| ¨ | Fee paid previously with preliminary materials. |
| ¨ | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. |
6. | Amount Previously Paid: |
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7. | Form, Schedule or Registration Statement No.: |
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Gran Tierra Energy Inc.
300, 611-10th611-10th Avenue S.W.
Calgary, Alberta T2R 0B2 Canada
(403) 265-3221
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held On June 16, 20082009
Dear Stockholder:
You are cordially invited to attend the Annual Meetingannual meeting of Stockholdersstockholders ofGRAN TIERRA ENERGY INC., a Nevada corporation.corporation (“Gran Tierra”). The meeting will be held on Monday, Tuesday, June 16, 20082009 at 10:00 a.m. local time at 300, 611-10thLougheed House, 707 13th Avenue S.W., Calgary, Alberta T2R 0B20K8 Canada for the following purposes:
| 1. | To elect our fivethe Board’s seven nominees as directorsfor director to serve foruntil the ensuing yearnext annual meeting and until their successors are duly elected and qualified. |
| 2. | To approve an amendment to Gran Tierra’s Articles of Incorporation to increase the total authorized number of shares of common stock from 300,000,000 to 570,000,000 shares. |
2.3. | To ratify amendments to our Bylaws, as required by the Toronto Stock Exchange, which amendments enable us to comply with the listing requirements of the Toronto Stock Exchange. |
3. | To ratify the selection by the Audit Committee of the Board of Directors of Deloitte & Touche LLP as independent auditorsregistered public accounting firm of Gran Tierra Energy Inc. for its fiscal year ending December 31, 2008. 2009. |
| 4. | To conduct any other business properly brought before the meeting. |
These items of business are more fully described in the Proxy Statement accompanying this Notice.
The record date for the Annual Meetingannual meeting is April 24, 2008.20, 2009. Only stockholders of record at the close of business on that date may vote at the meeting or any adjournment thereof.
The proxy statement and annual report to stockholders are available at www.grantierra.com. |
| By Order of the Board of Directors |
| |
| /s/ Martin Eden |
| Martin Eden |
|
CALGARY, ALBERTA
April 28, 20082009
You are cordially invited to attend the meeting in person. Whether or not you expect to attend the meeting, please complete, date, sign and return the enclosed proxy, or vote over the Internet as instructed in these materials, as promptly as possible in order to ensure your representation at the meeting. A return envelope (which is postage prepaid if mailed in the United States) is enclosed for your convenience. Even if you have voted by proxy, you may still vote in person if you attend the meeting. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the meeting, you must obtain a proxy issued in your name from that record holder.
You are cordially invited to attend the meeting in person. Whether or not you expect to attend the meeting, please complete, date, sign and return the proxy mailed to you, or vote over the internet as instructed in these materials, as promptly as possible in order to ensure your representation at the meeting. A return envelope (which is postage prepaid if mailed in the United States) is enclosed for your convenience. Even if you have voted by proxy, you may still vote in person if you attend the meeting. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the meeting, you must obtain a proxy issued in your name from that record holder. |
Gran Tierra Energy Inc.
300, 611-10th611-10th Avenue S.W.
Calgary, Alberta T2R 0B2 Canada
(403) 265-3221
PROXY STATEMENT
FOR THE 20082009 ANNUAL MEETING OF STOCKHOLDERS
June 16, 20082009
QUESTIONS AND ANSWERS ABOUT THISTHESE PROXY MATERIALMATERIALS AND VOTING
Why did I receive a notice regarding the availability of proxy materials on the internet?
Why am I receiving these materials?Pursuant to rules adopted by the Securities and Exchange Commission (the “SEC”), we have elected to provide access to our proxy materials over the internet. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials (the “Notice”) to our stockholders of record. All stockholders will have the ability to access the proxy materials on the website referred to in the Notice or request to receive a printed set of the proxy materials. Instructions on how to access the proxy materials over the internet or to request a printed copy may be found in the Notice.
We have sent you this proxy statement and the enclosed proxy card because the Board of Directors (the “Board”) of Gran Tierra Energy Inc. (“Gran Tierra”) is soliciting your proxy to vote at the 2008 Annual Meeting of Stockholders. You are invited to attend the annual meeting to vote on the proposals described in this proxy statement. However, you do not need to attend the meeting to vote your shares. Instead, you may simply complete, sign and return the enclosed proxy card, or follow the instructions below to submit your proxy over the Internet.
We intend to mail this proxy statement and accompanying proxy cardthe Notice on or about May 16, 2008April 30, 2009 to all stockholders of record entitled to vote at the annual meeting.
Will I receive any other proxy materials by mail?
We may send you a proxy card, along with a second Notice, on or after May 10, 2009.
How do I attend the annual meeting?
The meeting will be held on Tuesday, June 16, 2009 at 10:00 a.m. local time at Lougheed House, 707 13th Avenue S.W., Calgary, Alberta T2R 0K8, Canada. Directions to the annual meeting may be found at www.grantierra.com. Information on how to vote in person at the annual meeting is discussed below.
Who can vote at the annual meeting?
Only stockholders of record of Gran Tierra Energy Inc., a Nevada corporation (“Gran Tierra”) at the close of business on April 24, 200820, 2009 will be entitled to vote at the annual meeting. On this record date, there were 90,831,429238,395,553 shares of common stock outstanding and entitled to vote, one share of Special A Voting Stock, and one share of Special B Voting Stock. On the record date, the share of Special A Voting Stock was entitled to 11,827,7768,254,760 votes, which equals the number of shares of common stock issuable upon exchange of exchangeable shares (the “Exchangeable Shares”) of Gran Tierra Goldstrike Inc. that were issued in connection with the transaction between the former shareholders of Gran Tierra Energy Inc., a privately-heldan Alberta corporation which we refer to as “Gran(“Gran Tierra Canada”), and Goldstrike, Inc. (the “Goldstrike Exchangeable Shares”). On the record date, the share of Special B Voting Stock was entitled to 26,882,180 votes, which equals the number of shares of common stock issuable upon exchange of exchangeable shares of Gran Tierra Exchangeco Inc. that were issued in connection with the transaction between the former shareholders of Solana Resources Limited, an Alberta corporation (“Solana”), and Gran Tierra (the “Solana Exchangeable Shares” and together with the Goldstrike Exchangeable Shares, the “Exchangeable Shares”).
StockholderStockholders of Record: Shares Registered in Your Name
If on April 24, 200820, 2009 your shares were registered directly in your name with Gran Tierra’s transfer agent, Computershare Trust Company, N.A., then you are a stockholder of record. As a stockholder of record, you may vote in person at the meeting or vote by proxy. Whether or not you plan to attend the meeting, we urge you to fill out and return the enclosed proxy cardmailed to you or vote by proxy overon the Internetinternet as instructed below to ensure your vote is counted.
Beneficial Owner: Shares Registered in the Name of a Broker or Bank
If on April 24, 200820, 2009 your shares were held, not in your name, but rather in an account at a brokerage firm, bank, dealer, or other similar organization, then you are the beneficial owner of shares held in “street name” and the Notice, and these proxy materials if you have received them, are being forwarded to you by that organization. The organization holding your account is considered to be the stockholder of record for purposes of voting at the annual meeting. As a beneficial owner, you have the right to direct your broker or other agent regarding how to vote the shares in your account. You are also invited to attend the annual meeting. However, since you are not the stockholder of record, you may not vote your shares in person at the meeting unless you request and obtain a valid proxy from your broker or other agent.
Stockholders Holding Exchangeable Shares
Holders of Goldstrike Exchangeable Shares are receiving these proxy materials which relate solely to the annual meeting of Gran Tierra and are being delivered in accordance with the provisions of the Goldstrike Exchangeable Shares and the voting exchange and support agreement dated November 10, 2005 (the “Goldstrike Voting Exchange Agreement”) among Goldstrike, 1203647 Alberta Inc., Gran Tierra Goldstrike Inc. and Olympia Trust Company (the “Goldstrike Trustee”). The Goldstrike Exchangeable Shares are the economic equivalent to the shares of common stock of Gran Tierra. In accordance with the Goldstrike Voting Exchange Agreement, holders of Goldstrike Exchangeable Shares are entitled to instruct Olympia Trust Company (the “the Goldstrike Trustee”) as to how to vote their Goldstrike Exchangeable Shares. The Goldstrike Trustee holds the one outstanding share of our Special A Voting Stock, which is entitled to as many votes as there are outstanding Goldstrike Exchangeable Shares on the record date, and may only vote the share of Special A Voting Stock as directed by the holders of Goldstrike Exchangeable Shares. Holders of Goldstrike Exchangeable Shares who do not hold their Goldstrike Exchangeable Shares in their own name are not entitled to instruct the Goldstrike Trustee as to how to exercise voting rights at the annual meeting. Only holders of Goldstrike Exchangeable Shares whose names appear on the records of Gran Tierra Goldstrike Inc. as the registered holders of Goldstrike Exchangeable Shares are entitled to instruct the Goldstrike Trustee as to how to exercise voting rights in respect of their Goldstrike Exchangeable Shares at the annual meeting. Holders of Goldstrike Exchangeable Shares may also obtain a proxy from the Goldstrike Trustee to vote their Goldstrike Exchangeable Shares at the annual meeting. Holders of Goldstrike Exchangeable Shares should follow the instructions sent to them by the Goldstrike Trustee in order to exercise their voting rights.
1Holders of Solana Exchangeable Shares are receiving these proxy materials which relate solely to the annual meeting of Gran Tierra and are being delivered in accordance with the provisions of the Solana Exchangeable Shares and the voting and exchange trust agreement dated November 14, 2008 (the “Solana Voting Exchange Agreement”) among Gran Tierra, Gran Tierra Exchangeco Inc. and Computershare Trust Company of Canada (the “Solana Trustee”). The Solana Exchangeable Shares are the economic equivalent to the shares of common stock of Gran Tierra. In accordance with the Solana Voting Exchange Agreement, holders of Solana Exchangeable Shares are entitled to instruct the Solana Trustee as to how to vote their Solana Exchangeable Shares. The Solana Trustee holds the one outstanding share of our Special B Voting Stock, which is entitled to as many votes as there are outstanding Solana Exchangeable Shares on the record date, and may only vote the share of Special B Voting Stock as directed by the holders of Solana Exchangeable Shares. Holders of Solana Exchangeable Shares who do not hold their Solana Exchangeable Shares in their own name are not entitled to instruct the Solana Trustee as to how to exercise voting rights at the annual meeting. Only holders of Solana Exchangeable Shares whose names appear on the records of Gran Tierra Exchangeco Inc. as the registered holders of Solana Exchangeable Shares are entitled to instruct the Solana Trustee as to how to exercise voting rights in respect of their Solana Exchangeable Shares at the annual meeting. Holders of Solana Exchangeable Shares may also obtain a proxy from the Solana Trustee to vote their Solana Exchangeable Shares at the annual meeting. Holders of Solana Exchangeable Shares should follow the instructions sent to them by the Solana Trustee in order to exercise their voting rights.
If on April 20, 2009 your Exchangeable Shares were held, not in your name, but rather in an account at a brokerage firm, bank, dealer, or other similar organization, then you are the beneficial owner of shares held in “street name” and the Notice, and these proxy materials if you have received them, are being forwarded to you by that organization. The organization holding your account is considered to be the stockholder of record for purposes of instructing your Trustee as to how to vote your Exchangeable Shares. As a beneficial owner, you have the right to direct your broker or other agent regarding how to instruct your Trustee as to how to vote your Exchangeable Shares.
What am I voting on?
There are three matters scheduled for a vote:
| · | Election of our five nominees asseven directors; |
| · | Approval of proposed amendment to Gran Tierra’s Articles of Incorporation to increase the authorized number of shares of common stock from 300,000,000 to 570,000,000 shares; and |
| · | Ratification of amendments to our Bylaws, which amendments enable us to comply with listing requirements of the Toronto Stock Exchange. |
· | Ratification of the selection by the Audit Committee of the Board of Directors of Deloitte & Touche LLP as our independent auditorsregistered public accounting firm of Gran Tierra for ourits fiscal year endedending December 31, 2008.2009. |
What if another matter is properly brought before the meeting?
