CADIZ INC
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 Exchange Act of 1934 (Amendment No. )
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under § 240.14a-12
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Cadiz Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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Proposed maximum aggregate value of transaction:
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Total fee paid:
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Fee paid previously with preliminary materials.
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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.
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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Filing Party:
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Date Filed:
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CADIZ INC.
__________________________________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 17, 2020
Dear Cadiz Inc. Stockholders:
NOTICE IS HEREBY GIVEN that the 2020 Annual Meeting of
Stockholders (the “2020 Annual Meeting”) of Cadiz Inc., a Delaware corporation, will be held virtually on Wednesday, June 17, 2020, at 10:00 a.m., Pacific Time, via the Internet at https://www.cstproxy.com/cadiz/2020/ to consider and act upon the following matters:
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The election of nine members of the Board of Directors, each to serve until the next annual meeting of stockholders or until their respective successors have been
elected and qualified;
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Ratification of the selection by the Audit Committee of our Board of Directors of PricewaterhouseCoopers LLP as the Company’s independent certified public
accountants for fiscal year 2020;
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The approval of a non-binding advisory resolution regarding the compensation of our named executive officers; and
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The transaction of such other business as may properly come before the meeting and any adjournments thereof.
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Only stockholders of record at the close of business on April 20, 2020, are entitled to notice of and to vote at the 2020 Annual Meeting. In order to
constitute a quorum for the conduct of business at the 2020 Annual Meeting, holders of a majority of all outstanding voting shares of our common stock and preferred stock must be present through virtual attendance or be represented by proxy. Holders
of our common stock and our preferred stock will vote together as a single class on each proposal.
We have implemented a virtual online format for our 2020 Annual Meeting to improve access for our stockholders regardless of their
location, and to support the health and well-being of our employees and stockholders following social distancing practices during the global coronavirus (COVID-19) pandemic. There will not be a physical location to attend the 2020 Annual Meeting in
person. However, the virtual 2020 Annual Meeting will provide substantially the same opportunities to participate as you would have at an in-person meeting, including the ability to submit questions and vote your shares. Detailed instructions on how
to vote and participate at the 2020 Annual Meeting may be found online at https://www.cstproxy.com/cadiz/2020. To be able to access the virtual 2020 Annual Meeting,
you must have your 12-digit control number that is printed on your proxy card.
Whether or not you expect to attend the virtual annual meeting, we encourage you to submit your proxy as soon as possible so that your
shares will be represented at the meeting. You can vote your shares online via the Internet or by signing, dating and returning the proxy in the postage paid return envelope provided, as promptly as possible. Detailed instructions are included on
the proxy card. Your proxy is revocable and will not affect your right to vote at the 2020 Annual Meeting if you choose to attend virtually.
If your brokerage firm, bank, broker-dealer or other similar organization is the holder of record of your shares (
i.e.
, your shares are held in “street name”), you will receive a voting instruction form from the holder of record. You must provide voting
instructions to your brokerage firm, bank, broker-dealer or other similar organization by filling out the voting instruction form in order for your shares to be voted. We recommend that you instruct your broker or other nominee to vote your shares as
promptly as possible.
If your shares are held in street name and you would like to attend the virtual annual meeting to vote your shares, you will need to
contact your brokerage firm, bank, broker-dealer or other similar organization to obtain a legal proxy. Once you have your legal proxy, contact Continental Stock Transfer to have a control number generated. Continental Stock Transfer’s contact
information is as follows: 917-262-2373, or email proxy@continentalstock.com.
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By Order of the Board of Directors
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Timothy J. Shaheen
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Secretary
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Los Angeles, California
April 22, 2020
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be held on June 17, 2020.
Our proxy statement and the 2019 Annual Report to
Stockholders are available at
https://www.cstproxy.com/cadiz/2020/
CADIZ INC.
Annual Meeting of Stockholders
TABLE OF CONTENTS
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PROPOSAL 2: APPROVAL OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
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CADIZ INC.
550 S. Hope Street, Suite 2850
Los Angeles, California 90071
PROXY STATEMENT
For
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 17, 2020
The Board of Directors of Cadiz Inc. (“the Company”) is soliciting proxies to be voted at the annual meeting of our stockholders to be held at 10:00 am
Pacific Time on Wednesday, June 17, 2020 (the “2020 Annual Meeting”) for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders. The 2020 Annual Meeting will be conducted this year as a virtual meeting and will be
accessible to stockholders of record via the Internet at the following website: https://www.cstproxy.com/cadiz/2020/. This proxy statement contains information
that may help you decide how to vote. These proxy materials were delivered on or about April 27, 2020 to all stockholders of record.
The Company’s Annual Report on Form 10-K for the year ended December 31, 2019, including audited financial statements, is also being delivered to you
with this proxy statement.
The Board of Directors has fixed the close of business on April 20, 2020, as the record date for determination of stockholders entitled to notice of, and
to vote at, the 2020 Annual Meeting.
On the record date, 34,796,106 shares of the Company’s common stock were outstanding and 10,000 shares of the Company’s preferred stock were also
outstanding. Holders of common stock are entitled to one vote per share. Holders of preferred stock are entitled to that number of votes equal to the number of shares of preferred stock held at the time the shares are voted multiplied by the voting
ratio then applicable to preferred stock, which is currently 301.98 votes for each share of preferred stock; provided, however, that no beneficial owner of preferred stock shall have the right to vote in excess of 9.9% of the total number of voting
shares.. Holders of our common stock and our preferred stock will vote together as a single class on each proposal.
The candidates for director receiving a plurality of the votes of the shares present through virtual attendance or represented by proxy will be elected
(Proposal 1). An affirmative vote of a majority of the shares present through virtual attendance or represented by proxy and voting at the meeting is required for ratification of the Company’s independent registered public accounting firm (Proposal
2). and the passage of the non-binding advisory resolution approving the compensation of the Company’s named executive officers (Proposal 3). While the vote on Proposal 3 is advisory, and will not be binding on the Company or our Board, the Board
will review the results of the voting on this proposal and take it into consideration when making future decisions regarding executive compensation, as we have done in this and previous years.
If you complete, sign, and date the enclosed proxy and return it before the 2020 Annual Meeting, the persons named will vote your shares as you specify
in the proxy. If you sign, date, and return your proxy but do not indicate how you wish your shares voted, they will be voted in accordance with the Board’s recommendations. If you do not return a signed proxy, or submit your vote via Internet,
then your shares will not be voted unless you attend the virtual meeting and cast your vote via the online meeting platform.
1
To have a quorum, holders of a majority of all voting shares of our common stock and preferred stock issued and outstanding on the record
date must be present and entitled to vote at the meeting, either through virtual attendance or by proxy. If you are a record holder of shares of voting stock as of the record date and you submit your proxy, regardless of whether you abstain from
voting on one or more matters, your shares will be counted as present at the 2020 Annual Meeting for the purpose of determining a quorum. If your shares are held in “street name,” your shares are counted as present for purposes of determining a
quorum if your bank, broker or other nominee submits a proxy covering your shares.
Brokers may not vote your shares on the election of directors (Proposal 1) in the absence of your specific instructions as to how to vote.
Brokers are also not authorized to vote your shares on Proposal 3. The Company encourages you to provide instructions to your broker regarding the voting of your shares on these Proposals.
Abstentions and "broker non-votes" will be counted for purposes of determining a quorum, but will be treated as neither a vote "for" nor a
vote "against" the proposals. However, because Proposals 2 and 3 require a majority of the shares present in person or by proxy at the meeting and entitled to vote on the proposals to pass, an abstention, because it is not a vote “for,” will have
the effect of a negative vote with respect to Proposals 2 and 3 and could cause these Proposals not to pass.
You may revoke a proxy any time before the voting begins in any of the following ways:
* By giving written notice to the Company’s corporate secretary;
* By signing and delivering a later dated proxy; or
* By attending virtually and casting your vote via the online platform during the 2020 Annual Meeting.
The Company is paying the expenses of this solicitation. If requested, we will also reimburse brokerage houses and other custodians, nominees and
fiduciaries for their reasonable expenses in sending proxy material to principals and obtaining their instructions. In addition to solicitation by mail, our directors, officers, and employees may solicit proxies, without extra compensation, in
person or by telephone, fax, e-mail, or similar means.
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ELECTION OF DIRECTORS
The Board of Directors has nominated the nine persons listed below for election at the 2020 Annual Meeting to serve as directors for a term expiring at
the 2021 Annual Meeting of Stockholders or until their respective successors are elected and qualified.
Keith Brackpool
Stephen E. Courter
Maria Echaveste
Geoffrey Grant
Winston H. Hickox
Murray H. Hutchison
Richard Nevins
Scott S. Slater
Carolyn Webb de Macías
Each of the nominees currently serves as a director and has agreed to serve as such for another term if elected. The Board has reviewed the background
of the nominees, as set out on the following page, and has determined to nominate each of the current Directors for re-election. Proxies may not be voted for a greater number of persons than nine, representing the number of nominees named in this
proxy statement.
The Board believes that each nominee has valuable individual skills and experience that, taken together, provides it with the variety and depth of
knowledge, judgment and vision necessary to provide effective oversight of a resource development enterprise like ours. As indicated in the following biographies, the nominees have extensive and diverse experience in a variety of fields, including
water policy (Mr. Brackpool and Mr. Slater), real estate development (Mr. Hutchison and Mr. Hickox), environmental stewardship (Mr. Hutchison and Mr. Hickox), agricultural development (Mr. Brackpool), capital raising (Mr. Brackpool, Mr. Grant, Mr.
Hickox and Mr. Nevins), public accounting (Mr. Courter), public policy (Ms. Echaveste, Ms. Webb de Macías , Mr. Hickox, Mr. Hutchison and Mr. Slater), community
engagement (Ms. Echaveste and Ms. Webb de Macías) and academia (Ms. Echaveste, Ms. Webb de Macías, Mr. Courter and Mr. Slater).
The Board also believes that, as indicated in the biographies, the nominees have demonstrated significant leadership skills as a chief executive officer
(Mr. Brackpool, Ms. Echaveste, Mr. Hutchison, Mr. Grant, Mr. Hickox, Mr. Courter and Mr. Nevins), as high-ranking appointments in state and federal government administrations (Mr. Brackpool, Ms. Echaveste, Ms. Webb de Macías and Mr. Hickox) or as chairs of community and academic foundation boards (Ms. Echaveste and Ms. Webb de Macías). All
of the nominees have significant experience in the oversight of public companies due to their service as the Company’s directors or as directors of other companies. The Board believes that these skills and experiences qualify each nominee to serve
as a director of the Company.
Proxies will be voted “FOR” the election of the nominees named above unless instructions are given to the contrary.
Vote by a plurality of the shares present in person through virtual attendance or represented by proxy at the 2020 Annual Meeting and
entitled to vote thereon is required for the election of directors under Proposal 1. You may vote “FOR” all Nominees, “WITHHOLD” your vote as to all Nominees, or “FOR” all Nominees except the specific nominee from whom you “WITHHOLD” your vote.
There is no “against” option. A properly executed proxy marked “WITHHOLD” with respect to the election of one or more directors will not be voted with respect to the director or directors indicated. Proxies may not be voted for more than nine
directors and stockholders may not cumulate votes.
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Should any nominee become unable to serve as a director, the persons named in the enclosed form of proxy will, unless otherwise directed,
vote for the election of such other person as the present Board of Directors may designate to fill that position.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” THE ELECTION OF EACH NOMINEE AS A DIRECTOR.
