<PAGE> 1
PROXY STATEMENT
PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
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 section 240.14a-11(c) or
section 240.14a-12
HECLA MINING COMPANY
(Name of Registrant as Specified in Its Charter)
MICHAEL B. WHITE, SECRETARY
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box): N/A
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or
14a-6(i)(2) or Item 22(a)(2) of Schedule 14A.
[ ] $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 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:
[ ] Fee Paid Previously with Preliminary Materials.
[ ] 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 registration
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:
<PAGE> 2
March 29, 1999
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 7, 1999, at 10 a.m.,
Pacific Daylight Time.
The annual meeting will involve the election of three directors and the
selection of auditors for 1999. 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 83815-8788
--------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held on
May 7, 1999
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 7, 1999, at 10 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 consider and vote upon the selection of PricewaterhouseCoopers LLP as
independent auditors of the Corporation for the fiscal year ending December 31,
1999; and
(3) To transact such other business as may properly come before the Annual
Meeting or any postponements or adjournments thereof.
The close of business on March 15, 1999, 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 postponements 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 29, 1999
- -------------------------------------------------------------------------------
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> 4
HECLA MINING COMPANY
6500 Mineral Drive
Coeur d'Alene, Idaho 83815-8788
(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 7, 1999
--------------------
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 7, 1999, and any postponements 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 29, 1999.
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 to 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 consider and to
take action on the selection of PricewaterhouseCoopers LLP as independent
auditors of the Corporation for the fiscal year ending December 31, 1999. See
"Approval of Auditors."
VOTING AT ANNUAL MEETING
General
The Board of Directors of the Corporation has fixed the close of business on
March 15, 1999, 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 55,104,618 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 abstentions,
broker nonvotes 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
<PAGE> 5
independent auditors 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 nonvotes 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
accordance with the instructions indicated in such proxies. If no instructions
are indicated on any proxy, the shares represented by such proxy will be voted:
(1) FOR the election of each of the three nominees for election as directors;
(2) FOR the approval of PricewaterhouseCoopers LLP as the Corporation's
independent auditors; and (3) 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. Attendance in person
at the Annual Meeting will not, in itself, be sufficient to revoke a proxy.
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 forwarding
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. Leland O. Erdahl, Thomas J. O'Neil and Paul A. Redmond will expire at
the Annual Meeting of Shareholders in 1999. Messrs. Erdahl, O'Neil and Redmond
have been designated by the Board of Directors of the Corporation as nominees
for election as directors of the Corporation each for a three-year term expiring
in 2002. Mr. Redmond was added to the Board of Directors on January 1, 1998.
Mr. Redmond previously served as a Director of the Corporation from 1988 to
1994. The terms of Messrs. Arthur Brown, John E. Clute and Joe Coors Jr., will
expire in 2000. The terms of Messrs. Ted Crumley, Charles L. McAlpine and Jorge
E. Ordonez C. will expire in 2001.
It is intended that the proxies solicited hereby will be voted FOR election
of the nominees for directors 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 submitted by the Directors
Nominating Committee of the Board of Directors. If substitute nominees are
selected, proxies will be voted in favor of such nominees.
<PAGE> 6
Nominees
The nominees for directors for terms which will expire in 2002 are as
follows:
<TABLE>
<CAPTION>
Year First
Age at Became
Principal Occupation and Other Directorships May 7, 1999 Director
- -------------------------------------------- ----------- ----------
<S> <C> <C>
LELAND O. ERDAHL. Consultant from November 1984 to
July 1987 and from January 1992 to 1995; President of
Stolar, Inc. (geologic imaging and radio
communications) from July 1987 to January 1992;
President of Albuquerque Uranium Corporation from
November 1987 to 1992; 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, John Hancock Mutual Funds; Director,
Canyon Resources Corporation; Director, Original
Sixteen to One Mine, Inc.; Vice President, Chief
Financial Officer and Director, Amax Gold, Inc., from
March 1997 to June 1998; Director, Uranium Resources
