DEF 14A 1 vtnr-def14a_062322.htm DEFINITIVE PROXY STATEMENT

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a)

of the Securities Exchange Act of 1934

Filed by the Registrant ☒

Filed by party other than the registrant ☐

Check the appropriate box:

☐ Preliminary Proxy Statement	☐ Confidential, for use of the Commission only
	(as permitted by Rule 14a-6(e)(2)).
☒ Definitive Proxy Statement

☐ Definitive additional materials.

☐ Soliciting material under Rule 14a-12.

VERTEX ENERGY, INC.

(Name of Registrant as Specified in Charter)

Payment of Filing Fee (Check all boxes that apply):

☒ No fee required

☐ Fee paid previously with preliminary materials

☐ Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11

VERTEX ENERGY, INC.

NOTICE OF 2022 ANNUAL MEETING OF STOCKHOLDERS

To be held on June 23, 2022

To our stockholders:

Notice is hereby given of the 2022 annual meeting of stockholders of Vertex Energy, Inc. (the “Company”) to be held on Thursday, June 23, 2022 at 10 A.M. Houston time at the Company’s corporate offices: 1331 Gemini, Suite 250, Houston, Texas 77058 (the “Annual Meeting” or the “Meeting”), for the following purposes:

To elect six directors to the Board of Directors (the “Board”) each to serve a term of one year and until their respective successors have been elected and qualified, or until their earlier resignation or removal.

	2.	*Advisory vote to approve named executive officer compensation.*

	3.	*Advisory vote on the frequency of shareholder votes on named executive officer compensation.*

	4.	*To ratify the appointment of Ham, Langston & Brezina, L.L.P., as the Company’s independent auditors for the fiscal year ending December 31, 2022.*

	5.	*To consider a shareholder proposal regarding simple majority vote.*

Any action may be taken on any one of the foregoing proposals at the Meeting on the date specified above or on any date or dates to which the Meeting may be adjourned. Common and preferred stockholders of record on the close of business on April 26, 2022 are entitled to notice of, and to vote at, the Annual Meeting and any adjournments thereof.

The Company is pleased to continue utilizing the Securities and Exchange Commission rules that allow issuers to furnish proxy materials to their stockholders on the Internet. Accordingly, we are sending a Notice of Internet Availability of Proxy Materials, or E-proxy notice, on or about April 29, 2022 to our stockholders of record as of the close of business on April 26, 2022. The E-proxy notice contains instructions for your use of this process, including how to access our proxy statement and annual report and how to authorize your proxy to vote online. In addition, the E-proxy notice contains instructions on how you may receive a paper copy of the proxy statement and annual report or elect to receive your proxy statement and annual report over the Internet. The Company believes these rules allow it to provide you with the information you need while lowering the costs of delivery and reducing the environmental impact of the Annual Meeting.

The enclosed proxy statement is also available at https://www.iproxydirect.com/VTNR (please note this link is case sensitive). This website also includes copies of the form of proxy and the Company’s Annual Report to stockholders for the year ended December 31, 2021 (the “2021 Annual Report”). Stockholders may also request a copy of the proxy statement and the Company’s Annual Report by contacting our main office at (866) 660-8156.

As a stockholder of record, you are cordially invited to attend the meeting in person. Stockholders who do not expect to attend the Annual Meeting are encouraged to vote via the Internet, by phone or by returning a signed proxy card.

Even if you plan to attend the Annual Meeting in person, we request that you submit a proxy by following the instructions on your proxy card as soon as possible and thus ensure that your shares will be represented at the Annual Meeting if you are unable to attend.

By Order of the Board of Directors,

Benjamin P. Cowart

Chairman

Houston, Texas

April 29, 2022

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to Be Held on Thursday, June 23, 2022.

Our proxy statement and annual report on Form 10-K for the year ended December 31, 2021, are available at the following cookies-free website that can be accessed anonymously: https://www.iproxydirect.com/VTNR (please note this link is case sensitive).

