SOLITARIO ZINC CORP.
10-Ks and 10-Qs
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UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
SCHEDULE
14A INFORMATION
Proxy
Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
(Amendment
No. )
Filed
by the
Registrant
☒
Filed
by a Party other than the Registrant
☐
Check
the appropriate box:
☐
Preliminary Proxy Statement
☐
Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
☒
Definitive Proxy Statement
☐
Definitive Additional Materials
☐
Soliciting Material under §240.14a-12
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SOLITARIO ZINC CORP.
(Name
of Registrant as Specified in Its Charter)
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(Name
of Person(s) Filing Proxy Statement, if Other Than the
Registrant)
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Payment
of Filing Fee (Check the appropriate box):
☒ No
fee required.
☐
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11
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(1) Title
of each class of securities to which transaction applies:
(2) Aggregate
number of securities to which transaction applies:
(3) Per
unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
(4) Proposed
maximum aggregate value of transaction:
(5) Total
fee paid:
☐
Fee paid previously with preliminary
materials.
☐
Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify thefiling for which the offsetting
fee was paid previously. Identify the previous filing by
registrationstatement number, or the Form or Schedule and the date
of its filing.
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(1) Amount
previously paid:
(2) Form,
Schedule or Registration Statement
No:
(3) Filing
Party:
(4) Date
Filed:
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SOLITARIO ZINC CORP.
Notice of Annual Meeting of Shareholders
To the
Shareholders:
You are invited to attend the annual meeting (the
“
Annual
Meeting
”)
of shareholders (“
Shareholders
”
or “
Solitario
Shareholders
”) of
Solitario Zinc Corp. (the “
Company
”
or “
Solitario
”). The
Annual Meeting will be held
at 4251 Kipling Street, Suite
390, Wheat Ridge, CO 80033, on June 17, 2020 at 10:00 a.m.,
Mountain Daylight Time.
At
the Annual Meeting, you will be asked to consider and vote upon the
following proposals:
1.
To elect six
directors to serve until the next annual meeting of shareholders or
until their successors are elected and qualified;
2.
To hold an advisory
vote to approve Solitario’s executive compensation
program;
3.
To ratify the
appointment of Plante Moran PLLC as Solitario's independent
registered public accounting firm for fiscal year 2020;
and
4.
To transact such
other business as may properly come before the meeting and all
adjournments thereof.
The
Board of Directors of the Company has fixed the close of business
on May 6, 2020 as the record date for the determination of
shareholders entitled to notice of, and to vote at, the Annual
Meeting. The approximate date of the mailing of the Proxy
Statement, the enclosed annual report and form of proxy is May 10,
2020. A complete list of shareholders will be available for
examination at the Annual Meeting and prior to the Annual Meeting
at our offices at 4251 Kipling Street, Suite 390, Wheat Ridge, CO
80033 beginning two business days after the date of the mailing of
the enclosed Proxy Statement.
Your
attention is directed to the accompanying Proxy Statement. To
constitute a quorum for the conduct of business at the Annual
Meeting, it is necessary that holders of a majority of all
outstanding shares of common stock entitled to vote at the Annual
Meeting be present in person or be represented by proxy. To assure
representation at the Annual Meeting, you are urged to date and
sign the enclosed proxy and return it promptly in the enclosed
envelope.
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By
Order of the Board of Directors
/s/James R.
Maronick
Secretary
April
28, 2020
Wheat
Ridge, Colorado
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PROXY STATEMENT
TABLE OF CONTENTS
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Page
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SHARES OUTSTANDING; VOTES REQUIRED; BOARD
RECOMMENDATIONS
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2
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QUESTIONS AND ANSWERS ABOUT THIS PROXY STATEMENT
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3
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FORWARD LOOKING STATEMENTS
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4
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PROPOSAL NO. 1:
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5
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PROPOSAL NO. 2:
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8
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PROPOSAL NO. 3:
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9
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CORPORATE GOVERNANCE AND BOARD MATTERS
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10
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EXECUTIVE COMPENSATION
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16
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
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24
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
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25
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PROPOSALS OF SHAREHOLDERS
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26
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OTHER BUSINESS
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27
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DELIVERY OF DOCUMENTS TO SHAREHOLDERS SHARING AN
ADDRESS
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27
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SOLITARIO ZINC CORP.
4251 Kipling Street, Suite 390
Wheat Ridge, CO 80033
(303) 534-1030
PROXY STATEMENT
This
Proxy Statement (the "
Proxy Statement
") is
furnished in connection with the solicitation by the Board of
Directors (the "
Board of
Directors
” or the “
Board
") of Solitario
Zinc Corp., a Colorado corporation ("
Solitario
" or the
"
Company
"), of
proxies in the accompanying form for use at the annual meeting of
shareholders to be held on June 17, 2020 at 10:00 a.m., Mountain
Daylight Time, at the Company’s principal executive offices
at 4251 Kipling Street, Suite 390, Wheat Ridge, CO 80033, and any
adjournment or postponement of such meeting (the "
Annual
Meeting
").
Important Notice Regarding the Availability of
Proxy Materials for the Annual Meeting of Shareholders to be held
on June 17, 2020: This Proxy Statement, the accompanying proxy
card, and our 2019 Annual Report on Form 10-K for the year ended
December 31, 2019 (the "
2019
10-K
") (without exhibits)
are available online at www.solitarioxr.com.
Shareholders cannot submit their vote at
www.solitarioxr.com.
The
2019 10-K is being mailed to the Company's shareholders with this
Proxy Statement. Upon written request from any person solicited
herein, addressed to the Corporate Secretary of Solitario at its
principal offices at 4251 Kipling Street, Suite 390, Wheat Ridge,
CO 80033, Solitario will provide, at no cost, a copy of the 2019
10-K, without exhibits. A copy of any or all of the exhibits to the
2019 10-K will be furnished for a fee, which will not exceed the
Company's reasonable expenses in furnishing the
exhibits.
Proxies
are solicited so that each shareholder may have an opportunity to
vote. These proxies will enable shareholders to vote on all matters
that are scheduled to come before the Annual Meeting. When proxies
are returned properly executed, the shares represented thereby will
be voted in accordance with the shareholders' directions.
Shareholders are urged to specify their choices by marking the
appropriate boxes on the enclosed proxy card; if no choice has been
specified, the shares will be voted as recommended by the Board.
Means have been provided whereby a shareholder may withhold his or
her vote for any director. The proxy card also confers
discretionary authority to vote the shares authorized to be voted
thereby on any matter that was not known on the date of the Proxy
Statement but may properly be presented for action at the Annual
Meeting.
You are
asked to sign, date, and return the accompanying proxy card
regardless of whether or not you plan to attend the Annual Meeting.
The approximate date of the mailing of this Proxy Statement and the
enclosed annual report and form of proxy is May 10, 2020. Any
shareholder returning a proxy has the power to revoke it at any
time before shares represented by the proxy are voted at the Annual
Meeting. A proxy may be revoked by a shareholder by the submission
of a new proxy card with a later date or a written notice of
revocation to the Company’s Corporate Secretary at the
address on the cover of this Proxy Statement before the Annual
Meeting. Further, if a shareholder attends the Annual Meeting in
person, he or she may request that a previously submitted proxy not
be used. Any shares represented by an unrevoked proxy will be voted
unless the shareholder attends the Annual Meeting and votes in
person. A shareholder's right to revoke his or her proxy is not
limited by, or subject to, compliance with a specified formal
procedure, but written notice should be given to the Corporate
Secretary of Solitario at or before the Annual
Meeting.
The
proposed corporate actions on which the shareholders are being
asked to vote at the Annual Meeting are not corporate actions for
which shareholders of a Colorado corporation have the right to
dissent under the Colorado Business Corporation Act.
The
expense of printing and mailing proxy material will be borne by
Solitario. In addition to the solicitation of proxies by mail,
solicitation may be made by certain directors, officers, and other
employees of Solitario in person or by telephone or other means of
electronic communication. No additional compensation will be paid
for such solicitation.
Arrangements will
also be made with brokerage firms and other custodians, nominees,
and fiduciaries to forward proxy solicitation material to certain
beneficial owners of Common Stock (as defined below) and Solitario
will reimburse such brokerage firms, custodians, nominees,
fiduciaries for reasonable out-of-pocket expenses incurred by them
in connection therewith.
1
SHARES OUTSTANDING; VOTES REQUIRED; BOARD
RECOMMENDATIONS
The
holders of shares of Solitario's issued and outstanding $.01 par
value common stock (the “
Common Stock
”)
at the close of business on May 6, 2020, the record date, are
entitled to vote at the Annual Meeting. On April 27, 2020 there
were 58,116,366 shares of Common Stock outstanding and it is
expected that the same number of shares will be outstanding on the
record date. Each outstanding share of Common Stock entitles its
holder to one vote. The presence in person or by proxy of a
majority of the outstanding shares of Common Stock is required to
constitute a quorum for the transaction of business at the Annual
Meeting. Shares of Common Stock held by persons who abstain, and
broker non-votes will be counted as present in determining whether
a quorum is present at the Annual Meeting. In the event there are
not sufficient shares of Common Stock in person or by proxy for a
quorum or to approve one or more of the proposals at the time of
the Annual Meeting, the Annual Meeting may be adjourned in order to
permit further solicitation of proxies.
If a
quorum is present at the Annual Meeting:
●
The six nominees
for election as directors who receive the greatest number of votes
cast for the election of directors shall be elected
directors.
●
With respect to
each of the other proposals being submitted to the shareholders for
approval, being: (i) the non-binding advisory vote on executive
compensation; and (ii) the proposal to ratify the appointment of
Plante Moran PLLC (“Plante Moran”) as our independent
registered public accounting firm, each will be approved if a
majority of the votes. deemed present at the time of a vote, vote
in favor of such proposal.
The
Board of Directors unanimously recommends that shareholders
vote:
●
FOR the election of
each of the nominees for director;
●
FOR approval of the
Company’s executive compensation program; and
●
FOR the
ratification of Plante Moran as the Company’s independent
registered public accounting firm.
Proxies
submitted properly will be voted in accordance with the
instructions contained therein. If the proxy card is submitted but
voting directions are not provided, the proxy will be voted
“FOR” each of the six director nominees;
“FOR” the advisory vote on executive compensation, and
“FOR” ratification of the appointment of Plante Moran
as our independent registered public accounting firm, and in such
manner as the proxies named on the proxy card, in their discretion,
determine upon such other business as may properly come before the
Annual Meeting or any adjournment or postponement
thereof.
If your
shares are held through a broker, bank or other nominee
(collectively referred to as “brokers”), the broker
will vote your shares according to the specific instructions it
receives from you. If the broker does not receive voting
instructions from you, the broker is only deemed present and
entitled to vote on a proposal that is considered a
“routine” matter without specific instruction from the
shareholder. The ratification of Plante Moran is a routine
matter; however, each of the other proposals being considered at
the Annual Meeting is not considered a “routine”
matter.
Accordingly, if you do
not give instructions to your broker the broker will not be deemed
present at the time of the vote on each non-routine matter and will
not be deemed authorized to vote your shares with respect to the
non-routine matters being considered at the Annual Meeting. The
broker’s failure to vote because it lacks discretionary
authority to do so, commonly referred to as a “broker
non-vote,” will not affect the outcome of the vote on the
non-routine matters being submitted at the Annual Meeting because
they will not be deemed present at the time of the vote for those
matters. For the proposal to ratify the appointment of Plante Moran
as the Company’s independent registered public accounting
firm a broker non-vote would have the effect of a vote against that
proposal. However,
there should not be
any broker “non-votes” on this proposal because it will
likely be deemed a “routine” matter upon which brokers
may vote without specific direction from holders of shares in
“street name.”
2
QUESTIONS AND ANSWERS ABOUT THIS PROXY STATEMENT
1. When and where will the Annual Meeting be
held?
