<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/ / Preliminary proxy statement
/X/ Definitive proxy statement
/ / Definitive additional materials
/ / Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
HECLA MINING COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
HECLA MINING COMPANY
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
/X/ $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:1
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registrations statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
- ---------------
(1)Set forth the amount on which the filing fee is calculated and state
how it was determined.
<PAGE> 2
March 28, 1994
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of
Shareholders of Hecla Mining Company, which will be held at the corporate
offices, located at 6500 Mineral Drive in Coeur d'Alene, Idaho, on Friday, May
6, 1994, at 10:00 a.m., Pacific Daylight Time.
The annual meeting will involve the election of three
directors and approval of the selection of auditors for 1994. In addition,
reports of the Corporation's operations and other matters of interest will be
made at the meeting. For information with respect to these matters, please
refer to the Notice of Meeting and Proxy Statement which are enclosed.
Your Board of Directors respectfully recommends that you vote
to elect the directors nominated and vote to approve the auditors.
It is important that your shares be represented at the meeting
whether or not you are personally able to attend. You are therefore urged to
complete, date and sign the accompanying proxy and mail it in the enclosed
postage-paid envelope as promptly as possible.
Thank you for your cooperation.
Sincerely,
/s/ Arthur Brown
Arthur Brown
Chairman, President and
Chief Executive Officer
<PAGE> 3
HECLA MINING COMPANY
6500 Mineral Drive
Coeur d'Alene, Idaho 83814-8788
-----------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held on
May 6, 1994
To the Shareholders of
HECLA MINING COMPANY:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders
of Hecla Mining Company (the "Corporation") will be held at the corporate
offices located at 6500 Mineral Drive in the City of Coeur d'Alene, State of
Idaho, on Friday, May 6, 1994, at the hour of 10:00 a.m., Pacific Daylight
Time, for the following purposes:
(1) To elect three members of the Board of Directors
of the Corporation to serve for three-year terms or until
their respective successors are elected and have qualified;
(2) To approve the selection of Coopers & Lybrand as
independent auditors of the Corporation for the fiscal year
ending December 31, 1994; and
(3) To transact such other business as may properly
come before the Annual Meeting or any adjournment or
adjournments thereof.
<PAGE> 4
2
The close of business on March 14, 1994, has been fixed as the
record date for the determination of the shareholders entitled to notice of,
and to vote at, the Annual Meeting and at any adjournment or adjournments
thereof. The stock transfer books of the Corporation will not be closed.
By Order of the Board of Directors
MICHAEL B. WHITE
Secretary
March 28, 1994
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Whether or not you plan to attend the Annual Meeting, please
complete, sign and date the accompanying proxy and mail it at once in the
enclosed envelope, which requires no additional postage if mailed in the United
States. Your proxy will be revocable, either in writing or by voting in person
at the Annual Meeting, at any time prior to its exercise.
- -------------------------------------------------------------------------------
<PAGE> 5
3
HECLA MINING COMPANY
6500 Mineral Drive
Coeur d'Alene, Idaho 83814-8788
(208) 769-4100
------------------
P R O X Y S T A T E M E N T
Relating to
ANNUAL MEETING OF SHAREHOLDERS
to be held on May 6, 1994
------------------
INTRODUCTION
This Proxy Statement is being furnished by the Board of
Directors of Hecla Mining Company, a Delaware corporation (the "Corporation"),
to holders of shares of the Corporation's Common Stock, par value $0.25 per
share (the "Common Stock") in connection with the solicitation by the Board of
Directors of proxies to be voted at the Annual Meeting of Shareholders of the
Corporation to be held on Friday, May 6, 1994, and any adjournment or
adjournments thereof (the "Annual Meeting"), for the purposes set forth in the
accompanying Notice of Annual Meeting. This Proxy Statement is first being
mailed to shareholders on or about March 28, 1994.
PURPOSES OF ANNUAL MEETING
Election of Directors
At the Annual Meeting, shareholders entitled to vote (see
"Voting at Annual Meeting") will be asked to consider and take action on the
election of three directors to the Corporation's Board of Directors, each to
serve for a three-year term. See "Election of Directors."
Selection of Independent Auditors
At the Annual Meeting, shareholders also will be asked to
approve the selection of Coopers & Lybrand as independent auditors of the
Corporation for the fiscal year ending December 31, 1994. See "Approval of
Auditors."
<PAGE> 6
4
VOTING AT ANNUAL MEETING
General
The Board of Directors of the Corporation has fixed the close
of business on March 14, 1994, as the record date (the "Record Date") for
determination of the shareholders entitled to notice of, and to vote at, the
Annual Meeting. As of the Record Date, there were issued and outstanding
34,644,734 shares of Common Stock entitled to vote. A majority of such shares
will constitute a quorum for the transaction of business at the Annual Meeting.
The holders of record on the Record Date of the shares entitled to be voted at
the Annual Meeting are entitled to cast one vote per share on each matter
submitted to a vote at the Annual Meeting. Directors are elected by a
plurality of the votes cast by the holders of the Common Stock at a meeting at
which a quorum is present. "Plurality" means that the individuals who receive
the largest number of votes cast are elected as directors up to the maximum
number of directors to be chosen at the meeting. Consequently, any shares not
voted (whether by abstention, broker non-votes or otherwise) have no impact in
the election of directors except to the extent the failure to vote for an
individual results in another individual receiving a larger number of votes.
The approval of the independent auditor requires the favorable vote of the
holders of a majority of the shares present at the meeting, provided a quorum
is present. Any shares which are not voted (whether by abstentions, broker
non-votes or otherwise) will not count toward the required total and will have
the same effect as shares voted against such approval.
