Schedule 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. ____)
Filed by the Registrant þ
Filed by a Party other than the Registrant o
Check the appropriate box:
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Soliciting Material Pursuant to §240.14a-12 |
Synthesis Energy Systems, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required. |
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SYNTHESIS ENERGY SYSTEMS, INC.
Three Riverway, Suite 300
Houston, Texas 77056
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held December 14, 2010
You are cordially invited to attend the annual meeting of the stockholders of Synthesis Energy
Systems, Inc., which will be held at 9:00 a.m. Central time on December 14, 2010, at our offices at
Three Riverway, Suite 300, Houston, Texas 77056, for the following purposes:
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To elect seven directors; |
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To ratify the selection of PricewaterhouseCoopers LLP to serve as our
independent registered public accountants for the year ending June 30, 2011; and |
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To consider and act on such other business as may properly come before the
meeting or any adjournment or postponement of the meeting. |
If you were a stockholder at the close of business on October 15, 2010, you are entitled to
notice of and to vote at the meeting. A stockholders’ list will be available at our offices, Three
Riverway, Suite 300, Houston, Texas 77056, for a period of ten days prior to the meeting or any
adjournment or postponement of the meeting. The stockholders’ list will also be available for
inspection at the meeting.
Your vote is important. Whether or not you expect to attend the meeting, please sign and date
the enclosed proxy card and return it to us promptly. A stamped envelope has been provided for your
convenience. The prompt return of proxies will ensure a quorum and save us the expense of further
solicitation.
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By Order of the Board of Directors,
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/s/ Robert Rigdon
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Robert Rigdon |
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President and Chief Executive Officer |
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November 4, 2010
SYNTHESIS ENERGY SYSTEMS, INC.
THREE RIVERWAY, SUITE 300
HOUSTON, TEXAS 77056
PROXY STATEMENT
Our Board of Directors (the “Board”) is soliciting proxies for the annual meeting of our
stockholders for the year ended June 30, 2010 (the “Annual Meeting”) to be held at our offices at
Three Riverway, Suite 300, Houston, Texas 77056, on December 14, 2010, and at any adjournment or
postponement thereof, for the purposes set forth in the accompanying notice. This proxy statement
and the accompanying proxy card are first being mailed to stockholders on or about November 4,
2010. Stockholders are urged to read carefully the material in this proxy statement.
QUESTIONS AND ANSWERS
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Who can attend and vote at the Annual Meeting? |
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You can attend and vote at the Annual Meeting if you were a
stockholder at the close of business on the record date, October
15, 2010. On that date, there were 48,428,762 shares of common
stock outstanding and entitled to vote at the Annual Meeting. |
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What am I voting on? |
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You are voting on: |
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The election of seven directors; and |
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The ratification of PricewaterhouseCoopers LLP to serve as our independent
registered public accountants for the year ending June 30, 2011. |
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How do I cast my vote? |
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If your shares are registered directly in your name with our transfer
agent, American Stock Transfer & Trust Company, you are considered the
registered stockholder for those shares. As the registered
stockholder, you have the right to vote those shares and we will send
you the proxy materials and a proxy card. You should sign and return
the mailed proxy card in the prepaid and addressed envelope that was
enclosed with the proxy materials, and your shares will be voted at
the meeting in the manner you direct. In the event that you return a
signed proxy card on which no directions are specified, your shares
will be voted as recommended by the Board on all matters, and in the
discretion of the proxy holders as to any other matters that may
properly come before the meeting or any postponement or adjournment of
the meeting. We do not know of any other business to be considered at
the meeting other than the proposals noted herein. |
If your shares are registered in the name of a broker, bank or other nominee (typically
referred to as being held in “street name”), you will receive instructions from your broker,
bank or other nominee that must be followed in order for your broker, bank or
other nominee to vote your shares per your instructions. Many brokerage firms and banks have
a process for their beneficial holders to provide instructions via the Internet or over the
telephone. If Internet or telephone voting is unavailable from your broker, bank or other
nominee, please complete and return the enclosed voting instruction card in the addressed,
postage paid envelope provided.
In the event you do not provide instructions on how to vote, your broker may not have
authority to vote your shares. Under the rules that govern brokers who are voting with
respect to shares that are held in street name, brokers have the discretion to vote such
shares on routine matters, but not on non-routine matters. Routine matters include the
ratification of the appointment of independent auditors, but not the election of directors.
Beginning this year, your vote is especially important. If your shares are held by a broker,
your broker cannot vote your shares for the election of directors unless you provide voting
instructions. Therefore, please instruct your broker regarding how to vote your shares on
the election of the directors promptly. See “Vote Required” following each proposal for
further information.
If you hold shares through a broker, bank or other nominee and wish to be able to vote in
person at the meeting, you must obtain a legal proxy from your broker, bank or other nominee
and present it to the inspector of election with your ballot at the meeting.
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What voting methods are available? |
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We send proxy cards to all registered stockholders to enable them to vote their shares.
Stockholders who submit a proxy card need not vote at the Annual Meeting. However, we will
pass out written ballots to any registered stockholder or holder of a legal proxy who wishes to
vote in person at the Annual Meeting. |
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Can I vote by telephone or via the Internet? |
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We will only accept votes submitted by proxy card. |
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Are the proxy materials available on the Internet? |
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Pursuant to new rules promulgated by the Securities and Exchange Commission (the “SEC”), we are
providing access to our proxy materials both by sending you this full set of proxy materials,
including a proxy card, and by notifying you of the availability of our proxy materials on the
Internet. This proxy statement and a copy of our Annual Report are available on the home page
of our web site at www.synthesisenergy.com. Additionally, and in accordance with new SEC rules,
we maintain the proxy materials on our website in a manner that will not infringe on your
anonymity if you access them. |
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How does the Board recommend I vote on the proposal? |
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The Board recommends you vote “FOR” each of the nominees to the Board and “FOR” the
ratification of our independent registered public accountants for the year ending June 30,
2011. |
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Can I revoke my proxy? |
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Yes. If you are a registered stockholder, you can revoke your proxy at any time before it is
exercised by: |
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submitting a properly signed proxy card with a more recent date; |
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giving written notice of your revocation before the Annual Meeting to Ann Tanabe,
our Vice President of Investor Relations, at our offices, Three Riverway, Suite 300,
Houston, Texas 77056; or |
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attending the Annual Meeting and voting your shares in person. |
If you are a beneficial owner, please refer to the voting instructions provided by your
individual broker, bank, trustee or other nominee for their procedures for revoking or
changing your vote.
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Who will count the votes? |
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One of our officers will act as the inspector of the election and will count the votes. |
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Why is my proxy being solicited and who pays the cost for such solicitation? |
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Because many stockholders are unable to attend the Annual Meeting, the Board solicits proxies to ensure that each
stockholder has an opportunity to vote on all matters scheduled to come before the Annual Meeting. In addition to the
solicitation by the Board, we have retained Georgeson Inc., a proxy soliciting firm, to assist with the solicitation of
proxies for a fee not to exceed $8,000, plus reimbursement for out-of-pocket expenses. We will bear the costs of the proxy
solicitation. |
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What is a “quorum?” |
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A quorum is the presence at the Annual Meeting, in person or by proxy, of the holders of a majority of the outstanding
shares of our common stock as of the record date. There must be a quorum for the Annual Meeting to be held. If you submit
a valid proxy card or attend the Annual Meeting, your shares will be counted to determine whether there is a quorum.
Abstentions and broker non-votes will be counted toward the quorum. |
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What vote is required to approve each item? |
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Election of Directors. The seven nominees for election as directors at the Annual Meeting who receive the greatest number
of votes cast by the stockholders, a plurality, will be elected as our directors. You may vote “FOR” all nominees or
withhold your vote for any one or more of the nominees. Abstentions will not affect the outcome of the election of
directors. If you hold your shares through a broker, bank, trustee or other nominee and you do not instruct them on how to
vote on this proposal, your broker or other nominee will not have authority to vote your shares. |
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Ratification of PricewaterhouseCoopers LLP to serve as our independent registered public
accountants for the year ending June 30, 2011. The affirmative vote of the holders of a
majority of the shares of common stock entitled to vote and represented at the Annual
Meeting, in person or by proxy, is required to approve the ratification of the independent
registered public accountants for the year ending June 30, 2011. For the ratification of
PricewaterhouseCoopers LLP to serve as our independent registered public accountants for the
year ended June 30, 2011, you may vote “FOR” or “AGAINST” or “ABSTAIN” from voting.
Abstentions and broker non-votes will have the same effect as a vote “AGAINST” the
ratification of our independent registered public accountants for the year ending June 30,
2011.
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What shares are included on my proxy card? |
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Your proxy card represents all shares registered to your account with the same social security number and address. |
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What does it mean if I get more than one proxy card? |
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Your shares are probably registered in more than one account. You should vote each proxy card you receive. We encourage
you to consolidate all your accounts by registering them in the same name, social security number and address. This can be
accomplished by contacting your stock broker. |
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How many votes can I cast? |
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On all matters, you are entitled to one vote per share of common stock. |
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When are stockholder proposals due for the Annual Meeting of Stockholders for the year ended June 30, 2011? |
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If you want to present a proposal from the floor at the Annual Meeting of Stockholders for the year ending June 30, 2011,
you must give us written notice of your proposal no later than September 15, 2011 and no earlier than August 16, 2011 and
follow the procedures specified in our Amended & Restated Bylaws (the “Bylaws”). If instead of presenting your proposal at
the meeting you want your proposal to be considered for inclusion in next year’s proxy statement, you must submit the
proposal in writing to the Vice President of Investor Relations so that it is received by August 16, 2011. Your notice
should be sent to the Vice President of Investor Relations, Synthesis Energy Systems, Inc., Three Riverway, Suite 300,
Houston, Texas 77056. See “Other Information — Stockholder Proposal Information.” |
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Where can I find the voting results of the Annual Meeting? |
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The preliminary voting results will be announced at the Annual Meeting. The final results will be published in a current
report on Form 8-K to be filed promptly after the Annual Meeting. |
4
TABLE OF CONTENTS
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A copy of the Annual Report, which includes the Form 10-K of Synthesis Energy Systems, Inc. for the
fiscal year ended June 30, 2010, is being mailed with this proxy statement. You may receive an
additional copy of the Form 10-K and other information at no charge upon request directed to: Ann
Tanabe, Vice President of Investor Relations, Synthesis Energy Systems, Inc., Three Riverway, Suite
300, Houston, Texas 77056.
