Mr. Price has served as a governor since our inception. Mr. Price's term as a governor will expire at the 20212024 annual meeting. Mr. Price currently serves as a member of the Audit, Compensation and Nominating Committees.Committee. Mr. Price served as vice president from the inception of the Company until May 2007, and until recently served as secretary.
Since 1980, Mr. Price has been the managing partner and is currently vice president of Price Cattle Ranch LLP, a cattle operation. Since 1997, he has been the managing partner and is currently the president of Missouri River Feeders LLP, a feedlot and diversified farm. He also serves as a governor of Dakota Beef Growers, LLC, a specialized beef operation, and is a governor of Sunnyside Feeds, LLC, a custom feed plant. Mr. Price is also a governor of North Dakota Sow Center LLLP, a 10,000 head ISO wean facility. Mr. Price is a member of multiple associations, including the North Dakota Stockmen's Association, the National Cattlemen's Beef Association, and the Great Bend Irrigation District, and has served on the Missouri Slope Irrigation Board of Governors and served as chairman of the North Dakota Feeder Council.
Mr. Bachmeier has served as the Company's Chief Executive Officer since July 2010 and has been involved in the ethanol industry for the past twenty-eightthirty-one years. He has served as a Plant Manager of Morris Ag Energy and Chief Marketing Manager of United Ethanol Sales. He was instrumental in the design, formation and construction of DENCO, LLC and was the major role player for the acquisition of Morris Ag Energy. Mr. Bachmeier has held various board positions with many industry trade groups including the Renewable Fuels Association and the Minnesota Coalition for Ethanol. Mr Bachmeier currently serves on the board for the Renewable Fuels Marketing Group and the North Dakota Ethanol Council, and is the current President of the North Dakota Ethanol Producers Association. Mr. Bachmeier serves at the pleasure of the Board until his earlier resignation or removal and pursuant to the terms of his employment contract.
Ms. Johnson has served as the Company's Chief Financial Officer since April 2013. She is a Certified Public Accountant who operated her own tax preparation service for the last sixnine years where she prepared tax returns and provided other financial services for her clients. Ms. Johnson was also the Accounting Assistant and then Controller for the Theodore Roosevelt Medora Foundation since August 2004 where she prepared financial statements, supervised other accounting staff and performed other accounting related duties. Ms. Johnson serves at the pleasure of the Board until her earlier resignation or removal.
Mr. Willett has served as the Company's Chief Operating Officer since June 2016. Prior to becoming the COO he served as the Company's Maintenance Manager since March 2013. Mr. Willett was a General Foremen for Industrial Contractors Inc. for eight years prior to beginning his employment with the Company. Mr. Willett serves at the pleasure of the Board until his earlier resignation or removal.
Ryan Wiege, Grain Merchandiser - Age 3538
Mr. Wiege has served as the Company's Grain Merchandiser since December 2008 and currently serversserves on our Risk Management Committee. Prior to his employment with the Company he worked at the Bobcat Company in Bismarck as an Assembly Mechanic for four years. Mr. Wiege serves at the pleasure of the Board until his earlier resignation or removal.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
For purposes of our governors, governor nominees, management and members who beneficially own 5% or more of the membership units, beneficial ownership is determined in accordance with the rules of the SEC. Except as indicated by footnote, a person named in the tables below has sole voting and sole investment power for all membership units beneficially owned by that person. In addition, unless otherwise indicated, all persons named below can be reached at Red Trail Energy, LLC at 3682 Highway 8 South, P.O. Box 11, Richardton, ND 58652.
There are no persons known by management that hold thehave beneficial ownership of 5% or more of the outstanding membership units as of January 24, 2020.27, 2023.
SECURITY OWNERSHIP OF OUR BOARD OF GOVERNORS, MANAGEMENT AND OUR NOMINEES
As of January 24, 2020,27, 2023, members of our management, the Board and our nominees own membership units as follows:
| | | | | | | | | | | | | | | | | | | | |
Title of Class | | Name of Beneficial Owner | | Amount and Nature of Beneficial Ownership | | Percent of Class |
Membership Units | | Ronald Aberle, Governor and Nominee | | 502,920(1) | | 1.25% |
Membership Units | | Mike Appert, Governor | | 1,345,000(2) | | 3.35% |
Membership Units | | Ambrose Hoff, Governor and Nominee | | 780,000(3) | | 1.94% |
Membership Units | | Frank Kirschenheiter, Governor | | 100,000 | | * |
Membership Units | | Syd Lawler, Governor | | 205,000(4) | | * |
Membership Units | | Robert Mauch, Nominee | | 100,000 | | * |
Membership Units | | Sid Mauch, Governor | | 66,500(5) | | * |
Membership Units | | Anthony Mock | | 15,000(6) | | * |
Membership Units | | William Price, Governor | | 400,000(7) | | * |
Membership Units | | Gerald Bachmeier, CEO | | 1,624,500(8) | | 4.05% |
Membership Units | | Jodi Johnson, CFO | | — | | —% |
Membership Units | | Ryan Wiege, Grain Merchandiser | | — | | —% |
TOTAL: | | Governors/Officers/Nominees as a Group | | 5,138,920 | | 12.80% |
(*) Designates less than one percent ownership.
