UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
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LAYNE CHRISTENSEN COMPANY
Layne Christensen Company
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other thanOther Than the Registrant)
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and Proxy Statement |
LAYNE CHRISTENSEN COMPANYApril 28, 2017
May 4, 2016
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of Layne Christensen Company to be held at the Company’s Corporate Headquarters at 1800 Hughes Landing Blvd., Suite 800, The Woodlands, Texas 77380 on Friday, June 3, 2016,Wednesday, May 31, 2017, commencing at 10:00 a.m., local time. The business to be conducted at the meeting is described in the attached Notice of Annual Meeting and Proxy Statement. In addition, there will be an opportunity to meet with members of senior management and review the business and operations of the Company.
Your Board of Directors joins with me in urging you to attend the meeting. Whether or not you plan to attend the meeting, however, please sign, date and return the enclosed proxy card promptly. To make it easy to vote, internet and telephone voting are also available. The instructions for voting are on the enclosed proxy card. If you hold your shares through a bank, broker or other holder of record, please follow the voting instruction you received from the holder of record. A prepaid return envelope is provided for this purpose. You may revoke your proxy at any time before it is exercised and it will not be used if you attend the meeting and prefer to vote in person.
Sincerely yours,
Michael J. Caliel
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Your vote is important to us. Please vote today. |
2 | 2017 Proxy Statement |
LAYNE CHRISTENSEN COMPANYDate and Time
1800 Hughes Landing Boulevard, Ste. 800
The Woodlands, TX 77380Wednesday, May 31, 2017 at 10:00 a.m. CDT
NOTICEOF ANNUAL MEETINGOF STOCKHOLDERSPlace
TOBE HELDON JUNE 3, 2016
The Annual Meeting of Stockholders of Layne Christensen Company a Delaware corporation (“Layne Christensen” or the “Company”), will be held at the Company’s Corporate Headquarters at
1800 Hughes Landing Blvd., Suite 800
The Woodlands, Texas, 77380 on Friday, June 3, 2016, commencing at 10:00 a.m., local time, and thereafter as it may from time to time be adjourned, for the following purposes:
1. | To vote on the election of the Company’s seven nominees for director to hold office for terms expiring at the |
2. | To conduct an advisory vote to approve named executive officer compensation; |
3. | To conduct an advisory vote on the frequency of an advisory vote to approve named executive officer compensation; |
4. | To consider and act upon a proposal to |
To consider and act upon ratification of the selection of the accounting firm of Deloitte & Touche LLP as the independent auditors of Layne Christensen Company for the fiscal year ending January 31, |
To transact such other business as may properly come before the meeting and any adjournment or adjournments thereof. |
Items of Business
The Board of Directors of Layne Christensen has fixed the close of business on April 11, 2016,12, 2017, as the record date for determination of the stockholders entitled to notice of, and to vote at, the Annual Meeting and any adjournment or adjournments thereof.
All stockholders are cordially invited to attend the meeting. Whether or not you intend to be present at the meeting,By Order of the Board of Directors, of Layne Christensen encourages you to sign, date
Steven F. Crooke
Senior Vice President — Chief Administrative Officer,
General Counsel and return the enclosed proxy card promptly. A prepaid return envelope is provided for this purpose. You may revoke your proxy at any time before it is exercised and it will not be used if you attend the meeting and prefer to vote in person. Your vote is important and all stockholders are urged to be present in person or by proxy.Secretary
April 28, 2017
The Woodlands, Texas
Your vote is important | ||
Internet | If you choose to vote via the Internet, follow the instructions for accessing the Web site on your proxy card. | |
| If you choose to vote by telephone, you may call the toll-free number on your proxy card. You will need to have the 16-digit control number printed on your proxy card. | |
If you choose to vote by mail, simply mark, sign and date your proxy card and return it in the postage prepaid envelope that was included with the proxy card. | ||
In Person | All stockholders are cordially invited to attend the meeting. You may revoke your proxy at any time before it is exercised and it will not be used if you attend the meeting and prefer to vote in person. | |
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be held on May 31, 2017: The Proxy Statement and Annual Report to Stockholders are available to you at http://www.astproyportal.com/ast/21286. |
Layne Christensen Company | 3 |
May 4,Table of Contents
Fiscal 2017
Dear Valued Shareholders
When I joined Layne two years ago, I outlined three priorities designed to address the long-standing challenges facing the company. These priorities included reducing our corporate overhead costs, bolstering our liquidity and sharpening our capital allocation focus. I also clearly expressed my confidence in what I consider to be the cornerstones of Layne: the quality of our people, the solid foundation that we’ve established in our respective end markets, and the fact that water is at our core.
With these objectives in mind, in fiscal 2016 we established a strategic roadmap to optimize our cost structure, address operational issues, streamline our portfolio and identify growth opportunities. One of our first objectives was to stabilize our Heavy Civil business, return the division to profitability and create strategic options. We then conducted a comprehensive review of all aspects of our portfolio and operations with a focus on improving and growing our core segments of Water Resources and Inliner, and strengthening our balance sheet, all with a goal of raising our overall profitability.
What have we accomplished over the past two years? First, we have significantly improved our liquidity position and strengthened our balance sheet, providing much-needed financial flexibility. In addition, to refine our strategic focus, we sold Geoconstruction, integrated the Energy Services Division into the Water Resources Division and announced an agreement to sell our Heavy Civil Division. Also, in response to the ongoing softness in the mining sector, we restructured the Mineral Services Division and exited Australia and Africa. And, along the way, we flattened the leadership structure and recruited key new leaders while driving significant reductions in our SG&A costs.
We clearly have more work to do, especially in the Water Resources Division. During the first half of fiscal 2017, we commenced a comprehensive business improvement initiative in the Water Resources Division with a focus on enhancing our bidding and overall risk management processes, improving our project execution and management systems, and streamlining our cost structure. These actions are designed to leverage our national platform in order to take advantage of our scale, national reach and leading market positions.
And while we anticipated slower activity and reduced profitability in fiscal 2017, due to lower activity levels in the Western U.S., the performance of this division was well below our expectations, due to execution challenges on a handful of larger projects. Despite our disappointmentwith recent performance, we believe Water Resources is inherently an excellent business, with a 135-year history, a market leadership position, and outstanding opportunities for growth. And, as importantly, we have a clear understanding of the operational issues we have encountered, and we believe we know are fixing these issues.
Concentrating on Our Core Businesses
Throughout fiscal 2017, we continued our transformation towards a water-focused company. The Water Resources Division’s broad service offering includes a variety of water management solutions for government agencies, utilities and industrial companies. And even with the current challenges, our Water Resources Division maintained a strong market position by capitalizing on the inadequate water infrastructure in the United States.
California has been a growth driver of our water drilling operations, and even with recent drought relief, we continue to benefit from the increasing need for water management services, especially in the agribusiness market. Also, the integration of our Energy Services unit into our Water Resources Division provides us with an opportunity to take advantage of the nascent recovery of the oil and gas industry.
Our Inliner Division continues to benefit from aging U.S. infrastructure and the consistent improvements in profitability for this division over many years reflect an increase in activity, efficiency improvements and the addition of crews.
The Woodlands, TexasMineral Services Division generated positive adjusted EBITDA in fiscal 2017 due to increased activity and higher asset utilization.
Important Notice RegardingFinally, the Availabilitypending sale of Proxy Materialsour Heavy Civil business is consistent with our previously-announced strategy to simplify and restructure our operating portfolio. The closing of this transaction will enable us to focus on our core water-related businesses and reduce our risk exposure to large construction projects, while positioning Layne to improve its profitability in a growing water and water infrastructure industry.
Strengthening Our Financial Performance
During this past fiscal year, we continued to strengthen our overall liquidity and reduce our working capital levels. Adjusted working capital decreased by about $17 million year-over-year, and we also realized $10 million from the sale of assets during the year. As a result, we improved our
Layne Christensen Company | 5 |
SHAREHOLDER LETTER | |
liquidity position from $132 million at January 31, 2016 to $141 million at January 31, 2017.
These ongoing improvements in liquidity and the cash generation have created greater financial flexibility that are expected to allow us to make selected growth investments going forward.
Our Continued “Journey to ZERO”
At Layne, safety is a core value and safe operations are at the center of our culture, an integral part of our business strategy, and essential to our continued success. In fiscal 2017, we continued our “Journey to ZERO” – a commitment to incident-free operations where every Layne employee is empowered and expected to demonstrate safety leadership and accountability. We implemented new safety leadership training, increased safety-related communications and established enhanced safety reviews, all with an eye towards improving our safety performance.
Sustainability
We recognize our responsibility to operate our business in a way that protects and preserves the environment and we are constantly exploring ways to reduce our environmental impact. Our commitment to providing responsible and sustainable solutions to address the world’s need for water and minerals is very important to us. Protecting our essential resources is a continuing focus for Layne and we continue to develop and deliver products and services that provide communities with access to safe, clean and reliable sources of water.
Driving Transformation, Together
At Layne, water is at our core. The steps we are taking are critical in moving the Stockholder Meetingcompany toward a more focused strategy that simplifies our business. While we are making measurable progress, there is still more to do. Importantly, we remain on track with our key objective to hone our business around our water-focused strategy, to invest in and grow our core businesses of Water Resources and Inliner and to reduce our cost structure. All with the goal of returning Layne to profitability in fiscal year 2018.
Building Layne to be held on June 3, 2016: The Proxy Statementa leading player requires vision, hard work, enthusiasm and Annual Report to Stockholders are available to you at http://www.edocumentview.com/LAYN.
Sincerely yours,
Michael J. Caliel
President and Chief Executive Officer
6 | 2017 Proxy Statement |
LAYNE CHRISTENSEN COMPANY
1800 Hughes Landing Boulevard, Ste. 700
The Woodlands, TX 77380
PROXY STATEMENT
ANNUAL MEETINGOF STOCKHOLDERS
TOBE HELD JUNE 3, 2016
This Proxy Statement is being furnished to the stockholders of Layne Christensen Company, a Delaware corporation (“Layne Christensen” or the “Company”), in connection with the solicitation of proxies by the Board of Directors of the Company for use at the Annual Meeting of Stockholders to be held on June 3, 2016,May 31, 2017, and at any adjournment or adjournments thereof (the “Annual Meeting”). The Annual Meeting will commence at 10:00 a.m., local time, and will be held at the Company’s Corporate Headquarters at 1800 Hughes Landing Blvd., Suite 800, The Woodlands, Texas 77380.
This Proxy Statement and the enclosed form of proxy were first mailed to the Company’s stockholders on or about May 4, 2016.April 28, 2017.
Proxies
Proxies |
You are requested to complete, date and sign the enclosed form of proxy and return it promptly to the Company in the enclosed postage prepaid envelope. Alternatively, you may also vote by internet and telephone. For instructions on voting by internet or telephone, refer to your proxy card on page 3 of this Proxy Statement. Shares represented by properly executed proxies will, unless such proxies have been revoked prior to exercise, be voted in accordance with the stockholders’ instructions indicated in the proxies. If no instructions are indicated, such shares will be voted in favor of the election of the nominees for director named in this Proxy Statement; in favor of the approval of the compensation of our named executive officers, as disclosed in this Proxy Statement; to conduct an advisory vote on named executive officer compensation every year; in favor of amendingapproving the Company’s 2006 Equity Incentive Plan, to increase the number of shares available for issuance under the plan;as amended and restated effective May 31, 2017; in favor of ratifying the selection of the accounting firm of Deloitte & Touche LLP as the Company’s independent auditors for the current fiscal year; and, as to any other matter that properly may be brought before the Annual Meeting, in accordance with the discretion and judgment of the appointed proxies. A stockholder who has given a proxy may revoke it at any time before it is exercised at the Annual Meeting by filing written notice of revocation with the Secretary of the Company, by executing and delivering to the Secretary of the Company a proxy bearing a later date, or by appearing at the Annual Meeting and voting in person.
If you plan to attend the Annual Meeting and vote in person, you will be given a ballot when you arrive. However, if your shares are held in the name of your broker, bank or other nominee (commonly referred to as being held in “street” name), proof of ownership may be required for you to be admitted to the meeting. A recent brokerage statement or letter from a bank or broker are examples of proof of ownership. If you want to vote your shares of Common Stock held in street name in person at the meeting, you will have to get a written proxy in your name from the broker, bank or other nominee who holds your shares.
Voting at the Meeting
Voting at the Meeting |
For purposes of voting on the proposals described herein, the presence in person or by proxy of stockholders holding a majority of the total outstanding shares of the Company’s Common Stock shall constitute a quorum at the Annual Meeting. Only holders of record of shares of the Company’s Common Stock as of the close of business on April 11, 201612, 2017 (the “Record Date”), are entitled to notice of, and to vote at, the Annual Meeting or any adjournment or adjournments thereof. As of the Record Date, 19,802,59619,804,526 shares of the Company’s Common Stock were outstanding and entitled to be voted at the Annual Meeting. Each share of Common Stock is entitled to one vote on each matter properly to come before the Annual Meeting.
Directors are elected by a plurality (a number greater than those cast for any other candidates) of the votes cast, in person or by proxy, of stockholders entitled to vote at the Annual Meeting for that purpose. In accordance with Delaware law, a stockholder entitled to vote in the election of directors can withhold authority to vote for all nominees for director or can withhold authority to vote for certain nominees for director. Votes withheld in connection with the election of one or more nominees for director will not be counted as votes cast for such nominees, and will not have any effect on the outcome of the election. All other matters will be determined by a vote of a majority of the votes cast affirmatively or negatively by the stockholders present in person or represented by proxy at the meeting and entitled
Layne Christensen Company | 7 |
PROXY STATEMENT | |
to vote thereon. Under Delaware law, abstentions are not considered votes cast and will have no effect on whether a matter is approved.
On certain routine matters, such as the ratification of the selection of Deloitte & Touche LLP as the independent registered public accounting firm of the Company, if a stockholder that holds its shares through a broker does not provide instructions to that broker on how the stockholder wishes to vote, the broker will be allowed to exercise discretion and vote on behalf of the stockholder. A broker is prohibited, however, from voting on other non-routine matters, including the election of directors, the advisoryvote on executive compensation, the advisory vote on the frequency of an advisory vote on named executive officer compensation and the amendment toand restatement of the 2006 Equity Incentive Plan. Broker “non-votes” will occur when a broker does not receive voting instructions from a stockholder on a non-routine matter or if the broker otherwise does not vote on behalf of a stockholder. Broker non-votes will not count in determining the number of votes cast with respect to the election of directors or a proposal that requires a majority or plurality of votes cast and, therefore, will not affect the outcome of the election of directors or the voting on such a proposal.
Solicitation of Proxies
Solicitation of Proxies |
This solicitation of proxies for the Annual Meeting is being made by the Company’s Board of Directors, which is sometimes referred to in this Proxy Statement as the Board. The Company will bear all costs of such solicitation, including the cost of preparing and mailing this Proxy Statement and the enclosed form of proxy. After the initial mailing of this Proxy Statement, proxies may be solicited by mail, telephone, facsimile transmission, electronically or personally by directors, officers, employees or agents of the Company. Brokerage houses and other custodians, nominees and fiduciaries will be requested to forward soliciting materials to beneficial owners of shares held ofheldof record by them, and their reasonable out-of-pocket expenses, together with those of the Company’s transfer agent, will be paid by the Company.
A list of stockholders entitled to vote at the Annual Meeting will be available for examination at least ten days prior to the date of the Annual Meeting during normal business hours at the Company’s Corporate Headquarters, 1800 Hughes Landing Boulevard, Ste. 800, The Woodlands, TXTexas 77380. The list will also be available at the Annual Meeting.
8 | 2017 Proxy Statement |
ELECTION OF DIRECTORS The Board recommends a voteFOR each Director NomineeELECTIONOF DIRECTORSITEM
1
One of the purposes of this Annual Meeting is to elect seven directors to serve one-year terms expiring at the Annual Meeting of Stockholders in 20172018 and until their successors are duly elected and qualified or until their earlier death, retirement, resignation or removal. The Company’s Board of Directors consists of seven directors. The Board of Directors has designated Messrs. David A.B. Brown, Michael J. Caliel, J. Samuel Butler, Nelson Obus, Robert R. Gilmore, John T. Nesser III and Alan P. Krusi as the nominees proposed for election at the Annual Meeting. Mr. Krusi was appointed to the Board effective January 15, 2016 to fill a newly created position on the Company’s Board, following a search conducted by an independent search firm.
Unless authority to vote for the nominees is withheld, it is intended that the shares represented by properly executed proxies in the form enclosed will be voted for the election of the nominees for director. In the event that one or more of the nominees should become unavailable for election, it is intended that the shares represented by the proxies will be voted for the election of such substitute nominee as may be designated by the Board of Directors, unless the authority to vote for the nominee who has ceased to be a candidate has been withheld. The nominees have indicated their willingness to serve as directors if elected, and the Board of Directors has no reason to believe that the nominees will be unavailable for election.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF DAVID A.B. BROWN, MICHAEL J. CALIEL, J. SAMUEL BUTLER, NELSON OBUS, ROBERT R. GILMORE, JOHN T. NESSER III AND ALAN P. KRUSI AS DIRECTORS OF THE COMPANY. |
Layne Christensen Company | 9 |
ELECTION OF DIRECTORS | |
Nominees for DirectorNOMINEES FOR DIRECTOR
The following table sets forth certain information with respect to the persons nominated by the Board of Directors for election as directors at the Annual Meeting.
Name | Age | Present Position with the Company | Director Since | Age | Present Position with the Company | Director Since | ||||||
David A.B. Brown | 72 | Director, Chairman of the Board | 2003 | 73 | Director, Chairman of the Board | 2003 | ||||||
Michael J. Caliel | 56 | Director, President and Chief Executive Officer | 2015 | 57 | Director, President and Chief Executive Officer | 2015 | ||||||
J. Samuel Butler | 70 | Director | 2003 | 71 | Director | 2003 | ||||||
Nelson Obus | 69 | Director | 2004 | 70 | Director | 2004 | ||||||
Robert R. Gilmore | 64 | Director | 2009 | 65 | Director | 2009 | ||||||
John T. Nesser III | 67 | Director | 2013 | 68 | Director | 2013 | ||||||
Alan P. Krusi | 61 | Director | 2016 | 62 | Director | 2016 |
The business experience during the last five fiscal years of the persons nominated by the Board of Directors for election as directors at the Annual Meeting is as follows:
DAVID A.B. BROWN Age:73 Director Since:2003 Committees Served: ●Nominating & Corporate Governance ●Compensation |
David A.B.Biography
Mr. Brown served as the Company’s Interim President and CEO from June of 2014 through January 2, 2015. Mr. Brown served as Chairmanchairman of the Boardboard of Directorsdirectors of Pride International, Inc. from 2005 until Pride’s acquisition by Ensco Plc in 2011, at which time he became a member of the Boardboard of Directorsdirectors of Ensco PLC. Mr. Brown retired from the Boardboard of Directorsdirectors of Ensco PLC in May of 2014. He is also on the board of directors of EMCOR Group, Inc., Hercules Offshore, and Global Power Equipment Group Inc., and from 1984 to 2005, Mr. Brown was president of The Windsor Group, a consulting firm that focused on strategic related issues facing oilfield services and engineering companies. He is a Chartered Accountantchartered accountant and CPA and has over 4045 years of energy relatedenergy-related experience. Mr. Brown’s pertinent experience, qualifications, attributes and skills include: financial literacy and extensive managerial experience attained from serving as the president and CEO
Skills and Experience |
Other Public Company Directorships:EMCOR Group, Inc. and Global Power Equipment Group Inc. |
MICHAEL J. CALIEL Age:57 Director Since:2015 |
Michael J.Biography
Mr. Caliel was appointed President and Chief Executive Officer of the Company on January 2, 2015. Mr. Caliel also became a director of the Company on January 2, 2015. Mr. Caliel has 30 years of global sales, management and operating experience. PriorFrom 2011 to joining Layne,2014, Mr. Caliel served as Presidentpresident and CEO (2011-2014)chief executive officer of the Invensys Software and Industrial Automation Division of Invensys plc (“Invensys Software”), a LSE-listed global software, systems and technology company that serves both manufacturing and infrastructure industries. PriorFrom 2006 to that,2011, Mr. Caliel served as President,president, CEO, and Executive Director (2006-2011)executive director of Integrated Electrical Services, Inc., a Nasdaq-listed national provider of electrical and communications solutions for the commercial, industrial, and residential markets.
Skills and Experience |
Other Public Company Directorships:None |
10 | 2017 Proxy Statement |
ELECTION OF DIRECTORS | |
J. SAMUEL BUTLER Age:71 Director Since:2003 Committees Served: ●Nominating & Corporate Governance (Chairperson) ●Audit ●Compensation |
Biography
Mr. Caliel’s pertinent experience, qualifications, attributes and skills include: financial literacy and extensive managerial and operating experience attained from serving as the president and chief executive officer of the Invensys Software and Automation Division of Invensys plc and Integrated Electrical Service, Inc., the knowledge and experience he has attained from service on other public company boards, and the knowledge and experience he has attained from his service on the Company’s Board since 2015.
