DEF 14A 1 def14a2018.htm


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 (Amendment No.    )
 
Filed by the Registrant       
Filed by a Party other than the Registrant
Check the appropriate box:
 
Preliminary Proxy Statement
 
Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
 
Definitive Proxy Statement
 
Definitive Additional Materials
 
Soliciting Material Pursuant to §240.14a-12
 
TRECORA RESOURCES
 

(Name of Registrant as specified in its Charter)
 
 

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
 
Payment of Filing Fee (Check the appropriate box):
 
No fee required.
 
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
 
 
 
(1)
Title of each class of securities to which transaction applies:
 
 
    
       
 
 
(2)
Aggregate number of securities to which transaction applies:
 
 
    
       
 
 
(3)
Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth amount on which the filing fee is calculated and state how it was determined):
 
 
    
           
 
 
(4)
Proposed maximum aggregate value of transaction:
 
 
    
         
 
 
(5)
Total fee paid:
   
 
   
     
 
Fee paid previously with preliminary materials.
 
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify 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:
 

 
(1)
Amount Previously Paid:
    
       
 
(2)
Form, Schedule or Registration Statement No.:
 
    
         
 
(3)
Filing Party:
   
    
     
 
(4)
Date Filed:
   
    
     






1650 Hwy 6 South, Suite 190
Sugar Land, TX  77478
(409) 385-8300


April 10, 2018

To Our Stockholders:

On behalf of the Board of Directors, I cordially invite you to attend the 2018 Annual Stockholders' Meeting on May 15, 2018, at 11:00 a.m., Central Time.  The meeting will be held at our South Hampton Resources Office, 7752 FM 418, Silsbee, Texas 77656.  If you plan to attend the meeting, please RSVP to 409-385-8300.

Matters to be acted upon at the meeting are described in the attached Notice of 2018 Annual Meeting of Stockholders and Proxy Statement.  We have also included a copy of our Annual Report on Form 10-K for the year ended December 31, 2017, for your review.

Your vote on the business to be considered at the meeting is important regardless of the number of shares you own.  Whether or not you plan to attend, please vote your proxy promptly in accordance with the instructions on the enclosed proxy card.  If you do attend the meeting, you may, of course, withdraw your proxy should you wish to vote in person.

Sincerely,


 
Nicholas Carter
Executive Chairman of the Board


TRECORA RESOURCES
("TREC")
1650 Hwy 6 South, Suite 190
Sugar Land, TX  77478
(409) 385-8300

NOTICE OF 2018 ANNUAL MEETING OF STOCKHOLDERS

Time and Date:
 
11:00 a.m. Central Time, May 15, 2018
     
Place:
 
South Hampton Resources Office
   
7752 FM 418
   
Silsbee, TX  77656
     
Items of Business:    
 
(1)
Re-election of seven directors to serve until the next annual meeting;
 
(2)
Approval and adoption of the Amended and Restated Certificate of Incorporation of Trecora Resources;
 
(3)
Ratification of the selection of BKM Sowan Horan, LLP as the Company's independent registered public accounting firm for 2018;
 
(4)
Approval, by non-binding vote, of the compensation of the Company's named executive officers;
 
(5)
Approval of the Second Amendment to the Company's Stock and Incentive Plan; and
 
(6)
To transact any other business that may properly come before the annual meeting and postponement or adjournment of the annual meeting.
     
Adjournments and Postponements:
 
Any action on the items of business described above may be considered at the annual meeting at the time and on the date specified above or at any time and date to which the annual meeting may be properly adjourned or postponed.
     
Record Date:
 
You are entitled to vote only if you were a Trecora Resources stockholder of record as of the close of business on March 26, 2018.  Your vote is important. We encourage you to vote by proxy, even if you plan to attend the meeting.  You may vote your proxy by telephone, Internet or mail.  A toll-free telephone number and website address are included on your proxy card.
     
Meeting Admission:
 
You are entitled to attend the annual meeting only if you were a Trecora Resources stockholder of record as of the close of business on March 26, 2018, or hold a valid proxy for the annual meeting.  You should be prepared to present photo identification for admittance.  If you are not a stockholder of record but hold shares through a broker, trustee or nominee, you should provide proof of beneficial ownership as of the record date, such as your most recent account statement prior to March 26, 2018, a copy of the voting instruction card provided by your broker, trustee or nominee, or similar evidence of ownership.  If you do not provide photo identification and comply with the other procedures outlined above, you will not be admitted to the annual meeting.
     
Webcast:
 
www.ir.trecora.com


This notice of annual meeting of stockholders, proxy statement, form of proxy and our Annual Report on Form 10-K for the year ended December 31, 2017, are first being mailed on or about April 10, 2018.



Connie J. Cook, Secretary


TABLE OF CONTENTS
   
1
   
2
   
2
   
6
   
6
     
19
     
19
     
20
     
20
   
22
   
23
   
27
   
30
   
32
   
33
   
33
   
57
   
70
   
71
75
76


PROXY STATEMENT

GENERAL EXPLANATION OF MATERIALS INCLUDED

This proxy statement is furnished in connection with the solicitation of proxies by the Board of Directors (the "Board") of Trecora Resources, a Delaware corporation (the "Company"), for the Company's 2018 annual meeting of stockholders (the "annual meeting") which is scheduled to take place on May 15, 2018, at 11:00 a.m., Central Time.  This proxy statement provides a description of the business matters to be covered at the annual meeting.  As a stockholder, you are entitled and encouraged to attend the annual meeting and to vote on the matters described in this proxy statement.  Detailed information on voting is provided below.

On or about April 10, 2018, we mailed a notice of annual meeting of stockholders, this proxy statement, the form of proxy and our Annual Report on Form 10-K for the year ended December 31, 2017, to our stockholders of record at the close of business on March 26, 2018. In addition to notifying you of the upcoming annual meeting of stockholders, we request your vote on the matters to be covered at the annual meeting.  In making this solicitation, the Company will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials and soliciting votes. Proxies may be solicited in person by our employees, or by mail, courier, telephone, email or facsimile.

This proxy statement includes the following abbreviations:
(1)
TREC – Trecora Resources
(2)
TOCCO – Texas Oil & Chemical Co. II, Inc. – wholly owned subsidiary and parent of SHR and TC
(3)
SHR – South Hampton Resources, Inc. – Petrochemical segment
(4)
TC – Trecora Chemical – Specialty wax segment
(5)
AMAK – Al Masane Al Kobra Mining Company – Mining investment – 33.4% ownership
(6)
PEVM – Pioche Ely Valley Mines, Inc. – Inactive mine – 55% ownership

Specific Items of Business

The following six proposals will be presented at the meeting for your vote.  Space is provided in the accompanying proxy card to vote for, against, or abstain from voting on each of the proposals other than the re-election of directors. Space is provided in the accompanying proxy card to vote for or withhold your vote for each director candidate. If you vote using the telephone or Internet, you will be instructed how to vote on these issues when you call or access the relevant website.

(1)
To re-elect seven directors to serve until the next annual meeting,

(2)
To approve and adopt the Amended and Restated Certificate of Incorporation of Trecora Resources,

(3)
To ratify the selection of our independent registered public accounting firm,

(4)
To  approve, by non-binding vote, the compensation of the Company's named executive officers, and

1

(5)
To approve the Second Amendment to the Company's Stock and Incentive Plan.

QUESTIONS AND REQUESTS FOR ADDITIONAL INFORMATION

Questions regarding the annual meeting, this proxy statement, voting or otherwise should be directed to the individual listed below at the provided contact information.  The following proxy materials should be included with this mailing: (1) notice of annual meeting of stockholders; (2) proxy statement; (3) form of proxy (or voting instruction card for beneficial owners) with pre-addressed envelope; and (4) the Company's Annual Report on Form 10-K for the year ended December 31, 2017.  If any portion of the proxy materials appears to be missing, or if you would like an additional copy of the proxy materials, please contact the individual below at the listed contact information for a free copy.

Corporate Secretary
Trecora Resources
P. O. Box 1636
Silsbee, TX  77656
(409) 385-8300

Our proxy statement and Annual Report on Form 10-K for the year ended December 31, 2017, may also be accessed on our website at www.trecora.com.

Request for Multiple Copies of Proxy Materials

Please note that if multiple stockholders reside at the same address, only one set of proxy materials has been provided, unless the Company received contrary instructions from one or more of the stockholders.  To request a separate copy of the proxy materials, or to request to receive separate copies of the proxy materials in the future, contact the Corporate Secretary at the above address, and a free copy will be promptly delivered to you.

Request for Single Copy of Proxy Materials

If you share an address with one or more stockholders and are currently receiving multiple sets of proxy materials, you may request delivery of a single set of proxy materials by contacting the Corporate Secretary at the above address.

VOTING

Company stockholders of record and beneficial owners are entitled to vote on the items of business described in this proxy statement.  Stockholders of record may (1) attend the annual meeting and vote their shares in person, (2) vote by submitting a proxy or (3) vote electronically via the Internet or by telephone.  Beneficial owners may (1) attend the annual meeting and vote their share in person only if they obtain a legal proxy from their broker, trustee or nominee, (2) vote by submitting voting instructions or (3) vote electronically via the Internet or by telephone.

2

Voting Securities, Record Date

Stockholders of record at the close of business on March 26, 2018 (the "record date"), are entitled to vote at the meeting and any adjournment or postponement of the meeting.  On the record date, there were 24,387,625 shares of common stock of the Company, par value $0.10, issued and outstanding.

Stockholder of Record

If your shares are registered directly in your name, you are the stockholder of record of those shares, and these proxy materials are being sent directly to you by the Company.  As a stockholder of record, you have the right to grant your voting proxy directly to the Company or a third party or vote in person at the meeting.  The Company has enclosed a proxy card for you to use.

Beneficial Owner

If your shares are held in a brokerage account or by another nominee, you are considered the beneficial owner of shares held in street name, and these proxy materials are being forwarded to you together with a voting instruction card on behalf of your broker, trustee or nominee.  Your broker is not permitted to vote on your behalf on the re-election of directors and the other matters at the stockholder meeting (except for the ratification of the selection of BKM Sowan Horan, LLP as auditors for 2018), unless you provide specific instructions by completing and returning the Voting Instruction Form or following the instructions provided to you to vote your shares via telephone or the Internet.  For your vote to be counted, you need to communicate your voting decisions to your broker, bank or other financial institution before the date of the stockholder meeting.

Voting in Person at the Annual Meeting

Stockholders of record are invited to attend the annual meeting of stockholders on May 15, 2018, at the South Hampton Resources office in Silsbee, TX and vote their shares in person.  Beneficial owners may vote in person at the annual meeting only if they obtain a legal proxy from their broker, trustee or nominee that holds their shares giving them the right to vote the shares.

Voting by Submitting a Proxy or Voting Instructions

Regardless of whether you plan to attend the annual meeting, stockholders of record and beneficial owners have the option of voting their shares by submitting a proxy or voting instructions, as applicable.

Stockholders of record may vote by proxy.  To vote by proxy, stockholders of record must complete, sign and date their proxy cards and mail them in the accompanying pre-addressed envelopes.  Your proxy card and pre-addressed envelope is included with this proxy statement.

Beneficial owners may vote by submitting voting instructions to their broker, trustee or nominee.  Your voting instruction card should be provided by your broker, trustee or nominee.  Please refer to your voting instruction card for voting procedures and additional information.
 
 
3

Proxies and Voting Instructions Are Revocable

A stockholder of record may change his or her vote by either: (1) submitting a new proxy bearing a later date (which automatically revokes the earlier proxy) no later than May 14, 2018; (2) providing written notice of revocation to the Corporate Secretary at the address listed above on page 2 to be received by us no later than May 14, 2018, or (3) attending the annual meeting and voting in person.  Please note that your attendance at the annual meeting will not revoke a previously submitted proxy unless you specifically make such a request.  A beneficial owner may change his or her vote by either: (1) submitting new voting instructions to the appropriate broker, trustee or nominee; or (2) if they have obtained a legal proxy from their broker, trustee or nominee giving them the legal right to vote their shares, by attending the annual meeting and voting in person.

Voting Electronically

Stockholders of record and beneficial owners may vote electronically by following the instructions provided on their proxy cards prior to 1:00 a.m. CDT on May 15, 2018.

Voting Procedures

The Company's by-laws provide that each stockholder shall have one vote for each share of stock having voting power, registered in his or her name on the books of the Company.

Vote Required to Approve Each Proposal

Proposal No. 1.  Directors are elected upon a plurality vote of the stockholders.  Therefore, the director nominees who receive the highest number of "FOR" votes are elected.  In the election of directors, you may vote "FOR" or "WITHHOLD" with respect to each of the nominees.  "WITHHOLD" votes will not impact the election of directors, except as set forth below, and broker non-votes will have no effect on the election of directors.  Cumulative voting is not permitted in the election of directors.

Pursuant to the Corporate Governance Guidelines of the Company, in any non-contested election of directors, any director nominee who receives a greater number of votes "WITHHELD" from his or her election than votes "FOR" such election shall tender his or her resignation. Within 90 days after certification of the election results the Board of Directors will decide, through a process managed by the Nominating and Governance Committee and excluding the nominee in question, whether to accept the resignation. Absent a compelling reason for the director to remain on the Board, the Board shall accept the resignation.

Proposal No. 2.  The affirmative vote of the holders of a majority of the outstanding shares entitled to vote on this proposal is required for approval and adoption of this proposal.  You may vote "FOR," "AGAINST" or "ABSTAIN" on this proposal.  If you elect to "ABSTAIN," the abstention has the same effect as a vote "AGAINST." Broker non-votes will have the same effect as votes "AGAINST" this proposal.

Proposal Nos. 3, 4 and 5. The affirmative vote of the holders of a majority of shares present in person or represented by proxy and entitled to vote on these proposals at the annual meeting is
 
 
4

required for approval of each of these proposals, respectively.  You may vote "FOR," "AGAINST" or "ABSTAIN" on each these proposals.  If you elect to "ABSTAIN," the abstention has the same effect as a vote "AGAINST." Broker non-votes will have no effect on the votes for these proposals.

How Shares will be Voted by Proxy or Voting Instructions

If you provide specific instructions with regard to certain proposals, your shares will be voted as you instruct on such proposals.  If you sign your proxy card or voting instruction card without giving specific instructions, your shares will be voted in accordance with the recommendations of the Board ("FOR" the Company's nominees to the Board, "FOR" the approval and adoption of the Amended and Restated Certificate of Incorporation of Trecora Resources, "FOR" the approval and adoption of an amendment to the Certificate of Incorporation, "FOR" the ratification of BKM Sowan Horan, LLP as the Company's independent registered public accounting firm for 2018, "FOR" the approval of the compensation for the Company's named executives, and "FOR" the approval of the Second Amendment to the Company's Stock and Incentive Plan.)

Broker Non-Votes

If you hold shares beneficially in street name and do not provide your broker with voting instructions, your shares may constitute "broker non-votes."  Generally, broker non-votes occur on a matter when a broker is not permitted to vote on that matter without instructions from the beneficial owner, and instructions are not given.  In tabulating the voting result for any particular proposal, shares that constitute broker non-votes are not considered entitled to vote on that proposal.  Thus, broker non-votes will not affect the outcome of any matter being voted on at the meeting, other than Proposal Nos. 2 and 3, assuming that a quorum is obtained.

Additional Proposals Presented at Meeting

Other than the proposals listed in the notice of the annual meeting attached hereto, the Board is not aware of any other business to be acted upon at the annual meeting.  However, if you grant a proxy, the persons named as proxy holders will have the discretion to vote your shares on any additional matters properly presented for a vote at the meeting.  If for any reason any nominee is not available as a candidate for director, the persons named as proxy holders will vote your proxy for such other candidate or candidates as may be nominated by the Board.