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The following sets forth certain biographical information, the present occupation and the business experience for the past five years or more of each
director who will stand for election or re-election at our 2020 Annual Meeting of Stockholders and for each executive officer who is not also a director.
Nominees for Director:
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Age
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Position with Cadiz
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Keith Brackpool
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Chairman of the Board
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Stephen E. Courter
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65
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Director
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Maria Echaveste
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65
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Director
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Geoffrey Grant
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59
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Director
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Winston H. Hickox
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77
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Director
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Murray H. Hutchison
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Director
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Richard Nevins
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72
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Director
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Scott S. Slater
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Director, President and Chief Executive Officer
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Carolyn Webb de Macías
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72
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Director
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Executive Officers not also on the Board of Directors:
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Name
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Age
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Position with Cadiz
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Timothy J. Shaheen
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60
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Chief Financial Officer and Secretary
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Keith Brackpool
is a
co-founder of the Company and Chairman of the Company’s Board of Directors, a position he has held since 2001. Mr. Brackpool was appointed to the Board of Directors in 1986. Mr. Brackpool served as President of the Company from December 1991
until April 2011. Mr. Brackpool also served as Chief Executive Officer of the Company from December 1991 until January 2013. Mr. Brackpool is also currently a principal of 1334 Partners L.P., a partnership that owns commercial real estate in
California. Mr. Brackpool has extensive experience in California public policy and, most recently, served on the California Horse Racing Board (CHRB) from September 2009 – January 2013, including a term as Chairman from 2010 – 2013. Previously,
Mr. Brackpool was co-chair of California Governor Gray Davis’ Agriculture and Water Transition Task Force and the Commission on Building for the 21st Century, a diverse panel that developed long-term policy proposals to meet the state’s future
water, housing, technology and transportation needs. Earlier in his career, Mr. Brackpool served as director and chief executive officer of North American Operations for Albert Fisher Group, a multi-billion dollar food company.
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Stephen E. Courter
was appointed a
director of the Company effective October 9, 2008. Mr. Courter was originally appointed to the Board as a designee of LC Capital Master Fund for a term expiring at the 2009 annual meeting of stockholders. Mr. Courter is currently on the faculty
of the McCombs School of Business, University of Texas at Austin where he teaches MBA courses in strategy and new venture creation. He also serves as a director of Upland Software, a business process software company. Mr. Courter has over 30
years of experience in management positions in the technology/telecommunications industry, serving most recently as CEO of Broadwing Communications from 2006 to 2007 and CEO of NEON Communications from 2000 to 2006. Mr. Courter began his career as
an officer in the U.S. Army and has also held various executive positions, both in the U.S. and Europe, at several major corporations including KPMG, IBM and Sprint.
Maria
Echaveste
was elected as a director at the Company’s 2019 Annual Meeting. Ms. Echaveste is a scholar with a distinguished career working as a community leader, public policy advisor, lecturer, senior White House official, and
attorney. She is presently President and CEO of the Opportunity Institute, a non-profit working to increase economic and social mobility focused on equity for the most vulnerable communities. Ms. Echaveste has been affiliated with UC Berkeley in
various capacities since 2004 including: lecturing at the School of Law and in the undergraduate division on immigration and education; serving as program and policy director of the Law School’s Chief Justice Earl Warren Institute on Law and Social
Policy from 2006 -2012; serving as a Senior Fellow at UC Berkeley’s Center for Latin American Studies since 2008; and as a Visiting Scholar with the Berkeley Food Institute from 2015-2016. Previously, from 1998 to 2001 Ms. Echaveste served as
Assistant to the President and Deputy Chief of Staff for President Bill Clinton focused on issues relating to immigration, civil rights, education, finance, Mexico and Latin America. From 1993 to 1997 she served as Administrator of the Wage and
Hour Division at the US Department of Labor. In 2009, then-Secretary of State Hillary Clinton appointed Ms. Echaveste as a special representative to Bolivia. From 2015-2017, Ms. Echaveste served as vice-chair of the California International Trade
and Investment Advisory Committee, an appointment by Governor Brown. Ms. Echaveste presently serves on the board of directors of the Level Playing Field Institute, Mi Familia Vota and UCSF Benioff Children’s Hospitals.
Geoffrey Grant
was appointed a director
of the Company effective January 22, 2007. Mr. Grant is presently a private investor. In 2012, Mr. Grant retired from Grant Capital Partners, an asset management firm founded by Mr. Grant in 2008, where he was the Managing Partner and the Chief
Investment Officer. Prior to founding Grant Capital Partners, Mr. Grant was a Managing Partner and the Chief Investment Officer of Peloton Partners LLP, a global asset management firm. Mr. Grant co-founded Peloton Partners LLP in 2005. Mr.
Grant’s career in financial markets spans 35 years beginning at Morgan Stanley in 1982 in foreign exchange options and currency derivatives, then with Goldman Sachs from 1989 to 2004 where he ultimately served as Head of Global Foreign Exchange and
Co-head of the Proprietary Trading Group in London.
Winston Hickox
was appointed a director
of the Company effective October 2, 2006. Mr. Hickox is currently a Principal at California Strategies, LLC, a public policy consulting firm and a member of the Strategic Advisory Group for Paladin Capital Group, a leading global private
investment firm. From 2004 to 2006, Mr. Hickox completed a two-year assignment as Sr. Portfolio Manager with the California Public Employees’ Retirement System (CalPERS) where he assisted with the design and implementation of a series of
environmentally oriented investment initiatives in the Private Equity, Real Estate, Global Public Equities, and Corporate Governance segments of the fund’s investment portfolio. Prior to his assignment at CalPers, from 1999 to 2003, Mr. Hickox
served as Secretary of the California Environmental Protection Agency and a member of the Governor Gray Davis’ cabinet. Mr. Hickox’s environmental policy experience also includes membership on the board of the California League of Conservation
Voters, including a four-year term as Board President (1990 - 1994); and two years on the boards of Audubon California and Sustainable Conservation (2004 - 2006). Mr. Hickox formerly served as a member of the board of Thomas Properties Group,
Inc., a publicly traded full service real estate investment firm, prior to its acquisition by Parkway Properties, Inc. in December 2013. Additionally, Mr. Hickox formerly served as a member of the board of GRIDiant Corporation, a privately held
corporation in the energy technology sector. Earlier in his professional career, Mr. Hickox was a partner and Managing Director with LaSalle Advisors, Ltd., a major force in the world's real estate capital markets, and a Managing Director with
Alex Brown Kleinwort Benson Realty Advisors Corp., where he served as head of the firm’s Portfolio Management Group.
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Murray H. Hutchison
was appointed a
director of the Company in June 1997. He is also a member of the Board of Managers (an LLC's functional equivalent of a Board of Directors) of the Company’s subsidiary, Cadiz Real Estate LLC. In his capacity as a manager of the LLC, he performs
essentially the same duties on behalf of the LLC as he would as an outside director for a corporation. Since his retirement in 1996 from International Technology Corporation (“ITC”), a publicly traded diversified environmental management company,
Mr. Hutchison has been self-employed with his business activities involving primarily the management of an investment portfolio. From 1976 to 1996, Mr. Hutchison served as Chief Executive Officer and Chairman of International Technology for
ITC. Mr. Hutchison formerly served as Chairman of the Board of Texas Eastern Product Pipelines Company (TEPPCO), a publicly traded company operating in refined petroleum products, liquefied petroleum gases and petrochemical transportation and
storage, prior to its acquisition by Enterprise Products Partners L.P. in October 2011. Mr. Hutchison formerly served as Lead Director on the board of Jack in the Box, Inc., a publicly traded fast food restaurant chain since May 1998 until
February 2012. Mr. Hutchison serves as a director on the board of Cardium Therapeutics, Inc., a publicly traded medical technology company. Additionally, Mr. Hutchison serves as a director of several other non-publicly traded U.S. companies.
Richard
Nevins
was appointed as a Director of the Company effective July 1, 2016. Mr. Nevins was originally appointed to the Board as a
designee of LC Capital Master Fund. Mr. Nevins is an independent financial advisor and has over 30 years of financial experience as a senior investment banker and senior corporate officer. Mr. Nevins holds a Master of Business Administration
from the Stanford Graduate School of Business and a Bachelor of Arts in Economics from the University of California, Riverside.
Scott S. Slater
is the
Company’s President and Chief Executive Officer, appointed to the role of President in April 2011 and Chief Executive Officer effective February 1, 2013. In addition, Mr. Slater has been a member of the Company’s Board of Directors since February
2012. Mr. Slater is an accomplished negotiator and litigator and, in addition to his role at the Company, is a shareholder in Brownstein Hyatt Farber Schreck LLP, the nation’s leading water law firm. For more than 30 years, Mr. Slater’s practice
has been limited to litigation and the negotiation of agreements related to the acquisition, distribution, and treatment of water. He has served as lead negotiator on a number of important water transactions, including the negotiation of the
largest conservation-based water transfer in U.S. history on behalf of the San Diego County Water Authority. Mr. Slater is also the author of
California
Water Law and Policy
, the state’s leading treatise on the subject, and has taught water law and policy courses at University of California, Santa Barbara, Pepperdine University, and the University of Western Australia, among others.
Carolyn
Webb de
Macías
was
elected as a director at the Company’s 2019 Annual Meeting.
Carolyn Webb de
Macías
is a community leader with an extensive career in public policy and higher education.
Ms. Webb de Macías currently serves as Board Chair for the Los Angeles Partnership, a non-profit
organization that manages 17 public schools through a Memorandum Of Understanding with the Los Angeles Unified School District, and as Member of the Board of the Community Coalition of South Los Angeles, a community education and advocacy
organization. Previously Ms. Webb de Macías served in the office of Elementary and Secondary Education in the US Department of Education as an appointee of President Barack Obama from 2010-2012. From 1997 – 2008, Ms. Webb de Macías served in
various roles at the University of Southern California including adjunct faculty member in the USC Rossier School of Education, associate provost from1997-2002 and vice president for external relations from 2002 - 2008. From 1991-1997 Ms. Webb de
Macías served as chief of staff for Los Angeles City Councilman Mark Ridley-Thomas. Ms. Webb de Macías’ strong record of community service includes roles as founding member of the Board for the Alliance for Regional Collaboration to Heighten
Educational Success (ARCHES), member of the Boards of the Los Angeles African American Women’s Public Policy Institute and the International Black Women’s Public Policy Institute, member of the Central City Association Executive Committee, and
founding president of the Education Consortium of Central Los Angeles. Ms. Webb de Macías has been honored for her work as a founding member of Young Black Scholars of Los Angeles and named a
Black Woman of Achievement
by the NAACP Legal Defense and Education Fund.
7
Timothy J. Shaheen
was
appointed Chief Financial Officer and Secretary of the Company in November 2008. Mr. Shaheen previously served as a director of the Company from March 1999 – July 2019. Effective April 12, 2011, Mr. Shaheen also serves as Chairman and Chief
Executive Officer of the Board of Managers of Cadiz Real Estate LLC, a wholly-owned subsidiary of the Company. Mr. Shaheen is also a private investor and principal of Shaheen & Associates. From September 1996 to April 2005, Mr. Shaheen served
as the President, Chief Executive Officer and a director of Sun World International. From 1999 through 2005, Mr. Shaheen served as a Governor appointee to the Los Angeles Regional Water Quality Control Board and from 2001 through 2003, as Chairman
of the Food Security Task Force for the United Fresh Fruit and Vegetable Association. Prior to joining Sun World, from 1989 to 1996, Mr. Shaheen served as a senior executive with Albert Fisher North America, a publicly traded international produce
company. Mr. Shaheen also has seven years of experience with the accounting firm Ernst & Young LLP; and is a certified public accountant.
