Additional information regarding the Annual Meeting is set forth in the accompanying proxy statement. Our Board of Directors (the “Board”) has specified the close of business on October 27, 201518, 2016 as the record date (“Record Date”) for the purpose of determining the stockholders who are entitled to receive notice of, and to vote at, the Annual Meeting. Only stockholders of record at the close of business on the Record Date are entitled to notice of and to vote at the Annual Meeting and at any adjournment or postponement thereof.

 

On behalf of the Blue Dolphin Board of Directors and management team, we thank you for your continued support. We are making great progress,excited about the opportunities that lie ahead, and we are well positionedlook forward to creating and positioning Blue Dolphin for growth into 2016.long-term success.

 

 

 

 

 

 

 

The Board has affirmatively determined that each of itsBlue Dolphin’s outside directors with the exception ofother than Jonathan P. Carroll, our Chief Executive Officer and President, and Herbert N. Whitney, is independent under applicable National Association of Securities Dealers Automated Quotations (“NASDAQ”)an “Independent Director” as such term is defined by OTCQX and SEC rules related to corporate governance.rules. The independent members of the Board have nominated Jonathan P. Carroll, Ryan A. Bailey, Amitav Misra, Christopher T. Morris, and Mr.Messrs. Carroll and Whitney to serve as directors until the next annual meeting of stockholders. Each director that has been nominated (each a “Director Nominee”) shall serve as a director until the next annual meeting of stockholders, or in each case until their successors have been duly elected and qualified, or until their earlier resignation or removal.

Each Director Nominee has consented to being nominated and has expressed a willingness to serve if elected. The Board has no reason to believe that any of the Director Nominees will be unable or unwilling to serve if elected. However, should any Director Nominee become unable or unwilling to serve as a director at the time of the Annual Meeting, the person or persons exercising the proxies will vote for the election of a substitute Director Nominee designated by the Board.

The following sets forth,This table shows, as of the Record Date, each Director Nominee’s name, age, principal occupation and directorships during the past five (5) years, as well as their relevant knowledge and experience that led to their nomination to the Board:

 

 

For purposes of determining whether to select UHY as our independent registered public accounting firm to perform the audit of our consolidated financial statements for the year ending December 31, 2015,2016, the Audit Committee conducted a thorough review of UHY’s performance. The Audit Committee considered:

UHY acts as our principal independent registered public accounting firm. We are asking our stockholders to ratify the selection of UHY as our independent registered public accounting firm. Although ratification is not required by our By-Laws or otherwise, the Board is submitting the selection of UHY to our stockholders for ratification as a matter of good corporate practice. If the selection is not ratified, the Audit Committee will consider whether it is appropriate to select another independent registered public accounting firm. Even if the selection is ratified, the Audit Committee, in its discretion, may select a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of Blue Dolphin and our stockholders.

A representative of UHY is expected to be available during the Annual Meeting, with the opportunity to make a statement if he or she decides, and will respond to appropriate questions.

At the date of this proxy statement, the Board was not aware of any matter to be acted upon at the Annual Meeting other than those matters set forth in Proposal Nos. (1) and (2), as described herein. If other business comes before the Annual Meeting, the persons named on the proxy will vote the proxy in accordance with their best judgment.

 

 

The Board consists of Messrs. Carroll, Bailey, Misra, Morris and Whitney with Mr. Carroll serving as Chairman. During 2014,2015, the Board held two (2) regular meetings and two (2) special meetings. Each director attended at least 75% of the total number of meetings of the Board and committees on which he served. The Board has two standing committees, the Audit Committee and the Compensation Committee. In February 2013, the Board formed a Special Committee of the Board to oversee a potential conversion of Blue Dolphin from a Delaware “C” corporation to a Delaware MLP.master limited partnership (“MLP”).

The MLP Conversion Special Committee consists of Messrs. Morris, Bailey, and Misra with Mr. Morris serving as Chairman. The MLP Conversion Special Committee did not formally meet during 2014.  The Board has affirmatively determined that all2015. However, members met with third-parties to ascertain the current members of the MLP Conversion Special Committee are independent.  The MLP Conversion Special Committee was formed by the Board in February 2013 to conduct a strategic review of the feasibility ofclimate for optimizing stockholder value bythrough converting Blue Dolphin from a publicly traded “C” corporation to a publicly traded MLP. Upon completion of its review,Due to a shift in market conditions over the past three years, the MLP Conversion Special Committee will makedetermined that a recommendation toconversion in the Board.  There canforeseeable future would not be no assurancein the best interests of shareholders. The MLP Conversion Special Committee was formed by the Board in February 2013. The Board has affirmatively determined that all members of the MLP Conversion Special Committee’s review will result in the proposal for or subsequent completion of a corporate reorganization of Blue Dolphin.Committee are independent.

