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independent registered public accounting firm for the fiscal year ending December 31, 2023;TGC INDUSTRIES, INC.PRELIMINARY PROXY STATEMENT — SUBJECT TO COMPLETION101 E. Park Blvd.,DAWSON GEOPHYSICAL COMPANY955800Plano, Texas 75074Midland, TX 79701
432-684-3000
To Be Held June 4, 2013[To•], 2023ofTGC INDUSTRIES, INC.:The annual meeting(the “Annual Meeting”) of the shareholders of TGC Industries, Inc. (the “Company”)Dawson Geophysical Company will be held at the University Club, 1 West 54th Street, New York, New York 10019, on June 4, 2013, at 10:00 a.m. (Eastern Daylight Saving Time)Central Time on [•], 2023. This year’s Annual Meeting will be a virtual meeting held over the internet. You will be able to attend the Annual Meeting, vote your shares electronically and submit your questions during the live audio webcast of the Annual Meeting by visiting www.virtualshareholdermeeting.com/DWSN2023 and entering your control number contained on your proxy card. The Annual Meeting will be held for the following purposes:sixfive directors to serve until the next annual meeting of shareholders and until their respective successors shall be elected and qualified;cast an advisory vote to approve named executive officer compensation;3.To approveamend the amendment to the Company’s restated articlesRestated Articles of incorporation to increase the authorized number of shares of TGC Common Stock to 35,000,000 and make other amendments to conform with the requirementsIncorporation, as amended, of the Texas Business Organizations Code;Company (the “Charter”) to remove Section 7(6)(f) requiring a supermajority vote for business combinations;Lane Gorman Trubitt, PLLCRSM US LLP as the Company’s Independent Registered Public Accounting Firm; andannual meeting and any adjournment thereof.Information regarding matters to be acted upon at the annual meeting is contained in the accompanying Proxy Statement. Only shareholders of record at the close of business on April 9, 2013, are entitled to notice of and to vote at the annual meeting and any adjournment thereof.All shareholders are cordially invited to attend the annual meeting. Whether or not you plan to attend, please complete, sign, and return promptly the enclosed proxy in the accompanying addressed envelope for which postage is prepaid. You may revoke the proxy at any time before the commencement of the annual meeting.By Order of the Board of Directors:James K. BrataSecretaryPlano, TexasMay 3, 2013IMPORTANTIT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE ANNUAL MEETING REGARDLESS OF THE NUMBER OF SHARES YOU HOLD. PLEASE COMPLETE, SIGN, AND RETURN PROMPTLY THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE, WHETHER OR NOT YOU INTEND TO BE PRESENT AT THE ANNUAL MEETING.
SOLICITATION OF PROXIES
This Proxy Statement is furnished to shareholders in connection with the solicitation of proxies by the Board of Directors of TGC Industries, Inc. (the “Company” or “TGC”) for the Annual Meeting of Shareholders to be held at the University Club, 1 West 54th Street, New York, New York 10019, on June 4, 2013, at 10:00 a.m. (Eastern Daylight Saving Time), and at any adjournment thereof, for the purpose of submitting to a vote of the shareholders the actions and proposals set forth in this Proxy Statement. The Notice of Meeting, the form of Proxy, and this Proxy Statement are being mailed to the Company’s shareholders on or about May 3, 2013.
Although solicitation (the total expense of which will be borne by the Company) is to be made primarily through the mail, the Company’s officers and employees and those of its transfer agent may solicit proxies personally, by telephone, facsimile, electronic mail or other forms of communication, but in such event no additional compensation will be paid by the Company for such solicitation. Further, brokerage firms, fiduciaries, and others may be requested to forward solicitation material regarding the annual meeting to beneficial owners of the Company’s common stock, par value $.01 per share (the “Common Stock”), and in such event the Company will reimburse them for all reasonable out-of-pocket expenses so incurred.
A copy of the Annual Report to shareholders of the Company for its fiscal year ended December 31, 2012, is being mailed with this Proxy Statement to all such shareholders entitled to vote, but does not form any part of the information for solicitation of proxies.
Important Notice Regarding the Availability of Proxy Materials
for the Annual Meeting of Shareholders
to be Held on June 4, 2013
This Proxy Statement, the accompanying proxy card, and the Company’s 2012 Annual Report to Shareholders are available at www.tgcseismic.com/proxy.
RECORD DATE AND VOTING SECURITIES
The Board of Directors of the Company has fixed the close of business on April 9, 2013 (the “Record Date”)November [•], 2023 as the record date for the determination of shareholders entitled to notice of and to vote at the annual meeting. AsAnnual Meeting and at any adjournment or adjournments thereof.
| | | | BY ORDER OF THE BOARD OF DIRECTORS | |
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| | | | James K. Brata, | |
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The Company’s Restated Articles of Incorporation authorize 25,000,000 shares of Common Stock. In voting on all matters expectedentitled to come beforevote at the annual meeting, a shareholder will beAnnual Meeting. Shareholders are entitled to one vote, in person (via the live audio webcast) or by proxy, for each share of Common Stock held in his, her, or itstheir name on the Record Date. The Company’s Restated Articlesrecord date.
ACTION TO BE TAKEN AND VOTE REQUIRED
Action willthe Common Stock outstanding and entitled to vote must be takenpresent (via the live audio webcast) or represented by proxy to constitute a quorum.
approval of the amendment to the Company’s restated articles of incorporation to increase the authorized number of shares of TGC Common Stock to 35,000,000 and make other amendments to conform with the requirements of the Texas Business Organizations Code; and (iv) FOR the ratification of Lane Gorman Trubitt, PLLC as the Company’s Independent Registered Public Accounting Firm. Any person executing the enclosed proxy may nevertheless revoke it at any time prior to the actual voting thereof by filing with the Secretary of the Company either a written instrument expressly revoking it or a duly executed proxy bearing a later date. Furthermore, such person may nevertheless electable to attend the annual meetingAnnual Meeting (via the live audio webcast), we urge you to vote by proxy.
Shareholders electat the nominated directorsAnnual Meeting and entitled to vote thereon. Directors are elected by a plurality of the votes cast at the annual meeting.cast. This means that the director nominees with regardthe most votes are elected, regardless of whether any nominee receives a majority of votes cast. Approval of the two proposals to Proposal No. 1,amend the shareholdersCharter will elect the six persons receiving the highest number of “for” votes at the annual meeting. With regard to Proposal No. 3,each require the affirmative vote of the holders of two-thirds (2/3rds)eighty percent (80%) or more of the issued and outstanding shares of common stock as ofCommon Stock outstanding on the Record Date is required for the shareholdersrecord date.
”; FOR THE PROPOSAL TO AMEND THE CHARTER TO REMOVE THE SUPERMAJORITY VOTE FOR BUSINESS COMBINATIONS AS DISCLOSED IN THIS PROXY STATEMENT AS DESCRIBED UNDER “PROPOSAL 2: CHARTER AMENDMENT TO REMOVE SUPERMAJORITY VOTE FOR BUSINESS COMBINATIONS”; FOR THE PROPOSAL TO AMEND THE CHARTER TO PERMIT SHAREHOLDERS TO TAKE NON-UNANIMOUS ACTION BY WRITTEN CONSENT AS DISCLOSED IN THIS PROXY STATEMENT AS DESCRIBED UNDER “PROPOSAL 3: CHARTER AMENDMENT TO PERMIT SHAREHOLDERS TO TAKE NON-UNANIMOUS ACTION BY WRITTEN CONSENT”; FOR THE APPOINTMENT OF RSM US LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM AS SET FORTH UNDER “PROPOSAL 4: RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM”; FOR THE PROPOSAL TO APPROVE A NON-BINDING ADVISORY RESOLUTION ON THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS PROXY STATEMENT AS DESCRIBED UNDER “PROPOSAL 5: ADVISORY VOTE ON EXECUTIVE COMPENSATION”; AND ON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE ANNUAL MEETING OR ANY ADJOURNMENTS THEREOF.
Six
Although it is not contemplatedrecommends that any nominee will be unable to serve as a director, in such event the proxies will be voted by the holders thereof for such other person as may be designated by the current Board of Directors. The management of the Company has no reason to believe that anyyou vote FOR all of the nominees will be unable or unwilling to serve if elected to office, and to the knowledge of management the nominees intend to serve the entire term for which election is sought.
Mr. Wayne A. Whitener, the Company’s President and Chief Executive Officer, is the only executive officer of the Company who is a nominee as set forth below. listed above.
Name | |
| Age | | | Position | |
Matthew Wilks | | | |||||
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Bruce Bradley | | | 65 | | | Director | |
| | | 67 | | | Director | |
Jose Carlos Fernandes | | | 57 | | | Director | |
Sergei Krylov | | | 45 | | | Director | |
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The Company’s Board of Directors recommends that you vote FOR all of the nominees listed above.
EXECUTIVE OFFICERS
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SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following tabulation sets forth the names of those persons who are known to the Company to be the beneficial owner(s) as of the Record Date of more than five percent (5%) of the Common Stock. Such tabulation also sets forth the number of shares of Common Stock beneficially owned as of the Record Date by each of the Company’s directors, nominees for director, named executive officers, and all directors and executive officers of the Company on January 10, 2022. Mr. Wilks currently serves as Executive Chairman of the board of directors for ProFrac Holdings Corp. He has also served as the President of ProFrac Holdings, LLC since October 2018, and served as its Chief Financial Officer since May 2017. Mr. Wilks also has served as Vice President of Investments for Wilks Brothers, LLC, our controlling shareholder, since January 2012. From 2010 to 2012, Mr. Wilks served as Vice President of Logistics for FTSI. Additionally, Mr. Wilks served as a group. Persons having direct beneficial ownership of Common Stock possess the sole voting and dispositive power in regard to such stock. Asmember of the Record Date there were 20,807,502 sharesboard of Common Stock outstanding.
The following tabulation also includes Common Stock covered by vested options granted under the Company’s 2006 Stock Awards Plan, which options are collectively referred to as “Stock Options.” The Stock Options have no voting or dividend rights.
