| Fee paid previously with preliminary materials. | |||
| Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||
(1)Amount Previously Paid:
(3)Filing Party:
Notice of Annual Meeting of Shareholders
To be Held Wednesday, June 5, 2024 at 10 a.m. Central Time
Fellow Shareholders,
The 2024 Annual Meeting of Shareholders (the “Meeting”) of Flotek Industries, Inc.
2.An advisory vote to approve the compensation of the Company’s named executive officers;
4.Approval of an amendment to the Flotek Industries, Inc.: 2018 Long-Term Incentive Plan; and
These items are more fully described in the following matters:
We are furnishing proxy materials to our shareholders over the Internet. On or about April 24, 2024, we intend to mail a Notice of Internet Availability of Proxy Materials (the “Notice”) on how to access proxy materials and our 2023 Annual Report on Form 10-K (the “2023 Annual Report”), how to vote, and how to obtain a paper copy of the proxy materials. You will need the control number printed on your Notice, proxy card or voting instruction card in order to vote. A list of shareholders of record will be available during the Meeting for inspection by shareholders for any legally valid purpose relating to the Meeting.
Your vote is very important. We urge you to review the proxy materials and vote as soon as possible. Even if you plan to attend the Meeting, please vote by mail or through the telephone or Internet voting systems. Specific directions for submitting your vote by mail or through the telephone or Internet are included in the accompanying Proxy Statement. Even if you have submitted your proxy, you may still vote in person if you attend the Meeting. AtThis Notice of Annual Meeting of Shareholders, the Proxy Statement and the 2023 Annual Report are available free of charge at the “Investor Relations” section of our website at https://www.flotekind.com/investor-relations.
On behalf of the Board and the executive team of the Company, I thank you for your support and participation.
By Order of the Board of Directors,
Amy E. Blakeway
Senior Vice President, General Counsel and Corporate Secretary
April 23, 2024
TABLE OF CONTENTS
Director Nominees | |||||
| Security Ownership of Certain Beneficial Owners, Executive Officers and Directors | |||||
Other Policies, Guidelines & Practices Related to Executive Compensation | |||||
Summary Compensation Table | |||||
Item 3: Ratification of Independent Registered Accounting Firm | |||||
Proxy Statement Summary
PROXY STATEMENT SUMMARY
This summary highlights information that is contained elsewhere in this proxy statement (the “Proxy Statement”). This summary does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting. This Proxy Statement and the related proxy materials were first released to shareholders and made available on the Internet on or about April 24, 2024.
Annual Meeting of Shareholders
When: June 5, 2024 at 10:00 a.m., Central Time
Where: The Company’s headquarters located at 5775 N. Sam Houston Parkway W., Suite 400, Houston, TX 77086
Who: Shareholders of record at the close of business on such date, there were outstanding and entitledApril 8, 2024 will be eligible to vote
What: We are asking shareholders to vote 57,248,810 shareson the following four items:
| Item up for Vote | Board’s Voting Recommendation | Page Reference | ||||||
| Election of director candidates, to serve until the next annual meeting of shareholders (Item 1) | FOR EACH CANDIDATE | |||||||
| An advisory vote to approve the compensation of the Company’s named executive officers (Item 2) | FOR | |||||||
| Ratification of the appointment of KPMG LLP as the Company’s independent auditor for 2024 (Item 3) | FOR | |||||||
| Approval of an amendment to the Flotek Industries, Inc. 2018 Long-Term Incentive Plan (Item 4) | FOR | |||||||
1
Proxy Statement Summary
Board and Board Committees
There are currently seven positions on our Board. Our Board is not classified, and all positions stand for election at each annual meeting of common stock, $0.0001 par value per share (“Common Stock”shareholders. The standing committees for our Board are the Audit Committee (the “Audit Committee”), the Compensation Committee (the "Compensation Committee"), the Corporate Governance & Nominating Committee (the “Governance Committee”) and the Risk & Sustainability Committee (the “Risk Committee”), designated by A, C, G and R in the table below, respectively. Mr. Agadi serves as our Non-Executive Chairman of the Board.
The following table provides summary information about our nominees for election to the Board as of April 18, 2024.
| Name and Principal Occupation | Age | Independent | Director Since | Committee Membership | ||||||||||||||||||||||
| A | C | G | R | |||||||||||||||||||||||
 | Harsha V. Agadi(1) | 61 | 2020 | |||||||||||||||||||||||
| Chief Executive Officer of GHS Holdings, LLC | ||||||||||||||||||||||||||
 | Dr. Ryan G. Ezell | 45 | 2023 | |||||||||||||||||||||||
| Chief Executive Officer of Flotek Industries, Inc. | ||||||||||||||||||||||||||
 | Evan R. Farber | 52 | 2022 | l | « | l | ||||||||||||||||||||
| General Counsel, The Cranemere Group | ||||||||||||||||||||||||||
 | Michael Fucci | 66 | 2020 | « | « | |||||||||||||||||||||
| Director, Acadia Healthcare Company, Inc. | ||||||||||||||||||||||||||
 | Lisa Mayr | 56 | 2021 | « | l | l | ||||||||||||||||||||
| CFO, Marigold Inc. | ||||||||||||||||||||||||||
 | David Nierenberg | 70 | 2018 | l | l | l | l | |||||||||||||||||||
| President, Nierenberg Investment Management Company, Inc. | ||||||||||||||||||||||||||
 | Matthew D. Wilks | 41 | 2022 | |||||||||||||||||||||||
| Executive Chairman and President, ProFrac Holding Corp. | ||||||||||||||||||||||||||
1 Non-Executive Chairman of the Board«Chair of CommitteelMember of Committee
For additional information on our directors and their qualifications, please see the section entitled “Item 1: Election of Directors—Director Nominees.”
2
Proxy Statement Summary
Board Overview
| Independence | Tenure | ||||
 | |||||
| 71% of our directors are independent | 86% of our directors have a tenure of less than 5 years, with an average tenure of 3.4 years | ||||
| Director Skills and Experience | |||||||||||||||||||||||
 | |||||||||||||||||||||||
3
Proxy Statement Summary
Cautionary Statements
This Proxy Statement contains “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. Forward-looking statements are not historical facts, but instead represent the current assumptions and beliefs regarding future events of the Company, many of which,
Note About our Website
None of the statements or information on websites referenced or discussed in this Proxy Statement are deemed to be part of, or incorporated by reference into, this Proxy Statement.
4
General Information About the Annual Meeting
GENERAL INFORMATION ABOUT THE ANNUAL MEETING
Solicitation of Proxies
We are providing this Proxy Statement in connection with the solicitation of proxies by our Board for use at the Meeting.
Date, Place and Time of Meeting
The Meeting will be held on Wednesday, June 5, 2024 at 10:00 a.m., Central Time, at the Company’s headquarters located at 5775 N. Sam Houston Parkway W., Suite 400, Houston, TX 77086, or at such other time and place to which the Meeting may be postponed or adjourned. References in this Proxy Statement to the “Meeting” also refer to any adjournments, postponements, or changes in location of the Meeting, to the extent applicable.
Record Date
The “Record Date” for the Meeting is April 8, 2024. Shareholders of record at the close of business on April 8, 2024 will be entitled to vote at the Meeting. At of the close of business on April 8, 2024, we had 29,661,130 shares of common stock outstanding. Each share of common stock is entitled to one vote on each item. Shareholders may not cumulate votes.
Attending the Meeting
The Meeting will be held at the Company’s headquarters located at 5775 N. Sam Houston Parkway W., Suite 400, Houston, TX 77086. Please allow ample time for check-in by arriving at the Meeting fifteen minutes early. If a bank, brokerage firm or other nominee holds your shares, you should contact that organization for additional information.
Delivery of Proxy Materials – Notice-And-Access
In accordance with the SEC rules on “Notice and Access,” we intend to mail a Notice of Internet Availability of Proxy Materials (the “Notice”) to certain shareholders on or about April 24, 2024. The Notice describes the matters to be considered at the Meeting and how the shareholders can access the proxy materials online. It also provides instructions on how those shareholders can vote their shares. If you received the Notice, you will not receive a print version of the proxy materials, unless you request one. If you would like to receive a print version of the proxy materials, free of charge, please follow the instructions on the Notice.
Items of Business
There are four items scheduled to be voted on at the Meeting:
2.An advisory vote to approve the compensation of the Company’s named executive officers (the “Say-On-Pay Proposal”);
3.Ratification of the appointment of KPMG LLP as the Company’s independent auditor for 2024 (the “Auditor Proposal”); and
4.Approval of an amendment to the Flotek Industries, Inc. 2018 Long-Term Incentive Plan (the “LTIP Amendment Proposal”).
