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
Proxy
Statement Pursuant to Section 14(a) of the Securities
Filed by the Registrant
☒
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 pursuant to
§240.14a-12
BLUE DOLPHIN ENERGY COMPANY
(Name
of Registrant as specified in its Charter)
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 the 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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Due to
the public health impact of the ongoing COVID-19 pandemic and to
support the health and well-being of our stockholders and our
management, the 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
conducted in a virtual meeting format only. This will be a
telephonic call-in meeting. There will be no in-person meeting. The
virtual telephone meeting will be held on Thursday, December 31,
2020 at 10:00 a.m. Central Time.
Our
Board of Directors (the “Board”) has specified the
close of business on November 23, 2020 as the record date
(“Record Date”). You are entitled to participate in the
Annual Meeting if you were a stockholder as of the Record Date.
Stockholders that desire to participate in the Annual Meeting will
be required to register in advance at
investor.relations@blue-dolphin.com
prior to the registration deadline of Wednesday, December 30, 2020
at 5:00 p.m. Central Time. Upon registering, stockholders will
receive further instructions via email. The list of registered
stockholders as of the Record Date is available for inspection by
email request to
investor.relations@blue-dolphin.com
.
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)
approve, on an
advisory basis, a non-binding vote on executive compensation
(“Say on Pay”);
(3)
approve, on an
advisory basis, a non-binding vote on the frequency of Say on Pay
votes;
(4)
ratify the
selection of UHY LLP (“UHY”) as our independent
registered public accounting firm for the fiscal year ending
December 31, 2020; and
(5)
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. Regardless of whether you plan to
participate in the Annual Meeting, 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
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Proxy
materials are available online
https://iproxydirect.com/BDCO
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Registered
stockholders may vote during the Annual Meeting, if they have
registered in advance to participate, by casting a ballot through
the Internet or by phone. Beneficial stockholders that desire to
cast a ballot during the Annual Meeting must obtain and use the
legal proxy form from provided by their brokerage firm, bank,
trust, or other nominee, which contains a control number. 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 that brokerage firms, banks, trusts, and other
nominees use to verify whether a beneficial stockholder is entitled
to vote at the Annual Meeting. See “Frequently Asked
Questions – 7. How do I vote if I am a beneficial
stockholder?” for more information on voting shares held
through a brokerage firm, bank, trust or other
nominee.
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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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November 25,
2020
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Houston,
Texas
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BLUE DOLPHIN ENERGY COMPANY
November
25, 2020
Fellow
Stockholders:
We are
in the midst of an unprecedented and historic global event, and the
financial markets have reflected the disruption with the oil and
gas sector being particularly hard hit, not just by a virus-related
shock to demand but by a supply-side shock as well. Despite the
volatility in the energy market, we have remained committed
ensuring our personnel are safe, maintaining our assets, and
planning for recovery.
Personnel Safety
At the
onset of the COVID-19 crisis, we responded quickly by prioritizing
the safety of our personnel. We implemented work from home policies
for our workforce and established rigorous health and safety
protocols for refining and contractor/vendor-facing resources.
These processes were successfully established without significant
business disruption.
Nixon Facility Improvements
During
2020 we safely completed a 13-day planned maintenance turnaround
and concluded the 5-year capital improvement expansion project of
the Nixon facility. The turnaround focused on resolving crude
heater issues while the expansion project involved the construction
of nearly 1.0 million bbls of new petroleum storage tanks and
smaller efficiency improvements to the refinery. The increase in
petroleum storage capacity has helped with de-bottlenecking the
Nixon refinery, and the additional petroleum storage capacity will
allow for increased refinery throughput of up to approximately
30,000 bpd.
Looking Ahead
The
Board of Directors and management evaluate our strategy each year
and refine our goals and strategies to ensure we are working for
the long-term benefit of our stakeholders. Like many of our peer
companies, we are exploring opportunities in the next
decade’s “energy transition,” including
opportunities to use our existing sites, equipment, and process
expertise to develop or partner in the development of renewable
fuels and materials. We believe this will provide us and our
customers with increasing options as the world’s energy needs
and supply mix evolve.
Our
personnel continue to work tirelessly in these challenging times,
and I would like to thank them for their commitment. I would also
like to thank you, our shareholders, for continuing to place your
trust in us.
With
regards,
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Jonathan
P. Carroll
Chairman
of the Board,
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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4
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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)
ADVISORY VOTE ON SAY ON PAY
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10
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(3)
ADVISORY VOTE ON FREQUENCY OF SAY ON PAY VOTES
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10
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(4)
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
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11
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(5)
TRANSACTION OF OTHER MATTERS
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11
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EXECUTIVE
OFFICERS
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12
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CORPORATE
GOVERNANCE AND BOARD MATTERS
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13
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AUDIT
COMMITTEE REPORT
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14
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COMPENSATION
DISCUSSION AND ANALYSIS
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17
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COMPENSATION
COMMITTEE REPORT
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19
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SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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19
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RELATED
PARTY TRANSACTIONS
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20
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SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
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23
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DIRECTOR
NOMINATION AND STOCKHOLDER PROPOSALS BY STOCKHOLDERS FOR ANNUAL
MEETING OF STOCKHOLDERS
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24
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WHERE
YOU CAN FIND MORE INFORMATION
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25
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CAUTIONARY
NOTICE REGARDING FORWARD-LOOKING STATEMENTS
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25
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DELIVERY
OF DOCUMENTS TO STOCKHOLDERS SHARING AN ADDRESS
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26
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1
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PROCEDURAL
MATTERS
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General
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.
