UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934
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Filed
by the Registrant x
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Filed
by a Party other than the Registrant o
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Check
the appropriate box:
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Preliminary
Proxy Statement
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Confidential,
for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
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x
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Definitive
Proxy Statement
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Definitive
Additional Materials
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Soliciting
Material Pursuant to §240.14a-12
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STORM
CAT ENERGY CORPORATION
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(Name
of Registrant as Specified In Its Charter)
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(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
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Payment
of Filing Fee (Check the appropriate box):
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x
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No
fee required.
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o
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Fee
computed on table below per Exchange Act
Rules 14a-6(i)(1) and 0-11.
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(1)
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Title
of each class of securities to which transaction
applies:
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(2)
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Aggregate
number of securities to which transaction applies:
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(3)
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Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
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(4)
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Proposed
maximum aggregate value of transaction:
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(5)
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Total
fee paid:
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o
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Fee
paid previously with preliminary materials.
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o
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Check
box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its
filing.
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(1)
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Amount
Previously Paid:
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(2)
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Form,
Schedule or Registration Statement No.:
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(3)
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Filing
Party:
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(4)
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Date
Filed:
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Notice
of Annual General Meeting of Shareholders
To
Be Held on June 18, 2008
DEAR
SHAREHOLDERS:
We
cordially invite you to attend the Annual General Meeting of the shareholders of
Storm Cat Energy Corporation (the “Company”), which will be held on
June 18, 2008, at 10:00 a.m., Mountain daylight time, at 8th Avenue
SW, Suite 200, 209, Calgary, Alberta, Canada, for the following
purposes:
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1.
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To
elect as directors the seven nominees named in the attached proxy
statement to serve for one-year terms on the board of directors of the
Company;
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2.
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To
ratify the Audit Committee’s selection of and appoint Hein &
Associates LLP as the Company’s independent registered public accounting
firm for the year ending December 31, 2008;
and
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3.
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To
transact such other business as may properly come before the Annual
General Meeting of the shareholders or any adjournments or postponements
thereof.
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These
items of business are more fully described in the proxy statement accompanying
this notice.
The board
of directors has fixed the close of business on Monday, May 5, 2008, as the
record date for determining the shareholders entitled to notice of and to vote
at the Annual General Meeting or at any adjournment or postponement thereof.
Therefore, shareholders who own common shares of the Company at the close of
business on that date are entitled to notice of and to vote at the
meeting.
Shareholders
who are unable to personally attend the meeting are requested to read the
enclosed form of proxy and complete, date, sign and mail the enclosed form of
proxy in the accompanying postage prepaid return envelope, or to complete the
proxy by telephone or Internet, in accordance with the instructions set out in
the form of proxy. If your shares are held in the name of a broker, trust, bank
or other nominee and receive these materials through your broker or through
another intermediary, please complete and return the materials in accordance
with the instructions provided to you by your broker or by the other
intermediary. Failure to do so may result in your shares not being eligible to
be voted by proxy at the meeting.
THE
ENCLOSED PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS. THE BOARD
RECOMMENDS THAT YOU VOTE “FOR” THE PROPOSED ITEMS. YOUR VOTE IS VERY
IMPORTANT.
ALL
SHAREHOLDERS ARE EXTENDED A CORDIAL INVITATION
TO
ATTEND THE ANNUAL GENERAL MEETING OF SHAREHOLDERS
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By
Order of the Board of Directors,
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/s/
Paul
Wiesner
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Denver,
Colorado
April 29,
2008
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Paul
Wiesner
Chief
Financial Officer, Treasurer and
Secretary
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Important
Notice Regarding Availability of Proxy Materials for the Annual
General
Meeting
of Shareholders to be Held on June 18, 2008.
The
Notice of Annual General Meeting, Proxy Statement and the Annual Report are
available at
http://www.stormcatenergy.com/2008annualmeeting
TABLE
OF CONTENTS
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Page
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1
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1
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2
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2
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2
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3
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Nominees
for Director
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3
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4
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4
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Code
of Business Conduct and Ethics
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4
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Board
Mandate
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4
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Board
and Committee Information
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5
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Communications
with the Board
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5
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Shareholder
Recommendations of Candidates for Director
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5
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Independence
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5
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Executive
Sessions
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6
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Attendance
at Annual General Meetings
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6
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Committees
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6
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Audit
Committee
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6
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Compensation
Committee
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7
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Nominating
Committee
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7
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Executive
Committee
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7
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Other
Directorships
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7
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Position
Descriptions
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7
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Orientation
and Continuing Education
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7
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Director
Compensation for 2007
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8
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2007
Director Compensation Table
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9
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11
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11
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Independent
Registered Public Accounting Firm
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11
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Audit
Committee Pre-Approval Policy
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12
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Compensation
Discussion and Analysis
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12
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Compensation
Committee Report
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14
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2007
Summary Compensation Table
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15
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2007
Grants of Plan-Based Awards
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17
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Outstanding
Equity Awards at December 31, 2007
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18
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Option
Exercises and Stock Vested in Year 2007
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Potential
Payments Upon Termination or Change in Control
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Compensation
Committee Interlocks and Insider Participation
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21
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Related
Person Transaction Policy
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Related
Party Transactions
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Employment
and Indemnification Agreements
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-i-
PROXY
STATEMENT
This
proxy statement is provided in connection with the solicitation of proxies by
the board of directors of Storm Cat Energy Corporation, a corporation organized
under the laws of British Columbia, for use at the Annual General Meeting of the
shareholders, to be held on June 18, 2008, at 10:00 a.m., Mountain
daylight time, or any adjournment or postponement thereof, at 8th Avenue SW,
Suite 200, 209, Calgary, Alberta, Canada (the “Annual General Meeting”). The
Company maintains its principal executive offices at 1125 17th Street,
Suite 2310, Denver, Colorado 80202. We use the terms the “Company,” “Storm
Cat,” “we,” “us” and “our” to refer to Storm Cat Energy Corporation in this
proxy statement.
Pursuant
to new rules promulgated by the Securities and Exchange Commission (the "SEC"),
we are providing access to our proxy materials, which include our notice of
annual general meeting, proxy statement and annual report over the Internet at
http://www.stormcatenergy.com/2008annualmeeting. These proxy materials are
available free of charge.
This
proxy statement and the accompanying form of proxy are expected to first be sent
or given to shareholders beginning on or about May 12, 2008. While it is
expected that the solicitation will be primarily by mail, proxies may be
solicited personally or by telephone by the directors and regular employees of
the Company. All costs of solicitation will be borne by the Company. The Company
will pay for preparing, assembling and mailing this proxy statement and any
other proxy materials transmitted on behalf of the board of directors. The
Company will, upon request, reimburse brokerage firms and others for their
reasonable expenses in forwarding proxy materials to the beneficial owners of
the Company’s common shares.
This
proxy statement is being sent to both registered and non-registered owners of
common shares of the Company. If you are a non-registered owner, and the Company
or its agent has sent these materials directly to you, your name and address and
information about your holdings of common shares have been obtained in
accordance with applicable securities regulatory requirements from the
intermediary holding on your behalf. By choosing to send these materials to you
directly, the Company (and not the intermediary holding on your behalf) has
assumed responsibility for (1) delivering these materials to you, and
(2) executing your proper voting instructions. Please return your voting
instructions as specified in the form of proxy. For further information relating
to non-registered owners see the discussion below under the heading “Information
For Non-Registered (Beneficial) Owners Of Common Shares.”
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APPOINTMENT AND REVOCATION OF
PROXIES
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The
individuals named in the accompanying proxy are directors and/or officers of the
Company and will represent management of the Company at the Annual General
Meeting. A SHAREHOLDER WISHING TO APPOINT SOME OTHER PERSON (WHO NEED NOT BE A
SHAREHOLDER) TO REPRESENT HIM AT THE ANNUAL GENERAL MEETING HAS THE RIGHT TO DO
SO, EITHER BY INSERTING SUCH PERSON’S NAME IN THE BLANK SPACE PROVIDED IN THE
FORM OF PROXY AND STRIKING OUT THE TWO PRINTED NAMES OR BY COMPLETING ANOTHER
FORM OF PROXY. A proxy will not be valid unless the completed, dated and signed
form of proxy is received by Computershare Investor Services Inc. not less than
48 hours (excluding Saturdays, Sundays and holidays) before the time for holding
the Annual General Meeting or any adjournment thereof, or is delivered to the
Chairman of the Annual General Meeting prior to the commencement of the Annual
General Meeting or an adjourned meeting. The mailing address of
Computershare Investor Services Inc. is 100 University Avenue, 11th
Floor, Toronto, Ontario, Canada M5J 2Y1. Registered shareholders may also
deposit their proxies through telephone and Internet services made available by
Computershare Investor Services Inc. See the attached form of proxy for further
instructions.
A
shareholder who has given a proxy may revoke it by an instrument in writing
executed by the shareholder or by his attorney authorized in writing or, where
the shareholder is a corporation, by a duly authorized officer or attorney of
the corporation, and delivered either to the registered office of the Company,
3000 - 1055 West Georgia Street, Vancouver, British Columbia, Canada V6E 3R3, at
any time up to and including the last business day preceding the day of the
Annual General Meeting, or if adjourned, any reconvening thereof, to the
Chairman of the Annual General Meeting on the day of the Annual General Meeting
or, if adjourned, any reconvening thereof or in any other manner provided by
law. A revocation of a proxy does not affect any matter on which a vote has been
taken prior to the revocation. Proxies in the form enclosed, unless revoked,
will be voted at the Annual General Meeting as directed by you on the form or,
in the absence of such direction, in favor of Proposals 1 and 2 at the Annual
General Meeting.
-1-
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INFORMATION FOR NON-REGISTERED (BENEFICIAL) OWNERS
OF COMMON SHARES
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Common
shares owned by many shareholders of the Company are not registered on the
records of the Company in the beneficial shareholders’ own name. Rather, such
common shares are registered in the name of a securities dealer, bank or other
intermediary, or in the name of a clearing agency (referred to in this proxy
statement as “intermediaries”). Shareholders who do not hold their common shares
in their own name (referred to in this proxy statement as “non-registered
owners”) should note that only
registered shareholders or duly appointed proxyholders are permitted to vote at
the Annual General Meeting. A non-registered owner cannot be recognized at the
Annual General Meeting for the purpose of voting his common shares unless such
holder is appointed by the applicable intermediary as a
proxyholder.
Non-registered
owners who have not objected to their intermediary disclosing certain ownership
information about themselves to the Company are referred to as “NOBOs.” Those
non-registered owners who have objected to their intermediary disclosing
ownership information about themselves to the Company are referred to as
“OBOs.”
In
accordance with applicable securities regulatory policy (National Instrument
54-101 of the Canadian Securities Administrators) the Company has elected to
seek voting instructions directly from NOBOs. The Intermediaries (or their
service companies) are responsible for forwarding this proxy statement and the
proxy to each OBO, unless the OBO has waived the right to receive
them.
Proxy
statements sent to non-registered owners who have not waived the right to
receive proxy statements are accompanied by a request for voting instructions (a
“VIF”). This form is provided instead of a proxy. By returning the VIF in
accordance with the instructions noted on it a non-registered owner is able to
instruct the registered shareholder how to vote on behalf of the non-registered
owner. VIF’s, whether provided by the Company or by an intermediary, should be
completed and returned in accordance with the specific instructions noted on the
VIF.
In either
case, the purpose of this procedure is to permit non-registered owners to direct
the voting of the common shares that they beneficially own. If a non-registered
owner who receives a VIF wishes to attend the Annual General Meeting or have
someone else attend on his behalf, then the non-registered owner may request a
legal proxy as set forth in the VIF, which will grant the non-registered owner
or his nominee the right to attend and vote at the Annual General
Meeting.
IF
YOU ARE A NON-REGISTERED OWNER AND WISH TO VOTE IN PERSON AT THE ANNUAL GENERAL
MEETING, PLEASE REFER TO THE INSTRUCTIONS SET OUT ON THE “REQUEST FOR VOTING
INSTRUCTIONS” (VIF) THAT ACCOMPANIES THIS PROXY STATEMENT.
Common
shares represented by proxy are only entitled to be voted on any poll and, where
a choice with respect to any matter to be acted upon has been specified in the
form of proxy, the common shares will, on a poll, be voted or withheld from
voting in accordance with the specification so made.
SUCH
COMMON SHARES WILL ON A POLL BE VOTED FOR EACH MATTER FOR WHICH NO CHOICE HAS
BEEN SPECIFIED BY THE SHAREHOLDER.
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VOTING AT THE ANNUAL GENERAL
MEETING
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The
common shares of the Company are listed on the American Stock Exchange (“AMEX”)
and the Toronto Stock Exchange (“TSX”). The only voting securities of the
Company are its common shares. Only shareholders of record at the close of
business on May 5, 2008, the date selected as the record date by the board
of directors, are entitled to vote their common shares at the Annual General
Meeting. Each holder of common shares is entitled to one vote per share of
common shares on each matter submitted to the shareholders for vote. At the
close of business on April 28, 2008, 81,109,403 common shares were
outstanding and entitled to vote.
At least
two shareholders of an aggregate of 5% of the issued common shares who are
present, in person or by proxy, will constitute a quorum for the transaction of
business at the Annual General Meeting or any adjournment or postponement
thereof. Directors are elected by a plurality of the affirmative votes cast by
the shareholders present at the Annual General Meeting in person or by proxy,
and entitled to vote. Cumulative voting is not permitted in the election of
directors. The affirmative vote of the holders of a majority of the voting power
of the common shares present at the Annual General Meeting, in person or by
proxy, and entitled to vote, and actually cast is necessary for ratification and
appointment of the Company’s auditors. If the ratification of the selection and
appointment of auditors is not approved, the Audit Committee of the board of
directors will review its future selection of auditors.
Abstentions
and broker non-votes are not relevant to the election of directors. Abstentions
and broker non-vote will have no effect on the vote on the proposal for the
ratification and appointment of the Company’s auditors. A “broker non-vote”
occurs if you do not provide the record holder of your shares (usually a bank,
broker, or other nominee) with voting instructions on a matter and the holder is
permitted to vote, but does not vote, on the matter without instructions from
you under the AMEX rules.