5
Proposal 1
ELECTION OF DIRECTORS
At the Annual Meeting, seven directors are to be elected. All nominees are currently
directors. The Board was expanded from six to seven directors in February 2010 in connection with
the appointment of Ziwang Xu. Each director is to hold office until the next annual meeting of
stockholders or until his successor is elected and qualified. The persons designated as proxies on
the accompanying proxy card intend, unless authority is withheld, to vote for the election of the
nominees named below to the Board. If any nominee should become unavailable for election, the
proxy may be voted for a substitute nominee as the Nominating and Governance Committee of the Board
(the “Nominating and Governance Committee”) may recommend and the independent members of
the Board may nominate, or the Board may be reduced accordingly. The Nominating and Governance
Committee, which consists solely of directors that are independent within the meaning of Rule 4200
of the NASDAQ Stock Market Rules, recommended the nomination of the seven directors to the Board.
Based on that recommendation, the Board nominated such directors for election at the Annual
Meeting. The nominees have consented to be nominated and have expressed their intention to serve
if elected. We have no reason to believe that any of the nominees will be unable to serve if
elected to office and, to our knowledge, the nominees intend to serve the entire term for which
election is sought. Only the nominees or substitute nominees designated by the Board will be
eligible to stand for election as directors at the Annual Meeting. See “Other Information —
Stockholder Proposal Information.”
Nominees
Certain information regarding the nominees is set forth below:
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Director |
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Position |
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Lorenzo Lamadrid |
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Chairman of the Board |
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2005 |
Robert Rigdon |
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President, Chief Executive Officer and Director |
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2009 |
Donald Bunnell |
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President and Chief Executive Officer—Asia Pacific and Director |
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2003 |
Michael Storey (1) |
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69 |
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Director |
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2005 |
Denis Slavich (1) |
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70 |
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Director |
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2005 |
Harry Rubin (1) |
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Director |
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2006 |
Ziwang Xu |
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59 |
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Director |
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2010 |
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Member of the Compensation Committee, Nominating and Governance Committee and Audit
Committee of the Board. |
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Lorenzo Lamadrid. Mr. Lamadrid has been the Chairman of the Board since April 2005. Since
2001, Mr. Lamadrid has been the Managing Director of Globe Development Group, LLC, a firm that
specializes in the development of large scale energy, power generation, transportation and
infrastructure projects in China and provides business advisory services and investments with a
particular focus on China. Mr. Lamadrid has also been a director of Flow International
Corporation since January 2006. Mr. Lamadrid has been a member of the International Advisory
Board of Sirocco Aerospace, an international aircraft manufacturer and marketer, since mid-2001. He
previously served as President and Chief Executive Officer of Arthur D. Little, a management and
consulting company, from 1999 to 2001 (which filed for bankruptcy under Chapter 11 of the U.S.
Bankruptcy Code within two years of his leaving the company), as President of Western Resources
International, Inc. from 1996 through 1999 and as Managing Director of The Wing Group from 1993
through 1999. The Wing Group was a leading international electric power project-development company
that was sold to Western Resources in 1999. Prior to that, he was with General Electric from 1984
to 1993 serving as corporate officer, Vice President and General Manager at GE Aerospace for
Marketing and International Operations, and as General Manager of Strategic Planning and Business
Development of GE’s International Sector. Prior to joining GE, Mr. Lamadrid was a senior Manager at
the Boston Consulting Group where he worked from 1975 to 1984. Mr. Lamadrid’s experience in
business development and management is a key attribute for us, and his background in overseas
markets has provided him with valuable insights into our international focus.
Education: Mr. Lamadrid holds a dual bachelor’s degree in Chemical Engineering and
Administrative Sciences from Yale University, an M.S. in Chemical Engineering from the
Massachusetts Institute of Technology and an M.B.A. in Marketing and International Business from
the Harvard Business School.
Directorships in the past five years: Flow International (2006 to present).
Robert Rigdon. Mr. Rigdon is our President and Chief Executive Officer and is also a director.
Mr. Rigdon joined us as a director in August 2009, and has served as President and Chief Executive
Officer since March 31, 2009. Prior to that, he served as Chief Operating Officer since November
2008 and as Senior Vice President of Global Development since May 2008, where he was responsible
for overseeing all aspects of our current and future coal gasification projects worldwide. From
June 2004 until joining us, Mr. Rigdon worked for GE Energy in a variety of capacities, including
Manager—Gasification Engineering, Director—IGCC Commercialization, and Director—Gasification
Industrials and Chemicals Business. For the 20 years previous to this, Mr. Rigdon worked for
Texaco, and later ChevronTexaco, as an engineer and in the Worldwide Power & Gasification group,
where he ultimately became Vice President—Gasification Technology for the group. As a result of his
three decades working on gasification, Mr. Rigdon is experienced in the operational and marketing
strategies that are key to our development and success.
Education: Mr. Rigdon is a mechanical engineer with a B.S. from Lamar University.
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Directorships in the past five years: None, other than our Board.
Donald Bunnell. Mr. Bunnell is our President and Chief Executive Officer—Asia Pacific, a
director and one of our co-founders. Since 2009, his duties have included oversight of our global
licensing business. From 2001 until our founding in 2003, Mr. Bunnell was the Asia Business
Development Vice President for BHP Billiton’s aluminum group. Between 1997 and 2001, Mr. Bunnell
served in various capacities, including Vice President in charge of Enron China’s power group, and
Country Manager, with the power development team of Enron Corporation. During
this time, Mr. Bunnell spent three years leading the Enron/Messer/Texaco consortium for the
Nanjing BASF Project. From 1995 to 1997, Mr. Bunnell was a manager with Coastal Power Corporation
(now part of El Paso Corporation) in Beijing, where he was involved in development of gas turbine
power plants and other power projects. Mr. Bunnell has practiced law in Hong Kong, advising clients
on China investments, prior to entering the power business. Mr. Bunnell is fluent in Mandarin
Chinese, has lived in China for over 14 years, and has 10 years of experience in the China power
industry developing projects and managing joint ventures. Mr. Bunnell’s extensive experience in the
power industry, wealth of technical knowledge and role as one of our founders provides him with
unique insight into potential issues that could emerge with respect to our operational development.
Education: Mr. Bunnell graduated from Miami University with a B.A. and from the
William & Mary School of Law with a J.D.
Directorships in the past five years: None, other than our Board.
Michael Storey. Mr. Storey has served as one of our directors since November 2005. From June
2002 through November 2005, he was a partner with Union Charter Financial. From 2000 to 2004, he
served as President and CEO of Inmarsat Ventures, a global communications company. He resigned in
March 2004, but continued as an advisor until March 2006. From 1993 to 1999, Mr. Storey ran several
telecommunications businesses during European deregulation that became MCI Europe and is now
Verizon Communications. In 1984, Mr. Storey and a partner established City Centre Communications, a
business in the cable television and telecommunications industry. The business was grown through
several acquisitions of franchises before the business was sold in 1992 to Videotron and Bell
Canada. He served as a Director and later as Chairman of the Cable Communications Association from
1983 to 1990, representing all the investors in the U.K. cable industry. Starting in 1972, Mr.
Storey served for 10 years as a Vice President and Partner of Booze Allen Hamilton International
Management Consultants. He is also currently the non-executive Chairman of Impello Plc, an
independent utility company in the United Kingdom. From 1958 to 1968, he worked in the healthcare
industry, operating hospitals in the U.K., Middle East and North America. Through his various
management roles, Mr. Storey has developed an in-depth knowledge and experience in strategic
development that is key to our growth.
Education: Mr. Storey is a graduate of King’s Fund Administrative Staff College and
has an M.B.A. from the University of Chicago. He also holds two professional certifications:
Professionally Qualified Hospital Administrator and Professionally Qualified Personnel Manager.
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Directorships in the past five years: Impello Plc (2008 to present).
Denis Slavich. Mr. Slavich has served as a director since November 2005 and currently serves
as the Chairman of the Audit Committee. Mr. Slavich has over 35 years of experience in large scale
power generation development. He is currently an international consultant to a number of U.S. and
China-based companies engaged in cross border transactions, as well as an advisor and board member
for a number of additional firms. He has also served as a director of China Advanced Construction
Materials Group, Inc., a company traded on the OTC Bulletin
Board, since September 2009. From 1998 to 2000, Mr. Slavich was the CFO and director of KMR
Power Corporation and was responsible for the development of an international IPP company that
developed projects in Columbia as well as other areas. From 2000 until 2002, he served as Vice
President and CFO of BigMachines Inc., a software company, and from 2001 until the present, he has
served as Chairman of Leading Edge Technologies, a desalination technology company, and has
recently served as its CEO. Mr. Slavich also served as acting President for Kellogg Development
Corporation, a division of M.W. Kellogg, during 1997. From 1991 to 1995, Mr. Slavich was also a
Vice President of Marketing for Fluor Daniel. From 1971 to 1991, Mr. Slavich served in various
executive positions at Bechtel Corporation including Sr. VP, CFO, and director and Sr. VP and
manager of the International Power Division. In addition to his experience in power generation
development, Mr. Slavich is experienced in finance and accounting matters and has extensive
experience with financial statements.
Education: Mr. Slavich received his Ph.D. from Massachusetts Institute of Technology,
his M.B.A. from the University of Pittsburgh and his B.S. in Electrical Engineering from the
University of California at Berkeley.