The Board of Directors knows of no other matters that will be presented for consideration at the annual meeting. If any other matters are properly brought before the meeting, it is the intention of the persons named in the accompanying proxy to vote on those matters in accordance with their best judgment.
How do I vote?
You may either vote “For” all the nominees to the Board of Directors or you may “Withhold” your vote for any nominee you specify. For each of the other matters to be voted on, you may vote “For” or “Against” or abstain from voting. The procedures for voting are as follows:
StockholderStockholders of Record: Shares Registered in Your Name
If you are a stockholder of record, you may vote in person at the annual meeting, vote by proxy usingon the enclosed proxy cardinternet, or vote by proxy on the Internet.using a proxy card that you may request or that we may elect to deliver at a later time. Whether or not you plan to attend the meeting, we urge you to vote by proxy to ensure your vote is counted. You may still attend the meeting and vote in person even if you have already voted by proxy.
| Ø | To vote in person, come to the annual meeting and we will give you a ballot when you arrive. |
| Ø | To vote using the proxy card, simply complete, sign and date the enclosed proxy card that may be delivered and return it promptly in the envelope provided. If you return your signed proxy card to us by 11:59 p.m. Mountain Time on June 15, 2008,2009, we will vote your shares as you direct. |
| Ø | To vote on the Internet,internet, go to http://www.proxyvote.com to complete an electronic proxy card.You will be asked to provide the company number and control number from the enclosed proxy card.Notice. Your vote must be received by 11:59 p.m. Mountain Time on June 15, 20082009 to be counted. |
Beneficial Owner: Shares Registered in the Name of a Broker or Bank
If you are a beneficial owner of shares registered in the name of your broker, bank, or other agent, you should have received a proxy card andNotice containing voting instructions with these proxy materials from that organization rather than from Gran Tierra. Simply follow the voting instructions in the Notice to ensure that your vote is counted. If you have received these proxy materials and a proxy card and voting instructions therein, simply complete and mail the proxy card to ensure that your vote is counted. Alternatively, you may vote over the Internetinternet as instructed by your broker or bank. To vote in person at the annual meeting, you must obtain a valid proxy from your broker, bank, or other agent. Follow the instructions from your broker or bank included with these proxy materials, or contact your broker or bank to request a proxy form.
Beneficial Owner: Exchangeable Shares
If you are a holder of Goldstrike Exchangeable Shares, you should have received voting instructions with these proxy materials from the Goldstrike Trustee, which is the holder of the share of Special A Voting Stock. Follow the instructions from the Goldstrike Trustee, or contact the Goldstrike Trustee for further information. Instruments of proxy must be received by Olympia Trust Company, 2300, 125 - 9th Avenue S.E., Calgary, Alberta, T2G OP6, Canada by 4:3011:59 p.m. Mountain DaylightEastern Time on June 11, 2008,2009, or not less than 48 hours before the time for the holding of or any adjournment of the annual meeting.
If you are a holder of record of Solana Exchangeable Shares, you should have received voting instructions with these proxy materials from the Solana Trustee, which is the holder of the share of Special B Voting Stock. Follow the instructions from the Solana Trustee, or contact the Solana Trustee for further information. Instruments of proxy must be received by Computershare Trust Company of Canada, 600, 530 - 8th Avenue SW Calgary, Alberta T2P 3S8, Canada, by 11:59 p.m. Eastern Time on June 11, 2009, or not less than 48 hours before the time for the holding of or any adjournment of the annual meeting.
If you are a beneficial owner of Exchangeable Shares registered in the name of your broker, bank, or other agent, you should have received a Notice containing voting to allow you to vote your shares on-line, with procedures designedinstructions from that organization rather than from Gran Tierra. Simply follow the voting instructions in the Notice to ensure the authenticity and correctness ofthat your proxy vote instructions. However, please be aware that you must bear any costs associated with your Internet access, such as usage charges from Internet access providers.is counted.
We provide internet proxy voting to allow you to vote your shares online, with procedures designed to ensure the authenticity and correctness of your proxy vote instructions. However, please be aware that you must bear any costs associated with your internet access, such as usage charges from internet access providers. |
How many votes do I have?
On each matter to be voted upon, you have one vote for each share of common stock you own as of April 24, 2008,20, 2009, and one vote for each Exchangeable Share held as of April 24, 2008,20, 2009, all of which are represented by the one share of Special A Voting Stock and one share of Special B voting Stock of Gran Tierra. Holders of Goldstrike Exchangeable Shares should follow the instructions sent to them by the Goldstrike Trustee and holders of Solana Exchangeable Shares should follow the instructions sent to them by the Solana Trustee in order to exercise their respective voting rights.
What if I return a proxy card or otherwise vote but do not make specific choices?
If you return a signed and dated proxy card or otherwise vote without marking any voting selections, your shares will be voted, as applicable, “For” the election of all fiveseven nominees for director, “For” the ratificationapproval of the amendmentsamendment to the Bylaws,Articles of Incorporation, and “For” the ratification of the selection of Deloitte & Touche LLP as the independent auditors for our fiscal year ended December 31, 2008.2009. If any other matter is properly presented at the meeting, your proxyholder (one of the individuals named on your proxy card) will vote your shares using his or her best judgment.
What if I am a holder of Exchangeable Shares and return a voting election but do not make specific choices?
If you return a signed and dated voting election without marking voting selections, your shares will not be voted.
Who is paying for this proxy solicitation?
We will pay for the entire cost of soliciting proxies.In addition to these mailed proxy materials, our directors and employees may also solicit proxies in person, by telephone, or by other means of communication.Directors and employees will not be paid any additional compensation for soliciting proxies.proxies, but the Altman Group will be paid its customary fee of approximately $5,500 plus out-of-pocket expenses if it solicits proxies for Gran Tierra. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.
What does it mean if I receive more than one Notice or more than one set of proxy card?materials?
If you receive more than one Notice or more than one set of proxy card,materials, your shares aremay be registered in more than one name or are registered in different accounts.Please complete, sign and return eachfollow the voting instructions on the Notices or the instructions on the proxy cardcards in the proxy materials to ensure that all of your shares are voted.
Can I change my vote after submitting my proxy?
Yes.You can revoke your proxy at any time before the final vote at the meeting.If you are the record holder of your shares, you may revoke your proxy in any one of threethe following ways:
| Ø | You may submit another properly completed later-dated proxy card with a later date, or vote again over the internet; |
| Ø | You may send a timely written notice that you are revoking your proxy to Gran TierraTierra’s Secretary at 300, 611-10thth Avenue, S.W., Calgary, Alberta, Canada, T2R 0B2, attention: Secretary;Canada; or |
| Ø | You may attend the annual meeting and vote in person.Simply attending the meeting will not, by itself, revoke your proxy. |
Your most current proxy card or internet proxy is the one that is counted.
If your shares are held by your broker or bank as a nominee or agent, you should follow the instructions provided by your broker or bank.
If you are a holder of Goldstrike Exchangeable Shares, you should follow the instructions provided by the Trustee.Goldstrike Trustee with respect to the Goldstrike Exchangeable Shares you hold, and if you are a holder of Solana Exchangeable Shares, you should follow the instructions provided by the Solana Trustee with respect to the Solana Exchangeable Shares you hold.
When are stockholder proposals due for next year’s annual meeting?
ToIf you wish to submit a proposal to be considered for inclusion in next year’sGran Tierra’s proxy materials next year, your proposal must be submitted in writing by January 16,December 31, 2009 to Martin Eden at 300, 611-10th Avenue, S.W., Calgary, Alberta, Canada, T2R 0B2;0B2, Canada; provided, however, that if our 20092010 annual meeting of stockholders is held before May 17, 20092010 or after July 16, 2009,2010, then the deadline is a reasonable amount of time prior to the date we begin to print and mail our proxy statement for the 20092010 annual meeting of stockholders.If you wish to submit a proposal that is not to be included in next year’sGran Tierra’s proxy materials next year or to nominate a director next year, you must do so between March 18, 20092010 and April 17, 2009,2010, unless our 20092010 annual meeting of stockholders is not held between May 17, 20092010 and July 16, 2009,August 15, 2010, in which case notice must be received between 60delivered to Gran Tierra not earlier than the 90th day prior to the meeting and 90 daysnot later than the later of the 60th day prior to the meeting or no later than the date10th day following the day on which is ten days after noticeGran Tierra makes its first public announcement of the meeting is first published by Gran Tierra.date. You are also advised to review our Bylaws, which contain additional requirements about advance notice of stockholder proposals and director nominations.
How are votes counted?
Votes will be counted by the inspector of election appointed for the meeting, who will separately count “For” and “Withhold” and, with respect to proposals other than the election of directors, “Against” votes, abstentions and broker non-votes. BrokerAbstentions and broker non-votes and abstentions have no effect and will not be counted towards the vote total for any proposal.
proposal except for Proposal 2. For Proposal 2, abstentions and broker non-votes will have the same effect as “Against” votes.
What are “broker non-votes”?
Broker non-votes occur when a beneficial owner of shares held in “street name” does not give instructions to the broker or nominee holding the sharesas to how to vote on matters deemed “non-routine.” Generally, if shares are held in street name, the beneficial owner of the shares is entitled to give voting instructions to the broker or nominee holding the shares.If the beneficial owner does not provide voting instructions, the broker or nomineecan still vote the shares with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters. Under the rules and interpretations of the New York Stock Exchange (“NYSENYSE”), “non-routine” matters are generally those involving a contest or a matter that may substantially affect the rights or privileges of shareholders, such as mergers or shareholder proposals.
How many votes are needed to approve each proposal?
| Ø | For the election of our five nominees as directors, the fiveseven nominees receiving the most “For” votes (from the holders of votes of shares present in person or represented by proxy and entitled to vote on the election of directors) will be elected.Only votes “For” or “Withheld” will affect the outcome. outcome; |
| Ø | To be approved, Proposal 2, the ratificationamendment to Gran Tierra’s Articles of amendmentsIncorporation to increase the Bylaws,number of shares of Gran Tierra’s common stock authorized for issuance, must receive more “For” votes than “Against” votes. Brokerfrom the holders of shares of Gran Tierra’s common stock, Goldstrike Exchangeable Shares, and Solana Exchangeable Shares entitling them to exercise at least a majority of the combined voting power of the total number of outstanding shares of Gran Tierra’s common stock, Goldstrike Exchangeable Shares, and Solana Exchangeable Shares. As a result, abstentions and broker non-votes and abstentions will have no effect.the same effect as “Against” votes; and |
| Ø | To be approved, Proposal 3, the ratification of the selection by the Audit Committee of the Board of DeloitteDeloitee & Touche LLP as our independent auditors for our fiscal year ended December 31, 2008,2009, must receive more “For” votes than “Against” votes. Brokervotes. Abstentions and broker non-votes and abstentions will have no effect. |
What is the quorum requirement?
A quorum of stockholders is necessary to hold a valid meeting.A quorum will be present if stockholdersholding outstanding shares of Gran Tierra’s capital stock representing at least a majority of the outstanding sharestotal number of votes are present at the meeting in person or represented by proxy.On April 24, 2008, the record date, there were 102,659,205238,395,553 votes that could be cast. Those votes were represented by 203,258,613 shares of common shares (including 11,827,776stock outstanding and entitled to vote and 35,136,940 shares of common stock issuable upon exchange of the Exchangeable Shares and therefore entitled to vote through the one share of Special A Voting Stock) outstandingStock and entitled to vote.one share of Special B Voting Stock. Thus, the holders of 51,329,603outstanding shares of common stock (including the Exchangeable Shares)representing at least 119,197,777 votes must be present in person or represented by proxy at the meeting or by proxy to have a quorum.
Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you vote in person at the meeting.Abstentions and broker non-votes will be counted towards the quorum requirement.If there is no quorum, the Chairman of the meeting or the holders of a majority of shares present at the meeting in person or represented by proxy must adjourn the meeting to another date.
How can I find out the results of the voting at the annual meeting?
