| | | | | | | | | | | | | | |
(1)Outstanding Equity Awards at Fiscal Year-End | Under the terms of their employment agreements, Messrs. Patterson, Krenek, Newman, Dame and Lannen are entitled to the compensation described under “Employment Agreements” below. |
| | |
(2) | This column represents the total grant date fair value of RSUs granted to each of the applicable named executive officers. The fair value of RSUs was calculated based upon the closing market price of the Company’s common stock on December 27, 2016, the first day the reorganized Company’s common shares began trading. The actual value that an executive officer will realize upon vesting RSUs will depend on the market price of the Company’s stock on the vesting date, so there is no assurance that the value realized by an executive officer will be at or near the value of the market price of the Company’s stock on the grant date. |
| |
(3) | The aggregate number of option awards held by each executive officers at December 31, 2016, is as follows: Mr. Patterson 100,368, Messrs. Krenek and Newman 35,614 each, Mr. Dame 19,426 and Mr. Lannen 9,713. The option awards will vest in three equal installments beginning on December 23, 2017. Each option has an exercise price of $36.55. |
| |
(4) | Reflects aggregate bonus payments made utilizing metrics under our annual cash bonus incentive compensation plan and division-level Quarterly Incentive Bonus Plan. None of the named executive officers received any annual cash bonus payments under our annual cash bonus incentive compensation plan for 2016. In 2014, Messrs. Patterson, Krenek and Newman did not participate in the Quarterly Incentive Bonus Plan and received only an annual cash bonus for 2014 performance that was paid in early 2015. Messrs. Dame participated in the Quarterly Incentive Bonus Plan in 2015 and 2014, and received an annual cash bonus for 2014 performance that was paid in early 2015. Mr. Lannen participated in the Quarterly Incentive Bonus Plan in 2015. |
| |
(5) | Includes employer contributions to Executive Deferred Compensation Plan as follows for 2016, 2015 and 2014, respectively: for Mr. Patterson, $0, $10,600 and $10,400 ; for Mr. Krenek, $0, $10,600 and $10,400; for Mr. Newman, $0, $10,600 and $10,400; for Mr. Dame, $0, $10,600 and $10,400; and for Mr. Lannen, $0 and $400. Includes vehicle allowance of $896 for 2014 for Mr. Patterson, $8,834 for Mr. Newman and $2,704 for 2014 for Mr. Dame. Includes a cell phone allowance for each NEO for $0.00 and $1,200 each year for 2015 and 2014, and prorated for Mr. Lannen for 2015 to $400. |
Grants of Plan-Based Awards
The following table sets forth information concerning grantsunexercised stock options and unvested restricted stock of awards to each of our named executive officers under our 2003 Planas of December 31, 2019:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Option Awards | | | | | | Stock Awards | | | |
| | | | | | | | | |
| Number of Securities Underlying Unexercised Options | Number of Securities Underlying Unexercised Options | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options | Option Exercise Price | Option Expiration Date | Number of Shares or Units of Stock that have not vested | Market Value of Shares or Units of Stock that have not vested | Equity Incentive Plan Awards: Number of Unrestricted Shares, Units or Other Rights that have not vested | Equity Incentive Plan Awards: Market or Payout value of Unearned Shares, Units or Other Rights that have not vested |
| | | | | | | | | |
| (#) | (#) | | | | | | | |
Name | Exercisable | Unexercisable | (#) | ($) | | (#) | ($) | (#) | ($) |
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) |
T.M. “Roe” Patterson (1) | | | | | | | | | |
David Schorlemer | | | | | | | | | |
8/29/2018 (2) | — | | — | | — | | — | | — | | — | | — | | 66,000 | | $17,820 | |
5/15/2019 (3) | — | | — | | — | | — | | — | | — | | — | | 39,912 | | $10,776 | |
5/15/2019 (4) | — | | — | | — | | — | | — | | 39,912 | | $10,776 | | — | | — | |
5/15/2019 (5) | — | | — | | — | | — | | — | | 79,824 | | $21,552 | | — | | — | |
James F. Newman | | | | | | | | | |
12/23/2016 (6) | — | | — | | 35,614 | | $36.55 | | 12/31/2026 | — | | — | | — | | — | |
2/22/2017 (7) | — | | 11,871 | | 23,653 | | $41.93 | | 2/22/2027 | — | | — | | — | | — | |
2/22/2017 (8) | — | | — | | — | | — | | — | | — | | — | | 9,893 | | $2,671 | |
2/8/2018 (9) | — | | — | | — | | — | | — | | — | | — | | 10,641 | | $2,873 | |
2/8/2018 (10) | — | | — | | — | | — | | — | | — | | — | | 15,692 | | $4,237 | |
5/15/2019 (3) | — | | — | | — | | — | | — | | — | | — | | 41,667 | | $11,250 | |
5/15/2019 (4) | — | | — | | — | | — | | — | | 41,667 | | $11,250 | | — | | — | |
5/15/2019 (5) | — | | — | | — | | — | | — | | 83,331 | | $22,499 | | — | | — | |
(1) On September 13, 2019, Mr. T.M. “Roe” Patterson notified the Board of his decision to voluntarily resign as President and Management Incentive Plan during fiscal 2016. All unvested awards granted pursuant to our 2003 Plan were cancelled by operationChief Executive Officer of the Prepackaged Plan.Company. Thus, all his outstanding stock and option awards were forfeited.
(2) Performance-based RSUs were granted by our Board, as recommended by the Compensation Committee on August 8, 2018. Performance for the award is measured based on the Company's relative total stock return (“TSR”) compared to the TSR of a selected peer group of energy services companies. These units have a two year performance period and will vest in two equal installment beginning on March 15, 2020.
Grants(3) RSUs were granted by our Board, as recommended by the Compensation Committee, to certain members of Plan-Based Awards — 2016management, including our named executive officers, on May 15, 2019. RSUs begin to vest in three equal annual installments on May 15, 2020.
(4) On May 15, 2019, the Compensation Committee of the Board made grants of cash-settled time-based phantom restricted stock to certain members of management. Cash-settled time-based phantom shares granted under the LTIP, vest in one-third increments on May 15, 2020, 2021 and 2022. Each cash-settled time-based phantom share is the economic equivalent of one share of Company common stock, subject to a maximum settlement amount of $9.00 per phantom share and are subject to accelerated vesting in certain circumstances.
(5) On May 15, 2019, the Compensation Committee of the Board made grants of cash-settled performance-based phantom restricted stock to certain members of management. Performance for the award is measured based on the Company's relative total stock return (“TSR”) compared to the TSR of a selected peer group of energy services companies. These units have a two year performance period and will vest in two equal installments beginning on May 15, 2021. Each cash-settled time-based phantom share is the economic equivalent of one share of Company common stock, subject to a maximum settlement amount of $9.00 per phantom share and are subject to accelerated vesting in certain circumstances.
(6) These options vested in equal installments beginning on December 23, 2017. As of December 31, 2019, these options are fully vested.
(7) One third of the options vested on February 8, 2018, and another one third vested on February 22, 2019. The remainder will vest February 22, 2020.
(8) Performance-based RSUs were granted by our Board, as recommended by the Compensation Committee, to certain of our employees, including our named executive officers, on February 22, 2017. Performance for the award was measured based on the Company's relative total stock return (“TSR”) compared to the TSR of a selected peer group of energy services companies. One third of the Performance-based RSUs vested on February 22, 2018, and another one third vested on February 22, 2019. The remainder will vest February 22, 2020.
19 | Basic Energy Services, Inc. 2020 Proxy Statement
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | All Other | All Other | | |
| | | Estimated Future Payouts | Estimated Future Payouts | Stock | Option | | |
| | | Under Non-Equity Incentive | Under Equity Incentive | Awards: | Awards: | | |
| | | Plan Awards | Plan Awards | Number of | Number of | Exercise or | |
| | | | | | | | | Shares of | Securities | Base Price | Grant Date |
| | | | | | | | | Stock or | Underlying | of Option | Fair Value |
| | Grant | Threshold | Target | Maximum | Threshold | Target | Maximum | Units | Options | Awards | of Stock and |
Name | | Date | ($) | ($) | ($) | (#) | (#) | (#) | (#) | (#) | ($/Sh) | Option Awards |
(a) | | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | (j) | (k) | (l) |
| | | | | | | | | | | | |
T.M. “Roe” Patterson | | 03/24/16 (1) | $ | — |
| $ | — |
| $ | — |
| — |
| — |
| — |
| 156,636 |
| — |
| — |
| $ | 427,616 |
|
| | 03/24/16 (2) | $ | — |
| $ | — |
| $ | — |
| — |
| 156,636 |
| 234,954 |
| — |
| — |
| — |
| 427,616 |
|
| | 12/23/16 (3) | $ | — |
| $ | — |
| $ | — |
| — |
| — |
| — |
| 250,920 |
| — |
| — |
| 9,171,126 |
|
| | 12/23/16 (4) | $ | — |
| $ | — |
| $ | — |
| — |
| — |
| — |
| — |
| 100,368 |
| $ | 36.55 |
| 2,104,717 |
|
Alan Krenek | | 03/24/16 (1) | $ | — |
| $ | — |
| $ | — |
| — |
| — |
| — |
| 56,038 |
| — |
| — |
| 152,984 |
|
| | 03/24/16 (2) | $ | — |
| $ | — |
| $ | — |
| — |
| 56,038 |
| 84,057 |
| — |
| — |
| — |
| 152,984 |
|
| | 12/23/16 (3) | $ | — |
| $ | — |
| $ | — |
| — |
| — |
| — |
| 89,036 |
| — |
| — |
| 3,264,134 |
|
| | 12/23/16 (4) | $ | — |
| $ | — |
| $ | — |
| — |
| — |
| — |
| — |
| 35,614 |
| $ | 36.55 |
| 746,826 |
|
James F. Newman | | 03/24/16 (1) | $ | — |
| $ | — |
| $ | — |
| — |
| — |
| — |
| 56,038 |
| — |
| — |
| 152,984 |
|
| | 03/24/16 (2) | $ | — |
| $ | — |
| $ | — |
| �� |
| 56,038 |
| 84,057 |
| — |
| — |
| — |
| 152,984 |
|
| | 12/23/16 (3) | $ | — |
| $ | — |
| $ | — |
| — |
| — |
| — |
| 89,036 |
| — |
| — |
| 3,264,134 |
|
| | 12/23/16 (4) | $ | — |
| $ | — |
| $ | — |
| — |
| — |
| — |
| — |
| 35,614 |
| $ | 36.55 |
| 746,826 |
|
William T. Dame | | 03/24/16 (1) | $ | — |
| $ | — |
| $ | — |
| — |
| — |
| — |
| 39,352 |
| — |
| — |
| 107,431 |
|
| | 03/24/16 (2) | $ | — |
| $ | — |
| $ | — |
| — |
| 39,352 |
| 59,028 |
| — |
| — |
| — |
| 107,431 |
|
| | 12/23/16 (3) | $ | — |
| $ | — |
| $ | — |
| — |
| — |
| — |
| 48,565 |
| — |
| — |
| 1,775,051 |
|
| | 12/23/16 (4) | $ | — |
| $ | — |
| $ | — |
| — |
| — |
| — |
| — |
| 19,426 |
| $ | 36.55 |
| 407,363 |
|
Eric Lannen | | 03/24/16 (1) | $ | — |
| $ | — |
| $ | — |
| — |
| — |
| — |
| 35,879 |
| — |
| — |
| 97,950 |
|
| | 03/24/16 (2) | $ | — |
| $ | — |
| $ | — |
| — |
| 35,879 |
| 53,819 |
| — |
| — |
| — |
| 97,950 |
|
| | 12/23/16 (3) | $ | — |
| $ | — |
| $ | — |
| — |
| — |
| — |
| 24,283 |
| — |
| — |
| 887,544 |
|
| | 12/23/16 (4) | $ | — |
| $ | — |
| $ | — |
| — |
| — |
| — |
| — |
| 9,713 |
| $ | 36.55 |
| 203,682 |
|
(9) Time-based RSUs were granted by our Board, as recommended by the Compensation Committee, to certain of our employees, including our named executive officers, on February 8, 2018. RSUs begin to vest in three equal annual installments on March 15, 2019.______________(10) Performance-based RSUs were granted by our Board, as recommended by the Compensation Committee, to certain members of management, including our named executive officers, on February 8, 2018. Performance for the award is measured based on the Company's relative total stock return (“TSR”) compared to the TSR of a selected peer group of energy services companies. These units have a two year performance period and will vest in two equal installments beginning on March 15, 2020.
| | | | | | | | | | | | | | |
(1)Employment Agreements | Shares of restricted stock were granted by our Compensation Committee to certain of our employees, including our named executive officers, on March 24, 2016. The shares of restricted stock vest over a three-year period from the grant date in one-third increments on each of March 15, 2017, 2018 and 2019. The shares of restricted stock were granted pursuant to our 2003 Incentive Plan and were cancelled by operation of the Prepackaged Plan. |
| | |
(2) | Shares of performance based phantom stock were granted by our Compensation Committee to certain of our employees, including our named executive officers, on March 18, 2015. The shares of phantom stock vest over a three-year period from the grant date in one-third increments on each of March 15, 2016, 2017 and 2018. The shares of phantom stock were granted pursuant to our 2003 Incentive Plan but were cancelled by operation of the Prepackaged Plan. |
| |
(3) | RSUs were granted to certain of our employees, including our named executive officers, on December 23, 2016, pursuant to the Prepackaged Plan. The RSUs vest one-third on the grant date and one-third on the first and second anniversaries of the date of grant, respectively. The RSUs were granted pursuant to our Management Incentive Plan, as approved by the Bankruptcy Court. |
| |
(4) | The stock option awards were granted to certain of our employees, including our named executive officers, on December 23, 2016, pursuant to the Prepackaged Plan. The Options vest over a three-year period in one-third increments beginning on December 23, 2017. The stock options were granted pursuant to our Management Incentive Plan, as approved by the Bankruptcy Court. |
Employment Agreements
Pursuant to our employment agreement, effective May 2013,December 19, 2019, with T.M. “Roe” Patterson,Keith L. Schilling, our President and Chief Executive Officer, Mr. Patterson’sSchilling’s initial annual base salary was set at $650,000 and is subject to adjustment at least annually. Mr. PattersonSchilling is entitled to an annual performance bonus if certain performance criteria are met. In addition, Mr. PattersonSchilling is eligible from time to time to receive grants of stock options and other long-term equity incentive compensation under our equity compensation plan.LTIP. If Mr. Patterson’sSchilling’s employment were to be terminated for certain reasons, he would be entitled to a lump sum severance payment equal to two times the sum of his annual base salary plus his current annual incentive target bonus for the full year in which the termination of employment occurred. Additionally, if Mr. Patterson’s employment were to be terminated for certain reasons within the six months preceding or the twelve months following a change in control of our company, he would be entitled to a lump sum severance payment equal to three1.5 times the sum of his annual base salary plus the higher of (i) his current annual incentive target bonus for the full year in which the termination of employment occurred or (ii) the highest annual incentive bonus received by him for any of the last three completed fiscal years. Additionally, in the event that within the six months preceding or the twelve months following a change of control of the Company, Mr. Patterson’sSchilling’s Employment Agreement is not renewed by the Company and a new employment agreement has not been entered into, Mr. Schilling will be entitled to the same severance benefits described above, subject to certain conditions. Mr. Schilling’s employment agreement renews automatically each January 1st for a one-year period unless notice of termination is properly given by us or Mr. Patterson.Schilling. In the event that Mr. Patterson’sSchilling’s employment agreement is not renewed by us for any reason other than cause and a new employment agreement has not been entered into prior to the expiration of the then-current term, Mr. PattersonSchilling will be entitled to the same severance benefits described above.