Name & Address |
| Title of Class |
| Amount & Nature of |
| Approximate |
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Wayne A. Whitener |
| Common |
| 20,950 | (2)(6) | * |
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William J. Barrett |
| Common |
| 2,019,673 | (2)(3) | 9.68 | % |
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Herbert M. Gardner |
| Common |
| 802,870 | (2)(4) | 3.84 | % |
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Allen T. McInnes |
| Common |
| 1,062,621 | (2) | 5.09 | % |
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Edward L. Flynn |
| Common |
| 1,634,965 | (2)(5) | 7.83 | % |
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Stephanie P. Hurtt |
| Common |
| 394,786 | (2) | 1.90 | % |
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Daniel G. Winn |
| Common |
| 77,847 | (6) | * |
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James K. Brata |
| Common |
| 43,479 | (6) | * |
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Royce & Associates, LLC |
| Common |
| 1,472,138 | (7) | 7.08 | % |
Name & Address |
| Title of Class |
| Amount & Nature of |
| Approximate |
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Paradigm Capital Management, Inc. |
| Common |
| 1,960,966 | (8) | 9.42 | % |
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All directors and officers as a group of eight (8) persons |
| Common |
| 6,057,191 | (2)(3)(4)(5)(6) | 28.58 | % |
* Less than 1%
(1)The percentage calculations have been made in accordance with Rule 13d-3(d)(1) promulgated under the Securities Exchange Actdirectors of 1934, as amended. In making these calculations, sharesApproach Resources, Inc., an energy and production company focused on exploration, development and production of Common Stock beneficially owned by a person as a result of the ownership of certain Stock Options were deemed to be currently outstanding solely with respect to the holders of such Stock Options.
(2)Includes the number of shares of Common Stock underlying Stock Options set forth opposite the person’s nameunconventional oil and gas resources in the following table, which shares are deemedUnited States.
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(3)Includes 169,281 shares of Common Stock owned by William J. Barrett’s wife. Mr. Barrett has disclaimed beneficial ownership of these shares.
(4)Includes 76,622 shares of Common Stock owned by the Mary K. Gardner estate. Mr. Gardner has disclaimed beneficial ownership of these shares.
(5)Includes 288,506 shares of Common Stock owned by Edward L. Flynn’s wife. Mr. Flynn has disclaimed beneficial ownership of these shares. Also includes 28,940 shares held by Flynn Meyer PSP&T #1. Mr. Flynn has disclaimed beneficial ownership of these shares.
(6)Includes 5,000 shares of restricted stock for Mr. Whitener, and 8,750 shares of restricted stock for each of Messrs. Winn and Brata, one-half of which will vest on January 1, 2014 and the other half of which will vest on January 1, 2015, provided the recipient remains employed by the Company. Messrs. Whitener, Winn and Brata have sole voting rights over all of their restricted stock shares but have disposition rights over only those restricted stock shares from which restrictions have been removed.
(7)Royce & Associates, LLC (“Royce”) filed a Schedule 13G/A on January 22, 2013, reporting that Royce owns and has sole voting and dispositive power over 1,472,138 shares of Common Stock. All information presented above relating to Royce is based solely on the Schedule 13G/A.
(8)Paradigm Capital Management, Inc. (“Paradigm”) filed a Schedule 13G/A on February 12, 2013, reporting that Paradigm owns and has sole voting and dispositive power over 1,960,966 shares of Common Stock. All information presented above relating to Paradigm is based solely on the Schedule 13G/A.
Depositories such as The Depository Trust Company (Cede & Company) as of the Record Date held, in the aggregate, more than 5% of the Common Stock. The Company understands that such depositories hold such shares for the benefit of various participating brokers, banks, and other institutions which are entitled to vote such shares according to the instructions of the beneficial owners thereof. Except as noted in the table above, the Company has no reason to believe that any of such beneficial owners hold more than 5% of the Company’s outstanding voting securities.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s directors and officers, and persons who own more than 10% of the Common Stock, to file with the Securities and Exchange Commission certain reports of beneficial ownership of Common Stock. Based solely on copies of such reports furnished to the Company and written representations that no other reports were required, the Company believes that all applicable Section 16(a) filing requirements were complied with by its directors, officers, and 10% shareholders during the last fiscal year.
BOARD OF DIRECTORS
Board Leadership Structure
The Company has in place a cost-effective, yet constructive and efficient, leadership structure. The Board of Directors has not appointed a Chairman of the Board, butCompany on January 10, 2022. Mr. Bradley has designated Dr. McInnesserved as the Company’s presiding, or lead, independentPresident and Founder of Castleton Holdings, LLC, a privately held real estate investment company that engages in the acquisition and development of investment grade real estate, since 1993. Mr. Bradley is the managing principal and chief investment strategist, responsible for legal/financial structuring on all transactions, oversight of debt and equity relationships, setting investment strategy, creating deal flow, and supervision of asset management, leasing and sales activities. Mr. Bradley has more than 30 years of experience in the commercial real estate industry. Prior to forming Castleton Holdings he served in senior management roles with both commercial brokerage and development companies. Mr. Bradley holds a B.A. in Economics from the University of Nevada Las Vegas.
The NASDAQ Stock Market (“NASDAQ”). Further, we have concluded that four independent directors, representing a majority of our Board of Directors, is appropriate given the size of our businessduring 2022 and enables the Company to obtain the benefits of diverse expertise, skill sets, and backgrounds for proper governance2023, each of the Company.members of the Audit Committee, Compensation Committee and Nominating Committee, as applicable, qualified as “independent” in accordance with the NASDAQ listing requirements. The NASDAQ independence definition includes a series of objective tests, such as that the director is not an employee of the company and has not engaged in various types of business dealings with the company. In addition, to being cost effective, the Company has only four committees, one of which is an Audit Committee comprised solely of independent directors. Our Audit Committee Charter is available at www.tgcseismic.com. Matters relating to other governance issues including, but not limited to, nominating directors, are managedas further required by the Board of Directors. This structure enables effective communication among the directors by utilizing their participation in all of the critical areas of governance, including risk oversight and interaction with management.
The Audit Committee has the responsibility to oversee the Company’s guidelines to govern the process by which risk assessment and risk management are undertaken by management.
Our Board of Directors and principal executive officers have significant ownership of the equity securities of the Company. As a result, the Board of Directors believes that management focuses on both the short-term and long-term objectives of the Company with neither being disadvantaged by the other. Management bonuses each year are tied to the profitability of the Company and also to the future values of the Company’s equity securities through ownership of Common Stock and Stock Options. As a result, the Board of Directors has concluded that the incentive promoting structure of the Company does not promote risks that are inappropriate for the operation of the business.
The Board of Directors has assessed the composition of the Board and has concluded that the Board has the appropriate mix of business experience and skills to address effectively the Company’s business needs and challenges. We believe thatNASDAQ rules, our Board of Directors has made a wide range of diversity with regardsubjective determination as to professional experience, skills, education, and other attributeseach independent director that contribute to the Board’s ability to operateno relationships exist that, in the long-range best interestsopinion of the Company’s shareholders.
Independence
The Board of Directors, has determined that the following four directors have no material relationship with the Company that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.
Committees and Meetingsa standing committee of the Board of Directors
Directors. The Company’s Executive Committee is comprised of Dr. McInnes and Messrs. Barrett and Gardner. The Executive Committee, which met one time in 2012, is charged by the Company’s bylaws with the responsibility of exercising such authority of the Board of Directors as is specifically delegated to it by the Board, subject to certain limitations contained in the bylaws.
The Company’s Compensation Committee is comprised of Dr. McInnes, Mr. Flynn, and Ms. Hurtt. The Compensation Committee met one time in 2012. The Compensation Committee is responsible for the oversight of the Company’s executive compensation and benefit policies to ensure that they are fair, reasonable, and competitive. The Compensation Committee does not rely on a Compensation Committee Charter.
The Company’s Audit Committee is comprised of Dr. McInnes, Mr. Gardner, Mr. Flynn, and Ms. Hurtt. The Audit Committee conducted four meetings in 2012. The purpose and functions of the Audit Committee are to: appoint or terminateto determine whether our management has established internal controls which are sound, adequate and working effectively; to ascertain whether our assets are verified and safeguarded; to review and approve external audits; to select, engage and supervise our independent public accountants; and to determine and approve the fees paid to the independent auditors; evaluatepublic accountants. During 2022 and determine compensationcurrently, the members of the independent auditors; review the scope of the audit proposedAudit Committee are Messrs. Bradley, Conly (Chair) and Fernandes.
The Company’s Stock Awards CommitteeDirectors that is comprised of Dr. McInnes, Mr. Flynn,periodically reviewed, updated and Ms. Hurtt. The Stock Awards Committee did not meet during 2012, but unanimously consented to actions without meetings four times. The Stock Awards Committee is responsible for awarding incentive stock options, nonqualified stock options, reload options, Common Stock, and restricted stock to key employees, directors, or individuals who provide substantial advice or other assistance to the Company so that they will apply their best efforts for the benefit of the Company.
The Company does not have a standing Nominating Committee, and nominations for directors are madeapproved by the Company’s independent directors.Audit Committee. The Board of Directors believes that, consideringinitially approved the sizeAudit Committee Charter effective as of February 11, 2015, and has subsequently updated, reviewed, and approved the Company and the Board of Directors, nominating decisions can be made effectively on a case-by-case basischarter. The Audit Committee Charter was most recently reviewed by the independent directors.
In carrying out the functions of a NominatingAudit Committee the independent directors do not rely on a NominatingOctober 27, 2020, and no changes were made. The Audit Committee Charter. The independent directors of the Company utilize the following criteria as guidelines in considering nominations to the Company’s Board of Directors. The criteria include:
·personal characteristics, including such matters as integrity, age, education, diversity of background and experience, and absence of potential conflicts of interest with the Company or its operations;
·the availability and willingness to devote sufficient time to the duties of a director of the Company;
·experience in corporate management, such as serving as an officer or former officer of a publicly held company;
·experienceCharter is posted on our website at www.dawson3d.com in the Company’s industry and with relevant social policy concerns;
·experience as a board member of another publicly held company;
·academic expertise in an“Corporate Governance” area of the Company’s operations; and
·practical and mature business judgment.
“Investor Relations” section.
Acting in the capacity of a Nominating Committee, the independent directors have not adopted any policy with regard to the consideration of director candidates recommended by security holders for the reason that such a policy is deemed unnecessary since at no time in the history of the Company has any such recommendation ever been received from any of the Company’s security holders.
“Investor Relations” section.
2022.
Code of Ethics
The Company has adopted a Code of Ethicsexperience, qualifications, attributes and skills that appliesled us to the Company’s executive officers andconclusion that our directors includingshould serve as Directors for the Company’s principal executive officer and principal financial and accounting officer. A copyCompany: For our Chairman of the CodeBoard, Mr. Wilks, his leadership qualities, tenure as Chairman of Ethics may be obtained without charge by written request toProFrac Holdings and long experience in the Companyoil and gas service industry. For Mr. Bradley, his extensive experience in management as follows: TGC Industries,President of Castleton Holdings and knowledge of investment and corporate strategies. For Mr. Conly, his accounting experience at PricewaterhouseCoopers LLP and his finance background at FTI Consulting. For Mr. Fernandes, his extensive knowledge of running a successful business as CEO and President of Chevy Chase Contractors, Inc., 101 Park Blvd., Suite 955, Plano, Texas 75074, Attn: James K. Brata, Secretary.
Shareholder Communications
The Company has established For Mr. Krylov, his significant knowledge of the oil and gas industry acquired during his time as CFO of Wilks Brothers, LLC, as CEO of Approach Resources Inc, and while a process for shareholders to send their communications to the Managing Director of J.P. Morgan Securities LLC.
