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
Filed by
the Registrant ý Filed by a
party other than the Registrant ¨
Check the
appropriate box:
¨ Preliminary
Proxy Statement
¨ Confidential, for Use of the
Commission Only (as permitted by Rule 14a-6(e)(2))
ý Definitive
Proxy Statement
¨ Definitive
Additional Materials
¨ Soliciting
Material Pursuant to §240.14a-12
U.S. Energy
Corp.
(Name of
Registrant as Specified In Its Charter)
(Name of
Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
ý No
fee required.
¨ Fee
computed on table below per Exchange Act Rules 14a-6(I)(1) and
0-11.
1)
|
Title
of each class of securities to which transaction
applies:
|
2)
|
Aggregate
number of securities to which transaction applies:
|
3)
|
Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
|
4)
|
Proposed
maximum aggregate value of transaction:
|
5)
|
Total
fee
paid:
|
U.S.
ENERGY CORP.
877
North 8th West
Riverton,
Wyoming 82501
-------------------------
Notice
of Annual Meeting of Shareholders
-------------------------
We are
pleased to give you notice of our Annual Meeting of Shareholders:
Date: Friday,
June 26, 2009.
Time: 10:00
AM MDT
Place: 877
North 8th West, Riverton, Wyoming 82501
|
Purposes:
|
-
|
Elect
the two directors identified in the accompanying proxy statement (Keith G.
Larsen and Allen S. Winters) to serve until the third succeeding annual
meeting of shareholders, and until their successors have been duly elected
or appointed and qualified;
|
-
|
Ratify
appointment of the independent auditor;
and
|
-
|
For
any other purpose that properly may come before the meeting, in accordance
with the Bylaws of the Company.
|
Record
Date: April 27,
2009. The stock transfer books will not be closed.
The
Securities and Exchange Commission requires companies to furnish proxy materials
over the Internet, which reduces environmental impact as well as printing and
mailing costs. Unless otherwise requested by the shareholder we are
mailing to most of our stockholders a Notice of Internet Availability of Proxy
Materials, instead of mailing paper copies of the proxy
materials. The Notice of Availability contains instructions on how to
access the materials on the Internet, and also on how to request a paper copy of
the proxy materials. All stockholders who do not receive a Notice of
Availability will receive a paper copy of the proxy materials by
mail.
Whether
or not you plan to attend the meeting, please take the time to vote
-
Ø
|
By
the Internet – Go to the website shown on your proxy card or the Notice of
Internet Availability; or
|
Ø
|
By
Telephone – Call the toll free number shown on the notice of availability;
or
|
Ø
|
By
mail – Complete, sign and date your proxy card and mail it in the postage
paid envelope.
|
If you
owned shares in the Company at the close of business on April 27, 2009, you may
attend and vote at the meeting. The names of shareholders of record
entitled to vote at the meeting will be available for review at the meeting and
during regular business hours at our headquarters in Riverton,
Wyoming.
If you
wish to attend the meeting and vote in person, but you are a beneficial owner
(the shares are held in “street name”), contact your broker, as soon as you
receive this notice, to obtain a “legal proxy” which you must bring to the
meeting in order to vote in person at the meeting.
By Order of the
Board of Directors
Dated: May
15,
2009 Steven
R. Youngbauer, Secretary
TABLE
OF CONTENT
Page
Who
Can Vote
|
4
|
Quorum
and Voting Rights
|
4
|
How
Your Proxy Will Be Voted; Recommendation of the Board
|
5
|
Granting
Your Proxy
|
5
|
Revoking
Your Proxy
|
5
|
Proxy
Solicitation
|
5
|
Requirement
and Deadlines for Shareholders to Submit Proxy Proposals
|
6
|
Corporate
Governance, Audit Committee, Compensation Committee and Nominating
Committee
|
6
|
Advance
Notice Requirements for Proposed Nominees to the Board of Directors, and
Other Proposals
|
7
|
Principal
Holder of Voting Securities and Ownership by Officers and
Directors
|
10
|
Proposal
1: Election of Directors
|
12
|
Directors
|
12
|
Filing
of Reports Under Section 16(a)
|
14
|
COMPENSATION
DISCUSSION AND ANALYSIS
|
14
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EXECUTIVE
COMPENSATION
|
20
|
Grants
of Pan-Based Awards
|
23
|
Outstanding
Equity Awards at December 31, 2008
|
24
|
Option
Exercises and Stock Vested
|
25
|
Potential
Payments upon Change in Control
|
28
|
Retirement
Policy
|
29
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Non-Employee
Director Compensation Table
|
31
|
Certain
Relationships and Related Transactions
|
32
|
Proposal
2: Ratification of the Appointment of Independent
Auditors
|
34
|
Principal
Accounting Fees and Services
|
35
|
Report
of the Audit Committee
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36
|
U.S.
ENERGY CORP.
877
North 8th West
Riverton,
Wyoming 82501
PROXY
STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
ON
FRIDAY, JUNE 26, 2009
The
Annual Report to Shareholders for the fiscal year ended December 31, 2008 is
available on or about May 15, 2009. The proxy materials consist of
this proxy statement and notice of annual meeting, and the Annual
Report.
This
proxy statement is provided in connection with a solicitation of proxies by the
Board of Directors of U.S. Energy Corp. (“U.S. Energy” or “the Company”) for the
annual meeting of shareholders (the "meeting") to be held on Friday, June 26,
2009, at 10:00 am MDT, and at any adjournments of the meeting.
Who
Can Vote
If you
held any shares of common stock on the record date (April 27, 2009), then you
will be entitled to vote at the meeting. If you held stock in your
own name, you may vote directly by internet, telephone, mail or in
person. If you own stock beneficially but in the record name (street
name) of an institution, you may instruct the record holder how to vote when the
record holder contacts you about voting and gives you the proxy
materials. If you are a beneficial owner and you wish to attend the
meeting and vote in person, contact your broker, as soon as you receive this
notice, to obtain a “legal proxy” which you must bring to the meeting in order
to vote in person at the meeting.
Common
Stock Outstanding on the Record Date: 21,336,529 Shares
Quorum
and Voting Rights
A quorum
for the meeting will exist if a majority of the voting power of the shareholders
is present at the meeting, in person or represented by properly executed proxy
delivered to us prior to the meeting. Shares of common stock present
at the meeting that abstain/withhold from voting, or that are the subject of
broker non-votes, will be counted as present for determining a
quorum. A broker non-vote occurs when a nominee holding stock in
street name or otherwise for a beneficial owner does not vote on a particular
matter because the nominee does not have discretionary voting power with respect
to that item and has not received voting instructions from the beneficial
owner.
You are
entitled to one vote for each share of U.S. Energy Corp. common stock you hold,
except that in the election of directors you may cumulate your votes. Cumulative
voting generally allows each holder of shares of common stock to multiply the
number of shares owned by the number of directors being elected, and to
distribute the resulting number of votes among nominees in any proportion that
the holder chooses. Nominees in number equal to the seats to be
filled, who receive a plurality of votes cast, will be elected as
directors. If you withhold from voting, your shares will not be
counted for any director.
Each of
the other proposals, and any other matter which properly comes before the
meeting in accordance with the Bylaws of the Company, will be approved if the
number of votes cast in favor exceeds the number of votes opposed.
Withholdings
and broker non-votes will have no effect on the election of
directors. Abstentions as to all other matters which properly may
come before the meeting will be counted as votes against those
matters. Broker non-votes as to all other matters will not be counted
as votes for or against, and will not be included in calculating the number of
votes necessary for approval of these matters.
How
Your Proxy Will Be Voted; Recommendation of the Board
The Board
of Directors is soliciting a proxy in the enclosed form to provide you with the
opportunity to vote on all matters scheduled to come before the meeting (as
stated in the Notice of Annual Meeting which accompanies this proxy statement),
whether or not you attend in person.
The Board
of Directors recommends you vote in favor of the nominees for directors (Keith
Larsen and Allen Winters, as stated in the Notice of Annual Meeting), and in
favor of ratifying management's appointment of the audit firm. These
are the purposes of the meeting (as provided in the Company’s Bylaws in
conformity with Wyoming law), and they are also referred to as “matters” in this
proxy statement. Only the matters identified in the Notice will be
considered at the meeting and voted upon by the shareholders.
Granting
Your Proxy
If you
properly complete the appropriate form of proxy in accordance with the Notice
and Access rules, your shares will be voted as you specify. If you
make no specifications, your proxy will be voted in favor of all
proposals.
We expect
no matters to be presented for action at the meeting other than the matters
stated in the Notice of Annual Meeting accompanying this proxy
statement. However, as permitted by SEC rule 14a-4(c), the proxy will
confer discretionary authority with respect to any other matter that may
properly come before the meeting. The persons named as proxies intend
to vote in accordance with their judgment on any matters that may properly come
before the meeting.
Revoking
Your Proxy
If you
submit a proxy, you may revoke it later or submit a revised proxy at any time
before it is voted. You also may attend the meeting in person and
vote by ballot, which would cancel any proxy you previously
submitted.
Proxy
Solicitation
We will
pay all expenses of soliciting proxies for this proxy statement provided by the
Board of Directors for the meeting. In addition to solicitations by
mail, arrangements have been made for brokers and nominees to send proxy
materials to their principals, and we will reimburse them for their reasonable
expenses. We have not hired a solicitation firm for the
meeting. Our employees and directors will solicit proxies by
telephone or other means, if necessary; these people will not be paid for these
services.
Requirement
and Deadlines for Shareholders to Submit Proxy Proposals
Generally,
we hold the annual meeting on the last Friday in June. Under the
rules of the SEC, if a shareholder wants us to include persons to be considered
for nomination as directors in our proxy statement for presentation at our
Annual Meeting of Shareholders to be held in June 2010, information about the
persons to be considered must be received by us in writing at least 150 calendar
days in advance of the meeting date, at U.S. Energy Corp., 877 North 8th West,
Riverton, Wyoming 82501; Attention: Steven R. Youngbauer,
Secretary. In addition, the Board of Directors amended the Company’s
Bylaws in March 2009, to adopt “advance notice” requirements that apply to all
other proposals which shareholders may wish to have included in the Company’s
proxy statement, or to be stated in a notice for a special meeting of
shareholders. Information about other proposals must be provided to
the Company at least 90 calendar days before the meeting date. Please
see “Advance Notice Requirements for Proposed Nominees to the Board of
Directors, and Other Proposals,” below.
