Adams Resources & Energy (AE) DEF 14ADefinitive proxy

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No. )

ADAMS RESOURCES & ENERGY, INC.

17 South Briar Hollow Lane, Suite 100

Houston, Texas 77027

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

TO BE HELD ON MAY 12, 2021

To the Shareholders of Adams Resources & Energy, Inc.:

The Annual Meeting of Shareholders of Adams Resources & Energy, Inc. will be held at 17 South Briar Hollow Lane, Suite 100, Houston, Texas 77027, on Wednesday, May 12, 2021 at 11:00 a.m., Houston time, to consider the following matters:

Further information regarding the meeting and the above proposals is set forth in the accompanying Proxy Statement.  The close of business on April 1, 2021 has been fixed as the record date for the determination of shareholders entitled to receive notice of and to vote at the Annual Meeting or any adjournment(s) thereof.

As part of our precautions regarding the coronavirus (COVID-19), we are also planning for the possibility that the annual meeting may be held solely by means of remote communications. If we take this step, we will announce the decision to do so in advance, and details on how to participate will be issued by press release and filed with the SEC as proxy material.

ADAMS RESOURCES & ENERGY, INC.

PROXY STATEMENT

FOR

2021 ANNUAL MEETING OF SHAREHOLDERS

To Be Held on May 12, 2021

This Proxy Statement and accompanying proxy are being furnished to our shareholders in connection with the solicitation of proxies by the Board of Directors (“Board”) of Adams Resources & Energy, Inc., a Delaware corporation (the “Company”), for use at our 2021 Annual Meeting of Shareholders to be held at 17 South Briar Hollow Lane, Suite 100, Houston, Texas 77027, on Wednesday, May 12, 2021 at 11:00 a.m., Houston time, and any and all adjournments thereof, (such meeting or adjournment(s) thereof referred to as the “Annual Meeting”), for the purposes set forth in the accompanying Notice of Annual Meeting of Shareholders. As part of our precautions regarding the coronavirus (COVID-19), we are also planning for the possibility that the annual meeting may be held solely by means of remote communications. If we take this step, we will announce the decision to do so in advance, and details on how to participate will be issued by press release and filed with the SEC as proxy material.

This Proxy Statement and the accompanying proxy are being mailed to shareholders on or about April 7, 2021. Unless otherwise indicated, the terms the “Company,” “our,” “we,” “us” and similar terms refer to Adams Resources & Energy, Inc. together with our subsidiaries.

We will pay the cost of solicitation of the proxies.  In addition to solicitation by mail, proxies may be solicited personally by telephone or e-mail by our directors, officers and employees, and arrangements may be made with brokerage houses or other custodians, nominees and fiduciaries to send proxies and proxy material to their principals.  We will bear the compensation and expenses of such firms, if any, which are not expected to exceed $1,000. Currently, we have not entered into any arrangements with any firm to aid in the solicitation of proxies.

VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF

At the close of business on April 1, 2021, the record date of those entitled to receive notice of and to vote at the Annual Meeting, we had outstanding 4,251,015 shares of common stock, $0.10 par value per share (“Common Stock”).  The presence, in person or by proxy, of a majority of the outstanding shares of Common Stock on the record date is necessary to constitute a quorum at the Annual Meeting.  Abstentions will be considered present at the Annual Meeting and counted toward the quorum, but they will not be counted as votes cast. Broker non-votes (which are shares represented by proxies, received from a bank or broker, that are not voted on a matter because the bank or broker did not receive voting instructions from the shareholder) will be treated the same as abstentions. Therefore, abstentions and broker non-votes will not have an effect on any of the proposals at this meeting because they will not be counted as votes cast.  Each share of Common Stock is entitled to one vote on all issues requiring a shareholder vote at the Annual Meeting.  Shareholders may not cumulate their votes for the election of directors.

The election of directors and the advisory resolution on executive compensation are not considered “routine matters.”  Thus, if a shareholder does not vote its shares with respect to any of these matters, such shareholder’s bank or broker may not vote such shares and such shares will be left unvoted on the matter.

ELECTION OF DIRECTORS

Directors shall be elected by a plurality of the votes of the shares present or represented by proxy and entitled to vote at the Annual Meeting.  Withholding authority will have the effect of a vote cast “AGAINST” Item 1.  Broker non-votes will not be counted in the tabulations of the votes cast on Item 1 and will have no effect on the outcome of the vote.

For each of our directors, the following table sets forth their names, ages, principal occupations, other directorships of public companies held by them and length of continuous service as a director of the Company.  Any directorship of public companies held by the nominees within the last five years is also presented below.

Townes G. Pressler

    Mr. Pressler is Chairman of the Board of the Company. He was appointed Executive Chairman and Chairman of the Board of the Company in September 2017, and effective December 31, 2019, he retired from the position of Executive Chairman. Mr. Pressler is President and founder of Tepee Petroleum, an independent oil and gas producer based in Houston, that he founded in 1978. In 1985, he founded and is currently chairman of VSO Inc. (formerly Pressler Petroleum Consultants, Inc.), which provides engineering consulting services.  Prior to 1985, Mr. Pressler was President of Philip Hill Energy, President of Republic Oil and Gas Corp., and Chief Petroleum Engineer for Barnhart Co. after his initial years with ExxonMobil.  Mr. Pressler holds a Bachelor of Science in Petroleum Engineering from the University of Texas, and is a Registered Professional Engineer.