Preliminary voting results will be announced at the annual meeting.Final voting results will be published in our Quarterly Reportquarterly report on Form 10-Q for the second quarter ending June 30, 2008.2009.
What proxy materials are available on the internet?
The proxy statement and annual report to stockholders are available at www.grantierra.com.
Proposal 1
Election Of Directors
ELECTION OF DIRECTORS
Proposal 1 is to elect our five nominees as directors. Gran Tierra’s Board of Directors consists of fiveseven directors. There are fiveseven nominees for director this year.Each director to be elected and qualified will hold office until the next annual meeting of stockholders and until his or her successor is elected, or, if sooner, until the director’s death, resignation or removal.Each of the nominees listed below, except for Mr. Price and Mr. Antony, is currently a director of Gran Tierra. Dana Coffield, Jeffrey Scott, Walter Dawson,Tierra who was previously elected by the stockholders. Pursuant to the terms of the Arrangement Agreement, dated July 28, 2008 and Verne Johnson were founding shareholders oflast amended on October 9, 2008, by and between Gran Tierra, Canada. Nicholas Kirton was recommendedGran Tierra Exchangeco Inc., and Solana (the “Arrangement Agreement”), Mr. Price and Mr. Antony were designated to serve on Gran Tierra’s Board of Directors, effective November 14, 2008. Prior to the Board by Verne Johnson.Arrangement Agreement, Mr. Price was Solana’s President, Chief Executive Officer, and a member of Solana’s board of directors, and Mr. Antony was the Chairman of Solana’s board of directors. It is Gran Tierra’s policy to invite nominees for directordirectors to attend the annual meeting. Four out of five of the then current directors attended the 2008 Annual Meeting of Stockholders.
Directors are elected by a plurality of the votes of the holders of shares present in person or represented by proxy and entitled to vote on the election of directors.The fiveseven nominees receiving the highest number of affirmative votes will be elected. Shares represented by executed proxies will be voted, if authority to do so is not withheld, for the election of the fiveseven nominees named below.If any nominee becomes unavailable for election as a result of an unexpected occurrence, your shares will be voted for the election of a substitute nominee proposed by Gran Tierra. Each person nominated for election has agreed to serve if elected. OurGran Tierra’s management has no reason to believe that any nominee will be unable to serve.
NOMINEESNominees
The following is a brief biography of each director and each nominee for director as of April 24, 2008:and his age on February 15, 2009.
Executive Officers and Directors | | | | Position Held With Gran Tierra |
| | | | |
| Dana Coffield | | 50 | | President and Chief Executive Officer; Director |
| Jeffrey Scott | | 4546 | | Chairman of the Board of Directors |
| Ray Antony | | 56 | | Director |
| Walter Dawson | | 68 | | Director |
| Verne Johnson | | 64 | | Director |
| Nicholas G. Kirton | | 6364 | | Director |
| J. Scott Price | | 46 | | Director |
Dana Coffield, President, Chief Executive Officer and Director.
Before joining Gran Tierra as President, Chief Executive Officer and a Director in May 2005, Mr. Coffield led the Middle East Business Unit for EnCana Corporation, North America’s largest independent oil and gas company, from 2003 through 2005. His responsibilities included business development, exploration operations, commercial evaluations, government and partner relations, planning and budgeting, environment/health/safety, security and management of several overseas operating offices. From 1998 through 2003, he was New Ventures Manager for EnCana’s predecessor — AEC International — where he expanded activities into five new countries on three continents. Mr. Coffield was previously with ARCO International for ten years, where he participated in exploration and production operations in North Africa, SE Asia and Alaska. He began his career as a mud-logger in the Texas Gulf Coast and later as a Research Assistant with the Earth Sciences and Resources Institute where he conducted geoscience research in North Africa, the Middle East and Latin America. Mr. Coffield has participated in the discovery of over 130,000,000 barrels of oil equivalent reserves. Mr. Coffield graduated from the University of South Carolina with a Masters of Science degree and a doctorate (PhD) in Geology, based on research conducted in the Oman Mountains in Arabia and Gulf of Suez in Egypt, respectively. He has a Bachelor of Science degree in Geological Engineering from the Colorado School of Mines. Mr. Coffield is a member of the AAPG and the CSPG, and is a Fellow of the Explorers Club.
Jeffrey Scott, Chairman of the Board of Directors.
Mr. Scott has served as Chairman of our Board since January 2005. Since 2001, Mr. Scott has served as President of Postell Energy Co. Ltd., a privately held oil and gas producing company. He has extensive oil and gas management experience, beginning as a production manager of Postell Energy Co. Ltd in 1985 advancing to President in 2001. Mr. Scott is also currently a Director of Saxon Energy Services, Inc., Suroco Energy, Inc., an oil and gas company where he is also President and Chief Executive Officer, VGS Seismic Canada Inc., Essential Energy Services Trust, and Galena Capital Corp., all of which are publicly traded companies.companies, and Tuscany International Drilling Inc., a private company. Mr. Scott holds a Bachelor of Arts degree from the University of Calgary, and a Masters of Business Administration from California Coast University.
Ray Antony, Director.
Mr. Antony has served as a director since November 14, 2008 when he was designated by Solana to serve on the Board of Gran Tierra pursuant to the Arrangement Agreement, which resulted in Solana’s combination with Gran Tierra. Prior to the combination, Mr. Antony was the Chairman of Solana’s board of directors. Mr. Antony has been a Chartered Accountant for more than thirty years. Mr. Antony is currently an independent business man. From January 2004 to September 2006, Mr. Antony was the President of Breakside Energy Ltd., a private oil and gas exploration and production company. Prior to that time, Mr. Antony was President of Resolution Resources Ltd., a public oil and gas exploration and production company starting October 2001. Mr. Antony has obtained significant financial experience and exposure to accounting and financial issues as a director and audit committee member of a number of public companies including Eaglewood Energy Ltd., Sienna Gold Inc., Canyon Services Group Inc., Cobalt Energy Ltd., Birch Lake Capital Inc., Paramax Resources Ltd. and Rich Minerals Corporation. These companies have operations in various areas and include international operations in Argentina, Papua New Guinea and Peru.
Walter Dawson, Director.
Mr. Dawson has served as a director since January 2005. Mr. Dawson is the Chairman and CEO of Tuscany International Drilling Inc., a private oilfield services company. Mr. Dawson was the founder of Saxon Energy Services Inc. (“Saxon”), an international oilfield services company that has beenwhich was a publicly traded company sincefrom 2001, and currently serves aswas Chairman of the board of directors of Saxon.Saxon, prior to its sale in 2008. Before his time at Saxon, Mr. Dawson served for 19 years as President, Chief Executive Officer and a director and founded what became known asof Computalog Gearhart Ltd., which is now an operating division of Precision Drilling Corp.Weatherford. Computalog’s primary businesses arewere oil and gas logging, perforating, directional drilling and fishing tools. While at Computalog, Mr. Dawson instituted a technology center, at Computalog, located in Fort Worth, Texas, a developer ofto develop electronics designed to developfor downhole wellbore logging tools. In 1993 Mr. Dawson founded what became known as Enserco Energy Services Company Inc., formerly Bonus Resource Services Corp. Enserco entered the well servicing businesses through the acquisition of over 26 independent Canadian service rig operators. Mr. Dawson is currently Chairman and a director of VGS Seismic Canada Inc., and a director of Suroco Energy Inc. and Action Energy Inc. (formerly High Plains Energy Inc.), and was a director of Suroco Energy Inc. until April 7, 2009 when he resigned, all of which are publicly traded companies. Mr. Dawson is the sole owner and President of Perfco Investments, Ltd., an investment company.
Verne Johnson, Director.
Mr. Johnson has served as a director since AprilJanuary 2005. Starting with Imperial Oil Limited in 1966, he has spent his entire career in the petroleum industry, primarily in western Canada, contributing to the growth of oil and gas companies of various sizes. He worked with Imperial Oil Limited until 1981 (including two years with Exxon Corporation in New York from 1977 to 1979). From 1981 to 2000,2002, Mr. Johnson served in senior capacities with various companies, such asachieving the positions of President of Paragon Petroleum Ltd., ELAN Energy Inc., Ziff Energy Group and Enerplus Resources Group. He was President and Chief Executive OfficerCEO of ELAN Energy Inc., President of Paragon Petroleum and Senior Vice President of Enerplus Resources Group until February 2002.Group. Mr. Johnson retired in February 2002. Mr. Johnson is a director of Fort Chicago Energy Partners LP, Harvest Energy Trust, Essential Energy Services Trust, and Suroco Energy Inc., all publicly traded companies. Mr. Johnson received a Bachelor of Science degree in Mechanical Engineering from the University of Manitoba in 1966. He is currently president of his private family company, KristErin EnergyResources Inc.
Nicholas G. Kirton
Mr. Kirton has served as a director since March 27, 2008. Mr. Kirton is a Chartered Accountant and former KPMG partner who retired in 2004 after a thirty-eight year career at KPMG. He is currently sits on the boards of directorsa director of Canexus Income Fund, Innicor Subsurface TechnologiesGrand Cache Coal Corporation, Result Energy Inc., and Result Energy Inc.the Canadian Investor Protection Fund. In addition, he is a member of the Board of Governors and Audit Committee Chair of the University of Calgary and is a member of the Education and Qualifications Committee of the Canadian Institute of Chartered Accountants. Mr. Kirton received a Bachelor of Science (Mathematics and Physics) in 1966 from Bishop's University, his Chartered Accountant designation in Quebec in 1969 and was named a Fellow of the Institute of Chartered Accountants (FCA) in Alberta in 1996, and in 2006 received the designation of ICD.D from the Institute of Corporate Directors.
J. Scott Price
Mr. Price has served as a director since November 14, 2008, when he was designated by Solana to serve on the Board of Gran Tierra pursuant to the Arrangement Agreement, which resulted in Solana’s combination with Gran Tierra. From October 2006 to November 14, 2008, he was the President and CEO of Solana. From January 2004 to October 2006, he was Founder, President and CEO of Breakaway Energy, Inc., a private international resource company, which was taken over by Solana. From May 2005 to the present, he has also been co-founder and non-executive Chairman of Virgin Resources, a private oil and gas exploration company focused on the Middle East. From May 2003 to the present, Mr. Price has been Founder, President and CEO of Prospect International Inc., a private investment company and is currently President of PASS Resources Inc., also a private company. Mr. Price is a director of the public company Birch Lake Capital Inc. Mr. Price has 24 years of diverse global oil and gas experience in North and South America, Europe, Africa, Middle East and the former Soviet Union. Mr. Price holds a Bachelor of Science degree in Chemical Engineering and a Masters of Business Administration both from the University of Calgary.
On February 6, 2009, Mr. Jeffrey Scott and Mr. Walter Dawson entered into a settlement with the Alberta Securities Commission (the “ASC”) under which each admitted to incomplete disclosure of oil and gas production numbers in press releases of High Plains Energy, of which they were non-management members of the board of directors. Mr. Scott and Mr. Dawson each agreed to pay to the ASC Canadian $20,000 in settlement and Canadian $5,000 towards investigation costs.
Our above-listed officers and directors have neither been convicted in any criminal proceeding during the past five years nor been parties to any judicial or administrative proceeding during the past five years that resulted in a judgment, decree or final order enjoining them from future violations of, or prohibiting activities subject to, federal or state securities laws or a finding of any violation of federal or state securities law or commodities law. Similarly, no bankruptcy petitions have been filed by or against any business or property of any of our directors or officers, nor has any bankruptcy petition been filed against a partnership or business association in which these persons were general partners or executive officers.
THE BOARD OF DIRECTORS RECOMMENDSThe Board Of Directors Recommends
A VOTE IN FAVOR OF EACH NAMED NOMINEE.Vote In Favor Of Each Named Nominee.
INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCEinformation regarding the board of directors and corporate governance
INDEPENDENCE OF THE BOARD OF DIRECTORSIndependence of The Board of Directors
Gran Tierra follows the NASDAQ Stock Market (“NASDAQ”) listing standards even though its common stock is not listed on NASDAQ and, withof the listing of our common stock on the American Stock Exchange (“AMEX”) on April 8, 2008, we follow the AMEX listing standards.NYSE Amex. As required under the NASDAQ and AMEXNYSE Amex listing standards, a majority of the members of a listed company’s board of directors must qualify as “independent,” as affirmatively determined by the board of directors. TheGran Tierra’s Board of Directors consults with Gran Tierra’s counsel to ensure that the Board’s determinations are consistent with relevant securities and other laws and regulations regarding the definition of “independent,” including those set forth in the NASDAQ and AMEXNYSE Amex listing standards, as in effect from time to time.
Consistent with these considerations, after review of all relevant identified transactions or relationships between each director, or any of his or her family members, and Gran Tierra, its senior management and its independent auditors, the Board has affirmatively determined that the following foursix of our fiveseven directors are independent directors within the meaning of Rule 4350(d)(2)(A)(i) and (ii) of the NASDAQ listing standards and Rule 803(a)(2) of the AMEXapplicable NYSE Amex listing standards: Messrs. Scott,Antony, Dawson, Johnson, Kirton, Price, and Dawson. In addition, Ms. Smith was an independent director while serving as a director of Gran Tierra.Scott. In making this determination, the Board found that none of these directors or nominees for director had a material or other disqualifying relationship with Gran Tierra. Dana Coffield, Gran Tierra’s President and Chief Executive Officer is not an independent director by virtue of his employment with Gran Tierra.
MEETINGS OF THE BOARD DIRECTORSMeetings of The Board of Directors
The Board of Directors met 23twenty-one times during 2007.the last fiscal year. Each Board member attended 75% or more of the aggregate number of the meetings of the Board and of the committees on which he or she served, held during the periodportion of the last fiscal year for which he or shewas a director or committee member.member, except that Mr. Scott attended one of the two meetings the Reserves Committee held in the last fiscal year.
INFORMATION REGARDING COMMITTEES OF THE BOARD OF DIRECTORSInformation Regarding Committees of the Board of Directors
The Board has four standing committees:an Audit Committee, a Compensation Committee, a Nominating and Corporate Governance Committee, and a Reserves Committee. The Nominating and Corporate Governance Committee was formed on June 25, 2007, and the Reserves Committee was formed on April 19, 2007. The following table provides membership and meeting information for fiscal 2007year 2008 for each committee of the Board:
| Name | | Audit | | Compensation | | Nominating and Corporation Governance Committee | | Reserves Committee |
| Dana Coffield | | | | | | | | X |
| Jeffrey Scott | | X | | X | | X | | X |
| Walter Dawson | | | | X | | X* | | |
| Verne Johnson | | X | | X* | | X | | X* |
Nadine C. Smith(1) | | X* | | | | | | |
James Hart(2) | | | | | | | | |
| Total meetings in 2007 | | 5 | | 1 | | 1 | | 3 |
| | | | | | Nominating and Corporate Governance | | |
| | | | | | | | | |
| Dana Coffield | | | | | | | | X |
| Jeffrey Scott | | X | | X | | X | | X |
| Ray Antony | | | | | | | | |
| Walter Dawson | | | | X | | X* | | |
| Verne Johnson | | X | | X* | | X | | X* |
| Scott Price | | | | | | | | |
Nadine Smith(1) | | X* | | | | | | |
Nicholas Kirton(1) | | X* | | | | | | |
| Total Meetings in fiscal year 2008 | | 7 | | 2 | | 2 | | 2 |
* Committee Chairperson
(1) | Ms. Smith resignedas a director effective March 27, 2008, and Mr. Kirton joined the Audit Committee on that date, also replacing Ms. Smith as Chairperson of the Audit Committee. |
(2) | Mr. Hart ceased to be a director effective October 10, 2007. |
Below is a description of each committee of the Board. Board of Directors. Each of the committees has authority to engage legal counsel or other experts or consultants, as it deems appropriate to carry out its responsibilities.
Audit Committee
The Audit Committee of the Board of Directors was established by the Board in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), to oversee management’s conduct of ourGran Tierra’s corporate accounting and financial reporting processes and audits of its financial statements. For this purpose, the Audit Committee performs several functions.The Audit Committee reviews our financial reports and other financial information disclosed to the public, the government and various regulatory bodies, our system of internal accounting, our financial controls, and the annual independent audit of our financial statements. The Audit Committee evaluates the performance of and assesses the qualifications of the independent auditors; determines and approves the engagement of the independent auditors; determines whether to retain or terminate the existing independent auditors or to appoint and engage new independent auditors; reviews and approves the retention of the independent auditors to perform any proposed permissible non-audit services; monitors the rotation of partners of the independent auditors on Gran Tierra’s audit engagement team as required by law; reviews and approves or rejects transactions between the companyGran Tierra and any related persons; confers with management and the independent auditors regarding the effectiveness of internal controls over financial reporting; establishes procedures, as required under applicable law, for the receipt, retention and treatment of complaints received by Gran Tierra regarding accounting, internal accounting controls or auditing matters and the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters; and meets to review ourGran Tierra’s annual audited financial statements and quarterly financial statements with management and the independent auditor,auditors, including reviewing oura review of Gran Tierra’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” The Audit Committee is composed of three directors: Jeffrey Scott, Verne Johnson, and Nicholas Kirton. The Audit Committee met fiveseven times during 2007.the fiscal year. The Audit Committee has adopted a written charter that is available to stockholders on ourGran Tierra’s website at www.grantierra.com.
The Board of Directors reviews the NASDAQ and AMEXNYSE Amex listing standards in effect for determiningdefinition of independence for Audit Committee members and has determined that all members of ourGran Tierra’s Audit Committee are independent (as independence is currently established in Rule 4350(d)(2)(A)(i) and (ii) of the NASDAQ listing standards and Rule 803(a)(2) of the AMEXNYSE Amex listing standards). Additionally each audit committeeAudit Committee member has met the criteria for audit committee independence set forth in Rule 10A-3 promulgated pursuant to the Exchange Act. The Board had determined that Nadine Smith, an independent director, qualified as an “audit committee financial expert” within the meaning of Item 407(d)(5) of Regulation S-K promulgated by the SEC, based on her experience overseeing and assessing the performance of companies with respect to the preparation and evaluation of financial statements, and that Mr. Kirton is an “audit committee financial expert” based on his past experience as a former KPMG partner. The audit committee selects the independent accountants to audit our books and financial records, and considers and acts upon accounting matters as they arise.
Report of the Audit Committee of the Board of Directors11
The Audit Committee has reviewed and discussed the audited financial statements for the fiscal year endended December 31, 20072008 with our management.management of Gran Tierra. The Audit Committee has discussed with the independent auditors the matters required to be discussed by the Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, , Vol. 1. AU section 380), as adopted by the Public Company Accounting Oversight Board (“PCAOB”PCAOB”) in Rule 3200T. The Audit Committee has also received the written disclosures and the letter from the independent accountants required by the Independence Standards Board Standard No. 1, (Independence Discussions with Audit Committees ), as adopted byapplicable requirements of the PCAOB in Rule 3600Tregarding the independent accountants’ communications with the audit committee concerning independence, and has discussed with the independent accountants the independent accountant’saccountants’ independence. Based on the foregoing, the Audit Committee has recommended to the Board of Directors that the audited financial statements be included in ourGran Tierra’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007.2008.
| Nicholas Kirton, Chair |
| Verne Johnson |
| Jeffrey Scott |
Compensation Committee
The Compensation Committee is composed of three directors: Messrs. Scott, Dawson, and Johnson. All members of Gran Tierra’s Compensation Committee are independent (as independence is currently defined in Rule 803(a)(2) of the NYSE Amex listing standards). The Compensation Committee met two times during the fiscal year. The Compensation Committee has adopted a written charter that is available to stockholders on Gran Tierra’s website at www.grantierra.com.
The Compensation Committee of the Board of Directors acts on behalf of the Board to review, recommend for adoption and oversee Gran Tierra’s compensation strategy, policies, plans and programs, including:
1 | The material in this report is not “soliciting material” is not deemed "filed" with the Commission and is not to be incorporated by reference in any filing of Gran Tierra under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. |
Compensation Committee
All members of our Compensation Committee are independent (as independence is currently defined in Rule 4200(a)(15) of the NASDAQ listing standards and Rule 803(a)(2) of the AMEX listing standards). The Compensation Committee met one time during 2007. The Compensation Committee has adopted a written charter that is available on our website at www.grantierra.com.
The Compensation Committee of the Board acts on behalf of the Board to review, recommend for adoption and oversee Gran Tierra’s compensation strategy, policies, plans and programs, including:
| | · | establishing corporate and individual performance objectives relevant to the compensation of our directors,Gran Tierra’s executive officers, directors, and other senior management, as appropriate, and evaluating performance in light of these stated objectives; |
| | · | establishing policies with respect to equity compensation arrangements; |
| | · | reviewing and approving the compensation and other terms of employment or service, including severance and change-in-control arrangements, of ourGran Tierra’s Chief Executive Officer and the other executive officers; and |
| | · | reviewing and recommending to the Board for approval, modification or termination of Gran Tierra’s equity compensation plans, pension and profit-sharing plans, deferred compensation plans and other similar plans and programs, as well as administering such plans and programs. |
The Compensation Committee also reviews with management ourGran Tierra’s Compensation Discussion and Analysis and considers whether to recommend that it be included in proxy statements and other public filings.
Compensation Committee Processes and Procedures
Typically, the Compensation Committee meets at least once annually and with greater frequency if necessary. The agenda for each meeting is usually developed by the Chairchair of the Compensation Committee, in consultation with the Chief Executive Officer. The Compensation Committee meets regularly in executive session.However, from time to time, various members of management and other employees as well as outside advisors or consultantsmay be invited by the Compensation Committee to makepresentations, to provide financial or otherbackground information or advice or to otherwise participate in Compensation Committee meetings.The Chief Executive Officer may not participate in, or be present during, any deliberations or determinations of the Compensation Committee regarding his compensation or individual performance objectives. The charter of the Compensation Committee grants the Compensation Committee full access to all books, records, facilities and personnel of Gran Tierra, as well as authority to obtain, at the expense of Gran Tierra, advice and assistance from internal and external legal, accounting or other advisors and consultants and other external resources that the Compensation Committee considers necessary or appropriate in the performance of its duties.In particular, the Compensation Committee has the sole authority to retain compensation consultants to assist in its evaluation ofexecutiveand director compensation, including the authority to approve the consultant’s reasonable fees and other retention terms.
During the past fiscal year, the Compensation Committee did not engage any compensation consultant.
Under its charter, the Compensation Committee may form, and delegate authority to, subcommittees, as appropriate. In 2007,2008, the Compensation Committee did not form any subcommittees.
The Compensation Committee makes adjustments to annual compensation, recommends bonus and equity awards in December of each year, and establishes new performance objectives at one or more meetings held during the first quarter of the year. Generally, the Compensation Committee’s process comprises two related elements:the recommendation of compensation levels and the establishment of performance objectives for the current year. In the case of the Chief Executive Officer, the evaluation of his performance is conducted by the Compensation Committee, which determines any adjustments to hiscompensationas well as awards to be granted. For all executives and directors, as part of its deliberations, the Compensation Committee may review and consider, as appropriate,materials such as financial reports and projections, operational data, tax and accounting information, tally sheets that set forth the total compensation that may become payable to executives in various hypothetical scenarios, executive and director stock ownership information, company stock performance data, analyses of historical executive compensation levels, and current company-wide compensation levels, and independent compensation surveys for the petroleum industry in Canada for peer groupings within the industry.
The specific determinations of the Compensation Committee with respect to executive compensation for fiscal 20072008 are described in greater detail in the section titledof this proxy statement entitled “Compensation Discussion and Analysis” found elsewhere in this proxy statement.Analysis.”
