Every member of our Compensation Committee is independent, as independence is defined in the listing standards of the NYSE (page 37)14).

Our Executive Incentive Compensation Recoupment Policy provides a mechanism for us to recover all forms of incentive compensation paid to our executive officers in some circumstances (page 56).

Our Compensation Committee has established a thorough process for the review and approval of our compensation programs and practices and it has retained and directed an independent compensation consultant to assist in the discharge of its duties (page 57)43).

Our Board of Directors has adopted stock ownership guidelines that apply to our directors and executive officers (pages 3519 and 68)58).

We employ our executive officers “at will” under employment agreements similar to those executed by all our employees (page 68)57).

Our insider trading policy prohibits transactions involving short sales, the buying and selling of puts, calls, or other derivative instruments, and certain forms of hedging or monetization transactions involving our securities (page 44).

On an annual basis, our Compensation Committee awards performance-based, long-term cash incentives to certain of our executive officers to supplement the long-term performance-based incentive and retention value provided by time-vesting equity awards.

A significant portion of our executive officers’ compensation is in the form of long-term incentive awards that are tied to the long-term performance of our stock and certain key measures that drive stockholder returns. The process by which the Compensation Committee determines the structure of these long-term incentive awards takes into account TETRA’s performance relative to our peers and internal budgeted expectations, market compensation and the need to retain executive talent over the long-term, and alignment with the experience of our long-term stockholders.

PROPOSAL NO. 3 — ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION

Our Board of Directors believes that our compensation program is effective in implementing our compensation philosophy and furthering our strategic goals and objectives. Pursuant to SEC rules, we are asking our stockholders to approve the compensation of our named executive officers (“NEOs”)NEOs as disclosed in the Compensation Discussion and AnalysisCD&A (beginning on page 52)36), the compensation tables (beginning on page 71)61) and the narrative discussion following the compensation tables. This advisory stockholder vote, commonly known as “say-on-pay,” gives you as a stockholder the opportunity to approve or not approve our executive compensation program and policies through the following resolution:

“RESOLVED, that the stockholders of TETRA Technologies, Inc. approve, on an advisory basis, the compensation of its named executive officers as disclosed in the Company’s 20182020 Proxy Statement pursuant to the executive compensation disclosure rules of the Securities and Exchange Commission, which disclosure includes the Compensation Discussion and Analysis, the compensation tables and related narrative disclosure contained in this Proxy Statement.”

Board Recommendation

The Board of Directors recommends that you vote “FOR” approval of the named executive officer compensation as disclosed pursuant to the executive compensation disclosure rules of the SEC, including in the Compensation Discussion and Analysis, the compensation tables and related narrative discussion as contained in this proxy statement. Proxies returned will be so voted unless contrary instructions are indicated thereon.

Vote Required

Approval of Proposal No. 3, on an advisory basis, requires the affirmative vote of a majority of the common shares represented in person or by proxy and entitled to vote on the proposal at the annual meeting of stockholders. Please see the "General Information About the Meeting and Voting" section in this proxy statement for additional information.

PROPOSAL NO. 4 — APPROVAL OF 2018 LONG TERM INCENTIVE COMPENSATION PLAN

Proposal No. 4  — Approval of 2018 Equity Incentive Plan

Board Recommendation

Our stockholders are being asked to approve our 2018 Long Term Incentive Compensation Plan, which is referred to in this description as the 2018 Plan.  The 2018 Plan includes a number of features that our Board of Directors believes are consistent with the interests of our stockholders and sound corporate governance practices, and will provide us with a share reserve that will enable us to continue to provide a competitive mix of compensation to our key employees.

The Board of Directors recommends that you vote “FOR” the 2018 Plan, and proxies returned will be so voted unless contrary instructions are indicated thereon.

Introduction

On March 15, 2018, our Board of Directors, at the recommendation of our Compensation Committee (“Committee”), approved the TETRA Technologies, Inc. 2018 Equity Incentive Plan (“the 2018 Plan”), subject to approval by our stockholders at our 2018 annual meeting.  The number of shares of our common stock that may be the subject of awards and issued under the 2018 Plan is 6,365,000.  The 2018 Plan will become effective on the date it is approved by our stockholders.  In addition, this year we have elected to bifurcate our equity incentive plans and have established, and are seeking stockholder approval of, a stand-alone equity plan for non-employee directors with a share reserve of an additional 335,000 shares (the “Director Plan”) (please see Proposal No. 5 below).  If both the 2018 Plan and the Director Plan are approved by our stockholders, we intend to continue this practice going forward.

We also have grants outstanding under our 2011 Long Term Incentive Compensation Plan (the “Existing Plan”) and our 2007 Long Term Incentive Compensation Plan (the “2007 Plan”) which continue to be governed by the applicable terms and conditions of the respective plan.  The 2007 Plan has expired and no further options or awards may be granted under such plan.  We may also grant inducement equity awards to new employees under our 2018 Inducement Restricted Stock Plan (the “Inducement Plan”), more fully described on page 23.  

If the 2018 Plan is approved by our stockholders, no new awards will be made under the Existing Plan, unless the Director Plan is not approved by stockholders.  If the Director Plan is not approved by stockholders, annual awards to our non-employee directors will continue to be made under the Existing Plan.  Awards outstanding under the Existing Plan and the 2007 Plan as of the date the 2018 Plan becomes effective will continue to be subject to the terms of the applicable plan; however, if those awards subsequently expire, are forfeited, canceled or terminated or are settled in cash, the shares subject to those awards will not become available for awards under the 2018 Plan.

As of the close of business on March 5, 2018, the record date for the Annual Meeting, a total of 9,422,837 shares were subject to outstanding awards under the Existing Plan, of which 3,615,389 shares were subject to outstanding stock options with an average exercise price of $6.91 per share and a weighted average remaining contractual term of 7.43 years, and 1,459,142 shares were subject to unvested restricted stock awards.  As of the same date, 1,577,164 shares were available for future awards under the Existing Plan.  No shares remaining available for future awards under the Existing Plan as of the effective date of the 2018 Plan will  be carried over into the 2018 Plan.  

PROPOSAL NO. 4 — APPROVAL OF 2018 LONG TERM INCENTIVE COMPENSATION PLANCORPORATE GOVERNANCE

As of the close of business on March 5, 2018, a total of 2,309,666 shares were subject to outstanding awards under the 2007 Plan, of which 2,031,529 shares were subject to outstanding stock options with a weighted average exercise price of $10.23 per share and a weighted average remaining contractual term of 3.608 years, and 278,137 shares were subject to unvested restricted stock awards.  The 2007 Plan has expired and no further awards can be made under the 2007 Plan.

As of the close of business on March 5, 2018, a total of 923,505 shares were subject to outstanding awards under the Inducement Plan, all of which were subject to unvested restricted stock awards.  As of the same date, 76,495 shares of restricted stock were available for future awards under the Inducement Plan. 

Stockholder Approval

Stockholder approval of the 2018 Plan is being sought in order to satisfy the stockholder approval requirements of the New York Stock Exchange and Section 422 of the Internal Revenue Code (the “Code”) to enable options granted under the 2018 Plan to qualify as incentive stock options.

If the 2018 Plan is not approved by our stockholders, the Existing Plan will remain in effect, and we will remain subject to the existing share reserve of the Existing Plan.

Factors Considered in Setting Size of Requested Share Reserve

In setting the proposed number of shares reserved and issuable under the 2018 Plan, the Compensation Committee and our Board of Directors considered a number of factors, including the following:

Shares available for grant and outstanding awards

Under the heading “Equity Compensation Plan Information” on page 45, we provide information about the shares of our common stock that may be issued under the Existing Plan as of December 31, 2017, the end of our most recent fiscal year.  To facilitate approval of the 2018 Plan, we are providing updated information as of our record date, March 5, 2018.

