Table of ContentsCompensation Discussion and Analysis
2018-2020 Long-term Incentive Plan
Dr. McDonald | | | | | | | | | | | | Silver Equivalent (includes Gold) Reserve Growth | | | | Silver Equivalent Ounce Target (millions) | | Additional Reserve
(millions) | | Unit Value | | | | 427.6 | | | | 90 | | | | $ | 75.00 | | | | | 397.6 | | | | 60 | | | | $ | 50.00 | | | | | 367.6 | | | | 30 | | | | $ | 25.00 | | | | | 337.6 | | | | 0 | | | | $ | 10.00 | |
| | | | | | | | | | | | Silver Equivalent (includes Gold) Production Growth | | | | Production Target (in mm ozs.) | | Average Annual Target
(in mm ozs.) | | Unit Value | | | | 105.0 | | | | 35.0 | | | | $ | 100.00 | | | | | 96.0 | | | | 32.0 | | | | $ | 75.00 | | | | | 90.0 | | | | 30.0 | | | | $ | 50.00 | | | | | 86.0 | | | | 28.7 | | | | $ | 25.00 | | | | | 80.0 | | | | 26.7 | | | | $ | 10.00 | |
| | | | | | | Mine Site Operating Cash Flow Less Capital | | | Cash Target (millions) | | Unit Value | $425 | | | $ | 100.00 | | $375 | | | $ | 50.00 | | $350 | | | $ | 25.00 | | $230 | | | $ | 5.00 | |
| | | | | | | TSR | | | Ranking within Peer Group Companies | | Unit Value | | | Top 2 | | | $ | 100.00 | | | | Top 4 | | | $ | 75.00 | | | | Top 6 | | | $ | 50.00 | | | | Top 8 | | | $ | 25.00 | | | | <Top 8 | | | $ | 0.00 | |
2018-2020 LTIP Performance Summary | | | | | | | | | | | | | | | | | | | | | | Performance Measure | | Target | | | Actual
Performance | | | % of
Target | | | Value Earned
Per Unit | | | | | | | Silver Reserve Growth | |
| 30.0 silver
equivalent oz.
added (millions) |
| |
| 21.3 silver
equivalent oz.
added (millions) |
| | | 71 | % | | $ | 20.75 | | | | | | | Production Growth | |
| 86.0 silver
equivalent oz.
added (millions) |
| |
| 84.5 silver
equivalent oz.
added (millions) |
| | | 98 | % | | $ | 21.25 | | | | | | | Cash Flow | |
| $350 cash flow
(millions) |
| |
| $205.1 cash
flow (millions) |
| | | 59 | % | | $ | 0 | | | | | | | TSR (Hecla ranking vs. peers) | | | 8th | | | | 7th | | | | 100 | % | | $ | 25.00 | | | | | | | Total Earned Per Unit | | | | | | | | | | | | | | $ | 67.00 | |
2021 Proxy Statement 65
Compensation Discussion and Analysis During this three-year period, performance in reserve growth was very robust in 2018 and 2019. In 2020, COVID-19 restrictions inhibited our ability to drill, and we were not able to replace the reserves we mined. During the 3-year LTIP period we were able to add almost 21.3 million equivalent ounces to the reserves, which was above threshold and below target. Production growth was slightly above target in 2018 and slightly below target during 2019 and 2020. The full production over the LTIP period was 84.5 million silver equivalent ounces, which was 98% of target. Cash flows for 2018, 2019 and 2020 were below target, resulting in a cash flow generation of 59% of target. Hecla’s relative TSR over the 3-year LTIP period ranked 7th among the 16 peer companies (inclusive of Hecla). As a result, with a range in potential value per unit of $0 to $375, in February 2021, the committee determined that the total 2018-2020 LTIP payout was $67.00 per unit. The committee approved payout of the LTIP awards to be 100% in cash. 2018-2020 LTIP Award Summary The following chart shows the number of performance units awarded in 2018 to each NEO, the unit value achieved, the total amount of the award (number of units x $67.00 = total award value), and the amount of cash received. | | | | | | | | | | | | | | | | | Name | | 2018-2020
Performance
Units
(#) | | | Unit
Value
($) | | | Total
Amount
of Award
($) | | | | | | Phillips S. Baker, Jr. | | | 11,400 | | | | 67.00 | | | | 763,800 | | | | | | Lindsay A. Hall | | | 5,000 | | | | 67.00 | | | | 335,000 | | | | | | Lauren M. Roberts | | | 1,889 | (1) | | | 67.00 | | | | 126,563 | | | | | | Robert D. Brown | | | 3,000 | | | | 67.00 | | | | 201,000 | | | | | | David C. Sienko | | | 3,000 | | | | 67.00 | | | | 201,000 | |
| (1) | | Year-end 2018 Performance Results | | | n | found more resources and reserves at Casa Berardi to extend mine life; | | | n | developed near-term exploration plans to increase resources and reserves at Greens Creek and to extend its life of mine; | | | n | provided support for ore sorting and metallurgical test work with on-site application; | | | n | enhanced ability to estimate resources and reserves, including training of new resource modelers; and | | | n | set up external audit of commercial analytic labs that the Company uses for analysis of exploration samples. | | | | | Mr. Brown | | Year-end 2018 Performance Results | | | n | developed corporate and banking relationships to facilitate an acquisition; | | | n | directed the Klondex Mines Ltd. acquisition; | | | n | continued to strengthen the M&A process; and | | | n | developed a plan to maintain and prioritize acquisition candidates. |
Based on each NEO’s performance in managing their functions and the progress they made towards the Company’s AIP Components and their individual goals as discussed above, and the overall success ofMr. Robert’s 2018-2020 LTIP units were prorated because he joined the Company in 2018, the committee determined that each of the NEO’s should be awarded between 50% and 64% of targeted AIP value.August 2019.
Mr. Baker’s annual incentive is based 100% on corporate performance. Although overall metal production increased with record gold production, and Mr. Baker’s leadership led to achieving significant strategic goals and objectives for the year, including increased reserves and improved safety metrics, and assuring growth in skills and performance in the Company’s management team, share performance caused the committee to award Mr. Baker 50% of his targeted annual incentive award, a reduction from the corporate rating of 82%.
2018 AIP Award Summary. For 2018, based on the assessment by the committee of the Company’s overall performance on both quantitative and qualitative measures, as well as relevant discretionary factors under the AIP, the committee determined Company performance to be at 82% of target (out of a possible range of 0-200%. This was comprised of 39% related to the quantitative factors (20% for Production, 0% for EBITDA less capital, and 19% for work-related injury reduction); 23% for qualitative factors; and 20% for discretionary.
Set forth in the table below is each NEO’s target award and actual award, which was paid 100% in cash.
| Name | | Base Salary
($) | | Base Salary
Factor
(%) | | Target Annual
Incentive
($) | | % to
Target(1)
(%) | | Actual
Award(2)
($) | | Phillips S. Baker, Jr. | | 635,000 | | 100 | | 635,000 | | 50 | | 317,500 | | Lindsay A. Hall | | 380,000 | | 100 | | 380,000 | | 50 | | 190,000 | | Lawrence P. Radford | | 416,000 | | 100 | | 416,000 | | 50 | | 208,000 | | Dr. Dean W.A. McDonald | | 275,000 | | 100 | | 275,000 | | 50 | | 137,500 | | Robert D. Brown | | 264,000 | | 70 | | 184,800 | | 64 | | 118,800 |
(1) | The percentages listed for each of the NEOs includes corporate achievement of goals and individual performance. | (2) | The amount reported in this column was paid in cash to the NEO and is included in theSummary Compensation Table for 2018 on page 49 under “Non-Equity Incentive Plan Compensation.” |
Long-term Incentive Plan (“LTIP”)
We use the LTIP to focus employees on meeting long-term (three-year) corporate performance goals. The LTIP is also designed to attract and retain employees in a highly competitive talent market. The committee considers mining and general industry market practices, as well as the objectives of the LTIP, when determining the terms and conditions of long-term incentive goals, such as resource additions and cash flow generation.
Under the LTIP, a new performance period begins each calendar year and runs for three years. The three-year performance period recognizes that some value-creating activities require a significant period of time to be implemented and for measurable results to accrue. Starting a new performance period each year also gives the committee flexibility to adjust for new business conditions, circumstances or priorities in setting the performance metrics and goals for each three-year cycle. Performance units are assigned to each NEO at the beginning of each three-year period and provide the basis for the amount of awards made to each NEO under the LTIP. Performance units are designed to encourage management to deliver long-term value. Performance units reinforce Hecla’s business strategy by clearly establishing our key performance elements (e.g., reserve growth, production growth, cash flow, and relative TSR) and the associated long-term performance objectives that must be met for us to be successful and create value for shareholders.
Table of Contents
2016-2018 LTIP. In February 2016, the committee approved the 2016-2018 LTIP, which has a target unit value of $100 and a maximum potential value of $375. Performance units are paid out in the first half of the year following the end of each performance period, upon approval by the committee. At the discretion of the committee, the payouts may be in the form of cash, common stock, or a combination of both.
The tables below summarize the performance unit valuation ranges for silver equivalent reserve growth, production growth, cash contribution, and TSR for the 2016-2018 plan period – the four performance goals approved by the committee in February 2016. These are important goals for the following reasons:
|
Equity
We have no program, plan, or practice to time the grant of stock-based awards relative to the release of material non-public information or other corporate events. All equity grants to executive officers are approved by the committee at regularly scheduled meetings or, in limited cases involving key recruits or promotions, by a special meeting or unanimous written consent. The grant date is the meeting date, or a fixed, future date specified at the time of the grant. Under the terms of our 2010 Stock Incentive Plan, the fair market value of any award is determined by the closing price of our common stock on the NYSE on the date of grant or a fixed, future date specified at the time of grant. In addition, the committee typically makes equity grants to NEOs in the first half of the year.
Restricted Stock Units (“RSUs”)
RSUs are granted to the NEOs under the 2010 Stock Incentive Plan. RSUs are used to retain our NEOs and align their interests with the long-term interests of our shareholders. The committee awarded RSUs to each NEO in June 2020. The RSUs vest in three equal amounts with vesting dates of June 21, 2021, June 21, 2022, and June 21, 2023. See Grants of Plan-Based Awards for 2020 on page 81.
In December 2014, the committee amended the 2010 Stock Incentive Plan and Key Employee Deferred Compensation Plan so that any RSUs vesting after 2014 would no longer be credited with dividend equivalents. In order to incentivize RSU recipients to continue working for the Company, RSU awards require both an age and years of service trigger in order to qualify for vesting of the RSUs as of the employee’s retirement. The 2010 Stock Incentive Plan provides that for purposes of the RSU awards, RSU recipients who retire under Hecla Mining Company’s Retirement Plan must be at least age: (i) 60 and have 15 or more years of service with the Company; (ii) 65 and have seven or more years of service with the Company; or (iii) 68, in order to receive their unvested RSUs after retirement. If one of the above requirements is met, the recipients will receive their RSUs on the applicable vesting dates. In 2018, we amended our 2010 Stock Incentive Plan to provide for a double-trigger vesting acceleration upon a change of control.
n66 www.hecla-mining.com
Compensation Discussion and Analysis In 2020, we granted RSUs to approximately 116 employees under the 2010 Stock Incentive Plan, including the NEOs as follows: | | | | | | | | | | | | | | NEO | | Value of Restricted
Stock Units | | Number of Shares(1) | | | | Phillips S. Baker, Jr. | | | $ | 400,000 | | | | | 132,013 | | | | | Lindsay A. Hall | | | $ | 225,000 | | | | | 74,257 | | | | | Lauren M. Roberts | | | $ | 225,000 | | | | | 74,257 | | | | | Robert D. Brown | | | $ | 160,000 | | | | | 52,805 | | | | | David C. Sienko | | | $ | 150,000 | | | | | 49,505 | |
| (1) | Silver equivalent reserve growth. Silver equivalent reserve growth remains a fundamental value creator. We need to replace and add reserves to extend mine lives and grow production. This is critical to the achievement of our long-term success. In the context of this plan, reserves include the silver equivalent of gold but not base metals. Silver equivalent reserve and resource growth includes gold converted to silver equivalent at 71 to 1. | | | n | Silver production growth. One of the most important components of value is demonstrable production growth. | | | n | Cash flow. The design of the cash flow goal is identical to that contained in prior years since silver cost per ounce and production are key elements in creating shareholder value. When used in the context of our LTIP, “cash flow” is measured by comparing (i) the actual cash cost, after by-product credits multiplied by actual silver/gold production versus (ii) budgeted cash cost, after by-product credits multiplied by the budgeted silver/gold production over a three-year period. “Cash cost, after by-product credits,” a non-GAAP measure, includes all direct and indirect operating cash costs related directly to the physical activities of producing the primary metal, including mining, processing and other plant costs, third-party refining expense, on-site general and administrative costs, royalties and mining production taxes, and offsets that amount by the production value of all metals other than the primary metal produced at each unit. | | | n | TSR. TSR provides a performance metric relative to our peers. This objective differs from the other objectives which are focused on activities that in an absolute sense should be value drivers: reserves and resources, production, and cash contribution. TSR measures the price appreciation of our stock, including dividends paid during the performance period, and thereby simulates the actual investment performance of Hecla stock. Any payout is based on how Hecla’s TSR performance compares to the TSR of the common stock of a group of our peer companies. |
2016-2018 Long-term Incentive Plan
| Silver Equivalent (includes Gold) Reserve Growth | Ounce Target
(millions) | | Additional Reserve
(millions) | | Unit Value | | 423 | | 100 | | $ | 100.00 | | 363 | | 40 | | $ | 50.00 | | 353 | | 30 | | $ | 25.00 | | 323 | | 0 | | $ | 5.00 | | | | | | | | | Silver Equivalent (includes Gold) Production Growth | Target
(in mm ozs.) | | Average Annual Target
(in mm ozs.) | | Unit Value | | 93.0 | | 31.0 | | | $ 75.00 | | 89.5 | | 29.5 | | | $ 50.00 | | 87.0 | | 29.0 | | | $ 25.00 | | 84.0 | | 28.0 | | | $ 10.00 | | | | | | | | | Cash Flow | | % of Target | | | | Unit Value | | 115% | | | | $ | 100.00 | | 110% | | | | $ | 50.00 | | 105% | | | | $ | 35.00 | | 100% | | | | $ | 25.00 | | 90% | | | | $ | 15.00 | | | | | | | | | Total Shareholder Return | | %ile rank within Peer Group Companies | | | | Unit Value | | 100% | | | | $ | 100.00 | | 90% | | | | $ | 75.00 | | 80% | | | | $ | 50.00 | | 70% | | | | $ | 35.00 | | 60% | | | | $ | 25.00 | | 50% | | | | $ | 15.00 | | <50% | | | | $ | 0.00 |
Table of Contents
2016-2018 LTIP Performance Summary
| Performance Measure | | Target | | Actual
Performance | | % of
Target | | | Value Earned
Per Unit | | Silver Reserve Growth | | 30.0 silver
equivalent oz.
added (millions) | | 70.6 silver
equivalent oz.
added (millions) | | 235 | % | | | $ 75.50 | | Production Growth | | 87.0 silver
equivalent oz.
added (millions) | | 91.8 silver
equivalent oz.
added (millions) | | 105 | % | | | $ 66.25 | | Cash Flow | | $847 cash flow
(millions) | | $795 cash flow
(millions) | | 94 | % | | | $ 19.00 | | Total Shareholder Return | | 60% Hecla
ranking vs. peers | | <50% Hecla
ranking vs. peers | | 41.7 | % | | | $ 0 | | Total Earned Per Unit | | | | | | | | | | $160.75 |
During this three-year period, performance in reserve and production growth exceeded target levels. Performance in cash flow was below target, but above minimum threshold levels, and TSR was below the minimum level. As a result, with a range in potential value per unit of $0 to $375, in February 2019, the committee determined that the total 2016-2018 LTIP payout was $160.75 per unit. The committee and the Board further approved payout of the LTIP awards to be 100% in Hecla common stock issued under the 2010 Stock Incentive Plan.
2016-2018 LTIP Award Summary
The following chart shows the number of performance units awarded in 2016 to each NEO, the unit value achieved, the total amount of the award (number of units x $160.75 = amount received), and the amount of cash and numberNumber of shares received.
| Name | | 2016-2018
Performance Units
(#) | | | Unit Value
($) | | Total Amount
of Award(1)
($) | | | Equity Received(2)
(#) | | Phillips S. Baker, Jr. | | 9,500 | | | 160.75 | | 1,527,125 | | | 663,967 | | Lindsay A. Hall | | 3,383 | (3) | | 160.75 | | 543,817 | | | 236,442 | | Lawrence P. Radford | | 4,200 | | | 160.75 | | 675,150 | | | 293,543 | | Dr. Dean W.A. McDonald | | 3,000 | | | 160.75 | | 482,250 | | | 209,674 | | Robert D. Brown | | 2,400 | | | 160.75 | | 385,800 | | | 167,739 |
(1) | The amount reported in this column was paid in equity to the NEO and is also reported in the Summary Compensation Table for 2018 on page ___ under “Non-Equity Incentive Plan Compensation.” | (2) | The equity portion of the 2016-2018 LTIP award was determined by dividing the cash value of the award by the closing price of the Company’s common stock on the NYSE on March 11, 2019 ($2.30). | (3) | Mr. Hall’s 2016-2018 LTIP units were prorated because he joined the Company in July 2016. |
Equity
Restricted Stock Units
Restricted stock units (“RSUs”) are granted to the NEOs under the 2010 Stock Incentive Plan. RSUs are used to retain our NEOs and align their interests with the long-term interests of our shareholders. The committee awarded RSUs to each NEO in June 2018. The RSUs vest in three equal amounts with vesting dates of June 21, 2019, June 21, 2020, and June 21, 2021. See Grants of Plan-Based Awards for 2018on page 51.
In December 2014, the committee amended the 2010 Stock Incentive Plan and Key Employee Deferred Compensation Plan so that any RSUs vesting after 2014 would no longer be credited with dividend equivalents. In February 2017, the committee amended the 2010 Stock Incentive Plan so unvested RSUs are forfeited by participants upon termination of employment in advance of vesting, with the exception of termination due to retirement if certain criteria are met. In the case of an employee retiring before the amendment, RSU recipients aged 55 or above, and who had at least 10 years of service, were eligible to receive their unvested RSUs. For 2017, and future awards, in order to incentivize RSU recipients to continue working for the Company, the committee amended the RSU awards to require both an age and years of service trigger in order to qualify for vesting of the RSUs as of the employee’s retirement. The amendment provides that for purposes of the RSU awards, RSU recipients who retire under Hecla Mining Company’s Retirement Plan must be at least age: (i) 60 and have 15 or more years of service with the Company; (ii) 65 and have 7 or more years of service with the Company; or (iii) 68, in order to receive their unvested RSUs after retirement. If one of the above requirements are met, the recipient will receive their RSUs on the original vesting dates. In 2014, we amended our change in control agreements to provide for a “double-trigger”. However, our 2010 Stock Incentive Plan provided for a single-trigger because we felt the single-trigger was appropriate for our other employees who receive equity under the plan, but who do not have change in control agreements. In 2018, one of the proxy advisory firms recommended voting against Hecla’s Say-on-Pay advisory vote at our 2018 Annual Meeting because of a single-trigger requirement in the 2010 Stock Incentive Plan. In December 2018, we amended our 2010 Stock Incentive Plan to provide for a double-trigger.
Table of Contents
In 2018, we granted RSUs to 186 employees under the 2010 Stock Incentive Plan, including the NEOs as follows:
| NEO | | Value of Restricted
Stock Units | | Target Number
of Shares(1) | | Phillips S. Baker, Jr. | | $ | 500,000 | | 130,548 | | Lawrence P. Radford | | $ | 450,000 | | 117,493 | | Lindsay A. Hall | | $ | 300,000 | | 78,329 | | Dr. Dean W.A. McDonald | | $ | 250,000 | | 65,274 | | Robert D. Brown | | $ | 200,000 | | 52,219 |
(1) | Number of shares is determined by dividing the value of the restricted stock units awarded by the closing price of our common stock on the NYSE on June 19, 2018 ($3.83). |
Performance-based Shares
We grant performance-based share awards to certain executive officers, including our NEOs. The value of the awards is based on the ranking of the market performance of our common stock relative to the performance of the common stock of a group of peer companies over a three-year measurement period. The number of shares to be issued is based on the target value of the awards divided by the share price at grant date. The compensation cost is measured using a Monte Carlo simulation to estimate their value at grant date.
In June 2018, the committee granted performance-based shares to our NEOs, with a target value listed below. The value of these performance-based shares will be based on the TSR of our common stock for the three-year period from January 1, 2018 through December 31, 2020, based on the percentile rank listed below within a group of peer companies.
| NEO | | Target Value of
Performance-based
Shares | | Target Number
of Shares(1) | | Phillips S. Baker, Jr. | | $ | 600,000 | | 156,658 | | Lawrence P. Radford | | $ | 300,000 | | 78,329 | | Lindsay A. Hall | | $ | 165,000 | | 43,081 | | Dr. Dean W.A. McDonald | | $ | 130,000 | | 33,943 | | Robert D. Brown | | $ | 130,000 | | 33,943 |
(1) | Target number of shares is determined by dividing the target value of the performance-based shares by the closing price of our common stock on the NYSE on June 19, 2018 ($3.83). |
Company TSR Rank Among Peers | | TSR Performance Multiplier | 50thpercentile | | Threshold award at 50% of target | 60thpercentile | | Target award at grant value | 100thpercentile | | Maximum award at 200% of target |
If Hecla’s performance is below the 50thpercentile, the award is zero. If Hecla’s performance is between the 50thand 100thpercentile, the award is prorated. For any award, the number of shares issued at the conclusion of the three-year performance period (December 31, 2020) will be determined by using the share price on the date of original grant (June 19, 2018) of $3.83.
Hecla’s TSR performance versus that of our peer group will be based on the average closing share price over the last sixty (60) calendar days prior to January 1, 2018, as the base price and average closing share price over the last sixty (60) calendar days of the three-year performance period to determine relative share value performance and ranking among peers.
The industry peer group used for purposes of the 2018-2020 TSR performance-based award discussed above is listed on page 30.
CEO 2016-2018 Performance-based Share Results
On June 7, 2016, the committee granted a target award of 113,636 performance-based shares of Hecla’s common stock to our CEO.
To determine the relative share performance, Hecla’s TSR performance versus that of peer group companies was based on the average closing share price over the last sixty (60) calendar days prior to January 1, 2016, as the base price, compared with the average closing share price over the last sixty (60) calendar days of the three-year performance period (ending December 31, 2018).
The following table shows the calculation of the performance-based share results at the end of the three-year performance period on December 31, 2018. Hecla’s TSR ranked 8thamong the 13 companies in the peer group based on TSR from 2016 through 2018, including dividends paid during that period. Ranking 8thplaces Hecla at 41.7% among the peer companies, which equates to an award value to our CEO of $0.
Table of Contents
| TOTAL SHAREHOLDER RETURN – January 1, 2016 through December 31, 2018 | | Peer Name | | Average Stock
Price over 60-day
period leading up to
1/1/2016
($) | | Average Stock
Price over 60-day
period leading up to
12/31/18
($) | | Dividends Paid
(1/1/16 thru
12/31/18)
($) | | TSR thru
12/31/18
(%) | | Rank
(#) | | Payout
($) | | B2Gold | | 1.48 | | 3.53 | | 0.00 | | 100.0 | | 1 | | 1,000,000 | | IAMGOLD | | 1.49 | | 3.35 | | 0.00 | | 91.7 | | 2 | | 895,833 | | SSR Mining* | | 5.45 | | 11.16 | | 0.00 | | 83.3 | | 3 | | 791,667 | | Pan American Silver | | 6.86 | | 13.74 | | 0.29 | | 75.0 | | 4 | | 687,500 | | Coeur Mining | | 2.60 | | 4.37 | | 0.00 | | 66.7 | | 5 | | 583,333 | | TARGET PAYOUT | | | | | | | | | | | | 500,000 | | First Majestic Silver | | 3.20 | | 5.32 | | 0.00 | | 58.3 | | 6 | | 458,333 | | Endeavour Silver | | 1.45 | | 1.99 | | 0.03 | | 50.0 | | 7 | | 250,000 | | THRESHOLD PAYOUT | | | | | | | | | | | | 0 | | Hecla | | 1.96 | | 2.42 | | 0.03 | | 41.7 | | 8 | | 0 | | Alamos Gold | | 3.23 | | 3.44 | | 0.06 | | 33.3 | | 9 | | 0 | | Centerra Gold | | 7.18 | | 5.47 | | 0.12 | | 25.0 | | 10 | | 0 | | Detour Gold | | 13.83 | | 10.43 | | 0.00 | | 16.7 | | 11 | | 0 | | Tahoe Resources | | 8.48 | | 3.32 | | 0.43 | | 8.3 | | 12 | | | | New Gold | | 2.30 | | 0.81 | | 0.00 | | 0.0 | | 13 | | 0 | | Primero Mining** | | | | | | | | | | | | 0 |
* | SSR Mining was previously called Silver Standard Resources. | ** | Primero Mining was acquired by First Majestic Silver and was removed from the TSR peer group. |
Stock Options. For the past eight years, we have not issued any stock options to our NEOs (or any other employee). Any stock options granted under the 2010 Stock Incentive Plan will be issued with an exercise price based on the fair market value (the closing sales price of our common stock on the NYSE on June 22, 2020 ($3.03).
|
Performance-based Shares (“PSUs”)
We grant PSUs to certain executive officers, including our NEOs. The value of the awards is based on the ranking of the market performance of our common stock relative to the performance of the common stock of a group of peer companies over a three-year measurement period. The number of shares to be issued is based on the target value of the awards divided by the share price at grant date. The compensation cost is measured using a Monte Carlo simulation to estimate their value at grant date.
In June 2020, the committee granted PSUs to our NEOs with a target value listed below. The value of these PSUs will be based on the TSR of our common stock for the three-year period from January 1, 2020 through December 31, 2022, based on the percentile rank listed below within a group of peer companies.
| | | | | | | | | | |
| | |
NEO | | Target Value of
Performance-based
Shares | | Number of Shares(1) |
| | |
Phillips S. Baker, Jr. | | | $ | 400,000 | | | | | 132,013 | |
| | |
Lindsay A. Hall | | | $ | 150,000 | | | | | 49,505 | |
| | |
Lauren M. Roberts | | | $ | 150,000 | | | | | 49,505 | |
| | |
Robert D. Brown | | | $ | 105,000 | | | | | 34,653 | |
| | |
David C. Sienko | | | $ | 100,000 | | | | | 33,003 | |
| (1) | Number of shares was determined by dividing the datetarget value of grant). Other
Nonqualified Deferred Compensation Plan. We maintain the Key Employee Deferred Compensation Plan (the “KEDCP”), a nonqualified deferred compensation plan, under which participants may defer all or a portionPSUs by the closing price of their annual base salary, performance-based compensation awarded under our AIP and LTIP, and RSUs granted under the 2010 Stock Incentive Plan. Participants may elect to have their deferred base salary and AIP or LTIP awards valued based on Hecla common stock and credited to a stock account. Deferred RSUs are credited to a stock account. The KEDCP provides for discretionary matching contributions on base salary, AIP and LTIP amounts deferred to a stock account and discretionary company contributions that are credited to a participant’s stock account. The deferral features promote alignment of the interests of participants with those of our shareholders. Investment accounts are credited monthly with an amount based on the prime rate for corporate borrowers. Participants receive distributions from their accounts only upon separation from service with us, a fixed date or schedule selected by the participant, death, disability, an unforeseeable emergency or a change in control, as these events are defined under Section 409A of the Internal Revenue Code. The amounts deferred are unfunded and unsecured obligations of Hecla, receive no preferential standing, and are subject to the same risks as any of our other general obligations. Additional details about the KEDCP are described in the narrative accompanying theNonqualified Deferred Compensation for 2018 tableNYSE on page 54.
Benefits. We provide our employees with a benefits package that is designed to attract and retain the talent needed to manage Hecla. As part of that, most U.S, salaried employees including the U.S. NEOs, are eligible to participate in the Hecla Mining Company Retirement Plan, a 401(k) plan, which includes matching contributions by Hecla of up to 6%, health, vision, dental coverage, and paid time off, including vacations and holidays. All Canadian salaried employees, including the Canadian NEOs, are eligible to participate in a similar benefits package. NEOs are eligible to receive certain additional benefits, as described below. The committee intends for the type and value of such benefits offered to be competitive with general market practices.
Other Qualified and Nonqualified Benefit Plans. Under the Retirement Plan, upon normal retirement, each participant is eligible to receive a monthly benefit equal to a certain percentage of final average annual earnings for each year of credited service. Additional details about the Retirement Plan are in the narrative accompanying the Pension Benefits table on page 53. Under Hecla’s unfunded Supplemental Excess Retirement Plan, the amount of any benefits not payable under the Retirement Plan because of the limitations imposed by the Internal Revenue Code and/or the Employee Retirement Income Security Act, and certain reductions of benefits, if any, due to a deferral of salary made under our KEDCP, may be paid out of our general funds to employees who are adversely affected. The Retirement Plan and Supplemental Excess Retirement Plan define earnings for purposes of the plans to include base salary plus any other cash incentives up until July 1, 2013, after which only base salary plus one-half of AIP compensation is included (no LTIP compensation is included)June 22, 2020 ($3.03).
Personal Benefits. We do not provide company-paid cars, country club memberships, or other similar perquisites to our executives. The only material personal benefit provided by Hecla is a relocation benefit, which is offered as needed to meet specific recruitment needs.
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Clawback Policy
At its February 2013 meeting, the committee adopted a clawback policy with respect to incentive awards to executive officers. The policy provides that in the event of a restatement of our financial results as a result of material non-compliance with financial reporting requirements, the Board will review incentive compensation that was paid to our current and former executive officers under the Company’s AIP and LTIP (or any successor plans) based solely on the achievement of specific corporate financial goals (“Incentive Award”) during the period of the restatement. If any Incentive Award would have been lower had it been calculated based on the Company’s restated financial results, the Board will, as and to the extent it deems appropriate, including with respect to intent or level of culpability of the relevant individual(s), seek to recover from any executive officer, any portion of an Incentive Award paid in excess of what would have been paid based on the restated financial results. The policy does not apply in any situation where a restatement is not the result of material non-compliance with financial reporting requirements, such as any restatement due to a change in applicable accounting rules, standards or interpretations, a change in segment designations or the discontinuance of an operation.
In December 2015, the committee amended each of our incentive plans (AIP, LTIP, KEDCP, and 2010 Stock Incentive Plan) to include a clawback provision consistent with the clawback policy described above.
Insider Trading Policy
Our insider trading policy prohibits all directors, executive officers (as defined under Section 16 of the Exchange Act) and certain other employees designated as insiders from purchasing or selling any Company securities three weeks before through two days after the public release of any of our periodic results (including the filing of any Form 10-Q or Form 10-K), or at any other time during the year while in possession of material non-public information about the Company. In addition, directors and officers are prohibited from short-term trading, short sales, options trading, trading on margin, hedging or pledging any securities of the Company.
Change in Control Agreements
We have entered into change in control agreements (“CIC Agreements”) with each of our NEOs. Under the terms of our CIC Agreements, the CEO and the other NEOs are entitled to payments and benefits upon the occurrence of specified events, including termination of employment (with or without cause) following a change in control of the Company. The specific terms of these arrangements, as well as an estimate of the compensation that would have been payable had they been triggered as of fiscal year-end, are described in detail in the section entitledPotential Payments Upon Termination or Change in Control on page 54.
The termination of employment provisions of the CIC Agreements were entered into to address competitive concerns when the NEOs were recruited to Hecla by providing these individuals with a fixed amount of compensation that would offset the risk of leaving their prior employer or foregoing other opportunities to join the Company. At the time of entering into these arrangements, the committee considered the aggregate potential obligations of the Company in the context of the desirability of hiring the individual and the expected compensation upon joining Hecla.
The committee believes that these CIC Agreements are important for a number of reasons, including providing reasonable compensation opportunities in the unique circumstances of a change in control that are not provided by other elements of our compensation program. Further, change in control benefits, if structured appropriately, serve to minimize the distraction caused by a potential transaction and reduce the risk that key executives will leave Hecla before a transaction closes. The committee also believes that these agreements motivate the executives to make decisions that are in the best interests of our shareholders in the event of a pending change in control. These agreements provide executives with the necessary job stability and financial security during a change in control transaction and the subsequent period of uncertainty to help them stay focused on managing Hecla rather than on their own personal employment situation. The committee believes that all these objectives serve our shareholders’ interests. The committee also believes that change in control provisions are an essential component of the executive compensation program and are necessary to attract and retain senior talent in the highly competitive talent market in which we compete.
The change in control provisions were developed by the Company and the committee based on market and industry competitive practices. The Company and the committee periodically review the benefits provided under the CIC Agreements to ensure that they serve our interests in retaining our key executives, are consistent with market and industry practice, and are reasonable.
Tax and Accounting Considerations
Our compensation programs are affected by each of the following:
Accounting for Stock-Based Compensation. We take into account certain requirements of GAAP in determining changes to policies and practices for our stock-based compensation programs.
Section 162(m) of the Internal Revenue Code. Section 162(m) of the Internal Revenue Code of 1986, as amended (“Code Section 162(m)”), generally provides that compensation in excess of $1 million paid to the CEO and certain other NEOs (“covered employees”) of a public company will not be deductible for U.S. federal income tax purposes.
Our primary objective in designing and administering our compensation policies is to support and encourage the achievement of our strategic goals and to enhance long-term shareholder value. We also believe that it is important to preserve flexibility in administering compensation programs. For these and other reasons, the committee has determined that it will not necessarily seek to limit executive compensation to the amount that would be fully deductible under Code Section 162(m).
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Effective for taxable years beginning after December 31, 2017, the exemption from Code Section 162(m) for performance-based compensation was repealed in the tax reform legislation signed into law on December 22, 2017. Thus, it is anticipated that future compensation in excess of $1 million paid to covered employees will not be deductible for U.S. federal income tax purposes.
The committee will continue to monitor developments and assess alternatives for managing the deductibility of compensation payments and benefits to the extent reasonably practicable, as determined by the committee to be consistent with our compensation policies and in the best interests of the Company and our shareholders.
Section 409A of the Internal Revenue Code. Section 409A imposes additional significant taxes in the event that an executive officer or director receives “deferred compensation” that does not satisfy the requirements of Section 409A. We believe that we have designed and operated our plans appropriately to comply with Section 409A.
