SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Securities Exchange Act of 1934
| ||||
| ||||
| ||||
| ||||
| ||||
☒ No fee required. ☐ Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: (2) Aggregate number of securities to which transaction applies: (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): (4) Proposed maximum aggregate value of transaction: (5) Total fee paid: ☐ Fee paid previously with preliminary materials. ☐ Check box if any part | ||||
| ||||
| ||||
| ||||
|
Dear Stockholder:
On behalf of the Boardfee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of Directors of Key Energy Services, Inc., which we refer to as our Company, we cordially invite you to attend the 2015 Annual Meeting of Stockholders of our Company, which we refer to as our Annual Meeting. We will hold our Annual Meeting at the Embassy Suites Houston Downtown, 1515 Dallas St., Houston, Texas 77010, at 9:00 a.m. (Central Daylight Time) on Thursday, May 14, 2015.
This year, we are taking advantage of the rules of the Securities and Exchange Commission that allow issuers to provide electronic access to proxy materials over the Internet instead of mailing printed copies of those materials to each stockholder. We believe that furnishing these materials electronically will allow us to more efficiently provide our stockholders with our proxy materials while reducing costs and reducing the impact of the Annual Meeting on the environment. However, if you would prefer to receive printed proxy materials, please follow the instructions included in the Notice of Internet Availability of Proxy Materials referenced below. If you have previously elected to receive our proxy materials electronically, you will continue to receive these materials electronically, unless you elect otherwise.
Onits filing.
Your vote is important. Whether or not you plan to attend the Annual Meeting, please take the time to vote. You may vote your shares via the Internet or by telephone by following the instructions included in this proxy statement or, if you elected to receive printed versions of the materials, by signing, dating and returning the enclosed paper proxy card in the enclosed postage-paid envelope. If you attend the Annual Meeting and wish to vote your shares in person, you may revoke your proxy.
Thank you for your cooperation and support.
Sincerely,
Dick Alario
Chairman of the Board,
President and Chief Executive Officer
Registration Statement No.:
KEY ENERGY SERVICES, INC.
1301 McKinney Street
Suite 1800
Houston, Texas 77010
To Be Held on May 14, 2015
| Meeting Date & Time: | | | Meeting Place: | | | Record Date: | |
| Wednesday May 1, 2019 8:00 a.m. Central Time | | | The Four Seasons Hotel Houston 1300 Lamar Street Houston, Texas 77010 | | | March 4, 2019 | |
| | | | | | | | |
We invite you to
The Board
Our Board setthe Company’s Common Stock (NYSE: KEG) entitles the owner of record at the close of business on March 2, 2015, as the record date for determining stockholders entitled4, 2019, to receive notice of and to vote at the Annual Meeting or any adjournment or postponement thereof. Each stockholder is entitled to one vote for each share of common stock of the Company held by such stockholder at that time.Annual Meeting. A list of all stockholders entitled to vote is available for inspection during normal business hours at our principal executive offices at 1301 McKinney St., Suite 1800, Houston, Texas 77010. This list will also be available at the Annual Meeting.
Your vote is important regardless
Our stock transfer books will remain open for the purchase and sale of our common stock.
online or request paper copies.
Kimberly R. Frye
Corporate Secretary
77010
Houston, Texas
March 23, 2015
15, 2019
| | | Page | | |||
| | | | 1 | | | |
| | | | 5 | | | |
| | | | 5 | | | |
| | | | 5 | | | |
| | | | 6 | | | |
| | | | 10 | | | |
| | | | 10 | | | |
| | | | 11 | | | |
| | | | 11 | | | |
| | | | 11 | | | |
| | | | 11 | | | |
| | | | 12 | | | |
| | | | 12 | | | |
| | | | 12 | | | |
| | | | 13 | | | |
| | | | 15 | | | |
| | | | 16 | | | |
| | | | 16 | | | |
| | | | 17 | | | |
| | | | 17 | | | |
| | | | 19 | | | |
| | | | 20 | | | |
| | | | 22 | | | |
| | | | 27 | | | |
| | | | 27 | | | |
| | | | 29 | | | |
| | | | 31 | | | |
| | | | 31 | | | |
| | | | 33 | | | |
| | | | 34 | | | |
| | | | 35 | | | |
| | | | 35 | | | |
| | | | 42 | | | |
| | | | 43 | | | |
| | | | 43 | | | |
| | | | 44 | | | |
| | | | 47 | | | |
| | | | 47 | | |
| | | Page | | |||
| | | | 47 | | | |
| | | | 48 | | | |
| | | | 50 | | | |
| | | | 50 | | | |
| | | | 50 | | | |
| | | | | | ||
| | | | 59 | | | |
| | | | 60 | | | |
| | | | 60 | | | |
| | | | | | ||
| | | | 62 | | | |
| | | | 62 | | | |
| | | | | | ||
| | | | 63 | | | |
| | | | 63 | | | |
| | | | | |
| ||||
| ||||
| ||||
i
PROXY STATEMENT FOR THE 2015 ANNUAL MEETING OF STOCKHOLDERS
This
IMPORTANT INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
|
| |||||
|
| |||||
|
| |||||
|
|
|
| |||||
| ||||||
| ||||||
|
|
| |||||
|
| |||||
|
| |||||
|
| |||||
|
|
| ||||
| ||||||
| ||||||
|
|
| |||||
|
|
|
|
Delivery of Documents to Security Holders Sharing an Address
Some banks, brokers and other nominee record holders may be participating in the practice of “householding” proxy statements and annual reports. This means that only one copy of this proxy statement or Annual Report to Stockholders may have been sent to multiple stockholders in your household, unless we have received contrary instructions. We will promptly deliver a separate copy of either document to you if you request it by writing to or calling us at the following address or telephone number:Counsel, 1301 McKinney Street, Suite 1800, Houston, Texas 77010, Attention: Investor Relations; (713) 651-4300. If you want to receive separate copies of this(2) duly executing a proxy statementbearing a later date, (3) voting again by Internet or by telephone or (4) attending the Annual Report to StockholdersMeeting and voting in person. Your last vote or proxy will be the future,vote or if you are receiving multiple copies and would like to receive only one copy for your household, you should contact your bank, broker or other nominee record holder, or you may contact usproxy that is counted. Attendance at the above address and telephone number.
Stock OwnershipAnnual Meeting will not cause your previously granted proxy to be revoked unless you vote or specifically so request.
This section provides information about the beneficial ownership of our common stock by our directors and executive officers. The numberpersons holding a majority of shares of Common Stock outstanding on the Record Date will constitute a quorum, permitting us to conduct our common stock beneficially ownedbusiness at the Annual Meeting. On the Record Date, there were 20,374,477 shares of Common Stock held by each person is determined under91 stockholders of record. Abstentions (i.e., if you or your broker mark “abstain” on a proxy or voting instruction form, or if a stockholder of record attends the rulesAnnual Meeting but does not vote (either before or during the Annual Meeting)) and broker non-votes will be considered to be shares present at the meeting for purposes of establishing a quorum.
The address for each person identified below is care of Key Energy Services, Inc., 1301 McKinney Street, Suite 1800, Houston, Texas 77010.
Throughout this proxy statement, the individuals who served as our PrincipalNamed Executive Officer and Principal Financial Officer during fiscal year 2014, and each of our three other most highly compensated executive officers in fiscal year 2014 are referred to as the “Named Executive Officers” or “NEOs.”
Set forth below is certain information with respect to beneficial ownership of our common stock as of March 2, 2015 by each of our NEOs and each of our directors, as well as the directors and all executive officers asCompensation.
Name of Beneficial Owner | Number of Shares(1) | Percentage of Outstanding Shares(2) | ||||||
Richard J. Alario (3) | 2,159,175 | 1.38 | % | |||||
Lynn R. Coleman | 113,951 | * | ||||||
Kevin P. Collins | 132,375 | * | ||||||
William D. Fertig | 205,789 | * | ||||||
W. Phillip Marcum | 212,875 | * | ||||||
Ralph S. Michael, III (4) | 166,672 | * | ||||||
William F. Owens | 113,174 | * | ||||||
Robert K. Reeves | 114,655 | * | ||||||
Mark H. Rosenberg | 50,863 | |||||||
Arlene M. Yocum | 113,951 | * | ||||||
Kim B. Clarke (5) | 637,430 | * | ||||||
J. Marshall Dodson (6) | 524,814 | |||||||
Barry B. Ekstrand (7) | 15,972 | * | ||||||
Kimberly R. Frye (8) | 416,822 | * | ||||||
Newton W. Wilson III (9) | 850,159 | * | ||||||
Current Directors and Executive Officers as a group (17 persons, including the persons listed above) (10) | 6,176,194 | 3.96 | % |
The following table sets forth, certain information regarding the beneficial ownership of common stock by each person, other than our directors or executive officers, who is known by us to beneficially own more than 5% of the outstanding shares of our common stock.
Shares Beneficially Owned | ||||||||
Name and Address of Beneficial Owner | Number | Percent(1) | ||||||
MHR Fund Management LLC(1) | 17,484,343 | 11.5 | % | |||||
40 West 57thStreet, 24thFloor | ||||||||
New York, NY 10019 | ||||||||
Dimensional Fund Advisors LP(2) | 10,255,671 | 6.68 | % | |||||
Building One | ||||||||
6300 Bee Cave Road | ||||||||
Austin, Texas 78746 | ||||||||
BlackRock, Inc.(3) | 7,698,106 | 5.00 | % | |||||
55 East 52nd Street | ||||||||
New York, NY 10022 |
We have not made any independent determination as to the beneficial ownership of each stockholder, and are not restricted in any determination we may make by reason of inclusion of such stockholder or its shares in this table.
Stock Ownership Guidelines
We believe that the ownership of our stock by our executive officers and directors aligns their interests with those of our stockholders. Accordingly, the Board adopted stock ownership guidelines in August 2011, as amended in August 2012, that require our Chief Executive Officer, or CEO, Board members, and executive officers who are direct reports to our CEO or Chief Operating Officer to own shares of common stock at least equal in value to the following multiples of base salary or annual retainer (as applicable) by the later of December 31, 2016, or at the end of five years of continuous service:
|
| |
For purposes of calculating share ownership levels required by these guidelines, we include both vested and unvested restricted stock and restricted stock units, but we do not include unexercised stock options, cash-based performance unit, SARs, or jointly-held stock. Stock ownership levels are calculated at year-end using the 12-month volume weighted average pricenon-binding advisory basis, of the Company’s common stock.
Named Executive Officer compensation for the fiscal year ended December 31, 2018 requires the affirmative vote of the holders of at least a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and entitled to vote. Broker non-votes are not taken into account in determining the outcome of this proposal, and abstentions will have the effect of a vote against this proposal. This advisory vote on executive compensation is not
The current Class III directors are Richard J. Alario, Ralph S. Michael, III and Arlene Yocum. Each of Mr. Alario, Mr. Michael and Ms. Yocum has been nominated by the Board pursuant to the recommendation of the Corporate Governance and Nominating (“CGN”) Committee to be elected by the holders of our common stock to serve a three-year term as a Class III director. If you execute and return the enclosed proxy card, the proxies named therein will vote to elect as Class III directors Richard J. Alario, Ralph S. Michael, III and Arlene Yocum, unless you indicate on your proxy card that your shares should be voted against one or more of the nominees or to abstain from votingCompany. Biographical information for each director nominee is contained in the election“Directors and Executive Officers” section below.
Each of the nominees has indicated his or her willingnessunwilling to serve if elected. However, if anyIf a director nominee shouldbecomes unable or unwilling to accept nomination or election, either the number of the Company’s directors will be unable to serve,reduced or the sharespersons acting under the proxy will vote for the election of common stock represented by proxies may be voted for a substitute nominee designated bythat the Board.
There are no family relationships between or among anyBoard of Directors recommends.
Director nominees are elected by a relative majority voteCompany’s director resignation policy, in uncontested director elections. Under this voting standard, in order to be elected in an uncontestedany non-contested election our bylaws require that a directorof directors, any incumbent nominee must receive more votes cast “for” such nominee’s election than “against” his or her re-election in order to be re-elected to the Board. The Board requires that a director tender his or her resignation if he or she fails to receive the required number of votes cast “against” such nominee’s election. Under our Corporate Governance Guidelines, as a condition to being nominated, each incumbent director is required to submit an irrevocable letter of resignation that will become effective if stockholders do not re-elect the director and the Board determines to accept the resignation.for re-election. If an incumbent director is not re-elected in an uncontested election, our CGNfails to receive the required vote for re-election, the Nominating and Governance Committee will recommendact on an expedited basis to determine whether to accept the director’s resignation and will submit its recommendation for prompt consideration by the Board. The Nominating and Governance Committee and the Board may consider any factors they deem relevant in deciding whether to accept a director’s resignation.
Name | | | Age | | | Title | |
Robert J. Saltiel | | | 56 | | | President, Chief Executive Officer and Director | |
J. Marshall Dodson | | | 47 | | | Senior Vice President, Chief Financial Officer and Treasurer | |
Scott P. Miller | | | 40 | | | Senior Vice President, Operational Services and Chief Administrative Officer | |
Katherine I. Hargis | | | 47 | | | Senior Vice President, General Counsel and Corporate Secretary | |
Louis Coale | | | 52 | | | Vice President and Controller | |
Phil Norment(2) | | | 59 | | | Chairman of the Board and Soter Director | |
Jacob Kotzubei(2)(3) | | | 50 | | | Soter Director | |
Bryan Kelln(2)(3) | | | 53 | | | Soter Director and Chair of the Compensation Committee | |
Mary Ann Sigler(3) | | | 64 | | | Soter Director and Chair of the Nominating and Governance Committee | |
Steve Pruett(1) | | | 57 | | | Lead Director and Independent Director | |
Sherman Edmiston(1) | | | 56 | | | Independent Director | |
Scott Vogel(2)(3) | | | 43 | | | Independent Director | |
Tripp Wommack(1)(2)(3) | | | 63 | | | Independent Soter Director and Chair of the Audit Committee | |
be a “Controlled Company” for purposes of the New York Stock Exchange (“NYSE”) Rule 303A.
Nominees for Term Expiring in 2018 (Class III Directors)
Richard J. AlarioCanWel Building Materials Group until April 11, 2016.
Ralph S. Michael, III, age 60, is our Lead Director He joined the Company in August 2018, and has been a member of the Board of Directors since March 2003. HeAugust 2018. Prior to joining the company, Mr. Saltiel served as President and CEO of Atwood Oceanics, Inc. from 2009 until the company’s sale in October 2017. Mr. Saltiel also served as Director of Atwood Oceanics from 2010 until October 2017. Prior to this, he served in various senior management roles, including Chief Operating Officer at Transocean Ltd. Mr. Saltiel previously held management positions at Nabors Industries, Enron Corp and McKinsey & Company, and he began his career as a process engineer with ExxonMobil. Mr. Saltiel holds a BSE in Chemical Engineering from Princeton University and an MBA from Northwestern University. An active member of his community, he serves on the Board of Trustees of Spindletop Charities.
Arlene M. Yocum, age 57, has been a member of the Board since October 2007. She is the Chair of our Audit Committee and is currently serving as Chair of the Special Committee. Ms. Yocum has been Executive Vice President Managing Executive of Client Salesfor First Reserve Corporation originating upstream equity investments. Mr. Pruett began his career as a petroleum engineer for ARCO Oil & Gas and Serviceworked in planning and business development for PNC’s Asset Management Group since 2003. Prior to that, she served as an Executive Vice President of PNC’s Institutional Investment Group from 2000 to 2003. Ms. Yocum was a director of Protection One, Inc until 2010. She holds a BA from Dickinson College and a JD from Villanova School of Law. We believe Ms. Yocum’s qualifications to serve on our Board include her extensive business experience, including her investment and finance expertise and her designation as an “audit committee financial expert,” as well as her knowledge of legal matters by virtue of her training as an attorney.
Continuing Directors
Biographical and other information with respect to all members of the Board of Directors whose current terms will continue after the annual meeting is set forth below:
Directors Whose Term ExpiresAmoco Production Company. Mr. Pruett received his B.S. in 2016 (Class I Directors)
Lynn R. Coleman, age 75, has been a member of the Board since October 2007. As a partner in the law firm of Skadden, Arps, Slate, Meagher and Flom LLP (“Skadden”), Mr. Coleman founded and led the firm’s energy practice for 20 years. He retired from the Skadden partnership in 2007. Prior to joining Skadden, Mr. Coleman served as the General Counsel of the U.S. Department of Energy and later as Deputy Secretary. From March 2008 through April 2010, Mr. Coleman served on the Supervisory Board of Lyondell Basell Industries, a large chemical company with operations in the U.S. and abroad. In May 2008, he also was appointed to the board of directors (non-executive Chair) of Total Holdings USA, Inc., a U.S. subsidiary of a large international oil company. In June 2010, Mr. Coleman was appointed to the board of directors of Defense Group Inc., a privately-owned corporation involved in defense and national security contracts, headquartered in Vienna, Virginia. In December 2012, Mr. Coleman was appointed to the board of directors of Standard Solar, Inc., a privately held corporation involved in development and installation of solar systems at the residential,
commercial and municipal level. In 2007 and 2008, he was a lecturer at the University of Virginia School of Law, offering a seminar on energy and environmental law. He has also been appointed adjunct professor at the University of Texas School of Law offering a similar seminar. He holds an LLB degreePetroleum Engineering from the University of Texas and a BAgraduated with an MBA from Abilene Christian College. We believethe Harvard Business School. Mr. Coleman’s qualifications to serve on our Board includePruett’s successful operating, financial, management and industry experience and his extensive experience practicing law in the energy industry, including his 20 yearsqualification as a senior partner and leader of the energy practice at a prominent global law firm. Hean “audit committee financial expert”, has wide ranging experience with energy transactions, litigation, government policy and regulation, in the U.S. and other countries. He has also served as managing partner and in similar management positions over other large groups of attorneys. His responsibilities in this capacity included decisions concerning strategic planning, hiring, partnership advancement, attorney evaluations, direction of work of other attorneys and management of client relationships.
Kevin P. Collins, age 64, has been a member ofled the Board since March 1996. Heto conclude he has been Managing Member of The Old Hill Company LLC since 1997, a company he founded that provides corporate finance and management consulting services. From 1979 until 1991, he worked for various financial institutions. From 1992the expertise necessary to 1997, he served as a principal of JHP Enterprises, Ltd.; and from 1985 to 1992, he served as Senior Vice President of DG Investment Bank, Ltd., both of which were engaged in providing corporate finance and advisory services. Mr. Collins was a director of WellTech, Inc. from January 1994 until March 1996, when WellTech was merged into Key. From 2000 until 2010, Mr. Collins servedserve as a director of the Penn Traffic Company. Additionally, Mr. Collins was alsoPruett’s knowledge and experience from serving as president and chief financial officer of a director of Applied Natural Gas Fuels, Inc. from November 2008 until October 2012company that went through an initial public offering adds a unique and Antiochvaluable perspective to the Company LLC from February 2009 until November 2013. Mr. Collins is alsoas a director of PowerSecure International, Inc. He holds BS and MBA degrees from the University of Minnesota. Mr. Collins is a CFA Charterholder. We believe Mr. Collins’ qualifications to serve on our Board include his extensive knowledge of Key and our industry, his analytical business background, his experience working on strategic transactions, as well as his lending and advisory experience with large financial institutions and his extensive experience serving on boards of directors, including his service on our and other companies’ audit committees.