Quorum Requirement

The quorum requirement for holding the annual meeting and transacting business is that holders of a majority of the Company stock issued and outstanding and entitled to vote at the meeting, must be present in person or represented by proxy.  Both abstentions and broker non-votes are counted for the purpose of determining the presence of a quorum.


5




STOCKHOLDER PROPOSALS

Stockholder Proposals Intended to be Included in Proxy Statement

You may submit proposals for consideration at future stockholder meetings.  For a stockholder proposal to be considered for inclusion in the Company's proxy statement for the annual meeting next year, the Corporate Secretary must receive the written proposal at the address above no later than the close of business on December 11, 2018.  Such proposals also must comply with Securities and Exchange Commission ("SEC") regulations under Rule 14a-8 regarding the inclusion of stockholder proposals in company-sponsored proxy materials.  Proposals should be addressed to the Corporate Secretary at the address on page 2.

CORPORATE GOVERNANCE

The Company is committed to maintaining the highest standards of business conduct and corporate governance which we believe are essential to running our business efficiently, serving our stockholders well and maintaining the Company's integrity in the marketplace.  The Company has adopted Corporate Governance Guidelines and Standards of Business Conduct that apply to the Company's principal executive officer, principal financial officer, controller, and all other employees and directors.  The Company's Corporate Governance Guidelines and Standards of Business Conduct, in conjunction with the Certificate of Incorporation, by-laws and Board committee charters, form the framework for governance of the Company.

The Company's Corporate Governance Guidelines, Standards of Business Conduct, Certificate of Incorporation, by-laws and Board committee charters are available on the Company's website at www.trecora.com.  Stockholders may also request free printed copies of these from the Corporate Secretary at the address on page 2.

Directors and Executive Officers

The following sets forth the name and age of each current director of the Company, the date from which each director has served on our Board, all other positions and offices with the Company held by him or her, and each director's participation on other public company boards.

Name; Current Positions Held & Other Public Company Boards
Age
Director since
 
Nicholas N. Carter ………………………………….
Executive Chairman of the Board, Member of AMAK Board
 
71
 
 
2004
 
Simon Upfill-Brown…………………………………
    Chief Executive Officer and Chief Operating Officer, President of SHR since 2013, Member of  AMAK Board
 
65
 
2014
6

 
 
John R. Townsend ………………………………….
Chair of the Compensation
Committee and Member of Audit
Committee
 
64
 
2011
Joseph P. Palm 
Chair of Nominating and Governance
Committee and Member of Compensation
Committee
 
74
 
2011
Gary K. Adams. 
Member of Compensation Committee and
Nominating and Governance Committee
Boards: Phillips 66
 
67
 
2012
Karen A. Twitchell. 
Lead Independent Director, Chair of Audit
Committee and Member of
Compensation Committee
Boards: Kraton Corporation,
KMG Chemicals, Inc.
 
62
 
2015
 
Pamela R. Butcher. 
Member of Audit, Compensation, and
Nominating and Governance Committees
Boards: Pilot Chemical Corp.,
Gruden Topco Holdings
 
60
 
2016
 

Mr. Nicholas N. Carter, Executive Chairman of the Board, was previously the non-executive Chairman of the Board from July 2015 until March 2018 and President and Chief Executive Officer of the Company from July 2009 until his retirement in July 2015. Mr. Carter was temporarily appointed to the position of Executive Chairman in March 2018 to serve through the end of 2018, or earlier, if agreed to by the Company and Mr. Carter.  He is a 1975 graduate of Lamar University with a Bachelor of Business Administration in Accounting.  He worked at the Sabine River Authority of Texas as a Project Accountant from 1973 to 1975. From 1975 to 1977 he was a Staff Accountant with Wathen, DeShong and Company, CPA's. From 1977 until 2015 Mr. Carter had been employed by the Company in a succession of positions with increasing and broader operating responsibilities, as follows; 1977 to 1979, Controller of SHR; 1979 to 1982, Facility Manager at a ship dock and terminal facility owned by TOCCO; 1982 to 1987, Treasurer of TOCCO; 1987 to 2013, President of SHR; and 2007 to 2009, Executive Vice President of the Company. This succession of positions with the Company gave Mr. Carter broad experience and knowledge in operations, finances and strategy of the Company. Mr. Carter serves as a Director and President of PEVM of which the Company owns 55% of the outstanding stock. Mr. Carter was appointed to the Board of AMAK in February 2009.  We believe that his experience with the Company provides a wealth of knowledge to our Board.

7

Mr. Simon Upfill-Brownreceived undergraduate degrees in chemistry and mathematical statistics from Stellenbosch University, South Africa and a Master of Business Administration from Stanford Graduate School of Business.  He is a National Association of Corporate Directors (NACD) Governance Fellow.  He has over 20 years of senior level experience in international management of coatings, chemicals and renewable resources.  Beginning in 1993 he was President and CEO of Haltermann Inc. Haltermann was a subsidiary of Ascot plc until its acquisition by The Dow Chemical Company in June 2001. He was General Manager of Dow Haltermann from 2001 until 2008.  Mr. Upfill-Brown was also CEO of his own consulting firm, as well as CEO of a venture-backed algae-to-fuels company spun out of MIT in 2001, and a technology start-up focused on converting organic waste to hydrocarbon fuels. He began his career in the paint and protective coatings industry. Mr. Upfill-Brown joined the Company in 2012 as Executive Vice President and in 2013 was appointed President of SHR.  He was appointed to the AMAK Board in December 2012. In July 2015 he was promoted to the position of President and Chief Executive Officer of the Company.  In March 2018, his role was expanded to Chief Executive Officer and Chief Operating Officer. We believe that his knowledge and broad experience within the chemical industry, along with strong personal integrity and extensive management experience, provide valuable resources to our Board.

Mr. John R. Townsend has a Bachelor of Science in Chemical Engineering from Louisiana Tech University with over 30 years of experience in the petrochemical industry garnered through his employment with Mobil Chemical Company which subsequently became ExxonMobil Chemical Company.  During his tenure he held the positions of Technical Service Engineer, Technical Department Section Supervisor, Planning Associate, Operations Manager, Plant Manager and Site Manager.  Mr. Townsend retired from ExxonMobil Chemical Company in 2010.  We believe that with his vast experience and knowledge of the industry, Mr. Townsend provides a critical resource and skill set to our Board.

Mr. Joseph P. Palmis a graduate of LaSalle University with a Bachelor of Arts and has a Master of Business Administration from Xavier University.  Mr. Palm has over 40 years of experience in the petrochemical industry.  From 1967-1995 Mr. Palm served Rohm and Haas Company in varying positions including Market Manager, Business Development Manager, Product Safety Manager, and Market Development Analyst.  He was awarded the "Golden C Award" by the Commercial Development Association in 1992.  From 1997-2010 he served INEOS Oligomers as Business Development Manager and Marketing Manager.  He was awarded the BP Breakthrough Award in 2000 for his work to bring new products to the marketplace.  Mr. Palm retired from INEOS Oligomers in 2010.  We believe that his knowledge and experience provide valuable resources to our Board.

Mr. Gary K. Adamsholds a Bachelor of Science in Industrial Management from the University of Arkansas and has over 40 years of experience in the petrochemical and plastics industries.  He started his chemical industry career with Union Carbide and after 15 years serving in a number of positions at Union Carbide, Mr. Adams joined Chemical Market Associates Inc. ("CMAI").  He began at CMAI as the director of the Monomers Market Advisory Service and progressed to President, CEO and Chairman of the Board from 1997 until its acquisition by IHS in 2011.  Mr. Adams served as the Chief Advisor – Chemicals for IHS Markit until April 1, 2017.  Mr. Adams is a director of Phillips 66 and previously served on the boards of Westlake Chemical Partners LP and Phillips 66 Partners LP from 2013 to 2016.  We believe that his knowledge of the global chemical market provides a critical resource to our Board.

8

Ms. Karen A. Twitchellholds a Bachelor of Arts in Economics from Wellesley College and a Master of Business Administration from Harvard University.  She has over 35 years of experience in financial management, including financings and capital structures, mergers and acquisitions, investor relations, accounting matters and enterprise risk management. Ms. Twitchell serves on the public company boards of KMG Chemicals, Inc. and Kraton Corporation. From 2010 until her retirement in 2013, Ms. Twitchell served as the Executive Vice President and Chief Financial Officer of Landmark Aviation, where she was responsible for all financial and strategic planning functions.  Previously she was Vice President and Treasurer of LyondellBasell Industries and Lyondell Chemical Company from 2001 to 2009. Prior to that she was Vice President and Treasurer of Kaiser Aluminum Corporation and Southdown, Inc., and she began her career as an investment banker with Credit Suisse First Boston.  Ms. Twitchell brings important experience to the Board in accounting matters, financings and capital structure, merger and acquisition transactions, investor relations and enterprise risk management.

Ms. Pamela R. Butcherholds a Bachelor Degree in Agronomy and a Master of Science Degree from Purdue University.  In addition, she is a graduate of the Northwestern University Marketing Executive Program and has participated in the Prince of Wales Sustainability Conference and the Asian Master Class on Asian Business.  Ms. Butcher was the CEO, President and Chief Operating Officer of Pilot Chemical Corp. from January 2010 through July 2016, when she retired.  In November 2017, she was asked by the Pilot Board to return as CEO and President.  Previously, she worked 29 years for The Dow Chemical Company where she held a variety of executive leadership positions including Business Vice President of Specialty Chemicals, Vice President of Corporate Marketing & Sales and Vice President and General Manager of Adhesives and Sealants.  She was a distinguished recipient of Dow's Genesis Award for people excellence, which is Dow's highest recognition for people leadership.  She currently serves as a director on the boards of Pilot Chemical Corp. and Gruden Topco Holdings.  Previously, she also served on the board of trustees for the Chemical Educational Foundation, as a member of the US Bank Regional Advisory Board, on the Board of the American Cleaning Institute and the Ohio Manufacturers' Association.  Her broad knowledge of the chemical industry provides a valuable resource to our Board.

None of our directors is party to any legal proceedings required to be disclosed under Item 103 of Regulation S-K.


9


 
The table below shows each director's skillset.
 
Experience, expertise or attribute
Adams
Butcher
Carter
Palm
Townsend
Twitchell
Upfill-Brown
Strategic Executive Leadership: Identify and critically assess strategic opportunities and threats to company and organization. Provide strategic guidance that clearly aligns policies and business objectives and the best path forward.
*
*
*
 
*
*
*
Global Business Acumen: Apply a global comprehension of our business to decisions as success depends upon growing sales outside the United States. Balance the demand impact on our U.S. customers into our plans and decisions as they become more dependent on exports of their products.
*
*
*
*
   
*
Chemical Industry - Operations: Apply direct operating experience; imparting a practical and experience-based understanding of developing, implementing and assessing operating plans and business strategy.
*
*
*
 
*
 
*
Chemical Industry - Commercial: Apply a broad and direct understanding of commercial transacting experience in the sector and industries in which we participate.
*
*
*
*
   
*
Corporate Finance/ Capital Allocation: Provide deep understanding of various methods to raise capital and manage cash flow through experience. Define the best option for capital deployment and most efficient means to finance growth are key components of our future success.
 
*
   
*
*
 
Financial Expertise / Literacy: Understand and oversee our financial reporting and internal controls.
*
*
*
*
*
*
*
Mergers and Acquisitions: Apply direct experience in sourcing, examining, developing effective negotiating tactics, and executing strategic combinations is critical to our success relative to achieving long-term growth plans.
 
*
 
*
*
*
*
Investments/Fund Management/Investor Relations: Evaluate our financial statements, relations with the investment community and guide our stockholder interactions.
 
*
*
   
*
*
Risk & Compliance Management: Identify primary risks to the organization related to each significant aspect of business. Monitor risk and compliance based on knowledge of legal and regulatory requirements.
*
*
*
*
*
*
*
Public Company Board Service & Governance: Apply experience and skills from serving on other corporate boards including practical understanding of organizations, processes, strategy, risk management and change drivers.
*
       
*
 

 
10

The following sets forth the name and age of each current executive officer of the Company, the date of his or her appointment and all other positions and offices with the Company held by him or her.

Name of Executive
Positions
Age
Appointed
Simon Upfill-Brown
Chief Executive Officer and Chief Operating Officer, Director, President SHR, AMAK Board Member
65
2018/2013
Mark D. Williamson
Vice President of Marketing SHR
62
1996
S. Sami Ahmad
Chief Financial Officer, Treasurer, Treasurer - TOCCO
56
2018/2016
Connie J. Cook
Vice President of Accounting and Compliance, Secretary and Secretary -  TOCCO
55
2016/2004
Peter M. Loggenberg
Chief Sustainability Officer
55
2018/2014

Each executive officer of the Company serves for a term extending until his or her successor is elected and qualified.

Please refer to the director discussion above for Mr. Upfill-Brown's business experience.

Mr. Mark D. Williamsonreceived his Bachelor of Business Administration in Marketing from Sam Houston University.  He has been Vice President of Marketing for SHR since 1996.  He has over 30 years within the petrochemical industry.  He joined SHR in 1987 as sales manager.  Before SHR, Mr. Williamson spent 5 years with Ashland Chemicals as Sales and Marketing Representative and Branch Manager.

Mr. S. Sami Ahmadreceived his Bachelor of Science in Chemical Engineering from the University of Pennsylvania and a Master of Business Administration from the University of Chicago. He was appointed Chief Financial Officer of the Company in October 2016 and in February 2018 he was appointed Treasurer of the Company.  Mr. Ahmad has over 25 years of experience in corporate finance, accounting, and engineering. Prior to joining the Company in October 2016, Mr. Ahmad was Chief Financial Officer of Armada Water Assets, Inc., an oil field service company, which he helped build from its formation in 2013.  Previously, he served as Chief Financial Officer for Southwest Water Company, and as Vice President and Treasurer for Exterran, a publicly-owned oil and gas services company.  Earlier Mr. Ahmad worked for LyondellBasell Industries and Lyondell Chemical Company from 1998 to 2009, where his positions included Director, Corporate Development; Assistant Treasurer, Corporate Finance; and Director, Investor Relations.  From 1991 through 1998 he held various positions with ARCO Chemical Company where his responsibilities included managing acquisitions and business development, marketing, and investor relations.

Ms. Connie J. Cookreceived her Bachelor of Business Administration in Accounting from Lamar University in 1991 and is a CPA.  She became Vice President of Accounting and Compliance of the Company in October 2016.  She was Chief Financial Officer of the Company from January 2011 through October 2016.  In 2008, Ms. Cook became the Secretary/Treasurer of the Company.  In 2018, the office of Treasurer was transferred to Mr. Ahmad.  In 2004, Ms.
 
 
11

Cook became the Secretary/Treasurer of TOCCO and continues to hold those titles.  She was the Assistant Secretary of the Company from 2007-08.  She was the Accounting Manager of TOCCO from 1991-96.  She was the Controller of TOCCO from 1996 to 2011 and was the Assistant Secretary of TOCCO from 1992-2004.

Dr. Peter M. Loggenberg received his Bachelor of Science in Chemistry and Mathematics, Honors Degree in Chemistry, Master of Science in Physical Chemistry and a PhD in Chemistry (Catalysis).  He was appointed to the office of Chief Sustainability Officer in March 2018. He was President of Trecora Chemical since the Company's acquisition of SSI Chusei, Inc. in October 2014 until his appointment to Chief Sustainability Officer.  He served as President of SSI Chusei, Inc. from 2010 through 2014.  He continued as President of Trecora Chemical upon the Company's acquisition.  He has over 25 years of experience in the chemical industry with over 15 years at the corporate level.

There are no family relationships among our directors and executive officers.

We have adopted a Standards of Business Conduct that apply to the Company's principal executive officer, principal financial officer, principal accounting officer and controller, and to persons performing similar functions.  A copy of the Standards of Business Conduct is available on the Company's website at www.trecora.com.