|
| | | | | | |
Title of Class | | Name of Beneficial Owner | | Amount and Nature of Beneficial Ownership | | Percent of Class |
Membership Units | | Ronald Aberle, Governor and Nominee | | 402,920(1) | | * |
Membership Units | | Tony Aman, Nominee | | 25,000 | | * |
Membership Units | | Mike Appert, Governor | | 1,345,000(2) | | 3.35% |
Membership Units | | Ambrose Hoff, Governor and Nominee | | 660,000(3) | | 1.64% |
Membership Units | | Frank Kirschenheiter, Governor | | 100,000 | | * |
Membership Units | | Sid Mauch, Governor | | 21,000(4) | | * |
Membership Units | | Anthony Mock, Governor | | 15,000(5) | | * |
Membership Units | | William Price, Governor | | 400,000(6) | | * |
Membership Units | | Gerald Bachmeier, CEO | | 1,624,500(7) | | 4.05% |
Membership Units | | Jodi Johnson, CFO | | — | | —% |
Membership Units | | Dustin Willett, COO | | — | | —% |
Membership Units | | Ryan Wiege, Grain Merchandiser | | — | | —% |
TOTAL: | | Governors/Officers/Nominees as a Group | | 4,593,420 | | 11.44% |
| |
(*) | Designates less than one percent ownership. |
| |
(1) | Includes 202,920 units owned jointly with Mr. Aberle's spouse. Additionally, 200,000 units are held by Aberle Farms of which Mr. Aberle is a partner and of which Mr. Aberle disclaims beneficial ownership. |
| |
(2)
| Includes 375,000 units which Mr. Appert owns jointly with his spouse and 100,000 units held directly by his son of which Mr. Appert disclaims beneficial ownership. Additionally, 160,000 units are held by Appert Acres, Inc., of which Mr. Appert is a partial owner and of which Mr. Appert disclaims beneficial ownership and 210,000 units are held by Appert Farms, Inc., of which Mr. Appert is a partial owner and of which Mr. Appert disclaims beneficial ownership. |
| |
(3)
| Includes 360,000 units owned jointly with Mr. Hoff's spouse. Additionally, 300,000 units are held by Richardton Development Company, of which Mr. Hoff serves as an officer and of which Mr. Hoff disclaims beneficial ownership. |
(4) Includes 222,920 units owned jointly with Mr. Aberle's spouse. Additionally, 260,000 units are held by Aberle Farms of which Mr. Aberle is a partner and of which Mr. Aberle disclaims beneficial ownership, and 20,000 units are held by Old Ten Investment, of which Mr. Aberle is a partner and of which Mr. Aberle disclaims beneficial ownership.
(2) Includes 375,000 units which Mr. Appert owns jointly with his spouse and 100,000 units held directly by his son of which Mr. Appert disclaims beneficial ownership. Additionally, 160,000 units are held by Appert Acres, Inc., of which Mr. Appert is a partial owner and of which Mr. Appert disclaims beneficial ownership and 210,000 units are held by Appert Farms, Inc., of which Mr. Appert is a partial owner and of which Mr. Appert disclaims beneficial ownership.
(3) Includes 480,000 units owned jointly with Mr. Hoff's spouse. Additionally, 300,000 units are held by Richardton Development Company, of which Mr. Hoff serves as an officer and of which Mr. Hoff disclaims beneficial ownership.
(4) Includes 105,000 units owned jointly with Mr. Lawler's spouse.
(5) Includes 65,500 units owned jointly with Mr. Mauch's spouse.
| |
(5)(6) Includes 15,000 units owned jointly with Mr. Mock's spouse. (7) Includes 300,000 units which Mr. Price owns jointly with his brother and 100,000 units held jointly with his brother and mother. (8) Includes 1,624,500 units owned by RTSB, LLC of which Mr. Bachmeier is a principal owner and of which Mr. Bachmeier disclaims beneficial ownership.
| Includes 15,000 units owned jointly with Mr. Mock's spouse. |
| |
(6)
| Includes 300,000 units which Mr. Price owns jointly with his brother and 100,000 units held jointly with his brother and mother. |
| |
(7)
| Includes 1,624,500 units owned by RTSB, LLC of which Mr. Bachmeier is a principal owner and of which Mr. Bachmeier disclaims beneficial ownership. |
BOARD OF GOVERNORS' MEETINGS AND COMMITTEES
The Board generally meets once per month. The Board held eleven regularly scheduled meetings and twono special meetings during the fiscal year ended September 30, 2019.2022. Each governor attended at least 75% of the meetings of the Board during the fiscal year ended September 30, 2019.2022.
The Board does not have a formalized process for holders of membership units to send communications to the Board. The Board feels this is reasonable given the accessibility of our governors. Members desiring to communicate with the Board are free to do so by contacting a governor. The names of our governors are listed on the Company's website at www.redtrailenergyllc.com/investors/board_of_directorshttps://redtrailenergy.com/fccp-board-directors-20592 or are available by calling the Company's office at (701) 974-3308.
The Board does not have a policy with regard to governors' attendance at annual meetings. Last year, all seven governors attended the Company's annual meeting. Due to this high attendance record, it is the view of the Board that such a policy is unnecessary.
Governor and Nominee Independence
All of our governors and nominees are independent, as defined by our Audit Committee Charter. In evaluating the independence of our governors and nominees, we considered the following factors: (i) the business relationships of our governors and nominees; (ii) positions our governors and nominees hold with other companies; (iii) family relationships between our governors
and nominees and other individuals involved with the Company; (iv) transactions between our governors and nominees and the Company; and (v) compensation arrangements between our governors and nominees and the Company.
