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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(Mark One)
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2009
or
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For
the transition period from ________ to ________.
Commission File No. 0-15905
BLUE DOLPHIN ENERGY COMPANY
(Exact name of registrant as specified in its charter)
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Delaware
State or other jurisdiction
of incorporation or organization
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73-1268729
(I.R.S. Employer
Identification No.) |
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801 Travis Street, Suite 2100
Houston, Texas
(Address of principal executive
offices)
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77002
(Zip Code) |
(713) 568-4725
Registrant’s telephone number, including area code
Securities registered pursuant to Section 12(b) of the Act:
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| Title of each class
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Name of each exchange on which registered |
| Common Stock, par value $0.01 per share
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NASDAQ Capital Market |
Securities registered pursuant to Section 12(g) of the Act:
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o No þ
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o No þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes þ No o
Indicate by check mark whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Data File required to be submitted and posted
pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files). Yes
o No o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K
(§229.405 of this chapter)is not contained herein, and will not be contained, to the best of
registrant’s knowledge, in definitive proxy or information statements incorporated by reference in
Part III of this Form 10-K or any amendment to this Form 10-K. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the definition of “large accelerated
filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Act.
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| Large accelerated filer o
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Accelerated filer o
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Non-accelerated filer o
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Smaller Reporting Company þ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the
Act). Yes o No þ
Aggregate market value of voting stock held by non-affiliates of the registrant
as of June 30, 2009 was approximately $3.2 million based on the closing price of
$0.42 per share on the NASDAQ Capital Market.
Number of shares of common stock outstanding as of April 30, 2010 11,928,251
DOCUMENTS INCORPORATED BY REFERENCE
None.
BLUE DOLPHIN ENERGY COMPANY
FORM 10-K/A REPORT INDEX
2
EXPLANATORY NOTE
This Amendment No. 1 on Form 10-K/A (this “Amendment”) amends Blue Dolphin Energy Company’s
(“Blue Dolphin” or the “Company”) Annual Report on Form 10-K for the fiscal year ended December 31,
2009, originally filed on April 15, 2010 (the “Original Filing”). Blue Dolphin is filing this
Amendment to include the information required by Part III contained in the Original Filing as Blue
Dolphin will not file its definitive proxy statement within 120 days of the end of Blue Dolphin’s
fiscal year ended December 31, 2009. In addition, in connection with the filing of this Amendment
and pursuant to the rules of the Securities and Exchange Commission (the “SEC”), Blue Dolphin is
including with this Amendment certain currently dated certifications. Accordingly, Item 15 of Part
IV has been amended to reflect the filing of these currently dated certifications.
Except as described above, no other changes have been made to the Original Filing. This Amendment
continues to speak as of the date of the Original Filing, and Blue Dolphin has not updated the
disclosures contained therein to reflect any events which occurred at a date subsequent to the
Original Filing.
Remainder of Page Intentionally Left Blank
3
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Board Composition
The Company’s amended and restated bylaws provide that the Board of Directors (the “Board”) shall
consist of five members, with the precise number to be determined from time to time by the Board,
except that no decrease in the number shall have the effect of shortening the term of an incumbent
director. The Board currently has five directors, each serving until the next annual meeting of
stockholders to be held by the Company. However, on April 22, 2010, the Board authorized an
increase in the size of the Board from five to seven members upon the closing of a Stock Purchase
Agreement (the “SPA”), a condition of which is the appointment of two persons to the Board that are
designated by the purchasers named in the SPA.
The following sets forth, as of April 30, 2010, each director, all positions held with the Company,
principal occupation, age, year in which the director first became a director of the Company, and
the specific experience, qualifications, attributes or skills that led to the conclusion that the
person should serve as a director.
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| Name, Age, Principal Occupation and Specific Attributes |
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Director Since |
Ivar Siem, 63, Chairman of the Board and Chief
Executive Officer. Mr. Siem has served as Chairman of the
Board of the Company since 1989 and was appointed as Chief
Executive Officer in 2004. Since 2000, he has also served
as Chairman of the Board and Chief Executive Officer of
Drillmar Energy Inc., a subsidiary of which filed for
Chapter 11 bankruptcy reorganization in November 2009. From
1995 to 2000, he served as Chairman and director and
interim President of DI Industries, which later became Grey
Wolf, Inc. From 1996 to 1997, Mr. Siem also served as Chief
Executive Officer of Seateam Technology ASA. From 1981 to
1995, Mr. Siem was an international consultant to companies
in the energy, technology and finance industries. From 1974
to 1981, Mr. Siem held a variety of progressively
responsible management positions within the Fred. Olsen
group of companies, including President of Dolphin
International, Inc. until it was sold in 1981. Mr. Siem
began his career as a petroleum engineer for Amoco
Corporation. He currently serves or has previously served
on the Boards of Directors of several public and
privately-held companies, including Avenir ASA, The
Classical Theatre, Frupor SA, TI A/S, Siem Industries, Inc.
