UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No.)



HALLADOR ENERGY COMPANY

(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant) 







1660 Lincoln Street

Suite 2700

Denver, CO 80264

(303) 839-5504

April 12, 20172019





ToAs a shareholder of Hallador Energy Shareholders:

Notice isCompany, you are hereby given that our 2017notice of and invited to attend in person or by proxy, Hallador Energy Company’s 2019 Annual Meeting of Shareholders (the “2017“2019 Annual Meeting”). The 2019 Annual Meeting will be Thursday, May 25, 2017,held at 4:00 p.m. Eastern Daylight Time, in the Singapore Conference Room of the Conrad Hotel, 50 West Washington Street, Indianapolis,Hilton Garden Inn Terre Haute, 750 Wabash Avenue, Terre Haute, Indiana 4620447807 for the following purposes:





Only shareholders of record atThe Board has fixed the close of business on March 31, 2017 (the "Record Date") will be29, 2019, as the record date for the determination of shareholders entitled to notice of and to vote at the meeting2019 Annual Meeting and any adjournment or postponement or adjournment thereof.YOUR VOTE IS IMPORTANT. Whether or not you plan

Pursuant to attendrules adopted by the Meeting,SEC, we hope you will vote as soon as possible. You may vote byare providing access to our proxy overmaterials primarily via the Internet, or by telephone, or, if you requestedrather than mailing paper copies of the proxythese materials you can also vote by mail by following the instructions on the proxy card or voting instruction card. Voting over the Internet, by telephone or by written proxy or voting instruction card will ensure your representation at the Meeting regardless of whether you attend. In accordance with the Securities and Exchange Commission’s “notice and access” model, we are providing our Notice of Annual Meeting, Proxy Statement and annual report on Form 10-K for the year ended December 31, 2016 to you online with paper copies available, free of charge, upon request.each shareholder. On or about April 12, 2017,2019, we will beginbegan mailing a Notice of Internet Availability of Proxy Materials, detailingwhich contains instructions on how to access the proxy materials, electronically and how to submit your proxy, via the Internet. The Notice of Internet Availability of Proxy Materials also provides instructions on how toand request and obtain paper copies of the proxy materials and proxy card or voting instruction form, as applicable.materials.  We believe this process provides our shareholders with a convenient way to accessexpedites shareholders’ receipt of the proxy materials, lowers the cost of our 2019 Annual Meeting through lower printing and submit their proxies online, while allowing us to reduce ourdistribution costs, and reduces the environmental impact associated with printing a large volume of proxy materials. Your vote is important.  We urge you to review the Proxy Statement carefully and to submit your proxy or voting instructions as wellsoon as possible so that your shares will be represented at the costs of printingmeeting.

Thank you for your continued interest and distribution.support.





1660 Lincoln Street, Suite 2700, Denver, Colorado 80264









GENERAL INFORMATION ABOUT THE MEETING OF SHAREHOLDERS



This Proxy Statement is being furnished by the Board of Directors (the “Board”"Board") of Hallador Energy Company (the “Company”"Company", "Hallador", "we" or "us") to holders of our common stock in connection with the solicitation by the Board of proxies to be voted at the 20172019 Annual Meeting of Shareholders (the “Meeting”.)    The

GENERAL MEETING INFORMATION

Date and Location of Meeting

Our Meeting will be held on, May 25, 201723, 2019, at 4:00 p.m.10:30 a.m. Eastern Daylight Time, forat the purposes set forthHilton Garden Inn Terre Haute, 750 Wabash Avenue, Terre Haute, Indiana 47807, or at such other time and place if the meeting is postponed or adjourned.  References in this Proxy Statement to the 2019 Annual Meeting also refer to any adjournments, postponements or changes in time or location of the Meeting, to the extent applicable.

Who can attend the Meeting?

We invite all Hallador shareholders as of the Record Date or their named representatives and members of their immediate family to the Meeting.  We reserve the right to limit the number of representatives who may attend.  Proof of ownership and identification is required to attend the Meeting.  A recent brokerage statement or a letter from your bank or broker are examples of evidence of ownership.  Cameras, recording devices, and other electronic devices are not allowed at the Meeting. 

We ask that you RSVP to Hallador by May 17, 2019, via email to investorrelations@halladorenergy.com, attention Rebecca Palumbo or by telephone to 1-800-839-5506, ext. 316. 

What is the purpose of the Meeting?

At the Meeting, shareholders will act upon the matters outlined in the accompanying Notice"Notice of Annual Meeting, and" which appears on the cover page of this Proxy Statement.Statement, including 

DELIVERY OF THE PROXY MATERIALS



ByMailing Date

On or about April 12, 2017,2019, we will have mailed a Notice of Internet Availability of Proxy Materials (the “Notice of Availability”) to our shareholders containing instructions on how to access the proxy materials and submit your proxy online. We have made these proxy materials available to you over the Internet or, upon your request, will deliverhave delivered paper copies of these materials to you by mail, in connection with the solicitation of proxies by the Board for the Meeting. As of the Record Date, the Company's officers and directors are the record and beneficial owners of a total of 13,580,080 shares (approximately 46.17%) of the Company's outstanding common stock.  It is management's intention to vote all of its shares in the manner recommended by the Board for each matter to be considered by the shareholders.

ABOUT THE MEETING

What is the purpose of the Meeting?

At the Meeting, shareholders will act upon the matters outlined in the “Notice of Annual Meeting”, which appears on the cover page of this Proxy Statement, including

Who is entitled to vote?

Only shareholders of record at the close of business on March 31, 2017 (the “Record Date”), are entitled to receive notice of the Meeting and to vote the shares of common stock of the Company (“Common Stock”).  The holders of the Common Stock may vote on all matters presented at the Meeting and will vote together as a class.  Each outstanding share of Common Stock entitles the holder to one vote.  As of Record Date, there were 29,412,799 shares of Common Stock outstanding. 

Who can attend the Meeting?

We invite all Hallador shareholders (as of the Record Date) or their named representatives and members of their immediate family to the Meeting.  We reserve the right to limit the number of representatives who may attend.   The Meeting will begin at 4:00 p.m. EDT.  Proof of ownership and identification is required to attend the Meeting.  If your shares are held in street name by a bank or broker, you will need to bring a copy of your account statement evidencing your ownership.  We ask that you RSVP to Hallador by May 18, 2017, via email to investorrelations@halladorenergy.com, attention Rebecca Palumbo or by telephone to 1-800-839-5506, ext. 316.  Cameras, recording devices, and other electronic devices will not be permitted at the Meeting. 

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What constitutes a quorum?

Shareholders Sharing an Address

One-thirdRegistered Shareholders—Each registered shareholder (meaning you own shares in your name on the books of our transfer agent, Computershare Trust Company, N.A.) will receive one Notice of Availability, regardless of whether you have the same address as another registered shareholder.

Street Name Shareholders—If you own shares in "street name" (that is, in the name of a bank, broker or another holder of record), applicable rules permit brokerage firms and our company, under certain circumstances, to send one Notice of Availability to multiple shareholders who share the same address. This practice is known as “householding.” Householding saves printing and postage costs by reducing duplicate mailings.   If you hold your shares through a broker, you may have consented to reduce the number of copies of materials delivered to your address.  If you wish to revoke a “householding” consent you previously provided to a broker, you must contact that broker to revoke your consent. If your household is receiving multiple copies of the outstanding common shares entitledNotice of Availability and you wish to vote, represented in person or by proxy, constitutesrequest delivery of a quorum for the Meeting. single copy, you should contact your broker directly.