The Secretary will send a written acknowledgment to a shareholder upon receipt of his or her communication submitted in accordance with the provisions set forth in this Proxy Statement unless such shareholder communication is frivolous or includes advertising, solicitation for business, requests for employment, requests for contribution, or a communication of a similar nature. A shareholder wishing to contact the directors may do so anonymously; however, shareholders are encouraged to provide the name in which the Company’s shares of stock are heldidentified risks and the numbermitigation strategies planned or in place to address such risks.
The following communications to the directors will not be considered a shareholder communication: (i) communication from a Company officer or director; (ii) communication from a Company employee or agent, unless submitted solely in such employee’s or agent’s capacity as a shareholder; and (iii) any shareholder proposal submitted pursuant to Rule 14a-8 promulgated under the Securities Exchange Act$112,000, consisting of 1934, as amended.
Compensation Committee Interlocks and Insider Participation
From October 16, 2007 to March 5, 2012, the membersannualized compensation of the Compensation Committee were Dr. McInnes, Mr. Gardner, Mr. Flynn, and Ms. Hurtt. On March 5, 2012, Mr. Gardner stepped down from the Compensation Committee. Messrs. Gardner and Whitener also serve as directors$125,000 representing quarterly cash payments of Supreme Industries, Inc. (“Supreme”). Dr. McInnes and Messrs. Barrett, Gardner, Flynn, and Whitener also serve as directors of Chase Packaging Corporation (“Chase”). Mr. Barrett serves as Executive Vice President (Long Range and Strategic Planning), Assistant Treasurer and Secretary of Supreme. Dr. McInnes serves as President and Treasurer of Chase, Mr. Gardner serves as Vice President of Chase, and Mr. Barrett serves as Secretary of Chase.
REPORT OF THE AUDIT COMMITTEE
The responsibilities of the Audit Committee, which are set forth in the Audit Committee Charter adopted by the Board of Directors, include providing oversight to the Company’s financial reporting process through periodic meetings with the Company’s independent auditors and management to review accounting, auditing, internal controls, and financial reporting matters. The Audit Committee Charter is available at www.tgcseismic.com.
Theapproximately $31,250. In addition, members of the Audit Committee are independent as defined in NASDAQ’s listing standards (which isreceived annualized compensation of $18,000, with the national securities exchange definitionChairman receiving an additional $6,000 representing quarterly cash payments of “independent” the Audit Committee has chosen to use as required under Securitiesapproximately $4,500 and Exchange Commission rules). All members$1,500, respectively. Members of the AuditCompensation Committee received an additional annualized compensation of $6,000 representing quarterly cash payments of $1,500. For services performed in the first quarter of 2022, cash compensation of $21,000 and $24,000 was paid to previous board members Mr. Vander Ploeg and Mr. North, respectively. We also reimburse reasonable expenses incurred by our directors in attending meetings and other company business. None of the reimbursements for our non-employee directors exceeded the $10,000 threshold in 2022, and consequently, are financially literate andnot included in the table below.
available fundingtotal compensation paid to engage any independent legal counsel and any accounting or other expert advisors as necessary to carry out its duties.
We have reviewed and discussed with senior management the Company’s audited financial statements included in the 2012 Annual Report to Shareholders. Management has confirmed to us that such financial statements: (i) have been prepared with integrity and objectivity and are the responsibility of management; and (ii) have been prepared in conformity with accounting principles generally accepted in the United States of America.
We have discussed with Lane Gorman Trubitt, PLLC, the Company’s independent accountants, the matters required to be discussedearned by Statement of Auditing Standards (“SAS”) No. 61, “Communications with Audit Committees,” as amended and as adopted by the Public Company Accounting Oversight Board (“PCAOB”). SAS No. 61 requires the Company’s independent accountants to provide us with additional information regarding the scope and results of their audit of the Company’s financial statements, including with respect to: (i) their responsibility under auditing standards of the PCAOB (United States); (ii) significant accounting policies; (iii) management judgments and estimates; (iv) any significant audit adjustments; (v) any disagreements with management; and (vi) any difficulties encountered in performing the audit.
We have received from Lane Gorman Trubitt, PLLC a letter providing the disclosures required by Independence Standards Board Standard No. 1, “Independence Discussions with Audit Committees,” with respect to any relationships between Lane Gorman Trubitt, PLLC and the Company that in its professional judgment may reasonably be thought to bear on its independence. Lane Gorman Trubitt, PLLC has discussed its independence with us and has confirmed in such letter that, in its professional judgment, it is independent of the Company within the meaning of the federal securities laws.
Based on the review and discussions described above with respect to the Company’s audited financial statements included in the Company’s 2012 Annual Report to Shareholders, we recommended to the Board of Directors that such financial statements be included in the Company’s Annual Report on Form 10-K for filing with the Securities and Exchange Commission.
As specified in the Audit Committee Charter, it is not the duty of the Audit Committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and in accordance with accounting principles generally accepted in the United States of America. That is the responsibility of management and the Company’s independent accountants. In giving our recommendation to the Board of Directors, we have relied on: (i) management’s representation that such financial statements have been prepared with integrity and objectivity and in conformity with generally accepted accounting principles; and (ii) the report of the Company’s independent accountants with respect to such financial statements.
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Audit and Non-Audit Fees
The following table presents the aggregate fees billed by the Company’s Independent Registered Public Accounting Firm, Lane Gorman Trubitt, PLLC (the “Independent Auditor”), for professional services rendered for the auditseach of our annual financial statements and audit-related fees, tax fees, and all other fees for the fiscal years ended December 31 of 2012 and 2011, as compiled on an invoice-date basis:
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| 2012 |
| 2011 |
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Audit fees (1) |
| $ | 172,456 |
| $ | 158,033 |
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Audit-related fees (2) |
| 11,175 |
| 10,850 |
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Tax fees (3) |
| 77,815 |
| 64,055 |
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Other fees (4) |
| — |
| 34,830 |
| ||
Total fees |
| $ | 261,446 |
| $ | 267,768 |
|
(1)Audit fees for professional services rendered in connection with the audit of the Company’s annual financial statements for the fiscal years ended December 31, 2012 and 2011, and the reviews of the financial statements included in the Company’s quarterly reports.
(2)Audit-related fees are fees for benefit plan audits and various other assurance services.
(3)Tax fees consist of fees for professional services rendered to the Company for tax compliance.
(4)Other fees consist of fees for professional services rendered for the Company’s entry into and subsequent termination of a material definitive agreement.
The Audit Committee has the sole authority to authorize all audit and non-audit services to be provided by the Independent Auditor engaged to conduct the annual audit of the Company’s financial statements. In addition, the Audit Committee has adopted pre-approval policies and procedures that are detailed as to each particular service to be provided by the Independent Auditor, and such policies and procedures do not permit the Audit Committee to delegate its responsibilities under the Securities Exchange Act of 1934, as amended, to management. The Audit Committee pre-approved fees for all audit and non-audit services provided by the Independent Auditor during the fiscal years ended December 31, 2012 and 2011.
The Audit Committee has advised the Company that it has determined that the non-audit services rendered by the Company’s Independent Auditornon-employee directors during the year ended December 31, 2012, were compatible2022.
Name | | | Fees Earned or Paid in Cash | | | Stock Awards(1) | | | Option Awards | | | All Other Compensation | | | Total | | |||||||||||||||
Mark A. Vander Ploeg | | | | $ | 21,000 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 21,000 | | |
Ted R. North | | | | | 24,000 | | | | | | | | | | | | | | | | | | | | | | | | 24,000 | | |
Matthew Wilks | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Bruce Bradley | | | | | 134,250 | | | | | | — | | | | | | — | | | | | | — | | | | | | 134,250 | | |
Name | | | Fees Earned or Paid in Cash | | | Stock Awards(1) | | | Option Awards | | | All Other Compensation | | | Total | | |||||||||||||||
Albert Conly | | | | | 116,250 | | | | | | — | | | | | | — | | | | | | — | | | | | | 116,250 | | |
Jose Carlos Fernandes | | | | | 107,250 | | | | | | — | | | | | | — | | | | | | — | | | | | | 107,250 | | |
Sergei Krylov | | | | | 93,750 | | | | | | — | | | | | | — | | | | | | — | | | | | | 93,750 | | |
EXECUTIVE COMPENSATION
Compensation Discussionyear ended December, 31, 2022, in accordance with ASC 718.
Overview of Compensation
From October 16, 2007 to March 5, 2012, the membersNorth resigned from their positions as directors of the Compensation Committee were Dr. McInnes, Mr. Gardner, Mr. Flynn, and Ms. Hurtt. OnCompany on March 5, 2012, Mr. Gardner stepped down from the Compensation Committee. 23, 2022.
Name | | | Age | | | Position | |
Stephen C. Jumper | | | 61 | | | President and Chief Executive Officer | |
James K. Brata | | | 67 | | | Chief Financial Officer, Executive Vice President, Secretary and Treasurer | |
C. Ray Tobias | | | 65 | | | Chief Operating Officer and Executive Vice President | |
Anthony Clark | | | 66 | | | Executive Vice President and Chief Business Officer | |
heading “Option Awards” consist of a grant of stock options to our Named Executive Officers.
— The column reflects all compensation not reported in the other columns of the Summary Compensation PhilosophyTable other than perquisites and Objectivesother personal benefits with an aggregate value for a Named Executive Officer of less than $10,000.
Name and Principal Position | | | Year | | | Salary | | | Bonus(1) | | | Stock Awards(2) | | | All other Compensation(3) | | | Total | | | ||||||||||||||||||||
Stephen C. Jumper Chief Executive Officer and President | | | | | 2022 | | | | | $ | 360,001 | | | | | $ | — | | | | | $ | — | | | | | $ | 35,621 | | | | | $ | 395,622 | | | | ||
| | | 2021 | | | | | | 360,001 | | | | | | — | | | | | | 99,000 | | | | | | 33,942 | | | | | | 492,943 | | | | ||||
James K. Brata Executive Vice President, Chief Financial Officer, Secretary and Treasurer | | | | | 2022 | | | | | | 278,751 | | | | | | — | | | | | | — | | | | | | 21,894 | | | | | | 300,645 | | | | ||
| | | 2021 | | | | | | 278,751 | | | | | | — | | | | | | 49,500 | | | | | | 21,603 | | | | | | 349,854 | | | | ||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||||
C. Ray Tobias Executive Vice President and Chief Operating Officer | | | | | 2022 | | | | | | 316,251 | | | | | | — | | | | | | — | | | | | | 36,894 | | | | | | 353,145 | | | | ||
| | | 2021 | | | | | | 316,251 | | | | | | — | | | | | | 49,500 | | | | | | 32,909 | | | | | | 398,660 | | | | ||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
·Align the interests of executives, including the Company’s executive officers, with those of the shareholders.2021, respectively, are as follows: Mr. Jumper no shares and 50,000 shares; Mr. Brata no shares and 25,000 shares; and Mr. Tobias no shares and 25,000 shares. The Compensation Committee believes it is appropriate to tie a portion of executive compensation to the value of the Common Stockrestricted stock awards granted in order2021 is based upon the grant date fair value of $1.98 on August 16, 2021.