Inc. 70 1984
THOMAS J. O'NEIL. Executive Vice President -
Operations, Cleveland-Cliffs Inc., since October 1995;
employed by Cleveland-Cliffs Inc. as an officer since
November 1991; employed as an officer of certain
operating subsidiaries of Cyprus Minerals Corporation
from October 1987 through November 1991; Director, Lake
Superior and Ishpeming Railroad (subsidiary of
Cleveland-Cliffs Inc.); Member, National Academy of
Engineering 59 1996
PAUL A. REDMOND. Chairman of the Board and Chief
Executive Officer of Washington Water Power Company
("Water Power") (electric and natural gas utility, now
Avista Corp.) from May 1985 to July 1998; held various
positions as an officer of Water Power since 1978;
Director of ITRON, Inc., and U.S. Bancorp; Director,
Hecla Mining Company, 1988-1994 62 1998
<PAGE> 7
Remaining Directors
The remaining directors whose present terms of office will continue after
the meeting and will expire in 2000 are as follows:
Year First
Age at Became
Principal Occupation and Other Directorships May 7, 1999 Director
- -------------------------------------------- ----------- ----------
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 positions as an officer of the
Corporation since 1980; employed by the Corporation
since 1967; Director, AMCOL International Corporation
(an American industrial minerals company); Director,
Idaho Independent Bank; Director, Southern Africa
Minerals Corporation (a Canadian mining company) 58 1983
Principal Occupation and Other Directorships
- --------------------------------------------
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 to 1991; employed by Boise Cascade
Corporation in various other capacities commencing
March 1965; Director, The Jundt Growth Fund, Inc.;
Director, Jundt Funds, Inc. (Jundt U.S. Emerging Growth
Fund, Jundt Opportunity Fund and Jundt Twenty-Five
Fund); Director, RealResume, Inc. (computerized
employment and personnel services) 64 1981
JOE COORS JR. Chairman of the Board, Coors Ceramics
Company since 1985; Chairman, Air Force Memorial
Foundation; President and Director, ACX Technologies,
Inc.; Trustee, Colorado School of Mines 57 1990
<PAGE> 8
The remaining directors whose present terms of office will continue after
the meeting and will expire in 2001 are as follows:
Year First
Age at Became
Principal Occupation and Other Directorships May 7, 1999 Director
- -------------------------------------------- ----------- ----------
TED CRUMLEY. Senior Vice President and Chief Financial
Officer of Boise Cascade Corporation (manufacturer of
paper and forest products), 1994 to present; Vice
President and Controller of Boise Cascade Corporation,
1990 to 1994; other positions held at Boise Cascade
Corporation from 1972 to 1990; Director, Boise Cascade
Office Products Corporation, 1995 to present 54 1995
CHARLES L. McALPINE. President of Arimathaea Resources
Inc. (Canadian gold exploration company) from December
1982 to June 1992; President of Campbell Chibougamau
Mines Ltd. (Canadian copper-gold mining company) from
1969 to 1979; Director, First Tiffany Resource
Corporation; Director, Goldstake Explorations, Inc.;
Director, Postec Systems, Inc. 65 1989
JORGE E. ORDONEZ C. Director, Altos Hornos de Mexico,
S.A. de C.V.; Director, Minera Carbonifera Rio
Escondido, S.A. de C.V.; Director, Grupo Acerero del
Norte, S.A. de C.V.; Director, Fischer-Watt Gold Co.,
Inc.; Vice President, Minera Montoro, S.A. de C.V.;
President and Chief Executive Officer, Ordonez-
Profesional S.C., Acting President and CEO, Real del
Monte Mining Corp. 59 1994
</TABLE>
<PAGE> 9
CERTAIN INFORMATION ABOUT THE BOARD OF DIRECTORS
AND COMMITTEES OF THE BOARD
The Board of Directors met five times during 1998. One director was unable
to attend one board meeting. The standing committees of the Board of Directors
are the Executive, Audit, Compensation, Directors Nominating and Finance
committees.
The Executive Committee, the members of which were Messrs. Brown
(Chairman), Clute, Crumley, Erdahl and Redmond, did not meet in 1998. The
Executive Committee is empowered with the same authority as the Board of
Directors in the management of the business of the Corporation, except for
certain matters enumerated in the Corporation's By-Laws which are specifically
reserved to the full Board of Directors.
The Audit Committee, the members of which are Messrs. McAlpine (Chairman),
Erdahl, O'Neil and Ordonez, met twice in 1998. 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 were Messrs. Clute
(Chairman), Coors, Crumley, Erdahl and Redmond, met three times in 1998. The
Compensation Committee's principal functions are to make recommendations to the
Board of Directors concerning the compensation of executive officers of the
Corporation and to administer the Corporation's stock-based plans.
The Directors Nominating Committee, the members of which are Messrs. Erdahl
(Chairman), Clute, McAlpine and Ordonez, did not meet in 1998. The 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. Coors (Chairman),
Crumley, O'Neil and Ordonez, met one time in 1998. 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 managers 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 director's
meeting attended, a retainer fee of $2,000 per calendar quarter and $800 for
attending any meeting of any Committee of the Board.
