DEF 14A of Ramaco Resources, Inc.
Filed Apr 29, 2024 · FY20230001558370-24-006096
April 29, 2024
| 2023 RSU and PSU Awards | 39 | | EQUITY COMPENSATION PLAN INFORMATION | 41 | | PAY VERSUS PERFORMANCE | 42 | | SCT Compared to CAP | 42 | | Comparative Disclosure | 45 | | Financial Performance Measures | 47 | | PAY RATIO | 48 | | REPORT OF THE AUDIT COMMITTEE | 49 | | INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | 50 | | Changes in Independent Public Accountants | 50 | | Principal Accounting Firm Fees | 53 | | Audit Committee Policies and Procedures for Preapproval of Audit and Non-Audit Services | 53 | | ITEM 2: ADVISORY VOTE ON EXECUTIVE COMPENSATION | 54 | | ITEM 3: ADVISORY VOTE ON SIMPLE MAJORITY VOTING | 55 | | GENERAL INFORMATION | 58 | | Shareholder Proposals for 2025 Annual Meeting | 58 | | Delinquent Section 16(a) Reports | 58 | | Householding of Annual Meeting Materials | 58 | | Annual Report to Shareholders | 59 |
ITEM 1: ELECTION OF DIRECTORS
ITEM 1: ELECTION OF DIRECTORS Nominees for Directors Our Board is currently composed of nine members. Effective April 13, 2022, the Board approved the implementation of a staggered board pursuant to the terms of the Company’s Amended and Restated Certificate of Incorporation, consisting of three classes. The term of one class expires each year on the date of the annual meeting of shareholders or special meeting in lieu thereof, and any director subsequently appointed to fill a vacancy shall hold office for the remaining term of the director’s predecessor. As of the date of this proxy, each nominee for election currently serves as a director and, if elected, will serve for a term expiring on the date of the Annual Meeting of Shareholders in 2027 or the special meeting in lieu thereof. If any nominee becomes unavailable for election, the Board of Directors can name a substitute nominee, and proxies will be voted for the substitute nominee pursuant to discretionary authority. Listed below are the biographies of each director. The biographies include information regarding each individual’s service as a director of the Company, business experience, director positions at public companies held currently or at any time during the last five years, and the experiences, qualifications, attributes or skills that caused the Board of Directors to determine that the person should serve as a director for the Company. No current director or executive officer has any family relationship with any other executive officer, director, or director nominee. Pursuant to the Shareholders’ Agreement (as defined below), Yorktown (as defined below) was previously entitled to designate certain directors to serve on the Board of Directors. The ability to designate directors pursuant to the Shareholders’ Agreement terminated during 2022. The current Yorktown directors are Bryan H. Lawrence and Peter Leidel. The three nominees for election at the Annual Meeting are listed below.
NOMINEES STANDING FOR ELECTION; TERM TO EXPIRE IN 2027
NOMINEES STANDING FOR ELECTION; TERM TO EXPIRE IN 2027
NOMINEES STANDING FOR ELECTION; TERM TO EXPIRE IN 2027
| PETER LEIDEL | | | Peter Leidel, age 67, has served as a member of our Board of Directors since November 2019. Mr. Leidel is a founder and partner of Yorktown Partners. The Yorktown partnerships were formerly affiliated with the investment firm of Dillon, Read & Co. Inc. where Mr. Leidel was a partner in the venture capital group and invested in a variety of private companies with a particular focus on energy investments until the merger of Dillon Read with SBC Warburg in September 1997. Mr. Leidel’s focus is on energy companies in a variety of different industries. He was previously in corporate treasury positions at Mobil Corporation and worked for KPMG Peat Marwick and the U.S. Patent and Trademark Office. Mr. Leidel is a director of University of Wisconsin Foundation and the American Spectator Foundation, as well as several private energy companies. He served as an adjunct faculty member at the University of Pennsylvania’s School of Business, where he taught financial and managerial accounting. Mr. Leidel became a Certified Public Accountant in 1979. He received his B.B.A. with Honors from the University of Wisconsin and M.B.A. from the Wharton School at the University of Pennsylvania. We believe that Mr. Leidel’s extensive experience in private equity and extensive leadership experience qualifies him to serve on our Board of Directors. | Non-Independent Director Committees: None |
NOMINEES STANDING FOR ELECTION; TERM TO EXPIRE IN 2027
| C. LYNCH CHRISTIAN, III | | | C. Lynch Christian, III, age 72, has served as a member of our Board of Directors since June 2019. Mr. Christian has been involved in coal mining and coal land leasing and management since 1980 as an officer and director of Imperial Colliery Company and Milburn Colliery Company. Among other energy related businesses, Mr. Christian has experience as an officer and director of companies providing mining and hydraulic equipment, material crushing and handling equipment, conveyor design and installation and crane and rigging services. Prior to commencing work in the coal industry, Mr. Christian practiced energy law with the firm of Jackson Kelly PLLC in Charleston, West Virginia. Mr. Christian is a graduate of the University of North Carolina and Washington & Lee University School of Law. We believe that Mr. Christian’s management experience and lengthy career in the Appalachian coal industry qualifies him for service on our Board of Directors. | Independent Director Committees: Audit Environmental, Health and Safety Nominating and Corporate Governance Technology | | AURELIA SKIPWITH GIACOMETTO | | | Aurelia Skipwith Giacometto, age 43, has served as a member of our Board of Directors since January 2022. Ms. Giacometto has a wide background as an experienced government administrator at the federal level, an attorney, a scientist, and a businesswoman. She served as Director of the United States Fish and Wildlife Service until early 2022. She served as the General Counsel of AVC Global, an international logistics company that operates using blockchain technology until 2023, she co-founded the company in 2016. She currently serves as the Head of the Louisiana Department of Environmental Quality, a position to which she was appointed in 2023. She began her career at Monsanto in research. She later served in both legal and research positions at the United States Department of Agriculture and as an intellectual property consultant to the United States Agency for International Development. She has also worked in legal and regulatory divisions of Alltech, a global leader in the animal feed industry. Ms. Giacometto received her Bachelor of Science in biology from Howard University, a Master’s of Science in molecular genetics from Purdue University and a Juris Doctor degree from the University of Kentucky College of Law. We believe that Ms. Giacometto’s government experience and leadership roles bring valuable strategic and analytical skills to the Board of Directors and qualify her for service. | Independent Director Committees: Environmental, Health and Safety Technology |
DIRECTORS NOT STANDING FOR ELECTION; TERM TO EXPIRE IN 2026
DIRECTORS NOT STANDING FOR ELECTION; TERM TO EXPIRE IN 2026
DIRECTORS NOT STANDING FOR ELECTION; TERM TO EXPIRE IN 2026
