SOUTH DAKOTA SOYBEAN PROCESSORS LLC
10-Ks and 10-Qs
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of Commission Only (as permitted by Rule 14c-5(d)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to Section 240.14a-12
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South Dakota Soybean Processors, LLC
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(Name of Registrant As Specified in Charter)
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Payment of Filing Fee (Check the appropriate box):
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x
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No fee required
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¨
Fee computed on table below per Exchange Act Rule 14a-6(i((1) and 0-11
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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(5)
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Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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South Dakota Soybean Processors, LLC
100 Caspian Avenue, PO Box 500
Volga, South Dakota 57071
NOTICE OF ANNUAL MEETING OF MEMBERS
TO BE HELD ON JUNE 21, 2016
Registration and Supper: 5:30 p.m. - Meeting: 6:30 p.m.
Members of South Dakota Soybean Processors, LLC:
The 2016 Annual Meeting of Members of South Dakota Soybean Processors, LLC (the “Company,” “we,” “us” or “our”) will be held on June 21, 2016 at the Sioux Valley Middle School Gym, located at 200 Hansina Ave, Volga, South Dakota, 57071. Registration and supper will begin at 5:30 p.m. (CDT), and the Annual Meeting will commence at 6:30 p.m. (CDT).
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF ANNUAL MEETING
MATERIALS FOR THE MEMBER MEETING TO BE HELD ON TUESDAY, JUNE 21, 2016:
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This communication presents only an overview of the complete annual meeting materials that are available to you on the Internet. We encourage you to access and review all of the important information contained in the annual meeting materials before voting.
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The Proxy Statement, Ballot and Annual Report to members are available at www.sdsbp.com, click "Investor Relations" and "2016 Annual Meeting."
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If you wish to receive a paper or email copy of these documents, you must request one. There is no charge to you for requesting a copy. Please make your request for a copy by calling our office at (605) 627-6100 or toll free at (888) 737-7888, or emailing Amy Koisti at Amy.Koisti@sdsbp.com on or before June 1, 2016, to facilitate timely delivery.
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The purposes of the meeting are to take the following actions: (1) To receive the report of management on the business of the Company and the Company’s audited financial statements for the fiscal year ended December 31, 2015; (2) To elect five members of the board of managers, one from each of the five geographical districts; (3) To approve, on an advisory basis, the compensation of the Company's named executive officers ("Say-on-Pay"), and (4) To transact such other business as may properly come before the meeting and at any and all adjournments thereof.
Only those members of record on May 1, 2016 are entitled to notice of and to vote at the 2016 Annual Meeting and any adjournments thereof. For your ballot to be valid, it must be received by us no later than June 21, 2016 (10 a.m. CDT) or must be presented in person at the 2016 Annual Meeting.
All members are cordially invited and encouraged to attend the Annual Meeting and to cast your membership vote in person. However, to assure the presence of a quorum, we request that you promptly sign, date, and return the ballot, if you do not plan to attend the meeting. Ballots are available on our website at
www.sdsbp.com
, then clicking “Investor Relations” and “2016 Annual Meeting” and may be printed by the members. If you wish to revoke your ballot at the meeting and execute a new ballot, you may do so by giving notice to Amy Koisti. You may fax the ballot to us at (605) 627-5869 or mail it to us at PO Box 500, Volga, South Dakota 57071. If you have any questions about the voting process or need directions to the Annual Meeting, please call us at (605) 627-6100.
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BY ORDER OF THE BOARD OF MANAGERS
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/s/ Ardon Wek, President
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Board of Managers
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Volga, South Dakota
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April 21, 2016
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South Dakota Soybean Processors, LLC
100 Caspian Avenue, PO Box 500
Volga, South Dakota 57071
PROXY STATEMENT
2016 ANNUAL MEETING OF MEMBERS
JUNE 21, 2016
Registration and Supper - 5:30 p.m. Meeting - 6:30 p.m.
VOTING INFORMATION
The proxy statement and ballot were prepared by the board of managers of South Dakota Soybean Processors, LLC (the “Company,” “we,” “us” or “our”) for use at the 2016 Annual Meeting of Members to be held on Tuesday, June 21, 2016, or at any adjournment thereof. The 2016 Annual Meeting will be held at the Sioux Valley Middle School Gym, located at 200 Hansina Ave, Volga, South Dakota 57071. Distribution of this proxy statement and ballot to the members is scheduled to begin on or about May 2, 2016.
QUESTIONS AND ANSWERS ABOUT THE ANNUAL MEETING AND VOTING
Q: Why did I receive this Proxy Statement?
A: The board of managers of the Company is providing this proxy statement and ballot to enable you to vote at the 2016 Annual Meeting because you were a member of the Company at the close of business on May 1, 2016, the record date, and are entitled to vote at the meeting.
Q: What am I voting on?
A: At the 2016 Annual Meeting, the members will vote on: (i) the election of five managers to the board - one from each of the five geographical districts and (2) to approve, on an advisory basis, the compensation of our named executive officers ("Say-on-Pay"). Although the board is not currently aware of any additional matters to be presented at the 2016 Annual Meeting, if other matters do properly come before the 2016 Annual Meeting, those present will vote on those matters if a quorum is present.
Q: How many votes do I have?
A: Each Class A member is entitled to one vote for each matter to be voted on at the 2016 Annual Meeting, regardless of how many capital units the member owns.
Q: What is the voting requirement to elect the board members and what is the effect of an abstention vote?
A: In the election of board members, the nominees from each of the five districts receiving the greatest number of votes relative to the votes cast will be elected, regardless of whether any individual nominee receives votes from a majority of the quorum. Members do not have cumulative voting rights. In the election, because board members are elected by plurality vote, abstentions votes will not be counted either for or against any nominee. Abstentions will be included when counting members to determine whether a sufficient number of the voting members are represented to establish a quorum.
Q: What is the Say-on-Pay Vote?
A: The Say-on-Pay vote is an advisory vote by the Company's members where the member can either endorse or not endorse the Company's system of compensating its named executive officers. While the Say-on-Pay vote is not binding on our board, the board intends to consider the outcome of the vote in making future compensation awards to the named executive officers. The Company may also use the Say-on-Pay vote to engage members in a dialogue regarding the Company's system of compensating its named executive officers.
Q: What is the voting requirement for the Say-on-Pay vote and what is the effect of an abstention?
A: The advisory vote regarding the compensation of named executive officers will be approved if the votes cast FOR the proposal exceed the votes cast AGAINST the proposal. A properly executed ballot marked ABSTAIN with respect
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to the proposal will not count FOR or AGAINST the proposal. Abstentions with respect to this proposal are counted for purposes of establishing a quorum.
Q: How many Class A members are there?
A: As of May 1, 2016, there were 30,419,000 Class A units outstanding and 2,179 Class A members of record. Since each Class A member is entitled to one vote, regardless of the number of units the member owns, there are 2,179 total votes available on any matter presented to the members.
Q: What constitutes a quorum?
A: The presence, either in person or through a mail-in ballot, of ten percent (10%) of the first 100 Class A members and five percent (5%) of additional Class A members constitutes a quorum. Based on the current number of Class A members, the presence of at least 114 members, either in person or through a properly executed ballot, would constitute a quorum. If you submit a properly executed ballot, you will be considered present at the 2016 Annual Meeting for the purpose of establishing a quorum.
Q: How do I vote?
A: You may vote at the 2016 Annual Meeting by submitting a ballot using either of the following methods:
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Cast Ballot by Mail or Fax prior to the 2016 Annual Meeting.
You may cast your vote for the proposals by executing a ballot for the 2016 Annual Meeting and submitting it to us prior to the 2016 Annual Meeting. We urge you to specify your choice by marking the appropriate boxes on your ballot for the 2016 Annual Meeting. After you have marked your choices, please sign and date the ballot and return it to us, either by mail at PO Box 500, Volga, South Dakota, 57071 or fax to (605) 627-5869. All ballots submitted by mail or fax must be RECEIVED by us by June 21, 2016 (10:00 a.m. CDT).
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Cast Ballot In Person at the 2016 Annual Meeting.
You may cast your vote by being present in person at the 2016 Annual Meeting and casting your ballot at the meeting.
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Q: What can I do if I change my mind after I send in my ballot?
