Document:

ex10-5.htm

Exhibit 10.5

 

HECLA MINING COMPANY

 

ANNUAL INCENTIVE PLAN

 

 

Introduction

 

The Hecla Mining Company Annual Incentive Plan (the “Plan” or “AIP”) is amended and restated effective January 1, 2015, as set forth herein.

 

Purpose

 

This Plan is designed to provide a significant and variable economic opportunity to selected officers and employees of the Company as a reflection of their individual and group contributions to the success of the Company.

 

Definitions

 

“Annual Incentive Plan Goals” shall mean the performance goals in effect for the Plan Year as recommended by management and approved by the Committee. The Committee may modify the Annual Incentive Plan Goals as it sees fit and will finally approve them to be in effect for that Performance Period. Annual Incentive Plan factors are divided into the following components, which may be modified by the Committee from time to time, including with respect to the relative weights:

 

	 	
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Quantitative corporate performance factors, normally comprising 50% of the overall potential Award;

 

	 	
●
	
Qualitative set of goals, normally comprising 25% of the overall potential Award; and

 

	 	
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Discretionary factor as determined by the Committee, normally comprising 25% of the overall potential Award.

 

The maximum total payout in aggregate can be up to two times the Target Award level.

 

“Annual Incentive Plan Pay” or “AIP Pay” shall consist of an award from the Company payable to a participant pursuant to the terms of the Plan either in cash or in equity under one of the Company’s stock plans.

 

“Base Salary” is the annual salary approved by the Board for Executives or by the Company for other Plan participants.

 

“Code” shall mean the Internal Revenue Code of 1986, as amended.

 

“Committee” shall mean the Compensation Committee of the Board.

 

“Company” shall mean Hecla Mining Company, a Delaware Corporation, and its subsidiaries.

 

“Disinterested Person” shall mean a member of the Board who qualifies as an “outside director” for purposes of Section 162(m) of the Code.

 

“Participants” shall mean eligible officers and employees who are designated by the Committee for participation in the Plan.

 

 

 

 

 

“Payment Date” shall mean the date or dates selected by the Committee for payment of AIP Pay following the conclusion of the Performance Period for which the Committee certifies that applicable AIP Goals have been satisfied. Such date or dates shall be between January 1 and December 31 of the year following the end of the Performance Period.

 

“Performance Period” will be the Company’s fiscal year.

 

“Target Award” shall mean the percentage of each Participant’s base salary that is established for achievement of target performance level in consideration of quantitative, qualitative and discretionary factors as determined by the Board. The Target Award for each plan participant will be determined by the Committee prior to each Performance Period. Participants may be awarded up to twice their Target for exceptional performance against all criteria.

 

Administration

 

The AIP shall be administered by the Committee or such other committee of the Board which is composed of not less than two Disinterested Persons, each of whom shall be appointed by and serve at the pleasure of the Board.

 

In administering the Plan the Committee may at its option employ compensation consultants, accountants and counsel (who may be the independent auditors, outside counsel, or compensation consultants of the Company) and other persons to assist or render advice to the Committee, all at the expense of the Company.

 

Eligibility

 

The Committee shall, in its sole discretion, determine for each Performance Period those officers and employees of the Company who shall be eligible to participate in the AIP (the “Participants”) based upon such Participants’ opportunity to have a substantial impact on the Company’s operating results. Nothing contained in the Plan shall be construed as or be evidence of any contract or employment with any Participant for a term of any length nor shall participation in the Plan in any Performance Period by any Participant require continued participation by such Participant in any subsequent Performance Period.

 

Determination of Performance Pay

 

The form and amount of Annual Incentive Plan Pay awarded to a Participant shall be determined by and in the discretion of the Committee. The Committee may condition the earning of AIP Pay upon the attainment of specified Performance Goals measured over a period not greater than one year relating to the Participant or the Company, or a subsidiary, division or department of the Company for or within which the Participant is primarily employed, or upon such other factors or criteria as the Committee shall determine, which Performance Goals may be different for each Participant. Annual Incentive Plan Pay payable under the Plan will consist of a cash or equity award from the Company, based upon a degree of achievement of such Performance Goals over the Performance Period.

 

The Committee may, in its sole discretion, increase or decrease the amount of any Annual Incentive Plan Pay payable to a Participant and may award Annual Incentive Plan Pay to Participants even though the Annual Incentive Plan Pay is not earned. Annual Incentive Plan Pay earned or otherwise awarded will be paid on the Payment Date.