and two of its affiliates. Mr. Siem holds a Bachelor of
Science in Mechanical Engineering from the University of
California, Berkeley, and has completed an executive MBA
program at Amos Tuck School of Business, Dartmouth
University. As a result of these and other professional
experiences, Mr. Siem possesses particular knowledge and
experience in engineering, strategic planning, operations
and general management that strengthen the Board’s
collective qualifications, skills and experience.
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Laurence N. Benz, 47, Director. Dr. Benz was elected as a
director of the Company in 2004. He is currently the
President / Chief Executive Officer of PT Development LLC,
a private equity firm with operating holdings in various
health care related companies. From 1987 to 2007, he
served as the President of Kentucky Orthopedic
Rehabilitation LLC, which he founded. From 1984 through
1989, he served as a Captain in the Army Medical
Specialists Corps of the United States Army. Dr. Benz is
the founder and organizer of multiple private companies
representing healthcare, banking, telecommunications, real
estate and consulting services. He also serves on the
Board for multiple private companies. Dr. Benz received a
Bachelor of Science in Biology from Bowling Green State
University, a Masters in Physical Therapy from Baylor
University, a Masters in Business Administration from Ohio
State University and a Doctorate in Physical Therapy from
MGH Institute of Health Professionals in Boston,
Massachusetts. As a result of these and other professional
experiences, Dr. Benz possesses particular knowledge and
experience in accounting, capital structure, finance and
strategic and tactical planning that strengthen the Board’s
collective qualifications, skills and experience.
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2004 |
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4
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| Name, Age, Principal Occupation and Specific Attributes |
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Director Since |
John N. Goodpasture, 61, Director. Mr. Goodpasture was
appointed as a director of the Company in 2006. From 2001
to 2009, he served as Vice President of Corporate
Development for Texas Eastern Products Pipeline Company,
L.L.C., the general partner of TEPPCO Partners, L.P. In
this capacity, Mr. Goodpasture directed the acquisition and
divestiture activities for the partnership, and also had
primary commercial responsibility for the midstream
business segment. From 1999 to 2001, he was Vice President
of Business Development for Enron Transportation Services.
From 1980 to 1999, Mr. Goodpasture held various
executive-level positions with Seagull Energy Corporation,
including President of Seagull Pipeline & Marketing
Company. Previously he held a variety of management
positions at Union Carbide Corporation, where he began his
career in 1970. Mr. Goodpasture also serves on the Board of
End Hunger Network of Houston. He earned a Bachelor of
Science in Mechanical Engineering from Texas Tech
University in Lubbock, Texas. As a result of these and
other professional experiences, Mr. Goodpasture possesses
particular knowledge and experience in the oil and gas
industry in business development, capital structure and
mergers and acquisitions that strengthen the Board’s
collective qualifications, skills and experience.
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2006 |
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Harris A. Kaffie, 59, Director. Mr. Kaffie has served as a
director of the Company since 1989. Mr. Kaffie is a
private investor with diverse investments and business
activities across such areas as energy, finance, venture
capital, real estate development, farming, ranching and
minerals. Since 1994, he has been associated with Kaffie
Brothers, a real estate, farming and ranching company,
where he serves as a partner. He also serves on the Board
of several privately held companies. Mr. Kaffie received a
Bachelor of Business Administration from Southern Methodist
University in 1972. As a result of these and other
professional experiences, Mr. Kaffie possesses particular
knowledge and experience in capital structure, business
development and strategic planning that strengthen the
Board’s collective qualifications, skills and experience.
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1989 |
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Erik Ostbye, 58, Director. Mr. Ostbye was elected as a
director of the Company in 2006. Since 1983, Mr. Ostbye
has been associated with the Arne Blystad Group of
companies. Since 2007, he has served as President of
Chianti Asset Management LLC, from 2003 to 2007 he was Vice
President of Finance of Sokana Chartering, from 1988 to
2003 he served as Vice President of Finance of Blystad
Shipping (USA) Inc. and from 1983 to 1988 he was Financial
Manager of Arne Blystad AS. Following the sale of the
Blystad tanker operation to Eitzen Chemical USA in 2006,
Mr. Ostbye has continued his work for the Blystad Group of
companies as a U.S. representative. Mr. Ostbye also serves
on the Board of several privately held companies. He holds
a Sivilokonom/MBA from the Norwegian School of Management
(BI). As a result of these and other professional
experiences, Mr. Ostbye possesses particular knowledge and
experience in accounting, capital structure and finance
that strengthen the Board’s collective qualifications,
skills and experience.