<PAGE> 10
In August 1994, the Corporation adopted a new Deferred Compensation Plan
for directors which commenced January 1, 1995 (the "1994 Plan"). The prior
plans were terminated, and all amounts deferred thereunder were rolled over into
the 1994 Plan. The 1994 Plan provides that all directors' fees and retainers
may be deferred; interest is to be credited monthly on all deferred accounts at
1.23 times the Moody's long-term bond rate; distributions may be made at the
election of the director on a lump-sum, annual or monthly basis; distributions
for unforeseeable financial emergencies are permitted before and after
retirement; and a grantor trust is established to receive distributions from the
Corporation to provide for the obligations of the Corporation pursuant to the
1994 Plan. Interest accrued in 1998 for the accounts of directors, under the
1994 Plan, amounted to an aggregate of $18,993.
In March 1995, the Corporation adopted the Hecla Mining Company Stock Plan
for Nonemployee Directors (the "Directors Stock Plan"), which became effective
following shareholder approval on May 5, 1995, and is subject to termination by
the Board of Directors at any time. Pursuant to the Directors Stock Plan, each
nonemployee director is credited with 1,000 shares of the Common Stock on May 30
of each year. Nonemployee directors joining the Board of Directors after May 30
of any year are credited with a pro rata number of shares based upon the date
they join the Board. All credited shares are held in a grantor trust, the
assets of which are subject to the claims of the Corporation's creditors, until
delivered under the Directors Stock Plan. Delivery of the shares from the trust
occurs upon the earliest of (i) death or disability; (ii) retirement from the
Board; (iii) a cessation of the director's service for any other reason; or (iv)
a Change in Control of the Corporation (as defined). Subject to certain
restrictions, directors may elect delivery of the shares on such date or in
annual installments thereafter over 5, 10 or 15 years. The shares of Common
Stock credited to nonemployee directors pursuant to the Directors Stock Plan may
not be sold until at least six months following the date they are credited. The
maximum number of shares of Common Stock which may be credited pursuant to the
Directors Stock Plan is 120,000. Each nonemployee director of the Corporation
then serving was credited with 1,000 shares of Common Stock on May 31, 1998,
except Mr. Redmond, who was credited with 404 shares in January 1998,
representing the proportion of the year during which he was a director.
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 with respect to compensation matters. The
Compensation Committee is currently comprised of five nonemployee directors who
are 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 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
<PAGE> 11
an identity between executive and shareholder interests through stock-based
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 met three times in 1998 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. Because most executive skills and expertise
are transferable between industries and business segments, the Compensation
Committee believes the Corporation's most direct competitors for executive
talent are not limited to those companies included in the peer group established
for comparing shareholder returns. Thus, the Corporation's peer group used for
compensation analysis includes, but is not limited to, the selected peer group
identified in the Performance Graph shown on page 10. The Compensation
Committee's periodic review ensures an ongoing evaluation of the correlation
between the Corporation's performance and its executive compensation in the
context of, and in comparisons to, the compensation programs of other companies.
The Compensation Committee recommends to the Board of Directors
compensation levels and programs for the Chief Executive Officer and all Vice
Presidents ("executive officers" as used in this report), 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, annual cash performance payments and stock-based grants. 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 executive,
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, the
Committee's deliberations for setting base salaries are essentially subjective,
and no set quantitative formula determines the base salary level of any of the
named executives. The Corporation adopted a performance payment plan in 1994
utilizing a quantitative formula to determine an executive's eligibility for
annual performance payments in addition to base salary.
The Committee analyzed the potential impact on the Company's executive
compensation program of Section 162(m) of the Internal Revenue Code and the
regulations thereunder, which generally disallows deductions for compensation in
excess of $1.0 million per year to the five most highly compensated executives
of a public company. Based upon its analysis, the Committee expects that all of
the compensation payable pursuant to its compensation program now in effect will
be deductible.
<PAGE> 12
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 including those in the peer group.
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 taking into account new
responsibilities for any particular officer. In the case of executive officers
who are responsible 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 business efficiency because certain sectors of the Corporation's businesses
do not control the prices at which their products are sold.
Although the Committee believed that some of the above factors might
otherwise justify a base salary increase for certain executives, other factors
and the Corporation's lack of profitability resulted in the Committees
determination that no executive officer be granted an increase in base salary in
1998.
With respect to the base salary set for Mr. Brown in 1998, the Compensation
Committee took into account a comparison of base salaries of chief executive
officers of the new peer group companies, the Corporation's lack of
profitability in 1998, the performance of the Common Stock and the assessment by
the Compensation Committee of Mr. Brown's individual performance. Based upon
these factors, the Board of Directors did not increase Mr. Brown's salary in
1998.