Mr. Pressler has been nominated to serve on the Board in light of his extensive business and management experience in the energy industry and his history with the Company.

Michelle A. Earley

    Ms. Earley is a Partner at the law firm of Locke Lord LLP, having joined the law firm in 1998, and she has served as a Partner since 2008. Ms. Earley has extensive experience in merger, acquisition, and disposition transactions, securities regulation matters and securities offerings, including representing purchasers and sellers of publicly-traded and privately-held companies, representing issuers and selling shareholders in connection with the public offering and private placement of debt and equity securities, tender offers, exchange offers and advising management and boards of directors on general corporate governance matters.  She holds an undergraduate degree from Texas A&M University and a Juris Doctor from Yale Law School.

Ms. Earley has been nominated to serve on the Board in light of her extensive experience in merger and acquisition transactions, including representing publicly traded companies for many years.

Murray E. Brasseux

    Mr. Brasseux has extensive commercial and financial banking experience including energy lending practices.  He retired from Compass Bank in December 2014 after 20 years of service, having most recently served as Managing Director of Oil & Gas Finance. Following retirement, Mr. Brasseux served as a consultant to Compass Bank from January 2015 to June 2015 and as a consultant to Loughlin Management Partners (a restructuring and advisory firm) from June 2015 to December 2017. In 2019, Mr. Brasseux joined the board of directors of the general partner of Enterprise Products Partners, L.P. and currently serves on the audit and conflicts committee. Mr. Brasseux also serves on the board of the Rare Book School (an affiliate of the University of Virginia). He holds a Bachelor of Science in Finance and a Master of Science in Finance from Louisiana State University.

Mr. Brasseux has been nominated to serve on the Board in light of his extensive commercial and financial experience in the banking industry, including energy lending practices.

Dennis E. Dominic

Mr. Dominic has more than 40 years of experience in the energy industry in the areas of refining, marketing and trading. He retired from Valero Energy Corporation (“Valero”) in July 2019 where he served as Vice President of Domestic Crude Supply and Trading from January 2002 until his retirement. Prior to his more than 17 years of service at Valero, Mr. Dominic worked at and enjoyed increasing levels of responsibility at Conoco, Inc., Horizon Trading Company and Sigmor Refining Company (“Sigmor”). In 1982, Mr. Dominic joined Diamond Shamrock Refining Company (“Diamond Shamrock”) when it acquired Sigmor. In 1996, Mr. Dominic joined Ultramar Diamond Shamrock (“Ultramar”) upon Ultramar’s merger with Diamond Shamrock. He was with Ultramar from 1996 until Ultramar was purchased by Valero in 2001. Mr. Dominic holds a Bachelor of Applied Arts and Sciences from Southwest Texas State University and a Master of Business Administration from Incarnate Word University.

Mr. Dominic has been nominated to serve on the Board in light of his extensive experience in the energy industry, including in crude oil marketing, and his broad management experience.

Richard C. Jenner

    Mr. Jenner is the managing partner of Endeavor Natural Gas, LP (“Endeavor”), a private equity backed upstream energy company with operations throughout Texas and Louisiana. Mr. Jenner founded Endeavor in November 2001, and held the position of co-managing partner until September 2020. He has been active in the oil and gas industry for over 30 years, having worked for Santa Fe Minerals, Torch Energy Advisors and Tepee Petroleum Company. His experience throughout his career has touched on all aspects of managing an independent oil and gas producer, including operations, engineering, accounting, and mergers and acquisitions. Mr. Jenner holds a Bachelor of Science in Petroleum Engineering from the Colorado School of Mines and a Master of Business Administration from the University of Chicago.

Mr. Jenner has been nominated to serve on the Board in light of his extensive experience in the energy industry, including in crude oil marketing, and his broad management experience.

W. R. Scofield

    Mr. Scofield is the President and Chief Operating Officer of KSA Industries, Inc. (“KSAI”), our affiliate, having served in this position since April 2015. Mr. Scofield served as Vice President of Corporate Development and Tax Planning at KSAI for more than five years prior to 2015. He has extensive experience with a diverse group of businesses, including oil and gas, agriculture, automotive, insurance, environmental and professional sports.  Mr. Scofield is a graduate of the University of Texas and holds a Bachelor of Business Administration and a Master of Professional Accounting, specializing in taxation.

Mr. Scofield has been nominated to serve on the Board in light of his diversified managerial experience in various industries.

John O. Niemann, Jr.

Mr. Niemann is a Managing Director of Andersen Tax LLC (formerly known as WTAS LLC), having served in this position since June 2013. He is also the president and chief operating officer of Arthur Andersen LLP, and has been since 2003. He previously served on the administrative board of Arthur Andersen LLP and on the board of partners of Andersen Worldwide. Mr. Niemann began his career at Arthur Andersen LLP in 1978 and has served in increasing responsibilities in senior management positions since 1992.