| BRYAN H. LAWRENCE | | | Bryan H. Lawrence, age 81, has served as a member of our Board of Directors since December 2016. Mr. Lawrence is a founder and senior manager of Yorktown Partners LLC (“Yorktown Partners”), which manages the Yorktown group private equity partnerships with approximately $5.0 billion of capital under management that invest 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 publicly traded Hallador Energy Company, Riley Exploration Permian, Inc. and Star Group, L.P. and certain nonpublic companies in the energy industry in which Yorktown partnerships hold equity interests. Mr. Lawrence is a graduate of Hamilton College and also has an M.B.A. from Columbia University. | Non-Independent Director Nominee Committees: None |
DIRECTORS NOT STANDING FOR ELECTION; TERM TO EXPIRE IN 2026
| We believe that Mr. Lawrence’s wealth of industry-specific transactional skills and experience qualifies him to serve on our Board of Directors. | | | DAVID E.K. FRISCHKORN, JR. | | | David E.K. Frischkorn, Jr., age 73, has served as a member of our Board of Directors since January 2021. Mr. Frischkorn is an investment banker with more than 40 years of energy industry experience. Previously, Mr. Frischkorn was Managing Director, Corporate Finance at Seaport Global Holdings LLC, an investment bank, from November 2011 to December 2017. Mr. Frischkorn also served as Vice Chairman-Corporate Finance of Dahlman Rose & Company LLC, a New York-based investment bank, from September 2004 to September 2011, and as Managing Director of the Energy Group of Jefferies & Co., an investment bank, from August 1996 to February 2003. Mr. Frischkorn holds an M.B.A. in Finance and Accounting from Columbia Business School and a B.A. in Economics and German from Tufts University. We believe that Mr. Frischkorn’s extensive experience in the energy industry brings valuable strategic and analytical skills to the Board of Directors and qualifies him for service on our Board of Directors. | Independent Director Nominee Committees: Audit Compensation Finance and Investment Technology | | PATRICK C. GRANEY, III | | | Patrick C. Graney, III, age 70, has served as a member of our Board of Directors since December 2016. Mr. Graney is currently a private investor. Previously, Mr. Graney founded and served as Chairman of the One Stop Convenience Store chain and was the President and CEO of Petroleum Products, Inc., a motor fuel and lubricant distribution company in West Virginia. Mr. Graney was elected to the Board of Truist Financial Corp., a public bank, in October 2018, where he continues to serve. He also serves on the boards of the University of Charleston, the West Virginia Chamber of Commerce and several privately held companies in which he is an investor with operations in the West Virginia area. He was previously a Class B Director representing West Virginia to the Richmond Federal Reserve. Mr. Graney received a B.A. degree from the University of Virginia, and an M.B.A. from the Colgate Darden School at the University of Virginia. We believe that Mr. Graney’s extensive leadership and financial experience brings valuable strategic and managerial skills to the Board of Directors and qualifies him to serve on our Board of Directors. | Independent Director Nominee Committees: Compensation Finance and Investment Nominating and Corporate Governance |
DIRECTORS NOT STANDING FOR ELECTION; TERM TO EXPIRE IN 2025
DIRECTORS NOT STANDING FOR ELECTION; TERM TO EXPIRE IN 2025
DIRECTORS NOT STANDING FOR ELECTION; TERM TO EXPIRE IN 2025
| RANDALL W. ATKINS | | | Randall W. Atkins, age 71, has served as Chairman of our Board of Directors since August 2015, and as our Chief Executive Officer since January 2021. Mr. Atkins also served as our Chief Financial Officer from July 2018 to May 2019. Mr. Atkins has been involved in energy related investment and financing activities for over 40 years. He also has served as Chairman and Chief Executive Officer of the predecessor company, Ramaco Coal, LLC, from 2011 to 2022. Prior to the formation of Ramaco, Mr. Atkins was a banker at J.P. Morgan and had worked in various investment banking and private equity positions in the mining and energy fields. Mr. Atkins is the immediate past Chairman of the Department of Energy’s National Coal Council. He was also appointed by the Department of Energy as a United States representative to the International Energy Agency’s Coal Advisory Board and Critical Minerals Working Group. He sits on the Board of Directors of the National Mining Association (“NMA”). He began his career at Ashland Oil, Inc. Mr. Atkins holds a B.A. degree from Duke University and a J.D. degree from Washington & Lee University School of Law. We believe that Mr. Atkins’s considerable financial and energy investment experience brings important and valuable skills to the Board of Directors and qualifies him to serve on our Board of Directors. | Non-Independent Director Chairman of the Board Committees: None | | RICHARD M. WHITING | | | Richard M. Whiting, age 69, has served as a member of our Board of Directors since December 2016. Mr. Whiting most recently served as President of Kinder Morgan Resources LLC, and before that as President, Chief Executive Officer, and Director of Patriot Coal Corporation (“Patriot Coal”). Prior to the spin-off of Patriot Coal from Peabody Energy Corporation (“Peabody”), Mr. Whiting served in various positions at Peabody including Executive Vice President & Chief Marketing Officer, President & Chief Operating Officer and Director. Mr. Whiting has served as both a Director and on the Executive Committee of the NMA. He has also served as a Director of the National Coal Council and as a member of the Society of Mining Engineers Foundation Board of Trustees. Mr. Whiting holds a B.S. degree in Mining Engineering from West Virginia University. We believe that Mr. Whiting’s business experience and leadership roles bring valuable strategic and analytical skills to the Board of Directors and qualify him for service. | Independent Director Committees: Audit Compensation Nominating and Corporate Governance |
DIRECTORS NOT STANDING FOR ELECTION; TERM TO EXPIRE IN 2025
| E. FORREST JONES, JR. | | | E. Forrest Jones, Jr., age 73, has served as a member of our Board of Directors since January 2021. Mr. Jones is the owner and manager of Jones & Associates, a law firm in Charleston, West Virginia, which focuses upon all areas of corporate and business practice and specializes in corporate and regulatory matters relating to the coal industry. He received his license to practice law in 1977, and prior to starting Jones & Associates, was a Partner with Hall, Albertson and Jones, Attorneys at Law, from 1977 to 1988. Over the course of his career, Mr. Jones has served as General Field Counsel for Pickands Mather & Company, W-P Coal Company, Agipcoal USA, Inc. (formerly Enoxy Coal, Inc.), Agipcoal America Inc. and Costain Coal Inc. Mr. Jones received a B.A. in American History from the University of Virginia, a B.S. in Business Administration from West Virginia University and a J.D. from West Virginia University. He is admitted to practice in the Circuit Courts and The Supreme Court of Appeals for the State of West Virginia, the U.S. District Court for the Southern District of West Virginia and the United States Court of Appeals for the Fourth Circuit. We believe that Mr. Jones’ experience and background in the coal industry, combined with his experience in advising on various legal matters, qualifies him for service on our Board of Directors. | Non-Independent Director Committees: Environmental, Health and Safety Finance and Investment Technology |
DIRECTORS NOT STANDING FOR ELECTION; TERM TO EXPIRE IN 2025
The Board of Directors recommends a vote FOR the election of each of the three identified nominees standing for election as directors.
