ITEM 10: DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
The following table
sets forth information regarding the members of our Board of Directors and our executive officers. All directors hold office for
one-year terms until the election and qualification of their successors. Officers are appointed by the Board of Directors and serve
at the discretion of the Board of Directors.
Name
|
|
Age
|
|
Position with the Company
|
Stephen Alfers
|
|
71
|
|
Chief Executive Officer and President, Chairman of the Board of Directors
|
Debra Struhsacker
|
|
64
|
|
Senior Vice President
|
Timothy Janke
|
|
65
|
|
Chief Operating Officer
|
Eric Alexander
|
|
50
|
|
Vice President Finance and Controller
|
Barry Honig
|
|
46
|
|
Director
|
Edward Karr
|
|
47
|
|
Director
|
Alex Morrison
|
|
53
|
|
Director
|
Stephen Alfers
.
Mr. Alfers has served as our Chief Executive Officer and Chairman since February 2012 and as our President since August 2012. Mr.
Alfers served as the President and Chief of U.S. Operations of Franco-Nevada Corporation from January 2010 to September 2011 and
its Vice President (Legal) from December 2007 to December 2009. Mr. Alfers is the founder and, since 2007, the President of Alfers Mining
Consulting, which performs consulting services from time to time for mining and exploration companies and investors in these industries,
including providing continuing services from time to time for Franco-Nevada Corporation, with Mr. Alfers serving as an officer
and director of certain of the U.S. subsidiaries of Franco-Nevada Corporation. Mr. Alfers served as the President and Chief Executive
Officer of NewWest Gold Corporation, a publicly traded Canadian corporation listed on the Toronto Stock Exchange, from 2006 to
2007. Mr. Alfers also served on the board of directors of NewWest Gold Corporation from 2005 to 2007. Mr. Alfers served as President
and Chief Executive Officer of the NewWest Resources Group from 2001 to 2005 and as President and Chief Executive Officer of NewWest
Gold Corporation, a privately-held Delaware Corporation, from 2005 to 2006. Mr. Alfers founded Alfers & Carver LLC, a boutique
natural resources law firm, in 1995, and served as its managing partner from 1995 to 2001. Mr. Alfers received a J.D. from the
University of Virginia, an M.A. in Monetary Policy and Public Finance from the University of Denver and a B.A. in Economics from
the University of Denver. Mr. Alfers was chosen to be a director of the Company based on his extensive mining industry and operational
experience, and his mining industry legal expertise. Mr. Alfers is a member of the Technical Committee.
Debra Struhsacker.
Ms. Struhsacker joined the Company in September 2013 as its Corporate Vice President and was named Senior Vice President in September
2014. From June 2006 until joining the Company, Ms. Struhsacker was the principal of her own consulting business, providing management,
coordination and execution of environmental permitting strategies and other environmental, regulatory, governmental and community
relations issues consulting services to mining companies. She has provided consulting services to the Company at the Relief Canyon
Project since October 2011. She served as Vice President, U.S. Governmental and Regulatory Affairs for Kinross Gold USA, Inc.,
a subsidiary of Kinross Gold Corporation, from July 2003 to May 2006, and was engaged in her own consulting business from April
1991 until June 2003. Ms. Struhsacker has over 25 years of experience in hardrock mining and environmental issues, including related
public policy issues, permitting and reclamation. She has a B.A. in Geology and French from Wellesley College and a M.S. in Geology
from the University of Montana. Ms. Struhsacker is a certified professional geologist (Wyoming and American Institute of Professional
Geologists).
Timothy Janke
.
Mr. Janke joined the Company in August 2014 as its Chief Operating Officer. Since November 2010, Mr. Janke has been the president
of his own consulting business, providing mine operating and evaluation services to several mining companies. Beginning in July
2012, he provided consulting services at the Relief Canyon Project, advising the Company on mine start-up plans and related activities.
From June 2010 to August 2014, Mr. Janke served as Vice President and Chief Operating Officer of Renaissance Gold, Inc. and its
predecessor, Auex Ventures, Inc. He was General Manager-Projects for Goldcorp Inc. and its predecessor Glamis Gold, Inc. from July
2009 to May 2010, Vice President and General Manager of the Marigold Mine from February 2006 to June 2009, and its Manager of Technical
Services from September 2004 to January 2006. Mr. Janke has served as a director for Renaissance Gold since August 2011 and as
a director for US Gold since April 2016. Mr. Janke has over 40 years of engineering and operational experience in the mining industry.
He has a B.S. in Mining Engineering from the Mackay School of Mines.
Eric Alexander.
