DEF 14A of Hallador Energy Co
Filed Apr 19, 2024 · FY20230001437749-24-012550
Director Nominees
Director Nominees BRENT K. BILSLAND, the Chairman of the Board, President, and CEO, has served on the Board since 2009. Mr. Bilsland was elected Chairman of the Board in 2018, appointed CEO in 2014, and has been a director and our President since 2009. He was President of Sunrise Coal, LLC, our primary operating subsidiary, from July 2006 through November 2017, and Vice President of Knapper Corporation, a private corporation, from 1998 to 2004. Mr. Bilsland is a graduate of Butler University located in Indianapolis, Indiana. Mr. Bilsland brings broad industry experience and significant operational capabilities to our Company. He has an intimate understanding of our business and its operations that benefit us. In 2015 and 2016, Mr. Bilsland served as the Chairman of the Indiana Coal Council. Mr. Bilsland's investment in our Common Stock, combined with his wife and children, is 3.88%. ZARRELL GRAY, Executive Advisor to Teays Rivers, a U.S. holding company with a strategic focus on production based and vertically integrated agricultural businesses with assets and operations across 23 states and 10 countries. From 2007 to 2021 he was Executive Vice President and Chief Operating Officer at Teays River. Prior to joining Teays River, Mr. Gray was professionally involved in the hybrid seed industry for over 17 years (1990 to 2007) and remains a principal owner of Gray's Seed, Inc. Mr. Gray graduated from Purdue University and has a Bachelor of Science in Agricultural Economics. Mr. Gray brings more than 16 years as a senior executive (COO/EVP) in the formation and growth of a large-scale holding company. Mr. Gray has served on multiple private corporate boards each with sales in the hundreds of millions or greater. He also has extensive experience in investment committees, diligence processes, and various acquisition execution responsibilities and has been engaged in raising capital and debt facilities, each in excess of a billion dollars. Over his career he developed a unique and broad global network of investors, bankers and operators. We believe that Mr. Gray's vast experience will enable us to advance our long-term strategic growth plan. DAVID C. HARDIE, a Director, serves as Chair of our Audit Committee. From July 1989 through January 2014, Mr. Hardie was our Chairman of the Board. He is the Executive Chairman of the board of directors of Hallador Investment Advisors Inc., which manages Hallador Cash Fund LP, Hallador Alternative Assets Fund, Moka Fund, and Hallador Balanced Fund. Mr. Hardie is also the Managing Member of Allora, a fine dining restaurant in Sacramento, California. Mr. Hardie joined the board of directors of Earlens Corporation, a venture-backed hearing aid company, in November 2020. He serves as a director and partner of other private entities that are owned by members of his family and serves as director of The Parasol Tahoe Community Foundation and University of California Davis Environmental Research Center. Mr. Hardie is a Graduate of California Polytechnic University, San Luis Obispo with a Bachelor of Science in Accounting. He also completed the Owner/President Management program at the Harvard Business School. Mr. David C. Hardie, who controls 6.31% of our Common Stock, has been a Board member for the last 35 years. His significant broad experience, as well as an intimate knowledge of our Company, is a tremendous benefit to us in planning and executing our corporate strategy. BRYAN H. LAWRENCE, a Director, is a founder and senior manager of Yorktown Partners LLC, the manager of the Yorktown group of investment partnerships, which make investments in companies engaged in the energy industry. The Yorktown partnerships were formerly affiliated with the investment firm of Dillon, Read & Co. Inc., where Mr. Lawrence had been employed since 1966, serving as a Managing Director until the merger of Dillon Read with SBC Warburg in September 1997. Mr. Lawrence also serves as a director of Riley Exploration Permian, Inc., Ramaco Resources, Inc., and Star Group, LP (each a United States publicly-traded company) and certain non-public companies in the energy industry in which Yorktown partnerships hold equity interests. Mr. Lawrence is a graduate of Hamilton College and also has an MBA from Columbia University. Mr. Lawrence, who controls 1.37% of our Common Stock, has been a Board member for the last 29 years. We believe that Mr. Lawrence's wealth of industry-specific transactional skills and experience qualifies him to serve on our Board. As