Annual Performance Payment
- --------------------------
In August 1994, the Corporation adopted a formal short-term performance
payment plan based on the recommendation of the Compensation Committee. Under
the plan, executive officers (eight in 1998) were eligible for annual cash
payments based upon a formula established in the plan covering the calendar year
1998 and generally described below. The plan formula for 1998 includes an
overall corporate performance element, a departmental performance element, an
individual performance element and an asset addition element. Each of these
elements was assigned a percentage weight described below, such that all
elements combined total 100%. For 1998, corporate performance for all executives
other than Messrs. Brown and Kauffman, were assigned a 40% weight, departmental
performance was assigned a 25% weight, asset addition was assigned a 20% weight
and individual performance was assigned a 15% weight. Mr. Kauffman's
performance payment was conditioned on corporate profitability and tied 40% to
corporate performance, 30% to achieving goals in each of the
<PAGE> 13
Corporations operational segments, 20% to individual performance and 10% to
reserve replacement. Mr. Brown's performance payment was tied 100% to corporate
performance. The Compensation Committee, based upon recommendations from the
Corporation's senior management, established targeted performance goals in key
areas called "key success factors" for the corporate performance element. For
1998, the key success factors and measures for the corporate performance
included gold and silver production and industrial minerals revenue (45%),
operating cash flow after capital expenditures but before financing (25%), cost
management (5%) and relative share price (25%). Departmental factors vary for
each department, but include such factors as cost management, internal customer
service and production goals for metal and industrial mineral operating
divisions. Payments under the plan are determined by the application of a
performance formula to these key success factors. At the first quarterly board
meeting after the end of each year, actual performance results are compared
against the targeted performance goals as a percentage of targeted goals for the
various key success factors. Actual performance must reach at least 90% of the
targeted goals to be included in the performance formula. The key success
factors and the percentage weights assigned to each of the elements may be
altered from year to year at the discretion of the Compensation Committee. The
corporate and departmental performance elements are tied to a formula, while the
individual performance element is discretionary and not based upon any specific
formula. Individual performance payments for all eligible executives, other
than the chief executive officer, are based in significant part upon the
recommendations of the chief executive officer. The Compensation Committee
reviews and approves individual performance payments for all eligible
executives.
The plan provides that no performance payments may be awarded based upon
any of the corporate key success factors if the Corporation does not achieve a
net profit after preferred dividends. However, payments derived from the asset
addition, departmental and individual performance elements may nevertheless be
available pursuant to the plan.
Although certain of the targeted corporate success factors goals were
attained for 1998, because the Corporation did not achieve a net profit after
preferred dividends in 1998, no performance payments were granted for 1998 to
any executive with respect to corporate performance. Because Mr. Brown was only
eligible for a corporate performance payment for 1998, he received no
performance payment. Because Mr. Kauffman was only eligible for a performance
payment in the event the Corporation achieved profitability, he received no
performance payment in 1998. Payments for executives other than Messrs. Brown
and Kauffman were awarded for 1998 on the basis of departmental performance.
For the named executives, the amounts are set forth in the summary compensation
table under Annual Compensation - Bonus.
Stock-Based Grants
- ------------------
The Corporation currently uses two stock-based compensation plans, which
are intended to give the Corporation a competitive advantage in attracting,
retaining and motivating its officers and key employees, and are intended to
provide the Corporation with the ability to provide incentives more directly
linked to the profitability of the Corporation's business and increases in
shareholder value.
<PAGE> 14
The 1987 Nonstatutory Stock Option Plan (the "1987 Plan") was approved by
the shareholders in 1987 and provides that stock options may be granted to the
Corporation's officers and key employees, including the individuals whose
compensation is detailed in this Proxy Statement. The right to grant options
under this plan expired in February 1997. Certain previously granted options
remain available to exercise under the 1987 Plan. All options previously
granted under the 1987 Plan were granted at the fair market value of the stock
on the date of the grant.
In May 1995, the shareholders of the Corporation approved the Corporation's
1995 Stock Incentive Plan which provides for a variety of stock-based grants to
the Corporation's officers and key employees, including the individuals whose
compensation is detailed in this Proxy Statement. The plan is administered by
the Compensation Committee of the Board of Directors. The plan provides for the
grant of stock options, stock appreciation rights, restricted stock and
performance units to eligible officers and key employees of the Corporation.
Stock options under the plan must be granted at 100% of the market value of the
stock on the date of the grant. The term of such options is determined by the
Compensation Committee, but may not be longer than ten years from the date of
grant. A total of 585,000 nonstatutory stock options were granted to executive
officers in 1998, representing 83% of the total granted. All options granted to
executive officers were granted under the following vesting schedule: 20% of the
granted options vested on the date of grant in 1998 and 20% will vest on each of
the succeeding four anniversary dates following the original grant. Stock
options granted in 1998 to the five named executive officers are summarized in
the Summary Compensation Table under Long-Term Compensation Awards-Options.