A: You may revoke your ballot by:
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Giving written notice of the revocation, which must be RECEIVED prior to 10:00 a.m. (CDT) on June 21, 2016, to Amy Koisti, at our offices at PO Box 500, Volga, South Dakota 57071 or by fax at (605) 627-5869; or
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Giving personal or written notice of the revocation to Amy Koisti at the commencement of the 2016 Annual Meeting.
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Q: Who can attend the 2016 Annual Meeting?
A: All members as of the close of business on the record date, and their immediate families, may attend the 2016 Annual Meeting.
Q: What is the record date for the 2016 Annual Meeting?
A: May 1, 2016.
Q: Who will count the vote at the 2016 Annual Meeting?
A: All votes will be tabulated by members of the Nomination Committee, who were appointed as Inspectors of Elections by the board.
YOUR VOTE IS IMPORTANT. PLEASE PRINT, COMPLETE, SIGN AND RETURN YOUR BALLOT NO LATER THAN 10:00 A.M. CDT ON TUESDAY, JUNE 21, 2016 WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING.
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PROPOSALS
PROPOSAL ONE
: ELECTION OF MANAGERS
The first proposal at the 2016 Annual Meeting is the election of five members of the board of managers. Each district will elect
ONE
manager. The elected managers will serve on the board until the 2019 Annual Meeting (a term of three years). Petition and other forms nominating the following members have been submitted to the Nomination Committee of the board and been approved for presentation to the membership:
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District
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Geographic Are by State and County
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Name(s)
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District 1
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South Dakota
: Brookings, Deuel, Hamlin and Kingsbury
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Kent Howell
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District 2
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South Dakota
: Lake, McCook, Miner, Minnehaha and Moody
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Doyle Renaas
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Minnesota
: Cottonwood, Jackson, Murray, Nobles, Pipestone and Rock
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Robert Nelsen
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District 3
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Minnesota
: Lac qui Parle, Lincoln, Lyon and Yellow Medicine
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David Driessen
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Jeffrey Hanson
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District 4
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Minnesota
: All other counties
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Gary Kruggel
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District 5
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South Dakota
: All other counties
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Ned Skinner
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All Other States
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Edward Verhelst
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The board has not taken a position on recommending any of the above nominees for election by the members.
Information About Nominees
The following table sets forth certain information, with respect to the nominees to the board of the Company. The number of capital units beneficially owned by the nominees to the board and existing board members not running for election is set forth below under “Security Ownership of Certain Beneficial Owners, Management and Nominees.”
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District
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Name and Position with
Company, if any, Address.
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Age
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Board
Member
Since or
Prior
Board
Member
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Occupation
and
Background
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1
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Kent Howell
21281 464th Ave
Volga, SD 57071
Planning Committee
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60
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2011; also served from 2005 -2008
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Kent has been a farmer for the past 40 years. He is a retired firefighter with the Volga Fire Department. He received his B.S. degree in Agriculture from South Dakota State University, Brookings, South Dakota, in 1977.
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District
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Name and Position with
Company, if any, Address.
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Age
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Board
Member
Since or
Prior
Board
Member
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Occupation
and
Background
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2
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Doyle Renaas
22223 459th Ave
Nunda, SD 57050
Membership Committee
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49
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2012
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Doyle has been a farmer for the past 29 years. He has been a member of the Rutland High School board for 7 years and board member of Grace Church Council for 12 years, where he has served as president and deacon. He previously served as supervisor of the Township of Clarno board for ten years. He graduated with an Associate’s degree in Agriculture from South Dakota State University, Brookings, South Dakota, in 1992.
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Robert Nelsen
1173 280th Ave
Westbrook, MN 56183
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75
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2005 - 2014; 1995 - 2004
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Robert is a retired farmer. He is a state director of the Minnesota Soybean Growers Association and a board member of the Murray County Corn and Soybean Growers. He is also a member of the Lions, VFW and American Legion.
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3
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David Driessen
410 Oscar Ave N
Canby, MN 56220
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61
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2005 - 2015
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David has been a farmer for the past 35 years. He is past director of the Canby Farmers Grain Coop. He received his B.A. degree from Southwest State University, Marshall, Minnesota, in 1977.
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Jeffrey Hanson
2011 Hwy 40
Madison, MN 56256
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Jeffery has been a farmer for the past 35 years. He served as chairman for the Faith Lutheran Church in Madison, Minnesota. He graduated with a B.S. degree in Physical Education from Moorhead State in Moorhead, Minnesota in 1981.
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Gary Kruggel
30217 State Hwy 15
Winthrop, MN 55396
Governance and Membership Committees
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54
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2006
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Gary has been a farmer for the past 24 years. He is a commissioner for Sibley County, Minnesota, and a board member of Winthrop Opportunities in Winthrop, Minnesota. He is a former board member of The New Midwest Company, LLC (f/k/a Golden Oval Eggs, LLC), a former SEC reporting company, and is active in various civic organizations. He graduated with a degree in Sales & Marketing from Willmar Vo-Tech College, Willmar, Minnesota, in 1987.
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District
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Name and Position with
Company, if any, Address.
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Age
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Board
Member
Since or
Prior
Board
Member
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Occupation
and
Background
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5
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Ned Skinner
525 Turnberry Lane
St. Augustine, FL 32080
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63
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Ned has been the President of Skinner Agri-Products, Inc. since 1998. He has served as a director for Portland Food Products in Portland, Oregon; Two Rivers Bank & Trust in Burlington, Iowa; and Nu World Foods in Naperville, Illlinois. He received his B.S. in Industrial Administration from Iowa State University in Ames, Iowa, in 1974, and earned his Masters in Business Administration from Harvard Business School in Cambridge, Massachusetts in 1981.
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5
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Edward Verhelst
20644 404th Ave
Huron, SD 57350
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64
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Edward has been a farmer and rancher for the past 47 years. He is a member of the South Dakota Soybean Association and the South Dakota Corn Growers Association. He previously served as a board member for the Minnesota Soybean Processors in Brewster, Minnesota and Farmers Pork LLC in Salem, South Dakota; supervisor of the Valley Township in Beadle County; and chairman of the Faith Lutheran Church in Huron.
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Information About Non-Nominee Board Members
The following table describes important information about the members of the board who are not subject to re-election at the 2016 Annual Meeting and are continuing in office.
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District
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Name and Position with
Company, if any, Address. |
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Age
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Board
Member Since or Prior Board Member |
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Current
Term
Expiring*
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Occupation
and Background |
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1
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Jonathan Kleinjan
400 Ohio Dr
Brookings, SD 57006
Finance/Audit and Nomination Committees
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43
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2014
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2017
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Jonathan has been a farmer for the past 20 years. He has been employed in the Plant Science Department at South Dakota State University since 2002 and is currently the director of Crop Performance Testing. He received his B.S. degree in Ag Business and a M.S. in Agronomy from South Dakota State University, Brookings, South Dakota, in 1996 and 2002, respectively.
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District
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Name and Position with
Company, if any, Address. |
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Age
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Board
Member Since or Prior Board Member |
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Current
Term
Expiring*
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Occupation
and Background |
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1
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Gary Duffy
21761 446th Ave
Oldham, SD 57051
Planning Committee
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63
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2015
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2018
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Gary has been a farmer for the past 41 years. He is the former president of the South Dakota Corn Growers Association, South Dakota Corn Utilization Council, and South Dakota Value Added Development Center. He also served as a board member on the South Dakota Crop Improvement Association, Associated School Boards of South Dakota, Oldham School Board, and Oldham City Council. He received his B.S. degree in Mechanical Agriculture from South Dakota State University, Brookings, South Dakota, in 1975.
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Maurice Odenbrett
2778 41st St
Fulda, MN 56131
Finance/Audit and Nomination Committees
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71
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2014; also served from 2006 - 2013 and 1995 - 2005
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2017
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Maurice is a retired farmer. He serves on the St. Gabriel's Cemetery Board.
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2
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Paul Barthel
22308 486th Ave
Elkton, SD 57026
Governance and Planning Committees
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47
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2007; also served from 1996-2006
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2018
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Paul has been a farmer for the past 30 years. He is a member of the South Dakota Soybean Association and the South Dakota Corn Growers Association. He graduated with a B.S. degree in Ag Business and minor in Agronomy from South Dakota State University, Brookings, South Dakota, in 1992.
