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HECLA MINING COMPANY | ||
PROXY STATEMENT | ||
2017 ANNUAL MEETING OF SHAREHOLDERS | ||
HECLA MINING COMPANY |   |
NOTICE OF 20162017 ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the 20162017 Annual Meeting of Shareholders (“Annual Meeting”) of Hecla Mining Company (“we,” “our,” “us,” “Hecla,” or the “Company”) will be held in the Eric A. Johnston Auditorium at the Northwest Museum of Arts & Culture,Fairmont Pacific Rim Hotel, located at 2316 W. 1st Avenue, Spokane, Washington,1038 Canada Place, Vancouver, British Columbia, on Thursday, May 19, 2016,25, 2017, at 10:00 a.m., Pacific Daylight Time, for the following purposes:
| 1. | Elect | ||
| 2. | |||
| Ratify the Audit Committee’s appointment of BDO USA, LLP as our independent registered public accounting firm for | |||
| 3. | Approve, on an advisory basis, the compensation of our named executive officers; | ||
| 4. | Approve, on an advisory basis, the frequency of our executive compensation approval vote; | ||
| 5. | Approve our Amended and Restated Hecla Mining Company Stock Plan for Nonemployee Directors, including to increase to 3,000,000, the number of shares of common stock available for issuance under such Plan; | ||
| 6. | Approve an amendment to our Certificate of Incorporation increasing the number of authorized shares of our common stock from 500,000,000 to 750,000,000; | ||
| 7. | Approve amendments to our Certificate of Incorporation and Bylaws to remove certain 80% supermajority voting provisions; | ||
| 8. | Approve amendments to our Certificate of Incorporation and Bylaws to permit shareholders to call special meetings of shareholders under certain circumstances; and | ||
| 9. | Transact such other business as may properly come before the meeting. | ||
The Board of Directors (“Board”) has fixed the close of business on March 23, 201627, 2017 as the record date for the determination of shareholders entitled to notice of, and to vote at, the Annual Meeting and at any adjournment or postponement thereof (“Record Date”).
On or about April 4, 2016,10, 2017, we began mailing to our shareholders of record as of the Record Date, either a Notice of Internet Availability of Proxy Materials (“Notice”) containing instructions on how to access this Proxy Statement and our 20152016 Annual Report (“Proxy Materials”) online, or a printed copy of these Proxy Materials.
By Order of the Board of Directors
Michael B. White
Corporate Secretary
April 4, 201610, 2017
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIALS Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting to be held on |
2017 Proxy Statementi
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 19, 201625, 2017
iiwww.hecla-mining.com
2017 Proxy Statementiii
ivwww.hecla-mining.com
A MESSAGE FROM YOUROUR
INDEPENDENT CHAIRMAN
Your Board is committed to fulfilling its duties and to keeping the interests of our shareholders and employees at the center of our priorities. |  | |
Ted Crumley, |  |
Dear Fellow Shareholder:
It is the responsibility of the Board to maintain sound corporate governance practices and to oversee the Company’s strategic and operational activities in a manner that protects and creates long-term shareholder value. Your Board is committed to fulfilling these duties and to keeping the interests of our shareholders and employees at the center of our priorities.
Corporate Strategy
Hecla’s Board operates under the premise that we are elected by you, the shareholders, to oversee the long-term success of our Company. We are alsothe ultimate decision-making body of the Company, except for those matters reserved to or shared with our shareholders, and we play a critical role in strategic planning. Management is responsible for the day-to-day operations and management of the Company.
We oversee and evaluate a very capable management team that is focused on the growth of the Company. Over the years, we have had to weather the financial markets and lower metal prices, but we believe the Company made significant progress during those difficult times, which has allowed us to prosper as the environment for mining companies improved in 2016. In both good times and bad times, Hecla remains committed to the Company’s strategic approach to creating shareholder value - consistent, long-lived production that increases and improves over time. This means we need long-life assets to profit from higher metals prices, strong geological understanding to increase reserves, and operating expertise to reduce costs and lower risks.
As the Company weathers the current decline of metals prices, our strong financial position should enable us to continue to grow the Company, and we are confident that we are well positioned to create long-term shareholder value.
Governance
The Board, directly and through its Corporate Governance and Directors’Directors Nominating Committee (“Governance Committee”), seeks to maintain corporate governance practices that are aligned with our strategic, financial and operational goals. We do this by conducting processes at least annually to evaluate, optimize and update governance and practice guidelines.
Your Board is committed to keeping up with good corporate governance practices. In February 2017, the Board approved an amendment to its Corporate Governance Guidelines to include a director resignation policy. The policy provides that any director who is not elected by a majority of votes cast shall tender his or her resignation to the Governance Committee, which will then recommend to the Board whether to accept or reject the resignation offer, and the Board will act on the Governance Committee’s recommendation within ninety (90) days following certification of the election results. Any director who tenders his or her resignation pursuant to this provision will not participate in the proceedings of either the Governance Committee or the Board with respect to his or her own resignation offer.
Shareholder Outreach
One of our priorities is listening to the views of our shareholders and considering them as we make decisions in the boardroom. We accomplish this through ongoing outreach and engagement with our shareholders. Through management, we engage with shareholders on a variety of topics. Based on this engagement, we have made significant enhancements to the Company’s governance and compensation programs over the last several years.
2017 Proxy Statementv
Board Composition and Refreshment
Shareholders continue to express a genuine and legitimate interest in finding effective ways to ensure that boards of directors are comprised of the right people, with the right skills and qualifications, to effectively represent their interests. The issue of Board composition and refreshment is a priority of our shareholders, and we agree that refreshing the Board with new perspectives and new ideas is critical to a forward-looking and strategic Board. At the same time, it is also important to benefit from the valuable experience and familiarity that longer-serving directors bring to the boardroom. The Board places great valueis also very conscious of the benefits of diversity on the feedbackBoard. Ensuring diverse perspectives, including a mix of skills, experience and backgrounds, is key to effectively representing the long-term interests of shareholders. Doing so is a top priority of the Board. In just the last year and a half, three new directors have been appointed to our Board. As a result, the average tenure for our directors has been reduced and our Board now includes a woman director.
We remain committed to ensuring your Board is composed of a highly capable and diverse group of directors, well-equipped to oversee the success of the business and effectively represent the interests of our shareholders. We will continue to seek qualified candidates that will further enhance our Board’s diversity.
Your participation and your votes are important to the future of our Company. We encourage you to vote your shares in accordance with the Board’s recommendations. Details of the items to be voted upon are provided throughout this Proxy Statement.
Ted Crumley
Chairman
viwww.hecla-mining.com
A MESSAGE FROM OUR PRESIDENT
AND CHIEF EXECUTIVE OFFICER
Our simple strategy is to explore, develop and operate properties that have consistent, long-lived production that grows and whose margins improve over time. |  |
Phillips S. Baker, Jr., |
Dear Fellow Shareholder:
On behalf of your entire Board and the management team, I deeply appreciate your support and faith in our Company. I also want to express my gratitude to our Board for its guidance and support as we execute our strategy, which we expect to yield long-term shareholder value as it receiveshas throughout 2016 and into 2017. To all our employees, please accept my appreciation for your readiness to adapt, your responsiveness, creativity and willingness to work together towards attaining that success.
Our Responsibility
At Hecla, our Integrated Corporate Responsibility Policy begins with the belief that a safe mine is a productive mine – each day, each shift, home safely. We will strive to guard the health and safety of our employees and the community. Second, we will be responsible environmental stewards and strive to minimize environmental effects during exploration, development and operations and then reclaim our projects to productive post mining land uses. Third, we believe that by being responsive to community needs, the Company builds trust and relationships that foster our social license to operate. This encompasses taking a mutually-beneficial approach to issues affecting the community, treating others with respect, and engaging in open and honest communication. Each of these aspects is integrated into our business planning as they are considered key to our core business strategy and continued profitability.
Our Strategy and 2016 Accomplishments
Our simple strategy is to explore, develop and operate properties that have consistent, long-lived production that grows and whose margins improve over time.
At the heart of our strategy is long-lived, low-cost mines: both our existing mines and acquiring assets with the ability to be long-lived, making smart investments to further extend the mine life, which in turn enables us to work toward lowering both operating and capital costs and to take advantage of the metals’ price cycle.
Building around the core of long-lived, low-cost mines are the four elements necessary to be successful. The first is metals that we mine. While our focus is primarily on silver and gold, we continue to produce a substantial amount of lead and zinc as by-products. The recent acquisitions of Rock Creek and Montanore in northwestern Montana gives us two of the largest undeveloped silver and copper deposits in North America. The advantages of this diversity include multiple revenue streams, which lowers our risk profile and provides a natural hedge with more stability and predictability of revenues, enabling us to better run our business.
Second is our committed and talented employees, many of whom have been with the Company for decades, who are working together making our mines more safe, efficient and productive.
Third is financial discipline. During my tenure as president and CEO we have issued a significant amount of equity only three times: 2003, 2008-2009, and 2013 – the latter two were to acquire new assets (Greens Creek and Casa Berardi). Over the past several years we have seen our production and reserves per share grow more than an average of our peers. Combined with low-cost growth, this disciplined approach has also created shareholder value.
Finally, our North American focused asset portfolio takes advantage of low-risk, mining-friendly jurisdictions where, by being responsive to community needs, we’ve built trust and relationships that foster our social license to operate.
2017 Proxy Statementvii
In 2016, some of our key achievements included the following:
| ● | silver equivalent production of 46.1 million ounces, the highest in the Company’s history;1 |
| ● | a 48% increase in silver production to 17.2 million ounces, a record, with cost of sales of $298.7 million, and cash cost after by-product credits, per silver ounce of $3.10;2 |
| ● | a 24% increase in gold production to 233,929 ounces Company-wide, with 145,975 ounces produced at Casa Berardi; with cost of sales and other direct production costs and depreciation, depletion and amortization of $155.7 million and cash cost, after by-product credits, per gold ounce of $764;2 |
| ● | cash provided by operating activities of $225.3 million, a 112% increase compared to 2015; |
| ● | net income of $69 million and Adjusted EBITDA of $264.6 million, a 179% and 127% increase compared to 2015;3 |
| ● | achieved the above milestones while ending the year with a cash, cash equivalents and short-term investments balance of $198.9 million as of December 31, 2016, an increase of $43.7 million during the year; |
| ● | commenced development of the East Mine Crown Pillar (“EMCP”) open pit project at Casa Berardi, with processing of ore from EMCP that began in July 2016; |
| ● | completed the #4 Shaft at Lucky Friday, the largest capital project in our history, which started in 2008; |
| ● | acquisition of Mines Management, Inc., giving us ownership of the Montanore project, a very large silver/copper project undergoing permitting in northwestern Montana; and |
| ● | the first hardrock mining company to receive independent certification under CORESafety.4 |
We believe our strategy and accomplishments have provided our shareholders with substantial share value.
We sincerely hope you will be able to attend and participate in our Annual Meeting. We welcome the opportunity to meet with many of you and give you a firsthand report on our progress, as well as express our appreciation for your confidence and support.
Phillips S. Baker, Jr.
President and Chief Executive Officer
| 1 | 2016 silver equivalent calculation is based on the following prices: $17.10 (per oz.) for silver, $1,248 (per oz.) for gold, $0.85 (per lb.) for lead, and $0.95 (per lb.) for zinc. |
| 2 | Cash cost, after by-product credits, per silver and gold ounce represents a non-GAAP measurement, a reconciliation of which to cost of sales and other direct production costs and depreciation, depletion and amortization, the most comparable GAAP measure, can be found in Appendix FunderReconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to Cash Cost, Before By-product Credits Per Silver/Gold Ounce and Cash Cost Per Silver/Gold Ounce, After By-product Credits (non-GAAP).It is an important operating statistic that management utilizes to measure each mine’s operating performance. It also allows the benchmarking of performance of each mine versus those of our competitors. As a primary silver mining company, management also uses the statistic on an aggregate basis – aggregating the Greens Creek, Lucky Friday and San Sebastian mines – to compare performance with that of other primary silver mining companies. With regard to Casa Berardi, management uses cash cost, after by-product credits, per gold ounce to compare its performance with other gold mines. The statistic is also useful in identifying acquisition and investment opportunities as it provides a common tool for measuring the financial performance of other mines with varying geologic, metallurgical and operating characteristics. In addition, the Company may use it when formulating performance goals and targets under our incentive program. |
| 3 | Adjusted EBITDA is a non-GAAP measurement, a reconciliation of which to net income (loss), the most comparable GAAP measure, can be found in Appendix FunderReconciliation of Net Income (Loss) (GAAP) to Adjusted EBITDA (non-GAAP) to Net Income (Loss) (GAAP). Adjusted EBITDA is a measure used by management to evaluate the Company’s operating performance but should not be considered an alternative to net income (loss), or cash provided by operating activities as those terms are defined by GAAP, and does not necessarily indicate whether cash flows will be sufficient to fund cash needs. In addition, the Company may use it when formulating performance goals and targets under our incentive program. |
| 4 | CORESafety is a partnership led by the members of the National Mining Association. It is an approach to mining safety and health to prevent accidents before they happen using a management system that involves leadership, management and assurance. Its objective is to have zero fatalities and a 50 percent reduction in mining’s injury rate within five years (0:50:5). |
viiiwww.hecla-mining.com
| PROXY STATEMENT SUMMARY |
This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all the information you should consider and you should read the entire Proxy Statement before voting. For more complete information regarding the Company’s 2016 performance, please review our Annual Report on Form 10-K.
Only record or beneficial owners of Hecla’s common stock as of the Record Date, or a valid proxy or representative of such shareholder, or an invited guest of management, may attend the Annual Meeting in person. Any shareholder,proxy or representative who wishes to attend the Annual Meeting must present the documentation described under “General Information about the Meeting – Rules for Attending the Annual Meeting” on page 97.
| Proposals | Board Vote Recommendation | Page Reference For More Information | |||
| Proposal 1 – | Election of Two Class I Directors | FOReach Director Nominee | 11 | ||
| Proposal 2 – | Ratification of BDO USA, LLP as the Company’s Independent Registered Public Accounting Firm for 2017 | FOR | 30 | ||
| Proposal 3 – | Advisory Vote on Executive Compensation | FOR | 75 | ||
| Proposal 4 – | Advisory Vote on Frequency of Vote on Executive Compensation | 1 YEAR | 76 | ||
| Proposal 5 – | Approval of Amended and Restated Hecla Mining Company Stock Plan for Nonemployee Directors, including to Increase to 3,000,000 the Number of Shares of Common Stock Available for Issuance under the Hecla Mining Company Stock Plan for Nonemployee Directors | FOR | 77 | ||
| Proposal 6 – | Amendment to our Certificate of Incorporation to Increase the Number of Authorized Shares | FOR | 81 | ||
| Proposal 7 – | Approval of Amendments to our Certificate of Incorporation and Bylaws to Remove Certain 80% Supermajority Voting Provisions | FOR | 83 | ||
| Proposal 8 – | Approval of Amendments to our Certificate of Incorporation and Bylaws to Permit Shareholders to Call Special Meetings of Shareholders Under Certain Circumstances | FOR | 86 |
2017 Proxy Statement1
| PROXY STATEMENT SUMMARY |
Our Board is composed of nine members divided into three classes, with each class serving a term of three years. Our director, Dr. Anthony P. Taylor, has reached the mandatory retirement age of 75 and will not be standing for re-election at the Annual Meeting. The size of the Board is expected to be reduced to eight at the Annual Meeting.
The Board and the Governance Committee believe the two director nominees (Baker and Johnson) possess the necessary qualifications to provide effective oversight of our business and quality advice and counsel to the Company’s management.
The following table summarizes important information about each director nominee standing for re-election to the Board for a three-year term expiring in 2020.
| Class I Director Nominees | Experience and Qualifications |
| Phillips S. Baker, Jr.(age 57) Director since 2001 Chairman of the Executive Committee Serves on one other public company board | ●Public company board service ●CEO/administration and operations ●Finance ●Industry and mining experience ●Reputation in the industry ●Legal |
| George R. Johnson (age 68) Independent Director since 2016 Retired mining executive Serves on one other public company board | ●Public company board service ●Industry and mining experience ●International business ●Leadership/executive officer experience ●Reputation in the industry ●Mining engineering |
Corporate Governance Highlights
We are committed to good corporate governance practices and believe that Proposals 7 and 8 are in the best interests of our shareholders. We believe that if passed they would enhance Board and management accountability and help build public trust in the Company.
In addition to Proposals 7 and 8 described beginning on pages 83 and 86, respectively, theCorporate Governance and Related Matters section beginning on page 18 further describes our current governance framework, which includes the following highlights:
Shareholder Rights
| Director Resignation Policy | Directors who receive more “Against” votes than “For” votes must tender their resignation to the Board for consideration. | |
| No Poison Pill | We do not have a shareholder rights plan (commonly referred to as a “poison pill”). | |
| Majority Voting for Director Elections | Directors are elected by a majority of votes cast, which increases Board accountability to shareholders. |
Board Structure
| Governance Policies | Our Corporate Governance Guidelines provide shareholders with information regarding the best practice principles of our corporate governance program and Board framework. | |
| Board Refreshment and Tenure | We added two new directors in 2016 and one new director in 2017, thereby reducing the average tenure of the Board from 11 years to approximately 9 years. | |
| 90% Independent | Eight of nine directors are independent, including the Audit, Compensation, and Governance Committee members. | |
| Independent Chairman of the Board | The positions of CEO and Chairman of the Board are held by separate persons. The Board believes this structure is optimal for the Company because it allows the CEO to focus on leading the Company’s business and operations, and the Chairman to focus on broader strategies and leading the activities of the Board. |
2www.hecla-mining.com
| PROXY STATEMENT SUMMARY |
| Regular Executive Sessions of Independent Directors | Executive sessions of non-management directors are included on the agenda for every regularly scheduled Board meeting. | |
| Committee Governance | Our Board committees have written charters that clearly establish their respective roles and responsibilities, and are comprised exclusively of independent directors. Committee composition and charters are reviewed annually by our Board. | |
| Mandatory Retirement | We have a mandatory director retirement age of 75, which helps ensure regular refreshment of our Board. | |
| Annual Performance Evaluations | Our Governance Committee oversees an annual performance evaluation of our Board, while the Committees perform their own self-evaluations on an annual basis. | |
| Access to Management and Experts | Our Board and Committees have complete access to all levels of management and can engage advisors at our expense, giving them access to employees with direct responsibility for managing our Company and experts to help them fulfill their oversight responsibilities on behalf of our shareholders. | |
| Succession Planning | Our Board’s Compensation Committee and/or our full Board reviews potential CEO and other senior executive successors annually to develop our future leaders and ensure we can sustain business continuity, if any of these key employees were to leave our Company. |
Executive Compensation
| Stock Ownership Guidelines | We have rigorous share ownership guidelines for our Section 16(b) officers and our directors. | |
| Annual Say-on-Pay Vote | Shareholders have the opportunity annually to cast an advisory vote on our executive compensation. In Proposal 4 of this Proxy Statement, the Board is recommending that the shareholders continue to have the opportunity to cast an annual advisory vote on our executive compensation. | |
| At-Risk, Performance- Based Compensation | 84% of CEO and 74% of NEO pay is at-risk1. Over 68% of total compensation for the CEO is performance-based and 54% of total compensation for the other NEOs is performance-based. | |
| Stock Awards | We grant restricted stock units to retain our senior executives and align their interests with long-term interests of our shareholders. The restricted stock units vest in equal amounts with annual vesting dates over a three-year period. | |
| Change in Control Agreements | Our change in control agreements are double-trigger and contain no excise tax gross-up provision. | |
| Insider Trading Policy | Our Insider Trading Policy prohibits all directors, executive officers and certain other employees from purchasing or selling any Company securities three weeks before through two days after the public release of any of our periodic results, or at any other time during the year while in possession of material non-pubic information about the Company. | |
| Anti-hedging and Anti- pledging policies | Our Insider Trading Policy provides that directors and officers are prohibited from hedging or pledging any securities of the Company. | |
| Clawback Policy | Each of the Company’s incentive plans (Annual Incentive Plan, Long-term Incentive Plan, Key Employee Deferred Compensation Plan, and 2010 Stock Incentive Plan) have clawback provisions. |
| 1 | Pay at-risk refers to the portion of an employee’s compensation that is variable, and therefore “at-risk” of not being paid out. This “at-risk pay” is typically performance-based, and is in contrast to the fixed pay (salary) that the NEO receives as a condition of employment. |
Over the last several years we have undertaken significant shareholder outreach efforts in order to elicit and potential shareholders, particularly with respectunderstand the concerns of our shareholders. After implementing certain changes in 2014 and 2015 to our executive compensation program, our 2016 say-on-pay vote received 81% support. The Compensation Committee believes the changes made in 2014 and 2015 impacted the vote because they were responsive to the feedback from investors and proxy advisory firms, and enhanced the performance orientation of our executive compensationprogram. The current frequency of shareholder advisory votes on executive compensation is every year.
Once again, in advance of our 2017 Annual Meeting, we engaged with our shareholders and others to seek their feedback. We held one-on-one discussions with shareholders holding over 50,000,000 shares of our common stock, as we believe in maintainingwell as a high level of transparency in that area. Oneface-to-face discussion with one of the primary sourcesproxy advisory firms. The response was overwhelmingly supportive to the changes we made to
2017 Proxy Statement3
| PROXY STATEMENT SUMMARY |
In addition to seeking input on our compensation practices, our shareholder outreach efforts pursuant to which we elicit the viewpoints of large shareholders and certain proxy advisory firms. In part because of the feedback we have received through our shareholder outreach efforts, we have implemented certain changes in our executive compensation program. We believe those changes helped us obtain a favorable vote of 83% on our say-on-pay proposal in 2015, which was 30% more favorable than our 2013 say-on-pay vote.
Our shareholder outreach program also seeks to identify corporate governance matters that are of concern primarily to our shareholders, as well asbut also to the major proxy advisory firms.
During our shareholder outreach in 2015 twoand 2016, three corporate governance issues were discussed with our shareholders: (i) the ability of shareholders to call special meetings, and (ii) the 80% supermajority voting requirement on certain amendments to amend provisions in our Certificate of Incorporation and Bylaws impacting special meetings. meetings, and (iii) the absence of a director resignation policy.
At our 2014 Annual Meeting, we asked shareholders to vote on a proposal to amend our Certificate of Incorporation and Bylaws to permit shareholders to call special meetings under certain circumstances. Under our Certificate of Incorporation, this change required the approval by holders of 80% of our outstanding shares of common stock, yet we only received approval from 41%. We are again includingsubmitted this proposal on the ballot for the Annual Meeting. In addition, we are including another proposal to amend our Certificate of Incorporation and Bylaws to change the required approval of amendments to the Certificate of Incorporation and Bylaws relating to the calling of special meetings from 80% to a two-thirds voting standard.
Board Composition
In December 2015, we were saddened to announce the passing of John H. Bowles, a director of the Company. John served on the Board of Hecla for over nine years following his retirement as a partner at PricewaterhouseCoopers LLP. He chaired the Audit Committee, and was also a member of the Executive Committee and Health, Safety, Environmental and Technical Committee. He leaves a long, distinguished legacy in our industry and as a member of our Board for which we are eternally grateful.
Shareholders continue to express a genuine and legitimate interest in finding effective ways to ensure thatboards of directors are comprised of the right people, with the right skills and qualifications, to effectively represent their interests. The issue of Board composition and refreshment is a priority of our shareholders, and we agree that refreshing the Board with new perspectives and new ideas is critical to a well-functioning Board. Accordingly, we have been actively pursuing new members.
In seeking new directors, the Board is also very conscious of the benefits of diversity on the Board. We have sought and continue to seek qualified candidates that would enhance our Board’s diversity.
Your participation and your votes are important to the future of our Company. We encourage you to vote your shares in accordance with the Board’s recommendations. Details of the items to be voted upon are provided throughout this Proxy Statement.
Ted CrumleyChairman
A MESSAGE FROM THE PRESIDENT ANDCHIEF EXECUTIVE OFFICER
|  |
Dear Fellow Shareholder:
On behalf of your entire Board and the management team, I deeply appreciate your support and faith in our Company. I also want to express my gratitude to our Board for its guidance and support as we execute our strategy, which we expect to yield long-term shareholder value. To all our employees, please accept my appreciation for your readiness to adapt, your responsiveness, creativity and willingness to work together towards attaining that success.
Our Responsibility
At Hecla, our Integrated Corporate Responsibility Policy (“ICR”) begins with the belief that a safe mine is a productive mine – each day, each shift, home safely. We will strive to guard the health and safety of our employees and the community. Second, we will be responsible environmental stewards and strive to minimize environmental effects during exploration, development and operations, and then reclaim our projects to productive post-mining land uses. Third, we believe that by being responsive to community needs, the Company builds trust and relationships that foster our social license to operate. This encompasses taking a mutually-beneficial approach to issues affecting the community, treating others with respect, and engaging in open and honest communication. Each of these aspects is fully integrated into our business planning as they are considered key to our core business strategy.
Our Strategy and 2015 Accomplishments
Our simple strategy is to explore, develop and operate properties that have consistent, long-lived production that grows and whose margins improve over time.
Despite lower metals prices in 2015, we finished the year strongly, with the most silver and silver equivalent production in our history. The Company also, for the 10th consecutive year, grew silver reserves to the most in our history, despite using lower price assumptions. We ended the year with $155 million of cash on the balance sheet, which was consistent with our expectations and using our balance sheet strength to invest in expanding mine life and increasing production.
In 2015, our key achievements included the following:
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Into the Future
2016 marks Hecla’s 125th anniversary. We believe our strategy and accomplishments will give shareholders value in all price environments, both compared to peers and when metals prices increase, and for what we hope is another 125 years.
We sincerely hope you will be able to attend and participate in our Annual Meeting. We welcome the opportunity to meet with many of you and give you a firsthand report on our progress, as well as express our appreciation for your confidence and support.
Phillips S. Baker, Jr.President and Chief Executive Officer
This summary highlights information contained elsewhere in this Proxy Statement. This summary does not contain all of the information that you should consider and you should read the entire Proxy Statement before voting.
Proposal 1 – Election of Directors (page 10)
The Board and the Corporate Governance and Directors’ Nominating Committee believe that the three director nominees (Crumley, Rogers and Stanley) possess the necessary qualifications to provide effective oversight of our business and quality advice and counsel to the Company’s management.
Director Nominees Recommended by the Board of Directors
| Name | Age | Director Since | Experience/Qualification | Independent (Yes/No) | Committee Memberships | Other Current Public Directorships | ||||||||
| Ted Crumley Board Chairman | 71 | 1995 | Former Executive Vice President and Chief Financial Officer of OfficeMax Incorporated | Yes | EC CC | None | ||||||||
| Terry V. Rogers | 69 | 2007 | Former Senior Vice President and Chief Operating Officer of Cameco Corporation | Yes | HSET (Chair) AC CC EC | Centerra Gold Inc. | ||||||||
| Charles B. Stanley | 57 | 2007 | Chief Executive Officer, President and Chairman of the Board of QEP Resources, Inc. | Yes | AC (Chair) HSET CG&DNC | QEP Resources, Inc. | ||||||||
| Continuing Members of the Board | ||||||||||||||
| Name | Age | Director Since | Experience/Qualification | Independent (Yes/No) | Committee Memberships | Other Current Public Directorships | ||||||||
| Term Ending at the 2017 Annual Meeting | ||||||||||||||
| Phillips S. Baker, Jr. | 56 | 2001 | President and Chief Executive Officer of Hecla Mining Company | No | EC (Chair) | QEP Resources, Inc. | ||||||||
| Dr. Anthony P. Taylor | 74 | 2002 | President, Chief Executive Officer and Director of Selex Resources Ltd. | Yes | CG&DNC (Chair) HSET CC | None | ||||||||
| George R. Johnson | 67 | 2016 | Former Senior Vice President of Operations of B2Gold Corporation | Yes | AC HSET | None | ||||||||
| Term Ending at the 2018 Annual Meeting | ||||||||||||||
| George R. Nethercutt, Jr. | 71 | 2005 | Chairman of The George Nethercutt Foundation and Of Counsel for Lee & Hayes PLLC | Yes | CC (Chair) CG&DNC | ARCADIS Corporation | ||||||||
| Stephen F. Ralbovsky | 62 | 2016 | Former Partner with PricewaterhouseCoopers LLP | Yes | AC CG&DNC | None | ||||||||
EC: Executive CommitteeAC: Audit CommitteeCC: Compensation CommitteeCG&DNC: Corporate Governance and Directors’ Nominating CommitteeHSET: Health, Safety, Environmental and Technical Committee
Proposal 2 – Approval of Amendments to the Company’s Certificate of Incorporation and Bylaws to Remove Certain 80% Supermajority Voting Provisions (page 26)
Our Certificate of Incorporation currently requires the approval of 80% of shares outstanding in order to make certain amendments to our Certificate of Incorporation and Bylaws affecting the ability to call special meetings of shareholders. This provision would be revised downward to a two-thirds vote requirement. If approved, the Companyintends to take the remaining steps required to implement the proposed amendments.
Proposal 3 – Approval of Amendments to the Company’s Certificate of Incorporation and Bylaws to Permit Shareholders to Call Special Meetings of Shareholders Under Certain Circumstances (page 29)
We are seeking the approval of our shareholders to amend our Certificate of Incorporation and Bylaws to add a right permitting shareholders who have held at least a 25% “net long position” in our outstanding common stock for at least 120 days to call special meetings of shareholders, subject to the conditions set forth in our Bylaws. Establishing a 25% “net long position” threshold for the right to call a special meeting would ensure that matters proposedfor consideration have significant support among our shareholders. If approved, the Company intends to take the remaining steps required to implement the proposed amendments.
Proposal 4 – Ratification of the Appointment of BDO USA, LLP as the Company’s Independent Registered Public Accounting Firm (page 31)
The Audit Committee and the Board believe that the continued retention of BDO USA, LLP to serve as the independent registered public accounting firm for the calendar year ending December 31, 2016, is in the best interests of the Company and its shareholders. As a matter of good corporate governance, shareholders are beingasked to ratify the Audit Committee’s selection of the independent auditor.
Proposal 5 – Approval of Named Executive Officer Compensation (page 77)
The Company seeks a non-binding advisory vote from its shareholders to approve the compensation of its named executive officers (“NEOs”) as described in theCompensation Discussion and Analysis section beginning on page 34 and the compensation tables beginning on page 62. The Board values shareholders’ opinions and the Compensation Committee will take into account the outcome of the advisory vote when considering future executive compensation decisions.
We are committed to good corporate governance practices and believe that Proposals 2 and 3 are in the best interests of our shareholders. We believe that if passed they would enhance Board and management accountability and help build public trust in the Company. In addition to Proposals 2 and 3 described beginning on pages 26 and 29, respectively, theCorporate Governance and Related Matters section beginning on page 18 further describes our current governance framework, which includes the following highlights:
Over the last few years we have undertaken significant shareholder outreach efforts in order to elicit and understand the concerns of our shareholders. In advance of our 2015year’s Annual Meeting a management team (excluding NEOs) held one-on-one discussions with shareholders holding over 15% of our common stock and obtained constructive feedback on our executive compensation program. The Compensation Committee, with assistance from management and its compensation consultant, considered the opinions and specific requests expressed during these meetings, as well as the analysis provided by proxy advisory firms. After implementing certain changes in 2014 and 2015, our 2015 say-on-pay vote received 83% support. The Compensation Committee believes the changes made in 2014 and 2015 impacted the vote because they were responsive to the feedback from investors and proxy advisory firms, and enhanced the performance orientation of our executive compensation program. The current frequency of shareholder advisory votes on executive compensation is every year.
Once again, in advance of our 2016 Annual Meeting, we engaged with our shareholders and others to seek their feedback. Our management team (excluding NEOs) again held one-on-one discussions with shareholders holding over 10% of our common stock, as well as one-on-one discussions with two proxy advisory firms. The response was overwhelmingly supportive of the changes we made to our executive compensation program in 2014 and 2015. The results of this engagement and the Compensation Committee’s ongoing efforts to ensure a strong alignment between executive pay and Company performance, led the committee to make no substantivechanges to its executive compensation program. However, in December 2015, due to budget reductions for 2016, our Chief Executive Officer’s (“CEO”) base salary was reduced by 20%, and base salary for all other NEO’s was reduced by 10% effective through all of calendar year 2016. In addition, our Board’s annual cash payments were reduced by 10% through all of calendar year 2016.
In addition to seeking input on our compensation practices, our shareholder outreach program seeks to identify corporate governance matters that are of concern primarily to our shareholders, but also to the major proxy advisory firms.
During our shareholder outreach in 2015, two corporate governance issues were discussed with our shareholders: (i) the ability of shareholders to call special meetings, and (ii) the 80% supermajority voting requirement to amend provisions in our Certificate of Incorporation and Bylaws impacting special meetings. At our 2014 Annual Meeting, we asked shareholders to vote on a proposal to amend our Certificate of Incorporation and Bylaws to permit shareholders to call special meetings under certain circumstances. Under our Certificate of Incorporation, this change required the approval by holders of 80% of our outstanding shares of common stock, yet we only received approval from 41%47%. We are again submitting this proposal at this year’s Annual Meeting. In addition, last year we are addingadded another proposal to amend our Certificate of Incorporation and Bylaws to change the required approval of certain amendments to the Certificate of Incorporation and Bylawsthose documents relating to the ability to call a special meeting from 80% to a two-thirds voting standard.
Table This change also required the approval by holders of Contents80% of our outstanding shares of common stock, and we only received approval from 46%. In a continued effort to show our support of shareholder feedback, we are again adding these two proposals to the ballot for shareholders to approve at the 2017 Annual Shareholder Meeting.
In February 2017, the Board approved amendments to our Corporate Governance Guidelines, which included a director resignation policy. Any director who is not elected by a majority of the votes cast, shall tender his or her resignation to the Governance Committee which will then recommend to the Board whether to accept or reject the resignation offer, and the Board will act on the Governance Committee’s recommendation within ninety (90) days following certification of the election results. Any director who tenders his or her resignation pursuant to this provision will not participate in the proceedings of either the Governance Committee or the Board with respect to his or her own resignation offer.
Key Compensation Actions Taken in 2015 and 2016
Below is a brief summary of actions taken by the Compensation Committee in 2015 and 2016. The compensation of our NEOs for 20152016 is more fully described in theCompensation Discussion and Analysis section of this Proxy Statement, starting on page 3433 and in the compensation tables starting on page 62.61.
Adoption of Clawback ProvisionsReduction in Annual Cash Compensation for our Incentive Plans (page 53)Board. In February 2013,Effective January 1, 2016, the Compensation Committee adoptedrecommended and the Board approved a clawback policy with respect to incentive awards to executive officers. In December 2015, the Compensation Committee amended10% reduction in our incentive plans (Annual Incentive Plan, Long-term Incentive Plan, Key Employee Deferred Compensation Plan, and 2010 Stock Incentive Plan) to each include a clawback provision.Board’s annual cash compensation in 2016.
Reduction in Base Salaries for the CEO and other NEOs (page 55). Effective January 1, 2016, the Compensation Committee approved base salary reductions for our NEOs. Our CEO’s base salary was reduced by 20%, and all other NEOs’ base salaries were reduced by 10%.
Reduction in Annual Cash Compensation for our Board (page 17). The Compensation Committee recommended and the Board approved a 10% reduction in our Board’s annual cash compensation in 2016.
Annual Incentive Plan (“AIP”) (page 44). For 2015,2016 was the quantitative corporatestrongest year in Hecla’s history, from a silver and silver equivalent production perspective, a result driven by the tremendously successful San Sebastian mine, as well as production at our other mines that exceeded our expectations. Silver production increased by 48%, which drove our excellent financial performance, factors (generally weightedgenerating cash provided by operating activities of $225.3 million, $264.6 million in the aggregate at 50% of the award) were divided proportionally into three factors: production (20%), adjusted EBITDA, (20%) and adding $43.7 million cash (10%)and short-term investments to the balance sheet, while reducing the net debt/EBITDA ratio by 60%. The life of our San Sebastian mine was increased by more than a year and it provided cash, provided by operating activities of $93.9 and $92.4 million in free cash flow in 2016.5 These strong results were recognized by the market, and our share price increased by 177% in 2016, significantly outpacing most of our peers.
| 5 | Free cash flow is a non-GAAP measurement used by management to analyze cash flows generated from operations. It is calculated as cash provided by operating activities (GAAP) less additions to properties, plants, equipment and mineral interests (GAAP). The Company believes free cash flow is also useful as one of the bases for comparing the Company’s performance with its competitors. Although free cash flow and similar measures are frequently used as measures of cash flows generated from operations by other companies, the Company’s calculation of free cash flow is not necessarily comparable to such other similarly titled captions of other companies. |
4www.hecla-mining.com
| PROXY STATEMENT SUMMARY |
| 2016 AIP Quantitative Measure Results | Target | Actual | Performance Value | |||
| Production | ||||||
| Silver equivalent ounces | 42.0 mm ozs. | 46.5 mm ozs. | 30% | |||
| Adjusted EBITDA | $255 mm | $264.6mm | 17.5% | |||
| Cash and short-term investments | $100 mm | $198.9mm | 30% | |||
| Work-related injury reduction | 15% | 25% | 7.5% | |||
| Total Quantitative | 85% |
The Compensation Committee approved payout of the Company’s overall performance on both qualitativeAIP awards to be 75% cash and quantitative measures25% in Hecla common stock issued under the 2010 Stock Incentive Plan. The AIP the committee determined Company performance to be at 115% of target. The 115% was measured by quantitative achievement at 50%, qualitative achievement at 35%,(qualitative and discretionary at 30%.factors) is more fully described in theCompensation Discussion and Analysis section of this Proxy Statement, starting on page 33.
2013 – 20152014-2016 Long-term Incentive Plan (“LTIP”) (page 47). The 2013-20152014-2016 LTIP hashad a maximum potential unit value of $300.$375. The Compensation Committee assessed performance under the 2013-20152014-2016 LTIP as follows:
| Performance Measure | Target | Actual Performance | % of Target | Value Earned Per Unit | ||||||
| Silver Reserve Growth | 30.0 silver oz. added (millions) | 25.4 silver oz. added (millions) | 85% | $20.50 | ||||||
| Production Growth | 54.1 silver oz. (millions) | 59.2 silver oz. (millions) | 109% | $43.50 | ||||||
| Cash Flow | $848.49 cash flow (millions) | $884.98 cash flow (millions) | 104% | $31.50 | ||||||
| Total Shareholder Return | 50% Hecla ranking vs. peers | 69.2% Hecla ranking vs. peers | 138% | $34.50 | ||||||
| #4 Shaft Completion | Shaft Completed by 2/15/16 | 10/26/16 completion date | 0% | No Payout | ||||||
| Total Earned Per Unit | $130.00 |
| Performance Measure | Target | Actual Performance | % of Target | Value Earned Per Unit | ||||
| Silver Reserve Growth | 30.0 silver oz. added (millions) | Silver oz. decreased by 2.7 mm oz. | -9% | No Payout | ||||
| Production Growth | 70.5 silver oz. (millions) | 76.5 silver oz. (millions) | 108% | $50.00 | ||||
| Cash Flow | $628.75 Cash Flow (millions) | $829.36 Cash Flow (millions) | 132% | $75.00 | ||||
| Total Shareholder Return | 60% Hecla ranking vs. peers | 92.9% Hecla ranking vs. peers | 155% | $82.25 | ||||
| #4 Shaft Completion | Shaft Completed by 5/1/16 | 1/20/17 completion date | 0% | No Payout | ||||
| Total Earned Per Unit | $207.25 |
During thethis three-year period, performance in production exceeded the maximum threshold, and cash flow generation and Total Shareholder Return (“TSR”) exceededTSR components fell between target and the target,maximum threshold. The #4 Shaft completion and silver reserve growth exceeded the threshold, but was below target, and #4 Shaft completion waswere each below the threshold. As a result, with a range in potential value per unit of $0 to $300,$375, in February 2016,2017, the Compensation Committee determinedCommitteedetermined that the total 2013-20152014-2016 LTIP payout was $130.00$207.25 per unit. The Compensation Committee further approved payout of the LTIP awards to be 50%75% in cash and 50%25% in Hecla common stock issued under the 2010 Stock Incentive Plan. The 2014-2016 LTIP is more fully described in theCompensation Discussion and Analysis section of this Proxy Statement, starting on page 33.
2017 Proxy Statement5
| PROXY STATEMENT SUMMARY |
 |
CEO Total Direct Compensationfor 2015 - $3,373,250
| ✓ | |
| ✓ | Annual Incentive Plan Payout – |
| ✓ | Long-term Incentive Plan Payout – |
| ✓ | Restricted Stock Units – In |
| ✓ | Performance-based |
Set forth on the following page is the 20152016 compensation for each NEO as determined under Securities and Exchange Commission (“SEC”) rules. Total compensation, as reported in theSummary Compensation Table for 2016 and calculated under SEC rules, includes several items that are driven by accounting and actuarial assumptions. Accordingly, it is not necessarily reflective of the compensation our NEOs actually realized in 2015.2016. To supplement that disclosure, we have added the “W-2/T4 Realized Comp.” column to the right of the table below to compare our NEOs’ 20152016 compensation as determined under SEC rules with W-2/T4 income for 2015,2016, which is the federally taxable (under the U.S. and Canada) compensation our NEOs received in 20152016 inclusive of vested stock and exercised stock options, if any.
This supplemental table is not designed to replace theSummary Compensation Table for 20152016 found on page 62,61, but rather to provide additional, supplemental compensation disclosure.
The differences between this supplemental table and theSummary Compensation Table for 2016 are (i) the supplemental table includes compensation related to stock awards that became fully vested in 2015,2016, whereas theSummary Compensation Table for 2016 includes compensation for stock awards as it is expensed for financial accounting purposes; (ii) the supplemental table does not reflect the FASB ASC Topic 718 expense associated with equity awards; (iii) the supplemental table includes compensation related to bonusesincentive compensation that werewas paid in 2015,2016, whereas theSummary Compensation Table for 2016 includes bonusesincentive compensation as they areit is expensed for financial accounting purposes; and (iv) the supplemental table does not include the change in pension value and the Company matching contribution for individual 401(k) deferral. For more information on total compensation as calculated under SEC rules, see the narrative and footnotes accompanying theSummary Compensation Table for 20152016 on page 62.61.
6www.hecla-mining.com
| PROXY STATEMENT SUMMARY |
| 2015 Summary Compensation and Realized Compensation | |||||||||||||||||||
| Name and Principal Position | Salary ($) | Stock Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Non-Qualified Deferred Compensation Earnings ($) | All Other Compensation ($) | SEC Total ($) | SEC Total Without Change in Pension Value ($) | W-2/T4 Realized Comp.1 ($) | |||||||||||
| Phillips S. Baker, Jr. | 605,000 | 1,727,174 | 1,768,250 | 599,477 | 15,900 | 4,715,801 | 4,116,324 | 2,777,810 | |||||||||||
| President and CEO | |||||||||||||||||||
| James A. Sabala | 380,000 | 583,700 | 822,000 | 174,075 | 15,900 | 1,975,675 | 1,801,600 | 1,585,582 | |||||||||||
| Senior Vice President | |||||||||||||||||||
| and CFO | |||||||||||||||||||
| Lawrence P. Radford | 380,000 | 556,694 | 890,000 | 105,114 | 15,900 | 1,947,708 | 1,842,594 | 1,480,083 | |||||||||||
| Senior Vice President – | |||||||||||||||||||
| Operations | |||||||||||||||||||
| Dr. Dean W. A. McDonald | 275,000 | 480,468 | 580,000 | 110,743 | 15,900 | 1,462,111 | 1,351,368 | 1,504,5582 | |||||||||||
| Senior Vice President – | |||||||||||||||||||
| Exploration | |||||||||||||||||||
| David C. Sienko | 250,000 | 289,933 | 397,000 | 36,365 | 15,900 | 989,198 | 952,833 | 900,897 | |||||||||||
| Vice President – | |||||||||||||||||||
| General Counsel | |||||||||||||||||||
| Don Poirier* | 226,000 | 314,950 | 401,500 | 82,950 | 15,900 | 1,041,300 | 958,350 | 1,036,9022 | |||||||||||
| Former Vice President – | |||||||||||||||||||
| Corporate Development | |||||||||||||||||||
2016 Summary Compensation and Realized Compensation
| 2016 Summary Compensation | Realized Compensation | |||||||||||||||||
| Name and Principal Position | Salary ($) | Stock Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Non-Qualified Deferred Compensation Earnings ($) | All Other Compensation ($) | SEC Total ($) | SEC Total Without Change in Pension Value ($) | W-2/T4 Realized Comp.1 ($) | ||||||||||
| Phillips S. Baker, Jr. | 484,000 | 2,074,935 | 2,876,375 | 924,335 | 15,900 | 6,375,545 | 5,451,210 | 1,897,266 | 2 | |||||||||
| President and CEO | ||||||||||||||||||
| Lindsay A. Hall* | 156,750 | 344,999 | 326,027 | 13,1463 | 9,200 | 850,122 | 836,976 | 204,622 | 4 | |||||||||
| Senior Vice President | ||||||||||||||||||
| and CFO | ||||||||||||||||||
| Lawrence P. Radford | 342,000 | 789,999 | 1,388,650 | 125,898 | 15,900 | 2,662,447 | 2,536,549 | 1,902,528 | ||||||||||
| Senior Vice President – | ||||||||||||||||||
| Operations | ||||||||||||||||||
| Dr. Dean W. A. McDonald | 247,500 | 589,999 | 882,600 | 196,7663 | 15,900 | 1,932,765 | 1,735,999 | 1,777,226 | 4 | |||||||||
| Senior Vice President – | ||||||||||||||||||
| Exploration | ||||||||||||||||||
| David C. Sienko | 225,000 | 352,500 | 723,775 | 82,310 | 15,900 | 1,399,485 | 1,317,175 | 853,950 | ||||||||||
| Vice President – | ||||||||||||||||||
| General Counsel | ||||||||||||||||||
| James A. Sabala* | 168,588 | 411,001 | 786,399 | 203,085 | 15,900 | 1,584,973 | 1,381,888 | 1,526,103 | ||||||||||
| Former Senior Vice | ||||||||||||||||||
| President and CFO | ||||||||||||||||||
| * | Mr. |
| 1 | The amounts reported in this column include |
| 2 | Mr. Baker deferred all vested equity received in 2016, except for performance-based vested shares received. See Option Exercises and Stock Vested for 2016 on page 65. |
| 3 | As non U.S. citizens Mr. Hall and Dr. McDonald are not participants in the Retirement Plan, or the unfunded SERP. In lieu of participation in these plans, Mr. Hall and Dr. McDonald are expected to receive a similar benefit as if they had participated in these plans. |
| 4 | Dr. McDonald and Mr. |
2017 Proxy Statement7
| PROXY STATEMENT |
Board of Directors Selection Process
Our current Bylaws require the Board to have not less than five nor more than nine members. The size of the Board may be increased or decreased within that range from time-to-time by resolution approved by the affirmative vote of a majority of the Board. In December 2016, the Board increased the size of the Board from eight members to nine members and appointed one new director, effective as of January 1, 2017.
| Identifying and Evaluating Nominees for Directors |
The Corporate Governance and Directors’ Nominating Committee uses a variety of methods for identifying and evaluating nominees for director. The committee is responsible for ensuring that the composition of the Board accurately addresses the needs of our business. In the event vacancies are anticipated, or arise, the committee considers various potential candidates for director. Candidates may come to the attention of the committee through current Board members, professional search firms, shareholders or other persons. Consideration of new director nominee candidates typically involves a series of internal discussions, review of information concerning candidates and interviews with selected candidates. The committee then determines the best qualified candidates based on the established criteria and recommends those candidates to the Board for election at the next annual meeting of shareholders (or sooner when appropriate).election.
We hold the view that the continuing service of qualified incumbents promotes stability and continuity in the boardroom, contributing to the Board’s ability to work as a collective body, while giving us the benefit of familiarity and insight into our affairs that our directors have accumulated during their tenure. Recent additions to the Board may provide new perspectives, while directors who have served for a number of years bring experience, continuity, institutional knowledge, and insight into the Company’s business and industry. Directors with relevant business and leadership experience can provide the Board a useful perspective on business strategy and significant risks and an understanding of the challenges facing the business. Accordingly, the process for identifying nominees reflects our practice of re-nominating incumbent directors who (i) continue to satisfy the committee’s criteria for membership on the Board, (ii) the committee believes continue to make important contributions to the Board, and (iii) consent to continue their service on the Board.
