PEDEVCO CORP
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment
No. __)
Filed
by the Registrant
☑
Filed
by a Party other than the Registrant
☐
Check
the appropriate box:
[
]
Preliminary Proxy
Statement
☐
Confidential, For Use of the Commission Only
(As Permitted by Rule 14a-6(e)(2))
☑
Definitive Proxy Statement
☐
Definitive Additional Materials
☐
Soliciting Material under Rule
14a-12
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PEDEVCO CORP.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
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Payment
of Filing Fee (Check the appropriate box):
☑
No fee required
☐
Fee computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11.
(1)
Title of each class of securities to which transaction
applies:
(2)
Aggregate number of securities to which transaction
applies:
(3) Per
unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on
which the filing fee is calculated and state how it
was determined):
(4)
Proposed maximum aggregate value of transaction:
(5)
Total fee paid:
☐
Fee paid previously with preliminary
materials.
☐
Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and identify the filing
for which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the form or
schedule and the date of its filing.
(1)
Amount Previously Paid:
(2)
Form, Schedule or Registration Statement No.:
(3)
Filing Party:
(4)
Date Filed:
PEDEVCO CORP.
575 N.
Dairy Ashford, Suite 210
Houston,
Texas 77079
(713)
221-1768
July
10, 2020
Dear
Stockholder:
The
board of directors and officers of PEDEVCO Corp., a Texas
corporation, join me in extending to you a cordial invitation to
attend the 2020 annual meeting of our stockholders, which we refer
to as the annual meeting. This meeting will be held
on Thursday, August 27, 2020 at 10:00 a.m. central time.
Due to the significant public health impact of the coronavirus
pandemic (COVID-19) and to support and protect the health and
well-being of our officers, directors and stockholders, the annual
meeting will be held in a virtual meeting format only. You will not
be able to attend the annual meeting physically. The annual meeting
will be held via an audio teleconference. Stockholders may attend,
vote and submit questions during the annual meeting via the
Internet by logging in at
http://issuerdirect.com/virtual-event/ped
(please note this link is case sensitive) with your Control ID and
Request ID, and thereafter following the instructions to join
the virtual meeting. In addition to voting by submitting your proxy
prior to the annual meeting and/or voting online as discussed
herein, you also will be able to vote your shares electronically
during the annual meeting. We expect to resume in person
stockholder meetings in successive years. Details regarding the
business to be conducted are more fully described in the
accompanying Notice of Annual Meeting and Proxy
Statement.
As
permitted by the rules of the Securities and Exchange Commission
(the “
SEC
” or the
“
Commission
”), we have
provided access to our proxy materials over the Internet.
Accordingly, we are sending a Notice of Internet Availability of
Proxy Materials, or E-proxy notice, on or about July 10, 2020 to
our stockholders of record as of the close of business on July 9,
2020. The E-proxy notice contains instructions for your use of this
process, including how to access our proxy statement and annual
report and how to authorize your proxy to vote. In addition, the
E-proxy notice contains instructions on how you may receive a paper
copy of the proxy statement and annual report or elect to receive
your proxy statement and annual report over the Internet. We
believe these rules allow us to provide you with the information
you need while lowering the costs of delivery and reducing the
environmental impact of the annual meeting.
To be
admitted to the virtual annual meeting, stockholders must enter the
Control ID and Request ID numbers found on their proxy card or
E-proxy notice at the website provided above, at the time of the
virtual annual meeting. If you are unable to attend the virtual
annual meeting, it is very important that your shares be
represented and voted at the meeting. You may authorize your proxy
to vote your shares over the Internet as described in the E-proxy
notice. Alternatively, if you received a paper copy of the proxy
card by mail, please complete, date, sign and promptly return the
proxy card. You may also authorize your proxy to vote your shares
by telephone or fax as described in your proxy
card.
If you authorize your
proxy to vote your shares over the Internet, return your proxy card
by mail or vote by telephone prior to the annual meeting, you may
nevertheless revoke your proxy and cast your vote personally at the
meeting.
We look
forward to your participation at the August 27, 2020 annual
meeting. Your vote and participation in our governance is very
important to us.
Sincerely,
/s/ John J. Scelfo
John J.
Scelfo, Chairman
Important Notice Regarding the Availability of Proxy Materials for
the Virtual Annual Meeting of Stockholders to Be Held on August 27,
2020.
Our
proxy statement and Annual Report on Form 10-K for the year ended
December 31, 2019 are available at the following cookies-free
website that can be accessed anonymously:
https://www.iproxydirect.com/PED
.
PEDEVCO CORP.
575 N. Dairy Ashford, Suite 210
Houston, Texas 77079
(713) 221-1768
___________________________
NOTICE OF VIRTUAL ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 27, 2020
___________________________
To the
Stockholders of PEDEVCO Corp.:
We are pleased to provide you notice of, and to
invite you to attend, the 2020 annual meeting of the stockholders
of PEDEVCO Corp., a Texas corporation, which will be held in a
virtual meeting format only, by live audio webcast, on Thursday,
August 27, 2020 at 10:00 a.m. Central time.
Stockholders may attend, vote and
submit questions during the annual meeting via the Internet by
logging in at
http://issuerdirect.com/virtual-event/ped
(please note this link is case
sensitive) with your Control ID and Request ID, and thereafter
following the instructions to join the virtual meeting. The annual
meeting is being held for the following
purposes:
1.
To
consider and vote upon a proposal to elect four directors to the
board of directors, each to serve a term of one year and until
their respective successors have been elected and qualified, or
until their earlier resignation or removal, as named in, and set
forth in greater detail in this proxy statement.
2.
To
consider and vote upon a proposal to ratify the appointment of
Marcum LLP, as our independent auditors for the fiscal year ending
December 31, 2020.
3.
To
consider a non-binding advisory vote on compensation of our named
executive officers.
4.
To
consider a non-binding advisory vote on the frequency of the
advisory vote on compensation of our named executive
officers.
5.
To
transact such other business as may properly come before the annual
meeting or any adjournment or postponement thereof.
THE BOARD, INCLUDING THE INDEPENDENT DIRECTORS, UNANIMOUSLY
RECOMMENDS THAT YOU VOTE “
FOR
”
EACH OF PROPOSALS ONE THROUGH THREE, AND FOR
“
THREE
YEARS
” FOR
PROPOSAL FOUR.
We do
not expect to transact any other business at the annual meeting.
Our board of directors has fixed the close of business on July
9, 2020 as the record date for determining those stockholders
entitled to vote at the annual meeting and any adjournment or
postponement thereof. Accordingly, only stockholders of record at
the close of business on that date are entitled to notice of, and
to vote at, the annual meeting. A complete list of our stockholders
will be available for examination at our offices in Houston, Texas,
during ordinary business hours for a period of 10 days prior
to the annual meeting.
We
cordially invite you to attend the virtual annual meeting if you
were a stockholder of record who owned the Company’s common
stock shares at the close of business on July 9, 2020. However, to
ensure your representation at the annual meeting, please authorize
the individuals named on your proxy card to vote your shares by
calling the toll-free telephone number, faxing your proxy card or
by using the Internet as described in the instructions included
with your proxy card or voting instruction card. Alternatively, if
you received a paper copy of the proxy card by mail, please
complete, date, sign and promptly return the proxy card. This will
not prevent you from voting at the meeting, but will help to secure
a quorum and avoid added solicitation costs. If your shares are
held in “
street
name
” by your broker or other nominee, only that
holder can vote your shares and the vote cannot be cast unless you
provide instructions to your broker. You should follow the
directions provided by your broker regarding how to instruct your
broker to vote your shares. Your proxy may be revoked at any time
before it is voted. Please review the proxy statement accompanying
this notice for more complete information regarding the matters to
be voted on at the meeting.
The
enclosed proxy statement, which is first being mailed to
stockholders on July 10, 2020, is also available
at
https://www.iproxydirect.com/PED
.
This website also includes copies of the form of proxy and our
Annual Report on Form 10-K for the year ended December 31, 2019,
which we refer to as the 2019 annual report. Stockholders may also
request a copy of the proxy statement and our annual report by
contacting our main office at (713) 221-1768.
Even
if you plan to attend the virtual annual meeting, we request that
you submit a proxy by following the instructions on your proxy card
as soon as possible and thus ensure that your shares will be
represented at the annual meeting if you are unable to
attend.
By
Order of the Board of Directors
/s/ John J. Scelfo
John J.
Scelfo
Chairman
Houston,
Texas
July
10, 2020
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IMPORTANT: WHETHER OR NOT YOU PLAN TO ATTEND THE VIRTUAL ANNUAL
MEETING, WE ASK YOU TO VOTE BY TELEPHONE, MAIL, FAX OR ON THE
INTERNET USING THE INSTRUCTIONS ON THE PROXY CARD.
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TABLE OF CONTENTS
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GENERAL
INFORMATION
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1
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Information
Contained in This Proxy Statement
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1
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Important Notice
Regarding the Availability of Proxy Materials
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1
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Meeting Time and
Location
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1
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Reason
for Holding a Virtual Meeting
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1
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Procedures at the
Virtual Meeting
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2
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Record
Date and Shares Entitled to Vote
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2
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Voting
Process
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2
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Attendance at the
Annual Meeting
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3
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Conduct at the
Meeting
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3
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Quorum
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3
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Votes
Required to Approve Each Proposal
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3
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Broker
Non-Votes and Abstentions
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4
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Board
of Directors Voting Recommendations
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5
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Inspector of
Voting
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5
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Stockholders
Entitled to Vote at the Meeting
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5
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Voting
Instructions
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5
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Confidential
Voting
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5
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Stockholder of
Record and Shares Held in Brokerage Accounts
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5
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Multiple
Stockholders Sharing the Same Address
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6
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Voting
Results
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6
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Company Mailing
Address
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6
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INCORPORATION
BY REFERENCE
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6
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VOTING
RIGHTS AND PRINCIPAL STOCKHOLDERS
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6
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Security Ownership
of Management and Certain Beneficial Owners and
Management
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6
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Changes in
Control
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9
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CORPORATE
GOVERNANCE
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9
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Board
Leadership Structure
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9
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Risk
Oversight
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9
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Family
Relationships
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9
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Other
Directorships
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9
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Arrangements
Between Officers and Directors
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10
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Involvement in
Certain Legal Proceedings
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10
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COMMITTEES
OF THE BOARD
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10
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Audit
Committee
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11
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Compensation
Committee
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11
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Compensation
Committee Interlocks and Insider Participation
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11
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Nominating and
Corporate Governance Committee
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11
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Stockholder
Communications with the Board of Directors
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12
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Executive Sessions
of the Board of Directors
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12
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Director
Independence
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12
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Website
Availability of Documents
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12
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Insider
Trading/Anti-Hedging Policies
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13
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Policy
on Equity Ownership
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13
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Compensation
Recovery
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13
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Code
of Ethics
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13
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Report
of Audit Committee
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13
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AUDIT
COMMITTEE REPORT
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13
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EXECUTIVE
OFFICERS
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15
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EXECUTIVE
COMPENSATION
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16
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Summary
Compensation Table
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16
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Outstanding Equity
Awards at Fiscal Year-End
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17
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Issuances of
Equity to Executive Officers
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18
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Compensation of
Directors
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19
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Securities
Authorized for Issuance Under Equity Compensation
Plans
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20
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Equity
Compensation Plan Information
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20
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2017
Say on Pay Vote
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23
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Agreements with
Current Named Executive Officers
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23
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Temporary Salary
Reductions and Amendments to Employment Agreements
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25
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Agreements with
Former Named Executive Officers
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25
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CERTAIN
RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
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27
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Related
Transactions
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27
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Review
and Approval of Related Party Transactions
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31
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Delinquent Section
16(a) Reports
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31
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PROPOSAL
1 ELECTION OF DIRECTORS
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32
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PROPOSAL
2 RATIFICATION OF APPOINTMENT OF AUDITORS
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36
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PROPOSAL
3 NON-BINDING ADVISORY VOTE ON EXECUTIVE COMPENSATION
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37
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PROPOSAL
4 NON-BINDING ADVISORY VOTE ON THE FREQUENCY OF
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HOLDING
ADVISORY VOTES ON EXECUTIVE COMPENSATION
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38
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ADDITIONAL
INFORMATION AND MATTERS
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38
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Stockholder
Proposals for 2021 Annual Meeting of Stockholders and 2021 Proxy
Materials
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38
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Additional
Filings
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39
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Documents
Incorporated by Reference
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39
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Other
Matters
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39
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Interest of
Certain Persons in or Opposition to Matters to Be Acted
Upon:
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40
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Company Contact
Information
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40
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PEDEVCO CORP.
PROXY STATEMENT
FOR 2020 VIRTUAL ANNUAL MEETING OF STOCKHOLDERS
PEDEVCO Corp. (“
PEDEVCO,
”
“
we,
”
“
us
”, “
our
”
or the “
Company
”)
has made these materials available to you on the Internet or, upon
your request, has delivered printed versions of these materials to
you by mail, in connection with the Company’s 2020 virtual
annual meeting of stockholders, which we refer to as our annual
meeting, to be held on Thursday, August 27, 2020 at 10:00 a.m.,
Central time, at
http://issuerdirect.com/virtual-event/ped
(please note this link is case
sensitive), and at any postponement(s) or adjournment(s) thereof.
These materials were first sent or given to stockholders on July
10, 2020. You are invited to attend the virtual annual meeting and
are requested to vote on the proposals described in this Proxy
Statement.
The information in this proxy statement relates
to the proposals to be voted on at the annual meeting, the voting
process, the compensation of our directors and executive officers,
corporate governance, and certain other required information.
Included with this proxy statement is a copy of the
Company’s
Annual
Report on Form 10-K
for the
year ended December 31, 2019, as filed with the SEC on March 30,
2020, which we refer to as the 2019 annual report. If you requested
printed versions of these materials by mail, these materials also
include the proxy card or vote instruction form for the annual
meeting.
Pursuant to rules
adopted by the SEC, the Company uses the Internet as the primary
means of furnishing proxy materials to stockholders. Accordingly,
the Company is sending a Notice of Internet Availability of Proxy
Materials, which we refer to as the notice, to the Company’s
stockholders. All stockholders will have the ability to access the
proxy materials (including the Company’s Annual Report on
Form 10-K, which does not constitute a part of, and shall not be
deemed incorporated by reference into, this proxy statement or the
enclosed form of proxy) via the Internet at
https://www.iproxydirect.com/PED
or
request a printed set of the proxy materials. Instructions on how
to access the proxy materials over the Internet or to request a
printed copy may be found in the notice. The notice contains a
Control ID and Request ID that you will need to vote your shares
and access the virtual annual meeting. Please keep the notice for
your reference through the meeting date. In addition, stockholders
may request to receive proxy materials in printed form by mail or
electronically by email on an ongoing basis. The Company encourages
stockholders to take advantage of the availability of the proxy
materials on the Internet to help reduce the environmental impact
of its annual meetings.
The
Company’s 2020 virtual annual meeting of stockholders will be
held on Thursday, August 27, 2020 at 10:00 a.m., Central time. The
annual meeting will be a virtual meeting of stockholders, which
will be conducted via live audio webcast, accessible at
http://issuerdirect.com/virtual-event/ped
(please note this link is case sensitive). Additional information
on how to access the virtual annual meeting can be found below
under “
Attendance at the
Annual Meeting
”.
Due to
the significant public health impact of the coronavirus pandemic
(COVID-19), as a result of various ‘stay-at-home’ and
no travel orders and suggestions, and to support and protect the
health and well-being of our officers, directors and stockholders,
we have decided that the annual meeting will be held in a virtual
meeting format only. You will not be able to attend the annual
meeting physically. The annual meeting will be held via an audio
teleconference. See also “
Attendance at the
Annual Meeting
” below.
1
Stockholders may
attend, vote and submit questions during the annual meeting via the
Internet by logging in at
http://issuerdirect.com/virtual-event/ped
(please note this link is case sensitive) with your Control ID and
Request ID, and thereafter following the instructions to join the
virtual meeting. Questions will be relayed to the meeting
organizers and forwarded to the Chairman of the meeting for review.
Questions regarding matters to be acted upon at the meeting will be
answered after each matter has been presented, as
appropriate.
Questions
from stockholders not relating to proposals will be grouped by
topic with a representative question read aloud and answered as
time permits and to the extent such questions do not relate to
material non-public information, off-topic items or other matters
which the Chairman in his discretion, believes should not be
addressed at the annual meeting.
Our
board of directors has fixed the close of business on July 9, 2020
as the record date for determining the holders of shares of our
voting stock entitled to receive notice of and to vote at our
annual meeting and any adjournments or postponements thereof. Only
holders of record of shares of common stock at the close of
business on that date will be entitled to vote at our annual
meeting and at any adjournment or postponement of that meeting. As
of the record date, there were 72,125,328 shares of common stock
outstanding and entitled to vote at our annual meeting, held by
approximately 752 holders of record.
Each
share of common stock is entitled to one vote on each proposal
presented at our annual meeting and at any adjournment or
postponement thereof, for 72,125,328 total voting shares.
Stockholders do not have the right to cumulate their votes in the
election of directors
In
order for us to satisfy our quorum requirements, the holders of at
least 33 1/3% of our total number of outstanding voting shares
entitled to vote at the meeting must be present. You will be deemed
to be present if you attend the meeting or if you submit a proxy
(including through the mail, by fax or by telephone or the
Internet) that is received at or prior to the meeting (and not
revoked).
If your
proxy is properly executed and received by us in time to be voted
at our annual meeting, the shares represented by your proxy
(including those given through the mail, by fax or by telephone or
the Internet) will be voted in accordance with your instructions.
If you execute your proxy but do not provide us with any
instructions, your shares will be voted “
FOR
” the proposals set
forth in the notice of annual meeting.
The
only matters that we expect to be presented at our annual meeting
are set forth in the notice of annual meeting. If any other matters
properly come before our annual meeting, the persons named in the
proxy card will vote the shares represented by all properly
executed proxies on such matters in their best
judgment.
If you
are a stockholder of record, there are five ways to
vote:
●
At
the meeting
. You may vote your shares at the virtual annual
meeting. Instructions regarding how to vote will be provided when
you log into the meeting web site.
●
Via
the Internet
. You may vote by proxy via the Internet by
following the instructions provided in the notice.
●
By
Telephone
. If you request printed copies of the proxy
materials by mail, you may vote by proxy by calling the toll-free
number found on the proxy card.
●
By
Fax
. If you request printed copies of the proxy materials by
mail, you may vote by proxy by faxing your proxy to the number
found on the proxy card.
●
By
Mail
. If you request printed copies of the proxy materials
by mail, you may vote by proxy by filling out the proxy card and
returning it in the envelope provided.
Revocability of Proxies
The
presence of a stockholder at our annual meeting will not
automatically revoke that stockholder’s proxy. However, a
stockholder may revoke a proxy at any time prior to its exercise
by:
●
submitting a
written revocation prior to the annual meeting to the Corporate
Secretary, PEDEVCO Corp., 575 N. Dairy Ashford, Suite 210, Houston,
Texas 77079;
●
submitting another
signed and later dated proxy card and returning it by mail in time
to be received before our annual meeting or by submitting a later
dated proxy by the Internet or telephone prior to the annual
meeting; or
●
attending our
annual meeting and voting at the meeting through the web
portal.
2
Attendance at the
annual meeting is limited to holders of record of our common stock
at the close of business on the record date, July 9, 2020 and our
guests.
Stockholders of
record as of the record date may attend the annual meeting via the
Internet by logging in at
http://issuerdirect.com/virtual-event/ped
(please note this link is case sensitive) with your Control ID and
Request ID, and thereafter following the instructions to join
the virtual meeting. Stockholders participating in the annual
meeting will be able to listen only and will not be able to speak
during the webcast. However, in order to maintain the interactive
nature of the annual meeting, virtual attendees will be able
to:
● submit
questions or comments to the Company’s officers during the
annual meeting via the online portal. Information on how to submit
questions will be provided at the time of the meeting once
stockholders login.
To the
best of our knowledge, the virtual annual meeting platform is fully
supported across browsers (Internet Explorer, Firefox, Chrome, and
Safari) and devices (desktops, laptops, tablets, and cell phones)
running the most updated version of applicable software and
plugins. Participants should ensure they have a strong Internet
connection wherever they intend to participate in the annual
meeting. Participants should also allow plenty of time to log in
and ensure that they can hear streaming audio prior to the start of
the annual meeting.
If
shares of our common stock are held on your behalf in a brokerage
account or by a bank or other nominee, you are considered to be the
beneficial owner of shares that are held in “
street name
”. As the
beneficial owner, you have the right to direct your broker, bank or
other nominee as to how to vote your shares in the manner provided
in the voting instructions you receive from your broker, bank or
other nominee. If you request a printed copy of our proxy materials
by mail, your broker, bank or other nominee will provide a voting
instruction form for you to use. Street name stockholders are also
invited to attend the virtual annual meeting, provided that such
stockholders must contact Emily Watson at
proxy@issuerdirect.com
in advance of the virtual annual meeting, and prior to August 19,
2020, and present proof of their ownership of common stock, such as
a bank or brokerage account statement indicating that they owned
shares of common stock at the close of business on the record date,
in order to be issued a Control ID and Request ID in order to
access the virtual annual meeting. Additionally, because a street
name stockholder is not the stockholder of record, you may not vote
your shares of our common stock virtually at the annual meeting
unless you follow your broker, bank or other nominee’s
procedures for obtaining a legal proxy.
If you
encounter any difficulties accessing the virtual meeting during the
check-in or meeting time, please call the technical support number
that will be posted on the login page at
http://issuerdirect.com/virtual-event/ped
(please note this link is case sensitive).
The Chairman of the meeting has broad
responsibility and legal authority to conduct the annual meeting in
an orderly and timely manner. Rules regarding the annual meeting
and the procedure for asking questions at the annual meeting will
be posted at the web portal located at
http://issuerdirect.com/virtual-event/ped
(please note this link is case
sensitive), once you login.
If you
vote at the annual meeting or by proxy at our annual meeting, you
will be counted for purposes of determining whether there is a
quorum at the meeting. Shares of our capital stock present in
person or by proxy at our annual meeting that are entitled to vote
will be counted for the purpose of determining whether there is a
quorum for the transaction of business at our annual meeting. Our
bylaws, as amended, provide that 33 1/3% of the outstanding shares
of our capital stock entitled to vote at the meeting, represented
in person or by proxy, constitutes a quorum at a meeting of our
stockholders.
Appointment of
directors
. With respect to the election of directors
(proposal 1), under plurality voting, the four nominees receiving
the highest number of affirmative votes of our common stock will be
elected as directors to serve until the next annual meeting of
stockholders and until their successors are duly elected and
qualified.