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3
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Wayne Enger
2090 180th St
Madison, MN 56256
Finance/Audit and Nomination Committees
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62
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2014; also
served from 2004-2013 |
2017
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Wayne has been a farmer for the past 41 years. He is a former secretary of the Madison Farmers Elevator and former board member of the Lac Qui Parle County Soybean Producers. He also served as president and treasurer of the Midwest Cattlemen's Assoc-iation and is the former president and financial secretary of the Garfield Lutheran Church Board. He received a B.A. degree in Mathematics and German Literature from University of Minnesota - Morris in 1975.
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6
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District
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Name and Position with
Company, if any, Address. |
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Age
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Board
Member Since or Prior Board Member |
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Current
Term
Expiring*
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Occupation
and Background |
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3
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Gary Goplen
2574 220th St
Canby, MN 56220
Membership Committee
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52
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2015
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2018
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Gary has been a farmer for the past 35 years. He was a maintenance worker for Assoc-iated Milk Producers in Dawson for 19 years. He is a former president and membership chairman for the Midwest Cattlemen's Association. He served as group leader and on the livestock committee for the OWA 4H in Canby, Minnesota. He also served as treasurer and superintendent of the Dawson Covenant Church Sunday School program. He graduated with a degree in Farm Diesel Mechanics from Canby Vo-Tech in Canby, Minnesota, in 1983.
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4
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Gary Wertish
26416 Co Rd 17
Renville, MN 56284
Vice-President; Governance, Finance/Audit, and Nomination Committees
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65
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2006
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2017
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Gary has been a farmer for the past 45 years. He serves as supervisor of Emmet Township and as a board member of the Renville Volunteer Ambulance Association. He received an Associate's Degree in Ag Business from Willmar Area Vocational Technical Institute, Willmar, Minnesota in 1970.
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4
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Randy Tauer
22257 Skyview Ave
Morgan, MN 56266
Planning Committee
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54
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2007
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2018
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Randy has been a farmer for the past 34 years. He is a member of the Minnesota Soybean Association and the American Soybean Association. He is a former board member of The New Midwest Company, LLC (f/k/a Golden Oval Eggs, LLC), a former SEC reporting company, from 2003 to 2006. He grad-uated with a degree in Ag Production from Willmar Vo-Tech, Willmar, Minnesota, in 1982.
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5
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Delbert Tschakert
16150 442nd Ave
Florence, SD 57235
Secretary; Governance, Membership, and Nomination Committees
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60
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2007; also served from 1994-2006
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2017
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Delbert has been a farmer for the past 38 years. He is a member of the South Dakota Soybean Association, South Dakota Corn Growers Assoc-iation, and former president of the South Dakota Soybean Association. He received his B.S. degree in Ag Communi-cations and a minor in Econ-omics from South Dakota State University, Brookings, South Dakota, in 1977.
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7
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District
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Name and Position with
Company, if any, Address. |
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Age
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Board
Member Since or Prior Board Member |
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Current
Term
Expiring*
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Occupation
and Background |
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5
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Ardon Wek
43958 288th St
Freeman, SD 57029
President; Governance and Membership Committees
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58
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2007; also
served from 1996-2006 |
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2018
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Ardon has been a farmer for the past 36 years. He is the deacon at the Spring Valley Lutheran Church in Viborg, South Dakota. He is also a member of the South Dakota Corn Growers, and the South Dakota Soybean Association. He graduated with a degree in Architectural Draft-ing and Building Construction from Mitchell Technical College, Mitchell, South Dakota, in 1978.
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Information about Executive Officers
The following individuals serve as our executive officers in the capacities listed. These officers serve at the discretion of the board and can be terminated without notice.
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Name
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Age
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Position
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Thomas J. Kersting
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53
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Chief Executive Officer
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Mark Hyde
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42
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Chief Financial Officer
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Thomas J. Kersting,
Chief Executive Officer.
Tom has served as the chief executive officer since March 28, 2011. As chief executive officer, he is responsible for the entire operation of the Company. Prior to serving as the chief executive officer, he served as commercial manager of the Company from 1998 to 2011 and as procurement manager from 1996 to 1998. He graduated from the University of Minnesota’s College of Agriculture with a B.S. in Agricultural Business Administration with an emphasis in operations management. He is a licensed commodity broker and a former director of the National Oilseed Processors Association.
Mark Hyde,
CPA
, Chief Financial Officer.
Mark has served as the chief financial officer since November 1, 2010. He is responsible for all financial, accounting and reporting obligations of the Company. Prior to becoming chief financial officer, he served as corporate controller of the Company from 2003 to 2010. Prior to this time, he was employed as a senior associate with Eide Bailly LLP, in Sioux Falls, South Dakota. He graduated from the University of South Dakota with a B.S. in Business Administration, and from the University of Denver with a Masters of Accounting.
PROPOSAL TWO: ADVISORY (NON-BINDING) VOTE ON EXECUTIVE COMPENSATION
We are requesting your advisory (non-binding) approval of the compensation of our named executive officers as disclosed in Executive Officers and Executive Compensation, the compensation tables, and related narrative disclosures in this Proxy Statement. This non-binding advisory vote is commonly referred to as a “Say-on-Pay” vote. Please read the Compensation of Officers and Managers section starting on page 14 of this Proxy Statement for a detailed discussion about our executive compensation programs, including information about the compensation paid to our named executive officers in 2015.
Although the advisory Say-on-Pay vote is non-binding, our board of managers will consider the outcome of the vote when making future compensation decisions for named executive officers.
Our total compensation philosophy is designed to maintain a compensation program that will:
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Attract, retain and reward associates with the skills required to accomplish the Company's strategic business objectives;
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Provide accountability and incentives for achievement of those objectives;
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Link compensation to financial performance and increased capital unit value;
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Properly balance the risk profile of the Company with both short- and long-term incentives;
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Be designed within a consistent philosophy and framework;
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Create a culture of adherence to core values and strong ethical behavior; and
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Be integrated with the Company's business processes, including business planning, performance management, and succession planning.
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The total compensation philosophy seeks to achieve the appropriate balance among market-based salaries, variable incentive compensation and benefits designed to incent and reward both the current and long-term achievement of our business objectives, business and financial plans, and mission fulfillment. It also seeks to incent prudent risk taking within Board-established parameters with the proper balance and accountabilities between short- and long-term business performance. For named executive officers, the Company strives to deliver a significant portion of total target compensation through performance-based pay. The board of managers believes that this philosophy fosters a performance-oriented, results-based culture wherein compensation varies from one year to the next on the basis of actual results achieved. They also find that this variable performance-based compensation approach has been effective at driving financial performance in a difficult economic environment, aligning the interests of our members and our executives, and retaining qualified and experienced executives.
We are asking you to indicate your support for the compensation of our named executive officers as described in the Proxy Statement. This vote is not intended to address any specific item of compensation, our general compensation policies, or the compensation of our board of managers. Rather, this vote relates to the overall compensation of our named executive officers and the philosophy, policies and practices described in this Proxy Statement. Accordingly, we are asking you to vote, on an advisory basis, “For” the following resolution at the Annual Meeting:
“RESOLVED, that the members of the Company hereby approve, on an advisory basis, the compensation paid to the Company’s named executive officers, as disclosed in Compensation of Officers and Managers, the compensation tables, and related information in this Proxy Statement.”
OUR BOARD UNANIMOUSLY RECOMMENDS THAT MEMBERS CAST THEIR ADVISORY VOTE IN FAVOR OF “FOR” THE FOREGOING RESOLUTION.
CORPORATE GOVERNANCE
Board Structure
The board currently consists of 15 persons representing five geographical districts. The geographical districts are located primarily in South Dakota and Minnesota. The president (chairman) of the board does not serve as our chief executive officer, chief financial officer, or in any management executive position. Also, neither our chief executive officer, chief financial officer, nor any management personnel serves on the board.
Determination of Board Independence
The board has considered the independence of the nominees for election at the Annual Meeting and the existing board members not running for election at the Annual Meeting under the Nasdaq Marketplace Rules (“NASDAQ”) (though the Company’s capital units are not publicly traded or listed on any exchange or quotation system). The board has determined that, with the exception of Messrs. Howell, Kleinjan, and Tschakert, all of the nominees to the board and existing board members not running for election are independent under NASDAQ’s rules. Messrs. Howell, Kleinjan, and Tschakert are not considered independent because each received from the Company over $120,000 for the sale and delivery of soybeans to the Company within any of the preceding three years.