5
General Information About the Annual Meeting
Quorum
A quorum is required to conduct business at the Meeting. The holders of a majority of the Company’s issued and outstanding shares of Common Stockthat are entitled to vote at the Meeting are required to be present, or represented by proxy, in order to constitute a quorum at the Meeting. Proxies received but marked as abstentions or broker non-votes will be counted towards the quorum requirement.
If less than a quorum is represented at the Meeting, in person or by proxy, to constitute a quorum. Abstentions and broker non-votes represented by submitted proxies will be included in the calculationchairperson of the numberMeeting or a majority of the shares present atso represented may adjourn the Meeting from time to time without further notice, and the persons named as proxies will vote the proxies they have been authorized during the Meeting in favor of such an adjournment.
Voting Counting
Votes will be counted by one or more inspectors appointed by the chairperson of the Meeting (the “Inspector of Elections). No candidate for the purposesoffice of determining a quorum. “Broker non-votes” means shares helddirector may be appointed as the Inspector of record by a broker that are not voted on a matter because the broker has not received voting instructions from the beneficial ownerElections.
Voting Requirements
Item 1: Each of the shares and either lacks or declines to exercise the authority to vote the shares in its discretion.
Item 3: The Auditor Proposal 4: Ratification of Selection of Independent Registered Public Accounting Firm
This means that the votes that our stockholdersshareholders cast “FOR”"for" this proposal must exceed the votes that our stockholdersshareholders cast “AGAINST”“against” this proposal at the Meeting. However, your vote will not be binding on the Board or the Company. Proposal 4 is considered a “routine” matter under the NYSE rulesproposal. Abstentions and therefore, brokerage firms and nominees that are members of the NYSE have the authority under those rules to vote their customers’ unvoted shares on Proposal 4 if their customers have not furnished voting instructions within a specified period of time prior to the Meeting. Accordingly, broker non-votes represented by submitted proxies will not be taken into account in determining the outcome of this proposal; abstentionsproposal. However, as the Auditor Proposal is considered a “routine” matter under the applicable rules (as further discussed below), your broker, if any, has discretionary voting authority to vote your shares, even if such broker does not receive voting instructions from you. Thus, broker non-votes are not expected on the Auditor Proposal. The Inspector of Elections will separately count the number of “for” votes and “against” votes with regard to the Auditor Proposal.
Item 4: The LTIP Amendment Proposal must receive an affirmative vote of a majority of the total votes cast with respect to this proposal at the Meeting. This means that the votes that our shareholders cast "for" this proposal must exceed the votes that our shareholders cast “against” this proposal. Abstentions and broker non-votes will not be taken into account in determining the outcome of this proposal. The Inspector of Elections will separately count the number of “for” votes and “against” votes with regard to the LTIP Amendment Proposal.
6
General Information About the Annual Meeting
Broker non-votes occur when a beneficial owner of shares held in “street name” does not give instructions to the brokerage firm, bank, dealer or nominee holding the shares as to how to vote on matters deemed “non-routine.” Generally, if shares are held in street name, the beneficial owner of the shares is entitled to give voting instructions to the broker or nominee holding the shares. If the beneficial owner does not provide voting instructions, the broker or nominee can still vote the shares with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters. In the event that a broker, bank, custodian, nominee or other record holder of shares of our common stock indicates on a proxy that it does not have discretionary authority to vote certain shares on a particular proposal, then those shares will be countedtreated as broker non-votes with respect to that proposal. Accordingly, if you own shares through a nominee, such as a broker or bank, please be sure to instruct your nominee how to vote against this proposal.to ensure that your vote is counted on each of the proposals. Items 1, 2 and 4 are considered “non-routine matters” and Item 3 is considered a “routine matter.”
The vote for Item 2, the Say-On-Pay Proposal, is non-binding, but the Board will consider the results of the vote in making future decisions.
Voting Procedures
Holders of our common stock may hold shares either beneficially through a broker or bank, or directly in their own name. If, on the enclosed formRecord Date, your shares were registered directly in your name with our transfer agent, you are considered the shareholder of proxy is properly executed and returned to the Company prior to orrecord of those shares. As a shareholder of record, you may vote directly at the Meeting in person, by proxy, by Internet at www.proxyvote.com, by telephone or by mail by following the instructions provided on the proxy card or on the Internet site. If, on the Record Date, your shares were held in an account at a bank, brokerage firm, dealer or similar organization, then you are the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by that organization. The organization holding your account is considered the stockholder of record for purposes of voting at the Meeting. As a beneficial owner, you have the right to direct your broker or other agent on how to vote the shares in your account. You are also invited to attend the Meeting. However, since you are not revoked priorthe stockholder of record, you may not vote your shares in person at the Meeting unless you request and obtain a valid proxy card from your broker or other agent.
Proxy Solicitation Costs
The expenses of soliciting proxies to its exercise, all shares of Common Stock represented thereby will be voted at the Meeting and, where instructions have been given by a stockholder, will be votedpaid by us. We or our directors, executive officers, employees, or agents may also solicit proxies in accordanceperson, by telephone, or by electronic communication, but we will not pay a fee to any of our directors, officers or employees as compensation for soliciting proxies.
Following the original mailing of the Notice, we will request that banks, brokers, custodians, nominees, and other record holders of our common stock forward copies of the soliciting materials to persons for whom they hold shares of common stock and request authority for the exercise of proxies. We will reimburse banks, brokers, custodians, nominees, and other record holders for reasonable charges and expenses incurred in forwarding soliciting materials to their clients. Shareholders voting via the telephone or internet should understand that there may be costs associated with telephonic or electronic access, such instructions.as usage charges from telephone companies and internet service providers, which must be borne by the shareholder.
If you are a shareholder of record, whether you give your proxy which is solicited hereby hasover the power toInternet, by telephone or by mail, you may revoke it at any time before it is exercised. You may enter a new vote by voting in person at the Meeting, electronically, by mail or by telephone so long as it is received prior to its exercise. Revocationthe Meeting. If you hold your shares beneficially, you must follow the instructions provided by your broker or nominee as to whether and how you may be made by attendingrevoke your proxy. Attending the Meeting alone will not revoke your proxy.
7
General Information About the Annual Meeting
Voting Results
We will announce preliminary voting results during the Meeting and report the final voting the shares of Common Stock in person or by delivering to the Secretaryresults within four business days of the Company at the principal executive offices of the Company located at 10603 W. Sam Houston Parkway N., Suite 300, Houston, Texas 77064, prior to exercise of the proxy,Meeting on a written notice of revocation or a later-dated, properly executed proxy.
| Name | Shares Owned (a) | Percent of Class (b) | |||
| Named Executive Officers and Directors | |||||
| John W. Chisholm | 1,048,346 | 1.83% | |||
Steven A. Reeves (c) (d) (e) | 295,095 | * | |||
Joshua A. Snively, Sr. (f) | 321,300 | * | |||
Robert M. Schmitz (g) | 52,617 | * | |||
Robert C. Bodnar (h) | 76,955 | * | |||
| H. Richard Walton | 201,234 | * | |||
| Kenneth T. Hern | 89,457 | * | |||
| John S. Reiland | 51,165 | * | |||
| L.V. “Bud” McGuire | 124,793 | * | |||
| L. Melvin Cooper | 104,445 | * | |||
Carla S. Hardy (i) | 349,959 | * | |||
| Ted D. Brown | 43,226 | * | |||
| Michelle M. Adams | 23,089 | * | |||
| All executive officers and directors as a group (13 persons) | 2,781,681 | 4.86% | |||
| 5% Beneficial Owners | |||||
Gates Capital Management, Inc. (j) | 5,696,416 | 9.95% | |||
BlackRock, Inc. (k) | 7,241,765 | 12.65% | |||
CORPORATE GOVERNANCE
We are committed to conducting our business in accordance with the highest level of ethical and corporate governance practices. We have adopted a number of corporate governance policies and practices designed to promote the long-term interests of our stockholders, maintain internal checks and balances, strengthen management accountability, engender public trust and foster responsible decision making and accountability. From time-to-time, we review our governance practices and take actions to address changes related to regulatory requirements and best practices. The following are certain of the important corporate governance policies and practices we have adopted.