As
described in the notice, we will hold the Annual Meeting at the
offices of Solitario located at 4251 Kipling St., Suite 390, Wheat
Ridge, Colorado 80033. The Annual Meeting is scheduled for
June 17, 2020 at 10:00 a.m. Mountain Daylight Time. If you expect
to attend the Annual Meeting in person, please call Solitario at
(303) 534-1030 to ensure that sufficient accommodations are
prepared.
2. Who is asking for my vote?
The
Board of Directors is sending this Proxy Statement along with other
soliciting materials and the enclosed proxy card to you and all
other persons who are shareholders of record of Solitario as of the
close of business on May 6, 2020. The Board of Directors is
soliciting your vote for our Annual Meeting.
3. Who is eligible to vote?
Shareholders who
own shares of Common Stock at the close of business on the record
date are eligible to vote. Each outstanding share of Common Stock
is entitled to one vote.
4. Might the Annual Meeting be
adjourned?
We do
not intend to seek adjournment of the Annual Meeting unless we have
insufficient holders of the outstanding shares of Common Stock
present in person or by proxy to meet a quorum (which requires the
presence of holders of at least a majority of the outstanding
shares). If this occurs, we will consider the advisability of
proposing an adjournment to a specific time and place. Unless the
Board of Directors fixes a new record date, shareholders for an
adjourned meeting shall be as originally determined for the meeting
from which the adjournment was taken. If the adjournment is for
more than 30 days, or if after the adjournment, a new record date
is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each shareholder entitled to vote. At the
adjourned meeting any business may be transacted that might have
been transacted at the Annual Meeting as originally
called.
5. Why did you send me this booklet?
This
booklet is a Proxy Statement. It provides you with information you
should review before voting on the proposals, discussed above, and
in the Notice of Annual Meeting of Shareholders. You are receiving
these proxy materials because you have the right to vote at the
Annual Meeting. Such proxy materials are also available on-line at
www.solitarioxr.com.
6. How do I vote?
Registered Shareholders
There
are different methods by which registered shareholders
(“
Registered
Shareholders
”), whose names are directly shown on the
books or records of the Company as owning shares of Common Stock,
can vote their shares at the Annual Meeting in person or by proxy.
Should a Registered Shareholder wish to vote in person at the
Annual Meeting, that person should attend the meeting where his or
her vote will be taken and counted. Should the Registered
Shareholder not wish to attend the meeting, his or her vote may be
voted by proxy through one of the methods below.
A
Registered Shareholder may vote by proxy by using one of the
following methods: (i) the paper form of proxy to be returned by
mail or delivery; (ii) by using the internet; or (iii) by
telephone. The methods of using each of these procedures are as
follows:
Voting by
Mail
.
A Registered
Shareholder may vote by mail by completing, dating and signing the
enclosed form of proxy and mailing it to Computershare Investor
Services Inc. in the envelope provided for receipt no later than
5:00 p.m. (MDT) on June 15, 2020. Joint owners must each sign the
proxy card.
3
Voting by
Internet.
A
Registered Shareholder may vote by Internet by accessing the
following website: www.investorvote.com. When you log on to the
site you will be required to input a control number as instructed
on the form of proxy. Registered Shareholders may vote by internet
up to 5:00 p.m. (MDT) on June 15, 2020.
Voting by
Telephone
:
A
Registered Shareholder may vote by telephone by calling the
toll-free number 1-866-732-8683 from a touch tone phone. When you
telephone you will be required to input a control number as
instructed on the form of proxy. Registered Shareholders may vote
by telephone up to 5:00 p.m. (MDT) on June 15, 2020.
Beneficial Shareholder
If you
own your shares through a broker-dealer or other nominee (a
“
Beneficial
Shareholder
”) you must vote your shares in the manner
provided by that broker-dealer or other nominee. If you own your
shares through a broker-dealer or other nominee, you are not
considered to be a shareholder of record, and you will not be
permitted to vote your shares in person at the Annual Meeting,
unless you have obtained a proxy for those shares from the person
who holds your shares of record. Beneficial Shareholders should
ensure that instructions respecting the voting of their shares of
Common Stock are communicated to the appropriate person at the
broker-dealer or other nominee where your shares are
held.
7. Why does my name not appear as a shareholder
of record?
Many
investors own their investment securities through a broker-dealer
or other nominee. Broker-dealers frequently clear their
transactions through other broker-dealers and may hold the actual
certificates for shares in the name of securities depositories,
such as CEDE & Co. (operated by Depository Trust Company of New
York City). In such a case, only the ultimate certificate holder
appears on our records as a shareholder even though that nominee
may not have any economic interest in the shares that you actually
own through your broker-dealer. You should contact your
broker-dealer for more information about this process. You have the
right to request that your broker-dealer deliver to you a
certificate representing your shares.
8. How can I obtain more information about
Solitario?
This
Proxy Statement is available online at www.solitarioxr.com. In
addition, information is available on our website at
www.solitarioxr.com and through periodic reports filed by Solitario
with the Securities and Exchange Commission (“SEC”) and
available at: www.sec.gov.
9. Why are we being asked to vote on the
proposals?
The
rules of the NYSE American Exchange (the “NYSE
American”) and Colorado state law require Solitario to hold
an annual meeting of shareholders to, among other things, elect
directors. At the Annual Meeting shareholders are being asked to
consider certain proposals that are commonly considered at an
annual meeting of shareholders for a publicly reporting company,
being the election of a slate of directors (Proposal No. 1), the
approval of the Company’s executive compensation program
(Proposal No. 2), and the ratification of the Company’s
independent public accounting firm for fiscal 2020 (Proposal No.
3).
THIS
PROXY STATEMENT CONTAINS FORWARD-LOOKING STATEMENTS THAT HAVE BEEN
MADE PURSUANT TO PROVISIONS OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995. FORWARD-LOOKING STATEMENTS REPRESENT
SOLITARIO’S EXPECTATIONS OR BELIEFS CONCERNING FUTURE EVENTS,
INCLUDING ANY STATEMENTS REGARDING: SOLITARIO'S BUSINESS AND
BUSINESS RELATIONSHIPS, SOLITARIO'S BUSINESS ACTIVITIES, THE
SUFFICIENCY OF SOLITARIO'S CASH BALANCES AND CASH USED IN
OPERATIONS, FINANCING AND/OR INVESTING ACTIVITIES. WITHOUT LIMITING
THE FOREGOING, THE WORDS "BELIEVES," "INTENDS," "PROJECTS,"
"PLANS," "EXPECTS," "ANTICIPATES" AND SIMILAR EXPRESSIONS ARE
INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. ACTUAL EVENTS OR
RESULTS MAY DIFFER MATERIALLY FROM THESE PROJECTIONS. INFORMATION
REGARDING CERTAIN OF THESE RISKS, UNCERTAINTIES AND OTHER FACTORS
THAT COULD CAUSE ACTUAL RESULTS TO DIFFER FROM THE RESULTS IN THESE
FORWARD-LOOKING STATEMENTS ARE DISCUSSED IN SOLITARIO'S PERIODIC
REPORTS AND DOCUMENTS FILED WITH THE SEC. THE FORWARD-LOOKING
STATEMENTS INCLUDED IN THIS PROXY STATEMENT ARE MADE ONLY AS OF THE
DATE OF THIS PROXY STATEMENT. WE DO NOT UNDERTAKE ANY OBLIGATION TO
UPDATE OR SUPPLEMENT ANY FORWARD-LOOKING STATEMENTS TO REFLECT
SUBSEQUENT EVENTS OR CIRCUMSTANCES, EXCEPT AS REQUIRED BY
LAW.
4
PROPOSAL NO. 1: ELECTION OF DIRECTORS
The
Board currently consists of six directors. The directors elected at
the Annual Meeting will serve until the next annual meeting of
shareholders or until their successors are elected or appointed and
qualified or until any such director’s earlier death,
resignation or removal. Unless a vote is withheld by the
shareholder, the proxies solicited by the Board will be voted for
the election of each nominee. The six nominees who receive the most
votes will be elected. If a shareholder does not vote for a nominee
or indicates to "withhold" authority to vote for a nominee on the
proxy card, that shareholder's vote will not count either for or
against the nominee. If any nominee shall not be a candidate for
election as a director at the meeting, it is intended that votes
will be cast pursuant to the enclosed proxy for any substitute
nominees as may be nominated by the existing directors. No
circumstances are presently known which would render any nominee
named below unavailable to serve as a director.
Identification of Directors
The
slate of nominees for election to Solitario’s Board of
Directors is below.
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Name
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Age
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Brian
LabadieChairman
(1)(3)(4)
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67
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Mr.
Labadie has been a director of Solitario since June 2006 and
Chairman since March of 2009. He is an independent mining industry
consultant. He was a director of Crown Resources Corporation (TSX:
CRS) ("
Crown
") from June of
2002 until August 2006 upon completion of Crown’s merger with
Kinross Gold Corporation ("
Crown-Kinross
Merger
") and a director of Battle Mountain Gold Exploration
Corporation (OTC:BMGX) from June 2005 to June 2007. In evaluating
Mr. Labadie’s qualifications as a director, the Board
considered Mr. Labadie’s experience of over forty years in
the mining industry. The specific experience that Mr. Labadie
brings to Solitario includes formal training and experience as a
mining engineer including developing and operating mines, both as a
mine manager and as a senior executive at Miramar Mining
Corporation and Echo Bay Mines. The Board believes Mr.
Labadie’s operating experience complements and enhances the
knowledge and understanding the other Board members and management
of Solitario have in mining exploration, and corporate finance. Mr.
Labadie spent ten years with Miramar Mining Corporation from
November 1996 to September 2006 as the Executive Vice President,
COO. Prior to that, Mr. Labadie spent nine years with Echo Bay
Mines, Ltd. as Vice President of Operations. Mr. Labadie holds a
Bachelor of Science degree in geological engineering from the
University of Toronto.
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John
Labate
(1)(2)(3)(4)
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71
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Mr.
Labate has been a director of Solitario since December 2016 and is
the Audit Committee Chairman. Since May 2015 he has served as the
CFO of Gold Resource Corporation. Mr. Labate has held management
positions in the mining industry for over 35 years. These include
Operations Analysis Manager for Anaconda Minerals Company
(1980-1986), Corporate Controller for Bond International Gold
(1987-1991), CFO for Crown (1992-1997), CFO for GeoBiotics
(1997-1999); CFO for Applied Optical Technologies (1999-2004), CFO
for Constellation Copper (2004-2008), CFO for Golden Star Resources
(2008-2012) and principal of East Cape Advisors (2012-2015). Mr.
Labate is experienced in all aspects of accounting, finance and
regulatory management within the public sector of the mining
industry in both the United States and Canada. The Board believes
Mr. Labate’s formal training in accounting and finance,
coupled with his more than 35 years of industry experience, makes
him suited to serve on the Board. Mr. Labate received a Bachelor of
Science, Accounting, from San Diego State University and passed all
parts of the CPA examination.
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5
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James
Hesketh
(1)(2)(3)
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63
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Mr.
Hesketh has been a director of Solitario since July of 2017. He is
presently serving as President, CEO, and Director of Viva Gold
Corp., an exploration company listed on the TSX Venture Exchange
(“
TSXV
”)
(TSXV:VAU), which owns an advanced stage gold exploration property
near Tonopah Nevada. From March 2008 to December 2016 Mr. Hesketh
served as President, CEO and Director of Atna Resources, Ltd., a
TSX listed company that operated two gold mines, one each in
California and Nevada (“Atna Resources”). Prior to
that, from 2005 to 2008, Mr. Hesketh served as President, CEO and
Director of Canyon Resources Corporation (“
Canyon
”), a
NYSE American listed mining company, which was merged with Atna
Resources in 2008. Prior to joining Canyon, Mr. Hesketh served as
Principal Mining Engineer and Vice President of NM Rothschild &
Sons (Denver) Inc. from 2000 to 2004, which engaged in structured
lending to the global metals and mining industry. Mr. Hesketh has
proven leadership skills and broad-based industry experience
ranging from mergers and acquisitions to mining finance, to mine
permitting, development, construction and operations, both
domestically and internationally and under U.S. and international
regulatory regimes. In evaluating Mr. Hesketh’s
qualifications to serve as a director, the Board of Solitario
believes that his formal training in engineering and economics
combined with more than 35 years of broad-based industry experience
and leadership makes him uniquely suited to serve on the Board. Mr.
