BLUE DOLPHIN ENERGY CO
10-Ks and 10-Qs
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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
(Amendment No. __)
Filed by a Party
other than the Registrant ☐
Check the
appropriate box:
☐ Preliminary
Proxy Statement
☐
Confidential, For Use of the Commission Only (As Permitted by Rule
14a-6(e)(2))
☑
Definitive Proxy Statement
☐
Definitive Additional Materials
☐
Soliciting Material under Rule 14a-12
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BLUE DOLPHIN ENERGY COMPANY
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
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Payment of Filing
Fee (Check the appropriate box):
☑ No
fee required
☐ Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title
of each class of securities to which transaction
applies:
(2) Aggregate
number of securities to which transaction applies:
(3) Per
unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule
0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed
maximum aggregate value of transaction:
(5) Total
fee paid:
☐ Fee
paid previously with preliminary materials.
☐ Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the form or schedule and the date
of its filing.
(1) Amount
Previously Paid:
(2) Form,
Schedule or Registration Statement No.:
(3) Filing
Party:
(4) Date
Filed:
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NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
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To Our
Stockholders:
Notice
is hereby given that an Annual Meeting of Stockholders (the
“Annual Meeting”) of Blue Dolphin Energy Company, a
Delaware corporation (referred to herein as “Blue
Dolphin,” “we,” “us” and
“our”), will be held on Wednesday, December 7, 2016 at
10:00 a.m. Central Time at Blue Dolphin’s principal office
located at 801 Travis Street, 21
st
Floor, Houston,
Texas 77002. At the Annual Meeting, stockholders will consider
proposals to:
(1)
Elect five (5)
directors, all of whom shall serve until the next annual meeting of
stockholders, or in each case until their successors are duly
elected and qualified, or until their earlier resignation or
removal;
(2)
Ratify the
selection of UHY LLP (“UHY”) as our independent
registered public accounting firm for the fiscal year ending
December 31, 2016; and
(3)
Transact any other
business that may properly come before the Annual
Meeting.
Additional
information regarding the Annual Meeting is set forth in the
accompanying proxy statement. Our Board of Directors (the
“Board”) has specified the close of business on October
18, 2016 as the record date (“Record Date”) for the
purpose of determining the stockholders who are entitled to receive
notice of, and to vote at, the Annual Meeting. Only stockholders of
record at the close of business on the Record Date are entitled to
notice of and to vote at the Annual Meeting and at any adjournment
or postponement thereof.
Regardless of
whether you plan to attend the Annual Meeting in person, we request
that you
vote your shares of Blue
Dolphin common stock at your earliest convenience in order to
ensure that your shares of Blue Dolphin common stock will be
represented at the Annual Meeting.
Depending on how you hold
your shares of Blue Dolphin common stock, options to cast your
ballot include the Internet, telephone, or mail. If you have
Internet access, we recommend that you record your vote via the
Internet.
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AVAILABILITY OF PROXY MATERIALS – IMPORTANT NOTICE
Proxy
materials are available online
https://iproxydirect.com/BDCO
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MEETING
DETAILS
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Location
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Parking
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Blue Dolphin Energy
Company
801
Travis Street (On Travis Street at Rusk Street;
directly across
from The Esperson Buildings)
21st
Floor, Houston, Texas 77002
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Parking will be
validated for attendees that park in the 801 Travis Street parking
garage (entrance off Rusk Street).
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Proxy Forms
Registered
stockholders may vote in person at the Annual Meeting by completing
a ballot or by submitting their preprinted proxy form. Beneficial
stockholders that desire to vote in person at the Annual Meeting
must obtain a legal proxy form from the brokerage firm, bank, trust
or other nominee and present it to the inspector of election with
their ballot. The inspector of election at the Annual Meeting has
access to the registered stockholder’s list to verify whether
a registered stockholder is entitled to vote as of the Record Date.
However, the inspector of election does not have access to the
control number verification system brokerage firms, banks, trusts
and other nominees use to verify whether a beneficial stockholder
is entitled to vote at the Annual Meeting.
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By Order of the
Board
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/s/
JONATHAN P.
CARROLL
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Jonathan P.
Carroll
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Chairman of the
Board
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October
31, 2016
Houston,
Texas
BLUE
DOLPHIN ENERGY COMPANY
October
31, 2016
Fellow
Stockholders:
Despite
the volatile energy market, we set out on a course in 2015 to make
capital and efficiency improvements at the Nixon Facility that will
enable us to remain competitive. W
hen
expansion of the Nixon Facility is complete, total crude oil,
condensate, and refined petroleum product storage capacity at the
Nixon Facility will exceed 1,000,000 bbls. This significantly
increased storage capacity will allow us to:
(i) generate
additional revenue from leasing product and crude storage to third
parties; (ii) have crude and product storage to support refinery
throughput and future expansion of up to 30,000 bbls per day; and
(iii) increase the processing capacity and complexity of the Nixon
Facility.
Nixon Facility Expansion
During
2015, we secured $35.0 million in 19-year financing for the Nixon
Facility expansion project. To date, we
have:
●
completed
refurbishment of the naphtha stabilizer and depropanizer units,
which improve the overall quality of the naphtha that we produce
and help increase the capacity utilization rate of the Nixon
Facility;
●
purchased idle
refinery equipment, including, among others, a Merox unit, vacuum
tower, prefrac tower unit, and LPG fractionator, which may, over
time, be refurbished for use at the Nixon Facility;
●
continued
debottlenecking efforts, which improve production and
efficiency;
●
completed
construction of an additional 450,000 bbls of petroleum storage
tanks with 350,000 bbls under construction at the Nixon Facility;
and
●
made smaller,
impactful capital improvements to the Nixon Facility, including
refurbishment of the wastewater system, and construction of other
infrastructure, including new access roads, drainage, and tank
firewalls.
New Revenue Opportunities
In
2016, we saw new opportunities arise by delivering our refined
petroleum products in new ways. For example, with the recent
opening of the Mexican diesel market to private companies, in the
second quarter we began providing low sulfur diesel to customers
exporting product to Mexico via truck. We also began fulfilling
heavy oil-based mud blendstock and atmospheric gas oil orders by
barge. As a result, we remain optimistic that new revenue
opportunities will present themselves regardless of the price of
oil.
On
behalf of the Blue Dolphin Board of Directors and management team,
we thank you for your continued support. We are excited about the
opportunities that lie ahead, and we look forward to creating and
positioning Blue Dolphin for long-term success.
With
regards,
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Jonathan P.
Carroll
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Chairman of the
Board,
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Chief Executive
Officer and President
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801
Travis Street, Suite 2100, Houston, Texas 77002
Phone
(713) 568-4725 ● Fax (713) 227-7626 ●
www.blue-dolphin-energy.com
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PROXY STATEMENT
BLUE DOLPHIN ENERGY COMPANY
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TABLE OF CONTENTS
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PROCEDURAL MATTERS
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2
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General
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2
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Date, Time and Place
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2
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Purpose
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2
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Record Date; Who Is Entitled to Vote
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2
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Material Delivery
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2
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Quorum
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2
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Abstentions and Broker Non-Votes
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3
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Votes Required for Approval
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3
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Voting Your Shares
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3
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Revoking Your Proxy
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3
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Where to Direct Questions
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4
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Reimbursement of Solicitation Expenses
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4
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FREQUENTLY ASKED QUESTIONS (“FAQs”)
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5
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PROPOSALS
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8
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(1) ELECTION OF DIRECTORS
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8
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(2) RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
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10
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(3) TRANSACTION OF OTHER MATTERS
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10
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EXECUTIVE OFFICERS
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11
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CORPORATE GOVERNANCE AND BOARD MATTERS
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12
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AUDIT COMMITTEE REPORT
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14
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COMPENSATION DISCUSSION AND ANALYSIS
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16
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COMPENSATION COMMITTEE REPORT
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18
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
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RELATED PARTY TRANSACTIONS
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19
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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DIRECTOR NOMINATION AND STOCKHOLDER PROPOSALS BY STOCKHOLDERS FOR
ANNUAL MEETING OF STOCKHOLDERS
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WHERE YOU CAN FIND MORE INFORMATION
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CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
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DELIVERY OF DOCUMENTS TO STOCKHOLDERS SHARING AN ADDRESS
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1
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PROCEDURAL MATTERS
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This
proxy statement and accompanying notice and proxy form are being
furnished to the stockholders of Blue Dolphin Energy Company
(referred to herein as “Blue Dolphin,”
“we,” “us” and “our”) in
connection with the solicitation of proxies by Blue Dolphin’s
Board of Directors (the “Board”) for use at the Annual
Meeting of Stockholders (the “Annual Meeting”) and any
adjournment or postponement thereof.
The
Annual Meeting will be held on Wednesday, December 7, 2016 at 10:00
a.m. Central Time at Blue Dolphin’s principal office, which
is located at 801 Travis Street, 21
st
Floor, Houston,
Texas 77002.