Unless
you indicate otherwise on your proxy card, the persons named as your proxies
will vote your shares: “FOR” all of the nominees for
director named in this proxy statement; and “FOR” ratification and
appointment of Hein & Associates LLP as the Company’s independent
registered public accounting firm for the year ending December 31,
2008.
Only
shareholders and persons holding proxies from shareholders may attend the
meeting. If your shares are registered in your name, you should bring
a form of identification to the meeting. If your shares are held in
the name of a broker, trust, bank or other nominee you will need to bring a
proxy or letter from that broker, trust, bank or other nominee that confirms you
are the beneficial owner of those shares.
-2-
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PROPOSAL 1. ELECTION OF
DIRECTORS
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Storm
Cat’s business and affairs are managed under the direction of the board of
directors, which is currently comprised of seven members. The size of the board
of directors may be fixed from time to time by the board of directors as
provided in the Articles of the Company.
The term
of office of each of the present directors expires at the Annual General
Meeting. At this Annual General Meeting, there are seven nominees for election
to the board of directors, each of whom, if elected, will serve until the next
annual general meeting of the shareholders or until his successor is elected or
appointed, unless his office is earlier vacated in accordance with the Articles
of the Company, or with the provisions of the British Columbia Business Corporations Act
(the “Business Corporations Act”). Management does not contemplate that any of
these nominees will be unable to serve as a director. The names of each nominee
and continuing director, their respective ages (as of April 29, 2008), the
province or state and country in which each is ordinary resident, periods during
which they have served the Company as a director, position (if any) with the
Company, business experience during at least the past five years and
directorships of other publicly-owned corporations appear below. The number of
our common shares beneficially owned by each nominee, directly or indirectly, or
over which control or direction is exercised, is set out below under “Beneficial
Ownership of Voting Securities.” There are no family relationships
among any director, executive officer, or any person nominated or chosen by the
Company to become a director.
Each
nominee is an incumbent director and has consented to be named herein and to
serve on the board of directors if elected. If any of these director nominees
should be unavailable for election at the time of the Annual General Meeting,
which is not anticipated, the proxies will be voted for such other person as may
be recommended by the board of directors in place of each such
nominee.
Joseph M. Brooker (48),
Colorado, USA. Mr. Brooker was appointed our Chief Executive Officer
and a director in June 2007. Mr. Brooker is a petroleum engineer
and lawyer with over 25 years of experience in the oil and gas
business. Prior to joining Storm Cat, Mr. Brooker served as Manager
of Monday Creek Resources LLC, a Denver-based start-up company, from 2005 to
2007. Mr. Brooker served from 2003 to 2005 as Vice President and
General Counsel of Medicine Bow Energy Corporation, a Denver-based
private-equity backed exploration and production company. Prior to
that, from 2000 to 2002 Mr. Brooker served as Vice President of Land and General
Counsel of Shenandoah Energy Inc, a Denver-based private-equity-backed
exploration and production company.
Robert J. Clark (63),
Colorado, USA. Mr. Clark has been our director since January 2006. Mr. Clark is
a 40-year veteran of the oil and gas industry. Mr. Clark is President of Bear
Cub Energy, LLC, a privately held gas gathering and processing company, which he
founded in 2001. In 1995, Mr. Clark formed a predecessor company, Bear Paw
Energy LLC, which was sold in early 2001 to Northern Border Partners. Earlier
experience included officer positions with Snyder Oil Corporation, Ladd
Petroleum Corporation and NICOR, Inc. Mr. Clark currently serves on the board of
Evergreen Energy Inc. and is a member of the board of Managers for Bear Cub
Energy, LLC and Fluid Compressor Partners LLC. He most recently served on the
board of directors for Evergreen Resources, Inc., sold in late 2004, and Patina
Oil and Gas Corporation, sold in early 2005.
Michael J. O’Byrne (47),
Alberta, Canada. Mr. O’Byrne has been our director since September 2003. Mr.
O’Byrne has been involved in the oil and gas business for over 10 years as a
Landman, Land Manager and Vice-President, Land. Mr. O’Byrne has been serving as
President of OMJ Land Services Ltd. specializing in preparation of joint-venture
documentation and other areas of oil and gas administration, since June 1992 and
was previously the Vice President of Land and a principal of Golden Eagle
Energy, Ltd. He is currently Vice-President, Land for Unbridled Energy, a
Canadian public oil and gas company, and a director and Principal of White Max
Energy, Ltd., a private oil and gas production company.
Robert D. Penner (64),
Alberta, Canada. Mr. Penner has served as our director since January 2005. Mr.
Penner is a Chartered Accountant and a graduate member of the Institute of
Corporate Directors and was a senior tax partner with KPMG, LLP, from
March 1965 until his retirement in April 2004. He has over 35 years of
public accounting experience, and specialized in advising clients on Canadian
and international tax matters, with a particular emphasis on the taxation and
financing of oil and gas and natural resource projects. He is a member of the
Canadian Institute of Chartered Accountants and the Institute of Chartered
Accountants of Alberta and Manitoba. He currently serves as a director of
Sustainable Energy Technology Ltd, a manufacturer of energy converters traded on
the TSX Venture Exchange; Terra Energy Corporation, a Canadian TSX Venture
listed oil and gas company; Corridor Resources Inc., a Canadian TSX listed oil
and gas company; and Unbridled Energy Corporation, a Canadian TSX Venture listed
oil and gas company.
Jon R. Whitney (63), Colorado,
USA. Mr. Whitney has served as our director since May 2006. Mr. Whitney was with
Colorado Interstate Gas Company from 1968 to 2001, serving as President and
Chief Executive Officer from 1990 until its merger with the El Paso Corporation
in 2001. Since 2001, Mr. Whitney has been a member of Peak Energy Ventures, a
natural gas consulting company. He is currently a director of American Oil &
Gas, Inc.
David G. Wight (67), Alaska,
USA. Mr. Wight has served as our director since May 2006. Mr. Wight was
President and Chief Executive Officer of Alyeska Pipeline Service Company from
July 2000 until his retirement in January 2006. Prior to joining Alyeska, Mr.
Wight served as President of BP Amoco Energy Company of Trinidad and Tobago for
eight years. Mr. Wight was also previously a director of Alaska Oil and Gas
Association, the API and the Association of Oil Pipelines, from which positions
he resigned upon his retirement. He is a member of many industry associations,
including the Petroleum Engineering Board with the Texas Tech
University.
Michael J. Wozniak (53),
Colorado, USA. Mr. Wozniak has served as our director since June 2005. Mr.
Wozniak was a partner in the Environmental, Natural Resources and Energy Group
of the international law firm of Dorsey & Whitney LLP from March 2002 until
July 2005, where he also served as Partner-in-Charge of the Denver office. Mr.
Wozniak is a current and founding partner of Beatty & Wozniak LLC, a natural
resources law firm located in Denver, Colorado. He has been a partner with
Beatty & Wozniak LLC since July 2005. Mr. Wozniak is a member of the
executive committee of IPAMS, the executive council of the Natural Resources and
Energy Law section of the Colorado Bar Association, and is the current Mayor of
Cherry Hills Village, Colorado.
The
board of directors unanimously recommends a vote “FOR” the election of each of
the nominees to serve as a director.
-3-
Shown
below are the names, ages as of April 28, 2008, and current positions of
the executive officers of the Company. There are no family relationships between
any of the persons listed below, or between any of such persons and any of the
directors of the Company or any persons nominated or chosen by the Company to
become a director or executive officer of the Company.
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Name
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Age
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Position
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Joseph
M. Brooker
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48
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Chief
Executive Officer and Director
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Keith
J. Knapstad
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45
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President
and Chief Operating Officer
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Paul
Wiesner
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43
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Chief
Financial Officer, Treasurer and
Secretary
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Joseph M.
Brooker. Mr. Brooker was appointed our Chief Executive Officer and a
director in June 2007. Mr. Brooker’s biography is set forth
above under the heading “Nominees for Director.”
Keith J.
Knapstad. Mr. Knapstad is our President and Chief Operating Officer.
He served as acting President and Chief Executive Officer from March 2007, to
July 2007. Mr. Knapstad was the Company’s Executive Vice President and
Chief Operating Officer from December 2006 to March 2007 and Vice
President, Operations (USA) from April 2005 to December 2006. Prior to
joining the Company, Mr. Knapstad was the Manager of Powder River Basin
Assets for J. M. Huber Corporation, a privately held corporation with extensive
unconventional resource holdings since May 2003. Prior to Huber,
Mr. Knapstad worked for Marathon Oil Company from 1990 to 2005 as a senior
engineer.
Paul Wiesner. Mr. Wiesner
is our Chief Financial Officer, Treasurer and Secretary. He has been the Chief
Financial Officer since March 2005 and Secretary and Treasurer since
June 2005. Prior to joining the Company, Mr. Wiesner was the Chief
Financial Officer for NRT Colorado Inc., a corporation with over 150 employees
and 20 locations, from April 2002 to March 2005.
Corporate
governance is the process and structure used to direct and manage the business
and affairs of an issuer with the objective of enhancing value for its owners.
National Instrument 58-101 of the Canada Securities Administrators—Disclosure of Corporate Governance
Practices (“NI 58-101”) requires the Company to disclose in this proxy
statement a summary of its corporate governance protocols.
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Code
of Business Conduct and Ethics
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The board
of directors has adopted a Code of Business Conduct and Ethics applicable
equally to the Company’s directors, officers and employees. The code sets forth,
among other things, the Company’s conflict of interest policy and policies for
the protection of the Company’s property, proprietary information and integrity
of records and financial reports, equal opportunities, political activities and
contributions, protection of the health and safety of the Company’s employees,
officers and directors.
The
Company regards maintaining a culture of ethical business conduct and social
responsibility as critically important. Management consistently strives to
instill the Company’s principles into the practices and actions of the Company’s
management and staff. The board monitors compliance with the code by requiring
management and supervisors to assume responsibility for the conduct of those who
report to them. This means ensuring that the code is clearly communicated,
leading by example, establishing and maintaining controls designed to prevent or
detect breaches, appropriately investigating situations which may indicate a
breach and dealing appropriately with known breaches. All known or suspected
breaches of the code are required to be reported to a supervisor, general
manager, the Chief Executive Officer, or the Chief Financial Officer. All known
or suspected instances of fraud are required to be reported to the Audit
Committee, who report all complaints and allegations to the board of directors
for investigation.
The Code
of Conduct calls on all directors, officers and employees of the Company to
strive to avoid situations that create, have the potential to create, or create
the appearance of, a conflict of interest. A director or officer who has a
material interest in any transaction or agreement that comes before the board
for decision is required to disclose his or her interest to the board members
and to abstain from any vote taken on the matter.
A copy of
the Code of Business Conduct and Ethics is available on the Company’s website at
www.stormcatenergy.com under “Corporate Governance,” on SEDAR at www.sedar.com
or in print, without charge, to any shareholder who sends a request to the
office of the Secretary of Storm Cat Energy Corporation at 1125 17th Street,
Suite 2310, Denver, Colorado 80202.
|
|
Board
Mandate
|
The board
of directors is responsible for supervising management in carrying on the
business and affairs of the Company. Directors are required to act and exercise
their powers with reasonable prudence in the best interests of the Company. In
discharging its mandate, the board is responsible for the oversight and review
of the development of, among other things, the following matters:
-4-
|
|
·
|
the
strategic planning process of the
Company;
|
|
|
·
|
identifying
the principal risks of the Company’s business and ensuring the
implementation of appropriate systems to manage these
risks;
|
|
|
·
|
planning
for succession of management;
|
|
|
·
|
the
Company’s policies regarding communications with its shareholders and
others; and
|
|
|
·
|
the
integrity of the internal controls and management information systems of
the Company.
|
In
carrying out its mandate, the board relies primarily on management to provide it
with regular detailed reports on the operations of the Company and its financial
position. The board reviews and assesses these reports and other information
provided to it at meetings of the full board and of its committees. Other
management personnel regularly attend board meetings to provide information and
answer questions, including our President and Chief Operating Officer and our
Chief Financial Officer. Directors also consult from time to time with
management. At least annually, the board reviews management’s report on its
business and strategic plan and any changes with respect to risk management and
succession planning.
|
|
Board
and Committee Information
|
The board
of directors held 13 meetings during 2007. During 2007 each of our incumbent
directors, other than J. Scott Zimmerman, attended at least 75% of the total
number of meetings held by the board of directors and by the committees of the
board of directors on which they served for the period during which he was a
member.
J. Scott
Zimmerman did not stand for reelection in 2007 and his term as director expired
in June 2007. Joseph M. Brooker joined the board of directors following the
2007 Annual General Meeting. The attendance record of the directors at board
meetings held during 2007 was as follows:
|
Director
|
2007
Board of Directors Meetings
|
|
|
Joseph
M. Brooker
|
3
of 3
|
|
|
Robert
J. Clark
|
13
of 13
|
|
|
Michael
J. O’Byrne
|
10
of 13
|
|
|
Robert
D. Penner
|
10
of 13
|
|
|
Jon
R. Whitney
|
13
of 13
|
|
|
David
G. Wight
|
10
of 13
|
|
|
Michael
J. Wozniak
|
12
of 13
|
|
|
J.