TABLE OF CONTENTS

GENERAL INFORMATION	1
Information Contained In This Proxy Statement	1
Important Notice Regarding the Availability of Proxy Materials	1
Record Date and Shares Entitled to Vote	1
Voting Process	2
Providing and Revoking Proxies	2
Attendance at the Annual Meeting	2
Conduct at the Meeting	2
Voting Requirements for Each of the Proposals	3
Quorum; Broker Non-Votes and Abstentions	3
Board of Directors Voting Recommendations	4
Mailing Costs and Solicitation of Proxies	4
Inspector of Voting	4
Stockholders Entitled to Vote at the Meeting	4
Voting Instructions	5
Confidential Voting	5
Stockholder of Record and Shares Held in Brokerage Accounts	5
Multiple Stockholders Sharing the Same Address	5
Voting Results	5
Company Mailing Address	6
FORWARD LOOKING STATEMENTS AND WEBSITE LINKS	6
INCORPORATION BY REFERENCE	6
VOTING RIGHTS AND PRINCIPAL STOCKHOLDERS	6
Security Ownership of Management and Certain Beneficial Owners and Management	6
Change of Control	8
CORPORATE GOVERNANCE	9
Board Leadership Structure	9
Risk Oversight	9
Family Relationships	9
Arrangements between Officers and Directors	9
Other Directorships	10
Involvement in Certain Legal Proceedings	10
Board of Directors Meetings	10
Board Observer Right	10
Executive Sessions of the Board of Directors	11
Stockholder Communications with the Board	11
Director Independence	11
Board Diversity Matrix	12
Code of Conduct	12
Whistleblower Protection Policy	12
Policy on Equity Ownership	12
Pledging of Shares	12
Insider Trading/Anti-Hedging Policies	13
Compensation Risk Assessment	13
Compensation Recovery and Clawback Policies	13
COMMITTEES OF THE BOARD	13
Board Committee Membership	13
Website Availability of Documents	14
Audit Committee	14

Compensation Committee	14
Compensation Committee Interlocks and Insider Participation	15
Nominating and Governance Committee	15
Related Party Transaction Committee	17
Risk Committee	17
INFORMATION ABOUT OUR EXECUTIVE OFFICERS	18
AUDIT COMMITTEE REPORT	19
EXECUTIVE AND DIRECTOR COMPENSATION	20
Compensation Discussion and Analysis	20
Objectives and Philosophy of Our Executive Compensation Program	20
Components of our Executive Compensation Program	20
Chief Executive Officer Compensation	22
Say-on-pay Voting Outcome	23
Benchmarking	23
Role of Chief Executive Officer and Other Officers	23
Role of Independent Consultant	23
Employment Agreements	24
COMPENSATION COMMITTEE REPORT	24
EXECUTIVE COMPENSATION	25
Summary Executive Compensation Table	25
Employment Agreements	26
2021 Grants of Plan-Based Awards	33
Outstanding Equity Awards At Fiscal Year-End	33
Option Exercises During Fiscal 2021	34
Fiscal Year 2021 Pension Benefits	34
Fiscal Year 2021 Nonqualified Deferred Compensation	34
Potential Payments Upon Termination or Change-in-Control	34
Potential Payments upon Termination or Change in Control Table	35
CEO Pay Ratio	39
DIRECTORS COMPENSATION	40
EQUITY COMPENSATION PLAN INFORMATION	42
Description of Equity Plans	42
Equity Compensation Plan Table	44
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	44
Review and Approval of Related Party Transactions	44
Related Party Stock Transactions	45
DELINQUENT SECTION 16(A) REPORTS	45
PROPOSAL 1 ELECTION OF DIRECTORS	46
PROPOSAL 2 ADVISORY VOTE ON EXECUTIVE COMPENSATION	50
PROPOSAL 3 ADVISORY VOTE ON THE FREQUENCY OF HOLDING ADVISORY VOTES ON EXECUTIVE COMPENSATION	51
PROPOSAL 4 RATIFICATION OF APPOINTMENT OF AUDITORS	52
PROPOSAL 5 SHAREHOLDER PROPOSAL – SIMPLE MAJORITY VOTE	53
STOCKHOLDER PROPOSALS FOR 2023 ANNUAL MEETING	55
Proxy Statement Proposals	55