In 1998, Mr. Brown was granted nonstatutory stock options to purchase
150,000 shares of Common Stock under the 1995 Stock Incentive Plan at an
exercise price of $5.875, which price was the fair market value of the stock on
the date of grant. All options granted to Mr. Brown were granted under a
vesting schedule where 20% or 30,000 stock options vested on the date of grant
in 1998 and 20% will vest on each of the succeeding four anniversary dates
following the original grant. Mr. Brown owns 24,962 shares of Common Stock and
holds options to purchase an additional 418,000 shares under the 1987 and 1995
plans. The Compensation Committee believes that significant equity interests in
the Corporation held by the Corporation's management align the interests of
shareholders and management, and the Committee considered this in granting
additional options to Mr. Brown.
<PAGE> 15
Conclusion
- ----------
The Corporation's executive compensation is primarily based upon
individual, departmental and corporate performance and stock price appreciation.
In 1998, as in previous years, a significant portion of the Corporation's
executive compensation consisted of these performance-based variable elements.
The Compensation Committee intends to continue the policy of relating 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 18, 1999
John E. Clute, Chairman
Joe Coors Jr.
Ted Crumley
Leland O. Erdahl
Paul A. Redmond
<PAGE> 16
Comparison of Five-Year Cumulative Total Return(1)
Hecla Mining, S&P 500, S&P 500 Gold & Precious Metal Mining Index and Peer Group
[ GRAPH ]
- --------------------------------------------------------------------------------
S&P 500 Gold
& Precious New Peer Old Peer
Date Hecla Mining S&P 500 Metal Group (2) Group(3)
- --------------------------------------------------------------------------------
December 1993 $ 100.00 $ 100.00 $ 100.00 $ 100.00 $ 100.00
December 1994 $ 87.10 $ 101.36 $ 80.84 $ 85.39 $ 80.18
December 1995 $ 59.14 $ 139.32 $ 90.97 $ 81.53 $ 75.04
December 1996 $ 48.39 $ 171.23 $ 90.35 $ 75.94 $ 60.14
December 1997 $ 42.47 $ 228.27 $ 59.34 $ 42.93 $ 36.83
December 1998 $ 31.18 $ 293.38 $ 52.01 $ 34.73 $ 31.18
1. Total return assumes reinvestment of dividends on a quarterly basis.
2. New Peer Group: Agnico Eagle Mines Ltd., Battle Mountain Gold Company,
Cambior, Inc., Coeur d'Alene Mines Corp., Echo Bay Mines Ltd., Homestake
Mining, TVX Gold, Inc. The Company selected a different peer group from
that used last year, excluding two members of last year's peer group due to
a bankruptcy (Pegasus Gold, Inc.), a merger (Amax Gold Inc.) and adding
three members similar in products produced and market capitalization
(Agnico Eagle Mines Ltd., Cambior, Inc. and TVX Gold, Inc.).
3. Old Peer Group: Amax Gold Inc., Battle Mountain Gold Company, Coeur
d'Alene Mines Corp., Echo Bay Mines Ltd., Homestake Mining, Pegasus Gold,
Inc.
<PAGE> 17
EXECUTIVE COMPENSATION
Compensation for 1998
The following table sets forth information regarding the aggregate
compensation for the fiscal years ended December 31, 1996, 1997 and 1998, 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(1)
<TABLE>
<CAPTION>
Long-
Other Term
Annual Compen-
Name and Principal Annual Compen- sation
Position Year Compensation(2) sation(3) Awards
- -------------------- ---- ----------------- --------- ------
<S> <C> <C> <C> <C> <C>
Salary Bonus(4) Options(5)
Arthur Brown: Chairman, 1998 $ 402,500 $ -0- $ 33,775 150,000
President & Chief 1997 $ 402,500 $ -0- $ 42,339 107,000
Executive Officer 1996 $ 402,500 $ -0- $ 52,646 71,000
Roger A. Kauffman: 1998 $ 265,000 $ -0- $ 13,828 75,000
Executive Vice President 1997 $ 258,750 $ -0- $ 10,079 50,000
& Chief Operating Officer 1996 $ 117,787 $ -0- $ 4,548 30,000
J. Gary Childress: 1998 $ 220,000 $ 10,333 $ 18,115 60,000
Vice President - 1997 $ 215,833 $ 11,000 $ 17,942 42,000
Industrial Minerals 1996 $ 202,500 $ 33,000 $ 17,341 25,500
Michael B. White: 1998 $ 187,000 $ 21,038 $ 10,907 60,000
Vice President - 1997 $ 179,917 $ 20,000 $ 10,885 34,000
General Counsel & 1996 $ 164,583 $ 28,000 $ 11,526 21,000
Secretary
John P. Stilwell: 1998 $ 187,000 $ 20,126 $ 9,732 60,000
Vice President - 1997 $ 179,917 $ 36,000 $ 9,773 34,000
Chief Financial Officer 1996 $ 161,667 $ 35,000 $ 8,630 20,000
1. Information for deleted columns is not required, because no
compensation was paid by the Corporation that would require disclosure
under any such deleted column.