Mr. Niemann has served as a director and chairman of the audit committee of Hines Global Income Trust, Inc. since August 2014 and as lead independent director since May 2019. Since May 2012, he has also served as a director of MSC Income Fund, Inc. (previously known as HMS Income Fund, Inc.). He is a member of the audit committee (chairman from May 2012 until November 2020), and in November 2020, he became chairman of the nominating and corporate governance committee. He previously served as a director and chairman of the audit committee of Gateway Energy Corporation from June 2010 until December 2013 when the company went private.

Mr. Niemann has served on the board of directors of many Houston area non-profit organizations, including Catholic Endowment Foundation of Galveston-Houston, Strake Jesuit College Preparatory School (past chair of the board), The Regis School of the Sacred Heart (past chair of the board), The Houston Symphony, The University of St. Thomas, The Alley Theatre and Taping for the Blind, Inc. He holds a Bachelor of Arts in Managerial Studies and a Master of Accounting from Rice University, a Juris Doctor from the South Texas College of Law and a Master of Law in taxation from the University of San Francisco School of Law.

Mr. Niemann has been nominated to serve on the Board in light of his extensive business, management and accounting and finance experience.

Our Board of Directors is comprised of a majority of independent directors as defined under NYSE American listing standards. There are no family relationships among any of our directors or executive officers.  The Board has determined that the following Directors are independent: Messrs. Brasseux, Dominic, Jenner and Niemann and Ms. Earley. The Board has determined that none of the designated independent directors have any relationship that, under NYSE American rules, would preclude their service on any of the standing committees of the Board.  In making its determination, the Board considered transactions and relationships between each director or his immediate family and us and our subsidiaries, including those reported under “Compensation Committee Interlocks and Insider Participation” and “Transactions with Related Persons” below.  The purpose of this review was to determine whether any such relationships or transactions were material and, therefore, inconsistent with a determination that the director is independent.  In addition, the Board requires each of its members and each of the director nominees to disclose in an annual questionnaire any relationship they or their family members may have had with us, our subsidiaries, our independent accountants, directors and officers within the past five years. The Board considers any such relationship in making its determination.  Mr. Pressler is considered an inside director because of his previous employment with the Company. Mr. Scofield is considered an inside director because of his employment with KSAI.

Our Board, with the assistance of the Nominating and Corporate Governance Committee, evaluates its size, function, needs and composition on an annual basis, with the intent that the Board as a whole collectively possess a broad range of skills, expertise, industry and other knowledge, and business, diversity and other experience useful to the effective oversight of the Company’s business.

Our Bylaws provide the Board flexibility to determine the appropriate leadership of the Board, and whether the roles of Chairman and Chief Executive Officer should be combined or separate. The Board believes it is in the best interests of the Company and its shareholders for the Board to determine which director is best qualified to serve as Chairman in light of the circumstances at the time, rather than based on a fixed policy. Currently, our Chairman and Chief Executive Officer roles are separated, with Mr. Pressler serving as Chairman of the Board and Kevin J. Roycraft serving as Chief Executive Officer.

During 2020, the Board held executive sessions of independent directors without the presence of non-independent directors and management. Mr. Brasseux, as longest serving independent member, presided at such executive sessions since Mr. Pressler, Chairman of the Board and a non-independent director, was not present.

During 2020, the full Board of Directors met eighteen times and all director nominees attended all of the meetings of the Board and the committees on which they served for the period in which they held office.  It is our policy that all persons nominated for election to the Board at the time of the annual meeting be present at such meeting.  All directors at the time of the 2020 annual meeting attended the 2020 annual meeting.  The Board has four standing committees – the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee and the Investment Committee.

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Committee appointments are as follows:

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In identifying and evaluating candidates for nomination to the Board, the Nominating and Corporate Governance Committee considers several factors including: education, experience, knowledge, expertise, independence and availability to effectively carry out the duties of a Board member.  The qualifications and backgrounds of prospective candidates are reviewed in the context of the current composition of the Board to ensure the Board maintains the proper balance of knowledge and experience to effectively manage our business for the long-term interests of our shareholders.  The Nominating and Corporate Governance Committee initially identifies candidates for nomination through the Committee’s and management’s general industry contacts.  The Nominating and Corporate Governance Committee does not have a policy, nor has it been our practice, to consider for nomination any specific director candidates recommended by shareholders as no such request has ever occurred.  The Nominating and Corporate Governance Committee will review its policy position if such a request is received.  Shareholders may communicate with the Board as described herein below.

The Nominating and Corporate Governance Committee views diversity expansively and considers, among other things, functional areas of business and financial expertise, educational and professional background, and those competencies that it deems appropriate to develop a cohesive board such as ethics, integrity, values, practical wisdom, mature judgment and the ability of the candidate to represent the interests of all shareholders and not those of a special interest group.  Specifically with respect to the experience and qualifications of each of the persons nominated to serve on the Board, the Nominating and Corporate Governance Committee considered the foregoing information to conclude that each nominee should serve as a director of our Board.

Messrs. Pressler, Brasseux, Dominic, Jenner, Niemann and Scofield and Ms. Earley have previously stood for election to the Board of Directors.  In connection with the Annual Meeting, the Nominating and Corporate Governance Committee has recommended the Directors listed in this proxy.