Ratification of independent
auditor
. For the approval of the proposal to ratify the
appointment of Marcum LLP as our independent auditors for the
fiscal year ended December 31, 2020 (proposal 2), a majority of the
shares present in person or represented by proxy at the annual
meeting and entitled to vote on, and who voted for, against, or
expressly abstained with respect to, the proposal, must be voted
“
FOR
”
approval and adoption of such proposal in order for such proposal
to be approved and adopted, assuming a quorum is present at the
annual meeting.
3
Approval on
a non-binding basis of executive compensation
. For the approval of executive compensation
(proposal 3), a majority of the shares present in person or
represented by proxy at the annual meeting and entitled to vote on,
and who voted for, against, or expressly abstained with respect to,
the proposal, must be voted “
FOR
” approval and adoption of such proposal in
order for such proposal to be approved and adopted, assuming a
quorum is present at the annual meeting, provided that such vote is
non-binding and advisory in nature.
Approval on
a non-binding basis of the frequency of holding future advisory
votes on executive compensation
. For the approval of the frequency of holding
future advisory votes on executive compensation (proposal 4), the
final vote will not be binding on us and is advisory in nature, and
no minimum level of votes is required to be obtained on any voting
option. Instead, the option (1 year, 2 years or 3 years), if any,
that receives the greatest number of affirmative votes of the
shares (i.e., a plurality of the votes cast) present in person or
represented by proxy at the meeting and entitled to vote will be
determined to be approved by the Company’s stockholders,
provided that the final vote will not be binding on us and is
advisory in nature. The Board will carefully consider the voting
results in their entirety in determining the frequency of holding
future advisory votes on the compensation of our named executive
officers moving forward.
A
broker “
non-vote
” occurs when a
nominee holding shares for a beneficial owner does not vote on a
particular proposal because the nominee does not have discretionary
voting power with respect to that item, and the broker has not
received voting instructions from the beneficial owner. If a broker
indicates on the proxy that it does not have discretionary
authority as to certain shares to vote on a particular matter,
those shares will not be considered as present and entitled to vote
with respect to that matter or proposal.
A
broker is entitled to vote shares held for a beneficial owner on
“
routine
” matters, such as
the ratification of the appointment of Marcum LLP as our
independent registered public accounting firm (proposal 2), without
instructions from the beneficial owner of those shares. On the
other hand, absent instructions from the beneficial owner of such
shares, a broker is not entitled to vote shares held for a
beneficial owner on certain “
non-routine
” matters,
which include all of the other proposals up for vote at the annual
meeting.
With
respect to the election of directors (proposal 1), under plurality
voting, broker non-votes and abstentions have no effect on
determining the nominees elected, except to the extent that they
affect the total votes received by any particular candidate. If you
hold your shares in street name and you do not instruct your broker
how to vote in the election of directors, the broker will not vote
your shares in the director election.
With
respect to the proposal to approve executive compensation (proposal
3), broker non-votes and abstentions could prevent the proposal
from receiving the affirmative vote of a majority of the shares
present in person or represented by proxy at the annual meeting and
entitled to vote on, and who voted for, against, or expressly
abstained with respect to, such proposal, provided that such
proposal is non-binding and advisory in nature.
With respect to the advisory vote on the frequency
of holding future advisory votes on the compensation of our named
executive officers (Proposal 4), stockholders have four voting
options (“
1
year
”,
“
2
years
”,
“
3
years
” or
“
abstain
”),
provided that the final vote will not be binding on us and is
advisory in nature, and no minimum level of votes is required to be
obtained on any voting option. Instead, the option (1 year, 2
years or 3 years), if any, that receives the greatest number of
affirmative votes of the shares (i.e., a plurality of the votes
cast) present in person or represented by proxy at the meeting and
entitled to vote will be determined to be approved by the
Company’s stockholders, provided that the final vote will not
be binding on us and is advisory in nature. The Board will
carefully consider the voting results in their entirety in
determining the frequency of holding future advisory votes on the
compensation of our named executive officers moving
forward.
Abstaining shares
will be considered present at the annual meeting and
“
entitled to
vote
” on the applicable provisions so that the effect
of abstentions will be the equivalent of a vote “
AGAINST
” each applicable
proposal. With respect to broker non-votes, the shares subject to a
broker non-vote will not be considered present at the annual
meeting for each proposal, since they are not “
entitled to vote
” on such
proposals, so broker non-votes will have the practical effect of
reducing the number of affirmative votes required to achieve a
majority vote of the shares present in person or represented by
proxy at the annual meeting and entitled to vote on such applicable
proposals, by reducing the total number of shares from which the
majority is calculated.
4
Our
board of directors recommends that you vote your
shares:
● “
FOR
”
election of all four director nominees to the board of directors,
each to serve a term of one year and until their respective
successors have been elected and qualified, or until their earlier
resignation or removal (proposal 1);
● “
FOR
”
ratification of the appointment of Marcum LLP, as our independent
auditors for the fiscal year ending December 31, 2020 (proposal
2);
●
“
FOR
”
the approval of the non-binding advisory resolution approving the
Company’s executive compensation (proposal 3);
and
● “
3
YEARS
” for the proposal regarding an advisory vote on
the frequency of the advisory vote on executive compensation
(proposal 4).
Mailing
Costs and Solicitation of Proxies
In
addition to solicitation by use of the mails, certain of our
officers and employees may solicit the return of proxies personally
or by telephone, electronic mail or facsimile. We have not and do
not anticipate retaining a third-party proxy solicitation firm to
solicit proxies on behalf of the board of directors. The cost of
any solicitation of proxies will be borne by us. Arrangements may
also be made with brokerage firms and other custodians, nominees
and fiduciaries for the forwarding of material to, and solicitation
of proxies from, the beneficial owners of our securities held of
record at the close of business on the record date by such persons.
We will reimburse such brokerage firms, custodians, nominees and
fiduciaries for the reasonable out-of-pocket expenses incurred by
them in connection with any such activities.
It is
anticipated that representatives of Issuer Direct Corporation will
tabulate the votes and act as inspector of election at the Annual
Meeting.
A complete list of stockholders entitled to vote
at the annual meeting will be available for examination at our
principal executive offices (575 N. Dairy Ashford, Suite 210,
Houston, Texas 77079), for any purpose germane to the annual
meeting, during ordinary business hours, for a period of ten days
prior to the annual meeting. The list of stockholders will
also be available during the annual meeting through the annual
meeting website (
http://issuerdirect.com/virtual-event/ped
)
for those stockholders who choose to attend.
You will need your Control ID and Request ID in
order to access the virtual annual meeting and review the list of
stockholders.
Your
vote is very important. Whether or not you plan to attend the
annual meeting, we encourage you to read this proxy statement and
submit your proxy or voting instructions as soon as possible. For
specific instructions on how to vote your shares, please refer to
the instructions on the Notice of Internet Availability of Proxy
Materials you received in the mail, or, if you requested to receive
printed proxy materials, your enclosed proxy card.
Independent
inspectors count the votes. Your individual vote is kept
confidential from us unless special circumstances exist. For
example, a copy of your proxy card will be sent to us if you write
comments on the card, as necessary to meet applicable legal
requirements, or to assert or defend claims for or against the
Company.
If on
the record date your shares were registered in your name with our
transfer agent, then you are a stockholder of record and you may
vote in person at the meeting, by proxy or by any other means
supported by us. If on the record date your shares were held in an
account at a brokerage firm, bank, dealer, or other similar
organization, then you are the beneficial owner of shares held in
“
street
name
” and the proxy statement is required to be
forwarded to you by that organization. The organization holding
your account is considered the stockholder of record for purposes
of voting at the annual meeting. As a beneficial owner, you have
the right to direct your broker or other agent on how to vote the
shares in your account. You are also invited to attend the virtual
annual meeting. However, since you are not the stockholder of
record, you may not vote your shares in person at the meeting
unless you request and obtain a valid proxy from your broker or
other agent. Additionally, you must contact Emily Watson at
proxy@issuerdirect.com in advance of the virtual annual meeting and
present proof of your ownership of common stock, such as a bank or
brokerage account statement indicating that you owned shares of
common stock at the close of business on the record date, in order
to be issued a Control ID and Request ID in order to access the
virtual annual meeting.
5
In some
cases, one copy of this proxy statement and the accompanying notice
of annual meeting of stockholders, and 2019 annual report, is being
delivered to multiple stockholders sharing an address, at the
request of such stockholders. We will deliver promptly, upon
written or oral request, a separate copy of this proxy statement or
the accompanying notice of annual meeting of stockholders, and 2019
annual report, to such a stockholder at a shared address to which a
single copy of the document was delivered. Stockholders sharing an
address may also submit requests for delivery of a single copy of
this proxy statement or the accompanying notice of annual meeting
of stockholders, and 2019 annual report, but in such event will
still receive separate forms of proxy for each account. To request
separate or single delivery of these materials now or in the
future, a stockholder may submit a written request to our Corporate
Secretary, Clark R. Moore, at our principal executive offices at
575 N. Dairy Ashford, Suite 210, Houston, Texas 77079, or a
stockholder may make a request by calling our Corporate Secretary,
Clark R. Moore at (713) 221-1768.
If you receive more than one notice, it means
that your shares are registered differently and are held in more
than one account. To ensure that all shares are voted, please
either vote each account as discussed above under
“
Voting
Process
”, or sign
and return by mail all proxy cards or voting instruction
forms.
The
final voting results will be tallied by the inspector of voting and
published in our Current Report on Form 8-K, which we are required
to file with the SEC within four business days following the annual
meeting.
The
mailing address of our principal executive offices is 575 N. Dairy
Ashford, Suite 210, Houston, Texas 77079.
To the extent that this proxy statement has been
or will be specifically incorporated by reference into any other
filing of the Company under the Securities Act of 1933, as amended,
or the Securities Exchange Act of 1934, as amended (the
“
Exchange
Act
”), the section of
this proxy statement titled “
Audit Committee
Report
” (to the extent
permitted by the rules of the U.S. Securities and Exchange
Commission (the “
SEC
” or the “
Commission
”))
shall not be deemed to be so incorporated, unless specifically
provided otherwise in such filing.
Holders
of record of our common stock at the close of business on the
record date, July 9, 2020, will be entitled to one vote per share
on all matters properly presented at the annual meeting and at any
adjournment or postponement thereof. As of the record date, there
were 72,125,328 shares of common stock outstanding and entitled to
vote at the annual meeting and at any adjournment or postponement
thereof, held by approximately 752 holders of record. Each share of
common stock is entitled to one vote on each proposal presented at
our annual meeting, for 72,125,328 total voting
shares.
Our
stockholders do not have dissenters’ rights or similar rights
of appraisal with respect to the proposals described herein and,
moreover, do not have cumulative voting rights with respect to the
election of directors.
The
following table sets forth, as of the record date, July 9, 2020,
the number and percentage of outstanding shares of our common stock
beneficially owned by: (a) each person who is known by us to be the
beneficial owner of more than 5% of our outstanding shares of
common stock; (b) each of our directors; (c) our executive officers
(including former executive officers who are “Named Executive
Officers” in our 2019 annual report); and (d) all current
directors, our director nominees and executive officers, as a
group. As of the record date,
there
were
72,125,328
shares of
common stock and no shares of Series A Convertible Preferred
Stock issued and outstanding.
Beneficial
ownership has been determined in accordance with Rule 13d-3 under
the Exchange Act of 1934, as amended, which we refer to as the
Exchange Act. Under this rule, certain shares may be deemed to be
beneficially owned by more than one person (if, for example,
persons share the power to vote or the power to dispose of the
shares). In addition, shares are deemed to be beneficially owned by
a person if the person has the right to acquire shares (for
example, upon exercise of an option or warrant or upon conversion
of a convertible security) within 60 days of the date as of which
the information is provided. In computing the percentage ownership
of any person, the amount of shares is deemed to include the amount
of shares beneficially owned by such person by reason of such
acquisition rights. As a result, the percentage of outstanding
shares of any person as shown in the following table does not
necessarily reflect the person’s actual voting power at any
particular date.
6
Beneficial
ownership as set forth below is based on our review of our record
stockholders list and public ownership reports filed by certain
stockholders of the Company, and may not include certain securities
held in brokerage accounts or beneficially owned by the
stockholders described below.
To
our knowledge, except as indicated in the footnotes to this table
and pursuant to applicable community property laws, the persons
named in the table have sole voting and investment power with
respect to all shares of common stock shown as beneficially owned
by them.
|
|
Common
Stock
|
|
|
|
Number
of Common Stock Shares Beneficially Owned (1)
|
Percent
of Common Stock (1)
|
|
Named Executive Officers and Directors
|
|
|
|
Simon
G. Kukes (2)
|
53,760,368
|
74.5
%
|
|
Clark
R. Moore (3)
|
450,144
|
*
|
|
Ivar
Siem (4)
|
287,100
|
*
|
|
J.
Douglas Schick (5)
|
259,000
|
*
|
|
John
J. Scelfo (6)
|
201,000
|
*
|
|
Paul
A. Pinkston (7)
|
115,000
|
*
|
|
H.
Douglas Evans (8)
|
180,000
|
*
|
|
Frank
C. Ingriselli (9)**
|
131,740
|
*
|
|
Gregory
Overholtzer (10)**
|
182,326
|
*
|
|
Michael
L. Peterson (11)**
|
205,000
|
*
|
|
All Current Named Executive Officers and Directors as a group
(seven persons)
|
55,252,612
|
76.3
%
|
|
|
|
|
|
Greater than 5% Stockholders
|
|
|
|
SK
Energy, LLC (12)
|
51,791,325
|
71.8
%
|
|
|
|
|
|
Viktor
Tkachev (13)
|
8,500,000
|
11.8
%
|
|
Arhitektora
Vlasova Street 22
Apt
93
|
|
|
|
Moscow,
Russia 117393
|
|
|
*Less than 1%.
** Former Officers.
Unless otherwise stated, the address of each stockholder is c/o
PEDEVCO Corp., 575 N. Dairy Ashford, Suite 210, Houston, Texas
77079.
(1)
Ownership voting percentages are based on
72,125,328
total shares of common
stock which were outstanding as the record date, provided that
shares of common stock subject to options, warrants or other
convertible securities (including the common stock issuable upon
exercise of convertible promissory notes) that are currently
exercisable or convertible, or exercisable or convertible within 60
days of the applicable date of determination, are deemed to be
outstanding and to be beneficially owned by the person or group
holding such options, warrants or other convertible securities for
the purpose of computing the percentage ownership of such person or
group, but are not treated as outstanding for the purpose of
computing the percentage ownership of any other person or group.
Beneficial ownership is determined in accordance with the rules of
the SEC and includes voting and/or investing power with respect to
securities. We believe that, except as otherwise noted and subject
to applicable community property laws, each person named in the
following table has sole investment and voting power with respect
to the securities shown as beneficially owned by such
person.
7
(2)
Consisting
of the following: (a) 51,791,325 shares of common stock held
by SK Energy LLC, an entity which Dr. Simon G. Kukes is deemed to
beneficially own; (b) 1,256,043 shares of fully-vested common
stock held by Dr. Kukes; (c) 710,000 unvested shares of common
stock held by Dr. Kukes, 100,000 of which vest on each of December
12, 2020 and December 12, 2021, and 170,000 of which vest on each
of January 13, 2021, January 13, 2022 and January 13, 2023,
provided that Dr. Kukes remains employed by us, or is a consultant
to us, on such vesting dates; and (d) 1,000 shares of
fully-vested common stock held by the spouse of Dr. Kukes, and
2,000 unvested shares of common stock of which 1,000 shares vest on
each of December 12, 2021 and December 12, 2022, provided that his
spouse remains an employee of, or consultant to, the Company on
such vesting dates. Dr. Kukes has voting control over his unvested
shares of common stock.
(3)
Consisting
of the following: (a) 197,076 fully-vested shares of common
stock held by Mr. Moore; (b) 2,867 fully-vested shares of
common stock held by each of Mr. Moore’s two children, which
he is deemed to beneficially own; (c) 196,000 unvested shares
of common stock held by Mr. Moore, 17,000 of which vest on each of
December 12, 2020 and December 12, 2021, and 54,000 of which vest
on each of January 13, 2021, January 13, 2022 and January 13, 2023,
provided that Mr. Moore remains employed by us, or is a consultant
to us, on such vesting dates; (d) options to purchase 23,334
shares of common stock exercisable by Mr. Moore at an exercise
price of $5.10 per share; and (e) options to purchase 28,000
shares of common stock exercisable by Mr. Moore at an exercise
price of $2.20 per share. Mr. Moore has voting control over his
unvested shares of common stock.
(4)
Consisting
of the following: (a) 187,000 shares of common stock held by
American Resources Offshore Inc., which shares Mr. Siem is deemed
to beneficially own (Mr. Siem disclaims beneficial ownership of the
securities held by American Resources Offshore Inc., except to the
extent of his pecuniary interest therein); and (b) 100,000
unvested shares of common stock held by Mr. Siem, which vest on
July 12, 2020, provided that Mr. Siem remains a director, employee
of, or consultant to the Company on such vesting date. Mr. Siem has
voting control over his unvested shares of common
stock.
(5)
Consisting
of the following: (a) 22,333 shares of fully-vested common
stock held by Mr. Schick; and (b) 236,667 unvested shares of
common stock, 37,333 of which vest on each of December 12, 2021,
and 37,334 which vest on December 12, 2022, and 54,000 of which
vest on each of January 13, 2021, January 13, 2022 and January 13,
2023, provided that Mr. Schick remains employed by us, or is a
consultant to us, on such vesting dates. Mr. Schick has voting
control over his unvested shares of common stock.
(6)
Consisting
of the following: (a) 11,000 shares of fully-vested common
stock held by Mr. Scelfo; (b) 70,000 unvested shares of common
stock, which vest on July 12, 2020, provided that Mr. Scelfo
remains a director, employee of, or consultant to the Company on
such vesting date; and (c) options to purchase 120,000 shares
of common stock exercisable by Mr. Scelfo at an exercise price of
$2.19 per share. Mr. Scelfo has voting control over his unvested
shares of common stock.
(7)
Consisting
of the following: (a) 10,000 shares of fully-vested common
stock held by Mr. Pinkston; and (b) 105,000 unvested shares of
common stock, 15,000 of which vest on December 12, 2020, and 30,000
of which vest on each of January 13, 2021, January 13, 2022 and
January 13, 2023, provided that Mr. Pinkston remains employed by
us, or is a consultant to us, on such vesting dates. Mr. Pinkston
has voting control over his unvested shares of common
stock.
(8)
Consisting
of the following: (a) 30,000 shares of fully-vested common
stock held by Mr. Evans; (b) 50,000 unvested shares of common
stock, which vest on September 27, 2020, provided that Mr. Evans
remains a director, employee of, or consultant to the Company on
such vesting date; and (c) options to purchase 100,000 shares
of common stock exercisable by Mr. Evans at an exercise price of
$2.19 per share. Mr. Evans has voting control over his unvested
shares of common stock.
(9)
Consisting
of the following: (a) 55,659 shares of common stock; (b) options to
purchase 39,081 shares of common stock exercisable by Mr.
Ingriselli at an exercise price of $5.10 per share; and (c) options
to purchase 37,000 shares of common stock exercisable by Mr.
Ingriselli at an exercise price of $3.70 per share. The information
presented with respect to the holder’s beneficial ownership
is based solely on the Company’s record stockholder list and
securities which the holder beneficially owns, to the best of the
Company’s knowledge, which information has not been
independently verified or confirmed.
(10)
Consisting
of the following: (a) 14,559 fully-vested shares of common stock;
(b) options to purchase 11,667 shares of common stock exercisable
by Mr. Overholtzer at an exercise price of $5.10 per share; (c)
options to purchase 5,000 shares of common stock exercisable by Mr.
Overholtzer at an exercise price of $3.70 per share; (d) options to
purchase 15,000 shares of common stock exercisable by Mr.
Overholtzer at an exercise price of $2.20 per share; (e) options to
purchase 1,100 shares of common stock exercisable by Mr.
Overholtzer at an exercise price of $3.00 per share; (f) options to
purchase 60,000 shares of common stock exercisable by Mr.
Overholtzer at an exercise price of $1.10 per share; and (g)
options to purchase 75,000 shares of common stock exercisable by
Mr. Overholtzer at an exercise price of $0.3088 per share. The
information presented with respect to the holder’s beneficial
ownership is based solely on the Company’s record stockholder
list and securities which the holder beneficially owns, to the best
of the Company’s knowledge, which information has not been
independently verified or confirmed.
(11)
Consisting
of 205,000 shares of common stock, including shares held by a
family trust which Mr. Peterson is deemed to beneficially own. The
information presented with respect to the holder’s beneficial
ownership is based solely on the Company’s record stockholder
list and securities which the holder beneficially owns, to the best
of the Company’s knowledge, which information has not been
independently verified or confirmed.
8
(12)
Consisting
of 51,791,325 shares of common stock held by SK Energy LLC, an
entity which Dr. Simon G. Kukes is deemed to beneficially own due
to his position as the Chief Executive Officer and 100% owner of SK
Energy.
(13)
Consisting
of the following: (a) 8,400,000 shares of common stock held by
Mr. Tkachev; and (b) 100,000 unvested shares of common stock,
which vested on May 8, 2020. Mr. Tkachev has voting control
over his unvested shares of common stock. The information presented
with respect to the holder’s beneficial ownership is based
solely on the Company’s record stockholder list and
securities which the holder beneficially owns, to the best of the
Company’s knowledge, which information has not been
independently verified or confirmed.
The
Company is not currently aware of any arrangements which may at a
subsequent date result in a change of control of the
Company.
We
promote accountability for adherence to honest and ethical conduct;
endeavor to provide full, fair, accurate, timely and understandable
disclosure in reports and documents that we file with the SEC and
in other public communications made by us; and strive to be
compliant with applicable governmental laws, rules and
regulations.
Information regarding the members of and
biographical information of our board of directors is provided
below under “
Proposal
1- Election of Directors
”, beginning on page
32
.
Our board of directors has the responsibility for
selecting our appropriate leadership structure. In making
leadership structure determinations, the board of directors
considers many factors, including the specific needs of our
business and what is in the best interests of our
stockholders
. Our current leadership
structure is comprised of a separate Chairman of the board of
directors and Chief Executive Officer (“
CEO
”). Mr. John J. Scelfo serves as
Chairman and Dr. Simon Kukes serves as CEO. The board of directors
does not have a policy as to whether the Chairman should be an
independent director, an affiliated director, or a member of
management. Our board of directors believes that the
Company’s current leadership structure is appropriate because
it effectively allocates authority, responsibility, and oversight
between management (the Company’s CEO, Dr. Kukes) and
the members of our board of directors. It does this by giving
primary responsibility for the operational leadership and strategic
direction of the Company to its CEO, while enabling our Chairman to
facilitate our board of directors’ oversight of management,
promote communication between management and our board of
directors, and support our board of directors’ consideration
of key governance matters. The board of directors believes that its
programs for overseeing risk, as described below, would be
effective under a variety of leadership frameworks and therefore do
not materially affect its choice of structure.