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Directors of the Company hold office until the next annual meeting of stockholders or until their successors are elected and qualified. There are no
family relationships between any directors or current officers of the Company. Officers serve at the discretion of the Board of Directors.
The Board of Directors is responsible for our management and direction and for establishing broad corporate policies, including our leadership
structure. Assessing and managing risk is the responsibility of the management of the Company. Our Board of Directors oversees and reviews certain aspects of the Company’s risk management efforts. Annually, the Board reviews our strategic
business plans, which includes evaluating the objectives of and risks associated with these plans.
Under its charter, the Audit Committee (acting on its behalf and concomitantly as the Risk Committee, as described below) reviews and
discusses with management the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures, including the Company’s risk assessment and risk management policies.
The Audit Committee is currently composed of Stephen E. Courter, Winston H. Hickox and Richard Nevins. The Board of Directors has
determined that Mr. Courter, a member of the Company’s Audit Committee, is an “audit committee financial expert” as that term is defined in Item 407(d)(5) of Regulation S-K under the Securities Act. Mr. Courter is the Chairman of the Audit
Committee.
Messrs. Courter, Grant, Hickox, Hutchison, Nevins and Mses. Echaveste and Webb de Macías have all been affirmatively determined by the
Board to be “independent” under all relevant securities and other laws and regulations, including those set forth in SEC and regulations and pertinent listing standards of the NASDAQ Global Market, as in effect from time to time. In February 2017,
the directors unanimously elected Mr. Grant as the Company’s lead independent director to further enhance independent director oversight of management.
The Company's independent directors meet routinely in executive session without the presence of management. Independent directors met
in executive session at each regularly scheduled meeting of the Board, at least four (4) times annually, in each case outside the presence of any director who also serves as an executive officer. In addition to regularly scheduled board meetings,
the Board of Directors and various committees of the Board regularly meet to receive and discuss operating and financial reports presented by the Chief Executive Officer and other members of management as well as reports by experts and other
advisors.
The Board maintains three committees, whose functions are described below. The Board has determined that all members of its committees are
independent. Each Board committee is chaired by an independent director and maintains a written charter detailing its authority and responsibilities. These charters are reviewed periodically as legislative and regulatory developments and
business circumstances warrant and are available in their entirety on the Company's website at
http://www.cadizinc.com
and to any stockholder
otherwise requesting a copy.
Stockholders wishing to communicate with the Board, or with a specific Board member, may do so by writing to the Board, or to the particular Board
member, and delivering the communication in person or mailing it to: Board of Directors c/o Timothy J. Shaheen, Corporate Secretary, Cadiz Inc., 550 S. Hope Street, Suite 2850, Los Angeles, California 90071.
9
During the year ended December 31, 2019, the Board of Directors held six formal meetings, conferred on a number of occasions through telephone
conferences, and took action, when appropriate, by unanimous written consent. All incumbent members of the Board of Directors were present at each meeting, with the exception (i) Mr. Courter, who was unable to attend one telephonic meeting, (ii)
Mr. Hutchison, who was unable to attend two telephonic meetings and (iii) Mr. Nevins, who was unable to attend one in-person meeting, Ms. Echaveste and Ms. Webb de Macías were not named to the Board until July 2019 and therefore each did not
attend one in-person meeting and three telephonic meetings in 2019.
The Board of Directors has three standing committees, the Audit Committee (also acting concomitantly as the Risk Committee), the Compensation Committee
and the Corporate Governance and Nominating Committee, each of which is comprised entirely of directors whom the Board has affirmatively determined to be independent, as they meet the objective requirements set forth by the NASDAQ Global Market and
the SEC, and have no relationship, direct or indirect, to the Company other than as stockholders or through their service on the Board.
The Audit Committee (also acting
concomitantly as the Risk Committee)
The Audit Committee is responsible for (i) considering the adequacy of the Company’s internal accounting control procedures, (ii) overseeing the
Company’s compliance with legal and regulatory requirements, (iii) reviewing the independent auditor’s qualifications and independence, (iv) the appointment, compensation and oversight of all work performed by the independent registered public
accounting firm and (v) overseeing the accounting and financial reporting processes of the Company and the audits of the financial statements of the Company. The Committee advises and makes recommendations to the Board of Directors regarding the
financial, investment and accounting procedures and practices followed by the Company.
The Audit Committee is currently composed of Mr. Courter, Mr. Hickox and
Mr. Nevins. Mr. Courter is currently the Audit Committee Chair. The Board has determined that all members of its Audit Committee are independent. The Audit Committee met four times during the year ended December 31, 2019. All then serving
members of the Audit Committee were present at each meeting, with the exception of Mr. Hickox, who was unable to attend one meeting. Mr. Nevins was not appointed to the Audit Committee until March 2020 and therefore did not attend meetings held in
2019. Each member of the Audit Committee receives quarterly training from the Company’s independent auditors, with such training to include coverage of compliance with Generally Accepted Accounting Principles, the Sarbanes Oxley Act, corporate
governance, assessment of risk, compliance auditing, and reporting requirements for publicly-traded corporations.
In February 2017, the Board designated the Audit Committee to act concomitantly as the Company’s Risk Committee. In addition to and separately from
the Audit Committee’s duties, the Risk Committee’s duties include (i) ensuring that the Company makes decisions that will more likely than not allow it to construct a pipeline to deliver water from its property to the Southern California water
transportation system without violating any governing laws or regulations, (ii) monitoring the Company’s compliance with all risk assessment and reporting conducted by the Company’s employees, (iii) identifying material risks relating to the
Company’s compliance and preparing a written report to the Board whenever a material risk relating to the Company’s compliance is identified, (iv) monitoring compliance with the Company’s Code of Business Conduct and Ethics, and (v) reporting to
the Compensation Committee on an annual basis regarding the CEO’s and Chief Financial Officer’s contribution to the Company’s culture of ethics and compliance and their effectiveness and dedication to ensuring the Company’s compliance with
applicable laws, rules, and regulations. The Risk Committee will meet at least two times annually in executive session with no member of management present.
10
The Compensation Committee
The Compensation Committee oversees compensation of the Chief Executive Officer and key executives and oversees regulatory compliance with respect to
the Company’s compensation matters. The Committee also oversees the Company’s compensation policy applicable to senior management of the Company and advises and makes recommendations to the Board of Directors regarding the compensation of
directors and executive officers. The Committee operates under a written charter adopted by the Board of Directors, which is available on the Company’s website at
http://www.cadizinc.com
and to any stockholder otherwise requesting a copy. The Compensation Committee is currently composed of Mr. Hutchison, Mr. Hickox, Mr. Courter, Mr. Grant and Ms. Webb de Macías. Mr. Hutchison
is the Compensation Committee Chair. The Board has determined that all members of its Compensation Committee are independent. In 2019, the Compensation Committee met one time in-person and conferred on a number of occasions through telephone
conferences, and took action, when appropriate, by unanimous written consent. All then serving members of the Compensation Committee were present at the meeting.
The Corporate Governance and Nominating
Committee
The Corporate Governance and Nominating Committee is responsible for the establishment of procedures for its oversight and evaluation of
the Board and management. The Corporate Governance and Nominating Committee makes recommendations to the Board of corporate guidelines applicable to the Company. The Corporate Governance and Nominating Committee is also responsible for the
identification and recommendation to the Board of qualified candidates for nomination to the Board. The Corporate Governance and Nominating Committee will consider director candidates recommended by stockholders provided the nominations are
received on a timely basis and contain all information relating to such nominee as is required to be disclosed in the Bylaws, including such person’s written consent to being named in the Proxy Statement as a nominee and to serve as a director if
elected, the name and address of such stockholder or beneficial owner on whose behalf the proposed nomination is being made, and the class and number of shares of the Company owned beneficially and of record by such stockholder or beneficial owner.
The Corporate Governance and Nominating Committee will consider nominees suggested by stockholders on the same terms as nominees selected by the Corporate Governance and Nominating Committee.
The Corporate Governance and Nominating Committee believes that nominees for election to the Board must possess certain minimum
qualifications. The Corporate Governance and Nominating Committee will consider a candidate’s judgment, skill, ethics, expertise, experience with businesses and other organizations of comparable size, financial background, beneficial ownership of
the Company and the interplay of the candidate’s experience with the experience of other Board members, among other factors, in assessing a candidate.
The Corporate Governance and Nominating Committee does not currently have a formal policy regarding the handling or consideration of
director candidate recommendations received from a stockholder, or a formal process for identifying and evaluating nominees for directors (including nominees recommended by stockholders). However, the Corporate Governance and Nominating Committee
does regularly consider director refreshment opportunities to ensure the Board has the skills necessary to guide the Company’s business plan over time. When such needs arise, they will be considered by the Corporate Governance and Nominating
Committee, which will then make a recommendation to the Board.
11
Although the Board does not have a formal policy regarding diversity, the Corporate Governance and Nominating Committee’s evaluation of
director nominees also considers diversity as an important factor in determining board composition to ensure that our Board can offer management the benefit of different experiences and viewpoints to best inform Company practices and strategic
goals. To achieve diversity among directors, the Committee considers a number of attributes, including, but not limited to, race, gender, ethnicity, culture, nationality and age among other skills, background and knowledge important to achieving
the Company’s goals. The addition of two new directors in 2019 following the retirement of two long-serving directors, as well as the contraction of the Board by two additional members by agreement, has improved the gender, racial, ethnic, skill
and background diversity of our board and improved its connection to the State of California where we do business. Two of nine director nominees are either women and/or racially and ethnically diverse.
The Corporate Governance and Nominating Committee operates under a written charter adopted by the Board, which is available on the
Company’s website at
http://www
.cadizinc.com
and to any stockholder otherwise requesting a copy. The Corporate Governance and Nominating Committee is currently composed of Ms. Echaveste, Mr. Hickox, Mr. Hutchison and Mr. Nevins. Mr. Hickox is the Corporate Governance and Nominating Committee
Chair. The Board has determined that all members of its Corporate Governance and Nominating Committee are independent. In 2019, the Corporate Governance and Nominating Committee met two times in-person and conferred on a number of occasions
through telephone conferences, and took action, when appropriate, by unanimous written consent. All then serving members of the Corporate Governance and Nominating Committee were present at the meetings with the exception of Mr. Nevins, who was
unable to attend one in-person meeting.
Effective at the time of our 2017 Annual Meeting of Stockholders, a majority of the members of the Board shall attend each annual stockholder meeting.
At the 2019 Annual Meeting of Stockholders, 10 members of the Board were present either in-person or through telephone conference.
During annual stockholder meetings, stockholders shall have the right to ask questions, both orally and in writing, and, where appropriate, receive
answers and discussion from the members of the Board and CEO with such discussion to take place regardless of whether those questions have been submitted in advance. Instructions regarding how to ask a question at the 2020 Annual Meeting will be
provided in the virtual meeting room to those stockholders who register online to attend virtually.
The Company has adopted a code of ethics that applies to all of our employees, including the CEO and CFO. A copy of the code of ethics may be found on
the Company’s website at
http://www.cadizinc.com
.
Any employee who becomes aware of any existing or potential violation of the code of ethics is required to report it. Any waivers from and amendments to the code of ethics granted to directors or executive officers will be
promptly disclosed on the Company’s website at
http://www.cadizinc.com
.
