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 x | ||
Filed by a party other than the Registrant o | ||
Check the appropriate box: | ||
o | Preliminary Proxy Statement | |
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
x | Definitive Proxy Statement | |
o | Definitive Additional Materials | |
o | Soliciting Material Under § 240.14a-12 | |
GRANITE FALLS ENERGY, LLC | ||
(Name of Registrant as Specified In Its Charter) | ||
Payment of Filing Fee (Check the appropriate box): | ||
x | No fee required. | |
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GRANITE FALLS ENERGY, LLC
15045 Highway 23 S.E.
Granite Falls, MN 56241-0216
NOTICE OF 2014 ANNUAL MEETING OF MEMBERS
To Be Held On: Thursday, March 20, 2014
To our members:
The 2014 Annual Meeting of Members (the “2014 Annual Meeting”) of Granite Falls Energy, LLC (the “Company”) will be held on Thursday, March 20, 2014, at Prairie's Edge Casino Resort, 5616 Prairie's Edge Lane, Granite Falls, Minnesota. Registration for the meeting will begin at 8:00 a.m. The 2014 Annual Meeting will commence at 9:00 a.m. The purposes of the meeting are to:
• | Cast an advisory vote on executive compensation; |
• | Elect three (3) Governors to serve on the Company's Board of Governors. The three (3) elected Governors will serve until the 2017 Annual Meeting of Members and until their successors are elected; |
• | Transact such other business as may properly come before the 2014 Annual Meeting or any adjournments thereof. |
The foregoing items of business are more fully described in the proxy statement accompanying this notice. If you have any questions regarding the information in the proxy statement or regarding completion of the enclosed proxy card or how to vote in person at the meeting, please call the Company at (320) 564-3100.
Only members listed on the Company's records at the close of business on February 28, 2014 are entitled to notice of the 2014 Annual Meeting and to vote at the 2014 Annual Meeting and any adjournments thereof. For your proxy card to be counted in advance of the meeting, it must be received by the inspector of elections, Christianson & Associates, PLLP, 302 SW 5th Street, Willmar, MN 56201, no later than 5:00 p.m. on Wednesday, March 19, 2014.
All members are cordially invited to attend the 2014 Annual Meeting in person. However, to assure the presence of a quorum, the board of governors requests that you promptly sign, date and return the enclosed proxy card, which is solicited by the board of governors, whether or not you plan to attend the meeting. The proxy card will not be used if you attend and vote at the meeting in person. You may fax the enclosed proxy card to Christianson & Associates, Attention: Christina Parsley, at (320) 235-5962 or mail it to Christianson & Associates, PLLP, Attention: Christina Parsley, at 302 SW 5th Street, Willmar, MN 56201, using the enclosed envelope.
By order of the board of governors,
/s/ Paul Enstad
PAUL ENSTAD
Chairman
Granite Falls, Minnesota
February 28, 2014
Granite Falls Energy, LLC
15045 Highway 23 S.E.
Granite Falls, MN 56241-0216
Proxy Statement
Annual Meeting of Members
Thursday, March 20, 2014
The enclosed proxy is solicited by the board of governors of Granite Falls Energy, LLC (the “Company”, “we”, “us”, “our”) for use at the 2014 Annual Meeting of members of the Company to be held on Thursday, March 20, 2014 (the “2014 Annual Meeting”), and at any adjournment thereof. The 2014 Annual Meeting will be held at Prairie's Edge Casino Resort, 5616 Prairie's Edge Lane, Granite Falls, Minnesota. Registration for the meeting will begin at 8:00 a.m. The 2014 Annual Meeting will commence at approximately 9:00 a.m.
This solicitation is being made by mail, however, the Company may also use its officers, governors, and employees (without providing them with additional compensation) to solicit proxies from members in person or by telephone, facsimile or letter. Distribution of this proxy statement and a proxy card is scheduled to begin on or about February 28, 2014.
We have organized this proxy statement into three sections in order to set forth our information in a straightforward and understandable way. You should read all three sections.
• | Questions and Answers about the 2014 Annual Meeting: this section provides answers to frequently asked questions regarding the purpose of the Annual Meeting and meeting procedures. |
• | Proxy Proposals: this section provides information and detailed explanation of the proposals to be voted on at the 2014 Annual Meeting. |
• | Required Information: this section provides information that is required by law to be included in the Company's Proxy Statement, which has not been included in Sections I and II. |
1
SECTION I - QUESTIONS AND ANSWERS ABOUT THE 2014 ANNUAL MEETING AND VOTING
Q: | Why did I receive this proxy statement? |
A: | The board of governors is soliciting your proxy to vote at the 2014 Annual Meeting because you were a member of the Company as of the close of business on the record date, and are entitled to vote at the meeting. |
Q: | Who can attend the 2014 Annual Meeting? |
A: | All members as of the close of business on the record date may attend the 2014 Annual Meeting. |
Q: | What is the record date for the 2014 Annual Meeting? |
A: | February 28, 2014. |
Q: | How many membership units are outstanding on the record date? |
A: | On February 28, 2014, there were 30,606 membership units outstanding and entitled to vote at the Meeting. |
Q: | What am I voting on? |
A: | You are voting on two proposals: |
Proposal 1: Members will provide an advisory vote on executive compensation, commonly known as a “Say-on-Pay” proposal. Detailed information regarding executive compensation is provided below under “SECTION III - REQUIRED INFORMATION, EXECUTIVE OFFICERS AND EXECUTIVE COMPENSATION.” The Board of Governors recommends a vote FOR Proposal 1.
Proposal 2: The election of three governors. The following persons have been nominated by the nominating committee to fill the three open seats on the board of governors: Kenton Johnson, Shannon Johnson, Julie Oftedahl-Volstad, Michael Lund, Bruce LaVigne, and Clifton Gipp. Detailed information on each nominee is provided below at “SECTION II - PROPOSALS TO BE VOTED ON, ELECTION OF GOVERNORS.” The board of governors believes all six of the nominees are well qualified to serve as a governor of the Company and is not recommending any group of six particular nominees for election as governors.
Q: | What is the Say-on-Pay Vote? |
A: | The Say-on-Pay vote is an advisory vote by the Members whereby you can either endorse or not endorse the Company's system of compensating its executive officers. |
While we are asking our Members to indicate their support for the compensation of our executive officers, the Say-on-Pay vote is not binding on the Board. The Board intends to take the vote into consideration in making future compensation awards to the Company's executive officers. The Company may also use the Say-on-Pay vote to engage members in a dialogue regarding the Company’s system of compensating its executive officers.
Q: | How many votes do I have? |
A: | Members are entitled to one vote for each membership unit owned by such member as of the close of business on the record date on any matter which may properly come before the meeting. |
Q: | What are the voting requirements for the proposals? |
A: | Proposal 1: The affirmative vote of the holders of a majority of the Units present, either in person or by proxy, and entitled to vote is required for approval of Proposal 1: Say-On-Pay. You may vote “FOR,” “AGAINST” or “ABSTAIN” on Proposal 1. |
Proposal 2: In the election of governors, the three (3) nominees receiving a plurality vote of the membership units will be elected. The three (3) nominees receiving the greatest number of votes will be elected as governors regardless of whether an individual nominee receives a majority of the votes cast.
Q: | What is the effect of an abstention? |
A: | Abstentions will be counted when determining whether a quorum is present. Abstentions will have the following effect: |
Proposal 1: The Say-On-Pay vote requires the affirmative vote of the holders of a majority of the total number of membership units outstanding. Therefore, if you abstain from voting on Proposal 1, it has the same effect as a vote AGAINST Proposal 1.
Proposal 2: Abstentions for Governor elections will not be counted either for or against any nominee because Governors are elected by plurality vote, meaning that the person receiving the most votes will be elected.