with most of our other Board members, he too has a significant indirect monetary investment in our Company and accordingly has a vested interest in our success. DAVID J. LUBAR, a Director, is President and CEO of Lubar & Co. He began his career in 1977 at Wells Fargo Bank (f/k/a Norwest Bank N.A.) in Minneapolis, where he spent six years in commercial and correspondent banking. Mr. Lubar joined Lubar & Co. in 1983 and has served as lead investor to over 20 companies in a wide range of industries and various stages of development. He currently serves as a director of each of the Lubar Companies as well as Nicholas Company, Baird Funds, Ixonia Bank (chairman), Milwaukee Brewers Baseball Club, and several other private companies. He previously served on the boards of BMO Financial Corp and Northwestern Mutual Life Insurance Company. He also serves in many community leadership positions throughout the Milwaukee area. Mr. Lubar has a Bachelor of Arts degree from Bowdoin College and Master of Business Administration from the University of Minnesota. Mr. David J. Lubar controls 14.92% of our Common Stock. Mr. Lubar has 40 years of investment experience with private companies, public stocks, and fixed income. His experience provides him insight from the view of an investor and Board member. CHARLES R WESLEY, IV, a Director, has served as President of Thoroughbred Resources LP (a Yorktown Partners affiliate) since 2014 and CEO since 2016. Mr. Wesley served as Chief Planning and Commercial Officer of Ramaco Resources and, before joining Thoroughbred, Senior Director of Finance and Senior Counsel at Lumen Technologies (formerly Level 3 Communications), where he was also responsible for the operation and ultimate disposition of the Company's coal mining operations. Prior to Lumen Technologies, he worked at the law firms of Akin, Gump, Strauss, Hauer & Feld, and Strasburger & Price, focusing on international energy transactions. He began his career with a coal company as a mining engineer and is an active investor in natural resources and financial technology. Mr. Wesley is a board member across multiple industries and philanthropic organizations. Mr. Wesley holds a Juris Doctorate from the University of Kentucky College of Law and a Bachelor of Science in Mining Engineering from Virginia Polytechnic Institute. Mr. Wesley brings a wealth of invaluable coal mining industry knowledge and experience to the Board. His vast knowledge of the industry assists the Board in driving future and potential growth and expansion opportunities.
Non-Continuing Director
Non-Continuing Director STEVEN R. HARDIE, a Director, has served on the Board since 1994. He is the manager of NextG LLC, a family investment partnership formed in 2016. For the past 38 years, he has been a private investor and serves as director and partner of other private entities owned by members of his family. Mr. Hardie is not standing for re-election and will be retiring from the Board when his current term expires at the Meeting.
OUR NAMED EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
OUR NAMED EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS On March 25, 2024, the Company appointed Marjorie Hargrave as its new Chief Financial Officer, effective April 10, 2024, to succeed Lawrence D. Martin. Because Ms. Hargrave joined the Company as CFO in April 2024, she is not a “Named Executive Officer” in respect of the fiscal year ended December 31, 2023 for purposes of this proxy statement, but Mr. Martin is a “Named Executive Officer” for such purpose. LAWRENCE D. MARTIN, CPA, age 58, served as both Hallador’s CFO and President of Hallador’s subsidiary Sunrise Coal through April 9, 2024. From 2007 to 2017, Mr. Martin was Sunrise’s CFO. Prior to joining Sunrise, he worked for 19 years at CliftonLarsonAllen, LLP (CLA). Mr. Martin was a Senior Manager at CLA before his employment with Sunrise Coal. Mr. Martin is a graduate of Indiana State University and received his Bachelor of Science degree in Accounting in 1988. HEATH A. LOVELL, age 49, has served as President of Hallador Power Company since 2022. Mr. Lovell will succeed Mr. Martin as President of Sunrise Coal. Prior to joining Hallador, Mr. Lovell was the Vice President – Public Affairs for Alliance Coal, LLC since June of 2017. Before that, he was Vice President of Operations for Alliance Coal covering Illinois, Indiana, and parts of Western Kentucky. He had been with Alliance Coal since 2006 and held several other positions including General Manager of River View Coal, LLC and General Manager of Webster County Coal, LLC. Mr. Lovell was