def14a
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
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Filed by the Registrant þ |
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Filed by a Party other than the Registrant
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Check the appropriate box: |
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o Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2)) |
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þ Definitive Proxy Statement |
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o Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
Basic Energy Services, Inc.
(Name
of Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
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þ No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11. |
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(1) Title of each class of securities to which transaction applies: |
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(2) Aggregate number of securities to which transaction applies: |
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined): |
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(4) Proposed maximum aggregate value of transaction: |
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o Fee paid previously with preliminary materials: |
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o Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing. |
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(1) Amount Previously Paid: |
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(2) Form, Schedule or Registration Statement No.: |
Basic Energy Services,
Inc.
500 W. Illinois, Suite 100
Midland, Texas 79701
NOTICE OF THE 2009
ANNUAL MEETING OF
STOCKHOLDERS
The 2009 Annual Meeting of Stockholders of Basic Energy
Services, Inc. will be held on Tuesday, May 26, 2009, at
10:00 a.m. local time, at the Petroleum Club of Midland,
located at 501 W. Wall, Midland, Texas 79701, for the
following purposes:
1. To elect three Class I directors to serve a
three-year term;
2. To approve the Fourth Amended and Restated Basic Energy
Services, Inc. 2003 Incentive Plan;
3. To ratify the appointment of KPMG LLP as our independent
auditor for fiscal year 2009; and
4. To transact such other business as may properly come
before the meeting, or any adjournment of it.
Stockholders of record at the close of business on
April 23, 2009 are entitled to vote at the meeting or any
adjournment. A list of such stockholders will be available for
examination by a stockholder for any purpose germane to the
meeting during ordinary business hours at our offices at
500 W. Illinois, Suite 100, Midland, Texas 79701
during the ten days prior to the meeting. Stockholders holding
at least a majority of the outstanding shares of our common
stock are required to be present or represented by proxy at the
meeting to constitute a quorum.
Please note that space limitations make it necessary to limit
attendance at the meeting to stockholders, though each
stockholder may be accompanied by one guest. Admission to the
meeting will be on a first-come, first-served basis.
Registration will begin at 9:30 a.m. and seating will begin
at 9:45 a.m. Each stockholder may be asked to present
valid picture identification, such as a drivers license or
passport. Stockholders holding stock in brokerage accounts must
bring a copy of a brokerage statement reflecting stock ownership
as of the record date. Cameras, recording devices and other
electronic devices will not be permitted at the meeting. You may
obtain directions to the Petroleum Club of Midland by calling
(432) 682-2557.
Important Notice Regarding the Availability of Proxy
Materials for the 2009 Annual Meeting of Stockholders to Be Held
on May 26, 2009: This notice, the proxy statement for the
2009 Annual Meeting of the Stockholders and our annual report on
Form 10-K
for the fiscal year ended December 31, 2008 are available
at https://www.proxydocs.com/BAS.
By Order of the Board of Directors,
Alan Krenek,
Secretary
Midland, Texas
April 24, 2009
YOUR VOTE IS IMPORTANT
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE SIGN,
DATE AND RETURN YOUR PROXY AS PROMPTLY AS POSSIBLE. AN ENVELOPE,
WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES, IS
ENCLOSED FOR THIS PURPOSE.
TABLE OF
CONTENTS
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ii
PROXY
STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 26, 2009
GENERAL
This proxy statement is furnished in connection with the
solicitation of proxies by the Board of Directors in connection
with the 2009 Annual Meeting of Stockholders (the 2009
Annual Meeting) of Basic Energy Services, Inc., a
Delaware corporation (the Company), to be
held at the Petroleum Club of Midland, located at
501 W. Wall, Midland, Texas 79701, on Tuesday,
May 26, 2009, at 10:00 a.m. local time. Stockholders
of record at the close of business on April 23, 2009, are
entitled to notice of, and to vote at, the meeting and at any
postponement or adjournment.
When a properly executed proxy is received prior to the meeting,
the shares represented will be voted at the meeting in
accordance with the directions noted on the proxy. A proxy may
be revoked at any time before it is exercised by submitting a
written revocation or a later-dated proxy to the Secretary of
the Company at the mailing address provided below or by
attending the meeting in person and so notifying the inspector
of elections.
Management does not intend to present any business for a vote at
the 2009 Annual Meeting, other than (i) the election of
directors, (ii) approval of the Fourth Amended and Restated
Basic Energy Services, Inc. 2003 Incentive Plan (the
Restated Incentive Plan) and (iii) the
ratification of KPMG LLP as the Companys independent
auditor for fiscal year 2009. Unless stockholders specify
otherwise in their proxy, their shares will be voted FOR the
election of the nominees listed in this proxy statement, FOR the
approval of the Restated Incentive Plan and FOR the ratification
of the independent auditor. If other matters requiring the
vote of stockholders properly come before the meeting, it is the
intention of the persons named in the enclosed proxy card to
vote proxies held by them in accordance with their judgment.
The complete mailing address of the Companys executive
offices is 500 W. Illinois, Suite 100, Midland,
Texas 79701. The approximate date on which this proxy
statement and the accompanying proxy card are first being sent
or given to the stockholders of the Company is April 24,
2009.
VOTING
PROCEDURES
A majority of the outstanding shares of our common stock present
or represented by proxy at the 2009 Annual Meeting will
constitute a quorum for the transaction of business. ADP
Investor Communication Services will tabulate all votes cast, in
person or by submission of a properly executed proxy, before the
closing of the polls at the meeting. The Company will appoint an
inspector of elections at the meeting.
The affirmative vote of holders of a plurality of our common
stock present or represented by proxy at the meeting and
entitled to vote is required for the election of each nominee
for director. Therefore, abstentions and broker non-votes will
not be taken into account in determining the outcome of the
election of directors.
For approval of the Restated Incentive Plan, ratification of the
independent auditor and any other matters presented for a vote
of stockholders, the affirmative vote of holders of a majority
of our common stock present or represented by proxy at the
meeting and entitled to vote is required. Therefore, on any such
matters, abstentions have the effect of a negative vote, and
broker non-votes will not be taken into account.
Stockholders who send in proxies but attend the meeting in
person may vote directly if they prefer and withdraw their
proxies or may allow their proxies to be voted with the similar
proxies sent in by other stockholders.
VOTING
SECURITIES
On April 23, 2009, the record date, there were outstanding
40,682,672 shares of our common stock held of record by
approximately 298 persons. Stockholders are entitled to one
vote, exercisable in person or by proxy, for each share of our
common stock held on the record date. Stockholders do not have
cumulative voting rights.
PROPOSAL 1:
ELECTION
OF DIRECTORS
Board of Directors. The Companys Bylaws
provide for the Board of Directors to serve in three classes
having staggered terms of three years each. Three Class I
directors will be elected at the 2009 Annual Meeting to serve
for a three-year term expiring at the Annual Meeting of
Stockholders in 2012. Pursuant to Delaware law, in the event of
a vacancy on the Board of Directors, a majority of the remaining
directors will be empowered to elect a successor, and the person
so elected will hold office for the remainder of the full term
of the director whose death, retirement, resignation, removal,
disqualification or other cause created the vacancy and
thereafter until the election of a successor director.
Recommendation; Proxies. The Board of
Directors recommends a vote FOR each of the nominees named
below. The persons named in the enclosed proxy card will
vote all shares over which they have discretionary authority FOR
the election of the nominees named below. Although the Board of
Directors of the Company does not anticipate that any of the
nominees will be unable to serve, if such a situation should
arise prior to the meeting, the appointed persons will use their
discretionary authority pursuant to the proxy and vote in
accordance with their best judgment.
Nominees. The following table sets forth
information for each nominee. Each nominee has consented to be
named in this proxy statement and to serve as a director, if
elected.
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Director
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Name
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Principal Occupation
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Sylvester P. Johnson, IV
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Mr. Johnson has served as President and Chief Executive Officer
and a director of Carrizo Oil & Gas, Inc. since December
1993. Prior to that, he worked for Shell Oil Company for
15 years. His managerial positions included Operations
Superintendent, Manager of Planning and Finance and Manager of
Development Engineering. Mr. Johnson is a director of
Pinnacle Gas Resources, Inc. Mr. Johnson is a Registered
Petroleum Engineer and has a B.S. in Mechanical Engineering from
the University of Colorado.