Policy Regarding Employee, Officer and Director Hedging
We do not have a policy prohibiting our directors, officers or employees from purchasing financial instruments that are designed to hedge or offset any decrease in the market value of the Company's membership units held by such persons. As a limited liability company, we are required to restrict the transfers of our membership units in order to preserve our partnership tax status. Our membership units may not be traded on any established securities market or readily traded on a secondary market (or the substantial equivalent thereof). Because there is no public market for our units, it is the view of the Board that such a policy is unnecessary.
Board Leadership Structure and Role In Risk Oversight
The Company is managed by a Chief Executive Officer that is separate from the Chairman of the Board. The Board has determined that its leadership structure is effective to create checks and balances between the executive officers of the Company and the Board. The Board is actively involved in overseeing all material risks that face the Company. The Board administers its oversight functions by reviewing the operations of the Company, by overseeing the executive officers' management of the Company, and through its risk management committee.
Code of Ethics
The Company has adopted a Code of Business Conduct that applies to all of our employees, officers and governors, and a Code of Ethics for Senior Financial Officers that applies to our Chief Executive Officer, Chief Financial Officer Chief Operating Officer and Grain Merchandiser and other persons performing similar functions. The Code of Business Conduct and Code of Ethics are available on the Investors section of our website at www.redtrailenergyllc.com/investors/how_to_invest.https://redtrailenergy.com/fccp-how-invest-20588.
Committees
The Board has four standing committees: the Audit Committee, Compensation Committee, Nominating Committee and Risk Management Committee. Each committee member attended at least 75% of the committee meetings for all committees on which they served.
Audit Committee
The Audit Committee of the Board operates under a charter adopted by the Board on December 22, 2010. A copy of our Audit Committee charter is posted on our website at www.redtrailenergyllc.com/investors/how_to_invest.https://redtrailenergy.com/fccp-how-invest-20588. Under the charter, the Audit Committee must have at least three members. Our Audit Committee members are Ronald Aberle, Ambrose Hoff and William Price.
Syd Lawler. The chairperson of the Audit Committee is Mr. Aberle. Our Audit Committee currently does not have an individual designated as a financial expert and has communicated this to the Nominating Committee for their consideration as they review potential nominees for the Board. The reason the Audit Committee does not have a financial expert is that none of our current governors qualify as a financial expert. Since the Company is not registered with a national securities exchange, the Audit Committee is exempt from the independence listing standards required by such national securities exchanges. Our Audit Committee charter requires a majority of our committee members to be independent as defined in the Audit Committee charter. All three members of our Audit Committee are independent as required by our Audit Committee charter.
The Audit Committee held fivefour meetings during the fiscal year ended September 30, 2019.2022. Each audit committee member attended at least 75% of the audit committee meetings during the fiscal year ended September 30, 2019.2022.
Audit Committee Report
The Audit Committee delivered the following report to the Board of the Company on December 18, 2019.16, 2022. The following report of the Audit Committee shall not be deemed to be incorporated by reference in any previous or future documents filed by the Company with the Securities and Exchange Commission under the Securities Act of 1933 or the Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates the report by reference in any such document.
The Audit Committee reviews the Company's financial reporting process on behalf of the Board. Management has the primary responsibility for the financial statements and the reporting process. The Company's independent auditors are responsible for expressing an opinion on the conformity of the audited financial statements to generally accepted accounting principles. The
Audit Committee reviewed and discussed with management the Company's audited financial statements as of and for the fiscal year ended September 30, 2019.2022. The committee has discussed with Eide Bailly LLP, its independent accountants, the matters required to be discussed under Public Company Accounting Oversight Board ("PCAOB") Auditing Standard No. 61, as amended Communications with Audit Committee (AS61)(SAS 61). The committee has received from the independent auditors written disclosures regarding the auditors' independence required by PCAOB and the Independence Rule 3526, Communication with Audit Committees Concerning Independence, and has discussed with the independent auditors, the independent auditors' independence. The committee has considered whether the provision of services by Eide Bailly LLP not related to the audit of the financial statements referred to above and to the reviews of the interim financial statements included in the Company's Forms 10-Q are compatible with maintaining Eide Bailly LLP independence.
Based on the reviews and discussions referred to above, the Audit Committee recommended to the Board that the audited financial statements referred to above be included in the Company's annual report on Form 10-K for the fiscal year ended September 30, 2019.2022.
Audit Committee
Ronald Aberle, Chairman
Ambrose Hoff
William Price Syd Lawler
Independent Registered Public Accounting Firm
The Audit Committee has selected Eide Bailly LLP as the independent registered public accountants for the fiscal year October 1, 20192022 to September 30, 2020.2023. A representative of Eide Bailly LLP is expected to be presentrepresented at the 20202023 Annual Meeting to respond to questions from the members and will have an opportunity to make a statement if they desire.