Scott Zimmerman
|
7
of 10
|
|
The
attendance record of the directors at board meetings held in 2008 to date is as
follows:
|
Director
|
2008
Board of Directors Meetings
|
|
|
Joseph
M. Brooker
|
1
of 1
|
|
|
Robert
J. Clark
|
1
of 1
|
|
|
Michael
J. O’Byrne
|
1
of 1
|
|
|
Robert
D. Penner
|
1
of 1
|
|
|
Jon
R. Whitney
|
1
of 1
|
|
|
David
G. Wight
|
1
of 1
|
|
|
Michael
J. Wozniak
|
1
of 1
|
|
|
|
Communications
with the Board
|
Interested
parties, including our shareholders, desiring to communicate with our board
members, including the non-management directors as a group, may do so by mailing
a request to our Secretary, Storm Cat Energy Corporation, at 1125 17th Street,
Suite 2310, Denver, Colorado 80202. Pursuant to the instruction of the
Company’s non-management directors, the Secretary will review inquiries and if
they are relevant to, and consistent with our operations, policies and
procedures, they will be forwarded to the director or directors to whom it is
addressed. Inquiries not forwarded will be retained by the Company and will be
made available to any director on request.
|
|
Shareholder
Recommendations of Candidates for
Director
|
Shareholders
wishing to recommend candidates to the Nominating Committee for consideration as
directors should submit a written recommendation to the office of the Secretary,
Storm Cat Energy Corporation, at 1125 17th
Street, Suite 2310, Denver, Colorado 80202. The Nominating Committee
employs a process for evaluating all candidates for director, including those
recommended by shareholders. See the discussion under the heading “Corporate
Governance—Nominating Committee.”
|
|
Independence
|
As at the
date hereof, the Board of Directors of the Company consists of seven directors,
six of whom are independent directors under the applicable listing standards of
the AMEX and five of whom are independent directors pursuant to the requirements
of NI 58-101. Pursuant to the AMEX listing standards, a director will be
considered an independent director if he or she is not an executive officer or
employee of the Company and if the board of directors makes an affirmative
determination that the director does not have a relationship that would
interfere with the exercise of independent judgment in carrying out the
responsibilities of a director, and is not otherwise deemed not to be
independent. Applying the AMEX listing standards, the directors determined that
each of Messrs. Clark, Penner, O’Byrne, Whitney, Wight and Wozniak is an
independent director.
-5-
Mr. Brooker
is not considered to be an independent director under AMEX listing standards
because he is currently an executive officer of the Company. In determining
whether the members of the board of directors are independent under the AMEX
standards, the board took into consideration the arrangements for legal services
between the Company and Beatty & Wozniak, P.C., a law firm of which
Mr. Wozniak is a partner. The board determined that the arrangements did
not affect Mr. Wozniak’s independence under the listing standards of AMEX.
See “Related Party Transactions” for more information.
Pursuant to
NI 58-101 a director is considered independent if he has no direct or indirect
relationship with the Company which could, in the view of the board, reasonably
be expected to interfere with the exercise of his independent judgment, and is
not otherwise deemed not to be independent. Applying the criteria in NI 58-101,
each of Messrs. Clark, O’Byrne, Penner, Whitney and Wight is an independent
director. Mr. Brooker is not considered to be an independent director
because he is currently an executive officer of the Company. Mr. Wozniak is
not considered to be an independent director under NI 58-101 due to the
arrangements for legal services between the Company and Beatty &
Wozniak, P.C., a law firm of which Mr. Wozniak is a partner. See “Related
Party Transactions” for more information.
The
independent members of the board believe that their majority on the board, their
sophistication and their knowledge of the Company’s business are sufficient to
facilitate the functioning of the board independently of management and to
provide for open and candid discussion among the independent
directors.
|
|
Executive
Sessions
|
The
independent directors hold regularly scheduled meetings without the
non-independent directors and other members of management in attendance and are
able to hold such meetings whenever they wish.
|
|
Attendance
at Annual General Meetings
|
We
encourage, but do not require, our board members to attend our annual general
meeting of shareholders. Last year, each of our directors serving at the time of
the annual general meeting, other than Mr. Zimmerman, attended the annual
general meeting of shareholders.
|
|
Committees
|
Our board
of directors has established four standing committees. The standing committees
consist of an Audit Committee, Compensation Committee, Nominating Committee and
Executive Committee. Each of the standing committees, other than the Executive
Committee, is comprised entirely of independent directors. Copies of the charter
for each standing committee, other than the Executive Committee which has not
formally adopted a charter, are available on our website at
www.stormcatenergy.com under “Corporate Governance.”
The
functions performed by each of the committees are briefly described
below.
Audit Committee
The
members of the Audit Committee during 2007 and as of the date of this proxy
statement are Messrs. Clark, Penner and Whitney. Mr. Penner is the
Chairman of the Audit Committee. The Audit Committee met five times during 2007.
The Audit Committee has the responsibility of assisting the board of directors’
oversight of the quality and integrity of the Company’s financial statements and
other financial information, the compliance of such statements and information
with legal and regulatory requirements, the qualifications and independence of
the Company’s independent registered public accounting firm, and the performance
of the Company’s internal accounting procedures and the independent registered
public accounting firm. The Audit Committee operates under an Audit Committee
charter adopted by our board of directors, a copy of which is available on our
website at www.stormcatenergy.com under “Corporate Governance.”
The
members of the Audit Committee do not have fixed terms for holding their
positions and are appointed by, and may be replaced by, the board of directors.
Each of the members serving on our Audit Committee satisfies the standards for
independence of AMEX and the SEC as they relate to audit committees. Our board
of directors believes each of the members of the Audit Committee is financial
literate and Mr. Penner qualifies as an “audit committee financial expert”
within the meaning of the regulations of the SEC.
Compensation Committee
The
members of the Compensation Committee during 2007 and as of the date of this
proxy statement are Messrs. O’Byrne, Wight and Wozniak. Mr. Wozniak is
the Chairman of the Compensation Committee. The Compensation Committee met two
times during 2007. The Compensation Committee is responsible for assisting the
board of directors in discharging their responsibilities relating to
compensation of officers and directors and overseeing the Company’s compensation
structure, including equity compensation plans and benefit programs. The
Compensation Committee has the authority to retain, at the Company’s expense,
outside consultants, legal counsel and other advisors as it deems appropriate to
assist it in its performance of its responsibilities, including the authority to
approve such advisors’ fees and other engagement terms. The Compensation
Committee’s duties and responsibilities include reviewing and approving
corporate goals and objectives relevant to the compensation of the Company’s
executive officers, evaluating their performance, and as a committee,
determining and recommending our executive officers’ compensation levels based
on such evaluations. The Compensation Committee also reviews and discusses the
Compensation Discussion and Analysis with our management, and based on such
review and discussions, recommended to the board of directors that the
Compensation Discussion and Analysis be included in this proxy statement. The
Compensation Committee operates under a Compensation Committee charter adopted
by our board of directors, a copy of which is available on our website at
www.stormcatenergy.com under “Corporate Governance.”
-6-
The
members of the Compensation Committee do not have fixed terms for their
positions, are appointed by, and may be replaced by, the board of directors.
Each of the members of the Compensation Committee satisfies the standards for
independence of AMEX.
Nominating
Committee
The
members of the Nominating Committee during 2007 and as of the date of this proxy
statement are Messrs. Clark, O’Byrne and Wozniak. Mr. Wozniak is the
Chairman of the Nominating Committee. The Nominating Committee met one time
during 2007. The Nominating Committee is responsible for assisting
the board of directors in identifying individuals qualified to be members of the
board of directors, to recommend director nominees, to assist the board in the
event of any vacancy on the board and to recommend qualified individuals to fill
any vacancies, and to recommend to the board director nominees for
board committees. The mandate of the Nominating Committee includes overseeing
the effective functioning of the board, which includes a periodic review of the
effectiveness of the board as a whole and of the composition of the board. To
date, given the small size of the board and the frequency with which its
meetings are held, the board has not found it necessary to institute any formal
process in order to satisfy itself that the board, its committees and its
individual directors are performing effectively. The Nominating Committee is
entitled to rely, in good faith, on information, opinions, reports of statements
or other information prepared by officers or other employees of the Company,
counsel, public accounts or other persons of similar professional competence.
The Nominating Committee operates under a Nominating Committee charter adopted
by the board of directors, a copy of which is available at
www.stormcatenergy.com under “Corporate Governance.”
The
members of the Nominating Committee do not have fixed terms for their positions,
are appointed by, and may be replaced by, the board of directors. Each of the
members of the Nominating Committee satisfies the standards for independence of
AMEX.
Executive
Committee
The
Executive Committee was formed in June 2006. The members of the Executive
Committee during 2007 were Messrs. Clark, Wight and Zimmerman.
Mr. Zimmerman was a member of the Executive Committee until expiration of
his term as director in June 2007. The Executive Committee met
two times during 2007. The board decided to dissolve the Executive
Committee in June 2007.
|
|
Other
Directorships
|
For
information respecting our directors that serve as directors of any other
publicly-owned corporations or issuers that are reporting issuers or the
equivalent in Canada or elsewhere see “Proposal 1. Election of Directors”
above.
|
|
Position
Descriptions
|
The board
has not adopted written position descriptions for the chairman of the board and
the chairman of each board committee, on the basis that the role of the chairman
is well understood by all of the directors. The board has also not adopted a
written position description for the Chief Executive Officer, Mr. Brooker,
on the basis that his role and responsibilities are well understood by him and
by the directors.
|
|
Orientation
and Continuing Education
|
The board
does not have a formal orientation and education program for new directors. Upon
joining the board in June of 2007, Joseph M. Brooker was provided with an
orientation program regarding the role of the board, its committees and its
directors, and the nature and operation of the Company’s current and past
business. He was also provided with a copy of the Company’s policies which
include the Code of Business Conduct, Disclosure Policy, Insider Trading Policy,
AFE Policy, Delegation of Authority, Hedging Policy, Purchase Policy, Complaints
Procedures and Employee Handbook. New directors are also provided with the Audit
and Compensation Committee Charters. The board encourages directors to
participate in continuing education opportunities in order to ensure that the
directors may maintain or enhance their skills and abilities as directors, and
maintain a current and thorough understanding of the Company’s
business.
|
|
Director
Compensation For 2007
|
On June
20, 2007, the Compensation Committee approved an amended director compensation
policy (the “Director Compensation Policy”) that was adopted and approved by the
board of directors on June 21, 2007. Under the Director Compensation
Policy, each director receives a one-time grant of 100,000 common share options
under the Storm Cat Energy Corporation Amended and Restated Share Option Plan
(or any successor plan) within 30 days of the date of his or her initial
appointment or election to the board, which options will vest 1/3rd every six
months, over an eighteen months period from the date of grant, provided that
such options are subject to immediate vesting upon change of control of the
Company.
Each
director that has served for a complete year, which is the period from the
Annual General Meeting at which the director was last elected to May 31 of the
following year, is deemed to have earned 15,000 fully-vested common share
options as at the close of business on May 31 of each year. Such
options will be treated as having been earned for past services to the Company
such that both continuing and retiring Directors that have served for the year
then just completed will be awarded the options effective on June 1 of each
year.
Each
director elected to the board at the Annual General Meeting is, in addition to
the above-described grants of stock options, entitled to a grant of RSUs under
the Storm Cat Energy Corporation Restricted Share Unit Plan (or any successor
plan) entitling the director to acquire 5,000 common shares. The RSUs
vest as to 1,250 common shares at the end of each quarter. Directors
who join the board between Annual General Meetings will be entitled to a grant
of RSUs entitling the director to acquire 1,250 common shares for each full
quarter remaining prior to the Company’s next expected Annual General Meeting,
vesting as to 1,250 common shares at the end of each quarter.
-7-
In
addition to the equity awards described above, the Director Compensation Policy
provides for annual cash compensation in the form of a retainer of $1,000 per
quarter, plus additional amounts of: (a) $1,000 per meeting for physical
attendance at any quarterly board meeting, (b) $500 per meeting for
participation by telephone in a quarterly board meeting; and (c) $500 per
meeting for any other board meeting over 30 minutes in duration, and an
additional $500 if any such meeting is over two hours in duration. Board members
are also entitled to receive $1,000 per year for service on each board
committee, plus an additional $2,500 per year for service as a chair of any
board committee. No additional amounts are paid for participation in
board committee meetings. All of our directors are reimbursed for reasonable
out-of-pocket expenses related to attendance at board and board committee
meetings.
Prior to
adoption of the amended Director Compensation Policy in June 2007, directors
were granted unrestricted RSUs at the end of a quarter as compensation for
service for that quarter. During 2007, our non-employee directors
received compensation in the form of cash fees, options and stock awards as
further described below. Compensation paid to Mr. Brooker, who became our Chief
Executive Officer as well as our director during 2007, and Mr. Zimmerman, our
former President and Chief Executive Officer and a former director, for their
service as directors is shown in the "2007 Summary Compensation Table" on page
15.
|
|
2007
Director Compensation Table
|
| Name |
Fees Earned or
Paid in
Cash
|
Stock
Awards
(1)
|
Option
Awards
(2)
|
Total
|
||||
| Robert J. Clark |
$20,000
|
$9,937
|
$16,531
|
$46,467
|
||||
| Michael J. O'Byrne |
$16,500
|
$9,937
|
$34,857
|
$61,293
|
||||
| Robert D. Penner |
$16,500
|
$9,937
|
$34,857
|
$61,293
|
||||
| Jon R. Whitney |
$15,000
|
$9,937
|
$36,189
|
$61,126
|
||||
| David G. Wight |
$15,500
|
$9,937
|
$36,189
|
$61,626
|
||||
| Michael J. Wozniak |
$21,000
|
$27,714
|
$33,847
|
$82,561
|
|
(1)
|
The
amounts represent the portion of the fair value of RSUs recognized as
expense during 2007 for financial statement reporting purposes,
disregarding the estimate of forfeitures related to service-based vesting
conditions, but otherwise computed in accordance with SFAS No. 123R,
“Share Based Payment” (“SFAS 123R”), converted into US dollars based on
the average exchange rate for 2007 of C$1.00: US$0.93565. The amounts do
not represent cash payments made to the directors or amounts realized.