Board Leadership Structure

The Board will annually elect one director to serve as Chairman of the Board. The Chairman of the Board may also be the Chief Executive Officer or any other officer of the Company.  The Board does not have a policy on whether the roles of Chairman of the Board and Chief Executive Officer should be separate or combined. This allows the Board flexibility to determine whether the two roles should be separated or combined based upon the Company's needs and the Board's assessment of the Company's leadership from time to time.  Mr. Carter retired on July 15, 2015, from his position as President and Chief Executive Officer of the Company.  He remains a director of the Company and AMAK, as well as the Chairman of the Board.  In March 2018, he was temporarily appointed as Executive Chairman of the Board.  He possesses an in-depth knowledge of the Company and the array of opportunities and challenges to be faced. This knowledge was gained through more than 35 years of successful experience in progressively senior positions.  The Board believes that these experiences and other insights put Mr. Carter in the best position to provide broad leadership for the Board as it considers strategy and exercises its fiduciary responsibilities to stockholders.  In addition, in 2017, the Board appointed Ms. Twitchell to serve as the Board's Lead Independent Director.  During 2017, she presided over executive sessions of the independent directors.  Further, the Board has demonstrated its commitment and ability to provide independent oversight of management.  Each independent director has access to the current Chief Executive Officer and other Company executives; may call meetings of the independent directors; and may request agenda topics to be added or dealt with in more detail at meetings of the full Board or an appropriate Board committee.

Board Policy Regarding Voting for Directors

The Company has implemented a plurality vote standard in the election of directors.  In addition, the Company's Corporate Governance Guidelines state that any director nominee standing for re-
 
12

election who receives a greater number of votes "WITHHELD" than votes "FOR" such re-election will tender his or her resignation for consideration by the Nominating and Governance Committee.  Within 90 days after certification of the re-election results the Board of Directors will decide, through a process managed by the Nominating and Governance Committee and excluding the nominee in question, whether to accept the resignation.  Absent a compelling reason for the director to remain on the Board, the Board shall accept the resignation.

Board Independence

The Company's Corporate Governance Guidelines and the NYSE listing standards require that a majority of the Board consist of independent directors.  The Board has determined that each of Gary K. Adams, Pamela R. Butcher, Joseph P. Palm, John R. Townsend, and Karen A. Twitchell is independent within the meaning of the NYSE listing standards.

Meetings of the Board and Its Committees

Quarterly Board meetings are held in person.  Other Board meetings may be held via telephone conference call due to the geographical distance between members of the Board.  In the instance where all members cannot meet or be contacted at once, members may be contacted individually, and upon agreement, Unanimous Consent Resolutions may be signed.  During 2017 the Board held five meetings.

Board Structure and Committee Composition

As of the date of this proxy statement, our Board has seven directors and the following three standing committees: (1) Audit, (2) Compensation and (3) Nominating and Governance.  Committee membership and meetings during the last fiscal year and the function of each of the standing committees are described below.  Mr. Carter, our Executive Chairman, and Mr. Upfill-Brown, our Chief Executive Officer and Chief Operating Officer, do not serve on any of our standing committees.  Each of the standing committees operates under a written charter adopted by the Board.  Committee charters are available on the Company's website at www.trecora.com.  Free printed copies are also available to any stockholder who makes a request to the address on page 2.

All directors attended at least 75% of all Board and applicable standing committee meetings during 2017.  Directors are also encouraged to attend annual meetings of Company stockholders.  All of our then-current directors attended our 2017 annual meeting of stockholders either in person or via telephone.

 
Name of Director
Audit
Compensation
Nominating and Governance
Non-Employee Directors:
     
Gary K. Adams
 
Member
Member
Pamela R. Butcher
Member
Member
Member
Joseph P. Palm
 
Member
Chair
John R. Townsend
Member
Chair
 
Karen A. Twitchell
Chair
Member
 
Number of Meetings in Fiscal 2017
9
8
7

 
13

Audit Committee

The Company has a separately-designated standing Audit Committee established in accordance with the Securities Exchange Act of 1934, as amended (the "Exchange Act").  The Audit Committee assists the Board in fulfilling its responsibilities for generally overseeing the Company's financial reporting processes and the audit of the Company's financial statements, including:

the integrity of the Company's financial statements, including the Company's compliance with legal and regulatory requirements;
the qualifications and independence of the independent registered public accounting firm; and
the performance of the Company's internal audit function and the independent registered public accounting firm, risk assessment and risk management, and finance and investment functions.

Among other things, the Audit Committee:

prepares the Audit Committee report for inclusion in the annual proxy statement;
annually reviews its charter and performance;
appoints, evaluates and determines the compensation of the independent registered public accounting firm;
reviews and approves the scope of the annual audit, the audit fee and the financial statements;
reviews and approves all permissible non-audit services to be performed by the independent registered public accounting firm;
reviews the Company's disclosure controls and procedures, internal controls, information security policies, internal audit function, and corporate policies with respect to financial information and earnings guidance;
reviews regulatory and accounting initiatives and off-balance sheet structures, oversees the Company's compliance programs with respect to legal and regulatory requirements;
oversees investigations into complaints concerning financial matters;
reviews other risks that may have a significant impact on the Company's financial statements;
reviews and oversees treasury matters, the Company's loans and debt, loan guarantees and outsourcings; and
reviews the Company's capitalization; and coordinates with the Compensation Committee regarding the cost, funding and financial impact of the Company's equity compensation plans and benefit programs.

The Audit Committee works closely with management as well as the independent registered public accounting firm.  In performance of their oversight function, the Audit Committee has the authority to obtain advice, assistance from, and receive appropriate funding from the Company for, outside legal, accounting or other advisors as the Audit Committee deems necessary to carry out its duties.

The individuals serving on the Audit Committee of the Board of Directors are Karen A. Twitchell (Chair), Pamela R. Butcher and John R. Townsend.  The Board has determined that
 
 
14

each of the Committee members is independent pursuant to SEC rules and NYSE listing standards governing audit committee members.  The Board also determined that Karen A. Twitchell and Pamela R. Butcher are audit committee financial experts as defined by SEC rules and NYSE listing standards.

The charter of the Audit Committee is available on the Company's website at www.trecora.com.  A free printed copy is also available to any stockholder who requests it from the Corporate Secretary at the address on page 2.

Compensation Committee

The Compensation Committee:

discharges the Board's responsibilities relating to the compensation of the Company's executives and directors;
prepares the report required to be included in the annual proxy statement;
provides general oversight of the Company's compensation structure;
reviews and provides guidance on the Company's human resources programs; and
retains and approves the terms of the retention of compensation consultants and other compensation experts.

Other specific duties and responsibilities of the Compensation Committee include:

reviewing and approving objectives relevant to executive officer compensation, evaluating performance and determining the compensation of executive officers in accordance with those objectives;
approving severance arrangements and other applicable agreements for executive officers;
overseeing the Company's equity-based and incentive compensation plans; overseeing non-equity based benefit plans and approving any changes to such plans involving a material financial commitment by the Company;
monitoring workforce management programs; establishing compensation policies and practices for service on the Board and its committees;
developing guidelines for and monitoring director and executive stock ownership; and
annually evaluating its performance and its charter.

The individuals serving on the Compensation Committee of the Board of Directors are John R. Townsend (Chair), Gary K. Adams, Pamela R. Butcher, Joseph P. Palm, and Karen A. Twitchell.  The Board determined that each of the Committee members is independent pursuant to NYSE listing standards governing compensation committee members.

The charter of the Compensation Committee is available on the Company's website at www.trecora.com.  A free printed copy is also available to any stockholder who requests it from the Corporate Secretary at the address on page 2.
15


Nominating and Governance Committee

The Nominating and Governance Committee:

recommends candidates to be nominated for election as directors at the Company's annual meeting, consistent with criteria approved by the Board;
develops and regularly reviews corporate governance principles and related policies for approval by the Board;
oversees the organization of the Board to discharge the Board's duties and responsibilities properly and efficiently; and
sees that proper attention is given and effective responses are made to stockholder concerns regarding corporate governance.

Other specific duties and responsibilities of the Nominating and Governance Committee include:

annually assessing the size and composition of the Board, including developing and reviewing director qualifications for approval by the Board;
identifying and recruiting new directors and considering candidates proposed by stockholders; recommending assignments of directors to committees to ensure that committee membership complies with applicable laws and listing standards;
conducting annual evaluations of Board performance and recommending improvements; and
conducting a preliminary review of director independence and financial literacy and expertise of Audit Committee members and making recommendations to the Board relating to such matters; and overseeing director orientation and continuing education.

The Nominating and Governance Committee also reviews and approves any executive officers for purposes of Section 16 of the Exchange Act ("Section 16 Officers") standing for election for outside for-profit boards of directors; and reviews stockholder proposals and recommends Board responses.

The individuals serving on the Nominating and Governance Committee of the Board of Directors are Joseph P. Palm (Chair), Pamela R. Butcher and Gary K. Adams.  The Board has determined that each of the Committee members is independent pursuant to NYSE listing standards governing nominating committee members.

The charter of the Nominating and Governance Committee is available on the Company's website at www.trecora.com.  A free printed copy is also available to any stockholder who requests it from the Corporate Secretary at the address on page 2.

Stockholder Recommendations

The policy of the Nominating and Governance Committee is to consider properly submitted stockholder recommendations of candidates for membership on the Board as described below under "Identifying and Evaluating Candidates for Directors."  In evaluating such recommendations, the Nominating and Governance Committee seeks to achieve a balance of knowledge, experience and capability on the Board and to address the membership criteria set forth below under "Director Qualifications."  Any stockholder recommendations proposed for
 
16

consideration by the Nominating and Governance Committee should include the candidate's name and qualifications for Board membership and should be addressed to the Corporate Secretary at the address on page 2.

Director Qualifications

The Company maintains certain criteria that apply to nominees recommended for a position on the Company's Board.  Under these criteria, members of the Board should have the highest professional and personal ethics and values, consistent with longstanding Company values and standards.  They should have broad experience at the policy-making level in business, government, education, technology or public service.  They should be committed to enhancing stockholder value and should have sufficient time to carry out their duties and to provide insight and practical wisdom based on experience.  Their service on other boards of public companies should be limited to a number that permits them, given their individual circumstances, to perform responsibly all director duties.  Each director must represent the interests of all stockholders of the Company.

Identifying and Evaluating Candidates for Directors

The Company recognizes the strength and effectiveness of the Board reflects the balance, experience, and diversity of the individual directors; their commitment; and the ability of directors to work effectively as a group in carrying out their responsibilities.  The Company seeks candidates with diverse backgrounds who possess knowledge and skills in areas of importance to the Company.  In addition to seeking a diverse set of business or academic experiences, the Nominating and Governance Committee seeks a mix of nominees whose perspectives reflect diverse life experiences and backgrounds.  The Nominating and Governance Committee does not use quotas but considers diversity when evaluating potential new directors.

The Nominating and Governance Committee uses a variety of methods for identifying and evaluating nominees for director.  The Nominating and Governance Committee regularly assesses the appropriate size of the Board and whether any vacancies on the Board are expected due to retirement or otherwise.  In the event that vacancies are anticipated, or otherwise arise, the Nominating and Governance Committee considers various potential candidates for director.  Candidates may come to the attention of the Nominating and Governance Committee through current Board members, professional search firms, stockholders or other persons.  Identified candidates are evaluated at regular or special meetings of the Nominating and Governance Committee and may be considered at any point during the year.  As described above, the Nominating and Governance Committee considers properly submitted stockholder recommendations for candidates for the Board to be included in the Company's proxy statement.

Board Oversight of Risk Management

The Board oversees management of risk.  The Board regularly reviews information regarding the Company's business and operations, including the key operational and financial risks.  As described below, consistent with SEC regulations and NYSE requirements, the Board committees are also engaged in overseeing risk associated with the Company.

17

The Audit Committee oversees management of exposure to financial risks and monitors and evaluates the effectiveness of the Company's risk management and risk assessment guidelines and policies.

The Compensation Committee oversees the management of risks relating to the Company's executive compensation plans and incentive structure.

The Nominating and Governance Committee oversees the Company's ethics and compliance programs.

While each committee is responsible for evaluating certain risks and overseeing the management of those risks, the full Board is ultimately responsible for overseeing the Company's risk exposures and management thereof, and the Board is regularly informed on these matters through committee and senior management presentations.

Executive Sessions

Executive sessions of independent directors are held at least four times a year with Ms. Twitchell, our Lead Independent Director, presiding.  During 2017, four in-person and three telephone meetings were held.  Each session is scheduled and chaired by Ms. Twitchell.  Any independent director may request that an additional executive session be scheduled.

Communications with the Board

Individuals may communicate with the Board by contacting:

Simon Upfill-Brown
Trecora Resources
1650 Highway 6 South, Suite 190
Sugar Land, TX  77478

All directors have access to this correspondence.  In accordance with instructions from the Board, the secretary to the Board reviews all correspondence, organizes the communications for review by the Board and relays communications to the full Board or individual directors, as appropriate.  The Company's independent directors have requested that certain items that are unrelated to the Board's duties, such as spam, junk mail, mass mailings, solicitations, resumes and job inquiries, not be forwarded.

Communications that are intended specifically for the independent directors or non-management directors should be sent to the address noted above to the attention of independent directors.
18


COMMON STOCK OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information, as of March 15, 2018, concerning beneficial ownership by:

(1)
Company directors and nominees, each of the named executive officers, and all individuals owning more than 5% of the Company's outstanding Common Stock and
(2)
Current directors and Company executive officers as a group.

The information provided in the table is based on the Company's records, information filed with the SEC and information provided to the Company, except where otherwise noted.

The number of shares beneficially owned by each entity or individual is determined under SEC rules, and the information is not necessarily indicative of beneficial ownership for any other purpose.  Under such rules, beneficial ownership includes any shares as to which the entity or individual has sole or shared voting power or investment power and also any shares that the entity or individual has the right to acquire as of March 15, 2018, through the exercise of any stock option or other right.  Unless otherwise indicated, each person has sole voting and investment power (or shares such powers with his or her spouse) with respect to the shares set forth in the following table.

BENEFICIAL OWNERSHIP TABLE

 
Name of Beneficial Owner
 
Amount and Nature of Beneficial Ownership1
   
 
Note
   
Percent of
Class
 
Current Directors:
                 
Gary K. Adams
   
100,000
     
2
     
*
 
Pamela R. Butcher
   
7,557
             
*
 
Nicholas N. Carter
   
756,566
     
2
     
3.0
%
Joseph P. Palm
   
83,385
     
2,3
     
*
 
John R. Townsend
   
32,289
     
2,3
     
*
 
Karen A. Twitchell
   
15,000
     
3
     
*
 
Current Director or Named Executive Officer:
                       
S. Sami Ahmad
   
432
             
*
 
Simon Upfill-Brown
   
299,297
     
2
     
1.2
%
Connie J. Cook
   
147,673
     
2
     
*
 
Peter M. Loggenberg
   
24,873
             
*
 
Mark D. Williamson
   
142,874
     
2
     
*
 
                         
All current directors and executive officers as a group (11 persons)
   
1,609,946
     
2,3
     
6.4
%
                         
Individuals with beneficial ownership of more than 5% of outstanding Common Stock
                       
Funds affiliated with Wellington Management Group, LLP (number of shares includes those owned by Wellington Trust Company, NA)
   
3,348,922
     
4
     
13.3
%
Fahad Mohammed Saleh Al Athel
   
3,066,742
     
5
     
12.1
%
Wellington Trust Company, NA (see above)
   
2,275,596
     
6
     
9.0
%

19

Notes to Beneficial Ownership Table

 * Indicates beneficial ownership of less than 1% of shares outstanding.