As of the close of business on March 5, 2018, there were 126,210,853 shares of our common stock issued and outstanding.  The closing sale price of a share of our common stock on the New York Stock Exchange on that date was $3.83.  The following table summarizes information regarding awards outstanding and shares remaining available for grant under the Existing Plan and the 2007 Plan and under the Inducement Plan, as of the close of business on March 5, 2018:

The Compensation Committee is focused on using equity to compensate executives in a manner that links executive and stockholder interests while focusing on the overall dilutive impact of that equity.  The Compensation Committee balances the need to attract, motivate, and retain the level of executive talent required to execute the business strategy and achieve operational excellence at TETRA with the need to carefully consider and manage the usage of equity and the resulting equity dilution.

PROPOSAL NO. 4 — APPROVAL OF 2018 LONG TERM INCENTIVE COMPENSATION PLAN

Burn Rate

We manage our long-term dilution by limiting the number of shares subject to equity awards that we grant annually.  The “burn rate” calculated below shows the dilution of our outstanding equity awards on our total outstanding shares.  We have calculated the burn rate under our equity compensation program for the past three years, as set forth on the following table:

Estimated duration of shares available for issuance under the 2018 Plan -  Based on the 6,365,000 shares to be reserved under the 2018 Plan and certain assumptions described below, we expect that the share reserve of the 2018 Plan will cover awards for approximately two years.  Our estimation of the duration of the 2018 Plan is based on a number of assumptions including the anticipated amount of annual grants under the 2018 Plan, the rate at which shares will be returned to the 2018 Plan reserve through forfeitures, cancellations and the like, and our future stock price performance.  While the Committee believes that the assumptions utilized are reasonable, future share usage will differ to the extent that actual events differ from our assumptions.

Potential Dilution

The potential dilution from the 6,365,000 share reserve of the 2018 Plan is approximately 5.07% (calculated as the share reserve divided by the fully-diluted shares outstanding as of the Record Date).  Including the 335,000 share reserve under the Director Plan, the potential dilution is approximately 5.34%.  The board has considered this potential dilution level and believes it is within normal range for similarly situated companies.

In addition to overall dilution, in recommending the size of the share reserve under the 2018 Plan, as well as the Director Plan, the Compensation Committee considered annual dilution from our equity incentive plans, as shown on the following table:

Key Compensation Practices

The 2018 Plan includes a number of features that we believe are consistent with the interests of our stockholders and sound corporate governance practices, including the following:

PROPOSAL NO. 4 — APPROVAL OF 2018 LONG TERM INCENTIVE COMPENSATION PLAN

Description of the 2018 Incentive Compensation Plan

The major features of the 2018 Plan are summarized below. The summary is qualified in its entirety by reference to the full text of the 2018 Plan, which is attached to this proxy statement as Appendix A.

Eligible Participants - Employees and consultants of the Company or any subsidiary will be eligible to receive awards under the 2018 Plan.  As of March 5, 2018, there were approximately 2,600 employees of the Company and its subsidiaries and an indeterminate number of consultants who would be eligible to receive awards under the 2018 Plan.

Administration - The 2018 Plan will be administered by the Administrator, which is the Board of Directors or any of its committees that may be administering the plan in accordance with the terms of the plan.  To the extent consistent with applicable law, different committees may administer the 2018 Plan with respect to different groups of service providers.

The Administrator has the authority to determine the fair market value of awards, persons to whom awards will be granted, the timing of awards, the type and number of shares covered by each award, the terms, conditions, performance criteria and restrictions of the awards as well as the manner in which awards are paid and settled. The Administrator may also prescribe, amend, or rescind rules to administer the 2018 Plan, adopt special provisions applicable to certain awards (including awards to foreign employees), interpret the 2018 Plan and any related award agreement, reconcile any inconsistency, correct any defect or supply an omission in the 2018 Plan and any related award agreement, determine in what circumstances an award shall be forfeited, accelerate the vesting or extend the exercise period of an award, otherwise amend the terms of outstanding awards to the extent permitted under the 2018 Plan, and require or permit the deferral of the settlement of an award. Unless an amendment to the terms of an award is necessary to comply with applicable tax laws, if a participant’s rights under an impacted award would be adversely affected by such an amendment, the participant must consent to the amendment.

Except in connection with equity restructurings and other situations in which share adjustments are specifically authorized, the 2018 Plan prohibits the Administrator from repricing any outstanding option or SAR awards without the prior approval of our stockholders. 

Subject to certain limitations set forth in the 2018 Plan, the Administrator may also modify the terms of awards under the 2018 Plan with respect to participants who reside outside of the United States or who are employed by a non-U.S. subsidiary of the Company in order to comply with local legal or regulatory requirements.

Available Shares and Limitations on Awards - A maximum of 6,365,000 shares of our common stock may be the subject of awards and issued under the 2018 Plan, subject to adjustment for changes in our corporate structure or shares, as described below. The shares of common stock issuable under the 2018 Plan may come from our authorized but unissued shares or treasury shares.  The maximum number of shares that may be subject to stock

PROPOSAL NO. 4 — APPROVAL OF 2018 LONG TERM INCENTIVE COMPENSATION PLAN

options or SARs granted to any single participant in any calendar year is 1,000,000 shares.  The maximum number of shares that may be subject to restricted stock awards, restricted stock units, performance shares, performance units and other stock-based awards granted to any single participant in any calendar year is 1,000,000 shares.

Shares of common stock that are issued under the 2018 Plan or that are potentially issuable pursuant to outstanding awards will reduce the 2018 Plan’s share reserve by one share for each share issued or issuable pursuant to an outstanding award.

Any shares of common stock subject to an award under the 2018 Plan that expires, is cancelled or forfeited or is settled or paid in cash will, to the extent of such expiration, cancellation, forfeiture or cash settlement, automatically replenish the 2018 Plan share reserve and become available for future awards.  The following shares shall not again become available for awards or replenish the share reserve: any shares tendered or withheld to pay the exercise price of an option or to satisfy a tax withholding obligation in connection with any award; any shares repurchased by the Company using option exercise proceeds; and, and any shares subject to a stock-settled SAR award that are not issued in connection with the settlement of the SAR award.  Awards that may be settled solely in cash will not reduce the share reserve under the 2018 Plan.

Share Adjustment Provisions – If certain transactions occur that cause the per share value of our common stock to change, such as stock dividends, stock splits, spin-offs, rights offerings or certain recapitalizations (referred to as an “equity restructuring”), the Administrator will equitably adjust (i) the aggregate number and kind of shares or other securities issued or reserved for issuance under the 2018 Plan, (ii) the number and kind of shares or other securities subject to outstanding awards, (iii) the exercise price of outstanding stock options and SAR awards, and (iv) award limitations under the 2018 Plan. Other types of transactions may also impact our common stock, such as a reorganization, merger, consolidation or partial or complete liquidation of our Company.  If there is such a transaction and the Administrator determines that adjustments of the type previously described in connection with the equity restructurings would be appropriate to prevent any dilution or enlargement of benefits under the 2018 Plan, the Administrator may make such adjustments as it deems equitable.

Types of Awards - The 2018 Plan permits us to award stock options, SARs, restricted stock awards, restricted stock units, performance units, performance shares, other stock-based awards, and cash-based awards to eligible recipients. These types of awards are described in more detail below.

The total purchase price of the shares to be purchased upon exercise of an option will be paid in full by the participant (including provision for any applicable tax withholding) in the manner determined by the Administrator and authorized by the award agreement and the 2018 Plan.  Any shares delivered or withheld in payment of an exercise price will be valued at their fair market value on the exercise date and have an aggregate value equal to the purchase price of the shares being purchased.

An option will vest and become exercisable at such time, in such installments, and subject to such conditions as may be determined by the Administrator, and no option may have a term greater than 10 years from its date of grant.  Until shares are issued upon exercise, no dividends or dividend equivalents may be paid or credited with respect to shares subject to an option award.  