Q: | What constitutes a quorum? |
A: | As of the record date, we had 30,606 membership units issued and outstanding. The presence of members holding 40 percent of the total outstanding membership units constitutes a quorum. Accordingly, we need 12,243 membership units represented at the meeting to constitute a quorum. If you submit a properly executed proxy, then you will be considered part of the quorum even if you are not physically present at the meeting. |
Q: | How do I vote? |
A: | Membership units can be voted only if the holder of record is present at the 2014 Annual Meeting either in person or by proxy. You may vote using either of the following methods: |
• | Proxy card. The enclosed proxy card is a means by which a member may authorize the voting of his, her, or its membership units at the 2014 Annual Meeting. The membership units represented by each properly executed proxy card will be voted at the 2014 Annual Meeting in accordance with the member's directions. The Company urges you to specify your choices by marking the appropriate boxes on your enclosed proxy card. After you have marked your choices, please sign and date the enclosed proxy card and return it in the enclosed envelope or fax it to Christianson & Associates, Attention: Christina Parsley, at (320) 235-5962. If you sign and return the proxy card without specifying any choices, your membership units will be voted FOR Proposal 1 and ABSTAIN for all nominees with respect to Proposal 2. |
• | In person at the 2014 Annual Meeting. All members may vote in person at the 2014 Annual Meeting. |
Q: | What can I do if I change my mind after I vote my units? |
A: | You may revoke your proxy by: |
• | Voting in person at the 2014 Annual Meeting; or |
• | Giving written notice of revocation that is received by Christianson & Associates, PLLP by 5:00 p.m. on Wednesday, March 19, 2014. |
Q: | What happens if I mark too few or too many boxes on the proxy card? |
A: | Proposal 1: If you do not mark any choices on the proxy card, then the proxy will vote your units FOR Proposal 1. |
Proposal 2: If you do not mark any choices on the proxy card, then the proxy will vote your units ABSTAIN for all nominees with respect to Proposal 2.
You may wish to vote for only one or two of the governor nominees. In this case, your vote will only be counted for the governor candidates you have selected.
If you vote for more than three nominees, then the proxy will vote your units ABSTAIN for all nominees with respect to Proposal 2.
If you mark contradicting choices on the proxy card, such as both FOR and ABSTAIN for a candidate, your votes will not be counted with respect to the governor candidate for which you marked contradicting choices. However, each fully executed proxy card will be counted for purposes of determining whether a quorum is present at the 2014 Annual Meeting. If any other matters are properly presented to the 2014 Annual Meeting for action, including voting to adjourn or postpone
the annual meeting to solicit additional proxies with respect to any proposal or for any other reason, the Proxy will vote the proxy cards (which confer discretionary authority to vote on such matters) in accordance with his best judgment.
Q: | Do I have dissenters' rights to any matter acted upon during the Annual Meeting? |
A: | No. Neither the advisory vote on executive compensation nor the election of governors is a circumstance in which the Minnesota Limited Liability Company Act or the Company's member control agreement provides members with dissenters' rights. |
Pursuant to the Minnesota Limited Liability Company Act, dissenters' rights are available to members under the following circumstances: (1) an amendment to the articles of organization which materially and adversely affects the rights or preferences of the membership interests of the dissenting member; (2) a sale, lease, transfer, or other disposition of property and assets requiring member approval; (3) a plan of merger; (4) a plan of exchange; (5) a plan of conversion; or (6) any other action taken to which the articles of organization, member control agreement, bylaws, or a resolution approved by the board of governors directs that dissenting members may obtain payment for their membership units. In addition, the Company's member control agreement does not provide for any dissenters' rights for our members.
Q: | Who will count the vote? |
A: | The Company has hired the accounting firm of Christianson & Associates, PLLP to count the ballots. |
Q: | How do I nominate a candidate for election as a governor or make a proposal for next year's annual meeting? |
A: | This question is answered in the section of this Proxy Statement entitled "SECTION III - REQUIRED INFORMATION; MEMBER PROPOSALS FOR 2014 ANNUAL MEETING." |
Q: | Who is paying for this proxy solicitation? |
A: | The entire cost of this proxy solicitation will be borne by the Company. The cost will include the cost of supplying necessary additional copies of the solicitation material for beneficial owners of membership units held of record by brokers, dealers, banks and voting trustees and their nominees and, upon request, the reasonable expenses of such record holders for completing the mailing of such material and report to such beneficial owners. |
FORWARD-LOOKING STATEMENTS
This proxy statement contains forward-looking statements that involve future events, our future performance and our expected future operations and actions. In some cases you can identify forward-looking statements by the use of words such as “may,” “will,” “should,” “anticipate,” “believe,” “expect,” “plan,” “future,” “intend,” “could,” “estimate,” “predict,” “hope,” “potential,” “continue,” or the negative of these terms or other similar expressions. These forward-looking statements are only our predictions and involve numerous assumptions, risks and uncertainties, including, but not limited to those described in this proxy statement and our other Securities and Exchange Commission filings.
Our actual results or actions could and likely will differ materially from those anticipated in the forward-looking statements for many reasons, including the reasons described in this proxy statement. We are not under any duty to update the forward-looking statements contained in this proxy statement. We cannot guarantee future results, levels of activity, performance or achievements. We caution you not to put undue reliance on any forward-looking statements, which speak only as of the date of this proxy statement. You should read this proxy statement and the documents that we reference in this proxy statement, completely and with the understanding that our actual future results may be materially different from what we currently expect. We qualify all of our forward-looking statements by these cautionary statements.
SECTION II - PROPOSALS TO BE VOTED UPON
PROPOSAL ONE
SAY-ON-PAY
We believe that our compensation policies and procedures are reasonable based on the size and complexity of the Company, consistent with the Company’s budget, financial performance, and local labor market conditions, and are strongly aligned with the long-term interests of our members. We believe our compensation program supports our business initiatives and provides incentives to high performance.
We urge you to read the “SECTION III - REQUIRED INFORMATION; EXECUTIVE OFFICER AND EXECUTIVE COMPENSATION" section of this proxy statement, including the Company's Compensation Discussion and Analysis section, for details on the Company's executive compensation, including the Company’s compensation philosophy and objectives and the 2013 compensation of our executive officers. This advisory member vote, commonly known as “Say-on-Pay,” gives you as a member the opportunity to endorse or not endorse our executive officer compensation program and policies. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our Named Executive Officers and the philosophy, policies and practices described in this proxy statement. Accordingly, we ask our Members to vote “FOR” the following resolution at the Meeting:
RESOLVED, that the Members of Granite Falls Energy, LLC approve, on an advisory basis, the compensation of the Named Executive Officers as disclosed in Granite Falls Energy, LLC's proxy statement for the 2014 Annual Meeting of Members pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the compensation discussion and analysis, the compensation tables and any related material disclosed in this proxy statement.
Because your vote is advisory, it will not be binding upon the Board of Governors or the Compensation Committee. However, it will provide valuable information to us that the Compensation Committee will take into account when considering future executive compensation arrangements. We believe the "Say-on-Pay" proposal demonstrates our commitment to achieving a high level of total return for our Members.
Approval of this Proposal 1 requires the affirmative vote of the holders of a majority of the units present, in person or by proxy, and entitled to vote on this Proposal 1.
The Board of Governors Recommends
Members Vote FOR
Proposal 1: Advisory Vote on Executive Compensation
5
PROPOSAL TWO
ELECTION OF THREE GOVERNORS
Our current board of governors consists of eight (8) elected governors and one (1) Fagen, Inc. appointed governor. However, pursuant to an amendment to the Operating and Member Control Agreement adopted at the 2013 Annual Meeting, Fagen, Inc. no longer holds a right to designate one governor effective as of date of the 2014 Annual Meeting. At the 2014 Annual Meeting, the Fagen, Inc. designee will be deemed to have resigned and will be replaced with an at-large governor elected by the Company's members. Therefore, the Company will continue to have nine (9) governors, but all nine (9) governors will be elected by the plurality vote of members of the Company, including Fagen, Inc.