Date, Time, and Place
The
Annual Meeting will be held on Thursday, December 31, 2020 at 10:00
a.m. Central Time. Due to COVID-19, the meeting will be a
telephonic call-in meeting. There will be no in-person
meeting.
Purpose
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)
approve, on an
advisory basis, the Say on Pay proposal;
(3)
approve, on an
advisory basis, a non-binding vote on the frequency of Say on Pay
votes;
(4)
ratify the
selection of UHY LLP (“UHY”) as our independent
registered public accounting firm for the fiscal year ending
December 31, 2020; and
(5)
transact any other
business that may properly come before the Annual
Meeting.
Record Date; Who Is Entitled to Vote
The
Board has fixed the close of business on November 23, 2020 as the
record date (the “Record Date”) for the determination
of stockholders entitled to notice of, and to vote at, the Annual
Meeting. The list of registered stockholders as of the Record Date
is available for inspection by email request to
investor.relations@blue-dolphin.com
.
On the Record Date, there were 12,693,514 shares of our common
stock, par value $0.01 per share (the “Common Stock”),
outstanding. Stockholders are entitled to one (1) vote per share of
Common Stock
held on the Record
Date
on each matter
presented at the Annual Meeting.
Material Delivery
This
proxy statement, along with its accompanying notice and proxy form,
are first being mailed to stockholders on or about November 30,
2020. We are also mailing an insert notifying stockholders that our
Annual Report on Form 10-K for the fiscal year ended December 31,
2019 (the “Annual Report”) is available
online.
Quorum
The
holders of a majority of the
shares
of Common Stock entitled to vote at the Annual Meeting and
represented in person (via telephone for the Annual Meeting) or by
proxy shall constitute a quorum at the Annual Meeting
for
the transaction of business.
2
Abstentions and Broker Non-Votes
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 (via
telephone for the Annual Meeting) 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.
Votes Required for Approval
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 (via telephone for the Annual Meeting) 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;
Proposal (2) –
Advisory Say on Pay
Vote: 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 (via telephone for the
Annual Meeting) or by proxy, is required to approve the advisory
proposal concerning the compensation of our named executive
officers;
Proposal (3)
–
Advisory Vote on
Frequency of Say on Pay Votes: 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 (via
telephone for the Annual Meeting) or by proxy, is required to
approve the advisory vote on the frequency of Say on Pay votes;
and
Proposal (4)
— 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 (via telephone for the
Annual Meeting) or by proxy, is required to approve the
ratification of UHY as our independent registered public
accountants for the fiscal year ending December 31, 2020. 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.
Voting Your Shares
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), (2), (3) and (4).
3
Revoking Your Proxy
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
(via telephone at the Annual Meeting).
A
written notice of revocation should be sent by email to
investor.relations@blue-dolphin.com
.
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
Investor Relations at
investor.relations@blue-dolphin.com
.
Reimbursement of Solicitation Expenses
Blue
Dolphin will bear all costs of this solicitation. Proxies will be
solicited primarily by mail but may also be solicited 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
4
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FREQUENTLY
ASKED QUESTIONS (“FAQs”)
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The
FAQs presented in this section are to assist you in understanding
the proposals 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
November 23, 2020, 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 12,693,514
shares of Common Stock and outstanding.
4.
When
and where will the Annual Meeting be held?
The
Annual Meeting will be held on Thursday, December 31, 2020 at 10:00
a.m. Central Time. Due to COVID-19, the meeting will be a
telephonic call-in meeting. There will be no in-person
meeting.
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 (1) 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) by participating
telephonically in the Annual Meeting. If voting by mail, fax, or
the Internet, your voting instructions must be received by the
“voting closed” determination that will be made live
during the Annual Meeting. Voting by mail, fax, or the Internet
will not prevent you from participating in the Annual Meeting
telephonically. You are encouraged to submit a proxy by mail, fax,
or the Internet even if you plan to participate in the Annual
Meeting telephonically to ensure that your shares of Common Stock
are present in person or represented by proxy.
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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. The Common Stock
is being held in “street name” and your broker, bank,
or other nominee is considered to be the holder of these shares.
This means that,
as a
beneficial stockholder, you cannot vote your shares of Common Stock
directly
.
You have
the right to direct / instruct the brokerage firm, bank, trust, or
other nominee on how to vote your shares of Common Stock
.
You also have the right to
participate in the Annual Meeting telephonically
. Your
broker, bank, trustee, or nominee is obligated to provide you with
a voting instruction form for voting purposes.
Under
SEC Rules, brokers are not permitted to vote on your behalf for
non-routine matters. They may vote on your behalf for routine
matters.
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.
Non-Routine
Matters
:
Proposal (1),
election of directors
Proposal (2),
approval, on an advisory basis, the Say on Pay
proposal
Proposal (3),
approval, on an advisory basis, a non-binding vote on the frequency
of Say on Pay votes
Routine Matters
:
Proposal (4),
ratification of UHY as our independent registered public accounting
firm for the year ending December 31, 2020
If you wish to vote in person (via
telephone 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 Nos. (1), (2), and (3).