VOTING INFORMATION



Who is entitled to vote?

Only shareholders of record at the close of business on March 29, 2019 (the “Record Date”), are entitled to receive notice of the Meeting and to vote the shares of common stock of the Company (“Common Stock”).  The holders of the Common Stock may vote on all matters presented at the Meeting and will vote together as a class.  Each outstanding share of Common Stock entitles the holder to one vote.  As of the Record Date, there were 30,244,599 shares of Common Stock outstanding.

As of the Record Date, the Company's officers and directors are the record and beneficial owners of a total of 10,093,107 shares (33.4%) of the Company's outstanding Common Stock.  Management intends to vote all of its shares in the manner recommended by the Board for each matter to be considered by the shareholders.

What constitutes a quorum?

One-third of the outstanding common shares entitled to vote, represented in person or by proxy, constitutes a quorum for the Meeting. 

How to Votedo I vote?



Our proxy materials are available to shareholders on the Internet and by mail.  You may read, print and download our 20162018 Form 10-K, 20172019 Proxy Statement and Proxy Card at www.edocumentview.com/HNRG.http://materials.proxyvote.com/40609P.  On an ongoing basis, stockholdersshareholders may request to receive proxy materials in printed form by mail or electronically by e-mail.  You may vote your shares by the Internet, by regular mail or in person at the Meeting.  Each of these voting options is described in the Notice of Availability and the Proxy Card.



To ensure that your vote is counted at the Meeting, regardless of whether you plan to attend, you should vote by using the Internet voting option on your Proxy Card or mailing in your Proxy Card. If you return an executed Proxy Card without marking your instructions, your executed Proxy Card will be voted in accordance withby the recommendations of the Board. In connection therewith, the Board has designated Victor P. Stabio, Chairman of the Board, and Brent K. Bilsland, Chairman, President and CEO, and Lawrence D. Martin, CFO, as proxies. If you indicate a choice with respect toconcerning any matter to be acted upon on your proxy card or voting instruction card, your shares will be voted per your instructions.



Important Voting Information for Beneficial Owners.Owners



If you hold your Hallador shares are held for you in a brokerage, bank or otheranother institutional account, you are considered the beneficial owner of those shares, but not the record holder. This meansholder; meaning that you vote by providing instructions to your broker rather than directly to the Company. Unless you provide specific voting instructions, your broker is not permitted to vote your shares on your behalf.  For your vote on any other matters to be counted, you will need to communicate your voting decisions to your broker, bank or other institution before the date of the Meeting using the voting instruction form that the

institution provides to you.  If you would like to vote your shares at the meeting, you must obtain a proxy from your financial institution and bring it with you to hand in with your ballot.



What if I do not specify how my shares are to be voted?



For “Proposal No. 1 – Election of Directors,” if you submit a proxy but do not indicate any voting instructions, your shares will be voted in accordance withper the recommendations of the Company’s Board of Directors (the “Board”),Board.



For “Proposal No. 2 – Advisory Vote Approving Named Executive OfficersOfficers’ Compensation,” if you submit a proxy but do not indicate any voting instructions, your shares will be counted as a vote approving the compensation of the Company’s Named Executive Officers,Officers.

For “Proposal No. 3 –Approve Frequency of Future Say-on-Pay Votes,” if you submit a proxy but do not indicate any voting instructions, your shares will be counted as a vote in favor of holding such an advisory vote every year, and

For “Proposal No. 4 – Approval of the Amended and Restated 2008 Restricted Stock Unit Plan,” if you submit a proxy but do not indicate any voting instructions, your shares will be counted as a vote in favor of adopting the Amended and Restated 2008 Restricted Stock Unit Plan.



Can I change my vote after I return my proxy card?



Yes.  Even after you have submitted your Proxy Card, you may change your vote at any time before the proxy is exercised by filing with the Secretary of the Company at our address above either a notice of revocation or a duly executed proxy bearing a later date.  If you attend the Meeting in person, you may revoke your proxy and vote in person.

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What if other matters come up at the Meeting?



The matters described in this Proxy Statement are the only matters we know that will be voted on at the Meeting.  If other matters are properly presented at the Meeting, the proxy holders will vote your shares as they see fit.



Can I vote in person at the Meeting rather than by completing the Proxy Card?



Although we encourage you to complete and return the Proxy Card to ensure that your vote is counted, you can attend the Meeting and vote your shares in person.



How are votes counted?counted?

We will hold the Meeting if holders of one-third of the total shares of Common Stock entitled to vote either sign and return their Proxy Cards or attend the Meeting.  If you sign and return your Proxy Card, your shares will be counted to determine whether the Company has a quorum even if you abstain or fail to vote on any of the proposals listed on the Proxy Card.



Where can I find the voting results of the Annual Meeting?

We will announce the preliminary voting results at the Meeting.  The final voting results will be reported in a Current Report on Form 8-K, which we are required to file with the SEC within four business days following the Meeting.

Who pays for this proxy solicitation?



The Company will pay all the costs of solicitation, including the preparation, assembly, printing and mailing of this Proxy Statement, the Proxy Card, and any additional solicitation materials furnished to shareholders.  CopiesWe will supply copies of the solicitation materials will be furnished to brokerage houses, fiduciaries, and custodians holding shares in their names that are beneficially owned by others so that they may forward this solicitation material to such beneficial owners.  Also, the Company may reimburse such persons for their costs in forwarding the solicitation materials to such beneficial owners.  In addition to sending you these materials, some of the Company’sCompany's employees may contact you by telephone, by mail, or in person.  None of these employees will receive any extra compensation for doing this.



What vote is required to approve each item?



Election of Directors.  At the Meeting, sevensix director-nominees are standing for election to the Board.  Each director-nominee will serve on the Board until his successor is duly elected and qualified.  Director-nominees will be elected by a pluralitymajority of the votes cast by holders of the Common Stock, represented in person or by proxy at the Meeting.  ThisMeeting, which means that the director-nominees will be elected if they receive more affirmative votes cast by holders of the Company’s Common Stockfor than any other person.against his election.  A properly executed proxy marked “Withheld” with respect to"Withheld" for the election of any director-nominee will not be voted with respect tofor such director-nominee indicated, although it will be counted for purposes of determining whether there is a quorum. 

Say-on-Pay. At the Meeting, we are asking shareholders to vote to approve on an advisory basis on the compensation paid to the Named Executive Officers.  A majority of the shares of Common Stock represented at the Meeting and entitled to vote on this proposal must vote FOR the proposal to approve it. Your broker may not vote your shares on this proposal unless you give voting instructions. Broker non-votes have no effect ondo not affect the vote. Your vote will not directly affectchange 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 and Nominating Committee when considering future compensation arrangements.

Say-on-Frequencyof the say-on-pay vote. A majority of the shares of Common Stock represented at the Meeting and entitled to vote on this proposal must vote FOR the proposal to approve it. Your broker may not vote your shares on this proposal unless you give voting instructions. If no voting specification is made on a properly returned or voted proxy card, the proxies named on the proxy card will vote FOR a frequency of ONE YEAR for future advisory votes regarding executive compensation.