We entered into a Separation Agreement on September 13, 2019 with Mr. Patterson (the “Separation Agreement”), pursuant to which he will receive (i) a severance payment of $1,442,000, minus applicable taxes and withholdings, and a $200,000 one-time cash payment within ten days following the six-month anniversary of his separation from the Company effective on January 2, 2020 (the “Separation Date”), (ii) after-tax reimbursement of 100% of the COBRA premiums for up to 18 months after the Separation Date or the date Mr. Patterson becomes eligible for group health insurance coverage under another employer’s group health insurance, whichever is sooner, and (iii) reimbursement of attorneys’ fees in an amount up to $20,000 incurred by him in consultations related to the Separation Agreement. In addition, Mr. Patterson received (i) all base salary through the Separation Date, pay for any accrued unused paid time off as of the Separation Date, and his performance bonus for the year 2019, in each case to the extent payable in accordance with Mr. Patterson’s Amended and Restated Employment Agreement, dated as of October 24, 2016, as amended and (ii) all vested benefits under the Basic Energy Services, Inc. 401(k) Plan and the Basic Energy Services, Inc. Executive Deferred Compensation Plan, in each case in accordance with the terms of the respective plan.
Pursuant to the Separation Agreement, all equity incentive awards previously granted to Mr. Patterson continued to be governed by the terms and conditions of their respective award agreements. All incentive awards that were unvested immediately prior to the Separation Date were forfeited as of the Separation Date. All stock options which vested prior to the Separation Date remained exercisable for 90 days following the Separation Date, after which they expire.
Mr. Schorlemer’s employment agreement provides for an initial base salary of $400,000. Mr. Schorlemer is also entitled to an annual performance bonus if certain performance criteria are met. Under the employment agreement, Mr. Schorlemer is eligible from time to time to receive awards of long-term equity incentive compensation under Basic’s equity compensation plans. Mr. Schorlemer also received payments of $200,000 on each of March 15, 2019 and March 15, 2020 and is entitled to receive another $200,000 payment on March 15, 2021. In addition, effective August 29, 2018, Mr. Schorlemer was granted 66,000 performance-based Restricted Stock Units under the Basic Energy Services, Inc. Management Incentive Plan based on a two-year performance period and followed by a two-year vesting period.
If Mr. Schorlemer’s employment is terminated for certain reasons, he would be entitled to a lump sum severance payment equal to 1.5 times the sum of his base salary plus his current annual incentive target bonus for the full year in which the termination of employment occurred. Additionally, if Mr. Schorlemer’s employment is terminated for certain reasons within the six months preceding or the twelve months following a change of control
20 | Basic Energy Services, Inc. 2020 Proxy Statement
of Basic, he would be entitled to a lump sum severance payment equal to two times the sum of his base salary plus the higher of (i) his current annual incentive target bonus for the full year in which the termination of employment occurred or (ii) the highest annual incentive bonus received by him for any of the last three completed fiscal years. In the event that within the six months preceding or the twelve months following a change of control of the Company, Mr. Schorlemer’s employment agreement is not renewed by the Company and a new employment agreement has not been entered into, Mr. Schorlemer will be entitled to the same severance benefits described above, subject to certain conditions.
We have also entered into an employment agreement with Alan Krenek, effective December 2006, our Senior Vice President, Chief Financial Officer, Treasurer and Secretary. James F. Newman, our Senior Vice President — Region Operations and William T. Dame, our Vice President — Pumping Services, effective November 2013. Pursuant to their agreements, Messrs. Krenek,the agreement, Mr. Newman and Dame werewas given an initial annual base salariessalary of $240,000, $400,000 and $295,000 respectively which areis subject to adjustment at least annually. Each of Messrs. Krenek,Mr. Newman and Dame is also entitled to an annual performance bonus if certain performance criteria are met. In addition, each of Messrs. Krenek,Mr. Newman and Dame is eligible from time to time to receive grants of stock options and other long-term equity incentive compensation under our equity compensation plan.LTIP. If theMr. Newman's employment of any of these officers were to be terminated for certain reasons, he would be entitled to a lump sum severance payment equal to 1.5 times the sum of his annual base salary plus his current annual incentive target bonus for the full year in which the termination of employment occurred. Additionally, if the employment of any of these officers were to be terminated for certain reasons within the six months preceding or the twelve months following a change in control of our company,Company, he would be entitled to a lump sum severance payment equal to two times the sum of his annual base salary plus the higher of (i) his current annual incentive target bonus for the full year in which the termination of employment occurred or (ii) the highest annual incentive bonus received by him for any of the last three fiscal years. Each of theseThe employment agreementsagreement renews automatically each January 1st for a one-year period unless notice of termination is properly given by us or the officer. In the event that anyeither of these employment agreements is not renewed by us for any reason other than cause and a new employment agreement has not been entered into prior to the expiration of the then-current term, the officer will be entitled to the same severance benefits described above.
The employment agreementsagreement for Messrs. Patterson, Krenek,Mr. Newman and Dame also provideprovides for gross up payments to the extent Section 280G of the Internal Revenue Code would apply to such payments as excess “parachute” payments. These provisions have been included in the applicable employment agreements for each of these officers since prior to 2008.
The employment agreements for Messrs. Patterson, Krenek, Newman and Dame also provide for gross up payments to the extent Section 280G of the Internal Revenue Code would apply to such payments as excess “parachute” payments. These provisions have been included in the applicable employment agreements for each of these officers since prior to 2008.
We have also entered into an employment agreement with Eric Lannen, effective August 2015, our Vice President - Human Resources. Pursuant to our employment agreement with Mr. Lannen, Mr. Lannen��s initial annual base salary is set at $285,000, and is subject to adjustment at least annually. Mr. Lannen is also entitled to an annual performance bonus if certain performance criteria were met. In addition, Mr. Lannen is eligible from time to time to receive grants of stock options and other long-term equity incentive compensation under our equity incentive plan. If Mr. Lannen’s employment is terminated for certain reasons, including retirement, he is entitled to a lump sum severance payment equal to 0.75 times the sum of his annual base salary plus his current annual incentive target bonus for the full year in which the termination occurred. Additionally, if Mr. Lannen’s employment were to be terminated for certain reasons within the six months preceding or the twelve months following a change in control of our company, he will be entitled to a lump sum severance payment equal to 1.0 times the sum of his annual base salary plus the higher of (i) his current annual incentive target bonus for the full year in which the termination of employment occurred or (ii) the highest annual incentive bonus received by him for any of the last
three fiscal years. Mr. Lannen’s employment agreement is renewable automatically each January 1 for a one-year period unless notice of termination is properly given by us or Mr. Lannen. In the event that within the six months preceding or the twelve months following a change in control of our company, Mr. Lannen’s employment agreement was not renewed by us for any reason other than cause and a new employment agreement was entered into prior to the expiration of the then-current term, Mr. Lannen is entitled to the change in control severance benefits described above.
As consideration for our entering into the above employment agreements, each of Messrs. Patterson, Krenek,Schilling, Newman Dame and LannenSchorlemer has agreed in his employment agreement that, for a period of six months following the termination of his employment by us without cause or by him for good reason, and for a period of two years following the termination of his employment for retirement or any other reason, he will not, among other things, engage in any business competitive with ours, render services to any entity that is competitive with us or solicit business from certain of our customers or potential customers. These non-competition restrictions will not apply in the event that such termination is within twelve months of a change in control of our company. Additionally, each officer has agreed not to solicit any of our employees to terminate, reduce or otherwise adversely affect his or her employment with us for a period of two years following the termination of his employment by us for whatever reason.
Our Compensation Committee reviews and discusses periodically with a compensation consultant the salary and wage levels of our officers and employees, including our named executive officers.NEOs. In February 2016,2020, our Compensation Committee, based on its discussion with its compensation consultant, decreased 2016increased 2020 base salaries from the 20152019 salary amounts for each of our executive officers (other than Mr. Lannen, which was unchanged from 2015).officers. Base salaries for 2016 were2020 are as follows: Mr. PattersonSchilling - $630,000;$650,000; Mr. KrenekSchorlemer - $381,800;$400,000; and Mr. Newman - $381,800; Mr. Dame - $290,904; and Mr. Lannen - $285,000.
$408,049.
21 | Basic Energy Services, Inc. 2020 Proxy Statement
Outstanding Equity Awards at Fiscal Year-End
Upon our emergence from bankruptcy and pursuant to the Prepackaged Plan, all outstanding equity awards of the Company as of the Effective Date were cancelled. The following table sets forth information concerning unexercised stock options and unvested RSUs that were granted following emergence from bankruptcy to each of our named executive officers as of December 31, 2016: |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Option Awards | | Stock Awards |
| | | | | | | | | | | | | | | | | | Equity Incentive |
| | Number of | | Number of | | Equity | | | | | | Number of | | | | Equity Incentive | | Plan Awards: |
| | Securities | | Securities | | Incentive Plan | | | | | | Shares | | | | Plan Awards: | | Market or Payout |
| | Underlying | | Underlying | | Awards: Number of | | | | | | or Units of | | Market Value of | | Number of Unearned | | Value of Unearned |
| | Unexercised | | Unexercised | | Securities Underlying | | Option | | | | Stock That | | Shares or Units of | | Shares, Units or | | Shares, Units or |
| | Options | | Options | | Unexercised | | Exercise | | Option | | Have Not | | Stock That | | Other Rights that | | Other Rights That |
| | (#) | | (#) | | Unearned Options | | Price | | Expiration | | Vested | | Have Not Vested | | Have Not Vested | | Have Not Vested |
Name | | Exercisable | | Unexercisable | | (#) | | ($) | | Date | | (#) | | ($) | | (#) | | ($) |
(a) | | (b) | | (c) | | (d) | | (e) | | (f) | | (g) | | (h) | | (i) | | (j) |
| | | | | | | | | | | | | | | | | | |
T.M. “Roe” Patterson | | | | | | | | | | | | | | | | | | |
12/23/2016(1) | | — |
| | — |
| | — |
| | — |
| | | | 167,280 |
| | 5,913,348 |
| | — |
| | — |
|
12/23/2016(2) | | — |
| | — |
| | 100,368 |
| | $36.55 | | 12/23/2026 | | — |
| | — |
| | — |
| | — |
|
Alan Krenek | | | | | | | | | | | | | | | | | | |
12/23/2016(1) | | — |
| | — |
| | — |
| | — |
| | | | 59,357 |
| | 2,098,270 |
| | — |
| | — |
|
12/23/2016(2) | | — |
| | — |
| | 35,614 |
| | $36.55 | | 12/23/2026 | | — |
| | — |
| | — |
| | — |
|
James F. Newman | | | | | | | | | | | | | | | | | | |
12/23/2016(1) | | — |
| | — |
| | — |
| | — |
| | | | 59,357 |
| | 2,098,270 |
| | — |
| | — |
|
12/23/2016(2) | | — |
| | — |
| | 35,614 |
| | $36.55 | | 12/23/2026 | | | | — |
| | — |
| | — |
|
William T. Dame | | | | | | | | | | | | | | | | | | |
12/23/2016(1) | | — |
| | — |
| | — |
| | — |
| | | | 32,376 |
| | 1,144,492 |
| | — |
| | — |
|
12/23/2016(2) | | — |
| | — |
| | 19,426 |
| | $36.55 | | 12/23/2026 | | | | — |
| | — |
| | — |
|
Eric Lannen | | | | | | | | | | | | | | | | | | |
12/23/2016(1) | | — |
| | — |
| | — |
| | — |
| | | | 16,188 |
| | 572,246 |
| | — |
| | — |
|
12/23/2016(2) | | — |
| | — |
| | 9,713 |
| | $36.55 | | 12/23/2026 | | — |
| | — |
| | — |
| | — |
|
(1) One third of the RSUs vested on December 23, 2016. The remainder will vest in equal installments on December 23, 2017 and 2018.
(2) The options will vest in three equal annual installments: one third on December 23, 2017, one third on December 23, 2018, and the remainder on December 23, 2019.
Option Exercises and Stock Vested
The following table sets forth information concerning exercises of stock options and vesting of RSUs and restricted stock awards ("RSAs") of each of our named executive officers during fiscal 2016:
Option Exercises and Stock Vested — 2016
0
|
| | | | | | | | | | | | | | |
| | | | | | | |
| Option Awards | | Stock Awards |
| Number of Shares | Value | | Number of RSUs | Value | Number of RSAs | Value |
| Acquired on Exercise | Realized on Exercise | | Acquired on Vesting | Realized on Vesting | Acquired on Vesting | Realized on Vesting |
Name | (#) | ($) | | (#) | ($) | (#) | ($) |
(a) | (b) | (c) | | (d) | (e) | (f) | (g) |
| | | | | | | |
T.M. “Roe” Patterson | — |
| — |
| | 83,640 | $ | 3,530,776 |
| 161,684 |
| $ | 473,734 |
|
Alan Krenek | — |
| — |
| | 29,679 | $ | 1,253,119 |
| 57,458 |
| $ | 168,352 |
|
James F. Newman | — |
| — |
| | 29,679 | $ | 1,224,192 |
| 47,585 |
| $ | 139,424 |
|
William T. Dame | — |
| — |
| | 16,189 | $ | 696,406 |
| 35,733 |
| $ | 104,698 |
|
Eric Lannen | — |
| — |
| | 8,095 | $ | 295,872 |
| — |
| $ | — |
|
Nonqualified Deferred Compensation Plans
The following table sets forth information concerning the nonqualified deferred compensation of our named executive officers during fiscal 2016:
Nonqualified Deferred Compensation — 2016
)
|
| | | | | | | | | | | | | | |
| | | | | |
| | | | | |
| Executive | Registrant | Aggregate | Aggregate | Aggregate |
| Contributions | Contributions | Earnings in | Withdrawals/ | Balance at |
| in Last FY | in Last FY | Last FY | Distributions | Last FY |
Name | ($) | ($) | ($) | ($) | ($) |
(a) | (b)(1) | (c)(2) | (d) | (e) | (f)(3) |
| | | | | |
T.M. “Roe” Patterson | $ | 43,167 |
| — |
| $ | 47,533 |
| — |
| $ | 583,133 |
|
Alan Krenek | — |
| — |
| $ | 51,217 |
| $ | (72,328 | ) | $ | 429,940 |
|
James F. Newman | — |
| — |
| $ | 55,555 |
| — |
| $ | 563,198 |
|
William T. Dame | $ | 6,500 |
| — |
| $ | 25,676 |
| — |
| $ | 437,190 |
|
Eric Lannen | — |
| — |
| $ | 589 |
| — |
| $ | 10,440 |
|
__________________
| |
(1) | Executive contributions during 2016 are included in the executive’s salary and bonus amounts, as applicable, as reported in the Summary Compensation Table. |
| |
(2) | Registrant contributions during 2016 are included in all other compensation in the Summary Compensation Table. |
| |
(3) | All amounts were previously reported as compensation in the Summary Compensation Tables for previous years. |
Each of our named executive officers is permitted to participate in our Executive Deferred Compensation Plan. An executive officer permitted to participate in this plan may defer a portion of his compensation, up to a maximum of 50% of his annual salary and 100% of his annual cash bonus, into his plan account. We make an annual matching contribution to each participating executive’s plan account, with the Company matching 100% of the first 3% of the executive’s salary that is deferred, and 50% of the next 2% of the executive’s salary that is deferred, up to a plan-year maximum of $10,600. We may also make discretionary contributions into an executive officer’s plan account from time to time as we deem appropriate. Subject to certain exceptions, our matching and discretionary contributions vest in one-fourth increments determined by the executive’s years of service, with vesting beginning after two years of service, and full vesting occurring after five years of service. Each executive officer is always fully vested in his own contributions to his plan account. Earnings on an executive officer’s plan account for any given year are dependent upon the investment options chosen by the executive officer for such plan account. Generally, participants under this plan may elect when and how distributions of vested amounts in a plan account will be made, including whether such distributions are in annual installments or a lump sum. However, certain key employees, including our named executive officers, may not receive distributions before a date six months after the date their employment with us is terminated for any reason other than death or disability.