Hesketh holds a Bachelor of Science in Mining engineering and an
Master of Science in Mineral economics, both from the Colorado
School of Mines.
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Christopher
E. Herald
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66
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Mr.
Herald has been a director of Solitario since August 1992. Mr.
Herald has also served as Chief Executive Officer since June 1999
and President since August 1993. Mr. Herald also served as a
director of Crown starting in April 1989, as Chief Executive
Officer of Crown starting in June of 1999, and as President of
Crown from November 1990, each until August 2006, when he resigned
from such positions upon completion of the Crown-Kinross Merger. In
evaluating Mr. Herald’s qualifications to serve as a
director, the Board of Solitario believes his leadership of
Solitario since Solitario’s inception as President and then
Chief Executive Officer, as well as his knowledge of the
Company’s operations, make him a valuable member of the
Board. In addition, Mr. Herald has shown a keen insight in the
evaluation of various opportunities in the mining industry,
including the acquisition of properties for exploration and
potential merger and acquisition candidates for Solitario. Mr.
Herald has a track record of operating mining companies both with
Crown and Solitario and the Board believes this is a significant
contributor to the success of Solitario. Prior to joining Crown,
Mr. Herald was a Senior Geologist with Echo Bay Mines and Anaconda
Minerals. Mr. Herald is currently a director of Viva Gold Corp. Mr.
Herald was formerly a director of Underworld Resources Inc. (UW: V)
from June 2009 to June 2011, and Atna Resources from May 2009 to
June 2015. Mr. Herald is a past Chairman of the Denver Gold Group,
a non-profit industry trade group that organizes gold mining
industry institutional conferences in the United States and Europe.
Mr. Herald received a Master of Science in Geology from the
Colorado School of Mines and a Bachelor of Science in Geology from
the University of Notre Dame.
|
|
|
|
|
|
Gil
Atzmon
(1)(4)
|
60
|
Mr.
Atzmon has served a director of Solitario since July 2017. He is
the founder of Zazu Metals Corporation (“Zazu”). Mr.
Atzmon previously served as Chairman, Chief Executive Officer and
President of Zazu from 2006 until it became a wholly-owned
subsidiary of Solitario. Mr. Atzmon has over 30 years’
experience in the mineral resources sector. His career has included
positions as a mining executive, investment banker and mining fund
manager. Mr. Atzmon participated in many global exploration and
mining projects and successfully arranged financing for the
exploration and development of several mineral properties. In
evaluating Mr. Atzmon’s qualifications to serve as a
director, the Board believes his leadership of Zazu as its founder
and as Zazu’s Chief Executive Officer, as well as his
knowledge of the Lik deposit and operations, make him a valuable
member of the Board. In 2001 and 2002, Mr. Atzmon acted as Vice
President, Corporate Development of Ivanhoe Mines Ltd. In 2000 and
2001, Mr. Atzmon served as a global energy and mining specialist in
institutional equity and sales for BNP Paribas. From 1998 to 2000,
Mr. Atzmon was Chief Investment Strategist and Portfolio Manager
for US Global Investors, Inc. Mr. Atzmon holds a Bachelor of
Science degree in Geology and Geography from Columbia College at
Columbia University, New York and holds a Master of Arts in Energy
and Mineral Resources Economics from the University of Texas at
Austin, Texas.
|
6
|
Joshua
D. Crumb
(1)(2)
|
40
|
Mr.
Crumb has been a director of Solitario since July 2017. Mr. Crumb
is a founder, Director and Chief Strategy Officer of Goldmoney
Inc., a financial service and technology company, serving in this
role since 2014. Mr. Crumb was a director of Zazu from 2011 until
it became a wholly-owned subsidiary of Solitario. Mr. Crumb was
previously an Executive Director at Goldman Sachs, working as the
Senior Metals Strategist in the Global Economics, Commodities and
Strategies research division in London from 2010-2012. Mr. Crumb
also held various positions within the Lundin group of companies,
serving as Director of Corporate Development at Lundin Mining, and
Special Project Analyst for group chairman Lukas Lundin. From
2012-2014, Mr. Crumb served as a founder and Director of Loma Vista
Capital, and an independent Director of Silver Bull Resources Inc.
(OTCQB: SVBL; TSX: SVB)) and Astur Gold Corp (TSX: BDG). In
evaluating Mr. Crumb’s qualifications to serve as a director,
the Board of Solitario believes his extensive financial and
corporate development experience in the junior mining industry as
well as his knowledge and leadership of Zazu as one of its
directors make him suited to serve on Solitario’s Board. Mr.
Crumb holds a Master of Science degree in Mineral Economics, a
Graduate Certificate in International Political Economy, and a
Bachelor of Science degree in Engineering from the Colorado School
of Mines.
|
|
|
|
|
|
1.
The Board has
determined this director to be an independent member of the Board
in accordance with Section 803A of the NYSE American Company
Guide.
2.
Member of the Audit
Committee.
3.
Member of the
Compensation Committee.
4.
Member of the
Nominating Committee.
|
||
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ALL OF THE NOMINEES
LISTED ABOVE.
--------------------------------------------------------------
7
PROPOSAL NO. 2:
ADVISORY VOTE ON EXECUTIVE COMPENSATION
We are
asking Solitario shareholders to approve an advisory resolution on
the compensation program of our “Named Executive
Officers” as disclosed in this Proxy Statement.
As
described more fully in the “Executive Compensation”
below, our executive compensation program is structured to align
the interests of our executive officers (each of whom is a
shareholder of the Company) with those of our non-affiliated
shareholders and to fairly reward them for creating shareholder
value and for helping the Company achieve its business objectives.
Our primary compensation objectives are to reward performance that
supports our principles of building shareholder value, to retain
our executives, to attract new executives as necessary and fairly
compensate our current executives, including to recognize
individual performance from time-to-time.
We
believe that our executive compensation program, which relies on
clear and simple objectives for executive performance and reward,
has been effective at incenting our Named Executive Officers to
further achievement of positive results and strong financial
performance by the Company, appropriately aligning pay and
performance and in enabling us to attract and retain talented
executives within our industry.
We are
asking our shareholders to indicate their support for our executive
compensation program as described in this Proxy Statement. This
proposal gives our shareholders the opportunity to express their
views on our fiscal year 2019 executive compensation policies and
procedures. It is not intended to address any specific item of
compensation, but rather the overall compensation of our Named
Executive Officers and the policies and procedures described in
this Proxy Statement. Accordingly, in accordance with
Section 14A of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), we are asking our shareholders to
approve the following resolution:
“RESOLVED
THAT
:
Solitario
shareholders approve the compensation of Solitario’s Named
Executive Officers, as disclosed in this Proxy Statement, pursuant
to the compensation disclosure rules of the Securities and Exchange
Commission set forth in Item 402 of Regulation S-K, including, but
not limited to, the “Executive Compensation” section,
the compensation tables, and any related material disclosed in this
Proxy Statement for the 2020 annual meeting.”
The
advisory vote on executive compensation is not binding on the
Company, our Board or our Compensation Committee. However, our
Board and the Compensation Committee will review the voting results
in connection with their on-going evaluation of our compensation
programs and may consider the outcome of the vote when making
future compensation decisions.
At the
Company’s 2018 annual meeting of shareholders, the
shareholders voted in favor of holding future advisory votes on the
Company’s executive officer compensation program every year,
and the Company’s Board of Directors subsequently adopted
this as its official position. Accordingly, this
proposal on the advisory vote on executive compensation is being
submitted to obtain the advisory vote of the shareholders in
accordance with the Dodd-Frank Act, Section 14A of the
Exchange Act and the SEC’s rules. We currently expect that
following this year’s vote, the next shareholder advisory
vote on the Company’s executive compensation program will
take place at the annual meeting of shareholders to be held in
2021. We are required to solicit shareholder preferences regarding
the frequency of future advisory votes on executive compensation at
least once every six (6) years.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR APPROVAL OF THE
COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THIS
PROXY STATEMENT.
--------------------------------------------------------------
8
PROPOSAL NO. 3:
RATIFICATION OF THE APPOINTMENT OF
THE
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
At the
Annual Meeting our shareholders are being asked to ratify the
selection of Plante Moran as our independent registered public
accounting firm and to continue as such for fiscal year 2020.
Effective October 1, 2018, EKS&H
LLLP (“EKS&H”), Solitario’s prior independent
registered public accounting firm, combined with Plante Moran. As a
result of this transaction, on October 1, 2018, EKS&H resigned
as Solitario’s independent registered public accounting firm.
Concurrent with such resignation, Solitario’s audit committee
approved the engagement of Plante Moran as its new independent
registered public accounting firm.
The senior members of the
audit and tax staff, including the partner in charge of our audit
and the partner in charge of the preparation of our tax returns,
did not change as a result of the acquisition of EKS&H by
Plante Moran. References to Plante Moran in this 2020 Proxy
Statement include the predecessor firm of EKS&H. Although the
Company is not required to submit the selection of independent
registered public accountants for shareholder approval, if the
appointment of Plante Moran as our independent registered public
accounting firm for the year 2020 is not ratified by shareholders,
the Audit Committee will reconsider its appointment. The Board
considers Plante Moran to be well qualified to serve as the
independent auditors for the Company; however, even if the
selection is ratified, our Board may direct the appointment of a
different independent registered public accounting firm at any time
during the year if the Audit Committee and Board determine that the
change would be in our best interests. Representatives of Plante
Moran may choose to be present at the Annual Meeting and have the
opportunity to make a statement and to respond to appropriate
questions.
Audit Fees
The
following table summarizes the aggregate fees billed to Solitario
by Plante Moran for the fiscal years ended December 31, 2019 and
2018.
|
|
2019
|
2018
|
|
Audit Fees
(1)
|
$
45,000
|
$
48,000
|
|
Audit related fees
(2)
|
27,000
|
27,000
|
|
Tax fees
(3)
|
32,000
|
47,000
|
|
Total
|
$
104,000
|
$
119,000
|
(1)
Fees billed for
audit services in 2019 and 2018 consisted of:
i.
Audit of our annual
financial statements for the 2018 and 2017 fiscal
years.
ii.
Consents and other
services related to SEC filings.
(2)
Represents fees
billed related to reviews of our quarterly reports during 2019 and
2018.
(3)
Represents fees
billed in connection with the preparation and filing of our United
States federal and Colorado and Alaska state income tax
returns.
Pre-approval of Audit Fees
On an
annual basis the Audit Committee approves the proposed audit
services and the fees related thereto by our independent auditors
in advance of the year of service in accordance with the
pre-approval policy adopted by the Audit Committee. All other fees
are pre-approved on an ongoing basis as required. The Audit
Committee pre-approval policy requires that the Audit Committee
determine that proposed services and related fees are required and
reasonable under the circumstances. All of the fees billed to
Solitario by Plante Moran during 2019 and 2018 were pre-approved by
the Audit Committee pursuant to the Audit Committee pre-approval
policy. The Audit Committee considered whether the provision of
non-audit services is compatible with maintaining the principal
accountant's independence and has determined that the provision is
compatible.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
SELECTION OF PLANTE MORAN AS OUR INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM.
--------------------------------------------------------------
9
CORPORATE GOVERNANCE AND BOARD MATTERS
Meetings of Board of Directors Annual Meeting
Attendance
During
the fiscal year ended December 31, 2019, there were four meetings
of the Board. Each of the incumbent directors attended each of
those Board meetings other than Mr. Crumb, who missed one of the
meetings. Each of the incumbent directors attended all meetings
held by committees of the Board (described below) on which they
served during 2019 other than Mr. Crumb, who missed two of the
meetings. All of the references to meetings exclude actions taken
by written consent.