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) approve, on an advisory basis, Say on Pay, (3)
approve, on an advisory basis, a non-binding vote on the frequency
of Say on Pay votes, (4) ratify the selection of UHY as our
independent registered public accounting firm for the year ending
December 31, 2020 and (5) 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.
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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.
13.
What
constitutes a quorum for the Annual Meeting?
The
presence, in person (via telephone at the Annual Meeting) 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 (via telephone 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 Blue Dolphin, Investor
Relations at
investor.relations@blue-dolphin.com
.
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
|
|
(1) ELECTION OF DIRECTORS
|
Director Nominees
The
Board has affirmatively determined that each of Ryan A. Bailey,
Amitav Misra, and Christopher T. Morris, each an outside director,
is considered an “Independent Director” as such term is
defined by OTCQX and SEC rules. Jonathan P. Carroll, our Chief
Executive Officer and President, and Herbert N. Whitney, are not
independent directors. The independent members of the Board
nominated Messrs. Bailey, Misra, Morris, Carroll, and Whitney to
serve as directors until the next annual meeting of stockholders.
Each director that was 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 they resign or are
removed.
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 reflects, as of the Record Date: (i) each Director
Nominee’s name, age, principal occupation, and directorships
during the past five (5) years and (ii) 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
, 59
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
(since 2006)
and
Majority Owner
Together,
LEH and Jonathan Carroll own approximately 82% of our outstanding
Common Stock as of the Record Date.
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
, 45
Carbonado
Partners
Managing Partner
(since September 2020)
and Founder
Pacenote
Capital
Managing Partner
(2019 to 2020)
and Co-founder
Children’s
Health System of Texas
Head of Investments
(2014 to 2019)
Mr.
Bailey was appointed to Blue Dolphin’s Board in November
2015. He is currently a member of the Audit and
Compensation Committees. He also serves as an advisor
and mentor to Texas Wall Street Women, a non-profit member
organization; is a member of the advisory board of Solovis, Inc.,
an investment software company; and serves as a Board member for
the Texas Hedge Fund Association.
|
|
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
, 43
HighRadius
Corporation
Vice President of Treasury Marketing
(since July
2020)
Arundo
Analytics, Inc.
General Manager Americas (
2018 to 2020
)
Vice President of Marketing
(2017 to 2020)
Cardinal
Advisors
Partner
(2014 to 2017)
and
Founder
Taxa,
Inc.
President, Director and Chief Operating Officer
(2012 to
2014)
Mr.
Misra has served on Blue Dolphin’s Board since
2014. He is currently a member of the Audit and
Compensation Committees. 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 organization.
|
|
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
, 59
Bonaventure
Realty Group
Executive Vice President
(January 2020 to
Present)
Impact
Partners LLC
President
(2017 to 2020)
Tatum
(a Randstad Company)
New York Managing Partner
(2013 to 2017)
MPact
Partners LLC
President
(2011 to Present)
Mr.
Morris has served on Blue Dolphin’s Board since 2012; he is
currently Chairman of the Audit and Compensation
Committees.
|
|
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
, 80
Wildcat
Consulting, LLC
President
(since 2006)
and
Founder
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
|
(2) ADVISORY VOTE ON SAY ON PAY
|
As
required pursuant to Section 14A of the Exchange Act, we seek a
non-binding advisory vote from our stockholders to approve the
compensation of our executives as described under
“Compensation Discussion and Analysis” in this proxy
statement. Say on Pay gives our stockholders the opportunity to
express their views on our executive compensation. Because your
vote is advisory, it will not be binding on the Board or the
Compensation Committee. However, the Compensation Committee will
consider the outcome of the vote when making future executive
compensation decisions. Accordingly, we ask our stockholders to
vote on the following resolution at the Annual
Meeting:
“RESOLVED,
that the stockholders of Blue Dolphin Energy Company approve, on an
advisory basis, the compensation of the named executive officers as
disclosed in our proxy statement for the 2020 Annual Meeting of
Stockholders pursuant to the compensation disclosure rules of the
SEC, including the compensation discussion and analysis, the
compensation table, and any related material disclosed
therein.”
The Say
on Pay vote is non-binding on the Board and the Compensation
Committee. However, the Board values the opinions of our
stockholders as expressed through their votes and other
communications with us, and the Board and the Compensation
Committee will consider the outcome of the Say on Pay vote when
making future executive compensation decisions.
Recommendation
THE BOARD UNANIMOUSLY RECOMMENDS
A VOTE “FOR” SAY ON PAY.
|
(3) ADVISORY VOTE ON FREQUENCY OF SAY ON PAY VOTES
|
As
required pursuant to Section 14A of the Exchange Act, we seek a
non-binding advisory vote from our stockholders regarding the
desired frequency for holding future non-binding advisory votes to
approve the compensation of our named executive officers as
described in our annual proxy statement.
This
proposal gives our stockholders the opportunity to express their
views as to whether Say on Pay votes should occur every one, two or
three years. Stockholders may also abstain from casting a vote on
this proposal. Because your vote is advisory, it will not be
binding on Blue Dolphin, the Board, or the Compensation Committee.
However, the Board will carefully consider the outcome of the
frequency vote and other communications from stockholders when
making future decisions regarding the frequency of Say on Pay
votes. Therefore, we look forward to hearing from our stockholders
as to their preferences on the frequency of an advisory vote on
executive compensation.
After
careful consideration of the various arguments supporting each
frequency level, the Board believes that submitting the advisory
vote on executive compensation to stockholders every three years is
the most appropriate alternative at this time.