The committee reviews annually with the Board the composition of the Board as a whole and recommends, if necessary, measures to be taken so that the Board reflects the appropriate balance of knowledge, experience, skills,expertise and diversity required for the Board as a whole and contains at least the minimum number of independent directors required by applicable laws and regulations.
Board members should possess such attributes and experience as are necessary for the Board as a whole and contain a broad range of personal characteristics, including diversity of backgrounds, management skills, mining, accounting, finance and business experience. Directors should be able to commit the requisite time for preparation and attendance at regularly scheduled Board and committee meetings, as well as be able to participate in other matters necessary to ensure good corporate governance is practiced.
In general, and as more fully outlined in our Bylaws and Corporate Governance Guidelines, in evaluating director candidates for election to our Board, the committee will: (i) consider if the candidate satisfies the minimum qualifications for director candidates as set forth in the Corporate Governance Guidelines; (ii) consider factors that are in the best interests of the Company and its shareholders, including the knowledge, experience, integrity and judgment of each candidate; (iii) consider the contribution of each candidate to the diversity of backgrounds, experience and competencies which the Board desires to have represented, with such diversity being considered among the other desirable attributes of the Board; (iv) assess the performance of an incumbent director during the preceding term; (v) consider each candidate’s ability to devote sufficient time and effort to his or her duties as a director; (vi) consider a candidate’s independence and willingness to consider all strategic proposals; (vii) consider any other criteria established by the Board and any core competencies or technical expertise necessary to manage and direct the affairs and business of the Company, including, when applicable, to enhance the ability of committees of the Board to fulfill their duties; and (viii) determine whether there exists any special, countervailing considerations against nomination of the candidate.
8www.hecla-mining.com
| PROXY STATEMENT |
| Shareholder Nominees |
The committee will consider persons recommended by shareholders as nominees for election as directors. Our Bylaws provide that any shareholder who is entitled to vote for the election of directors at a meeting called for such purpose may nominate persons for election to the Board by following the procedures set forth on page 87.100. Shareholders who wish to submit a proposed nominee to the committee should send written notice to the Corporate Governance and Directors’Directors Nominating Committee Chairman, c/o Corporate Secretary, Hecla Mining Company, 6500 N. Mineral Drive, Suite 200, Coeur d’Alene, Idaho 83815-9408, within the time period set forth on page 87.100. The notification should set forth all information relating to the nominee that is required to be disclosed in solicitations of proxies for elections of directors pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (“Exchange Act”), including the nominee’sthenominee’s written consent to being named in the Proxy Statement as a nominee and to serving as a director if elected; the name and address of the shareholder or beneficial owner making the nomination or on whose behalf the nomination is being made; and the class and number of shares of stock of the Company owned beneficially and of record by such shareholder or beneficial owner. The committee will consider shareholder nominees on the same terms as nominees selected by the committee.
Regardless of how a candidate is brought to the committee, qualified candidates are subjected to one or more interviews with appropriate members of the Board. Chosen candidates are extended invitations to join the Board. If a candidate accepts, he or she is formally nominated.
| Director Qualifications, Evaluation, and Nomination |
The committee believes that nominees for election to the Board should also possess certain minimum qualifications and attributes. The nominee must: (i) exhibit strong personal integrity, character and ethics, and a commitment to ethical business and accounting practices; (ii) not be involved in ongoing litigation with the Company or be employed by an entity that is engaged in such litigation; and (iii) not be the subject of any ongoing criminal investigations in the jurisdiction of the United States or any state thereof, including investigations for fraud or financial misconduct. OurIn December 2016, the Board amended our Bylaws and Corporate Governance Guidelines to provide that directors will not be nominated for re-election after their 7275ndth birthday.birthday (previously the age limit was 72).
In connection with the director nominees who are up for re-election at the Annual Meeting, the committee also considered the nominees’ roles in: (i) overseeing the Company’s efforts in complying with its SEC disclosure requirements;disclosurerequirements; (ii) assisting in improving the Company’s internal controls and disclosure controls; (iii) assisting with the development of the strategic plan of the Company; and (iv) working with management to implement the strategic plan and mission statement. Directors are expected to exemplify high standards of personal and professional integrity and to constructively challenge management through their active participation and questioning.
In addition to fulfilling the above criteria, each nominee for election to the Board at the upcoming Annual Meeting brings a strong and unique background and set of skills to the Board, giving the Board as a whole competence and experience in a wide variety of areas, including corporate governance, executive management, legal, accounting, finance, mining, and board service. The committee has reviewed the nominees’ overall service to the Company during their terms, including the number of meetings attended, level of participation and quality of performance.
2017 Proxy Statement9
| PROXY STATEMENT |
| Selection of New Directors in 2016 and 2017 |
In December 2015, we were saddened to announce the passing of one of our directors, John H. Bowles. After Mr. Bowles’ passing, we reduced the size of the Board to six. After many discussions with potential director candidates, and careful consideration, onOn March 1, 2016, the Corporate Governance and Directors’ Nominating Committee recommended and the Board approved an increase in the sizeappointment of two new directors to our Board (Messrs. Ralbovsky and Johnson). Effective January 1, 2017, upon the recommendation of the Governance Committee, the Board from six to eight andalso appointed twoCatherine “Cassie” J. Boggs as a new directorsdirector to our Board.
Mr. Stephen F. Ralbovsky was appointed as a Class II director (standing for election in 2018), filling a vacancy created by the death of John H. Bowles.. Mr. Ralbovsky is a certified public accountant and was a partner with PricewaterhouseCoopers, LLP from February 1987 until his retirement in June 2014. He has over 3637 years’ experience in taxation, auditing and accounting, where he specialized in the mining industry. The Corporate Governance and Directors’ Nominating Committee and Board determined that Mr. Ralbovsky was independent under the New York Stock Exchange listing standards. The Board also appointed Mr. Ralbovsky to serve on the Audit Committee and the Corporate Governance and Directors’ Nominating Committee.
Mr. George R. Johnson was appointed as a Class I director (standing for election in 2017), to fill a resulting vacancy when the Board increased the size of the Board from six to eight directors.. Mr. Johnson is a mining engineer and most recentlyformerly served as Senior Vice President of Operations at B2Gold Corporation from AugustfromAugust 2009 until his retirement in May 2015. Mr. Johnson also held many positions with Hecla in the early 1980’s through 1999 and is very familiar with the Company’s operations. He has over 45 years of foreign and domestic experience in underground and open-pit mine construction and operations management. The Corporate Governance and Directors’ Nominating Committee and Board determined that Mr. Johnson was independent under the New York Stock Exchange listing standards. The Board also appointed Mr. Johnson to serve on the Audit Committee and the Health, Safety, Environmental and Technical Committee.
Ms. Catherine “Cassie” J. Boggs was appointed as a Class II director (standing for election in 2018). Ms. Boggs is an attorney and has served as General Counsel at Resource Capital Funds since January 2011. She has over 35 years’ experience as a mining and natural resources lawyer with experience in domestic and international mining projects. The Governance Committee and Board determined that Ms. Boggs was independent under the New York Stock Exchange listing standards. The Board appointed Ms. Boggs to serve on the Audit Committee and Governance Committee.
10www.hecla-mining.com
| PROPOSAL 1 – ELECTION OF DIRECTORS |
PROPOSAL 1 – ELECTION OF DIRECTORS
In accordance with our Certificate of Incorporation, the Board is divided into three classes. The terms of office of the directors in each class expire at different times. There are three Class I directors whose terms will expire at the 20162017 Annual Meeting: Ted Crumley, Terry V. RogersPhillips S. Baker, Jr., George R. Johnson and Charles B. Stanley.Dr. Anthony P. Taylor.
As of the 2017 Annual Meeting, Dr. Taylor will have attained the mandatory retirement age of 75 and will not stand for re-election. Dr. Taylor was elected to the Board by preferred shareholders in May 2002. He has over 52 years’ experience in the mining industry in all levels of exploration from a field geologist to senior management. The Board recognizes and commends, with great appreciation, Dr. Taylor’s 15 years of invaluable and devoted service to Hecla, and for his substantial contributions as a director of the Company, as chairman of the Governance Committee and as a member of the Health, Safety, Environmental and Technical Committee and Compensation Committee of the Board.
At the May 2017, Annual Meeting, the size of the Board is expected to be reduced from nine persons to eight persons.
At a meeting held by the Corporate Governance and Directors’ Nominating Committee in February 2016,2017, the committee determined that the threetwo remaining directors whose terms are expiring - Messrs. Crumley, RogersBaker and StanleyJohnson - were qualified candidates to stand for re-election at the Annual Meeting, and the Board designated Messrs. Crumley, RogersBaker and StanleyJohnson as nominees for re-election as directors of the Company, each for a three-year term expiring in 2019.2020. Each nominee has accepted the nomination and agreed to serve as a director if elected by the Company’s shareholders.
It is intended that the proxies solicited hereby from our shareholders that do not provide voting instructions will be votedFORthe election of Ted Crumley, Terry V. RogersPhillips S. Baker, Jr. and Charles B. Stanley.George R. Johnson. The Board knows of no reason why the nominees will be unable or unwilling to accept election. However, if any nominee becomes unable or is unwilling to accept election, the Board will either reduce the number of directors to be elected or select substitute nominees submitted by the Corporate Governance and Directors’ Nominating Committee. If substitute nominees are selected, proxies that do not provide voting instructions will be voted in favor of such nominees.
Summary of Director Qualifications and Experience
| Director Qualifications and Experience | Baker | Boggs | Crumley | Johnson | Nethercutt | Ralbovsky | Rogers | Stanley | Taylor | |||||||||
| Audit Committee Financial Expert | ● | ● | ● | ● | ||||||||||||||
| Board Service on Public Companies | ● | ● | ● | ● | ● | |||||||||||||
| CEO/Administration and Operations | ● | ● | ● | ● | ● | ● | ||||||||||||
| Corporate Governance | ● | ● | ● | ● | ● | ● | ||||||||||||
| Finance | ● | ● | ● | ● | ● | ● | ● | |||||||||||
| Geology, Mining and Engineering | ● | ● | ● | ● | ||||||||||||||
| Industry and Mining | ● | ● | ● | ● | ● | ● | ● | ● | ● | |||||||||
| Industry Association Participation | ● | ● | ● | ● | ● | ● | ● | |||||||||||
| International Business | ● | ● | ● | ● | ● | ● | ● | ● | ||||||||||
| Leadership | ● | ● | ● | ● | ● | ● | ● | ● | ● | |||||||||
| Legal and Compliance | ● | ● | ● | ● | ||||||||||||||
| Reputation in the Industry | ● | ● | ● | ● | ● | ● | ● | |||||||||||
| Risk Management | ● | ● | ● | ● | ● | ● | ● | ● | ● |
Set forth below is biographical information for each of the director nominees, including the key qualifications, experience, attributes, and skills that led our Board to the conclusion that each of the director nominees should serve as a director. There are no family relationships among any of our directors or executive officers.
Our Board includes individuals with strong backgrounds in executive leadership and management, legal, accounting and finance, and Company and industry knowledge, and we believe that, as a group, they work effectively together in overseeing our business.
2017 Proxy Statement11
| PROPOSAL 1 – ELECTION OF DIRECTORS |
| Current Class I Nominees for Election to the Board – Term Ending at the |
If elected, the nominees will each serve for a three-year term ending in 2019.2020. The nominees are as follows:
 | Phillips S. Baker, Jr. President and Chief Executive Officer Director since:2001 Age:57 Other Directorships: Hecla Committees: ●Executive (Chairman) | |||
Mr. Baker has been our CEO since May 2003 and has served as our President since November 2001. He has served as a Director of QEP Resources, Inc., an independent natural gas and oil exploration and production company, since May 2010, as well as serving as a Director for Questar Corporation, a Western U.S. natural gas-focused exploration and production, interstate pipeline and local distribution company, from February 2004 through June 2010. Mr. Baker has served as Vice Chairman of the Board for the National Mining Association, a U.S. mining advocate and national trade organization that represents the interests of mining businesses, since October 2015, and has been a Board member since September 2010. He has also served as a Board member of the National Mining Hall of Fame and Museum, a federally-chartered non-profit national mining museum, since February 2012.
Board Qualification and Skills:
High Level of Financial Experience: Substantial financial experience gained in his roles of President, CEO, and previously as Chief Financial Officer of the Company and other companies.
Extensive Senior Leadership/Executive Officer Experience: Has served as Hecla’s President and CEO for 13 years. Has 22 years’ of executive and management experience in the mining industry.
Significant Public Company Board Experience: In addition to serving on the Board of Hecla, has served on the board of QEP Resources for 7 years, and prior to that served on the board of Questar Corporation for 6 years. He serves as chair of the audit committee and as a member of the governance committee for QEP Resources, Inc.
Extensive Knowledge of the Company’s Business and Industry: Over 30 years’ experience in the mining industry.
Designations: Mr. Baker received a Bachelor of Business Administration in Accounting from Texas A&M University in 1981, and a law degree and Master of Business Administration from the University of Houston in 1985. He became a member of the State Bar of Texas in 1985, and received his Certified Public Accountant designation in 1986 from the Texas State Board of Public Accounting.
12 www.hecla-mining.com
| PROPOSAL 1 – ELECTION OF DIRECTORS |
 | George R. Johnson Former Senior Vice President of Operations with B2Gold Corporation Director since:2016 Age:68 Other Directorships: Hecla Committees: ●Health, Safety, Environmental and Technical ●Audit | |||
Mr. Johnson served as Senior Vice President of Operations of B2Gold Corporation, a Canadian-based gold producing company, from August 2009 until his retirement in April 2015. He is a former Senior Vice President of Russian Operations of Kinross Gold Corporation, a senior gold mining company, from March 2007 to August 2009, and Senior Vice President of Operations of Bema Gold Corporation, a gold producing company, from October 1999 to March 2007. He has served on the Board of Directors of B2Gold Corporation since March 2016.
Board Qualification and Skills:
Extensive Knowledge of the Company’s Business and Industry: Over 45 years of foreign and domestic experience in underground and open-pit mine construction and operations management. Served in a variety of positions culminating as Vice President – Metal Mining for Hecla from 1983 to 1999.
Senior Leadership/Executive Officer Experience: Has extensive experience in management in the mining industry.
Designations: Mr. Johnson received a Bachelor of Science with a major in Mining Engineering from the University of Washington in 1972.
 | The Board recommends that shareholders vote “FOR” the election of Phillips S. Baker, Jr. and George R. Johnson |
2017 Proxy Statement13
| PROPOSAL 1 – ELECTION OF DIRECTORS |
Our directors whose terms are not expiring this year follow. They will continue to serve as directors for the remainder of their terms or until their respective successors are appointed or elected.
| Continuing Class II Members of the Board – Term Ending at the 2018 Annual Meeting |
 | George R. Nethercutt, Jr. Chairman of The George Nethercutt Foundation and Of Counsel for Lee & Hayes PLLC Director since:2005 Age:72 Other Directorships: Hecla Committees: ●Compensation (Chairman) ●Corporate Governance and Directors Nominating | |||
Mr. Nethercutt has served as Chairman of The George Nethercutt Foundation, a non-profit student leadership and civics education charity, since 2005, and was appointed Of Counsel at Lee & Hayes PLLC, a law firm, in September 2010. He has been a board member of Washington Policy Center, a public policy organization providing analysis on issues relating to the free market and government regulation, since January 2005; board member of ARCADIS Corporation, an international company providing consultancy, engineering and management services, since May 2005; and Board of Chancellors, Juvenile Diabetes Research Foundation International, a charity and advocate of juvenile diabetes research worldwide, since June 2011. He was a Principal of Nethercutt Consulting LLC, a strategic planning and consulting firm, from January 2007 to January 2012, and served as a member on the board of IP Street, a software company, from May 2011 to January 2015.
Board Qualification and Skills:
Extensive Knowledge of the Company’s Business and Industry: Served as a U.S. Congressman and focused on natural resource policies, mining legislation and environmental policies on public lands.
Extensive Government Leadership Experience: Has extensive political background, including working as a staff member in the U.S. Senate in Washington, D.C., where he focused on issues relating to oil and gas, natural resources, mining and commerce. Served as chief of staff to a U.S. Senator from Alaska, working on such issues as agriculture, fisheries, timber and mining. He had his own consulting business which consisted of representing clients with mining and natural resource issues.
Significant Public Company Board Experience:Over 11 years of service on Hecla’s Board.
Designations: Mr. Nethercutt received his Bachelor of Arts in English from Washington State University in 1967, and a law degree from Gonzaga University Law School in 1971. He has been a member of the Washington State Bar Association since 1972.
  |
Founder and Director since: Age: Other Directorships: Hecla Committees: ●Audit ●Corporate Governance and Directors Nominating | |||
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Mr. Ralbovsky has been the Founder and Principal of Wolf Sky Consulting LLC, a tax consulting firm, since June 2014. Prior to that, he was a partner with PricewaterhouseCoopers LLP, an accounting firm, from February 1987 until his retirement in June 2014, where he concentrated his practice on public companies operating in the mining industry. He is an adjunct faculty member at the University of Arizona. He previously served as an Advisory Board member of Diocese of Phoenix Catholic Cemeteries and Mortuaries, a non-profit organization, from July 2009 to July 2012. Mr. Ralbovsky is also a member of several organizations, including: AICPA, Arizona Society of CPAs, National Mining Association, and Society for Mining, Metallurgy and Exploration.
Board Qualification and Skills:
High Level of Financial Experience: Over 37 years’ experience in taxation, auditing and accounting.
Extensive Knowledge of the Company’s Business and Industry: Over 37 years’ experience in accounting, where he was heavily involved in the mining industry with emphasis in global mining tax and royalty policy.
Extensive Senior Leadership Experience: Has extensive experience in leadership in the accounting industry. Served in numerous senior leadership positions, including US Mining Leader, US Mining Tax Leader, Global Mining Tax Leader and Tax Partner for PricewaterhouseCoopers LLP.
Designations: Mr. Ralbovsky received a Bachelor of Business Administration with a major in Accounting from Siena College in 1975. He also received a law degree from Albany Law School in 1978. He is licensed in D.C. and Arizona as a Certified Public Accountant.
14www.hecla-mining.com
| PROPOSAL 1 – ELECTION OF DIRECTORS |
 | Catherine “Cassie” J. Boggs General Counsel at Resource Capital Funds Director since:2017 Age:62 Other Directorships: Hecla Committees: ●Audit ●Corporate Governance and Directors Nominating | |||
Ms. Boggs has been the General Counsel at Resource Capital Funds, a mining-focused private equity firm, since January 2011. Prior to that, she served as Senior Vice President, Corporate Development at Barrick Gold Corporation, a gold mining company, from January 2009 to December 2010, and Vice President from July 2005 to 2008. Ms. Boggs was also an international partner at Baker & McKenzie, a law firm, from July 2001 to July 2005. She has been a board member of Funzeleo, a non-profit organization that inspires and prepares youth for high-demand science and math-based careers, since January 2016, as well as serving as a Board member and President of the Rocky Mountain Mineral Law Foundation, a non-profit organization dedicated to the study of laws and regulations relating to mining, oil and gas, energy, public lands, water, environmental and international law, from July 2011 to July 2015.
Board Qualification and Skills:
High Level of Legal Experience: Over 35 years’ experience as an attorney, having practiced law in several U.S. and overseas jurisdictions.
Extensive Knowledge of the Company’s Business and Industry: Over 35 years’ experience as a mining and natural resources lawyer with experience in domestic and international mining projects.
Extensive Knowledge of Risk Assessment: In addition to managing all legal affairs of Resource Capital Funds, she is responsible for legal due diligence, country and political risk assessments, and participates in the structuring and implementation of risk mitigation strategies.
Extensive Senior Leadership Experience: Has extensive experience in leadership in the mining industry, having worked for Barrick Gold Company, serving in a variety of leadership roles, including serving as the CEO of Tethyan Copper Company, a gold and copper development project in Pakistan, interim President of the African Business Unit, and as interim General Counsel of African Barrick Gold (now known as Acacia Mining) in its formation and initial public offering.
Designations: Ms. Boggs received a Bachelor of Arts with a major in Economics from University of Denver in May 1976. She received a Master of Science in Resource Development from Michigan State University in December 1977, and a law degree from the University of Denver College of Law in 1981.
2017 Proxy Statement 15
| PROPOSAL 1 – ELECTION OF DIRECTORS |
| Continuing Class III Members of the Board – Term Ending at the 2019 Annual Meeting |
 | Ted Crumley Former Executive Vice President and Chief Financial Officer OfficeMax Incorporated Director since:1995 Board Chairman since 2006 Age:72 Other Directorships: Hecla Committees: ●Executive ●Compensation | |||
Mr. Crumley served as Executive Vice President and Chief Financial Officer of OfficeMax Incorporated, a distributor of office products, from January 2005 until his retirement in December 2005. He was also Senior Vice President of OfficeMax Incorporated from November 2004 to January 2005, and Senior Vice President and Chief Financial Officer of Boise Cascade Corporation, a manufacturer of paper and forest products, from 1994 to 2004.
Board Qualification and Skills:
High Level of Financial Experience:Substantial financial experience gained from a long career with OfficeMax Incorporated and Boise Cascade Corporation.
Senior Leadership/Executive Officer Experience:Has over 30 years’ experience in management, finance and accounting in the natural resources industry. Served in numerous senior leadership positions, including Executive Vice President and Chief Financial Officer of OfficeMax Incorporated and Senior Vice President and Chief Financial Officer of Boise Cascade Corporation.
Significant Public Company Board Experience:Over 2021 years of service on Hecla’s Board, including as Chairman since 2006.
Extensive Knowledge of the Company’s Business and Industry:With over 20 years’21 years of service on Hecla’s Board, Mr. Crumley understands all aspects of our business, including the mining elements.
Designations:Mr. Crumley received his Bachelor of Business Administration with a major in Accounting from Idaho State University College of Business in 1969.
  | Terry V. Rogers, C. Dir., H.R.C.C.C. Former Senior Vice President and Chief Operating Officer Director since:2007 Age: Other Directorships: Hecla Committees: | ||||
● | Health, Safety, Environmental and Technical ●Compensation ●Audit ●Executive | ||||
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Mr. Rogers served as Senior Vice President and Chief Operating Officer of Cameco Corporation, a uranium producer, from February 2003 until his retirement in June 2007. He is a former President of Kumtor Operating Company, a gold producing company and a subsidiary of Cameco Corporation, where he served from 1999 to 2003 and has served on the Board of Directors of Centerra Gold Inc., a gold mining company, since February 2003.
Board Qualification and Skills:
High Level of Financial Experience:Financial experience gained from his senior leadership/executive officer experience with Cameco Corporation and Kumtor Operating Company.
Senior Leadership/Executive Officer Experience:Has experience in management in the mining industry. Served in numerous senior leadership positions, including Senior Vice President and Chief Operating Officer of Cameco Corporation, and former President of Kumtor Operating Company (a subsidiary of Cameco Corporation).
Significant Public Company Board Experience:In addition to serving on the Board of Hecla, has over 1213 years of service on the Board of Centerra Gold Inc., including as lead independent lead director, chairman of the human resources and compensation committee, and a member of the audit committee.
Extensive Knowledge of the Company’s Business and Industry:Over 30 years’ experience in the mining industry, including, opencast, open-pit and underground operations in coal, gold, and uranium mines around the world.
Designations:Mr. Rogers received an Associate degree in Applied Science from the Superior Technical Institute in Wisconsin in 1972. He also obtained a Chartered Director (C. Dir.) designation from The Directors College in 2011, as well as a Human Resources and Compensation Committee Certified (H.R.C.C.C.) designation from The Directors College in 2013.
16www.hecla-mining.com
| PROPOSAL 1 – ELECTION OF DIRECTORS |
  | Charles B. Stanley Chief Executive Officer, President and Chairman of the Board Director since:2007 Age: Other Directorships: Hecla Committees: | ||||
● | Audit | ||||
| (Chairman) ● | Health, Safety, Environmental and Technical ●Corporate Governance and Directors Nominating | ||||
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Mr. Stanley has been Chief Executive Officer and President of QEP Resources, Inc., an independent natural gas and oil exploration and production company, since May 2010. He was appointed Chairman of the Board of QEP Resources, Inc. in May 2012. He also served as Chairman, Chief Executive Officer, President and Director of QEP Midstream Partners, LP, a master limited partnership that owns, operates, acquires and develops midstream energy assets, from May 2013 to December 2014. He served as Chief Operating Officer of Questar Corporation, a Western U.S. natural gas-focused exploration and production, interstate pipeline and local distribution company, from March 2008 to June 2010; and Executive Vice President and Director of Questar Corporation from February 2002 to June 2010.
Board Qualification and Skills:
High Level of Financial Experience:Substantial financial experience gained from a long career with QEP Resources, Inc. and Questar Corporation.
Extensive Senior Leadership/Executive Officer Experience:In addition to his current position as Chief Executive Officer and President of QEP Resources, Mr. Stanley served in numerous other senior leadership positions, including Chief Executive Officer and President of QEP Midstream Partners, LP, and Chief Operating Officer of Questar Corporation.
Significant Public Company Board Experience:In addition to serving on the Board of Hecla, has served on the board of QEP Resources, Inc. the past 56 years and as Chairman of the Board since 2012. Prior to serving on QEP’s board, Mr. Stanley served on the board of Questar Corporation.Corporation for 8 years. He also serveshas served on the boards of various natural gas industry trade organizations, including the American Exploration and Production Council and America’s Natural Gas Alliance.
Extensive Knowledge of the Company’s Business and Industry:Over 3233 years’ experience in the international and domestic upstream and midstream oil and gas industry. He is a geologist with an extensive background in natural resources.
Designations:Mr. Stanley received a Bachelor of Science degree in Geology in 1981, as well as a Master of Science degree in Geology in 1983 from Virginia Tech.
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Our directors whose terms are not expiring this year follow. They will continue to serve as directors for the remainder of their terms or until their respective successors are appointed or elected.
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Mr. Baker has been our CEO since May 2003 and has served as our President since November 2001. He has served as a Director of QEP Resources, Inc., an independent natural gas and oil exploration and production company, since May 2010, as well as serving as a Director for Questar Corporation, a Western U.S. natural gas-focused exploration and production, interstate pipeline and local distribution company, from February 2004 through June 2010.
Board Qualification and Skills:
High Level of Financial Experience: Substantial financial experience gained in his roles of President, CEO, and previously as Chief Financial Officer and Chief Operating Officer of the Company.
Extensive Senior Leadership/Executive Officer Experience: In addition to serving as Hecla’s President and CEO, served as Chief Financial Officer and Chief Operating Officer. Has 18 years’ management experience in the mining industry.
Significant Public Company Board Experience: In addition to serving on the Board of Hecla, has served on the board of QEP Resources for 11 years. He serves as chair of the audit committee and as a member of the governance committee for QEP Resources, Inc.
Extensive Knowledge of the Company’s Business and Industry: Over 29 years’ experience in the mining industry.
Designations: Mr. Baker received a Bachelor of Business Administration in Accounting from Texas A & M University in 1981, and a law degree and Master of Business Administration from the University of Houston in 1985. He became a member of the State Bar of Texas in 1985, and received his Certified Public Accountant designation in 1986 from the Texas State Board of Public Accounting.
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Dr. Taylor has served as President, Chief Executive Officer and Director of Selex Resources Ltd., a private Ontario Corporation engaged in mineral exploration, since January 2012. Since October 2001, he has served as President and Director of Caughlin Preschool Co., a private Nevada corporation that operates a preschool, which he co-founded. He previously served as Executive Chairman of Crown Gold Corporation, a public Canadian minerals exploration company, from August 2010 to August 2012, after serving as Chief Executive Officer and Director of Gold Summit Corporation, a public Canadian minerals exploration company, from October 2003 to August 2010.
Board Qualification and Skills:
Extensive Knowledge of the Company’s Business and Industry: Over 51 years’ experience in the mining industry in all levels of exploration from a field geologist to senior management. Has extensive experience in lead, zinc, nickel, copper, diamond, gold and silver exploration from his work in Europe, Australia, South Africa, and North and South America.
Extensive Senior Leadership/Executive Officer Experience: Has extensive experience in management in the mining industry. Served in numerous senior leadership positions, including Executive Chairman of Crown Gold Corporation and Chief Executive Officer and Director of Gold Summit Corporation.
Significant Public Company Board Experience: Over 13 years of service on Hecla’s Board.
Designations: Dr. Taylor received his Bachelor of Science (with honors) in Geology from Durham University (U.K.) in 1964, and his Ph.D in Geology from Manchester University (U.K.) in 1974.
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Mr. Johnson served as Senior Vice President of Operations of B2Gold Corporation, a Canadian-based gold producing company, from August 2009 until his retirement in May 2015. He is a former Senior Vice President of Russian Operations of Kinross Gold Corporation, a senior gold mining company, from March 2007 to August 2009, and Senior Vice President of Operations of Bema Gold Corporation, a gold producing company, from October 1999 to March 2007.
Board Qualification and Skills:
Extensive Knowledge of the Company’s Business and Industry: Over 45 years of foreign and domestic experience in underground and open-pit mine construction and operations management. Served as Vice President – Metal Mining for Hecla from May 1996 to 1999 where he was responsible for performance of Hecla’s metals division, including mines operated by Hecla and joint ventures with other companies, exploration programs, business development, capital projects and corporate technical services. He held various other positions with Hecla from 1983 to 1990, including as general manager of Hecla’s Lucky Friday mine from July 1986 to February 1989; mine superintendent from November 1984 to June 1986, and development foreman from October 1983 to 1984.
Senior Leadership/Executive Officer Experience: Has extensive experience in management in the mining industry. Served in numerous senior leadership positions including Senior Vice President of Operations for B2Gold Corporation, Senior Vice President of Russian Operations for Kinross Gold Corporation, and Senior Vice President of Operations for Bema Gold Corporation.
Designations: Mr. Johnson received a Bachelor of Science with a major in Mining Engineering from the University of Washington in 1972.
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Mr. Nethercutt has served as Chairman of The George Nethercutt Foundation, a non-profit student leadership and civics education charity, since 2007, and was appointed Of Counsel for Lee & Hayes PLLC, a law firm, in September 2010. He has been a board member of Washington Policy Center, a public policy organization providing analysis on issues relating to the free market and government regulation, since January 2005; board member of ARCADIS Corporation, an international company providing consultancy, engineering and management services, since May 2005; and Board of Chancellors, Juvenile Diabetes Research Foundation International, a charity and advocate of juvenile diabetes research worldwide, since June 2011. He was a Principal of Nethercutt Consulting LLC, a strategic planning and consulting firm, from January 2007 to January 2012, and served as a member on the board of IP Street, a software company, from May 2011 to January 2015. He also served as U.S. Chairman of the Permanent Joint Board on Defense - U.S./Canada from April 2005 to December 2009; Member, U.S. House of Representatives from 1995 to 2005; Member, Subcommittee on Interior, Agriculture and Defense Appropriations from 1995 to 2005; Member, Committee on Science and Energy from 1998 to 2005; and Vice Chairman, Defense Subcommittee on Appropriations from 2000 to 2004.
Board Qualification and Skills:
Extensive Knowledge of the Company’s Business and Industry: Served as a U.S. Congressman and focused on natural resource policies, mining legislation and environmental policies on public lands.
Extensive Government Leadership Experience: Has extensive political background, including working as a staff member in the U.S. Senate in Washington, D.C., where he focused on issues relating to oil and gas, natural resources, mining and commerce. Served as chief of staff to a U.S. Senator from Alaska, working on such issues as agriculture, fisheries, timber and mining. He had his own consulting business which consisted of representing clients with mining and natural resource issues.
Significant Public Company Board Experience: Over 10 years of service on Hecla’s Board.
Designations: Mr. Nethercutt received his Bachelor of Arts in English from Washington State University in 1967, and a law degree from Gonzaga University Law School in 1971. He has been a member of the Washington State Bar Association since 1972.
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Mr. Ralbovsky was a partner with PricewaterhouseCoopers LLP, an accounting firm, from February 1987 until his retirement in June 2014, where he concentrated his practice on public companies operating in the mining industry. He previously served on the Board and as Treasurer of the American Heart Association – Arizona Affiliate, a non-profit organization dedicated to fighting heart disease, from July 1991 to June 1995; Board member (and President for one year) of Southwest Human Development, a non-profit dedicated to early childhood development, from June 1990 to June 1996; and Advisory Board member of Diocese of Phoenix Catholic Cemeteries and Mortuaries, a non-profit organization, from July 2009 to July 2012. Mr. Ralbovsky is also a member of several organizations, including: AICPA, Arizona Society of CPAs, National Mining Association, and Society for Mining, Metallurgy and Exploration.
Board Qualification and Skills:
High Level of Financial Experience: Over 36 years’ experience in taxation, auditing and accounting.
Extensive Knowledge of the Company’s Business and Industry: Over 36 years’ experience in accounting, where he was heavily involved in the mining industry with emphasis in global mining tax and royalty policy.
Extensive Senior Leadership Experience: Has extensive experience in leadership in the accounting industry. Served in numerous senior leadership positions, including US Mining Leader, US Mining Tax Leader, Global Mining Tax Leader and Tax Partner for PricewaterhouseCoopers LLP.
Designations: Mr. Ralbovsky received a Bachelor of Business Administration with a major in Accounting from Siena College in 1975. He also received a law degree from Albany Law School in 1978. He is licensed in D.C. and Arizona as a Certified Public Accountant.
COMPENSATION OF NON-MANAGEMENT DIRECTORS
The Compensation Committee of the Board is responsible for recommending to the Board the form and amount of compensation for our non-management directors. The compensation program is designed to provide pay that is competitive with directors in the Company’s peer group, which is described on page 38 of this2017 Proxy Statement in theCompensation Discussion and Analysis. It consists of a combination of cash retainers and equity awards.17
The committee periodically engages its compensation consultant to review compensation of the Company’s Board compared to the Company’s peer group. The following discussion of compensation applies only to our non-management directors, and does not apply to Mr. Baker who, as an employee of the Company, is compensated as an executive officer and does not receive additional compensation for his service as a director.
2015 Compensation Changes for Non-Management Directors
As a result of its periodic review of Board compensation, in 2015, the Compensation Committee recommended and the Board approved an increase in the annual equity award under the 2010 Stock Incentive Plan from $61,000 to $76,000.
Each non-management director receives an annual cash retainer for his service on the Board in the amount of $66,000. The Chairman of the Board receives an additional annual cash retainer in the amount of $90,000. For service on Board committees or as chair of the committees: (i) each non-management member of the Audit and Compensation Committees receives an annual fee of $12,000; (ii) each non-management member of the Executive, Corporate Governance and Directors’ Nominating, and Health Safety, Environmental and Technical Committees receives an annual fee of $8,000; (iii) the committee chair for each of the Audit andCompensation Committees receives an additional annual fee of $12,000; and (iv) the committee chair for each of the Health, Safety, Environmental and Technical and Corporate Governance and Directors’ Nominating Committees receives an additional annual fee of $8,000.
All of the above annual fees are paid in quarterly installments. No other attendance fees are paid to the non-management directors. The non-management directors do not receive stock options, non-equity incentive plan compensation, or any other compensation, except as described below.
In March 1995, we adopted the Hecla Mining Company Stock Plan for Nonemployee Directors, which became effective following shareholder approval on May 5, 1995. The plan was amended July 18, 2002, February 25, 2004, May 6, 2005, December 10, 2007, and May 24, 2012. The plan terminates July 17, 2017, and is subject to termination by the Board at any time. Pursuant to the plan, on May 30 of each year, each non-management director is credited with a number of shares determined by dividing $24,000 by the average closing price for Hecla’s common stock on the New York Stock Exchange (“NYSE”) for the prior calendar year. Non-management directors joining the Board after May 30 of any year are credited with a pro rata number of shares based upon the date they join the Board. These shares are held in a grantor trust, the assets of which are subject to the claims of our creditors, until delivered under the terms of the plan. Delivery of the shares from the trust occurs upon the earliest of: (i) death or disability; (ii) retirement from the Board; (iii) a cessation of the director’sservice for any other reason; (iv) a change in control of the Company (as defined in the plan); or (v) at the election of the director at any time, provided, however, that shares must be held in the trust for at least two years prior to delivery. Subject to certain restrictions, directors may elect delivery of the shares on such date or in annual installments thereafter over 5, 10 or 15 years. The maximum number of shares of common stock which may be credited pursuant to the plan is 1,000,000. As of December 31, 2015, there were 506,921 shares remaining under the plan.
In February 2010, we adopted the 2010 Stock Incentive Plan for executive officers, employees, directors, and certain consultants, which was approved by shareholders in June 2010, and became effective on August 25, 2010. Pursuant to the 2010 Stock Incentive Plan, directors may be awarded grants of stock options, restricted stock units, restricted stock, or stock. In July 2015, the Compensation Committee recommended that the Board award $76,000
of additional stock to the directors as part of their compensation. The Board approved the additional award, and each of the directors received 31,148 additional shares under the 2010 Stock Incentive Plan in July 2015.
As described more fully above, the following chart summarizes the annual cash and equity compensation for our non-management directors during 2015.
Non-Management Director Compensation for 2015
| Fees | ||||||||||||||||
| Director | Annual Retainer ($) | Committee Meeting Fees ($) | Committee Chairman Fees ($) | Totals Fees Paid in Cash ($) | Stock Awards1 ($) | All Other Compensation ($) | Total ($) | |||||||||
| Ted Crumley, | 156,000 | 20,000 | 0 | 176,000 | 25,0072 | 0 | 277,008 | |||||||||
| Chairman | 76,0013 | |||||||||||||||
| John H. Bowles | 66,000 | 28,000 | 12,000 | 106,000 | 25,0072 | 0 | 207,008 | |||||||||
| 76,0013 | ||||||||||||||||
| George R. Nethercutt, Jr. | 66,000 | 20,000 | 12,000 | 98,000 | 25,0072 | 0 | 199,008 | |||||||||
| 76,0013 | ||||||||||||||||
| Terry V. Rogers | 66,000 | 32,000 | 8,000 | 106,000 | 25,0072 | 0 | 207,008 | |||||||||
| 76,0013 | ||||||||||||||||
| Charles B. Stanley | 66,000 | 28,000 | 0 | 94,000 | 25,0072 | 0 | 195,008 | |||||||||
| 76,0013 | ||||||||||||||||
| Dr. Anthony P. Taylor | 66,000 | 28,000 | 8,000 | 102,000 | 25,0072 | 0 | 203,008 | |||||||||
| 76,0013 | ||||||||||||||||
2016 Compensation Changes for Non-Management Directors
Effective January 1, 2016, the Compensation Committee recommended and the Board approved a 10% reduction in the annual cash compensation paid to non-management directors in 2016.
The Company covers directors under its overall director and officer liability insurance policies, as well as reimbursing them for travel, lodging, and meal expenses incurred in connection with their attendance at Board and committee meetings, meetings of shareholders, and for traveling to visit our operations. Directors are eligible, on the same basis as Company employees, to participate in the Company’s matching gift program, pursuant to which the Company matches contributions made to qualifying nonprofit organizations. The aggregate annual limit per participant is $5,000. Beyond these items, no other cash compensation was paid to any non-management director.
The Company has no current retirement plan for non-management directors. Our Bylaws and Corporate Governance Guidelines provide that directors will not be nominated for re-election after their 72nd birthday (this policy was waived in 2014 when Dr. Anthony P. Taylor was nominated for re-election after his 72nd birthday). As of December 31, 2015, the average age of members of our Board was approximately 68 and the average tenure of our Board was approximately 11 years. With the addition of two new members to the Board in February 2016, the average age of members of our Board is now approximately 67 and the average tenure of our Board is approximately 8 years.
| CORPORATE GOVERNANCE AND RELATED MATTERS |
CORPORATE GOVERNANCE AND RELATED MATTERS
We believe that good corporate governance practices reflect our values and support our strong strategic and financial objectives and performance. Our corporate governance practices are generally reflected in our Bylaws, Corporate Governance Guidelines, and committee charters, which can be found at http://www.hecla-mining.com.www.hecla-mining. com. The charters of each committee spell out the committees’ roles and responsibilities assigned to each by the Board. In addition, the Board has established policiesestablishedpolicies and procedures that address matters such as chief executive officer succession planning, transactions with related persons, risk oversight, communications with the Board by shareholders and other interested parties, as well as the independence and qualifications of our directors. This corporate governance section provides insights into how the Board has implemented these policies and procedures to benefit Hecla and our shareholders.
The Board’s Role and Activities in 20152016
Hecla’s Board acts as the ultimate decision-making body of the Company on certain fundamental matters and advises and oversees management, who areis responsible for the day-to-day operations and management of the Company. In carrying out its responsibilities, the Board reviews and assesses Hecla’s long-term strategy. During 2015,2016, there were fourfive meetings of the Board. Directors are expected toexpectedto make every efforttoeffort to attend the Annual Meeting, all Board meetings and the meetings of the committees on which they serve. All members of the Board attended last year’s Annual Meeting of Shareholders, which was held in May 2015.2016. In 2015,2016, each director attended over 95% of the meetings of the Board and the committees of which he wasthey are a member.
Role of Board in Risk Oversight
Our management is responsible for identifying and reviewing risks facing the Company, including, without limitation, strategic, operational, financial, compensation and regulatory risks, and meets regularly as part of such responsibility to review and discuss the Company’s risk exposure. The Board does not have a standing risk management committee, but rather administers this oversight function directly through the Board as a whole, as well as through various standing committees of the Board that address risks inherent in their respective areas of oversight. In particular, the Board is responsible for monitoring and assessing strategic, operational and reputational risk exposure. The Board and its committees periodically receive risk management updates through business reports from management provided at meetings of the Board or its committees throughout the year. Following consideration of the information provided by management, the Board provides feedback and makes recommendations, as needed, to help minimize the Company’s risk exposure. We also believe that our leadership structure and the use of executive sessions aids the Board in risk oversight.
The Audit Committee is responsible for considering and discussing major financial risk exposures (including financial statements, financial systems, the financialreporting process, compliance and auditing) and the steps management has taken to monitor and control these exposures. The committee regularly reviews and monitors compliance with securities and financial regulations, in addition to overseeing the audit work performed on behalf of the Company in the area of internal audit for compliance with the Sarbanes-Oxley Act. The committee meets at least quarterly to review the major financial risk exposures in connection with various matters, including the filing of quarterly reports with the SEC.
The Corporate Governance and Directors’ Nominating Committee monitors the effectiveness of the Company’s Corporate Governance Guidelines and other corporate governance matters.
The Compensation Committee assesses and monitors whether any of the Company’s executive compensation policies and programs have the potential to encourage excessive risk-taking. In 2015,2016, with the assistance of Mercer (US) Inc. (“Mercer”), (a compensation consulting firm engaged by the committee, which is a wholly owned subsidiary of Marsh & McLennan Companies, Inc. (a compensation consulting firm engaged by the committee)), the committee assessed the Company’s compensation arrangements to determine if their provisions and operation create undesired or unintentional risks of a material nature.
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| CORPORATE GOVERNANCE AND RELATED MATTERS |
The committee found that our compensation policies and practices do not create inappropriate or unintended significant risk to the Company as a whole.
The Health, Safety, Environmental and Technical Committee oversees the operational, reserve, and other technical risks, environment, health and safety compliance of the Company, as well as risks relating to public policy initiatives.
To the extent any risks identified by each standing committee of the Board are material or otherwise merit discussion by the whole Board, the respective committee chair will raise such risks at the next scheduled meeting of the Board, or sooner if merited.
For the foregoing reasons, we have determined that our risk oversight is appropriate in the context of our specific circumstances, risk management efforts, and the Board’s administration of its oversight function.
Our Corporate Governance Guidelines provide, among other things, that the Board will have a majority of directors who meet the criteria for independence required by the NYSE.New York Stock Exchange (“NYSE”). In determining independence each year, the Corporate Governance and Directors’ Nominating Committee affirmatively determines whether directors have any “material relationship” with the Company. When assessing the “materiality” of a director’s relationship with the Company, the committee considers all relevant facts and circumstances, not merely from the director’s standpoint, but from that of the persons or organizations with which the director has an affiliation. The committee also reviews the frequency or regularity of services or transactions between the Company and directors, whether the services or transactions are being carried out at arm’s length in the ordinary course of business and whether the services or transactions are being provided substantially on the same terms to the Company as those prevailing at the time from unrelated parties for comparable services or transactions. Material relationships can include commercial, banking, industrial, consulting, legal, accounting, charitable and familial relationships. To guide its determination of whether a director is independent, the Board has adopted the following NYSE listing standards:
A director will not be independent if:
| ● | the director is, or has been, within the last three years, our employee, or an immediate family member |
| ● | the director or an immediate family member has received, during any twelve-month period within the last three years, more than $120,000 in directcompensation from us, other than director and committee fees and pension and other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service); |
| ● | the director is: (i) a current partner or employee of a firm that is our internal or external auditor; (ii) the director has an immediate family member who is a current partner of a firm that is our internal or external auditor and who personally works on the Company’s audit; (iii) the director has an immediate family member who is a current employee of a firm that is our internal or external auditor and who personally works on the Company’s audit; or (iv) the director or an immediate family member was within the last three years a partner or employee of a firm that is our internal or external auditor and personally worked on our audit within that time; |
| ● | the director or an immediate family member is, or has been within the last three years, employed as an executive officer of another company where any of our present executive officers at the same time serves or served on that company’s compensation committee; or |
| ● | the director is a current employee, or an immediate family member is a current executive officer, of a company that has made payments to, or received payments from, us for property or services in an amount which, in any of the last three calendar years, exceeds the greater of $1 million or 2% of such other company’s consolidated gross revenues. |
Pursuant to our Corporate Governance Guidelines, the committee undertook its annual review of director independence in February 2016.2017. During this review, the committee considered transactions and relationships between each director or any member of his immediate family and Hecla and our subsidiaries and affiliates, including relationships described below and any reported on page 25 underCertain Relationships and Related Transactions.Transactions. The committee also examined transactions and relationships between directors or their affiliates and members of our senior management or their affiliates. As provided in the Corporate Governance Guidelines,
| 6 | An “immediate family member” includes a person’s spouse, parents, children, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, brothers- and sisters-in-law, and anyone (other than domestic employees) who shares such person’s home. |
| 7 | The term “executive officer” has the same meaning specified for the term “officer” in Rule 16a-1(f) under the Exchange Act, or any successor rule. |
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the purpose of this review was to determine whether any such relationships or transactions were inconsistent with a determination that the director is independent.
Based upon an assessment of all facts and circumstances known to the committee, including, among other things, a review of questionnaires submitted by our directors, the committee and the Board affirmatively determined that the following directors are independent of the Company and its management under the standards set forth by the NYSE:
| Ted Crumley | Stephen F. Ralbovsky |
| Catherine J. Boggs | Terry V. Rogers |
| George R. Johnson | Charles B. Stanley |
| George R. Nethercutt, Jr. | Dr. Anthony P. Taylor |
Messrs. Stanley and Baker both serve as members of the board of directors of QEP Resources, Inc., of which Mr. Stanley is also the chief executive officer. The committee reviewed this relationship with the Board, and the Board made the affirmative decision that this relationship did not disqualify Mr. Stanley from being independent. Neither Mr. Baker nor Mr. Stanley serves on the Compensation Committee of either Hecla or QEP Resources, Inc.
Mr. Baker is our President and CEO. As such, he cannot be deemed independent under the NYSE listing standards.
Directors are expected to immediately inform the Board of any material change in their circumstances or relationships that may impact their independence.
The Company has no current retirement plan for non-management directors. In December 2016, the Governance Committee recommended, and the Board approved, amending our Bylaws and Corporate Governance Guidelines to provide that directors will not be nominated for re-election after their 75th birthday. Prior to this amendment, the age was 72.
As of December 31, 2016, the average age of members of our Board was approximately 67 and the average tenure of our Board was approximately 10 years. With the addition of one new member to the Board in January 2017, and the retirement of Dr. Taylor in May 2017, the average age of members of our Board will be approximately 65 and the average tenure of our Board will be approximately 8 years.
There are currently no family relationships between the directors or executive officers of Hecla.