Ramaco Coal Acquisition
| ● | director compensation that is required to be reported in the Company’s proxy statement under Item 402 of Regulation SK; |
DIRECTOR COMPENSATION
DIRECTOR COMPENSATION Our Compensation Committee oversees fee levels and other elements of compensation for our non-employee directors. During fiscal year 2023, Messrs. Whiting, Graney, Christian, Frischkorn and Jones and Ms. Giacometto each received $125,000 for director fees and $25,000 for committee chair fees in the form of cash, which were paid in monthly and quarterly installments, respectively. Each of these individuals also received a restricted stock award on February 20, 2023 under the LTIP of 9,588 shares of common stock, which fully vested in January 2024. All members of the Board are reimbursed for reasonable costs and expenses incurred in attending meetings of the Board. Director Compensation Table The table below and the narrative in the footnotes provide compensation amounts for our non-employee directors for fiscal year 2023 as well as additional material information in connection with such amounts.
DIRECTOR COMPENSATION
| Name | Fees Earned or Paid in Cash ($) | Stock Awards(1) ($) | Total ($) | | Richard M. Whiting | 150,000 | 101,729 | 251,729 | | Patrick C. Graney, III | 150,000 | 101,729 | 251,729 | | C. Lynch Christian, II | 150,000 | 101,729 | 251,729 | | David E. K. Frischkorn, Jr. | 150,000 | 101,729 | 251,729 | | E. Forrest Jones, Jr. | 150,000 | 101,729 | 251,729 | | Aurelia Skipwith Giacometto | 150,000 | 101,729 | 251,729 | | Bryan H. Lawrence(2) | - | - | - | | Peter Leidel(2) | - | - | - |
DIRECTOR COMPENSATION
| (1) Amounts in this column reflect the aggregate grant date fair value, computed in accordance with FASB ASC Topic 718, of restricted stock awards granted under our LTIP to certain of our non-employee directors then in office as of February 20, 2023. |
DIRECTOR COMPENSATION
| (2) Mr. Lawrence and Mr. Leidel did not receive any compensation for serving as directors of the Company during fiscal year 2023. |
Compensation Philosophy and Objectives
Compensation Philosophy and Objectives Compensation amounts historically have been determined by the Compensation Committee based on a variety of informal factors including our financial condition and available resources, our need to attract and retain executive talent and the compensation levels of our other executive officers, each as of the time of the applicable compensation decision. In making such determinations, the Compensation Committee has considered the competitive market for corresponding positions within members of our peer group, based on its general knowledge regarding the compensation provided to executive officers of such other companies in our industry through informal discussions with recruiting firms, research, personal knowledge of the competitive market as well as market data provided by our independent compensation consultant Meridian Compensation Partners, LLC (“Meridian”). As a result, our Compensation Committee does not formally benchmark executive compensation against our peer group or use a formula to set the compensation for our executives in relation to survey data. Our Compensation Committee, in consultation with Meridian, made compensation decisions for our executive officers based on the various factors and data described above and, for all Named Executive Officers other than our Chief Executive Officer, the recommendations of our Chief Executive Officer, as further described below. Our Compensation Committee believes our compensation program to be well designed to achieve the following objectives:
Compensation Committee Procedures and Role of Compensation Consultant
Compensation Committee Procedures and Role of Compensation Consultant For executive officers other than the Chief Executive Officer, the Compensation Committee receives and reviews reports and recommendations from the Chief Executive Officer regarding the performance and recommended compensation of the other executive officers of the Company, and the Compensation Committee recommends to the Board the annual compensation, including salary, incentive and equity compensation, for such officers. The Chief Executive Officer may be present during Compensation Committee discussions evaluating and setting the compensation levels of the Company’s executive officers other than for the Chief Executive Officer but may not vote on such deliberations. The Compensation Committee also annually analyzes our Chief Executive Officer’s performance and recommends to the Board his base salary, cash performance awards and grants of long-term equity incentive awards based on its assessment of his performance with input from any consultants engaged by the Compensation Committee. The Compensation Committee has met both formally and informally prior to acting to establish executive compensation. The Compensation Committee considers various items in its deliberations related to executive compensation including, without limitation, comparative compensation programs utilized by others in the industry, the importance of our executives to the ongoing success and operation of the Company and certain performance parameters related to our executives and the overall business. In order to ensure that we continue to remunerate our executives appropriately, the Compensation Committee has retained Meridian. Meridian assists the Compensation Committee by providing comparative market data on compensation practices and programs based on an analysis of peer competitors and by providing guidance on industry best practices. Meridian performs no other work for us. The Compensation Committee regularly reviews the consultant’s independence relative to key factors identified in the applicable listing standards of NASDAQ. Based on its assessment, the Compensation Committee concluded that Meridian is independent and that no conflicts of interest exist. The Compensation Committee has worked with Meridian to develop our compensation peer group, which is used in the decision-making process to determine the compensation paid to our Named Executive Officers. Our compensation peer group is primarily comprised of companies within the coal extraction industry. The coal extraction industry has unique dynamics and requires a unique set of skills and experience. Since there are a limited number of publicly-traded coal extraction companies, and to ensure a sufficient number of companies were included in our compensation peer group, the group also includes companies in other extraction industries (primarily oil and gas). Our compensation peer group was updated during 2023 and is comprised of the following companies:
Compensation Committee Procedures and Role of Compensation Consultant
| Alliance Resource Partners, L.P. | Alpha Metallurgical Resources, Inc. | | Arch Resources, Inc. | Berry Corporation | | Compass Minerals International, Inc. | CONSOL Energy Inc. | | Coronado Global Resources Inc. | Hallador Energy Company | | Peabody Energy Corporation | Piedmont Lithium Inc. | | Ring Energy, Inc. | SunCoke Energy, Inc. | | Talos Energy Inc. | Tellurian Inc. | | Warrior Met Coal, Inc. | |
Elements of Compensation
| ● | annual cash incentive awards linked to overall company and individual performance; |
Elements of Compensation
| ● | periodic grants of long-term equity-based compensation, such as restricted stock, restricted stock units and performance stock units; |
Elements of Compensation
| ● | a severance plan for certain executives, which contains termination and change of control benefits. |
Pay Mix
Pay Mix We utilize the particular elements of compensation described above because we believe that it provides a well-proportioned mix of secure compensation, retention value and at-risk compensation which produces short-term and long-term performance incentives and rewards. By following this approach, we provide the executive a measure of security in the minimum expected level of compensation, while motivating the executive to focus on business metrics that will produce a high level of short-term and long-term performance for the Company and long-term wealth creation for the executive, as well as reducing the risk of recruitment of top executive talent by competitors. The mix of metrics used for our annual cash bonus and long-term incentive program likewise provides an appropriate balance between short-term financial performance and long-term financial and stock performance. For key executives, the mix of compensation is weighted relatively evenly between short-term and long-term at-risk pay (annual target incentive cash bonus and long-term incentives). The direct compensation opportunity for the executives (base salary, annual target incentive cash bonus and annual target long-term incentive) results fundamentally in a pay-for-performance orientation, which is aligned with our stated compensation philosophy of providing compensation commensurate with performance as demonstrated in the charts below:
Base Salary
Base Salary The base salary established for each of our executive officers is intended to reflect each individual’s responsibilities, experience, prior performance and other discretionary factors deemed relevant by our Compensation Committee. Base salary is also designed to provide our executive officers with steady cash flow during the course of the fiscal year that is not contingent on short-term variations in our corporate performance. Our Compensation Committee determines market level compensation for base salaries based on our executives’ experience in the industry with reference to the base salaries of similarly situated executives in the peer group. The Compensation Committee was also informed by Meridian as to establishing base salaries for our executive officers. Base salaries for our Named Executive Officers during fiscal year 2023 were generally set at levels deemed by our Compensation Committee as necessary to attract and retain qualified individuals with superior talent commensurate with their relative expertise and prior experience. When establishing the base salaries for our Named Executive Officers for fiscal year 2023, our Compensation Committee specifically considered Meridian’s review and presentation related to the peer group, as well as each of our Named Executive Officer’s duties and responsibilities. The salary increases supported the Compensation Committee’s objective to continue to more closely align the Named Executive Officers’ cash compensation with the cash compensation paid to executives in comparable positions in the peer group, as well as significant growth in performance as it related to a meaningful year-on-year increase in both production and sales. The base salaries paid to our Named Executive Officers in fiscal year 2022 and fiscal year 2023 are set forth in the chart below.