Effective
risk oversight is an important priority of the board of directors.
Because risks are considered in virtually every business decision,
the board of directors discusses risk throughout the year generally
or in connection with specific proposed actions. The board of
directors’ approach to risk oversight includes understanding
the critical risks in our business and strategy, evaluating our
risk management processes, allocating responsibilities for risk
oversight among the full board of directors, and fostering an
appropriate culture of integrity and compliance with legal
responsibilities.
The board of directors exercises
direct oversight of strategic risks to us. Our Audit Committee
reviews and assesses our processes to manage business and financial
risk and financial reporting risk. It also reviews our policies for
risk assessment and assesses steps management has taken to control
significant risks. Our Compensation Committee oversees risks
relating to compensation programs and policies. In each case
management periodically reports to our board of directors or the
relevant committee, which provides the relevant oversight on risk
assessment and mitigation
(the
Company’s committees are described in greater detail below
under “
Committees
of the Board
”,
beginning on page
10
).
None of
our directors are related by blood, marriage, or adoption to any
other director, executive officer, or other key
employees.
Other
than Mr. Siem, who currently serves on the Board of Directors of
Petrolia Energy Corporation, (OTCQB: BBLS), no directors of the
Company are also directors of issuers with a class of securities
registered under Section 12 of the Exchange Act (or which otherwise
are required to file periodic reports under the Exchange
Act).
9
There
is no arrangement or understanding between our directors and
executive officers and any other person pursuant to which any
director or officer was or is to be selected as a director or
officer, and there is no arrangement, plan or understanding as to
whether non-management stockholders will exercise their voting
rights to continue to elect the current board of directors. There
are also no arrangements, agreements or understandings to our
knowledge between non-management stockholders that may directly or
indirectly participate in or influence the management of our
affairs.
To
the best of our knowledge, during the past ten years, none of
our directors or executive officers were involved in any of the
following: (1) any bankruptcy petition filed by or
against any business of which such person was a general partner or
executive officer either at the time of the bankruptcy or within
two years prior to that time; (2) any conviction in
a criminal proceeding or being a named subject to a pending
criminal proceeding (excluding traffic violations and other minor
offenses); (3) being subject to any order, judgment, or
decree, not subsequently reversed, suspended or vacated, of any
court of competent jurisdiction, permanently or temporarily
enjoining, barring, suspending or otherwise limiting his
involvement in any type of business, securities or banking
activities; (4) being found by a court of competent
jurisdiction (in a civil action), the SEC or the Commodities
Futures Trading Commission to have violated a federal or state
securities or commodities law; (5) being the subject of, or a
party to, any Federal or State judicial or administrative order,
judgment, decree, or finding, not subsequently reversed, suspended
or vacated, relating to an alleged violation of (i) any
Federal or State securities or commodities law or regulation;
(ii) any law or regulation respecting financial institutions
or insurance companies including, but not limited to, a temporary
or permanent injunction, order of disgorgement or restitution,
civil money penalty or temporary or permanent cease-and-desist
order, or removal or prohibition order; or (iii) any law or
regulation prohibiting mail or wire fraud or fraud in connection
with any business entity; or (6) being the subject of, or a
party to, any sanction or order, not subsequently reversed,
suspended or vacated, of any self-regulatory organization (as
defined in Section 3(a)(26) of the Exchange Act), any
registered entity (as defined in Section 1(a)(29) of the
Commodity Exchange Act), or any equivalent exchange, association,
entity or organization that has disciplinary authority over its
members or persons associated with a member.
Meetings of the Board of Directors and Prior Annual
Meetings
During the fiscal year that ended on December 31, 2019, the Board
held eight meetings and took various other actions via the
unanimous written consent of the board of directors and the various
committees described above. All directors attended all of the board
of directors’ meetings and committee meetings relating to the
committees on which each director served during fiscal year 2019.
The Company held annual stockholders meetings on June 26, 2014,
October 7, 2015, December 28, 2016, December 28, 2017, September
27, 2018 and August 28, 2019, at which meetings all directors were
present in person or via teleconference. Each director of the
Company is expected to be present at annual meetings of
stockholders, absent exigent circumstances that prevent their
attendance. Where a director is unable to attend an annual meeting
in person but is able to do so by electronic conferencing, the
Company will arrange for the director’s participation by
means where the director can hear, and be heard, by those present
at the meeting.
We
currently maintain a Nominating and Corporate Governance Committee,
Compensation Committee and Audit Committee which have the following
committee members:
The committees
of the Board of Directors consist of the following members as of
the date of this filing:
|
Director
|
|
Audit Committee
|
|
Compensation Committee
|
|
Nominating and Corporate Governance Committee
|
|
Independent
|
|
Dr. Simon Kukes
|
|
|
|
|
|
|
|
|
|
Ivar Siem
|
|
|
|
|
|
|
|
|
|
John J. Scelfo (1)
|
|
C
|
|
C
|
|
M
|
|
X
|
|
H. Douglas Evans
|
|
M
|
|
M
|
|
C
|
|
X
|
C - Chairman of Committee.
M – Member.
(1) – Chairman of the board of directors.
Each of
these committees has the duties described below and operates under
a charter that has been approved by our board of directors and is
posted on our website as discussed below.
10
The
audit committee’s duties include (A) assisting the Board with
oversight of (1) the integrity of the Company’s financial
statements, (2) compliance with applicable laws, rules and
regulations regarding the public reporting of financial
information, including financial information in periodic reports
filed with the SEC, (3) the selection, qualifications, independence
and performance of the Company's independent registered public
accounting firm, and (4) the performance of the Company's internal
audit function and controls; (B) reviewing the Company’s
annual audited financial statements and quarterly financial
statements, including the notes to such financial statements, the
draft annual audit report and the accompanying “management's
discussion and analysis of financial condition and results of
operations” with management and the independent registered
public accounting firm prior to filing such financial statements
with the SEC; and (C) establishing procedures for (1) the receipt,
retention and treatment of complaints received by the Company
regarding accounting, internal accounting controls or auditing
matters and (2) the confidential, anonymous submission by the
Company’s employees of concerns regarding questionable
accounting or auditing matters.
Mr. Scelfo serves as Chair of the Audit Committee
and our board of directors has determined that Mr. Scelfo is an
“
audit committee
financial expert
” as
defined under Item 407(d)(5) of Regulation S-K of the Exchange
Act.
During
the year ended December 31, 2019, the audit committee held six
meetings.
The
compensation committee reviews and approves (a) the annual
salaries and other compensation of our executive officers, and
(b) individual stock and stock option grants. The compensation
committee also provides assistance and recommendations with respect
to our compensation policies and practices and assists with the
administration of our compensation plans. Mr.
Scelfo serves as Chair of the compensation
committee.
During
the year ended December 31, 2019, the compensation committee held
one meeting.
The
current members of the compensation committee are Messrs. John J.
Scelfo (Chairman) and H. Douglas Evans, who are each independent
members of our board of directors. No member of the compensation
committee is an employee or a former employee of the Company.
During fiscal 2019, none of our executive officers served on the
compensation committee (or its equivalent) or board of directors of
another entity whose executive officer served on our Compensation
Committee. Accordingly, the compensation committee members have no
interlocking relationships required to be disclosed under SEC rules
and regulations.
The nominating and corporate governance committee
assists our board of directors in fulfilling its responsibilities
by: identifying and approving individuals qualified to serve as
members of our board of directors, selecting director nominees for
our annual meetings of
stockholders
, evaluating the performance of our board of
directors, and developing and recommending to our board of
directors corporate governance guidelines and oversight procedures
with respect to corporate governance and ethical conduct. Mr.
Evans serves as Chair of the nominating and corporate governance
committee.
In
considering individual director nominees and Board committee
appointments, our nominating and corporate governance committee
seeks to achieve a balance of knowledge, experience and capability
on the Board and Board committees and to identify individuals who
can effectively assist the Company in achieving our short-term and
long-term goals, protecting our stockholders’ interests and
creating and enhancing value for our stockholders. In so doing, the
nominating and corporate governance committee considers a
person’s diversity attributes (e.g., professional
experiences, skills, background, race and gender) as a whole and
does not necessarily attribute any greater weight to one attribute.
Moreover, diversity in professional experience, skills and
background, and diversity in race and gender, are just a few of the
attributes that the nominating and corporate governance committee
takes into account.
While there are no specific minimum requirements that the
nominating and corporate governance committee believes must be met
by a prospective director nominee, the nominating and corporate
governance committee does believe that director nominees should
possess personal and professional integrity, have good business
judgment, have relevant experience and skills, and be willing and
able to commit the necessary time for Board and Board committee
service. The Company does not have a formal diversity policy.
However, the nominating and corporate governance committee
evaluates each individual in the context of the Board as a whole,
with the objective of recommending individuals that can best
perpetuate the success of our business and represent stockholder
interests through the exercise of sound business judgment using
their diversity of experience in various areas. We believe our
current directors possess diverse professional experiences, skills
and backgrounds, in addition to (among other characteristics) high
standards of personal and professional ethics, proven records of
success in their respective fields and valuable knowledge of our
business and our industry.
11
The
nominating and corporate governance committee uses a variety of
methods for identifying and evaluating director nominees. The
nominating and corporate governance committee also regularly
assesses the appropriate size of the Board and whether any
vacancies on the Board are expected due to retirement or other
circumstances. In addition, the nominating and corporate governance
committee considers, from time to time, various potential
candidates for directorships. Candidates may come to the attention
of the nominating and corporate governance committee through
current Board members, professional search firms, stockholders or
other persons. These candidates may be evaluated at regular or
special meetings of the nominating and corporate governance
committee and may be considered at any point during the year. The
nominating and governance committee may use its network of contacts
to compile a list of potential candidates. The nominating and
governance committee has not in the past relied upon professional
search firms to identify director nominees but may engage such
firms if so desired. The nominating and governance committee may
meet to discuss and consider candidates’ qualifications and
then choose a candidate by majority vote.
The
committee evaluates director nominees at regular or special
committee meetings pursuant to the criteria described above and
reviews qualified director nominees with the Board. The committee
selects nominees that best suit the Board’s current needs and
recommends one or more of such individuals for election to the
Board.
The nominating and governance committee will
consider qualified director candidates recommended in good faith
by
stockholders
, provided those
nominees meet the requirements of NYSE American and
applicable federal securities law. The nominating and governance
committee’s evaluation of candidates recommended by
stockholders
does not differ
materially from its evaluation of candidates recommended from other
sources. The Committee will consider candidates recommended
by
stockholders
if the
information relating to such candidates are properly submitted in
writing to the Secretary of the Company in accordance with the
manner described for
stockholder
proposals under “
Stockholder Proposals
for 2021 Annual Meeting of Stockholders and 2021 Proxy
Materials
” on
page
38
below.
Individuals recommended by stockholders in accordance with these
procedures will receive the same consideration received by
individuals identified to the Committee through other
means.
During
the year ended December 31, 2019, the nominating and corporate
governance committee held one meeting.
Our stockholders and other interested parties may
communicate with members of the board of directors by submitting
such communications in writing to our Corporate Secretary, 575 N.
Dairy Ashford, Suite 210, Houston, Texas 77079 who, upon receipt of
any communication other than one that is clearly marked
“
Confidential
,”
will note the date the communication was received, open the
communication, make a copy of it for our files and promptly forward
the communication to the director(s) to whom it is addressed.
Upon receipt of any communication that is clearly marked
“
Confidential,
”
our Corporate Secretary will not open the communication, but will
note the date the communication was received and promptly forward
the communication to the director(s) to whom it is addressed.
If the correspondence is not addressed to any particular Board
member or members, the communication will be forwarded to a Board
member to bring to the attention of the board of
directors.
The
independent members of our board of directors meet in executive
session (with no management directors or management present) from
time to time. The executive sessions include whatever topics the
independent directors deem appropriate.
The
board of directors annually determines the independence of each
director and nominee for election as a director. The Board makes
these determinations in accordance with the NYSE American’s
listing standards for the independence of directors and the
SEC’s rules.
In
assessing director independence, the Board considers, among other
matters, the nature and extent of any business relationships,
including transactions conducted, between the Company and each
director and between the Company and any organization for which one
of our directors is a director or executive officer or with which
one of our directors is otherwise affiliated.
Our
board of directors has determined that Mr. Scelfo and Mr. Evans are
independent directors as defined in the NYSE American rules
governing members of boards of directors and as defined under Rule
10A-3 of the Exchange Act. Accordingly, 50% of the members of our
board of directors are independent as defined in the NYSE American
rules governing members of boards of directors and as defined under
Rule 10A-3 of the Exchange Act.
The charters of the Audit Committee, Compensation Committee and
Nominating and Corporate Governance Committee and our Code of
Business Conducts and Ethics can be found on our website at
https://pedevco.com/ped/corporate_governance
.
Unless specifically stated herein, documents and information on our
website are not incorporated by reference in this proxy
statement.
12
All
employees, officers and directors of, and consultants and
contractors to, us or any of our subsidiaries are subject to our
Insider Trading Policy. The policy prohibits the unauthorized
disclosure of any nonpublic information acquired in the workplace
and the misuse of material nonpublic information in securities
trading. The policy also includes specific anti-hedging
provisions.
To
ensure compliance with the policy and applicable federal and state
securities laws, all individuals subject to the policy must refrain
from the purchase or sale of our securities except in designated
trading windows or pursuant to preapproved 10b5-1 trading plans.
Even during a trading window period, certain identified insiders,
which include the named executive officers and directors, must
comply with our designated pre-clearance policy prior to trading in
our securities. The anti-hedging provisions prohibit all employees,
officers and directors from engaging in “
short sales
” of our
securities or from trading in options with maturities less than
nine months on our stock.
The Company does not have a policy on equity
ownership at this time. However, as illustrated in the
“
Security Ownership of
Management and Certain Beneficial Owners
” table beginning on page
6
, all
Named Executive Officers and directors are beneficial owners of
stock of the Company.
Under the Sarbanes–Oxley Act of 2002 (the
“
Sarbanes-Oxley
Act
”), in the event of
misconduct that results in a financial restatement that would have
reduced a previously paid incentive amount, we can recoup those
improper payments from our Chief Executive Officer and Chief
Accounting Officer. We plan to implement a claw back policy in the
future, although we have not yet implemented such
policy.
C
ode of Ethics
In
2012, in accordance with SEC rules, our board of directors adopted
a Code of Business Conduct and Ethics for our directors, officers
and employees. Our board of directors believes that these
individuals must set an exemplary standard of conduct. This code
sets forth ethical standards to which these persons must adhere and
other aspects of accounting, auditing and financial compliance, as
applicable. The Code of Business Conduct and Ethics is available on
our website as discussed above and
was filed as an exhibit to our Form
8-K/A filed with the SEC on
August 8, 2012
as Exhibit 14.1
thereto
.
We
intend to disclose any amendments to our Code of Business Conduct
and Ethics and any waivers with respect to our Code of Business
Conduct and Ethics granted to our principal executive officer, our
principal financial officer, or any of our other employees
performing similar functions on our website
at www.pedevco.com, within four business days after the
amendment or waiver. In such case, the disclosure regarding the
amendment or waiver will remain available on our website for at
least 12 months after the initial disclosure. There have been
no waivers granted with respect to our Code of Business Conduct and
Ethics to any such officers or employees to date.
The following report of the Audit Committee does not constitute
soliciting materials and should not be deemed filed or incorporated
by reference into any other Company filing under the Securities Act
of 1933, as amended, or the Exchange Act, except to the extent we
specifically incorporate such report by reference
therein.
The
Audit Committee represents and assists the board of directors in
fulfilling its responsibilities for general oversight of the
integrity of the Company’s financial statements, the
Company’s compliance with legal and regulatory requirements,
the independent registered public accounting firm’s
qualifications and independence, the performance of the
Company’s internal audit function and independent registered
public accounting firm, and risk assessment and risk management.
The Audit Committee manages the Company’s relationship with
its independent registered public accounting firm (which reports
directly to the Audit Committee). The Audit Committee has the
authority to obtain advice and assistance from outside legal,
accounting or other advisors as the Audit Committee deems necessary
to carry out its duties and receives appropriate funding, as
determined by the Audit Committee, from the Company for such advice
and assistance.
13
In connection with the audited financial
statements of the Company for the year ended December 31, 2019, the
Audit Committee of the
board
of
directors
of the Company (1) reviewed and discussed the
audited financial statements with the Company’s management;
(2) discussed with the Company’s independent auditors the
applicable requirements of the Public Company Accounting Oversight
Board (PCAOB) and the Securities and Exchange Commission; (3)
received the written disclosures and the letter from the
independent auditors required by the applicable requirements of the
PCAOB regarding the independent auditors’ communications with
the Audit Committee concerning independence; (4) discussed with the
independent auditors the independent auditors’ independence;
and (5) considered whether the provision of non-audit services by
the Company’s principal auditors is compatible with
maintaining auditor independence.
Based
upon these reviews and discussions, the Audit Committee recommended
to the board of directors, and the board of directors approved,
that the audited financial statements for the year ended December
31, 2019 be included in the Company’s Annual Report on Form
10-K for the year ended December 31, 2019 for filing with the
Securities and Exchange Commission.
The
undersigned members of the Audit Committee have submitted this
Report to the board of directors.
Audit Committee
/s John J. Scelfo (Chairman)
/s/ H. Douglas Evans
14
The following table sets forth certain information with respect to
our executive officers (ages are as of the record
date).
|
Name
|
|
Age
|
|
Executive Position
|
|
Dr.
Simon Kukes
|
|
74
|
|
Chief
Executive Officer and Director
|
|
J.
Douglas Schick
|
|
45
|
|
President
|
|
Paul
Pinkston
|
|
52
|
|
Chief
Accounting Officer
|
|
Clark
R. Moore
|
|
47
|
|
Executive
Vice President, General Counsel and Secretary
|
Dr. Simon Kukes, Chief Executive Officer and Director
Dr. Kukes’s biographical
information is presented below in “
Proposal
1 Election of Directors
”, beginning on page
32
.
J. Douglas Schick, President
Mr.
Schick has over twenty years of experience in the oil and gas
industry. Prior to joining the Company as President on August 1,
2018, Mr. Schick was employed by American Resources, Inc., a
Houston, Texas-based privately-held oil and gas investment,
development and operating company which he co-founded and continues
to serve as Chief Executive Officer (from August 2017 to the
present) and formerly as Chief Financial Officer and Vice
President of Business Development (from August 2013 to August
2017), provided that Mr. Schick’s service to American
Resources requires only minimal time commitment from Mr. Schick
that does not conflict with his duties and responsibilities to the
Company. Prior to starting American Resources, Mr. Schick served as
the founder, owner and principal of J. Douglas Enterprises, a
Houston, Texas-based energy industry focused business development
and financial consulting firm (from June 2011 to August
2013) as Vice President of Finance (from January 2011 until
its sale in June 2011) for Highland Oil and Gas, a private
equity-backed E&P company headquartered in Houston, Texas, as
Manager of Planning and then Director of Planning at Houston,
Texas-based Mariner Energy, Inc. (from December 2006 until its
merger with Apache Corp. in December 2010), and in various roles of
increasing responsibility in finance, planning, M&A, treasury
and accounting at The Houston Exploration Company, ConocoPhillips
and Shell Oil Company (from 1998 to 2006). Mr. Schick current
serves on the Board of Directors of Rockdale Marcellus, LLC, a
Houston, Texas-based subsidiary of Rockdale Energy, LLC engaged in
the development of natural gas in Northeastern
Pennsylvania.
Mr.
Schick holds a BBA in Finance from New Mexico State University and
an MBA with a specialization in Finance from Tulane
University.
Paul A. Pinkston, Chief Accounting Officer
Mr.
Pinkston brings over 20 years of accounting, compliance, and
financial reporting expertise to the Company, with extensive
experience in handling and managing corporate compliance, financial
reporting and audits, and other regulatory functions for companies
engaged in the oil and gas industry in the U.S. Prior to
joining the Company on December 1, 2018, from August 2017 to
February 2018, Mr. Pinkston served as Corporate Controller and
Secretary for Trecora Resources (NYSE: TREC), a Sugar Land,
Texas-based petrochemical manufacturing and customer processing
service company. Prior to joining Trecora Resources, from May
2013 to June 2017, Mr. Pinkston served in various roles of
increasing authority and responsibility at Camber Energy, Inc.
(NYSE American: CEI), a Houston, Texas-based oil and gas
exploration and production company, including as Camber
Energy’s Chief Accounting Officer, Secretary and Treasurer
(August 2016 to June 2017), and as its Director of Financial
Reporting (May 2013 to August 2016). Before joining Camber
Energy, Mr. Pinkston served as a Senior Consultant with Sirius
Solutions LLLP, where he performed accounting, audit and finance
consulting services (January 2006 to May 2013), as a Corporate
Auditor performing internal audits for Baker Hughes, Inc. (January
2002 to November 2005), and as a Senior Auditor, conducting public
and private audits, at Arthur Andersen LLP (from September 1998 to
November 2001).
Mr.
Pinkston received a Bachelor of Business Administration (Finance
and Marketing) degree from the University of Texas and earned
a Master of Business Administration (Accounting) degree from
the University of Houston. Mr. Pinkston is a Certified Public
Accountant registered in the State of Texas.
Clark R. Moore, Executive Vice President, General Counsel and
Secretary
Mr.
Moore has served as our Executive Vice President, General Counsel,
and Secretary since our acquisition of Pacific Energy Development
in July 2012 and has served as the Executive Vice President,
General Counsel, and Secretary of the Company since its inception
in February 2011. Mr. Moore began his career in 2000 as a corporate
attorney at the law firm of Venture Law Group located in Menlo
Park, California, which later merged into Heller Ehrman LLP in
2003. In 2004, Mr. Moore left Heller Ehrman LLP and launched a
legal consulting practice focused on representation of private and
public company clients in the energy and high-tech industries. In
September 2006, Mr. Moore joined Erin Energy Corporation
(OTCMKTS:ERN) (formerly CAMAC Energy, Inc.), an independent
energy company headquartered in Houston, Texas, as its acting
General Counsel and continued to serve in that role through
February 2011. In addition, since June 1, 2018, Mr. Moore has
served as a partner at Foundation Law Group, LLP.
Mr.
Moore received his J.D. with Distinction from Stanford Law School
and his B.A. with Honors from the University of
Washington.