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2001
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Steven A. Webster
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Mr. Webster has served as Co-Managing Partner and President of
Avista Capital Holdings, L.P., a private equity firm focused on
investments in the energy, media and healthcare sectors, since
July 1, 2005. From 2000 until June 30, 2005, Mr. Webster served
as Chairman of Global Energy Partners, a specialty group within
Credit Suisses Alternative Capital Division that made
investments in energy companies. From 1998 to 1999, Mr. Webster
served as Chief Executive Officer and President of R&B
Falcon Corporation, and from 1988 to 1998, Mr. Webster served as
Chairman and Chief Executive Officer of Falcon Drilling Company,
both offshore drilling contractors. Mr. Webster serves as
Chairman of Carrizo Oil & Gas, Inc. and as a director of
SEACOR Holdings Inc., Hercules Offshore, Inc., Camden Property
Trust, Geokinetics, Inc. and various privately held companies.
Mr. Webster was the founder and an original shareholder of
Falcon, a predecessor to Transocean, Inc., and was a co-founder
and original shareholder of Carrizo. Mr. Webster holds a
B.S.I.M. from Purdue University and an M.B.A. from Harvard
Business School.
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2001
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Director
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H. H. Wommack, III
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Mr. Wommack was our founder and our Chairman of the Board from
1992 until January 2001. Mr. Wommack is currently a principal of
and Chief Executive Officer of Sagebrush Oil & Gas, LLC, a
privately held oil and gas company that he founded in August
2008. From May 2004 until July 2008, Mr. Wommack served as Chief
Executive Officer of Saber Resources, LLC, a privately held oil
and gas company that he founded in May 2004. Mr. Wommack served
as Chairman of the Board, President, Chief Executive Officer and
a Director of Southwest Royalties Holdings, Inc. from its
formation in July 1997 until April 2005 and of Southwest
Royalties, Inc. from its formation in 1983 until its sale in May
2004. Prior to the formation of Southwest Royalties,
Mr. Wommack was a self-employed independent oil and gas
producer. Mr. Wommack is currently Chairman of the Board of
Midland Red Oak Realty, a commercial real estate company
involved in investments in the Southwest. He graduated with a
B.A. from the University of North Carolina and a J.D. from the
University of Texas School of Law.
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1992
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Other Directors. The following table sets
forth certain information for the Class II and
Class III directors, whose terms will expire at the Annual
Meetings of Stockholders in 2010 and 2011, respectively.
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Director
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William E. Chiles
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Mr. Chiles has served as the Chief Executive Officer and
President and a director of Bristow Group Inc. (formerly
Offshore Logistics, Inc.), a provider of helicopter
transportation services to the worldwide offshore oil and gas
industry, since July 2004. Mr. Chiles served as Executive Vice
President and Chief Operating Officer of Grey Wolf, Inc. from
March 2003 until June 2004. Mr. Chiles served as Vice
President of Business Development at ENSCO International
Incorporated from August 2002 until March 2003. From August 1997
until its merger into an ENSCO International affiliate in August
2002, Mr. Chiles served as President and Chief Executive Officer
of Chiles Offshore Inc. Mr. Chiles has a B.B.A. in Petroleum
Land Management from the University of Texas and an M.B.A. in
Finance and Accounting with honors from Southern Methodist
University, Dallas.
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2003
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II
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Director
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Robert F. Fulton
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Mr. Fulton has served as President and Chief Executive Officer
of Frontier Drilling ASA, an offshore oil and gas drilling and
production contractor, since September 2002. From December 2001
to August 2002, Mr. Fulton managed personal investments. Prior
to December 2001, Mr. Fulton spent most of his business career
in the energy service and contract drilling industry. He served
as Executive Vice President and Chief Financial Officer of
Merlin Offshore Holdings, Inc. from August 1999 until November
2001. From 1998 to June 1999, Mr. Fulton served as
Executive Vice President of Finance for R&B Falcon
Corporation, during which time he closed the merger of Falcon
Drilling Company with Reading & Bates Corporation to create
R&B Falcon Corporation and then the merger of R&B
Falcon Corporation with Cliffs Drilling Company. He graduated
with a B.S. degree in Accountancy from the University of
Illinois and an M.B.A. in finance from Northwestern University.
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2001
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James S. DAgostino
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Mr. DAgostino serves as Chairman of the Board, President
and Chief Executive Officer of Encore Bancshares, Inc., a
banking, wealth management and insurance services holding
company currently listed on the NASDAQ Global Market, and has
served in such capacities for its subsidiary, Encore Bank, N.A.,
since November 1999. From 1998 to 1999, Mr. DAgostino
served as Vice Chairman and Group Executive, and from 1997 until
1998, he served as President, Member of the Office of Chairman
and a director, of American General Corporation. Mr.
DAgostino graduated with an economics degree from
Villanova University and a J.D. from Seton Hall University
School of Law.
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2004
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III
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Kenneth V. Huseman
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Mr. Huseman has 30 years of well servicing experience. He
has been our President and Chief Executive Officer and a
director since 1999. Prior to joining Basic, he was Chief
Operating Officer at Key Energy Services from 1996 to 1999. He
was a Divisional Vice President at WellTech, Inc., from 1993 to
1996. From 1978 to 1993, he was employed at Pool Energy Services
Co., where he managed operations throughout the United States,
including drilling operations in Alaska. Mr. Huseman graduated
with a B.B.A. degree in Accounting from Texas Tech University.
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1999
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III
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Director
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Thomas P. Moore, Jr.
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Mr. Moore has served as a director of Basic since 2005. Mr.
Moore was a Senior Principal of State Street Global Advisors,
the head of Global Fundamental Strategies, and a member of the
Senior Management Group from 2001 through July 2005. Mr. Moore
retired from this position in July 2005. From 1986 through 2001,
he was a Senior Vice President of State Street Research &
Management Company and was head of the State Street Research
International Equity Team. From 1977 to 1986 he served in
positions of increasing responsibility with Petrolane, Inc.,
including Administrative Vice President (1977-1981), President
of Drilling Tools, Inc., an oilfield equipment rental subsidiary
(1981-1984), and President of Brinkerhoff-Signal, Inc., an oil
well contract drilling subsidiary (1984-1986). Mr. Moore is a
Chartered Financial Analyst and holds an M.B.A. degree from
Harvard Business School.
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2005
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III
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5
BOARD OF
DIRECTORS AND COMMITTEES OF THE BOARD
Board of
Directors
Meetings. During fiscal
2008, the Board of Directors held eight meetings of the full
Board and 18 meetings of committees. The Nominating and
Corporate Governance Committee held four meetings, the
Compensation Committee held seven meetings and the Audit
Committee held seven meetings during fiscal 2008. In addition,
the Companys independent auditors and management meet with
the Audit Committee Chairman prior to the issuance of earnings
press releases, and the other members of the Audit Committee are
invited to attend these meetings. Each director attended at
least 75% of the aggregate of (1) the total number of
meetings of the Board of Directors (held during the period for
which he has been a director) and (2) the total number of
meetings of committees of the Board on which he served (during
the periods that he served). Our non-management directors meet
at regularly scheduled executive sessions presided over by our
Chairman, Mr. Webster. Additionally, our independent
directors meet at least once a year without members of
management or non-independent directors present.
Messrs. Huseman, DAgostino, Webster and Johnson
attended our 2008 annual meeting of stockholders.
Compensation. Directors who
are our employees do not receive a retainer or fees for service
on the Board or any committees. We pay non-employee members of
the Board for their service as directors. For 2008, directors
who were not employees received an annual fee of $35,000. In
addition, the chairman of each committee received the following
annual fees: Audit Committee $15,000; Compensation
Committee $10,000; and Nominating and Corporate
Governance Committee $10,000. Directors who were not
employees received a fee of $2,000 for each Board meeting
attended whether in person or telephonically. For committee
meetings, directors who were not employees received a fee of
$2,000 for each committee meeting attended whether in person or
telephonically. In addition, each non-employee director has
received, upon election to the Board, a stock option to purchase
37,500 shares of our common stock at the market price on
the date of grant, and the option vests ratably over three years.
In 2008, based in part on a review and recommendations by Pearl
Meyer & Partners, our independent compensation
consultants, and our Compensation Committee, and consistent with
compensation for 2007, each non-employee director received an
annual grant of 4,000 shares of restricted stock that vest
ratably over four years. Our Chairman was also granted
additional shares of restricted stock in 2007 and in 2008 that
vested upon issuance as consideration for services in his
capacity as Chairman and in lieu of his annual director fees.