(1) Unless otherwise indicated, to the knowledge of the Company, all shares are owned directly and the owner has sole voting and investment power (includes shares of restricted stock).
(2) Includes 865,510 aggregated shares which these directors and executive officers have the right to acquire through the exercise of presently exercisable stock options.  These options are held as follows:  Mr. Carter 279,030 shares; Mr. Palm 40,000 shares; Mr. Upfill-Brown 205,000 shares; Mr. Adams 100,000 shares; Mr. Townsend 20,000 shares; Mr. Williamson 115,830 shares; and Ms. Cook 105,650 shares.
 (3) Includes 19,298 aggregated shares which these directors and executive officers have the right to acquire presently or upon vesting within 60 days.  These shares are held as follows: Ms. Twitchell 6,000 shares, Mr. Townsend 7,022 shares, and Mr. Palm 6,276 shares.
 (4) As reported in Amendment No. 9 to Schedule 13G filed by Wellington Management Group LLP, Wellington Group Holdings LLP, Wellington Investment Advisors Holdings LLP and Wellington Management Company LLP (the "Wellington Entities") with the SEC on February 2, 2018, for their holdings as of December 29, 2017. Each such entity reported that it has shared power to vote 2,531,219 shares of Common Stock and shared power to dispose of 3,348,922 shares of Common Stock, except for Wellington Management Company LLP, which reported that it has shared power to vote 2,478,370 shares of Common Stock and shared power to dispose of 3,091,733 shares of Common Stock. Each such entity's principal business office address is c/o Wellington Management Company LLP, 280 Congress Street, Boston, MA 02210. The number of shares reported as beneficially owned by the Wellington Entities in the Schedule 13G/A includes shares of our outstanding stock beneficially owned by Wellington Trust Company, NA ("Wellington Trust"). Wellington Trust separately filed a Schedule 13G/A with the SEC on February 2, 2018. See footnote 7 below.
(5) As reported on a Form 4 dated February 21, 2018, and filed with the SEC on February 21, 2018, Mr. Fahad Al-Athel is the beneficial owner of 3,066,742 shares.
(6) As reported in Amendment No. 8 to Schedule 13G filed by Wellington Trust with the SEC on February 2, 2018, for its holdings as of December 29, 2017, Wellington Trust reported that it has shared power to vote and dispose of all 2,275,596 shares. Wellington Trust's principal business office address is c/o Wellington Management Company LLP, 280 Congress Street, Boston, MA 02210.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Exchange Act requires our directors, executive officers and holders of more than 10% of Company common stock to file reports with the SEC regarding their ownership and changes in ownership of our securities.  The Company believes that its directors and executive officers complied with all Section 16(a) filing requirements during fiscal 2017.  In making these statements, the Company has relied upon examination of the copies of Forms 3, 4, and 5, and amendments thereto, provided to the Company and the written representations of its directors and executive officers.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company directly owns approximately 55% of the outstanding capital stock of PEVM. Mr. Carter is currently a director and President of PEVM.  The Company is providing funds necessary to cover the PEVM operations.  During 2017 and 2016, the Company advanced approximately $20,000 and $20,000, respectively, for such purposes.  As of December 31, 2017, PEVM owed the Company approximately $634,000 as a result of advances made by the Company.  During the first quarter of 2018, the Company advanced approximately $5,000 and at March 15, 2018, PEVM owed the Company approximately $639,000.  The indebtedness is secured by real estate but bears no interest.
 

 
20

Consulting fees of approximately $74,000 and $73,000 were incurred during 2017 and 2016, respectively for Executive Chairman of the Board Nicholas Carter.  During the first quarter of 2018, consulting fees of approximately $16,000 were incurred for Mr. Carter.  Due to his history and experience with the Company as President and Chief Executive Officer and to provide continuity after his retirement, a three year consulting agreement was entered into with Mr. Carter on July 16, 2015.  This consulting agreement was amended on March 20, 2018, to make certain market adjustments to Mr. Carter's fees, and to include an expiration date of December 31, 2018, unless otherwise agreed by the Company and Mr. Carter.  At December 31, 2017, and March 15, 2018, we had no outstanding liability payable to Mr. Carter.

Consulting fees of approximately $27,000 and $33,000 were incurred during 2017 and 2016, respectively from IHS Global FZ LLC where Company Director Gary K. Adams held the position of Chief Advisor – Chemicals until April 1, 2017.  During the first quarter of 2018, we incurred consulting fees of approximately $28,000 from IHS.  At December 31, 2017, and March 15, 2018, we had no outstanding liability payable to IHS Global FZ LLC.

Review, Approval or Ratification of Transactions with Management and Others

The Company's Standards of Business Conduct addresses conflicts of interest and is available on our website.  Our chief executive officer, chief financial officer, principal accounting officer and controller, and persons performing similar functions are required to abide by this code by avoiding activities that conflict with, or are reasonably likely to conflict with, the best interests of the Company and its stockholders.  Personal activities, interests, or relationships that would or could negatively influence judgment, decisions, or actions must be disclosed to the Board with prompt and full disclosure for Board review and/or action.

We also solicit information from our directors and executive officers annually in connection with preparation of disclosures in our proxy statement.  These questionnaires specifically seek information pertaining to any "related-person" transaction.

21

PROPOSAL NO. 1

RE-ELECTION OF DIRECTORS

In 2007, our Board adopted an amendment to our by-laws intending to classify our Board into three classes with staggered three-year terms. Since 2008, in practice, we have maintained a classified Board by submitting related proposals to our stockholders with each class standing for re-election every three years, respectively, in accordance with our by-laws.

In 2017, we conducted a comprehensive review of all of the Company's corporate governance policies and practices, including those related to the Board and its committees, and the Board has determined that it is in the best interest of the Company and its stockholders to not have a classified Board.  Accordingly, each of our seven directors are standing for re-election at the annual meeting to serve until the next annual meeting of stockholders or, in each case, if later, until such director's successor shall have been duly elected and qualified or until such director's earlier retirement, death, resignation or removal.

There are no family relationships among our executive officers and directors.

If you sign your proxy or voting instruction card but do not give instructions with respect to voting for directors, your shares will be voted for the person(s) recommended by the Board.  If you wish to give specific instructions with respect to voting for directors, you may do so by indicating your instructions on your proxy or voting instruction card.

The nominees have indicated to the Company that they will be available to serve as directors.  In the event that the nominee should become unavailable, however, the proxy holders, Christopher A. Groves and/or Connie J. Cook, will vote for a nominee or nominees designated by the Board.

The Company's Corporate Governance Guidelines state that any director nominee standing for re-election who receives a greater number of votes "WITHHELD" than votes "FOR" such re-election, will tender his or her resignation for consideration by the Nominating and Governance Committee.  Within 90 days after certification of the re-election results the Board of Directors will decide, through a process managed by the Nominating and Governance Committee and excluding the nominee in question, whether to accept the resignation.  Absent a compelling reason for the director to remain on the Board, the Board shall accept the resignation.

Vote Required

As provided in the Company's by-laws, directors are elected upon a plurality vote of the stockholders.  Therefore, the seven director nominees who receive the highest number of "FOR" votes are elected.

Our Board recommends a vote FOR the re-election to the Board of Mr. Adams, Ms. Butcher, Mr. Carter, Mr. Palm, Mr. Townsend, Ms. Twitchell and Mr. Upfill-Brown.

22




NON-EMPLOYEE DIRECTOR COMPENSATION

The following table provides a summary of compensation earned by members of our Board during the year ended December 31, 2017.

2017 Non-Employee Director Compensation

Name of Non-Employee Director
 
Fees Earned or Paid in Cash
($)(1)
   
Stock Awards
($)(2)
   
Total
($)
 
                   
Gary K. Adams
   
74,250
     
187,500
     
261,750
 
Pamela R. Butcher
   
87,875
     
-
     
87,875
 
Nicholas N. Carter3
   
74,500
     
-
     
74,500
 
Allen P. McKee4
   
9,486
     
-
     
9,486
 
Joseph P. Palm
   
72,250
     
-
     
72,750
 
John R. Townsend
   
89,000
     
-
     
89,000
 
Karen A. Twitchell
   
93,932
     
-
     
92,932
 

(1)
In the aggregate, this column includes committee fees for 2017 in the amount of $110,891, Company board fees in the amount of $335,720, lead independent director fees in the amount of $10,432, subsidiary board fees in the amount of $10,000, AMAK board representation in the amount of $10,000, and per diem amounts of $24,250.
(2)
Represents the aggregate grant date fair value of restricted stock unit awards granted to the non-employee directors in 2017, pursuant to Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718 ("ASC 718"), disregarding any estimates for forfeitures.  These amounts reflect the Company's total estimated accounting expense and may not correspond to the actual value that will be realized by the non-employee directors.  For information on the valuation assumptions, see "Note 2 – Summary of Significant Accounting Policies – Share-Based Compensation" and "Note 16 – Share-Based Compensation" in the notes to our consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2017.
(3)
Mr. Carter was temporarily appointed to the position of Executive Chairman of the Board in March 2018.
(4)
Mr. McKee retired effective February 10, 2017.

The following table presents information concerning outstanding equity awards held by the directors as of December 31, 2017.
23


Outstanding Non-Employee Director Equity Awards at 2017 Fiscal Year-End

   
Option awards
   
Stock awards
 
Name of Non-Employee Director
 
Number of Securities Underlying Unexercised Options
(#) Exercisable
   
Number of Securities Underlying Unexercised Options
(#) Unexercisable
   
Equity incentive plan awards: number of securities underlying unexercised unearned options
(#)
   
Option exercise price
($)
   
Option Expiration date
   
Number of Shares or units of stock that have not vested
(#)
   
Market value of shares or units of stock that have not vested
($)(1)
 
Gary K. Adams
   
100,000
     
--
     
-
   
$
7.14
   
11/14/22
     
15,369
   
$
187,500
 
Pamela R. Butcher
   
--
     
--
     
--
     
--
     
--
     
15,691
   
$
187,507
 
Nicholas N. Carter
   
129,030
     
--
     
--
   
$
4.86
   
1/11/21
     
--
     
--
 
   
112,500
     
--
     
37,500
   
$
12.26
   
2/20/24
     
--
     
--
 
   
--
     
--
     
--
     
--
     
--
     
23,133
   
$
337,510
 
Joseph P.
Palm
   
40,000
     
--
     
--
   
$
3.52
   
09/24/21
     
18,829
   
$
225,007
 
John R. Townsend
   
20,000
     
--
     
--
   
$
4.09
   
05/01/21
     
21,068
   
$
225,006
 
Karen A. Twitchell
   
--
     
--
     
--
     
--
     
--
     
18,000
   
$
223,020
 

(1)
Represents the aggregate grant date fair value of restricted stock unit awards granted to the non-employee directors in 2017, pursuant to FASB ASC 718, disregarding any estimates for forfeitures.  These amounts reflect the Company's total estimated accounting expense and may not correspond to the actual value that will be realized by the non-employee directors.  For information on the valuation assumptions, see "Note 2 – Summary of Significant Accounting Policies – Share-Based Compensation" and "Note 16 – Share-Based Compensation" in the notes to our consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2017.

General

A director who is not one of our employees (a non-employee director) receives compensation for his or her services as described in the following paragraphs per the current policy and upon recommendation by the Compensation Committee and approval by the Board.  Directors are reimbursed for reasonable expenses incurred in connection with attendance at Board and Committee meetings.  A director who is one of our employees receives no additional compensation for his service as a director or as a member of a committee of the Board.  Mr. Carter was appointed Executive Chairman in March 2018 but will not receive additional compensation for his service in that role beyond what is described in this section for non-employee directors.  However, he will continue to receive compensation under his consulting agreement described above under "Certain Relationships and Related Transactions" for the separate services provided thereunder.

Board Compensation

The directors' fees policy adopted in 2015 as recommended by the Compensation Committee proposed annual cash stipends for members of the TREC Board in the amount of $55,000/year and subsidiary boards of the Company in the amount of $5,000/year for U.S. subsidiaries and $10,000/year for AMAK's Board.  These amounts are to be prorated based upon time of
 
 
24

service.   These amounts were not modified with respect to 2017.  In 2017, the Board approved an amount of $15,000/year for service as Lead Independent Director.

Effective April 1, 2018, the directors' fees policy was revised to (1) set the annual cash stipends for members of the TREC Board in the amount of $70,000/year, and (2) eliminate cash stipends for service on U.S. subsidiary boards. There was no change to the amount for service as Lead Independent Director.

Committee Compensation

The directors' fees policy adopted in 2015 as recommended by the Compensation Committee proposed annual cash stipends for members of the Audit Committee in the amount of $15,000, the Compensation Committee in the amount of $10,000, and the Nominating and Governance Committee in the amount of $5,000.  These amounts are to be prorated based upon time of service upon the applicable committee.  These amounts were not modified with respect to 2016 or 2017.  

Effective April 1, 2018, the directors' fees policy proposed annual cash stipends for Chair of the Audit Committee in the amount of $15,000, Chair of the Compensation Committee in the amount of $10,000, and the Chair of the Nominating and Governance Committee in the amount of $10,000, and eliminated cash stipends for members of a committee that do not serve as a Chair.

Equity Compensation

Beginning in 2016 and effective through May 16, 2020, (the date current equity grants to non-employee directors expire), all new equity grants to non-employee directors will be (i) prorated to expire on May 16, 2020, and (ii) limited to the number of shares of stock that equals the number of years then remaining until May 16, 2020, multiplied by $75,000 per year divided by the closing price of the stock on the grant date.  After May 16, 2020, the Company intends to transition to an annual grant of restricted stock units to non-employee directors.

In 2015, the equity compensation program for our non-employee directors consisted of grants of 30,000 shares of restricted stock units upon appointment of new non-employee directors to vest in equal increments over 5 years (6,000 shares per year).  Prior to 2015, the non-employee directors were eligible to receive stock option awards.  The previous equity compensation policy provided for the grant of 100,000 stock options vesting over 5 years (20,000 per year) and to be awarded in the quarter following the end of the year to non-employee directors who had attended at least 75% of all called meetings during the year and were serving in full capacity on December 31st of that year.  Certain non-employee directors still hold such stock option awards.

Per Diem Compensation

The directors' fees policy adopted in 2015 allowed per diem payments of $500 per day for non-employee directors.  Approximately $24,250 was paid for directors' compensation expenses related to per diem payments in 2017.

Effective April 1, 2018, the directors' fees policy eliminated per diem payments for meetings.

25

Compensation Committee Interlocks and Insider Participation
 
No member of the Compensation Committee is or has been an executive officer of our Company or had any relationships requiring disclosure by us under the SEC's rules requiring disclosure of certain relationships and related-party transactions, other than Gary K. Adams.  See "Certain Relationships and Related Transactions" above.  In addition, none of our executive officers has served as a member of a board of directors or a compensation committee (or other committee serving an equivalent function) of any other entity, one of whose executive officers served as a member of the Board or the Committee.  Accordingly, the Committee members have no interlocking relationships required to be disclosed under SEC rules and regulations.  Also, no two directors serve together on both our board and other public company boards or committees.

26

PROPOSAL NO. 2

APPROVAL AND ADOPTION OF THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION

Our board of directors unanimously approved as of March 14, 2018, and recommends that the stockholders approve an amendment and restatement of the Company's Certificate of Incorporation, in the form attached to this proxy statement as Appendix A ("Restated Certificate"). While some amendments have been made over the years, our current Certificate of Incorporation ("Certificate") has not been amended and restated since 1967. Our board of directors believes that amendment of the Certificate is necessary to update, provide clarification and modernize the Certificate and otherwise make it more appropriate for a publicly-held company. This includes conforming our Certificate to current Delaware law and practice, as well as eliminating certain unnecessary provisions that are duplicative of the DGCL or otherwise antiquated. The complete text of the proposed amendments to our Certificate of Incorporation are set forth in the proposed Restated Certificate in Appendix A to this proxy statement. Such text is subject to revision for changes as may be required by the Delaware Secretary of State or other changes consistent with this proposal that we may deem necessary or appropriate.

Summary of Selected Changes

The below summarizes some of the changes that appear in the Restated Certificate. For a complete understanding of the proposals, this summary should be ready in conjunction with the full text of the Restated Certificate.