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2006 |
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Executive Officers
The following sets forth the age and background of each executive officer and the year in which the
executive officer first joined the Company:
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| Name, Age and Principal Occupation |
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Joined Company |
Thomas W. Heath, 47, President, Secretary and
Assistant Treasurer. Mr. Heath was appointed as President,
Secretary and Assistant Treasurer of the Company in 2009,
having previously served as Executive Vice President since
2007. From 2004 to 2007 he served as a Vice President of
Union Bank of California, N.A., an affiliate of Bank of
Tokyo-Mitsubishi UFJ, Ltd., where he developed and
implemented an energy derivatives desk supporting Energy
Capital Services. From 1988 to 2004 Mr. Heath held a
variety of management and executive level positions with
the evolving marketing units of Acadian Gas Pipeline
System, Shell Trading Gas & Power (formerly Coral Energy,
L.P.), Sempra Energy Trading Corp. and Tejas Gas
Corporation. Mr. Heath began his career in 1983 with
Columbia Gulf Transmission Company where he served in
various operational and commercial positions until 1988.
He is an alumnus of the University of Houston.
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2007 |
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5
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| Name, Age and Principal Occupation |
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Joined Company |
T. Scott Howard, 38, Treasurer and Assistant Secretary.
Mr. Howard was appointed as Treasurer of the Company in
2009 and Assistant Secretary of the Company in April 2008.
He joined the Company as Accounting Manager in 2006. From
1996 to 2006 he held a variety of management level
positions: Audit Manager with DRDA, P.C., an independent
public accounting firm in Houston, Texas from 2002 to 2006,
Trust Officer with Frost National Bank in Houston, Texas
from 2000 to 2002 and Controller for Hall’s Insurance
Agency, Inc. in Dickinson, Texas from 1996 to 2000. He
began his career as a Staff Accountant for Griffin, Iles,
Masel & Duval, LLP, a public accounting firm, where he was
employed from 1994 to 1996. Mr. Howard, who is a Certified
Public Accountant in Texas, received his Bachelor of
Business Administration in Accounting from St. Edward’s
University.
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2006 |
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Family Relationships between Directors and Officers
As of April 30, 2010, there were no relationships between any director or executive officer of the
Company and any other director or executive officer of the Company.
Committees and Meetings of the Board
Board
During 2009, the Board consisted of Dr. Benz and Messrs. Goodpasture, Kaffie, Ostbye and Siem with
Mr. Siem serving as Chairman. During the fiscal year ended December 31, 2009, the Board held five
(5) regular meetings and seven (7) special meetings. Each director attended at least 75% of the
total number of meetings of the Board and committees on which he served. The Board has two
standing committees, the Audit Committee and the Compensation Committee.
Audit Committee
During 2009, the Audit Committee consisted of Dr. Benz and Messrs. Kaffie and Ostbye with Dr. Benz
serving as Chairman. During the fiscal year ended December 31, 2009, the Audit Committee met four
(4) times. The Board has affirmatively determined that all members of the Audit Committee are
independent and that Dr. Benz qualifies as an Audit Committee Financial Expert. The Audit
Committee’s duties include overseeing financial reporting and internal control functions and the
Audit Committee’s charter is available on our website (www.blue-dolphin.com).
Compensation Committee
During 2009, the Compensation Committee consisted of Messrs. Goodpasture and Kaffie. During fiscal
year ended December 31, 2009, the Compensation Committee met one (1) time. The Board has
affirmatively determined that all members of the Compensation Committee are independent. The
Compensation Committee does not have a charter, however, its duties are to oversee and set the
Company’s compensation policies, to approve compensation of executive officers and to administer
the Company’s stock incentive plan.
Nominating Committee
Given the size of the Board and that a majority of its members are independent, as defined under
National Association of Securities Dealers Automated Quotations (“NASDAQ”) Listing Rules, the Board
adopted a “Board Nomination Procedures” policy in July 2005 in lieu of appointing a standing
nominating committee. The policy is used by independent members of the Board when choosing
nominees to stand for election.