2. 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 of each
year.
3. "Other Annual Compensation" for the last fiscal year includes the
following for Messrs. Brown, Kauffman, Childress, White and Stilwell:
(i) matching contributions under the Corporation's Deferred
Compensation Plan of $3,236, $5,423, $2,887, $3,754 and $4,224 for
each named executive, respectively; (ii) the above
</TABLE>
<PAGE> 18
market portion of interest accrued under the Corporation's
Deferred Compensation Plan of $22,940, $3,489, $1,963, $2,995 and
$2,231 on behalf of each named executive, respectively; (iii) matching
contributions under the Corporation's Capital Accumulation Plan of
$2,400 for each named executive, respectively; (iv) the dollar value
benefit of premium payments for term life insurance coverage of
$3,540, $1,016, $979, $477 and $444 for each named executive,
respectively; (v) the dollar value of use of automobiles owned by the
Corporation of $459, $-0-, $346, $531 and $433 for each named
executive, respectively; (vi) personal tax service provided by
consultants at the expense of the Corporation for Mr. Brown, $1,200;
Mr. Kauffman, $1,500; Mr. Childress, $750; and Mr. White, $750; and
(vii) imputed interest of $8,790 on a loan to Mr. Childress.
4. For 1998, amounts shown represent performance payments pursuant
to the Corporation's Performance Payment Plan, described in the Report
of the Compensation Committee above. 1998 Performance Payments will
be delivered during the second quarter of 1999.
5. All options granted to the named executives in 1998 were granted
under a vesting schedule described in Option Grants in Last Fiscal
Year - footnote 1.
OPTION GRANTS IN LAST FISCAL YEAR(1)
Individual Grants Potential Realizable
% of Value at Assumed
Total Annual Rate of Stock
Options Price Appreciation
Granted for Option Term(2)
to Exercise
Employees or Base
Options in Fiscal Price: Expiration
Name Granted Year $/Share Date 5% 10%
- --------------------------------------------------------------------------------
Arthur Brown 150,000 21.19% $5.875 5/6/08 $554,235 $1,404,525
Roger A. Kauffman 75,000 10.59% $5.875 5/6/08 $277,118 $ 702,263
J. Gary Childress 60,000 8.47% $5.875 5/6/08 $221,694 $ 561,810
Michael B. White 60,000 8.47% $5.875 5/6/08 $221,694 $ 561,810
John P. Stilwell 60,000 8.47% $5.875 5/6/08 $221,694 $ 561,810
1. All options granted were coupled with a Tax Offset bonus which,
upon exercise, would approximately equal the federal and state income
taxes incurred in exercising the options. 20% of the options were
first exercisable on May 7, 1998; another 20% vested on May 7, 1999;
and 20% shall vest on May 7 on each of the succeeding three years.
All options were granted with an exercise price equal to the fair
market value of the Common Stock on the date of grant.
2. The Potential Realizable Value shown in the table represents the
maximum gain if held for the full ten-year term at each of the assumed
annual appreciation rates. Gains, if any, are dependent upon the
actual performance of the Common Stock and the timing of any sale of
the Common Stock received upon exercising the options.
<PAGE> 19
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table shows information concerning the exercise of stock
options during fiscal year 1998 by each of the named executive officers and the
fiscal year-end value of unexercised options.
Number of
Unexercised
Shares Options at Value of
Acquired FY-End (#) Unexercised In-
on Value Exercisable/ the-Money-Options
Name Exercise(#) Realized($) Unexercisable Options at FY-End
- --------------------------------------------------------------------------------
Arthur Brown -0- -0- 219,600/198,400 -0-
Roger Kauffman -0- -0- 53,000/102,000 -0-
J. Gary Childress -0- -0- 58,700/78,300 -0-
Michael B. White -0- -0- 53,900/72,600 -0-
John P. Stilwell -0- -0- 51,600/72,400 -0-
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, 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 1998. 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 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
$130,000 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."
<PAGE> 20
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 1998 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, 1999.
Final Average Years of Credited Service
Annual Earnings 5 10 15 20 25 30
- -----------------------------------------------------------------------------
100,000 6,674 13,347 20,021 26,694 33,368 40,041
125,000 8,549 17,097 25,646 34,194 42,743 51,291
150,000 10,424 20,847 31,271 41,694 52,118 62,541
175,000 12,229 24,597 36,896 49,194 61,493 73,791
200,000 14,174 28,347 45,521 56,694 70,868 85,041
225,000 16,049 32,097 48,146 64,194 80,243 96,291
250,000 17,924 35,847 53,771 71,694 89,618 107,541
275,000 19,799 39,597 59,396 79,194 98,993 118,791
300,000 21,674 43,347 65,021 86,694 108,368 130,041
325,000 23,549 47,097 70,646 94,194 117,743 141,291
350,000 25,424 50,847 76,271 101,694 127,118 152,541
375,000 27,299 54,597 81,896 109,194 136,493 163,791
400,000 29,174 58,347 87,521 116,694 145,868 175,041
425,000 31,049 62,097 93,146 124,194 152,243 186,791
450,000 32,924 65,847 98,771 131,694 164,618 197,541
Benefits listed in the pension table are not subject to any deduction for
Social Security or other offset amounts. As of December 31, 1998, the following
executive officers have completed the indicated number of full years of credited
service: A. Brown, 31 years; R. A. Kauffman, 20 years; J. G. Childress, 12
years; J. P. Stilwell, 13 years; and M. B. White, 18 years.
Employment Agreements, Termination of Employment Arrangement and Other
Management Arrangements
The Corporation has entered into employment agreements (collectively, the
"Agreements") with Messrs. Booth, Brown, Childress, Kauffman, Langstaff,
Stilwell, White and Johnson (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 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 13d-3 of the Securities Exchange Act of 1934, as amended, the
"Exchange Act") becomes the beneficial owner of 20% or more of
<PAGE> 21
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 the Corporation will make an additional gross-up
payment if necessary to place the Executive in the same after-tax position as if
no excise tax were imposed by the Internal Revenue Code. Pursuant to the
Agreements between the Corporation and each of its named executive officers, if
a Change of Control occurred and the named executive officers were each
terminated as of December 31, 1998, the named executive officers would be
entitled to the following estimated cash payments pursuant to the Agreements:
Mr. Brown, $2,508,000; Mr. Kauffman, $793,000; Mr. Childress, $654,000; Mr.
White, $659,000; and Mr. Stilwell, $616,000. The named executive officers would
also be entitled to lump-sum payments representing the difference in pension and
supplemental retirement benefits to which they would be entitled on (i) the date
of actual termination, and (ii) the end of the two-year employment period under
the Agreements.
Mr. J. Gary Childress, Vice President - Industrial Minerals, relocated to
the Coeur d'Alene, Idaho, headquarters from the Mayfield, Kentucky, headquarters
of Kentucky-Tennessee Clay Company in February 1994. The Corporation offset the
substantial differential in housing costs between the two locations by loaning
Mr. Childress $150,000 at an interest rate of 5.86%, which is currently
outstanding and which is secured by a mortgage on his Idaho residence.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
There are no directors on the Compensation Committee which are employees of
the Company.
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 Exchange Act) or otherwise held by each director
and executive officer of the Corporation and by all directors and executive
officers as a group, as of March 15, 1999. On that date, all of such persons
together beneficially owned an aggregate of less than 1% of the outstanding
shares of the Corporation's Common Stock. Except as otherwise
<PAGE> 22
indicated, the directors and officers have sole voting and investment power with
respect to the shares beneficially owned by them. To the Corporation's
knowledge, no person or entity owned more than 5% of the Corporation's Common
Stock as of March 15, 1999.
Number of Shares
of Common Stock
Named Executive Officer, and Nature of
Director or Nominee Beneficial Ownership
-----------------------------------------------------------
Arthur Brown 376,852(1,4)
William B. Booth 45,308(1)
J. Gary Childress 58,700(1)
John E. Clute 4,300(3)
Joe Coors Jr. 4,000(3)
Ted Crumley 7,539(3)
Leland O. Erdahl 35,575(3)
George R. Johnson 45,100(1)
Roger A. Kauffman 56,382(1)
Jon T. Langstaff 45,920(1)
Charles L. McAlpine 6,000(3)
Thomas J. O'Neil 3,000(3)
Jorge E. Ordonez C. 4,000(3)
Paul A. Redmond 1,704(3)
John P. Stilwell 53,955(1)
David F. Wolfe 12,050(1)
Michael B. White 54,518(1)
All directors and executive officers
as a group (17 persons) 814,903(2)
1. Includes the following number of shares of Common Stock issuable
upon the exercise by the following individuals of currently
exercisable options: Mr. Brown, 219,600; Mr. Booth, 44,800; Mr.
Childress, 58,700; Mr. Kauffman, 53,000; Mr. Langstaff, 44,000; Mr.
Johnson, 44,600; Mr. Stilwell, 51,600; Mr. Wolfe, 12,000; and Mr.
White, 53,900.
2. Includes 359,100 shares issuable upon the exercise of currently
exercisable options.
3. Includes the following number of shares credited to each
nonemployee director, all of which are held in trust pursuant to the
Corporation's Stock Plan for Nonemployee Directors: Mr. Clute, 4,000;
Mr. Coors, 4,000; Mr. Crumley, 3,539; Mr. Erdahl, 4,000; Mr. McAlpine,
4,000; Mr. O'Neil, 3,000; Mr. Ordonez, 4,000; and Mr. Redmond, 1,404.
Each director disclaims beneficial ownership of all shares held in
trust under the stock plan. See Compensation of Directors.
4. Includes the following number of shares credited to each officer
under the company's amended Executive Compensation Plan, all of which
are held in trust pursuant to the plan: Arthur Brown 132,290. Each
officer disclaims beneficial ownership of all shares held in trust
under the Executive Deferred Compensation Plan.
<PAGE> 23
APPROVAL OF AUDITORS
PricewaterhouseCoopers LLP, independent public accountants, has been
selected by the Board of Directors as independent auditors for the Corporation
for the fiscal year ending December 31, 1999, subject to approval by the
shareholders. PricewaterhouseCoopers LLP, 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. Erdahl, McAlpine,
O'Neil and Ordonez, none of whom is an officer or employee of the Corporation.
A representative of PricewaterhouseCoopers LLP is expected to be present if the
representative so desires at the Annual Meeting to make a statement if the
representative so desires and to be available to respond to any questions from
shareholders.
The Board of Directors recommends a vote FOR approval of the selection of
PricewaterhouseCoopers LLP as the Corporation's independent auditors for 1999.
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 of the Corporation at the principal
executive offices of the Corporation not less than 90 days nor more than120 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
120th day prior to such Annual Meeting and not later than the close of business
on the later of the 90th day prior to such Annual Meeting or the 10th day
following the day on which public announcement of the date of such meeting is
first made. Adjournment of a meeting shall not commence a new time period for
the giving of a shareholder's notice as described above. 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 in an election contest, or is otherwise required, in each
case pursuant to Regulation 14A under the Exchange Act as amended and Rule 14a-
11 thereunder, including such person's written consent to being named in the
proxy statement as a nominee and to serve 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 under the Exchange
Act 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
<PAGE> 24
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; and (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. The
Corporation will comply with Rule 14a-8 of the Exchange Act with respect to any
proposal that meets its requirements.
SHAREHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
The Corporation will review shareholder proposals intended to be included in
the Corporation's proxy materials for the 2000 Annual Meeting of Shareholders
which are received by the Corporation at its principal executive offices no
later than November 30, 1999, subject to the By-Law provision discussed above.
Such proposals must be 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, 1998 (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, 1998 (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 materials 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 29, 1999
<PAGE> 25
<TABLE>
<CAPTION>
<S> <C> <C>
PROXY SOLICITED ON BEHALF OF HECLA MINING COMPANY ANNUAL MEETING OF SHAREHOLDERS
THE BOARD OF DIRECTORS 6500 Mineral Drive May 7, 1999
Coeur d'Alene, Idaho 83815-8788
THE BOARD OF DIRECTORS RECOMMENDS 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 7, 1999, and any adjournments or postponements 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.
1. ELECTION OF DIRECTORS / / FOR all nominees listed at right / / WITHHOLD AUTHORITY
/ / (except as marked to the contrary below) / / to vote for all nominees listed at right
Leland O. Erdahl Thomas J. O'Neil Paul A. Redmond
(INSTRUCTION: To withhold authority to vote for any individual nominee,
put a line through that nominee's name.)
2. PROPOSAL to approve the selection of PricewaterhouseCoopers LLP as
independent auditors of the Corporation for the fiscal year ending December 31, 1999.
/ / FOR / / AGAINST / / ABSTAIN
3. In their discretion on all other business that may properly come before the
meeting or any adjournment or adjournments thereof.
<PAGE> 26
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.
DATE , 1999 Signature
------------------------ ------------------------------------
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THE
PROXY CARD USING THE ENCLOSED ENVELOPE. Signature
------------------------------------
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 full corporate name by
duly authorized officer(s), who should specify
the title(s) of such officer(s).
</TABLE>