15
The following table sets forth the compensation
for services paid in all capacities for the two fiscal years ended
December 31, 2019 and 2018 to (a) Dr. Simon Kukes, our current
Chief Executive Officer and Director, (b) J. Douglas Schick,
our current President, (c) Clark R. Moore, our Executive Vice
President, General Counsel and Secretary, (d) Paul A Pinkston,
our current Chief Accounting Officer, (e) Frank C. Ingriselli,
our former Chairman, former President and former Chief Executive
Officer, (f) Michael L. Peterson, our former President and
Chief Executive Officer, and (g) Gregory Overholtzer, our
former Chief Financial Officer (collectively, the
“
Named Executive
Officers
”). There were no
other executive officers who received compensation in excess of
$100,000 in either 2019 or 2018.
|
Name
and Principal Position
|
Fiscal
Year
|
Salary
($)
|
Bonus
($)
|
Option
Awards ($)
|
Stock
Awards ($)
|
All Other
Compensation
($)
|
Total
($)
|
|
Simon
Kukes
|
2019
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Chief
Executive Officer
|
2018
|
-
|
-
|
-
|
399,000
(1)
|
-
|
399,000
|
|
|
|
|
|
|
|
|
|
|
J.
Douglas Schick
|
2019
|
250,000
|
-
|
-
|
-
|
-
|
250,000
|
|
President
|
2018
|
104,167
|
-
|
-
|
148,960
(2)
|
-
|
253,127
|
|
|
|
|
|
|
|
|
|
|
Clark
R. Moore
|
2019
|
250,000
|
-
|
-
|
-
|
-
|
250,000
|
|
Executive
Vice President, General Counsel and Secretary
|
2018
|
250,000
|
-
|
-
|
141,830
(3)
|
-
|
391,830
|
|
|
|
|
|
|
|
|
|
|
Paul
A. Pinkston
|
2019
|
140,000
|
-
|
-
|
-
|
-
|
140,000
|
|
Chief
Accounting Officer
|
2018
|
11,667
|
-
|
-
|
39,900
(4)
|
-
|
51,567
|
|
|
|
|
|
|
|
|
|
|
Frank
C. Ingriselli (5)
|
2018
|
66,346
|
-
|
-
|
116,000
(6)
|
350,000
(7)
|
532,346
|
|
Former
Chairman of the Board, Chief Executive Officer and
President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
L. Peterson (8)
|
2018
|
125,000
|
-
|
-
|
-
|
-
|
125,000
|
|
Former
Chief Executive Officer and President
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gregory
Overholtzer (9)
|
2018
|
190,000
|
-
|
-
|
26,600
(10)
|
-
|
216,600
|
|
Former
Chief Financial Officer
|
|
|
|
|
|
|
|
Does not include perquisites and other personal benefits or
property, unless the aggregate amount of such compensation is more
than $10,000. No executive officer earned any non-equity
incentive plan compensation or nonqualified deferred compensation
during the periods reported above. Stock Awards represent the
aggregate grant date fair value of awards computed in accordance
with Financial Accounting Standards Board Accounting Standard
Codification Topic 718. For additional information on the valuation
assumptions with respect to the option grants, refer to
“
Part
II
” -
“
Item 8. Financial
Statements and Supplementary Data
” - “
Note 11 –
Stockholders’ Equity – Common Stock
” of the 2019 annual report. These amounts
do not correspond to the actual value that will be recognized by
the named individuals from these awards.
|
(1)
|
Consists
of the value of 300,000 shares of restricted common stock granted
in December 2018 at $1.33 per share.
|
|
(2)
|
Consists
of the value of 112,000 shares of restricted common stock granted
in December 2018 at $1.33 per share.
|
|
(3)
|
Consists
of the value of 50,000 shares of restricted common stock granted in
July 2018 at $1.48 per share and the value of 51,000 shares of
restricted common stock granted in December 2018 at $1.33 per
share.
|
|
(4)
|
Consists
of the value of 30,000 shares of restricted common stock granted in
December 2018 at $1.33 per share.
|
|
(5)
|
Mr.
Ingriselli served as Chief Executive Officer of the Company until
his retirement effective May 1, 2016, after which date he continued
to serve as Chairman of the Company’s Board of Directors
until September 27, 2018, and again served as our Chief Executive
Officer from April 2018 to July 2018, and served as President from
April 2018 to August 1, 2018.
|
|
(6)
|
Consists
of the value of 80,000 shares of restricted common stock granted in
May 2018 at $0.34 per share and the value of 60,000 shares of
restricted common stock granted in July 2018 at $1.48 per
share.
|
|
(7)
|
Consists
of cash severance amount paid to Mr. Ingriselli pursuant to the
Separation and General Release Agreement, dated September 6, 2018,
entered into by and between Mr. Ingriselli and the
Company.
|
16
|
(8)
|
Mr.
Peterson resigned as Chief Executive Officer and President
effective May 31, 2018, and pursuant to a consulting agreement
entered into with him, he received $5,000 per month through May
2019 for debt restructuring, strategic planning, and capital
markets consulting services.
|
|
(9)
|
Mr.
Overholtzer resigned as Chief Financial Officer effective December
31, 2018, and pursuant to a consulting agreement entered into with
him, he received $15,000 per month through April 7, 2019 for
transitional consulting services, and was paid an additional amount
of cash severance and accrued vacation (totaling
$37,755) pursuant to the Separation and General Release
Agreement, dated December 31, 2018, entered into by and between Mr.
Overholtzer and the Company.
|
|
(10)
|
Consists
of the value of 20,000 shares of restricted common stock granted in
December 2018 at $1.33 per share.
|
The
following table sets forth information as of December 31, 2019
concerning outstanding equity awards for the executive officers
named in the Summary Compensation Table.
|
|
Option
Awards
|
Stock
Awards
|
||||
|
Name
|
Number
of securities underlying unexercised options
(#) exercisable
|
Number
of securities underlying unexercised
options (#)
unexercisable
|
Option
Exercise price ($)
|
Option
expiration date
|
Number
of shares or units of stock that have not vested
(#)
|
Market
value of shares or units of stock that have not vested
($)
|
|
Dr.
Simon Kukes
|
-
|
-
|
-
|
-
|
200,000
(1)
|
$
266,000
|
|
|
|
|
|
|
|
|
|
J.
Douglas Schick
|
-
|
-
|
-
|
-
|
74,677
(1)
|
$
99,320
|
|
|
|
|
|
|
|
|
|
Clark
R. Moore
|
18,887
|
-
|
$
5.10
|
6/18/2022
|
34,000
(1)
|
$
6,720
|
|
|
4,447
|
-
|
$
5.10
|
6/18/2022
|
-
|
-
|
|
|
27,000
*
|
-
|
$
3.70
|
1/7/2020
|
-
|
-
|
|
|
28,000
|
-
|
$
2.20
|
1/7/2021
|
-
|
-
|
|
|
|
|
|
|
|
|
|
Paul
A. Pinkston
|
-
|
-
|
-
|
-
|
15,000
(2)
|
19,950
|
|
|
|
|
|
|
|
|
|
Frank
C. Ingriselli**
|
34,827
|
-
|
$
5.10
|
5/30/2021
|
-
|
-
|
|
|
4,254
|
-
|
$
5.10
|
5/30/2021
|
-
|
-
|
|
|
37,000
|
-
|
$
3.70
|
5/30/2021
|
-
|
-
|
|
|
|
|
|
|
|
|
|
Gregory
Overholtzer**
|
11,667
|
-
|
$
5.10
|
6/18/2022
|
-
|
-
|
|
|
5,000
|
-
|
$
3.70
|
12/31/2021
|
-
|
-
|
|
|
15,000
|
-
|
$
2.20
|
12/31/2021
|
-
|
-
|
|
|
1,100
|
-
|
$
3.00
|
2/8/2022
|
-
|
-
|
|
|
60,000
|
-
|
$
1.10
|
12/31/2021
|
-
|
-
|
|
|
75,000
|
-
|
$
0.3088
|
12/28/2022
|
-
|
-
|
|
|
|
|
|
|
|
|
|
Michael
L. Peterson**
|
-
|
-
|
|
|
-
|
-
|
(1)
Stock
award vests 50% on December 12, 2020 and December 12, 2021, subject
to the holder remaining an employee of or consultant to the Company
on such vesting dates.
(2)
Stock
award vests on December 1, 2020, subject to the holder remaining an
employee of or consultant to the Company on such vesting
date.
*
Since
expired unexercised.
**
Former
officers.
17
Restricted Stock
During the year ended December 31, 2018, the
Company issued shares of common stock and restricted common stock
as follows: 600,000 shares of common stock issued to SK Energy LLC,
which is 100% owned and controlled by Dr. Simon Kukes, the
Company’s Chief Executive Officer and director
(“
SK
Energy
”) with a fair
value of $185,000 based on the market price on the date of
issuance, 80,000 shares of restricted stock were issued to our
former CEO (Mr. Ingriselli) with a fair value of $27,000 based
on the market price on the date of issuance, and 30,848 shares were
issued to employees for the cashless exercise of options. The
80,000 shares of restricted stock were issued in consideration for
Mr. Ingriselli rejoining the Company as its President and Chief
Executive Officer in May 2018. Mr. Ingriselli subsequently resigned
as President and Chief Executive Officer on September 27, 2018 and
the shares of restricted stock fully vested on October 1, 2018
pursuant to a separation agreement entered into with
him.
Also,
restricted stock awards were granted to Messrs. Frank C. Ingriselli
(then President) and Clark R. Moore (Executive Vice President,
General Counsel and Secretary) of 60,000 and 50,000 shares,
respectively, under the Company’s Amended and Restated 2012
Equity Incentive Plan during the year ended December 31, 2018. The
restricted stock awards vest as follows: 100% on the six-month
anniversary of the grant date. These shares have a total fair value
of $164,000 based on the market price on the issuance date. Upon
Mr. Ingriselli’s resignation, noted above, the 60,000 shares
of restricted stock fully vested on October 1, 2018 pursuant to a
separation agreement entered into with him.
Subsequent
restricted stock awards were granted to 12 employees and two
directors totaling an aggregate of 714,000 shares (90,000 shares on
September 27, 2018 and 624,000 shares on December 12, 2018), under
the Company’s Amended and Restated 2012 Equity Incentive
Plan. The grants for a total of 40,000 of the restricted stock
awards vest as follows: 100% on the one-year anniversary of the
grant date. These shares have a total fair value of $88,000 based
on the market price on the issuance date. The grant for 50,000
shares of restricted stock vest as follows: 50% on the one-year
anniversary of the grant date and 50% on the second-year
anniversary of the grant date. These shares have a total fair value
of $109,000 based on the market price on the issuance date. The
grant for 624,000 shares of restricted stock vest as follows: 33.3%
on the one-year anniversary of the grant date, 33.3% on the
two-year anniversary of the grant date and 33.3% on the third-year
anniversary of the grant date. These shares have a total fair value
of $830,000 based on the market price on the issuance date. In each
case above the restricted shares are subject to the recipient of
the shares being an employee of or consultant to the Company on
such vesting date, and subject to the terms and conditions of a
Restricted Shares Grant Agreement, as applicable, entered into by
and between the Company and the recipient. In addition, 65,017
shares were issued to an employee for the cashless exercise of
options, and 192,208 shares were issued for the exercise of
warrants at an exercise price of $0.322 per share for an aggregate
exercise price of $64,000.
In
April 2019, restricted stock awards were granted to three new
employees and one consultant for an aggregate of 160,000 shares of
the Company’s common stock, under the Company’s Amended
and Restated 2012 Equity Incentive Plan. The grant for a total of
50,000 of the restricted stock awards vests as follows: 100% on the
one-year anniversary of the grant date, subject to the
recipient’s continued service with the Company. These shares
have a total fair value of $135,000 based on the market price on
the issuance date. The grants for 110,000 shares of restricted
stock vest as follows: 50% on the one-year anniversary of the grant
date and 50% on the second-year anniversary of the grant date,
subject to the recipient’s continued service with the
Company. These shares have a total fair value of $253,000 based on
the market price on the issuance date.
On
July 18, 2019, 50,000 shares of restricted stock were awarded to an
advisor under the Company’s Amended and Restated 2012 Equity
Incentive Plan. The restricted stock vests as follows: 100% on the
six-month anniversary of the grant date, subject to the
recipient’s continued service with the Company. These shares
have a total fair value of $83,000, based on the market price on
the issuance date.
On
August 28, 2019, restricted stock awards were granted to three
directors for an aggregate of 170,000 shares of the Company’s
common stock, under the Company’s Amended and Restated 2012
Equity Incentive Plan (70,000 shares to Mr. John Scelfo and 50,000
shares to Mr. H. Douglas Evans). The grant for a total of 120,000
of the restricted stock awards vests as follows: 100% on July 12,
2020, subject to the recipient’s continued service with the
Company. These shares have a total fair value of $187,000 based on
the market price on the issuance date. The grants for 50,000 shares
of restricted stock vest as follows: 100% on September 27, 2020,
subject to the recipient’s continued service with the
Company. These shares have a total fair value of $78,000 based on
the market price on the issuance date. Additionally, 50,000 shares
of restricted stock were awarded to a director for advisory
services provided to the Company under the Company’s Amended
and Restated 2012 Equity Incentive Plan. The restricted stock vests
as follows: 100% on July 12, 2020, subject to the recipient’s
continued service with the Company. These shares have a total fair
value of $78,000, based on the market price on the issuance
date.
On
October 5, 2019, 250,000 shares of restricted stock were awarded to
an advisor under the Company’s Amended and Restated 2012
Equity Incentive Plan. The restricted stock vests as follows: 100%
on the six-month anniversary of the grant date, subject to the
recipient’s continued service with the Company. These shares
have a total fair value of $350,000, based on the market price on
the issuance date.
18
On
November 8, 2019, the Company entered into an Advisory Agreement
and Restricted Shares Grant Agreement with Viktor Tkachev, a
greater than 10% stockholder of the Company (who acquired $12
million of shares of common stock on September 17, 2019),
under which Mr. Tkachev agreed to provide strategic planning and
business development services, and pursuant to which 100,000 shares
of restricted common stock were awarded to Mr. Tkachev under the
Company’s Amended and Restated 2012 Equity Incentive Plan,
100% of which vest on the six-month anniversary of the grant date,
subject to the recipient’s continued service with the Company
and the terms and conditions of these agreements. These shares have
a total fair value of $128,000 based on the market price on the
issuance date.
Also
on November 8, 2019, the Company entered into an Advisory Agreement
with Ivar Siem, a member of the Board of Directors, pursuant to
which the 50,000 restricted shares of common stock previously
awarded to Mr. Siem on August 28, 2019 under the Plan continue to
vest, with 100% vesting on July 12, 2020, subject to Mr. Siem
continuing to provide advisory services to the Company on such
vesting date, and subject to the terms and conditions of a
Restricted Shares Grant Agreement entered into by and between the
Company and Mr. Siem on August 28, 2019. The Advisory Agreement
contains customary confidentiality, indemnification and no conflict
language; and may be terminated by the Company or the advisor with
15 days prior written notice for any reason.
The
awarded shares above are subject to trading restrictions, and
forfeiture, subject to the vesting terms described above. When such
securities are vested in accordance with their terms, the trading
restrictions are lifted.
Stock-based
compensation expense recorded related to restricted stock during
the years ended December 31, 2019 and 2018 was $1,259,000 and
$659,000, respectively. The remaining amount of unamortized
stock-based compensation expense related to restricted stock
at December 31, 2019 and 2018 was $999,000 and $967,000,
respectively.
Options
On
August 14, 2019, the Company issued 9,782 total shares of common
stock upon the cashless exercise of stock options to purchase an
aggregate of 12,500 shares of common stock with an exercise price
of $0.31 per share, based on a then current market value of $1.42
per share, under the terms of the options. The options had an
intrinsic value of $14,000 on the exercise date.
On September 27, 2018, the Company granted options to purchase an
aggregate of 120,000 and 100,000 shares of common stock an exercise
price of $2.19 per share to John J. Scelfo, our Chairman, and H.
Douglas Evans, a Director, respectively, all pursuant to the
Company’s 2012 Amended and Restated Equity Incentive Plan and
in consideration for their joining the Company’s board of
directors and committees thereof. The options have a term of five
years and fully vest on the one-year anniversary of the vesting
commencement date contingent upon the recipient’s continued
service with the Company. The aggregate fair value of the options
on the date of grant, using the Black-Scholes model, was $417,000.
Variables used in the Black-Scholes option-pricing model for the
options issued include: (1) a discount rate of 2.75%,
(2) expected term of 3.0 years, (3) expected volatility
of 171%, and (4) zero expected dividends.
On
December 12, 2018, the Company granted options to purchase an
aggregate of 50,000 shares of common stock to an employee at an
exercise price of $1.33 per share. The options have a term of five
years and fully vest in December 2021. 33.3% vest each subsequent
year from the date of grant contingent upon the recipient’s
continued service with the Company. The aggregate fair value of the
options on the date of grant, using the Black-Scholes model, was
$59,000. Variables used in the Black-Scholes option-pricing model
for the options issued include: (1) a discount rate of 2.75%,
(2) expected term of 3.5 years, (3) expected volatility
of 164%, and (4) zero expected dividends.
The
following table sets forth compensation information with respect to
our non-executive directors during our fiscal year ended December
31, 2019.
|
Name
|
Fees
Earned or Paid in Cash ($)*
|
Stock
Awards ($) (1) (2) (3)
|
All
Other Compensation ($)
|
Total
($)
|
|
John
J. Scelfo
|
$
-
|
$
109,200
|
$
-
|
$
109,200
|
|
Ivar
Siem
|
$
-
|
$
156,000
|
$
-
|
$
156,000
|
|
H.
Douglas Evans
|
$
-
|
$
78,000
|
$
-
|
$
78,000
|
* The table above does not include the amount of any expense
reimbursements paid to the above directors. No directors received
any Non-Equity Incentive Plan Compensation or Nonqualified Deferred
Compensation. Does not include perquisites and other personal
benefits, or property, unless the aggregate amount of such
compensation is more than $10,000.
|
(1)
|
Amounts
in this column represent the aggregate grant date fair value of
awards computed in accordance with Financial Accounting Standards
Board Accounting Standard Codification Topic 718. For additional
information on the valuation assumptions with respect to the
restricted stock grants, refer to
“
Part
II
” -
“
Item 8. Financial
Statements and Supplementary Data
” - “
Note 11 – Stockholders’ Equity –
Common Stock
” of the 2019
annual report
. These amounts do not correspond to the actual
value that will be recognized by the named individuals from these
awards.
|
|
(2)
|
Mr.
Scelfo, Mr. Evans and Mr. Siem received grants of 70,000, 50,000
and 50,000 shares of restricted stock, respectively, on August 28,
2019, each with an aggregate grant date fair value of $109,200,
$78,000 and $78,000, respectively, which will vest in full on July
12, 2020, September 27, 2020 and July 12, 2020, respectively. For
the year ended December 31, 2019, there was compensation of
$88,000, related to these grants.
|
19
|
(3)
|
Mr.
Siem also received an additional grant of 50,000 shares of
restricted stock, on August 28, 2019, for advisory services
provided to the Company with an aggregate grant date fair value of
$78,000, which will vest in full on July 12, 2019. For the year
ended December 31, 2019, there was compensation of $26,000, related
to these grants.
|
Effective
September 27, 2018, the Board no longer has a formal compensation
program; provided that the Board of Directors and/or the
Compensation Committee may authorize compensation (including, but
not limited to cash, options and restricted stock) to the
members of the Board of Directors from time to time in their
discretion.
The
following table sets forth information, as of December 31, 2019,
with respect to our compensation plans under which common stock is
authorized for issuance.
|
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 (1)
|
699,635
|
$
2.76
|
3,341,870
(2)
|
|
Equity compensation
plans not approved by stockholders (3)
|
204,043
|
$
1.58
|
-
|
|
Total
|
903,678
|
$
2.50
|
3,341,870
|
|
(1)
|
Consists
of (i) options to purchase 21,635 shares of common stock
issued and outstanding under the Pacific Energy Development Corp.
2012 Amended and Restated Equity Incentive Plan, and
(ii) options to purchase 678,000 shares of common stock issued
and outstanding under the PEDEVCO Corp. 2012 Amended and Restated
Equity Incentive Plan.
|
|
(2)
|
Consists
of 3,341,870 shares of common stock reserved and available for
issuance under the PEDEVCO Corp. 2012 Amended and Restated Equity
Incentive Plan.
|
|
(3)
|
Consists
of (i) options to purchase 53,714 shares of common stock
granted by Pacific Energy Development Corp. to employees and
consultants of the company in October 2011 and June 2012, and
(ii) warrants to purchase 150,329 shares of common stock
granted by PEDEVCO Corp. to lenders in June 2018.
|
2012 Plan
General.
On June 26, 2012, our board of directors
adopted the Blast Energy Services, Inc. 2012 Equity Incentive Plan,
which was approved by our stockholders on July 30, 2012 and
subsequently renamed to the PEDEVCO Corp. 2012 Equity Incentive
Plan in connection with our name change from Blast Energy Services,
Inc. to PEDEVCO Corp. The 2012 Equity Incentive Plan provides for
awards of incentive stock options, non-statutory stock options,
rights to acquire restricted stock, stock appreciation rights, or
SARs, and performance units and performance shares. Subject to the
provisions of the 2012 Equity Incentive Plan relating to
adjustments upon changes in our common stock, an aggregate
of 200,000 shares of common stock were reserved for
issuance under the 2012 Equity Incentive Plan. On April 23, 2014,
the board of directors adopted an amended and restated 2012 Equity
Incentive Plan, to increase by 500,000 shares, the number
of awards available for issuance under the plan, which was approved
by stockholders on June 27, 2014. On July 27, 2015, the board of
directors adopted an amended and restated 2012 Equity Incentive
Plan, to increase by 300,000 shares, the number of awards
available for issuance under the plan, which was approved by
stockholders on October 7, 2015. On October 21, 2016, the board of
directors adopted an amended and restated 2012 Equity Incentive
Plan, to increase by 500,000 shares, the number of awards
available for issuance under the plan, which was approved by
stockholders on December 28, 2016. On November 6, 2017, the board
of directors adopted an amended and restated 2012 Equity Incentive
Plan, to increase by 1,500,000 shares, the number of awards
available for issuance under the plan, which was approved by
stockholders on December 28, 2017. On August 10, 2018, the board of
directors adopted an amended and restated 2012 Equity Incentive
Plan, to increase by 3,000,000 shares, the number of awards
available for issuance under the plan, which was approved by
stockholders on September 27, 2018. On July 1, 2019, the board of
directors adopted an amended and restated 2012 Equity Incentive
Plan, to increase by 2,000,000 shares, the number of awards
available for issuance under the plan, which was approved by
stockholders on August 28, 2019.
20
We
refer to the 2012 Amended and Restated Incentive Plan as the 2012
Plan.
Purpose.