responsible for the development of River View in 2009 with its nine units of operations and initial capital investment of $270 million. Before joining Alliance, Mr. Lovell was Vice President and Partner of Dodge Hill Mining, LLC. He has over 25 years of experience in the mining industry and holds a Master of Business Administration and a Bachelor of Science degree in Electrical Engineering from the University of Kentucky. Mr. Lovell has served as the Chairman of the Kentucky Coal Association Board of Directors, West Virginia Coal Association Board of Directors, Indiana Coal Association Board of Directors, Reliable Energy, Inc. Board of Directors, as well as a Board Member of the American Coal Council and an appointed member of the National Coal Council. MARJORIE HARGRAVE, age 60, joined Hallador on April 10, 2024 as our Chief Financial Officer. Ms. Hargrave has served as a director for Evolution Petroleum, a publicly traded company on the NYSE, since March 1, 2021 and currently serves as its Chair of the Audit Committee, and as a member of the Compensation and Nominating & Corporate Governance Committees. Ms. Hargrave most recently was the President and CFO of Enservco Corporation, a publicly traded Oilfield Services Company. Ms. Hargrave is the former CFO of CTAP (currently owned by Marubeni-Itochu Tubulars America), a provider of pipe and tubing to the energy industry and the former CFO of High Sierra Energy, a midstream energy company that was sold to NGL Energy Partners. Previous assignments include VP Finance/Managing Director, Black Hills Corp., Finance Consultant, Xcel Energy; and VP Investment Banking, Merrill Lynch. Ms. Hargrave holds a Bachelor’s degree in economics from Boston University, a Master’s degree in economics from New York University, and certification in Cybersecurity Oversight from Carnegie Mellon University.
Director Compensation
Director Compensation Beginning in 2023, each of our non-employee members of our Board, with the exception of Mr. Lawrence, who declined being compensated for his Board role, receives an annual retainer of $50,000 and each chair of the Audit Committee, the Compensation Committee and the Nominating Committee receives an additional retainer of $25,000.
2023 Director Compensation Table
2023 Director Compensation Table The following table sets forth information concerning the compensation paid to the non-employee members of our Board during the fiscal year ended December 31, 2023:
2023 Director Compensation Table
| Director Name | Fees Earned(1) | Total | | Brent K. Bilsland | $-- | $-- | | David C. Hardie | $75,000 | $75,000 | | Steven R. Hardie | $50,000 | $50,000 | | Bryan H. Lawrence | $-- | $-- | | David J. Lubar | $75,000 | $75,000 | | Charles R. Wesley, IV | $75,000 | $75,000 | | ____________ | | | | (1) Such amounts were earned in 2023, and paid in March 2024. | | |
2023 Director Compensation Table
PROPOSAL NO. 2: APPROVE, ON AN ADVISORY BASIS, THE NAMED EXECUTIVE OFFICERS' COMPENSATION. THE BOARD RECOMMENDS THAT YOU VOTE "FOR" HALLADOR'S NAMED EXECUTIVE OFFICER COMPENSATION. In accordance with Section 14A of the Securities Exchange Act of 1934, we are asking our shareholders for an advisory vote to approve the compensation of our Named Executive Officers as disclosed in this Proxy Statement as set forth in the "Summary Compensation Table" in accordance with the compensation disclosure rules of the SEC. The Board recommends that shareholders support the following resolution. RESOLVED, that the shareholders approve, on an advisory basis, Hallador's compensation of its Named Executive Officers, as disclosed in Hallador's Proxy Statement for the 2024 Annual Meeting, pursuant to the compensation disclosure rules of the SEC, including the Summary Compensation Table and all other tables and narrative disclosures regarding Named Executive Officer compensation. This advisory proposal is not binding. A majority of the shares of Common Stock represented at the Meeting in person or by proxy must vote FOR the proposal to approve it. If you "abstain" from voting with respect to this proposal, your vote will have the same effect as a vote "against" the proposal. Your broker may not vote your shares on this proposal unless you give voting instructions. Broker non-votes will have no effect on the vote for this proposal. Your vote will not directly change or otherwise limit or enhance any existing compensation or award arrangement of any of our Named Executive Officers, but the outcome of the say-on-pay vote will be taken into account by the Compensation Committee when considering future compensation arrangements.
