and the terms and
conditions under which benefits may be vested, received or exercised.
Executive
Compensation Philosophy and Objectives
The
Compensation Committee is committed to a strong link between business
performance and the attainment of strategic goals with the Companys
compensation and benefit programs. The
Companys compensation policy is designed to support the overall objective of
maximizing the return to the Companys shareholders by:
·
Attracting, developing, rewarding, and
retaining highly qualified and productive individuals.
·
Directly aligning compensation to both Company
and individual performance.
·
Encouraging executive stock ownership to
enhance a mutuality of interest with the Companys shareholders.
This
policy is intended to provide incentives that promote both the short-term and
long-term financial objectives of the Company.
Base salary and performance bonuses are designed to reward achievement
of short-term objectives while long-term incentive compensation is intended to
encourage executives to focus on the long-term goals of the Company.
8
Components
of Executive Compensation
Base Salary
The
Compensation Committee periodically reviews the compensation of each executive
officer, including salaries, bonuses and total compensation levels. The compensation for each of our named
executive officers is subjectively determined primarily on the basis of the
following factors: experience,
individual performance, contribution to our corporate performance, level of
responsibility, duties and functions, and breadth of knowledge. Base salaries are also reviewed to ensure
internal consistency among the various levels of responsibility within the
Company. Members of the Compensation
Committee are generally knowledgeable about compensation levels in the oil and
gas industry through associations within the industry and through periodic
review of public disclosure documents such as proxy statements of other
companies. These base salaries are
reviewed annually and may be adjusted in the discretion of the Compensation
Committee, based upon the factors discussed above, as well as changes in the
duties, responsibilities and functions of the executive officer, changed
economic circumstances affecting the Company, and the Companys financial
performance generally. The relative
weight given to each of these factors differs from individual to individual, as
the Compensation Committee deems appropriate.
Annual Cash Bonuses and Incentives
Cash
bonuses are awarded to executive officers to recognize and reward Company and
individual performance. Performance
bonuses to executive officers are subject to the discretion of the Board of
Directors and focus on performance criteria reviewed at the end of the year,
including but not limited to: direct
revenue and income generation, production volume, reserve replacement, finding
costs, internal and external prospect generation, promoting acquisitions, dispositions
or other transactions that contribute to the Companys success, and the Companys
overall financial performance. The
Compensation Committee does not generally utilize predetermined targets to
establish the payment or level of performance bonuses, but may establish
particular performance goals for certain officers. A performance goal established for the Chief
Financial Officer was to supervise the preparation of financial statements that
did not contain a material internal control weakness, and to provide improved
training and continuity of the accounting staff. While this goal was met, no cash bonuses were
awarded for fiscal 2009 due to the Companys operating results and general
business conditions.
Long-Term Incentive Compensation
At
the discretion of the Board of Directors, stock options may be granted to
employees, including named executive officers.
Grants are made generally on a basis similar to the parameters described
above for cash bonuses. No predetermined
targets are utilized to determine the timing or amounts of awards to be
granted. However, the Board of Directors
considers items such as the potential impact on the Companys financial
statements and the desire to align the employees interests with the interests
of shareholders by providing incentive based compensation such as stock
options, and encouraging the Companys personnel to own and hold the Companys
stock. The Companys stock option plan
uses vesting periods to encourage long term affiliation with the Company.
Other Benefits
The
executive officers are entitled to the same benefits coverage as other
employees of the Company, including health insurance, participation in the
Companys 401(K) plan and the reimbursement of ordinary and reasonable
business expenses. The CEO receives
other benefits, as approved by the Board of Directors, as described in the
Summary Compensation Table.
The
Company does not currently offer any deferred compensation program,
supplemental executive retirement plan or any financial planning services for
its executive officers.
Mr. Huffman
and certain other technical employees receive payments from oil and gas
production interests granted to them periodically by the Company. In fiscal 2009, such payments to Mr. Huffman
totaled $55,929.
9
Chief Executive Officer
The
Compensation Committee believes that Mr. Huffman has positioned the
Company to maintain its growth rate while expanding and diversifying the volume
and breadth of the Companys business in terms of geography, capital requirements,
risk and reserve potential. He was also
responsible for directing the Companys long term focus on oil vs. natural gas
exploration and for managing all of the Companys natural gas hedging
transactions. The Compensation Committee
also considered CREDOs long record of consistent performance as the following
citations show: 200 Best Small
Companies 2008, 2006, 2004, 2001 (
Forbes
Magazine); Americas Fastest Growing Small Companies 2006, 2005,
2004, 2003 (
Fortune Small Business
Magazine); Top
Performing 25 Stocks in the Past 25 Years (#17) 2007 (
USA Today
). Mr. Huffman
retired from his position of CEO effective January 15, 2010. Cash compensation for Mr. Huffman during
2009 consisted of his $200,000 base salary and a retirement bonus of $413,800. Mr. Huffman also received $55,929 in
cash payments in 2009 related to oil and gas production interests granted to
him by the Company in prior years. The
Compensation Committee did not award any equity-based incentives in 2009.