Any shareholder or other interested party who wishes to communicate with the Board, a committee of the Board or any individual director may do so by contacting David Hurst, Corporate Secretary, Adams Resources & Energy, Inc., 17 South Briar Hollow Lane, Suite 100, Houston, Texas 77027.  Communications will be relayed to the intended recipient on the Board in accordance with the request of the shareholder.

The Board’s role in our risk oversight process includes receiving regular reports from members of our senior management on areas of material risk to us, including operational, financial, legal, regulatory, and strategic risks. 

Mr. Pressler serves as the Chairman of the Board of the Company. The Board has not designated a lead independent director, but believes its leadership structure is appropriate given the active role the independent directors play on the Board’s standing committees. While the Board is aware of the potential conflicts that may arise when an interested director serves as Chairman, it believes these potential conflicts are offset by the Company’s strong corporate governance practices.

The Audit Committee is responsible for oversight of risks relating to our accounting matters, financial reporting and legal and regulatory compliance.  To satisfy these oversight responsibilities, the Audit Committee meets regularly with management, our internal auditor and independent registered public accounting firm. 

The Compensation Committee is responsible for overseeing risks relating to employment policies and our policies on structuring compensation programs.  To satisfy these oversight responsibilities, the Compensation Committee meets regularly with management to understand the implications of compensation decisions, particularly the risks our compensation policies pose to our finances, human resources and shareholders.

Other than our insider trading policy, which prohibits purchases and sales of our securities and related derivative securities while in possession of material non-public information, we do not have any policies that prevent employees (including officers) or directors from purchasing financial instruments (including prepaid variable forward contracts, equity swaps, collars, and exchange funds), or otherwise engaging in hedging transactions related to our equity securities.

EXECUTIVE OFFICERS

The following table provides information regarding our executive officers as of March 15, 2021.  Our officers serve at the discretion of our Board of Directors.

    

SUMMARY COMPENSATION TABLE

The following table sets forth the total compensation of our Chief Executive Officer, Chief Financial Officer and each of our other most highly compensated executive officers during the years ended December 31, 2020, 2019 and 2018, whose total annual salary and bonus for fiscal 2020 exceeded $100,000 (the “Named Executive Officers”). 

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The following table presents the components of “All Other Compensation” for each Named Executive Officer for the year ended December 31, 2020.

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COMPENSATION, DISCUSSION AND ANALYSIS

We compete for talent in the Houston, Texas marketplace, which is heavily tied to the energy industry and related fields.  There is strong demand for executives in the energy industry (and in Houston in particular).  Within the public company community, Adams Resources & Energy, Inc. is consistently listed as one of the Houston areas’ top 100 companies as ranked by revenues.  As a measure of results, our “Performance Graph” prepared under the applicable rules of the U.S. Securities and Exchange Commission (“SEC”) appears in our 2020 Annual Report on Form 10-K.  The Performance Graph data indicates that our Integrated Oil and Gas peer group and the S&P 500 index had higher returns than us in each of the past five years.

The Compensation Committee, composed entirely of independent directors, reviews and approves our executive compensation program for all senior executive officers, including our Named Executive Officers, to ensure that our compensation program is adequate to attract, motivate, and retain well-qualified senior executives and that it is directly and materially related to the short-term and long-term objectives of our Company and our shareholders. The Compensation Committee annually reviews and evaluates our executive compensation program to ensure that the program is aligned with our compensation philosophy. To carry out its role, among other things, the Compensation Committee:

The Compensation Committee is authorized to act on behalf of the Board on all issues pertaining to the compensation of our senior executive officers, including individual components of total compensation, goals and performance criteria for incentive compensation and the grant of equity awards. However, it is the practice of the Compensation Committee to fully review its activities and recommendations with the full Board.

Our compensation philosophy, as implemented through the Compensation Committee, is to match executive compensation with the performance of the Company and the individual by using several compensation components for our executive officer group. The Compensation Committee has adopted the following objectives, and executive compensation levels are determined in consideration thereof:

Through mid-year 2018, it was our policy to pay all forms of compensation in cash.  In May 2018, we adopted a long-term incentive plan that we believe appropriately aligns our officers and promotes retention of talent. 

Our management and the Compensation Committee review the results of the annual “Say on Pay” vote by shareholders for feedback on our executive compensation amounts. Our Compensation Committee, which is responsible for designing and administering our executive compensation program, has designed our executive compensation program to provide a competitive and internally equitable compensation and benefits package that, among other objectives, reflects Company performance, job complexity and value of the position, while ensuring long-term retention, motivation and alignment with the long-term interests of our shareholders.

We utilize the following four elements of executive compensation to retain our executive officer group:

Base Salary

The Compensation Committee considers adjustments to base salary for our executive officer group on an annual basis and may do so more frequently upon a change in circumstances. The annual base salary of our Chief Executive Officer is decided solely by the Compensation Committee in executive session without management present. The annual base salaries of the other members of our executive officer group are determined by the Compensation Committee with input or recommendations from our Chief Executive Officer and Chairman of the Board. None of the members of our executive officer group have employment agreements.

The Compensation Committee did not adjust the 2019 base salaries of the Named Executive Officers during 2020. However, for 2021, the Compensation Committee increased the base salaries of Mr. Ohmart to $309,000 and Ms. Davis to $283,250.