The aggregate fair market value of shares of our common stock with respect to which incentive stock options granted to any participant may first become exercisable during any calendar year may not exceed $100,000.  Any incentive stock options that become exercisable in excess of this amount will be treated as

PROPOSAL NO. 4 — APPROVAL OF 2018 LONG TERM INCENTIVE COMPENSATION PLAN

nonqualified stock options.  The maximum number of shares that may be issued upon the exercise of incentive stock option awards under the 2018 Plan is 6,365,000.

Minimum Vesting Periods – Except as described in the following sentence, all awards are subject to a minimum vesting period of one year from the date of grant.  This minimum vesting requirement does not apply: (i) with respect to an acceleration of vesting upon a change in control in accordance with the 2018 Plan or (ii) to awards involving an aggregate number of shares up to 5 percent of the 2018 Plan’s share reserve.  Generally, vesting will be suspended during any unpaid leave of absence.

Transferability of Awards - In general, no right or interest in any award under the 2018 Plan may be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than upon a participant’s death to a beneficiary designated pursuant to the plan or by will or the laws of descent and distribution and may be exercised, during the lifetime of the participant, only by the participant.

Performance Based Awards - The 2018 Plan allows for performance-based awards.  The performance measures specified in the 2018 Plan include the following: net income; cash flow; cash flow on investment; cash flow from operations; pre-tax or post-tax profit levels or earnings; operating income or earnings; closings; return on investment; earned value added; expenses; free cash flow; free cash flow per share; earnings; earnings per share;

PROPOSAL NO. 4 — APPROVAL OF 2018 LONG TERM INCENTIVE COMPENSATION PLAN

net earnings per share; net earnings from continuing operations; sales growth; sales volume; economic profit; expense reduction; return on assets; return on net assets; return on equity; return on capital; return on sales; return on invested capital; organic revenue; growth in managed assets; total stockholder return; stock price; stock price appreciation; EBITDA; adjusted EBITDA; return in excess of cost of capital; profit in excess of cost of capital; capital expended; working capital; net operating profit after tax; operating margin; profit margin; adjusted revenue; revenue; net revenue; operating revenue; cash provided by operating activities; net cash provided by operating activities per share; cash conversion percentage; new sales; net new sales; cancellations; gross margin; gross margin percentage; revenue before deferral; implementation or completion of critical projects; research; horsepower; horsepower utilization rate; product development; government relations; compliance; mergers; acquisitions or sales of assets or subsidiaries; health; safety; environmental; debt level; cost reduction targets; equity ratios; depreciation and amortization; G&A expense or adjusted G&A measures; charge offs; and such other criteria as established by the Committee in its sole discretion from time to time.  

Effect of Termination of Employment -  Unless otherwise set forth in an applicable award agreement, if a participant ceases to be employed by or provide other services to us and our subsidiaries, awards under the 2018 Plan will be treated as set forth in the 2018 Plan.  Unless otherwise set forth in the applicable award agreement, upon termination of a participant for any reason, all unvested and unexercisable portions of any outstanding awards will be immediately forfeited without consideration; however, the participant may exercise the currently vested and exercisable portions of his or her stock option awards within the time period specified in the award agreement.  If the award agreement does not specify the time period within which the currently vested and exercisable portions of such award must be exercised, they shall be exercisable for three months following his or her termination date.  Upon termination due to disability or death, the currently vested and exercisable portions of option awards may be exercised within the time period specified in the award agreement.  If the award agreement does not specify the time period within which the currently vested and exercisable portions of such option must be exercised, they shall be exercisable for twelve months following his or her termination date.

Change in Control - For purposes of the 2018 Plan, a “change in control” generally refers to (i) the acquisition by a person or group of beneficial ownership of 50% or more of the combined voting power of our voting securities, (ii) the sale of all or substantially all of our assets, other than to persons who beneficially own at least 50% of the combined voting power of our voting securities or a spin-off type transaction of such assets to our stockholders, (iii) our incumbent directors ceasing to constitute a majority of our Board during any consecutive 12-month period, or (iv) a merger or consolidation of us with another corporation (unless immediately following such merger or consolidation all or substantially all of our previous holders of voting securities beneficially own more than 50% of the combined voting power of the resulting entity in substantially the same proportions). A “corporate transaction” means a transaction described in either clause (ii) or clause (iv) of the foregoing sentence.

If a change in control of the Company that involves a corporate transaction occurs, then the consequences will be as described below unless otherwise provided in an applicable award agreement or other agreement with a participant. 

If and to the extent outstanding awards are continued, assumed or substituted by a successor entity, and if within 24 months after the date of a change in control a participant’s employment or other service is involuntarily terminated without cause or is terminated by the participant for good reason (as such terms are defined in the 2018 Plan), (i) each of such participant’s outstanding options and SARs will become exercisable in full and remain exercisable for one year,  (ii) each of such participant’s unvested awards other than options and SARs will fully vest, and (iii) to the extent vesting of an award is subject to the satisfaction of specified performance goals, such award will be deemed  fully vested if the performance goals are deemed to have been satisfied at the target level of performance and the vested portion of the award at that level of performance is proportionate to the portion of the performance period elapsed prior to the participant’s termination of employment or other service. If and to the extent any outstanding award is not continued, assumed or replaced in connection with a change in control involving a corporate transaction, then (i) all such outstanding options and SARs will become fully exercisable for a period of time prior to the effective time of the corporate transaction and will then terminate at the effective time of the corporate transaction,  (ii) all such awards other than options and SARs will fully vest immediately prior to the effective time of the corporate transaction, and (iii) to the extent vesting of an award is subject to the satisfaction of specified performance goals, such award will be deemed fully vested in the same manner as described above,

PROPOSAL NO. 4 — APPROVAL OF 2018 LONG TERM INCENTIVE COMPENSATION PLAN

except that the  proportionate vesting amount will be determined with respect to the portion of the performance period that elapsed prior to the time of the corporate transaction. Alternatively, if outstanding awards are not continued, assumed or replaced, the Committee may elect to cancel such awards at or immediately prior to the effective time of the corporate transaction in exchange for a cash payment with respect to each award in an amount equal to the excess, if any, between the fair market value of the shares subject to the award immediately prior to the effective date of such corporate transaction (which may be the fair market value of the consideration that would otherwise be received in the corporate transaction for the same number of shares) over the aggregate exercise price (if any) for the shares subject to such award (or, if there is no excess, such award may be terminated without payment). In the event of a change in control of the Company that does not involve a corporate transaction, the Committee may, in its discretion, take such action as it deems appropriate with respect to outstanding awards, which may include (i) making such adjustments or modifications to the awards then outstanding as the Committee deems appropriate, which may include acceleration of vesting in full or in part, or (ii) providing for the cancellation of any outstanding award in exchange for a payment in an amount determined in the same manner as described in the preceding paragraph. The Committee is not required to treat all awards similarly in a change in control.

Effective Date and Term of the 2018 Plan - The 2018 Plan will become effective on the date it is approved by our stockholders.  Unless terminated earlier, the 2018 Plan will terminate on the tenth anniversary of the effective date.  Awards outstanding under the 2018 Plan at the time it is terminated will continue in accordance with their terms and the terms of the 2018 Plan unless otherwise provided in the applicable award agreements.

Amendment of the Plan - Our Board of Directors may amend the 2018 Plan from time to time, but no amendments to the 2018 Plan will be effective without stockholder approval if such approval is required under applicable laws, regulations, or stock exchange rules.  Our Board of Directors also may suspend or terminate the 2018 Plan at any time. No termination, suspension or amendment of the 2018 Plan may materially impair the rights of any participant under a previously granted award without the consent of the affected participant, except for amendments necessary to comply with applicable laws or stock exchange rules.

Amendment of Awards - The Administrator may amend the terms of any award subject to certain limitations, however, no such amendment may materially impair the rights of any participant under a previously granted award without the consent of the affected participant, except for amendments necessary to comply with applicable tax laws.