Year | | | Summary Compensation Table Total for PEO(1) | | | Compensation Actually Paid to PEO(2) | | | Average Summary Compensation Total for Non- PEO Named Executive Officers(1) | | | Average Compensation Actually Paid to Non- PEO Named Executive Officers(2) | | | Value of Initial Fixed $100 Investment Based on Total Shareholder Return(3) | | | Net Loss (in thousands)(4) | | ||||||||||||||||||
2022 | | | | $ | 395,622 | | | | | $ | 367,297 | | | | | $ | 326,895 | | | | | $ | 312,733 | | | | | $ | 92 | | | | | $ | (20,451) | | |
2021 | | | | $ | 492,943 | | | | | $ | 519,663 | | | | | $ | 374,257 | | | | | $ | 388,427 | | | | | $ | 109 | | | | | $ | (29,091) | | |
·Have a significant portion of pay that is performance-based. The Company expects superior performance. The Company’s executive compensation programs are designed to reward executives based on performance. The Compensation Committee believes that compensation paid to executives should closely align their performance with the performance of the Company on both a short-term and long-term basis.
·Provide competitive compensation. The Company’s executive compensation programs are designed to attract, retain, and motivate highly qualified executives critical to achieving the Company’s strategic objectives and building shareholder value.
The Compensation Committee reviews the Company’s compensation philosophy and objectives each year to determine if revisions are necessary in light of market conditions, the Company’s strategic goals, or other relevant factors. The Company’s2021, Stephen Jumper was our Chief Executive Officer who is also a member(“PEO”) and our remaining Named Executive Officers (“NEO’s”) consisted of James Brata and Ray Tobias.
The Compensation Committee uses a variety of compensation elements to reach its compensation objectives, including current salary, bonus opportunity, and long term equity-based incentives, all of which are discussed in detail below. Specifically, the Compensation Committee believes that executive compensation should include the following three components:
actually paid.
·Annual Cash Bonus Opportunity. The Company uses annual cash bonuses to reward executives for the roles they play in the achievement of annual Company profitability.
·Long-Term Equity-Based Incentives. The Company utilizes stock-related plans including optionscommon shares on December 31, 2020, and stock grants as long-term equity-based incentives to foster a long-term view of what is in the best interests of the Company and its shareholders by better aligning the interests of the executives with those of the shareholders.
The Compensation Committee reviews and approves, on an annual basis, annual compensation for executive officers, which compensation consists of base salary and bonus (discussed below). The Compensation Committee may request additional information and analysis and ultimately determines in its discretion whether to approve any recommended changes in compensation.
Annual Base Salary
The Company pays its executive officers a base salary to remain competitive in the market. The base salaries are less performance-based than the annual cash bonuses and long-term equity-based incentives. During 2012, the base salaries of Messrs. Whitener, Winn and Brata were increased to make them competitive in the market.
Annual Cash Bonus Opportunity
In order to provide incentives for future annual performance, the Company believes that a meaningful portion of certain executive officers’ and other key employees’ compensation should be in the form of a cash incentive bonus. Cash incentive bonus payments are discretionary and are based primarily on the executive officer’s contribution to the Company’s profitability over the applicable performance measurement periods. The Company believes that profitability is the most useful measure of management’s effectiveness in creating value for the shareholders of the Company. The Company’s policy is to set aside in a bonus pool a portion of its pre-tax profit as determined by the Company’s Chief Executive Officer and approved by the Board. No specific formula is used in making such bonus determinations to the individuals eligible to participate in the bonus pool, but senior management recommends to the Compensation Committee the allocation of the bonus pool based on each employee’s contribution to the Company’s profitability during the year. In measuring each employee’s contribution to the Company’s profitability, the Compensation Committee relies on personal qualitative factors (such as effective leadership and communication) rather than quantitative performance goals of the Company (such as specific revenue or earnings targets).
Messrs. Whitener, Winn, and Brata are the three named executive officers who were eligible for annual cash bonuses under the Company’s bonus plan in 2012. In December of 2012, Mr. Whitener was paid a cash bonus of $250,000, and Messrs. Winn and Brata were paid cash bonuses of $100,000 each. These bonuses were paid out of the bonus poolcalculated based on the Company’s 2012 performance. The bonus received by Mr. Whitener is determined bydifference between the Boardshare price of Directors (other than Mr. Whitener) based uponour Common Stock at the resultsend and the beginning of the Company’s operationsmeasurement period, and reinvestment of all dividends.
Adjustments to Determine Compensation “Actually Paid” for PEO | | | 2022 | | | 2021 | | ||||||
Reported Summary Compensation Table total for PEO | | | | $ | 395,622 | | | | | $ | 492,943 | | |
Deduction for Amounts Reported under the “Stock Awards” Column in the SCT | | | | | — | | | | | | (99,000) | | |
Increase for Fair Value of Awards Granted during year that Remain Unvested as of Year end | | | | | — | | | | | | 116,000 | | |
Increase/deduction for Change in Fair Value from Prior Year-end to vesting Date of Awards Granted Prior to year that vested during year | | | | | (28,325) | | | | | | 9,720 | | |
Total Adjustments | | | | $ | (28,325) | | | | | $ | 26,720 | | |
Compensation Actually paid to PEO | | | | $ | 367,297 | | | | | $ | 519,663 | | |
Adjustments to Determine Compensation “Actually Paid” for Non-PEO NEO’s | | | 2022 | | | 2021 | | ||||||
Reported Average Summary Compensation Table total for Non-PEO NEO’s | | | | $ | 326,895 | | | | | $ | 374,257 | | |
Deduction for Amounts Reported under the “Stock Awards” Column in the SCT | | | | | — | | | | | | (49,500) | | |
Increase for Fair Value of Awards Granted during year that Remain Unvested as of Year end | | | | | — | | | | | | 58,000 | | |
Increase/deduction for Change in Fair Value from Prior Year-end to vesting Date of Awards Granted Prior to year that vested during year | | | | | (14,163) | | | | | | 5,670 | | |
Total Adjustments | | | | $ | (14,163) | | | | | $ | 14,170 | | |
Average Compensation Actually paid to Non-PEO NEO’s | | | | $ | 312,733 | | | | | $ | 388,427 | | |
The Company believes that
Perquisites
The Company provides limited perquisites to executive officers, including the named executive officers, in order to facilitate the successful achievement of their and the Company’s performance. These perquisites include car allowances and insurance premiums. In addition, the Company’s President and Chief Executive Officer receives additional perquisites related to certain club memberships and tax preparation services.
Medical and Other Welfare Benefits
The Company’s executives, along with all other employees, are eligible to participate in medical, dental, vision, life, accidental death and disability, long-term disability, short-term disability, 401(k) plan matches, and any other employee benefit made available to employees.
Employment Agreement
The Board of Directors has determined that it is appropriate to reinforce and encourage the continued attention and dedication of the Company’s President and Chief Executive Officer to his assigned duties without distraction in potential circumstances arising from the possibilityevent of a change inof control or upon termination of employment for reasons other than cause, or termination of employment due to death or disability. The Employment Agreements limit the Company. Accordingly, on April 13, 2012,extent to which such accelerated vesting will apply for the Named Executive Officers. Under the Employment Agreements, if a Named Executive Officer’s employment is terminated by the Company entered into an employment agreement with Mr. Whitener that provideswithout “cause”, by the Executive for the payment of certain compensation if Mr. Whitener’s employment with the Company“good reason” or due to “disability” (as each such term is terminated under one of the circumstances describeddefined in the agreement in connection with cause, good reason,Employment Agreement), whether before or a change in control of the Company. See definitions of “cause,” “good reason” and “change in control” in the Executive Compensation section under “Discussion Regarding Summary Compensation Table and Grants of Plan-Based Awards Table — Employment Contract.” The Company considers the compensation that would be payable under the agreement upon termination in such cases to be appropriate in light of the industry in which it is engaged and the uncertain length of time necessary to find new employment, including the assurance of severance and benefits for Mr. Whitener upon termination. See “Executive Compensation — Potential Payments Upon Termination or Change in Control” for information about estimated payments and benefits that would be paid to Mr. Whitener in such event. The level of payments and benefits provided under Mr. Whitener’s employment agreement are considered appropriate. These benefits are recognized as part of the total compensation package and are reviewed periodically, but are not specifically considered by the Compensation Committee when making changes in base salary, annual incentive compensation, or long-term incentive compensation. The Company does not have severance agreements with named executive officers other than in connection with Mr. Whitener’s employment agreement.
2006 Stock Awards Plan
Pursuant to the 2006 Stock Awards Plan, upon a “change in control,” the unvested stock options and restricted stock of all employees, including the executive officers, vest immediately. See the definition of “change in control” set forth in “Executive Compensation—Discussion Regarding Summary Compensation Table and Grants of Plan-Based Awards Table—2006 Stock Awards Plan.”
The “change in control” provisions in the 2006 Stock Awards Plan help prevent employees from being distracted by rumored or actual changes in control. The “change in control” provisions provide:
·incentives for executive officers to remain with the Company despite the uncertainties of a potential or actual change in control transaction; and
·access to equity components after a change in control.
The 2006 Stock Awards Plan provides for the vesting of stock options and restricted stock for all employees upon a “change in control” for the following reasons:
·employees who remain after a change of control, are treatedaccelerated vesting and exercisability of the same with regard to equity asNamed Executive Officer’s currently outstanding awards under the general stockholders who could sell or otherwise transfer their equity upon a change in control; and
·since the Company would not exist in its present form after a change in control, executives should not have to have their return on such equity dependent upon the new company’s future success.
Role of Shareholder Say-on-Pay Votes
In June 2012, the Company held a shareholder advisory vote on the compensation of its named executive officers as describedRestated 2016 Plan will occur. Similarly, in the 2012 Proxy Statement, commonly referred to asevent of a say-on-pay vote.Named Executive Officer’s death, the award agreements under the Restated 2016 Plan will provide for such
Compensation Committee Report
The Compensation Committee has reviewed and discussed the Compensation Disclosure and Analysis with management of the Company. Based on the review and discussions referred to in the preceding sentence, the Compensation Committee has recommended to the Board of Directorsevent that the Compensation Disclosure and Analysis be included in the Proxy Statement.
| |
| |
| |
|
Summary Compensation Table
The table below sets forth, on an accrual basis, all cash and cash equivalent remuneration paid by the Company during 2012, 2011, and 2010 to the Company’s Chiefa Named Executive Officer and the Company’s two most highly compensated executive officers who were serving as executive officers at the end of 2012, the “named executive officers.” The individuals listed below are the only executive officers employed by the Company during 2012.