Audit Fees
The aggregate fees billed to the Company by our independent registered public accountants, Eide Bailly LLP, during our 20192022 and 20182021 fiscal years are as follows:
| | | | | | | | | | | | | | |
Category | | Fiscal Year | | Eide Bailly Fees |
Audit Fees(1) | | 2022 | | 90,696 | |
| | 2021 | | 85,177 | |
Audit- Related Fees | | 2022 | | — | |
| | 2021 | | — | |
Tax Fees(2) | | 2022 | | 18,264 | |
| | 2021 | | 17,514 | |
All Other Fees | | 2022 | | — | |
| | 2021 | | — | |
(1)Audit Fees. This category includes the fees and out-of-pocket expenses for professional services rendered by the principal accountant for the audit of the Company's annual financial statements and review of financial statements included in the Company's Form 10-Q or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements. |
| | | | | | |
Category | | Fiscal Year | | Eide Bailly Fees |
Audit Fees(1) | | 2019 | | $ | 85,756 |
|
| | 2018 | | 91,021 |
|
Audit- Related Fees | | 2019 | | — |
|
| | 2018 | | — |
|
Tax Fees(2) | | 2019 | | 24,072 |
|
| | 2018 | | 16,898 |
|
All Other Fees | | 2019 | | — |
|
| | 2018 | | — |
|
(2) Tax Fees. This category consists of fees for tax compliance, tax advice and tax planning. | |
| Audit Fees. This category includes the fees and out-of-pocket expenses for professional services rendered by the principal accountant for the audit of the Company's annual financial statements and review of financial statements included in the Company's Form 10-Q or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements.
|
| |
(2)
| Tax Fees. This category consists of fees for tax compliance, tax advice and tax planning.
|
The Board is required to pre-approve all audit and non-audit services performed by the Company's independent auditor to assure that the provision of such services does not impair the auditor's independence. All audit and non-audit services performed by the Company's independent auditor during 2021 and 2022 were pre-approved by the Board. The Board will not authorize the independent auditor to perform any non-audit service which independent auditors are prohibited from performing under the rules and regulations of the Securities and Exchange Commission or the Public Company Accounting Oversight Board. The Board may delegate its pre-approval authority to one or more of its governors, but not to management. The governor or governors to whom such authority is delegated shall report any pre-approval decisions to the Board at its next scheduled meeting.
Compensation Committee
The Company's standing Compensation Committee consists of all members of the Board. Sid Mauch serves as the chairman of the Compensation Committee. The Compensation Committee has the overall responsibility for approving and evaluating the Company's governorgovernors' and Chief Executive Officer's compensation. Each member of the Compensation Committee is independent pursuant to the independence standard included in the Company's Audit Committee charter. The Compensation Committee has delegated to the Chief Executive Officer the authority to set compensation for lower executive officers, including the Company's Chief Financial Officer, Chief Operating Officer and Grain Merchandiser, and also the authority to implement compensation plans, policies and programs consistent with the Company's philosophy and objectives. The Compensation Committee has not engaged compensation consultants or any other person to assist in determining or recommending the amount or form of executive or governor compensation, but would consider doing so in those situations where it felt such an engagement was warranted or appropriate.
The Compensation Committee does not operate under a charter and is exempt from the independence listing standards because the Company's securities are not listed on a national securities exchange or listed in an automated inter-dealer quotation system or a national securities association or to issuers of such securities. The Compensation Committee held one meeting during the fiscal year ended September 30, 20192022 and each member of the Compensation Committee attended the meeting.
For additional information on the responsibilities and activities of the compensation committees,committee, including the process for determining executive compensation; see the section of this proxy statement entitled "Compensation Discussion and Analysis."
Nominating Committee
The Nominating Committee of the Board consists of Mike Appert, Frank Kirschenheiter, Sid Mauch, Anthony MockSyd Lawler and William Price. Mr. Appert serves as chairman of the Nominating Committee. Each member of the Nominating Committee is independent
pursuant to the independence standard included in the Company's Audit Committee charter. The Nominating Committee held one meeting during the fiscal year ended September 30, 20192022 and each member of the Nominating Committee attended the meeting. The Nominating Committee does not operate under a written charter.
Governor Nominations Policy
Our Nominating Committee will consider governor candidates recommended by members.members in accordance with the Company's Operating Agreement. Members interested in submitting the name of a candidate for consideration as governor should send a letter to the Secretary of the Company, P.O. Box 11, 3682 Highway 8 South, Richardton, ND 58652, and specify that the letter should be forwarded to the chairman of the Nominating Committee. The Board has not yet adopted a formal policy regarding qualifications of governor candidates and we do not have a policy regarding considering diversity in governor nominees. In evaluating governor nominees, the nominatingNominating Committee and the Board considers a variety of factors, including the appropriate size of the Board; our needs with respect to the particular talents and experience of our governors; the knowledge, skills and experience of nominees, includingincluding: experience in the ethanol, corn or feed industries, finance, administration or public service, in light of prevailing business conditions and the knowledge, skills and experience already possessed by other members of the Board; experience with accounting rules and practices; and the desire to balance the benefit of continuity with the periodic injection of the fresh perspectiveperspectives provided by new Board members. To date, we have not engaged third parties to identify or evaluate or assist in identifying potential nominees, although we reserve the right in the future to retain a third party search firm, if necessary.