Clawback -  Awards are subject to forfeiture or recovery pursuant to any clawback policy we may adopt from time to time, including any clawback policy adopted to comply with applicable laws, including the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

U.S. Federal Income Tax Consequences

The following is a brief summary of certain U.S. federal income tax consequences relating to the transactions described under the 2018 Plan.  This summary does not purport to address all aspects of U.S. federal income taxation and does not describe state, local, or foreign tax consequences.  This discussion is based upon provisions of the Internal Revenue Code of 1986, as amended (the “Code”) and the Treasury Regulations issued thereunder, and judicial and administrative interpretations under the Code and Treasury Regulations, all as in effect as of the date hereof, and all of which are subject to change (possibly on a retroactive basis) or different interpretation.  This information is not applicable to participants who are not subject to U.S. federal income taxation.

Nonqualified Stock Options - A participant receiving a nonqualified stock option that has been issued with an exercise price not less than the fair market value of our common stock on the grant date will not recognize income and we will not be allowed a tax deduction at the time that the nonqualified stock option is granted.  When a participant exercises a nonqualified stock option, the difference between the option price and any higher market value of the stock on the date of exercise will be ordinary income to the participant and will be claimed as a deduction for federal income tax purposes by us.  When a participant disposes of shares acquired by the exercise of the nonqualified stock option, any amount received in excess of the fair market value of the shares on the date of exercise will be treated as short-term or long-term capital gain, depending upon whether the participant held the shares for more than one year following the exercise date of the option.  If the amount received upon subsequent disposition of the shares is less than the fair market value of the shares on the date of exercise, the loss will be

PROPOSAL NO. 4 — APPROVAL OF 2018 LONG TERM INCENTIVE COMPENSATION PLAN

treated as short-term or long-term capital loss, depending upon whether the participant held the shares for more than one year following the exercise date of the option.

Incentive Stock Options - incentive stock options granted under the 2018 Plan are intended to meet the requirements of Section 422 of the Code.  A participant receiving a grant of incentive stock option will not recognize income and the we will not be allowed a deduction at the time the incentive stock option is granted.  When a participant exercises an incentive stock option while employed by the us or our subsidiary, or within the three-month period (one year period following termination due to disability) after termination of employment, no ordinary income will be recognized by the participant at that time (and no tax deduction will be allowed to the us) but the excess of the fair market value of the shares acquired via such exercise over the option price will be taken into account in determining the participant’s alternative minimum taxable income for purposes of the federal alternative minimum tax applicable to individuals.  If the shares acquired upon exercise are not disposed of before (i) two years after the date of grant and (ii) one year after the date of transfer of the shares to the participant (i.e., the statutory holding periods for incentive stock options), the excess of the sale proceeds over the aggregate exercise price of such shares will be long-term capital gain, and we will not be entitled to any federal income tax deduction.  Except in the event of death, if the shares are disposed of prior to the expiration of the statutory holding periods for incentive stock options (referred to as a “Disqualifying Disposition”), the excess of the fair market value of such shares at the time of exercise over the aggregate exercise price (but not more than the gain on the disposition if the disposition is a transaction on which a loss, if sustained, would be recognized) will be ordinary income at the time of such Disqualifying Disposition (and we will be entitled to a federal income tax deduction in a like amount), and the balance of the gain, if any, will be capital gain (short-term or long-term depending upon whether the participant held the shares for more than one year following the exercise date of the incentive stock option).  To the extent that the aggregate fair market value of stock (determined on the date of grant) with respect to which incentive stock options become exercisable for the first time during any calendar year exceeds $100,000, such excess options will be treated as nonqualified stock options.

Special rule if option price is paid for in common stock.  If a participant pays the exercise price of a nonqualified stock option or incentive stock option with previously-owned common stock of ours and the transaction is not a Disqualifying Disposition, the shares received equal to the number of shares surrendered are treated as having been received in a tax-free exchange.  The shares received in excess of the number surrendered will not be taxable income if an incentive stock option is being exercised, but will be taxable as ordinary income to the extent of their fair market value if a nonqualified stock option is being exercised.  The participant does not recognize income and the Company receives no tax deduction as a result of the tax-free portion of the exchange transaction.  If the use of previously acquired incentive stock option shares to pay the exercise price of another incentive stock option constitutes a Disqualifying Disposition, the tax results described in the preceding paragraph will apply.  The income tax treatment will apply to the shares disposed of, but will not affect the favorable tax treatment of the shares received.

Stock Appreciation Rights and Restricted Stock -A participant receiving a grant of a stock appreciation right or a restricted stock award will not recognize income, and we will not be allowed a deduction at the time such award is granted, unless the participant makes a Section 83(b) election, as described below, with respect to a restricted stock award.  While an award remains unvested or otherwise subject to a substantial risk of forfeiture, a participant will recognize compensation income equal to the amount of any dividends received and we will be allowed a tax deduction in a like amount.  When an award vests or otherwise ceases to be subject to a substantial risk of forfeiture, the excess of the fair market value of the award on the date of vesting or the cessation of the substantial risk of forfeiture over the amount paid, if any, by the participant for the award will be ordinary income to the participant and will be claimed as a tax deduction for federal income tax purposes by us.  Upon disposition of the shares received, the gain or loss recognized by the participant will be treated as capital gain or loss, and the capital gain or loss will be short-term or long-term depending upon whether the participant held the shares for more than one year following the vesting or cessation of the substantial risk of forfeiture.  However, if the participant files a Section 83(b) election with the Internal Revenue Service within 30 days after the date of grant of restricted stock, the participant’s ordinary income, commencement of the holding period, and the tax deduction will be determined as of the date of grant.  In such a case, the amount of ordinary income recognized by such participant and deductible by us will be equal to the excess of the fair market value of the award as of the date of grant over the amount paid, if any, by the participant for the award. If a Section 83(b) election is made and the participant thereafter forfeits such award, no refund or deduction will be allowed for the amount previously included in the participant’s income.

PROPOSAL NO. 4 — APPROVAL OF 2018 LONG TERM INCENTIVE COMPENSATION PLAN

Other Awards-  The current federal income tax consequences of other awards authorized under the 2018 Plan generally follow certain basic patterns. Restricted stock unit awards generally result in income recognition by a participant at the time payment of such an award is made in an amount equal to the amount paid in cash or the then-current fair market value of the shares received, as applicable.  In the case of another stock-based award, a participant will generally recognize ordinary income in an amount equal to any cash received and the fair market value of any common stock received on the date of payment or delivery, provided that the award is either exempt from or complies with applicable requirements under Section 409A of the Code.  In that taxable year, we will receive a federal income tax deduction in an amount equal to the ordinary income amount recognized by the participant.

Parachute Payments - Under the “golden parachute” provisions of Section 280G of the Code, the accelerated vesting of stock options and benefits paid under other incentive awards granted under the 2018 Plan in connection with a change in control of TETRA, as described under Section 280G, may be required to be valued and taken into account in determining whether participants have received compensatory payments, contingent on the change in control, in excess of certain limits under Section 280G.  If these limits are exceeded, a portion of the amounts payable to the participant may be subject to an additional 20% federal tax imposed on the participant and be nondeductible to us.  If a participant’s rights under the 2018 Plan are accelerated as a result of a change of control and the participant is a “disqualified individual” under Section 280G, the then present value of any accelerated rights received by such participant may be included in determining whether the participant received an “excess parachute payment” under Section 280G.

Section 409A of the Code -  Section 409A of the Code applies to certain plans providing deferred compensation to employees, non-employee directors, consultants and other service providers.  Section 409A could potentially apply to certain of the different types of incentive awards available under the 2018 Plan.  Generally, to the extent that the tax deferral of an award granted under the 2018 Plan fails to meet either an exemption from the application of Section 409A, or the requirements for compliance with Section 409A, such award may be subject to taxation and tax penalties under Section 409A.  We intend to structure awards granted under the 2018 Plan and administer the 2018 Plan in a manner that either complies with or is exempt from the requirements of Section 409A.  If any 2018 Plan provision or any outstanding award would result in the imposition of a tax or penalty under Section 409A, we may reform that 2018 Plan provision or award (to the extent permitted by Section 409A) to avoid imposition of the tax or penalty, and no such action taken to comply with Section 409A, or an exemption thereunder, will be deemed to adversely affect the participant’s rights to the award.