Under SFAS 123R, the fair value of RSUs granted to directors is recognized
ratably over the vesting period. There were no forfeitures of RSUs by
directors during the year ended December 31,
2007.
|
|
|
The
grant date fair value of each RSU award is computed in accordance with
SFAS 123R based on the closing price of Storm Cat common shares on the
date of grant. Each non-employee director received (i) 3,750 unrestricted
RSUs on April 2, 2007 for board service during the third and fourth
quarters of 2006 and the first quarter of 2007, having an aggregate grant
date fair value of $26,280, (ii) 1,250 unrestricted RSUs on June 21, 2007
for board service during the second quarter of 2007, having an aggregate
grant date fair value of $9,988, and (iii) 5,000 RSUs on June 21, 2007 for
board service during the third and fourth quarters of 2007 and the first
and second quarters of 2008 that vests in equal installments at the end of
each quarter, having an aggregate grant date fair value of
$39,952. In addition, Mr. Wozniak received 25,000 unrestricted
RSUs on September 19, 2007 for his service as lead director of our board
of directors, having an aggregate grant date fair value of
$17,777.
|
|
|
As
of December 31, 2007, each of our non-employee directors held 2,500
outstanding RSUs..
|
|
(2)
|
The
amounts represent the portion of the fair value of options recognized as
expense during 2007 for financial statement reporting purposes,
disregarding the estimate of forfeitures related to service-based vesting
conditions, but otherwise computed in accordance with SFAS No. 123R,
converted into US dollars based on the average exchange rate for 2007 of
C$1.00: US$0.93565. The amounts do not represent cash payments made to the
directors or amounts realized. Under SFAS 123R, the fair value of options
granted to directors is recognized ratably over the vesting period. There
were no forfeitures of options by directors during the year ended December
31, 2007. See details of the assumptions used in valuation of
the options in Note 7 to the Company’s audited consolidated financial
statements included in the Annual Report on Form 10-K filed for the year
ended December 31, 2007. To obtain a free copy of the Form 10 K
please see “Additional Information”
below.
|
|
|
On
June 21, 2007, each of our non-employee directors was granted 15,000
fully-vested options for board service the previous twelve months having
an aggregate grant date fair value of $72,782. The grant date
fair value of each option award is computed in accordance with SFAS 123R
based on the assumptions referenced above and an exercise price of $1.14
(as converted into US dollars based on the exchange rate on the date of
grant).
|
|
|
As of
December 31, 2007, our non-employee directors held the following
outstanding options: Mr. Clark – 115,000, Mr. O’Byrne –
280,000, Mr. Penner – 130,000, Mr. Whitney – 115,000, Mr. Wight – 115,000,
and Mr. Wozniak 130,000.
|
-8-
The
following table shows information with respect to beneficial ownership of our
common shares, as of April 28, 2008, for:
|
|
·
|
each
of our directors and our executive officers listed in the summary
compensation table provided below, whom we refer to as our named executive
officers;
|
|
|
·
|
all
of our current directors and current executive officers as a group;
and
|
|
|
·
|
each
person known by us, including based upon our review of documents filed by
them with the SEC in respect of the ownership of our common shares, to
beneficially own five percent or more of our common
shares.
|
We have
calculated the percentage of beneficial ownership based on a total of 81,109,403
common shares outstanding as of the close of business on April 28,
2008.
|
Common Shares
|
||||
|
Name of Beneficial Owner
|
Amount and
Nature of
Beneficial
Ownership
(1)
|
Percent
of Class
|
||
|
Directors
|
||||
|
Joseph
M. Brooker(2)
|
801,841
|
*
|
||
|
Michael
J. O’Byrne(3)
|
352,297
|
*
|
||
|
Robert
D. Penner(4)
|
238,750
|
*
|
||
|
Michael
J. Wozniak(5)
|
198,750
|
*
|
||
|
Robert
J. Clark(6)
|
521,098
|
*
|
||
|
Jon
R. Whitney(7)
|
249,384
|
*
|
||
|
David
G. Wight(8)
|
290,236
|
*
|
||
|
J.
Scott Zimmerman(9)
|
3,039,141
|
3.68
|
||
|
Executive
Officers
|
||||
|
Paul
Wiesner(10)
|
526,579
|
*
|
||
|
Keith
J. Knapstad(11)
|
420,000
|
*
|
||
|
Donald
R. Martin(12)
|
4,000
|
*
|
||
|
All
current directors and current executive officers as a group
(9 persons)
|
3,613,935
|
4.35
|
||
|
Five
Percent Shareholders
|
||||
|
Trapeze
Capital Corp.(13)
|
27,839,186
|
29.22
|
||
|
GLG
North American Opportunity Fund(14)
|
8,457,007
|
9.44
|
||
|
Touradji
Capital Management(15)
|
4,139,463
|
5.10
|
||
|
William
Herbert Hunt Trust Estate(16)
|
4,273,504
|
5.01
|
||
|
UBS
AG Canada Branch(17)
|
4,273,504
|
5.01
|
||
|
*
|
Represents
less than 1%.
|
|
(1)
|
Beneficial
ownership is determined under the rules of the SEC and includes
voting or investment power with respect to the securities. Unless
indicated otherwise by footnote, the address for each listed director and
executive officer is 1125 17th
Street, Suite 2310, Denver, Colorado 80202. The number of common
shares outstanding used in calculating the percentage for each listed
person includes the common shares underlying warrants or options held by
that person that are currently exercisable or are exercisable within 60
days of April 28, 2008, but excludes common shares underlying
warrants or options held by any other
person.
|
|
(2)
|
Includes
66,666 options to purchase common shares. Also includes 704,225 common
shares in the name of Buckeye Ventures, LLC, of which Mr. Brooker is
the manager and his family are the
members.
|
|
(3)
|
Includes
280,000 options to purchase common shares and 8,547 common shares issuable
upon the conversion of our Series B Convertible Subordinated
Notes.
|
|
(4)
|
Includes
130,000 options to purchase common
shares.
|
|
(5)
|
Includes
130,000 options to purchase common
shares.
|
|
(6)
|
Includes
115,000 options to purchase common shares and 42,735 common shares
issuable upon the conversion of our Series B Convertible Subordinated
Notes.
|
|
(7)
|
Includes
115,000 options to purchase common
shares.
|
-9-
|
(8)
|
Includes
115,000 options to purchase common shares and 25,641 common shares
issuable upon the conversion of our Series B Convertible Subordinated
Notes.
|
|
(9)
|
Includes
23,000 common shares and 125,000 options to purchase common shares held by
Mr. Zimmerman’s spouse, 1,415,000 options to purchase common shares
and 25,641 common shares issuable upon the conversion of our Series B
Convertible Subordinated Notes. Mr. Zimmerman resigned as the
President and Chief Executive Officer effective as of April 9, 2007.
Pursuant to the Separation Agreement between the Company and
Mr. Zimmerman, the Company agreed to accelerate Mr. Zimmerman’s
outstanding unvested stock options and agreed to extend the expiration
date of Mr. Zimmerman’s options from 90 days after the effective date
of Mr. Zimmerman’s term as a director expired as set forth in the
original terms of the option award until the original expiration date of
each of the options. The information for Mr. Zimmerman is based on
information the Company had on June 21,
2007.
|
|
(10)
|
Includes
400,000 options to purchase common shares and 21,368 common shares
issuable upon the conversion of our Series B Convertible Subordinated
Notes.
|
|
(11)
|
Includes
400,000 options to purchase common
shares.
|
|
(12)
|
Mr. Martin
resigned as Vice President of Canadian and International Operations on
July 9, 2007, effective July 31, 2007. As of Mr. Martin’s
resignation, all unvested stock options were terminated and all vested
options remained exercisable for 90 days after July 31, 2007. The
information for Mr. Martin is based on information the Company had on
July 31, 2007.
|
|
(13)
|
The
27,839,186 shares represent 13,682,776 common shares and 14,156,410 common
shares issuable upon the conversion of our Series A and Series B
Convertible Subordinated Notes due March 31, 2012. Amounts shown are
beneficially owned by Trapeze Asset Management Inc. and Trapeze Capital
Corp., 1346049 Ontario Limited and Randall Abramson, related parties that
filed a Schedule 13D/A as a group with the SEC on April 10, 2008. The
address for the group is 22 St. Clair Avenue East, 18th Floor, Toronto,
Ontario, Canada M4T 2S3.
|
|
(14)
|
The
8,457,007 shares represent common shares issuable upon the conversion of
our Series A and Series B Convertible Subordinated Notes due
March 31, 2012. Amounts shown are beneficially owned by GLG North
American Opportunity Fund, GLG Partners LP, GLG Partners Limited, Noam
Gottesman, Pierre Lagrange and Emmanuel Roman, related parties that filed
a Schedule 13G/A as a group with the SEC on February 14, 2008. The
address for the group is 1 Curzon Street, London I1J 5HB, United
Kingdom.
|
|
(15)
|
This
information was derived from the Schedule 13G/A filed by Touradji Capital
Management LP, Touradji Global Resources Master Fund, Ltd. and Paul
Touradji with the SEC on February 14, 2008. The address for the group
is 101 Park Avenue, 48th Floor, New York, NY
10178.
|
|
(16)
|
The
4,273,504 shares represent common shares issuable upon the conversion of
our Series A and Series B Convertible Subordinated Notes due
March 31, 2012. The address for William Herbert Hunt Trust Estate is
1601 Elm Street, Suite 3400, Dallas, Texas
75201.
|
|
(17)
|
The
4,273,504 shares represent common shares issuable upon the conversion of
our Series A and Series B Convertible Subordinated Notes due
March 31, 2012. The address for UBS AG Canada Branch is 161 Bay
Street, Suite 4100, P.O. Box 617, Toronto, Ontario, Canada M5J
2S1.
|
-10-
Our Audit
Committee reviews our financial reporting process on behalf of our board of
directors. On June 23, 2005, our board of directors adopted a written
charter for our Audit Committee, and has re-evaluated it in connection with the
filing of our Annual Report on Form 10-K with the Securities and Exchange
Commission. In fulfilling its responsibilities, the Audit Committee has reviewed
and discussed the audited financial statements contained in the 2007 Annual
Report on Form 10-K with our management and our independent registered
public accounting firm, Hein & Associates LLP. Our management is
responsible for the financial statements and the reporting process, including
the system of internal controls. Hein & Associates is responsible for
expressing an opinion on the conformity of those audited financial statements
with accounting principles generally accepted in the United States.
Hein & Associates is also responsible for expressing an opinion on the
effectiveness, and on management’s assessment of the effectiveness of the
Company’s internal control over financial reporting.
The Audit
Committee has discussed with Hein & Associates the matters requiring
discussion by Statement on Auditing Standards No. 61, Communication with
Audit Committees, as modified or supplemented, and all other matters required to
be discussed with the auditors. In addition, the Audit Committee has received
the written disclosures and the letter from Hein & Associates required
by Independence Standards Board No. 1 (Independence Discussions with Audit
Committees), as modified or supplemented, and discussed with Hein &
Associates their independence from Storm Cat and its management. The Audit
Committee has also considered whether, and determined that, the independent
registered public accounting firm’s provision of other non-audit services to us
is compatible with maintaining Hein & Associates’
independence.
Based on
the reviews and discussions referred to above, the Audit Committee recommended
to the board of directors (and the board of directors approved) that the
audited financial statements be included in the Annual Report on Form 10-K
for the year ended December 31, 2007, for filing with the Securities and
Exchange Commission.
Respectfully
submitted on April 29, 2008, by the members of the Audit Committee of the
board of directors.
Robert D.
Penner, Chairman
Robert J.
Clark
Jon R.
Whitney
In
accordance with the rules and regulations of the SEC, the above report of
the Audit Committee shall not be deemed to be “soliciting material” or to be
“filed” with the SEC or subject to Regulations 14A or 14C of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”) or to the liabilities of
Section 18 of the Exchange Act and shall not be deemed to be incorporated
by reference into any filing under the Securities Act of 1933, as amended, or
the Exchange Act, notwithstanding any general incorporation by reference of this
proxy statement into any other filed document.
|
|
Independent
Registered Public Accounting Firm
|
Hein &
Associates, LLP, served as our independent registered public accounting firm for
the year ended December 31, 2007, and has been selected to serve as our
independent registered public accounting firm for the current year. For the
years ended December 31, 2006, and December 31, 2007, we incurred fees
for services from Hein & Associates as discussed below.
|
|
·
|
Audit Fees. The
aggregate fees billed for professional services rendered by
Hein & Associates for the audit of our annual financial
statements included in our Form 10-K and the review of the financial
statements included in our Forms 10-Q were approximately $148,068 for the
year ended December 31, 2006, and approximately $225,000 for the year
ended December 31, 2007. For the years ended December 31, 2006,
and December 31, 2007, such fees included fees for Hein &
Associates’ examination of managements’ assessment of the effectiveness,
and the effectiveness, of the Company’s internal control over financial
reporting.
|
|
|
·
|
Audit-Related Fees. The
aggregate fees billed for professional services rendered by
Hein & Associates for assurances and related services that are
reasonably related to the performance of the audit or review of our
financial statements were approximately $13,605 for the year ended
December 31, 2006, and $0 for the year ended December 31,
2007.
|
|
|
·
|
Tax Fees. The aggregate
fees billed for professional services rendered by Hein &
Associates related to federal and state tax compliance, tax advice and tax
planning were approximately $24,757 for the year ended December 31,
2006, and $33,000 for the year ended December 31, 2007. All of these
services are permitted non-audit
services.
|
|
|
·
|
All Other Fees. The
aggregate fees for professional services rendered by Hein &
Associates for their services relating to Sarbanes-Oxley Act compliance
was approximately $48,475 for the year ended December 31, 2006, and
$0 for the year ended December 31,
2007.
|
|
|
Audit
Committee Pre-Approval Policy
|
The Audit
Committee pre-approves all audit and permissible non-audit services provided by
our independent registered public accounting firm on a case-by-case basis unless
such non-audit services which are not pre-approved are reasonably expected not
to constitute, in the aggregate, more than 5% of the fees paid to our
independent registered public accounting firm for that year, were not
recognized, and are promptly brought to the attention of the Audit Committee and
approved prior to the completion of the audit. These services may include audit
services, audit-related services, tax services and other services. Our Chief
Financial Officer is responsible for presenting the Audit Committee with an
overview of all proposed audit, audit-related, tax or other non-audit services
to be performed by our independent registered public accounting firm. The
presentation must be in sufficient detail to define clearly the services to be
performed. The Audit Committee does not delegate its responsibilities to
pre-approve services performed by our independent registered public accounting
firm to management.