 

Given the size of the Board, the Board adopted a “Board Nomination Procedures” policy in lieu of appointing a standing nominating committee. The policy is used by independent members of the Board when choosing nominees to stand for election. The Board will consider for possible nomination qualified nominees recommended by stockholders.stockholders in accordance with Blue Dolphin’s Certificate of Incorporation. As addressed in the “Board Nomination Procedures” policy, the manner in which independent directors evaluate nominees for director as recommended by a stockholder is the same as that for nominees received from other sources. (See “Director Nomination and Stockholder Proposals by Stockholders for Annual Meeting of Stockholders” in this proxy statement for more information).

 

 

Blue Dolphin is led by Jonathan P. Carroll, who has served as Chairman of the Board since 2014 and as our Chief Executive Officer and President since 2012. Having a single leader for the Company is commonly utilized by other public companies in the United States, and we believe it is effective for Blue Dolphin as well. This leadership structure demonstrates to our personnel, customers and stockholders that we are under strong leadership, with a single person setting the tone and having primary responsibility for managing our operations, and eliminates the potential for confusion or duplication of efforts. We do not believe that appointing an independent Board chairman, or a permanent lead director, would improve upon the performance of the Board.

Our Board is actively involved in overseeing Blue Dolphin’s risk management. Presentations by management to the Board include consideration of the challenges and risks to our business, and the Board and management actively engage in discussion on these topics. Furthermore, the two standing Board committees provide appropriate risk oversight. The Audit Committee oversees the accounting and financial reporting processes, as well as compliance, internal control, legal and risk matters. The Compensation Committee oversees compensation policies, including the approval of compensation for directors and management. We believe that the processes established to report and monitor systems for material risks applicable to us are appropriate and effective.

 

 

The Audit Committee’s primary duties and responsibilities are to:

The Audit Committee discussed with UHY its performance and independence for the matters required to be discussed pursuant to PCAOB guidance related to communication with Audit Committees.

 

 

 

 

Audit fees for 20142015 and 20132014 related to the audit of our consolidated financial statements and the review of our quarterly reports that are filed with the SEC. Audit-related fees for 2013 were for consultation services related to our contemplated MLP conversion.  The Audit Committee must pre-approve all audit and non-audit services provided to us by our independent registered public accounting firm.

Based on discussions with management and UHY, as well as review of UHY’s report to the Audit Committee, the Audit Committee then consisting of Messrs. Morris and Misra recommended to the Board that our audited consolidated financial statements for the fiscal year ended December 31, 2015, be included in the Annual Report, as filed with the SEC.

The Audit Committee:

   Christopher T. Morris, Chairman

   Ryan A. Bailey

   Amitav Misra

 

LEH manages and operates all of our properties pursuant to an Operating Agreement (the “Operating Agreement”). Under the Operating Agreement, LEH provides us with personnel, among other services, in capacities equivalent to Chief Executive Officer and Chief Financial Officer. All Blue Dolphin personnel work for and are paid directly by LEH. Blue Dolphin is billed at cost by LEH for certain personnel associated with Blue Dolphin Pipe Line Company, a wholly owned subsidiary of Blue Dolphin.

Pursuant to the Operating Agreement,This table shows compensation paid to our principal executive officer, principal financial officer, and the most highly compensated executive officers other than the principal executive officer and principal financial officer whose annual salary exceeded $100,000 in(collectively, the “Named Executive Officers”) pursuant to the Operating Agreement for services rendered to Blue Dolphin for the fiscal year ended December 31, 2014 (collectively, the “Named Executive Officers”) for services rendered to Blue Dolphin follows:2015:

The Compensation Committee reviews and recommends to the Board for its approval all compensation for the Chief Executive Officer and other senior executives.

LEH’s approach to compensation practices and policies applicable forto our non-executive personnel throughout our organization is consistent with the base pay market median for each positionposition. LEH believes its practices and policies in this regard are not reasonably likely to have a material adverse effect on us.

Under the Operating Agreement, LEH provides us with personnel, among other services, in capacities equivalent to Chief Executive Officer and Chief Financial Officer. AsMr. Carroll, our Chief Executive Officer and President, does not receive any compensation for his service as a result, we do not have any directors that are also our personnel of Blue Dolphin.director. The Compensation Committee reviews and recommends to the Board for its approval all compensation for the directors.

 

During 2014, theThe annual retainer payable to non-employee directors serving on the Board was decreased from $50,000 tois $40,000 per year. Payments are made in Common Stock and cash on a quarterly rotating basis.