The Board will consider for possible nomination qualified nominees recommended by stockholders. As
addressed in the “Board Nomination Procedures” policy, the manner in which independent directors
6
evaluate nominees for director as recommended by a stockholder will be the same as that for
nominees received from other sources. Stockholders who wish to propose a qualified candidate for
consideration should submit complete information as to the identity and qualifications of that
person to the Secretary of the Company no later than February 26, 2011, for the 2011 Annual Meeting
of Stockholders. The information should be sent to: Blue Dolphin Energy Company, Attention:
Secretary, 801 Travis Street, Suite 2100, Houston, Texas 77002.
The Board will continue to nominate qualified directors of whom the Board believes will make
important contributions to the Board and the Company. The Board generally requires that nominees
be persons of sound ethical character, be able to represent all stockholders fairly, have
demonstrated professional achievements, have meaningful experience and have a general appreciation
of the major business issues facing the Company. The Board also considers issues of diversity and
background in its selection process, recognizing that it is desirable for its membership to have
differences in viewpoints, professional experiences, educational backgrounds, skills, race, gender,
age and national origin.
Corporate Governance
Leadership Structure
The Company is led by Ivar Siem, who has served as Chairman of the Board since 1989 and Chief
Executive Officer since 2004. Having a single leader for the Company is commonly utilized by other
public companies in the United States, and we believe it has been effective for our Company as
well. This leadership structure demonstrates to our employees, customers and stockholders that we
are under strong leadership, with a single person setting the tone and having primary
responsibility for managing our operations, and eliminates the potential for confusion or
duplication of efforts. We do not believe that appointing an independent Board chairman, or a
permanent lead director, would improve upon the performance of the Board.
Risk Oversight
Our Board is actively involved in overseeing the risk management of the Company. Presentations by
management to the Board include consideration of the challenges and risk to our business, and the
Board and management actively engage in discussion on these topics. Furthermore, the two standing
Board committees provide appropriate risk oversight. The Audit Committee oversees the accounting
and financial reporting processes, as well as compliance, internal control, legal and risk matters.
The Compensation Committee oversees compensation policies, including the approval of compensation
for our Chairman and Chief Executive Officer. We believe that the processes established to report
and monitor systems for material risks applicable to the Company are appropriate and effective.
Code of Conduct
In July 2005, the Board adopted a code of conduct (the “Code of Conduct”) applicable to all
directors, officers and employees, as set forth in the Sarbanes-Oxley Act of 2002, which is
publicly available on Blue Dolphin’s website (www.blue-dolphin.com). The Code of Conduct requires
all directors, officers and employees to act ethically at all times, and prohibits any employee
from retaliating or taking any adverse action against anyone for raising or helping to resolve an
integrity concern.
The Audit Committee established procedures to enable anyone who has a concern about the Company’s
conduct or policies, or any employee who has a concern about the Company’s accounting, internal
accounting controls or auditing matters, to communicate that concern directly to the Chairman of
the Audit Committee. Violations and/or concerns may be sent anonymously by mail to Laurence N.
Benz (Audit Committee Chairman, Blue Dolphin Energy Company), 13000 Equity Place, Suite 105,
Louisville, Kentucky 40223, via email to larry@physicaltherapist.com or such other contact
information for Dr. Benz that the Company may post on its website from time to time.
7
Code of Ethics
In April 2003, the Board adopted a Code of Ethics policy that is applicable to the principal
executive officer, principal financial officer, principal accounting officer or controller, or
persons performing similar functions. The Code of Ethics policy is posted on our website
(www.blue-dolphin.com) and is available to any stockholder, without charge, upon written request to
Blue Dolphin Energy Company, Attention: Secretary, 801 Travis Street, Suite 2100, Houston, Texas
77002. Any amendments or waivers to provisions of the Code of Ethics policy will be disclosed on
our website.
Communicating with the Directors
As the Board does not receive a large volume of correspondence from stockholders, the Board, at
this time, does not have a formal process by which stockholders can communicate with the Board.
Instead, any stockholder who desires to contact the Board or specific members of the Board may do
so by writing to: Blue Dolphin Energy Company, Attention: Secretary for Board, 801 Travis Street,
Suite 2100, Houston, Texas 77002. Currently, all communications addressed in such manner are sent
directly to the indicated directors. In the future, if the Board adopts a formal process for
determining how communications are to be relayed to directors, that process will be disclosed on
our website.