Potential Payments upon Termination or Change in Control
Each of our named executive officers is party to an employment agreement as described above. Pursuant to these agreements, these officers are entitled to certain severance benefits. In addition, the grant agreements relating to our executive officers’ stock option and restricted stock awards provide for accelerated vesting under certain circumstances, including a “double-trigger” requirement in connection with a change in control. The tables below quantify amounts that would have been paid assuming the following events took place on December 31, 2016.
Potential Post-employment Payments as of December 31, 2016 — T.M. “Roe” Patterson
0
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | CIC with | | |
| | | | | | | Termination | | |
| | | | Termination | Termination | Change in | for Good | | |
| | | | by Company | by Executive | Control | Reason or | | |
| Voluntary | | Termination | Except for | for Good | without | Without | | |
| Termination | Retirement(1) | for Cause(2) | Cause | Reason(3) | Termination (4) | Cause (4) | Death | Disability |
Compensation | | | | | | | | | |
Severance(5) | $ | — |
| $ | 2,394,000 |
| $ | — |
| $ | 2,394,000 |
| $ | 2,394,000 |
| $ | — |
| $ | 5,232,570 |
| $ | — |
| $ | — |
|
Bonus(6) | — |
| 567,000 |
| — |
| 567,000 |
| 567,000 |
| — |
| 630,000 |
| 567,000 |
| 567,000 |
|
Long-Term Incentive(7): | | | | | | | | | |
Acceleration of Unvested Options | — |
| 2,104,717 |
| — |
| 2,104,717 |
| 2,104,717 |
| — |
| 2,104,717 |
| 2,104,717 |
| 2,104,717 |
|
Acceleration of Unvested RSUs | — |
| 6,114,084 |
| — |
| 6,114,084 |
| 6,114,084 |
| — |
| 6,114,084 |
| 6,114,084 |
| 6,114,084 |
|
Benefits and Perquisites(8): | | | | | | | | | |
Employer Contributions to Executive Deferred Compensation Plan | — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
COBRA Continuation | N/A |
| 31,118 |
| N/A |
| 31,118 |
| 31,118 |
| N/A |
| 31,118 |
| — |
| — |
|
280G Tax Gross-up | N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| 2,556,609 |
| N/A |
| N/A |
|
Total | $ | — |
| $ | 11,210,919 |
| $ | — |
| $ | 11,210,919 |
| $ | 11,210,919 |
| $ | — |
| $ | 16,669,098 |
| $ | 8,785,801 |
| $ | 8,785,801 |
|
Potential Post-employment Payments as of December 31, 2016 — Alan Krenek
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | CIC with | | |
| | | | | | | Termination | | |
| | | | Termination | Termination | Change in | for Good | | |
| | | | by Company | by Executive | Control | Reason or | | |
| Voluntary | | Termination | Except for | for Good | without | Without | | |
| Termination | Retirement(1) | for Cause(2) | Cause | Reason(3) | Termination (4) | Cause (4) | Death | Disability |
Compensation | | | | | | | | | |
Severance(5) | $ | — |
| $ | 1,002,225 |
| $ | — |
| $ | 1,002,225 |
| $ | 1,002,225 |
| $ | — |
| $ | 1,860,196 |
| $ | — |
| $ | — |
|
Bonus(6) | — |
| 286,350 |
| — |
| 286,350 |
| 286,350 |
| — |
| 286,350 |
| 286,350 |
| 286,350 |
|
Long-Term Incentive(7): | | | | | | | | | |
Acceleration of Unvested Options | — |
| 746,826 |
| — |
| 746,826 |
| 746,826 |
| — |
| 746,826 |
| 746,826 |
| 746,826 |
|
Acceleration of Unvested RSUs | — |
| 2,179,367 |
| — |
| 2,179,367 |
| 2,179,367 |
| — |
| 2,179,367 |
| 2,179,367 |
| 2,179,367 |
|
Benefits and Perquisites(8): | | | | | | | | | |
Employer Contributions to Executive Deferred Compensation Plan Contributions to | — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
COBRA Continuation | N/A |
| 20,981 |
| N/A |
| 20,981 |
| 20,981 |
| N/A |
| 20,981 |
| — |
| — |
|
280G Tax Gross-up | N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| — |
| N/A |
| N/A |
|
Total | $ | — |
| $ | 4,235,749 |
| $ | — |
| $ | 4,235,749 |
| $ | 4,235,749 |
| $ | — |
| $ | 5,093,720 |
| $ | 3,212,543 |
| $ | 3,212,543 |
|
0
Potential Post-employment Payments as of December 31, 2016 — James F. Newman
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | CIC with | | |
| | | | | | | Termination | | |
| | | | Termination | Termination | Change in | for Good | | |
| | | | by Company | by Executive | Control | Reason or | | |
| Voluntary | | Termination | Except for | for Good | without | Without | | |
| Termination | Retirement(1) | for Cause(2) | Cause | Reason(3) | Termination (4) | Cause (4) | Death | Disability |
Compensation | | | | | | | | | |
Severance(5) | — |
| 1,002,225 |
| — |
| 1,002,225 |
| 1,002,225 |
| — |
| 1,860,196 |
| — |
| — |
|
Bonus(6) | — |
| 286,350 |
| — |
| 286,350 |
| 286,350 |
| — |
| 286,350 |
| 286,350 |
| 286,350 |
|
Long-Term Incentive(7): | | | | | | | | | |
Acceleration of Unvested Options | — |
| 746,826 |
| — |
| 746,826 |
| 746,826 |
| — |
| 746,826 |
| 746,826 |
| 746,826 |
|
Acceleration of Unvested RSUs | — |
| 2,179,367 |
| — |
| 2,179,367 |
| 2,179,367 |
| — |
| 2,179,367 |
| 2,179,367 |
| 2,179,367 |
|
Benefits and Perquisites(8): | | | | | | | | | |
Employer Contributions to Executive Deferred Compensation Plan Contributions to | — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
COBRA Continuation | N/A |
| 28,682 |
| N/A |
| 28,682 |
| 28,682 |
| N/A |
| 28,682 |
| — |
| — |
|
280G Tax Gross-up | N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| — |
| N/A |
| N/A |
|
Total | $ | — |
| $ | 4,243,450 |
| $ | — |
| $ | 4,243,450 |
| $ | 4,243,450 |
| $ | — |
| $ | 5,101,421 |
| $ | 3,212,543 |
| $ | 3,212,543 |
|
Potential Post-employment Payments as of December 31, 2016 — William T. Dame
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | CIC with | | |
| | | | | | | Termination | | |
| | | | Termination | Termination | Change in | for Good | | |
| | | | by Company | by Executive | Control | Reason or | | |
| Voluntary | | Termination | Except for | for Good | without | Without | | |
| Termination | Retirement(1) | for Cause(2) | Cause | Reason(3) | Termination (4) | Cause (4) | Death | Disability |
Compensation | | | | | | | | | |
Severance(5) | $ | — |
| $ | 763,623 |
| $ | — |
| $ | 763,623 |
| $ | 763,623 |
| $ | — |
| $ | 1,134,726 |
| $ | — |
| $ | — |
|
Bonus(6) | — |
| 218,178 |
| — |
| 218,178 |
| 218,178 |
| — |
| 218,178 |
| 218,178 |
| 218,178 |
|
Long-Term Incentive(7): | | | | | | | | | |
Acceleration of Unvested Options | — |
| 407,363 |
| — |
| 407,363 |
| 407,363 |
| — |
| 407,363 |
| 407,363 |
| 407,363 |
|
Acceleration of Unvested RSUs | — |
| 1,183,379 |
| — |
| 1,183,379 |
| 1,183,379 |
| — |
| 1,183,379 |
| 1,183,379 |
| 1,183,379 |
|
Benefits and Perquisites(8): | | | | | | | | | |
Employer Contributions to Executive Deferred Compensation Plan Contributions to | — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
COBRA Continuation | N/A |
| 20,981 |
| N/A |
| 20,981 |
| 20,981 |
| N/A |
| 20,981 |
| — |
| — |
|
280G Tax Gross-up | N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| — |
| N/A |
| N/A |
|
Total | $ | — |
| $ | 2,593,524 |
| $ | — |
| $ | 2,593,524 |
| $ | 2,593,524 |
| $ | — |
| $ | 2,964,627 |
| $ | 1,808,920 |
| $ | 1,808,920 |
|
0
Potential Post-employment Payments as of December 31, 2016 — Eric Lannen
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | CIC with | | |
| | | | | | | Termination | | |
| | | | Termination | Termination | Change in | for Good | | |
| | | | by Company | by Executive | Control | Reason or | | |
| Voluntary | | Termination | Except for | for Good | without | Without | | |
| Termination | Retirement(1) | for Cause(2) | Cause | Reason (3) | Termination (4) | Cause (4) | Death | Disability |
Compensation | | | | | | | | | |
Severance(5) | — |
| 320,625 |
| — |
| 320,625 |
| 320,625 |
| — |
| 427,500 |
| — |
| — |
|
Bonus(6) | — |
| 142,500 |
| — |
| 142,500 |
| 142,500 |
| — |
| 142,500 |
| 142,500 |
| 142,500 |
|
Long-Term Incentive(7): | | | | | | | | | |
Acceleration of Unvested Options | — |
| 203,682 |
| — |
| 203,682 |
| 203,682 |
| — |
| 203,682 |
| 203,682 |
| 203,682 |
|
Acceleration of Unvested RSUs | — |
| 591,708 |
| — |
| 591,708 |
| 591,708 |
| — |
| 591,708 |
| 591,708 |
| 591,708 |
|
Benefits and Perquisites(8): | | | | | | | | | |
Employer Contributions to Executive Deferred Compensation Plan Contributions to | — |
| 0 |
| — |
| — |
| — |
| — |
| — |
| — |
| — |
|
COBRA Continuation | N/A |
| 28,648 |
| N/A |
| 28,648 |
| 28,648 |
| N/A |
| 28,648 |
| — |
| — |
|
280G Tax Gross-up | N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
| N/A |
|
Total | $ | — |
| $ | 1,287,163 |
| $ | — |
| $ | 1,287,163 |
| $ | 1,287,163 |
| $ | — |
| $ | 1,394,038 |
| $ | 937,890 |
| $ | 937,890 |
|
| |
(1) | Retirement. “Retirement” is defined for purposes of each of our current executive officer’s employment agreement, as such executive’s voluntary termination of his employment after attaining age 65 (with the exception of Mr. Patterson being age 60) and accruing ten years of service with us. For purposes of the acceleration of unvested stock options, “Retirement” means the voluntary termination of his employment by an executive officer after he has attained the age of 65.
|
| |
(2) | Cause. Under each executive officer’s employment agreement, the definition of “Cause” includes, among other things, conviction of the executive officer of a crime involving moral turpitude or a felony, commission by the executive officer of fraud upon, or misappropriation of funds of, the Company, knowing engagement by the executive officer in any activity in direct competition with the Company, and a material breach by the executive officer of such employment agreement. For purposes of the acceleration of unvested stock options, “Cause” has the same meaning as it in the employment agreements. For purposes of the acceleration of unvested RSUs, “Cause” has the same meaning as it has in the employment agreements.
|
| |
(3) | Good Reason. Under each executive officer’s employment agreement, the definition of “Good Reason” includes, among other things, a reduction in the executive officer’s base salary or bonus opportunity, a relocation of more than fifty miles of the executive officer’s principal office, a substantial and adverse change in the executive officer’s duties, control, authority, status or position, the failure of the Company to continue in effect any pension plan, life insurance plan, health-and-accident plan, retirement plan, disability plan, stock option plan, deferred compensation plan or executive incentive compensation plan under which the executive officer was receiving material benefits, or the Company’s material reduction of the executive officer’s benefits under any such plan, and any material breach by the Company of any other material provision of such employment agreement. Prior to terminating his employment for Good Reason, the executive officer must comply with the notice provisions of his employment agreement. For purposes of the acceleration of unvested stock options, “Good Reason” has the same meaning as it has in the employee agreements. For purposes of the acceleration of unvested RSUs, “Good Reason” has the same meaning as it has in the employment agreements.
|
| |
(4) | Change in Control. Under each executive officer’s employment agreement, the definition of “Change in Control” (or “CIC”) includes, subject to certain exceptions, (i) acquisition by any individual, entity or group of beneficial ownership of 50% or more of either the then-outstanding shares of common stock of the Company or the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors, (ii) approval by the stockholders of the Company of a merger, unless immediately following such merger, substantially all of the
|
holders of the Company’s securities immediately prior to the merger beneficially own more than 50% of the common stock of the corporation resulting from such merger, and (iii) the sale or other disposition of all or substantially all of the assets of the Company. For purposes of the acceleration of unvested stock options, “Change in Control” has the same meaning as it has for purposes of the MIP. For purposes of the acceleration of unvested restricted stock, “Change in Control” has the same meaning as it has for purposes of the executive officer’s employment agreement.
Termination by the Company except for Cause or termination of his own employment for Good Reason or Retirement
Each executive officer would be entitled to a lump sum severance payment equal to a multiple of the sum of his base salary plus his current annual incentive target bonus for the full year in which the termination of employment occurred. For Mr. Patterson the multiple is two, for Messrs. Krenek, Newman and Dame the multiple is 1.50, for Mr. Lannen the multiple is .75. During 2016, the annual incentive target bonus for our named executive officers utilized was 90% for Mr. Patterson, 75% for Messrs. Krenek, Newman and Dame and 50% for Mr. Lannen, in each case of their annual salary as of the end of the fiscal year.Based on performance metrics, the Company did not pay annual cash incentive bonuses for the fiscal year 2016.
Termination by the Company except for Cause, or termination of his own employment for Good Reason or Retirement, within the six months preceding or the twelve months following a Change in Control
Instead of the payment disclosed in the pervious paragraph, each executive officer would be entitled to a lump sum severance payment equal to a multiple of the sum of his base salary plus the higher of (i) his current annual incentive target bonus for the full year in which the termination of employment occurred or (ii) the highest annual incentive bonus received by him for any of the last three fiscal years. For Mr. Patterson, the multiple is three, for Messrs. Krenek, Newman and Dame the multiple is two, and for Mr. Lannen the multiple is one.
| |
(6) | Bonus. In addition to severance payments, the named executive officers are entitled to a pro rata portion of their estimated bonus upon certain events of termination. The above tables reflect the annual incentive target bonus for the named executive officers for 2016.
|
Stock Options
In the event of a termination of the executive by the Company for Cause or resignation by the executive without a Good Reason, all unvested stock options will be forfeited immediately, automatically and without consideration upon the termination. In the event of termination by the Company without Cause or resignation for a Good Reason, any portion of the unvested stock options that would have vested had the executive continued his service during the 12 months following the termination will vest on such termination or resignation date. In the event of Death or Disability, all unvested stock options fully vest on such date. In the event of any Change of Control, all unvested options will fully vest.
Restricted Stock Units
In the event of a termination of the executive by the Company for Cause or resignation by the executive without a Good Reason, all unvested RSUs will be forfeited immediately, automatically and without consideration upon the termination. In the event of termination by the Company without Cause or resignation for a Good Reason, any portion of the unvested RSUs that would have vested had the executive continued his service during the 12 months following the termination will vest on such termination or resignation date. In the event of Death or Disability, all unvested RSUs fully vest on such date. In the event of any Change of Control, all unvested RSUs will fully vest.
| |
(8) | Other Benefits and Perquisites. |
Employer Contributions to Executive Deferred Compensation Plan
Each executive officer will become fully vested in all unvested matching and discretionary contributions made by the Company into his plan account upon (i) obtaining the age of 65, (ii) his death or disability or (iii) a termination for any reason whatsoever within 24 months following a Change in Control. Otherwise, each executive officer will forfeit any unvested portion of his plan account upon a termination for any reason. Additionally, certain key employees, including the named executive officers, may not receive distributions before a date six months after the date they separate service from the Company for any reason other than death or disability.