For additional information regarding fees earned for services as
a director effective in 2007 and 2008, see Compensation
Discussion and Analysis Board Process
Compensation of Directors. Directors are reimbursed for
reasonable out-of-pocket expenses incurred in attending meetings
of the Board or committees and for other reasonable expenses
related to the performance of their duties as directors.
Independence. Our Board of
Directors currently consists of eight members, including five
members determined by our Board to be independent
Messrs. DAgostino, Chiles, Johnson, Moore and Wommack.
The Board has determined that Messrs. DAgostino,
Chiles, Johnson, Moore and Wommack are independent as that term
is defined by rules of the New York Stock Exchange and, in the
case of the Audit Committee, rules of the Securities and
Exchange Commission. In determining that each of these directors
is independent, the Board considered that the Company and its
subsidiaries in the ordinary course of business sell products
and services to other companies, including those at which
certain directors serve (or recently served) as executive
officers or directors. In particular, Carrizo Oil &
Gas, Inc., a company for which Mr. Johnson serves as
President and Chief Executive Officer and a director, uses the
services of the Company, but such services represented less than
2% of Carrizos revenues in 2007 and 2008. Affiliates of
Mr. Wommack also have used services of the Company, but
such services also represented less than 2% of such
affiliates revenues. In each case, the transactions and
contributions did not automatically disqualify the directors
from being considered independent under the NYSE rules. The
Board also determined that these transactions were not otherwise
material to the Company or to the other company involved in the
transactions and that none of our directors had a material
interest in the transactions with these companies. Based upon
its review, the Board of Directors has affirmatively determined
that each of these directors are independent and that none of
these independent directors has a material relationship with the
Company.
6
Shareholder and Interested Party Communications
with the Board of Directors. Shareholders and
interested parties may communicate directly with the Board or a
particular director by sending a letter to the attention of the
Board or the particular director(s), as applicable,
c/o Secretary,
Basic Energy Services, Inc., 500 W. Illinois,
Suite 100, Midland, Texas 79701. Shareholder communications
must contain a clear notation on the mailing envelope indicating
that the enclosed letter is a Shareholder-Board
Communication or
Shareholder-Director
Communication. Additionally, if the enclosed letter is
from an interested party, the mailing envelope must contain a
clear notation indicating that it is an Interested
Party-Board Communication or an Interested
Party-Director
Communication, as applicable. All such letters must
identify the author as a shareholder
and/or
interested party and clearly state whether the intended
recipients are all members of the Board, certain specified
individual directors or a group of directors, such as the
non-management directors. The Secretary will make copies of all
such letters and circulate them to the appropriate director or
directors.
Committees
All of the directors on our Audit Committee, Nominating and
Corporate Governance Committee and Compensation Committee are
currently independent in compliance with the requirements of the
Sarbanes Oxley Act of 2002, the NYSE listing standards and SEC
rules and regulations. The following table shows the committees
on which each director serves:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nominating
|
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|
|
|
|
|
|
|
|
and Corporate
|
|
|
|
|
Director
|
|
Audit
|
|
|
Governance
|
|
|
Compensation
|
|
|
Steven A. Webster
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth V. Huseman
|
|
|
|
|
|
|
|
|
|
|
|
|
James S. DAgostino, Jr.
|
|
|
X
|
|
|
|
|
|
|
|
X
|
|
William E. Chiles
|
|
|
X
|
|
|
|
|
|
|
|
X
|
|
Robert F. Fulton
|
|
|
|
|
|
|
|
|
|
|
|
|
Sylvester P. Johnson, IV
|
|
|
|
|
|
|
X
|
|
|
|
|
|
H. H. Wommack, III
|
|
|
|
|
|
|
|
|
|
|
X
|
|
Thomas P. Moore, Jr.
|
|
|
X
|
|
|
|
X
|
|
|
|
|
|
Audit Committee. The
responsibilities of the Audit Committee, composed of
Messrs. Moore (Chairman), DAgostino and Chiles,
include:
|
|
|
|
|
to appoint, engage and terminate our independent auditors;
|
|
|
|
to approve fees paid to our independent auditors for audit and
permissible non-audit services in advance;
|
|
|
|
to evaluate, at least on an annual basis, the qualifications,
independence and performance of our independent auditors;
|
|
|
|
to review and discuss with our independent auditors reports
provided by the independent auditors to the Audit Committee
regarding financial reporting issues;
|
|
|
|
to review and discuss with management and our independent
auditors our quarterly and annual financial statements prior to
our filing of periodic reports;
|
|
|
|
to review our procedures for internal auditing and the adequacy
of our disclosure controls and procedures and internal control
over financial reporting;
|
|
|
|
to establish and maintain procedures for the receipt, retention
and treatment of complaints received by us and concerns of
employees regarding accounting and auditing matters; and
|
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|
|
to evaluate its own performance at least annually and deliver a
report setting forth the results of such evaluation to the Board.
|
To promote the independence of the audit, the Audit Committee
consults separately and jointly with the independent auditors,
the internal auditors and management. The Board of Directors has
determined that
7
Messrs. Moore and DAgostino are audit committee
financial experts. The Board of Directors has adopted a
written charter for the Audit Committee, a copy of which is
available in the Investor Relations Corporate
Governance section of the Companys website
(www.basicenergyservices.com).
|
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|
|
to identify, recruit and evaluate candidates for membership on
the Board and to develop processes for identifying and
evaluating such candidates;
|
|
|
|
to annually present to the Board a list of nominees recommended
for election to the Board at the annual meeting of stockholders,
and to present to the Board, as necessary, nominees to fill any
vacancies that may occur on the Board;
|
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|
|
to adopt a policy regarding the consideration of any director
candidates recommended by our stockholders and the procedures to
be followed by such stockholders in making such recommendations;
|
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|
|
to adopt a process for our stockholders to send communications
to the Board;
|
|
|
|
to evaluate its own performance at least annually and deliver a
report setting forth the results of such evaluation to the Board;
|
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|
|
to oversee our policies and procedures regarding compliance with
applicable laws and regulations relating to the honest and
ethical conduct of our directors, officers and employees;
|
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|
|
to have the sole responsibility for granting any waivers under
our Code of Ethics and Corporate Governance Guidelines; and
|
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|
|
to evaluate annually, based on input from the entire Board, the
performance of the CEO and report the results of such evaluation
to the Compensation Committee of the Board.
|
The Board of Directors has adopted a written charter for the
Nominating and Corporate Governance Committee, a copy of which
is available on the Companys website
(www.basicenergyservices.com).
The Nominating and Corporate Governance Committee has not
established any minimum qualifications for non-employee director
candidates that it recommends for nomination.
The Nominating and Corporate Governance Committee has
established procedures for identifying and evaluating nominees.
First, the Committee considers the Boards needs.
Candidates will first be interviewed by the Committee. If
approved by the Committee, candidates will then be interviewed
by all other members of the Board. The full Board, with such
interested directors recusing themselves as appropriate, will
approve all final nominations after considering the
recommendations of the Committee. The Chairman of the Board,
acting on behalf of the other members of the Board, will extend
the formal invitation to an approved candidate to stand for
election to the Board.
Stockholders may nominate director candidates in accordance with
the Companys Bylaws. To summarize, such nominations must
be made in writing to the Companys Secretary at the
Companys principal executive offices. The recommendation
must set forth certain information about both the nominee and
the nominating stockholder(s). The foregoing is a summary, and
the specific requirements and procedures of the Bylaws,
including timing of proposals, control.
The stockholders notice must set forth as to each nominee
all information relating to the nominee that may be required
under United States securities laws to be disclosed in
solicitations of proxies for the election of directors,
including the written consent of the person being recommended as
a director candidate to being named in the proxy statement as a
nominee and to serving as a director if elected. The
stockholders notice must also set forth as to the
stockholder giving notice and the beneficial owner, if any, on
whose behalf the nomination is made: (i) the name and
address of such stockholder, as they appear on the
Companys books, and of any such beneficial owner,
(ii) the class and number of shares of the Company that are
owned beneficially and of record by such stockholder and any
such beneficial owner, and (iii) whether either such
stockholder or beneficial owner intends to deliver a proxy
statement
8
and form of proxy to holders of a sufficient number of holders
of the Corporations voting shares to elect such nominee or
nominees.
If the information supplied by the stockholder is deficient in
any material aspect or if the foregoing procedures are not
followed, the Board or the chairman of the meeting may determine
that the stockholders nomination should not be brought
before the meeting and that the nominee is ineligible for
election as a director of the Company. The Committee will not
alter the manner in which it evaluates candidates, including the
minimum criteria set forth above, based on whether or not the
candidate was recommended by a stockholder.