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Amended and Restated 2008 Restricted Stock Unit Plan.  The affirmative vote of a majority of the Common Stock represented at the Meeting and entitled to vote on this proposal must vote FOR the approval of the Amended and Restated 2008 Restricted Stock Unit Plan, in order to approve it. A properly executed proxy marked “Abstain” with respect to such matter will not be voted, although it will be counted for purposes of determining whether there is a quorum.  Accordingly, an abstention will have the effect of a negative vote. 



Other Matters. For most other matters that properly come before the Meeting, the affirmative vote of a majority of shares of Common Stock, present in person or represented by proxy and voted at the Meeting, will be required. 



PROPOSAL NO. 1: ElectionELECTION OF DIRECTORS.

At our 2018 Annual Meeting, our shareholders elected a Board of Directors.five directors.   In August 2018, we increased our board size from five to six members.



Our Boardcurrent directors are listed below and nominated for re-election at the Meeting.  Each of Directors has nominated seventhe directors for electionelected at thisthe Meeting to hold office untilwill serve a one-year term expiring at the next annual meeting of shareholders or until their successors are elected and the election of their successors.  All of the nominees currently are directors.qualified, or until he resigns or is removed.  Each agreed to be named in this proxy statement and to serve if elected.



Pursuant toUnder Hallador’s by-laws,Bylaws, in an uncontested election, directors are elected by the majoritya plurality of votes cast with respect tofor such director, meaning that the number of votes cast “for”"for" a director must exceed the number of votes cast “against”"against" that director. Your broker may not vote your shares on this proposal unless you give voting instructions.  Abstentions and broker non-votes have no effect ondo not affect the vote. Any director who receives a greater number of votes “against” his or her election than votes “for” in an uncontested election must tender his or her resignation.

We have no reason to believe that any of the nominees will be unable or unwilling for good cause to serve if elected.  However, if any nominee should become unable for any reason or unwilling for good cause to serve, the proxies may be voted for another person nominated as a substitute by the Board, or the Board may reduce the number of Directors.



Information about the Director Nominees

Below is information about each nominee, including biographical data for at least the past five years and an assessment of the skills and experience of each nominee. For the past ten years, none of the nominees have filed bankruptcy.





Our directors are appointed for a one-year term to hold office until the next Annual Meeting of Shareholders or until removed from office. Each director will hold office after the expiration of his term until his successor is elected and qualified, or until he resigns or is removed.



BRENT K. BILSLAND, Director,Chairman of the Board, President and CEO.CEO, has served on the Board since 2009.    Mr. Bilsland is our Chairman of the Board, President and CEO.   Mr. Bilsland was named ourelected Chairman of the Board in March 2018, appointed CEO onin January 24, 2014, and has been a director and our President and director since September 2009.  He has beenwas President of Sunrise Coal, LLC, our primary operating subsidiary, sincefrom July 31, 2006. Previously, Mr. Bilsland was2006 through November 2017, and Vice President of Knapper Corporation;Corporation, a family owned farming businessprivate corporation, from 1998 to 2004.  Mr. Bilsland is a graduate of Butler University located in Indianapolis, Indiana.

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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 benefitsbenefit us.  Mr. Bilsland’s personal investment in Hallador stock, combined with his wife and children, amounts to 988,283 shares in addition to his 100,000 RSUs that will lapse/vest in December 2017.  Mr. Bilsland currently serves as a director of both the National Mining Association (NMA) and the Indiana Coal Council (ICC).   In 2015 and 2016, Mr. Bilsland served as the Chairman of the ICC.

We believeIndiana Coal Council.  Mr. Bilsland’s investment in our Common Stock, combined with his wife and children, is 4.0% (1,200,969 shares).  Additionally, he has 206,250 RSUs that board members who are willing and able to have a sizable portion, or in some case a substantial portion, of their personal net worth invested in us tend to be conscientious directors.  In other words, our directors’ interests are closely aligned with our shareholders’ interests.  If our stock increases, our directors’ benefit directly and so do our other shareholders.will lapse/vest equally over the next three years beginning December 2019. 



DAVID C. HARDIE, Director,has served on the Boardsince 1989.  He is also the Chair of our board since July 1989.Audit and Compensation and Nominating committees. From July 1989 through January 2014, Mr. Hardie was our Chairman of the Board.   He is the Chairman of the Board and Chief Executive Officer of Hallador Investment Advisors Inc., which manages Hallador Cash Fund LP, Hallador Alternative Assets Fund, Moka Fund, and Hallador Balanced Fund. Mr. Hardie is andalso the Managing Member of a group of three restaurants in Sacramento, California.  He serves as a director and partner of other private entities that are owned by members of his family and also serves as Chairman of Parasol Tahoe Community Foundation.  Mr. Hardie is a graduate of California Polytechnic University, San Luis Obispo.  He also attended the Owner/President Management program offered byat the Harvard Business School.



Mr. David C. Hardie, who controls 6.0% of our Common Stock, has been a board member for the last 30 years. His significant broad experience, as well as intimate knowledge of our Company, is a tremendous benefit to us in planning and executing our corporate strategy.

STEVEN R. HARDIE, Director, has served on our boardthe Board since 1994. He is manager of NextG LLC a family investment partnership formed in 2016. For the past 3133 years, he has been a private investor and serves as director and partner of other private entities owned by members of his family.



Messrs. David andMr. Steven Hardie, have served aswho controls 5.3% of our Common Stock, has been a board membersmember for the last 2725 years. His experience and 23 years, respectively.  Both have been private investors in many companies over their careers and served on numerous boards.  At one time, the two brothers and their family owned over 50% of our stock.  Currently, the two brothers beneficially own through various entities 11.6% of our stock giving them a vested interest in monitoring the well-being of our Company, although Messrs. David and Steven Hardie disclaim any beneficial ownership of any other shares held by such entities. Their significant broad experiences, as well as intimate knowledge of our Company areadds significant benefitsvalue to usthe Board.  As with most of our other board members, he too has a significant indirect monetary investment in planningour Company and executingaccordingly has a vested interest in our corporate strategy.success.



BRYAN H. LAWRENCE, Director,has served on our boardthe Board since November 1995. Mr. Lawrence 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 Carbon Natural Gas Company, Ramaco Resources, Inc., and Star Gas,Group, L.P. (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 M.B.A. from Columbia University.  



Mr. Lawrence, who controls about 20%7.9% of our stock,Common Stock, has been a board member for the last 2124 years. He sits on numerous boards for both private and public companies that are involved in the energy business. His experience with us and in other energy companies, gives us a significant benefit. 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.



SHELDON B.DAVID J. LUBAR, Director,has served on our boardthe Board since 2008. Since 1977,August 2018.  Mr. David Lubar has been Chairman of the Boardis President and CEO of Lubar & Co. Incorporated, He began his career in 1977 at Norwest Bank (n/k/a private investmentWells Fargo Bank) in Minneapolis, where he spent six years in commercial and venture capital firm he founded. Duringcorrespondent 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 past five years, he served on the board of Approach Resources, Inc.Lubar Companies as well as Northwestern Mutual Life Insurance Co., Crosstex Energy, Inc.BMO Financial Corp., Crosstex Energy L.P.,Milwaukee Brewers Baseball Team, and several other private companies. He also serves in many community leadership positions throughout the Milwaukee area. Mr. Lubar currently serves on the boardhas a Bachelor of Star Gas Partners L.P. and on the boards of a number of private companies. Mr. Lubar holds a bachelor'sArts degree in Business Administrationfrom Bowdoin College and a law degreeMaster of Business Administration from the University of Wisconsin-Madison. He was awarded Honorary Doctorates degrees from the University of Wisconsin-Milwaukee, University of Wisconsin-Madison and the Medical College of Wisconsin.Minnesota.