COBRA Continuation
In addition to the above cash benefits paid pursuant to each executive officer’s employment agreement, the Company will continue to provide the executive officer and his dependents with health benefits for up to 18 months.
280G Tax Gross-up
The employment agreements for Messrs. Patterson, Krenek, Newman, and Dame provide for gross up payments to the extent Section 280G of the Internal Revenue Code would apply to any payments as excess “parachute” payments. The tax gross-up terms have been included in the applicable employment agreement for each of these officers since prior to 2008.
Any benefits payable as described above are payable in a cash lump sum not later than 60 calendar days following the termination date. The employment agreements of the named executive officers also contain certain non-competition and non-solicitation provisions. For additional information regarding these employment agreements, see “Executive Compensation Matters — Employment Agreements.”
Director Compensation
The following table sets forth information concerning the 20162019 compensation of each of our directors (both current and former) other than T. M. “Roe” Patterson, who iswas a named executive officer and receivesreceived no compensation for serving as a director:
Director Compensation — 2016 |
| | | | | | | | | | | | | | | | | |
| Fees Earned or | Stock | Option | Non-Equity Incentive | Change in Pension Value and | All Other | |
| Paid in Cash | Awards | Awards | Plan Compensation | Nonqualified Deferred | Compensation | Total |
Name | ($) | ($) | ($) | ($) | Compensation Earnings | ($) | ($) |
(a) | (b) | (c) (1) | (d) | (e) | (f) | (g) | (h) |
| | | | | | | |
Steven A. Webster | $ | 109,900 |
| $ | 40,950 |
| — |
| — |
| — |
| — |
| $ | 150,850 |
|
Sylvester P. Johnson, IV | $ | 63,900 |
| $ | 27,300 |
| — |
| — |
| — |
| — |
| $ | 91,200 |
|
William E. Chiles | $ | 78,300 |
| $ | 27,300 |
| — |
| — |
| — |
| — |
| $ | 105,600 |
|
Robert F. Fulton | $ | 93,700 |
| $ | 27,300 |
| — |
| — |
| — |
| — |
| $ | 121,000 |
|
James S. D’Agostino, Jr. | $ | 109,900 |
| $ | 27,300 |
| — |
| — |
| — |
| — |
| $ | 137,200 |
|
Thomas P. Moore, Jr. | $ | 81,000 |
| $ | 27,300 |
| — |
| — |
| — |
| — |
| $ | 108,300 |
|
Antonio O. Garza, Jr. | $ | 58,500 |
| $ | 27,300 |
| — |
| — |
| — |
| — |
| $ | 85,800 |
|
Kenneth V. Huseman | $ | 49,500 |
| $ | 27,300 |
| — |
| — |
| — |
| — |
| $ | 76,800 |
|
Timothy H. Day(2) | $ | 4,792 |
| — |
| — |
| — |
| — |
| — |
| $ | 4,792 |
|
Julio M. Quintana(2) | $ | 3,542 |
| — |
| — |
| — |
| — |
| — |
| $ | 3,542 |
|
John Jackson(2) | $ | 3,750 |
| — |
| — |
| — |
| — |
| — |
| $ | 3,750 |
|
James D. Kern(2) | $ | 3,125 |
| — |
| — |
| — |
| — |
| — |
| $ | 3,125 |
|
Samuel E. Langford(2) | $ | 3,125 |
| — |
| — |
| — |
| — |
| — |
| $ | 3,125 |
|
Anthony J. DiNello(2)(3) | — |
| — |
| — |
| — |
| — |
| — |
| — |
|
| | | | | | | | | | | | | | | | | | | | | | | |
Name | Fees Earned or Paid in Cash | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | Nonqualified Deferred Compensation Earnings | All Other Compensation | Total |
| ($) | ($) | ($) | ($) | ($) | ($) | ($) |
(a) | (b) | (c) (1) | (d) | (e) | (f) | (g) | (h) |
Julio M. Quintana (Chairman) | 93,750 | | 70,081 | | — | | — | | — | | — | | 163,831 | |
Timothy H. Day (2) | 115,167 | | 89,815 | | — | | — | | — | | — | | 204,982 | |
John Jackson | 90,000 | | 70,081 | | — | | — | | — | | — | | 160,081 | |
James D. Kern | 75,000 | | 70,081 | | — | | — | | — | | — | | 145,081 | |
Samuel E. Langford (2) | 75,000 | | 70,081 | | — | | — | | — | | — | | 145,081 | |
Anthony J. DiNello (2) | 78,601 | | — | | — | | — | | — | | — | | 78,601 | |
0
1.This column represents the total grant date fair value of restricted stock awards granted to each of the applicable directors. The fair value of restricted stock awards and the cash-settled restricted stock units were calculated based upon the closing market price of the Company’s common stock on the grant date.
2.Mr. DiNello resigned from the Board effective November 8, 2019. Mr. Day and Mr. Langford resigned from the Board effective March 9, 2020.
| |
(1) | This column represents the total grant date fair value of restricted stock awards granted to each of the applicable directors. The fair value of restricted stock awards was calculated based upon the closing market price of the Company’s common stock on the grant date. None of the awarded restricted shares vested and were cancelled pursuant to the Prepackaged Plan. |
| |
(2) | No equity awards were issued to non-employee directors upon emergence during 2016; however, we plan to grant to current directors equity awards pursuant to the Director Incentive Plan, which is subject to stockholder approval. The current directors also received no cash or other compensation during 2016. |
| |
(3) | Mr. DiNello did not serve as a director during 2016. |
For additional information regarding fees earned for services as a director in 2016,2019, including annual retainer fees, committee and chairmanship fees, and meeting fees, see “Board of Directors and Committees of the Board — Board of Directors — Compensation.”
| | | | | | | | | | | | | | |
Transactions with Related Persons, Promoters and Certain Control Persons | | | | |
Transactions with Related Persons Promoters and Certain Control Persons
Transactions with Related Persons.. During 2016,2019, there were no transactions with related persons that were required to be disclosed in this proxy statement other than as set forth below.
In December 2010, Basic entered into a lease agreement with Darle Vuelta Cattle Co., LLC (“DVCC”), an affiliate of a former director, for the right to operate a salt water disposal well, brine well and fresh water well. The term of the lease will continue until the salt water disposal well and brine well are plugged and no fresh water is being sold. The lease payments are the greater of (i) the sum of $0.10 per barrel of disposed oil and gas waste and $0.05 per barrel of brine or fresh water sold or (ii) $5,000 per month.
In February 2015, Basic purchased 100 acres of vacant land outside of Midland, Texas for $1.5 million from DVCC. In October 2016, Basic completed a non-cash exchange with DVCC in which the land purchased in February 2015, was exchanged for 34.81 acres in Midland County to be used for a salt water disposal well.
Each of these transactions with DVCC was reviewed and discussed by the Audit Committee and was authorized and approved by the Audit Committee pursuant to our “Policy and Procedures with Respect to Related Person Transactions.”Item 404(d) of Regulation S-K.
Review, Approval or Ratification of Transactions with Related Persons. Pursuant to the charter of the Audit Committee, the Audit Committee is responsible for establishing procedures for the approval of all related party transactions between the Company and any officer or director that would potentially require disclosure. The Board of Directors has adopted a written policy regarding related party transactions that is to be administered by the Audit Committee. The policy applies generally to transactions, arrangements or relationships in which the Company was, is or will be a participant, in which the amount involved exceeds $60,000$120,000 and in which any related person had, has or will have a direct or indirect material interest. Related persons include, among others, directors and officers of the Company, beneficial owners of 5% or more of the Company’s voting securities, immediate family members of the foregoing persons, and any entity in which the foregoing persons are employed, are a principal or in which such person has more than a 10% beneficial ownership interest. The Company’s Chief Financial Officer is responsible for submitting related person transactions to the Audit Committee for approval by the committee at regularly scheduled meetings, or, if such approval is not practicable, to the Chairman of the Audit Committee for approval between such meetings. When considering related person transactions, the Audit Committee, or where submitted to the Chairman, the Chairman, will consider all of the relevant facts available, including, but not limited to: the benefits of the transaction to the Company; the impact on a director’s independence in the event the related person is a director; the availability of other sources for comparable products or services; the terms of the transaction; and the terms of comparable transactions available to unrelated third parties or to employees of the Company generally. In addition, the Stockholders Agreement with Ascribe (as defined below) provides that certain actions of the Company and its subsidiaries require approval of a special committee of the Board comprised
22 | Basic Energy Services, Inc. 2020 Proxy Statement
solely of at least two independent directors. The Company is not aware of any transaction that was required to be reported in its filings with the SEC where such policies and procedures either did not require review or were not followed.
Compensation Committee Interlocks
| | | | | | | | | | | | | | |
Change in Control Transaction | | | | |
On March 9, 2020, the Company entered into a Purchase Agreement (the “Purchase Agreement”) with Ascribe Investments III LLC, a Delaware limited liability company (“Ascribe”), NexTier Holding Co., a Delaware corporation (“Seller”) and Insider ParticipationC&J Well Services, Inc., a Delaware corporation, and wholly owned subsidiary of Seller (“CJWS”).
Messrs. Day (Chairman)Pursuant to the Purchase Agreement, among other things, (i) Seller transferred and delivered to the Company and the Company purchased and acquired from Seller, all of the issued and outstanding shares of capital stock of CJWS held by Seller (the “Stock Purchase”), Jackson and Quintana serve assuch that CJWS became a wholly-owned subsidiary of the members of our Compensation Committee. The Board of Directors has determined that Messrs. Day, Jackson and Quintana are independent directors (as defined by NYSE listing standards). None of our executive officers servesCompany; (ii) as a memberportion of the boardconsideration for the Stock Purchase, Ascribe, on behalf of directors or compensation committeethe Company, conveyed to Seller certain 10.75% senior secured notes due October 2023 issued by the Company to Ascribe in an aggregate amount equal to $34.4 million (the “Ascribe Senior Notes”); (iii) Ascribe entered into an Exchange Agreement, dated March 9, 2020, with the Company (the “Exchange Agreement”) pursuant to which, among other things, Ascribe exchanged the Ascribe Senior Notes for (a) 118,805 shares of any entity that has one or morenewly issued common stock equivalent preferred stock, designated as “Series A Participating Preferred Stock,” par value $0.01 per share, of its executive officers servingthe Company (the “Series A Preferred Stock”) and (b) an amount in cash approximately equal to $1.5 million (the “Exchange Transaction” and, together with the Stock Purchase and the other transactions contemplated by the Purchase Agreement, the “C&J Transaction”), and (iv) the Company agreed to hire Jack Renshaw as a memberSenior Vice President, Western Region, upon consummation of our Boardthe C&J Transaction.
The Exchange Agreement
Pursuant to the Exchange Agreement, as partial consideration for the Exchange Transaction, the Company issued to Ascribe 118,805 shares of Directors or Compensation Committee.newly issued Series A Preferred Stock of the Company, which constitutes 83% of the equity interest in the Company. Upon consummation of the Exchange Transaction, the Company’s public shareholders owned approximately 14.94% of the equity interests in the Company.
The Company has issued and outstanding $300 million principal amount of the 10.75% Senior Secured Notes due 2023 (the “Notes”), issued pursuant to that certain Indenture, dated as of October 2, 2018 (the “Base Indenture”) by and among the Company, the guarantors party thereto and UMB Bank, National Association, as trustee and collateral agent (the “Trustee”), as supplemented by the First Supplemental Indenture, dated as of August 22, 2019, by and among the Company, the guarantors party thereto and the Trustee (the “First Supplemental Indenture” and, together with the Base Indenture, the “Indenture”). Under the Exchange Agreement, as partial consideration for the Exchange Transaction, the Company paid to Ascribe an amount in cash equal to, $1.5 million, representing the accrued (but unpaid) interest, from and including the most recent date to which interest has been paid pursuant to the terms of the Notes and the Indenture but excluding the date of the closing of the C&J Transaction, on the aggregate principal amount of the Ascribe Senior Notes. Leadership StructureIf Ascribe is required to pay the Make-Whole Payment to Seller pursuant to the Purchase Agreement, the Company will be required to reimburse to Ascribe the amount of such Make-Whole Payment (such amount, the “Make-Whole Reimbursement Amount”) either (i) in cash (a) to the extent the Company has available cash (as determined by an independent committee of the Company’s Board) and (b) subject to satisfaction of certain “Payment Conditions” set forth in the Credit Agreement (as defined below) or (ii) if the Company is unable to pay the full Make-Whole Reimbursement Amount in cash pursuant to clause “(i)” of this paragraph, in additional Notes as permitted under the Indenture. In consideration of providing the Make-Whole Payment to Seller, the Company paid Ascribe $1 million in cash at the closing of the C&J Transaction.
Stockholders’ Agreement & Governance
In connection with the Exchange Agreement, the Company and Ascribe entered into a Stockholders Agreement. As contemplated by the Stockholders Agreement, simultaneously with the closing of the transactions
23 | Basic Energy Services, Inc. 2020 Proxy Statement
contemplated by the Exchange Agreement, the Board was reconstituted from six directors to seven directors, comprised of Directors(i) three Class I directors with terms to expire in 2020 (the “Class I Directors”), (ii) two Class II directors with terms to expire in 2021 (the “Class II Directors”) and (iii) two Class III directors with terms to expire in 2022 (the “Class III Directors”). Additionally, effective as of the closing of the C&J Transaction, each of Messrs. Timothy H. Day and Samuel E. Langford resigned from the Board and (a) Lawrence First was appointed as a Class I Director, (c) Derek Jeong was appointed as a Class II Director and (b) Ross Solomon was appointed as a Class III Director. Pursuant to the terms of the Stockholders Agreement, following the closing of the C&J Transaction and until the Board Rights Termination Date (as defined below), Ascribe is entitled to designate for nomination for election to the Board all members of the Board, provided that such designations must be made in a manner to ensure that at all times the Board is comprised of at least two independent directors. The subsidiaries require approval of a special committee of the Board comprised solely of at least two independent directors. The “Board Rights Termination Date” means the earlier to occur of (A) the date on which Ascribe Affiliated Entities (as defined below), collectively, no longer beneficially own 25% of the fully-diluted common equity of the Company (including the Series A Preferred Stock) and (B) the date on which Ascribe and its affiliates, collectively, no longer constitute the largest holder of fully-diluted common equity of the Company (including the Series A Preferred Stock). The “Ascribe Affiliated Entities” will be comprised of (x) Ascribe and each investment fund which Ascribe or its affiliates controls or for which Ascribe or its affiliates act as a manager or investment advisor and (y) each other person (including portfolio companies) in which person(s) described in clause (x) of this sentence holds a majority of the outstanding equity or voting securities.
| | | | | | | | | | | | | | |
Leadership Structure of the Company’s Board | | | | |
Mr. DayQuintana is the Chairman of the Board. The Chairman is not the principal executive officer of the Company. The Board believes that the separation of the Chairman and the Chief Executive Officer functions in this structure is appropriate for oversight purposes on behalf of its investors, because it clarifies the individual roles of the Chairman and given thatChief Executive Officer, allows the Chief Executive Officer to speak for the Company’s common stock is publicly traded.management, provides independent Board oversight by an independent Chairman and enhances accountability. The Board periodically reviews the leadership structure and may make changes in the future.
| | | | | | | | | | | | | | |
Board Role in Risk Oversight of the Company | | | | |
The Board has delegated certain responsibilities to the Audit Committee under the Company’s Audit Committee charter. These responsibilities include, among others: (i) meeting periodically with management and/or the Company’s Chief Financial Officer and Chief Accounting Officer to review and discuss (A) the Company’s major financial risk exposures and steps management has taken to monitor and control such exposures, including guidelines and policies with respect to risk management and risk assessment and (B) the effects of regulatory and accounting changes; (ii) reviewing and discussing with the Company’s independent auditor reports that the independent auditors are required to provide to the Audit Committee relating to significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements; (iii) discussing periodically with members of management, the Company’s internal auditors and the Company’s independent auditor the adequacy and effectiveness of the Company’s disclosure controls and procedures and internal control over financial reporting, any changes in internal controls, and any significant deficiencies or material weaknesses in the design or operation of internal controls; and (iv) establishing and maintaining whistleblower procedures for complaints received by the Company regarding accounting, internal accounting controls and auditing matters, and for the confidential, anonymous submission by Company employees of concerns regarding questionable accounting or auditing matters. In connection with these risk oversight matters, the Audit Committee also regularly reviews with management safety and litigation matters.
24 | Basic Energy Services, Inc. 2020 Proxy Statement
The Board receives regular reports from the Chairman of the Audit Committee regarding its activities and actions, as well as any issues that arise with respect to the quality or integrity of the Company’s financial statements, the Company’s compliance with legal or regulatory requirements, the performance and independence of the auditors, and the performance of the internal audit function.
The Board does not have any separate risk committees. However, the Compensation Committee, in connection with setting 20162019 and 20172020 compensation, has considered whether its compensation policies and practices are reasonably likely to cause a material adverse effect on the Company. Risk oversight with respect to other Company matters, to the extent applicable, remains with the Board or the Company’s management.
25 | Basic Energy Services, Inc. 2020 Proxy Statement
Audit Committee Report
The Audit Committee (the “Committee”) of the Board of Directors (the “Board”) of Basic Energy Services, Inc. (the “Company”) consists of three directors who are independent, as defined by the standards of the New York Stock Exchange and the rules of the Securities and Exchange Commission. Under the charter approved by the Board, the Audit Committee assists the Board in overseeing matters relating to the accounting and financial reporting practices of the Company, the adequacy of its internal controls and the quality and integrity of its financial statements and is responsible for selecting and retaining the independent auditors. The Company’s management is responsible for preparing the financial statements of the Company, and the independent auditors are responsible for auditing those financial statements. The Audit Committee’s role under the charter is to provide oversight of management’s responsibility. The Committee is not providing any expert or special assurance as to the Company’s financial statements or any professional certification as to the independent auditors’ work. The Committee met seven times during the year ended December 31, 2016.2019.
The independent auditors provided the Committee a written statement describing all the relationships between the auditors and the Company that might bear on the auditors’ independence consistent with Public Company Accounting Oversight Board (“PCAOB”) Rule 3526 (Communication with Audit Committees Concerning Independence). The Committee also discussed with the auditors any relationships that may impact the independence of the auditors.
The Committee discussed and reviewed with the independent auditors all communications required to be discussed by standards of the Public Company Accounting Oversight Board,PCAOB, including those described in Statement of Auditing Standards No. 61, as amended,PCAOB AS 1301, “Communication with Audit Committees.”
The Committee reviewed the Company’s audited financial statements as of and for the year ended December 31, 2016,2019, and discussed them with management and the independent auditors. Based on such review and discussions, the Committee recommended to the Board that the Company’s audited financial statements be included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2016,2019, for filing with the Securities and Exchange Commission.
This report of the Audit Committee shall not be deemed “soliciting material,” or to be “filed” with the Securities and Exchange Commission or subject to Regulation 14A or 14C or to the liabilities of Section 18 of the SecuritiesExchange Act, except to the extent that the Company specifically requests that the information be treated as soliciting material or specifically incorporates it by reference into a document filed under the Securities ActAct.
John Jackson, Chairman
Timothy H. Day
James D. Kern
Julio Quintana
Independent Auditor and Fees
26 | Basic Energy Services, Inc. 2020 Proxy Statement
| | | | | | | | | | | | | | |
Independent Auditor and Fees | | | | |
KPMG LLP, a registered public accounting firm, audited the Company’s consolidated financial statements for fiscal 20162019 and has advised the Company will have a representative available at the 20172020 Annual Meeting to respond to appropriate questions. Such representative will be permitted to make a statement if he or she so desires.
KPMG LLP has billed the Company and its subsidiaries fees as set forth in the table below for (i) the audits of the Company’s 20162019 and 20152018 annual financial statements reviews of quarterly financial statements, and review of the Company’s documents filed with the Securities and Exchange Commission (Audit Fees), (ii) assurance and other services reasonably related to the audit or review of the Company’s financial statements (Audit-Related Fees), (iii) services related to tax compliance (Tax Fees) and (iv) all other services provided by KPMG LLP (All Other Fees). For fiscal 2016
| | | | | | | | | | | | |
| | | | |
| | | | |
| Audit Fees | | | All Other Fees (1) |
Fiscal 2019 | $1,368,500 | | | | | $103,000 | |
Fiscal 2018 | $1,452,000 | | | | | $160,000 | |
___________
(1) “All Other Fees” consists of fees related to the adoption of ASC Topic 842 - Leases, and 2015, thereout of scope work related to an acquisition. All other fees in 2018 consisted of fees related to the adoption of ASC Topic 842 - Leases and a comfort letter. There were no Audit-Related Fees, and thus none reportedfees billed by KPMG in the table below.2019 or 2018 that would constitute “Audit-Related Fees” or “Tax Fees.”
0
|
| | | | | | | | | |
| | | |
| | Tax Fees | All Other |
| Audit Fees | Fees(1) | Fees(2) |
Fiscal 2016 | $ | 1,270,880 |
| $ | 642,360 |
| $ | 20,000 |
|
Fiscal 2015 | $ | 1,370,102 |
| $ | — |
| $ | 10,000 |
|
___________
| | | | | | | | | | | | | | |
(1)Audit Committee Pre-Approved Policies and Procedures | “Tax Fees” consist of fees paid for reviews performed in connection with Restructuring Tax Services in 2016 |
| | |
(2) | "All Other Fees" consist of the registration statement on Form S-3 and related consent in 2015 and Form S-8 and related consent in 2016. |
Audit Committee Pre-Approved Policies and Procedures
The Audit Committee of the Board of Directors has adopted policies regarding the pre-approval of auditor services. The Audit Committee historically approves at its May meeting all services provided by the independent public accountants. All additional services must be pre-approved on a case-by-case basis. The Audit Committee reviews the actual and budgeted fees for the independent public accountants at its first and fourth meetings. All of the services provided by KPMG LLP during fiscal 20162019 were pre-approved by the Audit Committee.
PROPOSAL 2:
APPROVAL OF BASIC ENERGY SERVICES, INC.
NON-EMPLOYEE DIRECTOR INCENTIVE PLAN
On January 6, 2017, pursuant to the recommendation of the Compensation Committee, the Board of Directors unanimously approved, subject to stockholder approval, the Basic Energy Services, Inc. Non-Employee Director Incentive Plan (the “Director Incentive Plan”). The maximum aggregate number of shares of our common stock under the Director Incentive Plan will be 100,000 shares. If approved, the Director Incentive Plan will be effective as of January 6, 2017, the date the Board approved the Director Incentive Plan.The Director Incentive Plan is intended to promote the interestsaffirmative vote of the Company by encouraging non-employee directorsholders of the Company and its affiliates to acquire an equity interest in the Company and to provide a means whereby they may develop a sense of proprietorship and personal involvement in the development and financial success of the Company, and to encourage them to remain with and devote their best efforts to the business of the Company, thereby advancing the interests of the Company and its stockholders. The Director Incentive Plan is also intended to enhance the ability of the Company and its affiliates to attract and retain the services of non-employee directors who are essential for the growth and profitability of the Company. As discussed in “Compensation Discussion and Analysis -- Other Practices, Policies and Guidelines -- Compensation of Directors”, in connection with 2017 director compensation, we expect to grant each non-employee director $125,000 in targeted restricted stock awards (or $150,000 aggregate for our Chairman) under the Director Incentive Plan, subject to stockholder approval, which awards would vest on December 23, 2017 (or the first anniversary of the director hire date) . If the Director Incentive Plan is not approved at our 2017 Annual Stockholders Meeting or restricted stock awards are not subsequently approved by the Board, we will pay such annual amounts in cash on a pro rata basis, quarterly in arrears.
The Board of Directors unanimously recommends that you vote FOR this proposal.
A majority of the votes castvoting power of our Voting Stock present in person or represented by proxy at the meeting and entitled to vote is required to approve this proposal. Brokers do not have discretion to vote on this proposal without your instruction. If you do not instruct your broker how to vote on this proposal, your broker will deliver a non-vote on this proposal.
The following is a summary
27 | Basic Energy Services, Inc. 2020 Proxy Statement
| | |
PROPOSAL 2: APPROVAL OF AN AMENDMENT TO OUR CERTIFICATE OF INCORPORATION TO INCREASE THE NUMBER OF SHARES OF AUTHORIZED COMMON STOCK |
| | |
The Board unanimously recommends that you vote FOR this proposal. |
On March 24, 2020, the Board approved an amendment to Article FOURTH of the key termsour Second Amended and Restated Certificate of the Director Incentive Plan. The summary does not purportIncorporation (the “Certificate of Incorporation”) to be a complete description of all provisions ofincrease the Director Incentive Plan and is qualified in its entirety by reference to the complete text of the Director Incentive Plan attached to this proxy statement as Annex A. Terms used but not defined herein should be given the meaning used under the Director Incentive Plan.
Summary of Key Terms of the Director Incentive Plan
Shares Available; Types of Awards; Individual Limits
The aggregate number of shares with respect to which awards may be granted under the Director Incentive Plan, subject to stockholder approval, is up to 100,000authorized shares of the Company’s common stock.
The Director Incentive Plan permits the grantingcapital stock from 85,000,000 to 203,805,000 shares, consisting of the following types5,000,000 previously authorized shares of awards to non-employee directors of the Company: (i) nonqualifiedpreferred stock, options to purchase80,000,000 previously authorized shares of common stock (“Options”); (ii) restricted stock (“Restricted Stock”); (iii) restricted stock units (“RSUs”); and (iv) other stock-based awards (“Other Stock-Based Awards,” and collectively with Options, Restricted Stock and RSUs, “Awards”).
Subject to118,805,000 newly authorized shares of common stock. The text of the potential adjustments described in “Adjustment to Shares”proposed amendment is set forth below, and any adjustment set forthincluded in Appendix A.
Purpose and Effects of the Proposed Amendment
We are currently authorized pursuant to our Certificate of Incorporation to issue up to 80,000,000 shares of common stock. As of March 9, 2020, there were 24,936,864 shares of common stock issued and outstanding, resulting in 55,063,136 shares of authorized and unissued shares of common stock available for issuance. The purpose of our proposed increase in the applicable Award agreement, the maximum numberauthorized shares of common stock is to ensure sufficient shares that may be covered by Options granted to any Non-Employee Director in any calendar year is 20,000, and the maximum number of shares that may be covered by Restricted Stock, RSUs and Other Stock-Based Awards granted to any Non-Employee Director in any calendar year is 20,000.
Eligibility for Participation
Only Non-Employee Directors are eligible to participate in this Plan.
Administration
The Director Incentive Plancommon stock will be administeredavailable for issuance by us in the Board. Subject toevent the termsSeries A Preferred Stock (as defined below) is converted into shares of common stock.
On March 9, 2020, the Company entered into a Purchase Agreement with Ascribe III Investments LLC, a Delaware limited liability company (“Ascribe”), NexTier Holding Co., a Delaware corporation, and conditions of the Director Incentive Plan, the Board will have authority to: (i) determine the Fair Market Value of Awards; (ii) determine the number of shares to be covered by each Award granted under the Director Incentive Plan; (iii) approve forms of Award agreements for use under the Director Incentive Plan; (iv) determine the terms and conditions of any Award granted, including but not limited to, the exercise price, the time or times when Awards may be exercised, any vesting acceleration or waiver of forfeiture or repurchase restrictions, and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Board determines; (v) construe and interpretC&J Well Services, Inc., a Delaware corporation (“C&J”). Under the terms of the Director Incentive PlanPurchase Agreement and Awards granted pursuantrelated agreements, the Company acquired C&J and issued 118,805 shares of Series A Preferred Stock to Ascribe in exchange for Senior Secured Notes, which the Company used as a portion of the purchase price for C&J. Acquiring 118,805 shares of Series A Preferred Stock increased Ascribe’s percentage equity ownership interest to approximately eighty-five percent, decreasing the existing stockholders’ percentage equity ownership interest. However, the proposed increase in authorized shares of common stock in connection with the Purchase Agreement will not further dilute the existing stockholders’ percentage equity ownership interest in relation to the Director Incentive Plan; (vi) interpret and administerSeries A Preferred Stock.
If the Director Incentive Plan and any instrument or agreements relating to an Award; (vii) prescribe, amend and rescind rules and regulations relating toproposed amendment is approved by stockholders, the Director Incentive Plan; (viii) amendnewly authorized shares of common stock would be held in reserve for the terms of any outstanding Award, including the discretionary authority to extend the post‑termination exercise period of Awards and accelerate the satisfaction of any vesting criteria or waiver of forfeiture or repurchase restrictions, provided that any amendment that would adversely affect the Non-Employee Director's rights under an outstanding Award shall not be made without the Non-Employee Director's written consent; (ix) allow a Non-Employee Director to defer the receiptconversion of the paymentSeries A Preferred Stock into common stock, should that occur, leaving the company with 55,063,136 shares available to be issued for any proper corporate purpose, including future acquisitions, investment opportunities, the establishment of cashcollaboration or other strategic agreements, capital raising transactions of equity or convertible debt securities, future at the deliverymarket offerings of common stock, stock splits, stock dividends, issuance under current or future employee equity plans or for other corporate purposes. The remainder of the shares that would otherwise be due to the Non-Employee Director under an Award; (x) determine whether Awards shall be adjustedavailable for Dividend Equivalents; and (xi) make all other determinations that the Board deems necessary or advisable for administering the Director Incentive Plan.
Amendment and Termination
The Board may at any time amend, alter, suspend or terminate the Director Incentive Plan.
Options
The Board will have the authority to grant Options to such participants, in such amounts and with such terms and conditions as it mayissuance from time to time approve, subject toat the termsdiscretion of the Director Incentive Plan.
Manner of Exercise
Any Option willBoard without further stockholder action, except as may be exercisable according to the terms of the Director Incentive Plan and at such times and under such conditions as determinedrequired for a particular transaction by the Board and set forthlaw, stock exchange regulations or other agreements or restrictions we may enter into in the Award Agreement. An Option will be deemed exercised whenfuture. To the Company receives: (x) written or electronic notice of exercise (in accordance with the Award agreement) from the person entitled to exercise the Option, and (y) full payment for the shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of paymentextent that additional authorized by the Board and permitted by the Award agreement and the Director Incentive Plan. Shares issued upon exercise of an Option will be issued in the name of the Non-Employee Director or, if requested by the Non-Employee Director, in the name of the Non-Employee Director and his spouse. Until the shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Award, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the shares are issued, except as in certain circumstances described in “Adjustment to Shares” below or the applicable Award agreement. Exercising an Option in any manner will decrease the number of shares thereafter available for sale under the Option, by the number of shares as to which the Option is exercised.
Exercise Price
The price at which shares of common stock may be purchased uponbeyond those held in reserve for the exercise of an Option will be determined by the Board at the time the Option is granted, but will not be less than the fair market value per share on the grant date.
Option Term
The term of each Option will be stated in each Award agreement, but in no event will be more than ten years from the date of grant. At the time an Option is granted, the Board will fix the period within which the Option may be exercised and will determine any conditions that must be satisfied before the Option may be exercised. The Board, in its sole discretion, may accelerate the satisfaction of such conditions at any time.