The nine (9) governor positions are divided into three classes. Three governors are to be elected by the members at the 2014 Annual Meeting and the terms of the six (6) remaining elected governors expire in either 2015 or 2016, respectively. The Company's current governors and their respective terms are as follows:
Term Expires 2014 | Shannon Johnson | Class I Governor |
David Thompson | Class I Governor | |
Kenton Johnson | Fagen, Inc. Appointed Governor | |
Term Expires 2015 | Paul Enstad | Class II Governor |
Marten Goulet | Class II Governor | |
Rod Wilkison | Class II Governor | |
Term Expires 2016 | Leslie Bergquist | Class III Governor |
Myron Peterson | Class III Governor | |
Dean Buesing | Class III Governor |
At the 2011 annual meeting, Shannon Johnson and David Thompson were elected to serve a three-year term until the 2014 annual meeting. At the 2012 annual meeting, Paul Enstad and Rod Wilkison were re-elected and Marten Goulet was elected to serve three-year terms until the 2015 annual meeting. At the 2013 annual meeting, Dean Buesing and Myron Peterson were re-elected and Leslie Bergquist was elected to serve three-year terms until the 2016 annual meeting.
The nominating committee of the board of governors has nominated Clifton Gipp, Kenton Johnson, Shannon Johnson, Bruce LaVigne, Michael Lund, and Julie Oftedahl-Volstad as nominees for the 2014 annual board of governors election. Two of these nominees, Kenton Johnson and Shannon Johnson, are incumbent governors. All nominees have indicated their willingness to serve as Governors if elected.
Except for the now-expired appointment right described above, we know of no arrangements or understandings between a governor or nominee and any other person pursuant to which he or she has been selected as a governor or nominee. There are no direct family relationships exist between any of the nominees, our governors, officers, or key employees of the Company. Kenton Johnson is Shannon Johnson's nephew.
The following table contains certain information with respect to the nominees for election to the board of governors at the 2014 Annual Meeting:
Name | Age | Year First Became a Governor (if applicable) | Term Expires (if applicable) |
Kenton Johnson | 25 | 2013 | 2014 |
Shannon Johnson | 52 | 2000 | 2014 |
Julie Oftedahl-Volstad | 59 | 2000 | 2013 |
Michael Lund | 47 | n/a | n/a |
Bruce LaVigne | 63 | n/a | n/a |
Clifton Gipp | 67 | n/a | n/a |
Biographical Information for Nominees
Clifton Gipp - Age 67, Nominee. Mr. Gipp served as Interim General Manager of Waconia Farm Supply from December 2012 to September 2013. He was the Construction Project Manager of UFC Brownton Grain Terminal from July 2011 to September 2012. He was General Manager of the Farm Supply division of Burnett Dairy Coop in Grantsburg, Wisconsin from March 2009 to March 2011. He served as Chief Operating Officer and Energy Division Manager of United Farmers Cooperative in Winthrop Minnesota. Mr. Gipp was the General Manager of Cannon Valley Cooperative in Northfield, Minnesota from 1998 to 2005. Mr. Gipp has a degree in Business Administration from University of Wisconsin, Eau Claire and an MBA from the University of St. Thomas, St. Paul. He serves as CEO of Waterford Warriors, a snowmobile club in Northfield, Minnesota.
Kenton Johnson - Age 25, Fagen, Inc. Appointed Governor and Nominee. In April 2013, Fagen, Inc. appointed Mr. Johnson to fill its appointed seat on the board of governors. Mr. Johnson currently raises corn and soybeans with his father south of Granite Falls, Minnesota. In May of 2007, Mr. Johnson started managing his own farming operation. In August of 2009, Mr. Johnson became Chief Executive Officer and shareholder of Prairie View Farms, Inc. Prairie View Farms has been a family owned and operated farming business since 1990. Mr. Johnson is a member of the Minnesota Corn Growers Association and the Minnesota Soybean Growers Association. Mr. Johnson served on the board at Heron Lake BioEnergy, LLC, an SEC-reporting company, from 2011 to 2013. He also serves on the boards of Platinum Ethanol, LLC and Bushmills Ethanol, Inc. He is a member of YME Hoops Club and Granite Falls Lutheran Church. Mr. Johnson received his B.S. in Agriculture Business Management from Southwest Minnesota State University.
Shannon Johnson - Age 52, At-Large Governor and Nominee. Mr. Johnson has served on the board of governors of the Company since its inception. Mr. Johnson has been farming in eastern Yellow Medicine County since 1979. He produces corn, soybeans and sugar beets. He is co-owner and secretary of a farrow to finish swine operation and currently serves as the Hazel Run Township clerk. He is a Yellow Medicine County Corn Growers Board member and a Soybean Growers member. Mr. Johnson also serves as a governor of Heron Lake BioEnergy, LLC, an SEC-reporting company.
Bruce LaVigne - Age 63, Nominee. Mr. LaVigne manages 2800 acres of commercial timber production lands in northern Minnesota. He serves as Retiring CEO of Lac Seul Airways, Ltd and CEO of 972974 Ontario Limited, a private equity mining and real estate company. He also serves as chairman of 1009167 Ontario Limited, a private investment holding company; Vice President of Boundary Waters Land and Timber, a private equity Minnesota real estate development and timber production company; Managing Director of Red Lake Resources Ltd, an Ontario private equity mineral exploration company; and Director of Finance of Numax Resources, Inc., a Minnesota private equity Mineral exploration company. Mr. LaVigne holds a private pilot license and a commercial Canadian pilot license.
Michael Lund - Age 47, Nominee. Mr. Lund is co-owner of Stony Run Farms, a 2800 acre corn and soybean farm near Montevideo. He also owns West Central Seeds, Inc., a sales agency for Pioneer Hi-Bred. He previously worked as an agronomist for Golden Harvest Seed Company. He serves as director and Secretary of Leenthrop Farmers Mutual Insurance Company. He is also President of the Congregation of Our Saviors Lutheran Church. Mr. Lund earned his B.S. decree in Agronomy and Ag Economics at the University of Minnesota, St. Paul, and he earned his Masters in Corn and Soybean Production at the University of Wisconsin, Madison.
Julie Oftedahl-Volstad - Age 59, Former At-Large Governor, Former Secretary and Nominee. Ms. Oftedahl-Volstad previously served on the board of governors of the Company since its inception until May 2013. She has been farming along the Yellow Medicine River near Hanley Falls, Minnesota since 1978 on a farm homesteaded in 1873 by her great-great-grandfather. She farms in partnership with her three brothers, principally growing corn, soybeans, and wheat. She and her husband, Elmo, have five children. She has a degree in Sociology from Southwest Minnesota State University. She is a member of Yellow Medicine County Corn Growers and Soybean Growers. She is an active member of Yellow Medicine Lutheran Church and currently serves on the church council. She is also on the board of Neighbors United Resource Center, a support organization.
Required Vote and Board Recommendation
The affirmative vote of a plurality of the membership voting interests is required to elect a nominee to the position of governor. The three nominees receiving the greatest number of votes will be elected as governors. If you do not submit a proxy card or attend the meeting, or if you abstain from voting, your vote will not be counted as a vote for or against any nominee.
YOUR BOARD BELIEVES ALL OF THE NOMINEES ARE WELL QUALIFIED TO SERVE AS A GOVERNOR OF THE COMPANY AND DOES NOT RECOMMEND ANY PARTICULAR GROUP OR INDIVIDUALS OF THE ABOVE NOMINEES FOR ELECTION AS GOVERNORS AT THE 2014 ANNUAL MEETING.