Compensation Committee Interlocks and Insider Participation
OurAs noted above, Gran Tierra’s Compensation Committee currently consists of Mr.Messrs. Johnson, Mr. Scott, and Mr. Dawson. None of the members of ourthe Compensation Committee has at any time been an officer or employee of Gran Tierra.Tierra, except that Mr. Scott served as CEO of Gran Tierra on an interim basis from January 2005 to April 2005. No member of the Board or of ourthe Compensation Committee served as an executive officer of another entity that had one or more of ourGran Tierra’s executive officers serving as a member of that entity’s board or compensation committee.
Compensation Committee Report22
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis contained in this proxy statement. Based on this review and discussion, the Compensation Committee has recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated into ourGran Tierra’s Annual Report on Form 10-K for the fiscal year ended 2007.December 31, 2008.
| Verne Johnson, Chair |
Walter ScottDawson |
|
___________________________________________________________________________________________________________
2
| The material in this report is not “soliciting material,” is furnished to, but not deemed "filed" with, the Commission and is not deemed to be incorporated by reference in any filing of Gran Tierra under the Securities Act or the Exchange Act, other than Gran Tierra’s Annual Report on Form 10-K, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.Scott |
Nominating and Corporate Governance Committee
The Board created the Nominating and Corporate Governance Committee or the Governance Committee, on June 25, 2007. Prior to the formation of the Governance Committee, the Board took any necessary actions of the type that are currently delegated to the Governance Committee.
The Governance Committee of the Board of Directors is responsible for identifying, reviewing and evaluating candidates to serve as directors of Gran Tierra (consistent with criteria approved by the Board), reviewing and evaluating incumbent directors, recommending to the boardBoard for selection candidates for election to the Board of Directors, making recommendations to the Board regarding corporate governance issues, assessing the performance of the Board and management, and developing a set of corporate governance principles for Gran Tierra. The Nominating and Corporate Governance Committee is composed of three directors: Messrs. Dawson, Scott, and Johnson. All members of the Nominating and Corporate Governance Committee are independent (as independence is currently defined in Rule 4200(a)(15) of the NASDAQ listing standards and Rule 803(a)(2) of the AMEXNYSE Amex listing standards). The Nominating and Corporate Governance Committee met one timetwo times during 2007.the fiscal year. The Nominating and Corporate Governance Committee has adopted a written charter that is available to stockholders on ourGran Tierra’s website at www.grantierra.com.
The Nominating and Corporate Governance Committee believes that candidates for director should have certain minimum qualifications, including the ability to read and understand basic financial statements and having the highest personal integrity and ethics. The Nominating and Corporate Governance Committee also intends to consider such factors as possessing relevant expertise upon which to be able to offer advice and guidance to management, having sufficient time to devote to the affairs of Gran Tierra, demonstrated excellence in his or her field, having the ability to exercise sound business judgment and having the commitment to rigorously represent the long-term interests of ourGran Tierra’s stockholders. However, the Nominating and Corporate Governance Committee retains the right to modify these qualifications from time to time. Candidates for director nominees will beare reviewed in the context of the current composition of the Board, the operating requirements of Gran Tierra and the long-term interests of stockholders. In conducting this assessment, the Nominating and Corporate Governance Committee will considerconsiders diversity, age, skills, and such other factors as it deems appropriate given the current needs of the Board and Gran Tierra, to maintain a balance of knowledge, experience and capability. In the case of incumbent directors whose terms of office are set to expire, the Nominating and Corporate Governance Committee reviews these directors’ overall service to Gran Tierra during their terms, including the number of meetings attended, level of participation, quality of performance, and any other relationships and transactions that might impair the directors’ independence. In the case of new director candidates, the Nominating and Corporate Governance Committee will also determinedetermines whether the nominee is independent for NASDAQand AMEXNYSE Amex purposes, which determination is based upon applicable NASDAQ and AMEXNYSE Amex listing standards, applicable SEC rules and regulations and the advice of counsel, if necessary. The Nominating and Corporate Governance Committee will conductconducts any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of the Board. The Nominating and Corporate Governance Committee meets to discuss and consider the candidates’ qualifications and then selects a nominee for recommendation to the Board by majority vote. In 2007,fiscal 2008, neither the Nominating and Corporate Governance Committee nor the Board paid any fees to any third party to assist in the process of identifying or evaluating director candidates.
| 2 | The material in this report is not “soliciting material,” is furnished to, but not deemed "filed" with, the Commission and is not deemed to be incorporated by reference in any filing of Gran Tierra under the Securities Act or the Exchange Act, other than Gran Tierra’s Annual Report on Form 10-K, where it shall be deemed to be “furnished,” whether made before or after the date hereof and irrespective of any general incorporation language in any such filing |
The Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders. The Nominating and Corporate Governance Committee does not intend to alter the manner in which it evaluates candidates, including the minimum criteria set forth above, based on whether or not the candidate was recommended by a stockholder or not.stockholder. Stockholders who wish to recommend individuals for consideration by the Nominating and Corporate Governance Committee to become nominees for election to the Board may do so by delivering a written recommendation to the Nominating and Corporate Governance Committee at the following address: Gran Tierra Energy Inc., 300, 611-10th Avenue S.W., Calgary, Alberta T2R 0B2, Canada, Attention: Director Nominations. This written recommendation must be delivered by January 2, 2009, the dateat least 120 days prior to the anniversary date of the mailing of Gran Tierra’s proxy statement for the 2008 Annual Meetinglast annual meeting of Stockholders.stockholders. Submissions must include the full name of the proposed nominee, a description of the proposed nominee’s business experience for at least the previous five years, complete biographical information, a description of the proposed nominee’s qualifications as a director and a representation that the nominating stockholder is a beneficial or record ownerholder of Gran Tierra’s stock. Any such submission must be accompanied by the written consent of the proposed nominee to be named as a nominee and to serve as a director if elected.
Reserves Committee
We created a Reserves Committee on April 19, 2007. Prior to forming the Reserves Committee, the Board and its committees took any necessary actions of the type that are currently delegated to the Reserves Committee. The primary purpose of the Reserves Committee is to act on behalf of the Board in fulfilling the Board’s oversight responsibilities with respect to evaluating and reporting on Gran Tierra’s oil and gas reserves.
The Reserves Committee oversees Gran Tierra’s (1) annual review of its oil and gas reserves, (2) procedures for evaluating and reporting its oil and gas producing activities, and (3) compliance with applicable regulatory and securities laws relating to the preparation and disclosure of information with respect to its oil and gas reserves. The Reserves Committee also consults with the Audit Committee on matters relating to Gran Tierra’s oil and gas reserves which impact Gran Tierra’s financial statements. The Reserves Committee is composed of three directors: Messrs. Johnson, Coffield, and Scott. All members of the Reserves Committee are independent (as independence is currently defined in Rule 4200(a)(15) of the NASDAQ listing standards and Rule 803(a)(2) of the AMEXNYSE Amex listing standards), other than Mr. Coffield, ourGran Tierra’s Chief Executive Officer. The Reserves Committee met threetwo times during 2007.fiscal 2008. The Reserves Committee has adopted a written charter that is available on ourGran Tierra’s website at www.grantierra.com.
STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORSStockholder Communications With The Board Of Directors
TheGran Tierra’s Board has adopted a formal process by which stockholders may communicate with the Board or any of its directors. This information is available on Gran Tierra’s website at www.grantierra.com.
Code Of Ethics
CODE OF ETHICS
Gran Tierra has adopted the Gran Tierra Energy Inc.a Code of Business Conduct and Ethics, or the Code of Ethics that applies to all officers, directors and employees. The Code of Business Conduct and Ethics is available on ourGran Tierra’s website at www.grantierra.com. If we makeGran Tierra makes any substantive amendments to the Code of Business Conduct and Ethics or grantgrants any waiver from a provision of the Code of Ethics to any executive officer or director, weGran Tierra will promptly disclose the nature of the amendment or waiver on ourits website.
PROPOSAL 2
RATIFICATION OF AMENDMENTS TO OUR BYLAWS
TO
COMPLY WITH CERTAIN LISTING REQUIREMENTS OF THE TORONTO STOCK EXCHANGE
The Board is recommending the ratification of amendments to our Bylaws which comply with the listing requirements of the Toronto Stock Exchange, or TSX. The TSX has required that we submit these amendments to our stockholders for ratification.
The TSX required that we amend our Bylaws in order to meet TSX’s listing requirements. These amendments were as follows:
| · | Article III, Section 2(a) of the Bylaws was amended to clarify that all directors are in the same class and have equal voting rights; |
| · | A new Section (1) was added to Article V (and the other sections were appropriately renumbered), which new section specifies that Gran Tierra’s stock shall be issued in accordance with the Fourth Section of the Gran Tierra Articles of Incorporation at fair market value as determined by the Board, and that the consideration for the issuance of stock shall not be in the form of promissory notes or services to be performed, or any combination thereof; |
| · | Article II, Section 5 was amended to provide that no proxy shall be voted after six (6) months from the date of its creation, unless such proxy provides for a longer period, which may not exceed 7 years from the date of its creation; |
| · | Article II, Section 10 was added to provide that the Board shall have the power and authority at all meetings to sell, lease or exchange substantially all of the property and assets of Gran Tierra upon such terms as the Board deems expedient and in the best interests of the corporation and stockholders only upon the authorization of our stockholders holding the majority of the voting power; and |
| · | Article II, Section 11 was added to provide that any stockholder of any class is entitled to dissent from, and obtain payment of the fair market value of his shares in the event of (1) an amendment to our Articles of Incorporation to add, change or remove any provision restricting or constraining the issue, transfer or ownership of shares of that class or restriction on the business that may be conducted by Gran Tierra, or the sale, lease or exchange of all or substantially all of our assets. |
The Board requests that stockholders ratify the amendments, as the amendments were required by the TSX as a condition to the listing of our common stock on the TSX. If the amendments are not ratified, the Board in its discretion will determine what action, if any, to take, subject to approval from the TSX if required. If the amendments are ratified, the Board in its discretion may still determine at a later date to amend the Bylaws, subject to approval from the TSX if required, if it determines that such amendment would be in the best interests of Gran Tierra and its stockholders.
The Board believes that the foregoing amendments were in the best interests of Gran Tierra and its stockholders. To be approved, ratification of amendments to the Bylaws must receive more “For” votes than “Against” votes. For purposes of this vote abstentions and broker non-votes will not be counted for any purpose in determining whether this matter has been approved.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
Proposal 2
Approval of Increase in Number of Authorized Shares of Common Stock
PROPOSAL 3The Board of Directors is requesting stockholder approval of an amendment to Gran Tierra’s amended Articles of Incorporation to increase Gran Tierra’s authorized number of shares of common stock from 300,000,000 shares to 570,000,000 shares. If approved, the fourth article of Gran Tierra’s amended Articles of Incorporation will be amended to provide that the total number of authorized shares of Gran Tierra’s common stock shall be 570,000,000 shares, and therefore that the total authorized shares, including the current 25,000,000 shares of blank check preferred stock and shares of Special A Voting Stock and Special B Voting Stock shall be 595,000,002 shares. If this Proposal 2 is approved, the first two paragraphs of the fourth article of Gran Tierra’s amended Articles of Incorporation shall be amended to read in their entirety as follows:
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORSFourth Article
The total number of shares of all classes of stock which the Corporation shall have authority to issue is five hundred ninety-five million and two (595,000,002), to be divided into four (4) classes, of which five hundred seventy million (570,000,000) shares, par value of $0.001, shall be designated as Common Stock (“Common Stock”); one (1) share, par value of $0.001, shall be designated as Special A Voting Stock (the “Special A Voting Stock”); one (1) share, par value of $0.001, shall be designated as Special B Voting Stock (the “Special B Voting Stock”); and twenty-five million (25,000,000) shares, par value of $0.001, shall be designated as Preferred Stock (“Preferred Stock”).
A. Common Stock
The aggregate number of shares of Common Stock which the Corporation shall have authority to issue is five hundred seventy million (570,000,000) shares, par value of $0.001 per share. All stock when issued shall be fully paid and non-assessable. The Board of Directors of the Corporation may, at its discretion and by resolution of the Board of Directors, issue any authorized but unissued Common Stock of the Corporation which has not been reserved for issuance upon the exercise of any outstanding warrants, options, or other documents evidencing the right to acquire the Common Stock of the Corporation.