FUTURE COMPENSATION ACTIONS
2019 STIP
The plan was formally named “Annual Incentive Plan”, but in February 2019, we renamed the plan to Short-term Incentive Plan (“STIP”). The changed name more accurately reflects the way the plan works, as the qualitative and discretionary factors are measured over a time period that extends beyond the calendar year. Furthermore, eligibility for payment under the plan requires the employees must be on the payroll roster at the time the bonus is paid. A change in the name of the plan helps reinforce to our employees that both eligibility under the plan and the goal measurement timeframe under the plan extend beyond the calendar year. The factors for the STIP may be modified by the committee from time to time, including with respect to the relative weights:
| ■ | quantitative corporate performance factors comprising 50% of the targeted award; |
| ■ | qualitative/other goals, comprising 25% of the targeted award; and |
| ■ | a discretionary factor as determined by the committee, comprising 25% of the targeted award. |
| | | | | | | Each component can achieve two times the target with respect to the component, with the maximum total payout limited to two times the targetCompany TSR Rank Among Peers
| | TSR Performance Multiplier | | | | 50th percentile | | | Threshold award level (200%at 50% of target | | | | 60th percentile | | | Target award at grant value | | | | 100th percentile | | | Maximum award at 200% of target | |
If Hecla’s performance is below the 50th percentile, the award is zero. If Hecla’s performance is between the 50th and 100th percentile, the award is prorated. For any award, the number of shares issued at the conclusion of the three-year performance period (December 31, 2022), will be determined by using the share price on the date of original grant (June 22, 2020) of $3.03. Hecla’s TSR performance versus that of our peer group will be based on the average closing share price over the last sixty (60) calendar days prior to January 1, 2020, as the base price and average closing share price over the last sixty (60) calendar days of the three-year performance period to determine relative share value performance and ranking among peers. The industry peer group used for purposes of the 2020-2022 TSR PSUs discussed above is listed on page 53. 2021 Proxy Statement 67
Compensation Discussion and Analysis 2018-2020 PSU Results On June 19, 2018, the committee granted PSUs of Hecla’s common stock to our NEOs. To determine the relative share performance, Hecla’s TSR performance versus that of peer group companies was based on the average closing share price over the last sixty (60) calendar days prior to January 1, 2018, as the base price, compared with the average closing share price over the last sixty (60) calendar days of the three-year performance period (ended December 31, 2020). The following table shows the calculation of the PSU results at the end of the three-year performance period on December 31, 2020. Hecla’s TSR ranked 10th among the 15 companies in the peer group based on TSR from 2018 through 2020, including dividends paid during that period. Ranking 10th placed Hecla at a percentile ranking of 36th among the peer companies, which equated to an award value to our CEO and NEOs of $0. This is the second year in a row in which the PSUs had zero payout. TSR – January 1, 2018 through December 31, 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Peer Name | | Average Stock
Price over 60-day
period leading up to
1/1/2018
($) | | Average Stock
Price over 60-day
period leading up to
12/31/20
($) | | Dividends Paid
(1/1/18 thru
12/31/20)
($) | | TSR 1/1/2018 Thru 12/31/20
(%) | | Rank
(%) | | Rank
(#) | | | | | | | | | | | Kirkland Lake Gold | | | | 14.17 | | | | | 42.36 | | | | | 0.96 | | | | | 206 | | | | | 100.0 | | | | | 1 | | | | | | | | | | | | | | | B2Gold | | | | 3.45 | | | | | 7.51 | | | | | 0.12 | | | | | 121 | | | | | 92.9 | | | | | 2 | | | | | | | | | | | | | | | SSR Mining | | | | 8.58 | | | | | 19.15 | | | | | 0.00 | | | | | 123 | | | | | 85.7 | | | | | 3 | | | | | | | | | | | | | | | Eldorado Gold | | | | 6.17 | | | | | 12.98 | | | | | 0.00 | | | | | 110 | | | | | 78.6 | | | | | 4 | | | | | | | | | | | | | | | Pan American | | | | 15.20 | | | | | 31.94 | | | | | 0.50 | | | | | 113 | | | | | 71.4 | | | | | 5 | | | | | | | | | | | | | | | Yamana Gold | | | | 2.69 | | | | | 5.53 | | | | | 0.13 | | | | | 110 | | | | | 64.3 | | | | | 6 | | | | | | | | | | | | | | | Centerra | | | | 7.31 | | | | | 13.26 | | | | | 0.14 | | | | | 83 | | | | | 57.1 | | | | | 7 | | | | | | | | | | | | | | | First Majestic Silver | | | | 6.83 | | | | | 11.33 | | | | | 0.00 | | | | | 66 | | | | | 50.0 | | | | | 8 | | | | | | | | | | | | | | | Alamos Gold | | | | 6.34 | | | | | 8.94 | | | | | 0.13 | | | | | 43 | | | | | 42.9 | | | | | 9 | | | | | | | | | | | | | | | Hecla | | | | 3.93 | | | | | 5.41 | | | | | 0.04 | | | | | 39 | | | | | 35.7 | | | | | 10 | | | | | | | | | | | | | | | Coeur Mining | | | | 7.39 | | | | | 8.48 | | | | | 0.00 | | | | | 15 | | | | | 28.6 | | | | | 11 | | | | | | | | | | | | | | | IAMGOLD | | | | 5.61 | | | | | 3.55 | | | | | 0.00 | | | | | -37 | | | | | 21.4 | | | | | 12 | | | | | | | | | | | | | | | New Gold | | | | 3.19 | | | | | 2.02 | | | | | 0.00 | | | | | -37 | | | | | 14.3 | | | | | 13 | | | | | | | | | | | | | | | Tahoe Resources(1) | | | | 4.50 | | | | | 3.40 | | | | | 0.00 | | | | | 0 | | | | | 7.1 | | | | | 14 | | | | | | | | | | | | | | | Detour Gold(2) | | | | 13.51 | | | | | 23.10 | | | | | 0.00 | | | | | 0 | | | | | 0.00 | | | | | 15 | | | | | | |
| (1) | Tahoe Resources was acquired by Pan American in 2019. |
| (2) | Detour Gold was acquired by Kirkland Lake in 2020. |
Other Nonqualified Deferred Compensation Plan. We maintain the Key Employee Deferred Compensation Plan (the “KEDCP”), a nonqualified deferred compensation plan, under which participants may defer all or a portion of their annual base salary, performance-based compensation awarded under our STIP and LTIP, RSUs and performance-based shares granted under the 2010 Stock Incentive Plan. Participants may elect to have their deferred base salary and cash STIP or cash LTIP awards valued based on Hecla common stock and credited to a stock account. Deferred RSUs and performance-based shares are credited to a stock account. The KEDCP provides for discretionary matching contributions on base salary, STIP and LTIP amounts deferred to a stock account and discretionary Company contributions that are credited to a participant’s stock account. The deferral features promote alignment of the interests of participants with those of our shareholders. Investment accounts are credited monthly with an amount based on the prime rate for corporate borrowers. Participants receive distributions from their accounts only upon separation from service with us, a fixed date or schedule selected by the participant, death, disability, an unforeseeable emergency, or a change in control, as these events are defined under Section 409A of the Internal Revenue Code. The amounts deferred are unfunded and unsecured obligations 68 www.hecla-mining.com
Compensation Discussion and Analysis of Hecla, receive no preferential standing, and are subject to the same risks as any of our other general obligations. Additional details about the KEDCP are described in the narrative accompanying the Nonqualified Deferred Compensation for 2020 table on page 86. Benefits. We provide our employees with a benefits package that is designed to attract and retain the talent needed to manage Hecla. As part of that benefits package, most U.S salaried employees, including the U.S. NEOs, are eligible to participate in the Hecla Mining Company Retirement Plan, our 401(k) plan, which includes matching contributions by Hecla of up to 6%, health, vision, dental coverage, and paid time off, including vacations and holidays. Canadian NEOs are eligible to participate in a similar benefits package. NEOs are eligible to receive certain additional benefits, as described below. The committee intends for the type and value of such benefits offered to be competitive with general market practices. Other Qualified and Nonqualified Benefit Plans. Under the Hecla Mining Company Retirement Plan (“Retirement Plan”), which is a defined benefit plan, upon normal retirement, participants in the final average salary plan are eligible to receive a monthly benefit equal to a certain percentage of their final average annual earnings for each year of credited service. Participants in the cash balance plan are eligible to take a lump sum distribution of their benefits. Additional details about the Retirement Plan are in the narrative accompanying the Pension Benefits table on page 85. Under Hecla’s unfunded Supplemental Excess Retirement Plan, the amount of any benefits not payable under the Retirement Plan because of the limitations imposed by the Internal Revenue Code and/or the Employee Retirement Income Security Act, and certain reductions of benefits, if any, due to a deferral of salary made under our KEDCP, may be paid out of our general funds to employees who are adversely affected. The Retirement Plan and Supplemental Excess Retirement Plan define earnings for purposes of the plans to include base salary plus any other cash incentives up until July 1, 2013, after which only base salary plus one-half of STIP compensation is included (no LTIP compensation is included). Personal Benefits. We do not provide company-paid cars, country club memberships, or other similar perquisites to our executives. The only material personal benefit provided by Hecla is a relocation benefit, which is offered as needed to meet specific recruitment needs. Clawback Policy In February 2013, the committee adopted a clawback policy with respect to incentive awards to executive officers. The policy provides that in the event of a restatement of our financial results as a result of material non-compliance with financial reporting requirements, the Board will review incentive compensation that was paid to our current and former executive officers under the Company’s STIP and LTIP (or any successor plans) based solely on the achievement of specific corporate financial goals (“Incentive Award”) during the period of the restatement. If any Incentive Award would have been lower had it been calculated based on the Company’s restated financial results, the Board will, as and to the extent it deems appropriate, including with respect to intent or level of culpability of the relevant individual(s), seek to recover from any executive officer, any portion of an Incentive Award paid in excess of what would have been paid based on the restated financial results. The policy does not apply in any situation where a restatement is not the result of material non-compliance with financial reporting requirements, such as any restatement due to a change in applicable accounting rules, standards or interpretations, a change in segment designations or the discontinuance of an operation. In December 2015, the committee amended each of our incentive plans (STIP, LTIP, KEDCP, and 2010 Stock Incentive Plan) to include a clawback provision consistent with the clawback policy described above. Insider Trading Policy Our insider trading policy prohibits all directors, executive officers (as defined under Section 16 of the Exchange Act) and certain other employees designated as insiders from purchasing or selling any Company securities three weeks before through two days after the public release of any of our periodic results (including the filing of any Form 10-Q or Form 10-K), or at any other time during the year while in possession of material non-public information about the Company. In addition, directors and officers are prohibited from short-term trading, short sales, options trading, trading on margin, hedging or pledging any securities of the Company. 2021 Proxy Statement 69
Compensation Discussion and Analysis Stock Ownership Guidelines To more closely align the Company’s independent directors’ financial interests with those of the shareholders, in June 2012, the Compensation Committee and Board adopted stock ownership guidelines for our independent directors. Under these guidelines, each independent director is required to own shares of common stock (which includes shares held under the Hecla Mining Company Stock Plan for Nonemployee Directors) valued at three times his or her annual cash retainer within five years of his or her appointment to the Board. In the event an independent director’s cash retainer increases, he or she will have three years from the date of the increase to acquire any additional shares needed to meet these guidelines. Similarly, we believe that it is important to encourage our executive officers to hold a material amount of our common stock and to link their long-term economic interest directly to that of our shareholders. To achieve this goal, in June 2012, the committee and Board established stock ownership guidelines for the Company’s senior management. The guidelines for the CEO are six times base salary, and for the other executive officers, two times base salary. These guidelines must be achieved by the later of (i) June 2017 or (ii) five years after the executive officer is hired to such position. Unvested RSUs and shares held directly are considered owned for purposes of the guidelines. If an executive officer becomes subject to a greater ownership amount due to a promotion or an increase in base salary, he or she must meet the higher ownership requirement within three years. Because of fluctuations in the Company’s stock price, in February 2016, the committee and the Board amended the stock ownership guidelines to provide a valuation methodology that consists of valuing the shares held by using the average closing price of the Company’s common stock on the NYSE for the previous calendar year. Because share prices of all companies are subject to market volatility, the Board believes that it would be unfair to require an executive or director to buy more shares simply because Hecla’s stock price drops. In the event there is a significant decline in Hecla’s stock price that causes an executive or director’s holdings to fall below the applicable threshold, the executive or directors will not be required to purchase additional shares to meet the threshold, but they generally may not sell or transfer any shares until the threshold has again been achieved. See Non-management Director Stock Ownership table on page 44, and Stock Ownership for NEOs table on page 84 for further information. Change in Control Agreements We have entered into change in control agreements (“CIC Agreements”) with each of our NEOs. Under the terms of our CIC Agreements, the CEO and the other NEOs are entitled to payments and benefits upon the occurrence of specified events, including termination of employment (with or without cause) following a change in control of the Company. The specific terms of these arrangements, as well as an estimate of the compensation that would have been payable had they been triggered as of calendar year-end, are described in detail in the section entitled Potential Payments Upon Termination or Change in Control on page 86. The termination of employment provisions of the CIC Agreements were entered into to address competitive concerns when the NEOs were recruited to Hecla by providing these individuals with a fixed amount of compensation that would offset the risk of leaving their prior employer or foregoing other opportunities to join the Company. At the time of entering into these arrangements, the committee considered the aggregate potential obligations of the Company in the context of the desirability of hiring the individual and the expected compensation upon joining Hecla. The committee believes that these CIC Agreements are important for a number of reasons, including providing reasonable compensation opportunities in the unique circumstances of a change in control that are not provided by other elements of our compensation program. Further, change in control benefits, if structured appropriately, serve to minimize the distraction caused by a potential transaction and reduce the risk that key executives will leave Hecla before a transaction closes. The committee also believes that these agreements motivate the executives to make decisions that are in the best interests of our shareholders in the event of a pending change in control. These agreements provide executives with the necessary job stability and financial security during a change in control transaction and the subsequent period of uncertainty to help them stay focused on managing Hecla rather than on their own personal employment situation. The committee believes that all these objectives serve our shareholders’ interests. The committee also believes that change in control provisions are an essential component of the executive compensation program and are necessary to attract and retain senior talent in the highly competitive talent market in which we compete. 70 www.hecla-mining.com
Compensation Discussion and Analysis The change in control provisions were developed by the Company and the committee based on market and industry competitive practices. The Company and the committee periodically review the benefits provided under the CIC Agreements to ensure that they serve our interests in retaining our key executives, are consistent with market and industry practice, and are reasonable. Tax and Accounting Considerations Our compensation programs are affected by each of the following: Accounting for Stock-Based Compensation. We take into account certain requirements of GAAP in determining changes to policies and practices for our stock-based compensation programs. Section 162(m) of the Internal Revenue Code. Section 162(m) of the Internal Revenue Code of 1986, as amended (“Code Section 162(m)”), generally provides that compensation in excess of $1 million paid to the CEO and certain other employees, including NEOs (“covered employees”), of a public company will not be deductible for U.S. federal income tax purposes. Our primary objective in designing and administering our compensation policies is to support and encourage the achievement of our strategic goals and to enhance long-term shareholder value. We also believe that it is important to preserve flexibility in administering compensation programs. For these and other reasons, the committee has determined that it will not necessarily seek to limit executive compensation to the amount that would be fully deductible under Code Section 162(m). The committee will continue to monitor developments and assess alternatives for managing the deductibility of compensation payments and benefits to the extent reasonably practicable, as determined by the committee to be consistent with our compensation policies and in the best interests of the Company and our shareholders. Section 409A of the Internal Revenue Code. Section 409A imposes additional significant taxes in the event that an executive officer or director receives “deferred compensation” that does not satisfy the requirements of Section 409A. Our plans are intended to be exempt from, or comply with, Section 409A. 2021 Proxy Statement 71
FUTURE COMPENSATION ACTIONS 2021 Short-term Incentive Plan Our Short-term Incentive Plan (“STIP”) works by measuring quantitative, qualitative, and discretionary factors over a time period that extends beyond the calendar year. Eligibility for payment under the plan generally requires employees be on the payroll roster at the time the bonus is paid. The factors for the 2021 STIP may be modified by the committee from time to time, including with respect to the relative weights, and are categorized as follows: quantitative corporate performance factors (measured on a calendar year basis), comprising 50% of the overall targeted award; qualitative factors (measured from February 1 of the plan year until the end of February of the following year), comprising 25% of the overall targeted award; and a discretionary factor (measured from February 1 of the plan year until the end of February of the following year) as determined by the committee, comprising 25% of the overall targeted award. The maximum total payout for each of the three factors, and in the aggregate, can be up to two times the target award. In order to be eligible for payout, an employee generally must be on the payroll at the time the STIP is paid, which is typically at or near the end of March or beginning of April. Quantitative Goals The 2021 STIP has three quantitative goals (including weighting): production (20%), Adjusted EBITDA less capital (20%), and ESG (10%). The production goal converts gold, lead, and zinc at actual year-end metals prices. The target is set at 100%. Maximum payout is attained if actual production reaches 110% of target. The minimum payout is achieved if actual production is greater than 96% of target. | | | | | | | | | | | | 2021 Production in Silver Equivalent Ounces (includes all metals) | | | | | | | | | Factor Value | | | | 110% | | | | Maximum | | | | | 40 | % | | | | 100% | | | | Target | | | | | 20 | % | | | | <96% | | | | | | | | | 0 | % |
The minimum threshold for the Adjusted EBITDA less capital goal is $80 million. The maximum is $250 million, with $160 million set as the target. In order to achieve target or above, Hecla needs more production, lower costs or higher metal prices. | | | | | | | | | | | | Quantitative2021 Adjusted EBITDA Less Capital Metrics
| | | | | | | | Factor Value | | | | $250mm | | | | Maximum | | | | | 40 | % | | | | $160mm | | | | Target | | | | | 20 | % | | | | <$80m | | | | | | | | | 0 | % |
ESG Metrics The final 2021 quantitative goal is related to ESG metrics. The first component is a safety goal that continues a 6-year trend of reducing our AIFR. Our 2021 target is to reduce the AIFR by 2.5%. Hecla’s actual rate in 2020 was 1.22, which was the lowest rate Hecla has achieved in its 129-year history. A 2.5% reduction from our low 2020 rate would result in a rate of 1.185 and is the target. A 5% reduction would result in a rate of 1.16 as the maximum threshold. A flat rate, or a 2020 AIFR rate of 1.22, would result in no payout. | | | | | | | | | | | | 2021 AIFR Reduction Metrics | | | | | | | | | Factor Value | | | | 5% | | | | Maximum | | | | | 10 | % | | | | 2.5% | | | | Target | | | | | 5 | % | | | | 0% | | | | | | | | | 0 | % |
72 www.hecla-mining.com
Future Compensation Actions The second component of this goal is an environmental goal that is focused on reducing our energy usage intensity, measured by energy used per silver ounce produced. We are targeting 2% energy intensity score reduction from our already low score in 2020. Hecla’s energy intensity score was 37 kWh/Ag ounce last year. A 2% reduction in 2021 would result in a score of 36.25 kWh/Ag ounce and would be the target. A 4% reduction would result in a score of 35.5 kWh/Ag ounce and is the maximum threshold. A flat score of 37 kWh/Ag ounce would result in no payout. | | | | | | | | | | | | 2021 Energy Use Intensity Reduction Metrics | | | | | | | | | Factor Value | | | | 4% | | | | Maximum | | | | | 10 | % | | | | 2% | | | | Target | | | | | 5 | % | | | | 0% | | | | | | | | | 0 | % |
Qualitative Goals Qualitative performance factors comprise 25% of the overall potential award. There are over 100 qualitative goals that are recommended by management, approved by the committee, and cover the areas of safety and health, environmental, social responsibility and governance, technology and innovation, operations, financial and cost controls, employee development, benefit plans, mine life extension, exploration and reserve growth, investor relations, government, information technology, community affairs, corporate development, and legal. These qualitative goals are recognized and treated as commonly shared goals among all functions and locations. Outstanding Long-term Incentive Plan Periods Below we provide the current three-year LTIP periods that are outstanding. 2019-2021 LTIP In February 2019, the committee approved the 2019-2021 LTIP, which is different than our prior three-year LTIP periods. Firstly, the target value of each unit value factor was reduced from $100 to $90 (each target value of the three-unit factors is $30). Secondly, the number of unit value factors was reduced from four to three: reserve growth, production growth, and mine site operating cash flow (less capital). Thirdly, the TSR factor which was previously a stand-alone unit value factor was removed and converted to a multiplier with a value of 10% to 250% based on relative performance. The multiplier has also been capped at 100% if the absolute share return is negative. | | | | | | | | | | | | Silver Equivalent (includes Gold) Reserve Growth | | | | Ounce Target (millions) | | Additional Reserve
(millions) | | Unit Value | | | | 520 | | | | 90 | | | | $ | 70.00 | | | | | 480 | | | | 60 | | | | $ | 50.00 | | | | | 450 | | | | 30 | | | | $ | 30.00 | | | | | 420 | | | | 0 | | | | $ | 10.00 | |
| | | | | | | | | | | | Silver Equivalent (includes Gold) Production Growth | | | | Target (in mm ozs.) | | Average Annual Target
(in mm ozs.) | | Unit Value | | | | 120 | | | | 40.0 | | | | $ | 70.00 | | | | | 115 | | | | 38.3 | | | | $ | 50.00 | | | | | 108 | | | | 36.0 | | | | $ | 30.00 | | | | | 100 | | | | 33.3 | | | | $ | 10.00 | |
| | | | | | | Mine Site Operating Cash Flow (Less Capital) | | | Cash Target (in millions) | | Unit Value | | | $450 | | | $ | 70.00 | | | | $400 | | | $ | 50.00 | | | | $375 | | | $ | 30.00 | | $300 | | | $ | 10.00 | |
2021 Proxy Statement 73
Future Compensation Actions TSR (Multiplier) The TSR provides a relative performance metric to our peers, with an absolute performance metric dependent upon where we rank amongst the peer group on a relative basis. This component of the 2019-2021 LTIP is different than the other components in that the TSR serves as a multiplier (either increasing or decreasing an award). This component insures alignment of the results of the other components with share performance. If Hecla’s relative TSR performance is in the mid-range (7th – 9th), the multiplier is 100% of the value achieved by the other three components, and thus has no positive or negative effect on the unit value earned. If Hecla’s relative TSR is in the top 6, the multiplier is positive, and thus would enhance the unit value because the relative TSR was strong. If Hecla’s relative TSR is in the bottom 6, the multiplier is negative. If the relative TSR is in the top 3, and the TSR is positive on an absolute basis, the TSR multiplier is 250%. Regardless of the values earned for the factors described above, in the event Hecla’s absolute TSR is negative, the multiplier is capped at 100% of the value derived from unit value performance. The 2019-2021 peer group consists of the following companies: | | | | | The 2019 STIP is like the 2018 AIP. For the 2019 STIP, the quantitative corporate performance factors are divided into three factors (including weighting): production (20%), Adjusted EBITDA less capital (20%), and AIFR reduction (10%).IAMGOLD
Hochschild Mining The production factor converts gold, lead and zinc to silver equivalent at ratios of 78 oz. silver to 1 oz. gold, 16.0 lb. lead, and 12.8 lb. of zinc. Our production target is 48.0 million silver equivalent ounces. Maximum payout is attained if production achieves 50.5 million ounces. The minimum payout is achieved if production is greater than 47.0 million ounces.B2Gold
Centerra Gold 2019 Production Metrics
Coeur d’Alene Mines | | New Gold Fresnillo Pan American Silver Silver Standard Endeavour Silver | | Alamos Gold First Majestic Oceana Gold Detour Gold 2019 Production in Silver Equivalent Ounces (includes all metals)
| | | | | Factor Value | 50.5mm | | Maximum | | 40% | 48.0mm | | Target | | 20% | <47.0mm | | | | 0% |
| | | | | | | The minimum threshold for the Adjusted EBITDA less capital goal is <$40 million. The maximum limit is $75 million, and target is set at $60 million.TSR
| | | Ranking within Peer Group Companies | | Multiplier | | | 1st – 3rd | | | | 250 | % | | | 4th – 6th | | | | 175 | % | | | 7th – 9th | | | | 100 | % | | | 10th – 12th | | | | 33 | % | | | 13th – 15th | | | | 10 | % |
2020-2022 LTIP In March 2020, the committee approved the 2020-2022 LTIP, which is similar to the 2019-2021 LTIP. The target value of each of the three-unit factors is $30: reserve growth, production growth, and mine site operating cash flow (less capital). The TSR factor is the same as the 2019-2021 LTIP described above. The payout has also been capped at target if the absolute share return is negative. 2019 Adjusted EBITDA Less Capital Metrics | | | | | Factor Value | $75mm | | Maximum | | 40% | $60mm | | Target | | 20% | < $40m | | | | 0% | | | | | | | | | | | | Silver Equivalent (includes only Gold) Reserve Growth | | | | Ounce Target
(millions) | | Additional Reserve
(millions) | | Unit Value | | | | 540 | | | | 90 | | | | $ | 70.00 | | | | | 510 | | | | 60 | | | | $ | 50.00 | | | | | 480 | | | | 30 | | | | $ | 30.00 | | | | | 450 | | | | 0 | | | | $ | 10.00 | |
| | | | | | | | | | | | Silver Equivalent (includes only Gold) Production Growth | | | | Target (in mm ozs.) | | Average Annual Target
(in mm ozs.) | | Unit Value | | | | 102 | | | | 34.0 | | | | $ | 70.00 | | | | | 96 | | | | 32.0 | | | | $ | 50.00 | | | | | 90 | | | | 30.0 | | | | $ | 30.00 | | | | | 87 | | | | 27.0 | | | | $ | 10.00 | |
74 www.hecla-mining.com
Future Compensation Actions | | | | | | | Mine Site Operating Cash Flow (Less Capital) | | | Cash Target
(in millions) | | Unit Value | | | $350 | | | $ | 70.00 | | | | $300 | | | $ | 50.00 | | | | $275 | | | $ | 30.00 | | | | $200 | | | $ | 10.00 | |
TSR (Multiplier) The TSR provides a relative performance metric to our peers, with an absolute performance metric dependent upon where we rank amongst the peer group on a relative basis. This component of the 2020-2022 LTIP is different than the other components in that the TSR serves as a multiplier (either positive or negative). This component insures alignment of the results of the other components with share performance. If Hecla’s relative TSR performance is in the mid-range (9th – 14th), the multiplier is 100% of the value achieved by the other three components, and thus has no positive or negative effect on the unit value earned. If Hecla’s relative TSR is in the top 8, the multiplier is positive, and thus would enhance the unit value because the relative TSR was strong. If Hecla’s relative TSR is in the bottom 8, the multiplier is negative. Regardless of the values earned for the factors described above, in the event Hecla’s absolute TSR is negative, the multiplier is capped at 100% of the value derived from the unit value performance. The 2020-2022 peer group consists of the following companies/funds: | | | | | IAMGOLD Silver Standard Centerra Gold Endeavour Silver Coeur Mining GLD Gold Share Fresnillo | | Pan American Silver B2Gold Torex Minerals Oceana Gold SLV Silver Trust New Gold GDXJ Vectors Junior Gold Miner ETF | | Hochschild Mining First Majestic Silver Alamos Gold Eldorado Gold Pretium Resources GDX Vectors Gold Miner ETF Equinox Gold |
| | | | | | | The AIFR reduction target is 5%. The 2018 national AIFR was approximately 2.4. Hecla’s actual rate was 2.0 in 2018. A 5% reduction from our low 2018 rate would result in a rate of 1.90 as the target. A 10% reduction would result in a rate of 1.80 as the maximum threshold, and a flat rate, or a 2019 AIFR rate of 2.00, would result in no payout.TSR
| | | Ranking within Peer Group Companies | | Multiplier | | | 1st – 2nd | | | | 250 | % | | | 3rd – 5th | | | | 175 | % | | | 6th – 8th | | | | 135 | % | | | 9th – 14th | | | | 100 | % | | | 15th – 17th | | | | 75 | % | | | 18th – 20th | | | | 50 | % | | | 21st – 22nd | | | | 10 | % |
2021 Proxy Statement 75
Future Compensation Actions 2021-2023 LTIP In February 2021, the committee approved the 2021-2023 LTIP, which is similar to the 2020-2022 LTIP. The target value of each of the three-unit value factors is $30: reserve growth, production growth, and mine site operating cash flow. The TSR factor is similar to the 2020-2022 LTIP described above. The payout has also been capped at target if the absolute share return is negative. | | | | | | | | | | | | Silver Equivalent (includes only Gold) Reserve Growth | | | | Ounce Target (millions) | | Additional Reserve
(millions) (replacement in situ) | | Unit Value | | | | 410 | | | | 54 | (136) | | | $ | 70.00 | | | | | 380 | | | | 24 | (106) | | | $ | 50.00 | | | | | 360 | | | | 4 | (86) | | | $ | 30.00 | | | | | 330 | | | | -26 | (56) | | | $ | 10.00 | |
| | | | | | | | | | | | Silver Equivalent (includes only Gold) Production Growth | | | | Target (in mm ozs.) | | Average Annual Target
(in mm ozs.) | | Unit Value | | | | 90 | | | | 30.0 | | | | $ | 70.00 | | | | | 88 | | | | 29.3 | | | | $ | 50.00 | | | | | 84 | | | | 28.0 | | | | $ | 30.00 | | | | | 82 | | | | 27.3 | | | | $ | 10.00 | |
| | | | | | | Mine Site Operating Cash Flow (Less Capital) | | | Cash Target (in millions) | | Unit Value | | | $950 | | | $ | 70.00 | | | | $875 | | | $ | 50.00 | | | | $775 | | | $ | 30.00 | | | | $675 | | | $ | 10.00 | |
76 www.hecla-mining.com
Future Compensation Actions TSR (Multiplier) The TSR serves as a multiplier (either positive or negative). This component insures alignment on the results of the other components with share performance. If Hecla’s relative TSR performance is in the mid-range (9th – 14th), the multiplier is 100% of the value achieved by the other three components, and thus has no positive or negative affect on the unit value earned. If Hecla’s relative TSR is in the top 8, the multiplier is positive, and thus would enhance the unit value because the relative TSR was strong. If Hecla’s relative TSR is in the bottom 9, the multiplier is negative. Regardless of the values earned for the factors described above, in the event the absolute TSR is negative, the multiplier is limited to no greater than 100% of the value earned by the unit value factors. The 2021-2023 peer group consists of the following companies/funds: | 2019 AIFR Reduction Metrics | | | | | | Factor Value | | 10% | | Maximum | | 20% | | 5% | | Target | | 10% | | 0% | | | | 0% |
Table of ContentsIAMGOLD
Qualitative GoalsSilver Standard
Centerra Gold Endeavour Silver Coeur Mining GLD Gold Share Fresnillo Fortuna | | Pan American Silver B2Gold Torex Minerals Oceana Gold SLV Silver Trust New Gold GDXJ Vectors Junior Gold Miner ETF | | Hochschild Mining First Majestic Silver Alamos Gold Eldorado Gold Pretium Resources GDX Vectors Gold Miner ETF Equinox Gold There are over 100 qualitative goals that are recommended by management, approved by the committee, and cover the areas of safety and health, environmental, technology and innovation, continuous improvement, operations, financial and cost controls, balance sheet management, employee development, benefit plans, acquisitions, mine life extension, exploration and reserve growth, investor relations, government and community affairs, and legal. These qualitative goals are recognized and treated as commonly shared goals among all functions and locations.
|
Outstanding LTIP Periods
Below we provide the current three-year LTIP periods that are outstanding.
2017-2019 LTIP
In February 2017, the committee approved the 2017-2019 LTIP, which has a target unit value of $100. The 2017-2019 LTIP has four factors, three of which are repeat factors from the 2016-2018 LTIP, with a maximum potential payout of $375 per unit. The three factors include: silver equivalent reserve growth (gold is converted into silver equivalent at a ratio of 71 to 1), silver equivalent production growth (includes silver and gold, but not base metals), and total shareholder return. The fourth factor is mine site operating cash flow less capital, which replaces the cash flow goal from previous plans. This goal also includes the impact associated with any acquisitions (or dispositions) of operating mine sites.
| Silver Equivalent (includes Gold) Reserve Growth | Ounce Target
(millions) | | Additional Reserve
(millions) | | Unit Value | | 405.6 | | 90 | | $ | 75.00 | | 375.6 | | 60 | | $ | 50.00 | | 345.6 | | 30 | | $ | 25.00 | | 315.6 | | 0 | | $ | 5.00 |
| Silver Equivalent (includes Gold) Production Growth | Target
(in mm ozs.) | | Average Annual Target
(in mm ozs.) | | Unit Value | | 100.0 | | 33.3 | | $ | 100.00 | | 96.0 | | 32.0 | | $ | 75.00 | | 93.0 | | 31.0 | | $ | 50.00 | | 90.0 | | 30.0 | | $ | 25.00 | | 85.0 | | 28.3 | | $ | 10.00 | Mine Site Operating Cash Flow Less Capital | Cash Target
(millions) | | | | Unit Value | | $375 | | | | $ | 100.00 | | $350 | | | | $ | 50.00 | | $300 | | | | $ | 25.00 | | $250 | | | | $ | 5.00 |
| Total Shareholder Return | | %ile rank within Peer Group Companies | | Unit Value | | 100% | | $ | 100.00 | | 90% | | $ | 90.00 | | 80% | | $ | 75.00 | | 70% | | $ | 50.00 | | 60% | | $ | 30.00 | | 50% | | $ | 25.00 | | <50% | | $ | 0.00 |
| Table of ContentsTSR
2018-2020 LTIP
In February 2018, the committee approved the 2018-2020 LTIP, which has a target unit value of $100. The 2018-2020 LTIP has four factors, which are repeat factors from the 2017-2019 LTIP, with a maximum potential payout of $375 per unit. The four factors include: silver equivalent reserve growth (gold is converted into silver equivalent at a ratio of 71 to 1), silver equivalent production growth (includes silver and gold, but not base metals), total shareholder return and mine site operating cash flow less capital.
| Silver Equivalent (includes Gold) Reserve Growth | Silver Equivalent
Ounce Target
(millions) | | Additional Reserve
(millions) | | Unit Value | | 427.6 | | 90 | | $ | 75.00 | | 397.6 | | 60 | | $ | 50.00 | | 367.6 | | 30 | | $ | 25.00 | | 337.6 | | 0 | | $ | 10.00 | | | | | | | | | Silver Equivalent (includes Gold) Production Growth | Target
(in mm ozs.) | | Average Annual Target
(in mm ozs.) | | Unit Value | | 105.0 | | 35.0 | | $ | 100.00 | | 96.0 | | 32.0 | | $ | 75.00 | | 90.0 | | 30.0 | | $ | 50.00 | | 86.0 | | 28.7 | | $ | 25.00 | | 80.0 | | 26.7 | | $ | 10.00 | Mine Site Operating Cash Flow Less Capital | Cash Target
(millions) | | | | Unit Value | | $425 | | | | $ | 100.00 | | $375 | | | | $ | 50.00 | | $350 | | | | $ | 25.00 | | $330 | | | | $ | 10.00 | | | | Total Shareholder Return | | Ranking within Peer Group Companies | | | | Unit Value | | Top 2 | | | | $ | 100.00 | | Top 4 | | | | $ | 75.00 | | Top 6 | | | | $ | 50.00 | | Top 8 | | | | $ | 25.00 | | <Top 8 | | | | $ | 0.00 |
2019-2021 LTIP
In February 2019, the committee approved the 2019-2021 LTIP, which has changed from prior years. First the target unit of each factor value has been reduced from $100 to $90 with only three factors: reserve growth, production growth, and mine site operating cash flow (less capital). TSR that was previously a factor has been removed and is now a multiplier with a value of 10% to 250% based on relative performance. The payout has also been capped at target if the absolute share return is negative.
| Silver Equivalent (includes Gold) Reserve Growth | Ounce Target
(millions) | | Additional Reserve
(millions) | | Unit Value | | 520 | | 90 | | $ | 70.00 | | 480 | | 60 | | $ | 50.00 | | 450 | | 30 | | $ | 30.00 | | 420 | | 0 | | $ | 10.00 |
| Table of ContentsRanking within Peer Group Companies
| Silver Equivalent (includes Gold) Production Growth | Target
(in mm ozs.) | | Average Annual Target
(in mm ozs.) | | Unit Value | | 120 | | 40.0 | | $ | 70.00 | | 115 | | 38.3 | | $ | 50.00 | | 108 | | 36.0 | | $ | 30.00 | | 100 | | 33.3 | | $ | 10.00 |
| | Multiplier | | | 1st – 2nd | Mine Site Operating Cash Flow (Less Capital) | Cash Target (in millions) | Unit Value | | $450 | | $ | 70.00 | | $400 | | $ | 50.00 | | $375 | | $ | 30.00 | | $300 | | $ | 10.00 |
| | | | 250 | % | | | 3rd – 5th | | | | 175 | % | | | TSR (Multiplier)6th – 8th
| | | | 135 | % | | | 9th – 14th | | | | 100 | % | | | The TSR provides a relative performance metric to our peers, with an absolute performance metric applicable in the event we are in the top 3 amongst the peer group on a relative basis. This component of the 2019-2021 LTIP is different than the other components in that the TSR serves as a multiplier (either increasing or decreasing award). This component insures alignment on the results of the other components with share performance. If Hecla’s relative TSR performance is in the mid-range (715th – 17th
| | | | 75 | % | | | 18th – 19th | | | | 50 | % | | | 20th – 922thnd), the multiplier is 100% of the value achieved by the other three components, and thus has no positive or negative affect on the unit value earned. If Hecla’s relative TSR is in the top 6, the multiplier is positive, and thus would enhance the unit value because the relative TSR was strong. If Hecla’s relative TSR is in the bottom 6, the multiplier is negative. If the relative TSR is in the top 3, and the TSR is positive on an absolute basis, the TSR multiplier is 250%. Regardless of the unit value earned by the Unit Values, in the event the absolute TSR is negative, the multiplier is limited to no greater than 100%. The 2019-2021 peer group includes the following companies: IAMGOLD | New Gold | Alamos Gold | Hochschild Mining | Fresnillo | First Majestic | B2Gold | Pan American Silver | Oceana Gold | Centerra Gold | Silver Standard | Detour Gold | Coeur d’Alene Mines | Endeavour Silver | | 25 | % | | | 22nd – 23rd | | | | 10 | % |
TSR | Ranking within Peer Group Companies | | Multiplier** | 1st – 3rd | | | 250% | 4th – 6th | | | 175% | 7th – 9th | | | 100% | 10th – 12th | | | 33% | 13th – 15th | | | 10% |
2021 Proxy Statement 77 ** | If Hecla’s absolute 3-year TSR is positive, and in the top three on a relative basis, the plan qualifies for a 250% multiplier. If the absolute 3-year TSR is negative, the payout is limited to target. If the ranking between the bottom of one group and the top of the next has less than a 7.5% difference, then the multiplier is the average of the two groups. |
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The members of the Compensation Committee are set forth in theCompensation Committee Report. There are no members of the committee who were officers or employees of Hecla or any of our subsidiaries during the fiscalcalendar year, formerly were officers of Hecla or any of our subsidiaries, or had any relationship otherwise requiring disclosure under the proxy rules promulgated by the SEC or the NYSE. Table of Contents
COMPENSATION COMMITTEE REPORT The Compensation Committee has reviewed and discussed the CD&ACompensation Discussion and Analysiswith Hecla’s managementVice President – Human Resources and its independent compensation consultant. Basedbased on its review and discussions, the committee recommended to the Board, and the Board has approved, the CD&ACompensation Discussion and Analysisincluded in this Proxy Statement and incorporated by reference in Hecla’s Annual Report on Form 10-K for the year ended December 31, 2018. 2020. Respectfully submitted by The Compensation Committee of the
Board of Directors Terry V. Rogers, Chair Catherine J. Boggs Ted Crumley George R. Nethercutt, Jr. 78 www.hecla-mining.com
COMPENSATION OF NAMED EXECUTIVE OFFICERS Summary Compensation Table for 20182020 The following compensation tables provide information regarding the compensation of our CEO, CFO, and three other most highly compensated officers for the year ended December 31, 2018.2020, determined in accordance with SEC rules. Name and Principal
Position | Year | Salary(1)
($) | Stock
Awards(2)
($) | | Non-Equity
Incentive Plan
Compensation(3)
($) | Change in
Pension
Value and
Non-Qualified
Deferred
Compensation
Earnings(4)
($) | | All Other
Compensation
($) | | Total
($) | Phillips S. Baker, Jr. President and CEO | 2018 | 635,000 | 870,859 | (5) | 1,844,625 | 317,452 | | 18,606 | (7) | 3,686,542 | | 2017 | 618,750 | 842,802 | | 2,473,625 | 1,017,111 | | 18,306 | | 4,970,594 | | 2016 | 484,000 | 1,190,811 | | 2,876,375 | 924,335 | | 15,900 | | 5,491,421 | Lindsay A. Hall(8) Senior Vice President and CFO | 2018 | 380,000 | 401,987 | (5) | 733,817 | 126,137 | (6) | 18,210 | (7) | 1,660,151 | | 2017 | 380,000 | 413,558 | | 701,926 | 143,281 | | 17,790 | | 1,656,555 | | 2016 | 156,750 | 344,999 | | 326,027 | 13,146 | | 9,200 | | 850,122 | Lawrence P. Radford Senior Vice President – Chief Operating Officer | 2018 | 399,500 | 635,428 | (5) | 883,150 | 61,551 | | 18,606 | (7) | 1,998,235 | | 2017 | 380,000 | 413,558 | | 1,170,850 | 160,820 | | 18,306 | | 2,143,534 | | 2016 | 342,000 | 345,000 | | 1,388,650 | 125,898 | | 15,900 | | 2,217,488 | Dr. Dean W. A. McDonald(8) Senior Vice President – Exploration | 2018 | 275,000 | 330,353 | (5) | 619,750 | 97,510 | (6) | 17,793 | (7) | 1,340,406 | | 2017 | 275,000 | 345,705 | | 917,900 | 241,254 | | 17,402 | | 1,797,261 | | 2016 | 247,500 | 300,000 | | 882,600 | 196,766 | | 15,900 | | 1,642,766 | Robert D. Brown(8) Vice President – Corporate Development | 2018 | 264,000 | 280,353 | (5) | 504,600 | 33,252 | (6) | 18,210 | (7) | 1,100,415 | | 2017 | 264,000 | 228,567 | | 459,012 | 60,669 | | 17,655 | | 1,029,903 | | 2016 | 237,600 | 200,000 | | 373,552 | 0 | | 15,900 | | 827,052 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | Year | | Salary(1)
($) | | Stock
Awards(2)
($) | | Non-Equity
Incentive Plan
Compensation(3)
($) | | Change in
Pension
Value and
Non-Qualified
Deferred
Compensation
Earnings(4)
($) | | All Other
Compensation
($) | | Total
($) | Phillips S. Baker, Jr. President and CEO | | | | 2020 | | | | | 635,000 | | | | | 937,292 | (5) | | | | 1,970,300 | | | | | 1,628,345 | | | | | 19,571 | (7) | | | | 5,190,508 | | | | | | 2019 | | | | | 635,000 | | | | | 399,999 | | | | | 1,575,950 | | | | | 2,452,596 | | | | | 18,801 | | | | | 5,082,346 | | | | | | 2018 | | | | | 635,000 | | | | | 870,859 | | | | | 1,844,625 | | | | | 317,452 | | | | | 18,606 | | | | | 3,686,542 | | Lindsay A. Hall(8) Senior Vice President and CFO | | | | 2020 | | | | | 380,000 | | | | | 511,878 | (5) | | | | 981,000 | | | | | 208,234 | (6) | | | | 19,065 | (7) | | | | 2,100,177 | | | | | | 2019 | | | | | 380,000 | | | | | 225,000 | | | | | 724,250 | | | | | 254,053 | | | | | 18,750 | | | | | 1,602,053 | | | | | | 2018 | | | | | 380,000 | | | | | 401,987 | | | | | 733,817 | | | | | 126,137 | | | | | 18,210 | | | | | 1,660,151 | | Lauren M. Roberts(9) Senior Vice President and COO | | | | 2020 | | | | | 380,000 | | | | | 511,878 | (5) | | | | 829,563 | | | | | 275,046 | | | | | 9,151 | (7) | | | | 2,005,638 | | | | | | 2019 | | | | | 142,501 | | | | | 225,000 | | | | | 214,783 | | | | | 53,083 | | | | | 3,453 | | | | | 638,820 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Robert D. Brown(8) Vice President – Corporate Development | | | | 2020 | | | | | 264,000 | | | | | 363,661 | (5) | | | | 404,280 | | | | | 111,007 | (6) | | | | 19,065 | (7) | | | | 1,162,013 | | | | | | 2019 | | | | | 264,000 | | | | | 150,000 | | | | | 390,150 | | | | | 140,532 | | | | | 18,750 | | | | | 963,432 | | | | | | 2018 | | | | | 264,000 | | | | | 280,353 | | | | | 504,600 | | | | | 33,252 | | | | | 18,210 | | | | | 1,100,415 | | David C. Sienko Vice President – General Counsel | | | | 2020 | | | | | 256,875 | | | | | 341,254 | (5) | | | | 432,875 | | | | | 207,581 | | | | | 19,009 | (7) | | | | 1,257,594 | | | | | | 2019 | | | | | 250,000 | | | | | 150,000 | | | | | 437,750 | | | | | 308,601 | | | | | 18,345 | | | | | 1,164,696 | | | | | | 2018 | | | | | 250,000 | | | | | 255,354 | | | | | 535,800 | | | | | (1,915 | ) | | | | 18,126 | | | | | 1,057,365 | |
| (1) | Salary amounts include base salary both earned and paid in cash during the fiscal year listed. |
| (2) | Represents RSUs awarded and performance-based sharesPSUs granted in each of fiscal years 2018, 20172020, 2019 and 2016.2018. The amounts represent the aggregate grant date fair value of the awards granted to each NEO computed in accordance with stock-based accounting rules (FASB ASC Topic 718). Assumptions used in the calculation of these amounts are included inNote 10 – Stockholders’ Equityto our calendar year 20182020 consolidated financial statements, which is included in our Annual Report on Form 10-K filed with the SEC on February 22, 201918, 2021 (the “Form 10-K”). RSUs generally vest in three substantially equal annual installments beginning on June 21 of the following year fromfollowing the date they are granted.of grant. Consistent with the requirements of FASB ASC Topic 718, the value of performance-based sharesPSUs is based on the estimated outcome as of the date of grant. In accordance with FASB ASC Topic 718, this result is based on a relative TSR result modeled using a Monte Carlo simulation. Please see theGrants of Plan-Based Awards for 20182020table on page 5181 for more information about the awards granted in 2018.2020. The amounts in this column reflect the aggregate grant date fair value of the PSUs for accounting, purposes determined in accordance with SEC rules and do not reflect the actual economic value that may be realized by the NEO at the end of a relevant three-year performance period. Because share performance against the peer group did not meet the threshold for the three-year period 2018-2020, the shares of stock underlying performance-based shares were not issued to our NEOs (i.e., there was zero payout). See 2018-2020 PSU Results on page 68. |
2021 Proxy Statement 79
Compensation of Named Executive Officers | (3) | This column represents the performance payments awarded and earned by the NEOs for the calendar years 2016, 20172020, 2019 and 2018 under our AIPSTIP and for the LTIP plan periods 2014-2016, 2015-20172018-2020, 2017-2019 and 2016-2018. Both the 2020 STIP and 2018-2020 LTIP were paid in cash. The 2016 AIP2019 STIP was paid in cash, and 2014-2016the 2017-2019 LTIP awards were paid 75% in cash and 25% in common stock. The 2017 AIP was paid 100% in cash, andstock of the 2015-2017 LTIP awards were paid 50% in cash and 50% in common stock.Company. The 2018 AIPSTIP was paid in cash and the 2016-2018 LTIP wasawards were paid 100% in common stock.stock of the Company. The awards for each of the plan years are as follows: |
Table of Contents
| Name | Year | AIP
Award
($) | LTIP Plan
Period | LTIP
Units
(#) | | Unit
Value
($) | LTIP
Award
($) | Total AIP
and LTIP
($) | Total AIP and LTIP
Paid in Cash
($) | Total AIP and LTIP
Paid in Cash
(#) | | | Baker | 2018 | 317,500 | 2016-2018 | 9,500 | | 160.75 | 1,527,125 | 1,844,625 | 317,500 | 663,967 | * | | 2017 | 476,250 | 2015-2017 | 9,500 | | 210.25 | 1,997,375 | 2,473,625 | 1,475,238 | 254,119 | | | 2016 | 907,500 | 2014-2016 | 9,500 | | 207.25 | 1,968,875 | 2,876,375 | 2,157,281 | 108,789 | | | Hall | 2018 | 190,000 | 2016-2018 | 3,383 | (i) | 160.75 | 543,817 | 733,817 | 190,000 | 236,442 | * | | 2017 | 285,000 | 2015-2017 | 1,983 | (i) | 210.25 | 416,926 | 701,926 | 493,463 | 53,044 | | | 2016 | 205,200 | 2014-2016 | 583 | (i) | 207.25 | 120,827 | 326,027 | 244,520 | 12,331 | | | Radford | 2018 | 208,000 | 2016-2018 | 4,200 | | 160.75 | 675,150 | 883,150 | 208,000 | 293,543 | * | | 2017 | 456,000 | 2015-2017 | 3,400 | | 210.25 | 714,650 | 1,170,850 | 813,425 | 90,948 | | | 2016 | 684,000 | 2014-2016 | 3,400 | | 207.25 | 704,650 | 1,388,650 | 1,041,486 | 52,521 | | | McDonald | 2018 | 137,500 | 2016-2018 | 3,000 | | 160.75 | 482,250 | 619,750 | 137,500 | 209,674 | * | | 2017 | 371,250 | 2015-2017 | 2,600 | | 210.25 | 546,650 | 917,900 | 644,575 | 69,548 | | | 2016 | 343,750 | 2014-2016 | 2,600 | | 207.25 | 538,850 | 882,600 | 661,950 | 33,381 | | | Brown | 2018 | 118,800 | 2016-2018 | 2,400 | | 160.75 | 385,800 | 504,600 | 118,800 | 167,739 | * | | 2017 | 171,600 | 2015-2017 | 1,367 | (ii) | 210.25 | 287,412 | 459,012 | 315,306 | 36,566 | | | 2016 | 232,320 | 2014-2016 | 683 | (ii) | 207.25 | 141,552 | 373,872 | 280,404 | 14,141 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Year | | STIP
Award
($) | | LTIP Plan
Period | | LTIP
Units
(#) | | Unit
Value
($) | | LTIP
Award
($) | | Total STIP
and LTIP
($) | | Total STIP
and/or
LTIP
Paid in
Cash
($) | | Total
STIP
and/or
LTIP
Paid in
Shares
(#) | Baker | | | | 2020 | | | | | 1,206,500 | | | | | 2018-2020 | | | | | 11,400 | | | | | 67.00 | | | | | 763,800 | | | | | 1,970,300 | | | | | 1,970,300 | | | | | 0 | | | | | | 2019 | | | | | 444,500 | | | | | 2017-2019 | | | | | 11,400 | | | | | 99.25 | | | | | 1,131,450 | | | | | 1,575,950 | | | | | 444,500 | | | | | 621,676 | | | | | | 2018 | | | | | 317,500 | | | | | 2016-2018 | | | | | 9,500 | | | | | 160.75 | | | | | 1,527,125 | | | | | 1,844,625 | | | | | 317,500 | | | | | 663,967 | | Hall | | | | 2020 | | | | | 646,000 | | | | | 2018-2020 | | | | | 5,000 | | | | | 67.00 | | | | | 335,000 | | | | | 981,000 | | | | | 981,000 | | | | | 0 | | | | | | 2019 | | | | | 228,000 | | | | | 2017-2019 | | | | | 5,000 | | | | | 99.25 | | | | | 496,250 | | | | | 724,250 | | | | | 228,000 | | | | | 272,665 | | | | | | 2018 | | | | | 190,000 | | | | | 2016-2018 | | | | | 3,383 | (i) | | | | 160.75 | | | | | 543,817 | | | | | 733,817 | | | | | 190,000 | | | | | 236,442 | | Roberts | | | | 2020 | | | | | 703,000 | | | | | 2018-2020 | | | | | 1,889 | (ii) | | | | 67.00 | | | | | 126,563 | | | | | 829,563 | | | | | 829,563 | | | | | 0 | | | | | | 2019 | | | | | 159,600 | | | | | 2017-2019 | | | | | 556 | (ii) | | | | 99.25 | | | | | 55,183 | | | | | 214,783 | | | | | 159,600 | | | | | 30,320 | | Brown | | | | 2020 | | | | | 203,280 | | | | | 2018-2020 | | | | | 3,000 | | | | | 67.00 | | | | | 201,000 | | | | | 404,280 | | | | | 404,280 | | | | | 0 | | | | | | 2019 | | | | | 92,400 | | | | | 2017-2019 | | | | | 3,000 | | | | | 99.25 | | | | | 297,750 | | | | | 390,150 | | | | | 92,400 | | | | | 163,599 | | | | | | 2018 | | | | | 118,800 | | | | | 2016-2018 | | | | | 2,400 | | | | | 160.75 | | | | | 385,800 | | | | | 504,600 | | | | | 118,800 | | | | | 167,739 | | Sienko | | | | 2020 | | | | | 231,875 | | | | | 2018-2020 | | | | | 3,000 | | | | | 67.00 | | | | | 201,000 | | | | | 432,875 | | | | | 432,875 | | | | | 0 | | | | | | 2019 | | | | | 140,000 | | | | | 2017-2019 | | | | | 3,000 | | | | | 99.25 | | | | | 297,750 | | | | | 437,750 | | | | | 140,000 | | | | | 163,599 | | | | | | 2018 | | | | | 150,000 | | | | | 2016-2018 | | | | | 2,400 | | | | | 160.75 | | | | | 385,800 | | | | | 535,800 | | | | | 385,800 | | | | | 167,739 | |
| | | | | * | Consists only of LTIP awards, which were paid 100% in common stock. The number of shares was determined based on the closing price of Hecla’s common stock on the NYSE on March 11, 2019 ($2.30). |
| (i) | Mr. Hall’s 2014-2016, 2015-2017 and 2016-2018 LTIP units were prorated due to Mr. Hall joiningbecause he joined the Company in July 2016. |
| (ii) | Mr. Brown’s 2014-2016Robert’s 2017-2019 and 2015-20172018-2020 LTIP units were prorated due to Mr. Brown joiningbecause he joined the Company in January 2016.August 2019. |