Summary Compensation Table
Summary Compensation Table The following table sets forth information regarding the compensation awarded to, earned by, or paid to our NEOs in fiscal years ended December 31, 2023 and 2022:
Summary Compensation Table
| Name and Principal Position | Fiscal Year | Salary | Bonus (1) | Non-Equity Incentive Plan (2) | Stock Awards (3) | All Other Compensation (4) | Total | | Brent K. Bilsland Chairman, President and CEO | 2023 | $615,000 | $184,800 | $184,800 | $- | $13,200 | $997,800 | | | 2022 | $586,250 | $357,200 | $611,449 | $1,864,733 | $12,200 | $3,431,832 | | Lawrence D. Martin (5) CFO, and President, Sunrise Coal | 2023 | $400,000 | $120,000 | $120,000 | $- | $13,200 | $653,200 | | | 2022 | $375,000 | $260,000 | $397,045 | $1,212,174 | $12,200 | $2,256,419 | | Heath A. Lovell (6) President, Hallador Power | 2023 | $400,000 | $120,000 | $120,000 | $- | $13,200 | $653,200 |
Summary Compensation Table
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Summary Compensation Table
| (1) The amounts disclosed in the Bonus column reflect discretionary bonuses under the executive officer plan. | | (2) The amounts disclosed in the Non-Equity Incentive Plan column reflect amounts paid in respect of our 2023 executive officer bonus performance plan, as determined by the Compensation Committee. | | (3) The amounts disclosed in the Stock Awards column represent the aggregate grant date fair value of time-based RSUs, computed in accordance with FASB Accounting Standards Codification Topic 718, disregarding for this purpose the estimate of forfeitures. Amounts disclosed in this column reflect the closing market price per share on the respective grant dates of the time-based RSUs. | | (4) The amounts disclosed in the All Other Compensation column reflect matching contributions by the Company to our 401(k) plan. | | (5) Mr. Martin ceased to be our Chief Financial Officer effective as of April 9, 2024. | | (6) Mr. Lovell was not an NEO prior to the fiscal year ended December 31, 2022 and, therefore, in accordance with SEC regulations, only compensation information for the fiscal year ended December 31, 2023 is included in the Summary Compensation Table. |
Outstanding Equity Awards at December 31, 2023
Outstanding Equity Awards at December 31, 2023
Outstanding Equity Awards at December 31, 2023
| Name | Grant Date | Number of Shares or Units of Stock That Have Not Vested (1) | Market Value of Shares or Units of Stock That Have Not Vested (2) | | Brent K. Bilsland | 11/11/2022 | 178,358 | $1,576,685 | | Lawrence D. Martin | 11/11/2022 | 115,942 | $1,024,927 | | Heath A. Lovell | 11/11/2022 | 115,942 | $1,024,927 |
Outstanding Equity Awards at December 31, 2023
| ________________________ |
Outstanding Equity Awards at December 31, 2023
| (1) The RSUs granted to Messrs. Bilsland, Martin, and Lovell on November 11, 2022 vest ratably on March 31, 2024, and March 31, 2025. | | (2) Market value was calculated based on the closing market price per share of our Common Stock on the last trading day of 2023 ($8.84 per share). |
Potential Payments Upon Termination or Change in Control
Potential Payments Upon Termination or Change in Control As of December 31, 2023, Messrs. Bilsland and Lovell were eligible to receive payments upon a change in control, including with respect to termination of employment related to a change in control in certain cases, in accordance with the 2022 executive officer plan, in each case, as follows:
Potential Payments Upon Termination or Change in Control
| ● | Mr. Bilsland – in the event of a change in control, Mr. Bilsland would be entitled to the following amounts, subject to his execution, delivery and non-revocation of a general release of claims in favor of the Company: |
Potential Payments Upon Termination or Change in Control
| ● | a lump sum retention payment equal to $1,076,250, provided he remains employed with the Company through the closing of such change in control transaction (or $1,230,000 in the event he is not engaged to work for the acquiring company following the transaction). |
Potential Payments Upon Termination or Change in Control
| o | if following the announcement of, but prior to the closing of, a change in control transaction, Mr. Bilsland’s employment is terminated by the Company without cause, or if he resigns for good reason, the retention payment described above that would have been paid had he remained employed through the change in control (reduced on a dollar-for-dollar basis (but not below zero) by the amount of any severance paid to him by the Company pursuant to the terms of any severance agreement (if applicable)); and |