Federal Tax Withholding -  Income realized by an employee upon the exercise of a nonqualified stock option or the receipt of shares under another type of award is generally subject to withholding of federal, state, and local income tax, as well as to withholding of the participant’s share of tax under the Federal Insurance Contribution Act.  Because the withholding requirement applies only to employees, a non-employee participant who receives an award under the 2018 Plan is not subject to tax withholding by us.

To satisfy federal income tax withholding requirements, we have the right to require that, as a condition to delivery of any certificate for common stock, the participant remit to us an amount sufficient to satisfy the withholding requirements.  Alternatively, we may withhold a portion of the shares (valued at fair market value) that otherwise would be issued to the participant to satisfy all or part of the withholding tax obligations.  Tax withholding does not represent an increase in the participant’s total income tax obligation since it is fully credited toward the participant’s tax liability for the year.  Additionally, withholding does not affect the participant’s basis in shares of common stock received under the 2018 Plan.

ERISA - The 2018 Plan is not subject to any of the provisions of the Employee Retirement Income Security Act of 1974.  The 2018 Plan is not a qualified plan under Section 401(a) of the Code.

PROPOSAL NO. 4 — APPROVAL OF 2018 LONG TERM INCENTIVE COMPENSATION PLAN

Awards Under the 2018 Plan

The 2018 Plan will not become effective until it is approved by our stockholders and the Administrator has not yet approved any awards under, or subject to, the 2018 Plan. Because all awards under the 2018 Plan are discretionary with the Administrator, neither the number nor types of 2018 Plan awards to be received by or allocated to particular participants or groups of participants is presently determinable. Information regarding awards made under the Existing Plan during fiscal 2017 to our named executive officers is provided under “Grants of Plan-Based Awards” on page 72.

Vote Required

Pursuant to our bylaws, approval of the 2018 Plan requires the affirmative vote of a majority of the common shares represented in person or by proxy and entitled to vote on the proposal at the annual meeting of stockholders. In addition to the vote required by our bylaws described above, under the New York Stock Exchange (“NYSE”) rules, approval of the 2018 Plan requires approval of a majority of votes cast on the proposal.

Please see the "General Information About the Meeting and Voting" section in this proxy statement for additional information.

If the stockholders approve the 2018 Plan, it will be effective as of May 4, 2018. A copy of the 2018 Plan is attached to this proxy statement as Appendix A. The preceding description of the 2018 Plan is not intended to be complete and is qualified by reference to Appendix A, which contains the complete text of the 2018 Plan.

PROPOSAL NO. 5 — APPROVAL OF 2018 NON-EMPLOYEE DIRECTOR EQUITY INCENTIVE PLAN

Proposal No. 5  — Approval of 2018 Non-Employee Director Equity Incentive Plan

Board Recommendation

Our stockholders are being asked to approve our 2018 Non-Employee Director Equity Incentive Plan, which is referred to in this description as the “Director Plan”.  The Director Plan includes a number of features that our Board of Directors believes are consistent with the interests of our stockholders and sound corporate governance practices, and will provide us with a share reserve that will enable us to continue to provide a competitive compensation package to attract and retain qualified individuals to serve as our non-employee directors.

The Board of Directors recommends that you vote “FOR” the Director Plan, and proxies returned will be so voted unless contrary instructions are indicated thereon.

Introduction

The 2011 Long Term Incentive Compensation Plan (the “Existing Plan”) has been used in recent years to provide equity-based compensation to our non-employee directors.  As discussed in Proposal 4 regarding the 2018 Equity Incentive Plan (the “2018 Plan”), we have elected to establish, and seek approval of, a stand-alone equity plan for our non-employee directors.  Accordingly, on March 15, 2018, our Board of Directors, at the recommendation of our Compensation Committee (“Committee”), approved the Director Plan, subject to approval by our stockholders at our 2018 annual meeting.  The Director Plan will become effective on the date it is approved by our stockholders. 

We believe that, because the market for qualified director candidates is highly competitive, our successful performance depends on its ability to offer fair compensation packages to its non-employee directors that are competitive with our peers.  In that regard, the ability to offer equity-based compensation to our non-employee directors, which both aligns the behavior of non-employee directors with stockholder interests and provides a retention tool, is vital to the our future growth and success.  

The proposed Director Plan provides a means of retaining the services of current non-employee directors and attracting qualified persons to serve as non-employee directors in the future.  The equity awards to be granted to non-employee directors will provide significant incentives to them to remain on the Board of Directors and to devote their best efforts to the success of our business and the enhancement of stockholder value in the future.  

The number of shares of our common stock that may be the subject of awards and issued under the Director Plan is 335,000.  If the Director Plan is approved by our stockholders, no new awards to non-employee directors will be made under the Existing Plan.  If our stockholders do not approve the Director Plan, equity-based grants to our non-employee directors will continue to be made under our Existing Plan until the Existing Plan expires or shares available for grants under the Existing Plan are no longer available.

Stockholder Approval

Stockholder approval of the Director Plan is being sought in order to satisfy the stockholder approval requirements of the New York Stock Exchange.

PROPOSAL NO. 5 — APPROVAL OF 2018 NON-EMPLOYEE DIRECTOR EQUITY INCENTIVE PLAN

Factors Considered in Setting Size of Requested Share Reserve

In setting the proposed number of shares reserved and issuable under the Director Plan, the Compensation Committee and our Board of Directors considered many of the same factors discussed in Proposal No. 4 regarding the proposed 2018 Plan, including outstanding awards and the number of shares available for grant under the Existing Plan, the 2007 Long Term Incentive Compensation Plan (the “2007 Plan”) and the 2018 Inducement Restricted Stock Plan (the “Inducement Plan”) as well as the number of shares being requested under the 2018 Plan.  We have also considered the potential dilution from the shares requested under the Director Plan in its own accord and in conjunction with the 2018 Plan.  

Based upon prior equity-based awards to our non-employee directors and certain assumptions regarding our future stock price and the number of directors on our Board of Directors, we believe that the requested share reserve for the Director Plan will cover awards for approximately two years.

Key Compensation Practices

The Director Plan includes a number of features that we believe are consistent with the interests of our stockholders and sound corporate governance practices, including the following:

Description of the 2018 Director Plan

The major features of the Director Plan are summarized below. The summary is qualified in its entirety by reference to the full text of the Director Plan, which is attached to this proxy statement as Appendix A.

Eligible Participants – Only our non-employee directors will be eligible to receive awards under the Director Plan.  As of March 5, 2018, there were 8 non-employee directors on the Board of Directors.  After the Annual Meeting, there will be 6 non-employee directors.

Administration - The Director Plan will be administered by the Administrator, which is the Board of Directors or a committee thereof that may be administering the plan in accordance with the terms of the plan. 

The Administrator has the authority to determine the fair market value of awards, non-employee directors to whom awards will be granted, the timing of awards, the type and number of shares covered by each award, the terms, conditions, and restrictions of the awards as well as the manner in which awards are paid and settled. The Administrator may also prescribe, amend, or rescind rules to administer the Director Plan,  interpret the Director Plan and any related award agreement, reconcile any inconsistency, correct any defect or supply an omission in the Director Plan and any related award agreement, determine in what circumstances an award shall be forfeited,

PROPOSAL NO. 5 — APPROVAL OF 2018 NON-EMPLOYEE DIRECTOR EQUITY INCENTIVE PLAN

accelerate the vesting or extend the exercise period of an award, otherwise amend the terms of outstanding awards to the extent permitted under the Director Plan, and require or permit the deferral of the settlement of an award. Unless an amendment to the terms of an award is necessary to comply with applicable tax laws, a participant whose rights under an affected award would be materially impaired by such an amendment must consent to the amendment.