The additional common stock to be authorized by adoption of the amendment would have rights identical to the currently outstanding common stock of Gran Tierra. Adoption of the proposed amendment and issuance of the common stock would not affect the rights of the holders of currently outstanding common stock of Gran Tierra, except for effects incidental to increasing the number of shares of Gran Tierra’s common stock outstanding, such as dilution of the earnings per share and voting rights of current holders of common stock. If the amendment is adopted, it will become effective upon filing of a Certificate of Amendment to Articles of Incorporation with the Secretary of State of the State of Nevada.
Holders of the common stock are entitled to one vote for each share on all matters submitted to a stockholder vote. Holders of common stock do not have cumulative voting rights. Therefore, holders of a majority of the shares of common stock voting for the election of directors can elect all of the directors. Holders of the common stock representing a majority of the voting power of the capital stock issued, outstanding and entitled to vote, represented in person or by proxy, are necessary to constitute a quorum at any meeting of stockholders. A vote by the holders of a majority of the outstanding shares of common stock is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment to the articles of incorporation.
Holders of common stock are entitled to share in all dividends that the Board of Directors, in its discretion, declares from legally available funds. In the event of a liquidation, dissolution or winding up, each outstanding share entitles its holder to participate pro rata in all assets that remain after payment of liabilities and after providing for each class of stock, if any, having preference over the common stock. Holders of the common stock have no pre-emptive rights, no conversion rights and there are no redemption provisions applicable to the common stock.
In addition to the 238,710,473 shares of common stock outstanding on December 31, 2008, which number includes 10,984,126 shares of common stock issuable upon the exchange of the Goldstrike Exchangeable Shares issued to certain former shareholders of Gran Tierra Canada and 37,254,143 shares of common stock issuable upon the exchange of the Solana Exchangeable Shares issued to certain former shareholders of Solana, approximately 11,403,870 shares were issuable upon exercise of outstanding options, approximately 13,348,351 shares were issuable upon exercise of outstanding warrants, and approximately 6,443,966 shares were reserved for future grants under Gran Tierra’s 2007 Equity Incentive Plan. The total number of shares reserved under Gran Tierra’s 2007 Equity Incentive Plan is 18,000,000 shares.
The approval of the amendment will not alter Gran Tierra’s present ability to issue up to 25,000,000 shares of its blank check preferred stock.
Although, at present, the Board of Directors has no plans to issue the additional shares of common stock, it desires to have the shares available to provide additional flexibility to use its capital stock for business and financial purposes in the future. Gran Tierra believes it is important to retain a significant reserve of authorized but unissued common stock that could be used to raise additional capital through the sale of securities, declare stock dividends or stock splits, acquire another company or its business or assets, create negotiating leverage and flexibility in the event of an unfriendly takeover bid or establish a strategic relationship with a corporate partner, among other uses.
If approved, the proposed amendment would authorize additional shares of common stock that will be available in the event that the Board of Directors determines to undertake any of the above actions. In addition, if a person or group of persons attempts a hostile takeover of Gran Tierra, such shares could be issued in connection with a stockholder rights plan, or poison pill or rights plan which would allow stockholders (other than the hostile parties) to purchase Gran Tierra’s common stock at a discount to the then current market price, which would have a dilutive effect on the hostile parties. Although this proposal to increase the authorized common stock has been prompted by business and financial considerations and not by the threat of any hostile takeover attempt (nor is the Board currently aware of any such attempts directed at Gran Tierra), nevertheless, stockholders should be aware that approval of the proposal could facilitate future efforts by Gran Tierra to deter or prevent changes in control of Gran Tierra, including transactions in which the stockholders might otherwise receive a premium for their shares over the then current market prices. Any additional equity financings may be dilutive to stockholders, and a debt financing, if available, may involve restrictions on stock dividends and other restrictions on Gran Tierra. Moreover, while Gran Tierra continually evaluates potential acquisitions and other strategic transactions, it has no present agreements or commitments with respect to issuing shares of common stock as part of any acquisition.
If the amendment is adopted, 270,000,000 additional shares of Gran Tierra’s common stock will be available for issuance at the discretion of Gran Tierra’s Board, except that certain large issuances, such as future new issuances or series of related issuances that would result in an increase of the current shares outstanding by 20% or more, may require stockholder approval in accordance with the requirements of the NYSE Amex listing standards, and certain stock-based employee benefit plans may require stockholder approval in order to obtain desirable treatment under tax or securities laws and accounting regulations.
Gran Tierra’s Board believes it desirable that Gran Tierra have the flexibility to issue the additional shares as described above. As is typical in publicly held energy companies, the holders of common stock have no pre-emptive rights to purchase any stock of Gran Tierra. Stockholders should be aware that the issuance of additional shares could have a dilutive effect on earnings per share and on the equity ownership of the present holders of common stock. No actions are currently being taken with respect to any large issuance of additional shares.
Each share of Gran Tierra’s common stock, Goldstrike Exchangeable Share, and Solana Exchangeable Share has one vote. In order for Proposal 2 to be approved by Gran Tierra’s stockholders, it must receive “For” votes from the holders of shares of Gran Tierra’s common stock, Goldstrike Exchangeable Shares, and Solana Exchangeable Shares collectively entitling them to exercise at least a majority of the combined voting power of the total number of outstanding shares of Gran Tierra’s common stock, Goldstrike Exchangeable Shares, and Solana Exchangeable Shares. As a result, abstentions and broker non-votes will have the same effect as negative votes.
References to voting power of Goldstrike Exchangeable Shares refer to the voting power exercised through the Goldstrike Trustee with respect to the Goldstrike Exchangeable Shares, whether by the Goldstrike Trustee or by proxy, and references to voting power of Solana Exchangeable Shares refer to the voting power exercised through the Solana Trustee with respect to the Solana Exchangeable Shares, whether by the Solana Trustee or by proxy.
The Board Of Directors Recommends
A Vote In Favor Of Proposal 2.
Proposal 3
Ratification of Selection of Independent Auditors
The Audit Committee of the Board of Directors has selected Deloitte & Touche LLP as ourGran Tierra’s independent auditors for the fiscal year ending December 31, 20082009 and has further directed that management submit the selection of independent auditors for ratification by the stockholders at the annual meeting. Deloitte & Touche LLP has audited ourGran Tierra’s financial statements since its inception in 2005.2005. Representatives of Deloitte & Touche LLP are expected to be present at the annual meeting. They will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.
Neither ourGran Tierra’s Bylaws nor other governing documents or lawslaw require stockholder ratification of the selection of Deloitte & Touche LLP as ourGran Tierra’s independent auditors. However, the Audit Committee of the Board is submitting the selection of Deloitte & Touche LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Audit Committee of the Board will reconsider whether or not to retain that firm. Even if the selection is ratified, the Audit Committee of the Board in its discretion may direct the appointment of different independent auditors at any time during the year if they determine that such a change would be in the best interests of Gran Tierra and its stockholders.
The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and voting at the annual meeting will be required to ratify the selection of Deloitte & ToucheLLP. BrokerAbstentions and broker non-votes and abstentions are counted towards a quorum, but are not counted for any purpose in determining whether this matter has been approved.
PRINCIPAL ACCOUNTANT FEES AND SERVICESPrincipal Accountant Fees and Services
Set forth below is a summary of fees paid to Deloitte & Touche LLP, our independent registered Chartered Accountants, for services in the fiscal periods ended December 31, 20052008 and December 31, 2006.2007. In determining the independence of Deloitte & Touche LLP, the Audit Committee considered whether the provision of non-audit services is compatible with maintaining Deloitte & Touche LLP’s independence.
| | | 2006 | | 2007 | |
| | | Deloitte & Touche LLP | | Deloitte & Touche LLP | |
| Audit Fees | | $ | 478,719 | | $ | 474,396 | |
| Audit Related | | | 35,394 | | $ | 138,553 | |
| Tax Preparation | | | 73,694 | | | 219,491 | |
| All Other Fees | | | – | | | | |
| Total | | $ | 587,807 | | $ | 832,440 | |
| | | Fiscal Year Ended (in thousands) | |
| | | | | | | |
| Audit Fees | | $ | 726,741 | | | $ | 474,396 | |
| Audit-related Fees | | | 172,331 | | | | 138,553 | |
| Tax Fees | | | 90,201 | | | | 219,491 | |
| All Other Fees | | | — | | | | — | |
| Total Fees | | $ | 989,273 | | | $ | 832,440 | |
Audit Fees
The total audit fees and reimbursement of expenses paid to Deloitte & Touche LLP were for audits, reviews of the quarterly financial statements, and the preparation of comfort letters and consents. As well, an audit was performed on the nine months ended September 30, 2006 to facilitate the application to register the common shares issued in June 2006.
Audit Related
Miscellaneous advisory services, related to the acquisitions and share registration activities of Gran Tierra during the year.
Tax Fees
Tax preparation fees, including reimbursement of expenses, paid to Deloitte & Touche LLP were for the preparation of our US, Canadian, Colombian and Argentinean tax returns.returns in 2007. For 2008, fees were paid for review of such returns (prepared by a third party) and review of tax planning strategies for 2008.
All Other Fees
No other fees were incurred.
All fees described above were approved by the Audit Committee.
PRE-APPROVAL POLICIES AND PROCEDURES.Pre-Approval Policies and Procedures.
Before we engageGran Tierra engages an independent public accountant to render audit services, any engagement covering audit or non-audit services by the engagementauditors is approved by our audit committeeGran Tierra’s Audit Committee or the engagement to render services is entered into pursuant to pre-approval policies and procedures established by the audit committee.Audit Committee. The pre-approval policy adopted by ourGran Tierra’s Audit Committee on March 9, 2006 to permit pre-approval of non-audit services is attached as Schedule A to the charter of the Audit Committee, which was filed as Exhibit 99.1 to ourGran Tierra’s Annual Report on Form 10-KSB for 2005. This policy requires that the Audit Committee consider, prior to pre-approving any non-audit services, multiple factors taken as a whole, including whether the services are prohibited pursuant to SEC rules, whether the auditors are best positioned to provide the services, and the percentage of total services the non-audit services will comprise. Requests for non-audit services will be made in writing to ourGran Tierra’s independent auditor specifying the services requested and the reasons therefor,for the request, and the chairperson of the audit committeeAudit Committee will be copied on the communication. Then ourGran Tierra’s independent auditor must respond to ourGran Tierra’s request with a description of the services, the fees that it will charge, and a request for pre-approval of the services plus pre-approval of 10% over the amount. The chairperson of the Audit Committee will then make a determination based on all of the relevant factors, and if approved report back to the Audit Committee at the next Audit Committee meeting for ratification.
The Audit Committee has determined that the rendering of the services other than audit services by Deloitte & Touche LLP is compatible with maintaining the principal accountant’s independence.
THE BOARD OF DIRECTORS RECOMMENDSThe Board Of Directors Recommends
A VOTE IN FAVOR OF PROPOSAL 3.
Vote In Favor Of Proposal 3.
STOCKHOLDER APPROVAL OF STOCK PLANS
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The following table provides certain information with respect to securities authorized for issuance under all of Gran Tierra’s equity compensation plans in effect as of the end of December 31, 2007:
Equity Compensation Plan Information
| Plan category | | Number of securities to be issued upon exercise of options | | Weighted average exercise price of outstanding options | | Number of securities remaining available for future issuance | |
| Equity compensation plans approved by security holders | | | 5,724,168 | | $ | 1.52 | | | 3,275,832 | |
| Equity compensation plans not approved by security holders | | | — | | | — | | | — | |
| Total | | | 5,724,168 | | | | | | 3,725,832 | |
The only equity compensation plan approved by our stockholders is our 2007 Equity Incentive Plan, which is an amendment and restatement of our 2005 Equity Plan, under which the Board is authorized to issue options or other rights to acquire up to 9,000,000 shares of our common stock.