Potential Payments Upon Termination or Change in Control
| ● | an amount equal to the performance bonus paid for the most recently completed fiscal year prior to the change in control, pro-rated for the period served in the fiscal year of the change in control through the closing of such change in control transaction. |
Potential Payments Upon Termination or Change in Control
| ● | Mr. Lovell – in the event of a change in control, Mr. Lovell would be entitled to the following amounts, subject to his execution, delivery and non-revocation of a general release of claims in favor of the Company: |
Potential Payments Upon Termination or Change in Control
| ● | a lump sum retention payment equal to $700,000, provided he remains employed with the Company through the closing of such change in control transaction (or $800,000 in the event he is not engaged to work for the acquiring company following the transaction). |
Potential Payments Upon Termination or Change in Control
| o | if following the announcement of, but prior to the closing of, a change in control transaction, Mr. Lovell’s employment is terminated by the Company without cause, or if he resigns for good reason, the retention payment described above that would have been paid had he remained employed through the change in control (reduced on a dollar-for-dollar basis (but not below zero) by the amount of any severance paid to him by the Company pursuant to the terms of any severance agreement (if applicable)). |
Potential Payments Upon Termination or Change in Control
| ● | an amount equal to the performance bonus paid for the most recently completed fiscal year prior to the change in control, pro-rated for the period served in the fiscal year of the change in control through the closing of such change in control transaction. |
Potential Payments Upon Termination or Change in Control
The retention payments described above for Messrs. Bilsland and Lovell may, if they are employed at the time of the change in control, be conditioned on them agreeing with the acquirer, if so requested, to continue to work for the acquirer following the change-in-control for a period of three months, provided the acquirer agrees to pay (i) a monthly base salary no less than the monthly base salary rate in effect before the transaction, and (ii) an additional retention payment equal to 25% of the performance bonus for the most recently completed fiscal year prior to the change in control. Under the terms of the 2024 executive officer plan, Messrs. Bilsland and Lovell are entitled to similar retention payments in connection with a change in control as under the 2022 executive officer plan, except that the lump sum retention payment each would be entitled to would be $1,181,250 for Mr. Bilsland (or $1,350,000 in the event he is not engaged to work for the acquiring company following the transaction) and $787,500 for Mr. Lovell (or $900,000 in the event he is not engaged to work for the acquiring company following the transaction). In April 2024, following the expiration of their existing severance agreements, the Company entered into new severance agreements with each of our executive officers, including Messrs. Bilsland and Lovell that terminate on March 31, 2026 or, if earlier, a change in control. Under the terms of the severance agreements, upon a termination of the executive’s employment by the Company without cause or a resignation for good reason, subject to the executive’s execution, delivery and non-revocation of a general release of claims in favor of the Company, the executive is entitled to a lump sum severance payment equal to 1.5 times the sum of (i) the executive’s annual base salary in effect on the termination date and (ii) the annual bonus received by the executive for the fiscal year prior to the year in which the termination date occurs. No severance is payable in connection with a termination of the executive’s employment by the Company for cause or a resignation without good reason. In addition, vesting would be accelerated for any unvested RSUs held by Mr. Bilsland and Lovell upon either (i) a change in control, or (ii) termination of employment by the Company without cause, or resignation for good reason.