Our current Certificate authorizes the issuance of 40 million shares of common stock. The Restated Certificate retains that number and clarifies that each holder of common stock is entitled to one vote for each share of Common Stock held of record by such holder on all matters on which stockholders are entitled to vote generally. See Articles Fourth and Fifth.

Our current Certificate does not address the frequency of director election or classification of the Board as provided in our by-laws.  The Restated Certificate provides that each of the directors will stand for election at each annual meeting of the stockholders, to serve until the next annual meeting or, in each case, if later, until such director's successor shall have been duly elected and qualified or until such director's earlier retirement, death, resignation or removal.

Our business purpose as stated in our current Certificate is antiquated in that it is several pages long and lists a variety of business activities in which we may engage. Delaware law currently permits a simple one-line business purpose to clarify that a corporation may engage in any lawful act or activity for which corporations may be organized under the DGCL.  Although we have no plans at this time to change our core business activities, the Board believes it is appropriate to provide for a broad business purpose in keeping with the practice of modern business corporations and to provide the Company with flexibility of business activities that may be desired in the future. See Article Third.

27

The DGCL provides for or otherwise permits broad indemnification rights applicable to officers, directors and other agents or representatives of the Company and such persons already benefit from such arrangements under the DGCL and our by-laws. The provisions recommended for inclusion in our Restated Certificated are intended to conform our Certificate to current Delaware indemnification law and practice. The Restated Certificate provides that we will indemnify, to the fullest extent permitted by law, any person in connection with any action, suit or proceeding to which they are made or are threatened to be made by reason of the fact that such person is or was a director or officer of our company or is or was serving at our request as a director or officer of another entity. There is no similar provision in the existing Certificate. However, this proposed provision is typical of Delaware companies that have modernized certificates of incorporation and is consistent with powers granted to us under Section 145 of the DGCL and with obligations imposed upon us by our by-laws. See Article Eleventh.

The Restated Certificate also leaves unchanged or makes minor technical changes to add or modernize currently existing provisions (or delete or revise antiquated provisions) with respect to:

o
our name (Article First);

o
our registered agent (Article Second)

o
the powers delegated to our directors (including as to amending our by-laws) (Articles Eighth and Tenth);

o
the  holding of an annual meeting (Article Eighth);

o
compromises or arrangements between the Company and its creditors or stockholders (Article Ninth);

o
limitation of liability of our directors (Articles Tenth); and

o
amendment of the certificate of incorporation (Article Twelfth).

The Restated Certificate makes other minor changes to update, provide clarification and modernize the Certificate.

If our stockholders approve the Restated Certificate, the amendments will become effective upon the filing of the Restated Certificate with the Delaware Secretary of State. If the Restated Certificate is not approved, no amendments will be made to the Certificate. The Company is also reviewing its by-laws, as with the Certificate, in an effort to update, provide clarification and modernize. Such by-law amendments would be subject to review and approval of our Board of Directors, but are not subject to approval by our stockholders and would likely be put in place following the outcome of the vote on the Restated Certificate.


28



Vote Required

The affirmative vote of the holders of a majority of the outstanding shares entitled to vote on this proposal is required for approval and adoption of this proposal.

Our Board recommends a vote FOR the approval and adoption of the Restated Certificate.

29


PROPOSAL NO. 3

RATIFICATION OF SELECTION OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM

We are asking you to ratify the Audit Committee's selection of BKM Sowan Horan, LLP ("BKM") as the Company's independent registered public accounting firm for 2018.  BKM has audited the accounts of the Company since June 2010.  The Board considers it desirable to continue the services of BKM Sowan Horan, LLP.

Representatives of BKM are expected to be present at the 2018 annual meeting of stockholders to make statements to the stockholders if desired, and to be available to respond to stockholder questions.

The fees billed by BKM for professional services rendered to the Company during 2017 and 2016 are set forth below.  The Audit Committee has concluded that the provision of the non-audit services provided by BKM to the Company has not and does not impair or compromise their independence, and all such services were pre-approved by the Audit Committee.

Vote Required

The affirmative vote of the holders of a majority of shares present in person or represented by proxy and entitled to vote on this proposal at the annual meeting is required for approval of this proposal.

If the stockholders should fail to ratify the selection of the independent registered public accounting firm, the Audit Committee will designate an independent registered public accounting firm as required under the rules of the Exchange Act and in accordance with its charter.

Our Board recommends a vote FOR the ratification of the selection of BKM Sowan Horan, LLP as the Company's independent registered public accounting firm for 2018.

Audit Committee Report

We operate under a written charter approved by us and adopted by the Board of Directors.  Our primary function is to assist the Board of Directors in fulfilling the Board's oversight responsibilities relating to (1) the effectiveness of the Company's internal control over financial reporting, (2) the integrity of the Company's financial statements, (3) the Company's compliance with legal and regulatory requirements, (4) the qualifications and independence of the Company's independent registered public accounting firm, (5) the performance of the Company's independent registered public accounting firm and internal audit firm and (6) review and approval or ratification of any transaction that would require disclosure under Item 404(a) of Regulation S-K of the rules and regulations of the SEC.

We oversee the Company's financial reporting process on behalf of the Board.  Our responsibility is to monitor this process, but we are not responsible for developing and consistently applying the Company's accounting principles and practices, preparing and maintaining the integrity of the Company's financial statements and
 
 
30

maintaining an appropriate system of internal controls, auditing the Company's financial statements and the effectiveness of internal control over financial reporting, or reviewing the company's unaudited interim financial statements.  Those are the responsibilities of management and the Company's independent registered public accounting firm, respectively.

We reviewed and discussed the 2017 audited financial statements with management and BKM, the Company's independent registered public accounting firm, together and separately. These discussions and reviews included the reasonableness of significant judgments, significant accounting policies (including critical accounting policies), the auditor's assessment of the quality, not just the acceptability of the Company's accounting principles and other such matters as are required to be discussed with the Audit Committee under the standards of the Public Company Accounting Oversight Board (United States).

Management conducted its evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2017, based upon the framework in Internal Control – Integrated Framework (2013) by the Committee of Sponsoring Organizations of the Treadway Commission. Management's assessment included an evaluation of the design of our internal control over financial reporting and testing the operating effectiveness of our internal control over financial reporting. Management reviewed the results of the assessment with the Audit Committee of the Board of Directors. Based on its assessment and review with the Audit Committee, management concluded that our internal control over financial reporting was effective as of December 31, 2017.

We reviewed and discussed with management, the internal auditor and BKM, management's report on internal control over financial reporting and BKM's report on their audit of the Company's internal control over financial reporting as of December 31, 2017, both of which are included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017.

We have received from BKM the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant's communications with the audit committee concerning independence, and we have discussed with BKM their independence from the Company and management.  We have also discussed with BKM the matters required to be discussed by PCAOB Auditing Standard No. 16 – Communication with Audit Committees.

Based upon the review and discussions described in this report, the Audit Committee recommended to the Board of Directors that the audited financial statements be accepted and included in the Company's Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC.

We also review the Company's internal audit function, including the selection and compensation of the Company's internal auditor.  In accordance with our charter, our committee appointed Sirius Solutions as the Company's internal auditor for 2017.
 
 
31


This report is provided by the following independent directors who comprised the Audit Committee on the 10-K filing date:
 
Karen A. Twitchell, Chair
Pamela R. Butcher
John R. Townsend

PRINCIPAL ACCOUNTING FEES AND SERVICES

 
The table below sets forth the fees billed by BKM. Fees billed were for audits of our financial statements and internal controls for the fiscal years ended December 31, 2017, and 2016, and the review of our financial statements for the quarterly periods in the years ended December 31, 2017, and 2016, and other fees that the company was billed for services rendered during the fiscal years ended December 31, 2017, and 2016.

   
2017
   
2016
 
Audit Fees
 
$
520,410
   
$
425,905
 
Audit-Related Fees
   
-
     
-
 
Tax Fees
   
49,372
     
48,486
 
All Other Fees
   
27,087
     
26,685
 

Under its charter, the Audit Committee must pre-approve all auditing services and permitted non-audit services (including the fees and terms thereof) to be performed for the Company by its independent auditor, subject to the de minimis exceptions for non-audit services under the Exchange Act, which are approved by the Audit Committee prior to the completion of the audit.

Audit Fees

These amounts represent fees billed by BKM for professional services rendered for the audits of the Company's annual financial statements for the years ended December 31, 2017, and 2016, the reviews of financial statements included in the Company's Quarterly Reports on Form 10-Q, and services related to statutory and regulatory filings and engagements for such fiscal years.  These amounts also include approximately $140,000 during 2017 for work performed related to the audited financial statements of AMAK.

Tax Fees

These amounts represent fees billed by BKM for professional services rendered relating to tax compliance, tax advice and tax planning in the U.S.

All Other Fees

These amounts represent fees billed by BKM for professional services related to the Company's 401(k) audit and for providing consultation on various issues.

32

PROPOSAL NO. 4

ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

Under the rules of the SEC, the Company is required to provide its stockholders with the opportunity to cast a non-binding, advisory vote on the executive compensation for the Company's named executive officers.  This proposal is frequently referred to as a "say-on-pay" vote.  At the 2017 annual meeting, stockholders voted, on an advisory basis, in favor of casting the advisory say-on-pay vote on an annual basis.

Our Board recommends an advisory vote "FOR" the following resolution:

Resolved that the stockholders of the Company approve, on an advisory basis, compensation paid to the Company's named executive officers as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, compensation tables and narrative discussion.

The Board of Directors recommends a vote FOR this resolution because it believes that the policies and practices described in the Compensation Discussion and Analysis are effective in achieving the Company's goals of rewarding sustained financial and operating performance and motivating the executives to remain with the Company for long and productive careers.  We urge stockholders to read the Compensation Discussion and Analysis which provides detailed information on the Company's compensation policies and practices and the compensation of our named executive officers.

Vote Required

The affirmative vote of the holders of a majority of shares present in person or represented by proxy and entitled to vote on this proposal at the annual meeting is required for approval of this proposal.

Since the vote on this proposal is advisory, it is not binding on the Company.  Nonetheless, the Compensation Committee will take into account the outcome of the vote when making future executive compensation decisions.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

This Compensation Discussion and Analysis presents information about the compensation of our officers named in the Summary Compensation Table below (the "Named Executive Officers" or "NEOs").  Our executive compensation program, administered by our Compensation Committee (the "Committee"), is designed to promote a strong culture of leadership development, aligned with performance improvement (focused on both growth and productivity) and integrity, which in turn drives financial performance that provides value to our stockholders.  The main components of our executive compensation program include base salary and annual and long-term incentives (total direct compensation).  Our incentive program is designed to emphasize a pay-for-performance philosophy.
 
33


Annual incentive awards consist of cash bonuses generated under our annual incentive program and our legacy profit sharing program.  Cash awards under our annual incentive plan are tied to financial results (Operating Income) and provide a strong link between pay and performance.

Long-term incentive (LTI) awards consist of equity-based rewards to our executives.  To both retain and incentivize our executives, the Target LTI is made up of 50% time vested restricted stock units and 50% performance based.

Our long-term success depends on our people.  We strive to ensure that our employees' contribution and performance are recognized and rewarded through a competitive compensation program.  We target an executive compensation package that is competitive against the market in which we compete for talent.  A substantial portion of any of our executives' annual total compensation package is variable compensation tied to performance (i.e., Operating Income).  We designed our incentive program in such a way that if performance is at or above targeted levels, the executive's total compensation will be at or above targeted levels.  Conversely, if performance is below targeted levels, the executive's compensation will be below targeted levels.

Executive Compensation Program Design

Base Salary.  Base salaries provide for competitive pay based on the market value of the position and meet the objective of attracting and retaining talent needed to run the business.  Salaries are reviewed by the Committee annually.  Salary increases may be given based on individual factors, such as competencies, skills, experience, performance and market practices.  There are no specific weightings assigned to these individual factors.  Annual salary increases are generally effective in the first quarter.  Increases may also be given when executives assume new roles or are promoted.

The Committee increased 2018 base salaries for Mr. Upfill-Brown and Mr. Loggenberg by 2% over 2017 base salaries.  The Committee also increased 2018 base salaries for Ms. Cook and Mr. Williamson by 3% over 2017.  The Committee increased 2018 base salary for Mr. Ahmad by 6% over 2017.  These increases were effective February 23, 2018.

Below is a table comparing 2017 and 2018 executive base salaries.

 
 
 
Name of Executive
 
 
 
Base Salary
2017
   
 
 
Base Salary
2018
   
% Increase
between
2017 & 2018
 
Simon Upfill-Brown
 
$
510,000
   
$
520,200
     
2
%
S. Sami Ahmad
   
267,650
     
283,709
     
6
%
Connie J. Cook
   
255,000
     
262,650
     
3
%
Mark D. Williamson
   
306,000
     
315,180
     
3
%
Peter M. Loggenberg
   
353,500
     
360,570
     
2
%
 

 
34

Annual Cash Incentive Plan.  We use pre-bonus Operating Income as the financial metric for annual executive bonus awards.  The Committee believes that this financial metric is a strong indicator of performance.  It excludes items outside of management's control such as tax and interest rates.  Pre-bonus Operating Income is equal to Revenues less Operating Costs and Expenses, General and Administrative Expenses and Depreciation. For 2018, the Committee selected Adjusted EBITDA as the financial measure for annual executive bonus awards.  Adjusted EBITDA is more commonly used by stockholders and analysts to measure our financial performance than Operating Income.  Thus, we believe this change better aligns our financial performance metric with the financial community.

Once financials are available at the conclusion of the fiscal year, the Committee reviews our pre-bonus Operating Income results and chooses to exclude or adjust certain items to ensure that award payments reflect the core operating performance of the business.  Examples include expenses related to Hurricane Harvey.  Operating Income measures our ability to generate income after covering operating costs and general and administrative expenses.  Operating Income grows by not only increasing revenues through increased sales or improved product prices, but also by maintaining product  margins, reducing costs and managing assets.  Beginning in 2016, the Committee also had the capability to use safety as a mechanism to apply negative discretion to NEO bonus payouts when safety performance is unsatisfactory.

Annual cash bonuses are designed to motivate and reward NEOs and all other eligible executives on the achievement of Company goals for the performance year.  Bonus payouts for the CEO/COO and other NEOs are aligned with overall Company performance and stockholder return.  Our annual incentive plan is designed to allow NEOs and other executives to earn up to 200% of their target bonus based upon performance achieved.  Each executive's target bonus is expressed as a percentage of base salary.  The bonus levels below were adopted by the Committee for 2016 and 2017.

 
Participant
 
Target Bonus
(as % of Base Salary)
   
Maximum Bonus
(as % of Base Salary)
 
Simon Upfill-Brown
   
100
%
   
200
%
Peter M. Loggenberg
   
60
%
   
120
%
S. Sami Ahmad
   
50
%
   
100
%
Connie J. Cook
   
50
%
   
100
%
Mark D. Williamson
   
50
%
   
100
%


2017 Payout Design.  In the event that 100% ("Target" performance) of the Operating Income goal is met, then a 1.0X multiple is applied to the participant's target bonus.  Threshold payouts will occur when 80% of the Operating Income goal is met ("Threshold" performance), and a 0.50X multiple is applied to the participant's Target bonus for Threshold performance.  Performance below Threshold (less than 80% Target of Operating Income) results in no payout.  The Maximum payout occurs when actual Operating Income is greater than or equal to 140% of the Operating Income goal ("Maximum" performance).  When Maximum performance is achieved, a 2.00X multiple is applied to the participant's Target bonus.  Payouts are scaled linearly between Threshold and Target and between Target and Maximum.  Payouts will be interpolated for actual performance between these points. The CEO/COO has discretion to reduce individual cash bonuses payable to other NEOs by 20% based on the CEO/COO's personal assessment of their individual performance.