Stockholders
may cast a vote on the preferred voting frequency by selecting the
option of one year, two years, or three years (or abstain) when
voting in response to the resolution set forth below. Stockholders
will not be voting to approve or disapprove the recommendation of
the Board.
“RESOLVED,
that the stockholders determine, on an advisory basis, whether the
preferred frequency of an advisory vote on the executive
compensation of Blue Dolphin Energy Company’s named executive
officers as set forth in Blue Dolphin’s proxy statement
should be every year, every two years, or every three
years.”
Recommendation
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE
“FOR”
THE FREQUENCY ON SAY ON PAY VOTES EVERY THREE YEARS.
|
(4) RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
|
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,
2020, 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 has
acted as our principal independent registered public accounting
firm since 2002. We are asking our stockholders to ratify the
selection of UHY as our independent registered public accounting
firm for the fiscal year ended December 31, 2020. 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 to do so, and will respond to appropriate
questions.
This
table shows fees paid to UHY for the periods
indicated:
|
|
December 31,
|
|
|
|
2019
|
2018
|
|
|
($ in thousands)
|
|
|
Audit
fees
|
$
247
|
$
138
|
|
Audit-related
fees
|
-
|
-
|
|
Tax
fees
|
-
|
-
|
|
|
|
|
|
|
$
247
|
$
138
|
Audit
fees for 2019 and 2018 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.
Recommendation
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE
RATIFICATION
OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
|
(5) TRANSACTION OF OTHER MATTERS
|
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), (2), (3), and (4) 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.
10
|
EXECUTIVE
OFFICERS
|
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, Principal Financial Officer, and
Principal Accounting Officer)
|
|
2012
|
|
59
|
|
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. Together, LEH and Jonathan Carroll own
approximately 82% of Blue Dolphin’s Common Stock as of the
Record Date. 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.
|
|
|
Remainder
of Page Intentionally Left Blank
11
12
|
CORPORATE
GOVERNANCE AND BOARD MATTERS
|
Board
The
Board consists of Messrs. Carroll, Bailey, Misra, Morris and
Whitney, with Mr. Carroll serving as Chairman. During 2019, the
Board met three (3) times and acted by written consent twice. All
directors participated in the meetings and acted by written
consent. The Board has two standing committees, the Audit
Committee, and the Compensation Committee.
Audit Committee
The
Audit Committee consists of Messrs. Morris, Bailey, and Misra, with
Mr. Morris serving as Chairman. During 2019, 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 2019, 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
).
Nominating Procedures
Given
the small size of the Board, the Board adopted a “Board
Nomination Procedures” policy in lieu of appointing a
standing nominating committee. Using the “Board Nomination
Procedures” policy, the Audit Committee, which is comprised
of independent directors, uses the policy to perform in a similar
function as a standing nominating committee. The policy is used by
the independent directors 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.
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
Given the small size of the Board, director attendance at our
annual meeting of stockholders is encouraged but not
required.
Mr. Carroll was the only director present at the
2019 annual meeting of stockholders.
13
Leadership Structure
Blue
Dolphin is led by Mr. 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 involved in overseeing Blue Dolphin’s risk
management. 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. Our code
of ethics and code of conduct policies are 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.
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
)
.
|
AUDIT
COMMITTEE REPORT
|
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
).
14
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, 2019, management represented to the
Audit Committee that our consolidated financial statements were
prepared in accordance with accounting principles generally
accepted by the United States of America. Management concluded that
our internal controls over financial reporting were ineffective at
December 31, 2019 due to certain material weaknesses and/or
significant deficiencies as described below:
-
Significant
deficiency – There is currently not a process in place for
formal review of manual journal entries.
-
Material weakness
– The company currently lacks resources to handle complex
accounting transactions. This can result in errors related to the
recording, disclosure, and presentation of consolidated financial
information in quarterly, annual, and other filings. Current year
audit procedures resulted in significant adjustments related to the
accounting for a certain stock issuance in payment of related party
debt, as well as deferred revenue relating to consideration
received from a supplier.
We are
taking the necessary measures to implement formal policies, improve
processes, document procedures, and better define segregation of
duties to improve financial reporting. These actions are subject to
ongoing senior management review, as well as Audit Committee
oversight. Although we plan to complete remediation by year end
2020, we cannot at this time estimate how long it will take, and
our initiatives may not prove to be successful in fully remediating
the identified weakness and deficiency.
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, 2019, 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,
2019.
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.
With
regard to determining UHY’s performance and independence for
the fiscal year ended December 31, 2019, 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.
15
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 has received the written disclosures and the letter
from our independent registered public accounting firm as required
by the Public Company Accounting Oversight Board Ethics and
Independence Rule 3526, Communications with Audit Committees
Concerning Independence. Further, the Audit Committee discussed
with UHY its performance and independence for the fiscal year ended
December 31, 2019. 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 participate. 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.
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, 2019, be included
in the Annual Report, as filed with the SEC.