On July 31, 2008, the Board adopted an Amended and Restated Operating Agreement, which provided that members must give advance notice to the Company of any business that they propose to bring before an annual meeting or of any person that they propose be nominated as a governor. Under the advance notice provision, to be timely, a member's notice must be received at the principal executive offices of the Company not less than 60 days nor more than 90 days prior to the anniversary date of the immediately preceding annual meeting of members. With regard to governor nominations, the notice must also set forth (a) the name and address of the member who intends to make the nomination, (b) the name, age, business address and, if known, residence address of each person so proposed, (c) the principal occupation or employment of each person so proposed for the past five years, (d) the number of membership units of the Company beneficially owned by each person so proposed and the earliest date of acquisition of any such membership units, (e) a description of any arrangement or understanding between each person so proposed and the member(s) making such nomination with respect to such person's proposal for nomination and election as a governor and actions to be proposed or taken by such person if elected a governor; and (f) the written consent of each person so proposed to serve as a governor if nominated and elected as a governor.
For the 20202023 Annual Meeting, the Nominating Committee evaluated the qualifications and performance of two incumbent governors, Ronald Aberle and Ambrose Hoff, whose terms as Group I governors will expire at the 20202023 Annual Meeting, and our non-incumbent nominee Tony Aman, and who were each recommended by members of the Company. In addition, the Nominating Committee received a nomination for Robert Mauch, who was recommended by members of the Company. Based upon these evaluations, the Nominating Committee nominated Mr. Aberle, Mr. AmanHoff and Mr. HoffRobert Mauch for election as governors at the 20202023 Annual Meeting. The Nominating Committee did not receive any other nominations.
Risk Management Committee
The Risk Management Committee of the Board consists of Ronald Aberle, Mike Appert, and Sid Mauch and Anthony Mock.Mauch. Mr. Appert serves as chairman of the Risk Management Committee. The Risk Management Committee is involved in setting the direction for the Company in relation to its corn and ethanol hedging strategies. The Risk Management Committee met sixty-fivefifty-six times during our fiscal year ended September 30, 20192022 and each committee member attended at least 75% of the committee meetings.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Board has adopted a written policy requiring all governors, officers and employees, and their immediate family members, to notify the Board about any transaction, of any size, with the Company. The Board is responsible for enforcing this policy. Some of our governors, officers and employees and their immediate family members have sold corn to the Company or purchased E85 or distillers grains from the Company. These purchases and sales were made on terms available to all parties that do business with the Company, and were as follows for our 20192022 fiscal year:
Ronald Aberle, a governor and nominee, and a company owned in part by Mr. Aberle, sold corn to the Company in an amount equal to $1,799,845$662,959 during our fiscal year ended September 30, 2019.2022.
Mike Appert, a governor, and various companies owned in part by Mr. Appert, sold corn to the Company in an amount equal to $1,972,503$8,928,292 and had E85 purchases in an amount equal to $5,078$24,400 during our fiscal year ended September 30, 2019.2022.
Ambrose Hoff, a governor, and nominee, sold corn to the Company in an amount equal to $134,921$434,771, received land rent for the CCS project of $7,456, and had E85 purchases of $1,573$1,126 during our fiscal year ended September 30, 2019.2022.
Anthony Mock, a governor, and a company owned in part by Mr. Mock, sold corn to the Company in an amount equal to $300,507 during our fiscal year ended September 30, 2019.
Gerald Bachmeier, the Company's Chief Executive Officer, and a company owned in part by Mr. Bachmeier, had E85 purchases in an amount equal to $610 and distillers purchases in an amount equal to $14,969 during our fiscal year ended September 30, 2019.
William Price, a governor, and a company owned in part by Mr. Price, had distillers purchases in an amount equal to $82,324$861,909 during our fiscal year ended September 30, 2019.2022.
Ryan Wiege, the Company's Grain Merchandiser, had E85 purchases in an amount equal to $1,270$1,247 during our fiscal year ended September 30, 2019.2022.
Dustin Willett, the Company's Chief Operating Officer, had E85 purchases in an amount equal to $1,085 during our fiscal year ended September 30, 2019.
The Board reviews all transactions with related parties, as that term is defined by Item 404 of SEC Regulation S-K, or any transaction in which related persons have an indirect interest. The Company's Code of Business Conduct and Code of Ethics also includes a written policy governing related party transactions, that applies to all of our employees, officers and governors. The Board believes these transactions were no less favorable to the Company than the Company could receive from an independent third party.
Robert Mauch who is a nominee is the brother of Sid Mauch who serves as a governor.
COMPENSATION OF GOVERNORS AND EXECUTIVE OFFICERS
Compensation Discussion and Analysis
Overview
Throughout this proxy statement, the individuals who serve as our Chief Executive Officer, Chief Financial Officer, Chief Operating Officer and Grain Merchandiser are referred to as the "executive officers". The Compensation Committee has responsibility for establishing, implementing and regularly monitoring adherence to the Company's compensation philosophy and objectives.
In setting compensation, the Compensation Committee took into account the member vote at our 20172020 annual member meeting called the "Say-on-Pay," where the Company's members overwhelming voted to endorse the Company's system of compensating its executive officers.
Compensation Philosophy and Objectives
Our compensation programs are designed to achieve the following objectives:
•Attract, retain and motivate highly qualified and talented executives who will contribute to the Company's success by reason of their ability, ingenuity and industry;
•Link compensation realized to the achievement of the Company's short and long-term financial and strategic goals;
•Align management and member interests by encouraging long-term member value creation;
•Maximize the financial efficiency of the compensation program from tax, accounting, cash flow and dilution perspectives; and
•Support important corporate governance principles and comply with best practices.