Annual Incentive Cash Bonus
Annual Incentive Cash Bonus Our Compensation Committee has authority to award annual incentive bonuses to our Named Executive Officers. The annual cash bonuses are intended to offer incentive compensation by rewarding the achievement of corporate and individual performance objectives. For fiscal year 2023, the Compensation Committee established the target percentage amounts for the annual incentive cash bonuses for each of our Named Executive Officers, as set forth in the chart below.
Annual Incentive Cash Bonus
| Named Executive Officer | Fiscal Year 2023 Base Salary | Fiscal Year 2023 Annual Bonus Target Percentage | Fiscal Year 2023 Annual Bonus Target Amount | | Randall W. Atkins | $900,000 | 200% | $1,800,000 | | Jeremy R. Sussman | $610,000 | 150% | $915,000 | | Christopher L. Blanchard | $610,000 | 150% | $915,000 | | Jason T. Fannin | $610,000 | 150% | $915,000 | | John C. Marcum | $550,000 | 150% | $825,000 |
Annual Incentive Cash Bonus
Historically, the annual bonus was entirely discretionary, with the Compensation Committee determining an executive’s bonus amount after the end of the year taking into account the executive’s individual performance as well as Company performance. Beginning in fiscal year 2022, the Compensation Committee took a more structured approach (and more aligned with the peer group bonus practices) such that 60% of the total target bonus opportunity was based on Company performance metrics and 40% was based on individual performance (as determined by the Compensation Committee). The Company performance metrics consisted of: (i) adjusted EBITDA based against budgeted levels and adjusted for any unusual events at the Committee’s discretion, (ii) cash mine costs excluding sales related costs against budgeted levels and adjusted for any unusual events at the Committee’s discretion, (iii) safety compliance, and (iv) environmental compliance, each of which was established by the Compensation Committee to encourage our Named Executive Officers to stay focused on operational execution, balance sheet strength and environmental and safety stewardship. The following table sets forth the information regarding the Company performance metrics and actual performance for fiscal 2023.
Annual Incentive Cash Bonus
| | 2023 Performance Metrics | | | | 2023 Performance | | | | Performance Goal | Weighting | Threshold Payout (50%) | Target Payout (100%) | Maximum Payout (200%) | Performance | Payout as % of Target | Aggregate Target Bonus % Earned | | Adjusted EBITDA(1) | 25% | $206 | $258 | $310 | $186 | 0% | 0% | | Cost of Coal Sales per Ton Sold(2) | 15% | $91 | $85 | $79 | $94 | 0% | 0% | | Safety – TRIR(3) | 10% | 3.9 | 3.6 | 3.2 | 2.3 | 200% | 20.0% | | Environmental(4) | 10% | 29 | 22 | 19 | 20 | 161% | 16.1% | | Total | 60% | | | | | | 36.1% |
Annual Incentive Cash Bonus
| (1) Threshold, Target, and Maximum Adjusted EBTIDA goals were established by the Compensation Committee based on budgeted Adjusted EBITDA as of December of 2022. We believe adjusted EBITDA is useful because it allows us to more effectively evaluate our operating performance. We defined Adjusted EBITDA for this purpose as EBTIDA of $167.8M (net income ($82.3M), plus depreciation, depletion, and amortization ($54.3M), net interest expense ($8.9M), and income tax expense ($22.3M)), adjusted for stock-based compensation ($12.9M), accretion of asset retirement obligations ($1.4M) and idle mine costs ($4.0M). |
Annual Incentive Cash Bonus
| (2) Threshold, Target and Maximum Cost of Coal Sales per Ton Sold goals were established by the Compensation Committee based on budgeted Cost of Coal Sales per Ton Sold as of December of 2022. We believe this metric provides investors with useful information to enable them to compare our cash cost per ton against a similar measurement made by other publicly traded coal companies and more effectively monitor changes in coal cost from period to period, excluding the impact of transportation costs which are beyond our control. Cost of Coal Sales per Ton Sold for fiscal year 2023 was $94, and was calculated as follows: net cash cost of sales of $309.8M (calculated as cost of sales (company produced) ($469.0M) excluding (i) transportation costs ($101.6M), (ii) sale-related costs ($49.8M), (iii) idle mine costs ($4.0M), and (iv) costs related to Wyoming initiatives ($3.8)), divided by tons sold of 3.3M. |
Annual Incentive Cash Bonus
| (3) Total Recordable Incident Rate (“TRIR”) is a standard established by the Mine Safety and Health Administration and is widely used by coal companies to judge their safety performance. It is calculated as the sum of Non-Fatal Days Lost rate and No Day Lost rate. Threshold, Target, and Maximum TRIR goals were established by the Compensation Committee based on the average TRIR for 2020, 2021, and 2022. |
Annual Incentive Cash Bonus
| (4) Environmental Compliance is measured by the total number of water quality exceedances, excluding selenium (“Net Exceedances”). Threshold, Target, and Maximum Net Exceedances goals were established by the Compensation Committee based on the average Net Exceedance for 2020, 2021, and 2022. |
Annual Incentive Cash Bonus
Following the end of the year, the Compensation Committee reviewed the individual performance of the executives and determined the individual performance payout. Based on corporate and individual performance, the total annual bonus payout for fiscal year 2023 was as follows:
Annual Incentive Cash Bonus
| Named Executive Officer | Total Fiscal Year 2023 Annual Bonus Payout | Total Fiscal Year 2023 Annual Bonus Payout as % of Target | | Randall W. Atkins | $2,000,000 | 111% | | Jeremy R. Sussman | $951,600 | 104% | | Christopher L. Blanchard | $869,250 | 95% | | Jason T. Fannin | $951,600 | 104% | | John C. Marcum | $742,500 | 90% |
Long-Term Equity-Based Compensation