The
Company does not have a formal policy regarding the attendance of
our Board members at our annual meetings of shareholders and Board
members are not required to attend such meetings. Mr. Herald was
the only director that attended the annual meeting of shareholders
held on June 17, 2019.
No
material changes to the procedures for nominating directors by our
shareholders, as described in the 2019 proxy statement filed with
the SEC by the Company on April 29, 2019 with respect to the 2019
annual meeting of shareholders, have been made since such proxy
statement was filed.
Corporate Governance and Nominating Committee
In June
of 2006, the Board formed the Corporate Governance and Nominating
Committee of the Board (the "
Nominating
Committee
"). A copy of the Nominating Committee charter is
available on the Company website at www.solitarioxr.com. Mr.
Atzmon, Mr. Labadie and Mr. Labate are members of the Nominating
Committee. The members of the Nominating Committee are all
independent in accordance with the definition of independence set
forth in the NYSE American Company Guide.
The Nominating Committee did not hold a meeting
during 2019, however, the Nominating Committee did approve the
nomination of the slate of directors proposed to the shareholders
for re-election at the Annual Meeting of
shareholders.
The
primary purposes of the Nominating Committee a
re to (a) identify individuals qualified to become
Board members and select or recommend director nominees; (b)
develop and recommend to the Board corporate governance principles
applicable to the Company; (c) lead the Board in its review of the
Board's performance; and (d) recommend to the Board director
nominees for each committee.
The Nominating Committee has
not adopted specific, minimum qualifications that nominees must
meet in order for the committee to recommend them to the Board of
Directors, but rather each nominee is individually evaluated based
on his or her individual merits, taking into account the needs of
the Company and the composition of the Board of Directors. The
Nominating Committee has incorporated the consideration of
diversity, including gender diversity, in identifying nominees for
director and does seek to have a Board of Directors composed of
individuals with a diverse set of expertise and business
experiences.
The
Nominating Committee will consider candidates submitted from a
variety of sources (including, without limitation, incumbent
directors, shareholders, and Company management) to fill vacancies
and/or expand the Board of Directors. The committee will then
evaluate each potential candidate's educational background,
employment history, outside commitments and other relevant factors
to determine whether he/she is potentially qualified to serve on
the Board of Directors. The committee seeks to identify and recruit
the best available candidates and will endeavor to evaluate
qualified shareholder nominees (if any) on the same basis as those
submitted by members of the Board of Directors, third-party search
firms (if applicable) or other sources.
Pursuant to Section
2.11 of our Bylaws, candidates for election as directors at any
meeting of shareholders may be made (a) by, or at the direction of,
a majority of the members of the Board (although as described
above, such role has been delegated to the Nominating Committee) or
(b) by any shareholder entitled to vote at such a meeting, subject
to the requirements outlined below. The Board makes no distinction
in evaluating candidates who come to their attention directly or
who are nominated by any shareholder. No shareholder submitted a
nomination to the Board during the Company’s 2019 fiscal
year. The Nominating Committee does not have specific minimum
qualifications that a candidate must possess for
consideration.
10
In
order to qualify for consideration at a shareholder meeting,
shareholder nominations must be in writing addressed to the
Corporate Secretary of Solitario not less than 60 days nor more
than 90 days prior to the date of a scheduled shareholders'
meeting; provided, however, that if less than 70 days’ notice
or prior public disclosure of the scheduled date of such a meeting
is given or made, notice of a shareholder nomination must be
delivered or received not later than the close of business on the
10
th
day
following the earlier of the day on which such notice of the date
of the scheduled meeting was mailed or the day on which such public
disclosure was made.
Such
shareholder's notice shall set forth (a) as to each person whom the
shareholder proposes to nominate for election or re-election as a
director and as to the shareholder giving the notice (i) the name,
age, business address and residence address of such person, (ii)
the principal occupation or employment of such person, (iii) the
class and number of shares of stock of the Company which are
beneficially owned by such person as of the date of such
shareholder notice and (iv) any other information relating to such
person that is required to be disclosed in solicitations of proxies
with respect to nominees for election as directors pursuant to
Regulation 14A, under the Exchange Act and (b) as to the
shareholder giving the notice (i) the name and address, as they
appear on the Company's books, of such shareholder and any other
shareholders known by such shareholder to be supporting such
nominees and (ii) the class and number of shares of stock of the
Company which are beneficially owned by such shareholder on the
date of such shareholder notice and by any other shareholders known
by such shareholder to be supporting such nominees on the date of
such shareholder notice.
The
Board may reject any shareholder nomination not timely made in
accordance with the requirements of Section 2.11 of Solitario's
Bylaws. Furthermore, if the Board determines that the information
provided in a shareholder's notice does not satisfy the
informational requirements of Section 2.11 of the Bylaws in any
material respect, the Corporate Secretary will promptly notify such
shareholder of the deficiency in the notice. The shareholder will
then have an opportunity to cure the deficiency by providing
additional information to the Corporate Secretary within such
period of time, not to exceed five days from the date such
deficiency notice is given to the shareholder, as the Board shall
reasonably determine. If the deficiency is not cured within such
time period, or if the Board reasonably determines that the
additional information provided by the shareholder, together with
information previously provided, does not satisfy the requirements
of Section 2.11 of the Company's Bylaws in any material respect,
then the Board may reject such shareholder's nomination. The
Corporate Secretary shall notify a shareholder in writing whether
his or her nomination has been made in accordance with the time and
information requirements of the Company's Bylaws. Notwithstanding
the procedure set forth above, if the Board does not make a
determination as to the validity of any shareholder nominations,
the presiding officer of the meeting of the shareholders shall
determine and declare at the meeting whether a nomination was made
in accordance with the terms of the Company's Bylaws and shall
accept or reject the nomination accordingly.
Audit Committee
Solitario has a
separately designated standing audit committee established in
accordance with section 3(a)(58)(A) of the Exchange Act. The Audit
Committee consists of Mr. Labate, Mr. Crumb and Mr. Hesketh, each
of whom is “independent” in accordance with NYSE
American standards, as well as the independence requirements for
audit committee members under Rule 10A-3 promulgated under the
Exchange Act. The Board has determined that Mr. Labate is the audit
committee financial expert as defined in Item 407(d)(5) of
Regulation S-K. The Audit Committee acts under a written charter
that was adopted and approved by the Board on July 26, 2006, a
current copy of which is available on the Company website at
www.solitarioxr.com. The Audit Committee’s primary function
is to review Solitario's financial reporting process on behalf of
the Board. Management has the primary responsibility for the
financial statements and the reporting processes, including the
system of internal controls. The Audit Committee met four times
during the year ended December 31, 2019.
Audit Committee Report
In
performing its duties, the Audit Committee reviewed and discussed
the audited financial statements contained in the 2019 Annual
Report on Form 10-K with management and Solitario's independent
registered public accountant, Plante Moran. The Audit Committee met
with Plante Moran, and discussed all issues deemed to be
significant by Plante Moran, including any matters required by Rule
2-07 of Regulation S-X, "Communication with Audit Committees" and
by the statements on Auditing Standard No. 16, as amended (AICPA
Professional Standards
,
Vol. 1, AU section 380), as adopted by the Public Company Oversight
Board, and without management present, discussed and reviewed the
results of the independent auditor's examination of the financial
statements. In addition, in accordance with Independence Standards
Board Standard No. 1, "Independence Discussions with Audit
Committees" as amended or supplemented, the Audit Committee
discussed with Plante Moran its independence from Solitario and its
management, and has received and reviewed the written disclosures
and letter from Plante Moran required by applicable requirements of
the Public Company Accounting Oversight Board regarding Plante
Moran’s communications with the Audit Committee including
that Plante Moran is independent and has discussed Plante
Moran’s independence with them.
11
Based
on the reviews and discussions outlined above, the Audit Committee
recommended to the Board that Solitario include the audited
financial statements in its Annual Report on Form 10-K for the year
ended December 31, 2019 which was filed with the SEC on March 2,
2020.
AUDIT
COMMITTEE
John Labate, Chairman
Jim Hesketh
Joshua Crumb
Compensation Committee
On June
27, 2006, the Board approved the charter for and formed the
Compensation and Management Development Committee (the
"
Compensation
Committee
"). A current copy of the Compensation Committee
charter is available on the Company website at www.solitarioxr.com.
Mr. Labadie, Mr. Labate and Mr. Hesketh are the members of the
Compensation Committee. The Compensation Committee met once during
2019.
The
primary purposes of the Compensation Committee are to (a) review
from time to time and approve the overall management evaluation and
compensation policies of Solitario; (b) review and approve goals
and objectives relevant to the compensation of the executive
officers, including the chief executive officer, of Solitario and
evaluate the performance of Solitario's executive officers; (c) set
the compensation of the executive officers of Solitario, in light
of the Compensation Committee's review; (d) review, approve and
periodically evaluate Solitario's compensation and other benefit
plans, including incentive compensation and equity-based plans and
programs for non-employee directors, executive officers and senior
management, and make recommendations as necessary; (e) review and
approve any amendments and modifications to any such plan or
program requiring approval of the Board, subject to applicable
regulatory and shareholder approval requirements; (f) review and
approve the grant of options, restricted stock, stock appreciation
rights and other equity-based grants to Solitario's non-employee
directors, executive officers and senior management consistent with
the Company’s incentive compensation plans and programs and
compensation and retention strategy, subject to ratification by the
Board; (g) review and approve plans of the Company for management
development and senior managerial succession; (h) oversee
compliance with the applicable compensation reporting requirements
of the SEC; and (i) conduct an annual performance self-evaluation
of the Compensation Committee. The Compensation Committee has not
engaged compensation consultants but has the authority to do so
under the Compensation Committee charter. Further, the Compensation
Committee may form, and delegate authority to, subcommittees when
appropriate.
The
processes and procedures used for the consideration and
determination of executive compensation are described in the
section of this Proxy Statement entitled "EXECUTIVE
COMPENSATION."
The
scope and authority of the Compensation Committee, including the
role of executive officers and compensation consultants in
determining or recommending the amount and form of compensation and
the ability of the Compensation Committee to delegate authority,
are more fully described in the Compensation Committee
charter.
Compensation Committee Interlocks and Insider
Participation
Mr.
Labadie, Mr. Labate and Mr. Hesketh are the members of the
Compensation Committee and are “independent” in
accordance with the definition of independence set forth in the
NYSE American Company Guide. No member of the Compensation
Committee is currently, or has been, an officer or employee of
Solitario for the last three years or had a relationship with
Solitario required to be disclosed pursuant to Item 404 of
Regulation S-K.
12
Compensation Committee Report
The
Compensation Committee has reviewed, evaluated and discussed the
(i) allocation of executive compensation, including the allocation
of compensation between salary paid in cash and deferred
compensation in the form of stock option grants and awards; (ii)
goals and objectives of our executive compensation including the
need to be competitive with peer companies to retain and attract
the best available executive talent; (iii) existing elements of
executive compensation including salary, bonus and stock options,
and (iv) performance of our existing executives, including our
Chief Executive Officer (“
CEO
”), against
general targets and goals including budgets, exploration activities
and success, the performance of our stock and other measures.
Neither the Compensation Committee nor management has engaged any
compensation consultants in determining or recommending the amount
or form of executive or director compensation in the last year. The
Compensation Committee has reviewed recommendations prepared by our
CEO for levels of compensation for Mr. Hunt, our Chief Operating
Officer, and Mr. Maronick, our Chief Financial Officer. The
Compensation Committee has reviewed
and discussed with management the
Company's “Executive Compensation” section of this
Proxy Statement. Based on such review and discussions, the
Compensation Committee has recommended to the Board of Directors
that the Executive Compensation be included in this 2020 Proxy
Statement and included by reference in the Company's Annual Report
on Form 10-K for the year ended December 31,
2019.