ITEM 11. EXECUTIVE COMPENSATION
Executive Compensation Policy and Procedures
Compensation for the Company’s executive officers consists of base salary, cash bonuses and
incentive awards that have historically consisted of stock options. The Company does not offer a
retirement plan that provides for the payment of retirement benefits. In the event an employee of
the Company retires after age 65, the non-vested portion of any stock options received expires
immediately. The vested portion of any stock options received expires, to the extent not
exercised, three months after retirement. The Compensation Committee has the authority to approve
all forms of executive compensation based on its experience and informal consideration of
compensation practices of oil and gas companies of similar size and business focus. The
Compensation Committee has not used compensation consultants in the past in making its
determinations. The Company believes that stock ownership by its executive officers and other
employees furthers the alignment between the interests of the executive officers and other
employees and the stockholders, thereby enhancing the Company’s efforts to improve stockholder
returns and increase stockholder value.
The Company’s stock incentive plan provides that upon a change of control, the Compensation
Committee may accelerate the vesting of options, cancel options and make payments in respect
thereof in cash in accordance with the terms of the stock incentive plan, adjust the outstanding
options as appropriate to reflect such change of control or provide that each option shall
thereafter be exercisable for the number and class of securities or property that the optionee
would have been entitled to receive had the option been exercised. The stock incentive plan
provides that a change of control occurs if any person, entity or group acquires or gains ownership
or control of more than 50% of the outstanding Common Stock or, if after certain enumerated
transactions, the persons who were directors before such transactions cease to constitute a
majority of the Board. Consummation of the transaction set forth in the SPA will not trigger a
change in control under our stock incentive plan.
The compensation of executive officers is reviewed on an annual basis, as well as when changes in
responsibilities occur. The Compensation Committee may not delegate its authority to approve
compensation determinations for executive officers. The Compensation Committee approves changes in
compensation for Messrs. Heath and Howard based on the recommendations of Mr. Siem as principal
executive officer and Chairman of the Board. The Compensation Committee determines the
compensation for Mr. Siem.
8
Mr. Heath has a three year employment agreement with an annual base salary of $175,000. His
employment with the Company began May 1, 2007. Pursuant to the terms of a letter agreement dated
October 9, 2009, the initial term of his employment agreement was extended from three years to four
years. If the Company terminates Mr. Heath’s employment for other than cause: (i) his base salary
will be paid from the termination date through the expiration date of his employment agreement as
severance and (ii) the non-vested portion of his stock options will expire immediately upon
termination and the vested portion will expire, to the extent not exercised, within three months of
termination. If Mr. Heath’s employment is terminated due to death or disability (i) his base
salary will be paid through the end of the month of termination and (ii) the non-vested portion of
his stock options will expire immediately upon termination and the vested portion will expire, to
the extent not exercised, on the one year anniversary of the termination date.
Compensation for Named Executives
The following table sets forth the compensation paid to the Company’s principal executive officer
and the two most highly compensated executive officers other than the principal executive officer
whose annual salary exceeded $100,000 in the fiscal year ended December 31, 2009 (collectively, the
“Named Executive Officers”) for services rendered to the Company:
SUMMARY COMPENSATION TABLE
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Option |
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Year |
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Salary |
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Awards(3) |
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Total |
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Ivar Siem(1) |
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Chairman of the Board and |
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2009 |
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$ |
100,000 |
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$ |
63,727 |
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$ |
163,727 |
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Chief Executive Officer |
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2008 |
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$ |
100,000 |
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$ |
84,970 |
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$ |
184,970 |
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Thomas W. Heath(2) |
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President, Secretary and |
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2009 |
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$ |
175,000 |
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$ |
161,280 |
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$ |
336,280 |
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Assistant Treasurer |
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2008 |
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$ |
175,000 |
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$ |
161,280 |
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$ |
336,280 |
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T. Scott Howard |
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Treasurer and |
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2009 |
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$ |
110,000 |
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$ |
— |
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$ |
110,000 |
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Assistant Secretary |
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2008 |
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$ |
107,500 |
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$ |
— |
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$ |
107,500 |
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Mr. Siem’s salary is based on part-time employment with the Company in his capacity as Chief
Executive Officer. |
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Mr. Heath has a three year employment agreement with an annual base salary of $175,000. His
employment with the Company began May 1, 2007. Pursuant to the terms of a letter agreement
dated October 9, 2009, the initial term of his employment agreement was extended from three
years to four years. |
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| (3) |
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Represents amounts recognized for financial statement purposes for the fiscal years ended
December 31, 2009 and 2008, in accordance with Statement of Financial Accounting Standards No.
123(R), Share Based Payments. Assumptions used in the calculation of these amounts are
included in Footnote 5 to the Company’s audited, consolidated financial statements for the
fiscal years ended December 31, 2009, and December 31, 2008, which are included in the
Company’s Original Filing and Annual Report on Form 10-K for the year ended December 31, 2008. |
Compensation Risk Assessment
Our approach to compensation practices and policies applicable for non-executive employees
throughout our organization is consistent with that followed for executive employees. Base pay is
based on market median for each position, and bonuses and stock based incentives are based on
individual and Company performance. Accordingly, we believe our practices and policies in this
regard are not reasonably likely to have a materials adverse effect on our Company.