Long-Term Equity-Based Compensation We believe that equity-based compensation is an important component of our executive compensation program and that providing a significant portion of our executive officers’ total compensation package in equity-based compensation aligns the incentives of our executives with the interests of our shareholders and with our long-term corporate success. Additionally, we believe that equity-based compensation awards enable us to attract, motivate, retain and adequately compensate executive talent. Historically, the Compensation Committee has generally awarded time-based restricted stock awards to its executives. As part of its enhancements to the structure of the compensation program and to more closely align with peer group members, the Compensation Committee determined to award performance-based equity awards as well, and made awards in fiscal year 2023 to each of our Named Executive Officers in the form of time-based restricted stock units (“RSUs”) and PSUs granted under the Ramaco Resources, Inc. Long-Term Incentive Plan, as amended (the “LTIP”). We believe such equity awards provide executives with a significant long-term interest in our success by rewarding the creation of shareholder value over time. On February 20, 2023, the Compensation Committee granted RSUs and PSUs to each of our Named Executive Officers under the LTIP, as follows:
Long-Term Equity-Based Compensation
| Named Executive Officer | RSUs(1) | | PSUs | | | | # Shares | Grant Date Fair Value(2) | # Shares | Grant Date Fair Value(3)(4) | | Randall W. Atkins | 144,704 | $1,535,309 | 144,704 | $2,617,695 | | Jeremy R. Sussman | 65,631 | $696,345 | 65,631 | $1,187,265 | | Christopher L. Blanchard | 65,631 | $696,345 | 65,631 | $1,187,265 | | Jason T. Fannin | 64,593 | $685,332 | 64,593 | $1,168,487 | | John C. Marcum | 54,870 | $582,171 | 54,870 | $992,598 |
Long-Term Equity-Based Compensation
| (1) The RSUs vest in one-third increments on January 31, 2024, January 31, 2025, and January 31, 2026, subject to continued employment through each such vesting date. |
Long-Term Equity-Based Compensation
| (2) The grant date fair value is based on the $10.61 closing share price on the February 20, 2023 grant date. |
Long-Term Equity-Based Compensation
| (3) The grant date fair value of $18.09 per share on the February 20, 2023 grant date is valued relative to the stock price performance of the 2023 peer group companies, based on a Monte Carlo simulation. |
Long-Term Equity-Based Compensation
| (4) Does not include incremental value of $1,095,869 associated with the 2023 modification of PSUs originally granted in 2022 related to changes in the composition of the peer group as well as changes in the way relative total shareholder return is evaluated against the updated peer group (Atkins $442,595; Sussman $207,137; Blanchard $207,137; Fannin $177,037; and Marcum $61,963). |
Long-Term Equity-Based Compensation
| (5) Class B common stock awards were distributed to existing holders of stock-based awards on June 21, 2023 through a stock dividend. NEOs are entitled to 0.2 shares of Class B common stock for every share of Class A common stock that ultimately vests under the awards’ terms and conditions. No incremental value occurred under ASC 718. Class B common stock awards are not shown above. Please refer to “Outstanding Equity Awards at 2023 Fiscal Year-End” and “Options Exercised and Stock Vested in the 2023 Fiscal Year” tables later in this Proxy Statement for more information. |
Long-Term Equity-Based Compensation
The PSUs will vest and be earned, if at all, based on the Company’s total shareholder return (“TSR”) measured against our compensation peer group, as listed previously, over the three-year performance period from January 1, 2023 through December 31, 2025. The number of PSUs that vest at the end of such performance period will be determined based on the Company’s TSR relative to the TSR of the members of the peer group, with 0% of the PSUs vesting at below threshold achievement (less than the 25th percentile), 50% of the PSUs vesting at threshold achievement (25th percentile), 100% of the PSUs vesting at target achievement (50th percentile), and 200% of the PSUs vesting at maximum achievement (75th percentile or greater), with linear interpolation applied between the 25th and 75th percentiles.
Other Executive Benefits and Perquisites
| ● | short-term and long-term disability; and |
Severance and Change in Control Benefits
Severance and Change in Control Benefits We believe that a strong, experienced management team is essential to the best interests of the Company and our shareholders. We recognize that the possibility of a change in control could arise and that such a possibility could result in the departure or distraction of members of the management team to the detriment of the Company and our shareholders. We have adopted the Ramaco Resources, Inc. Change in Control and Severance Plan (the “Severance Plan”), which provides severance benefits to our Named Executive Officers who enter into participation agreements under the Severance Plan, and who are not parties to any separate individual agreement providing for severance benefits upon a termination of employment or change in control benefits (other than as provided in an equity award agreement). These benefits are enumerated and quantified in the section captioned “Potential Payments Upon Termination or a Change in Control.” The Company has not entered into employment agreements with any of its Named Executive Officers. We do not provide for excise tax gross-ups to our executive officers and do not expect to do so in the future.
Accounting for Stock-Based Compensation
Accounting for Stock-Based Compensation We follow Financial Accounting Standards Board Accounting Standards Codification Topic 718, or ASC 718, for our equity-based compensation awards. ASC 718 requires companies to calculate the grant date “fair value” of their equity-based awards using a variety of assumptions. ASC 718 also requires companies to recognize the compensation cost of their equity-based awards in their income statements over the period that an associate is required to render service in exchange for the award. Future grants of stock options, restricted stock, restricted stock units and other equity-based awards under our equity incentive award plans will be accounted for under ASC 718. The Compensation Committee regularly considers the accounting implications of significant compensation decisions, especially in connection with decisions that relate to our equity incentive award plans and programs. As accounting standards change, we may revise certain programs to appropriately align accounting expenses of our equity awards with our overall executive compensation philosophy and objectives.