Board Leadership and Executive Sessions
Currently, the positions of CEO and Chairman of the Board (“Chairman”) are held by separate persons. The Board believes this structure is optimal for the Company at this time because it allows the CEO to focus on leading the Company’s business and operations, and the Chairman to serve as a sounding board and advisor to the CEO, and to lead the activities of the Board. The Board has also determined that having a non-management director serve as Chairman is in the best interest of shareholders. This structure ensures a greater role for the independent directors in the oversight of the Company and it enhances the Board’s independence and, we believe, senior management’s accountability to the Board.
If the individual elected as Chairman is the CEO, the independent directors will elect an Independent Lead Director for a one-year term. This would help ensure continued robust independent leadership of the Board.
Currently, our Chairman, Mr. Ted Crumley, chairs meetings of the Board, as well as the executive sessions with independentwithindependent members of the Board. His duties include chairing annual meetings of shareholders, overseeing the preparation of agendas forBoardfor Board meetings, preparing for executive sessions of the Board and providing feedback to the CEO, staying current on developments to determine when it may be appropriate to alert the Board to significant pending developments, serving as a liaison between independent directors and the CEO with respect to sensitive issues, and other matters. Executive sessions of non-managementindependent directors are included on the agenda for every regularly scheduled Board meeting and during 2015,2016, executive sessions were held at each regularly scheduled Board meeting. The executive sessions are chaired by the Chairman. Our non-managementindependent directors meet in executive sessions without management present, unless the non-managementindependent directors request their attendance.
For the foregoing reasons, we have determined that our leadership structure is appropriate in the context of our specific circumstances.
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Each year, the Board conducts a self-evaluation of its performance and effectiveness. As part of this process, each director completes an evaluation form on specific aspects of the Board’s role, organization and meetings. The collective comments are then presented by the chair of the Corporate Governance and Directors’ NominatingCommitteeCommittee to the whole Board. As part of the evaluation, the Board assesses the progress in the areas targeted for improvement a year earlier, and develops actions to take to enhance the Board’s effectiveness over the next year. Additionally, each committee conducts an annual self-evaluation of its performance through a similar process.
Committees of the Board and Committee Assignments
The Board has five standing committees: Audit; Compensation; Corporate Governance and Directors’Directors Nominating; Health, Safety, Environmental &and Technical; and Executive. Information regarding these committees is provided below. With the exception ofExcept for the Executive Committee, all committees are composed entirely of independent directors. With the exception of the Executive Committee, theThe charters of each of the other committees(other than Executive) committee are available on the Company’s website atwebsiteat http://www.hecla-mining.com under “Investors” by selecting “Corporate Governance.” You may also obtain copies of these charters by contacting the Company’s Investor Relations Department. The members of the Board on the date of this Proxy Statement, and the committees of the Board on which they serve, are identified below, along with the number of meetings held in 2015.
In 2015, the Audit Committee consisted of John H. Bowles (Chair), Charles B. Stanley, and Terry V. Rogers. After the death of Mr. Bowles in December 2015, the Corporate Governance and Directors’ Nominating Committee recommended and the Board approved the appointment of Charles B. Stanley as the Chair and also appointed Ted Crumley to the Audit Committee. As of the filing of our financial statements in our Annual Report on Form 10-K for the year ended December 31, 2015, on February 23, 2016, the committee members consisted of Charles B. Stanley (Chair), Ted Crumley and Terry V. Rogers.
At a meeting held in February 2016, the Corporate Governance and Directors’ Nominating Committee recommended and the Board approved the appointment of George R. Johnson and Stephen F. Ralbovsky to the Audit Committee, effective March 1, 2016. Mr. Johnson was also appointed to the Health, Safety, Environmental and Technical Committee, effective March 1, 2016. Mr. Ralbovsky was also appointed to the Corporate Governance and Directors’ Nominating Committee, effective March 1, 2016.
At the effective time of the appointments of Messrs. Johnson and Ralbovsky to the Audit Committee on March 1, 2016, Mr. Crumley withdrew as a member of the Audit Committee.
| Executive Committee Members | Functions of the Committee | Meetings in | ||||||
Phillips S. Baker, Jr., Chair | ●empowered with the same authority as the Board in the management of our business, except for certain matters enumerated in our Bylaws | None* | ||||||
Audit Committee Members1, 2, 3 | Functions of the Committee | Meetings | ||||||
Charles B. Stanley, Chair | ●assist the Board in fulfilling its oversight responsibilities ●review the integrity of our financial statements ●review the independent auditor’s qualifications and independence ●review the performance of our internal auditor and the independent auditor ●review our compliance with laws and regulations, including disclosure controls and procedures ●please refer to |
|
Compensation Committee Members2 | Functions of the Committee | Meetings | ||||||
George R. Nethercutt, Jr., Chair | ●approve compensation levels and programs for the executive officers, including the CEO ●administer our stock-based plans ●please refer to the “Compensation Discussion and Analysis” on page 33 | 5 |
| * | The Executive Committee did act by Unanimous Consent In lieu of Meeting once in 2016. |
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Corporate Governance and | Functions of the Committee | Meetings | ||||||
Dr. Anthony P. Taylor, Chair | ●consider matters of corporate governance ●periodically review our Corporate Governance Guidelines, Code of Business Conduct and Ethics, and other corporate procedures to ensure compliance with laws and regulations ●review any director candidates, including those nominated or recommended by shareholders ●identify individuals qualified to become directors consistent with criteria approved by the Board ●recommend to the Board the director nominees for the next annual meeting of shareholders, any special meeting of shareholders, or to fill any vacancy on the Board ●review the appropriateness of the size of the Board relative to its various responsibilities ●recommend committee assignments and committee chairpersons for the standing committees for consideration by the Board | 4 | ||||||
Health, Safety, Environmental | Functions of the Committee | Meetings | ||||||
Terry V. Rogers, Chair | ●review the operational and exploration performance ●review the operational, reserve and other technical risks ●review and monitor health, safety and environmental policies ●review the implementation and effectiveness of compliance systems ●review the effectiveness of health, safety and environmental policies, systems and monitoring processes ●review audit results and updates from management with respect to health, safety and environmental performance ●review emerging health, safety and environmental trends in legislation and proposed regulations affecting the Company ●review the technical activities of the Company ●make recommendations to the Board concerning the advisability of proceeding with the exploration, development, acquisition or divestiture of mineral properties and/or operations | 4 |
| 1 | The Board has determined that each of the members of the Audit Committee is financially literate and Messrs. Stanley, Rogers |
| 2 | Each member of the Audit, Compensation, and Corporate Governance and |
| 3 | |
| 4 | |
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While the Board has not adopted a formal policy on diversity, the Company’s Corporate Governance Guidelines provide that, as a whole, the Board should include individuals with a diverse range of experience to give the Board depth and breadth in the mix of skills represented. The Board seeks to include an array of skills and experience in its overall composition ratherthan requiring every director to possess the same skills, perspective, and interests. This guideline is implemented by seeking to identify candidates who bring diverse skill sets, backgrounds, and experiences, including ethnic and gender diversity, to the Board when director candidates are needed.
Shareholders or other interested parties wishing to communicate with the Chairman or with the independent directors as a group may do so by delivering or mailing the communication in writing to: Chairman of the Board, c/o Corporate Secretary, Hecla Mining Company, 6500 N. Mineral Drive, Suite 200, Coeur d’Alene, Idaho 83815-9408. Concerns relating to accounting, internal controls or auditing matters are immediately brought to theattention of our internal auditor and handled in accordance with procedures established by the Audit Committee with respect to such matters. From time to time, the Board may change the process by which shareholders may communicate with the Board or its members. Please refer to our website at http://www.hecla-mining.com under the tab entitled “Investors” and then select the tab entitled “Corporate Governance” for any changes in this process.
In light ofConsidering the critical importance of executive leadership to the Company’s success, the Compensation Committee is charged with the responsibility of developing a process for identifying and evaluating candidates to succeed our CEO and to report annually to the Board on the status of the succession plan, includingplan. As part of the annual report, the committee may also address issues related to the preparedness for the possibility of an emergency situation involving senior management and an assessment of the long-term growth and development of the senior management team.
The CEO and Director of Human Resources make a formal succession planning presentation to the Compensation Committee annually. The Compensation Committee reviews recommended candidates for senior management positions as part of the process to identify and gauge the availability of qualified candidates for those positions and receives reports concerning development plans that are utilized to strengthen the skills and qualifications of the candidates. The criteria used when assessing the qualifications of potential CEO successors include, among others, strategic vision and leadership, operational excellence, financial management, executive officer leadership development, ability to motivate employees, and an ability to develop an effective working relationship with the Board.
In 2015,2016, the Compensation Committee conducted a full executive talent review of all NEOs, with an emphasis on CEO succession. In connection with that review, the Compensation Committee identified potential successors to the CEO.
In conjunction with the succession review, management also reviewed potential successors for the top management roles across Hecla. In connection with that review, we concluded that “ready now” potential successors exist for approximately one-third of those roles, which represents an increase in the level of readiness of our talent compared to previous years. We created development plans for the potential successors who were identified as being ready in one to two years or three to five years. By the end of 2015, we had greater visibility into our talent poolIn 2016, those potential successors were sent to specific leadership classes and we used that information to build the succession plansseminars for the next tier of critical roles.further training.
Our Corporate Governance Guidelines also provide that in the event of the death, resignation, removal or incapacitation of the President and CEO, the Chairman will act as the President and CEO until a successor is duly elected. In addition, our Corporate Governance Guidelines and Bylaws provide that in the event of the death, resignation, removal or incapacitation of our current Chairman, the President and CEO will act as Chairman until his successor is duly elected.
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CORPORATE GOVERNANCE AND RELATED MATTERS |
Electronic Access to Corporate Governance Documents
Our corporate governance documents are available by accessing our website at http://www.hecla-mining.com under the tab entitled “Investors” and then selecting the tab entitled “Corporate Governance.” These include:
| ● | Corporate Governance Guidelines; |
| ● | Whistleblower Policy; |
| ● | Charters of the Audit, Compensation, Corporate Governance and |
| ● | Code of Ethics for our Chief Executive Officer and Senior Financial Officers; and |
| ● | Code of Business Conduct and Ethics for Directors, Officers and Employees. |
Shareholders may also request a free copy of these documents from: Investor Relations, Hecla Mining Company, 6500 N. Mineral Drive, Suite 200, Coeur d’Alene, Idaho 83815-9408; (208) 769-4100.
Corporate Governance Guidelines
The Corporate Governance Guidelines were adopted by the Board to ensure that the Board is independent from management, that the Board adequately performs its function as the overseer of management, and to help ensure that the interests of the Board and management align with the interests of our shareholders. In December 2014,2016, the Corporate Governance and Directors’ Nominating Committee and the Board amended the Corporate Governance Guidelines to more precisely track statutory requirements to improve its clarity and functionality, as well asincluding with respect to more closely match the Company’s evolving practices.practices and policies, and to amend the director’s retirement age from 72 years to 75 years.
In February 2017, the Governance Committee recommended and the Board approved further amendments to the Corporate Governance Guidelines to include a director resignation policy. The policy provides that any director who is not elected by a majority of votes cast, shall tender his or her resignation to the Governance Committee. The Governance Committee will recommend to the Board whether to accept or reject the resignation offer, or whether other action should be taken. In determining whether to recommend that the Board accept any resignation offer, the committee will be entitled to consider all factors believed relevant by the Governance Committee’s members. The Board will act on the Governance Committee’s recommendation within ninety (90) days following certification of the election results. In deciding whether to accept the resignation offer, the Board will consider the factors considered by the Governance Committee and any additional information and factors that the Board believes to be relevant. If the Board accepts a director’s resignation offer pursuant to this process, the Governance Committee will recommend to the Board and the Board will thereafter determine whether to fill such vacancy or reduce the size of the Board. Any director who tenders his or her resignation pursuant to this provision will not participate in the proceedings of either the Governance Committee or the Board with respect to his or her own resignation offer. If a director’s resignation is not accepted by the Board, the director shall continue to serve until the next annual meeting of shareholders or until his or her successor is duly elected and qualified, or his or her earlier resignation or removal. If a director’s resignation is accepted by the Board, then the Board, in its sole discretion, shall fill any resulting vacancy or decrease the size of the Board.
Code of Business Conduct and Ethics
We believe that operating with honesty and integrity has earned trust from our shareholders, credibility within our community, and dedication from our employees. Our directors, officers and employees are required to abide by our Code of Business Conduct and Ethics to promote the conduct of our business in a consistently legal and ethical manner. Our Code of Business Conduct and Ethics covers manycoversmany topics, including conflicts of interest, confidentiality, fair dealing, proper use of the Company’s assets, and compliance with laws, rules and regulations. In addition to the Code of Business Conduct and Ethics for directors, officers and employees, our CEO, Chief Financial Officer and Controller are also bound by a Code of Ethics for the Chief Executive Officer and Senior Financial Officers.
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| CORPORATE GOVERNANCE AND RELATED MATTERS |
The Corporate Governance and Directors’ Nominating Committee has adopted procedures to receive, retain, and react to complaints received regarding possible violations of the Code of Business Conduct and Ethics, and to allow for the confidential and anonymous submission by employees of concerns regarding possible violations of the Code of Business Conduct and Ethics. Our employees may submit any concerns regarding apparent violations of the Code of Business Conduct and EthicsandEthics to their supervisor, our General Counsel, the Chair of the Corporate Governance and Directors’ Nominating Committee, or through an anonymous telephone hotline.
In February 2017, the Governance Committee recommended and the Board approved certain amendments to the Code of Business Conduct and Ethics.
We have a Whistleblower Policy adopted by our Audit Committee that encourages our employees to report to appropriate Company representatives, without fear of retaliation, certain accounting information relating to possible fraud. Our employees may submit any concerns regarding financial statement disclosures, accounting,internal accounting controls or auditing matters to the Audit Committee, our General Counsel, or through an anonymous telephone hotline. The goal of this policy is to discourage illegal activity and business conduct that damages Hecla’s reputation, business interests, and our relationship with shareholders.
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Certain Relationships and Related Transactions
We review all relationships and transactions with related persons to determine whether such persons have a direct or indirect material interest. Transactions with related persons are those that involve our directors, executive officers, director nominees, greater than 5% shareholders, immediate family members of these persons, or entities in which one of these persons has a direct or indirect material interest. Transactions that are reviewed as related party transactions by us are transactions that involve amounts that would exceed $120,000 (the current threshold required to be disclosed in the Proxy Statement under SEC regulations) and certain other transactions. Pursuant to our Code of Business Conduct and Ethics, employees and directors have a duty to report any potential conflicts of interest to the appropriate level of management or to the Corporate Governance and Directors’ Nominating Committee. We evaluate these reports along with responses to our annual director and officer questionnaires for any indication of possible related party transactions. Our legal staff is primarily responsible for the development and implementation of processes and controls to obtain information from the directors and executive officers with respect to related party transactions. If a transaction is deemed by us to be a related party transaction, the information regarding the transaction is discussed with the Board. As required under the SEC rules, transactions that are determined to be directly or indirectly material to Hecla or a related party are disclosed in our Proxy Statement.
In December 2007, we created the Hecla Charitable Foundation (the “Foundation”). We have made and intend to continue to make charitable contributions to thetothe Foundation, which in turn has provided and intends to continue to provide grants to other organizations for charitable and educational purposes. Mr. James A. Sabala (our former Senior Vice President and Chief Financial Officer) served as a director of the Foundation until his retirement in June 2016. Mr. Phillips S. Baker, Jr. and Dr. Dean W.A. McDonald (our Senior Vice PresidentChief Executive Officer and Chief Financial Officer andour Senior Vice President – Exploration, respectively) serve as directors of the Foundation, and Luther J. Russell (our Vice President – External Affairs) serves as President and as a director of the Foundation. In December 2007, our Board madeapproved a contribution of 550,000 shares of our common stock to the Foundation. Since 2007, the Foundation has sold 279,860 shares of our common stock. Cash contributions totaling $2.0 million and $1.5 million were made by the Company to the Foundation during 2011 and 2010, respectively. The funds from the sale of the shares and the additional cash were put into various investment accounts. The Foundation is currently operating in a self-sufficient manner. The Company gave no additional funds to the Foundation during 2015.2016. The Foundation holds 270,140 shares of our common stock as of December 31, 2015.2016. The value of those shares based on the closing price of our common stock on the NYSE on December 31, 201530, 2016 ($1.89)5.24), was $510,565.$1,415,534. In 2015,2016, the Foundation gave $331,575.13$433,530 in donations.
In 2015,2016, we did not make any contribution to any charitable organization, of which a director served as an executive officer, which exceeded the greater of $1 million or 2% of the charitable organization’s consolidated gross revenues.
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COMPENSATION OF NON-MANAGEMENT DIRECTORS The Compensation Committee of the Board is responsible for recommending to the independent members of the Board the form and amount of compensation for our non-management directors. The independent members of the Board consider the committee’s recommendation and make final determination of non-management director compensation. Compensation for non-management directors is designed to reflect current market trends and developments with respect to compensation of board members, and aligns with its philosophy toward executive compensation – with a higher proportion of compensation in equity. It consists of a combination of cash retainers and equity awards. The committee periodically engages its independent compensation consultant to benchmark director compensation against the Company-selected peer group, which is the same group of companies the committee uses to benchmark executive compensation (see page 38 for a list of these companies). When considering non-management director compensation for calendar year 2016, the committee reviewed and considered the results of a benchmarking report prepared by the committee’s independent compensation consultant. The report reviewed the Company’s calendar year annual cashretainers, fees for Board and committee chairmanships, and the annualized present value of equity compensation for the Company-selected peer group (primarily based on reported calendar year 2015 compensation or calendar year 2016 compensation, if disclosed). The following discussion of compensation applies only to our non-management directors, and does not apply to Mr. Baker who, as an employee of the Company, is compensated as an executive officer and does not receive additional compensation for his service as a director. 2016 Compensation Changes for Non-Management Directors Due to the low prices of metals in 2015, effective January 1, 2016, the Compensation Committee recommended and the Board approved a 10% reduction in the annual cash compensation paid to non-management directors in 2016. In June 2016, the Compensation Committee recommended, and the Board approved an increase in the annual cash retainer for each non-management member of the Health, Safety, Environmental and Technical Committeefrom $8,000 to $12,000 annually. In addition, the annual cash retainer for the committee chair of the Health, Safety, Environmental and Technical Committee was increased from $8,000 to $12,000. The increase was due to the committee’s recent increased responsibilities in monitoring (i) health, safety and environmental policies, (ii) compliance systems, (iii) safety audit results, and (iv) emerging health, safety and environmental trends in legislation and proposed regulations affecting the Company. 26www.hecla-mining.com
Components of Non-Management Director Compensation
Annual cash retainers are paid in quarterly installments. No other attendance fees are paid to the non-management directors. The non-management directors do not receive stock options, non-equity incentive plan compensation, or any other compensation, except as described herein. In March 1995, we adopted the Hecla Mining Company Stock Plan for Nonemployee Directors, which became effective following shareholder approval on May 5, 1995. The plan was amended July 18, 2002, February 25, 2004, May 6, 2005, December 10, 2007, and May 24, 2012. The plan is currently scheduled to terminate July 17, 2017, and is subject to termination by the Board at any time (see Proposal 5, beginning on page 77 for a description of the proposal to amend and restate the plan). Pursuant to the current plan, on May 30 of each year, each non-management director is credited with a number of shares determined by dividing $24,000 by the average closing price for Hecla’s common stock on the NYSE for the prior calendar year. Non-management directors joining the Board after May 30 of any year are credited with a pro rata number of shares based upon the date they join the Board. These shares are held in a grantor trust, the assets of which are subject to the claims of our creditors, until delivered under the terms of the plan. Delivery of the shares from the trust occurs upon the earliest of: (i) death or disability; (ii) retirement from the Board; (iii) a cessation of the director’s service for any other reason; (iv) a change in control of the Company (as defined in the plan); or (v) at the election of the director at any time, provided, however, that shares must be held in the trust for at least two years prior to delivery. Subject to certain restrictions, directors may elect delivery of the shares on such date or in annual installments thereafter over 5, 10 or 15 years. The maximum number of shares of common stock which may be credited pursuant to the plan is 1,000,000. As of December 31, 2016, there were 438,459 shares remaining available for issuance under the plan. In February 2010, we adopted the 2010 Stock Incentive Plan for executive officers, employees, directors, and certain consultants, which was approved by shareholders in June 2010, and became effective on August 25, 2010. Pursuant to the 2010 Stock Incentive Plan, directors may be awarded grants of stock options, restricted stock units, restricted stock, or stock. The Board receives an additional award of $76,000 in common stock under the 2010 Stock Incentive Plan as part of their compensation. In 2016, the Compensation Committee recommended and the Board approved the award of 17,273 shares of common stock under the 2010 Stock Incentive Plan to each non-management director. 2017 Proxy Statement27
As described more fully on the previous page, the following chart summarizes the annual cash and equity compensation for our non-management directors during 2016. Non-Management Director Compensation for 2016
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2017 Compensation Changes for Non-Management Directors Effective January 1, 2017, the Compensation Committee recommended and the Board approved the reinstatement of the annual cash compensation paid to non-management directors to its full value as described under “Components of Non-Management Director Compensation” on page 27. At the Annual Meeting, we are asking our shareholders to approve an amendment and restatement of the HeclaMining Company Stock Plan for Nonemployee Directors (“Director Stock Plan”). If approved by shareholders, this will eliminate non-management director participation in the 2010 Stock Incentive Plan, and all stock awards will be solely awarded under the Director Stock Plan, beginning in 2017. See page 77 for a full description of the Director Stock Plan. The Company covers directors under its overall director and officer liability insurance policies, as well as reimbursing them for travel, lodging, and meal expenses incurred in connection with their attendance at Board and committee meetings, meetings of shareholders, and for traveling to visit our operations. Directors are eligible, on the samebasis as Company employees, to participate in the Company’s matching gift program, pursuant to which the Hecla Charitable Foundation matches contributions made to qualifying nonprofit organizations. Beyond these items, no other cash compensation was paid to any non-management director. 2017 Proxy Statement29
PROPOSAL The Audit Committee is directly responsible for the appointment, compensation, retention and oversight of the independent registered public accounting firm retained to audit our financial statements. The committee appointed BDO USA, LLP (“BDO”) as the independent registered public accounting firm for Hecla for the calendar year ending December 31,
The members of the committee believe that the continued retention of BDO to serve as our independent registered public accounting firm is in the best interests of Hecla and its shareholders. Although ratification is not required, the Board is submitting the appointment of BDO to our shareholders for ratification because we value our shareholders’ views on the Company’s independent registered public accounting firm, and as a matter of good Representatives of BDO are expected to be present at the Annual Meeting with the opportunity to make statements and respond to appropriate questions from shareholders present at the meeting.
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The committee’s principal functions are to assist the Board in fulfilling its oversight responsibilities, and to specifically review: (i) the integrity of our financial statements; (ii) the independent auditor’s qualifications and independence; (iii) the performance of our internal auditor and the independent auditor; and (iv) our compliance with laws and regulations, including disclosure controls and procedures. During The committee acts under a written charter as amended on December In performing its functions, the Audit Committee:
Based on the review and discussions described in this report, and subject to the limitations on the role and responsibilities of the Audit Committee referred to above and in the Audit Committee Charter, the committee recommended to the Board that the audited financial statements be included in our Annual Report on Form 10-K for the calendar year ended December 31, Respectfully submitted by Charles B. Stanley, Chairman 2017 Proxy Statement31
The following table represents fees for professional audit services rendered by BDO for the audit of our annual financial statements for the years ended December 31, 2015 and December 31,
The committee’s current practice requires pre-approval of all audit services and permissible non-audit services to be provided by the independent registered public accounting firm. The committee reviews each non-audit service to be provided and assesses the impact of the service on the firm’s independence. On a periodic basis, 32www.hecla-mining.com
COMPENSATION DISCUSSION AND ANALYSIS Our Compensation Committee strives to design a fair and competitive compensation program for executive officers that will attract, motivate and retain highly qualified and experienced executives, reward performance and provide incentives
Hecla is a leading primary low-cost silver producer with operating silver mines in Alaska (Greens Creek), Idaho (Lucky Friday), and Mexico (San Sebastian) and is a gold producer with an operating mine in Quebec, Canada (Casa Berardi). We also produce lead and zinc. In addition to our diversified silver and gold operating cash-flow Our
We believe this share price Our philosophy is to operate mines safely by promoting a deeply-rooted value-based culture, leveraging mining skills developed over the Company’s long history and by innovating new practices. We are proud to be the first hardrock mine to be certified under the National Mining Association’s CORESafety system. We believe very strongly that the future of mining lies in productivity increases, and one of the best ways to increase productivity and safety is by automating the mining tasks allowing the miners to move away from the mining face, and in some cases, operate the machinery from surface, or have machinery that operates by itself. High speed wireless data transfer is being used to improve communication, monitoring and data collection. This information helps management make better decisions, and enables both tele-remote and autonomous equipment operation. We have begun introducing automated drilling, tele-remote mucking, automated hauling trucks and battery powered equipment in some of our 2017 Proxy Statement33
Key Operating and Financial Results
The mining business requires long-term planning and implementation of operating strategies over several years to deliver successful operating and financial results. Accordingly, in the table below and summary that follows, we set forth our key operating and financial results for years 2016, 2015
Our overall operating and financial results are more fully described inManagement’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K filed with the SEC on February 23, 2017. Our 2016 results were strong relative to our 2015 results. In 2016, we achieved the following:
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The charts below show the change in our share price in 2016 and in 2015 compared to each of the companies in our peer group. 2016 Stock Price  2015 Stock Price 
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Shareholder Outreach and Over the last In Oversight and Determination of the Executive Compensation Program Role of the Compensation
Role of Independent Compensation Consultant. Mercer performs executive compensation services solely on behalf of the committee, is engaged by and reports directly to the committee, meets separately with the committee with no members of management present, and consults with the committee chair between meetings. The committee has assessed Mercer’s independence in light of SEC rules and NYSE listing standards, and has determined that Mercer’s work does not raise any conflicts of interest or independence concerns. The Mercer consultants Pursuant to a written agreement dated
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In addition to providing technical support and input on market practices, the committee’s goal in using a compensation and benefits In The committee has established procedures that it considers adequate to ensure that Mercer’s advice to the committee remains objective and is not influenced by Company management. These procedures include: a direct reporting relationship between the Mercer consultant and the committee; a provision in the committee’s engagement letter with Mercer specifying the information and recommendations that can and cannot be shared with management; an annual update to the committee on Mercer’s financial relationship with Hecla, including a summary of the work performed for Hecla during the preceding 12 months; and written assurances from Mercer that within the Mercer organization, the Mercer consultants who perform services for Hecla The total amount of fees for executive compensation consulting services Mercer provided to the committee in During Role of Management. The committee considers input from the CEO in making determinations regarding our executive compensation program and the individual compensation of each Benchmarking Using Compensation Peer Groups. To attract and retain key executives, our goal is to provide competitive compensation. We generally align our NEO total compensation to the Central to the pay review process is the selection of a relevant peer group. Because we operate in a global business that is dominated by Canadian companies, In 2016, Hecla’s peer group was made up of the following
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The peer group is composed entirely of publicly held companies, most of which are engaged in the business of mining precious metals with revenue, market capitalization and total assets within a reasonable range of Hecla’s. We believe these peer companies are appropriate because they are in the same industry, compete with us for executive talent, have executives in positions similar to ours, and are considered by the committee to be in an acceptable range of revenue, market capitalization and/or total assets compared to Hecla. During our shareholder outreach, many of our largest shareholders have informed us that they consider our peer group to be the most relevant and appropriate for compensation and performance benchmarking purposes. The peer group selected last year by Glass-Lewis included 14 of our 17 selected peers. The peer group selected by Institutional Shareholder Services (“ISS”) included only 4 of our 17 selected peers. The rest of the peer group selected by ISS contained U.S. based companies in the agricultural product, forest products, industrial and specialty chemicals, metal powders, coatings, paper and other industries – companies and industries whose market fundamentals are different from the precious metals mining industry. We understand that ISS’s internal policies prohibit its selection of Canadian companies (which account for eleven of our peers), and require that Hecla be compared to companies having only similar revenue instead of similar market capitalization or total assets. We believe that a faircompensation peer group, in terms of both industry profile and size, cannot be selected for Hecla without including Canadian companies. In making compensation decisions the committee also reviews survey data provided by Mercer from the following mining and general industry survey sources:
Base salaries are targeted between the 25th percentile and median (50th percentile), with incentive opportunities that can provide above-median total compensation based on performance. Compensation for NEOs within this group may be positioned higher or lower than Mercer provided the committee with a report summarizing executive compensation levels at the 25th, 50th and 75th percentiles of the peer group and the survey data for positions comparable to those held by each of our NEOs. The committee also received an analysis from Mercer 38www.hecla-mining.com
comparing the target total cash compensation (base salary plus target annual incentive) and target total direct compensation (base salary plus target annual incentive plus the value of long-term target incentives) for each of the NEOs against these benchmarks. For retention and competitive considerations, in comparison to the peer group data or survey data applicable to each NEO’s position, we target each NEO’s total cash compensation at the median level and the total target direct compensation at or above the median level, and deliver compensation above or below these levels when warranted by performance. In
In
Compensation Philosophy and Objectives We operate in a competitive and challenging industry. Over the past decade, a worldwide mining boom has significantly increased the demand for executives with mining-related skills and experience. In addition, the supply of mining executives is very limited, particularly in the United States. As a result, having a viable compensation strategy is critical to our success. Our compensation philosophy is to pay our NEOs competitive levels of compensation that best reflect their individual responsibilities and contributions to the Company, while providing incentives to achieve our business and financial objectives. While comparisons to compensation levels at companies in our peer group are helpful in assessing the overall competitiveness of our compensation program, we believe that our executive compensation program also must be internally consistent and equitable in order for the Company to achieve our corporate objectives. The pay-for-performance philosophy of our executive compensation programs described in this Proxy Statement plays a significant role in our ability to produce strong operating, exploration, strategic, and financial results. It enables us to attract and retain a highly experienced and successful team to manage our business. Our In setting policies and practices regarding compensation, the guiding philosophy of the committee is to:
The committee believes that a mix of both cash and equity incentives is appropriate, as The committee conducts its annual review process near the end of each calendar year in order to align each executive’s compensation awards with the Company’s operational, financial and strategic results for the calendar year. 2017 Proxy Statement39
We also maintain (or avoid) the following pay practices that we believe enhance our pay-for-performance philosophy and further align our NEOs’ interests with those of shareholders:
Elements of Total Compensation We have a multifaceted compensation program. For the year ended December 31,
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2017 Proxy Statement41
Total Compensation Mix Our executive compensation program – composed primarily of base salary, short- and long-term incentives, and equity awards – is intended to align the interests of our NEOs with the long-term interests of our shareholders. The program is designed to accomplish this by rewarding performance that results in an increase in the value of our shareholders’ investment in Hecla. We believe that the proportion of at-risk, performance-based compensation should comprise a significant portion of executive pay. The mix of compensation for our CEO and other NEOs, which we believe is similar to our peer group, is shown below.
CEO Mix of Target Pay
Other NEO Mix of Target Pay
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Individual base salaries and annual incentive targets for the NEOs are based on the scope of each NEO’s responsibilities, individual performance and market data. At the beginning of each year, we also define the keystrategic objectives each NEO is expected to achieve during that year, which are evaluated and approved by the committee.
Overview of our Compensation Decisions and Results for
Design. Pursuant to our market positioning policy, the committee targets base salaries between the 25th percentile and median of Hecla’s peer group for our NEOs. An individual NEO’s base salary may be set above or below this market range for that particular position, depending on the committee’s subjective assessment of the individual NEO’s experience, recent performance and expected future contribution, retention concerns, and the recommendation of our CEO (other than for himself). The committee does not use any type of quantitative formula to determine the base salary level of any of the NEOs. The committee reviews NEO salaries at least annually as partof its overall competitive market assessment, as Analysis and Decision. In The following table shows base salaries for all NEO’s from July 1, 2014 through December 31, Base Salary for NEOs July 1, 2014 through December 31,
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Company Performance and Relationship to NEOCompensation. Our incentive compensation plans include the Hecla Mining Company Annual Incentive Plan and the Hecla Mining Company Executive and Senior Management Long-Term Performance Payment Plan. The plans include performance measures of the most important factors we believe contribute to Hecla’s sustained long-term success that can lead to improved stock price performance. Hecla Mining Company Annual Incentive Plan (“AIP”). Consistent with Hecla’s pay-for-performance philosophy, substantially all salaried employees, including our NEOs, are eligible to participate in the AIP. Late in the prior year, or early in the current year, the committee approves a company-wide, short-term incentive pool that is available for payment to salaried employees, including the NEOs, the amount of which is based on Company performance during the prior year. AIP Components. In 2014, the AIP was amended to use a more formulaic approach to awards, with less committee discretion. The AIP includes the following components and relative weights:
For The production factor converts gold, lead and zinc to silver equivalent at a ratio of Production Goal Metrics
The adjusted EBITDA target was
Adjusted EBITDA Goal Metrics
The cash position target is $100 million. Maximum payout is achieved if our cash position at year-end is at or above $200 million. The threshold payout level is $85 million, below which no payout is earned. 44www.hecla-mining.com
Cash Goal Metrics
The work-related injury rate reduction target is 15% at year-end. Maximum payout is achieved if our work-related injury rate is met at 35%. The threshold payout level is 5% reduction, below which no payout is earned. Work-Related Injury Rate Reduction
Target Opportunities. Each NEO has a target award opportunity expressed as a percentage of base salary, along with minimum and maximum award levels. The target award opportunities are determined based on the following: market assessments and the committee’s market positioning policy; the individual NEO’s organization level, scope of responsibility and ability to impact Hecla’s overall performance; and internal equity among the NEOs. Actual awards are paid after the end of each annual performance period and can range from 0% to 200% of the target awards, based on the committee’s assessment of our actual performance and the achievement of an individual NEO’s goals. Having a limit on our maximum award reduces the likelihood of windfalls to executives and encourages financial discipline. It is also competitive with typical peer group practice. For 2016, target AIP award opportunities for the NEOs were as follows:
The market analysis prepared by Mercer in June 2016 indicated that annual incentives were generally at the median of peers. Performance Measures. Our management develops proposed targets for each Company performance measure based on a variety of factors, including historical corporate performance, internal budgets, forecasts and growth targets, market expectations and strategic objectives. The committee reviews the targets and adjusts them, as it deems appropriate. The committee believes that linking annual incentive awards to pre-established goals creates a performance-based compensation strategy consistent with shareholder interests. The committee also believes that incentive compensation targets should be established to drive real and sustainable improvements in operating performance and the strategic position of the Company. 2017 Proxy Statement45
2016 AIP – Analysis and Decisions. The committee reviewed the performance versus the AIP goals on a quarterly basis. For 2016, based on the assessment by the committee of the Company’s overall performance on both quantitative and qualitative measures as well as relevant discretionary factors under the AIP, the committee determined Company performance to be at 150% of target (out of a possible range of 0-200%). For 2016, Company performance for AIP was 150%, which was comprised of 85% related to the quantitative factors (30% for Production, 17.5% for Adjusted EBITDA, 30% for Cash, and 7.5% for Work-related injury reduction); 40% for qualitative factors; and 25% for discretionary.
As reflected in the table above, production and cash generation each achieved the maximum level, while Adjusted EBITDA and work-related injury reduction goals exceeded target levels. In addition to quantitative corporate performance factors, our AIP has a component that is based on qualitative and other goals relating not only to Hecla as a whole, but also to each NEO. This component is targeted to account for 25% of the total AIP target award, but can account for 0 to 50% of the target award. For our 2016 AIP, qualitative objectives for NEOs included those related to (i) strategy, (ii) succession planning, (iii) safety, health and environment, (iv) process improvement and innovation, (v) operations, (vi) financial condition, (vii) human capital development, (viii) acquisitions, (ix) mine life extension exploration and reserve growth, (x) investor relations, (xi) government and community relations, and (xii) legal. While most of the goals are subjective in nature, to the extent possible, objective and quantifiable targets are set in order to improve accountability for results. For 2016, the committee assessed performance under this component at 40% of the target award. The committee based its assessment on the following factors:
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The final component of our AIP is at the discretion of the committee and it is targeted to account for 25% of the total AIP target award, but can account for 0 to 50% of the target award. For 2016, the committee determined the discretionary factor performance value to be at 25% of the target award. The committee based its assessment primarily on the following significant performance results by Hecla in 2016:
In addition to the strong performance realized by our NEOs within their functional area and as part of the executive team, each NEO made significant contributions to Hecla’s 2016 performance. Mr. Baker’s performance is based 100% on corporate performance. The Company had an outstanding year under Mr. Baker’s guidance, including strong share performance, increased metals production, and cash flow growth. As Mr. Baker’s performance is based on corporate performance, the committee assessed Mr. Baker’s AIP to be 150% of target. Mr. Radford’s leadership was also instrumental in developing the organization, including acquiring the work force needed to operate the San Sebastian mine at full production throughout the year, achieving higher metal recoveries at Greens Creek, reducing geotechnical risk in the underground operations, advancing the EMCP open-pit project at Casa Berardi and the combined operations achieving higher production than the prior year. The committee assessed Mr. Radford’s AIP to be at 180% of target. Dr. McDonald oversees the exploration program for the Company and was instrumental in developing the resource model that will extend Greens Creek’s life of mine to 2027, as well as having a successful drilling program at Casa Berardi, that has shown the potential for another open-pit mine. The committee assessed Mr. McDonald’s AIP to be at 125% of target. Mr. Sabala and his successor, Mr. Hall, were both instrumental in managing Hecla’s cash position in 2016, effectively managing working capital, negotiating credit agreements and improving capital market relationships. Mr. Sabala retired in June 2016, and Mr. Hall joined the Company in July 2016. The committee felt that there was a smooth transition between Messrs. Sabala and Hall, and the committee assessed AIP for Mr. Sabala to be at 115% of target, and 120% at target for Mr. Hall, both of which were prorated. Mr. Sienko was successful in resolving several significant regulatory and legal matters involving environmental, health and safety, and other civil litigation issues, while also supporting the acquisition of Mines Management, and the funding of our pension plans. The committee assessed Mr. Sienko’s AIP to be at 189% of target. 2017 Proxy Statement47
Set forth in the table below is each NEO’s target award and actual award, which was paid 75% in cash and 25% in Hecla common stock issued under the 2010 Stock Incentive Plan.
Hecla Mining Company Executive and Senior Management Long-Term Performance Payment Plan (“LTIP”). We use the LTIP to focus executives on meeting long-term (three-year) corporate performance goals. The LTIP is also designed to attract and retain executives in a highly competitive talent market. The committee considers mining and general industry market practices, as well as the objectives of the LTIP, when determining the terms and conditions of long-term incentive goals, such as resource additions and cash flow generation. Under the LTIP, a new performance period begins each calendar year and runs for three years. The three-year performance period recognizes that some value-creating activities require a significant period of time to be implemented and for measurable results to accrue. Starting a new performance period each year also gives the committee flexibility to adjust for new business conditions, circumstances or priorities in setting the performance metrics and goals for each three-year cycle. Performance units are assigned to each NEO at the beginning of each three-year period, and provide the basis for the amount of awards made to each NEO under the LTIP. Performance units are designed to encourage management to deliver long-term value. Performance units reinforce Hecla’s business strategy by clearly establishing our key performance elements (e.g., reserve growth, production growth, cash flow, #4 Shaft completion, and relative TSR) and the associated long-term performance objectives that must be met for us to be successful and create value for shareholders. The 2014-2016 LTIP units have a maximum potential value of $375. Performance units are paid out as soon as practicable after the end of each performance period, upon approval by the committee. At the discretion of the committee, the payouts may be in the form of cash, common stock, restricted stock units, or a combination of these forms. 2014-2016 LTIP. The tables below summarize the performance unit valuation ranges for reserve growth, production growth, cash contribution, #4 Shaft completion, and TSR for the 2014-2016 plan period – the five performance goals approved by the committee in February 2014. These are important goals for the following reasons:
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2014-2016 Performance Unit Valuation
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2014-2016 LTIP – Analysis and Decisions.The committee assessed performance under the 2014-2016 LTIP as follows:
During this three-year period, performance in production exceeded the maximum threshold, and cash flow generation and TSR components fell between target and the maximum threshold. The #4 Shaft completion and silver reserve growth were each below the threshold. As a result, with a range in potential value per unit of $0 to $375, in February 2017, the committee determined that the total 2014-2016 LTIP payout was $207.25 per unit. The committee and the Board further approved payout of the LTIP awards to be 75% in cash and 25% in Hecla common stock issued under the 2010 Stock Incentive Plan. The following chart shows the number of performance units awarded in 2014 to each NEO, the unit value achieved, the total amount of the award (number of units x $207.25 = amount received), and the amount of cash and number of shares received.
Restricted Stock Units. Restricted stock units (“RSUs”) are granted to the NEOs under the Key Employee Deferred Compensation Plan and/or the 2010 Stock Incentive Plan. RSUs are used to retain our NEOs and align their interests with the long-term interests of our shareholders. The committee awarded each NEO RSUs in June 2016. The RSUs vest in three equal amounts with vesting dates of June 21, 2017, June 21, 2018, and June 21, 2019. SeeGrants of Plan-Based Awards for 2016 on page 63. In December 2014, the committee amended the 2010 Stock Incentive Plan and Key Employee Deferred Compensation Plan so that any RSUs vesting after 2014 would no longer be credited with dividend equivalents. In 2016, we granted RSUs to 89 employees, including all NEOs, under the 2010 Stock Incentive Plan. Performance-based Shares. In June 2016, the committee and the independent Board members granted 113,636 performance-based shares to our CEO, with a grant date value of $500,000, comprising one-half of his total equity award in 2016. The value of these performance-based shares will be based on the TSR of our common stock for the three-year period from January 1, 2016 through December 31, 2018, based on the following percentile rank within a group of peer companies: 50www.hecla-mining.com
If Hecla’s performance is below the 50th percentile, the award is zero. If Hecla’s performance is between the 50th and 100th percentile, the award is prorated. For any award, the number of shares issued in 2018 at the conclusion of the three-year performance period will be based on the grant date share price (June 7, 2016) of $4.40. Hecla’s TSR performance versus that of our peer group will be based on the average closing share price over the last sixty (60) calendar days prior to January 1, 2016, as the base price and average closing share price over the last sixty (60) calendar days of the three-year performance period to determine relative share value performance and ranking among peers. For 2016, the industry peer group used for purposes of the TSR performance-based award is listed on page 39. 2014 – 2016 Performance-based Shares – Analysis and Decision. On June 25, 2014, the committee and independent members of the Board of Directors granted 151,515 performance-based shares of Hecla’s common stock To determine the relative share performance, Hecla’s TSR performance versus that of peer group companies was based on the average closing share price over the last sixty (60) calendar days prior to January 1, 2014, as the base price, compared with the average closing share price over the last sixty (60) calendar days of the three-year performance period (ending December 31, 2016). The following table shows the calculation of the performance-based share results at the end of the three-year performance period on December 31, 2016. Hecla’s TSR ranked 2nd among the 13 companies in the peer group based on TSR from 2014 through 2016, including dividends paid during that period. Ranking 2nd places Hecla at 92.9% among the peer companies, which equates to an award value of $911,250 or 276,136 shares at the $3.30 closing price of Hecla’s common stock on June 25, 2014.
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Stock Options. In the past six years, we have not issued any stock options to our NEOs (or any other employee). Any stock options granted under the 2010 Stock Incentive Plan will be issued with an exercise price based on the fair market value (the closing sales price of our common stock on the NYSE on the date of grant). Nonqualified Deferred Compensation Plan.We maintain the Key Employee Deferred Compensation Plan (the “KEDCP”), a nonqualified deferred compensation plan, under which participants may defer all or a portion of their annual base salary, performance-based compensation awarded under our AIP and LTIP, and RSUs granted under the 2010 Stock Incentive Plan. Participants may elect to have their deferred base salary and AIP or LTIP awards valued based on Hecla common stock and credited to a stock account. Deferred RSUs are credited to a stock account. The KEDCP provides for discretionary matching contributions on base salary, AIP and LTIP amounts deferred to a stock account and discretionary company contributions that are credited to a participant’s stock account. The deferral features promote alignment of the interests of participants with those of our shareholders. Investment accounts are credited monthly with an amount based on the prime rate for corporate borrowers. Participants receive distributions from their accounts only upon separation from service with us, a fixed date or schedule selected by the participant, death, disability, an unforeseeable emergency or a change in control, as these events are defined under Section 409A of the Internal Revenue Code. The amounts deferred are unfunded and unsecured obligations of Hecla, receive no preferential standing, and are subject to the same risks as any of our other general obligations. Additional details about the KEDCP are described in the narrative accompanying theNonqualified Deferred Compensation for 2016 table on page 66. Benefits. We provide our employees with a benefits package that is designed to attract and retain the talent needed to manage Hecla. As part of that, all U.S. salaried employees, including the NEOs, are eligible to participate in the Hecla Mining Company Retirement Plan (the “Retirement Plan”), the Capital Accumulation Plan (a 401(k) plan, which includes matching contributions by Hecla up to 6%), health, vision, dental coverage, and paid time off, including vacations and holidays. All Canadian salaried employees, including NEOs, are eligible to participate in a similar benefits package. NEOs are eligible to receive certain additional benefits, as described below. The committee intends for the type and value of such benefits offered to be competitive with general market practices. Other Qualified and Nonqualified Benefit Plans. Under the Retirement Plan, upon normal retirement, each participant is eligible to receive a monthly benefit equal to a certain percentage of final average annual earnings for each year of credited service. Additional details about the Retirement Plan are in the narrative accompanying thePension Benefits table on page 74. Under Hecla’s unfunded Supplemental Excess Retirement Plan, the amount of any benefits not payable under the Retirement Plan because of the limitations imposed by the Internal Revenue Code and/or the Employee Retirement Income Security Act, and the reduction of benefits, if any, due to a deferral of salary made under our KEDCP, will be paid out of our general funds to any employee who may be adversely affected. The Retirement Plan and Supplemental Excess Retirement Plan define earnings for purposes of the plans to include base salary plus any other cash incentives up until July 1, 2013, after which only base salary plus one-half of AIP compensation is included (no LTIP compensation is included). Personal Benefits. We do not provide company-paid cars, country club memberships, or other similar perquisites to our executives. The only material personal benefit provided by Hecla is a relocation benefit, which is offered as needed to meet specific recruitment needs. At its February 2013 meeting, the Compensation Committee adopted a clawback policy with respect to incentive awards to executive officers. The policy provides that in the event of a restatement of our financial results as a result of a material non-compliance with financial reporting requirements, the Board will review incentive compensation that was paid to our current and former executive officers under the Company’s AIP and LTIP (or any successor plans) based solely on the achievement of specific corporate financial goals (“Incentive Award”) during the period of the restatement. If any Incentive Award would have been lower had it been calculated based on the Company’s restated financial results, the Board will, as and to the extent it deems appropriate, including with respect to intent or level of culpability of the relevant individual(s), seek to recover from any executive officer, any portion of an Incentive Award paid in excess of what would have been paid based on the restated financial results. The policy does not apply in any situation where a restatement is not the result of material non-compliance with financial 52www.hecla-mining.com
reporting requirements, such as any restatement due to a change in applicable accounting rules, standards or interpretations, a change in segment designations or the discontinuance of an operation. In December 2015, the Compensation Committee amended each of our incentive plans (AIP, LTIP, KEDCP, and 2010 Stock Incentive Plan) to include a clawback provision consistent with the clawback policy described above. Our insider trading policy prohibits all directors, executive officers (as defined under Section 16 of the Exchange Act) and certain other employees designated as insiders from purchasing or selling any Company securities three weeks before through two days after the public release of any of our periodic results (including the filing of any Form 10-Q or Form 10-K), or at any other time during the year while in possession of material non-public information about the Company. In addition, directors and officers are prohibited from short-term trading, short sales, options trading, trading on margin, hedging or pledging any securities of the Company. We have entered into change in control agreements (“CIC Agreements”) with each of our NEOs. Under the terms of our CIC Agreements, the CEO and the other NEOs are entitled to payments and benefits upon the occurrence of specified events, including termination of employment (with or without cause) following a change in control of the Company. The specific terms of these arrangements, as well as an estimate of the compensation that would have been payable had they been triggered as of fiscal year-end, are described in detail in the section entitledChange in Control and Terminationon page 67. The termination of employment provisions of the CIC Agreements were entered into to address competitive concerns when the NEOs were recruited to Hecla by providing these individuals with a fixed amount of compensation that would offset the risk of leaving their prior employer or foregoing other opportunities to join the Company. At the time of entering into these arrangements, the committee considered the aggregate potential obligations of the Company in the context of the desirability of hiring the individual and the expected compensation upon joining Hecla. The committee believes that these CIC Agreements are important for a number of reasons, including providing reasonable compensation opportunities in the unique circumstances of a change in control that are not provided by other elements of our compensation program. Further, change in control benefits, if structured appropriately, serve to minimize the distraction caused by a potential transaction and reduce the risk that key executives will leave Hecla before a transaction closes. The committee also believes that these agreements motivate the executives to make decisions that are in the best interests of our shareholders in the event of a pending change in control. These agreements provide executives with the necessary job stability and financial security during a change in control transaction and the subsequent period of uncertainty to help them stay focused on managing Hecla rather than on their own personal employment situation. The committee believes that all of these objectives serve our shareholders’ interests. The committee also believes that change in control provisions are an essential component of the executive compensation program and are necessary to attract and retain senior talent in the highly competitive talent market in which we compete. The change in control provisions were developed by the Company and the committee based on market and industry competitive practices. The Company and the committee periodically review the benefits provided under the CIC Agreements to ensure that they serve our interests in retaining our key executives, are consistent with market and industry practice, and are reasonable. For example, recently the agreements were amended to eliminate “double trigger” and excise tax gross-up provisions, replacing them with single trigger and “best net after tax payment” provisions instead. 2017 Proxy Statement53
Tax and Accounting Considerations Our compensation programs are affected by each of the following: Accounting for Stock-Based Compensation. We take into account certain requirements of GAAP in determining changes to policies and practices for our stock-based compensation programs. Section 162(m) of the Internal Revenue Code. Section 162(m) of the Internal Revenue Code of 1986, as amended (“Code Section 162(m)”) provides generally that compensation in excess of $1 million paid to the CEO or to any other NEO (other than the chief financial officer) of a public company will not be deductible for federal income tax purposes unless such compensation is paid pursuant to one of the enumerated exceptions set forth in Code Section 162(m). Our primary objective in designing and administering our compensation policies is to support and encourage the achievement of our strategic goals and to enhance long-term shareholder value. We also believe that it is important to preserve flexibility in administering compensation programs. For these and other reasons, the committee has determined that it will not necessarily seek to limit executive compensation to the amount that would be fully deductible under Code Section 162(m). Further, although we received shareholder approval for our 2010 Stock Incentive Plan at our 2010 Annual Meeting, there is no assurance that such approval satisfied or continues to satisfy the shareholder approval requirements under Code Section 162(m) necessary for amounts awarded under that plan to be fully deductible by Hecla. As a result of the foregoing, amounts awarded or paid under any of our compensation programs, including salaries, annual incentive awards, performance awards, stock options and RSUs, may not qualify as performance-based compensation that is excluded from the limitation on deductibility. The committee will continue to monitor developments and assess alternatives for preserving the deductibility of compensation payments and benefits to the extent reasonably practicable, as determined by the committee to be consistent with our compensation policies and in the best interests of the Company and our shareholders. In 2016, Mr. Baker, our President and CEO, and Mr. Radford, our Senior Vice President – Operations, earned amounts subject to Section 162(m) in excess of $1 million, therefore a portion of each of those officer’s total compensation is not deductible by Hecla. Section 409A of the Internal Revenue Code. Section 409A imposes additional significant taxes in the event that an executive officer or director receives “deferred compensation” that does not satisfy the requirements of Section 409A. We believe that we have designed and operated our plans appropriately to comply with Section 409A. Base Salaries for 2017 Due to the low prices of metals in 2015, the Compensation Committee approved salary reductions for calendar year 2016. Our CEO’s base salary was reduced by 20%, and other NEO’s base salary was reduced by 10%. Effective January 1, 2017, base salary reductions ceased and are in effect through or about June 30, 2017. Base salaries are reviewed mid-year.