Proxies
Shares of Common Stock which are entitled to be voted at the
Annual Meeting and which are represented by properly executed proxies will be
voted in
<PAGE> 7
5
accordance with the instructions indicated in such proxies. If no instructions
are indicated, such shares will be voted: (a) FOR the election of each of the
three nominees for election as directors; (b) FOR the approval of the selection
of independent auditors; and (c) in the discretion of the proxy holder as to
any other matters which may properly come before the Annual Meeting. A
shareholder who has executed and returned a proxy may revoke it at any time
before it is voted at the Annual Meeting by executing and returning a proxy
bearing a later date, by giving written notice of revocation to the Secretary
of the Corporation or by attending the Annual Meeting and voting in person.
The Corporation will bear all the costs and expenses relating
to the solicitation of proxies, including the costs of preparing, printing and
mailing this Proxy Statement and accompanying material to shareholders. In
addition to the solicitation of proxies by use of the mails, the directors,
officers and employees of the Corporation, without additional compensation, may
solicit proxies personally or by telephone or otherwise. Arrangements will be
made with brokerage firms and other custodians, nominees and fiduciaries for
the forwarding of solicitation materials to the beneficial owners of the shares
of Common Stock held by such persons, and the Corporation will reimburse such
brokerage firms, custodians, nominees and fiduciaries for reasonable
out-of-pocket expenses incurred by them in connection with such activities.
ELECTION OF DIRECTORS
In accordance with the Corporation's Certificate of
Incorporation, its Board of Directors is divided into three classes. The terms
of office of the directors in each of such classes expire at different times.
The terms of Messrs. Brown,
<PAGE> 8
6
Clute and Coors will expire at the Annual Meeting of Shareholders in 1994.
Messrs. Brown, Clute and Coors have been designated by the Board of Directors
of the Corporation as nominees for election as directors of the Corporation for
a three-year term expiring in 1997. The terms of Messrs. Charles L. McAlpine
and Richard J. Stoehr will expire in 1995, and the terms of Messrs. Erdahl,
Griffith and Redmond will expire in 1996.
It is intended that the proxies solicited hereby will be voted
FOR election of the nominees for director listed below, unless authority to do
so has been withheld. The Board of Directors knows of no reason why any of its
nominees will be unable or unwilling to accept election. However, if any
nominee becomes unable to accept election, the Board will either reduce the
number of directors to be elected or select substitute nominees nominated by
the Directors Nominating Committee. If substitute nominees are selected,
proxies will be voted in favor of such nominees.
Nominees
The nominees for director for terms which will expire in 1997
are as follows:
<TABLE>
<CAPTION>
Year First
Age at Became
Principal Occupation and Other Directorships May 6, 1994 Director
- -------------------------------------------- ----------- ----------
<S> <C>
ARTHUR BROWN. Chairman of the Board of Directors
of the Corporation since June 1987; also, Chief
Executive Officer of the Corporation since May 1987;
President of the Corporation since May 1986; Chief
Operating Officer of the Corporation from May 1986
to May 1987; Executive Vice President of the
Corporation from May 1985 to May 1986; held various
</TABLE>
<PAGE> 9
7
<TABLE>
<S> <C> <C>
positions as an officer of the Corporation since 1980;
employed by the Corporation since 1967; Director, Great
Lakes Minerals Inc. (a Canadian mining company),
Kingswood Resources Inc. (a Canadian exploration company),
Idaho Independent Bank, and American Colloid Company (an
American industrial minerals company) . . . . . . . . . . 53 1983
JOHN E. CLUTE. Dean, Gonzaga University School of
Law since August 1991; Senior Vice President, Human
Resources and General Counsel of Boise Cascade
Corporation (manufacturer of paper and forest products)
1982-1991; employed by Boise Cascade Corporation in
various other capacities commencing March 1965;
Director, Jundt Growth Fund, Inc. . . . . . . . . . . . . 59 1981
JOE COORS, JR. Chairman of the Board, Coors Ceramics
Company since 1985; Chairman, Air Force Memorial
Foundation; President and Director, ACX Technologies,
Inc.; Director, Provenant Health Care Systems; Trustee,
Colorado School of Mines. . . . . . . . . . . . . . . . . 52 1990
</TABLE>
Remaining Directors
The remaining directors whose present terms of office will
continue after the meeting and will expire in 1995 are as follows:
<TABLE>
<CAPTION>
Year First
Age at Became
Principal Occupation and Other Directorships May 6, 1994 Director
- -------------------------------------------- ----------- ----------
<S> <C> <C>
CHARLES L. McALPINE. President of Arimathaea
Resources Inc. (Canadian gold exploration company)
from December 1982 to present; former President
of Jerome Gold Mines Corporation (Canadian gold
exploration company); Director, First Tiffany
Resources Corporation and Holmer Gold Mines Ltd. . . . . . 60 1989
RICHARD J. STOEHR. Mining industry consultant.
Retired in 1984 as Senior Vice President of Homestake
Mining Company; Director, Christensen Boyles Corporation;
Advisor, S. G. Warburg Group . . . . . . . . . . . . . . . 67 1984
</TABLE>
<PAGE> 10
8
The remaining directors whose present terms of office will
continue after the meeting and will expire in 1996 are as follows:
<TABLE>
<CAPTION>
Year First
Age at Became
Principal Occupation and Other Directorships May 6, 1994 Director
- -------------------------------------------- ----------- -----------
<S> <C> <C>
LELAND O. ERDAHL. Consultant to Stolar, Inc.,
from November 1984 to July 1987 and from January
1992 to present; President of Stolar, Inc.