Mr. Alexander joined the Company in September 2012 as its Vice President Finance and Controller and was appointed as the Company’s
principal financial officer and principal accounting officer in November 2012. Prior to joining the Company, Mr. Alexander was
the Corporate Controller for Sunshine Silver Mines Corporation, a privately held mining company with exploration and pre-development
properties in Idaho and Mexico, from March 2011 to August 2012. He was a consultant to Hein & Associates LLP from August 2012
to September 2012 and a Manager with Hein & Associates LLP from July 2010 to March 2011. He served from July 2007 to May 2010
as the Corporate Controller for Golden Minerals Company (and its predecessor, Apex Silver Mines Limited), a publicly traded mining
company with operations and exploration activities in South America and Mexico. He has over 25 years of corporate, operational
and business experience, and 12 years of mining industry experience. In addition to working in the industry, he has also held the
position of Senior Manager with the public accounting firm KPMG LLP, focusing on mining and energy clients. Mr. Alexander has a
B.S. in Business Administration (concentrations in Accounting and Finance) from the State University of New York at Buffalo and
is also a licensed CPA.
Barry Honig.
Mr. Honig has served as a director since September 2010, serving as Co-Chairman from September 2010 to September 2011 and as Chairman
from September 2011 to February 2012. Since January 2004, Mr. Honig has been the President of GRQ Consultants, Inc., acting as
a private investor and consultant to early stage companies. Mr. Honig’s expertise includes early stage company capital restructuring,
debt financing, capital introductions, and mergers and acquisitions. In addition, Mr. Honig served as director and co-Chairman
of Chromadex Corporation from October 2011 to February 2015, and as director and co-Chairman of InterCLICK, Inc. from August 2007
through December 2011. Mr. Honig also served on the board of directors of Majesco Entertainment from September 2015 to December
2016, and has served on the board of directors of Levon Resources Ltd. since July 2015, currently serving as Chairman. Mr. Honig
was selected to serve as a director due to his extensive knowledge of the capital markets, his judgment in assessing business strategies
and accompanying risks, and his expertise with emerging growth companies. Mr. Honig is a member of the Compensation Committee and
the Technical Committee.
Edward Karr.
Mr. Karr was appointed to the Board of Directors in June 2015. Mr. Karr is an international entrepreneur and the founder of several
investment management and investment banking firms based in Geneva, Switzerland. Since April 2016, he has been President and CEO
of US Gold Corp., a junior exploration company. From 2005 to June 2015, Mr. Karr was the Chief Executive Officer of RAMPartners
SA, an investment advisory firm based in Geneva, Switzerland. Mr. Karr was also Managing Director of Strategic Asset Management
SA and Managing Director of Strategic Swiss Advisors Sàrl, both Swiss asset management companies, from February 2013 to
December 2015. Mr. Karr served as a director of Spherix Corporation from November 2012 to December 2014. He served as a Director
of Majesco Entertainment from September 2015 to December 2016. He is currently on the boards of Levon Resources Ltd. and Dataram
Corporation, and serves as chairman of the audit committees of both. Mr. Karr previously worked for Prudential Securities in the
United States. He has been in the financial services industry for over twenty years. Before his entry into the financial services
arena, Mr. Karr was affiliated with the United States Antarctic Program and spent thirteen consecutive months working in Antarctica,
receiving the Antarctic Service Medal. Mr. Karr studied at Embry-Riddle Aeronautical University, Lansdowne College in London, England
and received a B.S. in Economics/Finance with Honors (magna cum laude) from Southern New Hampshire University. He is an Executive
Committee member, past President and current Nominating Committee Chair of the American International Club of Geneva. Mr. Karr
was selected to serve as a director due to his experience in capital markets and financial expertise. Mr. Karr is currently a member
of the Audit Committee, the Compensation Committee and the Corporate Governance and Nominating Committee.
Alex Morrison
.
Mr. Morrison has served as a director since November 2012. Mr. Morrison is a mining executive, chartered accountant and certified
public accountant with over 27 years of experience in the mining industry. He currently serves on the boards of Detour Gold Corporation,
Gold Resource Corporation and Taseko Mines Limited. Mr. Morrison has held senior executive positions at a number of mining companies,
most recently serving as Vice President and Chief Financial Officer of Franco-Nevada Corporation from 2007 to April 2010. From
2002 to 2007, Mr. Morrison held increasingly senior positions at Newmont Mining Corporation, including Vice President, Operations
Services and Vice President, Information Technology. Prior to 2002, Mr. Morrison was Vice President and Chief Financial Officer
of NovaGold Resources, Inc. and Vice President and Controller of Homestake Mining Company and held senior financial positions at
Phelps Dodge Corporation and Stillwater Mining Company. In addition, from time to time between 2007 and the present, Mr. Morrison
has performed financial consulting services for mining companies. Mr. Morrison began his career with PricewaterhouseCoopers LLP
after obtaining his B.A. in Business Administration from Trinity Western University. Mr. Morrison was selected to serve as a director
due to his extensive mining resource and business experience and his financial expertise. Mr. Morrison is currently the chair of
the Audit Committee, the Compensation Committee, and the Corporate Governance and Nominating Committee and a member of the Technical
Committee.
Family Relationships
There
are no family relationships among the executive officers and directors.
Director or Officer Involvement in Certain
Legal Proceedings
Our directors and executive
officers were not involved in any legal proceedings, as described in Item 401(f) of Regulation S-K, in the past ten years.