Except in connection with equity restructurings and other situations in which share adjustments are specifically authorized, the Director Plan prohibits the Administrator from repricing any outstanding option or SAR awards without the prior approval of our stockholders. 

Available Shares and Limitations on Awards - A maximum of 335,000 shares of our common stock may be the subject of awards and issued under the Director Plan, subject to adjustment for changes in our corporate structure or shares, as described below.  The shares of common stock issuable under the Director Plan may come from authorized but unissued shares or treasury shares.  No outside director may be granted during any calendar year awards having an aggregate Fair Market Value, determined on the date of grant, in excess of $300,000.

Shares of common stock that are issued under the Director Plan or that are potentially issuable pursuant to outstanding awards will reduce the Director Plan’s share reserve by one share for each share issued or issuable pursuant to an award.

Any shares of common stock subject to an award under the Director Plan that expires, is cancelled or forfeited or is settled or paid in cash will, to the extent of such expiration, cancellation, forfeiture or cash settlement, automatically replenish the Director Plan share reserve and become available for future awards.  The following shares shall not again become available for awards or replenish the share reserve: any shares tendered or withheld to pay the exercise price, any shares repurchased by us using option exercise proceeds, and any shares subject to a stock-settled SAR award that are not issued in connection with the settlement of the SAR award.  Awards that may be settled solely in cash will not reduce the share reserve under the Director Plan.

Share Adjustment Provisions – If certain transactions occur that cause the per share value of our common stock to change, such as stock dividends, stock splits, spin-offs, rights offerings or certain recapitalizations (referred to as “equity restructurings”), the Administrator will equitably adjust (i) the aggregate number and kind of shares or other securities issued or reserved for issuance under the Director Plan, (ii) the number and kind of shares or other securities subject to outstanding awards, (iii) the exercise price of outstanding stock options and SAR awards and (iv) award limitations prescribed by the Director Plan.  Other types of transactions may also affect our common stock, such as a reorganization, merger, consolidation or partial or complete liquidation of TETRA.  If there is such a transaction and the Administrator determines that adjustments of the type previously described in connection with the equity restructurings would be appropriate to prevent any dilution or enlargement of benefits under the Director Plan, the Administrator may make such adjustments as it deems equitable.

Types of Awards - The Director Plan permits us to award stock options, SARs, restricted stock awards, restricted stock units, other stock-based awards, and cash-based awards to our non-employee directors. These types of awards are described in more detail below.

The total purchase price of the shares to be purchased upon exercise of an option will be paid in full by the participant (including provision for any applicable tax withholding) in the manner determined by the Administrator and authorized by the award agreement and the Director Plan.  Any shares delivered in

PROPOSAL NO. 5 — APPROVAL OF 2018 NON-EMPLOYEE DIRECTOR EQUITY INCENTIVE PLAN

payment of an exercise price will be valued at their fair market value on the exercise date and have an aggregate value equal to the purchase price of the shares being purchased.

An option will vest and become exercisable at such time, in such installments and subject to such conditions as may be determined by the Administrator, and no option may have a term greater than 10 years from its date of grant.  Until shares are issued upon exercise, no dividends or dividend equivalents may be paid or credited with respect to shares subject to an option award.  

Transferability of Awards - In general, no right or interest in any award under the Director Plan may be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than upon a participant’s death to a beneficiary designated pursuant to the plan or by will or the laws of descent and distribution and may be exercised, during the lifetime of the participant, only by the participant.

Effect of Termination of Service -  Unless otherwise set forth in an applicable award agreement, if a participant ceases to be a non-employee director, awards under the Director Plan will be treated as set forth in the Director Plan.  Unless otherwise set forth in the applicable award agreement, upon ceasing to be a non-employee director

PROPOSAL NO. 5 — APPROVAL OF 2018 NON-EMPLOYEE DIRECTOR EQUITY INCENTIVE PLAN

for any reason, all unvested and unexercisable portions of any outstanding awards will be immediately forfeited without consideration; however, the participant may exercise the currently vested and exercisable portions of his or her nonqualified stock option awards within the time period specified in the award agreement.  If the award agreement does not specify the time period within which the currently vested and exercisable portions of such award must be exercised, they shall be exercisable for three months following his or her termination date.  Upon termination due to disability or death, the currently vested and exercisable portions of nonqualified stock option awards may be exercised within the time period specified in the award agreement.  If the award agreement does not specify the time period within which the currently vested and exercisable portions of such award must be exercised, they shall be exercisable for twelve months following his or her termination date.

Change in Control - If a change in control of TETRA occurs, then unless otherwise provided in an applicable award agreement, (i) each of the participant’s outstanding options and SARs will become exercisable in full and remain exercisable for one year, and (ii) each of the participant’s unvested awards other than nonqualified stock options and SAR awards will fully vest. For purposes of the Director Plan, a “change in control” generally refers to (i) the acquisition by a person or group of beneficial ownership of 50% or more of the combined voting power of our voting securities, (ii) the sale of all or substantially all of our assets, other than to persons who beneficially own at least 50% of the combined voting power of our voting securities or a spin-off type transaction of such assets to our stockholders, (iii) our incumbent directors ceasing to constitute a majority of our Board during any consecutive 12-month period, or (iv) a merger or consolidation of us with another corporation (unless immediately following such merger or consolidation all or substantially all of our previous holders of voting securities beneficially own more than 50% of the combined voting power of the resulting entity in substantially the same proportions).

Effective Date and Term of the Director Plan - The Director Plan will become effective on the date it is approved by our stockholders.  Unless terminated earlier, the Director Plan will terminate on the tenth anniversary of the effective date.  Awards outstanding under the Director Plan at the time it is terminated will continue in accordance with their terms and the terms of the Director Plan unless otherwise provided in the applicable award agreements.

Amendment of the Plan - Our Board of Directors may amend the Director Plan from time to time, but no amendments to the Director Plan will be effective without stockholder approval if such approval is required under applicable laws, regulations or stock exchange rules.  Our Board of Directors also may suspend or terminate the Director Plan at any time. No termination, suspension or amendment of the Director Plan may materially impair the rights of any participant under a previously granted award without the consent of the affected participant, except for amendments necessary to comply with applicable laws or stock exchange rules.

Amendment of Awards - The Administrator may amend the terms of any award subject to certain limitations, however, no such amendment may materially impair the rights of any participant under a previously granted award without the consent of the affected participant, except for amendments necessary to comply with applicable tax laws.

Clawback -  Awards are subject to forfeiture or recovery pursuant to any clawback policy we may adopt from time to time, including any clawback policy adopted to comply with applicable laws, including the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

U.S. Federal Income Tax Consequences

The following is a brief summary of certain U.S. federal income tax consequences relating to the transactions described under the Director Plan.  This summary does not purport to address all aspects of U.S. federal income taxation and does not describe state, local, or foreign tax consequences.  This discussion is based upon provisions of the Internal Revenue Code of 1986, as amended (the “Code”) and the Treasury Regulations issued thereunder, and judicial and administrative interpretations under the Code and Treasury Regulations, all as in effect as of the date hereof, and all of which are subject to change (possibly on a retroactive basis) or different interpretation.  This information is not applicable to participants who are not subject to U.S. federal income taxation.

PROPOSAL NO. 5 — APPROVAL OF 2018 NON-EMPLOYEE DIRECTOR EQUITY INCENTIVE PLAN

Nonqualified Stock Options- A participant receiving a nonqualified stock option that has been issued with an exercise price not less than the fair market value of our common stock on the grant date will not recognize income and we will not be allowed a tax deduction at the time that the nonqualified stock option is granted.  When a participant exercises a nonqualified stock option, the difference between the option price and any higher market value of the stock on the date of exercise will be ordinary income to the participant and will be claimed as a deduction for federal income tax purposes by us.  When a participant disposes of shares acquired by the exercise of the nonqualified stock option, any amount received in excess of the fair market value of the shares on the date of exercise will be treated as short-term or long-term capital gain, depending upon whether the participant held the shares for more than one year following the exercise date of the option.  If the amount received upon subsequent disposition of the shares is less than the fair market value of the shares on the date of exercise, the loss will be treated as short-term or long-term capital loss, depending upon whether the participant held the shares for more than one year following the exercise date of the option.