The
Audit Committee:
Christopher
T. Morris, Chairman
Ryan
A. Bailey
Amitav
Misra
Remainder
of Page Intentionally Left Blank
16
|
COMPENSATION
DISCUSSION AND ANALYSIS
|
Executive Compensation Policy and Procedures
LEH
operates and manages all Blue Dolphin properties pursuant to an
Amended and Restated Operating
Agreement
dated April 1, 2020 (the “Amended and
Restated Operating Agreement) between LEH and Blue Dolphin, Lazarus
Energy, LLC (“LE”), Lazarus Refining & Marketing,
LLC (“LRM”), Nixon Product Storage, LLC
(“NPS”), Blue Dolphin Pipe Line Company
(“BDPL”), Blue Dolphin Petroleum Company
(“BDPC”), and Blue Dolphin Services Co.
(“BDSC”). Services under the Amended and Restated
Operating Agreement include personnel serving in a variety of
capacities, including, but not limited to corporate executives. All
personnel work for and are paid by LEH.
Compensation for Named Executives
Under
the Amended and Restated Operating Agreement, 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”) for the periods indicated was as
follows:
|
Summary Compensation Table
|
|
|
Name and Principal Position
|
|
Year
|
Salary
|
Total
|
|
|
|
|
(in
thousands)
|
|
|
|
|
|
|
|
|
Jonathan
P. Carroll
|
|
2019
|
$
-
|
$
-
|
|
Chief
Executive Officer and President
|
|
2018
|
-
|
-
|
|
(Principal
Executive Officer, Principal
|
|
|
|
|
|
Financial
Officer, and Principal
|
|
|
|
|
|
Accounting
Officer)
|
|
|
|
|
|
|
|
|
|
|
|
Tommy L. Byrd
(1)
|
|
2019
|
-
|
-
|
|
Chief
Financial Officer
|
|
2018
|
$
100
|
$
100
|
(1)
Mr. Byrd resigned
effective December 31, 2018.
Compensation Risk Assessment
LEH’s
approach to compensation practices and policies applicable for
executive and non-executive personnel throughout our organization
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 materials adverse effect on
us.
Outstanding Equity Awards
None.
Director Compensation Policy and Procedures
Although
Jonathan Carroll is a director of Blue Dolphin, his services as
Chief Executive Officer are provided under the Amended and Restated
Operating Agreement (see above under “Executive Compensation
Policy and Procedures.”) Therefore, we do not have any
directors that are also employed by Blue Dolphin. The Compensation
Committee reviews and recommends to the Board for its approval all
compensation for the directors.
17
Compensation for Non-Employee Directors
Non-employee,
independent directors receive compensation for their service on the
Board of $40,000 per year. Compensation is earned in Common Stock
and cash on a quarterly rotating basis, as follow:
|
Fair
Market Value
|
|
Period
Services Rendered
|
|
Payment
Method
|
|
|
|
|
|
|
|
$10,000
|
|
January
1 – March 31 (First Quarter)
|
|
Common
stock
|
|
$10,000
|
|
April 1
– June 30 (Second Quarter)
|
|
Cash
|
|
$10,000
|
|
July 1
– September 30 (Third Quarter)
|
|
Common
stock
|
|
$10,000
|
|
October
1 – December 31 (Fourth Quarter)
|
|
Cash
|
For the
first and third quarters, the number of shares of Common Stock to
be issued is determined by the closing price of Blue
Dolphin’s Common Stock on the last trading day in the
respective quarterly period and such closing price is the cost
basis for such issuance. The shares of Common Stock are subject to
resale restrictions applicable to restricted securities and
securities held by affiliates under federal securities
laws.
Non-employee,
independent directors also earn additional compensation for serving
on the Audit Committee. The chairman of the Audit Committee earns
an additional $2,500 in cash in each of the second and fourth
quarters of the year, for a total of $5,000 annually. Members of
the Audit Committee earn an additional $1,250 in cash in each of
the second and fourth quarters of the year, for a total of $2,500
annually. Non-employee, independent directors serving on the
Compensation Committee do not earn any additional compensation for
their service as directors. Non-employee, independent directors are
reimbursed for reasonable out-of-pocket expenses related to
in-person meeting attendance.
At
December 31, 2019, non-employee, independent directors had not been
paid the cash portion of their compensation since 2015 and the
common stock portion of their compensation following the first
quarter 2018 service period due to defaults under our secured loan
agreements, historic net losses, and working capital. However, as
of the filing date of this report, non-employee, independent
directors had been paid the outstanding cash portion of accrued
director fees. Non-employee, independent directors will receive
payment of the common stock portion of director fees going forward.
Unpaid cash fees are reflected within accrued expenses and other
current liabilities on our consolidated balance
sheets.
|
Accrued and Unpaid Non-Employee, Independent Director
Compensation
|
|
|
|
Years Ended
December 31,
|
|||||
|
|
2019
|
2018
|
||||
|
|
(in
thousands)
|
|||||
|
Name
|
Cash
|
Stock
(1)
|
Total
(3)
|
Cash
|
Stock
(1)(2)
|
Total
(3)
|
|
|
|
|
|
|
|
|
|
Christopher
T. Morris
|
$
25
|
$
20
|
$
45
|
$
25
|
$
20
|
$
45
|
|
Ryan
A. Bailey
|
23
|
20
|
43
|
23
|
20
|
43
|
|
Amitav
Misra
|
23
|
20
|
43
|
23
|
20
|
43
|
|
|
|
|
|
|
|
|
|
|
$
70
|
$
60
|
$
130
|
$
70
|
$
60
|
$
130
|
|
(1)
|
At both
December 31, 2019 and 2018, Messrs. Morris, Bailey, Misra and
Whitney had total restricted awards of Common Stock outstanding of
75,026, 60,676, 66,767 and 9,683, respectively.
|
|
(2)
|
At March 31, 2018, the grant date market value cost basis was $0.60
per share.
|
|
(3)
|
At both December 31, 2019 and 2018, Messrs. Morris, Bailey and
Misra were collectively owed $263,000 and $273,000, respectively,
in accrued and unpaid compensation for director fees. The amounts
owed were significantly reduced during 2020
|
18
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.
|
COMPENSATION
COMMITTEE REPORT
|
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 2020 proxy statement.