9
Committees of the Board of Managers and Committee Independence
The board has the following committees: finance/audit committee, governance committee, nomination committee, membership committee, and planning committee. The board does not have a standing compensation committee because of the Company’s small size and management structure which the board believes reduces the need for such committee; instead, the governance committee and the remaining members of the board participate in the consideration of executive officer and board compensation. The composition and function of the committees of the board are set forth below.
Finance/Audit Committee.
The finance/audit committee acts under an audit committee charter, which is available on the Company’s website at http://www.sdsbp.com under “About SDSP,” “Board of Managers.” The charter is used by the audit committee to guide its activities. The current members of the audit committee are Gary Wertish, who serves as the chairman of the committee, Wayne Enger, Jonathan Kleinjan, Maurice Odenbrett, and Lyle Trautman. Because our board members are generally farmers, as is common for producer-based agricultural entities, we do not have a financial expert serving on our finance/audit committee. Our finance/audit committee is exempt from the independence listing standards because our capital units are not publicly traded or listed on a national securities exchange or listed in an automated inter-dealer quotation system of a national securities association or to issuers of such securities. Nevertheless, we believe that, with the exception of Mr. Kleinjan, all of the members of the finance/audit committee are independent within the meaning of NASDAQ’s rules. Mr. Kleinjan is not independent because he received payment from the Company for the sale and delivery of soybeans to the Company within any of the three preceding years. The finance/audit committee held four meetings during the fiscal year ended December 31, 2015.
Governance Committee.
The governance committee assists the board in the supervision of the chief executive officer and chief financial officer, including the review of their performance and compensation package, reviews legal issues and responsibilities of the Company, and provides for future planning of the Company. The current members of the governance committee are Ardon Wek, who serves as chairman of the committee, Paul Barthel, Gary Kruggel, Delbert Tschakert and Gary Wertish. The governance committee held three meetings during the fiscal year ended December 31, 2015.
Nomination Committee.
The nomination committee acts under a nomination committee charter that is available for review on our website at http://www.sdsbp.com under “About SDSP,” “Board of Managers.” The members of the nomination committee for the 2016 Annual Meeting are Jonathan Kleinjan, who serves as the chairman of the committee, Wayne Enger, Maurice Odenbrett, Delbert Tschakert, and Gary Wertish. New members of the nomination committee are selected each year and will be appointed for purposes of the 2017 Annual Meeting. The nomination committee reviews the nomination petition forms submitted by members and searches for and contacts potential nominees for positions on the board. We believe that, with the exception of Messrs. Kleinjan and Tschakert, all of the members of the nomination committee are independent within the meaning of NASDAQ’s rules. Messrs. Kleinjan and Tschakert are not independent because each received payment from the Company for the sale and delivery of soybeans to the Company within any of the three preceding years. The nomination committee held three meetings in 2015 and through March 31, 2016.
Planning Committee.
The planning committee assists the board and our management in capital planning, budgeting and growth of the Company. The current members of the planning committee are Paul Dummer, who serves as chairman of the committee, Paul Barthel, Gary Duffy, Kent Howell, and Randy Tauer. The planning committee held two meetings during the fiscal year ended December 31, 2015.
Membership Committee.
The membership committee assists the board and our management in planning of annual and special meetings of members, as well as communicating with our members, the local community and public at large. The current members of the public relations committee are Gary Kruggel, who serves as chairman of the committee, Gary Goplen, Doyle Renaas, Delbert Tschakert and Ardon Wek. The membership committee held three meetings during the fiscal year ended December 31, 2015.
Board Attendance at Board, Committee and Annual Member Meetings
The board held ten regularly scheduled meetings during the fiscal year ended December 31, 2015. Each board member, with the exception of Doyle Renaas, attended at least 75% of the meetings of the board during the fiscal year ended 2015. Each manager attended at least 75% of the committee meetings of which each was a member during the fiscal year ended 2015. The Company does not have a formal attendance policy for the annual meeting; however,
10
we encourage all board members to attend the annual meeting of members. All board members attended the annual meeting of members in 2015.
Board Nomination
Criteria for Nomination to the Board.
The nomination committee is responsible for identifying, evaluating and approving qualified candidates for nomination as managers. The committee has not adopted minimum qualifications that nominees must meet in order for the committee to recommend them to the board. Rather, the committee evaluates each prospective nominee against general standards and qualifications, including their:
|
•
|
experience in the Company's core business or ancillary markets;
|
|
•
|
ability to represent the interests of the members of the Company;
|
|
•
|
standards of integrity, commitment and independence of thought and judgment; and
|
|
•
|
ability to dedicate sufficient time, energy and attention to the diligent performance of his or her duties.
|
The committee also considers other relevant factors as it deems appropriate, including:
|
•
|
the current composition of the board, and the extent to which the prospective nominee would contribute to the board's diversity in terms of talent, skill, knowledge, and expertise; and
|
|
•
|
the evaluations of other prospective nominees.
|
Members are permitted and encouraged each year to recommend a prospective nominee to the board by sending a letter to the attention of the nomination committee. In addition, our operating agreement requires all board members to be members or a representative owner of a member in the Company, which in effect causes members generally to nominate to the board other members of the Company or causes members of the Company to submit nomination on behalf of themselves.
Process for Identifying and Evaluating Nominees
To be nominated for election to the board at an annual meeting, nominations are required to be submitted in writing to our office, 100 Caspian Ave, PO Box 500, Volga, South Dakota 57071-0500. Nominations are required to be submitted no earlier than January 1 and no later than March 15 of each year. The letter may include whatever supporting material the member considers appropriate. A member who is himself or herself interested in being considered for nomination to the board is required to fill out a questionnaire and return the questionnaire to the nomination committee no earlier than January 1 and no later than March 15 of each year.
Once the committee has identified a prospective nominee, the committee makes an initial determination as to whether to conduct a full evaluation of the candidate. This initial determination is based on the information provided to or known by the committee, which may be supplemented by inquiries to the person making the recommendation or others. The preliminary determination is based primarily on the following factors:
|
•
|
the need for additional board members to fill vacancies or expand the size of the board; and
|
|
•
|
the likelihood that the prospective nominee can satisfy the evaluation factors described above.
|
If the committee determines (in consultation with the other managers as appropriate) that additional consideration is warranted, it may gather additional information about the prospective nominee’s background and experience. The committee then evaluates the prospective nominee against the standards and qualifications it determines are relevant. After completing this evaluation, the committee determines whether or not a nominee should be presented for election by the members.
Board Nominees for the 2016 Annual Meeting
The nomination committee selected the eight nominees - David Driessen, Jeffrey Hanson, Kent Howell, Gary Kruggel, Robert Nelsen, Doyle Renaas, Ned Skinner, and Edward Verhelst for the 2016 Annual Meeting of Members. With the
11
exceptions of Messrs. Hanson, Skinner and Verhelst, all nominees were selected because, as existing or former board members of the Company, each has valuable knowledge and experience about the Company’s business and operations. Each nominee also was selected because he is, or was, an agriculture producer, which provides the Company with valuable information about the soybean and farming industry. For purposes of the 2016 Annual Meeting, all of the selected nominees are members of the Company who submitted nomination petitions on behalf of themselves.
Relationships between Board Members, Executive Officers, or Nominees
No family or interlocking relationships exist between any of the managers of the board, officer, key employee, or nominee of the Company.
Communications with the Board
Members and other parties interested in communicating directly with the board, or to an individual member of the board, may do so in writing to the board or to an individual member of the board. Communications should be addressed to: the name of the individual board member, or the Board of Managers, South Dakota Soybean Processors, LLC, 100 Caspian Ave, PO Box 500, Volga, South Dakota 57071.