Risk Assessment
Risk Assessment The Company has determined that any risks arising from its compensation programs and policies are not reasonably likely to have a material adverse effect on the Company. The Company’s compensation programs and policies mitigate risk by combining performance-based, long-term compensation elements with payouts that are highly correlated to the value delivered to shareholders. The combination of performance measures and maximum payout levels for annual bonuses and the equity compensation programs, as well as the multiyear vesting schedules for equity awards encourage employees to maintain both a short and a long-term view with respect to Company performance. Compensation Committee Report The Compensation Committee of the Board has reviewed and discussed with management the compensation discussion and analysis required by Item 402(b) of Regulation S-K. Based on the review and discussions, the Compensation Committee recommended to the Board that the compensation discussion and analysis be included in this Proxy Statement. Members of the Compensation Committee during fiscal year 2023 were:
Risk Assessment
| Name and Principal Position | Year | Salary ($) | Bonus(1) ($) | Stock Awards(2) ($) | Non-Equity Incentive Plan Compensation(3) ($) | All Other Compensation(4) ($) | Total ($) | | Randall W. Atkins(5) | 2023 | 900,000 | 800,000 | 4,595,600 | 1,200,000 | 13,200 | 7,508,800 | | Chief Executive Officer, Director and Chairman of the Board | 2022 | 850,000 | 600,000 | 3,505,571 | 900,000 | 12,200 | 5,867,771 | | | 2021 | 600,000 | 1,650,000 | 2,094,248 | | 11,600 | 4,355,848 | | Jeremy R. Sussman | 2023 | 610,000 | 380,640 | 2,090,747 | 570,960 | 13,200 | 3,665,547 | | Chief Financial Officer | 2022 | 580,000 | 313,200 | 1,640,625 | 469,800 | 12,200 | 3,015,825 | | | 2021 | 430,000 | 950,000 | 900,526 | | 11,600 | 2,292,126 | | Christopher L. Blanchard | 2023 | 610,000 | 347,700 | 2,090,747 | 521,550 | 13,200 | 3,583,197 | | Chief Operating Officer | 2022 | 580,000 | 278,400 | 1,640,625 | 417,600 | 12,200 | 2,928,825 | | | 2021 | 430,000 | 950,000 | 900,526 | | 11,600 | 2,292,126 | | Jason T. Fannin | 2023 | 610,000 | 380,640 | 2,030,856 | 570,960 | 13,200 | 3,605,656 | | Chief Commercial Officer | 2022 | 550,000 | 313,500 | 1,402,221 | 470,250 | 12,200 | 2,748,171 | | | 2021 | | | | | | | | John C. Marcum | 2023 | 550,000 | 297,000 | 1,636,732 | 445,500 | 13,200 | 2,942,432 | | Chief Accounting Officer | 2022 | 450,000 | 319,050 | 490,779 | 243,450 | 12,200 | 1,515,479 | | | 2021 | | | | | | |
Risk Assessment
| 10-K for fiscal year 2023 for a description of the valuation, and refer to the “Outstanding Equity Awards at 2023 Fiscal Year End” table below for further details regarding these awards. Amounts in this column include incremental fair value of $1,095,869 calculated under ASC 718 associated with the 2023 modification of PSUs originally granted in 2022, which was related to changes in the composition of the peer group as well as changes in the way relative total shareholder return is evaluated against the updated peer group (Atkins $442,595; Sussman $207,137; Blanchard $207,137; Fannin $177,037; and Marcum $61,963). No incremental value occurred under ASC 718 related to the distribution of Class B common stock to existing shareholders on June 21,2023. NEOs are entitled to 0.2 shares of Class B common stock for every share of Class A common stock that ultimately vests under the awards’ original terms and conditions. |
Risk Assessment
| (1) The treatment of these awards upon certain termination and change in control events is described in the “Potential Payments Upon Termination or a Change in Control” section below. |
Risk Assessment
| Benefits and Payments Upon Termination(1) | Termination by the Company Without Cause ($) | Qualifying Termination ($) | Change in Control (Without a Qualifying Termination) ($) | | Randall W. Atkins | | | | | Aggregate Cash Payment(2) | 7,227,600 | 8,577,600 | - | | Accelerated Vesting of Equity Awards(3) | 12,992,563 | 22,409,420 | 9,416,857 | | COBRA Payments(4) | 47,276 | 47,276 | - | | Jeremy R. Sussman | | | | | Aggregate Cash Payment(2) | 3,992,600 | 4,755,100 | - | | Accelerated Vesting of Equity Awards:(3) | 5,677,676 | 10,001,816 | 4,324,140 | | COBRA Payments(4) | 47,276 | 47,276 | - | | Christopher L. Blanchard | | | | | Aggregate Cash Payment(2) | 3,992,600 | 4,755,100 | - | | Accelerated Vesting of Equity Awards:(3) | 5,677,676 | 10,001,816 | 4,324,140 | | COBRA Payments(4) | 47,276 | 47,276 | - | | Jason T. Fannin | | | | | Aggregate Cash Payment(2) | 3,992,600 | 4,755,100 | - | | Accelerated Vesting of Equity Awards:(3) | 3,238,201 | 7,271,259 | 4,033,058 | | COBRA Payments(4) | 26,760 | 26,760 | - | | John C. Marcum | | | | | Aggregate Cash Payment(2) | 3,602,600 | 4,290,100 | - | | Accelerated Vesting of Equity Awards:(3) | 2,442,321 | 5,134,190 | 2,691,869 | | COBRA Payments(4) | 30,873 | 30,873 | - |
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE SCT Compared to CAP The following table compares the total compensation from the Summary Compensation Table (“SCT”) to compensation actually paid (“CAP”) for the CEO and the average CAP paid to the other non-CEO Named Executive Officers (“NEOs”) for the fiscal years ended December 31, 2020, December 31, 2021, December 31, 2022, and December 31, 2023. This table also includes, for comparative purposes, the Company’s total shareholder return (“TSR”), peer group TSR, and the Company’s net income and Adjusted EBITDA.
PAY VERSUS PERFORMANCE
| | | | | | Value of Initial Fixed $100 Investment Based On: | | | | | Year | SCT Total for PEO(1) | CAP for PEO(2) | Average SCT Total for Non- PEO NEOs | Average CAP for Non-PEO NEOs(3) | Total Shareholder Return | Peer Group Total Shareholder Return(4) | Net Income (Loss) (in millions) | Adjusted EBITDA (in millions)(5) | | 2023 | $7,508,800 | $20,071,325 | $3,449,208 | $7,873,885 | $556.16 | $170.21 | $82.3 | $186.1 | | 2022 | $5,867,771 | $(894,648) | $2,552,075 | $469,773 | $245.87 | $146.65 | $116.0 | $214.1 | | 2021 | $4,355,848 | $16,280,449 | $2,292,126 | $7,158,856 | $379.89 | $94.82 | $39.8 | $79.0 | | 2020 | $2,521,400 | $1,987,124 | $1,916,400 | $1,556,635 | $80.45 | $56.93 | $(4.9) | $18.5 |
PAY VERSUS PERFORMANCE
| (1) Mr. Atkins was our PEO for fiscal years 2023, 2022, 2021, and 2020. For fiscal year 2023 and fiscal year 2022, the non-PEO NEOs of the Company were Messrs. Sussman, Blanchard, Fannin, and Marcum. For fiscal year 2021, the non-PEO NEOs of the Company were Messrs. Blanchard and Sussman. For fiscal year 2020, the non-PEO NEOs of the Company were Messrs. Blanchard and Michael D. Bauersachs (the Former President, Chief Executive Officer and Director). |
PAY VERSUS PERFORMANCE
| (2) The following table sets forth adjustments made to the SCT Total for our PEO during each year to determine compensation actually paid, with “fair value” calculated in accordance with ASC Topic 718 as of the end of the specified period. Since the Company did not report a change in pension value for the CEO for any years reflected in the Summary Compensation Table, adjustments for pension are not needed. |
PAY VERSUS PERFORMANCE