Amendments of 2007 Equity Incentive Plan
In June 2007, the Board adopted Gran Tierra’s 2007 Equity Incentive Plan, or the Plan, which was approved by our stockholders on October 10, 2007. The Plan is an amended, restated and retitled version of Gran Tierra’s 2005 Equity Incentive Plan. The Board subsequently amended the Plan on December 20, 2007 and January 14, 2008, respectively. The Board approved these amendments in order to meet certain listing requirements of the Toronto Stock Exchange, or the TSX. Specifically, the Board made the following amendments to the Plan, as required by the TSX:
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| Option grants below fair market value. The Plan generally provides that the exercise price for options granted under the Plan shall be not less than one hundred percent of the fair market value of our common stock subject to the option on the date of grant. The Plan permits options to be granted with an exercise price lower than the fair market value on the date of grant, provided such options are granted pursuant to an assumption or substitution for another option in the manner satisfying the provisions of Section 424(a) of the Internal Revenue Code of 1986, as amended, or the Code. The Plan was amended to provide that so long as our shares are listed for trading on the TSX, options granted below fair market value on the date of grant are subject to approval by the TSX, to the extent necessary to satisfy the TSX rules.
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| Amendment of the Plan or Stock Awards. The Plan previously provided that the Board could amend the Plan unless stockholder approval was required by Section 422 of the Code. The Plan was amended to include the following provisions:
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| ·
| No amendments to stock awards could be made if the common stock is listed on the TSX unless approved by the stockholders to the extent necessary to satisfy the TSX rules. |
| ·
| If an amendment reducing the stock option exercise price or extending the term of the stock option is made to a stock option held by an Insider, the amendment shall only be made effective after the approval is received of Disinterested Stockholders at a meeting of the stockholders of Gran Tierra. An “Insider” is defined to be an “insider” as defined under the policies of the TSX, as amended from time to time, which includes, among others, directors and senior officers of Gran Tierra or any subsidiary of Gran Tierra and includes an issuer, all of the voting securities of which are owned by such an officer. “Disinterested Stockholders” is defined as stockholders of Gran Tierra except Insiders who are eligible to receive stock awards, and such Insiders’ associates. |
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| Amendments without Stockholder Approval. The Plan was amended to include a provision specifying the circumstances under which the Board could amend the Plan without stockholder approval, which provision specifies that: “the Board shall have the authority: (a) to make amendments to the Plan or a Stock Award of a housekeeping or administrative nature; (b) if the common stock is listed on the Toronto Stock Exchange subject to any required approval of the Toronto Stock Exchange, to change the vesting or termination provisions of a Stock Award or the Plan; (c) any amendment to reduce the option exercise price of an Option held by a non-insider; (d) amendments necessary to comply with provisions of applicable law or stock exchange requirements or for grants to qualify for favorable treatment under applicable laws; (e) the addition of any form of financial assistance by Gran Tierra for the acquisition by all or certain categories of Participants of common stock under the Plan, and the subsequent amendment of any such provisions; and (f) any other amendment, fundamental or otherwise, not requiring stockholder approval under the Code; provided, however, that no amendment shall be made without stockholder approval to the extent stockholder approval is necessary to satisfy the requirements of Section 422 of the Code.”
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· | Limitations with respect to Insiders and Consultants. The Plan was amended to include limitations on grants to Insiders and consultants as follows:
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| · | The maximum number of shares of common stock which may be reserved for issuance to Insiders, at any time, under the Plan and any other share compensation arrangement of Gran Tierra shall be 10% of the common stock issued and outstanding. |
| · | The maximum number of shares of common stock which may be issued to Insiders under the Plan, at any time, and any other share compensation arrangement within any 12-month period shall be 10% of the common stock outstanding. |
| · | The maximum number of shares of common stock which may be issued to any one Insider and such Insider’s associates under the Plan, at any time, within a 12-month period shall be 5% of the common stock outstanding. |
| · | The number of stock options granted to any one consultant in any 12-month period under the Plan shall not exceed 2% of the issued and outstanding shares of common stock at the time of grant. |
The essential features of the Plan are outlined below:
General
The Plan provides for the grant of stock options, restricted stock awards, stock appreciation rights, restricted stock units and other stock awards (collectively “awards”). Stock options granted under the Plan are not intended to qualify as incentive stock options within the meaning of Section 422 of the Code. Stock appreciation rights granted under the Plan may be tandem rights, concurrent rights or independent rights. See “U.S. Federal Income Tax Information” for a discussion of the tax treatment of awards. To date, Gran Tierra has granted only stock options under the Plan.
Purpose
The Board adopted the Plan, which is an amendment and restatement of the 2005 Equity Plan, or the Prior Plan, to provide a means by which employees, directors and consultants of Gran Tierra and its affiliates may be given an opportunity to purchase stock in Gran Tierra, to assist in retaining the services of such persons, to secure and retain the services of persons capable of filling such positions and to provide incentives for such persons to exert maximum efforts for the success of Gran Tierra and its affiliates. All of the approximately 128 employees, directors and consultants of Gran Tierra and its affiliates are eligible to participate in the Plan.
Administration
The Board administers the Plan. Subject to the provisions of the Plan, the Board has the power to construe and interpret the Plan and to determine the persons to whom and the dates on which awards will be granted, the number of shares of common stock to be subject to each award, the time or times during the term of each award within which all or a portion of such award may be exercised, the exercise price, the type of consideration and other terms of the award.
The Board has the power to delegate administration of the Plan to a committee composed of not fewer than two members of the Board. A committee may consist solely of two or more outside directors in accordance with Section 162(m) of the Code or solely of two or more non-employee directors in accordance with Rule 16b-3 of the Exchange Act. The Board has delegated administration of the Plan to the Compensation Committee of the Board. As used herein with respect to the Plan, the “Board” refers to any committee the Board appoints as well as to the Board itself.
Stock Subject to the Plan
An aggregateSecurity Ownership of 9,000,000 shares of common stock is reserved for issuance under the Plan. If awards granted under the Plan expire or otherwise terminate without being exercised, the shares of common stock not acquired pursuant to such awards again become available for issuance under the Plan. If Gran Tierra reacquires unvested stock issued under the Plan, the reacquired stock will not become available for reissuance under the Plan. As of April 1, 2008:
| · | Stock options to purchase 74,167 shares had been exercised under the Plan, and an additional 5,651,664 shares were outstanding under the Plan, collectively representing 5.7% of Gran Tierra’s 99,988,644 shares of common stock issued and outstanding as of April 1, 2008 (the “Outstanding Capital Stock”), which number includes 11,827,776 shares of common stock issuable upon the exchange of outstanding Exchangeable Shares; and
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| · | The entire 9,000,000 shares issued or issuable under the Plan represents 9.0% of Gran Tierra’s Outstanding Capital Stock. |
Eligibility
Employees (including officers), directors, and consultants of both Gran Tierra and its affiliates are eligible to receive all types of awards under the Plan. No person may be granted awards under the Plan exercisable for more than 1,000,000 shares of common stock during any calendar year (“Section 162(m) Limitation”).
Terms of Options
The following is a description of the permissible terms of options under the Plan. Individual option grants may be more restrictive as to any or all of the permissible terms described below.
Exercise Price; Payment. The exercise price of options may not be less than 100% of the fair market value of the common stock on the date of grant, except as provided in the amendments as described above. The Plan defines the “fair market value” of the common stock on any given date as the closing price on that date for such stock (or the closing bid, if no sales were reported) as quoted on the exchange or market with the greatest volume of trading in the common stock. If options were granted to covered executives with exercise prices below fair market value, deductions for compensation attributable to the exercise of such options could be limited by Section 162(m) of the Code. See “U.S. Federal Income Tax Information.” The closing price of Gran Tierra’s common stock as reported on the American Stock Exchange on April 25, 2008 was $4.28 per share.
The exercise price of options granted under the Plan must be paid either in cash at the time the option is exercised or at the discretion of the Board, (1) by delivery of other common stock of Gran Tierra, (2) pursuant to a deferred payment arrangement or (3) in any other form of legal consideration acceptable to the Board. The Plan does not provide for financial assistance in exercising stock options.
Option Exercise. Options granted under the Plan may become exercisable in cumulative increments (“vest”) as determined by the Board. Shares covered by currently outstanding options under the Plan typically vest over a three year period in three annual installments during the participant’s employment by, or service as a director or consultant to, Gran Tierra or an affiliate (collectively, “service”). Shares covered by options granted in the future under the Plan may be subject to different vesting terms. The Board has the power to accelerate the time during which an option may vest or be exercised. In addition, options granted under the Plan may permit exercise prior to vesting, but in such event the participant may be required to enter into an early exercise stock purchase agreement that allows Gran Tierra to repurchase unvested shares, generally at their exercise price, should the participant’s service terminate before vesting. To the extent provided by the terms of an option, a participant may satisfy any federal, state or local tax withholding obligation relating to the exercise of such option by a cash payment upon exercise, by authorizing Gran Tierra to withhold a portion of the stock otherwise issuable to the participant, by delivering already-owned common stock of Gran Tierra or by a combination of these means.
Limitations with respect to Insiders and Consultants. The Plan, as a result of the amendments, provides that: (1) the maximum number of shares of common stock which may be reserved for issuance to Insiders, at any time, under the Plan and any other share compensation arrangement of Gran Tierra shall be 10% of the common stock issued and outstanding; (2) the maximum number of shares of common stock which may be issued to Insiders under the Plan, at any time, and any other share compensation arrangement within any 12-month period shall be 10% of the common stock outstanding; (3) the maximum number of shares of common stock which may be issued to any one Insider and such Insider’s associates under the Plan, at any time, within a 12-month period shall be 5% of the common stock outstanding; and (4) the number of stock options granted to any one consultant in any 12-month period under the Plan shall not exceed 2% of the issued and outstanding shares of common stock at the time of grant.
Term.
The maximum term of options under the Plan is 10 years. Options under the Plan generally terminate three months after termination of the participant’s service unless (1) such termination is due to the participant’s permanent and total disability (as defined in the Code), in which case the option may, but need not, provide that it may be exercised (to the extent the option was exercisable at the time of the termination of service) at any time within 12 months of such termination; (2) the participant dies before the participant’s service has terminated, or within three months after termination of such service, in which case the option may, but need not, provide that it may be exercised (to the extent the option was exercisable at the time of the participant’s death) within 18 months of the participant’s death by the person or persons to whom the rights to such option pass by will or by the laws of descent and distribution; or (3) the option by its terms specifically provides otherwise. A participant may designate a beneficiary who may exercise the option following the participant’s death. Individual option grants by their terms may provide for exercise within a longer period of time following termination of service.
The option term generally may be extended in the event that exercise of the option within these periods is prohibited. A participant’s option agreement may provide that if the exercise of the option following the termination of the participant’s service would be prohibited because the issuance of stock would violate the registration requirements under the Securities Act of 1933, as amended (the “Securities Act”), then the option will terminate on the earlier of (1) the expiration of the term of the option or (2) three months after the termination of the participant’s service during which the exercise of the option would not be in violation of such registration requirements.
Terms of Restricted Stock Awards and Purchases of Restricted Stock
Payment.
The Board determines the purchase price under a restricted stock purchase agreement but the purchase price may not be less than 100% of the fair market value of Gran Tierra’s common stock on the date of purchase. The Board may award stock bonuses in consideration of past services without a purchase payment.
The purchase price of stock acquired pursuant to a restricted stock purchase agreement under the Plan must be paid either in cash at the time of purchase or at the discretion of the Board, (1) by delivery of other common stock of Gran Tierra, (2) pursuant to a deferred payment arrangement or (3) in any other form of legal consideration acceptable to the Board.
Vesting.
Shares of stock sold or awarded under the Plan may, but need not be, subject to a repurchase option in favor of Gran Tierra in accordance with a vesting schedule as determined by the Board. The Board has the power to accelerate the vesting of stock acquired pursuant to a restricted stock purchase agreement under the Plan.
Restrictions on Transfer.