Directorships in the past five years: China Advanced Construction Materials Group,
Inc. (2009 to present), Leading Edge Technologies (2001 to present), Comsat International
(2006-2007).
Harry Rubin. Mr. Rubin has served as a director since August 2006. Mr. Rubin is currently
Chairman of Henmead Enterprises, in which capacity he advises various companies regarding strategy,
acquisitions and divestitures. He held board positions at a number of private and public companies
such as the A&E Network, RCA/Columbia Pictures Home Video, the Genisco Technology Corporation and
Image-Metrics Plc. He was a founding partner of the Boston Beer Company. In the 12 years prior to
2006, Mr. Rubin held various senior management roles in the computer software industry, including
Senior Executive Vice President and Chief Operating Officer of Atari, and President of
International Operations and Chief Financial Officer for GT Interactive Software. Mr. Rubin entered
the computer software business in 1993 when he became Executive VP for GT Interactive Software as a
start-up company, and played a leadership role in GT’s progression as the company went public in
1995 and became one of the largest industry players. Through his various management roles, Mr.
Rubin has developed an in-depth knowledge and experience in strategic development that is key to
our growth. Prior to 1993, he held various senior financial and general management positions at
RCA, GE and NBC.
Education: He is a graduate of Stanford University and Harvard Business School.
Directorships in the past five years: 784 Park Avenue Realty, Inc. (December 2005 to
present), Henmead Enterprises, Inc. (1991 to present), Image-Metrics Plc (December 2005 to April
2010).
9
Ziwang Xu. Mr. Xu is currently the Chairman of CXC Capital, Inc. and CXC China Sustainable
Growth Fund, companies which he founded in March of 2008 and which are based in Shanghai, China.
From November of 2005 until founding CXC, he was a private investor in Shanghai and worked on the
development of residential real estate projects. During this same time, he was an Advisory
Director for Goldman Sachs in Beijing, China. From 1997 through
2005, he served as a Managing Director and Partner for Goldman Sachs in Hong Kong. He is
also currently an Advisory Partner with Clayton, Dubilier & Rice, a member of the Board of
Overseers of the Fletcher School of Law and Diplomacy at Tufts University, and Vice Chairman,
Alumni Association of Economics and Finance, of Fudan University in Shanghai, China. Additionally,
he is a member of the Shanghai Comprehensive Economy Studies Council and the Shanghai International
Cultural Council. Mr. Xu’s background in overseas markets and his experience in finance matters
has provided him with valuable insights into our strategy.
Education: He holds a B.A. from East China Normal University and an M.A. in Economics
from Fudan University and an M.A. in International Business from the Fletcher School of Law and
Diplomacy at Tufts University.
Directorships in the past five years: CXC Capital, Inc. (2008 to present).
Vote Required
The seven nominees for election as directors at the Annual Meeting who receive the greatest
number of votes cast by the stockholders, a plurality, will be elected as our directors. You may
vote “FOR” all nominees, “AGAINST” all nominees or withhold your vote for any one or more of the
nominees. Abstentions will not affect the outcome of the election of directors. If you hold your
shares through a broker, bank, trustee or other nominee and you do not instruct them on how to vote
on this proposal, your broker or other nominee will not have authority to vote your shares.
Board Recommendation
The Board recommends a vote “FOR” each nominee to the Board.
Communicating with the Board
Stockholders who wish to communicate to the Board should do so in writing to the following
address:
[Name of Director(s) or Board of Directors]
Synthesis Energy Systems, Inc.
Attn: Vice President of Investor Relations
Three Riverway, Suite 300
Houston, Texas 77056
All such communications are logged and those not deemed frivolous, threatening or otherwise
inappropriate are forwarded to the Chairman of the Nominating and Governance Committee for
distribution.
Board Member Attendance at Annual Meeting of Stockholders
Although we do not have a formal policy regarding attendance by members of the Board at our
annual meeting of stockholders, we encourage directors to attend. Messrs. Lamadrid and Rigdon
attended the Annual Meeting of Stockholders for the year ended June 30, 2009.
10
Director Independence
The Board has determined that the following members are independent within the meaning of Rule
4200 of the NASDAQ Stock Market Rules: Lorenzo Lamadrid, Michael Storey, Denis Slavich, Harry Rubin
and Ziwang Xu.
Board Leadership Structure
Our Board believes that independent leadership is a critical component of our governance
structure. Since 2006, our chairman and chief executive officer roles have been separate, and the
Board continues to believe that this structure is appropriate at this time. By separating the roles
of the chairman and chief executive officer, our chief executive officer can focus his time and
energy on setting our strategic direction, overseeing daily operations, developing our future, and
promoting employee engagement at all levels of the organization. Meanwhile, our independent
chairman leads the Board in the performance of its duties by establishing agendas and ensuring
appropriate meeting content, engaging with the chief executive officer and senior management team
between Board meetings on business developments, and providing overall guidance to our chief
executive officer as to the Board’s views and perspectives, particularly on our strategic
direction. As a result of this, we do not believe that a separate lead independent director is
necessary at this time. If the positions of chairman and chief executive officer are held by the
same person in the future, the Board may select a lead director from among the independent
directors.
Board Role in Risk Oversight
Our Board is responsible for oversight of us and our business, including risk management.
Together with the Board’s standing committees, the Board is responsible for ensuring that material
risks are identified and managed appropriately. The Board and its committees regularly review
material strategic, operational, financial, compensation and compliance risks with our senior
management. The Audit Committee of the Board (the “Audit Committee”) has oversight responsibility
for financial risk (such as accounting, finance, internal controls and tax strategy), and also
oversees compliance with applicable laws and regulations. The Compensation Committee of the Board
(the “Compensation Committee”) oversees compliance with our compensation plans, and the Nominating
and Governance Committee oversees compliance with our corporate governance principles. Each of the
committees report to the Board regarding the areas of risk they oversee.
11
Director Compensation
Prior to March 31, 2009, independent directors, other than Mr. Lamadrid, received a quarterly
cash payment of $1,500 as reimbursement for expenses incurred in connection with their service on
the Board. In addition, upon appointment to the Board, directors received a one-time option to
acquire 160,000 shares of common stock. They also received a one-time option to acquire 40,000
shares of common stock if they serve as the chairperson of a committee of the Board. Additional
options grants to directors were determined on an annual basis. Effective
March 31, 2009, the Board, and the Compensation Committee approved a new compensation plan for
the members of the Board. Under the new plan approved by the Board, (i) the prior cash payments to
directors other than Mr. Lamadrid will be continued, (ii) non-executive directors who serve as
chair of a Board committee will receive an annual grant of stock options with an aggregate value of
$100,000 and (iii) all other non-executive directors will receive an annual grant of stock options
with an aggregate value of $90,000, in each case based on a fair market valuation and the exercise
price in the grant, while non-independent, executive directors will continue to receive no
compensation for their service on the Board. The options shall vest as to 25% of the shares on
each of March 31, June 30, September 30 and December 31 in the year of grant and the exercise price
shall be determined based on the closing price on the date of the grant. The initial grants were
made effective March 31, 2009 at an exercise price of $0.66 per share. In addition, Mr. Lamadrid
has a consulting agreement with us for his service as Chairman of the Board. For more on director
compensation, including a summary of Mr. Lamadrid’s consulting agreement, see below under “Other
Information-Executive and Director Compensation-Director Compensation for the Year Ended June 30, 2010.”
Meeting Attendance and Board Committees
Meetings of the Board. During the year ended June 30, 2010, the Board held five meetings.
All directors attended at least 75 percent of the total meetings of the Board and the committees on
which they serve for the year ended June 30, 2010. We believe that attendance at meetings of the
Board is only one criterion for judging the contribution of individual directors and that all
directors have made substantial and valuable contributions.
Audit Committee. During the year ended June 30, 2010, the members of the Audit Committee were
Michael Storey, Denis Slavich and Harry Rubin. The Board has determined that Denis Slavich is an
audit committee financial expert under Item 407(d) of Regulation S-K of the SEC. All of the
members of the Audit Committee were and are independent within the meaning of Rule 4200 of the
NASDAQ Stock Market Rules. The Audit Committee operates under a written charter adopted by the
Board which is available at the “Corporate Governance” section of our website at
www.synthesisenergy.com. The Audit Committee met seven times during the year ended June
30, 2010.
The primary purpose of the Audit Committee is to assist the Board in overseeing (a) the
integrity of our financial statements, (b) our compliance with legal and regulatory requirements,
(c) the qualifications and independence of the independent registered public accountants and (d)
the performance of our internal auditors (or other personnel responsible for the internal audit
function).
Compensation Committee. During the year ended June 30, 2010, the members of the Compensation
Committee were Michael Storey, Denis Slavich and Harry Rubin. All of the members were and are
independent within the meaning of Rule 4200 of the NASDAQ Stock Market Rules. The Compensation
Committee operates under a written charter adopted by the Board which is available at the
“Corporate Governance” section of our website at www.synthesisenergy.com. The Compensation
Committee met four times during the year ended June 30, 2010.
12
The primary purpose of the Compensation Committee is to provide oversight on the broad range
of matters surrounding the compensation of management, including recommending to the Board the
compensation for our chief executive officer and approving the compensation and employee benefits
for our other executive officers and employees. The Compensation Committee determines the total
compensation (including the nature and amount of each element of the compensation) of Robert
Rigdon, our President and Chief Executive Officer. Mr. Rigdon attends the meetings of the
Compensation Committee regarding executive compensation for all other executive officers and
discusses his recommendations with the Compensation Committee, including his evaluation of the
performance of the other executive officers in arriving at his recommendations, which are based on
his direct evaluation of such executives, after receiving input from the peers of such executives
and others, if necessary. These recommendations are considered by the Compensation Committee, along
with other relevant data, in determining the total compensation for such executives.