Summary Compensation Table
The following table sets
forth the total compensation received during the Companys last three fiscal
years for services in all capacities by persons acting as the Chief Executive
Officer and Chief Financial Officer (the Named Executive Officers). No other executive officer of the Company had
total compensation in excess of $100,000 for the fiscal years ended October 31, 2009,
2008 and 2007.
|
|
|
|
|
|
|
|
|
|
|
|
Change
in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
Nonqualified
|
|
All
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Deferred
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
Option
|
|
Plan
|
|
Compensation
|
|
Compen-
|
|
|
|
Name
and
|
|
|
|
Salary
|
|
Bonus
|
|
Awards(1)
|
|
Compensation
|
|
Earnings
|
|
sation(3)
|
|
Total
|
|
Principal
Position
|
|
Year
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
James T. Huffman
|
|
2009
|
|
$
|
200,000
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
506,051
|
|
$
|
706,051
|
|
Chief Executive Officer
|
|
2008
|
|
$
|
200,000
|
|
$
|
150,000
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
111,470
|
|
$
|
461,470
|
|
|
|
2007
|
|
$
|
135,000
|
|
$
|
100,000
|
|
$
|
|
|
$
|
|
|
$
|
|
|
$
|
123,255
|
|
$
|
358,255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alford B. Neely(2)
|
|
2009
|
|
$
|
190,000
|
|
$
|
|
|
$
|
30,415
|
|
$
|
|
|
$
|
|
|
$
|
16,870
|
|
$
|
237,285
|
|
Chief Financial Officer
|
|
2008
|
|
$
|
54,167
|
|
$
|
20,000
|
|
$
|
19,680
|
|
$
|
|
|
$
|
|
|
$
|
3,017
|
|
$
|
96,864
|
|
|
|
2007
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
N/A
|
|
(1)
|
Dollar amount of
compensation recognized in 2009 and 2008 for option awards, calculated in
accordance with ASC 714, formerly SFAS 123R, including costs related to
awards granted in previous years. The discussion of assumptions used in
calculating these values can be found in Note 1 of the Notes to Consolidated
Financial Statements included in the Companys Annual Report on
Form 10-K for the year ended October 31, 2009.
|
(2)
|
Mr. Neely
began serving as the Companys Chief Financial Officer in July 2008.
|
(3)
|
For
additional information on All Other Compensation, see table below.
|
The following table provides
a detailed breakdown of the amounts for fiscal years 2009, 2008 and 2007 under All
Other Compensation in the Summary Compensation Table:
10
All Other Compensation
|
|
|
|
James
T.
|
|
Alford
B.
|
|
Benefits
|
|
Year
|
|
Huffman
|
|
Neely
|
|
Company Contributions to 401(k) Retirement Plan
|
|
2009
|
|
$
|
16,660
|
|
$
|
7,390
|
|
|
|
2008
|
|
$
|
12,566
|
|
$
|
|
|
|
|
2007
|
|
$
|
8,989
|
|
$
|
|
|
Health, Disability & Long Term Care
|
|
2009
|
|
$
|
11,222
|
|
$
|
9,481
|
|
Insurance Premiums
|
|
2008
|
|
$
|
13,535
|
|
$
|
3,017
|
|
|
|
2007
|
|
$
|
10,800
|
|
$
|
|
|
Life Insurance Premiums
|
|
2009
|
|
$
|
4,136
|
|
$
|
|
|
|
|
2008
|
|
$
|
10,609
|
|
$
|
|
|
|
|
2007
|
|
$
|
12,800
|
|
$
|
|
|
Payments from Oil and Gas Production
|
|
2009
|
|
$
|
55,929
|
|
$
|
|
|
|
|
2008
|
|
$
|
68,731
|
|
$
|
|
|
|
|
2007
|
|
$
|
84,924
|
|
$
|
|
|
Health Club Membership
|
|
2009
|
|
$
|
2,085
|
|
$
|
|
|
|
|
2008
|
|
$
|
2,039
|
|
$
|
|
|
|
|
2007
|
|
$
|
1,763
|
|
$
|
|
|
Auto and Other
|
|
2009
|
|
$
|
2,219
|
|
$
|
|
|
|
|
2008
|
|
$
|
3,990
|
|
$
|
|
|
|
|
2007
|
|
$
|
3,979
|
|
$
|
|
|
Retirement Bonus (1)
|
|
2009
|
|
$
|
413,800
|
|
$
|
|
|
|
|
2008
|
|
$
|
|
|
$
|
|
|
|
|
2007
|
|
$
|
|
|
$
|
|
|
Total All Other Compensation
|
|
2009
|
|
$
|
506,051
|
|
$
|
16,870
|
|
|
|
2008
|
|
$
|
111,470
|
|
$
|
3,017
|
|
|
|
2007
|
|
$
|
123,255
|
|
$
|
|
|
(1)
|
Mr. Huffman
was granted a retirement bonus of $413,800 in recognition of his 30 years of
service to the Company. The amount of the bonus was based on the cost of a
life-time $2,500 per month annuity. Mr. Huffman will continue as
Chairman of the Board of Directors and will work on a part-time basis through
2010.