| | 2023 | 2022 | 2021 | 2020 | | SCT Total for PEO | $7,508,800 | $5,867,771 | $4,355,848 | $2,521,400 | | (Deduct) amounts reported under “Stock Awards” Column of the SCT | $(4,595,600) | $(3,505,571) | $(2,094,248) | $(1,350,000) | | (Deduct) amounts reported under “Option Awards” Column of the SCT | $0 | $0 | $0 | $0 | | Add the fair value of awards granted in the covered year that remain outstanding and unvested as of covered year-end (a) | $10,075,729 | $1,001,859 | $6,517,569 | $1,270,587 | | Add(Subtract) change in fair value of awards granted in any prior year that remain outstanding and unvested as of the covered year-end (b) | $5,585,768 | $(4,427,167) | $7,179,141 | $(247,029) | | Add the fair value of awards granted and vested during the covered year (c) | $1,013,384 | $271,295 | $0 | $0 | | Add(Subtract) change in fair value from prior year-end to vesting date of awards granted in any prior year that vested during the covered year (d) | $40,649 | $(102,834) | $322,139 | $(207,835) | | Subtract fair value of awards granted in any prior year that were forfeited or failed to vest during the covered year | $0 | $0 | $0 | $0 | | Add dividends on unvested awards paid during the covered year | $0 | $0 | $0 | $0 | | Add incremental fair value of awards modified during the covered year | $442,595 | $0 | $0 | $0 | | CAP for PEO (e) | $20,071,325 | $(894,648) | $16,280,449 | $1,987,124 |
PAY VERSUS PERFORMANCE
| a. | For 2023, the value is based primarily on RSU and PSU awards granted on February 20, 2023 that are unvested as of December 31, 2023. In addition, 2023 includes the year-end 2023 value of $2,823,663 associated with Class B common stock awards that were distributed on June 21, 2023 as part of the Company’s equity restructuring that remain unvested as of December 31, 2023. For 2022, the value is based on RSU and PSU awards granted in February 2022 that are unvested as of December 31, 2022. For 2021, the value is based on restricted stock awards granted in February 2021 with a vesting date of June 30, 2024. For 2020, the value is based on restricted stock awards granted in February 2020 with a vesting date of June 30, 2023. Restricted stock and RSUs were valued using the year-end closing stock prices for each period. PSUs were valued using a Monte Carlo simulation performed as of December 31, 2023 and December 31, 2022. |
PAY VERSUS PERFORMANCE
| b. | For 2023, the value includes the change in fair value of Class A restricted stock awards and Class A RSUs granted in February 2021 and February 2022, respectively, with vesting dates of June 30, 2024 and December 15, 2024, respectively, as well as the change in fair value of PSUs granted in February 2022 with a potential vesting date of December 31, 2024. For 2022, the value includes the change in fair value of restricted stock awards granted in February 2020 and February 2021 with vesting dates of June 30, 2023 and June 30, 2024, respectively. For 2021, the value includes the change in fair value of restricted stock awards granted in January 2019 and February 2020 with vesting dates of June 30, 2022 and June 30, 2023, respectively. For 2020, the value includes the change in fair value of restricted stock awards granted in January 2018 and January 2019 with vesting dates of June 30, 2021 and June 30, 2022, respectively. Restricted stock and RSUs were valued using the applicable year-end closing stock price, and PSUs were valued using a Monte Carlo simulation. |
PAY VERSUS PERFORMANCE
| c. | For 2023, the value is related entirely to the vesting of Class B common stock awards that were distributed on June 21, 2023 as part of the Company’s equity restructuring. The fair value is based on the closing stock price for Class B common stock on the June 30, 2023 and December 15, 2023 vesting dates. For 2022, the value is related to RSUs that were granted in February 2022 and vested at year-end 2022. The fair value is based on the closing stock price on the vesting date. |
PAY VERSUS PERFORMANCE
| d. | For 2023, the value includes the change in fair value of 441,176 restricted shares of Class A common stock granted in February 2020 that vested on June 30, 2023 and 30,864 of Class A RSUs granted in February 2022 that vested on December 15, 2023. For 2022, the value includes the change in fair value of 228,520 restricted shares granted in January 2019 that vested on June 30, 2022. For 2021, the value includes the change in fair value of 124,378 restricted shares granted in January 2018 that vested on June 30, 2021. For 2020, the value includes the change in fair value of 144,330 restricted shares granted in previous years that vested on June 30, 2020. |
PAY VERSUS PERFORMANCE
| e. | The negative CAP for 2022 was primarily due to the decline in fair value from December 31, 2021 to December 31, 2022 of awards granted in years prior to 2022. |
PAY VERSUS PERFORMANCE
| (3) The following table sets forth adjustments made to the SCT Total during each year to determine average CAP to the Non-PEO NEOs, with “fair value” calculated in accordance with ASC Topic 718 as of the end of the specified period. Since the Company did not report a change in pension value for any of the Non-PEO NEOs for any years reflected in the Summary Compensation Table, adjustments for pension are not needed. |
PAY VERSUS PERFORMANCE
| | 2023 | 2022 | 2021 | 2020 | | Average total SCT for non-PEO NEOs | $3,449,208 | $2,552,075 | $2,292,126 | $1,916,400 | | (Deduct) amounts reported under “Stock Awards” Column of the SCT | $(1,962,270) | $(1,293,563) | $(900,526) | $(958,500) | | (Deduct) amounts reported under “Option Awards” Column of the SCT | $0 | $0 | $0 | $0 | | Add the fair value of awards granted in the covered year that remain outstanding and unvested as of covered year-end (a) | $4,158,869 | $369,685 | $2,802,552 | $902,117 | | Add(Subtract) change in fair value of awards granted in any prior year that remain outstanding and unvested as of the covered year-end (b) | $1,756,907 | $(1,239,100) | $2,912,356 | $(171,255) | | Add the fair value of awards granted and vested during the covered year (c) | $276,834 | $100,112 | $0 | $0 | | Add(Subtract) change in fair value from prior year-end to vesting date of awards granted in any prior year that vested during the covered year (d) | $31,018 | $(19,436) | $52,348 | $(132,126) | | Subtract fair value of awards granted in any prior year that were forfeited or failed to vest during the covered year | $0 | $0 | $0 | $0 | | Add dividends on unvested awards paid during the covered year | $0 | $0 | $0 | $0 | | Add incremental fair value of awards modified during the covered year | $163,319 | $0 | $0 | $0 | | Average CAP for non-PEO NEOs | $7,873,885 | $469,773 | $7,158,856 | $1,556,635 |
PAY VERSUS PERFORMANCE
| a. | For 2023, the value is based primarily on RSU and PSU awards granted on February 20, 2023 that are unvested as of December 31, 2023. In addition, 2023 includes the average year-end 2023 value of $1,017,501 associated with Class B common stock awards that were distributed on June 21, 2023 as part of the Company’s equity restructuring that remain unvested as of December 31, 2023. For 2022, the value is related to the fair value of RSU and PSU awards granted in February 2022 that are unvested as of December 31, 2022. For 2021, the value is related to the fair value of restricted stock awards granted in February 2021 with a vesting date of June 30, 2024. For 2020, the value is related to the fair value of restricted stock awards granted in February 2020 with a vesting date of June 30, 2023. Restricted stock and RSUs were valued using the year-end closing stock prices for each period. PSUs were valued using a Monte Carlo simulation performed as of December 31, 2023 and December 31, 2022. |