The Compensation Committee has directly engaged, and may in the future engage, compensation
consultants familiar with our industry to advise the Compensation Committee regarding certain
compensation issues. The assignments of the consultants are determined by the Compensation
Committee, although management may have input into these assignments. In December 2008, Korn/Ferry
International, the independent compensation consultant engaged by the Compensation Committee, was
engaged to provide the Compensation Committee with data and analysis as part of the Compensation
Committee’s comparative process for determining compensation. Korn/Ferry conducted interviews with
members of management and the Board, developed a peer group for comparison, analyzed compensation
levels and programs among the peer group, prepared a survey of the same and developed
recommendations for the Compensation Committee. The peer group included US Geothermal, Inc.
Fuelcell Energy, Inc., American Pacific Corp., Balchem Corp., Flotek Industries, Inc., Hawkins,
Inc., Greenhunter Energy, Inc., Pacific Ethanol, Inc., Rentech, Inc., Syntroleum Corp., Endeavour
International Corp., TXCO Resources, Inc., Georesources Inc., Gastar Exploration Ltd., FX Energy
Inc. and Cubic Energy Inc. Korn/Ferry did not provide any additional services to us in the year
ended June 30, 2009 and no compensation consultants were engaged during the year ended June 30,
2010.
Nominating and Governance Committee. During the year ended June 30, 2010, the members of the
Nominating and Governance Committee were Michael Storey, Denis Slavich and Harry Rubin. All of the
members of the Nominating and Governance Committee were and are independent within the meaning of
Rule 4200 of the NASDAQ Stock Market Rules. The Nominating and Governance Committee operates under
a written charter adopted by the Board which is available at the “Corporate Governance” section of
our website at www.synthesisenergy.com. The Nominating and Governance Committee met four
times during the year ended June 30, 2010.
The primary purpose of the Nominating and Governance Committee is to provide oversight on the
broad range of matters surrounding the composition and operation of the Board. These matters
include identifying individuals qualified to become Board members, recommending to the Board
director nominees, and recommending to the Board a set of corporate governance principles
applicable to us.
13
Director Nominations Process. Nominating functions are handled by the Nominating and
Governance Committee pursuant to its charter. Our Bylaws also contain provisions that address the
process by which a stockholder may nominate an individual to stand for election to the Board at our
annual meeting of stockholders. Historically, we have not had a formal policy concerning
stockholder recommendation to the Nominating and Governance Committee (or its predecessors), other
than the provisions contained in our Bylaws. To date, we have not received any recommendations
from stockholders requesting that the Nominating and Governance Committee (or any predecessor)
consider a candidate for inclusion among the Nominating and Governance Committee’s slate of
nominees in our proxy statement, and therefore we believe that, other than the provisions contained
in our Bylaws, no formal policy concerning stockholder recommendations is needed. There are no
differences in the criteria used by the Nominating and Governance Committee when evaluating
nominations made by our stockholders.
In evaluating director nominees, the Nominating and Governance Committee considers the
following factors:
| |
• |
|
the appropriate size of the Board; |
| |
| |
• |
|
our needs with respect to the particular talents and experience of our directors; |
| |
| |
• |
|
the knowledge, skills and experience of nominees, including experience in
technology, business, finance, administration or public service, in light of prevailing
business conditions and the knowledge, skills and experience already possessed by other
members of the Board; |
| |
| |
• |
|
familiarity with our business and industry; |
| |
| |
• |
|
experience with accounting rules and practices; and |
| |
| |
• |
|
the desire to balance the considerable benefit of continuity with the periodic
injection of the fresh perspective provided by new members. |
The goal of the Nominating and Governance Committee is to assemble a Board that brings us a
variety of perspectives and skills derived from high quality business and professional experience.
Other than the foregoing, there are no stated minimum criteria for director nominees, although
the Nominating and Governance Committee may also consider such other factors as it deems to be in
the best interests of us and our stockholders. The Nominating and Governance Committee does,
however, believe it appropriate that a majority of the members of the Board meet the definition of
“independent director” under the rules of The NASDAQ Stock Market. The Nominating and Governance
Committee also believes it appropriate for certain key members of our management to participate as
members of the Board. Although not part of any formal policy, our goal is a balanced and diverse
Board, with members whose skills, backgrounds and experiences are complimentary and, together,
cover the spectrum of areas that impact our business. As part of this evaluation and to further
our commitment to diversity, the Nominating and Governance Committee assesses whether the nominees,
as a group, collectively
represent a diversity of views, backgrounds, and experiences that will enhance the Board’s and
our effectiveness.
14
The Nominating and Governance Committee identifies nominees by first evaluating the current
members of the Board willing to continue in service. Current members of the Board with skills and
experience that are relevant to our business and who are willing to continue in service are
considered for re-nomination, balancing the value of continuity of service by existing members of
the Board with that of obtaining a new perspective. If any member of the Board does not wish to
continue in service or if the Board decides not to re-nominate a member for re-election, the
Nominating and Governance Committee identifies the desired skills and experience of a new nominee
in light of the criteria above. Current members of the Nominating and Governance Committee and the
Board are polled for suggestions as to individuals meeting such criteria. Research may also be
performed to identify qualified individuals. In the past, we have also engaged third parties and
search firms to identify or evaluate or assist in identifying potential nominees.
Our Bylaws provide that nominations for the election of directors may be made by any
stockholder entitled to vote in the election of directors. However, a stockholder may nominate a
person for election as a director at a meeting only if written notice of such stockholder’s intent
to make such nomination has been given to our Vice President of Investor Relations as described
under “Other Information — Stockholder Proposal Information” in this proxy statement. Pursuant to
the requirements of our Bylaws, each notice must set forth: (a) as to each person whom the
stockholder proposes to nominate for election or re-election as a director, all information
relating to such person that is required to be disclosed in solicitations of proxies for election
of directors, or is otherwise required, in each case pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) including such person’s written
consent to being named in the proxy statement as a nominee and to serving as a director if elected;
and (b) as to the stockholder giving the notice, among other things, (i) the name and address, as
they appear on our books, of such stockholder and (ii) the class and number of our shares that are
beneficially owned by such stockholder and that are owned of record by such stockholder. There
have not been any material changes to the procedures by which stockholders may recommend nominees
to the Board since the Annual Meeting of Stockholders for the year ended June 30, 2009.
Code of Ethics. We have adopted a Code of Business and Ethical Conduct that applies to all of
our employees, as well as each member of our Board. The Code of Business and Ethical Conduct is
available at the “Corporate Governance” section of our website at www.synthesisenergy.com.
We intend to post amendments to or waivers from the Code of Business and Ethical Conduct (to the
extent applicable to our chief executive officer, principal financial officer or principal
accounting officer) at this location on our website.
Where to Find Corporate Governance Information
The charters for our Audit Committee, Compensation Committee and Nominating and Governance
Committee and our Code of Business and Ethical Conduct are available on our website at
www.synthesisenergy.com under the “Corporate Governance” section. Copies of these documents
are also available in print form at no charge by sending a request to Ann
Tanabe, Vice President of Investor Relations, Synthesis Energy Systems, Inc., Three Riverway,
Suite 300, Houston, Texas 77056, telephone (713) 579-0602.
15
Proposal 2
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS FOR YEAR ENDING JUNE 30, 2011
In November 2008, PricewaterhouseCoopers LLP, a U.S. based accounting firm (“PwC”), became our
independent registered public accountants. The Audit Committee, in its capacity as a committee of
the Board, has appointed PwC to audit our financial statements for the fiscal year ending June 30,
2011. Representatives of PwC plan to attend the Annual Meeting and will be available to answer
appropriate questions from stockholders. These representatives will be able to make a statement at
the Annual Meeting if they wish, although we do not expect them to do so.
Stockholder ratification of the appointment of PwC is not required by the rules of The NASDAQ
Stock Market or the SEC or by our Bylaws. However, our Board is submitting the appointment of PwC
to you for ratification as a matter of good corporate practice. If our stockholders fail to ratify
the appointment, the Audit Committee will review its future selection of our independent registered
public accountants. Even if the appointment of PwC is ratified, the Audit Committee may change to
different independent registered public accountants if it determines a change may be in the best
interest of us and our stockholders.
Independent Registered Public Accountant Fees
In the years ended June 30, 2009 and June 30, 2010, PwC, and in the year ended June 30, 2009,
KPMG LLP, a U.S. based accounting firm and our prior audit firm (“KPMG”), provided services in the
following categories and amounts:
| |
|
|
|
|
|
|
|
|
| |
|
June 30, 2010 |
|
|
June 30, 2009 |
|
Audit Fees |
|
$ |
440,000 |
|
|
$ |
482,500 |
|
Other |
|
$ |
28,842 |
|
|
$ |
180,429 |
|
|
|
|
|
|
|
|
Total |
|
$ |
468,842 |
(1) |
|
$ |
662,929 |
(2) |
|
|
|
|
|
|
|
| |
|
|
| (1) |
|
Includes $10,000 of audit fees for services rendered by KPMG. |
| |
| (2) |
|
Includes $194,329 for services rendered by KPMG, $50,000 of which was
for audit fees. |
Policy on Audit Committee Pre-Approval of Audit and Non-Audit Services of Independent Registered
Public Accountants
The Audit Committee’s policy is to pre-approve all audit and non-audit services provided by
the independent registered public accountants. These services may include audit services,
audit-related services, tax services and other services subject to the de minimis exceptions for
non-audit services described in Section 10A(i)(1)(B) of the Exchange Act which are approved by the
Audit Committee prior to the completion of the audit. Alternatively, the engagement of the
independent registered public accountants may be entered into pursuant to pre-approval policies and
procedures established by the Audit Committee, provided that the policies and procedures are
detailed as to the particular services and the Audit Committee is informed of each service. The
Audit Committee may form and delegate authority to subcommittees consisting of one or more members
when appropriate, including the authority to grant pre-approvals of audit and
permitted non-audit services, provided that decisions of such subcommittee to grant
pre-approvals shall be presented to the full Audit Committee at its next scheduled meeting.