At the
Annual Meeting, stockholders are being asked to consider and vote
upon proposals to:
(1)
Elect five (5)
directors, all of whom shall serve until the next annual meeting of
stockholders, or in each case until their successors are duly
elected and qualified, or until their earlier resignation or
removal;
(2)
Ratify the
selection of UHY LLP (“UHY”) as our independent
registered public accounting firm for the fiscal year ending
December 31, 2016; and
(3)
Transact any other
business that may properly come before the Annual
Meeting.
The
Board has fixed the close of business on October 18, 2016 as the
record date (the “Record Date”) for the determination
of stockholders entitled to notice of, and to vote at, the Annual
Meeting. A list of registered stockholders entitled to vote at the
Annual Meeting will be open for examination by any stockholder
during normal business hours for a period of ten (10) days prior to
the Annual Meeting at our principal office, which is located at 801
Travis Street, 21
st
Floor, Houston,
Texas 77002. On the Record Date, there were 10,474,714 shares of
our common stock, par value $0.01 per share (the “Common
Stock”), outstanding. Stockholders are entitled to one vote
per share of Common Stock
held on the
Record Date
on each
matter presented at the Annual Meeting.
This
proxy statement, along with its accompanying notice and proxy form,
are first being mailed to stockholders on or about October 24,
2016. We are also mailing an insert notifying stockholders that our
Annual Report on Form 10-K for the fiscal year ended December 31,
2015 (the “Annual Report”) is available
online.
The
holders of a majority of the
shares
of Common Stock entitled to vote at the Annual Meeting and
represented in person or by proxy shall constitute a quorum at the
Annual Meeting
for the transaction of business.
2
Abstentions
– If a stockholder abstains from voting on
a proposal, the shares are considered present and entitled to vote
at the Annual Meeting. Therefore, abstentions will count toward
determining whether or not a quorum is present. Under Delaware law,
a proxy marked “abstain” is not considered a vote cast.
Accordingly, an abstention will have no effect on the proposal
regarding the election of directors as the nominees are elected by
a plurality of the votes cast. Abstentions on proposals that
require the affirmative vote of a majority of the shares entitled
to vote and represented at the Annual Meeting, in person or by
proxy, will, in effect, be a vote against such matter.
Broker Non-Votes
– Broker non-votes occur when
brokers, banks or other nominees that hold shares on behalf of
beneficial (“street name”) stockholders do not receive
voting instructions from the beneficial stockholders prior to the
Annual Meeting and do not have discretionary voting authority to
vote those shares. Broker non-votes are considered present and
entitled to vote at the Annual Meeting. Therefore, broker non-votes
will count toward determining whether or not a quorum is present.
However, under New York Stock Exchange Rule 452, which has been
approved by the Securities and Exchange Commission (the
“SEC”), brokers are prohibited from voting shares of
Common Stock for which they have not received instructions on
non-routine matters, including the election of
directors.
With
the exception of the election of directors, our By-Laws, as amended
and restated (the “By-Laws”), require an affirmative
vote of a majority of the votes cast by the stockholders present,
either in person or by proxy, and entitled to vote at the Annual
Meeting for the proposal to be approved. The votes required for
approval, and the impact of abstentions and broker non-votes for
each proposal stockholders are being asked to consider and vote
upon are as follows:
Proposal (1) -
Election of Directors: You may vote “FOR” any one or
all of the nominees, or withhold your vote for any one or more of
the nominees. As the nominees are elected by a plurality of the
votes cast, withheld votes and abstentions will not affect the
outcome of this proposal. This proposal is considered a non-routine
matter and brokers will not have discretionary authority to vote
shares for which they have not received instructions;
and
Proposal (2)
– Ratification of Independent Registered Public Accounting
Firm: You may vote “FOR” or “AGAINST” or
abstain from voting. The affirmative vote of the holders of a
majority of the shares of Common Stock entitled to vote and
represented at the Annual Meeting, in person or by proxy, is
required to approve the ratification of UHY as our independent
registered public accountants for the year ending December 31,
2016. Abstentions will have the same effect as a vote
“AGAINST” the ratification. Under applicable SEC rules,
this proposal is considered a routine matter and brokers will have
the discretionary authority to vote shares of Common Stock for
which they have not received instructions.
All
shares of Common Stock represented at the Annual Meeting by
properly executed proxies will be voted in accordance with the
instructions indicated on the proxies. If no instructions are
indicated with respect to any shares for which properly executed
proxies have been received, such proxies will be voted
“
FOR
” Proposal
Nos. (1) and (2).
Any
proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before it is voted. Proxies may be
revoked pursuant to the following actions:
- providing written
or electronic notice of revocation;
- submitting a
proxy of a later date; or
- voting in person
at the Annual Meeting.
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A
written notice of revocation should be sent to Blue Dolphin Energy
Company, Attention: Secretary, 801 Travis Street, Suite 2100,
Houston, Texas 77002. Depending on how you hold your shares, you
can submit a proxy of a later date via the Internet, by telephone,
by fax, or by mail.
Where to Direct Questions
To
assist you with casting your vote, we have attempted to answer key
questions you may have as a stockholder related to the proposals
you are being asked to consider. Please review the frequently asked
questions (FAQs) section, which is included as part of this proxy
statement. If you have any additional questions, please contact
Blue Dolphin, Investor Relations at (713) 568-4725.
Blue
Dolphin will bear all costs of this solicitation. Proxies will be
solicited primarily by mail, but may also be solicited in person,
by telephone or other electronic means by directors, officers and
employees of Blue Dolphin in the ordinary course of business for
which they will not
receive additional
compensation
. Blue Dolphin has requested that brokers,
nominees, fiduciaries and other custodians send proxy materials to
the beneficial owners of
Common
Stock,
for which Blue Dolphin will reimburse them for their
reasonable out-of-pocket expenses.
Remainder
of Page Intentionally Left Blank
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The
FAQs presented in this section are to assist you in understanding
the proposals for which you are being asked to vote upon for the
Annual Meeting. The items addressed may not answer all questions
that may be important to you as a stockholder. For additional
information, please refer to the more detailed discussion contained
elsewhere in this proxy statement or contact Blue Dolphin, Investor
Relations at (713) 568-4725.
Procedural Matters
1.
Why
am I receiving this proxy statement?
You are
receiving this proxy statement because you hold shares of Blue
Dolphin Common Stock as of the Record Date for the Annual
Meeting.
2.
What
does it mean if I receive more than one proxy?
If you
receive more than one proxy form, it means that you hold shares of
Common Stock in more than one account. For example, you may own
your shares of Common Stock individually, jointly with your spouse,
as trustee of a trust or as custodian for a minor. To ensure that
all of your shares of Common Stock are voted, you will need to sign
and return each proxy form received because they are held in a
different form of ownership.
3.
Who
is entitled to attend and vote at the Annual Meeting?
If you
owned shares of Common Stock as of the close of business on October
18, 2016, you are entitled to notice of, and to vote at, the Annual
Meeting or any adjournment or postponement of the Annual Meeting.
As of the Record Date there were approximately 10,474,714 shares of
Common Stock and outstanding.
4.
When
and where will the Annual Meeting be held?
The
Annual Meeting will be held on Wednesday, December 7, 2016 at 10:00
a.m. Central Time at Blue Dolphin’s principal office, which
is located at 801 Travis Street, 21
st
Floor, Houston,
Texas 77002.
5.
What
do I need to do now?
After
carefully reading and considering the information contained in this
proxy statement, please vote your shares of Common Stock as
described below. You are entitled to one vote for each share of
Common Stock you own as of the Record Date.
6.
How
do I vote if I am a registered stockholder?
If your
shares of Common Stock are registered directly in your name with
our transfer agent, Securities Transfer Corporation, you are
considered, with respect to those shares, the stockholder of record
or a “registered stockholder.” Registered stockholders
may vote as follows: (i) by mail by completing, signing and dating
each proxy form received and returning it in the enclosed prepaid
envelope, (ii) by fax by completing, signing and dating each proxy
form received and faxing to (202) 521-3464, (iii) via the Internet
at
https://www.iproxydirect.com/BDCO
by following the instructions, or (iv) in person by attending the
Annual Meeting. If voting by mail, fax, or the Internet, your
voting instructions must be received by 11:59 p.m. Eastern / 10:59
p.m. Central on the date prior to the date of the Annual Meeting.
Voting by mail, fax, or the Internet will not prevent you from
voting in person at the Annual Meeting. You are encouraged to
submit a proxy by mail, fax, or the Internet even if you plan to
attend the Annual Meeting in person to ensure that your shares of
Common Stock are present in person or represented by proxy at the
Annual Meeting.
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7.
How
do I vote if I am a beneficial stockholder?