Other Proposals and Nominations	55
ANNUAL REPORT	55
ADDITIONAL FILINGS	55
IMPORTANT NOTICE REGARDING DELIVERY OF STOCKHOLDER DOCUMENTS	56
DOCUMENTS INCORPORATED BY REFERENCE	56
OTHER MATTERS	56
INTEREST OF CERTAIN PERSONS IN OR OPPOSITION TO MATTERS TO BE ACTED UPON	56
COMPANY CONTACT INFORMATION	57

iii

	●	In person. You may vote in person at the Annual Meeting. We will give you a ballot when you arrive.

	●	Via the Internet. You may vote by proxy via the Internet by following the instructions provided in the Notice.

	●	By Telephone. If you request printed copies of the proxy materials by mail, you may vote by proxy by calling the toll-free number found on the proxy card.

	●	By Fax. If you request printed copies of the proxy materials by mail, you may vote by proxy by faxing your proxy to the number found on the proxy card.

	Proposal	Vote Required	Broker Discretionary Voting Allowed*
1	Election of directors	Plurality of Votes Cast	No
2	Advisory vote to approve named executive officer compensation.	Majority of the votes cast on the proposal	No
3	Advisory vote on the frequency of shareholder votes on named executive officer compensation.	Plurality of Votes Cast	No
4	Ratification of the appointment of Ham, Langston & Brezina, L.L.P., as the Company’s independent auditors for the fiscal year ending December 31, 2022	Majority of the votes cast on the proposal	Yes
5	Shareholder proposal regarding simple majority vote	Majority of the votes cast on the proposal	No

●	“FOR” each of the nominees to the Board of Directors (Proposal 1).
●	“FOR” the compensation of the Company's named executive officers (Proposal 2).
●	For “3 YEARS” for the frequency of the advisory vote on the compensation of the Company's named executive officers (Proposal 3).
●	“FOR” the ratification of the appointment of Ham, Langston & Brezina, L.L.P., as the Company’s independent auditors for the fiscal year ending December 31, 2022 (Proposal 4).
●	“AGAINST” a shareholder proposal regarding simple majority vote (Proposal 5).

Title of Class	Name and Address of Beneficial Owner	Amount and Nature of Beneficial Ownership (a)		Percent of Class
*Named Executive Officers and Directors*
Common Stock	Benjamin P. Cowart	7,629,619	(1)	11.7	%
Common Stock	Chris Carlson	1,509,889	(2)	2.3	%
Common Stock	John Strickland	628,575	(3)	*	%
Common Stock	Dan Borgen	449,181	(4)	*	%
Common Stock	David Phillips	192,828	(5)	*	%
Common Stock	Christopher Stratton	240,000	(6)	*	%
Common Stock	Timothy C. Harvey	35,800	(7)	*	%
Common Stock	James P. Gregory	180,000	(8)	*	%
Common Stock	All Named Executive Officers and Directors as a Group (8 persons)	10,865,892		16.3	%

*5% Stockholders (9)*
	*Common Stock*
Common Stock	Laurence W. Lytton (10)	3,649,067		5.7	%
Common Stock	Richard Jacinto II (11)	4,645,000		7.2	%
	*Series A Convertible Preferred Stock*
Series A Convertible Preferred Stock (b)	Fredrick W B Vogel (12)	30,072		7.9	%

Board Diversity Matrix (As of April 26, 2022)
Total Number of Directors	6
	Female	Male	Non- Binary	Did Not Disclose Gender
Part I: Gender Identity
Directors	—	6	—	—
Part II: Demographic Background
African American or Black	—	—	—	—
Alaskan Native or Native American	—	—	—	—
Asian	—	—	—	—
Hispanic or Latinx	—	—	—	—
Native Hawaiian or Pacific Islander	—	—	—	—
White	—	6	—	—
Two or More Races or Ethnicities	—	—	—	—
LGBTQ+	—
Did Not Disclose Demographic Background	—