COMPENSATION
COMMITTEE
Brian
Labadie, Chairman
Jim
Hesketh
John
Labate
Delinquent Section 16(a) Reports
Section
16(a) of the Exchange Act requires Solitario's directors and
executive officers, and persons who own more than ten percent of a
registered class of Solitario's equity securities, to file with the
SEC initial reports of ownership and reports of changes in
ownership of the Common Stock and other equity securities of
Solitario. Officers, directors and greater than ten percent
shareholders are required by SEC regulation to furnish Solitario
with copies of all Section 16(a) reports they file. To our
knowledge, based solely on review of the copies of reports filed
pursuant to Section 16(a) of the Exchange Act, all filing
requirements under Section 16(a) applicable to our officers,
directors and beneficial owners of more than 10 per cent of our
common stock were timely filed with respect to fiscal year 2019.
Shareholder Communications
We
endeavor to keep all shareholders well informed as to financial
performance of the Company, primarily by means of its annual and
quarterly reports, current reports on Form 8-K and by press
releases. The Board and management of Solitario are receptive to
shareholder feedback in any form. It is Solitario's policy to
receive and respond promptly to shareholder inquiries while being
guided by legal requirements as well as the Company's policies with
respect to confidentiality and disclosure requirements.
Shareholders wishing to send communications to the Board should
write to either the Chairman of the Board or to the Corporate
Secretary at the following address: Solitario Zinc Corp., 4251
Kipling St., Suite 390, Wheat Ridge, CO 80033. All such
communication shall state the type and amount of the Company's
securities held by the shareholder and shall clearly state the
communication is intended to be shared with or directed only to the
Board, or if applicable, with a specific committee of the Board.
The Chairman of the Board or the Corporate Secretary, as
applicable, will forward such communication to the members of the
Board or a specific committee of the Board.
Indemnification of Directors
Our
Articles of Incorporation authorize our Board to the fullest extent
permitted by Colorado law as now or hereafter in effect, to
indemnify any director of Solitario. The Board is entitled to
determine the terms of such indemnification, including advancement
of expenses, and to give effect thereto through the adoption of
Bylaws, approval of agreements, or by any other manner approved by
the Board. Any amendment to or repeal of the authorization of
indemnification contained in our Articles of Incorporation shall
not adversely affect any right of a director of Solitario
thereunder with respect to any right to indemnification that arises
prior to such amendment. . Solitario’s Bylaws, subject to
certain exceptions, provide that directors are entitled to
indemnification with respect to proceedings that arise by reason of
the fact that he or she is or was a director (or officer) of
Solitario, or who, while a director (or officer) of Solitario, is
or was serving at the request of Solitario as a director, officer,
employee or agent of Solitario or another corporation or of a
partnership, joint venture, trust, other enterprise, or employee
benefit plan
13
Code of Ethics
We
adopted a Code of Business Conduct and Ethics including a Code of
Ethics applicable to the principal executive officer and the
principal financial and accounting officer of Solitario (the
"
Code of
Ethics
") on June 27, 2006, a copy of which may be found on
our website at www.solitarioxr.com and on SEDAR at www.sedar.com.
Any person who wishes to receive a copy of the Code of Ethics may
do so at no charge by written request to Investor Relations,
Solitario Zinc Corp., 4251 Kipling St, Suite 390, Wheat Ridge, CO
80033.
Board Leadership and Risk Oversight
We have
maintained separate individuals in the position of CEO and
non-executive Chairman of the Board of Solitario since our
inception. Our n
on-executive Chairman
serves as liaison between the CEO and other independent directors,
approves meeting agendas and schedules and notifies other members
of the Board of Directors regarding any significant concerns of
shareholders or interested parties of which he becomes aware. Our
non-executive Chairman presides at all Board meetings he attends
and provides advice and counsel to the CEO.
We believe the
separation of these positions, with an independent non-executive
Chairman, provides Solitario with valuable independent direction
and advice for our CEO and our other executive
officers.
Our
Board of Directors is responsible for the overall risk oversight of
Solitario. Directors are entitled to rely on management and the
advice of the Company’s outside advisors and auditors but
must at all times have a reasonable basis for such reliance. The
Board of Directors delegates the day-to-day risk management of
Solitario to the CEO and Chief Financial Officer, each of whom
periodically report to the Board of Directors and to certain
committees of the Board of Directors. The Audit Committee oversees
our financial and reporting risks, including our short-term
investing and hedging risks and these risks are discussed at no
less than one Audit Committee meeting per year, providing the Audit
Committee members the opportunity to discuss the risks and the risk
mitigation process. The Compensation Committee oversees the risks
arising from our compensation policies and practices and provides a
report to the Board of Directors regarding the compensation of the
CEO and executive officers. The Nominating Committee evaluates and
recommends individuals for nomination to the Board of Directors in
the event of a vacancy in the Board of Directors.
We are
dependent upon information technology systems in the conduct of our
operations. Our information technology systems are subject to
disruption, damage or failure from a variety of sources, including,
without limitation, computer viruses, security breaches,
cyber-attacks, natural disasters and defects in
design. Management has implemented cybersecurity safeguards to
Solitario’s systems, and periodically reports to the Audit
Committee and the full board updates and changes to its
cybersecurity systems as well as risks and any cybersecurity
incidents. Solitario has not experienced any material cybersecurity
breaches during 2019 or 2018.
We face
risks related to health epidemics and other outbreaks of
communicable diseases, which could significantly disrupt our
operations and may materially and adversely affect our business and
financial conditions. The Company’s business could be
adversely impacted by the effects of the coronavirus (COVID-19) or
other epidemics or pandemics. In December 2019, a novel strain of
the coronavirus emerged in China and the virus has now spread
globally,
including the areas we operate in - the western U.S.,
Alaska and Peru.
The extent to which the coronavirus impacts
the Company’s business, including exploration and development
activities and the market for its securities, will depend on future
developments, which are highly uncertain and cannot be predicted at
this time, and include the duration, severity and scope of the
outbreak and the actions taken to contain or treat the coronavirus
outbreak. In particular, the continued spread of the coronavirus
and travel and other restrictions established to curb the spread of
the coronavirus, could materially and adversely impact the
Company’s business including without limitation, planned
exploration programs at our Florida Canyon and Lik projects during
2020, employee health, workforce productivity, increased insurance
premiums, limitations on travel, the availability of industry
experts and personnel, the timing to process drill and other
metallurgical testing, and other factors that will depend on future
developments beyond the Company’s control, which may have a
material and adverse effect on our business, financial condition
and results of operations.
There
can be no assurance that the Company's personnel will not be
impacted by coronavirus or other pandemic diseases and that we
could ultimately see our workforce productivity reduced or incur
increased medical costs or insurance premiums as a result of these
health risks. In addition, a significant outbreak of coronavirus
could result in a widespread global health crisis that could
adversely affect global economies and financial markets
result
ing in an economic downturn that
could have an adverse effect on the demand for precious and base
metals and our future prospects.
14
Compensation of Directors
In
addition to any equity awards our directors receive the following
compensation in their capacities as directors:
|
Annual
Director retainer fee:
|
$12,000
($3,000 per quarter)
|
|
Additional Chairman
fee:
|
$4,000
($1,000 per quarter)
|
|
Additional Audit
Committee Chairman fee:
|
$3,000
($750 per quarter)
|
All the
above referenced fees were as of December 31, 2019. Director fees
are paid quarterly during the year. Fees cover participation in all
board and committee meetings, including the position of all
committee chairmen (excluding audit chairman who receives an
additional fee). A deduction may be made for any regularly
scheduled board meeting (four quarterly meetings) that is missed.
In March of 2020, the Compensation Committee reduced the Annual
Director retainer fee to $8,000 ($2,000 per quarter), the Annual
Chairman fee to $2,000 ($500 per quarter) and the Annual Audit
Committee Chairman fee to $2,000 ($500 per quarter) effective April
1, 2020.
The
following table provides summary information regarding compensation
earned by our directors during the fiscal year ended December 31,
2019:
|
Name
(1)
|
Fees earned or
paid in cash ($)
|
Stock
Awards
($)
|
Option
Awards
(2)($)
|
Non-equity
incentive plan compensation
|
Change in
Pension Value and Nonqualified Deferred Compensation
Earnings
($)
|
All Other
Compensation ($)
|
Total
($)
|
|
Mr. Labadie,
Chairman
|
16,000
|
-
|
-
|
-
|
-
|
-
|
16,000
|
|
Mr.
Atzmon
|
12,000
|
-
|
-
|
-
|
-
|
-
|
12,000
|
|
Mr.
Crumb
|
12,000
|
-
|
-
|
-
|
-
|
-
|
12,000
|
|
Mr.
Hesketh
|
12,000
|
-
|
-
|
-
|
-
|
-
|
12,000
|
|
Mr.
Labate
|
15,000
|
-
|
-
|
-
|
-
|
-
|
15,000
|
|
|
|
|
|
|
|
|
|
(1)
Mr. Herald served
as a director during 2019 and as the Chief Executive Officer. He
received a salary and other compensation for his services as an
officer of Solitario during the year ended December 31, 2019, which
are shown below under the “Summary Compensation
Table”.
(2)
There were no stock or stock option grants to
officers or directors during 2019.
EXECUTIVE OFFICERS
The
following biographies describe the business experience of our
executive officers (each being a "
Named Executive
Officer
" as defined in Item 402 of Regulation
S-K):
Christopher E.
Herald
–
See the biography
above under the heading “Identification of
Directors.”
Walter H. Hunt
(69) has been
Chief Operating Officer of Solitario since June 2008 and Vice
President - Operations and President - South American Operations of
Solitario since June 1999. He also served as Vice President - Peru
Operations from July 1994 until June 1999. Mr. Hunt was also Vice
President - Operations of Crown from 1994 until completion of the
Crown - Kinross Merger in August of 2006. Mr. Hunt has over 40
years of exploration, development and operational experience with
Anaconda Minerals, Noranda and Echo Bay Mines where he served as
Superintendent, Technical Services and Chief Geologist at Echo
Bay's Kettle River Operations. Mr. Hunt received his Master of
Science degree in geology from the Colorado School of Mines and a
Bachelor of Science degree in geology from Furman
University.
15
James R. Maronick
(64)
has served as Chief Financial Officer, Secretary and Treasurer of
Solitario since 1999 and was Chief Financial Officer of Crown from
June 1999 until completion of the Crown - Kinross Merger in August
of 2006. Prior to that, Mr. Maronick served as Vice President -
Finance and Secretary/Treasurer of Consolidated Nevada Gold Fields
Corporation from November 1994 to September 1997. Mr. Maronick
graduated from the University of Notre Dame with a Bachelor of
Business Administration in accounting and received his
Masters’ degree in Finance from the University of
Denver.
Family Relationships
There
are no family relationships among any director, executive officer,
or person nominated or chosen by the Company to become a director
of Solitario.
Business Experience
The
business experience of each of our directors is set forth above
under “Identification of Directors” and the business
experience of those executive officers who are not also our
directors is set forth above under “Executive
Officers.”
The
directorships held by each of our directors in any company with a
class of securities registered pursuant to Section 12 of the
Exchange Act, or subject to Section 15(d) of the Exchange Act or
any company registered as an investment company under the
Investment Company Act of 1940, as amended, are set forth above
under “Identification of Directors.”
Involvement in Certain Legal Proceedings
During
the past ten years, except as disclosed below regarding Mr.