| (4) | The amounts reported in this column for 20182020 are changes between December 31, 20172019 and December 31, 20182020 in the actuarial present value of the accumulated pension benefits. Pension values may fluctuate significantlywill typically increase from yearyear-to-year due to year depending on a number of factors, includingincreasing age, years of service, and average annual earnings, and can fluctuate significantly due to changes in the assumptions used to determine the present value. The Company cautions that the values reported in the Change in Pension Value and Nonqualified Deferred Compensation Earnings column are theoretical as those amounts are(the “Pension Value column”) is calculated pursuant to SEC requirements and areis based on assumptions used in preparing the Company’s audited financial statements for the applicable calendar years. The Company’s retirement plans utilizeSpecifically, the interest discount rate used in the calculations is based on the rates of return available on fixed income investments which can significantly change year-to-year affecting comparability with the prior year. A portion of the increase in the Pension Value column from 2019 and 2020 is the result of a different methoddecrease in the discount rate from 3.32% at December 31, 2019 to 2.64% at December 31, 2020. For example, $374,719 of calculating actuarial present valuethe $1,628,343 increase reflected in the Pension Value column for Mr. Baker is attributable to the purpose of determine a lump sum payment, if any. The change0.68% decrease in pension valuethe discount rate from year2019 to year as2020. For these reasons, the Company cautions that the values reported in the table is subject to market volatility andPension Value column may not represent the value that aan NEO will actually accrue or receive under the Company’s retirement plans during any given year. None of the amounts reported in this column are above-market nonqualified deferred compensation earnings. |
| (5) | Includes: (i) restricted stock units granted to each NEO on June 19, 2018,22, 2020 and (ii) performance-based shares awarded to each NEO on June 19, 2018.22, 2020. SeeGrants of Plan-Based Awards for 20182020table on page 5181 andPerformance-based Shareson page 4267 for a description of the performance-based shares. |
| (6) | As non-U.S. citizens, Mr. Hall Dr. McDonald and Mr. Brown are not participants in the Hecla Mining Company Retirement Plan, or the unfunded SERP. In lieu of participation in these plans, Mr. Hall Dr. McDonald and Mr. Brown are expected to receive a similar supplement benefit as if they had participated in these plans. SeeRetirement Planon page 5893 for a description of non-U.S. employee’s retirement benefits. |
| (7) | Includes the following: |
| | | | | | | | | | | | | | | | | NEO | | Matching
401(k)
Contribution
($) | | | Annual
Life
Insurance
Premium
($) | | | Other
($) | | | Total
($) | | Baker | | | 17,100 | | | | 2,471 | | | | 0 | | | | 19,571 | | Hall | | | 17,100 | (i) | | | 1,965 | (ii) | | | 0 | | | | 19,065 | | Roberts | | | 6,680 | | | | 2,471 | | | | 0 | | | | 9,151 | | Brown | | | 17,100 | (i) | | | 1,965 | (ii) | | | 0 | | | | 19,065 | | Sienko | | | 17,100 | | | | 1,909 | | | | 0 | | | | 19,009 | |
| (7) | Includes the following: |
| NEO | Matching 401(k)
Contribution
($) | | Annual Life
Insurance
Premium
($) | | Other
($) | | Total
($) | | Baker | 16,500 | | 2,106 | | 0 | | 18,606 | | Hall | 16,500 | (i) | 1,710 | (ii) | 0 | | 18,210 | | Radford | 16,500 | | 2,106 | | 0 | | 18,606 | | McDonald | 16,500 | (i) | 1,293 | (ii) | 0 | | 17,793 | | Brown | 16,500 | (i) | 1,710 | (ii) | 0 | | 18,210 |
| (i) | These amounts are paid to Mr. Hall and Mr. Brown in lieu of the 401(k) match made on behalf of Mr. Hall, Dr. McDonald and Mr. Brown.match. Canadian employees are excluded from participation in the Hecla Capital Accumulation401(k) Plan. Mr. Hall Dr. McDonald and Mr. Brown are paid in Canadian funds. The amounts reported are in U.S. dollars based on the applicable exchange rates as reported inThe Wall Street Journalby the Bank of Canada from time-to-time. |
| (ii) | Life insurance premium is paid in Canadian funds. |
80 www.hecla-mining.com
Compensation of Named Executive Officers | (8) | Mr. Hall Dr. McDonald and Mr. Brown receive their compensation in Canadian funds. The amounts reported for Mr. Hall Dr. McDonald and Mr. Brown are in U.S. dollars based on the applicable exchange rates as reported inThe Wall Street Journalby the Bank of Canada from time-to-time during this time period. |
50(9) | Mr. Roberts deferred the amount of $428,263 to the KEDCP in 2020. The amount reported in this table is the total amount of base salary and/or short- and long-term cash compensation he received before his deferrals. See Nonqualified Deferred Compensation for 2020 on page 85 for further information. |
Table of Contents
Grants of Plan-Based Awards for 2018
The following table shows all plan-based awards granted to the NEOs during 2018.2020. Grants of Plan-Based Awards for 2020 | . | | Estimated Future Payouts
Under
Non-Equity Incentive Plan
Awards | | Estimated Future Payouts
Under Equity Incentive Plan
Awards | All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#) | Grant
Date
Fair Value
of Stock
and
Option
Awards(1)
($) | | | | | | | | | Estimated Future Payouts
Under
Non-Equity Incentive Plan
Awards | | Estimated Future Payouts
Under Equity Incentive Plan
Awards | | | All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#) | | Grant
Date
Fair Value
of Stock
and
Option
Awards(1)
($) | | | Name | Grant
Date | | Threshold
($) | Target
($) | Maximum
($) | | Threshold
(#) | Target
(#) | Maximum
(#) | All Other
Stock
Awards:
Number of
Shares of
Stock or
Units
(#) | Grant
Date
Fair Value
of Stock
and
Option
Awards(1)
($) | | Grant
Date | | Threshold
($) | | Target
($) | | Maximum
($) | | Threshold
(#) | | Target
(#) | | Maximum
(#) | | | Phillips S. Baker, Jr. | | | | | | | | | | | | | | | | | | | | | | | | | | | Restricted Stock Units(2) | 6/19/18 | | 130,548 | 499,999 | | 6/22/20 | | | | | | | | | | | | | | | 132,013 | | | 855,444 | | | Performance-based Shares(3) | 6/19/18 | | 78,329 | 156,658 | 313,316 | 156,658 | 370,860 | | 6/22/20 | | | | | | | | | 66,007 | | | 132,013 | | | 264,026 | | | 132,013 | | | 81,848 | | | LTIP(4) | | 0 | 1,140,000 | 4,275,000 | | | | | 0 | | | 720,000 | | | 4,200,000 | | | | | | | | | | | | | AIP(5) | | 0 | 635,000 | 1,270,000 | | | STIP(5) | | | | | 0 | | | 635,000 | | | 1,270,000 | | | | | | | | | | | | | Lindsay A. Hall | | | | | | | | | | | | | | | | | | | | | Restricted Stock Units(2) | 6/19/18 | | 78,329 | 300,000 | | 6/22/20 | | | | | | | | | | | | | | | 74,257 | | | 481,185 | | | Performance-based Shares(3) | 6/19/18 | | 21,541 | 43,081 | 86,162 | 43,081 | 101,987 | | 6/22/20 | | | | | | | | | 24,753 | | | 49,505 | | | 99,010 | | | 49,505 | | | 30,693 | | | LTIP(4) | | 0 | 500,000 | 1,875,000 | | | | | 0 | | | 360,000 | | | 2,100,000 | | | | | | | | | | | | | AIP(5) | | 0 | 380,000 | 760,000 | | | | Lawrence P. Radford | | | STIP(5) | | | | | 0 | | | 380,000 | | | 760,000 | | | | | | | | | | | | Lauren M. Roberts | | | | | | | | | | | | | | | | | | | | | Restricted Stock Units(2) | 6/19/18 | | 117,493 | 449,998 | | 6/22/20 | | | | | | | | | | | | | | | 74,257 | | | 481,185 | | | Performance-based Shares(3) | 6/19/18 | | 39,165 | 78,329 | 156,658 | 78,329 | 185,430 | | 6/22/20 | | | | | | | | | 24,753 | | | 49,505 | | | 99,010 | | | 49,505 | | | 30,693 | | | LTIP(4) | | 0 | 500,000 | 1,875,000 | | | | | 0 | | | 360,000 | | | 2,100,000 | | | | | | | | | | | | | AIP(5) | | 0 | 416,000 | 832,000 | | | | Dr. Dean W.A. McDonald | | | | Restricted Stock Units(2) | 6/19/18 | | 65,274 | 249,999 | | | Performance-based Shares(3) | 6/19/18 | | 16,972 | 33,943 | 67,886 | 33,943 | 80,354 | | | LTIP(4) | | 0 | 360,000 | 1,350,000 | | | | AIP(5) | | 0 | 275,000 | 550,000 | | | STIP(5) | | | | | 0 | | | 380,000 | | | 760,000 | | | | | | | | | | | | | Robert D. Brown | | | | | | | | | | | | | | | | | | | | | Restricted Stock Units(2) | 6/19/18 | | 52,219 | 199,999 | | 6/22/20 | | | | | | | | | | | | | | | 52,805 | | | 342,176 | | | Performance-based Shares(3) | 6/19/18 | | 16,972 | 33,943 | 67,886 | 33,943 | 80,354 | | 6/22/20 | | | | | | | | | 17,327 | | | 34,653 | | | 69,306 | | | 34,653 | | | 21,485 | | | LTIP(4) | | 0 | 300,000 | 1,125,000 | | | | | 0 | | | 270,000 | | | 1,575,000 | | | | | | | | | | | | | AIP(5) | | 0 | 184,800 | 369,600 | | | STIP(5) | | | | | 0 | | | 184,800 | | | 369,600 | | | | | | | | | | | | David C. Sienko | | | | | | | | | | | | | | | | | | | | Restricted Stock Units(2) | | | 6/22/20 | | | | | | | | | | | | | | | 49,505 | | | 320,792 | | Performance-based Shares(3) | | | 6/22/20 | | | | | | | | | 16,502 | | | 33,003 | | | 66,006 | | | 33,003 | | | 20,462 | | LTIP(4) | | | | | 0 | | | 270,000 | | | 1,575,000 | | | | | | | | | | | | STIP(5) | | | | | 0 | | | 185,500 | | | 371,000 | | | | | | | | | | | |
| (1) | The restricted stock unit amounts represent the aggregate grant date fair value of the awards granted to each NEO computed in accordance with stock-based accounting rules (FASB ASC Topic 718). Assumptions used in the calculation of these amounts are included inNote 10 – Stockholders’ Equityto our calendar year 20182020 consolidated financial statements, which is included in our Annual Report on Form 10-K filed with the SEC on February 22, 201918, 2021 (the “Form 10-K”). Annual RSUs generally vest in three substantially equal annual installments beginning on June 21 in the following year fromfollowing the date they are granted.of grant. Consistent with the requirements of FASB ASC Topic 718, the value of performance-based sharesPSUs is based on the estimated outcome as of the date of grant. In accordance with FASB ASC Topic 718, this result is based on a relative TSR result modeled using a Monte Carlo simulation. The amounts in this column reflect the aggregate grant date fair value of the PSUs for accounting purposes determined in accordance with SEC rules and do not reflect the actual economic value that may be realized by the NEO at the end of the relevant three-year performance period. |
| (2) | Represents the number of RSUs granted on June 19, 201822, 2020 to the NEOs under the terms of the 2010 Stock Incentive Plan. The restrictions generally lapse for one-third of the RSUs on June 21, 2019, 2021, one-third on June 21, 2020,2022 and one-third on June 21, 2021,2023, at which time the units are converted into shares of our common stock. The grant date fair value of the RSUs is the number of RSUs multiplied by the closing price of the Company common stock on the grant date of June 19, 201822, 2020 ($3.83)3.03). |
| (3) | Represents the number of performance-based sharesPSUs of Hecla common stock granted under the 2010 Stock Incentive Plan, having a target value for each NEO of: Baker, $600,000;$400,000; Hall, $165,000; Radford, $300,000; McDonald, $130,000;$150,000; Roberts, $150,000; Brown, $105,000; and Mr. Brown, $130,000,Sienko, $100,000, with the potential of up to 200% of this target value (subject to specific performance terms and conditions established for these shares) awarded to the NEOs under the 2010 Stock Incentive Plan. Determination of the actual number of these performance-based sharesPSUs to be received by the NEOs will be based on the TSR of Hecla common stock for the three-year period from January 1, 20182020 through December 31, 2020,2022, based on the following percentile rank within peer group companies: |
| n• | | 100thpercentile rank = maximum award at 200% of target; |
2021 Proxy Statement 81
Compensation of Named Executive Officers | n• | | 60thpercentile rank = target award at grant value; |
| n• | | 50thpercentile rank = threshold award at 50% of target. |
Hecla’s TSR performance versus that of peer group companies will be based on a comparison of the average share price over the last 60 calendar days prior to January 1, 2018,
| Hecla’s TSR performance versus that of peer group companies will be based on a comparison of the average share price over the last 60 calendar days prior to January 1, 2020, as the base price, and the average share price the last 60 calendar days of the three-year performance period, plus dividends, to determine relative share value performance and ranking among peers. |
| (4) | Represents the potential value of the payout for each NEO under the 2018-20202020-2022 LTIP period if the threshold, target or maximum goals are satisfied for all performance measures. The potential payouts are performance-driven and therefore completely at-risk. The business measurements and performance goals for determining the |
Table of Contents
| | payout are described in theCompensation Discussion and Analysisbeginning CD&A starting on page 39.64. Dollar amounts shown are valued as follows on a per unit basis: Threshold, $0; Target, $100;$90; and Maximum, $375.$525. The number of units awarded to each NEO for the 2018-20202020-2022 LTIP period are as follows: |
NEO | 2018-2020 LTIP
Units
(#) | Baker | 11,400 | Hall | 5,000 | Radford | 5,000 | McDonald | 3,600 | Brown | 3,000 |
| | | | | | NEO | | 2020-2022 LTIP
Units
(#) | Baker | | | | 8,000 | | Hall | | | | 4,000 | | Roberts | | | | 4,000 | | Brown | | | | 3,000 | | Sienko | | | | 3,000 | |
| (5) | Represents the potential value of the payout for each NEO under the 2018 AIP2020 STIP described in the CD&A starting on page 35.59. The total payout to each NEO under the 2018 AIP2020 STIP is described in footnote 3 to theSummary Compensation Tableon page 49.80. |
The following table provides information on the current holdings of stock awards by the NEOs. This table includes unvested RSUs, and unvested performance-based shares. There were no unexercised stock options held by any NEO at year-end. Outstanding Equity Awards at Fiscal Year-End for 20182020 | | | | | Stock Awards | | | Stock Awards | | | Name | Number of
Shares or Units
of Stock That
Have Not
Vested(1)
(#) | Market Value of
Shares or Units of
Stock That Have
Not Vested(2)
($) | Equity Incentive
Plan Awards:
Number of
Unearned Shares,
Units or Other
Rights That Have
Not Vested
(#) | | Equity Incentive
Plan Awards:
Market or Payout
Value of Unearned
Shares, Units or
Other Rights That
Have Not Vested(3)
($) | | Number of
Shares or
Units
of Stock
That
Have Not
Vested(1)
(#) | | Market
Value of
Shares or
Units of
Stock That
Have
Not
Vested(2)
($) | | Equity Incentive
Plan Awards:
Number of
Unearned
Shares,
Units or Other
Rights That
Have
Not Vested
(#) | | Equity Incentive Plan Awards:
Market or
Payout
Value of
Unearned
Shares, Units
or
Other Rights
That
Have Not
Vested(3)
($) | | Phillips S. Baker, Jr. | 225,213 | 531,503 | | | | | 320,456 | | | | | 2,076,555 | | | | | | | | | | 51,108 | (4) | 120,615 | | | | | 78,329 | (5) | 184,856 | | | | | | | | | | | | | 271,739 | (4) | | | 1,760,869 | | | | | | | | | | | | | 132,013 | (5) | | | 855,444 | | | | Lindsay A. Hall | 135,970 | 320,889 | | | | | | | 181,889 | | | | | 1,178,641 | | | | | | | | | | 10,222 | (4) | 24,124 | | | | | 21,541 | (5) | 50,837 | | | Lawrence P. Radford | 182,811 | 431,434 | | | | | | | | 10,222 | (4) | 24,124 | | | | | 39,165 | (5) | 92,429 | | | Dr. Dean W. A. McDonald | 122,073 | 288,092 | | | | | | | | 6,815 | (4) | 16,083 | | | | | 16,972 | (5) | 40,054 | | | | | | | | | | | | | 81,522 | (4) | | | 528,263 | | | | | | | | | | | | | 49,505 | (5) | | | 320,792 | | | Lauren M. Roberts | | | | | 148,883 | | | | | 964,762 | | | | | | | | | | | | | | | | | | 74,627 | (4) | | | 483,583 | | | | | | | | | | | | | 49,505 | (5) | | | 320,792 | | | | Robert D. Brown | 90,085 | 212,601 | | | | | | | 124,560 | | | | | 807,149 | | | | | | | | | | 4,259 | (4) | 10,051 | | | | | 16,972 | (5) | 40,054 | | | | | | | | | | | | | 62,500 | (4) | | | 405,000 | | | | | | | | | | | | | 34,653 | (5) | | | 224,551 | | | David C. Sienko | | | | | 119,084 | | | | | 771,664 | | | | | | | | | | | | | | | | | | 54,348 | (4) | | | 352,175 | | | | | | | | | | | | | 33,003 | (5) | | | 213,859 | |
82 www.hecla-mining.com
Compensation of Named Executive Officers | (1) | The following table shows the dates on which the restricted stock units in the outstanding equity awards table vest and the corresponding number of shares, subject generally to continued employment through the vest date. |
| | | | | Number of Unvested Restricted Stock Units | | | Number of Unvested Restricted Stock Units | | | Vesting Date | Baker | Hall | Radford | McDonald | Brown | | Baker | | Hall | | Roberts | | Brown | | Sienko | | 6/21/19 | 109,788 | 64,159 | 84,891 | 61,521 | 43,915 | | | 6/21/20 | 71,909 | 45,701 | 58,755 | 38,794 | 28,763 | | | | 6/21/21 | 43,516 | 26,110 | 39,165 | 21,758 | 17,407 | | | | 159,985 | | | | | 91,624 | | | | | 62,065 | | | | | 62,183 | | | | | 58,907 | | | 6/21/22 | | | | | 116,467 | | | | | 65,513 | | | | | 62,065 | | | | | 44,776 | | | | | 43,676 | | | 6/21/23 | | | | | 44,004 | | | | | 24,752 | | | | | 24,753 | | | | | 17,601 | | | | | 16,501 | | | | Total | 225,213 | 135,970 | 182,811 | 122,073 | 90,085 | | | | 320,456 | | | | | 181,889 | | | | | 148,883 | | | | | 124,560 | | | | | 119,084 | |
| (2) | The market value of the RSUs is based on the closing market price of our common stock on the NYSE as of December 31, 2018,2020, which was $2.36.$6.48. |
| (3) | The market value of the performance-based shares is based on the closing market price of our common stock on the NYSE as of December 31, 2018,2020, which was $2.36.$6.48. |
| (4) | Award of performance-based shares,PSUs, the value of which will be determined based on the TSR of Hecla common stock for the three-year period from January 1, 20172019 through December 31, 2019.2021. For purposes of determining the amounts reflected in this column, it is assumed that threshold performance was achieved as of the end of the fiscal year ended December 31, 2018.2020. |
| (5) | Award of performance-based shares,PSUs, the value of which will be determined based on the TSR of Hecla common stock for the three-year period from January 1, 20182020 through December 31, 2020.2022. For purposes of determining the amounts reflected in this column, it is assumed that threshold performance was achieved as of the end of the fiscal year ended December 31, 2018.2020. |
The following table shows information concerning the exercise of stock options and the number of stock awards that vested during calendar year 20182020 for each of the NEOs, and the value realized on the exercise of options and vesting of stock awards during calendar year 2018.2020. Table of Contents
Stock Vested for 2018(1)in 2020 | | | | Stock Awards | | | Stock Awards | | Name | | Number of Shares
Acquired on Vesting
(#) | | | Value Realized on
Vesting
($) | | | Number of
Shares
Acquired
on Vesting
(#) | | Value Realized on Vesting ($) | | | Phillips S. Baker, Jr. | | 68,306 | (2) | | 261,612 | (3) | | | | 28,393 | (1) | | | 86,031 | | | | | | | 43,516 | (2) | | | 131,853 | | | | | 37,879 | (4) | | 145,077 | (3) | | | | 72,464 | (3) | | | 219,566 | | | | | 28,393 | (5) | | 108,745 | | | | Lindsay A. Hall | | 18,459 | (4) | | 70,698 | | | | | 19,591 | (1) | | | 59,361 | | | | | 19,591 | (5) | | 75,034 | | | | | 26,110 | (2) | | | 79,113 | | | Lawrence P. Radford | | 45,765 | (2) | | 175,280 | | | | | | 26,136 | (4) | | 100,101 | | | | | 40,761 | (3) | | | 123,506 | | | | | 19,591 | (5) | | 75,034 | | | | Dr. Dean W.A. McDonald | | 40,983 | (2) | | 156,965 | | | | | | 22,727 | (4) | | 87,044 | | | Lauren M. Roberts | | | | | 37,314 | (3) | | | 113,061 | | | | | 17,035 | (5) | | 65,244 | | | | Robert D. Brown | | 15,152 | (4) | | 58,032 | | | | | 11,357 | (1) | | | 34,412 | | | | | 11,358 | (5) | | 43,501 | | | | | 17,406 | (2) | | | 52,741 | | | | | | | 27,174 | (3) | | | 82,337 | | | David C. Sienko | | | | | 8,745 | (1) | | | 26,497 | | | | | | | 15,231 | (2) | | | 46,150 | | | | | | | 27,174 | (3) | | | 82,337 | |
| (1) | There were no stock options exercised in 2018. All remaining stock options expired in May 2015. | | | | | (2) | The NEOs were granted these RSUs on July 1, 2015. On June 21, 2018, the restrictions lapsed, and each NEO received his units in the form of shares of our common stock. The shares vested at a price of $3.83, which was the closing sales price of our common stock on the NYSE on June 21, 2018. | | | | | (3) | Mr. Baker deferred the shares into his stock account under the terms of the KEDCP. He may not receive the shares until a “Distributable Event,” as defined under the KEDCP, and will not realize value until the shares are distributed to him. The shares are included in theNonqualified Deferred Compensationfor 2018 table on page 54. | | | | | (4) | The NEOs were granted these RSUs on June 7, 2016.2017. On June 21, 2018,2020, the restrictions lapsed, and each NEO received his units in the form of shares of our common stock. The shares vested at the price of $3.83,$3.03, which was the closing sales price of our common stock on the NYSE on June 21, 2018.22, 2020. |
| | | | (5)(2) | The NEOs were granted these RSUs on June 7, 2017.19, 2018. On June 21, 2018,2020, the restrictions lapsed, and each NEO received his units in the form of shares of our common stock. The shares vested at the price of $3.83,$3.03, which was the closing sales price of our common stock on the NYSE on June 22, 2020. |
| (3) | The NEOs were granted these RSUs on June 21, 2018.2019. On June 21, 2020, the restrictions lapsed, and each NEO received his units in the form of shares of our common stock. The shares vested at the price of $3.03, which was the closing sales price of our common stock on the NYSE on June 22, 2020. |
2021 Proxy Statement 83
Compensation of Named Executive Officers Stock Ownership for NEOs The following table summarizes the NEO stock ownership guidelines and their status as of December 31, 2020, based on the average closing price of our common stock on the NYSE for calendar year 2020 ($4.0506). As of December 31, 2020, all NEOs met the guidelines. In the calculations for our NEOs, we include shares directly held and unvested RSUs. We do not include unexercised stock options or unvested performance-based shares. See Stock Ownership Guidelines on page 70 for further discussion. NEO Stock Ownership as of December 31, 2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | NEO | | Annual
Base
Salary
($) | | X
Annual
Base
Salary | | Total
Value of
Shares to
be Held
($) | | Shares
Held
Directly
(#) | | Unvested
RSUs
(#) | | Total
Shares
(#) | | Total Value
of Shares
Held by NEO
at 12/31/20
($4.0506)(1)
($) | | Meets
Guidelines | Baker | | | | 635,000 | | | | | 6x | | | | | 3,810,000 | | | | | 5,104,407 | (2),(3) | | | | 320,456 | | | | | 5,424,863 | | | | | 21,973,950 | | | | | Yes | | Hall | | | | 380,000 | | | | | 2x | | | | | 760,000 | | | | | 794,612 | | | | | 181,889 | | | | | 976,501 | | | | | 3,955,415 | | | | | Yes | | Roberts | | | | 380,000 | | | | | 2x | | | | | 760,000 | | | | | 244,672 | (2),(3) | | | | 148,883 | | | | | 393,555 | | | | | 1,594,134 | | | | | Yes | | Brown | | | | 264,000 | | | | | 2x | | | | | 528,000 | | | | | 182,325 | | | | | 124,560 | | | | | 306,885 | | | | | 1,243,068 | | | | | Yes | | Sienko | | | | 265,000 | | | | | 2x | | | | | 530,000 | | | | | 635,081 | (3) | | | | 119,084 | | | | | 754,165 | | | | | 3,054,821 | | | | | Yes | |
| (1) | The value of shares held is determined by using the average closing price of the Company’s common stock for the calendar year on the NYSE, which for 2020 was $4.0506. |
| (2) | Includes 1,795,964 shares for Mr. Baker and 175,284 shares for Mr. Roberts deferred under the KEDCP. |
| (3) | Includes Hecla Mining Company common shares held in their 401(k) account. |
Additional information regarding shares held by our NEOs is included in the Security Ownership of Certain Beneficial Owners and Management table on page 102. 84 www.hecla-mining.com
Compensation of Named Executive Officers Pension Benefits The following table shows pension information under the Hecla Mining Company Retirement Plan, the SERPHecla Mining Company Supplemental Excess Retirement Plan (“SERP”) and Supplemental Benefits for the NEOs as of December 31, 2018.2020. The terms and conditions for participation in, and payments from, these plans are described aboveon page 93 under “Retirement Plan.”Retirement Plan. The actuarial present value of the accumulated benefit is determined using the same assumptions used for financial reporting purposes except that retirement age is assumed to be the normal retirement age of 65, or the current age if eligible for early retirement. These assumptions are described in the pension footnotes to our financial statements included in our Annual Report on Form 10-K. | | Name | | Plan Name | | Number
of Years
Credited
Service
(#) | | Present Value of
Accumulated
Benefit
($) | | Payments
During Last
Calendar
Year
($) | | Plan Name | | Number
of Years
Credited
Service
(#) | | Present
Value of
Accumulated
Benefit
($) | | Payments During Last Calendar Year ($) | | | Phillips S. Baker, Jr. | | Hecla Mining Company Retirement Plan | | 17 | | 668,758 | | 0 | | Hecla Mining Company Retirement Plan | | | | 19 | | | | | 1,140,372 | | | | | 0 | | | | Hecla Mining Company Supplemental
Excess Retirement Plan | | 5,721,581 | | 0 | | | Lindsay A. Hall(1) | | Hecla Mining Company Retirement Plan | | N/A | | N/A | | | | Hecla Mining Company Supplemental Excess Retirement Plan | | | | | | | 9,330,908 | | | | | 0 | | | | Lindsay A. Hall(1) | | Hecla Mining Company Supplemental
Excess Retirement Plan | | N/A | | N/A | | Hecla Mining Company Retirement Plan | | | | | | | N/A | | | | | N/A | | | | Hecla Mining Company Supplemental Benefit | | 2 | | 282,564 | | 0 | | Hecla Mining Company Supplemental Excess Retirement Plan | | | | 4 | | | | | 744,851 | | | | | 0 | | | Lawrence P. Radford | | Hecla Mining Company Retirement Plan | | 7 | | 256,782 | | 0 | | | | Hecla Mining Company Supplemental
Excess Retirement Plan | | 427,715 | | 0 | | | Dr. Dean W.A. McDonald(1) | | Hecla Mining Company Retirement Plan | | N/A | | N/A | | | | Hecla Mining Company Supplemental
Excess Retirement Plan | | N/A | | N/A | | | Lauren M. Roberts | | | Hecla Mining Company Retirement Plan | | | | 9 | | | | | 70,112 | | | | | 0 | | | | | Hecla Mining Company Supplemental Excess Retirement Plan | | | | | | | 288,766 | | | | | 0 | | | | | Hecla Mining Company Supplemental Benefit | | 12 | | 1,525,801 | | 0 | | | | Robert D. Brown(1) | | Hecla Mining Company Retirement Plan | | N/A | | N/A | | Hecla Mining Company Retirement Plan | | | | | | | N/A | | | | | N/A | | | | Hecla Mining Company Supplemental
Excess Retirement Plan | | N/A | | N/A | | | | | Hecla Mining Company Supplemental Benefit | | 3 | | 136,515 | | 0 | | Hecla Mining Company Supplemental Excess Retirement Plan | | | | 5 | | | | | 388,054 | | | | | 0 | | | David C. Sienko | | | Hecla Mining Company Retirement Plan | | | | 10 | | | | | 491,260 | | | | | 0 | | | | | Hecla Mining Company Supplemental Excess Retirement Plan | | | | | | | 453,733 | | | | | 0 | |
| (1) | As non-U.S. citizens, Mr. Hall Dr. McDonald and Mr. Brown are not participants in the Retirement Plan, or the unfunded SERP. In lieu of participationPlan; however, they do participate in the Retirement Plan and the unfunded SERP, Mr. Hall, Dr. McDonald and Mr. Brown are expected to receive a similar Supplemental Benefit.SERP. |
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The table below provides information on the nonqualified deferred compensation of the NEOs in 2018. None of the NEOs, including our CEO, has deferred any cash under our KEDCP. The only deferrals under the KEDCP have been from our CEO, who has deferred vested common stock awards.2020. Nonqualified Deferred Compensation for 20182020 | | Name | | Executive Stock
Contributions in
Last FY
(#) | | | Registrant
Contributions in
Last FY
(#) | | Aggregate
Earnings in
Last FY
(#) | | Aggregate
Withdrawals/
Distributions
(#) | | Aggregate
Balance of Stock at
Last FYE
(#) | | | Executive
Contributions
in Last FY
($) | | Registrant
Contributions in
Last FY
($) | | Aggregate
Earnings in
Last FY
($) | | Aggregate
Withdrawals/
Distributions
($) | | Aggregate Balance of Stock At Last FYE ($)(1) | | | Phillips S. Baker, Jr. | | 106,185 | (1) | | 0 | | 0 | | 0 | | 1,758,085 | (2) | | | | 0 | | | | 0 | | | | 0 | | | | | 0 | | | | | 11,637,846 | | | | Lindsay A. Hall(3) | | 0 | | 0 | | 0 | | 0 | | 0 | | | | | 0 | | | | 0 | | | | 0 | | | | | 0 | | | | | 0 | | | Lawrence P. Radford | | 0 | | 0 | | 0 | | 0 | | 0 | | | | Dr. Dean W. A. McDonald(3) | | 0 | | 0 | | 0 | | 0 | | 0 | | | | Lauren M. Roberts | | | | | 428,263 | (2) | | | 42,826 | (2) | | | 0 | | | | | 0 | | | | | 1,135,840 | | | | Robert D. Brown(3) | | 0 | | 0 | | 0 | | 0 | | 0 | | | | | 0 | | | | 0 | | | | 0 | | | | | 0 | | | | | 0 | | | David C. Sienko | | | | | 0 | | | | 0 | | | | 0 | | | | | 0 | | | | | 0 | |
| (1) | Restricted stock units that vested in 2018 and were deferred into the KEDCP. |
| (2) | Total amount of deferred shares held under the KEDCP as of December 31, 2018.2020. The value shown in this column is the value of the total amount of shares held in the KEDCP multiplied by our closing stock price on the NYSE on December 31, 2020 ($6.48). The number of shares so held is as follows: Baker, 1,795,964 shares; and Roberts, 175,284 shares. |
| (2) | Mr. Roberts deferred a portion of his 2020 base salary and his 2019 STIP cash award to the KEDCP. The total amount of compensation deferred to the KEDCP ($428,263) was credited to a stock account, and converted to share units on a quarterly basis. The Company match in 2020 was $42,826 and was credited to Mr. Robert’s stock account and converted to share units. The deferred cash amounts are reported in the Summary Compensation Table for 2020 on page 79 as part of Mr. Roberts total 2020 compensation. The total amount of shares held by Mr. Roberts under the KEDCP is reported in the Security Ownership of CertainBeneficial Owners and Management Table on page 102. |
| (3) | Canadian employees are not eligible to participate in our deferred compensation plan. |
2021 Proxy Statement 85
Compensation of Named Executive Officers Pursuant to the Company’s KEDCP, executives and key employees, including the NEOs, may defer all or a portion of their base salary, cash or equity awards earned under the LTIP and AIP,STIP, and any vested RSUs or vested performance-based sharesPSUs granted under the 2010 Stock Incentive Plan. Deferral elections are made by the individual generally in the year prior to the beginning of the plan year for amounts to be earned or granted in the following year. Base salary, AIPSTIP and LTIP amounts deferred under the KEDCP are credited to either an investment account or a stock account at the participant’s election. Amounts credited to an investment account are valued in cash, credited with deemed interest, and distributed with deemed interest in cash upon a distributable event. RSUs and other common stock awarded (performance-based shares)(PSUs) under the 2010 Stock Incentive Plan and deferred by a participant are credited to a stock account. Amounts credited to the stock account of a participant are valued based upon our common stock and are delivered to the participant in shares of our common stock upon a distributable event. The KEDCP also provides for corporate matching amounts where the participants elect to have their base salary, AIPSTIP or LTIP cash awards credited to a stock account. Matching contributions are also valued based on our common stock and distributed upon a distributable event in stock. The ability to defer compensation into a company stock account promotes alignment of the interests of participants with those of our common shareholders. It also provides for corporate discretionary allocations of amounts valued based upon our common stock and credited to a stock account. As of the end of the last day of each calendar month, an additional amount is credited to the investment account of the participant equal to the product of (i) the average daily balance of the investment account for the month, multiplied by (ii) the annual prime rate for corporate borrowers quoted at the beginning of the quarter byThe Wall Street Journal (or such other comparable interest rate as the committee may designate from time to time). The amounts credited to the investment or stock account of a participant under the KEDCP are distributable or payable within 75 days of the earliest to occur of the following distribution events: (i) the date on which the participant separates from service with us, with the distribution delayed for six months for certain “specified employees;” (ii) “disability” as defined in Section 409A of the Internal Revenue Code; (iii) the participant’s death; (iv) a fixed date or fixed schedule selected by the participant at the time the deferral election was made; (v) an “unforeseeable emergency,” as defined in Section 409A of the Internal Revenue Code; (vi) a “change in control” of the Company, as defined in regulations issued by the Internal Revenue Service;Service under Section 409A of the Internal Revenue Code; and (vii) termination of the KEDCP. The KEDCP is at all times considered to be entirely unfunded both for tax purposes and for purposes of Title I of the Employee Retirement Income Security Act of 1974, as amended, and no provision will at any time be made with respect to segregating our assets for the payment of any amounts under the KEDCP. Any funds that may be invested for purposes of fulfilling our promises under the KEDCP are for all purposes to be part of our general assets and available to general creditors in the event of a bankruptcy or insolvency of the Company. Nothing contained in the KEDCP will constitute a guarantee by us that any funds or assets will be sufficient to pay any benefit under the KEDCP. Potential Payments Upon Termination or Change in Control We have a change in control agreement (“CIC Agreement”) with each of our NEOs (Messrs. Baker, Hall, McDonald, RadfordRoberts, Brown and Brown)Sienko). The CIC Agreements provide that each of the NEOs shallwill serve in such executive position as the Board may direct. The CIC Agreements become effective only upon a change in control of the Company (the date of such change in control is referred to as the “Effective Date”). The term of employment under the CIC Agreements is threetwo years from the Effective Date (except for Messrs. Radford, HallBaker and Brown)Sienko, who each have a term of twothree years from the Effective Date). Any CIC Agreements entered into with newly hired executives will contain an employment term of two years from the Effective Date. The CIC Agreements automatically extend for an additional year on each anniversary date of the agreements unless we give notice of nonrenewal 60 days prior to the anniversary date. Under the CIC Agreements, a change in control is, with certain limitations, deemed to occur if: (i) an individual or entity (including a “group” under Section 13(d) (3) of the Exchange Act) becomes the beneficial owner of 20% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors; (ii) as the result of a tender offer, merger, proxy fight or similar transaction, the persons who were previously directors of the 86 www.hecla-mining.com
Compensation of Named Executive Officers Company cease to constitute a majority of the Board; (iii) consummation of the sale of all, Table of Contents
or substantially all, of the assets of the Company (with certain limitations) occurs; or (iv) the approval of a plan of dissolution or liquidation. The CIC Agreements are intended to ensure, among other things, that in the event of a change in control, each NEO will continue to focus on adding shareholder value. We seek to accomplish this by assuring that each NEO continues to receive payments and other benefits equivalent to those he was receiving at the time of a change in control for the duration of the employment term under of the CIC Agreement. The CIC Agreements also provide that should an NEO’s employment be terminated either (i) by the NEO for good reason, or (ii) by the Company (other than for cause or disability) after the Effective Date of the CIC Agreement, he would receive from us a lump-sum defined amount generally equivalent to three times the aggregate of his then annual base salary rate, his highest short-term incentive, and his highest annualprorated long-term incentive during the three-year period, prior to the Effective Date. For Messrs. Radford, Hall, Roberts, and Brown, and any other CIC Agreements entered into hereafter, the lump-sum defined amount is generally equivalent to two times. The NEOs would also be entitled to lump-sum payments representing the difference in pension and supplemental retirement benefits to which they would be entitled on (i) the date of actual termination, and (ii) the end of the three-year (or two-year where applicable) employment period under the CIC Agreements. We would also maintain such NEO’s participation in all benefit plans and programs (or provide equivalent benefits if such continued participation was not possible under the terms of such plans and programs). A NEO whose employment has terminated would not be required to seek other employment in order to receive the defined benefits. The following table summarizes the circumstances under which our NEOs receive severance benefits upon termination or a change in control. Summary of Potential Payments Upon Termination or Change in Control | | | | | | | | | | | Compensation
Element | | Termination
Following a
Change in Control(1) | | Termination due to
Following a
Change in Control9Death or Disability | | Involuntary
Not
For Cause
or
Voluntary
Termination due to
Death or Disability | | Involuntary Not
For Cause or
Voluntary
Termination | | For Cause
Termination | | Retirement | | | | | | | | Base Salary | | Messrs. Baker and McDonaldSienko receive three times their annual base salary. Messrs. Hall, RadfordRoberts, and Brown receive two times their annual base salary. | | N/A | | N/A | | N/A | | N/A | AIP | | | | | | | STIP | | Messrs. Baker and McDonaldSienko receive three times the highest AIPSTIP paid in the last three years. Messrs. Hall, RadfordRoberts, and Brown receive two times the highest AIPSTIP paid in the last three years. | | N/A | | N/A | | N/A | | N/A |
2021 Proxy Statement 87
Compensation of Named Executive Officers | | | | | | | | | | | Compensation Element | | Termination
Following a
Change in Control(1) | | Termination due to
Death or Disability | | Involuntary
Not
For Cause
or
Voluntary
Termination | | For Cause
Termination | | Retirement | | | | | | | | LTIP | | Messrs. Baker and McDonaldSienko receive three times the highest LTIP paid in the last three years. Messrs. Hall, RadfordRoberts, and Brown receive two times the highest LTIP paid in the last three years. | | Each NEO would receive a prorated portion of any LTIP plan in which the NEO was a participant. The surviving spouse or other beneficiary would receive the payment.payment based on actual performance. | | N/A | | N/A | | In order to qualify for vesting of long-term award benefits, the employee must retire under the Hecla Mining Company Retirement Plan and be at least age: (i) 60 and have 15 or more years of service with the Company; (ii) 65 and have 7 or more years of service with the Company; or (iii) 68. If the participant meets these age and years of service requirements, their prorated portion for outstanding plan periods will be paid after the completion of those plan periods.periods based on actual performance. | | | | | | | | RSUs | | All unvested RSUs willmay vest upon a change in control.10(2) | | All unvested RSUs shallwould vest immediately as of the date of such Disabilitydisability or Deathdeath and shallwould be delivered to the NEO, spouse, or beneficiary. | | N/A | | N/A | | If an employee retires before their restricted stock unitsRSUs have vested, they must meet certain requirements in order for their restricted stock unitsRSUs to continue to vest based on the applicable vesting schedule. In order to qualify for vesting of RSUs, the employee must retire under the Hecla Mining Company Retirement Plan and be at least age: (i) 60 and have 15 or more years of service with the Company; (ii) 65 and have 7 or more years of service with the Company; or (iii) 68. |
88 www.hecla-mining.com
Compensation of Named Executive Officers 9 | This means an involuntary termination without cause or voluntary termination for good reason within the stated period (three or two years) after the change in control. | | | | | | | | | | 10 | Our 2010 Stock Incentive Plan provides for a double-trigger vesting. |
Table of Contents
Compensation
Element | | Termination
Following a
Change in Control(1) | | Termination due to
Following a
Change in ControlDeath or Disability | | Involuntary
Not
For Cause
or
Voluntary
Termination due to
Death or Disability | | Involuntary Not
For Cause or
Voluntary
Termination | | For Cause
Termination | | Retirement | Performance-based Shares | | | | | | | PSUs | | All unearned performance-based shares willPSUs may immediately become earned and vested at 100% of target level as of the date of the change in control.11(2) | | The TSR performance goal willwould be deemed achieved at 100% of target level as of the date of such Disabilitydisability or Deathdeath and shallwould be delivered to the NEO, spouse, or beneficiary. | | N/A | | N/A | | In order to qualify for vesting of unearned performance-based shares,PSUs, the employee must retire under the Hecla Mining Company Retirement Plan and be at least age: (i) 60 and have 15 or more years of service with the Company; (ii) 65 and have 7 or more years of service with the Company; or (iii) 68. | Health and
Welfare
Benefits | | For Messrs. Baker and McDonald -Sienko would receive three years of health and welfare benefits and disability and life insurance premiums would be paid for such three-year period. In addition to any earned, but unused vacation, they would be eligible for up to $20,000 in outplacement assistance and the 401(k) match would be deposited in their accounts. For Messrs. Hall, RadfordRoberts, and Brown, the same would apply, but for two years. | | Unused vacation and the 401(k) match would be deposited in their account. | | N/A | | N/A | | Unused vacation and the 401(k) match would be deposited in their accounts. |
| (1) | This means an involuntary termination without cause or voluntary termination for good reason within the stated period (three or two years) after the change in control. |
| (2) | Our 2010 Stock Incentive Plan provides for a double-trigger vesting. |
2021 Proxy Statement 89
Compensation of Named Executive Officers The following tables reflect the amount of compensation that would be paid to each of our NEOs in the event of a termination of the NEO’s employment under the various scenarios listed above and should be read in conjunction with the disclosure above. The amounts shown assume that such termination was effective as of December 31, 20182020 and include estimates of the amounts that would be paid to each NEO upon such NEO’s termination. The tables only include additional benefits that result from the termination and do not include any amounts or benefits earned, vested, accrued, or owing under any plan for any other reason. Please seeGrants of Plan-Based Awards for 20182020 on page 51,, Outstanding Equity Awards at Fiscal Year-End for 20182020 on page 52,, Pension Benefitstable on page 53,, and the section entitledNonqualified Deferred Compensation for 20182020 on page 54 for additional information. The actual amounts to be paid can only be determined at the time of such NEO’s separation from Hecla. | | Termination Payments and Benefits for Phillips S. Baker, Jr. | | Termination Following
a Change in Control
($) | | Disability
($) | | | Death
($) | | | Termination Following
a Change in Control
($) | | | Disability
($) | | | Death
($) | | | Base Salary(1) | | 1,905,000 | | 0 | | 0 | | | | 1,905,000 | | | | 0 | | | | 0 | | | Annual Performance Compensation(2) | | 2,722,500 | | 0 | | 0 | | | Short-term Performance Compensation(2) | | | | 3,619,500 | | | | 0 | | | | 0 | | | Unvested Restricted Stock Units(3) | | 531,503 | | 531,503 | | 531,503 | | | | 2,076,555 | | | | 2,076,555 | | | | 2,076,555 | | | Unearned Performance-based Shares(4) | | 610,940 | | 610,940 | | 610,940 | | | | 2,616,313 | | | | 2,616,313 | | | | 2,616,313 | | | Long-term Performance Compensation | | 5,992,125 | (5) | 2,667,125 | (6) | �� | 2,667,125 | (6) | | | 4,581,375 | (5) | | | 1,603,806 | (6) | | | 1,603,806 | (6) | | Benefits & Perquisites: | | | | | | | | | Health and Welfare Benefits(7) | | 69,463 | | 0 | | 0 | | | | 60,155 | | | | 0 | | | | 0 | | | Life Insurance Benefits(8) | | 11,103 | | 0 | | 0 | | | | 12,148 | | | | 0 | | | | 0 | | | Outplacement | | 20,000 | | 0 | | 0 | | | | 20,000 | | | | 0 | | | | 0 | | | Total | | 11,862,634 | | 3,809,568 | | | 3,809,568 | | | | 14,891,046 | | | | 6,296,674 | | | | 6,296,674 | |
11 Our 2010 Stock Incentive Plan provides for a double-trigger vesting.
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| | Termination Payments and Benefits for Lindsay A. Hall | | Termination Following
a Change in Control
($) | | Disability
($) | | | Death
($) | | | Termination Following
a Change in Control
($) | | | Disability
($) | | | Death
($) | | | Base Salary(1) | | 760,000 | | 0 | | 0 | | | | 760,000 | | | | 0 | | | | 0 | | | Annual Performance Compensation(2) | | 570,000 | | 0 | | 0 | | | Short-term Performance Compensation(2) | | | | 1,292,000 | | | | 0 | | | | 0 | | | Unvested Restricted Stock Units(3) | | 320,889 | | 320,889 | | 320,889 | | | | 1,178,641 | | | | 1,178,641 | | | | 1,178,641 | | | Unearned Performance-based Shares(4) | | 149,917 | | 149,917 | | 149,917 | | | | 849,055 | | | | 849,055 | | | | 849,055 | | | Long-term Performance Compensation | | 1,087,742 | (5) | 1,043,817 | (6) | | 1,043,817 | (6) | | | 1,087,634 | (5) | | | 695,000 | (6) | | | 695,000 | (6) | | Benefits & Perquisites: | | | | | | | | | Health and Welfare Benefits(7) | | 9,504 | | 0 | | 0 | | | | 9,169 | | | | 0 | | | | 0 | | | Life Insurance Benefits(8) | | 6,924 | | 0 | | 0 | | | | 4,680 | | | | 0 | | | | 0 | | | Outplacement | | 20,000 | | 0 | | 0 | | | | 20,000 | | | | 0 | | | | 0 | | | Total | | 2,924,976 | | 1,514,623 | | | 1,514,623 | | | | 5,201,179 | | | | 2,722,696 | | | | 2,722,696 | |
| Termination Payments and Benefits for Lawrence P. Radford | | Termination Following
a Change in Control
($) | | Disability
($) | | | Death
($) | | | Base Salary(1) | | 832,000 | | 0 | | | 0 | | | Annual Performance Compensation(2) | | 1,368,000 | | 0 | | | 0 | | | Unvested Restricted Stock Unit(3) | | 431,434 | | 431,434 | | | 431,434 | | | Unearned Performance-based Shares(4) | | 233,102 | | 233,102 | | | 233,102 | | | Long-term Performance Compensation | | 1,429,700 | (5) | 1,175,150 | (6) | | 1,175,150 | (6) | | Benefits & Perquisites: | | | | | | | | | | Health and Welfare Benefits(7) | | 30,997 | | 0 | | | 0 | | | Life Insurance Benefits(8) | | 7,402 | | 0 | | | 0 | | | Outplacement | | 20,000 | | 0 | | | 0 | | | Total | | 4,352,635 | | 1,839,686 | | | 1,839,686 | |
90 www.hecla-mining.com | Termination Payments and Benefits for Dean W.A. McDonald | | Termination Following
a Change in Control
($) | | Disability
($) | | | Death
($) | | | Base Salary(1) | | 825,000 | | 0 | | | 0 | | | Annual Performance Compensation(2) | | 1,113,750 | | 0 | | | 0 | | | Unvested Restricted Stock Units(3) | | 288,092 | | 288,092 | | | 288,092 | | | Unearned Performance-based Shares(4) | | 112,270 | | 112,270 | | | 112,270 | | | Long-term Performance Compensation | | 1,639,950 | (5) | 842,250 | (6) | | 842,250 | (6) | | Benefits & Perquisites: | | | | | | | | | | Health and Welfare Benefits(7) | | 14,256 | | 0 | | | 0 | | | Life Insurance Benefits(8) | | 8,695 | | 0 | | | 0 | | | Outplacement | | 20,000 | | 0 | | | 0 | | | Total | | 4,022,013 | | 1,242,612 | | | 1,242,612 | |
Compensation of Named Executive Officers | Termination Payments and Benefits for Robert D. Brown | | Termination Following
a Change in Control
($) | | Disability
($) | | | Death
($) | | | Base Salary(1) | | 528,000 | | 0 | | | 0 | | | Annual Performance Compensation(2) | | 464,640 | | 0 | | | 0 | | | Unvested Restricted Stock Units(3) | | 212,601 | | 212,601 | | | 212,601 | | | Unearned Performance-based Shares(4) | | 100,208 | | 100,208 | | | 100,208 | | | Long-term Performance Compensation | | 771,600 | (5) | 685,800 | (6) | | 685,800 | (6) | | Benefits & Perquisites: | | | | | | | | | | Health and Welfare Benefits(7) | | 9,504 | | 0 | | | 0 | | | Life Insurance Benefits(8) | | 6,924 | | 0 | | | 0 | | | Outplacement | | 20,000 | | 0 | | | 0 | | | Total | | 2,113,477 | | 998,609 | | | 998,609 | |
| | | | | | | | | | | | | Termination Payments and Benefits for Lauren M. Roberts | | Termination Following
a Change in Control
($) | | | Disability
($) | | | Death
($) | | Base Salary(1) | | | 760,000 | | | | 0 | | | | 0 | | Short-term Performance Compensation(2) | | | 1,406,000 | | | | 0 | | | | 0 | | Unvested Restricted Stock Units(3) | | | 964,762 | | | | 964,762 | | | | 964,762 | | Unearned Performance-based Shares(4) | | | 804,375 | | | | 804,375 | | | | 804,375 | | Long-term Performance Compensation | | | 253,126 | (5) | | | 439,881 | (6) | | | 439,881 | (6) | Benefits & Perquisites: | | | | | | | | | | | | | Health and Welfare Benefits(7) | | | 49,538 | | | | 0 | | | | 0 | | Life Insurance Benefits(8) | | | 8,099 | | | | 0 | | | | 0 | | Outplacement | | | 20,000 | | | | 0 | | | | 0 | | Total | | | 4,265,900 | | | | 2,209,018 | | | | 2,209,018 | |
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| | | | | | | | | | | | | Termination Payments and Benefits for Robert D. Brown | | Termination Following
a Change in Control
($) | | | Disability
($) | | | Death
($) | | Base Salary(1) | | | 528,000 | | | | 0 | | | | 0 | | Short-term Performance Compensation(2) | | | 406,560 | | | | 0 | | | | 0 | | Unvested Restricted Stock Units(3) | | | 807,149 | | | | 807,149 | | | | 807,149 | | Unearned Performance-based Shares(4) | | | 629,551 | | | | 629,551 | | | | 629,551 | | Long-term Performance Compensation | | | 771,600 | (5) | | | 471,000 | (6) | | | 471,000 | (6) | Benefits & Perquisites: | | | | | | | | | | | | | Health and Welfare Benefits(7) | | | 9,169 | | | | 0 | | | | 0 | | Life Insurance Benefits(8) | | | 7,092 | | | | 0 | | | | 0 | | Outplacement | | | 20,000 | | | | 0 | | | | 0 | | Total | | | 3,179,121 | | | | 1,907,700 | | | | 1,907,700 | |
| | | | | | | | | | | | | Termination Payments and Benefits for David C. Sienko | | Termination Following
a Change in Control
($) | | | Disability
($) | | | Death
($) | | Base Salary(1) | | | 795,000 | | | | 0 | | | | 0 | | Short-term Performance Compensation(2) | | | 695,625 | | | | 0 | | | | 0 | | Unvested Restricted Stock Units(3) | | | 771,664 | | | | 771,664 | | | | 771,664 | | Unearned Performance-based Shares(4) | | | 566,034 | | | | 566,034 | | | | 566,034 | | Long-term Performance Compensation | | | 1,157,400 | (5) | | | 471,000 | (6) | | | 471,000 | (6) | Benefits & Perquisites: | | | | | | | | | | | | | Health and Welfare Benefits(7) | | | 26,387 | | | | 0 | | | | 0 | | Life Insurance Benefits(8) | | | 10,723 | | | | 0 | | | | 0 | | Outplacement | | | 20,000 | | | | 0 | | | | 0 | | Total | | | 4,042,833 | | | | 1,808,698 | | | | 1,808,698 | |
| (1) | Represents three times annual base salary for Messrs. Baker and McDonald.Sienko. Represents two times annual base salary for Messrs. Hall, RadfordRoberts, and Brown. |
| (2) | Represents three times the highest annualshort-term incentive payment paid in the last three years for Messrs. Baker and McDonald.Sienko. Represents two times the highest annualshort-term incentive payment paid in the last three years to Messrs. Hall, RadfordRoberts, and Brown. |
| (3) | In the event of a qualifying termination following a change in control, any unvested RSUs shallwill become immediately earned and vested as of the date of the change in control.control termination. In the event of termination by reason of disability or death, the unvested RSUs shallwill become immediately earned and vested as of the date of disability or death. The value is based on the closing price of Hecla’s common stock on the NYSE on December 31, 20182020 ($2.36)6.48). Please see theOutstanding Equity Awards at Fiscal Year-End for 20182020table on page ___82 for more information. |
| (4) | For unearned performance-based shares,PSUs, the values included in the table are based on the number of unearned performance-based sharesPSUs that would have vested if termination occurred on the last business day of 2018,2020, assuming target performance (258,873(403,752 shares for Mr. Baker, 63,524131,027 shares for Mr. Hall, 98,772 |
2021 Proxy Statement 91
Compensation of Named Executive Officers | 124,132 for Mr. Radford, 47,572 shares for Dr. McDonald, and 42,461Roberts, 97,153 shares for Mr. Brown)Brown, and 87,351 shares for Mr. Sienko), multiplied by the closing price of our common stock on the NYSE on December 31, 20182020 ($2.36)6.48). In the event of a change in control, any unearned performance-based shares shallwill become immediately earned and vested as of the date of the change in control. In the event of termination by reason of disability or death, the unearned performance-based shares shallwill become immediately earned and vested as of the date of disability or death. The totals listed in the disability and death columns are based on the number of performance-based shares that would have vested if disability or death would have occurred on the last business day of 2018,2020 assuming target performance for each of the NEOs, multiplied by the closing price of our common stock on the NYSE on December 31, 20182020 ($2.36)6.48). |
| (5) | Represents three times the highest long-term incentive payment paid in the last three years for Messrs. Baker and McDonald.Sienko. Represents two times the highest long-term incentive payment paid in the last three years for Messrs. Hall, RadfordRoberts, and Brown. |
| (6) | Represents the prorated portion of outstanding LTIP plans for 2016-2018, 2017-20192019-2021 and 2018-2020.2020-2022. |
| (7) | Reflects the estimated lump-sum value of all future premiums, which will be paid by the Company on behalf of Messrs. Baker and McDonaldSienko under our health and welfare benefit plans for three years upon a termination following a change in control. Reflects the estimated lump-sum value of all future premiums, which will be paid by the Company on behalf of Messrs. Hall, RadfordRoberts and Brown under our health and welfare benefit plans for two years upon a termination following a change in control. |
| (8) | Reflects the estimated lump-sum value of the cost of coverage for life insurance provided by us to each NEO. |
CEO Pay Ratio We believe our executive compensation program should be internally consistent and equitable in order to motivate our employees to create shareholder value. Our committee strives to design a fair and competitive compensation program that will attract, motivate, and retain employees, reward performance, and provide incentives based on our performance. As required by SEC rules, the committee reviewed a comparison of CEO pay to the pay of our “median employee.” The median employee was determined from a review of all employees as of December 31, 2017. In this review, we applied the average 2017 U.S. Dollar exchange rate, as reported by Bloomberg, to the Canadian Dollar and the Mexican Peso. We determined our median employee by ranking employees from highest to lowest, excluding our CEO, based on W-2 earnings statements or comparable annual earnings statements for non-U.S. employees. During 2018, we added approximately 300 employees of Klondex Mines Ltd., which we acquired effective July 20, 2018. SEC rules permit the exclusion of employees of a newly-acquired entity from the calculation of the CEO pay ratio for the fiscal year in which the acquisition occurs. Klondex employees acquired in the merger will be included in determining our 2019 CEO pay ratio.