9
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
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Option Awards |
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Number of |
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Securities |
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Unexercised |
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Unexercised |
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Option |
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Option |
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Options — |
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Options — |
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Exercise |
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Expiration |
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Exercisable |
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Unexercisable |
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Price |
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Date |
Ivar Siem |
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8,000 |
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— |
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$ |
6.00 |
|
|
5/17/2010 |
|
|
|
100,000 |
|
|
|
— |
|
|
$ |
2.81 |
|
|
10/15/2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Thomas W. Heath(1) |
|
|
132,000 |
|
|
|
68,000 |
|
|
$ |
2.99 |
|
|
5/31/2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T. Scott Howard |
|
|
4,500 |
|
|
|
— |
|
|
$ |
2.81 |
|
|
10/15/2017 |
|
|
|
| (1) |
|
Mr. Heath’s unexercisable options vest 100% on May 1, 2010. |
Director Compensation Policy and Procedures
Directors who are also employees of the Company are not paid any fees or other compensation for
services as a member of the Board or any committee of the Board. Compensation for members of the
Board and committees of the Board is approved by the Board based on recommendations by Mr. Siem as
principal executive officer and Chairman of the Board. As with employee stock ownership, the
Company believes that stock ownership by members of the Board furthers the alignment between the
interests of the directors and the stockholders, resulting in an enhancement of the Company’s
efforts to improve stockholder returns and increase stockholder value.
Compensation for Non-Employee Directors
Non-employee directors are paid an annual retainer of $20,000, payable quarterly in Common Stock
with the number of shares based upon the fair value on the date of payment. The shares are
restricted from sale pursuant to holding periods under Rule 144 of the Securities Act, and
applicable state securities laws. The Audit Committee chairman receives an additional
annual retainer of $5,000 and other Audit Committee members receive an additional
annual retainer of $2,500. The Audit Committee retainer is payable semi-annually in cash. No
additional compensation is paid to directors serving on the Compensation Committee. Directors are
entitled to be reimbursed for reasonable out-of-pocket expenses related to in-person meeting
attendance.
Remainder of Page Intentionally Left Blank
10
The following table sets forth the compensation paid to non-employee directors in fiscal year ended
December 31, 2009:
DIRECTOR COMPENSATION
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Fees Earned |
|
|
|
|
|
|
|
| |
|
or Paid in |
|
|
Stock |
|
|
|
|
| Name |
|
Cash |
|
|
Awards(1)(2) |
|
|
Total |
|
Laurence N. Benz |
|
$ |
5,000 |
|
|
$ |
20,000 |
|
|
$ |
25,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John N. Goodpasture |
|
$ |
— |
|
|
$ |
20,000 |
|
|
$ |
20,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Harris A. Kaffie |
|
$ |
2,500 |
|
|
$ |
20,000 |
|
|
$ |
22,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Erik Ostbye |
|
$ |
2,500 |
|
|
$ |
20,000 |
|
|
$ |
22,500 |
|
|
|
|
| (1) |
|
Represents amounts recognized for financial statement purposes for the fiscal year ended
December 31, 2009, in accordance with Statement of Financial Accounting Standards No. 123(R),
Share Based Payments. Assumptions used in the calculation of these amounts are included in
Footnote 5 to the Company’s audited, consolidated financial statements for the fiscal year
ended December 31, 2009, which is included in the Original Filing. |
| |
| (2) |
|
At December 31, 2009, each non-employee director had total stock awards outstanding as
follows: Dr. Benz — 79,487, Mr. Goodpasture — 72,577, Mr. Kaffie — 102,038 and Mr. Ostbye
— 73,454. |
Remainder of Page Intentionally Left Blank
11
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Security Ownership
The table below sets forth certain information with respect to the beneficial ownership for shares
of Common Stock (the only class of voting security issued and outstanding) as of April 30,
2010 by: (i) all persons and institutions known by us to be the beneficial owners of 5% or more of
the outstanding shares of Common Stock, (ii) each director, (iii) each executive officer; and (iv)
all directors and executive officers as a group. Unless otherwise indicated, each of the following
persons having sole voting and dispositive power with respect to such shares.
