(1) Percent
of class is computed by dividing the number of shares beneficially owned plus
any options held by the reporting person, by the number of shares outstanding
plus the shares underlying options held by that person.
(2) Mr.
Keith Larsen exercises sole voting rights over 249,335 directly held shares,
65,853 shares held in an ESOP account established for his benefit and 729,640
shares underlying options. He exercises shared voting rights over
155,811 unallocated ESOP shares in his capacity as an ESOP Trustee with the
other ESOP Trustee, Mr. Mark Larsen. Mr. Keith Larsen exercises sole
dispositive rights over 249,335 directly held shares, and 729,640 shares
underlying options. He exercises shared dispositive rights over
541,735 shares in his capacity as an ESOP Trustee with the other ESOP
Trustee.
(3) Mr.
Mark Larsen exercises sole voting rights over 127,772 shares held directly,
4,600 Custodial Shares, 52,272 shares held in the ESOP account established for
his benefit, and 620,105 shares underlying options. He exercises
shared voting rights over 155,811 unallocated ESOP shares in his capacity as an
ESOP Trustee with the other ESOP Trustee, Mr. Keith Larsen, and 4,600 Custodial
shares. Mr. Larsen exercises sole dispositive rights over 127,772
shares held directly, 4,600 Custodial shares, and 620,105 shares underlying his
options. He exercises shared dispositive rights over 541,735 shares
in his capacity as an ESOP Trustee with the other ESOP Trustee.
(4) Mr.
Lorimer exercises sole voting rights over 319,958 directly held shares, 73,977
shares held in the ESOP account established for his benefit, and 542,139 shares
underlying options. He exercises sole dispositive rights over 319,958
directly held shares, and 542,139 shares underlying options.
(5) Mr.
Anderson exercises sole voting rights over 8,087 directly owned shares and
75,000 shares underlying his options. He exercises sole dispositive
rights over 8,087 directly owned shares and 75,000 shares underlying his
options.
(6) Mr.
Feinstein exercises sole voting rights over 6,158 directly held shares and
25,000 shares underlying options. Mr. Feinstein exercises sole
dispositive rights over 6,158 directly held shares and 25,000 shares underlying
options.
(7) Mr.
Fraser exercises sole voting rights over 20,413 directly held shares, 4,000
shares held in an IRA for his benefit, 1,000 shares held in a street name
account for his benefit and 127,500 shares underlying options. He
exercises shared voting rights over 1,300 shares held directly by his
wife. Mr. Fraser exercises sole dispositive rights over 20,413
directly held shares, 4,000 IRA shares, 1,000 held in a street name account for
his benefit and 127,500 shares underlying his options. He exercises
shared dispositive powers over 1,300 of his wife's shares.
(8) Mr.
Winters exercises sole voting rights and sole dispositive rights over 600
directly held shares.
(9) Mr.
Youngbauer exercises sole voting rights over 61,574 shares held directly, 13,575
shares held in the ESOP account established for his benefit and 175,000 shares
underlying options. He exercises sole dispositive rights over the
61,574 shares directly held and 175,000 shares underlying his
option.
(10) The
group exercises sole voting rights over 793,897 directly held shares, 1,000
shares held in joint tenancy, 4,000 shares held in IRAs, 4,600 custodial shares,
205,677 ESOP shares and 2,294,384 shares underlying options. Shared
voting rights are exercised over 1,300 shares held in IRA accounts for spouses,
4,600 custodial shares and 155,811 shares held in the ESOP which are not
allocated to plan participants.
The sole
dispositive shares consist of 793,897 directly held shares, 1,000 shares held in
joint tenancy, 4,000 shares held in IRAs, 4,600 custodial shares, and 2,294,384
shares underlying options. The group exercises shared dispositive
rights over 1,300 shares held in IRA accounts for spouses, 541,735 shares held
in the ESOP.
(11) Based
upon the most recent Schedule 13G filed by the reporting person.
*
|
Director
|
**
|
Officer
Only
|
Proposal
1: Election
of Directors
Directors
The
directors are divided into three classes, each consisting of two persons so far
as practicable, to be elected until the third succeeding annual meeting and
until their successors have been duly elected or appointed and qualified or
until death, resignation or removal. Two of the nominees for
election, Michael H. Feinstein and H. Russell Fraser, are incumbent directors
standing for re-election. Robert Scott Lorimer is also an incumbent,
but was appointed a director by the board in 2008, to fill the vacated seat of
Harold F. Herron due to early retirement. Mr. Lorimer is therefore
now standing for election by the shareholders. Directors are subject
to a mandatory retirement age of 70 years of age. If a director
reaches the age of 70 during his regularly elected term, he is allowed to serve
out the term to which he was elected prior to turning 70 years of
age. Mr. Feinstein has been exempted from the mandatory retirement
age for one additional term on a one time only exemption for all directors and
is standing for re-election in 2008. If elected, he will serve until
the annual meeting in 2011 at which time he will be required to retire from the
Board of Directors.
Current
directors are:
|
Other
|
|
Meeting
at
|
Name,
age and
|
positions
with
|
Director
|
which
term
|
designation
|
with the Company
|
Since
|
will expire
|
|
|
|
|
Keith
G. Larsen (49)
|
CEO
and Chairman
|
1997
|
2009
|
|
|
|
|
Mark
J. Larsen (45)
|
President
and COO
|
2006
|
2010
|
|
|
|
|
Robert
Scott Lorimer (57)
|
CFO
and Treasurer
|
2008
|
2008
|
|
|
|
|
Allen
S. Winters (67)
|
|
2007
|
2009
|
|
|
|
|
Michael
H. Feinstein (72)
|
|
2004
|
2008
|
|
|
|
|
H.
Russell Fraser (66)
|
|
1996
|
2008
|
|
|
|
|
Mike
Anderson (56)
|
|
2003
|
2010
|
Executive
officers are elected by the Board of Directors at the annual directors' meeting,
which follows each Annual Shareholders' Meeting, to serve until the officer's
successor has been duly elected and qualified, or until death, resignation or
removal. If elected, the terms of Messrs. Lorimer, Feinstein and
Fraser as directors will expire at the 2011 annual meeting. Executive
Officers are subject to mandatory retirement at the age of 70. The
Board of Directors can request service by an officer beyond the age of 70 on a
case by case basis as appropriate.
Family
Relationships.
Keith G.
Larsen, a director, CEO and Chairman, and Mark J. Larsen, a director, President,
and COO are brothers.
Business Experience and Other
Directorships of Directors and Officers.
Keith G. Larsen, age 49, has
been principally employed by U.S. Energy Corp. for more than the past five
years. He has been a director since November 25, 1997, and was its
President and Chief Operating Officer from that date until August 23, 2005, when
he became Chairman of the Board and Chief Executive Officer. Mr.
Larsen also is director of Sutter Gold Mining, Inc. (“SGMI”), a gold prospect
company of which U.S. Energy Corp. owns 54.4%.