Compensation Committee. The
responsibilities of the Compensation Committee, composed of
Messrs. Chiles (Chairman), DAgostino and Wommack,
include:
|
|
|
|
|
to evaluate and develop the compensation policies applicable to
our executive officers and make recommendations to the Board
with respect to the compensation to be paid to our executive
officers;
|
|
|
|
to review, approve and evaluate on an annual basis the corporate
goals and objectives with respect to compensation for our Chief
Executive Officer;
|
|
|
|
to determine and approve our Chief Executive Officers
compensation, including salary, bonus, incentive and equity
compensation;
|
|
|
|
to review and make recommendations regarding the compensation
paid to non-employee directors;
|
|
|
|
to review and make recommendations to the Board with respect to
our incentive compensation plans and to assist the Board with
the administration of such plans; and
|
|
|
|
to evaluate its own performance at least annually and deliver a
report setting forth the results of such evaluation to the Board.
|
The Board of Directors has adopted a written charter for the
Compensation Committee, a copy of which is available on the
Companys website
(www.basicenergyservices.com).
CORPORATE
GOVERNANCE
Corporate
Governance Guidelines and Code of Ethics
The Board of Directors has adopted Corporate Governance
Guidelines, which present a flexible framework within which the
Board, supported by its committees, directs the affairs of the
Company. The Board of Directors has also adopted a Code of
Ethics that applies to the Companys directors and
executive officers, including its Chief Executive Officer and
Chief Financial Officer. The Corporate Governance Guidelines and
Code of Ethics are available in the Investor
Relations Corporate Governance section of the
Companys website
(www.basicenergyservices.com).
If the Company amends or waives the Code of Ethics with respect
to the chief executive officer, principal financial officer or
principal accounting officer, it will post the amendment or
waiver at this location on its website.
9
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of shares of common
stock beneficially owned as of April 23, 2009 by
(1) all persons who beneficially own more than 5% of the
outstanding voting securities of the Company, to the knowledge
of the Companys management, (2) each current
director, (3) each executive officer named in the Summary
Compensation Table and (4) all current directors and
executive officers as a group.
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature
|
|
|
Percent of
|
|
|
|
of Beneficial
|
|
|
Shares
|
|
Name
|
|
Ownership
|
|
|
Outstanding
|
|
|
DLJ Merchant Banking Partners III, L.P. and affiliated funds(1)
|
|
|
18,059,424
|
|
|
|
44.4
|
%
|
FMR LLC(2)
|
|
|
4,000,000
|
|
|
|
9.8
|
%
|
Barclays Global Investors, NA.(3)
|
|
|
2,372,189
|
|
|
|
5.8
|
%
|
Kenneth V. Huseman(4)
|
|
|
882,873
|
|
|
|
2.2
|
%
|
Alan Krenek(5)
|
|
|
182,290
|
|
|
|
*
|
|
Charles W. Swift(6)
|
|
|
193,006
|
|
|
|
*
|
|
T.M. Roe Patterson(7)
|
|
|
63,360
|
|
|
|
*
|
|
James E. Tyner(8)
|
|
|
36,477
|
|
|
|
*
|
|
James F. Newman(9)
|
|
|
28,475
|
|
|
|
*
|
|
Mark D. Rankin(10)
|
|
|
55,881
|
|
|
|
*
|
|
Douglas B. Rogers(11)
|
|
|
25,785
|
|
|
|
*
|
|
Steve J. McCoy(12)
|
|
|
5,488
|
|
|
|
*
|
|
Steven A. Webster(13)(14)
|
|
|
302,750
|
|
|
|
*
|
|
James S. DAgostino, Jr.(13)(15)
|
|
|
84,950
|
|
|
|
*
|
|
William E. Chiles(13)(16)
|
|
|
20,750
|
|
|
|
*
|
|
Robert F. Fulton(13)(17)
|
|
|
100,750
|
|
|
|
*
|
|
Sylvester P. Johnson, IV(13)(17)
|
|
|
100,750
|
|
|
|
*
|
|
Thomas P. Moore, Jr.(13)(18)
|
|
|
105,000
|
|
|
|
*
|
|
H.H. Wommack, III(13)(19)
|
|
|
204,895
|
|
|
|
*
|
|
Directors and Executive Officers as a Group (16 persons)(20)
|
|
|
2,393,480
|
|
|
|
5.7
|
%
|
|
|
|
* |
|
Less than one percent. |
|
(1) |
|
Includes 18,059,424 shares of common stock owned by DLJ
Merchant Banking and its affiliates as follows: DLJ Merchant
Banking Partners III, L.P. (12,650,117 shares); DLJ ESC II,
L.P. (1,493,185 shares); DLJ Offshore Partners III, C.V.
(884,531 shares); DLJ Offshore Partners III-1, C.V.
(228,284 shares); DLJ Offshore Partners III-2, C.V.
(162,622 shares); DLJMB Partners III GmbH &
Co. KG (107,898 shares); DLJMB Funding III, Inc.
(132,220 shares); Millennium Partners II, L.P.
(21,516 shares); MBP III Plan Investors, L.P.
(2,379,051 shares). |
|
|
|
Credit Suisse, a Swiss bank, owns the majority of the voting
stock of Credit Suisse Holdings (USA), a Delaware corporation
which in turn owns all of the voting stock of Credit Suisse
(USA) Inc., a Delaware corporation (CS-USA). The
entities discussed in the above paragraph are merchant banking
funds managed by indirect subsidiaries of CS-USA and form part
of Credit Suisses Alternative Capital Division. The
ultimate parent company of Credit Suisse is Credit Suisse Group
(CSG). CSG disclaims beneficial ownership of the
reported common stock that is beneficially owned by its direct
and indirect subsidiaries. Steven A. Webster served as the
Chairman of Global Energy Partners, a specialty group within
Credit Suisses Alternative Capital Division, from 1999
until June 30, 2005. |
|
|
|
All of the DLJ Merchant Banking entities can be contacted at
Eleven Madison Avenue, New York, New York
10010-3629
except for the three Offshore Partners entities,
which can be contacted at John B. Gosiraweg, 14, Willemstad,
Curacao, Netherlands Antilles. |
|
(2) |
|
Fidelity Management & Research Company
(Fidelity), a wholly-owned subsidiary of FMR LLC, is
the beneficial owner of all 4,000,000 shares as a result of
acting as investment adviser to various investment companies
registered under Section 8 of the Investment Company Act of
1940. The ownership of one |
10
|
|
|
|
|
investment company, Fidelity Low Priced Stock Fund, amounted to
4,000,000 shares of common stock. Edward C. Johnson 3d and
FMR LLC, through its control of Fidelity, and the funds each has
sole power to dispose of the 4,000,000 shares owned by
Fidelity. |
|
|
|
Members of the family of Edward C. Johnson 3d, Chairman of FMR
LLC, are the predominant owners, directly or through trusts, of
Series B voting common shares of FMR LLC, representing 49%
of the voting power of FMR LLC. The Johnson family group and all
other Series B shareholders have entered into a
shareholders voting agreement under which all
Series B voting common shares will be voted in accordance
with the majority vote of Series B voting common shares.