As permitted by SEC rules we can use the same median employee in 20182020 that we identified for 2017in 2019 for calculating our CEO pay ratio unless there have been changes in the employee population or employee compensation arrangements that we reasonably believe would result in a significant change in our pay ratio disclosure. Other than the Klondex merger, weWe determined that there were no changes in 2018 in our 2020 employee population or employee compensation arrangements that would result in a significant change in the ratio. However, our 2017 median employee had a change in circumstance that we believe would result in a significant change in our pay ratio disclosure. As a result, we believe it is no longer appropriate to use last year’s median employee for this year’s pay ratio calculation. Using the compensation measure used to select last year’s median employee, we identified an employee whose compensation is substantially similar to that of last year’s median employee. The total compensation for the median employee was calculated in the same manner as the total compensation shown for our CEO in theSummary Compensation Table for 2018 on page 49 of this Proxy Statement. CEO. For 2018,2020, the annual total compensation of our CEO was $3,686,542,$4,296,317, and the annual total compensation of our median employee was $94,737.$112,783. The ratio of CEO pay to the pay of our median employee was 38.938 to 1. 92 www.hecla-mining.com
OTHER BENEFITS Retirement Plan With the exception of our NEOs who are Canadian citizens, our NEOs participate in the Hecla Mining Company Retirement Plan (the “Retirement Plan”)., which is a defined benefit plan. Canadian NEOs participate in Canada’s public retirement income system, which includes the following components: (i) the Canada (or Quebec) Pension Plan, which is a contributory, earnings-related social insurance program, and (ii) the Old Age Security program. In addition, the Registered Retirement Savings Plan is a tax-deferred individual savings plan available to Canadian employees. Mexican employees participate in Mexico’s public retirement income system, which is based on contributions the employee, employer and the government submit to the retirement savings system. The system is administered through savings accounts managed by private fund managers selected by the participant. Contributions to the Retirement Plan, and the related expense or income, are based on general actuarial calculations and, accordingly, no portion of our contributions, and related expenses or income, is specifically attributable to our officers. We also have an unfunded Supplemental Excess Retirement Plan adopted in November 1985 (the “SERP”) under which the amount of any benefits not payable under the Retirement Plan by reason of the limitations imposed by the Internal Revenue Code and/or the Employee Retirement Income Security Act, as amended (the “Acts”), and the loss, if any, due to a deferral of salary made under our KEDCP and/or our 401(k) Plan will be paid out of our general funds to any employee who may be adversely affected. Under the Acts, the current maximum annual pension benefit payable by the Retirement Plan to any employee is $220,000,$230,000, subject to specified adjustments, and is calculated using earnings not in excess of $275,000.$285,000. Upon reaching the normal retirement age of 65, each participant is eligible to receive annual Table of Contents
retirement benefits in monthly installments for life equal to, for each year of credited service, 1% of final average annual earnings (defined as the highest average earnings of such employee for any 36 consecutive calendar months for participants hired after June 30, 2013, during the final 120 calendar months of service) up to the applicable covered compensation level (which level is based on the Social Security maximum taxable wage base) and 1.75% of the difference, if any, between final average annual earnings and the applicable covered compensation level. The Retirement Plan and SERP define earnings for purposes of the plans to be “a wage or salary for services of employees inclusive of any bonus or special pay including gain-sharing programs, contract miners’ bonus pay and the equivalent,” except that on or after July 1, 2013, earnings are defined as “base salary or wages for personal services and elective deferrals plus (i) elective deferrals not includable in the gross income of the Employee under Code Sections 125, 132(f)(4), 402(e)(3), 402(h), 403(b) and 457, (ii) one-half (1/2) of any performance based or annualshort-term incentive bonus, (iii) one-half (1/2) of any safety incentive award, (iv) paid time off, other than pay while on disability leave, (v) any post-employment payment for services performed during the course of employment that would have been paid to the Employee prior to the severance from employment if the Employee had continued in employment with an Employer, and (vi) compensation for overtime at the Employee’s regular rate of pay.” 2021 Proxy Statement 93
Other Benefits The following table shows estimated aggregate annual benefits under our Retirement Plan and the SERP payable upon retirement to a participant who retires in 20182020 at age 65 having the years of service and final average annual earnings as specified. The table assumes Social Security covered compensation levels as in effect on January 1, 2018.2020. Estimated Annual Retirement Benefits Final Average
Annual Earnings | | Years of Credited Service | | | 5 | | 10 | | 15 | | 20 | | 25 | | 30 | | 35 | | $ | 100,000 | | $ | 5,633 | | $ | 11,266 | | $ | 16,899 | | $ | 22,531 | | $ | 28,164 | | $ | 33,797 | | $ | 39,430 | | | 150,000 | | | 10,008 | | | 20,016 | | | 30,024 | | | 40,031 | | | 50,039 | | | 60,047 | | | 70,055 | | | 200,000 | | | 14,383 | | | 28,766 | | | 43,149 | | | 57,531 | | | 71,914 | | | 86,297 | | | 100,680 | | | 250,000 | | | 18,758 | | | 37,516 | | | 56,274 | | | 75,031 | | | 93,789 | | | 112,547 | | | 131,305 | | | 300,000 | | | 23,133 | | | 46,266 | | | 69,399 | | | 92,531 | | | 115,664 | | | 138,797 | | | 161,930 | | | 350,000 | | | 27,508 | | | 55,016 | | | 82,524 | | | 110,031 | | | 137,539 | | | 165,047 | | | 192,555 | | | 400,000 | | | 31,883 | | | 63,766 | | | 95,649 | | | 127,531 | | | 159,414 | | | 191,297 | | | 223,180 | | | 450,000 | | | 36,258 | | | 72,516 | | | 108,774 | | | 145,031 | | | 181,289 | | | 217,547 | | | 253,805 | | | 500,000 | | | 40,633 | | | 81,266 | | | 121,899 | | | 162,531 | | | 203,164 | | | 243,797 | | | 284,430 | | | 550,000 | | | 45,008 | | | 90,016 | | | 135,024 | | | 180,031 | | | 225,039 | | | 270,047 | | | 315,055 | | | 600,000 | | | 49,383 | | | 98,766 | | | 148,149 | | | 197,531 | | | 246,914 | | | 296,297 | | | 345,680 | | | 650,000 | | | 53,758 | | | 107,516 | | | 161,274 | | | 215,031 | | | 268,789 | | | 322,547 | | | 376,305 | | | 700,000 | | | 58,133 | | | 116,266 | | | 174,399 | | | 232,531 | | | 290,664 | | | 348,797 | | | 406,930 | | | 750,000 | | | 62,508 | | | 125,016 | | | 187,524 | | | 250,031 | | | 312,539 | | | 375,047 | | | 437,555 | | | 800,000 | | | 66,883 | | | 133,766 | | | 200,649 | | | 267,531 | | | 334,414 | | | 401,297 | | | 468,180 | | | 850,000 | | | 71,258 | | | 142,516 | | | 213,774 | | | 285,031 | | | 356,289 | | | 427,547 | | | 498,805 | | | 900,000 | | | 75,633 | | | 151,266 | | | 226,899 | | | 302,531 | | | 378,164 | | | 453,797 | | | 529,430 | | | 950,000 | | | 80,008 | | | 160,016 | | | 240,024 | | | 320,031 | | | 400,039 | | | 480,047 | | | 560,055 | | | 1,000,000 | | | 84,383 | | | 168,766 | | | 253,149 | | | 337,531 | | | 421,914 | | | 506,297 | | | 590,680 |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Final Average Annual Earnings | | Years of Credited Service | | | | 5 | | | 10 | | | 15 | | | 20 | | | 25 | | | 30 | | | 35 | | $ 100,000 | | $ | 5,320 | | | $ | 10,640 | | | $ | 15,960 | | | $ | 21,280 | | | $ | 26,601 | | | $ | 31,921 | | | $ | 37,241 | | 150,000 | | | 9,695 | | | | 19,390 | | | | 29,085 | | | | 38,780 | | | | 48,476 | | | | 58,171 | | | | 67,866 | | 200,000 | | | 14,070 | | | | 28,140 | | | | 42,210 | | | | 56,280 | | | | 70,351 | | | | 84,421 | | | | 98,491 | | 250,000 | | | 18,445 | | | | 36,890 | | | | 55,335 | | | | 73,780 | | | | 92,226 | | | | 110,671 | | | | 129,116 | | 300,000 | | | 22,820 | | | | 45,640 | | | | 68,460 | | | | 91,280 | | | | 114,101 | | | | 136,921 | | | | 159,741 | | 350,000 | | | 27,195 | | | | 54,390 | | | | 81,585 | | | | 108,780 | | | | 135,976 | | | | 163,171 | | | | 190,366 | | 400,000 | | | 31,570 | | | | 63,140 | | | | 94,710 | | | | 126,280 | | | | 157,851 | | | | 189,421 | | | | 220,991 | | 450,000 | | | 35,945 | | | | 71,890 | | | | 107,835 | | | | 143,780 | | | | 179,726 | | | | 215,671 | | | | 251,616 | | 500,000 | | | 40,320 | | | | 80,640 | | | | 120,960 | | | | 161,280 | | | | 201,601 | | | | 241,921 | | | | 282,241 | | 550,000 | | | 44,695 | | | | 89,390 | | | | 134,085 | | | | 178,780 | | | | 223,476 | | | | 268,171 | | | | 312,866 | | 600,000 | | | 49,070 | | | | 98,140 | | | | 147,210 | �� | | | 196,280 | | | | 245,351 | | | | 294,421 | | | | 343,491 | | 650,000 | | | 53,445 | | | | 106,890 | | | | 160,335 | | | | 213,780 | | | | 267,226 | | | | 320,671 | | | | 374,116 | | 700,000 | | | 57,820 | | | | 115,640 | | | | 173,460 | | | | 231,280 | | | | 289,101 | | | | 346,921 | | | | 404,741 | | 750,000 | | | 62,195 | | | | 124,390 | | | | 186,585 | | | | 248,780 | | | | 310,976 | | | | 373,171 | | | | 435,366 | | 800,000 | | | 66,570 | | | | 133,140 | | | | 199,710 | | | | 266,280 | | | | 332,851 | | | | 399,421 | | | | 465,991 | | 850,000 | | | 70,945 | | | | 141,890 | | | | 212,835 | | | | 283,780 | | | | 354,726 | | | | 425,671 | | | | 496,616 | | 900,000 | | | 75,320 | | | | 150,640 | | | | 225,960 | | | | 301,280 | | | | 376,601 | | | | 451,921 | | | | 527,241 | | 950,000 | | | 79,695 | | | | 159,390 | | | | 239,085 | | | | 318,780 | | | | 398,476 | | | | 478,171 | | | | 557,866 | | 1,000,000 | | | 84,070 | | | | 168,140 | | | | 252,210 | | | | 336,280 | | | | 420,351 | | | | 504,421 | | | | 588,491 | |
Benefits listed in the pension table are not subject to any deduction for Social Security or other offset amounts. As of December 31, 2018,2020, the following executive officers have completed the indicated number of full years of credited service: P. Baker, 17 years; L. Radford, 7 years; D. McDonald, 1219 years; R. Brown, 35 years; D. Sienko, 10 years; L. Hall, 4 years; and L. Hall, 1 year.Roberts, 9 years. Table of Contents
| PROPOSAL 4 | | | Approval of Amendments to and Restatement of Our Hecla Mining Company 2010 Stock Incentive Plan
| |
94 www.hecla-mining.com
PROPOSAL 4 APPROVAL OF AMENDMENT AND RESTATEMENT OF THE HECLA MINING COMPANY KEY EMPLOYEE DEFERRED COMPENSATION PLAN Overview The Hecla Mining Company 2010 Stock IncentiveKey Employee Deferred Compensation Plan (the “2010 Incentive Plan”“KEDCP”) originally became effective following shareholder approval on May 21, 2010. The plan permits the Company to grant equity awardsJuly 18, 2002 and has been subsequently amended several times, including an amendment and restatement in order to (i) attract, retain2015 and reward key talent, (ii) provide stock-based incentives that promote the Company’s short and long-term financial growth and stability, and (iii) align the interests of eligible key employees, officers, and other eligible service providers with the long-term interests of our shareholders. Wea subsequent amendment in 2016. In this proposal, we are now asking our shareholders to approve an amendment and restatement of the 2010 Incentive Plan, which amendment and restatement was approved byKEDCP, primarily to increase the Board on March 20, 2019 (subject to shareholder approval).share pool under the plan as described below. We refer to this amendment and restatement of the 2010 Incentive PlanKEDCP as the “Amended Plan.”
The KEDCP is a nonqualified deferred compensation plan. Under the KEDCP, eligible key employees may defer all or a portion of their base salary, cash or equity awards earned under the Company’s Long-Term Incentive Plan (the “LTIP”) and Short-Term Incentive Plan (the “STIP”), and any vested restricted stock units (“RSUs”) or vested performance-based shares granted under the Company’s 2010 Stock Incentive Plan (the “Stock Plan”). Deferrals of cash compensation (“Cash Deferrals”) may be credited to an investment account that receives interest credits based on the prime rate or to a stock account credited as stock units payable in shares of our common stock (“Stock Units”). Deferrals of RSUs and performance-based shares and stock deferrals under the LTIP and the STIP (“Stock Deferrals”) are required to be credited to the stock account. Cash Deferrals, and deferral of stock earned under the LTIP and the STIP into the stock account may result in additional 10% matching contributions by the Company credited to the stock account (“Matching Contributions”), which would result in additional Stock Units. The KEDCP also permits certain Company discretionary contributions to be credited to the stock account which may have vesting or other conditions. In viewShares of common stock payable for Stock Units related to Cash Deferrals and any Matching Contributions credited to a stock account are paid out of a share pool approved for the KEDCP (the “KEDCP Share Pool”). Shares of common stock payable for Stock Deferrals (other than any Matching Contributions) are paid out of the limited numberseparate Stock Plan share pool that has been separately approved by shareholders.
The KEDCP Share Pool of 6,000,000 shares as originally approved by shareholders is now running low. As of March 21, 2021, there were approximately 130,000 shares remaining available underin the 2010 Incentive Plan,KEDCP Share Pool. In order to provide a continued opportunity for eligible key employees to elect Cash Deferrals and receive Matching Contributions credited to a stock account that can be payable in shares of our common stock (as well as any Company discretionary contributions credited to the Board approvedstock account), the KEDCP was amended and restated primarily to increase the KEDCP Share Pool by 1,500,000 shares, subject to shareholder approval. Apart from the increase to the KEDCP Share Pool, the Amended Plan primarilymakes no substantive changes to (i) authorize a newthe plan terms. The Amended Plan makes no change to the Stock Plan share pool of 20,000,000 shares of Hecla common stock (“common stock”) for awards made after May 23, 2019, and (ii) extend the expiration date of the plan from August 25, 2020(used to May 23, 2030. As described further below, the Amended Plan, if approved, adds several features not included in the 2010 Incentive Plan that further enhance long-term stockholder interests:
| · | No single-trigger accelerationpay Stock Deferrals). Under the Amended Plan, we do not automatically accelerate vesting of awards in connection with a change in control on the Company. |
| · | No Liberal Share Counting. The Amended Plan prohibits the Company from re-using shares that are tendered or surrendered to pay the exercise cost or tax obligation of grants. The only shares that are re-used in the Amended Plan are for awards that have been canceled, forfeited, expired or for awards settled in cash. |
| · | Minimum Vesting Requirements. The Amended Plan includes minimum vesting requirements. Equity-based awards generally cannot vest earlier than one year after grant. Certain limited exceptions are permitted. |
| · | Dividends. We do not pay dividends or dividend equivalents on stock options, SARs, or RSUs. We also do not pay dividends on unearned restricted shares or other stock-based awards, except to the extent the award actually becomes vested. |
| · | Clawback. Awards granted under the Amended Plan are subject to the Company’s clawback policy (described at page 44 above). |
In addition, the Amended Plan continues to include other features that protect the interests of our long-term shareholders, including:
| · | Limitation on terms of stock options and stock appreciation rights. The maximum term of each stock option and stock appreciation right, or SAR, is ten years. |
| · | No repricing or grant of discounted stock options or SARs. The Amended Plan does not permit the repricing of options or SARs. The Amended Plan prohibits the granting of stock options or SARs with an exercise price less than the fair market value of the common stock on the date of grant. |
Shareholders are asked to approve the Amended Plan, among other reasons, to (i) qualify stock options as incentive stock options for purposes of Section 422 of the Internal Revenue Code (the “Code”), and (ii) satisfy NYSE rules relating to equity compensation plans. If shareholders do not approve the Amended Plan, the Company may be compelledwill not have sufficient shares in the KEDCP Share Pool to increase the cash component of compensation for theoffer further Cash Deferrals and any Matching Contributions that are payable in our common shares. The Board believes that encouraging participating key employees to invest their Cash Deferrals into the stock account helps to further align the interests of participating key employees with our long-term shareholders and officers becauseincreases the Company would need to replace components of compensation previously delivered in equity awards. Table of Contents
Information on Equity Compensation Plans as of April 1, 2019
The Board recognizes that the increase“skin in the number ofgame” for those participating key employees. The additional 1,500,000 shares underto be added to the KEDCP Share Pool, if the Amended Plan will result in additionalis approved by shareholders, represents only about 0.28% dilution or “overhang” forto our shareholders. As commonly calculated, the total potential overhang resulting from the Amended Plan would be approximately 4.5%, calculated as of April 1, 2019 as follows:8
(a) Incremental Share Request Subject to Shareholder Approval8 | | | 20,000,000 | | (b) Shares Underlying Outstanding Awards | | | 3,236,613 | | (c) Shares currently available underAs of December 31, 2020, the 2010 Incentive Plan | | | 10,447 | | (d) TotalCompany had 531,665,866 common shares authorized for, or outstanding under, equity awards (aoutstanding. We calculate the additional dilution of the proposed additional shares as 1,500,000 ÷ (531,665,866 + b + c) | | | 23,247,060 | | (e) Total shares outstanding | | | 486,585,127 | | (f) Fully Diluted Overhang (d/(d+e)) | | | 4.5% | 1,500,000). |
Outstanding awards include unvested shares of restricted stock and RSUs, as well as performance-based shares assuming target performance. We note that the number of shares remaining available for grant as described above differs from those reported above under Equity Compensation Plan Information, since that table, required by SEC disclosure rules, is dated as of December 31, 2018, and therefore does not take into account year-to-date grants during 2019.2021 Proxy Statement 95
The Board periodically reviews the rate at which the Company grants equity awards relative to its shares
Proposal 4 — Approval of common stock outstanding (sometimes referred to as the Company’s “run rate”). The Company believes that our run rate demonstrates a responsible useAmendment and Restatement of the available share pool. Our employee population has grown because of acquisitions, and we expect to grant equity awards to a broader population of employees going forward. As a result, we expect our run rate over the next several years to increase from prior levels. Using our stock price on March 19, 2019 of $2.40 per share, we intend the proposed share reserve for the AmendedHecla Mining Company Key Employee Deferred Compensation Plan to cover all of our stock awards for the next five years. The following is a summary of the material features of the Amended Plan. This summary does not purport to be a complete description of all of the provisions of the Amended Plan. It is qualified in its entirety by reference to the full text of the Amended Plan, which has been filed with the SEC with this Proxy Statement and is included herewith as ExhibitAppendix “A.” Material Features of the Amended Plan Purpose. The purpose of the Amended Plan is to assist the Company in attracting and retaining key employees, encouraging their long-term commitment to the success of the Company, reducing cash expenditures of the Company, and offering key employees an opportunity to defer compensation, increase their equity ownership in the Company, and participate in the increase in value of the Company. The Amended Plan is a nonqualified deferred compensation plan which is not subject to the qualification requirements of Section 401(a) of the Internal Revenue Code. The Amended Plan is intended to be exempt from most of the substantive requirements of the Employee Retirement Income Security Act of 1974, as amended, as a plan primarily for the benefit of a select group of management or highly compensated employees (sometimes known as a “top hat” plan). Administration. The provisions in the Amended Plan regarding plan administration are materially the same as those included in the 2010 Incentive Plan. The Amended Plan will be administered by the Compensation Committee of the Board, or such other committee of the Board as the Board may from time to time designate comprised of two or more “non-employee“non-employee directors” within the meaning of the rules under Section 16 of the Securities Exchange Act of 1934, as amended (the “Committee”). The Committee will have the authority to: (i)to select officers and key employees who are eligible to participate in the Amended Plan, and certain independent consultants to whom awards may be granted; (ii) determinemake any other determinations which it believes necessary or advisable for the typeadministration of award, and the number of shares of common stock covered by each award; and (iii) determine the terms and conditions of any such awards.Plan. The Committee also will have the authority to: (i) adopt, alter and repeal the administrative rules, guidelines and practices governing the Amended Plan as it deems advisable; (ii) interpret the terms and provisions of the Amended Plan and any awards issued thereunder; and (iii) otherwise supervise the administration of the Amended Plan. All decisions made by the Committee pursuant to the Amended Plan will be final and binding. Number of Authorized Shares; AdjustmentsShares.. The Amended Plan authorizes the issuance, from and after May 23, 2019, of up to 20,000,000 shares of common stock pursuant tothat shall be made available for purposes of satisfying the grant or exerciseobligations of awards. If any award under the 2010 Incentive Plan made before May 23, 2019, or any award madeCompany under the Amended Plan from and after May 23, 2019, expires, or is terminated, surrendered or forfeited (including a repurchaseshall be both (i) the KEDCP Share Pool, which shall equal 6,000,000 shares of unvested shares at no more than the cost, if any, paid for such shares), in whole or in part, the unissuedour common stock coveredas originally approved plus, upon approval by such award will again be available forour shareholders at the grant of awards under the Amended Plan. Up to all such shares may be granted as incentive stock options under Internal Revenue Code Section 422. Any award settled in cash will not be counted asannual meeting, an additional 1,500,000 shares of our common stock, for any purpose under the Amended Plan. Likewise, awards granted in assumption of or in substitution for awards previously granted by an acquired company will not be counted as shares of common stock for any purpose under the Amended Plan. The Amended Plan clarifies the treatment of shares used to cover the cost of an award, and prohibits so-called “liberal share counting.” Accordingly, the number of shares of common stock available for the purpose of awards under the Amended Plan is reduced by: (i) the total number of SARs exercised, regardless of whether any of the shares of common stock underlying the SARs are not actually issued to the participant as the result of a net settlement; and (ii) the Stock Plan share pool. The Company expects that Cash Deferrals, any shares of common stock usedMatching Contributions, and any Company discretionary contributions that are credited to pay any exercise price for a stock option or tax withholding obligation with respectaccount will be satisfied from the KEDCP Share Pool, and that Stock Deferrals will be satisfied from the Stock Plan Share Pool. The Company has in the past, and will in the future, keep separate sub-accounts to any award (including restricted stock and RSUs). Any shares of common stock purchased on the open market with the proceeds of stock option exercises are not added back to the availabledetermine which applicable share pool under the Amended Plan. The shares subject to grant under the Amended Plan are toStock Units will be made available from authorized but unissued shares or from treasury shares as determined from time to time by the Board.settled from.
Adjustments for Certain Changes in Capital. In the event of any change in corporate capitalization, such as a stock split, or a corporate transaction, such as any merger, consolidation, separation, including a spin off, or other distribution of stock or property of the Company, any reorganization (whether or not such reorganization comes within the definition of such term in Section 368 of the Code) or any partial or complete liquidation of the Company, the Committee or Board will make such substitution or adjustments in the aggregate number and kind of shares reserved for issuance under the Amended Plan, in the number, kind and option price of shares subject to outstanding stock options and SARs, in Table of Contents
the number and kind of shares subject to other outstanding awards and/or such other equitable substitution or adjustments as it determines to be appropriate in its sole discretion, provided thatequitably adjust (i) the number of shares subjectavailable under the KEDCP Share Pool (and a similar adjustment may be made under the Stock Plan to any awardthe Stock Plan Share Pool), and (ii) the Stock Units credited to stock accounts. Adjustments will be made by the Committee, whose determination in that respect shall always be a whole number.
final, binding, and conclusive. Eligibility and Participation. Eligibility to participate in the Amended Plan is the same as under the 2010 Stock Incentive Plan and is limited to officers employees, and certain independent consultantskey employees of the Company, its affiliates or subsidiaries, as determined by the Committee. Committee, with participation limited to a select group of management or highly compensated employees. Non-employee directors are not eligible. As of March 2021, there were approximately 65 eligible employees under the KEDCP, including five executive officers. Deferral Elections, Matching Contributions, and Company Discretionary Contributions.Participation in the Amended Plan is atvoluntary. A participant may elect to defer receipt of part or all of his or her eligible base salary, cash or equity awards earned under the discretionCompany’s LTIP and STIP, and any vested RSUs or vested performance-based shares granted under the Stock Plan. An election to defer for any calendar year generally must be made before December 31 of the Committee. Asyear preceding the year in which such compensation is expected to be earned or for which any bonus awards are expected to be determined or RSUs granted, with certain limited exceptions as permitted by Section 409A of April 1, 2019, there were approximately 160 eligible participantsthe Internal Revenue Code. If a participant allocates any Cash Deferrals or stock earned under the 2010 Incentive Plan, including seven executive officers.LTIP or the STIP to the stock account, the participant will be credited with additional Matching Contributions to the stock account on a quarterly basis. The Types96 www.hecla-mining.com
Proposal 4 — Approval of AwardAmendment and Restatement of the Hecla Mining Company Key Employee Deferred Compensation Plan Matching Contributions will equal 10% of the deferrals credited to the stock account (or such other percentage as determined by the Committee). The Company may also credit additional discretionary contributions to a participant’s stock account. Cash Deferrals and Matching Contributions are 100% vested. Stock Deferrals are subject to the vesting terms of the underlying awards per the applicable award agreement and the Stock Plan. Any Company discretionary contributions may be subject to such vesting conditions as determined by the Committee. Deemed Investments. Cash Deferrals may be allocated by a participant to a stock account or an investment account. Matching Contributions, Stock Deferrals, and any Company discretionary contributions must be allocated to a stock account. Cash Deferrals allocated to a participant’s investment account will be credited with interest as of the last day of each calendar month. The amount credited equals the product of (i) the balance of the investment account at the end of the month, multiplied by (ii) the prime rate quoted at the beginning of the quarter by the Wall Street Journal. The Committee may, in its sole discretion, establish a different interest rate or deemed investment index for the investment accounts on a prospective basis. Stock Deferrals are credited to a participant’s stock account with a number of Stock Units equal to the number of RSUs, performance-based shares, or shares earned under the STIP or the LTIP, respectively, that are being deferred. Cash Deferrals, Matching Contributions and any Company discretionary contributions allocated to a stock account will be denominated in Stock Units at the end of each calendar quarter based on the average fair market value of our common stock for such calendar quarter. (As of March 10, 2021, our common stock had a closing price of $6.27 per share.) Stock Units are not credited with dividend equivalents during the deferral period. Time and Form of Distributions. The amounts credited to the investment or stock account of a participant under the Amended Plan.The Amended Plan authorizes are distributable or payable within 75 days of the Committeeearliest to grant awards, individually or collectively, to participants in anyoccur of the following forms,distribution events: (i) the date on which the participant separates from service with us, with the distribution delayed for six months for certain “specified employees;” (ii) “disability” as defined in Section 409A of the Internal Revenue Code; (iii) the participant’s death; (iv) a fixed date or fixed schedule selected by the participant at the time the deferral election was made; (v) an “unforeseeable emergency,” as defined in Section 409A of the Internal Revenue Code; (vi) a “change in control” of the Company, as defined in regulations issued by the Internal Revenue Service under Section 409A of the Internal Revenue Code; and (vii) termination of the Amended Plan. Distributions from an investment account are paid in cash. Distributions from a stock account are paid in shares of our common stock (one share of common stock for each Stock Unit that is payable), all subject to such terms, conditions, and provisions asrequired tax withholdings. Withholding of amounts with respect to a participant’s stock account may be effected by withholding a number of the Committee may determineStock Units credited to be necessary or desirable: | · | incentive stock options (“ISOs”); |
| · | nonqualified stock options (“NSOs”); |
| · | restricted stock units (“RSUs”); |
| · | other stock-based awards. |
Stock Options. The Amended Plan authorizes the Committee to grant options to purchase Hecla common stock at an exercise price which cannot be less thanaccount, based on the fair market value of such shares on the date of grant. The Amended Plan permits optionees, with the approvalcommon stock as of the Committee, to pay the exercise price of options in cash, stock (valued at its fair market value on the date of exercise) or a combination thereof, or by “cashless exercise” through a broker or the Company. The term of options will be as determined by the Committee, but may not be longer than ten (10) years from the date of grant (or five (5) years in the case of an ISO granted to an optionee who, at the time the ISO is granted, owns common stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company). The Committee will determine the conditions under which options will become exercisable, and the extent to which they will be exercisable after the option holder’s employment terminates. Generally, options terminate upon:
| · | immediately upon the option holder’s termination of employment for cause (as defined in the Amended Plan); |
| · | one (1) year after the option holder’s death; |
| · | three (3) years after the option holder’s employment terminates because of disability; |
| · | five (5) years after the option holder’s retirement; and |
| · | three (3) months after the option holder’s employment terminates for any other reason. |
The option award agreement may specify a shorter period, and in no event may the option be exercised after its original expirationapplicable tax date.
As noted above, options may be granted either as ISOs or NSOs. The principal difference between ISOs and NSOs is tax treatment (see “Federal Income Tax Consequences” below).
SARsUnfunded Plan. The Amended Plan authorizesis an unfunded “book-entry” plan, and the Committee to grant SARs in conjunction with all or part of any stock option grantedbenefits payable under the Amended Plan. Upon the exercise of a SAR, the holder will receive an amount in cash, shares of common stock, or both equal in value to the excessPlan are unsecured obligations of the fair market value of one share of common stock over the option price per share specifiedCompany to pay deferred compensation in the related stock option multiplied by the number of sharesfuture in respect of which the SAR has been exercised. Such amount will be paid to the holder in stock (valued at its fair market value on the date of exercise), cash or a combination thereof, as the Committee may determine. A SAR may be granted as an alternative to a previously or contemporaneously granted nonqualified option, but may only be granted contemporaneouslyaccordance with the grant of an ISO. A SAR will entitle the optionee, in lieu of exercising the option, to receive the excess of the fair market value of a share of stock on the date of exercise over the option price multiplied by the number of shares for which the optionee is exercising the SAR. Because a SAR is an alternative to an option, the option will be cancelled to the extent that the SAR is exercised, and the SAR will be cancelled to the extent the option is exercised.
Restricted Stock, RSUs and Other Stock-based Awards. The Committee may grant awards of restricted stock, which are shares of common stock subject to specified restrictions, and RSUs, which represent the right to receive shares of the common stock in the future. These awards may be made subject to repurchase, forfeiture or vesting restrictions at the Committee’s discretion. The restrictions may be based on continuous service with the Company or the attainment of specified performance goals, as determined by the Committee. RSUs may be paid in stock or cash or a combination of stock and cash, as determined by the Committee. Restricted stock may have voting rights during the restricted period, but regular cash dividends during the restricted period will not be paid to the participant, but may be accrued and paid at vesting or delivered as additional shares of restricted stock subject to the same vesting conditions of the underlying award. RSUs are not eligible to receive dividends or dividend equivalents. The Committee may also grant other types of equity or equity-based awards subject to the terms of the Amended Plan based on any other terms and conditions determined by the Committee.
Performance Units. The Amended Plan authorizes the Committee to award performance units either alone or in addition to other awards granted under the Amended Plan. The Committee may condition the settlement of performance units upon the
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continued servicedeferred compensation obligations will rank equally with other unsecured indebtedness of the participant, the attainment of performance goals, or both. The provisions of such awards (including applicable performance goals) need not be the same with respectCompany from time to each recipient. Performance units are generally forfeited upon termination of employment, except as otherwise set forth in the award agreement or determined by the Committee. Payment of performance units to the extent earned may be made in shares of common stock, cash, or a combination, as determined by the Committee.time outstanding.
Amendment and Discontinuance. The Amended Plan may generally be amended, altered or discontinued by the Board, but no amendment, alteration or discontinuance may be made that would impair the rights of a participant under andan award without the participant’s consent, subject to certain limited exceptions. Also, no amendment will be made without the consent of the Company’s stockholders to the extent such consent is required by law or agreement. See “No Repricing” below for additional restrictions on amendments to stock options and SARs. Change in ControlTransferability. The Amended Plan provides that in the event of a change-in-control of the Company, as defined in the Amended Plan, treatment of awards will depend on whether the awards have been assumed, converted or replaced by the successor in the transaction:
| · | To the extent outstanding awards are assumed, converted, or replaced by the resulting entity in the change-in-control, if, within 24 months after the change-in-control, the participant has a termination of employment initiated by the successor other than for cause (which may include a termination of employment initiated by the participant for “good reason” if provided in the applicable award agreement), the award will become fully vested and exercisable upon such termination of employment. This is often referred to as “double-trigger” vesting. For performance units or other awards that vest based on performance, the vesting at termination of employment will be based on the assumed achievement of target goals, or if greater, based on achievement of performance measured through the fiscal quarter immediately preceding the change-in-control. |
| · | To the extent outstanding awards are not assumed, converted, or replaced by the resulting entity in the change-in-control, then upon the change-in-control awards will become fully vested and exercisable. For performance units or other awards that vest based on performance, the vesting will be based on the assumed achievement of target goals, or if greater based on achievement of performance measured through the fiscal quarter immediately preceding the change-in-control. |
No Repricing. Without stockholder approval, the Committee is not authorized to (i) lower the exercise or grant price of a stock option or SAR after it is granted, except in connection with certain adjustments to our corporate or capital structure permitted by the Amended Plan, such as stock splits, (ii) take any other action that is treated as a repricing under generally accepted accounting principles or (iii) cancel a stock option or SAR at a time when its exercise or grant price exceeds the fair market value of the underlying stock, in exchange for cash, another stock option or SAR, restricted stock, RSUs or other equity award, unless the cancellation and exchange occur in connection with a change in capitalization or other similar change.
Minimum Vesting. Equity-based awards grantedAmounts deferred under the Amended Plan will have a one-year minimum vesting requirement. This requirement doesare not apply to (i) substitute awards resulting from acquisitions, or (ii) shares delivered in lieu of fully vested cash awards. Also, the Committee may grant equity-based awards without regard to the minimum vesting requirement with respecttransferable by participants, except to a maximum of five percent (5%) of the available share reserve authorizeddesignated beneficiary for issuancepayments due upon death.
Clawback. All awards and any amounts or benefits received or outstanding under the Amended Plan. In addition,Plan shall be subject to potential clawback, cancellation, recoupment, rescission, payback, reduction, or other similar action in accordance with the minimum vesting requirement does not apply to the Committee’s discretion to provide for accelerated exercisabilityterms or vestingconditions of any award, including in casesapplicable Company clawback or similar policy or any applicable 2021 Proxy Statement 97
Proposal 4 — Approval of retirement, death, disability or a change in control, in the termsAmendment and Restatement of the award or otherwise.Hecla Mining Company Key Employee Deferred Compensation Plan Transferability. Awards are not transferable, except by willlaw related to such actions, as may be in effect from time to time, including the requirements of (i) Section 304 of the Sarbanes Oxley Act and Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act; (ii) similar rules under the laws of descentany other jurisdiction; and distribution and, in(iii) any policies adopted by the case of nonqualified stock options, pursuantCompany to a qualified domestic relations order or a gift to an optionee’s children.implement such requirements.
New Plan Benefits
As of the date of this Proxy Statement, no awards have been made under the Amended Plan, and there are no awardsamounts currently deferred or credited under the 2010 Incentive PlanKEDCP that are conditioned on approval of the Amended Plan. The amount of awardsamounts to be madedeferred or credited under the Amended Plan isare not presently determinable. Federal Income Tax Consequences
The following discussion is intended only as a brief summary of the U.S. federal income tax rules that are generally relevant to stock options, SARs, restricted stock, RSUs, and performance units.amounts deferred under the Amended Plan. The following information is not a definitive explanation of the tax consequences of participation in the awards,Amended Plan, and recipients should consult with their own tax advisors with respect to the tax consequences inherent in participation in the ownership and/or exercise of the awards, and the ownership and disposition of any underlying securities.Amended Plan. Tax consequences will also vary depending upon the jurisdiction where the recipient of the awardparticipant may reside. Nonqualified Stock Options and SARs. A participant generally will not recognize taxable income upon the grantAmounts Deferred or vesting of a nonqualified stock option (or related SAR)Credited. Upon the exercise of a nonqualified stock option (or related SAR), a participant generally will recognize compensation taxable as ordinary income in an amount equal to the difference between the fair market value of the shares underlying the stock option on the date of exercise and the exercise price of the stock option. When a participant sells the shares, the
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participant will have short-term or long-term capital gain or loss, as the case may be, equal to the difference between the amount the participant received from the sale and the tax basis of the shares sold. The tax basis of the shares generally will be equal to the greater of the fair market value of the shares on the exercise date or the exercise price of the stock option.
Incentive Stock Options.A participant generally will not recognize taxable income upon the grant of an incentive stock option. If a participant exercises an incentive stock option during employment or within three months after employment ends (12 months in the case of permanent and total disability), the participant will not recognize taxable income at the time of exercise for regular U.S. federal income tax purposes (although the participant generally will have taxable income for alternative minimum tax purposes at that time as if the stock option were a nonqualified stock option). If a participant sells or otherwise disposes of the shares acquired upon exercise of an incentive stock option after the later of (a) one year from the date the participant exercised the option and (b) two years from the grant date of the stock option, the participant generally will recognize long-term capital gain or loss equal to the difference between the amount the participant received in the disposition and the exercise price of the stock option. If a participant sells or otherwise disposes of shares acquired upon exercise of an incentive stock option before these holding period requirements are satisfied, the disposition will constitute a “disqualifying disposition,” and the participant generally will recognize taxable ordinary income in the year of disposition equal to the excess of the fair market value of the shares on the date of exercise over the exercise price of the stock option (or, if less, the excess of the amount realized on the disposition of the shares over the exercise price of the stock option). The balance of the participant’s gain on a disqualifying disposition, if any, will be taxed as short-term or long-term capital gain, as the case may be.
With respect to both nonqualified stock options and incentive stock options, special rules apply if a participant uses shares of common stock already held by the participant to pay the exercise price or if the shares received upon exercise of the stock option are subject to a substantial risk of forfeiture by the participant.
Restricted Stock Awards, RSUs, and Performance Units.A participant generally will not have taxable income uponwith respect to amounts deferred or credited under the grant of restricted stock, RSUs or performance units. Instead, the participant will recognize ordinary income at the time of vesting or payout equalAmended Plan until such amounts are actually paid to the fair market value (on the vesting or payout date) of the shares or cash received minus any amount paid. For restricted stock only, a participant may instead elect to be taxed at the time of grant.
Other Stock-based Awards.The U.S. federal income tax consequences of other stock-based awards will depend upon the specific terms of each award, but generally the participant will recognize ordinary income at the time of vesting or payout equal to the fair market value (on the vesting or payout date) of the shares or cash received minus any amount paid.
participant. Tax Consequences to the Company. In the foregoing cases, weWe generally will be entitled to a deduction at the same time, and in the same amount, as a participant recognizes ordinary income, subject to certain limitations imposed under the Internal Revenue Code, including Section 162(m). Under Section 162(m) as amended by the Tax Act, we cannot deduct compensation paid to certain covered employees in a calendar year that exceeds $1 million.
Code Section 409A.We intend that awards granted underThe Amended Plan is intended to comply with Section 409A of the Internal Revenue Code. Notwithstanding any provision of the Amended Plan comply with, or otherwise be exempt from, Code Section 409A (toto the extent applicable), but make no representation or warranty to that effect.
Tax Withholding.We are authorized to deduct or withhold from any award granted or payment due undercontrary, the Amended Plan or require a participant to remit to us, the amount of any withholding taxes due in respect of the award or paymentshall be interpreted, operated, and to take such other action as may be necessary to satisfy all obligations for the payment of applicable withholding taxes. We are not required to issue any shares of common stock or otherwise settle an award under the Amended Plan until all tax withholding obligations are satisfied.administered consistent with its intent.
Equity Compensation Plan Information
The following table summarizes information about our equity compensation plans as of December 31, 2018.2020. The table updates information as originally reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.2020. All outstanding awards relate to our common stock. | | | | Number of Securities to
be Issued Upon Exercise
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
Equity Compensation
Plans | | Number of
Securities
to be Issued
Upon Exercise
of Outstanding
Options,
Warrants and
Rights | | Weighted-
Average
Exercise Price
of Outstanding
Options | | Number of
Securities
Remaining
Available for
Future Issuance
Under
Equity
Compensation
Plans | | Equity Compensation Plans Approved by Security Holders: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2010 Stock Incentive Plan | | | 3,236,613 | | | | N/A | | | | 3,607,822 | | | | 4,972,186 | (1) | | | N/A | (2) | | | 12,443,518 | | | | | | | | | | | | | | | | | | Stock Plan for Nonemployee Directors | | | 544,147 | | | | N/A | | | | 3,120,707 | | | | | | | | | | | | | | | | | | Stock Plan for Non-Employee Directors | | | | — | | | | N/A | | | | 2,476,644 | | Key Employee Deferred Compensation
Plan | | | 1,760,728 | | | | N/A | | | | 433,833 | | | | 195,345 | (3) | | | N/A | | | | 228,624 | | | | | | | | | | | | | | | | | | Equity Compensation Plans Not Approved by Security Holders | | | — | | | | — | | | | — | | | | Total | | | 5,541,488 | | | | N/A | | | | 7,162,362 | | | | — | | | | N/A | | | | 15,148,786 | |
64(1) | Includes unvested performance-based shares, and unvested restricted stock units. Unvested performance-based shares are disclosed based on target performance. |
| (2) | Unvested performance-based shares and unvested restricted stock units have no exercise price. |
| (3) | Shares deferred under the Key Employee Deferred Compensation Plan by participants. Shares are distributed on a date elected by the participant, or within six months after death, disability, or retirement. |
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Proposal 4 — Approval of Amendment and Restatement of the Hecla Mining Company Key Employee Deferred Compensation Plan Required Vote The approval of this proposal will require the affirmative vote of a majority of votes cast at the Annual Meeting, whether in person or by proxy. Under a majority of votes cast standard, the shares voted “for” Proposal 4 must exceed the number voted “against” Proposal 4 for the proposal to be approved. Abstentions and broker non-votes are not counted as votes cast for this purpose and will have no effect on the outcome of the vote. Votes marked “against” will have an effect on the outcome of the vote. | | | | | |  | | |  | Our Board recommends shareholders vote“FOR” the approval of the Amended and Restated KEDCP Plan in substantially the same form as included asAppendix A to this Proxy Statement. | | | | |
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| PROPOSAL 5 | | | Approval of Amendments to Our Certificate of Incorporation and Bylaws to Remove Certain 80% Supermajority Voting Provisions | |
Overview2021 Proxy Statement 99
There
OTHER MATTERS Certain Relationships and Related Transactions On a quarterly basis, we review all relationships and transactions with related persons to determine whether such persons have a direct or indirect material interest. Transactions with related persons are certain provisions inthose that involve our Certificate of Incorporation (the “Certificate”) and Bylaws that can only be revised through the affirmative vote of the holders of at least 80% of the voting power of the then outstanding shares of our capital stock entitled to vote generally in the election of directors. We refer to these shares as “Voting Stock” and to this voting requirement as “80% supermajority” throughout this Proposal 5 and Proposal 6. Certaindirectors, executive officers, director nominees, greater than 5% shareholders, immediate family members of these provisions relate to the authority to call special meetings of shareholders, and currently, only our Board has such authority. We are seeking the approval of our shareholders to amend our Certificate and Bylaws to remove those 80% supermajority voting requirements that impact who may call special meetings of shareholders and replace them with two-thirds voting standards. We refer to this lower voting requirement as “two-thirds vote” throughout this Proposal 5 and Proposal 6. If approved by the required 80% supermajority vote, this proposal would become effective upon the filing of an amendment to our Certificate with the Secretary of State of Delaware,persons, or entities in which we intend to do promptly after the required shareholder approval is obtained, at which time the related amendment to our Bylaws would also become effective.
We proposed these same amendments for shareholder approval at our 2018 Annual Shareholder Meeting. While shareholders owning almost 56% of our Voting Stock voted in favor of these amendments in 2018, the level of support was not sufficient to approve the amendments. SeeRequired Vote, Our Board’s Recommendation and Additional Information below. Because some shareholders continue to believe that these amendments are appropriate, we are again asking shareholders to vote “For” these proposed amendments.
As described more fully below under Proposal 6, in 2014, 2016, 2017 and 2018 we sought the approval of our shareholders to amend the Certificate and Bylaws to add a right permitting shareholders who have held at least a 25% “net long position” in our outstanding common stock for at least 120 days to call special meetings of shareholders, subject to the conditions set forth in our Bylaws (we refer to this as the “Special Meeting Proposal”). In order to implement the Special Meeting Proposal, an 80% supermajority vote of our shareholders was required. The 80% supermajority vote was not obtained in 2014, 2016, 2017 or 2018 and as a result we were unable to implement the Special Meeting Proposal.
We are again proposing the Special Meeting Proposal at our 2019 Annual Meeting of Shareholders. It is described in Proposal 6 below.
We believe that the 80% supermajority vote requirement is an impediment to implementing the Special Meeting Proposal because of the difficulty in getting the holders of that many shares to vote at a shareholders meeting. If instead of the 80% supermajority provisions, the required vote to implement the Special Meeting Proposal was a two-thirds of the Voting Stock, we believe the Special Meeting Proposal would have a better chance to be approved by our shareholders. However, even with the change to the lower two-thirds vote requirement, there is no assurance that the Special Meeting Proposal will be approved by the required vote of our shareholders. SeeRequired Voteon page 68.
Current Provisions in Certificate and Bylaws
Currently, the Certificate states that shareholders can alter, amend or repeal certain Bylaws relating to calling a special meeting of shareholders, only if that action is approved by the affirmative vote of the holders of at least 80% of the voting power of the then outstanding shares of Voting Stock, voting together as a single class (this supermajority voting provision is in Article V of the Certificate). Likewise, the Certificate currently states that a supermajority vote of at least 80% of the voting power of the then outstanding Voting Stock, voting together as a single class, is necessary to alter, amend or repeal Article VII of the Certificate which provides that special meetings of shareholders can only be called by our Board. Finally, the Bylaws also contain a similar provision regarding amending the provision therein concerning calling special meetings of shareholders.
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Set forth below are the relevant provisions of the Certificate and Bylaws:
Certificate
ARTICLE V.
Bylaws
| | In furtherance and not in limitation of the powers conferred by law, the Board is expressly authorized to make, repeal, alter, amend and rescind the bylaws of the Corporation by a majority vote of the entire Board at any regular or special meeting of the Board;provided, however, that notwithstanding anything contained in this Certificate of Incorporation or the Bylaws of the Corporation to the contrary, the affirmative vote of the holders of at least 80% of the voting power of the then outstanding shares of Voting Stock, voting together as a single class, shall be required to (i) alter, amend or repeal any provision of the Bylaws which is substantially identical to and/or implements the last sentence of Article IV or Articles VI, VII or VIII, of this Certificate of Incorporation, or (ii) alter, amend or repeal any provision of this proviso to Article V. |
ARTICLE VII.