Mark J. Larsen, age 45, has
been principally employed by U.S. Energy Corp. for more than the past five
years. He became President and Chief Operating Officer of U.S. Energy
Corp. on August 23, 2005. Mr. Larsen graduated from the University of
Wyoming with a B.S. Degree in Business Management.
Robert Scott Lorimer, age 57,
has been Chief Accounting Officer, Chief Financial Officer, Vice President of
Finance and Treasurer of U.S. Energy for more than the past five
years. Mr. Lorimer also has been their Vice President Finance since
April 1998, and became a director of U.S. Energy Corp. in
2008. Mr. Lorimer has over 30 years experience in the minerals
industry. Prior to joining U.S. Energy in 1980, Mr. Lorimer served as
Controller for the Gas Hills uranium operations for TVA. Mr. Lorimer
received a B.S. in Finance, Accounting, Economics and German from Brigham Young
University and worked toward a Masters in Accountancy at the University of
Nebraska. Mr. Lorimer serves on the Advisory Board of First
Interstate Bank.
Steven R. Youngbauer, age 57,
was appointed General Counsel and Secretary in January 2007. Mr.
Youngbauer served as Assistant Secretary and Associate General Counsel to U.S.
Energy since February 2004. Mr. Youngbauer has over 25 years
experience in the legal profession and 30 years in the mining
industry. Mr. Youngbauer has served in various capacities including
President, Vice President and General Counsel to oil and gas production
companies and Amax Coal West, Inc. Mr. Youngbauer received a Juris
Doctorate Degree from the University of Wyoming Law School in 1982 and also
served as a Wyoming State Senator, Chairman of the Wyoming Environmental Quality
Council and on the Board of Directors of the Wyoming Mining
Association.
Allen S. Winters, age 67,
became a director on January 23, 2007. Mr. Winters has over 40 years
of experience in mining industry including Vice President and General Manager
with Homestake Mining Company. Mr. Winters has a B.S. in Mining
Engineering and a M.S. in Geological Engineering.
Michael H. Feinstein, age 72,
has been director since September 2004. Mr. Feinstein is a graduate
of Wharton School, University of Pennsylvania. He became a certified
public accountant in the state of Colorado in 1960. Mr. Feinstein is
currently a financial and business consultant and the Director of Taxation for
an accounting firm in Scottsdale, Arizona which provides accounting and tax
services to small businesses. He has over 40 years of accounting,
auditing, and business experience including a partner for Deloitte & Touche
and its predecessors. He has served as a director, CFO and CEO of
numerous public and private companies.
H. Russell Fraser, age 66, has been a director since
1996. He is past president and director of American Capital, Inc.,
the first "A" rated financial guarantee company in New York, New
York. Mr. Fraser was chairman of the board and chief executive
officer of Fitch Investors Services, L.P. Fitch Investors Services,
L.P., New York, New York, is a nationwide stock and bond rating and information
distribution company. From 1980-1989, Mr. Fraser served as president
and chief executive officer of AMBAC, the oldest municipal bond issuer in the
United States. Before joining AMBAC, Mr. Fraser was senior vice
president and director of fixed-income research at PaineWebber,
Inc. Mr. Fraser holds a B.S. in finance and economics from the
University of Arizona.
In
August 2004, Mr. Fraser and his wife, and two family companies, filed petitions
for reorganization under Chapter 11 of the Bankruptcy Code, due to the impact of
health problems in 2004.
Michael Thomas
Anderson, age 56, has been a director since
2003. Mr. Anderson has run his own accounting and consulting practice
since 1993. Prior to that, he was chief financial officer for an
operating unit of a Fortune 500 company for eight years. From 1977 to
1985, Mr. Anderson worked in public accounting. He is a member of the
AICPA and The Wyoming Society of Certified Public Accountants. Mr.
Anderson holds a B.S. degree in accounting from Brigham Young
University.
Filing of Reports Under Section
16(a)
We have
reviewed reports on Forms 3, 4 and 5 of ownership of common stock in the Company
which have been filed with the SEC in 2007 under section 16(a) of the Exchange
Act, and written representations from the filing persons. Based
solely upon review of the reports and representations, two officers reported
transactions late on one occasion each: Keith G. Larsen and Mark J.
Larsen.
COMPENSATION
DISCUSSION AND ANALYSIS
Compensation
discussion and analysis is intended to illustrate the aspects of executive
compensation and the different types of compensation utilized by U.S. Energy to
attract and retain executives, incentive performance along various measures, and
to adequately compensate key employees for their significant contributions to
the ongoing success of the Company. Initially, an explanation of the
current business environment is provided which is followed by an overview of the
general philosophy with regard to executive compensation. Following
that discussion, we provide a review of the Compensation Committee and their
roles and objectives followed by a discussion of each of the types of
compensation employed and their intent. Next, included are tables
illustrating the actual compensation transactions during the most recent fiscal
year with each table being followed by a narrative explanation of the
information presented. Finally, we provide a brief discussion of
future compensation issues and potential considerations to be reviewed by the
Compensation Committee.
Business
Environment
U.S.
Energy is not an operator under the typical definition for the mineral
extraction industries. It helps to understand some of the approaches
the Company takes in regard to structuring compensation for its key
employees. For more than 40 years, the Company’s business model has
been the acquisition, development and sale (or joint venturing) of mineral
properties. Our business typically has generated transaction-based
revenues instead of recurring operating revenues (with the exception of the coal
bed methane sector, which was sold in mid-2005). Transaction-based
business requires long lead times to acquire and explore properties, and perform
development work, while monitoring commodity price trends, before the properties
can be sold or joint ventured. Our compensation policies to date have
been tailored to fit this business strategy. For each deal, different
individuals in the Company are involved to varying degrees with critical
functions such that the Compensation Committee and Board have opted to align its
compensation philosophy and application with the nature of the Company’s ongoing
success in its business strategy.
In
addition, U.S. Energy is headquartered in Riverton, Wyoming, which is considered
a very rural area and the attraction of talent can be difficult. The
nature of the complexity of operations and business strategies is such that it
would be extremely difficult to hire certain key roles from outside the Company
and have them be able to quickly adapt and provide value in driving the
business. All of these factors have been taken into account to
develop the overall compensation philosophy.
Compensation
Philosophy
Considering
the Company’s business environment, the nature of operations, and in an attempt
to keep total compensation competitive and reduce turnover, U.S. Energy employs
a combination of short term and long term compensation to reduce short term cash
flow burdens, increase performance, retain personnel, and provide some
compensation assurance to executives if there should be a hostile takeover
situation. This philosophy focuses on multiple measuring points
including current success and the future potential of success, blended with
components of loyalty to the firm (i.e. years of service and dedication to
project and deadline completion) and expertise in individual roles, to arrive at
what we feel are competitive compensation and severance
packages. They are designed to retain key personnel, achieve short
term and long term financial performance and stock appreciation. Due
to the nature of the business strategy and the uncertainty associated with
specific projects, compensation decisions are based significantly upon a project
by project analysis as well as our financial position, rather than preset bonus
and award structures.