J. Samuel Butler has been president of Trinity Petroleum Management, LLC, an oil and gas management outsourcing company, since 1996. Mr. Butler has also served as Chairmanchairman of the Board,board, chief executive officer and president of ST Oil Company, an independent oil and gas exploration and production company, since 1996. Mr. Butler was appointed to the Colorado School of Mines Board of Governors in 2009, and in 2007, Mr. Butler became the Chairmanchairman of Genesis Gas & Oil Partners LLC, a private oil and gas partnership focused on the acquisition and exploitation of coalbed methane and other unconventional oil and gas reserves. Mr. Butler’s pertinent experience, qualifications, attributes and skills include: financial literacy and extensive managerial experience attained from
Skills and Experience |
Other Public Company Directorships:None |
NELSON OBUS Age:70 Director Since:2004 Committees Served: ●Audit ●Nominating & Corporate Governance ●Compensation |
NelsonBiography
Mr. Obus is the co-founder and has served as president of Wynnefield Capital, Inc. since November 1992. He has also served1992 and as the managing member of Wynnefield Capital Management, LLC since January 1997. Wynnefield Capital Management manages two partnerships and Wynnefield Capital, Inc. manages one partnership, all three of which invest in small-cap value U.S. public equities. Mr. Obus served as a member of the board of directors of Gilman Ciocia, Inc., a company that provides income tax return preparation, accounting and financial planning services from September 2007 to January 2012. Mr. Obus2012, and was also a member of the board of directors of Breeze-Eastern Corporation, a company that designs, develops, manufactures, sells and services sophisticated mission equipment for helicopters, from January 2012 to December 2015. Mr. Obus’ pertinent experience, qualifications, attributesObus is also a member of the board of directors of Global Power Equipment Group Inc., a company that provides custom-engineered auxiliary equipment and skills include: financial literacy and expertise, capital markets expertise and managerial experience gained through his leadership roles and ownership interest in related investment management companies, Wynnefield Capital Management, LLC and Wynnefield Capital, Inc.,maintenance support services for the knowledge and experience he has attained from service on other public company boards, and the knowledge and experience he has attained from his service on the Company’s Board since 2004.global power generation industry.
Skills and Experience |
Other Public Company Directorships: Global Power Equipment Group Inc. |
Layne Christensen Company | 11 |
ELECTION OF DIRECTORS | |
ROBERT R. GILMORE Age:65 Director Since:2009 Committees Served: ●Audit (Chairperson) ●Nominating & Corporate Governance ●Compensation |
Robert R.Biography
Mr. Gilmore is an independent CPA. From 1997 to May 2006 and from March 2008 to present, Mr. Gilmore has served as an independent financial consultant to a number of companies. From May 2006 to February 2008, he was chief financial officer of NextAction Corporation, a private company engaged in multi-channel direct marketing using technology-based proprietary lead generation methods for the retail industry. Since April 2003, Mr. Gilmore has been a Directordirector of Eldorado Gold Corporation, serving as Chairmannon-executive chairman of the Boardboard since December 2009. Since June 2010, Mr. Gilmore has been a director of Fortuna Silver Mines, Inc. Mr. Gilmore also served as a Directordirector of Global Med Technologies, Inc. from March 31, 2006, until March 2010. From July 2007 to March 2009, Mr. Gilmore was also a Directordirector of Frontera Copper Corporation. Mr. Gilmore was also a Directordirector of Ram Power Corporation from October 2009 until April 2010.
Skills and Experience |
Other Public Company Directorships: Eldorado Gold Corporation and Fortuna Silver Mines, Inc. |
JOHN T. NESSER III Age:68 Director Since:2003 Committees Served: ●Compensation (Chairperson) ●Audit ●Nominating & Corporate Governance |
Biography
Mr. Gilmore’s pertinent experience, qualifications, attributes and skills include: public accounting and financial reporting expertise (including extensive experience as a certified public accountant), managerial experience attained from serving as the chief financial officer of NextAction Corporation, the knowledge and experience he has attained from service on other public company boards, and the knowledge and experience he has attained from his service on the Company’s Board since 2009.
John T. Nesser IIIbrings 4045 years of executive, corporate, and legal experience to the Company.Company, including a proven record of success in the international oil & gas, engineering & construction, and maritime industries. Since July 2013, Mr. Nesser has served as the co-founder, manager, co-chief executive officer and directormanager of All Coast, LLC, the owner and operator of a private company that owns and operates the largestlarge fleet of liftboatsliftboards for the offshore oil and gas market in the Gulf of Mexico. Beginning in 1998 through his retirement in July 2011, Mr. Nesser retired as Executive Vice President and Chief Operating Officerheld positions of increasing responsibility at McDermott International, Inc. in 2011. He joined McDermott, a NYSE-listed globalinternational engineering procurement,and construction company, including chief operating officer responsible for all worldwide operations, chief administrative and installation company with a focus on the energy industry, as Associate General Counsel in 1998legal officer and spent over 10 years in various senior management roles, including as General counsel, Chief Administrative Officer and Chief Legal Officer.general counsel. Prior to joining McDermott, Mr. Nesser spent seven yearsserved as a partner, and then 13 years as a co-foundingmanaging partner of two majorNesser, King and LeBlanc, a law firms.firm that he co-founded in 1985. Mr. Nesser also serves on the Board of Directors of Thermon Group Holdings, Inc. Mr. Nesser’s pertinent experience, qualifications, attributes and skills include: financial literacy and extensive managerial experience attained from serving as the chief operating officer of McDermott International, legal experience attained from serving as the general counsel of McDermott International and practicing law at a private law firm that he co-founded, the knowledge and experience he has attained from service on other public company boards, and the knowledge and experience he has attained from his serviceNesser served on the Company’s Board since 2013.of Directors of Seahawk Drilling Incorporated from August 2009 to October 2011. In February 2011, Seahawk Drilling Incorporated announced that substantially all of its assets would be sold to Hercules Offshore, Inc., such sale being implemented through a Chapter 11 bankruptcy filing, citing heavy losses due to the slow issuance of shallow water drilling permits following the April 2010 oil spill in the Gulf of Mexico and other factors.
Skills and Experience |
Other Public Company Directorships:Thermon Group Holdings, Inc. |
12 | 2017 Proxy Statement |
ELECTION OF DIRECTORS | |
ALAN P. KRUSI Age:62 Director Since:2016 Committees Served: ●Audit ●Nominating & Corporate Governance ●Compensation |
Alan P.Biography
Mr. Krusi has served as a Director of the Company since January 2016. Mr. Krusi has beenserved as President, Strategic Development of AECOM Technology Corporation, sincea NYSE-listed company, from 2008 through 2015, where he led the firm’s M&A activities among other responsibilities. From 2003 until 2008 Mr. Krusi served as CEO and President of Earth Tech, Inc., a global engineering and construction firm which specialized in the design, construction, financing and operations of water treatment facilities. Prior to that, and over a period of twenty-six years, Mr. Krusi held a number of technical and management positions within the engineering and construction industries. Mr. Krusi currently serves on the Board of Directors of Comfort Systems USA, Inc., Blue Earth, Inc. and Alacer Gold Corp. and Lithko Contracting, LLC. Mr. Krusi is a Registered Geologist, Certified Engineering Geologist, and Licensed General Contractor in the State of California. Mr. Krusi’s pertinent experience, qualifications, attributes and skills include: financial literacy and extensive managerial
Skills and Experience |
Other Public Company Directorships: Comfort Systems USA, Inc. and Alacer Gold Corp. |
Layne Christensen Company | 13 |
ELECTION OF DIRECTORS | |
There is no arrangement or understanding between any director and any other person pursuant to which such director was selected as a director of the Company.
Compensation of DirectorsCOMPENSATION OF DIRECTORS
For the first quarter of fiscal 2016, each director of the Company who was not also an employee of the Company, except the Chairman of the Board, received a retainer of $11,250. The Chairman of the Board received a retainer of $16,875 for the first quarter of fiscal 2016. The Chairmen of the Audit, the Compensation and the Nominating & Corporate Governance Committees received additional retainers of $3,750, $2,500 and $1,250, respectively, for the first quarter of fiscal 2016. In addition, each non-employee director received $1,500 for each board meeting he attended either in person or via teleconference and each member of the Audit, the Compensation and the Nominating & Corporate Governance committees received $1,500 for each committee meeting he attended either in person or via teleconference during the first quarter of fiscal 2016. Effective April 1, 2015, the Company adopted a new compensation structure for its non-employee directors. The Company eliminated the fee paid for each meeting attended by a non-employee director and increased the retainers paid in an amount that was equivalent to the average number of meetings the Company typically held during a year. As a result of these changes, eachEach non-employee director of the Company, except the Chairman of the Board, will receivereceived an annual retainer equal to $65,000, and the Chairman of the Board will receivereceived an annual retainer equal to $100,000. The Chairmen of the Audit, Compensation and Nominating & Corporate Governance Committees will receivereceived additional annual retainers of $25,000, $17,500 and $10,000, respectively, while the members of each such committee will receivereceived additional annual retainers of $10,000, $7,500 and $5,000, respectively. All such retainers are payablewere paid in quarterly installments.
Since this compensation structure was put into effect at the end of the first quarter of 2016, the retainers received by the non-employee directors and the Chairman of the Board for their board and committee membership were pro-rated to cover three quarters of 2016. As an additional component of their compensation packages, all non-employee directors of the Company receive a one-time award of an option to purchase 3,000 shares of the Company’s Common Stock upon becoming a member of the Board. For fiscal 2016,2017, each non-employee director, except the Chairman, also received an annual award of restricted stock or stock options of the Company, or a combination of both, whichever he chose, with a value approximately equal to $50,000 on the date of the award. For fiscal 2016,2017, the Chairman received an annual award of either restricted stock or stock options of the Company or a combination of both, whichever he chose, with a value equal to $75,000 on the date of the award as consideration for his services as a director. The annual equity award for fiscal 20162017 was made on April 1, 2015.2016. However, everyone, including the directors, received an annual equity grant for fiscal 2017 reduced by 5% due to the fact that the Company did not have enough shares available under its 2006 Equity Plan to make a full grant. The restricted stock is valued based on the market price of the Company’s Common Stock on the day the stock is issued, vests one year from the date of issuance, and is otherwise subject to all of the terms and conditions of the Company’s 2006 Equity Incentive Plan, or such other plan under which the restricted stock may be issued. The director options have an exercise price equal to the market price of the Common Stock on the day they were issued, are 100% vested upon issuance, have a ten-year life and are otherwise subject to all of the termstheterms and conditions of the 2006 Equity Incentive Plan or such other plan under which the options may be issued. Directors of the Company who are also employees of the Company receive no compensation for service to the Company as directors.
A director may elect to defer receipt of all or a portion of his cash compensation in accordance with the terms of the Company’s Deferred Compensation Plan for Directors. Under the Company’s Deferred Compensation Plan for Directors, non-employee directors of the Company can elect to receive deferred compensation in three forms—a cash credit, a stock credit or a combination of the two. The value of deferrals made in the form of a stock credit track the value of the Company’s Common Stock. Deferrals made in the form of a cash credit will accumulate interest at a rate based on the annual yield of the longest term United States Treasury Bond outstanding at the end of the preceding year. All payments made under the plan will be made in cash. As of January 31, 2016,2017, Mr. Brown had accumulated the equivalent of 28,812.87 shares of Common Stock in his stock credit account, Mr. Butler had accumulated the equivalent of 2,939.76 shares of Common Stock in his stock credit account, Mr. Obus had accumulated the equivalent of 27,930.2038,715.22 shares of Common Stock in his stock credit account and Mr. Gilmore had accumulated the equivalent of 408.83175.16 shares of Common Stock in his stock credit account. Mr. Nesser and Mr. Krusi had no shares of Common Stock in their respective stock credit accounts.
The following table sets forth the compensation paid to our directors during the fiscal year ended January 31, 2016.2017. Because Mr. Caliel was also an employee of the Company during the fiscal year, his compensation is reported in our Summary Compensation Table and not in the following table.
Fiscal 20162017 Director Compensation Table
Name | Fees Earned or Paid in Cash(1) | Stock Awards(2) | Option Awards(3) | Total | ||||||||||||
David A.B. Brown | $ | 108,583 | — | $ | 75,000 | $ | 183,583 | |||||||||
J. Samuel Butler | $ | 83,792 | — | $ | 50,000 | $ | 133,792 | |||||||||
Nelson Obus | $ | 78,792 | $ | 25,000 | $ | 25,000 | $ | 128,792 | ||||||||
Robert R. Gilmore | $ | 93,792 | $ | 50,000 | — | $ | 143,792 | |||||||||
John T. Nesser III | $ | 88,792 | $ | 50,000 | — | $ | 138,792 | |||||||||
Alan P. Krusi | $ | 2,889 | — | $ | 3,540 | $ | 6,429 |
Name | Fees Earned or Paid in Cash (1) | Stock Awards (2) | Option Awards (3) | Total | ||||||||
David A.B. Brown | $ | 112,500 | — | $ | 71,250 | $ | 183,750 | |||||
J. Samuel Butler | 92,500 | — | 47,500 | $ | 140,000 | |||||||
Nelson Obus | 87,500 | $ | 23,750 | 23,750 | $ | 135,000 | ||||||
Robert R. Gilmore | 102,500 | 23,750 | 23,750 | $ | 150,000 | |||||||
John T. Nesser III | 97,500 | 47,500 | — | $ | 145,000 | |||||||
Alan P. Krusi | 87,500 | — | 47,500 | $ | 135,000 |
(1) | Includes amounts deferred under the Company’s Deferred Compensation Plan for Directors for the accounts of |
(2) | The amount reported in this column is equal to the grant date fair value computed in accordance with Accounting Standards Codification (“ASC”) Topic 718 for each stock award. As of January 31, |
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(3) | The amount reported in this column is equal to the grant date fair value computed in accordance with ASC Topic 718 for each option award. As of January 31, |
Meetings of the Board and CommitteesMEETINGS OF THE BOARD AND COMMITTEES
During the fiscal year ended January 31, 2016,2017, the Company’s Board of Directors held fourfive meetings. All directors attended at least 75% of the meetings of the Board of Directors and the committees of the Board of Directors on which they served that were held during such fiscal year and during the period which such director served. It should be noted that the Company’s directors discharge their responsibilities throughout the year, not only at such Board of Directors and committee meetings, but through personal meetings and other communications with members of management and others regarding matters of interest and concern to the Company.
The Company has a policy encouraging its directors to attend the Annual Meeting of Stockholders. All directors then serving attended the Company’s 20152016 Annual Meeting.
Pursuant to the Company’s Bylaws, the Board of Directors has established an Audit Committee in accordance with Section 3(a)(58)(A) of the Securities Exchange Act, as amended, a Nominating & Corporate Governance Committee and a Compensation Committee.
Audit CommitteeAUDIT COMMITTEE
The Audit Committee assists the Board of Directors in fulfilling its responsibilities with respect to the oversight of (i) the integrity of the Company’s financial statements, financial reporting process and internal control system; (ii) the Company’s compliance with legal and regulatory requirements; (iii) the independent registered public accounting firm qualifications and independence; (iv) the performance of the Company’s internal audit function and its independent auditors and (v) the system of internal controls and disclosure controls and procedures established by management. The Audit Committee is responsible for the appointment of the Company’s independent registered public accounting firm and the terms of their engagement, reviewing the Company’s policies and procedures with respect to internal auditing, accounting, financial and disclosure controls and reviewing the scope
and results of audits and any auditor recommendations. The Audit Committee held four meetings during the fiscal year ended January 31, 2016,2017, in addition to personal meetings and other communications conducted throughout the year with members of management and each other regarding issues within the committee’s area of responsibility. The Amended and Restated Audit Committee Charter is available on the Company’s website under the heading “Governance” on the Investor Relations page (http://investor.laynechristensen.com/governance.cfm).
The current members of the Audit Committee are Robert R. Gilmore (Chairperson), J. Samuel Butler, Nelson Obus, John T. Nesser III and Alan P. Krusi. All of the members of the Audit Committee are independent within the meaning of SEC regulations and the NASDAQ listing standards. The Board has determined that all members of the committee are qualified as audit committee financial experts within the meaning of SEC regulations and that such members are financially literate and have experience in finance or accounting resulting in their financial sophistication within the meaning of the NASDAQ listing standards. The Report of the Audit Committee for fiscal year 20162017 appears below.
THE FOLLOWING REPORT OF THE AUDIT COMMITTEE DOES NOT CONSTITUTE SOLICITING MATERIAL AND SHOULD NOT BE DEEMED FILED OR INCORPORATED BY REFERENCE INTO ANY OTHER COMPANY FILING UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIESTHESECURITIES EXCHANGE ACT OF 1934, EXCEPT TO THE EXTENT THE COMPANY SPECIFICALLY INCORPORATES THIS REPORT BY REFERENCE THEREIN.
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The Audit Committee of the Board of Directors is composed of independent directors as required by and in compliance with the listing standards of the NASDAQ Stock Market. The Audit Committee operates pursuant to a written charter adopted by the Board of Directors. The functions of the Audit Committee are set forth in its charter. One of the Audit Committee’s principle functions is overseeing the Company’s financial reporting process on behalf of the Board of Directors. Management of the Company has the primary responsibility for the Company’s financial reporting process, principles and internal controls as well as preparation of its financial statements. The Company’s independent registered public accounting firm is responsible for performing an audit of the Company’s financial statements and expressing an opinion as to the conformity of such financial statements with accounting principles generally accepted in the United States. The Audit Committee has reviewed and discussed the Company’s audited financial statements as of and for the year ended January 31, 2017, with management, the Company’s internal auditors and the independent registered accounting firm. The Audit Committee has discussed with the independent registered accounting firm the matters required to be discussed under Public Company Accounting Oversight Board (United States) (“PCAOB”) Auditing Standard No. 16, “Communications with Audit Committees.” The independent registered public accounting firm has provided to the Audit Committee the written independence disclosures under applicable requirements of the PCAOB, and the Audit Committee has discussed with the auditors their independence from the Company. The Audit Committee has also considered whether the independent registered public accounting firm’s provision of tax and other non-audit services to the Company is compatible with maintaining the registered public accounting firm’s independence. The Audit Committee has concluded that the independent registered public accounting firm is independent from the Company and its management. Based on the reports and discussions described above, the Audit Committee has approved the inclusion of the Company’s audited financial statements and Management’s Report on Internal Control Over Financial Reporting in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2017, which was filed with the Securities and Exchange Commission. Respectfully submitted on April 21, 2017, by the members of the Audit Committee of the Board of Directors: | ||||
Robert R. Gilmore, Chairman | J. Samuel Butler | Nelson Obus | ||
John T. Nesser III | Alan P. Krusi |
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REPORT OF THE AUDIT COMMITTEE
The Audit Committee of the Board of Directors is composed of independent directors as required by and in compliance with the listing standards of the NASDAQ Stock Market. The Audit Committee operates pursuant to a written charter adopted by the Board of Directors.
The functions of the Audit Committee are set forth in its charter. One of the Audit Committee’s principle functions is overseeing the Company’s financial reporting process on behalf of the Board of Directors. Management of the Company has the primary responsibility for the Company’s financial reporting process, principles and internal controls as well as preparation of its financial statements. The Company’s independent registered public accounting firm is responsible for performing an audit of the Company’s financial statements and expressing an opinion as to the conformity of such financial statements with accounting principles generally accepted in the United States.
The Audit Committee has reviewed and discussed the Company’s audited financial statements as of and for the year ended January 31, 2016, with management, the Company’s internal auditors and the independent registered accounting firm. The Audit Committee has discussed with the independent registered accounting firm the matters required to be discussed under Public Company Accounting Oversight Board (United States) (“PCAOB”) Auditing Standard No. 16, “Communications with Audit Committees.” The independent registered public accounting firm has provided to the Audit Committee the written independence disclosures under applicable requirements of the PCAOB, and the Audit Committee has discussed with the auditors their independence from the Company. The Audit Committee has also considered whether the independent registered public accounting firm’s provision of tax and other non-audit services to the Company is compatible with maintaining the registered public accounting firm’s independence. The Audit Committee has concluded that the independent registered public accounting firm is independent from the Company and its management.
Based on the reports and discussions described above, the Audit Committee has approved the inclusion of the Company’s audited financial statements and Management’s Report on Internal Control Over Financial Reporting in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2016, which was filed with the Securities and Exchange Commission.