Discretionary Bonus

Discretionary bonuses are used as an incentive for favorable results.  The discretionary bonus may also serve as a supplement to base salary levels, while allowing the Board flexibility when results are not consistent with expectations.  Discretionary bonuses are anticipated to increase or decrease with the prevailing trend for consolidated net earnings, cash flow and execution of our growth strategy.

Grants of Plan Based Awards

During 2018, we adopted the 2018 LTIP. We granted restricted stock unit awards and performance share unit awards to each executive officer in 2020. The following table presents information concerning each grant of an equity-based award in 2020 to our Named Executive Officers.

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Restricted Stock Unit Awards

The restricted stock unit awards are granted under the 2018 LTIP. A restricted stock unit award is a grant of a right to receive our common shares in the future at no cost to the recipient apart from fulfilling service and other conditions once a defined vesting period expires, subject to customary forfeiture provisions. Restricted stock unit awards generally vest at a rate of approximately 33 percent per year beginning approximately one year after the grant date and are non-vested until the required service periods are satisfied by the recipient. For 2020, 2019 and 2018, restricted stock unit awards were made in the number of shares equal to the approved award dollar value divided by the closing price of our common stock on the NYSE American on the date of grant, rounded up to the nearest whole share. Each 2018 award of restricted stock units to our Named Executive Officers were granted on June 29, 2018 and began vesting on May 8, 2019 upon fulfillment of service and other customary conditions. Each 2019 award of restricted stock units to our Named Executive Officers were granted on June 3, 2019 and began vesting on May 22, 2020 upon fulfillment of service and other customary conditions. Each 2020 award of restricted stock units to our Named Executive Officers were granted on March 9, 2020 (with the exception of Mr. Mills, whose grant date was March 30, 2020) and began vesting on March 1, 2021 upon fulfillment of service and other customary conditions. Grants of 2021 restricted stock unit awards were made on March 1, 2021 and will begin vesting on March 1, 2022 upon fulfillment of service and other customary conditions.

If dividends are paid with respect to our common shares during the vesting period, an equivalent amount of dividends will accrue and be held by us without interest until the restricted stock unit awards vest, at which time the amount will be paid to the recipient.

Performance Share Unit Awards

The performance share unit awards are granted under the 2018 LTIP. These awards are contingent upon (i) continued service with the Company for three years after the vesting commencement date, as defined in the award agreement, and (ii) the attainment of performance goals during the performance cycle. The performance goals are pre-established by the Compensation Committee. Following the end of the performance period, the holder of a performance-based compensation award is entitled to receive payment of an amount not exceeding the number of shares of common stock subject to, or the maximum value of, the performance-based compensation award, based on the achievement of the performance goals for the performance period. The performance share unit awards generally vest in full approximately three years after grant date, and are non-vested until the requisite service period is satisfied by the recipient.

If dividends are paid with respect to our common shares during the vesting period, an equivalent amount of dividends will accrue and be held by us without interest until the restricted stock unit awards vest, at which time the amount will be paid to the recipient.

2018 Performance Share Unit Awards (the “2018 awards”)

The performance period for the 2018 awards was the period between January 1, 2018 and December 31, 2018. The 2018 awards were granted to our Named Executive Officers on June 29, 2018 and will vest, to the extent earned, on May 8, 2021.

The 2018 award determination was based upon our performance relative to specified performance goals during the applicable performance period, as follows: Seventy-five percent of the award was earned based upon our attainment of adjusted pre-tax cash flow, as defined in the award agreement, and twenty-five percent of the award was earned based on our attainment of adjusted pre-tax earnings, as defined in the award agreement.

For the 2018 performance year, the following metrics were used to determine award levels:

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The performance period for the 2018 awards was completed on December 31 2018, and the performance factor was set at 47.5 percent.

2019 Performance Share Unit Awards (the “2019 awards”)

The performance period for the 2019 awards was the period between January 1, 2019 and December 31, 2019. The 2019 awards were granted to our Named Executive Officers on June 3, 2019 and would vest, to the extent earned, on May 22, 2022; however, no awards were earned for the 2019 performance year (as discussed further below).

The performance share unit award determination was based upon our performance relative to specified performance goals during the applicable performance period, as follows: Seventy-five percent of the award was to be earned based upon our attainment of adjusted pre-tax cash flow, as defined in the award agreement, and twenty-five percent of the award was to be earned based on our attainment of adjusted pre-tax earnings, as defined in the award agreement.

For the 2019 performance year, the following metrics were used to determine award levels:

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The performance period for the 2019 awards was completed on December 31, 2019, and the performance factor was set at 0 percent, which effectively terminated these awards.

2020 Performance Share Unit Awards (the “2020 awards”)

The performance period for the 2020 awards was the period between January 1, 2020 and December 31, 2020. The 2020 awards were granted to our Named Executive Officers on March 10, 2020 and will vest, to the extent earned, on March 1, 2023.

The performance share unit award determination was based upon our performance relative to specified performance goals during the applicable performance period, as follows: Seventy-five percent of the award was to be earned based upon our attainment of adjusted pre-tax cash flow, as defined in the award agreement, and twenty-five percent of the award was to be earned based on our attainment of adjusted pre-tax earnings, as defined in the award agreement.