Our board of directors adopted the 2012 Plan to
provide a means by which our employees, directors and consultants
may be given an opportunity to benefit from increases in the value
of our common stock, to assist in attracting and retaining the
services of such persons, to bind the interests of eligible
recipients more closely to our interests by offering them
opportunities to acquire shares of our common stock and to afford
such persons stock-based compensation opportunities that are
competitive with those afforded by similar
businesses.
Administration.
Unless
it delegates administration to a committee, our board of directors
administers the 2012 Plan. Subject to the provisions of the 2012
Plan, our board of directors has the power to construe and
interpret the 2012 Plan, and to determine: (a) the fair value
of common stock subject to awards issued under the 2012 Plan;
(b) the persons to whom and the dates on which awards will be
granted; (c) what types or combinations of types of awards
will be granted; (d) the number of shares of common stock to
be subject to each award; (e) the time or times during the
term of each award within which all or a portion of such award may
be exercised; (f) the exercise price or purchase price of each
award; and (g) the types of consideration permitted to
exercise or purchase each award and other terms of the
awards.
Eligibility.
Incentive
stock options may be granted under the 2012 Plan only to employees
of us and our affiliates. Employees, directors and consultants of
us and our affiliates are eligible to receive all other types of
awards under the 2012 Plan.
Terms of Options and
SARs.
The exercise price
of incentive stock options may not be less than the fair market
value of the common stock subject to the option on the date of the
grant and, in some cases, may not be less than 110% of such fair
market value. The exercise price of nonstatutory options also may
not be less than the fair market value of the common stock on the
date of grant.
Options granted under the 2012 Plan may be
exercisable in cumulative increments, or “
vest,
”
as determined by our board of directors. Our board of directors has
the power to accelerate the time as of which an option may vest or
be exercised. The maximum term of options, SARs and performance
shares and units under the 2012 Plan is ten years, except that in
certain cases, the maximum term is five years. Options, SARs
and performance shares and units awarded under the 2012 Plan
generally will terminate three months after termination of the
participant’s service, subject to certain
exceptions.
A
recipient may not transfer an incentive stock option otherwise than
by will or by the laws of descent and distribution. During the
lifetime of the recipient, only the recipient may exercise an
option, SAR or performance share or unit. Our board of directors
may grant nonstatutory stock options, SARs and performance shares
and units that are transferable to the extent provided in the
applicable written agreement.
Terms of Restricted Stock
Awards.
Our board of
directors may issue shares of restricted stock under the 2012 Plan
as a grant or for such consideration, including services, and,
subject to the Sarbanes-Oxley Act of 2002, promissory notes, as
determined in its sole discretion.
Shares
of restricted stock acquired under a restricted stock purchase or
grant agreement may, but need not, be subject to forfeiture to us
or other restrictions that will lapse in accordance with a vesting
schedule to be determined by our board of directors. In the event a
recipient’s employment or service with us terminates, any or
all of the shares of common stock held by such recipient that have
not vested as of the date of termination under the terms of the
restricted stock agreement may be forfeited to us in accordance
with such restricted stock agreement.
Rights
to acquire shares of common stock under the restricted stock
purchase or grant agreement shall be transferable by the recipient
only upon such terms and conditions as are set forth in the
restricted stock agreement, as our board of directors shall
determine in its discretion, so long as shares of common stock
awarded under the restricted stock agreement remain subject to the
terms of such agreement.
Adjustment
Provisions.
If any change is made to our outstanding shares of
common stock without our receipt of consideration (whether through
reorganization, stock dividend or stock split, or other specified
change in our capital structure), appropriate adjustments may be
made in the class and maximum number of shares of common stock
subject to the 2012 Plan and outstanding awards. In that event, the
2012 Plan will be appropriately adjusted in the class and maximum
number of shares of common stock subject to the 2012 Plan, and
outstanding awards may be adjusted in the class, number of shares
and price per share of common stock subject to such
awards.
Effect of Certain Corporate
Events.
In the event of (a) a liquidation or
dissolution of the Company; (b) a merger or consolidation of
the Company with or into another corporation or entity (other than
a merger with a wholly-owned subsidiary); (c) a sale of all or
substantially all of the assets of the Company; or (d) a
purchase or other acquisition of more than 50% of the outstanding
stock of the Company by one person or by more than one person
acting in concert, any surviving or acquiring corporation may
assume awards outstanding under the 2012 Plan or may substitute
similar awards. Unless the stock award agreement otherwise
provides, in the event any surviving or acquiring corporation does
not assume such awards or substitute similar awards, then the
awards will terminate if not exercised at or prior to such
event.
21
Duration, Amendment and
Termination.
Our board of
directors may suspend or terminate the 2012 Plan without
stockholder approval or ratification at any time or from time to
time. Unless sooner terminated, the 2012 Plan will terminate ten
years from the date of its adoption by our board of directors,
i.e., in June 2022.
Our
board of directors may also amend the 2012 Plan at any time, and
from time to time. However, except as it relates to adjustments
upon changes in common stock, no amendment will be effective unless
approved by our stockholders to the extent stockholder approval is
necessary to preserve incentive stock option treatment for federal
income tax purposes. Our board of directors may submit any other
amendment to the 2012 Plan for stockholder approval if it concludes
that stockholder approval is otherwise advisable.
As
of the Record Date, options to purchase 1,287,000 shares
of common stock and 5,044,130 shares of restricted stock
have been issued under the 2012 Plan,
with 1,668,870 shares of common stock remaining available
for issuance under the 2012 Plan. The options have a weighted
average exercise price of $2.19 per share and have expiration
dates ranging from 2021 to 2025.
2012 Pacific Energy Development (Pre-Merger) Plan
On
February 9, 2012, prior to the Pacific Energy Development merger,
Pacific Energy Development adopted the Pacific Energy Development
2012 Equity Incentive Plan, which we refer to as the 2012
Pre-Merger Plan. We assumed the obligations of the 2012 Pre-Merger
Plan pursuant to the Pacific Energy Development merger, though the
2012 Pre-Merger Plan has been superseded by the 2012 Plan
(described above).
The
2012 Pre-Merger Plan provides for awards of incentive stock
options, non-statutory stock options, rights to acquire restricted
stock, stock appreciation rights, or SARs, and performance units
and performance shares. Subject to the provisions of the 2012
Pre-Merger Plan relating to adjustments upon changes in our common
stock, an aggregate of 100,000 shares of common stock have
been reserved for issuance under the 2012 Pre-Merger
Plan.
The
board of directors of Pacific Energy Development adopted the 2012
Pre-Merger Plan to provide a means by which its employees,
directors and consultants may be given an opportunity to benefit
from increases in the value of its common stock, to assist in
attracting and retaining the services of such persons, to bind the
interests of eligible recipients more closely to our interests by
offering them opportunities to acquire shares of our common stock
and to afford such persons stock-based compensation opportunities
that are competitive with those afforded by similar
businesses.
The exercise price of incentive stock options may
not be less than the fair market value of the common stock subject
to the option on the date of the grant and, in some cases, may not
be less than 110% of such fair market value. The exercise price of
nonstatutory options also may not be less than the fair market
value of the common stock on the date of grant. Options granted
under the 2012 Pre-Merger Plan may be exercisable in cumulative
increments, or “
vest,
”
as determined by the board of directors of Pacific Energy
Development at the time of grant.
Shares
of restricted stock could be issued under the 2012 Pre-Merger
Plan as a grant or for such consideration, including services, and,
subject to the Sarbanes-Oxley Act of 2002, promissory notes, as
determined in the sole discretion of the Pacific Energy Development
board of directors. Shares of restricted stock acquired under a
restricted stock purchase or grant agreement could, but need not,
be subject to forfeiture or other restrictions that will lapse in
accordance with a vesting schedule determined by the board of
directors of Pacific Energy Development at the time of grant. In
the event a recipient’s employment or service with the
Company terminates, any or all of the shares of common stock held
by such recipient that have not vested as of the date of
termination under the terms of the restricted stock agreement may
be forfeited to the Company in accordance with such restricted
stock agreement.
Appropriate
adjustments may be made to outstanding awards in the event of
changes in our outstanding shares of common stock, whether through
reorganization, stock dividend or stock split, or other specified
change in capital structure of the Company. In the event of
liquidation, merger or consolidation, sale of all or substantially
all of the assets of the Company, or other change in control, any
surviving or acquiring corporation may assume awards outstanding
under the 2012 Pre-Merger Plan or may substitute similar awards.
Unless the stock award agreement otherwise provides, in the event
any surviving or acquiring corporation does not assume such awards
or substitute similar awards, then the awards will terminate if not
exercised at or prior to such event.
As
of the date of this Annual Report, 21,635 options remain
outstanding under the 2012 Pre-Merger Plan. These options have a
weighted average exercise price of $4.98 per share and have
expiration dates ranging from May 31, 2021 to June 18,
2022.
22
At the
annual meeting of our stockowners held on December 28, 2017,
stockholders holding 37.2% of the total shares eligible to be voted
at the annual meeting, 91.9% of the shares voted at the annual
meeting and 94.9% of the total votes cast on the proposal, voted in
favor of our named executive officers’ 2017 compensation. The
board of directors and the Compensation Committee considered these
favorable results and did not make significant changes to our
executive compensation program because it believes this advisory
stockholder vote indicates strong support for our current
compensation policies. Stockholders are being asked to vote on
execution compensation again at the annual meeting.
Dr. Simon
Kukes
.
Dr. Kukes has agreed to receive an annual salary
of $1 as his compensation for serving as Chief Executive Officer of
the Company and as a member of the Board of Directors and to not
charge the Company for any personal business expenses he incurs in
connection with such positions. Notwithstanding the above, Dr.
Kukes was not paid any salary for 2019 or 2018.
J. Douglas
Schick
. On August 1, 2018, in
connection with his appointment as President of the Company, we
entered into an offer letter with J. Douglas Schick (the
“
Offer
Letter
”). Pursuant to the
Offer Letter, Mr. Schick agreed to serve as President of the
Company on an at-will basis; the Company agreed to pay Mr. Schick
$20,833 per month (as reduced by the Temporary Salary Reductions as
discussed below) and that Mr. Schick is eligible for an annual
bonus in the discretion of the Company totaling up to 40% of his
then current salary and may also receive grants of restricted stock
and options in the Board of Directors’ sole discretion. Mr.
Schick’s employment may be terminated by him or the Company
with 30 days prior written notice. In the event Mr.
Schick’s employment with the Company is terminated by the
Company without “
Cause
,”
the Company will (a) pay Mr. Schick an amount equal to twelve
(12) months of his then-current annual base salary, and
(b) immediately accelerate by twelve (12) months the
vesting of all outstanding Company restricted stock and options
exercisable for Company capital stock held by Mr. Schick. For
purposes of the Offer Letter, “
Cause
”
means Mr. Schick’s (1) conviction of, or plea of nolo
contendere to, a felony or any other crime involving moral
turpitude; (2) fraud on or misappropriation of any funds or
property of the Company or any of its affiliates, customers or
vendors; (3) act of material dishonesty, willful misconduct,
willful violation of any law, rule or regulation, or breach of
fiduciary duty involving personal profit, in each case made in
connection with his responsibilities as an employee, officer or
director of the Company and which has, or could reasonably be
deemed to result in, a material adverse effect upon the Company;
(4) illegal use or distribution of drugs; (5) willful
material violation of any policy or code of conduct of the Company;
or (6) material breach of any provision of the Offer Letter or
any other employment, non-disclosure, non-competition,
non-solicitation or other similar agreement executed by him for the
benefit of the Company or any of its affiliates, all as reasonably
determined in good faith by the Board of Directors of the Company.
However, an event that is or would constitute
“
Cause
”
shall cease to be “
Cause
”
if he reverses the action or cures the default that constitutes
“
Cause
”
within 10 days after the Company notifies him in writing that Cause
exists.
The
Offer Letter contains standard confidentiality provisions; a
standard non-compete restriction prohibiting Mr. Schick from
competing against the Company during the term of his employment and
for one year thereafter in connection with any directly competitive
enterprise, commercial venture, or project involving petroleum
exploration, development, or production activities in the same
geographic areas as the Company’s activities or doing
business with the Company during the six-month period before the
termination of his employment, with certain exceptions; and a
non-solicitation provision prohibiting him from inducing or
attempting to induce any employee of the company from leaving their
employment with the Company and/or attempting to induce any
consultant, service provider, customer or business relation of the
Company from terminating their relationship with the Company during
the term of his employment and for one year
thereafter.
On March 31, 2020, Mr. Schick and the Company
entered into an amendment to his Offer Letter discussed in greater
detail below under “
Temporary Salary
Reductions and Amendments to Employment
Agreements
”.
Clark R.
Moore.
Pacific Energy
Development, our wholly-owned subsidiary, has entered into an
employment agreement, dated June 10, 2011, as amended January 11,
2013, with Clark Moore, its Executive Vice President, Secretary and
General Counsel (the “
Moore Employment
Agreement
”), pursuant to
which, effective June 1, 2011, Mr. Moore has been employed by
Pacific Energy Development, with a current annual base salary
of $250,000 (which has been reduced by the Temporary Salary
Reductions discussed below), and a target annual cash bonus of
between 20% and 40% of his base salary, awardable by the board of
directors in its discretion. In addition, Mr. Moore’s
employment agreement includes, among other things, severance
payment provisions that would require the Company to make lump sum
payments equal to 18 months’ salary and target bonus to Mr.
Moore in the event his employment is terminated due to his death or
disability, terminated without “
Cause
”
or if he voluntarily resigns for “
Good
Reason
” (36 months in
connection with a “
Change of
Control
”), and
continuation of benefits for up to 36 months (48 months in
connection with a “
Change of
Control
”), as such terms
are defined in the employment agreement. The employment agreement
also prohibits Mr. Moore from engaging in competitive activities
during and following termination of his employment that would
result in disclosure of our confidential information, but does not
contain a general restriction on engaging in competitive
activities.
23
For purposes of the Moore Employment Agreement,
the term “
Cause
”
means his (1) conviction of, or plea of nolo contendere to, a
felony or any other crime involving moral turpitude; (2) fraud
on or misappropriation of any funds or property of our company or
any of its affiliates, customers or vendors; (3) act of
material dishonesty, willful misconduct, willful violation of any
law, rule or regulation, or breach of fiduciary duty involving
personal profit, in each case made in connection with his
responsibilities as an employee, officer or director of our company
and which has, or could reasonably be deemed to result in, a
Material Adverse Effect upon our company; (4) illegal use or
distribution of drugs; (5) material violation of any policy or
code of conduct of our company; or (6) material breach of any
provision of the employment agreement or any other employment,
non-disclosure, non-competition, non-solicitation or other similar
agreement executed by him for the benefit of our company or any of
its affiliates, all as reasonably determined in good faith by the
board of directors of our company. However, an event that is or
would constitute “
Cause
”
shall cease to be “
Cause
”
if he reverses the action or cures the default that constitutes
“
Cause
”
within 10 days after our company notifies him in writing that Cause
exists. No act or failure to act on Mr. Moore’s part will be
considered “
willful
”
unless it is done, or omitted to be done, by him in bad faith or
without reasonable belief that such action or omission was in the
best interests of our company. Any act or failure to act that is
based on authority given pursuant to a resolution duly passed by
the board of directors, or the advice of counsel to our company,
shall be conclusively presumed to be done, or omitted to be done,
in good faith and in the best interests of the
Company.
For purposes of the Moore Employment Agreement,
“
Material Adverse
Effect
” means any event,
change or effect that is materially adverse to the condition
(financial or otherwise), properties, assets, liabilities,
business, operations or results of operations of our company or its
subsidiaries, taken as a whole.
For purposes of the Moore Employment Agreement,
“
Good
Reason
” means the
occurrence of any of the following without his written consent:
(a) the assignment to him of duties substantially inconsistent
with this employment agreement or a material adverse change in his
titles or authority; (b) any failure by our company to comply
with the compensation provisions of the agreement in any material
way; (c) any material breach of the employment agreement by
our company; or (d) the relocation of him by more than fifty
(50) miles from the location of our company’s office
located in Danville, California. However, an event that is or would
constitute “
Good
Reason
” shall cease to be
“
Good
Reason
” if: (i) he
does not terminate employment within 45 days after the event
occurs; (ii) before he terminates employment, we reverse the
action or cure the default that constitutes
“
Good
Reason
” within 10 days
after he notifies us in writing that Good Reason exists; or
(iii) he was a primary instigator of the
“
Good
Reason
” event and the
circumstances make it inappropriate for him to receive
“
Good
Reason
” termination
benefits under the employment agreement (e.g., he agrees
temporarily to relinquish his position on the occurrence of a
merger transaction he assists in negotiating).
For
purposes of the Moore Employment Agreement,
“
Change of
Control
” means:
(i) a merger, consolidation or sale of capital stock by
existing holders of capital stock of our company that results in
more than 50% of the combined voting power of the then outstanding
capital stock of our company or its successor changing ownership;
(ii) the sale, or exclusive license, of all or substantially
all of our company’s assets; or (iii) the individuals
constituting our company’s board of directors as of the date
of the employment agreement (the “
Incumbent Board of
Directors
”) cease
for any reason to constitute at least 1/2 of the members of the
board of directors; provided, however, that if the election, or
nomination for election by our stockholders, of any new director
was approved by a vote of the Incumbent Board of Directors, such
new director shall be considered a member of the Incumbent Board of
Directors. Notwithstanding the foregoing and for purposes of
clarity, a transaction shall not constitute a Change in Control if:
(w) its sole purpose is to change the state of our
company’s incorporation; (x) its sole purpose is to
create a holding company that will be owned in substantially the
same proportions by the persons who held our company’s
securities immediately before such transaction; or (y) it is a
transaction effected primarily for the purpose of financing our
company with cash (as determined by the board of directors in its
discretion and without regard to whether such transaction is
effectuated by a merger, equity financing or
otherwise).
On March 31, 2020, Mr. Moore and the Company
entered into an amendment to his employment agreement discussed in
greater detail below under “
Temporary Salary
Reductions and Amendments to Employment
Agreements
”.
Paul A.
Pinkston.
On December 1,
2018, the Company appointed Mr. Pinkston as the Chief Accounting
Officer of the Company and Mr. Pinkston commenced employment with
the Company pursuant to the terms of an Offer Letter, dated October
16, 2018, and effective December 1, 2018, entered into by and
between the Company and Mr. Pinkston (the
“
Pinkston
Offer Letter
”). Also
effective on December 1, 2018, Mr. Pinkston commenced serving as
the Company’s Principal Financial and Accounting Officer of
the Company.
Pursuant
to the Pinkston Offer Letter, Mr. Pinkston agreed to serve as Chief
Accounting Officer of the Company on an at-will basis, the Company
agreed to pay Mr. Pinkston $11,666.67 per month (subject to the
Temporary Salary Reductions discussed below), Mr. Pinkston is
eligible for an annual bonus in the discretion of the Board of
Directors of the Company totaling up to 30% of his then current
salary, Mr. Pinkston may also receive grants of restricted stock
and options in the Board of Directors’ sole discretion, and
Mr. Pinkston’s employment may be terminated by him or the
Company with 30 days prior written notice. In addition, Mr.
Pinkston was granted 30,000 shares of the Company’s common
stock under the Company’s employee equity incentive plan, 50%
of which shares vest on Mr. Pinkston’s one (1) year
anniversary of his employment commencement date, and 50% of which
shares vest on Mr. Pinkston’s two (2) year anniversary
of his employment commencement date, subject to Mr.
Pinkston’s continued service with the Company and the terms
of a Board-approved restricted stock purchase agreement entered
into between Mr. Pinkston and the Company.
24
The
Pinkston Offer Letter contains standard confidentiality provisions
and a standard a non-solicitation provision prohibiting him from
inducing or attempting to induce any employee of the Company from
leaving their employment with the Company and/or attempting to
induce any consultant, service provider, customer or business
relation of the Company from terminating their relationship with
the Company during the term of his employment and for one year
thereafter.
On March 31, 2020, as part of the Company’s
efforts to reduce operating and corporate costs, the independent
Compensation Committee of the Company’s Board of Directors
approved a 20% reduction in salary for all of the Company’s
salaried employees, effective April 1, 2020 (the
“
Temporary Salary
Reductions
”).
In connection with the 20% salary reduction, on
March 31, 2020, the Company and each of Mr. Douglas J. Schick, the
Company’s President, and Mr. Clark R. Moore, the
Company’s Executive Vice President, General Counsel, and
Secretary, entered into amendments to their respective employment
agreements (the “
Amendments
”)
to effect the salary reductions on a temporary basis, until such
time as the Company determines, in its reasonable discretion, that
oil markets have recovered to acceptable levels (the
“
Salary Reduction
Period
”), which
determination has not been made to date. The Amendments to Messrs.
Schick’s and Moore’s employment agreements do not,
however, reduce the amount of severance compensation that such
executive would receive under their respective employment
agreements in the event of an applicable termination of their
respective employment, subject to the terms of such employment
agreements.
In addition, the amendment entered into with Mr.
Schick includes a provision whereby, in the event Mr.
Schick’s employment with the Company is voluntarily
terminated by him due to the Company failing to pay his base salary
(as currently reduced as disclosed above) without his written
consent, the Company will (a) continue to pay Mr. Schick an amount
equal to his base salary as in effect immediately before his
termination of employment on the same bi-monthly schedule and
amounts (less required withholdings) as he received such salary
payments prior to his date of termination (the
“
Cash
Payments
”), which Cash
Payments shall be reported by the Company on IRS Form 1099 as
income to Mr. Schick and will continue until the earlier to occur
of (x) the date that is twelve (12) months after the termination of
his employment or (y) the date that he commences employment with
another employer that pays him a base salary equal to, or greater
than, his base salary as in effect immediately before his
termination of employment, provided that, if his new employer pays
him less than his Company base salary, he shall only be entitled to
Cash Payment amounts going forward through the remainder of the
twelve (12) month term equal to (i) his Company base salary at the
time of his termination minus the salary he receives from his new
employer; and (b) continue to vest his outstanding Company
restricted stock and options exercisable for Company capital stock
issued to him by the Company which are then held by him on his date
of termination on their then-current vesting schedules during the
period of up to twelve (12) months that he continues to receive the
Cash Payments, in exchange for a full and complete release of
claims against the Company, its affiliates, officers and directors
in a form reasonably acceptable to the Company. Upon the date that
his Cash Payments discontinue, he shall no longer continue to vest
into any outstanding Company restricted stock or options. The Cash
Payments payable to Mr. Schick and the other amounts, based on his
salary, which may be due to him upon termination of his offer
letter upon certain events, and subject to the terms thereof,
during the Salary Reduction Period will continue to be based on Mr.
Schick’s non-reduced salary.