The
Compensation Committee:
Christopher
T. Morris, Chairman
Ryan
A. Bailey
Amitav
Misra
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|
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
|
66.4
%
|
|
|
|
801
Travis Street, Suite 2100
|
|
|
|
|
|
Houston,
Texas 77002
|
|
|
(1)
Based upon
12,693,514 shares of Common Stock issued and outstanding as of the
Record Date.
19
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)
|
10,346,216
|
81.5
%
|
|
Common
Stock
|
|
Christopher
T. Morris / Mpact Partners, LLC
|
120,054
|
*
|
|
Common
Stock
|
|
Amitav
Misra
|
111,795
|
*
|
|
Common
Stock
|
|
Ryan
A. Bailey
|
105,704
|
*
|
|
Common
Stock
|
|
Herbert
N. Whitney
|
9,683
|
---
|
|
|
|
|
|
|
|
Directors/Nominees
and Executive Officers as a Group (5 Persons)
|
10,693,452
|
84.2
%
|
||
(1)
Based upon
12,693,514 shares of Common Stock issued and outstanding and 0
shares of Common Stock issuable upon exercise of stock options,
each 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%.
|
RELATED
PARTY TRANSACTIONS
|
Affiliate Operational Agreements Summary
Blue
Dolphin and certain of its subsidiaries are party to several
operational agreements with LEH and its affiliates, Lazarus Texas
Refinery I, LLC (“LTRI”) and Lazarus Marine Terminal
LLC (“LMT”)(LEH, LTRI, and LMT are collectively
referred to herein as the “Affiliates”). Management
believes that these related-party transactions were consummated on
terms equivalent to those that prevail in arm's-length
transactions. Related-party agreements related to Blue
Dolphin’s operations consist of the following:
|
Agreement/Transaction
|
Parties
|
Effective Date
|
Key Terms
|
|
Refinery
Equipment Purchase
|
LTRI -
LE
|
07/01/2019
|
LE
purchase of two (2) refurbished heat exchangers for $0.08 million
each
|
|
Dock
Tolling Agreement
|
LMT -
LE
|
05/24/2016
|
5-year
term cancellable by either party any time; LE paid flat reservation
fee for tolling volumes up to 84,000 gallons per day; excess
tolling volumes subject to increased per gallon rate; terminated
07/01/2019
|
|
Jet
Fuel Sales Agreement
|
LEH -
LE
|
04/01/2020
|
1-year
term expiring earliest to occur of 03/31/2021 plus 30-day carryover
or delivery of maximum jet fuel quantity; LEH bids on jet fuel
contracts under preferential pricing terms due to a HUBZone
certification
|
|
Office
Sub-Lease Agreement
|
LEH -
BDSC
|
01/01/2018
|
68-month
term expiring 08/31/2023; office lease Houston, Texas; includes
6-month rent abatement period; rent approximately $0.02 million per
month
|
|
Amended
and Restated Operating Agreement
|
LEH
– Blue Dolphin, LE, LRM, NPS, BDPL, BDPC and
BDSC
|
04/01/2020
|
3-year
term; expires 04/01/2023 or notice by either party at any time of
material breach or 90 days Board notice; LEH receives management
fee of 5% of all consolidated operating costs, excluding crude
costs, depreciation, amortization and interest, of Blue Dolphin,
LE, LRM, NPS, BDPL, BDPC and BDSC
|
20
Working Capital
We have
historically depended on Affiliates for financing when revenue from
operations and borrowings under bank facilities are insufficient to
meet our liquidity and working capital needs. Such borrowings are
reflected in our consolidated balance sheets in accounts payable,
related party, and/or long-term debt, related party.
Related-Party Long-Term Debt
|
Loan Description
|
Parties
|
Maturity Date
|
Interest Rate
|
Loan Purpose
|
|
March
Carroll Note
(in
default)
|
Jonathan
Carroll – Blue Dolphin
|
Jan
2019
|
8.00%
|
Blue
Dolphin working capital; reflects amounts owed to Jonathan Carroll
under the guaranty fee agreements
|
|
March
Ingleside Note
(in
default)
|
Ingleside
– Blue Dolphin
|
Jan
2019
|
8.00%
|
Blue
Dolphin working capital
|
|
June
LEH Note
(in
default)
|
LEH
– Blue Dolphin
|
Jan
2019
|
8.00%
|
Blue
Dolphin working capital; reflects amounts owed to LEH under the
Amended and Restated Operating Agreement
|
|
BDPL-LEH
Loan Agreement
(in
default)
(1)
|
LEH -
BDPL
|
Aug
2018
|
16.00%
|
Blue
Dolphin working capital
|
|
Amended
and Restated Guaranty Fee Agreement
(2)
|
Jonathan
Carroll - LE
|
--
|
2.00%
|
Tied to
payoff of LE $25 million Veritex loan
|
|
Amended
and Restated Guaranty Fee Agreement
(2)
|
Jonathan
Carroll - LRM
|
--
|
2.00%
|
Tied to
payoff of LRM $10 million Veritex loan
|
(1)
The original
principal amount of the BDPL-LEH Loan Agreement was $4.0
million.