SECTION III - REQUIRED INFORMATION
GOVERNORS AND OFFICERS
Biographical Information for Non-nominee Governors
Leslie Bergquist - Age 54, At-Large Governor. Mr. Bergquist was first elected as an at-large governor in 2013. Mr. Bergquist is currently the owner and President of Bergquist Consulting Corporation, performing commercial and agricultural loan reviews and appraisal reviews. He also serves as a farm manager for Fagen Farms, LLC, which is an affiliate of Fagen, Inc., a bus driver for Bennett & Bennett Transportation, and works for Granite Falls Municipal Hospital and Manor in ambulance transport services. Prior to founding Bergquist Consulting Corporation in January 2012, Mr. Bergquist served as a senior credit analyst for Forstrom Bancorporation, Inc. from May 2007 through December 2011. He also previously worked at Yellow Medicine County Bank, holding the positions of President, Vice President, and director over the course of his tenure. Mr. Bergquist's community involvement includes current and previous involvement with the Minnesota Bankers Association, Minnesota Valley Antique Farm Power and Machinery Association, Granite Falls Kiwanis, Yellow Medicine East Dollars for Scholars, Steelesville Cemetery Association, City of Granite Falls Planning Commission, and Granite Falls Lutheran Church. He received his Bachelor's degree in Agronomy from the University of Minnesota. Mr. Bergquist also serves as an alternate governor of Heron Lake BioEnergy, LLC, an SEC-reporting company.
Dean Buesing - Age 61, At-Large Governor and Secretary. Mr. Buesing has served as a governor of the Company since 2009. Mr. Buesing and his brother have been farming near Granite Falls since 1973, raising corn and soybeans. Since 1980, he has served as president of Buesing Farms, Inc. He is also President of Buesing-Buesing, LLC, which is a farming operation formed in 2006. In 2007, Buesing Ag Partnership was formed, in which he is a partner with his brother and nephew. Mr. Buesing was a director of Minnesota Corn Processors, LLC, an ethanol production facility located near Marshall, Minnesota from 1998 to 2002. Minnesota Corn Processors, LLC was bought by Archer Daniels Midland in 2002. While a director of Minnesota Corn Processors, LLC, he also served on the long range planning and development committee. From 2007 to 2011, Mr. Buesing served as a director and secretary of SW Energy, LLC, a development stage ethanol production facility located near McCook, Nebraska. From 1992 to 2000, he was also a director and treasurer of Yellow Medicine Soybean Growers. He is also currently a member of the Minnesota Soybean and Corn Growers Associations. Mr. Buesing also serves as a governor of Heron Lake BioEnergy, LLC, an SEC-reporting company.
Paul Enstad - Age 54, At-Large Governor and Chairman of the Board of Governors. Mr. Enstad has served on the board of governors of the Company since its inception. Mr. Enstad has been farming near Granite Falls, Minnesota since 1978. He and his two brothers currently farm together as a partnership and raise corn and soybeans. He served on the board of directors of Farmers Cooperative Elevator Company, a member of the Company, for 15 years until 2011. Mr. Enstad also serves as chairman and as a governor of Heron Lake BioEnergy, LLC, an SEC-reporting company.
Marten Goulet - Age 34, At-Large Governor. Mr. Goulet was first elected as an at-large governor in 2012. Mr. Goulet is the Chief Financial Officer of Wagner Construction, Inc. Based in International Falls, Minnesota, Wagner Construction, Inc. is an underground utility and site development contractor with operations in Minnesota, North Dakota, Michigan, Arizona, and Canada. Prior to joining Wagner Construction, Inc., Mr. Goulet spent 8 years in the Twin Cities managing banking relationships and providing financial services to companies with annual revenues of $20 million to $1 billion, including construction, manufacturing, wholesaling, and service-related industries. Mr. Goulet serves on the board of KBB, LLC, a general contractor with operations in Minnesota and North Dakota. Mr. Goulet received his B.A. in Finance from Bemidji State University and his M.B.A. in Accounting from the University of St. Thomas in St. Paul. Mr. Goulet also serves as a governor of Heron Lake BioEnergy, LLC, an SEC-reporting company.
Myron D. Peterson - Age 69, At-Large Governor. Mr. Peterson was elected to the Board of Governors as an at-large governor in March of 2010. From 2002 until his election as an at-large governor, he served as our alternate at-large governor to act in the absence of an at-large governor. Mr. Peterson farms with his four brothers and their families in a family farm partnership called Peterson Partners established in 1972, growing approximately 3,300 acres of corn and soybeans in western Renville County, Minnesota. He served nine years as a director of the Minnesota Corn Growers Association Board. In 2003, he became a director of the Minnesota Corn Research and Production Council. Mr. Peterson has been a supervisor for Hawk Creek Township for the past 36 years and County Township secretary-treasurer for Renville County for 32 years.
Martin Seifert - Age 41, Alternate At-Large Governor. Mr. Seifert was appointed as the Company’s alternate at-large governor in May 2011. Mr. Seifert has served as the executive director of the Avera Marshall Foundation at Avera Marshall Regional Medical Center from October 2010 to December 2013. Mr. Seifert has also been a Realtor with Real Estate Retrievers since 2010. Prior to joining the Avera Marshall Foundation and Real Estate Retrievers, Mr. Seifert was a member of the Minnesota House of Representatives from 1996 to 2011. He also served as minority leader in the Minnesota House of Representatives from 2006 to 2009. Mr. Seifert graduated from Southwest Minnesota State University in 1995. Mr. Seifert currently resides in Marshall, Minnesota. He is currently a candidate for Governor of Minnesota.
David Thompson - Age 63, At-Large Governor. Mr. Thompson was first elected as an at-large governor in 2011 and prior to that, was designated to serve as the Company's at-large alternate governor from November 2009 to May 2011. For the past five years, Mr. Thompson has been president of Flolo-Thompson, Inc., a consulting firm serving value added agricultural plants in the design, development and operation of their business. Much of Mr. Thompson's consulting work focuses on transportation, logistics and marketing. Mr. Thompson is a graduate of the University of Minnesota. Prior to founding Flolo-Thompson, Inc., Mr. Thompson worked in varying capacities for Cargill, Bunge Corporation and the Burlington Northern Railway. Mr. Thompson also serves as an alternate governor of Heron Lake BioEnergy, LLC, an SEC-reporting company.
Rod Wilkison - Age 59, At-Large Governor, and Vice Chairman of the Board of Governors. Mr. Wilkison was initially appointed to an at-large board seat in December 2006 and elected as an at-large governor in 2007. Mr. Wilkison has served as a member of the Audit Committee since being elected as an at-large governor in 2007. Mr. Wilkinson serves as chairman of the Audit Committee for both Granite Falls Energy, LLC and Heron Lake BioEnergy, LLC. Mr. Wilkison has been the owner and chief executive officer of Wilkison Consulting Service since 1985. Wilkison Consulting Service provides financial consulting, tax preparation, and monthly accounting services for farmers and small businesses. Prior to starting his consulting business, Mr. Wilkison worked for two different banks for over eleven years and continues to work closely with several area banks on joint clients. Mr. Wilkison graduated from Pipestone Area Vocational Technical Institute with a degree in Agricultural Banking. Mr. Wilkison is certified by the Minnesota Department of Agriculture as a Farm Business Management Instructor. Mr. Wilkison also serves as vice-chairman and as a governor of Heron Lake BioEnergy, LLC, an SEC-reporting company.
Biographical Information on Executive Officers
Steve Christensen - Age 56, Chief Executive Officer. Mr. Christensen joined the Company in April 2012 as Chief Executive Officer and General Manager. From 2005 through December 2011, Mr. Christensen was Chief Executive Officer and General Manager of Western Wisconsin Energy, LLC, which owned and operated an ethanol plant in Boyceville, Wisconsin until its purchase by Big River Resources in December 2011. Mr. Christensen also has a family farm operation with his brother in southwest Iowa. Mr. Christensen holds a B.S. degree in Animal Science from Iowa State University and has completed some post graduate work in business.