Compensation Committee Procedures
The Compensation Committee is responsible for determining the nature and amount of compensation for the Company's Chief Executive Officer and has delegated to the Chief Executive Officer the authority to set compensation for lower executive officers, including the Company's Chief Financial Officer Chief Operating Officer and Grain Merchandiser. The Compensation Committee has also delegated to the Chief Executive Officer the authority to implement compensation plans, policies and programs consistent with the Company's philosophy and objectives.
The Compensation Committee recommended that the Company enter into an employment agreement with the Company's Chief Executive Officer effective July 8, 2010. On April 26, 2017,January 1, 2023, the agreement was extended until December 31, 2022.2023. The employment agreement provides for an annual base salary and a year-end bonus based on the Company's net income.
Base Salary
The evaluation of the Chief Executive Officer's employment agreement was based on the scope of the chief executive's roles, responsibilities, experience levels and performance, and taking into account competitive market compensation paid by comparable companies for similar positions.
Bonus
In addition to the base salary, the evaluation of the Chief Executive Officer's employment agreement also included the potential to earn a year-end bonus based on the Company's net income. The Compensation Committee believes that the alignment of bonus potential with the Company's financial performance is consistent with the Company's compensation philosophy and objectives.
Accounting and Tax Treatment of Awards
None of our executive officers, governors, or employees receives compensation in excess of $1,000,000 and therefore the entire amount of their compensation is deductible by the Company as a business expense. Certain large executive compensation awards are not tax deductible by companies making such awards. None of our compensation arrangements are likely to reach this cap in the foreseeable future.
Compensation Committee Report
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based upon this review and discussion, the Board determined that the Compensation Discussion and Analysis should be included in this proxy statement.
Compensation Committee
Sid Mauch, Chair
Ronald Aberle
Mike Appert
Ambrose Hoff
Frank Kirschenheiter
Anthony Mock Syd Lawler
William Price
Compensation Committee Interlocks and Insider Participation
None of the members of the executive compensation committee is or has been an employee of the Company. There are no interlocking relationships between the Company and other entities that might affect the determination of the compensation of our executive officers.
Summary Compensation Table
The following table sets forth all compensation paid or payable by the Company during the last three fiscal years, or such shorter period that they were covered by this requirement, to our Chief Executive Officer, Chief Financial Officer Chief Operating Officer and Grain Merchandiser.
We did not have any compensatory security option plan or other plan for long term compensation for our executive officer or governors in place as of September 30, 2019.2022. Further, as of September 30, 2019,2022, none of our governors or executive officers had any options, warrants, or other similar rights to purchase securities of the Company.
Compensation of Named Executive Officers
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position | | Fiscal Year | | Salary | | Bonus | | Other | | Total |
Gerald Bachmeier, CEO(1) | | 2022 | | $ | 240,000 | | | $ | 64,420.00 | | | $ | 10,985 | | | $ | 315,405 | |
| | 2021 | | 236,154 | | | — | | | 10,042 | | | 246,196 | |
| | 2020 | | 228,462 | | | 282 | | | 10,042 | | | 238,786 | |
Jodi Johnson, CFO | | 2022 | | 149,423 | | | 26,292 | | | — | | | 175,715 | |
| | 2021 | | 135,000 | | | 2,500 | | | — | | | 137,500 | |
| | 2020 | | 134,423 | | | 307 | | | — | | | 134,730 | |
Ryan Wiege, Grain Merchandiser(3) | | 2022 | | 119,731 | | | 11,292 | | | — | | | 131,023 | |
| | 2021 | | 113,945 | | | 2,500 | | | — | | | 116,445 | |
| | 2020 | | 112,904 | | | 307 | | | — | | | 113,211 | |
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Name and Principal Position | | Fiscal Year | | Salary | | Bonus | | Other | | Total |
Gerald Bachmeier, CEO(1) | | 2019 | | $ | 221,923 |
| | $ | 307 |
| | $ | 9,335 |
| | $ | 231,565 |
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| | 2018 | | 212,308 |
| | 42,131 |
| | 8,774 |
| | 263,213 |
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| | 2017 | | 196,154 |
| | 29,519 |
| | 7,414 |
| | 233,087 |
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Jodi Johnson, CFO | | 2019 | | 129,770 |
| | 807 |
| | — |
| | 130,577 |
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| | 2018 | | 127,000 |
| | 10,307 |
| | — |
| | 137,307 |
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| | 2017 | | 120,000 |
| | 10,000 |
| | — |
| | 130,000 |
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Dustin Willett, COO(2) | | 2019 | | 127,904 |
| | 807 |
| | 4,467 |
| | 133,178 |
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| | 2018 | | 129,000 |
| | 4,307 |
| | 3,246 |
| | 136,553 |
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| | 2017 | | 125,000 |
| | 2,000 |
| | 4,797 |
| | 131,797 |
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Ryan Wiege, Grain Merchandiser(3) | | 2019 | | 110,385 |
| | 1,307 |
| | 4,123 |
| | 115,815 |
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| | 2018 | | 109,000 |
| | 5,307 |
| | 3,635 |
| | 117,942 |
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| | 2017 | | 105,000 |
| | 5,000 |
| | 3,906 |
| | 113,906 |
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(1)Mr. Bachmeier was appointed CEO effective July 8, 2010 and is paid pursuant to Mr. Bachmeier's employment agreement - see additional information under "Employment Agreements with Governors or Officers." Mr. Bachmeier previously served as CEO of the Company from June 16, 2009 to December 31, 2009. The other compensation Mr. Bachmeier received in 2020, 2021 and 2022 was the excess medical insurance benefit he receives compared to the reimbursement the Company makes for its other employees.