|
Grants of Plan-Based Awards
There
were no grants of stock options to Named Executive Officers during the fiscal
year ended October 31, 2009.
Option
Exercised and Stock Vested
There were no option exercises by the Named Executive Officers during
fiscal year 2009, however, Mr. Huffman exercised 50,000 options on February 8,
2010.
Pension Benefits
The
Company has no pension benefit plans.
Nonqualified Deferred
Compensation
The
Company had no nonqualified deferred compensation plans during 2009.
11
Outstanding Equity Awards at Fiscal Year End
(1)
Name
|
|
Number
of
Securities
Underlying
Unexercised
Options
Exercisable
|
|
Number
of
Securities
Underlying
Unexercised
Options
Unexercisable
|
|
Option
Exercise
Price
|
|
Option
Expiration
Date
|
|
James T. Huffman
|
|
58,563(2)
|
|
|
|
$
|
5.93
|
|
6/13/2013
|
|
Alford B. Neely
|
|
15,000(3)
|
|
5,000(3)
|
|
$
|
12.78
|
|
12/6/2016
|
|
(1)
|
All
option awards were granted under the Companys 1997 Stock Option Plans. The
Company does not grant stock awards.
|
(2)
|
This
was a single grant on June 13, 2003, as adjusted for subsequent stock
dividends and stock splits, net of exercise of 50,000 shares. The grant
vested one third on the grant date, one third on each succeeding
anniversary of the grant date, and became fully vested on
June 13, 2005.
|
(3)
|
This
was a single grant of options to purchase 20,000 shares, granted on
December 6, 2006. The grant vests 25% on each anniversary of the
grant date and becomes fully vested on December 6, 2010.
|
Compensation Committee
Interlocks and Insider Participation
The entire Board of
Directors served as the Companys Compensation Committee, provided however,
that Mr. Huffman did not participate in any discussions or decisions
regarding the Chief Executive Officers compensation and benefits.
No interlocking relationship exists between the
members of the Companys Board of Directors or Compensation Committee and the
board of directors or compensation committee of any other company.
Director Compensation
The following table describes the
compensation earned by persons who served as Directors who were not executives
of the Company during fiscal 2009. Officers of the Company serving on the Board
or committees received no additional compensation for such service.
Name
|
|
Fees Earned or
Paid in Cash
($) (1)
|
|
Stock Awards
($) (2)
|
|
Total
($)
|
|
Clarence H. Brown
|
|
$
|
38,563
|
|
$
|
0
|
|
$
|
38,563
|
|
Oakley Hall
|
|
48,125
|
|
3,282
|
|
51,407
|
|
W. Mark Meyer(3)
|
|
31,500
|
|
0
|
|
31,500
|
|
John A. Rigas(3)
|
|
31,500
|
|
0
|
|
31,500
|
|
H. Leigh Severance(4)
|
|
31,250
|
|
0
|
|
31,250
|
|
William F. Skewes
|
|
43,250
|
|
0
|
|
43,250
|
|
Marlis E. Smith, Jr.(5)
|
|
22,500
|
|
0
|
|
22,500
|
|
Richard B. Stevens(6)
|
|
14,000
|
|
0
|
|
14,000
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Amounts
in this column represent retainers, meeting fees and chair fees.
|
(2)
|
Amounts
in this column represent the dollar amounts recognized for financial
statement reporting purposes for fiscal 2009, calculated in accordance with
Accounting Standards Codification Topic 718 (ASC 718), formerly SFAS 123R,
including costs related to awards granted in previous years. As of October 31, 2009, outstanding
option awards to non-employee directors totaled 49,250, all of which are
currently exercisable. The weighted average grant date fair value of
outstanding options held by non-employee directors at
October 31, 2009 was $2.59 per share, as measured using the
Black-Scholes option-pricing model at the date of grant. Additional
information regarding the assumptions used to estimate the fair value of all
stock option awards is contained within the Companys 2009 Annual Report on
Form 10-K.
|
(3)
|
Director
fees earned by Messrs. Meyer and Rigas are paid 63% to RCH Energy
Opportunity Fund II, LP and 37% to RCH Energy Opportunity Fund III, LP. Messrs Meyer and Rigas do not directly
receive any director fees.