Accordingly, through their ownership of voting common shares and
the execution of the shareholders voting agreement,
members of the Johnson family may be deemed, under the
Investment Company Act of 1940, to form a controlling group with
respect to FMR LLC. Neither FMR LLC nor Edward C. Johnson 3d,
Chairman of FMR LLC, has the sole power to vote or direct the
voting of the shares owned directly by the Fidelity Funds, which
power resides with the Funds Boards of Trustees. Fidelity
carries out the voting of the shares under written guidelines
established by the Funds Boards of Trustees. FMR
LLCs address is 82 Devonshire Street, Boston,
Massachusetts 02109. |
|
(3) |
|
Includes 969,239 shares beneficially owned by Barclays
Global Investors, NA.; 1,387,267 shares beneficially owned
by Barclays Global Fund Advisors; and 15,683 shares
beneficially owned by Barclays Global Investors, Ltd. |
|
(4) |
|
Includes 390,948 shares of restricted stock, a portion of
which are subject to forfeiture and generally vest over the next
four years. Includes 268,200 shares issuable within
60 days upon the exercise of options granted under our 2003
Incentive Plan. Does not include 100,000 shares underlying
options that are not exercisable within 60 days granted
under our 2003 Incentive Plan. Includes 476,415 shares
owned subject to bank pledges. |
|
(5) |
|
Includes 70,840 shares of restricted stock, a portion of
which are subject to forfeiture and generally vest over the next
four years. Includes 111,250 shares issuable within
60 days upon the exercise of options granted under our 2003
Incentive Plan. Does not include 30,000 shares underlying
options that are not exercisable within 60 days granted
under our 2003 Incentive Plan. |
|
(6) |
|
Includes 81,376 shares of restricted stock, a portion of
which are subject to forfeiture and generally vest over the next
four years. Includes 96,750 shares issuable within
60 days upon the exercise of options granted under our 2003
Incentive Plan. Does not include 25,250 shares underlying
options that are not exercisable within 60 days granted
under our 2003 Incentive Plan. |
|
(7) |
|
Includes 48,060 shares of restricted stock, a portion of
which are subject to forfeiture and generally vest over the next
four years. Includes 8,750 shares issuable within
60 days upon the exercise of options granted under our 2003
Incentive Plan. Does not include 11,250 shares underlying
options that are not exercisable within 60 days granted
under our 2003 Incentive Plan. |
|
(8) |
|
Includes 23,477 shares of restricted stock, a portion of
which are subject to forfeiture and generally vest over the next
four years. Includes 12,500 shares issuable within
60 days upon the exercise of options granted under our 2003
Incentive Plan. Does not include 10,000 shares underlying
options that are not exercisable within 60 days granted
under our 2003 Incentive Plan. |
|
(9) |
|
Includes 10,975 shares of restricted stock, a portion of
which are subject to forfeiture and generally vest over the next
four years. |
|
(10) |
|
Includes 15,381 shares of restricted stock, a portion of
which are subject to forfeiture and generally vest over the next
four years. Includes 40,000 shares issuable within
60 days upon the exercise of options granted under our 2003
Incentive Plan. Does not include 10,000 shares underlying
options that are not exercisable within 60 days granted
under our 2003 Incentive Plan. |
|
(11) |
|
Includes 21,585 shares of restricted stock, a portion of
which are subject to forfeiture and generally vest over the next
four years. |
|
(12) |
|
Includes 5,488 shares of restricted stock, a portion of
which are subject to forfeiture and generally vest over the next
four years. |
|
(13) |
|
Includes 12,000 shares of restricted stock, a portion of
which are subject to forfeiture and generally vest over the next
four years. |
11
|
|
|
(14) |
|
Includes 88,750 shares issuable within 60 days upon
the exercise of options granted under our 2003 Incentive Plan.
Does not include 8,750 shares underlying options that are
not exercisable within 60 days granted under our 2003
Incentive Plan. |
|
(15) |
|
Includes 68,750 shares issuable within 60 days upon
the exercise of options granted under our 2003 Incentive Plan.
Does not include 8,750 shares underlying options that are
not exercisable within 60 days granted under our 2003
Incentive Plan. |
|
(16) |
|
Includes 8,750 shares issuable within 60 days upon the
exercise of options granted under our 2003 Incentive Plan. Does
not include 8,750 shares underlying options that are not
exercisable within 60 days granted under our 2003 Incentive
Plan. |
|
(17) |
|
Includes 88,750 shares issuable within 60 days upon
the exercise of options granted under our 2003 Incentive Plan.
Does not include 8,750 shares underlying options that are
not exercisable within 60 days granted under our 2003
Incentive Plan. |
|
(18) |
|
Includes 40,000 shares issuable within 60 days upon
the exercise of options granted under our 2003 Incentive Plan.
Does not include 2,500 shares underlying options that are
not exercisable within 60 days granted under our 2003
Incentive Plan. |
|
(19) |
|
Includes 88,750 shares issuable within 60 days upon
the exercise of options granted under our 2003 Incentive Plan.
Does not include 8,750 shares underlying options that are
not exercisable within 60 days granted under our 2003
Incentive Plan. Also reflects the beneficial ownership of
12,630 shares beneficially owned by Galloway Bend Ltd.
(Galloway Bend). Mr. Wommack and certain of his
immediate family members hold the general partner and limited
partner interests in Galloway Bend. Also reflects the beneficial
ownership of 176 shares beneficially owned by Fortress
Holdings, LLC (Fortress), successor in interest to
Southwest Royalties Holdings, Inc. Mr. Wommack owns
approximately 33% of the outstanding units of, and is a manager
and the President of, Fortress. Mr. Wommack disclaims
beneficial ownership of the shares beneficially owned directly
by Fortress and Galloway Bend, other than to the extent of his
pecuniary interest in such shares. |
|
(20) |
|
Includes an aggregate of 752,130 restricted shares, of which
429,371 remain subject to vesting, and an aggregate of
1,009,950 shares issuable within 60 days upon the
exercise of options granted under our 2003 Incentive Plan. Does
not include 241,500 shares underlying options that are not
exercisable within 60 days granted under our 2003 Incentive
Plan. |
SECURITIES
AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION
PLANS
The following table sets forth information regarding shares of
our common stock authorized for issuance under our equity
compensation plans as of December 31, 2008:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
Securities to be
|
|
|
|
|
|
Securities
|
|
|
|
Issued Upon
|
|
|
Weighted Average
|
|
|
Remaining
|
|
|
|
Exercise of
|
|
|
Exercise Price of
|
|
|
Future
|
|
Plan Category
|
|
Outstanding
|
|
|
Outstanding
|
|
|
Issuance
|
|
|
Equity compensation plans approved by stockholders(1)
|
|
|
1,608,675
|
|
|
$
|
11.11
|
|
|
|
815,675
|
|
Equity compensation plans not approved by stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,608,675
|
|
|
$
|
11.11
|
|
|
|
815,675
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Consists of the Basic Energy Services, Inc. Third Amended and
Restated 2003 Incentive Plan (as amended effective May 12,
2008). |
12
COMPENSATION
DISCUSSION AND ANALYSIS
The following discussion and analysis addresses compensation
with respect to fiscal 2008 for our named executive officers.
|
|
|
|
|
attract, reward and retain individuals of the highest quality in
these key positions;
|
|
|
|
recognize individual performance and the performance of the
Company relative to the performance of other companies of
comparable size, complexity and quality;
|
|
|
|
provide motivation toward, and reward the accomplishment of,
corporate annual objectives;
|
|
|
|
align the executive officers compensation to shareholder
interests; and
|
|
|
|
align the executives incentives with both the short-term
and long-term goals of the Company.
|
We also have the following compensation objectives when setting
the compensation programs for our executive officers:
|
|
|
|
|
provide a significant percentage of long-term equity
compensation that is at-risk based on predetermined performance
criteria;
|
|
|
|
maintain an opportunity for increased equity ownership by the
Companys executives; and
|
|
|
|
set compensation levels that are competitive within the market
in which positions are located.
|
In addition, the Compensation Committee considers the
anticipated tax treatment of the Companys executive
compensation program.
Elements of
Compensation. The executive compensation
program for our named executive officers and other senior
executives included five principal elements that, taken
together, constitute a flexible and balanced method of
establishing total compensation. These elements are:
|
|
|
|
|
base salary;
|
|
|
|
quarterly incentive bonus plan cash awards to certain executive
officers (excluding our CEO and CFO);
|
|
|
|
annual cash incentive bonuses;
|
|
|
|
long-term incentive awards (which during 2008 consisted solely
of restricted stock awards); and
|
|
|
|
beginning in 2008, a performance-based incentive program (the
Three-Year PB Incentive Program) which reflects a
three-year performance period and is based on performance
factors contained in the 2003 Incentive Plan; if the performance
measures are met, the participants will earn their
restricted stock awards, which shares of restricted stock will
then be issued and remain subject to time-based vesting in
one-third increments in each of the subsequent three years.
|
In addition to these principal elements, special 2008 bonuses
were granted by the Committee to executive officers, including
two named executive officers, in connection with work and
sacrifices made related to the proposed Grey Wolf merger. The
compensation program for our named executive officers during the
periods covered under the Summary Compensation Table below
included only very limited additional perquisites not offered to
employees generally.
The Companys executive compensation program is consistent
with the Companys philosophy of tying a significant
portion of each executives compensation to performance
because this aligns the executive officers compensation to
shareholder interests. Under the performance-based Three-Year PB
Incentive Program, executive compensation is based on the
Company achieving pre-established targets relative to its
selected peer group. Similarly, the quarterly incentive bonus
plan ties the compensation of the area, region, and
division-level employees directly to the financial return on
assets employed within their particular operations and ties
corporate-level bonuses
13
to the Companys net income. Annual cash incentive bonuses
and long-term incentive awards also take into account a set of
Company and individual performance metrics used by the
Compensation Committee.