Corporate Governance Guidelines
We have adopted Corporate Governance Guidelines (the “Corporate Governance Guidelines”) in fulfilling its responsibilities relating to the compensation of the Company’s named executive officers and outside directors. The primary responsibilities of the Compensation Committee include (i) annually reviewing the Company’s general compensation policiescompliance with respect to named executive officers, (ii) annually reviewing and approving the corporate goals and objectives relevant to the compensation of our executive officers, evaluating our officers’ performance in light of these goals, and approving or recommending to the Board compensation levels based on these evaluations, (iii) producing a committee report on executive compensation as required by the SEC to be included or incorporated by reference in our proxy statement or other applicable SEC filings, and (iv) recommending, on a biennial basis, the compensation program applicable to the Company’s outside directors. The Committee met 9 times during the year ended December 31, 2017.
Code of 1986, as amended (the “Code”) for 2017.Business Conduct and Ethics
Insider Trading Policy; Anti-Hedging and Pledging
We have adopted an Insider Trading Policy (the “Insider Trading Policy”) governing the purchase, sale, and/or other dispositions of our securities by directors, officers and employees that is intended to ensure compliance with insider trading laws, rules and regulations, and any listing standards applicable to us. Directors, officers and employees are required to complete annual anti-bribery training.
securities.
Stock Ownership Guidelines
Board Structure
Our business and affairs are managed under the direction of the Board. Our Board currently consists of seven directors with four standing committees to assist the Board in the discharge of its responsibilities: the Audit Committee, the Compensation Committee, the Governance Committee and the Risk Committee. The Board’s size and makeup is intended to facilitate meaningful discussion and allow for diverse perspectives. The balance of these perspectives on our Board is more important than any specific size target. Our Board is not classified, and all positions stand for election at each annual meeting of shareholders. The Board has determined, as of the Record Date, that five of our seven directors are independent, as defined by the NYSE and SEC, see “—Director Independence” below.
In January 2023, the Board unanimously approved the separation of the roles of Chairman of the Board and Chief Executive Officer. In connection with that separation of roles, the Board determined that the Chairman of the Board role will only be filled by an independent, non-management director.
The duties of the Non-Executive Chairman of the Board include serving as a liaison between the non-management directors and the Chief Executive Officer. On January 19, 2023, Mr. Nierenberg was appointed as the Non-Executive Chairman of the Board and Mr. Agadi was appointed Interim Chief Executive Officer of the Company. On June 6, 2023, Mr. Agadi ceased to serve as Interim Chief Executive Officer of the Company and Dr. Ezell, the Company's then existing President, was appointed Chief Executive Officer and to the Board. On June 8, 2023, Mr. Agadi assumed the role of Non-Executive Chairman. Because the Chairman of the Board is an independent, non-management director, the Board is not required to designate a Lead Director.
The following table identifies current members of the Board, the standing committees of the Board on which they serve and the chair of each committee as of the date of this Proxy Statement. The Board appoints members to its various committees on an annual basis at a regularly scheduled meeting, typically following the annual meeting of stockholders. Additional information about each committee is set forth below under the heading “—Board Committees.”
10
Corporate Governance
| Name | Independent | Committee Membership | |||||||||||||||
| Audit Committee | Compensation Committee | Governance Committee | Risk Committee | ||||||||||||||
| Harsha V. Agadi | ü | ||||||||||||||||
| Non-Executive Chairman of the Board | |||||||||||||||||
| Dr. Ryan G. Ezell | |||||||||||||||||
| Evan R. Farber | ü | l | « | l | |||||||||||||
| Michael Fucci | ü | « | « | ||||||||||||||
| Lisa Mayr | ü | « | l | l | |||||||||||||
| David Nierenberg | ü | l | l | l | l | ||||||||||||
| Matthew D. Wilks | |||||||||||||||||
«Chair of CommitteelMember of Committee
Director Nominations Process
The Board as a whole is responsible for selecting nominees for the Board. The Governance Committee is responsible for screening and recommending candidates. The Governance Committee identifies nominees by first evaluating the current members of the Board willing to continue in service. Current members with qualifications and skills that are consistent with the Governance Committee's criteria for Board service will be considered for re-nomination by the Board, but the Board is not obligated to do so. These criteria may include factors such as independence, age, integrity, skills, expertise, breadth of experience, knowledge about the Company's business or industry and willingness to devote adequate time and effort to Board responsibilities in the context of the existing composition and needs of the Board and its committees. Our Board seeks independent directors who represent a mix of backgrounds and experiences that will enhance the quality of our Board’s deliberations and decisions. In selecting potential Board candidates, our Board considers diversity in its broadest sense, including, among other things, diversity of background, perspective, personal and professional experiences, race, gender, age and nationality, as well as the existing skill set of our Board and the needs of our Company. As to new candidates, the Governance Committee generally polls the Board members and members of management for their recommendations and will review candidates properly proposed by stockholders in accordance with the guidelines described below. The Governance Committee may also review the composition and qualification of the boards of directors of the Company's competitors or other companies and may seek input from industry experts or analysts. The Governance Committee reviews the qualifications, experience and background of the candidates. Final candidates are interviewed by the independent directors and executive management. In making its determinations, the Governance Committee evaluates each individual in the context of the Board as whole, with the objective of assembling a group that can best perpetuate the success of the Company and represent stockholder interests through the exercise of sound judgment. After review and deliberation of all feedback and data, the Governance Committee makes its recommendation to the Board. Recommendations received by stockholders in accordance with the guidelines described below will be reviewed and are subject to the same criteria as are candidates selected by the Governance Committee.
The Governance Committee may engage a third-party search firm to identify candidates in those situations where particular qualifications are required or where existing contacts are not sufficient to identify appropriate candidates.
11
Corporate Governance
Sections 14 and 15 of Article II of the Bylaws of the Company, entitled "Notice of Nominations for Election to the Board of Directors" and “Additional Requirements for Valid Nomination of Candidates to Serve as Director, and If Elected, to Be Seated as Directors,” respectively, set out a detailed procedure for stockholder proposed candidates and this procedure will be followed by the Company. See also “Other Matters—Important Dates for 2025 Annual Meeting” below.
ProFrac Holdings Directors
Pursuant to that certain Master Transaction Agreement, dated February 2, 2022, between the Company and ProFrac Holdings, LLC (“ProFrac Holdings”), ProFrac Holdings was granted the right to designate two designees to serve on the Board. Pursuant to this right, Mr. Wilks was nominated and elected to serve on the Board at the Company’s 2022 Annual Meeting of shareholders. Pursuant to that certain Securities Purchase Agreement, dated February 16, 2022 (the “SPA”), between the Company and ProFrac Holdings, ProFrac Holdings was granted the right to designate two additional designees to serve on the Board. Pursuant to this right, Mr. Farber was appointed to the Board on October 11, 2022. The SPA provides that at least three of the four directors that may be appointed by ProFrac Holdings (the “ProFrac Holdings Directors”) are required to be independent (as defined under applicable NYSE listing standards) and eligible and qualified to serve on the Audit Committee and the Compensation Committee (such eligibility determined in accordance with the rules and regulations of the SEC and the applicable NYSE listing standards).
In addition, the SPA further provides that until such time as ProFrac Holdings and its affiliates hold less than 40% of the shares of common stock outstanding as of the closing date of the SPA, the Board will (i) replace any vacancy created by the departure of a ProFrac Holdings Director with a nominee of ProFrac Holdings and (ii) ensure that the chairperson of the Governance Committee is a ProFrac Holdings Director, subject to the rules and requirements of the NYSE. Any time that ProFrac Holdings and its affiliates hold (i) less than 40%, but at least 30%, of the shares of common stock outstanding, ProFrac Holdings will have the right to designate (and replace due to vacancy) three directors, (ii) less than 30%, but at least 20%, of the shares of common stock outstanding, ProFrac Holdings will have the right to designate (and replace due to vacancy) two directors, and (iii) less than 20%, but at least 10%, of the shares of common stock outstanding, ProFrac Holdings will have the right to designate (and replace due to vacancy) one director. In the event that ProFrac Holdings and its affiliates hold less than 10% of the shares of common stock outstanding, ProFrac Holdings will not have the right to designate or replace due to vacancy any directors; provided, however, that if ProFrac Holdings holds less than 10%, but greater than 5%, of the shares of common stock outstanding, ProFrac Holdings may designate one individual to be an observer of the Board on usual and customary terms.
See “— Certain Relationships and Related Party Transactions” and the table and related footnotes presented in “Security Ownership of Certain Beneficial Owners, Executive Officers and Directors” for additional information.