16
Changes in and Disagreements with Accountants
On November 18, 2008, the Audit Committee approved the dismissal of KPMG as our independent
registered public accountants. KPMG’s audit reports on our consolidated financial statements as of
June 30, 2008 and 2007 and for each of the years in the three year period ended June 30, 2008 and
for the period from November 4, 2003 (inception) to June 30, 2008 did not contain any adverse
opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope,
or accounting principles, except as follows:
KPMG’s audit report on our consolidated financial statements for the periods
stated above contained a separate paragraph stating that “As discussed in
Notes 8 and 4, respectively, to the consolidated financial statements,
effective July 1, 2007, we adopted the provisions of FASB Interpretation
No. 48, Accounting for Uncertainty in Income Taxes, and effective July 1,
2006, we adopted the fair value method of accounting for stock-based
compensation as required by Statement of Financial Accounting Standards
No. 123(R), Share-Based Payment.”
KPMG’s audit report on the effectiveness of internal control over financial reporting as of
June 30, 2008 did not contain any adverse opinion or disclaimer of opinion and was not qualified or
modified as to uncertainty, audit scope or accounting principles, except that KPMG’s report
indicates that we did not maintain effective internal control over financial reporting as of June
30, 2008 because of material weaknesses on the achievement of the objectives in the control
criteria and contains an explanatory paragraph regarding the material weaknesses surrounding (i)
accounting for complex and non-routine transactions and (ii) monitoring of internal controls within
the period-end close process.
During the fiscal years ended June 30, 2008 and 2007 and the subsequent interim period through
November 18, 2008, there were no: (i) disagreements with KMPG on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or procedure, which, if
not resolved to the satisfaction of KPMG, would have caused KPMG to make reference to the subject
matter of the disagreement(s) in connection with its reports, or (ii) “reportable events” as
defined in Regulation S-K, Item 304(a)(1)(v), except as noted above related to the material
weaknesses identified as of June 30, 2008. We have authorized KPMG to respond fully to any
inquiries from PwC regarding this matter.
On November 18, 2008, the Audit Committee engaged PwC as its independent registered public
accountants for our fiscal year ended June 30, 2009. During the fiscal years ended June 30, 2008
and 2007 and the subsequent interim period prior to the engagement of PwC, we did not consult with
PwC regarding either (i) the application of accounting principles to a specific completed or
contemplated transaction, or the type of audit opinion that might be rendered on our consolidated
financial statements or the effectiveness of internal control over financial reporting or (ii) any
matter that was either the subject of a disagreement or event identified in response to (a)(1)(iv)
of Item 304 of Regulation S-K.
17
Report of the Audit Committee
The Audit Committee assists the Board in overseeing (i) the integrity of our financial
statements, (ii) our compliance with legal and regulatory requirements, (iii) the qualifications
and independence of the independent registered public accountants and (iv) the performance of our
internal auditors (or other personnel responsible for the internal audit function) and independent
registered public accountants. In so doing, it is the responsibility of the Audit Committee to
maintain free and open communication between the directors, the independent registered public
accountants and our financial management. The Audit Committee is directly responsible for the
appointment, compensation, retention and oversight of the work of the independent registered public
accountants for the purpose of preparing or issuing an audit report or performing other audit,
review or attest services for us. The independent registered public accountants report directly to
the Audit Committee.
Management is responsible for the preparation, presentation, and integrity of our consolidated
financial statements, accounting and financial reporting principles, internal control over
financial reporting, and procedures designed to ensure compliance with accounting standards,
applicable laws, and regulations. Management is also responsible for objectively reviewing and
evaluating the adequacy, effectiveness, and quality of our system of internal control over
financial reporting. Our independent registered public accountants are responsible for performing
an independent audit of the consolidated financial statements and expressing an opinion on the
conformity of those financial statements with accounting principles generally accepted in the
United States. The Audit Committee’s responsibility is to monitor and oversee these processes and
the engagement, independence and performance of our independent registered public accountants. The
Audit Committee relies, without independent verification, on the information provided to it and on
the representations made by management and the independent registered public accountants.
The Audit Committee met with our independent registered public accountants and discussed the
overall scope and plans for their audit. The Audit Committee also discussed with the independent
registered public accountants matters required to be discussed with audit committees under
generally accepted auditing standards, including, among other things, matters related to the
conduct of the audit of our consolidated financial statements and the matters required to be
discussed by the statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards,
Vol. 1, AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T.
PwC also provided to the Audit Committee the written disclosures and the letter required by
Independence Standards Board Standard No. 1 (Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committees), as adopted by the Public Company Accounting
Oversight Board in Rule 3200T, and the Audit Committee discussed its independence with the
independent registered public accountants. When considering PwC’s independence, the Audit
Committee considered the non-audit services provided to us by the independent registered public
accountants and concluded that such services are compatible with maintaining the independence of
the independent registered public accountants.
18
The Audit Committee reviewed and discussed our audited consolidated financial statements for
the fiscal year ended June 30, 2010 with management and PwC. Based on the Audit Committee’s review
of the audited consolidated financial statements and the meetings and discussions with management
and the independent registered public accountants and subject to the limitations on the Audit
Committee’s role and responsibilities referred to above and in the Audit Committee Charter, the
Audit Committee recommended to the Board that our audited consolidated financial statements be
included in our Annual Report on Form 10-K filed with the SEC.
Michael Storey
Denis Slavich
Harry Rubin
Vote Required
The ratification of PwC as our independent registered public accountants for the year ending
June 30, 2011 requires the affirmative vote of the holders of a majority of the shares represented
at the Annual Meeting, in person or by proxy, and entitled to vote. For the ratification of our
independent registered public accountants, you may vote “FOR” or “AGAINST” or abstain from voting.
If you hold your shares in your own name and abstain from voting on this matter, your abstention
will have the effect of a vote “AGAINST” this proposal. If you hold your shares through a broker,
bank, trustee or other nominee and you do not instruct them how to vote on this proposal, your
broker may have authority to vote your shares. Broker non-votes will have no effect on the
approval of this proposal.
Board Recommendation
The Board recommends a vote “FOR” the ratification of PricewaterhouseCoopers LLP as our
independent registered public accountants for the fiscal year ending June 30, 2011.
19
OTHER INFORMATION
Principal Stockholders
The following table sets forth information with respect to the beneficial ownership of our
common stock as of October 15, 2010, by:
| |
• |
|
each person who is known by us to beneficially own 5% or more of the
outstanding class of our capital stock; |
| |
| |
• |
|
each member of the Board; |
| |
| |
• |
|
each of our executive officers; and |
| |
| |
• |
|
all of our directors and executive officers as a group. |
Beneficial ownership is determined in accordance with the rules of the SEC. To our knowledge,
each of the holders of capital stock listed below has sole voting and investment power as to the
capital stock owned unless otherwise noted.
| |
|
|
|
|
|
|
|
|
| |
|
Numbers of Shares of |
|
|
|
|
| |
|
Common Stock Beneficially |
|
|
% of Common Stock |
|
| Name and Address of Beneficial Owner |
|
Owned |
|
|
Outstanding (1) |
|
Columbia Wanger Asset Management, L.P. (2)
227 West Monroe Street, Suite 3000
Chicago, IL 60606 |
|
|
6,272,700 |
|
|
|
13.0 |
% |
Donald Bunnell |
|
|
3,804,318 |
|
|
|
7.9 |
% |
Lorenzo Lamadrid (3) |
|
|
3,460,431 |
|
|
|
7.1 |
% |
David A. Schwedel (4)
4000 Ponce de Leon Boulevard, Suite 470
Coral Gables, Florida 33134 |
|
|
3,020,738 |
|
|
|
6.2 |
% |
Michael Storey (5) |
|
|
1,785,431 |
|
|
|
3.7 |
% |
Harry Rubin (6) |
|
|
426,431 |
|
|
|
* |
|
Denis Slavich (7) |
|
|
405,431 |
|
|
|
* |
|
Ziwang Xu (8) |
|
|
98,025 |
|
|
|
* |
|
Robert Rigdon (9) |
|
|
176,250 |
|
|
|
* |
|
Kevin Kelly (10) |
|
|
72,500 |
|
|
|
* |
|
|
|
|
|
|
|
|
Executive Officers and Directors as a
group (8 persons) |
|
|
10,228,817 |
|
|
|
20.4 |
% |
|
|
|
|
|
|
|
| |
|
|
| * |
|
Less than 1% |
| |
| (1) |
|
Based on 48,428,762 shares outstanding as of October 15, 2010. |
| |
| (2) |
|
Based on information included in a Schedule 13F filed on August 4, 2010. Also includes
shares held by Columbia Acorn Trust, which has agreed to file as a group with Columbia Wanger
Asset Management, L.P. |
| |
| (3) |
|
Includes 285,431 shares of common stock issuable upon the exercise of options which are
currently exercisable or exercisable within 60 days. |
| |
| (4) |
|
Based on information included in a Form 4 filed on January 9, 2008. Includes 205,200 shares
held by the David A. Schwedel Living Trust of which Mr. Schwedel is the beneficial owner. |
| |
| (5) |
|
Includes 385,431 shares of common stock issuable upon the exercise of options which are
currently exercisable or exercisable within 60 days. |
| |
| (6) |
|
Includes 356,431 shares of common stock issuable upon the exercise of options which are
currently exercisable or exercisable within 60 days. |
20
| |
|
|
| (7) |
|
Includes 385,431 shares of common stock issuable upon the exercise of options which are
currently exercisable or exercisable within 60 days. |
| |
| (8) |
|
Includes 98,025 shares of common stock issuable upon the exercise of options which are
currently exercisable or exercisable within 60 days. |
| |
| (9) |
|
Includes 156,250 shares of common stock issuable upon the exercise of options which are
currently exercisable or exercisable within 60 days. |
| |
| (10) |
|
Includes 70,000 shares of common stock issuable upon the exercise of options which are
currently exercisable or exercisable within 60 days. |
Executive Officers and Key Employees
All of our executive officers and key employees are listed in the following table, and certain
information concerning these officers, except for Messrs. Rigdon and Bunnell, who are also members
of the Board, follows the table:
| |
|
|
|
|
|
|
| Name |
|
Age |
|
Position |
Robert Rigdon
|
|
|
52 |
|
|
President, Chief Executive Officer and Director |
Kevin Kelly
|
|
|
47 |
|
|
Chief Accounting Officer, Controller and Secretary |
Donald Bunnell
|
|
|
45 |
|
|
President and Chief Executive Officer—Asia Pacific and Director |
Francis Lau
|
|
|
63 |
|
|
Senior Vice President and Chief Technology Officer |
Kevin Kelly. Mr. Kelly joined us as our Controller in October 2008 and was named our Chief
Accounting Officer and Secretary in November 2008. From 2005 to October 2008, Mr. Kelly served as
the Corporate Controller for W-H Energy Services. From 2004 to 2005, Mr. Kelly served as the
Director of Reporting and Financial Analysis for Pride International, Inc. Prior to that, Mr.