|
(4)
|
Mr. Severance
joined the Board in November 2008.
|
(5)
|
Mr. Smith
joined the Board in April 2009.
|
(6)
|
Mr. Stevens retired from the Board
May 1, 2009.
|
12
During fiscal 2009, the Company paid the
following cash fees to non-company officer directors:
Annual Retainer
|
|
$
|
25,000
|
|
Audit Committee Chair Additional Annual Retainer
|
|
6,000
|
|
In Person Board Meeting
|
|
1,000
|
|
Telephonic Board Meeting
|
|
250
|
|
Committee (per hour)
|
|
250
|
|
All stipends and meeting attendance fees
are paid quarterly in arrears. The Company also reimburses non-employee
directors for reasonable expenses incurred in attending Board and committee
meetings.
The Companys Certificate of Incorporation provided for indemnification
of its officers and directors. The
Certificate generally requires the Company to indemnify such officers and
directors to the fullest extent permitted by Delaware Law and to advance
expenses in connection with certain claims against the officers and directors.
Equity
Compensation Plan Information
The
Company has two equity incentive compensation plans that have been approved by
the stockholders under which shares of the Companys common stock have been
authorized for issuance to directors, officers, employees, advisors and
consultants:
·
the 1997 Stock Option Plan, which expired July 29,
2007. No additional options can be
granted under the 1997 Plan. However all outstanding options granted under
the 1997 Plan will continue to be governed by the provisions of the 1997 Plan.
·
the 2007 Stock Option Plan, which authorized
1,000,000 shares for issuance. No
shares are outstanding and 1,000,000 shares remain available for grant.
The
following table sets forth information, as of October 31, 2009, with
respect to the Companys compensation plans under which Common Stock is, or
was, authorized for issuance and is outstanding.
Plan
Category
|
|
Number
of Securities to
be Issued Upon Exercise
of Outstanding Options
(a)
|
|
Weighted-Average
Per
Share Exercise Price of
Outstanding Options
(b)
|
|
Number
of Securities
Remaining Available for
Future Issuance Under the
Equity Compensation
Plan(s)
(c)
|
|
|
|
|
|
|
|
|
|
Equity compensation plans approved by security holders
|
|
179,063
|
|
$
|
7.46
|
|
1,000,000
|
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
179,063
|
|
$
|
7.46
|
|
1,000,000
|
|
Potential Payments upon Termination or Change in Control
Key Employee Retention Plan
The
Company has established a Key Employee Retention Plan (the Plan) for certain
of its key employees which includes the chief executive officer and the chief
financial officer. The purpose of the
Plan is to provide a bonus incentive to certain key employees to remain in the
employ of the Company during periods when there is a potential for a change in
control of the Company. Employees who
are participants in the Plan are generally entitled to receive qualified
payments equal to one month for each year of service, but in no case less than
twelve months, or such greater amount as the Board of Directors may deem
appropriate considering the circumstances.
Such payments include the
13
employees
current monthly base salary and the greater of (i) one-twelfth of their
prior year bonus or (ii) one-twelfth of the average of their prior three
years bonus. Such payments become
effective in the event that their employment is terminated within two years
after a change in control of the Company (a) without cause by the new
controlling party or (b) for good reason by the employee (e.g. an
adverse change in the officers status after a change in control), each as
defined in the Plan. In addition, all
insurance and fringe benefits will be provided for a period equal to the
greater of one month of coverage for each year of employment with the Company
or 12 months of coverage.
A
change in control is defined to include (i) any person or group becomes
the beneficial owner, directly or indirectly of 30% or more of the outstanding
voting stock of the Company, (ii) the stockholders of the Company approve
a merger, combination or consolidation of the Company with any other entity
resulting in the voting securities of the Company immediately prior to the
transaction representing less than 51% of the merged, combined or consolidated
securities, (iii) any transaction (or combination of transactions) is
consummated for the sale, disposition or liquidation of at least 50% of the
Companys net assets, or (iv) election of one-third of the members of the
Companys Board of Directors proposed by any party or group nominating
directors in opposition to the directors nominated for election by the Company.
The following table presents
the amount of compensation payable to Mr. Huffman and Mr. Neely if
the triggering termination event had occurred on the last day of the Companys
most recently completed fiscal year, October 31, 2009.
Name
|
|
Salary
|
|
Bonus
|
|
All
Other
Compensation(1)
|
|
Total
|
|
James T. Huffman (2)
|
|
$
|
200,000
|
|
$
|
83,333
|
|
59,013
|
|
$
|
342,346
|
|
Alford B. Neely (3)
|
|
$
|
190,000
|
|
$
|
21,666
|
|
16,870
|
|
$
|
228,536
|
|
(1)
|
Excludes
payments for oil and gas production payable to Mr. Huffman.
|
(2)
|
These
amounts represent annual totals which would be paid to Mr. Huffman on a
pro-rata monthly basis for a period of 32 months, with the aggregate
amount payable to Mr. Huffman under the plan being $912,922.
