SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial ownership of our Common Stock, as of April 13, 2020, by beneficial owners of more than five percent of our Common Stock, each of our directors and executive officers individually and all executive officers and directors as a group.
|
|
|
|
|
Name
|
Amount and Nature of Beneficial Ownership
|
|
Percent of Class (1)
|
|
SECURITY OWNERSHIP OF 5% HOLDERS
|
|
|
|
|
Gate City Capital Management, LLC / Michael Melby
|
2,463,137
|
(2)
|
10.58%
|
|
Salem Investment Counselors Inc
|
1,941,600
|
(3)
|
8.34%
|
|
Dimensional Fund Advisors LP
|
1,797,233
|
(4)
|
7.72%
|
|
Renaissance Technologies, LLC
|
1,755,263
|
(5)
|
7.54%
|
|
Ameriprise Financial Inc / Columbia Management Investment Advisors, LLC
|
1,675,461
|
(6)
|
7.19%
|
|
Grace & White Inc.
|
1,321,741
|
(7)
|
5.68%
|
|
SECURITY OWNERSHIP OF MANAGEMENT
|
|
|
|
|
William J. Barrett
|
864,676
|
(8)
|
3.71%
|
|
Stephen C. Jumper
|
245,316
|
|
1.05%
|
|
C. Ray Tobias
|
125,070
|
|
*
|
|
James K. Brata
|
70,337
|
|
*
|
|
Craig W. Cooper
|
87,252
|
|
*
|
|
Gary M. Hoover
|
84,371
|
|
*
|
|
Ted R. North
|
79,393
|
|
*
|
|
Mark A. Vander Ploeg
|
62,073
|
(9)
|
*
|
|
James W. Thomas
|
71,595
|
|
*
|
|
Michael L Klofas
|
33,833
|
|
*
|
|
Total Management Ownership
|
1,723,916
|
|
7.40%
|
|
* Indicates less than 1% of the outstanding shares of Common Stock.
|
(1)
|
|
As of April 13, 2020, there were 23,287,410 shares of Common Stock outstanding. Unless otherwise indicated, the beneficial owner has sole voting and investment power with respect to all shares listed.
|
|
(2)
|
|
As reported on Schedule 13G/A filed with the SEC on April 9, 2020. The filing person's address is 425 S. Financial Place, Suite 910A, Chicago, Illinois 60605.
|
|
(3)
|
|
As reported on Schedule 13G/A filed with the SEC on February 14, 2020. The filing person’s address is P.O. Box 25427, Winston-Salem, North Carolina 27114.
|
|
(4)
|
|
As reported on Schedule 13F-HR filed with the SEC on February 14, 2020. The filing person’s address is 6300 Bee Cave Road, Building One, Austin, TX 78746.
|
|
(5)
|
|
As reported on Schedule 13G/A filed with the SEC on February 13, 2020. The filing person’s address is 800 Third Avenue, New York, NY 10022.
|
|
(6)
|
|
As reported on Schedule 13G filed with the SEC on February 14, 2020. The shares listed have shared voting and investment power between Ameriprise Financial Inc. and Columbia Management Investment Advisers, LLC. The filing persons’ addresses are 145 Ameriprise Financial Center, Minneapolis, Minnesota 55474 and 225 Franklin St., Boston, Massachusetts 02110, respectively.
|
|
(7)
|
|
As reported on Schedule 13G/A filed with the SEC on February 3, 2020. The filing person’s address is 515 Madison Avenue, Suite 1700, New York, NY 10022.
|
|
(8)
|
|
Includes 78,166 shares of Common Stock owned by Mr. Barrett’s wife. Mr. Barrett has disclaimed beneficial ownership of these shares.
|
|
(9)
|
|
Includes 36,792 shares of Common Stock held through the Hermosa Trust.
|
2019 PAY RATIO DISCLOSURE
In accordance with Item 402(u) of Regulation S-K, promulgated by the Dodd-Frank Wall Street Reform Act and Consumer Protection Act of 2010, we calculated a reasonable estimate of the ratio of the annual total compensation of Stephen C. Jumper, our Chairman, President and Chief Executive Officer, to the annual total compensation of our median employee in 2019.
For purposes of determining our CEO pay ratio, we are permitted to use the same median employee for up to three years, provided there is no material change to the employment population or change in employee compensation arrangements that would significantly impact our pay ratio disclosure. After reviewing data related to our employees and employee compensation, we determined that there were no changes to our employee population or our employee compensation arrangements in the past year that would significantly impact our pay ratio in 2019 as compared to 2018 or 2017. When determining the median employee for the 2017 pay ratio the median fell between two employees. We selected the employee with the higher wages for the 2017 pay ratio calculation. The employee that was selected for the 2017 pay ratio was terminated during 2018 and, therefore, cannot be used for the 2018 pay ratio. The other median employee from 2017 is still employed and worked for us for all of 2018 and 2019. Therefore, in accordance with the relevant rules, we elected to use this same median employee determined in 2017 for our 2018 and 2019 pay ratio calculation.
To determine the population of our workforce, in accordance with Item 402(u), we included all full-time, part-time, temporary and seasonal employees. The date of employment we selected was December 8, 2017. We believe that the use of annualized gross wages is the best consistently applied compensation measure of our workforce, of whom the majority are hourly workers. We annualized all full-time workers who were hired during 2017. We did not exclude any employees other than Mr. Jumper from our population.
After applying the methodology described above, our median employee was a U.S. full-time hourly worker on one of our land survey crews, whose total annual compensation using the Summary Compensation Table requirements was $41,367 for the year ended December 31, 2019. Mr. Jumper’s compensation found in the Summary Compensation Table on page 18 was $643,972. Therefore, our CEO to median employee pay ratio is 16:1.
The SEC’s 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, to apply certain exclusions, and to make reasonable estimates and assumptions that reflect their employee populations and compensation practices. As a result, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies have different employee populations and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
PROPOSAL 2:
AMENDMENT TO THE COMPANY’S 2016 STOCK AND PERFORMANCE INCENTIVE PLAN
We are requesting that our shareholders vote in favor of approving the amendment to the 2016 Plan, which amendment would be reflected in an amended and restated version of the 2016 Plan. The 2016 Plan, as amended and restated, is referred to as the “Restated 2016 Plan” in this proxy statement. Upon recommendation of the Company’s Compensation Committee, the Board of Directors of the Company has adopted the Restated 2016 Plan, subject to shareholder approval.
The 2016 Plan was approved by our shareholders on May 5, 2016 and originally authorized the issuance of 1,000,000 shares of Common Stock, which authorized amount has been increased to 1,050,000 as a result of the Stock Dividend (it being understood that the Stock Dividend has been deemed to apply to all shares under all awards that were granted under the 2016 Plan prior to the Stock Dividend for purposes of maintaining records of the remaining shares of Common Stock for usance under the 2016 Plan). As of April 24, 2020, 337,869 shares of Common Stock remained available for future issuance under the 2016 plan. If the Restated 2016 Plan is approved by our shareholders, the number of shares of Common Stock authorized for issuance as long-term incentive compensation to our employees, consultants and non-employee directors will increase by 1,000,000 shares relative to the 2016 Plan. This increase will cause the total aggregate number of shares of Common Stock reserved under the Restated 2016 Plan to
be 2,050,000 shares (i.e., with such shares being comprised of the 1,050,000 shares originally reserved with respect to the 2016 Plan plus the 1,000,000 additional shares that would be reserved with respect to the Restated 2016 Plan). If the Restated 2016 Plan is approved by our shareholders, the termination date of the Restated 2016 Plan would be extended by 10 years from the date on which the Restated 2016 Plan was adopted by the Board of Directors of the Company.
A summary description of the material features of the Restated 2016 Plan is set forth below. The Restated 2016 Plan document is attached to this proxy statement as Appendix A and is incorporated by reference into this proposal.
Introduction
Purpose. The purpose of the Restated 2016 Plan is to further the interests of the Company, its subsidiaries, if any, and its shareholders by providing incentives in the form of awards to employees, consultants and non-employee directors who can contribute materially to the success of the Company and its subsidiaries. These awards are intended to recognize and reward outstanding performances and individual contributions and give participants in the Restated 2016 Plan an interest in the Company that is intended to be parallel to that of the shareholders in order to enhance the proprietary and personal interest of such participants in the Company's continued success and progress. The Restated 2016 Plan is also intended to support the Company's and its subsidiaries' ongoing efforts to attract and retain such employees, consultants and non-employee directors.
General. Awards to participants under the Restated 2016 Plan may be made in the form of stock options, stock appreciation rights, stock awards in the form of Common Stock or stock units, including restricted stock or restricted stock units, cash awards, or performance awards based on objective performance goals pre-established by the Compensation Committee (collectively "Awards").
Shares Subject to the Restated 2016 Plan. The Restated 2016 Plan provides for the award of up to 2,050,000 shares of the Company's Common Stock, all of which may be available for issuance of Awards of incentive stock options. The shares of Common Stock to be delivered under the Restated 2016 Plan may be made from (i) authorized but unissued shares of Common Stock, (ii) shares of Common Stock held in the treasury of the Company, or (iii) previously issued shares of Common Stock reacquired by the Company, including Common Stock purchased on the open market. The aggregate number of shares under the Restated 2016 Plan, the number of shares covered by each outstanding Award, the exercise price or other price of such Awards, the Fair Market Value (as defined below) or other price determinations of such Awards and the Award limitations are subject to adjustment in the event of a stock split, recapitalization or capital reorganization or certain other corporate transactions, dividends and distributions. Shares of Common Stock underlying Awards that are forfeited, terminated, settled in cash in lieu of Common Stock, exchanged for Awards that do not involve Common Stock, expire unexercised or are utilized for the payment of any exercise price or tax withholding with respect to any Award become immediately available for additional Awards under the Restated 2016 Plan.
Administration and Eligibility
Administration. The Compensation Committee generally has the authority to administer the Restated 2016 Plan; provided that the Board of Directors has such authority with respect to Awards that are granted to non-employee directors under the Restated 2016 Plan. Thus, although the summary described herein is generally limited to the Compensation Committee's administration of the Restated 2016 Plan, such summary may be applied to the Board of Directors with respect to Awards granted to non-employee directors. The Compensation Committee selects the employees and consultants to whom Awards will be granted and determines the number, type and the other terms and conditions of Awards to be granted to such individual, including, but not limited to, the term of the Awards, the effect of a leave of absence or termination of employment or service relationship of the holders of the Awards. In addition, the Compensation Committee has the power to interpret and construe the Restated 2016 Plan and the Award agreements thereunder and reconcile any inconsistency, defect or omission therein, as well as to make all other determinations, perform all acts and exercise all powers and authority necessary or advisable for administering the Restated 2016 Plan. Furthermore, the Compensation Committee, in its discretion, may accelerate vesting of an Award or waive any restriction or other provision in the Restated 2016 Plan or any Award agreement thereunder. The Compensation Committee may delegate its authority in a manner that is not contrary to applicable law.
Eligibility. All employees, non-employee directors and consultants of the Company and its subsidiaries will be eligible to receive Awards under the Restated 2016 Plan if it is approved by shareholders. No determination has been made as to which of those eligible employees, non-employee directors and consultants will receive grants under the Restated 2016 Plan, and therefore, the benefits to be allocated to any individual or to any group of employees, consultants and non-employees are not presently determinable.
Awards Agreements
Each Award may be embodied in an agreement containing such terms, conditions and limitations as determined by the Compensation Committee. Awards may be granted singly in combination or in tandem with, in replacement of, or as alternatives to, grants or rights under the Restated 2016 Plan or any other employee benefit plan of the Company. All or part of an Award may be subject to conditions established by the Compensation Committee, including continuous service with the Company, achievement of specific business objectives and other comparable measurements of performance.