Code of Ethics
Our board has adopted a Code of Ethics that applies to our officers, including our chief executive officer and chief financial officer. A copy of the Code of Ethics can be obtained, without charge, by writing to the Company at the following address:
South Dakota Soybean Processors, LLC
100 Caspian Ave, PO Box 500
Volga, South Dakota 57071
Amendments and modifications to, and waivers of, the Code of Ethics will be promptly disclosed by the Company, to the extent required under the Exchange Act, on a current report on Form 8-K.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF MANAGERS
The finance/audit committee oversees our accounting and financial reporting process and assists the board in fulfilling its oversight responsibilities. Our management has the primary responsibility for the financial statements and the reporting process. Our independent auditor, Eide Bailly LLP, is responsible for expressing an opinion on the conformity of the audited financial statements to generally accepted accounting principles. The finance/audit committee reviewed and discussed with management our audited financial statements as of and for the year ended December 31, 2015. The finance/audit committee has discussed with Eide Bailly LLP the matters required to be discussed by SAS 61 (Codification of Statements on Auditing Standards, AU Section 380), as amended, with respect to those statements. We have reviewed the written disclosures and the letter from Eide Bailly LLP required by Independence Standards Board No. 1 (Independence Standards Board Standard No. 1, Independence Discussions with Audit Committees) and have discussed with Eide Bailly LLP its independence in connection with its audit of our most recent financial statements. Based on this review and these discussions, we recommended to the board that the financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015.
|
|
THE FINANCE/AUDIT COMMITTEE
|
|
|
|
|
|
Wayne Enger
|
|
|
Jonathan Kleinjan
|
|
|
Maurice Odenbrett
|
|
|
Lyle Trautman
|
|
|
Gary Wertish
|
12
INDEPENDENT ACCOUNTANTS
Eide Bailly LLP, independent certified accountants, served as our independent registered accounting firm for the fiscal years ended December 31, 2015 and 2014. Representatives of Eide Bailly are not expected to be present at the 2016 Annual Meeting of Members. The fees paid in 2015 and 2014 are as follows:
Fees for Fiscal Year Ended December 31, 2015:
Audit Fees.
Eide Bailly LLP billed a total amount of $85,500 for professional services rendered for the audit of the Company’s various annual financial statements for the fiscal year ended December 31, 2015, and the reviews of the financial statements included in the Company’s Form 10-Qs for the fiscal year ended December 31, 2015.
Tax Fees.
Eide Bailly LLP billed a total amount of $35,100 for professional tax services for the fiscal year ended December 31, 2015.
All Other Fees.
Eide Bailly LLP did not render any other services for which fees were paid for services rendered in connection with other matters requested by the Company during the fiscal year ended December 31, 2015.
Fees for Fiscal Year Ended December 31, 2014:
Audit Fees.
Eide Bailly LLP billed a total amount of $83,500 for professional services rendered for the audit of the Company’s various annual financial statements for the fiscal year ended December 31, 2014, and the reviews of the financial statements included in the Company’s Form 10-Qs for the fiscal year ended December 31, 2014.
Tax Fees.
Eide Bailly LLP billed a total amount of $31,750 for professional tax services for the fiscal year ended December 31, 2014.
All Other Fees.
Eide Bailly LLP did not render any other services for which fees were paid for services rendered in connection with other matters requested by the Company during the fiscal year ended December 31, 2014.
Audit Committee Pre-Approval Policies
The finance/audit committee charter provides that the finance/audit committee shall approve in advance any fees related to non-audit services. Accordingly, Eide Bailly submits to the finance/audit committee a notice of services proposed to be provided and the associated fees prior to the provision of any non-audit services.
COMPENSATION OF OFFICERS AND MANAGERS
Compensation Discussion and Analysis
Overview
Throughout this proxy statement, the individuals who serve as our Chief Executive Officer and Chief Financial Officer are referred to as the "executive officers".
Compensation Committee
The five-member governance committee serves are the Company's compensation committee for the year ended December 31, 2015. The governance committee assists the board in the supervision of the chief executive officer and chief financial officer, including the review of their performance and compensation package. The governance committee ensures that the total compensation paid to executive officers is fair, reasonable and competitive.
The governance committee:
|
1.
|
establishes and administers a compensation policy for the executive officers;
|
|
2.
|
reviews and approves the compensation policy for all of the employees other the executive officers;
|
13
|
3.
|
reviews and monitors our financial performance as it affects our compensation policies or the administration of those policies;
|
|
4.
|
reviews and monitors our succession plans;
|
|
5.
|
approves awards to employees pursuant to our incentive compensation plans; and
|
|
6.
|
approves modifications in the employee benefit plans.
|
All of the governance committee's actions are reported to the full board and, where appropriate, submitted to the board for ratification. In determining the Chief Executive Officer's compensation, the governance committee considers evaluations prepared by the managers. From time to time, the governance committee may delegate the the Chief Executive Officer the authority to implement certain decisions of the committee, to set compensation for other executive officers and management employees and to fulfill administrative duties.
In setting compensation, the governance committee took into account the member vote at the 2013 Annual Meeting of Members called the "Say-on-Pay" proposal, where the members voted in favor of the Company's system of compensating its executive officers and voted to hold the Say-on-Pay vote at the Company's annual meeting every three years.
Compensation Philosophy and Objectives
Our total compensation philosophy is designed to maintain a compensation program that will:
|
•
|
Attract, retain and reward associates with the skills required to accomplish the Company's strategic business objectives;
|
|
•
|
Provide accountability and incentives for achievement of those objectives;
|
|
•
|
Link compensation to financial performance and increased capital unit value;
|
|
•
|
Properly balance the risk profile of the Company with both short- and long-term incentives;
|
|
•
|
Be designed within a consistent philosophy and framework;
|
|
•
|
Create a culture of adherence to core values and strong ethical behavior; and
|
|
•
|
Be integrated with the Company's business processes, including business planning, performance management, and succession planning.
|
Compensation Committee Procedures
The compensation committee is responsible for determining the nature and amount of compensation for the Company's executive officers. The compensation committee receives input from the Chief Executive Officer on the personal performance achievements of the executives and management employees who report to him. This individual performance assessment determines a portion of the annual compensation for each manager. In addition, the Chief Executive Officer provides input on salary increases, incentive compensation opportunities, and long-term incentive grants for the executives and management employees who report to him, which the committee considers when making executive compensation decisions.
The compensation committee does its own performance review of the Chief Executive Officer. The compensation committee annually evaluates the performance of our Chief Executive Officer and determines and approves the Chief Executive Officer's compensation level based on this evaluation. In determining the long-term incentive component of the Chief Executive Officer's compensation, the compensation committee will consider all relevant factors, including the Company's performance, the value of similar awards to chief executive officers of comparable companies, and the awards given to the Chief Executive Officer of the Company in past years. The Chief Executive Officer is not present at compensation committee deliberations concerning his compensation.
Compensation Elements
Generally, the types of compensation and benefits provided to the executive officers are similar in form to the compensation and benefits provided to our other employees. For the year ended December 31, 2015, the principal components of our compensation for executive officers included:
|
•
|
base salary;
|
14
|
•
|
incentive cash bonuses; and
|
|
•
|
other personal benefits.
|
We expect that the principal components of compensation for any executive officer who may be hired in 2016 will be comprised of the same principal components. We have entered into employment agreements with Mr. Kersting (our CEO). These components have been included in the employment agreements with our executive officers, as well as in Company policies.
Base Salaries
Base salaries for our executive officers are established based on the scope of their roles, responsibilities, experience levels and performance, and taking into account competitive market compensation paid by comparable companies for similar positions. Base salaries are reviewed approximately annually, and may be adjusted from time to time to realign salaries with market levels after taking into account individual performance and experience.
Bonus
Annual incentive compensation in the form of a bonus is made to all full-time employees, including executive officers, under an employee profit-sharing program approved by the board. Under the annual incentive program, a cash bonus is made to executive officers if and only to the extent the Company is profitable, based on the Company’s defined net income at the end of the fiscal year. For all executive officers, including Messrs. Kersting and Hyde, the specific percentage awarded is based on a formula and an evaluation by the Chief Executive Officer and board of managers, who take into account current base salary level, level of responsibility and the impact of the executive officer's position on profits. Specifically, if net income exceeds $2 million at the end of the year, an aggregate amount, or pool, is set aside for distribution based on the following formula: [Net Income -$2 million] * 4.6%. Net income for purposes of this calculation is defined as consolidated net income according to our audited financial statements, excluding any income or expense that may be considered extraordinary and not arising in the ordinary course of business. Our net income in 2015, 2014, and 2013 for purposes of calculating the employees’ incentive pool was $23.38 million, $19.71 million, and $22.20 million, respectively.
Employment Agreements with Executive Officers
On August 18, 2015, we entered into a new employment agreement with Mr. Kersting which continues until terminated by Mr. Kersting or the Company.
The employment agreement provides for an initial base salary of $316,667 for 2015, $350,000 for 2016, and is subject to review and adjustment on an annual basis by the board of managers. The agreement contains benefits relating to termination and change in control. In the event that Mr. Kersting is terminated from employment from the Company for various reasons, he is entitled to the payment equal to Mr. Kersting’s base salary at the time of termination for the greater of the remaining term of his agreement (up to a maximum of 36 months) or a 52 week period. If Mr. Kersting voluntarily terminates his employment or is terminated for "cause" by the Company, he has no right, and the Company has no obligation, to continue salary or other employee benefits after the date of termination.