5Mr. David Lubar controls 9.2% of our Common Stock and was elected to our board on August 4, 2018, to fill the board seat vacated by his father, Sheldon B. Lubar.  Mr. David Lubar has extensive public and private company board expertise in the areas of finance and private equity. His experience provides him insight from the view of an investor and board member.

Mr. Lubar, who controls 9.5% of our stock, has been on our board for nine years.  Mr. Lubar is a very successful entrepreneur and sits on numerous boards in the energy business along with Mr. Lawrence. With his 9.5% stake, he too has a vested interest in our success.

JOHN VAN HEUVELEN,CHARLES R WESLEY, IV, Director,has served on our boardthe Board since 2009. Additionally,August 2018.  Mr. Wesley has served as President of Thoroughbred Resources L.P. (a Yorktown Partners affiliate) since 2014 and CEO since 2016. Mr. Wesley served as Chief Planning and Commercial Officer of Ramaco Resources and, prior to joining Thoroughbred, Senior Director of Finance and Senior Counsel at CenturyLink (formerly Level 3 Communications), where he was also responsible for the operation and ultimate disposition of the company’s coal mining operations. Prior to CenturyLink, 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 the boardKentucky College of directorsLaw and a Bachelor of MasTec, Inc. (NYSE: MTZ), a position he has held for the last 15 years. At MasTec, Mr. Van Heuvelen is a lead director who also serves on the executive, nominating and audit committees. MasTec is a $5 billion (revenue) specialty contractorScience in the power generation and transmission industry.  Mr. Van Heuvelen is also a member of the board of directors of Orchid Island Capital (NYSE), a residential mortgage REIT. Since February 2013, Mr. Van Heuvelen has served as Orchid Island’s audit committee chairman, lead director and as a member of the compensation committee.   Mr. Van Heuvelen was formerly audit chair and chairman of the board at LifeVantage (OTC: LFVN). For the last 17 years, Mr. Van Heuvelen has been a private equity investor based in Denver, Colorado. His investment activities have included private telecom and technology firms, where he remains active.  Previously, Mr. Van Heuvelen spent 14 years with Morgan Stanley and Dean Witter Reynolds in various senior management positions in the asset management unit, investment trust, and municipal bond divisions before serving as president of Morgan Stanley Dean Witter Trust Company.

Early in his career, Mr. Van Heuvelen was actively involved in the energy business while living in Montana. Mr. Van Heuvelen’s contacts with investment banking firms will prove invaluable to us as we seek to grow our Company.

VICTOR P. STABIO, Chairman of the Board,since January 2014.  Mr. Stabio has been a director of the Company since 1991 and was our CEO and President for 23 years before stepping down in January 2014.   He has been active in oil and gas exploration and production for the past 39 years and coal mining for the past 12 years. Mr. Stabio is a director of Savoy Exploration, the general partner of Savoy Energy, LP, of which we own 30.6%.Mining Engineering from Virginia Polytechnic Institute.



Mr. Stabio hasWesley brings a personal investmentwealth of invaluable coal mining industry knowledge and experience to the Board.  His vast knowledge of the industry assists the Board in usdriving future and owns 267,776 shares of our stock,potential growth and has 80,000 Restricted Stock Units (“RSUs”) that will lapse/vest in December 2017. He has been responsible principally for our business strategy since March 1991. His industry experience and vision are a primary component of our successful operations since that time.expansion opportunities.



Officers are appointed by and serve at the discretion of the Board.

We believe that board members who are willing and able to have a sizable portion, or in some case a substantial portion, of their personal net worth invested in us tend to be conscientious directors.  In other words, our directors’ interests are closely aligned with our shareholders’ interests.  If our stock increases, our directors’ benefit directly and so do our other shareholders.  



CORPORATE GOVERNANCE

Board of Directors and its Committees

We had five Board meetings during 2016. AllEach of the board members up for re-election attended at least 75% of the Board and Committee meetings (in person or by telephone) and 100% of the Board committees on which he served during the year. Other Board actions were taken by written unanimous consent.



We do not have a specific policy regarding attendance at the annual shareholders meeting. All directors, however, are encouraged to attend if available, and we try to ensure that at least one independent director attends the annual shareholders meeting and is available to answer questions.available.  Three of our directors one of which is independent, attended our 2016 annual meeting2018 Annual Meeting of shareholders.Shareholders, two in person and one via conference call.

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The Board has an Audit Committee and a Compensation and Nominating Committee and an Executive Committee.  The current charters for the Audit Committee and the Compensation and Nominating Committee are available on our Internet website, www.halladorenergy.com. 

The Board committee members, astable below lists the directors, the committees they sit on, and the number of the date of this Proxy Statement, are identified in the following table:meetings held during 2018.



Audit Committee and Financial Expert

The Audit Committee met four times during 2016. The Audit Committee assists the Board in fulfilling its oversight responsibilities with respect to:



All Audit Committee members are “independent” as defined by the NASDAQNasdaq listing standards, including those standards applicable specifically to audit committee members.  In addition,Also, no member of the Audit Committee has served as one of our officers or employees at any time.  All members of the Audit Committee are “non-employee directors” as defined in SEC rules.

Compensation and Nominating Committee



OurThe Compensation and Nominating Committee consists of five members. It held one meetingdid not meet in 2016, and2018, but many actions were taken by unanimous written consent. The purpose of our Compensation and Nominating Committee is to:



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All Compensation and Nominating Committee members are “independent” as defined by the NASDAQNasdaq listing standards, including those standards applicable specifically to compensation committee members. In addition, no member of the Compensation Committee has served as one of our officers or employees at any time. All members of the Compensation and Nominating Committee are “non-employee directors” as defined in SEC rules.



Executive Committee



Our Executive Committee did not meet during 2016. When theIn 2018, our Board is not in session,voted to eliminate the Executive Committee has alldue to the small size of the power and authority as delegated by the Board, except with respect to:Board. 



Executive Sessions of Non-Management Directors

To promote open discussions, our non-management directors meet in executive sessions regularly.



Code of Conduct



Our Board adopted the Company’sCompany's Code of Conduct, which provides general statements of our expectations regarding ethical standards that we expect our directors, officers, and employees to adhere to while acting on our behalf. The Code of Conduct provides, among other things, that our directors, officers, and employees will: (i) comply with all laws, rules, and regulations applicable to us; (ii) avoid conflicts of interest; (iii) protect our assets and maintain our confidentiality; (iv) honestly and accurately maintain records and make required disclosures; and (v) promote ethical behavior and report violations of law, rules, regulations or the Code of Conduct.



The Code of Conduct is available on our Internet website, www.halladorenergy.com.