Mr. Huffman retired effective as of January 15, 2010.
|
(3)
|
These
amounts represent annual totals which would be paid to Mr. Neely on a
pro-rata monthly basis for a period of 12 months.
|
Compensation Committee
Report
The independent members of
the Board of Directors, acting as the Compensation Committee, reviewed and
discussed the above Compensation Discussion and Analysis with the Companys
management. Based on the review and
discussions, the Compensation Committee recommended to the Board of Directors
that the Compensation Discussion and Analysis be included in this proxy
statement on Schedule 14A.
MEMBERS OF THE BOARD OF
DIRECTORS ACTING AS THE COMPENSATION COMMITTEE:
Clarence H. Brown
Oakley Hall
W. Mark Meyer
John A. Rigas
H. Leigh Severance
William F. Skewes
Marlis
E. Smith, Jr.
RATIFICATION
OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
(Item 2
on Proxy Card)
During
fiscal year 2008, the Company dismissed Hein & Associates LLP (Hein)
as the Companys independent registered public accounting firm and engaged
Ernst & Young LLP (Ernst & Young) as its new independent
registered public accounting firm for the audit of fiscal 2008. The change in independent public accounting
firms was not the result of any disagreement with Hein.
14
The
Board of Directors has appointed Ernst & Young LLP as the Companys
independent registered public accounting firm for fiscal 2010. Representatives of Ernst & Young LLP
will be present at the Annual Meeting of Shareholders to make any statement
they so desire and will be available to answer appropriate shareholder
questions.
In
the event this proposal is defeated, the shareholder vote will not be binding
on the Company but may be considered by the Audit Committee when it considers
selecting other auditors for the next fiscal year. However, because of the difficulty and
expense of making any substitution of auditors after the beginning of the
fiscal year, Ernst & Youngs appointment for the 2010 fiscal year will
be permitted to stand unless the Audit Committee finds other reasons for making
a change.
In the absence of contrary instructions by a shareholder, the shares
represented by the proxy will be voted FOR the ratification of the appointment
of Ernst & Young LLP as the Companys independent registered pubic
accounting firm for fiscal 2010.
Audit Fees
The aggregate fees billed for professional services rendered by Ernst &
Young LLP for its audit of the Companys annual financial statements included
in the Companys Annual Report on Form 10-K, its audit of internal
controls, and its reviews of the financial statements included in the Companys
Quarterly Reports on Form 10-Q were $270,000 for fiscal 2009, and $273,000
in 2008.
Aggregate fees billed professional services rendered by Hein &
Associates LLP for its review of the financial statements included in the
Companys Quarterly Reports on Form 10-Q and its review of the Companys
Annual Report in Form 10-K were $2,000 in fiscal year 2009 and $48,700 in
fiscal year 2008.
Audit-Related Fees
No audit related services were provided in fiscal 2009 or 2008 by either
Ernst & Young LLP or Hein & Associates LLP.
Tax Fees
Neither Ernst & Young LLP nor Hein & Associates LLP
provided tax services to the Company during fiscal 2009 or 2008.
All
Other Fees
Neither Ernst & Young LLP nor Hein & Associates LLP
provided services during fiscal 2009 or 2008 other than the services described
above.
Policies and Procedures for Approval
of Audit and Non-Audit Services
The
Audit Committee pre-approves all audit and non-audit services expected to be
performed by Ernst & Young LLP in any fiscal year. In addition, the Audit Committee has
delegated authority to its Chairman to pre-approve additional non-audit
services by Ernst & Young LLP, and ensures that the independent
registered public accounting firm shall not be engaged to perform the specific
non-audit services that are prohibited by law or regulation. The Audit Committee Chairman must report any
such additional pre-approved services at the next scheduled Audit Committee
meeting. There were no hours expended on
the Ernst & Young LLP audit of the Companys most recent
financial statements by persons other than Ernst & Young LLPs
full-time, permanent employees.
15
Audit Committee Report
The
responsibilities of the Audit Committee are set forth in the
Audit Committee Charter
which was reviewed and approved October 21, 2009
by the Board of Directors, and is included as Appendix A to this Proxy
Statement. The Audit Committee reviews
and reassesses the adequacy of its Charter on an annual basis. The Companys
Audit
Committee Charter
is posted on the Companys internet website (www.credopetroleum.com). In addition, a copy of the
Audit Committee Charter
can be obtained from the Company,
without charge, by written request to the Chief Financial Officer at the
Companys address.