The performance-based awards and discretionary restricted stock
and stock option grants also provide retention benefits because
the executive officers must remain in the employ of the Company
throughout the applicable vesting period to receive the full
benefit, subject to exceptions as applicable under certain
agreements for termination of executives by the Company not for
cause, termination by executives for good reason, the death or
disability of the executives, or, under certain agreements and
with additional limitations, the retirement of the executives.
These time-based awards also provide an opportunity for
increased equity ownership by the executives to further the link
between the executive officers interests, shareholder
interests and the short-term and long-term goals of the Company.
In addition, the Company uses market survey data from comparable
companies to set base salary and total compensation levels that
are competitive within the market.
Selection of Elements to Provide Competitive
Levels of Compensation. The Compensation
Committee generally attempts to provide the Companys
senior executives with a total compensation package that is
competitive and reflective of the performance achieved by the
Company compared to the performance achieved by the
Companys peers. During the periods covered by the Summary
Compensation Table included in this proxy statement, the
Compensation Committee has attempted to weight compensation
generally toward long-term incentives. The Committee has
determined a competitive level of compensation for each
executive based on information drawn from a variety of sources,
including proxy statements of other companies and surveys. The
Company initially engaged Pearl Meyer & Partners
during 2005 to perform an executive compensation review, and the
Compensation Committee has continued to engage them for
compensation consulting since that time.
For the periods from
2006-2008,
the peer groups used by Pearl Meyer & Partners have
been comprised of a combination of the Companys direct
competitors and other energy and energy services companies that
experience similar market forces and are looked at similarly by
the investment community. Compensation norms for the group were
adjusted for comparability of revenue size to the Company, and
data is trended forward based on what Pearl Meyer &
Partners believes is occurring with other companies. These
reviews have been used by the Compensation Committee in
establishing executive base salaries, the range for potential
cash incentive bonuses, and aggregate long-term incentive plan
payouts and equity awards.
During 2008, the Company continued to make equity grant levels
somewhat higher than the median, particularly with respect to
its CEO, as part of its objective to weight compensation
generally toward long-term incentives. With respect to cash
bonuses for 2007 paid in 2008, the total cash paid to officers
was generally determined to be at or slightly above the survey
midpoints for officers other than our CEO, whose total cash was
below the mid-point due to desired equity weighting for his
compensation. For 2008 bonuses paid in 2009 and new salaries and
equity grants made in 2009, Pearl Meyer noted certain wage
freezes being implemented by certain energy companies, and this
information and industry conditions were reflected in decisions
made by the Compensation Committee and the Company in March
2009. While the targeted value of an executives
compensation package may be competitive, its actual value may
exceed or fall below market average levels depending on
performance, as discussed below.
The Company also engaged Pearl Meyer & Partners during
2006 to review the terms of the employment agreements for its
named executive officers and other senior executives, and to
recommend changes to these agreements. New agreements with the
executive officers were entered into effective December 31,
2006. The principal effect of these new agreements was to
streamline severance and non-competition provisions among our
executive officers into three tiers, with our CEO in one tier,
our CFO and Senior Vice President Rig and Truck
Operations in a second tier, and our other Vice Presidents in a
third tier. Severance benefits are discussed below under
Severance Benefits. In November 2008, in
connection with the promotion of Thomas M. Patterson to Senior
Vice President Rig and Truck Operations,
Mr. Pattersons employment agreement was amended to
make his terms consistent with the second tier described above.
Mr. Swift, the prior Senior Vice President Rig
and Truck Operations, remains our current Vice
President Gulf Coast Region.
14
Mix and Allocation of Compensation
Components. As noted above, the salary for
our named executive officers can represent 100% of compensation
in any given year when incentives do not pay out or long-term
awards are not made. However, the general mix of compensation
for individual performance in the annual incentive plans, plus
the net annualized present value of long-term compensation
grants, can range as follows, depending upon the executive. The
following general percentage mix would apply to the typical
approach in establishing the total compensation for the
Companys executives at 2008 performance. It is important
to note that the influences of the timing of awards,
availability of stock, company financial performance and stock
price performance could significantly change the basic mix of
compensation components as a percentage of total compensation:
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For the CEO:
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Base pay = 25% to 30%
Bonus compensation at target = 20% to 30%
Long-term compensation annualized = 40% to 50%
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For the other named executives:
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Base pay = 35% to 45%
Bonus compensation at target = 20% to 25% (excluding special
2008 bonuses)
Long-term compensation annualized = 30% to 45%
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Base Salaries. The
Compensation Committee periodically reviews and establishes
executive base salaries. Generally, base salaries are based on
(1) the scope and complexity of the position held,
(2) market survey data from comparable companies and
(3) the incumbents competency level based on overall
experience and past performance. In February 2008, our
Compensation Committee, based on its review of peer group data
and discussion with its compensation consultant, increased base
salaries for each of our executive officers, including our named
executive officers, for 2008. In March 2009, our Compensation
Committee, based on its review of peer group data and discussion
with its compensation consultant, initially approved base
salaries for each of our named executive officers that remained
the same as their then-current salaries (including
Mr. Swift, whose salary had been previously reduced in
connection with his change in position). Subsequently, in
connection with wage and salary reductions announced throughout
the Company effective March 30, 2009, these salaries were
reduced 10% for our CEO, 7-8% for three of our other named
executive officers and 0% for one named executive officer whose
salary had already been decreased due to a change in position.
Quarterly Incentive Bonus
Plans. The Company has maintained three
individual Quarterly Incentive Bonus Plans for management and
administrative personnel. These plans address
(1) area-level personnel, (2) non-administrative
region- and division-level personnel and
(3) non-administrative corporate-level personnel, except
for the CEO and CFO. The Company also maintained an annual
incentive bonus plan for executive officers. Employees
participating under these plans were eligible for cash bonuses.
Compensation potential and actual compensation received from all
the plans are part of the cash compensation review process.
The purpose of the area, region, and division-level plans is to
tie the compensation of the respective employees directly to the
financial return on assets employed within their particular
operations. During 2008, corporate-level bonuses were tied to
the Companys region and division-level bonuses.
Messrs. Huseman and Krenek have not participated in any of
the Quarterly Incentive Bonus Plans during the periods included
in the Summary Compensation Table in this proxy statement.
Mr. Swift participated in the division-level Quarterly
Incentive Bonus Plan in 2007 and 2008, which payments were
factored into his annual cash bonuses received by him in early
2008 and 2009. Messrs. Patterson and Tyner each
participated in the corporate-level Quarterly Incentive
Bonus Plans in 2007 and 2008, which payments were factored into
annual cash bonuses received by them in early 2008 and 2009.
Annual Cash Bonuses (Non-Equity Incentive Plan
Compensation) and Special Bonuses. The
purpose of annual cash bonuses under our Third Amended and
Restated 2003 Incentive Plan (the 2003 Incentive
Plan) is to provide motivation toward, and reward the
accomplishment of, corporate annual objectives and to provide a
competitive compensation package that will attract, reward and
retain individuals of the highest quality. The annual cash bonus
awards to our named executive officers for 2008 were paid as
non-equity incentive plan compensation based upon the
achievement of corporate performance objectives. The special
2008 bonuses were paid as cash bonus compensation.
15
2008 Annual Cash Bonuses. During 2008,
the Compensation Committee of the Company utilized a set of
metrics, which we refer to as our 2008 annual incentive
compensation plan, for determining aggregate annual bonuses for
our senior executive officers, including each of our named
executive officers, consisting of (including relative weighting):
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earnings per share (25%);
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peer-group prior
3-year
average return on capital employed (25%);
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safety record (based on total reportable incident rates)(10%);
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preventable motor vehicle accident rate (10%);
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revenue growth (10%); and
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personal performance, based on board discretion (20%).
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Target bonus award levels for the Companys executive
officers during 2008 were established by senior management
working with the Compensation Committee. Target levels represent
the award level attainable when the plans are performed fully to
expectations or plan and individual performance is rated
accordingly. Potential annual cash awards for 2008 for our CEO
ranged from zero to 90% of base salary, with a target level of
60%. Potential annual cash awards for 2008 for our Tier II
named executive officers (Messrs. Krenek, Patterson and
Swift) ranged from zero to 75% of base salary, with a target
level of 50%. Potential annual cash awards for 2008 for our
Tier III named executive officer (Mr. Tyner) ranged
from zero to 60% of base salary, with a target level of 40%.