Stacie Schuler - Age 41, Chief Financial Officer. Ms. Schuler joined the Company in July 2005 as Chief Financial Officer and Controller. Ms. Schuler worked for Cargill, Incorporated from 1997 to 2005. Ms. Schuler received her accounting degree through Southwestern Technical College in Granite Falls, Minnesota and Southwest State University in Marshall, Minnesota.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
As of February 28, 2014, the following beneficial owners owned or held 5% or more of our outstanding membership units:
Title of Class | Name and Address of Beneficial Owner | Amount and Nature of Beneficial Ownership | Percent of Class | |||||
Membership Units | Glacial Lakes Energy, LLC 301 20th Avenue SE Watertown, SD 57201 | 5,004 Membership Units | 16.35 | % | ||||
Membership Units | Fagen, Inc.(1) 501 W. Highway 212 P.O. Box 159 Granite Falls, MN 56241 | 3,925 Membership Units | 12.82 | % |
(1) | Leslie Bergquist, a governor, serves as a farm manager for Fagen Farms, LLC, an affiliate of Fagen, Inc., and therefore may also be considered a beneficial owner of these units. Kenton Johnson, a governor, was appointed to our board by Fagen, Inc., and therefore may also be considered a beneficial owner of these units. |
SECURITY OWNERSHIP OF MANAGEMENT AND NOMINEES
As of our fiscal year ended Thursday, October 31, 2013, we had no equity compensation plan in place and accordingly none of our governors or our executive officers have received our membership units or options to purchase such units as compensation.
As of February 28, 2014, members of our board of governors, nominees to our board of governors and executive officers own membership units as follows:
Title of Class | Name of Beneficial Owner(1) | Amount and Nature of Beneficial Ownership | Percent of Class | |||||
Membership Units | Paul Enstad(3) | 125 | units | * | % | |||
Membership Units | Steve Christensen | 0 | units | * | % | |||
Membership Units | Stacie Schuler | 5 | units | * | % | |||
Membership Units | Kenton Johnson(5) | 10 | units | * | % | |||
Membership Units | Shannon Johnson(6) | 125 | units | * | % | |||
Membership Units | Myron Peterson(7) | 60 | units | * | % | |||
Membership Units | Rod Wilkison | 62 | units | * | % | |||
Membership Units | Dave Thompson | 5 | units | * | % | |||
Membership Units | Dean Buesing(2) | 635 | units | 2.07 | % | |||
Membership Units | Marten Goulet(4) | 50 | units | * | % | |||
Membership Units | Martin Seifert | 0 | units | * | % | |||
Membership Units | Leslie Bergquist(1) | 15 | units | * | % | |||
TOTAL | 2.07 | % |
(*) | Indicates less than one percent (1%) ownership. | |||||||
1 | Does not include units owned by Fagen, Inc., an affiliate of an employer of Mr. Bergquist. | |||||||
2 | Includes 287 units owned directly through Dean J. Buesing Revocable Living Trust and 348 units owned indirectly through Barbara J. Buesing Revocable Living Trust with his wife. 550 of these units are pledged as security. | |||||||
3 | Includes 20 units owned by the Enstad Brothers Partnership and 5 units owned by the Enstad Family Partnership. Mr. Enstad is a partner of both entities. | |||||||
4 | Includes 10 units owned indirectly through Jasper Gerald Goulet, Marten Goulet’s son. | |||||||
5 | Does not include units owned by Fagen, Inc., which appointed Kenton Johnson to our board of governors. | |||||||
6 | Includes 5 units owned jointly with Willis Johnson, Shannon Johnson's father. | |||||||
7 | Includes 50 units owned by Peterson Partners, of which Mr. Peterson is a partner. |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities and Exchange Act of 1934, as amended (the “Exchange Act”), requires our officers and governors, and persons who own more than 10% of a registered class of our equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission (the “SEC”). Officers, governors and greater than 10% beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations from our officers and governors, all Section 16(a) filing requirements were complied with during the fiscal year ended October 31, 2013.
BOARD OF GOVERNORS' MEETINGS AND COMMITTEES
The board of governors generally meets once per month. The board of governors held twelve regularly scheduled meetings and five special meetings during the fiscal year ended October 31, 2013. All governors attended at least 75% of the aggregate of all meetings of the board of governors and all committees of the board on which he or she served during the fiscal year ended October 31, 2013.
The board of governors does not have a formalized process for holders of membership units to send communications to the board. The board of governors 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 via our website, fax, phone or in writing. The names of our governors are listed on the Company's website at www.granitefallsenergy.com.
The board of governors does not have a policy with regard to governors' attendance at annual meetings. Last year all of our governors attended the Company's annual meeting. Due to this high attendance record, it is the view of the board of governors that such a policy is unnecessary.
Governor Independence Standards
In determining independence, the board reviews whether governors have any material relationship with the Company. The board considers all relevant facts and circumstances. In assessing the materiality of a governor's relationship to the Company, the board considers the issues from the governor's standpoint and from the perspective of the persons or organizations with which the governor has an affiliation and is guided by the standards set forth by the SEC and NASDAQ. An independent governor must not have any material relationship with the Company, directly or as a partner, shareholder, or officer of an organization that has a relationship with the Company, or any relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a governor.
During our 2013 fiscal year, all of our governors and governor nominees were independent, as defined by NASDAQ Rule 5605(a)(2).
Code of Ethics
The board of governors has adopted a Code of Ethics that sets forth standards regarding matters such as honest and ethical conduct, compliance with the law, and full, fair, accurate, and timely disclosure in reports and documents that we file with the SEC and in other public communications. The Code of Ethics applies to all of our employees, officers, and governors, including our Chief Executive Officer and Chief Financial Officer. The Code of Ethics is available free of charge on written request to Granite Falls Energy, LLC, 15045 Highway 23 S.E., Granite Falls, Minnesota, 56241-0216.
Audit Committee
The Audit Committee of the board of governors operates under a charter adopted by the board of governors in the Fall of 2005. Our audit committee charter is available on our website at www.granitefallsenergy.com. Under the charter, the Audit Committee must have at least three members. Our audit committee members are Leslie Bergquist, Marten Goulet and Rod Wilkison The chairperson of the Audit Committee is Rod Wilkison.
The Audit Committee 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 of a national securities association or to issuers of such securities. However, our Audit Committee charter requires a majority of our committee members to be independent. All of the members of our Audit Committee are independent under the definition provided in our Audit Committee charter and the definition of independence provided by NASDAQ rules 5605(a)(2) and 5605(c)(2).
Rod Wilkison serves as our Audit Committee financial expert. Mr. Wilkison's experience as the owner and chief executive officer of Wilkison Consulting Service, which provides financial consulting, tax preparation, and monthly accounting services for farmers and small businesses, qualifies him to be the Audit Committee's financial expert.
The Audit Committee held four meetings during the fiscal year ended October 31, 2013.
Audit Committee Report
This is a report of the Audit Committee of the board of governors of the Company for the fiscal year ended October 31, 2013. 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 of governors. 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 October 31, 2013. The Audit Committee has discussed with Boulay PLLP, its independent auditors, the matters required to be discussed by Statement on Auditing Standards No. 61 Communication with audit committees, as amended, by the Auditing Standards Board of the American Institute of Certified Public Accountants and as adopted by the Public Company Accounting Oversight Board in Rule 3200T. The Audit Committee has received and reviewed the written disclosures and the letter to management from Boulay PLLP, as required by applicable requirements of the Public Company Accounting Oversight Board, and has discussed with the independent accountants the independent accountants' independence. The Audit Committee has considered whether the provision of services by Boulay PLLP, 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 Boulay PLLP's independence and concluded that the provision of such services is compatible with maintaining Boulay PLLP's independence.