The
Audit Committee met seven times during fiscal 2009 and has met once since
fiscal 2009 year-end. The Audit
Committee reviewed and discussed the Companys audited financial statements for
fiscal 2009 with management and the Companys independent registered public
accounting firm, and discussed with the Companys independent registered public
accounting firm the matters required to be discussed by Codification of
Statements on Auditing Standards, AU 380 (formerly Statement on Auditing
Standards 61) and as adopted by the Public Company Accounting Oversight Board
in Rule 3200T, as in effect for the Companys fiscal 2009. The Audit Committee has received the written
disclosures and the letter from the independent registered public accounting
firm as required by applicable requirements of the PCAOB regarding their
communication with the audit committee concerning independence, and has
discussed with them their independence from the Company. Based on these reviews and discussions, the
Audit Committee recommended to the Board of Directors that the Companys
audited financial statements for the year ended October 31, 2009 be
included in the Companys Annual Report on Form 10-K.
Submitted by the Audit
Committee of the Board of Directors
Oakley Hall, Chairman
Clarence H. Brown
William
F. Skewes
CODE OF
ETHICS
The Company has adopted a
Code of Ethics
that applies to, among others, its directors, principal executive, financial
and accounting officers, and other persons, if any, performing similar
functions. The Companys
Code of Ethics
is posted on the Companys Internet website
(www.credopetroleum.com). In addition, a
copy of the
Code of Ethics
can be obtained from the
Company, without charge, by written request to the Chief Financial Officer at
the Companys address.
Any amendment to, or waiver under, the Company
Code of
Ethics
will be posted on the Companys website
(www.credopetroleum.com).
MANNER
AND EXPENSES OF SOLICITATION
Solicitation of proxies will be by mail.
The total expenses of such solicitation will be borne by the Company and
will include reimbursement of brokerage firms and others for their expenses in
forwarding solicitation material regarding the meeting to beneficial
owners. Solicitation of proxies may be
made by telephone or oral communication by regular employees of the Company who
will not be directly compensated. In
addition, the Company may choose to employ a proxy solicitor. Costs of a proxy solicitor, if any, will be
paid by the Company and should not exceed $500,000.
SECTION 16(A) BENEFICIAL
OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires
the Companys directors and executive officers to file initial reports of
ownership and reports of changes in ownership of the Companys common stock
with the Securities and Exchange Commission.
Such persons are required to furnish the Company with copies of all Section 16(a) forms
that they file. Based upon a review of
these filings and written representations by such persons, the Company believes
that its directors and executive officers were in compliance with all filing
requirements pursuant to Section 16(a) during fiscal 2009.
16
SHAREHOLDER PROPOSALS FOR NEXT
ANNUAL MEETING
AND SHAREHOLDER COMMUNICATIONS
WITH THE BOARD OF DIRECTORS
Any proposal which a shareholder intends to present for consideration
and action at the next Annual Meeting of Shareholders must be received in
writing by the Company at 1801 Broadway, Suite 900, Denver, Colorado,
80202 no later than October 29, 2010 and must conform to applicable
Securities and Exchange Commission rules and regulations. If a shareholder does not seek inclusion of a
proposal in the proxy material and submits the proposal outside the process
described in Rule 14a-8 promulgated under the Securities Exchange Act of
1934, as amended, the proposal must be received by the Companys Secretary on
or before December 31, 2010.
If the proposal is not received by that date, the Board of Directors
will be allowed to use its discretionary voting authority as to the proposal
when it is raised at the Annual Meeting of Shareholders. Nothing in this paragraph shall be deemed to
require the Company to permit presentation of a shareholder proposal, or to
include in the Companys proxy materials relating to the 2011 Annual Meeting of
Shareholders, any shareholder proposal that does not meet all of the
requirements for presentation or inclusion established by the regulations of
the Securities and Exchange Commission in effect at that date.
The Board of Directors attends each Annual Meeting and the individual
directors are available to answer appropriate questions. Appropriate questions generally relate to the
Boards responsibility to establish overall policy and direction for the
Company, its responsibility to retain and evaluate management, and its
responsibilities related to certain functions related to the Audit
Committee. Shareholders may send
communications to the Board of Directors addressed to the attention of the
Chairman of the Executive Committee of the Board of Directors at the Companys
business address. The Chairman of the
Executive Committee will log and retain all such communications. Those communications that the Chairman, in
his sole judgment, believes are (i) within the scope of the Board of
Directors responsibility, (ii) credible, and (iii) material, or
potentially material, will be presented to the full Board of Directors at its
next succeeding regular quarterly meeting.
The Board of Directors will then determine, in its sole judgment,
whether a response is appropriate.