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(1)
| Mr. Bachmeier was appointed CEO effective July 8, 2010 and is paid pursuant to Mr. Bachmeier's employment agreement - see additional information under "Employment Agreements with Governors or Officers." Mr. Bachmeier previously served as CEO from June 16, 2009 to December 31, 2009. The other compensation Mr. Bachmeier receives is the excess medical insurance benefit he receives compared to the reimbursement the Company makes for its other employees. |
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(2)
| The other compensation Mr. Willett received was for excess vacation hours paid out. The Company allows employees to carryover up to 80 hours of vacation each year and then pays out the excess at the end of each year. |
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(3)
| The other compensation Mr. Wiege received was for excess vacation hours paid out. The Company allows employees to carryover up to 80 hours of vacation each year and then pays out the excess at the end of each year. |
Employment Agreements with Governors or Officers
The Company entered into an employment agreement with Gerald Bachmeier for the position of Chief Executive Officer of the Company effective July 8, 2010. The term of this agreement terminates on December 31, 20222023 and is subject to customary termination provisions. The employment agreement provides for an annual base salary as well as a year-end bonus based on the Company's net income.
We do not have any employment agreements with any other officer or governor.
CEO Pay Ratio
As a result ofIn accordance with SEC rules, adopted by the SEC, we are disclosing the following information regarding the relationship of the annual total compensation of our employees and the annual total compensation of our Chief Executive Officer for the fiscal year ended September 30, 2019:2022:
•The median of the annual total compensation of all of our employees (excluding the Chief Executive Officer) was $78,198.$83,672.
•The annual total compensation of our Chief Executive Officer, as reported on our Summary Compensation Table, was $231,565.$315,405.
•Based on this information, the ratio of our Chief Executive Officer's annual total compensation to our median employee was 2.97:3.77:1.00.
Our employee population as of September 30, 20192022 (the date we selected to identify our median employee), consisted of 4657 individuals, with all of these individuals located in the United States. We identified our median employee based on the annual total compensation paid during the fiscal year ended September 30, 2019,2022, calculated consistent with the disclosure requirements of executive compensation under Item 402(c)(2)(x) of Regulation S-K.
In addition, for purposes of reporting the ratio of annual total compensation of the Chief Executive Officer to the median employee, both the Chief Executive Officer and median employee’s total compensation paid during the fiscal year ended September 30, 2019,2022, were calculated consistent with the disclosure requirements of executive compensation under Item 402(c)(2)(x) of Regulation S-K. The Company has not made any of the adjustments permissible by the SEC, nor have any material assumptions or estimates been made to identify the median employee or to determine annual total compensation.
GOVERNOR COMPENSATION
Pursuant to our governor compensation policy, we currently pay governor fees as follows:
•$1,000.00 per Board meeting
•$400.00 per Audit Committee meeting or Audit Committee conference call
•$400.00 per Risk Management Committee meeting or Risk Management Committee conference call
•$400.00 per Nominating Committee meeting
•$100.00500.00 for meetings attended by conference call, with the exception of Audit Committee and Risk Management Committee conference calls
The compensation policy also provides for reimbursement to governors for all out-of-pocket costs and mileage for travel to and from meetings and other locations to perform these tasks.
In the fiscal year ended September 30, 2019,2022, the Company had incurred an aggregate of $161,918$146,305 in governor fees and related expenses.
The table below shows the compensation paid to each of our governors for the fiscal year ended September 30, 20192022.
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Name | | Fiscal Year | | Fees Earned or Paid in Cash(1) | | All Other Compensation(2) | | Total Compensation |
Ronald Aberle | | 2022 | | $ | 33,500 | | | $ | — | | | $ | 33,500 | |
Mike Appert | | 2022 | | 33,300 | | | — | | | 33,300 | |
Ambrose Hoff | | 2022 | | 10,100 | | | — | | | 10,100 | |
Frank Kirschenheiter | | 2022 | | 8,500 | | | — | | | 8,500 | |
Syd Lawler | | 2022 | | 6,300 | | | — | | | 6,300 | |
Sid Mauch | | 2022 | | 31,500 | | | 1,005 | | | 32,505 | |
Anthony Mock | | 2022 | | 13,300 | | | — | | | 13,300 | |
William Price | | 2022 | | 8,800 | | | — | | | 8,800 | |
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(1)Includes reimbursement for regular board meetings as well as committee meetings. |
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Name | | Fiscal Year | | Fees Earned or Paid in Cash(1) | | All Other Compensation(2) | | Total Compensation |
Ronald Aberle | | 2019 | | $ | 34,400 |
| | $ | 125 |
| | $ | 34,525 |
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Mike Appert | | 2019 | | 31,700 |
| | 815 |
| | 32,515 |
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Ambrose Hoff | | 2019 | | 9,200 |
| | 435 |
| | 9,635 |
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Frank Kirschenheiter | | 2019 | | 8,500 |
| | 599 |
| | 9,099 |
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Sid Mauch | | 2019 | | 32,300 |
| | 1,740 |
| | 34,040 |
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Anthony Mock | | 2019 | | 31,900 |
| | 809 |
| | 32,709 |
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William Price | | 2019 | | 9,200 |
| | 195 |
| | 9,395 |
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(2)Includes reimbursement for mileage incurred in connection with services rendered to the Board and for services rendered to the Company.