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In February 2017, the committee approved the 2017 AIP goals. The AIP factors were divided into the following components, which may be modified by the committee from time to time, including with respect to the relative weights:
Each component can achieve two times the target with respect to the component, with the maximum total payout limited to two times the target award level (200%). Quantitative Goals The 2017 AIP is like the 2016 AIP except one quantitative goal was eliminated, cash, and the Adjusted EBITDA goal have been changed by including a capital component in the measure. For the 2017 AIP, the quantitative corporate performance factors are divided into three factors (including weighting): production (20%), EBITDA less capital (20%), and all injury frequency rate reduction (10%). The production factor converts gold, lead and zinc to silver equivalent at a ratio of Production Goal Metrics
The
The All Injury Frequency Rate (“AIFR”) reduction target is 15% at year-end, which achieves the long-term goal. The 2016 AIFR was 3.42. A 15% reduction results in a rate of 2.91 as the target. A 35% reduction results in a rate of2.22, which is as the maximum threshold. A reduction of less than 5%, or a 2017 AIFR rate of 3.25, would result in no payout. 2017 Proxy Statement55
Qualitative Goals The qualitative/other goals are recommended by management, approved by the committee, and cover the areas of safety and health, environmental, technology and innovation, continuous improvement, operations, financial and cost controls, employee development,
In March 2015, the committee approved the 2015-2017 LTIP, which has a target unit value of $100. The 2015-2017 LTIP has the same factors as the 2014-2016 LTIP,
2015-2017 Performance Unit Valuation
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In February 2016, the committee approved the 2016-2018 LTIP, which has a target unit value of $100. The 2016-2018 LTIP has the same factors as the 2015-2017 LTIP, with a maximum potential payout of $375 per unit. 2016-2018 Performance Unit Valuation
2017 Proxy Statement57
In February 2017, the committee approved the 2017-2019 LTIP, which has a target unit value of $100. The 2017-2019 LTIP has four factors, three of which are repeat factors from the 2016-2018 LTIP, with a maximum potential payout of $375 per unit. The three factors include: silver equivalent reserve growth (gold is converted into silver equivalent at a ratio of 71 to 1), silver equivalent production growth (includes silver and gold, but not base metals), and total shareholder return. The fourth factor is mine site operating cash flow less capital, which replaces the cash flow goal from previous plans. 2017-2019 Performance Unit Valuation
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The members of the Compensation Committee are set forth in theCompensation Committee 2017 Proxy Statement59
The Compensation Committee has reviewed and discussed theCompensation Discussion and Analysis with Hecla’s management and its independent compensation consultant. Based on its review and discussions, the committee recommended to the Board, and the Board has approved, theCompensation Discussion and Analysis included in this Proxy Statement and incorporated by reference in Hecla’s Annual Report on Form 10-K for the year ended December 31,
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COMPENSATION OF NAMED EXECUTIVE OFFICERS Summary Compensation Table for The following compensation tables provide information regarding the compensation of our CEO, CFO, and four other NEOs who were the most highly compensated in the calendar year ended December 31,
2017 Proxy Statement61
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| COMPENSATION OF NAMED EXECUTIVE OFFICERS |
The following table shows all plan-based awards granted to the NEOs during 2016.
Grants of Plan-Based Awards for 2016
| Long-Term Performance Plan Units (#) | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | Other Stock Awards: Number of Shares of Stock or Units (#) | Closing Market Price on Date of Grant ($) | Grant Date Fair Value of Stock and Option Awards1 ($) | ||||||||||||||||||
| Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||
| Phillips S. Baker, Jr. | |||||||||||||||||||||||
| Common Shares2 | 2/19/16 | 374,629 | 2.36 | 884,124 | |||||||||||||||||||
| Restricted Stock3 | 6/7/16 | 113,636 | 4.40 | 499,998 | |||||||||||||||||||
| Performance Shares | 6/7/16 | 56,8185 | 113,6365 | 227,2725 | 4.40 | 690,813 | |||||||||||||||||
| LTIP6 | 9,500 | 0 | 1,187,500 | 3,562,500 | |||||||||||||||||||
| AIP7 | 0 | 605,000 | 1,210,000 | ||||||||||||||||||||
| Lindsay A. Hall | |||||||||||||||||||||||
| Restricted Stock4 | 7/18/16 | 55,377 | 6.23 | 344,999 | |||||||||||||||||||
| LTIP6 | 4,200 | 0 | |||||||||||||||||||||
| AIP7 | 0 | 525,000 | 1,575,000 | ||||||||||||||||||||
| 380,000 | 760,000 | ||||||||||||||||||||||
| Lawrence P. Radford | |||||||||||||||||||||||
| Common Shares2 | 2/19/16 | 188,559 | 2.36 | 444,999 | |||||||||||||||||||
| Restricted Stock3 | 6/7/16 | 78,409 | 4.40 | 345,000 | |||||||||||||||||||
| LTIP6 | 4,200 | 0 | 525,000 | 1,575,000 | |||||||||||||||||||
| AIP7 | 0 | 380,000 | 760,000 | ||||||||||||||||||||
| Dr. Dean W.A. McDonald | |||||||||||||||||||||||
| Common Shares2 | 2/19/16 | 122,881 | 2.36 | 289,999 | |||||||||||||||||||
| Restricted Stock3 | 6/7/16 | 68,182 | 4.40 | 300,000 | |||||||||||||||||||
| LTIP6 | 3,000 | 0 | 375,000 | 1,125,000 | |||||||||||||||||||
| AIP7 | 0 | 275,000 | 550,000 | ||||||||||||||||||||
| David C. Sienko | |||||||||||||||||||||||
| Common Shares2 | 2/19/16 | 84,110 | 2.36 | 198,500 | |||||||||||||||||||
| Restricted Stock3 | 6/7/16 | 35,000 | 4.40 | 154,000 | |||||||||||||||||||
| LTIP6 | 2,400 | 0 | 300,000 | 900,000 | |||||||||||||||||||
| AIP7 | 0 | 175,000 | 350,000 | ||||||||||||||||||||
| James A. Sabala | |||||||||||||||||||||||
| Common Shares2 | 2/19/16 | 174,153 | 2.36 | 411,001 | |||||||||||||||||||
| AIP7 | 0 | 380,000 | 760,000 | ||||||||||||||||||||
| 1 | We account for equity-based awards in accordance with the requirements of FASB ASC Topic 718, pursuant to which we recognize compensation expense of performance-based share awards to an employee based on the fair value of the award on the grant date. Compensation expense of restricted stock and RSU awards to an employee is based on the stock price at grant date. The compensation expense for restricted stock and RSUs is recognized over the vesting period. |
| 2 | Represents the number of shares of common stock awarded on February 19, 2016 to each of the NEOs under the terms of the 2010 Stock Incentive Plan. These shares were awarded as part of the 2015 AIP and 2013-2015 LTIP awards, of which 50% was paid in equity. |
| 3 | Represents the number of RSUs granted on June 7, 2016, to the NEOs (except for Mr. Hall) under the terms of the 2010 Stock Incentive Plan. The restrictions lapse for one-third of the RSUs on June 21, 2017, one-third on June 21, 2018, and one-third on June 21, 2019, at which time the units are converted into shares of our common stock. The grant date fair value of the RSUs is the number of RSUs multiplied by the closing price of the Company common stock on the grant date of June 7, 2016 ($4.40). |
| 4 | Represents the number of RSUs granted to Mr. Hall on July 18, 2016, under the terms of the 2010 Stock Incentive Plan. The restrictions lapse for one-third of the RSUs on June 21, 2017, one-third on June 21, 2018, and one-third on June 21, 2019, at which time the units are converted into shares of our common stock. The grant date fair value of the RSUs is the number of RSUs multiplied by the closing price of the Company common stock on the grant date of July 18, 2016 ($6.23). |
| 5 | Represents the number of performance-based shares of Hecla common stock, having a target value of $500,000 with the potential of up to 200% of this target value (subject to specific performance terms and conditions established for these shares) awarded to Mr. Baker under the 2010 Stock Incentive Plan. Determination of the actual number of these performance-based shares to be received by Mr. Baker will be based on the TSR of Hecla common stock for the three-year period from January 1, 2016 through December 31, 2018, based on the following percentile rank within peer group companies: |
| ● | 100thpercentile rank = maximum award at 200% of target; |
| ● | 60thpercentile rank = target award at grant value; |
| ● | 50thpercentile rank = threshold award at 50% of target. |
Hecla’s TSR performance versus that of peer group companies will be based on a comparison of the average share price over the last 60 calendar days prior to January 1, 2016, as the base price, and the average share price the last 60 calendar days of the three-year performance period, plus dividends, to determine relative share value performance and ranking among peers. |
2017 Proxy Statement63
| COMPENSATION OF NAMED EXECUTIVE OFFICERS |
| 6 | Represents the potential value of the payout for each NEO under the 2016-2018 LTIP period if the threshold, target or maximum goals are satisfied for all performance measures. The potential payouts are performance-driven and therefore completely at risk. The business measurements and performance goals for determining the payout are described in theCompensation Discussion and Analysisbeginning on page 33. Dollar amounts shown are valued as follows on a per unit basis: Threshold, $0; Target, $125; and Maximum, $375. |
| 7 | Represents the potential value of the payout for each NEO under the 2016 AIP described on page 44. The total payout to each NEO under the 2016 AIP is described in footnote 4 to theSummary Compensation Table for 2016on page 62. Awards were paid 75% in cash and 25% in Hecla’s common stock issued under the 2010 Stock Incentive Plan. |
The following table provides information on the current holdings of stock awards by the NEOs. This table includes unvested RSUs, and unvested performance-based shares. There were no unexercised stock options held by any NEO at year-end.
Outstanding Equity Awards at Calendar Year-End for 2016
| Option Awards | Stock Awards | ||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Grant Date | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested1 (#) | Market Value of Shares or Units of Stock That Have Not Vested as of 12/30/162 ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested3 ($) |
| Phillips S. Baker, Jr. | — | 300,753 | 1,575,946 | ||||||
| 204,9184 | 1,073,770 | ||||||||
| 113,6365 | 595,453 | ||||||||
| Lindsay A. Hall | — | 55,377 | 290,175 | ||||||
| Lawrence P. Radford | — | 203,777 | 1,067,791 | ||||||
| Dr. Dean W. A. McDonald | — | 180,451 | 945,563 | ||||||
| David C. Sienko | — | 92,632 | 485,392 | ||||||
| James A. Sabala* | — | 0 | 0 | ||||||
| * | Mr. Sabala retired in June 2016. All outstanding RSUs with vesting dates after June 2016, were forfeited. |
| 1 | The following table shows the dates on which the restricted stock units in the outstanding equity awards table vest and the corresponding number of shares, subject to continued employment through the vest date. |
| Number of Unvested Restricted Stock Units | |||||
| Vesting Date | Baker | Hall | Radford | McDonald | Sienko |
| 6/21/17 | 106,184 | 18,459 | 71,902 | 63,711 | 32,704 |
| 6/25/17 | 50,505 | — | 33,838 | 30,303 | 15,556 |
| 6/21/18 | 106,185 | 18,459 | 71,901 | 63,710 | 32,705 |
| 6/21/19 | 37,879 | 18,459 | 26,136 | 22,727 | 11,667 |
| Total | 300,753 | 55,377 | 203,777 | 180,451 | 92,632 |
| 2 | The market value of the RSUs is based on the closing market price of our common stock on the NYSE as of December 30, 2016, which was $5.24. |
| 3 | The market value of the performance-based shares is based on the closing market price of our common stock on the NYSE as of December 30, 2016, which was $5.24. |
| 4 | Award of performance-based shares, the value of which will be determined based on the TSR of Hecla common stock for the three-year period from January 1, 2015 through December 31, 2017. |
| 5 | Award of performance-based shares, the value of which will be determined based on the TSR of Hecla common stock for the three-year period from January 1, 2016 through December 31, 2018. |
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| COMPENSATION OF NAMED EXECUTIVE OFFICERS |
The following table shows information concerning the exercise of stock options and the number of stock awards that vested during calendar year 2016 for each of the NEOs, and the value realized on the exercise of options and vesting of stock awards during calendar year 2016.
Option Exercises and Stock Vested for 2016
| Option Awards1 | Stock Awards | ||||||||
| Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | |||||
| Phillips S. Baker, Jr. | — | — | 374,629 | 2,3 | — | ||||
| 236,177 | 4 | 691,999 | |||||||
| 56,883 | 5,3 | — | |||||||
| 68,306 | 6,3 | — | |||||||
| 50,505 | 7,3 | — | |||||||
| Lindsay A. Hall | — | — | — | — | |||||
| Lawrence P. Radford | — | — | 188,559 | 2 | 444,999 | ||||
| 34,130 | 5 | 156,657 | |||||||
| 45,765 | 6 | 210,061 | |||||||
| 33,838 | 7 | 159,715 | |||||||
| 26,000 | 8 | 169,000 | |||||||
| Dr. Dean W.A. McDonald | — | — | 122,881 | 2 | 289,999 | ||||
| 34,130 | 5 | 156,657 | |||||||
| 40,984 | 6 | 188,117 | |||||||
| 30,303 | 7 | 143,030 | |||||||
| David C. Sienko | — | — | 84,110 | 2 | 198,500 | ||||
| 17,520 | 5 | 80,417 | |||||||
| 21,039 | 6 | 96,569 | |||||||
| 15,556 | 7 | 73,424 | |||||||
| James A. Sabala | — | — | 174,153 | 2 | 411,001 | ||||
| 39,249 | 5 | 180,153 | |||||||
| 47,131 | 6 | 216,331 | |||||||
| 34,848 | 7 | 164,483 | |||||||
| 1 | There were no stock options exercised in 2016. All remaining stock options expired in May 2015. |
| 2 | The NEOs were awarded common stock on February 19, 2016, as part of their 2015 AIP and 2013-2015 LTIP being paid 50% in common stock. The shares were awarded at the price of $2.36, which was the closing sales price of our common stock on the NYSE on February 19, 2016. |
| 3 | Mr. Baker deferred the shares into his stock account under the terms of the KEDCP. He may not receive the shares until a “Distributable Event,” as defined under the KEDCP, and will not realize value until the shares are distributed to him. The shares are included in theNonqualified Deferred Compensation for 2016table on page 66. |
| 4 | Performance-based shares received in March 2016 based on the TSR of Hecla common stock for the three-year period from January 1, 2013 through December 31, 2015. The share price was determined by using the closing price of Hecla’s common stock on the NYSE on June 21, 2013 ($2.93), the date of grant of the performance-based shares. |
| 5 | The NEOs were granted these RSUs on June 21, 2013. On June 21, 2016, the restrictions lapsed and each NEO received his units in the form of shares of our common stock. The shares vested at the price of $4.59, which was the closing sales price of our common stock on the NYSE on June 21, 2016. |
| 6 | The NEOs were granted these RSUs on July 1, 2015. On June 21, 2016, the restrictions lapsed and each NEO received his units in the form of shares of our common stock. The shares vested at the price of $4.59, which was the closing sales price of our common stock on the NYSE on June 21, 2016. |
| 7 | The NEOs were granted these RSUs on June 25, 2014. On June 25, 2016, the restrictions lapsed and each NEO received his units in the form of shares of our common stock. The shares vested at the price of $4.72, which was the closing sales price of our common stock on the NYSE on June 25, 2016. |
| 8 | Mr. Radford was granted 26,000 RSUs on October 19, 2011. On August 5, 2016, the restrictions lapsed and Mr. Radford received his units in the form of shares of our common stock. The shares vested at a price of $6.50, which was the closing sales price of our common stock on the NYSE on August 5, 2016. |
2017 Proxy Statement65
| COMPENSATION OF NAMED EXECUTIVE OFFICERS |
The table below provides information on the nonqualified deferred compensation of the NEOs in 2016.
Nonqualified Deferred Compensation for 20161
| Name | Executive Stock Contributions in Last FYE2 (#) | Registrant Contributions in Last FYE ($) | Aggregate Earnings in Last FYE ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance of Stock at Last FYE (#) |
| Phillips S. Baker, Jr. | 550,323 | 39,098 | — | — | 888,909 |
| Lindsay A. Hall3 | — | — | — | — | — |
| Lawrence P. Radford | — | — | — | — | — |
| Dr. Dean W. A. McDonald3 | — | — | — | — | — |
| David C. Sienko | — | — | — | — | — |
| James A. Sabala | — | — | — | — | — |
| 1 | No cash compensation was deferred by NEOs in 2016. |
| 2 | Vested stock deferred into the KEDCP in 2016. |
| 3 | Canadian employees are not eligible to participate in our deferred compensation plan. |
Pursuant to the Company’s KEDCP, executives and key employees, including the NEOs, may defer all or a portion of their base salary, awards earned under the LTIP and AIP (including common stock), and any RSUs granted under the 2010 Stock Incentive Plan (our CEO may also defer any performance-based awards under the KEDCP). Deferral elections are made by the individual generally in the year prior to the beginning of the plan year for amounts to be earned or granted in the following year. Base salary, AIP and LTIP amounts deferred under the KEDCP are credited to either an investment account or a stock account at the participant’s election. Amounts credited to an investment account are valued in cash, credited with deemed interest, and distributed with deemed interest in cash upon a distributable event. RSUs and other common stock awarded (performance-based shares) under the 2010 Stock Incentive Plan and deferred by a participant are credited to a stock account. Amounts credited to the stock account of a participant are valued based upon our common stock and are delivered to the participant in shares of our common stock upon a distributable event.
The KEDCP also provides for corporate matching amounts where the participants elect to have their base salary, AIP or LTIP awards credited to a stock account. Matching contributions are also valued based on our common stock and distributed upon a distributable event in stock. The ability to defer compensation into a company stock account promotes alignment of the interests of participants with those of our common shareholders. It also provides for corporate discretionary allocations of amounts valued based upon our common stock and credited to a stock account.
As of the end of the last day of each calendar month, an additional amount is credited to the investment account ofthe participant equal to the product of (i) the average daily balance of the investment account for the month, multiplied by (ii) the annual prime rate for corporate borrowers quoted at the beginning of the quarter byThe Wall Street Journal(or such other comparable interest rate as the Compensation Committee may designate from time to time).
The amounts credited to the investment or stock account of a participant under the KEDCP are distributable or payable within 75 days of the earliest to occur of the following distribution events: (i) the date on which the participant separates from service with us, with the distribution delayed for six months for certain “specified employees”; (ii) “disability” as defined in Section 409A of the Internal Revenue Code; (iii) the participant’s death; (iv) a fixed date or fixed schedule selected by the participant at the time the deferral election was made; (v) an “unforeseeable emergency,” as defined in Section 409A of the Internal Revenue Code; (vi) a “change in control” of the Company, as defined in regulations issued by the Internal Revenue Service; and (vii) termination of the KEDCP.
The KEDCP is at all times considered to be entirely unfunded both for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended, and no provision will at any time be made with respect to segregating our assets for the payment of any amounts under the KEDCP. Any funds that may be invested for purposes of fulfilling our promises under the KEDCP are for all purposes to be part of our general assets and available to general creditors in the event of a bankruptcy or insolvency of the Company. Nothing contained in the KEDCP will constitute a guarantee by us that any funds or assets will be sufficient to pay any benefit under the KEDCP.
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Table of ContentsChange in Control and Termination
We have a change in control agreement (“CIC Agreement”) with our NEOs (Messrs. Baker, Sabala, McDonald, Poirier, Radford
| COMPENSATION OF NAMED EXECUTIVE OFFICERS |
Change in Control and Sienko).
In March 2015, the Compensation Committee approved an amendment to each CIC Agreement eliminating the excise tax gross-up provision and adding a “Best Net After Tax Payment,” which reduces the amount received by the NEO upon a change in control if the NEO would receive a greater after-tax benefit than he would if full severance benefits were paid, taking into account all applicable taxes including any excise tax. SeePayments Made Upon a Change in Control on next page.
The CIC Agreements provide that each of the NEOs shall serve in such executive position as the Board may direct. The CIC Agreements become effective only upon a change in control of the Company (the date of such change in control is referred to as the “Effective Date”). The term of employment under the CIC Agreements is three years from the Effective Date (except for Mr. Radford who has a term of two years from the Effective Date). Any CIC Agreements entered into with newly hired executives will contain an employment term of two years from the Effective Date. The CIC Agreements automatically extend for an additional year on each anniversary date of the agreements unless we give notice of nonrenewal 60 days prior to the anniversary date. Under the CIC Agreements, a change in control is, with certain limitations, deemed to occur if: (i) an individual or entity (including a “group” under Section 13(d)(3) of the Exchange Act) becomes the beneficial owner of 20% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors; (ii) as the result of a tender offer, merger, proxy fight or similar transaction, the persons who were previously directors of the Company cease to constitute a majority of the Board; (iii) consummation of the sale of all, or substantially all, of the assets of the Company (with certain limitations) occurs; or (iv) the approval of a plan of dissolution or liquidation.
The CIC Agreements are intended to ensure, among other things that, in the event of a change in control, each NEO will continue to focus on adding shareholder value. We seek to accomplish this by assuring that each NEO continues to receive payments and other benefits equivalent to those he was receiving at the time of a change in control for the duration of the employment term under of the CIC Agreement. The CIC Agreementsalso provide that should an NEO’s employment be terminated either (i) by the NEO for good reason, or (ii) by the Company (other than for cause or disability) after the Effective Date of the CIC Agreement, he would receive from us a lump-sum defined amount generally equivalent to three times the aggregate of his then annual base salary rate and his highest annual incentive prior to the Effective Date. For Mr. Radford and any other CIC Agreements entered into hereafter, the lump-sum defined amount is generally equivalent to two times.
The NEOs would also be entitled to lump-sum payments representing the difference in pension and supplemental retirement benefits to which they would be entitled on (i) the date of actual termination, and (ii) the end of the three-year (or two-year where applicable) employment period under the CIC Agreements. We would also maintain such NEO’s participation in all benefit plans and programs (or provide equivalent benefits if such continued participation was not possible under the terms of such plans and programs).
An NEO whose employment has terminated would not be required to seek other employment in order to receive the defined benefits.
The table starting on page 70 reflects the amount of compensation payable to each of the NEOs in the event of termination of such NEO’s employment under the terms of the NEO’s CIC Agreement. That table also shows the amount of compensation payable to each NEO upon voluntary termination; involuntary not for cause termination; for cause termination; termination following a change in control; and in the event of disability or death of the NEO. The amounts shown assume that such termination was effective as of December 31, 2015, and thus include amounts earned through such time, and are estimates of the amounts which would be paid out to the NEOs upon their termination. The actual amounts to be paid out can only be determined at the time of such NEO’s separation from Hecla.
Payments Made Upon Termination
We have a change in control agreement (“CIC Agreement”) with our NEOs (Messrs. Baker, Hall, McDonald, Radford and Sienko). Mr. Sabala’s CIC Agreement terminated at the time of his retirement in June 2016.
The CIC Agreements provide that each of the NEOs shall serve in such executive position as the Board may direct. The CIC Agreements become effective only upon a change in control of the Company (the date of such change in control is referred to as the “Effective Date”). The term of employment under the CIC Agreements is three years from the Effective Date (except for Messrs. Radford and Hall who each have a term of two years from the Effective Date). Any CIC Agreements entered into with newly hired executives will contain an employment term of two years from the Effective Date. The CIC Agreements automatically extend for an additional year on each anniversary date of the agreements unless we give notice of nonrenewal 60 days prior to the anniversary date. Under the CIC Agreements, a change in control is, with certain limitations, deemed to occur if: (i) an individual or entity (including a “group” under Section 13(d)(3) of the Exchange Act) becomes the beneficial owner of 20% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors; (ii) as the result of a tender offer, merger, proxy fight or similar transaction, the persons who were previously directors of the Company cease to constitute a majority of the Board; (iii) consummation of the sale of all, or substantially all, of the assets of the Company (with certain limitations) occurs; or (iv) the approval of a plan of dissolution or liquidation.
The CIC Agreements are intended to ensure, among other things that, in the event of a change in control, each NEO will continue to focus on adding shareholder value. We seek to accomplish this by assuring that each NEO continues to receive payments and other benefits equivalent to those he was receiving at the time of a change in control for the duration of the employment term under of the CIC Agreement. The CIC Agreements also provide that should an NEO’s employment be terminated either (i) by the NEO for good reason, or (ii) by the Company (other than for cause or disability) after the Effective Date of the CIC Agreement, he would receive from us a lump-sum defined amount generally equivalent to three times the aggregate of his then annual base salary rate and his highest annual incentive prior to the EffectiveDate. For Messrs. Radford and Hall, and any other CIC Agreements entered into hereafter, the lump-sum defined amount is generally equivalent to two times.
The NEOs would also be entitled to lump-sum payments representing the difference in pension and supplemental retirement benefits to which they would be entitled on (i) the date of actual termination, and (ii) the end of the three-year (or two-year where applicable) employment period under the CIC Agreements. We would also maintain such NEO’s participation in all benefit plans and programs (or provide equivalent benefits if such continued participation was not possible under the terms of such plans and programs).
An NEO whose employment has terminated would not be required to seek other employment in order to receive the defined benefits.
The table starting on page 69 reflects the amount of compensation payable to each of the NEOs in the event of termination of such NEO’s employment under the terms of the NEO’s CIC Agreement. That table also shows the amount of compensation payable to each NEO upon voluntary termination; involuntary not for cause termination; for cause termination; termination following a change in control; and in the event of disability or death of the NEO. The amounts shown assume that such termination was effective as of December 31, 2016, and thus include amounts earned through such time, and are estimates of the amounts which would be paid out to the NEOs upon their termination. The actual amounts to be paid out can only be determined at the time of such NEO’s separation from Hecla.
Payments Made Upon Termination.. For voluntary and involuntary not for cause terminations, NEOs may receive: (i) a prorated portion of short-term performance compensation; (ii) any amounts due under matured long-term performance compensation plans; (iii) one month of health and welfare benefits; and (iv) any earned, but unused vacation. Neither of these terminations would impact their vested retirement plans and the 401(k) match would be deposited in their accounts.
Payments Made Upon Retirement.The NEOs could receive a prorated portion of any short-term performance compensation and a prorated portion of any long-term compensation in effect at the time of their retirement. They would also receive one month of health and welfare |
2017 Proxy Statement67 benefits and any earned but unused vacation, and the 401(k) match would be deposited in their accounts. As of December 31, 2016, Mr. Baker was the only NEO that qualified for early or regular retirement from the qualified Hecla Mining Company Retirement Plan. Payments Made Upon Death or Disability.Upon death or disability, the NEOs would receive a prorated portion of any short-term performance compensation, as well as a prorated portion of any long-term compensation plans in which the NEO was a participant. In both cases, retirement payments would be reduced in accordance with the terms of the plans and, in the case of death, the surviving spouse or other beneficiary would receive the payments. They would also receive one month of health and welfare benefits and any accrued, but unused vacation and the 401(k) match would be deposited in their accounts. Payments Made Upon a Change in Control.If a change in control occurs as defined in the NEOs’ CIC Agreements, they would be eligible for a prorated portion of any short-term performance compensation and a prorated portion of any long-term performance compensation as though they had been employed for an additional three years. They would also receive three years of health and welfare benefits and disability and life insurance premiums would be paid for such three-year period. In addition to any earned, but unused vacation, they would be eligible for up to $20,000 in outplacement assistance and the 401(k) match would be deposited in their accounts. Payment would be as if the NEO had been employed for an additional two years under the CIC Agreement with Messrs. Radford and Hall and any other CIC Agreements entered into hereafter. The CIC Agreements provide for specified payments and other benefits if the NEO’s employment is terminated either (i) by the NEO for good reason, or (ii) by Hecla or its successor other than for cause, death or disability, within the three years (two years for Messrs. Radford and Hall) following a change in control, or prior to a change in control if it can be demonstrated that the termination was related to a potential change in control. These payments and benefits include the following: all accrued obligations; a lump-sum payment equal to three times the sum of the NEO’s then annual base salary and the NEO’s highest annual and long-term incentive payment for the three years prior to the change in control, with multiples of two years under the CIC Agreement with for Messrs. Baker, McDonald and Sienko, the continued participation for three years in all of Hecla’s benefit plans and programs to which the NEO would be entitled on the date of the change in control (or provision of equivalent benefits if such continued participation was not possible under the terms of such plans and programs), or two years in the case of Messrs. Radford and Hall and any other CICAgreement entered into hereafter. In addition, the CIC Agreements, in conjunction with our equity compensation plans, provide for immediate vesting of all stock options and restricted stock awards in the event that, following a change in control, the NEO is terminated without cause or leaves for good reason (i.e., a “double trigger”). In such a situation, the LTIP would also pay out a prorated award based on target performance, regardless of actual performance. However, this payment directly offsets the cash severance payment by the same amount. These plan provisions are intended to recognize the value of the NEO’s long-term contribution to Hecla and to permit management decisions to be made without undo concern about possible termination following a change in control. 68www.hecla-mining.com Potential Payments Upon Termination or Change in Control 2017 Proxy Statement69 70www.hecla-mining.com EQUITY COMPENSATION PLAN INFORMATION As of December 31, 2016, the Company has three equity incentive compensation plans that have been approved by the shareholders under which shares of the Company’scommon stock have been authorized for issuance to directors, officers, employees, and consultants. All outstanding awards relate to our Common Stock. 2017 Proxy Statement71 With the exception of our NEOs who are Canadian citizens, and certain hourly employees who are covered by separate plans, our NEOs participate in the Hecla Mining Company Qualified Retirement Plan (the “Retirement Plan”). Contributions to the Retirement Plan, and the related expense or income, are based on general actuarial calculations and, accordingly, no portion of our contributions, and related expenses or income, is specifically attributable to our officers. We also have an unfunded Supplemental Excess Retirement Plan adopted in November 1985 (the “SERP”) under which the amount of any benefits not payable under the Retirement Plan by reason of the limitations imposed by the Internal Revenue Code and/or the Employee Retirement Income Security Act, as amended (the “Acts”), and the loss, if any, due to a deferral of salary made under our KEDCP and/or our 401(k) Plan will be paid out of our general funds to any employee who may be adversely affected. Under the Acts, the current maximum annual pension benefit payable by the Retirement Plan to any employee is $210,000, subject to specified adjustments, and is calculated using earnings not in excess of $265,000. Upon reaching the normal retirement age of 65, each participant is eligible to receive annual retirement benefits in monthly installments for life equal to, for each year of credited service, 1% of final average annual earnings (defined as the highest average 72www.hecla-mining.com The following table shows estimated aggregate annual benefits under our Retirement Plan and the SERP payable upon retirement to a participant who retires in 2016 at age 65 having the years of service and final average annual earnings as specified. The table assumes Social Security covered compensation levels as in effect on January 1, 2016. Estimated Annual Retirement Benefits Benefits listed in the pension table are not subject to any deduction for Social Security or other offset amounts. 2017 Proxy Statement73 The following table shows pension information under the Hecla Mining Company Retirement Plan and the SERP for the NEOs as of December 31, 2016. The terms and conditions for participation in, and payments from, these plans are described above under “Retirement Plan.” The actuarial present value of accumulated benefit isdetermined using the same assumptions used for financial reporting purposes except that retirement age is assumed to be the normal retirement age of 65, or the current age if eligible for early retirement. These assumptions are described in the pension footnotes to our financial statements included in our Annual Report on Form 10-K. 74www.hecla-mining.com PROPOSAL PROPOSAL 3 – APPROVAL OF NAMED EXECUTIVE OFFICER COMPENSATION Our Board, pursuant to Section 14A of the Securities Exchange Act of 1934, seeks your vote to approve, on an advisory basis, the compensation of our NEOs as set forth under the headingCompensation Discussion and Analysisbeginning on page 33 and in the accompanying compensation tables beginning on page 61, and related material. The Board believes strongly that the Company’s current executive compensation program is right for the Company and our shareholders at the current time. The Company’s executive compensation program is designed to attract, retain, and motivate talented individuals who possess the executive experience and the leadership skills needed by the Company in order to maintain and increase shareholder value. The Company seeks to provide executive compensation that is competitive with that provided by companies in our peer group within the mining industry. The Company also seeks to provide both near-term and long-term financial incentives to our executives that reward them for good performance and achieving financial results and strategic objectives that are expected to contribute to increased long-term shareholder value. Underlying these incentives is a strong philosophy of “pay-for-performance” that forms the foundation of decisions regarding the compensation of our NEOs. This compensation philosophy, which has been consistent over many years, is designed to align the interests of our NEOs with the interests of our shareholders and is central to our ability to attract, retain and motivate executive leaders to guide the Company through market challenges over the long-term. The Company has demonstrated consistent strong financial performance both in the short-term and in the long-term. The Company believes that our NEOs have contributed significantly to these achievements. Their tenure with the Company ranges from approximately one year to 15 years, providing the Company with consistent, steady and experienced leadership that has been able to guide the Company to consistent strong financial performance over multi-year periods. The Board strongly believes in the effectiveness and appropriateness of our executive compensation program. We believe this confidence is shared by our shareholders, as evidenced by the favorable vote of 81% of our shareholders on the proposal to approve NEO compensation presented at last year’s annual meeting. Our compensation practices did not substantially change from calendar year 2016 to calendar year 2017 and the Board hopes our shareholders will continue to believe in the effectiveness and appropriateness of our executive compensation program, and will express that belief through a favorable vote on this proposal at this Annual Meeting. The vote is advisory and therefore not binding on the Company, the Compensation Committee or the Board. However, the Board and the Compensation Committee value the opinions of our shareholders and to the extent there is any significant vote against the NEO compensation as disclosed in this Proxy Statement, the Compensation Committee will carefully review and consider the voting results when evaluating our executive compensation program. We are asking shareholders to approve the following resolution at the 2017 Annual Meeting: “RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, described in the Compensation Discussion and Analysis, Summary Compensation Table for 2016, and the related compensation tables and narrative in the Proxy Statement for the Company’s 2017 Annual Shareholders’ Meeting, is hereby APPROVED.” The Board recommends that you vote “FOR” approval of the compensation of our 2017 Proxy Statement 75 PROPOSAL 4 – ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION The Company is providing shareholders with the opportunity to vote, on a non-binding, advisory basis, for their preference as to how frequently to cast future advisory votes on the compensation of our NEOs (commonly referred to as “Say-on-Pay”). Shareholders may indicate whether they would prefer that the Company conduct future advisory votes on executive compensation once every one, two or three years (commonly referred to as “Say-on-Frequency”). At our 2011 annual meeting, shareholders voted for annual say-on-pay advisory votes on NEO compensation. The Company has held advisory say-on-pay votes on the compensation of our NEOs at every subsequent annual meeting. We are required to hold a Say-on-Frequency vote every six years. The Board has determined that an advisory vote on executive compensation that occurs every year is the most appropriate alternative for the Company and recommends shareholders vote for a one-year interval for the advisory vote on executive compensation. The Board recommends an annual advisory vote on executive compensation because it allows for frequent input from our shareholders on our compensation philosophy, policies and practices. Similarly, any shareholder concerns about our executive compensation program can be expressed through a vote without having to wait two or three years. In addition, the Board considered survey data on our institutional shareholders’ preferences, which reflected an annual advisory vote to approve the NEOs’ compensation. The vote on the frequency of the advisory vote on executive compensation is advisory and not binding on the Company, the Board, or the Compensation Committee. The Company recognizes shareholders may have different views as to the best approach for the Company. The Board and the Compensation Committee will consider the outcome of the vote; however, when considering the frequency of future advisory votes on executive compensation, the Board may decide it is in the best interests of our shareholders and the Company to hold an advisory vote on executive compensation more or less frequently than the frequency receiving the most votes cast by our shareholders. Also, in accordance with applicable law, shareholders will have the opportunity to recommend the frequency of future advisory votes on executive compensation at least once every six years. Shareholders may cast a vote on the preferred voting frequency by selecting the option of one year, two years, or three years (or abstain) when voting in response to the following resolution: “RESOLVED, that the shareholders determine, on an advisory basis, whether the preferred frequency of an advisory vote on the executive compensation of the Company’s NEOs should be every one year, every two years, or every three years.” The frequency option – one year, two years, or three years – that receives the most votes “FOR” of all votes cast on the proposal will be the frequency option approved by the shareholders. The Board 76www.hecla-mining.com PROPOSAL 5 – APPROVAL OF AMENDMENT AND RESTATEMENT OF STOCK PLAN FOR NONEMPLOYEE DIRECTORS Overview The Hecla Mining Company Stock Plan for Nonemployee Directors (the “Director Stock Plan”) originally became effective following shareholder approval on May 5, 1995. The Director Stock Plan was subsequently amended, in each instance with the approval of our shareholders, on July 18, 2002, February 25, 2004, May 6, 2005, December 10, 2007, and May 24, 2012. We are now asking our shareholders to approve an amendment and restatement of the Director Stock Plan, which amendment and restatement was approved by the Board on February 21, 2017 (subject to shareholder approval), and which would, among other things: extend the eliminate nonemployee director participation in the limit the events that constitute a “Change in Control” (as defined below) under the plan; increase the maximum number of shares available for issuance under the plan by 2,000,000, from 1,000,000 currently (of which 434,776 remain available) to 3,000,000 (corresponding with the termination of the nonemployee directors participation in the 2010 Stock Incentive Plan); limit the amount of compensation that may be paid to a nonemployee director in a calendar year, under theplan and all other Company director compensation arrangements; and place the powers and authorities related to administration of the plan with the Board. The Director Stock Plan is intended to help us attract and retain qualified persons to serve as nonemployee directors of the Company and to solidify the common interests of those directors and our shareholders in enhancing the value of our common stock. We believe that the Director Stock Plan is an important tool in attracting and maintaining qualified persons to serve on the Board and that it effectively aligns the interests of Board members with those of our shareholders. As of February 21, 2017, 434,776 shares of common stock remained reserved for issuance to nonemployee directors under the Director Stock Plan. On February 21, 2017, the Board approved, subject to shareholder approval, an amendment of the Director Stock Plan that would make available 3,000,000 shares of common stock be issued under the Director Stock Plan and affect the other changes described above. If our shareholders approve the amended and restated Director Stock Plan, it will remain in effect until May 15, 2027, unless it is terminated earlier by the Board. If our shareholders do not approve the amended and restated Director Stock Plan, it will expire on July 17, 2017. Description of Amended and Restated Director Stock Plan The following is a summary of the principal features of the Director Stock Plan, as amended and restated. This summary, however, does not purport to be a complete description of all the provisions of the Director Stock Plan. A copy of the Director Stock Plan is attached to this Proxy Statement as Appendix A. Credit of Shares The Director Stock Plan provides that each nonemployee director of the Company will be credited a stock retainer on September 30 of each year in addition to any annual cash retainer paid to the director. Currently, we have eight nonemployee directors on the Board. Nonemployeedirectors are members of the Board who are not full-time employees of the Company or any subsidiary. Under the Director Stock Plan, beginning in 2017, on September 30 of each year, each nonemployee director will be credited a number of shares of our common stock determined 2017 Proxy Statement 77 by dividing the annual retainer payable to the director for service on the Board for that year, by the average closing price of our common stock on the NYSE for the prior calendar year. The Director Stock Plan does not permit ournonemployee directors to receive awards under any other equity compensation plan of the Company or any affiliate while participating in the Director Stock Plan. Contributions to the Trust A minimum of 25% of the annual stock retainer under the Director Stock Plan will be contributed to a grantor trust established by the Company. Each director may elect, prior to the first day of the applicable year, to have a greater percentage contributed to the grantor trust for that year. The remaining portion of the stock retainer will be transferred to the nonemployee director as soon as practicable after the applicable September 30. The trust shares will be held together with any dividends and distributions with respect thereto, until they are delivered in accordance with the terms of the Director Stock Plan. The assets of the trust will remain subject to the claims of our creditors. Nonemployee directors who join the Board afterSeptember 30 of any year will be credited with a pro rata grant of shares when they join the Board. A minimum of 25% of their stock retainers for that year will be contributed to the trust. Each director may elect, within 30 days after becoming a participant in the Director Stock Plan, to have a greater percentage contributed to the grantor trust for that year. The remaining portion will be transferred to these directors as soon as practicable after they become members of the Board. Delivery of Trust Shares Under the Director Stock Plan, the shares held in the trust will be delivered to the nonemployee director on (or beginning on) the earliest to occur of: (1) death; (2) disability; (3) retirement from the Board; (4) a cessation of the nonemployee director’s Board service for any other reason; (5) a change in control of the Company; or (6) a specified date elected by the director that is at least two years after the stock retainer is credited to the director. Subject to certain restrictions, nonemployee directors may elect delivery of their trust shares under the Director Stock Plan in annual installments over 5, 10 or 15 yearsif the delivery event is death, disability or retirement. If the delivery event is normal cessation from Board service, a change in control of the Company or a specified date, all trust shares will be delivered in one lump sum. Upon delivery, a nonemployee director will receive the trust shares plus (1) any dividends and distributions that the nonemployee director would have received with respect to the trust shares if such shares had been delivered at the time they were credited, and (2) interest at a rate equal to our cost of funds on all such distributions from the date they would have been received through the date of delivery. Change in Control Under the Director Stock Plan, a change in control occurs if (1) a person or entity acquires 50% or more of either the fair market value of the outstanding common stock of the Company or the combined voting power of the outstanding voting securities entitled to vote in an election of directors (subject to certain exclusions); (2) a person or entity acquires 30% or more of the combined voting power of the Company during a 12-month period (subject to certain exclusions); (3) a majority of the incumbent directors are replaced during any 12-month period by directors whose appointment is not endorsed by a majority of the incumbent directors; or (4) a person acquires assets of the Company during a 12-month period that have a total gross fair market value of at least 40% of the gross fair market value of all of the assets of the Company (subject to certain exclusions). If an amount or benefit under the Director Stock Plan is considered “deferred compensation” under Internal Revenue Code Section 409A and would be affected by a change in control, the amount or benefit is subject to the change in control also constituting a “change in control event” under Section 409A. Number of Authorized Shares If the amended and restated Director Stock Plan is approved by our shareholders, the maximum number of shares of our common stock that may be issued underthe plan will be 3,000,000. In the event of any change in the common stock by reason of any stock dividend, split, split-up, split-off, spin-off, combination of shares, 78www.hecla-mining.com exchange of shares, an offering of warrants or rights to purchase common stock at a price below its fair market value, reclassification, recapitalization, reorganization, reincorporation, merger, consolidation or other changein capitalization, appropriate adjustment will be made by the Board in the number and kind of shares subject to the Director Stock Plan. Annual Director Compensation Limit Under the Director Stock Plan, the maximum value of stock retainers credited during any calendar year to any nonemployee director, taken together with any cash fees and the value of any awards granted pursuant to any otherequity compensation plan of the Company or an affiliate, may not exceed (i) $900,000 for the Chair of the Board and (ii) $675,000 for each nonemployee director other than the Chair of the Board. Administration The Director Stock Plan will be administered by the Board. The Board will have the full power and authority to take all actions and make all determinations required or provided for under the Director Stock Plan and to take all other actions that the Board may deem necessary or appropriate for the administration of the plan. All actions by the Boardunder the Director Stock Plan will be in the Board’s sole discretion and will be final, binding and conclusive. The Board may delegate its responsibilities and authority under the Director Stock Plan to the Compensation Committee or such other committee as it deems appropriate. Term, Amendment and Termination If the amended and restated Director Stock Plan is approved by our shareholders, it will remain in effect until May 15, 2027, unless it is terminated earlier by the Board. If the amended and restated Director Stock Plan is not so approved it will expire July 17, 2017. The Board may from time to time amend or suspend the Director Stock Plan without further approval of our shareholders, unless the Board determines that shareholder approval is required. In addition, the plan may not be amended without shareholder approval to the extent such approval is otherwise required by law or agreement, or stock exchange rule. The Board may terminate the Director Stock Plan at any time subject to Section 409A. No amendment or suspension of the Director Stock Plan may, without the consent of the affected director, materially impair the rights or obligations of the director. Federal Income Tax Consequences The following is a brief summary of the U.S. federal income tax consequences of the Director Stock Plan generally applicable to the Company and to participants in the plan who are subject to U.S. federal taxes. The summary is based on the Internal Revenue Code, applicable Treasury Regulations and administrative and judicial interpretations thereof, each as in effect on the date of this Proxy Statement, and is, therefore, subject to future changes in the law, possibly with retroactive effect. The summary is general in nature and does not purport to be legal or tax advice. Furthermore, the summary does not address issues relating to any U.S. gift or estate tax consequences or the consequences of any state, local or foreign tax laws. A nonemployee director generally will recognize taxable income upon the delivery of shares to the directorunder the Director Stock Plan. The amount of income generally will equal the fair market value of the shares delivered, measured on the date the nonemployee director recognizes the compensation income. Dividends and other distributions that are made with respect to plan awards prior to delivery of shares will also be taxed as compensation income to the nonemployee directors when received by them, as will any interest paid thereon. The Company, in computing its federal income tax, will generally be entitled to compensation deductions at the same times and in the same amounts as the nonemployee directors recognize taxable compensation income. For more information about the Director Stock Plan and payments made thereunder, please see “Compensation of Non-Management Directors” beginning on page 26. 