The employment agreement prohibits Mr. Kersting from competing with the Company anywhere in North America during the term of the employment agreement and for two years thereafter. The employment agreement also restricts Mr. Kersting from disclosing certain Company information, interfering with the Company and soliciting customers, suppliers or past or present employees of the Company in connection with a competitive business in North America for one year after the date of termination.
Mr. Hyde does not have an employment agreement with us and is employed at will by the Company.
Potential Payments upon Termination or Change in Control
If our Chief Executive Officer would have been dismissed without cause on December 31, 2015, and assuming that there was no reduction for salary earned in other employment, the Company estimates that it would have provided salary and health care benefits over a 36-month period of approximately $1,114,000 pursuant to our employment agreement with the Chief Executive Officer.
15
Stock Awards
Until February 3, 2015, Mr. Kersting participated in a non-qualified deferred plan that awarded “phantom” capital units. The awarded phantom capital units, which were fully vested, were valued annually based on fair market value of the Company’s capital units at the end of the year, compared to the prior year. If the value of the capital units at the end of the year was less than the value compared to the prior year, it resulted in a negative value, decreasing the cash amount potentially awarded to the recipient upon payment. In contrast, if the value of the capital units at the end of the year is greater than the value compared to the prior year, it resulted in a positive value, increasing the cash amount potentially awarded to the recipient upon payment. Upon terminating the plan on February 3, 2015, the Company agreed to pay Mr. Kersting a lump sum of $60,000 which represented the net present value of the vested phantom capital units as of December 31, 2014.
All Other Compensation
Other compensation provided to our executive officers includes such things as defined contribution plans and life insurance premiums. We provide these benefits, as well as medical and dental coverage, to our executive officers to the same extent as such benefits are provided to our other employees. These benefits are intended to make our executive officers more efficient and effective and provide for their health and well-being. The board reviews these other benefits to confirm that they are reasonable and competitive in light of the overall goal of designing the compensation program to attract and retain talent while maximizing the interests of our members.
Defined Contribution Plans -
We provide the executive officers and all employees of the Company a tax-qualified 401(k) plan of the Internal Revenue Code. We match 50% of all full-time employees’ contributed earnings, up to a maximum contribution of three percent (3%) of the employee’s wages.
Life Insurance Premiums -
We pay premiums for basic term life insurance, and accidental and disability insurance policies for all executive officers and all employees of the Company.
Perquisites - The chief executive officer and chief financial officer do not receive any perquisites. If any perquisites are used for personal reasons, the cost of value is imputed to the executive officers as income and the executive officers are responsible for all applicable taxes.
Accounting and Tax Treatment of Awards
None of our executive officers, governors, or employees receives compensation in excess of $1,000,000 and therefore the entire amount of their compensation is deductible by the Company as a business expense. Certain large executive compensation awards are not tax deductible by companies making such awards. None of our compensation arrangements are likely to reach this cap in the foreseeable future.
Compensation Committee Report
The governance committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based upon this review and discussion, the board of managers determined that the Compensation Discussion and Analysis should be included in this proxy statement.
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THE GOVERNANCE COMMITTEE
|
|
|
|
|
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Paul Barthel
|
|
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Gary Kruggel
|
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Delbert Tschakert
|
|
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Ardon Wek
|
|
|
Gary Wertish
|
Summary Compensation Table
The tables below summarize the total compensation paid or earned for services in all capacities during each of the previous three years for (i) Tom Kersting, who has served as our chief executive officer; and (ii) Mark Hyde, who served
16
as our chief financial officer . There were no other executive officers, or employees acting in similar capacity, in the previous three years.
|
Name and Principal Position
|
Year
|
Salary*
($)
|
Bonus*
($)
|
Stock
Awards*
($)
|
All Other*
Compensation
($)
|
Total
($)
|
||||||||||||||||
|
Tom Kersting
|
2015
|
$
|
316,667
|
|
$
|
125,620
|
|
$
|
—
|
|
$
|
8,589
|
|
$
|
450,876
|
|
||||||
|
Chief Executive Officer
|
2014
|
283,333
|
|
106,244
|
|
39,990
|
|
8,439
|
|
438,006
|
|
|||||||||||
|
2013
|
250,000
|
|
125,983
|
|
6,721
|
|
9,599
|
|
392,303
|
|
||||||||||||
|
|
||||||||||||||||||||||
|
Mark Hyde
|
2015
|
$
|
114,792
|
|
$
|
35,400
|
|
N/A
|
|
$
|
4,985
|
|
$
|
155,177
|
|
|||||||
|
Chief Financial Officer
|
2014
|
110,375
|
|
31,488
|
|
N/A
|
|
4,958
|
|
146,821
|
|
|||||||||||
|
2013
|
104,857
|
|
35,750
|
|
N/A
|
|
4,764
|
|
145,371
|
|
||||||||||||
* See “Base Salaries,” “Bonus,” “Stock Awards,” and “All Other Compensation” above for further information.
Board of Managers' Compensation
For their services on the board of managers of the Company, an individual received compensation shown in the following table and explained in the accompanying notes. No employees serve on the board.
|
Name
|
|
Fees Earned or
Paid in Cash See Note 1 |
|
Total ($)
|
||||
|
Paul Barthel
|
$
|
4,225
|
|
$
|
4,225
|
|
||
|
Gary Duffy
|
2,875
|
|
2,875
|
|
||||
|
Paul Dummer
|
|
4,950
|
|
|
4,950
|
|
||
|
Wayne Enger
|
|
4,225
|
|
|
4,225
|
|
||
|
Gary Goplen
|
2,875
|
|
2,875
|
|
||||
|
Kent Howell
|
|
4,225
|
|
|
4,225
|
|
||
|
Jonathan Kleinjan
|
5,025
|
|
5,025
|
|
||||
|
Gary Kruggel
|
4,550
|
|
4,550
|
|
||||
|
Maurice Odenbrett
|
5,025
|
|
5,025
|
|
||||
|
Doyle Renaas
|
3,350
|
|
3,350
|
|
||||
|
Randy Tauer
|
4,475
|
|
4,475
|
|
||||
|
Lyle Trautman
|
5,025
|
|
5,025
|
|
||||
|
Delbert Tschakert
|
5,225
|
|
5,225
|
|
||||
|
Ardon Wek
|
8,125
|
|
8,125
|
|
||||
|
Gary Wertish
|
4,625
|
|
4,625
|
|
||||
|
(1)
|
For each board or committee meeting or function requiring more than four hours of service, the president receives a fee of $600, the secretary receives a fee of $500, and all other managers receive a $400 fee. All managers receive $100 for each board or committee meeting or function requiring less than four hours of service and $75 for each conference call. Managers are also reimbursed at current IRS rates for travel incurred for each board and committee meeting or function and when attending other events on behalf of the Company.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, MANAGEMENT AND NOMINEES
The following table sets forth the beneficial ownership of our outstanding capital units by nominees to the board who are existing board members, named executive officers, and existing board members who are not running for election as of May 1, 2016. As of that date, no person beneficially owned more than 5% of our capital units.