Criteria for Director Nominations



General criteria for the nomination of director candidates include experience and successful track record, integrity, skills, ability to make analytical inquiries, understanding of our business environment, and willingness to devote adequate time to director duties, and diversity (although no formal policy exists, considered along with the aforementioned factors), all in the context of the perceivedperceived- needs of the Board at that time. Stock ownership could also be a consideration.



Shareholder-Recommended Director Candidates



Our Board is responsible for identifying individuals qualified to become board members, and the Board selects the nominees for directorship are selected by the Board.directorship. Although the Board is willing to consider candidates recommended by our shareholders, it has not adopted a formal policy with regard toabout the consideration of any director candidates recommended by our shareholders. The Board believes that a formal policy is not necessary or appropriate because of the small size of the Board and because the current Board already has a diversity of business background and industry experience.  Our Board will consider director candidates recommended by shareholders who are highly qualified in terms of business experience and be both willing and expressly interested in serving on the Board.  Shareholders recommending candidates for consideration should send their recommendations including the candidate’s name, address, principal occupation, number of shares of common stock held by the proposed director candidate, and the recommending shareholder’s name, address and number of shares of common stock held, and any other information about the candidate’s qualifications to Hallador Energy Company, Attn:  President, 1660 Lincoln Street, Suite 2700, Denver, Colorado 80264.



When submitting a shareholder recommended board candidate, please include the candidate's name, address, principal occupation, number of shares of Common Stock held by the proposed director candidate, and the recommending shareholder's name, address, and any other information about the candidate's qualifications.

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Submissions must include sufficient biographical information concerning the recommended individual, including age, educational background, employment history for at least the past five years indicating employer’s name and description of the employer’s business, and any other biographical information that would assist the Board in determining the qualifications of the individual. The Board will consider all candidates, whether recommended by shareholders or members of management. The Board will consider recommendations received by a date not later than 120 calendar days before the date our proxy statement was released to shareholders in connection with the prior year’s annual meeting for nomination at that annual meeting. The Board will consider nominations received beyond that date at the annual meeting subsequent to the next annual meeting.

Board Leadership Structure

On March 9, 2018, our Board appointed Mr. Brent K. Bilsland to a combined role as Chairman, President and CEO after our Chairman Mr. Victor Stabio, passed on March 7, 2018.



The Board does not have a policy regarding the separation of the roles of CEO and Chairman of the Board.  Our Board as our Board believes itfeels that Mr. Bilsland is in our best interestssuited to make that determination based on our position and direction, and membership of the Board. Currently, the position of CEO and Chairman are separate, with Victor Stabio servingserve as Chairman of theand CEO.   Since we have a small Board, and Brent Bilsland serving as the CEO.directors have a significant monetary stake in the Company, they believe they can provide oversight to Mr. Bilsland's combined role.

Director Independence

As required by NASDAQNasdaq rules, the Board will evaluate the independence of its members at least annually, and at other appropriate times when a change in circumstances could potentially impact a director’s independence or effectiveness (e.g., in connection with a change in employment status or other significant events). This process is administered by our Audit Committee, which consists entirely of directors who are independent under applicable NASDAQNasdaq and SEC rules.  After considering all relevant relationships with us, the Audit Committee submits its recommendations regarding independence to the full Board, which then makes a determination with respect to each director.

In making independence determinations, our Audit Committee and Board consider relevant facts and circumstances, including

After considering the standards for independence adopted by NASDAQNasdaq and various other factors as described herein, the Board has determined that all of our current directors, other than Messrs. Stabio andMr. Bilsland, are independent.  Mr. Van Heuvelen isDavid Hardie and Mr. Charles Wesley are the only non-employee directordirectors that receivesreceive compensation from us.

DIRECTOR COMPENSATION

Mr. Van HeuvelenDavid Hardie’s compensation is paid $100,000 per year and hassolely for his role as the option to be paid in cash or shares of our stock. Since 2009, Mr. Van Heuvelen has elected to be paid in stock.Audit Committee Chairman.

Mr. Stabio earned $375,600 for director’s services. Additionally, Mr. Stabio had 80,000 restricted stock units that vested on December 16, 2016 for a gross amount of $699,200 based on a closing stock price that day of $8.74/share.

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AUDIT COMMITTEE REPORTDirector Compensation 

Audit Committee Report



The Audit Committee evaluates the performance of EKSH,Plante & Moran, PLLC (Plante Moran) including the senior audit engagement team, each year and determines whether to re-engage EKSHPlante Moran or consider other audit firms. In doing so, the Audit Committee considers the quality and efficiency of the services provided by EKSHPlante Moran, and their technical expertise, tenure as our independent auditors and knowledge of our operations and industry. Based on this evaluation, the Audit Committee decided to engage EKSHPlante Moran as our independent auditors for the year ended December 31, 2016.2018. The Audit Committee reviewed with senior members of our financial management team and EKSHPlante Moran the overall audit scope and plans, and the quality of our financial reporting. The Audit Committee has the sole authority to appoint the independent auditors.



Management has reviewed and discussed the audited financial statements in our Annual Report on Form 10-K for the year ended December 31, 2018 with the Audit Committee including a discussion of the quality, not just the acceptability, of the accounting principles, the reasonableness of significant accounting judgments and estimates, and the clarity of disclosures in the financial statements. In addressing the quality of management’smanagement's accounting judgments, members of the Audit Committee asked for management’smanagement's representations and reviewed certifications prepared by the CEO and the CFO that our unaudited quarterly and audited consolidated financial statements fairly present in all material respects, our financial condition, results of operations and cash flows, and have expressed to both management and EKSHPlante Moran their general preference for conservative policies when a range of accounting options is available.



The Audit Committee believes that, by thus focusing its discussions with EKSH,Plante Moran, it can promote a more meaningful dialogue that provides a basis for its oversight judgments.



The Audit Committee also discussed with EKSHPlante Moran those matters required to be discussedaddressed by the auditors with the Audit Committee under the rules adopted by the Public Company Accounting Oversight Board (PCAOB). The Audit Committee received the written disclosures and the letter from EKSHPlante Moran required by applicable requirements of the PCAOB regarding EKSH'sPlante Moran’s communication with the Audit Committee concerning independence and has discussed with EKSHPlante Moran their independence.



In performing all of these functions, the Audit Committee acts in an oversight capacity. The Audit Committee reviews our quarterly and annual reports on Form 10-Q and Form 10-K prior tobefore filing with the SEC. In its oversight role, the Audit Committee relies on the work and assurances of management, which has the primary responsibility for establishing and maintaining adequate internal control over financial reporting and for preparing the financial statements, and other reports, and of EKSH,Plante Moran, who are engaged to audit and report on our consolidated financial statements.



In reliance on these reviews and discussions, and the reports of EKSH,Plante Moran, the Audit Committee has recommended to the Board of Directors, and the Board has approved, that the audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2016,2018, for filing with the SEC

SEC.