If your
shares of Common Stock are held by a brokerage firm, bank, trust or
other nominee, you are considered the “beneficial
stockholder” of the shares of Common Stock being held in
“street name.” These proxy materials are being
forwarded to you by your broker, bank or other holder of record who
is considered, with respect to those shares of Common Stock, the
stockholder of record. As the beneficial stockholder you have the
right to direct your broker, bank or other holder of record on how
to vote your shares of Common Stock and you are invited to attend
the Annual Meeting. Your broker, bank, trustee or nominee is
obligated to provide you with a voting instruction form for voting
purposes.
As a
beneficial stockholder, you cannot vote your shares of Common Stock
directly and must instead instruct the brokerage firm, bank, trust
or other nominee on how to vote your shares of Common Stock. With
specific instructions on how to vote, your brokerage firm, bank,
trust or other nominee will be permitted to vote shares of Common
Stock on your behalf for any matter, including non-routine matters
under SEC Rules. Proposal (1), election of directors, is considered
a non-routine matter. Without instructions in how to vote, your
brokerage firm, bank, trust or other nominee will only be permitted
to vote shares of Common Stock on your behalf for routine matters
under applicable SEC rules. Proposal (2), ratification of UHY as
our independent registered public accounting firm for the year
ending December 31, 2016, is considered a routine matter.
Therefore, it
is important that you promptly follow the directions provided by
your brokerage firm, bank, trust or other nominee regarding how to
instruct them to vote your shares of Common Stock.
If you wish to vote in
person at the Annual Meeting, you must obtain a legal proxy form
from the brokerage firm, bank, trust or other nominee and present
it to the inspector of election with your ballot.
If you
hold some shares of Common Stock as a registered stockholder and
some shares of Common Stock as a beneficial stockholder, the shares
of Common Stock cannot be combined for voting purposes because the
shares of Common Stock held beneficially list the brokerage firm,
bank, trust or other nominee as the stockholder of
record.
8.
What
if I fail to instruct my brokerage firm, bank, trust or other
nominee how to vote?
Because
your brokerage firm, bank, trust or other nominee does not have
discretionary authority to vote on non-routine matters, failure to
provide your broker or other nominee with voting instructions on
how to vote your shares of Common Stock will result in a broker
non-vote for Proposal (1).
9.
What
are the proposals that will be voted on at the Annual
Meeting?
You are
being asked to consider and vote upon proposals to: (1) elect five
directors, (2) ratify the selection of UHY as our independent
registered public accounting firm for the year ending December 31,
2016, and (3) transact any other business that may properly come
before the Annual Meeting and any adjournment or postponement
thereof.
10.
How
does Blue Dolphin’s Board recommend that I vote on the
proposals?
The
Board has determined that each of the proposals presented in the
proxy statement are in the best interests of you -- our stockholder
-- and unanimously recommends that you vote “
FOR
” each proposal presented in
the proxy statement.
11.
How
many votes are required to approve an adjournment or postponement
of the Annual Meeting to a later time, if necessary or appropriate,
to obtain a quorum or solicit additional proxies in favor of the
proposals?
If a
quorum is not met, the Board may submit a proposal to adjourn or
postpone the Annual Meeting to a later date or dates until a quorum
is met. If a quorum is met but there are insufficient votes to
adopt the proposals, our By-Laws require the affirmative vote of a
majority of the votes cast in order to adjourn or postpone the
Annual Meeting to a later time. Withheld votes, abstentions and
broker non-votes will have no effect on this matter.
12.
How
are votes counted?
The
inspector of election that is appointed for the Annual Meeting will
count the votes. Such person will separately count
“
FOR
,”
“
WITHHELD
,” and
“
AGAINST
” votes,
as well as abstentions and broker non-votes.
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13.
What
constitutes a quorum for the Annual Meeting?
The
presence, in person or by proxy, of stockholders representing a
majority of the shares of Common Stock entitled to vote at the
Annual Meeting will constitute a quorum for the Annual Meeting.
Shares of Common Stock held by registered stockholders that submit
a properly executed proxy form will be counted as part of the
quorum. Shares of Common Stock held by beneficial stockholders that
either provide their brokerage firm, bank, trust or other nominee
with voting instructions or obtain a legal proxy form for voting in
person at the Annual Meeting will be counted as part of the
quorum.
14.
Am
I entitled to appraisal rights?
Under
Delaware law, stockholders are not entitled to appraisal rights
with respect to any of the proposals presented at the Annual
Meeting.
15.
What
happens if I sell my shares of Blue Dolphin Common Stock before the
Annual Meeting?
The
date of record to determine whether stockholders are entitled to
vote at the Annual Meeting is earlier than the date of the Annual
Meeting. If you transfer or sell your shares of Common Stock after
the Record Date but before the Annual Meeting, you will, unless
special arrangements are made, retain your right to vote at the
Annual Meeting.
16.
Who
can answer further questions?
For
additional questions, please contact Investor Relations at (713)
568-4725. For assistance in submitting proxies or voting shares of
Common Stock, registered stockholders should contact Securities
Transfer Corporation by phone at (469) 633-0101 or visit their
website at
http://www.stctransfer.com
.
Beneficial stockholders should contact their brokerage firm, bank,
trust or other nominee for additional information.
Selection of UHY as Independent Registered Public Accounting
Firm
17.
How long has UHY been our independent registered public accounting
firm?
UHY has
been engaged as our independent registered public accounting firm
since 2002. Although ratification of UHY as our independent
registered public accounting firm by our stockholders is not
required by our By-Laws, the Board believes that submitting this
matter to a vote reflects good corporate practice.
18.
What happens if UHY’s selection is not ratified?
In the
event of a negative vote on such ratification, the Audit Committee
of the Board (the “Audit Committee”) will consider
whether it is appropriate to select another independent registered
public accounting firm. Even if this appointment is ratified, the
Audit Committee, in its discretion, may direct the appointment of a
different independent registered public accounting firm at any time
during the year if the Audit Committee determines that such a
change would be in our best interest and that of our
stockholders.
Remainder of Page Intentionally Left Blank
7
|
PROPOSALS
|
Director Nominees
The
Board has affirmatively determined that each of Blue
Dolphin’s outside directors other than Jonathan P. Carroll,
our Chief Executive Officer and President, and Herbert N. Whitney,
is an “Independent Director” as such term is defined by
OTCQX and SEC rules. The independent members of the Board have
nominated Ryan A. Bailey, Amitav Misra, Christopher T. Morris, and
Messrs. Carroll and Whitney to serve as directors until the next
annual meeting of stockholders. Each director that has been
nominated (each a “Director Nominee”) shall serve as a
director until the next annual meeting of stockholders, or in each
case until their successors have been duly elected and qualified,
or until their earlier resignation or removal.
Each
Director Nominee has consented to being nominated and has expressed
a willingness to serve if elected. The Board has no reason to
believe that any of the Director Nominees will be unable or
unwilling to serve if elected. However, should any Director Nominee
become unable or unwilling to serve as a director at the time of
the Annual Meeting, the person or persons exercising the proxies
will vote for the election of a substitute Director Nominee
designated by the Board.
This
table shows, as of the Record Date, each Director Nominee’s
name, age, principal occupation and directorships during the past
five (5) years, as well as their relevant knowledge and experience
that led to their nomination to the Board:
|
Name,
Age
Principal Occupation and Directorships During Past 5
Years
|
|
Knowledge
and Experience
|
|
|
|
|
|
Jonathan P. Carroll
, 55
Blue
Dolphin Energy Company
Chairman of the Board
(since 2014)
Chief Executive Officer, President,
Assistant Treasurer and Secretary
(since 2012)
Lazarus
Energy Holdings, LLC (“LEH”)
President and majority owner
(since 2006)
LEH
owns approximately 81% of our outstanding Common
Stock.
Mr.
Carroll has served on Blue Dolphin’s Board since 2014. He is
currently Chairman of the Board. Since 2004, he has served on the
Board of Trustees of the Salient Fund Group, and has served on the
compliance, audit and nominating committees of several of
Salient’s private and public closed-end and mutual funds. Mr.
Carroll previously served on the Board of Directors of the General
Partner of LRR Energy, L.P. (NYSE: LRE) from January 2014 until its
merger with
Vanguard
Natural Resources, LLC in October 2015.
|
|
Mr.
Carroll earned a Bachelor of Arts degree in Human Biology and a
Bachelor of Arts degree in Economics from Stanford University, and
he completed a Directed Reading in Economics at Oxford University.
Based on his educational and professional experiences, Mr. Carroll
possesses particular knowledge and experience in business
management, finance and business development that strengthen the
Board’s collective qualifications, skills and
experience.
|
|
|
|
|
|
|
|
|
|
Ryan A. Bailey
, 41
Children’s
Health System of Texas
Head of Investments
(since 2014)
The
Meadows Foundation
Investment Officer/Interim Chief Investment Officer
(2006 to
2014)
Mr.