17
|
Name of Beneficial Owner (1)
|
|
Number of
Votes
Beneficially
Owned
|
|
Voting
Percentage
|
|
Number of
Capital
Units
Beneficially
Owned
|
|
Ownership
Percentage
|
||||
|
Paul Barthel, Manager
|
|
1
|
|
|
*
|
|
|
20,500
|
|
|
*
|
|
|
Gary Duffy, Manager (2)
|
|
2
|
|
|
*
|
|
|
20,750
|
|
|
*
|
|
|
Paul Dummer, Manager (3)
|
|
1
|
|
|
*
|
|
|
65,000
|
|
|
*
|
|
|
Wayne Enger, Manager (4)
|
|
1
|
|
|
*
|
|
|
20,500
|
|
|
*
|
|
|
Gary Goplen, Manager
|
1
|
|
*
|
|
7,500
|
|
*
|
|
||||
|
Kent Howell, Manager (5)
|
|
2
|
|
|
*
|
|
|
80,000
|
|
|
*
|
|
|
Mark Hyde, CFO
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Tom Kersting, CEO
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Jonathan Kleinjan, Manager
|
|
1
|
|
|
*
|
|
|
7,500
|
|
|
*
|
|
|
Gary Kruggel, Manager (6)
|
|
1
|
|
|
*
|
|
|
15,000
|
|
|
*
|
|
|
Maurice Odenbrett
|
1
|
|
|
*
|
|
|
45,000
|
|
|
*
|
|
|
|
Doyle Renaas, Manager (7)
|
|
2
|
|
|
*
|
|
|
27,000
|
|
|
*
|
|
|
Randy Tauer, Manager
|
|
1
|
|
|
*
|
|
|
29,000
|
|
|
*
|
|
|
Lyle Trautman, Manager (8)
|
|
1
|
|
|
*
|
|
|
14,500
|
|
|
*
|
|
|
Delbert Tschakert, Manager (9)
|
|
2
|
|
|
*
|
|
|
43,500
|
|
|
*
|
|
|
Ardon Wek, Manager (10)
|
|
1
|
|
|
*
|
|
|
35,000
|
|
|
*
|
|
|
Gary Wertish, Manager (11)
|
2
|
|
*
|
|
191,000
|
|
*
|
|
||||
|
Managers and Executive Officers, as a group
|
20
|
|
*
|
|
621,750
|
|
2.0
|
%
|
||||
___________________
* Percentage of shares beneficially owned by each owner does not exceed 1.5% of the class.
|
(1)
|
The addresses for each of the individual managers listed are set forth above under “Information About Nominees” and “Information about Non-Nominee Board Members.”
|
|
(2)
|
Includes 8,250 capital units owned by Sharock Farms, Inc. of which Mr. Duffy is the president.
|
|
(3)
|
Represents capital units owned by Paul and Debra Dummer Living Trust of which Mr. Dummer is a trustee.
|
|
(4)
|
Represents capital units owned by Wayne Enger Revocable Trust of which Mr. Enger is a trustee.
|
|
(5)
|
Includes 50,000 capital units owned by Howell Farms of which Mr. Howell is an owner and 30,000 capital units owned jointly with Mr. Howell's wife.
|
|
(6)
|
Represents capital units owned by Gary A. Kruggel Living Trust of which Mr. Kruggel is the trustee.
|
|
(7)
|
Includes 20,000 capital units owned jointly with Mr. Renaas’ parents.
|
|
(8)
|
Represents capital units owned jointly with Mr. Trautman’s wife.
|
|
(9)
|
Includes 21,500 capital units owned by Mr. Tschakert’s wife.
|
|
(10)
|
Represents capital units owned jointly with Mr. Wek’s wife.
|
|
(11)
|
Includes 35,000 capital units owned by Mr. Wertish’s wife.
|
18
The following table sets forth the beneficial ownership of our outstanding capital units by the nominees to the board who are not existing board members as of May 1, 2016.
|
Name of Beneficial Owner
|
|
Number of
Votes Beneficially Owned |
|
Voting
Percentage |
|
Number of
Capital Units Beneficially Owned |
|
Ownership
Percentage |
||
|
David Driessen
|
1
|
|
*
|
45,000
|
|
*
|
||||
|
Jeffrey Hanson
|
1
|
|
*
|
35,000
|
|
*
|
||||
|
Robert Nelsen
|
1
|
|
*
|
26,000
|
|
*
|
||||
|
Ned Skinner (1)
|
1
|
|
*
|
100,000
|
|
*
|
||||
|
Edward Verhelst (2)
|
|
1
|
|
|
*
|
|
141,500
|
|
|
*
|
* Percentage of shares beneficially owned does not exceed 1% of the class.
|
(1)
|
Represents capital units owned by Skinner Agri-Products, Inc. of which Mr. Skinner is the president.
|
|
(2)
|
Represents capital units owned by Verhelst Partnership of which Mr. Verhelst is an owner.
|
RELATED PERSON TRANSACTIONS
Transactions in Fiscal Years 2014 and 2015
Since 2014, we have not entered into any transactions and there are no currently proposed transactions, in which we were or are to be a participant and the amount exceeds $120,000, in which any related person had or will have a direct or indirect interest, except as described in the “Executive Officers and Executive Compensations” section of this proxy statement or as described below.
In the ordinary course of business, we regularly enter into transactions to purchase soybeans. From time to time, we may buy soybeans from related persons on the same basis as we buy soybeans from unrelated parties. In fiscal year 2015, we purchased soybeans in the amount of $200,000 from Howell Farms which is Kent Howell’s business. Mr. Howell is a member of our board.
In fiscal year 2014, we purchased soybeans from the following persons and amounts: $176,000 from Howell Farms which is Kent Howell’s business; and $143,000 from Delbert Tschakert. Messrs. Howell and Tschakert are members of our board.
Process for Review, Approval or Ratification of Transactions with Related Persons
We do not have any formal policies and procedures for the review, approval or ratification of transactions between individual board members or officers and the Company except as set forth under our operating agreement. Under our operating agreement, all acts of the board are required to be conducted by majority vote of disinterested persons serving on the board. A disinterested person is defined as a person who does not have a financial interest or affiliation in any contract or agreement, or whose family member does not have a financial interest or affiliation. A person who is not disinterested is precluded from voting on the matter at hand unless such agreement or contract is made available to all members of the Company, such as a soybean delivery agreement or transfer of capital units. In 2015, these terms and conditions were fully complied with by all members of the board.
SECTION 16(a) BENEFICIAL OWNERSHIP
REPORTING COMPLIANCE
Under Section 16(a) of the Exchange Act, our directors (managers), executive officers and any persons holding 10% or more of the capital units are required to report their ownership of our capital units and any changes in that ownership to the Securities and Exchange Commission (the “SEC”) and to furnish us with copies of such reports. Specific due dates for these reports have been established and we are required to disclose in this report any failure to file on a
19
timely basis by such persons. To our knowledge, based solely upon a review of copies of such reports received by us which were filed with the SEC from January 1, 2015 through December 31, 2015, and upon written representations from such persons that no other reports were required, we believe that all reports required to be filed under Section 16(a) have been timely filed with the SEC in 2015.
ANNUAL REPORT
Our Annual Report to the Securities and Exchange Commission on Form 10-K, including the financial statements and the notes thereto, for the fiscal year ended December 31, 2015, is posted on our website at
http://www.sdsbp.com
then clicking “Investor Relations” “2016 Annual Meeting,” and “2015 Annual Report on Form 10-K.”
These annual meeting materials are being delivered pursuant to the Internet Availability of Proxy Materials rules promulgated by the SEC. We will provide each member a printed or e-mail copy of the Proxy Statement and Annual Report on Form 10-K without charge within three business days of receiving a written request. Members should direct any requests for a printed or e-mail copy of the annual meeting materials as follows: (i) by calling our office at (605) 627-6100 or toll free at (888) 737-7888; (ii) by e-mail to Amy Koisti at
amy.koisti@sdsbp.com
; or iii) by access on our website at
http://www.sdsbp.com
, by June 1, 2016 to facilitate timely delivery. We will provide each member a copy of the exhibits to the Annual Report on Form 10-K upon written request and without charge to our members. The 2015 Annual Report on Form 10-K complete with exhibits and the Proxy Statement are also available from the SEC at 6432 General Green Way, Mail stop 0-5, Alexandria, VA 22312-2413, by e-mail at foiapa@sec.gov or fax at (703) 914-2413 or through the IDEA database available from the SEC’s internet site (www.sec.gov).
MEMBER PROPOSALS
Any member proposal intended to be considered for inclusion in the Proxy Statement for presentation at the 2017 Annual Meeting of Members must be received by the Company no later than February 15, 2017. The proposal must be in accordance with the Rule 14a-8 promulgated by the SEC under the Exchange Act. It is suggested that the proposal be submitted by certified mail-return receipt requested. Members who intend to present a proposal at the 2017 Annual Meeting of members without including such proposal in the Company’s Information Statement must provide us with notice of such proposal no later than 60 days before the Annual Meeting date. We reserve the right to reject, rule out of order, or take appropriate action with respect to any proposal that does not comply with these and other applicable requirements.