Rights under a stock bonus or restricted stock bonus agreement may be transferred only upon the terms and conditions of the award agreement as the Board shall determine in its discretion, except where such assignment is required by law or expressly authorized by the terms of the applicable stock bonus or restricted stock purchase agreement.
Stock Appreciation Rights
The Plan authorizes the grant of stock appreciation rights. Stock appreciation rights entitle the participant to receive upon exercise an appreciation distribution equal to the fair market value of that number of share equivalents in which the participant is vested under the independent stock appreciation rights less the fair market value of such number of shares of stock on the date of grant of the independent stock appreciation rights. The Plan defines the “fair market value” of the common stock on any given date as the closing price on that date for such stock (or the closing bid, if no sales were reported) as quoted on the exchange or market with the greatest volume of trading in the common stock. Appreciation distributions payable upon exercise of stock appreciation rights may, at the Board’s discretion, be made in cash, in shares of stock or a combination thereof.
Restrictions on Transfer
The Board may grant stock options that are transferable to the extent provided in the stock option agreement. Options generally are not transferable, except by will or by the laws of descent and distribution. Shares subject to repurchase by Gran Tierra under an early exercise stock purchase agreement may be subject to restrictions on transfer that the Board deems appropriate.
Adjustment Provisions
Transactions not involving receipt of consideration by Gran Tierra, such as a merger, consolidation, reorganization, stock dividend, or stock split, may change the type(s), class(es) and number of shares of common stock subject to the Plan and outstanding awards. In that event, the Plan will be appropriately adjusted as to the type(s), class(es) and the maximum number of shares of common stock subject to the Plan, and outstanding awards will be adjusted as to the type(s), class(es), number of shares and price per share of common stock subject to such awards.
Effect of Certain Corporate Transactions
In the event of (1) the sale, lease, license or other disposition of all or substantially all of the assets of Gran Tierra, (2) the sale or other disposition of all or substantially all of the outstanding securities of Gran Tierra, or (3) certain specified types of merger, consolidation or similar transactions (collectively, “corporate transaction”), any surviving or acquiring corporation may continue or assume awards outstanding under the Plan or may substitute similar awards. If any surviving or acquiring corporation does not assume such awards or substitute similar awards, then with respect to awards held by participants whose service with Gran Tierra or an affiliate has not terminated as of the effective date of the corporate transaction, the vesting of such awards (and, if applicable, the time during which such awards may be exercised) will be accelerated in full and the awards will terminate if not exercised (if applicable) at or prior to such effective date.
The Plan provides, that in the event of certain change of control events, any outstanding stock awards may be subject to additional acceleration of vesting and exercisability upon or after such change of control event, if such acceleration is provided for in the individual award holder’s stock award agreement
The acceleration of an award in the event of a corporate transaction or a change in control event may be viewed as an anti-takeover provision, which may have the effect of discouraging a proposal to acquire or otherwise obtain control of Gran Tierra.
Duration, Amendment and Termination
The Board may suspend or terminate the Plan without stockholder approval or ratification at any time or from time to time.
The Board may also amend the Plan at any time or from time to time. However, no amendment will be effective unless approved by the stockholders of Gran Tierra within 12 months before or after its adoption by the Board to the extent such approval is necessary to satisfy the requirements of Section 422 of the Code, no amendments to stock awards could be made if the common stock is listed on the TSX unless approved by the stockholders to the extent necessary to satisfy the rules of the TSX, and no amendment may reduce the exercise price or extend the term of an option granted to an Insider, unless approved by a majority of disinterested stockholders. The Board may, in its discretion, submit any other amendment to the Plan for stockholder approval.
U.S. Federal Income Tax Information
Stock Options, Restricted Stock Purchase Awards and Stock Bonuses.
Stock options, restricted stock purchase awards and stock bonuses granted under the Plan generally have the following federal income tax consequences. There are no tax consequences to the participant or Gran Tierra by reason of the grant. Upon acquisition of the stock, the participant normally will recognize taxable ordinary income equal to the excess, if any, of the stock’s fair market value on the acquisition date over the purchase price. However, to the extent the stock is subject to certain types of vesting restrictions, the taxable event will be delayed until the vesting restrictions lapse unless the participant elects to be taxed on receipt of the stock. With respect to employees, Gran Tierra is generally required to withhold from regular wages or supplemental wage payments an amount based on the ordinary income recognized. Subject to the requirement of reasonableness, the provisions of Section 162(m) of the Code and the satisfaction of a tax reporting obligation, Gran Tierra will generally be entitled to a business expense deduction equal to the taxable ordinary income realized by the participant.
Upon disposition of the stock, the participant will recognize a capital gain or loss equal to the difference between the selling price and the sum of the amount paid for such stock plus any amount recognized as ordinary income upon acquisition (or vesting) of the stock. Such gain or loss will be long-term or short-term depending on whether the stock was held for more than one year. Slightly different rules may apply to participants who acquire stock subject to certain repurchase options or who are subject to Section 16(b) of the Exchange Act.
Stock Appreciation Rights.
No taxable income is realized upon the receipt of a stock appreciation right, but upon exercise of the stock appreciation right the fair market value of the shares (or cash in lieu of shares) received must be treated as compensation taxable as ordinary income to the participant in the year of such exercise. Generally, with respect to employees, Gran Tierra is required to withhold from the payment made on exercise of the stock appreciation right or from regular wages or supplemental wage payments an amount based on the ordinary income recognized. Subject to the requirement of reasonableness, Section 162(m) of the Code and the satisfaction of a reporting obligation, Gran Tierra will be entitled to a business expense deduction equal to the taxable ordinary income recognized by the participant.
Potential Limitation on Company Deductions.
Section 162(m) of the Code denies a deduction to any publicly held corporation for compensation paid to certain “covered employees” in a taxable year to the extent that compensation to such covered employee exceeds $1 million. It is possible that compensation attributable to awards, when combined with all other types of compensation received by a covered employee from Gran Tierra, may cause this limitation to be exceeded in any particular year.
Certain kinds of compensation, including qualified “performance-based compensation,” are disregarded for purposes of the deduction limitation. In accordance with Treasury Regulations issued under Section 162(m), compensation attributable to stock optionsBeneficial Owners and stock appreciation rights will qualify as performance-based compensation if the award is granted by a compensation committee comprised solely of “outside directors” and either (1) the plan contains a per-employee limitation on the number of shares for which such awards may be granted during a specified period, the per-employee limitation is approved by the stockholders, and the exercise price of the award is no less than the fair market value of the stock on the date of grant, or (2) the award is granted (or exercisable) only upon the achievement (as certified in writing by the compensation committee) of an objective performance goal established in writing by the compensation committee while the outcome is substantially uncertain, and the award is approved by stockholders.
Awards to purchase restricted stock and stock bonus awards will qualify as performance-based compensation under the Treasury Regulations only if (1) the award is granted by a compensation committee comprised solely of “outside directors,” (2) the award is granted (or exercisable) only upon the achievement of an objective performance goal established in writing by the compensation committee while the outcome is substantially uncertain, (3) the compensation committee certifies in writing prior to the granting (or exercisability) of the award that the performance goal has been satisfied and (4) prior to the granting (or exercisability) of the award, stockholders have approved the material terms of the award (including the class of employees eligible for such award, the business criteria on which the performance goal is based, and the maximum amount — or formula used to calculate the amount — payable upon attainment of the performance goal).
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENTManagement
The following table sets forth information regarding the beneficial ownership of ourGran Tierra common stock as of April 1, 2008February 15, 2009 by (1) each of its directors and named executive officers and (2) all of Gran Tierra’s executive officers and directors as a group. To Gran Tierra’s knowledge, there is no person who to our knowledge, beneficially owns more than 5% of the outstanding shares of theits common stock; (2) each of our directors and named executive officers; and (3) all of our executive officers and directors as a group.stock. Unless otherwise indicated in the footnotes to the following table, each person named in the table has sole voting and investment power and that person’s address is 300, 611-10th Avenue, S.W., Calgary, Alberta T2R 0B2, Canada. Shares of common stock subject to options or warrants currently exercisable or exercisable within 60 days following April 1, 2008February 15, 2009 are deemed outstanding for computing the share and percentage ownership of the person holding such options and warrants, but are not deemed outstanding for computing the percentage of any other person. All share numbers and ownership percentage calculations below assume that all Exchangeable Shares have been converted on a one-for-one basis into corresponding shares of our common stock.
Name and Address of Beneficial Owner (1) | | Amount and
Nature of
Beneficial Ownership | | Percentage of
Class | |
| Dana Coffield (2) | | | 2,009,663 | | | 2.01 | % |
| Martin Eden (3) | | | 89,000 | | | * | |
| Max Wei (4) | | | 1,871,335 | | | 1.87 | % |
| Rafael Orunesu (5) | | | 1,951,349 | | | 1.95 | % |
| Edgar Dyes (6) | | | 33,334 | | | * | |
| Jeffrey Scott (7) | | | 2,647,195 | | | 2.64 | % |
| Walter Dawson (8) | | | 3,055,953 | | | 3.04 | % |
| Verne Johnson (9) | | | 1,858,714 | | | 1.86 | % |
| Nicholas G. Kirton (10) | | | — | | | * | |
| James R. Hart (11) | | | 1,688,889 | | | 1.69 | % |
| Greywolf Capital Management LP (12) | | | 6,286,001 | | | 6.08 | % |
| U.S. Global Investors, Inc. (13) | | | 6,409,017 | | | 6.31 | % |
| Directors and officers as a group (total of 10 persons) (14) | | | 15,205,432 | | | 14.87 | % |
| Name and Address of Beneficial Owner (1) | | Amount and Nature of Beneficial Ownership | | | Percentage of Class | |
| Dana Coffield (2) | | | 2,209,663 | | | | * | |
| Martin Eden (3) | | | 197,333 | | | | * | |
| Max Wei (4) | | | 1,992,167 | | | | * | |
| Rafael Orunesu (5) | | | 2,063,850 | | | | * | |
| Edgar Dyes (6) | | | 133,334 | | | | * | |
| Shane O’Leary (7) | | | 12,000 | | | | * | |
| Jeffrey Scott (8) | | | 2,780,528 | | | | 1.16 | % |
| Walter Dawson (9) | | | 3,130,922 | | | | 1.31 | % |
| Verne Johnson (10) | | | 1,562,892 | | | | * | |
| Nicholas G. Kirton (11) | | | 63,333 | | | | * | |
| Ray Antony (12) | | | 495,455 | | | | * | |
| J. Scott Price (13) | | | 7,184,049 | | | | 2.97 | % |
| | | | | | | | | |
| Directors and officers as a group (total of 12 persons) (14) | | | 21,825,526 | | | | 8.92 | % |
* Less than 1%
| (1) | | Beneficial ownership is calculated based on 99,988,644238,710,473 shares of common stock issued and outstanding as of April 1, 2008,February 15, 2009, which number includes 11,827,77610,984,126 shares of common stock issuable upon the exchange of the Exchangeable Shares issued to certain former holders of Gran Tierra Canada’s common stock and 31,519,884 shares of common stock issuable upon the exchange of the Exchangeable Shares issued to certain former holders of Solana’s common stock. Beneficial ownership is determined in accordance with Rule 13d-3 of the SEC.Exchange Act. The number of shares beneficially owned by a person includes shares of common stock underlying options or warrants held by that person that are currently exercisable or exercisable within 60 days of April 1, 2008.February 15, 2009. The shares issuable pursuant to the exercise of those options or warrants are deemed outstanding for computing the percentage ownership of the person holding those options and warrants but are not deemed outstanding for the purposes of computing the percentage ownership of any other person. Unless otherwise indicated, the persons and entities named in the table have sole voting and sole investment power with respect to the shares set forth opposite that person’s name, subject to community property laws, where applicable. |
| (2) | | The number of shares beneficially owned includes an option to acquire 175,001375,000 shares of common stock exercisable within 60 days of April 1, 2008,February 15, 2009, and shares issuable upon exercise of warrants to acquire 48,32748,328 shares of common stock exercisable within 60 days of April 1, 2008.February 15, 2009. The number of shares beneficially owned also includes 1,689,683 Exchangeable Shares. |