UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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Exchange Act of 1934 (Amendment No. )
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ALLIED NEVADA GOLD CORP. | ||||
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ALLIED NEVADA GOLD CORP.
9790 Gateway Drive, Suite 200
Reno, Nevada 89521
SUPPLEMENT TO THE PROXY STATEMENT
FOR THE 2014 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 1, 2014
The following information supplements and amends the proxy statement (the “Proxy Statement”) of Allied Nevada Gold Corp. (“we,” “us,” “our,” the “Company,” or “Allied Nevada”) furnished to Stockholders of the Company in connection with the solicitation of proxies by the Board of Directors (the “Board”) of the Company for the 2014 Annual Meeting of Stockholders and any adjournment or postponement thereof (the “Annual Meeting”). Capitalized terms used in this supplement to the Proxy Statement (this “Supplement”) and not otherwise defined have the meaning given to them in the Proxy Statement. This Supplement is being filed with the Securities and Exchange Commission (the “SEC”) and is being made available to Stockholders on April 8, 2014.
THE PROXY STATEMENT CONTAINS IMPORTANT ADDITIONAL INFORMATION AND THIS SUPPLEMENT SHOULD BE READ IN CONJUNCTION WITH THE PROXY STATEMENT.
Only Stockholders of record as of the close of business on March 5, 2014 are entitled to receive notice of and to vote at the Annual Meeting. We believe that our disclosures made in the Proxy Statement were fulsome, satisfied all of the Company’s disclosure obligations, and provided sufficient information to allow our Stockholders to make an informed judgment concerning each of the proposals contained therein. The following supplemental disclosure concerning Proposal 4 is therefore in addition to the information required to be provided to the Company’s Stockholders under the applicable proxy disclosure rules.
Correction of Inadvertent Error in Proposal 4: Approval of the Performance and Incentive Pay Plan
On page 58 of the Proxy Statement, the first sentence under “Shares Available Under the Plan” should read “The maximum aggregate number of shares of common stock available for issuance under the Plan is four million (4,000,000) or 3.8% of the number of shares of common stock outstanding as of March 5, 2014” instead of “of 3.8%”.
Supplemental Disclosure Concerning Proposal 4: Approval of the Performance and Incentive Pay Plan
As described in the Proxy Statement, the Performance and Incentive Pay Plan (the “Plan”) is designed to promote the interests of the Company (including its subsidiaries and affiliates) and our Stockholders by using stock-based and cash-based incentives to attract, retain and motivate its management and other eligible persons, including officers, directors, key employees and certain consultants, to encourage and
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reward such persons’ contributions to the performance of the Company and to align their interests with the interests of our Stockholders. The Compensation Committee and the Board believe that the ability to provide stock-based and cash-based incentives has been, and will continue to be, vital to the Company’s ability to continue to attract and retain individuals in the competitive labor markets in which we compete. The Plan, if approved by our Stockholders, will replace both the Allied Nevada Gold Corp. Restricted Share Plan (the “RSU Plan”) and the Allied Nevada Gold Corp. 2007 Stock Option Plan (the “2007 Option Plan” and together with the RSU Plan, the “Former Plans”). An aggregate total of 6.9 million shares of common stock have been reserved for issuance under the Former Plans and, as of March 5, 2014, a total of 20,000 shares of common stock remained available for issuance. The Plan contemplates a total of 4,000,000 shares of common stock being available for issuance under the Plan, or 3.8% of the number of shares of common stock outstanding as of March 5, 2014, which represents an increase of 3,980,000 shares from the combined shares available under the Former Plans.
We are committed to effectively managing our employee equity compensation programs while minimizing Stockholder dilution. For this reason, in administering our equity compensation program, we consider both our “burn rate” and our “overhang” in evaluating the impact of the program on our Stockholders. We define “burn rate” as the number of equity awards granted during the year, divided by the weighted average number of shares of common stock outstanding during the period. The burn rate measures the potential dilutive effect of our equity grants. We define “overhang” as the full value awards granted (but not yet vested or issued) and stock options granted (but not yet exercised) divided by the number of shares of common stock outstanding at the end of the period.
Potential Dilutive Impact of Plan
Burn Rate Analysis.The Compensation Committee approved and recommended that the Board approve the Plan, which would increase the number of available shares of common stock from 20,000 to 4,000,000, based on its analysis that this amount will be sufficient to cover awards for two to five years depending on the price of our common stock at the time of actual grants. The Board subsequently approved the Plan, subject to approval by our Stockholders. In setting the amount of shares subject to the Plan, the Compensation Committee and the Board considered the historical amounts of equity awards the Company has granted in the past three years. In fiscal years 2011, 2012 and 2013, the Company granted under the Former Plans equity awards representing a total of approximately 245,962 shares, 293,289 shares, and 1,427,395 shares, respectively. In fiscal years 2011, 2012 and 2013, the Company granted the Company’s directors equity awards pursuant to its Deferred Share Unit Plan (“DSU Plan”) and Deferred Phantom Unit Plan (“DPU Plan”) representing 43,869 shares, 45,842 shares, and 100,400 shares, respectively. Using grants under the Former Plans, as well as the DPU and DSU Plans, the Company calculated its three-year average equity expenditures, referred to as the burn rate, as 1.12%, which was lower than the proxy advisory firm Institutional Shareholder Services Inc.’s (“ISS”) burn rate cap guideline of 2.85%. The Compensation Committee intends to manage Allied Nevada’s burn rate by continuing to meet ISS policy guidelines and, in connection with that, believes the 4,000,000 shares of common stock for which Stockholder approval is being sought represents an appropriate increase at this time.