-11-
|
|
Compensation
Discussion And Analysis
|
|
|
Executive
Compensation Philosophy and
Objectives
|
The
Compensation Committee and the board of directors has responsibility for
establishing, implementing and monitoring the Company’s overall executive
compensation policies and practices. Our named executive officers in
this proxy statement include our principal executive officer, our principal
financial officer, our President and Chief Operating Officer as well as our
former Vice President, Canadian and International Operations who resigned in
July 2007 and our former President and Chief Executive Officer who resigned in
April 2007. Storm Cat has no other executive officers. The board has
operated pursuant to a compensation philosophy of providing short- and long-term
initiatives to attract qualified individuals during the initial growth phase of
the Company’s development and to drive the Company’s financial performance by
providing monetary and equity awards that are linked to the success of the
Company and returns to shareholders. Historically, compensation decisions have
been made at the board’s discretion in the context of personnel needs and the
Company’s performance.
The
Compensation Committee and the board evaluates both the Company’s performance
and compensation to ensure that the Company maintains its ability to attract and
retain superior employees in key positions with the skills and experience
necessary to implement the Company’s business objectives. In order to remain
competitive in the market for executive talent, the Compensation Committee
evaluates executive compensation levels at similarly situated companies (the
“Peer Group”). The Compensation Committee selected the Company’s Peer Group
after an examination of oil and gas companies focused on exploration and
development of unconventional reserves, with similar property holdings. The Peer
Group for compensation decisions in 2006 and 2007 consisted of Carrizo Oil &
Gas, Inc., Double Eagle Petroleum Co., Galaxy Energy Corporation, Gasco Energy,
Inc., Kodiak Oil & Gas Corp., NGAS Resources, Inc., Teton Energy
Corporation, Torrent Energy Corporation and Warren Resources, Inc.
The
Compensation Committee considers four primary components of compensation when
evaluating compensation of our named executive officers. The primary elements
consist of:
|
|
·
|
Base
Salary;
|
|
|
·
|
Annual
Cash Bonus;
|
|
|
·
|
Long-Time
Incentives (Stock Options and Restricted Share Units);
and
|
|
|
·
|
Benefits
packages.
|
The award
of base salary, annual cash bonus, long-term incentives and benefit packages are
in the complete discretion of the Compensation Committee in accordance with its
charter; however, the historical practice of the Company has been for the board
to ratify all compensation decisions of the Compensation Committee. This permits
the Compensation Committee and the board to control and tailor compensation
levels based on the Company’s and each named executive officer’s individual
performance. Base salary is intended to provide the basic level of market
competitive compensation. The Compensation Committee evaluates base salaries at
the Peer Group companies in order to assist it in setting base salary levels
that will attract and retain key employees.
Annual
cash bonuses are provided at the end of the year and awarded dependent upon the
Company’s and each named executive officer’s individual performance during the
year. The Compensation Committee evaluates the Company’s stock performance,
revenues, acquisition and exploration activities and other
achievements.
The
Company’s long term incentives consist of stock options and restricted share
units, or RSUs, pursuant to our Amended and Restated Share Option Plan and our
Restricted Share Unit Plan, both adopted in June 2006. The
Compensation Committee awards long term incentives to align the interests of the
executives with those of shareholders. Upon joining the Company, executives are
granted stock options or RSUs on a case-by-case basis. Our named executive
officers may also be awarded stock options or RSUs one or more times throughout
the year to focus the executive’s efforts on the Company’s stock performance.
All equity awards are approved by the Compensation Committee and ratified by the
board of directors. The Compensation Committee’s practice is to award stock
options with exercise prices based on the closing market price of the Company’s
common shares on the date of the grant. Historically, the Compensation Committee
has awarded long term incentives with eighteen month vesting periods in order to
incentive focus on the Company’s stock performance during its first three years
of operations. Starting in 2007, the Compensation Committee has extended vesting
periods to twenty-four months to improve the retentive value of the awards and
to incentivize the Company’s long term growth.
Currently,
the Company does not use perquisites to compensate its named executive officers.
The Compensation Committee and the board has determined to provide all employees
with the same benefits packages, and thus, named executive officers do not
receive any perquisites or benefits beyond those offered to all of the Company’s
employees. The Company does not provide pension benefits to any named executive
officers or any of its employees.
The
Compensation Committee in determining compensation awards does not typically set
an allocation or “weight” attributable to each element of compensation. All
elements of compensation are considered each year to determine appropriate
levels of base salary, annual cash incentives, long term incentives and benefits
in order to attract, retain and motivate the Company’s named executive
officers.
-12-
The
amounts of compensation awarded by the Compensation Committee to our named
executive officers, other than the Chief Executive Officer, is based in part on
the recommendations of the Chief Executive Officer and in most cases, tracks the
Chief Executive Officer’s recommendations. The Compensation Committee makes, and
the board ratifies, all determinations regarding compensation awards, with named
executive officers, including any serving as a director, excluded from the
process.
The
Compensation Committee has considered the potential impact of
Section 162(m) of the Internal Revenue Code adopted under the Federal
Revenue Reconciliation Act of 1993. Section 162(m) disallows tax
deduction to any publicly-held corporation for individual compensation exceeding
$1 million in any taxable year paid to the Chief Executive Officer and up to
three other most highly compensated officers who are included in the summary
compensation table in the Company’s proxy statement for the following fiscal
year, excluding chief financial officer, unless compensation is
performance-based. Since the targeted cash compensation of each of the named
executive officers is well below the $1 million threshold, the Compensation
Committee believes that Section 162(m) will not reduce the tax
deductions that would be available to the Company for executive compensation in
2007 or for compensation awards to be granted to the Company’s executives in the
future. The Company policy is to qualify to the extent reasonable for executive
compensation for deductibility under applicable tax laws.
In April
2008, the Compensation Committee adopted a formalized incentive compensation
plan with identified performance targets to attract and retain key employees and
link rewards granted to named executive officers to Company performance. This
plan is discussed further below under the heading “Contemplated Changes in
Executive Compensation.”
|
|
Compensation
Elements In 2007
|
|
|
Base
Salary
|
Base
salaries for the named executive officers are established based on the scope of
their responsibilities, taking into account competitive market compensation for
similar positions amongst the Peer Group, and an executive’s ability to
contribute to the Company’s success. The Company does not have
employment agreements with any of its named executive officers that require the
setting of salary levels. Each named executive officer is paid a base salary
that is reviewed annually by the Compensation Committee and the
board. Salary adjustments take into account salary adjustments
amongst the Company’s Peer Group and other similarly situated companies, the
success and growth of the Company, including its stock performance, and the
context of a named executive officer’s role, responsibilities, experience,
tenure, individual performance and contribution to the Company’s results. The
actual base salaries paid to the named executive officers in 2007 are disclosed
in the “2007 Summary Compensation Table” on page 15.
|
|
Annual
Bonuses
|
The
Compensation Committee awards annual cash bonuses at its discretion and upon
ratification by the board. After taking into consideration the Company’s
performance during year 2007, the Compensation Committee determined, and the
board concurred, not to award any cash bonuses to its named executive officers
for year 2007.
|
|
Equity-Based
Awards
|
Similar
to the annual cash bonuses, stock options and RSUs are awarded at the
Compensation Committee’s discretion upon ratification by the board. Upon
ratification by the board, the Compensation Committee awarded 20,000
unrestricted RSUs, together with a small cash payment to offset the tax
liability associated with such grant, to each of our President and Chief
Operating Officer and Chief Financial Officer for their assistance and
dedication through the transition after the resignation of the Company’s former
Chief Executive Officer and the appointment of Mr. Brooker as the Company’s
Chief Executive Officer in June 2007. In connection with Mr.
Brooker’s appointment as our Chief Executive officer, the Compensation Committee
approved a grant of 200,000 stock options that vest ratably over twenty-four
months on July 5, 2008, January 5, 2009 and July 5, 2009. Mr. Brooker
also received 100,000 stock options in accordance with the Director Compensation
Policy that vest ratably over eighteen months on December 21, 2007, June 21,
2008 and December 21, 2008. All options have an exercise price on the
closing market price of the Company’s common shares on the TSX on the date of
the grant. The level and exercise prices of awards to each named
executive officer is reflected in the “2007 Grants of Plan-Based Awards” table
on page 17.
|
|
Benefits
|
In 2007,
executives were eligible for health and welfare benefits on the same terms and
conditions as benefits available to the Company’s eligible
employees. These benefits included health and dental coverage,
AD&D coverage, term life insurance coverage, as well as a
401(k) savings plan. Historically and in 2007, contributions to
401(k) savings plans were not matched by the Company.
|
|
Potential
Payments Upon Termination
|
The
Company has not entered into employment agreements or stand-alone change in
control or severance agreements with any of its named executive officers or
other employees. On September 19, 2007, the board of directors, upon
the recommendation of and approval by the Compensation Committee, adopted and
approved a Change in Control Severance Pay Plan, or the Severance
Plan. The Severance Plan is effective only in the event of a change
in control, as defined in the Severance Plan, of the Company. Upon
the occurrence of such a change in control, the Company will pay an employee, if
the Company terminates such employee’s employment other than for cause, as
defined in the Severance Plan, or if the employee terminates employment due to
death or for good reason, as defined in the Severance Plan, during the change in
control period, the following amounts: (i) the accrued obligations of the
Company owing to the employee, including base salary owed to date, the
employee’s annual bonus on a pro rata basis and any
accrued vacation pay not already paid; and (ii) additional severance benefits to
three tiers of employees as follows:
|
·
|
Tier
1 Employees: Chief Executive Officer, President, Chief Operating Officer
and Chief Financial Officer. An amount equal to two times the
sum of the employee’s annual base salary and annual bonus. The
severance period for a Tier 1 Employee is eighteen
months.
|
-13-
|
·
|
Tier
2 Employees: All employees that are not Tier 1 Employees and that have
been employed by the Company or an affiliate for at least 12 consecutive
months. An amount equal to one time the sum of the employee’s
annual base salary and annual bonus. The severance period for a
Tier 2 Employee is twelve months.
|
|
·
|
Tier
3 Employees: All employees that are not Tier 1 Employees and that have NOT
been employed by the Company or an affiliate for at least 12 consecutive
months. An amount equal to the employee’s monthly compensation
(one-twelfth of annual base salary) for each consecutive month period of
service with the Company (rounded to the nearest month), up to a maximum
severance benefit of eleven times the Employee’s monthly compensation and
a minimum severance benefit of two times the employee’s monthly
compensation.
|
An
employee must execute a waiver and release agreement with respect to the
employee’s potential claims concerning his or her employment or separation in
the form provided by the Company to be eligible for the above Tier 1, Tier 2 or
Tier 3 severance benefits. Such severance benefits are contingent
upon the completion of the change in control and may be offset against certain
other amounts owing or offers made to the employee. Tier 1 and Tier 2
Employees may be eligible for the continuation of certain other benefits, and
all employees may be eligible for payment of other benefits owing to
them. If a change in control causes any payments to Tier 1 or Tier 2
Employees to be subject to additional excise tax, such Tier 1 and Tier 2
Employees shall be entitled to an additional gross-up payment equal to the
amount of the excise tax. Payments to Tier 3 Employees may be subject
to further limitations if considered “parachute payments” as defined under the
tax code. If any employee is terminated for cause, such employee
shall be entitled only to his or her annual base salary and other benefits
through the date of termination. All equity compensation grants made
to an employee by the Company and outstanding at the time of a change in control
shall be accelerated and vest 100%.
|
|
Contemplated
Changes in Executive Compensation
|
The
Compensation Committee recently adopted a formalized annual incentive
compensation plan for 2008 with identified performance targets to attract and
retain key employees and link rewards granted to named executive officers to
Company performance. The annual incentive plan includes objective performance
criteria such as growth in net asset value, production and EBITDA, as well as
subjective discretion by the Compensation Committee to adjust awards based on
the Company’s overall success and individual merit. The Compensation
Committee has set a target award opportunity as a percentage of base salary
based on their position and level of responsibility in the
Company. The amount of any annual cash incentive award will be based
on achievement of the Company’s goals in the three performance categories listed
above. Each of the performance categories has been weighted
accordingly and performance targets have been established in order to payout
awards at a minimum threshold level, a target level and a maximum outstanding
level. If the Company fails to achieve the minimum threshold level of
performance for a measure, then no payout for that measure will be
made. Achievment at the threshold level will generally payout 25% of
the target award opportunity and achievement at the target and outstanding
levels will generally payout at 100% and 200%, respectively, of the target award
opportunity. Any payout will be subject to the discretion of the
Compensation Committee to consider other subjective factors it deems
appropriate.
All of
the Company’s employees and name executive officers will participate in this new
compensation plan. Target performance for the named executive officers will be
set by the Compensation Committee and reviewed on an annual basis. Target
performance levels for the remaining employees will be set by the Chief
Executive Officer and approved by the Compensation Committee.
|
|
COMPENSATION
COMMITTEE REPORT
|
The
Compensation Committee met with management to review and discuss the
Compensation Discussion and Analysis. Based on such review and discussion, the
Compensation Committee recommended to the board of directors (and our board of
directors approved) that the Compensation Discussion and Analysis be included in
this proxy statement and incorporated by reference in the Company’s Annual
Report on Form 10-K for the year ended December 31, 2007.
Respectfully
submitted on April 29, 2008 by the members of the Compensation Committee of
the board of directors.
Michael
J. Wozniak, Chairman
David G.
Wight
Michel J.
O’Byrne
In
accordance with the rules and regulations of the SEC, the above report of
the Compensation Committee shall not be deemed to be “soliciting material” or to
be “filed” with the SEC or subject to Regulations 14A or 14C of the Exchange Act
or to the liabilities of Section 18 of the Exchange Act and shall not be
deemed to be incorporated by reference into any filing under the Securities Act
of 1933, as amended, or the Exchange Act, notwithstanding any general
incorporation by reference of this proxy statement into any other filed
document.