OTHER
MATTERS
The Company does not know of
any matters other than the election of directors and ratification of the
Companys independent registered accounting firm to be brought before the
Annual Meeting of Shareholders. If any
other matters not mentioned in this proxy statement are properly brought before
the Annual Meeting of Shareholders, the individuals named in the enclosed proxy
will use their discretionary voting authority under the proxy to vote the proxy
in accordance with their best judgment on those matters.
HOUSEHOLDING
INFORMATION
The Security and Exchange Commission permits companies
and intermediaries (such as brokers and banks) to satisfy delivery requirements
for proxy statements and annual reports with respect to two or more
stockholders sharing the same address by delivering a single proxy statement
and annual report to those stockholders. This process, which is commonly referred to as
householding, is intended to reduce the volume of duplicate information
stockholders receive and also reduce expenses for companies. While the Company does not utilize
householding, some intermediaries may be householding our proxy materials and
annual report. Once you have received
notice from your broker or another intermediary that they will be householding
materials to your address, householding will continue until you are notified
otherwise or until you revoke your consent. If you hold your shares through an
intermediary that sent a single proxy statement and annual report to multiple
stockholders in your household, we will promptly deliver a separate copy of
each of these documents to you if you send a written request to us at our
address appearing on page one of this proxy statement, to the attention of
the Corporate Secretary. If you hold
your shares through an intermediary that is utilizing householding and you want
to receive separate copies of our annual report and proxy statement in the
future, you should contact your bank, broker or other nominee record holder.
17
APPENDIX A
CREDO PETROLEUM CORPORATION
Audit Committee Charter
Composition
The Audit Committee is established as a standing committee of the Board
of Directors. The membership of the
Audit Committee shall consist of at least three non-employee directors who are
(or will become within a reasonable time after appointment) financially
literate, including at least one member who will be qualified as an audit
committee financial expert under applicable rules of the Securities and
Exchange Commission (SEC) and the NASDAQ Stock Market, Inc. (NASDAQ). No member of the Audit Committee shall have
participated in the preparation of the financial statements of the Company or
any current subsidiary of the Company at any time during the three years prior
to the date of such determination. Each
member of the Audit Committee shall be free of any relationship that, in the
opinion of the Board of Directors, would interfere with the exercise of his or
her independent judgment and shall meet the independence requirements of the
applicable federal securities laws, SEC and NASDAQ then in effect.
Meetings and Structure
The Board of Directors shall appoint one member of the Audit Committee
as chairperson. He or she shall be responsible
for leadership of the Audit Committee and reporting to the Board of Directors.
The Audit Committee shall meet as often as it deems necessary to execute
its duties and as is required by applicable laws, regulations and NASDAQ
standards. Such meetings shall be at the
times and places and by such means as the Chair shall determine. A majority of the members of the Audit
Committee shall constitute a quorum.
Minutes of all Audit Committee meetings will be prepared and filed with
the minutes of the Board of Directors.
Statement of Policy
The Audit Committee will provide assistance to the directors in
fulfilling their responsibilities to the shareholders and to the investment
community relating to accounting, reporting practices and the quality and integrity
of the financial reports of the Company.
To that end, it is the responsibility of the Audit Committee to maintain
free and open lines of communication between the Board of Directors, the
independent auditors and the Companys accounting and financial management.
Responsibilities
The
Audit Committees primary responsibilities include:
(a)
Review and make
recommendations to the Board of Directors as to which independent auditors
should be selected to audit the financial statements of the Company and its
subsidiaries. Confirm the regular
rotation of the lead audit partner and reviewing partner as required by law.
(b)
Meet with the independent
auditors and financial management of the Company to review the scope of the
proposed audit for the current year, and, after the completion of the audit, to
review the results of the audit, including any comments or recommendations made
by the independent auditors.
(c)
Ensure that the
independent auditors, on a periodic basis, submit a formal written statement
delineating all relationships between the Company and the independent auditors,
and actively engage in a dialogue with the independent auditors with respect to
any disclosed relationships or services that may impact the objectivity and
independence of the independent auditors.
(d)
Pre-approve all audit and
non-audit services expected to be rendered by the independent auditors. The Audit Committee shall not engage the
independent auditors to perform the specific non-audit services proscribed by
law or regulation. The Audit Committee
may delegate pre-approval authority for additional non-audit services to the
Chair of the Audit Committee, whose decisions shall be presented to the full
Audit Committee at its next scheduled meeting.
18
(e)
Review with the
independent auditors and the Companys financial and accounting personnel the
adequacy and effectiveness of the accounting and financial controls of the
Company, and elicit any recommendations from the independent auditors regarding
the improvement of those internal control procedures or particular areas where
new or more detailed controls or procedures might be necessary to protect
material assets of the Company.
(f)
Review annually
managements report on internal controls and the independent auditors
attestation regarding managements assessment of internal controls, when and as
required by Section 404 of the Sarbanes-Oxley Act.