Restricted Stock
Subject to the terms and provisionsconversion of the Director Incentive Plan, the Board, at any time and from time to time, may grant Shares of RestrictedSeries A Preferred Stock to a Non-Employee Director in such amounts as the Board, in its sole discretion, shall determine. Each Award of Restricted Stock will be evidenced by an Award agreement that will specify the vesting schedule (if any), the number of shares granted, and such other terms and conditions as the Board, in its sole discretion, shall determine. Unless the Board determines otherwise, shares of Restricted Stock will be held by the Company as escrow agent until the restrictions on the Shares have lapsed. Shares of Restricted Stock covered by each Award will be released from escrow as soon as practical after the last day of the vesting schedule (if any). The Board, in its sole discretion, may accelerate the time at which any restrictions will lapse or be removed.
Voting Rights
During the period of time the shares remain unvested (if at all), Non-Employee Directors holding shares of Restricted Stock may exercise full voting rights with respect to those shares, unless the Board determines otherwise.
Dividends and other Distributions
During the vesting schedule (if any), Non-Employee Directors holding shares of Restricted Stock will be entitled to receive all dividends and other distributions paid with respect to the shares unless otherwise provided in the Award agreement. If any dividends or distributions are paid in shares, the shares will be subject to the same restrictions on transferability and forfeitability as the shares of Restricted Stock with respect to which they were paid.
Return of Restricted Stock to Company
On the date set forth in the Award agreement, the Restricted Stock for which restrictions have not lapsed will revert to the Company and again shall become available for grant under the Director Incentive Plan.
Restricted Stock Units
The Board may grant Awards of Restricted Stock Units in such amounts and subject to such terms and conditions as the Board may determine, subject to the provisions of the Director Incentive Plan.
Other Stock-Based Awards
Other Stock-Based Awards may be granted either alone, in addition to, or in tandem with, other Awards granted under the Director Incentive Plan and/or cash awards made outside of this Plan. The Board will have authority to determine the Non-Employee Directors to whom and the time or times at which Other Stock-Based Awards will be made, the amount of such Other Stock-Based Awards, and all other conditions of the Other Stock-Based Awards, including any dividend or voting rights and whether the Award should be paid in cash.
General Provisions Regarding All Awards
Term of the Director Incentive Plan and Term of Awards
The Director Incentive Plan has been adopted by the Board and became effective on January 6, 2017, provided that if the Director Incentive Plan is not approved by the Company’s stockholders at the Company’s 2017 Annual Meeting of
Stockholders at such time, the Director Incentive Plan shall immediately and automatically thereafter terminate and any and all outstanding Awards granted thereunder shall be extinguished. Assuming the Director Incentive Plan is approved at the Company’s 2017 Annual Meeting of Stockholders on May 25, 2017, the Director Incentive Plan will continue to be in effect for a term of ten years from the effective date unless terminated earlier in accordance with the Director Incentive Plan.
Limits on Transfer of Awards
Unless determined otherwise by the Board, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by shall or by the laws of descent or distribution and may be exercised, during the lifetime of the Non-Employee Director, only by the Non-Employee Director. If the Board makes an Award transferable, such Award will contain such additional terms and conditions as the Board deems appropriate.
Adjustments to Shares
In the event of any change in the outstanding shares of the Company’s common stock by reason of any stock split, stock dividend or other non‑recurring dividends or distributions, recapitalization, merger, consolidation, spin‑off, combination, repurchase or exchange of stock, reorganization, liquidation, dissolution or other similar corporate transaction that affects the common stock, an adjustment will be made, as the Board deems necessary or appropriate, in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Director Incentive Plan. Such adjustment may include an adjustment to the number and class of shares which may be delivered under the Director Incentive Plan, the number, class and price of shares subject to outstanding Awards, the number and class of shares issuable pursuant to Options, and the numerical limits described above under “Shares Available, Types of Awards, Individual limits”.
Change in Control
Unless otherwise provided in an Award agreement or the Board determines otherwise, in the event of a Change of Control (as defined in the Director Incentive Plan), the Non-Employee Director will fully vest in and have the right to exercise his Options as to all of the Award, including shares as to which such Awards would not otherwise be vested or exercisable, and all restrictions on Restricted Stock, Restricted Stock Units and Other Stock-Based Awards, as applicable, will lapse.
Outstanding and Future Grants
It is not possible at this time to determine the awards that will be madeissued in the future, pursuant tothey will decrease the Director Incentive Plan. No grants have been made that are contingent onexisting stockholders’ percentage equity ownership interests and could be issued at prices lower than the approvalprices at which existing stockholders purchased their stocks. Any such issuance of the Director Incentive Plan by our stockholders. Options and other awards may be granted in the future under the Director Incentive Plan within the discretion of the Board.
U.S. Federal Income Tax Consequences of the Director Incentive Plan
In General
The Director Incentive Plan is not qualified under Section 401(a) of the Internal Revenue Code (the “Code”).
The following summary is based on the applicable provisions of the Code as currently in effect and the income tax regulations and proposed income tax regulations thereunder.
Nonqualified Options
Only nonqualified options may be granted under the Director Incentive Plan. No federal income tax is imposed on the optionee upon the grant of a nonqualified option. Upon the exercise of a nonqualified option, the optionee will be treated as receiving compensation, taxable as ordinary income in the year of exercise. The amount recognized as ordinary income upon exercise will be the excess of the fair market value of theadditional shares of common stock atcould have the timeeffect of exercise overdiluting the exercise price paid for such common stock. At the time common stock received upon exerciseearnings per share and book value per share of a nonqualified option is
disposed of, any difference between the fair market value of the shares of common stock at the time of exercise and the amount realized on the disposition will be treated as capital gain or loss.
Upon an optionee’s exercise of a nonqualified option, the Company may claim a deduction for the compensation paid at the same time and in the same amount as compensation is treated as being received by the optionee, assuming the Company satisfies the federal income tax reporting requirements with respect to such compensation. The Company is not entitled to any tax deduction in connection with a subsequent disposition by the optionee of theoutstanding shares of common stock.
Restricted Stock
A grantee generally will not recognize taxable income upon the grant of Restricted Stock, and the recognition of any income will be postponed until such shares are no longer subject to restrictions on transfer or the risk of forfeiture. When either the transfer restrictions or the risk of forfeiture lapses, the grantee will recognize ordinary income equal to the fair market value of the Restricted Stock at the time of such lapse. A grantee may elect to be taxed at the time of the grant of Restricted Stock and, if this election is made, the grantee will recognize ordinary income equal to the excess of the fair market value of the Restricted Stock at the time of grant (determined without regard to any of the restrictions thereon) over the amount paid, if any, by the grantee for such Restricted Stock. In each case, the Company will be entitled to a deduction for the corresponding amount.
Other Stock-Based Awards
In general, a participant who receives an Other Stock-Based Award will not be taxed on receipt of the Award, but instead the fair market value of the cash or common stock received will be taxable as ordinary income on the date that the cash or common stock is received in payment of the Award. The Company will be entitled to a deduction for the corresponding amount.
PROPOSAL 3:
ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION
We are asking stockholders to approve, on a non-binding advisory basis, the Company’s compensation of its named executive officers as disclosed in this proxy statement. At our 2012 Annual Meeting of Stockholders, our Board recommended, and a majority of our stockholders approved, the voting on this advisory vote each year. As described above in “Compensation Discussion and Analysis,” the Compensation Committee has structured our executive compensation program to achieve the following key objectives:
attract, reward and retain the highest quality executive officers;
recognize individual performance and the performance of the Company relative to the performance of other companies of comparable size, complexity and quality;
provide motivation toward, and reward the accomplishment of, corporate annual objectives;
align executive officers’ compensation to stockholder interests; and
align executive officers’ incentives with both the short-term and long-term goals of the Company.
We urge stockholders to read “Compensation Discussion and Analysis” beginning on page 18 of this proxy statement, which describes in more detail how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives, as well as “Executive Compensation Matters” and the related compensation tables and narrative therein beginning on page 34, which provide detailed information on the compensation of our named executive officers. The Compensation Committee and the Board of Directors believe that the policies and procedures articulated in “Compensation Discussion and Analysis” are effective in achieving our goals and that the compensation of our named executive officers reported in this proxy statement has and will contribute to the Company’s recent and long-term success.
In accordance with Section 14A of the Exchange Act, and as a matter of good corporate governance, we are asking stockholders to approve the following resolution at the 2017 Annual Meeting of Stockholders:
RESOLVED, that the stockholders of28 | Basic Energy Services, Inc. (the “Company”) approve, on a non-binding advisory basis,2020 Proxy Statement
Implementation of Proposed Amendment
If Proposal 2 is approved by the compensationrequisite holders of the Company’s named executive officersVoting Shares as disclosedset forth above, the proposed amendment to article FOURTH of the Certificate of Incorporation will become effective upon the filing of a Certificate of Amendment to the Certificate of Incorporation with the Delaware Secretary of State.
Text of the Amendment
We propose to amend the first paragraph of Article FOURTH of the Certificate of Incorporation so that the first sentence of the paragraph would read in its entirety as follows:
“FOURTH: The total number of shares of capital stock of the corporation shall be 203,805,000, which shall consist of 5,000,000 shares of Preferred Stock, par value of $0.01 per share, and 198,805,000 shares of Common Stock, par value of $0.01 per share.”
The only changes that would be made to the first paragraph of Article FOURTH of the Certificate of Incorporation, as currently in effect, would be to increase the number of authorized shares of common stock from 80,000,000 to 198,805,000 and to reflect a corresponding increase in the Compensation Discussion and Analysis and Executive Compensation Matters sections andaggregate number of shares of capital stock of all classes that may be issued from 85,000,000 to 203,805,000. The full text of the related compensation tables, notes and narrativeproposed amendment to the Certificate of Incorporation to effect Proposal 2 is included in theAppendix A to this Proxy Statement for the Company’s 2017 Annual MeetingStatement.
The affirmative vote of Stockholders.
This advisory resolution, commonly referred to asholders of a “say-on-pay” resolution, is non-binding on the Board of Directors. Although non-binding, the Board and the Compensation Committee will review and consider the voting results when making future decisions regarding our executive compensation program.
A majority of the votes castvoting power of our Voting Stock present in person or represented by proxy at the meeting and entitled to vote is required to approve this proposal. Brokers do not have discretion to vote on this proposal without your instruction. If you do not instruct your broker how to vote on this proposal, your broker will deliver a non-vote on this proposal.
29 | Basic Energy Services, Inc. 2020 Proxy Statement
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PROPOSAL 3: APPROVAL OF AN AMENDMENT TO OUR CERTIFICATE OF INCORPORATION TO PERMIT STOCKHOLDERS TO ACT BY WRITTEN CONSENT |
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The Board unanimously recommends that you vote FOR this proposal. |
Overview
In addition to the proposed amendment to our Articles of Incorporation described in Proposal 2, the Board recommends that the stockholders approve an amendment to the Certificate of Incorporation to permit stockholders to act by written consent.
Under the provisions of Section 228 of the Delaware General Corporation Law (the “DGCL”), corporate action of stockholders without a meeting of stockholders may be taken by the written consent of holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted, unless otherwise specified in the certificate of incorporation. Our current Certificate of Incorporation does not allow for stockholders to act by written consent. Accordingly, the adoption of Proposal 3 would conform the applicable provisions of our Certificate of Incorporation to the requirements of Section 228 of the DGCL.
Our Board believes that the proposed amendment would be in the best interests of our Company and its stockholders. It will allow the Company, in situations where approval by the stockholders is required, to take prompt action by obtaining the requisite stockholder consent in writing, without the delay and expense of convening a stockholder meeting for the purpose of approving the action. The Board believes that in such cases where stockholders representing the requisite number of Directors unanimously recommendsvotes necessary to authorize an action have already consented to a given action, the stockholder meeting becomes a formality that you vote FOR this proposal.
PROPOSAL 4:
ADVISORY VOTE ON THE FREQUENCY OF
FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION
utilizes time and resources that are better spent on other corporate functions. Pursuant to Section 14Athe Exchange Agreement discussed above under the heading “Change in Control Transaction,” as partial consideration for the Exchange Transaction, the Company issued to Ascribe 118,805 shares of newly issued Series A Preferred Stock of the Company, which constitutes 83% of the voting equity interest in the Company. Upon consummation of the Exchange Act, we are asking the Company’s stockholders to vote on whether future advisory votes on executive compensationTransaction, Ascribe held approximately 85.2% of the nature reflectedvoting equity interests in the Company. Please see “Security Ownership of Certain Beneficial Owners and Management” for more information. Accordingly, following the approval of Proposal 3, above should occur every year, every two years or every three years.
Based on practices and our stockholder vote in 2011, and due consideration and an ongoing dialogue with our stockholders, the Board of Directors believes that continuing an advisory vote on executive compensation every year is the most appropriate policy for our stockholders and the Company.
An annual advisory vote on executive compensation would allow our stockholders to provide us with their direct input on our compensation philosophy, policies and practices as annually disclosed in the proxy statement. Additionally, an annual advisory vote on executive compensation is consistent with our policy of seeking input from, and engaging in discussions with, our stockholders on corporate governance matters and our executive compensation philosophy, policies and practices. We look forward to hearing from our stockholders on this proposal.
Prior to voting on this proposal, we urge stockholders to read “Compensation Discussion and Analysis” beginning on page 18 of this proxy statement, which describes in more detail how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives, as well as “Executive Compensation Matters” and the related compensation tables and narrative therein beginning on page 34, which provide detailed information on the compensation of our named executive officers.
StockholdersAscribe will be able to specify oneunilaterally determine matters submitted to a vote of four choices for this proposal onstockholders, such as approval of significant corporate transactions, by written consent without a meeting of stockholders until such time as its ownership interest decreases to less than 50%.
Implementation of Proposed Amendment
If Proposal 3 is approved by the proxy card: one year, two years, three years or abstain. Stockholders are not voting to approve or disapprove the Board’s recommendation. This advisory vote on the frequency of future advisory votes on executive compensation is not binding on the Board of Directors or the Company in any way. Notwithstanding the Board of Director’s recommendation and the outcomerequisite holders of the stockholderVoting Shares as set forth above, the proposed amendment to article NINTH of the Certificate of Incorporation will become effective upon the filing of a Certificate of Amendment to the Certificate of Incorporation with the Delaware Secretary of State.
Text of the Amendment
We propose to amend Article NINTH of the Certificate of Incorporation to read as follows:
“NINTH: Any action which may be taken at any annual or special meeting of stockholders may be taken without a meeting and without prior notice, if one or more consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding shares having not less than the minimum number of votes that
30 | Basic Energy Services, Inc. 2020 Proxy Statement
would be necessary to authorize or take such action at a meeting at which all of the shares entitled to vote the Board of Directors may in the future decide to conduct advisory votes on a more or less frequent basisthereon were present and may vary its practice based on factors such as discussions with stockholders and the adoption of material changes to compensation programs.voted.”
The full text of the proposed amendment to the Certificate of Incorporation to effect Proposal 3 is included in Appendix A to this Proxy Statement.
The affirmative vote of holders of a majority of the votes castvoting power of our Voting Stock present in person or represented by proxy at the meeting and entitled to vote is required to approve this proposal. Brokers do not have discretion to vote on this proposal without your instruction. If you do not instruct your broker how to vote on this proposal, your broker will deliver a non-vote on this proposal.
31 | Basic Energy Services, Inc. 2020 Proxy Statement
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PROPOSAL 4: ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION |
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The Board unanimously recommends that you vote FOR this proposal. |
We are asking stockholders to approve, on a non-binding advisory basis, the Company’s compensation of its NEOs as disclosed in this proxy statement. At our 2017 Annual Meeting of Stockholders, our Board recommended, and a majority of our stockholders approved, the voting on this advisory vote each year.As described above in “Executive Compensation Matters” the Compensation Committee has structured our executive compensation program to achieve the following key objectives:
•attract, reward and retain the highest quality executive officers;
•recognize individual performance and the performance of the Company relative to the performance of other companies of comparable size, complexity and quality;
•provide motivation toward, and reward the accomplishment of, corporate annual objectives;
•align executive officers’ compensation to stockholder interests; and
•align executive officers’ incentives with both the short-term and long-term goals of the Company.