Actions by Shareholders
| | Any action required or permitted to be taken by the shareholders of the Corporation must be effected at a duly called annual or special meeting of shareholders of the Corporation and may not be effected by any consent in writing by such shareholders.Special meetings of shareholders of the Corporation may be called only by the Board pursuant to a resolution approved by a majority of the entire Board. Notwithstanding anything contained in this Certificate of Incorporation to the contrary, the affirmative vote of the holders of at least 80% of the voting power of the then outstanding shares of Voting Stock, voting together as a single class, shall be required to alter, amend or repeal this Article VII. |
Bylaws
ARTICLE VI.
Amendments
| | These Bylaws may be altered or repealed and Bylaws may be made at any annual meeting of the shareholders or at any special meeting thereof if notice of the proposed alteration or repeal of Bylaws to be made be contained in the notice of such meeting, by the affirmative vote of the holders of a majority of the total voting power of all outstanding shares of the voting stock of the Corporation. These Bylaws may also be altered or repealed and Bylaws may be made by the affirmative vote of a majority of the Board of Directors, at any annual or regular meeting of the Board of Directors, or at any special meeting of the Board of Directors if notice of the proposed alteration or repeal, or Bylaws or Bylaws to be made, be contained in the notice of such special meeting. |
| | Notwithstanding anything contained in these Bylaws to the contrary, the affirmative vote of the holders of at least 80% of the voting power of all of the shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to alter, amend or repeal Section 4 or Section 6 of Article II, or Section 1, Section 2 or Section 3 of Article III, of these Bylaws. |
Proposed Amendments to Certificate and Bylaws
This Proposal 5 proposes to amend the Certificate and Bylaws so that future amendments to certain provisions within the Certificate and the Bylaws can be approved by a two-thirds vote of the outstanding shares rather than an 80% supermajority vote. Specifically, in this Proposal 5, we propose:
| n | to amend the 80% supermajority voting requirement in Article V of the Certificate by specifying that the applicable threshold to amend the Bylaw provision relating to special meetings of shareholders is two-thirds. As a result, any future action by shareholders to alter, amend or repeal the Bylaw relating to calling a special meeting of shareholders would require approval by the affirmative vote of at least two-thirds of the voting power of the then outstanding Voting Stock, voting together as a single class; |
| n | to amend the 80% supermajority voting requirement in Article VII of the Certificate by replacing the reference to “80 percent” with “two-thirds”, solely with respect to the provision in Article VII concerning the ability to call special meetings of shareholders. As a result, any future action by shareholders to alter, amend or repeal the provisions in the Certificate relating to calling a special meeting of shareholders would require approval by the affirmative vote of at least two-thirds of the voting power of the then outstanding Voting Stock, voting together as a single class; and |
| n | to amend the 80% supermajority voting requirement in Article VI of the Bylaws by specifying that with respect to Section 4 of Article II of the Bylaws, the applicable vote threshold is two-thirds to amend. As a result, any future action by shareholders to alter, amend or repeal the Bylaw relating to calling a special meeting of shareholders would require approval by the affirmative vote of at least two-thirds of the voting power of the then outstanding Voting Stock, voting together as a single class. |
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Additional Information
Our Board is committed to good governance practices and this Proposal 5 is the result of our Board’s ongoing review of our corporate governance principles. As part of that review, our Board recognizes that the chances of obtaining shareholder approval of the Shareholder Meeting Proposal described below in Proposal 6 in the future (if it is not approved at the 2019 annual meeting) may be improved if the changes to the Certificate and Bylaws described in this Proposal 5 are approved by our shareholders. Although Proposal 5 and Proposal 6 will each require the affirmative vote of holders of at least 80% of our outstanding shares of common stock, the approval of one of these proposals is not conditioned on the other, and if Proposal 5 is passed but Proposal 6 is not, then ifpersons has a direct or indirect material interest. Transactions that are reviewed as related party transactions by us are transactions that involve amounts that would exceed $120,000 (the current threshold required to be disclosed in the futureProxy Statement under SEC regulations) and certain other transactions. Pursuant to our Code of Conduct, employees and directors have a duty to report any potential conflicts of interest to the appropriate level of management or to the Governance Committee. Our Board and NEOs respond to a quarterly related party transaction questionnaire prepared by our corporate legal department. We then evaluate these quarterly reports along with responses to our annual director and officer questionnaires for any indication of possible related party transactions. Our legal staff is primarily responsible for the development and implementation of processes and controls to obtain information from the directors and executive officers with respect to related party transactions. If a transaction is deemed by us to be a related party transaction, the information regarding the transaction is discussed with the Board. As required under the SEC rules, transactions that are determined to be directly or indirectly material to Hecla or a related party are disclosed in our Proxy Statement.
On February 19, 2020, we again seek approvalcompleted an underwritten offering and sale of $475.0 million aggregate principal amount of the Special Meeting Proposal, it would only need to be approved by the lower two-thirds vote rather than the current 80% supermajority vote. After receiving shareholder input and the recommendation of the Governance Committee, our Board, at its meeting on February 20, 2019, approved and declared advisable and in our shareholders’ best interests the amendments to the Certificate and Bylaws described in this Proposal 5.
The above description is a summary and is qualified by and subject to the full text of the proposed amendments to our Certificate and Bylaws, which are set forth inAppendix BandAppendix C, respectively. Additions of text contained in the appendices are indicated by underlining and deletions of text are indicated by strikeouts.
Required Vote
Approval of this proposal requires the affirmative vote of 80% of our outstanding shares of common stock. Abstention and broker non-votes have the effect of a vote against this proposal.
You may vote “FOR,” “AGAINST,” or “ABSTAIN” on the proposal to approve the amendments to our Certificate of Incorporation and Bylaws to remove certain 80% supermajority voting provisions.
| | | | | | | | Our Board recommends that shareholders vote“FOR”the amendments to our Certificate of Incorporation and Bylaws to remove certain 80% supermajority voting requirements and replace them with two-thirds voting standards as described above. | | | | | | |
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| PROPOSAL 6 | | | Approval of Amendments to Our Certificate of Incorporation and Bylaws to Permit Shareholders to Call Special Meetings of Shareholders Under Certain Circumstances | |
Overview
We are seeking the approval of our shareholders to amend our Certificate and Bylaws to add a right permitting shareholders who have held at least a 25% “net long position” in our outstanding common stock for at least 120 days to call special meetings of shareholders, subject to the conditions set forth in our Bylaws, as described below. Currently, shareholders do not have the right to call special shareholder meetings; only our Board can call such meetings. If approved by the required 80% supermajority vote, this proposal would become effective upon the filing of an amendment to our Certificate with the Secretary of State of Delaware, which we intend to do promptly after the required shareholder approval is obtained, at which time the related amendment to our Bylaws would also become effective.
We proposed these same amendments for shareholder approval at our 2014, 2016, 2017 and 2018 Annual Shareholder Meetings. While shareholders owning approximately 41%, 47%, 55% and 56% of our Voting Stock, respectively, voted in favor of these amendments, the level of support was not sufficient to approve the amendments. SeeRequired Vote, Our Board’s Recommendation and Additional Information below. Because our Board of Directors continues to believe that these amendments are appropriate, we are again asking shareholders to vote “For” these proposed amendments. In addition, under Proposal 5, we are seeking the approval of our shareholders to amend our Certificate and Bylaws to remove certain – but not all – 80% supermajority voting requirements that impact who may call special meetings of shareholders and replace them with two-thirds voting standards. If Proposal 5 is passed, we believe it will improve the chances that an amendment permitting shareholders to call special meetings of shareholders under certain circumstances, if proposed in the future, would be adopted (if Proposal 6 is not adopted at the 2019 Annual Meeting)Company’s 7.250% Senior Notes due 2028 (the “Notes”). However, even if Proposal 5 is approved by the required vote of our shareholders, there is no assurance that this Proposal 6 will be approved by the required vote of our shareholders. SeeRequired Voteon page 70.
Proposed Amendments to Certificate and Bylaws
This Proposal 6 proposes to amend the Certificate and Bylaws to implement the right of shareholders who have held at least a 25% “net long position” in our outstanding common stock for at least 120 days to call special meetings of shareholders, subject to compliance with the requirements set forth in our Bylaws, as proposed to be amended.
Our Board believes that establishing an ownership threshold of at least 25% in order for a shareholder (or group of shareholders) to request a special meeting strikes an appropriate balance between enhancing shareholder rights and avoiding the situations that could arise if the threshold were set so low that a small minority of shareholders, including shareholders with special interests, could force the Company to incur the time and expense of convening a special meeting to consider a matter of little or no interest to other shareholders. Organizing and preparing for a special meeting involves significant attention of our Board and management, which could divert their attention from performing their primary functions: to oversee and operate our business in the best interests of our shareholders. In addition, for every special meeting of shareholders, the Company incurs significant costs. We will continue to maintain our existing governance mechanisms that afford management and our Board the ability to respond to proposals and concerns of all shareholders, regardless of the level of share ownership.
Establishing a 25% “net long position” threshold for the right to call a special meeting would ensure that matters proposed for consideration have significant support among our shareholders. A shareholder’s “net long position” is generally defined as the amount of common stock in which the shareholder holds a positive (also known as “long”) economic interest, reduced by the amount of common stock in which the shareholder holds a negative (also known as “short”) economic interest. In addition, requiring that shareholders must have held their stock for at least 120 days helps to ensure that their economic interest in the Company’s affairs is more than transitory. Also, during the required 120 day holding period, the Company will continue to make disclosure through its statutory filings,which may provide shareholders with information that might avoid an unnecessary call for special meetings of shareholders.
The proposed amendment to our Bylaws contains procedural and informational requirements for shareholders to call a special meeting, including without limitation, that (i) no business may be conducted at the special meeting except asAs set forth in the Company’s noticetable below, certain of meeting,our directors and officers purchased Notes from the underwriters, as follows:
| | | | | | | | Name | | Title | | Notes
Purchased | Phillips S. Baker, Jr. | | Director, President and CEO | | | $ | 1,500,000 | | Lauren M. Roberts | | Senior Vice President and Chief Operating Officer | | | $ | 1,000,000 | | Terry V. Rogers | | Director | | | $ | 100,000 | | Catherine J. Boggs | | Director | | | $ | 100,000 | | George R. Nethercutt, Jr. | | Director | | | $ | 100,000 | |
Because certain of our directors expressed an interest in purchasing the Notes, and four directors did purchase Notes (the “Participating Directors”), in addition to the procedures set forth in the first paragraph of this section, the Board created an independent committee of directors consisting of Ted Crumley and Charles B. Stanley (the “Pricing Committee”) to determine, among other things, (i) whether to proceed with the Notes offering (the “Offering”), (ii) a special meeting will not be held if similar business iswhether to be covered at an annual or special meeting calledapprove participation in the Offering by the BoardParticipating Directors (who indicated they would only participate if, and only up to be held within 90 days after the special meeting request is receivedamount, approved by the Secretary,Pricing Committee), and (iii) no shareholder special meeting request maythe final terms of the Offering, including the size of the Offering, the price at which the Notes would be made during the period commencing 90 days priorsold to the first anniversaryunderwriters, the interest rate of the dateNotes, and the other terms and conditions of the immediately preceding annual meetingNotes. In December 2007, we created the Hecla Charitable Foundation (the “HCF”), which has provided and ending on the dateintends to continue to provide grants to other organizations for charitable and educational purposes. Mr. Phillips S. Baker, Jr., our Chief Executive Officer, serves as a director of the next annual meeting, (iv)HCF, and Luther J. Russell, our Vice President – External Affairs, serves as President and as a special meeting request cannot cover business substantially similar to what was covered at an annual or special meeting held not more than 120 days before the special meeting request was received by the Table of Contents
Secretary, (v) any shares beneficially owned or held of record asdirector of the dateHCF. In December 2007, our Board approved a contribution of 550,000 shares of our common stock to the requestHCF. Since 2007, the HCF has sold 279,860 shares of our common stock. In May 2020, our Board approved a contribution of 650,000 shares of our common stock to the HCF. Cash contributions totaling $2.0 million and sold$1.5 million were made by the requesting holder priorCompany to the meeting will be treated as a revocation ofHCF during 2011 and 2010, respectively. The funds from the request to the extentsale of the shares sold and (vi) the requesting shareholder’s notice must include information (as specified in the amendment to the Bylaws) as to the business proposed to be conducted, as to each nominee (if applicable), and as to the shareholder giving notice and the beneficial owner, if any, on whose behalf the proposaladditional cash were put into various investment accounts. The HCF is made.
Additional Information
Our Board is committed to good governance practices and this Proposal 6 is the resultcurrently operating in a self-sufficient manner. The HCF holds 920,140 shares of our Board’s ongoing review of our corporate governance principles. After receiving shareholder input, and based upon the recommendation of the Governance Committee, our Board, at its meeting on February 20, 2019, approved the amendments to the Certificate and Bylaws described in this Proposal 6.
The above description is a summary and is qualified by and subject to the full text of the proposed amendments to our Certificate and Bylaws, which are set forth inAppendix D andAppendix E, respectively. Additions of text contained in the appendices are indicated by underlining and deletions of text are indicated by strikeouts.
Required Vote
Approval of this proposal requires the affirmative vote of 80% of our outstanding shares of common stock. Abstention and broker non-votes have the effect of a vote against this proposal.
You may vote “FOR,” “AGAINST,” or “ABSTAIN” on the proposal to approve the amendments to our Certificate of Incorporation and Bylaws to permit shareholders to call special meetings of shareholders under certain circumstances.
| | | | | | | | Our Board recommends shareholders vote“FOR” the amendments to our Certificate of Incorporation and Bylaws to permit shareholders to call special meetings of shareholders under certain circumstances. | | | | | | |
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| PROPOSAL 7 | | | Approval of Amendments to Our Certificate of Incorporation and Bylaws to Declassify Our Board of Directors and Provide for the Annual Election of Directors | |
We are seeking the approval of our shareholders to amend our Certificate and Bylaws to eliminate the classified structure of our Board of Directors. The Board of Directors adopted, and recommends that shareholders approve, an amendment to Article VI of our Certificate that would eliminate the classified structure of the Board of Directors and provide for annual election of directors (the “Declassification Amendment”). If the Declassification Amendment is approved, the Board intends to cause the Declassification Amendment to be filed with the Secretary of State of the State of Delaware following the 2019 Annual Meeting and adopt conforming amendments to the Company’s Bylaws and Corporate Governance Guidelines. If the Declassification Amendment is not approved, our Board will remain classified. The proposed revisions to the Certificate and Bylaws are included in this Proxy Statement asAppendix F andAppendix G, respectively. Additions of text contained in the appendices are indicated by underlining and deletions of text are indicated by strikeouts.
Rationale for Declassification
In late 2017, a shareholder submitted a non-binding proposal to declassify the Board of Directors. The Board approved inclusion of that proposal on the ballot at the 2018 Annual Meeting of Shareholders. At the meeting, 94% of the votes cast and 51% of the outstanding shares of common stock were in favoras of that proposal. Considering the voting result and the Board’s recognition that the sentiment of shareholders and institutional investor groups is generally in favor of the annual election of directors, the Board decided to take the next step in declassifying the Board by approving the Declassification Amendment and placing it on the ballot for the 2019 Annual Meeting of Shareholders.
Proposed Declassification
Article VI, Section 1 of the Company’s Certificate currently provides that the Company’s directors are divided into three classes, with the term of one class expiring each year, and the directors in each class serving three-year terms.December 31, 2020. The Declassification Amendment would not affect the term of the class of directors elected at this 2019 Annual Meeting, or the terms of classes elected in 2018 and 2017. If adopted, the Declassification Amendment would mean that the successors of the directors whose terms expire at the 2020 Annual Meeting will be elected for terms expiring at the 2021 Annual Meeting. At the 2021 Annual Meeting, the successors of directors whose terms expire at that meeting will be elected for terms expiring at the 2022 Annual Meeting. At the 2022 Annual Meeting, and each subsequent annual meeting, the successors of each director whose terms expire at that meeting will be elected for terms expiring at the next annual meeting.
The Declassification Amendment would not change the present number of directors or the Board’s authority to change that number and to fill any vacancies or newly created directorships. The Declassification Amendment would also provide that, upon the annual election of the entire Board at the 2022 Annual Meeting of Shareholders, a director appointed to a vacancy or new directorship would serve for a term expiring at the next Annual Meeting of Shareholders following his or her appointment.
Required Vote
Approval of this proposal requires the affirmative vote of 80% of our outstanding shares of common stock. Abstentions and broker non-votes have the effect of a vote against this proposal.
You may vote “FOR,” “AGAINST,” or “ABSTAIN” on the proposal to declassify our Board.
| | | | | | | | Our Board recommends shareholders vote“FOR” the amendment to the Certificate of Incorporation and Bylaws to declassify the Board. | | | | | | |
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STOCK OWNERSHIP INFORMATION
Guidelines and Timing of Equity Awards. We have no program, plan or practice to time the grant of stock-based awards relative to the release of material non-public information or other corporate events. All equity grants to executive officers are approved by the Compensation Committee at regularly scheduled meetings or, in limited cases involving key recruits or promotions, by a special meeting or unanimous written consent. The grant date is the meeting date, or a fixed, future date specified at the time of the grant. Under the terms of our 2010 Stock Incentive Plan, the fair market value of any award is determined bythose shares based on the closing price of our common stock on the NYSE on December 31, 2020 ($6.48), was $5,962,507.
In 2020, we did not make any contribution to any charitable organization, of which a director served as an executive officer, which exceeded the dategreater of grant$1 million or a fixed, future date specified at2% of the timecharitable organization’s consolidated gross revenues. 100 www.hecla-mining.com
Other Matters Political Contributions and Engagement Government policy is one of grant. In addition, the committee typically makes equity grantsmost powerful external forces affecting us today. New laws and changes to NEOsexisting laws can fundamentally impact the Company’s operations and the markets where it does business – and in turn, our bottom line, thereby affecting us and our employees, retirees, communities, and shareholders. It is important for government leaders to understand the impact of such actions. Because the impact of government policy is so critical to our survival and success, we participate in the first half of the year. Stock Ownership Guidelines
To more closely alignpolitical process and advocate in a responsible and constructive manner on issues that advance the Company’s non-management directors’ financial interests with thosegoals and protect shareholder value. We are committed to the highest standard of the shareholders,ethical conduct in June 2012, the Compensation Committeeour involvement in policymaking and Board adopted stock ownership guidelines for our non-management directors. Under these guidelines, each non-management director is required to own shares of common stock (which includes shares held underpolitical process. We maintain the Hecla Mining Company Stock PlanPolitical Action Committee (“Hecla PAC”), which is a forum for Nonemployee Directors) valued at three times his or her annual cash retainer within five yearsour employees and directors to voluntarily contribute to a fund that supports the election of their appointmentcandidates to Congress that support a regulatory and legislative environment constructive to the Board. Any directors appointed or elected after June 2012operation and development of our mines. The Hecla PAC is organized under the provisions of the Federal Election Campaign Act of 971 and the amendments of 1974, 1976 and 1979. Decisions about contributions to specific federal candidates are expected to achieve their expected value requirement within five yearsmade by members of his or her appointment or electionthe Hecla PAC. In total, our employees contributed approximately $28,534 to the Board.
In the event a non-management director’s cash retainer increases, he or she will have three years from the date of the increaseHecla PAC in 2020, and our directors contributed $18,700 in 2020. The Hecla PAC then contributed those funds to acquire any additional shares needed to meet these guidelines.
Similarly, we believe that it is important to encourage our executive officers to hold a material amount of our common stockfederal candidates, state and to link their long-term economic interest directly to that of our shareholders. To achieve this goal, in June 2012, the committeelocal parties, and Board established stock ownership guidelinesassociations who are advocates for the Company’s senior management. The guidelines fornatural resources industry. We file all required Hecla PAC contribution reports with the CEO are six times base salary, and for the other executive officers, two times base salary. These guidelines shall be achieved by the later of (i) June 2017 or (ii) five years after the executive officer is hired to such position. Unvested RSUs and shares held directly are considered owned for purposes of the guidelines. If an executive officer becomes subject to a greater ownership amount due to a promotion or an increase in base salary, he or she must meet the higher ownership requirement within three years.Federal Election Commission.
Because of fluctuations in the Company’s stock price, in February 2016, the committee and the Board amended the stock ownership guidelines to provide a valuation methodology that consists of valuing the shares held by using the average closing price of the Company’s common stock on the NYSE for the previous calendar year. Because share prices of all companies are subject to market volatility, the Board believes that it would be unfair to require an executive or Board member to buy more shares simply because Hecla’s stock price drops. In the event there is a significant decline in Hecla’s stock price that causes an executive’s or Board member’s holdings to fall below the applicable threshold, the executives or Board members will not be required to purchase additional shares to meet the threshold, but they generally may not sell or transfer any shares until the threshold has again been achieved.
The following tables summarize the non-management director and NEO stock ownership guidelines and their status as of December 31, 2018, based on the average closing price of our common stock on the NYSE for calendar year 2018 ($3.3225). As of December 31, 2018, all NEOs met the guidelines. In the calculations for our NEOs, we include shares directly held and unvested RSUs. We do not include unexercised stock options or unvested performance-based shares.
Non-Management Director Stock Ownership as of December 31, 2018
| Director | | Annual
Retainer
($) | | X
Annual
Retainer | | Total Value
of Shares
to be Held
($) | | Shares
Held
Directly
(#) | | Shares
Held in
Directors
Trust(1)
(#) | | Total
Shares
(#) | | Total Value of
Shares Held
by Director
($3.3225)(2)
($) | | Meets
Guidelines | | Boggs(3) | | 98,000 | | 3x | | 294,000 | | 0 | | 48,550 | | 48,550 | | 161,307 | | No | | Crumley | | 218,000 | | 3x | | 654,000 | | 126,536 | | 128,422 | | 254,958 | | 847,098 | | Yes | | Johnson(4) | | 98,000 | | 3x | | 294,000 | | 17,273 | | 56,083 | | 73,356 | | 243,725 | | No | | Nethercutt | | 98,000 | | 3x | | 294,000 | | 31,686 | | 70,071 | | 101,757 | | 338,088 | | Yes | | Ralbovsky(4) | | 98,000 | | 3x | | 294,000 | | 17,273 | | 56,083 | | 73,356 | | 243,725 | | No | | Rogers | | 98,000 | | 3x | | 294,000 | | 100,536 | | 97,469 | | 198,005 | | 657,872 | | Yes | | Stanley | | 98,000 | | 3x | | 294,000 | | 100,536 | | 97,469 | | 198,005 | | 657,872 | | Yes |
| | (1) | As of December 31, 2018, the total amount of shares held in trust pursuant to the terms of the Stock Plan for Nonemployee Directors by each of the above-named directors. | (2) | The value of shares held is determined by using the average closing price of the Company’s common stock for the calendar year on the NYSE, which for 2018 was $3.3225. | (3) | Ms. Boggs joined the Board in January 2017 and has until January 2022 to comply with the guidelines. | (4) | Messrs. Johnson and Ralbovsky joined the Board in March 2016 and have until January 2021 to comply with the guidelines. |
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NEO Stock Ownership as of December 31, 2018
| NEO | | Annual
Base
Salary
($) | | X
Annual
Base
Salary | | Total
Value of
Shares to
be Held
($) | | Shares
Held
Directly
(#) | | | Unvested
RSUs
(#) | | Total
Shares
(#) | | Total Value
of Shares
Held by NEO
at 12/31/18
($3.3225)(1)
($) | | Meets
Guidelines | | | Baker | | 635,000 | | 6x | | 3,810,000 | | 3,548,020 | (2),(3) | | 225,213 | | 3,773,233 | | 12,536,567 | | Yes | | | Hall | | 380,000 | | 2x | | 760,000 | | 134,884 | | | 135,970 | | 270,854 | | 899,912 | | Yes | | | Radford | | 416,000 | | 2x | | 832,000 | | 573,400 | (3) | | 182,811 | | 756,211 | | 2,512,511 | | Yes | | | McDonald | | 275,000 | | 2x | | 550,000 | | 437,571 | | | 122,073 | | 559,644 | | 1,859,417 | | Yes | | | Brown | | 264,000 | | 2x | | 528,000 | | 111,942 | | | 90,085 | | 202,027 | | 671,235 | | Yes | |
| | (1) | The value of shares held is determined by using the average closing price of the Company’s common stock for the calendar year on the NYSE, which for 2018 was $3.3225. | (2) | Includes 1,758,085 shares deferred under the KEDCP. | (3) | Includes Hecla Mining Company common shares held in their 401(k) account. |
Additional information regarding shares held by the non-management directors and our NEOs is included in theSecurity Ownership of Certain Beneficial Owners and Management table that follows.
Security Ownership of Certain Beneficial Owners and Management
The following table shows the number and percentage of the shares of common stock beneficially owned by each current director and each executive officer of Hecla, and by all current directors and executive officers as a group, as of March 25, 2019. On that date, all such persons together beneficially owned an aggregate of ____% of the outstanding shares of our common stock. Except as otherwise indicated, the directors, nominees and officers have sole voting and investment power with respect to the shares listed, including shares which the individual has the right to acquire, but has not done so.
| | | | Shares Beneficially Owned | | | | Name of Beneficial
Owner | | Title of
Class | | Number | | | Nature | | | Percent of
Class | | Phillips S. Baker, Jr. | | | | 2,429,075 | (1) | | Direct | (2) | | | | President and CEO | | | | 24,843 | | | 401(k) Plan | | | | | | | | | 225,213 | | | RSU | (3) | | | | | | | | 1,758,085 | | | Deferred | (4) | | | | | | | | 258,873 | | | Performance-based | (5) | | | | | | Common | | 4,696,089 | | | | | | ____ | % | Robert D. Brown | | | | 279,681 | | | Direct | (2) | | | | Vice President – Corporate Development | | | | 90,085 | | | RSU | (3) | | | | | | | | 42,461 | | | Performance-based | (5) | | | | | | Common | | 412,227 | | | | | | * | | Lindsay A. Hall | | | | 371,326 | | | Direct | (2) | | | | Senior Vice President and Chief Financial Officer | | | | 135,970 | | | RSU | (3) | | | | | | | | 63,524 | | | Performance-based | (5) | | | | | | Common | | 570,820 | | | | | | * | | Dr. Dean W.A. McDonald | | | | 647,245 | | | Direct | (2) | | | | Senior Vice President – Exploration | | | | 122,073 | | | RSU | (3) | | | | | | | | 47,572 | | | Performance-based | (5) | | | | | | Common | | 816,890 | | | | | | * | | Lawrence P. Radford | | | | 843,589 | (6) | | Direct | (2) | | | | Senior Vice President – Operations | | | | 24,142 | | | 401(k) Plan | | | | | | | | | 182,811 | | | RSU | (3) | | | | | | | | 98,772 | | | Performance-based | (5) | | | | | | Common | | 1,149,314 | | | | | | * | | Catherine J. Boggs | | | | 48,550 | | | Indirect | (7) | | | | Director | | Common | | 48,550 | | | | | | * | | Ted Crumley | | | | 126,536 | | | Direct | (2) | | | | Director | | | | 128,442 | | | Indirect | (7) | | | | | | Common | | 254,978 | | | | | | * | | George R. Johnson | | | | 17,273 | | | Direct | (2) | | | | Director | | | | 56,083 | | | Indirect | (7) | | | | | | Common | | 73,356 | | | | | | * | |
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| | | | Shares Beneficially Owned | | | | Name of Beneficial
Owner | | Title of
Class | | Number | | | Nature | | | Percent of
Class | | George R. Nethercutt, Jr. | | | | 31,686 | | | Direct | (2) | | | | Director | | | | 70,071 | | | Indirect | (7) | | | | | | Common | | 101,757 | | | | | | * | | Stephen F. Ralbovsky | | | | 17,273 | | | Direct | (2) | | | | Director | | | | 56,083 | | | Indirect | (7) | | | | | | Common | | 73,356 | | | | | | * | | Terry V. Rogers | | | | 100,536 | | | Direct | (2) | | | | Director | | | | 97,469 | | | Indirect | (7) | | | | | | Common | | 198,005 | | | | | | * | | Charles B. Stanley | | | | 100,536 | | | Direct | (2) | | | | Director | | | | 97,469 | | | Indirect | (7) | | | | | | Common | | 198,005 | | | | | | * | | All current directors, director nominees and executive
officers as a group (13 individuals) | | Common | | 8,593,347 | | | | | | ____ | % |
| | * | Represents beneficial ownership of less than one percent, based upon ____________ shares of our common stock issued and outstanding as of March 25, 2019. | (1) | Includes 223,642 shares held jointly with Mr. Baker’s spouse, as to which Mr. Baker shares voting and investment power. | (2) | “Direct” means shares held of record and any shares beneficially owned through a trust, broker, financial institution, or other nominee, and with respect to which the officer or director has sole or shared voting power. | (3) | “RSU” means restricted stock units awarded under the KEDCP or 2010 Stock Incentive Plan that have not vested. See footnote 1 of theOutstanding Equity Awards at Fiscal Year-End for 2018 on page 52. | (4) | “Deferred Shares” means stock that has vested or been awarded but is deferred until a distributable event under the terms of the KEDCP. | (5) | “Performance-based Shares” means performance-based equity, based on a three-year TSR. SeePerformance-based Shares on page 42 andOutstanding Equity Awards at Fiscal Year-End for 2018 table on page 52. | (6) | All shares are jointly held with Mr. Radford’s spouse, as to which Mr. Radford shares voting and investment power. | (7) | “Indirect” means shares credited to each independent director, all of which are held indirectly in trust pursuant to our Stock Plan for Nonemployee Directors. Each director disclaims beneficial ownership of all shares held in trust under the stock plan. SeeCompensation of Non-Management Directors on page 22. |
To our knowledge, as of March 25, 2019, the only “beneficial owners” (as such term is defined in Rule 13d-3 under the Exchange Act) of more than 5% of our common stock entitled to vote at the Annual Meeting are shown in the table below:
Title of Class | | Name & Address of
Beneficial Owner | | Amount & Nature of
Beneficial Ownership | | Percent of
Class | | Common | | Van Eck Associates Corporation(1) | | 60,487,065 | | ____ | % | | | 666 Third Ave. – 9thFloor | | | | | | | | New York, NY 10017 | | | | | | Common | | The Vanguard Group, Inc.(2) | | 43,771,281 | | ____ | % | | | 100 Vanguard Blvd. | | | | | | | | Malvern, PA 19355 | | | | | | Common | | Dimensional Fund Advisors LP(3) | | 36,181,949 | | ____ | % | | | Building One | | | | | | | | 6300 Bee Cave Rd. | | | | | | | | Austin, TX 78746 | | | | | | Common | | BlackRock, Inc.(4) | | 32,792,082 | | ____ | % | | | 55 East 52ndStreet | | | | | | | | New York, NY 10055 | | | | | |
| | (1) | Based solely on a Schedule 13G/A filed on February 11, 2019, with the SEC by Van Eck Associates Corporation. Van Eck Associates Corporation has sole voting and dispositive power with respect to all shares. | (2) | Based solely on a Schedule 13G/A filed on February 11, 2019, with the SEC by The Vanguard Group, Inc. The Vanguard Group, Inc. has sole voting power with respect to 509,130 shares, shared voting power with respect to 103,339 shares, sole dispositive power with respect to 43,217,554 shares, and shared dispositive power with respect to 553,727 shares. | (3) | Based solely on a Schedule 13G/A filed on February 9, 2018, with the SEC by Dimensional Fund Advisors LP. Dimensional Fund Advisors LP has sole voting power with respect to 35,383,060 shares and sole dispositive power with regard to 36,181,949 shares. | (4) | Based solely on a Schedule 13G/A filed on February 4, 2019, with the SEC by BlackRock, Inc. BlackRock, Inc. has sole voting power with respect to 31,757,534 shares and sole dispositive power with regard to 32,792,082 shares. |
SECTIONDelinquent Section 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCEReports
Section 16(a) of the Exchange Act requires our directors, executive officers, and holders of more than 10% of our common stock to file with the SEC reports regarding their ownership and changes in their ownership of our common stock. These persons are required by the SEC to furnish us with copies of all Section 16(a) forms they file. The SEC has designated specific due dates for these reports, and we must identify in this Proxy Statement those persons who did not file these reports when due. To our knowledge, and based solely on our review of copies of such forms, or written representations from certain reporting persons that no such forms were required, we believe that during the calendar year ended December 31, 2018,2020, all filing requirements applicable to our officers, directors and greater than 10% owners of our common stock were timely satisfied. Table of Contents
GENERAL INFORMATION ABOUT THE MEETING
Record Date, Shares Outstandingsatisfied, with the exception of: (i) Mr. Sienko filed a late Form 4 on April 6, 2020 to report shares granted to him on March 31, 2020; (ii) Mr. Brown filed a late Form 4 on April 6, 2020 to report shares granted to him on March 31, 2020; (iii) Mr. Hall filed a late Form 4 on April 6, 2020 to report shares granted to him on March 31, 2020; (iv) Mr. Baker file a late Form 4 on April 6, 2020 to report shares granted to him on March 31, 2020; and Quorum
If you were(v) Mr. Roberts filed a holder of Hecla common stock either as a “shareholder of record” or as the “beneficial owner” oflate Form 4 on April 6, 2020 to report shares held in street namegranted to him on March 31, 2020, and shares he deferred to our Key Employee Deferred Compensation Plan as of the Record Date, you may vote your shares at the Annual Meeting. As of the Record Date, ____________ shares of common stockMarch 31, 2020. The late filings were outstanding and entitleddue to vote at the Annual Meeting. Shares of our common stock that are held by us in our treasury are not counted as shares outstanding and will not be voted. Each shareholder has one vote for each share of common stock held as of the Record Date.
A quorum must be present in order for business to be conducted at the Annual Meeting. A quorum consists of the presence at the Annual Meeting, in person or represented by proxy, of a majority of the outstanding shares of our common stock as of the Record Date. Shares represented by proxies marked “Abstain” and “broker non-votes” are counted in determining whether a quorum is present for the transaction of business at the Annual Meeting.
Broker Non-Votes
A “broker non-vote” occurs when a broker or other nominee who holds shares in street name for a client returns a proxy but provides no instruction as to how shares should be voted on a particular “non-routine” matter. The Dodd-Frank Act and stock exchange rules prevent brokers from casting votes on “non-routine” matters.
Votes Required for the Proposals
Under NYSE rules, if our shares are held in “street name” and you do not indicate how you wish to vote, your broker is only permitted to exercise its discretion to vote your shares on certain “routine” matters. Proposal 2 (Ratification of Appointment of BDO USA, LLP) is a “routine” matter. Proposal 1 (Election of Directors), Proposal 3 (Approval of our Named Executive Officer Compensation), Proposal 4 (Approval of Amendments and Restatement of our Hecla Mining Company 2010 Stock Incentive Plan), Proposal 5 (Approval of Amendments to our Certificate of Incorporation and Bylaws to Remove Certain 80% Supermajority Voting Provisions), Proposal 6 (Approval of Amendments to our Certificate of Incorporation and Bylaws to Permit Shareholders to Call Special Meetings Under Certain Circumstances), and Proposal 7 (Approval of Amendments to our Certificate of Incorporation and Bylaws to Declassify our Board of Directors) are “non-routine” matters. Accordingly, if you do not direct your broker how to vote for directors in Proposal 1 or how to vote for Proposals 3, 4, 5, 6 and 7, your broker is not permitted to exercise discretion and is not permitted to vote your shares on such matters. This is called a “broker non-vote.”
Proposal 1 – Election of Class III Directors. Pursuant to our Bylaws, each director will be electedadministrative oversight by the affirmative vote of a majority of votes cast at the Annual Meeting, whether in person or by proxy. Under a majority of votes cast standard, the shares voted “for” a nominee must exceed the number voted “against” that nominee. Shareholders may vote “for,” “against” or “abstain” with respect to this proposal. Abstentions and broker non-votes are not counted as votes cast, and thus will have no effect on the outcome of the vote. A properly executed proxy card marked “AGAINST” with respect to the election of directors will have an effect on the outcome of the vote. If the votes cast “against” an incumbent director exceeds the number of votes cast “for” the director, the director will not be elected, will remain on the board as a holdover director and must stand for election at the next annual meeting of shareholders, absent his or her earlier resignation or removal. See “Corporate Governance Guidelines” on page 13 for a description of our director resignation policy.Company’s stock administrator.
You may vote “FOR,” “AGAINST,” or “ABSTAIN” on the nominees for election as directors.
Proposal 2 – Ratification of the Appointment of BDO USA, LLP as our Independent Registered Public Accounting Firm for 2019. Under the Sarbanes-Oxley Act of 2002, the Audit Committee has the sole authority to appoint the independent registered public accounting firm for the Company. However, the Board feels that it is important for the shareholders to approve the selection of BDO USA, LLP. This proposal requires the affirmative vote of a majority of votes cast at the Annual Meeting, whether in person or by proxy. Abstentions and broker non-votes are not counted as votes cast, and thus will have no effect on the outcome of the vote. Votes marked “against” will have an effect on the outcome of the vote. The appointment of our independent registered public accounting firm for calendar year 2019 is considered a “routine” matter and brokers that are not directed how to vote are permitted to vote shares held in street name for their customers on this proposal.
You may vote “FOR,” “AGAINST,” or “ABSTAIN” on the proposal to ratify the appointment of BDO USA, LLP as our independent registered public accounting firm for 2019.
Proposal 3 – Approval, on an Advisory Basis, of our Executive Compensation. For more information on approval of our executive compensation see “Proposal 3 – Approval, on an Advisory Basis, of our Executive Compensation” beginning on page ___. The advisory vote on executive compensation will require the affirmative vote of a majority of votes cast at the Annual Meeting, whether in person or by proxy. Under a majority of votes cast standard, the shares voted “for” Proposal 3 must exceed the number voted “against” Proposal 3 for the proposal to be approved. Abstentions and broker non-votes are not counted as votes cast for this purpose and will have no effect on the outcome of the vote. Votes marked “against” will have an effect on the outcome of the vote. Even though your vote is advisory and therefore will not be binding on the Company, the Board’s Compensation Committee will review the voting results and take them into consideration when making future decisions regarding executive compensation.
You may vote “FOR,” “AGAINST,” OR “ABSTAIN” on the proposal to approve the compensation of our NEOs.
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Proposal 4 – Approval of Amendments to and Restatement of our Hecla Mining Company 2010 Stock Incentive Plan.Approval of this proposal will require the affirmative vote of a majority of votes cast at the Annual Meeting, whether in person or by proxy. Under a majority votes cast standard, the shares voted “for” Proposal 4 must exceed the number voted “against” Proposal 4 for the proposal to be approved. Abstentions and broker non-votes are not counted as votes cast for this purpose and will have no effect on the outcome of the vote. Votes marked “against” will have an effect on the outcome of the vote.
Proposal 5 – Approval of Amendments to our Certificate of Incorporation and Bylaws to Remove Certain 80% Supermajority Voting Provisions. Approval of this proposal requires the affirmative vote by the holders of not less than 80% of our outstanding shares of common stock. Abstentions and broker non-votes have the effect of a vote against this proposal.
You may vote “FOR,” “AGAINST,” OR “ABSTAIN” on the proposal to approve the amendments to our Certificate of Incorporation and Bylaws to Remove Certain 80% Supermajority Voting Provisions.
Proposal 6 – Approval of Amendments to our Certificate of Incorporation and Bylaws to Permit Shareholders to Call Special Meetings of Shareholders Under Certain Circumstances. Approval of this proposal requires the affirmative vote by the holders of not less than 80% of our outstanding shares of common stock. Abstentions and broker non-votes have the effect of a vote against this proposal.
You may vote “FOR,” “AGAINST,” OR “ABSTAIN” on the proposal to approve the amendments to our Certificate of Incorporation and Bylaws to Permit Shareholders to Call Special Meetings of Shareholders Under Certain Circumstances.
Proposal 7 – Approval of Amendments to our Certificate of Incorporation and Bylaws to Declassify our Board of Directors and Provide for the Annual Election of Directors. Approval of this proposal requires the affirmative vote by the holders of not less than 80% of our outstanding shares of common stock. Abstentions and broker non-votes have the effect of a vote against this proposal.
You may vote “FOR,” “AGAINST,” OR “ABSTAIN” on the proposal to declassify our Board.
Discretionary voting by proxies on other matters. Aside from the: (i) election of three directors; (ii) ratification of the appointment of BDO USA, LLP; (iii) approval of executive compensation; (iv) approval of amendments and restatement of our 2010 Stock Incentive Plan; (v) approval of amendments to our Certificate of Incorporation and Bylaws to remove certain 80% supermajority voting provisions; (vi) approval of amendments to our Certificate of Incorporation and Bylaws to permit shareholders to call special meetings of shareholders under certain circumstances; and (vii) approval of amendments to our Certificate of Incorporation and Bylaws to declassify our Board and provide for the annual election of directors, we do not know of any other proposal that may be presented at the Annual Meeting. However, if any other business is properly presented at the Annual Meeting, your proxy gives authority to Phillips S. Baker, Jr. and Michael B. White to vote on such matters at their discretion. No other proposals have been timely submitted in accordance with our Bylaws and we are not aware of any matters other than those described in this Proxy Statement that will be acted upon at the Annual Meeting.
Proxies
A “proxy” is your legal appointment in a written document of another person to vote the shares that you own in accordance with your instructions. The persons you appoint to vote your shares are also called proxies. We have designated Phillips S. Baker, Jr., our President and CEO, and Michael B. White, our Corporate Secretary, as proxies for the Annual Meeting. When you sign the proxy card, you appoint Phillips S. Baker, Jr. and Michael B. White as your representatives at the Annual Meeting. As your representatives, they will vote your shares at the Annual Meeting (including any adjournment or postponement) as you have instructed them on your proxy card.
Proxies Submitted but not Voted
If you properly sign and return your proxy card or complete your proxy via the telephone or Internet, your shares will be voted as you direct. If you sign and return your proxy but do not specify how you want your shares voted they will be voted FOR (i) the election of all nominees for Director as set forth under “Election of Directors;” (ii) ratification of the appointment of the independent registered public accountants; (iii) the advisory vote on executive compensation; (iv) the amendments and restatement of our 2010 Stock Incentive Plan; (v) the amendments to the Company’s Certificate of Incorporation and Bylaws to remove certain 80% supermajority voting provisions; (vi) the amendments to the Company’s Certificate of Incorporation and Bylaws to permit shareholders to call special meetings of shareholders under certain circumstances; and (vii) the amendments to the Company’s Certificate of Incorporation and Bylaws to declassify the Board and provide for annual election of directors.
Methods of Voting
If your shares are held in your name, you have the right to vote in person at the Annual Meeting. If your shares are held in a brokerage account or by another nominee, you are considered the beneficial owner of shares held in street name. Since a beneficial owner is not the shareholder of record, you may not vote these shares in person at the Annual Meeting unless you obtain a “legal proxy” from your broker or nominee that holds your shares, giving you the right to vote the shares at the Annual Meeting.
Whether you hold shares directly as a shareholder of record or beneficially in street name, you may vote without attending the Annual Meeting. You may vote by granting a proxy or, for shares held beneficially in street name, by submitting voting instructions to your broker or nominee. In most cases, you will be able to do this by using the Internet, by telephone, or by mail if you received a printed set of the Proxy Materials.
To vote by mail:
■ | Mark, sign and date your proxy card; and | ■ | Return your proxy card in the enclosed postage-paid envelope. |
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To vote by proxy over the Internet:
■ | Have your proxy card or Notice available; | ■ | Log on to the Internet and visit the website noted on your proxy card or Notice (www.proxyvote.com); | ■ | Follow the instructions provided; and | ■ | Do not mail your proxy card. |
To vote by proxy by telephone:
■ | Have your proxy card available; | ■ | Call the toll-free number listed on your proxy card (1-800-690-6903); | ■ | Follow the recorded instructions; and | ■ | Do not mail your proxy card. |
To vote in person if you are a registered shareholder of record:
■ | Attend our Annual Meeting; | ■ | Bring a valid photo identification; and | ■ | Deliver your completed proxy card or ballot in person. |
To vote in person if you hold your shares in “street name” (through a broker, financial institution or other nominee):
■ | Attend our Annual Meeting; | ■ | Bring a valid photo identification; and | ■ | Obtain from your broker a document that allows you to vote the shares held for your benefit, attach that document to your completed proxy card or ballot and deliver it in person. |
To vote your 401(k) Plan shares:
If you participate in the Hecla Mining Company Capital Accumulation Plan and hold shares of our common stock in your plan account as of the Record Date, you will receive a request for voting instructions from the plan trustee (“Vanguard”) with respect to your plan shares. You are entitled to direct Vanguard how to vote your plan shares. If you do not provide voting instructions to Vanguard by 11:59 p.m., Eastern Daylight Time, on May 22, 2019, the Hecla shares in your plan account will be voted by Vanguard in the same proportion as the shares held by Vanguard for which voting instructions have been received from other participants in the plan.
Deadline for Voting
The deadline for voting by telephone or electronically is 11:59 p.m., Eastern Daylight Time, on May 22, 2019. If you are a registered shareholder and attend the meeting, you may deliver your completed proxy card in person. “Street name” shareholders who wish to vote at the meeting will need to obtain a proxy form from the institution that holds their shares.
Revoking a Proxy
If you are a shareholder of record, you may revoke your proxy and change your vote at any time before your proxy is voted at the Annual Meeting, in any of the following ways:
| ■ | By sending a written notice of revocation to our Corporate Secretary, if such notice is received prior to the vote at the Annual Meeting, at our principal executive offices: |
Hecla Mining Company
Attn: Corporate Secretary
6500 N. Mineral Drive, Suite 200
Coeur d’Alene, ID 83815-9408
| ■ | By submitting a later-dated proxy to our Corporate Secretary prior to the vote at the Annual Meeting; or |
| ■ | By voting in person at the Annual Meeting. |
If you hold your shares in street name, you should contact your broker for information on how to revoke your voting instructions and provide new voting instructions.
If you hold your shares in the Hecla Mining Company Capital Accumulation Plan, you may revoke your previously provided voting instructions by filing with Vanguard either a written notice of revocation or a properly executed proxy bearing a later date prior to the deadline for voting plan shares. If you hold your Hecla shares outside of the plan, you may vote those shares separately.
Rules for Attending the Annual Meeting
Only a record or beneficial owner of Hecla’s common stock as of the Record Date, the close of business on March 25, 2019, or a valid proxy or representative of such shareholder, may attend the Annual Meeting in person, and they must comply with the admission requirements below. Guests of shareholders will not be admitted to the Annual Meeting.If you do not comply with the requirements set forth below you will not be admitted to the Annual Meeting.
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All attendees must register at the registration desk and present appropriate documentation at the registration desk prior to being admitted to the meeting, which includes:
■ | Valid Photo Identification. Any registered shareholder, beneficial (“street name”) shareholder, or valid proxy or representative of such shareholder, must present a valid, current form of government-issued photo identification, such as a driver’s license or passport, that matches the name on the documentation described below. |
| ○ | If you hold shares in street name(such as through a broker or bank), then you must present proof of ownership, such as a brokerage statement or letter from your bank or broker, demonstrating that you held our common stock as of the Record Date. | | | | | ○ | If you hold shares in registered form, your record holder’s ownership as of the Record Date must be verified on the list of registered shareholders maintained by our transfer agent. |
■ | Proof of Representation.If you are a representative of a shareholder, then you must present valid legal documentation that demonstrates your authority to represent that shareholder.We reserve the right to limit the number of representatives who may represent a shareholder at the meeting. |
| ■ | If you hold a proxy to vote shares at the Annual Meeting for a shareholder who holds shares in street name(such as through a broker or a bank), then you must present: |
| ■ | Valid photo identification as described above; |
| ■ | A written legal proxy from the broker or bank holding shares to the street name holder that is assignableand signed by the street name holder; and |
| ■ | Proof of ownership, such as a brokerage statement or letter from the bank or broker, demonstrating that the street name holder who appointed you legal proxy held Hecla common stock as of the Record Date. |
| ■ | If you hold a proxy to vote shares at the Annual Meeting for a shareholder who is a registered shareholder,then |
| ■ | You must present valid photo identification as described above; |
| ■ | You must provide a written legal proxy to you signed by the registered shareholder; and |
| ■ | The registered shareholder’s ownership as of the Record Date must be verified on the list of registered shareholders maintained by our transfer agent. |
For the safety of attendees, all boxes, handbags and briefcases are subject to inspection upon registration. Cameras (including cell phones with photographic capabilities), audio/video recording devices and other electronic devices are not permitted at the meeting.