12
Pursuant to our Policy Statement Regarding Insider Trading and Confidentiality, we prohibit all of our directors, officers, employees, and consultants
from hedging their ownership of our stock, including trading in options, puts, calls, or other derivative instruments related to our stock or debt which are designed to hedge or offset any potential decrease in market value. Such persons are
prohibited from purchasing our stock on margin, borrowing against our stock held in a margin account, or pledging our stock as collateral for a loan, unless approved by a designated official following consultation with our General Counsel.
13
The Company’s compensation policies and practices are developed and implemented through the Compensation Committee of the Board of Directors. The
Committee’s responsibility is to review and consider annually the performance of the Company’s named executive officers in achieving both corporate and individual goals and objectives, and to assure that the Company’s compensation policies and
practices are competitive and effective in incentivizing management.
The Compensation Discussion and Analysis section provides a description of the primary elements of the Company’s fiscal year 2019 compensation program
and policies for the following individuals, who are referred to throughout this proxy statement as our named executive officers:
|
•
|
Scott Slater, President and Chief Executive Officer
|
|
•
|
Timothy Shaheen, Chief Financial Officer
|
|
•
|
Keith Brackpool, Chairman of the Board
|
In February 2013, the Board separated the roles of Chief Executive Officer (“CEO”) and Chairman of the Board, which had until that time both been held
by Mr. Brackpool. As CEO, Mr. Slater manages the day-to-day operation of the Company and its projects and Mr. Brackpool, a Company founder, holds an essential role advising management in the Chairman position. Therefore, Mr. Brackpool remains
among our named executive officers and his compensation is further described in this statement.
In 2019, our named executive officers effectively completed multiple transactions important to the long-term success of the Company, including:
|
•
|
Negotiated and entered into agreements to secure the development of the Company’s Northern Pipeline Asset.
|
|
•
|
Advanced and defended permits necessary for the Company’s Southern Pipeline Asset.
|
|
•
|
Improved agricultural assets and launched hemp-focused joint venture, SoCal Hemp JV LLC, diversifying our revenue and cash flow opportunities.
|
|
•
|
Completed investments in water supply infrastructure to support our agricultural and water projects.
|
|
•
|
Negotiated and executed financial transactions to significantly reduce outstanding debt and improve the Company’s balance sheet.
|
Compensation Committee activities in 2019 included:
|
•
|
Evaluating the performance of the Company’s executive officers;
|
|
•
|
Reviewing, analyzing and approving the total compensation and benefits of the Company’s executive officers, including cash compensation and
long-term incentive compensation; and
|
|
•
|
Reviewing guidelines and standards regarding the Company’s compensation practices and philosophy.
|
14
For the Company’s named executive officers, other than Mr. Slater, the committee established compensation levels based, in part, on the recommendations
of Mr. Slater as CEO.
This section should be read in conjunction with the “Summary Compensation Table” and related tables pertaining to the compensation earned in 2019 by
the named executive officers presented in this proxy statement under the caption “Executive Compensation”.
We welcome direct stockholder feedback on our compensation programs. Throughout the year we have met, both in person, online and via
telephone calls, with stockholders representing over 80% of shares outstanding and have taken into consideration the issues that have been expressed as being important to them regarding executive compensation.
The Company’s compensation program has four primary components: cash salary, performance-based cash awards, long-term incentives through
equity stock awards, and benefits. Each element of the Company’s compensation program has been specifically chosen to reward, motivate and incentivize the executives of the Company to complete the long-term development and implementation of the
Water Project and our other resource development initiatives. The Compensation Committee determines the amount for both total compensation and each compensation element through discussions with the Company’s management, consideration of
benchmarking data, past performance and future corporate and individual objectives.
The four basic elements of compensation, described in further detail below, are:
|
•
|
SALARY. Base salaries for the Company’s named executives are determined by the Compensation Committee depending on a variety of factors including
the scope of their responsibilities, their leadership skills and values, their performance and length of service. Salaries for our named executive officers are intended to create a minimum level of compensation that is competitive with
other companies deemed comparable, depending on the prior experience and position of the executive. Salaries are typically paid in cash, but could also be paid with restricted stock awards. Decisions regarding salary increases are
affected by the named executive’s current salary and the amounts paid to their peers within and outside the Company.
|
15
|
•
|
LONG-TERM INCENTIVES. The primary form of incentive compensation that is offered to the Company’s executives consists of long-term incentives in
the form of equity awards. The use of such long-term incentives is intended to focus and align goals of Company executives with those of stockholders and creates a direct interest in the results of operations, short and long-term
performance and achievement of the Company’s milestones and goals.
|
|
•
|
PERFORMANCE BASED CASH AWARDS. The Compensation Committee believes that it is sometimes important to offer cash incentives to executives for the
achievement of specified objectives that yield increased value for stockholders and will utilize performance based cash awards from time to time to provide additional incentives.
|
|
•
|
BENEFITS. The Compensation Committee also incorporates retirement, insurance, termination and severance benefits in the compensation program for
executive officers. These benefits are offered to retain top executives, maintain their health and wellness and remain competitive in the industry. The retirement and insurance benefits are consistent with those benefits offered more
broadly to the Company’s employees.
|
The Company’s overall compensation packages for our named executive officers have historically emphasized equity incentives due to the long-term
development timelines of our projects and the focus of the Company on achieving the implementation of these projects. Even with the emphasis on long-term incentives, the Company’s overall compensation is established at a level comparable to our
peer group of companies, which share a similar focus on long-term development of assets. As the Water Project has finalized numerous permitting milestones and prepares for construction and implementation, the Committee has also utilized
performance based cash awards to reward achieved milestones and goals in that calendar year.
In October 2019, the Compensation Committee engaged Frederic W. Cook & Co., Inc. (“FW Cook”), a market leading independent firm
specializing in executive compensation, with the objective of providing a competitive reference on pay levels and incentive design, including long-term equity incentives and cash-based incentive awards. In the course of its engagement, FW Cook and
the Compensation Committee reviewed pay data for comparable companies, including a peer group of nine publicly traded water, real estate, and agricultural development companies identified by them (See “Use of Peer Group”, below).”
Our main asset consists of a large land position with water rights in Southeastern California and our business is primarily focused on developing this
asset for its highest and best use, including the permitting of a water supply and storage project at our primary property in Cadiz, California. Because no other publicly-traded company is situated with similar assets and projects, it is
difficult to identify directly comparable peer companies.
For guidance this year, with
the assistance of FW Cook, we identified
a peer group of companies operating in the property and asset development sectors, specifically companies with
comparable market capitalization and an emphasis on the development of property and real estate, including for agriculture, in the Southwestern United States. The peer group includes the following nine publicly traded companies:
16
|
•
Alico, Inc.
•
Forestar Group, Inc.
|
|
•
Limoneira Company
•
Maui Land & Pineapple
|
|
•
PICO Holdings, Inc.
•
Pure Cycle Corp.
•
Stratus Properties
|
|
•
Tejon Ranch Co.
•
The St. Joe Company
|
The Compensation Committee believes it is important to understand and analyze the current compensation programs of other companies when making
compensation decisions. We traditionally consider the compensation programs of our peers when determining compensation for the named executive officers. This year the Committee reviewed publicly available information for our peer group companies
to compare the components of our compensation program for the executive officers with those of the peer group. We also consulted with FW Cook, which reviewed our current executive compensation program and recommended adjustments to our programs to
ensure continued competitiveness amongst our peers.
Due to the Company’s unique business plan with particular emphasis on development of the Water Project, the Compensation Committee exercises its
discretion in determining compensation packages that may differ from the peer group. Nevertheless, the peer group is instructive in assessing elements of compensation and structure for similarly situated companies.
Upon review of publicly available information for our peers, the
Committee found the annual base salary of our CEO in 2018 was near median among our peers and
total direct compensation of our CEO to be among the lowest in the peer group in 2018 at the 15
th
percentile in the peer group.
The Committee emphasizes performance objectives for executives when granting long-term equity compensation awards from existing plans. Currently, as
described above, the Company is focused on the performance of objectives related to implementation of the Water Project and continued agricultural projects, and fixes equity grants to satisfaction of such project development objectives including
both restrictions as to sale and on a vesting schedule commensurate with the anticipated project development timelines.
1. SALARY. In evaluating base salaries for 2019, the Compensation
Committee believed it was important to maintain competitive base salary compensation that would also keep cash compensation expenditures to a minimum. In 2019, Mr. Slater’s, Mr. Shaheen’s and Mr. Brackpool’s annual base salary remained the same as
in 2018.
2. LONG-TERM INCENTIVES. The Committee has chosen to rely upon equity instruments, such as restricted stock and options, in designing compensation
packages for executives. The Committee views the grant of equity based awards as an incentive for future performance since the value of these equity based awards will increase as the Company’s stock price increases, thereby satisfying the
Committee’s goal of linking executive compensation to share price appreciation over the longer term and promoting the retention of the key executives throughout the development process of our projects. The Committee is conscious of the potential
dilutive effect arising from the use of equity incentives and tries to limit issuances to maintain appropriate ratios of overall ownership levels in the Company from year to year.
17
In order for us to utilize equity based awards as our primary form of incentive compensation and maintain alignment with the
goals of stockholders, the Committee and the Board have created plans subject to stockholder approval. The Company’s most recent equity incentive program (the “2019 Incentive Plan”) was approved by stockholders at the Company’s 2019 Annual Meeting of Stockholders. The 2019 Incentive Plan reserved 1,200,000 shares for issuance; the plan currently has 958,106 shares available for issuance.
The Committee did not award restricted stock or options to the Company’s named executive officers in 2019.
3. CASH AWARDS. While the Compensation Committee believes that equity based awards rather than cash based awards allow the Company to
better preserve our existing cash resources and, accordingly, has relied primarily upon the grant of equity based awards to reward executive performance (see "Long-Term Incentives") of named executive officers, the Compensation Committee also
believes that it is important to offer cash incentives to executives for the achievement of specified objectives that yield increased value for stockholders and to reduce the tax burdens associated with the issuance of restricted equity based
awards. In 2019, Mr. Brackpool, Mr. Shaheen and Mr. Slater were each granted a $300,000 cash award by the Board for exemplary service in implementing Company objectives throughout the course of the year, including those transactions described under
“Overview”, above.
4. BENEFITS. Per their 2014 amended and restated employment agreements described below, Mr. Brackpool and Mr. Shaheen received retirement benefits as
part of their compensation packages in 2019.
The Company’s current compensation agreements with Messrs. Brackpool and
Shaheen provide for certain severance provisions and benefits associated with various termination scenarios, as well as certain vesting acceleration for equity-based compensation in the event of a change-in-control. The severance and change in
control provisions were determined largely by negotiations between the parties as one of the many elements of a larger negotiation involving the particular executive’s employment or consulting agreement with the Company. These agreements are
designed to be competitive in the marketplace and provide security for these executives in the event that the Company is acquired and their position is impacted. This will allow the Company’s executives to consider and implement transformative
transactions of significant benefit to our stockholders without undue concern over their own financial situations. Nevertheless, if an executive leaves under circumstances that call into question whether any compensation amounts paid to
him or her were validly earned, we would pursue any legal rights we deemed appropriate under the circumstances.
A summary of the severance and change-in-control provisions
applicable to compensation arrangements with the Company’s named executive officers named in the Summary Compensation Table, along with a quantification of the benefits available to each named officer as of December 31, 2019, can be found in the
section captioned "Potential Payments upon Termination or Change in Control". The Company does not provide excise tax gross-ups as part of these benefits.