Features of Awards
Employee Awards. The type of Awards to employees that may be made under the Restated 2016 Plan are as follows:
Stock Options. The Compensation Committee may grant an Award in the form of a stock option. Stock options are rights to purchase a specified number of shares of Common Stock at a specified price. In the case of an option granted to an employee, such option may be either an incentive stock option under Section 422 of the Internal Revenue Code (the "Code") or a nonqualified stock option. The Compensation Committee determines the exercise price, whether the stock option is intended to qualify as an incentive stock option under the Code and other provisions not inconsistent with the Restated 2016 Plan. The exercise price of a stock option will not be less than the "Fair Market Value" of the Common Stock subject to such option at the date of grant. "Fair Market Value" of a share of Common Stock means, as of a particular date, (i) (A) if shares of Common Stock are listed on a national securities exchange, the mean between the highest and lowest sales price per share of the Common Stock on the consolidated transaction reporting system for the principal national securities exchange on which shares of Common Stock are listed on that date, or, if there will have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported, or, at the discretion of the Compensation Committee, the price prevailing on the exchange at the time of exercise or other relevant time (as determined under procedures established by the Compensation Committee), (B) if shares of Common Stock are not so listed but are quoted by The Nasdaq Stock Market, Inc., the mean between the highest and lowest sales price per share of Common Stock reported on the consolidated transaction reporting system for The Nasdaq Stock Market, Inc., or, if there will have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported, or, at the discretion of the Compensation Committee, the price prevailing as quoted by The Nasdaq Stock Market, Inc. at the time of exercise, (C) if the Common Stock is not so listed or quoted, the mean between the closing bid and asked price on that date, or, if there are no quotations available for such date, on the last preceding date on which such quotations will be available, as reported by The Nasdaq Stock Market, Inc., or, if not reported by The Nasdaq Stock Market, Inc., by the National Quotation Bureau Incorporated or (D) if shares of Common Stock are not publicly traded, an amount determined by the Compensation Committee by taking into account all factors the Compensation Committee deems appropriate, including, without limitation, the reasonable valuation requirements of Section 409A of the Code. The term of an option will not exceed 10 years from the date of grant. Options may not be repriced and may not include provisions that reload the option upon exercise; provided that certain modifications to an option's exercise price may be made in connection with a stock split, recapitalization or capital reorganization or certain other corporate transactions.
Stock Appreciation Rights ("SARs"). The Compensation Committee may grant an Award in the form of a SAR. A SAR is a right to receive an amount equal to the excess of the Fair Market Value of one share of Common Stock on the date of exercise over the grant price of the SAR. The grant price for a SAR will not be less than the Fair Market Value of the Common Stock subject to the SAR on the date of grant. The term of the SAR will not exceed 10 years from the date of grant. SARs may not be repriced and may not include provisions that reload any SAR upon exercise; provided that certain modifications to a SAR's grant price may be made in connection with a stock split, recapitalization or capital reorganization or certain other corporate transactions.
Stock Awards. The Compensation Committee may grant stock awards. Such stock awards may be in the form of (i) restricted stock, which are grants of shares of Common Stock that are subject to restrictions that lapse upon the vesting of such Awards, (ii) Common Stock, which are grants of shares that are not subject to any restriction and (iii) restricted stock units, which are rights that entitle the grantee to receive Common Stock upon the vesting of such Awards. Such Awards may be subject to such terms, conditions and limitations, not inconsistent with the Restated 2016 Plan, as may be determined by the Compensation Committee.
Cash Awards. The Compensation Committee may grant cash awards. Cash awards are Awards denominated and payable in cash. Such Awards may be subject to such terms, conditions and limitations, not inconsistent with the Restated 2016 Plan, as may be determined by the Compensation Committee.
Performance Awards. Any Award available under the Restated 2016 Plan may be made as a performance award. A performance award is an Award that is subject to the attainment of one or more pre-established performance goals.
A performance goal may be based on one or more business criteria that apply to the participant, one or more business units, divisions or sectors of the Company, or the Company as a whole, and if so desired by the Compensation Committee, by comparison with a peer group of companies. A performance goal may include one or more of the following: increased revenue; net income measures; stock price measures; market share; earnings per share; earnings before interest, taxes, depreciation and amortization ("EBITDA"); economic value added ("EVA"); cash flow measures (including net cash flow and net cash flow before financing activities), return measures (including return on equity, return on average assets, return on capital, risk-adjusted return on capital, return on investors' capital and return on average equity); operating measures (including operating income, funds from operations, cash from operations, after-tax operating income, sales volumes, production volumes and production efficiency); expense measures (including, but not limited to, finding and development costs, overhead cost and general and administrative expense); margins; shareholder value; total shareholder return; proceeds from dispositions; production volumes; and corporate value measures (including ethics compliance, environmental and safety). Unless otherwise stated, such a performance goal need not be based upon an increase or positive result under a particular business criterion and could include, for example, maintaining the status quo or limiting economic losses (measured, in each case, by reference to specific business criteria).
In prior fiscal years, compensation in excess of $1 million paid to any one of certain key employees in a taxable year was deductible only if it was “performance-based compensation” within the meaning of Section 162(m) of the Code. The 2016 Plan permitted, but did not require, the Compensation Committee to structure any performance award as qualified performance-based compensation within the meaning of Section 162(m) of the Code. Under tax reform introduced in 2017 (the “2017 Tax Act”), effective January 1, 2018, the exception under Section 162(m) of the Code for performance-based compensation is no longer available, subject to transition relief for certain grandfathered arrangements in effect as of November 2, 2017.
Award Limits. No employee may be granted, during any calendar year, options or SARs that are exercisable for more than 100,000 shares of Common Stock. No employee may be granted, during any calendar year, (i) cash awards or other Awards that may be settled solely in cash, (ii) or stock awards, in each case, having a value determined on the grant date in excess of $750,000.
Consultant Awards. The Compensation Committee will have the sole responsibility and authority to determine the type or types of Awards to be made to a consultant under the Restated 2016 Plan and the terms, conditions and limitations applicable to such Awards.
Non-employee Director Awards. Awards to non-employee directors may be in the form of options, SARs, stock awards or performance awards. The Board of Directors may grant options to non-employee directors; provided that the options granted to non-employee directors will not be incentive stock options. The Board of Directors may grant SARs and stock awards to non-employee directors. Additional terms, conditions and limitations applicable to any SAR or stock award granted to a non-employee director pursuant to the Restated 2016 Plan, including the grant price, the term and the dates upon which they become exercisable, if the Award is an SAR, or including but not limited to rights to dividend equivalents, if the Award is a stock award, will be determined by the Board of Directors. The Board of Directors may also grant performance awards to non-employee directors. Additional terms, conditions and
limitations applicable to any performance award granted to a non-employee director pursuant to the Restated 2016 Plan, as well as performance goals and the value and amount of performance awards, will be determined by the Board of Directors. Non-employee directors may not be granted, during any fiscal year, options or SARs (including performance awards) that are exercisable for more than 100,000 shares of Common Stock. No non-employee director may be granted, during any calendar year, (i) cash awards or other Awards that may be settled solely in cash, or (ii) stock awards, in each case, having a value determined on the grant date in excess of $750,000.
Payment of Awards. Payment made to a participant pursuant to an Award may be made in the form of cash or Common Stock, or a combination thereof. The Compensation Committee may provide for the payment of dividends on shares of Common Stock granted in connection with Awards or dividend equivalents with respect to any shares of Common Stock subject to an Award that have not actually been issued under the Award; provided that in no event shall dividends or dividend equivalents be granted in connection with any option or SAR.
Change of Control. Upon a change in control, the Compensation Committee, acting in its discretion, will effect one or more of the following alternatives, which may vary among individual participants and which may vary among Awards held by any individual participant: (i) provide for the substitution of a new award or other arrangement (which, if applicable, may be exercisable for such property or stock as the Committee determines) for an Award or the assumption of the Award, (ii) provide for acceleration of the vesting and exercisability of, or lapse of restrictions, in whole or in part, with respect to, the Award and, if the transaction is a cash merger, provide for the termination of any portion of the Award that remains unexercised at the time of such transaction, or (iii) cancel any such Awards and deliver to the participants cash in an amount that the Compensation Committee will determine in its discretion is equal to the Fair Market Value of such Awards on the date of such event, which in the case of options or SARs will be the excess of the Fair Market Value of shares on such date over the exercise or grant price of such Award.
Repayment/Forfeiture of Awards. Any Award will be subject to recovery or clawback by the Company under any clawback policy adopted by the Company whether before or after the date of grant of the Award.
Duration; Plan Amendments. The Restated 2016 Plan has a term of 10 years from the date on which the Restated 2016 Plan was adopted by the Board of Directors of the Company. The Board of Directors may at any time amend, modify, suspend or terminate the Restated 2016 Plan, but in doing so cannot adversely affect any outstanding Award without the grantee's written consent or make any amendment without shareholder approval, to the extent such shareholder approval is required by applicable law or the exchange upon which the shares are traded.
Federal Income Tax Consequences
Set forth below is a brief summary of the federal income tax consequences of Awards under the Restated 2016 Plan. This summary is based upon the current provisions of the Code, existing final and proposed Treasury regulations promulgated under the Code, administrative rulings and judicial decisions now in effect, all of which are subject to change, possibly with retroactive effect. Changes in these authorities may cause the tax consequences to vary substantially from the consequences described below. We have not sought a ruling from the Internal Revenue Service, which is referred to as the "IRS," with respect to any of the tax matters discussed below, and the IRS would not be precluded from taking positions contrary to those described herein. As a result, no assurance can be given that the IRS will agree with all of the tax characterizations and the tax consequences described below. Different or additional rules may apply to participants who are subject to income tax in a foreign jurisdiction and/or are subject to state or local income tax in the United States. As a result, this summary is not a complete description of the applicable tax consequences, and it is subject to any changes in applicable tax rules. Each participant should rely on his or her own tax advisers regarding federal income and other tax treatment under the Restated 2016 Plan.
The Restated 2016 Plan will not be qualified under Section 401(a) of the Code.
Nonqualified Stock Options. An optionee will not recognize any income for federal income tax purposes upon the grant of a nonqualified stock option (i.e., an option that is not intended to comply with Section 422 of the Code). Upon exercise of a nonqualified stock option, the optionee will recognize ordinary income in an amount equal to the excess of the fair market value of the shares of Common Stock received, determined as of the date of exercise, over the exercise price paid for such shares. The basis of shares of Common Stock transferred to an optionee upon the exercise of a nonqualified stock option is the price paid for such shares plus an amount equal to any taxable income
recognized by the optionee as a result of the exercise of the option. If an optionee thereafter sells shares of Common Stock acquired upon exercise of a nonqualified stock option, any amount realized over the basis of the shares will constitute capital gain to the optionee for federal income tax purposes.
Incentive Stock Options. No income will be recognized by an optionee for federal income tax purposes upon the grant or generally, at the time of exercise of an incentive stock option (i.e., an option that is intended to comply with Section 422 of the Code). However, the exercise of an incentive stock option will result in an item of income for purposes of the "alternative minimum tax" in an amount equal to the excess of the fair market value of the transferred shares of Common Stock at the time of exercise of the option over the price paid for such shares. The basis of shares of Common Stock transferred to an optionee upon exercise of an incentive stock option is the price paid for the shares.