MEMBERS OF THE AUDIT COMMITTEE:



John Van Heuvelen-Chairman

David C. Hardie – Chairman of the Committee

Sheldon B.Bryan H. Lawrence

David J. Lubar



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BOARD RISK OVERSIGHTBoard Risk Oversight



Our Board has ultimate responsibility for general oversight of risk management processes.  The Board receives regular reports from Mr. Bilsland on areas of risk we face. Our risk management processes are intended to identify, manage and control risks so that they are appropriate considering our scope, operations, and business objectives. The full Board (or the appropriate committee in the case of risks in areas for which responsibility has been delegated to a particular committee) engages with the appropriate members of management to enable its members to understand and provide input and oversight of our risk identification, risk management, and risk mitigation strategies. The Audit Committee also meets without management present to, among other things, discuss our risk management culture and processes.  In the event, a committee receives a report from a member of management regarding areas of risk, the Chairman of the relevant committee will report on the discussion to the full Board to the extent necessary or appropriate. This enables the Board to coordinate risk oversight, particularly with respect toconcerning interrelated or cumulative risks that may involve multiple areas for which more than one committee has responsibility.



COMPENSATION COMMITTEE RISK ASSESSMENT

The Compensation Committee reviewed and discussed an internal risk assessment of our executive and non-executive compensation programs and the outcomes of such assessment. Based on such review, the Compensation Committee believes that our compensation programs (i) do not motivate our executives or our non-executive employees to take excessive risks, (ii) are aligned with shareholders’ best interests, and (iii) are not reasonably likely to have a material adverse effect on us. Our compensation programs are designed to support, reward appropriate risk taking, and include the following:

OTHER GOVERNANCE MATTERS

Policy for Approval of Related Person TransactionsIndemnification Agreements



The Audit Committee is responsible for reviewing and approving all related person transactions in accordanceWe have entered into indemnification agreements with our written policy. Such transactions are generally reviewed before entry intodirectors and executive officers. These agreements require us to indemnify these individuals to the related person transaction. In addition, iffullest extent permitted by Colorado law against liabilities that may arise by reason of their service to us, and to advance expenses incurred as a result of any proceeding against them as to which they could be indemnified

There is currently no pending material litigation or proceeding involving any of our specifieddirectors, officers or directors becomes aware of a related party transaction that has not been previously approved or ratified, such related person transaction will be promptly submitted thereafter to the Audit Committeeemployees for its review. In reviewing a transaction, the Audit Committee considers the relevant facts and circumstances, including the benefits to us, any impact on director independence and whether the terms are consistent with a transaction available on an arms-length basis. Only those related person transactions that are determined to be in (or not inconsistent with) our best interests are permitted to be approved. No member of the Audit Committee may participate in any review of a transaction in which the member or any of his or her family membersindemnification is the related person.sought.



Good corporate governance is a priority to us. Our key governance practices are outlined in our committee charters, and Code of Conduct. These documents can be found on our website, www.halladorenergy.com by clicking on “Corporate Governance,” and are available in print to any Shareholder, without charge, upon request. Information on our website is not considered part of this Proxy Statement. The Code of Conduct applies to our directors, executive officers and our other personnel. Any updates or amendments to the Code of Conduct will be posted on the website.

The Audit Committee and Compensation and Nominating Committee of the Board are responsible for reviewing the Corporate Governance Guidelines annually and reporting and making recommendations to the Board concerning corporate governance matters.

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Shareholder Communications with our Board



We invite shareholders to send written communications to the entire Board or to individual Board members.  Please sendsubmit your letter in care of the Chairman at the address shown on the front page of this Proxy Statement.



If a shareholder communication raises concerns about management or our ethical conduct, you can report it confidentially by e-mail at http://www.openboard.info/hpco/ or by telephone to 866-229-6923.  The communications submitted through this hotline are forwarded to the Chairman of our Audit Committee and, if appropriate, the Audit Committee will take such actions as it authorizes to ensure that the subject matter is addressed by the appropriate Board committee, management and/orand by the full Board. 



If a shareholder or other interested person seeks to communicate exclusively with our non-management directors, such shareholder communication should be sent directly to the Corporate Secretary who will forward any such communications directly to the Chair of the Audit Committee.  The Corporate Secretary will first consult with and receive the approval of theMr. David C. Hardie, Chair of the Audit Committee, before disclosing or otherwise discussingat the communication with members of management or directors who are members of management.Company’s address. 

At the direction of the Board, we reserve the right to screen all materials sent to the directors for potential security risks, harassment purposes or routine solicitations. 



Shareholders have an opportunity to communicate with the Board at our Annual Meeting of Shareholders.



The Chairman shall be the spokesperson for the Board except in circumstances where the inquiry or comment is about the Chairman.  In such instances, the Chairman of the Audit Committee shall become the spokesperson.



INFORMATION ABOUT OUR NON-DIRECTOR NEO



LAWRENCE D. MARTIN, 51, CPA, becameage 53, is our Executive Vice President and Chief Financial Officer and Chief Accounting Officer in April 2016. He will continueOfficer.  In 2017 he was promoted to serve asPresident of Sunrise Coal, LLC.    Before his promotion, he was Chief Financial Officer of Sunrise Coal, LLC, our primary operating subsidiary, a position he has held for 9ten years.  Prior to his employment withBefore joining Sunrise Coal in 2007, he worked 19 years for CliftonLarsonAllen, LLP (CLA).  Mr. Martin was a Senior Manager at CLA prior to his employment with Sunrise Coal.  Mr. Martin is a graduate from Indiana State University and received his Bachelor of Science degree in Accounting in 1988. 



COMPENSATIONPROPOSAL NO. 2: ADVISORY VOTE APPROVING NAMED EXECUTIVE OFFICERS’ COMPENSATION.



Compensation Discussion and Analysis

Our program regarding compensation of our executive officers is different from many public company programs.

For the full year 2016, we had two named executive officers, our CEO and CFO. Our Board of Directors control over 46% of Common Stock. Our Compensation Committee is comprised of five directors: who collectively control 41% of our shares outstanding. They decide how the CEO should be compensated and the CEO decides how the CFO should be compensated, with approval by the Compensation Committee. Factors considered by our CEO in setting our CFO’s compensation are typically subjective, such as his perception of our CFO’s performance.

We have no employment agreements. There are no excessive perquisites such as company aircraft or car leases, or country clubs. We have no stock options. We offer no post-employment benefits other than our 401-K plan, which is available to all employees. They also participate in the same health benefit programs that are offered to all of the employees and their families.

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We do not use outside consultants to determine executive compensation. We are of the opinion that our Compensation Committee, based on their many years of business experience, has the requisite knowledge to determine our CEO’s compensation. Our compensation philosophy is quite simple. Our CEO’s base salary is set in order to provide a degree of financial certainty and stability. The primary objective of our compensation program is to align the interest of our executives with those of our shareholders. If our executive officers become wealthy, it will be primarily through their ownership in our stock, not through salaries. The granting of Restricted Stock Units is the method we use to accomplish this objective. As evidence of this philosophy, for the past three years between 42%-60% of our CEO compensation (using the W-2 Compensation) was attributable to the vesting of RSUs each year.  No additional RSUs were granted to our CEO during 2016.  In December 2017, 100,000 RSUs are expected to vest. In September 2016, our CEO sold 123,586 shares.  For the last five years, he has not sold any other shares.  Our CEO and his immediate family own 988,283 shares.

Compensation Committee Report

Our Compensation Committee has reviewed and discussed the “Compensation Discussion and Analysis” with management. Based on these reviews and discussions, the Compensation Committee recommended to the Board of Directors that the “Compensation Discussion and Analysis” be included in this Proxy Statement.