18
Impact of Code Section 162(m)
The Compensation Committee has considered the impact of provisions of the Internal Revenue Code of 1986, specifically Code Section
162(m). Section 162(m) limits to $1 million the Company’s deduction for compensation paid to each of our executive officers, which does not qualify as "performance based”. The 2019 Equity Incentive Plan was designed to permit grant awards that
qualify as performance-based compensation, thereby permitting the Company to receive a federal income tax deduction in connection with the awards.
The Compensation Committee has reviewed and discussed the foregoing
Compensation Discussion and Analysis with management of the Company. Based on this review and discussion, we recommend to the Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement.
|
|
THE COMPENSATION COMMITTEE
|
|
|
|
|
|
Murray H. Hutchison, Chairman
|
|
|
Stephen E. Courter
Geoffrey Grant
Winston H. Hickox
Carolyn Webb de Macías
|
The foregoing report shall not be deemed incorporated by reference by any general statement incorporating by reference this statement into any filing
under the Securities Act of 1933 or under the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.
19
The following table shows the compensation awarded to, earned by, or paid during the years ended December 31, 2019, 2018 and 2017, to the Company’s
current chief executive officer and president, our chief financial officer and our former chief executive officer and current Chairman.
|
Name and Principal Position
(1)
|
Year
|
Salary
($) |
Bonus
($) |
Stock Awards (2) ($) |
Option
Awards (2) ($) |
All Other
Compensation (3) ($) |
Total
($) |
|||||||||||||||||||||
|
Scott Slater
President and current Principal Executive Officer
|
2019
2018
2017
|
300,000
300,000
300,000
|
200,000
300,000
300,000
|
-
-
-
|
-
-
-
|
-
-
- |
500,000
600,000
600,000
|
|||||||||||||||||||||
|
Timothy J. Shaheen
Principal Financial Officer and Secretary
|
2019
2018
2017
|
350,000
350,000
350,000
|
200,000
300,000
300,000
|
-
-
851,500
|
-
-
-
|
11,399
12,587
12,336
|
561,399
662,587
1,513,836
|
|||||||||||||||||||||
|
Keith Brackpool
Chairman and former Principal Executive Officer
|
2019
2018
2017
|
275,000
275,000
275,000
|
200,000
300,000
300,000
|
-
-
851,500
|
-
-
-
|
51,111
44,936 47,260 |
526,111
619,936
1,473,760
|
|||||||||||||||||||||
_____________________________________________
|
(1)
|
The executive officers listed in the Summary Compensation Table above were the Company’s only executive officers during the year ended December 31,
2019.
|
|
(2)
|
This column discloses the dollar amount of compensation cost recognized for the respective fiscal year in accordance with FASB ASC Topic 718. The
assumptions used for determining the value of stock awards and options are set forth in the relevant Cadiz Inc. Annual Report to Stockholders in Note 9 to the Consolidated Financial Statements, ”Stock-Based Compensation Plans and
Warrants”. All Stock Awards listed were approved by Stockholders as part of the 2014 Equity Incentive Plan and became fully vested and were issued in 2017.
|
|
(3)
|
All Other Compensation includes a 401k match that is generally available to all employees. Messrs. Brackpool and Shaheen received $11,000 and
$11,200, respectively, in 401k matching contributions in 2019. In 2019, Mr. Brackpool’s Other Compensation also includes $40,111 of company paid expenses related to a leased automobile. Mr. Shaheen’s Other Compensation for 2019 includes
$199 in a car allowance. The value of perquisites for Mr. Slater was less than $10,000, and thus no amount relating to perquisites is included in the Summary Compensation Table.
|
There were no non-equity incentive plan awards or equity awards granted to our named executive officers in 2019.
The following table sets forth certain information concerning outstanding
stock and option awards as of December 31, 2019, for each named executive officer.
20
|
|
Option Awards
|
Stock Awards
|
|||||||||||||||||||
|
Name
|
Securities
Underlying Unexercised Options (#) Exercisable |
Securities
Underlying Unexercised Options (#) Unexercisable |
Option
Exercise Price ($) |
Option
Expiration Date |
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested
(#) |
Equity Incentive Plan Awards: Marked or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested
($)
|
|||||||||||||||
|
Scott Slater
|
|
100,000
(1)
|
|
-
|
12.51
|
4/12/21
|
-
|
-
|
|||||||||||||
|
Timothy J. Shaheen
|
100,000
(1)
|
|
-
|
11.50
|
1/14/20
|
-
|
-
|
||||||||||||||
|
Keith Brackpool
|
|
200,000
(1)
|
|
|
-
|
|
|
11.50
|
1/14/20 |
-
|
-
|
||||||||||
__________________________
|
(1)
|
Options granted by the Company under the 2009 Equity Incentive Plan.
|
The following table sets forth certain information concerning stock option exercises and restricted stock vesting during 2019 for each named executive
officer.
|
|
Option Awards
|
Stock Awards
|
||||||||||||||
|
Name
|
Shares Acquired
on Exercise (#)
|
Value Realized
on Exercise ($)
|
Shares Acquired
on Vesting (#)
|
Value Realized
on Vesting ($)
|
||||||||||||
|
Scott Slater
|
-
|
-
|
-
|
-
|
||||||||||||
|
Timothy J. Shaheen
|
-
|
-
|
-
|
-
|
||||||||||||
|
Keith Brackpool
|
-
|
-
|
-
|
-
|
||||||||||||
The Company does not have any qualified or non-qualified defined benefits plans.
The Company does not have any non-qualified defined contribution plans or other deferred compensation plans.
21
Mr. Scott S. Slater has served with the Company since November 2008 pursuant to an agreement with the law firm Brownstein Hyatt Farber and Schreck LLP,
where Mr. Slater is also a shareholder. From 2008 – 2012, Mr. Slater was primarily focused on the development of the Company's Water Project and did not receive a base salary from the Company for his role as General Counsel (2008 – 2012) and
President (2011 – 2012). Mr. Slater's compensation from the Company consisted exclusively of long-term incentives due to the nature of the development of the Water Project. In April 2011, Mr. Slater received options to purchase 100,000 shares of
common stock at an exercise price of $12.51 per share under the Company's 2009 Incentive Plan with such options vesting 1/3 when issued, 1/3 in April 2012 and 1/3 in April 2013. On February 1, 2013, Mr. Slater was named Chief Executive Officer in
addition to his ongoing role as President. As a result, Mr. Slater's employment arrangements were amended to reflect the broadening of his responsibilities and leadership role over all of the Company's asset development initiatives. In
consideration of Mr. Slater's agreement to serve as Chief Executive Officer and President, Mr. Slater began to receive an annual base salary from the Company of $300,000 effective February 1, 2013.
The Company's Chief Financial Officer, Mr. Timothy J. Shaheen, entered into an amended and restated employment agreement with the Company effective
July 1, 2014 (“2014 Amended Agreement”) replacing a May 2009 employment agreement. Mr. Shaheen serves as the Principal Financial Officer of the Company and as Chairman and Chief Executive of the Board of Managers of Cadiz Real Estate LLC, our
subsidiary holding title to the Company's land and water assets. Mr. Shaheen also oversees the Company's agricultural operations. Mr. Shaheen's 2014 Amended Agreement provided for a new base salary compensation structure and established milestone
principles for further long-term incentive equity awards. Pursuant to the 2014 Amended Agreement, Mr. Shaheen's annual base cash compensation was reduced for 2014, 2015 and 2016 in exchange for equity based salary in the form of restricted stock
units ("RSUs") that vested ratably during those years. Effective July 1, 2014, Mr. Shaheen's salary was decreased to $200,000 per annum, and he received a total of 62,500 RSUs, 12,500 in 2014, and 25,000 each in 2015 and 2016. In addition, Mr.
Shaheen received a long-term equity incentive milestone award of 100,000 shares of the Company's stock in the form of 100,000 RSUs. These RSUs were earned and issued in June 2017. In accordance with the terms of his 2014 Amended Agreement,
effective January 1, 2017 the base cash salary for Mr. Shaheen automatically reverted to $350,000, representing his salary as in effect immediately prior to the 2014 RSU grants. On March 10, 2020, Mr. Shaheen’s 2014 Amended Agreement was further
amended to include a service continuation bonus in the amount of $300,000 in the event that Mr. Shaheen ceases to serve as the Chief Financial Officer of the Company.
Mr. Keith Brackpool entered into an amended and restated employment agreement effective July 1, 2014 ("2014 Amended Agreement") replacing a May 2009
employment agreement. The 2014 Amended Agreement provided for a new base salary compensation structure and established milestone principles for further long-term incentive equity awards. Pursuant to the 2014 Amended Agreement, Mr. Brackpool's
annual base cash compensation was reduced for 2014, 2015 and 2016 in exchange for equity based salary in the form of restricted stock units ("RSUs") that vested ratably during those years. Effective July 1, 2014, Mr. Brackpool's salary was
decreased to $35,000 per annum, and he received a total of 100,000 RSUs, 20,000 in 2014 and 40,000 each in 2015 and 2016. In addition, Mr. Brackpool received a long-term equity incentive milestone award of 100,000 shares of the Company's stock in
the form of 100,000 RSUs.. These RSUs were earned and issued in June 2017. In accordance with the terms of his amended and restated employment agreement, effective January 1, 2017 the base cash salary for Mr. Brackpool automatically reverted to
$275,000, representing his salary as in effect immediately prior to the RSU grants.
22
The following table and summary set forth estimated potential payments the Company would be required to make to our named executive
officers upon termination of employment or change in control of the Company, pursuant to each executive’s employment or consulting agreement in effect at year end. Except as otherwise indicated, the table assumes that the triggering event occurred
on December 31, 2019.
|
Name
|
Benefit
|
Termination without
Cause or
Resignation upon Company Material Breach ($) |
Death or
Disability ($) |
Termination
Following Change of Control ($) |
|||||||||
|
Scott Slater
|
Salary
|
-
|
-
|
-
|
|||||||||
|
|
Bonus
|
-
|
-
|
-
|
|||||||||
|
|
Equity Acceleration
|
-
|
-
|
-
|
|||||||||
|
|
Benefits Continuation
(1)
|
-
|
-
|
-
|
|||||||||
|
|
Total Value
|
-
|
-
|
-
|
|||||||||
|
Timothy J. Shaheen
|
Salary
|
175,000
|
175,000
|
350,000
|
|||||||||
|
|
Bonus
|
-
|
-
|
-
|
|||||||||
|
|
Equity Acceleration
|
-
|
-
|
-
|
|||||||||
|
|
Benefits Continuation
(1)
|
23,262
|
-
|
46,524
|
|||||||||
|
|
Total Value
|
198,262
|
175,000
|
396,424
|
|||||||||
|
Keith Brackpool
|
Salary
|
275,000
|
550,000
|
550,000
|
|||||||||
|
|
Bonus
|
-
|
-
|
-
|
|||||||||
|
|
Equity Acceleration
|
-
|
-
|
-
|
|||||||||
|
|
Benefits Continuation
(1)
|
72,354
|
-
|
144,708
|
|||||||||
|
|
Total Value
|
347,354
|
550,000
|
694,708
|
|||||||||
_____________________________
|
(1)
|
The benefits continuation amounts include car allowances, 401(k) matching benefits and paid vacation.
|
Termination without Cause or Resignation upon Company Material Breach
Mr. Shaheen’s 2014 Amended Agreement provides that if Mr.