Respectfully submitted on April 6, 2016, by the members of the Audit Committee of the Board of Directors:
Robert R. Gilmore, Chairman
J. Samuel Butler
Nelson Obus
John T. Nesser III
Alan P. Krusi, who was appointed to the Audit Committee effective as of April 7, 2016, did not participate in any of the Audit Committee meetings during fiscal 2016 and did not participate in the preparation of the Report of the Audit Committee included in this Proxy Statement.
NominatingNOMINATING & Corporate Governance CommitteeCORPORATE GOVERNANCE COMMITTEE
The Nominating & Corporate Governance Committee (the “Nominating Committee”), in accordance with the process described below under the heading “Selection of Board Nominees,” identifies individuals qualified to become members of the Company’s Board of Directors, recommends to the Board proposed nominees for Board membership, recommends to the Board directors to serve on each standing committee of the Board and assists the Board in developing and overseeing corporate governance guidelines. The Nominating Committee’s evaluation of director nominees takes into account their ability to contribute to the diversity of gender, age, background and experience represented on the Board, and the Nominating Committee reviews its effectiveness in balancing these considerations when assessing the composition of the Board.theBoard. The Nominating & Corporate Governance Committee Charter is available on the Company’s website under the heading “Governance” on the Investor Relations page (http://investor.laynechristensen.com/governance.cfm). The Nominating Committee held one meeting during the fiscal year ended January 31, 2016,2017, in addition to personal meetings and other communications conducted throughout the year with members of management and each other regarding issues within the committee’s area of responsibility. The current members of the Nominating Committee are J. Samuel Butler (Chairperson), David A.B. Brown, Robert R. Gilmore, Nelson Obus, John T. Nesser and Alan P. Krusi. Messrs. Butler, Gilmore, Obus, Nesser and KrusiAll of the members are independent within the meaning of SEC regulations and the NASDAQ listing standards and the Board of Directors has determined that Mr. Brown is independent under the SEC regulations and the NASDAQ listing standards other than during the time that he served as interim President and CEO.standards.
Compensation CommitteeCOMPENSATION COMMITTEE
The Compensation Committee establishes annual and long-term performance goals and objectives for the Company’s management, evaluates the performance of management and makes recommendations to the Board of Directors regarding the compensation and benefits of the Company’s executive officers and the members of the Board of Directors. The Compensation Committee also administers certain of the Company’s incentive plans, including the Company’s Executive Incentive Compensation Plan. The Amended and Restated Compensation Committee Charter is available on the Company’s website under the heading “Governance” on the Investor Relations pageRelationspage (http://investor.laynechristensen.com/governance.cfm). The current members of the Compensation Committee are John T. Nesser III (Chairperson), David A.B. Brown, J. Samuel Butler, RobbyRobert R. Gilmore, Nelson Obus and Alan P. Krusi. Messrs. Nesser, Butler, Gilmore, Obus and KrusiAll of the members are independent within the meaning of SEC regulations and the NASDAQ listing standards and the Board of Directors has determined that Mr. Brown is independent under the SEC regulations and the NASDAQ listing standards other than during the time that he served as interim President and CEO.standards. The Compensation Committee met one timetwo times during the fiscal year ended January 31, 2016,2017, in addition to personal meetings and other communications conducted throughout the year with members of management and each other regarding compensation issues within the committee’s area of responsibility.
Selection of Board NomineesSELECTION OF BOARD NOMINEES
The Nominating Committee considers candidates for Board membership suggested by its members and other Board members, as well as management and stockholders. A stockholder who wishes to recommend a prospective nominee for the Board should notify the Company’s Secretary in writing with whatever supporting material the stockholder considers appropriate or that is required by the Company’s bylaws relating to stockholder nominations as described below under the heading “Advance Notice Procedures.” The Company’s Secretary will forward the information to the members of the Nominating Committee, who will consider whether to nominate any person nominated by a stockholder pursuant to the provisions of the proxy rules, the Company’s bylaws, the Company’s Nominating Committee Charter, the Company’s Corporate Governance Guidelines and the director selection procedures established by the Nominating Committee.
Once the Nominating Committee has identified a prospective nominee candidate, the Committee makes an initial determination as to whether to conduct a full evaluation of the candidate. This initial determination is basedisbased on the information provided to the Nominating Committee with the recommendation of the prospective candidate, as well as the Nominating Committee’s own knowledge of the candidate. This information may be supplemented by
inquiries to the person making the recommendation or others. The preliminary determination is based primarily on the need for additional Board members to fill vacancies or expand the size of the Board and the likelihood that the prospective nominee can satisfy the criteria and qualifications described below. If the Nominating Committee determines, in consultation with the Chairman of the Board and other Board members as appropriate, that additional consideration is warranted, the Nominating Committee then evaluates the prospective nominees against the criteria and qualifications set out in the Company’s Corporate Governance Guidelines. Such criteria and qualifications include:
● | a general understanding of management, marketing, accounting, finance and other elements relevant to the Company’s success in today’s business environment; |
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an understanding of the principal operational, financial and other plans, strategies and objectives of the Company;
an understanding of the results of operations and the financial condition of the Company and its significant business segments for recent periods;
an understanding of the relative standing of the Company’s significant business segments vis-à-vis competitors;
the educational and professional background of the prospective candidate;
the prospective nominee’s standards of personal and professional integrity;
the demonstrated ability and judgment necessary to work effectively with other members of the Board to serve the long-term interests of the stockholders;
the extent of the prospective nominee’s business or public experience that is relevant and beneficial to the Board and the Company;
the prospective nominee’s willingness and ability to make a sufficient time commitment to the affairs of the Company in order to effectively perform the duties of a director, including regular attendance at Board and committee meetings;
the prospective nominee’s commitment to the long-term growth and profitability of the Company; and
the prospective nominee’s ability to qualify as an independent director as defined in the NASDAQ listing standards.
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● | an understanding of the principal operational, financial and other plans, strategies and objectives of the Company; |
● | an understanding of the results of operations and the financial condition of the Company and its significant business segments for recent periods; |
● | an understanding of the relative standing of the Company’s significant business segments vis-à-vis competitors; |
● | the educational and professional background of the prospective candidate; |
● | the prospective nominee’s standards of personal and professional integrity; |
● | the demonstrated ability and judgment necessary to work effectively with other members of the Board to serve the long-term interests of the stockholders; |
● | the extent of the prospective nominee’s business or public experience that is relevant and beneficial to the Board and the Company; |
● | the prospective nominee’s willingness and ability to make a sufficient time commitment to the affairs of the Company in order to effectively perform the duties of a director, including regular attendance at Board and committee meetings; |
● | the prospective nominee’s commitment to the long-term growth and profitability of the Company; and |
● | the prospective nominee’s ability to qualify as an independent director as defined in the NASDAQ listing standards. |
However, as determining the specific qualifications or criteria against which to evaluate the fitness or eligibility of potential director candidates is necessarily dynamic and an evolving process, the Board believes that it is not always in the best interests of the Company or its stockholders to attempt to create an exhaustive list of such qualifications or criteria. Appropriate flexibility is needed to evaluate all relevant facts and circumstances in context of the needs of the Board and the Company at a particular point in time.
The Nominating Committee also considers such other relevant factors as it deems appropriate, including the current composition and diversity of age, gender, ethnicity, background and experience of the Board, the balance of management and independent directors, the need for Audit Committee expertise and the evaluations of other prospective nominees. In connection with this evaluation, the Nominating Committee determines whether to interview the prospective nominees, and, if warranted, one or more members of the Nominating Committee, and others as appropriate, interview prospective nominees in person or by telephone. After completing this evaluation and interview, the Nominating Committee makes a recommendation to the full Board as to the persons who should be nominated by the Board, and the Board determines the nominees after considering the recommendation and report of the Nominating Committee.
Leadership Structure of the BoardLEADERSHIP STRUCTURE OF THE BOARD
The Company’s Corporate Governance Guidelines do not require the separation of the roles of Chairman of the Board and Chief Executive Officer, as the Board believes that an effective board leadership structure can be highly dependent on the experience, skills and personal interaction between persons in leadership roles. Since 1992, other than during Mr. Brown’s service as interim Chief Executive Officer, the Company has separated the positions of chairman and chief executive officer. During the period in which Mr. Brown served as Chairman and interim Chief Executive Officer, the Board appointed John T. Nesser III to servetoserve as lead independent director. Mr. Brown resumed his role as the independent chairman following the appointment of Michael J. Caliel as the Chief Executive Officer of the Company. The Board believes this structure provides strong leadership for the Board, while also positioning the Chief Executive Officer as the leader of the Company in the eyes of our customers, employees and other stakeholders. The Board also believes that this structure has afforded the Company an effective combination of internal and external experience, continuity and independence that has served the Board and the Company well.
Chief Executive Officer Succession PlanningCHIEF EXECUTIVE OFFICER SUCCESSION PLANNING
Assuring that the Company has the appropriate management talent to successfully pursue the Company’s strategies is one of the Board’s primary responsibilities. To fulfill this responsibility the Board has adopted a policy to assure that the Company has in place an appropriate plan to address succession should the Company’s Chief Executive Officer become unexpectedly unable to perform his duties, Chief Executive Officer succession in the ordinary course ofcourseof business, and succession for key members of senior management. The Board annually reviews the senior executive team’s experience, skills, and competencies and assesses which, if any, of the executives possess, or have the ability to develop, attributes the Board believes are necessary to lead and achieve the Company’s goals. The Company’s succession plan is reviewed annually by the Board.
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Communications with the BoardTable of DirectorsContents
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COMMUNICATIONS WITH THE BOARD OF DIRECTORS
The Board of Directors has approved a formal policy for stockholders to send communications to the Board or its individual members. Stockholders can send communications to the Board and specified individual Directors by mailing a letter to the attention of the Board or a specific Director (c/o the General Counsel) at Layne Christensen Company, 1800 Hughes Landing Boulevard, Ste. 800, The Woodlands, TX 77380, or by sending a message through the Company’s website at http://investor.laynechristensen.com/contactus.cfm.
Upon receipt of a communication for the Board or an individual Director, the General Counsel will promptly forward any such communication to all the members of the Board or the individual Director or Directors, as appropriate. If a communication to an individual Director deals with a matter regarding the Company, the General Counsel will forward the communication to the entire Board, as well as the individual Director. Neither the Board nor a specific Director is required to respond to stockholder communications and when responding shall do so only in compliance with the Company’s Corporate Governance Guidelines.
The Board considers oversight of the Company’s risk management efforts to be a responsibility of the entire Board. The Board’s role in risk oversight includes receiving regular reports from members of senior management on areas of material risk to the Company, or to the success of a particular project or endeavor under consideration, including operational, financial, legal and regulatory, security, strategic and reputational risks. The full Board (or the appropriate Committee, in the case of risks that are under the purview of a particular Committee) receives these reports from the appropriate members of management to enable the Board (or Committee) to understand the Company’s risk identification, risk management, and risk mitigation strategies. When a report is vetted at the Committee level, the chairperson of that Committee subsequently reports on the matter to the full Board. This enables the Board and its Committees to coordinate the Board’s risk oversight role.
Part of the Audit Committee’s responsibilities, as set forth in its charter, is to review with corporate management, the independent auditors and the internal auditors, if applicable, any legal matters, risks or exposures that could have a significant impact on the financial statements and the steps management has taken to minimize the Company’s exposure. In this regard, the Company’s internal auditors prepare annually a comprehensive risk assessment report and review that report with the Audit Committee. This report identifies the material business risks
for the Company, and identifies the Company’s internal controls that respond to and mitigate those risks. The Company’s management regularly evaluates these controls, and the Audit Committee is provided regular updates regarding the effectiveness of the controls. The Audit Committee regularly reports to the full Board.
Risk Assessment of Compensation PoliciesRISK ASSESSMENT OF COMPENSATION POLICIES
In March 2016,2017, the Company conducted a risk assessment of its compensation policies and practices. The Company’s compensation policies and practices were evaluated to ensure that they do not foster risk-taking above the level of risk associated with the Company’s business model. The Company considered the design and operation of its compensation arrangements, including the performance objectives and target levels used in connection with incentive awards, and evaluated the relationship between thebetweenthe Company’s risk management and these arrangements. The results of the assessment were then reported to the Compensation Committee. Based on this assessment, the Compensation Committee concluded that the Company has a balanced pay and performance program that does not encourage unnecessary or excessive risk-taking and that any risks arising from the Company’s compensation policies and practices for its employees are not reasonably likely to have a material adverse effect on the Company.
Other Corporate Governance MattersOTHER CORPORATE GOVERNANCE MATTERS
All of the members of the Board are independent within the meaning of SEC regulations and the NASDAQ listing standards, with the exception of Michael J. Caliel. Mr. Caliel is considered an inside director because of his employment as an executive of the Company. During Mr.DuringMr. Brown’s service as interim President and CEO, he was not considered independent. Following such service, which did not last longer than a year, the Board of Directors determined that he is independent under applicable SEC regulations and the NASDAQ listing standards.
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Transactions with Management/Related-Party TransactionsTable of Contents
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TRANSACTIONS WITH MANAGEMENT/RELATED-PARTY TRANSACTIONS
The Company considers any transaction that would require disclosure under Item 404(a) of Regulation S-K to be a related-party transaction. The Company has an Employee Conflict of Interest Policy that requires employees to identify potential conflicts of interest, including related-party transactions, to the Compliance Department. Furthermore, the Company’s Audit Committee must review and approve all related-party transactions that are required to be disclosed pursuant to Item 404(a) of Regulation S-K.
The Company was not a party to any transactions with any directors or executive officers of the Company during the last fiscal year requiring disclosure under the regulations of the Securities and Exchange Commission.
The Company has a Code of Business Conduct and Ethics that applies to all directors and employees of the Company, including the chief executive officer, chief financial officer and the chief accounting officer. The Code of Business Conduct and Ethics is available free of charge on the Company’s website under the heading “Governance” on the Investor Relations page (http://investor.laynechristensen.com/governance.cfm).
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COMPENSATION DISCUSSION AND ANALYSISTable of Contents
The following is a discussion and analysis of the compensation arrangements of our named executive officers (which we refer to collectively as our(our “NEOs” or “Executives”) for fiscal 2016 should2017. We recommend that it be read together with the compensation tables and related disclosures set forth below.
Executive Summary
About Layne |
Each of Layne’s business units is a leader in its industry:
Our Strategy to Unlock Value for our Shareholders |
Layne’s management is rapidly executing a strategy to transform Layne:
FY16 | FY18 | ||
Strategic Review | Business Performance Improvement | Unlock Value | ||||||||
●Initiated strategic focus to streamline portfolio ●Addressed operational issues ●Identified growth opportunities | ●Cost reductions ●Procurement savings ●Enhanced working capital management | ●Investing in core offerings and capabilities ●Leverage and expand leading market positions |
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COMPENSATION DISCUSSION AND ANALYSIS | |
Fiscal 2017 Performance Highlights |
Our Divisions
Inliner | Mineral Services | Water Resources | Heavy Civil | |||||
Revenue: $196.8M Backlog: $117.4M | Revenue: $63.8M | Revenue: $204.6M Backlog: $49.2M | Revenue: $137.2M Backlog: $193.4M | |||||
●Liner tube manufacturing ●Cured-in-place pipe (CIPP) construction ●Program management | ●Exploratory and mine site drilling ●Borehole services ●Mine water management | ●Drilling ●Repair and maintenance ●Treatment and water management | ●Pipeline installation ●Treatment plants ●Wastewater collection ●Marine, biogas, tunneling and water supply | |||||
* Revenues are for FY’17; Backlog as of 1/31/17
Fiscal 2017 Stock Price Performance
* Monthly average closing price data from Yahoo Finance
Executive Compensation Objectives |
Our compensation program for our Executives is designed to:
● | attract and retain top-quality executives; |
● | tie annual and long-term equity incentives to achievementof measurable corporate, strategic, business unit, safetyand individual performance objectives; and |
● | align the Executives’ incentives with stockholder valuecreation. |
Pay for Performance Philosophy |
Our executive compensation program seeks to attract and retain top-quality executives, tie annual and long-term equity incentives to achievement of measurable corporate, business unit and individual performance objectives, and align the Executives’ incentives with stockholder value creation. To achieve these objectives and to implement our executive compensation program emphasizes performance-basedcommitment to a strong pay-for-performance philosophy by emphasizingperformance-based incentive compensation under our Executive Short-Term Incentive Plan (the “STI Plan”) and our Long-Term Incentive Plan (the “LTI Plan”), which aligns.
CEO and Other NEOs Target Compensation Mix
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COMPENSATION DISCUSSION AND ANALYSIS | |
Compensation Governance |
The Board and Compensation Committee engage in robust oversight of Layne’s executive compensation program. Below is a summary of the key features of our Executives’executive compensation program:
We Do: ●Pay for Performance using a compensation structure that includes performance-based annual and LTI awards that are aligned with stockholder interests ●Use a mix of cash and equity incentives tied to short-term financial performance and long-term value creation ●Maintain share ownership guidelines for the Company’s CEO, CFO and General Counsel ●Have a Clawback policy ●Provide limited and modest benefits to Executives on the same terms as all Company employees ●Have an independent compensation consultant that reports directly to the Compensation Committee | We Do Not: ●Offer supplemental executive retirement plan benefits to our Executives ●Provide any material perquisites to executives ●Engage in option backdating or re-pricing ●Permit executive officers and directors to engage in certain types of activity, such as short sales or buying or selling put or call options of any of our securities ●Encourage excessive risk or inappropriate risk taking through our incentive programs |
Say on Pay Results |
At our 2016 Annual Meeting, our Say on Pay proposal received support from 82% of votes cast. The board believes the percentage of votes cast “for” the Company’s financial performance and stock price, providing our Executives with an incentive to maximize stockholder value. Our Compensation Committee (the “Committee”) is responsible for establishing and overseeingnamed executive officer compensation reflects the administration of annualCommittee’s continued focus on ensuring that the total short- and long-term performance goals for our Executives, as well as setting the overall compensation philosophyincentivecompensation for the Company, subject to approval by the Board. Consistent with our strong pay-for-performance culture, the Committee seeks to tie the compensation of the ExecutivesCompany’s executive officers is linked to the Company’s financialperformance as discussed elsewhere in this Proxy Statement.
The following Executives are the “Named Executive Officers” included in the Summary Compensation Table on page 33:
Name | Title | |
Michael J. Caliel | President and Chief Executive Officer | |
J. Michael Anderson | Chief Financial Officer and Senior Vice President | |
Steven F. Crooke | Senior Vice President, Chief Administrative Officer and General Counsel | |
Kevin Maher | Senior Vice President of Water & Mineral Services | |
Larry Purlee | President of Inliner |
Compensation Components |
As discussedTo assist in achieving the goals outlined above, our compensation program is designed to provide competitive compensation that rewards both short-term results and long-term strategic contributions that reinforce sustained business performance and discourage excessive risk-taking. The program consists of the following four core components:
Base Salary | Short-term Incentive Plan | Long-term Incentive Plan | Benefits |
Layne Christensen Company | 23 |
COMPENSATION DISCUSSION AND ANALYSIS | |
These components are described below, in July 2015 the Company hired J. Michael Anderson as the Company’s Senior Vice President and Chief Financial Officer. In connectiontogether with the hiring of Mr. Anderson, Andrew Atchison resigned as the Company’s interim Chief Financial Officer. Messrs. Anderson and Atchison did not participate in our STI Plan or LTI Plandecisions made under each component for fiscal 2016 due2017. We also pay discretionary bonuses if the Committee determines such awards are necessary to appropriately reward performance.
The following sections also contain information on the interim natureperformance targets for the various compensation components, the extent to which they were achieved, and how the compensation under each component was determined.
Target Compensation |
Our compensation plans tie a significant portion of Mr. Atchison’s employment and the commencement of Mr. Anderson’s employment midway through the fiscal year.
Executives’ total compensation to our financial performance. The Committee believes that its historical commitment to a strong pay-for-performance philosophy is evidencedthe Company’s target total compensation program should ideally be set at, or near, the 50th percentile of the market. Based on the most recent benchmarking study provided by the fact that inCommittee’s compensation consultant, the recent past,aggregate target total compensation of our Executives is slightly below the Company’s executive officers have realized very little value from50th percentile of the equity awards they have been granted. For example, during the period from fiscal 2011 through fiscal 2016, over 845,000 shares of performance-contingent restricted stock, performance-contingent restricted stock units, (collectively, “performance shares”) and stock options, with an aggregate grant date fair market value of approximately $8.8 million were granted to our executive officers. As of January 31, 2016,benchmark data. However, due to the decrease in the Company’s stock price and related performance challenges, the executive officers have realized no value from these awards.
The Committee recommended, and the Board approved, modest increases in compensation for Larry Purlee, President of the Inliner division, and Ronald Thalacker, President of the Water Resources division, due to the recent strong performance of those divisions. The Committee determined that salary increases were not warranted for the other Executives because their salaries had been either recently established (in the case of the hiring of Messrs. Caliel and Anderson) or adjusted (in the case of the appointment of Mr. Crooke as Chief Administrative Officer).