Name and |
|
|
| Base |
|
|
| Stock |
| All Other |
|
|
|
Principal |
|
|
| Salary |
| Bonus |
| Awards |
| Compensation |
| Total |
|
Position |
| Year |
| ($) |
| ($) |
| ($)(1) |
| ($)(2) |
| ($)(3) |
|
(a) |
| (b) |
| (c) |
| (d) |
| (e) |
| (f) |
| (g) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wayne A. Whitener |
| 2012 |
| 340,385 |
| 250,000 |
| 180,900 |
| 13,903 |
| 785,188 |
|
President and CEO |
| 2011 |
| 300,000 |
| 200,000 |
| 150,000 |
| 12,191 |
| 662,191 |
|
|
| 2010 |
| 250,000 |
| 250,000 |
| — |
| 15,747 |
| 515,747 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel G. Winn |
| 2012 |
| 200,000 |
| 100,000 |
| 79,144 |
| 11,002 |
| 390,146 |
|
Executive Vice President |
| 2011 |
| 200,000 |
| 50,000 |
| 50,000 |
| 10,852 |
| 310,852 |
|
|
| 2010 |
| 154,476 |
| 31,000 |
| — |
| 9,470 |
| 194,946 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James K. Brata |
| 2012 |
| 191,298 |
| 100,000 |
| 79,144 |
| 7,604 |
| 378,046 |
|
CFO, Vice President, Secretary and Treasurer |
| 2011 |
| 179,687 |
| 50,000 |
| 25,000 |
| 6,918 |
| 261,605 |
|
| 2010 |
| 140,865 |
| 23,000 |
| — |
| 2,430 |
| 166,295 |
|
(1)The amount shown in this column represents the aggregate grant date fair values of unrestricted stock awarded computed in accordance with FASB ASC Topic 718.
(2)Includes (in addition to certain perquisites and personal benefits) the Company’s matching contribution to its Section 401(k) Retirement Plan.
(3)Includes columns (c), (d), (e) and (f).
All Other Compensation
The following table describes each component of column (f) of the Summary Compensation Table.
|
|
|
| Car |
| Insurance |
| 401(k) |
| Club |
| Tax |
|
|
|
|
|
|
| Allowance |
| Premium |
| Match |
| Membership |
| Prep |
| Total |
|
|
| Year |
| ($) |
| ($) |
| ($) |
| ($) |
| ($) |
| ($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wayne A. Whitener |
| 2012 |
| 3,912 |
| 792 |
| 7,500 |
| 1,004 |
| 695 |
| 13,903 |
|
|
| 2011 |
| 4,488 |
| 792 |
| 5,259 |
| 957 |
| 695 |
| 12,191 |
|
|
| 2010 |
| 5,802 |
| 516 |
| 6,461 |
| 2,273 |
| 695 |
| 15,747 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Daniel G. Winn |
| 2012 |
| 4,079 |
| 792 |
| 6,122 |
| — |
| — |
| 11,002 |
|
|
| 2011 |
| 4,316 |
| 792 |
| 5,744 |
| — |
| — |
| 10,852 |
|
|
| 2010 |
| 3,926 |
| 792 |
| 4,752 |
| — |
| — |
| 9,470 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James K. Brata |
| 2012 |
| 1,324 |
| 516 |
| 5,764 |
| — |
| — |
| 7,604 |
|
|
| 2011 |
| 1,143 |
| 516 |
| 5,259 |
| — |
| — |
| 6,918 |
|
|
| 2010 |
| 1,214 |
| 516 |
| 700 |
| — |
| — |
| 2,430 |
|
Grants of Plan-Based Awards
The following table presents grants of equity awards during the fiscal year ended December 31, 2012:
|
|
|
| All Other |
|
|
|
|
|
|
|
|
| Stock |
|
|
|
|
|
|
|
|
| Awards: |
| Grant Date |
|
|
|
|
|
|
| Number |
| Fair Value of |
|
|
|
|
|
|
| of Shares |
| Stock |
|
|
|
|
| Grant |
| of Stock |
| Awards |
| Total |
|
|
| Date |
| (#) |
| ($/Sh) (1) |
| ($) |
|
|
|
|
|
|
|
|
|
|
|
Wayne A. Whitener |
| 08/07/2012 |
| 30,000 |
| 6.03 |
| 180,900 |
|
Daniel G. Winn |
| 08/07/2012 |
| 13,125 |
| 6.03 |
| 79,144 |
|
James K. Brata |
| 08/07/2012 |
| 13,125 |
| 6.03 |
| 79,144 |
|
(1)The grant date fair value of stock awards is based on the mean of the opening and closing share price on date of grant.
Discussion Regarding Summary Compensation Table and Grants of Plan-Based Awards Table
Employment Contract
On April 13, 2012, the Company entered into an Amended and Restated Employment Contract (the “Restated Employment Contract”) with Mr. Whitener. The term of the Restated Employment Contract is effective from March 1, 2012 to February 28, 2015, with the option to renew for successive one-year terms. Under the Restated Employment Contract, Mr. Whitener will receive: (1) a minimum base salary of $350,000 per year; and (2) an annual performance bonus of up to 100% of his annual base salary then in effect if approved by the Board of Directors. Pursuant to the Restated Employment Contract, upon termination of Mr. Whitener by the Company other than for “cause,” or if Mr. Whitener terminates the Restated Employment Contract for “good reason,” Mr. Whitener will receive the remaining portion of his base salary through February 28, 2015, plus his proportionate share of the performance bonus. In addition, Mr. Whitener will receive payments related to his Company automobile and key employee deferred compensation benefits. Pursuant to the Restated Employment Contract, if Mr. WhitenerOfficer’s employment is terminated by the Company without “cause” or by the executive for “cause,“good reason.” or if he terminates his employment for other than “good reason,” Mr. Whitener will not receive any future payments under the Restated Employment Contract other than any amounts accrued to him as of the date of termination. InFurther, in the event of a “change in control” of the Company that results in the termination of Mr. Whitener’sthe executive’s employment by the Company without “cause” or by Mr. Whitenerthe executive for “good reason,” Mr. Whitener willreason” within 12 months of the change in control, the executive would be entitled to receive a lump sum payment equal to 2.99two times his then present annual base salary.
the stated amounts for severance payments, bonus payments and COBRA benefits.
“Cause” is generally defined as Mr. Whitener’s (i) absence from the Company’s offices for any successive period of 61 business days or for a total of 90 business days in any onevoting power of the Company’s fiscal years,then outstanding securities; (ii) commission of an act of gross negligence in the performance of his duties or obligations under the Restated Employment Contract, (iii) commission of any act of fraud, malfeasance, disloyalty, or breach of trust against the Company, or failure to observe any covenant in the Restated Employment Contract, (iv) refusal, or substantial inability, to perform the duties assigned to him pursuant to the Restated Employment Contract, (v) death or affirmative indication in writing that he no longer intends to
abide by the termsindividuals who were members of the Restated Employment Contract, or (vi) actsBoard of moral turpitude or dishonesty in the Company’s affairs, gross insubordination or the equivalent, or violation or failure to comply with any of the material provisions of the Restated Employment Contract.
“Good reason” is generally defined as (i) the Company’s material breach of the Restated Employment Contract, (ii) the Company’s assignment to Mr. Whitener of any duties materially inconsistent with his position, authority, duties, or responsibilities contemplated in the Restated Employment Contract, or (iii) a “change in control” in which Mr. Whitener elects not to remain with the Company.
“Change in control” is generally defined as a change in the ownershipDirectors of the Company orimmediately prior to a change in the ownership of a substantial portionmeeting of the Company’s assets.
2006 Stock Awards Plan
The 2006 Stock Awards Plan originally became effective on March 30, 2006 and was amended effective April 12, 2010. The 2006 Stock Awards Plan provides for the granting of stock options, Common Stock, and restricted stock, and authorizes the issuance of 3,000,000 shares of Common Stock. A maximum of 80,000 shares may be granted in any one year in the form of any award to any one participant, of which a maximum of (i) 50,000 shares may be granted to a participant in the form of stock options and (ii) 30,000 shares may be granted to a participant in the form of restricted stock. Employees (including any employee who is also a director or an officer), consultants, and outside directorsshareholders of the Company or its subsidiaries whose judgment, initiative, and efforts contributed to or may be expected to contribute toinvolving a contest for the successful performanceelection of directors shall not constitute a majority of the Company are eligible to participate in the 2006 Stock Awards Plan.
Under the 2006 Stock Awards Plan, all awards vest uponBoard of Directors following such election unless a change in control. “Change in control” means anymajority of the following, except as otherwise provided herein: (i) any consolidation, merger, or share exchangenew members of the Company in which the Company is not the continuingBoard were recommended or surviving corporation or pursuant to which sharesapproved by majority vote of members of the Company’s Common Stock would be converted into cash, securities, or other property, other than a consolidation, merger, or share exchangeBoard of the Company in which the holders of the Company’s Common StockDirectors immediately prior to such transactionshareholders’ meeting; (iii) the Company shall have merged into or consolidated with another corporation, or merged another corporation into the same proportionate ownershipCompany, on a basis whereby less than 50% of Common Stockthe total voting power of the surviving corporation immediately afteris represented by shares held by former shareholders of the Company prior to such transaction; (ii) any sale, lease, exchange,merger or other transfer (excluding transfer by way of pledgeconsolidation; or hypothecation) in one transaction(iv) the Company shall have sold, transferred or a series of related transactions, ofexchanged all, or substantially all, of theits assets to another corporation or other entity or person. The change of control definition under Section 409A of the Company; (iii)Internal Revenue Code will apply to the shareholdersextent necessary to comply with the requirements of Section 409A of the Company approve any plan or proposal for the liquidation or dissolution of the Company; (iv) the cessation of control (by virtue of their not constituting a majority of directors) of the Board by the individuals (the “Continuing Directors”) who (x) at the date of the 2006 Stock Awards Plan were directors or (y) become directors after the date of the 2006 Stock Awards Plan and whose election or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds of the directors then in office who were directors at the date of the 2006 Stock Awards Plan or whose election or nomination for election was previously so approved; (v) the acquisition of beneficial ownership (within the meaning of Rule 13d-3 under the 1934 Act) of an aggregate of 50% or more of the voting power of the Company’s outstanding voting securities by any person or group (as such term is used in Rule 13d-5 under the 1934 Act) who beneficially owned less than 50% of the voting power of the Company’s outstanding voting securities on the date of the 2006 Stock Awards Plan; provided, however, that notwithstanding the foregoing, an acquisition shall not constitute a change in control under the 2006 Stock Awards Plan if the acquirer is (x) a trustee or other fiduciary holding securities under an employee benefit plan of the Company and acting in such capacity, (y) a subsidiary of the Company or a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportions as their ownership of voting securities of the Company or (z) any other person whose acquisition of shares of voting securities is approved in advance by a majority of the Continuing Directors; or (vi) in a Title 11 bankruptcy proceeding, the appointment of a trustee or the conversion of a case involving the Company to a case under Chapter 7.