The optionee will recognize taxable income in the year in which the shares of Common Stock underlying the incentive stock option are sold or otherwise disposed. Sales and dispositions are divided into two categories: qualifying and disqualifying. A qualifying disposition occurs if the sale or disposition is made more than two years from the option grant date and more than one year from the exercise date. If the optionee sells or disposes of the shares of Common Stock in a qualifying disposition, any gain recognized by the participant on such sale or disposition will be a long-term capital gain, and the Company will not be entitled to an income tax deduction.
If either of the two holding periods described above is not satisfied, then a disqualifying disposition will occur. If the optionee makes a disqualifying disposition of the shares of Common Stock that have been acquired through the exercise of the incentive stock option, the optionee will include as ordinary income and the Company will be entitled to an income tax deduction (subject to the limitations described below) for the taxable year in which the sale or disposition occurs an amount equal to the lesser of: (i) the excess of the fair market value of such shares on the option exercise date over the exercise price paid for the shares or (ii) the amount realized on the sale or disposition over the exercise price paid for the shares.
SARs. The recipient will not be subject to any federal income tax consequences upon the grant of SARs. Generally, the recipient will recognize ordinary income upon the exercise of SARs in an amount equal to the amount of cash received and/or the fair market value of any shares acquired pursuant to the exercise.
Stock Awards — Restricted Stock. If the restrictions on an award of shares of restricted stock are of a nature that the shares are both subject to a substantial risk of forfeiture and are not freely transferable (within the meaning of Section 83 of the Code), the recipient will not recognize income for federal income tax purposes at the time of the Award unless the recipient affirmatively elects within 30 days after the date the restricted stock is granted to include the fair market value of the shares of Common Stock subject to the Award (as of the date of the Award), less any amount paid for the shares, in gross income for the year of the Award pursuant to Section 83(b) of the Code. In the absence of this election, the recipient will be required to include in income for federal income tax purposes on the date the shares either become freely transferable or are no longer subject to a substantial risk of forfeiture (within the meaning of Section 83 of the Code), the fair market value of the shares of restricted stock on such date, less any amount paid for the shares. If a Section 83(b) election is made, no additional income will be recognized by the recipient upon the lapse of restrictions on the restricted stock, but, if the restricted stock is subsequently forfeited, the recipient may not deduct the income that was recognized pursuant to the Section 83(b) election at the time of the receipt of the restricted stock.
Dividends paid to a recipient on shares of restricted stock before the expiration of the restricted period will be additional compensation taxable as ordinary income to the recipient, unless the recipient made an election under Section 83(b) of the Code. If the recipient has made a Section 83(b) election, the dividends will be dividend income, rather than additional compensation, to the recipient.
Stock Awards — Restricted Stock Units. There are no federal income tax consequences to the recipient upon the award of restricted stock units. Generally, the recipient will recognize ordinary income upon the transfer of shares of Common Stock (or cash if applicable) in satisfaction of an award of restricted stock units in an amount equal to the fair market value of the shares (or cash if applicable) so transferred. In addition, a recipient will generally recognize ordinary income upon the payment of any cash dividend equivalents or other cash distributions paid in relation to an award of restricted stock units in an amount equal to the cash received.
Stock Awards — Unrestricted Grants. A grant of shares of Common Stock that is not subject to vesting restrictions will result in taxable income for federal income tax purposes to the recipient at the time of grant in an amount equal to the fair market value of the shares less any amount paid by the recipient to acquire such shares.
Cash Awards. Cash awards are ordinary income to the recipient for federal income tax purposes at the time of payment. The recipient will have ordinary income equal to the amount of cash paid.
Withholding and Deductions; Limits on Deductibility; Excise Taxes
Withholding and Deductions. Generally, a participant's ordinary income is subject to applicable withholding taxes, to the extent the participant is an employee. In general, a federal income tax deduction is allowed to the Company in an amount equal to the ordinary income recognized by a participant with respect to Awards under the Restated 2016 Plan; provided that such amount constitutes an ordinary and necessary business expense of the Company, that such amount is reasonable and that the Company satisfies any withholding obligation with respect to such income.
Section 162(m). As discussed above, Section 162(m) of the Code may limit the Company's ability to deduct compensation in excess of $1 million to certain key employees subject to Section 162(m) of the Code, unless the excess amounts satisfy the requirements for (i) "qualified performance-based compensation" and (ii) certain transition relief for grandfathered arrangements in effect as of November 2, 2017.
Change of Control. The acceleration of the exercisability or the vesting of a grant or Award upon the occurrence of a change of control may result in an "excess parachute payment" within the meaning of Section 280G of the Code. A "parachute payment" occurs when an officer or highly compensated individual (or other individual subject to Section 280G) receives payments contingent upon a change of control that exceed an amount equal to three times his or her "base amount." The term "base amount" generally means the average annual compensation paid to such individual during the five-year period preceding the change of control. An "excess parachute payment" is the excess of all parachute payments made to the individual on account of a change of control over the individual's base amount. If any amount received by such individual is characterized as an excess parachute payment, the individual is subject to a 20% excise tax on the amount of the excess, and the Company is denied a deduction with respect to such excess.
Section 409A. Section 409A of the Code generally provides that any deferred compensation arrangement must satisfy specific requirements, both in operation and in form, regarding (i) the timing of payment, (ii) the advance election of deferrals and (iii) restrictions on changes to the time of payment. Failure to comply with Section 409A may result in the early taxation (plus interest) to the participant of deferred compensation and the imposition of a 20% penalty on the participant on such deferred amounts included in the participant's income. The Company intends to structure Awards under the Restated 2016 Plan in a manner that is designed to be exempt from or in compliance with Section 409A.
Recommendation and Required Affirmative Vote
The affirmative vote of the holders of a majority of our Common Stock entitled to vote and who do vote (in person (via the live audio webcast) or by proxy) at the Annual Meeting is required for approval of the proposal to approve the Restated 2016 Plan. Our Board of Directors believes that the Restated 2016 Plan is in the best interests of the Company and our shareholders.
Our Board of Directors unanimously recommends that you vote FOR the amendment to the 2016 Stock and Performance Incentive Plan.
PROPOSAL 3:
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors has selected RSM US LLP (“RSM”) for appointment as our independent registered public accounting firm for the fiscal year ending December 31, 2020, subject to ratification by the shareholders. RSM has served as our independent registered public accounting firm since fiscal year ending December 31, 2016.
Representatives of RSM are expected to be present (via the live audio webcast) at the Annual Meeting to respond to appropriate questions and will have an opportunity to make a statement if they desire to do so.
Our Board of Directors unanimously recommends that you vote FOR the appointment of RSM US LLP as our independent registered public accountants for the fiscal year ending December 31, 2020.
FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS
The following table presents the aggregate fees billed by the independent registered accounting firm RSM for professional services rendered for the audits of our annual financial statements and audit‑related fees, for the years ended December 31, 2019 and 2018, respectively:
|
|
|
|
|
|
|
|
|
2019
|
|
2018
|
Audit Fees (1)
|
|
$
|
610,000
|
|
$
|
627,000
|
All other fees (2)
|
|
|
-
|
|
|
26,700
|
Total fees
|
|
$
|
610,000
|
|
$
|
653,700
|
|
(1)
|
|
Audit fees for professional services rendered in connection with the audit of the Company’s annual financial statements for the years ended December 31, 2019 and 2018, and the reviews of the financial statements included in the Company’s quarterly reports.
|
|
(2)
|
|
All other fees consist of miscellaneous fees billed for other services.
|
The Audit Committee’s policy on pre‑approval of fees and other compensation paid to the independent registered accounting firm requires the Audit Committee to approve all services and fees of the principal independent accountant prior to commencement of any services. The Audit Committee pre‑approved fees for all audit and non‑audit services provided by the independent registered accounting firm during the years ended December 31, 2019 and 2018. All of the work performed in auditing our financial statements for the last two years by the principal independent accounting firm RSM, has been performed by their full‑time, permanent employees.
AUDIT COMMITTEE REPORT
To the Shareholders of Dawson Geophysical Company:
It is the responsibility of the members of the Audit Committee to contribute to the reliability of the Company’s financial statements. In keeping with this goal, the Board of Directors adopted a written charter for the Audit Committee, which is posted on the Company’s website at www.dawson3d.com in the “Corporate Governance” area of the “Investor Relations” section. The Audit Committee reviewed its charter during 2019 and minor updates were made and approved by the Board of Directors. The Audit Committee held six meetings during 2019. The members of the Audit Committee are independent directors.
The Audit Committee reviews management’s overview of the Company’s financial reporting process on behalf of the Board of Directors. Management has the primary responsibility for the Company’s financial statements and the reporting process, including the systems of internal controls. The primary responsibilities of the Audit Committee are to select and retain the Company’s auditors (including review and approval of the terms of engagement and fees), to review with the auditors the Company’s financial reports (and other financial information) provided to the SEC and the investing public, to prepare and publish this report and to assist the Board of Directors with oversight of the following:
|
·
|
|
integrity of the Company’s financial statements;
|
|
·
|
|
compliance by the Company with standards of business ethics and legal and regulatory requirements;
|
|
·
|
|
qualifications and independence of the Company’s independent auditors; and
|
|
·
|
|
performance of the Company’s independent auditors.
|
The Audit Committee does not provide any expert or special assurance as to the Company’s financial statements or any professional certification as to the independent auditors’ work.
In the performance of its oversight function, the Audit Committee has reviewed and discussed the quarterly and annual financial statements, including the quality of accounting principles with management and the independent accountants. The Audit Committee (i) reviewed and discussed the Company’s audited consolidated financial statements for the year ended December 31, 2019 with the Company’s management and with the Company’s independent auditors; (ii) discussed with the Company’s independent auditors the matters required to be discussed by Statement on Auditing Standards No. 61, “Communication with Audit Committees,” as currently in effect; and (iii) received the written disclosures and the letter from the Company’s independent accountants required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountants’ communications with the Audit Committee concerning independence and discussed with the Company’s independent auditors the independent auditors’ independence.
Audit and audit‑related fees billed to the Company by RSM related to their audit of the Company’s year ended December 31, 2019 included audit of the Company’s annual financial statements, the review of those financial statements included in the Company’s quarterly reports of Form 10‑Q and the audit of our internal controls over financial reporting totaled approximately $610,000.
Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board of Directors that the financial statements for the year ended December 31, 2019 be included in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2019.
|
|
April 24, 2020
|
Submitted by the Audit Committee of the Board of Directors
|
|
|
|
Ted R. North (Chairman)
|
|
William J. Barrett
|
|
Mark A. Vander Ploeg
|
|
|
PROPOSAL 4:
ADVISORY VOTE ON EXECUTIVE COMPENSATION
This advisory vote on executive compensation, referred to as the “say‑on‑pay” vote, gives shareholders the opportunity to express their views on our Named Executive Officers’ compensation, as disclosed in this Proxy Statement pursuant to Item 402 of Regulation S‑K. Shareholders may vote for or against the approval of the Company’s executive compensation, or they may abstain from voting on this proposal.
As described in detail in our Compensation Discussion and Analysis beginning on page 10, the primary objectives in designing our executive compensation program are to attract, retain and motivate the talent needed to lead and grow the Company, reward successful performance and more closely align executives’ interests with those of the Company and its shareholders. The ultimate objective of our compensation program is to improve the intrinsic value of the Company and long‑term shareholder value.
We encourage you to review the compensation tables and the narrative disclosures on compensation in this Proxy Statement. In addition, we encourage you to read the section above entitled “Compensation Discussion and Analysis,” which discusses in detail how our executive compensation program implements our compensation philosophy. The Compensation Committee and the Board of Directors believe that our executive compensation program is effective in implementing our compensation philosophy and in achieving its goals.