Costs of Solicitation
We will bear all costs and expenses relating to the solicitation of proxies, including the costs of preparing, assembling, printing, mailing and distributing these Proxy Materials. We have hired Broadridge to assist us in mailing these Proxy Materials. Additionally, we have retained Morrow Sodali LLC, 470 West Ave., Stamford, Connecticut to assist in the solicitation of votes for an estimated fee of $9,000, plus reimbursement of certain out-of-pocket expenses. Solicitations may be made personally or by mail, facsimile, telephone, or via the Internet. However, if you choose to access the Proxy Materials over the Internet, you are responsible for any Internet access charges you may incur. Arrangements will be made with brokerage firms and other custodians, nominees and fiduciaries for forwarding solicitation materials to the beneficial owners of the shares of common stock held by such persons, and we will reimburse such brokerage firms, custodians, nominees and fiduciaries for reasonable out-of-pocket expenses incurred by them in connection with such activities.
Results of the Annual Meeting
Preliminary voting results will be announced at the Annual Meeting. We will publish final results in a Current Report on Form 8-K that we expect to file with the SEC within four business days of the Annual Meeting. After the Form 8-K is filed, you may obtain a copy by visiting the SEC’s website at www.sec.gov, visiting our website at www.hecla-mining.com or contacting our Investor Relations Department by writing to Investor Relations Department, Hecla Mining Company, 6500 N. Mineral Dr., Suite 200, Coeur d’Alene, ID 83815-9408 or by sending an email to hmc-info@hecla-mining.com.
Annual Report
Our Annual Report to Shareholders, consisting of our Form 10-K for the year ended December 31, 2018, and other information, is being made available to shareholders with this Proxy Statement. Shareholders may obtain a copy of our Annual Report for the calendar year ended December 31, 2018, without cost, by written or oral request to:
Hecla Mining Company
Attention: Jeanne DuPont
6500 N. Mineral Drive, Suite 200
Coeur d’Alene, Idaho 83815-9408
Telephone: 208-769-4100
You can also access our SEC filings, including our Annual Reports on Form 10-K, and all amendments thereto, on the SEC website at https://www.sec.gov/edgar.shtml or on our website at http://www.hecla-mining.com.
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Householding of Proxy Materials
Many brokerage firms, financial institutions and transfer agents have instituted “householding” procedures for beneficial owners and shareholders of record. Householding is when a single copy of our Proxy Materials is sent to a household in which two or more shareholders reside if they appear to be members of the same family. This practice is designed to reduce duplicate mailings and save significant printing and postage costs, as well as natural resources.
If you are a beneficial owner, you may have received householding information from your broker, financial institution or other nominee shareholder in the past. Please contact the shareholder of record directly if you have questions, require additional copies of our Proxy Materials, or wish to revoke your decision to household and thereby receive multiple copies. You should also contact the shareholder of record if you wish to institute householding. These options are available to you at any time.
Shareholders of record who share an address and would like to receive a separate copy of our Proxy Materials for future annual meetings, or have questions regarding the householding process, may contact our transfer agent, American Stock Transfer & Trust Company, either by written request or by telephone at the address and telephone number listed below. By contacting American Stock Transfer & Trust Company, shareholders of record sharing an address can also request delivery of multiple copies of our Proxy Materials in the future.
American Stock Transfer & Trust Company
6201 15thAvenue
Brooklyn, New York 11219
Telephone: 1-800-937-5449
Electronic Delivery of Proxy Materials, Annual Reports, News Releases and Documents Filed with the Securities and Exchange Commission
We want to communicate with you in the way that is most convenient for you. You may choose to receive either a full set of printed materials – which will include an Annual Report, Proxy Statement, and proxy card (“Proxy Materials”) – or an email with instructions for how to view the materials and vote online. If you are a shareholder of record, you may request and consent to electronic delivery of future Proxy Materials by following the instructions on your proxy card or by visiting our website at http://www.hecla-mining.com under “Investors,” selecting “Annual Reports,” and then selecting “Electronic Proxy Request.” If your shares are held in street name, please contact your broker and ask about the availability of electronic delivery. If you select electronic delivery, we will discontinue mailing the Proxy Materials to you beginning next year and you will be sent an email message notifying you of the Internet address or addresses where you may access the Proxy Materials. Your consent to electronic delivery will remain in effect until you revoke it. If you selected electronic delivery last year, we will not mail the Proxy Materials to you this year and you will receive an email message with the Internet address where you may access the Proxy Materials for the current year. This process is designed to expedite shareholders’ receipt of Proxy Materials, lower the cost of the Annual Meeting, and help conserve natural resources.
Shareholders may also elect to receive notice of our filings with the SEC, annual reports and news releases by email. You may sign up for this service by visiting our website at http://www.hecla-mining.com under “Investors” and selecting “Subscribe for Updates.”
Shareholder List
A list of shareholders eligible to vote at the meeting will be available for examination by any shareholder for any purpose relevant to the meeting during ordinary business hours for at least ten days prior to May 23, 2019, at Hecla’s corporate offices, located at 6500 N. Mineral Dr., Suite 200, Coeur d’Alene, Idaho, and at our offices in Vancouver, at Hecla Canada Ltd., Suite 970, 800 W. Pender Street, Vancouver, British Columbia, Canada.
PROVISIONS OF OUR BYLAWS WITH RESPECT TO SHAREHOLDER PROPOSALS AND NOMINATIONS FOR ELECTION AS DIRECTORS
You may submit proposals for consideration at future annual shareholder meetings, including director nominations, as follows:
Shareholder proposals at the 20202022 Annual Meeting of Shareholders Our Bylaws establish procedures governing the eligibility of nominees for election to our Board, and the proposal of business to be considered by our shareholders at an Annual Meeting of Shareholders. For nominations or other business to be properly brought before an Annual Meeting of Shareholders by a shareholder, the shareholder must have given timely notice thereof in writing to our Corporate Secretary. To be timely, a shareholder’s notice shall be delivered to our Corporate Secretary at our principal executive offices located at 6500 N. Mineral Drive, Suite 200, Coeur d’Alene, Idaho 83815-9408, not less than 90 days nor more than 120 days prior to the first Table of Contents
anniversary of the preceding year’s Annual Meeting of Shareholders;provided,,however, that in the event the date of the Annual Meeting of Shareholders is advanced by more than 30 days or delayed by more than 60 days from such anniversary date, notice by the shareholder to be timely must be delivered not earlier than the 120th120th day prior to such Annual Meeting of Shareholders and not later than the close of business on the later of the 90th90th day prior to such Annual Meeting of Shareholders or the 10th10th day following the day on which public announcement of the date of such meeting is first made. Adjournment of a meeting shall not commence a new time period for giving shareholder’s notice as described above. Such shareholder’s notice shall set forth: | (a) | As to each person whom the shareholder proposes to nominate for election or re-election as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Exchange Act and Rule 14a-11 thereunder, including such person’s written consent to being named in our Proxy Statement as a nominee and to serve as a director if elected; |
| (b) | As to any other business that the shareholder proposes to bring before the meeting, if the shareholder has not otherwise complied with the rules and regulations under the Exchange Act for the inclusion of a shareholder |
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Other Matters | proposal in our Proxy Statement, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting, and any material interest in such business of such shareholder and the beneficial owner, if any, on whose behalf the proposal is made; and |
| (c) | As to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made: |
| (i) | the name and address of such shareholder, as they appear on the Company’s books, and of such beneficial owner; and |
| (ii) | the class and number of Company shares which are owned beneficially and of record by such shareholder or beneficial owner. |
The applicable time period for timely shareholder submissions pursuant to the above provisions for the 20202022 Annual Meeting of Shareholders is January 24, 202019, 2022 (the 120th120th day preceding the anniversary of the 20192021 Annual Meeting) to February 23, 202018, 2022 (the 90th90th day preceding such anniversary). The chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the procedures set forth in the Bylaws and, if any proposed nomination or business is not in compliance with the Bylaws, to declare that such defective proposal shall be disregarded. The foregoing time limits also apply in determining whether notice is timely for purposes of rules adopted by the SEC relating to the exercise of discretionary voting authority. Shareholder proposals to be included in next year’s Proxy Statement In addition to the foregoing section, we will comply with Rule 14a-8 under the Exchange Act with respect to any shareholder proposals that meet that rule’s requirements. We will review shareholder proposals intended to be included in our Proxy Statement for the 20202021 Annual Meeting of Shareholders which are received by us at our principal executive offices located at 6500 N. Mineral Drive, Suite 200, Coeur d’Alene, Idaho 83815-9408, no later than December 11, 2019.6, 2021. Such proposals must be submitted in writing and should be sent to the attention of our Corporate Secretary. You may contact the Corporate Secretary at our principal executive offices for a copy of the relevant Bylaw provisions regarding the requirements for making shareholder proposals and nominating director candidates. Security Ownership of Certain Beneficial Owners and Management OTHER BUSINESSThe following table shows the number and percentage of the shares of common stock beneficially owned by each current director and each executive officer of Hecla, and by all current directors and executive officers as a group, as of March 22, 2021. On that date, all such persons together beneficially owned an aggregate of 1.6% of the outstanding shares of our common stock. Except as otherwise indicated, the directors, nominees and officers have sole voting and investment power with respect to the shares listed, including shares which the individual has the right to acquire, but has not done so.
| | | | | | | | | | | | | | | | | | Title of
Class | | | Shares Beneficially Owned | | Percent of
Class | | Name of Beneficial Owner | | Number | | | Nature | Phillips S. Baker, Jr. President and CEO | | | | | | | 2,867,033 | (1) | | Direct(2) | | | | | | | | | | | | 41,449 | | | 401(k) Plan | | | | | | | | | | | | 320,456 | | | RSU(3) | | | | | | | | | | | | 1,795,964 | | | Deferred(4) | | | | | | | | | | | | 403,752 | | | Performance-based(5) | | | | | | | | | | | | | | | | | | | | | | | Common | | | | 5,428,654 | | | | | | 1.0% | | Robert D. Brown Vice President – Corporate Development | | | | | | | 182,325 | | | Direct(2) | | | | | | | | | | | | 124,560 | | | RSU(3) | | | | | | | | | | | | 97,153 | | | Performance-based(5) | | | | | | | | | | | | | | | | | | | | | | | Common | | | | 404,038 | | | | | | * | | Lindsay A. Hall(6) Former Senior Vice President and Chief Financial Officer | | | | | | | 0 | | | Direct(2) | | | | | | | | | | | | 0 | | | RSU(3) | | | | | | | | | | | | 0 | | | Performance-based(5) | | | | | | | | | | | | | | | | | | | | | | | Common | | | | 0 | | | | | | * | |
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Other Matters | | | | | | | | | | | | | | | | | | Title of
Class | | | Shares Beneficially Owned | | Percent of
Class | | Name of Beneficial Owner | | Number | | | Nature | Lauren M. Roberts Senior Vice President – Chief Operating Officer | | | | | | | 67,634 | | | Direct(2) | | | | | | | | | | | | 2,006 | | | 401(k) Plan | | | | | | | | | | | | 148,883 | | | RSU(3) | | | | | | | | | | | | 190,391 | | | Deferred(4) | | | | | | | | | | | | 124,132 | | | Performance-based(5) | | | | | | | | | | | | | | | | | | | | | | | Common | | | | 533,046 | | | | | | * | | David C. Sienko Vice President and General Counsel | | | | | | | 613,154 | | | Direct(2) | | | | | | | | | | | | 23,107 | | | 401(k) Plan | | | | | | | | | | | | 119,084 | | | RSU(3) | | | | | | | | | | | | 87,351 | | | Performance-based(5) | | | | | | | | | | | | | | | | | | | | | | | Common | | | | 842,696 | | | | | | * | | Catherine J. Boggs Director | | | | | | | 82,459 | | | Direct(2) | | | | | | | | | | | | 98,640 | | | Indirect(7) | | | | | | | | | | | | | | | | | | | | | | | Common | | | | 181,099 | | | | | | * | | Ted Crumley Director | | | | | | | 126,536 | | | Direct(2) | | | | | | | | | | | | 220,431 | | | Indirect(7) | | | | | | | | | | | | | | | | | | | | | | | Common | | | | 346,967 | | | | | | * | | George R. Johnson Director | | | | | | | 17,273 | | | Direct(2) | | | | | | | | | | | | 148,092 | | | Indirect(7) | | | | | | | | | | | | | | | | | | | | | | | Common | | | | 165,365 | | | | | | * | | George R. Nethercutt, Jr. Director | | | | | | | 31,686 | | | Direct(2) | | | | | | | | | | | | 162,080 | | | Indirect(7) | | | | | | | | | | | | | | | | | | | | | | | Common | | | | 193,766 | | | | | | * | | Stephen F. Ralbovsky Director | | | | | | | 17,273 | | | Direct(2) | | | | | | | | | | | | 148,092 | | | Indirect(7) | | | | | | | | | | | | | | | | | | | | | | | Common | | | | 165,365 | | | | | | * | | Terry V. Rogers Director | | | | | | | 48,103 | | | Direct(2) | | | | | | | | | | | | 144,611 | | | Indirect(7) | | | | | | | | | | | | | | | | | | | | | | | Common | | | | 192,714 | | | | | | * | | Charles B. Stanley Director | | | | | | | 100,536 | | | Direct(2) | | | | | | | | | | | | 189,478 | | | Indirect(7) | | | | | | | | | | | | | | | | | | | | | | | Common | | | | 290,014 | | | | | | * | | Alice Wong Director | | | | | | | 0 | | | Direct(2) | | | | | | | | | | | | 0 | | | Indirect(7) | | | | | | | | | | | | | | | | | | | | | | | Common | | | | 0 | | | | | | * | | All current directors, director nominees and executive officers as a group (13 individuals) | | | Common | | | | 8,743,724 | | | | | | 1.6% | |
| * | Represents beneficial ownership of less than one percent, based upon 535,333,953 shares of our common stock issued and outstanding as of March 22, 2021. |
| (1) | Includes 223,642 shares held jointly with Mr. Baker’s spouse, as to which Mr. Baker shares voting and investment power. |
| (2) | “Direct” means shares held of record and any shares beneficially owned through a trust, broker, financial institution, or other nominee, and with respect to which the officer or director has sole or shared voting power. |
| (3) | “RSU” means restricted stock units awarded under the 2010 Stock Incentive Plan that have not vested. See footnote 1 of the Outstanding Equity Awards at Fiscal Year-End for 2020 on page 82. |
| (4) | “Deferred Shares” means stock that has vested or been awarded but is deferred until a distributable event under the terms of the KEDCP. See Nonqualified Deferred Compensation for 2020 on page 85. |
| (5) | “Performance-based Shares” means performance-based equity, based on a three-year TSR. See Performance-based Shares on page 67 and Outstanding Equity Awards at Fiscal Year-End for 2020 table on page 82. |
| (6) | Mr. Hall resigned as of February 28, 2021, and subsequently disposed of his shares. All of his remaining unvested equity awards were forfeited. |
| (7) | “Indirect” means shares credited to each independent director, all of which are held indirectly in trust pursuant to our Stock Plan for Nonemployee Directors. Each director disclaims beneficial ownership of all shares held in trust under the stock plan. See Compensation of Non-Management Directors on page 42. |
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Other Matters To our knowledge, as of March 22, 2021, the only “beneficial owners” (as such term is defined in Rule 13d-3 under the Exchange Act) of more than 5% of our common stock entitled to vote at the Annual Meeting are shown in the table below: | | | | | | | | | | | Title of Class | | Name & Address of Beneficial Owner | | Amount & Nature of
Beneficial Ownership | | | Percent of
Class | | Common | | Van Eck Associates Corporation(1) 666 Third Ave. – 9th Floor New York, NY 10017 | | | 54,440,018 | | | | 10.2 | % | Common | | The Vanguard Group, Inc.(2) 100 Vanguard Blvd. Malvern, PA 19355 | | | 46,964,821 | | | | 8.8 | % | Common | | BlackRock, Inc.(3) 55 East 52nd Street New York, NY 10055 | | | 39,900,200 | | | | 7.5 | % | Common | | Dimensional Fund Advisors LP(4) Building One 6300 Bee Cave Rd. Austin, TX 78746 | | | 33,704,366 | | | | 6.3 | % |
| (1) | Based solely on a Schedule 13G/A filed on February 11, 2021, with the SEC by Van Eck Associates Corporation. Van Eck Associates Corporation has sole voting and dispositive power with respect to all shares. |
| (2) | Based solely on a Schedule 13G/A filed on February 10, 2021, with the SEC by The Vanguard Group, Inc. The Vanguard Group, Inc. has shared voting power with respect to 525,740 shares, sole dispositive power with respect to 46,015,360 shares, and shared dispositive power with respect to 949,461 shares. |
| (3) | Based solely on a Schedule 13G/A filed on January 29, 2021, with the SEC by BlackRock, Inc. BlackRock, Inc. has sole voting power with respect to 39,040,548 shares and sole dispositive power with regard to 39,900,200 shares. |
| (4) | Based solely on a Schedule 13G/A filed on February 12, 2021, with the SEC by Dimensional Fund Advisors LP. Dimensional Fund Advisors LP has sole voting power with respect to 32,620,927 shares and sole dispositive power with regard to 33,704,366 shares. |
Other Business As of the date of this Proxy Statement, the Board is not aware of any matters that will be presented for action at the Annual Meeting other than those described above. However, should other business properly be brought before the Annual Meeting, the proxies will be voted thereon at the discretion of the persons acting thereunder. | | By Order of the Board of Directors | |  |  | Michael B. White | | Corporate Secretary |
April 9, 2019
April 5, 2021 Table of Contents104 www.hecla-mining.com
APPENDIX A Hecla Mining Company Key Employee Deferred Compensation Plan HECLA MINING COMPANY 2010 STOCK INCENTIVE KEY EMPLOYEE DEFERRED COMPENSATION PLAN Amended, Restated, and Effective May 19, 2021 (Amended2021 Proxy Statement A-1
Appendix A Section 1 Introduction and restatedDefinitions 1.1 Purpose of the Plan. The Company established this Key Employee Deferred Compensation Plan effective July 18, 2002, to assist the Company in attracting and retaining key executive officers and select management, encouraging their long-term commitment to the success of the Company and providing an opportunity to participate in the increase in value of the Company. To this end, the Plan provides for (i) Participant elections to defer Base Salary, (ii) Participant elections to defer Performance-Based Compensation, (iii) Participant Elections to defer Performance-Based Stock, (iv) Participant elections to defer Restricted Stock Units, (v) Company Matching Contributions, and (vi) Discretionary Awards. The Plan was subsequently amended several times, most recently by an amendment and restatement of the Plan effective as of December 1, 2015, as amended by that certain First Amendment effective as of November 30, 2016. This document is an amendment and restatement of the Plan effective as of May 23, 2019) Section 1. Purpose; Definitions
19, 2021, primarily to add shares of Common Stock to the Plan’s share pool, subject to approval of the Company’s shareholders. However, grandfathered accounts which were frozen effective December 31, 2004, shall be governed by the terms of the prior Plan document in effect at that time. Nothing herein shall be construed to modify any Accounts or the time or form of payment of Accounts in existence as of May 19, 2021. The purposePlan is intended to be “unfunded” within the meaning of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Accordingly, it is intended that the Plan be a “top hat plan” that is exempt from the requirements of Parts II, III and IV of Title I of ERISA pursuant to give§§ 201(2), 301(a)(3) and 401(a)(1) of ERISA. 1.2Definitions. The following words and phrases shall have the Corporationfollowing meanings unless a different meaning is plainly required by the abilitycontext. Any masculine terminology used in the Plan shall also include the feminine gender and the definition of any terms in the singular shall also include the plural. Account means the separate bookkeeping account or accounts established and maintained for a Participant to attract, retain and motivate officers, employees and certain independent consultants, andrecord a Participant’s interest under the Plan attributable to provideamounts credited to the Corporation, its subsidiaries and any memberParticipant pursuant to the Plan. The Account or Accounts of a controlled groupParticipant shall consist of corporations,Company Stock Accounts and Investment Accounts. The Company shall maintain sub-Accounts for a Participant as determinednecessary to facilitate the administration of distributions under the Plan. Active Participant means an Employee who is eligible to participate in accordance withthe Plan for a Plan Year, as described in Section 1563(a)(l), (2)3.1. Base Salary means a participant’s regular base salary, but shall not include cash bonuses and (3)awards made under the Stock Plan, Hecla Mining Company Short-term Incentive Plan or Hecla Mining Company Executive and Senior Management Long-Term Performance Payment Plan or any other bonus or award that is treated as Performance-Based Compensation. Beneficiary means the person or persons designated as such by the Participant to receive all or a part of the Internal Revenue Code with respectParticipant’s vested Account balance in the event of the Participant’s death prior to which the Corporation is a member,full payment thereof. Each such designation shall be filed with the ability to provide incentives more directly linkedCompany in a form acceptable to the returns to shareholders. For purposesCompany and shall become effective only when received by the Company. Designated persons or entities shall not be considered Beneficiaries until the death of the Plan,Participant. If a Participant becomes divorced after having named his or her spouse as a Beneficiary, the following terms are defined as set forth below:
(a) “Affiliate”means a corporation or other entity that is: (i) a member of a controlled group of corporations or entities as determined in accordance with Section 1563(a)(l), (2) and (3)prior designation of the Internal Revenue Codespouse as Beneficiary shall be void. After the divorce, the Participant may, in his or her discretion, designate his or her ex-spouse as a Beneficiary by filing a new beneficiary designation form with respect to which the Corporation is a member, and (ii) designated by the Committee from time to time as such.Company.
(b) “Award”means a Stock Appreciation Right, Stock Option, Restricted Stock, Performance Units, Restricted Stock Unit, or Other Stock-Based Award.
(c) “Award Cycle”means a fiscal year or a period of consecutive fiscal years or portions thereof designated by the Committee over which Performance Units are to be earned.
(d) “Board”Boardmeans the Board of Directors of the Corporation.Company.
(e) “Cause”means: (i) convictionChange of Control means a change in the ownership or effective control of the participant for committing a felony under federal lawCompany or the lawParticipant’s Employer, or in the ownership of a substantial portion of the state in which such action occurred; (ii) dishonesty in the course of fulfilling the participant’s employment duties; or (iii) willful and deliberate failure on the partassets of the participant to perform hisCompany or her employment duties in any material respect, or such other events asthe Participant’s Employer. The definition of “Change of Control” shall be determined by the Committee. The Committee shall have the sole discretion to determine whether “Cause” exists, and its determination shall be final and binding on all interested parties.construed in a manner consistent with Section 409A.
(f) “Change-in-Control”has the meaning set forth in Section 11.
(g) “Code”Codemeans the Internal Revenue Code of 1986, as amended from time to time,time. References to the Code shall include the valid and any successor thereto.binding governmental regulations, court decisions and other regulatory and judicial authority issued or rendered thereunder.
(h) “Commission”means the Securities and Exchange Commission or any successor agency.A-2 www.hecla-mining.com
Appendix A (i) “Committee”Committeemeans the Compensation Committee of the Board or any committee or other person or persons designated by the Board to administer the Plan. The Board will cause the Committee to satisfy the applicable requirements of Directorsany stock exchange on which the Common Stock may then be listed. To the extent necessary for compliance with Section 16 of the CorporationExchange Act, the Committee means all of the members of the Committee who are “non-employee directors” within the meaning of Rule 16b-3 adopted under the Exchange Act. All references in the Plan to the Board shall mean such Committee or such other committee referred to in Section 2.the Board.
(j) “Common Stock”Stockmeans the Company’s common stock, par value $0.25 per share, of the Corporation.share.
(k) “Corporation”Companymeans Hecla Mining Company, a Delaware corporation.corporation, and any successor.
Company Stock Account means an Account established and maintained for a Participant to record the amount of any compensation deferred under the Plan in the form of Stock Units, which may include elective deferrals of Base Salary, Performance-Based Compensation, Performance-Based Stock, or Restricted Stock Units, or amounts credited as Matching Contributions or Discretionary Employer Contributions. (l) “Disability”Deferral Electionmeans permanentthe agreement executed by an Eligible Employee whereby an Eligible Employee elects to defer Base Salary, Performance-Based Compensation, Performance-Based Stock, or Restricted Stock Units.
Disability:a Participant is disabled if the Committee determines that: (i) The Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months; (ii) The Participant is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than 3 months under an accident and total disabilityhealth plan covering employees of the Company; or (iii) The Participant is determined to be disabled by the Social Security Administration. The foregoing definition of Disability shall be construed in a manner consistent with the treatment of “disability” as determineda payment event under procedures establishedSection 409A. Discretionary Employer Contributions means discretionary amounts credited to a Participant’s Company Stock Account pursuant to Section 3.4. Eligible Employee means an Employee designated by the Committee for purposes ofas eligible to participate in the Plan. (m) “Early Retirement”means retirement from active employment with the Corporation, a subsidiary or AffiliatePlan pursuant to the early retirement provisions of the applicable pension plan of such employer.Section 3.1.
Employee means an individual employed by a Participating Employer. (n) “Exchange Act”ERISAmeans the Securities ExchangeEmployee Retirement Income Security Act of 1934,1974, as amended from time to time, and any successor thereto.amended.
(o) “Fair Market Value”Valuemeans, as of any given date, the value of a share of Common Stock determined as follows: (a) if the Common Stock is listed or quoted on any (i) established securities exchange (such as the New York Stock Exchange, the NASDAQ Global Market and the NASDAQ Global Select Market); (ii) national market system; or (iii) automated quotation system, on which the shares of Common Stock are listed, quoted or traded, its Fair Market Value shall be the closing sales price for a share of Common Stock as quoted on such exchange or system for such date or, if there is no closing sales price for a share of Common Stock on the date in question, the closing sales price for a share of Common Stock on the last preceding date for which such quotation exists, as
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reported inThe Wall Street Journalor such other source as the Committee deems reliable; (b) if there is no regular public trading market for such Common Stock, the Fair Market Value of the Common Stock shall be determined by the Committee reasonably and in good faith. Investment Account means the bookkeeping Account established and maintained for a Participant to record the amount of Base Salary and Performance-Based Compensation the Participant elected to defer and have credited in an account at the equivalent cash value, plus deemed investment returns credited pursuant to Section 4.3. (p) “Incentive
2021 Proxy Statement A-3
Appendix A Matching Contribution means a matching contribution credited to a Participant’s Company Stock Option”Account pursuant to Section 3.3. Participantmeans an Eligible Employee who becomes a Participant in this Plan in accordance with the provisions of Section 3. Participating Employer means the Company and any Stock Optionother entity affiliated with the Company and designated as a participating employer under this Plan from time to time by the Company, and qualifiedtheir respective successors and assigns. As of the effective date of this restatement, the Participating Employers are set forth on Exhibit A attached to the Plan. Exhibit A may be updated from time to time by the Company. Performance-Based Compensation means compensation where the amount of, or entitlement to, the compensation is contingent on the satisfaction of preestablished organizational or individual performance criteria relating to a performance period of at least twelve (12) consecutive months in which the Participant performs services including, but not limited to, awards made under the Hecla Mining Company Short-term Incentive Plan and Hecla Mining Company Executive and Senior Management Long-Term Performance Payment Plan. Organizational or individual performance criteria are considered preestablished if established in writing no later than ninety (90) days after the commencement of the period of service to which the criteria relates, provided that the outcome is substantially uncertain at the time the criteria are established. This definition shall be interpreted and construed in a manner consistent with the definition of “performance-based compensation” under Section 409A. Performance-Based Stock means an award of some number of shares of Common Stock where the amount of, or entitlement to, the shares of Common Stock is contingent on the satisfaction of pre-established organizational or individual performance criteria relating to a performance period of at least twelve (12) consecutive months in which the Participant performs services, including but not limited to, awards made under the Stock Plan. Plan means the Hecla Mining Company Key Employee Deferred Compensation Plan, as the same may be in effect from time to time. Plan Year means the calendar year (i.e., the twelve-month period beginning on each January 1 and ending on the following December 31). Restricted Stock Units means an “Incentiveaward of Stock Option”Units made under the Stock Plan or this Plan which is subject to vesting conditions specified in the applicable award agreement and which may be deferred in accordance with Section 3.2.3. Section 409A means Section 409A of the Code. Separation from Service means a Participant’s “separation from service” with the Participating Employers within the meaning of Section 422409A and any related administrative policies of the Code.Participating Employers. (q) “Non-Employee Director”Specified Employeemeans a member“specified employee” within the meaning of the Board who qualifies as a “Non-Employee Director” as defined in Rule 16b-3(b)(i), as promulgated by the Commission under the Exchange Act, or any successor definition adopted by the Commission.Section 409A.
(r) “Nonqualified Stock Option” means any Stock Option that is not an Incentive Stock Option.
(s) “Normal Retirement”means retirement from active employment by the employee with the Corporation, a subsidiary or Affiliate on or after the date on which the employee attains age 65.
(t) “Other Stock-based Award” means an award made pursuant to Section 10.
(u) “Performance Goals”mean any performance goals established by the Committee prior to the grant of Restricted Stock or Performance Units, which may include, but shall not be limited to, the attainment of specified levels of earnings per share from continuing operations, operating income, revenues, return on operating assets, return on equity, stockholder return (measured in terms of stock price appreciation) and/or total stockholder return (measured in terms of stock price appreciation and/or dividend growth), reserve growth, achievement of cost control, production targets at specific mines or company-wide, or such subsidiary, division or department of the Corporation for or within which the participant is primarily employed or the stock price of the Corporation. Such Performance Goals also may be based upon attaining specified levels of Corporation performance under one or more of the measures established by the Committee, which may include those described above relative to the performance of other corporations.
(v) “Performance Units”means an award made pursuant to Section 8.
(w) “Plan”Planmeans the Hecla Mining Company 2010 Stock Incentive Plan as set forth hereinamended and as hereinafter amended from time to time.
(x) “Restricted Stock”means an award granted under Section 7.
(y) “Restricted Stock Unit” means a bookkeeping entry representing the equivalent shares of Common Stock awarded pursuant to Section 9. A Restricted Stock Unit represents an unfunded and unsecured obligation of the Corporation.
(z) “Retirement”means Normal or Early Retirement.
(aa) “Rule 16b-3”means Rule 16b-3, as promulgated by the Commission under Section 16(b) of the Exchange Act, as amended from time to time.
(bb) “Stock Appreciation Right” means a right granted under Section 6.
(cc) “Stock Option” means an option granted under Section 5.
(dd) “Termination of Employment”means the termination of the employment of a participant with the Corporation and any subsidiary or Affiliate. A participant employed by a subsidiary or an Affiliate shall also be deemed to incur a Termination of Employment if the subsidiary or Affiliate ceases to be such a subsidiary or an Affiliate, as the case may be, and the participant does not immediately thereafter become an employee of the Corporation or another subsidiary or Affiliate. Temporary absences from employment because of illness, vacation or leave of absence and transfers among the Corporation and its subsidiaries and Affiliates shall not be considered Terminations of Employment.
In addition, certain other terms used herein have definitions given to them in the first place in which they are used.
Section 2. Administration
The Plan shall be administered by the Compensation Committee of the Board or such other committee of the Board as the Board mayeffect from time to time, designate (the “Committee”), which shall be composedand any successor plan thereto.
Stock Unit means a unit having a value as of not less than two Non-Employee Directors, and shall be appointed by and serve at the pleasure of, the Board. The Committee shall have plenary authority to grant Awards pursuanta given date equal to the termsFair Market Value of the Plan to officers and employees of the Corporation and its subsidiaries and Affiliates and certain independent consultants.
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The Committee shall also have the authority and responsibility to make recommendations to the independent members of the Board with respect to any Awards granted under the terms of the Plan.
Among other things, the Committee shall have the authority, subject to the terms of the Plan:
(a) to select the employees, and certain independent consultants to whom Awards may from time to time be granted;
(b) determine whether and to what extent Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock, Performance Units, Restricted Stock Units or any combination thereof are to be granted hereunder;
(c) determine the number of sharesone (1) share of Common Stock on such date, and includes Restricted Stock Units.
Unforeseeable Emergency means a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, or a dependent (as defined in section 152(a) of the Code) of the Participant, loss of the Participant’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. The circumstances that constitute an Unforeseeable Emergency shall depend on the facts of each case, but, in any case, payment may not be coveredmade to the extent the hardship may be relieved through distributions or loans from a qualified plan maintained by each Award granted hereunder;the Company, reimbursement or compensation by insurance or through liquidation of other assets, (d) determine the terms and conditions of any Award granted hereunder (including, but not limited to, the option price (subject to Section 5(a)), any vesting condition, restriction or limitation (which may be related to the performance of the participant, the Corporation or any subsidiary or Affiliate) and any vesting acceleration or forfeiture waiver regarding any Award and the shares of Common Stock relating thereto, based on such factors as the Committee shall determine;provided, however,that the Committee shall have no authority to reprice existing Stock Options under the Plan without shareholder approval;A-4 www.hecla-mining.com
Appendix A (e) modify, amendto the extent such distribution or adjust the terms and conditionsliquidation does not itself cause a severe financial hardship. The foregoing definition of any Award, at any time or from time to time, including but not limited to Performance Goals;
(f) determine to what extent and under what circumstances Common Stock and other amounts payable with respect to an AwardUnforeseeable Emergency shall be deferred; andconstrued in a manner consistent with the treatment of “unforeseeable emergency” as a payment event under Section 409A.
Section 2 (g) determine under what circumstances an Award may be settled in cash or Common Stock.Administration
2.1. Administration. The Committee shall have the authority, to adopt, alterduty and repeal such administrative rules, guidelines and practices governing the Plan as it shall from time to time deem advisable,power to interpret the terms and provisions of the Plan and any Award issued under the Plan (and any agreement relating thereto) and to otherwise supervise the administration of the Plan. The Committee may act only by a majority of its members then in office, except that the members thereof may authorize any one or more of their number or any officer of the Corporation to execute and deliver documents on behalf of the Committee.
Any determination made by the Committee or pursuant to delegated authority pursuant toconstrue the provisions of the Plan with respectas it deems appropriate, to adopt, establish and revise rules, procedures and regulations relating to the Plan, to determine the conditions subject to which any Awardbenefits may be payable, to resolve all factual and legal questions concerning the status and rights of the Participants and others under the Plan, including, but not limited to, eligibility for benefits, and to make any other determinations which it believes necessary or advisable for the administration of the Plan. Benefits under this Plan will be payable only if the Committee decides in its discretion that the applicant is entitled to them under the Plan. The Company shall be made inhave the sole discretionduty and responsibility of maintaining records, making the requisite calculations, and disbursing payments hereunder. The determinations, interpretations, and regulations of the Committee or such delegate atand the timecalculations of the grant of the Award or, unless in contravention of any express term of the Plan, at any time thereafter. All decisions made by the Committee or any appropriately delegated officer pursuant to the provisions of the PlanCompany shall be final and binding on all interestedpersons and parties includingconcerned. The Committee may delegate any of its duties and powers hereunder to the Corporationextent permitted by applicable law.
2.2 Liability. No current or former member of the Committee and no director, officer or member of the Board of the Company or its affiliates shall be liable to any persons for any actions taken under the Plan, participants.or for any failure to effect any of the objectives or purposes of the Plan, by reason of insolvency or otherwise. Neither the officers nor any current or former member of the Committee or the Board of Directors of the Company or any of its affiliates in any way secures or guarantees the payment of any benefit or amount which may become due and payable hereunder to or with respect to any Participant. Each Participant and other person entitled at any time to payments hereunder shall look solely to the assets of the Company for such payments as an unsecured, general creditor. Nothing herein shall be construed to give a Participant, Beneficiary or any other person or persons any right, title, interest or claim in or to any specific asset, fund, reserve, account, or property of any kind whatsoever owned by the Company or in which it may have any right, title, or interest now or in the future. After benefits shall have been paid to or with respect to a Participant or Beneficiary (as applicable) and such payment purports to cover in full the benefit hereunder, such former Participant or Beneficiary or other person or persons, as the case may be, shall have no further right or interest in the other assets of the Company and its affiliates in connection with this Plan. Section 3 Eligibility; Deferral Elections; Employer Contributions 3.1. Eligibility. The Committee shall designate which Employees are eligible to participate in the Plan. Eligible Employees shall be selected consistent with the intent that the Plan be a “top hat” plan for a select group of management or highly compensated employees under ERISA. 3.2. Deferral Elections. An Eligible Employee may elect to defer a percentage of his or her Base Salary, Performance-Based Compensation, Performance-Based Stock, and Restricted Stock Units for a Plan Year. All Deferral Elections shall be made in writing on a form, or pursuant to other electronic or non-written procedures, as may be prescribed from time to time by the Committee and shall be irrevocable for the Plan Year for which the Deferral Election was made. Deferral Elections shall not automatically apply to future compensation of the same type payable for any subsequent Plan Year unless otherwise permitted by the Committee and specified by the Participant. Deferral Elections shall be made in accordance with the following timing rules. 3.2.1 Base Salary. To be effective for a Plan Year, elections to defer Base Salary must be made no later than the December 31 immediately preceding the Plan Year for which services are performed to earn the Base Salary. However, a newly hired or promoted Eligible Employee who first becomes eligible to participate in the Plan after the start of a Plan Year may make a Deferral Election within thirty (30) days after first becoming eligible to participate in the Plan to the extent permitted by Section 409A. 3.2.2 Performance-Based Compensation and Performance-Based Stock. Elections to defer Performance-Based Compensation or Performance-Based Stock shall generally be made no later than the December 31 immediately preceding the Plan Year for which services are performed to earn the Performance-Based Compensation or Stock. Notwithstanding the foregoing, the Committee may, in its discretion, permit Deferral 2021 Proxy Statement A-5
Appendix A Elections for Performance-Based Compensation or Stock on or before the date that is six months before the end of the applicable performance period, provided that the Participant provides service continuously from the later of the beginning of the performance period or the date the performance criteria was established through the date the election is made and the compensation has not become readily ascertainable and substantially certain to be paid, all to the extent permitted by Section 3.409A. A newly hired or promoted Eligible Employee who first becomes eligible to participate in the Plan after the start of a Plan Year may make a Deferral Election within thirty (30) days after first becoming eligible to participate in the Plan to the extent permitted by Section 409A. 3.2.3 Restricted Stock Units. An Eligible Employee may elect to make a Deferral Election with respect to Restricted Stock Units in accordance with the following rules. | (a) | General Rule. Elections to defer Restricted Stock Units shall generally be made no later than the December 31 immediately preceding the Plan Year in which the Restricted Stock Units are granted. |
| (b) | Forfeitable Restricted Stock Units. With respect to Restricted Stock Units that are subject to a condition requiring the Eligible Employee to provide services for a period of at least twelve (12) months from the grant date to avoid forfeiture of payment for the Restricted Stock Units, the Committee may permit the Deferral Election to be made no later than thirty (30) days after the grant date and at least twelve (12) months in advance of the earliest date at which the forfeiture condition could lapse, all to the extent permitted by Section 409A. |
| (c) | Short Term Deferrals. The Committee may permit a Deferral Election may to be made with respect to Restricted Stock Units that, absent a Deferral Election, would be treated as a “short term deferral” within the meaning of Section 409A, provided that the Deferral Election (i) is made at least twelve (12) months before the scheduled vesting date and (ii) provides that payment for the Restricted Stock Units will be deferred for a period of not less than five (5) years from the date such payment would otherwise have been paid, except that payment may be made earlier in the event of the Participant’s death, Disability, Change in Control, or Unforeseeable Emergency, all to the extent permitted by Section 409A. |
| (d) | Newly Eligible. A newly hired or promoted Eligible Employee who first becomes eligible to participate in the Plan after the start of a Plan Year may make a Deferral Election within thirty (30) days after first becoming eligible to participate in the Plan to the extent permitted by Section 409A |
3.3 Matching Contributions. If a Participant makes a Deferral Election for Base Salary or Performance-Based Compensation for a Plan Year and elects to have all or a portion of such amount credited to the Company Stock Account, the Committee shall credit to the Participant’s Company Stock Account, at the end of each quarter, a 10% matching contribution, unless the Committee determines that another percentage shall apply for a Plan Year. The Matching Contribution shall be denominated in Stock Units in accordance with Section 4.4. Notwithstanding the foregoing, the Matching Contribution shall not take into account any Performance-Based Stock or Restricted Stock Units a Participant may have elected to defer to the Company Stock Account for that Plan Year. 3.4 Discretionary Employer Contributions. The Committee may, in its sole discretion, credit an amount determined by the Committee to a Participant’s Company Stock Account. Any Discretionary Employer Contribution shall be denominated in Stock Units. If the Discretionary Employer Contribution is initially determined as a cash amount, the number of Stock Units shall be determined in accordance with Section 4.4. 3.5 Cancellation Due to Unforeseeable Emergency. A Participant may elect to cancel the Participant’s Deferral Election due to an Unforeseeable Emergency. The Deferral Election must be cancelled, not merely postponed or otherwise delayed. Any subsequent Deferral Election will be subject to the provisions governing initial deferral elections. Section 4 Accounts 4.1. Establishment of Accounts. The Company shall establish and maintain on its books an Account for each Participant. Each Account shall be designated by the name of the Participant for whom established. 4.2 Participant Election of Account. A Participant who elects to defer Base Salary or Performance-Based Compensation may elect, at the same time as the Deferral Election is made, to have such amounts credited to an Investment Account or Company Stock Account. All Restricted Stock Units and Performance-Based Stock deferred under the Plan, Matching Contributions, and Employer Discretionary Contributions for a Participant shall be credited as Stock Units to the Participant’s Company Stock Account. A-6 www.hecla-mining.com
Appendix A 4.3. Investment Account. The Committee shall credit each Investment Account with deemed investment earnings and gains as of the last day of each calendar month. The amount credited shall equal the product of (i) the balance of the Investment Account at the end of the month, multiplied by (ii) the prime rate quoted at the beginning of the quarter by theWall Street Journal. The Committee may, in its sole discretion, establish a different interest rate or deemed investment index for the Investment Accounts on a prospective basis. Amounts distributed from Investment Accounts shall be distributed in cash. 4.4 Company Stock Account. Amounts credited to a Participant’s Company Stock Account shall be denominated in whole and fractional Stock Units in accordance with the following rules. 4.4.1 Initial Amounts Credited. Where an amount being deferred is denominated in Stock Units, such as an award of Restricted Stock Units, the number of Stock Units credited to the Company Stock Account shall be based on the portion of such award that is deferred. For any amount to be credited to the Company Stock Account that is initially denominated in cash, including any deferral of Base Salary or Performance-Based Compensation, any Matching Contributions or any Discretionary Employer Contributions awarded in a cash amount, the dollar amount credited to the Company Stock Account shall be converted to a number of whole and fractional Stock Units as of the last business day of the calendar quarter in which such amount is credited to the Company Stock Account based on the average Fair Market Value of the Common Stock Subjectfor such calendar quarter. 4.4.2 Reallocations from Investment Account. Notwithstanding any provision herein to the contrary, a Participant may elect to have all or a portion of his or her Investment Account reallocated to a Company Stock Account. Such an election may be made once per calendar quarter within the ten (10) day period following the public release of the Company’s financial results for the quarter for which the election is made and is irrevocable once made. If such an election is made, the cash value to be reallocated to the Participant’s Company Stock Account shall be converted to a number of whole and fractional Stock Units based on the Fair Market Value of the Common Stock as of the effective date of such reallocation. 4.4.3 Dividend Equivalents. Company Stock Accounts shall not be adjusted or credited with additional amounts for cash dividends paid on Common Stock. 4.4.4 Adjustments. The number of Stock Units credited to a Participant’s Company Stock Account is subject to adjustment as provided in Section 8.3.2. 4.5 Vesting. A Participant is 100% vested in Base Salary and Performance-Based Compensation deferred to the Plan and Matching Contributions. Employer Discretionary Contributions, Performance-Based Stock, and Restricted Stock Units shall be subject to any vesting or other restrictions imposed by the Committee as specified in the notice of award. Section 5 Distributions 5.1. Specified Date. A Participant may elect, at the time of a Deferral Election, to have Base Salary, Performance-Based Compensation, Performance-Based Stock, and Restricted Stock Units subject to the Deferral Election distributed in a single lump sum payment on a specific date, and for Performance-Based Stock, Restricted Stock Units or Discretionary Contributions that include a vesting schedule, after the last applicable vesting date. Such an election will apply to any Matching Contributions related to the Base Salary or Performance Based Compensation deferred. The Committee may establish a latest permitted specified date (such as the date the Participant attains an age specified by the Committee). Such an election shall state whether the specified date will be effective without regard to any earlier Distribution Event under Section 5.2. A Participant may elect to change the time of payment only if (i) the election is made at least twelve (12) months before the date the distribution would otherwise occur, (ii) the election shall not take effect until at least twelve months after the date the election is made, and (ii) the effect of the election is to defer commencement of such payment by at least five (5) years. 5.2. Distribution Events. Amounts credited to an Account shall be distributed on the earliest to occur of the following (each a “Distribution Event”): (a) The date elected by the Participant pursuant to Section 5.1 (subject to any election to disregard an earlier Distribution Event); 2021 Proxy Statement A-7
Appendix A (b) the Participant’s death; (c) the Participant’s Disability; (d) the Participant’s Separation from Service; or (e) a Change of Control. 5.3 Additional Rules for Distribution Events. If distribution of an Account is due as a result of a Distribution Event, other than the Separation from Service of a Specified Employee, such payment will be made as soon as practicable, but no later than seventy-five (75) days after the applicable Distribution Event. If payment is due as a result of a Separation from Service and the Participant is a Specified Employee, distribution will occur on the earlier of (i) first day of the seventh month following the Participant’s Separation from Service, or (ii) the date of the Participant’s death. 5.4 Unforeseeable Emergency. A Participant may request a distribution of vested amounts from his or her Account in the event the Participant has an Unforeseeable Emergency. A Participant who receives a distribution due to an Unforeseeable Emergency shall have any Deferral Election for the Plan Year in which the distribution is received cancelled for the remainder of the Plan Year. The total numberamount distributed with respect to an Unforeseeable Emergency shall not exceed the amounts necessary to satisfy such Unforeseeable Emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution. The Committee may establish guidelines and procedures for implementing withdrawals. An application shall be written, be signed by the Participant and include a statement of facts causing the Unforeseeable Emergency and any other facts required by the Committee. The withdrawal amount and date shall be fixed by the Committee. The Committee may require a minimum advance notice and may limit the amount, time and frequency of withdrawals. The foregoing shall be construed in a manner consistent with Section 409A. 5.5 Form of Payment. Payment from a Participant’s Account shall be made in the form of cash or shares of Common Stock reserved and availablein accordance with the following rules. 5.5.1 Investment Account. Amounts payable from a Participant’s Investment Account shall be payable in cash. 5.5.2 Company Stock Account. Unless otherwise determined by the Committee, amounts payable from a Participant’s Company Stock Account shall be payable in the form of one share of Common Stock for granteach whole Stock Unit then payable, with cash payable for each fractional Stock Unit based on the Fair Market Value of the Common Stock as of the applicable distribution date. For payment of amounts attributable to a Restricted Stock Unit originally granted under the Stock Plan, the shares payable shall come from and after May 23, 2019, shall be 20,000,000. Shares subject to an Award under the Plan may be authorized and unissued shares or may be treasury shares. The number ofStock Plan’s share pool. All other shares of Common Stock availablepayable from a Participant’s Company Stock Account shall come from the share pool for this Plan as provided in Section 8.3.