Compensation
Objectives and Compensation Committee Responsibilities
Compensation
Committee
The
Compensation Committee of the Board of Directors is responsible for evaluating
and recommending, after deliberation, an executive compensation program to the
full board. The Compensation Committee meets regularly and receives
input from Company executives. All base salaries equal to or in
excess of $100,000 per year are reviewed and approved by the Compensation
Committee on a case by case basis. Once a compensation determination
has been made, it is communicated to the full Board of Directors which then
votes to approve or disapprove the Compensation Committee’s
recommendations. Any changes to compensation for executives or any
employee related to them, must be approved by the Compensation
Committee.
Objectives
of the Compensation Program
Our
compensation plans focus on two principles and allocate a substantial portion of
overall compensation to attaining operational and financial goals, such as
assembling and developing attractive property packages at reasonable cost, then
selling or joint venturing the properties.
The
principles are
·
|
A
substantial portion of compensation should be performance
based. This is accomplished through periodic cash bonuses, and
seeks to obtain continued exemplary service from the executives through
salary, and their equity
participation.
|
and
· Compensation
in the form of equity awards (stock and options) are designed to
allow the executives to build personal and shareholder wealth. Their
personal equity benefit is the same as the other shareholders. We do
not pay stock appreciation rights.
Individual
executive performance is evaluated to arrive at compensation levels which the
Compensation Committee and board believe, based on their general business /
industry knowledge and experience, are generally comparable to those paid to
executives in other companies of similar size, and type of operations, in the
minerals industry. However, neither the Compensation Committee nor
the board engages in “benchmarking” of total compensation (or any particular
element of compensation) paid to the executives as compared to compensation paid
at other companies.
Executive
compensation consists of base salary, discretionary bonus, and long-term equity
incentives (options and stock awards). The Compensation Committee
does not set upper or lower limits on the total amount of compensation (all
three categories taken together) paid to any executive in a
year. Executives also participate in two broad-based plans for all
employees (ESOP and 401(k)). The Compensation Committee does not take
into account compensation paid in prior years, except on occasion (for example
the June 2007 and September 2006 Company-wide bonuses discussed in detail below)
as part of the process of allocating bonus amounts among all employees based on
total compensation. Generally, except for Company-wide bonuses,
decisions surrounding amounts paid to any one executive in salary, bonuses, and
long-term equity incentives are determined independently of one
another.
The
summary below reflects the compensation elements currently being
utilized. All compensation arrangements as well as any changes
thereto are approved by the full Board of Directors, upon the recommendations of
the Compensation Committee. The executives make compensation
proposals to the Committee (awards of options, stock, bonuses, and salary) but
do not participate in the Committee’s deliberations. Other than
actuarial consultants who help assess ESOP valuation and the accrual of the
executive retirement benefit, the Committee does not use outside
consultants. When making decisions on proposed compensation, the
Committee may take into account the total historical compensation package for
each executive (for example, options granted in prior years).
Types of Executive
Compensation Utilized
U.S.
Energy employs the following compensation types for its
executives. The combination of these elements allows executives to
focus on current operations without disproportionate concern for the short term
ups and downs of the business, which facilitates better long term decision
making and project planning.
Base Wages (guaranteed amount)
– Determined by the Committee for executive positions and based on the scope of
responsibilities, seniority, our ability to replace the individual, and other
primarily judgmental factors deemed relevant by the board. Salaries
are reviewed from time to time by the Committee and the Board, and may be
adjusted.
|
·
|
Cash Bonuses (short term
incentive amount) – Discretionary cash bonuses are determined by the
Committee with input from executives as to total amounts. In
addition to periodic discretionary bonuses, we have traditionally paid a
cash holiday bonus to all employees, including executives, based on a
percentage of base pay, ranging from 3-10%, but these bonuses may not be
paid in future years depending on available cash and the
budget. All cash bonuses, except the holiday bonus, are awarded
by the Compensation Committee based on Company financial condition,
successful completion of projects, performance on projects (for example,
attaining significant milestones), acquisitions and divestiture of
companies and assets taking into account staff tenure, project
involvement, roles, and realized amounts from
transactions. Because neither the timing of, nor the amount of
proceeds from, any transaction can be predicted year-to-year, we do not
set the bonus amount (by a formula or otherwise) until a short period of
time before payment.
|
Company-Wide
Cash Bonus Paid in 2007
On May 2,
2007, the Company, with the approval of its Board of Directors and upon the
recommendation of the Compensation Committee, paid a $4,887,000 gross cash bonus
to all employees and a cash bonus of $40,000 to each of the independent
directors for extraordinary service related to the April 30, 2007 sale of the
uranium assets to Uranium One.
Company-Wide
Cash Bonus Paid in 2006
In
September 2006, U.S. Energy Corp., with approval of the Board of Directors’
adoption of the recommendations from the Compensation Committee, paid a
Company-wide bonus in the aggregate amount of $3,013,000 in recognition of the
results of the work done over the years in the organization, operation and sale
of Rocky Mountain Gas, Inc. and the sale of the minority equity stake in
Pinnacle Gas Resources, Inc.
|
·
|
Stock Options (long term
incentive amount) – The 2001 Incentive Stock Option Plan (ISOP) was
approved at the 2001 Annual Meeting of Shareholders, and was amended in
2004 and 2007 to provide that the number of shares available for issuance
be equal to 25% of the total shares issued and outstanding at any point in
time. The options are intended to qualify under section 422 of the
Internal Revenue Code. Options are issued at exercise prices equal to
market price on grant dates (or for holders of 10% or more of the
outstanding stock at the time, 110% of market), and may vest (become
exercisable) at various times as determined by the Compensation Committee
and approved by the Board of Directors. Prior to 2007 most
options have vested immediately. Options issued during
2007 vest over various periods of time from three to five years. Options
cannot be exercised in the first year after their grant. All
options are exercisable for cash, or by delivery of shares of common stock
(valued at market), or a combination of cash and stock. Options
are awarded by the Compensation Committee based on performance on
projects, acquisitions, and divestiture of companies and assets taking
into account staff tenure, project involvement, roles, and realized
amounts from transactions. These serve as an added incentive to
executives as well as all personnel involved to maintain healthy growth
for the Company’s stock and focus on long term stock
appreciation.
|
If
options are intended to be issued at a meeting of the Board of Directors, but
there then is material non-public information, the issuance of the options will
be postponed until the third business day following release of the information,
and the exercise price will be set at the market price on that third business
day.
At the
annual meeting of shareholders on June 22, 2007, the U.S. Energy shareholders
approved the payment of taxes on 222,827 non-qualified options held by officers
and directors should those options be exercised prior to their expiration date
in 2008. This tax payment for each exercisor was conditioned on each
exercisor who was an officer or director, at time of approval, signing a lockup
agreement which prohibits disposition of the shares so acquired until cessation
of service due to retirement, disability, or death. On November 26,
2007 the shareholders of Crested Corp. also approved payment of taxes upon the
exercise of non-qualified Crested options, prior to the merger with U.S. Energy,
for officers of U.S. Energy who again agreed to sign a lock up agreement with
the same terms provided under the U. S. Energy lockup agreement.