Under the 2006 Stock Awards Plan, upon a participant’s death or total and permanent disability, the portion of the participant’s awards that would have vested had the participant remained employed through the vesting date immediately following the date of such death or total and permanent disability shall be immediately vested. “Total and permanent disability” means a participant is qualified for long-term disability benefits under the Company’s disability plan or insurance policy; or, if no such plan or policy is then in existence or if the participant is not eligible to participate in such plan or policy, that the participant, because of a physical or mental condition resulting from bodily injury, disease, or mental disorder is unable to perform his or her duties of employment for a period of six (6) continuous months, as determined in good faith by the committee of the Board of Directors administering the 2006 Stock Awards Plan, based upon medical reports or other evidence satisfactory to the committee.
General
Base salary paid and the amount of cash bonuses paid for 2012 represented from 75.2% to 77.1% of the named executive officers’ total compensation as presentedInternal Revenue Code in the Summary Compensation Table with the percentages being as follows: Mr. Whitener — 75.2%; Mr. Winn — 76.9%; and Mr. Brata — 77.1%.
Outstanding Equity Awards at Fiscal Year End
The following table provides information about the holdings of Stock Options and restricted stock by the named executive officers at December 31, 2012.
Option Awards |
| Stock Awards |
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| Equity |
| Equity |
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| Incentive |
| Incentive |
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| Plan |
| Plan |
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| Awards: |
| Awards: |
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| Number of |
| Market |
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| Number of |
| Number of |
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| Unearned |
| Payout Value |
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| Securities |
| Securities |
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| Shares or |
| of Unearned |
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| Underlying |
| Underlying |
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| Other |
| Shares or |
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| Unexercised |
| Unexercised |
| Option |
| Option |
| Rights |
| Other Rights |
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| Options |
| Options |
| Exercise |
| Expiration |
| That Have |
| That Have |
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| (#) |
| (#) |
| Price |
| Date |
| Not Vested |
| Not Vested |
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Name |
| Exercisable |
| Unexercisable |
| ($) |
| - |
| (#) |
| ($) |
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Wayne A. Whitener |
| 15,950 |
| — |
| 9.87 |
| 10/23/2013 |
| 30,000 | (1) | 245,700 |
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| — |
| — |
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| — |
| — |
| — |
| — |
| — |
| — |
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Daniel G. Winn |
| 34,729 |
| — |
| 2.91 |
| 10/23/2013 |
| 13,125 | (2) | 107,494 |
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| — |
| — |
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| — |
| — |
| — |
| — |
| — |
| — |
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James K. Brata |
| 34,729 |
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| 2.91 |
| 10/23/2013 |
| 13,125 | (2) | 107,494 |
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| — |
| — |
| — |
| — |
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(1)On January 1, 2013, 25,000 shares of Restricted Common Stock for Mr. Whitener vested. On each of January 1, 2014 and 2015, one-half of the unvested Restricted Common Stock, or 2,500 shares, will vest for Mr. Whitener.
(2)On January 1, 2013, 4,375 shares of Restricted Common Stock vested for each of Messrs. Winn and Brata. On each of January 1, 2014 and 2015, one-half of the unvested Restricted Common Stock, or 4,375 shares, will vest for each of Messrs. Winn and Brata.
Options Exercised and Stock Vested
The following table sets forth certain information regarding the year-end value of options held by the Company’s named executive officers during the fiscal year ended December 31, 2012. There were no shares acquired on vesting in 2012.
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| Option Awards |
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Name |
| Number of Shares |
| Value Realized |
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Wayne A. Whitener |
| 55,125 |
| 168,500 |
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Daniel G. Winn |
| — |
| — |
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James K. Brata |
| — |
| — |
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Potential Payments Upon Termination or Change in Control
The Company entered into the Restated Employment Contract with Mr. Whitener on April 13, 2012. Pursuant to the terms of the Restated Employment Contract, the Company may be required to make certain payments to Mr. Whitener upon the occurrence of certain events resulting in Mr. Whitener’s termination. For a detailed description of the events that may trigger such payments, see “Executive Compensation—Discussion Regarding Summary Compensation Table and Grants of Plan-Based Awards Table—Employment Contract.”
The 2006 Stock Awards Plan provides for vesting of a participant’s awards upon a change in control, the participant’s death or the participant’s total and permanent disability. If any of such events had occurred as of December 31, 2012, each of Messrs. Winn and Brata would have received $107,494 in market value of equity securities.
The Restated Employment Contract contains a confidentiality provision that is effective during and after Mr. Whitener’s employment with the Company and a non-competition provision that is effective for a minimum of one year after the termination of his employment for any reason (including termination resulting from a “change in control” of the Company).
Pursuant to the Restated Employment Contract, upon termination of Mr. Whitener by the Company other than for “cause,” or if Mr. Whitener terminates the Restated Employment Contract for “good reason,” Mr. Whitener will receive the remaining portion of his base salary through February 28, 2015, plus his proportionate share of the performance bonus. In addition, Mr. Whitener will receive payments related to his Company automobile and key employee deferred compensation benefits. Pursuant to the Restated Employment Contract, if Mr. Whitener is terminated by the Company for “cause,” or if he terminates his employment for other than “good reason,” Mr. Whitener will not receive any future paymentsevent an award under the Restated Employment Contract other than any amounts accrued2016 Plan is subject to him asSection 409A of the date of termination. In the event of a “change in control” of the Company that results in the termination of Mr. Whitener’s employment by the Company without “cause” or by Mr. Whitener for “good reason” within 90 days of the change in control, Mr. Whitener will receive a lump sum payment equal to 2.99 times his then present annual base salary.
See the definitions of “cause,” “good reason” and “change in control” set forth in “Executive Compensation—Discussion Regarding Summary Compensation Table and Grants of Plan-Based Awards Table—Employment Contract.”
Pursuant to the 2006 Stock Awards Plan, upon a change in control, all unvested awards shall vest. See theInternal Revenue Code. The definition of “change of control” under the Employment Agreements is defined in control” set forth in “Executive Compensation—Discussion Regarding Summary Compensation Table and Grants of Plan-Based Awards Table—2006 Stock Awardsa manner consistent with the Restated 2016 Plan.”
Wayne A. Whitener |
| Termination |
| CIC |
| CIC |
| Disability |
| Death |
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Compensation: |
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Base Salary |
| $ | 350,000 |
| $ | 1,046,500 |
| $ | 350,000 |
| $ | — |
| $ | — |
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Performance Bonus |
| — |
| 250,000 | (2) | — |
| — |
| — |
| |||||
Vesting Equity |
| — |
| 245,700 |
| — |
| 245,700 |
| 245,700 |
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Benefits and Perquisites: |
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Company Automobile |
| 4,604 | (1) | — |
| — |
| — |
| — |
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Total |
| $ | 354,604 |
| $ | 1,542,200 |
| $ | 350,000 |
| $ | 245,700 |
| $ | 245,700 |
|
Executive | | | Salary | | | Bonus(1) | | | Vesting of stock awards(2) | | | Vesting of option awards(2) | | | All other benefits and perquisites(3) | | | Total | | ||||||||||||||||||
Stephen C. Jumper | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Termination Without Cause/With Good Reason | | | | $ | 669,231 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 20,326 | | | | | $ | 689,557 | | |
CIC Termination | | | | | 1,338,462 | | | | | | — | | | | | | — | | | | | | — | | | | | | 40,652 | | | | | | 1,379,114 | | |
CIC Without Termination | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Disability | | | | | 300,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,775 | | | | | | 306,775 | | |
Death | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
James K. Brata | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Termination Without Cause/With Good Reason | | | | | 390,385 | | | | | | — | | | | | | — | | | | | | — | | | | | | 26,517 | | | | | | 416,902 | | |
CIC Termination | | | | | 780,770 | | | | | | — | | | | | | — | | | | | | — | | | | | | 38,034 | | | | | | 818,804 | | |
CIC Without Termination | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Disability | | | | | 175,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | 3,839 | | | | | | 178,839 | | |
Death | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Executive | | | Salary | | | Bonus(1) | | | Vesting of stock awards(2) | | | Vesting of option awards(2) | | | All other benefits and perquisites(3) | | | Total | | ||||||||||||||||||
C. Ray Tobias | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Termination Without Cause/With Good Reason | | | | | 446,154 | | | | | | — | | | | | | — | | | | | | — | | | | | | 90,326 | | | | | | 536,480 | | |
CIC Termination | | | | | 892,308 | | | | | | — | | | | | | — | | | | | | — | | | | | | 110,652 | | | | | | 1,002,960 | | |
CIC Without Termination | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Disability | | | | | 200,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,775 | | | | | | 206,775 | | |
Death | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
(2)Any year-end bonus to Mr. Whitener is determined at the discretion of the Company’s Board of Directors.
DIRECTOR COMPENSATION
For services performed in 2012, each outside director received fees of $55,000, consisting of $22,000 representing quarterly cash payments of $5,500, and Stock Options with a value of $39,000. In addition, each outside director received $1,650 for each Board meeting attended and $825 for each committee meeting attended, respectively. The Chairman of the Audit Committee received an additional $11,000. Directors who are employees of the Company do not receive directors’ fees.
The following table provides information about the compensation earned by the outside members of the Board during fiscal year 2012.
Name |
| Fees |
| Option |
| Total |
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William J. Barrett |
| 31,900 |
| 39,000 |
| 70,900 |
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Edward L. Flynn |
| 35,200 |
| 39,000 |
| 74,200 |
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Herbert M. Gardner |
| 32,725 |
| 39,000 |
| 71,725 |
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Stephanie P. Hurtt |
| 35,200 |
| 39,000 |
| 74,200 |
|
Allen T. McInnes |
| 46,200 |
| 39,000 |
| 85,200 |
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(1)The amounts shown in this column represent the aggregate grant date fair values of Stock Options granted in 2012 computed in accordance with FASB ASC Topic 718. The amounts are calculated based on the number of Stock Options awarded multiplied by the calculated value of $2.08 per share as determined using a Binomial Lattice option pricing model. The assumptions made in the valuation of the share-based payments are contained in Note B of Item 8 of the Annual Report on Form 10-K for the year ended December 31, 2012.
2022 under the Dawson Geophysical 2014 Annual Incentive Plan.