5.6 Beneficiary Designation. If distribution of an Account is due as a result of the Participant’s death, the Participant’s Account(s) will be distributed to the Participant’s designated beneficiary, designated in accordance with rules and procedures adopted by the Committee for beneficiary designations. If a Participant dies without designating a beneficiary or the designated beneficiary does not survive the Participant, then the Participant’s Account(s) shall be distributed to the Participant’s surviving spouse, or, if none, to the Participant’s surviving children, or, if none, to the Participant’s surviving grandchildren, or, if none, to the Participant’s surviving parents, or, if none, to the Participant’s surviving siblings, or, if none, to the Participant’s estate. Section 6 Amendment; Termination The Plan may be amended or terminated at any time through action by the Board or by the Committee; provided, however, that no amendment or termination of the Plan will reduce the amount actually credited to a Participant’s Account as of the date of the amendment or termination or further defer the due dates for the purposepayment of AwardsAccounts. An amendment shall be contingent on approval of the Company’s stockholders to the extent stated by the Committee, required by applicable law or required by applicable stock exchange listing requirements. Notwithstanding any provision of the Plan to the contrary but only to the extent permitted by Section 409A, in connection with any termination of the Plan the Committee shall have the authority to cause the Accounts of all Participants (and Beneficiaries of any deceased Participants) to be paid in a single cash payment as of a date A-8 www.hecla-mining.com
Appendix A determined by the Committee or to otherwise accelerate the payment of all Accounts in such manner as the Committee determines in its discretion. Section 7 Claims Procedure 7.1. Initial Claim. Any person (“Claimant”) claiming a benefit or requesting an interpretation, ruling or information under the Plan shall be reduced by: (i)present the total number of Stock Appreciation Rights exercised, regardless of whetherrequest in writing to the Committee. The Committee may, in its discretion and at any stage of the shares of Common Stock underlying such Awards are not actually issuedclaims process, hold one or more hearings. The Claimant may, at the Claimant’s own expense, have an attorney or other representative act on the Claimant’s behalf; provided that a written authorization is presented to the participantCommittee. 7.2. Timing of Initial Decision. Within 90 days after the Claimant delivers the claim (45 days in the case of a claim based upon Disability), the Claimant will receive either: (a) a decision; or (b) a notice for extension describing special circumstances requiring additional time to process the claim (up to 180 days from the day the Claimant delivered the claim or, in the case of a claim based upon Disability, up to two 30-day extensions for a total maximum processing time of 105 days from the day the Claimant delivered the claim). Any notice for extension will describe the special circumstances (such as the resultneed to hold a hearing) requiring more time and the date by which the Committee expects to render a decision. 7.3. Content of a net settlement; and (ii) any shares of Common Stock used to pay any exercise price for a Stock Option or any tax withholding obligation with respect to any Award (including Restricted Stock and Restricted Stock Units)Initial Decision. Any Award settled in cash shall not be counted as shares of Common Stock for any purpose under this Plan. Awards granted in assumption of or in substitution for awards previously granted by an acquired company will not be counted as shares of Common Stock for any purpose underIf the Plan. If any Award under the Plan expires, orClaimant’s claim is terminated, surrendered or forfeited (including a repurchase of unvested shares at no more than the cost, if any, paid for such shares),denied in whole or in part, the unissued Common Stock covered by such Award shall again be availableClaimant will receive a written notice specifying: (a) the reasons for the grantdenial; (b) the Plan provisions on which the denial is based; (c) any additional information needed from the Claimant in connection with the claim and the reason such information is needed; and (d) an explanation of Awardsthe claims review procedure and the applicable time limits, including a statement of the claimant’s right to bring a civil action under ERISA Section 502(a) following an adverse benefit determination on appeal. The time limits for making a decision on the Plan.Claimant’s claim will be frozen until any necessary additional information is received by the Committee. 7.4. Appeal. To appeal a benefit claim decision, the Claimant must deliver the Claimant’s written request for review to the Committee within 60 days (180 days for the denial of a claim based upon Disability) of the date the Claimant received the initial claim denial. The Claimant’s written request for review may (but is not required to) include issues, comments, documents, and other records the Claimant wants considered in the review. All the information the Claimant submits will be taken into account on appeal, even if it was not reviewed as part of the initial decision. The Claimant may ask to examine or receive free copies of all pertinent Plan documents, records, and other information relevant to the Claimant’s claim by asking the Committee. If the Claimant fails to deliver the written request for review to the Committee within 60 days (180 days for a Disability claim) of the date the Claimant received the initial claim denial, the Claimant shall forever forfeit his or her right to appeal the claim either to the Committee or to a court. 7.5. Timing of Decision Upon Appeal. Within 60 days (45 days for a claim based upon Disability) after the Claimant delivers the request for review, the Claimant will receive either: (a) a decision; or (b) a notice for extension describing special circumstances requiring additional time to process the Claimant’s claim (up to 120 days from the day the Claimant delivered the request for review or, in the case of a claim based upon Disability, up to 90 days from the day the Claimant delivered the request for review). Any notice for extension will describe the special circumstances (such as the need to hold a hearing) requiring more time and the date by which the Committee expects to render a decision on appeal. 7.6. Content of Decision Upon Appeal. The decision on the Claimant’s appeal will be in writing and will specify: (a) the reasons for the decision; (b) the Plan provisions on which the decision is based; and (c) any documents, records, or other information relevant to the Claimant’s claim. 7.7. Final Decision. All decisions on appeal are final and binding on all parties. No legal action may be brought more than one year following a final decision on the claim under these claims procedures. The one-year statute of limitations on suits applies in any forum where a Claimant initiates such suit or legal action. If a civil action is not filed within this period, the Claimant’s claim will be deemed permanently waived and abandoned, and the Claimant will be precluded from reasserting it. A Claimant’s authorized representative may act on the Claimant’s behalf in pursuing a claim or appeal of an adverse benefit determination. 2021 Proxy Statement A-9
Appendix A Section 8 General Provisions 8.1. Compliance with Section 409A. The Plan is intended to comply with Section 409A. Notwithstanding any provision of the Plan to the contrary, the Plan shall be interpreted, operated and administered consistent with its intent. Notwithstanding any provision of this Plan to the contrary, in the event that the Committee determines in good faith that any amounts payable under this Plan may not be either exempt from, or compliant with, Section 409A, the Committee shall adopt such amendments to this Plan or adopt other policies or procedures (including amendments, policies and procedures with retroactive effective), or take any other commercially reasonable actions necessary or appropriate (i) to preserve the intended tax treatment of the amounts payable hereunder, to preserve the economic benefits of such amounts, and/or to avoid less favorable accounting or tax consequences for the Participating Employers and/or (ii) to exempt the amounts payable hereunder from Section 409A or to comply with the requirements of Section 409A and thereby avoid the application of additional taxes thereunder; provided, however, that this Section 8.1 does not, and shall not be construed so as to, create any obligation on the part of any Participating Employer to adopt any such amendments, policies or procedures or to take any other such actions or to indemnify any Participant for any failure to do so. 8.2 Withholding. Amounts due for FICA taxes and other similar taxes on Base Salary, Performance-Based Compensation and Matching Contributions will be withheld from the Participant’s remaining compensation. The Company or Participating Employer, as the case may be, shall have the right to deduct from payments of any kind otherwise due to the Participant any federal, state, or local taxes of any kind required by law to be withheld as a result of (i) vesting in Restricted Stock Units or Discretionary Employer Contributions, (ii) issuance of shares of Common Stock, purchasedor (iii) any other event. Withholding of amounts with respect to a Participant’s Company Stock Account may be effected by withholding a number of the Stock Units credited to such Company Stock Account, based on the open market withFair Market Value of the proceedsCommon Stock as of the applicable tax date, at statutory minimum rates. 8.3 Stock Option exercises shall not be added backSubject to the Plan. 8.3.1 Share Pool. The shares of Common Stock that shall be made available share poolfor purposes of satisfying the obligations of the Company under the Plan shall be both (i) shares that are reserved and available for grant or award under the Plan in the sum of (A) 6,000,000 shares plus (B) upon approval by the Company’s shareholders at the 2021 annual meeting of shareholders, 1,500,000 shares, all subject to adjustment as provided below, and (ii) the shares of Common Stock authorized and approved under the Stock Plan. For purposes of counting shares of Common Stock available under this Section 38.3.1 for distribution from Company Stock Accounts, the number of shares covered by Stock Units credited to such Company Stock Accounts shall be counted on the date the Stock Units are credited to a Company Stock Account. The Company shall keep separate sub-accounts to determine which applicable share pool the Stock Units shall be settled from. 8.3.2 Adjustments. In the event of any change in corporate capitalization, such as a stock split, or a corporate transaction, such as any merger, consolidation, separation, including a spin off, or other distribution of stock or property of the Corporation,Company, any reorganization (whether or not such reorganization comes within the definition of such term in Section 368 of the Code) or any partial or complete liquidation of the Corporation,Company, the Committee or Board shall make such substitution or adjustments in the aggregate number and kind of shares reserved for issuance under the Plan, in the number, kind and option price of shares subject to outstanding Stock Options and Stock Appreciation Rights, in the number and kind of shares subject to other outstanding Awards granted under the Table of Contents
Plan and/or such other equitable substitution or adjustments as it shall determine to be appropriate in its sole discretion; provided however, thatequitably adjust (i) the number of shares subject to any Award shall always be a whole number. Such adjusted option price shall also be used to determine the amount payable by the Corporation upon the exercise of any Stock Appreciation Right associated with any Stock Option.
Section 4. Eligibility
Except as otherwise required under Section 422 of the Code, officers, employees, and certain independent consultants for the Corporation, its subsidiaries and Affiliates who are responsible for or contribute to the management, growth, profitability or operation of the business of the Corporation, its subsidiaries and Affiliates are eligible to be granted Awards under the Plan.
Section 5. Stock Options
Stock Options may be granted alone or in addition to other Awards grantedavailable under the Plan as provided in Section 8.3.1 above and (ii) the Stock Units credited to the Company Stock Account of each Participant. Adjustments under this Section 8.3.1 shall be made by the Committee, whose determination in that respect shall be final, binding, and conclusive.
8.4 Attorneys’ Fees. If a suit or action is instituted to enforce any rights under this Plan, the prevailing party may be of two types: Incentive Stock Optionsrecover from the other party reasonable attorneys’ fees at trial and Nonqualified Stock Options.on any court appeal. 8.5. Notices. Any Stock Option grantednotice under thethis Plan shall be in such formwriting and shall be effective when actually delivered or, if mailed, when deposited as the Committee may from time to time approve. The Committeefirst-class mail postage prepaid. Mail shall have the authority to grant any optionee Incentive Stock Options, Nonqualified Stock Options or both types of Stock Options (in each case with or without Stock Appreciation Rights);provided however,that grants hereunder are subjectbe directed to the total number of shares of Common Stock reserved and available for grant pursuant to Section 3. Incentive Stock Options may be granted only to employees ofCompany at the Corporation and its subsidiaries (within the meaning of Section 424(f) of the Code). To the extent that any Stock Option is not designated as an Incentive Stock Option or even if so designated does not qualify as an Incentive Stock Option, it shall constitute a Nonqualified Stock Option.
Stock Options shall be evidenced by option agreements with participants, the terms and provisions of which may differ with respect to each participant. An option agreement shall indicate on its face whether it is intended to be an agreement for an Incentive Stock Option or a Nonqualified Stock Option. The grant of a Stock Option shall occur on the date the Committee by resolution selects an individual to be a participantaddress stated in any grant of a Stock Option, determines the number of shares of Common Stock to be subject to such Stock Option to be granted to such individual and specifies the terms and provisions of the Stock Option. The Corporation shall promptly notify a participant of any grant of a Stock Option, and a written option agreement or agreements shall be duly executed and delivered by the Corporation to the participant. Such agreement or agreements shall become effective upon execution by the Corporation and the participant.
Anything in thethis Plan, to the contrary notwithstanding, no term ofParticipant’s last known home address shown in the Plan relatingCompany’s records, or to Incentive Stock Optionssuch other address as a party may specify by notice to the other parties. Notices to an Employer or the Committee shall be interpreted, amendedsent to the Company’s address.
8.6. Nontransferability. The rights of a Participant under this Plan are personal. No interest of a Participant or altered nor shall any discretionone claiming through a Participant may be directly or authority granted under the Plan be exercised so as to disqualify the Plan under Section 422 of the Codeindirectly assigned, alienated, pledged, transferred, or without the consent of the optionee affected, to disqualify any Incentive Stock Option under such Section 422. Stock Options granted under the PlanA-10 www.hecla-mining.com
Appendix A encumbered and no such interest shall be subject to theseizure by legal process, attachment, garnishment, execution following terms and conditions and shall contain such additional terms and conditions as the Committee shall deem desirable: (a) Option Price.The option price per share of Common Stock purchasable under a Stock Option shall be determined by the Committee and set forthjudgment or in the option agreement, and shall not be less than the Fair Market Value of the Common Stock subjectany other way subjected to the Stock Option on the date of grant;provided, however,that if a participant owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Corporation or of its parent or any subsidiary, the option price per share of an Incentive Stock Option granted to such participant shall not be less than one hundred ten percent (110%) of the Fair Market Value of the Common Stock per share on the date of the grant of the option.
(b) Option Term.The term of each Stock Option shall be fixed by the Committee, but no Stock Option shall be exercisable more than ten (10) years after the date the Stock Option is granted;provided, however,that in the event a Stock Option would expire during a black-out period, as such period is determined under the terms of the then currently effective insider trader policy of the Corporation, the termclaims of any such Stock Option shall automatically be extended forcreditor. The foregoing limitation precludes, among other things, a period of sixty (60) days after the end of such black-out period;further provided, however,in the case of an Incentive Stock Option granted to an optioneeParticipant who at the time the Incentive Stock Option is granted, owns Common Stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Corporation or of its parent orgetting (or has gotten) a divorce from transferring any subsidiary thereof, the term of the Incentive Stock Option shall be five (5) years from the date of grant or such shorter term as may be provided in the option agreement.
(c) Exercisability.Except as otherwise provided herein, Stock Options shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee. If the Committee provides that any Stock Option is exercisable only in installments, the Committee may at any time waive such installment exercise provisions, in whole or in part, based on such factors as the Committee may determine. In addition, the Committee may at any time accelerate the exercisability of any Stock Option.
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(d) Method of Exercise.Subject to the provisions of this Section 5, Stock Options may be exercised, in whole or in part, at any time during the option term by giving written notice of exercise to the Corporation specifying the number of shares of Common Stock subject to the Stock Option to be purchased.
Such notice shall be accompanied by payment in full of the purchase price by certified or bank check, wire transfer or such other method of payment or negotiable instrument as the Corporation may accept. If approved by the Committee, payment, in full or in part, may also be made in the form of unrestricted Common Stock already owned by the optionee of the same class as the Common Stock subject to the Stock Option (based on the Fair Market Value of the Common Stock on the date the Stock Option is exercised);provided however,that, in the case of an Incentive Stock Option, the right to make a payment in the form of already owned shares of Common Stock of the same class as the Common Stock subject to the Stock Option may be authorized only at the time the Stock Option is granted and must have been owned by the optionee for more than six (6) months on the date of surrender.
If payment of the option exercise price of a Nonqualified Stock Option is made, in whole or in part, in the form of unrestricted Common Stock, the number of shares of Common Stock to be received upon such exercise equal to the number of shares of unrestricted Common Stock used for payment of the option exercise price shall be subject to the same restrictions or other limitations to which such unrestricted Common Stock was subject, unless otherwise determined by the Committee.
In the discretion of the Committee, payment for any shares subject to a Stock Option may also be made by delivering a properly executed exercise notice to the Corporation, together with a copy of irrevocable instructions to a broker to deliver promptly to the Corporation the amount of sale or loan proceeds to pay the purchase price, and, if requested, the amount of any federal, state, local or foreign withholding taxes. To facilitate the foregoing, the Corporation may enter into agreements for coordinated procedures with one or more brokerage firms.
In addition, in the discretion of the Committee, payment for any shares subject to a Stock Option may also be made by instructing the Committee to withhold a number of such shares having a Fair Market Value on the date of exercise equal to the aggregate exercise price of such Stock Option.
No shares of Common Stock shall be issued until full payment therefore has been made. An optionee shall have all of the rights of a stockholder of the Corporation holding the class or series of Common Stock that is subject to such Stock Option (including, if applicable, the right to vote the shares and the right to receive dividends), when the optionee has given written notice of exercise, has paid in full for such shares and, if requested, has given the representation described in Section 14(a).
(e) Nontransferability of Stock Options.No Stock Option shall be transferable by the optionee other than: (i) by will or by the laws of descent and distribution consistent with Section 422(b)(5) of the Code; or (ii) in the case of a Nonqualified Stock Option, pursuant to: (a) a domestic relations order or (b) a gift to such optionee’s children, whether directly or indirectly or by means of a trust or partnership or otherwise, if expressly permitted under the applicable option agreement. If an Incentive Stock Option is transferred pursuant to a domestic relations order, the Stock Option does not qualify as an Incentive Stock Option as of the day of such transfer. All Stock Options shall be exercisable, during the optionee’s lifetime, only by the optionee or by the guardian or legal representative of the optionee or, in the case of a Nonqualified Stock Option, its alternative payee pursuant to such domestic relations order, it being understood that the terms “holder” and “optionee” include the guardian and legal representative of the optionee named in the option agreement and any person to whom an option is transferred by will or the laws of descent and distribution or, in the case of a Nonqualified Stock Option, pursuant to a domestic relations order or a gift permitted under the applicable option agreement.
(f) Termination by Death.Unless otherwise determined by the Committee, if an optionee’s employment terminates by reason of death, any Stock Option held by such optionee may thereafter be exercised, to the extent then exercisable, or on such accelerated basis as the Committee may determine, for a period of one year (or such other period as the Committee may specify in the option agreement) from the date of such death or until the expiration of the stated term of such Stock Option, whichever period is the shorter.
(g) Termination by Reason of Disability.Unless otherwise determined by the Committee, if an optionee’s employment terminates by reason of Disability, any Stock Option held by such optionee may thereafter be exercised by the optionee, to the extent it was exercisable at the time of termination, or on such accelerated basis as the Committee may determine, for a period of three years (or such shorter period as the Committee may specify in the option agreement) from the date of such termination of employment or until the expiration of the stated term of such Stock Option, whichever period is the shorter;provided however,that if the optionee dies within such period, any unexercised Stock Option held by such optionee shall, notwithstanding the expiration of such period, continue to be exercisable to the extent to which it was exercisable at the time of death for a period of 12 months from the date of such death or until the expiration of the stated term of such Stock Option, whichever period is the shorter. In the event of termination of employment by reason of Disability, if an Incentive Stock Option is exercised after the expiration of the exercise periods that apply for purposes of Section 422 of the Code, such Stock Option will thereafter be treated as a Nonqualified Stock Option.
(h) Termination by Reason of Retirement.Unless otherwise determined by the Committee, if an optionee’s
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employment terminates by reason of Retirement, any Stock Option held by such optionee may thereafter be exercised by the optionee, to the extent it was exercisable at the time of such Retirement, or on such accelerated basis as the Committee may determine, for a period of five years (or such shorter period as the Committee may specify in the option agreement) from the date of such termination of employment or until the expiration of the stated term of such Stock Option, whichever period is the shorter;provided however,that if the optionee dies within such period any unexercised Stock Option held by such optionee shall, notwithstanding the expiration of such period, continue to be exercisable to the extent to which it was exercisable at the time of death for a period of 12 months from the date of such death or until the expiration of the stated term of such Stock Option, whichever period is the shorter. In the event of termination of employment by reason of Retirement, if an Incentive Stock Option is exercised after the expiration of the exercise periods that apply for purposes of Section 422 of the Code, such Stock Option will thereafter be treated as a Nonqualified Stock Option.
(i) Other Termination.Unless otherwise determined by the Committee: (i) if an optionee incurs a Termination of Employment for Cause, all Stock Options held by such optionee shall thereupon terminate; and (ii) if an optionee incurs a Termination of Employment for any reason other than death, Disability or Retirement or for Cause, any Stock Option held by such optionee, to the extent then exercisable, or on such accelerated basis as the Committee may determine, may be exercised for the lesser of three months from the date of such Termination of Employment or the balance of such Stock Option’s term;provided however,that if the optionee dies within such three-month period, any unexercised Stock Option held by such optionee shall, notwithstanding the expiration of such three-month period, continue to be exercisable to the extent to which it was exercisable at the time of death for a period of 12 months from the date of such death or until the expiration of the stated term of the Stock Option, whichever period is shorter.
(j) Termination at or after a Change-in-Control.Notwithstanding the foregoing, if an optionee incurs a Termination of Employment at or after a Change-in-Control (as defined Section 11(b)), other than by reason of death, Disability or Retirement, any Stock Option held by such optionee shall be exercisable for the lesser of: (i) six months and one day from the date of such Termination of Employment, and (ii) the balance of such Stock Option’s term. In the event of Termination of Employment, if an Incentive Stock Option is exercised after the expiration of the exercise periods that apply for purposes of Section 422 of the Code, such Stock Option will thereafter be treated as a Nonqualified Stock Option.
(k) Cashing Out of Stock Option.On receipt of written notice of exercise, the Committee may elect to cash out all or part of the portion of the shares of Common Stock for which a Stock Option is being exercised by paying the optionee an amount, in cashhis or Common Stock, equal to the excess of the Fair Market Value of the Common Stock over the option price multiplied by the number of shares of Common Stock for which the Option is being exercised on the effective date of such cash-out. Cash-outs pursuant to this Section 5(k) relating to Options held by optionees who are actually or potentially subject to Section 16(b) of the Exchange Act shall comply with the “window period” provisions of Rule 16b-3, to the extent applicable, and, in the case of cash-outs of Nonqualified Stock Options held by such optionees, the Committee shall use Fair Market Value.
(l) $100,000 Per Year First Exercisable Limitation. Stock Options are not treated as Incentive Stock Options, but are instead treated as Nonqualified Stock Options, to the extent that the aggregate Fair Market Value of the Common Stock with respect to which Incentive Stock Options are exercisable for the first time by any optionee during any calendar year (under all plans of the Corporation and its parent and subsidiary corporations) exceeds $100,000.
Section 6. Stock Appreciation Rights
(a) Grant and Exercise.Stock Appreciation Rights may be granted in conjunction with all or part of any Stock Option granted under the Plan. In the case of a Nonqualified Stock Option, such rights may be granted either at or after the time of grant of such Stock Option. In the case of an Incentive Stock Option, such rights may be granted only at the time of grant of such Stock Option. A Stock Appreciation Right shall terminate and no longer be exercisable upon the termination or exercise of the related Stock Option.
A Stock Appreciation Right may be exercised by an optionee in accordance with Section 6(b) by surrendering the applicable portion of the related Stock Option in accordance with procedures established by the Committee. Upon such exercise and surrender, the optionee shall be entitled to receive an amount determined in the manner prescribed in Section 6(b). Stock Options which have been so surrendered shall no longer be exercisable to the extent the related Stock Appreciation Rights have been exercised.
(b) Terms and Conditions.Stock Appreciation Rights shall be subject to such terms and conditions as shall be determined by the Committee, including the following:
(i) Stock Appreciation Rights shall be exercisable only at such time or times and to the extent that the Stock Options to which they relate are exercisable in accordance with the provisions of Section 5 and this Section 6; provided however, that a Stock Appreciation Right shall not be exercisable during the first six months of its term by an optionee who is actually or potentially subject to Section 16(b) of the Exchange Act, except that this limitation shall not apply in the event of death or Disability of the optionee prior to the expiration of the six-month period.
(ii) Upon the exercise of a Stock Appreciation Right, an optionee shall be entitled to receive an amount in cash, shares of Common Stock or both equal in value to the excess of the Fair Market Value of one share of Common
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Stock over the option price per share specified in the related Stock Option multiplied by the number of shares in respect of which the Stock Appreciation Right shall have been exercised, with the Committee having the right to determine the form of payment.
In the case of Stock Appreciation Rights relating to Stock Options held by optionees who are actually or potentially subject to Section 16(b) of the Exchange Act, the Committee:
(1) may require that such Stock Appreciation Rights be exercised for cash only in accordance with the applicable “window period” provisions of Rule 16b-3; and
(2) in the case of Stock Appreciation Rights relating to Nonqualified Stock Options, may provide that the amount to be paid in cash upon exercise of such Stock Appreciation Rights during a Rule 16b-3 “window period” shall be based on the Fair Market Value.
(iii) Stock Appreciation Rights shall be transferable only to permitted transferees of the underlying Stock Option in accordance with Section 5(e).
(iv) Upon the exercise of a Stock Appreciation Right, the Stock Option or part thereof to which such Stock Appreciation Right is related shall be deemed to have been exercised for the purpose of the limitation set forth in Section 3 on the number of shares of Common Stock to be issued under the Plan, but only to the extent of the number of shares covered by the Stock Appreciation Right at the time of exercise based on the value of the Stock Appreciation Right at such time.
Section 7. Restricted Stock
(a) Administration.Shares of Restricted Stock may be awarded either alone or in addition to other Awards granted under the Plan. The Committee shall determine the officers, employees or independent consultants to whom and the time or times at which grants of Restricted Stock will be awarded, the number of shares to be awarded to any participant (subject to the total number of shares of Common Stock reserved and available for grant pursuant to Section 3), the conditions for vesting, the time or times within which such Awards may be subject to forfeiture and any other terms and conditions of the Awards, in addition to those contained in Section 7(c).
The Committee may, prior to grant, condition vesting of Restricted Stock upon the attainment of Performance Goals. The Committee may, in addition to requiring satisfaction of Performance Goals, condition vesting upon the continued service of the participant. The provisions of Restricted Stock Awards (including the applicable Performance Goals) need not be the same with respect to each recipient.
(b) Awards and Certificates.Shares of Restricted Stock shall be evidenced in such manner as the Committee may deem appropriate, including book-entry registration or issuance of one or more stock certificates. Any certificate issued in respect of shares of Restricted Stock shall be registered in the name of such participant and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Award, substantially in the following form:
“The transferability of this certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture) of the Hecla Mining Company 2010 Stock Incentive Plan and a Restricted Stock Agreement. Copies of such Plan and Agreement are on file at the offices of Hecla Mining Company, 6500 N. Mineral Drive, Suite 200, Coeur d’Alene, Idaho 83815-9408.”
The Committee may require that the certificates evidencing such shares be held in custody by the Corporation until the restrictions thereon shall have lapsed and that, as a condition of any Award of Restricted Stock, the participant shall have delivered a stock power, endorsed in blank, relating to the Common Stock covered by such Award.
(c) Terms and Conditions.Shares of Restricted Stock shall be subject to the following terms and conditions:
(i) Subject to the provisions of the Plan and the restricted stock agreement referred to in Section 7(c)(vi), during the period, if any, set by the Committee, commencing with the date of such Award for which such participant’s continued service is required (the “Restriction Period”), and until the later of: (A) the expiration of the Restriction Period, and (B) the date the applicable Performance Goals (if any) are satisfied, the participant shall not be permitted to sell, assign, transfer, pledge or otherwise encumber shares of Restricted Stock. Within these limits, the Committee may provide for the lapse of restrictions based upon period of service in installments or otherwise and may accelerate or waive, in whole or in part, restrictions based upon period of service or upon performance.
(ii) Except as provided in the applicable award agreement, the participant shall have the right to vote the shares of Restricted Stock prior to vesting. Regular cash dividends on unvested shares of Restricted Stock shall be
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automatically deferred and reinvested in additional shares of Restricted Stock, held subject to the same vesting conditions as applicable to the underlying Restricted Stock, except as may otherwise be provided in an award agreement, and provided that in no event may regular cash dividends be paid to a participant on unvested shares of Restricted Stock prior to vesting of the Award.
(iii) Except to the extent otherwise provided in the applicable restricted stock agreement and Sections 7(c)(i), 7(c)(iv) and 10(a), upon a participant’s Termination of Employment for any reason during the Restriction Period or before the applicable Performance Goals are satisfied, all shares still subject to restriction shall be forfeited by the participant.
(iv) Except to the extent otherwise provided in Section 11(a), in the event that a participant incurs a Retirement or the Corporation initiates such participant’s Termination of Employment (other than for Cause), the Committee shall have the discretion to waive, in whole or in part, any or all remaining restrictions with respect to any or all of such participant’s shares of Restricted Stock.
(v) If and when any applicable Performance Goals are satisfied and the Restriction Period expires without a prior forfeiture of the Restricted Stock, unlegended certificates for such shares shall be delivered to the participant upon surrender of the legended certificates.
(vi) Each Award shall be confirmed by, and be subject to the terms of, a restricted stock agreement.
Section 8. Performance Units
(a) Administration.Performance Units may be awarded either alone or in addition to other Awards granted under the Plan. The Committee shall determine the officers, employees, or independent consultants to whom and the time or times at which Performance Units shall be awarded, the number of Performance Units to be awarded to any participant (subject to the total number of shares of Common Stock reserved and available for grant pursuant to Section 3), the duration of the Award Cycle and any other terms and conditions of the Award, in addition to those contained in Section 8(b).
The Committee may condition the settlement of Performance Units upon the continued service of the participant, the attainment of Performance Goals, or both. The provisions of such Awards (including the applicable Performance Goals) need not be the same with respect to each recipient.
(b) Terms and Conditions.Performance Units Awards shall be subject to the following terms and conditions:
(i) Subject to the provisions of the Plan and the performance unit agreement referred to in Section 8(b)(vi), Performance Units may not be sold, assigned, transferred, pledged or otherwise encumbered during the Award Cycle. At the expiration of the Award Cycle, the Committee shall evaluate the Corporation’s performance in light of the Performance Goals for such Award to the extent applicable, and shall determine the number of Performance Units granted to the participant which have been earned and the Committee may then elect to deliver: (A) a number of shares of Common Stock equal to the number of Performance Units determined by the Committee to have been earned, or (B) cash equal to the Fair Market Value of such number of shares of Common Stock to the participant.
(ii) Except to the extent otherwise provided in the applicable performance unit agreement and Sections 8(b)(iii) and 10(a), upon a participant’s Termination of Employment for any reason during the Award Cycle or before any applicable Performance Goals are satisfied, the rights to the shares still covered by the Performance Units Award shall be forfeited by the participant.
(iii) Except to the extent otherwise provided in Section 11(a), in the event that a participant incurs a Retirement, or the Corporation initiates such participant’s Termination of Employment (other than for Cause), the Committee shall have the discretion to waive, in whole or in part, any or all remaining payment limitations with respect to any or all of such participant’s Performance Units.
(iv) A participant may elect to further defer receipt of the Performance Units payable under an Award (or an installment of an Award) for a specified period or until a specified event, subject in each case to the Committee’s approval and to such terms as are determined by the Committee (the “Elective Deferral Period”) and, if applicable, compliance with Code Section 409A and the regulations issued under Code Section 409A. Subject to any exceptions adopted by the Committee, such election must generally be made prior to commencement of the Award Cycle for the Award (or for such installment of an Award).
(v) If and when any applicable Performance Goals are satisfied and the Elective Deferral Period expires without a prior forfeiture of the Performance Units, payment in accordance with Section 8(b)(i) hereof shall be made to the participant.
(vi) Each Award shall be confirmed by, and be subject to the terms of, a performance unit agreement.
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Section 9. Restricted Stock Units
(a) Administration.Restricted Stock Units may be awarded either alone or in addition to other Awards granted under the Plan. The Committee shall determine the officers, employees, or independent consultants to whom and the time or times at which Restricted Stock Units shall be awarded, the number of Restricted Stock Units to be awarded to a participant (subject to the total number of shares of Common Stock reserved and available for grant pursuant to Section 3), and any other terms and conditions of the Restricted Stock Units, in addition to those contained in Section 9(b).
(b) Terms and Conditions.Restricted Stock Units shall be subject to the following terms and conditions:
(i) Each Restricted Stock Unit awarded to a participanther interest under this Plan may also be subject to such other provision ashis or her spouse or ex-spouse (except by naming the Committee determines appropriate, including without limitation, provisions for the forfeiture of and restrictions on the sale, resalespouse or other disposition of shares acquired under any Restricted Stock Unit, provisions giving the Corporation the right to repurchase shares acquired under any Restricted Stock Unit, and provisions to comply with federal and state securities laws, underwritings or conditions as to the participant’s employment, and Code Section 409A.
(ii) No Restricted Stock Unit shall be made more than ten years after the date of the adoption of the Plan; provided, however, that the terms and conditions applicable to any Restricted Stock Unit made within such period may thereafter be amended or modified by mutual agreement between the Corporation and the participant or such other persons as may then have an interest therein.
(iii) A Restricted Stock Unit may also be granted or awarded under this Plan and considered to be authorized and unissued shares or treasury shares as provided in Section 3 of this Plan, and allocated to a participant’s account under the Hecla Mining Company Key Employee Deferred Compensation Plan. Such Restricted Stock Units shall be accounted for under this Plan and shall reduce the number of shares of Common Stock reserved and available for grant or an Award under this Plan so that shares of Common Stock granted or awarded under this Plan can be used by the Corporation to satisfy the obligations of the Corporation under the Hecla Mining Company Key Employee Deferred Compensation Plan.
(iv) Restricted Stock Units may be settled in cash or Common Stock, as determined by the Committee. Restricted Stock Units shall be settled (i) no later than March 15th of the year following the year in which the Restricted Stock Unit is no longer subject to a substantial risk of forfeiture or (ii) pursuant to a participant’s election to defer settlement of Restricted Stock Units under the terms and conditions of the Hecla Mining Key Employee Deferred Compensation Plan.
(v) A holder of Restricted Stock Units shall not have voting, dividend, or dividend equivalent rights or any other rights of a shareholder.
Section 10. Other Stock-based Awards
(a) Administration. Other Stock-based Awards may be granted either alone or in addition to or in conjunction with other Awards under the Plan. Other Stock-based Awards may be granted in lieu of other cash or other compensation to which a participant is entitled from the Company or may be used in the settlement of amounts payable in shares of Common Stock under any other compensation plan or arrangement of the Company. Subject to the provisions of the Plan, the Committee shall have the sole and complete authority to determine the persons to whom and the time or times at which such Awards shall be made, the number of shares of Common Stock to be granted pursuant to such Awards, and all other conditions of such Awards. Unless the Committee determines otherwise, any such Award shall be confirmed by an award agreement, which shall contain such provisions as the Committee determines to be necessary or appropriate to carry out the intent of this Plan with respect to such Award.
(b) Non-Transferability. Any Common Stock subject to Awards made under this Section 10 may not be sold, assigned, transferred, pledged or otherwise encumbered prior to the date on which the shares are issued, or, if later, the date on which any applicable restriction, performance or deferral period lapses.
Section 11. Change-in-Control Provisions
(a) Impact of Event.For any Awards outstanding as of a Change-in-Control, either of the following provisions shall
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apply, depending on whether, and the extent to which, Awards are assumed, converted, or replaced by the resulting entity in the Change-in-Control, unless otherwise provided by the applicable Award agreement:
(i) To the extent such Awards are not assumed, converted, or replaced by the resulting entity in the Change-in-Control, then upon the Change-in-Control such outstanding Awards that may be exercised shall become fully exercisable, all restrictions with respect to such outstanding Awards (other than for Performance Units and other Awards for which vesting is contingent on the achievement of performance goals), shall lapse and become vested and nonforfeitable, and for any outstanding Performance Units and other Awards for which vesting is contingent on the achievement of performance
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goals, the target payout opportunities attainable under such Awards shall be deemed to have been fully earned as of the Change-in-Control based upon the greater of (A) an assumed achievement of all relevant performance goals at the “target” level or (B) the actual level of achievement of all relevant performance goals against target as of the Corporation’s fiscal quarter end preceding the Change-in-Control.
(ii) To the extent such Awards are assumed, converted, or replaced by the resulting entity in the Change-in-Control, if, within 24 months after the Change-in-Control, the participant has a Termination of Employment initiated by the Corporation other than for Cause (which may include a Termination of Employment initiated by the participant for “good reason” if provided in the applicable Award agreement), then such outstanding Awards that may be exercised shall become fully exercisable, all restrictions with respect to such outstanding Awards (other than for Performance Units and other Awards for which vesting is contingent on the achievement of performance goals) shall lapse and become vested and nonforfeitable, and for any outstanding Performance Units and other Awards for which vesting is contingent on the achievement of performance goals, the target payout opportunities attainable under such Awards shall be deemed to have been fully earned as of the Termination of Employment based upon the greater of: (A) an assumed achievement of all relevant performance goals at the “target” level, or (B) the actual level of achievement of all relevant performance goals against target as of the Corporation’s fiscal quarter end preceding the Change-in-Control.
Subject to Section 11(a)(i) above, in the event of a Change-in-Control, the Board may, upon at least 10 days’ advance notice to the affected persons, pay to the holders of outstanding Awards, in cash or stock, or any combination thereof, the value of such Awards based upon the price per share of Common Stock received or to be received by other stockholders of the Corporation in the event, and such Awards shall be canceled. In the case of any Stock Option or Stock Appreciation Right with an exercise price that equals or exceeds the price paid for a share of Common Stock in connection with the Change-in-Control, the Committee may cancel the Option or Stock Appreciation Right without the payment of consideration therefor.
(b) Definition of Change-in-Control.For purposes of the Plan, a “Change-in-Control” shall mean the happening of any of the following events:
(i) Any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) becomes the “beneficial owner” (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either: (A) the then outstanding shares of common stock of the Corporation (the “Outstanding Corporation Common Stock”), or (B) the combined voting power of the then outstanding voting securities of the Corporation entitled to vote generally in the election of directors (the “Outstanding Corporation Voting Securities”); provided, however, that for purposes of this Section 11(b), the following acquisitions shall not constitute a “Change-in-Control”: (I) any acquisition directly from the Corporation or approved by the “Incumbent Directors” (as defined in paragraph (ii) of this subsection (b)), following which such Person owns not more than 40% of the Outstanding Corporation Common Stock or the Outstanding Corporation Voting Securities; (II) any acquisition by an underwriter temporarily holding securities pursuant to an offering of such securities; (III) any acquisition by the Corporation; (IV) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Corporation or any corporation controlled by the Corporation; (V) any acquisition pursuant to a transaction which complies with clauses (A), (B) and (C) of paragraph (iii) of this subsection (b); or
(ii) Individuals who, as of the effective date of the Plan, constitute the Board (such Board shall hereinafter be referred to as the “Incumbent Directors”) cease for any reason to constitute at least a majority of the Board;provided however,that any individual who becomes a director subsequent to the effective date of the Plan whose election, or nomination for election by the Corporation’s shareholders, was approved by a vote of at least a majority of the Incumbent Directors then on the Board (either by a specific vote or by approval of the proxy statement of the Corporation in which such person is named as a nominee for director, without written objection to such nomination) shall be considered as though such individual wereBeneficiary).
8.7. Not an Incumbent Director; but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of either an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or (iii) Consummation of a reorganization, merger or consolidation (or similar corporate transaction) involving the Corporation or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Corporation, or the acquisition of assets or stock of another entity (a “Business Combination”), in each case, unless, immediately following such Business Combination, (A) more than 60% of, respectively, the then outstanding shares of common stockEmployment Contract. This Plan is not and the total voting power of (I) the corporation resulting from such Business Combination (the “Surviving Corporation”), or (II) if applicable, the ultimate parent corporation that directly or indirectly has beneficial ownership of 80% of the voting securities eligible to elect directors of the Surviving Corporation (the “Parent Corporation”), is represented by Outstanding Corporation Common Stock and Outstanding Corporation Voting Securities that were outstanding immediately prior to such Business Combination (or, if applicable, is represented by shares into which such Outstanding Corporation Common Stock or Outstanding Corporation Voting Securities, as the case may be, were converted pursuant to such Business Combination), and such beneficial ownership of common stock or voting power among the holders thereof is in substantially the same proportion as the beneficial ownership of Outstanding Corporation Common Stock and the voting power of such Outstanding Corporation Voting Securities among the holders thereof immediately prior to the Business Combination, (B) no person (other than any employee benefit plan (or related trust) sponsored or maintained by the Surviving Corporation or the Parent Corporation), is or becomes the beneficial owner, directly or indirectly, of 30% or
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more of the outstanding shares of common stock and the total voting power of the outstanding voting securities eligible to elect directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation), unless such acquisition is pursuant to a Business Combination that is an acquisition by the Corporation or a subsidiary of the Corporation of the assets or Stock of another entity that is approved by the Incumbent Directors, following which such person owns not more than 40% of such outstanding shares and voting power, and (C) at least a majority of the members of the board of directors of the Parent Corporation (or, if there is no Parent Corporation, the Surviving Corporation) following the consummation of the Business Combination were Incumbent Directors at the time of the Board’s approval of the execution of the initial agreement providing for such Business Combination; or
(iv) The approval by the stockholders of the Corporation of a complete liquidation or dissolution of the Corporation.
(v) Notwithstanding the foregoing, a Change-in-Control of the Corporation shall not be deemed to occur solely becauseconstitute a contract of employment between the Company and any Employee or other person, acquires beneficial ownership of 20%nor shall anything herein contained be deemed to give any Employee or moreother person any right to be retained in the Company’s employ or in any way limit or restrict the Company’s right or power to discharge any Employee or other person at any time and to treat him without regard to the effect which such treatment might have upon the Employee as a Participant in the Plan.
8.8. Successors. Amounts payable under this Plan shall be an obligation of the Outstanding Corporation Common Stock or Outstanding Corporation Voting Securities as a resultEmployer and successors of the acquisition of Outstanding Corporation Common Stock or Outstanding Corporation Voting SecuritiesEmployer and shall constitute mere unfunded, unsecured promises by the Corporation which reducesEmployer to pay cash compensation to the number of shares of Outstanding Corporation Common StockParticipants. The Company and its affiliates that constitute the Employer shall be jointly and severally liable for benefit payments to Participants under this Plan. In the event a Participant’s employer becomes insolvent, a Participant may bring a claim for benefits under this Plan against the Company or Outstanding Corporation Voting Securities;provided,that if after such acquisition by the Corporation such person becomes the beneficial owner of additional shares of Outstanding Corporation Common Stock or Outstanding Corporation Voting Securities that increases the percentage of Outstanding Corporation Common Stock or Outstanding Corporation Voting Securities beneficially owned by such person, a Change-in-Controlany affiliate of the Corporation shall then occur.Company that is an Employer under this Plan. Section 12. Term, Amendment and Termination
8.9. Incompetence. The Plan will terminate on May 23, 2030. Under the Plan, Awards outstanding as of such date shall not be affected or impaired by the terminationCommittee may decide that because of the Plan. The Boardmental or physical condition of a person entitled to payments, or because of other relevant factors, it is in the person’s best interest to make payments to others for the benefit of the person entitled to payment. In that event, the Committee may amend, alter, or discontinue the Plan, but no amendment, alteration or discontinuation shallin its discretion direct those payments to be made which would (i) impair the rights of an optionee underas follows:
(a) To a Stock Optionparent or spouse or a recipientchild of legal age; (b) To a Stock Appreciation Right, Restricted Stock Award, Performance Unit Awardlegal guardian; or Restricted Stock Unit theretofore granted (c) To one furnishing maintenance, support, or made without the optionee’s or recipient’s consent, except such an amendment made to cause the Plan to qualify for the exemption provided by Rule l6b-3, or (ii) disqualify the Plan from the exemption provided by Rule l6b-3. In addition, no such amendment shall be made without the approval of the Corporation’s stockholdershospitalization. 8.10. Governing Law. Except to the extent such approval is required by law or agreement. The Committee may amend the terms of any Stock Option or other Award theretofore granted or made prospectively or retroactively, but no such amendment shall impair the rights of any holder without the holder’s consent except such an amendment made to cause the Plan or Award to qualify for the exemption provided by Rule l6b-3.
Subject to the above provisions, the Board shall have authority to amend the Plan to take into account changes in law and tax and accounting rules, as well as other developments and to grant Awards which qualify for beneficial treatment under such rules without stockholder approval.
Section 13. Unfunded Status of Plan
It is intended that the Plan constitute an “unfunded” plan for incentive and deferred compensation under the Code and Title I of the Employee Retirement Income Security Act of 1974, as amended. The Committee may authorize the creation of trusts or other arrangements to meet the obligations created under the Plan to deliver Common Stock or make payments;provided however,that, unless the Committee otherwise determines, the existence of such trusts or other arrangements is consistent with the “unfunded” status of the Plan.
Section 14. General Provisions
(a) The Committee may require each person purchasing or receiving shares pursuant to an Award to represent to and agree with the Corporation in writing that such person is acquiring the shares without a view to the distribution thereof. The certificates for such shares may include any legend which the Committee deems appropriate to reflect any restrictions on transfer.
Notwithstanding any other provision of the Plan or agreements made pursuant thereto, the Corporation shall not be required to issue or deliver any certificate or certificates for shares of Common Stock under the Plan prior to fulfillment of all of the following conditions:
(i) listing or approval for listing upon notice of issuance, of such shares on the New York Stock Exchange, Inc., or such other securities exchange as may at the time be the principal market for the Common Stock;
(ii) any registration or other qualification of such shares of the Corporation under any state or federal law or regulation, or maintaining in effect any such registration or other qualification which the Committee shall, in its absolute discretion upon the advice of counsel, deem necessary or advisable; and
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(iii) obtaining any other consent, approval, or permit from any state or federal governmental agency which the Committee shall, in its absolute discretion after receiving the advice of counsel, determine to be necessary or advisable.
(b) Nothing contained in the Plan shall prevent the Corporation or any subsidiary or Affiliate from adopting other or additional compensation arrangements for its employees.
(c) Adoption of the Plan shall not confer upon any employee any right to continued employment, nor shall it interfere in any way with the right of the Corporation or any subsidiary or Affiliate to terminate the employment of any employee at any time.
(d) No later than the date as of which an amount first becomes includible in the gross income of the participant for federal income tax purposes with respect to any Award under the Plan, the participant shall pay to the Corporation, or make arrangements satisfactory to the Corporation regarding the payment of, any federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such amount. Unless otherwise determined by the Corporation, withholding obligations may be settled with Common Stock, including Common Stock that is part of the Award that gives rise to the withholding requirement. The obligations of the Corporation undercontrolling the Plan shall be conditional on such payment or arrangements,construed and the Corporation and its Affiliates shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to the participant. The Committee may establish such procedures as it deems appropriate, including making irrevocable elections, for the settlement of withholding obligations with Common Stock.
(e) Reinvestment of dividends in additional Restricted Stock at the time of any dividend payment shall only be permissible if sufficient shares of Common Stock are available under Section 3 for such reinvestment (taking into account then outstanding Stock Options and other Awards).
(f) The Committee shall establish such procedures as it deems appropriate for a participant to designate a beneficiary to whom any amounts payable in the event of the participant’s death are to be paid or by whom any rights of the participant, after the participant’s death, may be exercised.
(g) In the case of a grant of an Award to any employee of a Corporation subsidiary, the Corporation may, if the Committee so directs, issue or transfer the shares of Common Stock, if any, covered by the Award to the subsidiary, for such lawful consideration as the Committee may specify, upon the condition or understanding that the subsidiary will transfer the shares of Common Stock to the employeeentered in accordance with the terms of the Award specified by the Committee pursuant to the provisions of the Plan.
(h) The Plan and all Awards made and actions taken thereunder shall be governed by and construed in accordance with the laws of the State of Delaware, without referenceDelaware. Invalidation of any one of the provisions of the Plan for any reason shall in no way affect the other provisions hereof, and all such other provisions shall remain in full force and effect.
8.11. Unsecured General Creditor. Any amount allocated to principlesa Participant’s Account balance under this Plan shall be an unfunded, unsecured promise of conflictthe Employer to make payments in the future. Participants and their beneficiaries, heirs, successors, and assigns shall have no legal or equitable rights, interest or claims in any property or assets of laws.the Employer or any affiliate thereof. Any and all of the Employer’s assets shall be, and remain, the general, unpledged, unrestricted assets of the Employer. One or more of the entities constituting the Employer may choose (but are not required) to contribute assets to a rabbi trust, the assets of which will be subject to the claims of such entity’s creditors in the event of insolvency. The Employer may, but shall not be required to, establish a reserve of assets to provide funds for payments under this Plan. Establishing a reserve or rabbi trust shall have no effect on the operation of this Plan or upon the status of Participants as unsecured general creditors of the Employer. Rights to payments will not be limited to assets held in any reserve or rabbi trust. 8.12. Effective Date. This amended and restated Plan shall be effective December 1, 2015. (i)8.13. Clawback. All awards and any amounts or benefits received or outstanding under the Plan shall be subject to potential clawback, cancellation, recoupment, rescission, payback, reduction, or other similar action in accordance with the terms or conditions of any applicable CorporationCompany clawback or similar policy or any applicable law related to such actions, as may be in effect from time to time, including the requirements of (i) Section 304 of the Sarbanes Oxley Act and Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act; (ii) similar rules under the laws of any other jurisdiction; and (iii) any policies adopted by the CorporationCompany to implement such requirements. By participating in the Plan, the participant shall be deemed to have acknowledged and consented to the Corporation’sCompany’s application, implementation, and enforcement of any applicable CorporationCompany clawback or similar policy that may apply to the participant, whether adopted prior to or following the participant’s
2021 Proxy Statement A-11
Appendix A commencement of participation in the Plan, and any provision of applicable law relating to clawback, cancellation, recoupment, rescission, payback, or reduction of compensation, and to have agreed that the CorporationCompany may take such actions as may be necessary to effectuate any such policy or applicable law, without further consideration or action. (j) The terms and conditions of this Section 14(j) apply notwithstanding any other terms or conditions of the Plan to the contrary. The Plan is intended to comply with Code Section 409A to the extent subject thereto, and, accordingly, to the maximum extent permitted, the Plan shall be interpreted and administered to be in compliance therewith. Any payments described in the Plan that are due within the “short-term deferral period” as defined in Code Section 409A shall not be treated as deferred compensation unless applicable laws require otherwise. For purposes of Code Section 409A, each installment payment under the Plan shall be treated as a separate payment. To the extent required to avoid accelerated taxation or tax penalties under Code Section 409A, amounts that would otherwise be payable and benefits that would otherwise be provided under the Plan during the six-month period immediately after a participant’s Termination of Employment shall instead be paid on the first payroll date after the six-month anniversary of the participant’s Termination of Employment (or the participant’s death, if earlier). Notwithstanding anything in this Section 14(j), neither the Corporation nor the Board shall have any obligation to take any action to prevent the assessment of any additional tax or penalty on any Plan participant under Code Section 409A and neither the Corporation nor the Board shall have any liability to any participant for such tax or penalty. To the extent required to avoid accelerated taxation or tax penalties under Code Section 409A, an event shall not constitute a Change-in-Control for purposes of the payment (but not vesting) terms or conditions of any Award unless such event also constitutes a change in ownership or effective control of the Corporation or a change in the ownership of a substantial portion of the Corporation’s assets within the meaning of Code Section
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409A. To the extent required to avoid accelerated taxation or tax penalties under Code Section 409A, “Termination of Employment” shall mean a “separation from service” as defined under Code Section 409A and “Disability” shall mean a “disability” as defined under Code Section 409A.