Compensation Committee Members:

David Hardie-Chairman

Steven Hardie

Bryan Lawrence

Sheldon Lubar

John Van Heuvelen

Compensation Committee Interlocks and Insider Participation

We do not have any interlocking relationships between any member of our Compensation Committee and any of our executive officers that would require disclosure.

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Named Executive Officers Compensation

Compensation paid to officers is set forth in the Summary Compensation Table below. There are no “change in control” agreements other than outstanding RSUs (see below).

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Outstanding Equity Awards at December 31, 2016

The following table sets forth information concerning the outstanding stock awards held at December 31, 2016 by the named executive officers.

(1)If the performance criteria set by the Compensation Committee is met, the RSUs will lapse/vest on December 16, 2017.

(2)Market value is calculated at the number of common shares indicated multiplied by $9.09, which was the closing price of the Company’s common shares on December 30, 2016, $9.09, as reported by the NASDAQ Stock Market.

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Restricted Stock Unit Plan and Stock Bonus Plan

At December 31, 2016, we had 733,000 RSUs outstanding and 1,146,516 available for future issuance.  Our RSU and stock option plans were approved by our Board; collectively, they and their affiliates control about 46% of our stock.  Currently, there are 1,151,016 RSUs available for future issuance.

Our stock bonus plan was authorized in late 2009 with 250,000 shares.  We did not issue any shares from the Stock Bonus Plan in 2016, and there are 86,383 shares available for future issuance.

2017 COMPENSATION TO BE PAID TO NEOS

The Compensation Committee established a performance goal of $50 million in EBITDA for 2017 for determination of the vesting/lapsing of RSUs.

The Compensation Committee is discussing new four-year RSU awards for our Chairman, President, and CFO, which is expected to be similar to our past RSU awards. This would be our third four-year plan.  The first plan was from 2010-2013.  The second was from 2014-2017 and the third would run from 2018-2021.

PROPOSAL NO. 2:  Advisory vote approving named executive officers 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 table “Summary Compensation Table”” in accordance with the compensation disclosure rules of the SEC. With regard to the issuance of the RSU awards, such RSUs will lapse/vest based on achieving the adjusted EBITDA threshold.threshold of $50 million, which is defined as EBITDA plus stock compensation and ARO accretion, less the effects of our equity method investments and Hourglass Sands.



The Board recommends that shareholders support the following resolution for the reasons described in the Compensation Discussion and Analysis and the other tables in this Proxy Statement.

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 2019 Meeting of Shareholders, pursuant to the compensation disclosure rules of the SEC, including the Compensation Discussion and Analysis section, the Summary Compensation Table and all other tabletables 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 and entitled to vote on this proposal must vote FOR the proposal to approve it. Your broker may not vote your shares on this proposal unless you give voting instructions. Broker non-votes have no effect on the vote. Your vote will not directly affect 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.

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PROPOSAL NO. 3: To approve on an advisory basis, the Say-On-Frequency vote on the compensation of the Company’s Named Executive Officers.

In accordance with Section 14A of the Exchange Act, we are asking shareholders to vote on an advisory basis on the Say-on-Frequencyof the say-on-pay vote.  Shareholders are not voting to approve the Board’s recommendation, but rather will be able to specify whether future votes should occur every one year, two years or three years.

We are asking Shareholders to vote on the following resolution:

“RESOLVED, that the Company’s shareholders advise the Company to include anon-binding,advisory vote on the compensation of the Company’s named executive officers pursuant to Section 14A of the Exchange Act every:

This advisory proposal is not binding.

A majority of the shares of Common Stock represented at the Meeting and entitled to vote on this proposal must vote FOR the proposal to approve it. Your broker may not vote your shares on this proposal unless you give voting instructions. If no voting specification is made on a properly returnedBroker non-votes do not affect the vote. Your vote will not directly change or voted proxy card,otherwise limit or enhance any existing compensation or award arrangement of any of our named executive officers, but the proxies named onoutcome of the proxy cardsay-on-pay vote will vote FOR a frequency of ONE YEAR forbe taken into account by the Compensation Committee when considering future advisory votes regarding executive compensation.compensation arrangements.



PROPOSAL NO. 4: To approve the Amended and Restated Hallador Energy Company 2008 Restricted Stock Unit Plan (the “RSU Plan”) that (i) increases the number of shares by adding 1,000,000 shares to the RSU Plan, and (ii) to extend the term until May 25, 2027.

Description of Proposed Amendment. The Board of Directors believes that the continued growth and success of the Company depends, in large part, upon its ability to provide valuable benefits to its employees. Accordingly, the Board has adopted, subject to shareholder approval, the Amended and Restated 2008 Restricted Stock Unit Plan (the “Plan”). As described in further detail below, the purpose of the amendment and restatement of the Plan is to increase the total number of shares reserved for issuance under the Plan by 1,000,000 shares, and extend the term of the Plan by ten years until May 25, 2027. The affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at the Meeting and entitled to vote on the proposal is required to approve the amendment and restatement of the Plan.

The Board believes that the amendment and restatement of the Plan, if approved by shareholders, will provide it with a sufficient number of shares reserved under the Plan for issuance for through the next five years and to continue to make the Plan a successful element of the Company’s overall compensation strategy. The Plan is considered a valuable employee benefit plan and is highly regarded by the Company’s employees. Employees are our most important resource, and the contributions of our employees are critical to our success. The Plan is designed to more closely align the interests of the Company with the employees to share in the Company’s success through the appreciation in value of such Common Stock. The Plan is an important employee retention and recruitment vehicle.

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Impact of Proposed Amendment. If the Plan amendment is approved by the Company’s shareholders, total RSUs available for issuance under the Plan will be 2,151,016. The Plan as amended would also extend the termination date of the Plan from April 1, 2018 to May 25, 2027.

Material Features of the Plan.

A description of the Plan is set forth below.

Purpose. The Company adopted the Plan on April 8, 2008 to provide its employees an opportunity to received shares of Common Stock after the RSUs vested.  The Plan is intended to benefit the Company by increasing the employee’s interest in the Company’s growth and success and encouraging employees to remain in the employ of the Company.

Administration. The Plan is administered under the direction of the Compensation Committee of the Board. The Compensation Committee has the authority to interpret the Plan to prescribe, amend and rescind rules relating to it, and to make all other determinations necessary or advisable in administering the Plan. The Company bears all costs of administering and carrying out the Plan.

Eligibility. The Plan provides that any employee of the Company, nonemployee members of the Board or the board of directors of any subsidiary, or consultants or other independent advisors who provide services to the Company or any subsidiary may participate in the Plan.

Shares Available for Issuance Under the Plan. If the amendment is approved, the number of shares of Common Stock available for issuance under the Plan will be increased by 1,000,000, thereby increasing the number of shares of Common Stock reserved for issuance over the term of the Plan to 4,850,000 shares, which includes the 3,850,000 shares originally reserved for issuance under the Plan.

RSU Awards: The Plan Administrators grant the awards.

Term. If the amendment is approved, the Plan will expire on the earlier of: (i) May 25, 2027, or (ii) the date on which all shares available for issuance have been issued as fully vested shares.

Compensation Discussion and Analysis

Our executive officer compensation program is different from many public company programs.

For 2018, we had two named executive officers, our CEO and CFO (collectively called the “NEOs”).  Our Board controls 33.4% of Common Stock, and our Compensation Committee is comprised of four directors: who together control 28.4% of our shares outstanding. The Compensation and Nominating Committee determines how the NEOs should be compensated.  

Our NEOs do not have:



Our CEO relocated from Indiana to Colorado in August 2018.  To offset the increased housing expense in Colorado, the Compensation Committee authorized a housing allowance to our CEO for a maximum of 24 months.  Such amount is grossed up for all applicable payroll taxes.



We do not use outside consultants to determine executive compensation. We believe that our Compensation and Nominating Committee, based on their many years of business experience, has the requisite knowledge to determine our NEOs compensation.



Our compensation philosophy is quite simple; the NEOs’ base salary is set to provide a degree of financial certainty and stability.  We believe if our NEOs become wealthy, it will be primarily through their ownership in our stock, not through salaries.  We believe these RSU awards that vest over time help ensure that they have a stake in the Company’s long-term success by providing an incentive to improve the overall growth, profitability, and value of our Company while aligning their interests with those of our shareholders.



As evidence of this philosophy, 46%-87% of our NEO’s compensation (using the W-2 Compensation) was attributable to the vesting of RSUs each year. 



18Our NEOs compensation was set in 2017 under the Four-Year Compensation Plan (The Four-Year Plan) and consists of three components in order of importance:

In December 2019, we expect 106,250 RSUs to vest that were awarded to our NEOs in June 2017 under The Four-Year Plan.

Ownership Policy

We have not adopted a formal stock ownership policy for our NEOs, but through the vesting of the RSUs they hold a significant portion of their wealth in our stock.

Anti-hedging/Pledging

Under our Insider Trading Policy, we prohibit insiders from purchasing any financial instrument or engaging in any other transaction, such as a prepaid variable forward contract, equity swap, collar or exchange fund, which is designed to hedge or offset any decrease in the market value of Company securities. The policy also prohibits insiders from holding Company securities in a margin account or pledging Company securities as collateral for a loan.

NAMED EXECUTIVE OFFICERS (NEOs) COMPENSATION

Compensation paid to our NEOs is outlined in the Summary Compensation Table below.  Under the approved Four-Year Compensation Plan, there is a provision for a retention bonus payable upon a change of control as discussed in the Compensation Discussion and Analysis above.

Outstanding Equity Awards at December 31, 2018

The following table sets forth information concerning the outstanding stock awards held at December 31, 2018, by the named executive officers.

Restricted Stock Unit Plan and Stock Bonus Plan

At December 31, 2018, we had 789,250 RSUs outstanding and 1,258,466 available for future issuance.  As of March 29, 2019, there are 797,250 RSUs outstanding and 1,250,466 RSUs available for future issuance.  Our stock bonus plan was authorized in late 2009 with 250,000 shares, of which 86,383 shares are available for future issuance.  We did not issue shares from the Stock Bonus Plan in 2018.

2019 COMPENSATION TO BE PAID TO NEOS

(1)Represents seven months of lease for housing that expires in 2019 and prepayment of 12-month lease expiring in 2020.

(2)The Compensation and Nominating Committee set a performance goal of $50 million in adjusted EBITDA, plus stock compensation and ARO accretion, less the effects of our equity method investments and Hourglass Sands for determination of the vesting/lapsing of RSUs.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT



The following table sets forth certain information regarding the beneficial ownership of our Common Stock as of March 31, 201729, 2019 by (i) each person who is known by us to own beneficially more than five percent of our outstanding voting stock; (ii) each of our directors; (iii) each of our executive officers; and (iv) all of our executive officers and directors as a group.  As of March 31, 2017,29, 2019, the Record Date, 29,412,79930,244,599 shares of our Common Stock were issued and outstanding. 



We do not have any RSUs that vest within 60 days from the date of this Proxy Statement.

* Indicates beneficial ownership ofOwnership is less than 1% of the total outstanding Common Stock.



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Mr. Steven Hardie’s shares include 21,489 shares beneficially owned by the Steven Robert Hardie Trust; 13,481 shares beneficially owned by the Sandra Hardie Trust; and 1,422,101 shares owned by NextG Partners, LLC, a Nevada limited liability company.  Steven Hardie is a member and manager of NextG Partners, LLC, owning 38% of its membership interests. He disclaims beneficial ownership of the other 62% of the shares held by NextG Partners or 881,703 shares

Mr. Steven Hardie is also the trustee of the Steven Robert Hardie Trust.  Mr. Steven Hardie’s spouse, Sandra Hardie, is the trustee of the Sandra W. Hardie Revocable Family Trust.  Mr. Steven Hardie disclaims any beneficial ownership in any other shares held by the above-described entities.

SECTION 16 (A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE 

Section 16(a) of the Exchange Act requires our directors and executive officers, and any persons owning more than 10% of our Common Stock, to file with the SEC initial reports of beneficial ownership and certain changes in that beneficial ownership, with respect to our equity securities. Based upon our review of these reports filed with the SEC and written representations from the reporting persons that no Form 5 was required, we believe all reports were timely filed in 2018, except for an initial report on Form 3 for Charles R. Wesley, IV for August 4, 2018, the date he became a director.  At the time the Form 3 was due, Mr. Wesley did not own any stock in our Company.

INDEPENDENT AUDITORS’ FEES AND SERVICES

Auditors

Effective October 1, 2018, EKS&H LLLP (“EKSH”), our independent registered public accounting firm combined with Plante Moran.  As a result of this transaction, on October 1, 2018, EKSH resigned as our independent registered public accounting firm.  Concurrent with EKSH’s resignation, our audit committee approved the engagement of Plante Moran as our new independent registered public accounting firm.

Our consolidated financial statements for the fiscal years ended December 31, 2018 and 2017 have been audited by Plante Moran and EKSH, respectively, each of which served as our independent registered public accounting firm for those years.

A representative from Plante Moran is not expected to attend the Meeting.  Brent Peterson age (53) is our Audit Partner, and Nathan Gordon (age 40) is the concurring partner.

Audit Fees

Audit fees for 2018 were $342,000 plus an additional $15,500 for the 401(k) audit.  Audit fees for 2017 were $338,000 plus an additional $15,000 for the 401(k) audit.

Pre-Approval Policy

The Audit Committee adopted a formal policy concerning approval of audit and non-audit services to be provided by Plante Moran and EKSH.  The policy requires that all services Plante Moran provides to us be pre-approved by the Audit Committee.  The Audit Committee approved all services provided by Plante Moran and EKSH during 2018 and 2017.

PROPOSALS BY SECURITY HOLDERS

The Board did not receive any proposals for consideration to be voted upon at the Meeting.

Other Matters

The Board does not intend to bring any other matters before the Meeting and has not been informed that any other matters are to be presented by others.

Shareholder Proposals For 2020 Annual Meeting

Any qualified shareholder desiring to have their proposal included in the 2020 Proxy Statement must submit it in writing to us no later than December 10, 2019.  The submission of a shareholder proposal does not guarantee that it will be acted upon.  

CONTACT INFORMATION

All inquiries should be addressed by mail to Hallador Energy, 1660 Lincoln Street, Suite 2700, Denver, Colorado 80264; by phone to 303-839-5504; or by e-mail at investorrelations@halladorenergy.com.