 

 

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Termination of Employment

 

In the event that a Participant's employment with the Company terminates for any reason prior to the Payment Date, AIP Pay may be made to the terminated employee based on the pro rata degree to which the Performance Goals are achieved as determined by the Committee. Participants who remain employed through the Performance Period but are terminated prior to the Payment Date shall be entitled to receive Annual Incentive Plan Pay payable with respect to such Performance Period, unless terminated for Cause.

 

Amendments and Terminations

 

The Committee shall have the right to modify the Plan from time to time without prior approval of the Company's stockholders.

 

Miscellaneous

 

Payments of Annual Incentive Plan Pay shall be made from the general funds of the Company and no special or separate fund shall be established or other segregation of assets made to assure payment. No Participant or other person shall have under any circumstances any interest in any particular property or assets of the Company. The Plan shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to its principles of conflict of laws.

 

Deferral Elections

 

The Participants are permitted to defer the receipt of Annual Incentive Plan Pay payable hereunder in accordance with the Company's Key Employee Deferred Compensation Plan or any similar plan or program subject to compliance with Section 1.409A-2(a)(8) of the Treasury Regulations.

 

 

3ex10-6.htm

Exhibit 10.6

 

HECLA MINING COMPANY

 EXECUTIVE AND SENIOR MANAGEMENT

 LONG-TERM PERFORMANCE PAYMENT PLAN

 

(As Amended and Restated January 1, 2015)

 

Article I
Introduction

 

This instrument constitutes the Hecla Mining Company Executive and Senior Management Long-Term Performance Payment Plan (the “Plan”), as amended and restated effective January 1, 2015. 

 

Article II
Plan Purpose and Objectives

 

Plan objectives include:

 

	
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Focusing managing attention on key activities and initiatives. We want key decision makers to allocate time and energy to those key activities that drive the Company’s performance.

 

	
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Encouraging open and frequent communications. We want key decision makers to openly communicate with their peers regarding their ideas and suggested approaches in order to assist the Company in achieving its goals.

 

	
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Establish meaningful, challenging and achievable performance targets. We want to provide a financial incentive for individuals to seek to meet achievable performance targets.

 

	
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Recognize contribution to long-term growth objective efforts. Every position is important and contributes to the day-to-day success of the Company. However, a few individuals hold positions that can have long-term and dramatic impact on the future of the Company. Because these efforts are so critical, it is important to recognize both the individual contributions as well as the team contributions.

 

	
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Attract and retain high caliber executives and senior management. Compensation is an important consideration in a high caliber leader’s willingness to join and stay with a top-performing organization. This Plan helps meet this important objective by providing key leaders the opportunity to earn above industry standard total compensation through personal and organizational performance.

 

	
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Link Participant interests to those of the Company’s shareholders. Our entire compensation philosophy is based on achieving performance results that are in the best interest of our shareholders and provides them the opportunity to realize wealth through our performance.

 

Article III
Duration of the Plan

 

The Plan commenced effective January 1, 2003 and shall remain in effect, subject to the right of the Compensation Committee to amend or terminate the Plan at any time. Under this Plan, a new performance period begins each calendar year and runs for multiple year periods. Payment, if earned, is made in the year following the performance period. The following table provides an example of how the Plan works using overlapping three-year performance periods.

 

 

 

 

 

Example Overlapping Performance Periods

 

	  
	  
	
Performance
	  	  	  	  	  	  	  	  	  	  	  	  
	
Period
	  	
2015
	  	
2016
	  	
2017
	  	
2018
	  	
2019
	  	
2020

	  
	  
	
1
	  	  	  	  	  	  	  	
Payment
1
	  	  	  	  
	  
	  
	
2
	  	  	  	  	  	  	  	  	
Payment
2
	  	  
	  
	  
	
3
	  	  	  	  	  	  	  	  	
Payment
3

 

In this example, the first performance period will run from January 1, 2015 through December 31, 2017. The first performance payout, if earned, would be made in 2018. The next performance period, if approved by the Compensation Committee to be a three year period, will run from January 1, 2016 through December 31, 2018. The payout for this period, if earned, would be made in 2019.

 

The purpose of having multiple year performance periods is to recognize that some activities require significant periods of time to be implemented and for measurable results to accrue. Multiple year periods also provide the opportunity to adjust performance activities to keep on track toward performance targets. Starting a new plan period each year provides the opportunity to adjust for new conditions and circumstance or priorities. For example, a merger or acquisition could change the nature and level of subsequent year targets. Such an event would not change non-matured plan periods target but would be taken into account in future Plan periods.