Hesketh, none of the persons serving as executive officers and/or
directors of the Company has been the subject matter of any of the
following legal proceedings that are required to be disclosed
pursuant to Item 401(f) of Regulation S-K including: (a) any
bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer either at the
time of the bankruptcy or within two years prior to that time; (b)
any criminal convictions; (c) any order, judgment, or decree
permanently or temporarily enjoining, barring, suspending or
otherwise limiting his involvement in any type of business,
securities or banking activities; (d) any finding by a court, the
SEC or the U.S. Commodity Future Trading Commission to have
violated a federal or state securities or commodities law, any law
or regulation respecting financial institutions or insurance
companies, or any law or regulation prohibiting mail or wire fraud;
or (e) any sanction or order of any self-regulatory organization or
registered entity or equivalent exchange, association or entity.
Further, no such legal proceedings are believed to be contemplated
by governmental authorities against any director or executive
officer.
Mr.
Hesketh previously held the position of President, CEO and Director
of Atna Resources. Long-term weakness and declining gold prices
commencing in 2012 caused Atna Resources to experience several
years of operating losses. On November 18, 2015, Atna Resources
filed a voluntary petition for relief under Chapter 11 of Title 11
of the United States Code in the United States Bankruptcy Court for
the District of Colorado (the “
Bankruptcy
Court
”). On November 30, 2016, a motion was entered
with the Bankruptcy Court titled, “
Findings of Fact, Conclusions of Law and Order
under Section 1129 of the Bankruptcy Code and Bankruptcy Rule 3020
Confirming Debtor’s Joint Chapter 11 Plan of
Liquidation
”. The Plan of Liquidation was effective
December 31, 2016. On that date, Mr. Hesketh was terminated as an
employee and officer of Atna Resources.
16
EXECUTIVE COMPENSATION
The
following discussion provides information regarding the
compensation program for Solitario's Named Executive Officers for
2019.
Objectives of the Company’s Compensation Program
The
Compensation Committee has responsibility for approving the
compensation program for Solitario's Named Executive Officers and
acts according to a charter that has been approved by the Board and
is available on the Company website at www.solitarioxr.com. The
compensation program is designed to attract, retain and reward our
executives who contribute to Solitario's long-term success. This in
turn is intended to build value for Solitario and its shareholders.
The program is based upon three fundamental
principles:
(1)
A substantial portion of Solitario's Named Executive Officer
compensation should be performance and equity-based to achieve
alignment with shareholder interests.
This
principle is accomplished in two primary ways: first, through the
award of stock options or other equity awards contemplated in the
equity compensation plans adopted by Solitario, in an amount and
with such terms that are intended to encourage our Named Executive
Officers to promote the long-term growth and performance of
Solitario as may be reflected in the price of our Common Stock as
quoted on the TSX and the NYSE American.
Second,
this is also reflected in terms of cash compensation in the form of
cash bonuses. These bonuses are set by the Compensation Committee,
in its sole discretion, in a range of zero to 100% of base salary.
The extent to which bonuses are paid depends entirely on the extent
to which the Compensation Committee believes Solitario has met its
development, exploration, budget and shareholder goals, as set by
the Compensation Committee and the current and expected financial
condition of the Company. No bonuses were awarded to our Named
Executive Officers during 2019. The performance of the price of the
Common Stock during 2019 as quoted on the NYSE American, which the
Compensation Committee felt was impacted by a number of factors
(many of which were not in the control of our Named Executive
Officers)was a major factor in the decision of the Compensation
Committee not to award any bonuses during 2019. Similarly, the
Compensation Committee did not award any bonuses for the year ended
December 31, 2018 to any Named Executive Officer primarily based
upon their review of the performance of the price of the
Company’s Common Stock during 2018.
(2)
Solitario's compensation program for Named Executive Officers is
intended to enable the Company to compete for the best executive
talent available.
The
Compensation Committee believes shareholders are best served when
the Company can attract and retain the highest caliber executives
appropriate for a company of our size and complexity. This is done
with compensation packages we believe to be fair and competitive.
Our Named Executive Officers have served Solitario for many years.
During 2019 and 2018 the Compensation Committee reviewed published
compensation surveys and publicly available compensation
disclosures of several of our peer group companies (“Peer
Group Companies”) for which Solitario competes (or may
compete) for executive talent as the Compensation Committee
believes that each of these public companies share some attributes
of Solitario with regard to similar size, and in a similar industry
as Solitario. These Peer Group Companies included the following
companies:
|
Vista
Gold Corp.
|
Tinka
Resources Limited
|
|
Entree
Resources
|
Riverside
Resources Inc.
|
These
reviews were not used to create specific benchmarks applicable to
our Named Executive Officer compensation levels. These reviews were
used to inform the Compensation Committee of current standards in
the industry as such standards may relate, in their independent
judgment, to appropriate modifications to Solitario's existing
compensation levels. During much of 2019 and 2018, Solitario's
activities were generally focused on (i) the exploration planning
and evaluation of the potential of the Lik deposit which Solitario
acquired an interest through its acquisition of Zazu in 2017 (the
“Acquisition”); (ii) the implementation and completion
of a joint-funded drilling program with our joint venture partner
Nexa Resources Ltd. , at our Florida Canyon project and (iii) the
evaluation of mineral properties for acquisition and on junior
mining companies with mineral properties for strategic investment
in the form of potential merger, acquisition or sale. The focus of
Solitario during the two most recent fiscal years did not directly
compare in all cases to the activities of the Peer Group Companies.
Accordingly, the Compensation Committee took the difference in
focus into consideration when reviewing compensation of
Solitario’s Named Executive Officers compared to the Peer
Group Companies. Additionally, Solitario has traditionally
maintained a very minimal staff and the difference in the number of
total employees of Solitario, which currently has three employees
world-wide (excluding certain contractors), compared to the Peer
Group Companies, does not lend itself to effective use of specific
benchmarks.
17
During
2018, the Compensation Committee, in consultation with the Named
Executive Officers, in light of the then difficult financial
conditions in the junior mining sector as a result of continued low
precious and base metal prices, decided to reduce the annual
salaries of its Named Executive Officers, effective as of January
1, 2019; with the salary of Mr. Herald being reduced from $203,000
in 2018 to $166,000 for 2019, the salary of Mr. Maronick being
reduced from $152,000 to $139,000, and the salary of Mr. Hunt being
reduced from $170,000 to $140,000. In March 2020, for similar
reasons, the Compensation Committee further reduced the annual
salaries of the Named Executive Officers, beginning April 1, 2020,
with Mr. Herald’s annual salary being reduced to $138,000,
Mr. Hunt to $121,000 and Mr. Maronick to $120,000.
(3)
Solitario's compensation program for the Named Executive Officers
should be fair to the executive, the Company and all its employees
and perceived as such, both internally and externally.
The
Compensation Committee strives to create a compensation program
that promotes good corporate practice, encourages our Named
Executive Officers to perform at a high level and promotes teamwork
among our employees. The Compensation Committee takes these goals
into consideration by comparison of executive pay in relation to
all other Solitario salary costs for internal consistency, and by
comparison to both Peer Group Companies and industry salaries for
external consistency. In addition, the compensation program is
intended to enhance shareholder value and the Compensation
Committee strives to provide transparency and full disclosure to
all interested parties.
The
Compensation Committee has no authority to recover salary, bonuses
or stock option awards or other equity awards made to Named
Executive Officers. Although the Compensation Committee has the
ability to consider prior compensation (e.g. gains from prior
option grants or other equity awards) in setting current
compensation, it has no formal procedure or requirement to do so.
The Compensation Committee does not set or utilize benchmarks of
any kind to set, evaluate or allocate compensation. There have been
no actions taken or adjustments made to the process of setting
executive compensation discussed herein by the Compensation
Committee subsequent to December 31, 2019.
Key Elements of Executive Compensation
The
elements of the Company’s compensation program are intended
to balance long term and short-term compensation for its executives
and attempt to motivate executives to provide excellent leadership
and achieve Company goals by linking short-term (such as salaries
and benefits) and long-term incentives (such as equity-based
compensation) to the achievement of business objectives, thereby
aligning the interests of executives and shareholders. In addition,
the Compensation Committee recognizes the performance of the Common
Stock is often influenced by the general investment climate of the
junior mining industry and other macro-economic factors, which are
not within the control of the Named Executive Officers. The key
elements of the compensation of the Named Executive Officers are
outlined below. The Compensation Committee considers shareholder
input when setting compensation for Named Executive Officers. At
our 2019 annual meeting of shareholders, greater than 98% of the
votes cast on the advisory vote on executive compensation were in
favor of our executive compensation program. The Board of Directors
and the Compensation Committee reviewed these vote results and
determined that, given the significant level of support, no major
re-examination of our executive compensation program was necessary
at that time.
(1)
Base Salary
The
Compensation Committee attempts to provide base salary to the Named
Executive Officers that is commensurate with their review of our
Peer Group Companies. The Compensation Committee reduced the base
salary for the Named Executive Officers for 2019, as discussed
above, during its meeting in October 2018 and further reduced such
salaries in 2020, as discussed above, during its meeting in March
2020. Increases or decreases in base salary are dependent on the
Compensation Committee's evaluation of each individual Named
Executive Officer’s performance, the effect of a peer group
review, the performance of the entire Company relative to the
Company’s general goals and objectives, and the
Company’s current and projected financial resources. No Named
Executive Officer receives minimum base salary payments pursuant to
any employment agreement, or other agreement. The Compensation
Committee has authority from the Board to set the base salary at
any amount it believes is appropriate. Although the Compensation
Committee, reviews the accomplishments of the Named Executive
Officers against general goals of the Company, including planned
exploration programs, potential mineral property acquisitions,
evaluation of strategic opportunities for a corporate merger,
acquisition or sale; the Acquisition in 2017; the 2015 sale of our
former Mt. Hamilton project, corporate financing activities and
market price of Common Stock, among other things, the Compensation
Committee has full discretion to set compensation levels and has
not set specific compensation levels to specific criteria. Some of
the general criteria are discussed above.
18
(2)
Bonuses
The
Compensation Committee may provide bonuses to the Named Executive
Officers, in its sole discretion, based upon their evaluation of
the individual Named Executive Officer in light of certain
parameters, including, but not exclusively, the
following:
(i)
Operational goals
and parameters;
(ii)
The desire,
discussed above, to provide a substantial portion of compensation
based on performance;
(iii)
The performance of
the Company relative to Company goals including exploration
success;
(iv)
The share price
performance of the Common Stock.
(v)
The financial
strength of the Company, including liquid financial
assets;
(vi)
The quality of
mineral property assets, including exploration assets and mineral
properties under joint venture; and
(vii)
The financial
strength and prospects for the smaller (junior) exploration mining
industry.
In
establishing its goals for any particular year, the Compensation
Committee strives to ensure that the goals provide both an
incentive and an attainable goal that provides shareholders with
the opportunity for return on their investment while minimizing
corporate and shareholder risk to the extent possible. Although
certain targets and goals related to certain operational goals such
as potential property acquisitions and/or potential merger or
acquisition activities, if any, are confidential, the Compensation
Committee has attempted to structure these types of goals to be
reasonable and obtainable by our Named Executive Officers, without
undue risk to the assets of Solitario. Due to the nature of
Solitario's corporate activities relating to (i) the evaluation of
mineral properties for acquisition; (ii) the evaluation of
strategic opportunities for a corporate merger, acquisition or
sale; (iii) the exploration and evaluation of our Lik project in
Alaska; (iv) the exploration and evaluation of our Florida Canyon
project in Peru and (v) early-stage exploration of mineral
properties located in Peru, the goals for our Named Executive
Officers are not specifically related to traditional financial
metrics, such as revenue growth, earnings or earnings per share.