Shaheen were terminated by the Company without cause or if he resigns due to a breach of the 2014 Amended Agreement by us, then the Company is obligated to pay severance and continuation of benefits (to the extent such benefits could then be
lawfully made available by the Company) for one hundred eighty days following the effective date of the termination, as though Mr. Shaheen were continuing to provide services to the Company under the 2014 Employment Agreement. On March
10, 2020, Mr. Shaheen’s 2014 Amended Agreement was further amended to include a service continuation bonus in the amount of $300,000 in the event that Mr. Shaheen ceases to serve as the Chief Financial Officer of the Company.
Mr. Brackpool’s 2014 Amended Agreement provides that if Mr. Brackpool were terminated by the Company without cause or if he resigns due
to a breach of the 2014 Amended Agreement by us, then the Company is obligated to pay severance and continuation of benefits (to the extent such benefits could then be lawfully made available by the Company) for one year following the effective
date of the termination, as though Mr. Brackpool were continuing to provide services to the Company under his 2014 Amended Agreement.
23
Termination of Employment Due to Death or Disability
Mr. Shaheen’s 2014 Amended Agreement provides that if he dies or became disabled, he or his estate would be entitled to receive severance
for one hundred eighty days consisting of his base compensation.
Mr. Brackpool’s 2014 Amended Agreement provides that if he dies or became disabled, he or his estate would be entitled to receive
severance for two years consisting of his base compensation.
Change in Control
Mr. Shaheen's 2014 Amended Agreement provides that if Mr. Shaheen is terminated by the Company following a change in control, the Company
is obligated to pay severance and continuation of benefits (to the extent such benefits could then be lawfully made available by the Company) for one year following the effective date of the termination, as though Mr. Shaheen were continuing to
provide services to the Company under his 2014 Amended Agreement.
Mr. Brackpool's 2014 Amended Agreement provides that if Mr. Brackpool is terminated by the Company following a change in control, the
Company is obligated to pay severance and continuation of benefits (to the extent such benefits could then be lawfully made available by the Company) for two years following the effective date of the termination, as though Mr. Brackpool were
continuing to provide services to the Company under his 2014 Amended Agreement.
24
The following table summarizes the compensation earned by each of the non-employee directors in 2019. Directors who are also
officers or employees of the Company receive no compensation for duties performed as a director. No current director has an agreement or arrangement with any third party relating to compensation or other payments in connection with the director’s
candidacy or service as a director.
|
Name
|
Fees Earned
or Paid in Cash ($)
|
Stock
Awards ($)
(1)
|
Option
Awards ($) (2) |
Total ($)
|
||||||||||||
|
John A Bohn
(3)
|
27,500
|
16,250
|
-
|
43,750
|
||||||||||||
|
Jeffrey J. Brown
(4)
|
-
|
62,500
|
-
|
62,500
|
||||||||||||
|
Stephen E. Courter
|
40,000
|
22,500
|
-
|
62,500
|
||||||||||||
|
Maria Echaveste
|
25,000
|
12,500
|
-
|
37,500
|
||||||||||||
|
Geoffrey Grant
|
-
|
62,500
|
-
|
62,500
|
||||||||||||
|
Winston H. Hickox
|
40,000
|
22,500
|
-
|
62,500
|
||||||||||||
|
Murray H. Hutchison
|
-
|
62,500
|
-
|
62,500
|
||||||||||||
|
Richard Nevins
|
-
|
62,500
|
-
|
62,500
|
||||||||||||
|
Raymond J. Pacini
(5)
|
27,500
|
16,250
|
-
|
43,750
|
||||||||||||
|
Carolyn Webb de Macías
|
25,000
|
12,500
|
-
|
37,500
|
||||||||||||
_______________________________
|
(1)
|
This column discloses the dollar amount of compensation cost recognized in 2019 based on the fair value at grant date in accordance with FASB ASC
Topic 718. These awards were valued at the market value of the underlying stock on the date of grant in accordance with FASB ASC Topic 718.
|
|
(2)
|
Directors of the Company do not receive stock option awards.
|
|
(3)
|
Mr. Bohn resigned as a Director of the Company effective July 15, 2019.
|
|
(4)
|
Mr. Brown resigned as a Director of the Company effective February 19, 2020.
|
|
(5)
|
Mr. Pacini did not stand for re-election as a director at the Company’s 2019 Annual Meeting of Stockholders held on July 10, 2019.
|
All non-employee directors are entitled to receive, for each 12 month period ending June 30 of each year, the amount of $50,000, prorated for directors
serving less than the full 12 months. Payments are made in 4 quarterly installments of $12,500. A director may elect to receive any or all of his or her cash compensation earned in the form the Company’s common stock. A director is entitled to a
$12,500 fee for any quarter in which services are rendered. Each June 30, non-employee directors are also entitled to receive a deferred stock award consisting of shares of the Company’s common stock with a value equal to $25,000 (calculated with
reference to the average closing price of the Company’s common stock during the one month preceding the annual award date), prorated for directors serving less than the full 12 months.
25
The Company encourages stock ownership on behalf of our directors. Thus, the Company’s compensation structure for non-employee directors includes
awards of stock as compensation for director services. See “Director Compensation Policy", above.
The following table provides information as of December 31, 2019 with respect to shares of the Company’s common stock that may be issued under its
existing compensation plans. The table includes plan grants to executive officers and other Company employees.
|
Plan Category
|
Number of securities to be issued upon exercise of outstanding options, warrants and rights
(a)
|
Weighted-average exercise price of outstanding options, warrants and rights
(b)
|
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in
column (a))
(c)
|
|||||||||
|
Equity compensation plans approved by stockholders
|
492,500
(1)
|
|
|
$ 11.66
|
1,184,091
(2)
|
|
||||||
|
|
||||||||||||
|
Total
|
492,500
|
|
$ 11.66
|
1,184,091
|
||||||||
___________________________
|
(1)
|
Represents 492,500 options outstanding under the Company’s 2009 Equity Incentive Plan as of December 31, 2019.
|
|
(2)
|
Represents 1,184,091 securities issuable under the Company’s 2019 Equity Incentive Plan as of December 31, 2019.
|
Pursuant to the Dodd-Frank Act, the Securities and Exchange Commission adopted a rule requiring annual disclosure of the ratio of the
total annual compensation of the principal executive officer (“CEO”) to the median employee’s annual total compensation. Mr. Scott Slater is the Company’s Chief Executive Officer. In the pay ratio table below, Mr. Slater’s total compensation as
reflected in the foregoing Summary Compensation Table, is compared to the median employee’s total compensation. For simplicity, the value of the Company’s retirement plan was excluded for Mr. Slater and all permanent employees, as all employees,
including the CEO, are offered the same benefits. In determining the median employee, a listing was prepared of all employees that were actively employed as of December 31, 2019, with the exception of Mr. Slater. All wages, bonuses and stock awards
paid to each employee were deemed to be the employee’s total compensation. If a permanent employee was not employed by the Company for the entirety of the year, an annualized total compensation was calculated for that employee. The below table
presents the ratio of the total annual compensation of the Company’s Chief Executive Officer, Mr. Slater, to the median employee’s annual total compensation:
|
Mr. Scott Slater (CEO) total annual compensation
|
$
|
500,000
|
||
|
|
||||
|
Median Employee total annual compensation
|
$
|
135,000
|
||
|
|
||||
|
Ratio of CEO to Median Employee total annual compensation
|
3.70 : 1.00
|
|||
26
In fiscal 2019, there were no Compensation Committee interlocks and no insider participation in Compensation Committee decisions that were required to
be reported under the rules and regulations of the 1934 Act.
27
The following table sets forth the beneficial ownership of the Company’s voting
securities, as of the record date, April 20, 2020, for the 2020 Annual Meeting, by each stockholder whom the Company knows to own beneficially more than five percent of our common stock or preferred stock, and by each director, each named
executive officer, and all directors and executive officers as a group, excluding, in each case, rights under options or warrants not exercisable within 60 days. All persons named have sole voting power and investment power over their shares
except as otherwise noted.
|
Name and Address
|
Amount and Nature of
Beneficial Ownership
|
Percent
of Class
|
|
|
|
|
|
Hoving & Partners SA
Jan-Paul Menke
30A Route de Chene
CH-1208, Geneva
Switzerland
|
10,898,992
(1)
|
31.3%
|
|
LC Capital Master Fund, Ltd.
LC Capital Partners, LP
LC Capital Advisors, LLC
LC Offshore Fund, Ltd.
Lampe, Conway & Co., LLC
Steven G. Lampe
Richard F. Conway
c/o Lampe, Conway & Co., LLC
680 Fifth Avenue, 12th Floor
New York, NY 10019-5429
|
3,448,497
(2)
|
9.9%
|
|
Keith Brackpool
c/o 550 S. Hope St., Suite 2850
Los Angeles, CA 90071
|
165,387
|
*
|
|
Scott S. Slater
c/o 550 S. Hope St., Suite 2850
Los Angeles, CA 90071
|
129,387
(3)
|
*
|
|
Geoffrey Grant
c/o 550 S. Hope St., Suite 2850
Los Angeles, CA 90071
|
122,476
(4)
|
*
|
|
Timothy J. Shaheen
c/o 550 S. Hope St., Suite 2850
Los Angeles, CA 90071
|
108,887
|
*
|
|
|
|
|
|
Winston H. Hickox
c/o 550 S. Hope St., Suite 2850
Los Angeles, CA 90071
|
107,679
(5)
|
*
|
|
|
|
|
|
Murray Hutchison
c/o 550 S. Hope St., Suite 2850
Los Angeles, CA 90071
|
57,688
|
*
|
28
|
Stephen Courter
c/o 550 S. Hope St., Suite 2850
Los Angeles, CA 90071
|
25,862
|
*
|
|
Richard Nevins
c/o o 550 S. Hope St., Suite 2850
Los Angeles, CA 90071
|
17,647
|
*
|
|
Maria Echaveste
c/o 550 S. Hope St., Suite 2850
Los Angeles, CA 90071
|
0
|
*
|
|
Carolyn Webb de Macias
c/o 550 S. Hope St., Suite 2850
Los Angeles, CA 90071
|
0
|
*
|
|
All Directors and officers as a group
(nine individuals)
|
735,013
(3)(4)(5)
|
2.11%
|
|
|
* |
Represents less than one percent of the
34,796,106
outstanding
shares of common stock of the Company as of April 20, 2020.
|
Footnotes
|
(1)
|
Based upon a Form 13G/A filed on January 28, 2020 with the SEC, Hoving & Partners SA owns 10,898,992 shares of the Company's common
stock. Hoving & Partners’ filings with the SEC do not indicate which persons have the right to vote or dispose of the shares it presently owns.
|
|
(2)
|
Based upon Form 13G filed on March 9, 2020 with the SEC by LC Capital Master Fund Ltd. ("Master Fund"), information provided by Master Fund and the
Company's corporate records, Master Fund and affiliates beneficially own a total of 3,448,497 shares of the Company's common stock as of April 20, 2020.
Includes 3,263,926 shares of common stock presently outstanding.
Includes 146,092 shares of common stock presently outstanding and held by Steven G. Lampe over which he has sole voting and dispositive power, but
for which Master Fund disclaims beneficial ownership.