2017 Proxy Statement 79 New Plan Benefits The following table shows the dollar values that the individuals and groups referred to below will receive in 2017 if the Director Stock Plan is approved by the Company’s shareholders at this Annual Meeting (based on the $100,000 annual retainer payable to nonemployee directors of the Company as of the Record Date, which annual retainer amount is subject to change). Executive officers, employee directors and employees of the Company are not eligible to participate in the Director Stock Plan. New Plan Benefits The Board recommends shareholders vote “FOR” the approval of the Amended and Restated Hecla Mining Company Stock Plan for Nonemployee Directors in substantially the same form as included in Appendix A to this Proxy Statement. 80www.hecla-mining.com PROPOSAL 6 – APPROVAL OF THE AMENDMENT TO OUR CERTIFICATE OF INCORPORATION INCREASING THE NUMBER OF AUTHORIZED SHARES OF OUR COMMON STOCK The Board believes that it is in the Company’s best interest to approve a proposal to amend our Certificate of Incorporation to increase the number of authorized shares of common stock from 500,000,000 to 750,000,000. The terms, including the par value, of the common stock will remain unchanged. As of March 27, 2017, 395,826,290 of our 500,000,000 currently authorized shares of common stock were issuedand outstanding. Of the remaining authorized shares of common stock, 9,759,530 shares in the aggregate were reserved for issuance in connection with: (i) our stock-based compensation plans; and (ii) conversion of our outstanding Series B Cumulative Preferred Stock. As of March 27, 2017, 157,816 shares of our 5,000,000 currently authorized shares of preferred stock were issued and outstanding. Reasons for the Proposed Increase in Authorized Capital The purpose of the proposed amendment is to allow us to have a sufficient number of shares of authorized and unissued common stock to be used for such corporate purposes as may, from time to time, be considered advisable by the Board. Having such shares available for issuance in the future will give Hecla greater flexibility and will allow the shares to be issued as determined by the Board without the expense and delay of a special meeting of our shareholders to approve the additional authorized capital stock. The corporate purposes for which we mayissue common stock could include, without limitation, acquisitions of other companies or assets, exchange offers for debt or other equity, new equity offerings to raise capital, stock splits, paying stock dividends, and providing incentives to employees, officers and directors pursuant to our various stock plans or in connection with the adoption of additional stock-based incentive plans, such as the amended and restated Stock Plan for Nonemployee Directors (See Proposal 5). The Board will determine the terms of any issuance of additional shares. Possible Effects of the Proposed Amendment The increase in our authorized common stock will not have any immediate effect on the rights of existing shareholders. To the extent that the additional authorized shares are issued in the future, such shares will have a dilutive effect on the voting power and percentage equity ownership of our existing shareholders and, depending on the price at which they are issued, may have a dilutive effect on both the book value and market value of shares owned by our existing shareholders. The holders of our common stock have no preemptive rights to subscribe for or purchase any additional shares of our common stock that may be issued in the future. We have not proposed the increase in the authorized number of shares with the intention of using the additionalshares for anti-takeover purposes, although we could theoretically use the additional shares to make it more difficult or to discourage an attempt to acquire control of the Company because the issuance of such additional shares could be used to dilute the stock ownership or voting rights of a person seeking to obtain control of us. No further action or authorization by our shareholders would be necessary prior to the issuance of the additional shares authorized by the proposed amendment to our Certificate of Incorporation unless required in a particular transaction by applicable provisions of the Certificate of Incorporation, law or by the regulations of a stock exchange or other regulatory agency. Therefore, there may be instances where we have a sufficient number of 2017 Proxy Statement81 authorized but unissued shares to engage in a transaction, but we would still need shareholder approval to enter into the transactions. We do not have any current plans, agreements or understandings for stock issuances which in the aggregate would involve the use of a number of shares that exceeds the amount currently authorized but unissued. On February 21, 2017, the Board unanimously adopted resolutions setting forth the proposed amendment to our Certificate of Incorporation declaring its advisability and directing that the proposed amendment be submitted to the shareholders for their approval at the Annual Meeting. If adopted by the shareholders, the amendment will become effective upon filing of an appropriate amendment to our Certificate of Incorporation with the Delaware Secretary of State. The full text of the proposed revised Section 1 of Article IV of our Certificate of Incorporation is set forth as follows: ARTICLE IV. Capital Stock Section 1.Authorized Capital Stock. The Corporation will be authorized to issue two classes of shares of Capital Stock to be designated, respectively, “Preferred Stock” and “Common Stock”; the total number of shares of Capital Stock which the Corporation shall have authority to issue is 755,000,000; the total number of shares of Preferred Stock shall be 5,000,000, and each such share shall have a par value of $0.25; the total number of shares of Common Stock shall be 750,000,000, and each such share shall have a par value of $0.25. The Board recommends shareholders vote “FOR” the amendment to our Certificate of Incorporation increasing the number of authorized shares of common stock. 82www.hecla-mining.com PROPOSAL 7 – APPROVAL OF AMENDMENTS TO OUR CERTIFICATE OF INCORPORATION AND BYLAWS TO REMOVE CERTAIN 80% SUPERMAJORITY VOTING PROVISIONS Overview There are certain provisions in our Certificate of Incorporation (the “Certificate”) and Bylaws that can only be revised through the affirmative vote of the holders of at least 80% of the voting power of the then outstanding shares of our capital stock entitled to vote generally in the election of directors. We refer to these shares as “Voting Stock” and to this voting requirement as “80% supermajority” throughout this Proposal 7 and Proposal 8. Certain of these provisions relate to the authority to call special meetings of shareholders, and currently, only our Board has such authority. We are seeking the approval of our shareholders to amend our Certificate and Bylaws to remove those 80% supermajority voting requirements that impact who may call special meetings of shareholders, and replace them with two-thirds voting standards. We refer to this lower voting requirement as “two-thirds vote” throughout this Proposal 7 and Proposal 8. If approved, this proposal would become effective upon the filing of an amendment to our Certificate with the Secretary of State of Delaware, which we intend to do promptly after the required shareholder approval is obtained, at which time the related amendment to our Bylaws would also become effective. We proposed these same amendments for shareholder approval at our 2016 Annual Shareholder Meeting. While shareholders owning almost 46% of our Voting Stock voted in favor of these amendments in 2016, the level of support was not sufficient to approve the amendments. SeeRequired Vote, Our Board’s Recommendation and Additional Information on page 85. Because our Board of Directors continues to believe that these amendments are appropriate, we are again asking shareholders to vote “For” these proposed amendments. As described more fully under Proposal 8 on page 86, in 2014 and 2016, we sought the approval of our shareholders to amend the Certificate and Bylaws to add a right permitting shareholders who have held at least a 25% “net long position” in our outstanding common stock for at least 120 days to call special meetings of shareholders, subject to the conditions set forth in our Bylaws (we refer to this as the “Special Meeting Proposal”). In order to implement the Special Meeting Proposal, an 80% supermajority vote of our shareholders was required. The 80% supermajority vote was not obtained in 2014 or 2016, and as a result, we were unable to implement the Special Meeting Proposal. We are again proposing the Special Meeting Proposal at our 2017 Annual Meeting of Shareholders. It is described in Proposal 8 on page 86. We believe that the 80% supermajority vote requirement is an impediment to implementing the Special Meeting Proposal because of the difficulty in getting the holders of that many shares to vote at a shareholders meeting. If instead of the 80% supermajority provisions, the required vote to implement the Special Meeting Proposal was two-thirds of the Voting Stock, we believe the Special Meeting Proposal would have a better chance to be approved by our shareholders. However, even with the change to the lower two-thirds vote requirement, there is no assurance that the Special Meeting Proposal will be approved by the required vote of our shareholders. SeeRequired Vote, Our Board’s Recommendation and Additional Information on page 87. 2017 Proxy Statement83 Current Provisions in Certificate and Bylaws Currently, the Certificate states that shareholders can alter, amend or repeal certain Bylaws relating to calling a special meeting of shareholders, only if that action is approved by at least an 80% supermajority vote (this supermajority voting provision is in Article V of the Certificate). Likewise, the Certificate currently states that at least an 80%supermajority vote is necessary to alter, amend or repeal Article VII of the Certificate, which provides that special meetings of shareholders can only be called by our Board. Finally, the Bylaws also contain a similar provision regarding amending the provision therein concerning calling special meetings of shareholders. Set forth below are the relevant provisions of the Certificate and Bylaws: ARTICLE V. Bylaws In furtherance and not in limitation of the powers conferred by law, the Board is expressly authorized to make, repeal, alter, amend and rescind the bylaws of the Corporation by a majority vote of the entire Board at any regular or special meeting of the Board;provided, however that, notwithstanding anything contained in this Certificate of Incorporation or the Bylaws of the Corporation to the contrary, the affirmative vote of the holders of at least 80% of the voting power of the then outstanding shares of Voting Stock, voting together as a single class, shall be required to (i) alter, amend or repeal any provision of the Bylaws which is substantially identical to and/or implements the last sentence of Article IV or Articles VI, VII or VIII, of this Certificate of Incorporation, or (ii) alter, amend or repeal any provision of this proviso to Article V. ARTICLE VII. Actions by Shareholders Any action required or permitted to be taken by the shareholders of the Corporation must be effected at a duly called annual or special meeting of shareholders of the Corporation and may not be effected by any consent in writing by such shareholders.Special meetings of shareholders of the Corporation may be called only by the Board pursuant to a resolution approved by a majority of the entire Board. Notwithstanding anything contained in this Certificate of Incorporation to the contrary, the affirmative vote of the holders of at least 80% of the voting power of the then outstanding shares of Voting Stock, voting together as a single class, shall be required to alter, amend or repeal this Article VII. ARTICLE VI. Amendments These Bylaws may be altered or repealed and Bylaws may be made at any annual meeting of the shareholders or at any special meeting thereof if notice of the proposed alteration or repeal of Bylaws to be made be contained in the notice of such meeting, by the affirmative vote of the holders of a majority of the total voting power of all outstanding shares of the voting stock of the Corporation. These Bylaws may also be altered or repealed and Bylaws may be made by the affirmative vote of a majority of the Board of Directors, at any annual or regular meeting of the Board of Directors, or at any special meeting of the Board of Directors if notice of the proposed alteration or repeal, or Bylaws or Bylaw to be made, be contained in the notice of such special meeting. Notwithstanding anything contained in these Bylaws to the contrary, the affirmative vote of the holders of at least 80% of the voting power of all of the shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to alter, amend or repeal Section 4 or 6 of Article II, or Section 1, 2 or 3 of Article III, of these Bylaws. 84www.hecla-mining.com Proposed Amendments to Certificate and Bylaws This Proposal 7 proposes to amend the Certificate and Bylaws so that future amendments to certain provisions within the Certificate and the Bylaws can be approved by a two-thirds vote of the outstanding shares rather than an 80% supermajority vote. Specifically, in this Proposal 7, we propose: to amend the 80% supermajority voting requirement in Article V of the Certificate by specifying that the applicable threshold to amend the Bylaw provision relating to special meetings of shareholders is two-thirds. As a result, any future action by shareholders to alter, amend or repeal the Bylaw relating to calling a special meeting of shareholders would require approval by the affirmative vote of at least two-thirds of the voting power of the then outstanding Voting Stock, voting together as a single class; to amend the 80% supermajority voting requirement inArticle VII of the Certificate by replacing the referenceto “80 percent” with “two-thirds”, solely with respectto the provision in Article VII concerning the ability tocall special meetings of shareholders. As a result, anyfuture action by shareholders to alter, amend or repealthe provisions in the Certificate relating to calling aspecial meeting of shareholders would require approvalby the affirmative vote of at least two-thirds of thevoting power of the then outstanding Voting Stock,voting together as a single class; and to amend the 80% supermajority voting requirement inArticle VI of the Bylaws by specifying that with respect toSection 4 of Article II of the Bylaws, the applicable votethreshold is two-thirds to amend. As a result, any futureaction by shareholders to alter, amend or repeal theBylaw relating to calling a special meeting of shareholderswould require approval by the affirmative vote of at leasttwo-thirds of the voting power of the then outstandingVoting Stock, voting together as a single class. Required Vote, Our Board’s Recommendation and Additional Information Our Board is committed to good governance practices and this Proposal 7 is the result of our Board’s ongoing review of our corporate governance principles. As part of that review, our Board recognizes that the chances of obtaining shareholder approval of the Shareholder Meeting Proposal described on page 86 in Proposal 8 in the future (if it is not approved at the 2017 Annual Meeting) may be improved if the changes to the Certificate and Bylaws described in this Proposal 7 are approved by our shareholders. Although Proposal 7 and Proposal 8 will each require the affirmative vote of holders of at least 80% of our outstanding shares of common stock, the approval of one of these proposals is not conditioned on the other, and if Proposal 7 is passed but Proposal 8 is not, then if in the future we again seek approval of the Special Meeting Proposal, it would only need to be approved by the lower two-thirds vote rather than the current 80% supermajority vote. After receiving shareholder input and the advice of management and outside advisors, our Board considered the relative weight of the arguments in favor of and opposed to maintaining the 80% supermajority voting requirements described herein. As a result, and based upon the recommendation of the Governance Committee,our Board, at its meeting on February 21, 2017, approved and declared advisable and in our shareholders’ best interests, the amendments to the Certificate and Bylaws described in this Proposal 7. The above description is a summary, and is qualified by and subject to the full text of the proposed amendments to our Certificate and Bylaws, which are set forth inAppendix B andAppendix C, respectively. Additions of text contained in the appendices are indicated by underlining and deletions of text are indicated by strikeouts. According to our current Certificate and Bylaws, approval of this proposal requires the affirmative vote of holders of at least 80% of our outstanding shares of common stock. Our Board recommends that shareholders vote “FOR” the amendments to the Certificate of Incorporation and Bylaws to remove certain 80% supermajority voting requirements and replace them with two-thirds voting standards as described above. 2017 Proxy Statement85 PROPOSAL 8 – APPROVAL OF AMENDMENTS TO OUR CERTIFICATE OF INCORPORATION AND BYLAWS TO PERMIT SHAREHOLDERS TO CALL SPECIAL MEETINGS OFSHAREHOLDERS UNDER CERTAIN CIRCUMSTANCES Overview We are seeking the approval of our shareholders to amend our Certificate and Bylaws to add a right permitting shareholders who have held at least a 25% “net long position” in our outstanding common stock for at least 120 days to call special meetings of shareholders, subject to the conditions set forth in our Bylaws, as described below. Currently, shareholders do not have the right to call special shareholder meetings; only our Board can call such meetings. If approved, this proposal would become effective upon the filing of an amendment to our Certificate with the Secretary of State of Delaware, which we intend to do promptly after the required shareholder approval is obtained, at which time the related amendment to our Bylaws would also become effective. We proposed these same amendments for shareholder approval at our 2014 and 2016 Annual Shareholder Meetings. While shareholders owning almost 41% and 47% of our Voting Stock voted in favor of these amendments in 2014 and 2016, respectively, the level of support was not sufficient to approve the amendments. SeeRequired Vote, Our Board’s Recommendation and Additional Information on page 87. Because our Board continues to believe that these amendments are appropriate, we are again asking shareholders to vote “For” these proposed amendments. In addition, under Proposal 7, we are seeking the approval of our shareholders to amend our Certificate and Bylaws to remove all 80% supermajority voting requirements that impact who may call special meetings of shareholders (other 80% supermajority voting requirements will be unaffected), and replace them with two-thirds voting standards. If Proposal 7 is passed, we believe it will improve the chances that an amendment permitting shareholders to call special meetings of shareholders under certain circumstances, if proposed in the future, would be adopted (if Proposal 8 is not adopted at the 2017 Annual Meeting). However, even if Proposal 7 is approved by the required vote of our shareholders, there is no assurance that this Proposal 8 will be approved by the required vote of our shareholders. SeeRequired Vote, Our Board’s Recommendation and Additional Information on page 87. Proposed Amendments to Certificate and Bylaws This Proposal 8 proposes to amend the Certificate and Bylaws to implement the right of shareholders who have held at least a 25% “net long position” in our outstanding common stock for at least 120 days to call special meetings of shareholders, subject to compliance with the requirements set forth in our Bylaws, as proposed to be amended. Our Board believes that establishing an ownership threshold of at least 25% in order for a shareholder(or group of shareholders) to request a special meeting strikes an appropriate balance between enhancing shareholder rights and avoiding the situations that could arise if the threshold were set so low that a small minority of shareholders, including shareholders with special interests, could force the Company to incur the time and expense of convening a special meeting to consider a matter of little or no interest to other shareholders. Organizing and preparing for a special meeting involves significant attention of our Board and management, which 86www.hecla-mining.com could divert their attention from performing their primary functions: to oversee and operate our business in the best interests of our shareholders. In addition, for every special meeting of shareholders, the Company incurs significant costs. We will continue to maintain our existing governance mechanisms that afford management and our Board the ability to respond to proposals and concerns of all shareholders, regardless of the level of share ownership. Establishing a 25% “net long position” threshold for the right to call a special meeting would ensure that matters proposed for consideration have significant support among our shareholders. A shareholder’s “net long position” is generally defined as the amount of common stock in which the shareholder holds a positive (also known as “long”) economic interest, reduced by the amount of common stock in which the shareholder holds a negative (also known as “short”) economic interest. In addition, requiring that shareholders must have held their stock for at least 120 days helps to ensure that their economic interest in the Company’s affairs is more than transitory. Also during the required 120 day holding period, the Company will continue to make disclosure through its statutory filings, which may provide shareholders with information that might avoid an unnecessary call for special meetings of shareholders. The proposed amendment to our Bylaws contains procedural and information requirements for shareholders to call a special meeting, including, without limitation, that (i) no business may be conducted at the special meeting except as set forth in the Company’s notice of meeting, (ii) a special meeting will not be held if similar business is to be covered at an annual or special meeting called by the Board to be held within 90 days after the special meeting request is received by the Secretary, (iii) no shareholder special meeting request may be made during the period commencing 90 days prior to the first anniversary of the date of the immediately preceding annual meeting and ending on the date of the next annual meeting, (iv) a special meeting request cannot cover business substantially similar to what was covered at an annual or special meeting held not more than 120 days before the special meeting request was received by the Secretary, (v) any shares beneficially owned or held of record as of the date of the request and sold by the requesting holder prior to the meeting will be treated as a revocation of the request to the extent of the shares sold, and (vi) the requesting shareholder’s notice must include information (as specified in the amendment to the Bylaws) as to the business proposed to be conducted, as to each nominee (if applicable), and as to the shareholder giving notice and the beneficial owner, if any, on whose behalf the proposal is made. Required Vote, Our Board’s Recommendation and Additional Information Our Board is committed to good governance practices and this Proposal 8 is the result of our Board’s ongoing review of our corporate governance principles. After receiving shareholder input and the advice of management and outside advisors, our Board considered the relative weight of the arguments in favor of and opposed to the ability of shareholders to call special meetings under certain circumstances as described herein. As a result, and based upon the recommendation of the Governance Committee, our Board, at its meeting on February 21, 2017, approved and declared advisable and in our shareholders’, best interests the amendments to the Certificate and Bylaws described in this Proposal 8. The above description is a summary, and is qualified by and subject to the full text of the proposed amendmentsto our Certificate and Bylaws, which are set forth in Appendix D and Appendix E, respectively. Additions of text contained in the appendices are indicated by underlining and deletions of text are indicated by strikeouts. Our Board has approved this proposal, and according to our current Certificate and Bylaws, approval of this proposal requires the affirmative vote of holders of at least 80% of our outstanding shares of common stock. Our Board recommends shareholders vote “FOR” the amendments to the Certificate of Incorporation and Bylaws to permit shareholders to call special meetings of shareholders under certain circumstances. 2017 Proxy Statement87 Guidelines and Timing of Equity Awards.We have no program, plan or practice to time the grant of stock-based awards relative to the release of material non-public information or other corporate events. All equity grants to executive officers are approved by the Compensation Committee at regularly scheduled meetings or, in limited cases involving key recruits or promotions, by a special meeting or unanimous written consent. The grant dateis the meeting date or a fixed, future date specified at the time of the grant. Under the terms of our 2010 Stock Incentive Plan, the fair market value of any award is determined by the closing stock price of our common stock on the NYSE on the date of grant or a fixed, future date specified at the time of grant. In addition, the Compensation Committee typically makes equity grants to NEOs in the first half of the year. To more closely align the Company’s non-management directors’ financial interests with those of the shareholders, in June 2012, the Compensation Committee and Board adopted stock ownership guidelines for our non-management directors. Under these guidelines, each non-management director is required to own shares of common stock (which includes shares held under the Hecla Mining Company Stock Plan for Nonemployee Directors and the 2010 Stock Incentive Plan) valued at three times their annual cash retainer within five years of their appointment to the Board. Any directors appointed or elected after June 2012 are expected to achieve their expected value requirement within five years of their appointment or election to the Board. In the event a non-management director’s cash retainer increases, he or she will have three years from the date of the increase to acquire any additional shares needed to meet these guidelines. Similarly, we believe that it is important to encourage our executive officers to hold a material amount of our common stock and to link their long-term economic interest directly to that of our shareholders. To achieve this goal, in June 2012, the Compensation Committee and Board established stock ownership guidelines for the Company’s senior management. The guidelines for the CEO are six times base salary, and for the other executive officers, two times base salary. These guidelines shall be achieved by the later of (i) June 2017 or (ii) five years after the executive officer is hired to such position. Unvested RSUs and shares held directly are considered owned forpurposes of the guidelines. If an executive officer becomes subject to a greater ownership amount due to a promotion or an increase in base salary, he or she shall meet the higher ownership requirement within three years. Because of fluctuations in the Company’s stock price, in February 2016, the Compensation Committee and the Board amended the stock ownership guidelines to provide a valuation methodology that consists of valuing the shares held by using the average closing price of the Company’s common stock on the NYSE for the previous calendar year. Because share prices of all companies are subject to market volatility, the Board believes that it would be unfair to require an executive or Board member to buy more shares simply because Hecla’s stock price drops. In the event there is a significant decline in Hecla’s stock price that causes an executive’s or Board member’s holdings to fall below the applicable threshold, the executives or Board members will not be required to purchase additional shares to meet the threshold, but they generally may not sell or transfer any shares until the threshold has again been achieved. The following tables summarize the non-management directors and NEO’s stock ownership guidelines and their status as of December 31, 2016, based on the average closing price of our common stock on the NYSE for calendar year 2016 ($4.5919). As of December 31, 2016, all NEOs met the guidelines. In the calculations for our NEOs, we include shares directly held and unvested RSUs. We do not include unexercised stock options or unvested performance-based shares. 88www.hecla-mining.com Non-Management Director Stock Ownership as of December 31, 2016 Executive Stock Ownership as of December 31, 2016 Additional information regarding shares held by the non-management directors and our NEOs is included in theSecurity Ownership of Certain Beneficial Owners and Managementtable on the following page. Security Ownership of Certain Beneficial Owners and Management The following table shows the number and percentage of the shares of common stock beneficially owned by each current director and each executive officer of Hecla, and by all current directors and executive officers as a group, as of March 27, 2017. On that date, all such persons together beneficially owned an aggregate of 1.5% of theoutstanding shares of our common stock. Except as otherwise indicated, the directors, nominees and officers have sole voting and investment power with respect to the shares listed, including shares which the individual has the right to acquire, but has not done so. 2017 Proxy Statement89 90www.hecla-mining.com To our knowledge, as of March 27, 2017, the only “beneficial owners” (as such term is defined in Rule 13d-3 under the Exchange Act) of more than 5% of our common stock entitled to vote at the Annual Meeting are shown in the table below: 2017 Proxy Statement91 SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Exchange Act requires our directors, executive officers and holders of more than 10% of our common stock to file with the SEC reports regarding their ownership and changes in their ownership of our stock. These persons are required by the SEC to furnish us with copies of all Section 16(a) forms they file. To our knowledge, based solely on our review of copies of such forms, or written representations from certain reporting persons that no such forms were required, we believe that during the calendar year ended December 31, 2016, all filing requirements applicable to our officers, directors and greater than 10% owners of our common stock were timely satisfied, with the exception of a (i) Form 3 for Robert D. Brown, filed on March 3, 2016, relating to his appointment on January 4, 2016, which was due to an administrative error, and (ii) Form 4 for George R. Nethercutt, Jr., filed on July 13, 2016, which was due to late notice received regarding a sale of stock on July 1, 2016. 92www.hecla-mining.com Record Date, Shares Outstanding and Quorum If you were a holder of Hecla common stock either as a“shareholder of record”or as the“beneficial owner”of shares held in street name as of the Record Date, you may vote your shares at the Annual Meeting. As of the Record Date, 395,826,290 shares of common stock were outstanding and entitled to vote at the Annual Meeting. Shares of our common stock that are held by us in our treasury are not counted as shares outstanding and will not be voted. Each shareholder has one vote for each share of common stock held as of the Record Date. A quorum must be present in order for business to be conducted at the Annual Meeting. A quorum consists of the presence at the Annual Meeting, in person or represented by proxy, of a majority of the outstanding shares of our common stock as of the Record Date. Shares represented by proxies marked “Abstain” and “broker non-votes” are counted in determining whether a quorum is present for the transaction of business at the Annual Meeting. A “broker non-vote” occurs when a broker or other nominee who holds shares in street name for a client returns a proxy but provides no instruction as to how shares should be voted on a particular “non-routine” matter. The Dodd-Frank Act and stock exchange rules prevent brokers from casting votes on “non-routine” matters.Payments Made Upon Retirement. The NEOs could receive a prorated portion of any short-term performance compensation and a prorated portion of any long-term compensation in effect at the time of their retirement. They would also receive one month of health and welfare benefits and any earned but unused vacation, and the 401(k) match would be deposited in their accounts. As of December 31, 2015, Mr. Baker was the only NEO that qualified for early or regular retirement from the Hecla Mining Company Retirement Plan.Payments Made Upon Death or Disability. Upon death or disability, the NEOs would receive a prorated portion of any short-term performance compensation, as well as a prorated portion of any long-term compensation plans in which the NEO was a participant. In both cases, retirement payments would be reduced in accordance with the terms of the plans and, in the case of death, the surviving spouse or other beneficiary would receive the payments. They would also receive one month of health and welfare benefits and any accrued, but unused vacation and the 401(k) match would be deposited in their accounts.Payments Made Upon a Change in Control. If a change in control occurs as defined in the NEOs’ CIC Agreements, they would be eligible for a prorated portion of any short-term performance compensation and a prorated portion of any long-term performance compensation as though they had been employed for an additional three years. They would also receive three years of health and welfare benefits and disability and life insurance premiums would be paid for such three yearCOMPENSATION OF NAMED EXECUTIVE OFFICERS ● ● Mr. Messrs.Radford and Hall and any other CIC AgreementsAgreement entered into hereafter.hereafter;● The CIC Agreements provide for specified paymentsa lump-sum payment equal to the difference in the Retirement Plan and otherSupplemental Plan benefits if the NEO’s employment is terminated either (i) byto which the NEO for good reason, orwould be entitled on (i) the date of actual termination, and (ii) by Hecla or its successor other than for cause, death or disability, withinthe three years later (two years for Mr. Radford) following a change in control, or prior to a change in control if it can be demonstrated thatlater under the termination was related to a potential change in control. These paymentsCIC Agreement with Messrs. Radford and benefits include the following:●all accrued obligations;●a lump-sum payment equal to three times the sum of the NEO’s then annual base salary and the NEO’s highest annual and long-term incentive payment for the three years prior to the change in control, with multiples of two years under the CIC Agreement with Mr. Radford and any other CIC Agreement entered into hereafter;●a lump-sum payment equal to the difference in the Retirement Plan and Supplemental Plan benefits to which the NEO would be entitled on (i) the date of actual termination, and (ii) three years later (two years later under the CIC Agreement with Mr. Radford and any other CIC Agreement entered into hereafter); and●for Messrs. Baker, Sabala, McDonald, Sienko and Poirier, the continued participation for three years in all of Hecla’s benefits plans and programs to which the NEO would be entitled on the date of the change in control (or provision of equivalent benefits if such continued participation was not possible under the terms of such plans and programs), or two years in the case of Mr. RadfordHall and any other CIC Agreement entered into hereafter); and● 125 Years2016 Proxy Statement69COMPENSATION OF NAMED EXECUTIVE OFFICERSCOMPENSATION OF NAMED EXECUTIVE OFFICERS Executive Benefits and
Payments Upon Termination Voluntary
Termination on
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($) Phillips S. Baker, Jr. Short-term Performance Compensation 907,500 907,500 — 2,722,500 1 907,500 907,500 Stock Options — — — — — — Restricted Stock — — — 1,669,223 — — Long-term Performance Compensation 1,968,875 1,968,875 1,968,875 5,906,625 2 2,918,875 2,918,875 Benefits & Perquisites: Retirement Plans3 5,055,776 5,055,776 5,055,776 8,046,663 7,399,889 4,997,208 Deferred Compensation4 4,657,883 4,657,883 4,657,883 4,657,883 4,657,883 4,657,883 Health and Welfare Benefits5 1,470 1,470 1,470 52,920 1,470 1,470 Disability Income6 — — — — 925,246 — Life Insurance Benefits7 — — — 11,103 — 325,000 Change in Control Payment8 — — — 1,452,000 — — Earned Vacation Pay9 37,230 37,230 37,230 37,230 37,230 37,230 Outplacement — — — 20,000 — — Total 12,628,734 12,628,734 11,721,234 24,576,147 16,848,093 13,845,166 Lindsay A. Hall Short-term Performance Compensation 205,200 205,200 — 410,400 1 205,200 205,200 Stock Options — — — — — — Restricted Stock — — — 290,175 — — Long-term Performance Compensation 120,827 120,827 120,827 241,654 2 365,789 365,789 Benefits & Perquisites: Retirement Plans3 13,146 13,146 13,146 75,857 13,186 9,384 Health and Welfare Benefits5 388 388 388 9,312 388 388 Disability Income6 — — — — 323,958 — Life Insurance Benefits7 — — — 5,904 — 250,000 Change in Control Payment8 — — — 684,000 — — Earned Vacation Pay9 26,307 26,307 26,307 26,307 26,307 26,307 Outplacement — — — 20,000 — — Total 365,868 365,868 160,668 1,763,609 934,828 857,068 Lawrence P. Radford Short-term Performance Compensation 684,000 684,000 — 1,368,000 1 684,000 684,000 Stock Options — — — — — — Restricted Stock — — — 1,067,791 — — Long-term Performance Compensation 704,650 704,650 704,650 1,409,300 2 1,071,314 1,071,314 Benefits & Perquisites: Retirement Plans3 462,126 462,126 462,126 639,723 676,244 451,377 Health and Welfare Benefits5 1,022 1,022 1,022 24,528 1,022 1,022 Disability Income6 — — — — 1,016,965 — Life Insurance Benefits7 — — — 7,402 — 325,000 Change in Control Payment8 — — — 684,000 — — Earned Vacation Pay9 19,731 19,731 19,731 19,731 19,731 19,731 Outplacement — — — 20,000 — — Total 1,871,529 1,871,529 1,187,529 5,240,475 3,469,276 2,552,444 COMPENSATION OF NAMED EXECUTIVE OFFICERS Executive Benefits and
Payments Upon Termination Voluntary
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($) Death on
12/31/16
($) Dr. Dean W.A. McDonald Short-term Performance Compensation 343,750 343,750 — 1,031,250 1 343,750 343,750 Stock Options — — — — — — Restricted Stock — — — 945,563 — — Long-term Performance Compensation 538,850 538,850 538,850 1,616,550 2 812,182 812,182 Benefits & Perquisites: Retirement Plans3 1,187,037 1,187,037 1,187,037 1,928,675 1,306,470 916,590 Health and Welfare Benefits5 388 388 388 13,968 388 388 Disability Income6 — — — — 395,718 — Life Insurance Benefits7 — — — 7,538 — 189,000 Change in Control Payment8 — — — 742,200 — — Earned Vacation Pay9 19,038 19,038 19,038 19,038 19,038 19,038 Outplacement — — — 20,000 — — Total 2,089,063 2,089,063 1,745,313 6,324,782 2,877,546 2,280,948 David C. Sienko Short-term Performance Compensation 330,000 330,000 — 990,000 1 330,000 330,000 Stock Options — — — — — — Restricted Stock — — — 485,392 — — Long-term Performance Compensation 393, 775 393,775 393,775 1,181,325 2 600,440 600,440 Benefits & Perquisites: Retirement Plans3 335,108 335,108 335,108 478,254 834,347 511,298 Health and Welfare Benefits5 438 438 438 15,768 438 438 Disability Income6 — — — — 1,417,481 — Life Insurance Benefits7 — — — 8,559 — 225,000 Change in Control Payment8 — — — 675,000 — — Earned Vacation Pay9 12,981 12,981 12,981 12,981 12,981 12,981 Outplacement — — — 20,000 — — Total 1,072,302 1,072,302 742,302 3,867,279 3,195,687 1,680,157 James A. Sabala* — — — — — — * Mr. Sabala retired in June 2016, at which time his Change in Control Executive Benefits and
Payments Upon TerminationVoluntary
Termination on
12/31/15
($)Involuntary
Not For
Cause
Termination on
12/31/15
($)For Cause
Termination on
12/31/15
($)Termination
Following a
Change in
Control on
12/31/15
($)Disability on
12/31/15
($)Death on
12/31/15
($) Phillips S. Baker, Jr. Short-term Performance Compensation 695,750 695,750 — 2,758,800 1 695,750 695,750 Stock Options — — — — — — Restricted Stock — — — 685,713 — — Long-term Performance Compensation 1,072,500 1,072,500 1,072,500 4,151,814 2 2,022,500 2,022,500 Benefits & Perquisites: Retirement Plans3 4,131,441 4,131,441 4,131,441 6,862,316 6,923,561 4,579,218 Deferred Compensation4 566,032 566,032 566,032 566,032 566,032 566,032 Health and Welfare Benefits5 1,513 1,513 1,513 54,462 1,513 1,513 Disability Income6 — — — — 740,329 — Life Insurance Benefits7 — — — 11,103 — 325,000 Change in Control Payment8 — — — 1,815,000 — — Earned Vacation Pay9 46,536 46,536 46,536 46,536 46,536 46,536 Outplacement — — — 20,000 — — Total 6,513,772 6,513,772 5,818,022 16,971,776 10,996,221 8,236,549 James A. Sabala Short-term Performance Compensation 380,000 380,000 — 1,437,750 1 380,000 380,000 Stock Options — — — — — — Restricted Stock — — — 229,121 — — Long-term Performance Compensation 442,000 442,000 442,000 1,610,400 2 782,000 782,000 Benefits & Perquisites: Retirement Plans3 1,250,532 1,250,532 1,250,532 2,245,585 1,275,181 899,095 Health and Welfare Benefits5 1,051 1,051 1,051 37,833 1,051 1,051 Disability Income6 — — — — 418,489 — Life Insurance Benefits7 — — — 11,103 — 325,000 Change in Control Payment8 — — — 1,140,000 — — Earned Vacation Pay9 21,922 21,922 21,922 21,922 21,922 21,922 Outplacement — — — 20,000 — — Total 2,095,505 2,095,505 1,715,505 6,753,714 2,878,643 2,409,068 Lawrence P. Radford Short-term Performance Compensation 500,000 500,000 — 1,000,000 1 500,000 500,000 Stock Options — — — — — — Restricted Stock — — — 501,041 — — Long-term Performance Compensation 390,000 390,000 390,000 838,750 2 730,000 730,000 Benefits & Perquisites: Retirement Plans3 336,228 336,228 336,228 497,606 544,166 355,787 Health and Welfare Benefits5 1,513 1,513 1,513 36,308 1,513 1,513 Disability Income6 — — — — 779,908 — Life Insurance Benefits7 — — — 7,402 — 325,000 Change in Control Payment8 — — — 760,000 — — Earned Vacation Pay9 21,922 21,922 21,922 21,922 21,922 21,922 Outplacement — — — 20,000 — — Total 1,249,663 1,249,663 749,663 3,683,029 2,577,509 1,934,222 70 www.hecla-mining.com125 Years
Agreement terminated.Table1Represents three times the highest annual incentive payment paid in the last three years for Messrs. Baker, McDonald and Sienko. Represents two times the highest annual incentive payment paid in the last three years for Messrs. Radford and Hall. 2 Represents three times the highest long-term incentive payment paid in the last three years for Messrs. Baker, McDonald and Sienko. Represents two times the highest long-term incentive payment paid in the last three years for Messrs. Radford and Hall. 3 Reflects the estimated lump-sum present value of ContentsCOMPENSATION OF NAMED EXECUTIVE OFFICERSExecutive Benefits and
Payments Upon TerminationVoluntary
Termination on
12/31/15
($)Involuntary
Not For
Cause
Termination on
12/31/15
($)For Cause
Termination on
12/31/15
($)Termination
Following a
Change in
Control on
12/31/15
($)Disability on
12/31/15
($)Death on
12/31/15