The Company requests shareholder approval of the compensation of the Company’s Named Executive Officers as disclosed pursuant to the SEC’s compensation disclosure rules. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our Named Executive Officers and the philosophy, policies and practices described in this proxy statement. Accordingly, we will ask our shareholders to vote “FOR” the following non‑binding resolution at the Annual Meeting:
“RESOLVED, that the shareholders approve, on an advisory basis, the compensation of the Named Executive Officers as disclosed in the Proxy Statement of the Company for the 2020 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission.”
While your vote on this proposal is advisory and will not be binding on the Company, the Board of Directors or the Compensation Committee, we value the opinion of our shareholders and will take the results of this advisory vote into account when making future decisions regarding our executive compensation program.
Our Board of Directors unanimously recommends that you vote FOR the resolution, on an advisory basis, approving the executive compensation of the Named Executive Officers.
SHAREHOLDER PROPOSALS FOR NEXT ANNUAL MEETING
The next annual meeting of the Company’s shareholders is anticipated to be held on May 4, 2021. Shareholders may submit proposals appropriate for shareholder action at the next annual meeting consistent with the regulations of the SEC. If a shareholder desires to have such proposal included in the Proxy Statement and form of proxy distributed by the Board of Directors with respect to such meeting, the proposal must be received at our principal executive offices, 508 West Wall, Suite 800, Midland, Texas 79701, Attention: Mr. James K. Brata, Secretary, no later than December 31, 2020.
In addition, our Bylaws establish advance notice procedures with regard to certain matters, including shareholder proposals not included in our Proxy Statement, to be brought before an annual meeting. In general, our corporate secretary must receive notice of any such proposal not less than 60 days nor more than 90 days prior to the anniversary date of the date on which the Company first mailed its proxy materials for the preceding annual meeting (in the case of the next annual meeting, not before January 24, 2021 and not later than February 23, 2021) at the address of our principal executive offices shown above. Such notice must include the information specified in our Bylaws.
HOUSEHOLDING
The SEC permits a single set of annual reports and proxy statements to be sent to any household at which two or more shareholders reside if they appear to be members of the same family. Each shareholder continues to receive a separate proxy card. This procedure, referred to as householding, reduces the volume of duplicate information shareholders receive and reduces mailing and printing expenses. A number of brokerage firms have instituted householding.
As a result, if you hold your shares through a broker and you reside at an address at which two or more shareholders reside, you will likely be receiving only one annual report and proxy statement unless any shareholder at that address has given the broker contrary instructions. However, if any such beneficial shareholder residing at such an address wishes to receive a separate annual report or proxy statement in the future, or if any such beneficial shareholder that elected to continue to receive separate annual reports or proxy statements wishes to receive a single annual report or proxy statement in the future, that shareholder should contact their broker or send a request to our corporate secretary at our principal executive offices, 508 West Wall, Suite 800, Midland, Texas 79701, telephone number (432) 684‑3000. We will deliver, promptly upon written or oral request to the corporate secretary, a separate copy of the 2019 Annual Report and this Proxy Statement to a beneficial shareholder at a shared address to which a single copy of the documents was delivered. Similarly, you may also contact us if you received multiple copies of such materials and would prefer to receive a single copy in the future.
OTHER MATTERS
We know of no other business which will be presented at the Annual Meeting other than as explained herein. Our Board of Directors has approved a process for collecting, organizing and delivering all shareholder communications to each of its members. To contact all directors on the Board of Directors, all directors on a committee of the Board of Directors, or an individual member or members of the Board of Directors, a shareholder may mail a written communication to: Dawson Geophysical Company, Attention: Secretary, 508 West Wall, Suite 800, Midland, Texas 79701. All communications received in the mail will be opened by our Secretary, James K. Brata, for the purpose of determining whether the contents represent a message to the Board of Directors. The contents of shareholder communications to the Board of Directors will be promptly relayed to the appropriate members. We encourage all members of the Board of Directors to attend the Annual Meeting, although we have no formal policy requiring attendance. All of the members of the Board of Directors attended our 2019 annual meeting.
On March 6, 2020, we filed with the SEC an Annual Report on Form 10‑K for the year ended December 31, 2019. The Annual Report on Form 10‑K has been provided concurrently with this Proxy Statement to all shareholders entitled to notice of, and to vote at, the Annual Meeting.
Shareholders may also obtain a copy of the Annual Report on Form 10‑K and any of our other SEC reports, free of charge, (1) from the SEC’s website at www.sec.gov, (2) from our website at www.dawson3d.com, or (3) by writing to our corporate secretary at our principal executive offices, 508 West Wall, Suite 800, Midland, Texas 79701, telephone number (432) 684‑3000. The Annual Report on Form 10‑K is not incorporated into this Proxy Statement and is not considered proxy solicitation material. Information contained on our website, other than this Proxy Statement, is not part of the proxy solicitation material and is not incorporated by reference herein.
ADDITIONAL INFORMATION ABOUT THE COMPANY
You can learn more about the Company and our operations by visiting our website at www.dawson3d.com. Among other information we have provided there, you will find:
|
·
|
|
The charters of each of our standing committees of the Board of Directors;
|
|
·
|
|
Our code of business conduct and ethics;
|
|
·
|
|
Information concerning our business, recent news releases and filings with the SEC; and
|
|
·
|
|
Information concerning our Board of Directors and shareholder relations.
|
For additional information about the Company, please refer to our 2019 Annual Report, which is being mailed with this Proxy Statement.
|
|
|
BY ORDER OF THE BOARD OF DIRECTORS
|
|
|
|
James K. Brata,
|
|
Secretary
|
APPENDIX A:
AMENDED AND RESTATED
DAWSON GEOPHYSICAL COMPANY
2016 STOCK AND PERFORMANCE INCENTIVE PLAN
Table of Contents
Page
|
|
|
ARTICLE I Introduction
|
|
1
|
ARTICLE II Objectives
|
|
1
|
ARTICLE III Definitions
|
|
1
|
Section 3.1
|
Definitions
|
1
|
ARTICLE IV Eligibility
|
|
4
|
Section 4.1
|
Employees
|
4
|
Section 4.2
|
Directors
|
4
|
Section 4.3
|
Consultants
|
4
|
ARTICLE V Common Stock Available for Awards
|
|
4
|
Section 5.1
|
Award Limitations
|
4
|
Section 5.2
|
Unissued Awards
|
5
|
ARTICLE VI Administration.
|
|
5
|
Section 6.1
|
Administration by the Committee
|
5
|
Section 6.2
|
Liability of the Committee
|
6
|
Section 6.3
|
Authority of the Board
|
6
|
Section 6.4
|
Delegation of Authority
|
6
|
ARTICLE VII Employee Awards and Consultant Awards
|
|
6
|
Section 7.1
|
Employee Awards
|
6
|
Section 7.2
|
Limitations
|
8
|
Section 7.3
|
Consultant Awards
|
9
|
ARTICLE VIII Director Awards
|
|
9
|
Section 8.1
|
Grant of Director Awards
|
9
|
Section 8.2
|
Options
|
9
|
Section 8.3
|
Stock Appreciation Rights
|
9
|
Section 8.4
|
Stock Awards
|
9
|
Section 8.5
|
Cash Awards
|
9
|
Section 8.6
|
Performance Awards
|
10
|
Section 8.7
|
Limitations
|
10
|
ARTICLE IX Change of Control
|
|
10
|
Section 9.1
|
Acceleration of Vesting
|
10
|
Section 9.2
|
Exercise Period for Options and SARs
|
10
|
ARTICLE X Non-United States Participants
|
|
10
|
ARTICLE XI Payment of Awards
|
|
11
|
Section 11.1
|
General
|
11
|
Section 11.2
|
Dividends; Dividend Equivalents
|
11
|
Section 11.3
|
Cash-out of Awards
|
11
|
ARTICLE XII Option Exercise
|
|
11
|
ARTICLE XIII Taxes
|
|
11
|
ARTICLE XIV Amendment, Modification, Suspension, or Termination of the Plan
|
12
|
ARTICLE XV Assignability
|
|
12
|
ARTICLE XVI Adjustments
|
|
12
|
Section 16.1
|
Adjustments in General
|
12
|
Section 16.2
|
Proportionate Adjustments
|
12
|
ARTICLE XVII Restrictions
|
|
13
|
ARTICLE XVIII Unfunded Plan
|
|
13
|
ARTICLE XIX Right to Employment or Service
|
|
13
|
ARTICLE XX Successors
|
|
14
|
ARTICLE XXI Governing Law
|
|
14
|
ARTICLE XXII Headings and Usage
|
|
14
|
ARTICLE XXIII Severability
|
|
14
|
ARTICLE XXIV Clawback
|
|
14
|
ARTICLE XXV Section 409A
|
|
14
|
ARTICLE XXVI Effectiveness and Term
|
|
15
|
ARTICLE I
Introduction
Effective as of March 1, 2016, the Board of Directors (the “Board”) of Dawson Geophysical Company, a Texas corporation (the “Company”) originally adopted the Dawson Geophysical Company 2016 Stock and Performance Incentive Plan (the “Original Plan”) in order to reward certain corporate employees, consultants and nonemployee directors of the Company and its Subsidiaries by providing for certain cash benefits and by enabling such persons to acquire shares of Common Stock of the Company. The Original Plan is hereby amended and restated as follows (as the “Plan”) and adopted by the Board effective as of April 24, 2020.
ARTICLE II
Objectives
The purpose of the Plan is to further the interests of the Company, its Subsidiaries and its shareholders by providing incentives in the form of Awards to certain employees, consultants and nonemployee directors who can contribute materially to the success of the Company and its Subsidiaries. Such Awards are intended to recognize and reward outstanding performance and individual contributions and give Participants in the Plan an interest in the Company that is intended to be parallel to that of the shareholders in order to enhance the proprietary and personal interest of such Participants in the Company’s success and progress. The Plan is also intended to enable the Company and its Subsidiaries to attract and retain such employees, consultants and nonemployee directors.
ARTICLE III
Definitions
Section 3.1Definitions. As used herein, the terms set forth below shall have the following meanings:
“Award” means an Employee Award, a Director Award or a Consultant Award.
“Award Agreement” means one or more Employee Award Agreement, Director Award Agreement or Consultant Award Agreement.
“Board” means the Board of Directors of the Company.
“Cash Award” means an Award denominated in cash.
“Change of Control” means, except as otherwise reflected in an Award Agreement, one or more of the following events, under which:
(a) any “person” (as such term is used in sections 13(d) and 14(d)(2) of the Exchange Act) is or becomes a beneficial owner, directly or indirectly, of securities of the Company representing twenty percent (20%) or more of the total voting power of the Company’s then outstanding securities;
(b) the individuals who were members of the Board immediately prior to a meeting of the shareholders of the Company involving a contest for the election of directors shall not constitute a majority of the Board following such election unless a majority of the new members of the Board were recommended or approved by majority vote of the members of the Board immediately prior to such shareholder meeting;
(c) the Company shall have merged into or consolidated with another corporation, or merged another corporation into the Company, on a basis whereby less than fifty percent (50%) of the total voting power of the surviving corporation is represented by shares held by former shareholders of the Company prior to such merger or consolidation; or
(d) the Company shall have sold, transferred or exchanged all, or substantially all, of its assets to another corporation or other entity or person.