PAY VERSUS PERFORMANCE
| b. | For 2023, the value includes the change in fair value of Class A restricted stock awards and Class A RSUs granted in February 2021 and February 2022, respectively, with vesting dates of June 30, 2024 and December 15, 2024, respectively, as well as the change in fair value of PSUs granted in February 2022 with a potential vesting date of December 31, 2024. For 2022, the value is related to the change in fair value of restricted stock awards granted in February or April of 2020 and February 2021 with vesting dates of June 30, 2023 and June 30, 2024, respectively. For 2021, the value is related to the change in fair value of restricted stock awards granted in 2019 and 2020 with vesting dates of June 30, 2022 and June 30, 2023, respectively. For 2020, the value includes the change in fair value of restricted stock awards granted in January 2018 and January 2019 with vesting dates of June 30, 2021 and June 30, 2022, respectively. Restricted stock and RSUs were valued using the applicable year-end closing stock price, and PSUs were valued using a Monte Carlo simulation. |
PAY VERSUS PERFORMANCE
| c. | For 2023, the value is related entirely to the vesting of Class B common stock awards that were distributed on June 21, 2023 as part of the Company’s equity restructuring. The fair value is based on the closing stock price for Class B common stock on the June 30, 2023 and December 15, 2023 vesting dates. For 2022, the value is related to RSUs that were granted in February 2022 and vested at year-end 2022. The fair value is based on the closing stock price on the vesting date. |
PAY VERSUS PERFORMANCE
| d. | For 2023, the value includes the change in fair value of restricted shares of Class A common stock granted in 2020 that vested on June 30, 2023 as well as Class A RSUs granted in February 2022 that vested on December 15, 2023. For 2022, the value is related to the change in fair value of restricted shares granted in 2019 that vested on June 30, 2022. For 2021, the value is related to the change in fair value of restricted shares granted in January 2018 that vested on June 30, 2021. For 2020, the value is related to the change in fair value of restricted shares granted in previous years that vested on June 30, 2020. |
PAY VERSUS PERFORMANCE
| (4) The Company’s total shareholder return (“TSR”) is shown on a combined basis for both classes of common stock. Peer group TSR was calculated using our compensation peer group, as defined earlier in this document, which changed during 2023 primarily to increase the number of publicly-traded extraction companies. For comparison purposes, TSR under the 2022 compensation peer group was calculated as follows: $234.07 for 2023, $183.91 for 2022, $99.74 for 2021, and $52.90 for 2020. The previous peer group was made up of the following companies: Peabody Energy Corporation, Alliance Resource Partners, L.P., Alpha Metallurgical Resources, Inc., Talos Energy Inc., CONSOL Energy Inc., Arch Resources, Inc., Coronado Global Resources, Inc., Warrior Met Coal, Inc., SunCoke Energy, Inc., Berry Corporation, and Contango Oil and Gas Company (2020 only). |
PAY VERSUS PERFORMANCE
| (5) We have selected Adjusted EBITDA as our most important financial performance measure used by us to link compensation actually paid to our Named Executive Officers to Company performance for fiscal year 2023. |
PAY VERSUS PERFORMANCE
| ● | Adjusted EBITDA for 2023 is calculated as EBITDA of $167.8M (net income ($82.3M), plus depreciation, depletion, and amortization ($54.3M), net interest expense ($8.9M), and income tax expense ($22.3M)), adjusted for stock-based compensation ($12.9M), accretion of asset retirement obligations ($1.4M) and idle mine costs ($4.0M). |
PAY VERSUS PERFORMANCE
| ● | Adjusted EBITDA for 2022 is calculated as EBITDA of $194.2M (net income ($116.0M), plus depreciation, depletion, and amortization ($41.2M), net interest expense ($6.8M), and income tax expense ($30.2M)), adjusted for stock-based compensation ($8.2M), charitable contributions ($1.0M), accretion of asset retirement obligations ($1.1M) and Berwind mine idle costs ($9.5M). |
PAY VERSUS PERFORMANCE
| ● | Adjusted EBITDA for 2021 is calculated as EBTIDA of $73.2M (net income ($39.8M), plus depreciation, depletion, and amortization ($26.2M), net interest expense ($2.6M), and income tax expense ($4.6M)), adjusted for stock-based compensation ($5.3M) and accretion of asset retirement obligations ($0.6M). |
PAY VERSUS PERFORMANCE
| ● | Adjusted EBITDA for 2020 is calculated as EBTIDA of $13.7M (net loss ($-4.9M), plus depreciation, depletion, and amortization ($20.9M) and net interest expense ($1.2M), minus income tax benefit ($3.5M)), adjusted for stock-based compensation ($4.1M) and accretion of asset retirement obligations ($0.6M). |
PAY VERSUS PERFORMANCE
Comparative Disclosure The following graph sets forth the relationship between TSR and amount of compensation actually paid (CAP) to the PEO and Non-PEO NEOs for the years ended on December 31, 2023, December 31, 2022, December 31, 2021, and December 31, 2020. TSR is shown on a combined basis for both classes of common stock in 2023. The following graph sets forth the relationship between Net Income and amount of compensation actually paid (CAP) to the PEO and Non-PEO NEOs for the years ended on December 31, 2023, December 31, 2022, December 31, 2021, and December 31, 2020. The following graph sets forth the relationship between Adjusted EBITDA and amount of compensation actually paid (CAP) to the PEO and Non-PEO NEOs for the years ended on December 31, 2023, December 31, 2022, December 31, 2021, and December 31, 2020. The following graph sets forth the relationship between our TSR and our peer group TSR for the years ended on December 31, 2023, December 31, 2022, December 31, 2021, and December 31, 2020. TSR is shown on a combined basis for both classes of common stock in 2023. Financial Performance Measures The four items listed below measure the most important metrics used to link CAP to Company performance for the 2023 fiscal year as further described in the section titled “Annual Cash Incentive Bonus” of the Compensation Discussion and Analysis.
PAY VERSUS PERFORMANCE
| Most Important Performance Measures | | Adjusted EBITDA | | Cost of Coal Sales Per Ton | | Safety - TRIR | | Environmental |
PAY RATIO
PAY RATIO The following information is provided regarding the relationship of the annual total compensation of our employees and the annual total compensation of our Chief Executive Officer (“CEO”). As of December 31, 2023, we had approximately 800 employees, all of whom are in the United States. We identified our median employee for 2023 by examining the taxable wages of each individual employed by the Company as of December 31, 2023, excluding our CEO, as reported in Box 1 on Internal Revenue Service Form W-2. We did not annualize compensation of employees who were employed by us less than a full year. Upon identifying the median employee, we then calculated annual total compensation for this individual in the same manner as the total column shown for our NEOs in the “Summary Compensation Table for 2023” within this Proxy Statement. The annual total compensation of our median employee for 2023 was $120,158. As disclosed in the “Summary Compensation Table for 2023,” our CEO’s annual total compensation for 2023 was $7,508,800. Therefore, the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all other employees was 62 to 1.