(g)
Provide sufficient
opportunity for the independent auditors to meet with the members of the Audit
Committee without members of management present. Items which could be discussed at such
meetings include the independent auditors evaluation of the Companys
financial and accounting personnel, and the cooperation that the independent
auditors received during the course of any current or recently completed audit.
(h)
Review, evaluate and discuss
with the outside auditors and management the Companys audited annual financial
statements and other information that is to be included in the Companys annual
report on Form 10-K, and the results of the outside auditors audit of the
Companys annual financial statements, including the accompanying footnotes and
the outside auditors opinion, and determine whether to recommend to the Board
that the financial statements be included in the Companys Annual Report on Form 10-K
for filing with the SEC.
(i)
Retain the
outside auditors to review the Companys interim financial statements, and
review and discuss with the outside auditors and management the Companys
interim financial statements and other information to be included in the
Companys quarterly reports on Form 10-Q prior to filing such reports with
the SEC.
(j)
Review and
approve in advance all related party transactions as defined by SEC regulations
with the Company.
(k)
Prohibit the
Companys hiring of employees or former employees of the independent auditors
that meet the applicable federal securities laws, SEC regulations and NASDAQ
standards.
(l)
Submit the
minutes of all meetings of the Audit Committee to, or discuss the matters
discussed at each Audit Committee meeting with, the Board of Directors.
(m)
Investigate any matter
brought to its attention within the scope of its duties, with the power to
retain, at the Companys expense, outside legal counsel and other advisors for
this purpose if, in its judgment, that is appropriate.
(n)
Establish procedures for (i) the
receipt, retention and treatment of complaints received by the Company
regarding accounting, internal accounting controls or auditing matters, and (ii) the
confidential, anonymous submission by employees of the Company of concerns
regarding questionable accounting or auditing matters.
(o)
Review and reassess the
adequacy of this Charter on an annual basis.
The Board of Directors and the Audit Committee
will have ultimate authority and responsibility to select, evaluate and replace
the independent auditors. The
independent auditors are ultimately accountable to the Board of Directors and
the shareholders.
In
addition to the above responsibilities, the Audit Committee shall undertake
such other duties as the Board of Directors delegates to it.
Approved: October 21, 2009
19
PROXY
|
CREDO
PETROLEUM CORPORATION
|
PROXY
|
|
THIS
PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
|
|
Important Notice Regarding the
Availability of Proxy Materials for
the Annual Meeting of Shareholders to
be Held on April 8, 2010.
The Companys Notice, Proxy Statement
and Annual Report to Stockholders are available at http://www.credopetroleum.com.
In addition, and in accordance with
SEC rules, you may also access the Notice and Proxy Statement and vote via the
Internet at http://www.proxyvote.com, which does not have cookies that
identify visitors to the site.
The undersigned
shareholder of Credo Petroleum Corporation (the Company) acknowledges receipt
of the Notice of Annual Meeting of Shareholders to be held April 8, 2010,
at 2:30 p.m., MDT, at the Brown Palace Hotel, 321 Seventeenth Street,
Denver, Colorado 80202, and hereby appoints Oakley Hall or William F. Skewes,
or either of them, as Proxy, with the power of substitution, to vote all the
shares of the undersigned at said Annual Meeting of Shareholders and at all
adjournments thereof, hereby ratifying and confirming all that said Proxy may
do or cause to be done by virtue thereof.
The above named Proxy is instructed to vote all of the undersigneds
shares as follows:
1.
|
Election of Director:
|
o
|
FOR the Class I
nominees (except as marked to the contrary below)
|
|
|
o
|
WITHHOLD AUTHORITY to
vote for the Class I nominees listed below
|
INSTRUCTION:
To withhold authority to vote for any individual nominee, strike a line
through the nominees name in the list below.
Oakley Hall William
F. Skewes Marlis
E. Smith, Jr.
2.
|
Proposal to ratify
appointment of Ernst & Young, LLP as the Companys independent
registered public accounting firm for fiscal 2010:
|
o
FOR
o
AGAINST
o
ABSTAIN
3.
|
In his discretion, the
Proxy is authorized to vote upon such other business as may properly come
before the 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 PROPOSALS
1 and 2.
|
|
|
|
Dated this
day of
,
2010.
|
|
|
|
|
|
Signature
|
|
|
|
|
|
Signature
|
|
|
|
Please sign your name
exactly as it appears on your stock certificate. If shares are held jointly,
each holder must sign. Executors, trustees and other fiduciaries should so
indicate when signing.
|
iShares Trust (NASDAQ:CRED)
Historical Stock Chart
From Jun 2024 to Jul 2024
iShares Trust (NASDAQ:CRED)
Historical Stock Chart
From Jul 2023 to Jul 2024