The operational targets and goals are more subjective and generally
include (i) the evaluation and negotiation of related agreements
for the acquisition of mineral property; (ii) evaluation of
strategic opportunities; (iii) land and royalty joint ventures on
our existing properties, (iv) exploration activities and success,
both on our own and through joint ventures; (v) training and
retaining employees or contractors and (vi) operational activities
including: maintaining adequate liquidity to fund future
exploration activities, financial reporting and disclosure, and
shareholder return. The Compensation Committee also evaluates the
financial strength and prospects for the junior exploration segment
of the mining industry. The Compensation Committee reviews the
annual goals with the Named Executive Officers at or near the start
of each year. The evaluation of the performance of our Named
Executive Officers, relative to the goals outlined herein, has been
and is expected to continue to be at the discretion of the
Compensation Committee. As discussed above, in 2019 the
Compensation Committee determined that no bonus was earned during
the year ended December 31, 2019, and the Named Executive Officers
would not be paid a bonus for the year ended 2019 during
2020.
(3)
Equity
The
only equity compensation our Named Executive Officers have
historically received is in the form of stock options granted
pursuant to the 2006 Stock Option Incentive Plan (the
“
2006
Plan
”) and the 2013 Solitario Exploration &
Royalty Corp. Omnibus Stock and Incentive Plan (the
“
2013
Plan
”), with the exercise price of such options equal
to the current market value of our Common Stock at the date of
grant. The 2006 Plan terminated in 2016, and no option grants have
been made since the 2006 Plan was terminated, and there are no
outstanding options under the 2006 Plan. The Compensation Committee
believes that a portion of our Named Executive Officers’
compensation should be performance based and tied to the long-term
value of the Company. The Compensation Committee also believes that
our compensation policies should be fair to our shareholders and be
focused on our long-term viability. The Compensation Committee
believes the granting of stock options or other forms of
equity-based compensation aligns the interests of the Named
Executive Officers with those of our shareholders and provides the
incentive to manage the Company from the perspective of an owner of
the Company. In addition, the Compensation Committee believes the
vesting terms of the stock options granted from the 2013 Plan,
discussed below, provide that a significant portion of the
compensation will be received at a future date, which provides a
tempered longer-term incentive for our Named Executive Officers as
well as an incentive for them to remain with the
Company.
19
The
amount of all individual grants and the grant date of the stock
options have been determined periodically by the Compensation
Committee or by the full Board. All grants to date have, as of the
date of the approval by the Compensation Committee (or the full
Board, if requested by the Compensation Committee), an option
exercise price at the fair market value equal to the quoted price
of a share of Solitario stock on the NYSE American on the date of
grant. Generally, all option grants from the 2013 Plan vest 25% on
the date of grant and the remaining options vest at 25% per year on
the anniversary of the grant over a three-year period.
On
November 1, 2018, Solitario granted 1,623,000 options under the
2013 Plan including 920,000 options to our Named Executive
Officers. The 1,623,000 options granted have a five-year life, and
exercise price of $0.31 per share and had a total grant date fair
value of $282,000, based upon a Black-Scholes model with a
volatility of 64%, and a risk-free interest rate of
3.0%.
In the
future, our officers and directors may receive additional equity-
based awards pursuant to the 2013 Plan, which may take the form of
stock options or other forms of awards including restricted stock
awards, restricted stock units or stock appreciation
rights.
Allocation between the Key Elements of Compensation
The
Compensation Committee has complete discretion in allocating total
compensation between the key elements of compensation discussed
above. Each of the individual components of compensation is
evaluated by the Compensation Committee independently and each
component is not evaluated based upon the other components. The
Compensation Committee has not developed a set formula (such as
fair value of equity compensation to equal 50% of base salary) to
allocate the elements of compensation to each individual Named
Executive Officer.
Employment Agreements
None of
our Named Executive Officers have on-going employment agreements
other than individual Change in Control Severance Benefits
Agreements, discussed under “Change in Control
Agreements” below.
Change in Control Agreements
The
Compensation Committee and Solitario consider it essential to the
best interest of its shareholders to foster the continuous
employment of key management personnel. In this regard, the
Compensation Committee and Board recognize that, as is the case
with many publicly held corporations and their subsidiaries, the
possibility of a change in control may exist and that such
possibility, and the uncertainty and questions which it may raise
among management, may result in the departure or distraction of
management personnel to the detriment of the Company and its
shareholders.
Accordingly, on
March 14, 2007, the Compensation Committee approved separate Change
in Control Severance Benefits Agreements (each a "
CIC
") for each of
the persons serving as our Named Executive Officers, Mr. Herald,
Mr. Maronick and Mr. Hunt. Each CIC provides for the payment of
severance benefits if the employment of one of the Named Executive
Officers is terminated during a period of three years following the
last day of the month in which a Change in Control of Solitario (as
defined in the CIC) occurs equal to 2.5 times the base salary of
the Named Executive Officer. In addition, any unvested stock
options held by the Named Executive Officer will vest upon the
Change in Control. The CIC provides an additional gross up for any
taxes due as a result of Excise Tax, as defined by Section 4999 of
the Internal Revenue Code of 1986, as amended (the
“Code”).
Generally, the CIC
defines a "Change in Control" as (i) a person acquiring more than
50% of the outstanding stock of the Company, (ii) the shareholders
of the Company approving a merger or acquisition whereby more than
50% of the outstanding shares held prior to the vote will be held
by a new person or corporation, (iii) the shareholders of the
Company approving the sale or disposition of substantially all of
the company's assets, or (iv) the shareholders of the Company
approving a plan of liquidation or dissolution of the
Company.
20
Benefits are
payable under each CIC after a Change in Control if the Named
Executive Officer terminates his employment for "good reason," or
is terminated by the Company, other than for "cause." "Good reason"
is generally defined as a reduction in the compensation, or level
of responsibility or forced relocation, among other things. "Cause"
is generally defined in the CIC as the conviction of a felony,
gross and willful failure to perform assigned duties, and dishonest
conduct that is intentional and materially injurious to the
Company.
Tax Implications of Executive Compensation
Under
Section 162(m) of the Code, the Company generally receives a tax
deduction for compensation on payments which total less than
$1,000,000 paid to our Named Executive Officers, unless that
compensation is performance based. The total non-performance-based
compensation for any of our Named Executive Officers did not exceed
$1,000,000 during 2019, nor do we anticipate it will exceed
$1,000,000 for the foreseeable future.
Stock Ownership Guidelines
Solitario has not
established formal stock ownership guidelines for our Named
Executive Officers. The Company's Insider Trading Policy prohibits
the Named Executive Officers, as well as other insiders, who may
have access to material inside information, from purchasing,
selling, entering into short sale transactions, or engaging in
hedging or offsetting transactions regarding the Common Stock
during periods where such persons have access to material inside
information.
Compensation Policies with Regard to Risk Management
The
Board is responsible for the overall risk management of the
Company. Solitario is subject to the inherent risks involved in the
exploration and development of mineral properties and shareholders
should carefully review Item 1A, “Risk Factors,” in our
Annual Report on Form 10-K for the year ended December 31, 2019.
However, Solitario does not have any compensation plans or
incentives for our Named Executive Officers or any employee for any
risk-taking activity or risk management activities. Solitario does
not engage in activities that have traditional incentives for
financial risk-taking activities, such as buying or selling
derivatives or other similar instruments, other than our limited
use of derivatives to reduce our exposure to our holdings of
Kinross Gold Corporation common stock and our holdings of Vendetta
Mining Corp.
Role of the Chief Executive Officer in Compensation
Decisions
Mr.
Herald, our CEO, annually reviews the performance of all other
Named Executive Officers. The performance of Mr. Herald is reviewed
by the Chairman of the Compensation Committee. The conclusions and
recommendations, which include salary, bonus and equity grants, if
any, are presented to the Compensation Committee, which has
discretion in modifying or applying any of the recommendations for
the Named Executive Officers. The Compensation Committee presents
its conclusions and recommendations to the Board for their input
and review.
Summary Compensation Table
The
following table provides summary information regarding compensation
earned by our Named Executive Officers for the fiscal years ended
December 31, 2019 and 2018:
21
SUMMARY COMPENSATION TABLE
|
Name and
Principal Position
|
|
Year
|
Salary($)
|
Bonus($)
(1)
|
Stock
Awards
($)
|
Option
Awards
($)
(2)
|
Non-equity
incentive plan compensation
|
Change in
Pension Value and Nonqualified Deferred Compensation Earnings
($)
|
All Other
ompensation ($) (3)
|
Total
($)
|
|
Mr. Herald, CEO
|
|
2019
|
166,000
|
-
|
-
|
-
|
-
|
-
|
25,000
|
191.000
|
|
|
|
2018
|
202,500
|
-
|
-
|
280,255
|
-
|
-
|
27,914
|
510,669
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Maronick,
CFO
|
|
2019
|
139,000
|
-
|
-
|
-
|
-
|
-
|
25,000
|
164,000
|
|
|
|
2018
|
151,500
|
-
|
-
|
201,509
|
-
|
-
|
28,264
|
381,273
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Hunt, COO
|
|
2019
|
140,000
|
-
|
-
|
-
|
-
|
-
|
25,000
|
165,000
|
|
|
|
2018
|
170,000
|
-
|
-
|
214,522
|
-
|
-
|
25,008
|
409,530
|
(1)
No bonus amount was
earned and paid in 2019 or 2018, respectively.
(2)
The amount
represents the grant date fair value of option awards granted
during the year in accordance with FASB ASC No. 718. See Note 10,
“Employee Stock Compensation Plans” to the consolidated
financial statements included in our Annual Report on Form 10-K for
the year ended December 31, 2019 for a discussion regarding
assumptions used to calculate fair value.
a.
The total grant
date fair value of certain conditional options, which were approved
at our 2018 annual meeting, granted to our Named Executive Officers
were as follows:
Mr.
Herald:
500,000 options;
$210,799
Mr.
Maronick:
375,000 options;
$158,099
Mr.
Hunt:
400,000 options;
$168,639
The
total grant date fair value of the options granted on November 1,
2018 to our Named Executive Officers were as follows:
Mr.
Herald:
400,000 options; $
69,456
Mr.
Maronick:
250,000 options; $
43,410
Mr.
Hunt:
270,000 options; $
45,883
(3)
Mr. Herald, Mr.
Maronick and Mr. Hunt each received $25,000 and 24,500,
respectively, for 401(K) matches during 2019 and 2018. Mr. Herald
received $4,200 for contributions to a health savings account
during 2018. Mr. Maronick received $4,200 for contributions to a
health savings account during 2018. Mr. Herald, Mr. Maronick and
Mr. Hunt received $264, $264 and $508, respectively, during 2018
for group term life insurance premium payments.
Option Exercises and Stock Vested
There
were no exercises of stock options during the years ended December
31, 2019 or 2018 by our Named Executive Officers.
22
Outstanding Equity Award at Fiscal Year End
At
December 31, 2019 the following equity awards were
outstanding:
|
|
Option
Awards
|
Stock
Awards
|
|||||||
|
Name
|
Number of
Securities Underlying Unexercised
Options(#)Exercisable
|
Number of
Securities Underlying Unexercised
Options(#)Unexercisable
|
Equity Incentive
Plan Awards: Number of Securities Underlying Unexercised Unearned
Options(#)
|
Option Exercise
Price
|
Option Expiration
Date
|
Number of Shares or
Units of Stock That Have Not
Vested(#)
|
Market Value of
Shares or Units of Stock That Have Not
Vested($)
|
Equity Incentive
Plan Awards: Number of Unearned Shares, Units or Other Rights That
Have Not Vested(#)
|
Equity Incentive
Plan Awards: Market or Payout Value of Unearned Shares, Units or
Other Rights That Have Not
Vested($)
|
|
Christopher E
Herald,
|
375,000
(1)
|
125,000
|
-
|
$
0.77
|
8/31/22
|
-
|
-
|
-
|
-
|
|
CEO
|
200,000
(2)
|
200,000
|
-
|
$
0.31
|
10/31/23
|
-
|
-
|
-
|
-
|
|
James R.