($) Dr. Dean W.A. McDonald Short-term Performance Compensation 242,000 242,000 — 907,500 1 242,000 242,000 Stock Options — — — — — — Restricted Stock — — — 411,427 — — Long-term Performance Compensation 338,000 338,000 338,000 1,258,125 2 598,000 598,000 Benefits & Perquisites: Retirement Plans3 990,271 990,271 990,271 1,643,021 1,186,681 813,909 Health and Welfare Benefits5 388 388 388 13,968 388 388 Disability Income6 — — — — 363,769 — Life Insurance Benefits7 — — — 7,674 — 189,000 Change in Control Payment8 — — — 825,000 — — Earned Vacation Pay9 15,865 15,865 15,865 15,865 15,865 15,865 Outplacement — — — 20,000 — — Total 1,586,524 1,586,524 1,344,524 5,102,580 2,406,703 1,859,162 David C. Sienko Short-term Performance Compensation 150,000 150,000 — 675,000 1 150,000 150,000 Stock Options — — — — — — Restricted Stock — — — 211,202 — — Long-term Performance Compensation 247,000 247,000 247,000 956,175 2 437,000 437,000 Benefits & Perquisites: Retirement Plans3 252,798 252,798 252,798 380,971 702,777 423,004 Health and Welfare Benefits5 447 447 447 16,097 447 447 Disability Income6 — — — — 952,799 — Life Insurance Benefits7 — — — 9,531 — 251,000 Change in Control Payment8 — — — 750,000 — — Earned Vacation Pay9 14,423 14,423 14,423 14,423 14,423 14,423 Outplacement — — — 20,000 — — Total 664,668 664,668 514,668 3,033,399 2,257,446 1,275,874 Don Poirier* Short-term Performance Compensation 135,000 135,000 — 488,160 1 135,000 135,000 Stock Options — — — — — — Restricted Stock — — — 274,284 — — Long-term Performance Compensation 266,500 266,500 266,500 1,006,500 2 471,500 471,500 Benefits & Perquisites: Retirement Plans3 710,480 710,480 710,480 1,183,558 992,656 664,225 Health and Welfare Benefits5 388 388 388 13,968 388 388 Disability Income6 — — — — 425,116 — Life Insurance Benefits7 — — — 8,500 — 226,000 Change in Control Payment8 — — — 678,000 — — Earned Vacation Pay9 13,038 13,038 13,038 13,038 13,038 13,038 Outplacement — — — 20,000 — — Total 1,125,406 1,125,406 990,406 3,686,008 2,037,698 1,510,151 *Mr. Poirier departed the Company at the end of 2015.1Represents three times the highest annual incentive payment paid in the last three years for Messrs. Baker, Sabala, McDonald, Sienko and Poirier. Represents two times the highest annual incentive payment paid in the last three years for Mr. Radford.2Represents three times the highest long-term incentive payment paid in the last three years for Messrs. Baker, Sabala, McDonald, Sienko and Poirier. Represents two times the highest long-term incentive payment paid in the last three years for Mr. Radford.3Reflects the estimated lump-sum present value of qualified and nonqualified retirement plans to which the NEO would be entitled. Mr. Baker is the only NEO that qualified for early or regular retirement on December 31, 2015,qualified and nonqualified retirement plans to which the NEO would be entitled. Mr. Baker is the only NEO that qualified for early or regular retirement on December 31, 2016, under our retirement plan.125 Years2016 Proxy Statement714 Reflects the lump-sum present value of shares held in Mr. Baker’s stock account under our KEDCP, based on the Company’s closing stock price on the NYSE on December 30, 2016 ($5.24). Table5Reflects the estimated lump-sum value of ContentsCOMPENSATION OF NAMED EXECUTIVE OFFICERSall future premiums, which will continue to be paid by the Company on behalf of Messrs. Baker, McDonald and Sienko under our health and welfare benefit plans for three years upon a termination following a change in control and for one month otherwise. Reflects the estimated lump-sum value of all future premiums, which will continue to be paid by the Company on behalf of Messrs. Radford and Hall under our health and welfare benefit plans for two years upon a termination following a change in control and for one month otherwise.4Reflects the lump-sum present value of shares held in Mr. Baker’s stock account under our KEDCP, based on the Company’s closing stock price on the NYSE on December 31, 2015 ($1.89).5Reflects the estimated lump-sum value of all future premiums, which will continue to be paid by the Company on behalf of Messrs. Baker, Sabala, McDonald, Sienko and Poirier under our health and welfare benefit plans for three years upon a termination following a change in control and for one month otherwise. Reflects the estimated lump-sum value of all future premiums, which will continue to be paid by the Company on behalf of Mr. Radford under our health and welfare benefit plans for two years upon a termination following a change in control and for one month otherwise.6Reflects the estimated lump-sum present value of all future payments which the NEO would be entitled to receive under our disability program.7Reflects the estimated lump-sum value of the cost of coverage for life insurance provided by us to the NEO; provided, however, that the amount reflected under the heading “Death” reflects the estimated present value of the proceeds payable to the NEO’s beneficiaries upon his death.8Represents three times annual base salary for Messrs. Baker, Sabala, McDonald, Sienko and Poirier. Represents two times annual base salary for Mr. Radford.6 Reflects the estimated lump-sum present value of all future payments which the NEO would be entitled to receive under our disability program. 7 Reflects the estimated lump-sum value of the cost of coverage for life insurance provided by us to the NEO; provided, however, that the amount reflected under the heading “Death” reflects the estimated present value of the proceeds payable to the NEO’s beneficiaries upon his death. 8 Represents three times annual base salary for Messrs. Baker, McDonald and Sienko. Represents two times annual base salary for Messrs. Radford and Hall. 9 Represents lump-sum payment of earned vacation time accrued. 72 www.hecla-mining.com125 YearsEQUITY COMPENSATION PLAN INFORMATIONNumber of December 31, 2015, the Company has three equity incentive compensation plans that have been approved by the shareholders under which shares Securities To
Be Issued Upon
Exercise
of the Company’scommon stock have been authorized for issuance to directors, officers, employees,Outstanding Options,
Warrants and consultants. All outstanding awards relate to our Common Stock.Number of Securities ToBe Issued UponRightsWeighted-Average
Exercise Price
of Outstanding Options,
Warrants and RightsNumber of Securities
Remaining Available For
Future Issuance Under
Equity Compensation
PlansWeighted-AverageExercise Priceof Outstanding Options,Warrants and RightsNumber of SecuritiesRemaining Available ForFuture Issuance UnderEquity CompensationPlansEquity Compensation Plans Approved by Security Holders: 2010 Stock Incentive Plan—N/A11,975,936 Stock Plan for Nonemployee Directors—N/A506,921 Key Employee Deferred Compensation Plan—N/A638,911Equity Compensation Plans Not Approved bySecurity Holders———Total13,121,768125 Years2016 Proxy Statement73 2010 Stock Incentive Plan — N/A 8,302,326 Stock Plan for Nonemployee Directors — N/A 438,459 Key Employee Deferred Compensation Plan — N/A 511,303 Equity Compensation Plans Not Approved by Security Holders — — — Total — — 9,252,088 OTHER BENEFITSOur NEOs participate in the Hecla Mining Company Qualified Retirement Plan (the “Retirement Plan”), which covers substantially all of our employees, except for certain hourly employees who are covered by separate plans. annual earnings (defined as the highestaverage earnings of such employee for any 36 consecutive calendar months during the final 120 calendar months of service) up to the applicable covered compensation level (which level is based on the Social Security maximum taxable wage base) and 1.75% of the difference, if any, between final average annual earnings and the applicable covered compensation level. The Retirement Plan and SERP define earnings for purposes of the plans to be “a wage or salary for services of employees inclusive of any bonus or special pay including gain-sharing programs, contract miners’ bonus pay and the equivalent,” except that on or after July 1, 2013, earnings are defined as “base salary or wages for personal services and elective deferrals plus (i) elective deferrals not includable in the gross income of the Employee under Code Sections 125, 132(f)(4), 402(e)(3), 402(h), 403(b) and 457, (ii) one-half (1/2) of any performance based or annual incentive bonus, (iii) one-half (1/2) of any safety incentive award, (iv) paid time off, other than pay while on disability leave, (v) any post-employment payment for services performed during the course of employment that would have been paid to the Employee prior to the severance from employment if the Employee had continued in employment with an Employer, and (vi) compensation for overtime at the Employee’s regular rate of pay.”74 www.hecla-mining.com125 YearsOTHER BENEFITS Final Average Years of Credited Service Annual Earnings 5 10 15 20 25 30 35 $ 100,000 $ 5,839 $ 11,677 $ 17,516 $ 23,354 $ 29,193 $ 35,031 $ 40,870 150,000 10,214 20,427 30,641 40,854 51,068 61,281 71,495 200,000 14,589 29,177 43,766 58,354 72,943 87,531 102,120 250,000 18,964 37,927 56,891 75,854 94,818 113,781 132,745 300,000 23,339 46,667 70,016 93,354 116,693 140,031 163,370 350,000 27,714 55,427 83,141 110,854 138,568 166,281 193,995 400,000 32,089 64,177 86,266 128,354 160,443 192,531 224,620 450,000 36,464 72,927 109,391 145,854 182,318 218,781 255,245 500,000 40,839 81,677 122,516 163,354 204,193 245,031 285,870 550,000 45,214 90,427 135,641 180,854 226,068 271,281 316,495 600,000 49,589 99,177 148,766 198,354 247,943 297,531 347,120 650,000 53,964 107,927 161,891 215,854 269,818 323,781 377,745 700,000 58,339 116,677 175,016 233,354 291,693 350,031 408,370 750,000 62,714 125,427 188,141 250,854 313,568 376,281 438,995 800,000 67,089 134,177 201,266 268,354 335,443 402,531 469,620 850,000 71,464 142,927 214,391 285,854 357,318 428,781 500,245 900,000 75,839 151,677 227,516 303,354 379,193 455,031 530,870 950,000 80,214 160,427 240,641 320,854 401,068 481,281 561,495 1,000,000 84,589 169,177 253,766 338,354 422,943 507,531 592,120
As of December 31, 2016, the following executive officers have completed the indicated number of full years of credited service: P. Baker, 15 years; J. Sabala, 8 years; L. Radford, 5 years; D. McDonald, 10 years; D. Sienko, 6 years; and L. Hall, 0 years.OTHER BENEFITS Name Plan Name Number of Years
Credited Service
(#) Present Value of
Accumulated Benefit
($) Payments During
Last Calendar Year
($)Phillips S. Baker, Jr. Hecla Mining Company Retirement Plan 15 516,073 — Hecla Mining Company Supplemental Excess Retirement Plan 4,539,703 — Lindsay A. Hall1 Hecla Mining Company Retirement Plan 0 13,146 — Hecla Mining Company Supplemental Excess Retirement Plan — — Lawrence P. Radford Hecla Mining Company Retirement Plan 5 174,594 — Hecla Mining Company Supplemental Excess Retirement Plan 287,532 — Dr. Dean W.A. McDonald1 Hecla Mining Company Retirement Plan 10 414,981 — Hecla Mining Company Supplemental Excess Retirement Plan 772,056 — David C. Sienko Hecla Mining Company Retirement Plan 6 163,127 — Hecla Mining Company Supplemental Excess Retirement Plan 171,981 — James A. Sabala Hecla Mining Company Retirement Plan 8 368,125 — Hecla Mining Company Supplemental Excess Retirement Plan 1,082,979 — 1 As non U.S. citizens, Mr. Hall and Dr. McDonald are not participants in the Retirement Plan, andor the SERP payable upon retirement to a participant who retires in 2015 at age 65 having the yearsunfunded SERP. In lieu of service and final average annual earnings as specified. The table assumes Social Security covered compensation levels as in effect on January 1, 2015.Estimated Annual Retirement BenefitsFinal Average Years of Credited Service Annual Earnings 5 10 15 20 25 30 35 $ 100,000 $ 5,931 $ 11,862 $ 17,792 $ 23,723 $ 29,654 $ 35,585 $ 41,515 150,000 10,306 20,612 30,917 41,223 51,529 61,835 72,140 200,000 14,681 29,362 44,042 58,723 73,404 88,085 102,765 250,000 19,056 38,112 57,167 76,223 95,279 114,335 133,390 300,000 23,431 46,862 70,292 93,723 117,154 140,585 164,015 350,000 27,806 55,612 83,417 111,223 139,029 166,835 194,640 400,000 32,181 64,362 96,542 128,723 160,904 193,085 225,265 450,000 36,556 73,112 109,667 146,223 182,779 219,335 255,890 500,000 40,931 81,862 122,792 163,723 204,654 245,585 286,515 550,000 45,306 90,612 135,917 181,223 226,529 271,835 317,140 600,000 49,681 99,362 149,042 198,723 248,404 298,085 347,765 650,000 54,056 108,112 162,167 216,223 270,279 324,335 378,390 700,000 58,431 116,862 175,292 233,723 292,154 350,585 409,015 750,000 62,806 125,612 188,417 251,223 314,029 376,835 439,640 800,000 67,181 134,362 201,542 268,723 335,904 403,085 470,265 850,000 71,556 143,112 214,667 286,223 357,779 429,335 500,890 900,000 75,931 151,862 227,792 303,723 379,654 455,585 531,515 950,000 80,306 160,612 240,917 321,223 401,529 481,835 562,140 1,000,000 84,681 169,362 254,042 338,723 423,404 508,085 592,765 Benefits listed in the pension table are not subject to any deduction for Social Security or other offset amounts. As of December 31, 2015, the following executive officers have completed the indicated number of full years of credited service: P. Baker, 14 years; J. Sabala, 7 years; L. Radford, 4 years; D. McDonald, 9 years; D. Sienko, 5 years; and D. Poirier, 8 years.125 Years2016 Proxy Statement75OTHER BENEFITSThe following table shows pension information under the Hecla Mining Company Retirement Plan and the SERP for the NEOs as of December 31, 2015. The terms and conditions for participation in and payments from, these plans, Mr. Hall and Dr. McDonald are described above under “Retirement Plan.” The actuarial present value of accumulatedexpected to receive a similar benefit isdetermined using the same assumptions used for financial reporting purposes except that retirement age is assumed to be the normal retirement age of 65, or the current ageas if eligible for early retirement. These assumptions are describedthey had participated in the pension footnotes to our financial statements included in our Annual Report on Form 10-K.these plans. Name Plan Name Number of Years
Credited Service
(#) Present Value of
Accumulated Benefit
($) Payments During
Last Calendar Year
($) Phillips S. Baker, Jr. Hecla Mining Company Retirement Plan 14 415,383 — Hecla Mining Company Supplemental Excess Retirement Plan 3,716,058 — James A. Sabala Hecla Mining Company Retirement Plan 7 316,695 — Hecla Mining Company Supplemental Excess Retirement Plan 933,837 — Lawrence P. Radford Hecla Mining Company Retirement Plan 4 125,114 — Hecla Mining Company Supplemental Excess Retirement Plan 211,114 — Dr. Dean W.A. McDonald Hecla Mining Company Retirement Plan 9 341,029 — Hecla Mining Company Supplemental Excess Retirement Plan 649,242 — David C. Sienko Hecla Mining Company Retirement Plan 5 121,159 — Hecla Mining Company Supplemental Excess Retirement Plan 131,639 — Don Poirier Hecla Mining Company Retirement Plan 8 280,758 — Hecla Mining Company Supplemental Excess Retirement Plan 429,722 — 76 www.hecla-mining.com125 YearsPROPOSAL 5 – APPROVAL OF NAMED EXECUTIVE OFFICER COMPENSATION53 – APPROVAL OF NAMED EXECUTIVE OFFICER COMPENSATIONNEOs as set forth under the headingCompensation Discussion and Analysis on page 34 and in the accompanying compensation tables on page 62, and related material. NEOs.PROPOSAL 4 – ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION believes strongly that the Company’s currentrecommends an advisory vote on executive compensation program is rightbe held annually.PROPOSAL 5 – APPROVAL OF AMENDMENT AND RESTATEMENT OF STOCK PLAN FOR NONEMPLOYEE DIRECTORS ● Company and our shareholders at the current time. The Company’s executive compensation program is designed to attract, retain, and motivate talented individuals who possess the executive experience and the leadership skills needed by the Company in order to maintain and increase shareholder value. The Company seeks to provide executive compensation that is competitive with that provided by companies in our peer group within the mining industry. The Company also seeks to provide both near-term and long-term financial incentives to our executives that reward them for good performance and achieving financial results and strategic objectives that are expected to contribute to increased long-term shareholder value.Underlying these incentives is a strong philosophy of “pay-for-performance” that forms the foundation of decisions regarding the compensation of our NEOs. This compensation philosophy, which has been consistent over many years, is designed to align the interests of our NEOs with the interests of our shareholders and is central to our ability to attract, retain and motivate executive leaders to guide the Company through market challenges over the long-term.The Company has demonstrated consistent strong financial performance both in the short-term and in the long-term. The Company believes that its NEOs have contributed significantly to these achievements. Their tenure with the Company ranges from 5 years to 14 years, providing the Company with consistent, steady and experienced leadership that has been able to guide the Company to consistent strong financial performance over multi-year periods.The Board strongly believes in the effectiveness and appropriateness for the Company of its executive compensation program. We believe this confidence is shared by our shareholders, as evidenced by the favorable vote of 83% of our shareholders on the similar proposal presented at last year’s annual meeting. Our compensation practices did not change materially from calendar year 2014 to calendar year 2015 and the Board hopes that our shareholders will continue to believe in the effectiveness and appropriateness of our executive compensation program, and will express that belief through a favorable vote on this proposal at this Annual Meeting.The vote is advisory and therefore not binding on the Company, the Compensation Committee or the Board. However, the Board and the Compensation Committee value the opinions of our shareholders and to the extent there is any significant vote against the NEO compensation as disclosed in this Proxy Statement, the Compensation Committee will carefully review and consider the voting results when evaluating our executive compensation program.We are asking shareholders to approve the following resolution at the 2016 Annual Meeting:“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, described in the Compensation Discussion and Analysis, Summary Compensation Table for 2015, and the related compensation tables and narrative in the Proxy Statement for the Company’s 2016 Annual Shareholders’ Meeting, is hereby APPROVED.”☑The Board recommends that you vote “FOR” approval of the compensation of our named executive officers.125 Years2016 Proxy Statement77STOCK OWNERSHIP INFORMATIONGuidelines and Timing of Equity Awards. We have no program, plan or practice to time the grant of stock-based awards relative to the release of material non-public information or other corporate events. All equity grants to executive officers are approved by the Compensation Committee at regularly scheduled meetings or, in limited cases involving key recruits or promotions, by a special meeting or unanimous written consent. The grantexpiration date is the meeting date or a fixed, future date specified at the time of the grant. Underplan to May 15, 2027;● terms of our 2010 Stock Incentive Plan (and have nonemployee directors receive stock awards solely under the Director Stock Plan);● ● ● ● PROPOSAL 5 – APPROVAL OF AMENDMENT AND RESTATEMENT OF STOCK PLAN FOR NONEMPLOYEE DIRECTORS PROPOSAL 5 – APPROVAL OF AMENDMENT AND RESTATEMENT OF STOCK PLAN FOR NONEMPLOYEE DIRECTORS PROPOSAL 5 – APPROVAL OF AMENDMENT AND RESTATEMENT OF STOCK PLAN FOR NONEMPLOYEE DIRECTORS Name and Position Dollar Value Number of Shares Phillips S. Baker, Jr., President and CEO $0 — Lindsay A. Hall, Senior Vice President and CFO $0 — Lawrence P. Radford, Senior Vice President - Operations $0 — Dr. Dean W.A. McDonald, Senior Vice President - Exploration $0 — David C. Sienko, Vice President - General Counsel $0 — Executive group $0 — Non-Executive Director Group $100,0001 2 Non-Executive Officer Group $0 — 1 Represents the amount to be received by each nonemployee director based on the annual retainer payable as of the Record Date. The aggregate value of annual awards to all nonemployee directors under the Director Stock Plan will depend on (1) the amount of the annual retainer payable to such directors on September 30 of each year and (2) the number of such directors in office on September 30 of each year, both of which are subject to change. If the Director Stock Plan is approved by the closing stock priceCompany’s shareholders at the 2017 Annual Meeting, and the amount of the annual retainer payable to nonemployee directors and the number of such directors remains unchanged from the Record Date, the aggregate value of awards to all nonemployee directors for 2017 would be $800,000.2 On September 30, 2017, each nonemployee director will be credited a number of shares of our common stock determined by dividing the annual retainer payable to nonemployee directors on the NYSE on thesuch date of grant. In addition, the Compensation Committee typically makes equity grants to NEOs in the first half of the year.In an effort to more closely align the Company’s non-management directors’ financial interests with those of the shareholders, in June 2012, the Compensation Committee and Board adopted stock ownership guidelines for our non-management directors. Under these guidelines, each non-management director(which annual retainer currently is encouraged to own shares of common stock (which includes shares held under the Hecla Mining Company Stock Plan for Nonemployee Directors and the 2010 Stock Incentive Plan) valued at three times their annual cash retainer and should comply with the guidelines within five years of the adoption of the guidelines. Any directors appointed or elected after June 2012 are expected to achieve their expected value requirement within five years of their appointment or election to the Board.In the event a non-management director’s cash retainer increases, he or she will have three years from the date of the increase to acquire any additional shares needed to meet these guidelines.Similarly, we believe that it is important to encourage our executive officers to hold a material amount of our common stock and to link their long-term economic interest directly to that of our shareholders. To achieve this goal, in June 2012, the Compensation Committee and Board established stock ownership guidelines for the Company’s senior management. The guidelines for the CEO are six times base salary, which should be achieved within five years of the adoption of the guidelines. The guidelines for all other executive officers are two times base salary, which should be achieved within five years of the adoption of the guidelines. Unvested shares of restricted stock units and shares held directly are considered owned for purposes of the guidelines. Any executive officer employed after June 2012 is required to achieve his or her expected value requirement within five years of the date that the executive officer assumes his or her position. If an NEO becomes subject to a greater ownership amount due to a promotion or an increase in base salary, the NEO is expected to meet the higher ownership threshold within three years.Because of fluctuations in the Company’s stock price, in February 2016, the Compensation Committee and the Board of Directors amended the stock ownership guidelines to provide a valuation methodology that consists of valuing the shares held$100,000) by using the average closing price of the Company’s common stock on the NYSE for the previous calendar year. Because share prices of all companies are subject to market volatility, the Board believes that it would be unfair to require an executive or Board member to buy more shares simply because Hecla’s stock price drops. In the event there is a significant decline in Hecla’s stock price that causes an executive’s or Board member’s holdings to fall below the applicable threshold, the executives or Board members will not be required to purchase additional shares to meet the threshold, but they generally may not sell or transfer any shares until the threshold has again been achieved. The stock ownership guidelines also provide that if any executive or Board member falls below their required holdings, they shall have three years to achieve the required ownership level.The following tables summarize the non-management directors and NEO’s stock ownership guidelines and their status as of December 31, 2015, based on the average closing price of our common stock on the NYSE for the prior calendar year 2015 ($2.6071)year.PROPOSAL 6 – APPROVAL OF THE AMENDMENT TO OUR CERTIFICATE OF INCORPORATION INCREASING THE NUMBER OF AUTHORIZED SHARES OF OUR COMMON STOCK PROPOSAL 6 – APPROVAL OF THE AMENDMENT TO OUR CERTIFICATE OF INCORPORATION INCREASING THE NUMBER OF AUTHORIZED SHARES OF OUR COMMON STOCK PROPOSAL 7 – APPROVAL OF AMENDMENTS TO OUR CERTIFICATE OF INCORPORATION AND BYLAWS TO REMOVE CERTAIN 80% SUPERMAJORITY VOTING PROVISIONS PROPOSAL 7 – APPROVAL OF AMENDMENTS TO OUR CERTIFICATE OF INCORPORATION AND BYLAWS TO REMOVE CERTAIN 80% SUPERMAJORITY VOTING PROVISIONS Certificate Bylaws PROPOSAL 7 – APPROVAL OF AMENDMENTS TO OUR CERTIFICATE OF INCORPORATION AND BYLAWS TO REMOVE CERTAIN 80% SUPERMAJORITY VOTING PROVISIONS ● ● ● PROPOSAL 8 – APPROVAL OF AMENDMENTS TO OUR CERTIFICATE OF INCORPORATION AND BYLAWS TO PERMIT SHAREHOLDERS TO CALL SPECIAL MEETINGS OF SHAREHOLDERS UNDER CERTAIN CIRCUMSTANCES PROPOSAL 8 – APPROVAL OF AMENDMENTS TO OUR CERTIFICATE OF INCORPORATION AND BYLAWS TO PERMIT SHAREHOLDERS TO CALL SPECIAL MEETINGS OF SHAREHOLDERS UNDER CERTAIN CIRCUMSTANCES STOCK OWNERSHIP INFORMATION STOCK OWNERSHIP INFORMATION Director1 Annual
Retainer
($) X
Annual
Retainer Total Value
of Shares to
be Held
($) Shares
Held
Directly
(#) Shares
Held in
Directors
Trust2
(#) Total
Shares
(#) Total Value of
Shares Held by
Director
($4.5919)3
($) Meets
GuidelinesCrumley 156,000 3x 468,000 116,536 83,555 200,091 918,798 Yes Johnson4 66,000 3x 198,000 17,273 11,216 28,489 130,819 No Nethercutt 66,000 3x 198,000 60,536 58,854 119,390 548,227 Yes Ralbovsky4 66,000 3x 198,000 17,273 11,216 28,489 130,819 No Rogers 66,000 3x 198,000 100,536 52,602 153,138 703,194 Yes Stanley 66,000 3x 198,000 100,536 52,602 153,138 703,194 Yes Taylor 66,000 3x 198,000 30,000 77,016 107,016 491,407 Yes 1 Catherine J. Boggs joined the Board effective as of January 1, 2017, and thus is not reflected in this table. 2 As of December 31, 2015, all NEOs met2016, the guidelines. Intotal amount of shares held in trust pursuant to the calculationsterms of the Stock Plan for our NEOs, we includeNonemployee Directors by each of the above-named directors.3 The value of shares directly held is determined by using the average closing price of the Company’s common stock for the previous calendar year on the NYSE, which for 2016 was $4.5919.4 Messrs. Johnson and unvested RSUs. We do not include unexercised stock options or performance-based shares.In June 2014, the Compensation Committee recommended andRalbovsky joined the Board approved increases to cash retainers for the Chairman of the Board,in March 2016 and for each chair of the committees. Due to these increases in 2014, Mr. Crumley hashave until June 2017March 2021 to comply with the guidelines.NEO Annual
Base
Salary
($) X
Annual
Base
Salary Total Value
of Shares
to be Held
($) Shares
Held
Directly
(#) Unvested
RSUs
(#) Total
Shares
(#) Total Value of
Shares Held
by NEO at
12/31/16
($4.5919)1
($) Meets
GuidelinesBaker 605,000 6x 3,630,000 2,375,476 2,3 300,753 2,676,229 12,288,976 Yes Hall4 380,000 2x 760,000 0 55,377 55,377 254,286 No Radford 380,000 2x 760,000 367,113 3 203,777 570,890 2,621,470 Yes McDonald 275,000 2x 550,000 295,502 180,451 475,953 2,185,529 Yes Sienko 250,000 2x 500,000 251,962 3 92,632 344,594 1,582,341 Yes 1 Average closing price of Hecla’s common stock ownershipon the NYSE for calendar year 2016.2 Includes 888,909 shares deferred under the KEDCP. 3 Includes Hecla Mining Company common shares held in their 401(k) account. 4 Mr. Hall joined the Company in July 2016. He has five years from the date of hire to comply with the guidelines. 78 www.hecla-mining.com125 YearsSTOCK OWNERSHIP INFORMATION Shares Beneficially Owned Name of Beneficial
Owner Title of Class Number Nature Percent of
ClassPhillips S. Baker, Jr. 1,469,5961 Direct 2 President and CEO 16,998 401(k) Plan 300,753 RSU 3 1,273,834 Deferred 4 318,554 Performance-based 5 Common 3,379,735 * Robert D. Brown 33,715 Direct 2 Vice President – Corporate Development 45,455 RSU 3 Common 79,170 * Lindsay A. Hall 12,331 Direct 2 Senior Vice President and Chief Financial Officer 55,377 RSU 3 Common 67,708 * Dr. Dean W.A. McDonald 312,960 Direct 2 Senior Vice President – Exploration 180,451 RSU 3 Common 493,411 * Lawrence P. Radford 385,9846 Direct 2 Senior Vice President – Operations 15,196 401(k) Plan 203,777 RSU 3 Common 604,957 * David C. Sienko 268,508 Direct 2 Vice President and General Counsel 1,471 401(k) Plan 92,632 RSU 3 Common 362,611 * Catherine J. Boggs Director 3,683 Indirect 7 Common 3,683 * Ted Crumley 116,536 Direct 2 Director 83,555 Indirect 7 Common 200,091 * George R. Johnson 17,273 Direct 2 Director 11,216 Indirect 7 Common 28,489 * Stephen F. Ralbovsky 17,273 Direct 2 Director 11,216 Indirect 7 Common 28,489 * George R. Nethercutt, Jr. 60,536 Direct 2 Director 58,854 Indirect 7 Common 119,390 * Terry V. Rogers 100,536 Direct 2 Director 52,602 Indirect 7 Common 153,138 * Charles B. Stanley 100,536 Direct 2 Director 52,602 Indirect 7 Common 153,138 * Dr. Anthony P. Taylor 30,000 Direct 2 Director 77,016 Indirect 7 Common 107,016 * All current directors, nominee directors and officers as a group (14 individuals) Common 5,781,026 1.5 % STOCK OWNERSHIP INFORMATION Non-Management Director Stock Ownership as*Represents beneficial ownership of December 31, 2015 Director Annual
Retainer
($) X
Annual
Retainer Total Value
of Shares to
be Held
($) Shares
Held
Directly
(#) Shares
Held in
Directors
Trust1
(#) Total
Shares
(#) Total Value of
Shares Held by
Director
($2.6071)
($)2 Meets
Guidelines Bowles* 66,000 3x 198,000 88,263 48,233 136,496 355,859 Yes Crumley 156,000 3x 468,000 99,263 74,349 173,612 452,624 No Nethercutt 66,000 3x 198,000 83.263 49,648 132,911 346,512 Yes Rogers 66,000 3x 198,000 83,263 43,396 126,659 330,213 Yes Stanley 66,000 3x 198,000 83,263 43,396 126,659 330,213 Yes Taylor 66,000 3x 198,000 56,648 3 67,810 124,458 324,474 Yes *Mr. Bowles passed away on December 2, 2015.1As of December 31, 2015, the total amount of shares held in trust pursuant to the terms of the Stock Plan for Nonemployee Directors by each of the above-named directors.2The value of shares held is determined by using the average closing price of the Company’s common stock for the previous calendar year on the NYSE, which for 2015 was $2.6071.3Includes 2,500 shares held in an IRA by Dr. Taylor.Executive Stock Ownership as of December 31, 2015 NEO Annual
Base
Salary
($) X
Annual
Base
Salary Total Value
of Shares
to be Held
($) Shares
Held
Directly
(#) Unvested
RSUs
(#) Total
Shares
(#) Total Value of
Shares Held
by NEO at
12/31/15
($2.6071)1
($) Meets
Guidelines Baker 605,000 6x 3,630,000 1,925,770 362,811 2,288,581 5,966,560 Yes Sabala 380,000 2x 760,000 261,472 250,338 511,810 1,334,340 Yes Radford 380,000 2x 760,000 255,371 265,101 520,472 1,356,923 Yes McDonald 275,000 2x 550,000 276,103 217,686 493,789 1,287,357 Yes Sienko 250,000 2x 500,000 167,788 111,747 279,535 728,776 Yes Poirier 226,000 2x 452,000 210,644 145,124 355,768 927,523 Yes 1Average closing price of Hecla’s common stock on the NYSE for calendar year 2015.Additional information regarding shares held by the non-management directors and our NEOs is included in theSecurity Ownership of Certain Beneficial Owners and Management table on the following page.Security Ownership of Certain Beneficial Owners and ManagementThe following table shows the number and percentage of the shares of common stock beneficially owned by each current director and each named executive officer of Hecla, and by all current directors and executive officers as a group, as of March 23, 2016. On that date, all of such persons together beneficially owned an aggregate of lessthanless than one percent, of the outstandingbased upon 395,826,290 shares of our common stock. Exceptstock issued and outstanding as otherwise indicated, the directors, nominees and officers have soleof March 27, 2017.1 Includes 223,642 shares held jointly with Mr. Baker’s spouse, as to which Mr. Baker shares voting and investment powerpower.2 “Direct” means shares held of record and any shares beneficially owned through a trust, broker, financial institution, or other nominee, and with respect to the shares listed, including shares which the individualofficer or director has sole or shared voting power.3 “RSU” means restricted stock units awarded under the right to acquire by exercising stock options but hasKEDCP or 2010 Stock Incentive Plan that have not done so.125 Years2016 Proxy Statement79Tablevested. See footnote 1 of ContentstheSTOCK OWNERSHIP INFORMATIONShares Beneficially Owned Name of Beneficial
OwnerTitle of Class Number Nature Percent of
ClassPhillips S. Baker, Jr. 1,862,4591 Direct2 President and CEO 362,811 RSU3 674,117 Deferred Shares4 356,433 Performance-based Shares5 Common 3,255,820 * Dr. Dean W.A. McDonald 340,370 Direct2 Senior Vice President – Exploration 217,686 RSU3 Common 558,056 * Don Poirier 295,708 Direct2 Former Vice President – Corporate Development 145,124 RSU3 Common 440,832 * Lawrence P. Radford 377,650 Direct2 Senior Vice President – Operations 265,101 RSU3 Common 642,751 * James A. Sabala 374,3426 Direct2 Senior Vice President and Chief Financial Officer 250,338 RSU3 Common 624,680 * David C. Sienko 221,369 Direct2 Vice President and General Counsel 111,747 RSU3 Common 333,116 * Ted Crumley 99,263 Direct2 Director 74,349 Indirect7 Common 173,612 * George R. Johnson Director Common 2,010 Indirect7 * Stephen F. Ralbovsky Director Common 2,010 Indirect7 * George R. Nethercutt, Jr. 83,263 Direct2 Director 49,648 Indirect7 Common 132,911 * Terry V. Rogers 83,263 Direct2 Director 43,396 Indirect7 Common 126,659 * Charles B. Stanley 83,263 Direct2 Director 43,396 Indirect7 Common 126,659 * Dr. Anthony P. Taylor 54,148 Direct2 Director 2,500 IRA 67,810 Indirect7 Common 124,458 * All current directors, nominee directors and officers as a group (15 individuals) Common 6,754,617 1.8% *Represents beneficial ownership of less than one percent, based upon 380,842,223 shares of our common stock issued and outstanding as of March 23, 2016.1Includes 223,642 shares held jointly with Mr. Baker’s spouse, as to which Mr. Baker shares voting and investment power.2“Direct” means shares held of record and any shares beneficially owned through a trust, broker, financial institution, or other nominee, and with respect to which the officer or director has sole or shared voting power.3“RSU” means restricted stock units awarded under the KEDCP or 2010 Stock Incentive Plan that have not vested. See footnote 1 of theOutstanding Equity Awards at Calendar Year-End for 2015 on page 65.Outstanding Equity Awards at Calendar Year-End for 2016on page 64.4 “Deferred Shares” means stock that has vested or been awarded, but is deferred until a distributable event under the terms of the KEDCP. 80 5 “Performance-based Shares” means performance-based equity, based on a three-year TSR. SeePerformance-based Shareson page 51 andOutstanding Equity Awards at Calendar Year-End for 2016table on page 64. www.hecla-mining.com125 YearsTable of Contents6STOCK OWNERSHIP INFORMATION5“Performance-based Shares” means performance-based equity, based on a three-year TSR. SeePerformance-based Shares on page 51 andOutstanding Equity Awards at Calendar Year-End for 2015 table on page 65.6All shares are held jointly with Mr. Sabala’s spouse, as to which Mr. SabalaAll shares are jointly held with Mr. Radford’s spouse, as to which Mr. Radford shares voting and investment power. 7 “Indirect” means shares credited to each independent director, all of which are held indirectly in trust pursuant to our Stock Plan for Nonemployee Directors. Each director disclaims beneficial ownership of all shares held in trust under the stock plan. SeeCompensation of Non-Management Directors on page 16.To our knowledge, as of March 23, 2016, the only “beneficial owners” (as such term is defined in Rule 13d-3 under the Exchange Act)stock plan. SeeTitle of Class Name & Address of
Beneficial Owner Amount & Nature of
Beneficial Ownership Percent of
ClassCommon Dimensional Fund Advisors LP1 33,140,890 8.4 % Building One 6300 Bee Cave Rd. Austin, TX 78746 Common The Vanguard Group, Inc.2 30,385,638 7.8 % 100 Vanguard Blvd. Malvern, PA 19355 Common BlackRock, Inc.3 24,740,122 6.3 % 55 East 52ndStreet New York, NY 10055 Common Van Eck Associates Corporation4 23,577,634 6.0 % 666 Third Ave. – 9thFloor New York, NY 10017 1 Based solely on a Schedule 13G/A filed on February 8, 2017, with the SEC by Dimensional Fund Advisors LP. Dimensional Fund Advisors LP has sole voting power with respect to vote at32,712,893 shares and sole dispositive power with regard to 33,140,890 shares.2 Based solely on a Schedule 13G/A filed on February 13, 2017, with the Annual Meeting are shown inSEC by The Vanguard Group, Inc. The Vanguard Group, Inc. has sole voting power with respect to 460,380 shares, shared voting power with respect to 66,071 shares, sole dispositive power with respect to 29,879,375 shares, and shared dispositive power with respect to 506,263 shares.3 Based solely on a Schedule 13G/A filed on January 24, 2017, with the table below:Title of Class Name & Address of
Beneficial OwnerAmount & Nature of
Beneficial OwnershipPercent of
Class Common Van Eck Associates Corporation1 47,063,834 12.4 % 666 Third Ave. – 19thFloor New York, NY 10017 Common The Vanguard Group, Inc.2 25,273,086 6.6 % 100 Vanguard Blvd. Malvern, PA 19355 Common BlackRock, Inc.3 20,427,903 5.4 % 55 East 52ndStreet New York, NY 10055 1Based solely on a Schedule 13G/A filed on February 11, 2016,SEC by BlackRock, Inc. BlackRock, Inc. has sole voting power with respect to 23,882,776 shares and sole dispositive power with regard to 24,740,122 shares.4 Based solely on a Schedule 13G/A filed on February 13, 2017, with the SEC by Van Eck Associates Corporation. Van Eck Associates Corporation has sole voting and dispositive power with respect to all shares. 2Based solely on a Schedule 13G/A filed on February 11, 2016, with the SEC by The Vanguard Group, Inc. The Vanguard Group, Inc. has sole voting power with respect to 469,494 shares, shared voting power with respect to 45,100 shares, sole dispositive power with respect to 24,778,664 shares, and shared dispositive power with respect to 494,422 shares.3Based solely on a Schedule 13G/A filed on January 26, 2016, with the SEC by BlackRock, Inc. BlackRock, Inc. has sole voting power with respect to 19,560,312 shares and sole dispositive power with regard to 20,427,903 shares.125 Years2016 Proxy Statement81SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCESection 16(a) of the Exchange Act requires our directors, executive officers and holders of more than 10% of our common stock to file with the SEC reports regarding their ownership and changes in their ownership of our stock. These persons are required by the SEC to furnish us with copies of all Section 16(a) forms they file.Based solely on our review of copies of such forms, or written representations from certain reporting persons that no such forms were required, we believe that during the calendar year ended December 31, 2015, all filing requirements applicable to our officers, directors and greater than 10% owners of our common stock were complied with.82 www.hecla-mining.com125 YearsGENERAL INFORMATION ABOUT THE MEETINGRecord Date, Shares Outstanding and QuorumIf you were a holder of Hecla common stock either as a“shareholder of record”or as the“beneficial owner”of shares held in street name as of the Record Date, you may vote your shares at the Annual Meeting. As of the Record Date, 380,842,223 shares of common stock were outstanding and entitled to vote at the Annual Meeting. Shares of our common stock that are held by us in our treasury are not counted as shares outstanding and will not be voted. Each shareholder has one vote for each share of common stock held as of the Record Date.A quorum must be present in order for business to be conducted at the Annual Meeting. A quorum consists of the presence at the Annual Meeting, in person or represented by proxy, of a majority of the outstanding shares of our common stock as of the Record Date. Shares represented by proxies marked “Abstain” and “broker non-votes” are counted in determining whether a quorum is present for the transaction of business at the Annual Meeting. A “broker non-vote” occurs when a broker or other nominee holding shares for a beneficial owner does not vote on a particular proposal because the broker or nominee does not have discretionary voting power and has not received instructions from the beneficial owner.
Under NYSE rules, if our shares are held in “street name” and you do not indicate how you wish to vote, your broker is only permitted to exercise its discretion to vote your shares on certain “routine” matters. Proposal 2 (Ratification of Appointment of BDO USA, LLP) and Proposal 6 (Approval of Amendment to the Company’s Certificate of Incorporation to Increase Authorized Shares) are “routine” matters. Proposal 1 (Election of Directors), Proposal 3 (Approval of Named Executive Officer Compensation), Proposal 4 (Approval of Say-on-Frequency), Proposal 2 (Approval of Amendments to the Company’s Certificate of Incorporation and Bylaws to Remove Certain 80% Supermajority Voting Provisions), Proposal 3 (Approval of Amendments to the Company’s Certificate of Incorporation and Bylaws to Permit Shareholders to Call Special Meetings of Shareholders Under Certain Circumstances), and Proposal 5 (Approval of Executive Compensation), are not “routine” matters, whereas Proposal 4 (Ratification of Appointment of BDO USA, LLP) is a “routine” matter. Accordingly, if you do not direct your broker how to vote for a director in Proposal 1 or how to vote for Proposals 2, 3 and 5 (Approval of Amendment and Restatement of Director Stock Plan), Proposal 7 (Approval of Amendments to the Company’s Certificate of Incorporation and Bylaws to Remove Certain 80% Supermajority Voting Provisions), and Proposal 8 (Approval of Amendments to the Company’s Certificate of Incorporation and Bylaws to Permit Shareholders to Call Special Meetings Under Certain Circumstances), are “non-routine” matters. Accordingly, if you do not direct your broker how to vote for a director in Proposal 1 or how to vote for Proposals 3, 4, 5, 7 and 8, your broker is not permitted to exercise discretion and is not permitted to vote your shares on such matters. This is called a “broker non-vote.”
Proposal 1 – Election of Directors. Pursuant to our Bylaws, each director will be elected by a majority of votes cast at the Annual Meeting, whether in person or by proxy. A properly executed proxy card marked “WITHHOLD” with respect to the election of directors will not be voted (and therefore will not be considered a vote cast) and will not count “FOR” the nominee or nominees for which the vote was withheld. Any shares not voted (whether by abstentions, broker non-votes or otherwise) have the same impact as an instruction to withhold authority in the election of directors, and will not affect the election of directors.
You may vote “FOR” the nominees for election as directors, or you may “WITHHOLD” authority to vote for one or more of the nominees.
Please note that this election of directors is an uncontested election, meaning that there is only one candidate for each of the three directorships to be elected at the Annual Meeting. In the future, if an election for a board seat is contested at an annual or special meeting, the candidate who receives the most “FOR” votes would be the winner of the election (assuming a quorum is present at the meeting) because instructions to withhold authority, abstention and broker non-votes are not considered to be votes cast for purposes of determining a majority vote under our Bylaws. As a result, all director elections under our Bylaws are effectively determined in the same manner as would be the case under a “plurality” voting standard.
Proposal 2 – Approval of Amendments to the Company’s Certificate of Incorporation and Bylaws to Remove Certain 80% Supermajority Voting Provisions. Pursuant to our Bylaws, each director will be elected by the affirmative vote of a majority of votes cast at the Annual Meeting, whetherin person or by proxy. Under a majority of votes cast standard, the shares voted “for” a nominee must exceed the number voted “against” that nominee. Shareholders may vote “for,” “against” or “abstain” with respect to this proposal. Abstentions and broker non-votes are not counted as votes cast, and thus will have no effect on the outcome of the vote. A properly executed proxy card marked “AGAINST” with respect to the election of directors will have an effect on the outcome of the vote. If the votes cast “against” an incumbent director exceeds the number of votes cast “for” the director, the director will not be elected, will remain on the board as a holdover director and must stand for election at the next annual meeting of shareholders, absent his or her earlier resignation or removal. See “Corporate Governance and Related Matters” and “Corporate Governance Guidelines” on page 24 for a description of our director resignation policy.
You may vote “FOR,” “AGAINST,” or “ABSTAIN” on the nominees for election as directors.
Proposal 2 – Ratification of the Appointment of BDO USA, LLP as Independent Auditors.Under the Sarbanes-Oxley Act of 2002, the Audit Committee has the sole authority to appoint the independent registered public accounting firm for the Company. However, the Board feels that it is important for the shareholders to approve the selection
2017 Proxy Statement93
| GENERAL INFORMATION ABOUT THE MEETING |
of BDO USA, LLP. This proposal requires the affirmative vote of a majority of votes cast at the Annual Meeting, whether in person or by proxy. Abstentions and broker non-votes are not counted as votes cast, and thus will have no effect on the outcome of the vote. Votes marked “against” will have an effect on the outcome of the vote. The appointment of our independent registered public accounting firm for calendar year 2017 is considered a “routine” matter and brokers that are not directed how to vote are permitted to vote shares held in street name for their customers on this proposal.
You may vote “FOR,” “AGAINST,” or “ABSTAIN” on the proposal to ratify the appointment of BDO USA, LLP as our independent registered public accounting firm for 2017.
Proposal 3 – Advisory Vote to Approve Executive Compensation.For more information on approval of our executive compensation see “Proposal 3 – Advisory Vote to Approve Executive Officer Compensation” beginning on page 75. The advisory vote on executive compensation will require the affirmative vote of a majority of votes cast at the Annual Meeting, whether in person or by proxy. Under a majority of votes cast standard, the shares voted “for” Proposal 3 must exceed the number voted “against” Proposal 3 for the proposal to be approved. Abstentions and broker non-votes are not counted as votes cast for this purpose and will have no effect on the outcome of the vote. Votes marked “against” will have an effect on the outcome of the vote. Even though your vote is advisory and therefore will not be binding on the Company, the Board’s Compensation Committee will review the voting results and take them into consideration when making future decisions regarding executive compensation.
You may vote “FOR,” “AGAINST” OR “ABSTAIN” on the proposal to approve the compensation of our named executive officers.
Proposal 4 – Advisory Vote on the Frequency of Future Advisory Votes on Executive Compensation. The frequency of the advisory vote on executive compensation receiving the greatest number of votes (every one year, every two years, or every three years) will be considered the frequency recommended by shareholders. Abstentions and broker non-votes will not affect the outcome of voting on this proposal. Even though your vote is advisory and therefore will not be binding on the Company, the Board will review the voting results and take them into consideration when making future decisions regarding the frequency of the advisory vote on executive compensation.
You may vote to have the advisory vote held every “ONE,” “TWO” or “THREE” years, or you may “ABSTAIN.”
Proposal 5 – Approval of the Amendment and Restatement of the Hecla Mining Company Stock Plan for Nonemployee Directors.This proposal requires the affirmative vote of a majority of votes cast at the Annual Meeting, whether in person or by proxy. Under a majority of votes cast standard, the shares voted “for” Proposal 5 must exceed the number voted “against” Proposal 5 for the proposal to be approved. Abstentions not voted are not counted as cast for this purpose and will have no effect on the outcome of the vote. Votes marked “against” will have an effect on the outcome of the vote.
You may vote “FOR,” “AGAINST” OR “ABSTAIN” on the proposal to approve the amended and restated Hecla Mining Company Stock Plan for Nonemployee Directors.
Proposal 6 – Approval of the Amendment to our Certificate of Incorporation Increasing the Number of Authorized Shares of our Common Stock.Adoption of the proposed amendment to our Certificate of Incorporation increasing the number of authorized shares of our common stock will require the affirmative vote of the holders of a majority of outstanding shares of common stock entitled to vote thereon. Abstentions will have the effect of a vote against the proposal. A broker holding shares in street name may vote on this “routine” proposal in the absence of instructions from the beneficial owner. If a broker does not exercise this authority, it will have the effect of a vote against the proposal.
You may vote “FOR,” “AGAINST” OR “ABSTAIN” on the proposal to approve the amendment to our Certificate of Incorporation Increasing the Number of Authorized Shares of our Common Stock.
Proposal 7 – Approval of Amendments to our Certificate of Incorporation and Bylaws to Remove Certain 80% Supermajority Voting Provisions.Approval of this proposal requires the affirmative vote of 80% of our outstanding shares of common stock. Abstentions and broker non-votes have the effect of a vote against this proposal.
You may vote “FOR,” “AGAINST” OR “ABSTAIN” on the proposal to approve the amendments to our Certificate of Incorporation and Bylaws to Remove Certain 80% Supermajority Voting Provisions.