W. Phillip Marcumpublic company.
William F. Owens, age 64, has been a member of the Board since January 2007. He served as Governorboard and President of ColoradoPyote Water Solutions from 1999 to 2007, as Colorado State Treasurer from 1995 to 1999, and, prior to that, as a Colorado State legislator. Before his public service,2010 until 2017. Additionally, Mr. Owens was on the consulting staff at Touche Ross & Co. (now Deloitte & Touche, LLP) and served as Executive Director of the Colorado Petroleum Association, which represented more than 400 energy firms doing business in the Rocky Mountains region. Currently, he is a Managing Director of Renew Strategies LLC, a Denver-based land and water development firm. Mr. Owens serves on the boards of Cloud Peak Energy Inc., Federal Signal Corporation and Bill Barrett Corporation. From 2007 through 2009, heWommack served on the board of Highlands Acquisition Corp.;directors of C&J Energy Services, Inc. from 2007March 2015 through 2012, he servedDecember 2016. Additionally, Mr. Wommack was the founder, Chairman and Chief Executive Officer of Basic Energy Services (formerly Sierra Well Services, Inc.), and following its initial public offering, Mr. Wommack continued to serve on the board of FESCO,directors of Basic Energy Services through June 2009. Mr. Wommack graduated with a Russian company listed on the Moscow exchange; andB.A. from 2009 through 2011, he served on the board of Keating Capital, Inc. He holds a BS from Stephen F. Austin State University. He is also a Senior Fellow at the University of Denver’s Institute for Public Policy Studies. We believeNorth Carolina, Chapel Hill, and earned a J.D. from the University of Texas. Mr. Owens’ qualifications to serve on our Board includeWommack was selected as a director because of his wide-ranging backgroundextensive executive-level management experience and proven leadership and business capabilities in the oil and gas industry and his qualification as an “audit committee financial expert”. Additionally, Mr. Wommack’s knowledge and experience in business,from serving as chairman and chief executive officer of a company that went through an initial public policy, managementoffering adds a unique and energy.
Directors Whose Term Expires in 2017 (Class II Directors)
William D. Fertigvaluable perspective to the Company as a public company. Mr. Wommack is an independent director appointed by Soter and holds one vote on matters presented to the Board.
Robert K. ReevesHouston.
Mark H. Rosenberg, age 53, has been a memberthe evaluation of the Board since May 2013. Since 2002, he has been a Principalability and since 2012 he has been a Principal and Chief Operating Officer with MHR Fund Management LLC, an ownerintegrity of greater than 10% of the Company’s common stock. From 2000 to 2001, Mr. Rosenberg was Vice President with CRT Capital Group LLC in Greenwich, CT. From 1991 to 2000, Mr. Rosenberg was President of Rosemark Management, Inc., manager of a portfolio of investments and operating businesses. Mr. Rosenberg serves as aany director, and a member of the Audit Committee and Compensation Committee of Northern Offshore Ltd. Previously, Mr. Rosenberg served on the boards of Ben Arnold Beverage Company of South Carolina until 2012 and Medical Nutrition USA, Inc. until its sale in 2010. Mr. Rosenberg graduated from the Wharton School, University of Pennsylvania and holds a BS in Economics. We believe Mr. Rosenberg’s qualifications to serve on our Board include his investment and market expertise.
The Board of Directors believes that approval of the election of Richard J. Alario, Ralph S. Michael, III and Arlene M. Yocum to serve as Class III directors is in the best interestsexecutive officer, promoter or control person of the Company and of our stockholders and therefore recommends a vote FOR each ofduring the nominees.
past ten years.
We operate under a leadership structure in which our CEO also serves as Chairman of the Board.
Mr. Alario was elected The Chairman presides at all meetings of the Board, as well as executive sessions of non-employee directors and, in consultation with the CEO, non-employee directors and management, establishes the agenda for each Board meeting. In the event that the non-management directors include directors who are not independent under the listing requirements of the NYSE, as is currently the case, our Corporate Governance Guidelines provide that at least once a year, there shall be an executive session including only independent directors and the director who presides at these meetings (the “Lead Director”) shall be chosen by the Board based on August 25, 2004.the recommendation of the NGC. The Board has appointed Mr. Alario,Pruett as Lead Director. The Board has also delegated certain matters to its certain committees. Mr. Saltiel, as the Company’s Chief Executive Officer (CEO),President, CEO and Director, works in concert with the rest of our majority-independent Board and the independent Lead Director, Mr. Michael, to oversee the execution of the Company’s strategy. The
Role of Lead Director. Consistent with industry best practices, the Board has a strong and active Lead Director whose duties and responsibilities ensure the Company maintains a corporate-governance structure with appropriate independencewill elect the directors.
and the remainder of the Board in assuring effective corporate governance in managing the affairs of the Board and the Company. Mr. Michael serves as a liaison between the Chairman and the independent directors and works with the Chairman to approve all meeting agendas. He presides at (i) executive sessions of the non-employee directors, which are held regularly in conjunction with each scheduled quarterly meeting of the Board, and (ii) any other meetings as determined by the Lead Director. Mr. Michael also approves information sent to the Board and approves meeting schedules to assureits charter. Although there is sufficient time for discussion of all agenda items. In addition, as Lead Director, Mr. Michael has authority to call special meetings of the independent directors of the Board and is also a member of the Board’s Executive Committee, providing additional representation for the independent directors in all actions considered by the Executive Committee between Board meetings. Mr. Michael is primarily responsible for monitoring communications from stockholders and other interested parties and to provide copies or summaries of such communications to the other directors as he considers appropriate.
As described further below under “Board Committees,” we have five standing committees—the Audit Committee, the Compensation Committee, the Equity Award Committee, the CGN Committee and the Executive Committee. Other than the Executive Committee and the Equity Award Committee, on which Mr. Alario serves, each of the Board committees consists solely of independent directors, and each committee has a separate chair.
We believe that we are well-served by this leadership structure, which is a configuration commonly utilized by other public companies in the United States. We have a single leader for Key who sets the tone and has primary responsibility forno formal diversity policy, our operations. We believe this structure provides clear leadership, not only for Key, but for our Board. General oversight of the business operations is provided by experienced independent directors with an independent Lead Director and separate committee chairs. We believe that having a combined Chairman / CEO, independent chairs for each of our Board committees (other than the Equity Award Committee and the Executive Committee) and an independent Lead Director provides the right form of leadership for Key and our stockholders.
Nevertheless, our Board believes that no single organizational model will provide the most effective leadership structure in all circumstances. Accordingly, the Board may periodically consider whether the offices of CEO and Chairman should continue to be combined and who should serve in such capacities, and it retains the authority to separate the positions of CEO and Chairman if it deems appropriate in the future.
In considering whether to recommend a particular candidate for inclusion in the Board’s slate of recommended director nominees, our CGN Committee applies the criteria set forth in the guidelines contained in the Selection Process for New Director Candidates, which are available in the “Corporate Governance” section of our website, www.keyenergy.com. These criteria include the candidate’s integrity, business acumen, a commitment to understand our business and industry, experience, conflicts of interest and ability to act in the interests of all stockholders. The CGN Committee does not assign specific weights to particular criteria, and no particular criterion is a prerequisite for each prospective nominee. Any director nominee made by the CGN Committee must be highly qualified with respect to some or all of these criteria.
Our Board believes that the backgrounds and qualifications of its directors, considered as a group, should provide a composite mix of experience, knowledge and abilities that will allow it to fulfill its responsibilities. Although therePursuant to its charter, the NGC is no formal diversity policy, the Selection Process for New Director Candidates tasks the CGN Committeetasked with recommending director candidates who will assist in achieving this mix of Board members having diverse professional backgrounds and a broad spectrum of knowledge, experience and capability. At least once a year, the CGN Committee reviewsNGC will review the size and structure of the Board and its committees, including recommendations on Board committee structure and responsibilities.
Any stockholder entitled to vote for the election of directors may propose candidates for consideration for nomination for election to the Board. The CGN Committee will evaluate candidates proposed by stockholders in compliance with the guidelines contained in the Selection Process for New Director Candidates in the same manner as other candidates. If the Board determines to nominate a stockholder-recommended candidate and recommends his or her election, then the
candidate’s name will be included on our proxy card for the next annual meeting. Stockholders also have the right under our bylaws to directly nominate director candidates, without any action or recommendation on the part of the CGN Committee or the Board, by following the procedures set forth under the heading “Stockholder Proposals for the 2016 Annual Meeting” below. Candidates nominated by stockholders in accordance with procedures set forth in our bylaws will not be included on our proxy card for the next annual meeting.
The
Director Attendance at Annual Meeting of Stockholders
Our Corporate Governance Guidelines provide that directors are expected to attenda committee member in 2018. The Company expects the annual meeting of stockholders. All of our current directors attended the 2014 annual meeting, and we expect substantially all of our directors to attend annual meetings of stockholders. Pursuant to the 2015 annual meeting.
Company’s certificate of incorporation and bylaws, as amended, adopted on the Effective Date, the current Board will serve for the Initial Board Term, which commenced on the Effective Date and will conclude upon the election of directors at the Annual Meeting.
The Compensation Committee also has a subcommittee for purposes of Section 16 of the Exchange Act. The subcommittee consists of two directors who both qualify as independent for NYSE purposes. The subcommittee of the Compensation Committee does not have a charter.
The responsibilities of the Audit Committee include the following:
The current members of our Audit Committee are Ms. Yocum and Messrs. Collins, Michael and Owens. Ms. Yocum is the chair of the Audit Committee.Act. All members of the Audit Committee meet the financial literacy standard required by the NYSE rules and at least one member qualifieseach qualify as having accounting or related financial management expertise under the NYSE rules. In addition, as required by the Sarbanes-Oxley Act of 2002, the SEC adopted rules requiring that each public company disclose whether or not its audit committee has an “audit committee financial expert” as a member. An “audit committee financial expert” is defined as a person who, based on his or her experience, satisfies all of the following attributes:
The Audit Committee held thirteen meetings in 2014.five (5) meetings. In addition, members of the Audit Committee speak regularly with our independent registered public accounting firm and separately with the members of management to discuss any matters that the Audit Committee or these individuals believe should be discussed, including any significant issues or disagreements concerning our accounting practices or financial statements. For further information, see “Report of the Audit Committee” below.
The current members of the Compensation Committee are Messrs. Reeves, Fertig, Marcum, Coleman and Rosenberg, all of whom are independent, non-employee members of the Board. Mr. Reeves is the chair of the Compensation Committee. No Compensation Committee member participates in any of our employee compensation programs other than the Key Energy Services, Inc. 2014 Equity and Cash Incentive Plan. The Compensation Committee held six meetings in 2014.
Mr. Alario is
Corporate Governance and Nominating Committee
The responsibilities of the CGN Committee include the following:
The CGN CommitteeNGC has the authority and funding to retain counsel and other experts or consultants, including the sole authority to select, retain and terminate any search firm to be used to identify director candidates and to approve the search firm’s fees and other retention terms.
The Executive Committee’s membership consists of the CEO and Chairman of the Board, the Lead Director and the chair of each of the Audit Committee, Compensation Committee and CGN Committee. The Executive Committee only acts in place of the Board in situations where it may be impracticable to assemble the full Board to consider a matter on a timely basis. Any action by the Executive Committee will be promptly reported to the full Board. Currently, Messrs. Alario, Fertig, Michael and Reeves and Ms. Yocum serve on the Executive Committee. The Executive Committee held two meetings in 2014.
From time to time, the Board has established ad hoc or special committees to oversee certain Company projects or issues. During 2014, a Special Committee of directors consisting of Ms. Yocum (chair of the Special Committee) and Messrs. Michael, Collins, Owens, Coleman and Reeves was formed to investigate (i) possible violations of the FCPA involving business activities of our operations in Russia, (ii) an allegation involving our Mexico operations that, if true, could potentially constitute a violation of certain of our policies, including our Code of Business Conduct, the FCPA and other applicable laws, and (iii) a review of certain aspects of the Company’s Colombia operations, as well as our other international locations. The Special Committee held seventeen meetings in 2014.
Name | | | Title | |
Robert Saltiel | | | President, Chief Executive Officer and Director(1) | |
J. Marshall Dodson | | | Senior Vice President, Chief Financial Officer and Treasurer(2) | |
Scott P. Miller | | | Senior Vice President, Operations Services and Chief Administrative Officer | |
Katherine I. Hargis | | | Senior Vice President, General Counsel and Secretary | |
Louis Coale | | | Vice President and Controller(3) | |
Robert Drummond | | | Former President, Chief Executive Officer and Director(4) | |
David Brunnert | | | Former Senior Vice President and Chief Operations Officer(5) | |
granted time-based cash retention awards (each, a “Retention Bonus”) to Messrs. Dodson, Brunnert and Miller and Ms. Hargis in the following amounts: $637,500, $400,000, $310,000 and $310,000, respectively. Twenty-five percent of the Retention Bonus will vest on July 1, 2019 and the remaining 75% will vest on July 1, 2020. In the event of a voluntary termination prior to vesting, any unvested portion of the Retention Bonus will be forfeited and in the event the Company terminates the executive’s employment without Cause (as defined in the 2016 Equity and Cash Incentive Plan (the “2016 ECIP”)), any unvested portion of the Retention Bonus will vest in full. Mr. Brunnert’s employment with the Company was terminated without Cause on September 12, 2018 and his Retention Bonus of $400,000 vested in full.