Section 16(a) Beneficial Ownership Reporting
Compliance
Section 16(a) of the
Exchange Act requires our directors, executive officers, and persons who own more than 10% of our equity securities to file reports
of ownership and changes in ownership of our equity securities with the SEC. Based on the information available to us for 2016,
we believe that all applicable Section 16(a) filing requirements were met on a timely basis except that Mr. Alexander, Ms. Struhsacker
and Mr. Janke each filed one late report regarding one transaction each and Mr. Honig filed two late reports regarding one transaction
each.
Code of Ethics
Our Board of Directors
has adopted a Code of Ethics and Business Conduct that applies to all of our directors, officers and employees. Our Code of Ethics
and Business Conduct can be viewed on our website at www.pershinggold.com.
Stockholder Nominations
We do not currently
have a policy or specified procedures in place pursuant to which security holders may recommend nominees to the Board of Directors.
We believe that the Corporate Governance and Nominating Committee and the Board of Directors can appropriately consider and respond
to stockholder nominations.
Audit Committee
We have a standing
Audit Committee established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Audit Committee was formed
in June 2015 and met four times during 2016. Our Audit Committee is currently comprised of Messrs. Karr and Morrison.
D. Scott Barr was a member of the Audit Committee from June 2016 until his death in April 2017. Our Board of Directors has determined
each of the members of the Audit Committee is, and Mr. Barr was, independent and financially sophisticated, as defined by the NASDAQ
Stock Market LLC (“Nasdaq”) listing standards. Our Board of Directors has determined that each of Mr. Morrison,
the Audit Committee chairman, and Mr. Karr qualifies as an “Audit Committee Financial Expert” as that term is defined
in rules promulgated by the SEC.
Following the death
of Mr. Barr, the Audit Committee has been reduced to two members. As a result, the Company is no longer compliant with Nasdaq Listing
Rule 5605(c)(2) which requires that the Audit Committee consist of at least three members. On April 10, 2017, the Company
notified Nasdaq of Mr. Barr’s passing and the resulting non-compliance. On April 13, 2017, we received a written notice from
Nasdaq confirming the Audit Committee’s non-compliance with Listing Rule 5605(c)(2), and confirming that the Company, in
accordance with the cure period provided for in Nasdaq Listing Rule 5605(c)(4), has (a) until the earlier of its next annual stockholders’
meeting or April 9, 2018 to regain compliance, or (b) if the next annual stockholders’ meeting is held before October 6,
2017, then the Company must evidence compliance no later than October 6, 2017. We intend to identify candidates to replace Mr.
Barr and appoint a new director to the Audit Committee who satisfies the applicable requirements of the Nasdaq listing rules prior
to the expiration of the cure period.
ITEM 11: EXECUTIVE COMPENSATION
Summary Compensation Table
The following table
summarizes the compensation through December 31, 2016 of each of our named executive officers.
Name
and Principal Position
|
|
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)
(1)
|
|
|
Option
Awards
($)
|
|
|
Stock
Awards
($)
(2)
|
|
|
All
Other
Compensation
($)
|
|
|
Total
($)
|
|
Stephen Alfers
Chief Executive Officer, President and Chairman
|
|
|
2016
|
|
|
|
425,000
|
|
|
|
324,500
|
(3)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
749,500
|
|
|
|
|
2015
|
|
|
|
388,068
|
(4)
|
|
|
—
|
|
|
|
—
|
|
|
|
1,755,000
|
(5)
|
|
|
—
|
|
|
|
2,143,068
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debra Struhsacker
Senior
Vice President
|
|
|
2016
|
|
|
|
241,875
|
(6)
|
|
|
129,051
|
(7)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
370,926
|
|
|
|
|
2015
|
|
|
|
225,000
|
|
|
|
40,000
|
|
|
|
—
|
|
|
|
56,000
|
|
|
|
—
|
|
|
|
321,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Eric Alexander
Vice President
Finance
and Controller
|
|
|
2016
|
|
|
|
183,750
|
|
|
|
90,288
|
(8)
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
274,038
|
|
|
|
|
2015
|
|
|
|
183,750
|
|
|
|
24,500
|
|
|
|
—
|
|
|
|
23,625
|
|
|
|
—
|
|
|
|
231,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Bonuses in 2016 reflect bonuses
earned in 2016 but paid in 2017.
(2) Reflects the grant date fair value of the Company’s
common stock calculated in accordance with FASB ASC Topic 718. For information regarding the assumptions used to compute grant
date fair market value, see Note 2 to the Company’s Audited Consolidated Financial Statements included in the Original Filing.
(3) Reflects Mr. Alfers’ bonus earned
in 2016 but paid in 2017 and consists of (a) $175,000 in cash, and (b) the grant date fair market value of 50,000 restricted stock
units when granted on March 21, 2017 and valued at $149,500, calculated in accordance with FASB ASC Topic 718.
(4) Reflects an increase in Mr. Alfers’
base salary from $350,000 per year to $425,000 per year on June 28, 2015.