(geologic imaging and radio communications) from
July 1987 to January 1992; President of Albuquerque
Uranium Corporation from November 1987 to present;
President and Chief Executive Officer of Ranchers
Exploration and Development Corporation ("Ranchers")
from July 1983 to July 1984; held various positions
as an officer of Ranchers since 1970; Trustee,
Freedom Investment Trusts I, II & III; Director,
Canyon Resources Corporation and Freeport McMoRan
Copper & Gold, Inc. . . . . . . . . . . . . . . . . . . . 65 1984
W. A. GRIFFITH. Retired. Chairman of the Corporation
from May 1985 to June 1987; Chief Executive Officer
of the Corporation from May 1979 to May 1987; President
of the Corporation from May 1979 to May 1986; held
various positions as an officer of the Corporation
since 1973; initially employed by the Corporation
in 1968; Chairman, Inland Northwest Bank; Director,
Consolidated Silver Corporation (owner of silver mining
property), Silver Mountain Lead Mines, Inc., and The Coeur
d'Alenes Company. . . . . . . . . . . . . . . . . . . . . 72 1979
PAUL A. REDMOND. Chairman of the Board, President and
Chief Executive Officer of The Washington Water Power
Company ("Water Power") (electric and natural gas
utility) since May 1985; held various positions as an
officer of Water Power since 1978; Chairman of the
Board of ITRON, Inc.; Chairman of the Board of Pentzer
Corporation. . . . . . . . . . . . . . . . . . . . . . . . 57 1988
</TABLE>
<PAGE> 11
9
CERTAIN INFORMATION ABOUT THE FUNCTIONS OF THE
BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD
The Board of Directors met six times during 1993 and each
director attended all of such meetings, with the exception of one director who
did not attend two meetings. The standing committees of the Board of Directors
are the Executive, Audit, Compensation, Directors Nominating and Finance
Committees. All such Committees except the Directors Nominating Committee met
during 1993; each director attended 100% of such meetings of the committees on
which he served.
The Executive Committee, the members of which are Messrs.
Brown (Chairman), Clute, Griffith and Redmond, met three times in 1993.
The Audit Committee, the members of which are Messrs. Erdahl
(Chairman), Coors and McAlpine met twice in 1993. The Audit Committee's
principal functions are to meet with the Corporation's independent auditors to
review the financial statements contained in the Annual Report, to review the
Corporation's system of internal accounting controls, and to report to the
Board of Directors thereon.
The Compensation Committee, the members of which are Messrs.
Clute (Chairman), Erdahl, Griffith and Redmond, met three times in 1993. The
Compensation Committee's principal functions are to make recommendations to the
Board of Directors concerning the salaries of senior officers of the
Corporation and to administer the Corporation's stock option plans.
The Directors Nominating Committee, the members of which are
Messrs. Griffith (Chairman), Brown, Redmond and Stoehr, did not meet in 1993.
The
<PAGE> 12
10
Directors Nominating Committee reviews and recommends to the Board of Directors
nominees for election as directors at the Annual Meeting of Shareholders and
nominees to fill vacancies on the Board of Directors. The Directors Nominating
Committee will consider persons recommended by shareholders as nominees for
election as directors, which recommendations are submitted in writing to the
Secretary of the Corporation and include a statement as to the qualifications
and willingness of such persons to serve on the Corporation's Board of
Directors.
The Finance Committee, the members of which are Messrs. Stoehr
(Chairman), Coors and Redmond, met twice in 1993. The principal functions of
the Finance Committee are to develop and set the Corporation's long-term
investment policies and to review the performance of the investment manager of
the Corporation's Pension Trusts.
COMPENSATION OF DIRECTORS
The Corporation compensates directors who are not employees of
the Corporation for their services in the amount of $1,000 for each directors'
meeting attended, a retainer fee of $2,000 per calendar quarter and $800 for
attending any meeting of any Committee of the Board.
In 1981, the Corporation adopted a Deferred Compensation Plan
for Directors which allows the directors to defer the receipt of all or a
portion of each year's fees and to receive such deferred amounts, together with
interest at the annual average prime interest rate of The Chase Manhattan Bank
(N.A.), in one or more cash payments starting in the year following the year in
which the director
<PAGE> 13
11
ceases to be a director of the Corporation. Such interest is accrued in each
fiscal year on the total amount deferred in the previous years. In November
1985, the Corporation adopted a revised form of Deferred Compensation Plan for
Directors, which commenced in 1986, which varies from the previous Plan in
material respects as follows: retainer fees only may be deferred; interest is
to be credited monthly at the Moody's long-term bond rate (at 1.23 times the
Moody's long-term bond rate for deferrals made commencing in 1990); hardship
distributions are permitted after retirement from the Board; and benefit
payment periods may be varied with approval. Interest accrued in 1993 for the
accounts of directors, by reason of deferrals prior to 1993, amounted to an
aggregate of $4,520.34.
COMPENSATION OF EXECUTIVE OFFICERS
Report of the Compensation Committee on Executive Compensation
Overall Policy
Compensation of the Corporation's executive officers rests in
the discretion of the Board of Directors, and the Compensation Committee of the
Board of Directors is charged with considering specific information and making
recommendations to the full Board. The Compensation Committee is comprised of
four non-employee directors appointed annually by the Corporation's Board of
Directors. The Compensation Committee's consideration of and recommendations
regarding executive compensation are guided by a number of factors including
overall corporate performance and returns to shareholders. The overall
<PAGE> 14
12
objectives of the Corporation's executive compensation package are to attract
and to retain the best possible executive talent, to motivate the Corporation's
executives to achieve goals consistent with the Corporation's business
strategy, to provide an identity between executive and shareholder interests
through stock option plans, and finally to provide a compensation package that
recognizes an executive's individual contributions in addition to the
Corporation's overall business results.