 

Article IV
Eligibility

 

Upon the recommendation of the Chief Executive Officer, the Compensation Committee of the Board of Directors (the “Compensation Committee”) will establish participation eligibility requirements. Initially, eligibility will be restricted to those key executives and senior managers whose activities and decisions have a direct impact on the long-term strategic performance of the Company. These individuals constitute “Eligible Employees” for purposes of the Plan. As used hereunder, “Participant” shall mean any Eligible Employee approved for participation by the Compensation Committee. The Compensation Committee, with the recommendation of the Chief Executive Officer, shall have the sole discretionary authority to determine which employees shall be Eligible Employees for purposes of participation in the Plan.

 

A.     New Eligible Employees

 

Eligible Employees hired after a performance period has commenced will be eligible to participate in the Plan on a prorated basis, and participate fully as of the beginning of the next new performance period that begins after their date of hire with the Company.

 

 

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B.     Promotion and/or Salary Changes

 

Promotion and/or salary changes that may affect the basis for determining the target number of performance units a Participant may be eligible to receive will be adjusted on a pro-rated basis for non-matured plans.

 

C.     Reassignment and/or Relocation

 

Position reassignment, change in job scope or relocation that may affect the basis for determining the number or performance units a Participant may be eligible to receive may be adjusted on a pro-rated basis for any non-matured plans.

 

D.     Leaves of Absence

 

Eligibility to continue participation in any non-matured or future performance periods on a pro-rata basis preceding and after the effective dates of an approved leave of absence will be at the sole discretion of the Chief Executive Officer.

 

E.     Death

 

Beneficiaries of a Participant who dies during a performance period, and who has participated in prior performance periods not reaching maturity, will be entitled to a pro-rated share of the target performance award within seventy-five days of the Participant’s death.

 

F.     Retirement

 

A Participant who retires during a performance period will be eligible to receive a pro-rated share of target awards, if earned, for any performance period for which the Participant was eligible and which have not reached maturity.

 

G.     Disability

 

Eligibility to continue participation in any non-matured performance periods on a pro-rata basis preceding and after the dates of a disability will be at the sole discretion of the Chief Executive Officer. A Participant is deemed as being Disabled if they meet one of the following requirements: (A) the Participant is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months; (B) the Participant is, by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under the Company’s long-term disability plan; or (C) the Participant is determined to be totally disabled by the Social Security Administration. 

 

H.     Voluntary Separation from Service

 

Participants who separate from the service of the Company will not be eligible to receive any long-term incentive award from any non-matured performance plan periods. The determination of whether any Participant has separated from the service with the Company shall be made in accordance with Section 409A of the Code, and Treasury Regulations §1.409A-1(h) issued thereunder.

 

 

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I.      Involuntary Separation from Service

 

Eligible Participants, whose separation from the service of the Company is involuntary, other than as provided in this description, will not be eligible to receive any long-term incentive award from any non-matured performance periods. The Chief Executive Officer retains the authority to review each such instance and may make pro-rata awards under non-matured plans at his sole discretion.

 

J.     Change of Control

 

Eligible Participants will receive a pro-rated share of targeted awards upon the event of a change of control. A change of control shall be deemed to have occurred upon the change in ownership of the Company, a change in effective control of the Company or change in the ownership of a substantial portion of the assets of the Company, as defined under Treasury Regulations § 1.409A-3(i)(5).

 

K.     No Acceleration or Additional Deferral

 

No Participant in the Plan shall be entitled to accelerate the payment of their performance awards hereunder to a date that precedes the otherwise applicable payment dates. Once a Participant, or their Beneficiary, becomes entitled to receive a performance hereunder, distribution of such amount cannot be deferred for any reason except to the extent that the Participant made a timely election to defer payment under the Hecla Mining Company Key Employee Deferred Compensation Plan.

 

Article V
Plan Value Potential

 

Each Participant will receive a number of performance units at the beginning of each performance period. Performance units will be dollar-denominated units whose payment and/or value is contingent upon performance as determined by the Compensation Committee. The nominal target value for each performance unit will be determined by the Compensation Committee in its discretion.

 

Article VI
Performance Measures

 

Long-term performance targets, measures, or objectives should reflect the long-term strategic objectives of the Company as determined from time to time. For all Participants other than the Chief Executive Officer, performance targets and their measurement criteria will be recommended for each performance period by the Chief Executive Officer to the Compensation Committee for approval by the Compensation Committee. The performance targets and measurement criteria for the Chief Executive Officer must be approved by the Compensation Committee. Specific performance targets and measurement criteria may change from one performance period to the next. 

 

Once set for a performance period, performance targets, measurers, or objectives are not expected to change. It is expected that significant events causing the Company’s long-term strategy to change will change the targets, measurers or objectives to change subsequent performance periods. However, it is in the discretion of the Compensation Committee to change targets, measurers, or objectives.