Includes 38,479 shares of common stock issuable upon conversion of 95 shares of the Company’s Series 1 preferred stock owned by Master Fund at a
conversion rate of 405.05 shares of common stock per one share of preferred stock. Master Fund currently holds 9,671 shares of the Company’s Series 1 preferred stock, representing 96.7% of the outstanding shares of that class. Under the
terms of the preferred stock instrument, a holder of the preferred stock may not convert its preferred stock into common stock to the extent that after such conversion the holder would own more than 9.9% of the Company’s outstanding common
stock. As a consequence, Master Fund’s beneficial ownership on the record date does not include an additional 3,878,760 shares of common stock which would otherwise be issuable upon conversion of 9,576 shares of preferred stock currently
owned by Master Fund at a conversion rate of 405.05 shares of common stock per one share of preferred stock .
These securities, except for the common stock owned solely by Steven G. Lampe, are owned by Master Fund and may also be deemed to be beneficially owned by the named persons below by virtue of the following relationships: (i) LC Capital
Partners, LP ("Partners") and LC Offshore Fund, Ltd. ("Offshore Fund") beneficially own 100% of the outstanding shares of Master Fund; (ii) LC Capital Advisors LLC ("Advisors") is the sole general partner of Partners; (iii) Lampe, Conway
& Co., LLC ("LC&C") is investment manager to Master Fund, Partners, and Offshore Fund pursuant to certain investment management agreements and shares voting and dispositive power over the securities; and (iv) Steven G. Lampe and
Richard F. Conway are the sole managing members of each of Advisors and LC&C and therefore, have indirect voting and dispositive power over securities held by Master Fund. Each of the persons named above, other than Master Fund,
specifically disclaims beneficial ownership of these securities except to the extent of his or its pecuniary interest therein, if any.
|
29
|
(3)
|
Includes 100,000 shares underlying presently exercisable options.
|
|
|
(4)
|
Includes 30,500 shares held in five separate trusts, each holding 6,100 shares for the benefit of Mr. Grant's children. The trustee of these trusts
is not a member of the Reporting Person's immediate family. Mr. Grant disclaims beneficial ownership of the shares held by these trusts.
|
|
|
(5)
|
Includes 35,000 shares held by Mr. Hickox's spouse.
|
Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act") requires our directors and executive officers, and persons who beneficially own
more than 10% of a registered class of our equity securities ("reporting persons"), to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of common stock and other equity securities of
the Company. Reporting persons are required by Commission regulations to furnish the Company with copies of all Section 16(a) forms they file.
To our knowledge, based solely on a review of the copies of reports and amendments thereto on Forms 3, 4 and 5 furnished to us by reporting persons and
forms that we filed on behalf of certain directors and officers, during, and with respect to, our fiscal year ended December 31, 2019, and on a review of written representations from reporting persons to us that no other reports were required to be
filed for such fiscal year, all Section 16(a) filing requirements applicable to our reporting persons were satisfied in a timely manner, except that one Form 4 filing by Water Asset Management was inadvertently filed late.
30
As of December 31, 2019, the Audit Committee was composed of Mr. Courter, Mr. Brown and Mr. Hickox. Mr. Brown resigned from the Board of Directors in
February 2020. Mr. Nevins was appointed to the Audit Committee in March 2020. Mr. Courter currently serves as Chairman of the Committee.
Each member of the Committee is an independent director as defined under the listing standards of the NASDAQ Global Market. The Committee operates
under a written charter that is reviewed on an annual basis. During fiscal 2019, the Audit Committee performed all of its duties and responsibilities under its charter. The purpose of the Audit Committee is to assist the Board of Directors in its
oversight of management's control of the Company’s financial reporting processes. In February 2017, the Board designated the Audit Committee to act concomitantly as the Company’s Risk Committee.
Management is responsible for the preparation, presentation, and integrity of the Company’s financial statements, accounting and financial reporting
principles, internal controls, and procedures designed to ensure compliance with accounting standards, applicable laws and regulations. The Audit Committee reviews the Company’s accounting and financial reporting process on behalf of the Board of
Directors. In that regard, the Committee met four times in 2019 in order to expressly exercise the Committee's responsibilities related to the Company's quarterly and annual financial statements for fiscal 2019 and management's assessment of the
effectiveness of our internal controls over financial reporting as of December 31, 2019. During these meetings, the Committee reviewed and discussed with management and PricewaterhouseCoopers LLP, our independent registered public accounting firm,
our consolidated financial statements, including our audited consolidated financial statements for the year ended December 31, 2019, and financial reporting process, including the system of internal controls over financial reporting and significant
accounting policies applied by the Company.
The Audit Committee also reviewed the report of management contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019,
filed with the Securities and Exchange Commission, as well as PricewaterhouseCoopers LLP's Report of Independent Registered Public Accounting Firm included in our 2019 Annual Report on Form 10-K related to its audit of: (i) the consolidated
financial statements and (ii) the effectiveness of internal control over financial reporting. The Audit Committee continues to oversee the Company’s efforts related to its internal control over financial reporting and management's preparations for
the evaluation of its internal controls for fiscal 2020.
The Committee is directly responsible for the appointment, compensation, retention and oversight of the work of PricewaterhouseCoopers LLP. The
Committee regularly meets in executive session with PricewaterhouseCoopers LLP, without management present, to discuss the results of their examinations, evaluations of the Company’s internal controls and the overall quality of the Company’s
financial reporting.
Our independent registered public accounting firm is responsible for performing an independent audit of the consolidated financial statements of the
Company and expressing an opinion on the conformity of our financial statements with U.S. generally accepted accounting principles. The Committee discussed with the Company’s independent registered public accounting firm the scope and plan for its
audits including the review of internal controls prescribed in Section 404 of the Sarbanes-Oxley Act of 2002. The Committee has discussed with PricewaterhouseCoopers LLP the matters that are required to be discussed by the applicable requirements
of the Public Company Accounting Oversight Board. PricewaterhouseCoopers LLP has provided the Committee with the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding
PricewaterhouseCoopers LLP’s communications with the Committee concerning independence, and has discussed with PricewaterhouseCoopers LLP its independence from the Company. The Committee also considered the nature and scope of the non-audit
services provided by PricewaterhouseCoopers LLP to the Company and the compatibility of these services with PricewaterhouseCoopers LLP's independence. The Committee pre-approves all audit and permitted non-audit services to be performed by the
Company’s independent registered public accounting firm pursuant to the terms of the Committee's written charter.
31
In reliance on the reviews and discussions referred to above, the Committee recommended to the Board of Directors, and the Board of Directors approved,
that the audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2019. The Committee also appointed PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2020, and
has recommended that such appointment be submitted to the Company’s stockholders for ratification at the 2020 Annual Meeting of Stockholders.
|
|
THE AUDIT COMMITTEE
|
|
|
|
|
|
Mr. Stephen E. Courter, Chairman
|
|
|
Winston H. Hickox
|
|
|
Richard Nevins
|
For the fiscal years ended December 31, 2019 and 2018, professional services were performed by PricewaterhouseCoopers LLP. The Company's Audit
Committee annually approves the engagement of outside auditors for audit services in advance. The Audit Committee has also established complementary procedures to require pre-approval of all audit-related, tax and permitted non-audit services
provided by PricewaterhouseCoopers LLP, and to consider whether the outside auditors' provision of non-audit services to the Company is compatible with maintaining the independence of the outside auditors. The Audit Committee may delegate
pre-approval authority to one or more of its members. Any such fees pre-approved in this manner shall be reported to the Audit Committee at its next scheduled meeting. All services described below were pre-approved by the Audit Committee.
All fees for services rendered by PricewaterhouseCoopers LLP aggregated $413,000
and $341,000 during the fiscal years ended December 31, 2019 and 2018, respectively, and were composed of the following:
Audit Fees. The aggregate fees accrued by the Company for the audit of the annual financial statements during the fiscal years ended December 31, 2019
and 2018, for reviews of the financial statements included in the Company's Quarterly Reports on Form 10-Q, and for assistance with and review of documents filed with the SEC were $413,000 for 2019 and $341,000 for 2018.
Audit Related Fees. No audit-related fees were billed by PricewaterhouseCoopers LLP to the Company during the fiscal years ended December 31, 2019 and
2018.
Tax Fees. No tax fees were billed by PricewaterhouseCoopers LLP to the Company during the fiscal years ended December 31, 2019 and 2018.
All Other Fees. No other fees were billed during the fiscal years ended December 31, 2019 and 2018.
32
There have been no transactions since the beginning of our last fiscal year with our directors and officers and beneficial owners of more than five percent
of our voting securities and their affiliates requiring disclosure, except for the following:
As previously reported on Form 8-K filed with the SEC, on March 14, 2019, the Company entered into option agreements (the "Option
Agreements") with certain holders of the Company's 7.00% Convertible Senior Notes due 2020 (the "Notes"), including LC Capital Master Fund Ltd. (“Master Fund”). Under the terms of the Option Agreements, the Company was granted the option,
exercisable in its sole discretion, to extend the maturity date of the Notes from March 5, 2020 until September 5, 2021 and this option was required to be exercised, if at all, not later than December 5, 2019.
As previously reported on Form 8-K filed with the SEC, on November 8, 2019, the Company entered into certain amendments (the
“Amendments”) to the Option Agreements between the Company and certain holders of the Notes, including Master Fund. Under the terms of the Amendments, the Company’s previously granted option, exercisable in its sole discretion, to extend the
maturity date of the Notes from March 5, 2020 until September 5, 2021 was amended to be exercised, if at all, not later than March 5, 2020.
As previously reported on Form
8-K filed
with SEC
and announced via press release, on March 5, 2020, the Company
entered into Conversion and Exchange
Agreements (the “Exchange Agreements”) with certain holders (the “Holders”) of the Notes, including Master Fund, having an aggregate original principal amount of $27,381,000. Pursuant to the terms of the Exchange Agreements, the Holders exchanged
an aggregate amount payable of $27,340,875 under the Notes (such portion of the Convertible Notes, the “Exchanged Notes”) for an aggregate of 10,000 shares of Series 1 Preferred Stock, par value $0.01 per share, of the Company (the “Series 1
Preferred Stock”). In addition, pursuant to the terms of the Exchange Agreements, the Holders converted the remaining aggregate amount payable of $17,480,302 under the Notes (excluding the amount payable under the Exchanged Notes) into an aggregate
of 2,589,674 shares of common stock at a conversion price of $6.75 per share of common stock. Following the transactions contemplated by the Exchange Agreements, all of the Notes held by the Holders, including Master Fund, were satisfied in full
and cancelled.
Our Audit Committee Charter requires that the Audit Committee review and approve all related-party transactions between the Company, on the one hand,
and directors, officers, employees, consultants, and any of their family members, on the other hand. In addition, the Company's written Conflicts of Interest policy provides that no employee, officer or director may use or attempt to use his or
her position at the Company to obtain any improper personal benefit for himself or herself, for his or her family, or for any other person.
In order to implement these requirements, the Company requires that, prior to entering into any transaction with the Company, a
related party must advise Company management of the potential transaction. Management will, in turn, provide to the Audit Committee a description of the material terms of the transaction, including the dollar amount, the nature of the related
party's direct or indirect interest in the transaction, and the benefits to be received by the Company from the transaction. The Audit Committee may make such other investigations as it considers appropriate under the circumstances. The Audit
Committee will also consider whether the benefits of the proposed transaction could be obtained by the Company upon better terms from non-related parties, and whether the transaction is one that would be reportable by the Company in our public
filings. The Audit Committee will then make a determination as to whether the proposed transaction is in the best interests of the Company and should therefore be approved.