The Compensation Committee periodically reviews the
Corporation's executive compensation program. The Compensation Committee meets
at least once each year to consider various components of the executive
compensation program. In making recommendations concerning executive
compensation, the Committee reviews reports published by independent
compensation consultants assessing compensation programs and reviews the
Corporation's executive compensation, corporate performance, stock price
appreciation and total return to shareholders against a peer group of public
corporations made up of the Corporation's most direct competitors for executive
talent. The Corporation's peer group used for compensation analysis includes
the selected peer group identified in the Performance Graph shown on page 11.
The Compensation Committee believes the Corporation's most direct competitors
for executive talent are not necessarily those companies included in the peer
group established for comparing shareholder returns. The Compensation
Committee's periodic review permits an ongoing evaluation of the link between
the Corporation's performance and its executive compensation in the context of
the compensation programs of other companies.
<PAGE> 15
13
The Compensation Committee recommends to the Board of
Directors compensation levels and programs for the Chief Executive Officer and
all Vice Presidents, including the individuals whose compensation is detailed
in this proxy statement. In reviewing individual performance of executives
whose compensation is detailed in this proxy statement, the Compensation
Committee takes into account the views of Mr. Brown, the Corporation's Chief
Executive Officer.
The key elements of the Corporation's executive compensation
consist of base salary, cash bonus, and grant of stock options. The Company
does not have any long term incentive plan. The Compensation Committee's
policies with respect to each of these elements, including the basis for the
compensation awarded to Mr. Brown, are discussed below. In addition, while the
elements of compensation described below are considered separately, the
Compensation Committee takes into account the full compensation package
afforded by the Corporation to the individual, including deferred compensation,
pension benefits, supplemental retirement benefits, severance plans, insurance
and other benefits, as well as the programs described below. While the
Committee takes into consideration all of the performance and other factors set
forth below in setting base salaries and bonuses, the Committee's deliberations
are essentially subjective, and no set quantitative formula determines the
compensation level of any of the named executives.
The Committee has analyzed the potential impact on the
Company's executive compensation program of new Section 162(m) of the Internal
Revenue Code, which generally disallows deductions for compensation in excess
of $1 million per year to the five most highly compensated executives of a
public company and the
<PAGE> 16
14
proposed regulations thereunder. Based upon its analysis, the Committee
expects that none of the compensation payable pursuant to the program as now
in effect will be non-deductible as a result of Section 162(m).
Base Salaries
Base salaries for new executive officers are initially
determined by evaluating the responsibilities of the position held and the
experience of the individual, and by reference to the competitive marketplace
for executive talent, including a comparison to base salaries for comparable
positions at other companies both in the peer group and more broadly.
Annual salary adjustments which are made in May of each year
for a 12-month period from June 1 to May 31 are determined by evaluating the
performance of the Corporation and of each executive officer, and also take
into account new responsibilities for any particular officer. In the case of
executive officers with responsibility for a particular business unit, such
unit's financial, operating, cost containment and productivity results are also
considered by the Committee. The Compensation Committee, where appropriate,
also considers other corporate performance measures, including changes in
market share, productivity, cost control, safety, environmental awareness and
improvements in relations with customers, suppliers and employees. The
Compensation Committee places a premium on efficiency, since certain sectors of
the Corporation's businesses do not control the prices at which their products
are sold. Salaries for all executive officers were increased commencing August
1, 1993, based upon the considerations described above.
<PAGE> 17
15
With respect to the base salary granted to Mr. Brown in 1993,
the Compensation Committee took into account a comparison of base salaries of
chief executive officers of peer companies, the Corporation's success in
meeting its return on equity goals in 1992, the performance of the
Corporation's common stock and the assessment by the Compensation Committee of
Mr. Brown's individual performance. The Compensation Committee also took into
account the longevity of Mr. Brown's service to the Corporation and its belief
that Mr. Brown is an excellent representative of the Corporation to the public
by virtue of his stature in the community and the industry. In August 1993,
the Board of Directors increased Mr. Brown's base salary by $50,000 per year
commencing August 1, 1993, based upon the considerations described above.
Annual Bonus
The Corporation also has a management incentive program
pursuant to which executive officers are eligible for annual cash bonuses. The
performance measure for bonus payments is based largely on the judgment of the
Compensation Committee in assessing the executive's individual performance and
the Compensation Committee's review of the executive's contribution towards the
achievement of departmental and corporate performance objectives. However, the
Committee believes that an executive's contribution towards the meeting of
overall corporate financial objectives is of limited utility because the
achievement of these objectives is determined to a large extent by the prices
for the sale of various products produced by the Corporation, a factor over
which corporate executives have no control. As is the case with base salary,
the Compensation Committee considers individual non-financial performance
measures, especially operating efficiency and, where appropriate, unit
performance measures, in
<PAGE> 18
16
determining any bonus. Bonuses were awarded in 1993 in the amounts set forth
in the Summary Compensation Table under Annual Compensation - Bonus, and were
generally awarded to executives. Mr. Brown received a cash bonus of $40,000.
Stock Options
Under the Corporation's 1987 Non-Statutory Stock Option Plan,
which was approved by shareholders, stock options may be granted to the
Corporation's executive officers and key employees, including the individuals
whose compensation is detailed in this proxy statement. The Compensation
Committee sets the size of stock option grants based on factors, including
competitive compensation data, similar to those used to determine base salaries
and annual bonuses. The Compensation Committee can elect not to award options.