As
discussed above, Dr. Simon Kukes, our Chief Executive Officer and
director, has agreed to receive an annual salary of $1 as his
compensation for serving as Chief Executive Officer of the Company
and as a member of the Board of Directors and to not charge the
Company for any personal business expenses he incurs in connection
with such positions. We do not currently have a formal written
agreement in place with Dr. Kukes. To date, Dr. Kukes has not
accepted any salary from the Company (including his $1 annual
compensation).
Frank C.
Ingriselli.
Mr.
Frank C. Ingriselli entered into an Employment Agreement with
Pacific Energy Development, our wholly-owned subsidiary on May 10,
2018 (the “
Ingriselli Employment
Agreement
”). Pursuant to
the Ingriselli Employment Agreement, which had an effective date of
June 1, 2018, Mr. Ingriselli served as our President at an annual
base salary of $250,000, and a target annual cash bonus of
between 20% and 40% of his base salary, awardable by the Board of
Directors in its discretion. The Company also agreed to pay Mr.
Ingriselli standard benefits as other executive officers of the
Company. In addition, the Ingriselli Employment Agreement included
certain termination and severance provisions which provided for,
among other things, severance payment provisions that would require
the Company to make lump sum payments equal to 18 months’
salary and target bonus (payable within thirty days after
termination) to Mr. Ingriselli in the event his employment was
terminated due to his death or disability, terminated without
“
Cause
”
or if he voluntarily resigned for “
Good
Reason
” (36 months in
connection with a “
Change of
Control
”), and
continuation of benefits for up to 36 months (48 months in
connection with a “
Change of
Control
”), as such terms
are defined in the Ingriselli Employment
Agreement.
The definitions of “
Cause
”
(including the applicable cure provisions associated therewith),
“
Material Adverse
Effect
”,
“
Good
Reason
” and
“
Change of
Control
” in Mr.
Ingriselli’s employment agreement were substantially the same
as in Mr. Moore’s employment agreement as discussed
above.
25
In
addition, as additional consideration for Mr. Ingriselli rejoining
the Company as its President (which position he held until August
2018) and Chief Executive Officer (which position he held
until July 2018), on May 10, 2018, the Company granted Mr.
Ingriselli 80,000 shares of restricted Company common stock under
the Company’s Amended and Restated 2012 Equity Incentive
Plan, vesting with respect to 60,000 shares on the six
(6) month anniversary of June 1, 2018 and 20,000 of the shares
on the nine (9) month anniversary of June 1, 2018, subject to
his continued service as an employee of or consultant to the
Company on such vesting dates, and subject to the terms and
conditions of a Restricted Shares Grant Agreement entered into by
and between the Company and Mr. Ingriselli.
In an effort to reduce the general and
administrative expenses of the Company, Mr. Ingriselli, the
Company’s then-Chairman and former President and Chief
Executive Officer, agreed to retire from the Company as an
employee, effective September 6, 2018. Mr. Ingriselli
continued as the Non-Executive Chairman of the Company’s
Board of Directors until his resignation from the Board on
September 27, 2018, and continued to work with the Company in a
transitional consulting capacity until October 1, 2018 (the
“
Ingriselli Transition
Period
”) through his
wholly-owned consulting firm, Global Ventures Investments Inc.
(“
GVEST
”),
pursuant to an Agreement dated September 6, 2018, entered into by
and between the Company and GVEST (the “
Consulting
Agreement
”). Pursuant to the
Consulting Agreement, through GVEST Mr. Ingriselli agreed to
provide the Company with services in the areas of investor
relations, public relations, financing strategies, corporate
strategies and development of business opportunities through the
Ingriselli Transition Period in exchange for the acceleration of
vesting of an aggregate of 140,000 shares of restricted common
stock previously issued to Mr. Ingriselli by the Company (the
“
Unvested Ingriselli
Shares
”), which would
have otherwise vested in full on March 1, 2019, subject to Mr.
Ingriselli’s continued service to the Company, and would have
otherwise been forfeited by Mr. Ingriselli upon his resignation
prior to such vesting date. In addition, the Company and
Mr. Ingriselli entered into an Employee Separation and Release
dated September 6, 2018 (the “
Ingriselli Separation
Agreement
”), pursuant to
which Mr. Ingriselli agreed to (i) waive all severance
benefits to which he was entitled under his Executive Employment
Agreement dated May 10, 2018 (the “
Ingriselli Employment
Agreement
”), including,
but not limited to, waiver of any payments by the Company to Mr.
Ingriselli of a lump sum payment equal to up to eighteen
(18) months’ salary and 30% bonus, and continued medical
benefits for up to three (3) years, in the event of Mr.
Ingriselli’s termination under certain circumstances,
pursuant to the terms of the Ingriselli Employment Agreement, and
(ii) fully-release the Company from all claims, in exchange
for the Company agreeing to (x) allow Mr. Ingriselli to
transfer the Unvested Ingriselli Shares to GVEST, and (y) pay
a lump sum cash payment of $350,000 to Mr. Ingriselli after seven
(7) days following the effectiveness of the Separation
Agreement, which the Company paid in full.
Michael L.
Peterson
.
The Company and Mr. Peterson (who previously
served as the Company’s President and Chief Executive
Officer) entered into a customary Employee Separation and
Release on May 10, 2018 (the “
Separation
Agreement
”), pursuant to
which Mr. Peterson agreed to fully-release the Company from all
claims, in exchange for the Company agreeing to make a lump sum
payment of $20,000 upon effectiveness of the Separation Agreement.
In addition, in order to assist in the transition of his executive
duties to Mr. Ingriselli, and to continue to support the
Company’s ongoing efforts to restructure its debt prior to
its maturity in the second quarter of 2019, Mr. Peterson agreed to
continue to work with the Company in a consulting capacity for a
period of twelve (12) months commencing June 1, 2018 (the
“
Consulting
Term
”, which was
renewable thereafter for additional one month terms pursuant to the
terms of the agreement) pursuant to an Independent Contractor
Agreement dated May 10, 2018 entered into by and between the
Company and Mr. Peterson (the “
Peterson Consulting
Agreement
”). Pursuant to the
Peterson Consulting Agreement, Mr. Peterson provided the Company
with executive transition, debt restructuring, strategic planning
and capital markets support and services through the Consulting
Term in exchange for monthly fee of $5,000. The Peterson Consulting
Agreement is terminable by the Company at any time for
“
Cause
”,
as similarly defined under the Ingriselli Employment Agreement as
described above. The Company terminated the Peterson Consulting
Agreement effective June 30, 2019.
On
September 1, 2011, Pacific Energy Development, our wholly-owned
subsidiary, entered into a Consulting Agreement engaging Michael L.
Peterson to serve as Executive Vice President of Pacific Energy
Development. This Consulting Agreement was superseded by an
employment offer letter dated February 1, 2012, which employment
offer letter was later amended and restated in full on June 16,
2012 and further amended on April 25, 2016 in connection with his
promotion to the office of Chief Executive Officer of the Company.
Pursuant to Mr. Peterson’s employment offer letter, Mr.
Peterson served the Chief Executive Officer and President of the
Company (positions he held until May 31, 2018) at an annual
base salary of $300,000, and a target annual cash bonus of
between 20% and 40% of his base salary, awardable by the board of
directors in its discretion. Mr. Peterson’s employment offer
letter was terminated on May 31, 2018.
Gregory
Overholtzer.
Mr.
Overholtzer served as the Chief Financial Officer of the Company
from May 2016 to December 31, 2018, and formerly as the
Company’s Corporate Controller from January 2012 to May 2016,
and as the Company’s Vice President, Finance and Corporate
Controller from June 2012 to May 2016.
Effective
May 1, 2016, in connection with Mr. Overholtzer’s appointment
as Chief Financial Officer of the Company, the Company entered into
an Amendment No. 1 to Employment Agreement on April 25, 2016 with
Mr. Overholtzer (the “
Amended Overholtzer
Employment Agreement
”),
which amended that certain Employment Letter Agreement dated June
16, 2012, entered into by and between the Company as
successor-in-interest to Pacific Energy Development Corp. and Mr.
Overholtzer in connection with his original employment with the
Company, and provided that the Company may terminate Mr.
Overholtzer’ s employment for any reason with thirty
(30) days prior written notice (the “
Overholtzer Employment
Agreement
”). Mr.
Overholtzer had an annual base salary of $190,000, and was eligible
for a discretionary cash performance bonus each year of up to 30%
of his then-current annual base salary.
26
In connection with the Company’s
consolidation of accounting operations to its new Houston, Texas
headquarters, on December 31, 2018, the Company and Mr.
Overholtzer entered into a Separation and General Release Agreement
(the “
Overholtzer Separation
Agreement
”) pursuant
to which, effective December 31, 2018 (the
“
Overholtzer Separation
Date
”), Mr. Overholtzer
and the Company mutually agreed to discontinue Mr.
Overholtzer’s employment with the Company and Mr. Overholtzer
resigned from all positions held with the Company and its
subsidiaries. Mr. Overholtzer continued to work with the Company in
a transitional consulting capacity until April 7, 2019 (the
“
Transition
Period
”) pursuant to
a Consulting Agreement entered into by and between the Company and
Mr. Overholtzer on January 1, 2019 (the “
Overholtzer Consulting
Agreement
”). Pursuant to the
Overholtzer Consulting Agreement, Mr. Overholtzer agreed to provide
accounting and financial reporting services and support to the
Company for an average of up to six (6) hours per week during
the Overholtzer Transition Period in exchange for cash compensation
of $15,000 per month and continued COBRA insurance coverage for Mr.
Overholtzer and his dependents paid for by the Company during the
Overholtzer Transition Period. Upon the successful conclusion of
the Overholtzer Transition Period, (i) the Company agreed to
accelerate the vesting of an aggregate of 20,000 shares of
restricted common stock previously issued to Mr. Overholtzer by the
Company (the “
Unvested Overholtzer
Shares
”), which would
have otherwise vested ratably over three years through December 12,
2021, subject to Mr. Overholtzer’s continued service to the
Company, and which would have otherwise been forfeited by Mr.
Overholtzer upon his separation from the Company prior to such
vesting date, (ii) the Company agreed to accelerate the
vesting of options to purchase an aggregate of 30,000 shares of the
Company’s common stock at an exercise price of $0.3088 per
share previously issued to Mr. Overholtzer by the Company (the
“
Unvested Overholtzer
Options
”), which would
have otherwise vested in full on June 28, 2019, subject to Mr.
Overholtzer’s continued service to the Company, and which
would have otherwise been forfeited by Mr. Overholtzer upon his
separation from the Company prior to such vesting date, and
(iii) the Company agreed to extend the exercise period for all
of Mr. Overholtzer’s options for a period of three
(3) years following the Overholtzer Separation Date
(regardless of their original terms). In addition,
pursuant to the Overholtzer Separation Agreement, Mr. Overholtzer
agreed to fully-release the Company from all claims in exchange for
the Company agreeing to pay a lump sum cash payment of $15,833.33
to Mr. Overholtzer following the effectiveness of the Overholtzer
Separation Agreement.
Except as discussed below, referenced below, or
otherwise disclosed above under “
Executive
Compensation
”,
“
Agreements with
Current Named Executive Officers
” and “
Agreements with
Former Named Executive Officers
”, beginning on pages
16
,
23
and
25
,
respectively, there have been no transactions since January 1,
2018, and there is not currently any proposed transaction, in which
the Company was or is to be a participant, where the amount
involved exceeds $120,000, and in which any officer, director, or
any stockholder owning greater than five percent (5%) of our
outstanding voting shares, nor any member of the above referenced
individual’s immediate family, had or will have a direct or
indirect material interest.
On September 20, 2018, SK Energy LLC
(“
SK
Energy
”), a company
wholly-owned by our Chief Executive Officer and director, Dr. Simon
Kukes, entered into an agreement with American Resources Inc.
(“
American
”),
whose principals are Ivar Siem, a member of the Board of Directors
of the Company, and J. Douglas Schick, the President of the
Company. Pursuant to the agreement, American agreed to assist Dr.
Kukes with his investments in the Company and SK Energy agreed to
pay American 25% of the profit realized by SK Energy, if any,
following the sale or disposal of the securities of the Company
which SK Energy holds and may acquire in the future (prior to such
sale/disposition). The profit is to be calculated based on
(x) the amount of consideration received by SK Energy in
connection with the sale of such securities, minus (y) the
consideration paid by SK Energy for the securities, increased by
10% each year that such securities are held. The agreement has a
term of four years, but can be terminated at any time by SK Energy
with written notice to American.
Effective November 8, 2019, the Company entered
into an Advisory Agreement and Restricted Shares Grant Agreement
with Viktor Tkachev, a greater than 10% stockholder of the Company
(who acquired $12 million of shares of common stock on
September 17, 2019), under which Mr. Tkachev agreed to
provide strategic planning and business development services,
and pursuant to which 100,000 shares of restricted common
stock were awarded to Mr. Tkachev under the Company’s Amended
and Restated 2012 Equity Incentive Plan (the
“
Plan
”),
vesting in full on the six-month anniversary of the grant date,
subject to his continued service with the Company, in consideration
for advisory services to be provided by Mr. Tkachev to the Company.
The Advisory Agreement contains customary confidentiality,
indemnification and no conflict language, and may be terminated by
the Company or the advisor with 15 days prior written notice for
any reason.
Effective
November 8, 2019, the Company entered into an Advisory Agreement
with Ivar Siem, a member of the Board of Directors, pursuant to
which the 50,000 restricted shares of common stock previously
awarded to Mr. Siem on August 28, 2019 under the Plan continue to
vest, with 100% vesting on July 12, 2020, subject to Mr. Siem
continuing to provide advisory services to the Company on such
vesting date, and subject to the terms and conditions of a
Restricted Shares Grant Agreement entered into by and between the
Company and Mr. Siem on August 28, 2019. The Advisory Agreement
contains customary confidentiality, indemnification and no conflict
language; and may be terminated by the Company or the advisor with
15 days prior written notice for any reason.
27
SK Energy Note and Related Transactions
On June 26, 2018, the Company borrowed $7.7
million from SK Energy, which amount was evidenced by a Promissory
Note dated June 25, 2018, in the amount of $7.7 million (the
“
SK Energy
Note
”). SK Energy is 100%
owned and controlled by Dr. Simon Kukes, our Chief Executive
Officer and director. The SK Energy Note accrues interest monthly
at 8% per annum, payable quarterly (beginning October 15, 2018), in
either cash or shares of common stock (at the option of the
Company), or with the consent of SK Energy, such interest may be
accrued and capitalized. If interest on the SK Energy Note is paid
in common stock, SK Energy will be due that number of shares of
common stock as equals the amount due divided by the average of the
closing sales prices of the Company’s common stock for the
ten trading days immediately preceding the last day of the calendar
quarter prior to the applicable payment date, rounded up to the
nearest whole share of common stock (the “
Interest
Shares
”). The SK Energy
Note is due and payable on June 25, 2021, but may be prepaid at any
time, without penalty. Other than in connection with the Interest
Shares. The SK Energy Note contains standard and customary events
of default and upon the occurrence of an event of default, the
amount owed under the SK Energy Note accrues interest at 10% per
annum. As additional consideration for SK Energy agreeing to the
terms of the SK Energy Note, the Company issued SK Energy 600,000
shares of common stock (the “
Loan
Shares
”).
As part of the same transaction and as a required
condition to closing the sale of the SK Energy Note, SK Energy
entered into a Stock Purchase Agreement with Golden Globe Energy
(US), LLC (“
GGE
”), the then holder of our outstanding
66,625 shares of Series A Convertible Preferred Stock (convertible
pursuant to their terms into 6,662,500 shares of the
Company’s common stock – 47.6% of the Company’s
then outstanding shares post-conversion), pursuant to which on June
25, 2018, SK Energy purchased, for $100,000, all of the Series A
Convertible Preferred Stock).
Series A Convertible Preferred Stock Amendment and
Conversion
In connection with the Stock Purchase Agreement,
and immediately following the closing of the acquisition described
in the Stock Purchase Agreement (discussed above), the Company and
SK Energy, as the then holder of all of the then outstanding shares
of Series A Convertible Preferred Stock, agreed to the filing of an
Amendment to the Amended and Restated Certificate of Designations
of PEDEVCO Corp. Establishing the Designations, Preferences,
Limitations and Relative Rights of Its Series A Convertible
Preferred Stock (the “
Preferred
Amendment
”), which
amended the designation of our Series A Convertible Preferred Stock
(the “
Designation
”)
to remove the beneficial ownership restriction contained therein,
which prevented any holder of Series A Convertible Preferred Stock
from converting such Series A Convertible Preferred Stock into
shares of common stock of the Company if such conversion would
result in the holder thereof holding more than 9.9% of the
Company’s then outstanding common stock. The Company filed
the Preferred Amendment with the Secretary of State of Texas on
June 26, 2018.
On
July 3, 2018, SK Energy converted all of the Series A Convertible
Preferred Stock shares it acquired pursuant to the Stock Purchase
Agreement with GGE, pursuant to their terms, into 6,662,500 shares
of the Company’s common stock, representing 45.3% of the
Company’s then outstanding common stock, and resulting in
approximately 14,717,119 shares of the Company’s common stock
being issued and outstanding. The issuance was deemed a change of
control under applicable NYSE American rules and regulations,
provided that such issuance was previously approved at the 2015
annual meeting of stockholders of the Company held on October 7,
2015. The conversion transaction constituted a change in control of
the Company under applicable NYSE American rules and
regulations. The shares of common stock issued upon conversion
of the Series A Convertible Preferred Stock, together with the Loan
Shares (issued to SK Energy on June 26, 2018) totaled 49.9% of our
then outstanding shares of common stock, which shares are
beneficially owned by SK Energy and Dr. Kukes.
Convertible Note Sales
On August 1, 2018, we raised $23,600,000 through
the sale of $23,600,000 in Convertible Promissory Notes (the
“
Convertible
Notes
”). A total of
$22,000,000 in Convertible Notes was purchased by SK Energy;
$200,000 in Convertible Notes was purchased by an executive officer
of SK Energy; $500,000 in Convertible Notes was purchased by a
trust affiliated with John J. Scelfo, a director of the Company;
$500,000 in Convertible Notes was purchased by an entity affiliated
with Ivar Siem, our director, and J. Douglas Schick, who was
appointed as the President of the Company on August 1, 2018;
$200,000 in Convertible Notes was purchased by H. Douglas Evans,
who was appointed as a member of the Board of Directors on
September 27, 2018; and $200,000 in Convertible Notes were
purchased by an unaffiliated party.
The
Convertible Notes accrue interest monthly at 8.5% per annum, which
interest is payable on the maturity date unless otherwise converted
into our common stock as described below.
The Convertible Notes and all accrued interest
thereon are convertible into shares of our common stock, from time
to time after August 29, 2018, at the option of the holders
thereof, at a conversion price equal to the greater of (x) $0.10
above the greater of the book value of the Company’s common
stock and the closing sales price of the Company’s common
stock on the date the Convertible Notes were entered into (the
“
Book/Market
Price
”) (which
was $2.13 per share); (y) $1.63 per share; and (z) the
VWAP Price, defined as the volume weighted average price
(calculated by aggregate trading value on each trading day) of the
Company’s common stock for the 20 trading days ending August
29, 2018, which price was $2.08 per share, and which conversion
price is therefore $2.13 per share.
28
The conversion of the SK Energy Convertible Note
is subject to a 49.9% conversion limitation (for so long as SK
Energy or any of its affiliates holds such note), which prevents
the conversion of any portion thereof into common stock of the
Company if such conversion would result in SK Energy beneficially
owning (as such term is defined in the Exchange
Act)(“
Beneficially
Owning
”) more than 49.9%
of the Company’s outstanding shares of common
stock.
The conversion of the other Convertible Notes is
subject to a 4.99% conversion limitation, at any time such note is
Beneficially Owned by any party other than (i) SK Energy or any of
its affiliates (which is subject to the separate conversion
limitation described above); (ii) any officer of the Company; (iii)
any director of the Company; or (iv) any person which at the time
of first obtaining Beneficial Ownership of the Convertible Note
beneficially owns more than 9.99% of the Company’s
outstanding common stock or voting stock (collectively (ii) through
(iv), “
Borrower
Affiliates
”). The
Convertible Notes are not subject to a conversion limitation at any
time they are owned or held by Borrower
Affiliates.
The
Convertible Notes are due and payable on August 1, 2021, but may be
prepaid at any time, without penalty. The Convertible Notes contain
standard and customary events of default and upon the occurrence of
an event of default, the amount owed under the Convertible Notes
accrues interest at 10% per annum.
The
terms of the Convertible Notes may be amended or waived and such
amendment or waiver shall be applicable to all of the Convertible
Notes with the written consent of Convertible Note holders holding
at least a majority in interest of the then aggregate dollar value
of Convertible Notes outstanding.
Additional Convertible Note Sales
On October 25, 2018, the Company borrowed an
additional $7.0 million from SK Energy, through the issuance of a
convertible promissory note in the amount of $7.0 million (the
“
October 2018
Convertible Note
”). The October 2018 Convertible Note
accrues interest monthly at 8.5% per annum, which is payable on the
maturity date, unless otherwise converted into shares of the
Company’s common stock as described below. The October 2018
Convertible Note and all accrued interest thereon are convertible
into shares of the Company’s common stock, at the option of
the holder thereof, at a conversion price equal to $1.79 per share.
Further, the conversion of the October 2018 Convertible Note is
subject to a 49.9% conversion limitation which prevents the
conversion of any portion thereof into common stock of the Company
if such conversion would result in SK Energy or any of its
affiliates beneficially owning more than 49.9% of the
Company’s outstanding shares of common stock. The October
2018 Convertible Note is due and payable on October 25, 2021 but
may be prepaid at any time without penalty.
Also
on October 25, 2018, the Company and SK Energy agreed to convert an
aggregate of $164,000 of interest accrued under the SK Energy Note
from its effective date through September 30, 2018 into 75,118
shares of the Company’s common stock, based on a conversion
price equal to $2.18 per share, pursuant to the conversion terms of
the SK Energy Note.
January 2019 SK Energy Convertible Note
On January 11, 2019, the Company borrowed an
additional $15.0 million from SK Energy, through the issuance of a
convertible promissory note in the amount of $15.0 million (the
“
January 2019
Convertible Note
”). The January 2019 Convertible Note
accrues interest monthly at 8.5% per annum, which is payable on the
maturity date, unless otherwise converted into shares of the
Company’s common stock as described below. The January 2019
Convertible Note and all accrued interest thereon are convertible
into shares of the Company’s common stock, at the option of
the holder thereof, at a conversion price equal to $1.50 per share.