For the 2020 performance year, the following metrics, which were revised to include acquisitions that occurred during 2020, were used to determine award levels:

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The performance period for the 2020 awards was completed on December 31, 2020, and the performance factor was set at 138.5 percent.

2021 Performance Share Unit Awards (the “2021 awards”)

The performance period for the 2021 awards will be the period between January 1, 2021 and December 31, 2021. The 2021 awards were granted to our Named Executive Officers on March 1, 2021 and will vest, to the extent earned, on March 1, 2024.

The performance share unit award determination is based upon our performance relative to specified performance goals during the applicable performance period, as follows: Seventy-five percent of the award is to be earned based upon our attainment of adjusted pre-tax cash flow, as defined in the award agreement, and twenty-five percent of the award is to be earned based on our attainment of adjusted pre-tax earnings, as defined in the award agreement.

For the 2021 performance year, the following metrics will be used to determine award levels:

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The performance period for the 2021 awards will be completed on December 31, 2021.

Vesting of Plan Based Awards

The following table presents the vesting of restricted stock unit awards to our Named Executive Officers during the year ended December 31, 2020.

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Plan Based Awards Outstanding at December 31, 2020

The following table summarizes each Named Executive Officer’s long-term incentive awards outstanding at December 31, 2020.

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Benefits

We also provide employee benefits, primarily consisting of a 401(k) plan (discussed below) and an employer sponsored medical plan.  The benefits provided to the executive officer group are no different than those offered to non-executive employees.  At the current time, we do not offer a defined benefit pension plan nor do we offer deferred compensation.

Perquisites

Club dues reimbursements and automobile allowances are paid to the executive officers consistent with the payment of such amounts to non-executive employees.  The requirement to pay such amounts is negotiated with the executive at the time of their initial employment.  Life and disability insurance premiums are paid on behalf of the executives consistent with the payment of such insurance premiums for non-executive employees.  Perquisite amounts are not considered annual salary for bonus purposes.

401(k) Plan

We offer a 401(k) plan to our employees and our executive officers.  As referenced in footnote (1) to the Summary Compensation Table, we make a matching contribution to the plan.  In 2020, 2019 and 2018, we matched 100 percent of employee contributions up to 3 percent of compensation and matched 50 percent of employee contributions from 3 percent to 5 percent of compensation, subject to the Internal Revenue Code (“Code”) annual limits.  This level of matching contributions conforms to the Code’s safe harbor rules for 401(k) plans.

Compensation and Risk

In order to establish and maintain profitability, we become exposed to risk.  The most significant areas of risk involve commodity price risk, customer credit risk, and safety and security concerns.  Compensation policies for all employees are designed to promote the provision of management safeguards against risk and not incentivize excessive risk-taking.  Compensation policies toward this aim include the following:

On a scheduled basis over the course of the year, Mr. Niemann, representing the Audit Committee, conducted interviews with key non-executive operating and accounting personnel to monitor compliance with our designed internal control structure and overall corporate strategies. Management has concluded that compensation policies and practices are not reasonably likely to have a material adverse effect on the Company.

Compensation Process

Mr. Roycraft, Chief Executive Officer and President

Mr. Roycraft was appointed Chief Executive Officer and President effective January 1, 2020. By mutual agreement between Mr. Roycraft and the Compensation Committee, Mr. Roycraft’s 2020 annual base salary was set at $400,000, an amount aligned with the compensation of the current executive officers.

Role of the External Compensation Advisor

In the fall of 2017, the Compensation Committee engaged Meridian Compensation Partners, LLC to assist the Company with the design of the 2018 LTIP.

Pay Ratio Disclosure Rule

In August 2015, pursuant to a mandate of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the SEC adopted a rule requiring annual disclosure of the ratio of the median employee’s annual total compensation to the total annual compensation of the principal executive officer (“PEO”).  Our PEO for the fiscal year ended December 31, 2020 was Mr. Roycraft.  The purpose of this disclosure is to provide a measure of the equitability of pay within the organization.  We believe our compensation philosophy and process yield an equitable result and our ratio is as follows:

For purposes of this calculation, we aggregated Mr. Roycraft’s annual salary of $400,000 and 2020 bonus amount of $300,000 to arrive at the total PEO annual compensation for 2020.

In determining the median employee, a listing was prepared of all employees as of December 31, 2020.  Employees on leave of absence were excluded from the list and wages and salaries were annualized for those employees that were not employed for the full year of 2020.  The median amount was selected from the annualized list.  For simplicity, the value of our 401(k) plan and medical benefits provided was excluded as all employees including the PEO are offered the exact same benefits, and we utilize the Internal Revenue Code safe harbor provision for 401(k) discrimination testing.  As of December 31, 2020, we employed 726 persons of which 492 are professional truck drivers.

In establishing total compensation for our executive officer group, the Compensation Committee considers the accounting treatment and tax treatment of its compensation decisions, including Section 162(m) of the Code, which limits the deductibility of compensation paid to each covered employee. Generally, Section 162(m) of the Code prevents a company from receiving a corporate income tax deduction for annual compensation paid to the chief executive officer and the three other most highly compensated officers of a public corporation in excess of $1 million. Although the Compensation Committee takes the requirements of Section 162(m) into account in designing executive compensation, the Compensation Committee believes that the potential deductibility of the compensation payable under the Company’s incentive compensation plans and arrangements should be only one of a number of relevant factors taken into consideration in establishing those plans and arrangements for our executive officers and not the sole governing factor.