(5) Reflects grant of 700,000 restricted
stock units, 300,000 of which are time-based restricted stock units and 400,000 of which are performance-based restricted stock
units. The amount for the 300,000 time-based restricted stock units reflects grant date fair value of the Company’s common
stock calculated in accordance with FASB ASC Topic 718. The amount for the 400,000 performance-based restricted stock units reflects
the grant date value based upon the probable outcome of performance conditions, consistent with the estimate of aggregate compensation
cost to be recognized over the service period determined as of the grant date under FASB ASC Topic 718. Assuming the highest level
of performance conditions will be achieved, the value of the award at the grant date was $4,095,000.
(6) Reflects an increase in Ms. Struhsacker’s
base salary from $225,000 per year to $270,000 per year on August 16, 2016.
(7) Reflects Ms. Struhsacker’s bonus
earned in 2016 but paid in 2017 and consists of (a) $57,000 in cash, and (b) the grant date fair market value of 21,900 restricted
stock units when granted on February 3, 2017 and valued at $72,051, calculated in accordance with FASB ASC Topic 718.
(8) Reflects Mr. Alexander’s bonus
earned in 2016 but paid in 2017 and consists of (a) $35,500 in cash, and (b) the grant date fair market value of 16,653 restricted
stock units when granted on February 3, 2017 and valued at $54,788, calculated in accordance with FASB ASC Topic 718.
Agreements with Executive Officers
Stephen Alfers
We entered into an
amended and restated employment agreement (the “Alfers Employment Agreement”) with Mr. Alfers on June 28, 2015 that
provides that Mr. Alfers will serve as our Chief Executive Officer until December 31, 2018, subject to renewal. Pursuant to the
terms of the agreement, Mr. Alfers will be entitled to a base salary of $425,000 per year, subject to adjustment by the Board of
Directors. Mr. Alfers will also receive an annual bonus if the Company meets or exceeds certain criteria adopted by the Board of
Directors. The annual target bonus amount for Mr. Alfers shall equal 100% of his annualized base salary for that year
if target levels of performance for that year are achieved, with greater or lesser amounts paid for performance above and below
such target.
Upon
Mr. Alfers’ termination without Cause (as defined in the Alfers Employment Agreement) or upon Mr. Alfers’ resignation
for Good Reason (as defined in the Alfers Employment Agreement), in either case where such termination is outside of a Change in
Control Period (as defined below and in the Alfers Employment Agreement), the Company shall pay to Mr. Alfers, in addition to any
Accrued Obligations (as defined in the Alfers Employment Agreement), a lump sum payment in an amount equal to two times the sum
of (i) Mr. Alfers’ base salary plus (ii) the average of the actual bonus amounts paid to Mr. Alfers’ in the two years
prior to termination. Additionally, any remaining unvested restricted shares of Company common stock granted to Mr. Alfers on February
9, 2012 in conjunction with his Original Employment Agreement (as defined below) would fully and immediately vest. Any other unvested
equity awards shall be forfeited as of the date of termination (unless otherwise provided in the applicable award agreement or
equity plan), and vested equity awards shall be treated as provided in the applicable award agreement or equity plan.
Upon
Mr. Alfers’ termination without Cause within six months prior to or twenty-four months following a Change in Control (as
defined in the Alfers Employment Agreement and with such period to be referred to as a “Change in Control Period”)
or upon Mr. Alfers’ resignation for Good Reason during a Change in Control Period, the Company shall pay to Mr. Alfers, in
addition to any Accrued Obligations, a lump sum payment in an amount equal to two times the sum of (i) Mr. Alfers’ base salary
plus (ii) the average of the actual bonus amounts paid to Mr. Alfers’ in the two years prior to termination. Additionally,
any unvested equity awards that were granted prior to such Change in Control shall fully and immediately vest (unless otherwise
provided in the applicable award agreement or equity plan).
Mr.
Alfers’ bonus amounts are subject to claw-back rights in the event of certain restatements of the Company’s financial
information for a period of three years.
In
connection with the Alfers Employment Agreement, Mr. Alfers was awarded restricted stock units pursuant to a Restricted Stock Unit
Grant Agreement dated June 28, 2015 (the “2015 RSU Agreement”). Under the terms of the 2015 RSU Agreement, Mr. Alfers
was granted a total of 700,000 restricted stock units. 300,000 restricted stock units are time-based units (the “Time-Based
RSUs”) that are subject to vesting upon Mr. Alfers’ continuous employment through December 31, 2018 (“Employment
Term End Date”). If Mr. Alfers’ employment is terminated prior to the Employment Term End Date (i) by the Company other
than for Cause, (ii) by Mr. Alfers’ resignation for Good Reason, or (iii) as a result of Mr. Alfers’ death or Disability
(as defined in the Alfers Employment Agreement), all Time-Based RSUs shall become fully vested immediately prior to such termination.
Such Time-Based RSUs shall also become fully vested upon a Change in Control (as defined in the Company’s 2013 Equity Incentive
Plan). Each Time-Based RSU that becomes fully vested will entitle Mr. Alfers to receive one share of common stock as soon as practicable
following the vesting event.