Notwithstanding the paragraph above or the definition contained in an Award Agreement, in the event an Award is or becomes subject to section 409A of the Code, if the payment associated with such Award is permitted upon the occurrence of a Change of Control, the events that constitute a Change of Control shall be limited to the extent necessary to comply with the requirements of section 409A of the Code.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
“Committee” means the Compensation Committee of the Board or such other committee of the Board as is designated by the Board to administer the Plan; provided that, unless otherwise determined by the Board, the Committee shall consist solely of two (2) or more Directors, each of whom shall be a “nonemployee director” within the meaning of Rule 16b-3(b)(3) under section 16 of the Exchange Act.
“Common Stock” means Dawson Geophysical Company common stock, par value $0.01 per share.
“Company” means Dawson Geophysical Company, a Texas corporation.
“Consultant” means a person other than an Employee or a Nonemployee Director providing bona fide services to the Company or any of its Subsidiaries in a consultant, advisor, or similar capacity, as applicable; provided that, such person is a natural person and that such services are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for any securities of the Company.
“Consultant Award” means the grant of any Nonqualified Stock Option, SAR, Stock Award, Cash Award or Performance Award, whether granted singly, in combination, or in tandem, to a Consultant pursuant to such applicable terms, conditions and limitations as may be established in order to fulfill the objectives of the Plan.
“Consultant Award Agreement” means one or more agreements between the Company and a Consultant setting forth the terms, conditions and limitations applicable to a Consultant Award.
“Director” means an individual serving as a member of the Board.
“Director Award” means the grant of any Nonqualified Stock Option, SAR, Stock Award, Cash Award, or Performance Award, whether granted singly, in combination, or in tandem, to a Participant who is a Nonemployee Director pursuant to such applicable terms, conditions and limitations as may be established in order to fulfill the objectives of the Plan.
“Director Award Agreement” means one or more agreements between the Company and a Nonemployee Director setting forth the terms, conditions and limitations applicable to a Director Award.
“Dividend Equivalents” means, with respect to a Restricted Stock Unit Award, a right to receive with respect to each share of Common Stock subject to the Award an amount in cash, shares of Common Stock and/or Restricted Stock Units, as determined by the Committee in its sole discretion, equal in value to the dividends and other distributions made by the Company with respect to a share of Common Stock during the period such Award is outstanding.
“Effective Date” means the date in 2020 on which the shareholders of the Company approve of the Plan.
“Employee” means (a) an employee of the Company or any of its Subsidiaries; and (b) an individual who has agreed to become such an employee of the Company or any of its Subsidiaries and is expected to become such an employee within the following six (6) months.
“Employee Award” means the grant of any Option, SAR, Stock Award, Cash Award or Performance Award, whether granted singly, in combination, or in tandem, to an Employee pursuant to such applicable terms, conditions and limitations (including treatment as a Performance Award) as may be established in order to fulfill the objectives of the Plan.
“Employee Award Agreement” means one or more agreements between the Company and an Employee setting forth the terms, conditions and limitations applicable to an Employee Award.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Fair Market Value” of a share of Common Stock means, as of a particular date:
(a) if shares of Common Stock are listed on a national securities exchange, the mean between the highest and lowest sales price per share of the Common Stock on the consolidated transaction reporting system for the principal national securities exchange on which shares of Common Stock are listed on that date, or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported, or, at the discretion of the Committee, the price prevailing on the exchange at the time of exercise or other relevant time (as determined under procedures established by the Committee);
(b) if shares of Common Stock are not so listed but are quoted by The Nasdaq Stock Market, Inc., the mean between the highest and lowest sales price per share of Common Stock reported on the consolidated transaction reporting system for The Nasdaq Stock Market, Inc., or, if there shall have been no such sale so reported on that date, on the last preceding date on which such a sale was so reported, or, at the discretion of the Committee, the price prevailing as quoted by The Nasdaq Stock Market, Inc. at the time of exercise;
(c) if the Common Stock is not so listed or quoted, the mean between the closing bid and asked price on that date, or, if there are no quotations available for such date, on the last preceding date on which such quotations shall be available, as reported by The Nasdaq Stock Market, Inc., or, if not reported by The Nasdaq Stock Market, Inc., by the National Quotation Bureau Incorporated; or
(d) if shares of Common Stock are not publicly traded, the amount determined by the Committee in its discretion in such manner as it deems appropriate, taking into account all factors the Committee deems appropriate including, without limitation, the applicable reasonable valuation requirements under section 409A of the Code.
“Grant Date” means the date an Award is granted to a Participant pursuant to the Plan. The Grant Date for a substituted Award is the grant date of the original Award.
“Grant Price” means the price at which a Participant may exercise his or her right to receive cash or Common Stock, as applicable, under the terms of an Option or SAR Award.
“Incentive Stock Option” means an Option that is intended to comply with the requirements set forth in section 422 of the Code.
“Nonemployee Director” means an individual serving as a member of the Board who is not an Employee.
“Nonqualified Stock Option” means an Option that is not an Incentive Stock Option.
“Option” means a right to purchase a specified number of shares of Common Stock at the specified Grant Price with respect to such shares, which right may be an Incentive Stock Option or a Nonqualified Stock Option.
“Participant” means an Employee, Director or Consultant to whom an Award has been granted under the Plan.
“Performance Award” means an Award made pursuant to the Plan that is subject to the attainment of one or more Performance Goals.
“Performance Goal” means one or more organizational or individual standards under Section 7.1(f) below.
“Plan” means the Amended and Restated Dawson Geophysical Company 2016 Stock and Performance Incentive Plan, as such Plan may be amended from time to time.
“Reload” means the automatic grant of a new Option or SAR upon the exercise of an existing Option or SAR.
“Restricted Stock” means any shares of Common Stock that are restricted or subject to forfeiture provisions.
“Restricted Stock Unit” means a Stock Unit that is restricted or subject to forfeiture provisions.
“Restricted Stock Unit Award” means an award of Restricted Stock Units.
“Restriction Period” means a period of time beginning as of the Grant Date of an Award of Restricted Stock or Restricted Stock Units and ending as of the date upon which the Common Stock subject to such Award is no longer restricted or subject to forfeiture provisions.
“Stock Appreciation Right” or “SAR” means a right to receive a payment, in cash or in Common Stock (as determined by the Committee), equal to the excess of the Fair Market Value of a specified number of shares of Common Stock on the date the right is exercised over the Grant Price with respect to such shares.
“Stock Award” means an Award in the form of shares of Common Stock or Stock Units, including an award of Restricted Stock or Restricted Stock Units.
“Stock Based Award Limitations” means the limitations set forth in Section 7.2(a) and Section 7.2(b) below.
“Stock Dividend” means that certain 5% stock dividend (or 0.05 share for each share outstanding) on the outstanding shares of Common Stock approved by the Board on May 1, 2018.
“Stock Unit” means a unit evidencing the right to receive in specified circumstances one share of Common Stock or equivalent value (as determined by the Committee).
“Subsidiary” means in the case of a corporation, any corporation of which the Company directly or indirectly owns shares representing fifty percent (50%) or more of the combined voting power of the shares of all classes or series of capital stock of such corporation which have the right to vote generally on matters submitted to a vote of the shareholders of such corporation, in the case of a partnership or other business entity not organized as a corporation, any such business entity of which the Company directly or indirectly owns fifty percent (50%) or more of the voting, capital or profits interests (whether in the form of partnership interests, membership interests or otherwise), and any other corporation, partnership or other entity that is a “subsidiary” of the Company within the meaning of Rule 405 promulgated by the Securities and Exchange Commission under the Securities Act of 1933, as amended.
ARTICLE IV
Eligibility
Section 4.1Employees. All Employees are eligible for the grant of Employee Awards under the Plan in the discretion of the Committee.
Section 4.2Directors. All Nonemployee Directors are eligible for the grant of Director Awards under the Plan in the discretion of the Board.
Section 4.3Consultants. All Consultants are eligible for the grant of Consultant Awards under the Plan in the discretion of the Committee.
ARTICLE V
Common Stock Available for Awards
Section 5.1Award Limitations. Subject to the provisions of ARTICLE XVI hereof, the total number of shares of Common Stock reserved and available for issuance in connection with Awards under the Plan shall be
2,050,000 shares, all of which may be available for the issuance of Awards of Incentive Stock Options (it being understood that the Stock Dividend has been deemed to apply to all shares under all Awards that were granted under the Original Plan prior to the Stock Dividend for purposes of maintaining records of the remaining shares of Common Stock for issuance hereunder). No Award shall be granted if it shall result in the aggregate number of shares of Common Stock issued under the Plan plus the number of shares of Common Stock covered by or subject to Awards then outstanding under the Plan (after giving effect to the grant of the Award in question) to exceed the number of shares described in the preceding sentence. The shares of Common Stock to be delivered under the Plan shall be made available from (a) authorized but unissued shares of Common Stock; (b) shares of Common Stock held in the treasury of the Company; or (c) previously issued shares of Common Stock reacquired by the Company, including Common Stock purchased on the open market.
Section 5.2Unissued Awards.
(a) The number of shares of Common Stock that are the subject of Awards under the Plan that are forfeited or terminated, expire unexercised, are settled in cash in lieu of Common Stock or in a manner such that all or some of the shares covered by an Award are not issued to a Participant or are exchanged for Awards that do not involve Common Stock, shall again immediately become available for Awards hereunder. If the Grant Price or other purchase price of any Option or other Award granted under the Plan is satisfied by tendering shares of Common Stock to the Company, or if the tax withholding obligation resulting from the settlement of any such Option, SAR or other Award is satisfied by tendering or withholding shares of Common Stock, only the number of shares of Common Stock issued net of the shares of Common Stock tendered or withheld shall be deemed delivered for purposes of determining usage of shares against the maximum number of shares of Common Stock available for delivery under the Plan or any sublimit set forth above.
(b) Shares of Common Stock delivered under the Plan as an Award or in settlement of an Award issued or made: (i) upon the assumption, substitution, conversion or replacement of outstanding awards under a plan or arrangement of an entity acquired in a merger or other acquisition; or (ii) as a post-transaction grant under such a plan or arrangement of an acquired entity, shall, in each case, not reduce or be counted against the maximum number of shares of Common Stock available for delivery under the Plan, to the extent that the exemption for transactions in connection with mergers and acquisitions from the shareholder approval requirements of the Nasdaq National Market for equity compensation plans applies.
(c) The Committee may from time to time adopt and observe such rules and procedures concerning the counting of shares against the Plan maximum or any sublimit as it may deem appropriate, including rules more restrictive than those set forth above to the extent necessary to satisfy the requirements of any national stock exchange on which the Common Stock is listed or any applicable regulatory requirement or shareholder service recommendation deemed appropriate by the Committee. The Board and the appropriate officers of the Company are authorized to take from time to time whatever actions are necessary, and to file any required documents with governmental authorities, stock exchanges and transaction reporting systems to ensure that shares of Common Stock are available for issuance pursuant to Awards.
ARTICLE VI
Administration
Section 6.1Administration by the Committee.