Risk Management
The Board has an active role in overseeing management of the Company’s risks. The Board regularly reviews information regarding the Company’s operations, liquidity and associated risks. The Risk Committee is tasked with oversight of the general risk and sustainability programs of the Company. In addition, the Compensation Committee is responsible for overseeing the management of risks related to the Company’s executive compensation programs, the Audit Committee oversees the management of financial risks and SEC reporting, and the Governance Committee manages risks associated with director independence and potential conflicts of interest. While each committee is responsible for evaluating certain risks and overseeing the management of those risks, the entire Board is regularly informed through committee reports.
12
Corporate Governance
Board Committees
Our Board currently has four standing committees, each of which has specific responsibilities as described below. As noted above under “— Committee Charters,” each committee has a charter, which is available on our website under the “Investor Relations” section of our website at https://www.flotekind.com/board-of-directors/.
| Audit Committee | Chair: Lisa Mayr | ||||
Members: Evan R. Farber, David Nierenberg | |||||
| Meetings in 2023: 5 | |||||
PRIMARY RESPONSIBILITIES •Overseeing the Company’s financial reporting process and financial risk •Discussing significant financial reporting issues and judgments with the Company’s management and independent auditors •Appointing, overseeing, and determining payment for the Company’s independent registered public accounting firm •Overseeing the Company’s internal audit function •Preapproving all audit services and all permissible non-audit services provided by the Company’s independent registered public accounting firm •Reviewing the Company’s financial statements included in its Form 10-K, Form 10-Q and other SEC filings •Discussing earnings releases and guidance with Company management •Overseeing the compliance program of the Company and the hotline for reporting concerns with the Company’s financial or other practices INDEPENDENCE •Board has determined that each member of the Audit Committee is an “independent director” as defined by the NYSE rules and Rule 10A-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) •Board has determined that each member of the Audit Committee is “financially literate” as required by the NYSE rules •Board has determined that Ms. Mayr and Mr. Nierenberg each qualify as an “audit committee financial expert” as defined under rules and regulations of the SEC | |||||
13
Corporate Governance
| Corporate Governance & Nominating Committee | Chair: Evan R. Farber | ||||
| Members: Lisa Mayr, David Nierenberg | |||||
| Meetings in 2023: 7 | |||||
PRIMARY RESPONSIBILITIES •Reviewing the structure, skills and experience of the Board •Recommending candidates to the Board to fill vacancies as they occur •Recommending a slate of nominees for election to the Board at the annual meeting •Identifying qualified individuals to serve as potential Board members, including candidates recommended by shareholders •Engaging and approving the fees for third-party director search firms •Reviewing the composition of committees and giving the Board recommendations on rotations of chairpersons •Overseeing, reviewing and recommending the Company’s Corporate Governance Guidelines and Code of Business Conduct and Ethics •Reviewing potential conflicts of interest and related party transactions •Reviewing executive succession plans INDEPENDENCE •Board has determined that each of the members of the Governance Committee is an “independent director” as defined by the NYSE rules | |||||
| Compensation Committee | Chair: Michael Fucci | ||||
Members: Lisa Mayr, David Nierenberg | |||||
| Meetings in 2023: 19 | |||||
PRIMARY RESPONSIBILITIES •Reviewing and approving goals of the Chief Executive Officer (the “CEO”) and other executive officers •Determining, in conjunction with senior management, a compensation strategy for the CEO and other executive officers, including base salary •Awarding equity-based awards to the CEO, other executive officers and other employees of the Company •Making recommendations to the Board on Board compensation •Overseeing benefit programs applicable to all employees of the Company INDEPENDENCE •Board has determined that each of the members of the Compensation Committee is an “independent director” for purposes of serving on the Compensation Committee under applicable NYSE rules | |||||
14
Corporate Governance
| Risk & Sustainability Committee | Chair: Michael Fucci | ||||
Members: Evan R. Farber, David Nierenberg | |||||
| Meetings in 2023: 2 | |||||
PRIMARY RESPONSIBILITIES •Identification and assessment of risk in the organization by the executive management team •Oversight of strategic, financial, credit, market, liquidity, cyber security, property, IT, legal, regulatory, and other risks of the Company, in conjunction with other committees of the Board where applicable •Oversight of the division of risk-related responsibilities between the Board, the standing committees of the Board, and management •Approval of the Company’s risk management framework and reporting •Approval of the Company’s sustainability plans INDEPENDENCE •Board has determined that each of the members of the Risk Committee is an “independent director” as defined by the NYSE rules | |||||
The charters adopted for the Audit Committee, Compensation Committee, Governance Committee and Risk Committee are available on our website under the “Investor Relations” section of our website at https://www.flotekind.com/board-of-directors/. These charters describe each committee’s resources, responsibilities and authority in greater detail.
Director Independence
The NYSE, SEC and our Corporate Governance Guidelines require that a majority of our directors, and that all of the members of our Audit Committee, Compensation Committee and Governance Committee, are independent, using the criteria established by the NYSE and the SEC. The Board makes a determination annually about the independence of each director. The Board has determined that all nominees other than Mr. Wilks and Dr. Ezell are independent using the criteria established by the NYSE and the SEC.
Executive Sessions
To facilitate candid discussion among the directors, our independent directors typically meet in executive session in conjunction with regular Board meetings or as otherwise determined to be necessary. Mr. Agadi, our non-executive Chairman of the Board, presides over these meetings.
Meetings and Director Attendance
During 2023, the Board met 17 times, the Audit Committee met 5 times, the Compensation Committee met 19 times, the Governance Committee met 7 times and the Risk Committee met 2 times. All directors attended at least 75% of the Board meetings and the meetings of committees of which they were a member. The Company does not have a formal policy requiring members of the Board to attend the annual meeting of shareholders. All of the members of the Board attended last year’s annual meeting.
Certain Relationships and Related Party Transactions
Flotek generally does not engage in transactions or relationships involving a related person which would require disclosure under Item 404(a) of Regulation S-K of the rules and regulations of the SEC unless approved through the proper procedures. Any such transaction requires the approval of the Governance Committee or a special committee composed of independent directors of the Board delegated with the
15
Corporate Governance
responsibility to assess such transaction. No director may participate in the review or voting of any transaction in which he or she is a related party.
On September 25, 2023, the Company completed a reverse stock split of its common stock at a ratio of 1-to-6 (the “Reverse Stock Split”) resulting in 184,438,695 issued and outstanding shares of common stock being converted into 30,739,820 shares of common stock. The Company issued one whole share of common stock to any shareholder that would have received a fractional share as a result of the Reverse Stock Split. Therefore, no fractional shares were issued in connection with the Reverse Stock Split and no cash or other consideration was paid in connection with any fractional shares that resulted from the Reverse Stock Split. All references to shares of common stock in this Proxy Statement are presented on a post-Reverse Stock Split basis.
On February 2, 2022, Flotek entered into a Private Investment in Public Equity transaction (the “PIPE Transaction”) with a consortium of investors to secure growth capital for the Company. Pursuant to the PIPE Transaction, Flotek issued $21.2 million in aggregate initial principal amount of 10% convertible PIK notes (the “Convertible Notes”) for net cash proceeds of approximately $20.1 million. The Convertible Notes accrued paid-in-kind interest at a rate of 10% per annum, had a maturity of one year, and were convertible into common stock or pre-funded warrants to purchase common stock, subject to certain conditions. ProFrac Holdings and certain funds associated with David Nierenberg, a member of the Board, participated in the PIPE transaction and were issued $10.0 million and $3.0 million, respectively, in aggregate initial principal amount of Convertible Notes in exchange for cash. The PIPE transaction and the participation by the funds related to Mr. Nierenberg were reviewed and approved in advance by disinterested directors on the Board during deliberations at which Mr. Nierenberg was not present and did not take part. Mr. Wilks was not on our Board and ProFrac Holdings and its affiliates were not the beneficial owner of more than 5% of our common stock at the time of this transaction.
On March 21, 2022, $3.0 million of the Convertible Notes held by funds related to Mr. Nierenberg were converted into 465,505 shares acquiredof common stock at a price of $6.5286 per share. Upon maturity on February 2, 2023, the Convertible Notes held by funds not related to Mr. Nierenberg were converted into 1,722,640 shares of common stock at a price of $5.223 per share.
Upon maturity on February 2, 2023, the Convertible Notes held by ProFrac Holdings were converted into 2,113,880 warrants with an exercise price of $0.0006 per share (“February 2023 Warrants”). On September 6, 2023, the February 2023 Warrants were exercised and the Company issued 2,113,880 shares of common stock.