Bailey was appointed to Blue Dolphin’s Board in November
2015. He is currently a member of the Audit and Compensation
Committees, as well as a member of the Special Committee on MLP
Conversion. He also serves as an advisor and mentor to Texas Wall
Street Women, a non-profit member organization, and is a member of
the advisory board of Solovis, Inc., an investment software
company.
|
|
Mr.
Bailey earned a Bachelor of Arts in Economics from Yale University
and completed a graduate course in tax planning from the Yale
School of Management. He holds professional credentialing as a
Chartered Financial Analyst (CFA), Financial Risk Manager (FRM),
Chartered Alternative Investment Analyst (CAIA) and Chartered
Market Technician (CMT). Based on his educational and professional
experiences, Mr. Bailey possesses particular knowledge and
experience in finance, financial analysis and modeling, investment
management, risk assessment and strategic planning that strengthen
the Board’s collective qualifications, skills and
experience.
|
|
|
|
|
|
|
|
|
8
|
Name,
Age
Principal Occupation and Directorships During Past 5
Years
|
|
Knowledge
and Experience
|
|
|
|
|
|
Amitav Misra
, 39
Cardinal
Advisors
Founding Partner
(since 2014)
Taxa,
Inc.
President, Director and Chief Operating Officer
(2012 to
2014)
EnerNOC,
Inc.
Channel Manager
(2011 to 2012)
Private
Investment Partnership
Partner
(2007 to 2011)
Mr.
Misra has served on Blue Dolphin’s Board since 2014. He is
currently a member of the Audit and Compensation Committees, as
well as a member of the Special Committee on MLP Conversion. Mr.
Misra serves as an advisor to several energy technology and private
investment companies. He is also a director of the Houston Center
for Literacy, a non-profit.
|
|
Mr.
Misra earned a Bachelor of Arts in Economics from Stanford
University and holds FINRA Series 79 and Series 63 licenses. Mr.
Misra possesses particular knowledge and experience in economics,
business development, private equity, and strategic planning that
strengthen the Board’s collective qualifications, skills and
experience.
|
|
Christopher T. Morris
, 55
Tatum
(a Randstad Company)
New York Managing Partner
(since 2013)
MPact
Partners LLC
President
(2011 to 2013)
Freddie
Mac
Vice President (various divisions)
(2000 to
2010)
Mr.
Morris has served on Blue Dolphin’s Board since 2012; he is
currently Chairman of the Audit and Compensation Committees, as
well as Chairman of the Special Committee on MLP
Conversion.
|
|
Mr.
Morris earned a Bachelor of Arts in Economics from Stanford
University and a Masters in Business Administration from the
Harvard Business School. Based on his educational and professional
experiences, Mr. Morris possesses particular knowledge and
experience in business management, finance, strategic planning and
business development that strengthen the Board’s collective
qualifications, skills and experience.
|
|
|
|
|
|
|
|
|
|
Herbert N. Whitney
, 76
Wildcat
Consulting, LLC
Founder and President
(since 2006)
Mr.
Whitney has served on Blue Dolphin’s Board since 2012. He
previously served on the Board of Directors of Blackwater Midstream
Corporation, the Advisory Board of Sheetz, Inc., as Chairman of the
Board of Directors of Colonial Pipeline Company, and as Chairman of
the Executive Committee of the Association of Oil
Pipelines.
|
|
Mr. Whitney has
more than 40 years of experience in pipeline operations, crude oil
supply, product supply, distribution and trading, as well as marine
operations and logistics having served as the President of CITGO
Pipeline Company and in various general manager positions at CITGO
Petroleum Corporation. He earned his Bachelor of Science in Civil
Engineering from Kansas State University. Based on his educational
and professional experiences, he possesses extensive knowledge in
the supply and distribution of crude oil and petroleum products,
which strengthens the Board’s collective qualifications,
skills and expertise.
|
Recommendation
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE
“FOR”
THE ELECTION OF ALL OF THE DIRECTOR NOMINEES.
9
For additional information related to this matter, refer to the
FAQs provided as part of this proxy statement.
For
purposes of determining whether to select UHY as our independent
registered public accounting firm to perform the audit of our
consolidated financial statements for the year ending December 31,
2016, the Audit Committee conducted a thorough review of
UHY’s performance. The Audit Committee
considered:
-
UHY’s
performance on previous audits, including the quality of the
engagement team and the firm’s experience, client service,
responsiveness and technical expertise;
-
the firm’s
leadership, management structure and client and employee
retention;
-
the firm’s
financial strength and performance; and
-
the appropriateness
of fees charged.
UHY
acts as our principal independent registered public accounting
firm. We are asking our stockholders to ratify the selection of UHY
as our independent registered public accounting firm. Although
ratification is not required by our By-Laws or otherwise, the Board
is submitting the selection of UHY to our stockholders for
ratification as a matter of good corporate practice. If the
selection is not ratified, the Audit Committee will consider
whether it is appropriate to select another independent registered
public accounting firm. Even if the selection is ratified, the
Audit Committee, in its discretion, may select a different
independent registered public accounting firm at any time during
the year if it determines that such a change would be in the best
interests of Blue Dolphin and our stockholders.
A
representative of UHY is expected to be available during the Annual
Meeting, with the opportunity to make a statement if he or she
decides, and will respond to appropriate questions.
Recommendation
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE
RATIFICATION
OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
At the
date of this proxy statement, the Board was not aware of any matter
to be acted upon at the Annual Meeting other than those matters set
forth in Proposal Nos. (1) and (2), as described herein. If other
business comes before the Annual Meeting, the persons named on the
proxy will vote the proxy in accordance with their best
judgment.
Remainder
of Page Intentionally Left Blank
10
This
table shows, as of the Record Date, the name and age of each
executive officer, as well as their principal occupation during the
past five (5) years:
|
Name
|
|
Position
|
|
Since
|
|
Age
|
|
Jonathan P. Carroll
|
|
Chief Executive Officer, President, Assistant Treasurer, and
Secretary (Principal Executive Officer)
|
|
2012
|
|
55
|
|
|
|
|
|
|
|
|
|
Tommy L. Byrd
|
|
Chief Financial Officer (Principal Financial Officer)
|
|
2015
|
|
59
|
|
|
|
Treasurer and Assistant Secretary
|
|
2012
|
|
|
|
Jonathan P. Carroll
was appointed Chairman of the Board of
Blue Dolphin in 2014, and he was appointed Chief Executive Officer,
President, Assistant Treasurer and Secretary of Blue Dolphin in
2012. He has also served as President of LEH since 2006 and is its
majority owner. LEH owns approximately 81% of Blue Dolphin’s
Common Stock. Before founding LEH, Mr. Carroll was a private
investor focused on direct debt and equity investments, primarily
in distressed assets. Since 2004, he has served on the Board of
Trustees of Salient Fund Group, and has served on the compliance,
audit and nominating committees of several of Salient’s
private and public closed-end and mutual funds. Mr. Carroll
previously served on the Board of Directors of the General Partner
of LRR Energy, L.P. (NYSE: LRE) from January 2014 until its merger
with Vanguard Natural Resources, LLC in October 2015. He earned a
Bachelor of Arts degree in Human Biology and a Bachelor of Arts
degree in Economics from Stanford University, and he completed a
Directed Reading in Economics at Oxford University.
|
|
|
|
Tommy L. Byrd
was appointed Chief Financial Officer of Blue
Dolphin in 2015 having previously served as Interim Chief Financial
Officer from 2012 through 2015 and as Controller from 2011 to 2012.
Mr. Byrd also serves as Treasurer and Assistant Secretary of Blue
Dolphin, positions for which he was appointed in 2012. He is also
an employee of LEH, where he has served as Chief Financial Officer
since 2006. He earned a Bachelor of Business Administration in
Accounting from Stephen F. Austin State University. Mr. Byrd has
extensive financial management, accounting and internal audit
experience in the energy industry.
|
Remainder
of Page Intentionally Left Blank
11
Board
The
Board consists of Messrs. Carroll, Bailey, Misra, Morris and
Whitney with Mr. Carroll serving as Chairman. During 2015, the
Board held two (2) regular meetings. Each director attended at
least 75% of the total number of meetings of the Board and
committees on which he served. The Board has two standing
committees, the Audit Committee and the Compensation Committee. In
February 2013, the Board formed a Special Committee of the Board to
oversee a potential conversion of Blue Dolphin from a Delaware
“C” corporation to a Delaware master limited
partnership (“MLP”).