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(1)
| Includes reimbursement for regular board meetings as well as committee meetings. |
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(2)
| Includes reimbursement for mileage incurred in connection with services rendered to the Board and for services rendered to the Company. |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's officers and governors, and persons who own more than 10% of a registered class of the Company's equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, governors and greater than 10% beneficial owners are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file. To the Company's knowledge, based solely on a review of the copies of such reports furnished to the Company and written representations from our officers and governors, all Section 16(a) filing requirements were complied with during the fiscal year ended September 30, 2019.2022.
ANNUAL REPORT AND FINANCIAL STATEMENTS
The Company's annual report to the Securities and Exchange Commission on Form 10-K, including the financial statements and the notes thereto, for the fiscal year ended September 30, 2019,2022, accompanies this proxy statement.
These proxy materials are being delivered pursuant to the Internet Availability of Proxy Materials rules promulgated by the SEC. The Company will provide each member solicited a printed or e-mail copy of the Proxy Statement, Proxy Card and Annual Report on Form 10-K without charge within three business days of receiving a written request. Members should direct any requests for a printed or e-mail copy of the proxy materials as follows: (i) by calling our office at (701) 974-3308 or toll free at (855) 974-3308; (ii) by written request at Red Trail Energy, LLC at P.O. Box 11, Richardton, ND 58652; (iii) by e-mail at proxy@redtrailenergy.com; or (iv) on our website at www.redtrailenergy.com, on or before March 6, 20209, 2023 to facilitate timely delivery. The Company will provide each member solicited a copy of the exhibits to the Annual Report on Form 10-K upon written request and payment of specified fees. The 20192021 Annual Report on Form 10-K complete with exhibits and Proxy Statement are also available from the SEC at 6432 General Green Way, Mail stop 0-5, Alexandria, VA 22312-2413, by e-mail at foiapa@sec.gov or fax at (703) 914-2413 or through the EDGAR database available from the SEC's Internet site (www.sec.gov).
RED TRAIL ENERGY, LLC
PROXY SOLICITED ON BEHALF OF OUR BOARD OF GOVERNORS
FOR THE ANNUAL MEETING OF MEMBERS TO BE HELD ON MARCH 20, 202023, 2023
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Member Name: | | Vote by Mail or Facsimile: |
| | 1) Read the Proxy Statement |
Number of Units: | | 2) Mark your vote in the appropriate boxes below |
| | 3) Sign and date the proxy card |
| | 4) Return the proxy card via fax to (701) 974-3309 or by mail to the Company at P.O. Box 11, Richardton, ND 58652 by 4:00 p.m. on Wednesday, March 26, 2020.22, 2023. |
The undersigned hereby appoints Anthony MockSid Mauch and William Price,Mike Appert, and each or either of them, with the power of substitution, as proxies to represent the undersigned and to vote as designated below, at the 20202023 Annual Meeting of Members to be held on Friday, Thursday, March 20, 2020, at the Ramada-Bismarck, 1400 E. Interchange Avenue, Bismarck, North Dakota 58501,23, 2023, and at adjournment thereof, on any matters coming before the meeting. Said proxies will vote on the proposals set forth in the notice of the annual meeting and proxy statement as specified on this card. If a vote is not specified, said proxies will register the votes as withheld for each of the nominees. For Proposal Two the proxies will vote FOR Ronald Aberle and Ambrose Hoff, with the votes split equally between the nomineesSay-on-Pay and FOREVERY THREE YEARS Proposal Two.for the frequency of the Say-on-Pay. If any other matters properly come before the 20202023 Annual Meeting, said proxies will vote on such matters in accordance with the recommendations of the Board except to the extent that such matters would include substantive matters presented by the Company that would otherwise be required to be separately set out by the Company on the proxy card.
PROPOSAL ONE. Elect two (2) governors to the Board of Governors. Each will serve for a term of three years. To withhold authority to vote for any individual nominee, strike a line through the nominee's name in the list below.
You are entitled to give a nominee as many votes as is equal to the number of units you own multiplied by 2 (the number of governors to be elected), or you may distribute your votes among the nominees as you see fit. Write in the number of votes you are allocating to any nominee below. The Board recommends you vote your units for Ronald Aberle and Ambrose Hoff.
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Ronald Aberle | | | | Votes |
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Ambrose Hoff | | | | Votes |
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Tony AmanRobert Mauch | | | | Votes |
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PROPOSAL TWO. Advisory vote on executive compensation (Say-On-Pay). (Check One Box)
PROPOSAL THREE. Advisory vote on the frequency of the Say-On-Pay. (Check One Box)
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Every Year | | Every Two Years | | Every Three Years | | Abstain |
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This proxy card, if signed and returned, will be voted in accordance with your instructions above and authorizes the proxies to take action in their discretion upon other matters that may properly come before the meeting. The proxies cannot vote your units unless you sign and return this card.
Please sign exactly as your name appears on your unit certificate. When units are held by joint tenants, both should sign. When signing as attorney, as executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by president or other authorized officer. If a partnership, please sign in partnership name by authorized person.
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Signature of Unit Holder | | | Signature of Unit Holder | |
Dated: | | | Dated: | |