 

Article VII
Performance Award Value

 

Periodically, the Compensation Committee may establish a procedure, target or range of outcomes that could provide the basis for determining the value of the units. Meeting the performance targets (which, for the first performance period are cash flow from operations and gold equivalent resources) will create a performance unit nominal value. However, the value of performance units can be below and above the nominal value, depending upon performance as determined by the Compensation Committee.

 

 

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Article VIII
Performance Award Distribution

 

The primary determination on the number of performance units awarded will reflect the objective of providing the potential for a Participant to realize targeted total compensation levels. However, there will be other factors considered including scope of position responsibilities, accountabilities and involvement with specific strategic initiatives, ability to influence outcomes and other factors. In addition, the Compensation Committee, in its sole discretion, may make adjustments to awards earned by Participants in connection with achieving performance targets, and may also make awards to Participants in the event performance targets are not met.

 

The Compensation Committee will, as soon as practical after the end of the performance period, determine the amount, if any, that will be paid with respect to the performance period. Payments, if any, will be made in one or more installments between January 1 and December 31 of the year following the end of the performance period, except to the extent payment is subject to a Participant election under the Company’s Key Employee Deferred Compensation Plan. Payment may be in the form of cash and/or stock, with any shares of stock being granted under the Company’s 2010 Stock Incentive Plan or subsequent stock incentive plan adopted with shareholder approval.

 

Participants may elect to defer any performance unit award amounts up to 100% of the award pursuant to the terms of the Company's Key Employee Deferral Plan. 

 

Article IX
Other Information

 

A.     Regulatory Compliance

 

The Plan is intended to comply with the provisions of Section 409A of the Code, including the rules, regulations and interpretations issued thereunder. To the extent any provision of the Plan is inconsistent with the aforementioned regulatory requirements, said provisions shall be superseded and the requirements of Section 409A of the Code shall govern and control.

 

B.     Designation of Beneficiary

 

Each Participant may provide a written designation of the person(s) or entity(ies) who will be the Beneficiary or contingent Beneficiary, to whom any benefit under the Plan will be paid in the event of the Participant's death. A Participant may change this written designation at any time. The written Beneficiary designation most recently filed before the Participant's death will govern in all cases. The Compensation Committee has the right, but not the obligation, to require that the spouse of the Participant join in the designation of any Beneficiary who is a person other than the Participant's spouse. In the absence of an effective, written, Beneficiary designation, any amount payable to the Participant will be paid to the individual to whom the Participant is married at death, or if the Participant was not married at death, to the Participant's surviving children in equal shares, or if none, to the Participant's estate.

 

 

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C.     Amendment or Termination of the Plan

 

The Company, by action of the Compensation Committee, reserves the right to amend, modify, terminate, or discontinue the Plan at any time; and to make or not make any awards, such action shall be final, binding, and conclusive as to all parties.

 

D.     Correction of Errors

 

The Compensation Committee may correct errors that occur in the administration of the Plan, which may require the adjustment of a Participant's award. The Compensation Committee has no obligation to notify any affected Participant of such correction. With respect to any power of authority which the Compensation Committee has authority to exercise under the Plan, such discretion shall be exercised in a nondiscriminatory manner.

 

E.     No Employment Guarantee

 

Nothing in this Plan or in related Plan documents shall confer the Participant any right to continue in the employ of the Company or any subsidiary, or shall interfere with or restrict in any way the rights of the Company or its subsidiaries, which are expressly reserved, to discharge the Participant at an time for any reason whatsoever, with or without cause.

 

F.     No Assignment

 

Subject to a Participant’s right to name a Beneficiary under the terms of the Plan, a Participant may not assign, pledge or encumber his or her interest, if any, under the Plan.

 

G.     Governing Law

 

The Plan will be governed by the laws of the State of Idaho.

 

H.     Unfunded States

 

The benefits hereunder are unfunded and payable solely from the general assets of the Company. No Participant in the Plan has any interest whatsoever in any specific asset of the Company.

 

I.     Claim Process

 

The Compensation Committee has the sole discretion to decide all issues of fact, law or interpretation arising under this Plan. Any decision of the Compensation Committee that is not an abuse of discretion must be upheld by a court of law.

 

J.     No Employment Contract

 

Nothing contained herein shall be construed to constitute an employment contract.

 

 

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K.     No Exclusivity

 

The adoption of the Plan by the Board of Directors shall not be construed as creating any limitations on ·the power or authority of the Company to adopt such other or additional incentive or compensation arrangements as the Compensation Committee may deem necessary or desirable.

 

	
 
	
HECLA MINING COMPANY

	
 
	
 
	
 

	
 
	
By:
	
 

	 	 	 
	 	Its:	 
	 	 	 
	 	Date:	 

 

 

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