On February 2, 2022, the Company entered into a long-term supply agreement (the “Initial ProFrac Agreement”) with ProFrac Services, LLC (“ProFrac Services”), an affiliate of ProFrac Holdings, in exchange for $10.0 million in aggregate principal amount of Contract Consideration Convertible Notes Payable, under the same terms as the Convertible Notes issued in the PIPE Transaction described above, including the paid-in-kind interest at a rate of 10% per annum and conversion features. Upon maturity on February 2, 2023, the Contract Consideration Convertible Notes Payable were converted into 2,113,881 warrants with an exercise price of $0.0006 per share. On September 6, 2023, the warrants were exercised and the Company issued 2,113,881 shares of common stock.
Under the Initial ProFrac Agreement, ProFrac Services is obligated to order chemicals from exercisingthe Company at least equal to the greater of (a) the chemicals required for 33% of ProFrac Services’ hydraulic fracturing fleets and (b) a baseline measured by the first ten hydraulic fracturing fleets deployed by ProFrac Services during the term of the Initial ProFrac Agreement. If the minimum volumes are not achieved in any given year, ProFrac Services shall pay to the Company, as liquidated damages an amount equal to twenty-five percent (25%) of the difference between (i) the aggregate purchase price of the quantity of products comprising the minimum purchase obligation and (ii) the actual purchased volume during such calendar year (the “Contract Shortfall Fee”).
16
Corporate Governance
On May 17, 2022, the Company entered into an amendment to the Initial ProFrac Agreement (the “Amended ProFrac Agreement” and collectively the “ProFrac Agreement”) upon issuance of $50.0 million in aggregate principal amount of Convertible Notes to ProFrac Holdings. The Convertible Notes have the same terms as the Convertible Notes issued in the PIPE Transaction described above, including the paid-in-kind interest at a rate of 10% per annum and conversion features. Upon maturity in May 2023, the Convertible Notes Payable under the Amended ProFrac Agreement were converted into 10,582,821 shares of common stock options or vestingat price of shares, or$5.223 per share.
The Amended ProFrac Agreement amended the Initial ProFrac Agreement to (a) increase ProFrac Services’ minimum purchase obligation for each year to the greater of 70% of ProFrac Services, LLC’s requirements and a baseline measured by ProFrac Services’ first 30 hydraulic fracturing fleets, and (b) increase the term to 10 years.
On February 2, 2023, the Company entered into a second amendment to the ProFrac Agreement (the “Amended ProFrac Agreement No. 2”) effective as of January 1, 2023. The ProFrac Agreement was amended to (1) provide a ramp-up period from January 1, 2023 to May 31, 2023 for ProFrac Services to increase the number of shares necessaryactive hydraulic fracturing fleets to reach30 fleets, (2) waive any Contract Shortfall Fee payment relating to any potential order shortfall prior to January 1, 2023, (3) add additional fees to certain products, and (4) provide margin increases based on margins with non-ProFrac Services customers. Entry into the applicable stock ownership guidelines.Amended ProFrac Agreement No. 2 was reviewed and approved in advance by disinterested directors on the Board during deliberations at which Mr. Wilks was not present and did not take part.
On June 21, 2022, ProFrac Holdings II, LLC (“ProFrac Holdings II”), an affiliate of ProFrac Holdings, paid $19.5 million for prefunded warrants of the Company (the “PreFunded Warrants”). The PreFunded Warrants permit ProFrac Holdings II to purchase 2,184,140 shares of common stock at an exercise price equal to $0.0006 per share. The issuance of the PreFunded Warrants to ProFrac Holdings II was reviewed and approved in advance by disinterested directors on the Board during deliberations at which Mr. Wilks was not present and did not take part.
ProFrac Holdings II and its affiliates may not receive any voting or consent rights in respect of the PreFunded Warrants or the underlying shares unless and until (i) the Company has obtained approval from a majority of its shareholders excluding ProFrac Holdings II and its affiliates and (ii) ProFrac Holdings II has paid an additional $4.5 million to the Company; provided, however, that ProFrac Holdings II may exercise the PreFunded Warrants immediately prior to the sale of the shares of common stock subject to such exercise to a non-affiliate of ProFrac Holdings II. The Company obtained approval from a majority of its shareholders excluding ProFrac Holdings II and its affiliates, with respect to the exercise of the PreFunded Warrants in connection with a special meeting of shareholders held on September 5, 2023. As of April 18, 2024, the PreFunded Warrants had not been exercised.
During the years ended December 31, 2023 and 2022, the Company’s revenues from ProFrac Services were $121.5 million and $80.4 million, respectively. For the years ended December 31, 2023 and 2022, these revenues were net of amortization of contract assets of $5.0 million and $3.4 million, respectively. Cost of sales attributable to these revenues were $99.3 million and $84.5 million, respectively, for the years ended December 31, 2023 and 2022. As of December 31, 2023 and 2022 our accounts receivable from ProFrac Services was $34.6 million and $22.7 million, respectively.
See “Corporate Governance — ProFrac Holdings Directors” and the table and related footnotes presented in ““Item 1: Election of Directors – Security Ownership of Certain Beneficial Owners, Executive
17
Corporate Governance
Officers and Directors” for additional information, including information on ProFrac Holdings or its affiliates ownership interest in our Company’s common stock.
Ted D. Brown was a director of the Company from November 2013 through April 2022 and is the President and CEO of Confluence Resources LP (“Confluence”), a private oil and gas exploration and production company. Confluence ceased being considered a related party on April 15, 2022 when Mr. Brown stepped down from our Board. The Company’s revenues and related cost of sales for product sales to Confluence were $1.4 million and $1.4 million, respectively, through April 15, 2022.
18
Item 1: Election of Directors
ITEM 1: ELECTION OF DIRECTORS
Our Board is not divided into classes, so all current executivesdirector positions are up for election every year. The Board has nominated the following candidates for director:
| Name | Board Member Since | Primary Occupation | Age | ||||||||
| Harsha V. Agadi | 2020 | Chief Executive Officer, GHS Holdings, LLC | 61 | ||||||||
| Dr. Ryan Ezell | 2023 | Chief Executive Officer, Flotek Industries, Inc. | 45 | ||||||||
| Evan R. Farber | 2022 | General Counsel, The Cranemere Group | 51 | ||||||||
| Michael Fucci | 2020 | Director, Acadia Healthcare Company, Inc. | 65 | ||||||||
| Lisa Mayr | 2021 | Chief Financial Officer, Marigold Inc. | 56 | ||||||||
| David Nierenberg | 2018 | President, Nierenberg Investment Management Company, Inc. | 70 | ||||||||
| Matthew D. Wilks | 2022 | Executive Chairman and President, ProFrac Holding Corp. | 41 | ||||||||
In recommending this slate of candidates, the Board and the Governance Committee have taken into account the nominees’ experience, their expertise, their ethics and standards, and the diversity of views that this slate of candidates represents. A description of the candidates’ individual qualifications is below.
Each nominee has indicated approval of his or her nomination, and his or her willingness to serve if elected. If any nominee for election becomes unable to serve before the Meeting (which we do not expect), the persons named as proxies may vote for a substitute nominee or nominees, as may be designated by the Board prior to the Meeting.
Vote Required
Each of the seven director nominees in this Item 1 will be elected by a majority of the votes cast with respect to the nominee so long as the number of nominees for election equals the number of directors have metto be elected. A majority of votes cast means that the number of votes “for” a nominee’s election must exceed 50% of the votes cast “for” or substantially exceed“against” with respect to that nominee’s election, excluding abstentions. Broker non-votes will not count as votes cast with respect to that nominee’s election.
Recommendation
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE NOMINEES LISTED IN ITEM 1.