Maronick,
|
281,250
(1)
|
93,750
|
-
|
$
0.77
|
8/31/22
|
-
|
-
|
-
|
-
|
|
CFO
|
125,000
(2)
|
125,000
|
-
|
$
0.31
|
10/31/23
|
-
|
-
|
-
|
-
|
|
Walter H Hunt,
|
300,000
(1)
|
100,000
|
-
|
$
0.77
|
8/31/22
|
-
|
-
|
-
|
-
|
|
COO
|
135,000
(2)
|
135,000
|
-
|
$
0.31
|
10/31/23
|
-
|
-
|
-
|
-
|
(1)
Certain conditional
options were granted on September 1, 2017, approved at our 2018
annual meeting and vested 25% on date of approval and vest 25% on
each grant date anniversary thereafter.
(2)
Options were
granted on November 1, 2018 and vested 25% on date of grant and
vest 25% on each grant date anniversary thereafter.
23
Potential Payments Upon Termination or Change in
Control
As
noted under "Executive Compensation" in this Proxy Statement, the
Company entered into certain change in control agreements on March
14, 2007 with our Named Executive Officers. The terms of the CICs
are more fully described under "Change in Control Agreements" in
the "Executive Compensation" section above. The potential payments
to each Named Executive Officer are described below in the event of
an assumed change in control as defined in the applicable CIC as of
December 31, 2019.
|
Name
|
Salary
(1)
|
Stock option
vesting
(2)
|
Tax gross up
(3)
|
Total
|
|
Christopher E.
Herald, CEO
|
$
415,000
|
$
-
|
$
-
|
$
415,000
|
|
James R. Maronick,
CFO
|
347,500
|
-
|
-
|
347,500
|
|
Walter H, Hunt,
COO
|
350,000
|
-
|
-
|
350,000
|
(1)
Two and one-half
times base salary as of December 31, 2019. The amount in the table
above is shown as paid as a lump sum payment.
(2)
At December 31,
2019, the price of a share of our common stock as quoted on the
NYSE American was $0.30 per share. Accordingly, none of the
outstanding options held by our Named Executive Officers have any
intrinsic value from the acceleration of any of the unvested
options owned by the Named Executive Officer as of December 31,
2019.
(3)
The CIC provides
for a gross-up for taxes in the event the combined salary and all
other compensation, triggered by a change in control, results in
Excise Tax, as defined by Section 4999 of the Code. The CIC provide
for additional cash compensation to pay the Named Executive Officer
for the Excise Tax, which is 20% of all compensation in excess of
the base salary amount, when the total payments, including the fair
value from acceleration of vesting for unvested options, under the
CIC exceed three times base salary. We have estimated that no tax
gross up would have been due or payable as of December 31, 2019
because the total compensation, including the fair value from the
acceleration of any outstanding unvested options would not exceed
three times the base salary.
PAY RATIO OF CHIEF EXECUTIVE OFFICER COMPENSATION TO MEDIAN
EMPLOYEE COMPENSATION
Solitario
has determined that the 2019 annual total compensation of the
estimated median compensated employee who was employed as of
October 3, 2019, excluding the CEO, Christopher E. Herald, was
$139,000. Mr. Herald’s annual total compensation for 2019 was
$191,000. Mr. Herald’s annual total compensation is 1.4 times
(or a ratio of 1.4 to 1) that of the estimated median compensated
Solitario employee. This pay ratio is a reasonable estimate
calculated in accordance with SEC rules based on our payroll and
employment records and the methodology described
below.
As
of October 3, 2019, Solitario had four total employees and no
seasonal and temporary employees. We identified the median
compensated employee, based upon knowing the identity of each of
our employees. The compensation has been defined as base salary
excluding overtime and other incentives which provides a reasonable
estimate of compensation received. Salaries are annualized for the
employee’s employment in 2019. There were no part-time status
employees during 2019. The calculation is reported in United States
currency based upon the location and pay of Solitario employees. No
cost of living adjustment was applied.
Solitario’s
compensation practices and programs are designed to ensure
compensation programs are fair, equitable, globally compliant and
are aligned with Solitario’s business objectives. The SEC
rules for identifying the median compensated employee and
calculating the pay ratio based on that employee’s annual
total compensation allow companies to adopt a variety of
methodologies, exclusions, and assumptions that reflect their
compensation practices. As such, the pay ratio reported above may
not be comparable to the pay ratio reported by other companies,
even those in a related industry or of a similar size and scope.
Other companies may have different employment practices, regional
demographics or may utilize different methodologies and assumptions
in calculating their pay ratios.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
To our
knowledge, as of April 27, 2020, no person beneficially owns,
directly or indirectly, or exercises control or direction over,
more than five percent of our issued and outstanding Common Stock
with the exception of Zebra Holdings and Investments, S.A.R.L.,
which directly owns 3,937,873 shares representing approximately 6.8
percent of our issued and outstanding Common Stock.
24
The
following table sets forth, as of April 27, 2020, the beneficial
ownership of our outstanding Common Stock by each of our
shareholders beneficially owning more than five percent of our
outstanding shares, our directors, each Named Executive Officer and
all of our executive officers and directors as a group. Unless
otherwise indicated, the persons listed in the table below have
sole voting and investment powers with respect to the shares
indicated. Except as indicated below the mailing address for each
person is 4251 Kipling Street, Suite 390, Wheat Ridge, CO
80033.
|
Name and Address
of Beneficial Owner
|
Amount and
Nature of Beneficial Ownership*
|
Percent of Class
*
|
|
Gil Atzmon,
Director (1)
|
2,969,620
|
5.1
%
|
|
Christopher E.
Herald, CEO and Director (2)
|
2,248,250
|
3.8
%
|
|
Brian Labadie,
Director (3)
|
462,857
|
**
|
|
Joshua Crumb,
Director (4)
|
261,610
|
**
|
|
Jim Hesketh,
Director (5)
|
248,750
|
**
|
|
John Labate,
Director (6)
|
256,250
|
**
|
|
Walter H. Hunt, COO
(7)
|
900,462
|
1.5
%
|
|
James R. Maronick,
CFO (8)
|
1,047,289
|
1.8
%
|
|
All directors and
executive officers as a group (eight persons)
|
8,395,088
|
13.2
%
|
|
Zebra Holdings and
Investments, S.A.R.L
PO Box 6208, CH
– 1211 Geneva
|
3,937,873
|
6.8
%
|
* Calculated
in accordance with Rule 13d-3 under the Exchange Act and Item 403
of Regulation S-K.
**
Indicates holdings of less than 1%.
(1)
The beneficial
shares include 243,750 options held by Mr. Atzmon exercisable
within 60 days.
(2)
The beneficial
shares include 631,250 options held by Mr. Herald exercisable
within 60 days.
(3)
The beneficial
shares include 270,000 options held by Mr. Labadie exercisable
within 60 days.
(4)
The beneficial
shares include 243,750 options held by Mr. Crumb exercisable within
60 days.
(5)
The beneficial
shares include 243,750 options held by Mr. Hesketh exercisable
within 60 days.
(6)
The beneficial
shares include 246,250 options held by Mr. Labate exercisable
within 60 days.
(7)
The beneficial
shares include 485,000 options held by Mr. Hunt exercisable within
60 days.
(8)
The beneficial
shares include 456,250 options held by Mr. Maronick exercisable
within 60 days.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There
are no material interests, direct or indirect, of current
directors, executive officers, or any shareholder who beneficially
owns, directly or indirectly, more than 10% of the outstanding
shares of Common Stock, or any known associates or affiliates of
such persons, in any transaction since the beginning of the
Company’s last fiscal year or in any proposed transaction
which has materially affected or would materially affect the
Company and in which the amount involved exceeded
$120,000.
Policy Regarding Related Party Transactions
The
Board of Directors has adopted a written Related Party Transaction
Policy. Pursuant to that policy, Solitario may enter into
transactions with certain "related persons." Related persons
include the Company's executive officers, directors, 5% or more
beneficial owners of the Common Stock, immediate family members of
these persons and entities in which one of these persons has a
direct or indirect material interest. These transactions are
referred to as "related party transactions." All related party
transactions are subject to the following related party transaction
policy requirements:
●
the transaction
must be approved by disinterested members of the
Board;
●
the Audit Committee
must approve or ratify such transaction and the terms of the
transaction are comparable to that which could be attained in an
arm's-length dealing with unrelated third parties; or
●
a transaction that
involves compensation must be approved by the Compensation
Committee.
25
Director Independence
●
Solitario’s
Board has determined Mr. Atzmon, Mr. Crumb, Mr. Hesketh, Mr.
Labadie and Mr. Labate are independent members of the Board of
Directors in accordance with Section 803(A) of the NYSE American
Company Guide.
●
Mr. Labate, Mr.
Crumb and Mr. Hesketh are members of the Audit
Committee.
●
Mr. Labadie, Mr.
Labate and Mr. Hesketh are members of the Compensation
Committee.
●
Mr. Atzmon, Mr.
Labadie and Mr. Labate are members of the Nominating
Committee.
INCORPORATION BY REFERENCE
The
reports of the Compensation Committee and Audit Committee shall not
be deemed incorporated by reference by any general statement
incorporating by reference this Proxy Statement into any filing
under the Securities Act or the Exchange Act, except to the extent
we specifically incorporate this information by reference and shall
not otherwise be deemed filed under the Securities Act or the
Exchange Act.
PROPOSALS OF SHAREHOLDERS
Shareholder
proposals intended to be included in Solitario's proxy statement
for the 2021 annual meeting of Shareholders must be received by
Solitario prior to January 10, 2021 in order for the proposal to be
considered for inclusion in the proxy statement and form of proxy
relating to the 2021 annual meeting. If the date of the 2021 annual
meeting is changed by more than 30 days from June 17, 2021, the
deadline will be a reasonable time before we print and mail our
proxy materials. However, we are not required to include in our
proxy statement and form of proxy for the 2021 annual meeting any
stockholder proposal that does not meet all of the requirements for
inclusion established by the SEC in effect at the time the proposal
is received. Under Solitario’s Bylaws, in order for any
stockholder proposal that is not included in the proxy statement
and form of proxy disseminated by the Company to be brought before
the 2021 annual meeting, such proposal must be received by the
Corporate Secretary at our principal executive offices at 4251
Kipling Street, Suite 390, Wheat Ridge, CO 80033 not less than 60
days nor more than 90 days before the 2021 annual meeting; however,
if less than 70 days' notice or public disclosure of the date of
the 2021 meeting is given, the written notice must be delivered to
the Corporate Secretary no later than the close of business on the
10
th
day
after notice of the meeting was mailed or notice was publicly
disclosed, whichever is earlier. The notice must contain certain
information as to the proposal and the shareholder, including the
share ownership of the shareholder and any financial interest in
the proposal. If a timely proposal is received, the Board may
exercise any discretionary authority granted by the proxies to be
solicited on behalf of the Board in connection with such proposal
at the 2021 annual meeting.
No
shareholder proposals for the 2020 Annual Meeting had been received
by Solitario prior to the date of this Proxy
Statement.
26
OTHER BUSINESS
Solitario knows of
no other business to be presented at the meeting. If any other
business properly comes before the meeting, it is intended that the
shares represented by proxies will be voted with respect thereto in
accordance with the best judgment of the person named in the
accompanying form of proxy.
DELIVERY OF DOCUMENTS TO SHAREHOLDERS SHARING AN
ADDRESS
Only
one Proxy Statement and Annual Report is being delivered to
shareholders sharing an address unless we have received contrary
instructions from one or more of the shareholders. Upon
the written or oral request of a shareholder, we will deliver
promptly a separate copy of the Proxy Statement and Annual Report
to shareholders at a shared address to which a single copy was
delivered. Shareholders desiring to receive a separate
copy in the future may contact us by mail at 4251 Kipling Street,
Suite 390, Wheat Ridge, CO 80033 or by telephone
(303) 534-1030.
|
|
By
Order of the Board of Directors
/s/James R.
Maronick
Corporate
Secretary
April
28, 2020
Wheat
Ridge, Colorado
|
27
Appendix A
(Form of Proxy Card)
TABLE OF CONTENTS