(a) The Plan shall be administered by the Committee, except as otherwise provided herein. Subject to the provisions hereof, the Committee shall have full and exclusive power and authority to administer the Plan and to take all actions that are specifically contemplated hereby or are necessary or appropriate in connection with the administration hereof. In this regard, the Committee shall have full and exclusive power to (i) interpret and construe the Plan and the Award Agreements thereunder; (ii) adopt, amend and rescind such rules, regulations and guidelines for carrying out the Plan, as it may deem necessary or proper; (iii) determine the Employees and Consultants to whom, and the time or times at which, Employee Awards and Consultant Awards shall be granted; (iv) determine the amount of cash and/or the number of shares of
Common Stock, as applicable, that shall be the subject of each Employee Award or Consultant Award; (v) determine the terms and provisions of each Award Agreement (which need not be identical), including provisions defining or otherwise relating to (A) the term and the period or periods of Employee Awards and Consultant Awards and the extent of exercisability of Options and SARs, (B) the extent to which the transferability of Common Stock issued or transferred pursuant to any Employee Award or Consultant Award is restricted, (C) except as otherwise provided herein, the effect of termination of employment, or the service relationship with the Company, of a Participant on the Award, and (D) the effect of approved leaves of absence (consistent with any applicable regulations of the Internal Revenue Service); (vi) make determinations of Fair Market Value pursuant to the Plan; and (vii) make all other determinations, perform all other acts, and exercise all other powers and authority necessary or advisable for administering the Plan, including the delegation of those ministerial acts and responsibilities as the Committee deems appropriate. Subject to Rule 16b-3 under the Exchange Act, the Committee may correct any defect, supply any omission, or reconcile any inconsistency in the Plan, in any Employee Award or Consultant Award, or in any Award Agreement in the manner and to the extent it deems necessary or appropriate to carry the Plan into effect. Any decision of the Committee in the interpretation, construction and administration of the Plan and the Award Agreements thereunder shall lie within its sole and absolute discretion and shall be final, conclusive and binding on all parties concerned.
(b) The Committee, in its discretion, may also (i) provide for the extension of the exercisability of an Employee Award or Consultant Award; (ii) accelerate the vesting or exercisability of an Employee Award or Consultant Award; (iii) eliminate or make less restrictive any restrictions applicable to an Employee Award or Consultant Award; and (iv) waive any restriction or other provision of the Plan (insofar as such provision relates to Employee Awards or to Consultant Awards) or an Employee Award or Consultant Award, otherwise amend or modify an Employee Award or Consultant Award in any manner; provided that, the Committee may do the preceding actions in any manner that is either (A) not materially adverse to the Participant to whom such Employee Award or Consultant Award was granted, or (B) consented to by such Participant; provided further, that such actions are permissible in accordance with the requirements of applicable law, including but not limited to the compliance or exemption requirements, as applicable, of section 409A of the Code.
Section 6.2Liability of the Committee. No member of the Committee shall be liable for anything done or omitted to be done by him or her, by any member of the Committee or by any officer or employee of the Company in connection with the performance of any duties under the Plan, except for his or her own willful misconduct or as expressly provided by statute.
Section 6.3Authority of the Board. The Board shall have the same rights, powers, duties, and authority in connection with the administration of the Plan with respect to Director Awards as the Committee retains with respect to Employee Awards and Consultant Awards.
Section 6.4Delegation of Authority. The Committee may delegate its duties under the Plan (including, but not limited to, the authority to grant Awards) to such officers or employees of the Company or its Subsidiaries or such other agents as it may appoint from time to time; provided that, the Committee may not delegate its duties where such delegation would violate state corporate law, or with respect to making Awards to, or otherwise with respect to Awards granted to, individuals who are subject to section 16(b) of the Exchange Act.
ARTICLE VII
Employee Awards and Consultant Awards
Section 7.1Employee Awards. The Committee shall determine the type or types of Employee Awards to be made under the Plan and shall designate from time to time the Employees who are to be the recipients of such Awards. Each Employee Award may, in the discretion of the Committee, be embodied in an Employee Award Agreement, which shall contain such terms, conditions and limitations as shall be determined by the Committee in its sole discretion and, if required by the Committee, shall be signed by the Participant to whom the Employee Award is granted and/or signed for and on behalf of the Company. Employee Awards may consist of those Awards listed in this ARTICLE VII and may be granted singly, in combination or in tandem. Employee Awards may also be granted in
combination or in tandem with, in replacement of (subject to the last sentence of ARTICLE XIV), or as alternatives to, grants or rights under the Plan or any other employee plan of the Company or any of its Subsidiaries, including the plan of any acquired entity. All or part of an Employee Award may be subject to conditions established by the Committee, which may include, but are not limited to, continuous service with the Company and its Subsidiaries, achievement of specific business objectives, items referenced in Section 7.1(e)(ii)(B) below, and other comparable measurements of performance. Upon the termination of employment by a Participant who is an Employee, any unexercised, deferred, unvested, or unpaid Employee Awards shall be treated as set forth in the applicable Employee Award Agreement or as otherwise specified by the Committee.
(a) Options. An Employee Award may be in the form of an Option, which may be an Incentive Stock Option or a Nonqualified Stock Option. The Grant Price of an Option shall be not less than the Fair Market Value of the Common Stock subject to such Option on the Grant Date (or in the case of an Incentive Stock Option granted to an individual who owns units possessing more than ten percent (10%) of the total combined voting power of all classes of shares of the Company or its parent or any Subsidiary, one hundred ten percent (110%) of the Fair Market Value of the Common Stock subject to such Option on the Grant Date). The term of the Option shall extend no more than ten (10) years after the Grant Date. Options may not include provisions that Reload the Option upon exercise. Similarly, Options may not be repriced or otherwise modified in any way that would constitute a reduction in the Grant Price associated with such Options, except in connection with an event described in ARTICLE XVI. Subject to the foregoing provisions, the terms, conditions and limitations applicable to any Options awarded to Employees pursuant to the Plan, including the Grant Price, the term of the Options, the number of shares subject to the Options and the date or dates upon which they become exercisable, shall be determined by the Committee.
The terms of any Incentive Stock Option granted under the Plan shall comply in all respects with the provisions of section 422 of the Code. Only Employees described in clause (a) of the definition of “Employee” may receive grants of Incentive Stock Options. Incentive Stock Options shall not be granted more than ten (10) years after the earlier of the adoption of the Plan or the approval of the Plan by the Company’s shareholders. Notwithstanding the foregoing, the Fair Market Value of the Common Stock subject to an Incentive Stock Option and the aggregate Fair Market Value of the common stock of any parent or subsidiary company (within the meaning of sections 424(e) and (f) of the Code) subject to any other Incentive Stock Option of the Company or any such parent or subsidiary company that first becomes purchasable by a Participant in any calendar year may not (with respect to such Participant) exceed $100,000, or such other amount as may be prescribed under section 422 of the Code or applicable regulations or rulings from time to time. As used in the previous sentence, Fair Market Value shall be determined as of the date the Incentive Stock Options are granted. Failure to comply with this provision shall not impair the enforceability or exercisability of any Incentive Stock Option, but shall cause the excess amount of the Common Stock to be reclassified in accordance with the Code.
(b) Stock Appreciation Rights. An Employee Award may be in the form of an SAR. On the Grant Date, the Grant Price of an SAR shall be not less than the Fair Market Value of the Common Stock subject to such SAR. The holder of a tandem SAR may elect to exercise either the Option or the SAR, but not both. The exercise period for an SAR shall extend no more than ten (10) years after the Grant Date. SARs may not include provisions that Reload the SAR upon exercise. Similarly, SARs may not be repriced or otherwise modified in any way that would constitute a reduction in the Grant Price associated with such SARs, except in connection with an event described in ARTICLE XVI. Subject to the foregoing provisions, the terms, conditions and limitations applicable to any SARs awarded to Employees pursuant to the Plan, including the Grant Price, the term of any SARs, and the date or dates upon which they become exercisable, shall be determined by the Committee.
(c) Stock Awards. An Employee Award may be in the form of a Stock Award. The terms, conditions and limitations applicable to any Stock Awards granted pursuant to the Plan shall be determined by the Committee, subject to the limitations set forth below.
(d) Cash Awards. An Employee Award may be in the form of a Cash Award. The terms, conditions and limitations applicable to any Cash Awards granted pursuant to the Plan shall be determined by the Committee.
(e) Performance Awards. Any Employee Award may be in the form of a Performance Award. The terms, conditions and limitations applicable to any Performance Awards granted pursuant to the Plan shall be determined by the Committee, subject to the limitations set forth below. Any Stock Award granted as an Employee Award which is a Performance Award shall have a minimum Restriction Period of twelve (12) months from the Grant Date; provided that, the Committee may provide for earlier vesting upon a termination of employment by reason of death, disability, layoff, retirement or Change of Control. The Committee shall set Performance Goals in its discretion which, depending on the extent to which they are met, will determine the value and/or amount that will be paid out to the Participant under a Performance Award and/or the portion of a Performance Award that may be exercised.
(f) Performance Goals. Performance Awards shall be based on achievement of Performance Goals and be subject to such terms, conditions and restrictions as the Committee or its delegate shall determine. A Performance Goal may include one or more of the following:
1.Increased revenue;
2.Net income measures (including but not limited to income after capital costs and income before or after taxes);
3.Stock price measures (including but not limited to growth measures);
4.Market share;
5.Earnings per share (actual or targeted growth);
6.Earnings before interest, taxes, depreciation, and amortization (“EBITDA”);
7.Economic value added (“EVA”);
8.Cash flow measures (including but not limited to net cash flow and net cash flow before financing activities);
9.Return measures (including but not limited to return on equity, return on average assets, return on capital, risk-adjusted return on capital, return on investors’ capital and return on average equity);
10.Operating measures (including operating income, funds from operations, cash from operations, after-tax operating income, sales volumes, production volumes, and production efficiency);
11.Expense measures (including but not limited to finding and development costs, overhead cost and general and administrative expense);
12.Margins;
13.Shareholder value;
14.Total shareholder return;
15.Proceeds from dispositions;
16.Production volumes;
17.Total market value; and
18.Corporate values measures (including ethics compliance, environmental, and safety).
Unless otherwise stated, a Performance Goal need not be based upon an increase or positive result under a particular business criterion and could include, for example, maintaining the status quo or limiting economic losses (measured, in each case, by reference to specific business criteria).
Section 7.2Limitations. Notwithstanding anything to the contrary contained in the Plan, the following limitations shall apply to any Employee Awards made hereunder:
(a) no Participant may be granted, during any calendar year, Employee Awards consisting of Options or SARs (including Options or SARs that are granted as Performance Awards) that are exercisable for more than 100,000 shares of Common Stock);
(b) no Participant may be granted, during any calendar year, Stock Awards (including Stock Awards that are granted as Performance Awards) having a value determined on the Grant Date in excess of $750,000; and
(c) no Participant may be granted, during any calendar year, Cash Awards or other Awards that may be settled solely in cash having a value determined on the Grant Date in excess of $750,000.
Section 7.3Consultant Awards. Subject to the limitations described in this ARTICLE VII, the Committee shall have the sole responsibility and authority to determine the type or types of Consultant Awards to be made under the Plan and the terms, conditions and limitations applicable to such Awards.
ARTICLE VIII
Director Awards
Section 8.1Grant of Director Awards. The Board may grant Director Awards to Nonemployee Directors from time to time in accordance with this ARTICLE VIII. Director Awards may consist of those Awards listed in this ARTICLE VIII and may be granted singly, in combination, or in tandem. Each Director Award may, in the discretion of the Board, be embodied in a Director Award Agreement, which shall contain such terms, conditions and limitations as shall be determined by the Board in its sole discretion and, if required by the Board, shall be signed by the Participant to whom the Director Award is granted and/or signed for and on behalf of the Company.
Section 8.2Options. A Director Award may be in the form of an Option; provided that, Options granted as Director Awards shall not be Incentive Stock Options. The Grant Price of an Option shall be not less than the Fair Market Value of the Common Stock subject to such Option on the Grant Date. In no event shall the term of the Option extend more than ten (10) years after the Grant Date. Options may not include provisions that Reload the Option upon exercise. Similarly, Options may not be repriced or otherwise modified in any way that would constitute a reduction in the Grant Price associated with such Options, except in connection with an event described in ARTICLE XVI. Subject to the foregoing provisions, the terms, conditions and limitations applicable to any Options awarded to Nonemployee Directors pursuant to this ARTICLE VIII, including the Grant Price, the term of the Options, the number of shares subject to the Option and the date or dates upon which they become exercisable, shall be determined by the Board.