We urge stockholders to read “Executive Compensation Matters” beginning on page 16 of this proxy statement, which describes in more detail how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives and the related compensation tables and narrative therein beginning on page 18, which provide detailed information on the compensation of our NEOs. The Compensation Committee and the Board believe that the policies and procedures articulated in “Executive Compensation Matters” are effective in achieving our goals and that the compensation of our NEOs reported in this proxy statement has and will contribute to the Company’s recent and long-term success.
In accordance with Section 14A of the Exchange Act, and as a matter of good corporate governance, we are asking stockholders to approve the following resolution at the 2020 Annual Meeting of Stockholders:
RESOLVED, that the stockholders of Basic Energy Services, Inc. (the “Company”) approve, on a non-binding advisory basis, the compensation of the Company’s named executive officers as disclosed in the Executive Compensation Matters section and the related compensation tables, notes and narrative in the Proxy Statement for the Company’s 2020 Annual Meeting of Stockholders.
This advisory resolution, commonly referred to as a “say-on-pay” resolution, is non-binding on the Board. Although non-binding, the Board and the Compensation Committee will review and consider the voting results when making future decisions regarding our executive compensation program.
Required Vote
The Boardaffirmative vote of Directors unanimously recommendsholders of a majority of the voting power of our Voting Stock present in person or represented by proxy at the meeting and entitled to vote for holding the sayis required to approve this proposal. Brokers do not have discretion to vote on paythis proposal without your instruction. If you do not instruct your broker how to vote EVERY YEAR.on this proposal, your broker will deliver a non-vote on this proposal.
PROPOSAL 5:
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR
32 | Basic Energy Services, Inc. 2020 Proxy Statement
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PROPOSAL 5: RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR |
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The Board unanimously recommends that you vote FOR this proposal. |
The Audit Committee has selected KPMG LLP as the Company’s independent auditor for fiscal year 2017,2020, and the Board of Directors is asking stockholders to ratify that selection. Although current law, rules, and regulations, as well as the charter of the Audit Committee, require the Company’s independent auditor to be engaged, retained and supervised by the Audit Committee, the Board is submitting the selection of KPMG LLP for ratification by stockholders as a matter of good corporate practice. If the selection is not ratified, the Audit Committee will consider whether it is appropriate to select another registered public accounting firm. Even if the selection is ratified, the Audit Committee in its discretion may select a different registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our stockholders.
Required Vote
The affirmative vote of holders of a majority of the sharesvoting power of common stockour Voting Stock present in person or represented by proxy at the meeting and entitled to vote is required to approve the ratification of the selection of KPMG as the Company’s independent auditor for the current fiscal year.
The Board of Directors unanimously recommends that you voteFOR this proposal.
OTHER MATTERS
33 | Basic Energy Services, Inc. 2020 Proxy Statement
Management knows of no other business that will be presented to the meeting for a vote. If other matters properly come before the meeting, the persons named as proxies will vote on them in accordance with their best judgment.
The Company is soliciting proxies for the 20172020 Annual Meeting and will bear the cost of solicitation. In addition to solicitation by mail, certain of the directors, officers or regular employees of the Company may, without extra compensation, solicit the return of proxies by telephone or electronic media. Arrangements will be made with brokerage houses, custodians and other fiduciaries to send proxy material to their principals, and the Company will reimburse these parties for any out-of-pocket expenses.
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PROPOSALS OF STOCKHOLDERS FOR 2021 ANNUAL MEETING |
PROPOSALS OF STOCKHOLDERS FOR 2018 ANNUAL MEETING
Proxy Statement Proposals
Under SEC rules, stockholders wishing to submit proposals for inclusion in the proxy statement for the 2021 Annual Meeting of Stockholders must ensure that such proposals are received by the Company at the Company’s principal executive offices at 801 Cherry Street, Suite 2100, Fort Worth, Texas 76102, Attention: Corporate Secretary, on or before [●], 2021.
Other Proposals and Nominations
The Company expects that its 20182021 Annual Meeting of Stockholders will be held in May 20182021 consistent with prior annual meetings. The Company’s Bylaws govern the submission of nominations for director or other business proposals that a stockholder wishes to have considered at a meeting of stockholders, but which are not included in the Company’s proxy statement for that meeting. Stockholders of record who intend to submit a proposal at the annual meeting of stockholders in 20182021 must provide written notice to the Company in accordance with the Company’s Bylaws. Under the Company’s Bylaws, such notice must be received at the Company’s principal executive offices, addressed to the Secretary of the Company, not earlier than January 25, 20186, 2021 nor later than February 24, 2018,5, 2021, which are dates at least 90 days but not more than 120 days in advance of the first anniversary of the date of the Company’s 20172020 Annual Meeting. The notice must contain the information required by the Company’s Bylaws.
Stockholders who intendThese advance notice provisions are in addition to, submitand separate from, the requirements that a stockholder must meet in order to have a proposal at the annual meeting of stockholders in 2018 and desire that such proposal be included in the proxy materials for such meeting must followstatement under the procedures prescribed inrules of the SEC, see “Proxy Statement Proposals” above. A proxy granted by a stockholder will give discretionary authority to the proxies to vote on any matters introduced pursuant to the above advance notice bylaw provisions, subject to applicable rules of the SEC.
Copies of the Company’s Bylaws and Rule l4a-8 underare available on its website, www.basices.com, or may be obtained from the Securities Exchange Act of 1934, as amended. To be eligible for inclusion in the proxy materials, stockholder proposals must be received by the Secretary of the Company at the Company’s principal executive offices not earlier than January 25, 2018 nor later than February 24, 2018. Stockholders are also advised to review our Bylaws, which contain additional requirements about advance notice of stockholder proposals and director nominations.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
34 | Basic Energy Services, Inc. 2020 Proxy Statement
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DELINQUENT SECTION 16(A) REPORTS |
Based solely upon a review of reports on Forms 3 and 4 and amendments thereto furnished to the Company during fiscal 2016,2019, reports on Form 5 and amendments thereto furnished to the Company with respect to fiscal 2016,2019, and written representations from officers and directors that no Form 5 was required to be filed, the Company believes that all filing requirements applicable to its officers, directors and beneficial owners of more than 10% of the common stock under Section 16(a) of the Securities Exchange Act of 1934, as amended, were complied with during fiscal 2016, with the exception of the late2019, except that, inadvertently, Mr. Patterson’s Form 4 filings as described below:
(1) On March 24, 2016, Mr. Webster was granted 15,000 sharesreporting four transactions relating to forfeiture of restricted stock. The Form 4 for Mr. Webster for this transactioncertain incentive awards was filed on March 29, 2016.
(2) On November 16, 2016, Mr. Taylor sold 15,396 shares of common stock. The Form 4 for Mr. Taylor for this transaction was filedlate on November 28, 2016.26, 2019.
(3) On December 27, 2016, Luxor Capital Group, LP sold a total of 395,702 shares of common stock in a series of transactions. The Form 4 for Luxor Capital Group, LP for these transactions was filed on December 30, 2016.
We have adopted a procedure called "householding." Under this procedure, we are delivering only one copy of the Notice of Internet Availability of Proxy Materials and, as applicable, any additional proxy materials to multiple stockholders who share the same address, unless we have received contrary instructions from an affected stockholder.
We will deliver promptly upon written or oral request a separate copy of the Notice of Internet Availability of Proxy Materials, Annual Report or the Proxy Statement to any stockholder at a shared address to which a single copy of any of those documents was delivered. To receive a separate copy of the Notice of Internet Availability of Proxy Materials, Annual Report or Proxy Statement, you may submit a written request to Secretary, Basic Energy Services, Inc., 801 Cherry Street, Suite 2100, Fort Worth, Texas 76102 or call (817) 334-4100. You may also review the Company’s filings with the Securities and Exchange Commission by visiting our website at www.basicenergyservices.com.www.basices.com.
If you are a holder of record and would like to revoke your householding consent and receive a separate copy of the Annual Report or Proxy Statement in the future, please contact our Secretary at the contact information listed above. You will be removed from the householding program within 30 days of receipt of the revocation of your consent.
Any stockholders of record who share the same address and currently receive multiple copies of our Notice of Internet Availability of Proxy Materials, Annual Report and Proxy Statement who wish to receive only one copy of these materials per household in the future should contact our Secretary at the contact information listed above to participate in the householding program. Stockholders who participate in householding will continue to receive separate proxy cards.
A number of brokerage firms have instituted householding. If you hold your shares in "street name," please contact your bank, broker or other holder of record to request information about householding.
The Corporate Governance Guidelines, the Code of Ethics and the charters of the Audit Committee, the Nominating and Corporate Governance Committee and the Compensation Committee are also available on the Company’s website at www.basicenergyservices.comwww.basices.com, and copies of these documents are available to stockholders, without charge, upon request.
35 | Basic Energy Services, Inc. 2020 Proxy Statement
ANNEXAppendix A
FORM OF
CERTIFICATE OF AMENDMENT
TO
SECOND AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
BASIC ENERGY SERVICES, INC.
NON-EMPLOYEE DIRECTOR INCENTIVE PLAN
1. Basic Energy Services, Inc. (the “Purpose of this PlanCorporation. The purpose of this Plan is to: (i) attract”), a corporation organized and retain highly qualified individuals to serve as Non-Employee Directorsexisting under and by virtue of the Company, (ii) provide additional incentives to Non-Employee Directors, and (iii) promote the successGeneral Corporation Law of the Company's business. This Plan permitsState of Delaware (the “DGCL”), hereby certifies as follows pursuant to Section 242 of the grant of Options, Restricted Stock, Restricted Stock Units, and Other Stock-Based Awards.
2.Definitions. As used in this Plan, the following definitions shall apply:DGCL:
(a)FIRST": This Certificate of Amendment amends the Second Amended and Restated Certificate of Incorporation of the Corporation filed in the Office of the Secretary of State of the State of Delaware on December 23, 2016 (the “AwardCertificate of Incorporation" means, individually or collectively, a grant under this Plan of Options, Restricted Stock, Restricted Stock Units, or Other Stock‑Based Awards.”).
(b)SECOND"Award Agreement" means the written or electronic agreement setting forth the terms and provisions applicable to each Award granted under this Plan.: The Award Agreement is subject to the terms and conditions of this Plan.
(c)"Awarded Stock" means the Common Stock subject to an Award.
(d)"Beneficial Owners" shall have the same meaning ascribed to such term in Rule 13d-3 under the Exchange Act.
(e)"Board" means the Board of Directors of the Company.Corporation, acting in accordance with the provisions of Section 242 of the DGCL, adopted resolutions setting forth amendments to the Certificate of Incorporation of the Corporation to (i) increase the total number of shares of authorized common stock of the Corporation and (ii) permit stockholder action by written consent, and declaring said amendments to be advisable and in the best interests of the Corporation, as follows:
(f)RESOLVED"Change, that the first sentence of Control" means, except as otherwise provided in the Award Agreement, the consummation of anyArticle FOURTH of the following events:Corporation’s Certificate of Incorporation, as amended, be, and hereby is, amended to read as follows:
(i)Any Person becomes the Beneficial Owner, directly or indirectly,“FOURTH: The total number of more than securitiesshares of capital stock of the Company representing 30%Corporation shall be 203,805,000, which shall consist of 5,000,000 shares of Preferred Stock, par value of $0.01 per share, and 198,805,000 shares of Common Stock, par value of $0.01 per share.”
RESOLVED, that Article NINTH of the combined voting powerCorporation’s Certificate of Incorporation, as amended, be, and hereby is, amended to read as follows:
“NINTH: Any action which may be taken at any annual or special meeting of stockholders may be taken without a meeting and without prior notice, if one or more consents in writing, setting forth the action so taken, shall be signed by the holders of outstanding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all of the then outstanding voting securities of the Companyshares entitled to vote generally inthereon were present and voted.”
THIRD: That at the election of its directors (the "Outstanding Company Voting Securities"), including by way of merger, consolidation or otherwise; provided, however, that for purposes of this definition, the following acquisitions shall not be taken into account in determining whether a Change of Control has occurred: (i) any acquisition of voting securities2020 Annual Meeting of the Company directly fromStockholders held on [●], 2020, the Company or (ii) any acquisitionforegoing amendments were duly approved by the Company or any of its Subsidiaries of Outstanding Company Voting Securities, including an acquisition by any employee benefit plan or related trust sponsored or maintained by the Company or any of its Subsidiaries;
(ii)during any period of twelve (12) months, the following individuals (the "Incumbent Directors") cease for any reason to constitutemore than a majority of the number of directors then serving on the Board: individuals who, on the date this Plan is approved by the Company’s stockholders, constitute the Board and any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including, but not limited to, a consent or proxy solicitation, relating to the election of directors of the Company by or on behalf of a Person other than the Board) whose appointment or election by the Board or nomination for election by the Company’s stockholders was approved or recommended by a vote of at least a majority of the directors then still in office who either were directors on the date this Plan is approved by the Board or whose appointment, election or nomination for election was previously so approved or recommended;
(iii)consummation of a reorganization, recapitalization, merger or consolidation involving the Company, unless, following such transaction: (i) any individuals and entities that were the Beneficial Owners of Outstanding Company Voting Securities immediately prior to such transaction are the Beneficial Owners, directly or indirectly, of more than 50% of the combined voting power of the outstanding voting securities entitled
to vote generally in the electionshares of directors (or election of members of a comparable governing body) of the entity resulting from the transaction ("Successor Entity") in substantially the same relative proportions as their ownership immediately prior to such transaction; (ii) no Person (excluding any Successor Entity or any employee benefit plan or related trustcommon stock, par value $0.01 per share, of the Company such Successor Entity or any of their Subsidiaries) is the Beneficial Owner, directly or indirectly, of more than 30% of the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors (or comparable governing body) of the Successor Entity, except to the extent that such ownership existed prior to any such transaction; and (iii) at least a majority of the members of the board of directors (or comparable governing body) of the Successor Entity were Incumbent Directors (including persons deemed to be Incumbent Directors) at the time of the execution of the initial agreement or of the action of the Board providing for such transaction.
(iv)the sale or disposition, in one or a series of related transactions, of all or substantially all of the assetsSeries A Participating Preferred Stock, par value $0.01 per share, of the Company, to any Person.
Notwithstanding the foregoing, to the extent necessary to complyvoting together as one class, in accordance with Section 409A242 of the Code with respect to the payment of "nonqualified deferred compensation," "Change of Control"DGCL.
FOURTH: The foregoing amendments shall be limited to a "change in control event" as defined under Section 409A of the Code.
(g)"Code" means the Internal Revenue Code of 1986, as amended, and the U.S. Treasury regulations promulgated thereunder. Any reference to a section of the Code shall be a reference to any successor or amended section of the Code.
(h)"Common Stock" means the common stock of the Company.
(i)"Company" means Basic Energy Services, Inc., a Delaware corporation, and any successor to thereto.
(j)"Dividend Equivalent" means a credit, made at the sole discretion of the Board, to the account of a Non-Employee Director in an amount equal to the value of dividends paid on one Share for each Share represented by an Award held by such Non-Employee Director. Under no circumstances shall the payment of a Dividend Equivalent be made contingent on the exercise of an Option.
(k)"Exchange Act" means the Securities Exchange Act of 1934, as amended.
(l)"Fair Market Value" means, with respect to a share of Common Stockeffective as of a given date of determination hereunder, the closing price as quoted on any national stock exchange on which the Common Stock is then traded, or if the Common Stock was not traded on such date, then the immediately preceding date on which sales of shares of Common Stock have been so quoted or reported shall be used. If there should not be a public market for the Common Stock on such date, Fair Market Value shall be such value as determined by the Board in its discretion and, to the extent necessary, shall be determined in a manner consistent with Section 409A of the Code and the regulations thereunder.