Audit Committee
The
Audit Committee consists of Messrs. Morris, Bailey, and Misra with
Mr. Morris serving as Chairman. During 2015, the Audit Committee
met four (4) times. The Board has affirmatively determined that all
members of the Audit Committee are independent under OTCQX and SEC
rules and that each of Messrs. Morris and Bailey qualifies as an
Audit Committee Financial Expert. The Audit Committee's duties
include overseeing financial reporting and internal control
functions. The Audit Committee’s written charter is available
on our corporate website (
http://www.blue-dolphin-energy.com
).
Compensation Committee
The
Compensation Committee consists of Messrs. Morris, Bailey, and
Misra with Mr. Morris serving as Chairman. During 2015, the
Compensation Committee did not meet. The Board has affirmatively
determined that all members of the Compensation Committee are
independent under OTCQX rules. The Compensation Committee’s
duties include setting and overseeing our compensation policies, as
well as reviewing and recommending to the Board for its approval
all compensation for the Chief Executive Officer, other senior
executives, and directors. The Compensation Committee’s
written charter is available on our corporate website (
http://www.blue-dolphin-energy.com
).
MLP Conversion Special Committee
The MLP
Conversion Special Committee consists of Messrs. Morris, Bailey,
and Misra with Mr. Morris serving as Chairman. The MLP Conversion
Special Committee did not formally meet during 2015. However,
members met with third-parties to ascertain the current climate for
optimizing stockholder value through converting Blue Dolphin from a
publicly traded “C” corporation to a publicly traded
MLP. Due to a shift in market conditions over the past three years,
the MLP Conversion Special Committee determined that a conversion
in the foreseeable future would not be in the best interests of
shareholders. The MLP Conversion Special Committee was formed by
the Board in February 2013. The Board has affirmatively determined
that all members of the MLP Conversion Special Committee are
independent.
Nominating Committee
Given
the size of the Board, the Board adopted a “Board Nomination
Procedures” policy in lieu of appointing a standing
nominating committee. The policy is used by independent members of
the Board when choosing nominees to stand for election. The Board
will consider for possible nomination qualified nominees
recommended by stockholders in accordance with Blue Dolphin’s
Certificate of Incorporation. As addressed in the “Board
Nomination Procedures” policy, the manner in which
independent directors evaluate nominees for director as recommended
by a stockholder is the same as that for nominees received from
other sources. (See “Director Nomination and Stockholder
Proposals by Stockholders for Annual Meeting of Stockholders”
in this proxy statement for more information).
12
The
Board endeavors to nominate qualified directors that will make
important contributions to the Board and to Blue Dolphin. The Board
generally requires that nominees be persons of sound ethical
character, be able to represent all stockholders fairly, have
demonstrated professional achievements, have meaningful experience,
and have a general appreciation of the major business issues facing
Blue Dolphin. The Board also
considers issues of diversity and background in its selection
process, recognizing that it is desirable for its membership to
have differences in viewpoints, professional experiences,
educational backgrounds, skills, race, gender, age and national
origin.
Director Attendance at Annual Meeting
We do not have a formal policy regarding attendance by members of
the Board at our annual meeting of stockholders. We generally hold
a Board meeting immediately following our annual meeting of
stockholders. However, no Board meeting was held after our 2015
annual meeting of stockholders.
As a result, only Mr.
Carroll was present at the 2015 annual meeting of
stockholders.
Leadership Structure
Blue
Dolphin is led by Jonathan P. Carroll, who has served as Chairman
of the Board since 2014 and as our Chief Executive Officer and
President since 2012. Having a single leader for the Company is
commonly utilized by other public companies in the United States,
and we believe it is effective for Blue Dolphin as well. This
leadership structure demonstrates to our personnel, customers and
stockholders that we are under strong leadership, with a single
person setting the tone and having primary responsibility for
managing our operations, and eliminates the potential for confusion
or duplication of efforts. We do not believe that appointing an
independent Board chairman, or a permanent lead director, would
improve upon the performance of the Board.
Risk Oversight
Our
Board is actively involved in overseeing Blue Dolphin’s risk
management. Presentations by management to the Board include
consideration of the challenges and risks to our business, and the
Board and management actively engage in discussion on these topics.
Furthermore, the two standing Board committees provide appropriate
risk oversight. The Audit Committee oversees the accounting and
financial reporting processes, as well as compliance, internal
control, legal and risk matters. The Compensation Committee
oversees compensation policies, including the approval of
compensation for directors and management. We believe that the
processes established to report and monitor systems for material
risks applicable to us are appropriate and effective.
Code of Ethics and Code of Conduct
In
compliance with the Sarbanes-Oxley Act of 2002, the Board adopted a
code of ethics policy and a code of conduct policy. The Audit
Committee established procedures to enable anyone who has a concern
about our conduct, policies, accounting, internal control over
financial reporting, and/or auditing matters to communicate that
concern directly to the Chairman of the Audit Committee. The code
of ethics and code of conduct policies are available to any
stockholder, without charge, upon written request to Blue Dolphin
Energy Company, Attention: Audit Committee Chairman, 801 Travis
Street, Suite 2100, Houston, Texas 77002 or such other contact
information for the Audit Committee Chairman that we may post on
our website from time to time. Our code of ethics and code of
conduct policies are also available on our website (
http://www.blue-dolphin-energy.com
).
Any amendments or waivers to provisions of our code of ethics or
code of conduct will be disclosed on Form 8-K as filed with the SEC
and/or posted on our website.
13
Communicating with Directors
As the
Board does not receive a large volume of correspondence from
stockholders, at this time, there is no formal process by which
stockholders can communicate with the Board. Instead, any
stockholder who desires to contact the Board or specific members of
the Board may do so by writing to: Blue Dolphin Energy Company,
Attention: Secretary for the Board, 801 Travis Street, Suite 2100,
Houston, Texas 77002. Currently, all communications addressed in
such manner are sent directly to the indicated directors. In the
future, if the Board adopts a formal process for determining how
communications are to be relayed to directors, that process will be
disclosed on Form 8-K as filed with the SEC and/or posted on our
website (
http://www.blue-dolphin-energy.com
).
The
duties and responsibilities of the Audit Committee are set forth in
a written charter adopted by the Board. The Audit Committee is
comprised solely of independent directors who have the requisite
financial experience and expertise and meet the requirements of
OTCQX rules and SEC Rule 10A-3. The Audit Committee reviews and
reassesses its written charter annually and recommends any changes
to the Board for approval. In addition, the Audit Committee
periodically reviews relevant requirements of the Sarbanes-Oxley
Act of 2002, as well as proposed and adopted rules of the SEC
regarding Audit Committee procedures and responsibilities to ensure
compliance. The Audit Committee charter is available on our website
(
http://www.blue-dolphin-energy.com
).
The
Audit Committee’s primary duties and responsibilities are
to:
-
assess the
integrity of our financial reporting process and systems of
internal control regarding accounting;
-
assess the
independence and performance of our independent registered public
accounting firm; and
-
provide an avenue
of communication between our independent registered public
accounting firm, management, and the Board.
For the
fiscal year ended December 31, 2015, management represented to the
Audit Committee that: (i) our consolidated financial statements
were prepared in accordance with accounting principles generally
accepted by the United States of America and (ii)
our internal control
over financial reporting were effective. UHY, our independent
registered public accounting firm, performed an audit as of
December 31, 2015, that determined that our consolidated financial
statements were free of material misstatement. As a smaller
reporting company, we are not required to have an audit of our
internal control over financial reporting. However, UHY’s
audit as of December 31, 2015, included consideration of internal
control over financial reporting as a basis for designing audit
procedures that are appropriate in the circumstances. The Audit
Committee reviewed and discussed with management and UHY our
audited consolidated financial statements and our internal control
over financial reporting for the fiscal year ended December 31,
2015.
Pursuant
to Public Company Accounting Oversight Board guidance,
UHY:
-
communicates to the
Audit Committee its responsibilities in relation to the audit and
establishes an understanding of the terms of the audit engagement
with the audit committee;
-
obtains information
from the Audit Committee relevant to the audit;
-
communicates to the
Audit Committee an overview of the overall audit strategy and
timing of the audit; and
-
provides the Audit
Committee with timely observations arising from the audit that are
significant to the financial reporting process.
14
With
regard to determining UHY’s performance and independence for
the fiscal year ended December 31, 2015, the Audit Committee
reviewed:
Performance
-
UHY’s
performance on previous audits, including the quality of the
engagement team and the firm’s experience, client service,
responsiveness and technical expertise;
-
UHY’s
leadership, management structure, and client and employee
retention;
-
UHY’s
financial strength and performance; and
-
the appropriateness
of fees charged by UHY.
Independence
-
the relationships
between UHY and Blue Dolphin, as well as any relationships between
UHY and our management and directors;
-
whether any
relationship with or service provided by UHY: (i) creates a mutual
or conflicting interest with us, (ii) places UHY in the position of
auditing its own work, (iii) results in UHY acting as management or
an employee of us, or (iv) places UHY in a position of being an
advocate for us; and
-
whether UHY
provides any prohibited non-audit services to us.