Tax
Effects of Options
Some of
the options are qualified (ISOs), and some are nonqualified under IRS
regulations. In general, a participant does not have taxable income upon the
grant of an option. Participants will recognize ordinary income upon exercise of
a nonqualified stock option equal to the excess of the fair market value of
shares acquired on exercise over the exercise price. A participant will not
recognize ordinary income upon exercise of an ISO except that the alternative
minimum tax may apply. If a participant disposes of shares acquired upon
exercise of an ISO before the end of the applicable holding periods, the
participant will recognize ordinary income. Generally, a sale of shares acquired
by exercise of an option will result in short-term or long-term capital gain or
loss measured by the difference between the sale price and the participant’s tax
basis in the shares. The Company can claim a tax deduction equal to the amount
recognized as ordinary income by a participant in connection with an option, but
not with respect to a participant’s capital gains. We will not be entitled to
any tax deduction with respect to an ISO if the participant holds the shares for
the applicable ISO holding periods before selling or transferring the
shares.
|
·
|
Stock Awards (long term
incentive amount) – The shareholders approved the 2001 Stock Compensation
Plan (the "SCP") at the 2001 Annual Shareholders Meeting. The
SCP was amended on June 22, 2007 by a vote of the shareholders of U.S.
Energy. The SCP, as amended, will expire at the annual meeting
held in 2018 unless further extended by the shareholders. Under
the terms of the SCP each qualifying executive officer, currently four
individuals, receives 5,000 shares of U.S. Energy common stock per quarter
on which the taxes are paid due to the inability of the executive officers
to sell, transfer or pledge the
shares.
|
Since
2001, the stock option and award plans have been the sole method for
compensating executives on a regular basis with stock issuance, and stock has
not otherwise been issued as compensation. The existence of the plan
does not limit the Board’s authority to compensate officers with additional
stock issued for individual performance in other ways.
On June
22, 2007 the shareholders of the U.S. Energy Corp. authorized the release of
180,060 forfeitable shares, and the payment of taxes due as a result of the
release, to employees and officers of the Company. The shareholders
of Crested also approved the release of 15,000 forfeitable shares, converted to
7,500 shares of the Company’s common stock at the time of the merger of Crested
into U.S. Energy, and the payment of taxes due on them on November 26,
2007. The forfeitable shares of U.S. Energy and Crested were issued
in the early 1990s but were held in trust until certain conditions were
met.
|
·
|
Executive Officer Retirement
Benefits (long term guaranteed amount)
–
|
A
specific retirement plan for executives was approved by the Board of Directors
to be effective on October 20, 2005. This plan is designed to provide
supplemental income to executives for post retirement for the inordinate amount
of time and effort spent while employed in managing the business and to require
assistance from key personnel in transition to new executives and knowledge
transfer. Eligibility for benefits under the plan include reaching
age 60 and having served for a minimum of 15 years as a designated executive,
and being employed by the Company on December 31, 2010. During
October 2007, the Compensation Committee closed the Executive Retirement Plan to
only those executive officers who could qualify, at that time, under the plan
for benefits. Any future executive retirement consideration will be
considered by the Compensation Committee and full Board of Directors on a case
by case basis.
Benefits
include 5 years of payments equal to 50% of the greater of the average of the
individual’s last 5 years of base pay or the last annual base
pay. Payments are made through bi-weekly installments. In
return for this consideration, all executives agree to provide 1,040 post
retirement consulting hours to the Company to assist with transition and
knowledge transfer to replacements. If a retired executive is asked
to provide more than 1,040 hours, he will be compensated at commensurate hourly
rates. In the case of death, the benefits are paid to the beneficiary
or estate of the executive and the additional consulting hours are eliminated.
Beginning in 2007 the required funding for current officers was funded through
the use of a Rabbi Trust which is administered by a third party
trustee.
|
·
|
Severance and Non-compete
Agreements (long term guaranteed amount)
–
|
Individual
severance and non-compete agreements have been created by the Board of Directors
for key positions. These agreements are designed to ensure longevity
and executive focus on current operations as well as maintain protection against
competition in the event of severance of employment or change in control. Each
agreement provides that if the executive’s employment is terminated within three
years of a change in control of the Company, or severance of employment for
other than retirement or cause, the Company will be required to pay (i) an
amount equal to three times the average annual compensation over the prior five
years ending before the change in control, (ii) legal fees and expenses incurred
by such persons as a result of termination; (iii) the difference between market
value (as of the termination date) of shares issuable on exercise of options,
and the options' exercise price; (iv) continued insurance coverage (life,
health, medical, and disability; (v) any unpaid bonuses (including a pro rata
based on months of service in the year of termination) portion of
bonuses paid in the calendar year after termination, if he served for at least
six months in the termination year); (vi) two years of non-compete compensation
up to $250,000 per year; and (vii) a $1 million term life policy with the
premiums to be paid by the Company and total premiums paid will be reimbursed
from any death benefits paid. Currently those executives who have
severance and non-compete agreements are Keith G. Larsen, Chairman and CEO, Mark
J. Larsen, President and COO, Robert Scott Lorimer, CFO, Treasurer and V. P.
Finance, and Steven R. Youngbauer, Secretary and General Counsel.
EXECUTIVE
COMPENSATION
Summary
Compensation Table
Name
and Position
|
Year
|
|
Salary
|
|
|
Bonus (1)
|
|
|
Stock
Awards (2)
|
|
|
Option
Awards (3)
|
|
|
|
Non-Equity
Incentive Compensation
|
|
Change
in Pension Value & Non-Qualified Deferred Compensation
Earnings
|
|
All
Other Compensation (4)
|
|
|
Total
|
|
Keith
G.