Kelly held controllership and treasury management positions with a variety of public-traded
companies. Mr. Kelly is a Certified Public Accountant with a B.A. from Houston Baptist University.
Francis Lau. Mr. Lau joined us in September 2008 as Senior Vice President and Chief
Technology Officer. From January 2006 until joining us, he was Vice President of Gasification at
GreatPoint Energy, in Cambridge, Massachusetts in charge of technology development. From 1970
until joining GreatPoint, Mr. Lau was the Executive Director of Gasification and Gas Processing
Center at the Gas Technology Institute, or GTI, in Des Plaines, Illinois. At GTI, he led research,
development, demonstration, and deployment programs aimed at clean and efficient conversion of
coal, biomass, and other feedstocks to electricity, hydrogen, and clean liquid fuels. Mr. Lau
received a B.Sc. degree in Chemical Engineering from the University of Wisconsin, Madison, and
M.Sc. in Chemical Engineering from Northwestern University, Evanston, Illinois.
21
Executive and Director Compensation
Summary Compensation Table
The following table provides information concerning compensation paid or accrued during the
fiscal years ended June 30, 2010, 2009 and 2008 to our principal executive officer and our two
other most highly paid executive officers, determined at the end of the last fiscal year, and one
former executive officer for whom disclosure would have been required but for the fact that he was
not serving as an executive officer at the end of the fiscal year ended June 30, 2010:
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity |
|
|
|
|
|
|
|
| Name and Principal |
|
Fiscal |
|
|
|
|
|
|
|
|
|
Stock |
|
|
|
|
|
|
Incentive Plan |
|
|
All Other |
|
|
|
|
| Position |
|
Year |
|
Salary |
|
|
Bonus |
|
|
Awards |
|
|
Option Awards (1) |
|
|
Compensation |
|
|
Compensation |
|
|
Total |
|
Robert Rigdon |
|
2010 |
|
$ |
300,000 |
|
|
$ |
120,000 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
420,000 |
|
President and CEO |
|
2009 |
|
$ |
270,000 |
|
|
$ |
146,000 |
|
|
$ |
— |
|
|
$ |
185,789 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
601,789 |
|
|
|
2008 |
|
$ |
38,308 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
2,037,849 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
2,076,157 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin Kelly |
|
2010 |
|
$ |
230,000 |
|
|
$ |
69,000 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
299,000 |
|
Chief Accounting Officer, |
|
2009 |
|
$ |
155,000 |
|
|
$ |
62,000 |
|
|
$ |
— |
|
|
$ |
207,773 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
424,773 |
|
Controller and Secretary |
|
2008 |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald Bunnell, |
|
2010 |
|
$ |
180,000 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
5,000 |
|
|
$ |
185,000 |
|
President and CEO — Asia Pacific |
|
2009 |
|
$ |
180,000 |
|
|
$ |
72,000 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
252,000 |
|
|
|
2008 |
|
$ |
175,000 |
|
|
$ |
180,000 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
355,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy Vail (2) |
|
2010 |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Former President and CEO |
|
2009 |
|
$ |
135,000 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
469,723 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
604,723 |
|
|
|
2008 |
|
$ |
180,000 |
|
|
$ |
216,000 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
396,000 |
|
| |
|
|
| (1) |
|
The amounts in the
“Option awards” column reflect the aggregate grant date fair
value of awards pursuant to our Amended & Restated 2005 Incentive
Plan, as amended (the "2005 Plan"), for the fiscal years ended June 30, 2008, 2009 and
2010, in accordance with ASC 718. Assumptions used in the
calculation of these amounts are included in “Note 11—Stock-Based Compensation” to our
audited financial statements for the fiscal year ended June 30, 2010 included in our annual
report on Form 10-K for the year ended June 30, 2010. However, as required, the amounts
shown exclude the impact of estimated forfeitures related to service-based vesting
conditions. |
| |
| (2) |
|
Effective March 31, 2009, Mr. Vail ceased employment with us based on a mutual decision
with the Board. In connection with the departure, he entered into a Separation Agreement
and Release with us (the “Release”), whereby (i) his employment agreement with us was
terminated, subject to the continued enforcement of the provisions relating to
non-competition and confidentiality; (ii) he entered into a mutual release; (iii) his
Indemnification Agreement with us, dated August 13, 2008, survived the termination of his
employment agreements; (iv) he was granted reimbursement of his payment of his COBRA
premiums through (a) the one year anniversary of the termination or (b) until he is
eligible to participate in the health insurance plan of another employer, whichever is
sooner; and (v) he was granted a new option grant in satisfaction of his 2008 bonus and a
right to participate in our option exchange program. The grant was a fully vested option
to acquire 68,182 shares of common stock at an exercise price of $0.66 per share, in
satisfaction of his bonus earned during the year ended December 31, 2008. In addition, as
part of the option exchange program, Mr. Vail exchanged all of his option grants outstanding
on March 31, 2009 for a new fully vested option grant to acquire 960,000 shares of common
stock at an exercise price of $0.66 per share. |
22
Employment Agreements
We have entered into employment agreements with Robert Rigdon, our President and Chief
Executive Officer, Kevin Kelly, our Chief Accounting Officer and Controller, and Donald Bunnell,
our President and Chief Executive Officer—Asia Pacific.
Our agreement with Mr. Rigdon became effective March 14, 2008 and was amended in March 2009
and has a term of one year, with automatic renewal for two additional one year periods unless
either we or Mr. Rigdon elects not to renew. He currently receives an annual base salary of up to
$300,000 and bonuses as may be awarded from time to time in the sole discretion of the Compensation
Committee for the periods ending on January 1 and July 1 of a given year. Mr. Rigdon’s salary is
subject to increase upon the achievement of certain performance milestones. The Compensation
Committee also evaluates Mr. Rigdon’s salary on an annual basis and will determine if any
additional increases are warranted. The employment agreement prohibits Mr. Rigdon from competing
with us during his employment and for a period of eighteen months thereafter if he is terminated
for cause or he resigns without good reason. Mr. Rigdon is also subject to a confidentiality
obligation for a period of five years after cessation of his employment with us. Payments under
the agreement to Mr. Rigdon in connection with his termination or a change of control are described
below under “-Potential Payments Upon Termination or Change of Control.”
Our agreement with Mr. Kelly became effective October 16, 2008 and has a term of two years,
with automatic renewal for two additional one year periods unless either we or Mr. Kelly elects not
to renew. He currently receives an annual base salary of up to $230,000 and bonuses as may be
awarded from time to time based on criteria established by our chief executive officer, including a
performance bonus targeted at 50% of his base salary. The Compensation Committee also evaluates Mr.
Kelly’s salary on an annual basis and will determine if any additional increases are warranted. The
employment agreement prohibits Mr. Kelly from competing with us during his employment and for a
period of eighteen months thereafter if he is terminated by us, if he resigns without good reason
or if either he or us elects not to renew the agreement past its initial term. Mr. Kelly is also
subject to a confidentiality obligation for a period of five years after cessation of his
employment with us. Payments under the agreement to Mr. Kelly in connection with his termination or
a change of control are described below under “-Potential Payments Upon Termination or Change of
Control.”
Our agreement with Mr. Bunnell was amended and restated effective July 14, 2006, and further
amended on August 13, 2009 and October 15, 2010. The agreement has a term ending on August 31,
2011. Mr. Bunnell’s current salary is $15,000 per month and is subject to increase upon the
achievement of certain performance milestones. In addition, bonuses may be awarded to Mr. Bunnell
from time to time by the Board or any compensation committee thereof, including a performance
bonus, and reimbursement of no more than $1,500 per month for all reasonable and customary medical
and health insurance premiums incurred by Mr. Bunnell if he
is not covered by insurance. He is also entitled to an allowance of up to $30,000 annually to
cover various expenses related to his cost of living in Shanghai, China. The Compensation
Committee evaluates Mr. Bunnell’s salary on an annual basis and will determine if any additional
increases are warranted. The employment agreement prohibits Mr. Bunnell from competing with us
during his employment and for a period of 18 months thereafter.
23
Potential Payments upon Termination or Change of Control
Pursuant to the terms of their employment agreements, upon a termination without cause or a
voluntary termination for good reason, Messrs. Rigdon, Kelly and Bunnell are entitled to receive
(i) all payments of their base salary (as of the date of termination) for the remainder of the term
of their agreements and in accordance with the terms thereof, (ii) payment of any bonus that they
would have been otherwise entitled to receive under their agreement as of the date of their
termination (only in the case of Mr. Rigdon), and (iii) all unvested options shall automatically
vest as of the termination date (only in the case of Messrs. Rigdon and Kelly). In addition, in
connection with a termination without cause, Messrs. Rigdon and Kelly are entitled to reimbursement
of their COBRA premiums through the earlier of (i) twelve months after their termination or (ii)
until they are eligible to participate in the health insurance plan of another employer. Upon a
voluntary termination without good reason, termination for cause, death or disability, Messrs.
Rigdon, Kelly and Bunnell would not be entitled to receive benefits from us.