| |
|
|
|
|
|
|
|
|
| |
|
Shares Owned Beneficially |
|
| Name of Beneficial Owner |
|
Number |
|
|
Percent(1) |
|
Columbus Petroleum Limited, Inc.(2) |
|
|
911,712 |
|
|
|
7.4 |
% |
Spencer Finance Corp. and Arne Blystad(3) |
|
|
842,743 |
|
|
|
6.8 |
% |
Spencer Energy AS(3) |
|
|
586,743 |
|
|
|
4.8 |
% |
Harris A. Kaffie(4) |
|
|
899,315 |
|
|
|
7.3 |
% |
Ivar Siem(4) |
|
|
739,265 |
|
|
|
6.0 |
% |
Thomas W. Heath(4) |
|
|
320,000 |
|
|
|
2.6 |
% |
Laurence N. Benz |
|
|
136,748 |
|
|
|
* |
|
Erik Ostbye |
|
|
86,275 |
|
|
|
* |
|
John N. Goodpasture |
|
|
85,398 |
|
|
|
* |
|
T. Scott Howard(4) |
|
|
4,500 |
|
|
|
* |
|
| |
Directors and Executive Officers as a Group (7 Persons) |
|
|
2,271,501 |
|
|
|
18.4 |
% |
|
|
|
| * |
|
Less than 1%. |
| |
| (1) |
|
Based upon 12,324,322 shares of Common Stock issued and outstanding
(11,928,251 shares of Common Stock issued and outstanding as of the April 30, 2010 and
396,071 shares of Common Stock issuable upon exercise of options that may be exercised
within 60 days of April 30, 2010). |
| |
| (2) |
|
Based upon a Schedule 13D filed with the SEC on September 8, 2004, the
address of Columbus Petroleum Limited, Inc. was Aeulestrasse 74, FL-9490, Vaduz,
Liechtenstein. |
| |
| (3) |
|
Based on a Schedule 13D filed with the SEC on April 9, 2007, Spencer Finance
Corp. and Arne Blystad jointly exercise voting and investment authority over the
shares owned by Spencer Finance Corp. Spencer Energy AS is a subsidiary of Spencer
Finance Corp., and as such, the 586,743 shares held by Spencer Energy AS are included
in the 842,743 shares controlled by Spencer Finance Corp. and Arne Blystad. The
principal business address for Spencer Finance Corp., Arne Blystad and Spencer Energy
AS was Haakon VII gt. 1, 0161 Oslo, Norway. |
| |
| (4) |
|
Includes shares of Common Stock issuable upon exercise of options that may be
exercised within 60 days of April 30, 2010 as follows: Mr. Kaffie — 83,571; Mr. Siem
— 108,000; Mr. Heath — 200,000; Mr. Howard — 4,500; and all directors and executive
officers as a group — 396,071. |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires the
Company’s directors, executive officers, and stockholders who own more than 10% of our Common
Stock, to file reports of stock ownership and changes in ownership with the SEC and to furnish us
with copies of all such reports as filed. Based solely on a review of the copies of the Section
16(a) reports furnished to us, the Company is aware that during 2009, all of its directors,
executive officers and greater than 10% stockholders complied with their Section 16(a) filing
requirements, with the exception of Messrs. Goodpasture, Kaffie and Ostbye. Messrs. Goodpasture,
Kaffie and Ostbye each filed one (1) late Form 4 covering a total of one (1) transaction each.
12
Compensation Plan Information
The following table provides information for all equity compensation plans as of the fiscal
year ended December 31, 2009, under which our equity securities were authorized for issuance:
| |
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
Number of Securities |
|
| |
|
|
|
|
|
|
|
|
|
Remaining Available for |
|
| |
|
Number of Securities to |
|
|
Weighted Average |
|
|
Future Issuance Under |
|
| |
|
be Issued Upon Exercise |
|
|
Exercise Price of |
|
|
Equity Compensation Plans |
|
| |
|
of Outstanding Options, |
|
|
Outstanding Options, |
|
|
(Excluding Securities |
|
| |
|
Warrants and Rights |
|
|
Warrants and Rights |
|
|
Reflected in Column (a)) |
|
| Plan Category |
|
(a) |
|
|
(b) |
|
|
(c) |
|
Equity compensation plans approved by
security holders |
|
|
424,559 |
|
|
$ |
2.53 |
|
|
|
351,040 |
|
Equity compensation plans not approved
by security holders |
|
|
— |
|
|
$ |
0.00 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
424,559 |
|
|
$ |
2.53 |
|
|
|
351,040 |
|
|
|
|
|
|
|
|
|
|
|
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Director Independence
The Board has affirmatively determined that each of its members, with the exception of Mr. Siem,
are independent and have no material relationship with the Company (either directly or indirectly
or as a stockholder or officer of an organization that has a relationship with the Company), and
that all members of the Audit and Compensation Committees are independent, pursuant to NASDAQ
Listing and SEC rules.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Fees paid to UHY LLP, the Company’s independent registered public accounting firm, in
fiscal years ended December 31, 2009 and 2008 by the Company were as follows:
| |
|
|
|
|
|
|
|
|
| |
|
2009 |
|
|
2008 |
|
Audit fees |
|
$ |
163,000 |
|
|
$ |
128,000 |
|
Audit-related fees |
|
|
12,000 |
|
|
|
13,529 |
|
Tax fees |
|
|
23,000 |
|
|
|
21,288 |
|
All other fees |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
$ |
198,000 |
|
|
$ |
162,817 |
|
|
|
|
|
|
|
|
Audit fees included fees related to the audit of our consolidated financial statements and review
of our quarterly reports that are filed with the SEC. Audit fees for 2009 also included fees for
consultation related to our transaction with Lazarus Energy Holdings, LLC. Audit-related fees
include fees related to consultation concerning financial accounting and reporting standards for
share based payments to
13
employees and non-employees, current and deferred taxes and revenue
recognition. Tax fees primarily include fees for preparation of federal and state income tax
returns as well as tax planning services. The Audit Committee must pre-approve all audit and
non-audit services provided to the Company by its independent registered public accounting firm.