Our audit committee members are Leslie Bergquist, Marten Goulet and Rod Wilkison. The chairperson of the Audit Committee is Rod Wilkison. Based on the reviews and discussions referred to above, the audit committee recommended to the board of governors 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 October 31, 2013.
Audit Committee
Leslie Bergquist
Marten Goulet
Rod Wilkison, Chair
Independent Registered Public Accounting Firm
The audit committee selected Boulay PLLP, as independent registered public accountants for the fiscal year November 1, 2013 to October 31, 2014. A representative of Boulay PLLP, is expected to be present at the 2014 Annual Meeting of members and will have an opportunity to make a statement if so desired. The representative is also expected to be available for questions from the members.
Audit Fees
The aggregate fees billed by the principal independent registered public accountants (Boulay PLLP) to the Company for the fiscal year ended October 31, 2013, and fiscal year ended October 31, 2012 are as follows:
Category | Fiscal Year | Fees | ||||||
Audit Fees(1) | 2013 | $ | 124,000 | |||||
2012 | $ | 110,000 | ||||||
Tax Fees(2) | 2013 | $ | 16,000 | |||||
2012 | $ | 16,000 | ||||||
All Other Fees(3) | 2013 | $ | 41,000 | |||||
2012 | $ | 37,000 |
(1) | The audit fees were incurred for the audit of the Company's annual consolidated financial statements included within Form 10-K and review of the financial statements included in the Company's quarterly reports on Form 10-Q, as well as services in connection with other statutory and regulatory filings or engagements for the fiscal years ended October 31, |
2013 and 2012. Due to the Company’s acquisition of a majority interest in Heron Lake BioEnergy, LLC during 2013, the Company was required to file consolidated financial statements for the fiscal year ended October 31, 2013.
(2) | The tax fees were billed for services rendered for tax compliance. The nature of the services comprising the tax fees was for year-end tax preparation of the partnership return and associated K-1's. |
(3) | The other fees were billed for services rendered for the Renewable Identification Number (RINs) agreed-upon procedures as well as other financial, tax, and operational related consulting. |
Prior to engagement of the principal independent registered public accountants to perform audit services for the Company, the principal accountant was pre-approved by our audit committee pursuant to Company policy requiring such approval.
One hundred percent (100%) of all audit services, audit-related services and tax-related services were pre-approved by our audit committee.
Nominating Committee
The nominating committee operates under a charter adopted by the board of governors in August 2007. In May 2013, we amended our nominating committee charter in May 2013 to eliminate the requirement that the committee include at least two members that had served on the nominating committee during the previous nominating committee cycle. Under the amended charter, the nominating committee must consist of at least four (4) members and may not have more than one (1) member who is not a governor of the Company. Our nominating committee charter is available on our website at www.granitefallsenergy.com.
Dean Buesing, Leslie Bergquist, Myron Peterson and Lee Uldbjerg currently serve as the Company's nominating committee. The chairperson of the nominating committee is Lee Uldbjerg, who is the principal of Uldbjerg Consulting LLC and not a member of our board of governors.
Neither the Company nor the nominating committee has historically engaged governor nomination consultants. However during fiscal 2013, the Company and the nominating committee engaged Uldbjerg Consulting LLC to help identify and evaluate potential director nominees. As part of the engagement, Uldbjerg Consulting LLC agreed to provide the services of Mr. Uldbjerg as nominating committee chair and that he would attend all meetings of the Company's nominating committee and attend board of governor meetings as requested by our board. In exchange for these services, we agreed to pay Uldbjerg Consulting LLC $250 per each nominating meeting attended by Mr. Uldbjerg plus travel expenses and mileage at IRS approved rates. In addition, we agreed that for any meetings that go beyond two (2) hours in duration or that dictate substantial preparation, the Company will pay Uldbjerg Consulting LLC a consulting fee of $75 per hour. For fiscal year 2013, we paid Uldbjerg Consulting LLC a total of $2,058.
The nominating committee 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 of a national securities association or to issuers of such securities. Nevertheless, each member of the nominating committee is independent under the NASDAQ definition of independence. In addition, our nominating committee charter requires at least one (1) of our committee members to be independent. Each member of our nominating committee is independent under our nominating committee charter.
During the fiscal year ended October 31, 2013, our nominating committee held six meetings for the purpose of selecting nominees for the election of governors at the 2014 Annual Meeting. Each of our nominating committee members attended at least 75% of the nominating committee meetings. Mr. Uldbjerg attended all meetings.
The nominating committee oversees the identification and evaluation of individuals qualified to become governors and recommends to the board of governors the governor nominees for each annual meeting of the members. The major responsibilities of the nominating committee are to:
• | Develop a nomination process for candidates to the board of governors; |
• | Establish criteria and qualifications for membership to the board of governors; |
• | Identify and evaluate potential governor nominees; |
• | Fill vacancies on the board of governors; and |
• | Recommend nominees to the board of governors for election or reelection. |
The following list represents the types of criteria the nominating committee takes into account when identifying and evaluating potential nominees:
• | Agricultural, business and financial background; |
• | Accounting experience; |
• | Community or civic involvement; |
• | Independence from the Company (i.e. free from any family, material business or professional relationship with the Company); |
• | Lack of potential conflicts with the Company; |
• | Examples or references that demonstrate a candidate's integrity, good judgment, commitment and willingness to consider matters with objectivity and impartiality; and |
• | Specific needs of the existing board relative to any particular candidate so that the overall board composition reflects a mix of talents, experience, expertise and perspectives appropriate to the Company's circumstances. |
Pursuant to the nominating committee's charter, the nominating committee may consider potential governor candidates recommended by members. Company members may submit recommendations for candidates to the Chairman of the nominating committee. All nominations must be submitted in writing along with a completed nominee questionnaire which includes the nominating member's name and contact information, a brief description of the candidate's business experience, civic involvement, education and such other information as the member submitting the recommendation believes is relevant to the evaluation of the candidate. All member recommendations for the election of governors at the 2015 Annual Meeting must be received by the Company no later than November 1, 2014.
The nominating committee of the board of governors has nominated Kenton Johnson, Shannon Johnson, Julie Oftedahl-Volstad, Michael Lund, Bruce LaVigne, and Clifton Gipp as nominees for the 2014 annual board of governors election. Two of these governors, Kenton Johnson and Shannon Johnson, are incumbent nominees.
Compensation Committee
The board of governors has not established a committee specifically entitled “compensation committee.” Rather, the entire board of governors serves as the Company's compensation committee. The board, when fulfilling the duties of a compensation committee, does not operate under a charter.
The compensation committee has the overall responsibility for approving and evaluating the Company's governor and executive compensation plans, policies and programs. The compensation committee does not delegate any of its authority or obligations; however, the compensation committee does consider recommendations from the board of governors' three member executive committee. Neither the Company nor the compensation committee has historically engaged compensation consultants to assist in determining or recommending the amount or form of executive or governor compensation, but would consider doing so in those situations where either the Company or the compensation committee felt it was warranted or appropriate. The board of governors carried out its function as a compensation committee during three meetings held in the fiscal year ended October 31, 2013.
Although the board has acted as a compensation committee for the Company and no separate compensation committee has been formed to date, a compensation committee would be 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 of a national securities association. As discussed below, all of our governors are independent as defined by NASDAQ Rule 5605(a)(2).
Compensation Committee Interlocks and Insider Participation
None of the members of the compensation committee is or has been an employee of the Company. There are no interlocking relationships between our Company and other entities that might affect the determination of the compensation of our executive officer.