	Audit Committee	Compensation Committee	Nominating and Corporate Governance Committee	Related Party Transaction Committee	Risk Committee
Benjamin P. Cowart (1)
Dan Borgen	M	C	M	M
David Phillips	M	M	M	C
Christopher Stratton	C	M	C		M
Timothy C. Harvey					C
James P. Gregory

Name	Position	Age
Benjamin P. Cowart	President and Chief Executive Officer	53
Chris Carlson	Chief Financial Officer and Secretary	49
John Strickland	Chief Operating Officer	68

	Casella Waste Systems Inc.	CECO Environmental Corp.
	Perma-fix Environmental Services	US Ecology, Inc.
	Clean Diesel Technologies	Heritage-Crystal Clean
	Flotek Industries, Inc.	Nuverra Environmental Solutions
	Quest Resource Holding Corp	Trecora Resources

Name and Principal Position	Year Ended December 31	Salary ($)		Bonus ($)		Option Awards ($)(2)		All Other Compensation ($)(1)					Total ($)
Benjamin P.	2021	$	366,180	$	205,900	$	120,138		$	38,777	(3)	$	730,995
Cowart	2020	$	358,990	$	113,410	$	99,854		$	40,007	(4)	$	612,261
Chairman,	2019	$	351,951	$	149,164	$	72,365		$	39,049	(4)	$	612,529
CEO,
and President

Chris Carlson	2021	$	238,680	$	127,112	$	107,056		$	49,662	(5)	$	522,510
Chief	2020	$	233,610	$	77,713	$	83,217		$	46,930	(6)	$	441,470
Financial	2019	$	229,556	$	98,720	$	71,869		$	43,141	(6)	$	443,286
Officer and
Secretary

John	2021	$	245,820	$	252,000	$	67,323		$	38,977	(7)	$	604,120
Strickland	2020	$	241,120	$	79,290	$	86,336		$	38,027	(6)	$	444,773
Chief	2019	$	236,385	$	112,588	$	58,885		$	36,094	(6)	$	443,952
Operating
Officer

Name	Grant Date(1)		All Other Option Awards: Number of Securities Underlying Options(#)		Exercise or Base Price of Option Awards ($/Sh)(2)		Grant Date Fair Value of Stock and Option Awards ($)(3)
Benjamin P. Cowart		5/14/2021		95,520		2.12	120,138
Chris Carlson		5/14/2021		42,360		1.92	67,323
John Strickland		5/14/2021		67,360		1.92	107,055

Name	Number of securities underlying unexercised options (#) Exercisable		Equity Incentive Plan Awards: Number of securities underlying unexercised options (#) Unexercisable		Equity Incentive Plan Awards: Number of Securities underlying unexercised unearned options (#)			Option exercise price ($)		Option expiration date
Benjamin P. Cowart CEO and President
		150,000		—		—		$	1.07	8/20/22
		124,500		—		41,500	(1)	$	1.26	4/12/23
		81,500		—		81,500	(2)	$	1.60	5/20/24
		67,288		—		201,865	(3)	$	0.86	6/19/25
		—		—		96,520	(4)	$	2.12	5/14/26

Chris Carlson CFO and Secretary
		100,000		—		—		$	2.96	9/27/23
		75,000		—		—		$	3.15	6/24/25
		125,000		—		—		$	0.97	8/20/27
		81,000		—		27,000	(1)	$	1.14	4/12/28
		34,500		—		34,500	(2)	$	1.45	5/20/29
		53,612		—		160,834	(3)	$	0.78	6/19/30
		—				67,360	(4)	$	1.92	5/12/31