Larsen, Chairman
and Chief Executive Officer
|
2007
|
|
$ |
223,400 |
|
|
$ |
731,400 |
|
|
$ |
115,300 |
|
|
$ |
48,000 |
|
(a)
|
|
|
|
|
|
$ |
552,900 |
|
|
$ |
1,671,000 |
|
|
2006
|
|
$ |
185,000 |
|
|
$ |
300,000 |
|
|
$ |
50,200 |
|
|
$ |
28,900 |
|
(b)
|
|
|
|
|
|
$ |
364,400 |
|
|
$ |
928,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark
J. Larsen, President and
COO
|
2007
|
|
$ |
205,300 |
|
|
$ |
730,400 |
|
|
$ |
115,300 |
|
|
$ |
64,000 |
|
(a)
|
|
|
|
|
|
$ |
165,400 |
|
|
$ |
1,280,400 |
|
|
2006
|
|
$ |
170,000 |
|
|
$ |
300,000 |
|
|
$ |
50,200 |
|
|
$ |
28,900 |
|
(b)
|
|
|
|
|
|
$ |
26,000 |
|
|
$ |
575,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
Scott Lorimer, Chief Financial Officer and
Treasurer
|
2007
|
|
$ |
211,400 |
|
|
$ |
730,700 |
|
|
$ |
115,300 |
|
|
$ |
48,000 |
|
(a)
|
|
|
|
|
|
$ |
1,176,400 |
|
|
$ |
2,281,800 |
|
|
2006
|
|
$ |
175,000 |
|
|
$ |
319,000 |
|
|
$ |
50,200 |
|
|
$ |
28,900 |
|
(b)
|
|
|
|
|
|
$ |
155,300 |
|
|
$ |
728,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven
R. Youngbauer, General Counsel
|
2007
|
|
$ |
156,200 |
|
|
$ |
418,900 |
|
|
$ |
-- |
|
|
$ |
32,000 |
|
(a)
|
|
|
|
|
|
$ |
29,300 |
|
|
$ |
636,400 |
|
|
2006
|
|
$ |
120,000 |
|
|
$ |
150,000 |
|
|
$ |
-- |
|
|
$ |
5,800 |
|
(b)
|
|
|
|
|
|
$ |
26,000 |
|
|
$ |
301,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
2007
|
|
$ |
796,300 |
|
|
$ |
2,611,400 |
|
|
$ |
345,900 |
|
|
$ |
192,000 |
|
|
$ |
--
|
$ |
--
|
|
$ |
1,924,000 |
|
|
$ |
5,869,600 |
|
|
2006
|
|
$ |
650,000 |
|
|
$ |
1,069,000 |
|
|
$ |
150,600 |
|
|
$ |
92,500 |
|
|
$ |
--
|
$ |
--
|
|
$ |
571,700 |
|
|
$ |
2,533,800 |
|
(1)
|
During
2007 and 2006 all employees of U.S. Energy were paid a transaction
performance bonus as well as a 10% holiday bonus. The
transaction performance bonuses were paid subsequent to the acceptance of
the recommendation of the Compensation Committee by the Board of
Directors. The transaction performance bonus paid in 2007 was
in consideration of the extraordinary effort of the employees of U.S.
Energy in selling our uranium assets to Uranium One. The
transaction performance bonus paid in 2006 related to the sale of Rocky
Mountain Gas, Inc. and the liquidation of U.S. Energy’s shares of Pinnacle
Gas Resources, Inc. The holiday bonus paid to all employees is
based on base compensation salary for the twelve months ended December 31,
2007 and 2006.
|
(2)
|
Each
eligible officer received 15,000 shares and 10,000 shares of U.S. Energy’s
common stock under the 2001 Stock Award Plan during the years ended
December 31, 2007 and 2006 respectively. Each grant of shares
was made at the beginning of each quarter and valued at market. U.S.
Energy paid all applicable taxes on these shares as the executives have
agreed not to sell, transfer or pledge these shares until the first of
either of their retirement, total disability or death. The amounts do not
represent cash paid by U.S. Energy to these persons. On June
22, 2007 the shareholders of U.S. Energy increased the quarterly number of
shares payable to each executive from 2,500 shares to 5,000 shares per
quarter.
|
(3)
|
Certain
options granted to executive officers vested in 2007 and
2006. The amount of compensation reported in the above table is
the amount of expense recorded by U.S. Energy pursuant to SFAS
123(R). The amounts do not represent cash paid by U.S. Energy
to these persons but rather the expense recognized by U.S. Energy for the
vesting of the options.
|
(4)
|
Components
of Other Compensation consist of the exercise of non-qualified stock
options, the release of forfeitable shares, life insurance, and ESOP and
401(k) contributions. These areas of compensation are detailed
in the following table:
|
|
|
|
Exercise
of
|
|
|
|
Release
of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Qualified
|
|
|
|
Forfeitable
|
|
|
Life
|
|
|
ESOP
|
|
|
|
401 |
(K) |
|
|
|
|
|
|
Stock
Options
|
|
|
|
Shares
|
|
|
Insurance
|
|
|
Contribution
|
|
|
Contribution
|
|
|
Total
|
|
|
|
|
(a)
|
|
|
|
(b)
|
|
|
|
|
|
(c)
|
|
|
(d)
|
|
|
|
|
Keith
G. Larsen
|
2007
|
|
$ |
440,000 |
|
(i)
|
|
$ |
83,900 |
|
|
$ |
300 |
|
|
$ |
24,700 |
|
|
$ |
4,000 |
|
|
$ |
552,900 |
|
|
2006
|
|
$ |
338,400 |
|
(ii)
|
|
|
|
|
|
|
|
|
|
$ |
22,000 |
|
|
$ |
4,000 |
|
|
$ |
364,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark
J. Larsen
|
2007
|
|
$ |
136,400 |
|
(i)
|
|
$ |
-- |
|
|
$ |
300 |
|
|
$ |
24,700 |
|
|
$ |
4,000 |
|
|
$ |
165,400 |
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
22,000 |
|
|
$ |
4,000 |
|
|
$ |
26,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
Scott Lorimer
|
2007
|
|
$ |
368,100 |
|
(i)
|
|
$ |
778,800 |
|
|
$ |
800 |
|
|
$ |
24,700 |
|
|
$ |
4,000 |
|
|
$ |
1,176,400 |
|
|
2006
|
|
$ |
129,300 |
|
(ii)
|
|
|
|
|
|
|
|
|
|
$ |
22,000 |
|
|
$ |
4,000 |
|
|
$ |
155,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven
R. Youngbauer
|
2007
|
|
$ |
-- |
|
|
|
$ |
-- |
|
|
$ |
600 |
|
|
$ |
24,700 |
|
|
$ |
4,000 |
|
|
$ |
29,300 |
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
22,000 |
|
|
$ |
4,000 |
|
|
$ |
26,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
2007
|
|
$ |
944,500 |
|
|
|
$ |
862,700 |
|
|
$ |
2,000 |
|
|
$ |
98,800 |
|
|
$ |
16,000 |
|
|
$ |
1,924,000 |
|
|
2006
|
|
$ |
467,700 |
|
|
|
$ |
-- |
|
|
$ |
-- |
|
|
$ |
88,000 |
|
|
$ |
16,000 |
|
|
$ |
571,700 |
|
(a)(i)
During 2007 officers surrendered 83,071 shares of common stock they owned
for the exercise of 213,860 options pursuant to the ISOP. The
officers recognized compensation from the spread between the exercise price and
the share price on the date of exercise. Additionally on June 22,
2007, the shareholders of U.S. Energy authorized the payment of taxes on
specific non-qualified options which were going to expire. The
officers agreed not to sell, pledge or transfer the shares received from the
exercise of the options on which the taxes were paid. At the time of
the merger with Crested, the Crested shareholders approved the cashless exercise
of options by officers and employees prior to the merger. The Crested
shareholders also approved the payment of taxes for officers on the exercise of
these options of Crested as a result of the officers agreeing to not sell,
pledge or transfer the resultant shares of U.S. Energy they received from the
cashless exercised options of Crested. All of the officers in the
above table received 26,293 shares of U.S. Energy common stock as a result of
the cashless exercise of the Crested options with the exception of Mr.