The
Audit Committee discussed with UHY its performance and independence
for the fiscal year ended December 31, 2015. Based on its findings,
the Audit Committee determined that the services provided by UHY
are satisfactory and UHY is independent.
The
Audit Committee holds a meeting at least quarterly in which
management and UHY participates. Following the Audit Committee
meeting, independent members of the Board meet separately in an
executive session with representatives from UHY. As a result, an
avenue of communication between UHY, management, and the Board is
accomplished on a regular basis.
This
table shows fees paid to UHY for the periods
indicated:
|
|
December 31,
|
|
|
|
2015
|
2014
|
|
|
|
|
|
Audit
fees
|
$
195,387
|
$
192,860
|
|
Audit-related
fees
|
-
|
-
|
|
Tax
fees
|
-
|
-
|
|
All
other fees
|
-
|
-
|
|
|
|
|
|
|
$
195,387
|
$
192,860
|
Audit
fees for 2015 and 2014 related to the audit of our consolidated
financial statements and the review of our quarterly reports that
are filed with the SEC. The Audit Committee must pre-approve all
audit and non-audit services provided to us by our independent
registered public accounting firm.
Based
on discussions with management and UHY, as well as review of
UHY’s report to the Audit Committee, the Audit Committee
recommended to the Board that our audited consolidated financial
statements for the fiscal year ended December 31, 2015, be included
in the Annual Report, as filed with the SEC.
The
Audit Committee:
Christopher
T. Morris, Chairman
Ryan
A. Bailey
Amitav
Misra
15
Executive Compensation Policy and Procedures
LEH
manages and operates all of our properties pursuant to an Operating
Agreement (the “Operating Agreement”). Under the
Operating Agreement, LEH provides us with personnel, among other
services, in capacities equivalent to Chief Executive Officer and
Chief Financial Officer. All Blue Dolphin personnel work for and
are paid directly by LEH. Blue Dolphin is billed at cost by LEH for
certain personnel associated with Blue Dolphin Pipe Line Company, a
wholly owned subsidiary of Blue Dolphin.
Compensation for Named Executives
This
table shows compensation paid to our principal executive officer,
principal financial officer, and the most highly compensated
executive officers other than the principal executive officer and
principal financial officer whose annual salary exceeded $100,000
(collectively, the “Named Executive Officers”) pursuant
to the Operating Agreement for services rendered to Blue Dolphin
for the fiscal year ended December 31, 2015:
SUMMARY
COMPENSATION TABLE
|
Name and Principal Position
|
Year
|
Salary
|
Total
|
|
Jonathan
P. Carroll
|
|
|
|
|
Chief
Executive Officer and President
|
2015
|
$
-
|
$
-
|
|
|
2014
|
$
-
|
$
-
|
|
|
|
|
|
|
Tommy L. Byrd
(1)-
|
|
|
|
|
Chief
Financial Officer
|
2015
|
$
100,000
|
$
100,000
|
|
|
2014
|
$
100,000
|
$
100,000
|
(1)
Mr. Byrd works for
and is paid directly by LEH. However, a portion of his compensation
is billed to Blue Dolphin at cost pursuant to the Operating
Agreement.
The
Compensation Committee reviews and recommends to the Board for its
approval all compensation for the Chief Executive Officer and other
senior executives.
Compensation Risk Assessment
LEH’s
approach to compensation practices and policies applicable to our
non-executive personnel is consistent with the base pay market
median for each position. LEH believes its practices and policies
in this regard are not reasonably likely to have a material adverse
effect on us.
Outstanding Equity Awards
None.
Director Compensation Policy and Procedures
Under
the Operating Agreement, LEH provides us with personnel, among
other services, in capacities equivalent to Chief Executive Officer
and Chief Financial Officer. Mr. Carroll, our Chief Executive
Officer and President, does not receive any compensation for his
service as a director. The Compensation Committee reviews and
recommends to the Board for its approval all compensation for the
directors.
16
Compensation for Non-Employee Directors
The
annual retainer payable to non-employee directors serving on the
Board is $40,000 per year. Payments are made in Common Stock and
cash on a quarterly rotating basis.
Cash Fees
.
Cash fees reflect
the amount of cash compensation earned for Board and committee
service. For service on the Board,
non-employee directors
are entitled to receive cash payments in the amount of $10,000 for
services rendered in the second and fourth quarters of each
year.
Additional
compensation is paid to non-employee directors for serving on the
Audit Committee. The chairman of the Audit Committee receives an
additional annual retainer of $5,000 in cash in the second and
fourth quarters of each year. Members of the Audit Committee
receive an additional annual retainer of $2,500 in cash in the
second and fourth quarters of each year. During 2015, no additional
compensation was paid to non-employee directors for serving on the
MLP Conversion Special Committee. Non-employee directors serving on
the Compensation Committee do not receive additional compensation.
Non-employee directors are reimbursed for reasonable out-of-pocket
expenses related to in-person meeting attendance.
Stock
Awards
. For service on the
Board, non-employee directors are entitled to receive Blue Dolphin
Common Stock with a fair value of $10,000 for services rendered in
the first and third quarters of each year. The number of shares of
Common Stock issued is determined by the closing price of Blue
Dolphin’s Common Stock on the last trading day in the
respective quarterly period. The shares of Common Stock are subject
to resale restrictions applicable to restricted securities and
securities held by affiliates under federal securities
laws.
This
table shows
the compensation that each
director earned for his Board and committee service
for the
year ended December 31, 2015:
|
Name
|
Cash Fees
|
Stock
Awards
(1)(2)
|
Total
|
|
|
|
|
|
|
Christopher
T. Morris
|
$
28,750
|
$
20,000
|
$
48,750
|
|
Ryan
A. Bailey
|
10,625
|
-
|
10,625
|
|
Amitav
Misra
|
24,375
|
20,000
|
44,375
|
|
Herbert
N. Whitney
|
-
|
-
|
-
|
|
Jonathan
Carroll
|
-
|
-
|
-
|
|
|
|
|
|
|
|
$
63,750
|
$
40,000
|
$
103,750
|
|
(1)
|
At
December 31, 2015, Messrs. Morris, Bailey, Misra and Whitney had
total restricted awards of Common Stock outstanding of 12,051, 0,
3,792 and 9,683, respectively.
|
|
(2)
|
In accordance with SEC rules, the grant date fair value of
non-employee director stock awards is calculated by multiplying the
number of shares of Common Stock awarded by the closing price of
Blue Dolphin’s Common Stock on the grant date, which was
$4.59 at March 31, 2015 and $4.35 at September 30, 2015. Based on
the calculation, the aggregate grant date fair value of
non-employee director stock awards for services rendered for the
first and third quarters of 2015 was $20,000 and $20,000,
respectively.
|
17
Compensation Committee Interlocks and Insider
Participation
Only
one of our directors, Jonathan P. Carroll, also serves as an
executive officer. Mr. Carroll does not serve on any of our
standing committees.
None of
our executive officers serve on the board of directors of another
entity whose executive officers serve on our Board. None of our
officers or LEH’s personnel, other than Mr. Carroll,
participated in the deliberations of our Board or our Compensation
Committee concerning executive officer or director
compensation.
Family Relationships between Directors and Executive
Officers
As of
the Record Date, there were no relationships between any of our
directors or executive officers and any other director or executive
officer of Blue Dolphin.
Based
on discussions with management and review of the Compensation
Discussion and Analysis, the Compensation Committee consisting of
Messrs. Morris, Bailey, and Misra, recommended to the Board that
the Compensation Discussion and Analysis be included in the
Annual Report and 2016 proxy statement.
The
Compensation Committee:
Christopher
T. Morris, Chairman
Ryan
A. Bailey
Amitav
Misra
Security Ownership of Certain Beneficial Owners
This
table shows information with respect to persons or groups known to
us to be the beneficial owners of more than five percent (5%) of
our Common Stock as of the Record Date. Unless otherwise indicated,
each named party has sole voting and dispositive power with respect
to such shares.
|
Title of Class
|
Name of Beneficial Owner
|
Amount and Nature of Beneficial Ownership
|
Percent of
Class
(1)
|
|
|
|
|
|
|
Common Stock
|
Lazarus Energy Holdings, LLC
|
8,426,456
|
80.4%
|
|
|
801 Travis Street, Suite 2100
|
|
|
|
|
Houston, Texas 77002
|
|
|
(1)
Based upon
10,474,714 shares of Common Stock outstanding (10,624,714 shares of
Common Stock issued less 150,000 shares of Common Stock held in
treasury and 0 shares of Common Stock issuable upon exercise of
stock options, all as of the Record Date).
18
Security Ownership of Management
This
table shows information as of the Record Date with respect to: (i)
directors, (ii) executive officers and (iii) directors and
executive officers as a group beneficially owning our Common Stock.