19
Item 1: Election of Directors
DIRECTOR NOMINEES
Each of the guidelines.seven nominees for director is an incumbent that is up for reelection. Highlights of their respective backgrounds and service on the Board to date are described below:
| Harsha V. Agadi | Age: 61 | |||||||
| Director Since: July 2020 | ||||||||
 | EXPERIENCE •Chairman and CEO of GHS Holdings, L.L.C. (2000 to present)* •Interim CEO of Flotek Industries, Inc. (January 2023 to June 2023) •Board member (August 2010 to May 2021) and former President and CEO (August 2015 to May 2020) of Crawford & Company (NYSE: CRD-A) •Board member (March 2022 to present) of myKaarma* •Board member (May 2022 to present) of GLD Shop* •Former Board member of Diversified Foodservice Supply, Inc. (2016 to December 2022) •Former Chairman of Quiznos, LLC •Former Chairman, The Krystal Company •Former Chairman and CEO of Friendly’s Ice Cream, LLC •Former President and CEO of Church’s Chicken PHILANTHROPY & PUBLIC SERVICE •Chairman and Managing Trustee, GHS Charitable Foundation, Inc.* •Chairman and Managing Trustee SKSVMA Charitable Trust* •Board Member Emeritus of Fuqua School of Business, Duke University* •Member of the Board of Trustees of Babson College* •Member of the Board of Governors at the International Tennis Hall of Fame (ITHF)* | EDUCATION •Master of Business Administration, Fuqua School of Business at Duke University •Bachelor of Commerce, University of Mumbai BOARD ROLES •Non-Executive Chairman of the Board (June 2023 to present)* •Member and Chairman of the Compensation Committee (July 2020 to January 2023) •Member of the Audit Committee and Audit Committee Financial Expert (June 2021 to January 2023) •Member of the Risk and Sustainability Committee (June 2021 to June 2023) •Independent Director (July 2020 to January 2023) | ||||||
*Current Role
Mr. Agadi’s extensive experience serving on company boards, having served as a director of two public companies in addition to Flotek as well as several private companies, demonstrate his expertise in corporate governance. Furthermore, Mr. Agadi’s distinguished career as a five-time chief executive officer underscores his strong leadership capabilities. Mr. Agadi also possesses valuable international experience, having built several successful global brands throughout his highly accomplished career. We believe Mr. Agadi’s combination of expertise in corporate governance, executive leadership and international business make him a valuable member of our Board.
20
Item 1: Election of Directors
| Dr. Ryan G. Ezell | Age: 45 | |||||||
| Director Since: June 2023 | ||||||||
| EXPERIENCE •Chief Executive Officer of Flotek Industries, Inc. (June 2023 to present)* •Chief Operating Officer of Flotek Industries, Inc. (March 2022 to June 2023) •Various increasing roles of responsibility at Flotek industries including, President of Chemistry Technologies, SVP, Operations, VP, Operations (August 2019 to March 2022) •Various global leadership roles at Halliburton, most recently serving as Vice President of Baroid Drilling Fluids (May 2006 to July 2019) •Published scientist •Author on more than 26 patents •Member of the American Association of Drilling Engineers, American Chemical Society, Society of Petroleum Engineers, National Association of Corporate Directors, Sustainability Accounting Standards Board, Vistage Advisory Board PHILANTHROPY & PUBLIC SERVICE •Neuhaus Education Center Advisory Board* •Volunteer at Houston Food Bank, Habitat for Humanity, Star of Hope Mission, Fellowship of Montgomery •Volunteer Coach i9 Sports, Montgomery Little League | EDUCATION •Ph.D. in Polymer Science, the University of Southern Mississippi •Bachelor of Science in Chemistry, Millsaps College BOARD ROLES •Member of the Board (June 2023 to present)* | ||||||
*Current Role
With his background as a published scientist, extensive patent portfolio and over two decades of energy industry experience, Dr. Ezell brings a wealth of expertise and knowledge to the Board. His international experience further broadens his perspective and provides valuable insight for the Company’s international operations. Dr. Ezell’s strategic and operational understanding of the chemistry and data analytics fields provides our Board with a unique perspective on the opportunities and challenges we face. Dr. Ezell has also demonstrated exceptional leadership skills over the last year in helping return the Company to profitability. We believe Dr. Ezell’s unique knowledge of our Company, industry expertise and exceptional leadership skills make him a valuable asset to our Board.
21
Item 1: Election of Directors
| Evan R. Farber | Age: 51 | |||||||
| Director Since: October 2022 | ||||||||
 | EXPERIENCE •General Counsel of The Cranemere Group, an industrial holding company (March 2019 to present)* •Acting General Counsel of NorthStar Anesthesia, an operating company of The Cranemere Group (July 2018 to March 2019) •Chief Legal Officer (September 2015 to April 2018), General Counsel (October 2007 to September 2015) of The Advisory Board Company (NASDAQ: ABCO) •Partner at Hogan & Hartson LLP (now Hogan Lovells US LLP) PHILANTHROPY & PUBLIC SERVICE •Emeritus Board of the Children’s Law Center* •Board of Trustees of Concord Hill School | EDUCATION •Juris Doctorate, The George Washington University Law School •Bachelor of Arts from State University of New York at Binghamton BOARD ROLES •Independent Director (October 2022 to present)* •Member and Chair of the Corporate Governance and Nominating Committee (October 2022 to present)* •Member of the Audit Committee (June 2023 to present)* •Member of the Risk and Sustainability Committee (June 2023 to present)* •Member of the Compensation Committee (October 2022 to June 2023) | ||||||
*Current Role
Mr. Farber has extensive senior executive experience, including at a public company. Mr. Farber brings valuable expertise to our Board relating to transformational change, corporate governance and risk management. We believe the combination of executive leadership and legal expertise makes Mr. Farber a valuable asset to our Board. Mr. Farber was appointed to our Board pursuant to certain contractual rights discussed more fully under “Corporate Governance — ProFrac Holdings Directors.”
| Michael Fucci | Age: 65 | |||||||
| Director Since: November 2020 | ||||||||
 | EXPERIENCE •Executive Chairman (March 2015 to June 2019), Chairman Emeritus (June 2019 to October 2020) of Deloitte U.S. LLP •Director, Acadia Healthcare Company, Inc. (October 2020 to present)(NASDAQ: ACHC)* •Member of the Global Board of Deloitte •Chief Operating Officer of Deloitte Consulting (2009 to 2015) PHILANTHROPY & PUBLIC SERVICE •Supporter of Montclair State University Business School* •Involved in various community educational initiatives* | EDUCATION •Bachelor of Science in Mathematics, Montclair State University BOARD ROLES •Member and Chairman of the Risk and Sustainability Committee (June 2021 to present)* •Member of the Compensation Committee (June 2021-present); Chairman (June 2023 to present)* •Independent Director (November 2020 to present)* | ||||||
*Current Role
22
Item 1: Election of Directors
Mr. Fucci's extensive experience spanning over four decades as a senior leader and practitioner at Deloitte U.S. LLP underscore his remarkable multinational leadership capabilities. Mr. Fucci’s unique perspective on human resource transformation, corporate talent strategies and risk mitigation adds a valuable dimension to our Board’s expertise. We believe that Mr. Fucci’s extensive operational and corporate governance experience both in the United States and globally provide a unique perspective to our Board.
| Lisa Mayr | Age: 56 | |||||||
| Director Since: June 2021 | ||||||||
 | EXPERIENCE •Chief Financial Officer, Marigold (September 2023 to present)* •Chief Financial Officer, Internap Holding LLC (July 2020-August 2023) •Chief Financial Officer, MicroStrategy Incorporated (November 2019 to April 2020)(NASDAQ: MSTR) •Chief Financial Officer, EverFi (February 2018 to October 2019) •Chief Financial Officer, Blackboard •Board Observer and Member of the Audit Committee, WorldStrides •Certified Public Accountant* PHILANTHROPY & PUBLIC SERVICE •Advisory Council Member, STEM for Her* •Georgetown University MBA Advisory Counsel | EDUCATION •MBA, Georgetown University •Bachelor of Arts in International Studies and Economics, American University BOARD ROLES •Member of the Audit Committee (June 2021 to present); Chairman (June 2023 to present)* •Member of the Corporate Governance and Nominating Committee (June 2021 to present)* •Member of the Compensation Committee (June 2023 to present)* •Independent Director (June 2021 to present)* •Audit Committee Financial Expert (June 2021 to present)* | ||||||
*Current Role
Ms. Mayr brings valuable technological expertise to our Board with over two decades of experience in global technologies and software companies. Ms. Mayr, a certified public accountant, also has over 25 years of financial and accounting experience, having served in financial leadership roles at both public and private companies. We believe Ms. Mayr’s combined technological and financial knowledge enhance our Board’s ability to drive innovation and operational excellence in a financially prudent manner.