-14-
|
|
2007
Summary Compensation Table
|
|
Name and Principal Position
|
Year
|
Salary
|
Bonus
|
Stock
Awards
(1)
|
Option
Awards
(2)
|
All Other
Compensation
(3)
|
|
Total
|
|||||||
|
Joseph
M. Brooker, Chief Executive Officer(4)
|
2007
|
$105,500
|
—
|
$54,045
|
$152,851
|
—
|
$312,396
|
||||||||
|
Paul
Wiesner, Chief Financial Officer and Secretary
|
2007
|
$160,000
|
—
|
$20,771
|
$79,682
|
$10,000
|
$270,453
|
||||||||
|
2006
|
$153,750
|
—
|
—
|
$330,295
|
—
|
$484,046
|
|||||||||
|
Keith
J. Knapstad, President and Chief Operating Officer(5)
|
2007
|
$173,125
|
—
|
$22,456
|
$79,682
|
$10,000
|
$285,263
|
||||||||
|
2006
|
$150,417
|
—
|
—
|
$330,321
|
—
|
$480,738
|
|||||||||
|
|
|||||||||||||||
|
Donald
R. Martin, Former Vice President, Canadian and International
Operations(6)
|
2007
|
$101,309
|
—
|
—
|
—
|
—
|
$101,309
|
||||||||
|
2006
|
$152,086
|
—
|
—
|
$337,819
|
—
|
$489,905
|
|||||||||
|
|
|
|
|||||||||||||
|
J.
Scott Zimmerman, Former President and Chief
Executive Officer(7)
|
2007
|
$70,664
|
—
|
$5,181
|
$391,526
|
(8)
|
$350,000
|
(9)
|
$817,371
|
||||||
|
2006
|
$217,760
|
—
|
$8,247
|
$454,566
|
—
|
$678,573
|
|||||||||
|
(1)
|
The
amounts represent the portion of the fair value of RSUs recognized as
expense during 2007 and 2006 for financial statement reporting purposes,
disregarding the estimate of forfeitures related to service-based vesting
conditions, but otherwise computed in accordance with SFAS No. 123R,
converted into US dollars based on the average exchange rate for 2007 of
C$1.00: US$0.93565 and for 2006 of C$1.00: US$0.88206. The amounts do not
represent cash payments made to the named executive officers or amounts
realized. Under SFAS 123R, the fair value of RSUs granted to our named
executive officers is recognized ratably over the vesting period. There
were no forfeitures of RSUs by any named executive officers during 2007
and 2006.
|
|
|
See
the “2007 Grants of Plan-Based Awards” table for information on RSUs
awarded in 2007.
|
|
(2)
|
The
amounts represent the portion of the fair value of options recognized as
expense during 2007 and 2006 for financial statement reporting purposes,
disregarding the estimate of forfeitures related to service-based vesting
conditions, but otherwise computed in accordance with SFAS No. 123R,
converted into US dollars based on the average exchange rate for 2007 of
C$1.00: US$0.93565 and for 2006 of C$1.00: US$0.88206. The amounts do not
represent cash payments made to the named executive officers or amounts
realized. Under SFAS 123R, the fair value of options granted to the named
executive officers is recognized ratably over the vesting period. See
details of the assumptions used in valuation of the options in Note 7 to
the Company’s audited consolidated financial statements included in the
Annual Report on Form 10 K filed for the year ended December 31, 2007, and
in Note 3 to the Company’s audited consolidated financial statements
included in the Annual Report on Form 10-K filed for the year ended
December 31, 2006. To obtain a free copy of the Form 10 K please see
“Additional Information” below.
|
|
|
There
were no forfeitures of options awards by named executive officers during
2006 and 2007, other than 66,666 option awards forfeited by Mr. Martin
upon his resignation as described in note (5) to this 2007 Summary
Compensation Table.
|
|
|
See
the “2007 Grants of Plan-Based Awards” table for information on options
awarded in 2007.
|
|
(3)
|
Other
than with respect to Mr. Zimmerman as described below in note (9) to this
2007 Summary Compensation Table, amounts represent cash payments to each
of Messrs. Wiesner and Knapstad as a “gross-up” payment related to their
tax liability upon the grant of
RSUs.
|
|
(4)
|
On
June 20, 2007, the board of directors appointed Mr. Brooker to serve as
the Company’s Chief Executive Officer, effective as of July 2,
2007. Mr. Brooker’s initial salary as Chief Executive Officer
is $200,000 per year.
|
|
|
On
June 21, 2007, after the Annual General Meeting, the board of directors
appointed Mr. Brooker as a director of the Company. The amounts
reflected show Mr. Brooker’s compensation as both Chief Executive Officer
and director. Specifically, the amounts reported include the following
compensation with respect to Mr. Brooker’s service as a
director:
|
|
Year
|
|
Salary
|
Stock
Awards
|
Option
Awards
|
||
|
2007
|
|
$5,500
|
$54,045
|
$152,851
|
|
|
The
amounts for stock awards and option awards were computed in accordance
with SFAS 123R as specifically described in notes (1) and (2) to this 2007
Summary Compensation Table. For further information on the
equity awards granted to Mr. Brooker in connection with his 2007 director
service see the “2007 Grants of Plan-Based Awards”
table.
|
-15-
|
(5)
|
On
June 20, 2007, the board of directors appointed Keith Knapstad, who had
been serving as the Company’s Acting President and Chief Executive Officer
since March 9, 2007, to serve as the Company’s President and Chief
Operating Officer, effective as of July 2, 2007. Prior to March
9, 2007, Mr. Knapstad had been serving as our Executive Vice President and
Chief Operating Officer. Mr. Knapstad’s annual salary was
increased from $165,000 to $180,000 in connection with this
appointment.
|
|
(6)
|
Mr.
Martin resigned as Vice President of Canadian and International Operations
on July 9, 2007, effective July 31,
2007.
|
|
(7)
|
Mr.
Zimmerman resigned as President and Chief Executive Officer on and
effective April 9, 2007. Mr. Zimmerman did not stand for re-election at
last year’s Annual General Meeting and his term as a director expired on
June 21, 2007. The amounts reported include Mr. Zimmerman’s
compensation as both President and Chief Executive Officer and
director. Specifically, the amounts reported include the
following compensation with respect to Mr. Zimmerman’s service as a
director:
|
|
Year
|
Salary
|
Stock
Awards
|
Option
Awards
|
|||
|
2007
|
$8,500
|
$5,181
|
$391,526
|
|||
|
2006
|
$11,500
|
$8,027
|
$397,252
|
|
|
The
amounts for stock awards and option awards were computed in accordance
with SFAS 123R as specifically described in notes (1) and (2) to this 2007
Summary Compensation Table. For further information on the
equity awards granted to Mr. Zimmerman in connection with his 2007
director service see the “2007 Grants of Plan-Based Awards”
table.
|
|
(8)
|
On
May 18, 2007, the Company entered into a Separation and Release Agreement
(the “Separation Agreement”) with Mr. Zimmerman. Pursuant to
the Separation Agreement, the Company agreed to accelerate Mr. Zimmerman’s
outstanding unvested stock options and agreed to extend the expiration
date of Mr. Zimmerman’s options from 90 days after the effective date of
Mr. Zimmerman’s expiration of his term as a director as set forth in the
original terms of the option award until the original expiration date of
each of the options. As a result of such modifications, the
options set forth below were subject to the retirement eligibility
provisions of SFAS 123R, which resulted in acceleration of expense
recognition of $246,787 converted into US dollars based on the average
exchange rate for 2007 of C$1.00: US$0.93565. The incremental fair value,
computed as of the modification date in accordance with SFAS 123R, with
respect to the modified options is $392,522, converted into US dollars
based on the average exchange rate for 2007 of C$1.00:
US$0.93565.
|
|
Original
Grant Date
|
Modified
Grant Date
|
Option
Shares Outstanding
|
Expiration
Date Upon Director Term Expiration
|
Expiration
Date As Modified
|
||||
|
8/25/2004
|
5/18/2007
|
|
900,000
|
9/19/2007
|
8/25/2009
|
|||
|
3/9/2006
|
5/18/2007
|
300,000
|
9/19/2007
|
3/9/2011
|
||||
|
4/29/2005
|
5/18/2007
|
200,000
|
9/19/2007
|
4/29/2010
|
||||
|
6/30/2006
|
5/18/2007
|
15,000
|
9/19/2007
|
6/30/2011
|
|
(9)
|
Pursuant
to the Separation Agreement described in note (8) to this 2007 Summary
Compensation Table, the Company paid Mr. Zimmerman $350,000 in a single
lump sum payment on May 26, 2007, subject to statutory and authorized
deductions.
|
-16-
2007
Grants of Plan-Based Awards
|
Name
|
Grant
Date
|
All Other
Stock Awards:
Number of
Shares of
Stock or
Units
(1)
|
All Other
Option Awards:
Number of
Securities
Underlying
Options
(2)
|
Exercise or
Base Price
of Option
Awards
($/Sh)
(3)
|
Closing
Market Price
on Grant
Date
(4)
|
Grant Date
Fair Market
Value of Stock
and Option
Awards
(5)
|
||||||||
|
Joseph
M. Brooker
|
4/5/2007
|
5,000
|
(6)
|
—
|
—
|
—
|
$4,300
|
|||||||
|
5/1/2007
|
20,000
|
(6)
|
—
|
—
|
—
|
$22,200
|
||||||||
|
6/21/2007
|
5,000
|
(6)
|
—
|
—
|
—
|
$5,750
|
||||||||
|
6/21/2007
|
—
|
100,000
|
(7)
|
$1.14
|
$1.14
|
$114,000
|
||||||||
|
7/5/2007
|
—
|
200,000
|
(7)
|
$1.14
|
$1.14
|
$228,000
|
||||||||
|
Paul
Wiesner
|
7/17/2007
|
20,000
|
(8)
|
—
|
—
|
—
|
$21,200
|
|||||||
|
Keith
J. Knapstad
|
7/5/2007
|
20,000
|
(8)
|
—
|
—
|
—
|
$22,600
|
|||||||
|
Donald
R. Martin(9)
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||
|
J.
Scott Zimmerman(10)
|
4/2/2007
|
3,750
|
(11)
|
—
|
—
|
—
|
$3,563
|
|||||||
|
6/21/2007
|
1,250
|
(11)
|
—
|
—
|
—
|
$1,438
|
||||||||
|
6/21/2007
|
—
|
15,000
|
(11)
|
$1.14
|
$1.14
|
$17,100
|
||||||||
|
(1)
|
Amounts
represent RSUs granted under the Storm Cat Energy Corporation Restricted
Share Unit Plan. Unvested RSUs generally vest upon a change in
control of the Company, as such term is defined in the Storm Cat Energy
Corporation Change in Control Severance Pay
Plan.
|
|
(2)
|
Amounts
represent options granted under the Storm Cat Energy Corporation Amended
and Restated Share Option Plan. These options expire five years
from the date of grant and are subject to earlier termination upon certain
events related to termination of employment. Options not yet
exercisable generally become exercisable upon a change in control of the
Company, as such term is defined in the Storm Cat Energy Corporation
Change in Control Severance Pay
Plan.
|
|
(3)
|
Options
are granted with an exercise price in Canadian dollars and based on the
closing market price of the Company’s common shares on the TSX on the date
of grant or on the date prior to the grant. The exercise price of the
grant made to Mr. Brooker on June 21, 2007, was based on the closing
market price of the Company’s common shares on the TSX on the date of the
grant, which was C$1.22. The grants made to Mr. Brooker and Mr. Zimmerman
on July 5, 2007, was based on the closing market price of the Company’s
common shares on the TSX on the date of the grant, which was C$1.20. The
amounts shown here are a conversion of the exercise price into US Dollars
on the date of the grant.
|
|
(4)
|
Amounts
reflect closing market price of the Company’s common shares on the dates
of grant based as traded on AMEX.
|
|
(5)
|
Amounts
represent the full grant date fair value of RSUs and stock options granted
to the named executive officers. Generally, the full grant date fair value
is the amount that the Company would expense in its financial statements
over the award’s vesting schedule. See notes (1) and (2) to the “2007
Summary Compensation Table” for further discussion regarding computation
of these amounts.
|
|
(6)
|
Mr.
Brooker was granted 5,000 and 20,000 unrestricted RSUs on April 5, 2007
and May 1, 2007, respectively, as a consultant prior to commencement of
his employment. Subsequent to his employment, he was granted
5,000 RSUs that vest ratably (1,250 shares) at the end of each quarter for
his services as a director on the board of directors during the following
twelve months from the date of grant in accordance with the Director
Compensation Policy. See note (2) to the “2007 Director
Compensation Table” for more
information.
|
|
(7)
|
Of
Mr. Brooker’s awards, 100,000 were received as a one-time grant in
connection with his appointment as a director, with 33,333, 33,333 and
33,334 vesting on December 21, 2007, June 21, 2008, and December 21, 2008,
respectively, and 200,000 were received as a one-time grant in connection
with his appointment as Chief Executive Officer, with 66,666, 66,667 and
66,667 vesting on July 5, 2008, January 5, 2009, and July 5, 2009,
respectively.
|
|
(8)
|
Amounts
represent unrestricted RSUs granted to Messrs. Wiesner and
Knapstad.
|
|
(9)
|
Mr.
Martin resigned as Vice President of Canadian and International Operations
on July 9, 2007, effective July 31,
2007.
|
|
(10)
|
Mr.
Zimmerman resigned as the President and Chief Executive Officer effective
as of April 9, 2007. Mr. Zimmerman did not stand for re-election at last
year’s Annual General Meeting and his term as a director expired on June
21, 2007.
|
|
|
On
May 18, 2007, the Company entered into a Separation Agreement with Mr.
Zimmerman. Pursuant to the Separation Agreement, the Company
agreed to accelerate Mr. Zimmerman’s outstanding unvested stock options
and agreed to extend the expiration date of Mr. Zimmerman’s options from
90 days after the effective date of Mr. Zimmerman’s resignation as set
forth in the original terms of the option award until the original
expiration date of each of the options. As a result of such
modifications, these options were subject to the retirement eligibility
provisions of SFAS 123R, which resulted in acceleration of expense
recognition, as more fully described in note (8) to the “2007 Summary
Compensation Table.” The incremental fair value, computed as of
the modification date in accordance with SFAS 123R, with respect to the
modified options is $392,522, converted into US dollars based on the
average exchange rate for 2007 of C$1.00:
US$0.93565.
|
-17-
|
(11)
|
Mr.