Additional compensation is paid to non-employee directors for serving on the Audit Committee. The chairman of the Audit Committee receives an additional annual retainer of $5,000 in cash in the second and fourth quarters of each year. Members of the Audit Committee receive an additional annual retainer of $2,500 in cash in the second and fourth quarters of each year. During 2015, no additional compensation was paid to non-employee directors for serving on the MLP Conversion Special Committee. Non-employee directors serving on the Compensation Committee do not receive additional compensation. Non-employee directors are reimbursed for reasonable out-of-pocket expenses related to in-person meeting attendance.

 

As of the Record Date, there were no relationships between any of our directors or executive officers and any other director or executive officer of Blue Dolphin.

 

Based on discussions with management and review of the Compensation Discussion and Analysis, the Compensation Committee then consisting of Messrs. Morris, Bailey, and Misra, recommended to the Board that the Compensation Discussion and Analysis be included in the Annual Report and 20152016 proxy statement.

TheThis table below sets forthshows information with respect to persons or groups known to us to be the beneficial owners of more than five percent (5%) of our common stockCommon Stock as of the Record Date. Unless otherwise indicated, each named party has sole voting and dispositive power with respect to such shares.

 

 

 

Section 16(a) of the Exchange Act requires our directors, executive officers, and stockholders who own more than ten percent (10%) of the Common Stock, to file reports of stock ownership and changes in ownership with the SEC and to furnish us with copies of all such reports as filed. Based solely on a review of the copies of the Section 16(a) reports furnished to us, we are unaware of any late filings made during 2014.2015.

We have tentatively set the 20162017 Annual Meeting of Stockholders for June 15, 2016.14, 2017. Accordingly, stockholders should submit nominations and proposals in accordance with the guidance set forth below.

Our Amended and Restated Certificate of Incorporation provides that no person shall be eligible for nomination and election as a director unless written notice of such nomination is received from a stockholder of record by the Secretary of Blue Dolphin at least ninety (90) calendar days before the anniversary date of the previous year’s annual meeting. Further, such written notice is to be accompanied by the written consent of the nominee to serve, the name, age, business and residence addresses, and principal occupation of the nominee, the number of shares beneficially owned by the nominee, and any other information which would be required to be furnished by law with respect to any nominee for election to the Board. In order to avoid controversy as to the date on which a director nomination is received, stockholders of record must make submissions to us at our principal executive office by certified mail, return receipt requested. (See “Nomination Procedures”“Corporate Governance and Board Matters – Nominating Committee” in this proxy statement for more information.)

We did not receive any director nominee submissions by March 4, 2015,September 17, 2016, the deadline for the 2015 Annual Meeting.  The director nominee submission deadline for the 2016 Annual Meeting of Stockholders is March 9, 2016.Meeting.

Pursuant to SEC requirements, stockholders of record must submit stockholder proposals, for inclusion in the printed proxy materials, to us at least one hundred (120) calendar days before the date we released the previous year’s proxy statement for our annual meeting of stockholders. Any stockholderHowever, if the date of record that intendsthe annual meeting has been changed by more than thirty (30) days from the date of the previous year’s meeting, then stockholders must submit their proposals a reasonable time before Blue Dolphin begins to submit aprint and send its proxy materials. We did not receive any stockholder proposal notsubmissions by July 21, 2016, the deadline for inclusion in the printed materials for the 2016 Annual Meeting.

As noted above we expect our 2017 annual meeting to be held on June 14, 2017, and we therefore will print and send proxy materials on or around May 3, 2017. Accordingly, stockholder proposals must notify us at least forty-five (45) calendar days prior to the date we mail the proxy materials to stockholders.be submitted a reasonable time before May 3, 2017. In order to avoid controversy as to the date on which a stockholder proposal is received, stockholders of record must make submissions to us at our principal executive office by certified mail, return receipt requested.

 

Brokers, banks or other nominees may deliver only one copy of this proxy statement to multiple beneficial stockholders who share the same address, unless that broker, bank or other nominee has received contrary instructions from one or more of the beneficial stockholders. Upon written or oral request, we will promptly deliver a separate copy of this proxy statement to a beneficial stockholder at a shared address to which a single copy of the documents was delivered. Beneficial stockholders sharing an address who are receiving multiple copies of proxy materials and annual reports that wish to receive a single copy of such materials in the future will need to contact their broker, bank or other nominee to request that only a single copy of each document be mailed to all beneficial stockholders at the shared address in the future.

Registered and beneficial stockholders who wish to receive a separate copy of this proxy statement, now or in the future, should submit their request to Blue Dolphin, Investor Relations at (713) 568-4725, or submit a written request to Blue Dolphin Energy Company, Attention: Investor Relations, 801 Travis Street, Suite 2100, Houston, Texas 77002.

 

Houston, Texas