(2)
As a condition for
our secured loan agreements with Veritex, Jonathan Carroll was
required to personally guarantee repayment of borrowed funds and
accrued interest. Under the guaranty fee agreements, Mr. Carroll is
entitled to receive guaranty fees. The fees are payable 50% in cash
and 50% in Common Stock. The Common Stock portion is paid
quarterly. For the foreseeable future, management does not intend
to pay Mr. Carroll the cash portion due to Blue Dolphin’s
working capital deficits. The cash portion will continue to accrue
and be added to the outstanding principal balance owed to Mr.
Carroll under the March Carroll Note.
Guarantees and Security
|
Loan Description
|
Guarantees
|
Security
|
|
BDPL-LEH
Loan Agreement
|
---
|
●
Secured by certain
BDPL property
|
Covenants
The
BDPL-LEH Loan Agreement contains representations and warranties,
affirmative and negative covenants, and events of default that we
consider usual and customary for a credit facility of this type.
There are no covenants associated with the March Carroll Note,
March Ingleside Note, or June LEH Note.
Defaults
|
Loan Description
|
Event(s) of Default
|
Covenant Violations
|
|
March
Carroll Note
(in
default)
|
Failure
of borrower to pay past due obligations; loan matured January
2019
|
--
|
|
March
Ingleside Note
(in
default)
|
Failure
of borrower to pay past due obligations; loan matured January
2019
|
---
|
|
June
LEH Note
(in
default)
|
Failure
of borrower to pay past due obligations; loan matured January
2019
|
---
|
|
BDPL-LEH
Loan Agreement
(in
default)
|
Failure
of borrower to pay past due obligations; loan matured August
2018
|
---
|
Related-Party Financial Impact
Consolidated Balance Sheets
.
Accounts receivable, related party
. Accounts receivable,
related party totaled $0 and $1.4 million at September 30, 2020 and
December 31, 2019, respectively. At December 31, 2019, accounts
receivable, related party represented amounts owed from LEH for the
sale of jet fuel under the Jet Fuel Sales Agreement. Amounts
are settled under normal business terms. Amounts outstanding
relating to the Jet Fuel Sales Agreement can significantly vary
period to period based on the timing of the related sales and
payments received. See below for the total amount owed to LEH
under the June LEH Note and the BDPL-LEH Loan
Agreement.
Accounts payable, related party
. Accounts payable, related
party to LTRI related to the purchase of refinery equipment totaled
$0.2 million at both September 30, 2020 and December 31,
2019.
21
Long-term debt, related party, current portion (in default) and
accrued interest payable, related party.
|
|
September 30,
|
December 31,
|
|
|
2020
|
2019
|
|
|
(in thousands)
|
|
|
LEH
|
|
|
|
June
LEH Note (in default)
|
$
5,733
|
$
-
|
|
BDPL-LEH
Loan Agreement
|
6,654
|
6,174
|
|
LEH
Total
|
12,387
|
6,174
|
|
Ingleside
|
|
|
|
March
Ingleside Note (in default)
|
1,067
|
1,004
|
|
Jonathan
Carroll
|
|
|
|
March
Carroll Note (in default)
|
1,373
|
997
|
|
|
14,827
|
8,175
|
|
|
|
|
|
Less:
Long-term debt, related party, current portion, in
default
|
(12,173
)
|
(6,001
)
|
|
Less:
Accrued interest payable, related party (in default)
|
(2,654
)
|
(2,174
)
|
|
|
$
-
|
$
-
|
Consolidated Statements of Operations
.
Total revenue from operations.
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
||||||
|
|
2020
|
2019
|
2020
|
2019
|
||||
|
|
(in thousands, except percent amounts)
|
|||||||
|
Refinery
operations
|
|
|
|
|
|
|
|
|
|
LEH
|
$
11,942
|
27.8
%
|
$
25,034
|
31.8
%
|
$
34,244
|
27.8
%
|
$
70,016
|
31.0
%
|
|
Third-Parties
|
29,987
|
69.9
%
|
52,503
|
66.8
%
|
85,941
|
69.6
%
|
152,636
|
67.6
%
|
|
Tolling
and terminaling
|
|
|
|
|
|
|
|
|
|
Third-Parties
|
1,001
|
2.3
%
|
1,096
|
1.4
%
|
3,214
|
2.6
%
|
3,253
|
1.4
%
|
|
|
$
42,930
|
100.0
%
|
$
78,633
|
100.0
%
|
$
123,399
|
100.0
%
|
$
225,905
|
100.0
%
|
Interest expense.
|
|
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
||
|
|
2020
|
2019
|
2020
|
2019
|
|
|
(in thousands)
|
|||
|
Jonathan
Carroll
|
|
|
|
|
|
Guaranty
Fee Agreements
|
|
|
|
|
|
First
Term Loan Due 2034
|
$
108
|
$
110
|
$
324
|
$
333
|
|
Second
Term Loan Due 2034
|
45
|
46
|
134
|
138
|
|
March
Carroll Note (in default)
|
23
|
33
|
66
|
86
|
|
LEH
|
|
|
|
|
|
BDPL-LEH
Loan Agreement (in default)
|
160
|
160
|
480
|
480
|
|
June
LEH Note (in default)
|
102
|
17
|
245
|
40
|
|
Ingleside
|
|
|
|
|
|
March
Ingleside Note (in default)
|
15
|
12
|
50
|
63
|
|
|
$
453
|
$
378
|
$
1,299
|
$
1,140
|
Other.