Corporate
Governance, Audit Committee, Compensation Committee and Nominating
Committee
Meetings of the
Board. The Board of Directors, which held formal meetings in
2008, has primary responsibility for directing management of the
business. The Board currently consists of seven
members. All meetings were attended by the full Board of directors
serving at the time of the meeting during 2008, except for Mr. Anderson, who did
not attend one meeting. The Board conferred informally on several
other occasions during the year. From time to time the directors also
approve various matters by consent minutes without conducting formal meetings;
there were six such proceedings in 2008.
Attendance by Directors at Annual
Meetings. Although most of the directors attend annual
meetings of shareholders, we do not require such attendance. All of
the directors attended the 2008 annual meeting either in person or on the
telephone, and the regular meeting of the Board of Directors following the 2008
annual meeting of shareholders.
Communications from Shareholders to
the Board of Directors. Shareholders may send communications
to the Board of Directors, by addressing their communications to Keith G.
Larsen, Chief Executive Officer and Chairman of the Board of Directors, or Mark
J. Larsen, President, at 877 N. 8th West, Riverton, Wyoming
82501. The independent directors have established a process for
collecting and organizing communications from shareholders. Pursuant
to this process, Keith Larsen and Mark Larsen will determine which of the
communications address matters of substance and which should be considered by
all directors, and will send those communications to all the directors for their
consideration.
Audit Committee. To
provide effective direction and review of fiscal matters, the Board has
established an Audit Committee. The Audit Committee has the
responsibility of reviewing our financial statements, exercising general
oversight of the integrity and reliability of our accounting and financial
reporting practices, and monitoring the effectiveness of our internal control
systems. The Audit Committee also recommends selection of auditing
and internal audit firms and exercises general oversight of the activities of
our independent auditors, principal financial and accounting officer and
accounting employees and related matters. The Chairman of the Audit Committee is
Michael Anderson, a Certified Public Accountant. Other members of the
Audit Committee are Allen S. Winters, H. Russell Fraser and Michael Feinstein, a
non- practicing Certified Public Accountant. All members of the Audit
Committee are independent directors under criteria established by rule
4200(a)(15) adopted by the National Association of Securities Dealers, Inc.
("NASD," also now known as the Financial Industry Regulatory Authority,
“FINRA”).
The Board
of Directors has determined that Michael H. Feinstein and Michael T. Anderson
both are Audit Committee financial experts as defined in rule 401(h) of the
SEC's regulation S-K.
The Audit
Committee met seven times in 2008. This Committee has reviewed our
financial statements for the twelve months ended December 31, 2008 and discussed
them with management. The Committee also discussed with the
independent audit firm the various matters required to be discussed in SAS 63
(Codification of Statements on Auditing Standards, AU 380). Based on
the foregoing, the Audit Committee recommended to the Board of Directors that
the audited financial statements be included in our Annual Report on Form 10-K
for the twelve months ended December 31, 2008. The Audit Committee
also reviews and reassesses the adequacy of the Audit Committee Charter on an
annual basis.
Compensation
Committee. The Company has a Compensation Committee, whose
members are Allen S. Winters, H. Russell Fraser, Michael T. Anderson, and
Michael H. Feinstein. These members are independent under criteria
established by the NASD. Mr. Feinstein serves as the Chairman of the
Compensation Committee. This Committee met formally on four occasions
in 2008, and discussed compensation matters informally several times throughout
the fiscal year. Action was taken once by consent minutes, without a
meeting. All Compensation Committee members attended all meetings of
their Committee during 2008 either in person or by phone.
The
Compensation Committee reviews and recommends to the Board of Directors
compensation packages for the officers of U.S. Energy Corp. Please
see the Compensation Discussion and Analysis under “Executive Compensation”
below.
Charters for the Audit, Compensation,
and Nominating Committees; Code of Ethics. The charters of the
Audit Committee, the Compensation Committee, and the Nominating Committee, may
be viewed at our web site (www.usnrg.com), at the tab “Investor Relations,” then
go to “Corporate Governance.” The Code of Ethics also may be viewed
at that location. If these documents are amended (or if the Code of
Ethics should be waived in any respect), the amendments (and the occurrence of a
waiver of the Code of Ethics), will be disclosed on the website as required by
the Securities and Exchange Commission. Copies of each of these
documents are available without charge to any person who requests them, by
sending a request to U.S. Energy Corp., Attn: Steven R. Youngbauer, Secretary,
877 N. 8th W.,
Riverton, Wyoming 82501.
Executive
Committee. The Executive Committee members are Mark J. Larsen,
Chairman, Keith G. Larsen, Robert Scott Lorimer and Allen S.
Winters. This Committee helps implement the Board of Directors'
overall directives as necessary. This Committee usually does not
conduct formal meetings.
Advance
Notice Requirements for Proposed Nominees to the Board of Directors, and Other
Proposals
Nominating Committee and
Nominating Process. When needed as determined by the Board of
Directors, the Nominating Committee considers and recommends to the Board of
Directors individuals who may be suitable to be nominated to serve as
directors. Allen S. Winters, H. Russell Fraser, Michael T. Anderson,
and Michael H. Feinstein are the Nominating Committee members; they are
independent under criteria established by the NASD. Mr. Winters
serves as Chairman of the Nominating Committee. This Committee met
once in 2008, and held proceedings by consent instead of a meeting once in
2008.
The
Nominating Committee has adopted a written charter regarding the Company's
director and officer nomination process. The Nominating Committee
approves all nominations to serve on the Board of Directors as well as
Officers.
Pursuant
to its charter (as amended in April 2009), the Nominating Committee has adopted
a policy for consideration of any director candidates recommended by
shareholders, and may (or may not) recommend to the Board of Directors that
candidate(s) be put on an Annual Meeting election slate and identified in the
Company's proxy statement, if:
· At
least 150 calendar days before the meeting date, the shareholder requests in
writing that the Nominating Committee consider an individual for inclusion as a
director nominee in the next proxy statement for an Annual
Meeting. The shareholder must identify the individual and provide
background information about the individual sufficient for the Committee to
evaluate the suggested nominee's credentials. Such requests should be
addressed to Keith G. Larsen, Chief Executive Officer and Chairman of the Board
of Directors who will forward the requests to the Nominating
Committee.
· The
candidate meets certain specific minimum qualifications: Substantial experience
in top or mid-level management (or serving as a director) of public mineral
exploration companies, with particular emphasis on understanding and evaluating
mineral properties for either financing, exploration and development, or joint
venturing with industry partners; contacts with mining or oil and gas industry
companies to develop strategic partnerships or investments with the Company; and
the ability to understand and analyze complex financial statements. A
shareholder-recommended candidate also will have to possess a good business and
personal background, which the Nominating Committee will independently
verify. These same categories of qualifications will be used by the
Nominating Committee in considering any nominee candidate, whether recommended
by a shareholder, an officer, or another director.
·
The
Company is provided with all information relating to a shareholder-recommended
candidate that is required to be disclosed in solicitations of proxies for
election of directors in an election contest, or is otherwise required, in each
case pursuant to Regulation 14A under the Securities Exchange Act of
1934;
·
The
Company is informed whether and the extent to which any derivative instrument,
swap, option, warrant, short interest, hedge or profit interest or other
transaction has been entered into by or on behalf of the recommending
shareholder or the candidate, with respect to stock of the Company, and whether
any other agreement, arrangement or understanding (including any short position
or any borrowing or lending of shares of stock) has been made by or on behalf of
such holder or candidate, the effect or intent of any of the foregoing being to
mitigate loss to, or to manage risk of stock price changes for, such holder or
candidate or to increase or decrease the voting power or pecuniary or economic
interest of such holder or candidate with respect to stock of the Company;
and
·
The
Company receives representations from the shareholder (i) that he, she or it is
a holder of record of stock of the Company entitled to vote at a meeting of
stockholders and intends to appear in person or by proxy at the meeting to
propose such nomination; and (ii) whether the shareholder or the beneficial
owner, if any, intends or is part of a group which intends to solicit proxies
from other stockholders in support of such nomination (if the Company’s Board of
Directors determines to identity the candidate in the Company’s proxy
statement).
These
procedures also are mandated by the Company’s Bylaws, as amended in March
2009.
Although
all shareholder-recommended candidates, and all candidates recommended by
another director or by an officer, will be evaluated by the Nominating Committee
in good faith, the full Board of Directors, by majority vote, will make the
final decision whether to include an individual’s name in an Annual Meeting
notice and identify the individual in the Company’s proxy statement for that
Annual Meeting.
For the
2009 Annual Meeting, the Nominating Committee has not received a request from
any shareholder for consideration of a nominee candidate.
Advance
Notice Requirement for Other Shareholder Proposals
For any
other matter to be considered as a proper purpose for consideration by the
shareholders at an annual or special meeting (referred to below as an “Additional Purpose”),
each of the conditions set forth below must be satisfied in order for the
Additional Purpose to be included in the Company’s notice of the
meeting. If the conditions are satisfied, an Additional Purpose would
be set forth in either the Company’s proxy statement, or a proxy statement
prepared by the shareholder or shareholders requesting that the matter be voted
upon by all shareholders. Pursuant to the Bylaws, only the holder or
holders of at least 50% of the outstanding shares may demand that the Company
convene a special meeting of shareholders.
The
conditions also must be met in order for a shareholder to make a motion from the
floor of a meeting to nominate a person for election to the Board, if such
person has not been included as a director candidate in the Company’s notice of
the meeting.
At least
90 calendar days before the date for the meeting, the requesting shareholder
shall give written notice to the Secretary of the Company,
providing:
(a) a
brief description of the Additional Purpose which the shareholder wishes to
present to the meeting;
(b) the
reason why the Additional Purpose is sought to be presented at the
meeting;
(c) a
statement of any material interest which the requesting shareholder or its
beneficial owners have in the Additional Purpose;
(d) as
to the requesting shareholder giving the notice and the beneficial owner, if
any, on whose behalf the proposal to nominate or another proposal is made, a
statement of (1) the requesting shareholder’s and such beneficial owner’s name
and address, (2) the number of shares of the Company owned of record or
beneficially by the requesting shareholder and such beneficial owner, (3) the
name of each nominee holder of shares owned beneficially but not of record by
the requesting shareholder and the number of shares of stock held by each such
nominee holder, and (4) whether and the extent to which any derivative
instrument, swap, option, warrant, short interest, hedge or profit interest or
other transaction has been entered into by or on behalf of the requesting
shareholder with respect to stock of the Company and whether any other
agreement, arrangement or understanding (including any short position or any
borrowing or lending of shares of stock) has been made by or on behalf of the
requesting shareholder, the effect or intent of any of the foregoing being to
mitigate loss to, or to manage risk of stock price changes for, such shareholder
or to increase or decrease the voting power or pecuniary or economic interest of
the requesting shareholder with respect to stock of the Company;
(e) a
description of all agreements, arrangements or understandings between the
requesting shareholder and any other person or persons (including their names)
in connection with the proposal of the Additional Purpose;
(f) a
representation that the shareholder is a holder of record of stock of the
Company entitled to vote at such meeting and intends to appear in person or by
proxy at the meeting to propose such business or nomination and a representation
whether the shareholder or the beneficial owner, if any, intends or is part of a
group which intends to solicit proxies from other stockholders in support of
such nomination; and
(g) the
text of any amendment to the Articles of Incorporation of the Company, or the
Bylaws of the Company, which would be part of the Additional
Purpose.
Principal
Holders of Voting Securities and Ownership by Officers and
Directors
The
following are record holders as of April 10, 2009 who owned more than five
percent of the outstanding common stock, as well as the stock beneficially held
by each director and nominee, and each officer, and by all officers and
directors as a group. This information is based on SEC reports or as
otherwise known to us. Beneficial ownership includes the shares
underlying presently exercisable options.
Except as
noted, each holder exercises sole voting and dispositive powers over the shares
listed opposite the holder's name, excluding shares subject to forfeiture and
those held in ESOP accounts established for the holder's benefit.
The ESOP
Trustees, Keith G. Larsen and Mark J. Larsen, exercise voting powers over
non-allocated ESOP shares and dispositive powers over all ESOP
shares. It should be noted that voting and dispositive powers over
certain shares are shared by one or more of the listed holders; those shares are
reported for each holder having a shared interest.
|
|
Amount
and Nature of Beneficial Ownership
|
|
Total
|
|
|
Name
and Address
|
|
Voting
Rights
|
|
Dispositive
Rights
|
|
Beneficial
|
|
Percent
|
of
Benificial Owner
|
|
Sole
|
Shared
|
|
Sole
|
Shared
|
|
Ownership
|
|
of
Class (1)
|
|
|
|
|
|
|
|
|
|
|
|
Keith
G. Larsen
|
*(2)
|
1,159,217
|
466,513
|
|
1,078,975
|
1,072,843
|
|
2,232,060
|
|
9.9%
|
|
|
|
|
|
|
|
|
|
|
|
Mark
J. Larsen
|
*(3)
|
886,756
|
-
|
|
820,095
|
606,330
|
|
1,493,086
|
|
6.7%
|
|
|
|
|
|
|
|
|
|
|
|
Robert
Scott Lorimer
|
*(4)
|
1,050,463
|
-
|
|
962,097
|
-
|
|
1,050,463
|
|
4.7%
|
|
|
|
|
|
|
|
|
|
|
|
Mike
Anderson
|
*(5)
|
113,087
|
-
|
|
113,087
|
-
|
|
113,087
|
|
0.5%
|
|
|
|
|
|
|
|
|
|
|
|
Michael
H. Feinstein
|
*(6)
|
61,158
|
-
|
|
61,158
|
-
|
|
61,158
|
|
0.3%
|
|
|
|
|
|
|
|
|
|
|
|
H.
Russell Fraser
|
*(7)
|
166,363
|
1,300
|
|
166,363
|
1,300
|
|
167,663
|
|
0.8%
|
|
|
|
|
|
|
|
|
|
|
|
Allen
S. Winters
|
*(8)
|
32,600
|
-
|
|
32,600
|
-
|
|
32,600
|
|
0.1%
|
|
|
|
|
|
|
|
|
|
|
|
Steven
R. Youngbauer
|
**(9)
|
364,538
|
-
|
|
336,574
|
-
|
|
364,538
|
|
1.7%
|
|
|
|
|
|
|
|
|
|
|
|
All
officers and directors as a group (nine persons)
|
(10)
|
3,834,182
|
467,813
|
|
3,570,949
|
607,630
|
|
3,835,482
|
|
15.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corriente
Advisors, LLC
|
(11)
|
2,258,294
|
|
|
2,258,294
|
|
|
2,258,294
|
|
10.4%
|
|
|
|
|
|
|
|
|
|
|
|
Sprott
Asset Management
|
(11)
|
1,778,500
|
|
|
1,778,500
|
|
|
1,778,500
|
|
8.2%
|
|
|
|
|
|
|
|
|
|
|
|
Barclays
Global Investors
|
(12)
|
1,100,000
|
|
|
1,100,000
|
|
|
1,100,000
|
|
5.1%
|
|
|
|
|
|
|
|
|
|
|
|
(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 274,335 directly held shares,
80,242 shares held in an ESOP account established for his benefit and 804,640
shares underlying options. He exercises shared voting rights over
466,513 shares held in a Family Trust for which he serves as
Trustee. Mr. Keith Larsen exercises sole dispositive rights over
274,335 directly held shares, and 804,640 shares underlying
options. He exercises shared dispositive rights over 466,513 shares
in his capacity as the Trustee of a Family Trust and 606,330 shares in his
capacity as an ESOP Trustee with the other ESOP Trustee.
(3) Mr.
Mark Larsen exercises sole voting rights over 152,772 shares held directly,
66,661 shares held in the ESOP account established for his benefit, and 667,323
shares underlying options. Mr. Larsen exercises sole
dispositive rights over 152,772 shares held directly and 667,323 shares
underlying his options. He exercises shared dispositive rights over
606,300 shares in his capacity as an ESOP Trustee with the other ESOP
Trustee.
(4) Mr.
Lorimer exercises sole voting rights over 344,958 directly held shares, 88,366
shares held in the ESOP account established for his benefit, and 617,139 shares
underlying options. He exercises sole dispositive rights over 344,958
directly held shares, and 617,139 shares underlying options.
(5) Mr.
Anderson exercises sole voting rights over 8,087 directly owned shares and
105,000 shares underlying his options. He exercises sole dispositive
rights over 8,087 directly owned shares and 105,000 shares underlying his
options.
(6) Mr.
Feinstein exercises sole voting rights over 6,158 directly held shares and
55,000 shares underlying options. Mr. Feinstein exercises sole
dispositive rights over 6,158 directly held shares and 55,000 shares underlying
options.
(7) Mr.
Fraser exercises sole voting rights over 16,363 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 145,000 shares underlying options. He
exercises shared voting rights over 1,300 shares held directly by his
wife. Mr. Fraser exercises sole dispositive rights over 16,363
directly held shares, 4,000 IRA shares, 1,000 held in a street name account for
his benefit and 145,000 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 2,600
directly held shares and 30,000 shares underlying options.
(9) Mr.
Youngbauer exercises sole voting rights over 86,574 shares held directly, 27,964
shares held in the ESOP account established for his benefit and 250,000 shares
underlying options. He exercises sole dispositive rights over the
86,574 shares directly held and 250,000 shares underlying his
option.
(10) The
group exercises sole voting rights over 891,847 directly held shares, 1,000
shares held in joint tenancy, 4,000 shares held in IRAs, 263,233 ESOP shares and
2,674,102 shares underlying options. Shared voting rights are
exercised over 1,300 shares held in IRA accounts for spouses and 466,513 shares
held in a Family Trust. The sole dispositive shares
consist of 891,847 directly held shares, 1,000 shares held in joint tenancy,
4,000 shares held in IRAs and 2,674,102 shares underlying
options. The group exercises shared dispositive rights over 1,300
shares held in IRA accounts for spouses, and 606,330 shares held in the
ESOP.
(11) Based
upon the March 20, 2009 NASDAQ Pinpoint Market Intelligence Weekly
Report.
* 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. The nominees for election, Keith
G. Larsen and Allen S. Winters, are incumbent directors standing for
re-election. 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 was exempted from the
mandatory retirement age for one additional term and he
was re-elected in 2008. He will serve until the annual
meeting in 2011 at which time he will be required to retire from the Board of
Directors. No other directors have been given the exemption from
mandatory retirement from the Board of Directors. On April 17, 2009,
the Board of Directors of the Company adopted and approved, effective
immediately, an amendment to Section 2 of Article III of the Company’s Bylaws,
to limit service of the independent directors to two terms. If
recommended by the Chairman of the Board and approved by the full Board, an
independent director may serve one additional term for a total of three, three
year terms, maximum.
Current
directors are:
|
Other
|
|
Meeting
at
|
Name,
age and
|
positions
with
|
Director
|
which
term
|
designation
|
with the Company
|
Since
|
will expire
|
|
|
|
|
Keith
G. Larsen (50)
|
CEO
and Chairman
|
1997
|
2009
|
|
|
|
|
Mark
J. Larsen (46)
|
President
and COO
|
2006
|
2010
|
|
|
|
|
Robert
Scott Lorimer (58)
|
CFO
and Treasurer
|
2008
|
2011
|
|
|
|
|
Allen
S. Winters (69)
|
|
2007
|
2009
|
|
|
|
|
Michael
H. Feinstein (73)
|
|
2004
|
2011
|
|
|
|
|
H.
Russell Fraser (68)
|
|
1996
|
2011
|
|
|
|
|
Mike
Anderson (57)
|
|
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 Keith G. Larsen and Allen S.
Winters as directors will expire at the 2012 annual meeting.
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 50, 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.
Mark J. Larsen, age 46, 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 58,
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 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 59,
was appointed General Counsel and Secretary in January 2007. Prior to
these appointments, 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 and has 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 69,
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 73,
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. Until February
2009 Mr. Feinstein was 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. From February 2009, Mr.
Feinstein has served as Chief Financial Officer for the Arizona Regional Medical
Center, a private company based in Mesa, Arizona. He has over 40
years of accounting, auditing, and business experience including a partner for
Deloitte & Touche and its predecessors. Mr. Feinstein has served
as a director, CFO and CEO of numerous public and private
companies.
H. Russell Fraser, age 68, 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
57, 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 2008 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
Historically,
U.S. Energy has not been an operator of mineral properties. 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. With respect to bonuses, our compensation policies until
April 2009 were tailored to fit this business strategy, and bonuses have been
paid in accordance with the determinations of the Compensation Committee and the
Board of Directors as to the contributions made by different key employees to
particular transactions.
We
continue to devote substantial efforts to transaction-based activities, while
intensifying our focus on acquiring and developing assets that generate
recurring revenues. As an example, the Mount Emmons molybdenum
project is long-term in nature, requiring constant work with Thompson Creek
Metals to develop a plan of operations for the mine and processing facilities,
and resolve the many complex permitting issues that are involved at all levels
(Federal, state and local). We do not anticipate that the Mount
Emmons project will generate operating revenues until 2013 or
beyond.
Since
mid-2007, the Company has explored opportunities in the energy sector, including
multi-family housing related to energy development, traditional oil and gas
exploration plays, and various categories of alternative energy, with the goal
of developing recurring revenues. In recognition of this added
business dimension, the Compensation Committee recommended, and the Board of
Directors approved, the Executive Employment Agreements for our four executive
officers, which will allow payment of bonuses (generally, not more than 100% of
base salary) to them based on attainment of annual performance
goals.
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 compensation
assurance to executives (through the April 2009 Executive Employment
Agreements). Additional compensation assurance is provided through
separate agreements (which have been in place for many years) that would provide
compensation if employment is terminated within three years of a change in
control of the Company.
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
price 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.
In April
2009, the Board of Directors approved the recommendation of the Compensation
Committee for the Company to pay bonuses to the four top executives (Keith G.
Larsen, Mark J. Larsen, Robert Scott Lorimer, and Steven R. Youngbauer), for
performance in 2007 and 2008. The bonus paid to Mr. Lorimer is in
addition to the cash bonus for him authorized in March 2008 for his
extraordinary service in prior years. See “Cash Bonuses”
below. Future bonuses will be determined in accordance with the April
2009 Executive Employment Agreements. See “Employment Agreements”
below. Other compensation arrangements in place before April 2009 are
not affected by these agreements.
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 have two principal components: Cash salary and bonus, and
long term equity incentive awards.
The
components are
|
·
|
A
substantial portion of compensation is comprised of base salary and
benefits, and a performance based feature which makes
available annual cash bonuses (generally, not to exceed 100% of
base salary).
|
and
|
·
|
Equity
awards (stock and options) to allow the executives to build
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 and
industry knowledge and experience, are generally comparable to those paid to
executives at other companies of similar size, and type of operations, in the
oil and gas and 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 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 executive compensation is approved by the full Board of
Directors, taking into account the recommendations of the Compensation
Committee. The executives make compensation proposals to the
Committee (awards of options, stock, and salary) but do not participate in the
Committee’s deliberations. The participation of the executives in
proposing annual bonuses is discussed under “Employment Agreements”
below. 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.
Base Wages (guaranteed amount)
– Determined by the Compensation Committee (subject to full Board approval) for
executive positions and based on the scope of responsibilities, seniority, our
ability to replace the individual, and other factors deemed relevant by the
Compensation Committee. Salaries will be reviewed annually by the
Compensation Committee and its recommendations will be voted upon by the full
Board.
|
·
|
Cash Bonuses (short term
incentive amount)
|
No
bonuses were paid to executive officers in 2008, except to Robert Scott
Lorimer. On March 7, 2008, the Board of Directors accepted the
recommendation of the Compensation Committee, and approved payment of a $500,000
cash bonus to Robert Scott Lorimer (a director and the Chief Financial Officer)
for past extraordinary services provided to the Company in the acquisition of
and preservation of uranium assets, which work was integral to having the assets
available for sale to sxr Uranium One Inc. in 2007. The bonus for Mr.
Lorimer is to be paid quarterly in the amount of $62,500, beginning March 31,
2008 and ending December 31, 2009, and the Company shall pay, on behalf of Mr.
Lorimer, the income tax which he will owe upon receipt of each bonus
installment. Mr. Lorimer was not present during the discussion by the
Compensation Committee or full Board and did not vote on the resolutions. The
Board of Directors determined that such bonus was appropriate in light of the
extraordinary demands made upon the CFO over a period of many years, requiring
many months of work in addition to performance of his regular duties to the
Company. The Board of Directors determined that the amount of such bonus was the
same as previously paid (in 2006 and 2007) to the (now deceased) Chief Executive
Officer John L. Larsen, and the (now retired) General Counsel Daniel P. Svilar;
the Company also paid on behalf of such individuals the income tax owed by them
resulting from receipt of the bonuses.
On April
17, 2009, the Compensation Committee recommended and the Board of Directors
approved payment of cash bonuses to the executives in the amounts of $25,000 to
Keith G. Larsen; $70,000 to Mark J. Larsen; $25,000 to Robert Scott Lorimer; and
$25,000 to Steven R. Youngbauer. These bonuses were awarded for
extraordinary services from May 2007 through April 16, 2009, and before the date
of entry into the Executive Employment Agreements. These bonuses will
not be taken into account in determining any payments to be made under the
Executive Employment Agreements.
With the
April 2009 Executive Employment Agreements, payment of annual cash
bonuses (generally, not more than 100% of base salary) will be determined by the
Compensation Committee with input from executives, in accordance with
the Performance Plan in place for the year, depending on the extent to which the
performance goals have been met. In addition, we have traditionally
paid a cash holiday bonus to all employees, including executives, based on a
percentage of base pay, ranging from 3-10%. The holiday bonus (not more than 10%
of base pay, to all employees including executives) continue to be paid, at the
discretion of management, depending on available cash and the budget for the
next year; payment of the holiday bonus would not be constrained by the terms of
the Executive Employment Agreements, as determined by the Committee. See
“Employment Agreements” below.
·
|
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 June 22,
2007. 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 vested immediately. Options issued after 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 at a
time when material information is not in the public record, 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.
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.
|
·
|
Executive Officer Retirement
Benefits (long term guaranteed
amount)
|
A
specific retirement plan for executives was approved by the Board of Directors
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 five years of payments equal to 50% of the greater of the average of the
individual’s last five 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 up to 1,040 post
retirement consulting hours to the Company, if needed, 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.
|
·
|
Executive 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 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 $200,000 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 executive 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
|
2008
|
|
$ |
240,500 |
|
|
$ |
24,100 |
|
|
$ |
107,800 |
|
|
$ |
97,300 |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
$ |
28,000 |
|
|
$ |
497,700 |
|
|
2007
|
|
$ |
223,400 |
|
|
$ |
731,400 |
|
|
$ |
115,300 |
|
|
$ |
48,000 |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
$ |
552,900 |
|
|
$ |
1,671,000 |
|
|
2006
|
|
$ |
185,000 |
|
|
$ |
300,000 |
|
|
$ |
50,200 |
|
|
$ |
28,900 |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
$ |
364,400 |
|
|
$ |
928,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark
J. Larsen,
President
and COO
|
2008
|
|
$ |
229,800 |
|
|
$ |
22,800 |
|
|
$ |
108,300 |
|
|
$ |
126,500 |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
$ |
27,900 |
|
|
$ |
515,300 |
|
|
2007
|
|
$ |
205,300 |
|
|
$ |
730,400 |
|
|
$ |
115,300 |
|
|
$ |
64,000 |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
$ |
165,400 |
|
|
$ |
1,280,400 |
|
|
2006
|
|
$ |
170,000 |
|
|
$ |
300,000 |
|
|
$ |
50,200 |
|
|
$ |
28,900 |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
$ |
26,000 |
|
|
$ |
575,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
Scott Lorimer,
Chief
Financial Officer and Treasurer
|
2008
|
|
$ |
227,500 |
|
|
$ |
417,300 |
|
|
$ |
107,000 |
|
|
$ |
97,300 |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
$ |
28,400 |
|
|
$ |
877,500 |
|
|
2007
|
|
$ |
211,400 |
|
|
$ |
730,700 |
|
|
$ |
115,300 |
|
|
$ |
48,000 |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
$ |
1,176,400 |
|
|
$ |
2,281,800 |
|
|
2006
|
|
$ |
175,000 |
|
|
$ |
319,000 |
|
|
$ |
50,200 |
|
|
$ |
28,900 |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
$ |
155,300 |
|
|
$ |
728,400 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven
R. Youngbauer, General Counsel
|
2008
|
|
$ |
169,000 |
|
|
$ |
16,900 |
|
|
$ |
109,400 |
|
|
$ |
68,100 |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
$ |
28,400 |
|
|
$ |
391,800 |
|
|
2007
|
|
$ |
156,200 |
|
|
$ |
418,900 |
|
|
$ |
-- |
|
|
$ |
32,000 |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
$ |
29,300 |
|
|
$ |
636,400 |
|
|
2006
|
|
$ |
120,000 |
|
|
$ |
150,000 |
|
|
$ |
-- |
|
|
$ |
5,800 |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
$ |
26,000 |
|
|
$ |
301,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
2008
|
|
$ |
866,800 |
|
|
$ |
481,100 |
|
|
$ |
432,500 |
|
|
$ |
389,200 |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
$ |
112,700 |
|
|
$ |
2,282,300 |
|
|
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
2008 all officers and employees of the Company were paid a 10% of base
compensation holiday bonus. In addition the Company paid one half of the
bonus discussed above under cash bonuses to its CFO. No other
cash bonuses were paid to officers during 2008. 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 20,000, 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, 2008, 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.
|
(3)
|
Certain
options granted to executive officers vested in 2008, 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
|
2008
|
|
$ |
-- |
|
|
|
$ |
-- |
|
|
$ |
400 |
|
|
$ |
23,600 |
|
|
$ |
4,000 |
|
|
$ |
28,000 |
|
|
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
|
2008
|
|
$ |
-- |
|
|
|
$ |
-- |
|
|
$ |
300 |
|
|
$ |
23,600 |
|
|
$ |
4,000 |
|
|
$ |
27,900 |
|
|
2007
|
|
$ |
136,400 |
|
(i)
|
|
$ |
-- |
|
|
$ |
300 |
|
|
$ |
24,700 |
|
|
$ |
4,000 |
|
|
$ |
165,400 |
|
|
2006
|
|
$ |
-- |
|
|
|
$ |
-- |
|
|
$ |
-- |
|
|
$ |
22,000 |
|
|
$ |
4,000 |
|
|
$ |
26,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
Scott Lorimer
|
2008
|
|
$ |
-- |
|
|
|
$ |
-- |
|
|
$ |
800 |
|
|
$ |
23,600 |
|
|
$ |
4,000 |
|
|
$ |
28,400 |
|
|
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
|
2008
|
|
$ |
-- |
|
|
|
$ |
-- |
|
|
$ |
800 |
|
|
$ |
23,600 |
|
|
$ |
4,000 |
|
|
$ |
28,400 |
|
|
2007
|
|
$ |
-- |
|
|
|
$ |
-- |
|
|
$ |
600 |
|
|
$ |
24,700 |
|
|
$ |
4,000 |
|
|
$ |
29,300 |
|
|
2006
|
|
$ |
-- |
|
|
|
$ |
-- |
|
|
$ |
-- |
|
|
$ |
22,000 |
|
|
$ |
4,000 |
|
|
$ |
26,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
2008
|
|
$ |
-- |
|
|
|
$ |
-- |
|
|
$ |
2,300 |
|
|
$ |
94,400 |
|
|
$ |
16,000 |
|
|
$ |
112,700 |
|
|
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 2008, 2007 and 2006
all officers received a $23,600, $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 2008, 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. In addition to the 10% funding the officers received certain
unallocated shares from terminated employees pursuant to the terms of the
ESOP. The value of these forfeited shares are included in the officer
compensation.
(d) All
executives also participate in the 401(k) plan and all received a $4,000
contribution during 2008, 2007 and 2006 as matching funds under the plan for
their contributions to the plan.
Grants
of Plan-Based Awards
On the
recommendation of the Compensation Committee, in 2008 and 2007 the Board of
Directors approved stock awards under the U.S. Energy Corp. 2001 Stock
Compensation Plan and stock options under the 2001 ISOP to each of the named
executive officers in 2008 and 2007.
|
|
|
Estimated
Future Payouts Under Non-Equity Incentive Plan Awards
|
|
|
Estimated
Future Payouts Under Equity Incentive Plan Awards
|
|
|
All
Other Stock Awards
|
|
|
All
Other Option Awards
|
|
|
Exercise
or Base Price of Option Awards
|
|
Name
and Position
|
Grant
Date
|
|
Threshold
|
|
|
Target
|
|
|
Max
|
|
|
Threshold
|
|
|
Target
|
|
|
Max.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
|
(#)
|
|
|
|
(#)
|
|
|
|
(#)
|
|
|
|
(#)
|
|
|
|
(#
|
|
|
($/SH)
|
|
Keith
G.
Larsen,
Chairman
and Chief
Executive
Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
$ |
-- |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
20,000 |
(1) |
|
|
75,000 |
|
|
$ |
2.52 |
|
2007
|
|
|
$ |
-- |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
15,000 |
(1) |
|
|
150,000 |
|
|
$ |
4.97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark
J. Larsen,
President
and COO
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
$ |
-- |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
20,000 |
(1) |
|
|
75,000 |
|
|
$ |
2.52 |
|
2007
|
|
|
$ |
-- |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
15,000 |
|
|
|
200,000 |
|
|
$ |
4.97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
Scott Lorimer,
Chief
Financial Officer
and
Treasurer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
$ |
-- |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
20,000 |
(1) |
|
|
75,000 |
|
|
$ |
2.52 |
|
2007
|
|
|
$ |
-- |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
15,000 |
(1) |
|
|
150,000 |
|
|
$ |
4.97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven
R. Youngbauer,
General
Counsel
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
$ |
-- |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
75,000 |
|
|
$ |
2.52 |
|
2007
|
|
|
$ |
-- |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
100,000 |
|
|
$ |
4.97 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
|
$ |
-- |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
60,000 |
|
|
|
300,000 |
|
|
|
|
|
2007
|
|
|
$ |
-- |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
|
|
45,000 |
|
|
|
600,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Shares
granted under the 2001 Stock Compensation
Plan.
|
Outstanding
Equity Awards at December 31, 2008
|
|
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 |
|
|
|
|
-- |
|
|
|
75,000 |
|
|
|
-- |
|
|
$ |
2.52 |
|
09/21/18
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
100,000 |
|
|
|
-- |
|
|
|
-- |
|
|
$ |
3.86 |
|
10/13/15
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
60,000 |
(1) |
|
|
90,000 |
|
|
|
-- |
|
|
$ |
4.97 |
|
07/26/17
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark
J. Larsen
|
|
|
41,248 |
|
|
|
-- |
|
|
|
-- |
|
|
$ |
2.40 |
|
01/09/11
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
President/COO
|
|
|
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 |
|
|
|
|
-- |
|
|
|
75,000 |
|
|
|
-- |
|
|
$ |
2.52 |
|
09/21/18
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
100,000 |
|
|
|
-- |
|
|
|
-- |
|
|
$ |
3.86 |
|
10/13/15
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
80,000 |
(1) |
|
|
120,000 |
|
|
|
-- |
|
|
$ |
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 |
|
|
|
|
-- |
|
|
|
75,000 |
|
|
|
-- |
|
|
$ |
2.52 |
|
09/21/18
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
100,000 |
|
|
|
-- |
|
|
|
-- |
|
|
$ |
3.86 |
|
10/13/15
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
60,000 |
(1) |
|
|
90,000 |
|
|
|
-- |
|
|
$ |
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
|
|
|
-- |
|
|
|
75,000 |
|
|
|
-- |
|
|
$ |
2.52 |
|
09/21/18
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
50,000 |
|
|
|
-- |
|
|
|
-- |
|
|
$ |
3.86 |
|
10/13/15
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
40,000 |
(1) |
|
|
60,000 |
|
|
|
-- |
|
|
$ |
4.97 |
|
07/26/17
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,679,102 |
|
|
|
660,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Vested as of April 27, 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
2008
|
|
|
-- |
|
|
$ |
-- |
|
|
|
20,000 |
|
|
$ |
107,800 |
(1) |
Chairman/CEO
|
2007
|
|
|
77,718 |
|
|
$ |
276,400 |
|
|
|
15,000 |
|
|
$ |
115,300 |
(1) |
|
2006
|
|
|
105,777 |
|
|
$ |
338,400 |
|
|
|
10,000 |
|
|
$ |
50,200 |
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark
J. Larsen
|
2008
|
|
|
-- |
|
|
$ |
-- |
|
|
|
20,000 |
|
|
$ |
108,300 |
(1) |
President/COO
|
2007
|
|
|
70,925 |
|
|
$ |
238,400 |
|
|
|
15,000 |
|
|
$ |
115,300 |
(1) |
|
2006
|
|
|
-- |
|
|
$ |
-- |
|
|
|
10,000 |
|
|
$ |
50,200 |
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
Scott Lorimer
|
2008
|
|
|
-- |
|
|
$ |
-- |
|
|
|
20,000 |
|
|
$ |
107,000 |
(1) |
CFO/Treasurer
|
2007
|
|
|
65,218 |
|
|
$ |
230,700 |
|
|
|
15,000 |
|
|
$ |
115,300 |
(1) |
|
2006
|
|
|
40,650 |
|
|
$ |
129,300 |
|
|
|
10,000 |
|
|
$ |
50,200 |
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Steven
R. Youngbauer
|
2008
|
|
|
-- |
|
|
$ |
-- |
|
|
|
20,000 |
|
|
$ |
109,400 |
(1) |
General
Counsel
|
2007
|
|
|
-- |
|
|
$ |
-- |
|
|
|
-- |
|
|
$ |
-- |
|
|
2006
|
|
|
-- |
|
|
$ |
-- |
|
|
|
-- |
|
|
$ |
-- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
2008
|
|
|
-- |
|
|
$ |
-- |
|
|
|
80,000 |
|
|
|
432,500 |
|
|
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
On April
17, 2009, we entered into Executive Employment Agreements with our four
executive officers, Keith G. Larsen, Mark J. Larsen, Robert Scott Lorimer, and
Steven R. Youngbauer. The summary set forth below is qualified by
reference to the agreements, which are included as exhibits to the Report on
Form 8-K filed on April 20, 2009. The terms of the agreements were
proposed by the executives and negotiated to final form with the independent
directors comprising the Compensation Committee. The terms of the
Performance Compensation Plan (relating to bonuses) were not negotiated but were
proposed by the Compensation Committee then approved by the full Board of
Directors with the inside directors obtaining. The Employment
Agreements are not meant to supersede the Executive Severance and Non-Compete
Agreements upon the change of control.
The
agreements provide for three years of employment, renewable automatically for
one additional three year term if the executive is still employed on the third
anniversary of his agreement. Except for the initial base salary amounts, and
Mr. Youngbauer not being currently eligible under the Executive Officer
Retirement Benefits Plan, the provisions of each agreement are
identical.
·
|
Base
annual compensation will be paid in the following amounts for 2009 (pro
rated for the balance of the year): $240,510 to Keith G. Larsen; $233,000
to Mark J. Larsen; $227,510 to Mr. Lorimer; and $169,000 to Mr.
Youngbauer. Annual base compensation in subsequent years may be
changed annually upon recommendation of the Compensation Committee and
approval by the full Board.
|
·
|
Each
executive will continue to be eligible to participate in the 1989 Employee
Stock Ownership Plan; the 2001 Incentive Stock Option Plan; the 2001 Stock
Compensation Plan; and any additional compensation plans adopted by the
Board of Directors for the benefit of all employees. The
benefits of the existing executive severance and non-compete agreements
with each executive (providing for payments in the event of termination in
the three years following a change in control – see “Executive Severance
and Non-compete Agreements” above and “Potential Payments Upon Change in
Control” below) are not affected by the Executive Employment
Agreements.
|
·
|
If
the executive’s employment is terminated by the Company without cause, or
by the executive for good reason, the Company will pay him a lump sum
equal to (i) 300% of the annual base compensation then in effect (200% in
the case of Mr. Youngbauer, due to his lesser period of service with the
Company), plus (ii) equity in all vested options based on market price of
the Company’s common stock at termination date. If employment
is terminated following a change in control of the Company, payments will
be made to the Executive as required under the Executive Severance and
Non-Compete Agreements. (see Executive Severance and Non-Compete
Agreements above)
|
·
|
Once
the Executive reaches the age of 60 and is still employed by the Company,
the Company would continue paying for health insurance coverage for the
Executive and his wife until the Executive is eligible for Medicare
coverage.
|
·
|
Beginning
in 2009, and each year thereafter so long as the employment agreement is
in effect, each of the executives will be eligible to receive (following
the filing of the Annual Report on Form 10-K) an annual cash performance
award of not more than 100% of base compensation, based upon the
Company-wide goals stated in the Performance Compensation Plan then in
effect. The purpose of the Plan is to align cash awards to
achievement of the short-term business objectives and shareholder’s
interest.
|
While the
percentage of 100% available to each employee is stated for each component in
the Plan, none of the components are quantified, and each will be determined at
year end by the Compensation Committee. The extent to which the
executives are paid the performance award (up to the 100% ceiling) may vary from
one individual to another. All other Company employees are entitled
to earn a performance award in amounts ranging from 33% to 50% of their annual
base compensation, depending on their ranking by base
compensation. In addition, the distribution of the total award
percentage between executive and non-executive tiers of employees will be
determined by the Compensation Committee. The percentage weight
assigned to each of the factors considered in computing the annual award may be
modified each year by the full Board after recommendations have been made by the
Compensation Committee. “Individual employee goals” will be
determined by management.
Only if
the Company has had adjusted positive cash flow from operations for the year
will payment of the performance awards be considered. However, the
Board of Directors may pay cash awards for outstanding performance by employees
(including executives) who make a significant contribution to the Company, which
contribution is not within the performance matrix of the Plan. These
awards for outstanding performance will be determined by the Board without
regard to positive cash flows.
2009
Performance Compensation Plan
Description
|
Tier
|
|
Tier
|
|
Tier
|
|
Tier
|
|
Executive
|
|
1
|
|
2
|
|
3
|
|
4
|
|
5
|
|
|
|
|
|
|
|
|
|
|
Salary
Range
|
$0-$50,000
|
|
$50,000-$99,999
|
|
$100,000-149,999
|
|
150,000
+
|
|
Senior
|
|
|
|
|
|
|
|
Non-executive
|
|
Management
|
Bonus
Percentage of Base Salary
|
33%
|
|
33%
|
|
50%
|
|
100%
|
|
100%
|
(Maximum)
|
|
|
|
|
|
|
|
|
|
Criteria
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
Factors
|
|
|
|
|
|
|
|
|
|
Stock
Price
|
|
|
|
|
|
|
|
|
|
(based
upon 200 day moving average)
|
5.0%
|
|
5.0%
|
|
10.0%
|
|
15.0%
|
|
20.0%
|
ROE
Factor
|
2.5%
|
|
5.0%
|
|
5.0%
|
|
5.0%
|
|
10.0%
|
EPS
Factor
|
2.5%
|
|
5.0%
|
|
5.0%
|
|
5.0%
|
|
10.0%
|
Cash-Flow
Factor
|
5.0%
|
|
5.0%
|
|
10.0%
|
|
15.0%
|
|
20.0%
|
|
15%
|
|
20%
|
|
30%
|
|
40%
|
|
60%
|
Performance
rating
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Budget
|
|
|
|
|
|
|
|
|
|
Department
|
20%
|
|
15%
|
|
10%
|
|
10%
|
|
|
Company
|
|
|
|
|
5%
|
|
10%
|
|
10%
|
|
|
|
|
|
|
|
|
|
|
Department
Goals
|
25%
|
|
25%
|
|
20%
|
|
5%
|
|
|
Company
Goals
|
15%
|
|
15%
|
|
15%
|
|
20%
|
|
20%
|
Individual
employee Goals
|
25%
|
|
25%
|
|
20%
|
|
15%
|
|
10%
|
|
|
|
|
|
|
|
|
|
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
100%
|
|
|
|
|
|
|
|
|
|
|
Cash Flow from Operations –
Cash flow from operations from the annual audited financial statements filed
with the Securities and Exchange Commission. The cost of operations
of the water treatment plant at Mount Emmons, interest income and income taxes
paid will be added back to compute Cash Flow from Operations for purposes of the
Plan.
Return on Equity Factor
(“ROE”) – Positive addition to Retained Earnings and or a reduction of the prior
year loss which results in a reduction of Retained Earnings.
Earnings Per Share Factor (“EPS”)
– Improvement in earnings per share from prior year.
Budget – Meet expense goals
outlined in annual operating budget with Board approved modifications throughout
the year.
Potential Payments upon Change in
Control.
U.S.
Energy Corp. has Executive Severance and Non-Compete Agreements with 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 ($200,000 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,
2008. 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, 2008 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, 2008)
Amounts
shown as 300% of average compensation are based on the average annual salary
from the effective date through December 31, 2008.
Name
and Position
|
|
300%
of Average Compensation
|
|
|
Value
of Option Exercise at 12-31-08 (1)
|
|
|
Value
of Stock Awards at 12-31-08 (2)
|
|
|
Value
of Health Insurance for Three Years
|
|
|
Total
|
|
Keith
G. Larsen,
Chief
Executive
Officer
Effective
Date 2-14-01
|
|
$ |
590,500 |
|
|
$ |
-- |
|
|
$ |
151,400 |
|
|
$ |
60,600 |
|
|
$ |
802,500 |
|
Mark.
J. Larsen,
President
Effective
Date 2-14-01
|
|
$ |
520,200 |
|
|
$ |
-- |
|
|
$ |
151,400 |
|
|
$ |
60,600 |
|
|
$ |
732,200 |
|
Robert
Scott Lorimer,
Chief
Financial Officer
&
Treasurer
Effective
Date 4-18-92
|
|
$ |
542,500 |
|
|
$ |
-- |
|
|
$ |
151,400 |
|
|
$ |
60,600 |
|
|
$ |
754,500 |
|
Steven
Youngbauer ,
General
Counsel
Effective
Date 5-1-07
|
|
$ |
408,900 |
|
|
$ |
-- |
|
|
$ |
151,400 |
|
|
$ |
60,600 |
|
|
$ |
620,900 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$ |
2,062,100 |
|
|
$ |
-- |
|
|
$ |
605,600 |
|
|
$ |
242,400 |
|
|
$ |
2,910,100 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Equals closing price on December 31,2008 less the strike price of issued
options times the number of exercisable options. All options as
of Decemer 31, 2008 were underwater.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 potentially 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 2009.
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 Board, at a rate
which would be negotiated (but not less than the initial retirement
rate).
During
2008, 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 to be managed by an independent trustee pursuant to the
requirements of the trust and executive retirement plan. Annual
amounts are 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(1)
|
|
|
Payments
during Last Calendar Year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Keith
G. Larsen
|
|
2008
|
|
|
11 |
|
|
$ |
335,000 |
|
|
$ |
-- |
|
Chairman/CEO
|
|
2007
|
|
|
10 |
|
|
$ |
320,000 |
|
|
$ |
-- |
|
|
|
2006
|
|
|
9 |
|
|
$ |
235,200 |
|
|
$ |
-- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark
J. Larsen
|
|
2008
|
|
|
3 |
|
|
$ |
270,500 |
|
|
$ |
-- |
|
President/COO
|
|
2007
|
|
|
2 |
|
|
$ |
245,200 |
|
|
$ |
-- |
|
|
|
2006
|
|
|
1 |
|
|
$ |
180,300 |
|
|
$ |
-- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert
Scott Lorimer
|
|
2008
|
|
|
17 |
|
|
$ |
461,000 |
|
|
$ |
-- |
|
CFO/Treasurer
|
|
2007
|
|
|
16 |
|
|
$ |
439,290 |
|
|
$ |
-- |
|
|
|
2006
|
|
|
15 |
|
|
$ |
322,200 |
|
|
$ |
-- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
2008
|
|
|
|
|
|
$ |
1,066,500 |
|
|
$ |
-- |
|
Total
|
|
2007
|
|
|
|
|
|
$ |
1,004,490 |
|
|
$ |
-- |
|
|
|
2006
|
|
|
|
|
|
$ |
737,700 |
|
|
$ |
-- |
|
(1)
|
The
Company utilizes a certified actuary to compute the present value of the
retirement benefit based upon mortality tables, termination factors,
interest rates and longevity of each
officer.
|
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. Mr. Larsen’s estate will receive benefits earned under the
Executive Retirement Plan through September 4, 2011. Daniel P.
Svilar, former General Counsel and Secretary, retired on January 12,
2007. 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.
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, $1,100 per
month for the Chairman of the Audit and Compensation Committees, and $500 for
attending Board meetings in person), and reimbursements for any travel expenses
incurred in attending the meetings. Amounts paid to these directors
in 2008, 2007 and 2006 were as follows:
|
|
Fee
Earned or Paid in Cash (1)
|
|
|
Stock
Awards (2)
|
|
|
Options
Awards
|
|
|
Non-Equity
Incentive Plan Compensation
|
|
|
Change
in Pension Value and Nonqualified Deferred Compensation
Earnings
|
|
|
All
Other Compensation (3)
|
|
|
Total
|
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
Name
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
J. Feinstein
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
$ |
16,000 |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
|
N/A |
|
|
|
N/A |
|
|
$ |
2,500 |
|
|
$ |
18,500 |
|
2007
|
|
$ |
13,000 |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
|
N/A |
|
|
|
N/A |
|
|
$ |
43,500 |
|
|
$ |
56,500 |
|
2006
|
|
$ |
12,300 |
|
|
$ |
4,500 |
|
|
$ |
-- |
|
|
|
N/A |
|
|
|
N/A |
|
|
$ |
22,500 |
|
|
$ |
39,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael
Anderson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
$ |
16,500 |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
|
N/A |
|
|
|
N/A |
|
|
$ |
2,500 |
|
|
$ |
19,000 |
|
2007
|
|
$ |
13,500 |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
|
N/A |
|
|
|
N/A |
|
|
$ |
43,500 |
|
|
$ |
57,000 |
|
2006
|
|
$ |
11,800 |
|
|
$ |
4,500 |
|
|
$ |
-- |
|
|
|
N/A |
|
|
|
N/A |
|
|
$ |
22,500 |
|
|
$ |
38,800 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Allen
S. Winters
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
$ |
15,000 |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
|
N/A |
|
|
|
N/A |
|
|
$ |
2,500 |
|
|
$ |
17,500 |
|
2007
|
|
$ |
19,500 |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
|
N/A |
|
|
|
N/A |
|
|
$ |
43,500 |
|
|
$ |
63,000 |
|
2006
|
|
$ |
11,300 |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
|
N/A |
|
|
|
N/A |
|
|
$ |
-- |
|
|
$ |
11,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H.
Russel Fraser
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
$ |
15,500 |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
|
N/A |
|
|
|
N/A |
|
|
$ |
2,500 |
|
|
$ |
18,000 |
|
2007
|
|
$ |
17,750 |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
|
N/A |
|
|
|
N/A |
|
|
$ |
43,500 |
|
|
$ |
61,250 |
|
2006
|
|
$ |
12,300 |
|
|
$ |
4,500 |
|
|
$ |
-- |
|
|
|
N/A |
|
|
|
N/A |
|
|
$ |
22,500 |
|
|
$ |
39,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2008
|
|
$ |
63,000 |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
|
N/A |
|
|
|
N/A |
|
|
$ |
10,000 |
|
|
$ |
73,000 |
|
2007
|
|
$ |
63,750 |
|
|
$ |
-- |
|
|
$ |
-- |
|
|
|
N/A |
|
|
|
N/A |
|
|
$ |
174,000 |
|
|
$ |
237,750 |
|
2006
|
|
$ |
47,700 |
|
|
$ |
13,500 |
|
|
$ |
-- |
|
|
|
N/A |
|
|
|
N/A |
|
|
$ |
67,500 |
|
|
$ |
128,700 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Non-employee
directors are paid $1,000 per month, $1,100 per month for the Chairman of
the Audit and Compensation Committees, and $500 per meeting attended in
person.
|
(2)
|
During
2006 each non-employee director was paid $4,500 in common
stock.
|
(3)
|
During
2008 the directors were paid a holiday bonus of $2,500
each. During 2007 and 2006 the directors participated in a cash
bonus for the sale of U.S. Energy’s uranium assets to Uranium One and
Rocky Mountain Gas, Inc. and its interest in Pinnacle. Each
director received a cash bonus of $40,000 during 2007 and $20,000 during
2006 (Mr. Winters did not receive a cash bonus in 2006 as he was not a
director at the time). Additionally, each director was paid a
$3,500 cash holiday bonus during 2007 and all but Mr. Winters received a
$2,500 cash holiday bonus during
2006.
|
Compensation
Committee Interlocks and Insider Participation
None of
the Compensation Committee members has been an officer or employee of U.S.
Energy, and none of the members had any relationship with the Company which
would be required to be disclosed under Item 404 of Regulation S-K.
Compensation
Committee Report
The
Compensation Committee has reviewed and discussed the Compensation Discussion
and Analysis (set forth above) with management, and, based on that review and
discussions, the Committee recommended to the Board of Directors that the
Compensation Discussion and Analysis be included in this proxy
statement.
Certain
Relationships and Related Transactions
Family
Employment.
Mr. Keith
G. Larsen, Chairman and CEO, and Mr. Mark J. Larsen are brothers. Mr.
Richard Larsen, brother of Keith and Mark Larsen, is the chief pilot for the
Company and Mr. Reggie Larsen, son of Richard Larsen, is the Office
Manger/Administrative Assistant. Richard Larsen and Reggie Larsen
were paid $153,700 and $57,200 respectively during 2008, which includes their
base pay and the holiday bonus paid to all employees. Additionally,
Richard Larsen received 9,616 shares, valued at $16,100, as the annual
contribution to his ESOP account during 2008 and Reggie Larsen received 3,579
shares valued at $9,200. U.S. Energy also made contributions of $0
and $3,250 to the 401(k) retirement accounts of Richard Larsen and Reggie
Larsen, respectively, during 2008.
During
the year ended December 31, 2005, U.S. Energy adopted a nepotism policy which
was amended in 2007. The policy provides that family members of any
employee, which include father, mother, sibling, son, daughter, niece, nephew or
grandchildren, may not be hired, supervised or terminated by a direct family
member. Additionally, family members are not allowed to participate
in any discussion relating to the setting of compensation rates for other family
members. The policy was amended to provide that a direct family
member of any employee can only be hired after the Compensation Committee has
reviewed the application of a direct family member, has satisfied itself that
the position is (a) necessary, (b) has been adequately advertised, (c) other
applicants have been interviewed by non family managers of the Company and (d)
that the family member is the most qualified for the
position. Further, written approval from the chairman of the
Compensation Committee must be received along with an approved rate of pay
before any family members of any employees, officers or directors can be
employed and paid by the Company.
Policy
of the Audit Committee
From time
to time, we have entered into transactions with certain “related persons,” a
category that generally includes executive officers, directors, and beneficial
owners of five percent or more of the common stock; and immediate family members
of these persons and entities in which one of these persons has a direct or
indirect material interest. We refer to these transactions with these
related persons as “related party transactions.” The Audit Committee
is responsible for the review and approval of each related party transaction
exceeding $120,000, although, as a matter of policy, the Committee reviews and
approves all such transactions regardless of the amount involved.
The Audit
Committee considers all relevant factors when determining whether to approve a
proposed related party transaction, including (without limitation):
|
·
|
the
size of the transaction and the amount of consideration that might be paid
to a related person;
|
|
·
|
the
nature of the interest of the applicable related person;
and
|
|
·
|
whether
the transaction involves the provision of goods or services to us that are
available from unaffiliated third
parties.
|
Implementation
of the Policy
In
determining whether to approve a proposed related party transaction, the
Committee must be reasonably satisfied that
|
·
|
The
transaction likely will benefit, significantly, all shareholders at large,
even though it will provide a benefit to the related parties;
and
|
|
·
|
Goods
or services of comparable quality either cannot be obtained from third
parties in time to meet the Company’s needs, or can be obtained but at
significantly higher cost.
|
In
appropriate circumstances, the Committee may enlist outside sources to obtain
information about the possibility of using third party vendors’ goods and/or
services.
The
policy has been followed by the Committee since 2004.
Related
Party Transactions
There was
one related party transaction in 2008, which was approved by the Audit
Committee:
Sale
of Majority Position in Sutter Gold Mining, Inc.
Until
August 2008, Sutter Gold Mining, Inc. (“SGMI”), a public company, was a
majority-owned subsidiary of U.S. Energy. Additional stock was owned
by public shareholders, U.S. Energy, and by officers and some of the directors
of U.S. Energy. In August 2008, we sold 39,062,720 common shares of
SGMI (TSX-VS "SGMI"); the shares (sold to RMB Resources Ltd. (“RMB”) as trustee
for the Telluride Investment Trust for Cdn $5.4 million) represented 49.9% of
the outstanding shares of SGMI. We retained an equity position of
3,550,361 shares. In conjunction with the closing, we also
participated in a private placement of SGMI, by purchasing 4,545,455 units at
Cdn. $0.11 per unit for total Cdn. $500,000. Each unit was comprised
of two shares and a 24-month warrant (each for one share at Cdn.
$0.15). The warrants we acquired cover an additional 2,272,728 shares
of SGMI. As a result of the private placement, U.S. Energy owns the
warrants plus 8,095,816 shares. U.S. Energy also retained a
previously-owned 5% net profits royalty on SGMI’s California gold project, which
will be reduced to a 1% net profits royalty on the project after U.S. Energy
receives an additional US $4.6 million from production.
SGMI has
exploration properties in California and Mexico. U.S. Energy
continues to own a minority equity position in SGMI. U.S. Energy has
no representation on SGMI’s board of directors. Allen Winters
continues to serve as a director of SGMI, but Mr. Winters does not represent
U.S. Energy as a director of SGMI. None of the U.S. Energy officers
or other employees are officers or employees of SGMI.
As of the
date of this proxy statement, options to purchase 1,525,000 shares of SGMI are
held by officers and directors of U.S. Energy; additional options are held by
U.S. Energy employees, and also by officers and directors of SGMI who are not
affiliated with U.S. Energy. The options held by U.S. Energy officers
and directors were issued in April 2005 and August 2006. Keith G.
Larsen and Allen S. Winters are directors of U.S. Energy and both had been
directors of SGMI. Mr. Larsen was a director of SGMI until August
2008, when he resigned the position, but Mr. Winters continues as a SGMI
director. Mr. Lorimer also served as CFO of SGMI until December
2008. These individuals, together with the other officers and
directors of U.S. Energy, collectively own less than 5% of SGMI outstanding
common stock, and also hold options to buy SGMI stock (850,000 shares
exercisable until April 2010 at $0.28 per share, 150,000 at $0.30 per share
until April 2011 and 525,000 shares until August 2011 at $0.35 per
share).
Proposal
2: Ratification
of the Appointment of Independent Auditors
The Board
of Directors seeks shareholder ratification of the Board's appointment of Hein
& Associates LLP, certified public accountants, to act as the auditors of
our financial statements for the year ending December 31, 2009. Hein
& Associates LLP has audited our financial statements for the year ended
December 31, 2008. The Board has not determined what action, if any,
would be taken should the appointment of Hein & Associates LLP not be
ratified at the meeting.
On
November 10, 2008, the Board of Directors dismissed Moss Adams LLP (“MA”) as
USE’s independent accounting firm, and as of that same date, appointed Hein
& Associates LLP as the Company’s independent accounting firm in accordance
with the recommendations of the Audit Committee. Our Audit Committee
charter mandates a review of the Company’s relationship with its independent
accounting firm every five years. Moss Adams (including its
predecessor firm) served as the independent firm for five years.
In the
course of its review, the Audit Committee determined that USE should change to a
firm with particular expertise in the minerals sector. Moss Adams’
reports on our financial statements for 2006 and 2007 did not contain an adverse
opinion or a disclaimer of opinion, nor were the reports qualified or modified
as to uncertainty, audit scope, or accounting principles. In these
years, there were no disagreements with Moss Adams on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreements, if no resolved to the satisfaction of Moss
Adams, would have caused it to make reference to the subject matter of the
disagreements in connection with the reports. Moss Adams provided us
with a letter (addressed to the SEC) stating that it agreed with our statements
in this paragraph.