Stock options are intended to align the interests of
executives with those of the shareholders. All stock options granted under the
plan have been granted with an exercise price equal to the market price of the
Common Stock on the date of grant and are exercisable during a ten-year period.
This approach is designed to provide executive incentive for creation of
shareholder value over the long term since the benefit of the compensation
package cannot be realized unless stock price appreciation occurs. No stock
options were granted in 1993.
Mr. Brown was not granted any options in 1993. Mr. Brown owns
15,962 shares of the Corporation's common stock and holds options to purchase
an additional 82,000 shares. The Compensation Committee believes that
significant equity interests in the Corporation held by the Corporation's
management align the interests of shareholders and management.
<PAGE> 19
17
Conclusion
The Corporation's executive compensation is linked to
individual and corporate performance and stock price appreciation. In 1993, as
in previous years, a significant portion of the Corporation's executive
compensation consisted of these performance-based variable elements, although
no quantitative formulas are used to determine any individual executive's
compensation. The Compensation Committee intends to continue the policy of
linking executive compensation to corporate performance and returns to
shareholders, recognizing that the ups and downs of the business cycle,
particularly in the long-depressed price periods for a large portion of the
Corporation's products, from time to time may result in an imbalance for a
particular period. The Compensation Committee adjusts for factors such as
these, which are beyond an executive's control, by exercising its qualitative
judgment rather than employing strict quantitative formulas.
February 10, 1994
John E. Clute, Chairman
Leland O. Erdahl
William A. Griffith
Paul A. Redmond
<PAGE> 20
18
COMPARISON OF FIVE-YEAR CUMULATIVE TOTAL RETURN(1)
HECLA MINING COMPANY, S&P 500,
S&P GOLD MINING, AND PEER GROUP
<TABLE>
<CAPTION>
1988 1989 1990 1991 1992 1993
<S> <C> <C> <C> <C> <C> <C>
S & P 500 Index 100 132.16 127.49 166.17 178.81 196.75
S & P Gold Index 100 145.20 128.20 104.13 97.21 178.02
Peer Group(2) 100 131.59 90.65 79.30 57.70 120.34
Hecla Mining Company 100 111.29 67.96 87.95 61.97 92.95
</TABLE>
(1) Total return assumes reinvestment of dividends on a quarterly basis.
(2) Peer Group: Atlas Corporation, Battle Mountain Gold Company, Coeur d'Alene
Mines Corporation, Echo Bay Mines Ltd., Homestake Mining Company, Pegasus
Gold Inc., Sunshine Mining Company.
<PAGE> 21
19
Compensation for 1993
The following table sets forth information regarding the aggregate
compensation for the fiscal years ended December 31, 1991, 1992, and 1993 paid
or accrued for (i) the Chief Executive Officer of the Corporation and (ii) the
four most highly paid executive officers of the Corporation.
SUMMARY COMPENSATION TABLE(3)
<TABLE>
<CAPTION>
Long Term
Compen-
Annual sation
Compensation(1) Other Annual Awards
-------------------- Compen- ---------
Name and Principal Position Year Salary Bonus sation(2) Options
--------------------------- ---- ------ ----- ------------ -------
<S> <C> <C> <C> <C> <C>
Arthur Brown: Chairman, President & 1993 $320,833 $40,000 $ 93,908 -0-
Chief Executive Officer 1992 $300,000 -0- $ 30,333 46,000
1991 $289,583 -0- $ 33,183 -0-
Roger A. Kauffman:(4) 1993 $163,334 $20,000 $ 43,765 -0-
Vice President - 1992 $155,000 -0- $ 9,817 10,000
Industrial Minerals 1991 $146,667 $10,000 $ 8,411 -0-
Ralph R. Noyes: 1993 $163,334 $20,000 $ 26,062 -0-
Vice President - Metal Mining 1992 $155,000 -0- $ 3,376 10,000
1991 $146,667 $10,000 $ 2,994 -0-
Michael B. White: 1993 $124,167 $10,000 $ 12,744 -0-
Vice President - General Counsel & 1992 $110,860 -0- $ 2,692 -0-
Secretary 1991 $ 94,676 -0- $ 6,652 -0-
Joseph T. Heatherly: Vice President 1993 $111,666 $5,000 $ 23,030 -0-
- Controller 1992 $107,500 -0- $ 6,888 -0-
1991 $104,375 -0- $ 5,794 -0-
</TABLE>
(1) The annual compensation set forth in the table is based upon
salaries of the chief executive officer and other named executives
established in May of each year for 12-month periods from June 1
to May 31. This table reflects compensation paid to or earned by
the executive officers during the fiscal year ending December 31,
1993.
(2) "Other Annual Compensation" for the last fiscal year includes
the following for Messrs. Brown, Kauffman, Noyes, White, and
Heatherly, (i) tax offset bonuses paid upon the exercise of the
stock options of $56,237, $28,869, $21,520, $6,769, and $13,260,
for each named executive, respectively; (ii) matching contributions
under the Corporation's Deferred Compensation Plan of $3,073,
$3,459, $842, $1,820, and $2,087, for each named executive,
respectively, (iii) the above market portion of interest accrued
under the Corporation's Deferred Compensation Plan of $29,892,
$8,067, $1,060, $216, and $3,789, on behalf of each named
executive, respectively; (iv) matching contributions under the
Corporation's Capital Accumulation Plan of $2,248, $1,937, $2,198,
$1,494, and $1,245, for each named executive, respectively; (v)
the dollar value benefit of premium payments for term life
insurance coverage of $942, $389, $0.00, $150, and $1,689, for
each named executive, respectively; (vi) the dollar value of use
of automobiles owned by the Corporation of $416, $494, $442,
$1,445, and $960, for each named executive, respectively; and (vii)
personal tax service provided by consultants at the expense of the
Corporation for Mr. Brown, $1,100, Mr. Kauffman, $550, and
Mr. White, $850.