Youngbauer who received 6,574 shares. The amounts of compensation in
the above table do not represent cash paid by U.S. Energy to these
officers.
(a)(ii)
Officers exercised 146,427 options by the surrender of 64,932
shares they owned during 2006. The officers recognized compensation
from the spread between the exercise price and the share price on the date of
exercise. The amounts of compensation in the above table do not
represent cash paid by U.S. Energy to these officers.
(b) On
May 2, 2007 the Board of Directors amended the Forfeitable Stock Compensation
Plan, subject to shareholder approval, to release the forfeitable shares and pay
the taxes due as a result of the release of the forfeitable
shares. The shares had been issued to individuals in the early 1990’s
and were forfeitable until retirement, total disability or death. On
June 22, 2007 the shareholders of U.S. Energy approved the release of the180,060
forfeitable shares and the payment of taxes upon the release of the forfeitable
shares. Mr. Keith Larsen received 8,820 shares and Mr. Lorimer received 75,120
shares as a result of the release of the forfeitable shares. No other
current officers were participants in the Forfeitable Stock Compensation
Plan. Mr. Lorimer also received an additional 7,500 shares of U.S.
Energy common stock as a result of the release of forfeitable shares of Crested
under the same terms and approved by the Crested shareholders, on November 26,
2007, at the time of the merger with U.S. Energy. The Forfeitable
Stock Compensation Plan is no longer in effect.
(c) Each
executive officer participates in the ESOP which was established to annually
make contributions to employee retirement. During 2007 and 2006
all officers received a $24,700 and $22,000, respectively,
contribution to their ESOP account as a result of the Compensation Committee
recommending and the full board approving funding of the 10% of contribution
required amount for 2007 and 2006 with common stock of the
Company. The computation of the 10% contribution of wages paid is
limited by ceiling wage amounts as outlined in the Internal Revenue
Code.
(d) All
executives also participate in the 401(k) plan and all received a $4,000
contribution during 2007 and 2006 as matching funds under the plan for their
contributions to the plan.
Grants
of Plan-Based Awards
On the
recommendation of the Compensation Committee, in 2007 the Board of Directors
approved stock awards under the U.S. Energy Corp. 2001 Stock Compensation Plan
and stock options under the 2001 ISOP to each of the named executive officers in
2007.
|
|
|
Estimated
Future Payouts Under Non-Equity Incentive Plan Awards
|
|
|
Extimated
Future Payouts Under Equity Incentive Plan Awards
|
|
|
All
Other Stock Awards
|
|
|
All
Other Option Awards
|
|
|
Exercise
or Base Price of Option Awards
|
|
Name
and Position
|
Grant
Date
|
|
Threshold
|
|
|
Target
|
|
|
Max
|
|
|
Threshold
|
|
|
Target
|
|
|
Max.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
|
(#)
|
|
|
|
(#)
|
|
|
|
(#)
|
|
|
|
(#)
|
|
|
|
(# |
) |
|
($/SH)
|
|
Keith
G.
Larsen, Chairman
and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
15,000 |
(1) |
|
|
150,000 |
|
|
$ |
4.97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark
J. Larsen, President and
COO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
15,000 |
(1) |
|
|
200,000 |
|
|
$ |
4.97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
Scott Lorimer, Chief Financial Officer and
Treasurer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
15,000 |
(1) |
|
|
150,000 |
|
|
$ |
4.97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven
R. Youngbauer, General Counsel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
100,000 |
|
|
$ |
4.97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2007
|
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
45,000 |
|
|
|
600,000 |
|
|
|
|
|
(1)
|
Shares
granted under the 2001 Stock Compensation
Plan.
|
Outstanding
Equity Awards at December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
Awards
|
|
Stock
Awards
|
|
|
|
Number
of Securities Underlying Unexercised Options
|
|
|
Number
of Securities Underlying Unexercised Options
|
|
|
Equity
Incentive Plan Awards: Number of Securities Underlying Unexercised
Unearned Options
|
|
|
Option
Exercise Price
|
|
Option
Expiration Date
|
|
Number
of shares of stock that have not vested
|
|
|
Market
Value of shares of stock that have not vested
|
|
|
Equity
Incentive Plan Awards: Number of unearned shares, units or other rights
that have not vested
|
|
|
Equity
Incentive Plan Awards: Market or payout value of unearned shares, units or
other rights that have not vested
|
|
|
|
(#) |
|
|
(#) |
|
|
(#) |
|
|
($/SH)
|
|
|
|
(#) |
|
|
($) |
|
|
(#) |
|
|
($) |
|
Name
and Position
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Keith
G. Larsen
|
|
267,734 |
|
|
-- |
|
|
-- |
|
|
$ |
2.40 |
|
01/09/11
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
Chairman/CEO
|
|
100,000 |
|
|
-- |
|
|
-- |
|
|
$ |
3.90 |
|
12/06/11
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
52,556 |
|
|
-- |
|
|
-- |
|
|
$ |
2.25 |
|
12/07/11
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
59,350 |
|
|
-- |
|
|
-- |
|
|
$ |
2.46 |
|
06/30/14
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
100,000 |
|
|
-- |
|
|
-- |
|
|
$ |
3.86 |
|
10/13/15
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
30,000 |
|
|
120,000 |
|
|
-- |
|
|
$ |
4.97 |
|
07/26/17
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark
J. Larsen
|
|
27,782 |
|
|
-- |
|
|
-- |
|
|
$ |
2.88 |
|
09/25/08
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
President/COO
|
|
41,248 |
|
|
-- |
|
|
-- |
|
|
$ |
2.40 |
|
01/09/11
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
100,000 |
|
|
-- |
|
|
-- |
|
|
$ |
3.90 |
|
12/06/11
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
52,556 |
|
|
-- |
|
|
-- |
|
|
$ |
2.25 |
|
12/07/11
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
98,519 |
|
|
-- |
|
|
-- |
|
|
$ |
2.46 |
|
06/30/14
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
100,000 |
|
|
-- |
|
|
-- |
|
|
$ |
3.86 |
|
10/13/15
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
40,000 |
|
|
160,000 |
|
|
-- |
|
|
$ |
4.97 |
|
07/26/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
Scott Lorimer
|
|
80,233 |
|
|
-- |
|
|
-- |
|
|
$ |
2.40 |
|
01/09/11
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
CFO/Treasurer
|
|
100,000 |
|
|
-- |
|
|
-- |
|
|
$ |
3.90 |
|
12/06/11
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
52,556 |
|
|
-- |
|
|
-- |
|
|
$ |
2.25 |
|
12/07/11
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
59,350 |
|
|
-- |
|
|
-- |
|
|
$ |
2.46 |
|
06/30/14
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
100,000 |
|
|
-- |
|
|
-- |
|
|
$ |
3.86 |
|
10/13/15
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
30,000 |
|
|
120,000 |
|
|
-- |
|
|
$ |
4.97 |
|
07/26/17