Payments made under our Quarterly Incentive Bonus Plan offset
the annual bonus awards.
The earnings per share factor used by the Compensation Committee
in 2008 included the net cash received by the Company as the
termination fee in connection with the Grey Wolf merger and
excluded the impact of goodwill impairment, for an actual result
of $2.18 compared to a target of $2.23. The actual result for
three-year average ROCE was 21% compared to a 20% target. The
total reportable incident rate and preventable motor vehicle
accident rate were higher than target levels, thus resulting in
lower than target factor allocations. Mr. Huseman received
a target-level annual cash bonus for 2008. Messrs. Krenek,
Patterson Swift and Tyner received annual cash bonuses for 2008
equal to approximately 57%, 55%, 30% and 42% of base salary,
respectively. These annual cash bonuses (reduced by amounts paid
for prior payments under the Quarterly Incentive Bonus Plan, as
applicable) were paid during the first quarter of 2009. Payments
under these metrics were not qualified performance based
compensation within the meaning of Section 162(m) of
the Code.
Special 2008 Bonuses. In addition to
the annual cash bonuses, special bonuses were granted and paid
during 2008 by the Committee to Messrs. Krenek and Tyner in
connection with the terminated Grey Wolf merger. These bonuses
reflected extraordinary time, effort and sacrifices made in
connection with the transaction, which was terminated but
resulted in the payment of a termination fee to the Company.
2008 Equity Awards. In
addition to the annual cash bonus awards discussed above, the
Compensation Committee used the same metrics to determine the
potential value of equity incentive rewards in the form of 2009
performance-based restricted stock or restricted stock, which
targeted a range from zero to 250% for our CEO, zero to 200% for
our CFO and Senior Vice President Rig and Truck
Operations, and zero to 100% for the other named executive
officers. These awards were issued in March 2009 based on 2008
performance.
Equity awards granted in March 2008 were based on metrics used
by the Compensation Committee in 2007 to determine the potential
value of equity incentive rewards in the form of 2008
performance-based restricted stock or restricted stock, which
targeted a range from zero to 250% for our CEO, zero to 200% for
our CFO and Senior Vice President Rig and Truck
Operations, and zero to 100% for other named executive officers.
These awards were issued in March 2008 based on 2007
performance. The set of 2007 metrics used by the Committee were
used as guidelines, generally without employing specific
quantitative targets or thresholds, for determining aggregate
annual bonuses for our senior executive officers, including each
of our named executive officers. Certain factors in 2007,
including the JetStar and Sledge acquisitions, materially
changed the Companys business and caused the
16
Companys initial budget for 2007 and historical metrics
for evaluating executive compensation to no longer be useful or
directly comparable. The metrics used as guidelines consisted of:
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EBITDA return on capital employed (EBITDA/net debt and equity);
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accident record, including both the overall frequency rates and
levels of preventable accidents;
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revenue growth;
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return on equity; and
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individual performance, including extraordinary efforts and
results.
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The Companys annual performance measures for officers for
2008 were recommended by the Chief Executive Officer and used by
the Compensation Committee. The Compensation Committee also
based its determination of CEO compensation and levels of annual
performance measures based on input from its compensation
consultant and, with respect to the CEOs personal
performance, based on additional input from members of the
Nominating and Governance Committee and other board members.
Annual cash bonuses for 2008 were paid to each of our executive
officers during March of 2009. The Compensation Committee
periodically monitors the award target levels and variances to
assure their competitiveness and that they mesh with
compensation strategy for incentives and for total compensation.
During March 2009, the Compensation Committee of the Company
discussed the potential utilization of a new set of metrics for
use in our 2009 annual incentive compensation plan in light of
current industry conditions and matters of specific interest to
the Company. The Committee has not formalized the weighting of
these metrics or approved the targets, but these metrics would
include: (i) revenue; (ii) EBITDA; (iii) earnings
per share (fully diluted); (iv) return on average capital
employed; (v) turnover rate; (vi) safety record (based
on total reportable incident rate); (vii) preventable motor
vehicle accident rate; and (viii) personal performance,
based on board discretion.
2008 and 2009 Long-Term Incentive
Programs. During 2007, the Compensation
Committee engaged Pearl Meyer & Associates to assist
it in designing a new long-term incentive program under the 2003
Incentive Plan, including the development of performance
measures to determine ultimate payouts. After due consideration,
pursuant to its authorization under the 2003 Incentive Plan, the
Compensation Committee approved and implemented in March 2008 a
comprehensive long-term incentive plan, which we refer to as our
2008 Long-Term Incentive Program and discuss further below,
consisting of:
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a performance-based plan looking at a three-year performance
period, which we refer to as our Three-Year PB Incentive
Program, that is based on performance factors contained in the
2003 Incentive Plan; and
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discretionary, time-based restricted stock awards.
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The performance-based Three-Year PB Incentive Program represents
approximately 50% of total potential long-term incentive
compensation, with approximately 50% of our long-term
compensation (including time-based restricted stock grants)
remaining discretionary.
During March 2009, the Compensation Committee and the Board
continued this performance-based Three-Year PB Incentive Program
along with discretionary, time-based restricted stock awards as
part of its 2009 Long-Term Incentive Program, which awards are
also discussed further below.
Long-Term Incentive
Program. The long-term incentive program is
used to focus management attention on Company performance over a
period of time longer than one year in recognition of the
long-term horizons for return on investments and strategic
decisions in the energy services industry. The program is
designed to motivate management to assist the Company in
achieving a high level of long-term performance and serves to
link this portion of executive compensation to long-term
stockholder value. The Compensation Committee generally attempts
to provide the Companys executives, including
Mr. Huseman, with a total compensation package that is
competitive and reflective of the performance achieved by the
Company compared to its peers, and is typically weighted toward
long-term incentives. Aggregate stock or option holdings of the
executive have no bearing on the size of a performance award.
17
The Companys 2003 Incentive Plan, which was adopted by the
board and has been approved by the Companys stockholders
as amended, covers stock awards issued under the Companys
original 2003 Incentive Plan and predecessor equity plan. The
2003 Incentive Plan permits the granting of any or all of the
following types of awards: stock options; restricted stock;
performance awards; phantom shares; other stock based awards;
bonus shares; and cash awards. In fiscal 2006, the Committee
made grants of stock options, which vest ratably over a
four-year period beginning in 2008. In fiscal 2007, the
Committee made a combination of stock option grants and
restricted stock awards, which each vest ratably over a
four-year period beginning in 2009. In fiscal 2008, the
Committee made grants of restricted stock, which vest ratably
over a four-year period beginning in 2010.
All non-employee directors and employees of, or consultants to,
the Company or any of its affiliates are eligible for
participation under the 2003 Incentive Plan. The 2003 Incentive
Plan is administered by the Compensation Committee. The
Compensation Committee directly oversees the plan as it relates
to officers of the Company and oversees the plan in general, its
funding and award components, the type and terms of the awards
to be granted and interprets and administers the 2003 Incentive
Plan for all participants. No awards may be granted under the
2003 Incentive Plan after April 12, 2014.
Options granted pursuant to the 2003 Incentive Plan may be
either incentive options qualifying for beneficial tax treatment
for the recipient as incentive stock options under
Section 422 of the Code or non-qualified options. No person
may be issued incentive stock options that first become
exercisable in any calendar year with respect to shares having
an aggregate fair market value, at the date of grant, in excess
of $100,000. No incentive stock option may be granted to a
person if at the time such option is granted the person owns
stock representing more than 10% of the total combined voting
power of all classes of the Companys stock or any of it
subsidiaries as defined in Section 424 of the Code, unless
at the time incentive stock options are granted the purchase
price for the option shares is at least 110% of the fair market
value of the option shares on the date of grant and the
incentive stock options are not exercisable after five years
from the date of grant.
The 2003 Incentive Plan permits the payment of qualified
performance based compensation within the meaning of
Section 162(m) of the Code, which generally limits the
deduction that the Company may take for compensation paid in
excess of $1,000,000 to certain of the Companys
covered officers in any one calendar year unless the
compensation is qualified performance based
compensation within the meaning of Section 162(m) of
the Code. Prior stockholder approval of the 2003 Incentive Plan
(assuming no further material modifications of the plan) will
satisfy the stockholder approval requirements of
Section 162(m) for the transition period beginning with the
Companys initial public offering in December 2005 and
ending not later than the Companys annual meeting of
stockholders in 2009. While the Compensation Committee reserves
the right to grant ad hoc or special awards at any time that are
subject to the limits of deductibility, the main awards under
the plan are administered consistent with the requirements of
162(m) for performance based compensation.