(k) Notwithstanding any other provision of the Plan to the contrary, equity-based Awards granted under the Plan shall vest no earlier than the first anniversary of the date the Award is granted, excluding, for this purpose, any (i) Awards granted through the assumption of, or in substitution for, outstanding awards previously granted to individuals who become employees as a result of a merger, consolidation, acquisition or other corporate transaction involving the Company or any Affiliate, and (ii) shares delivered in lieu of fully vested cash incentive compensation under any applicable plan or program of the Company; provided, that, the Board may grant equity-based Awards without regard to the foregoing minimum vesting requirement with respect to a maximum of five percent (5%) of the available share reserve authorized for issuance under the Plan pursuant to Subsection 3 (subject to adjustment under Subsection 3); and, provided further, for the avoidance of doubt, that the foregoing restriction does not apply to the Committee’s discretion to provide for accelerated exercisability or vesting of any Award, including in cases of retirement, death, disability or a Change-in-Control, in the terms of the Award or otherwise.
(l) Notwithstanding anything to the contrary contained in the Plan, the repricing of Stock Options or Stock Appreciation Rights is prohibited without prior approval of the Company’s stockholders. For this purpose, a “repricing” means any of the following (or any other action that has the same effect as any of the following): (i) changing the terms of a Stock Option or Stock Appreciation Right to lower its exercise price; (ii) any other action that is treated as a “repricing” under generally accepted accounting principles; and (iii) repurchasing for cash or canceling a Stock Option or Stock Appreciation Right at a time when its exercise price is greater than the Fair Market Value of the underlying shares in exchange for another Award, unless the cancellation and exchange occurs in connection with a change in capitalization or similar change under Section 3 above. A cancellation and exchange under clause (iii) would be considered a “repricing” regardless of whether it is treated as a “repricing” under generally accepted accounting principles and regardless of whether it is voluntary on the part of the participant.
Section 15. Effective Date of Plan
The Plan, as amended and restated as of May 23, 2019, shall be effective as of such date, which is the date it is approved by at least a majority of the shares of Common Stock of the Corporation present, in person, or by proxy.
| | HECLA MINING COMPANY | | | | By: | | | | By: | | | | Phillips S. Baker, Jr. | | | | | | President and& CEO |
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APPENDIX BDate Signed: May 19, 2021
Certificate of IncorporationA-12 www.hecla-mining.com
Exhibit A Participating Employers Hecla Mining Company Hecla Greens Creek Mining Company Hecla Limited Rio Grande Silver, Inc. Hecla Silver Valley, Inc. Minera Hecla S.A. de C.V. Klondex Gold & Silver Mining Company ARTICLE V
2021 Proxy Statement A-13 Bylaws
In furtherance and not in limitation of the powers conferred by law, the Board is expressly authorized to make, repeal, alter, amend and rescind the Bylaws of the Corporation by a majority vote of the entire Board at any regular or special meeting of the Board; provided, however that, notwithstanding anything contained in this Certificate of Incorporation or the Bylaws of the Corporation to the contrary, the affirmative vote of the holders of at least 80% of the voting power of the then outstanding shares of Voting Stock, voting together as a single class, shall be required to (i) alter, amend or repeal any provision of the Bylaws which is substantially identical to and/or implements the last sentence inSection 4 of Article IV, or Articles VI, VII (subject to the proviso at the end of this sentence) or VIII, of this Certificate of Incorporation, or (ii) alter, amend or repeal any provision of this proviso to Article V;further provided that, notwithstanding anything contained in this Certificate of Incorporation or the Bylaws of the Corporation to the contrary, the affirmative vote of the holders of at least 66.67% of the voting power of the then outstanding shares of Voting Stock, voting together as a single class, shall be required to (i) alter, amend or repeal any provision of the Bylaws which is substantially identical to and/ or implements the last sentence of Article VII of this Certificate of Incorporation, or (ii) alter, amend or repeal this further proviso to Article V.
ARTICLE VII.
Actions by Shareholders
Any action required or permitted to be taken by the shareholders of the Corporation must be effected at a duly called annual or special meeting of shareholders of the Corporation and may not be effected by any consent in writing by such shareholders. Special meetings of shareholders of the Corporation may be called only by the Board pursuant to a resolution approved by a majority of the entire Board.Except as set forth in the final sentence of this Article VII, andNnotwithstanding anythingelse contained in this Certificate of Incorporation to the contrary, the affirmative vote of the holders of at least 80% of the voting power of the then outstanding shares of Voting Stock, voting together as a single class, shall be required to alter, amend or repeal this Article VII.Notwithstanding anything contained in this Certificate of Incorporation to the contrary, the affirmative vote of the holders of at least 66.67% of the voting power of the then outstanding shares of Voting Stock, voting together as a single class, shall be required to alter, amend or repeal the second and final sentences of this Article VII.
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APPENDIX CB Bylaws
ARTICLE VI.
Amendments
These Bylaws may be altered or repealed and Bylaws may be made at any annual meeting of shareholders or at any special meeting thereof if notice of the proposed alteration or repeal of Bylaws to be made be contained in the notice of such meeting, by the affirmative vote of the holders of a majority of the total voting power of all outstanding shares of the voting stock of the Corporation. These bylaws may also be altered or repealed and Bylaws may be made by the affirmative vote of a majority of the Board of Directors, at any annual or regular meeting of the Board of Directors, or at any special meeting of the Board of Directors if notice of the proposed alteration or repeal, or Bylaw or Bylaws to be made, be contained in the notice of such special meeting.
Notwithstanding anything contained in these Bylaws to the contrary,(i) the affirmative vote of the holders of at least 80% of the voting power of all of the shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to alter, amend or repeal Section 4, (subject to clause (ii) below) or Section 6 of Article II, Section 1, Section 2 or Section 3 of Article III, of these Bylaws,and (ii) notwithstanding the foregoing, the affirmative vote of the holders of at least 66.67% of the voting power of all of the shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to alter, amend or repeal the first sentence of Section 4 of Article II of these Bylaws.
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APPENDIX D
CertificateReconciliation of Incorporation
ARTICLE VII.
Actions by Shareholders
Any action required or permittedNon-GAAP Measures to be taken by the shareholders of the Corporation must be effected at a duly called annual or special meeting of shareholders of the Corporation and may not be effected by any consent in writing by such shareholders. Special meetings of shareholders of the Corporation may be called only by the Board pursuant to a resolution approved by a majority of the entire Board,except as otherwise permitted by the Bylaws of the Corporation. Notwithstanding anything contained in this Certificate of Incorporation to the contrary, the affirmative vote of the holders of at least 80% of the voting power of the then outstanding shares of Voting Stock, voting together as a single class, shall be required to alter, amend or repeal this Article VII.
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APPENDIX E
Bylaws
ARTICLE II.
Meetings of Shareholders
Section 1.Annual Meetings. Annual meetings of shareholders for the election of directors and for such other business as may be stated in the notice of the meeting, shall be held at such place, either within or without the State of Delaware, and at such time and date as the Board of Directors by resolution, shall determine and as set forth in the notice of the meeting. In the event the Board of Directors fails so to determine the time, date and place of meeting, the annual meeting of shareholders shall be held at the principal executive office of the Corporation at 10:00 a.m. on the first Wednesday in May. If the date of the annual meeting shall fall upon a legal holiday, the meeting shall be held on the next succeeding business day. The annual meeting may be adjourned by the chairman of the meeting from time to time and place to place. At any adjourned annual meeting the Corporation may transact any business which might have been transacted at the original annual meeting. The Board of Directors acting by resolution may postpone and reschedule any previously scheduled annual meeting of shareholders upon public notice or disclosure given prior to the date previously scheduled for such meeting of shareholders.
Section 2.Voting. Each shareholder who is entitled to vote pursuant to the terms of the Certificate of Incorporation and these Bylaws, or who is entitled to vote pursuant to the laws of the State of Delaware, shall be entitled to vote in person or by proxy, but no proxy shall be voted after three years from its date unless such proxy provides for a longer period. All elections for directors and all other questions shall be decided by majority vote except as otherwise provided by the Certificate of Incorporation, these Bylaws or the laws of the State of Delaware.
A complete list of the shareholders entitled to vote at any meeting of shareholders at which directors are to be elected, arranged in alphabetical order, with the address of each, and the number of shares held by each, shall be open to the examination of any shareholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any shareholder who is present.
The Chief Executive Officer shall appoint three Inspectors of Election prior to each meeting of shareholders. Upon his or her appointment, each such Inspector shall take and sign an oath faithfully to execute the duties of Inspector at such meeting with strict impartiality and to the best of his or her ability. Such Inspectors shall determine the number of shares outstanding, the voting power of each such share, the number of shares present at the meeting and whether a quorum is present at such meeting. The Inspectors shall receive votes and ballots and shall determine all challenges and questions as to the right to vote and shall thereafter count and tabulate all votes and ballots and determine the result. Such Inspectors shall do such further acts as are proper to conduct the elections of directors and the vote on other matters with fairness to all shareholders. The Inspectors shall make a certificate of the results of the elections of directors and the vote on other matters. No Inspector shall be a candidate for election as a director of the Corporation nor shall any such candidate be appointed an Inspector.
Section 3.Quorum. Except as otherwise required by law, by the Certificate of Incorporation or by these Bylaws, the presence, in person or by proxy, of shareholders holding a majority of the voting power of the outstanding stock of the Corporation shall constitute a quorum at all meetings of the shareholders. In case a quorum shall not be present at any meeting, a majority in interest of the shareholders entitled to vote thereat, present in person or by proxy or the chairman of the meeting, shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until the requisite amount of stock entitled to vote shall be present; provided, however, that if such adjournment is for more than thirty days, or if after such adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each shareholder of record entitled to vote at such adjourned meeting. At any such adjourned meeting at which the requisite amount of stock entitled to vote shall be represented, any business may be transacted which might have been transacted at the meeting as originally noticed; but only those shareholders entitled to vote at the meeting as originally noticed shall be entitled to vote at any adjournment or adjournments thereof unless the Board of Directors shall have fixed a new record date for such adjournment or adjournments pursuant to Section 4 of Article V of these Bylaws.
Section 4.Special Meetings.
Special meetings of shareholders may be called only by(i) the Board of Directors pursuant to a resolution approved by a majority of the entire Board of Directors,or (ii) solely to the extent required by Section 4(B), the Secretary of the Corporation. Special meetings of shareholders may be held at such place, either within or without the State of Delaware, and at such time and date as shall be stated in the notice of the meeting. The special meeting may be adjourned by the chairman of the special meeting from time to time and place to place. At any adjourned special meeting the Corporation may transact any business which might have been transacted at the original special meeting. The Board of Directors acting by resolution approved by a majority of the entire Board of Directors may postpone and reschedule any previously scheduled special meeting of shareholders upon public notice or disclosure given prior to the date previously scheduled for such meeting of shareholders.
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(B) | Shareholder Requested Special Meetings. |
(1) Special meetings of the shareholders (each a “Shareholder Requested Special Meeting”) shall be called by the Secretary upon the written request of a shareholder (or a group of shareholders formed for the purpose of making such request) who or which has held at least 25% Net Long Beneficial Ownership (as defined below) of the outstanding common stock of the Corporation continuously for at least 120 days as of the date of submission of the request (the “Requisite Percent”). Compliance by the requesting shareholder or group of shareholders with the requirements of this section and related provisions of these Bylaws shall be determined in good faith by the Board of Directors, which determination shall be conclusive and binding on the Corporation and the shareholders.
“Net Long Beneficial Ownership” (and its correlative terms), when used to describe the nature of a shareholder’s ownership of common stock of the Corporation, shall mean those shares of common stock of the Corporation as to which the shareholder in question possesses (x) the sole power to vote or direct the voting, (y) the sole economic incidents of ownership (including the sole right to profits and the sole risk of loss), and (z) the sole power to dispose of or direct the disposition. The number of shares calculated in accordance with clauses (x), (y) and (z) shall not include any shares (1) sold by such shareholder in any transaction that has not been settled or closed, (2) borrowed by such shareholder for any purposes or purchased by such shareholder pursuant to an agreement to resell or (3) subject to any option, warrant, derivative or other agreement or understanding, whether any such arrangement is to be settled with shares of common stock of the Corporation or with cash based on the notional amount of shares subject thereto, in any such case which has, or is intended to have, the purpose or effect of (A) reducing in any manner, to any extent or at any time in the future, such shareholder’s rights to vote or direct the voting and full rights to dispose or direct the disposition of any of such shares or (B) offsetting to any degree gain or loss arising from the sole economic ownership of such shares by such shareholder.
(2) A request for a Shareholder Requested Special Meeting must be signed by the Requisite Percent of the record holders (or their duly authorized agents) and be delivered to the Secretary at the principal executive offices of the Corporation by registered mail, return receipt requested.
Such request shall (A) set forth a statement of the specific purpose or purposes of the meeting and the matters proposed to be acted on at such special meeting, (B) bear the date of signature of each shareholder (or duly authorized agent) signing the request, (C) include (w) the name and address, as they appear in the Corporation’s stock ledger, of each shareholder signing such request (or on whose behalf the Shareholder Special Meeting Request is signed), (x) the class, if applicable, and the number of shares of common stock of the Corporation that are owned of record and beneficially by each such shareholders, (y) documentary evidence of such shareholder’s record and beneficial ownership of such stock and (z) a certification from each such shareholder that the shareholders signing the request in the aggregate satisfy the Net Long Beneficial Ownership requirement of these Bylaws, (D) set forth all information relating to each such shareholder (and if the matter proposed to be acted on at such special meeting involves the election of directors, each person whom the shareholder proposes to nominate for election) that must be disclosed in solicitations of proxies for election of directors in an election contest (even if an election contest is not involved), or is otherwise required, in each case, pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), (E) describe any material interest of each such shareholder in the specific purpose or purposes of the meeting, and (F) include an acknowledgement by each shareholder and any duly authorized agent that any disposition of shares of common stock of the Corporation as to which such shareholder has Net Long Beneficial Ownership as of the date of delivery of the special meeting request and prior to the record date for the proposed meeting requested by such shareholder shall constitute a revocation of such request with respect to such shares. In addition, the shareholder and any duly authorized agent shall promptly provide any other information reasonably requested by the Corporation to allow it to satisfy its obligations under applicable law.
Any requesting shareholder may revoke a request for a special meeting at any time by written revocation delivered to the Secretary at the principal executive offices of the Corporation. If, following such revocation at any time before the date of the Shareholder Requested Special Meeting, the remaining requests are from shareholders holding in the aggregate less than the Requisite Percent, the Board of Directors, in its discretion, may cancel the Shareholder Requested Special Meeting.
(3) Notwithstanding the foregoing, the Secretary shall not be required to call a special meeting of shareholders if (A) the request for such special meeting does not comply with this Section 4(B), (B) the Board of Directors has called or calls an annual or special meeting of shareholders to be held not later than ninety (90) days after the date on which a valid request has been delivered to the Secretary (the “Delivery Date”), (C) the request is received by the Secretary during the period commencing ninety (90) days prior to the first anniversary of the date of the immediately preceding annual meeting and ending on the date of the next annual meeting, (D) the request contains an identical or substantially similar item (a “Similar Item”) to an item that was presented at any meeting of shareholders held within one hundred and twenty (120) days prior to the Delivery Date (and, for purposes of this clause (D) the election of directors shall be deemed a “Similar Item” with respect to all items of business involving the election or removal of directors), (E) the request relates to an item of business that is not a proper subject for action by the shareholders of the Corporation under applicable law, or (F) the request was made in a manner that involved or would involve a violation of Regulation 14A under the Exchange Act or other applicable law.
(4) Any Shareholder Requested Special Meeting shall be held at such date, time and place within or without the state of Delaware as may be fixed by the Board of Directors; provided, however, that the date of any Shareholder Requested Special Meeting shall be not more than sixty (60) days after the record date for such meeting (the “Meeting Record Date”), which shall be fixed in accordance with Article V, Section 4 of these Bylaws, provided that, in no event shall the Meeting Record Date be more than twenty (20) days after the date on which a valid request for a Shareholder Requested Special
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Meeting, which complies with the requirements of this section and related provisions of these Bylaws, is delivered to the Secretary of the Corporation. In fixing a date and time for any Shareholder Requested Special Meeting, the Board of Directors may consider such factors as it deems relevant within the good faith exercise of business judgment, including, without limitation, the nature of the matters to be considered, the facts and circumstances surrounding any request for the special meeting and any plan of the Board of Directors to call an annual meeting or a special meeting.
(5) Business transacted at any Shareholder Requested Special Meeting shall be limited to the purpose(s) stated in the request; provided, however, that nothing herein shall prohibit the Corporation from submitting additional matters to a vote of the shareholders at any Shareholder Requested Special Meeting.
Section 5.Notice of Meetings. Written notice, stating the place, date and time of any annual or special meeting of shareholders, and the general nature of the business to be considered thereat, shall be given to each shareholder entitled to vote at such meeting at his address as it appears on the records of the Corporation, not less than ten nor more than sixty days before the date of the meeting.
Section 6.Shareholder Action. Any action required or permitted to be taken by the shareholders of the Corporation must be effected at a duly called annual or special meeting of shareholders of the Corporation and may not be effected by any consent in writing by such shareholders.
Section 7.Chairman of a Meeting. At each meeting of the shareholders the Chairman of the Board, or if he shall be absent therefrom, the President, or if he shall be absent therefrom, another officer of the Corporation chosen by the Board of Directors, shall act as chairman of the meeting or preside thereat.
Section 8.
| (A) | Annual Meetings of Shareholders. |
| (1) | Nominations of persons for election to the Board of Directors of the Corporation and the proposal of business to be considered by the shareholders may be made at an annual meeting of shareholders (a) pursuant to the Corporation’s notice of meeting, (b) by or at the direction of the Board of Directors or (c) by any shareholder of the Corporation who was a shareholder of record at the time of giving of notice provided for in this Bylaw, who is entitled to vote at the meeting and who complied with the notice procedures set forth in this Bylaw. |
| (2) | For nominations or other business to be properly brought before an annual meeting by a shareholder pursuant to clause (c) of paragraph (A)(1) of this Bylaw, the shareholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a shareholder’s notice shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from such anniversary date, notice by the shareholder to be timely must be so delivered not earlier than the 120thday prior to such annual meeting and not later than the close of business on the later of the 90thday prior to such annual meeting or the 10thday following the day on which public announcement of the date of such meeting is first made. In no event shall the public announcement of an adjournment of an annual meeting commence a new time period for the giving of a shareholder’s notice as described above. Such shareholder’s notice shall set forth (a) as to each person whom the shareholder proposes to nominate for election or reelection as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under theSecurities ExchangeAct of 1934, as amended (the “Exchange Act’) and Rule 14a-11 thereunder (including such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (b) as to any other business that the shareholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such shareholder and the beneficial owner, if any, on whose behalf the proposal is made; (c) as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf of the nomination or proposal is made (i) the name and address of such shareholder, as they appear on the Corporation’s books, and of such beneficial owner and (ii) the class and number of shares of the Corporation which are owned beneficially and of record by such shareholder and such beneficial owner. |
| (3) | Notwithstanding anything in the second sentence of paragraph (A)(2) of this Bylaw to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation is increased and there is no public announcement naming all of the nominees for Director or specifying the size of the increased Board of Directors made by the Corporation at least 100 days prior to the first anniversary of the preceding year’s annual meeting, a shareholder’s notice required by this Bylaw shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not later than the close of business on the 10thday following the day on which such public announcement is first made by the Corporation. |
| (B) | Special Meetings of Shareholders. Only such business shall be conducted at a special meeting of shareholders as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of shareholders at which directors are to be elected pursuant to the Corporation’s notice of meeting (1) by or at the direction of the Board of Directors or (2)provided that the Board of Directors has determined that directors shall be elected at such special meeting, by any shareholder of the Corporation who is a shareholder of record at the time of giving of notice provided for in this Bylaw, who shall be entitled to vote at the meeting andwho (y) in the case of a special meeting of shareholders called pursuant to clause (i) of the first sentence of Section (4)(A) of Article II of these Bylaws, complies with the notice procedures set forth in this Bylaw, or (z) in the case of |
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a Shareholder Requested Special Meeting, complies with the requirements set forth in section 4(B) of Article II of these Bylaws. In the event the Corporation calls a special meeting of shareholders for the purpose of electing one or more directors, any such shareholder may nominate a person or persons (as the case may be), for election to such position(s) as specified in the Corporation’s notice of meeting, if(i) in the case of a special meeting of shareholders called pursuant to clause (i) of the first sentence of Section 4(A) of Article II of these Bylaws, the shareholder’s notice required by paragraph (A)(2) of this Bylaw shall be delivered to the Secretary at the principal executive offices of the Corporation not earlier than the 120thday prior to such special meeting and not later than the close of business on the later of the 90thday prior to such special meeting or the 10thday following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting,or (ii) in the case of a Shareholder Requested Special Meeting, the shareholder complies with the requirements set forth in Section 4(B) of Article II of these Bylaws. In no event shall the public announcement of an adjournment of a special meeting commence a new time period for the giving of a shareholder’s notice as described above.
| (1) | Only such persons who are nominated in accordance with the procedures set forth in this Bylaw shall be eligible to serve as directors and only such business shall be conducted at a meeting of shareholders as shall have been brought before the meeting in accordance with the procedures set forth in this Bylaw. The Chairman of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the procedures set forth in this Bylaw and, if any proposed nomination or business is not in compliance with this Bylaw, to declare that such defective proposal shall be disregarded. |
| (2) | For purposes of this Bylaw, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Sections 13, 14 or 15(d) of the Exchange Act. |
| (3) | Notwithstanding the foregoing provision of this Bylaw, a shareholder shall also comply with all applicable requirements of the Exchange Act with respect to the matters set forth in this Bylaw. Nothing in this Bylaw shall be deemed to affect any rights of (i) shareholders to request inclusion of the proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (ii) the holders of any series of Preferred Stock to elect directors under specified circumstances. |
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APPENDIX F
Certificate of Incorporation
ARTICLE VI
Board of Directors
Section 1.Number, Election and Terms. The business and affairs of the Corporation shall be managed under the direction of a Board of Directors which, subject to any right of the holders of any series of Preferred Stock then outstanding to elect additional directors under specified circumstances shall consist of not less than five nor more than nine persons. The exact number of directors within the minimum and maximum limitations specified in the preceding sentence shall be fixed from time to time by the Board pursuant to a resolution adopted by a majority of the entire Board.Subject to the rights of the holders of any series of Preferred Stock then outstanding, at the 2020 Annual Meeting of Shareholders, the successors of each director whose term expires at that annual meeting shall be elected for a term expiring at the 2021 Annual Meeting, or at such time as the director’s successor is duly elected and qualified, or at the time of such director’s earlier death, resignation, disqualification or removal. At the 2021 Annual Meeting of Shareholders, the successors of each director whose term expires at that annual meeting shall be elected for a term expiring at the 2022 Annual Meeting of Shareholders, or at such time as the director’s successor is duly elected and qualified, or at the time of such director’s earlier death, resignation, disqualification or removal. At the 2022 Annual Meeting and each annual meeting thereafter, the successors of each director whose term expires at that annual meeting shall be elected for a term expiring at the next annual meeting, or at such time as the director’s successor is duly elected and qualified, or at the time of such director’s earlier death, resignation, disqualification or removal.The directors shall be divided into three classes, as nearly equal in number as possible, with the term of office of the first class to expire at the 1984 Annual Meeting of Shareholders, the term of office of the second class to expire at the 1985 Annual Meeting of Shareholders and the term of office of the third class to expire at the 1986 Annual Meeting of Shareholders. At each Annual Meeting of Shareholders following such initial classification and election, directors elected to succeed those directors whose terms expire shall be elected for a term of office to expire at the third succeeding Annual Meeting of Shareholders after the election.
Section 2.Newly Created Directorships and Vacancies. Subject to the rights of the holders of any series of Preferred Stock then outstanding, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the board resulting from death, resignation, retirement, disqualification, removal from office or other cause shall be filled only by a majority vote of the directors then in office, and directors so chosen shall hold office for a term expiring at thenext Annual Meeting of Shareholdersat which the term of the class to which they have been elected expiresand when such director’s successor has been duly elected and qualified. No decrease in the number of directors constituting the Board shall shorten the term of any incumbent director.
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APPENDIX G
Bylaws
ARTICLE III
Directors
Section 1.Number, Election and Terms. The business and affairs of the Corporation shall be managed under the direction of a Board of Directors which, subject to any right of the holders of any series of Preferred Stock then outstanding to elect additional directors under specified circumstances, shall consist of not less than five nor more than nine persons. The exact number of directors within the minimum and maximum limitations specified in the preceding sentence shall be fixed from time to time by the Board of Directors pursuant to a resolution adopted by a majority of the entire Board of Directors.Subject to the rights of the holders of any series of Preferred Stock then outstanding, at the 2020 Annual Meeting of Shareholders, the successors of each director whose term expires at that annual meeting shall be elected for a term expiring at the 2021 Annual Meeting, or at such time as the director’s successor is duly elected and qualified, or at the time of such director’s earlier death, resignation, disqualification or removal. At the 2021 Annual Meeting of Shareholders, the successors of each director whose term expires at that annual meeting shall be elected for a term expiring at the 2022 Annual Meeting of Shareholders, or at such time as the director’s successor is duly elected and qualified, or at the time of such director’s earlier death, resignation, disqualification or removal. At the 2022 Annual Meeting and each annual meeting thereafter, the successors of each director whose term expires at that annual meeting shall be elected for a term expiring at the next annual meeting, or at such time as the director’s successor is duly elected and qualified, or at the time of such director’s earlier death, resignation, disqualification or removal.The directors shall be divided into three classes, as nearly equal in number as possible, with the term of office of the first class to expire at the 1984 Annual Meeting of Shareholders and the term of office of the second class to expire at the 1985 Annual Meeting of Shareholders and the term of office of the third class to expire at the 1986 Annual Meeting of Shareholders. At each Annual Meeting of Shareholders following such initial classification and election, directors elected to succeed those directors whose terms expire shall be elected for a term of office to expire at the third succeeding Annual Meeting of Shareholders after their election.
Section 2.Newly Created Directorships and Vacancies. Subject to the rights of the holders of any series of Preferred Stock then outstanding, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or other cause shall be filled only by a majority vote of the directors then in office, and directors so chosen shall hold office for a term expiring at thenextAnnual Meeting of Shareholdersat which the term of the class to which they have been elected expiresand when such director’s successor has been duly elected and qualified. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director.
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APPENDIX H
Reconciliation of Non-GAAP MeasuresCash Provided by Operating Activities (GAAP) to Free Cash Flow (non-GAAP) The non-GAAP measure of free cash flow, calculated as cash provided by operating activities, less additions to properties, plants, equipment and mineral interests. Management believes that, when presented in conjunction with comparable GAAP measures, free cash flow is useful to investors in evaluating our operating performance. The following table reconciles cash provided by operating activities to free cash flow: | | | | | Dollars are in thousands | | December 31,
2020 | | Cash provided (used) by operating activities2 | | $ | 180,793 | | Less: Additions to properties, plants, equipment and mineral interests | | | (91,016 | ) | | | | | | Free cash flow | | $ | 89,777 | | | | | | |
Reconciliation of Mine Site Cash Provided by Operating Activities (GAAP) to Mine Site Operating Cash Flow Less Capital (non-GAAP) The non-GAAP measure of mine site operating cash flow less capital, which is a performance measure for our LTIP, is calculated as mine site cash provided by operating activities, less additions to properties, plants, equipment and mineral interests. Management believes that, when presented in conjunction with comparable GAAP measures, mine site operating cash flow less capital is useful to investors in evaluating our operating performance. The following table reconciles cash provided by operating activities to free cash flow: | | | | | Dollars are in thousands | | December 31,
2020 | | Mine site cash provided by operating activities | | $ | 573,583 | | Less: Additions to properties, plants equipment and mineral interests | | | (368,503 | ) | | | | | | Mine site operating cash flow less capital | | $ | 205,080 | | | | | | |
Reconciliation of Net (Loss) IncomeLoss (GAAP) to Earnings Before Interest, Taxes, Depreciation, and Amortization (non-GAAP) The non-GAAP measure of earnings before interest, taxes, depreciation, and amortization (“EBITDA”) is calculated as net (loss) incomeloss before the following items: interest expense, income tax benefit provision, and depreciation, depletion, and amortization expense. Management believes that, when presented in conjunction with comparable GAAP measures, EBITDA is useful to investors in evaluating our operating performance. The table below presents reconciliations between the GAAP measure of net (loss) incomeloss to the non-GAAP measure EBITDA for the years ended December 31, 2018, 20172020, 2019 and 20162018 (in thousands). | | | Year ended December 31, | | | | 2018 | | | 2017 | | 2016 | | | Net (loss) income (GAAP) | | $ | (26,563 | ) | | $ | (28,520) | | $ | 61,569 | | | Interest expense, net of amount capitalized(1) | | | 40,944 | | | | 38,012 | | | 21,796 | | | Income tax (benefit) provision | | | (6,701 | ) | | | 20,963 | | | 28,090 | | | Depreciation, depletion, and amortization | | | 140,905 | | | | 126,467 | | | 124,918 | | | EBITDA | | $ | 148,585 | | | $ | 156,922 | | $ | 236,373 | |
| | (1) | On April 12, 2013, we completed an offering of $500 million in aggregate principal amount of our Senior Notes due May 1, 2021 (the “Notes”), and issued additional Notes in 2014 to fund one of our defined benefit pension plans. In addition, on March 5, 2018, we entered into a note purchase agreement pursuant to which we issued CAD$40 million (approximately USD$30.8 million at the time of the transaction) in aggregate principal amount of our Series 2018-A Senior Notes due May 1, 2021 (the “RQ Notes”) to Ressources Québec, a subsidiary of Investissment Québec, a financing arm of the Québec government. See Note 7 ofNotes to Consolidated Financial Statements in our Form 10-K for the calendar year ended December 31, 2018, for more information. The Notes and RQ Notes bear interest at a rate of 6.875% and 4.68%, respectively, per year from the date of original issuance or from the most recent payment date to which interest has been paid or provided for. Interest on the Notes is payable on May 1 and November 1 of each year, commencing November 1, 2013 for the Notes and May 1, 2018 for the RQ Notes. |
| | | | | | | | | | | | | | | | Year ended December 31, | | | | | 2020 | | | 2019 | | | 2018 | | Net (loss) income (GAAP) | | $ | (16,790 | ) | | $ | (99,557 | ) | | $ | (26,563 | ) | Interest expense, net of amount capitalized | | | 49,569 | | | | 48,447 | | | | 40,944 | | Income tax (benefit) provision | | | (135 | ) | | | (24,101 | ) | | | (6,701 | ) | Depreciation, depletion, and amortization | | | 164,026 | | | | 204,475 | | | | 140,905 | | EBITDA | | $ | 196,940 | | | $ | 129,264 | | | $ | 148,585 | |
2021 Proxy Statement B-1
Appendix B Reconciliation of Net Loss (GAAP) to Adjusted EBITDA Less Capital (non-GAAP) The non-GAAP measure of earnings before interest, taxes, depreciation and amortization (“EBITDA”)EBITDA less capital for use in AIPSTIP performance measurement is calculated as net loss before the following items: interest expense, income tax benefit, depreciation, depletion, and amortization expense, acquisition costs, gainloss (gain) on disposition of properties, plants, equipment and mineral interests, suspension costs, foreign exchange gains,loss (gain), unrealized gainsloss (gain) on derivative contracts, provisional price (gains) losses, provisions for closed operations expense, stock-based compensation, unrealized losses on investments, interest and other income, lossincome/expense, gain on sale of investments and(“adjusted EBITDA”) less capital expenditures at our operations. Table of Contents
The following table reconciles net loss to adjusted EBITDA less capital (in thousands): | | | | | Year Ended
December 31, | | | | | Year Ended
December 31, 2018 | | | 2020 | | 2019 | | | Net loss | | $ | (26,563 | ) | | $ | (16,790 | ) | | $ | (99,557 | ) | | Plus: Interest expense, net of amount capitalized | | 40,944 | | | | 49,569 | | | | 48,447 | | | Plus: Income taxes | | (6,701 | ) | | | (135 | ) | | | (24,101 | ) | | Plus: Depreciation, depletion and amortization | | 140,905 | | | | 164,026 | | | | 204,475 | | | EBITDA | | 148,585 | | | | 196,940 | | | | 129,264 | | | Less: Depreciation, depletion and amortization not at operating mines | | (6,861 | ) | | | (6,896 | ) | | | (4,957 | ) | | Plus: Acquisition costs | | 10,045 | | | | 20 | | | | 645 | | | Plus: Suspension costs | | 20,693 | | | | Less: Gain on disposition of properties, plants, equipment and mineral interests | | | (2,793 | ) | | | Less: Foreign exchange gain | | (10,310 | ) | | | Less: Unrealized gains on derivative contracts | | (7,936 | ) | | | Plus: Provisional price losses | | 3,803 | | | Plus: Ramp-up and Suspension costs | | | | 24,911 | | | | 12,051 | | Plus/less: Loss (gain) on disposition of properties, plants, equipment and mineral interests | | | | 572 | | | | 4,643 | | Plus/less: Foreign exchange loss (gain) | | | | 4,605 | | | | 8,236 | | Plus/less: Unrealized losses (gains) on derivative contracts | | | | 5,578 | | | | 5,613 | | Less/plus: Provisional price (gains) losses | | | | (8,008 | ) | | | (597 | ) | | Plus: Provision for closed operations and environmental matters | | 6,090 | | | | 6,189 | | | | 6,914 | | | Plus: Stock-based compensation | | 6,242 | | | | 6,458 | | | | 5,668 | | | Plus: Unrealized losses on investments | | 2,816 | | | Less/plus: Unrealized (gains) losses on investments | | | | (10,268 | ) | | | 2,389 | | Foundation grant | | | | 1,970 | | | | 0 | | | Plus: Other | | 941 | ) | | | 2,256 | | | | 3,506 | | Adjusted EBITDA | | | | 224,327 | | | | 173,375 | | | Less: capital expenditures at operating mines | | (140,616 | ) | | | (99,939 | ) | | | (128,169 | ) | | EBITDA less capital | | $ | 30,699 | | | Adjusted EBITDA less capital | | | $ | 124,388 | | | $ | 49,552 | |
Reconciliation of Cost of Sales and Other Direct Production Costs and Depreciation, Depletion and Amortization (GAAP) to Cash Cost, Before By-product Credits Per Silver Ounce and Cash Cost Per Silver Ounce, After By-product Credits (non-GAAP) and All-In Sustaining Cost, Before By-product Credits and All-In Sustaining Cost, After By-product Credits For Total Silver (non-GAAP)B-2 www.hecla-mining.com
The tables below present reconciliations between the GAAP measure of cost of sales and other direct production costs and depreciation, depletion and amortization to the non-GAAP measures of (i) Cash Cost per Silver Ounce, Before By-product Credits, (ii) Cash Cost, After By-product Credits, (iii) AISC, Before By-product Credits and (iv) AISC, After By-product Credits, per Ounce for our silver operations for the years ended December 31, 2018 and 2017 (in thousands, except costs per ounce).
Cash Cost, After By-product Credits per Silver/Gold Ounce is an important operating statistic that we utilize to measure each mine’s operating performance. We recently started reporting AISC, After By-product Credits, per Ounce which we use as a measure of our mines’ net cash flow after costs for exploration, pre-development, reclamation, and sustaining capital. This is similar to the Cash Cost, After By-product Credits, per Ounce non-GAAP measure we report, but also includes on-site exploration, reclamation, and sustaining capital costs. Current GAAP measures used in the mining industry, such as cost of goods sold, do not capture all the expenditures incurred to discover, develop and sustain silver and gold production. These measures also allow us to benchmark the performance of each of our mines versus those of our competitors. As a primary silver mining company, we also use the statistic on an aggregate basis - aggregating the Greens Creek, Lucky Friday and San Sebastian mines, but not Casa Berardi, which is a primary gold mine - to compare our performance with that of other primary silver mining companies. Similarly, these statistics are useful in identifying acquisition and investment opportunities as they provide a common tool for measuring the financial performance of other mines with varying geologic, metallurgical and operating characteristics.
Cash Cost, Before By-product Credits and AISC, Before By-product Credits, per Silver Ounce include all direct and indirect operating cash costs related directly to the physical activities of producing metals, including mining, processing and other plant costs, third-party refining expense, on-site general and administrative costs, royalties and mining production taxes. AISC, Before By-product Credits for each mine also includes on-site exploration, reclamation, and sustaining capital costs. AISC, Before By-product Credits for our consolidated silver properties also includes corporate costs for general and administrative expense, exploration and sustaining capital projects. By-product credits include revenues earned from all metals other than the primary metal produced at each unit. Cash Cost, After By-product Credits and AISC, Before By-product Credits, per Silver Ounce, provide management and investors an indication of operating cash flow, after consideration of the average price, received from production. Management also uses these measurements for the comparative monitoring of performance of our mining operations period-to-period from a cash flow perspective. Cash Cost, After By-product Credits and AISC, After By-product Credits per Silver Ounce are measures developed by precious metals companies (including the Silver Institute and/or World Gold Council) in an effort to provide a uniform standard for comparison purposes. There can be no assurance, however, that our reporting of these non-GAAP measures is the same as those reported by other mining companies.
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As depicted in the table below, by-product credits comprise an essential element of our silver unit cost structure distinguishing our silver operations due to the polymetallic nature of their orebodies. By-product credits included in our presentation of Cash Cost, After By-product Credits and AISC, After By-product Credits, per Silver Ounce include:
| | | Total Silver | | | | Year ended
December 31, | | In thousands (except per ounce amounts) | | 2018 | | | 2017 | | By-product value, all silver properties: | | | | | | | | | Zinc | | $ | 103,096 | | | $ | 101,865 | | Gold | | | 76,416 | | | | 87,319 | | Lead | | | 30,512 | | | | 39,084 | | Total by-product credits | | $ | 210,024 | | | $ | 228,268 | | | | | | | | | | | By-product credits per silver ounce, all silver properties | | | | | | | | | Zinc | | $ | 10.32 | | | $ | 8.18 | | Gold | | | 7.65 | | | | 7.01 | | Lead | | | 3.05 | | | | 3.14 | | Total by-product credits | | $ | 21.02 | | | $ | 18.33 |
Cost of sales and other direct production costs and depreciation, depletion and amortization is the most comparable financial measure calculated in accordance with GAAP to Cash Cost, After By-product Credits and AISC, After By-product Credits. The cost of sales and other direct production costs and depreciation, depletion and amortization for our silver operating units in the table below is in our Consolidated Statement of Operations and Comprehensive (Loss) (in thousands) included in our audited financial statements which are included in our Annual Report on Form 10-K for the calendar year ended December 31, 2018.
| | | Total Silver | | | | Year ended
December 31, | | In thousands (except per ounce amounts) | | 2018 | | | 2017 | | | Cost of sales and other direct production costs and depreciation, depletion and amortization (GAAP) | | $ | 241,631 | | | $ | 240,610 | | | Depreciation, depletion and amortization | | | (52,125 | ) | | | (61,468 | ) | | Treatment costs | | | 39,820 | | | | 53,718 | | | Change in product inventory | | | 3,142 | | | | (449 | ) | | Reclamation and other costs | | | (4,470 | ) | | | (4,298 | ) | | Lucky Friday cash costs excluded | | | (7,247 | ) | | | | | | Cash Cost, Before By-product Credits(2) | | | 220,751 | | | | 228,113 | | | Reclamation and other costs | | | 3,816 | | | | 3,351 | | | Exploration | | | 12,902 | | | | 12,968 | | | Sustaining capital | | | 50,306 | | | | 46,118 | | | General and administrative | | | 36,542 | | | | 35,611 | | | AISC, Before By-product Credits | | | 324,217 | | | | 326,161 | | | By-product credits | | | (210,024 | ) | | | (228,267 | ) | | Cash Cost, After By-product Credits | | | 10,727 | | | | (154 | ) | | AISC, After By-product Credits | | | 114,293 | | | | 97,894 | | | Divided by silver ounces produced | | | 9,990 | | | | 12,449 | | | Cash Cost, Before By-product Credits, per Silver Ounce | | | 22.10 | | | | 18.33 | | | By-product credits per silver ounce | | | (21.02 | ) | | | (18.34 | ) | | Cash Cost, After By-product Credits, per Silver Ounce | | $ | 1.08 | | | $ | (0.01 | ) | | AISC, Before By-product Credits, per Silver Ounce | | | 32.46 | | | | 26.20 | | | By-product credits per silver ounce | | | (21.02 | ) | | | (18.34 | ) | | AISC, After By-product Credits, per Silver Ounce | | $ | 11.44 | | | $ | 7.86 | |
| | (2) | Includes all direct and indirect operating costs related directly to the physical activities of producing metals, including mining, processing and other plan costs, third-party refining and marketing expense, on-site general and administrative costs, royalties and mining production taxes, after by-product revenues earned from all metals other than the primary metal produced at each unit. |
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MEETING TO BE HELD AT:
Fairmont Pacific Rim Hotel
1038 Canada Place
Vancouver, British Columbia, Canada
For directions contact (604) 695-5300
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HECLA MINING COMPANY
6500 N. MINERAL DRIVE
SUITE 200
COEUR D'ALENE, ID 83815
VOTE BY INTERNET Before The Meeting - Go to www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 P.M. ETEastern Time on 05/22/2019May 18, 2021 for shares held directly and by 11:59 P.M. ETEastern Time on 05/20/2019May 17, 2021 for shares held in a Plan. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS
If you would like During The Meeting - Go to reducewww.virtualshareholdermeeting.com/HL2021 You may attend the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronicallymeeting via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and when prompted, indicatevote during the meeting. Have the information that you agree to receive or access proxy materials electronicallyis printed in future years.
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Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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| THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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| THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE NOMINEES FOR DIRECTOR LISTED IN ITEM 1 AND "FOR" PROPOSALS 2, 3, 4, 5, 6 AND 7.
| | | | | | | | | | 1. | ELECTION OF CLASS III DIRECTORS
| | | | | | | | | | | | | | | | | | Nominees
| | | | | | | | | | | | | For | | Against | | Abstain | | | 1a. Ted Crumley
| | ☐ | | ☐ | | ☐ | | | | | 1b. Terry V. Rogers | | ☐ | | ☐ | | ☐ | | | | | 1c. Charles B. Stanley | | ☐ | | ☐ | | ☐ | | | | | | | | | | | For | | Against | | Abstain | | 2. | Ratification of the appointment of BDO USA, LLP, as our independent registered public accounting firm for 2019. | | ☐ | | ☐ | | ☐ | | | | 3. | Approval, on an advisory basis, of our executive compensation. | | ☐ | | ☐ | | ☐ | | | | 4. | Approval of amendments to and restatement of our Hecla Mining Company 2010 Stock Incentive Plan
| | ☐ | | ☐ | | ☐ | | | | 5. | Approval of amendments to our Certificate of Incorporation and Bylaws to remove certain 80% supermajority voting provisions.
| | ☐ | | ☐ | | ☐ |
| | For | | Against | | Abstain | | | | | | | | 6. | Approval of amendments to our Certificate of Incorporation and Bylaws to permit shareholders to call special meetings of shareholders in certain circumstances.
| | ☐ | | ☐ | | ☐ | | | | | | | | | 7. | Approval of amendments to our Certificate of Incorporation and Bylaws to declassify our Board of Directors and provide for annual election of directors.
| | ☐ | | ☐ | | ☐ | | | | | | | | | 8. | In their discretion on all other business that may properly come before the meeting or any adjournment or adjournments thereof.
| | ☐ | | ☐ | | ☐ | | | | | | | | | This Proxy will be voted as specified. If no specification is made, this Proxy will be voted FOR the election of the three nominees for Director and FOR the approval of Proposals 2, 3, 4, 5, 6 and 7. This proxy also delegates discretionary authority to vote with respect to any other business which may properly come before the meeting or any adjournment or postponement thereof.
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The Notice & Proxy Statement, Annual Report is/are available atwww.proxyvote.com
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HECLA MINING COMPANY
6500 N. MINERAL DRIVE SUITE 200
COEUR D'ALENE, IDAHO 83815-9408 ANNUAL MEETING OF SHAREHOLDERS
May 23, 2019
ID 83815 TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: D43825-P54096 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS CARD IS VALID ONLY WHEN SIGNED AND DATED. HECLA MINING COMPANY THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE NOMINEES FOR DIRECTOR LISTED IN ITEM 1 AND "FOR" PROPOSALS 2, 3 4, 5, 6 AND 74. 1. ELECTION OF CLASS II DIRECTORS Nominees: For Against Abstain 1a. Stephen F. Ralbovsky 1b. Catherine J. Boggs 2. Ratification of the appointment of BDO USA, LLP, as our independent registered public accounting firm for 2021. 3. Approval, on an advisory basis, of executive compensation. 4. Approval of Amendment to the Hecla Mining Company Key Employee Deferred Compensation Plan. 5. In the proxies' discretion on all other business that may properly come before the meeting or any adjournment or adjournments thereof. This Proxy will be voted as specified. If no specification is made, this Proxy will be voted FOR the election of the two nominees for Director and FOR the approval of Proposals 2, 3 and 4. This proxy also delegates discretionary authority to vote with respect to any other business which may properly come before the meeting or any adjournment or postponement thereof. IF YOU HAVE NOT VOTED VIA THE INTERNET OR TELEPHONE PLEASE MARK, SIGN, DATE, AND PROMPTLY RETURN THE PROXY CARD USING THE ENCLOSED ENVELOPE. NOTE: The Proxy must be signed exactly as your name or names appear on this card. Executors, administrators, trustees, partners, etc., should give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer(s), who should specify the title(s) of such officer(s). Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. D43826-P54096 HECLA MINING COMPANY ANNUAL MEETING OF SHAREHOLDERS May 19, 2021 PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF THE NOMINEES FOR DIRECTOR LISTED IN ITEM 1 AND "FOR" PROPOSALS 2, 3 AND 4 The undersigned, revoking any previous proxies, hereby appoints PHILLIPS S. BAKER, JR. and MICHAEL B. WHITE, and each of them, proxies of the undersigned, with full power of substitution, to attend the Company's Annual Meeting of Shareholders on May 23, 2019,19, 2021, held virtually at www.virtualshareholdermeeting.com/HL2021, and any adjournments or postponements thereof, and there to vote the undersigned's shares of Common Stock of the Company on the following matters as described in the Board of Directors Proxy Statement for such meeting, a copy of which has been received by the undersigned. This Proxy will be voted as specified. If no specification is made, this Proxy will be voted FOR the election of the threetwo nominees for Director and FOR the approval of Proposals 2, 3 4, 5, 6 and 7.4. This proxy also delegates discretionary authority to vote with respect to any other business which may properly come before the meeting or any adjournment or postponement thereof. Continued and to be signed on reverse side
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