Upon a change of control (as defined in their employment agreements), all unvested options of
Messrs. Rigdon and Kelly would automatically vest on the effective date of the change of control,
even if their employment is not terminated.
None of the payments made upon termination or a change of control are conditioned upon
non-competition, non-solicitation or other negative covenants, other than a requirement that
Messrs. Rigdon, Kelly or Bunnell, as applicable, execute a written release in a form provided by us
in connection with the receipt of such payments.
24
The following tables further describe the potential payments upon termination or a change in
control for Messrs. Rigdon, Kelly and Bunnell. Tables are not included for Mr. Vail because, as
noted above, effective March 31, 2009, he is no longer employed by us.
Robert Rigdon
Chief Executive Officer and President
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
Voluntary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
Termination |
|
|
|
|
|
|
Involuntary |
|
|
|
|
|
|
After a |
|
| |
|
Voluntary |
|
|
for Good |
|
|
For Cause |
|
|
Not for Cause |
|
|
Death or |
|
|
Change in |
|
| Executive Benefits and Payments |
|
Termination |
|
|
Reason |
|
|
Termination |
|
|
Termination |
|
|
Disability |
|
|
Control |
|
| Upon Termination(1) |
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
Compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance (2) |
|
|
— |
|
|
|
250,000 |
|
|
|
— |
|
|
|
250,000 |
|
|
|
— |
|
|
|
300,000 |
|
Annual Cash Incentive (3) |
|
|
— |
|
|
|
120,000 |
|
|
|
— |
|
|
|
120,000 |
|
|
|
— |
|
|
|
— |
|
Stock Options (Unvested and Accelerated) (4) |
|
|
— |
|
|
|
152,250 |
|
|
|
— |
|
|
|
152,250 |
|
|
|
— |
|
|
|
152,250 |
|
|
|
Benefits and Perquisites |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health and Welfare Benefits Continuation (5) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
17,114 |
|
|
|
— |
|
|
|
17,114 |
|
Tax Gross-up |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
— |
|
|
|
522,250 |
|
|
|
— |
|
|
|
539,364 |
|
|
|
— |
|
|
|
469,364 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin Kelly
Chief Accounting Officer, Controller and Secretary
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
Voluntary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
Termination |
|
|
|
|
|
|
Involuntary |
|
|
|
|
|
|
After a |
|
| |
|
Voluntary |
|
|
for Good |
|
|
For Cause |
|
|
Not for Cause |
|
|
Death or |
|
|
Change in |
|
| Executive Benefits and Payments |
|
Termination |
|
|
Reason |
|
|
Termination |
|
|
Termination |
|
|
Disability |
|
|
Control |
|
| Upon Termination(1) |
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
Compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance (2) |
|
|
— |
|
|
|
230,000 |
|
|
|
— |
|
|
|
230,000 |
|
|
|
— |
|
|
|
— |
|
Annual Cash Incentive (3) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Stock Options (Unvested and Accelerated) (4) |
|
|
— |
|
|
|
58,781 |
|
|
|
— |
|
|
|
58,781 |
|
|
|
— |
|
|
|
58,781 |
|
|
|
Benefits and Perquisites |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health and Welfare Benefits Continuation (5) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
17,105 |
|
|
|
— |
|
|
|
17,105 |
|
Tax Gross-up |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
— |
|
|
|
288,781 |
|
|
|
— |
|
|
|
305,886 |
|
|
|
— |
|
|
|
75,886 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald Bunnell
President and Chief Executive Officer—Asia Pacific
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
Voluntary |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
Termination |
|
|
|
|
|
|
Involuntary |
|
|
|
|
|
|
After a |
|
| |
|
Voluntary |
|
|
for Good |
|
|
For Cause |
|
|
Not for Cause |
|
|
Death or |
|
|
Change in |
|
| Executive Benefits and Payments |
|
Termination |
|
|
Reason |
|
|
Termination |
|
|
Termination |
|
|
Disability |
|
|
Control |
|
| Upon Termination(1) |
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
Compensation |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance (2) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
30,000 |
|
|
|
— |
|
|
|
— |
|
Annual Cash Incentive (3) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
180,000 |
|
|
|
— |
|
|
|
— |
|
Stock Options (Unvested and Accelerated) (4) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
Benefits and Perquisites |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Health and Welfare Benefits Continuation (5) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Tax Gross-up |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
210,000 |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
| (1) |
|
For purposes of this analysis, we assumed that the effective date of termination is June 30,
2010 and that the executive’s compensation is as follows: Mr. Rigdon’s base salary is equal to
$300,000 and incentive target opportunity is equal to 40% of base salary; Mr. Kelly’s base
salary is equal to $230,000 and incentive target opportunity is equal to 50% of base salary;
and Mr. Bunnell’s base salary is equal to $180,000 and incentive target opportunity is equal
to 100% of base salary. |
| |
| (2) |
|
Under “Voluntary Termination for Good Reason” and “Involuntary Not for Cause Termination,”
severance under their respective agreements is all base salary for the remainder of the
employment period, but in the case of Mr. Rigdon, for not less than six months, and in the
case of Mr. Kelly, for not less than twelve months. |
| |
| (3) |
|
The bonus amounts included under “Voluntary Termination for Good Reason” (in the case of
Messrs. Rigdon and Kelly) and “Involuntary Not for Cause Termination” (in the case of Messrs.
Rigdon, Kelly and Bunnell) are based on the maximum bonus that each executive could receive
upon termination under their employment agreement for such reasons. The amounts of bonuses
payable under the employment agreements of each of Messrs. Rigdon, Kelly and Bunnell are in
the discretion of the Board and/or the Compensation Committee. |
| |
| (4) |
|
Pursuant to the terms of their employment agreements, under “Voluntary Termination for Good
Reason,” “Involuntary Not for Cause Termination” or “After a Change in Control” for Messrs.
Rigdon and Kelly, the vesting of all outstanding stock options will be
accelerated and all stock options shall be 100% vested on the date of termination of
employment or on the effective date of the “change in control,” as applicable. |
| |
| (5) |
|
Health and Welfare Benefits Continuation is calculated as 12 months of reimbursement of COBRA
premiums under “Involuntary Not for Cause Termination.” Such benefits payable will cease
prior to the end of 12 months if the executive is eligible to participate in the health
insurance plan of another employer. |
25
Outstanding Equity Awards for Year Ended June 30, 2010
The following table shows the number of shares covered by exercisable and unexercisable
options held by our named executive officers on June 30, 2010. Each of the awards in the table was
made under the 2005 Plan.
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Option Awards |
|
|
Stock Awards |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards: |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market or |
|
| |
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
Payout |
|
| |
|
|
|
|
|
|
|
|
|
Incentive |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive |
|
|
Value |
|
| |
|
|
|
|
|
|
|
|
|
Plan |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan Awards: |
|
|
of |
|
| |
|
|
|
|
|
|
|
|
|
Awards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Market |
|
|
Number |
|
|
Unearned |
|
| |
|
Number |
|
|
Number |
|
|
Number |
|
|
|
|
|
|
|
|
|
|
Number |
|
|
Value of |
|
|
of |
|
|
Shares, |
|
| |
|
of |
|
|
of |
|
|
of |
|
|
|
|
|
|
|
|
|
|
of Shares |
|
|
Shares or |
|
|
Unearned |
|
|
Units or |
|
| |
|
Securities |
|
|
Securities |
|
|
Securities |
|
|
|
|
|
|
|
|
|
|
or Units |
|
|
Units of |
|
|
Shares, |
|
|
Other |
|
| |
|
Underlying |
|
|
Underlying |
|
|
Underlying |
|
|
|
|
|
|
|
|
|
|
of Stock |
|
|
Stock |
|
|
Units or |
|
|
Rights |
|
| |
|
Unexercised |
|
|
Unexercised |
|
|
Unexercised |
|
|
Option |
|
|
|
|
|
|
That Have |
|
|
That Have |
|
|
Other Rights |
|
|
That Have |
|
| |
|
Options |
|
|
Options |
|
|
Unearned |
|
|
Exercise |
|
|
Option |
|
|
Not |
|
|
Not |
|
|
That Have |
|
|
Not |
|
| |
|
(#) |
|
|
(#) |
|
|
Options |
|
|
Price |
|
|
Expiration |
|
|
Vested |
|
|
Vested |
|
|
Not Vested |
|
|
Vested |
|
| Name |
|
Exercisable |
|
|
Unexercisable |
|
|
(#) |
|
|
($) |
|
|
Date |
|
|
(#) |
|
|
($) |
|
|
(#) |
|
|
($) |
|
| (a) |
|
(b) |
|
|
(c) |
|
|
(d) |
|
|
(e) |
|
|
(f) |
|
|
(g) |
|
|
(h) |
|
|
(i) |
|
|
(j) |
|
Robert Rigdon |
|
|
43,750 |
|
|
|
43,750 |
|
|
|
— |
|
|
|
0.43 |
|
|
|
02/10/19 |
(1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
43,750 |
|
|
|
43,750 |
|
|
|
— |
|
|
|
0.66 |
|
|
|
03/31/19 |
(1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
18,750 |
|
|
|
56,250 |
|
|
|
— |
|
|
|
0.43 |
|
|
|
02/10/19 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
50,000 |
|
|
|
150,000 |
|
|
|
— |
|
|
|
0.66 |
|
|
|
03/31/19 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kevin Kelly |
|
|
9,375 |
|
|
|
28,125 |
|
|
|
— |
|
|
|
0.43 |
|
|
|
02/10/19 |
(1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
6,250 |
|
|
|
18,750 |
|
|
|
— |
|
|
|
0.73 |
|
|
|
01/09/19 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
20,000 |
|
|
|
— |
|
|
|
— |
|
|
|
0.66 |
|
|
|
03/31/19 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
25,000 |
|
|
|
75,000 |
|
|
|
— |
|
|
|
0.66 |
|
|
|
03/31/19 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Donald Bunnell |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy Vail |
|
|
960,000 |
|
|
|
— |
|
|
|
— |
|
|
|
0.66 |
|
|
|
03/31/19 |
(1) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
68,182 |
|
|
|
— |
|
|
|
— |
|
|
|
0.66 |
|
|
|
03/31/19 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
| |
|
|
| (1) |
|
Represents stock option awards made in connection with our stock option exchange program
during fiscal 2009. |
26
Director Compensation
The following table summarizes the annual compensation for our non-employee directors during
the year ended June 30, 2010.