Unless otherwise indicated, each of the following persons has sole
voting and dispositive power with respect to such
shares.
|
Title of Class
|
Name of Beneficial Owner
|
Amount and Nature of Beneficial Ownership
|
Percent of
Class
(1)
|
|
|
|
|
|
|
Common
Stock
|
Jonathan P. Carroll
(2)
|
8,428,214
|
80.5
%
|
|
Common
Stock
|
Christopher
T. Morris
|
19,788
|
*
|
|
Common
Stock
|
Ryan
A. Bailey
|
5,438
|
*
|
|
Common
Stock
|
Amitav
Misra
|
11,529
|
*
|
|
Common
Stock
|
Herbert
N. Whitney
|
9,683
|
*
|
|
Common
Stock
|
Tommy
L. Byrd
|
---
|
---
|
|
|
|
|
|
|
Directors/Nominees and Executive Officers as a Group (6
Persons)
|
8,474,652
|
80.9
%
|
|
(1) Based upon
10,474,714 shares of Common Stock outstanding (10,624,714 shares of
Common Stock issued less 150,000 shares of Common Stock held in
treasury and 0 shares of Common Stock issuable upon exercise of
stock options, all as of the Record Date).
(2) Includes
8,426,456 shares issued to LEH. Mr. Carroll and his affiliates have
an approximate 60% ownership interest in LEH.
* Less than
1%.
We are
party to several agreements with related parties. We believe these
related party transactions were consummated on terms equivalent to
those that prevail in arm's-length transactions. A summary of these
agreements follows:
LEH
. We are party to an Operating Agreement, a Product Sales
Agreement, and a Terminal Services Agreement with LEH. LEH, our
controlling shareholder, owns approximately 81% of our Common
Stock. Jonathan Carroll, Chairman of the Board, Chief Executive
Officer, and President of Blue Dolphin, is the majority owner of
LEH.
Operating Agreement
. LEH manages and operates all of our
properties pursuant to the Operating Agreement. The Operating
Agreement expires upon the earliest to occur of: (a) the date of
the termination of the Joint Marketing Agreement pursuant to its
terms, (b) August 2018, or (c) upon written notice of either party
to the Operating Agreement of a material breach of the Operating
Agreement by the other party. For services rendered under the
Operating Agreement, LEH receives reimbursements and fees as
follows:
●
Reimbursements –
For management
and operation of all properties excluding the Nixon Facility, LEH
is reimbursed at cost for all reasonable expenses incurred while
performing the services. Unsettled reimbursements to LEH are either
reflected within prepaid expenses and other current assets or
accounts payable, related party in our consolidated balance
sheets.
●
Fees –
For management and
operation of the Nixon Facility, LEH receives: (i) weekly payments
from GEL Tex Marketing, LLC to cover direct expenses incurred in an
amount not to exceed $750,000 per month (the “Operations
Payments”), (ii) $0.25 for each bbl processed at the Nixon
Facility up to a maximum quantity of 10,000 bbls per day determined
on a monthly basis, and (iii) $2.50 for each bbl processed at the
Nixon Facility in excess of 10,000 bbls per day determined on a
monthly basis. Amounts expensed as fees to LEH are reflected within
refinery operating expenses in our consolidated statements of
operations. Fees owed to LEH under the Operating Agreement are
reflected within accounts payable, related party in our
consolidated balance sheets.
19
Product Sales Agreement
. Under a Product Sales Agreement,
LEH purchases jet fuel from the Nixon Facility for resale to third
parties. Sales to LEH under the Product Sales Agreement are
reflected within refined petroleum product sales in our
consolidated statements of operations.
Terminal Services Agreement
. Pursuant to a Terminal Services
Agreement, LEH leases a petroleum storage tank at the Nixon
Facility. The Terminal Services Agreement has an initial term of 12
months and automatically renews for additional terms of 6 months.
The parties may terminate the Terminal Services Agreement upon 45
days’ written notice. Rental fees received from LEH under the
Terminal Services Agreement are reflected within tank rental
revenue in our consolidated statements of operations.
Ingleside Crude, LLC (“Ingleside”)
. Pursuant to
an Amended and Restated Tank Lease Agreement with Ingleside, we
lease petroleum storage tanks to meet periodic, additional storage
needs. Ingleside is a related party of LEH and Jonathan Carroll.
The Amended and Restated Tank Lease Agreement had an initial term
of 30 days with automatic 30-day renewal periods. The parties may
terminate the tank lease agreement upon 30 days’ written
notice. Amounts expensed as rental fees to Ingleside under the
Amended and Restated Tank Lease Agreement are reflected within
refinery operating expenses in our consolidated statements of
operations. Rental fees owed to Ingleside under the Amended and
Restated Tank Lease Agreement are reflected within accounts
payable, related party in our consolidated balance
sheets.
Jonathan Carroll
. Pursuant to Guaranty Fee Agreements,
Jonathan Carroll receives fees for providing his personal guarantee
on certain of our long-term debt. Jonathan Carroll was required to
guarantee repayment of funds borrowed and interest accrued under
the loan agreements. Amounts owed to Jonathan Carroll under
Guaranty Fee Agreements are reflected within accounts payable,
related party in our consolidated balance sheets. Jonathan Carroll
is Chairman of the Board, Chief Executive Officer, and President of
Blue Dolphin.
Unsettled
reimbursements to LEH under the Operating Agreement reflected as
prepaid related party operating expenses as of the dates indicated
were as follows:
|
|
December 31,
|
|
|
|
2015
|
2014
|
|
|
|
|
|
LEH
|
$
624,570
|
$
-
|
|
|
|
|
|
|
$
624,570
|
$
-
|
Accounts
payable, related party, which reflects unsettled reimbursements to
LEH under the Operating Agreement, rental fees owed to Ingleside
under the Amended and Restated Tank Lease Agreement, and fees owed
to Jonathan Carroll under Guaranty Fee Agreements, as of the dates
indicated were as follows:
|
|
December 31,
|
|
|
|
2015
|
2014
|
|
|
|
|
|
LEH
|
$
-
|
$
1,174,168
|
|
Ingleside
|
300,000
|
-
|
|
Jonathan
Carroll
|
-
|
-
|
|
|
|
|
|
|
$
300,000
|
$
1,174,168
|
20
Refinery
operating expenses, which reflects amounts expensed as fees to LEH
pursuant to the Operating Agreement and to Ingleside pursuant to
the Amended and Restated Tank Lease Agreement, for the periods
indicated were as follows:
|
|
Years Ended December 31,
|
|||
|
|
2015
|
2014
|
||
|
|
Amount
|
Per bbl
|
Amount
|
Per bbl
|
|
|
|
|
|
|
|
LEH
|
$
11,683,658
|
$
2.80
|
$
10,698,023
|
$
2.77
|
|
Ingleside
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
|
|
$
11,683,658
|
$
2.80
|
$
10,698,023
|
$
2.77
|
We
received no revenue from LEH under the Product Sales Agreement and
the Terminal Services Agreement for the years ended December 31,
2015 and 2014.
Amounts
expensed as fees to Jonathan Carroll under Guaranty Fee Agreements
for the periods indicated were as follows:
|
|
Years Ended December 31,
|
|
|
|
2015
|
2014
|
|
|
|
|
|
Jonathan
Carroll
|
$
320,124
|
$
-
|
|
|
|
|
|
|
$
320,124
|
$
-
|
Section
16(a) of the Exchange Act requires our directors, executive
officers, and stockholders who own more than ten percent (10%) of
the Common Stock, to file reports of stock ownership and changes in
ownership with the SEC and to furnish us with copies of all such
reports as filed. Based solely on a review of the copies of the
Section 16(a) reports furnished to us, we are unaware of any late
filings made during 2015.
Director Nominations and Proposals Process
We have
tentatively set the 2017 Annual Meeting of Stockholders for June
14, 2017. Accordingly, stockholders should submit nominations and
proposals in accordance with the guidance set forth
below.
21
Director Nominations Deadline
Our
Amended and Restated Certificate of Incorporation provides that no
person shall be eligible for nomination and election as a director
unless written notice of such nomination is received from a
stockholder of record by the Secretary of Blue Dolphin at least
ninety (90) calendar days before the anniversary date of the
previous year’s annual meeting. Further, such written notice
is to be accompanied by the written consent of the nominee to
serve, the name, age, business and residence addresses, and
principal occupation of the nominee, the number of shares
beneficially owned by the nominee, and any other information which
would be required to be furnished by law with respect to any
nominee for election to the Board. In order to avoid controversy as
to the date on which a director nomination is received,
stockholders of record must make submissions to us at our principal
executive office by certified mail, return receipt requested. (See
“Corporate Governance and Board Matters – Nominating
Committee” in this proxy statement for more
information.)
We did
not receive any director nominee submissions by September 17, 2016,
the deadline for the 2016 Annual Meeting.