Under the STI Plan, performance was linked to Company achievement of an Adjusted EBITDA threshold of at least $35.4 million for fiscal 2016 (which was not met) and the achievement of individual performance goals. In addition, Mr. Purlee and Mr. Thalacker, as division heads, had the majority of their STI opportunity linked to achievement of an Adjusted EBITDA threshold of at least $17.7 million at the Inliner division and $20.9 million at the Water Resources division, respectively, which thresholds were met. Messrs. Caliel, Crooke, Purlee and Thalacker all met their individual performance goals. Accordingly, for fiscal 2016, Messrs. Caliel and Crooke received 20% of their target STI Plan awards, Mr. Purlee received approximately 106% of his target STI Plan award and Mr. Thalacker received approximately 75% of his target STI Plan award. Additionally, although Company Adjusted EBITDA was below the threshold for payment of the portion of the targeted STI Plan bonus based on Company Adjusted EBITDA, Mr. Caliel and Mr. Crooke received discretionary cash bonuses of $198,000 and $72,000, respectively, in recognition of their contributions to the improvement of the Company’s operations and financial condition during fiscal 2016. See “Compensation Components—Short-Term Incentive Plan—Awards for Fiscal 2016”.
Under the LTI Plan for fiscal 2016, the Committee recommended and the Board approved equity awards consisting of a combination of performance shares (which will vest only if the Company’s stock price significantly increases during the three-year period from the date of grant) and time-vesting restricted stock units (which are subject to a three-year cliff vesting and cannot be sold until the Executive is no longer employed by the Company).
Additionally, the Committee recommended and the Board approved awards made in connection with the hiring of Mr. Anderson as our Chief Financial Officer.
The remainder of this Compensation Discussion and Analysis addresses, among other things, the following topics in greater detail:
identification of our named executive officers;
leadership changes in fiscal 2016;
the objectives of our compensation program;
the role others play in designing and implementing our compensation program, including compensation consultants, peer groups and our Chief Executive Officer;
the components of compensation for our Executives, including the determination of base salaries, annual bonuses under our STI Plan, equity grants under our LTI Plan and discretionary bonuses; and
the manner in which the Company addresses Internal Revenue Code limits on deductibility of compensation.
The compensation tables appear immediately following this Compensation Discussion and Analysis.
Named Executive Officers
Our “named executive officers” (referred to as “Executives” throughout) are the executive officers that are included in the Summary Compensation Table on page 25. They include the following current officers:
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Under applicable SEC rules, our Executives for fiscal 2016 also includes Andrew Atchison (who resigned as interim Senior Vice President and Chief Financial Officer effective July 20, 2015).
Leadership Changes in Fiscal 2016
During fiscal 2016, the Company hired Mr. Anderson as Senior Vice President and Chief Financial Officer. In connection with the hiring of Mr. Anderson, Mr. Atchison resigned as the Company’s interim Chief Financial Officer.
Hiring of J. Michael Anderson as Chief Financial Officer
J. Michael Anderson, the Company’s Chief Financial Officer and Senior Vice President, joined the Company on July 20, 2015. On July 6, 2015, the Company entered into an offer letter with Mr. Anderson relating to his service as the Company’s Senior Vice President and Chief Financial Officer. In connection with the hiring of Mr. Anderson, the Committee sought the advice of F.W. Cook regarding a proposed compensation package for the Company’s Chief Financial Officer. The Committee then made its recommendations to the Board, which approved them. The offer letter provides for the benefits listed below.
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For fiscal 2016, the Company paid Mr. Anderson a prorated bonus under the STI Plan of $160,274 (based on the number of days worked during fiscal 2016, a target incentive opportunity equal to 75% of base salary and assuming a 100% of target level of achievement).
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The vesting of the Inducement Option will accelerate and become fully vested upon a “change in control” (as defined in the Company 2006 Equity Incentive Plan). If Mr. Anderson is terminated without “cause” by the Company or he resigns for “good reason” (as defined therein), prior to the third anniversary of his start date, a pro rata portion of the Inducement Option will vest and be exercisable based on time, assuming all performance conditions have been met.
If Mr. Anderson’s employment with the Company ends prior to the third anniversary of his start date for any other reason, he will forfeit the Inducement Option. After the third anniversary of his start date, if Mr. Anderson is terminated for “cause”, any unexercised portion of the Inducement Option will be immediately forfeited.
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The vesting of the Inducement RSUs will accelerate and become fully vested upon a “change in control.” If Mr. Anderson is terminated without “cause” by the Company or he resigns for “good reason”, prior to the third anniversary of his start date, a pro rata portion of the Inducement RSUs will vest based on time, assuming all performance conditions have been met.
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Vesting of the Inducement Cash will accelerate and become fully vested upon a “change in control”. If Mr. Anderson is terminated without “cause” or by Mr. Anderson for “good reason” prior to the third anniversary of his start date, a pro-rata portion of Inducement Cash will vest based on time assuming all performance conditions have been met.
Mr. Anderson’s Inducement Grant was made pursuant to NASDAQ Listing Rule 5635(c)(4) and therefore the awards were made outside of the share limits of the 2006 Equity Incentive Plan. However, the award agreements provide that the awards are otherwise subject to the terms of the Company’s 2006 Equity Incentive Plan.
Mr. Anderson also entered into a severance agreement with the Company providing for the payment of certain benefits under certain circumstances. See “Executive Compensation and Other Information—Potential Payments Upon Change of Control, Retirement, Death or Disability” below for descriptions of the amounts Mr. Anderson may receive upon a change in control, retirement, death or disability.
Because Mr. Anderson was hired midway through fiscal 2016 and did not participate in the STI Plan or the LTI Plan for fiscal 2016, the discussion in this Compensation Discussion and Analysis does not otherwise relate to Mr. Anderson’s compensation as CFO, and references herein to the compensation of our Executives do not include Mr. Anderson.
Resignation of Andrew Atchison as interim Chief Financial Officer
Andrew Atchison resigned from the Company effective July 20, 2015 in connection with the hiring of Mr. Anderson. Mr. Atchison was not party to an employment or severance related agreement with the Company.
Objectives of Our Compensation Program
The Company’s compensation philosophy is to structure compensation to drive financial and strategic growth and build long-term stockholder value. The foundation of the Company’s compensation programs is based on the following core principles:
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To achieve these objectives, the Committee implements and maintains compensation plans that tie a significant portion of the Executives’ overall compensation to our financial performance. The Committee generally believes that the Company’s target total compensation program should be set at, or near, the 50th percentile of the market. Based on the most recent benchmarking data provided by the Committee’s compensation consultant, the Company’s target total compensation is slightly below the 50th percentile of the benchmark data. See “Role of Peer Group” below. However, for the reasons discussed above in “Executive Summary,” the Company believes that the Executives’ realized total compensation for the past three fiscal years has likely been significantly below the 50th50th percentile.
Role of Compensation Consultants
To assist in carrying out its responsibilities, the Committee has from time to time retained independent consultants to provide advice on executive compensation and to perform specific tasks as requested by the Committee. Any consultant retained by the Committee reports directly to the Committee. On an annual basis, the Committee reviews and assesses the independence and performance of any consultant then engaged in order to confirm that the consultant is independent, free of any potential conflicts and meets all applicable regulatory requirements.
For fiscal 2016, the Committee engaged the independent compensation consulting firm of Frederic W. Cook & Co. (“F.W. Cook”) on a limited basis to assist with specific situations, primarily related to the hiring of Mr. Anderson as the Company’s Chief Financial Officer. The Committee did not retain F.W. Cook to perform an in-depth market analysis for fiscal 2016. Instead, the Committee relied on the most recent market analysis prepared by
F.W. Cook three years ago and the market analysis prepared by F.W. Cook for the Chief Executive Officer and Chief Financial Officer in connection with the hiring of Mr. Caliel in fiscal 2015 and Mr. Anderson in fiscal 2016. The Committee determined that it was not necessary to update the market analysis given the absence of significant increases in base salaries and lack of significant changes to the compensation program.
In addition, F.W. Cook provided advice to the Committee in connection with a review of the compensation program for the Company’s independent directors.
Role of the Peer Group
From time to time, the Committee directs its consultant to review the base salary and short- and long-term incentive levels of our Executives. In order to ensure that our compensation programs are market-based, the Committee’s consultant analyzes and matches the position and responsibilities of each Executive to proxy statement data from a peer group of companies.
Peer groups require periodic review for fit to ensure that the peer framework continues to provide an appropriate benchmark for executive pay and company performance. In selecting its peer group, F.W. Cook recommended that the Committee select companies based on similar industry classifications, organizational scope and size, financial metrics and comparable business operations. The Committee believes that the peer group consists of those companies for which executive compensation information is publicly available that are most comparable to the Company’s various businesses. However, several of the Company’s direct competitors are principally either privately held and/or incorporated in foreign jurisdictions that do not require public disclosure of executive compensation. Also, the uniqueness of the Company’s businesses results in a large number of companies in the peer group that are tangentially related to the Company or focused only on one of the Company’s lines of business. For these reasons, among others, the Committee recognizes that compensation comparisons are imperfect.
Based on the recommendation of F.W. Cook, the Company significantly revised its peer group at the beginning of fiscal 2014. The Committee determined that no changes to the peer group were necessary for fiscal 2016.
The peer group currently consists of the 15 peer companies listed below.
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The Committee believes the peer group data provides additional insights regarding competitive pay data and pay mix. The Committee also uses general industry survey data for benchmarking purposes.
Role of Executive Officers
Michael J. Caliel, our Chief Executive Officer, regularly attended meetings of the Committee during fiscal 2016 but was not a member of the Committee and did not vote on Committee matters. Mr. Caliel was not present for certain portions of Committee meetings, such as when the Committee held executive sessions or discussed CEO compensation.
In early fiscal 2016, Mr. Caliel submitted compensation recommendations to the Committee for each of the Executives (other than himself) that were then serving as an Executive. As discussed below under “Compensation Components—Base Salary”, Mr. Caliel recommended that the Company not make any changes to the Executives’ base salaries for fiscal 2016, except for increases for Messrs. Purlee and Thalacker. In addition, Mr. Caliel recommended to the Committee the goals for each of the participating Executives under the STI Plan, the relative mix of the equity awards for the participating Executives under the LTI Plan and the performance criteria for the performance shares.
Shortly after the end of fiscal 2016, Mr. Caliel provided recommendations to the Committee with respect to the payment of awards to the participating Executives under the STI Plan for 2016.
Compensation Components
Our compensation program consists of the following four core components as described in more detail below: (i) base salary, (ii) a short-term incentive plan, (iii) a long-term incentive plan, and (iv) benefits and perquisites.
Base Salary
The Committee annually reviews base salaries, and recommends adjustments from time to time to realign our salaries with market levels paid by other companies for similar positions after taking into account individual performance, responsibilities, experience, autonomy, strategic perspectives and marketability, as well as the recommendation of the Chief Executive Officer.
Generally, the Committee believes that Executive base salaries should be targeted at, or near, the 50th percentile for executives at competitive general industry companies in similar positions and with similar responsibilities.
For fiscal 2016,2017, the Committee, with input from Mr. Caliel (for Executives other than himself), recommended to the Board that no changes be made to the base salaries forsalariesfor Messrs. Caliel, CrookeAnderson and Atchison.Crooke. In making this recommendation, the Committee noted that the salaries for Messrs. Caliel, Anderson, Crooke and AtchisonPurlee had been either recently established (in the case of the hiring of Messrs. Caliel and Atchison) or adjusted (in the case of the appointment of Mr. Crooke as Chief Administrative Officer).adjusted. The Committee, with input from Mr. Caliel, recommended to the Board that Mr. Purlee’sMaher’s salary be increased from $257,500$265,250 to $264,000$300,000 in connection with his promotion to Senior Vice President, Water and that Mr. Thalacker’s salary be increased from $225,000 to $245,000 due to the recent strong performance of their divisions. Mr. Anderson was hired after the Board established salaries for fiscal 2016.MineralServices.
The table below lists the Executives’ annual base salaries for fiscal 2016.
Executive | Base Salary | |||
Michael J. Caliel | $ | 660,000 | ||
J. Michael Anderson1 | $ | 400,000 | ||
Andrew Atchison2 | $ | 300,000 | ||
Steven F. Crooke | $ | 400,000 | ||
Larry Purlee | $ | 264,000 | ||
Ronald Thalacker | $ | 245,000 |
2017.
Base Salary | ||
Michael J. Caliel | $660,000 | |
J. Michael Anderson | $400,000 | |
Steven F. Crooke | $400,000 | |
Kevin Maher | $300,000 | |
Larry Purlee | $264,000 |
Short-Term Incentive Plan |
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Short-Term Incentive Plan
Targets for Fiscal 2016. The Committee and the Board have adopted the STI Plan for the purpose of providing incentives for Executives to promote the best interests and profitable operation of the Company. All of the Executives, except Messrs. Anderson and Atchison, participated in the STI Plan in fiscal 2016.
The STI Plan is a short-term incentive plan designed to annually reward and incent participants for their performance and contributions to the Company’s overall financial and operational performance. Participants may receive awards based on the extent to which they meet pre-established annual performance goals recommended by the CEO and approved by the Committee are met during a one-year performance period.in the first quarter of each fiscal year. In general, performance goals relate to both corporate-level and individual performance, and in the case of division presidents, division-level performance.
Consistent with a strong pay-for-performance philosophy, the STI Plan is structured to generally provide increases in short-term incentive compensation (expressed as aasa percentage of base salary) if the Executives exceedExecutive exceeds established targets and decreases in short-term incentive compensation if the Executives failExecutive fails to meet established targets.
Bonus opportunities for each Executive are expressed as a percentage of base salaryand are based on the executive’s position and scope of responsibilities. Consistent with our pay-for-performance philosophy, Executives may earn up to twice their target based on the degree of achievement relative to the pre-established annual performance goals.
24 | 2017 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS | |
The total target annual incentive award opportunities of each participating Executive inunder the STI Plan for fiscal 20162017 are listed below.
Target Annual Incentive Award Opportunity
(as a % of base salary)
Executive | If Threshold Achieved (1) | If Target Achieved | If Maximum Achieved | |||
Michael J. Caliel | 74.0% | 100% | 200% | |||
J. Michael Anderson | 55.5% | 75% | 150% | |||
Steve F. Crooke | 44.4% | 60% | 120% | |||
Kevin Maher | 40.8% | 60% | 120% | |||
Larry Purlee | 44.4% | 60% | 120% |
(1) | In general, an Executive will receive a payout of 80% of the target annual incentive award opportunity related to a particular performance goal (i.e., Adjusted EBTIDA, safety, individual performance) if the threshold for that goal is achieved. However, the payout percentage is 50% for achieving the threshold for individual performance and Minerals division Adjusted EBITDA. The thresholds detailed above are based on the weighted payouts for each Executive and range from 44% to 74%. |
Setting Fiscal 2017 Targets |
Executive | If 80% of Goal Achieved | If 100% of Goal Achieved | If 150% or More of Goal Achieved | |||||||||
Michael J. Caliel | 65 | % | 100 | % | 200 | % | ||||||
Steve F. Crooke | 39 | % | 60 | % | 120 | % | ||||||
Larry Purlee | 39 | % | 60 | % | 120 | % | ||||||
Ronald Thalacker | 39 | % | 60 | % | 120 | % |
General.In setting the fiscal 20162017 targets, the Committee considered information in the Company’s business plans and preliminary recommendations from Mr. Caliel. For fiscal 2016, as in fiscal 2015, the Committee decided not to set a primary goal based on a threshold return on net assets.Caliel (for Executives other than himself; see “Role of Executive Officers” below). The goals for fiscal 20162017 for the participating corporateour Corporate Executives (Messrs. Caliel, Anderson and Crooke) were a combination of Company Adjusted EBITDA, (generallysafety and individual performance goals. These Executives also had an additional Company financial goal of enhancing the Company’s balance sheet. For the division presidents (Messrs. Maher and Parlee), the fiscal 2017 goals were a combination of Division Adjusted EBITDA, Company Adjusted EBITDA, safety and individual performance goals.
Safety. The safety goals were based on an improvement in the Total Recordable Incident Rate (TRIR) and Lost Time Incident Rate (LTIR) on a consolidated basis for Messrs. Caliel, Anderson and Crooke or for the applicable division(s) for Mr. Maher and Mr. Purlee. The threshold, target and maximum safety goals were equal to improvements of 5%, 10% and 15%, respectively, in the TRIR and LTIR from the prior year. For Messrs. Caliel, Anderson and Crooke, they had an additional Company safety goal of strengthening the Company’s safety culture.
Individual. The individual performance goals were related to the achievement of various goals set forth in the business plan for each participating Executive’s respective corporate function or division.
Adjusted EBITDA. The table below lists the Adjusted EBITDA goals for fiscal 2017 (in thousands). Adjusted EBITDA is generally defined as net income or loss from continuing operations before net interest expense, income taxes, restructuring costs and non-cash items (such as depreciation, amortization and share-based compensation) and excluding equity in earnings and losses from minority investments, but including cash dividends or distributions received from minority investments) and personal goals. For the division presidents, the fiscal 2016 goals were a combinationinvestments.
Entity | Threshold | Target | Maximum | |||||||||||||
Layne Christensen Company | $23,274 | $29,093 | $36,366 | |||||||||||||
Inliner Division | $19,135 | $23,919 | $29,899 | |||||||||||||
Water Resources Division | $22,506 | $32,151 | $40,189 | |||||||||||||
Mineral Services Division | $4,103 | $8,206 | $12,309 | |||||||||||||
Layne Christensen Company | 25 |
The table below lists the Adjusted EBITDA goals for fiscal 2016 (in thousands):
Entity | Threshold (80%) | Target (100%) | Maximum (150%) | |||||||||
Layne Christensen Company | $ | 28,303 | $ | 35,379 | $ | 53,069 | ||||||
Inliner Division | $ | 17,696 | $ | 22,120 | $ | 33,180 | ||||||
Water Resources Division | $ | 20,855 | $ | 26,069 | $ | 39,104 |
COMPENSATION DISCUSSION AND ANALYSIS | |
The table below lists for fiscal 2016,2017, the relative weighting of the performance goals for the Executives:
Weighting of Performance Goals
Executive | Company Financial Goals | Division Adjusted EBITDA | Safety | Individual | ||||||||
Michael J. Caliel | 70% | 10% | 20% | |||||||||
J. Michael Anderson | 70% | 10% | 20% | |||||||||
Steve F. Crooke | 70% | 10% | 20% | |||||||||
Kevin Maher(1) | 20% | 40% | 20% | 20% | ||||||||
Larry Purlee | 20% | 40% | 20% | 20% | ||||||||
(1) | For Mr. Maher, the Division Adjusted EBITDA and Safety weightings were split 60% for the Water Resources division and 40% for the Mineral Services division. |
Executive | Company Adjusted EBITDA | Division Adjusted EBITDA | Individual | |||||||||
Michael J. Caliel | 80 | % | — | 20 | % | |||||||
Steve F. Crooke | 80 | % | — | 20 | % | |||||||
Larry Purlee | 20 | % | 60 | % | 20 | % | ||||||
Ronald Thalacker | 20 | % | 60 | % | 20 | % |
Awards for Fiscal 2016. 2017
In April 2016, the Committee discussedconsidering fiscal 20162017 awards under the STI Plan. Plan, the Committee considered the following factors:
● | The Inliner division achieved 134% of its Adjusted EBITDA target; the Adjusted EBITDA targets for the other divisions and Corporate were not met. |
● | Made significant progress towards the goal of enhancing Layne’s balance sheet. In particular, our Executives worked to reduce working capital, improve the Company’s cash position, eliminate certain covenants in the Company’s ABL credit facility and reduce SG&A expenses. As a result, the Committee awarded to Messrs. Caliel, Anderson and Crooke a payout of 20% of the targeted amount related to the achievement of these financial goals. |
● | The Minerals and Inliner divisions achieved 200% and 92%, respectively, of their safety targets. |
● | Each Executive achieved all of his individual performance goals, and the Committee awarded 100% of the portion of the targeted STI Plan bonus based on individual performance to Messrs. Caliel, Anderson, Crooke and Maher and 139% of the portion of the targeted STI Plan bonus based on individual performance to Mr. Purlee. |
Despite strong performance relative to several key goals, particularly within our Inliner division, we did not achieve itsmeet our goals for Company Adjusted EBITDA threshold duringfor fiscal 2016. With the exception of the portion of Messrs. Purlee’s and Thalacker’s financial goals tied to the performance of the Inliner and Water Resources divisions, respectively, none of the financial thresholds were achieved during fiscal 2016. The Inliner and Water Resources divisions achieved 122% and 95% of their Adjusted EBITDA targets, respectively. Each of the participating Executives achieved all of their individual performance goals and the Committee awarded the 20% of the targeted STI Plan bonus based on individual performance.2017. As a result, the Committee recommended, and the Board approved, the payment of anthe following STI Plan bonus tobonuses well below target levels for most of the participating Executives. Each participating Executive earned bonuses under the 2016 STI Plan equal to:Executives:
Executive | Payout | % of Target Awards | |||
Michael J. Caliel | $ | 237,000 | 36% | ||
J. Michael Anderson | $ | 108,000 | 36% | ||
Steve F. Crooke | $ | 86,400 | 36% | ||
Kevin Maher | $ | 64,800 | 36% | ||
Larry Purlee | $ | 200,000 | 126% |
26 | 2017 Proxy Statement |
Executive | Payout | |||
Michael J. Caliel | $ | 132,000 | ||
Steven F. Crooke | $ | 48,000 | ||
Larry Purlee | $ | 168,538 | ||
Ronald Thalacker | $ | 109,883 |
In addition, although Company Adjusted EBITDA was below the threshold for paymentTable of the portion of the STI Plan bonus based on Company Adjusted EBITDA, the Compensation Committee recommended, and the Board approved, a discretionary cash bonus of $198,000 for Mr. Caliel and $72,000 for Mr. Crooke. The Compensation Committee made its recommendations based on the contributions of Mr. Caliel and Mr. Crooke to the improvement of the Company’s operations and financial condition during fiscal 2016, including the disposition of non-core assets, the Company’s improved liquidity compared to fiscal 2015, cost reductions and improvements in safety, performance and culture.Contents
Equity Compensation
COMPENSATION DISCUSSION AND ANALYSIS | |
Equity Compensation (Long-Term Incentive Plan) |
The Committee believes that aligning the interests of stockholders and its Executives is achievedsupported through ownershipthe grant of stock-based awards, which expose the Executives to the risks of declining stock prices and providesprovide an incentive for Executives to maximize stockholder value.
2006 Equity Incentive Plan.Plan. Awards under the Company’s 2006 Equity Incentive Plan are designed to encourage Executives to acquire a proprietary and vested interest in the growth and performance of the Company, as well as to assist the Company in attracting and retaining Executives by providing them with the opportunity to participate in the success and profitability of the Company. The 2006 Equity Incentive Plan permits the grant of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and performance units.
Fiscal 2016 Grants under 2006 Equity Incentive Plan. The Board and the Committee have adopted the LTI Plan for the purpose of making equity grants on an annual basis to certain key employees. Under the LTI Plan, the Board is required to establishhas historically established an annual equity pool (the “LTI Pool”) within the first 90 days of each fiscal year. The equity awards issued from the LTI Pool relate to the Company’s Common Stock and will be made pursuant to the Company’s 2006 Equity Incentive Plan, or any successor or other Company stockholder-approved equity plan. The size of the LTI Pool in any year will generally be limited to 2% of the average market capitalization (the number of outstanding shares multiplied by the market price) of the Company during the 30-day period ending on January 31st31st of the award year. However, due to the Company’s low stock price on January 31, 2017, the 2% limit was waived by the Board and the Committee for fiscal 2017, as permitted under the 2006 Plan. Within the limits of the LTI Pool, the Board will make awards to participants based on recommendations made by the Compensation Committee.
A participant’s award from the LTI Pool (i.e., the participant’s “LTI Target Opportunity”) is expressed as a percentage of the participant’s current base salary, which percentage will vary depending on the participant’s position in the Company. TheUnder the LTI Plan, the percentages range from 200% of base salary for the Company’s Chief Executive Officer to 60% of base salary for the Company’s corporatedivision and senior vice-presidents. A percentage of each participant’s LTI Target Opportunity, as determined by the Committee, will beis granted in the form of time-vested restricted stock units (“RSUs”) and performance shares. The Committee has sole discretion to increase or decrease these percentages, recognizing that circumstances surrounding annual LTI grants will change from year to year. For
Fiscal 2017 Grants Under LTI Plan. Under the LTI Plan for fiscal 2016,2017, the Committee recommended and the Board approved equity awards consisting of a combination of time-vested restricted stock units and performance shares. The percentages for the time-vested RSUs and performance shares were set at 20%40% and 80%60%, respectively, of each participant’s LTI Target Opportunity.
Due to the limited number of shares available under the 2006 Plan, the awards for fiscal 2017 were reduced to 95% of the LTI Target Opportunities authorized under the LTI Plan. Awards were made to participating Executives that were employed by the Company on April 10, 2015.1, 2016.
Time-VestingTime-Vested Restricted Stock Units.Units. The Committee recommended, and the Board approved, grants of time-vestingtime-vested RSUs determined by dividing the RSU amount set forth in the table below by the closing price of our Common Stock as of April 10, 20151, 2016 (the date of grant).
Name of Executive | RSU Amount | Number of RSUs | RSU Amount | Number of RSUs | |||||||||
Michael J. Caliel | $ | 264,000 | 50,286 | $ | 501,600 | 71,250 | |||||||
J. Michael Anderson | $ | 152,000 | 21,591 | ||||||||||
Steven F. Crooke | $ | 80,000 | 15,238 | $ | 152,000 | 21,591 | |||||||
Kevin Maher | $ | 85,500 | 12,145 | ||||||||||
Larry Purlee | $ | 30,900 | 5,886 | $ | 60,192 | 8,550 | |||||||
Ronald Thalacker | $ | 27,000 | 5,143 |
Each RSU grant will vestvests and beis payable on the third anniversary of each such award’sthe grant date, or, if earlier, upon the participant’s retirement from the Company, which can occur only if the participant is age 60 and has been employed with the Company for at least five years. The participant is required to hold and not sell any shares issued in connection with the settlement of a vested RSU until the participant’s separation from the Company. See “Executive Compensation and Other Information—Potential Payments Upon Change of Control, Retirement, Death or Disability” below for descriptions of the amounts Executives may receive upon a change in control, retirement, death or disability.
Performance Shares.Shares. The Committee also recommended, and the Board approved, grants of performance shares of Company Common Stock determined by dividing the Performance Share amount set forth in the table below by the value of such shares determined by the Company’s performance share valuation method as of April 10, 20151, 2016 (the date of grant).
Name of Executive | Performance Share Amount | Number of Performance Shares | |||
Michael J. Caliel | $ | 752,400 | 160,085 | ||
Michael Anderson | $ | 228,000 | 48,511 | ||
Steven F. Crooke | $ | 228,000 | 48,511 | ||
Kevin Maher | $ | 128,250 | 27,287 | ||
Larry Purlee | $ | 90,288 | 19,210 |
Layne Christensen Company | 27 |
Name of Executive | Performance Share Amount | Number of Performance Shares | ||||||
Michael J. Caliel | $ | 1,056,000 | 375,801 | |||||
Steven F. Crooke | $ | 320,000 | 113,879 | |||||
Larry Purlee | $ | 123,600 | 43,986 | |||||
Ronald Thalacker | $ | 108,000 | 38,434 |
COMPENSATION DISCUSSION AND ANALYSIS | |
If the trailing average closing price of the Company’s Common Stock during any 30 consecutive trading-day period is at or above any of the following stock price goals during the period commencing on April 10, 20151, 2016 and ending on April 10, 2018,1, 2019, then the performance shares will vest as follows: 33% will vest if at or above $7.88$10.56 per share; 67% will vest if at or above $9.19$12.32 per share and 100%will vest if at or above $10.50$14.08 per share. See “Executive Compensation and Other Information—Potential Payments Upon Change of Control, Retirement, Death or Disability” below for descriptions of the amounts Executives may receive upon a change in control, retirement, death or disability.
BenefitsROLE OF COMPENSATION CONSULTANTS
To assist in carrying out its responsibilities, the Committee has from time to time retained independent consultants to provide advice on executive compensation and to perform specific tasks as requested by the Committee. Any consultant retained by the Committee reports directly to the Committee. On an annual basis, the Committee reviews and assesses the independence and performance of any consultant then engaged in order to confirm that the consultant is independent, free of any potential conflicts and meets all applicable regulatory requirements.
For most of fiscal 2017, the Committee engaged the independent compensation consulting firm of Frederic W. Cook & Co. (“F.W. Cook”) on a limited basis to assist with specific situations, including a review of the Company’s compensation peer group. The Compensation Committeeassessed the independence of F.W. Cook pursuant to applicable SEC rules and concluded that no conflict of interests existed preventing F.W. Cook from independently advising the Compensation Committee. The Committee did not retain F.W. Cook to perform an in-depth market analysis for fiscal 2017. Instead, the Committee relied on the most recent market analysis prepared by F.W. Cook four years ago and the market analysis prepared by F.W. Cook for the Chief Executive Officer and Chief Financial Officer in connection with the hiring of Mr. Caliel in fiscal2015 and Mr. Anderson in fiscal 2016. The Committee determined that it was not necessary to update the market analysis given the absence of significant increases in base salaries and lack of significant changes to the compensation program.
In addition, F.W. Cook provided advice to the Committee in connection with a review of the compensation program for the Company’s independent directors.
In late fiscal 2017, the Compensation Committee engaged Meridian Compensation Partners, LLC (“Meridian”) as its new independent compensation consultant.Meridian provided an objective perspective as to the reasonableness of our executive compensation programs and practices and their effectiveness in supporting our strategic and compensation objectives. Meridian advised the Compensation Committee with respect to compensation trends and best practices, incentive plan design, competitive pay levels, proxy disclosure, and individual pay decisions with respect to our Executives. The Compensation Committee has assessed the independence of Meridian pursuant to applicable SEC rules and concluded that no conflict of interests exists that would prevent Meridian from independently advising the Compensation Committee.
From time to time, the Committee directs its consultant to review the base salary and short- and long-term incentive levels of our Executives. In connection with these reviews, the Committee’s consultant analyzes and matches the position and responsibilities of each Executive to proxy statement data from a peer group of companies in order to ensure that our compensation programs are market-based.
Peer groups require periodic review to ensure that the peers continue to provide an appropriate benchmark for executive pay and company performance. At the beginning of fiscal 2014, based on the recommendation of F.W. Cook, the Committee selected a peer group of companies based on similar industry classifications, organizational scope and size, financial metrics and comparable business operations. The Committee believed that the peer group consisted of those companies for which executive compensation information was publicly available that was most comparable to the Company’s various businesses. The Committee also used general industry survey data for benchmarking purposes.
At the beginning of fiscal 2017, the Committee requested F.W. Cook to undertake a review of the Company’s peer group due to changes in the Company’s business strategy and recent divestitures. As part of its review, F.W. Cook noted that creating a representative peer group for the Company was difficult because several of the Company’s direct competitors are principally either privately held and/or incorporated in foreign jurisdictions that do not require public disclosure of executive compensation. Also, the uniqueness of the Company’s businesses results in a large number of companies in the peer group that are only tangentially related to the Company or focused only on one of the Company’s lines of business. As a result, F.W. Cook recommended that the Committee should rely more on general industry survey data. The Compensation Committee adopted F.W. Cook’s recommendation to rely on general industry survey data and for fiscal 2017 did not utilize a peer group for executive compensation purposes.
28 | 2017 Proxy Statement |
COMPENSATION DISCUSSION AND ANALYSIS | |
Michael J. Caliel, our Chief Executive Officer, regularly attended meetings of the Committee during fiscal 2017 but was not a member of the Committee and did not vote on Committee matters. Mr. Caliel was not present for certain portions of Committee meetings, such as when the Committee held executive sessions or discussed CEO compensation.
In early fiscal 2017, Mr. Caliel submitted compensation recommendations to the Committee for each of the Executives (other than himself). In March 2018, Mr. Caliel also recommended to the Committee the amount of STI Plan bonuses to be paid to each of the Executives (other than himself) for fiscal 2017.
Our Executives who meet minimum service requirements are entitled to receive medical, dental, life and short-term and long-term disability insurance benefits and may participate in a capital accumulation plan, as described below.describedbelow. Such benefits are provided equally to all Company employees, other than where benefits are provided pro-rata based on the respective Executive’s salary (such as the level of disability insurance coverage).
Capital Accumulation Plan |
Capital Accumulation Plan
The Company has adopted a capital accumulation plan (the “Capital Accumulation Plan”). Each of the Company’s executive officers, including the Executives, and substantially all other employees of the Company are eligible to participate in the Capital Accumulation Plan. The Capital Accumulation Plan is a defined contribution plan qualified under Section 401, including Section 401(k), of the Internal Revenue Code of 1986, as amended (the “Code”). amended.
The Capital Accumulation Plan provides for two methods of Company contributions,contributions: (i) a Company matching contribution tied to and contingent upon participant deferrals and (ii) a Company profit sharing contribution whichthat is not contingent upon participant deferrals. The amount, if any, of Company paid contributions, both matching and profit sharing, for each fiscal year under the Capital Accumulation Plan is determined by the Board of Directors in
its discretion. Each eligible employee meeting certain service requirements and electing to defer a portion of his or her compensation under the Capital Accumulation Plan participates in the Company’s matching contribution program pursuant to a formula as designated by the Board of Directors.
Currently, the Company makes a matching contribution that is equal to 100% of a participant’s salary deferrals that do not exceed 3% of the participant’s compensation pluscompensationplus 50% of a participant’s salary deferrals between 3% and 5% of the participant’s compensation. This form of matching contribution qualifies as what is known as a “safe harbor” matching contribution under the Employee Retirement Income Security Act of 1974. In addition, each eligible employee meeting certain service requirements participates in Company profit sharing contributions to the Capital Accumulation Plan in the proportion his or her eligible compensation bears to the aggregate compensation of the group participating in the Capital Accumulation Plan. At the option of the Board of Directors, all or any portion of Company contributions to this plan may be made in the Company’s Common Stock. Furthermore, each participant can voluntarily contribute, on a pre-tax basis, a portion of his or her compensation (which cannot exceed $18,000 for participants who are 49 or younger, or $24,000 for participants who are 50 or older, for the calendar year 2015)2016) under the Capital Accumulation Plan. A participant’s account will be placed in a trust and invested at the participant’s direction in any one or more of a number of available investment options. Each participant may receive the funds in his or her Capital Accumulation Plan account upon termination of employment.
For services rendered in fiscal 2016,2017, total Company contributions under the Capital Accumulation Plan were as follows:
Name of Executive | Company Contributions under the Capital Accumulation Plan | |
Michael J. Caliel | $ | 10,600 |
Michael Anderson | $ | 10,600 |
Steven F. Crooke | $ | 10,600 |
Kevin Maher | $ | 10,707 |
Larry Purlee | $ | 10,600 |
Layne Christensen Company | 29 |
Deferred Compensation
COMPENSATION DISCUSSION AND ANALYSIS | |
Deferred Compensation |
The Company’s Key Management Deferred Compensation Plan was designed to provide additional retirement benefits and income tax deferral opportunities for a select group of management and highly compensated employees. The plan allows such key executives, including the Executives, to defer the receipt of up to 50% of base salary and 100% of performance-based awards. The Company may match contributions to this plan in an amount determined annually by the Committee, generally based on recommendations from Company management. Currently, the Company is not making a matching contribution under the plan. In addition, the Company may make contributions on a discretionary basis.
Company contributions to the plan are subject to a five-year vesting schedule, with 50% of all such contributions becoming vested after three years of completed plan participation and 100% of all such contributions becoming vested after five years of completed plan participation or upon a participant turning 60 years of age. However, Company contributions become fully vested if a participant is involuntarily terminated by the Company within one yearoneyear after a change of control of the Company. If a plan participant is not employed by the Company as of the last day of the plan year other than by reason of his or her retirement, death or disability, the Company contributions, if any, for such plan year shall be zero. In the event of an Executive’s retirement, disability or death, he or she shall beis credited with the Company contribution, if any, for such plan year.
The deferred compensation plan is a nonqualified and unfunded plan, and participants have only an unsecured promise from the Company to pay the amounts when they become due from the general assets of the Company. The Committee offers this benefit to provide Executives with an opportunity to save, on a tax-deferred basis, amounts in addition to what they can save under the Company’s qualified retirement plans for retirement or future dates. The Committee believes this plan is important as a retention and recruitment tool because most of the companies with which the Company competes for executive talent provide a deferral plan for their executives.
The Company believes its executive compensation program described above is generally sufficient for attracting talented executives and that providing other significant perquisites isperquisitesis generally neither necessary nor in the stockholders’ best interests. No Executives received perquisites with a value in the aggregate in excess of $10,000 during fiscal 2016.2017.
Clawback PolicyCLAWBACK POLICY
The Board has adopted a policy that gives the Board, or if designated by the Board, the Committee, the ability to recoup cash and equity-based incentive compensation due to misconduct resulting in the Company’s material noncompliance with any financial reporting requirement under the securities laws. For purposes of the clawback policy, incentive compensation does not include compensation, in any form, for which vesting, payment,delivery, or exercisability is not based on goal or performance achievement. The Board, or the Committee, has discretion to seek recovery of any amount that it determines was received.
Stock Ownership GuidelinesSTOCK OWNERSHIP GUIDELINES
On April 10, 2015, the Board adoptedThe Company has stock ownership guidelines for certain executive officers that require the Company’s Chief Executive Officer to own shares of the Company’s Common Stock with a market value equal to three times his base salary and the Chief Financial Officer and General Counsel to own shares of Common Stock with a market value equal to one time their base salary. as follows:
CEO | 3xbase salary | |
CFO | equal tobase salary | |
General Counsel | equal tobase salary |
Executive officers subject to these guidelines are required to achieve the applicable ownership level within five years of the later of the effective date of the policy (April 15, 2015) or the date an individual becomes subject to the stock ownership guidelines. If an individual becomes subject to a greater ownership amount for any reason (e.g., due to promotion or increase in base salary), the individual is expected to meet the higher ownership amount within the later of the original period of becoming subject to the stock ownership guidelines or five years from the effective date of the increased requirement.
30 | 2017 Proxy Statement |
Hedging PoliciesTable of Contents
COMPENSATION DISCUSSION AND ANALYSIS | |
We do not have a policy with respect to hedging the economic risks of stock ownership. However, our policy statement regarding Securities Trading and Handling of Nonpublic Information prohibits our executive officers and directorsanddirectors from engaging in certain types of hedging activity, such as short sales or buying or selling put or call options of any of our securities.
Advisory Vote on Executive CompensationADVISORY VOTE ON EXECUTIVE COMPENSATION
The Company conducts an advisory vote on executive compensation each year at its annual meeting. While the votes are not binding on the Company, its Board, or the Committee, the Committee believes that an annual advisory vote on executive compensation offers stockholders the opportunity to express their views regarding the Company’s compensation program and the Committee’s decisions on executive compensation. The Board and the Committee value the opinions of stockholders and each year the Committee closely examines stockholders’ concerns and evaluates whether any actions are necessary to address those concerns.
At last year’s annual meeting, over 90%approximately 82% of the votes cast “for” and “against” the advisory vote on executive compensation were voted “for” the Company’s named executive officer compensation as disclosed in the proxy statement. The board believes the percentage of votes cast “for” the Company’s named executive officer compensation represented a significant increase from the prior year. The Board believes the increase reflects the Committee’s continued focus on ensuring that the total short- and long-term incentive compensation for the Company’s executive officers is linked to the Company’s performance as discussed elsewhere in this Proxy Statement.
Tax and Accounting Treatment of Compensation
Deductibility of CompensationTAX AND ACCOUNTING TREATMENT OF COMPENSATION
Deductibility of Compensation |
The Committee has taken, and it intends to continue to take, reasonable steps necessary to assure the Company’s ability to deduct for federal income tax purposes compensation provided to senior executives. However, such steps may not always be practical or consistent with the Committee’s compensation objectives. Given that the earnings limit for deductibility has remained fixed since 1993, and the value of someofsome compensation elements cannot be determined until year-end, there are circumstances in which some executive compensation may not meet tax deductibility requirements. The Company can deduct all of the compensation shown in the Summary Compensation Table for fiscal 2016,2017, excluding the value of time vestingtime-vesting RSUs, which are subject to taxation in a later period.
Nonqualified Deferred Compensation
Nonqualified Deferred Compensation |
Certain of the Company’s nonqualified compensation and benefits arrangements, incentive programs and corporate practices (such as severance, relocation and expense reimbursements) are considered nonqualified deferred compensation and subject to IRC Section 409A andof the Internal Revenue Code of 1986, as amended, andthe related regulations. In general, Code Section 409A restricts the timing and manner of payment (as well as the timing of participant elections) under these types of taxable compensation programs. The Company’s arrangements, programs and practices are in compliancecomply with these statutory and regulatory provisions.
Accounting for Stock-Based Compensation
Accounting for Stock-Based Compensation |
The Company accounts for stock-based compensation in accordance with the requirements of ASC Topic 718, which requires the Company to expense the estimated value of certain stock-based compensation.