Stock Appreciation Rights and Restricted Stock -A participant receiving a grant of a stock appreciation right or a restricted stock award will not recognize income, and we will not be allowed a deduction at the time such award is granted, unless the participant makes a Section 83(b) election, as described below, with respect to a restricted stock award.  While an award remains unvested or otherwise subject to a substantial risk of forfeiture, a participant will recognize compensation income equal to the amount of any dividends received and us will be allowed a tax deduction in a like amount.  When an award vests or otherwise ceases to be subject to a substantial risk of forfeiture, the excess of the fair market value of the award on the date of vesting or the cessation of the substantial risk of forfeiture over the amount paid, if any, by the participant for the award will be ordinary income to the participant and will be claimed as a tax deduction for federal income tax purposes by us.  Upon disposition of the shares received, the gain or loss recognized by the participant will be treated as capital gain or loss, and the capital gain or loss will be short-term or long-term depending upon whether the participant held the shares for more than one year following the vesting or cessation of the substantial risk of forfeiture.  However, if the participant files a Section 83(b) election with the Internal Revenue Service within 30 days after the date of grant of restricted stock, the participant’s ordinary income, commencement of the holding period. and the tax deduction will be determined as of the date of grant.  In such a case, the amount of ordinary income recognized by such participant and deductible by us will be equal to the excess of the fair market value of the award as of the date of grant over the amount paid, if any, by the participant for the award. If a Section 83(b) election is made and the participant thereafter forfeits such award, no refund or deduction will be allowed for the amount previously included in the participant’s income.

Other Awards -  The current federal income tax consequences of other awards authorized under the Director Plan generally follow certain basic patterns. Restricted stock unit awards generally result in income recognition by a participant at the time payment of such an award is made in an amount equal to the amount paid in cash or the then-current fair market value of the shares received, as applicable.  In the case of another stock-based award, a participant will generally recognize ordinary income in an amount equal to any cash received and the fair market value of any common stock received on the date of payment or delivery, provided that the award is either exempt from or complies with applicable requirements under Section 409A of the Code.  In that taxable year, we will receive a federal income tax deduction in an amount equal to the ordinary income amount recognized by the participant.

Section 409A of the Code - Section 409A of the Code applies to certain plans providing deferred compensation to non-employee directors.  Section 409A could potentially apply to certain of the different types of incentive awards available under the Director Plan.  Generally, to the extent that the tax deferral of an award granted under the Director Plan fails to meet either an exemption from the application of Section 409A, or the requirements for compliance with Section 409A, such award may be subject to taxation and tax penalties under Section 409A.  We intend to structure awards granted under the Director Plan and administer the Director Plan in a manner that either complies with or is exempt from the requirements of Section 409A.  If any Director Plan provision or any outstanding award would result in the imposition of a tax or penalty under Section 409A, we may reform that Director Plan provision or award (to the extent permitted by Section 409A) to avoid imposition of the tax or penalty, and no such action taken to comply with Section 409A, or an exemption thereunder, will be deemed to adversely affect the participant’s rights to the award.

ERISA - The Director Plan is not subject to any of the provisions of the Employee Retirement Income Security Act of 1974.  The Director Plan is not a qualified plan under Section 401(a) of the Code.

PROPOSAL NO. 5 — APPROVAL OF 2018 NON-EMPLOYEE DIRECTOR EQUITY INCENTIVE PLAN

Awards Under the Director Plan

The Director Plan will not become effective until it is approved by our stockholders and the Administrator has not yet approved any awards under, or subject to, the Director Plan. Because all awards under the Director Plan are discretionary with the Administrator, neither the number nor types of Director Plan awards to be received by or allocated to particular participants or groups of participants is presently determinable. Information regarding awards made under the Existing Plans during fiscal 2017 to our non-employee directors is provided under “Director Compensation Table” on page 80.

Vote Required

Pursuant to our bylaws, approval of the 2018 Non-Employee Director Equity Incentive Plan requires the affirmative vote of a majority of the common shares represented in person or by proxy and entitled to vote on the proposal at the annual meeting of stockholders. In addition to the vote required by our bylaws described above, under the New York Stock Exchange (“NYSE”) rules, approval of the 2018 Non-Employee Director Equity Incentive Plan requires approval of a majority of votes cast on the proposal.

Please see the "General Information About the Meeting and Voting" section in this proxy statement for additional information.

If the stockholders approve the Director Plan, it will be effective as of May 4, 2018. A copy of the Director Plan  is attached to this proxy statement as Appendix B. The preceding description of the Director Plan is not intended to be complete and is qualified by reference to Appendix B, which contains the complete text of the Director Plan.

CORPORATE GOVERNANCE

Corporate Governance Guidelines

The Board of Directors has adopted Corporate Governance Guidelines that address applicable NYSE corporate governance listing requirements and various other corporate governance matters. The Board of Directors believes the Corporate Governance Guidelines assist in ensuring that:

Majority Vote Policy

Our Corporate Governance Guidelines provide for a majority vote principle in connection with the election of our directors. This means that in an uncontested election (that is, an election where the number of nominees is not greater than the number of directors to be elected), any nominee who receives a greater number of votes “withheld” from his or her election than votes “for” his or her election must promptly tender his or her resignation to the Chairman of the Board unless such nominee has previously submitted an irrevocable letter of resignation in accordance with our Corporate Governance Guidelines. The Corporate Governance Guidelines also provide that the Board of Directors may require, in order for any incumbent director to become a nominee for further service on the Board of Directors, that such incumbent director submit to the Board of Directors an irrevocable letter of resignation. The irrevocable letter of resignation is conditioned upon, and will not become effective until there has been (i) a failure by that nominee to receive more votes “for” his or her election than votes “withheld” from his or her election in any uncontested election of directors and (ii) acceptance of the resignation by the Board of Directors. In the event a director receives a greater number of votes “withheld” from his or her election than “for” his or her election, the Nominating, Governance and Corporate GovernanceSustainability Committee will make a recommendation to the Board of Directors regarding the action to be taken with respect to the tendered resignation. A director whose resignation is being considered will not participate in any committee or Board of Directors meetings where his or her resignation is being considered. The Board of Directors will consider the Nominating, Governance and Corporate GovernanceSustainability Committee’s recommendation and decide whether to accept the tendered resignation within 90 days following the certification of the stockholder vote, and the Board of Directors will promptly and publicly disclose its decision. Each of the nominees for election to the Board of Directors has submitted an irrevocable letter of resignation in accordance with our Corporate Governance Guidelines.

Corporate Governance Documents

The following governance documents are available in the Corporate Governance section of the Investor Relations area of our website at www.tetratec.com and are also available upon written request addressed to Corporate Secretary, TETRA Technologies, Inc., 24955 Interstate 45 North, The Woodlands, Texas 77380:

CORPORATE GOVERNANCE

If any substantive amendments are made to the Code of Ethics for Senior Financial Officers, the nature of such amendment will be disclosed on our website. In addition, if a waiver from either the Code of Business Conduct or the Code of Ethics for Senior Financial Officers is granted to an executive officer, director, or principal accounting officer, the nature of such waiver will be disclosed on our website.