Further, the conversion of the January 2019 Convertible Note is
subject to a 49.9% conversion limitation which prevents the
conversion of any portion thereof into common stock of the Company
if such conversion would result in SK Energy or any of its
affiliates beneficially owning more than 49.9% of the
Company’s outstanding shares of common stock. The January
2019, Convertible Note is due and payable on January 11, 2022 but
may be prepaid at any time without penalty. In February 2019, the
January 2019 Convertible Note was converted into common stock as
discussed below.
Convertible Notes Amendment and Conversion
On
February 15, 2019, the Company and SK Energy agreed to amend the
terms of $23.6 million in Convertible Promissory Notes sold in
August 2018 (including $22 million acquired by SK Energy) and
a $7 million Convertible Note sold to SK Energy in October 2018,
each described in further detail above, as well as the January 2019
Convertible Note, whereby each of the notes were amended to remove
the conversion limitation that previously prevented SK Energy from
converting any portion of the notes into common stock of the
Company if such conversion would have resulted in SK Energy
beneficially owning more than 49.9% of the Company’s
outstanding shares of common stock.
Immediately
following the entry into the Amendment, on February 15, 2019, SK
Energy elected to convert (i) all $15,000,000 of the
outstanding principal and all $126,000 of accrued interest under
the January 2019 Convertible Note into common stock of the Company
at a conversion price of $1.50 per share as set forth in the
January 2019 Convertible Note into 10,083,819 shares of restricted
common stock of the Company, and (ii) all $7,000,000 of the
outstanding principal and all $18,700 of accrued interest under the
October 2018 note into common stock of the Company at a conversion
price of $1.79 per share as set forth in the October 2018 note into
4,014,959 shares of restricted common stock of the Company, which
shares in aggregate represented approximately 47.1% of the
Company’s then 29,907,223 shares of issued and outstanding
Company common stock after giving effect to the
conversions.
29
SK Energy Note Amendment; Note Purchases and
Conversion
On March 1, 2019, the Company and SK Energy
entered into a First Amendment to Promissory Note (the
“
SK Energy Note
Amendment
”) which
amended the note dated June 25, 2018, evidencing $7.7 million of
principal owed to SK Energy (the “
SK Energy
Note
”), to provide SK
Energy the right, at any time, at its option, to convert the
principal and interest owed under such SK Energy Note, into shares
of the Company’s common stock, at a conversion price of $2.13
per share. The SK Energy Note previously only included a conversion
feature whereby the Company had the option to pay quarterly
interest payments on the SK Energy Note in shares of Company common
stock instead of cash, at a conversion price per share calculated
based on the average closing sales price of the Company’s
common stock on the NYSE American for the ten trading days
immediately preceding the last day of the calendar quarter
immediately prior to the quarterly payment
date.
In addition, on March 1, 2019, the holders of
$1,500,000 in aggregate principal amount of Convertible Notes
issued by the Company on August 1, 2018 (the
“
August 2018
Notes
”) sold their
August 2018 Notes at face value plus accrued and unpaid interest
through March 1, 2019 to SK Energy (the “
August 2018 Note
Sale
”). Holders which
sold their August 2018 Notes pursuant to the August 2018 Note Sale
to SK Energy include an executive officer of SK Energy ($200,000 in
principal amount of August 2018 Notes); a trust affiliated with
John J. Scelfo, a director of the Company ($500,000 in principal
amount of August 2018 Notes); an entity affiliated with Ivar Siem,
a director of the Company, and J. Douglas Schick the President of
the Company ($500,000 in principal amount of August 2018 Notes);
and Harold Douglas Evans, a director of the Company ($200,000 in
principal amount of August 2018 Notes).
Following the August 2018 Note Sale, the
Company’s sole issued and outstanding debt was the
(i) $7,700,000 in principal, plus accrued interest, under the
SK Energy Note held by SK Energy, (ii) an aggregate of
$23,500,000 in principal, plus accrued interest, under the August
2018 Notes and SK Energy $22 million Convertible Note held by SK
Energy, and (iii) $100,000 in principal, plus accrued
interest, under an August 2018 Note held by an unaffiliated holder
(the “
Unaffiliated
Holder
”).
Immediately following the effectiveness of the SK
Energy Note Amendment and August 2018 Note Sale, on March 1, 2019,
SK Energy and the Unaffiliated Holder elected to convert all
$31,300,000 of outstanding principal and an aggregate of $1,462,818
of accrued interest under the SK Energy Note, SK Energy $22 million
Convertible Note and August 2018 Notes into common stock of the
Company at a conversion price of $2.13 per share (the
“
Conversion
Price
” and the
“
Conversions
”) as
set forth in the SK Energy Note, as amended, and the August 2018
Notes and SK Energy $22 million Convertible Note (collectively, the
“
Notes
”),
into an aggregate of 15,381,605 shares of restricted common stock
of the Company (the “
Conversion
Shares
”).
Common Stock Issuance to SK Energy LLC
On May 21, 2019, we raised $14,999,998.20
through the sale of 6,818,181 shares of restricted Company common
stock at a price of $2.20 per share (the “
Purchase
Price
”) to SK Energy,
pursuant to a Common Stock Subscription Agreement, dated May 21,
2019, entered into by and between the Company and SK Energy (the
“
Subscription
Agreement
”). The Purchase
Price represents a premium to the closing price of the
Company’s common stock on the NYSE American Exchange as of
the closing date and was above the greater of the book/market price
of the Company’s common stock for the purposes of the NYSE
American Exchange.
Additional Miscellaneous Related Party Transactions
On June 25, 2018, pursuant to a Debt Repayment
Agreement, we paid that certain Amended and Restated Secured
Subordinated Promissory Note, dated March 25, 2013, in the
principal amount of $6,170,065, entered into by Pacific Energy
Development Corp., our wholly-owned subsidiary
(“
PEDCO
”) and
MIE Jurassic Energy Corporation (“
MIEJ
”),
which we refer to as MIEJ (a subsidiary of MIE Holdings) in
consideration for $320,125 in cash.
On August 1, 2018, Red Hawk Petroleum, LLC, our
wholly-owned subsidiary (“
Red
Hawk
”) entered into a
Membership Interest Purchase Agreement with MIEJ, pursuant to which
we, through Red Hawk, acquired 100% of the outstanding membership
interests of Condor Energy Technology LLC
(“
Condor
”)
from MIEJ in consideration for $545,000.
On June 25, 2018, we entered into Debt Repayment
Agreements (the “
Repayment
Agreements
”) with the
holders of our outstanding Tranche A Secured Promissory Notes
(“
Tranche A
Notes
”) and Tranche B
Secured Promissory Notes (“
Tranche B
Notes
”), RJ Credit LLC,
and MIEJ, pursuant to which, on June 26, 2018, we retired all of
the then outstanding Tranche A Notes, in the aggregate amount of
approximately $5.7 million, for $3.8 million and all of the then
outstanding Tranche B Notes and notes held by RJ Credit LLC, in the
aggregate amount of approximately $67.7 million, for an aggregate
of $3,876,208.
Pursuant to the terms of the Repayment Agreement
relating to the Tranche B Notes, in addition to the cash
consideration due to the Tranche B Noteholders, as described above,
we agreed to grant to certain of the noteholders their pro rata
share of warrants to purchase an aggregate of 1,448,472 shares of
common stock of the Company (the “
Tranche B
Warrants
”). The Tranche B
Warrants have a term of three years and an exercise price equal to
$0.322, one (1) cent above the closing price of the Company’s
common stock on June 26, 2018 (“
Repurchase
Warrants
”).
30
On
August 10, 2018 the board of directors of the Company agreed to
accelerate the vesting of 150,000 shares of restricted stock held
by Mr. Adam McAfee, a then current member of the Company’s
board of directors, effective as of the 2018 Annual Meeting, in
consideration for Mr. McAfee’s service on the board and its
committees until the 2018 Annual Meeting, where he has not been
nominated for reelection. These shares would have otherwise vested
December 28, 2018 had Mr. McAfee remained on the board of directors
on such date.
Mr. David Steinberg (a former member of the Board
who resigned on July 11, 2018), entered into a Rescission Agreement
(the “
Rescission
Agreement
”) pursuant to
which the Company and Mr. Steinberg agreed to cancel and rescind an
aggregate of 75,975 shares of restricted Company Common Stock
originally granted to Mr. Steinberg pursuant to the Board
Compensation Program in 2015 and 2016.
On August 31, 2018, we entered into warrant
repurchase agreements with certain of the holders of Repurchase
Warrants, namely Senior Health Insurance Company of Pennsylvania,
Principal Growth Strategies, LLC, and RJ Credit LLC (collectively,
the “
Warrant
Holders
”). Pursuant to
the warrant repurchase agreements, the Company repurchased warrants
to purchase an aggregate of 1,105,935 shares of the Company’s
common stock (the shares of common stock issuable upon exercise of
which such Repurchase Warrants, the “
Warrant
Shares
”) held by the
Warrant Holders, which warrants had a term of three years (through
August 25, 2021) and an exercise price equal to $0.322 per share.
The Repurchase Warrants were repurchased for an aggregate of
$1,095,000 or $0.99 per Warrant Share, which amount the Company
paid to the Warrant Holders on September 17, 2018. Effective on the
date of payment of the warrant purchase amounts, the Repurchase
Warrants and the agreements evidencing such Repurchase Warrants
were deemed to have been repurchased by the Company and cancelled.
The Warrant Repurchase Agreements also included a release by which
the Warrant Holders released the Company from any liability or
claims associated with the Repurchase Warrants and certain of the
Warrant Repurchase Agreements included a release by which we
released the applicable Warrant Holders party thereto. The terms of
the Warrant Repurchase Agreements were individually negotiated with
each associated group of Warrant Holders.
On
November 1, 2019, the Company began subleasing approximately 300
square feet of office space at its current headquarters to SK
Energy, which is owned and controlled by Dr. Kukes, our Chief
Executive Officer and a member of the Board of Directors. The lease
renews on a monthly basis, may be terminated by either party at any
time upon prior written notice delivered to the other party, and
has a monthly base rent of $1,200.
We
have not adopted formal policies and procedures for the review,
approval or ratification of transactions, such as those described
above, with our executive officer(s), director(s) and significant
stockholders, provided that it is our policy that any and all such
transactions are presented and approved by the independent members
of the Board of Directors (typically through an ad hoc committee
formed solely for the purpose of approving each individual
transaction), or the Audit Committee (which is tasked with
reviewing and approving proposed transactions between the Company
and “related persons” as defined in Item 404 of SEC
Regulation S-K), or a majority of the board (with the interested
parties abstaining) and future material transactions between us and
members of management or their affiliates shall be on terms no less
favorable than those available from unaffiliated third
parties.
In addition, our Code of Ethics (described above
under “
Code of
Ethics
” on page
13
),
which is
applicable to all of our employees, officers and directors,
requires that all employees, officers and directors avoid any
conflict, or the appearance of a conflict, between an
individual’s personal interests and our
interests.
Section
16(a) of the Exchange Act requires our executive officers and
directors and persons who own more than 10% of a registered class
of our equity securities to file with the SEC initial statements of
beneficial ownership, reports of changes in ownership and annual
reports concerning their ownership in our common stock and other
equity securities, on Form 3, 4 and 5 respectively. Executive
officers, directors and greater than 10% stockholders are required
by the SEC regulations to furnish our company with copies of all
Section 16(a) reports they file.
Based
solely on our review of the copies of such reports received by us,
we believe that all filings required to be made under Section
16(a) during 2019 were timely made, except that Dr. Simon
Kukes inadvertently failed to timely file one Form 4, and as a
result one transaction was not reported on a timely basis and Ivar
Siem inadvertently failed to timely file one Form 4, and as a
result two transactions were not reported on a timely
basis.
31
ELECTION
OF DIRECTORS
At the
annual meeting, four directors are to be elected to hold office
until the 2021 annual meeting of stockholders and until their
respective successors are duly elected and qualified. The
Nominating and Governance Committee has recommended, and the board
of directors has selected, the following nominees for election:
John J. Scelfo, Dr. Simon Kukes, Ivar Siem and H. Douglas Evans,
all of whom are current members of the board of directors of the
Company.
If any
nominee for any reason is unable to serve or for good cause will
not serve, the proxies may be voted for such substitute nominee as
the proxy holder may determine. We are not aware of any nominee who
will be unable to, or for good cause will not, serve as a
director.
The
Company’s Nominating Committee has reviewed the
qualifications of the director nominees and has recommended each of
the nominees for election to the Board.
We
believe that each of our directors possesses high standards of
personal and professional ethics, character, integrity and values;
an inquisitive and objective perspective; practical wisdom; mature
judgment; diversity in professional experience, skills and
background and a proven record of success in their respective
fields; and valuable knowledge of our business and industry.
Moreover, each of our directors is willing to devote sufficient
time to carrying out his or her duties and responsibilities
effectively and is committed to serving us and our stockholders.
Set forth below is a brief description of the specific experiences,
qualifications and skills attributable to each of our directors
that led the board of directors, as of the date of this proxy
statement, to its conclusion that such director should serve as a
director of the Company. Director nominee ages set forth below are
as of the record date.
THE BOARD OF DIRECTORS RECOMMENDS
VOTING “
FOR
” EACH OF THE NOMINEES
LISTED BELOW.
|
JOHN J. SCELFO (AGE
62)
DIRECTOR
CHAIRMAN OF THE AUDIT COMMITTEE
CHAIRMAN OF THE COMPENSATION COMMITTEE
MEMBER OF THE CORPORATE GOVERNANCE AND NOMINATING
COMMITTEE
Director since July 2018
|
|
|
|
Mr.
Scelfo brings 40 years of experience in oil and gas management,
finance and accounting to the Board. Mr. Scelfo currently serves as
principal and owner of JJS Capital Group, a Fort Lauderdale,
Florida-based family investment company that he formed in April
2014. Prior to forming JJS Capital, Mr. Scelfo was Senior Vice
President, Finance and Corporate Development (from February 2004 to
March 2014), and Chief Financial Officer, Worldwide Exploration
& Producing (from April 2003 to January 2004) of New York,
New York-based Hess Corporation, a large integrated oil and gas
company, where he served as one of eight members of the
company’s Executive Committee and was responsible for the
company’s corporate treasury, strategy and upstream
commercial activities. Prior to joining Hess Corporation, Mr.
Scelfo served as Executive Vice President and Chief Financial
Officer of publicly listed Sirius Satellite Radio (from April 2001
to March 2003), as Vice President and Chief Financial Officer of
Asia Pacific & Japan for Dell Computer (November 1999 to March
2001), and in various roles of increasing responsibility with Mobil
Corporation (from June 1980 to October 1999).
Mr.
Scelfo holds a bachelor’s degree and an M.B.A. from Cornell
University. In 2011, he was awarded Cornell ILR School’s
Alpern Award given to those who “have been exceedingly
generous in their support of the ILR School in general and in
support of Off-Campus Credit Programs in
particular”.
The
board of directors believes that Mr. Scelfo’s over 30
years’ experience in management, finance and accounting in
the energy industry working at major oil and gas and other publicly
traded companies, and the insights he has gained from these
experiences, will provide crucial guidance for our future
operations, capital raising efforts, and financial accounting and
reporting functions.
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32
|
SIMON KUKES (AGE
74
)
CHIEF EXECUTIVE OFFICER AND DIRECTOR
Director Since July 2018
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Dr.
Simon Kukes is a globally renowned consultant for oil and gas
businesses in both the United States and Russia.
Holding
various positions over the years, Kukes has served as the principal
of his personal investment company, SK Energy LLC, since April
2013. From January 2005 to April 2013, Dr. Kukes was the CEO at
Samara-Nafta, a Russian oil company that partnered with US-based
international oil company, Hess Corporation. He was also the
President and Chief Executive of Tyumen Oil Company (TNK) from
1998 until it combined with British Petroleum in 2003 to create
TNK-BP. Following his time at TNK, Dr. Kukes joined Yukos Oil
Company in Moscow presiding as the CEO and Chairman. From 1979 to
1987 he was the Technical Director of oil-refining and
petro-chemistry for Phillips Petroleum and in 1987 became
Vice-President over marketing and business development for
Amoco.
Dr.
Kukes boasts several awards and achievements over his lifespan. In
1999, the Wall Street Journal voted Kukes as one of the Top 10
Central European Executives. He is also the recipient of the Medal
of the Ministry for Natural Resources of the Russian Federation, as
well as the American Society of Competition Development Award for
Leadership. In 2003, he was named by The Financial Times and
PricewaterhouseCoopers as one of the 64 most respected business
leaders in the world.
Dr.
Kukes attended several prestigious universities all over the globe,
receiving his Bachelor of Science in Chemical Engineering from the
University for Chemical Technology in Moscow, where he graduated
with Honors. From there, he pursued his PhD in Physical Chemistry
at the Academy of Sciences in Moscow, where he would later be a
Research Associate for Nuclear and Electronic Resonance. Kukes then
attended Rice University in Houston, Texas, where he was a
Postdoctoral Fellow. Dr. Kukes has also served as an Adjunct
Professor at the University of Delaware and on the Editorial Board
of Fuel Magazine.
His
commitment to the oil and gas industry has inspired Dr. Kukes to
publish more than 60 scientific papers and two books on the oil and
gas industry of Russia and the United States. Dr. Kukes is also the
holder of more than 130 patents, primarily in Oil and Petrochemical
Processing.
Dr.
Kukes brings to the board of directors decades of leadership and
experience in the global energy industry. The board of directors
believes that Dr. Kukes’ experience and strategic leadership
and vision will provide crucial guidance for our management and
operations, and provide key insights and guidance in the evaluation
of oil and gas acquisition and development
opportunities.
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33
|
IVAR SIEM (AGE
74)
DIRECTOR
Director since July 2018
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Mr. Siem has broad experience from both the
upstream and the service segments of the oil and gas industry, has
been the founder of several companies, and has been involved in
several roll-ups and restructuring processes throughout his career.
He currently serves as the Chairman of American Resources, Inc.,
and as a Managing Partner of its affiliated investment vehicle,
Norexas, LLC, both privately held Houston, Texas-based companies
active in oil and gas investment, acquisition and development and
has served in that capacity since 2013. Previously, Mr. Siem served
as Chairman and Chief Executive Officer of American Resources, Inc.
(from 2013 through July 2017) and Chairman of Blue Dolphin
Energy Company (OTCQX: BDCO), Houston, Texas after taking the
company out of bankruptcy in 1990. Blue Dolphin was an offshore
Gulf of Mexico operator until a merger in 2012 with an independent
refiner and marketer of petroleum products. Mr Siem’s role as
CEO ended with the merger and he left the board in 2014. From
January 2007 to present, Mr. Siem served as President of Drillmar
Oil and Gas, Inc. (“
Drillmar Oil
”), a subsidiary of Drillmar Energy, Inc. In
1999, Mr. Siem acquired a small distressed public company, American
Resources Offshore, Inc. and worked with creditors and existing
management to achieve a voluntary reorganization. From 1995 to
2000, Mr. Siem served as Chairman and interim CEO of DI
Industries/Grey Wolf Drilling while restructuring the company
financially and operationally. Through several mergers and
acquisitions, the company emerged as one of the leading land
drilling contractors in the US. The company was subsequently
acquired by Precision Drilling in 2008. From 1996 to 1997 Mr. Siem
served as the initial Chairman and CEO of Seateam Technology ASA
when it was spun off from DSND ASA and listed on the Oslo exchange.
Prior to Seateam, Mr. Siem held various executive roles at multiple
E&P and oil field service companies. Mr. Siem started his
career at Amoco working as an engineer in various segments of
upstream operations.
Mr.
Siem is currently on the Board of Directors at Siem Industries,
Inc., the Drillmar Energy Group of companies, and Petrolia Energy
Corporation (OTCQB: BBLS), and has served on the board of several
privately held and publicly traded companies including Frupor SA,
Avenir ASA, and DSND ASA. Siem Industries is a holding company
which invests in shipping and offshore oil and gas construction
services. Frupor SA, is a Portuguese agricultural business, which
Mr. Siem cofounded with his brother O. M. Siem in
1988.
Mr.
Siem holds a Bachelor of Science in Mechanical Engineering with a
minor in Petroleum from the University of California, Berkeley and
an Executive MBA from the Amos Tuck School of Business, Dartmouth
University.
The
board of directors believes that Mr. Siem’s broad experience
from both the upstream and the service segments of the oil and gas
industry, and executive management, technical and operating
experience at publicly-traded oil and gas companies, and the
insights he has gained from these experiences, will provide crucial
guidance for our future management and operations, and provide key
insights and guidance in the evaluation of oil and gas acquisition
and development opportunities.
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34
|
H. DOUGLAS EVANS (AGE
72)
DIRECTOR
CHAIRMAN OF
THE
CORPORATE
GOVERNANCE AND NOMINATING COMMITTEE
MEMBER OF THE AUDIT COMMITTEE
MEMBER OF THE COMPENSATION COMMITTEE
Director since September 2018
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Mr. Evans has 50 years of oil and gas industry
experience, 40 years of which have been spent in various executive
management positions with Gulf Interstate Engineering Company
(“
GIE
”), a privately-held Houston, Texas-based
firm specializing in the engineering of oil, gas and liquid
pipeline systems, where he has served as Honorary Chairman since
November 2017, and previously served as President and Chief
Executive Officer (July 2004-November 2017), President (February
2003-November 2017), Senior Vice President (September 1994-July
2004), and in various other roles since he joined the company in
1978. During Mr. Evans’ tenure as an executive at GIE, he has
successfully overseen the company’s organic growth from $25
million in sales in 1996 to over $250 million in sales in recent
years, with GIE involved in almost every major onshore oil and gas
pipeline in the world over the last 20 years.
Mr.
Evans holds a B.S. Civil Engineering and Master of Business
Administration from Queen’s University at Kingston, Ontario,
and is a registered Professional Engineer in Ontario and Alberta,
Canada. Mr. Evans currently serves as Honorary Chairman of GIE
(since November 2017), and previously a member of the Board of
Directors of Gulf Interstate Field Services, a GIE affiliate
engaged in providing oil and gas pipeline construction inspection
services, and a number of other GIE affiliated companies, the Board
of Directors and Chairman of the Strategy Committee for the
International Pipe Line and Offshore Contractors Association
(IPLOCA) (through September 2019), a member of the Board of
Houston, Texas-based Crossroads School, Inc. (since 2004), and a
former member of the Board of the Cystic Fibrosis Foundation
– Texas Gulf Coast Chapter.
The
board of directors believes that Mr. Evans’ over 45
years’ experience in management and operations in the energy
industry, and the insights he has gained from his experiences, will
provide crucial guidance for our management and
operations.
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Director Qualifications
The
board of directors believes that each of our director nominees is
highly qualified to serve as a member of the board of directors.
Each of the director nominees has contributed to the mix of skills,
core competencies and qualifications of the board of directors.