None of the members of the Compensation Committee was an officer or employee of us or any of our subsidiaries, or was formerly an officer of us or any of our subsidiaries or had any relationship requiring disclosure by us during the year ended December 31, 2020.  None of our executive officers have served as a member of the Compensation Committee (or other board committee performing equivalent functions) of another entity that had an executive officer serving as a member of our Board of Directors or the Compensation Committee.

    The following table sets forth information as of March 15, 2021, with respect to compensation plans under which our common stock may be issued:

COMPENSATION COMMITTEE REPORT

March 15, 2021

To the Board of Directors:

The following report of the Compensation Committee of the Board of Directors shall not be deemed to be “soliciting material” or to be “filed” with the Securities and Exchange Commission (“SEC”) or subject to the SEC’s proxy rules, except for the required disclosure in this Proxy Statement, or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), except to the extent that we specifically incorporate by reference into any filing we make under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act.

We have reviewed and discussed with management the above Compensation Discussion and Analysis (“CD&A”) and based on our review and discussions with management, we recommended to the Board of Directors that the CD&A be included in this Proxy Statement and our Annual Report on Form 10-K for the year ended December 31, 2020.

Under the provisions of Section 14A of the Securities Exchange Act of 1934, as amended, our shareholders are entitled to vote at the Annual Meeting to approve the compensation of our Named Executive Officers, as disclosed in this Proxy Statement pursuant to Item 402 of Regulation S-K.  Pursuant to the Dodd-Frank Act, the shareholder vote on executive compensation is an advisory vote only, and it is not binding on us or our Board of Directors.

Although the vote is non-binding, the Compensation Committee and the Board of Directors value the opinions of our shareholders and will consider the outcome of the vote when making future compensation decisions.  As described more fully in the “Compensation Discussion and Analysis” section of this Proxy Statement, our executive compensation program is designed to provide aggregate compensation opportunities for our Named Executive Officers that are both competitive in the business marketplace and are based upon company and individual performance. 

The advisory vote regarding the compensation of the Named Executive Officers described in this Item 2 shall be approved if the votes cast in favor of the proposal exceed the votes cast against the proposal.  Abstentions and broker non-votes will not be counted as either votes cast for or against Item 2.

2020 DIRECTOR COMPENSATION

Directors who are our employees do not receive fees or any other compensation for their services as directors. Directors who are not employees received cash compensation as presented in the table below. Director fees are based on a flat amount and are paid on a quarterly basis.  Directors are also reimbursed for direct out-of-pocket expenses in connection with travel associated with meeting attendance. Directors also receive an annual grant under the 2018 LTIP.

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On March 1, 2021, each of the above directors received a restricted stock unit award grant of 536 shares, with a vesting date of March 1, 2022.

KPMG LLP served as our independent registered public accounting firm, providing audit and financing services since their appointment in June 2017.

Fees for professional services provided by KPMG LLP in each of the last two years in each of the following categories were as follows:

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The scope and all fees associated with audit and other services performed by KPMG LLP are pre-approved by the Audit Committee on an annual basis.  The Audit Committee, established in accordance with Section 3(a)(58)(A) of the Exchange Act, has the responsibility to assist our Board of Directors in fulfilling its fiduciary responsibilities as to accounting policies and reporting our practices and those of our subsidiaries and the sufficiency of the audits of all of our activities.  The Audit Committee is the Board’s agent in ensuring the integrity of our financial reports and those of our subsidiaries, and the adequacy of disclosures to shareholders.  The Audit Committee is the focal point for communication between other directors, the independent auditors and management as their duties relate to financial accounting, reporting and controls. The Audit Committee is also responsible for reviewing our financial transactions involving any related parties.

The present intention of the Audit Committee of the Board of Directors is to appoint KPMG LLP, independent registered public accountants, to audit our financial statements for the year ending December 31, 2021.  KPMG LLP was first appointed as our auditors in 2017.  A representative of KPMG LLP will be present at the Annual Meeting of Shareholders and will be given an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.

The Audit Committee has established a policy intended to clearly define the scope of services performed by our independent registered public accountants.  This policy relates to audit services, audit-related services, tax and all other services that may be provided by our independent registered public accountants and is intended to ensure that such services do not impair the auditor’s independence.  The policy requires the pre-approval by the Audit Committee of all services to be provided by our independent registered public accountants.  Under the policy, the Audit Committee will annually review and pre-approve the services that may be provided by the independent registered public accountants.  The Audit Committee may delegate pre-approval authority to one or more of its members.  The member or members to whom such authority is delegated is required to report to the Audit Committee at its next meeting any services that such member or members has approved.  The policy also provides that the Audit Committee will pre-approve the fee levels for all services to be provided by the independent registered public accountants.

REPORT OF THE AUDIT COMMITTEE

March 15, 2021

To the Board of Directors:

We have reviewed and discussed with management the audited consolidated financial statements as of and for the year ended December 31, 2020.