The
remaining 400,000 restricted stock units (the “Performance RSUs”) are subject to vesting upon the attainment of certain
performance-based milestones set forth in the 2015 RSU Agreement and shall become fully vested upon a Change in Control. For each
fully vested Performance RSU, Mr. Alfers will be entitled to receive one share of common stock upon the earlier of December 31,
2018, Mr. Alfers’ separation from service or death, or a 409A Change in Control (as defined in the 2015 RSU Agreement), all
as set forth in the RSU Agreement. In June 2016, 120,000 Performance RSUs vested upon the attainment of certain performance-based
milestones.
On February 5, 2015,
the Company and Mr. Alfers entered into a Third Amendment to the Restricted Stock Agreement dated May 13, 2013, as amended
on December 23, 2013 and June 11, 2014 (as amended, the “Alfers 2013 RS Agreement”). Pursuant to this amendment,
the vesting of 72,098 shares of restricted stock, of a total of 216,251 restricted shares that were granted pursuant to the Alfers
2013 RS Agreement, was deferred from June 18, 2015 to March 14, 2016.
On February 5, 2015,
the Company and Mr. Alfers entered into a Third Amendment to the Amended and Restated Restricted Stock Agreement dated May 13,
2013, as amended on December 23, 2013 and June 11, 2014 (as amended, the “Alfers 2013 A&R RS Agreement”).
Pursuant to this amendment, the vesting of 20,514 shares of restricted stock, of a total of 61,527 restricted shares that were
granted pursuant to the Alfers 2013 A&R RS Agreement, was deferred from June 18, 2015 to March 14, 2016.
On February 5, 2015,
the Company and Mr. Alfers entered into a Third Amendment to the Executive Employment Agreement dated February 9, 2012, as
amended on February 8, 2013 and December 23, 2013 (as amended, the “Alfers Original Employment Agreement”). Pursuant
to this amendment, the vesting of 166,667 shares of restricted stock, of a total of 666,667 restricted shares that were granted
pursuant to the Alfers Original Employment Agreement, was deferred from February 9, 2015 to February 9, 2016. The Alfers Original
Employment Agreement was superseded by the Alfers Employment Agreement.
The Company and Mr. Alfers
entered into a Restricted Stock Unit Grant Agreement dated March 21, 2017 (the “Alfers Bonus RSU Agreement”) pursuant
to which Mr. Alfers was awarded 50,000 restricted stock units (the “Bonus RSUs”) as a discretionary bonus for his performance
in 2016. The Bonus RSUs were fully vested on the date of grant. The common stock underlying the Bonus RSUs will be issued upon
the earlier of December 31, 2018, Mr. Alfers’ separation from service or death, or a 409A Change in Control (as defined in
the Alfers Bonus RSU Agreement). Each Bonus RSU entitles Mr. Alfers to receive one share of common stock within 30 days of the
aforementioned events.
Debra Struhsacker
We entered into an
offer letter with Ms. Struhsacker on September 23, 2013 pursuant to which Ms. Struhsacker was hired to serve as the Company’s
Corporate Vice President and is entitled to an annual base salary, subject to adjustment at the sole discretion of the Chief Executive
Officer with the approval of the Board of Directors (the “Struhsacker Offer Letter”). In September 2014, Ms. Struhsacker
was promoted to Senior Vice President.
In connection with
the the Struhsacker Offer Letter, we also entered into a severance compensation agreement with Ms. Struhsacker on September 19,
2013 (the “Struhsacker Severance Compensation Agreement”). Upon a Qualifying Termination (as defined in the Struhsacker
Severance Compensation Agreement) occurring on or within twelve months following a Change in Control (as defined in the Struhsacker
Severance Compensation Agreement), we are required to pay Ms. Struhsacker a lump-sum severance payment equal to one and a half
times the sum of (i) Ms. Struhsacker’s base salary, plus (ii) the greater of Ms. Struhsacker’s Annual Bonus Amount
or Ms. Struhsacker’s Assumed Bonus Amount (both as defined in the Struhsacker Severance Compensation Agreement).
On August 15, 2016,
the Company and Ms. Struhsacker entered into an Extension Severance Compensation Agreement extending the term of the Struhsacker
Severance Compensation Agreement to March 18, 2017 and increasing Ms. Struhsacker’s salary to $270,000. On January 11, 2017,
the Company and Ms. Struhsacker entered into a Second Extension Severance Compensation Agreement extending the term of the Struhsacker
Severance Compensation Agreement to December 31, 2017.
On February 6, 2015,
the Company and Ms. Struhsacker entered into a First Amendment to the Restricted Stock Grant Agreement dated February
12, 2013 (the “Struhsacker February 2013 RSG Agreement”). Pursuant to this amendment, the vesting of 13,889 shares
of restricted stock, of a total of 41,667 restricted shares that were granted pursuant to the Struhsacker February 2013 Restricted
Stock Grant Agreement, was deferred from February 12, 2015 to February 12, 2016. On December 10, 2015, the Company and Ms. Struhsacker entered
into a Second Amendment to the Struhsacker February 2013 RSG Agreement, pursuant to which the vesting of 13,889 shares of restricted
stock, of a total of 41,667 restricted shares that were granted pursuant to the Struhsacker February 2013 RSG Agreement,
was deferred from February 12, 2016 to February 12, 2017.