Section 8.3 Stock Appreciation Rights. A Director Award may be in the form of an SAR. On the Grant Date, the Grant Price of an SAR shall be not less than the Fair Market Value of the Common Stock subject to such SAR. The holder of a tandem SAR may elect to exercise either the Option or the SAR, but not both. The exercise period for an SAR shall extend no more than ten (10) years after the Grant Date. SARs may not include provisions that Reload the SAR upon exercise. Similarly, SARs may not be repriced or otherwise modified in any way that would constitute a reduction in the Grant Price associated with such SARs, except in connection with an event described in ARTICLE XVI. Subject to the foregoing provisions, the terms, conditions and limitations applicable to any SARs awarded to Nonemployee Directors pursuant to the Plan, including the Grant Price, the term of any SARs, and the date or dates upon which they become exercisable, shall be determined by the Board.
Section 8.4Stock Awards. A Director Award may be in the form of a Stock Award. Any terms, conditions and limitations applicable to any Stock Awards granted to a Nonemployee Director pursuant to the Plan, including but not limited to rights to Dividend Equivalents, shall be determined by the Board.
Section 8.5Cash Awards. A Director Award may be in the form of a Cash Award. Any terms, conditions and limitations applicable to any Cash Awards granted to a Nonemployee Director pursuant to the Plan shall be determined by the Board.
Section 8.6Performance Awards. Without limiting the type or number of Director Awards that may be made under the other provisions of the Plan, a Director Award may be in the form of a Performance Award. Any additional terms, conditions and limitations applicable to any Performance Awards granted to a Nonemployee Director pursuant to the Plan shall be determined by the Board. The Board shall set Performance Goals in its discretion which, depending on the extent to which they are met, will determine the value and/or amount of Performance Awards that will be paid out to the Nonemployee Director.
Section 8.7Limitations. Notwithstanding anything to the contrary contained in the Plan the following limitations shall apply to any Director Awards made hereunder:
(a) no Participant may be granted, during any fiscal year, Director Awards consisting of Options or SARs (including Options or SARs that are granted as Performance Awards) that are exercisable for more than 100,000 shares of Common Stock;
(b) no Participant may be granted, during any fiscal year, Director Awards consisting of Stock Awards (including Stock Awards that are granted as Performance Awards) having a value determined on the Grant Date in excess of $750,000; and
(c) no Participant may be granted, during any calendar year, Cash Awards or other Awards that may be settled solely in cash having a value determined on the Grant Date in excess of $750,000.
ARTICLE IX
Change of Control
Section 9.1Acceleration of Vesting. Upon a Change of Control and except as otherwise provided in an Award Agreement, the Committee, acting in its sole discretion without the consent or approval of any Participant, shall affect one or more of the following alternatives, which may vary among individual Participants and which may vary among Awards held by any individual Participant:
(a) provide for the substitution of a new Award or other arrangement (which, if applicable, may be exercisable for such property or stock as the Committee determines) for an Award or the assumption of the Award, regardless of whether in a transaction to which section 424(a) of the Code applies;
(b) provide for acceleration of the vesting and exercisability of, or lapse of restrictions, in whole or in part, with respect to, the Award and, if the transaction is a cash merger, provide for the termination of any portion of the Award that remains unexercised at the time of such transaction; or
(c) cancel any such Award and deliver to the Participant cash in an amount that the Committee shall determine in its sole discretion is equal to the fair market value of such Award on the date of such event, which in the case of Options or Stock Appreciation Rights shall be the excess of the Fair Market Value of Shares on such date over the Grant Price of such Award.
Section 9.2Exercise Period for Options and SARs. In the event of a Change of Control, outstanding Options and SARs shall remain exercisable under clause (b) of Section 9.1 until the earlier of (a) the expiration of the term of the Award; or (b) if the Participant should die before the expiration of the term of the Award, until the earlier of (i) the expiration of the term of the Award or (ii) two (2) years following the date of the Participant’s death.
ARTICLE X
Non-United States Participants
The Committee may grant Awards to persons outside the United States under such terms and conditions as, in the judgment of the Committee, may be necessary or advisable to comply with the laws of the applicable foreign jurisdictions and, to that end, may establish sub-plans, modified Option exercise procedures and other terms and procedures. Notwithstanding the above, no actions may be taken by the Committee, and no Awards shall be granted, that would violate the Exchange Act, the Code, any securities law, any governing statute, or any other applicable law.
ARTICLE XI
Payment of Awards
Section 11.1General. Payment made to a Participant pursuant to an Award may be made in the form of cash or Common Stock, or a combination thereof.
Section 11.2Dividends; Dividend Equivalents. Rights to dividends or Dividend Equivalents may, as applicable, be extended to and made part of any Stock Award, subject to such terms, conditions and restrictions as the Committee may establish, including such terms, conditions and restrictions as may be necessary to ensure that the Stock Awards do not provide for the deferral of compensation within the meaning of, or otherwise violate, section 409A of the Code; provided that, no such dividends or Dividend Equivalents shall be paid with respect to unvested Performance Awards. The Committee may also establish rules and procedures for the crediting of interest on deferred cash payments, dividends or Dividend Equivalents. Dividends and/or Dividend Equivalents shall not be made part of any Options or SARs.
Section 11.3Cash-out of Awards. At the discretion of the Committee, an Award that is an Option or SAR may be settled by a cash payment equal to the difference between the Fair Market Value per share of Common Stock on the date of exercise and the Grant Price of the Award, multiplied by the number of shares with respect to which the Award is exercised. With respect to all Awards other than Options or SARs, at the discretion of the Board or the Committee, as applicable, such Awards may be settled by a cash payment in an amount that the Board or the Committee, as applicable, shall determine in its sole discretion is equal to the fair market value of such Awards.
ARTICLE XII
Option Exercise
The price at which shares of Common Stock may be purchased under an Option shall be paid in full at the time of exercise in cash or, if permitted by the Committee and elected by the Participant, the Participant may purchase such shares by means of the Company withholding shares of Common Stock otherwise deliverable on exercise of the Award or tendering Common Stock or surrendering another Award, including Restricted Stock, valued at Fair Market Value on the date of exercise, or any combination thereof. The Committee, in its sole discretion, shall determine acceptable methods for Participants to tender Common Stock or other Awards. The Committee may provide for procedures to permit the exercise or purchase of such Awards by use of the proceeds to be received from the sale of Common Stock issuable pursuant to an Award (including cashless exercise procedures approved by the Committee involving a broker or dealer approved by the Committee). Unless otherwise provided in the applicable Award Agreement, in the event shares of Restricted Stock are tendered as consideration for the exercise of an Option, a number of the shares issued upon the exercise of the Option, equal to the number of shares of Restricted Stock used as consideration therefore, shall be subject to the same restrictions as the Restricted Stock so submitted as well as any additional restrictions that may be imposed by the Committee. The Committee may adopt additional rules and procedures regarding the exercise of Options from time to time; provided that, such rules and procedures are not inconsistent with the provisions of this ARTICLE XII.
ARTICLE XIII
Taxes
The Company or its designated third party administrator shall have the right to deduct applicable taxes from any Award payment and withhold, at the time of delivery or vesting of cash or shares of Common Stock under the Plan, an appropriate amount of cash or number of shares of Common Stock or a combination thereof for payment of taxes or other amounts required by law or to take such other action as may be necessary in the opinion of the Company to satisfy all obligations for withholding of such taxes. The Committee may also permit withholding to be satisfied by the transfer to the Company of shares of Common Stock theretofore owned by the holder of the Employee Award with respect to which withholding is required. If shares of Common Stock are used to satisfy tax withholding, such shares shall be valued based on the Fair Market Value when the tax withholding is required to be made. The Committee may provide for loans, to the extent not otherwise prohibited by law, on either a short-term or demand basis, from the Company to a Participant who is an Employee or Consultant to permit the payment of taxes subject to and required by law.
ARTICLE XIV
Amendment, Modification, Suspension, or Termination of the Plan
The Board may amend, modify, suspend, or terminate the Plan for the purpose of meeting or addressing any changes in legal requirements or for any other purpose permitted by law, except that: (a) no amendment or alteration that would materially and adversely affect the rights of any Participant under any Award previously granted to such Participant shall be made without the consent of such Participant; and (b) no amendment or alteration shall be effective prior to its approval by the shareholders of the Company to the extent such approval is required by applicable legal requirements or the applicable requirements of the securities exchange on which the Company’s Common Stock is listed.
ARTICLE XV
Assignability
Unless otherwise determined by the Committee and provided in the Award Agreement or the terms of the Award, no Award or any other benefit under the Plan shall be assignable or otherwise transferable except by will, by beneficiary designation, or by the laws of descent and distribution or pursuant to a qualified domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended, or the rules thereunder. In the event that a beneficiary designation conflicts with an assignment by will or the laws of descent and distribution, the beneficiary designation will prevail. The Committee may prescribe and include in applicable Award Agreements or the terms of the Awards other restrictions on transfer. Any attempted assignment of an Award or any other benefit under the Plan in violation of this ARTICLE XV shall be null and void.
ARTICLE XVI
Adjustments
Section 16.1Adjustments in General. The existence of outstanding Awards shall not affect in any manner the right or power of the Company or its shareholders to make or authorize any or all adjustments, recapitalizations, reorganizations, or other changes in the capital stock of the Company or its business or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stock (whether or not such issue is prior to, on a parity with or junior to the existing Common Stock) or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding of any kind, whether or not of a character similar to that of the acts or proceedings enumerated above.
Section 16.2Proportionate Adjustments.
(a) In the event of any subdivision or consolidation of outstanding shares of Common Stock, declaration of a dividend payable in shares of Common Stock or other stock split, then (i) the number of shares of Common Stock reserved under the Plan; (ii) the number of shares of Common Stock available under the Plan for Incentive Stock Options and Stock Awards; (iii) the number of shares of Common Stock covered by outstanding Awards in the form of Common Stock or units denominated in Common Stock; (iv) the exercise or other price in respect of such Awards; (v) the Stock Based Award Limitations; and (vi) the appropriate Fair Market Value and other price determinations for such Awards shall each be proportionately adjusted by the Committee to reflect such transaction. In the event of any other recapitalization or capital reorganization of the Company, any consolidation or merger of the Company with another corporation or entity, the adoption by the Company of any plan of exchange affecting the Common Stock or any distribution to holders of Common Stock of securities or property (other than normal cash dividends or dividends payable in Common Stock), the Committee shall make appropriate adjustments to (A) the number of shares of Common Stock covered by Awards in the form of Common Stock or units denominated in Common Stock, (B) the exercise or other price in respect of such Awards, (C) the appropriate Fair Market Value and other price determinations for such Awards, (D) the number of shares of Common Stock available under the Plan for Incentive Stock Options and Stock Awards, and (E) the Stock Based Award Limitations to give effect to such transaction; provided that, such adjustments shall only be such as are necessary to maintain the
proportionate interest of the holders of the Awards and preserve, without exceeding, the value of such Awards.