When evaluating candidates for election to the board of directors,
the board of directors seeks candidates with certain qualities that
it believes are important, including integrity, an objective
perspective, good judgment, and leadership skills. Our director
nominees are highly educated and have diverse backgrounds and
talents and extensive track records of success in what we believe
are highly relevant positions.
Vote Required to Elect the Director Nominees
A
plurality of the votes cast in person or by proxy by the holders of
our common stock entitled to vote at the annual meeting are
required to elect the nominees. A plurality of the votes cast means
(1) the director nominee with the most votes for a particular seat
is elected for that seat; and (2) votes cast shall include
votes to “
withhold
authority
” (shown as “
AGAINST
” on the enclosed
form of proxy) and exclude abstentions and broker non-votes with
respect to that director’s election. Therefore, abstentions
and broker non-votes (which occur if a broker or other nominee does
not have discretionary authority and has not received instructions
with respect to a particular director nominee within ten days of
the annual meeting) will not be counted in determining the number
of votes cast with respect to that director’s
election.
Properly executed
proxies will be voted at the annual meeting in accordance with the
instructions specified on the proxy; if no such instructions are
given, the persons named as agents and proxies in the enclosed form
of proxy will vote such proxy “
FOR
” the election of the
nominees named herein. Should any nominee become unavailable for
election, discretionary authority is conferred to the persons named
as agents and proxies in the enclosed form of proxy to vote for a
substitute.
Pursuant to the
power provided to the board of directors in our Bylaws, the board
of directors has set the number of directors that shall constitute
the board of directors at four. Proxies cannot be voted for a
greater number of persons than the number of nominees named on the
enclosed form of proxy, and stockholders may not cumulate their
votes in the election of directors.
THE
BOARD OF DIRECTORS RECOMMENDS
VOTING “
FOR
” EACH OF THE NOMINEES
LISTED ABOVE.
35
PROPOSAL 2
RATIFICATION OF APPOINTMENT OF AUDITORS
The
board of directors has selected Marcum LLP (“
Marcum
”), as our
independent auditors for the fiscal year ended December 31, 2020,
and recommends that the stockholders vote to ratify such
appointment. Marcum served as our independent registered public
accounting for the years ended December 31, 2019 and
2018.
We do
not anticipate a representative from Marcum to be present at the
annual stockholders meeting. In the event that a representative of
Marcum is present at the annual meeting, the representative will
have the opportunity to make a statement if he/she desires to do so
and we will allow such representative to be available to respond to
appropriate questions.
AUDIT FEES
The
following table presents fees for professional audit services
performed by Marcum for the audit of our annual financial
statements for the years ended December 31, 2019 and 2018 (in
thousands).
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2019
|
2018
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Audit Fees
(1)
|
$
131
|
$
122
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Audit-Related Fees
(2)
|
-
|
-
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|
Tax Fees
(3)
|
40
|
27
|
|
All Other Fees
(4)
|
14
|
18
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|
Total
|
$
185
|
$
167
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(1)
|
Audit
fees include professional services rendered for (1) the audit
of our annual financial statements for the fiscal years ended
December 31, 2019 and 2018 and (ii) the reviews of the
financial statements included in our quarterly reports on Form 10-Q
for such years.
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(2)
|
Audit-related
fees consist of fees billed for professional services that are
reasonably related to the performance of the audit or review of our
consolidated financial statements but are not reported under
“Audit fees.”
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(3)
|
Tax
fees include professional services relating to preparation of the
annual tax return.
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(4)
|
Other
fees include professional services for review of various filings
and issuance of consents.
|
Pre-Approval Policies
It
is the policy of our board of directors that all services to be
provided by our independent registered public accounting firm,
including audit services and permitted audit-related and non-audit
services, must be pre-approved by our board of directors. Our board
of directors pre-approved all services, audit and non-audit,
provided to us by Marcum for 2019 and 2018.
In
order to assure continuing auditor independence, the Audit
Committee periodically considers the independent auditor’s
qualifications, performance and independence and whether there
should be a regular rotation of our independent external audit
firm. We believe the continued retention of Marcum to serve as our
independent auditor is in the best interests of the Company and its
stockholders, and we are asking our stockholders to ratify the
appointment of Marcum as our independent auditor for the year ended
December 31, 2020. While the Audit Committee is responsible for the
appointment, compensation, retention, termination and oversight of
the independent registered public accounting firm, the Audit
Committee and our board of directors are requesting, as a matter of
policy, that the stockholders ratify the appointment of Marcum as
our independent registered public accounting firm.
Ratification of
this appointment shall be effective upon the affirmative vote of a
majority of the shares present in person or represented by proxy at
the annual meeting and entitled to vote on, and who voted for,
against, or expressly abstained with respect to, this proposal,
provided that a quorum exists at the annual meeting. Abstentions
with respect to the ratification of this appointment will have the
effect of a vote “
AGAINST
” ratification of
this appointment. Properly executed proxies will be voted at the
annual meeting in accordance with the instructions specified on the
proxy; if no such instructions are given, the persons named as
agents and proxies in the enclosed form of proxy will vote such
proxy “
FOR
” the ratification of
the appointment of Marcum.
The
Audit Committee is not required to take any action as a result of
the outcome of the vote on this proposal. In the event stockholders
fail to ratify the appointment, the Audit Committee may reconsider
this appointment. Even if the appointment is ratified, the Audit
Committee, in its discretion, may direct the appointment of a
different independent accounting firm at any time during the year
if the committee determines that such a change would be in our and
the stockholders’ best interests.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “
FOR
”
THE APPOINTMENT OF MARCUM LLP AS OUR INDEPENDENT AUDITORS FOR THE
FISCAL YEAR ENDED DECEMBER 31, 2020.
36
NON-BINDING
ADVISORY VOTE ON EXECUTIVE COMPENSATION
In accordance with the requirements of
Section 14A of the Exchange Act and the related rules of the
SEC, we are including in this proxy statement a separate proposal,
which gives our stockholders the opportunity to approve or not
approve the compensation of our named executive officers (as
disclosed in this proxy statement) by voting
“
FOR
” or “
AGAINST
”
the resolution below (commonly referred to
as “
Say-on-Pay
”). While
our Board and Compensation Committee intend to carefully consider
the stockholder vote resulting from the proposal, the final vote
will not be binding on us and is advisory in
nature.
In considering their vote, stockholders are
encouraged to review with care the information regarding our
executive compensation program as discussed under
“
Executive
Compensation
”
(beginning on page
16
) and
the accompanying compensation tables and narratives (beginning on
page
16
).
As described under “
Committees of the
Board
”, beginning on
page
10
, our
Compensation Committee, which is comprised of two independent
directors, oversees all aspects of our executive compensation
program, annually reviews each component of our executive
compensation program and seeks to ensure that the compensation
program for our executive officers is aligned with the interests of
our stockholders and the compensation practices of our peer
companies (with whom we compete for executive management
personnel). Our executive compensation program is also designed to
attract, motivate and retain a highly qualified executive
management team and to appropriately reward our executive officers
for their contribution to the achievement of our short-term and
long-term business goals and the creation and enhancement of
stockholder value. The Compensation Committee is guided by the
following key principles in determining the compensation of our
executive officers:
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●
|
Competition Among Peers
. The Compensation
Committee believes that our compensation program should reflect the
competitive recruiting and retention conditions in the
Company’s industry, so that we can attract, motivate and
retain top industry talent.
|
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●
|
Accountability for Our Performance
. The
Compensation Committee also believes that our compensation program
should be tied in part to our financial and operational
performance, so that our executive officers are held accountable
through their compensation for the performance of the Company based
on our achievement of certain pre-determined financial and
operational goals.
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●
|
Accountability for Individual Performance
. In
addition, the Compensation Committee believes that our compensation
program should be tied in part to the executive officer’s
achievement of pre-determined individual performance goals, to
encourage and promote individual contributions to the
Company’s overall performance.
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●
|
Alignment with Stockholder Interests
. Moreover,
the Compensation Committee believes that our compensation program
should be tied in part to our stock price performance through the
grant of stock options and stock awards, to further align our
executive officers’ interests with those of our
stockholders.
|
We
believe that our executive compensation program (1) has played
a significant role in our ability to attract, motivate and retain a
highly qualified executive team to manage our company, and
(2) is structured in the best manner possible to support the
achievement of our short-term and long-term business goals and the
creation and enhancement of stockholder value.
The
Board endorses our executive compensation program and recommends
that our stockholders vote in favor of the following
resolution:
“
RESOLVED
, that the compensation paid to the
Company’s named executive officers as disclosed pursuant to
Item 402(m) through (q)
of Regulation S-K, including the compensation tables
and narrative discussion, be, and hereby is,
APPROVED.”
The Company’s policy (to be approved on a
non-binding basis by stockholders as discussed in
“
Proposal 4 -
Non-binding Advisory Vote on the Frequency of Holding Advisory
Votes on Executive Compensation
”, below (page 38)) is to provide
stockholders with an opportunity to approve the compensation of the
named executive officers every three years at the annual meeting of
stockholders. It is expected that the next such vote will occur at
the 2023 annual meeting of stockholders.
Vote Required
The approval of this proposal requires the
affirmative vote of a majority of the shares present in person or
represented by proxy at the meeting and entitled to vote provided
that a quorum exists at the Annual Meeting. Abstentions with
respect to this proposal will have the effect of a vote against
this proposal and broker non-votes (which will occur if a broker or
other nominee does not have discretionary authority and has not
received instructions with respect to this proposal within ten days
of the annual meeting) will not be counted in determining the
number of shares necessary for approval. Properly executed proxies
will be voted at the Annual Meeting in accordance with the
instructions specified on the proxy; if no such instructions are
given, the persons named as agents and proxies in the enclosed form
of proxy will vote such proxy “
FOR
” this proposal.
As
noted above, the vote solicited by this proposal is advisory in
nature and its outcome will not be binding on the Board or the
Compensation Committee, nor will the outcome of the vote require
the Board or the Compensation Committee to take any action.
Moreover, the outcome of the vote will not be construed as
overruling any decision of the Board or the Compensation Committee,
or creating or implying any additional fiduciary duty of the Board
or the Compensation Committee. However, the Board and the
Compensation Committee will carefully consider the outcome of the
vote when considering future executive compensation
arrangements.
THE BOARD OF DIRECTORS RECOMMENDS
VOTING “
FOR
” THIS PROPOSAL.
37
NON-BINDING
ADVISORY VOTE ON THE FREQUENCY OF
In accordance with the requirements of
Section 14A of the Exchange Act and the related rules of the
SEC, we are including in this proxy statement an additional
separate proposal, which gives our stockholders the opportunity to
vote on how frequently future advisory votes on the compensation of
our named executive officers (i.e., “
Say-on-Pay
” votes)
will occur. Stockholders may vote on whether they prefer an
advisory vote to occur every one (an annual), two (a biennial) or
three years (a triennial vote), or they may abstain from voting.
While our Board and Compensation Committee intend to carefully
consider the stockholder vote resulting from this proposal, the
final vote will not be binding on us and is advisory in
nature.
After
careful consideration, the Board recommends that an advisory vote
on the compensation of our named executive officers be held every
three years. An advisory vote every three years will be the most
effective timeframe for the Company to respond to
stockholders’ feedback and provide the Company with
sufficient time to engage with stockholders to understand and
respond to the vote results. The Company also believes a triennial
vote would align more closely with the multi-year performance
measurement cycle the Company uses to reward long-term performance.
Our executive compensation programs are based on our long-term
business strategy, which is more appropriately reflected with a
three-year timeframe. However, the Board recognizes that our
stockholders may elect to hold advisory votes on executive
compensation more frequently than every three years (i.e., every
one year or every two years). Therefore, the Board seeks input from
our stockholders regarding the frequency of holding advisory votes
on executive compensation.
With respect to this advisory vote on the
frequency of holding future advisory votes on the compensation of
our named executive officers, stockholders have three voting
options (1 year, 2 years or 3 years), and the
option, if any, that receives the affirmative vote of a majority of
the shares present in person or represented by proxy at the meeting
and entitled to vote will be considered approved by the
Company’ stockholders, provided that the final vote will not
be binding on us and is advisory in nature. Abstentions with
respect to this proposal will have the effect of a vote against
each of the voting options. Broker non-votes (which will occur if a
broker or other nominee does not have discretionary authority and
has not received instructions with respect to this proposal within
ten days of the Annual Meeting) will not be counted in determining
the number of shares necessary for approval. Properly executed
proxies will be voted at the Annual Meeting in accordance with the
instructions specified on the proxy; if no such instructions are
given, the persons named as agents and proxies in the enclosed form
of proxy will vote such proxy for “
3 YEARS
”
as to the frequency of holding advisory votes on executive
compensation.
As
noted above, the vote solicited by this proposal is advisory and
its outcome will not be binding on the Board or the Compensation
Committee, whether or not it is approved by the aforementioned
voting standard. In evaluating the vote on this proposal, the Board
and the Compensation Committee will carefully consider the voting
results in their entirety in determining the frequency of holding
future advisory votes on the compensation of our named executive
officers. If one of the voting options is not adopted by the
required vote of our stockholders, the Board and Compensation
Committee will evaluate the votes cast for each of the voting
options and will deem the voting option receiving the greatest
number of votes to be the voting option approved by our
stockholders.
The
Company is required to disclose the Board’s decision
regarding the future frequency of how often the Company conduct
future say-on-pay votes by the filing of a Current Report on Form
8-K no later than 150 calendar days after the date of the annual
meeting, but in any event no later than 60 calendar days prior to
the deadline for submission of stockholder proposals for the
Company’s 2021 annual meeting.
Pending
the outcome of the stockholder vote, the Company currently plans to
provide stockholders with an opportunity to approve the frequency
of holding future advisory votes on executive compensation every
three years at the annual meeting of stockholders. It is expected
that the next such vote will occur at the 2023 annual meeting of
stockholders.
THE BOARD OF DIRECTORS RECOMMENDS
VOTING FOR “
3 YEARS
”
AS TO THE FREQUENCY OF HOLDING ADVISORY VOTES ON EXECUTIVE
COMPENSATION.
Proposals of
holders of our voting securities intended to be presented at our
2021 annual meeting of stockholders and included in our proxy
statement and form of proxy relating to such meeting pursuant to
Rule 14a-8 of Regulation 14A must be received by us, addressed to
our Corporate Secretary, at our principal executive offices at 575
N. Dairy Ashford, Suite 210, Houston, Texas 77079, not earlier than
the close of business on April 29, 2021, and not later than the
close of business on May 29, 2021, together with written notice of
the stockholder’s intention to present a proposal for action
at the fiscal 2021 annual meeting of stockholders, unless our
annual meeting date occurs more than 30 days before or 30 days
after August 27, 2021. In that case, we must receive proposals not
earlier than the close of business on the 120th day prior to the
date of the fiscal 2021 annual meeting and not later than the close
of business on the later of the 90th day prior to the date of the
annual meeting or, if the first public announcement of the date of
the annual meeting is less than 100 days prior to the date of the
meeting, the 10th day following the day on which we first make a
public announcement of the date of the meeting.
38
Stockholder
proposals must be in writing and must include (a) the name and
record address of the stockholder who intends to propose the
business and the class or series and number of shares of capital
stock of us which are owned beneficially or of record by such
stockholder; (b) a representation that the stockholder is a holder
of record of stock of us entitled to vote at such meeting and
intends to appear in person or by proxy at the meeting to introduce
the business specified in the notice; (c) a brief description of
the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting; (d)
any material interest of the stockholder in such business; and (e)
any other information that is required to be provided by the
stockholder pursuant to Regulation 14A under the Exchange Act. The
board of directors reserves the right to refuse to submit any
proposal to stockholders at an annual meeting if, in its judgment,
the information provided in the notice is inaccurate or incomplete,
or does not comply with the requirements for stockholder proposals
set forth in our Bylaws.
Additionally, the
Nominating and Governance Committee will consider director
candidates recommended by stockholders, provided stockholders
include (a) as to each person whom the stockholder proposes for the
Nominating and Governance Committee to consider for nomination for
election as a director (i) the name, age, business address and
residence address of the person, (ii) the principal occupation or
employment of the person, (iii) the class or series and number of
shares of capital stock of us which are owned beneficially or of
record by the person and (iv) any other information relating to the
person that would be required to be disclosed in a proxy statement
or other filings required to be made in connection with
solicitations of proxies for election of directors pursuant to
Section 14 of the Exchange Act, and the rules and regulations
promulgated thereunder; and (b) as to the stockholder giving the
notice (i) the name and record address of such stockholder, (ii)
the class or series and number of shares of capital stock of us
which are owned beneficially or of record by such stockholder,
(iii) a description of all arrangements or understandings between
such stockholder and each proposed nominee and any other person or
persons (including their names) pursuant to which the nomination(s)
are to be made by such stockholder, (iv) a representation that such
stockholder intends to appear in person or by proxy at the meeting
to nominate the persons named in its notice and (v) any other
information relating to such stockholder that would be required to
be disclosed in a proxy statement or other filings required to be
made in connection with solicitations of proxies for election of
directors pursuant to Section 14 of the Exchange Act and the rules
and regulations promulgated thereunder. Such notice must be
accompanied by a written consent of each proposed nominee to being
named as a nominee and to serve as a director if elected.
Individuals recommended by stockholders in accordance with these
procedures will receive the same consideration received by
individuals identified to the Nominating and Governance Committee
through other means.
Our Forms 10-K, 10-Q, 8-K and
all amendments to those reports are available without charge
through our website (
www.pedevco.com
) as soon as
reasonably practicable after they are electronically filed with, or
furnished to, the SEC. Information on our website does not
constitute part of this proxy statement.
We will
provide, without charge, to each person to whom a proxy statement
is delivered, upon written or oral request of such person and by
first class mail or other equally prompt means within one business
day of receipt of such request, a copy of any of the filings
described above. Individuals may request a copy of such information
by sending a request to us, Attn: Corporate Secretary, PEDEVCO
Corp., 575 N. Dairy Ashford, Suite 210, Houston, Texas
77079.
None.
As of
the date of this proxy statement, our management has no knowledge
of any business to be presented for consideration at the annual
meeting other than that described above. If any other business
should properly come before the annual meeting or any adjournment
thereof, it is intended that the shares represented by properly
executed proxies will be voted with respect thereto in accordance
with the judgment of the persons named as agents and proxies in the
enclosed form of proxy.
The
board of directors does not intend to bring any other matters
before the annual meeting of stockholders and has not been informed
that any other matters are to be presented by others.
39
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(a)
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No
officer or director of us has any substantial interest in the
matters to be acted upon, other than his or her role as an officer
or director of us, or as a stockholder of us.
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(b)
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No
director of us has informed us that he or she intends to oppose the
action taken by us set forth in this proxy statement.
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All
inquiries regarding our Company should be addressed to our
Company’s principal executive office:
PEDEVCO Corp.
575 N. Dairy Ashford, Suite 210
Houston, Texas 77079
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By
Order of the Board of Directors,
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/s/ John J. Scelfo
John J.
Scelfo
Chairman
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40
FORM OF PROXY
(SEE ATTACHED)
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PEDEVCO CORP.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS – AUGUST 27, 2020 AT 10:00
A.M.
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CONTROL ID:
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REQUEST ID:
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The undersigned stockholder of PEDEVCO CORP., a Texas corporation
(the “Company”), hereby acknowledges receipt of the
Notice of Annual Meeting of Stockholders and Proxy Statement of the
Company, each dated on or around July 10, 2020, and hereby appoints
Dr. Simon Kukes and Clark R. Moore (the “Proxies”), or
any one of them, with full power of substitution and authority to
act in the absence of the other, each as proxies and
attorneys-in-fact, to cast all votes that the undersigned is
entitled to cast at, and with all powers that the undersigned would
possess if personally present at, the 2020 annual meeting of
Stockholders of the Company, to be held on Thursday, August 27,
2020, at 10:00 a.m. Central Time, at
http://issuerdirect.com/virtual-event/ped
(please note this link is case
sensitive), and at any adjournment or adjournments thereof, and to
vote all shares of the Company that the undersigned would be
entitled to vote if then and there personally present, on the
matters set forth on the reverse side, and all such other business
as may properly come before the meeting. I/we hereby revoke all
proxies previously given.
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(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
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VOTING INSTRUCTIONS
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If you vote by phone, fax or internet, please DO NOT mail your
proxy card.
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MAIL:
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Please mark, sign, date, and return this Proxy Card promptly using
the enclosed envelope.
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FAX:
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Complete the reverse portion of this Proxy Card and Fax to
202-521-3464.
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INTERNET:
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https://www.iproxydirect.com/PED
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PHONE:
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Call toll free
1-866-752-VOTE(8683)
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ANNUAL MEETING OF THE STOCKHOLDERS OF
PEDEVCO CORP.
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PLEASE COMPLETE, DATE, SIGN AND RETURN
PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR
BLACK INK AS SHOWN HERE:
☒
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PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
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Proposal 1
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FOR ALL
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AGAINST
ALL
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FOR
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AGAINST
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Election of Directors
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☐
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☐
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John J. Scelfo
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☐
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☐
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Simon Kukes
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☐
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☐
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Ivar Siem
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☐
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☐
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H. Douglas Evans
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☐
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☐
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Proposal 2
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FOR
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AGAINST
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ABSTAIN
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Ratification of the appointment of Marcum LLP, as the
company’s independent auditors for the fiscal year ending
December 31, 2020.
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☐
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☐
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☐
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CONTROL
ID:
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REQUEST
ID:
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Proposal 3
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FOR
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AGAINST
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ABSTAIN
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To
approve, by non-binding vote, the compensation of the
company’s named executive officers.
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☐
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☐
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☐
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Proposal 4
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1 YEAR
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2 YEARS
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3 YEARS
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ABSTAIN
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To recommend, by non-binding vote, the frequency of holding
advisory votes on the compensation of the company’s named
executive officers.
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☐
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☐
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☐
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☐
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MARK “X” HERE IF YOU PLAN
TO ATTEND THE MEETING:
☐
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This Proxy, when properly executed will be voted as provided above,
or if no contrary direction is indicated, it will be voted
“
For
All
” in Proposal 1,
“
For
” Proposals 2 and 3, for “
Three Years
” in Proposal
4, and for all such other business as may properly come before the
meeting in the sole determination of the
Proxies.
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MARK HERE FOR ADDRESS CHANGE
☐ New Address (if
applicable):
________________________
________________________
________________________
IMPORTANT:
Please sign
exactly as your name or names appear on this Proxy. When shares are
held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full
title as such. If the signer is a corporation, please sign full
corporate name by duly authorized officer, giving full title as
such. If signer is a partnership, please sign in partnership name
by authorized person.
Dated: ________________________, 2020
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(Print Name of Stockholder and/or Joint Tenant)
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(Signature of Stockholder)
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(Second Signature if held jointly)
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TABLE OF CONTENTS