MEMBER PROPOSALS FOR 2015 ANNUAL MEETING
We currently intend to hold our 2015 Annual Meeting during the last half of March 2015. Under the rules of the SEC, including Rule 14a-8 of the Securities Exchange Act of 1934, any member proposal to be considered by us for inclusion in the proxy material for the 2015 Annual Meeting must be received by the Secretary of the Company, 15045 Highway 23 S.E., Granite Falls, MN 56241-0216, no later than one-hundred and twenty (120) days prior to when we mailed the proxy materials for the preceding year’s annual meeting. Accordingly, we determined that members must submit proposals related to the 2015 Annual Meeting of Members to the Company by October 31, 2014. The submission of a proposal does not guarantee its inclusion in the proxy statement or presentation at the annual meeting unless certain securities laws requirements are met. Proposals submitted later than October 31, 2014 will be considered untimely and will not be included in our proxy statement for the 2015 Annual Meeting. We suggest that any proposal be submitted by certified mail - return receipt requested.
Pursuant to our nominating committee charter, members of the Company may submit recommendations for governor candidates to the chairman of the nominating committee. All such nominations must be submitted in writing to Nominating Committee at Granite Falls Energy, LLC, 15045 Hwy 23 SE, P.O. Box 216, Granite Falls, MN 56241. Such submissions should include the nominating member's name and contact information, a brief description of the candidate's business experience, civic involvement, education and such other information as the member submitting the recommendation believes is relevant to the evaluation of the candidate.
For candidates to be considered for election at the 2015 Annual Meeting, the recommendation must be received by the Company by November 1, 2014. Candidates properly submitted by members of the Company or members of the nominating committee will be considered in the same manner as those submitted by third-party search firms to the nominating committee.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
No direct family relationships exist between any of the governors of the board, officers, or key employees of the Company. Kenton Johnson is Shannon Johnson's nephew. We consider all of our at-large governors other than Messrs. Goulet, Seifert, Thompson, and Wilkison to be our founders and promoters. Over the past five years we have engaged in the following transaction with our promoters and their affiliates:
Corn Storage and Grain Handling Agreement
In October 2003 we entered into, and subsequently renegotiated in 2009, a corn storage and grain handling agreement with Farmers Cooperative Elevator Company, one of our members. We purchase all of our corn from Farmers Cooperative Elevator Company. The price at which we purchase our corn is the bid price the member establishes for the plant plus a per bushel procurement fee. During the fiscal year ended October 31, 2013, we purchased approximately $153,216,000 worth of corn from Farmers Cooperative Elevator Company for use in our operations. Farmers Cooperative Elevator Company owns a total of 650 units.
Paul Enstad, the chairman of our board of governors, was a member of the board of directors of Farmers Cooperative Elevator Company until his resignation of that position in July 2011. Mr. Enstad did not participate in any of our decisions regarding Farmers Cooperative Elevator Company while he was also on the board of Farmers Cooperative Elevator Company due to possible potential or actual conflicts of interest for Mr. Enstad.
COMPENSATION OF GOVERNORS AND EXECUTIVE OFFICERS
Compensation Discussion and Analysis
Overview
Throughout this proxy statement, the individuals who serve as our Chief Executive Officer and Chief Financial Officer 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. The compensation committee ensures that the total compensation paid to the executive officers is fair, reasonable and competitive. Generally the types of compensation and benefits provided to the executive officers are similar in form to the compensation and benefits provided to our other employees.
The compensation committee:
(1) | establishes and administers a compensation policy for senior management; |
(2) | reviews and approves the compensation policy for all of our employees other than senior management; |
(3) | reviews and monitors our financial performance as it affects our compensation policies or the administration of those policies; |
(4) | reviews and monitors our succession plans; |
(5) | approves awards to employees pursuant to our incentive compensation plans; and |
(6) | approves modifications in the employee benefit plans with respect to the benefits salaried employees receive under such plans. |
In determining the Chief Executive Officer's compensation, the committee considers evaluations prepared by the governors. From time to time, the compensation committee may delegate to the Chief Executive Officer the authority to implement certain decisions of the committee, to set compensation for other managers or to fulfill administrative duties.
The compensation committee has responsibility for establishing, implementing and regularly monitoring adherence to the Company's compensation philosophy and objectives. The compensation committee ensures that the total compensation paid to the named Chief Executive Officer is fair, reasonable and competitive.
The compensation committee receives input from the Chief Executive Officer on his personal performance achievements and that of the employees who report to them. This individual performance assessment determines a portion of the annual compensation for the Chief Executive Officer.
The compensation committee does its own performance review of the Chief Executive Officer. The compensation committee annually evaluates the performance of our Chief Executive Officer in light of the Company's goals and objectives and determines and approves the executive's compensation level based on this evaluation.
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 executive officers. The compensation committee receives input from the Chief Executive Officer on the personal performance achievements of the executives and management employees who report to him. This individual performance assessment determines a portion of the annual compensation for each manager. In addition, the Chief Executive Officer provides input on salary increases, incentive compensation opportunities, and long-term incentive grants for the executives and management employees who report to him, which the committee considers when making executive compensation decisions.
The compensation committee does its own performance review of the Chief Executive Officer. The compensation committee annually evaluates the performance of our Chief Executive Officer and determines and approves the Chief Executive Officer's compensation level based on this evaluation. In determining the long-term incentive component of the Chief Executive Officer's compensation, the compensation committee will consider all relevant factors, including the Company's performance, the value of similar awards to chief executive officers of comparable companies, and the awards given to the Chief Executive Officer of the Company in past years. The Chief Executive Officer is not present at either compensation committee level deliberations concerning his compensation.
Base Salary
Base salaries for our executive officers are established based on the scope of their roles, responsibilities, experience levels and performance, and taking into account competitive market compensation paid by comparable companies for similar positions. Base salaries are reviewed approximately annually, and may be adjusted from time to time to realign salaries with market levels after taking into account individual performance and experience.
Bonus
In addition to the base salaries, our executive officers may receive bonuses. During our 2013 fiscal year, our Chief Executive Officer received a bonus of $20,000 and our Chief Financial Officer received a bonus of $18,910. Our current Chief Executive Officer's bonus is dependent on our profitability. If our net profits are less than $10 million, then no bonus is paid. If our net profits are $10 million or more, then our current Chief Executive Officer is entitled to a bonus equal to one quarter of one percent of the amount of net profits. We believe that the bonuses paid to our employees are reasonable and well-justified.
Potential Payments upon Termination or Change in Control
In the event our Chief Executive Officer ("CEO") is terminated without cause, our CEO is entitled to receive six months' salary, which would equal approximately 77,868, and paid health insurance for a period of six months or until health coverage with another employer becomes effective, whichever occurs first. Our CEO is not entitled to any salary payment or health benefits in the event of termination with cause.
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 of governors determined that the Compensation Discussion and Analysis should be included in this proxy statement.
Compensation Committee
Paul Enstad, Chair
Rod Wilkison
Dean Buesing
Myron Peterson
David Thompson
Marten Goulet
Leslie Bergquist
Kenton Johnson
Shannon Johnson
Summary Compensation Table
Steve Christensen is currently serving as our Chief Executive Officer (“CEO”) and has served in that position since April 2012. Our prior CEO, Tracey Olson, served in that position through February 2012. Wayne Gordon served as our interim CEO from February 2012 through April 2012. Stacie Schuler is our Chief Financial Officer (“CFO”).
The following table sets forth all compensation paid or payable by the Company to our executive officers during the fiscal years ended October 31, 2013, 2012, and 2011, respectively. As of February 28, 2014, none of our officers had any options, warrants, or other similar rights to purchase securities of the Company.