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven
R. Youngbauer
|
|
25,000 |
|
|
-- |
|
|
-- |
|
|
$ |
2.46 |
|
06/30/14
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
General
Counsel
|
|
50,000 |
|
|
-- |
|
|
-- |
|
|
$ |
3.86 |
|
10/13/15
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
20,000 |
|
|
80,000 |
|
|
-- |
|
|
$ |
4.97 |
|
07/26/17
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
1,586,884 |
|
|
480,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option
Exercises and Stock Vested
|
|
|
Option
Awards
|
|
|
Stock
Awards
|
|
|
|
|
Number
of Shares Acquired on Exercise
|
|
|
Value
Realized on Exercise
|
|
|
Number
of Shares Acquired on Vesting
|
|
|
Value
Realized on Vesting
|
|
Name
and Position
|
|
|
(#)
|
|
|
($)
|
|
|
|
|
|
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Keith
G. Larsen
|
2007
|
|
|
77,718 |
|
|
$ |
276,400 |
|
|
|
15,000 |
|
|
$ |
115,300 |
(1) |
Chairman/CEO
|
2006
|
|
|
105,777 |
|
|
$ |
338,400 |
|
|
|
10,000 |
|
|
$ |
50,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark
J. Larsen
|
2007
|
|
|
70,925 |
|
|
$ |
238,400 |
|
|
|
15,000 |
|
|
$ |
115,300 |
(1) |
President/COO
|
2006
|
|
|
- |
|
|
$ |
- |
|
|
|
10,000 |
|
|
$ |
50,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
Scott Lorimer
|
2007
|
|
|
65,218 |
|
|
$ |
230,700 |
|
|
|
15,000 |
|
|
$ |
115,300 |
|
CFO/Treasurer
|
2006
|
|
|
40,650 |
|
|
$ |
129,300 |
|
|
|
10,000 |
|
|
$ |
50,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven
R. Youngbauer
|
2007
|
|
|
- |
|
|
$ |
- |
|
|
|
- |
|
|
$ |
- |
|
General
Counsel
|
2006
|
|
|
- |
|
|
$ |
- |
|
|
|
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
2007
|
|
|
213,861 |
|
|
$ |
745,500 |
|
|
|
45,000 |
|
|
$ |
345,900 |
|
|
2006
|
|
|
146,427 |
|
|
$ |
467,700 |
|
|
|
30,000 |
|
|
$ |
150,600 |
|
(1)
|
Value
of shares issued under the 2001 Stock Compensation Plan on date of
issue. U.S. Energy pays all taxes due on these shares as the
executive officer recipient has agreed not to sell, transfer or pledge
these shares until his retirement, permanent disability or
death.
|
Nonqualified
Deferred Compensation
None of
the executives participate in or have account balances in non-qualified defined
contribution plans or other deferred compensation plans maintained by U.S.
Energy Corp. The Compensation Committee may elect to provide these
benefits in the future but there are no current plans to do so.
Employment
Agreements
We do not
have employment agreements with the executives.
Potential Payments upon Change in
Control.
U.S.
Energy Corp. has Executive Severance and Non-Compete Agreements with Messrs.
Keith G. Larsen, Mark J. Larsen, Robert Scott Lorimer and Steven R. Youngbauer
which combine severance and non-compete provisions. The following
summarizes the principal features.
Each
agreement provides that if the executive’s employment is terminated within three
years of a change in control of the Company, the Company will be required to pay
(i) an amount equal to three times the average annual compensation over the
prior five years ending before the change in control, (ii) legal fees and
expenses incurred by such persons as a result of termination; (iii) the
difference between market value (as of the termination date) of shares issuable
on exercise of options, and the options' exercise price; (iv) continued
insurance coverage (life, health, medical, and disability; (v) any unpaid
bonuses (including a pro rata (based on months of service in the year of
termination) portion of bonuses paid in the calendar year after termination, if
he served for at least six months in the termination year); (vi) two years of
non-compete compensation ($250,000 per year) and (vii) a $1 million term life
policy with the premiums to be paid by the Company and total premiums paid will
be reimbursed from any death benefits paid.
A change
of control is defined to mean:
|
·
|
the
acquisition by any person or entity of the beneficial ownership of
securities representing 25% or more of the combined voting power of the
then outstanding voting securities, whether or not that ownership is
coupled with or followed by election of new directors who make up a
majority of the board;
|
|
·
|
during
any two consecutive years, the directors at the beginning of the period
cease to be a majority of the board;
or
|
|
·
|
as
a result of a tender offer, merger, contested election or similar
transactions, the directors before the transaction no longer make up a
majority of the board (unless the change in the board was approved by
majority vote of the directors before the
transaction).
|
If there
is a change in control, the executive’s employment will be deemed terminated
thereafter if he is assigned duties inconsistent with prior responsibilities; he
is not re-elected to the same positions; his base salary is reduced; or any
benefit or compensation elements are changed adversely to him.
In
addition, during the two years after termination of employment, the executive
will not directly or indirectly be involved in the minerals business in most of
the Western United States.
This
table shows our potential payment obligations under the severance and
non-compete agreements, as if termination took place on December 31,
2007. Actual payments could be more or less. For the
option buyout component, the closing market price of U.S. Energy’s stock on
December 31, 2007 is used. No estimate is made of legal fees that
might be involved and no provision is made for bonuses.
Table
of Potential Change in Control – Termination Payments
(as
if termination had been December 31, 2007)
Amounts
shown as 300% of average compensation are based on the average annual salary
from the effective date through December 31, 2007.
Name
and Position
|
|
300%
of Average Compensation
|
|
|
Value
of Option Exercise at 12-31-07 (1)
|
|
|
Value
of Stock Awards at 12-31-07 (2)
|
|
|
Value
of Health Insurance for Three Years
|
|
|
Total
|
|
Keith
G. Larsen,
Chief
Executive
Officer
Effective
Date 2-14-01
|
|
$ |
539,800 |
|
|
$ |
780,700 |
|
|
$ |
392,300 |
|
|
$ |
54,000 |
|
|
$ |
1,766,800 |
|
Mark.
J. Larsen,
President
Effective
Date 2-14-01
|
|
$ |
454,300 |
|
|
$ |
469,800 |
|
|
$ |
392,300 |
|
|
$ |
54,000 |
|
|
$ |
1,370,400 |
|
Robert
Scott Lorimer, Chief Financial Officer &
Treasurer
Effective
Date 4-18-92
|
|
$ |
487,400 |
|
|
$ |
433,800 |
|
|
$ |
392,300 |
|
|
$ |
54,000 |
|
|
$ |
1,367,500 |
|
Steven
Youngbauer , General
Counsel
Effective
Date 5-1-07
|
|
$ |
376,200 |
|
|
$ |
64,300 |
|
|
$ |
392,300 |
|
|
$ |
54,000 |
|
|
$ |
886,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
1,857,700 |
|
|
$ |
1,748,600 |
|
|
$ |
1,569,200 |
|
|
$ |
216,000 |
|
|
$ |
5,391,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Equals
closing price on December 29, 2007 less the strike price of issued options
times the number of exercisable
options.
|
(2)
|
Stock
awards pursuant to the 2001 Stock Compensation
Plan
|
Retirement
Policy.