| What we do | | | What we don’t do | |
| ✓ Grant short and long-term incentive awards that are performance-based or “at-risk” | | | X No single-trigger change of control vesting | |
| ✓ Equity awards for executive officers subject to three-year vesting periods | | | X No excessive perquisites | |
| ✓ Policy prohibiting hedging and pledging transactions and short sales by executives | | | X No payment of dividends on unvested restricted stock units | |
| ✓ Compensation Committee engages an Independent Compensation Consultant | | | X No gross-ups for severance or change of control payments | |
| ✓ Stock ownership guidelines for non-employee directors and executives | | | ||
| ✓ Annual compensation risk assessment | | | ||
| ✓ All incentive-compensation is subject to a clawback policy | | |
| Basic Energy Services, Inc. | | | Patterson-UTI Energy, Inc. | |
| C & J Energy Services, Inc. | | | Pioneer Energy Services Corp. | |
| Exterran Corporation | | | RPC, Inc. | |
| Helix Energy Solutions Group, Inc. | | | Superior Energy Services, Inc. | |
| Oceaneering International, Inc. | | |
| Basic Energy Services, Inc. | | | Mammoth Energy Services, Inc. | |
| Forbes Energy Services, Inc. | | | Pioneer Energy Services, Corp. | |
| C&J Energy Services, Inc. | | | Nuverra Environmental Solutions, Inc. | |
| Newpark Resources, Inc. | | | NCS Multistage Holdings, Inc. | |
| Quintana Energy Services, Inc. | | | TETRA Technologies, Inc. | |
| Superior Energy Services, Inc. | | | Select Energy Services, Inc. | |
| Ranger Energy Services, Inc. | | | Nine Energy Services, Inc. | |
Name | | | 2018 Base Salaries(2) | | | 2017 Base Salaries | | ||||||
Robert Drummond | | | | $ | 750,000 | | | | | $ | 750,000 | | |
Robert J. Saltiel(1) | | | | $ | 750,000 | | | | | | N/A | | |
J. Marshall Dodson | | | | $ | 425,000 | | | | | $ | 375,000 | | |
David Brunnert | | | | $ | 400,000 | | | | | $ | 350,000 | | |
Katherine I. Hargis | | | | $ | 310,000 | | | | | $ | 300,000 | | |
Scott P. Miller | | | | $ | 310,000 | | | | | $ | 275,000 | | |
Louis Coale(3) | | | | $ | 240,000 | | | | | | N/A | | |
Level | | | Threshold | | | Target | | | Maximum | | | 2018 Achievement | |
Adj. EBITDA | | | $20.5 million | | | $41.0 million | | | $57.4 million | | | $22 million | |
Potential Payout | | | 50% of target | | | 100% of target | | | 140% of target | | | 43% of target | |
Metric | | | Weighting | | | Percent Earned | | | Weighted Payout | |
Adj. EBITDA | | | 80% at target | | | 54% of target goal | | | 43% of target | |
Safety | | | 10% at target | | | 0% of target goal | | | 0% of target | |
Free Cash Flow | | | 10% at target | | | 100% of target goal | | | 10% of target | |
Total Payout | | | | | | | | | 52.6% of target | |
Name | | | Base Salary as of 12/31/18 ($) | | | | | | Target Bonus as % of Base Salary | | | | | | Percentage of Payout | | | | | | Actual 2018 Bonus Award | |
Robert J. Saltiel(1) | | | $750,000 | | | X | | | 100% | | | X | | | N/A | | | = | | | $273,288 | |
J. Marshall Dodson | | | $425,000 | | | X | | | 80% | | | X | | | 52.6% | | | = | | | $178,989 | |
Scott P. Miller | | | $310,000 | | | X | | | 80% | | | X | | | 52.6% | | | = | | | $130,557 | |
Katherine I. Hargis | | | $310,000 | | | X | | | 80% | | | X | | | 52.6% | | | = | | | $130,557 | |
Louis Coale | | | $240,000 | | | X | | | 50% | | | X | | | 52.6% | | | = | | | $60,170(2) | |
Robert Drummond | | | N/A | | | X | | | 125% | | | X | | | N/A | | | = | | | $0 | |
David Brunnert | | | N/A | | | X | | | 80% | | | X | | | N/A | | | = | | | $0 | |
Title | | | Ownership Guidelines | |
Chief Executive Officer | | | Six times annual base salary | |
Direct Reports of the Chief Executive Officer | | | Three times annual base salary | |
Non-executive Board Member | | | Three times annual cash retainer | |
Name | | | Grant Date | | | Target LTI Values $ | | | 2019 LTI Equity Grant (# of RSUs) | | | 2019 LTI Share Value Feb 4, 2019 Close of $2.19 | | | 2019 LTI Cash Award | | | 2019 Grant Date LTI Total Value | | ||||||||||||||||||
Robert J. Saltiel | | | | | 2/4/2019 | | | | | $ | 3,500,000 | | | | | | 600,000 | | | | | $ | 1,314,000 | | | | | $ | 1,000,000 | | | | | $ | 2,314,000 | | |
J. Marshall Dodson | | | | | 2/4/2019 | | | | | $ | 1,000,000 | | | | | | 141,667 | | | | | $ | 310,251 | | | | | $ | 150,000 | | | | | $ | 460,251 | | |
Scott P. Miller | | | | | 2/4/2019 | | | | | $ | 500,000 | | | | | | 58,333 | | | | | $ | 127,749 | | | | | $ | 150,000 | | | | | $ | 277,749 | | |
Katherine I. Hargis | | | | | 2/4/2019 | | | | | $ | 500,000 | | | | | | 58,333 | | | | | $ | 127,749 | | | | | $ | 150,000 | | | | | $ | 277,749 | | |
Louis Coale | | | | | 2/4/2019 | | | | | $ | 250,000 | | | | | | 29,167 | | | | | $ | 63,876 | | | | | $ | 75,000 | | | | | $ | 138,876 | | |
Name and Principal Position | | | Year | | | Salary ($) | | | Bonus ($)(1) | | | Stock Awards ($)(2) | | | Option Awards ($)(2) | | | Non-equity Incentive Plan Compensation ($)(3) | | | All Other Compensation ($)(4) | | | Total | | ||||||||||||||||||||||||
Robert J. Saltiel Chief Executive Officer | | | | | 2018 | | | | | $ | 259,615 | | | | | $ | 273,288 | | | | | $ | 3,255,008 | | | | | $ | ___ | | | | | $ | ___ | | | | | $ | 484 | | | | | $ | 3,788,395 | | |
J. Marshall Dodson Chief Financial Officer | | | | | 2018 | | | | | $ | 399,039 | | | | | $ | ___ | | | | | $ | ___ | | | | | $ | ___ | | | | | $ | 178,989 | | | | | $ | 18,603 | | | | | $ | 596,631 | | |
| | | 2017 | | | | | $ | 375,000 | | | | | $ | 283,333 | | | | | $ | 1,808,886 | | | | | $ | ___ | | | | | $ | 165,262 | | | | | $ | 13,420 | | | | | $ | 2,645,901 | | | ||
| | | 2016 | | | | | $ | 359,351 | | | | | $ | 141,667 | | | | | $ | 3,464,858 | | | | | $ | 1,074,313 | | | | | $ | 202,350 | | | | | $ | 11,002 | | | | | $ | 5,253,541 | | | ||
Scott P. Miller Chief Administrative Officer | | | | | 2018 | | | | | $ | 291,827 | | | | | $ | ___ | | | | | $ | ___ | | | | | $ | ___ | | | | | $ | 130,557 | | | | | $ | 1,191 | | | | | $ | 423,575 | | |
| | | 2017 | | | | | $ | 275,000 | | | | | $ | 100.000 | | | | | $ | 840,260 | | | | | $ | ___ | | | | | $ | 121,192 | | | | | $ | 486 | | | | | $ | 1,336,938 | | | ||
| | | 2016 | | | | | $ | 266,233 | | | | | $ | 50.000 | | | | | $ | 1,587,870 | | | | | $ | 499,038 | | | | | $ | 148,390 | | | | | $ | 486 | | | | | $ | 2,552,017 | | | ||
Katherine I. Hargis General Counsel | | | | | 2018 | | | | | $ | 304,808 | | | | | $ | ___ | | | | | $ | ___ | | | | | $ | ___ | | | | | $ | 130,557 | | | | | $ | 1,341 | | | | | $ | 436,706 | | |
| | | 2017 | | | | | $ | 276,442 | | | | | $ | 80,000 | | | | | $ | 1,070,661 | | | | | $ | 109,002 | | | | | $ | 132,210 | | | | | $ | 594 | | | | | $ | 1,668,909 | | | ||
| | | 2016 | | | | | $ | 266,437 | | | | | $ | 40,000 | | | | | $ | 537,878 | | | | | $ | 166,332 | | | | | $ | 115,493 | | | | | $ | 594 | | | | | $ | 1,126,734 | | | ||
Louis Coale Vice President & Controller | | | | | 2018 | | | | | $ | 144,077 | | | | | $ | ___ | | | | | $ | 324,800 | | | | | $ | ___ | | | | | $ | 60,170 | | | | | $ | 644 | | | | | $ | 529,521 | | |
Separated During 2018 | | | | | | | | | | ||||||||||||||||||||||||||||||||||||||||
Robert Drummond Former Chief Executive Officer | | | | | 2018 | | | | | $ | 346,154 | | | | | $ | 750,000 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 14,510 | | | | | $ | 1,110,664 | | |
| | | 2017 | | | | | $ | 750,000 | | | | | $ | 766,000 | | | | | $ | 3,561,059 | | | | | $ | — | | | | | $ | 505,795 | | | | | $ | 6,916 | | | | | $ | 5,589,770 | | | ||
| | | 2016 | | | | | $ | 683,654 | | | | | $ | 1,000,000 | | | | | $ | 6,804,358 | | | | | $ | 2,114,929 | | | | | $ | 632,419 | | | | | $ | 15,299 | | | | | $ | 11,250,659 | | | ||
David Brunnert Former Chief Operating Officer | | | | | 2018 | | | | | $ | 280,192 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 801,179 | | | | | $ | 1,081,371 | | |
| | | 2017 | | | | | $ | 350,000 | | | | | $ | — | | | | | $ | 1,418,400 | | | | | $ | — | | | | | $ | 154,244 | | | | | $ | 624 | | | | | $ | 1,923,268 | | | ||
| | | 2016 | | | | | $ | 24,231 | | | | | $ | — | | | | | $ | 2,021,384 | | | | | $ | 665,370 | | | | | $ | — | | | | | $ | — | | | | | $ | 2,710,985 | | |
Name | | | Insurance(a) | | | Medical Expenses(b) | | | Other(c) | | | Severance(d) | | | Total | | |||||||||||||||
Robert J. Saltiel | | | | $ | 306 | | | | | | — | | | | | $ | 179 | | | | | | — | | | | | $ | 484 | | |
Robert Drummond | | | | $ | 471 | | | | | $ | 13,265 | | | | | $ | 774 | | | | | | — | | | | | $ | 14,510 | | |
J. Marshall Dodson | | | | $ | 1,224 | | | | | $ | 17,109 | | | | | $ | 270 | | | | | | — | | | | | $ | 18,603 | | |
David Brunnert | | | | $ | 876 | | | | | | — | | | | | $ | 302 | | | | | $ | 800,000 | | | | | $ | 801,179 | | |
Scott P. Miller | | | | $ | 1,011 | | | | | | — | | | | | $ | 180 | | | | | | — | | | | | $ | 1,191 | | |
Katherine I. Hargis | | | | $ | 1,072 | | | | | | — | | | | | $ | 270 | | | | | | — | | | | | $ | 1,341 | | |
Louis Coale | | | | $ | 437 | | | | | | — | | | | | | — | | | | | | — | | | | | $ | 644 | | |
| | | | | | | | | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of Stock or Units | | | All Other Option Awards: Number of Securities Underlying Options (#) | | | Exercise or Base Price of Option Awards ($/Sh) | | | Grant Date Fair Value of Stock and Option Awards ($)(2) | | ||||||||||||||||||||||||||||||||||||||||||
Name | | | Grant Date | | | Threshold ($) | | | Target ($) | | | Maximum Awards ($) | | | Threshold (#) | | | Target (#) | | | Maximum # | | |||||||||||||||||||||||||||||||||||||||||||||
Robert J. Saltiel | | | | | 8/20/2018 | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | — | | | | | | — | | | | | | 251,158 | | | | | | — | | | | | | — | | | | | | 3,255,008 | | |
| | | | | | | | | 421,875 | | | | | | 937,500 | | | | | | 990,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | ||
J. Marshall Dodson | | | | | — | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | — | | | | | | 153,000 | | | | | | 340,000 | | | | | | 448,800 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | ||
Scott P. Miller | | | | | — | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | — | | | | | | 111,600 | | | | | | 248,000 | | | | | | 327,360 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | ||
Katherine I. Hargis | | | | | — | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | | | | | | | — | | | | | | — | | |
| | | — | | | | | | 111,600 | | | | | | 248,000 | | | | | | 327,360 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | ||
Louis Coale | | | | | 7/01/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 20,000 | | | | | | — | | | | | | — | | | | | | 324,800 | | |
| | | | | | | | | 49,500 | | | | | | 110,000 | | | | | | 145,200 | | | | | | 5,000 | | | | | | 10,000 | | | | | | 20,000 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | ||
Robert Drummond | | | | | — | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | — | | | | | | 421,875 | | | | | | 937,500 | | | | | | 1,237,500 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | ||
David Brunnert | | | | | — | | | | | | | | | | | | | | | | | | | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | — | | | | | | 126,000 | | | | | | 280,000 | | | | | | 369,600 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
| | | OPTION AWARDS | | | STOCK AWARDS | | |||||||||||||||||||||||||||||||||||||||||||||||||||
Name | | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | | 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 (#)(2) | | | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | | | Equity Incentive Plan Awards: Number of Unearned Performance Units That Have Not Vested ($)(2) | | | Equity Incentive Plan Awards: Market Value of Unearned Units That Have Not Vested ($)(1) | | | |||||||||||||||||||||||||||||
Robert J. Saltiel | | | | | — | | | | | | — | | | | | | — | | | | | $ | — | | | | | | — | | | | | | 251,158 | | | | | $ | 519,897 | | | | | | — | | | | | $ | — | | | | ||
J. Marshall Dodson | | | | | 12,754 | | | | | | — | | | | | | — | | | | | $ | 19.35 | | | | | | 12/15/26 | | | | | | 51,012 | | | | | $ | 105,595 | | | | | | 76,518 | | | | | $ | 158,392 | | | | ||
| | | 12,754 | | | | | | — | | | | | | — | | | | | $ | 47.99 | | | | | | 12/20/26 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | ||||
David Brunnert | | | | | 7,900 | | | | | | — | | | | | | — | | | | | $ | 19.35 | | | | | | 12/15/26 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | ||
| | | 7,900 | | | | | | — | | | | | | — | | | | | $ | 47.99 | | | | | | 12/20/26 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | ||||
Scott P. Miller | | | | | 5,924 | | | | | | — | | | | | | — | | | | | $ | 19.35 | | | | | | 12/15/26 | | | | | | 23,696 | | | | | $ | 49,051 | | | | | | 35,544 | | | | | $ | 73,576 | | | | ||
| | | 5,924 | | | | | | — | | | | | | — | | | | | $ | 47.99 | | | | | | 12/20/26 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | ||||
Katherine I. Hargis | | | | | 4,938 | | | | | | — | | | | | | — | | | | | $ | 19.35 | | | | | | 12/15/26 | | | | | | 21,666 | | | | | $ | 44,849 | | | | | | 32,500 | | | | | $ | 67,275 | | | | ||
| | | 4,938 | | | | | | — | | | | | | — | | | | | $ | 47.99 | | | | | | 12/20/26 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | ||||
Louis Coale | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 10,000 | | | | | | 20,700 | | | | | | 10,000 | | | | | | 20,700 | | | |
Name | | | Number of Shares | | | Vesting Date | | |||
Robert J. Saltiel | | | | | 83,720 | | | | August 20, 2019 | |
| | | 83,720 | | | | August 20, 2020 | | ||
| | | 83,718 | | | | August 20, 2021 | | ||
J. Marshall Dodson | | | | | 25,506 | | | | December 31, 2019 | |
| | | 102,024 | | | | December 31, 2020 | | ||
Scott P. Miller | | | | | 11,848 | | | | December 31, 2019 | |
| | | 47,392 | | | | December 31, 2020 | | ||
Katherine I. Hargis | | | | | 10,833 | | | | December 31, 2019 | |
| | | 43,333 | | | | December 31, 2020 | | ||
Louis Coale | | | | | 3,334 | | | | July 1, 2019 | |
| | | 3,333 | | | | July 1, 2020 | | ||
| | | 13,333 | | | | July 1, 2021 | |
| | | Option Awards | | | Stock Awards | | ||||||||||||||||||
Name | | | Number of Shares Acquired on Exercise (#) | | | Value Realized on Exercise ($) | | | Number of Shares Acquired on Vesting (#)(1) | | | Value Realized on Vesting ($)(2) | | ||||||||||||
Robert J. Saltiel | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | N/A | | |
J. Marshall Dodson | | | | | — | | | | | | — | | | | | | 25,506 | | | | | $ | 52,797 | | |
Scott P. Miller | | | | | — | | | | | | — | | | | | | 11,848 | | | | | $ | 24,525 | | |
Katherine I. Hargis | | | | | — | | | | | | — | | | | | | 10,834 | | | | | $ | 22,426 | | |
Separated during 2018 | | | | | | | | | | | | | | | | | | | | | | | | | |
Robert Drummond | | | | | N/A | | | | | | N/A | | | | | | N/A | | | | | | N/A | | |
David Brunnert | | | | | — | | | | | | — | | | | | | 60,000 | | | | | $ | 790,200 | | |
shortage of available shares for issuance under the 2016 ECIP, the Company amended Mr. Saltiel’s Employment Agreement to revise the 2019 long-term annual incentive award from an equity award equal to $3.5 million to an award of 600,000 time-vesting restricted stock units that vest in equal annual installments on the first three anniversaries of the grant date and a time-vesting cash long-term incentive award in an amount equal to $1 million that vests 40% on the first anniversary of the grant date and 60% on the second anniversary of the grant date, subject to the terms of the applicable award agreements (the “2019 CEO LTI Grant.” The Audit Committee has also received from,2019 CEO LTI Grant was made on February 4, 2019 and discussedis reflected above in the section entitled “Annual Long Term Incentive Grant—2019 Long-Term Incentive Awards.” Mr. Saltiel is entitled to at least four weeks of vacation per year and to participate in other benefit plans on terms consistent with Grant Thornton LLP,those applicable to the Company’s independent registered public accounting firm, various communicationsemployees generally, including, without limitation, personal time off, group medical and dental, life, accident and disability insurance, retirement plans and supplemental and excess retirement benefits as the Company may from time-to-time provide to similarly situated employees. As a condition of employment, Mr. Saltiel entered into a non-competition agreement pursuant to which Mr. Saltiel has agreed not to compete with Key or to solicit customers or employees of Key after the termination of his employment for a period of time equal to that during which he receives severance compensation or for a period of three years following a severance received after a Change of Control (as defined in his agreement).
The Company’s independent registered public accounting firm also provided the AuditCompensation Committee with the written disclosures requiredtarget bonus based on a percentage of his base salary as determined by Publicthe Compensation Committee. Mr. Drummond is entitled to at least four weeks of vacation per year and to participate in the Company’s Executive Health Reimbursement Plan, Director and Officer Liability Insurance, voluntary annual physicals and other benefit plans on terms consistent with those applicable to the Company’s employees generally, including, without limitation, personal time off, group medical and dental, life, accident and disability insurance, retirement plans and supplemental and excess retirement benefits as the Company Accounting Oversight Board Rule 3526 (Communicationmay from time-to-time provide to similarly situated employees. As a condition of employment, Mr. Drummond entered into a non-competition agreement pursuant to which Mr. Drummond has agreed not to compete with Audit Committees Concerning Independence).Key or to solicit customers or employees of Key for a period of one year after the termination of his employment. In addition, in connection with Mr. Drummond’s promotion to Chief Executive Officer, the Company entered into a Promotion Bonus Agreement with Mr. Drummond on March 7, 2016 pursuant to which Mr. Drummond would receive a promotion bonus of $750,000 (the “Promotion Bonus”) if he was still employed by the Company on March 5, 2018. The Audit Committee has discussedCompany revised the Promotion Bonus Agreement on
BasedCompany is terminated for any reason other than for “Cause” within 12 months following a “Change of Control” (both terms as defined in the revised Promotion Bonus Agreement), rather than on its discussionsa pro-rata basis.
ByCompany’s Welfare Plans and the Audit CommitteeCompany shall pay all required COBRA premiums until the earlier of the Boardsecond anniversary of Directors
Arlene M. Yocum, Chair
Kevin P. Collins
Ralph S. Michael, III
William F. Owens
Below arehis death or the names, agesdate on which his spouse and certain other information on each of our current executive officers, other than Mr. Alario, whose information is provided above.
his dependents receive replacement coverage that would terminate their COBRA termination rights.
Kim B. Clarke, age 59,full.
Kimberly R. Frye, age 46,Company’s Senior Vice President, General Counsel and Secretary.Corporate Secretary on September 12, 2017, the compensation committee approved the terms for an employment agreement to be entered into with Ms. Frye joined KeyHargis effective December 4, 2017, which supersedes and replaces that certain Change of Control Agreement between the Company and Ms. Hargis dated January 6, 2014. The employment agreement provides for an annual base salary of $300,000 and contains certain confidentiality, non-competition and intellectual property covenants. In July 2018, the Compensation Committee increased Ms. Hargis’ annual base salary to $310,000.
Mark A. Cox, age 55,full.