(3) Information for deleted columns is not required, since no such
compensation is paid by the Corporation for any such deleted
column.
(4) Mr. Kauffman resigned from the Corporation effective January 31,
1994.
<PAGE> 22
20
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES(1)
The following table shows information concerning the exercise of stock
options during fiscal year 1993 by each of the named executive officers and the
fiscal year-end value of unexercised options.
<TABLE>
<CAPTION>
Number of
Unexercised Value of Unexercised
Shares Acquired Value Options at In-the-Money Options
Name on Exercise (#) Realized ($) FY-End (#) at FY-End
---- --------------- ------------ ----------- ---------------------
<S> <C> <C> <C> <C>
Arthur Brown 18,000 $ 128,250 82,000 $ 74,250
Roger A. Kauffman 9,500 $ 65,313 28,500 $ 22,500
Ralph R. Noyes 9,500 $ 48,687 28,500 $ 22,500
Michael B. White 2,500 $ 15,312 8,500 $ 4,375
Joseph T. Heatherly 5,000 $ 30,000 8,500 $ 4,375
</TABLE>
(1) The Corporation's 1987 Nonstatutory Stock Option Plan (the "1987 Plan"),
adopted by the Board of Directors on February 13, 1987, and approved by the
shareholders of the Corporation at the 1987 Annual Meeting of Shareholders,
provides for the grant, from time to time, to officers and key employees of the
Corporation or its subsidiaries, of nonstatutory stock options to purchase up
to an aggregate of 500,000 shares of Common Stock. The 1987 Plan also provides
that the Board may grant tandem stock appreciation rights and/or tax offset
bonuses with any such nonstatutory stock option. All nonstatutory stock
options granted under the 1987 Plan to date have been granted with tax offset
bonuses. Pursuant to the terms of the 1987 Plan, the exercise price per share
of all nonstatutory stock options shall not be less than fifty percent (50%) of
the fair market value of the Common Stock on the date of grant of such options.
All options granted under the 1987 Plan have been granted at the fair market
value of the Common Stock on the date of grant. All options are vested and
immediately exercisable. No options were granted in 1993.
Retirement Plan
The officers of the Corporation participate in the Hecla Mining Company
qualified Retirement Plan (the "Retirement Plan"), which covers substantially
all employees of the Corporation, as defined, except for certain hourly
employees who are covered by separate plans. Contributions to the Retirement
Plan, and the related expense or income, are based on general actuarial
calculations and, accordingly, no portion of the Corporation's contributions,
and related expenses or income, is specifically attributable to the
Corporation's officers. The Corporation was not required to make a contribution
for 1993. The Corporation also has an unfunded Supplemental Retirement Benefit
Plan adopted in November 1985 (the "Supplemental Plan") under which the amount
of any benefits not payable under the Retirement Plan by reason of the
limitations imposed by the Internal Revenue Code and/or the Employee Retirement
<PAGE> 23
21
Income Security Act, as amended, (the "Acts") and the loss, if any, due to a
deferral of salary made under the Corporation's Deferred Compensation Plan for
Officers and/or the Capital Accumulation Plan will be paid out of the general
funds of the Corporation to any employee who may be adversely affected. Under
the Acts, the current maximum annual pension benefit payable by the Plan to any
employee is $118,800 subject to specified adjustments. Upon reaching the
normal retirement age of 65, each participant is eligible to receive annual
retirement benefits in monthly installments for life equal to, for each year of
credited service, 1% of final average annual earnings (defined as the highest
average earnings of such employee for any 36 consecutive calendar months during
the final 120 calendar months of service) up to the applicable covered
compensation level (which level is based on the Social Security maximum taxable
wage base) and 1 1/2% of the difference, if any, between final average annual
earnings and the applicable covered compensation level. The Retirement Plan
and Supplemental Plan define earnings for purposes of the Plans to be "a wage
or salary for services of employees inclusive of any bonus or special pay
including gainsharing programs, contract miner's bonus pay, and the
equivalent."
The following table shows estimated aggregate annual benefits under the
Retirement Plan and the Supplemental Plan payable upon retirement to a
participant who retires in 1994 at age 65 having the years of service and final
average annual earnings as specified. The table assumes Social Security covered
compensation levels as in effect on January 1, 1994:
<PAGE> 24
22
<TABLE>
<CAPTION>
Final Average Years of Credited Service
Annual Earnings 5 10 15 20 25 30
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
100,000 6,892 13,184 19,777 26,369 32,961 39,553
125,000 8,767 17,534 26,312 35,069 43,836 52,603
150,000 10,642 21,284 31,927 42,569 53,211 63,853
175,000 12,517 25,034 37,552 50,069 62,586 75,103
200,000 14,392 28,784 43,177 57,689 71,961 86,353
225,000 16,267 32,534 48,802 65,069 81,336 97,603
250,000 18,142 36,284 54,427 72,569 90,711 108,853
275,000 20,017 40,034 60,052 80,069 100,086 120,103
300,000 21,892 43,784 65,677 87,569 109,461 131,353
325,000 23,767 47,534 71,302 95,069 118,836 142,603
</TABLE>
Benefits listed in the pension table are not subject to any deduction
for Social Security or other offset amounts. As of December 31, 1993, the
following executive officers have completed the indicated number of full years
of credited service: A. Brown, 26 years; J. T. Heatherly, 10 years; R. A.