35

The following payout schedule is applied to 100% of the participant's target bonus which is tied to corporate performance in the form of Operating Income.

 
Payout Level
 
Corporate Performance
Bonus Multiple
 
 
Performance Achievement
Maximum
   
2.00
X
140% of Operating Income goal
Target
   
1.00
X
100% of Operating Income goal
Threshold
   
0.50
X
80% of Operating Income goal

Examples of bonus payout calculations for Mr. Upfill-Brown with respect to the 2017 year are as follows:

Base Salary: $510,000
     
Target Bonus as % of Base Salary: 100%
 
$
510,000
 
Maximum Bonus as % of Base Salary: 200%
 
$
1,020,000
 

As shown in the table below, the target bonus for Messrs. Upfill-Brown and Ahmad and Ms. Cook were based 100% on the performance of the Company, while the bonus for Mr. Loggenberg was based 80% on the performance of TC and 20% on the performance of the Company, and finally, the bonus for Mr. Williamson was based 80% on the performance of SHR and 20% on the performance of the Company.

   
Pre bonus Operating Income
 
NEO
 
TC
   
SHR
   
TREC
 
CEO, CFO, VP of Accounting
   
-
     
-
     
100
%
President of TC
   
80
%
   
-
     
20
%
SHR Vice President of Marketing
   
-
     
80
%
   
20
%

Determination of 2017 Performance Goals. Operating Income Target amounts are set taking into account business conditions, expectations regarding the probability of achievement, and historical financial performance.  Consistent with our philosophy and approach to setting goals, incentive payouts that are above target will be for results that exceed our business plan.  Targets are set at the beginning of the performance period.  The process is summarized below:

 
Beginning of the
Performance Period
 
During the Performance Period
 
End of the Performance Period
Operating Income goals are developed by the Committee and management and  approved by the Committee
Operating Income performance is monitored relative to goals
 
Operating Income goals cannot be changed during the performance period
Management presents actual Operating Income results relative to goals and the Committee reviews actual performance to determine any payouts
 
The Committee may exclude or adjust certain items that are outside the normal course of business, unusual and/or infrequent, and not reflective of our core operating performance for that period

Any adjustments at the end of the performance period will be at the Committee's discretion.

36

2017 Target (Operating Income) and Results for 2017.  After consultation with our NEOs and forecasts from outside analysts, the Committee set a Target of $23.7 million of pre-bonus Operating Income for 2017 for TREC resulting in a Threshold of $19.0 million.  The Target for 2017 represented a 47% decrease as compared to 2016; however, the 2017 target represented a 26.7% increase as compared to 2016 actual results.  SHR's 2017 target was set at $26.0 million of Operating Income and TC's 2017 target was set at $3.6 million of Operating Income. Following year end 2017, we decided to allow an adjustment for Hurricane Harvey expenses by adding back these estimated expenses to pre-bonus Operating Income.  Including this adjustment, adjusted pre-bonus operating income was $19.3 million for TREC, $31.0 million for SHR, and ($4.7) million for TC.  This resulted in estimated bonuses of $0.6 million which were paid in 2018.

2018 Target (Adjusted EBITDA).  For 2018, the Committee made the determination to use Adjusted EBITDA as the financial performance metric for the annual cash incentive plan in an effort to use a more well-known measure.

Profit Sharing ProgramThe profit sharing program is available to all employees, including NEOs, based upon quarterly performance.  Profit sharing is done on a quarterly basis when cash flow permits.  There is no set formula for calculating or allocating profit sharing as it is based upon several factors including profit, cash flow, expectations and special cash needs of the Company.  In 2010 the Committee adopted a written policy governing employee profit sharing which was subsequently amended in March 2017.  Pursuant to the amended policy, the pool of funds available for profit sharing during any particular calendar quarter cannot exceed 12% of estimated earnings before interest, depreciation, taxes and amortization ("EBITDA") for that quarter.  In addition, the CEO/COO must submit a recommended level of profit sharing with proposed employee allocations, other than for himself, to the Committee for approval. The amount of the total award allocated to each NEO and to each employee is based on (i) current base salary and pay levels, (ii) instances of individual superior performance, and (iii) instances of individual sub-standard performance.  The NEO profit sharing amount cannot exceed 10% of the total profit sharing payout, and no NEO will be allocated more than $10,000 per quarter.  The Company has a wide range of salary and pay levels, and in general employees at the lower end of the pay scale will be granted higher awards as a percentage of their base pay.  Under the policy, the Committee has authority to revise the amount of funding available for profit sharing, as well as, to adjust individual allocations.

Prior to 2016, all profit sharing awards to NEOs and other participants in the Annual Cash Incentive Plan were netted out of any cash bonuses paid out under the Company's Annual Cash Incentive Plan.  Pursuant to the amended profit sharing policy, profit sharing will not be deducted from the Company's Annual Cash Incentive Plan and the Committee will review the impact of profit sharing to the NEOs on the total cash compensation for NEOs and make adjustments as needed regarding base pay.

As an incentive for safe work performance, a safety award program is incorporated into the profit sharing program. As part of this program, SHR and TC pay every employee, including NEOs and other executives, a $500 net award at the end of each calendar quarter in which there are no lost-time or recordable accidents.  This program has been very successful in encouraging employees to watch out for one another and to work safely.

37

Long-Term Incentive

In the past, stock options and restricted stock units were periodically awarded to our NEOs and other executives in an effort to align their interests with those of our stockholders since both equity vehicles increase in value only if the Company's stock price increases.  Although some of our employees still hold unexercised stock option awards that are reflected in the compensation tables below, we did not grant any stock options during 2017.  The Company previously reported grants of restricted stock unit awards under the Stock Incentive Plan (as defined in Proposal No. 5) as grants of restricted stock, while such grants were treated at all times in all respects by the Company and plan participants as restricted stock unit awards.  This change in nomenclature (but not substance) has been made throughout this proxy statement.

On January 14, 2015, the Committee determined it would be prudent for the Company to cease making stock option grants to NEOs and only grant restricted stock units, because it would be simpler, less costly and less dilutive to our stockholders and a better match with the equity award programs at our peers.  The Committee decided to grant 100% time-based restricted stock unit awards for 2015, and beginning with the 2016 year, to implement a performance component where 50% of the restricted stock units vest contingent upon a set level of performance using threshold, target and maximum goals.   The Committee set up three tiers of target percentages of base salary for long-term incentive ("LTI") compensation to be granted annually to the NEOs.

 
Applicable Tier
Participants
Target LTI as
Percentage of Base Salary
Tier 1
CEO/COO
150%
Tier 2
Executive Vice Presidents
115%
Tier 3
Other Executive Officers
55%

Beginning in 2016, the Committee adopted an LTI award program with overlapping annual grants of restricted stock units for the NEOs.  The awards are granted out of the 2012 Stock and Incentive Plan.  Under the new LTI award program, time-vested awards will comprise 50% of the LTI award.  The time-vested awards will vest ratably over a 3-year period, subject to the acceleration or forfeiture provisions described below.

Performance-based awards will comprise the remaining 50% of the annual LTI award value.  The performance period for performance-based awards is 3 years and actual shares delivered will be determined at the end of the performance period based upon performance relative to pre-established goals.  Return on Invested Capital ("ROIC") and Earnings Per Share Growth ("EPS Growth") are the two performance measures that will be utilized.  Each measure will be equally weighted at 50% meaning that half of the performance based award (25% of the total award) will be allocated to each measure.  Performance will be measured on a relative basis against the Company's peer group.  Performance will range from 0% to 200% of the target award.

The Company's performance for the performance-based awards over the 3-year period will be ranked against a peer group resulting in the application of a single multiplier to the target award value under each performance measure used.  The peer group will be reviewed on an annual basis and with each new annual award the peer group can be modified for new awards.  Once a peer group is established at the outset of the performance period, the companies within do not change except when consolidation among peers in the marketplace occurs.    The Committee set
 
38

the same group of peer companies for the 2017 awards as was used for the 2016 awards.  The peer group list for 2017 awards is as follows:

American Vanguard Corp. Innospec Inc OMNOVA Solutions Inc.
Chase Corporation         KMG Chemicals Inc.                                                          Quaker Chemical Corp.
FutureFuel Corp.          Kraton Corporation  Stepan Company
Hawkins Inc.

If the Company percentile is below 25%, the performance based award will be forfeited.  If the Company percentile is between 25% and 50%, the amount earned will be determined by interpolation (between 50% and 100% of grant earned).  If the Company percentile is between 50% and 100%, the amount earned will be determined by interpolation (between 100% and 200% of grant earned).  Forfeiture of a performance based award will occur if EPS Growth is negative, regardless of its peer ranking.

 
Performance
 
Percentile
Earned
Percentile
Below Threshold
<25th
0%
Threshold
25th
50%
Target
50th
100%
Maximum (highest)
100th
200%

On June 15, 2017, the Committee approved the grant of restricted stock units on June 16, 2017, based upon that day's closing price to the NEOs based upon the target percentages indicated below:

 
 
Name of Employee
 
Target LTI
(as % of Base Salary)
   
Base Salary
2017
   
Target LTI
 
Simon Upfill-Brown
   
120
%
 
$
510,000
   
$
612,000
 
S. Sami Ahmad
   
60
%
   
267,650
     
160,590
 
Connie J. Cook
   
60
%
   
255,000
     
153,000
 
Peter M. Loggenberg
   
55
%
   
353,500
     
194,425
 
Mark D. Williamson
   
55
%
   
306,000
     
168,300
 

The closing price on June 16, 2017, was $11.40 resulting in the grant of target shares indicated below:
 
 
 
 
Name of Employee
 
Total Restricted Stock Units Granted
   
Time Vesting Period #1
6/16/17-
6/16/18
   
Time Vesting Period #2
6/16/18-
6/16/19
   
Time Vesting Period #3
6/16/19-
6/16/20
   
Performance Vesting Period
6/16/17-
6/16/20
 
Simon Upfill-Brown
   
53,684
     
8,947
     
8,947
     
8,947
     
26,842
 
S. Sami Ahmad
   
14,087
     
2,348
     
2,348
     
2,347
     
7,044
 
Connie J. Cook
   
13,421
     
2,237
     
2,237
     
2,237
     
6,710
 
Peter M. Loggenberg
   
17,055
     
2,843
     
2,843
     
2,842
     
8,528
 
Mark D. Williamson
   
14,763
     
2,461
     
2,461
     
2,460
     
7,381
 
Total
   
113,010
     
18,836
     
18,836
     
18,833
     
56,505
 

Upon any termination of employment, unvested shares and unearned performance based awards will be forfeited, except under the following scenarios:

39

Change in Control
Double trigger vesting
Death and Disability
Pro rata vesting for restricted stock, options and performance shares
Involuntary Termination Without Cause
Unvested restricted stock and stock options are forfeited and all performance awards expire and terminate
Retirement
Pro rata vesting for restricted stock and options, as well as pro rata vesting for performance awards based on actual performance, subject to minimum 6 month service requirement after grant

Perquisites  

We provide benefits that we believe are standard in the industry to all employees. These benefits consist of a group medical and dental insurance program for employees and their qualified dependents, group life insurance for employees and their spouses, accidental death and dismemberment coverage for employees, a Company sponsored cafeteria plan and a 401(k) employee savings and investment plan. The Company matches employee deferral amounts, including amounts deferred by named executive officers, up to a total of 6% of the employee's eligible salary, excluding annual cash bonuses, subject to certain regulatory limitations.  During 2017, company vehicles were supplied to each of our NEOs for business and personal travel.  Our use of perquisites as an element of compensation is very limited.  We do not view perquisites as a significant element of our comprehensive compensation structure.

Governance of Pay Setting Process

In setting total direct compensation, a consistent approach is applied for all executives:

We compare our NEOs to analogous positions within the market in terms of specific duties, responsibilities, and job scope.

Each position has an established target annual incentive award opportunity, executive benefits and perquisites.  These incentive levels and benefits are reviewed by the Committee on an annual basis to determine their relative level of competitiveness with the market.

We generally target all elements of pay and total direct compensation to be positioned between the 25th and 50th percentiles of our peer group based on several factors including the relative size of the Company compared with some of its peers.

Individual executive pay positioning will vary based on the requirements of the job (competencies and skills), the executive's experience and performance, and the organizational structure (internal alignment and pay relationships).

We also consider internal pay equity when establishing compensation levels.  Currently, we believe that our compensation level for each of our NEOs reflects his or her job responsibility and scope appropriately and scale down from the CEO/COO in a reasonable manner.

Exceptions to normal practice may be made based on critical business and people needs.

40

Role of the Compensation Committee in Establishing Pay Levels

The Committee (comprised of only independent directors) establishes, reviews and approves all elements of the executive compensation program.  A copy of the Compensation Committee Charter is available on our website.  During 2017 and 2016 the Committee engaged Pearl Meyer & Partners ("PM&P") to serve as its independent outside executive compensation consultant.  The Committee has engaged PM&P since 2010.  PM&P's primary role is to provide advice and perspective regarding market compensation trends that may impact decisions we make about our executive compensation program and practices.  In connection with its engagement of PM&P and based on the information presented to it, the Committee assessed the independence of PM&P pursuant to applicable SEC and NYSE rules and concluded that PM&P's work for the Committee did not raise any conflict of interest for 2017.  Management has the responsibility for effectively implementing the executive compensation program.  Additional responsibilities of the Committee, management and the consultant include:

The Committee reviews and approves business goals and objectives relevant to executive compensation, evaluates the performance of the CEO/COO in light of these goals and objectives, and determines and establishes the CEO/COO's compensation level.

Based on review of market data, individual performance and internal pay comparisons, the Committee independently sets the pay for our CEO/COO and reviews and approves all NEO and other executive pay arrangements.

Role of Management in Establishing Pay Levels

The CEO/COO makes recommendations on program design and pay levels other than his own, where appropriate, and oversees the implementation of such programs and directives approved by the Committee.

The CEO/COO develops pay recommendations for his direct reports and other key executives based on the results of PM&P's analysis of current market compensation levels.  This includes all of our NEOs (with the exception of the CEO/COO himself).

Our Vice President of Accounting provides the financial information used by the Committee to make decisions with respect to incentive compensation goals and related payouts.

Role of the Compensation Consultant in Establishing Pay Levels

The compensation consultant is responsible for gathering, analyzing and presenting peer group pay practices and relevant data to the Committee.  They do not have the authority to determine pay.

The consultant provides periodic updates to the Committee regarding various tax, accounting and regulatory issues that could have an impact on executive compensation design, administration and/or disclosure.

41


Regulatory Considerations

We account for the equity compensation expense for our executives under the rule of ASC 718, which requires us to estimate and record an expense for each award of equity compensation over the vesting period of the award.  Accounting rules also require us to record cash compensation as an expense at the time the obligation is accrued.

Pursuant to Section 162(m) of the Code ("Section 162(m)"), certain compensation paid to certain of our executive officers in excess of $1 million is not tax deductible.  For taxable years beginning prior to December 31, 2017, compensation that constitutes "qualified performance-based" under Section 162(m) was excluded from the deductibility limit if, among other requirements, the compensation was payable only upon the attainment of pre-established, objective performance goals under a plan approved by a company's shareholders.  However, the exemption from the Section 162(m) deduction limit for qualified performance-based compensation has been repealed, effective for taxable years beginning after December 31, 2017.  The repeal means that compensation paid to our covered executive officers in excess of $1 million will not be deductible even if it was intended to constitute qualified performance-based compensation unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017.

Historically, we have had the ability to design certain elements of compensation for our executive officers to be qualified performance-based compensation under Section 162(m) in order to maintain the deductibility of that compensation when we have determined that performance-based compensation was appropriate for those executive officers.  However, the Committee considers its primary goal to design compensation strategies that further the best interests of our stockholders.  In certain cases, it may determine that the amount of tax deductions lost is not significant when compared to the potential opportunity a compensation program provides for creating long-term stockholder value.  The Committee therefore retains the ability to evaluate the performance of our executive officers and to pay appropriate compensation, even if some or all of it may be non-deductible.