Name | | | Non- Renewal(1) | | | For Cause or Voluntary Resignation(2) | | | Death(3) | | | Disability(4) | | | Without Cause or For Good Reason(5) | | | Change of Control (No Termination)(6) | | | Change of Control and Termination(7) | | |||||||||||||||||||||
Robert J. Saltiel | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash Severance | | | | $ | 3,000,000 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 3,000,000 | | | | | $ | — | | | | | $ | 4,500,000 | | |
RSU(8) | | | | $ | 519,897 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 519,897 | | | | | $ | — | | | | | $ | 519,897 | | |
Health & Welfare(9) | | | | $ | 47,287 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 47,287 | | | | | $ | — | | | | | $ | 47,287 | | |
Retention Bonus(10) | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Outplacement(11) | | | | $ | 15,000 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 15,000 | | | | | $ | — | | | | | $ | 15,000 | | |
Pro Rata Bonus(12) | | | | $ | 273,288 | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 273,288 | | | | | $ | — | | | | | $ | 273,288 | | |
Total Benefit | | | | $ | 3,855,472 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 3,855,472 | | | | | $ | 0 | | | | | $ | 5,355,472 | | |
Name | | | Non- Renewal(1) | | | For Cause or Voluntary Resignation(2) | | | Death(3) | | | Disability(4) | | | Without Cause or For Good Reason(5) | | | Change of Control (No Termination)(6) | | | Change of Control and Termination(7) | | |||||||||||||||||||||
J. Marshall Dodson | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash Severance | | | | $ | 850,000 | | | | | $ | — | | | | | $ | — | | | | | $ | 425,000 | | | | | $ | 850,000 | | | | | $ | — | | | | | $ | 2,295,000 | | |
RSU(8) | | | | $ | 263,987 | | | | | $ | — | | | | | $ | 263,987 | | | | | $ | 263,987 | | | | | $ | 263,987 | | | | | $ | — | | | | | $ | 263,987 | | |
Health & Welfare(9) | | | | $ | 62,367 | | | | | $ | — | | | | | $ | 80,708 | | | | | $ | 83,157 | | | | | $ | 62,367 | | | | | $ | — | | | | | $ | 83,157 | | |
Retention Bonus(10) | | | | $ | 637,500 | | | | | $ | — | | | | | $ | 637,500 | | | | | $ | 637,500 | | | | | $ | 637,500 | | | | | $ | — | | | | | $ | 637,500 | | |
Outplacement(11) | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Pro Rata Bonus(12) | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Total Benefit | | | | $ | 1,813,855 | | | | | $ | 0 | | | | | $ | 982,196 | | | | | $ | 1,409,644 | | | | | $ | 1,813,855 | | | | | $ | 0 | | | | | $ | 3,279,644 | | |
Name | | | Non- Renewal(1) | | | For Cause or Voluntary Resignation(2) | | | Death(3) | | | Disability(4) | | | Without Cause or For Good Reason(5) | | | Change of Control (No Termination)(6) | | | Change of Control and Termination(7) | | |||||||||||||||||||||
Scott Miller | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash Severance | | | | $ | 310,000 | | | | | $ | — | | | | | $ | 310,000 | | | | | $ | 310,000 | | | | | $ | 310,000 | | | | | $ | — | | | | | $ | 310,000 | | |
RSU(8) | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 49,051 | | |
Health & Welfare(9) | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 22,806 | | |
Retention Bonus(10) | | | | $ | 310,000 | | | | | $ | — | | | | | $ | 310,000 | | | | | $ | 310,000 | | | | | $ | 310,000 | | | | | $ | — | | | | | $ | 310,000 | | |
Outplacement(11) | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Pro Rata Bonus(12) | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Total Benefit | | | | $ | 620,000 | | | | | $ | 0 | | | | | $ | 620,000 | | | | | $ | 620,000 | | | | | $ | 620,000 | | | | | $ | 0 | | | | | $ | 691,857 | | |
Name | | | Non- Renewal(1) | | | For Cause or Voluntary Resignation(2) | | | Death(3) | | | Disability(4) | | | Without Cause or For Good Reason(5) | | | Change of Control (No Termination)(6) | | | Change of Control and Termination(7) | | |||||||||||||||||||||
Katherine I. Hargis | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash Severance | | | | $ | 310,000 | | | | | $ | — | | | | | $ | 310,000 | | | | | $ | 310,000 | | | | | $ | 310,000 | | | | | $ | — | | | | | $ | 310,000 | | |
RSU(8) | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 44,851 | | |
Health & Welfare(9) | | | | $ | 24,879 | | | | | $ | — | | | | | $ | 24,879 | | | | | $ | 24,879 | | | | | $ | 24,879 | | | | | $ | — | | | | | $ | 24,879 | | |
Retention Bonus(10) | | | | $ | 310,000 | | | | | $ | — | | | | | $ | 310,000 | | | | | $ | 310,000 | | | | | $ | 310,000 | | | | | $ | — | | | | | $ | 310,000 | | |
Outplacement(11) | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Pro Rata Bonus(12) | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Total Benefit | | | | $ | 644,879 | | | | | $ | 0 | | | | | $ | 644,879 | | | | | $ | 644,879 | | | | | $ | 644,879 | | | | | $ | 0 | | | | | $ | 689,730 | | |
Name | | | Non- Renewal(1) | | | For Cause or Voluntary Resignation(2) | | | Death(3) | | | Disability(4) | | | Without Cause or For Good Reason(5) | | | Change of Control (No Termination)(6) | | | Change of Control and Termination(7) | | |||||||||||||||||||||
Louis Coale | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash Severance | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
RSU(8) | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 20,700 | | |
Health & Welfare(9) | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Retention Bonus(10) | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Outplacement(11) | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Pro Rata Bonus(12) | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | — | | |
Total Benefit | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 0 | | | | | $ | 20,700 | | |
Name | | | Fees Earned or Paid in Cash ($) | | | Stock Awards ($)(1) | | | Total ($) | | |||||||||
Scott D. Vogel | | | | $ | 125,000 | | | | | $ | 125,000 | | | | | $ | 250,000 | | |
Sherman K. Edmiston III | | | | $ | 135,000 | | | | | $ | 125,000 | | | | | $ | 260,000 | | |
H.H. Tripp Wommack, III | | | | $ | 145,000 | | | | | $ | 125,000 | | | | | $ | 270,000 | | |
Steven H. Pruett | | | | $ | 135,000 | | | | | $ | 125,000 | | | | | $ | 260,000 | | |
C. Christopher Gaut | | | | $ | 135,000 | | | | | $ | 135,000 | | | | | $ | 270,000 | | |
Robert Drummond | | | | $ | 34,188 | | | | | $ | — | | | | | $ | 34,188 | | |
Name of Beneficial Owner | | | Total Beneficial Ownership(1) | | | Percent of Outstanding Shares(2) | | ||||||
Non-Management Directors: | | | | ||||||||||
Scott D. Vogel(3) | | | | | 28,907 | | | | | | * | | |
Sherman K. Edmiston III(4) | | | | | 19,718 | | | | | | * | | |
H.H. Tripp Wommack III(5) | | | | | 19,718 | | | | | | * | | |
Steven H. Pruett(6) | | | | | 19,718 | | | | | | * | | |
Bryan Kelln | | | | | — | | | | | | * | | |
Jacob Kotzubei | | | | | — | | | | | | * | | |
Philip Norment | | | | | — | | | | | | * | | |
Mary Ann Sigler | | | | | — | | | | | | * | | |
Named Executive Officers: | | | | ||||||||||
Robert J. Saltiel | | | | | — | | | | | | * | | |
Robert W. Drummond(7) | | | | | 68,123 | | | | | | * | | |
J. Marshall Dodson(8) | | | | | 75,110 | | | | | | * | | |
David Brunnert | | | | | 68,608 | | | | | | * | | |
Scott P. Miller(9) | | | | | 15,480 | | | | | | * | | |
Katherine I. Hargis(10) | | | | | 18,807 | | | | | | * | | |
Louis Coale | | | | | — | | | | | | * | | |
Current Directors and NEOs as a group (15 Persons): | | | | | 334,189 | | | | | | 1.64% | | |
Jeffrey S. Skelly, age 57, Senior Vice President, Rig Services, Fluid Management Services and Operations Support. Mr. Skelly joined Key as its Senior Vice President, Rig Services effective on June 21, 2010. He currently serves as Senior Vice President, Rig Services and Operations Support. Mr. Skelly’s previous role was that of Chief Operating Officer at GEODynamics, a technology company focused on perforating systems and solutions, from November 2007 to January 2010. Previously, he was President for Expro Group’s Western Hemisphere Operations from January 2005 to June 2007. Mr. Skelly has also served in several roles at Halliburton including Global Manufacturing Operations Manager, Global Product Manager for Logging and Perforating, and Regional Manager of Wireline and Testing for the Middle East. Mr. Skelly began his career in the oil and gas services business after earning a B.S. Degrees in Civil Engineering and Ocean Engineering from Florida Institute of Technology. After college, he joined Schlumberger Limited (Schlumberger N.V.) (“Schlumberger”) and held various positions at Schlumberger over the next 15 years including Field Engineer, Technical Manager, Field Service Manager, District Manager, Area Operations Manager, and Sales Manager.
Fees of Independent Registered Public Accounting Firm
Effective December 1, 2006, Grant Thornton LLP was engaged as our independent registered public accounting firm. options.
2014 (1) | 2013 (2) | |||||||
Audit fees | $ | 2,202,718 | $ | 2,201,185 | ||||
Audit-related fees | — | — | ||||||
Tax fees | — | — | ||||||
All other fees | — | — | ||||||
|
|
|
| |||||
Total | $ | 2,202,718 | $ | 2,201,185 | ||||
|
|
|
|
Audit fees consist of professional services rendered for the auditoutstanding shares of our annual financial statements, the auditcommon stock.
| | | Shares Beneficially Owned | | |||||||||
Name and Address of Beneficial Owner | | | Number | | | Percent | | ||||||
Soter Capital, LLC(1) 360 North Crescent Drive, South Building Beverly Hills, CA 90210 | | | | | 10,204,609 | | | | | | 50.11% | | |
Rutabaga Capital Management(2) 64 Broad Street, 3rd Floor Boston, MA 02109 | | | | | 2,285,871 | | | | | | 11.26% | | |
Contrarian Capital Management, L.L.C.(3) 411 West Putnam Avenue, Suite 425 Greenwich, CT 06830 | | | | | 1,803,736 | | | | | | 8.89% | | |
Goldman Sachs & Co LLC(4) 200 West Street New York, NY 10282 | | | | | 1,514,591 | | | | | | 7.5% | | |
Policy for Pre-Approvaldetermination we may make by reason of Audit and Non-Audit Fees
The Audit Committee has an Audit and Non-Audit Services Pre-Approval Policy. The policy requires the Audit Committee to pre-approve the audit and non-audit services performed by our independent registered public accounting firm. Under the policy, the Audit Committee establishes the audit, audit-related, tax and all other services that have the approvalinclusion of such stockholder or its shares in this table.
The Audit Committee has delegated to its chair the authority to pre-approve services, not previously pre-approved by the Audit Committee, that involve aggregate payments (with respect to each such service or group of related services) of $50,000 or less. The chair will report any such pre-approval to the Audit Committee at its next scheduled meeting.
The policy contains procedures for a determination by the CFO that proposed services are included within the list of services that have received pre-approval of the Audit Committee. Proposed servicescopies of such forms furnished or available to us, we believe that require specific approval byour directors, executive officers and 10% stockholders complied with all Section 16(a) filing requirements for the Audit Committee must be submitted jointly byfiscal year ended December 31, 2018. In making these statements, we have relied upon an examination of the independent registered public accounting firmcopies of Forms 3, 4 and 5, and amendments thereto, and the CFOwritten representations of our directors, executive officers and must include backup statements10% stockholders.
Related to Our Affiliate Transaction Policy requires advance reviewReorganization
interest.
Mr. Reeves joined our Board in October 2007 and is currently an executive officer with Anadarko, one of our customers. During the fiscal year ended December 31, 2014, Anadarko purchased services from us for approximately $32.5 million, which is less than 1% of Anadarko’s revenue for 2014. In addition, Mr. Reeves’ son-in-law, West P. Gotcher, who had been an employee of Edge Oilfield Services, LLC, joined the Company as a non-officer employee upon our acquisition of Edge in August 2011. Mr. Gotcher’s total compensation received from the Company in 2014 was approximately $159,950. Both relationships were reviewed and approved under the Affiliate Transaction Policy. The Board has determined that our relationships with such related parties do not affect the independence of Mr. Reeves and that Mr. Reeves qualifies as “independent” in accordance with NYSE listing standards.
EXECUTIVE COMPENSATION
This section of the proxy statement describes and analyzes our executive compensation philosophy and program in the context of the compensation paid to our Named Executive Officers for 2014. Our 2014 Named Executive Officers are:
As of February 16, 2015, Mr. Wilson no longer served as our Executive Vice President. He will remain an employee of the Company until May 17, 2015. Effective October 7, 2014, Mr. Ekstrand, who served as Senior Vice President, CTS, FRS and Edge, was no longer with the Company, but was still considered an Named Executive Officer for the 2014 year under the SEC’s disclosure rules.
In this Compensation Discussion and Analysis, we first provide an executive summary of our actions and results from 2014 related to executive compensation. We next explain the factors affecting our compensation decisions, results from 2014 and changes for the 2015 executive compensation program. We will also explain our principles that guide our Compensation Committee’s executive compensation decisions, including the compensation philosophy. We encourage you to read the entirety of the executive compensation discussion.
Executive Summary
Pay for Performance Philosophy
We are committed to providing value to our shareholders. We believe that our executive compensation program fairly and appropriately compensates our executive officers. The core principle of our executive compensation philosophy is to pay for performance in ways that we believe will motivate our executives to develop and execute strategies that deliver performance improvements over the short and long term. Accordingly, our executive compensation program is heavily weighted toward “at-risk” performance-based compensation. We have three principal elements of total direct compensation: base salary, annual incentive compensation and long-term incentive compensation. These elements provide our compensation committee with a platform to reinforce our pay-for-performance philosophy while addressing our business needs and goals with appropriate flexibility.
To illustrate our pay for performance philosophy, the following charts set forth each element as a proportion of the total direct compensation (“TDC”) that the CEO and the other NEOs were targeted to receive for 2014. For the CEO, 84% of his TDC was at-risk, performance based and not guaranteed.
For the other NEOs, on average, 76% of their TDC was at-risk, performance based and not guaranteed.
CEO Reported Pay vs. Realized Pay
Realized Compensation Reflects Alignment with Stockholders
At the Company, a substantial portionrecommendation of the compensation granted by the Compensation Committee, on February 22, 2019, our Board adopted, subject to the CEO and reported in the “Summary Compensation Table” represents an incentive for future performance, not current cash compensation. This demonstrates the linkage between compensation and performance results. The table below sets forth the difference between pay shown in the “Summary Compensation Table” (“Reported Compensation”) and the actual pay realizedapproval by the CEO for fiscal years 2014, 2013, and 2012:
Year of Compensation | Total Reported Compensation | Total Realized Compensation | Realized Compensation vs. Reported Compensation | Realized Compensation as a Percentage of Reported Compensation | ||||||||||||
2014 | $ | 4,809,137 | $ | 2,730,986 | -$ | 2,078,151 | 57 | % | ||||||||
2013 | $ | 5,651,334 | $ | 3,771,010 | -$ | 1,880,325 | 67 | % | ||||||||
2012 | $ | 4,539,063 | $ | 3,480,585 | -$ | 1,058,478 | 77 | % |
Realized compensation is different than reported compensation as disclosed in the “Summary Compensation Table” below.
Reported Compensation -the total compensation based on the current reporting rules for the “Summary Compensation Table” to be disclosed by a Company. Reported compensation includes the “grant date fair value” of equity awards (i.e. restricted stock and performance shares), rather than the annual expense value for accounting purposes. The “grant date fair value” is also calculated without any consideration to the risk of forfeitures with the award.
Realized Compensation – the total compensation actually received by the executive during the fiscal year, including base salary, the current bonus cash payout, market value of previously granted restricted stock that vested in the current year, market value of previously awarded performance shares vesting in the current year (assuming performance was achieved), and all other compensation amounts realized in the current year. This excludes the value of newly awarded/unvested restricted stock and performance share grants, change in pension value, and other amounts that will not actually be received until a future date. Realized compensation as a percentage of reported compensation has decreased 20% since 2012.
A realized compensation analysis, on the other hand, measures the value of long-term compensation as it is earned rather than the value at the time of the grant. Because Key is ultimately focused on the interests of the shareholder, the realized compensation of the executive team, particularly the CEO, is linked to the performance of the Company’s total shareholder return and other performance metrics as described in the summary of compensation components below. The chart below details the performance of total shareholder return (“TSR”) over the past three years in comparison to reportedcompensation and to the compensation that was actually realized by the CEO in order to show that, based on our compensation philosophy, the compensation plans align realized pay with shareholder return:
Note: The total shareholder return (“TSR”) is the value of the stock performance between January 1st and year end. The realized long-term incentive values included the Realized TDC for the chart above include the restricted stock shares and the performance shares vested in each of the years at the year end stock price.
Executive Compensation Principles
As discussed in greater detail in this Compensation Discussion & Analysis, we believe that our compensation practices align the interests of our CEO and other executives to that of our stockholders, to drive performance. During the 2014 calendar year we evaluated the compensation practices that needed to be addressed and made significant changes, the majority of which are applicable to the 2015 calendar year, to our executive compensation practices, based on the feedback we received from the shareholders and our compensation consultants. An overview of the practices we have implemented to drive this behavior and improve performance is highlighted below.
We Pay for Performance.
We Follow Compensation Best Practices.
We Follow Corporate Governance Best Practices.
2014 Market and Industry Context
Our core businesses depend on our customers’ willingness to make expenditures to produce, develop and explore for oil and natural gas. Industry conditions are influenced by a number of factors, such as the domestic and international supply and demand for oil and natural gas, domestic and international economic conditions, political instability in oil producing countries and merger, acquisition and divestiture activity among E&P companies.
2014 was a year of extraordinary volatility in the energy services industry. During the first six months of 2014, oil prices climbed approximately 9%. Over the course of the first half of 2014, our businesses in the U.S. were faced with strong competitive forces in a market environment where demand for completion related services for horizontal oil wells continued to grow. In response to the competitive environment, we made organizational changes to improve our
responsiveness to customer demands and service requirements. In addition, given the strong demand for oilfield service labor, we faced rising labor costs in order to ensure that we could appropriately service our customers’ needs in a market where, due to competitive pressures, we were challenged to pass those costs along to our customers. Demand for production maintenance services did not see the same growth as completed relation services in 2014, although we believe that we began to see an increase in demand for maintenance on horizontal oil wellbores and expect that trend to continue.
In a drastic turn of events, oil prices dropped roughly 50% during the second half of 2014; declining to a low of $53 a barrel by year end. This has been one of the fastest oil price declines in history. As a result, customer demand as measured by the Baker Hughes land drilling rig count declined sharply as exploration and production companies cut capital expenditures.
Layered on top of the market dynamics, in addition to the substantial time spent by management during the course of the year, the Company incurred costs of approximately $41.1 million in connection with the Special Committee investigations described above, which in turn created uncertainty for investors as to the ongoing costs and ultimate resolution of the investigation.
How Key has Responded to Market Dynamics
As a result of the change in market conditions, management made several changes in the U.S. business to position Key for success in a market of declining demand and intense competition. These changes included:
In addition, we are proactively using our Key Value Added or KVA as our guidepost in pricing to ensure we are retaining cash flow positive work and maximizing the marginal dollars available to us in this market. KVA is not only a financial metric on which we measure ourselves, but, more important, it is a strategic analysis framework for decision making that we believe has meaningfully enhanced the institutional and commercial intelligence at Key. Please see below for a detailed discussion on KVA.
2014 Executive Compensation Highlights
Results of the 2014 Say-on-Pay Vote/Investor Outreach.
Our board of directors, our Compensation Committee and our management value the opinions of our stockholders. Our say-on-pay vote in 2014 received the approval of 68% of the votes cast at the 2014 annual meeting. The 2014 vote outcome represented a significant decline compared to our prior votes. In 2012 and 2013, over 97% of the shares that were voted supported our say-on-pay referendum.
The 2014 say-on-pay vote was taken very seriously by the Company, our Board of Directors and our Compensation Committee. Our management team significantly increased our efforts to obtain feedback from our stockholders. Our goal in soliciting feedback was to provide information to our Compensation Committee to help the Committee (i) better understand our stockholders’ views on executive compensation, (2) be responsive to our stockholders’ views expressed in the 2014 say-on-pay vote, and (3) understand whether potential changes to our compensation programs would address concerns expressed by our stockholders. We contacted a significant majority of our largest investors after the 2014 annual meeting to get their further opinion on our compensation policies and practices. Our aggressive investor outreach efforts included the following:
Our CFO, Director of Investor Relations and Associate General Counsel- Corporate and Transactional led the outreach to interested investors. We believe the stockholders appreciated the outreach and the dialogue that resulted, and generally expressed a high level of satisfaction with our pay-for-performance approach and overall disclosure, but also provided some meaningful recommendations for the Compensation Committee to consider. Many of our stockholders reviewed the Company’s recent filing on Form 8-K dated February 19, 2015 and the following items were noted by investors to be of particular importance with respect to executive compensation: (i) increase in performance period for performance shares; (ii) increase in percentage of performance based pay for NEOs; (iii) double trigger equity vesting for all NEOs; (iv) the adoption of a Clawback Policy; and (vi) increased disclosure regarding the link between short term incentive compensation and long term incentive compensation. We intend to continue this dialogue with our major stockholders.
As a result of the Compensation Committee’s ongoing efforts to ensure strong alignment between executive pay and Company performance, and in response to the feedback that we received from our major stockholders, as well as feedback from our compensation consultants, the Compensation Committee made the following key changes and decisions with respect to our executive compensation program:
Participant | Bonus Paid | |||
J. Marshall Dodson | $ | 125,000 | ||
Kim B. Clarke | $ | 125,000 | ||
Kimberly R. Frye | $ | 89,700 |
|
|
More details regarding our 2014 performance and executive compensation can be found below. We encourage you to read this section in conjunction with the advisory (nonbinding) vote with respect to the compensation of our NEOs described below. See “Compensation of Executive Officers— Summary Compensation Table” and other related compensation tables and narrative disclosure in the “Compensation of Executive Officers” section below.