Zimmerman was granted (i) 3,750 unrestricted RSUs on April 2, 2007 for
board service during the third and fourth quarters of 2006 and the first
quarter of 2007, (ii) 1,250 unrestricted RSUs on June 21, 2007 for board
service during the second quarter of 2007, and (iii) 15,000 fully-vested
options for board service the previous twelve months. See notes (2) and
(3) to the “2007 Director Compensation Table” for more
information.
|
|
|
Outstanding
Equity Awards at December 31,
2007
|
|
Option
Awards
|
Stock
Awards
|
|||||||||||||
|
Name
|
Number
of Securities Underlying Unexercised Options Exercisable
(1)
|
Number
of Securities Underlying Unexercised Options Unexercisable
|
Option
Exercise Price
(2)
|
Option
Expiration Date
(3)
|
Number
of Shares or Units of Stock That Have Not Vested
|
Market
Value of Shares or Units of Stock That Have Not Vested
(4)
|
||||||||
|
Joseph
M. Brooker
|
33,333 | 66,667 | (5) | $1.14 |
6/21/2012
|
— | — | |||||||
| — | 200,000 | (6) | $1.14 |
7/5/2012
|
— | — | ||||||||
| — | — | — | — | 2,500 | (7) | $1,775 | ||||||||
|
Paul
Wiesner
|
200,000 | — | $1.62 |
3/16/2010
|
— | — | ||||||||
| 133,334 | 66,666 | (8) | $2.59 |
3/9/2011
|
— | — | ||||||||
|
Keith
J. Knapstad
|
200,000 | — | $2.17 |
4/15/2010
|
— | — | ||||||||
| 133,334 | 66,666 | (8) | $2.59 |
3/9/2011
|
— | — | ||||||||
|
Donald
R. Martin(9)
|
— | — | — | — | — | — | ||||||||
|
J.
Scott Zimmerman(10)
|
900,000 | — | $0.38 |
8/25/2009
|
— | — | ||||||||
| 200,000 | — | $1.51 |
4/29/2010
|
— | — | |||||||||
| 300,000 | — | $2.59 |
3/9/2011
|
— | — | |||||||||
| 15,000 | — | $2.40 |
6/30/2011
|
— | — | |||||||||
|
(1)
|
All
exercisable options are currently
vested.
|
|
(2)
|
Options
are granted with an exercise price in Canadian dollars and based on the
closing market price of the Company’s common shares on the TSX on the date
of grant or on the date prior to the grant. The exercise price
amounts shown here reflect a conversion from Canadian dollars to U.S.
dollars based on the exchange rate on the date of the original
grant.
|
|
(3)
|
The
expiration date shown is the latest date the options may be
exercised. Options may terminate earlier in certain
circumstances, such as in connection with a named executive officer’s
termination of employment.
|
|
(4)
|
The
market value of RSUs that have not vested was computed by multiplying the
number of RSUs by the closing price of the Company’s common shares
underlying the RSUs on the TSX at December 31, 2007, which was $0.71 as
converted from Canadian dollars to U.S. dollars based on the exchange rate
on December 31, 2007.
|
|
(5)
|
Options
vest as to 33,333 on June 21, 2008 and 33,334 on December 21,
2008.
|
|
(6)
|
Options
vest as to 66,666 on July 5, 2008, 66,667 on January 5, 2009 and 66,667 on
July 5, 2009.
|
|
(7)
|
RSUs
vest at the rate of 1,250 on March 31, 2008 and June 30,
2008.
|
|
(8)
|
Options
vested on March 9, 2008.
|
|
(9)
|
Mr.
Martin resigned as Vice President of Canadian and International Operations
on July 9, 2007, effective July 31, 2007. As of Mr. Martin’s
resignation, all unvested stock options were terminated as of Mr. Martin’s
resignation and all vested options remained exercisable for 90 days after
July 31, 2007.
|
|
(10)
|
Mr.
Zimmerman resigned as the President and Chief Executive Officer effective
as of April 9, 2007. Pursuant to the Separation Agreement, as further
described in note (8) to the “2007 Summary Compensation Table,” the
Company agreed to accelerate Mr. Zimmerman’s outstanding unvested stock
options and agreed to extend the expiration date of Mr. Zimmerman’s
options from 90 days after the effective date of Mr.
Zimmerman’s expiration of his term as a director as set forth in
the original terms of the option award until the original expiration date
of each of the options.
|
-18-
|
|
Option
Exercises and Stock Vested In Year
2007
|
|
Stock Awards
|
|||||
|
Name
|
Number of Shares
Acquired on
Vesting
(1)
|
Value Realized
On Vesting
(1)
|
|||
|
Joseph
M. Brooker
|
27,500
|
$28,312(2)
|
|||
|
Paul
Wiesner
|
20,000
|
$21,200(3)
|
|||
|
Keith
J. Knapstad
|
20,000
|
$22,600(4)
|
|||
|
Donald
R. Martin
|
—
|
—
|
|||
|
J.
Scott Zimmerman
|
5,000
|
$5,000(5)
|
|||
|
(1)
|
These
amounts reflect the number of shares acquired and the aggregate dollar
amount realized on the vesting of RSUs for each of the named executive
officers during the most recent year ended December 31, 2007. The value
realized was computed by multiplying the number of RSUs by the market
value of the Company’s common shares underlying the RSUs on the TSX on the
vesting date (or the next trading day as applicable). The value
of the Company’s common shares at vesting is based on the closing market
price of our common shares and converted from Canadian dollars to U.S.
dollars based on the exchange rate on the date of
vesting.
|
|
(2)
|
As
a consultant, Mr. Brooker acquired 5,000 shares with a market price of
$0.86 upon vesting of RSUs on April 5, 2007 and 20,000 shares with a
market price of $1.11 upon vesting of RSUs on May 1, 2007. In
addition, as a director, he acquired 1,250 common shares with a market
price of $0.74 upon vesting of RSUs on September 30, 2007, and 1,250
common shares with a market price of $0.71 upon vesting of RSUs on
December 31, 2007.
|
|
(3)
|
Mr.
Wiesner acquired 20,000 common shares with a market price of $1.06 upon
vesting of RSUs on July 17, 2007.
|
|
(4)
|
Mr.
Knapstad acquired 20,000 common shares with a market price of $1.13 upon
vesting of RSUs on July 5, 2007.
|
|
(5)
|
Mr.
Zimmerman acquired 3,750 common shares with a market price of $0.95 upon
vesting of RSUs on April 2, 2007, and 1,250 common shares with a market
price of $1.15 upon vesting of RSUs on June 21,
2007.
|
|
|
Potential
Payments Upon Termination or Change in
Control
|
Pursuant
to our Amended and Restated Share Option Plan, upon a sale of the Company, all
unvested options, other than those granted to consultants conducting activities
intended to promote the merits or awareness of or the purchase or sale of the
Company’s securities, will be deemed fully vested.
If a sale
of the Company were to have occurred on December 31, 2007, there would be
no intrinsic value of options accelerated for any of our named executive
officers because the closing market price of the Company’s common shares on the
TSX on December 31, 2007, is less than the exercise prices of the options
granted to our named executive officers of the Company that are currently
unvested that would have been accelerated upon a sale of the
Company.
Pursuant
to our Restricted Share Unit Plan, upon the occurrence of a change of control of
the Company, all outstanding RSUs will automatically vest in full. As of
December 31, 2007, 2,500 of the RSUs held by our Chief Executive Officer
had not fully vested, and as a result, were such change in control to have
occurred on December 31, 2007, the value of RSUs accelerated for our Chief
Executive Officer would have been $1,775.
On
September 19, 2007, the board of directors, upon the recommendation of and
approval by the Compensation Committee, adopted and approved a Change in Control
Severance Pay Plan. For a description of this plan, see the discussion above
under the heading “Compensation Discussion and Analysis—Potential Payments Upon
Termination.”
Upon the
occurrence of a change in control, the Company has agreed to pay to an employee,
if the Company terminates such employee’s employment other than for cause, or if
the employee terminates employment due to death or for good reason, during the
change in control period, the following amounts: (i) the accrued obligations of
the Company owing to the employee, including base salary owed to date, the
employee’s annual bonus on a pro rata basis and any accrued vacation pay not
already paid; and (ii) additional severance benefits to three tiers of employees
as follows:
|
·
|
Tier
1 Employees: Chief Executive Officer, President, Chief Operating Officer
and Chief Financial Officer. An amount equal to two times the
sum of the employee’s annual base salary and annual bonus. The
severance period for a Tier 1 Employee is eighteen
months.
|
|
·
|
Tier
2 Employees: All employees that are not Tier 1 Employees and that have
been employed by the Company or an affiliate for at least 12 consecutive
months. An amount equal to one time the sum of the employee’s
annual base salary and annual bonus. The severance period for a
Tier 2 Employee is twelve months.
|
|
·
|
Tier
3 Employees: All employees that are not Tier 1 Employees and that have NOT
been employed by the Company or an affiliate for at least 12 consecutive
months. An amount equal to the employee’s monthly compensation
(one-twelfth of annual base salary) for each consecutive month period of
service with the Company (rounded to the nearest month), up to a maximum
severance benefit of eleven times the Employee’s monthly compensation and
a minimum severance benefit of two times the employee’s monthly
compensation.
|
-19-
Such
severance benefits are contingent upon the completion of the change in control
and may be offset against certain other amounts owing or offers made to the
employee. If any employee is terminated for cause, such employee shall be
entitled only to his or her annual base salary and other benefits through the
date of termination. All equity compensation grants made to an employee by the
Company and outstanding at the time of a change in control shall be accelerated
and vest 100%.
|
|
Compensation
Committee Interlocks and Insider
Participation
|
No
interlocking relationship exists between our board of directors or Compensation
Committee and the board of directors or compensation committee of any other
company, nor has any interlocking relationship existed in the past.
|
|
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY
COMPENSATION PLANS
|
The
following table sets out, as of the end of the Company’s fiscal year ended
December 31, 2007, all information required with respect to compensation
plans under which equity securities of the Company are authorized for
issuance:
|
|
Equity
Compensation Plan Information
|
|
Plan Category
|
Number of securities
to be issued
upon exercise of
outstanding options,
warrants and rights
|
Weighted-average
exercise price of
outstanding options,
warrants and rights
|
Number of securities remaining
available for future issuance
under equity compensation
plans (excluding securities
reflected in column (a))
|
|||
|
(a)
|
(b)
|
(c)
|
||||
|
Equity
compensation plans approved by security holders
|
4,550,000
|
$1.79(1)
|
3,716,250(2)
|
|||
|
Equity
compensation plans not approved by security holders
|
—
|
—
|
—
|
|||
|
Total
|
4,550,000
|
$1.79(1)
|
3,716,250(2)
|
|
(1)
|
As
converted into US dollars based on the average exchange rate for 2007 of
C$1.00: US$0.93565.
|
|
(2)
|
This
figure excludes common shares issued on exercise of outstanding options
under the Storm Cat Energy Corporation Amended and Restated Share Option
Plan and common shares issued upon vesting of RSUs under the Storm Cat
Energy Corporation Restricted Share Unit Plan through December 31,
2007.
|
|
|
Share
Option Plan
|
The
shareholders of the Company first adopted the Storm Cat Energy Corporation Share
Option Plan at the Annual and Special Meeting held on June 23, 2005, for
the benefit of directors, officers, employees, management employees and
consultants of the Company. The shareholders of the Company approved certain
amendments to the Share Option Plan at the Extraordinary General Meeting held on
October 20, 2005. At the Annual and Special General Meeting held on
June 27, 2006, the shareholders approved the Amended and Restated Share
Option Plan, which was further amended upon approval of shareholders at the
Annual General Meeting held on June 21, 2007. See Proposals 3 and 4
contained in the Company’s proxy statement for the 2007 Annual General Meeting
filed with the SEC April 30, 2007, and available on SEDAR at www.sedar.com, for
a description of the principal features of the Amended and Restated Share Option
Plan.
|
|
Restricted
Share Unit Plan
|
On
June 27, 2006, the shareholders of the Company approved our Restricted
Share Unit Plan at the Annual and Special General Meeting, which was amended
upon approval of shareholders at the Annual General Meeting held on
June 21, 2007.
Under the
Restricted Share Unit Plan, RSUs are granted to directors, officers, employees
and consultants. The RSUs are “phantom” shares that rise and fall in value based
on the value of the Company’s common shares and are redeemed for cash or actual
common shares on the vesting dates determined by the board of directors when the
RSUs are granted. See Proposal 5 contained in the Company’s proxy statement for
the 2007 Annual General Meeting filed with the SEC April 30, 2007, and available
on SEDAR at www.sedar.com, for a description of the principal features of the
Restricted Share Unit Plan.
|
|
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
|
Section 16(a) of
the Exchange Act requires our directors and executive officers, and persons who
own more than ten percent of a registered class of our equity securities, to
file with the SEC initial reports of ownership and reports of changes in
ownership of our common shares and other equity securities. Executive officers,
directors and holders of greater than ten percent (10%) of our common shares are
required by regulations of the SEC to furnish us with copies of all
Section 16(a) reports they file.
To our
knowledge, based solely upon a review of the copies of such reports furnished to
us and written representations that no other reports were required to be filed
during the year ended December 31, 2007, all filing requirements under
Section 16(a) applicable to our officers, directors and ten percent
shareholders were satisfied, other than the late reporting of (i) the
vesting of RSUs on September 30, 2007, granted to our directors for board
service; (ii) the grant of RSUs on September 19, 2007, to
Mr. Wozniak; (iii) the grant of options and RSUs on June 21,
2007, to Mr. Brooker; and (iv) the grant of RSUs on April 2, 2007, to
our directors for board service.