Proposal 8 – Approval of Amendments to our Certificate of Incorporation and Bylaws to Permit Shareholders to Call Special Meetings of Shareholders Under Certain Circumstances.Approval of this proposal requires the affirmative vote of 80% of our outstanding shares of common stock. Abstentions and broker non-votes have the effect of a vote against this proposal. 94www.hecla-mining.com You may vote “FOR,” “AGAINST” OR “ABSTAIN” on the proposal to approve the amendments to our Certificate of Incorporation and Bylaws to Permit Shareholders to Call Special Meetings of Shareholders Under Certain Circumstances. Discretionary voting by proxies on other matters.Aside from the: (i) election of two directors; (ii) ratification of the appointment of BDO USA, LLP; (iii) approval of executive compensation; (iv) advisory vote on Say-on-Frequency; (v) approval of amended and restated Hecla Mining Company Stock Plan for Nonemployee Directors; (vi) approval of amendment to our Certificate of Incorporation increasing authorized shares; (vii) approval ofamendments to our Certificate of Incorporation and Bylaws to remove certain 80% supermajority voting provisions; and (viii) approval of amendments to our Certificate of Incorporation and Bylaws to permit shareholders to call special meetings of shareholders under certain circumstances, we do not know of any other proposal that may be presented at the Annual Meeting. However, if any other business is properly presented at the Annual Meeting, your proxy gives authority to Phillips S. Baker, Jr. and Michael B. White to vote on such matters at their discretion. No other proposals have been timely submitted in accordance with our Bylaws and we are not aware of any matters other than those described in this Proxy Statement that will be acted upon at the Annual Meeting. A “proxy” is your legal appointment in a written document of another person to vote the shares that you own in accordance with your instructions. The persons you appoint to vote your shares are also called proxies. We have designated Phillips S. Baker, Jr., our President and CEO, and Michael B. White, our Corporate Secretary, asproxies for the Annual Meeting. When you sign the proxy card, you appoint Phillips S. Baker, Jr. and Michael B. White as your representatives at the Annual Meeting. As your representatives, they will vote your shares at the Annual Meeting (including any adjournment or postponement) as you have instructed them on your proxy card. Proxies Submitted but not Voted If you properly sign and return your proxy card or complete your proxy via the telephone or Internet, your shares will be voted as you direct. If you sign and return your proxy but do not specify how you want your shares voted they will be voted FOR (i) the election of all nominees for Director as set forth under “Election of Directors;” (ii) ratification of the appointment of the independent registered public accountants; (iii) the advisory vote on executive compensation; (iv) a frequency vote on executive compensation of “One Year;” (v) the amended and restatedHecla Mining Company Stock Plan on Nonemployee Directors; (vi) the increase in authorized shares of our outstanding common stock; (vii) the amendments to the Company’s Certificate of Incorporation and Bylaws to remove certain 80% supermajority voting provisions; and (viii) the amendments to the Company’s Certificate of Incorporation and Bylaws to permit shareholders to call special meetings of shareholders under certain circumstances. If your shares are held in your name, you have the right to vote in person at the Annual Meeting. If your shares are held in a brokerage account or by another nominee, you are considered the beneficial owner of shares held in street name. Since a beneficial owner is not the shareholder of record, you may not vote these shares in person at the Annual Meeting unless you obtain a “legal proxy” from your broker or nominee that holds your shares, giving you the right to vote the shares at the Annual Meeting. Whether you hold shares directly as a shareholder of record or beneficially in street name, you may vote withoutattending the Annual Meeting. You may vote by granting a proxy or, for shares held beneficially in street name, by submitting voting instructions to your broker or nominee. In most cases, you will be able to do this by using the Internet, by telephone, or by mail if you received a printed set of the Proxy Materials. To vote by mail: Mark, sign and date your proxy card; and Return your proxy card in the enclosed postage-paid envelope. 2017 Proxy Statement95 To vote by proxy over the Internet: Follow the instructions provided; and To vote by proxy by telephone: To vote in person if you are a registered shareholder of record: Deliver your completed proxy card or ballot in person. To vote in person if you hold your shares in “street name” (through a broker, financial institution or other nominee): Obtain from your broker a document that allows you to vote the shares held for your benefit, attach that document to To vote your 401(k) Plan shares: If you participate in the Hecla Mining Company Capital Accumulation Plan and hold shares of our common stock in your plan account as of the Record Date, you will receive a request for voting instructions from the plan trustee (“Vanguard”) with respect to your plan shares. You are entitled to direct Vanguard how to vote your plan shares. If you do not provide voting instructions to Vanguard by 11:59 p.m., Eastern Daylight Time, on May 24, 2017, the Hecla shares in your plan account will be voted by Vanguard in the same proportion as the shares held by Vanguard for which voting instructions have been received from other participants in the plan. The deadline for voting by telephone or electronically is 11:59 p.m., Eastern Daylight Time, on May 24, 2017. If you are a registered shareholder and attend the meeting, you may deliver your completed proxy card in person. “Streetname” shareholders who wish to vote at the meeting will need to obtain a proxy form from the institution that holds their shares. If you are a shareholder of record, you may revoke your proxy and change your vote at any time before your proxy is voted at the Annual Meeting, in any of the following ways: Hecla Mining Company By submitting a later-dated proxy to our Corporate Secretary prior to the vote at the Annual Meeting; or By voting in person at the Annual Meeting. If you hold your shares in street name, you should contact your broker for information on how to revoke your voting instructions and provide new voting instructions. If you hold your shares in the Hecla Mining Company Capital Accumulation Plan, you may revoke your previously provided voting instructions by filing with Vanguard either a written notice of revocation or a properly executed proxy bearing a later date prior to the deadline for voting plan shares. If you hold your Hecla shares outside of the plan, you may vote those shares separately. 96www.hecla-mining.com Rules for Attending the Annual Meeting Only a record or beneficial owner of Hecla’s common stock as of the Record Date, the close of business on March 27, 2017, or a valid proxy or representative of such shareholder, may attend the Annual Meeting in person, and they must comply with the admission requirements below. Guests of shareholders will not be admitted to the Annual Meeting.If you do not comply with the requirements set forth below you will not be admitted to the Annual Meeting. All attendees must register at the registration desk and present appropriate documentation at the registration desk prior to being admitted to the meeting, which includes: our transfer agent. For the safety of attendees, all boxes, handbags and briefcases are subject to inspection upon registration. Cameras (including cell phones with photographic capabilities), audio/video recording devices and other electronic devices are not permitted at the meeting. We will bear all costs and expenses relating to the solicitation of proxies, including the costs of preparing, assembling, printing, mailing and distributing these Proxy Materials. We have hired Broadridge to assist us in mailing these Proxy Materials. Additionally, we have retained Morrow Sodali LLC, 470 West Ave., Stamford, Connecticut to assist in the solicitation of votes for an estimated fee of $9,000, plus reimbursement of certain out-of-pocket expenses. Solicitations may be made personally or by mail, facsimile, telephone, or via the Internet. However, if youchoose to access the Proxy Materials over the Internet, you are responsible for any Internet access charges you may incur. Arrangements will be made with brokerage firms and other custodians, nominees and fiduciaries for forwarding solicitation materials to the beneficial owners of the shares of common stock held by such persons, and we will reimburse such brokerage firms, custodians, nominees and fiduciaries for reasonable out-of-pocket expenses incurred by them in connection with such activities. 2017 Proxy Statement97 Preliminary voting results will be announced at the Annual Meeting. We will publish final results in a Current Report on Form 8-K that we expect to file with the SEC within four business days of the Annual Meeting. After the Form 8-K is filed, you may obtain a copy by visiting the SEC’s website at www.sec.gov, visiting our website atwww.hecla-mining.com or contacting our Investor Relations Department by writing to Investor Relations Department, Hecla Mining Company, 6500 N. Mineral Dr., Suite 200, Coeur d’Alene, ID 83815-9408 or by sending an email to hmc-info@hecla-mining.com. Our Annual Report to Shareholders, consisting of our Form 10-K for the year ended December 31, 2016, and other information, is being made available to shareholders with this Proxy Statement. Shareholders may obtain a copy of our Annual Report for the calendar year ended December 31, 2016, without cost, by written or oral request to: Hecla Mining Company You can also access our SEC filings, including our Annual Reports on Form 10-K, and all amendments thereto, on the SEC website at https://www.sec.gov/edgar.shtml or on our website at http://www.hecla-mining.com. Householding of Proxy Materials Many brokerage firms, financial institutions and transfer agents have instituted “householding” procedures for beneficial owners and shareholders of record. Householding is when a single copy of our Proxy Materials is sent to a household in which two or more shareholders reside if they appear to be members of the same family. This practice is designed to reduce duplicate mailings and save significant printing and postage costs, as well as natural resources. If you are a beneficial owner, you may have received householding information from your broker, financial institution or other nominee shareholder in the past. Please contact the shareholder of record directly if you have questions, require additional copies of our Proxy Materials,or wish to revoke your decision to household and thereby receive multiple copies. You should also contact the shareholder of record if you wish to institute householding. These options are available to you at any time. PROVISIONS OF OUR BYLAWS WITH RESPECT TO SHAREHOLDER PROPOSALS AND NOMINATIONS FOR ELECTION AS DIRECTORS You may submit proposals for consideration at future annual shareholder meetings, including director nominations, as follows: Shareholder proposals at the 2018 Annual Meeting of Shareholders Our Bylaws establish procedures governing the eligibility of nominees for election to our Board, and the proposal of business to be considered by our shareholders at an Annual Meeting of Shareholders. For nominations or other business to be properly brought before an Annual Meeting of Shareholders by a shareholder, the shareholder must have given timely notice thereof in writing to our Corporate Secretary. To be timely, a shareholder’s notice shall be delivered to our Corporate Secretary at our principal executive offices located at 6500 N. Mineral Drive, Suite 200, Coeur d’Alene, Idaho 83815-9408, not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s Annual Meeting of Shareholders;provided,however, that in the event the date of the Annual Meeting of Shareholders is advanced by more than 30 days or delayed by more than 60 days from such anniversary date, notice by the shareholder to be timely must be delivered not earlier than the 120th day prior to such Annual Meeting of Shareholders and not later than the close of business on the later of the 90th day prior to such Annual Meeting of Shareholders or the 10th day following the day on which public announcement of the date of such meeting is first made. Adjournment of a meeting shall not commence a new time period for giving shareholder’s notice as described above. Such shareholder’s notice shall set forth: As to each person whom the shareholder proposes to nominate for election or re-election as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act and Rule 14a-11 thereunder, including such person’s written consent to being named in our Proxy Statement as a nominee and to serve as a director if elected; (i) the name and address of such shareholder, as they appear on the Company’s books, and of such beneficial owner; and The applicable time period for timely shareholder submissions pursuant to the above provisions for the 2018 Annual Meeting of Shareholders is January 26, 2018 (the 120th day preceding the anniversary of the The chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the procedures set forth in the Bylaws and, if any proposed nomination or business is not in compliance with the Bylaws, to declare that such defective proposal shall be disregarded. The foregoing time limits also apply in determining whether notice is timely for purposes of rules adopted by the SEC relating to the exercise of discretionary voting authority. 100 Table of Contents Shareholder proposals to be included in next year’s Proxy Statement In addition to the foregoing section, we will comply with Rule 14a-8 under the Exchange Act with respect to any shareholder proposals that meet that rule’s requirements. We will review shareholder proposals intended to be included in our Proxy Statement for the 2018 Annual Meeting of Shareholders which are received by us at our principal executive offices located at 6500 N. Mineral Drive, Suite 200, Coeur d’Alene, Idaho 83815-9408, nolater than December 11, 2017. Such proposals must be submitted in writing and should be sent to the attention of our Corporate Secretary. You may contact the Corporate Secretary at our principal executive offices for a copy of the relevant Bylaw provisions regarding the requirements for making shareholder proposals and nominating director candidates. As of the date of this Proxy Statement, the Board is not aware of any matters that will be presented for action at the Annual Meeting other than those described above. However, should other business properly be brought before the Annual Meeting, the proxies will be voted thereon at the discretion of the persons acting thereunder. Michael B. White April 10, 2017 2017 Proxy Statement101 HECLA MINING COMPANY STOCK PLAN 1.Name of Plan. This plan shall be known as the “Hecla Mining Company Stock Plan for Nonemployee Directors”and is hereinafter referred to as the “Plan.” 2.Purpose of Plan. The purpose of the Plan is to enable Hecla Mining Company, a Delaware corporation (the “Corporation”), to attract and retain qualified persons to serve as members of the Corporation’s Board of Directors (the “Board”) from time to time (each, a “Director”), to enhance the equity interest of Directors in the Corporation and to solidify the common interests of Directors and stockholders of the Corporation (“Stockholders”) in enhancing the value of the Corporation’s common stock, par value $0.25 per share (the “Common Stock”). The Plan seeks to encourage the highest level of Director performance by providing Directors with a proprietary interest in the Corporation’s performance and progress by crediting them with shares of Common Stock annually in satisfaction of their annual retainer. 3.Effective Date and Term. The Plan shall be effective as of February 21, 2017 (the “Effective Date”) (the date that it was approved by the Board), and shall remain in effect until (a) May 15, 2027 if approved by the Stockholders at the 2017 Annual Meeting of Stockholders, or (b) July 17, 2017 if not so approved by the Stockholders. 4.Eligible Participants. Each Director who is not a full-time employee of the Corporation or any of its affiliates (“Nonemployee Director”) shall be a participant (“Participant”) in the Plan. Each credit of shares of Common Stock pursuant to the Plan shall be evidenced by a written agreement duly executed and delivered by or on behalf of the Corporation and a Participant, if such an agreement is required by the Corporation to ensure compliance with applicable laws and regulations. Following the Effective Date, no Participant shall be eligible to receive awards under any other equity compensation plan of the Corporation or an affiliate while a Participant in the Plan. 5.Credit of Shares. (a) Commencing as of the Effective Date, in satisfaction of the annual retainer payable to each Participant for service on the Board (the “Annual Retainer”), each Participant shall be credited with shares of Common Stock subject to applicable restrictions set forth in Section 6 below with respect to payment. Subject to Section 5(b) below, each Participant shall be credited each year for service on the Board with a number of shares of Common Stock determined by dividing the amount of the Annual Retainer for the applicable year by the average closing price for the Common Stock on the New York Stock Exchange (or if not listed on such exchange on any other national securities exchange on which the shares of Common Stock are listed) for the prior calendar year (the “Stock Retainer”). The Stock Retainer for each year shall be credited as of September 30 of each year during the term of the Plan, commencing as of the Effective Date. A minimum of 25% of each Stock Retainer (or a greater percentage up to 100% if the Participant so elects prior to the first day of the year in which the applicable Stock Retainer is to be credited) shall be contributed to a grantor trust established by the Corporation pursuant to Section 6(g) below and subject to its terms (the “Trust Shares”). The portion of the applicable Stock Retainer that is not contributed to a grantor trust shall be transferred to the Participant as soon as administratively practicable following the applicable September 30. (b) Any person who becomes a Nonemployee Director following September 30 of any year during the term of the Plan, whether by appointment or election as a Director or by change in status from a full-time employee, shall be credited, on becoming a Nonemployee Director, with a portion of the compensation to be paid to such Participant until the Corporation’s next Annual Meeting of Stockholders, with a number of shares of Common Stock equal to the product of the number of shares determined pursuant to Section 5(a) above times a fraction, the numerator of which is the number of full weeks remaining until September 30 of the following year and the denominator of which is 52; provided that no fractional shares shall be credited and the number of shares of Common Stock to be credited pursuant to this Section 5(b) shall be rounded up to the next whole number. A minimum of 25% of any Stock Retainer payable pursuant to this Section 5(b) (or a greater percentage up to 100% if the Participant so elects within 30 days after becoming a Participant in the Plan (or such other time period permitted under Section 409A (“Section 409A”) of the Internal Revenue A-1www.hecla-mining.com APPENDIX A Code of 1986, as amended)) shall be Trust Shares and any portion the applicable Stock Retainer that is not contributed to a grantor trust shall be transferred to the Participant as soon as administratively practicable following the time the Participant becomes a Nonemployee Director. 6.Delivery of Trust Shares. (a) The Trust Shares, together with the “Dividend Equivalent Amount” (as defined in Section 6(c) below) with respect thereto, shall be delivered to the Participant or the Participant’s estate or legal guardian in shares of Common Stock on, or beginning on, the Delivery Date (as defined in Section 6(b) below), in accordance with this Section 6. The “Delivery Date” means the first date upon which one of the following events occurs: Retirement of the Participant from service as a Director in accordance with the Corporation’s By-Laws then in effect; (c) The “Dividend Equivalent Amount” with respect to any Trust Shares means (i) the amount of cash, plus the fair market value as determined by the Board on the date of distribution of any property, other than stock of the Corporation, plus (ii) any shares of stock of the Corporation, in each case which the Participant would have received as dividends or other distributions with respect to the Trust Shares, if the Trust Shares had been delivered to the Participant as shares of Common Stock at the time they were credited to the Participant under this Plan, plus (iii) interest on the amount described in clauses (i) plus (ii) at a rate equal to the Corporation’s cost of funds, from the date or date(s) such dividends or other distributions would have been received through the date the Trust Shares are delivered. (d) If a Participant’s Delivery Date is described in clause (iv) (normal cessation of service), clause (v) (Change in Control) or clause (vi) (specified date) of Section 6(b) above, all Trust Shares and all Dividend Equivalent Amounts with respect thereto shall be delivered at one time, as soon as practicable after the Delivery Date. If a Participant’s Delivery Date is described in clause (i) (death), clause (ii) (Disability) or clause (iii) (retirement) of Section 6(b) above, the Trust Shares and the Dividend Equivalent Amounts with respect thereto shall be delivered at one time, as soon as practicable after the Delivery Date, unless the Participant has in effect a valid Installment Delivery Election pursuant to Section 6(e) below to have the Trust Shares and Dividend Equivalent Amounts delivered in yearly installments over five, 10 or 15 years (the “Applicable Delivery Period”). If the Participant does have in effect a valid Installment Delivery Election, then the Trust Shares, together with the Dividend Equivalent Amounts with respect thereto, shall be delivered in equal yearly installments over the Applicable Delivery Period, with the first such installment being delivered on the first anniversary of the Delivery Date; provided, that if in order to equalize such installments, fractional shares would have to be delivered, such installments shall be adjusted by rounding to the nearest whole share. If any Trust Shares and Dividend Equivalent Amounts of a Participant are to be delivered after the Participant has died or become legally incompetent, they shall be delivered to the Participant’s estate or legal guardian, as the case may be, in accordance with the foregoing schedules; provided, that if the Participant dies with a valid Installment Delivery Election in effect, and the legal representatives of the Participant’s estate so request, the Board may (but shall not be obligated to) deliver all remaining undelivered Trust Shares and Dividend Equivalent Amounts to the Participant’s estate immediately. References to the Participant in this Plan shall be deemed to refer to the Participant’s estate or legal guardian, where appropriate. 2017 Proxy StatementA-2 (e) An “Installment Delivery Election” means a written election by a Participant, on such form as may be prescribed by the Board, to receive delivery of Trust Shares and Dividend Equivalent Amounts in installments over a period of five, 10 or 15 years, as more fully described in Section 6(d) above. Once made, an Installment Delivery Election may be superseded by another Installment Delivery Election. However, in order for any initial or superseding Installment Delivery Election to be valid, it must be received by the Corporation prior to the first day of the year in which the applicable shares of Common Stock are credited to the Participant under Section 5. In the case of multiple Installment Delivery Elections and/or revocations by any Participant, the most recent valid Installment Delivery Election or revocation in effect as of the Delivery Date shall be controlling. No Delivery Elections once made can be accelerated and any elections to further defer Delivery Elections must be made in accordance with the following: With respect to any Delivery Election issuance to be made at a specified time or pursuant to a fixed schedule pursuant to an election at the time of such initial deferral, such election must be made at least 12 months prior to the date of the first scheduled Delivery Election issuance under such initial election. (f) “Disability” shall mean (i) the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, (ii) the Participant is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident and health plan covering service providers of the Corporation or (iii) any other definition provided under Section 409A. Unless otherwise provided by the Board, in the event that the timing of payments under the Plan (that would otherwise be considered “deferred compensation” subject to Section 409A) would be accelerated upon the occurrence of a Disability, no such acceleration shall be permitted unless the Disability also satisfies the definition of “disability” pursuant to Section 409A. (g) The Corporation has created a grantor trust (the “Trust”) to assist it in accumulating the shares, cash and other property needed to fulfill its obligations under this Section 6. On each date when a Stock Retainer is credited to a Participant, the Corporation shall contribute Trust Shares to the Trust. However, Participants shall have no beneficial or other interest in the Trust and the assets thereof, and their rights under the Plan shall be as general creditors of the Corporation, unaffected by the existence or nonexistence of the Trust, except that deliveries of Trust Shares and payments of cash and other property to Participants from the Trust shall, to the extent thereof, be treated as satisfying the Corporation’s obligations under this Section 6. 7.Share Certificates; Voting and Other Rights. The certificates for shares delivered to a Participant or the trustee of the Trust, if any (the “Trustee”), pursuant to Section 6 above shall be issued in the name of the Participant or the Trustee, as the case may be, and the Participant or the Trustee, as the case may be, shall be entitled to all rights of a Stockholder with respect to Common Stock for all such shares issued in his name, including the right to vote the shares; provided, however, that the Participant or the Trustee, as the case may be, shall not receive dividends and other distributions paid or made with respect to such shares in addition to the Dividend Equivalent Amounts. 8.Change in Control. A “Change in Control” shall be deemed to have occurred if any of the following events shall have happened: A-3www.hecla-mining.com Notwithstanding any provision of this definition to the contrary, in the event that any amount or benefit under the Plan constitutes deferred compensation under Section 409A and the settlement of or distribution of such amount or benefit is to be triggered by a Change in Control, then such settlement or distribution shall be subject to the event constituting the Change in Control also constituting a “change in control event” under Section 409A. 9.General Restrictions. (a) Notwithstanding any other provision of the Plan or agreements made pursuant thereto, the Corporation shall not be required to issue or deliver any certificate or certificates for shares of Common Stock under the Plan prior to fulfillment of all the following conditions: 2017 Proxy StatementA-4 (b) Nothing contained in the Plan shall prevent the Corporation from adopting other or additional compensation arrangements for the Participants. (c) The Corporation shall not be required to issue or deliver any shares of Common Stock under the Plan if such issuance or delivery would constitute a violation of any provision of any law or regulation of any governmental authority. 10.Shares Available. (a) Subject to Section 11 below, the maximum number of shares of Common Stock which may be credited as Stock Retainers pursuant to the Plan is (i) 1,000,000 as of the Effective Date, and (ii) 3,000,000 as of the Corporation’s 2017 Annual Meeting of Stockholders, subject to the approval of the Stockholders at the 2017 Annual Meeting. Shares of Common Stock issuable under the Plan shall be taken from authorized but unissued shares or from treasury shares of the Corporation as shall from time to time be necessary for issuance pursuant to the Plan. (b) The maximum value of Stock Retainers credited during any calendar year to any Nonemployee Director, taken together with any cash fees paid to such Nonemployee Director for Board service during the calendar year and the value of awards granted to the Nonemployee Director under any other equity compensation plan of the Corporation or an affiliate during the calendar year, shall not exceed the following in total value (calculating the value of any Stock Retainers or other equity compensation plan awards based on the grant date fair value for financial reporting purposes): (i) $900,000 for the Chair of the Board and (ii) $675,000 for each Nonemployee Director other than the Chair of the Board; provided, however, that awards granted to Nonemployee Directors upon their initial election to the Board or the board of directors of an affiliate shall not be counted against the limits under this paragraph. 11.Change in Capital Structure. Subject to any required action by the Stockholders, in the event of any change in the Common Stock effected without receipt of consideration by the Corporation, whether by reason of any stock dividend, stock split, split-up, split-off, spin-off, combination of shares, exchange of shares, warrants or rights offering to purchase Common Stock at a price below its fair market value, reclassification, recapitalization, reorganization, reincorporation, merger, consolidation or other change in capitalization, appropriate adjustment shall be made by the Board in the number and kind of shares subject to the Plan and any other relevant provisions of the Plan, in order to prevent dilution or enlargement of Participants’ rights under the Plan. 12.Administration; Amendment. (a) The Board shall have such powers and authorities related to the administration of the Plan as are consistent with the Corporation’s certificate of incorporation and bylaws and applicable law. The Board shall have the power and authority to delegate its responsibilities hereunder to its Compensation Committee or such other committee as determined by the Board (the “Committee”), which shall have full authority to act in accordance with its charter (as in effect from time to time), and with respect to the power and authority of the Board to act hereunder, all references to the Board shall be deemed to include a reference to the Committee, unless such power or authority is specifically reserved by the Board. Except as may be required by applicable law, regulatory requirement or the certificate of incorporation or the bylaws of the Corporation, the Board shall have full power and authority to take all actions and to make all determinations required or provided for under the Plan, and shall have full power and authority to take all such other actions and make all such other determinations that the Board deems to be necessary or appropriate to the administration of the Plan. All actions, determinations and decisions by the Board or the Committee under the Plan shall be in the sole discretion of the Board (or the Committee, as applicable) and shall be final, binding and conclusive on all persons. (b) The Board may, at any time and from time to time, amend or suspend the Plan. An amendment shall be contingent on approval of the Stockholders to the extent stated by the Board, required by applicable law or required by applicable securities exchange listing requirements. No amendment or suspension of the Plan shall, without the consent of the affected Participant, materially impair rights or obligations of such Participant. A-5www.hecla-mining.com (c) The Board may terminate the Plan at any time subject to the requirements of Section 409A. 13.Grandfathered Amounts. Notwithstanding anything in this Plan to the contrary, any amounts accrued and vested by Participants under the Plan prior to January 1, 2005 will be paid under the terms of the Plan as then in effect. 14.Miscellaneous. (a) Nothing in the Plan shall be deemed to create any obligation on the part of the Board to nominate any Director for reelection by the Stockholders or to limit the rights of the Stockholders to remove any Director. (b) The Corporation shall have the right to require, prior to the issuance or delivery of any shares of Common Stock pursuant to the Plan, payment by a Participant of any taxes required by law with respect to the issuance or delivery of such shares. 15.Section 409A. (a) Notwithstanding any provision of the Plan to the contrary, it is intended that the provisions of the Plan comply with Section 409A, and all provisions of the Plan shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes or penalties under Section 409A. Each Participant is solely responsible and liable for the satisfaction of all taxes and penalties that may be imposed on or in respect of such Participant in connection with the Plan (including any taxes and penalties under Section 409A), and the Corporation shall not have any obligation to indemnify or otherwise hold any Participant (or beneficiary) harmless from any or all such taxes or penalties. With respect to any amount under the Plan that is considered “deferred compensation” subject to Section 409A, references in the Plan to “termination of employment” (and substantially similar phrases) shall mean “separation from service” within the meaning of Section 409A. For purposes of Section 409A, each of the payments that may be made under the Plan is designated as a separate payment. (b) Notwithstanding anything in the Plan to the contrary, if a Participant is a “specified employee” within the meaning of Section 409A, no payments under the Plan that are “deferred compensation” subject to Section 409A and that would otherwise be payable upon the Participant’s “separation from service” (as defined in Section 409A) shall be made to such Participant prior to the date that is six months after the date of such Participant’s “separation from service” or, if earlier, the date of the Participant’s death. Following any applicable six-month delay, all such delayed payments will be paid in a single lump sum on the earliest date permitted under Section 409A that is also a business day. 16.Governing Law. The Plan and all actions taken thereunder shall be governed by and construed in accordance with the laws of the State of Delaware. 2017 Proxy StatementA-6 CERTIFICATE OF INCORPORATION ARTICLE V Bylaws In furtherance and not in limitation of the powers conferred by law, the Board is expressly authorized to make, repeal, alter, amend and rescind the Bylaws of the Corporation by a majority vote of the entire Board at any regular or special meeting of the Board; provided, however that, notwithstanding anything contained in this Certificate of Incorporation or the Bylaws of the Corporation to the contrary, the affirmative vote of the holders of at least 80% of the voting power of the then outstanding shares of Voting Stock, voting together as a single class, shall be required to (i) alter, amend or repeal any provision of the Bylaws which is substantially identical to and/or implements the last sentence inSection 4 of Article IV, or Articles VI, VII (subject to the proviso at the end of this sentence) or VIII, of this Certificate ofIncorporation, or (ii) alter, amend or repeal any provision of this proviso to Article V;further provided that, notwithstanding anything contained in this Certificate of Incorporation or the Bylaws of the Corporation to the contrary, the affirmative vote of the holders of at least 66.67% of the voting power of the then outstanding shares of Voting Stock, voting together as a single class, shall be required to (i) alter, amend or repeal any provision of the Bylaws which is substantially identical to and/or implements the last sentence of Article VII of this Certificate of Incorporation, or (ii) alter, amend or repeal this further proviso to Article V. ARTICLE VII. Actions by Shareholders Any action required or permitted to be taken by the shareholders of the Corporation must be effected at a duly called annual or special meeting of shareholders of the Corporation and may not be effected by any consent in writing by such shareholders. Special meetings of shareholders of the Corporation may be called only by the Board pursuant to a resolution approved by a majority of the entire Board.Except as set forth in the final sentence of this Article VII, and BYLAWS ARTICLE VI. Amendments These Bylaws may be altered or repealed and Bylaws may be made at any annual meeting of shareholders or at any special meeting thereof if notice of the proposed alteration or repeal of Bylaws to be made be contained in the notice of such meeting, by the affirmative vote of the holders of a majority of the total voting power of all outstanding shares of the voting stock of the Corporation. These bylaws may also be altered or repealed and Bylaws may be made by the affirmative vote of a majority of the Board of Directors, at any annual or regular meeting of the Board of Directors, or at any special meeting of the Board of Directors if notice of the proposed alteration or repeal, or Bylaw or Bylaws to be made, be contained in the notice of such special meeting. Notwithstanding anything contained in these Bylaws to the contrary,(i) the affirmative vote of the holders of at least 80% of the voting power of all of the shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to alter, amend or repeal Section 4, (subject to clause (ii) below) or 6 of Article II, Section 1, 2 or 3 of Article III, of these Bylaws,and (ii) notwithstanding the foregoing, the affirmative vote of the holders of at least 66.67% of the voting power of all of the shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to alter, amend or repeal the first sentence of Section 4 of Article II of these Bylaws. 2017 Proxy StatementC-1 CERTIFICATE OF INCORPORATION ARTICLE VII. Actions by Shareholders Any action required or permitted to be taken by the shareholders of the Corporation must be effected at a duly called annual or special meeting of shareholders of the Corporation and may not be effected by any consent in writing by such shareholders. Special meetings of shareholders of the Corporation may be called only by the Board pursuant to a resolution approved by a majority of the entire Board,except as otherwise permitted by the Bylaws of the Corporation. Notwithstanding anything contained in this Certificate of Incorporation to the contrary, the affirmative vote of the holders of at least 80% of the voting power of the then outstanding shares of Voting Stock, voting together as a single class, shall be required to alter, amend or repeal this Article VII. BYLAWS ARTICLE II. Meetings of Shareholders Section 1.Annual Meetings. Annual meetings of shareholders for the election of directors and for such other business as may be stated in the notice of the meeting, shall be held at such place, either within or without the State of Delaware, and at such time and date as the Board of Directors by resolution, shall determine and as set forth in the notice of the meeting. In the event the Board of Directors fails so to determine the time, date and place of meeting, the annual meeting of shareholders shall be held at the principal executive office of the Corporation at 10:00 a.m. on the first Wednesday in May. If the date of the annual meeting shall fall upon a legal holiday, the meeting shall be held on the next succeeding business day. The annual meeting may be adjourned by the chairman of the meeting from time to time and place to place. At any adjourned annual meeting the Corporation may transact any business which might have been transacted at the original annual meeting. The Board of Directors acting by resolution may postpone and reschedule any previously scheduled annual meeting of shareholders upon public notice or disclosure given prior to the date previously scheduled for such meeting of shareholders. Section 2.Voting. Each shareholder who is entitled to vote pursuant to the terms of the Certificate of Incorporation and these Bylaws, or who is entitled to vote pursuant to the laws of the State of Delaware, shall be entitled to vote in person or by proxy, but no proxy shall be voted after three years from its date unless such proxy provides for a longer period. All elections for directors and all other questions shall be decided by majority vote except as otherwise provided by the Certificate of Incorporation, these Bylaws or the laws of the State of Delaware. A complete list of the shareholders entitled to vote at any meeting of shareholders at which directors are to be elected, arranged in alphabetical order, with the address of each, and the number of shares held by each, shall be open to the examination of any shareholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any shareholder who is present. The CEO shall appoint three Inspectors of Election prior to each meeting of shareholders. Upon his or her appointment, each such Inspector shall take and sign an oath faithfully to execute the duties of Inspector at such meeting with strict impartiality and to the best of his or her ability. Such Inspectors shall determine the number of shares outstanding, the voting power of each such share, the number of shares present at the meeting and whether a quorum is present at such meeting. The Inspectors shall receive votes and ballots and shall determine all challenges and questions as to the right to vote and shall thereafter count and tabulate all votes and ballots and determine the result. Such Inspectors shall do such further acts as are proper to conduct the elections of directors and the vote on other matters with fairness to all shareholders. The Inspectors shall make a certificate of the results of the elections of directors and the vote on other matters. No Inspector shall be a candidate for election as a director of the Corporation nor shall any such candidate be appointed an Inspector. Section 3.Quorum. Except as otherwise required by law, by the Certificate of Incorporation or by these Bylaws, the presence, in person or by proxy, of shareholders holding a majority of the voting power of the outstanding stock of the Corporation shall constitute a quorum at all meetings of the shareholders. In case a quorum shall not be present at any meeting, a majority in interest of the shareholders entitled to vote thereat, present in person or by proxy or the chairman of the meeting, shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until the requisite amount of stock entitled to vote shall be present; provided, however, that if such adjournment is for more than thirty days, or if after such adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at 2017 Proxy StatementE-1 such adjourned meeting. At any such adjourned meeting at which the requisite amount of stock entitled to vote shall be represented, any business may be transacted which might have been transacted at the meeting as originally noticed; but only those shareholders entitled to vote at the meeting as originally noticed shall be entitled to vote at any adjournment or adjournments thereof unless the Board of Directors shall have fixed a new record date for such adjournment or adjournments pursuant to Section 4 of Article V of these Bylaws. Section 4.Special Meetings. (A)General. Special meetings of shareholders may be called only by(i) the Board of Directors pursuant to a resolution approved by a majority of the entire Board of Directors,or (ii) solely to the extent required by Section 4(B), the Secretary of the Corporation. Special meetings of shareholders may be held at such place, either within or without the State of Delaware, and at such time and date as shall be stated in the notice of the meeting. The special meeting may be adjourned by the chairman of the special meeting from time to tie and place to place. At any adjourned special meeting the Corporation may transact any business which might have been transacted at the original special meeting. The Board of Directors acting by resolution approved by a majority of the entire Board of Directors may postpone and reschedule any previously scheduled special meeting of shareholders upon public notice or disclosure given prior to the date previously scheduled for such meeting of shareholders. (B)Shareholder Requested Special Meetings. E-2www.hecla-mining.com 2017 Proxy Statement E-3 Section 5.Notice of Meetings. Written notice, stating the place, date and time of any annual or special meeting of shareholders, and the general nature of the business to be considered thereat, shall be given to each shareholder entitled to vote at such meeting at his address as it appears on the records of the Corporation, not less than ten nor more than sixty days before the date of the meeting. Section 6.Shareholder Action. Any action required or permitted to be taken by the shareholders of the Corporation must be effected at a duly called annual or special meeting of shareholders of the Corporation and may not be effected by any consent in writing by such shareholders. Section 7.Chairman of a Meeting. Section 8. E-4www.hecla-mining.com delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the Corporation. (B)Special Meetings of Shareholders. Only such business shall be conducted at a special meeting of shareholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of shareholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (1) by or at the direction of the Board of Directors or (2) 2017 Proxy StatementE-5 Reconciliation of Non-GAAP Measures to GAAP The non-GAAP measure of earnings before interest, taxes, depreciation, and amortization (“EBITDA”) is calculated as net income (loss) before the following items: interest expense, income tax provision (benefit), and depreciation, depletion, and amortization expense. Management believes that, when presented in conjunction with comparable GAAP measures, EBITDA is useful to investors in evaluating our operating performance. The table below presents reconciliations between the GAAP measure of net income (loss) to the non-GAAP measure EBITDA to the GAAP measure of net income (loss) for the years ended December 31, 2016, 2015 and 2014 (in thousands). F-1www.hecla-mining.com Reconciliation of The non-GAAP measure of Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) is calculated as net loss before the following items: interest expense, income tax provision, depreciation, depletion, and amortization expense, exploration expense, pre-development expense, acquisition costs, foreign exchange gains, gains on derivative contracts, provisional price gains, provisions for closed operations expense, stock-based compensation, unrealized losses on investments, interest and other income, and loss on sale of investments. Management believes that, when presented in conjunction with comparable GAAP measures, Adjusted EBITDA is useful to investors in evaluating our operating performance. The following table reconciles net (loss) to Adjusted EBITDA (in thousands): Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to The tables below present reconciliations between the GAAP measure of cost of sales and other direct production costs and depreciation, depletion and amortization to the non-GAAP measures of Cash Cost per Silver/Gold Ounce, Before By-product Credits and Cash Cost, After By-product Credits per Silver/Gold Ounce for our operations for the year ended December 31, 2016 (in thousands, except costs per ounce and gold ounces produced). Cash Cost, After By-product Credits per Silver/Gold Ounce is an important operating statistic that we utilize to measure each mine’s operating performance. It also allows us to benchmark the performance of each of our mines versus those of our competitors. As a primary silver mining company, we also use the statistic on an aggregate basis - aggregating the Greens Creek, Lucky Friday and San Sebastian mines, but not Casa Berardi, which is a primary gold mine - to compare our performance with that of other primary silver mining companies. Similarly, the statistic is useful in identifying acquisition and investment opportunities as it provides a common tool for measuring the financial performance of other mines with varying geologic, metallurgical and operating characteristics. Cash Cost, Before By-product Credits per Silver/Gold Ounce include all direct and indirect operating cash costs related directly to the physical activities of producing metals, including mining, processing and other plant costs, third-party refining expense, on-site general and administrative costs, royalties and mining production taxes. By-product credits include revenues earned from all metals other than the primary metal produced at each 2017 Proxy StatementF-2 unit. Cash Cost, After By-product Credits, per Silver/Gold Ounce, provides management and investors an indication of operating cash flow, after consideration of the average price, received from production. Management also uses this measurement for the comparative monitoring of performance of our mining operations period-to-period from a cash flow perspective. Cash Cost, After By-product Credits, per Silver/Gold Ounce is a measure developed by precious metals companies (including the Silver Institute) in an effort to provide a uniform standard for comparison purposes. There can be no assurance, however, that our reporting of this non-GAAP measure is the same as that reported by other mining companies. The Casa Berardi section below reports Cash Cost, After By-product Credits, per Gold Ounce for the production of gold, its primary product, and by-product revenuesearned from silver, which is a by-product at Casa Berardi. Only costs and ounces produced relating to units with the same primary product are combined to represent Cash Cost, After By-product Credits, per Ounce. Thus, the gold produced at our Casa Berardi unit is not included as a by-product credit when calculating Cash Cost, After By-product Credits, per Silver Ounce for the total of Greens Creek, Lucky Friday and San Sebastian, our combined silver properties. As depicted in the Total, Greens Creek, Lucky Friday and San Sebastian Unit tables below, by-product credits comprise an essential element of our silver unit cost structure distinguishing our silver operations due to the polymetallic nature of their orebodies. By-product credits included in our presentation of Cash Cost, After By-product Credits, per Silver Ounce include: By-product credits included in our presentation of Cash Cost, After By-product Credits, per Gold Ounce for our Casa Berardi Unit include: Cost of sales and other direct production costs and depreciation, depletion and amortization is the most comparable financial measure calculated in accordance with GAAP to Cash Cost, After By-product Credits. The sum of the cost of sales and other direct production costs and depreciation, depletion and amortization forour operating units in the tables below is presented in our Consolidated Statement of Operations and Comprehensive (Loss) (in thousands) included in our audited financial statements which are included in our Annual Report on Form 10-K for the calendar year ended December 31, 2016. F-3www.hecla-mining.com APPENDIX F Total, Greens Creek, Lucky Friday 2017 Proxy StatementF-4 F-5www.hecla-mining.com APPENDIX F 2017 Proxy StatementF-6 HECLA MINING COMPANY VOTE BY INTERNET - www.proxyvote.com ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS VOTE BY PHONE - 1-800-690-6903 VOTE BY MAIL The Board of Directors recommends you vote FOR the following: Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The Notice & Proxy Statement and Annual Report are available atwww.proxyvote.com HECLA MINING COMPANY ANNUAL MEETING OF SHAREHOLDERS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE NOMINEES FOR DIRECTOR LISTED IN ITEM 1 "FOR" PROPOSALS 2, 3, 5, 6, 7 AND 8, AND "1 YEAR" FOR PROPOSAL 4. The undersigned, revoking any previous proxies, hereby appoints PHILLIPS S. BAKER, JR. and MICHAEL B. WHITE, and each of them, proxies of the undersigned, with full power of substitution, to attend the Company's Annual Meeting of Shareholders on May 25, 2017, and any adjournments or postponements thereof, and there to vote the undersigned's shares of Common Stock of the Company on the following matters as described in the Board of Directors Proxy Statement for such meeting, a copy of which has been received by the undersigned. This Proxy will be voted as specified. If no specification is made, this Proxy will be voted FOR the election of the two nominees for Director, FOR the approval of Proposals 2, 3, 5, 6, 7 and 8, and 1 year for proposal 4.. This proxy also delegates discretionary authority to vote with respect to any other business which may properly come before the meeting or any adjournment or postponement thereof. Continued and to be signed on reverse sideProposal 3 – Approval of Amendments to the Company’s Certificate of Incorporation and Bylaws to Permit Shareholders to Call Special Meetings of Shareholders Under Certain Circumstances. Approval of this proposal requires the affirmative vote of 80% of our outstanding shares of common stock. Abstentions and broker nonvotesProposal 4 – Ratification of the Appointment of BDO USA, LLP as Independent Auditors. This proposal requires the affirmative vote of a majority of votes cast at the Annual Meeting, whether in person or by proxy. Abstentions or shares that are not voted are not counted as cast for this purpose.The appointment of our independent registered public accounting firm for calendar year 2016 is considered a “routine” matter and brokers that are not directed how to vote are permitted to vote shares held in street name for their clients on this item.You may vote “FOR,” “AGAINST,” or “ABSTAIN” on the proposal to ratify the appointment of BDO USA, LLP as our independent registered public accounting firm for 2016.Proposal 5 – Advisory Vote to Approve Executive Compensation. The advisory vote on executive compensation requires the affirmative vote of a majority of votes cast at the Annual Meeting, whether in person or by proxy. Abstentions or shares that are not voted are not counted as cast for this purpose.Even though your vote is advisory and therefore will not be binding on the Company, the Board’s Compensation Committee will review the voting results and take them into consideration when making future decisions regarding executive compensation.A “proxy” is your legal appointment in a written document of another person to vote the shares that you own in accordance with your instructions. The persons you appoint to vote your shares are also called proxies. We have designated Phillips S. Baker, Jr., our President and CEO, and Michael B. White, our Corporate Secretary, asproxies for the Annual Meeting. When you sign the proxy card, you appoint Phillips S. Baker, Jr. and Michael B. White as your representatives at the Annual Meeting. As your representatives, they will vote your shares at the Annual Meeting (including any adjournment or postponement) as you have instructed them on your proxy card.Proxies Submitted but not VotedIf you properly sign and return your proxy card or complete your proxy via the telephone or Internet, your shares will be voted as you direct. If you sign and return your proxy but do not specify how you want your shares voted they will be voted FOR the election of all nominees for Director as set forth under “Election of Directors,” FOR the amendments to the Company’s Certificate of Incorporation and Bylawsto remove certain 80% supermajority voting provisions, FOR the amendments to the Company’s Certificate of Incorporation and Bylaws to permit shareholders to call special meetings of shareholders under certain circumstances, FOR ratification of the appointment of the independent registered public accountants, and FOR the advisory vote on executive compensation,If your shares are held in your name, you have the right to vote in person at the Annual Meeting. If your shares are held in a brokerage account or by another nominee, you are considered the beneficial owner of shares held in street name. Since a beneficial owner is not the shareholder of record, you may not vote these shares in person at the Annual Meeting unless you obtain a “legal proxy” from your broker or nominee that holds your shares, giving you the right to vote the shares at the Annual Meeting.Whether you hold shares directly as a shareholder of record or beneficially in street name, you may vote without attendingGENERAL INFORMATION ABOUT THE MEETING 84 www.hecla-mining.com125 Years● ● GENERAL INFORMATION ABOUT THE MEETING To vote by mail:●Mark, sign and date your proxy card; and●Return your proxy card in the enclosed postage-paid envelope.●Have your proxy card or Notice available;● Have your proxy card or Notice available; ● Log on to the Internet and visit the website noted on your proxy card or Notice (www.proxyvote.com); ● Log on to the Internet and visit the website noted on your proxy card or Notice (www.proxyvote.com);●●Do not mail your proxy card.To vote by proxy by telephone:●Have your proxy card available;●Call the toll-free number listed on your proxy card (1-800-690-6903);●Follow the recorded instructions; and● Do not mail your proxy card. ● Have your proxy card available; ● Call the toll-free number listed on your proxy card (1-800-690-6903); ● Follow the recorded instructions; and ● Do not mail your proxy card. ●Attend our Annual Meeting;● Attend our Annual Meeting; ● Bring a valid photo identification; and ● Bring a valid photo identification; and●●Attend our Annual Meeting;● Attend our Annual Meeting; ● Bring a valid photo identification; and ● Bring a valid photo identification; and● your completed proxy card or ballot and deliver it in person.To vote your 401(k) Plan shares:If you participate in the Hecla Mining Company Capital Accumulation Plan and hold shares of our common stock in your plan account as of the Record Date, you will receive a request for voting instructions from the plan trustee (“Vanguard”) with respect to your plan shares. You are entitled to direct Vanguard how to vote your plan shares. If you do not provide voting instructions to Vanguard by 11:59 p.m., Eastern Daylight Time, on May 18, 2016, the Hecla shares in your plan account will be voted by Vanguard in the same proportion as the shares held by Vanguard for which voting instructions have been received from other participants in the plan.The deadline for voting by telephone or electronically is 11:59 p.m., Eastern Time, on May 18, 2016. If you are a registered shareholder and attend the meeting, you may deliver your completed proxy card or ballot and deliver it in person. “Street name”● By sending a written notice of revocation to our Corporate Secretary, if such notice is received prior to the vote at the Annual Meeting, in any of the following ways:●By sending a written notice of revocation to our Corporate Secretary, if such notice is received prior to the vote at the Annual Meeting, at our principal executive offices:
Attn: Corporate Secretary
6500 N. Mineral Drive, Suite 200
Coeur d’Alene, ID 83815-9408● ● 125 Years2016 Proxy Statement85GENERAL INFORMATION ABOUT THE MEETING ● Valid Photo Identification. Any registered shareholder, beneficial (“street name”) shareholder, or valid proxy or representative of such shareholder, must present a valid, current form of government-issued photo identification, such as a driver’s license or passport, that matches the name on the documentation described below. ● Proof of Ownership. ○ TableIf you hold shares in street name (such as through a broker or bank), then you must present proof of ContentsGENERAL INFORMATION ABOUT THE MEETINGWe will bear all costs and expenses relating to the solicitation of proxies, including the costs of preparing, assembling, printing, mailing and distributing these Proxy Materials. We have hired Broadridge to assist us in mailing these Proxy Materials. Additionally, we have retained Morrow & Co., LLC, 470 West Ave., Stamford, Connecticut to assist in the solicitation of votes for an estimated fee of $8,000, plus reimbursement of certain out-of-pocket expenses. Solicitations may be made personallyownership, such as a brokerage statement or by mail, facsimile, telephone,letter from your bank or via the Internet. However, ifbroker, demonstrating that you choose to access the Proxy Materials over the Internet, youare responsible for any Internet access charges you may incur. Arrangements will be made with brokerage firms and other custodians, nominees and fiduciaries for forwarding solicitation materials to the beneficial ownersheld our common stock as of the Record Date.○ If you hold shares in registered form, your record holder’s ownership as of common stock heldthe Record Date must be verified on the list of registered shareholders maintained by such persons, and we will reimburse such brokerage firms, custodians, nominees and fiduciaries for reasonable out-of-pocket expenses incurred by them in connection with such activities.○ If you hold a proxy to vote shares at the Annual Meeting for a shareholder who holds shares in street name (such as through a broker or a bank), then you must present: Preliminary voting results will be announced■ Valid photo identification as described above; ■ A written legal proxy from the broker or bank holding shares to the street name holder that is assignableand signed by the street name holder; and ■ Proof of ownership, such as a brokerage statement or letter from the bank or broker, demonstrating that the street name holder who appointed you legal proxy held Hecla common stock as of the Record Date. ○ If you hold a proxy to vote shares at the Annual Meeting. We will publish final results inMeeting for a Current Report on Form 8-K that we expectshareholder who is a registered shareholder holder, then■ You must present valid photo identification as described above; ■ You must provide a written legal proxy to file withyou signed by the SEC within four business daysregistered shareholder; and■ The registered shareholder’s ownership as of the Annual Meeting. AfterRecord Date must be verified on the Form 8-K is filed, you may obtain a copylist of registered shareholders maintained by visiting the SEC’s website at www.sec.gov, visiting our website at www.hecla-mining.com or contacting our Investor Relations Department by writing to Investor Relations Department, Hecla Mining Company, 6500 N. Mineral Dr., Suite 200, Coeur d’Alene, ID 83815-9408 or by sending an email to hmc-info@hecla-mining.com.transfer agent.Our Annual Report to Shareholders, consisting of our Form 10-K for the year ended December 31, 2015, and other information, is being made available to shareholders with this Proxy Statement. Shareholders may obtain a copy of our Annual Report for the calendar year ended December 31, 2015,GENERAL INFORMATION ABOUT THE MEETING
Attention: Jeanne DuPont
6500 N. Mineral Drive, Suite 200
Coeur d’Alene, Idaho 83815-9408