(b) In the event of a corporate merger, consolidation, acquisition of property or stock, separation, reorganization or liquidation, the Committee may make such adjustments to Awards or other provisions for the disposition of Awards as it deems equitable, and shall be authorized, in its discretion, to (i) provide for the substitution of a new Award or other arrangement (which, if applicable, may be exercisable for such property or stock as the Committee determines) for an Award or the assumption of the Award (and for awards not granted under the Plan), regardless of whether in a transaction to which section 424(a) of the Code applies; (ii) provide, prior to the transaction, for the acceleration of the vesting and exercisability of, or lapse of restrictions with respect to, the Award and, if the transaction is a cash merger, provide for the termination of any portion of the Award that remains unexercised at the time of such transaction; (iii) provide for the acceleration of the vesting and exercisability of an Award and the cancellation thereof in exchange for such payment as the Committee, in its sole discretion, determines is a reasonable approximation of the value thereof; (iv) cancel any Awards and direct the Company to deliver to the Participants who are the holders of such Awards cash in an amount that the Committee shall determine in its sole discretion is equal to the Fair Market Value of such Awards as of the date of such event, which, in the case of any Option, shall be on a per share basis, the amount equal to the excess of the Fair Market Value of a share as of such date over the per‑share exercise price for such Option (for the avoidance of doubt, if such exercise price is less than such Fair Market Value, the Option may be canceled for no consideration); or (v) cancel Awards that are Options and give the Participants who are the holders of such Awards notice and opportunity to exercise prior to such cancellation.
ARTICLE XVII
Restrictions
No Common Stock or other form of payment shall be issued with respect to any Award unless the Company shall be satisfied based on the advice of its counsel that such issuance will be in compliance with applicable federal and state securities laws. Certificates evidencing shares of Common Stock delivered under the Plan (to the extent that such shares are so evidenced) may be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the rules, regulations and other requirements of the Securities and Exchange Commission, any securities exchange or transaction reporting system upon which the Common Stock is then listed or to which it is admitted for quotation and any applicable federal or state securities law. The Committee may cause a legend or legends to be placed upon such certificates (if any) to make appropriate reference to such restrictions.
ARTICLE XVIII
Unfunded Plan
The Plan shall be unfunded. Although bookkeeping accounts may be established with respect to Participants under the Plan, any such accounts shall be used merely as a bookkeeping convenience, including bookkeeping accounts established by a third party administrator retained by the Company to administer the Plan. The Company shall not be required to segregate any assets for purposes of the Plan or Awards hereunder, nor shall the Company, the Board or the Committee be deemed to be a trustee of any benefit to be granted under the Plan. Any liability or obligation of the Company to any Participant with respect to an Award under the Plan shall be based solely upon any contractual obligations that may be created by the Plan and any Award Agreement or the terms of the Award, and no such liability or obligation of the Company shall be deemed to be secured by any pledge or other encumbrance on any property of the Company. Neither the Company nor the Board nor the Committee shall be required to give any security or bond for the performance of any obligation that may be created by the Plan.
ARTICLE XIX
Right to Employment or Service
Nothing in the Plan or an Award Agreement shall interfere with or limit in any way the right of the Company or its Subsidiaries to terminate any Participant’s employment or other service relationship at any time, or confer upon any Participant any right to continue in the capacity in which he or she is employed or otherwise serves the Company or its Subsidiaries.
ARTICLE XX
Successors
All obligations of the Company under the Plan with respect to Awards granted hereunder shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business and/or assets of the Company.
ARTICLE XXI
Governing Law
The Plan and all determinations made and actions taken pursuant hereto, to the extent not otherwise governed by mandatory provisions of the Code or the securities laws of the United States, shall be governed by and construed in accordance with the laws of the State of Texas.
ARTICLE XXII
Headings and Usage
The headings in the Plan are inserted for convenience of reference only and shall not affect the meaning or interpretation of the Plan. Words used in the Plan in the singular shall include the plural and vice versa, and words of one gender shall be construed to include the other gender and the neuter, in each case as the context requires.
ARTICLE XXIII
Severability
If any provision of the Plan is held to be illegal or invalid for any reason, the illegality or invalidity shall not affect the remaining provisions hereof, but such provision shall be fully severable and the Plan shall be construed and enforced as if the illegal or invalid provision had never been included herein. If any of the terms or provisions of the Plan or any Award Agreement conflict with the requirements of Rule 16b-3 under the Exchange Act (as those terms or provisions are applied to Participants who are subject to section 16(b) of the Exchange Act) or section 422 of the Code (with respect to Incentive Stock Options), then those conflicting terms or provisions shall be deemed inoperative to the extent they so conflict with the requirements of Rule 16b-3 (unless the Board or the Committee, as appropriate, has expressly determined that the Plan or such Award should not comply with Rule 16b-3) or section 422 of the Code. With respect to Incentive Stock Options, if the Plan does not contain any provision required to be included herein under section 422 of the Code, that provision shall be deemed to be incorporated herein with the same force and effect as if that provision had been set out at length herein; provided that, to the extent any Option that is intended to qualify as an Incentive Stock Option cannot so qualify, that Option (to that extent) shall be deemed as a Nonqualified Stock Option not subject to section 422 of the Code for all purposes of the Plan.
ARTICLE XXIV
Clawback
Notwithstanding any other provisions in the Plan, any Award shall be subject to recovery or clawback by the Company under any clawback policy adopted by the Company whether before or after the date of grant of the Award.
ARTICLE XXV
Section 409A
Awards made under the Plan are intended to comply with or be exempt from section 409A of the Code, and ambiguous provisions hereof, if any, shall be construed and interpreted in a manner consistent with such intent.
Unless the Committee provides otherwise in an Award Agreement, each Restricted Stock Unit Award or Cash Award (or portion thereof if the Award is subject to a vesting schedule) shall be settled no later than the 15th day of the third month after the end of the first calendar year in which the Award (or such portion thereof) is no longer subject to a “substantial risk of forfeiture” within the meaning of section 409A of the Code. If the Committee determines that a
Restricted Stock Unit Award or Cash Award is intended to be subject to section 409A of the Code, the applicable Award Agreement shall include terms that are designed to satisfy the requirements of section 409A of the Code.
If a Participant is identified by the Company as a “specified employee” within the meaning of section 409A(a)(2)(B)(i) of the Code on the date on which the Participant has a “separation from service” (other than due to death) within the meaning of Treasury Regulation § 1.409A 1(h), any Award payable or settled on account of a separation from service that is deferred compensation subject to section 409A of the Code shall be paid or settled on the earliest of (a) the first business day following the expiration of six (6) months from the Participant’s separation from service; (b) the date of the Participant’s death; or (c) such earlier date as complies with the requirements of section 409A of the Code.
ARTICLE XXVI
Effectiveness and Term
The Plan, as approved by the Board on April 24, 2020, shall be effective as of the Effective Date. The Plan shall continue in effect for a term of ten (10) years commencing on the Effective Date, unless earlier terminated by action of the Board, and no further Awards may be granted under the Plan after the tenth (10th) anniversary of the Effective Date or, if earlier, termination by action of the Board, except as to Awards then outstanding under the Plan. Such outstanding Awards shall remain in effect until they have been exercised or terminated, or have expired.
Notwithstanding the foregoing, the adoption of the Plan is expressly conditioned upon the approval by the holders of a majority of shares of Common Stock present, or represented, and entitled to vote at a meeting of the Company’s shareholders at the Company’s 2020 annual shareholders’ meeting to be held on June 9, 2020, or any adjournment or postponement thereof. If the shareholders of the Company should fail to so approve the Plan on such date, the Plan shall not be of any force or effect.
The Plan is the successor to the Amended and Restated Dawson Geophysical Company 2006 Stock and Performance Incentive Plan, effective as of February 11, 2015 (the “Legacy Dawson Plan”) and the Amended and Restated 2006 Stock Awards Plan of Dawson Geophysical Company (formerly known as the 2006 Stock Awards Plan of TGC Industries, Inc.), effective as of February 11, 2015 (the “Legacy TGC Plan”). As of May 5, 2016 (i.e., the date on which the shareholders of the Company approved of the Original Plan), no new Awards have been or may be granted under the Legacy Dawson Plan or the Legacy TGC Plan. Awards granted pursuant to the Legacy Dawson Plan and the Legacy TGC Plan shall continue to be administered in accordance with the terms of the Legacy Dawson Plan and the Legacy TGC Plan, as applicable, provided that the Committee or its delegates responsible for administering this Plan shall constitute the Committee or its delegates under the Legacy Dawson Plan and the Legacy TGC Plan, as applicable.
|
|
|
VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. DAWSON GEOPHYSICAL CO ATTN: JAMES K. BRATA During The Meeting - Go to www.virtualshareholdermeeting.com/DWSN2020 508 WEST WALL, SUITE 800 MIDLAND, TX 79701-5010 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. For All Withhold All For All Except To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the The Board of Directors recommends you vote FOR the following: nominee(s) on the line below. 0 0 0 1. Election of Directors Nominees 01) Craig W. Cooper 02) Stephen C. Jumper 03) Michael L. Klofas 04) Ted R. North 05) Mark A. Vander Ploeg The Board of Directors recommends you vote FOR proposals 2, 3 and 4. For 0 Against 0 Abstain 0 2. Proposal to approve an amendment to the Company's 2016 Stock and Performance Incentive Plan. NOTE: The undersigned acknowledges receipt of the Notice of Annual Meeting of Shareholders and Proxy Statement of Dawson Geophysical Company for the Annual Meeting to be held on June 9, 2020. Please date and sign exactly as name appears on this proxy. Joint owners should each sign. If the signer is a corporation, please sign full corporate name by duly authorized officer. Executors, administrators, trustees, etc. should give full title as such. The shares represented by this proxy, when properly executed will be voted in the manner directed herein by the undersigned Shareholder(s). IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE BOARD OF DIRECTORS NOMINEES LISTED ABOVE AND FOR PROPOSALS 2, 3 and 4. If any other matters properly come before the meeting the persons named in this proxy will vote in their discretion. 0 0 0 3. Proposal to ratify the appointment of RSM US LLP as the Company's independent registered public accounting firm for the fiscal year ending December 31, 2020. 0 0 0 4. Proposal to approve a non-binding advisory resolution on the compensation of the named executive officers as disclosed in the Proxy Statement of the Company for the 2020 Annual Meeting of Shareholders. 0 For address change/comments, mark here. (see reverse for instructions) Please indicate if you plan to attend this meeting Yes 0 No 0 Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date 0000457782_1 R1.0.1.18
|
|
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Annual Report and Notice and Proxy Statement are available at www.proxyvote.com DAWSON GEOPHYSICAL COMPANY Annual Meeting of Shareholders June 9, 2020 at 10:00 AM Central Time This proxy is solicited by the Board of Directors The shareholder(s) hereby appoint(s) Stephen C. Jumper, Mark A. Vander Ploeg and James K. Brata, or any of them, as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse of this ballot, all of the shares of Common Stock of Dawson Geophysical Company that the shareholder(s) is/are entitled to vote at the Annual Meeting of Shareholder(s) to be held at 10:00 AM Central Time on June 9, 2020, via live audio webcast at www.virtualshareholdermeeting.com/ DWSN2020, and at any adjournment or postponement thereof. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED BY THE SHAREHOLDER(S). IF NO SUCH DIRECTIONS ARE MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE BOARD OF DIRECTORS NOMINEES LISTED ON THE REVERSE SIDE AND FOR PROPOSALS 2, 3 AND 4. PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD USING THE ENCLOSED REPLY ENVELOPE. Address change/comments: (If you noted any Address Changes and/or Comments above, please mark corresponding box on the reverse side.) Continued and to be signed on reverse side 0000457782_2 R1.0.1.18
|
Dawson Geophysical (NASDAQ:DWSN)
過去 株価チャート
から 7 2024 まで 8 2024
Dawson Geophysical (NASDAQ:DWSN)
過去 株価チャート
から 8 2023 まで 8 2024