23
Item 1: Election of Directors
| David Nierenberg | Age: 70 | |||||||
| Director Since: June 2018 | ||||||||
 | EXPERIENCE •Founder and President, Nierenberg Investment Management Company (1996 to present)* •Director of Riverview Bancorp (May 2016 to February 2021)(NASDAQ: RVSB) •Director of Houston Wire and Cable Company (March 2020 to June 2021)(NASDAQ: HWCC) •Director of Rosetta Stone (April 2015 to October 2020)(NYSE: RST) •Partner, Bain & Company Inc. •Chair Emeritus for the Advisory Board of the Ira M. Millstein Center for Global Markets and Corporate Ownership at Columbia Law School* •Chair of the Research Advisory Council of Glass, Lewis & Co. •Member of the Washington State Investment Board* •Retired member of the Massachusetts state bar PHILANTHROPY & PUBLIC SERVICE •Member of the board of The National WWII Museum* •Member of the board of Peace Health Southwest Washington Medical Center Foundation* | EDUCATION •Juris Doctorate, Yale Law School •Bachelor of Arts in History, summa cum laude, Yale University BOARD ROLES •Chairman of the Board (May 2019 to December 2019 and January 2023 to June 2023) •Member of the Audit Committee (May 2020 to present); Chairman (May 2020 to June 2023)* •Member of the Corporate Governance and Nominating Committee (June 2018 to present)* •Member of the Risk and Sustainability Committee (June 2021 to present)* •Member of the Compensation Committee (June 2023 to present)* •Independent Director (June 2018 to present)* •Audit Committee Financial Expert (May 2020 to present)* •Board Chairperson, twice •Lead Independent Director (2020 to 2023) | ||||||
*Current Role
Mr. Nierenberg brings a deep understanding of governance and best practices from his extensive public and private board service coupled with his leadership role at The Ira Millstein Center for Global Markets and Corporate Ownership at Columbia Law School, a world leader in corporate governance. Moreover, as the founder and president of Nierenberg Investment Management Company, a member of the Washington State Investment Board, which invests almost $200 billion of public employee retirement funds, and a former partner in consulting firm Bain & Company, Mr. Nierenberg has a wealth of investment knowledge. Mr. Nierenberg has also gained valuable energy industry experience through investments in the industry over the last two decades. We believe Mr. Nierenberg’s depth of corporate governance knowledge combined with his investment expertise enhance our Board’s ability to make sound decisions crucial to sustainable value creation.
24
Item 1: Election of Directors
| Matthew D. Wilks | Age: 41 | |||||||
| Director Since: June 2022 | ||||||||
| Matt D. Wilks has served as the Executive Chairman of the Board of Directors for ProFrac Holding Corp. since August 2021. Mr. Wilks has been the President of ProFrac since October 2018 and previously served as the Chief Financial Officer from May 2017 to August 2021. Mr. Wilks also serves as Vice President of Investments for Wilks Brothers since January 2012. From 2010 to 2012, Mr. Wilks served as Vice President of Logistics for FTSI. Additionally, Mr. Wilks served as a member of the Board of Directors of Approach Resources, Inc. (NASDAQ: “AREX"), an upstream oil and gas company focused on the exploration, development and production of unconventional oil and gas resources in the United States, from January 2017 to November 2019. | |||||||
As the Executive Chairman of ProFrac Holdings Corp., a technology-focused, vertically integrated energy services company, Mr. Wilks has developed extensive industry knowledge and valuable executive experience. We believe Mr. Wilks energy industry background and executive leadership skills allow our Board to better navigate the complexities of the energy industry and enhance our strategic decision-making. Mr. Wilks was appointed to our Board pursuant to certain contractual rights discussed more fully under “Corporate Governance — ProFrac Holdings Directors.”
The Company has implemented a minimum vesting requirementabove biographical and other information for equity awards. Upon stockholder approvalthe seven director nominees is current as of April 18, 2024.
The Board is committed to ensuring that the composition of the Board reflects the appropriate level of diverse viewpoints, taking into account gender, race, ethnicity, experience and background.
25
Item 1: Election of Directors
DIRECTOR COMPENSATION
Board members receive an annual retainer of $52,000 and additional retainers for serving as a chair or member of a Board committee. Directors may elect to receive their annual retainer in stock of the Company in lieu of cash. The Audit Committee chair receives an annual retainer of $32,000 and Audit Committee members receive an annual retainer of $8,000. The Compensation Committee chair receives an annual retainer of $20,000 and Compensation Committee members receive an annual retainer of $8,000. The Governance Committee chair receives an annual retainer of $16,000 and Governance Committee members receive an annual retainer of $4,000. The Risk Committee chair receives an annual retainer of $16,000 and Risk Committee members receive an annual retainer of $4,000. The Non-Executive Chairman receives an annual retainer of $60,000. Directors do not receive fees for attending Board or committee meetings.
The members of the Board also receive an annual grant of restricted stock equal to a market value of $100,000. The restricted stock vests on the one-year anniversary of the grant date or on the date of the annual meeting of shareholders following the grant, whichever is earlier.
We do not expect to pay our directors who are also our officers, such as Dr. Ezell, any additional amounts for their service to us in their capacities as directors. Accordingly, Dr. Ezell did not receive any additional compensation for his service as a member of the Board. Dr. Ezell’s compensation is reported below in “Item II. Advisory Vote on Executive Compensation – Summary Compensation Table.”
Mr. Wilks did not receive any compensation for his service as a member of the Board in 2023.
Beginning in 2021, directors were permitted to receive the cash portion of their compensation in common stock of the Company. For 2023, Mr. Nierenberg elected to receive the cash portion of his compensation in common stock of the Company.
The following table presents the total compensation for each person who served as a non-employee member of the Board during 2023 (other than Mr. Agadi who served as our Interim Chief Executive Officer from January 2023 through June 2023). Beginning in June 2023, in connection with his transition once more to a non-employee director role, Mr. Agadi received compensation for his service on our Board. Total compensation for Mr. Agadi for his service during 2023 (including Mr. Agadi’s compensation as a non-employee director beginning in June 2023) is presented in “Item II. Advisory Vote on Executive Compensation – Summary Compensation Table.”
| Name | Fees earned or paid in cash(1) | Stock awards(2)(3) | Non-equity incentive plan compensation | All other compensation | Total | ||||||||||||
| Evan R. Farber | $ | 79,000 | $ | 100,000 | $ | — | $ | — | $ | 179,000 | |||||||
| Michael Fucci | $ | 83,000 | $ | 100,000 | $ | — | $ | — | $ | 183,000 | |||||||
| Lisa Mayr | $ | 99,000 | $ | 100,000 | $ | — | $ | — | $ | 199,000 | |||||||
| David Nierenberg | $ | 3,000 | $ | 176,000 | $ | — | $ | — | $ | 179,000 | |||||||
| Matthew D. Wilks | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||
(1)Includes annual cash retainer fee, committee chair and committee membership fees, as applicable.
(2)These amounts reflect the aggregate grant date fair value, calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation-Stock Compensation (ASC 718), of awards pursuant to the Flotek Industries, Inc. 2018 Long-Term Incentive Plan, all awardsPlan. Assumptions used in the calculation of these amounts are included in “Note 14 — Stock-Based Compensation and Other Benefit Plans” to the Consolidated Financial Statements included under “Item 8. Financial Statements and Supplementary Data” in the 2018 Plan will be subject to a minimum vesting requirementCompany’s 2023 Form 10-K. Awards were not vested as of at least one year fromDecember 31, 2023, and vest on the date the award was granted. Therefore, no portion of any award may vest or become exercisable earlier than the firstone-year anniversary of the grant, or on the date such award was granted. This minimum vesting requirementof the annual meeting of shareholders following the grant, whichever is subjectearlier. For 2023, Mr. Nierenberg elected to receive his cash compensation in common stock of the Company, which resulted in him receiving only one payment in cash and the reminder of his fees in common stock.
(3)As of December 31, 2023, Mr. Farber had 22,831 stock awards outstanding, Mr. Fucci had 22,831 stock awards outstanding, Mr. Wilks had no stock awards outstanding, Ms. Mayr had 22,831 stock awards outstanding, and Mr. Nierenberg had 42,380 stock awards outstanding.
26
Item 1: Election of Directors
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS, EXECUTIVE OFFICERS AND DIRECTORS
The following table provides the beneficial ownership of common stock as of April 18, 2024 for (i) each named executive officer set forth in the Summary Compensation Table below, (ii) each of the Company’s directors (including each nominee), (iii) all of the Company’s current executive officers and directors as a “carve-out exception”group, and will not apply(iv) each person known by the Company to be a beneficial owner of more than 5% of our outstanding common stock based solely on our review of the share reservestatement of 3,000,000 sharesbeneficial ownership filed by these persons or entities with the SEC as of the date of such filing. “Beneficial Ownership” is a term broadly defined by the SEC in Rule 13d-3 under the 2018 Plan.Exchange Act. Beneficial ownership includes those shares of common stock held by someone who has investment and/or voting authority over such shares or has the right to acquire such shares within 60 days.
| Name | Shares Beneficially Owned(1) | Percent of Class(2) | ||||||
| Executive Officers and Directors | ||||||||
| Harsha V. Agadi (3) | 236,070 | * | ||||||
| Dr. Ryan G. Ezell (4) | 114,776 | * | ||||||
| John W. Gibson, Jr. (5) | 145,171 | * | ||||||
| J. Bond Clement | 58,560 | * | ||||||
| Nathan Snoke (6) | 11,721 | * | ||||||
| Michael Fucci | 54,576 | * | ||||||
| Lisa Mayr | 44,467 | * | ||||||
| David Nierenberg (7) | 1,317,566 | 4.44% | ||||||
| Evan R. Farber | 32,328 | * | ||||||
| Matthew D. Wilks (8) | — | * | ||||||
| All executive officers and directors as a group (9 persons) | 1,866,408 | 6.29% | ||||||
| 5% Beneficial Owners | ||||||||
| ProFrac Holdings, LLC (8) | 17,244,721 | 54.15% | ||||||
* Less than 1%.