On December 10, 2015,
the Company and Ms. Struhsacker entered into a First Amendment to the Restricted Stock Grant Agreement dated December
16, 2013 (the “Struhsacker December 2013 RSG Agreement”). Pursuant to this amendment, the vesting of 1,852 shares of
restricted stock, of a total of 5,556 restricted shares that were granted pursuant to the Struhsacker December 2013 RSG Agreement,
was deferred from December 16, 2015 to March 14, 2016.
On December 10, 2015,
the Company and Ms. Struhsacker entered into a First Amendment to the Restricted Stock Grant Agreement dated December
11, 2014 (the “Struhsacker December 2014 RSG Agreement”). Pursuant to this amendment, the vesting of 4,908 shares of
restricted stock, of a total of 14,723 restricted shares that were granted pursuant to the Struhsacker December 2014 RSG Agreement,
was deferred from December 11, 2015 to March 14, 2016.
Eric Alexander
We entered into a revised
offer letter with Mr. Alexander on November 21, 2012, amended on February 8, 2013, pursuant to which Mr. Alexander joined the Company
as our Vice President Finance and Controller and is entitled to an annual base salary of $175,000, subject to
adjustments
at the sole discretion of the Chief Executive Officer with the approval of the Board of Directors
(the “Alexander
Offer Letter”)
.
In addition, in connection with his appointment as the Company’s
principal financial officer and principal accounting officer, the Company granted Mr. Alexander 11,112 shares of restricted stock,
vesting over three years. The amendment deferred vesting of certain of the restricted shares, of which 3,704 vested in equal tranches
on March 14, 2014 and November 30, 2014, and a final tranche of 3,704 shares vested on November 30, 2015, subject to acceleration
under certain events, including upon a Change in Control as defined in the Company’s 2012 Equity Incentive Plan.
In connection with
the Alexander Offer Letter, we also entered into a severance compensation agreement with Mr. Alexander on November 21, 2012 that
was amended on November 19, 2015 (as amended, the “Alexander Severance Compensation Agreement”). Pursuant to the Alexander
Severance Compensation Agreement, Mr. Alexander will be entitled to receive certain benefits if he incurs a separation from service
(as defined in the Alexander Severance Compensation Agreement) during the term of the agreement which is initiated by the Company
for any reason other than Cause, death, or Disability (as such terms are defined in the Alexander Severance Compensation Agreement)
or is initiated by Mr. Alexander for Good Reason (as defined in the Alexander Severance Compensation Agreement). These benefits
depend on whether the separation occurs prior to or after a Change in Control (as defined in the Alexander Severance Compensation
Agreement). If the separation occurs prior to a Change in Control, the Company shall pay Mr. Alexander a lump-sum severance payment
equal to Mr. Alexander’s base salary plus the average of the annual cash bonuses paid to Mr. Alexander in the two years prior
to separation. If the separation occurs within 12 months following a Change in Control, the Company shall pay Mr. Alexander a lump-sum
severance payment equal to (x) 1.125 times (y) the sum of (a) Mr. Alexander’s base salary plus (b) the greater of (i) the
average annual cash bonus paid to Mr. Alexander in the two years prior to separation or (ii) the target bonus amount established
for Mr. Alexander in the fiscal year in which the separation occurs or, if none, an amount equal to 80% of Mr. Alexander’s
base salary. On September 15, 2016, the Company and Mr. Alexander entered into a Second Amended Severance Compensation Agreement
extending the term of the Alexander Severance Compensation Agreement to March 18, 2017. On January 11, 2017, the Company and
Mr. Alexander entered into a Third Amended Severance Compensation Agreement further extending the term of the Alexander Severance
Compensation Agreement to December 31, 2017.
On February 6, 2015,
the Company and Mr. Alexander entered into a First Amendment to the Restricted Stock Grant Agreement dated February 12, 2013
(the “Alexander February 2013 RSG Agreement”). Pursuant to this amendment, the vesting of 18,519 shares of restricted
stock, of a total of 55,556 restricted shares that were granted pursuant to the Alexander February 2013 RSG Agreement, was deferred
from February 12, 2015 to February 12, 2016. On December 10, 2015, the Company and Mr. Alexander entered into a Second
Amendment to the Alexander February 2013 RSG Agreement, pursuant to which the vesting of 18,518 shares of restricted stock, of
a total of 55,556 restricted shares that were granted pursuant to the Alexander February 2013 RSG Agreement, was deferred from
February 12, 2016 to February 12, 2017.
On December 10, 2015,
the Company and Mr. Alexander entered into a First Amendment to the Restricted Stock Grant Agreement dated December 16, 2013 (the
“Alexander December 2013 RSG Agreement”). Pursuant to this amendment, the vesting of 3,704 shares of restricted stock,
of a total of 11,112 restricted shares that were granted pursuant to the Alexander December 2013 RSG Agreement, was deferred from
December 16, 2015 to March 14, 2016.