Compensation Philosophy
Our compensation strategy is to support the successful attainment of our vision, values and business objectives. The primary goals of our compensation program are to attract and retain the talent we need to successfully manage the company, reward exceptional organizational and individual performance improvements, and accomplish these objectives at a reasonable total cost in relation to performance and market conditions.
The following compensation objectives are considered in setting the compensation components for our senior executives:
We want our executives to be motivated to achieve our short- and long-term goals, without sacrificing our financial and corporate integrity in trying to achieve those goals. While an executive’s overall compensation should be strongly influenced by the achievement of specific financial targets, we believe that an executive must be provided a degree of financial certainty and stability in his or her compensation. The design and operation of the compensation arrangements provide the executives with incentives to engage in business or other activities that would support the value of Key or its stockholders. One mechanism to achieve this arrangement is our stock ownership guidelines. See “Stock Ownership of Certain Beneficial Owners and Management—Stock Ownership Guidelines” above.
The principal components of our executive compensation program are base salary, cash incentive bonuses and long-term incentive awards in the form of equity, including performance-based equity. We blend these elements in order to formulate compensation packages that provide competitive pay, reward the achievement of financial, operational and strategic objectives on a short- and long-term basis, and align the interests of our executive officers and other senior personnel with those of our stockholders. We strive to hire and retain talented people who are compatible with our corporate culture, committed to our core values, and who want to make a contribution to our mission.
Elements of Compensation
The annual compensation program for our senior executives consists principally of the following components:
Base Salaries
We provide base salaries to compensate our senior executives and other employees for services performed during the fiscal year. This provides a level of financial certainty and stability in an industry with historical volatility and cyclicality. The base salaries are designed to reflect the experience, education, responsibilities and contribution of the individual executive officers. This form of compensation is eligible for annual merit increases, is initially established for each executive through individual negotiation, and is reflected in his or her employment agreement. Thereafter, salaries are reviewed annually, based on a number of factors, both quantitative, including detailed organizational and competitive analyses performed by an independent consultant engaged by the Compensation Committee, and qualitative, including the Compensation Committee’s perception of the executive’s experience, performance and contribution to our business objectives and corporate values. The base salaries are generally targeted to the 50th percentile for salaries as compared to our peers (all of whom are listed below).
The Compensation Committee provided Mr. Dodson and Ms. Frye with a slight salary increase in the 2014 year over their 2013 salaries, as shown in the table below. These increases brought these executives to the 50th percentile in our market for salaries. No other Named Executive Officers received a salary increase with respect to 2014 year, as the Compensation Committee felt that current salaries were appropriately in line with our target salary levels.
No increases were made to any NEO salary for 2015. In fact, as a part of our cost reduction efforts in response to the industry downturn, in January 2015, our Compensation Committee approved a temporary pay reduction program. In accordance with this program, effective February 22, 2015, Mr. Alario’s salary was reduced by 10% and Mr. Dodson’s, Ms. Clarke’s and Ms. Frye’s salaries were reduced by 7% each. All other corporate office employees’ salaries or hours were also reduced by 5%. We intend for this pay reduction to be temporary and remain in effect until such time as economic conditions improve to allow a return to previous levels. In addition to these salary decreases, our non-employee directors’ cash retainer has been temporarily reduced by 10% effective January 1, 2015. See “Director Compensation” below for additional information regarding directors’ fees.
Name | 2014 Base Salaries | 2015 Base Salaries | % Decrease | |||||||||
Richard J. Alario | $ | 865,000 | $ | 778,500 | (10 | %) | ||||||
J. Marshall Dodson | $ | 375,000 | $ | 348,750 | (7 | %) | ||||||
Kim B. Clarke | $ | 360,150 | $ | 334,939 | (7 | %) | ||||||
Kimberly R. Frye | $ | 345,000 | $ | 320,850 | (7 | %) |
Cash Bonus Incentive Plan
The cash bonus incentive plan is designed to pay for performance and align the interests of our executives with stockholder interests. The cash bonus incentive plan provides variable cash compensation earned only when established performance goals are achieved. It is designed to reward the plan participants, including the NEOs, who have achieved certain corporate and executive performance objectives and have contributed to the achievement of certain objectives of Key. The cash bonus incentive plan is measured on an annual basis.
Under the cash compensation program, each executive has the opportunity to earn a cash incentive compensation bonus based on the achievement of pre-determined operating and financial performance measures and other performance objectives established by the Compensation Committee. Each performance measure and related performance objective is independent of the results of the other performance measures. The cash bonus incentive plan goals for 2014 were as follows:
Cash Bonus Incentive Plan Measurements
| ||
| ||
| ||
|
|
| ||||||
Threshold | Target | Maximum | ||||||||
1.70 | 1.60 | 1.50 |
The Compensation Committee reviews all performance goals at the beginning of the period and authorizes payment following the end of the period. Under our incentive compensation program, the Compensation Committee has discretion to adjust targets, as well as individual awards, either positively or negatively.
Long-Term Equity-Based Incentive Compensation
The purpose of our long-term incentive compensation is to align the interests of our executives with those of our stockholders and to retain our executives and employees over the long term. We want our executives to be focused on increasing stockholder value. In order to encourage and establish this focus on stockholder value, during the first half of 2014, we used the Key Energy Services, Inc. 20072019 Equity and Cash Incentive Plan (the “2007“2019 Plan”), or the Key Energy Services, Inc. 2009“Plan”). Our Board has directed that the proposal to approve the Plan be submitted to our stockholders for their approval at the annual meeting.
The 2014 Plan was established as a successor to the Company’s Prior Plans. The Prior Plans were merged with and into the 2014 Plan effective asParticipant without constituting a termination of May 14, 2014 (the “Effective Date”), and no additional grants were made under the Prior Plans. Outstanding awards under the Prior Plans shall continue in effect according to their terms as in effect before the mergeremployment for purposes of the Prior Plans into the 20142019 Plan, (subject to such amendments as the Compensation Committee deems appropriate, consistent with the Prior Plans, as applicable), and the shares(k) make adjustments with respect to outstanding grantsAwards that may become necessary upon a change in corporate control or an event that triggers anti-dilution adjustments, and (l) exercise discretion to make any and all other determinations which it determines to be necessary or advisable for administration of the 2019 Plan. All decisions made by the Administrator pursuant to the provisions of the 2019 Plan will be final and binding on us and the Participants.
To promote our long-term objectives, equity awards have been madeany additional shares that become available for issuance under the Prior Plans2016 ECIP in accordance with the 2019 Plan. For purposes of this limitation, any stock subject to an Award under the 2019 Plan or the 2016 ECIP that is canceled, forfeited, expires or otherwise terminates without the issuance of stock, is settled in cash, or is exchanged with the Administrator’s permission, prior to the issuance of stock, or for an Award not involving stock, will again become available for issuance under the 2019 Plan.
Our practice is to grant restricted stock, restricted stock units and performance units on an annual basis at regularly scheduled Compensation Committee meetings. This meeting typically occurs at the end of January, a few weeks before we release our annual earnings results. We schedule the dates of these meetings approximately two years in advance. We grant restricted stock, restricted stock units and performance units to employees, including our NEOs at each January Compensation Committee meeting. WeAdministrator may also grant restricted stock and restricted stock units to NEOs at other Compensation Committee meetingsdeem advisable.
Termination.
TheRestricted Stock. Restricted stock awards represent awards2019 Plan are discretionary, so it is currently not possible to predict the number of actual shares of our common stock that include vesting provisions which are contingent upon continued employment. Underwill be granted or who will receive awards under the terms2019 Plan after the Annual Meeting. However, for illustrative purposes, the following table sets forth amounts granted to each of our NEOs, executive officers and non-executive directors and all other employees in 2018 under the 2016 ECIP.
| | | Stock-Based Awards | | | Cash-Based Awards(1) | | ||||||||||||
Name and Position | | | Dollar Value ($) | | | Number of Shares/Units | | | Dollar Value ($) | | |||||||||
Rob Saltiel Chief Executive Officer | | | | $ | 3,255,008 | | | | | | 251,158 | | | | | $ | 273,288 | | |
Robert Drummond Former Chief Executive Officer | | | | | — | | | | | | — | | | | | | — | | |
J. Marshall Dodson Chief Financial Officer | | | | | — | | | | | | — | | | | | $ | 178,989 | | |
David Brunnert Former Chief Operating Officer | | | | | — | | | | | | — | | | | | | — | | |
Scott P. Miller Chief Administrative Officer | | | | | — | | | | | | — | | | | | $ | 133,557 | | |
Katherine I. Hargis General Counsel | | | | | — | | | | | | — | | | | | $ | 133,557 | | |
Louis Coale Vice President & Controller | | | | $ | 324,800 | | | | | | 20,000 | | | | | $ | 60,170 | | |
Executive Group | | | | $ | 3,579,808 | | | | | | 271,158 | | | | | $ | 719,591 | | |
Non-Executive Director Group | | | | $ | 665,520 | | | | | | 53,691 | | | | | | — | | |
Non-Executive Officer Employee Group | | | | $ | 2,030,430 | | | | | | 132,000 | | | | | $ | 4,051,796 | | |
We believe that awards of restricted stock provide a significant incentive for executiveschange. An individual may also be subject to achievestate and maintain high levels of performance over multi-year periods, and strengthenlocal taxes, the connection between executive and stockholder interests. We believe that restricted shares are a powerful tool for helping us retain executive talent. The higher value of a share of restricted stock in comparison to a stock option allows us to issue fewer total shares in order to arrive at a competitive total long-term incentive award value. Furthermore, we believe that the use of restricted stock reflects competitive practice among other oilfield service companies with whom we compete for executive talent.
Performance Units. Performance units provide a cash incentive award, the unit valueconsequences of which is determined with reference to the value of our common stock. Performance units granted prior to January 1, 2015, are measured based on two performance periods. One half of the performance units are measured based on a performance period consisting of the first year after the grant date, and the other half are measured based on a performance period consisting of the second year after the grant date. At the end of each performance period, subject to review and certification of results by our Compensation Committee, performance units subject to that performance period vest based on the relative placement of Key’s total stockholder return within a peer group of companies. Performance units that are reflectednot discussed herein, in the 2014 compensation tables following this Compensation Discussionjurisdiction in which he or she works and/or resides. This summary is for general information and Analysis will have this vesting schedule.
Performance units granted after January 1, 2015 are measured based on one three-year performance period. At the end of the performance period, subject to review and certification of results by our Compensation Committee, performance units subject to that performance period vest based on the relative placement.
Total stockholder return is calculated with respect to each performance period, for Key and each other company in the peer group, based on the change in (i) the average closing price of commondoes not constitute tax advice.
The 2014 peer group for the performance units consists of the group of eleven companies used for comparative market data analyses in connection with setting compensation levels, which is listed and discussed below under the heading “The Role of Compensation Consultants.” The peer group was adjusted for the 2015 performance unit grants to more closely represent the size of the Company.
For performance units granted prior to January 1, 2015, the number of performance units that may be earned by a participant is determinedoptions should not recognize taxable income at the endtime of each performance period based on the relative placement of Key’s total stockholder return for that period within the peer group, as follows:
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
|
For performance units granted after January 1, 2015, the number of performance units that may be earned by a participant is determined at the end of the performance period based on the relative placement of Key’s total stockholder return for that period within the peer group, as follows:
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
| ||||
|
If any performance units are earned based on the above criteria for a performance period, then the participant will be paid, within 60 days following the end of the applicable performance period, a cashgrant. An individual should generally recognize ordinary compensation income in an amount equal to the number of units earned multiplied by the closing price of our common stock on the last trading day of that performance period (subject to the participant’s continuing employment through the payment date, except that payment will still be made in the caseexcess, if any, of the participant’s death or disability following the endfair market value of the performance period but prior to the payment date).
We believe that awards of performance units provide a significant incentive for senior executives to remain employed and to achieve and maintain high levels of performance over multi-year periods, and strengthen the connection between executive and stockholder interests.
Clawback Policy. In 2014, in response to shareholder feedback and to further strengthen our governance practices, our Board of Directors adopted a “clawback” policy to recoup incentive based compensation upon the occurrence of a financial restatement, misconduct, or other specified events. Furthermore, all equity award agreements, including those related to performance-based grants, are subject to “clawback” and “detrimental activities” provisions that allow us to reclaim previously granted equity under certain circumstances.
Hedging Transactions Policy. In 2014, our Board of Directors adopted an anti-hedging policy that prohibits directors and executive officers from engaging in any kind of hedging transaction that seeks to reduce or limit that person’s economic risk associated with his or her ownership in theoption shares on exercise of the Company’s common stock.
2014 Compensation Results and Decisions
Cash Bonus Plan Results for the Year Ended December 31, 2014
For 2014, each NEO had a bonus opportunity as a percentage of base salary for each performance measure. The bonus opportunity for each of the NEOs as a percentage of salary was as follows:
Participant | Minimum Payout | Target Payout | Maximum Payout | |||||||||
Richard J. Alario | 0 | % | 125 | % | 250 | % | ||||||
Newton W. Wilson III | 0 | % | 90 | % | 180 | % | ||||||
J. Marshall Dodson | 0 | % | 80 | % | 160 | % | ||||||
Kim B. Clarke | 0 | % | 80 | % | 160 | % | ||||||
Kimberly R. Frye | 0 | % | 80 | % | 160 | % |
Specifically, if the NEO met his or her performance target, then the calculation was as follows:
|
|
|
|
|
|
|
|
|
The performance metrics for 2014 were KVA (50%), Safety (25%) and Individual Performance Targets (25%), the results of which were as follows:
Key Value Added. For 2014, the Company met the threshold with its goal of Key Value Added, or KVA. The bonus earned above or below KVA target is determined by the bonus sensitivity as a percentage of the prior year ending balance of gross operating assets. The Compensation Committee used a straight line bonus multiple to determine the threshold and the maximum payout. In other words, there was an equal upside and downside from the KVA target. The determination of the maximum and threshold amounts reflected the Compensation Committee’s intent to normalize the expected bonus volatility. The corporate KVA improvement (which is the change in KVA) for 2014 was ($62.5) million, which met the threshold, but only reached 65% of target payment.
Safety. The Company achieved a 1.80 TRIR for 2014, which did not qualify for payment under the cash bonus incentive plan.
Individual Performance Targets. The NEO had the opportunity to achieve payment for his or her respective individual performance targets, each of which was set by the CEO with respect to the NEOs and by the Compensation Committee with respect to the CEO.
Based on these results, the bonus opportunities with respect to each performance metric and the payments earned by each NEO in 2014 under the cash bonus incentive plan were as follows:
2014 Bonus Paid
Richard J. Alario | ||||||||||||||||||||
Performance Measure | Base Salary | Weighting | Target Bonus Opportunity | Maximum Bonus Opportunity | Actual Bonus Paid | |||||||||||||||
KVA | $ | 865,000 | 50 | % | $ | 540,625 | $ | 1,081,250 | $ | 0 | ||||||||||
Safety | $ | 865,000 | 25 | % | $ | 270,313 | $ | 540,625 | $ | 0 | ||||||||||
Individual | $ | 865,000 | 25 | % | $ | 270,313 | $ | 540,625 | $ | 0 | ||||||||||
|
|
|
|
|
| |||||||||||||||
Total Bonus | $ | 1,081,250 | $ | 2,162,500 | $ | 0 | ||||||||||||||
|
|
J. Marshall Dodson
Performance Measure | Base Salary | Weighting | Target Bonus Opportunity | Maximum Bonus Opportunity | Actual Bonus Paid | |||||||||||||||
KVA | $ | 375,000 | 50 | % | $ | 150,000 | $ | 300,000 | $ | 97,500 | ||||||||||
Safety | $ | 375,000 | 25 | % | $ | 75,000 | $ | 150,000 | $ | 0 | ||||||||||
Individual | $ | 375,000 | 25 | % | $ | 75,000 | $ | 150,000 | $ | 27,500 | ||||||||||
|
|
|
|
|
| |||||||||||||||
Total Bonus | $ | 300,000 | $ | 600,000 | $ | 125,000 | ||||||||||||||
|
|
Kim B. Clarke | ||||||||||||||||||||
Performance Measure | Base Salary | Weighting | Target Bonus Opportunity | Maximum Bonus Opportunity | Actual Bonus Paid | |||||||||||||||
KVA | $ | 360,150 | 50 | % | $ | 144,060 | $ | 288,120 | $ | 93,639 | ||||||||||
Safety | $ | 360,150 | 25 | % | $ | 72,030 | $ | 144,060 | $ | 0 | ||||||||||
Individual | $ | 360,150 | 25 | % | $ | 72,030 | $ | 144,060 | $ | 31,361 | ||||||||||
|
|
|
|
|
| |||||||||||||||
Total Bonus | $ | 288,120 | $ | 576,240 | $ | 125,000 | ||||||||||||||
|
| |||||||||||||||||||
Kimberly R. Frye | ||||||||||||||||||||
Performance Measure | Base Salary | Weighting | Target Bonus Opportunity | Maximum Bonus Opportunity | Actual Bonus Paid | |||||||||||||||
KVA | $ | 345,000 | 50 | % | $ | 138,000 | $ | 276,000 | $ | 89,700 | ||||||||||
Safety | $ | 345,000 | 25 | % | $ | 69,000 | $ | 138,000 | $ | 0 | ||||||||||
Individual | $ | 345,000 | 25 | % | $ | 69,000 | $ | 138,000 | $ | 0 | ||||||||||
|
|
|
|
|
| |||||||||||||||
Total Bonus | $ | 276,000 | $ | 552,000 | $ | 89,700 | ||||||||||||||
|
|
In addition to Mr. Alario, neither Messrs. Wilson nor Ekstrand was paid a bonus.
Annual Long-Term Equity-Based Incentive Grant
For 2014, the Compensation Committee approved grants using the following long-term incentive plan multipliers targeting long-term incentives at the market 50th percentile recommended by its compensation consultant and provided for an allocation of long-term incentive compensation consisting of restrictednonstatutory stock and performance units as follows:
2014 | ||||||||||||
Participant | LTI Multiplier (to base salary) | % of Performance Units | % of Restricted Stock | |||||||||
Richard J. Alario | 450 | % | 50 | % | 50 | % | ||||||
Newton W. Wilson III | 350 | % | 40 | % | 60 | % | ||||||
J. Marshall Dodson | 325 | % | 20 | % | 80 | % | ||||||
Kim B. Clarke | 275 | % | 20 | % | 80 | % | ||||||
Kimberly R. Frye | 250 | % | 20 | % | 80 | % |
The program continues to tie executive compensation to the Company’s long-term financial performance, with a significant portion that is deferred and at-risk, and is designed to create appropriate incentives for employees to maximize long-term stockholder value, discourage excessive risk taking and promote retention. For 2015, the Compensation Committee revised the allocation of long-term incentive compensation for the CEO and NEOs as follows:
2015 | ||||||||
% Performance Units | % Restricted Stock | |||||||
CEO | 85 | % | 15 | % | ||||
NEOs | 50 | % | 50 | % |
In addition, for 2015 due to the Company’s low stock price, the Compensation Committee used negative discretion and reduced the equity-based incentive grant by 41% of the LTI value for the CEO and by 50% of the LTI value for Mr. Dodson and Mses. Clarke and Frye.