UHY has been engaged as our independent registered public accounting firm since 2002. Through
December 31, 2009, UHY had a continuing relationship with UHY Advisors, Inc. (“Advisors”) from
which it leases auditing staff who are full-time, permanent employees of Advisors and through which
UHY’s partners provide non-audit services. UHY has only a few full-time employees and therefore,
few, if any of the audit services performed were provided by permanent full-time employees of UHY.
UHY manages and supervises the audit services and audit staff, and is exclusively responsible for
the opinion rendered in connection with its examination.
Remainder of Page Intentionally Left Blank
14
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) List of documents filed as part of this report
3. Exhibits. We hereby file as part of this Annual Report on Form 10-K/A (Amendment No. 1)
the Exhibits listed in the attached Exhibit Index.
| |
|
|
| No. |
|
Description |
31.1
|
|
Ivar Siem Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to section 302 of the Sarbanes-Oxley Act of 2002 ** |
|
|
|
31.2
|
|
T. Scott Howard Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to section 302 of the Sarbanes-Oxley Act of 2002 ** |
|
|
|
32.1
|
|
Ivar Siem Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to section 906 of the Sarbanes-Oxley Act of 2002 ** |
|
|
|
32.2
|
|
T. Scott Howard Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to section 906 of the Sarbanes-Oxley Act of 2002 ** |
Remainder of Page Intentionally Left Blank
15
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
| |
|
|
|
|
| |
BLUE DOLPHIN ENERGY COMPANY
(Registrant)
|
|
| |
By: |
/s/ Ivar Siem
|
|
| |
|
Ivar Siem |
|
| |
|
(Chairman and CEO)
Date: |
|
| |
| |
Date: April 30, 2010 |
|
| |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the capacities and on the
dates indicated.
| |
|
|
|
|
| Signature |
|
Title |
|
Date |
|
|
Chairman and CEO
|
|
April 30, 2010 |
Ivar Siem
|
|
(Principal Executive Officer) |
|
|
|
|
|
|
|
|
|
Treasurer and Assistant Secretary
|
|
April 30, 2010 |
T. Scott Howard
|
|
(Principal Financial and Accounting Officer) |
|
|
|
|
|
|
|
/s/ Laurence N. Benz
Laurence N. Benz
|
|
Director
|
|
April 30, 2010 |
|
|
|
|
|
/s/ John N. Goodpasture
John N. Goodpasture
|
|
Director
|
|
April 30, 2010 |
|
|
|
|
|
/s/ Harris A. Kaffie
Harris A. Kaffie
|
|
Director
|
|
April 30, 2010 |
|
|
|
|
|
/s/ Erik Ostbye
Erik Ostbye
|
|
Director
|
|
April 30, 2010 |
16
Exhibit Index
| |
|
|
| No. |
|
Description |
31.1
|
|
Ivar Siem Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to section 302 of the Sarbanes-Oxley Act of 2002 ** |
| |
31.2
|
|
T. Scott Howard Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to section 302 of the Sarbanes-Oxley Act of 2002 ** |
| |
32.1
|
|
Ivar Siem Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to section 906 of the Sarbanes-Oxley Act of 2002 ** |
| |
32.2
|
|
T. Scott Howard Certification Pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to section 906 of the Sarbanes-Oxley Act of 2002 ** |
17