The repeal of the qualified performance-based compensation exception from the Section 162(m) deductibility limitations will restrict our ability in the future to pay compensation that is fully deductible.  The Committee will monitor the impact of the changes to Section 162(m).  However, we will retain flexibility and the ability to pay competitive compensation without requiring that all compensation be deductible.

Employment Arrangements

Contemporaneously with the acquisition of TC, the Company entered into an Employment Contract (the "Employment Contract") and Severance Agreement and Covenant Not to Compete, Solicit and Disclose (the "Severance Agreement") with Peter M. Loggenberg on October 1, 2014.  Effective March 7, 2018, Mr. Loggenberg's Employment Agreement was amended to reflect his appointment to Chief Sustainability Officer.  Pursuant to the Employment Contract, TREC agreed to employ Mr. Loggenberg as president of TC with duties typical of that position.  Mr. Loggenberg is to be paid a base salary of $350,000 subject to adjustment on an annual basis by the Board.  He also received a $35,000 signing bonus and grant of 7,000 restricted shares of the Company's common stock.  The Employment Contract may be terminated for or without
 
42

"good cause."  Under the Severance Agreement, upon a dismissal or termination of employment other than for good cause, the Company will pay a cash severance to Mr. Loggenberg in an amount equal to one-year of his then annual base salary (excluding bonuses, grants of stock and/or stock options, profit sharing, benefits, and perquisites).  The cash severance shall be payable in six (6) equal monthly installments.  As used in Mr. Loggenberg's Employment Contract, "good cause" means his commission of a crime involving moral turpitude, embezzling any funds or property of the Company or commission of any other dishonest act towards the Company, or the Company's determination that he was under the influence of alcohol or illegal drugs during working hours.

We have not entered into employment agreements with any of our other executives.  All other executives serve at the discretion of the Board with no fixed term of employment.

Peer Group Comparisons

We compare executive compensation against a peer group.  The peer group shown below was established by the Committee in 2016 and used for comparative purposes in 2016 and 2017.  Peer group proxy data provides sufficient comparisons for the executives, but because the companies are structured differently, not all peers have incumbents in the respective positions.  Some jobs have no peer benchmarks available from proxy data, which necessitates the use of industry specific and general industry related surveys as an additional data source.  The consultant's survey data provides expanded data to compare our executives' positions.  Peer group and survey data provides a focal point in the Committee's examination of compensation trends across the petrochemical and chemical processing industry.  All of the companies in the peer group are specialty and/or commodity chemical producers.

American Vanguard Corp. Innospec Inc OMNOVA Solutions Inc.
Chase Corporation           KMG Chemicals Inc.                                                      Quaker Chemical Corp.
FutureFuel Corp.             Kraton Corporation                                                           Stepan Company
Hawkins Inc.

Peer group market analysis is one of several factors considered in the pay setting process.  Peer group practices are analyzed periodically for the pay element making up total direct compensation, and periodically for other elements (such as executive benefits and perquisites).  Three years of proxy data were analyzed for each of the Company's ten peer companies.  In order to emphasize peer and industry long-term incentive practices, proxy data was the primary source used for long-term incentives and total direct compensation to develop market values for the compensation analysis.  In addition to peer group comparisons, we also used surveys provided by PM&P in the pay setting process.  Survey sources included proprietary energy sector and other general and industry executive compensation databases.  We used a combination of proxy and survey data to develop market values.  All data was summarized to relevant statistics (e.g., median, 25th percentile and 75th percentile), and where applicable, survey data was bracketed to reflect a range of data appropriate for the Company's revenue scope.  Data was segmented by revenue ranges (e.g., $100 million to $500 million) to ensure that the most appropriate information was used in the analysis. The strategy behind the sources of data is to promote the best mix of authorities for competitive positions, utilize industry data for line operations and line executives and some general industry mix to staff executive positions, and balance the proxy data with published authorities to help smooth the volatility of executive
 
43

changes in the peer group.  Market values of cash compensation were correlated to company size as measured by revenue and the data the Committee considered was size-adjusted where possible to reflect our general revenue level.  This process made the market data points directly applicable to the Company.

The Committee adopted the philosophy of targeting pay between the 25th to 50th percentile range of market data based on several factors including the relative size of the Company compared with some of the peers.

2017 Target Compensation

The table below sets forth the 2017 targeted compensation elements for each of our NEOs.  These target amounts represent the amount of realizable compensation at target performance and takes into account awards that were granted in prior years.

 
 
 
 
 
Name of Executive
 
 
 
 
 
2017
Base Salary
   
Annual
Incentive Plan Target
(Profit Sharing and Cash Bonus)
   
Long-Term Incentive Compensation(1)(2)
   
Total Direct Compensation
Target
 
Simon Upfill-Brown
 
$
510,000
   
$
510,000
   
$
744,909
   
$
1,764,909
 
S. Sami Ahmad
 
$
267,650
   
$
133,825
   
$
31,226
   
$
432,701
 
Connie J. Cook
 
$
255,000
   
$
127,500
   
$
214,887
   
$
597,387
 
Mark D. Williamson
 
$
306,000
   
$
153,000
   
$
271,706
   
$
730,706
 
Peter M. Loggenberg
 
$
353,500
   
$
212,100
   
$
150,099
   
$
715,699
 

(1)
The compensation amount for each NEO shown reflects the Company's accounting expense disregarding any estimates for forfeitures of options granted to the NEOs by the Compensation Committee in the first quarter of 2011 and 2014 which vest over four (4) years in equal increments.  For Mr. Upfill-Brown this amount represents the value of options granted in the second quarter of 2013 and the first quarter of 2014 which vest over the next (4) years in equal increments.
(2)
The compensation amount also represents the Company's accounting expense disregarding any estimates for forfeitures of restricted stock units granted to the NEOs in the first quarter of 2015 which vests over 4 years and in the first quarter of 2016 and second quarter of 2017 with half vesting over 3 years and the remainder upon the achievement of certain performance metrics.  The compensation amount does not correspond to the actual value that will be realized by the NEOs.

The calculation of total compensation under SEC rules, as shown in the 2017 Summary Compensation Table set forth below, includes several items that are driven by accounting and actuarial assumptions, which are not necessarily reflective of compensation actually realized by the NEOs in a particular year.  To supplement the SEC required disclosure, we have included the additional table below, which shows compensation actually realized by each NEO as reported on the NEO's W-2 form for each of the years shown.
44


2017 Realized Compensation Table

Name of Executive
Year
 
Realized
Compensation(1)
 
Simon Upfill-Brown
2017
 
$
757,996
 
2016
   
1,053,091
 
2015
   
910,325
 
S. Sami Ahmad(2)
2017
   
284,425
 
2016
   
70,397
 
Connie J. Cook
2017
   
331,186
 
2016
   
421,990
 
2015
   
412,655
 
Mark D. Williamson
2017
   
413,080
 
2016
   
579,835
 
2015
   
563,146
 
Peter M. Loggenberg
2017
   
455,935
 
2016
   
493,589
 
2015
   
465,252
 

(1)
Amounts reported as realized compensation differ substantially from the amounts determined under SEC rules and reported as total compensation in the 2017 Summary Compensation Table.  Realized compensation is not a substitute for total compensation.  For a reconciliation of amounts reported as realized compensation and amounts reported as total compensation, see below.  For more information on total compensation as calculated under SEC rules, see the narrative and notes accompanying the 2017 Summary Compensation Table set forth on page 48.
(2)
Mr. Ahmad's amounts only reflect one quarter in 2016 since he joined the Company in October 2016.

The amounts reported in the 2017 Realized Compensation Table reflect income for the years shown as reported on the NEOs' W-2 forms.  The amounts differ substantially from the amount reported as total compensation in the 2017 Summary Compensation Table required under SEC rules and are not a substitute for the amounts reported in the 2017 Summary Compensation Table.  For 2017, realized compensation represents: (1) total compensation, as determined under applicable SEC rules, minus (2) the aggregate grant date fair value of equity awards (as reflected in the Stock and Option Awards columns) and (3) the Company's 401(k) contributions (as reflected in the 2017 All Other Compensation Table above).  In addition, realized compensation reflects any bonus actually paid in the year shown, whereas total compensation under SEC rules, reflects any bonus earned for the year shown.

The charts below illustrate that a large portion of our NEOs' pay is performance based (e.g., approximately 71% of our CEO/COO's pay is performance based and approximately 47% of our other NEOs' pay is performance based).
 
45





Compensation and Risk

We believe that our performance-based compensation program creates appropriate incentives to increase long-term stockholder value.  This program has been designed and administered in a manner that discourages undue risk-taking by employees.  Relevant features of this program include:

limits on annual incentive and long-term performance awards, thereby defining and capping potential payouts;

application of an annual incentive metric that aligns employees with the common goal of increasing Operating Income;

use of a long-term incentive vehicle that vests over a number of years, thereby providing strong incentives for sustained operational and financial performance;

46

Committee discretion to adjust payouts under the annual incentive plan to reflect the core operating performance of the company but prohibits discretion for payouts above stated maximum awards; and

annual bonuses to executives are awarded after the Company and its subsidiaries' pre-bonus Operating Income for the fiscal year are determined which means that the annual bonus is delayed and at risk to the executives based on the actual net operating performance of the Company and its subsidiaries.

Executive Compensation Program for 2017

Results - Company Performance Highlights

Results of our 2017 performance year were:

TREC
o
Target Pre-bonus Operating Income of $23.7 million
o
Threshold level of $19.0 million
o
Actual Pre-bonus Operating Income (adjusted for estimated Harvey impact of $0.7 million) was $19.3 million which was 81.6% of the Target level

SHR
o
Target Operating Income of $26.0 million
o
Threshold level of $20.8 million
o
Actual Operating Income (adjusted for estimated Harvey impact of $0.7 million) was $31.0 million which was 119.1% of the Target level

TC
o
Target Operating Income of $3.6 million
o
Threshold level of $2.9 million
o
Actual Operating Income (adjusted for estimated Harvey impact of $0.04 million) was a loss of approximately $4.7 million

 As noted above, based on these results our executives received approximately $0.6 million in bonuses under the annual incentive program.

Report of the Compensation Committee

Management has prepared the Compensation Discussion and Analysis of the compensation program for NEOs (beginning on page 33).  The Committee has reviewed and discussed the Compensation Discussion and Analysis for fiscal year 2017 with management.  Based on this review and discussion, the Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company's Proxy Statement.
47


This report is provided by the following independent directors who comprise the committee:

John R. Townsend, Chair
Joseph P. Palm
Gary K. Adams
Karen A. Twitchell
Pamela R. Butcher

Executive Compensation Tables

2017 Summary Compensation Table

The following table sets forth information regarding 2017 compensation for each NEO; 2016 and 2015 compensation is presented for executives who were also NEOs in 2016 and 2015.  This table should be read in conjunction with the explanations provided above.  It sets forth summary compensation information for the year ended December 31, 2017, for the Company's (i) Chief Executive Officer, (ii) Chief Financial Officer, and (iii) each of the Company's three most highly compensated executives other than the Chief Executive Officer and the Chief Financial Officer who were serving as executive officers of the Company as of December 31, 2017.  

2017 Summary Compensation Table
Name and
Principal Position
Year
 
Salary
($)
   
Bonus
($)
   
Stock
Award(s)
($)(1)
   
Option Award(s)
($)(2)
   
Non-Equity
Incentive Plan
Compen-sation
($)
   
All Other
Compen-sation
($)(3)
   
Total
($)
 
Simon Upfill-Brown
Chief Executive Office and Chief Operating Officer(5)
2017
   
507,692
     
--
     
612,000
     
--
     
275,306
     
43,318
     
1,438,316
 
2016
   
492,308
     
--
     
600,000
     
--
     
--
     
59,973
     
1,152,281
 
2015
   
423,615
     
468,007
     
98,658
     
--
     
--
     
43,047
     
1,033,327
 
S. Sami Ahmad(4)
Chief Financial Officer
2017
   
267,038
     
--
     
160,590
     
--
     
72,241
     
28,762
     
528,631
 
since Oct 2016
   
66,250
     
--
     
--
     
--
     
--
     
4,147
     
70,397
 
Connie J. Cook
Vice President of Accounting & Compliance
2017
   
253,846
     
--
     
153,000
     
--
     
68,827
     
31,448
     
507,121
 
2016
   
253,365
     
--
     
150,000
     
--
     
--
     
44,187
     
447,552
 
2015
   
232,741
     
137,624
     
28,353
     
--
     
--
     
29,095
     
427,813
 
48

 
Mark D. Williamson
Vice President of Marketing, Petrochemical Company
2017
   
304,615
     
--
     
168,300
     
--
     
197,407
     
54,707
     
725,029
 
2016
   
298,462
     
--
     
165,000
     
--
     
--
     
61,454
     
524,916
 
2015
   
300,809
     
193,884
     
36,552
     
--
     
--
     
45,049
     
576,294
 
Peter M. Loggenberg(6)
Chief Sustainability Officer
2017
   
352,692
     
--
     
194,425
     
--
     
22,899
     
39,018
     
609,034
 
2016
   
350,000
     
--
     
192,500
     
--
     
--
     
33,090
     
575,590
 
2015
   
363,462
     
89,358
     
44,108
     
--
     
--
     
31,994
     
528,922
 

(1)
This column represents the dollar amounts for the years shown of the grant date fair value of restricted stock unit awards that were granted in those years, calculated in accordance with SEC rules.  For purposes of the time-based restricted stock unit awards granted in 2017, fair value is calculated using the closing price of a share of our stock on the date of grant.  For purposes of the performance-based restricted stock unit awards granted in 2017, fair value is calculated based on the probability of attaining the target performance goals on the date of grant.  Assuming that maximum performance was the probable outcome on the date of grant, the grant date value of the performance-based restricted stock unit awards granted in 2017 would have been $306,000, $80,295, $76,500, $84,150,  $97,213 for each of Messrs. Uphill-Brown, Ahmad, Ms. Cook, and Messrs. Williamson and Loggenberg, respectively.  For purposes of the time-based restricted stock unit awards granted in 2016, fair value is calculated using the closing price of a share of our stock on the date of grant.  For purposes of the performance-based restricted stock unit awards granted in 2016, fair value is calculated based on the probability of attaining the target performance goals on the date of grant.  Assuming that maximum performance was the probable outcome on the date of grant, the grant date value of the performance-based restricted stock unit awards granted in 2016 would have been $300,000, $75,000, $82,500, $96,250 for each of Mr. Uphill-Brown, Ms. Cook, and Messrs. Williamson and Loggenberg, respectively.  Amounts for 2015 reflect the Company's fiscal year accounting expense.  Amounts for all years do not correspond to the actual value that will be realized by the NEOs.  For information on the valuation assumptions used in calculating the amounts in this column, see "Note 2 – Summary of Significant Accounting Policies – Share-Based Compensation" and "Note 16– Share-Based Compensation" in the notes to our consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2017.
(2)
This column represents the dollar amounts for the years shown of grant date fair value of options that vested in those years.  Amounts reflect the Company's fiscal year accounting expense and do not correspond to the actual value that will be realized by the NEOs.  Since no options were granted in 2017, 2016, or 2015, no amounts are shown.
(3)
See the 2017 All Other Compensation Table below for additional information.
(4)
Mr. Ahmad was appointed the Company's Chief Financial Officer effective as of October 1, 2016.  As such, the amounts included for Mr. Ahmad in 2016 reflect only amounts actually earned or paid in connection with his employment with the Company from October 1, 2016 through December 31, 2016.
(5)
Mr. Upfill-Brown's role was expanded to Chief Executive Officer and Chief Operating Office effective as of March 6, 2018.
(6)
Mr. Loggenberg was appointed the Company's Chief Sustainability Officer effective as of March 6, 2018.