(m)"Non-EmployeeDirector" means a member of the Board who is not a current employee of the Company or any of its Subsidiaries.
(n)"Option" means a nonstatutory stock option to purchase Common Stock granted pursuant to this Plan.
(o)"Other Stock-Based Awards" means any other awards not specifically described in this Plan that are valued in whole or in part by reference to, or are otherwise based on, Shares and are created by the Board pursuant to Section 8 of this Plan.
(p)"Person" shall have the meaning ascribed to such term in Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d) thereof, including a “group” as defined in Section 13(d) thereof.
(q)"Plan" means this 2017 Non-Employee Director Incentive Plan.
(r)"Restricted Stock" means Shares issued pursuant to a Restricted Stock Award under Section 7 of this Plan or issued pursuant to the early exercise of an Option.
(s)"Restricted Stock Unit" means, pursuant to Sections 4 and 8 of this Plan, an unfunded and unsecured promise to deliver Shares, cash or other securities equal in value to the Fair Market Value of one Share in the Company5:00 p.m., Eastern Time, on the date of vesting or settlement, or as otherwise set forth in the Award Agreement.
(t)"Share" means a share of Common Stock, as adjusted in accordance with Section 11filing of this Plan.
3.Stock Subject to this Plan.
(a)Stock Subject to this Plan. Subject to the provisionsCertificate of Section 11 of this Plan, the maximum aggregate number of Shares that may be issued pursuant to all Awards under this Plan is One Hundred Thousand (100,000) Shares. Shares shall not be deemed to have been issued pursuant to this Plan with respect to any portion of an Award that is settled in cash. Upon payment in Shares pursuant to the exercise or settlement of an Award, the number of Shares available for issuance under this Plan shall be reduced on a one-for-one basis. Subject to Section 11 of this Plan, any Award shall not exceed the following Share limitations per calendar year: (i) 20,000 (for Options) (ii) 20,000 (for Restricted Stock, Restricted Stock Units and Other Stock-Based Awards).
(b)Share Reserve. The Company, during the term of this Plan, shall at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of this Plan.
4.Administration of this Plan. This Plan shall be administered by the Board. The Board’s decisions, determinations, actions and interpretations shall be final, conclusive and binding on all persons having an interest in this Plan. Subject to the provisions of this Plan, the Board shall have the authority, in its discretion to:
(a)determine the Fair Market Value of Awards;
(b)determine the number of Shares to be covered by each Award granted under this Plan;
(c)approve forms of Award Agreements for use under this Plan;
(d)determine the terms and conditions, not inconsistentAmendment with the termsSecretary of this Plan, of any Award granted under this Plan, including but not limited to, the exercise price, the time or times when Awards may be exercised, any vesting acceleration or waiver of forfeiture or repurchase restrictions, and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Board, in its sole discretion, shall determine;
(e)construe and interpret the terms of this Plan and Awards granted pursuant to this Plan;
(f)prescribe, amend and rescind rules and regulations relating to this Plan;
(g)amend the terms of any outstanding Award, including the discretionary authority to extend the post‑termination exercise period of Awards and accelerate the satisfaction of any vesting criteria or waiver of forfeiture or repurchase restrictions, provided that any amendment that would adversely affect the Non-Employee Director's rights under an outstanding Award shall not be made without the Non-Employee Director's written consent;
(h)allow a Non-Employee Director to defer the receipt of the payment of cash or the delivery of Shares that would otherwise be due to the Non-Employee Director under an Award;
(i)determine whether Awards shall be settled in Shares, cash or in a combination of Shares and cash;
(j)determine whether Awards shall be adjusted for Dividend Equivalents;
(k)create Other Stock-Based Awards for issuance under this Plan;
(l)establish one or more programs under this Plan to permit selected Non-Employee Directors the opportunity to elect to defer receipt of consideration upon exercise of an Award or other event that absent the election, would entitle the Non-Employee Director to payment or receipt of Shares or other consideration under an Award; and
(m)make all other determinations that the Board deems necessary or advisable for administering this Plan.
5.Eligibility. Only Non-Employee Directors are eligible to participate in this Plan.
6.Options.
(a)Term of Option. The term of each Option shall be stated in the Award Agreement, but shall in on event be more than ten years from the date of grant.
(b)Option Exercise Price and Consideration.
(i)Exercise Price. The per Share exercise price shall be determined by the Board, but shall not be less than Fair Market Value per Share on the date of grant.
(ii)Waiting Period and Exercise Dates. At the time an Option is granted, the Board shall fix the period within which the Option may be exercised and shall determine any conditions that must be satisfied before the Option may be exercised. The Board, in its sole discretion, may accelerate the satisfaction of such conditions at any time.
(c)Form of Consideration. The Board shall determine the acceptable form of consideration for exercising an Option, including the method of payment.
(d)Exercise of Option. Any Option granted under this Plan shall be exercisable according to the terms of this Plan and at such times and under such conditions as determined by the Board and set forth in the Award Agreement. An Option shall be deemed exercised when the Company receives: (x) written or electronic notice of exercise (in accordance with the Award Agreement) from the person entitled to exercise the Option, and (y) full payment for the Shares with respect to which the Option is exercised. Full payment may consist of any consideration and method of payment authorized by the Board and permitted by the Award Agreement and this Plan. Shares issued upon exercise of an Option shall be issued in the name of the Non-Employee Director or, if requested by the Non-Employee Director, in the name of the Non-Employee Director and his spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Award, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment shall be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 11 of this Plan or the applicable Award Agreement. Exercising an Option in any manner shall decrease the number of Shares thereafter available for sale under the Option, by the number of Shares as to which the Option is exercised.
7.Restricted Stock.
(a)Grant of Restricted Stock. Subject to the terms and provisions of this Plan, the Board, at any time and from time to time, may grant Shares of Restricted Stock to a Non-Employee Director in such amounts as the Board, in its sole discretion, shall determine.
(b)Restricted Stock Agreement. Each Award of Restricted Stock shall be evidenced by an Award Agreement that shall specify the vesting schedule (if any), the number of Shares granted, and such other terms and conditions as the Board, in its sole discretion, shall determine. Unless the Board determines otherwise, Shares of Restricted Stock shall be held by the Company as escrow agent until the restrictions on the Shares have lapsed.
(c)Removal of Restrictions. Except as otherwise provided in this Section 7, Shares of Restricted Stock covered by each Award made under this Plan shall be released from escrow as soon as practical after the last day of the veting schedule (if any). The Board, in its sole discretion, may accelerate the time at which any restrictions shall lapse or be removed.
(d)Voting Rights. During the period of time the Shares remain unvested (if at all), Non-Employee Directors holding Shares of Restricted Stock may exercise full voting rights with respect to those Shares, unless the Board determines otherwise.
(e)Dividends and Other Distributions. During the vesting schedule (if any), Non-Employee Directors holding Shares of Restricted Stock shall be entitled to receive all dividends and other distributions paid with respect to such Shares unless otherwise provided in the Award Agreement. If any dividends or distributions are paid in Shares, the Shares shall be subject to the same restrictions on transferability and forfeitability as the Shares of Restricted Stock with respect to which they were paid.
(f)Return of Restricted Stock to Company. On the date set forth in the Award Agreement, the Restricted Stock for which restrictions have not lapsed shall revert to the Company and again shall become available for grant under this Plan.
8.Restricted Stock Units. Subject to the provisions of this Plan, the Board may grant Awards of Restricted Stock Units in such amounts and subject to such terms and conditions as the Board may determine.
9.Other Stock-Based Awards. Other Stock-Based Awards may be granted either alone, in addition to, or in tandem with, other Awards granted under this Plan and/or cash awards made outside of this Plan. The Board shall have authority to determine the Non-Employee Directors to whom and the time or times at which Other Stock-Based Awards shall be made, the amount of such Other Stock-Based Awards, and all other conditions of the Other Stock-Based Awards, including any dividend or voting rights and whether the Award should be paid in cash.
10.Non-Transferability of Awards. Unless determined otherwise by the Board, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by shall or by the laws of descent or distribution and may be exercised, during the lifetime of the Non-Employee Director, only by the Non-Employee Director. If the Board makes an Award transferable, such Award shall contain such additional terms and conditions as the Board deems appropriate.
11.Adjustments; Dissolution or Liquidation; Change of Control.
(a)Adjustments. In the event of any change in the outstanding Shares of Common Stock by reason of any stock split, stock dividend or other non‑recurring dividends or distributions, recapitalization, merger, consolidation, spin‑off, combination, repurchase or exchange of stock, reorganization, liquidation, dissolution or other similar corporate transaction that affects the Common Stock, an adjustment shall be made, as the Board deems necessary or appropriate, in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Plan. Such adjustment may include an adjustment to the number and class of Shares which may be delivered under this Plan, the number, class and price of Shares subject to outstanding Awards, the number and class of Shares issuable pursuant to Options, and the numerical limits in Section 3 of this Plan. Notwithstanding the preceding, the number of Shares subject to any Award always shall be a whole number.
(b)Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Board shall notify each Non-Employee Director as soon as practical prior to the effective date of the proposed transaction. The Board, in its sole discretion, may provide for a Non-Employee Director to have the right
to exercise his Award, to the extent applicable, until 10 days prior to the transaction as to all of the Awarded Stock covered thereby, including Shares as to which the Award would not otherwise be exercisable. In addition, the Board may provide that any Award vesting shall accelerate 100%, provided the proposed dissolution or liquidation takes place at the time and in the manner contemplated. To the extent it has not been previously exercised or vested, an Award shall terminate immediately prior to the consummation of such proposed action.
(c)Change of Control. Unless otherwise provided in an Award Agreement or the Board determines otherwise, in the event of a Change of Control, the Non-Employee Director shall fully vest in and have the right to exercise his Options as to all of the Award, including Shares as to which such Awards would not otherwise be vested or exercisable, and all restrictions on Restricted Stock, Restricted Stock Units and Other Stock-Based Awards, as applicable, shall lapse.
12.Date of Grant. The date of grant of an Award shall be, for all purposes, the date on which the Board makes the determination granting such Award, or a later date as is determined by the Board. Notice of the determination shall be provided to each Non-Employee Director within a reasonable time after the date of such grant.
13.Board and Stockholder Approval; Term of Plan. This Plan was adopted by the Board and became effective on January 6, 2017, provided that if this Plan is not approved by the Company’s stockholders at the Company’s 2017 Annual Meeting of Stockholders, this Plan shall immediately and automatically thereafter terminate and any and all outstanding Awards granted hereunder shall be extinguished. This Plan shall continue in effect for a term of ten years from the effective date unless terminated earlier under this Section 13 or Section 14 of this Plan.
14.Amendment and Termination of this Plan.
(a)Amendment and Termination. The Board may at any time amend, alter, suspend or terminate this Plan.
(b)Stockholder Approval. The Company shall obtain stockholder approval of any Plan amendment to the extent necessary to comply with applicable laws.
(c)Effect of Amendment or Termination. No amendment, alteration, suspension, or termination of this Plan shall materially or adversely impair the rights of any Non-Employee Director, unless otherwise mutually agreed upon by the Non-Employee Director and the Board, which agreement must be in writing and signed by the Non-Employee Director and the Company. Termination of this Plan shall not affect the Board’s ability to exercise the powers granted to it under this Plan with respect to Awards granted under this Plan prior to the date of termination.
15.Severability. Notwithstanding any contrary provision of this Plan or an Award to the contrary, if any one or more of the provisions (or any part thereof) of this Plan or the Awards shall be held invalid, illegal, or unenforceable in any respect, such provision shall be modified so as to make it valid, legal, and enforceable, and the validity, legality, and enforceability of the remaining provisions (or any part thereof) of this Plan or Award, as applicable, shall not in any way be affected or impaired thereby.
16.No Rights to Awards. No Non-Employee Director or other person shall have any claim to be granted any Award pursuant to this Plan, and neither the Company nor the Board shall be obligated to treat Non-Employee Directors or any other person uniformly.
17.No Stockholder Rights. Except as otherwise provided in this Plan or an Award Agreement, a Non-Employee Director shall have none of the rights of a stockholder with respect to Shares covered by an Award until the Non-Employee Director becomes the record owner of the Shares.
18.Fractional Shares. No fractional Shares shall be issued and the Board shall determine, in its sole discretion, whether cash shall be given in lieu of fractional Shares or whether such fractional Shares shall be eliminated by rounding up or down as appropriate.
19.Governing Law. This Plan, all Award Agreements, and all related matters, shall be governed by the lawsState of the State of Delaware, without regard to choice of law principles that direct the applicationDelaware.
FIFTH: All other provisions of the lawsCertificate of another state.Incorporation shall remain in full force and effect.
20.Unfunded Obligation. This Section 20 shall only apply to Awards that are not settled in Shares. Non-Employee Directors shall have the status of general unsecured creditors of the Company. Any amounts payable to Non-Employee Directors pursuant to this Plan shall be unfunded and unsecured obligations for all purposes, including, without limitation, Title I of the Employee Retirement Income Security Act of 1974, as amended. The Company shall be required to segregate any monies from its general funds, or to create any trusts, or establish any special accounts with respect to such obligations. The Company shall retain at all times beneficial ownership of any investments, including trust investments, which the Company may make to fulfill its payment obligations under this Plan. Any investments or the creation or maintenance of any trust for any Non-Employee Directors account shall not create or constitute a trust or fiduciary relationship between the Board, the Company and Non-Employee Directors, or otherwise create any vested or beneficial interest in any Non-Employee Directors or the Non-Employee Director's creditors in any assets of the Company. The Non-Employee Directors shall have no claim against the Company for any changes in the value of any assets that may be invested or reinvested by the Company with respect to this Plan.
21.
[Signature Page Follows]
Section 409A
. It is
IN WITNESS WHEREOF, the intentionCorporation has caused these Article of the Company that no Award shall be "deferred compensation" subject to Section 409A of the Code, unless and to the extent that the Board specifically determines otherwise, and this Plan and the terms and conditions of all Awards shall be interpreted accordingly. The following rules shall apply to Awards intendedAmendment to be subject to Section 409Asigned and attested by its duly authorized officer this [●] day of the Code ("[●], 2020.
409A Awards"):
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BASIC ENERGY SERVICES, INC. | |
By: | |
Name: | |
Title: | |
(a)Any distribution of a 409A Award following a separation from service that would be subject to Section 409A(a)(2)(A)(i) of the Code as a distribution following a separation from service of a "specified employee" (as defined under Section 409A(a)(2)(B)(i) of the Code) shall occur no earlier than the expiration of the six‑month period following such separation from service.
(b)In the case of a 409A Award providing for distribution or settlement upon vesting or lapse of a risk of forfeiture, if the time of such distribution or settlement is not otherwise specified in this Plan or Award Agreement or other governing document, the distribution or settlement shall be made no later than March 15 of the calendar year following the calendar year in which such 409A Award vested or the risk of forfeiture lapsed.
(c)In the case of any distribution of any other 409A Award, if the timing of such distribution is not otherwise specified in this Plan or Award Agreement or other governing document, the distribution shall be made not later than the end of the calendar year during which the settlement of the 409A Award is specified to occur.
(d)Each payment that a Non-Employee Director may receive under this Plan that is governed by Section 409A of the Code shall be treated as a "separate payment" for purposes of Section 409A of the Code.
22.Construction. Headings in this Plan are included for convenience and shall not be considered in the interpretation of this Plan. References to sections are to Sections of this Plan unless otherwise indicated. Pronouns shall be construed to include the masculine, feminine, neutral, singular or plural as the identity of the antecedent may require. This Plan shall be construed according to its fair meaning and shall not be strictly construed against the Company.
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