(1)Except as otherwise disclosed, the persons named in the table have sole voting and Pledginginvestment power of Company Stock
all shares of common stock which are beneficially owned by them. None of the Company’scurrent executive officers or directors have pledged any Flotek Common Stock. In addition, allshares.
(2)Based on 29,661,130 shares of common stock outstanding as of April 18, 2024. Total shares outstanding includes shares of restricted stock subject to forfeiture conditions.
(3)Mr. Agadi served as our Interim Chief Executive Officer from January 2023 through June 2023 and then transitioned back to his non-employee director role on our Board.
(4)Dr. Ezell was promoted to our Chief Executive Officer in June 2023, having previously served as our President and Chief Operating Officer. Shares beneficially owned include 24,306 vested options with an exercise price of $8.64/share.
(5)Mr. Gibson’s employment with the Company ended on January 19, 2023. Information presented is based upon Form 4 filed with the SEC on January 3, 2023 by Mr. Gibson, which disclosed direct ownership of 871,021 shares of common stock before adjustment for the Reverse Stock Split. The share amount presented in the table above has been adjusted for the Reverse Stock Split by dividing the total by six, however, this may understate holdings by a few shares given the fact that fractional shares were rounded up by account, rather than by holder.
(6)Mr. Snoke’s employment with the Company ended on March 29, 2024. Information presented is based upon information provided to the Company by Mr. Snoke prior to his departure.
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Item 1: Election of Directors
(7)Information based upon the Schedule 13D/A filed with the SEC on December 19, 2023 by The D3 Family Fund, L.P. (the “Family Fund”), The D3 Family Bulldog Fund, L.P. (the “Bulldog Fund”), Haredale Ltd., Nierenberg Investment Management Company, Inc. and David Nierenberg. As of the close of business on December 18, 2023, the Family Fund individually beneficially owned 434,580 shares of common stock, the Bulldog Fund individually beneficially owned 765,150 shares of common stock, and Haredale Ltd. individually beneficially owned 47,907 shares of common stock. By virtue of its relationships with each of the Family Fund, the Bulldog Fund and Haredale Ltd., Nierenberg Investment Management Company, Inc. may be deemed to be the beneficial owner of the 1,247,637 shares of common stock, beneficially owned in the aggregate by the Family Fund, the Bulldog Fund and Haredale Ltd. By virtue of his relationship with Nierenberg Investment Management Company, Inc., Mr. Nierenberg may be deemed to be the beneficial owner of 1,317,566 shares of common stock, consisting of (i) 69,929 shares of common stock held directly and (ii) 1,247,637 shares of common stock beneficially owned by Nierenberg Investment Management Company, Inc. The Family Fund, Nierenberg Investment Management Company, Inc. and Mr. Nierenberg have shared power (i) to vote or direct the vote of, and (ii) to dispose or direct the disposition of, the shares held by the Family Fund. The Bulldog Fund, Nierenberg Investment Management Company, Inc. and Mr. Nierenberg have shared power (i) to vote or direct the vote of, and (ii) to dispose or direct the disposition of, the shares held by the Bulldog Fund. The Managed Account has sole power to vote or direct the vote of the shares held by the Managed Account, and the Managed Account, Nierenberg Investment Management Company, Inc.and Mr. Nierenberg have shared power to dispose or direct the disposition of, the shares held by the Managed Account. Mr. Nierenberg has sole power (i) to vote or direct the vote of, and (ii) to dispose or direct the disposition of, the shares held directly by him.Each of The Family Fund, The Bulldog Fund, Haredale Ltd., Nierenberg Investment Management Company, Inc. and Mr. Nierenberg has disclaimed ownership of these securities except to the extent of its pecuniary interest therein. The address of the foregoing is 19605 NE 8th St., Camas, Washington 98607.
(8)Information based upon the Schedule 13D/A filed with the SEC on July 14, 2023 by ProFrac Holding Corp., ProFrac Holdings and ProFrac Holdings II, which was prior to the Reverse Stock Split. The pre-Reverse Stock Split total of 103,468,322 shares of common stock consists of (i) 63,496,922 shares of common stock issued to ProFrac Holdings II on June 26, 2023, in payment of the Company’s officersobligations under the $50,000,000 original aggregate principal amount of 10% Convertible PIK Notes that matured on May 17, 2023, (ii) 13,104,839 shares of common stock issuable to ProFrac Holdings II upon exercise of the prefunded warrants issued to ProFrac Holdings II on June 21, 2022, (iii) 25,366,561 shares of common stock issued to ProFrac Holdings II on September 6, 2023 upon exercise of the prefunded warrants issued to ProFrac Holdings II on February 2, 2023 and (iv) 1,500,000 shares of common stock directly owned by ProFrac Holdings II. Each of ProFrac Holding Corp., ProFrac Holdings and ProFrac Holdings II may be deemed to beneficially own, and may be deemed to have shared power to direct the vote and shared power to dispose or to direct the disposition of, in the aggregate, the 103,468,322 shares of common stock. The address of the foregoing is 333 Shops Blvd., Suite 301, Willow Park, Texas 76087. The share amount presented in the table above has been adjusted for the Reverse Stock Split by dividing the total by six, however, this may understate holdings by a few shares given the fact that fractional shares were rounded up by account, rather than by holder. Percent of class is calculated based on 29,661,130 shares of common stock outstanding as of April 18, 2024 plus 2,184,140 shares (adjusted for the Reverse Stock Split) of common stock issuable upon the exercise of the prefunded warrants issued to ProFrac Holdings II on June 21, 2022.
Change of Control
As discussed under “Corporate Governance — ProFrac Holdings Directors,” “Corporate Governance – Certain Relationships and Related Party Transactions,” and footnote 8 to the table above, ProFrac Holdings and ProFrac Holdings II have the right to acquire additional shares of our common stock through the PreFunded Warrants. In addition, ProFrac Holdings has the right to designate up to four of the directors must pre-clear any transactions involving Flotek Common Stock withon the Company’s Compliance Officer.
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Item 2: Advisory Vote on Executive Compensation
ITEM 2: ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION
We are providing our shareholders with an opportunity to vote to approve, on an advisory, non-binding basis, the compensation of our named executive officers as disclosed in this Proxy Statement pursuant to Item 402 of Regulation S-K and in accordance with the SEC’s rules. This proposal, which may be referred to as a “say-on-pay” proposal, is required by Section 14A of the Exchange Act, which was put in place by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. We must provide this opportunity to our shareholders at least once every three years. The Board has determined to provide this opportunity on an annual basis.
Shareholders are urged to read “—Compensation Overview and Strategy” below, which discusses in detail how our compensation policies and procedures implement our compensation philosophy, and to refer to the related executive compensation tables. The compensation of our named executive officers is based on a philosophy that ties a substantial portion of an executive’s compensation to our attainment of financial and other performance measures that, our Board believes, promote the creation of long-term stockholder value and position our Company for long-term success. As described more fully in the “—Compensation Overview and Strategy,” the mix of fixed- and performance-based compensation, as well as the terms of cash bonuses and long-term equity incentive awards are designed to enable our Company to attract and maintain top talent while, at the same time, creating a close relationship between our Company’s performance and overall shareholder return and the named executive officers’ compensation. Our Compensation Committee and Board believe that the philosophy of the program, and hence the compensation awarded to named executive officers under the current program, fulfill these objectives.
The Board is very interested in the ideas and feedback ofasking our stockholders regarding executive compensation. At the 2017 Annual Meeting of Stockholders, 97.8% of voting stockholders approvedshareholders to approve the compensation of our named executive officers. The Company considers thisThis vote a positive endorsementis not intended to address any specific item of its executive compensation, practices and decisions.