2017 All Other Compensation Table

We provided our NEOs with additional benefits, reflected in the table below for 2017, that we believe are reasonable, competitive and consistent with the Company's overall executive compensation program.  The costs of these benefits constitute only a small percentage of each NEO's total compensation.
49


2017 All Other Compensation

Name of Executive
 
Company
401(k)
Contributions
   
 
Profit
Sharing
Award
   
Safety
Award
   
Personal
Use of
Company
Car
   
Life
Insurance
Premiums
   
Total
 
Upfill-Brown
 
$
24,000
   
$
1,500
   
$
1,170
   
$
13,454
   
$
3,194
   
$
43,318
 
Ahmad
   
11,375
     
1,500
     
1,164
     
12,771
     
1,952
     
28,762
 
Cook
   
15,231
     
1,500
     
1,208
     
12,778
     
771
     
31,448
 
Williamson
   
18,277
     
4,500
     
2,424
     
26,312
     
3,194
     
54,707
 
Loggenberg
   
21,132
     
500
     
1,684
     
13,750
     
1,952
     
39,018
 

Grants of Plan-Based Awards

The following table presents information concerning plan-based awards granted to each NEO during 2017 under the 2012 Stock and Incentive Plan.  The table also provides the range of bonus awards that could become payable pursuant to the Annual Cash Incentive Plan.

         
Estimated Possible Payouts
Under Non-Equity Incentive
Plan Awards (1)
   
Estimated Future
Payouts under
Equity Incentive
Plan Awards (2)
   
All Other Stock Awards:
       
Name of Executive
Grant
Date
Approval Date
 
Threshold
($)
   
Target
($)
   
Maximum
($)
   
Threshold
(#)
   
Target
(#)
   
Maximum
(#)
   
Number of Shares of Stock
(#)(3)
   
Grant Date Fair Value of Stock Awards ($)(4)
 
Simon Upfill-Brown
06/16/17
6/15/17
                     
13,421
     
26,842
     
53,684
     
26,841
     
306,000
 
       
255,000
     
510,000
     
1,020,000
                                         
S. Sami Ahmad
06/16/17
6/15/17
                           
3,522
     
7,044
     
14,088
     
7,043
     
80,295
 
       
66,913
     
133,825
     
267,650
                                         
Mark D. Williamson
06/16/17
6/15/17
                           
3,691
     
7,381
     
14,762
     
7,382
     
84,150
 
       
76,500
     
153,000
     
306,000
                                         
Connie J. Cook
06/16/17
6/15/17
                           
3,355
     
6,710
     
13,420
     
6,711
     
76,500
 
       
63,750
     
127,500
     
255,000
                                         
Peter M. Loggenberg
06/16/17
6/15/17
                           
4,264
     
8,528
     
17,056
     
8,528
     
97,213
 
       
106,050
     
212,100
     
424,200
                                         

(1)
Represents the threshold, target and maximum amount of awards that could have been paid pursuant to the Annual Cash Incentive Plan for the 2017 year.  Payouts of approximately $0.6 million were awarded under this plan for 2017. This amount was paid in 2017.
(2)
Represents the threshold, target and maximum number of shares that could be subject to the performance-based restricted stock unit awards granted in 2017.  Fifty percent of the performance awards will be calculated based upon ROIC, and the remaining fifty percent will be based on EPS Growth.  The actual amount of shares that may become vested will be determined as of December 31, 2019, the end of the performance period.
(3)
Represents time-based restricted stock awards, granted at a closing price on June 16, 2017, of $11.40 per share.
(4)
Represents the aggregate grant date fair value of both the time-based and performance-based awards granted on June 16, 2017.

50

Narrative Description to Summary Compensation Table and Grants of Plan-Based Awards

The table below shows a comparison to the base salary and bonus amounts that each executive received in 2017 in comparison to that NEO's total compensation for the 2017 year.

Name of Executive
 
Salary/Bonus in
Comparison to
Total Compensation
 
Simon Upfill-Brown
   
54
%
S. Sami Ahmad
   
64
%
Connie J. Cook
   
64
%
Mark D. Williamson
   
69
%
Peter M. Loggenberg
   
62
%

2017 Outstanding Equity Awards at Fiscal Year-End

The following table presents information concerning outstanding equity awards held by the NEOs.  This table includes unexercised (both vested and unvested) option and restricted stock unit awards that were not satisfied as of December 31, 2017.  Each equity grant is shown separately for each NEO.

   
Option Awards
   
Stock Awards
 
Name of Executive
 
Number of Securities Underlying Unexercised Options
(#) Exercisable (1)
   
Number of Securities Underlying Unexercised Options
(#) Unexercisable
   
Option
Exercise Price
($)
   
Option Expiration Date
   
Number of Shares or Units of Stock That Have Not Vested
(#)(2)
   
Market Value of Shares or Units of Stock That Have Not Vested
($)(3)
   
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(4)(5)
   
Equity
Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3)
 
Simon Upfill-Brown
                                               
2013 Option
   
85,000
           
7.71
   
05/28/23
     
--
     
--
     
--
     
--
 
2014 Option
   
90,000
     
30,000
     
12.26
   
02/20/24
     
--
     
--
     
--
     
--
 
2015 RSU
   
--
     
--
     
--
     
--
     
14,739
     
198,977
     
--
     
--
 
2016 RSU (Time-Based)
   
--
     
--
     
--
     
--
     
21,300
     
287,550
     
--
     
--
 
2016 RSU (ROIC)
   
--
     
--
     
--
     
--
     
--
     
--
     
15,974
     
215,649
 
2016 RSU (EPS Growth)
   
--
     
--
     
--
     
--
     
--
     
--
     
15,974
     
215,649
 
51

 
2017 RSU (Time-Based)
   
--
     
--
     
--
     
--
     
26,841
     
362,354
     
--
     
--
 
2017 RSU (ROIC)
   
--
     
--
     
--
     
--
     
--
     
--
     
13,421
     
181,184
 
2017 RSU (EPS Growth)
   
--
     
--
     
--
     
--
     
--
     
--
     
13,421
     
181,184
 
S. Sami Ahmad
                                                               
2017 RSU (Time-Based)
   
--
     
--
     
--
     
--
     
7,043
     
95,081
     
--
     
--
 
2017 RSU (ROIC)
   
--
     
--
     
--
     
--
     
--
     
--
     
3,522
     
47,547
 
2017 RSU (EPS Growth)
   
--
     
--
     
--
     
--
     
--
     
--
     
3,522
     
47,547
 
Connie J. Cook
                                                               
2011 Option
   
58,650
     
--
     
4.86
   
01/11/21
     
--
     
--
     
--
     
--
 
2014 Option
   
35,250
     
11,750
     
12.26
   
02/20/24
     
--
     
--
     
--
     
--
 
2015 RSU
   
--
     
--
     
--
     
--
     
4,242
     
57,267
     
--
     
--
 
2016 RSU (Time-Based)
   
--
     
--
     
--
     
--
     
5,324
     
71,874
     
--
     
--
 
2016 RSU (ROIC)
   
--
     
--
     
--
     
--
     
--
     
--
     
3,994
     
53,919
 
2016 RSU (EPS Growth)
   
--
     
--
     
--
     
--
     
--
     
--
     
3,994
     
53,919
 
2017 RSU (Time-Based)
   
--
     
--
     
--
     
--
     
6,711
     
90,599
     
--
     
--
 
2017 RSU (ROIC)
   
--
     
--
     
--
     
--
     
--
     
--
     
3,355
     
45,293
 
2017 RSU (EPS Growth)
   
--
     
--
     
--
     
--
     
--
     
--
     
3,355
     
45,293
 
Mark D. Williamson
                                                               
2011 Option
   
50,830
     
--
     
4.86
   
01/11/21
     
--
     
--
     
--
     
--
 
2014 Option
   
48.750
     
16,250
     
12.26
   
02/20/24
     
--
     
--
     
--
     
--
 
2015 RSU
   
--
     
--
     
--
     
--
     
5,466
     
73,791
     
--
     
--
 
2016 RSU (Time-Based)
   
--
     
--
     
--
     
--
     
5,858
     
79,083
     
--
     
--
 
2016 RSU (ROIC)
   
--
     
--
     
--
     
--
     
--
     
--
     
4,392
     
59,292
 
2016 RSU (EPS Growth)
   
--
     
--
     
--
     
--
     
--
     
--
     
4,393
     
59,306
 
2017 RSU (Time-Based)
   
--
     
--
     
--
     
--
     
7,382
     
99,657
     
--
     
--
 
2017 RSU (ROIC)
   
--
     
--
     
--
     
--
     
--
     
--
     
3,690
     
49,815
 
2017 RSU (EPS Growth)
   
--
     
--
     
--
     
--
     
--
     
--
     
3,691
     
49,829
 
52

 
Peter M. Loggenberg
                                                               
2015 RSU
   
--
     
--
     
--
     
--
     
6,598
     
89,073
     
--
     
--
 
2016 RSU (Time-Based)
   
--
     
--
     
--
     
--
     
6,834
     
92,259
     
--
     
--
 
2016 RSU (ROIC)
   
--
     
--
     
--
     
--
     
--
     
--
     
5,125
     
69,188
 
2016 RSU (EPS Growth)
   
--
     
--
     
--
     
--
     
--
     
--
     
5,125
     
69,188
 
2017 RSU (Time-Based)
   
--
     
--
     
--
     
--
     
8,528
     
115,128
     
--
     
--
 
2017 RSU (ROIC)
   
--
     
--
     
--
     
--
     
--
     
--
     
4,264
     
57,564
 
2017 RSU (EPS Growth)
   
--
     
--
     
--
     
--
     
--
     
--
     
4,264
     
57,564
 

(1) The 2011 option awards were granted on January 12, 2011 and vested as follows: 25% on January 11, 2012; 2013; 2014 and 2015, respectively.  The 2013 option award was granted to Mr. Upfill-Brown on May 29, 2013 and vests as follows: 25% on May 28, 2014; 2015, 2016 and 2017, respectively.  The 2014 option awards were granted on February 21, 2014, and vest as follows: 25% on February 21, 2015; 2016; 2017 and 2018, respectively.
(2) The 2015 restricted stock unit awards were granted on February 10, 2015 and include the following awards: 29,479 shares to Mr. Upfill-Brown, 8,482 shares to Ms. Cook, 10,932 shares to Mr. Williamson, and 13,194 shares to Mr. Loggenberg and vest as follows: 25% on February 9, 2016; 2017; 2018 and 2019, respectively.  The 2016 time-based restricted stock unit awards were granted on March 1, 2016 and vest as follows: one third on February 28, 2017; 2018; and 2019, respectively.  The 2017 time-based restricted stock unit awards were granted on June 16, 2017, and vest as follows: one third on June 16, 2018; 2019; and 2020, respectively.
(3) The market value of stock reported is calculated by multiplying the number of shares by the closing market price on December 29, 2017, the last day of trading on the NYSE for the 2017 fiscal year, which was $13.50 per share.
(4) The 2016 ROIC restricted stock unit awards and 2016 EPS Growth restricted stock unit awards were granted on March 1, 2016 and have a three-year performance period.  Payouts will range from 0% to 200% of the target award.  The number shown represents the payout assuming threshold performance.  For more information on these awards and the associated performance metrics, please see "—Executive Compensation Program Design—Long-Term Incentive," above.
(5) The 2017 ROIC restricted stock unit awards and 2017 EPS Growth restricted stock unit awards were granted on June 16, 2017, and have a three-year performance period.  Payouts will range from 0% to 200% of the target award.  The number shown represents the payout assuming threshold performance.  For more information on these awards and the associated performance metrics, please see "—Executive Compensation Program Design—Long-Term Incentive," above.

2017 Option Exercises and Stock Vested

The following table presents information concerning NEO option awards that were exercised and stock awards that vested during the fiscal year ended December 31, 2017.

53

   
Option awards
   
Stock awards
 
Name of Executive
 
Number of shares acquired on exercise
(#)
   
Value realized on exercise
($)
   
Number of shares acquired on vesting
(#)
   
Value realized on vesting
($)1
 
Simon Upfill-Brown
   
-
     
-
     
18,020
   
$
211,693
 
S. Sami Ahmad
   
-
     
-
     
-
    $
-
 
Connie J. Cook
   
-
     
-
     
4,782
   
$
56,317
 
Mark D. Williamson
   
-
     
-
     
5,662
   
$
66,870
 
Peter M. Loggenberg
   
-
     
-
     
6,715
   
$
79,354
 

(1)
Amounts reflected in this column are based on the closing price of the Company's common stock on the date or dates of vesting for each NEO's restricted stock award.

No Pension Benefits for 2017

Although we do maintain qualified retirement plans for certain employees, none of our current NEOs participate in any plan that provides for specified retirement payments or benefits, such as tax-qualified defined benefit plans or supplemental executive retirement plans.

Potential Payments upon Termination or Change in Control

Mr. Loggenberg Employment Arrangements

The Company entered into an Employment Contract ("Employment Contract") and Severance Agreement and Covenant Not to Compete, Solicit and Disclose ("Severance Agreement") with Peter M. Loggenberg on October 1, 2014.  Effective March 7, 2018, Mr. Loggenberg's Employment Agreement was amended to reflect his appointment to Chief Sustainability Officer. The Employment Contract may be terminated for or without "good cause."  Upon a dismissal or termination of employment other than for good cause, the Company will pay a cash severance to Mr. Loggenberg in an amount equal to one year of his then annual base salary (excluding bonuses, grants of stock and/or stock options, profit sharing, benefits, and perquisites).  The cash severance shall be payable in six (6) equal monthly installments.

As used in Mr. Loggenberg's Employment Contract, "good cause" means his commission of a crime involving moral turpitude, embezzling any funds or property of the Company or commission of any other dishonest act towards the Company, or the Company's determination that he was under the influence of alcohol or illegal drugs during working hours.

Restricted Stock Units and Option Awards

The following table shows how unvested restricted stock units and option grants are treated upon a change in control and/or termination of employment.
 
54


Change in Control
Double trigger vesting
Death and Disability
Pro rata vesting for restricted stock, options and performance shares
Involuntary Termination Without Cause
Unvested restricted stock and stock options are forfeited and all performance awards expire and terminate
Retirement
Pro rata vesting for restricted stock and options, as well as pro rata vesting for performance awards based on actual performance, subject to minimum 6 month service requirement after grant

The table below discloses the amount of compensation and/or other benefits due to the NEOs in the event of a change in control or their termination of employment, assuming such change in control or termination of employment occurred on December 31, 2017.   These values are considered to be our best estimates of values potentially due to our NEOs but actual values could not be determined until an actual termination of employment or a change in control event were to occur.

Name of Executive
 
Change in Control
   
Termination Without Cause 1
   
Termination Due to Death or Disability
   
Retirement
 
Simon Upfill-Brown
                       
   RSU Acceleration 2
 
$
1,642,545
   
$
--
   
$
275,639
   
$
275,639
 
   Option Acceleration 3
 
$
37,200
   
$
--
   
$
32,104
   
$
32,104
 
   TOTAL
 
$
1,679,745
   
$
--
   
$
307,743
   
$
307,743
 
S. Sami Ahmad
                               
   RSU Acceleration 2
 
$
190,175
   
$
--
   
$
17,279
   
$
17,279
 
Connie J. Cook
                               
   RSU Acceleration 2
 
$
418,163
   
$
--
   
$
72,265
   
$
72,265
 
   Option Acceleration 3
 
$
14,570
   
$
--
   
$
12,575
   
$
12,575
 
   TOTAL
 
$
432,733
   
$
--
   
$
84,840
   
$
84,840
 
Mark D. Williamson
                               
   RSU Acceleration 2
 
$
470,772
   
$
--
   
$
84,323
   
$
84,323
 
   Option Acceleration 3
 
$
20,150
   
$
--
   
$
17,390
   
$
17,390
 
   TOTAL
 
$
490,922
   
$
--
   
$
101,713