2015 Annual Grant
Restricted Shares
The following table sets forth the number of restricted shares granted on January 30, 2015 to our NEOs determined using the long-term incentive plan multipliers. The number of restricted shares granted was based on the then existing stock price at or about the time of grant and the multiple of base salary recommended by the compensation consultant.
2015 | ||||||||
Restricted Shares | Grant Value | |||||||
Participant | Granted | (based on $1.68 stock price) | ||||||
Richard J. Alario | 250,000 | $ | 420,000 | |||||
J. Marshall Dodson | 217,634 | $ | 365,625 | |||||
Kim B. Clarke | 176,859 | $ | 297,123 | |||||
Kimberly R. Frye | 154,018 | $ | 258,750 |
Performance Units
The following table sets forth the number of restricted shares granted on January 30, 2015 to our NEOs determined using the long-term incentive plan multipliers and the performance unit allocations. The number of performance units granted was based on the then existing stock price at or about the time of grant and the multiple of base salary recommended by the compensation consultant. The performance units granted in 2015 were measured based on a performance period of January 1, 2015 to December 31, 2017.
2015 | ||||||||
Performance Units | Grant Value | |||||||
Participant | Granted | (based on $1.68 stock price) | ||||||
Richard J. Alario | 1,390,178 | $ | 2,335,499 | |||||
J. Marshall Dodson | 217,634 | $ | 365,625 | |||||
Kim B. Clarke | 176,859 | $ | 297,123 | |||||
Kimberly R. Frye | 154,018 | $ | 258,750 |
2014 Annual Grant
Restricted Shares
The following table sets forth the number of restricted shares granted for 2014 determined using the long-term incentive plan multipliers and the restricted share allocations described above. The number of restricted shares granted was based on the then existing stock price at or about the time of grant and the multiple of base salary recommended by the compensation consultant. In addition, Ms. Clarke was awarded restricted shares on December 23, 2014, with a grant value of $75,001. The grant was in recognition for her support and additional duties in providing operational leadership for business development and fluid management services during 2014.
2014 | ||||||||
Restricted | Grant Value | |||||||
Participant | Shares Granted | (based on $7.33 stock price) | ||||||
Richard J. Alario | 265,518 | $ | 1,946,247 | |||||
Newton W. Wilson III | 142,233 | $ | 1,042,568 | |||||
J. Marshall Dodson | 124,147 | $ | 909,995 | |||||
Kim B. Clarke | 108,094 | $ | 792,329 | |||||
Kimberly R. Frye | 90,238 | $ | 661,445 | |||||
Barry B. Ekstrand | 49,113 | $ | 359,998 |
Performance Units
The following table sets forth the number of performance shares granted in 2014 determined using the long-term incentive plan multipliers and the performance unit allocations. The number of performance units granted was based on the then existing stock price at or about the time of grant and the multiple of base salary recommended by the compensation consultant. One half of the performance units granted in 2014 were measured based on a performance period consisting of calendar year 2014. The Company did not meet the performance criteria for the 2014 performance period and that portion of the award was forfeited. Although the first half of the award was forfeited, and we do not know whether we will meet the performance measures for the second half of the 2014 awards, we are required to report the full grant date fair value in the “Summary Compensation Table.”
2014 | ||||||||||||
Performance Units | Grant Value | First Vesting | ||||||||||
Participant | Granted | (based on $7.33 stock price) | Payout | |||||||||
Richard J. Alario | 265,518 | $ | 1,946,247 | $ | 0 | |||||||
Newton W. Wilson III | 94,822 | $ | 695,045 | $ | 0 | |||||||
J. Marshall Dodson | 31,037 | $ | 227,501 | $ | 0 | |||||||
Kim B. Clarke | 27,024 | $ | 198,086 | $ | 0 | |||||||
Kimberly R. Frye | 22,559 | $ | 165,357 | $ | 0 | |||||||
Barry B. Ekstrand | 12,278 | $ | 89,998 | $ | 0 |
In 2013, the NEOs were granted performance units under the 2012 Plan with a grant value as set forth below. One half of the performance units that were granted in 2013 were measured based on a performance period consisting of calendar year 2013 (the “first performance period”), and the other half were measured based on a performance period consisting of calendar year 2014 (the “second performance period”). Because the Company did not meet the performance criteria during the first or second performance periods, none of those performance units vested and the NEOs were not paid for any performance units for the calendar year 2014.
2013 | Grant Value | |||||||||||||||
Performance Units | (based on $7.70 stock | First Vesting | Second Vesting | |||||||||||||
Participant | Granted | price) | Payout | Payout | ||||||||||||
Richard J. Alario | 259,500 | $ | 1,998,150 | $ | 0 | $ | 0 | |||||||||
Newton W. Wilson III | 89,973 | $ | 692,792 | $ | 0 | $ | 0 | |||||||||
J. Marshall Dodson | 5,500 | $ | 42,350 | $ | 0 | $ | 0 | |||||||||
Kim B. Clarke | 25,153 | $ | 193,678 | $ | 0 | $ | 0 | |||||||||
Kimberly R. Frye | 21,200 | $ | 163,240 | $ | 0 | $ | 0 | |||||||||
Barry B. Ekstrand | 6,933 | $ | 53,384 | $ | 0 | $ | 0 |
For additional information about equity grants awarded in 2014, see “Compensation of Executive Officers— SummaryCompensation Table” and “—2014 Grants of Plan-Based Awards.”
2015 Cash Bonus Incentive Plan
Our executive compensation program is designed to support and reinforce our mission and each of our strategic objectives while at the same time aligning the interests of our management with those of our stockholders. For 2015, each performance measure for each NEO under the cash bonus incentive plan is weighted as follows:
Participant | KVA | Individual | ||||||
Richard J. Alario | 75 | % | 25 | % | ||||
J. Marshall Dodson | 75 | % | 25 | % | ||||
Kim B. Clarke | 75 | % | 25 | % | ||||
Kimberly R. Frye | 75 | % | 25 | % |
The Compensation Committee gave greater weight to the financial performance metric to further align management with the shareholders. As such, the Compensation Committee determined that the 2015 annual cash bonus incentive plan will continue to use Key Value Added as our primary financial performance measure.
We believe KVA creates true accountability at each level of the organization and cultivates an ownership culture. Long-term shareholder value relates to expected and actual KVA performance. Therefore, incentive targets should correlate to investor expectations of KVA performance.
| ||
|
| |
|
| |
|
| |
|
| |
|
|
The Compensation Committee believes that management can directly affect these drivers of KVA performance, which, in turn, can drive shareholder value. While safety remains a core value, the Compensation Committee believes that it is engrained in the Company culture and that individual goals should reflect the continued safety focus by those NEOs who can directly affect safety performance.
For 2015, the Compensation Committee kept the bonus opportunity as a percentage of base salary for each performance measure for the NEOs as follows:
Participant | Minimum Payout | Target Payout | Maximum Payout | |||||||||
Richard J. Alario | 0 | % | 125 | % | 250 | % | ||||||
J. Marshall Dodson | 0 | % | 80 | % | 160 | % | ||||||
Kim B. Clarke | 0 | % | 80 | % | 160 | % | ||||||
Kimberly R. Frye | 0 | % | 80 | % | 160 | % |
The total cash bonus opportunity reflects the incremental bonus percentage that may be received by an executive once the respective performance measure (KVA or Individual Goals) is achieved. Each performance metric is calculated on a stand-alone basis. For example, Mr. Alario would be entitled to 0% to 250% of his base salary depending on KVA performance above threshold, but below target, which would then be multiplied by the 75% weighting for the financial target. The same applies with respect to the individual goals. If he meets the threshold or overachieves on those goals, Mr. Alario would be entitled to 25% or 250%, respectively, of his base salary, which would then be multiplied by 25%.
2015 Cash Bonus Incentive Plan Performance Targets
KVA target is determined for a bonus year to be equal to the Company’s prior year KVA performance. If the Company maintains the prior year KVA performance, it will result in a one times target payout. Year-over-year improvements in KVA will result in increases to the payout up to a maximum of two times the target payout and year-over-year declines in KVA performance will result in decreases to the down to a minimum of zero. For 2015, the Compensation Committee kept the same bonus maximum payout but adjusted the threshold amount. The effect was to increase the threshold to qualify for a bonus payment.
The eligible bonus is determined by the amount of improvement or decline in KVA. Maintaining KVA (which is necessary to earn target bonus) requires management to increase Gross Cash Earnings by enough to cover the incremental capital charge on all investments that grow the Gross Operation Assets of the Company. The corporate KVA improvement goal (which is the change in KVA) for the cash bonus incentive plan for the NEOs is as follows:
|
|
| ||
|
The Compensation Committee has also established the individual goals for the CEO, who has in turn established the individual goals for the other NEOs. Each NEO has three target goals and each of the individual performance targets is established based on each NEO’s area of expertise or influence, including safety.
Oversight of Executive Compensation Program
As described above under “Corporate Governance—Board Committees—Compensation Committee,” the Compensation Committee of our Board is responsible for establishing, implementing and continually monitoring adherence with our compensation philosophy. The Compensation Committee has the sole authority to engage independent compensation consultants, who report directly to the committee, to advise and consult on compensation issues.
Role of Executives in Establishing Compensation
The Compensation Committee makes the final determination of all compensation paid to our NEOs and is involved in all compensation decisions affecting our chief executive officer. When making compensation decisions for individual executive officers, the committee considers many factors, including:
The Compensation Committee evaluates the performance of the chief executive officer and considers the evaluations of the other Named Executive Officers on an annual basis following the close of each fiscal year. Although these performance evaluations are most closely connected to the qualitative portion of the officer’s annual incentive award, the committee considers individual performance in evaluating the appropriateness of the officer’s base salary specifically and the compensation package as a whole. However, management also plays a role in the determination of executive compensation levels. The key members of management involved in the compensation process are the chief executive officer and the administration and chief people officer. Management proposes certain corporate safety and individual executive performance objectives based on the following year’s business plan, which is approved by the Board each year. Management also participates in the discussion of peer companies to be used to benchmark NEO compensation, and recommends the overall funding level for cash bonuses and equity incentive awards. All management recommendations are reviewed by its compensation consultant, modified as necessary by the Compensation Committee, and approved by the Compensation Committee. The Compensation Committee meets regularly in executive session without management present.
The Role of Compensation Consultants
The Compensation Committee has sole authorityoptions over the selection, use, and retention of any compensation consultant or any other experts engaged to assist the committee in discharging its responsibilities.exercise price thereof. In November 2013, the Compensation Committee engaged Longnecker & Associates to assist with its overall compensation review and decision-making. Longnecker conducted an independent, comprehensive, broad-based analysis of our executive compensation program, and the Compensation Committee used this analysis as one of several reference points in making decisions regarding 2014 compensation. Longnecker’s objectives were to:
Longnecker performed services solely on behalf of the Compensation Committee. In accordance with the rules and regulations of the SEC and the NYSE, the Compensation Committee assessed the independence of Longnecker and concluded that no conflicts of interest exist that would prevent Longnecker from providing independent and objective advice.
Longnecker also provides guidance on industry best practices. This information assists us in developing and implementing compensation programs generally competitive with those of other companies in our industry and other companies with which we generally compete for executive talent. The Compensation Committee reviews salary ranges for all senior executive positions annually.
Longnecker also tailored its recommendations to (i) balance external market data, (ii) reflect our internal environment to ensure fiscal responsibility, and (iii) address potential retention concerns. Specifically, Longnecker evaluated the total direct compensation of the senior executives, assessed the competitiveness of our executive compensation and analyzed other factors such as cost of management, pay versus total stockholder return performance, mix of pay, peer annual incentive targets and mix of peer long-term incentive awards.
The companies used for the executive compensation comparisons in 2014 included the following companies (the companies denoted with an “*” were removed from the peer group for 2015):
Longnecker also reviewed survey data as a reference point to compare the compensation of our executives to those of a broad range of companies. The following published surveys utilized by Longnecker were:
Based on its review of the compensation program in 2013, Longnecker recommended to the Compensation Committee that we consider the following compensation practices for 2014:
In 2014, the Compensation Committee again engaged Longnecker to Associates to assist with its overall compensation review and decision-making for the 2015 calendar year. Longnecker conducted an independent, comprehensive, broad-based analysis of our executive compensation program, and the Compensation Committee used this analysis as one of several reference points in making decisions regarding 2015 compensation. Longnecker performed services solely on behalf of the Compensation Committee. In accordance with the rules and regulations of the SEC and the NYSE, the Compensation Committee assessed the independence of Longnecker and concluded that no conflicts of interest exist that would prevent Longnecker from providing independent and objective advice.
The Compensation Committee worked with Longnecker to revise our peer group to include companies that more closely reflect our current size; as a result, we removed larger market-cap companies and replaced them with more representative size companies. Our revised peer group for 2015 is comprised of the following companies (the companies denoted with an “*” were added to the peer group for 2015):
Longnecker also reviewed survey data as a reference point to compare the compensation of our executives to those of a broad range of companies. The following published surveys utilized by Longnecker were:
Based on its review of the compensation program in 2014, Longnecker recommended to the Compensation Committee that we consider the following compensation practices for 2015:
Third parties other than Longnecker provide advice and consulting services related to all other non-executive compensation.
Executive Compensation Risk Assessment
We do not believe that our compensation policies and practices encourage excessive or unnecessary risk-taking. In fact, we believe that our program is designed with an appropriate balance of annual and long-term incentives. Factors considered in this analysis include the following:
Other Components of Total Compensation
The total compensation program for our senior executives also consists of the following components:
Retirement, Health and Welfare Benefits
We offer a 401(k) savings plan and health and welfare programs to all eligible employees. Under the terms of their employment agreements, the NEOs are eligible for the same broad-based benefit programs on the same basis as the rest of our employees. Our health and welfare programs include medical, pharmacy, dental, vision, life insurance and accidental death and disability. For additional information about employment agreements, see “Compensation of Executive Officers—Employment Agreements” below.
Under the 401(k) plan, eligible employees may elect to contribute up to 100% of their eligible compensation on a pre-tax basis in accordance with the limitations imposed under the Internal Revenue Code of 1986, as amended, and the regulations promulgated there under (collectively, the “Code”). We also match 100% of each employee’s deferrals up to 4% of the individual’s eligible salary, subject to a cap of $260,000. Therefore, even if an employee earned more than $260,000 in eligible salary, our matching contribution could not exceed $10,400.
The cash amounts contributed under the 401(k) plan are held in a trust and invested among various investment funds in accordance with the directions of each participant. For the year ended December 31, 2014, we made employer matching contributions to the 401(k) plan in the amount of $ 10,885,859 for all eligible employees. The amounts we contributed for the NEOs may be found in the “Summary Compensation Table” below.
Perquisites
We provide our NEOs with the opportunity to participate in our other employee benefit programs and to receive certain perquisites that we believe are reasonable and consistent with the practices of our peer group. In addition to the compensation described above, under the terms of his employment agreement, the CEO may also be reimbursed for personal financial advisory counseling, accounting and related services, legal advisory or attorneys’ fees and income tax preparation and tax audit services. Additional perquisites paid for the CEO include automobile allowances, plus reimbursement for reasonable insurance and maintenance expenses, and club memberships. With respect to all NEOs, we pay all covered out-of-pocket medical and dental expenses not otherwise covered by insurance. The NEOs receive these reimbursements under the terms of, andgeneral, subject to the limitations set forth in our Executive Health Reimbursement Plan. These programs are intended to promote the health and financial security of our employees. The programs are provided at competitive market levels to attract, retain and reward superior employees for key positions. Perquisites did not constitute a material portionSection 162(m) of the compensationCode and discussed below, we will be entitled to deduct from our taxable income the amount that the individual is required to include in ordinary income at the time of such inclusion. Additional special rules apply if an individual exercises a nonstatutory stock option by paying the exercise price, in whole or in part, by the transfer of shares of common stock to the NEOsCompany.
Severance Payments/Change of Control
We have determined that it is appropriate to formally documentat least one year after the employment relationships that we have with certain executive officersexercise date, upon disposition of the Company, and we have entered into employment agreements with each of our NEOs that offer severance payments and other benefits following terminationshares by the individual, the difference, if any, between the sale price of the applicable executive officer’s employment under various scenarios,shares and the exercise price of the option will be treated as described below. The Company believes that offering severance benefits is beneficial in attracting and retaining key executive officers, encourageslong-term capital gain or loss. In general, if a disqualifying disposition should occur (i.e., the retentionshares acquired upon exercise of such executive officers during the pendencyoption are disposed of a potential change of control transaction or other organizational changes within the Company and protectslater of two years from the Company’s interest. Each such agreement contains a confidentiality covenant, requiringdate of grant or one year from the applicable officerdate of exercise), an individual will generally recognize ordinary compensation income in the year of disposition in an amount equal to not disclose confidential information atthe excess, if any, time, as well as noncompetition and nonsolicitation covenants, which prevent the executive from competing during employment and for a prescribed period after the officer’s employment terminates. We believe the terms and benefits offered pursuant to these employment agreements are provided at competitive market levels and allow us to attract, retain and reward superior employees for key positions.
We have employment agreements in place with each of the NEOs providing for severance compensation for a period of up to three years if the executive’s employment is terminated for a variety of reasons, including a change of control of Key. We have provided more information about these benefits, along with estimatesfair market value of the value under various circumstances, underoption shares at the heading “Compensationtime of Executive Officers—Payments upon Termination or Change of Control” below.
Our practice has beenexercise (or, if less, the amount realized on disposition), over the exercise price thereof. We are not entitled to structure change of control benefits as “double trigger” benefits. In other words, the change of control does not itself trigger benefits. Rather, benefits are paid only if the employmentany deduction on account of the executive is terminated during a specified period after a changegrant of control. We believe a “double trigger” benefit maximizes stockholder
value because it prevents an unintended windfallincentive stock options or the individual’s exercise of the option to executivesacquire common stock. However, in the event of a friendly changesubsequent disqualifying disposition of control, while still providing appropriate incentives to cooperate in negotiating any changesuch shares of control. In addition, these agreements avoid distractions involving executive management that arise when the Board is considering possible strategic transactions involving a change of control, and assure continuity of executive management and objective input to the Board when it is considering any strategic transaction. For additional information concerning our change of control agreements, see “Compensation of Executive Officers—Payments upon Termination or Change of Control” below.
Each of the executive officers is subject to noncompete and non-solicitation provisionscommon stock acquired pursuant to the termsexercise of their employment agreements. See belowan incentive stock option under “Compensation of Executive Officers—Employment Agreements” for additional information aboutcircumstances resulting in taxable compensation to the NEOs’ employment agreements.
Regulatory Considerations
The tax and accounting consequences of utilizing various forms of compensation are considered byindividual, subject to the Compensation Committee when adopting new or modifying existing compensation.