U.S.
Energy Corp. adopted an executive retirement policy in 2005 and amended it in
2006 and 2007. The executive retirement policy as well as the policy
for all U.S. Energy employees sets a mandatory retirement age of 70, although
the Board of Directors may request service thereafter.
The
executive retirement policy provides retirement benefits for an eligible officer
who has reached 60 years of age, has served a minimum of 15 years as an
executive officer, and remains employed until December 31, 2010. All
conditions of eligibility must be met completely to qualify for cash payments
under the plan. The officers eligible for this benefit, under the
plan as amended, are the Keith G. Larsen, Mark J. Larsen and Robert Scott
Lorimer; none are eligible to retire in 2008.
At
retirement, an executive will receive for five years 50% of the greater of (i)
annual base salary (using his final regular pay check to calculate the annual
rate), or (ii) the average annual salary which he received over the last five
years. The benefit will be paid monthly (in accordance with normal
bi-weekly payroll practices) for five years following retirement from
employment. The first six months of benefits may be paid in the
seventh month for a ‘specified employee’ (as defined in section 409(a)(2)(B) of
the Code) instead of bi-weekly for the first six months. At death,
the unpaid installments will be paid to his designee (or classes of preference
beneficiaries, if there is no designee). The benefits are not
assignable. No perquisites will be continued or
provided. Life and medical insurance coverage are not
continued.
The
retired executive will be available to U.S. Energy for up to 1,040 hours per
year during the benefit period for consulting or other service the Board deems
is needed, for which he will not be paid anything. Service in
addition to the annual available hours would be compensated on an hourly basis
at the rate in effect at retirement. This retirement benefit may be
extended beyond the benefit period at the discretion of the boards, at a rate
which would be negotiated (but not less than the initial retirement
rate).
During
2007 the Board of Directors of U.S. Energy ratified the recommendation of the
Compensation Committee to fund the Executive Retirement Plan for the three
eligible officers. The Board of Directors further directed that
$375,500 be set aside in a Rabbi Trust to be managed by an independent trustee
pursuant to the requirements of the trust and executive retirement
plan. Annually additional amounts will be set aside to fund the
retirement plan and will be paid out per the plan by the trustee to eligible
retired officers pursuant to the terms of the plan. The following
table sets forth the status of the Executive Retirement Plan:
Name
and Position
|
Plan
Year
|
|
Number
of Years Credited Service
|
|
|
Present
Value of Accumulated Benefit
|
|
|
Payments
during Last Calendar Year
|
|
|
|
|
|
|
|
|
|
|
|
|
Keith
G. Larsen
|
2007
|
|
|
10 |
|
|
$ |
320,000 |
|
|
$ |
- |
|
Chairman/CEO
|
2006
|
|
|
9 |
|
|
$ |
235,200 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark
J. Larsen
|
2007
|
|
|
2 |
|
|
$ |
245,200 |
|
|
$ |
- |
|
President/COO
|
2006
|
|
|
1 |
|
|
$ |
180,300 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
Scott Lorimer
|
2007
|
|
|
16 |
|
|
$ |
439,290 |
|
|
$ |
- |
|
CFO/Treasurer
|
2006
|
|
|
15 |
|
|
$ |
322,200 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
2007
|
|
|
|
|
|
$ |
1,004,490 |
|
|
$ |
- |
|
|
2006
|
|
|
|
|
|
$ |
737,700 |
|
|
$ |
- |
|
Two
former executive officers were eligible for benefits under the Plan, John L.
Larsen and Daniel P. Svilar. Mr. Larsen, former Chairman, CEO and
President, qualified under the plan and passed away on September 4,
2006. His estate received $13,100 pursuant to the Executive
Retirement Plan and $143,800 pursuant to a death benefit plan which no longer is
effective to any executive officer. Mr. Larsen’s estate will receive
benefits earned under the Plan through September 4, 2011. Daniel P.
Svilar, former General Counsel and Secretary, retired on January 12,
2007. During 2007, Mr. Svilar received $81,700 in benefits pursuant
to the Plan. Mr. Svilar will continue to receive benefits pursuant to
the Executive Retirement Plan through January 12, 2012. The benefits
due to Mr. John L. Larsen and Mr. Daniel P. Svilar are not funded.
Mr. John
L. Larsen, Daniel P. Svilar and Robert Scott Lorimer, current CFO, Treasurer and
Director, performed extraordinary services in the acquisition of and
preservation of uranium and other assets over a period of 25
years. The work performed was integral to having the assets available
for sale to sxr Uranium One Inc. in 2007 and required many years of longer than
normal work hours and extraordinary demands placed on the three executive
officers in addition to the performance of their regular duties to U.S.
Energy. The Board of Directors accepted the recommendation of the
Compensation Committee to pay each of the three executives $500,000 for such
services and further agreed to pay the taxes due on the bonus. The
payments are unconditional as a result of the extraordinary efforts of the three
executives. The three executives also serve as board members but
recused themselves from the vote and did not participate in any of the
deliberations of the Compensation Committee or Board of Directors regarding the
bonuses. Payment was made to the estate of John L. Larsen and to
Daniel P. Svilar in two equal payments in 2006 and 2007. Mr. Lorimer
will be paid in eight equal quarterly payments of $62,500, net of taxes,
beginning March 31, 2008 and ending December 31, 2009.
Effective
December 28, 2007, Harold F. Herron, a former officer and director of U.S.
Energy and certain of its subsidiaries, elected to take early
retirement. Mr. Herron, although not fully vested in the Executive
Retirement Plan, had served the company for many years. As a result
of that service and the decision to retire early, the Board of Directors made a
one time payment to Mr. Herron of $600,000 in January 2008. U.S.
Energy further agreed to pay up to $10,000 in documented outplacement expenses
for one year from the effective date of Mr. Herron’s retirement. In
return for the retirement benefit payment Mr. Herron agreed to (1) vote
consistent with management on all matters affecting the Company or its
subsidiaries or affiliates and (2) for a period of three years assist the
Company with any project subject in which Mr. Herron was involved during his
employment including litigation support. During 2007, Mr. Herron
received total compensation of $2,065,300. This compensation
consisted of $205,300 base pay, $400 life insurance, $709,800 Uranium One
corporate bonus, $20,600 holiday bonus, $115,300 stock bonus and taxes due on
the stock bonus, $252,200 exercise of non qualified stock options and $761,700
for the release of forfeitable shares and the payment of taxes at time of
release. Mr. Herron continues to serve as the president of Sutter
Gold Mining, Inc.
Non-Employee
Director Compensation Table
Directors
who are employees are not paid for service as directors. Non-employee
directors receive a combination of cash payments ($1,000 per month and $500 for
attending board meetings in person), and reimbursements for any travel expenses
incurred in attending the meetings. Amounts paid to these directors
in 2006 and 2007 were as follow: