<SEC-DOCUMENT>0001193125-16-571422.txt : 20160502
<SEC-HEADER>0001193125-16-571422.hdr.sgml : 20160502
<ACCEPTANCE-DATETIME>20160502090111
ACCESSION NUMBER:		0001193125-16-571422
CONFORMED SUBMISSION TYPE:	DEFA14A
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20160502
DATE AS OF CHANGE:		20160502
EFFECTIVENESS DATE:		20160502

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			DARLING INGREDIENTS INC.
		CENTRAL INDEX KEY:			0000916540
		STANDARD INDUSTRIAL CLASSIFICATION:	FATS & OILS [2070]
		IRS NUMBER:				362495346
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0507

	FILING VALUES:
		FORM TYPE:		DEFA14A
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-13323
		FILM NUMBER:		161610014

	BUSINESS ADDRESS:	
		STREET 1:		251 O CONNOR RIDGE BLVD
		STREET 2:		STE 300
		CITY:			IRVING
		STATE:			TX
		ZIP:			75038
		BUSINESS PHONE:		9727170300

	MAIL ADDRESS:	
		STREET 1:		251 OCONNOR RIDGE BLVD
		STREET 2:		#300
		CITY:			IRVING
		STATE:			TX
		ZIP:			75038

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	DARLING INTERNATIONAL INC
		DATE OF NAME CHANGE:	19931223
</SEC-HEADER>
<DOCUMENT>
<TYPE>DEFA14A
<SEQUENCE>1
<FILENAME>d134995ddefa14a.htm
<DESCRIPTION>DEFA14A
<TEXT>
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<TITLE>DEFA14A</TITLE>
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 <P STYLE="line-height:1.0pt;margin-top:0pt;margin-bottom:0pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman" ALIGN="center"><B>UNITED STATES </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman" ALIGN="center"><B>SECURITIES AND EXCHANGE COMMISSION </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>WASHINGTON, D.C. 20549 </B></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><center>
<P STYLE="line-height:6.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.00pt solid #000000;width:21%">&nbsp;</P></center> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:18pt; font-family:Times New Roman" ALIGN="center"><B>SCHEDULE 14A
INFORMATION </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:12pt; font-family:Times New Roman" ALIGN="center"><B>SECURITIES EXCHANGE ACT OF 1934 </B></P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><center>
<P STYLE="line-height:6.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1.00pt solid #000000;width:21%">&nbsp;</P></center> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Filed by Registrant&nbsp;&nbsp;<FONT
STYLE="FONT-FAMILY:WINGDINGS">&#120;</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Filed by a Party other than the
Registrant&nbsp;&nbsp;<FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT> </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Check the appropriate box: </P>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD VALIGN="top"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">Preliminary Proxy Statement</TD></TR>
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<TD HEIGHT="8" COLSPAN="2"></TD></TR>
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<TD VALIGN="top"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom"><B>CONFIDENTIAL, FOR USE OF THE COMMISSION ONLY (AS PERMITTED BY RULE 14A-6(E)(2))</B></TD></TR>
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<TD VALIGN="top"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">Definitive Proxy Statement</TD></TR>
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<TD VALIGN="top"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#120;</FONT></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">Definitive Additional Materials</TD></TR>
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<TD HEIGHT="8" COLSPAN="2"></TD></TR>
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<TD VALIGN="top"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="bottom">Soliciting Material Pursuant to Section 240.14a-12</TD></TR>
</TABLE> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:22pt; font-family:Times New Roman" ALIGN="center"><B>DARLING INGREDIENTS INC. </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>(Name of Registrant as specified in its charter) </B></P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>NOT APPLICABLE </B></P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:8pt; font-family:Times New Roman" ALIGN="center"><B>(Name of
Person(s) Filing Proxy Statement if other than the Registrant) </B></P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Payment of Filing Fee (Check the appropriate box): </P>
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<TD VALIGN="top"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#120;</FONT></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" COLSPAN="3">No fee required.</TD></TR>
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<TD HEIGHT="16" COLSPAN="4"></TD></TR>
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<TD VALIGN="top"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" COLSPAN="3">Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.</TD></TR>
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<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">(1)</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Title of each class of securities to which transaction applies:</P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P></TD></TR>
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<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">(2)</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Aggregate number of securities to which transaction applies:</P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P></TD></TR>
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<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">(3)</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">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):</P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P></TD></TR>
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<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">(4)</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Proposed maximum aggregate value of transaction:</P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P></TD></TR>
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<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">(5)</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Total fee paid:</P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P></TD></TR>
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<TD HEIGHT="24" COLSPAN="4"></TD></TR>
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<TD VALIGN="top"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" COLSPAN="3">Fee paid previously with preliminary materials.</TD></TR>
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<TD HEIGHT="24"></TD>
<TD HEIGHT="24" COLSPAN="4"></TD></TR>
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<TD VALIGN="top"><FONT STYLE="FONT-FAMILY:WINGDINGS">&#168;</FONT></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top" COLSPAN="3">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.</TD></TR>
<TR STYLE="font-size:1pt">
<TD HEIGHT="24"></TD>
<TD HEIGHT="24" COLSPAN="2"></TD>
<TD HEIGHT="24" COLSPAN="2"></TD></TR>
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<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">(1)</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Amount Previously Paid:</P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P></TD></TR>
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<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">(2)</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Form, Schedule or Registration Statement No.:</P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="bottom"></TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top">(3)</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Filing Party:</P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P></TD></TR>
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<TD VALIGN="top">(4)</TD>
<TD VALIGN="bottom">&nbsp;</TD>
<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Date Filed:</P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</P></TD></TR>
</TABLE> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P> <P STYLE="line-height:1.0pt;margin-top:0pt;margin-bottom:0pt;border-bottom:1px solid #000000">&nbsp;</P>
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">May 2, 2016 </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="5%" VALIGN="top" ALIGN="left">Re:</TD>
<TD ALIGN="left" VALIGN="top">Darling Ingredients Inc. </TD></TR></TABLE>
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<TD WIDTH="5%" VALIGN="top" ALIGN="left">&nbsp;&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">2016 Annual Meeting of Stockholders &#150; To Be Held on May 10, 2016 </TD></TR></TABLE>
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<TD ALIGN="left" VALIGN="top">Proposal 3 &#150; Advisory Vote to Approve Executive Compensation </TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Dear Stockholder: </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We are writing to ask for your support by voting in accordance with the recommendation of our Board of Directors on all of the proposals
included in our Proxy Statement &#150; which was filed on March 31, 2016 and is available at www.proxydocs.com/DAR. In particular we are requesting your support on Proposal 3 &#150; our annual advisory vote on executive compensation (the
&#147;Say-on-Pay Proposal&#148;). </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Glass, Lewis &amp; Co., LLC (&#147;Glass Lewis&#148;), a leading proxy advisory firm, has recommended
that stockholders vote in favor of the Say-on-Pay Proposal. In contrast, another leading proxy advisory firm, Institutional Shareholder Services, Inc. (&#147;ISS&#148;), has recommended that stockholders vote against this proposal, expressing
concern over misalignment between pay and performance in 2015 and citing in particular the payout of a performance-based award that our Chief Executive Officer earned for a three-year financial performance period ending in 2015. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">We respectfully disagree with ISS&#146;s conclusion. We recognize that 2015 was a challenging year for our Company and our stockholders. Our
CEO&#146;s compensation for the year was substantially impacted by our performance in 2015, as explained in more detail below. In addition, we undertook a significantly expanded stockholder outreach program in 2015 following the Annual Meeting. We
reached out to holders of approximately 80% of our Common Stock and spoke with the responding stockholders, which represented 42% of our shares, during the second half of 2015.&nbsp;As a result of this outreach, we promptly implemented an extensive
series of changes to our compensation program, most of which were described in the Proxy Statement and have already been implemented in 2016.&nbsp;We encourage you to read the relevant portions of our Proxy Statement on the Say-on-Pay Proposal, but
also wish to bring to your attention the following points as you consider your vote: </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>Our CEO&#146;s 2015 pay was entirely aligned with the
Company&#146;s performance based on rigorous goals and incorporated best practices. </I></B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The recent challenges experienced by our
business and our stockholders had a clear and substantial impact on our CEO&#146;s 2015 compensation, demonstrating the operation of our pay-for-performance philosophy. Consider the following: </P>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Our CEO&#146;s pay opportunity is benchmarked to the median of the Company&#146;s pay peer group. Even though ISS selected a peer group with only four companies that overlap with the Company&#146;s selected peer group,
our CEO&#146;s actual pay in 2015 was 0.77 times the ISS peer group median, which was near the 25<SUP STYLE="font-size:85%; vertical-align:top">th</SUP> percentile. </TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Our CEO&#146;s pay in 2015 was significantly reduced from 2014, regardless of the methodology used. </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="14%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">On a &#147;realizable pay&#148; basis, our CEO&#146;s pay in 2015 was 57% less than in 2014. Even excluding a special one-time PSU award related to the VION acquisition made to the CEO and certain other executive
officers in 2014 (the &#147;Special 2014 PSUs&#148;), the reduction in our CEO&#146;s pay was still 46% as noted on pages 23 and 24 of the Proxy Statement. </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="14%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Using the SEC&#146;s methodology, which is reflected in the Summary Compensation Table in the Proxy Statement on p. 47, the reduction in CEO pay from 2014 to 2015 was 43%. </TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="14%">&nbsp;</TD>
<TD WIDTH="2%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Per the ISS methodology and report, the reduction was 46.6%. </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="9%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Our annual incentive plan is strongly tied to EBITDA performance. This resulted in significantly below target payouts for 2015, including our CEO&#146;s payout, which was 57.9% of target. </TD></TR></TABLE>

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<TD ALIGN="left" VALIGN="top">Our long-term incentive (&#147;LTI&#148;) awards for 2015 were strongly tied to rigorous return on gross investment (&#147;ROGI&#148;) goals. The 2013-2015 ROGI goals were set with reference to our Performance Peer
Group, whereby the ROGI target of 13.4% was aligned with the peer group median. </TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">In arriving at its negative recommendation
for the Say-on-Pay Proposal, ISS focused heavily on the payout of these LTI awards which were established at the start of 2015, earned based on the 2013-2015 &#147;backward-looking&#148; performance period and paid out in 2016 after such period was
complete. These awards paid out above target due to the Company&#146;s above-target performance against the pre-set relative ROGI goals. The Board of Directors, compensation committee and a number of our stockholders believe that earning a return on
dollars invested at the operating level on a consistent basis is an appropriate measure creating strong alignment with the interests of all stockholders, especially due to the volatility of the commodity cycles which impact stock price, but are
beyond the control of the Company. As such, we believe this award was appropriately structured and based on comparison to the peer group to ensure rigor. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Furthermore, the 2015 pay program for our CEO and other executive officers embodied numerous other best practices: </P>
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<TD ALIGN="left" VALIGN="top">Rigorous performance goals led to significant reductions in pay, resulting in alignment of total compensation with performance below target. </TD></TR></TABLE>
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<TD ALIGN="left" VALIGN="top">In 2015, our CEO agreed to an amendment to his employment agreement which eliminated his right to (i) an excise tax gross-up and (ii) a &#147;modified single-trigger&#148; provision regarding change in control severance
benefits. </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top">Our executive officers, including our CEO, are subject to a clawback policy, stock ownership guidelines and a rigorous anti-pledging and anti-hedging policy. </TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Based on results of our shareholder outreach efforts in 2015, we have already made significant changes to our compensation program for 2016
and onward, including the changes described in the following section. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B><I>We conducted comprehensive stockholder outreach in response to the 2015
Say-on-Pay Proposal vote, which resulted in a major redesign of our compensation program. </I></B></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">At the 2015 Annual Meeting of
Stockholders, for the first time in the Company&#146;s history, stockholders did not approve the say-on-pay proposal. In response, the Company embarked on an ambitious stockholder outreach program.&nbsp;Members of the compensation committee and
certain members of management reached out to stockholders representing over 80% of our then-outstanding shares in an effort to better understand the reasons that majority support was not obtained.&nbsp;The Company spoke with the responding
stockholders, which represented 42% of our shares, and conducted outreach discussions with ISS and Glass Lewis as well. The ensuing conversations contributed to a major redesign of the compensation program, which included the shift from ROGI to
return on capital employed (&#147;ROCE&#148;) as the performance metric for our LTI awards. Other meaningful changes include: </P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top">Eliminating the minimum award payout and guaranteed vesting features of our LTI award program. </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top">Introducing performance share units (&#147;PSUs&#148;) and shifting from a backward-looking/trailing performance measurement to a forward-looking performance measurement for PSUs. </TD></TR></TABLE>
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<TD ALIGN="left" VALIGN="top">Adding a total shareholder return (&#147;TSR&#148;) modifier to our PSU program. </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top">Imposing an additional two-year holding period on all vested and earned PSUs following the end of the performance period. </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD ALIGN="left" VALIGN="top">Lowering the maximum payout under the annual incentive program from 300% to 200% of target. </TD></TR></TABLE>

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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">We note that these changes are not reflected in the tables included in the current Proxy
Statement because they were not made until after the 2015 compensation program was in place, i.e., after we had an opportunity to engage directly with stockholders through our outreach program.&nbsp;However, compensation related to these changes
will be comprehensively covered in our 2017 Proxy Statement.&nbsp;We also note that our equity awards were modified in early 2015 to eliminate automatic single-trigger vesting in the event of a change of control.&nbsp;Beginning in March 2015,
double-trigger vesting has been reflected in these awards and will continue to be reflected going forward. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:8%; font-size:10pt; font-family:Times New Roman">We are committed to our pay
for performance philosophy.&nbsp;We strongly believe our past executive pay has been consistent with this philosophy and that our current and ongoing executive compensation program is in the best interests of our stockholders.&nbsp;<B>We encourage
you to vote &#147;FOR&#148; Proposal 3 &#150; the Say-on-Pay Proposal.</B> </P>
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