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nonqualified |
|
|
|
|
|
|
|
| |
|
Fees Earned |
|
|
|
|
|
|
|
|
|
|
Non-Equity |
|
|
Deferred |
|
|
|
|
|
|
|
| |
|
or Paid in |
|
|
|
|
|
|
|
|
|
|
Incentive |
|
|
Compensation |
|
|
All Other |
|
|
|
|
| Name |
|
Cash |
|
|
Stock Awards |
|
|
Option Awards (1) |
|
|
Compensation |
|
|
Earnings |
|
|
Compensation |
|
|
Total |
|
| (a) |
|
(b) |
|
|
(c) |
|
|
(d) |
|
|
(e) |
|
|
(f) |
|
|
(g) |
|
|
(h) |
|
Lorenzo Lamadrid |
|
$ |
60,000 |
|
|
|
— |
|
|
$ |
98,968 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
158,968 |
|
Michael Storey |
|
$ |
6,000 |
|
|
|
— |
|
|
$ |
98,968 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
104,968 |
|
Denis Slavich |
|
$ |
6,000 |
|
|
|
— |
|
|
$ |
98,968 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
104,968 |
|
Harry Rubin |
|
$ |
6,000 |
|
|
|
— |
|
|
$ |
98,968 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
104,968 |
|
Ziwang Xu |
|
$ |
3,000 |
|
|
|
— |
|
|
$ |
89,071 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
$ |
92,071 |
|
| |
|
|
| (1) |
|
The amounts in the “Option Awards” column reflect the aggregate grant date fair value for the fiscal year ended June 30, 2010, in
accordance with ASC 718. Assumptions used in the
calculation of these amounts are included in “Note 11—Stock-Based Compensation” to our
audited financial statements for the fiscal year ended June 30, 2010 included in our
annual report on Form 10-K for the year ended June 30, 2010 filed with the Securities
and Exchange Commission. However, as required, the amounts shown exclude the impact of
estimated forfeitures related to service-based vesting conditions. |
For a description of the compensation plan for the members of the Board, see “Director
Compensation” under Proposal One. Mr. Lamadrid also has a consulting agreement with us for his
service as Chairman of our Board. The agreement was initially for a four-year term effective August
1, 2006 and was extended for an additional three years in August 2010. Mr. Lamadrid receives an
annual consulting fee of $60,000 and reimbursement for reasonable expenses incurred in the
performance of his services. The Compensation Committee also evaluates Mr. Lamadrid’s consulting
fee on an annual basis and determines if any changes are warranted.
Securities Authorized For Issuance Under Equity Compensation Plans. The following table sets forth
information regarding our existing equity compensation plans as of June 30, 2010.
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Equity Compensation Plan Information |
|
| |
|
|
|
|
|
Weighted average |
|
|
Number of securities remaining |
|
| |
|
Number of securities to |
|
|
exercise |
|
|
available for future issuance |
|
| |
|
be issued upon exercise |
|
|
price of outstanding |
|
|
under equity compensation |
|
| |
|
of outstanding options, |
|
|
options, warrants and |
|
|
plans (excluding securities |
|
| |
|
warrants and rights |
|
|
rights |
|
|
reflected in column (a)) |
|
| Plan Category |
|
(a) |
|
|
(b) |
|
|
(c) |
|
Equity compensation
plans approved by
security holders (1) |
|
|
6,037,573 |
(2) |
|
$ |
0.74 |
|
|
|
1,507,627 |
(2) |
Equity compensation
plans not approved by
security holders |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total as of June 30, 2010 |
|
|
6,037,573 |
|
|
$ |
0.74 |
|
|
|
1,507,627 |
|
|
|
|
|
|
|
|
|
|
|
| (1) |
|
Consists of the 2005 Plan. |
| |
| (2) |
|
Of the total 8,000,000 shares under the 2005 Plan, options to acquire 6,037,573 shares
of commons stock were outstanding at June 30, 2010 and 5,800 shares of restricted stock had
been awarded under the 2005 Plan. The shares issued for the restricted stock grants were
vested immediately upon issuance. |
27
Certain Relationships and Related Party Transactions
Lorenzo Lamadrid, the Chairman of the Board, has a consulting agreement with us as disclosed
under “- Executive and Director Compensation — Director Compensation.”
The Audit Committee is required to approve all related party transactions regardless of the
dollar amount. In assessing a related party transaction, the Audit Committee considers such
factors as it deems appropriate including without limitation (i) the benefits to us of the
transaction; (ii) the commercial reasonableness of the terms of the related party transaction;
(iii) the materiality of the related party transaction to us; (iv) the extent of the related
party’s interest in the related party transaction; and (iv) the actual or apparent conflict of
interest of the related party participating in the related party transaction.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and executive officers, and persons
who own more than 10% of our equity securities, to file initial reports of ownership and reports of
changes in ownership of our common stock with the SEC and to furnish us a copy of each filed
report.
To our knowledge, based solely on review of the copies of such reports furnished to us and
written representations that no other reports were required, during the fiscal year ended June 30,
2010, our officers, directors and greater than 10% beneficial owners timely filed all required
Section 16(a) reports.
Stockholder Proposal Information
If you want to present a proposal from the floor at the 2011 Annual Meeting of Stockholders or
nominate a person for election to the Board at such meeting, you must give us written notice no
later than September 15, 2011 and no earlier than August 16, 2011, and follow the procedures
outlined in our Bylaws. If the date of the 2011 Annual Meeting of Stockholders is more or less
than 45 days from the one year anniversary of the 2010 Annual Meeting of Stockholders, your notice
of a proposal will be timely if we receive it by the close of business on the tenth day following
the earlier of the date on which a written statement setting forth the date of such meeting was
mailed to the stockholders or the date on which it is first disclosed to the public. If we do not
receive notice of your proposal within this time frame, our management will use its discretionary
authority to vote the shares it represents as the Board may recommend. Your notice should be sent
to our Vice President of Investor Relations, Ann Tanabe, at Three Riverway, Suite 300, Houston,
Texas 77056. You may request a copy of the provisions of the Bylaws governing the requirements for
notice from our Vice President of Investor Relations at the above address.
28
Other Matters
We have included a copy of our Annual Report to Stockholders and our Form 10-K for the fiscal
year ended June 30, 2010, with this proxy statement, which includes our audited consolidated
financial statements for the year then ended. We will bear the cost of soliciting proxies in the
accompanying form. In addition to solicitation by mail, our officers, directors and regular
employees may solicit your proxy by telephone, by facsimile transmission or in person, for which
they will not be compensated.
We file annual, quarterly, current and special reports, proxy statements, and other
information with the SEC. Our SEC filings are available to the public over the internet at the
SEC’s website at www.sec.gov and on our website at www.synthesisenergy.com. You
may also read and copy any document we file with the SEC at its public reference facilities at 100
F Street, N.E., Washington, D.C. 20549.
You may also request copies of any of our filings by writing or telephoning us at our
principal executive office: Ann Tanabe, Vice President of Investor Relations, Synthesis Energy
Systems, Inc., Three Riverway, Suite 300, Houston, Texas 77056, telephone (713) 579-0602.
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By Order of the Board of Directors,
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/s/ Robert Rigdon
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Robert Rigdon |
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President and Chief Executive Officer |
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29
ANNUAL MEETING OF STOCKHOLDERS OF
SYNTHESIS ENERGY SYSTEMS, INC.
December 14, 2010
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL:
The Notice of Meeting, proxy statement and proxy card
are available at www.synthesisenergy.com
Please sign, date and mail
your proxy card in the
envelope provided as soon
as possible.
¯
Please detach along perforated line and mail in the envelope provided.¯
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20730300000000000000
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE ELECTION OF DIRECTORS AND
“FOR” PROPOSALS 2 AND 3. |
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PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE.
PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN
HERE
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1. Election of Directors: To elect seven directors.
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FOR
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AGAINST
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ABSTAIN |
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To ratify the selection of PricewaterhouseCoopers LLP to serve
as our independent registered public accountants for the year
ended June 30, 2011. |
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NOMINEES: |
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FOR ALL NOMINEES
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Lorenzo Lamadrid
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Robert Rigdon
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WITHHOLD
AUTHORITY
FOR ALL NOMINEES
FOR ALL EXCEPT
(See instructions below)
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Donald Bunnell
Michael Storey
Denis Slavich
Harry Rubin
Ziwang Xu
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To consider and act on such other business as may properly
come before the meeting or any adjournment or postponement
of the meeting.
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INSTRUCTIONS:
To withhold authority to vote for any individual nominee(s),
mark “FOR ALL EXCEPT” and fill in the circle next to each
nominee
you wish to
withhold, as shown here: = |
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To change the address on your account, please check the box
at right and indicate your new address in the address space
above. Please note that changes to the registered name(s)
on the account may not be submitted
via this method. |
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Signature
of Stockholder
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Date:
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Signature
of Stockholder
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Date:
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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. |
n
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SYNTHESIS ENERGY SYSTEMS, INC.
Three Riverway, Suite 300
Houston, Texas 77056
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert Rigdon and Kevin Kelly as the true and lawful attorneys,
agents and proxies of the undersigned, each with full power of substitution, to represent and vote
as designated on the reverse side, all the shares of Common Stock of Synthesis Energy Systems, Inc.
held of record by the undersigned on October 15, 2010 at the Annual Meeting of Stockholders to be
held at the Company’s headquarters located at Three Riverway, Suite 300, Houston, Texas 77056, on
December 14, 2010, or any adjournment or postponement thereof.
(Continued and to be signed on the reverse side)