Fees associated with the Dock Tolling Agreement with
LMT totaled $0 and $0.05 million for the three months ended
September 30, 2020 and 2019, respectively. Fees associated with the
Dock Tolling Agreement with LMT totaled $0 and $0.4 million for the
nine months ended September 30, 2020 and 2019,
respectively.
Lease
payments received under the office sub-lease agreement with LEH
totaled approximately $0.01 million for both three-month periods
ended September 30, 2020 and 2019. Lease payments received under
the office sub-lease agreement with LEH totaled approximately $0.03
million for both nine-month periods ended September 30, 2020 and
2019.
The LEH
operating fee was flat, totaling approximately $0.2 million for
both three-month periods ended September 30, 2020 and 2019. The LEH
operating fee was also relatively flat, totaling approximately
$0.05 million for both nine-month periods ended September 30, 2020
and 2019.
22
|
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
|
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 2019.
Remainder
of Page Intentionally Left Blank
23
|
DIRECTOR
NOMINATION AND STOCKHOLDER PROPOSALS BY STOCKHOLDERS FOR ANNUAL
MEETING OF STOCKHOLDERS
|
Director Nominations and Proposals Process
Historically,
we hold our annual meeting of stockholders in December of each
year. We have tentatively set the 2021 Annual Meeting of
Stockholders for December 15, 2021. Accordingly, stockholders
should submit nominations and proposals in accordance with the
guidance set forth below.
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. Blue
Dolphin’s mailing address is located at our principal office:
801 Travis Street, Suite 2100, Houston, Texas 77002. (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, 2020,
the deadline for the 2020 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 and twenty (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.
As
noted above we expect our 2021 annual meeting to be held on
December 15, 2021, and we therefore will print and send proxy
materials on or around November 15, 2021. Accordingly, stockholder
proposals must be submitted a reasonable time before November 15,
2021. 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.
Remainder
of Page Intentionally Left Blank
24
|
WHERE
YOU CAN FIND MORE INFORMATION
|
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
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We also
make our SEC filings available on our website (
http://www.blue-dolphin-energy.com
)
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CAUTIONARY
NOTICE REGARDING FORWARD-LOOKING STATEMENTS
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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.
25
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DELIVERY
OF DOCUMENTS TO STOCKHOLDERS SHARING AN ADDRESS
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Brokers,
banks, or other nominees may deliver only one (1) 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.
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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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Houston,
Texas
November
25, 2020
Remainder
of Page Intentionally Left Blank
26
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BLUE DOLPHIN ENERGY COMPANY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
ANNUAL
MEETING OF STOCKHOLDERS – DECEMBER 31, 2020 AT 10:00 AM
CDT
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CONTROL ID:
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REQUEST ID:
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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 AS PROXY WITH THE POWER TO
APPOINT HIS SUBSTITUTE, AND AUTHORIZES HIM 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 NOVEMBER 23, 2020, AT THE ANNUAL
MEETING AND AT ANY ADJOURNMENT OR POSTPONEMENT
THEREOF.
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(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
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VOTING INSTRUCTIONS
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If you vote by the internet, please DO NOT mail your proxy
card.
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MAIL:
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Please
mark, sign, date, and return this Proxy Card promptly using the
enclosed envelope.
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INTERNET:
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http://www.shareholdervote.info/
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ANNUAL MEETING OF THE STOCKHOLDERS OFBLUE DOLPHIN ENERGY
COMPANY
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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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PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
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Proposal 1
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ELECT
FIVE (5) DIRECTORS.
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FOR ALL
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AGAINST
ALL
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FOR ALL
EXCEPT
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Director
Nominees:
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☐
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☐
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(1)
Jonathan P. Carroll
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☐
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(2)
Amitav Misra
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☐
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CONTROL
ID:
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(3)
Christopher T. Morris
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☐
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REQUEST
ID:
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(4)
Ryan A. Bailey
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☐
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(5)
Herbert N. Whitney
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☐
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Proposal 2
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APPROVE, ON AN
ADVISORY BASIS, A NON-BINDING VOTE ON EXECUTIVE COMPENSATION
(“SAY ON PAY”)
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FOR
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AGAINST
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ABSTAIN
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☐
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☐
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☐
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Proposal 3
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APPROVE, ON AN
ADVISORY BASIS, A NON-BINDING VOTE ON THE FREQUENCY OF SAY ON PAY
VOTES
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1 YEAR
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2 YEARS
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3 YEARS
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ABSTAIN
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☐
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☐
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☐
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☐
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Proposal 4
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RATIFY
UHY LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE
FISCAL YEAR ENDING DECEMBER 31, 2020.
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FOR
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AGAINST
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ABSTAIN
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☐
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☐
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☐
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Proposal 5
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TRANSACT ANY OTHER
BUSINESS THAT MAY PROPERLY COME BEFORE THE ANNUAL
MEETING.
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FOR
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AGAINST
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ABSTAIN
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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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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:
________________________, 2020
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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