Director Independence and Transactions Considered in Independence Determinations

Director Independence. The NYSE listing standards and our Corporate Governance Guidelines require our Board of Directors to be comprised of at least a majority of independent directors. Our Board of Directors determines independence in accordance with the listing requirements of the NYSE, taking into consideration such facts and circumstances as it considers relevant. In order to assist the Board of Directors in making its determination of whether directors are independent, each director completed and delivered to us a questionnaire designed to solicit accurate and complete information that may be relevant in making such independence determinations. The Board of Directors, with the assistance of the Nominating, Governance and Corporate GovernanceSustainability Committee, reviewed summaries of responses to such questionnaires and such other information considered relevant with respect to the existence of any relationships between a director and us. All of the directors who serve as members of the Audit Committee, Compensation Committee and the Nominating, Governance and Sustainability Committee are independent as required by the NYSE corporate governance rules. Under these rules, Audit Committee members also satisfy the separate SEC independence requirements, and the Compensation Committee members satisfy the additional NYSE independence requirements.

CORPORATE GOVERNANCE

The Board of Directors has affirmatively determined that the following directors are independent:

Transactions Considered in Independence Determinations.  In making its independence determinations, our Board of Directors considered transactions that occurred between us and entities associated with the independent directors and their immediate family members.

CORPORATE GOVERNANCE

Mr. Sullivan is a director of SM Energy Company and Legacy Reserves GP LLC, and Mr. Winkler is a director of Eclipse Resources. Each of these entitiesCompany.  SM Energy or theirits affiliates is a customer of TETRA orand CSI Compressco, although the revenues received from them areMr. Sullivan’s interest in these transactions was not considered to be material.material and therefore did not impact his independence. In addition, Messrs. Sullivan and Coombs are directors of CSI Compressco GP Inc., the general partner of CSI Compressco, which are subsidiaries of ours. We have an ongoing business relationship with CSI Compressco. We have considered the foregoing and have concluded that these transactions and relationships did not automatically disqualify Messrs. Sullivan Winkler, and Coombs from being considered independent under the rules of the NYSE. Our Board of Directors has also determined that none of Messrs.neither Mr. Sullivan Winkler, ornor Mr. Coombs has a material interest in these transactions, and that each of them is independent.

Based upon histheir ongoing employment with us, the Board of Directors has determined that Mr.Messrs. Murphy and Brightman isare not independent.

Board Leadership Structure; Separation of Positions of Chairman and Chief Executive Officer

As set forth in our Corporate Governance Guidelines, we require the separation of the positions of Chairman of the Board and Chief Executive Officer. Our Board of Directors believes that the separation of these positions strengthens the independence of our Board of Directors and its ability to carry out its roles and responsibilities on behalf of our stockholders. Mr. Brightman, asOur Chief Executive Officer is responsible for setting the strategic direction for TETRA and provides the day-to-day leadership of its operations and performance, while Mr. Sullivan, as Chairman, provides overall leadership to our Board of Directors in its oversight function. As Chairman, Mr. Sullivan serves as the presiding director of executive sessions of the non-management and independent directors.

Board Oversight of TETRA

Our board is responsible for, and committed to, the oversight of the business of TETRA.  In carrying out this responsibility, our board advises senior management, to help drivewhich is, in turn, responsible for the operations of our Company and driving long term value creation for our stockholders.  Our board discusses and receives regular updates on a wide variety of matters affecting TETRA.

TETRA and the primary focus areas are business strategy, risk management, financial reporting and compliance, corporate governance and sustainability, and CEO performance and executive succession planning. In many of these areas, significant responsibilities are delegated to the board’s committees, which are responsible for reporting to the board on their activities and actions. Please refer to “Board Role in Risk Oversight” for additional information on our committees.

CORPORATE GOVERNANCE

Strategy

Business Strategy

Board Role in Risk Oversight

It is our management’s responsibility to manage risks and to bring to the Board of Directors’ attention any aspects of our business or operations that may give rise to a material level of risk.  Our Chief Executive Officer has ultimate responsibility for management of our business, including enterprise level risks and the risk management program and processes, and brings members of management from various business or administrative areas into meetings of the Board of Directors from time to time to make presentations and to provide insight to the board, including insight into areas of potential risk. Such risks include competition risks, industry risks, economic risks, credit and liquidity risks, risks from operations, risks posed by significant litigation and regulatory matters, cyber security risks, risks related to our compensation program, and risks related to acquisitions and dispositions. The Board of Directors, either directly or through its committees, reviews with our management policies, strategic initiatives, and other actions designed to mitigate various types of risk.

CORPORATE GOVERNANCE

Enterprise Risk Management Program. The board’s oversight of risk management is enhanced by the detailed information it receives as a result of our Enterprise Risk Management (“ERM”) program.  Our ERM process is designed to identify potential key risks that may affect TETRA and manage risk within an established level of acceptable risk. The ERM assessment is performed quarterly and involves evaluation of key risk indicators.  During the quarterly ERM assessment, management will review and, to the extent necessary, update or supplement a list of key risks affecting each respective business area along with the corresponding risk mitigation strategies.  As part of the risk monitoring process, management evaluates each risk according to its likelihood of occurrence and, assuming that the development or event at risk was to occur, its most likely impact on our financial condition, operations, industry or reputation. The most significant risk items identified in each quarterly assessment are discussed with the Audit Committee.  In addition, a complete copy of the ERM report is distributed to and discussed by the full board on an annual basis.

The following table summarizes the role of the board and each of its committees in overseeing risk:

CORPORATE GOVERNANCE

Board Role in Risk Oversight

Corporate Responsibility – Health, Safety, Environment and Quality (“HSEQ”)

Our focus on HSEQ, an approach we call “Drive to ZERO”, is more than a priority, it is deeply rooted as one of our core values.  Emphasizing our commitment to Drive to ZERO incidents, in 2016, we reviewed and updated our HSEQ Policy to better align our message with our Dedicated to the CØre values.  Our HSEQ Policy is a concise message stating our commitment to HSEQ and outlining our cornerstone principles essential for our future success.  Our HSEQ policy has been endorsed by our CEO and communicated throughout the company, and to our suppliers and customers.  Below are some examples of the steps we have taken towards upholding these values:

CORPORATE GOVERNANCE

Sustainability Highlights

Our Board of Directors is focused on integrating sustainability into our Company’s long-term strategy.  We are committed to operating in a sustainable manner and being a responsible corporate citizen for the benefit of our customers, investors, employees, the environment and the communities in which we operate.  We focus on environmental stewardship, the health and safety of our workforce, the recruitment, development and retention of our workforce, and community engagement.

CORPORATE GOVERNANCE

Stock OwnershipStock Ownership Guidelines

Our Board of Directors has adopted a policyguidelines with regard to stock ownership for our directors and executive officers. The stock ownership guidelines provided under the policy are intended to align the interests of our directors and executive officers with the interests of our stockholders. Under this policy,the guidelines, our executive officers have historically been required to hold shares of our common stock with a value equal to a multiple, based upon position, of their base salary.  In addition to ownership of our stock, ownership of common units of CSI Compressco by our executive officers and directors counts toward fulfillment ofcount under the ownership requirement.guidelines. For purposes of this guideline:these guidelines: (1) each share of our common stock and each CSI Compressco common unit owned on the date of our Annual Meeting each year shall beis deemed to have a value equal to the greater of (a) the trading price of a share of our common stock or a CSI Compressco LP common unit, as applicable, as of the date the applicable share or common unit was acquired or (b) the trading price of a share of our common stock or a CSI Compressco common unit as of the date of our Annual Meeting.  The policy establishesguidelines establish the following minimum ownership guidelines.ownership:

CORPORATE GOVERNANCE

Board CommitteesCommittees and Meetings

Board Committees.  The Board of Directors assigns responsibilities and delegates authority to its committees, as appropriate, and the committees regularly report on their activities to the full board.  During 2017,2019, the standing committees of the Board of Directors consisted of an Audit Committee, a Compensation Committee, and a Nominating, Governance and Corporate GovernanceSustainability Committee.  Each committee has the authority to engage outside experts, advisors, and legal counsel to assist in its work.

The following table identifies the current committee members.chairs and membership of the board and each standing board committee.  As discussed above, the board has determined that each member of the Audit, Compensation, and Nominating, Governance and Corporate GovernanceSustainability Committees is independent in accordance with NYSE standards.

CORPORATE GOVERNANCE