Kauffman, 9 years; R. R. Noyes, 17 years; and M. B. White, 13 years.
Employment Agreements
The Corporation has entered into employment agreements (collectively,
the "Agreements") with Messrs. Brown, Kauffman, Noyes, Heatherly, White, and
with Mr. John P. Stilwell, the Corporation's Treasurer (collectively, the
"Executives" and individually, an "Executive"). The Agreements were
recommended to the Board of Directors by the Compensation Committee and were
approved by the Board of Directors on the basis of such recommendation. The
Agreements, which are substantially identical except for compensation
provisions, provide that each of the Executives shall serve in such executive
position as the Board of Directors may direct. The Agreements become effective
only upon a "Change of Control" of the Corporation (the "Effective Date"). The
term of employment under the Agreements is two years from the Effective Date.
The Agreements are automatically renewed for an additional year in November of
each year unless the
<PAGE> 25
23
Corporation gives notice of nonrenewal 60 days prior to the renewal date.
Under the Agreements, a Change of Control of the Corporation is deemed to occur
if a person (including a "group" under Section 13(d)(3) of the Securities
Exchange Act of 1934, as amended) becomes the beneficial owner of 20% or more
of the voting power of the Corporation or if, as the result of a tender offer,
merger, proxy fight or similar transaction, the persons who were previously
directors of the Corporation cease to constitute a majority of the Board. The
Agreements are intended to ensure that, in the event of a Change of Control,
each Executive will continue to receive payments and other benefits equivalent
to those he was receiving at the time of a Change of Control for the duration
of the term of the Agreement. The Agreements also provide, among other things,
that should an Executive's employment be terminated by the Corporation or by
the Executive for good reason (other than death, incapacity or misconduct)
after the Effective Date of the Agreement, he would receive from the
Corporation for the remaining term of his employment, payable in a lump sum, a
defined amount generally equivalent to his then annual base salary rate. The
Corporation would also maintain such Executive's participation in all benefit
plans and programs (or provide equivalent benefits if such continued
participation was not possible under the terms of such plans and programs) and
pay him the full retirement benefits to which he would have been entitled had
his employment not been terminated. An Executive whose employment has
terminated would not be required to seek other employment in order to receive
the defined benefits. The Agreements also provide that in the event an
Executive's employment is terminated in connection with a Change of Control,
triggering the payment of the above stated amounts, the Corporation shall make
an additional gross-up payment to place the Executive in the same after-tax
position as if no excise tax were imposed by the Internal Revenue Code.
<PAGE> 26
24
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Members of the Compensation Committee include Mr. William A. Griffith,
who retired from the Corporation in 1987 as Chairman, President and Chief
Executive Officer of the Corporation.
SECURITY OWNERSHIP
The following table presents certain information regarding the number
and percentage of the shares of Common Stock beneficially owned (as such term
is defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended)
by each director of the Corporation and by all directors and officers as a
group, as of February 15, 1994. On that date, all of such persons together
beneficially owned an aggregate of less than 1% of the outstanding shares of
the Common Stock. Except as otherwise indicated, the directors and officers
have sole voting and investment power with respect to the shares beneficially
owned by them.
<TABLE>
<CAPTION>
Number of Shares
of Common Stock
Named Executive Officer, and Nature of
Director or Nominee Beneficial Ownership
----------------------------------------------------------
<S> <C>
Arthur Brown......................... 97,962 (1)
John E. Clute........................ 300
Joe Coors, Jr. ...................... - -
Leland O. Erdahl..................... 35,631 (1)
William A. Griffith.................. 1,006
Joseph T. Heatherly.................. 10,461 (1)
Roger A. Kauffman.................... 29,882 (1)
Charles L. McAlpine.................. 500
Ralph R. Noyes....................... 29,500 (1)
Paul A. Redmond...................... 300
Richard J. Stoehr.................... 3,000
Michael B. White..................... 9,118 (1)
All present directors and executive
officers as a group (13 persons) .... 217,765 (2)
</TABLE>
(1) Includes the following number of shares issuable
upon the exercise by the following individuals of
currently exercisable options: Mr. Brown, 82,000;
Mr. Erdahl, 4,756; Mr. Heatherly, 8,500; Mr.
Kauffman, 28,500; Mr. Noyes, 28,500, and Mr. White,
8,500.
(2) Includes 160,756 shares issuable upon the exercise
of currently exercisable options.
APPROVAL OF AUDITORS
<PAGE> 27
25
Coopers & Lybrand, independent public accountants, have been selected by
the Board of Directors as independent auditors for the Corporation for the
fiscal year ending December 31, 1994, subject to approval by the shareholders.
Coopers & Lybrand, or its predecessor firm, has served as independent auditors
for the Corporation since 1964. This firm is experienced in the field of
mining accounting and is well qualified to act in the capacity of auditors.
The selection of this firm was recommended to the Board of Directors by its
Audit Committee, composed of Messrs. Coors, Erdahl and McAlpine, none of whom
is an officer or employee of the Corporation. A representative of Coopers &
Lybrand is expected to be present at the Annual Meeting to make a statement if
he so desires and to be available to respond to questions of the shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE SELECTION
OF COOPERS & LYBRAND AS THE CORPORATION'S INDEPENDENT AUDITORS FOR 1994.
PROVISIONS OF THE CORPORATION'S BY-LAWS
WITH RESPECT TO SHAREHOLDER PROPOSALS AND NOMINATIONS
FOR ELECTION AS DIRECTORS
The Corporation's By-Laws establish procedures governing the eligibility
of nominees for election to the Board of Directors of the Corporation and the
proposal of business to be considered by the shareholders at an Annual Meeting.