During
the fiscal years ended December 31, 2006 and 207, neither USE nor anyone acting
on our behalf engaged Hein & Associates LLP either as our principal
accountant or as an independent accountant to audit any
subsidiary. In addition, during that period and subsequently through
November 10, 2008, neither USE nor anyone acting on our behalf consulted with
Hein & Associates LLP regarding :
(i)
either: The application of accounting principles to a specified transaction,
either completed or proposed; or the type of audit opinion that might be
rendered on USE’s financial statements, and either a written report or oral
advice was provided to USE that Hein & Associates LLP concluded was an
important factor considered by USE in reaching a decision as to the accounting,
auditing or financial reporting issue; or
(ii) any
matter that was either the subject of a disagreement (as defined in the
preceding paragraph and the SEC’s instructions related thereto as set forth in
Form 8-K), or a reportable event as described in paragraph 304(a)1)(v) of Form
8-K.
Principal
Accounting Fees and Services
Hein
& Associates LLP has been paid for fees and services in 2008 as shown
below. The prior accounting firm, Moss Adams, LLP, was paid the
amounts shown for 2007.
|
|
Year
Ended
|
|
|
Form
10Q
|
|
|
Year
Ended
|
|
|
|
December
31,
|
|
|
Reviews
|
|
|
December
31,
|
|
|
|
2008
|
|
|
2008
|
|
|
2007
|
|
Audit
fees (a)
|
|
$ |
161,000 |
|
|
$ |
-- |
|
|
$ |
158,700 |
|
Audit
related fees (b)
|
|
|
-- |
|
|
|
48,600 |
|
|
|
33,400 |
|
Tax
fees (c)
|
|
|
-- |
|
|
|
-- |
|
|
|
-- |
|
All
other fees
(d)
|
|
|
-- |
|
|
|
-- |
|
|
|
25,200 |
|
|
|
$ |
161,000 |
|
|
$ |
48,600 |
|
|
$ |
217,300 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a)
|
Includes
fees for audit of the annual financial statements and review of quarterly
financial information filed with the Securities and Exchange Commission
("SEC").
|
(b)
|
For
assurance and related services that were reasonably related to the
performance of the audit or review of the financial statements, which fees
are not included in the Audit Fees
category.
|
(c)
|
For
tax compliance, tax advice, and tax planning services, relating to federal
and state tax returns as necessary.
|
(d)
|
For
services in respect of other reports required to be filed by the SEC and
other agencies.
|
The Audit
Committee approves the terms of engagement before we engage the audit firm for
audit and non-audit services, except as to engagements for services outside the
scope of the original terms, in which instances the services have been provided
pursuant to pre-approval policies and procedures, established by the Audit
Committee. These pre-approval policies and procedures are detailed as
to the category of service and the Audit Committee is kept informed of each
service provided. These policies and procedures, and the work
performed pursuant thereto, do not include any delegation to management of the
Audit Committee's responsibilities under the Securities Exchange Act of
1934.
The
percentage of services provided for Audit-Related Fees, Tax Fees and All Other
Fees for 2008 and 2007 are as follows:
|
Hein
& Associates LLP
|
|
Moss
Adams LLP
|
|
Year
Ended
|
|
Form
10Q
|
Year
Ended
|
|
December
31,
|
|
Reviews
|
December
31,
|
|
2008
|
|
2008
|
2007
|
Audit
fees
|
100.0%
|
|
0.0%
|
73.0%
|
Audit
related fees
|
0.0%
|
|
100.0%
|
15.4%
|
Tax
fees
|
0.0%
|
|
0.0%
|
0.0%
|
All
other fees
|
0.0%
|
|
0.0%
|
11.6%
|
|
|
|
|
|
|
100.0%
|
|
100.0%
|
100.0%
|
|
|
|
|
|
Relationship
with Independent Accountants
Hein
& Associates LLP has audited the Company's financial statements for the
twelve months ended December 31, 2008. A representative will be
present at the meeting in person or by telephone to respond to appropriate
questions, and will be provided the opportunity to make a statement at the
meeting. There have been no disagreements between the Company and
Hein & Associates LLP concerning any matter of accounting principles or
practices, financial statement disclosure, or auditing scope or procedure, which
were not resolved to the satisfaction of that firm.
Report
of the Audit Committee
Note:
Notwithstanding anything to the contrary otherwise set forth in any of the
Company’s filings under the Securities act of 1933 or the Securities Exchange
Act of 1923, that might incorporate other filings (including this proxy
statement) with the Securities and Exchange Commission, the following Report of
the Audit Committee shall not be deemed to be incorporated by reference into any
other such fillings.
Management
is responsible for the preparation of the Company’s financial statements, and
the reporting process, as well as maintaining effective internal control over
financial reporting and assessing the effectiveness of the
controls. Hein & Associates LLP is responsible for auditing the
annual financial statements and expressing an opinion as to whether they are
presented fairly, in all material respects, in conformity with accounting
principles generally accepted in the United States. The Audit
Committee is responsible for, among other things, reviewing and selecting the
independent registered public accounting firm, reviewing our annual and interim
financial statements, and pre-approving all engagement letters and fees for
audit services.
In
performing its oversight functions in connection with the Company’s financial
statements as of and for the year ended December 31, 2008, the Audit Committee
has
· Reviewed
and discussed the audited financial statements with management and Hein &
Associates LLP, including the quality of the accounting principles, and the
reasonableness of significant judgments made in the preparation of the financial
statements;
· Discussed
with Hein & Associates LLP those matters required to be discussed by the
Statement on Auditing Standards No. 114, of the Auditing Standards Board of the
American Institute of Certified Public Accountants;
· Received
written disclosures from Hein & Associates LLP regarding their independence
as required by the PCAOB; and
· Reviewed
and approved the services provided by Hein & Associates LLP.
Based
upon the foregoing reports and discussions, and subject to the limitations on
the roles and responsibilities of the Audit Committee referred to in its
charter, the Audit Committee recommended to the Board of directors, and the
Board of Directors has approved, that the Company’s audited financial statements
be included in the Company’s Annual Report on Form 10-K for the year ended
December 31, 2008, as filed with the Securities and Exchange Commission on March
13, 2009. The Audit Committee recommended that the Board of Directors
approve the Committee’s selection of Hein & Associates LLP as the
independent registered public accounting firm for 2009. See Proposal
Two above.
Copies
of Our Form 10-K
Promptly
upon receiving a request from any shareholder, without charge we will send to
the requester a copy of our Annual Report on Form 10-K for the twelve months
ended December 31, 2008, with exhibits, as filed with the Securities and
Exchange Commission. Please address your request to Steven R.
Youngbauer, Secretary, at U.S. Energy Corp., 877 North 8th West, Riverton,
Wyoming 82501. You also may call or fax Mr. Youngbauer at T
307.856.9271, F 307.857.3050.
PROXY U.S.
ENERGY CORP. PROXY
KNOW ALL
PERSONS: That the undersigned shareholder of U.S. Energy Corp. (the
"Company") in the amount noted below, hereby constitutes and appoints Messrs.
Mark J. Larsen and Robert Scott Lorimer, or either of them with full power of
substitution, as attorneys and proxies, to appear, attend and vote all of the
shares of stock standing in the name of the undersigned at the Annual Meeting of
the Company's shareholders to be held at the Company's Offices at 877 North 8th
West, Riverton, Wyoming 82501 on Friday,
June 26, 2009 at 10:00 a.m., local time, or at any
adjournments thereof upon the following:
THE
PROXIES WILL VOTE: (1) AS YOU SPECIFY ON THIS CARD; (2) AS THE BOARD
OF DIRECTORS RECOMMENDS WHERE YOU DO NOT SPECIFY YOUR VOTE ON A MATTER LISTED ON
THIS CARD, AND (3) AS THE PROXIES DECIDE ON ANY OTHER MATTER.
The
Board of Directors Recommends You Vote in Favor of the Nominees Keith G. Larsen
and Allen S. Winters, and in Favor the Selection of Independent
Auditors.
If you
wish to vote on all matters as the Board of Director recommends, please sign,
date and return this card. If you wish to vote on items individually,
please also mark the appropriate boxes below.
INSTRUCTION: Mark
only one box for each line item.
1. Election of
Directors:
FOR
the nominee
|
|
WITHHOLD
|
|
Keith
G. Larsen
|
¨
|
Keith
G. Larsen
|
¨
|
|
|
|
|
FOR
the nominee
|
|
WITHHOLD
|
|
Allen
S. Winters
|
¨
|
Allen
S. Winters
|
¨
|
IN THE VOTING FOR DIRECTORS, YOU HAVE
THE OPTION: To vote for some nominees(s), but withhold from
voting for other nominee(s). To do so, (1) check the FOR box, and (2)
draw a line through the name of the nominee(s) you want to withhold
from. To withhold from voting for all nominees, check the WITHHOLD
box and do not draw a line through any name.
OR,
To vote
for nominees by cumulating your votes, follow these steps: (1) check
the FOR box; (2) multiply the number of shares you hold times 2; and (3) print
the number of votes you want to cast on the line underneath to the nominee(s)
you want to vote for, and draw a line through the nominee(s) you do not want to
vote for. You may cast your votes for one nominee, or you may
distribute your votes among the nominees as you wish. The total votes cast must
equal the total number of shares you hold, multiplied by 2.
2. Ratification of appointment of Hein
& Associates LLP as independent auditors for the current fiscal
year.
¨ FOR the
appointment¨ AGAINST the
appointment¨ ABSTAIN
3. In
their discretion, the Proxies are authorized to vote upon such other business as
may properly come before the Meeting.
PROXY U.S. ENERGY
CORP. PROXY
THIS
PROXY IS SOLICITED BY THE BOARD OF DIRECTORS. THE SHARES REPRESENTED
HEREBY WILL BE VOTED AS PROVIDED ON THE REVERSE SIDE.
Sign your
name exactly as it appears on the mailing label below. It is
important to return this Proxy properly signed in order to exercise your right
to vote, if you do not attend in person. When signing as an attorney,
executor, administrator, trustee, guardian, corporate officer, etc., indicate
your full title as such.
(Sign on
this line - joint holders may sign appropriately)
é ù ________________
_________________
(Date) (Number
of Shares)
PLEASE
NOTE: Please sign, date and place this Proxy in the enclosed self-addressed,
postage prepaid envelope and deposit it in the mail as soon as
possible.
Please
check if you are planning to attend the meeting ¨
If the
address on the mailing label is not correct, please provide the correct address
in the following space.
______________________________
______________________________