PAY VS. PERFORMANCE
PAY VS. PERFORMANCE The following table sets forth additional compensation information of our Principal Executive Officer ("PEO") and our non-PEO named executive officers ("Non-PEOs") along with the relationship of such compensation to total shareholder return and net income performance results for our fiscal years ended December 31, 2023, 2022, and 2021, in accordance with Item 402(v) of Regulation S-K. "Compensation Actually Paid" values shown in the required table below are calculated in accordance with SEC rules and do not represent amounts actually earned or realized by our PEO and Non-PEOs in such fiscal years. The calculations and analysis below do not necessarily reflect the Company's approach to aligning executive compensation with performance.
Summary Table
| (2) SEC rules require certain adjustments to be made to the “Summary Compensation Table” totals to determine “compensation actually paid” as reported in the “Pay versus Performance Table” above. The following tables detail the applicable adjustments from the compensation reported in the “Total” column of the Summary Compensation Table. |
Summary Table
| PEO | | | | | Adjustments to Determine Compensation Actually Paid | 2023 | 2022 | 2021 | | Reported Summary Compensation Table Total for PEO | $997,800 | $3,431,832 | $730,252 | | Deduction for Amounts Reported under the Stock Awards Column in our Summary Compensation Table (or SCT) | $- | $(1,864,733) | $- | | Increase for Fair Value as of Year-end of Awards Granted during the Year that Remain Unvested as of Year-end | $- | $2,672,695 | $- | | Increase for Fair Value as of the Vesting Date of Awards Granted during the Year that Vest during the Year | $- | $- | $- | | Increase/deduction for Change in Fair Value from prior Year-end to current Year-end of Awards Granted Prior to the Year that were Outstanding and Unvested as of Year-end | $(205,112) | $- | $- | | Increase/deduction for Change in Fair Value from prior Year-end to Vesting Date of Awards Granted Prior to the Year that Vested during the Year | $(71,343) | $- | $48,125 | | Deduction of Fair Value of Awards Granted Prior to the Year that were Forfeited during the Year | $- | $- | $- | | Compensation Actually Paid to PEO | $721,345 | $4,239,794 | $778,378 |
Summary Table
| Non-PEOs | | | | | Adjustments to Determine Compensation Actually Paid | 2023 | 2022 | 2021 | | Reported Summary Compensation Table Total for Non-PEOs | $653,200 | $2,256,419 | $457,368 | | Deduction for Amounts Reported under the Stock Awards Column in our Summary Compensation Table (or SCT) | $- | $(1,212,174) | $- | | Increase for Fair Value as of Year-end of Awards Granted during the Year that Remain Unvested as of Year-end | $- | $1,737,391 | $- | | Increase for Fair Value as of the Vesting Date of Awards Granted during the Year that Vest during the Year | $- | $- | $- | | Increase/deduction for Change in Fair Value from prior Year-end to current Year-end of Awards Granted Prior to the Year that were Outstanding and Unvested as of Year-end | $(133,333) | $- | $- | | Increase/deduction for Change in Fair Value from prior Year-end to Vesting Date of Awards Granted Prior to the Year that Vested during the Year | $(46,377) | $- | $26,250 | | Deduction of Fair Value of Awards Granted Prior to the Year that were Forfeited during the Year | $- | $- | $- | | Compensation Actually Paid to Non-PEOs | $473,490 | $2,781,636 | $483,618 |
Relationship Between Compensation Actually Paid and Performance Measures
Relationship Between Compensation Actually Paid and Performance Measures From 2022 to 2023, the compensation actually paid to our PEO and the average of the compensation actually paid to the Non-PEOs both decreased by 83%, compared to a 12% decrease in our TSR over the same time period, and net income increased by 147% from 2022 to 2023.