Stockholder Proposals Deadline
Pursuant
to SEC requirements, stockholders of record must submit stockholder
proposals, for inclusion in the printed proxy materials, to us at
least one hundred (120) calendar days before the date we released
the previous year’s proxy statement for our annual meeting of
stockholders. However, if the date of the annual meeting has been
changed by more than thirty (30) days from the date of the previous
year’s meeting, then stockholders must submit their proposals
a reasonable time before Blue Dolphin begins to print and send its
proxy materials. We did not receive any stockholder proposal
submissions by July 21, 2016, the deadline for inclusion in the
printed materials for the 2016 Annual Meeting.
As
noted above we expect our 2017 annual meeting to be held on June
14, 2017, and we therefore will print and send proxy materials on
or around May 3, 2017. Accordingly, stockholder proposals must be
submitted a reasonable time before May 3, 2017. In order to avoid
controversy as to the date on which a stockholder proposal is
received, stockholders of record must make submissions to us at our
principal executive office by certified mail, return receipt
requested.
We are
subject to the informational requirements of the Exchange Act. We
file financial and other information with the SEC as required,
including but not limited to, proxy statements on Schedule 14A,
Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and
Current Reports on Form 8-K. Investors may obtain any document that
we file with the SEC through the SEC’s conventional and
electronic reading rooms. These reading rooms are managed by the
SEC’s Office of Freedom of Information and Privacy Act
Operations.
|
Office
of Freedom of Information and Privacy Act Operations
|
Conventional
Reading Rooms
|
Electronic
Reading Rooms
|
|
100 F
Street, N.E.
Mail
Stop 2736
Washington,
D.C. 20549
(202)
551-8300
|
Headquarters
Office
100 F
Street, N.E.
Room
1580
Washington,
D.C. 20549
(202)
551-8090
|
Public
Company Information / SEC Comment and Response Letters
https://www.sec.gov/edgar/searchedgar/companysearch.html
SEC
Opinion, Policy Statements, and Staff Manuals
https://www.sec.gov/foia/efoiapg.htm
|
We also
make our SEC filings available on our website (
http://www.blue-dolphin-energy.com
)
.
22
Certain
statements included in this proxy statement and the accompanying
notice and letter to stockholders are forward-looking statements
within the meaning of the Private Securities Litigation Reform Act
of 1935. Forward-looking statements represent management’s
beliefs and assumptions based on currently available information.
Forward-looking statements relate to matters such as our industry,
business strategy, goals, and expectations concerning our market
position, future operations, margins, profitability, capital
expenditures, liquidity and capital resources, commitments and
contingencies, and other financial and operating information. We
have used the words “anticipate,” “assume,”
“believe,” “budget,”
“continue,” “could,”
“estimate,” “expect,” “intend,”
“may,” “plan,” “potential,”
“predict,” “project,” “will,”
“future,” and similar terms and phrases to identify
forward-looking statements.
Forward-looking
statements reflect our current expectations regarding future
events, results, or outcomes. These expectations may or may not be
realized. Some of these expectations may be based upon assumptions
or judgments that prove to be incorrect. In addition, our business
and operations involve numerous risks and uncertainties, many of
which are beyond our control, which could result in our
expectations not being realized, or materially affect our financial
condition, results of operations, and cash flows. Actual events,
results, and outcomes may differ materially from our expectations
due to a variety of factors. Although it is not possible to
identify all of these factors, they include those described under
the heading “Risk Factors” in our Annual Report on Form
10-K and our Quarterly Reports on Form 10-Q as filed with the
SEC.
Brokers,
banks or other nominees may deliver only one copy of this proxy
statement to multiple beneficial stockholders who share the same
address, unless that broker, bank or other nominee has received
contrary instructions from one or more of the beneficial
stockholders. Upon written or oral request, we will promptly
deliver a separate copy of this proxy statement to a beneficial
stockholder at a shared address to which a single copy of the
documents was delivered. Beneficial stockholders sharing an address
who are receiving multiple copies of proxy materials and annual
reports that wish to receive a single copy of such materials in the
future will need to contact their broker, bank or other nominee to
request that only a single copy of each document be mailed to all
beneficial stockholders at the shared address in the
future.
Registered
and beneficial stockholders who wish to receive a separate copy of
this proxy statement, now or in the future, should submit their
request to Blue Dolphin, Investor Relations at (713) 568-4725, or
submit a written request to Blue Dolphin Energy Company, Attention:
Investor Relations, 801 Travis Street, Suite 2100, Houston, Texas
77002.
|
|
|
|
|
|
|
|
By Order of the
Board
|
|
|
|
|
|
|
|
|
|
/s/
JONATHAN P.
CARROLL
|
|
|
|
|
Jonathan P.
Carroll
|
|
|
|
|
Chairman of the
Board
|
|
Houston,
Texas
October 31, 2016
23
|
BLUE DOLPHIN ENERGY COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS - DECEMBER 7, 2016 AT 10:00 AM
CT
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CONTROL ID:
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REQUEST ID:
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This Proxy is Solicited on Behalf of the Board of Directors Blue
Dolphin Energy Company.
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS
INDICATED, WILL BE VOTED “FOR” THE
PROPOSALS. THIS PROXY IS SOLICITED ON BEHALF OF THE
BOARD OF DIRECTORS.
THIS PROXY FORM IS VALID ONLY WHEN SIGNED AND DATED ON THE
REVERSE. THE SIGNER ACKNOWLEDGES RECEIPT OF THE NOTICE
OF THE ANNUAL MEETING OF STOCKHOLDERS AND THE PROXY STATEMENT,
REVOKES ALL PREVIOUS PROXIES AND APPOINTS JONATHAN P. CARROLL AND
TOMMY L. BYRD, AND EACH OF THEM, AS PROXIES, EACH WITH THE POWER TO
APPOINT HIS SUBSTITUTE, AND AUTHORIZES EACH OF THEM TO REPRESENT
AND TO VOTE, AS DESIGNATED ON THE REVERSE, ALL OF THE SHARES OF
COMMON STOCK OF BLUE DOLPHIN ENERGY COMPANY HELD OF RECORD BY THE
SIGNER AT THE CLOSE OF BUSINESS ON OCTOBER 18, 2016, AT THE ANNUAL
MEETING AND AT ANY ADJOURNMENT OR
POSTPONEMENTTHEREOF.
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(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
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VOTING
INSTRUCTIONS
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||||||
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If you vote by phone, fax or internet, please DO NOT mail your
proxy card.
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MAIL:
|
Please mark, sign, date, and return this Proxy Card promptly using
the enclosed envelope.
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FAX:
|
Complete the reverse portion of this Proxy Card and Fax to
(202)
521-3464.
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INTERNET:
|
https://www.iproxydirect.com/BDCO
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PHONE:
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(866) 752-VOTE(8683)
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ANNUAL MEETING OF THE STOCKHOLDERS OF
BLUE DOLPHIN ENERGY COMPANY
|
PLEASE COMPLETE, DATE, SIGN AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN
HERE:
☒
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|||||||||
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PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
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Proposal 1
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FOR ALL
|
|
WITHHOLD
ALL
|
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FOR ALL
EXCEPT
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Election of Directors:
|
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☐
|
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☐
|
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Jonathan
P. Carroll
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☐
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Ryan
A. Bailey
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☐
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CONTROL ID:
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Amitav
Misra
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☐
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REQUEST ID:
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Christopher
T. Morris
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☐
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Herbert
N. Whitney
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☐
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Proposal 2
|
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FOR
|
|
AGAINST
|
|
ABSTAIN
|
|
|
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|
|
Ratify the selection of UHY LLP (“UHY”) as our
independent registered public accounting firm for the fiscal year
ending December 31, 2016.
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☐
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☐
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☐
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Proposal 3
|
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FOR
|
|
AGAINST
|
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ABSTAIN
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|
Transact any other business that may properly come before the
Annual Meeting.
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☐
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☐
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☐
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MARK
“X” HERE IF YOU PLAN TO ATTEND THE MEETING:
☐
|
|||||||
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THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE
ELECTION OF ALL OF THE DIRECTOR NOMINEES AND “FOR” THE
RATIFICATION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM.
|
|
MARK HERE FOR ADDRESS CHANGE
☐
New Address (if applicable):
IMPORTANT:
Please sign exactly as your name or names appear
on this Proxy. When shares are held jointly, each holder should
sign. When signing as executor, administrator, attorney, trustee or
guardian, please give full title as such. If the signer is a
corporation, please sign full corporate name by duly authorized
officer, giving full title as such. If signer is a partnership,
please sign in partnership name by authorized
person.
Dated: ________________________, 2016
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(Print
Name of Stockholder and/or Joint Tenant)
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(Signature
of Stockholder)
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(Second
Signature if held jointly)
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TABLE OF CONTENTS