TRANSACTIONS WITH RELATED PERSONS, PROMOTERS, AND
CERTAIN CONTROL PERSONS
On January 18, 2008 and on June 5, 2012, the Company borrowed $2,602,075 and $7,500,000, respectively, from Rumson-Fair Haven Bank & Trust (the “Bank”). Mr. Gardner, who serves as directorcommon stock of the Company also serves as directorin an aggregate amount of 1,188,235 and a convertible promissory note (the “Convertible Note”) in the principal amount of $9,880,000.50 payable on or after June 30, 2024 that, upon the terms and subject to the conditions described therein, automatically converted into 5,811,765 newly-issued shares of common stock of the Bank. In addition, Mr. Barrett owns approximately 12%Company (the “Conversion Shares”), at a conversion price of $1.70 per share, after the Company received stockholder approval of the equityproposal to issue the Conversion Shares in accordance with Listing Rule 5635 of the Bank, and Mr. Gardner owns approximately 1.5% - 2%NASDAQ Listed Company Manual at a special stockholder’s meeting held on September 13, 2023. As a result of such approval of the equitystockholders at the special stockholder’s meeting, the Conversion Shares were issued to Wilks and the Convertible Note was automatically extinguished.
It isrespect to the Indemnitee commenced in such six (6) year period.
EQUITY COMPENSATION PLAN INFORMATION
Plan Category | | | Number of Securities to be Issued Upon Exercise or Vesting of Outstanding Options, Warrants and Rights | | | Weighted Average Exercise Price of Outstanding Options, Warrants and Rights | | | Number of Securities Remaining Available for Future Issuance Under the Equity Compensation Plan (Excluding Securities Reflected in Column (a)) | | |||||||||
| | | (a) | | | | | | | | | | | | | | |||
Restated 2016 Plan | | | | | | | | | | | | | | | | | | | |
Equity compensation plan approved by security holders | | | | | — | | | | | $ | — | | | | | | 1,264,487 | | |
Equity compensation plans not approved by security holders | | | | | — | | | | | | — | | | | | | — | | |
Total | | | | | — | | | | | $ | — | | | | | | 1,264,487 | | |
Equity Compensation Plan Information
Plan Category |
| Number of Securities |
| Weighted-Average |
| Number of Securities |
| |
|
| (a) |
| (b) |
| (c) |
| |
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| |
Equity compensation plans approved by security holders |
| 705,159 |
| $ | 4.16 |
| 1,731,720 |
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| |
Equity compensation plans not approved by security holders |
| — |
| — |
| — |
| |
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| |
Total |
| 705,159 |
| $ | 4.16 |
| 1,731,720 |
|
PROPOSAL NO. 2
ADVISORY VOTE TO APPROVE
NAMED EXECUTIVE OFFICER COMPENSATION
The Company seeks a non-binding advisory vote from its shareholders regarding the compensationas of its namedNovember [•], 2023, by beneficial owners of more than five percent of our Common Stock, each of our directors and executive officers as described in this Proxy Statement. Shareholders are urged to read the Executive Compensation section of this Proxy Statement which discusses our compensation policiesindividually and procedures with respect to our named executive officers.
This proposal provides shareholders the opportunity to endorse or not endorse the Company’s executive compensation program through the following resolution:
“Resolved, that the compensation paid to the Company’s namedall executive officers and directors as disclosed pursuant to Item 402a group.
Name | | | Amount and Nature of Beneficial Ownership | | | Percent of Class(1) | | ||||||
SECURITY OWNERSHIP OF 5% HOLDERS | | | | | | | | | | | | | |
Wilks Brothers, LLC | | | | | 24,659,095(2) | | | | | | 80.03% | | |
SECURITY OWNERSHIP OF MANAGEMENT | | | | | | | | | | | | | |
Stephen C. Jumper | | | | | — | | | | | | 0.00% | | |
C. Ray Tobias | | | | | — | | | | | | 0.00% | | |
James K. Brata | | | | | — | | | | | | 0.00% | | |
Anthony Clark | | | | | — | | | | | | 0.00% | | |
Matthew Wilks | | | | | — | | | | | | 0.00% | | |
Bruce Bradley | | | | | — | | | | | | 0.00% | | |
Name | | | Amount and Nature of Beneficial Ownership | | | Percent of Class(1) | | ||||||
Albert Conly | | | | | — | | | | | | 0.00% | | |
Jose Carlos Fernandes | | | | | — | | | | | | 0.00% | | |
Sergei Krylov | | | | | — | | | | | | 0.00% | | |
Total Management Ownership | | | | | — | | | | | | 0.00% | | |
Because this is an advisory vote, it will not be binding upon the Board of Directors. However, the Board of Directors and the Compensation Committee will take into account the outcome of the vote when considering future executive compensation arrangements. The affirmative vote of a majority of the shares present in person or represented by proxy and entitled to vote at the annual meeting is required for the approval of this proposal.
The Company’s Board of Directors recommends that you vote FOR Proposal No. 2.
PROPOSAL NO. 3
APPROVAL OF THE AMENDMENT TO THE COMPANY’S RESTATED ARTICLES OF INCORPORATION TO INCREASE THE AUTHORIZED SHARES OF TGC COMMON STOCK TO 35,000,000 AND MAKE OTHER AMENDMENTS TO CONFORM WITH THE REQUIREMENTS OF THE TEXAS BUSINESS ORGANIZATIONS CODE
Background
Our restated articles of incorporation currently authorize TGC to issue a total of 25,000,000 shares of Common Stock. On April 18, 2013, our Board approved an amendment to the restated articles of incorporation to authorize an additional 10,000,000November [•], 2023 there were [•] shares of Common Stock outstanding. Unless otherwise indicated, the beneficial owner has sole voting and make otherinvestment power with respect to all shares listed.
take non-unanimous action by written consent. If this proposal to amend the Charter to remove Section 7(6)(f) requiring a supermajority vote for business combinations is approved, but Proposal 3 is not approved, then our Board of Directors intends to only amend our Bylaws to remove Section 2.10 of our Bylaws requiring a supermajority vote for business combinations and not to amend our Bylaws to permit shareholders of the Company to take non-unanimous action by written consent.
Proposed Amendment
OurSupermajority Provision can prohibit the Company from pursuing business objectives that it believes are in the best interests of its stockholders. Therefore, after careful consideration, our Board is proposingof Directors believes that the benefits of removing the Supermajority Provision from our Charter provide more accountability to amendstockholders, promote stronger corporate governance and outweigh the restated articlesbenefits of incorporation to increase the authorized sharesretaining such Supermajority Provision.
Under Texas law, we are only permitted to issue shares of our capital stock to the extent such shares have been authorized for issuance under the articles of incorporation. The restated articles of incorporation currently authorize the issuance of up to 25,000,000 shares of Common Stock.
As of the Record Date, we had 20,807,502 shares of Common Stock outstanding. If our shareholders approve these amendments, we will file such amendments with the Texas Secretary of State promptly after the annual meeting. If these amendments are not approved by our shareholders, the restated articles of incorporation regarding the numbers of authorized shares will not be amended in this respect, and our authorized Common Stock will remain the same.
Assuming this Proposal No. 3 is duly adopted at the annual meeting, the proposedCharter amendment to our restated articles of incorporation regarding the numbers of authorized sharesremove Section 7(6)(f) requiring a supermajority vote for business combinations will be as follows:
The entire paragraph of “Article 4.a. — Shares” in the restated articles of incorporation would be deleted in its entirety and would be replaced with the following:
“a. Common Stock. The aggregate number of shares of Common Stock which the Corporation may issue is 35,000,000 shares, each having a par value of $.01. The shares shall be designated as Common Stock and shall have identical rights and privileges in every respect.”
The terms of any additional shares of Common Stock would be identical to those of the currently outstanding shares of Common Stock.
Reasons for the Amendment
As of the Record Date, a total of 20,807,502 shares of the Company’s currently authorized 25,000,000 shares of Common Stock were issued and outstanding and approximately 1,731,720 shares were reserved for issuance pursuant to our 2006 Stock Awards Plan, leaving approximately 2,362,962 shares of our Common Stock currently unreserved and available for future use.
Our Board believes it is desirable to increase the number of authorized shares of Common Stock in order to provide the Company with adequate flexibility in corporate planning and strategies. The availability of additional authorized shares of Common Stock could be used for a number of purposes, including corporate financing, public or private offerings of Common Stock, future acquisitions, stock dividends, stock splits, strategic relationships with corporate partners, Stock Options, and other stock-based compensation. The availability of additional authorized shares of Common Stock is particularly important in the event that our Board needs to undertake any of the foregoing actions on an expedited basis and thus to avoid the time and expense of seeking shareholder approval in connection with the contemplated issuance of Common Stock. Previously, we have pursued additional sales of shares of our Common Stock in order to obtain additional equity capital. However, there are currently no plans, agreements, or understandings regarding the issuance of any of the additional shares of Common Stock that would be available only if this proposal is approved. Further, our proposed increase in Common Stock is not in response to efforts by any party to acquire or gain control of the Company. Such additional authorized shares may be issued for such purposes and for such consideration as our Board may determine without further shareholder approval, unless shareholder approval is required by applicable law or the rules of the NASDAQ or any stock exchange on which our securities may be listed.
Effects of the Authorization of Additional Common Stock on Holders of Common Stock
The increase in authorized shares of Common Stock will not have any immediate effect on the rights of our shareholders. Although the additional authorized shares of Common Stock will not change the voting rights, dividend rights, liquidation rights, or any other shareholder rights, our Board will have the authority to issue additional shares of Common Stock without requiring future shareholder approval of such issuances, except as may be required by applicable law or the rules of the NASDAQ or any stock exchange on which our securities may be listed. The issuance of additional shares of our Common Stock will decrease the relative percentage equity ownership of our shareholders, thereby diluting the voting power of their Common Stock, and, depending on the price at which the additional shares are issued, may also be dilutive to the earnings per share of the Common Stock. The holders of our Common Stock have no preemptive rights, and our Board has no plans to grant such rights with respect to any such shares. The authorization of additional shares of Common Stock could also have an anti-takeover effect in that additional shares could be issued in one or more transactions that could make a change in control or takeover of TGC more difficult or by the issuance of additional shares to certain persons allied with TGC’s management that could make it more difficult to remove such persons.
Anti-Takeover Effects of Existing Provisions in our Restated Articles of Incorporation and Bylaws
Some existing provisions of our restated articles of incorporation and bylaws may be deemed to have an anti-takeover effect and may delay, defer, or prevent a tender offer or takeover attempt that a shareholder might consider to be in that shareholder’s best interests. These provisions could limit the price that investors might be willing to pay in the future for shares of our Common Stock.
·Authorized but unissued shares. The authorized but unissued shares of our Common Stock are available for future issuance without shareholder approval unless such approval is required by applicable law or listing rules of an applicable securities exchange. The existence of authorized but unissued and unreserved Common Stock could render more
difficult or discourage an attempt to obtain control of TGC by means of a proxy contest, tender offer, merger, or otherwise.