Layne Christensen Company | 31 |
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee has reviewed and discussed with management the Compensation Discussion and Analysis included in this Proxy Statement beginning at page 12.
Based on the review and discussion with management, the Compensation Committee recommended to the BoardTable of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement for the Company’s 2016 Annual Meeting of Stockholders and be incorporated by reference into the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2016.Contents
Respectfully submitted by the members of the Compensation Committee of the Board of Directors:
John T. Nesser III, Chairman
David A.B. Brown
Robert R. Gilmore
J. Samuel Butler
Nelson Obus
Alan Krusi, who was appointed to the Compensation Committee effective as of April 7, 2016, did not participate in any of the Compensation Committee meetings at which the compensation of the Executives for the fiscal year ended January 31, 2016 was discussed and did not participate in the preparation of the Report of the Compensation Committee included in this Proxy Statement.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATIONCOMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are set forth in the preceding section. During the most recent fiscal year, no Layne Christensen executive officer served as (i) a member of the compensation committee (or equivalent), or the board of directors, of another entity, one of whose executive officers served on the Company’s Compensation Committee or (ii) a member of the compensation committee (or equivalent) of another entity, one of whose executive officers served as a director of the Company.
32 | 2017 Proxy Statement |
EXECUTIVE COMPENSATIONAND OTHER INFORMATIONEXECUTIVE COMPENSATION
Executive Compensation
The following table sets forth for the fiscal years ended January 31, 2017, 2016 2015 and 2014,2015, respectively, the compensation of the Company’s named executive officers:
Summary Compensation Table
Name and Principal Position | Fiscal Year | Salary(4) ($) | Bonus(5) ($) | Stock Awards(6) ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Compensation Earnings ($) | All Other Compensation(7) ($) | Total ($) | ||||||||||||||||||||||||||||||||||||
Michael J. Caliel(1) | 2016 | $660,000 | $198,000 | $1,320,002 | — | $132,000 | — | $17,848 | $2,327,850 | ||||||||||||||||||||||||||||||||||||
President, Chief Executive Officer and Director | 2015 | 53,308 | 54,247 | 499,997 | 499,999 | — | — | — | 1,107,551 | ||||||||||||||||||||||||||||||||||||
J. Michael Anderson(2) Chief Financial Officer and Senior Vice President | 2016 | 215,385 | 160,274 | 399,997 | 38,200 | — | — | 7,095 | 820,951 | ||||||||||||||||||||||||||||||||||||
Andrew Atchison (3) | 2016 | 230,769 | — | — | — | — | — | 10,619 | 241,388 | ||||||||||||||||||||||||||||||||||||
Interim Chief Financial Officer | 2015 | 161,538 | — | — | 73,500 | — | — | 34,584 | 269,622 | ||||||||||||||||||||||||||||||||||||
Steven F. Crooke | 2016 | 400,000 | 72,000 | 399,999 | — | 48,000 | — | 13,321 | 933,320 | ||||||||||||||||||||||||||||||||||||
Senior Vice President—Chief Administrative Officer and General Counsel |
| 2015 2014 |
|
| 368,058 376,183 |
|
| — — |
|
| 253,584 126,788 |
|
| 158,775 144,900 |
|
| — — |
|
| — — |
|
| 13,611 83,805 |
|
| 794,028 731,676 |
| ||||||||||||||||||
Larry Purlee | 2016 | 262,875 | — | 154,502 | — | 168,538 | — | 14,192 | 600,107 | ||||||||||||||||||||||||||||||||||||
President of Inliner | 2015 | 257,500 | — | 253,418 | 46,348 | 130,398 | — | 16,278 | 703,942 | ||||||||||||||||||||||||||||||||||||
Ronald Thalacker | 2016 | 241,539 | — | 135,000 | — | 109,883 | — | 18,216 | 504,638 | ||||||||||||||||||||||||||||||||||||
President of Water Resources | 2015 | 225,000 | — | 94,506 | 40,504 | 135,000 | — | 281,244 | 776,254 |
Name and Principal Position | Fiscal Year | Salary (3) ($) | Bonus (4) ($) | Stock Awards (5) ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Compensation ($) | All Other Compensation (6) ($) | Total ($) | |||||||||
Michael J. Caliel(1) | 2017 | $660,000 | — | $1,254,000 | — | $237,000 | — | $15,670 | $2,166,670 | |||||||||
President, Chief | 2016 | 660,000 | $198,000 | 1,320,002 | — | 132,000 | — | 17,848 | $2,327,850 | |||||||||
Executive Officer | 2015 | 53,308 | 54,247 | 499,997 | 499,999 | — | — | — | $1,107,551 | |||||||||
and Director | ||||||||||||||||||
J. Michael Anderson(2) | 2017 | 400,000 | — | 380,000 | — | 108,000 | — | 13,636 | $901,636 | |||||||||
Chief Financial Officer | 2016 | 215,385 | 160,274 | 399,997 | 38,200 | — | — | 7,095 | $820,951 | |||||||||
and Senior Vice | ||||||||||||||||||
President | ||||||||||||||||||
Steven F. Crooke | 2017 | 400,000 | — | 380,000 | — | 86,400 | — | 14,775 | $881,175 | |||||||||
Senior Vice President- | 2016 | 400,000 | 72,000 | 399,999 | — | 48,000 | — | 13,321 | $933,320 | |||||||||
Chief Administrative | 2015 | 368,058 | — | 253,584 | 158,775 | — | — | 13,611 | $794,028 | |||||||||
Officer and General | ||||||||||||||||||
Counsel | ||||||||||||||||||
Larry Purlee | 2017 | 264,000 | — | 150,480 | — | 200,000 | — | 15,130 | $629,610 | |||||||||
President of Inliner | 2016 | 262,875 | — | 154,502 | — | 168,538 | — | 14,192 | $600,107 | |||||||||
2015 | 257,500 | — | 253,418 | 46,348 | 130,398 | — | 16,278 | $703,942 | ||||||||||
Kevin Maher | 2017 | 300,000 | — | 213,750 | — | 64,800 | — | 14,110 | $592,660 | |||||||||
Senior Vice President of | ||||||||||||||||||
Water & Mineral Services |
(1) | All amounts reported for Mr. Caliel for fiscal 2015 reflect the portion of the year that he was employed by the Company. Mr. Caliel’s employment commenced on January 2, 2015. |
(2) | All amounts reported for Mr. Anderson for fiscal 2016 reflect the portion of each year that he was employed by the Company. Mr. Anderson’s employment commenced on July 20, 2016. |
(3) |
|
|
(4) | A portion of the incentive compensation paid to Messrs. Caliel and Crooke with respect to fiscal 2016 is reported in the “Bonus” column rather than the “Non-Equity Incentive Plan Compensation” column since the Company did not meet the financial performance goals set for those named executive officers under the Executive Incentive Compensation Plan. However, the Compensation Committee recommended, and the Board approved, discretionary bonuses for those named executive officers for fiscal 2016 to recognize their efforts to improve the Company’s liquidity, make cost reductions and improvements in safety. |
Plan of $54,247 (based on the number of days worked during fiscal 2015, a target incentive opportunity equal to 100% of base salary and assuming a 100% of target level of achievement for fiscal 2015). |
(5) | Amounts reported in the Stock Awards and Option Awards columns represent the aggregate grant date fair value of such awards, computed in accordance with ASC Topic 718. Pursuant to Securities and Exchange Commission rules, the amounts shown for the fiscal 2017, fiscal 2016 and fiscal 2015 |
Layne Christensen Company | 33 |
EXECUTIVE COMPENSATION AND OTHER INFORMATION | |
affect the vesting of such awards. These amounts do not include an estimate of forfeitures related to any time-based vesting conditions, and assume that the named executive officer will perform the requisite service to vest in the award. For assumptions used in determining these values, refer to Note |
(6) | Excludes perquisites and other benefits, unless the aggregate amount of such compensation exceeds $10,000. All Other Compensation for fiscal |
Grants of Plan-Based Awards during Fiscal 2016GRANTS OF PLAN-BASED AWARDS DURING FISCAL 2017
The following table sets forth information with respect to each named executive officer concerning grants during the fiscal year ended January 31, 2016,2017, of awards under both the Company’s equity and non-equity plans.
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards(1) ($) | |||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | |||||||||||||||||||||||||||||||||||||
Michael J. Caliel | ||||||||||||||||||||||||||||||||||||||||||||
STI Opportunity(2) | $ | 429,000 | $ | 660,000 | $ | 1,320,000 | ||||||||||||||||||||||||||||||||||||||
Time RSUs | 04/10/15 | (3) | 50,286 | $ | 264,000 | |||||||||||||||||||||||||||||||||||||||
Performance shares | 04/10/15 | (4) | 124,014 | 251,786 | 375,801 | $ | 1,056,000 | |||||||||||||||||||||||||||||||||||||
J. Michael Anderson | ||||||||||||||||||||||||||||||||||||||||||||
Stock options (inducement award) | 07/20/15 | (5) | 10,000 | $8.60 | $ | 38,200 | ||||||||||||||||||||||||||||||||||||||
Performance RSUs (inducement award) | 07/20/15 | (6) | 15,432 | N/A | (6) | 61,728 | $ | 400,000 | ||||||||||||||||||||||||||||||||||||
Cash (inducement award) | 07/20/15 | (7) | $ | 100,000 | N/A | (7) | $ | 400,000 | ||||||||||||||||||||||||||||||||||||
Steven F. Crooke | ||||||||||||||||||||||||||||||||||||||||||||
STI Opportunity(2) | $ | 156,000 | $ | 240,000 | $ | 480,000 | ||||||||||||||||||||||||||||||||||||||
Time RSUs | 04/10/15 | (3) | 15,238 | $ | 80,000 | |||||||||||||||||||||||||||||||||||||||
Performance shares | 04/10/15 | (4) | 37,580 | 76,299 | 113,879 | $ | 320,00 | |||||||||||||||||||||||||||||||||||||
Larry Purlee | ||||||||||||||||||||||||||||||||||||||||||||
STI Opportunity(2) | $ | 102,960 | $ | 158,400 | $ | 316,800 | ||||||||||||||||||||||||||||||||||||||
Time RSUs | 04/10/15 | (3) | 5,886 | $ | 30,900 | |||||||||||||||||||||||||||||||||||||||
Performance shares | 04/10/15 | (4) | 14,515 | 29,471 | 43,986 | $ | 123,600 | |||||||||||||||||||||||||||||||||||||
Ronald Thalacker | ||||||||||||||||||||||||||||||||||||||||||||
STI Opportunity(2) | $ | 95,550 | $ | 147,000 | $ | 294,000 | ||||||||||||||||||||||||||||||||||||||
Time RSUs | 04/10/15 | (3) | 5,143 | $ | 27,000 | |||||||||||||||||||||||||||||||||||||||
Performance shares | 04/10/15 | (4) | 12,683 | 25,751 | 38,434 | $ | 108,000 |
Estimated Possible Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) | Grant Date Fair Value of Stock and Option Awards (1) ($) | ||||||||||||||||
Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||
Michael J. Caliel | |||||||||||||||||||
STI Opportunity(2) | $488,400 | $660,000 | $1,320,000 | ||||||||||||||||
Time RSUs | 04/01/16 | (3) | 71,250 | $501,600 | |||||||||||||||
Performance shares | 04/01/16 | (4) | 52,828 | 107,257 | 160,085 | 752,400 | |||||||||||||
J. Michael Anderson | |||||||||||||||||||
STI Opportunity(2) | 222,000 | 300,000 | 600,000 | ||||||||||||||||
Time RSUs | 04/01/16 | (3) | 21,591 | 152,000 | |||||||||||||||
Performance RSUs | 04/01/16 | (4) | 16,009 | 32,502 | 48,511 | 228,000 | |||||||||||||
Steven F. Crooke | |||||||||||||||||||
STI Opportunity(2) | 177,600 | 240,000 | 480,000 | ||||||||||||||||
Time RSUs | 04/01/16 | (3) | 21,591 | 152,000 | |||||||||||||||
Performance shares | 04/01/16 | (4) | 16,009 | 32,502 | 48,511 | 228,000 | |||||||||||||
Larry Purlee | |||||||||||||||||||
STI Opportunity(2) | 117,216 | 158,400 | 316,800 | ||||||||||||||||
Time RSUs | 04/01/16 | (3) | 8,550 | 60,192 | |||||||||||||||
Performance shares | 04/01/16 | (4) | 6,339 | 12,871 | 19,210 | 90,288 | |||||||||||||
Kevin Maher | |||||||||||||||||||
STI Opportunity(2) | 122,400 | 180,000 | 360,000 | ||||||||||||||||
Time RSUs | 04/01/16 | (3) | 12,145 | 85,500 | |||||||||||||||
Performance shares | 04/01/16 | (4) | 9,005 | 18,282 | 27,287 | 128,250 |
(1) | Amounts reported in the Grant Date Fair Value of Stock and Option Awards column represent the aggregate grant date fair value of such awards, computed in accordance with ASC Topic 718. Pursuant to Securities and Exchange Commission rules, the amounts shown for the Stock Awards report the value at the grant date based upon the probable outcome of the performance conditions that affect the vesting of such awards. The amounts shown for the Option Awards do not include an estimate of forfeitures related to time-based vesting conditions, and assume that the named executive officer will perform the requisite service to vest in the award. For assumptions used in determining these values, refer to Note |
(2) | The amounts reported under the Threshold, Target and Maximum columns in this table are the possible incentive compensation awards calculated in accordance with the provisions set forth in the STI Plan. |
34 | 2017 Proxy Statement |
EXECUTIVE COMPENSATION AND OTHER INFORMATION | |
(3) | The grant of RSUs reported for this award will vest on the third anniversary of each such award’s grant date, or, if earlier, upon the participant’s retirement from the Company, which can occur only if the participant is age 60 and has been employed with the Company for at least five years. See the discussion in the Compensation Discussion and Analysis under the heading |
(4) | The grant of performance shares reported under the Threshold, Target and Maximum columns for this award will vest, if at all, in various percentages only if the trailing average closing price of the Company’s Common Stock during any 30 consecutive trading-day period is at or above the certain stock price goals during the period commencing on April |
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table lists all outstanding equity awards held by our named executive officers as of January 31, 2017.
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 (#) | Market Value of Shares or Units of Stock that Have Not Vested ($) (6) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested (#) | Equity Incentive Plan Awards: Market Value or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested ($) (6) | ||||||||||||
Michael J. Caliel | 109,409 | (1) | $10.06 | 01/02/2025 | 121,536 | $1,267,620 | 604,285 | $6,302,693 | |||||||||||||
J. Michael Anderson | 5,000 | (2) | 5,000 | (2) | 8.60 | 07/20/2025 | 21,591 | 225,194 | 110,239 | 1,149,793 | |||||||||||
Steven F. Crooke | 13,125 | (3) | 42.26 | 06/07/2017 | 42,762 | 446,008 | 178,992 | 1,866,887 | |||||||||||||
9,826 | (3) | 35.71 | 02/05/2018 | ||||||||||||||||||
21,277 | (3) | 15.78 | 02/01/2019 | ||||||||||||||||||
11,476 | (3) | 21.99 | 06/03/2019 | ||||||||||||||||||
8,569 | (3) | 27.79 | 02/19/2020 | ||||||||||||||||||
9,333 | (3) | 33.10 | 02/01/2021 | ||||||||||||||||||
15,430 | (3) | 24.32 | 02/01/2022 | ||||||||||||||||||
14,977 | (3) | 21.08 | 04/01/2023 | ||||||||||||||||||
9,979 | (4) | 4,990 | (4) | 17.19 | 05/01/2024 | ||||||||||||||||
10,000 | (5) | 5,000 | (5) | 8.22 | 12/12/2024 | ||||||||||||||||
Kevin Maher | 6,450 | (3) | 21.08 | 04/01/2023 | 20,643 | 215,306 | 78,849 | 822,395 | |||||||||||||
4,297 | (4) | 2,149 | (4) | 17.19 | 05/01/2024 | ||||||||||||||||
Larry Purlee | 3,932 | (3) | 33.10 | 02/01/2021 | 16,967 | 176,966 | 70,277 | 732,989 | |||||||||||||
6,267 | (3) | 24.32 | 02/01/2022 | ||||||||||||||||||
6,388 | (3) | 21.08 | 04/01/2023 | ||||||||||||||||||
4,256 | (4) | 2,128 | (4) | 17.19 | 05/01/2024 |
The options vest three years from the January 2, 2015 grant | |
(2) | For vesting to occur, Mr. Anderson must remain employed until July 20, 2018 and the award |
2015. The |
|
Outstanding Equity Awards at Fiscal Year-End
The following table lists all outstanding equity awards held by our named executive officers as of January 31, 2016.
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||
Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock that Have Not Vested (#) | Market Value of Shares or Units of Stock that Have Not Vested ($)(7) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested (#) | Equity Incentive Plan Awards: Market Value or Payout Value of Unearned Shares, Units or Other Rights that Have Not Vested ($)(7) | |||||||||||||||||||||||||
Michael J. Caliel | 109,409 | (1) | $ | 10.06 | 01/02/2025 | 50,286 | $ | 257,464 | 444,200 | $2,274,304 | ||||||||||||||||||||||||
J. Michael Anderson | 10,000 | (2) | $ | 8.60 | 07/20/2025 | — | — | 61,728 | $316,047 | |||||||||||||||||||||||||
Andrew Atchison | 25,000 | (3) | $ | 8.22 | 12/12/2024 | — | — | — | — | |||||||||||||||||||||||||
Steven F. Crooke | 13,125 | (3) | $ | 42.26 | 06/07/2017 | 21,171 | $ | 108,396 | 137,214 | $702,536 | ||||||||||||||||||||||||
9,826 | (3) | $ | 35.71 | 02/05/2018 | ||||||||||||||||||||||||||||||
21,277 | (3) | $ | 15.78 | 02/01/2019 | ||||||||||||||||||||||||||||||
11,476 | (3) | $ | 21.99 | 06/03/2019 | ||||||||||||||||||||||||||||||
8,569 | (3) | $ | 27.79 | 02/19/2020 | ||||||||||||||||||||||||||||||
9,333 | (3) | $ | 33.10 | 02/01/2021 | ||||||||||||||||||||||||||||||
15,430 | (3) | $ | 24.32 | 02/01/2022 | ||||||||||||||||||||||||||||||
9,884 | (4) | 5,093 | (4) | $ | 21.08 | 04/01/2023 | ||||||||||||||||||||||||||||
4,939 | (5) | 10,030 | (5) | $ | 17.19 | 05/01/2024 | ||||||||||||||||||||||||||||
4,950 | (6) | 10,050 | (6) | $ | 8.22 | 12/12/2024 | ||||||||||||||||||||||||||||
Larry Purlee | 3,932 | (3) | $ | 33.10 | 02/01/2021 | 8,417 | $ | 43,095 | 53,939 | $319,432 | ||||||||||||||||||||||||
6,267 | (3) | $ | 24.32 | 02/01/2022 | ||||||||||||||||||||||||||||||
4,216 | (4) | 2,172 | (4) | $ | 21.08 | 04/01/2023 | ||||||||||||||||||||||||||||
2,106 | (5) | 4,278 | (5) | $ | 17.19 | 05/01/2024 | ||||||||||||||||||||||||||||
Ronald Thalacker | 3,683 | (4) | 1,898 | (4) | $ | 21.08 | 04/01/2023 | 7,354 | $ | 37,652 | 47,130 | $241,306 | ||||||||||||||||||||||
1,841 | (5) | 3,738 | (5) | $ | 17.19 | 05/01/2024 |
|
|
(3) | The options are fully vested and exercisable. |
(4) | The options vest in three |
|
(5) | The options vest in three |
(6) | The market value of the shares of restricted stock, RSUs and performance shares, either earned or unearned, that have not vested was calculated by multiplying |
Layne Christensen Company | 35 |
EXECUTIVE COMPENSATION AND OTHER INFORMATION | |
Option Exercises and Stock VestedOPTION EXERCISES AND STOCK VESTED
The following table sets forth information with respect to each named executive officer concerning the exercise of options and the vesting of stock during the fiscal year ended January 31, 2016.
Option Awards | Stock Awards | |||||||||||||||
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($)(1) | ||||||||||||
Michael J. Caliel | — | — | — | — | ||||||||||||
J. Michael Anderson | — | — | — | — | ||||||||||||
Andrew Atchison | — | — | — | — | ||||||||||||
Steven F. Crooke | — | — | — | — | ||||||||||||
Larry Purlee | — | — | 8,450 | $56,784 | ||||||||||||
Ronald Thalacker | — | — | — | — |
2017.
| Option Awards | Stock Awards | ||||||
Name | Number of Acquired on Exercise (#) | Value Realized on Exercise ($) | Number of Acquired on Vesting (#) | Value Realized on Vesting ($) (1) | ||||
Michael J. Caliel | — | — | — | — | ||||
J. Michael Anderson | — | — | — | — | ||||
Steven F. Crooke | — | — | — | — | ||||
Kevin Maher | — | — | — | — | ||||
Larry Purlee | — | — | — | — |
Nonqualified Deferred CompensationNONQUALIFIED DEFERRED COMPENSATION
The following table sets forth the contributions made by our named executive officers and the earnings accrued on all such contributions under our Key Management Deferred Compensation Plan during the fiscal year ended January 31, 2016.2017.
Name | Executive Contributions in Last Fiscal Year(1) ($) | Registrant Contributions in Last Fiscal Year ($) | Aggregate Earnings (Losses) in Last Fiscal Year(2) ($) | Aggregate Withdrawals/Distributions ($) | Aggregate Balance at Last Fiscal Year End(3)($) | |||||||||||||||
Michael J. Caliel | — | — | — | — | — | |||||||||||||||
J. Michael Anderson | — | — | — | — | — | |||||||||||||||
Andrew Atchison | — | — | — | — | — | |||||||||||||||
Steven F. Crooke | — | — | $ 9 | — | $205,974 | |||||||||||||||
Larry Purlee | — | — | ($15,852 | ) | — | $171,754 | ||||||||||||||
Ronald Thalacker | — | — | ($ 6,546 | ) | — | $119,538 |
Name | Executive Contributions in Last Fiscal Year ($) | Registrant Contributions in Last Fiscal Year ($) | Aggregate Earnings (Losses) in Last Fiscal Year (1) ($) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last Fiscal Year End ($) | ||||||
Michael J. Caliel | — | — | — | — | — | ||||||
J. Michael Anderson | — | — | — | — | — | ||||||
Steven F. Crooke | — | — | $ | 32 | — | $206,006 | |||||
Kevin Maher | — | — | 1,182 | — | 9,409 | ||||||
Larry Purlee | — | — | 34,947 | — | 206,701 |
(1) |
|
The earnings reported in this column are not included in the Summary Compensation Table as they are not above-market or preferential. |
|
Potential Payments Upon Change of Control, Retirement, Death or DisabilityPOTENTIAL PAYMENTS UPON CHANGE OF CONTROL, RETIREMENT, DEATH OR DISABILITY
The following section describes the benefits that may become payable to certain Executives in connection with a termination of their employment with the Company or a change in control of the Company under arrangements in effect on January 31, 2016. Because the resignation by Mr. Atchison as interim Chief Financial Officer upon the hiring of Mr. Anderson during fiscal 2016 did not trigger any severance payment obligations on behalf of the Company, this section does not address potential benefits payable to Mr. Atchison.2017.
Executive Severance Agreements
Executive Severance Agreements |
The Company has entered into severance agreements with Messrs. Caliel, Anderson, Crooke and Crooke.Maher. The severance agreements subject these Executives to certain restrictive covenants including covenants not to compete, confidentiality andnon-solicitation of Company employees, which run during the term of the severance agreement. If an Executive fails to comply with these covenants (subject to a notice and right to cure period), the Company will not have the obligation to pay the severance benefits described in this section to the terminated Executive. The severance agreements also contain covenants not to compete andnon-solicitation provisions that apply for 24 months after termination.termination with respect to Messrs. Caliel, Anderson and Crooke and for 12 months after termination with respect to Mr. Maher.
The severance agreements with Messrs. Caliel, Anderson, Crooke and CrookeMaher generally provide:
● | If before a change of control or after a two-year period following a change of control with respect to Messrs. Caliel, Anderson, a three-year period following a change of control with respect to Mr. Crooke and a one-year period following a change of control with respect to Mr. Maher, the Company terminates the Executive’s employment without “cause” or if the Company constructively terminates such Executive’s employment (i.e., the Executive leaves for “good reason”), the Executive is entitled to receive severance benefits that include: |
36 | 2017 Proxy Statement |
With respect to Messrs. Caliel and Anderson: (i) 24 months of continued base salary paid in a lump sum, (ii) continued vesting of service-based equity awards and a continued right to exercise outstanding stock options during this 24-month severance period, (iii) for any performance-based equity award that is exercisable, payable or becomes vested only if the applicable performance-based criteria is satisfied, suchperformance-based award will become exercisable, payable or become vested at the time of and only if the underlying performance criteria is satisfied; provided, that if the performance period ends after the severance period, only a pro rata portion of the award shall become exercisable, payable or become vested, (iv) for any performance-based stock options that become exercisable after the end of the 24-month severance period, such stock options will remain exercisable until the earlier of the original expiration date of the option or 90 days after the end of the 24-month severance period, (v) a lump-sum payment equal to 24 times the present monthly amount of Layne Christensen’s total premium cost to cover Mr. Caliel or Mr. Anderson, as applicable, under Layne Christensen’s health, vision and dental plans, as well as the cost of coverage of any of his eligible dependents enrolled as of the date of his termination; and (vi) payment of a pro-rata portion of any annual incentive bonus Mr. Caliel or Mr. Anderson was eligible to receive during the year of Mr. Caliel’s or Mr. Anderson’s termination assuming performance was achieved at 100% of target.
With respect to Mr. Crooke: (i) 24 months of continued base salary paid in accordance with regular payroll practices, (ii) continued vesting of service-based equity awards and a continued right to exercise outstanding stock options during this 24-month severance period, (iii) for any performance-based equity award that is exercisable, payable or becomes vested only if the applicable performance-based criteria is satisfied, suchperformance-based award will become exercisable, payable or become vested at the time of and only if the underlying performance criteria is satisfied, (iv) for any performance-based stock options that become exercisable after the end of the24-month severance period, such stock options will remain exercisable until the earlier of the original expiration date of the option or 90 days after the end of the 24-month severance period, (v) with respect to Mr. Crooke, continued participation in the Company’s welfare benefit plans (or comparable arrangements) throughout the24-month severance period; and (vi) payment of any applicable COBRA premiums.
Following a change of control of the Company and for a three-year period following the change of control with respect to Mr. Crooke and a two-year period following the change of control with respect to Messrs. Caliel and Anderson, the Company or its successor is obligated to both (i) continue to employ the Executive in a substantially similar position (at an equal or greater base salary as before the change of control) and (ii) provide the Executive with certain welfare benefits and bonus
EXECUTIVE COMPENSATION AND OTHER INFORMATION | |
● | With respect to Messrs. Caliel and Anderson: (i) 24 months of continued base salary paid in a lump sum, (ii) continued vesting of service-based equity awards and a continued right to exercise outstanding stock options during this 24-month severance period, (iii) for any performance-based equity award that is exercisable, payable or becomes vested only if the applicable performance-based criteria is satisfied, such performance-based award will become exercisable, payable or become vested at the time of and only if the underlying performance criteria is satisfied; provided, that if the performance period ends after the severance period, only a pro rata portion of the award shall become exercisable, payable or become vested, (iv) for any performance-based stock options that become exercisable after the end of the 24-month severance period, such stock options will remain exercisable until the earlier of the original expiration date of the option or 90 days after the end of the 24-month severance period, (v) a lump-sum payment equal to 24 times the present monthly amount of Layne Christensen’s total premium cost to cover Mr. Caliel or Mr. Anderson, as applicable, under Layne Christensen’s health, vision and dental plans, as well as the cost of coverage of any of his eligible dependents enrolled as of the date of his termination; and (vi) payment of a pro-rata portion of any annual incentive bonus Mr. Caliel or Mr. Anderson was eligible to receive during the year of Mr. Caliel’s or Mr. Anderson’s termination assuming performance was achieved at 100% of target. |
● | With respect to Mr. Crooke: (i) 24 months of continued base salary paid in accordance with regular payroll practices, (ii) continued vesting of service-based equity awards and a continued right to exercise outstanding stock options during this 24-month severance period, (iii) for any performance-based equity award that is exercisable, payable or becomes vested only if the applicable performance-based criteria is satisfied, such performance-based award will become exercisable, payable or become vested at the time of and only if the underlying performance criteria is satisfied, (iv) for any performance-based stock options that become exercisable after the end of the 24-month severance period, such stock options will remain exercisable until the earlier of the original expiration date of the option or 90 days after the end of the 24-month severance period, (v) with respect to Mr. Crooke, continued participation in the Company’s welfare benefit plans (or comparable arrangements) throughout the 24-month severance period; and (vi) payment of any applicable COBRA premiums. |
● | With respect to Mr. Maher: (i) 12 months of continued base salary paid in a lump sum, (ii) continued vesting of service-based equity awards and a continued right to exercise outstanding stock options during this 12-month severance period, (iii) for any performance-based equity award that is exercisable, payable or becomes vested only if the applicable performance-based criteria is satisfied, such performance-based award will become exercisable, payable or become vested at the time of and only if the underlying performance criteria is satisfied; provided, that if the performance period ends after the severance period, only a pro rata portion of the award shall become exercisable, payable or become vested, (iv) for any performance-based stock options that become exercisable after the end of the 12-month severance period, such stock options will remain exercisable until the earlier of the original expiration date of the option or 90 days after the end of the 12-month severance period, and (v) a lump-sum payment equal to 12 times the present monthly amount of Layne Christensen’s total premium cost to cover Mr. Maher, as applicable, under Layne Christensen’s health, vision and dental plans, as well as the cost of coverage of any of his eligible dependents enrolled as of the date of his termination. |
● | Following a change of control of the Company and for a three-year period following the change of control with respect to Mr. Crooke, a two-year period following the change of control with respect to Messrs. Caliel and Anderson and a one-year period following the change of control with respect to Mr. Maher, the Company or its successor is obligated to both (i) continue to employ the Executive in a substantially similar position (at an equal or greater base salary as before the change of control) and (ii) provide the Executive with certain welfare benefits and bonus compensation opportunities similar to those of other similarly situated employees. Upon a change of control, all of Messrs. Caliel’s and Crooke’s outstanding equity awards become immediately vested, exercisable or payable, as the case may be. If Mr. Anderson’s employment is terminated by Layne Christensen without cause or by Mr. Anderson for good reason during the two-year period following a change of control of Layne Christensen, all of Mr. Anderson’s outstanding equity awards become immediately vested, exercisable or payable, as the case may be. If Mr. Maher’s employment is terminated by Layne Christensen without cause or by Mr. Maher for good reason during the one-year period following a change of control of Layne Christensen, all of Mr. Maher’s outstanding equity awards become immediately vested, exercisable or payable, as the case may be. |
● | If Mr. Caliel’s or Mr. Anderson’s employment is terminated by Layne Christensen without cause or by Mr. Caliel or Mr. Anderson for good reason during the two-year period following a change of control of Layne Christensen, Mr. Caliel or Mr. Anderson, as applicable, is entitled to (i) payment of any accrued but unpaid base salary and payment of any benefits as required by the terms of any employee benefit plan or |
Layne Christensen Company | 37 |
If Mr. Crooke’s employment is terminated by the Company or is constructively terminated (i.e., Mr. Crooke leaves for “good reason”) during the three-year period following a change of control of the Company, he is entitled to: (i) a special lump-sum severance payment equal to the present value of the remaining base salary he would receive if he remained an employee until the later of the end of the third anniversary of the change of control or the second anniversary of his termination date; and (ii) coverage under all employee benefit plans (other than the Company’s 401(k) retirement plan) that covered him prior to termination until the later of the end of the third anniversary of the change of control or the second anniversary of his termination date. Mr. Crooke is additionally entitled to, with respect to any payments made pursuant to the severance agreement that are subject to the Internal Revenue Code’s penalty tax provisions for excessive “golden parachute payments”, reimbursement by the Company (on an after-tax basis) for the amount of any such penalty tax.
EXECUTIVE COMPENSATION AND OTHER INFORMATION | |
program of Layne Christensen, (ii) a lump-sum severance payment equal to two times his base salary, (iii) a lump-sum severance payment equal to two times the amount of his annual incentive bonus for the year in which his termination occurred assuming performance was achieved at 100% of target and (iv) a lump-sum payment equal to 24 times the present monthly amount of Layne Christensen’s total premium cost to cover Mr. Caliel or Mr. Anderson under Layne Christensen’s health, vision and dental plans, as well as the cost of coverage of any of his eligible dependents enrolled as of the date of his termination. | |
● | If Mr. Crooke’s employment is terminated by the Company or is constructively terminated (i.e., Mr. Crooke leaves for “good reason”) during the three-year period following a change of control of the Company, he is entitled to: (i) a special lump-sum severance payment equal to the present value of the remaining base salary he would receive if he remained an employee until the later of the end of the third anniversary of the change of control or the second anniversary of his termination date; and (ii) coverage under all employee benefit plans (other than the Company’s 401(k) retirement plan) that covered him prior to termination until the later of the end of the third anniversary of the change of control or the second anniversary of his termination date. Mr. Crooke is additionally entitled to, with respect to any payments made pursuant to the severance agreement that are subject to the Internal Revenue Code’s penalty tax provisions for excessive “golden parachute payments”, reimbursement by the Company (on an after-tax basis) for the amount of any such penalty tax. |
● | If Mr. Maher’s employment is terminated by Layne Christensen without cause or by Mr. Maher for good reason during the one-year period following a change of control of Layne Christensen, Mr. Maher is entitled to (i) payment of any accrued but unpaid base salary and payment of any benefits as required by the terms of any employee benefit plan or program of Layne Christensen, (ii) a lump-sum severance payment equal to one times his base salary and (iii) a lump-sum payment equal to 12 times the present monthly amount of Layne Christensen’s total premium cost to cover Mr. Maher under Layne Christensen’s health, vision and dental plans, as well as the cost of coverage of any of his eligible dependents enrolled as of the date of his termination. |
● | If the Executive’s employment is terminated due to death, the Executive’s estate or his beneficiaries will be entitled to receive (i) immediate acceleration of the vesting of the Executive’s service-based equity awards and the right to exercise the service-based stock options until the earlier of the original expiration date of the options or 12 months after the Executive’s date of death, (ii) for any performance-based equity award that is exercisable, payable or becomes vested only if the applicable performance-based criteria is satisfied, such performance-based award will become exercisable, payable or become vested at the time of and only if the underlying performance criteria is satisfied, (iii) for any performance-based stock option that becomes exercisable due to the satisfaction of the underlying performance criteria, the continued right to exercise the option until the earlier of (a) with respect to Mr. Crooke, the option’s original expiration date or 12 months after the Executive’s date of death and (b) with respect to Messrs. Caliel, Anderson and Maher, the option’s original expiration date or the later of 12 months after the option first becomes exercisable or 12 months after the Executive’s date of death, and (iv) with respect to Messrs. Caliel, Anderson and Maher, payment of a pro-rata portion of any annual incentive bonus he was eligible to receive during the year of his death, to the extent the underlying performance criteria were met. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
● | If the Executive’s employment is terminated due to disability, the Executive will be entitled to (i) payment of a lump sum disability benefit equal to 12 months’ base salary, (ii) immediate acceleration of the vesting of his service-based equity awards and a continuation of his right to exercise any service-based stock options for a period of 12 months after the termination, (iii) for any performance-based equity award that is exercisable, payable or becomes vested only if the applicable performance-based criteria is satisfied, such performance-based award will become exercisable, payable or become vested at the time of and only if the underlying performance criteria is satisfied, (iv) for any performance-based stock options that have become exercisable due to the satisfaction of the
The Executives are parties to restricted stock award, RSU award, stock option award, performance share and cash incentive award agreements made pursuant to the Company’s 2006 Equity Incentive Plan. The award agreements and the 2006 Equity Incentive Plan provide in varying degrees, as described in greater detail below, for acceleration of the vesting of the awards in connection with a change of control, the Executive’s retirement and the Executive’s death or disability.
Upon the “retirement” of an Executive, which is defined under the equity award agreements as the Executive’s termination from all employment after attaining the age of 60 after having been employed by the Company or one of its affiliates for five years or more, the award agreements provide for various treatment of the awards. Under the restricted stock and performance share award agreements, the awards vest for the portion of the period during the term of the award in which the Executive was employed by the Company, subject to the satisfaction of the performance criteria specified therein. With respect to the restricted stock award agreements, the range of vesting varies from 0-150%. Under the RSU and option award agreements, the awards are accelerated in full upon the Executive’s retirement. Upon the death or “disability” of an Executive, the award agreements provide for various treatment of the awards. Under the restricted stock, RSU and option award agreements, the vesting of the awards is accelerated. The restricted stock awards, while vested, become payable only if the performance targets specified are achieved. Under the performance share award agreements, the Executive is entitled to the fraction of the award that would have been payable at the end of the quarter immediately preceding the date on which the Executive ceased to be an employee. The amount of the award is payable at the end of the performance period subject to the achievement of the performance targets and is pro-rated based on the number of quarters during the performance period that the Executive was employed. Mr. Caliel also received a special inducement grant (i) in the form of cash, which is performance-vesting, (ii) stock options and (iii) RSUs, some units of which are time-vesting and some of which are performance-vesting. These award grants are not governed by the terms of his severance agreement. Mr. Caliel must be employed by the Company on the third anniversary of hisstart-date for any of the inducement grant to vest. Each inducement award agreement provides for the acceleration of the vesting of the awards, regardless of the achievement of any performance criteria (with respect to the stock option, RSU and cash incentive awards) upon the occurrence of a change of control of the Company. Additionally, each inducement award agreement provides for proportionate vesting or exercisability (with respect to the stock option award) upon the occurrence of a “Qualifying Involuntary Termination” (as defined under Mr. Caliel’s severance agreement) based on the number of days he was employed in the vesting period. If Mr. Caliel’s employment is terminated for any other reason, including his death, “disability”, “Cause” (as defined under his severance agreement) or other voluntary resignation, the award agreements each provide that he forfeits any unvested award amounts. Mr. Anderson also received a special inducement grant in the form of cash, stock options and RSUs, all of which are performance-vesting. These award grants are not governed by the terms of his severance agreement. Mr. Anderson must be employed by the Company on the third anniversary of his start-date for any of the inducement grant to vest. Each inducement award agreement provides for the acceleration of the vesting of the awards, regardless of the achievement of any performance criteria (with respect to the stock option, RSU and cash incentive awards) upon the occurrence of a change of control of the Company.
The following table summarizes the severance benefits due Messrs. Caliel, Anderson, Crooke and
The following table summarizes the severance benefits due Messrs. Caliel, Anderson, Crooke and
The following table summarizes the severance benefits due Messrs. Caliel, Anderson, Crooke and
The following table summarizes the severance benefits due Mr. Purlee upon his retirement under his restricted stock, stock option, RSU and performance share award agreements (assuming his retirement occurred on January 31,
The following table summarizes the severance benefits due Messrs. Caliel, Anderson, Crooke and
Generally, all severance payments under the agreements will begin following the Executive’s termination of employment. However, as is provided for in the Severance Agreements, certain delays in payment timing may occur in order to comply with Section 409A of the Internal Revenue Code.
The following table sets forth certain information as of February 15,
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, enables our stockholders to vote to approve, on a non-binding advisory basis, the compensation of our named executive officers as disclosed in this Proxy Statement in accordance with the SEC’s rules. As described in detail under the heading “Compensation Discussion and Analysis,” our executive compensation programs are designed to attract and retain top-quality executives, tie annual and long-term equity incentives to achievement of measurable corporate, business unit and individual performance objectives, and align the executives’ incentives with stockholder value creation. The overall compensation program is designed to reward a combination of strong individual performance, strong performance by the Company in meeting its long-term strategic goals and stock price appreciation. Our compensation package for executive officers consists of a balance of base salary, annual bonuses under our Executive Incentive Compensation Plan, performance-based equity grants and certain employee benefits. To serve the best interests of stockholders, the Compensation Committee follows an executive compensation philosophy that emphasizes performance-based compensation, including stock options and performance-vesting restricted shares. The Compensation Committee periodically reviews our executive compensation practices to ensure they achieve our desired goals. We are asking our stockholders to indicate their support for our named executive officer compensation as described in this Proxy Statement. This proposal, commonly RESOLVED, that the Company’s stockholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in the Company’s Proxy Statement for the The say-on-pay vote is advisory, and therefore not binding on the Company, the Compensation Committee or our Board of Directors. However, our Board of Directors and Compensation Committee value the opinions of our stockholders and will consider the outcome of the vote when making future executive compensation decisions. The Company’s next say-on-pay vote after the 2017 Annual Meeting of stockholders is expected to occur at the 2018 Annual Meeting of stockholders and each year thereafter if the stockholders approve, on an advisory basis, the recommendation of the Board of Directors
The Dodd-Frank Act also enables our stockholders to indicate how frequently we should seek an advisory vote on the compensation of our Named Executive Officers. By voting on this proposal, stockholders may indicate whether they would prefer an advisory vote on Named Executive Officer compensation once every one, two or three years. After careful consideration, the Board of Directors has determined that an advisory vote on executive compensation that occurs every year (annual) is the most appropriate alternative for the Company, and therefore, the Board of Directors recommends that you vote Stockholders who have concerns about executive compensation during the interval between “say-on-pay” votes are welcome to bring their specific concerns to the attention of the Board of Directors at any time, by mail, telephone or email. Information on how to contact the Board of Directors can be found on page 3 of this Proxy Statement under the heading “Communications with the Board of Directors.” The proxy card provides stockholders with the opportunity to choose among four advisory options (holding the vote every one, two or three years, or abstaining) and, therefore, stockholders will not be voting to approve or disapprove the Board of Directors’ recommendation. You may cast youradvisory vote by choosing the option of one year, two years, three years, or abstaining from voting in response to the resolution set forth below: RESOLVED, that the option of one year, two years, or three years that receives the vote of the holders of a plurality of the votes cast by the stockholders present in person or represented by proxy at the Annual Meeting and entitled to vote on such matter for this resolution will be determined to be the stockholders’ preferred frequency with which the Company is to hold an advisory vote by stockholders to approve the compensation The option of one year, two years or three years, if any, that receives the approval by the affirmative vote of the holders of a plurality of the votes cast by the stockholders present in person or represented by proxy at the Annual meeting and entitled to vote on such matter will be the frequency of the vote on the compensation of our Named Executive Officers that has been approved by stockholders on an advisory basis. Although this advisory vote on the frequency of the “say-on-pay” vote is non-binding, the Board of Directors and the Compensation Committee will take into account the outcome of the vote when considering the frequency of future advisory votes on executive compensation.
APPROVAL OF 2006 EQUITY INCENTIVE PLAN, AS AMENDED AND RESTATED APPROVAL OF 2006 EQUITY INCENTIVE PLAN, AS AMENDED AND RESTATED The Board recommends a voteFORapproval. We believe that equity compensation aligns the interests of management and employees with the interests of other stockholders. The Company adopted the 2006 Equity Incentive Plan (the “2006 Equity Plan”) effective June 8, 2006. The Company last amended and restated the 2006 Equity Plan effective June 6, 2014 (the “2014 Restated Plan”). On April In addition to requesting stockholder approval of the 2017 Restated Plan, which reserves new shares for issuance, we are also requesting that our stockholders approve the material terms of the performance goals contained in the 2017 Restated Plan in order to allow certain awards to be potentially eligible for exemption from the $1.0 million deduction limit imposed by Section 162(m) of the Internal Revenue Code (the “Code”), as discussed under “Summary of the Material Features of the 2017 Restated Plan – General Terms and Awards - Performance Shares, Bonus Shares, Performance Units and Performance Awards” below. For purposes of Code Section 162(m), the materialterms of the performance goals for awards granted under the 2017 Plan include: (i) the employees eligible to receive compensation; (ii) the description of the business criteria on which the performance goals may be based; and (iii) the maximum amount, or the formula used to calculate the maximum amount, of compensation that can be paid to an employee under the arrangement. Each of these aspects is discussed in this If the stockholders fail to approve the 2017 Restated Plan, the existing plan will continue until the existing share reserve is depleted. Due to the limited number of shares STRUCTURE OF THE 2017 RESTATED PLAN Under this proposal, our stockholders are being asked to approve the 2017 Restated Plan,
These revisions continue our approach to align the 2006 Equity
We believe increasing the number of shares available for issuance under the 2014 Restated Plan is necessary to ensure that a sufficient reserve of shares is available for future grants of In its determination to recommend that the Board approve the
The Committee also took into account a proposed share increase submitted to the Company’s stockholders in 2016, which failed by a margin of less than two percent to receive the support of a majority of the votes cast. That 2016 proposal provided for an increase of 1,500,000 shares. The Committee believes that the 600,000 additional shares requested in connection with the 2014 Restated Plan, which request is for 60% fewer shares than requested in 2016, is reasonable and appropriate and is hopeful that stockholders will approve this lower share reserve increase. In light of the factors described above, and the ability to continue to grant equity compensation being vital to our efforts to continue to attract and retain employees in the competitive labor markets in which we compete, the Company believes that the size of the share reserve under the 2017 Restated Plan The principal features of the 2017 Restated Plan
The objectives of the 2017 Restated Plan are to encourage the Company’s employees and the employees of its affiliates to acquire a proprietary and vested interest in the Company’s growth and performance and to assist the Company in attracting and retaining employees and non-employee directors, by providing them with the opportunity to participate in the Company’s success and profitability. The 2017 Restated Plan provides for grants of incentive stock options (“ISOs”), which are entitled to special tax treatment under Section 422 of the The 2017 Restated Plan is not subject to any provisions of the Employee Retirement Income Security Act of 1974.
Either our Board of Directors or one or more committees of our Board may administer the 2017 Restated Plan. Our Board may delegate its discretionary authority over the 2017 Restated Plan to a committee of the Board (the “Committee”), which consists of at least two directors, each of whom is a “non-employee director” (within the meaning of Rule 16b-3(b)(3) under the Securities Act of 1934) and an “outside director” (within the meaning of Code Section 162(m)). Members of the Committee may be removed at the discretion of the Board. The Committee is authorized to interpret the 2017 Restated Plan and to adopt rules from time to time to carry out the 2017 Restated Plan. The Committee also has the authority to (i) select the participants to whom awards will be granted, (ii) determine the types of awards to be granted and the number of shares covered by each award, (iii)
If the If shares The number of shares authorized for awards is subject to adjustment due to changes resulting from payment of stock dividends or other distributions, stock splits, spin-offs, extraordinary cash dividends, subdivisions, consolidations, combinations, reclassifications, recapitalizations and other corporate transactions as the Committee determines to require an equitable adjustment.
Any non-employee director, key employee of the Company or an affiliate of the Company is eligible to receive awards under the 2017 Restated Plan. As of April 1,
Non-Employee Director Sublimit Incentive Stock Option Limits
Each award granted to a participant under the 2017 Restated Plan is evidenced by an award agreement entered by the participant and the Company. The award agreement specifies the terms and conditions of the award, including the number of shares subject to the award, the form of consideration payable upon exercise of the award, if applicable, the effect on the award of a participant’s termination of employment, and all other matters. As appropriate, the Committee will also establish the vesting conditions of awards. Vesting conditions may be based on a participant’s service (time-based vesting) or based on the participant’s or the Company’s performance (performance-based vesting). Awards granted under the 2017 Restated Plan will generally be required to have a minimum vesting or exercise period of twelve months from the award’s date of grant. The limit will not apply in certain situations, such as if a participant dies, becomes disabled, has a qualifying retirement or if the Company experiences a change in control. Five percent of the share reserve pool is exempt from the minimum vesting requirement. Unless otherwise specified in an award agreement, if there is a change in control (as defined in the 2017 Restated Plan), each award will, without regard to any vesting schedule, restriction or performance target, automatically become fully exercisable, fully vested or fully payable, as the case may be, Awards granted under the 2017 Restated Plan are not generally assignable or transferable by the participant except in the event of the participant’s death or incapacity. Under certain conditions, the Committee may permit awards to be transferred, exercised by and paid to certain persons or entities related to a participant, including members of the participant’s immediate family, charitable institutions, or trusts whose beneficiaries are members of the participant’s immediate family or charitable institutions. Notwithstanding the foregoing, ISOs are only transferable to the extent permitted in Code Section 422. Stock Options
months. In no event may the term of an option exceed ten years. Unless approved by our stockholders, the 2017 Restated Plan prohibits amending a stock option, cancelling a stock option in exchange for another stock award (including an option) or cash, or taking any other action with respect to a stock option if such amendment, cancellation and regrant or exchange would be considered a “repricing” of the option. Stock Appreciation Rights
Each SAR granted under the 2017 Restated Plan will be evidenced by a SAR award agreement entered into between the Company and the participant. The SAR award agreement will specify the exercise price per share, the terms of the SAR, the conditions of the exercise and such other terms and conditions as determined by the Committee. Subject to certain exceptions, stock appreciation rights must have a minimum vesting period of twelve months. In no event may the term of a SAR exceed ten years. Unless approved by our stockholders, the 2017 Restated Plan prohibits amending a SAR, cancelling a SAR in exchange for another stock award (including a SAR) or cash, or taking any other action with respect to a SAR if such amendment, cancellation and regrant or exchange would be considered a “repricing” of the SAR. Restricted Stock and Restricted Stock Units
With respect to shares of restricted stock, participants will have all voting, dividend, liquidation and other rights. Any dividends paid on shares of restricted stock or dividend equivalents paid on restricted stock units prior to Performance Shares, Bonus Shares, Performance Units and Performance Awards
The applicable Business Criteria may be applied on a pre- or post-tax basis, and the Committee may, when the applicable performance goals are established, provide that the formula for such goals may include or exclude items to measure specific objectives, such as losses from discontinued operations, Actual target levels for awards will be determined by the Committee. Measurements of the Company’s or a participant’s performance against the performance goals established by the Committee must be objectively determinable. To the extent the award is intended as Code Section 162(m) “performance-based” compensation, the Committee may adjust the amount payable pursuant to an award under the 2017 Restated Plan downward but not upward and the Committee may not waive the achievement of performance goals related to an award except in the case of a participant’s death or disability. Code Section 162(m) requires that the Committee certify that performance goals were achieved before the payment of the “performance-based” compensation. Although the Company generally will attempt to structure performance-based awards so as to preserve deductibility, there may be circumstances where the Company’s best interests may be best served by maintaining flexibility in the way compensation is provided even if it might result in the non-deductibility of the compensation. In addition, because of the uncertainties associated with the application and interpretation of Section 162(m) and the regulations issued thereunder, there can be no assurance that compensation intended to satisfy the requirements for deductibility under Section 162(m) will in fact be deductible. Achievement of the maximum performance target(s) entitles the holder to payment at the full maximum amount specified with respect to the award; however, the Committee may establish an upper limit on the amount payable. Following the conclusion of each performance period, the Committee will determine to what extent the performance targets have been attained, what payment, if any, is due with respect to an award and whether such payment will be made in cash, stock or a combination of cash and stock. As discussed above, subject to certain adjustments for changes in our corporate or capital structure described above, no participant may be granted awards for more than 600,000 shares in any calendar year period.
Because of the uncertainties associated with the application and interpretation of Section 162(m) and the regulations issued thereunder, there can be no assurance that compensation intended to satisfy the requirements for deductibility under Section 162(m) will in fact be deductible. Moreover, our Board or Compensation Committee may elect to grant performance-based awards that are not intended to satisfy all of the conditions necessary for awards granted under the 2017 Restated Plan to qualify
Our Board of Directors or the Committee is permitted to amend the 2017 Restated Plan or any outstanding award thereunder, except that only our Board is permitted to amend the 2017 Restated Plan if stockholder approval of the amendment is required by applicable law, regulation
Based on current provisions of the Code and the existing regulations thereunder, the anticipated U.S. federal income tax consequences of awards granted under the 2017 Restated Plan are as described below. The following discussion is not intended to be a complete discussion of applicable law and is based on the U.S. federal income tax laws as in effect on the date hereof. State tax consequences may in some cases differ from those described below. Nonqualified Stock Options Incentive Stock Options an incentive stock option after the later of (a) one year from the date the participant exercised the option and (b) two years from the grant date of the option, the participant generally will recognize long-term capital gain or loss equal to the difference between the amount the participant received in the disposition and the option exercise price. If a participant sells or otherwise disposes of shares acquired upon exercise of an incentive stock option before these holding period requirements are satisfied, the disposition will constitute a “disqualifying disposition,” and the participant generally will recognize taxable ordinary income in the year of disposition equal to the excess of the fair market value of the shares on the date of exercise over the option exercise price (or, if less, the excess of the amount realized on the disposition of the shares over the option exercise price). The balance of the participant’s gain on a disqualifying disposition, if any, will be taxed as short-term or long-term capital gain, as the case may be. With respect to both nonqualified stock options and incentive stock options, special rules apply if a participant uses shares of Common Stock already held by the participant to pay the exercise price. Stock Appreciation Rights
Restricted Stock Awards, Restricted Stock Units, Performance Shares and Performance Units Bonus Shares Tax Consequences to the Company Code Section409A Tax Withholding
If approved by the stockholders, the 2017 Restated Plan will be effective The following persons and groups have received grants of stock options to purchase the following number of shares under the 2006 Equity 2017:
The amounts shown include shares subject to options that may have been forfeited in whole or in part. The following table provides information as of January 31,
Equity Compensation Plan Information
We intend to register the additional shares to be issued under the 2017 Restated Plan by filing a Registration Statement on Form S-8 relating to the issuance of our Common Stock under the 2017 Restated Plan with the SEC pursuant to the Securities Act of 1933, as amended, as soon as practicable after approval of the 2017 Restated Plan by our stockholders. REQUIRED VOTES AND BOARD RECOMMENDATIONS The affirmative vote of the holders of a majority of the outstanding shares of Common Stock present or represented at the meeting and entitled to vote thereon is required for the approval of the
Table of
RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTANTS The Board recommends a voteFORapproval of the selection of Deloitte & Touche LLP. The Audit Committee of the Board of Directors has selected the independent registered public accounting firm of Deloitte & Touche LLP to audit the books, records and accounts of the Company for the fiscal year ending January 31, Deloitte & Touche LLP has served as the Company’s independent registered public accounting firm since fiscal 1990. Representatives of Deloitte & Touche LLP are expected to be present at the Annual Meeting. Such representatives will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions.
During fiscal (a) Audit Fees: Aggregate fees billed for professional services rendered for the audit of the Company’s annual financial statements and assessment of internal controls over financial reporting, and review of financial statements included in the Company’s Form 10-Q reports, as well as statutory audits for international entities and procedures for registration statements.
(b)Audit-Related Fees: Audit-related fees include benefit plan audits and consultation on potential acquisitions and various other matters.
(c)Tax Fees: Tax fees include income tax consultation and assistance in filing income tax returns.
(d)All Other Fees: All other fees relate to licensing of access to an on-line accounting research facility and miscellaneous fees for services. The Company did not incur any fees relating to the design and implementation of financial information systems in either fiscal 2016 or fiscal 2017.
The Audit Committee of the Board of Directors has considered whether provision of the services described in sections (b), (c) and (d) above is compatible with maintaining the registered public accounting firm’s independence and has determined that such services have not adversely affected Deloitte & Touche’s independence. The Audit Committee’s Policy for the Approval of Audit, Audit-Related, Tax and Other Services provided by the Independent Auditor provides for the pre-approval of the scope and estimated fees associated with the current year audit. The policy also requires pre-approval of audit-related, tax and other services specifically described by management on an annual basis and, furthermore, additional services anticipated to exceed the specified pre-approval limits for such services must be separately approved by the Audit Committee. Finally, the policy outlines nine specific restricted services outlined in the SEC’s rule on auditor independence that are not to be performed by the independent auditor. None of the services performed by Deloitte & Touche, as described above, were approved by the Audit Committee pursuant to Rule 2-01(c)(7)(i)(C) of Regulation S-X. All of the services described in sections (b), (c) and (d) above were pre-approved by the Audit Committee. Submission of the selection of the independent registered public accounting firm to the stockholders for ratification will not limit the authority of the Audit Committee to
appoint another independent registered public accounting firm to serve as independent auditors if the present auditors resign or their engagement otherwise is terminated. If the stockholders do not ratify the selection of Deloitte & Touche at the Annual Meeting, the Company intends to call a special meeting of stockholders to be held as soon as practicable after the Annual Meeting to ratify the selection of another independent registered public accounting firm as independent auditors for the Company.
Section 16(a) of the Securities Exchange Act of 1934 (the “Exchange Act”) requires the Company’s directors and executive officers, and certain persons who own more than 10% of the Company’s outstanding Common Stock, to file with the Securities and Exchange Commission (“SEC”) initial reports of ownership and reports of changes in ownership in Layne Christensen Common Stock and other equity securities. SEC regulations require directors, executive officers and certain greater than 10% stockholders to furnish Layne Christensen with copies of all Section 16(a) reports they file. To the Company’s knowledge, based solely on review of the copies of such reports furnished to Layne Christensen and written representations that no other reports were required, during the fiscal year ended January 31,
The Board of Directors is not aware of, and does not intend to present, any matter for action at the Annual Meeting other than those referred to in this Proxy Statement. If, however, any other matter properly comes before A copy of the Company’s Annual Report to Stockholders, containing financial statements for the fiscal year ended January 31, A
ADVANCE NOTICE PROCEDURES/STOCKHOLDER NOMINATION SUBMISSION PROCESS Under the Company’s bylaws, no business may be brought before an annual meeting unless it is specified in the notice of the meeting or is otherwise brought before the meeting by or at the direction of the Board or by a stockholder entitled to vote who has delivered written notice to the Company’s Secretary (containing certain information specified in the bylaws about the stockholder and the proposed action) not less than 120 or more than 150 days prior to the first anniversary of the preceding year’s annual meeting—that is, with respect to the (a) the name and address of the stockholder who intends to make the nomination and of the person or persons to be nominated; (b) a representation that such stockholder is a holder of record of stock of the Company entitled to vote in the election of directors at such meeting and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; (c) the name and address of such stockholder, as it appears on the Company’s books, and of the beneficial owner, if any, on whose behalf the nomination is made; (d) the class and number of shares of the Company which are owned beneficially and of record by the nominating stockholder and each nominee proposed by such stockholder; (e) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder; (f) such other information regarding each nominee proposed by such stockholder as would have been required to be included in a Proxy Statement filed pursuant to Regulation 14A (17 C.F.R. Section 240.14a-1 et seq.) as then in effect under the Securities Exchange Act of 1934, as amended (“Exchange Act”), had the nominee been nominated, or intended to be nominated, by the Board of Directors; and (g) the consent of each nominee to serve as a director of the Company if so elected. The Company may require any proposed nominee to furnish such other information as may reasonably be required by the Company to determine the eligibility of such proposed nominee to serve as director of the Company. These requirements are separate from and in addition to the SEC’s requirements that a stockholder must meet in order to have a stockholder proposal included in the Company’s Proxy Statement.
It is presently anticipated that the
If you and other residents at your mailing address own shares in street name, your broker, bank or other nominee may have sent you a notice that your household will receive only one annual report and Proxy Statement for each company in which you hold shares through that broker, bank or nominee. This practice is called “householding.” If you did not respond that you did not want to participate in householding, you are deemed to have consented to that process. If these procedures apply to you, your broker, bank or other nominee will have sent one copy of our Annual Report to Stockholders and Proxy Statement to your address. You may revoke your consent to householding at any time by contacting your broker, bank or other nominee. If you did not receive an individual copy of our Annual Report to Stockholders and Proxy Statement, we will send copies to you if you contact us at 1800 Hughes Landing Boulevard, Ste. 800, The Woodlands, Texas 77380, (281) 475-2600, Attention: Corporate Secretary. If you and other residents at your address have been receiving multiple copies of our Annual Report to Stockholders and Proxy Statement and desire to receive only a single copy of these materials, you may contact your broker, bank or other nominee or contact us at the above address or telephone number.
April 28, 2017
ANNUAL MEETING OF STOCKHOLDERS OF LAYNE CHRISTENSEN COMPANY May 31, 2017 GO GREEN e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.astfinancial.com to enjoy online access. NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL: Please sign, date and mail ↓Please detach along perforated line and mail in the envelope provided.↓ THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1, 2, 4 AND 5, AND FOR “1 YEAR” ON ITEM 3. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE ☒
ANNUAL MEETING OF SHAREHOLDERS OF LAYNE CHRISTENSEN COMPANY May 31, 2017
INTERNET -Access “www.voteproxy.com” and follow the on-screen instructions or scan the QR code with your smartphone. Have your proxy card available when you access the web page. TELEPHONE -Call toll-free1-800-PROXIES(1-800-776-9437) in the United States or1-718-921-8500from foreign countries from any touch-tone telephone and follow the instructions. Have your proxy card available when you call. Vote online/phone until 11:59 PM EST the day before the meeting. MAIL -Sign, date and mail your proxy card in the envelope provided as soon as possible. IN PERSON -You may vote your shares in person by attending the Annual Meeting. GO GREEN -e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.astfinancial.com to enjoy online access.
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL: The Notice of Meeting, proxy statement and proxy card are available at http://www.astproxyportal.com/ast/21286 ↓Please detach along perforated line and mail in the envelope providedIFyou are not voting via telephone or the Internet.↓ THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ITEMS 1, 2, 4 AND 5, AND FOR “1 YEAR” ON ITEM 3. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE ☒
LAYNE CHRISTENSEN COMPANY 2017 ANNUAL MEETING OF STOCKHOLDERS THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoints Michael J. Caliel, J. Michael Anderson and Steven F. Crooke, and each of them, each with the power to act alone and with full power of substitution and revocation, as attorneys and proxies of the undersigned to attend the This Proxy, when properly executed, will be voted in the manner directed herein by the undersigned stockholder(s).IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED POSTAGE PREPAID ENVELOPE.
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