-20-
|
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CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
|
|
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Related
Person Transaction Policy
|
The board
has adopted a policy for the review, approval or ratification of transactions
involving the Company and “related persons” as defined under the relevant SEC
rules. The policy covers any related person transaction that meets the minimum
threshold for disclosure in the proxy statement under the relevant SEC
rules (generally, transactions involving amounts exceeding $120,000 in
which a related person has a direct or indirect material interest). Our policy
is as follows:
|
|
·
|
Any
proposed related person transaction must be reported to the Company’s
Chief Executive Officer, Chief Financial Officer or General Counsel, which
we refer to in this policy as authorized officers, and reviewed and
approved by the Audit Committee, after full disclosure of the related
person’s interest in the transaction, prior to effectiveness or
consummation of the transaction, whenever
practicable.
|
|
|
·
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If
an authorized officer determines that advance approval of such transaction
is not practicable under the circumstances, the Audit Committee shall
review, after full disclosure of the related person’s interest in the
transaction, and, in its discretion, may ratify the transaction at the
next Audit Committee meeting or at its next meeting following the date
that such transaction comes to the attention of such authorized
officer.
|
|
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·
|
An
authorized officer may present any such transaction arising in the time
period between meetings of the Audit Committee to the Chair of the Audit
Committee, who shall review and may approve such transaction, subject to
ratification, after full disclosure of the related person’s interest in
the transaction, by the Audit Committee at the next Audit Committee
meeting.
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·
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Transactions
involving compensation of executive officers shall be reviewed and
approved by the Compensation Committee, pursuant to the Compensation
Committee charter.
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·
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In
review of a related person transaction, the Audit Committee will review
all relevant information available to it, and the Audit Committee may
approve or ratify such transaction only if the Audit Committee determines
that, under all of the circumstances, the transaction is in, or is not
inconsistent with, the best interests of the
Company.
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|
|
·
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The
Audit Committee may, in its sole discretion, impose such conditions as it
deems appropriate on the Company or the related person in connection with
the approval of such transaction.
|
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Related
Party Transactions
|
The
Company has entered into an agreement with Beatty & Wozniak, P.C., a
law firm of which Mr. Wozniak is a partner, for a retainer and legal fees
of a minimum of $10,000 per month plus reasonable expenses. In the year ended
December 31, 2007, the Company paid Beatty & Wozniak $240,564 in
legal fees and expenses.
Prior to
his appointment as chief executive officer, Mr. Brooker acted as a
consultant to the board of directors in March and April 2007. In
exchange for these consulting services, the Company granted to Mr. Brooker
25,000 RSUs as consulting fees.
The
Company closed its private offerings of Series A Convertible
Subordinated Notes due March 31, 2012 and Series B Convertible
Subordinated Notes due March 31, 2012, on January 30, 2007, and
March 30, 2007, respectively. Trapeze Asset Management Inc. and Trapeze
Capital Corp., two related entities that, together with a group including
1346049 Ontario Limited and Randall Abramson, beneficially own more than 5% of
the Company’s common shares, participated in both the Company’s Series A
Note and Series B Note offerings. The two entities purchased $3,700,000 in
Series A Convertible Subordinated Notes, convertible at a rate of $1.17 per
share into 3,162,394 common shares, and $13,100,000 in Series B Convertible
Subordinated Notes, convertible at a rate of $1.17 per share into 11,196,581
common shares.
Both
Series A Convertible Subordinated Notes and Series B Convertible
Subordinated Notes accrue interest at a rate of 9.25% per annum, which the
Company pays quarterly in arrears. The Notes are immediately convertible at a
conversion price of $1.17 per share. Our board of directors approved the
transactions with Trapeze Asset Management Inc. and Trapeze Capital
Corp.
|
|
Employment
and Indemnification Agreements
|
We do not
have employment agreements with any of our officers or employees. On
December 8, 2005, the board of directors adopted a form of Indemnity
Agreement to be used as a template for the Company’s indemnity agreements with
the directors and officers. Pursuant to the Indemnity Agreement, the Company
will indemnify each director and officer against claims against such person in
connection with the execution of his or her duties as a director or officer of
the Company or by virtue of he or she holding any other position as a director
or officer with any other entity at the Company’s request; provided that a court
does not find that such individual did not fail to act honestly and in good
faith with a view to the best interest of the Company or any other entity with
which such individual holds or held a position as a director or officer at the
Company’s request, in the case of a criminal proceeding or administrative
proceeding enforced by a monetary penalty, such individual did not have
reasonable grounds for believing that his or her conduct was unlawful, and in
the case of any act, error or omission of such individual, he or she acted
fraudulently or maliciously. As of the date of this proxy statement, the Company
has entered into indemnity agreements with each of its directors and
officers.
-21-
PROPOSAL 2. RATIFICATION OF SELECTION AND APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our Audit
Committee has unanimously selected Hein & Associates LLP to be our
independent registered public accounting firm and auditors for the year ending
December 31, 2008, and has further directed that management submit the
selection of Hein & Associates LLP as our independent registered public
accounting firm and auditors for the year ending December 31, 2008, for
ratification and appointment by the shareholders at the Annual
General Meeting. Hein & Associates LLP was first appointed auditors of
the Company on September 6, 2005.
Appointment
of Hein & Associates LLP by the shareholders is required by subsection
204(2) of the Business Corporations Act of British Columbia, under which
the Company is organized. The Audit Committee’s selection is being submitted to
the shareholders for ratification and appointment at the Annual General Meeting.
The persons designated in the enclosed proxy will vote your shares “FOR”
ratification and appointment unless you include instruction in your signed proxy
to the contrary. If the shareholders fail to ratify and appoint the selection of
this firm, our Audit Committee will reconsider the matter.
Representatives
of Hein & Associates are not expected to be present at the Annual
General Meeting to answer questions from the shareholders. If representatives of
Hein & Associates LLP are present at the Annual General Meeting and so
desire, they will be given an opportunity to make a statement on behalf of
Hein & Associates LLP.
None of
our directors or executive officers has any substantial interest, direct or
indirect, in Hein & Associates LLP.
The
board of directors unanimously recommends a vote “FOR” ratification of the
selection and appointment of Hein & Associates LLP as the Company’s
independent registered public accounting firm for the year ending
December 31, 2008.
Pursuant
to the Business Corporations Act of British Columbia, our management will
present our audited financial statements for the fiscal year ended
December 31, 2007, together with our auditors report thereon to the
shareholders at the Annual General Meeting. Our management knows of no other
matter to be acted upon at the Annual General Meeting. If any other matters are
properly brought before the Annual General Meeting however, the persons named in
the accompanying proxy card as proxies for the holders of Storm Cat’s common
shares will vote thereon in accordance with their best judgment.
Additional
information relating to the Company is on SEDAR at www.sedar.com and at the
SEC’s website at www.sec.gov.
Shareholders may contact the Company by mail at 1125 17th Street, Suite
2310, Denver, Colorado, 80202, by telephone at 303.991.5070, or by fax at
303.991.5075 to request copies of the documents referenced herein and in the
Company’s Annual Report on Form 10-K for year ended December 31,
2007.
In order
to include a shareholder proposal in the proxy statement and form of proxy
relating to the Company’s next annual general meeting of shareholders following
the end of 2008, we must receive it no later than December 31, 2008. Any
shareholder proposal submitted to us for consideration at next year’s annual
general meeting but which is not intended to be included in the related proxy
statement and form of proxy must be received by March 28, 2009. A proxy
will confer discretionary authority on the Company to vote a proxy with respect
to any matter that is not submitted to the Company by March 28,
2009.
Upon
your written request, we will provide to you a complimentary copy of the 2007
Annual Report on Form 10-K (without exhibits) as filed with the SEC. The
Annual Report includes audited consolidated financial statements for the year
ended December 31, 2007, together with the auditor’s report thereon. Your
request should be mailed to Storm Cat’s offices, addressed as follows: Storm Cat
Energy Corporation, 1125 17th Street, Suite 2310, Denver, Colorado 80202. A
free copy of the Form 10-K may also be obtained at the Internet web site
maintained by the SEC at www.sec.gov, on SEDAR at www.sedar.com, or by visiting
Storm Cat’s Internet web site at www.stormcatenergy.com and clicking on
“Investors,” then on “Annual Reports” or by clicking on “Contact Us” then on
“Request Information” and completing the request form.
By Order
of the Board of Directors,
/s/ Paul
Wiesner
Paul
Wiesner
Chief
Financial Officer, Treasurer and Secretary
April 29,
2008
-22-
STORM
CAT ENERGY CORPORATION
| 000001 | ||||||
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SAM
SAMPLE
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||||||
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123
SAMPLES STREET
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Security
Class
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COMMON
CLASS
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||||
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SAMPLETOWN
SS X9X
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||||||
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Holder
Account Number
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C9999999999
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I N
D
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Form
of Proxy - Annual General Meeting to be held on June 18, 2008
This
Form of Proxy is solicited by and on behalf of the Board of
Directors.
Notes
to proxy
|
1.
|
Every
holder has the right to appoint some other person or company of their
choice, who need not be a holder, to attend and act on their behalf at the
meeting. If you wish to appoint a person or company other than the persons
whose names are printed herein, please insert the name of your chosen
proxyholder in the space provided (see
reverse).
|
|
2.
|
If
the securities are registered in the name of more than one owner (for
example, joint ownership, trustees, executors, etc.), then all those
registered should sign this proxy. If you are voting on behalf of a
corporation or another individual you may be required to provide
documentation evidencing your power to sign this proxy with signing
capacity stated.
|
|
3.
|
This
proxy should be signed in the exact manner as the name appears on the
proxy.
|
|
4.
|
If
this proxy is not dated, it will be deemed to bear the date on which it is
mailed by Management to the holder.
|
|
5.
|
The
securities represented by this proxy will be voted as directed by the
holder, however, if such a direction is not made in respect of any matter,
this proxy will be voted as recommended by
Management.
|
|
6.
|
The
securities represented by this proxy will be voted or withheld from
voting, or will not be voted if the holder chose to abstain from voting,
in accordance with the instructions of the holder, on any ballot that may
be called for and, if the holder has specified a choice with respect to
any matter to be acted on, the securities will be voted
accordingly.
|
|
7.
|
This
proxy confers discretionary authority in respect of amendments to matters
identified in the Notice of Meeting or other matters that may properly
come before the meeting.
|
|
8.
|
This
proxy should be read in conjunction with the accompanying documentation
provided by Management.
|
Proxies
submitted must be received by 10:00 a.m. Mountain daylight time on Tuesday, June
16, 2008.
VOTE
USING THE TELEPHONE OR INTERNET 24 HOURS A DAY 7 DAYS A WEEK!
|
To
Vote Using the Telephone
|
To
Vote Using the Internet
|
|
|
·Call the number
listed BELOW from a touch tone
telephone.
|
·Go to the following
web site: www.investorvote.com
|
|
|
1-866-732-VOTE
(8683) Toll Free
|
If
you vote by telephone or the Internet, DO NOT mail back this proxy.
Voting by
mail may be the only method for securities held in the name of a corporation or
securities being voted on behalf of another individual.
Voting by
mail or by Internet are the only methods by which a holder may appoint a person
as proxyholder other than the Management nominees named on the reverse of this
proxy. Instead of mailing this proxy, you may choose one of the two voting
methods outlined above to vote this proxy.
To vote
by telephone or the Internet, you will need to provide your CONTROL NUMBER,
HOLDER ACCOUNT NUMBER and ACCESS NUMBER listed below.
CONTROL
NUMBER 014037HOLDER ACCOUNT
NUMBER C9999999999ACCESS
NUMBER 99999
-A1-
| + |
SAM
SAMPLE
|
C9999999999
|
*C9999999999*
|
+ | ||||||||||||||||
|
IND
|
C01
|
*C9999999999* | ||||||||||||||||||
Appointment
of Proxyholder
|
The
undersigned shareholder ("Registered Shareholder") of Storm Cat Energy
Corporation (the "Company") hereby appoint(s): Joseph M. Brooker, Chief
Executive Officer of the Company or failing him, Paul Wiesner, Chief
Financial Officer of the Company,
|
OR
|
Print
the name of the person you are appointing if this person is someone other
than the Management Nominees listed herein.
|
as my/our
proxyholder with full power of substitution and to vote in accordance with the
following direction (or if no directions have been given, as the proxyholder
sees fit) and all other matters that may properly come before the Annual General
Meeting of Storm Cat Energy Corporation to be held at the offices of Storm Cat
Energy Corporation at 8th Avenue SW, Suite 200, 209, Calgary, Alberta,
Canada. For directions to attend the Annual General Meeting, contact
Director of Investor Relations at 303.991.5070.
VOTING
RECOMMENDATIONS ARE INDICATED BY HIGHLIGHTED TEXT OVER THE BOXES.
|
1.
Election of Directors
|
||||||||||||||||
|
For
|
Withhold
|
For
|
Withhold
|
For
|
Withhold
|
|||||||||||
|
01:
Joseph M. Brooker
|
o
|
o
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02:
Robert J.Clark
|
o
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o
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03:
Michael J. O'Byrne
|
o
|
o
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||||||||
|
04.
Robert D. Penner
|
o
|
o
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05.
Jon R. Whitney
|
o
|
o
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06.
David G. Wight
|
o
|
o
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||||||||
|
07:
Michael J. Wozniak
|
o
|
o
|
||||||||||||||
|
2.
Appointment of Auditors
|
For
|
Against
|
Withhold/Abstain
|
|||
|
To
ratify the Audit Committee's selection of and appoint Hein &
Associates LLP as the Company’s independent registered public accounting
firm for the year ending December 31, 2008.
|
o
|
o
|
o
|
|
Authorized
Signature(s) - This section must be completed for your instructions to be
executed.
|
Signature(s)
|
||
|
I/We
authorize you to act in accordance with my/our instructions set out above.
I/We hereby revoke any proxy previously given with respect to the Meeting.
If no voting instructions are indicated above, this Proxy will be voted as
recommended by Management.
|
/ /
|
||
Important Notice of Internet
Availability of Proxy Materials for the Annual General Meeting: The
Notice of Annual General Meeting, Proxy Statement and Annual Report are
available at www.stormcatenergy.com/2008annualmeeting.
-A2-