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Overhang Analysis.In setting the amount of shares subject to the Plan, the Compensation Committee and the Board also considered the total amount of awards outstanding under existing grants. As of March 5, 2014, awards covering an aggregate of (1) 500,000 shares of common stock were outstanding under the 2007 Option Plan, (2) 2,504,331 shares of common stock were outstanding under the RSU Plan, (3) 134,408 shares of common stock were outstanding under the DSU Plan and (4) 248,136 shares of common stock were outstanding under the DPU Plan. Accordingly, our outstanding awards under all equity plans, consisting of approximately 3.4 million shares of common stock (commonly referred to as the “overhang”), represented approximately 3.3% of our outstanding shares of common stock as of March 5, 2014.
Projected Equity Award Grants.While the terms of the Plan specify the maximum number of shares of common stock that may be subject to awards under the Plan, the actual grant of awards to officers, directors, key employees and certain consultants will continue to be subject to the Compensation Committee’s and the Board’s business judgment and discretion. As evidenced by our low burn rate (as defined by ISS policy guidelines), the Compensation Committee and the Board have been judicious in granting such awards and have displayed a sensitivity to minimizing the impact of the potential dilution that such awards could have on our Stockholders. However, as the Plan does not contemplate the amount or timing of specific equity awards, it is not possible to calculate the amount of subsequent dilution that may ultimately result from such awards. Based on the foregoing, the Compensation Committee and the Board believe that the Plan, which represents an increase of 3,980,000 shares of common stock above the combined shares of common stock available as of March 5, 2014 under the Former Plans, is appropriate at this time.
Criteria Relied Upon for Equity Award Grant Decisions
In making its decisions regarding equity award grants, the Compensation Committee generally considers the scope of the potential grantee’s responsibility at Allied Nevada, the relative internal value to Allied Nevada of the position, the potential grantee’s experience, past performance, and expected future contributions to Allied Nevada, the need to attract or retain the particular potential grantee, and, in the case of executives, peer group data provided by the Compensation Committee’s independent consultant. The Compensation Discussion and Analysis, found on pages 27-43 of the Proxy Statement, describes in further detail the criteria and measures used by the Compensation Committee in making equity award grant determinations for our Named Executive Officers in 2013, as well as the performance criteria to be used for such grants in 2014. These determinations are in turn submitted by the Compensation Committee to the Board for ratification. The Compensation Committee and Board intend to continue to consider the Company’s equity expenditures in a manner that effectively attracts, retains, and motivates individuals to achieve long-term value creation in line with the interests of our Stockholders.
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Our Security Ownership Guidelines
Stockholders should also consider the Company’s security ownership guidelines that define ownership expectations for directors and certain executive officers. We believe that our directors and executive officers should have a significant financial stake in the Company to encourage alignment of their interests with those of our Stockholders. The security ownership guidelines for our directors and executive officers are addressed on pages 14-15 and 41 of the Proxy Statement, respectively. The Company’s security ownership guidelines contemplate that non-employee directors should own shares of common stock or deferred share or phantom units having a market value of three times the annual cash retainer payable under the Company’s director compensation policy, and that executive officers should hold Company securities equal in value to three times base salary (for our Chief Executive Officer) or one times base salary (for all other executive officers). The Compensation Committee annually reviews each executive officer’s progress toward meeting the stock ownership guidelines.
Our Recommendation
In light of the factors described above and in the Proxy Statement, including the limited increase in the total number of shares of common stock available for issuance as future equity awards and the fact that the ability to grant equity compensation is vital to the Company’s ability to continue to attract, motivate, reward, and retain individuals,THE BOARD RECOMMENDS VOTING “FOR” APPROVAL OF THE PERFORMANCE AND INCENTIVE PAY PLAN.
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The inclusion of this information in this Supplement should not be regarded as an indication that the assumptions used to determine the number of additional shares will be predictive of actual future equity grants. These assumptions are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, as amended. These statements involve known and unknown risks, uncertainties, assumptions and other factors which may cause our actual results, performance or achievements to be materially different from any results, performance or achievements expressed or implied by such forward-looking statements, including our ability to attract and retain talent, achievement of performance metrics with respect to certain equity-based awards, and others described in our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 and our other filings with the SEC.
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