John Strickland		100,000		—		—		$	7.55	4/23/24
COO		—		—		29,250	(1)	$	1.14	4/12/28
		66,500		—		66,500	(2)	$	1.45	5/20/29
		—		—		140,579	(3)	$	0.78	6/19/30
		—				42,360	(4)	$	1.92	5/12/31

			Option Awards
Name	Number of Shares Acquired on Exercise		Value Realized on Exercise ⁽¹⁾
Benjamin P. Cowart	—			—
Chris Carlson	100,000		$	285,000
John Strickland	386,610	⁽²⁾	$	2,741,714	⁽³⁾

	(1)	The dollar amounts shown are determined by multiplying the number of shares of the Company’s common stock by the difference between the per-share market price of the Company’s common stock at the time of exercise and the exercise price of the options.
	(2)	Includes 19,985 shares of common stock with a value of $137,497, subsequently forfeited to the Company in connection with a “net exercise” of options to purchase 50,000 shares of common stock for $2.75 per share, based on the fair market value of such shares (as provided in the option award agreements) upon exercise.
	(3)	Including the value of the common stock shares forfeited to the Company to pay the exercise price of options to purchase 50,000 shares of common stock with an exercise price of $2.75 per share, as discussed in footnote (2), above.

	Expiration of Employment Agreement prior to Automatic Renewal; Death, Disability, Termination by Executive Without “good reason” or by the Company for “cause” ($)(1)	Termination by Executive for “good reason”, or without “cause” by the Company ($)		Expiration of Employment Agreement prior to Automatic Renewal, Termination by Executive for Any Reason or by the Company without “cause” In Anticipation of, or After a Change of Control ($)



Name
*Benjamin P. Cowart*
Cash Payment	—	358,990	(2)	1,076,970	(6)
COBRA Payments	—	18,777	(3)	18,777	(3)
Acceleration of Time Vesting Options (Value as of 12/31/21)	—	1,347,958	(4)	1,347,958	(4)(7)
Bonus (1)	—	214,320	(5)	617,700	(8)
Total Termination Benefits	—	1,940,045		3,061,405
*Chris Carlson*
Cash Payment	—	233,610	(2)	700,830	(6)
COBRA Payments	—	26,458	(3)	26,458	(3)
Acceleration of Time Vesting Options (Value as of 12/31/21)	—	976,727	(4)	976,727	(4)(7)
Bonus (1)	—	132,350	(5)	756,000	(8)
Total Termination Benefits	—	1,369,145		2,460,015
*John Strickland*
Cash Payment	—	241,120	(2)	723,360	(6)
COBRA Payments	—	5,143	(3)	5,143	(3)
Acceleration of Time Vesting Options (Value as of 12/31/21)	—	941,708	(4)	941,708	(4)(7)
Bonus (1)	—	164,440	(5)	381,336	(8)
Total Termination Benefits	—	1,352,411		2,051,547

Name (1)	Fees Earned or Paid in Cash ($)		Option Awards ($)(2)(3)		All Other Compensation ($)			Total ($)
David Phillips	$	26,750	$	95,358	$	—		$	122,108
Dan Borgen	$	34,500	$	95,358	$	—		$	129,858
Christopher Stratton	$	40,000	$	95,358	$	—		$	135,358
Timothy C. Harvey	$	22,750	$	95,358	$	—		$	118,108
James P. Gregory	$	—	$	95,358	$	128,125	(4)	$	223,483


Name	Stock Options (#)
David Phillips	120,000
Dan Borgen	300,000
Christopher Stratton	300,000
Timothy C. Harvey	90,000
James P. Gregory	180,000

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights		Weighted- average exercise price of outstanding options, warrants and rights		Number of securities available for future issuance under equity compensation plans (excluding those in first column)
Equity compensation plans approved by the security holders (1)		3,990,168	$	2.95		3,778,222
Equity compensation plans not approved by the security holders		—		—		—
Total		3,990,168	$	2.95		3,778,222

SEC Form DEF 14A filed by Vertex Energy Inc