On December 10, 2015,
the Company and Mr. Alexander entered into a First Amendment to the Restricted Stock Grant Agreement dated December 11, 2014 (the
“Alexander December 2014 RSG Agreement”). Pursuant to this amendment, the vesting of 1,667 shares of restricted stock,
of a total of 5,000 restricted shares that were granted pursuant to the Alexander December 2014 RSG Agreement, was deferred from
December 11, 2015 to March 14, 2016.
Indemnification Agreements
The Company has entered
into indemnification agreements with its directors and executive officers providing for indemnification against all expenses, judgments,
fines and amounts paid in settlement incurred by such indemnitee in connection with any threatened, pending or completed action,
suit, alternative dispute resolution mechanism or proceeding to which indemnitee was or is a party or is threatened to be made
a party by reason of the fact that indemnitee is or was a director, officer, employee or agent of the Company, or is or was serving
at the request of the Company as a director, officer, employee or agent of another enterprise, to the fullest extent permitted
by Nevada law. The indemnification agreements also provide for the advancement of expenses (including attorneys’ fees) incurred
by the indemnitee in connection with any action, suit, alternative dispute resolution mechanism or proceeding (subject to the terms
and conditions set forth therein). The indemnification agreements contain certain exclusions, including proceedings initiated by
the indemnitee unless such advancement is specifically approved by a majority of our disinterested directors. The Company expects
that it will enter into similar indemnification agreements with any new directors and executive officers.
Outstanding Equity Awards at Fiscal Year-End
The following table
provides information on the holdings of equity awards of our named executive officers at December 31, 2016. This table includes
unexercised and unvested options and equity awards. Vesting schedules are subject to acceleration or forfeiture in certain circumstances,
including a change of control.
|
|
Option
awards
|
|
|
Stock
awards
|
|
Name
|
|
Number
of
securities
underlying
unexercised
options (#)
Exercisable
|
|
|
Number
of
securities
underlying
unexercised
options (#)
Unexercisable
|
|
|
Equity
incentive
plan awards:
number of
securities
underlying
unexercised
unearned options
(#)
|
|
|
Option
exercise
price
($)
|
|
|
Option
expiration
date
|
|
|
Number
of shares
or units of stock
that have not vested
(#)
|
|
|
Market
value
of shares
or units of stock
that have not
vested
($)
|
|
|
Equity
incentive
plan awards:
number of
unearned shares,
units or other
rights that have
not vested
(#)
|
|
|
Equity
incentive
plan awards:
market or payout
value
of unearned
shares, units or
other
rights that
have not vested
($)
(1)
|
|
Stephen
Alfers
|
|
|
555,556
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
8.82
|
|
|
|
2/9/22
|
|
|
|
300,000
|
(2)
|
|
$
|
981,000
|
|
|
|
280,000
|
(3)
|
|
$
|
915,600
|
|
|
|
|
277,778
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
6.12
|
|
|
|
6/18/22
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Debra
Struhsacker
|
|
|
22,223
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
8.10
|
|
|
|
3/6/22
|
|
|
|
21,191
|
(4)
|
|
$
|
69,295
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
22,223
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
6.12
|
|
|
|
6/18/22
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Eric
Alexander
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
12,243
|
(5)
|
|
$
|
40,035
|
|
|
|
—
|
|
|
|
—
|
|
(1) The market value of stock awards is
calculated at $3.27 per share, the closing price of our common stock on December 30, 2016.
(2) Includes 300,000 restricted stock units
which vest on December 31, 2018.
(3) Includes 280,000 restricted stock units
that vest upon the attainment of certain performance-based milestones.
(4) Includes 4,908 shares vesting on December
11, 2017; 5,333 restricted stock units vesting on December 23, 2017 and 10,950 restricted stock units vesting on February 3, 2018.
(5) Includes 1,666 shares vesting on December 11, 2017; 2,250
restricted stock units vesting on December 23, 2017 and 8,327 restricted stock units vesting on February 3, 2018.
2016 Director Compensation
Our directors who are
also our employees receive no fees for board service. Mr. Alfers is the only director who is also an employee. The compensation
for all non-employee directors includes a $25,000 annual cash retainer and a $1,000 cash fee for attendance at each Board of Directors
meeting. Directors receive a $1,000 cash fee for attendance at all committee meetings, and the chairs of the Technical, Audit,
Compensation and Corporate Governance and Nominating committees receive annual cash retainers of $15,000, $15,000, $10,000 and
$7,500 respectively. Non-employee directors on the Technical Committee receive a fee of $150 per hour up to a maximum of $1,000
per day for Technical Committee service that occurs other than at a meeting of the Technical Committee. Directors may elect to
receive restricted stock units in lieu of cash. Non-employee directors are also eligible to receive annual grants of restricted
stock units in such amounts and with such vesting provisions as are determined annually by the Compensation Committee and the Board
of Directors. These equity grants related to 2016 service were granted in February 2017. For each vested restricted stock unit,
the non-employee director is entitled to receive one unrestricted share of common stock upon termination of the director’s
service on our Board of Directors. Our directors are also eligible to receive other equity awards, including stock options, under
our equity incentive plans, as determined from time to time by the Board of Directors.
The following table
sets forth compensation paid to our non-employee directors in 2016.