Telephone: 208-769-4100You may submit proposals for consideration at future annual shareholder meetings, including director nominations, as follows:(a)Shareholder proposals at the 2017 Annual Meeting of ShareholdersOur Bylaws establish procedures governing the eligibility of nominees for election to our Board, and the proposal of business to be considered by our shareholders at an Annual Meeting of Shareholders. For nominations or other business to be properly brought before an Annual Meeting of Shareholders by a shareholder, the shareholder must have given timely notice thereof in writing to our Corporate Secretary. To be timely, a shareholder’s notice shall be delivered to our Corporate Secretary at our principal executive offices located at 6500 N. Mineral Drive, Suite 200, Coeur d’Alene, Idaho 83815-9408, not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s Annual Meeting of Shareholders;provided, however, that in the event the date of the Annual Meeting of Shareholders is advanced by more than 30 days or delayed by more than 60 days from such anniversary date, notice by the shareholder to be timely must be delivered not earlier than the 120th day prior to such Annual Meeting of Shareholders and not later than the close of business on the later of the 90th day prior to such Annual Meeting of Shareholders or the 10th day following the day on which public announcement of the date of such meeting is first made. Adjournment of a meeting shall not commence a new time period for giving shareholder’s notice as described above. Such shareholder’s notice shall set forth:(a) (b) As to any other business that the shareholder proposes to bring before the meeting, if the shareholder proposes to bring before the meeting, if theshareholder has not otherwise complied with the rules and regulations under the Exchange Act for the inclusion of a shareholder proposal in our Proxy Statement, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting, and any material interest in such business of such shareholder and the beneficial owner, if any, on whose behalf the proposal is made; and (c) As to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made: (ii) the class and number of Company shares which are owned beneficially and of record by such shareholder or beneficial owner. (i)the name and address of such shareholder, as they appear on the Company’s books, and of such beneficial owner; and(ii)the class and number of Company shares which are owned beneficially and of record by such shareholder or beneficial owner.The applicable time period for timely shareholder submissions pursuant to the above provisions for the 2017 Annual Meeting of Shareholders is January 19, 2017 2016 Annual Meeting) to February 18, 2017 Annual Meeting) to February 25, 2018 (the 90th day preceding such anniversary).88 www.hecla-mining.com125 YearsPROVISIONS OF HECLA’S BYLAWS WITH RESPECT TO SHAREHOLDERPROPOSALS AND NOMINATIONS FOR ELECTION AS DIRECTORSShareholder proposals to be included in next year’s Proxy StatementIn addition to the foregoing section, we will comply with Rule 14a-8 under the Exchange Act with respect to any shareholder proposals that meet that rule’s requirements. We will review shareholder proposals intended to be included in our Proxy Statement for the 2017 Annual Meeting of Shareholders which are received by us at our principal executive offices located at 6500 N. Mineral Drive, Suite 200, Coeur d’Alene, Idaho 83815-9408, nolater than December 5, 2016.PROVISIONS OF OUR BYLAWS WITH RESPECT TO SHAREHOLDER PROPOSALS AND NOMINATIONS FOR ELECTION AS DIRECTORS 125 Years2016 Proxy Statement89OTHER BUSINESSBy Order of the Board of Directors 
By Order of the Board of Directors
Corporate SecretaryApril 4, 201690 www.hecla-mining.com125 YearsAPPENDIX A
FOR NONEMPLOYEE DIRECTORS(b) (i) Death of the Participant; (ii) Disability of the Participant as defined in Section 6(f) below; (iii) (iv) Cessation of service as a Director for any reason other than those specified in clauses (i), (ii) or (iii) immediately above; (v) Change in Control as defined in Section 8 below; or (vi) At a specified date at least 24 months after the applicable Stock Retainer is credited pursuant to an election made by the Participant prior to the first day of the year in which the applicable notional shares of Common Stock are credited to the Participant under Section 5 above. APPENDIX A (i) Such election will not take effect until 12 months after the election is made; (ii) Any subsequent election other than under Section 6(b)(i) or Section 6(b)(ii) above must be for a period of at least 5 years from the date such Delivery Election issuance would otherwise have been made under the Plan; and (iii) (i) An acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) (including in connection with a merger, consolidation, purchase or acquisition of Common Stock, or similar business transaction) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of either (1) the fair market value of then outstanding shares of Common Stock of the APPENDIX A Certificate of IncorporationARTICLE VBylawsIn furtherance and not in limitation ofCorporation (the “Outstanding Corporation Common Stock”) or (2) the powers conferred by law, the Board is expressly authorized to make, repeal, alter, amend and rescind the Bylaws of the Corporation by a majority vote of the entire Board at any regular or special meeting of the Board; provided, however that, notwithstanding anything contained in this Certificate of Incorporation or the Bylaws of the Corporation to the contrary, the affirmative vote of the holders of at least 80% of thecombined voting power of the then outstanding shares of Voting Stock, voting together as a single class, shall be required to (i) alter, amend or repeal any provision of the Bylaws which is substantially identical to and/or implements the last sentence inSection 4 of Article IV, or Articles VI, VII (subject to the proviso at the end of this sentence) or VIII, of this Certificate of Incorporation, or (ii) alter, amend or repeal any provision of this proviso to Article V;further provided that, notwithstanding anything contained in this Certificate of Incorporation or the Bylawssecurities of the Corporation entitled to vote generally in the contrary,election of Directors (the “Outstanding Corporation Voting Securities”); excluding, however, the affirmative votefollowing: (1) any acquisition directly from the Corporation, other than an acquisition by virtue of the holdersexercise of at least 66.67%a conversion privilege unless the security being so converted was itself acquired directly from the Corporation; (2) any acquisition by the Corporation (other than an increase in the percentage of Common Stock owned by a Person caused as a result of a transaction in which the Corporation acquires its Common Stock in exchange for property); (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any corporation controlled by the Corporation; (4) any acquisition of additional beneficial ownership in Common Stock by a Person that is already considered to own more than 50% of more of the total fair market value or total voting power of the thenCorporation; or (5) any transaction in which the Common Stock of the Corporation does not remain outstanding after the transaction; or(ii) An acquisition by any Person (including in connection with a merger, consolidation, purchase or acquisition of Common Stock, or similar business transaction) of beneficial ownership of 30% or more of the combined voting power of the Corporation during a 12-month period; excluding, however, the following: (1) any acquisition directly from the Corporation, other than an acquisition by virtue of the exercise of a conversion privilege unless the security being so converted was itself acquired directly from the Corporation; (2) any acquisition by the Corporation (other than an increase in the percentage of Common Stock owned by a Person caused as a result of a transaction in which the Corporation acquires its Common Stock in exchange for property); (3) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any corporation controlled by the Corporation; or (4) any acquisition of additional beneficial ownership in Common Stock by a Person that is already considered to own more than 30% of more of the total voting power of the Corporation; or (iii) A change in the composition of the Board such that a majority of the Directors (such Directors shall be hereinafter referred to as the “Incumbent Directors”) are replaced during any 12-month period by Directors whose appointment or election is not endorsed by a majority of the Incumbent Directors before the date of the appointment or election; or (iii) An acquisition by any Person of assets from the Corporation, during a 12-month period, that have a total gross fair market value equal to or more than 40% of the total gross fair market value of all the assets of the Corporation immediately before such acquisition or acquisitions; excluding, however, an acquisition by any Person that is an entity controlled by the shareholders of the Corporation immediately after the transfer (within the meaning of Section 409A). (i) Listing or approval for listing upon notice of issuance of such shares on The New York Stock Exchange, or such other securities exchange as may at the time be the principal market for the Common Stock; (ii) Any registration or other qualification of such shares of Voting Stock, voting together as a single class,the Corporation under any state or federal law or regulation, or maintaining in effect any such registration or other qualification which the Board shall deem necessary or advisable; andAPPENDIX A (iii) Obtaining any other consent, approval or permit from any state or federal governmental agency which the Board shall determine to be required to (i) alter, amendnecessary or repeal any provision of the Bylaws which is substantially identical to and/or implements the last sentence of Article VII of this Certificate of Incorporation, or (ii) alter, amend or repeal this further proviso to Article V.advisable.APPENDIX A APPENDIX B Nnotwithstanding anythingelse contained in this Certificate of Incorporation to the contrary, the affirmative vote of the holders of at least 80% of the voting power of the then outstanding shares of Voting Stock, voting together as a single class, shall be required to alter, amend or repeal this Article VII.Notwithstanding anything contained in this Certificate of Incorporation to the contrary, the affirmative vote of the holders of at least 66.67% of the voting power of the then outstanding shares of Voting Stock, voting together as a single class, shall be required to alter, amend or repeal the second and final sentences of this Article VII.125 Years2016 Proxy StatementA-1APPENDIX BAPPENDIX BB-1www.hecla-mining.comBYLAWSARTICLE VI.AmendmentsThese Bylaws may be altered or repealed and Bylaws may be made at any annual meeting of shareholders or at any special meeting thereof if notice of the proposed alteration or repeal of Bylaws to be made be contained in the notice of such meeting, by the affirmative vote of the holders of a majority of the total voting power of all outstanding shares of the voting stock of the Corporation. These bylaws may also be altered or repealed and Bylaws may be made by the affirmative vote of a majority of the Board of Directors, at any annual or regular meeting of the Board of Directors, or at any special meeting of the Board of Directors if notice of the proposed alteration or repeal, or Bylaw or Bylaws to be made,, be contained in the notice of such special meeting.Notwithstanding anything contained in these Bylaws to the contrary,(i) the affirmative vote of the holders of at least 80% of the voting power of all of the shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to alter, amend or repeal Section 4, (subject to clause (ii) below) or 6 of Article II, Section 1, 2 or 3 of Article III, of these Bylaws,and (ii) notwithstanding the foregoing, the affirmative vote of the holders of at least 66.67% of the voting power of all of the shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to alter, amend or repeal the first sentence of Section 4 of Article II of these Bylaws.B-1 www.hecla-mining.com125 YearsAPPENDIX C APPENDIX D 125 YearsD-1www.hecla-mining.com2016 Proxy StatementC-1APPENDIX DD-1 www.hecla-mining.com125 YearsAPPENDIX E APPENDIX D(1) Special meetings of the shareholders (each a “Shareholder Requested Special Meeting”) shall be called by the Secretary upon the written request of a shareholder (or a group of shareholders formed for the purpose of making such request) who or which has held at least 25% Net Long Beneficial Ownership (as defined below) of the outstanding common stock of the Corporation continuously for at least 120 days as of the date of submission of the request (the “Requisite Percent”). Compliance by the requesting shareholder or group of shareholders with the requirements of this section and related provisions of these bylaws shall be determined in good faith by the Board of Directors, shall have fixed a new record date for such adjournment or adjournments pursuant to Section 4 of Article V of these Bylaws.Section 4.Special Meetings.(A) General.Special meetings of shareholders may be called only by(i) the Board of Directors pursuant to a resolution approved by a majority of the entire Board of Directors, or (ii) solely to the extent required by Section 4(B), the Secretary of the Corporation. Special meetings of shareholders may be held at such place, either within or without the State of Delaware, and at such time and date as shall be stated in the notice of the meeting. The special meeting may be adjourned by the chairman of the special meeting from time to tie and place to place. At any adjourned special meeting the Corporation may transact any business which might have been transacted at the original special meeting. The Board of Directors acting by resolution approved by a majority of the entire Board of Directors may postpone and reschedule any previously scheduled special meeting of shareholders upon public notice or disclosure given prior to the date previously scheduled for such meeting of shareholders.(B)Shareholder Requested Special Meetings.(1) Special meetings of the shareholders (each a “Shareholder Requested Special Meeting”) shall be called by the Secretary upon the written request of a shareholder (or a group of shareholders formed for the purpose of making such request) who or which has held at least 25% Net Long Beneficial Ownership (as defined below) of the outstanding common stock of the Corporation continuously for at least 120 days as of the date of submission of the request (the “Requisite Percent”). Compliance by the requesting shareholder or group of shareholders with the requirements of this section and related provisions of these bylaws shall be determined in good faith by the Board of Directors, which determination shall be conclusive and binding on the Corporation and the shareholders.“Net Long Beneficial Ownership” (and its correlative terms), when used to describe the nature of a shareholder’s ownership of common stock of the Corporation, shall mean those shares of common stock of the Corporation as to which the shareholder in question possesses (x) the sole power to vote or direct the voting, (y) the sole economic incidents of ownership (including the sole right to profits and the sole risk of loss), and (z) the sole power to dispose of or direct the disposition. The number of shares calculated in accordance with clauses (x), (y) and (z) shall not include any shares (1) sold by such shareholder in any transaction that has not been settled or closed, (2) borrowed by such shareholder for any purposes or purchased by such shareholder pursuant to an agreement to resell or (3) subject to any option, warrant, derivative or other agreement or understanding, whether any such arrangement is to be settled with shares of common stock of the Corporation or with cash based on the notional amount of shares subject thereto, in any such case which has, or is intended to have, the purpose or effect of (A) reducing in any manner, to any extent or at any time in the future, such shareholder’s rights to vote or direct the voting and full rights to dispose or direct the disposition of any of such shares or (B) offsetting to any degree gain or loss arising from the sole economic ownership of such shares by such shareholder. (2) A request for a Shareholder Requested Special Meeting must be signed by the Requisite Percent of the record holders (or their duly authorized agents) and be delivered to the Secretary at the principal executive offices of the Corporation by registered mail, return receipt requested. Such request shall (A) set forth a statement of the specific purpose or purposes of the meeting and the matters proposed to be acted on at such special meeting, (B) bear the date of signature of each shareholder (or duly authorized agent) signing the request, (C) include (w) the name and address, as they appear in the Corporation’s stock ledger, of each shareholder signing such request (or on whose behalf the Shareholder Special Meeting Request is signed), (x) the class, if applicable, and the number of shares of common stock APPENDIX E “Net Long Beneficial Ownership” (and its correlative terms), when used to describe the nature of a shareholder’s ownership of common stock of the Corporation, shall mean those shares of common stock of the Corporation as to which the shareholder in question possesses (x) the sole power to vote or direct the voting, (y) the sole economic incidents of ownership (including the sole right to profits and the sole risk of loss), and (z) the sole power to dispose of or direct the disposition. The number of shares calculated in accordance with clauses (x), (y) and (z) shall not include any shares (1) sold by such shareholder in any transaction that has not been settled or closed, (2) borrowed by such shareholder for any purposes or purchased by such shareholder pursuant to an agreement to resell or (3) subject to any option, warrant, derivative or other agreement or understanding, whether any such arrangement is to be settled with shares of common stock of the Corporation or with cash based on the notional amount of shares subject thereto, in any such case which has, or is intended to have, the purpose or effect of (A) reducing in any manner, to any extent or at any time in the future, such shareholder’s rights to vote or direct the voting and full rights to dispose or direct the disposition of any of such shares or (B) offsetting to any degree gain or loss arising from the sole economic ownership of such shares by such shareholder.(2) A request for a Shareholder Requested Special Meeting must be signed by the Requisite Percent of the record holders (or their duly authorized agents) and be delivered to the Secretary at the principal executive offices of the Corporation by registered mail, return receipt requested.Such request shall (A) set forth a statement of the specific purpose or purposes of the meeting and the matters proposed to be acted on at such special meeting, (B) bear the date of signature of each shareholder (or duly authorized agent) signing the request, (C) include (w) the name and address, as they appear in the Corporation’s stock ledger, of each shareholder signing such request (or on whose behalf the Shareholder125 Years2016 Proxy StatementD-2APPENDIX DSpecial Meeting Request is signed), (x) the class, if applicable, and the number of shares of common stock of the Corporation that are owned of record and beneficially by each such shareholders, (y) documentary evidence of such shareholder’s record and beneficial ownership of such stock and (z) a certification from each such shareholder that the shareholders signing the request in the aggregate satisfy the Net Long Beneficial Ownership requirement of these Bylaws, (D) set forth all information relating to each such shareholder (and if the matter proposed to be acted on at such special meeting involves the election of directors, each person whom the shareholder proposes to nominate for election) that must be disclosed in solicitations of proxies for election of directors in an election contest (even if an election contest is not involved), or is otherwise required, in each case, pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), (E) describe any material interest of each such shareholder in the specific purpose or purposes of the meeting, and (F) include an acknowledgement by each shareholder and any duly authorized agent that any disposition of shares of common stock of the Corporation as to which such shareholder has Net Long Beneficial Ownership as of the date of delivery of the special meeting request and prior to the record date for the proposed meeting requested by such shareholder shall constitute a revocation of such request with respect to such shares. In addition, the shareholder and any duly authorized agent shall promptly provide any other information reasonably requested by the Corporation to allow it to satisfy its obligations under applicable law. Any requesting shareholder may revoke a request for a special meeting at any time by written revocation delivered to the Secretary at the principal executive offices of the Corporation. If, following such revocation at any time before the date of the Shareholder Requested Special Meeting, the remaining requests are from shareholders holding in the aggregate less than the Requisite Percent, the Board of Directors, in its discretion, may cancel the Shareholder Requested Special Meeting. (3) Notwithstanding the foregoing, the Secretary shall not be required to call a special meeting of shareholders if (A) the request for such special meeting does not comply with this Section 4(B), (B) the Board of Directors has called or calls an annual or special meeting of shareholders to be held not later than ninety (90) days after the date on which a valid request has been delivered to the Secretary (the “Delivery Date”), (C) the request is received by the Secretary during the period commencing ninety (90) days prior to the first anniversary of the date of the immediately preceding annual meeting and ending on the date of the next annual meeting, (D) the request contains an identical or substantially similar item (a “Similar Item”) to an item that was presented at any meeting of shareholders held within one hundred and twenty (120) days prior to the Delivery Date (and, for purposes of this clause (D) the election of directors shall be deemed a “Similar Item” with respect to all items of business involving the election or removal of directors), (E) the request relates to an item of business that is not a proper subject for action by the shareholders of the Corporation under applicable law, or (F) the request was made in a manner that involved or would involve a violation of Regulation 14A under the Exchange Act or other applicable law. (4) Any Shareholder Requested Special Meeting shall be held at such date, time and place within or without the state of Delaware as may be fixed by the Board of Directors; provided, however, that the date of any Shareholder Requested Special Meeting shall be not more than sixty (60) days after the record date for such meeting (the “Meeting Record Date”), which shall be fixed in accordance with Article V, Section 4 of these Bylaws, provided that, in no event shall the Meeting Record Date be more than twenty (20) days after the date on which a valid request for a Shareholder Requested Special Meeting, which complies with the requirements of this section and related provisions of these Bylaws, is delivered to the Secretary of the Corporation. In fixing a date and time for any Shareholder Requested Special Meeting, the Board of Directors may consider such factors as it deems relevant within the good faith exercise of business judgment, including, without limitation, the nature of the matters to be considered, the facts and circumstances surrounding any request for the special meeting and any plan of the Board of Directors to call an annual meeting or a special meeting. (5) Business transacted at any Shareholder Requested Special Meeting shall be limited to the purpose(s) stated in the request; provided, however, that nothing herein shall prohibit the Corporation from submitting additional matters to a vote of the shareholders at any Shareholder Requested Special Meeting. (3) Notwithstanding the foregoing, the Secretary shall not be required to call a special meeting of shareholders if (A) the request for such special meeting does not comply with this Section 4(B), (B) the Board of Directors has called or calls an annual or special meeting of shareholders to be held not later than ninety (90) days after the date on which a valid request has been delivered to the Secretary (the “Delivery Date”), (C) the request is received by the Secretary during the period commencing ninety (90) days prior to the first anniversary of the date of the immediately preceding annual meeting and ending on the date of the next annual meeting, D) the request contains an identical or substantially similar item (a “Similar Item”) to an item that was presented at any meeting of shareholders held within one hundred and twenty (120) days prior to the Delivery Date (and, for purposes of this clause (D) the election of directors shall be deemed a “Similar Item” with respect to all items of business involving the election or removal of directors), (E) the request relates to an item of business that is not a proper subject for action by the shareholders of the Corporation under applicable law, or (F) the request was made in a manner that involved or would involve a violation of Regulation 14A under the Exchange Act or other applicable law.(4) Any Shareholder Requested Special Meeting shall be held at such date, time and place within or without the state of Delaware as may be fixed by the Board of Directors; provided, however, that the date of any Shareholder Requested Special Meeting shall be not more than sixty (60) days after the record date for such meeting (the “Meeting Record Date”), which shall be fixed in accordance with Article V, Section 4 of these Bylaws, provided that, in no event shall the Meeting Record Date be more than twenty (20) days after the date on which a valid request for a Shareholder Requested Special Meeting, which complies with the requirements of this section and related provisions of these Bylaws, is delivered to the Secretary of the Corporation. In fixing a date and time for any Shareholder Requested Special Meeting, the Board of Directors may consider such factors as it deems relevant within the good faith exercise of business judgment, including, without limitation, the nature of the matters to be considered, the facts and circumstances surrounding any request for the special meeting and any plan of the Board of Directors to call an annual meeting or a special meeting.(5) Business transacted at any Shareholder Requested Special Meeting shall be limited to the purpose(s) stated in the request; provided, however, that nothing herein shall prohibit the Corporation from submitting additional matters to a vote of the shareholders at any Shareholder Requested Special Meeting.APPENDIX E D-3 www.hecla-mining.com125 YearsAPPENDIX DSection 5.Notice of Meetings. Written notice, stating the place, date and time of any annual or special meeting of shareholders, and the general nature of the business to be considered thereat, shall be given to each shareholder entitled to vote at such meeting at his address as it appears on the records of the Corporation, not less than ten nor more than sixty days before the date of the meeting.Section 6.Shareholder Action. Any action required or permitted to be taken by the shareholders of the Corporation must be effected at a duly called annual or special meeting of shareholders of the Corporation and may not be effected by any consent in writing by such shareholders.Section 7.Chairman of a Meeting. At each meeting of the shareholders the Chairman of the Board, or if he shall be absent therefrom, the President, or if he shall be absent therefrom, another officer of the Corporation chosen by the Board of Directors, shall act as chairman of the meeting or preside thereat.(A) (A)Annual Meetings of ShareholdersShareholders..(1) (1) Nominations of persons for election to the Board of Directors of the Corporation and the proposal of business to be considered by the shareholders may be made at an annual meeting of shareholders (a) pursuant to the Corporation’s notice of meeting, (b) by or at the direction of the Board of Directors or (c) by any shareholder of the Corporation who was a shareholder of record at the time of giving of notice provided for in this By-Law, who is entitled to vote at the meeting and who complied with the notice procedures set forth in this By-Law.(2) For nominations or other business to be properly brought before an annual meeting by a shareholder pursuant to clause (c) of paragraph (A)(1) of this By-Law, the shareholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a shareholder’s notice shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from such anniversary date, notice by the shareholder to be timely must be so delivered not earlier than the 120thday prior to such annual meeting and not later than the close of business on the later of the 90thday prior to such annual meeting or the 10thday following the day on which public announcement of the date of such meeting is first made. In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a shareholder’s notice as described above. Such shareholder’s notice shall set forth (a) as to each person whom the shareholder proposes to nominate for election or reelection as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act’) and Rule 14a-11 thereunder (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (b) as to any other business that the shareholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such shareholder and the beneficial owner, if any, on whose behalf the proposal is made; (c) as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf of the nomination or proposal is made (i) the name and address of such shareholder, as they appear on the Corporation’s books, and of such beneficial owner and (ii) the class and number of shares of the Corporation which are owned beneficially and of record by such shareholder and such beneficial owner.(3) Notwithstanding anything in the second sentence of paragraph (A)(2) of this By-Law to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation is increased and there is no public announcement naming all of the nominees for Director or specifying the size of the increased Board of Directors made by the Corporation at least 100 days prior to the first anniversary of the preceding year’s annual meeting, a shareholder’s notice required by this By-Law shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be125 Years2016 Proxy StatementD-4APPENDIX Ddelivered to the Secretary of the Corporation at the principal executive offices of the Corporation not later than the close of business on the 10th day following the day on which such public announcement is first made by the Corporation.(B)Special Meetings of Shareholders. Only such business shall be conducted at a special meeting of shareholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of shareholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (1) by or at the direction of the Board of Directors or (2)provided that the Board of Directors has determined that directors shall be elected at such special meeting, by any shareholder of the Corporation who is a shareholder of record at the time of giving of notice provided for in this By-Law, who shall beis entitled to vote at the meeting andwho (y) in the case of a special meeting of shareholders called pursuant to clause (i) of the first sentence of Section (4)(A) of Article II of these Bylaws, compliescomplied with the notice procedures set forth in this By-Law,By-Law.(2) For nominations or (z) in the case ofother business to be properly brought before an annual meeting by a Shareholder Requested Special Meeting, complies with the requirements set forth in section 4(B) of Article II of these Bylaws. In the event the Corporation calls a special meeting of shareholders for the purpose of electing one or more directors, any such shareholder may nominate a person or persons (as the case may be), for election to such position(s) as specified in the Corporation’s notice of meeting, if(i) in the case of a special meeting of shareholders called pursuant to clause (i)(c) of paragraph (A)(1) of this By-Law, the shareholder must have given timely notice thereof in writing to the Secretary of the first sentence of Section (4)(A) of Article II of these Bylaws, theCorporation. To be timely, a shareholder’s notice required by paragraph (A)(2) of this By-Law shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from such anniversary date, notice by the shareholder to be timely must be so delivered not earlier than the 120thday prior to such specialannual meeting and not later than the close of business on the later of the 90thday prior to such specialannual meeting or the 10thday following the day on which public announcement is first made of the date of such meeting is first made. In no event shall the specialpublic announcement of an adjournment of an annual meeting commence a new time period for the giving of a shareholder’s notice as described above. Such shareholder’s notice shall set forth (a) as to each person whom the shareholder proposes to nominate for election or reelection as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under theSecurities Exchange Actof 1934, as amended (the “Exchange Act’) and Rule 14a-11 thereunder (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (b) as to any other business that the shareholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such shareholder and the beneficial owner, if any, on whose behalf the proposal is made; (c) as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf of the nominees proposednomination or proposal is made (i) the name and address of such shareholder, as they appear on the Corporation’s books, and of such beneficial owner and (ii) the class and number of shares of the Corporation which are owned beneficially and of record by such shareholder and such beneficial owner.(3) Notwithstanding anything in the second sentence of paragraph (A)(2) of this By-Law to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation is increased and there is no public announcement naming all of the nominees for Director or specifying the size of the increased Board of Directors made by the Corporation at least 100 days prior to the first anniversary of the preceding year’s annual meeting, a shareholder’s notice required by this By-Law shall also be elected atconsidered timely, but only with respect to nominees for any new positions created by such meeting, or (ii) in the case of a Shareholder Requested Special Meeting, the shareholder complies with the requirements set forth in Section 4(b) of Article II of these Bylaws.increase, if it shall beAPPENDIX E provided that the Board of Directors has determined that directors shall be elected at such special meeting, by any shareholder of the Corporation who is a shareholder of record at the time of giving of notice provided for in this By-Law, who shall be entitled to vote at the meeting andwho (y) in the case of a special meeting of shareholders called pursuant to clause (i) of the first sentence of Section (4)(A) of Article II of these Bylaws, complies with the notice procedures set forth in this By-Law,or (z) in the case of a Shareholder Requested Special Meeting, complies with the requirements set forth in section 4(B) of Article II of these Bylaws. In the event the Corporation calls a special meeting of shareholders for the purpose of electing one or more directors, any such shareholder may nominate a person or persons (as the case may be), for election to such position(s) as specified in the Corporation’s notice of meeting, if(i) in the case of a special meeting of shareholders called pursuant to clause (i) of the first sentence of Section (4)(A) of Article II of these Bylaws, the shareholder’s notice required by paragraph (A)(2) of this By-Law shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the 120th day prior to such special meeting and not later than the close of business on the later of the 90th day prior to such special meeting or the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting,or (ii) in the case of a Shareholder Requested Special Meeting, the shareholder complies with the requirements set forth in Section 4(b) of Article II of these Bylaws. In no event shall the public announcement of an adjournment of a special meeting commence a new time period for the giving of a shareholder’s notice as described above.(C) General.(1)Only such persons who are nominated in accordance with the procedures set forth in this By-Law shall be eligible to serve as directors and only such business shall be conducted at a meeting of shareholders as shall have been brought before the meeting in accordance with the procedures set forth in this By-Law. The Chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the procedures set forth in this By-Law and, if any proposed nomination or business is not in compliance with this By-Law, to declare that such defective proposal shall be disregarded.General. (1) Only such persons who are nominated in accordance with the procedures set forth in this By-Law shall be eligible to serve as directors and only such business shall be conducted at a meeting of shareholders as shall have been brought before the meeting in accordance with the procedures set forth in this By-Law. The Chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the procedures set forth in this By-Law and, if any proposed nomination or business is not in compliance with this By-Law, to declare that such defective proposal shall be disregarded. (2) For purposes of this By-Law, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act. (3) Notwithstanding the foregoing provision of this By-Law, a shareholder shall also comply with all applicable requirements of the Exchange Act with respect to the matters set forth in this By-Law. Nothing in this By-Law shall be deemed to affect any rights of (i) shareholders to request inclusion of the proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (ii) the holders of any series of Preferred Stock to elect directors under specified circumstances. D-5 www.hecla-mining.com125 YearsAPPENDIX EReconciliation of Net Income (Loss) (GAAP) to Earnings Before Interest, Taxes, Depreciation, and Amortization (non-GAAP) to Net Income (Loss) (GAAP) Year ended December 31, 2016 2015 2014 Net income (loss) (GAAP) $ 69,547 $ (86,968 ) $ 17,824 Interest expense, net of amount capitalized1 21,796 25,389 26,775 Income tax provision (benefit) 27,428 56,310 (5,240 ) Depreciation, depletion, and amortization 117,413 112,585 112,173 EBITDA $ 236,184 $ 107,316 $ 151,532 1 On April 12, 2013, we completed an offering of $500 million in aggregate principal amount of our Senior Notes due May 1, 2021 (the “Notes”), and issued additional Notes in 2014 to fund one of our defined benefit pension plans. SeeNote 6 of Notes to Consolidated Financial Statements in our Form 10-K for the calendar year ended December 31, 2015, 2014 and 2013 (in thousands).Year ended December 31, 2015 2014 2013 Net income (loss) (GAAP) $ (86,968 ) $ 17,824 $ (25,130 ) Interest expense, net of amount capitalized1 25,389 26,775 21,689 Income tax provision (benefit) 56,310 (5,240 ) (9,795 ) Depreciation, depletion, and amortization 112,585 112,173 82,366 EBITDA $ 107,316 $ 151,532 $ 69,130 1On April 12, 2013, we completed an offering of $500 million in aggregate principal amount of our Senior Notes due May 1, 2021 (the “Notes”), and issued additional Notes in 2014 to fund one of our defined benefit pension plans. SeeNote 6ofNotes to Consolidated Financial Statementsin our Form 10-K for the calendar year ended December 31, 2015,2016, for more information. The Notes bear interest at a rate of 6.875% per year from the date of original issuance or from the most recent payment date to which interest has been paid or provided for. Interest on the Notes is payable on May 1 and November 1 of each year, commencing November 1, 2013.APPENDIX F 125 Years2016 Proxy StatementE-1APPENDIX E Adjusted EBITDA (non-GAAP) to Net Income (Loss) (GAAP)The non-GAAP measure of Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) is calculated as net loss before the following items: interest expense, income tax provision, depreciation, depletion, and amortization expense, exploration expense, pre-development expense, acquisition costs, foreign exchange gains, gains on derivative contracts, provisional price gains, provisions for closed operationsexpense, stock-based compensation, unrealized losses on investments, interest and other income, and loss on sale of investments. Management believes that, when presented in conjunction with comparable GAAP measures, Adjusted EBITDA is useful to investors in evaluating our operating performance. The following table reconciles net (loss) to Adjusted EBITDA (in thousands):(non-GAAP) to Net Income (Loss) (GAAP)Year Ended
December 31,
2015Net (loss) $ (86,968 ) Plus: Interest expense, net of amount capitalized 25,389 Plus: Income taxes 56,310 Plus: Depreciation, depletion and amortization 111,489 Plus: Exploration expense 17,745 Plus: Pre-development expense 4,213 Plus: Acquisition costs 2,162 (Less): Foreign exchange (gain) (24,551 ) Less: Gains on derivative contracts (8,252 ) (Less): Provisional price (gains) (634 ) Plus: Provision for closed operations and environmental matters 12,036 Plus: Stock-based compensation 5,425 Plus: Unrealized losses on investments 3,333 (Less): Other (872 ) Adjusted EBITDA $ 116,825 Reconciliation of Cash Cost, Before By-product Credits Per Silver/Gold Ounce and Cash Cost, After By-product Credits Per Silver/Gold Ounce (non-GAAP)Year Ended
December 31,
2016Net (loss) $ 69,547 Plus: Interest expense, net of amount capitalized 21,796 Plus: Income taxes 27,428 Plus: Depreciation, depletion and amortization 115,468 Plus: Exploration expense 14,720 Plus: Pre-development expense 3,137 Plus: Acquisition costs 2,695 Plus: Foreign exchange loss 2,926 Less: Gains on derivative contracts (4,423 ) Plus: Provisional price losses 918 Plus: Provision for closed operations and environmental matters 4,813 Plus: Stock-based compensation 5,932 Plus: Unrealized losses on investments 177 Less: Other (507 ) Adjusted EBITDA $ 264,627 Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP)The tables below present reconciliations between the non-GAAP measures of Cash Cost, Before By-product Credits Per Silver/Gold Ounce and Cash Cost After By-product Credits Per Silver/Gold Ounce, to the GAAP measure of cost of sales and other direct production costs and depreciation, depletion and amortization for our operations for the year ended December 31, 2015 (in thousands, except costs per ounce and gold ounces produced).Cash Cost, After By-product Credits Per Silver/Gold Ounce is an important operating statistic that we utilize to measure each mine’s operating performance. It also allows us to benchmark the performance of each of our mines versus those of our competitors. As a primary silver mining company, we also use the statistic on an aggregate basis - aggregating the Greens Creek, Lucky Friday and San Sebastian mines, but not Casa Berardi, which is a primary gold mine - tocompare our performance with that of other primary silver mining companies. Similarly, the statistic is useful in identifying acquisition and investment opportunities as it provides a common tool for measuring the financial performance of other mines with varying geologic, metallurgical and operating characteristics.(non-GAAP)Cash Cost, Before By-product Credits Per Silver/Gold Ounce include all direct and indirect operating cash costs related directly to the physical activities of producing metals, including mining, processing and other plant costs, third-party refining expense, on-site general and administrative costs, royalties and mining production taxes. By-product credits include revenues earned from all metals other than the primary metal produced at each unit. Cash Cost, After By-product Credits, per Silver/Gold Ounce, provides management and investors an indicationAPPENDIX FE-2 Total, Greens Creek. Lucky Friday
and San Sebastian UnitsIn thousands (except per ounce amounts) Year ended December 31, 2016 2015 2014 By-product value, all silver properties: Zinc $ 92,277 $ 87,383 $ 95,701 Gold 99,905 59,019 61,871 Lead 62,989 55,955 66,082 Total by-product credits $ 255,171 $ 202,357 $ 223,654 By-product credits per silver ounce, all silver properties Zinc $ 5.38 $ 7.56 $ 8.65 Gold 5.83 5.10 5.59 Lead 3.67 4.84 5.97 Total by-product credits $ 14.88 $ 17.50 $ 20.21 Casa Berardi Unit In thousands (except per ounce amounts) Year ended December 31, 2016 2015 2014 Silver by-product value $ 572 $ 457 $ 464 Silver by-product credits per gold ounce $ 3.92 $ 3.57 $ 3.62 Total, Greens Creek, Lucky Friday
and San Sebastian UnitsIn thousands (except per ounce amounts) Year ended December 31, 2016 2015 2014 Cost of sales and other direct production costs and depreciation, $ 298,740 $ 260,498 $ 267,536 depletion and amortization (GAAP) Depreciation, depletion and amortization (68,156 ) (67,815 ) (72,936 ) Treatment costs 84,535 80,239 82,639 Change in product inventory (1,429 ) (1,632 ) 1,649 Reclamation and other costs (5,406 ) (1,319 ) (2,046 ) Cash Cost, Before By-product Credits2 308,284 269,971 276,842 By-product credits (255,171 ) (202,357 ) (223,654 ) Cash Cost, After By-product Credits 53,113 67,614 53,188 Divided by silver ounces produced 17,144 11,562 11,065 Cash Cost, Before By-product Credits, per Silver Ounce 17.98 23.35 25.02 By-product credits per silver ounce (14.88 ) (17.50 ) (20.21 ) Cash Cost, After By-product Credits, per Silver Ounce $ 3.10 $ 5.85 $ 4.81 Greens Creek Unit In thousands (except per ounce amounts) Year ended December 31, 2016 2015 2014 Cost of sales and other direct production costs and depreciation, depletion $ 191,297 $ 195,276 $ 199,682 and amortization (GAAP) Depreciation, depletion and amortization (52,564 ) (56,553 ) (63,505 ) Treatment costs 62,754 63,284 63,313 Change in product inventory (1,866 ) (4,222 ) 1,706 Reclamation and other costs (2,327 ) (1,342 ) (1,949 ) Cash Cost, Before By-product Credits2 197,294 196,443 199,247 By-product credits (161,782 ) (163,394 ) (176,650 ) Cash Cost, After By-product Credits 35,512 33,049 22,597 Divided by silver ounces produced 9,254 8,452 7,826 Cash Cost, Before By-product Credits, per Silver Ounce 21.32 23.24 25.46 By-product credits per silver ounce (17.48 ) (19.33 ) (22.57 ) Cash Cost, After By-product Credits, per Silver Ounce $ 3.84 $ 3.91 $ 2.89 2 www.hecla-mining.com125 YearsAPPENDIX Eof operating cash flow, after consideration of the average price, received from production. Management also uses this measurement for the comparative monitoring of performance of our mining operations period-to-period from a cash flow perspective. Cash Cost, After By-product Credits, per Silver/Gold Ounce is a measure developed by precious metals companies (including the Silver Institute) in an effort to provide a uniform standard for comparison purposes. There can be no assurance, however, that our reporting of this non-GAAP measure is the same as that reported by other mining companies.The Casa Berardi section below reports Cash Cost, After By-product Credits, per Gold Ounce for the production of gold, its primary product, and by-product revenues earned from silver, which is a by-product at Casa Berardi. Only costs and ounces produced relating to units with thesame primary product are combined to represent Cash Cost, After By-product Credits, per Ounce. Thus, the gold produced at our Casa Berardi unit is not included as a by-product credit when calculating Cash Cost, After By-product Credits, per Silver Ounce for the total of Greens Creek, Lucky Friday and San Sebastian, our combined silver properties.As depicted in the Total, Greens Creek, Lucky Friday and San Sebastian Unit tables below, by-product credits comprise an essential element of our silver unit cost structure distinguishing our silver operations due to the polymetallic nature of their orebodies. By-product credits included in our presentation of Cash Cost, After Byproduct Credits, per Silver Ounce include: Total, Greens Creek. Lucky Friday
and San Sebastian UnitsIn thousands (except per ounce amounts) Year ended December 31, 2015 2014 2013 By-product value, all silver properties: Zinc $ 87,383 $ 95,7016 $ 77,616 Gold 59,019 61,871 66,907 Lead 55,955 66,082 48,973 Total by-product credits $ 202,357 $ 223,654 $ 193,496 By-product credits per silver ounce, all silver properties Zinc $ 7.56 $ 8.65 $ 8.71 Gold 5.10 5.59 7.51 Lead 4.84 5.97 5.50 Total by-product credits $ 17.50 $ 20.21 $ 21.72 By-product credits included in our presentation of Cash Cost, After By-product Credits, per Gold Ounce for our Casa Berardi Unit include: Casa Berardi Unit3 In thousands (except per ounce amounts) Year ended December 31, 2015 2014 2013 Silver by-product value 457 464 262 Silver by-product credits per gold ounce 3.57 3.62 4.19 Cost of sales and other direct production costs and depreciation, depletion and amortization is the most comparable financial measure calculated in accordance with GAAP to Cash Cost, After By-product Credits. The sum of the cost of sales and other direct production costs and depreciation, depletion and amortization forour operating units in the tables below is presented in our Consolidated Statement of Operations and Comprehensive (Loss) (in thousands) included in our audited financial statements which are included in our Annual Report on Form 10-K for the calendar year ended December 31, 2015.125 Years2016 Proxy StatementE-3APPENDIX E
and San Sebastian UnitsIn thousands (except per ounce amounts) Year ended December 31, 2015 2014 2013 Cash Cost, Before By-product Credits1 $ 269,971 $ 276,842 $ 254,460 By-product credits (202,357 ) (223,654 ) (193,496 ) Cash Cost, After By-product Credits 67,614 53,188 60,964 Divided by silver ounces produced 11,562 11,065 8,907 Cash Cost, Before By-product Credits, per Silver Ounce 23.35 25.02 28.56 By-product credits per silver ounce (17.50 ) (20.21 ) (21.72 ) Cash Cost, After By-product Credits, per Silver Ounce $ 5.85 $ 4.81 $ 6.84 Reconciliation to GAAP: Cash Cost, After By-product Credits $ 67,614 $ 53,188 $ 60,964 Depreciation, depletion and amortization 67,815 72,936 63,098 Treatment costs (80,239 ) (82,639 ) (76,823 ) By-product credits 202,357 223,654 193,496 Change in product inventory 1,632 (1,649 ) (246 ) Reclamation and other costs 1,319 2,046 2,100 Cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) $ 260,498 $ 267,536 $ 242,589 Greens Creek Unit In thousands (except per ounce amounts) Year ended December 31, 2015 2014 2013 Cash Cost, Before by-Product Credits1 $ 196,443 $ 199,247 $ 203,496 By-product credits (163,394 ) (176,650 ) (170,563 ) Cash Cost, After By-product Credits 33,049 22,597 32,933 Divided by silver ounces produced 8,452 7,826 7,448 Cash Cost, Before By-product Credits, per Silver Ounce 23.24 25.46 27.32 By-product credits per silver ounce (19.33 ) (22.57 ) (22.90 ) Cash Cost, After By-product Credits, per Silver Ounce $ 3.91 $ 2.89 $ 4.42 Reconciliation to GAAP: Cash Cost, After By-product Credits $ 33,049 $ 22,597 $ 32,933 Depreciation, depletion and amortization 56,553 63,505 55,265 Treatment costs (63,284 ) (63,313 ) (67,341 ) By-product credits 163,394 176,650 170,563 Change in product inventory 4,222 (1,706 ) (159 ) Reclamation and other costs 1,342 1,949 1,947 Cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) $ 195,276 $ 199,682 $ 193,526 E-4 www.hecla-mining.com125 YearsAPPENDIX E Lucky Friday Unit In thousands (except per ounce amounts) Year ended December 31, 2015 2014 2013 Cash Cost, Before By-product Credits1 $ 72,052 $ 77,595 $ 50,964 By-product credits (38,035 ) (47,004 ) (22,933 ) Cash Cost, After By-product Credits 34,017 30,591 28,031 Divided by silver ounces produced 3,028 3,239 1,459 Cash Cost, Before By-product Credits, per Silver Ounce 23.79 23.95 34.93 By-product credits per silver ounce (12.56 ) (14.51 ) (15.72 ) Cash Cost, After By-product Credits, per Silver Ounce $ 11.23 $ 9.44 $ 19.21 Reconciliation to GAAP: Cash Cost, After By-product Credits $ 34,017 $ 30,591 $ 28,031 Depreciation, depletion and amortization 11,262 9,431 7,833 Treatment costs (16,915 ) (19,326 ) (9,482 ) By-product credits 38,035 47,004 22,933 Change in product inventory (1,154 ) 57 (405 ) Reclamation and other costs (23 ) 97 153 Cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) $ 65,222 $ 67,854 $ 49,063 San Sebastian Unit2 In thousands (except per ounce amounts) Year ended December 31, 2015 2014 2013 Cash Cost, Before By-product Credits1 $ 1,476 $ — $ — By-product credits (928 ) — — Cash Cost, After By-product credits 548 — — Divided by silver ounces produced 82 — — Cash Cost, Before By-product Credits, per Silver Ounce 18.07 — — By-product credits per silver ounce (11.36 ) — — Cash Cost, After By-product Credits, per Silver Ounce $ 6.71 $ — $ — Reconciliation to GAAP: Cash Cost, After By-product Credits $ 548 $ — $ — Treatment costs (40 ) — — By-product credits 928 — — Change in product inventory (1,436 ) — — Cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) $ — $ — $ — 125 Years2016 Proxy StatementE-5APPENDIX E Casa Berardi Unit3 In thousands (except ounce and per ounce amounts) Year ended December 31, 2015 2014 2013 Cash Cost, Before By-product Credits1 $ 99,129 $ 106,438 $ 59,717 By-product credits (457 ) (464 ) (262 ) Cash Cost, After by-product credits 98,672 105,974 59,455 Divided by gold ounces produced 127,891 128,244 62,532 Cash Cost, Before By-product Credits, per Gold Ounce 775.11 829.97 954.98 By-product credits per gold ounce (3.57 ) (3.62 ) (4.19 ) Cash Cost, After By-product Credits, per Gold Ounce $ 771.54 $ 826.35 $ 950.79 Reconciliation to GAAP: Cash Cost, After By-product Credits $ 98,672 $ 105,974 $ 59,455 Depreciation, depletion and amortization 43,674 38,198 18,030 Treatment costs (670 ) (564 ) (268 ) By-product credits 457 464 262 Change in product inventory 1,970 3,151 (3,766 ) Reclamation and other costs 455 820 142 Cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) $ 144,558 $ 148,043 $ 73,855 Total, All Locations In thousands Year ended December 31, 2015 2014 2013 Reconciliation to GAAP: Cash Cost, After By-product Credits $ 166,286 $ 159,162 $ 120,419 Depreciation, depletion and amortization 111,489 111,134 81,128 Treatment costs (80,909 ) (83,203 ) (77,092 ) By-product credits 202,814 224,118 193,758 Change in product inventory 3,602 1,502 (4,012 ) Reclamation and other costs 1,774 2,867 2,242 Cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) $ 405,056 $ 415,580 $ 316,443 1Includes all direct and indirect operating costs related directly to the physical activities of producing metals, including mining, processing and other plant costs, third-party refining and marketing expense, on-site general and administrative costs, royalties and mining production taxes, after by-product revenues earned from all metals other than the primary metal produced at each unit. 2Commercial production began at the San Sebastian unit in the fourth quarter of 2015. See theSan Sebastian Segmentsection of our Form 10-K for the calendar year ended December 31, 2015 for further discussion.3On June 1, 2013, we completed the acquisition of Aurizon Mines Ltd., which gave us 100% ownership of the Casa Berardi mine in Quebec, Canada. The information presented reflects our ownership of Casa Berardi commencing as of that date. SeeNote 15 of NotestoConsolidated Financial Statementsin our Form 10-K for the calendar year ended December 31, 2015, for more information. The primary metal produced at Casa Berardi is gold, with a by-product credit for the value of silver production.E-6 www.hecla-mining.com125 Years
MEETING TO BE HELD AT:Eric A. Johnston AuditoriumNorthwest Museum of Arts & Culture2316 W. 1st AvenueSpokane, WashingtonFor directions contact (509) 456-3931
Lucky Friday Unit In thousands (except per ounce amounts) Year ended December 31, 2016 2015 2014 Cost of sales and other direct production costs and depreciation, $ 76,210 $ 65,222 $ 67,854 depletion and amortization (GAAP) Depreciation, depletion and amortization (11,810 ) (11,262 ) (9,431 ) Treatment costs 20,277 16,915 19,326 Change in product inventory (1,162 ) 1,154 (57 ) Reclamation and other costs (822 ) 23 (97 ) Cash Cost, Before By-product Credits2 82,693 72,052 77,595 By-product credits (50,722 ) (38,035 ) (47,004 ) Cash Cost, After By-product Credits 31,971 34,017 30,591 Divided by silver ounces produced 3,596 3,028 3,239 Cash Cost, Before By-product Credits, per Silver Ounce 23.00 23.79 23.95 By-product credits per silver ounce (14.11 ) (12.56 ) (14.51 ) Cash Cost, After By-product Credits, per Silver Ounce $ 8.89 $ 11.23 $ 9.44 San Sebastian Unit3 In thousands (except per ounce amounts) Year ended December 31, 2016 2015 2014 Cost of sales and other direct production costs and depreciation, $ 31,233 $ — $ — depletion and amortization (GAAP) Depreciation, depletion and amortization (3,782 ) — — Treatment costs 1,504 40 — Change in product inventory 1,599 1,436 — Reclamation and other costs (2,257 ) — — Cash Cost, Before By-product Credits2 28,297 1,476 — By-product credits (42,667 ) (928 ) — Cash Cost, After By-product credits (14,370 ) 548 — Divided by silver ounces produced 4,294 82 — Cash Cost, Before By-product Credits, per Silver Ounce 6.59 18.07 — By-product credits per silver ounce (9.94 ) (11.36 ) — Cash Cost, After By-product Credits, per Silver Ounce $ (3.35 ) $ 6.71 $ — 2 Includes all direct and indirect operating costs related directly to the physical activities of producing metals, including mining, processing and other plant costs, third-party refining and marketing expense, on-site general and administrative costs, royalties and mining production taxes, after by-product revenues earned from all metals other than the primary metal produced at each unit. 3 Commercial production began at the San Sebastian unit in the fourth quarter of 2016. See theSan Sebastian Segmentsection of our Form 10-K for the calendar year ended December 31, 2016 for further discussion. Casa Berardi Unit In thousands (except ounce and per ounce amounts) Year ended December 31, 2016 2015 2014 Cost of sales and other direct production costs and depreciation, $ 155,711 $ 144,558 $ 148,043 depletion and amortization (GAAP) Depreciation, depletion and amortization (47,312 ) (43,674 ) (38,198 ) Treatment costs 1,264 670 564 Change in product inventory 2,890 (1,970 ) (3,151 ) Reclamation and other costs (459 ) (455 ) (820 ) Cash Cost, Before By-product Credits2 112,094 99,129 106,438 By-product credits (572 ) (457 ) (464 ) Cash Cost, After by-product credits 111,522 98,672 105,974 Divided by gold ounces produced 145,975 127,891 128,244 Cash Cost, Before By-product Credits, per Gold Ounce 767.90 775.11 829.97 By-product credits per gold ounce (3.92 ) (3.57 ) (3.62 ) Cash Cost, After By-product Credits, per Gold Ounce $ 763.98 $ 771.54 $ 826.35 Total, All Locations In thousands Year ended December 31, 2016 2015 2014 Reconciliation to GAAP: Cost of sales and other direct production costs and depreciation, $ 454,451 $ 405,056 $ 415,580 depletion and amortization (GAAP) Depreciation, depletion and amortization (115,468 ) (111,489 ) (111,134 ) Treatment costs 85,799 80,909 83,203 By-product credits (255,743 ) (202,814 ) (224,118 ) Change in product inventory 1,461 (3,602 ) (1,502 ) Reclamation and other costs (5,865 ) (1,774 ) (2,867 ) Cash Cost, After By-product Credits $ 164,635 $ 166,286 $ 159,162 2 Includes all direct and indirect operating costs related directly to the physical activities of producing metals, including mining, processing and other plant costs, third-party refining and marketing expense, on-site general and administrative costs, royalties and mining production taxes, after by-product revenues earned from all metals other than the primary metal produced at each unit. 
HECLA MINING COMPANY6500 N. MINERAL DRIVE, SUITE 200COEUR D'ALENE, ID 83815VOTE BY INTERNET - www.proxyvote.comUse the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
MEETING TO BE HELD AT:If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.VOTE BY PHONE - 1-800-690-6903Fairmont Pacific Rim HotelUse any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.1038 Canada Place
Vancouver, British Columbia
CanadaVOTE BY MAILMark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.For directions contact (604) 695-5300
6500 N. MINERAL DRIVE
SUITE 200
COEUR D'ALENE, ID 83815
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years.
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions.
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E04596-P76532 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. HECLA MINING COMPANY1. Election of Directors ForWithholdFor AllAllAllExceptTHE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE NOMINEES FOR DIRECTOR LISTED IN ITEM 1 AND "FOR" PROPOSALS 2, 3, 4 AND 5☐☐☐To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below.Nominees For Against Abstain 1A Phillips S. Baker, Jr. ☐ ☐ ☐ 1B George R. Johnson ☐ ☐ ☐ 1. ELECTION OF DIRECTORSNominees:01) Ted Crumley02)Terry V. Rogers03)Charles B. StanleyThe Board of Directors recommends you vote FOR proposals 2 and 3. For Against Abstain 2. PROPOSAL to ratify and approve the selection of BDO USA, LLP, as independent auditors of the Company for the calendar year ending December 31, 2017. ☐ ☐ ☐ 3. Advisory resolution to approve executive compensation. ☐ ☐ ☐ The Board of Directors recommends you vote 1 YEAR on the following proposal: 1 year 2 years 3 years Abstain 4. Advisory vote on frequency of executive compensation vote. ☐ ☐ ☐ ☐ ForAgainstAbstain2. PROPOSAL to approve amendments to the Company's Certificate of Incorporation and Bylaws to remove certain 80% supermajority voting provisions.☐☐☐3.PROPOSAL to approve amendments to the Company's Certificate of Incorporation and Bylaws to permit shareholders to call special meetings of shareholders under certain circumstances.☐☐☐4.PROPOSAL to ratify and approve the selection of BDO USA, LLP, as the Company's independent registered public accounting firm for the calendar year ending December 31, 2016.☐☐☐5.Approval, on an advisory basis, of named executive officer compensation.☐☐☐6.The Board of Directors recommends you vote FOR proposals 5, 6, 7 and 8. For Against Abstain 5. PROPOSAL to approve the Amended and Restated Hecla Mining Company Stock Plan for nonemployee Directors, including to increase to 3,000,000 the number of shares of common stock available for issuance under the Amended and Restated Hecla Mining Company Stock Plan for nonemployee Directors. ☐ ☐ ☐ 6. PROPOSAL to approve the amendment to the Certificate of Incorporation of the Company increasing the number of authorized shares of common stock of the Company from 500,000,000 to 750,000,000. ☐ ☐ ☐ 7. PROPOSAL to approve amendments to the Company's Certificate of Incorporation and Bylaws to remove certain 80% supermajority voting provisions. ☐ ☐ ☐ 8. PROPOSAL to approve amendments to the Company's Certificate of Incorporation and Bylaws to permit shareholders to call special meetings of shareholders in certain circumstances. ☐ ☐ ☐ NOTE:In their discretion on all other business that may properly come before the meeting or any adjournment or adjournments thereof.This proxy will be voted as specified. If no specification is made, this proxy will be voted FOR the election of the three nominees for Director and FOR the approval of Proposals 2, 3, 4 and 5. This proxy also delegates discretionary authority to vote with respect to any other business which may properly come before the meeting or any adjournment or postponement thereof.IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE PLEASE MARK, SIGN, DATE, AND PROMPTLY RETURN THE PROXY CARD USING THE ENCLOSED ENVELOPE.Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.Signature [PLEASE SIGN WITHIN BOX]DateSignature (Joint Owners)DateImportant Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com.E04597-P76532HECLA MINING COMPANYEric A. Johnston AuditoriumNorthwest Museum of Arts & Culture2316 W. 1st AvenueSpokane, WashingtonANNUAL MEETING OF SHAREHOLDERSMay 19, 2016PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORSTHE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE NOMINEES FOR DIRECTOR LISTED IN ITEM 1 AND "FOR" PROPOSALS 2, 3, 4 AND 5The undersigned, revoking any previous proxies, hereby appoints PHILLIPS S. BAKER, JR. and MICHAEL B. WHITE, and each of them, proxies of the undersigned, with full power of substitution, to attend the Company's Annual Meeting of Shareholders on May 19, 2016, and any adjournments or postponements thereof, and there to vote the undersigned's shares of Common Stock of the Company on the following matters as described in the Board of Directors Proxy Statement for such meeting, a copy of which has been received by the undersigned.This Proxy will be voted as specified. If no specification is made, this Proxy will be voted FOR the election of the three nominees for Director and FOR the approval of Proposals 2, 3, 4 and 5. This proxy also delegates discretionary authority to vote with respect to any other business which may properly come before the meeting or any adjournment or postponementadjournments thereof.Continued and to be signed on reverse sideSignature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date 
FAIRMOUNT PACIFIC RIM HOTEL
1038 CANADA PLACE, VANCOUVER, BRITISH COLUMBIA, CANADA
May 25, 2017