Name and Principal Position | Year | Salary | Bonus | All Other Compensation(1)(2)(3)(4) | Total | ||||||||
Steve Christensen, CEO | 2013 | $ | 155,736 | $ | 20,000 | $ | 18,164 | $ | 193,900 | ||||
2012 | $ | 90,596 | $ | — | $ | 6,602 | $ | 92,500 | |||||
Wayne Gordon, Former Interim CEO | 2012 | $ | 23,700 | $ | — | $ | 4,947 | $ | 28,647 | ||||
Tracey Olson, Former CEO | 2012 | $ | 44,854 | $ | 37,000 | $ | 27,482 | $ | 109,336 | ||||
2011 | $ | 120,702 | $ | 26,800 | $ | 15,245 | $ | 162,747 | |||||
Stacie Schuler, CFO | 2013 | $ | 95,950 | $ | 18,910 | $ | 5,548 | $ | 120,408 | ||||
2012 | $ | 87,454 | $ | 8,254 | $ | 3,959 | $ | 99,667 | |||||
2011 | $ | 83,229 | $ | 14,720 | $ | 4,463 | $ | 102,412 |
(1) | Mr. Christensen's other compensation includes compensation related to paid time off and vacation ($13,962 in fiscal year 2013 and $1,904 in fiscal year 2012) and personal use of a company vehicle ($4,202 in fiscal year 2013 and $4,698 in fiscal year 2012). |
(2) | Mr. Gordon's other compensation includes expense reimbursements. |
(3) | Mr. Olson's other compensation includes compensation related to paid time off and vacation ($25,369 in fiscal year 2012) and personal use of a company vehicle ($2,113 in fiscal year 2012). |
(4) | Ms. Schuler's other compensation includes compensation related to paid time off and vacation. |
Governor Compensation
In April 2012, our board of governors approved the Company's current governor compensation policy. The policy provides for payment to governors of a monthly stipend plus a fee based on attendance at board and committee meetings.
For Fiscal Year 2013, the Governors have received the following compensation:
Governor | Fiscal Year | Fees Earned or Paid in Cash(1)($) | Additional Compensation(2) ($) | Total Compensation ($) | ||||||
Paul Enstad | 2013 | $ | 24,500 | $ | 519 | $ | 25,019 | |||
Julie Oftedahl-Volstad | 2013 | $ | 9,625 | $ | 141 | $ | 9,766 | |||
Dean Buesing | 2013 | $ | 20,750 | $ | 598 | $ | 21,348 | |||
Shannon Johnson | 2013 | $ | 14,750 | $ | 104 | $ | 14,854 | |||
Myron Peterson | 2013 | $ | 16,500 | $ | 213 | $ | 16,713 | |||
Fagen, Inc. | 2013 | $ | 3,750 | $ | 561 | $ | 4,311 | |||
Marten Goulet | 2013 | $ | 14,875 | $ | 3,687 | $ | 18,562 | |||
Rod Wilkison | 2013 | $ | 19,500 | $ | 2,442 | $ | 21,942 | |||
David Thompson | 2013 | $ | 16,625 | $ | 2,082 | $ | 18,707 | |||
Kenton Johnson | 2013 | $ | 8,875 | $ | 1,150 | $ | 10,025 | |||
Martin Seifert | 2013 | $ | 14,625 | $ | 538 | $ | 15,163 | |||
Leslie Bergquist | 2013 | $ | 10,625 | $ | 116 | $ | 10,741 |
(1) | Includes a monthly stipend plus a fee based on attendance at board and committee meetings. We currently pay our governors as follows: $1,000 per month for meetings attended in-person plus an additional $250 per meeting for meeting participation whether in person or by conference call. We also pay $250 for additional meetings of greater than one-half day in length; $125 for attending meetings less than one-half day in length; and $125 for attendance at meetings by conference call. We pay $500 per month to the Chairman and Secretary of the board and $500 per quarter to Audit Committee members. |
(2) | Includes reimbursement for mileage and other reasonable expenses incurred in connection with services rendered to the Company and the board of governors. |
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 October 31, 2013, accompanies the mailing of this proxy statement.
The Company will provide each member solicited a copy of Exhibits to the 10-K upon written request and payment of specified fees. The written request for such Exhibits should be directed to Stacie Schuler, Chief Financial Officer of Granite Falls Energy, LLC at 15045 Highway 23 S.E., Granite Falls, MN 56241-0216. Such request must set forth a good faith representation that the requesting party was a holder of record or a beneficial owner of membership units in the Company on February 28, 2014 The 2012 annual report on Form 10-K complete with exhibits is also available at no cost through the EDGAR database available from the SEC's internet site (www.sec.gov). Information about us is also available at our website at www.granitefallsenergy.com, under “SEC Compliance,” which includes links to reports we have filed with the Securities and Exchange Commission.
Granite Falls Energy, LLC | MEMBER NAME | ||
2014 Annual Meeting - Thursday, March 20, 2014 | NUMBER OF UNITS | ||
For Unit Holders as of February 28, 2014 | TELEPHONE NUMBER | ||
Proxy Solicited on Behalf of the Board of Governors | |||
Vote by Mail or Facsimile: | |||
1) Read the Proxy Statement | |||
2) Check the appropriate boxes on the proxy card | |||
3) Sign and date the proxy card | |||
PROPOSAL ONE: ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION (SAY-ON-PAY) | 4) Return the proxy card in the envelope provided or via fax to (320) 235-5962 or mail to Christianson & Associates, PLLP, Attention: Christina Parsley at 302 SW 5th St, Willmar, MN 56201. It must be received by Christianson & Associates no later than 5:00 p.m. on March 19, 2014. |
For | Against | Abstain | ||
o | o | o |
PROPOSAL TWO: ELECTION OF THREE GOVERNORS You may vote for three (3) nominees by marking the “FOR” boxes. |
For | Abstain | |||
Kenton Johnson | o | o | PLEASE INDICATE YOUR SELECTION BY FIRMLY PLACING AN "X" IN THE APPROPRIATE BOX WITH BLUE OR BLACK INK | |
Shannon Johnson | o | o | ||
Julie Oftedahl-Volstad | o | o | ||
Michael Lund | o | o | ||
Bruce LaVigne | o | o | ||
Clifton Gipp | o | o |
By signing this proxy card, you appoint Paul Enstad and Rod Wilkison, jointly and severally, each with full power of substitution, as proxies to represent you at the 2014 Annual Meeting of the Members to be held on Thursday, March 20, 2014, at the Prairie's Edge Casino Resort, 5616 Prairie's Edge Lane, Granite Falls, Minnesota, and at any adjournment thereof, on any matters coming before the meeting. Registration for the meeting will begin at 8:00 a.m. The 2014 Annual Meeting will commence at 9:00 a.m. This proxy, when properly executed, will be voted in the manner directed herein 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. For your proxy card to be valid, it must be received by Christianson & Associates, PLLP by 5:00 p.m. on Wednesday, March 19, 2014, or by submitting the proxy card in person when registering at the Annual Meeting. If you do not mark any boxes, your units will be voted FOR Proposal 1 and ABSTAIN for all nominees with respect to Proposal 2. If you choose only one or two nominees, then the proxy will vote your units only for the nominee(s) you chose. If you mark contradicting choices on the proxy card, such as both FOR and ABSTAIN for a candidate or proposal, your votes will not be counted with respect to the candidate or proposal for which you marked contradicting choices. However, each fully executed proxy card will be counted for purposes of determining whether a quorum is present at the 2014 Annual Meeting. You may revoke your proxy by: (1) Voting in person at the 2014 Annual Meeting; or (2) Giving written notice of revocation, which is received by Christianson & Associates, PLLP by 5:00 p.m. on Wednesday, March 19, 2014.
Signature: | Signature: | |||
Date: | Date: | |||
Joint owners must both sign. When signing as attorney executor, administrator, trustee or guardian, please note that fact. |