Underlimitations set forth in Section 162(m) of the Code publicly held corporations may not takeand discussed below, in general, we should be entitled to a tax deduction for compensation in excess of $1 million paid to our chief executive officer, and our three most highly compensated executive officers other than our chief financial officer during any fiscal year. There is an exceptionequal to the $1 million limitation for performance-based compensation meeting certain requirements. To maintain flexibility in compensating executives in a manner designed to promote varying corporate goals, the Compensation Committee has not adopted a policy requiring allamount treated as taxable compensation to be deductible under Section 162(m). However, the Compensation Committee considers deductibility under Section 162(m) with respect to compensation arrangements for executives. The Compensation Committee cannot guarantee that future executive compensation will be fully deductible under Section 162(m). All compensation paid during calendar year 2014 was qualified under Section 162(m).
Accounting for Equity-Based Compensation
We account for equity-based compensationindividual. Additional special rules apply if an individual exercises an incentive stock option by paying the exercise price, in accordance withwhole or in part, by the requirementstransfer of FASB ASC Topic 718, “StockCompensation.”
The Compensation Committee reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b)shares of Regulation S-K with our management. Based on this review and discussion, the Compensation Committee recommendedcommon stock to the Board thatCompany.
By the Compensation Committee of the Board of Directors of Key Energy Services, Inc.
Robert K. Reeves, Chair
William D. Fertig
W. Phillip Marcum
Mark H. Rosenberg
Lynn R. Coleman
Compensation of Executive Officers
Summary Compensation Table
The following table contains information about the compensation that our NEOs earned for fiscal years 2014, 2013 and 2012 as applicable to their status as NEOs for each given year:
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1)(2) | Option Awards ($) | Non-equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total | ||||||||||||||||||||||||
Richard J. Alario | 2014 | $ | 865,000 | — | $ | 3,892,494 | — | — | $ | 51,643 | $ | 4,809,137 | ||||||||||||||||||||
Chief Executive Officer | 2013 | $ | 865,000 | — | $ | 3,996,300 | — | $ | 729,844 | $ | 60,190 | $ | 5,651,334 | |||||||||||||||||||
2012 | $ | 863,731 | — | $ | 3,610,879 | — | — | $ | 64,453 | $ | 4,539,063 | |||||||||||||||||||||
Newton W. Wilson III | 2014 | $ | 496,460 | — | $ | 1,737,613 | — | — | $ | 25,384 | $ | 2,259,457 | ||||||||||||||||||||
Former Executive Vice | 2013 | $ | 495,904 | — | $ | 1,731,984 | — | $ | 284,223 | $ | 40,613 | $ | 2,552,724 | |||||||||||||||||||
President | 2012 | $ | 480,769 | — | $ | 1,519,005 | — | — | $ | 22,754 | $ | 2,022,528 | ||||||||||||||||||||
J. Marshall Dodson | 2014 | $ | 373,077 | — | $ | 1,137,499 | — | $ | 125,000 | $ | 15,890 | $ | 1,651,466 | |||||||||||||||||||
Chief Financial Officer | 2013 | $ | 332,981 | — | $ | 1,006,750 | — | $ | 189,000 | $ | 3,801 | $ | 1,532,532 | |||||||||||||||||||
Kim B. Clarke | 2014 | $ | 360,150 | — | $ | 1,065,416 | — | $ | 125,000 | $ | 20,257 | $ | 1,570,823 | |||||||||||||||||||
Administration and Chief | 2013 | $ | 359,490 | — | $ | 968,398 | — | $ | 182,326 | $ | 17,378 | $ | 1,527,592 | |||||||||||||||||||
People Officer | 2012 | $ | 342,500 | — | $ | 875,237 | — | — | $ | 17,970 | $ | 1,235,707 | ||||||||||||||||||||
Kimberly R. Frye | 2014 | $ | 343,902 | — | $ | 826,802 | — | $ | 89,700 | $ | 21,135 | $ | 1,281,539 | |||||||||||||||||||
General Counsel and | 2013 | $ | 330,231 | — | $ | 816,200 | — | $ | 167,427 | $ | 13,075 | $ | 1,326,933 | |||||||||||||||||||
Secretary | 2012 | $ | 171,923 | — | $ | 723,337 | — | — | $ | 14,868 | $ | 910,128 | ||||||||||||||||||||
Barry B. Ekstrand | 2014 | $ | 243,577 | — | $ | 449,996 | — | — | $ | 654,352 | $ | 1,347,925 | ||||||||||||||||||||
Former Senior Vice President of CTS, FRS and Edge |
Perquisites
The following table contains information about the perquisites that our NEOs received for fiscal year 2014:
Name | Savings Plan Contributions(1) | Insurance | Auto Allowance(2 ) | Medical Expenses(3) | Other | Total | ||||||||||||||||||
Richard J. Alario . | $ | 10,400 | $ | 11,058 | (4) | $ | 14,309 | $ | 14,051 | $ | 1,825 | (5) | $ | 51,643 | ||||||||||
Newton W. Wilson III | $ | 10,400 | $ | 4,574 | (7) | — | $ | 9,222 | $ | 1,188 | (6) | $ | 25,384 | |||||||||||
J. Marshall Dodson | $ | 5,621 | — | — | $ | 10,089 | $ | 180 | (6) | $ | 15,890 | |||||||||||||
Kim B. Clarke | $ | 10,400 | — | — | $ | 9,083 | $ | 774 | (6) | $ | 20,257 | |||||||||||||
Kimberly R. Frye | $ | 8,732 | — | — | $ | 12,133 | $ | 270 | (6) | $ | 21,135 | |||||||||||||
Barry B. Ekstrand | $ | 10,400 | $ | 643,952 | (8) | $ | 654,352 |
2014 Grants of Plan-Based Awards
The following table presents information on plan-based awards made to the NEOs in fiscal 2014:
| ||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employment Agreements
Each NEO’s employment agreement provides for an initial term of two years and automatically renews for successive one-year extension terms unless terminated by the executive or Key at least 90 days prior to the commencement of an extension term. EachAward of Restricted Stock unless the NEOs receives an annual salary, which can be increased (but not decreased) at the discretion of the Compensation Committee and, in the case of Mr. Dodson, Ms. Clarke and Ms. Frye, at the discretion of the CEO. Each NEO is also eligible for an annual incentive bonus, of 100% of his or her base salary. Each NEO is entitled to participate in awards of equity-based incentives at the discretion of the Board or the Compensation Committee. Pursuant to the Executive Health Reimbursement Plan, in the absence of medical and dental insurance coverage, Key reimburses each of the NEOs directly for all medical and dental expenses incurred by them and their respective spouses and children, so that the executives have no out-of-pocket cost with respect to such expenses.
Mr. Alario receives an auto allowance of $1,100 per month, plus reimbursement for reasonable insurance and maintenance expenses, in connection with the use of his automobile and is entitledparticipant otherwise elects to be reimbursed up to $15,000 in any fiscal year for personal services provided by certified public accountants and tax attorneys. Mr. Alario is also entitled to be reimbursed for the initiation fee and the annual or other periodic fees, dues and costs to become and remain a member of one club or association for business use, as approved by the Compensation Committee.
The employment agreements also provide for certain severance benefits for each of the NEOs. Please see “Payments Upon Termination or Change of Control” and “Elements of Severance Payments” below for further discussion.
Effective October 7, 2014, Mr. Ekstrand, Senior Vice President, CTS, FRS and Edge, no longer worked for the Company. In connection with his departure, (i) Mr. Ekstrand received $643,952 and (ii) Mr. Ekstrand’s unvested equity and outstanding performance units were forfeited pursuant to the terms of his separation and release agreement.
As of February 16, 2015, Mr. Wilson no longer served as our Executive Vice President. Mr. Wilson will remain an employee of the Company until May 17, 2015. In connection with his departure, (i) Mr. Wilson will receive $992,920 payable over the 24 months beginning May 29, 2015 and health and welfare benefits for up to 24 months beginning May 17, 2015 and (ii) Mr. Wilson’s unvested equity and outstanding performance units vested, all in accordance with the terms of his employment agreement.
For a detailed description of accelerated vesting or potential forfeiture events please see the section “PotentialPayments Upon Termination or Change of Control” below.
2014 Outstanding Equity Awards at Fiscal Year-End
The following table provides information with respect to outstanding stock options, restricted stock and performance units held by the NEOs as of December 31, 2014:
Name | OPTION AWARDS | STOCK AWARDS | ||||||||||||||||||||||||||
Number of Securities Underlying Unexercised Options (#) Exercisable(1) | Option Exercise Price ($) | 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 ($)(2) | Equity Incentive Plan Awards: Number of Unearned Units That Have Not Vested (#)(5) | Equity Incentive Plan Awards: Market Value of Unearned Units That Have Not Vested ($)(6) | ||||||||||||||||||||||
Richard J. Alario |
| 200,000 224,719 231,000 | (4)
| $ $ $ | 11.90 14.32 15.07 |
|
| 06/24/15 08/22/17 04/10/18 |
| 503,055 | (3) | $ | 840,102 | 132,759 | $ | 55,427 | ||||||||||||
Newton W. Wilson III |
| 125,000 74,906 72,250 | (4)
| $ $ $ | 11.90 14.32 15.07 |
|
| 06/24/15 08/22/17 04/10/18 |
| 259,355 | (3) | $ | 433,123 | 47,411 | $ | 19,764 | ||||||||||||
J. Marshall Dodson |
| 10,000 25,000 14,888 7,000 |
(4)
| $ $ $ $ | 14.03 15.05 14.32 15.07 |
|
| 08/22/15 03/15/16 08/22/17 04/10/18 |
| 207,633 | (3) | $ | 346,747 | 15,518 | $ | 6,479 | ||||||||||||
Kim B. Clarke |
| — — |
|
| — — |
|
| — — |
| 234,417 | (3) | $ | 391,476 | 13,512 | $ | 5,641 | ||||||||||||
Kimberly R. Frye |
| 7,500 12,000 8,500 25,000 8,825 |
| $ $ $ $ $ | 15.05 14.32 15.07 16.06 16.50 |
|
| 03/15/16 08/22/17 04/10/18 07/31/18 08/21/18 |
| 159,699 | (3) | $ | 266,697 | 11,279 | $ | 4,709 | ||||||||||||
Barry B. Ekstrand |
| — — |
|
| — — |
|
| — — |
|
| — — |
|
| — — |
|
| — — |
|
| — — |
|
|
|
| ||
| ||||
| ||||
| ||||
| ||||
| ||||
2014 Option Exercises and Stock Vested
The following table sets forth certain information regarding options and stock awards exercised and vested, respectively, during 2014 for the NEOs:
Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#)(1) | Value Realized on Vesting ($)(2) | ||||||||||||
Richard J. Alario | — | — | 239,150 | $ | 1,814,343 | |||||||||||
Newton W. Wilson III | — | — | 107,878 | $ | 820,612 | |||||||||||
J. Marshall Dodson | — | — | 46,132 | $ | 398,217 | |||||||||||
Kim B. Clarke | — | — | 71,024 | $ | 541,231 | |||||||||||
Kimberly R. Frye | — | — | 61,052 | $ | 464,683 | |||||||||||
Barry B. Ekstrand | — | — | 15,912 | $ | 72,019 |
Potential Payments Upon Termination or Change of Control
The following tables reflect the potential payments to which the NEOs would be entitled upon termination of employment on December 31, 2014. The closing price of a share of our common stock on December 31, 2014, the last trading day of the year, was $1.67. The actual amounts to be paid out to executives upon termination can only be determinedtaxed at the time of each NEO’s separation from Key.
Name | Non- Renewal(1) | For Cause or Voluntary Resignation(2) | Death(3) | Disability(4) | Without Cause or For Good Reason(5) | Change of Control (No Termination)(6) | Change of Control and Termination(7) | |||||||||||||||||||||
Richard J. Alario | ||||||||||||||||||||||||||||
Cash Severance(8) | $ | 1,772,300 | — | — | $ | 2,679,600 | $ | 2,637,300 | — | $ | 5,274,600 | |||||||||||||||||
Restricted Stock(9) | $ | 840,102 | — | $ | 840,102 | $ | 840,102 | $ | 840,102 | $ | 840,102 | $ | 840,102 | |||||||||||||||
Options and SARs(10) | — | — | — | — | — | — | — | |||||||||||||||||||||
Phantom Shares(11) | — | — | — | — | — | — | — | |||||||||||||||||||||
Performance Units(12) | $ | 221,708 | — | $ | 221,708 | $ | 221,708 | $ | 221,708 | $ | 221,708 | $ | 221,708 | |||||||||||||||
Health & Welfare(13) | $ | 53,886 | — | $ | 70,604 | $ | 107,773 | $ | 53,886 | — | $ | 107,773 | ||||||||||||||||
Excise Tax Gross-Ups(14) | n/a | n/a | n/a | n/a | n/a | — | — | |||||||||||||||||||||
Total Benefit | $ | 2,887,996 | — | $ | 1,132,414 | $ | 3,849,183 | $ | 3,752,996 | $ | 1,061,820 | $ | 6,444,183 | |||||||||||||||
Name | Non- Renewal(1) | For Cause or Voluntary Resignation(2) | Death(3) | Disability(4) | Without Cause or For Good Reason(5) | Change of Control (no Termination)(6) | Change of Control and Termination(7) | |||||||||||||||||||||
J. Marshall Dodson | ||||||||||||||||||||||||||||
Cash Severance | $ | 750,000 | — | — | $ | 375,000 | $ | 750,000 | — | $ | 2,025,000 | |||||||||||||||||
Restricted Stock(9) | $ | 346,747 | — | $ | 346,747 | $ | 346,747 | $ | 346,747 | $ | 346,747 | $ | 346,747 | |||||||||||||||
Options and SARs(10) | — | — | — | — | — | — | — | |||||||||||||||||||||
Phantom Shares(11) | — | — | — | — | — | — | — | |||||||||||||||||||||
Performance Units(12) | $ | 25,916 | — | $ | 25,916 | $ | 25,916 | $ | 25,916 | — | $ | 25,916 | ||||||||||||||||
Health & Welfare(13) | $ | 31,314 | — | $ | 39,146 | $ | 41,752 | $ | 31,314 | — | $ | 41,752 | ||||||||||||||||
Excise Tax Gross-Ups(14) | n/a | n/a | n/a | n/a | n/a | n/a | n/a | |||||||||||||||||||||
Total Benefit | $ | 1,153,977 | — | $ | 411,809 | $ | 789,415 | $ | 1,153,977 | $ | 346,747 | $ | 2,439,415 | |||||||||||||||
Name | Non- Renewal(1) | For Cause or Voluntary Resignation(2) | Death(3) | Disability(4) | Without Cause or For Good Reason(5) | Change of Control (No Termination)(6) | Change of Control and Termination(7) | |||||||||||||||||||||
Newton W. Wilson III | ||||||||||||||||||||||||||||
Cash Severance | $ | 992,920 | — | — | $ | 496,460 | $ | 992,920 | — | $ | 2,978,760 | |||||||||||||||||
Restricted Stock(9) | $ | 433,123 | — | $ | 433,123 | $ | 433,123 | $ | 433,123 | $ | 433,123 | $ | 433,123 | |||||||||||||||
Options and SARs(10) | — | — | — | — | — | — | — | |||||||||||||||||||||
Phantom Shares(11) | — | — | — | — | — | — | — | |||||||||||||||||||||
Performance Units(12) | $ | 79,176 | — | $ | 79,176 | $ | 79,176 | $ | 79,176 | — | $ | 79,176 | ||||||||||||||||
Health & Welfare(13) | $ | 36,918 | — | $ | 37,412 | $ | 49,224 | $ | 36,918 | — | $ | 49,224 | ||||||||||||||||
Excise Tax Gross-Ups(14) | n/a | n/a | n/a | n/a | n/a | — | — | |||||||||||||||||||||
Total Benefit | $ | 1,542,137 | — | $ | 549,711 | $ | 1,057,983 | $ | 1,542,137 | $ | 433,123 | $ | 3,540,283 | |||||||||||||||
Name | Non- Renewal(1) | For Cause or Voluntary Resignation(2) | Death(3) | Disability(4) | Without Cause or For Good Reason(5) | Change of Control (No Termination)(6) | Change of Control and Termination(7) | |||||||||||||||||||||
Kim B. Clarke | ||||||||||||||||||||||||||||
Cash Severance | $ | 720,300 | — | — | $ | 360,150 | $ | 720,300 | — | $ | 2,160,900 | |||||||||||||||||
Restricted Stock(9) | $ | 391,476 | — | $ | 391,476 | $ | 391,476 | $ | 391,476 | $ | 391,476 | $ | 391,476 | |||||||||||||||
Options and SARs(10) | — | — | — | — | — | — | — | |||||||||||||||||||||
Phantom Shares(11) | — | — | — | — | — | — | — | |||||||||||||||||||||
Performance Units(12) | $ | 22,565 | — | $ | 22,565 | $ | 22,565 | $ | 22,565 | — | $ | 22,565 | ||||||||||||||||
Health & Welfare(13) | $ | 29,849 | — | $ | 37,135 | $ | 39,798 | $ | 29,849 | — | $ | 39,798 | ||||||||||||||||
Excise Tax Gross-Ups(14) | n/a | n/a | n/a | n/a | n/a | — | — | |||||||||||||||||||||
Total Benefit | $ | 1,164,190 | — | $ | 451,176 | $ | 813,989 | $ | 1,164,190 | $ | 391,476 | $ | 2,614,739 |
Name Kimberly R. Frye Cash Severance Restricted Stock(9) Options and SARs(10) Phantom Shares(11) Performance Units(12) Health & Welfare(13) Excise Tax Gross-Ups(14) Total Benefit Non-
Renewal(1) For Cause or
Voluntary
Resignation(2) Death(3) Disability(4) Without
Cause or For
Good
Reason(5) Change of
Control (No
Termination(6) Change of
Control and
Termination(7) $ 690,000 — — $ 345,000 $ 690,000 — $ 2,070,000 $ 266,697 — $ 266,697 $ 266,697 $ 266,697 $ 266,697 $ 266,697 — — — — — — — — — — — — — — $ 18,837 — $ 18,837 $ 18,837 $ 18,837 — $ 18,837 $ 25,458 — $ 31,450 $ 33,944 $ 25,458 — $ 33,944 n/a n/a n/a n/a n/a — — $ 982,793 — $ 292,718 $ 640,212 $ 982,793 $ 266,697 $ 2,365,212
Nonegrant pursuant to Section 83(b) of the NEOs would beCode. On the date an Award of Restricted Stock becomes transferable or is no longer subject to excise tax in connection with changea substantial risk of control benefits.
Effective October 7, 2014, Mr. Ekstrand, Senior Vice President, CTS, FRS and Edge, no longer worked forforfeiture, the Company. In connection with his departure, (i) Mr. Ekstrand received $643,952 and (ii) Mr. Ekstrand’s unvested equity and outstanding performance units were forfeited pursuantparticipant will have taxable compensation equal to the terms of his separation and release agreement.
As described above, as of February 16, 2015, Mr. Wilson no longer served as our Executive Vice President. Mr. Wilson will remain an employeedifference between the fair market value of the Company until May 17, 2015. In connection with his departure, (i) Mr. Wilson will receive $992,920 payableshares on that date over the 24 months beginning May 29, 2015 and health and welfare benefitsamount the participant paid for up to 24 months beginning May 17, 2015 and (ii) Mr. Wilson’s unvested equity and outstanding performance units vested, all in accordance withsuch shares, if any, unless the terms of his employment agreement.
Elements of Severance Payments
Key has entered into employment agreements with each NEO that provide for certain payments upon termination depending upon the circumstancesparticipant made an election under Section 83(b) of the NEO’s separation from Key, as summarized below.
Cash Severance
If, during the term of Mr. Alario’s employment agreement, he is terminated by Key for any reason other than for “Cause”, or if he terminates his employment for “Good Reason”, Mr. Alario willCode to be entitled to severance compensation in an aggregate amount generally equal to three times his base salary in effecttaxed at the time of termination, payable in equal installments over a 36-month period following termination. “Cause” is defined in Mr. Alario’s employment agreement as (i) any breach of any representation, warranty or covenant bygrant. If the executive of section 1(e)participant made an election under Section 83(b) of the employment agreement; (ii)Code, the willful and continued failure by the executive to substantially perform his duties under the employment agreement; (iii) the willful engaging by the executive in misconduct which is materially injurious to the Company, monetarily or otherwise; (iv) the conviction of the executive of a felony by a court of competent jurisdiction; or (v) the executive’s willful violation of the Key Energy Services, Inc. Amended and Restated Policy Regarding Acquisition, Ownership and Disposition of Company Securities. “Good Reason” is defined in Mr. Alario’s employment agreement as (i) a material diminution in the executive’s baseparticipant will have taxable compensation authority, duties or responsibilities; (ii) a material diminution in the authority, duties or responsibilities of a supervisor to whom the Executive reports (including a requirement that the executive report to another individual rather than to the Board of Directors of the Company); (iii) a material diminution in the budget over which the executive retains authority; (iv) a material change in the geographic location at which the executive must perform the
services required by the employment agreement, unless the executive receives reimbursement in connection with such relocation; or (v) any other action or inaction by the Company that constitutes a material breach of the employment agreement. The existence of any of the above conditions or circumstances shall not constitute Good Reason unless (i) the executive provides notice to the Company of the existence of the circumstance or conditions within 90 days of the existence of the initial circumstance or condition, and (ii) the Company does not cure the circumstance or condition within 30 days upon receipt of notice from the executive. If Mr. Alario’s employment is terminated because Key does not renew his employment agreement, Mr. Alario is entitled to the greater of one year’s base salary then in effect or the highest multiple of base salary in effect for non-renewal under any other executive officer’s employment agreement in effect at the time of non-renewal. However, Mr. Alario would onlygrant equal to the difference between the fair market value of the shares on the grant date over the amount the participant paid for such shares, if any. We will be able to increasededuct, at the severance above one year’s salary if such other executive officer’s employment agreement was also either in effect on the commencement date of Mr. Alario’s agreement or later approvedsame time as it is recognized by the Compensation Committee afterparticipant, the commencement dateamount of his agreement. Fortaxable compensation to the year ended December 31, 2014, he wouldparticipant for U.S. federal income tax purposes, but such deduction may be limited under Section 162(m) of the Code for compensation paid to certain executives designated in that Section.
For Mr. Dodson, Ms. Clarke and Ms. Frye, if, during the term of any such NEO’s employment agreement, the NEO is terminated by Key for any reason other than disability or for “Cause”, including non-renewalfair market value of the NEO’s employment agreement or ifpayment received in respect of the NEO terminates his or her employment for “Good Reason”, the NEOstock appreciation right. We will be entitledable to severancededuct this same amount for U.S. federal income tax purposes, but such deduction may be limited under Section 162(m) of the Code for compensation paid to certain executives designated in an aggregate amount equalthat Section.
For each of the NEOs, each of their respective employment agreements specifies that if termination is within one year following a change of control of Key, the severance compensation will be an amount equal to three times the NEO’s respective base salary then in effectAward becomes vested, plus an amount equal to three times the NEO’s respective annual target cash bonus, and will be payable in one lump sum on the effective date of the termination.
Each NEO’s employment agreement contains a comprehensive non-compete provision. The non-compete provision prohibits the executive from engaging in any activities that are competitive with Key during his or her employment, and for any period in which the executive is receiving severance compensation from Key (or if payment of severance compensation is increased due to a change of control, for a period of three years after the termination of employment) of for twelve months following terminationinterest, if the executive receives no severancegrant constitutes deferred compensation from Key.
Equity-Based Incentives
Equity-based incentives include restricted stock, stock options, performance units and SARs. For all of the NEOs except for Mr. Alario, all equity-based incentives require a “double trigger” to vest after a change of control. Pursuant to his employment agreement, Mr. Alario’s equity-based incentives vest immediately upon a change of control of Key. However, the Compensation Committee approved a new form of restricted stock award agreement for Section 16 Officers that provides for “double trigger” vesting after a change in control. This provision effectively waives the single trigger provision in Mr. Alario’s employment agreement with respect to any awards made under this form of restricted stock award
agreement. For Mr. Alario, Mr. Dodson, Ms. Clarke and Ms. Frye, if any such NEO is terminated by Key for any reason other than for “Cause,” or if the NEO terminates his or her employment for “Good Reason” (as defined in each employment agreement) or following a change of control of Key, any equity-based incentives held by the NEO that have not vested prior to the termination date shall immediately vest and, for stock options and SARs, such awards shall remain exercisable until, with respect to Mr. Alario, the earlier of the third anniversary date of the termination or the stated expiration date of the equity-based incentive, and with respect to Mr. Dodson, Ms. Clarke and Ms. Frye, until the earlier of the first anniversary date of the termination or the stated expiration date of the equity-based incentive.
Health & Welfare
If Mr. Alario, Mr. Dodson, Ms. Clarke or Ms. Frye terminates his or her employment for “Good Reason” (as defined in each employment agreement) or following a change of control or Key terminates his or her employment for any reason other than for “Cause,” including non-renewal, the NEO will continue to receive the benefits that he or she was receiving at Key’s expense prior to such termination until the earlier of (i) 24 months with respect to Mr. Dodson, Ms. Clarke and Ms. Frye, or 36 months with respect to Mr. Alario, (ii) the last date of eligibility under the applicable benefits or (iii) the date on which the NEO commences full-time employment with another employer that provides equivalent benefits; provided that, if termination occurs for any reason within one year following a change of control or in anticipation of a change of control, in lieu of such benefits, Key will pay an amount in cash equal to the aggregate reasonable expenses Key would incur to pay such benefits. In the event of Mr. Alario’s death, his spouse and dependents are entitled to up to 36 months of coverage after the date of termination. With respect to the other NEOs, the executives’ spouses and dependents are entitled to up to 24 months of coverage after the date of termination. In addition, Mr. Alario is entitled to term-life insurance for such period that he is otherwise entitled to severance under his respective employment agreement.
Tax Gross-Ups
If any of Mr. Alario, Ms. Clarke or Ms. Frye is subject to the tax imposed due to unfavorable tax treatment under Section 4999 of the Code because of any termination-related payments, Key has agreed to reimburse the NEO for such tax on an after-tax basis. However, for Ms. Clarke and Ms. Frye, if it is determined that he or she is otherwise entitled to a gross-up payment, the total parachute payments may be reduced if it is determined that the reduction in the total parachute payments would not give rise to any excise tax and the reduced parachute payments would not be less than 90% of the total parachute payments before such reduction. In addition, if any of Mr. Alario, Ms. Clarke or Ms. Frye is subject to unfavorable tax treatment under Section 409A of the Code becauseand the requirements of any nonqualified deferred compensation payments, Key has agreed to reimburse the NEO for such tax on an after-tax basis. As part of a comprehensive review of executive compensation conducted in 2011, the Compensation Committee confirmed that it was appropriate to honor and preserve the existing provisions related to the excise tax reimbursement for Key’s current executive officers, including the NEOs. However, the Compensation Committee determined that Key will not include any reimbursement provisions for taxes under either Section 409A or Section 4999 of the Code are not satisfied.
Director20% excise tax and we may be denied a federal income tax deduction.
For 2014, Plans
Plan Category | | | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants And Rights (a)(2) | | | Weighted Average Exercise Price of Outstanding Options, Warrants And Rights (b)(3) | | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c)(4) | | |||||||||
| | | (in thousands) | | | | | | | | | (in thousands) | | ||||||
Equity compensation plans approved by stockholders(1) | | | | | 803 | | | | | $ | 34.92 | | | | | | 380 | | |
Equity compensation plans not approved by stockholders | | | | | — | | | | | $ | — | | | | | | — | | |
Total | | | | | 803 | | | | | | | | | | | | 380 | | |
Effective January 1, 2015, as part of the Company’s cost cutting measures, the Compensation Committee temporarily reduced the director’s base cash retainer by 10% or $7,500 annually.
Third parties other than Longnecker provided advice and consulting services related to all other non-executive compensation.
The following table discloses the cash and equity awards earned, paid or awarded, as the case may be, to each of our non-employee directors during the fiscal year ended December 31, 2014:
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Total ($) | |||||||||
Lynn R. Coleman | $ | 80,959 | $ | 175,001 | $ | 255,960 | ||||||
Kevin P. Collins | $ | 90,959 | $ | 175,001 | $ | 265,960 | ||||||
William D. Fertig | $ | 85,000 | $ | 175,001 | $ | 260,001 | ||||||
W. Phillip Marcum | $ | 75,000 | $ | 175,001 | $ | 250,001 | ||||||
Ralph S. Michael III | $ | 115,959 | $ | 175,001 | $ | 290,960 | ||||||
William F. Owens | $ | 90,959 | $ | 175,001 | $ | 265,960 | ||||||
Robert K. Reeves | $ | 88,623 | $ | 175,001 | $ | 263,624 | ||||||
Mark H. Rosenberg | $ | 75,000 | $ | 175,001 | $ | 250,001 | ||||||
Arlene M. Yocum | $ | 106,918 | $ | 175,001 | $ | 281,919 |
2016 ECIP.
The Compensation Committee consists of Messrs. Reeves (chair), Fertig, Marcum, Rosenberg and Coleman, all of whom are independent non-employee directors. None of the Compensation Committee members has served as an officer or employee of Key and none of Key’s executive officers has served as a member of a compensation committee or board of directors of any other entity that has an executive officer serving as a member of the Board. As discussed above, Mr. Reeves has certain relationships that require disclosure under SEC regulations but which the Board determined do not affect his independence. See “Certain Relationships and Related Party Transactions” under “Corporate Governance.”
Our
| | | 2018 | | | 2017(1) | | ||||||
Audit fees | | | | $ | 1,080,000 | | | | | $ | 1,129,000 | | |
Audit-related fees | | | | | — | | | | | | — | | |
Tax fees | | | | | — | | | | | | — | | |
All other fees | | | | | — | | | | | | — | | |
Total | | | | $ | 1,080,000 | | | | | $ | 1,129,000 | | |
This advisory vote on executive compensation is not binding on the Company, the Compensation Committee or the Board. However, the Compensation Committee and the Board will take into account the result of the vote when determining future executive compensation programs.
We are providingOFFICER COMPENSATION
We are asking our stockholders to indicate their support for our NEO compensation as described in this proxy statement. This proposal, commonlyrules (commonly referred to as a “say-on-pay” proposal, is required under Section 14A“Say-on-Frequency” vote). By voting on this Proposal FIVE, stockholders may indicate, on a non-binding advisory basis, whether the say-on-pay advisory vote should occur every year, every two years or every three years, or abstain on this matter.
Accordingly, we ask our stockholders toProposal FIVE.
“RESOLVED, that the compensation paid to the Company’s Named Executive Officers, as disclosed herein pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, accompanying compensation tables and related narrative discussion, is hereby APPROVED.”
While we intend to carefully consider the voting results of this proposal, the finalSay-on-Pay vote is advisory, and therefore not binding on us,the Company, the Compensation Committee or the Board. The Board and Compensation Committee value the opinions of our stockholders, and to the extent there is any significant vote against the NEO compensation as disclosed in this proxy statement, we will consider our stockholders’ concerns, andHowever, the Compensation Committee and the Board value our stockholders’ opinions with respect to the frequency of the Say-on-Pay vote and will evaluate whether any actions are necessary to address those concerns. We intend to holdtake into account the result of this vote annually, withwhen determining the nextfrequency of future Say-on-Pay votes.
The Board of Directors believes that approval ofStockholders is changed by more than 30 days from May 1, 2020, in which case the compensation of our Named Executive Officers as disclosedproposal must be received at the Company’s principal executive offices a reasonable time before the Company begins to print and mail its 2020 proxy materials. Any such stockholder proposal must meet the requirements set forth in this proxy statement is in the best interestsRule 14a-8.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a)February 3, 2020. We will only consider proposals that meet the requirements of the Securities Exchange Act of 1934, as amended, requires our directors, executive officers and persons who beneficially own more than 10% of a registered class of our equity securities, to file initial reports of ownership on Form 3 and changes in ownership on Forms 4 or 5 with the SEC. Such officers, directors and 10% stockholders also are required by SECapplicable rules to furnish Key with copies of all Section 16(a) reports they file. Based solely on its review of the copies of such forms furnished or available to us, except for one late transaction as required to be filed on Form 4 by Ms. Clarke on December 26, 2014, we believe thatSEC and our directors, executive officers and 10% stockholders complied with all Section 16(a) filing requirements forBylaws.
Stockholder Communicationsrecommend to the Board of Directors
nominees for election by the holders of our Common Stock at the annual meeting of stockholders, as well as to fill vacancies or additions on the Board of Directors that may occur between annual meetings (Soter, as holder of our Series A Preferred Stock, identifies the individuals whom Soter will nominate and elect to the Board as sole holder of the Series A Preferred Stock). The Nominating and Governance Committee endeavors to recommend only director candidates who possess the highest personal values and integrity; who have experience and have exhibited achievements in one or more of the key professional, business, financial, legal and other challenges that face a U.S. oilfield services company; who exhibit sound judgment, intelligence, personal character, and the ability to make independent analytical inquiries; who demonstrate a willingness to devote adequate time to Board of Director duties; and who are likely to be able to serve on the Board of Directors for a sustained period.
Proposals that stockholders intend and is unaware of any matters to be includedpresented by other parties. If other matters are properly brought before the meeting for action by the stockholders, proxies will be voted in ouraccordance with the recommendation of the Board or, in the absence of such a recommendation, in accordance with the judgment of the proxy materials for presentation at the 2016holder.
If a stockholder desiresCommon Stock under this Plan, the Company shall be relieved from any liability for failure to bring a matter beforeissue and sell Common Stock upon exercise of such Awards unless and until such authority is obtained.
March 23, 2015
OUR BOARD OF DIRECTORS ENCOURAGES STOCKHOLDERS TO ATTEND THE MEETING. WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE OR VOTE OVER THE INTERNET OR BY TELEPHONE. A PROMPT RESPONSE WILL GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION WILL BE APPRECIATED.
ANNUAL MEETING OF STOCKHOLDERS
ToSTOCKHOLDERSTo be held on May 14, 20151, 2019 at 9:8:00 a.m., Central Daylight Time
This Proxy is solicited on behalf of the Board of Directors of
Key Energy Services, Inc. (the “Company”).
The.The undersigned, having received notice of the annual meeting of stockholders and the proxy statement therefor and revoking all prior proxies, hereby appoints each of RichardRobert J. AlarioSaltiel and Kimberly R. FryeKatherine I. Hargis (with full power of substitution), as proxies of the undersigned, to attend the annual meeting of stockholders of the Company to be held on Thursday,Wednesday, May 14, 2015,1, 2019, at the Embassy SuitesFour Seasons Hotel Houston, Downtown, 1515 Dallas St.,1300 Lamar Street, Houston, Texas 77010, and any adjourned or postponed session thereof, and there to vote and act as indicated upon the matters on the reverse side in respect of all shares of common stock which the undersigned would be entitled to vote or act upon, with all powers the undersigned would possess if personally present.
Youpresent.You may revoke or change your proxy at any time before it is voted at the annual meeting by (i) giving written notice of revocation to the Secretary of the Company; (ii) submitting another properly completed proxy bearing a later date; (iii) submitting a later dated proxy through the Internet or by telephone prior to the close of the Internet voting facility or the telephone voting facility; or (iv) voting in person at the annual meeting. If the undersigned hold(s) any of the shares of common stock in a fiduciary, custodial or joint capacity or capacities, this proxy is signed by the undersigned in every such capacity as well as individually.
Pleaseindividually.Please vote, date and sign on reverse side and return promptly in the enclosed pre-paid envelope.
CONTINUEDenvelope.CONTINUED AND TO BE SIGNED ON REVERSE SIDE
p PLEASESIDEPLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. p
ImportantPROVIDED.Important Notice Regarding the Availability of Proxy Materials for the Annual
MeetingAnnualMeeting of Stockholders to be held May 14, 2015.1, 2019. This Proxy Statement and our
2014our2018 Annual Report to Stockholders are available at:
http://www.viewproxy.com/keyenergy/2015
2019
The shares of common stock of Key Energy Services, Inc. (the “Company”) represented by this proxy, when properly executed, will be voted as directed by the undersigned for the proposals herein proposed by the Company. IF THIS PROXY IS PROPERLY EXECUTED BUT NO DIRECTION IS SPECIFIED, THIS PROXY WILL BE VOTED “FOR” THE THREEFOUR NOMINEES FOR DIRECTOR AND “FOR” PROPOSALS 2, 3 AND 4 and 3.“FOR” THE FREQUENCY OF “1 YEAR” IN PROPOSAL 5. In their discretion, the proxies are authorized to vote upon any other business that may properly come before the annual meeting or any adjournment thereof.
thereof.1. To elect the following nominees as directors of the Company, for a term of one (1) year expiring at the annual stockholders’ meeting in 2020: Nominees:
¨FOR ¨AGAINST ¨ABSTAIN01 Robert J. Saltiel o o o02 Sherman K. Edmiston, III o o o03 Steven H. Pruett o o o 04 Scott D. Vogel o o oDO NOT PRINT IN THIS AREA (Shareholder Name & Address Data)2. To approve our 2019 Equity and Cash Incentive Plan. FOR AGAINST ABSTAIN3. To ratify the appointment by the Audit Committee of the Board of Directorsof Grant Thornton LLP, an independent registered public accounting firm, as the Company’s independent auditors for the fiscal year ending December 31,2019. FOR AGAINST ABSTAIN
|
4. To approve, on an advisory basis, the compensation of the Company’s named executive officers. FOR AGAINST ABSTAIN 5. To approve, on a non-binding advisory basis, the frequency of the Named Executive officer compensation advisory vote. 1 YEAR 2 YEARS 3 YEARS ABSTAIN I plan to attend the Annual Meeting Date Signature For address changes and/or comments, please write them below
¨ FOR ¨ AGAINST ¨ ABSTAIN
I plan to attend the Annual Meeting ¨
Date
Signature
Signature
(Joint(Joint Owners)
Please sign exactly as your name(s) appears hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer.
CONTROL NUMBER
p PLEASE DETACH ALONG PERFORATED LINE AND MAIL IN THE ENVELOPE PROVIDED. p
CONTROL NUMBER
PROXY VOTING INSTRUCTIONS
Please have your 11 digit control number ready when voting by Internet or Telephone
|
|
|