OTHER MATTERS
The board knows of no other matter to be acted upon at the meeting.
|
BY THE ORDER OF THE BOARD OF MANAGERS
|
|
|
/S/ Ardon Wek
|
|
|
Ardon Wek
|
|
|
President of the Board of Managers
|
|
|
April 21, 2016
|
|
20
CLASS A MEMBER BALLOT - DISTRICT #1
SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
2016 Annual Meeting
By signing below, I certify that:
|
•
|
I am either the owner or the authorized representative of the owner of Class A Capital Units of South Dakota Soybean Processors, LLC, and have full power and authority to vote such capital units; and
|
|
•
|
I vote such capital units on the following matters as set forth below.
|
PROPOSAL ONE
: MANAGER ELECTION. Please place an X in the box next to the nominee for which you wish to vote, by marking “For” or “Abstain.”
YOU MAY CAST YOUR VOTE FOR ONLY ONE NOMINEE
.
|
|
For
|
Abstain
|
|
Kent Howell
|
¨
|
¨
|
PROPOSAL TWO
: ADVISORY (NON-BINDING) VOTE ON EXECUTIVE COMPENSATION (SAY-ON-PAY). Please place an X in the box next to your choice.
YOU MAY ONE VOTE BY MAKING ONE SELECTION
.
|
¨
For
|
¨
Against
|
¨
Abstain
|
Ballots must be RECEIVED by 10:00 a.m. (CDT) on Tuesday, June 21, 2016 at our office, either by mail or fax, or must be hand delivered to the 2016 Annual Meeting in order be valid. You may fax the ballot to us at (605) 627-5869 or mail to us at PO Box 500, Volga, South Dakota 57071.
|
Date:
|
|||
|
Signature
|
|||
|
Print Name
|
|||
|
Date:
|
|||
|
Signature
|
|||
|
Print Name
|
|||
PLEASE NOTE: If capital units are jointly owned, such as joint ownership between a husband and wife, both joint owners must sign the ballot for it to be valid.
21
CLASS A MEMBER BALLOT - DISTRICT #2
SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
2016 Annual Meeting
By signing below, I certify that:
|
•
|
I am either the owner or the authorized representative of the owner of Class A Capital Units of South Dakota Soybean Processors, LLC, and have full power and authority to vote such capital units; and
|
|
•
|
I vote such capital units on the following matters as set forth below.
|
PROPOSAL ONE
: MANAGER ELECTION. Please place an X in the box next to the nominee for which you wish to vote, by marking “For” or “Abstain.”
YOU MAY CAST YOUR VOTE FOR ONLY ONE NOMINEE
.
|
|
For
|
Abstain
|
|
Doyle Renaas
|
¨
|
¨
|
|
Robert Nelsen
|
¨
|
¨
|
PROPOSAL TWO
: ADVISORY (NON-BINDING) VOTE ON EXECUTIVE COMPENSATION (SAY-ON-PAY). Please place an X in the box next to your choice.
YOU MAY ONE VOTE BY MAKING ONE SELECTION
.
|
¨
For
|
¨
Against
|
¨
Abstain
|
Ballots must be RECEIVED by 10:00 a.m. (CDT) on Tuesday, June 21, 2016 at our office, either by mail or fax, or must be hand delivered to the 2016 Annual Meeting in order be valid. You may fax the ballot to us at (605) 627-5869 or mail to us at PO Box 500, Volga, South Dakota 57071.
|
Date:
|
|||
|
Signature
|
|||
|
Print Name
|
|||
|
Date:
|
|||
|
Signature
|
|||
|
Print Name
|
|||
PLEASE NOTE: If capital units are jointly owned, such as joint ownership between a husband and wife, both joint owners must sign the ballot for it to be valid.
22
CLASS A MEMBER BALLOT - DISTRICT #3
SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
2016 Annual Meeting
By signing below, I certify that:
|
•
|
I am either the owner or the authorized representative of the owner of Class A Capital Units of South Dakota Soybean Processors, LLC, and have full power and authority to vote such capital units; and
|
|
•
|
I vote such capital units on the following matters as set forth below.
|
PROPOSAL ONE
: MANAGER ELECTION. Please place an X in the box next to the nominee for which you wish to vote, by marking “For” or “Abstain.”
YOU MAY CAST YOUR VOTE FOR ONLY ONE NOMINEE
.
|
|
For
|
Abstain
|
|
David Driessen
|
¨
|
¨
|
|
Jeffrey Hanson
|
¨
|
¨
|
PROPOSAL TWO
: ADVISORY (NON-BINDING) VOTE ON EXECUTIVE COMPENSATION (SAY-ON-PAY). Please place an X in the box next to your choice.
YOU MAY ONE VOTE BY MAKING ONE SELECTION
.
|
¨
For
|
¨
Against
|
¨
Abstain
|
Ballots must be RECEIVED by 10:00 p.m. (CDT) on Tuesday, June 21, 2016 at our office, either by mail or fax, or must be hand delivered to the 2016 Annual Meeting in order be valid. You may fax the ballot to us at (605) 627-5869 or mail to us at PO Box 500, Volga, South Dakota 57071.
|
Date:
|
|||
|
Signature
|
|||
|
Print Name
|
|||
|
Date:
|
|||
|
Signature
|
|||
|
Print Name
|
|||
PLEASE NOTE: If capital units are jointly owned, such as joint ownership between a husband and wife, both joint owners must sign the ballot for it to be valid.
23
CLASS A MEMBER BALLOT - DISTRICT #4
SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
2016 Annual Meeting
By signing below, I certify that:
|
•
|
I am either the owner or the authorized representative of the owner of Class A Capital Units of South Dakota Soybean Processors, LLC, and have full power and authority to vote such capital units; and
|
|
•
|
I vote such capital units on the following matters as set forth below.
|
PROPOSAL ONE
: MANAGER ELECTION. Please place an X in the box next to the nominee for which you wish to vote, by marking “For” or “Abstain.”
YOU MAY CAST YOUR VOTE FOR ONLY ONE NOMINEE
.
|
|
For
|
Abstain
|
|
Gary Kruggel
|
¨
|
¨
|
PROPOSAL TWO
: ADVISORY (NON-BINDING) VOTE ON EXECUTIVE COMPENSATION (SAY-ON-PAY). Please place an X in the box next to your choice.
YOU MAY ONE VOTE BY MAKING ONE SELECTION
.
|
¨
For
|
¨
Against
|
¨
Abstain
|
Ballots must be RECEIVED by 10:00 a.m. (CDT) on Tuesday, June 21, 2016 at our office, either by mail or fax, or must be hand delivered to the 2016 Annual Meeting in order be valid. You may fax the ballot to us at (605) 627-5869 or mail to us at PO Box 500, Volga, South Dakota 57071.
|
Date:
|
|||
|
Signature
|
|||
|
Print Name
|
|||
|
Date:
|
|||
|
Signature
|
|||
|
Print Name
|
|||
PLEASE NOTE: If capital units are jointly owned, such as joint ownership between a husband and wife, both joint owners must sign the ballot for it to be valid.
24
CLASS A MEMBER BALLOT - DISTRICT #5
SOUTH DAKOTA SOYBEAN PROCESSORS, LLC
2016 Annual Meeting
By signing below, I certify that:
|
•
|
I am either the owner or the authorized representative of the owner of Class A Capital Units of South Dakota Soybean Processors, LLC, and have full power and authority to vote such capital units; and
|
|
•
|
I vote such capital units on the following matters as set forth below.
|
PROPOSAL ONE
: MANAGER ELECTION. Please place an X in the box next to the nominee for which you wish to vote, by marking “For” or “Abstain.”
YOU MAY CAST YOUR VOTE FOR ONLY ONE NOMINEE
.
|
|
For
|
Abstain
|
|
Ned Skinner
|
¨
|
¨
|
|
Edward Verhelst
|
¨
|
¨
|
PROPOSAL TWO
: ADVISORY (NON-BINDING) VOTE ON EXECUTIVE COMPENSATION (SAY-ON-PAY). Please place an X in the box next to your choice.
YOU MAY ONE VOTE BY MAKING ONE SELECTION
.
|
¨
For
|
¨
Against
|
¨
Abstain
|
Ballots must be RECEIVED by 10:00 a.m. (CDT) on Tuesday, June 21, 2016 at our office, either by mail or fax, or must be hand delivered to the 2016 Annual Meeting in order be valid. You may fax the ballot to us at (605) 627-5869 or mail to us at PO Box 500, Volga, South Dakota 57071.
|
Date:
|
|||
|
Signature
|
|||
|
Print Name
|
|||
|
Date:
|
|||
|
Signature
|
|||
|
Print Name
|
|||
PLEASE NOTE: If capital units are jointly owned, such as joint ownership between a husband and wife, both joint owners must sign the ballot for it to be valid.
25
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