The Audit Committee received from and discussed with KPMG LLP the written disclosure and the letter required by applicable requirements of the Public Company Accounting Oversight Board (the “PCAOB”) regarding KPMG LLP’s communications with the audit committee concerning independence and has discussed with KPMG LLP, the auditors’ independence.  These items relate to that firm’s independence from us.  In addition, the Audit Committee has also discussed with KPMG LLP the matters required to be discussed by applicable accounting standards and the PCAOB.  The Audit Committee monitored auditor independence, reviewed audit and non-audit services performed by KPMG LLP and discussed with the auditors their independence.   All of the services provided by our principal accounting firm described in this proxy statement were approved in accordance with this policy, and the Audit Committee has determined that the independent registered public accountants’ independence has not been compromised as a result of providing these services and receiving the fees for such services as noted above.

Based on the reviews and discussions referred to above, we recommend to the Board of Directors that the financial statements referred to above be included in our Annual Report on Form 10-K for the year ended December 31, 2020.

John O. Niemann, Jr., Chairman

Murray E. Brasseux

Richard C. Jenner

 

The Board of Directors has adopted a written policy for approval of transactions between the Company and its related parties, defined in the policy as its directors, director nominees, executive officers, greater than 5 percent beneficial owners, each of their respective immediate family members, and any firm, corporation or other entity in which of any of the foregoing persons is employed as an officer, general partner or principal or in a similar position or in which such person has a 10 percent or greater beneficial ownership interest. Pursuant to the policy, all transactions involving the company and a related party shall be subject to pre-approval or ratification by the Audit Committee after consideration of the material facts of the transaction. In determining whether to approve or ratify a related party transaction, the Audit Committee will take into account, among other factors it deems appropriate, whether the related party transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of the related person’s interest in the transaction.

TRANSACTIONS WITH RELATED PERSONS

We enter into certain transactions in the normal course of business with affiliated entities, including direct cost reimbursement for shared phone and administrative services.  For the year ended December 31, 2020, affiliated entities charged us approximately $13,000 on a net basis.  We also lease our corporate office space in a building operated by 17 South Briar Hollow Lane, LLC, an affiliate of KSA Industries, Inc., which is our largest stockholder.  The lease rental rate was determined by an independent appraisal.  Rental expense paid to the related party for 2020 totaled $0.6 million.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth information regarding the number of shares of our Common Stock held of record on March 15, 2021, (i) by the Named Executive Officers, directors and nominees for director, (ii) by beneficial owners of more than five percent of the Common Stock, and (iii) by all officers and directors as a group.  Unless otherwise stated below, the address of each beneficial owner listed on the table is c/o Adams Resources & Energy, Inc., 17 South Briar Hollow Lane, Suite 100, Houston, Texas 77027.  Unless otherwise indicated, each person named below has sole voting and investment power over all shares of Common Stock indicated as beneficially owned.

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* Less than 1 percent.

DELINQUENT SECTION 16(A) REPORTS

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and executive officers, and persons who beneficially own more than 10 percent of a registered class of our common stock (“reporting persons”), to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock. These reporting persons are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.

To our knowledge, based solely on a review of the copies of reports and amendments thereto on Forms 3, 4 and 5 furnished to us by reporting persons and forms that we filed on behalf of certain directors and officers, during, and with respect to, our fiscal year ended December 31, 2020, and on a review of written representations from reporting persons to us that no other reports were required to be filed for such fiscal year, all Section 16(a) filing requirements applicable to our reporting persons were satisfied in a timely manner, except that the Form 4 filed by Greg L. Mills on May 26, 2020 reporting share purchases was subsequently amended on May 27, 2020 due to the inadvertent omission of certain shares purchased, which amendment was filed late.

CODE OF ETHICS

ADDITIONAL INFORMATION

Under the rules of the SEC, in order to be considered for inclusion in next year’s proxy statement, all shareholder proposals must be submitted in writing by December 8, 2021 to Adams Resources & Energy, Inc., c/o Investor Relations, 17 South Briar Hollow Lane, Suite 100, Houston, Texas 77027.  The notice should contain the text of any proposal, the name and address of the shareholder as it appears in our books, the number of our common shares that are beneficially owned by the shareholder, and any material interest of the shareholder in such business.  If a shareholder submits a proposal for consideration at the 2022 Annual Meeting after December 8, 2021, our proxy for the 2022 Annual Meeting may confer discretionary authority to vote on such matter without any discussion of such matter in the proxy statement for the 2022 Annual Meeting.

We know of no matters to be presented for consideration at the Annual Meeting other than those described above.  If other matters are properly presented to the meeting for action, it is intended that the persons named in the accompanying proxy, and acting pursuant to authority granted thereunder, will vote in accordance with their best unanimous judgment on such matters.

Only one copy of this Proxy Statement and the Annual Report accompanying this Proxy Statement will be mailed to shareholders who have the same address unless we receive a request that the shareholders with the same address are to receive separate Proxy Statements and Annual Reports. These additional copies will be supplied at no additional cost to the requesting shareholder.  Shareholders who share an address and receive only one copy, or shareholders who share an address and receive two copies, may notify us that they wish to receive separate Annual Reports or Proxy Statements, or wish to receive only one Annual Report and Proxy Statement, as applicable, may notify us of such request by calling (713) 881-3600 or sending a written request to 17 South Briar Hollow Lane, Suite 100, Houston, Texas 77027.