·Amendment to bylaws. Our Board is authorized to make, alter, or repeal our bylaws without further shareholder approval.
·Advance notice of director nominations and matters to be acted upon at meetings. Our bylaws contain advance notice requirements for nominations for directors to our Board and for proposing matters that can be acted upon by shareholders at shareholder meetings.
·Vacancies in the Board. Any vacancy in our Board existing for any reason may be filled by the remaining directors.
·Special meetings of shareholders. Our bylaws provide that special meetings of shareholders may be called only by our President.
·Supermajority Vote for Business Combinations. Our restated articles of incorporation and bylaws provide thatrequire the affirmative vote of the holders of eighty percent (80%) or more of the issued and outstanding shares of Common Stock outstanding on the Companyrecord date. Abstentions and broker non-votes will be counted as present for the purposes of determining if a quorum is present but will have the same effect as a vote against the proposed Charter amendment. A failure to vote shares will also have the effect of a vote against the Charter amendment.
Texas Law
Finally, we are subjectfile a proxy statement and call a shareholders meeting to seek the restrictions contained in Section 21.606same level of shareholder approval. Therefore, after careful consideration, our Board of Directors recommends that the Charter be amended to permit shareholders to take action by non-unanimous written consent.
Amendments to Conform with the Requirements of the Texas Business Organizations Code
Effective January 1, 2010, the Texas Business Corporation Act (the “TBCA”) was replaced by the Texas Business Organizations Code (the “TBOC”). The TBOC was promulgated to modernize and consolidate the existing law governing Texas business entities. The TBOC took effect on January 1, 2006. However, Texas entities formed prior to January 1, 2006 were not subject to the TBOC until
January 1, 2010. After January 1, 2010, all entities formed in Texas, regardless of their date of formation, became governed by the TBOC. The Company was incorporated in Texas in 1980, and thus did not become subject to the TBOC until January 1, 2010. The TBOC provides that any Texas corporation formed prior to January 1, 2006quorum is not considered to have failed to comply with the TBOC if the corporation’s certificate of formation did not comply with the requirements of the TBOC as of January 1, 2010. However, any such corporation must conform its certificate of formation to the TBOC when the corporation next files an amendment to its certificate of formation. As a result of the proposal to amend the Company’s restated articles of incorporation to increase the authorized number of shares of TGC Common Stock from 25,000,000 to 35,000,000, the Company also proposes to make other amendments to conform with the requirements of the TBOC.
One of the most significant impacts of the TBOC was the standardization of the statutory terminology relating to Texas corporations and other business entities. For example, the TBOC provides that the primary governing document for a corporation is referred to as a “certificate of formation,” whereas the charter of a corporation such as the Company was previously referred to as “articles of incorporation.” As a result, the majority of the amendments made to the restated articles of incorporation relate to the new terminology created by the TBOC.
If the Company’s shareholders vote to approve the amendment to the Company’s restated articles of incorporation, the Companypresent but will have the authority to filesame effect as a vote against the amended and restated certificate of formation with the Texas Secretary of State, and the amended and restated certificate of formation will become effective upon its filing.
If the Company’s shareholders vote to approve Proposal No. 3, the following amendments to the Company’s restated articles of incorporation will be made.
·Article 3 will be amended to specify that the Company is a for-profit corporation;
·Article 4 will be amended to increase the number of authorized shares of Common Stock which the Company may issue up to 35,000,000;
·Article 5 regarding commencement of business will be deleted pursuant to the terms of the TBOC;
·Article 8 will be amended to include the current directors of the Company; and
·Various articles will be amended to conform terms and references specified by the TBOC.
The full text of the amended and restated certificate of formation is set forth in Appendix A.
Required Vote
Approval of theproposed Charter amendment to our restated articles of incorporationpermit shareholders to increase the number of authorizedtake non-unanimous action by written consent. A failure to vote shares of Common Stock from 25,000,000 shares to 35,000,000 shares and to make other amendments to conform with the requirements of the Texas Business Organizations Code requires the affirmative vote of the holders of two-thirds (2/3rds) of the outstanding shares of TGC Common Stock as of the Record Date. As a result, abstentions will also have the effect of a vote “AGAINST” this proposal.
The Company’sagainst the Charter amendment to permit shareholders to take non-unanimous action by written consent.
Annual Meeting to respond to appropriate questions and will have an opportunity to make a statement if they desire to do so. full-time, permanent employees.NO. 44:Audit CommitteeBoard of Directors has appointed Lane Gorman Trubitt, PLLC to serveselected RSM US LLP (“RSM”) for appointment as auditors of the Company. If the shareholders do not ratify the appointment of Lane Gorman Trubitt PLLC, the Audit Committee will reconsider the appointment. It is not expected that a representative of Lane Gorman Trubitt, PLLC will be present at the annual meeting. Proposal No. 4 is for the ratification of the selection of Lane Gorman Trubitt, PLLC as the Company’s Independent Registered Public Accounting Firmour independent registered public accounting firm for the fiscal year ending December 31, 2013. The affirmative vote2023, subject to ratification by the shareholders. RSM has served as our independent registered public accounting firm since fiscal year ending December 31, 2016. Representatives of a majority ofRSM are expected to be present (via the shares present in person or represented by proxy and entitled to votelive audio webcast) at the annual meeting is required for the approval of this proposal.The Company’sOur Board of Directors unanimously recommends that you vote FOR the appointment of RSM US LLP as our independent registered public accountants for the fiscal year ending December 31, 2023.FORFEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS 2022 2021 $ 407,700 $ 370,000 — 9,000 92,000 — All other fees — — Total fees $ 499,700 $ 379,000 Proposal No. 4.(1)OTHER MATTERSThemanagement knowsannual financial statements for the years ended December 31, 2022 and 2021, and the reviews of no other matters that may properly be, or which are likely to be, brought before the annual meeting. However, if any other matters are properly brought before the annual meeting, the persons namedfinancial statements included in the enclosed proxy, orCompany’s quarterly reports.substitutes, will vote in accordance with their best judgment on such matters.SHAREHOLDER PROPOSALSAUDIT COMMITTEE REPORTA shareholder proposal intendedbe presented atcontribute to the reliability of the Company’s Annual Meetingfinancial statements. In keeping with this goal, the Board of ShareholdersDirectors adopted a written charter for the Audit Committee, which is posted on the Company’s website at www.dawson3d.com in 2014 must be receivedthe “Corporate Governance” area of the “Investor Relations” section. The Audit Committee Charter was most recently reviewed by the Audit Committee on October 27, 2020, and no changes were made. The Audit Committee held four meetings during 2022. The members of the Audit Committee are independent directors.
| November [•], 2023 | | | Submitted by the Audit Committee of the Board of Directors | |
| | | | Albert Conly (Chairman) Bruce Bradley Jose Carlos Fernandes | |
In order for a shareholder proposal made outside of Rule 14a-8 to be considered timely pursuant tosuch meeting, the Company’s Amended and Restated Bylaws, such proposal must be received by the Company at itsour principal executive offices, 508 West Wall, Suite 800, Midland, Texas 79701, Attention: Mr. James K. Brata, Secretary, a reasonable time before we begin to print and send our proxy materials. In addition, to comply with the universal proxy rules, shareholders who intend to solicit proxies in Plano, Texas no earliersupport of director nominees other than February 2, 2014 and nothe Company’s nominees must provide timely notice that sets forth the information required by Rule 14a-19 under the Exchange Act.
FINANCIAL STATEMENTS
Financial statementsthe close of business on the later of: (i) the ninetieth (90th) day before such annual meeting or (ii) the tenth (10th) day following the day on which public announcement of the Company are containeddate of such meeting is first made, at the address of our principal executive offices shown above. Such notice must include the information specified in our Bylaws.
2022. On May 1, 2023, we filed with the SEC an Amendment No. 1 on Form 10-K/A for the year ended December 31, 2022. The Annual Report on Form 10-K and Amendment No. 1 on Form 10-K/A have been provided concurrently with this Proxy Statement to all shareholders entitled to notice of, and to vote at, the Annual Meeting.
Certificate of Formation
OF
TGC INDUSTRIES, INC.
Section 5
Name | | | Address | |
Wayne A. Whitener | | | 101 E. Park Blvd., Ste 955 | |
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William J. Barrett | | | P. O. Box 6199 | |
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Herbert M. Gardner | | | P. O. Box 463 | |
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Allen T. McInnes | | | 4532 | |
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Edward L. Flynn | | | 7511 Myrtle Avenue | |
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Stephanie P. Hurtt | | | P. O. Box 643695 | |
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b.Preferred Stock. The aggregate number of shares of Preferred Stock which the Corporation may issue is 4,000,000, each having a par value of $1.00. The Preferred Stock authorized by this Amended and Restated Certificate of Formation may be issued from time to time in series. The shares of each series shall be subject not only to the provisions of this Article 4b which is applicable to all series of preferred shares, but also to the additional provisions with respect to such series as are fixed from time to time by the Board of Directors. All preferred shares of each series shall be identical and of equal rank, except as may be modified by the Board of Directors. Each share of each series shall be identical in all respects with the other shares of such series, except as to the date from which dividends thereon shall be cumulative in the event the Board designates any such series to be cumulative preferred. The Board of Directors is hereby authorized and required to fix, in the manner and to the full extent provided and permitted by law, all provisions of the shares of each series not otherwise set forth in this Certificate, including, but not limited to:
evenly divisible by three, such holders received in lieu of any fraction of a share, an additional share of Common Stock. As of the Effective Time and thereafter, a certificate(s) representing shares of Common Stock prior to the Reverse Split were deemed to represent the number of new shares into which the old shares were convertible.
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be indemnified to the full extent permitted by the Texas Business Organizations Code as it may exist from time to time.
(c)by special legal counsel selected by the board of directors or a committee of a board by vote as set forth in subparagraphs (a) and (b) above, or, if such quorum cannot be obtained and such committee cannot be established, by a majority vote of all directors; or
f.Supermajority Vote for Business CombinationsCombinations.
The affirmative vote of the holders of eighty percent (80%) or more of the issued and outstanding shares of the Corporation at a duly called meeting of the stockholders shall be required for the approval or authorization of (1) any merger or consolidation of the Corporation with or into another corporation or entity, or (2) any sale of all or substantially all of the Corporation’s assets to another corporation or entity.
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j.Limitation of Liability.Liability
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Name | | | Address | |
Wayne A. Whitener | | | 101 E. Park Blvd., Ste 955 | |
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William J. Barrett | | | P. O. Box 6199 | |
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Herbert M. Gardner | | | P. O. Box 463 | |
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Allen T. McInnes | | | 4532 | |
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Edward L. Flynn | | | 7511 Myrtle Avenue | |
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Stephanie P. Hurtt | | | P. O. Box 643695 | |
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