For nominations or other business to be properly brought before an Annual
Meeting by a shareholder, the shareholder must have given timely notice thereof
in writing to the Secretary of the Corporation. To be timely, a shareholder's
notice shall be delivered to the Secretary at the principal executive offices
of the Corporation not less than 60 days nor more than 90 days prior to the
first anniversary of the preceding year's Annual Meeting; provided, however,
that in the event that the date of the Annual Meeting is advanced by more than
30 days or delayed by more than 60 days from such anniversary date, notice by
the shareholder to be timely must be so delivered not earlier than the 90th day
prior to such Annual Meeting and not later than the close of business on the
later of the 60th day prior to such Annual Meeting or the 10th day following
the day on
<PAGE> 28
26
which public announcement of the date of such meeting is first made. Such
shareholder's notice shall set forth (a) as to each person whom the shareholder
proposes to nominate for election or reelection as a director, all information
relating to such person that is required to be disclosed in solicitations of
proxies for election of directors, or is otherwise required, in each case
pursuant to Regulation 14A under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), including such person's written consent to being
named in the proxy statement as a nominee and to serving as a director if
elected; (b) as to any other business that the shareholder proposes to bring
before the meeting, who has not otherwise complied with the rules and
regulations of the Securities and Exchange Commission for the inclusion of a
shareholder proposal in the Corporation's proxy materials, a brief description
of the business desired to be brought before the meeting, the reasons for
conducting such business at the meeting and any material interest in such
business of such shareholder and the beneficial owner, if any, on whose behalf
the proposal is made; (c) as to the shareholder giving the notice and the
beneficial owner, if any, on whose behalf the nomination or proposal is made
(i) the name and address of such shareholder, as they appear on the
Corporation's books, and of such beneficial owner and (ii) the class and number
of shares of the Corporation which are owned beneficially and of record by such
shareholder and such beneficial owner. The Chairman of the meeting shall have
the power and duty to determine whether a nomination or any business proposed
to be brought before the meeting was made in accordance with the procedures set
forth in the By-Laws and, if any proposed nomination or business is not in
compliance with the By-Laws, to declare that such defective proposal shall be
disregarded.
SHAREHOLDER PROPOSALS FOR 1995 ANNUAL MEETING
The Corporation will review shareholder proposals intended to be
included in proxy material for the 1995 Annual Meeting of Shareholders which
are received by the Corporation at its principal executive offices no later
than November 30, 1994, subject to the By-Law provision discussed above. Such
proposals must be
<PAGE> 29
27
submitted in writing and should be sent to the attention of the Secretary of
the Corporation.
ANNUAL REPORT
The Corporation's Annual Report to Shareholders, including financial
statements, for the year ended December 31, 1993 (the "Annual Report"), is
being mailed to shareholders with this Proxy Statement. In addition, a
shareholder of record may obtain a copy of the Corporation's Annual Report on
Form 10-K for the fiscal year ended December 31, 1993 (the "Form 10-K"),
without cost, upon written request to the Secretary of the Corporation. The
Annual Report and the Form 10-K are not part of the proxy solicitation material
for the Annual Meeting.
OTHER BUSINESS
As of the date of this Proxy Statement, the Board of Directors is not
aware of any matters that will be presented for action at the Annual Meeting
other than those described above. However, should other business properly be
brought before the Annual Meeting, the Proxies will be voted thereon in the
discretion of the persons acting thereunder.
By Order of the Board of Directors
Michael B. White
Secretary
March 28, 1994
<PAGE> 30
HECLA MINING COMPANY
6500 Mineral Drive
Coeur d'Alene, Idaho 83814-8788
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF SHAREHOLDERS
May 6, 1994
THE BOARD OF DIRECTORS RECCOMMENDS A VOTE "FOR" THE ELECTION OF THE NOMINEES
FOR DIRECTOR LISTED IN ITEM 1 AND "FOR" PROPOSAL 2.
The undersigned, revoking any previous proxies, hereby appoints ARTHUR
BROWN and MICHAEL B. WHITE, and each of them, proxies of the undersigned, with
full power of substitution, to attend the Corporation's Annual Meeting of
Shareholders on May 6, 1994, and any adjournment or adjournments thereof, and
there to vote the undersigned's shares on the following matters as described in
the Board of Directors' Proxy Statement for such Meeting, a copy of which has
been received by the undersigned.
SEE REVERSE SIDE
<PAGE> 31
/X/ PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE
THIS PROXY WILL BE VOTED AS SPECIFIED, IF NO SPECIFICATION IS MADE, THIS PROXY
WILL BE VOTED FOR THE ELECTION OF THE THREE NOMINEES FOR DIRECTORS AND FOR THE
ADOPTION OF PROPOSAL 2.
1. Election of Directors FOR WITHHELD
/ / / /
For, except vote withheld from the following nominee(s)
--------------------------------------------------------
Nominees:
Arthur Brown
John E. Clute
Joe Coors, Jr.
2. PROPOSAL to approve the selection FOR AGAINST ABSTAIN
of Coopers & Lybrand as the Independent / / / / / /
Auditors of the Corporation for the
fiscal year ending December 31, 1994.
3. In their discretion on all other business that may properly come before the
meeting or any adjournment or adjournments thereof.
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THE PROXY CARD USING THE ENCLOSED
ENVELOPE.
SIGNATURE _________________________ DATE____________________________
The proxy must be signed exactly as your name or names appear on this card.
Executors, administrators, trustees, partners, etc. should give full title as
such. If the signer is a corporation, please sign in full corporate name by
duly authorized officer(s), who should specify the title(s) of such officer(s).