33
APPROVAL OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has selected PricewaterhouseCoopers LLP as the Company’s independent certified public accountants to audit our financial statements
for the 2020 fiscal year. Stockholder ratification of this appointment is not required by our bylaws or other applicable legal requirements. However, consistent with our past practice, the appointment of PricewaterhouseCoopers LLP is being
submitted to our stockholders for ratification. In the event stockholders do not ratify PricewaterhouseCoopers LLP as the Company’s independent certified public accountants for the 2020 fiscal year, the Audit Committee will reconsider its
selection of PricewaterhouseCoopers LLP, but will not be required to select another firm to audit the Company’s financial statements. Even if the stockholders do ratify the appointment, the Audit Committee, in its discretion, may appoint a
different firm at any time during the year if it believes that such a change would be in the best interests of the Company and our stockholders. PricewaterhouseCoopers LLP has advised us that neither it nor any of its partners or associates has
any direct or indirect financial interest in or any connection with the Company other than as accountants and auditors. A representative of PricewaterhouseCoopers LLP is expected to be present and available to answer appropriate questions at the
2020 Annual Meeting, and will be given the opportunity to make a statement if desired.
Required Vote.
The ratification of the selection of PricewaterhouseCoopers LLP requires the affirmative vote of the holders of a majority of the shares
present through virtual attendance or represented by proxy at the 2020 Annual Meeting and entitled to vote on the matter. You may vote “FOR,” “AGAINST” or “ABSTAIN.” If you ABSTAIN from voting on Proposal 2, the abstention will have the same effect
as an “AGAINST” vote.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE “FOR” PROPOSAL 2
A VOTE “FOR” PROPOSAL 2
34
ADVISORY VOTE ON COMPENSATION OF NAMED EXECUTIVE OFFICERS
This proposal, commonly referred to as a “say-on-pay” proposal, gives our stockholders the opportunity to consider the compensation of our named
executive officers as described in this proxy statement. This proposal is not intended to address any specific item of compensation, but rather to provide an opportunity for our stockholders to express their opinion of the overall compensation
program for our named executive officers and the philosophy, policies and practices described in this proxy statement.
As described more fully in the Compensation Discussion and Analysis section of this proxy statement, the Company is focused on the long-term
development of our significant land and water assets and, as a result, our compensation programs have been designed to attract and retain well-qualified executives with experience in the water, agriculture and asset development sector, a highly
competitive and specialized marketplace, and to encourage achievement of our business and financial objectives for our assets, which are typically long-term in nature. The Compensation Committee has established peer competitive compensation
programs that emphasize incentives that encourage our executive officers to achieve our long-term goals and also align the financial interests of the executive officers and management with those of our stockholders. These long-term incentives are
guided by stockholder approved plans, an important feature of our compensation philosophy and program.
We request that our stockholders consider and approve the following resolution:
“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the
Compensation Discussion and Analysis, the compensation tables and the narrative disclosures is hereby APPROVED.”
Required Vote.
The approval of a non-binding, advisory resolution approving the compensation of the Company’s named executive officers requires the
affirmative vote of the holders of a majority of the shares present through virtual attendance or represented by proxy at the 2020 Annual Meeting and entitled to vote on the matter. You may vote “FOR,” “AGAINST” or “ABSTAIN.” If you ABSTAIN from
voting on Proposal 3, the abstention will have the same effect as an “AGAINST” vote.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE “FOR”
APPROVAL OF THE NON-BINDING ADVISORY RESOLUTION APPROVING THE
COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS.
COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS.
35
The Board of Directors does not know of any other matters that may come before the 2020 Annual Meeting. However, if any other matter shall properly
come before the 2020 Annual Meeting, the proxy holders named in the proxy accompanying this statement will have discretionary authority to vote all proxies in accordance with their best judgment.
Stockholder proposals intended to be presented
at our next annual meeting of stockholders to be held in 2021 must be delivered to or mailed and received at our principal executive offices not less than ninety (90) calendar days but no more than one hundred twenty (120) calendar days in advance
of the date that is the one year anniversary of the date on which the Company first mailed its proxy statement to stockholders in connection with the 2020 Annual Meeting, provided, however, that in the event that the date of the 2021 annual meeting
of stockholders has been changed by more than thirty (30) days from the date that is the one year anniversary of the 2020 Annual Meeting, such notice must be so received not later than the close of business on the tenth (10
th
) day
following the day notice of the date of the meeting was mailed or a public announcement is made by the Company, whichever occurs first. Proposals should be sent to the Secretary of the Company at 550 S. Hope Street, Suite 2850, Los Angeles,
California 90071. Proposals must comply with the proxy rules relating to stockholder proposals, in particular Rule 14a-8 under the Securities Exchange Act, to be included in the Company’s proxy materials. Furthermore, stockholders are advised to
review the Company’s bylaws, which contain additional requirements with respect to advance notice of stockholder proposals and nominations for director candidates.
This proxy statement is accompanied by our Annual Report on Form 10-K for the year ended December 31, 2019. Exhibits to the Form 10-K will be made
available to stockholders for a reasonable charge upon their written request to the Company, Attention: Investor Relations, 550 S. Hope Street, Suite 2850, Los Angeles, California 90071.
A list of stockholders entitled to vote at the 2020 Annual Meeting will be available at https://www.cstproxy.com/cadiz/2020/, which is password protected, for review by our stockholders for any purpose germane to the annual meeting for at least ten days prior to the annual meeting. If you
have any questions with respect to accessing this list, please contact our Investor Relations department at (213) 271-1600.
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By Order of the Board of Directors
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Los Angeles, California
April 22, 2020
36
Important Notice Regarding the Availability of Proxy Materials for the
Annual Meeting of Stockholders to be held June 17, 2020.
The Proxy Statement and our 2019 Annual Report to Stockholders are
available at: https://www.cstproxy.com/cadiz/2020
FOLD HERE • DO NOT SEPARATE • INSDERT IN ENVELOPE PROVIDED
---------------------------------------------------------------------------------------------------------------------
PROXY
CADIZ INC.
SOLICITED ON BEHALF OF THE COMPANY AND APPROVED
BY THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Scott S. Slater and Timothy J. Shaheen, and each of them, as attorneys and proxies of the undersigned, with
full power of substitution, for and in the name, place, and stead of the undersigned, to appear at the fiscal 2020 Annual Meeting of Stockholders of Cadiz Inc. to be held on the 17th day of June 2020 at 10 a.m., local time, virtually via the Internet
at https://www.cstproxy.com/cadiz/2020 (pursuant to the Notice of Annual Meeting dated April 22, 2020, and accompanying proxy statement), and at any postponement or adjournment thereof, and to vote all of the shares of Cadiz Inc. that the undersigned
is entitled to vote with all the powers and authority the undersigned would possess if personally present in accordance with the following instructions.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS, WHICH RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2 AND 3.
(Continued and to be marked, dated and signed, on the other side)
YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY.
Vote by Internet or Telephone - QUICK ◾◾◾EASY
IMMEDIATE - 24 Hours a Day, 7 Days a Week or by Mail
CADIZ INC.
Voting by telephone or Internet is quick,
easy and immediate.
As a Cadiz Inc. stockholder, you have the option of voting your shares electronically through the Internet or your mobile phone, eliminating the need to return the proxy card. Your electronic vote authorizes the named
proxies to vote your shares in the same manner as if you marked, signed, dated and returned the proxy card. Votes submitted electronically over the Internet or by mobile phone must be received by 11:59 p.m., Eastern Standard Time, on June 16, 2020.
INTERNET -
www.cstproxyvote.com
www.cstproxyvote.com
Use the Internet to vote your proxy. Have your proxy card available when you access the above website. Follow the prompts to vote your shares.
VOTE AT THE MEETING -
If you plan to attend the
virtual online annual meeting, you will need your 12 digit control number to vote electronically at the annual meeting. To attend; https://www.cstproxy.com/cadiz/2020
MOBILE VOTING -
On your Smartphone/Tablet, open the QR Reader and scan the below image. Once the voting site is displayed, enter your Control Number from the proxy card and vote your shares.
PLEASE DO NOT RETURN THE PROXY CARD IF YOU ARE
VOTING ELECTRONICALLY
VOTING ELECTRONICALLY
MAIL -
Mark, sign and date your proxy card and return it in the postage-paid envelope provided.
FOLD HERE • DO NOT SEPARATE • INSERT IN ENVELOPE PROVIDED
PROXY
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO DIRECTION IS INDICATED, WILL BE VOTED "FOR" PROPOSALS 1, 2 AND 3.
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1.
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ELECTION OF DIRECTORS
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FOR
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WITHHOLD
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AUTHORITY
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(1)
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Keith Brackpool
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☐ | ☐ | ||||||||||||||
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(2)
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Stephen E. Courter
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(3)
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Maria Echaveste
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(4)
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Geoffrey Grant
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☐
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(5)
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Winston Hickox
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(6)
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Murray H. Hutchison
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(7)
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Richard Nevins
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(8)
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Scott S. Slater
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(9)
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Carolyn Webb de Macias
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(To withhold authority to vote for any individual nominee, strike a line through that nominee's name in the list above)
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2.
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Ratification of PricewaterhouseCoopers LLP as independent auditor.
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FOR
☐
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AGAINST
☐
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ABSTAIN
☐
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3.
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Advisory vote on executive compensation as disclosed in the proxy materials.
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FOR
☐
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AGAINST
☐
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ABSTAIN
☐
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4.
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In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting.
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CONTROL NUMBER:
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Signature(s)
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Signature(s)
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Date
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Please sign exactly as name appears hereon. When shares are held by joint owners, both should sign. When signing as attorney, executor, administrator,
trustee, or guardian, please give title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person.
TABLE OF CONTENTS
INFORMATION ABOUT SOLICITATION AND VOTINGRecord Date, Voting Securities and QuorumRevocability of ProxiesCost of SolicitationPROPOSAL 1: ELECTION OF DIRECTORSDIRECTORS AND EXECUTIVE OFFICERSTHE BOARD OF DIRECTORSDirector IndependenceIndependence of Committee MembersCommunications with the Board of DirectorsMeetings and Committees of the Board of DirectorsCODE OF ETHICSANTI-HEDGING AND PLEDGING POLICYCOMPENSATION DISCUSSION AND ANALYSISOverviewCompensation PhilosophyElements of CompensationUse of Independent Compensation ConsultantUse of Peer GroupBenchmarkingPerformance ObjectivesElements of 2019 CompensationSeverance and Change in Control ProvisionsTax and Accounting ConsiderationsCOMPENSATION COMMITTEE REPORTEXECUTIVE COMPENSATIONSummary Compensation TableGrants of Plan-Based AwardsOutstanding Equity Awards at Fiscal Year-EndOption Exercises and Stock VestedPension BenefitsNonqualified Deferred CompensationEMPLOYMENT ARRANGEMENTSPOTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROLDIRECTOR COMPENSATIONDIRECTOR COMPENSATION POLICYDIRECTOR STOCK OWNERSHIP POLICYEQUITY COMPENSATION PLAN INFORMATIONPAY RATIO DISCLOSURECOMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATIONSECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTDELINQUENT SECTION 16(A) REPORTSAUDIT COMMITTEE REPORTPRINCIPAL ACCOUNTANT FEES AND SERVICESCERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSPOLICIES AND PROCEDURES WITH RESPECT TO RELATED PARTY TRANSACTIONSPROPOSAL 2: APPROVAL OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMPROPOSAL 3: ADVISORY VOTE ON COMPENSATION OF NAMED EXECUTIVE OFFICERSOTHER MATTERSSTOCKHOLDER PROPOSALSADDITIONAL INFORMATION