Name
|
|
Fees
Earned or
Paid in Cash
($)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
|
|
|
Non-Equity
Incentive
Plan
Compensation
($)
|
|
|
Change
in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings
($)
|
|
|
All
Other
Compensation
($)
|
|
|
Total
($)
|
|
D.
Scott Barr
|
|
$
|
28,525
|
(1)
|
|
$
|
58,139
|
(2)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
20,000
|
(3)
|
|
$
|
106,664
|
|
Barry
Honig
|
|
$
|
30,000
|
(4)
|
|
$
|
32,900
|
(5)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
62,900
|
|
Edward
Karr
|
|
$
|
35,000
|
(6)
|
|
$
|
32,900
|
(5)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
67,900
|
|
Alex
Morrison
|
|
$
|
73,425
|
(7)
|
|
$
|
32,900
|
(5)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
106,325
|
|
(1) Amount represents $12,500 in retainer
payments for two quarters of service as a member of the Board of Directors, $5,000 for attendance at five Board of Director and
committee meetings, $7,500 in retainer payments for two quarters of service as chair of the Technical Committee, and $3,525 in
hourly fees for service provided to the Technical Committee.
(2) Amount represents grant date fair market
value, calculated pursuant to FASB ASC Topic 718, of (a) 5,995 restricted stock units when granted on June 24, 2016 and valued
at $25,239; all units vested upon Mr. Barr’s death in April 2017; and (b) 10,000 restricted stock units granted on February
3, 2017 for services provided in 2016 and valued at $32,900; 5,000 units vested on the date of the grant and 5,000 vested upon
Mr. Barr’s death in April 2017. See footnote (2) to the Summary Compensation Table on page 6 of this amended annual
report on Form 10-K/A for additional information regarding this calculation.
(3) Amount represents fees for consulting
services provided to the Company prior to Mr. Barr’s appointment to the Board of Directors.
(4) Amount represents Mr. Honig’s
$25,000 annual retainer for service on the Board of Directors and $5,000 for attendance at five Board of Director and committee
meetings. Mr. Honig elected to receive such payments in the form of restricted stock units. In satisfaction of these fees, the
Company issued 7,618 fully-vested restricted stock units (the “Honig Retainer RSUs”) on April 28, 2017 calculated
based on (x) the dollar amount of the director fees earned for the relevant fiscal quarter,
divided by
(y) the fair market
value of one share of the Company’s stock as of the end of the relevant fiscal quarter, with the result rounded up to the
nearest whole number. The Honig Retainer RSUs were granted as follows: (a) 2,342 units for director services rendered between January
1, 2016 and March 31, 2016, (b) 1,457 units for director services rendered between April 1, 2016 and June 30, 2016, (c) 1,601 units
for director services rendered between July 1, 2016 and September 30, 2016, and (d) 2,218 units for director services rendered
between on October 1, 2016 and December 31, 2016. Amount does not reflect the value of 2,351 shares of restricted common stock
issued to Mr. Honig on April 28, 2017 for service to the Board of Directors and committees in the fourth quarter of fiscal
year 2015. See footnote (2) to the Summary Compensation Table on page 6 of this amended annual report on Form 10-K/A for
additional information regarding these calculations.
(5) Amount includes the grant date fair
market value, calculated pursuant to FASB ASC Topic 718, of 10,000 restricted stock units granted on February 3, 2017 for services
provided in 2016; 5,000 units vested on the date of the grant and 5,000 units vest on February 3, 2018. See footnote (2) to the
Summary Compensation Table on page 6 of this amended annual report on Form 10-K/A for additional information regarding
these calculations.
(6) Amount represents Mr. Karr’s
$25,000 annual retainer for service on the Board of Directors and $10,000 for attendance at 10 Board of Director and committee
meetings. Mr. Karr elected to receive such payments in the form of restricted stock units. In satisfaction of these fees, the Company
issued 8,850 fully vested restricted stock units (the “Karr Retainer RSUs”) on April 28, 2017 calculated based
on (x) the dollar amount of the director fees earned for the relevant fiscal quarter,
divided by
(y) the fair market value
of one share of the Company’s stock as of the end of the relevant fiscal quarter, with the result rounded up to the nearest
whole number. The Karr Retainer RSUs were granted as follows: (a) 2,595 units for director services rendered between January 1,
2016 and March 31, 2016, (b) 1,690 units for director services rendered between April 1, 2016 and June 30, 2016, (c) 2,042 units
for director services rendered between July 1, 2016 and September 30, 2016, and (d) 2,523 units for director services rendered
between on October 1, 2016 and December 31, 2016. See footnote (2) to the Summary Compensation Table on page 6 of this
amended annual report on Form 10-K/A for additional information regarding these calculations.
(7) Amount represents Mr. Morrison’s
$25,000 annual retainer for service on the Board of Directors, $15,000 retainer as the chair of the Audit Committee, $10,000 retainer
as chair of the Compensation Committee, $3,750 in retainer payments for two quarters of service as chair of the Corporate Governance
and Nominations Committee, $10,000 for attendance at 10 Board of Director and committee meetings, and $9,675 in hourly fees for
service provided to the Technical Committee.