Three-Year PB Incentive
Program. Under the Three-Year PB Incentive
Program initially implemented during March 2008 and continued
during March 2009, the executive officers and certain middle
management personnel (total of 17 participants for 2008 awards
and a total of 19 participants for 2009 awards) may earn
restricted stock at the end of a one-year period, based on the
Companys performance over a three-year period. The
performance measures are based on the Company achieving
pre-established targets relative to its selected peer group (the
PB Peer Group) based on the following
factors/metrics:
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earnings per share (EPS) growth (50% of
performance-based awards), subject to forfeiture or a negative
adjustment of 100% if the Company either (i) has EPS growth
less than the worst performing PB Peer Group member or
(ii) incurs a net loss based on the Companys average
EPS for the three-year period; and
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return on capital employed (ROCE) (50% of
performance-based awards), subject to forfeiture or a negative
adjustment of 100% if (i) the Companys ROCE for the
three-year period is equal to or less than the worst performing
PB Peer Group member and (ii) the Companys ROCE is
less than 75% of the next lowest PB Peer Group member.
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If the performance measures are met, the plan participants will
earn their restricted stock awards, which will then
remain subject to time-based vesting in one-third increments in
each of the subsequent three years. The
18
combination of the performance period and the vesting schedule
results in the awards being realized by the executive over a
period of 4 years from the initial award date.
Achievement of the maximum goals will require superior
performance of the executives and the Company relative to the
Companys peer group, and the relative difficulty of
achieving this performance may be affected by certain risk
factors outside the control of the Company and the executives,
including risk factors disclosed in the Companys
Form 10-K
and other periodic filings.
Target award levels for 2008 and in 2009 were set for each
participant based on a multiple of the recommended annual base
salary of each executive officer. In determining the number of
restricted shares to award, the Compensation Committee used a
$10 price applicable on the date the proposed grant schedule was
prepared, compared to a lower price on the date of the
Committees March 11, 2008 meeting at which the awards
were actually approved. In determining the number of shares of
restricted stock to award, the Committee used this same price.
For awards in each of 2008 and 2009, the PB Peer Group consisted
of each of the following companies: (1) Pioneer Drilling
Co.; (2) Bronco Drilling Company, Inc.; (3) Tetra
Technologies, Inc.; (4) Oil States International, Inc.;
(5) Union Drilling, Inc.; (6) Superior Well Services,
Inc.; (7) Complete Production Services, Inc.;
(8) Allis-Chalmers Energy, Inc. (which also represents the
substitute for W-H Energy Services, Inc. as set forth in the
2008 Award Agreement in accordance with its terms due to the
merger of W-H Energy Services during 2008); (9) Superior
Energy Services, Inc.; and (10) Key Energy Services, Inc.
In general terms, if we rank first among our applicable peer
group for both the EPS growth and ROCE measures, our executive
officers will earn all of their restricted shares, equal to 150%
of the target shares, in each case subject to further time-based
vesting. In the event our performance is between the minimum
(resulting in forfeiture) and maximum limits, our executive
officers may earn a percentage of restricted shares between
50-100%.
The total maximum number of shares for all participants for the
Three-Year PB Incentive Program awards granted in March 2008
(150% of target) was 152,250 shares, which earned shares
would then remain subject to time-based vesting over a
three-year period. Of these shares, 84,750 was the maximum
number of shares which may be earned by the named executive
officers if the Company ranks as the highest in its PB Peer
Group for both the EPS growth and ROCE performance measures.
Based on peer performance data and the Companys actual
performance for the year, the Committee determined in March 2009
that an aggregate of 56,500 shares (100% of target) were
actually earned by the named executive officers under these 2008
awards.
19
The following LTIP payout grid shows the actual effect of
2006-2008
and the percentage earned based on our ranking within the PB
Peer Group (including ourselves):
LTIP
Payout Grids Percentage of Equity Compensation
that may be Retained Based on Relative EPS growth/ROCE
Ranking
Peer EPS Change
Peer ROCE Performance
The total maximum number of shares for all participants for the
Three-Year PB Incentive Program awards granted in March 2009
(150% of target) was 397,500 shares, which earned shares
will then remain subject to time-based vesting in increments
over a three-year period. Of these shares, 230,250 is the
maximum number of shares which may be earned by the named
executive officers if the Company ranks as the highest in its PB
Peer Group for both the EPS growth and ROCE performance
measures. Annual awards earned are not determinable by the
Committee until peer performance data is available. When
available, the data will be compiled and compared to the
Companys EPS growth and ROCE performance measures in light
of the Companys actual performance for the year.
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The 2008 and 2009 awards under the Three-Year PB Incentive
Program, including performance-based awards, do not comply with
the provisions of Internal Revenue Code Section 162(m) due
to the use of performance periods prior to the grant date.
Similar to the Quarterly Incentive Bonus Plan, the Three-Year PB
Incentive Program is consistent with the Companys
philosophy of tying a significant portion of each
executives compensation to performance because this aligns
the executive officers compensation to shareholder
interests. This program differs from the Quarterly Incentive
Bonus Plan in that it also provides retention benefits, because
the executive officers must remain in the employ of the Company
for four years from the grant date (including three years of
vesting after shares are earned) to receive the full
benefit, subject to exceptions for termination of executives not
for cause, termination for good reason, termination due to death
or disability and termination due to change in control.
Discretionary Restricted Stock
Grants. The Committee has used traditional
discretionary grants of restricted stock to supplement the
Three-Year PB Incentive Program for approximately 50% of total
potential awards. Because any awards of restricted stock earned
under the Three-Year PB Incentive Program will not begin to vest
until the second year after the date of grant of the restricted
stock in order to provide continued long-term incentives that
are competitive, the Committee determined in March 2008 to make
a special grant of restricted stock to the executive officers,
which grant is consistent with the equity awards to comparable
positions at our peer companies. These time-based awards also
provide an opportunity for increased equity ownership by the
executives to further the link between the creation of
shareholder value and long term incentive compensation. This
restricted stock grant will vest in four equal portions
beginning two years from the date of the grant.
All restricted stock earned under the Three-Year PB Incentive
Program and the special non-performance based restricted stock
grant, as is the case with the earlier grants of restricted
stock and stock options, will be forfeited if they are not
vested prior to the date the executive officer terminates his
employment, except in the cases of termination of executives not
for cause, termination for good reason, termination due to death
or disability and termination due to change in control.
Compensation for our Named Executive
Officers. The 2008 and current 2009 salaries
of our named executive officers, including our CEO, were
established by the entire Board of Directors at the
recommendation of the Compensation Committee. The basis for
selecting the severance benefits of each of the named executive
officers, including our CEO, as of December 31, 2008 is
discussed below under Severance Benefits.
CEO Compensation. A separate
process of evaluating Mr. Huseman was conducted for
purposes of determining his 2008 annual bonus paid during March
2009. Specifically, the Committees considerations
included: (1) earnings per share; (2) three-year
average return on capital employed compared to our peer group;
(3) our safety record based on total reportable incident
rates; (4) our preventable motor vehicle accident rate;
(5) our revenue growth; and
(6) Mr. Husemans personal performance, including
Mr. Husemans individual goals for fiscal 2008. Based
on these considerations, Mr. Huseman was granted an annual
cash bonus for 2008 performance of $330,000, equal to
approximately 60% of his base salary in effect on
December 31, 2008, which bonus was paid during the first
quarter of 2009.
Compensation of Other Named Executive
Officers. The Committee reviewed the
recommendations of the CEO regarding 2008 bonuses and awards.
The Committees considerations included the same general
Company performance-based factors as well as the individual
performance of each of the officers. The annual cash bonuses
paid to each of the other named executive officers for 2008
performance was equal to between approximately 30% to 57% of his
base salary in effect on December 31, 2008.
During 2008 and continuing into 2009, the Compensation Committee
has elected to use restricted stock awards as the primary
component of long-term compensation for our executive officers.
The rationale behind this shift to use restricted stock awards
is that we believe that restricted stock awards provide stronger
retention benefits than stock options, especially in slower
economic markets. Also, we believe that restricted stock awards
more closely align the interests of management with the
interests of our other shareholders. Finally, we undertake to
provide a compensation package to our executive officers that is
competitive with our peers, and the use of restricted stock as
long-term incentive compensation has increased among our peer
group compared to prior years.
21
In 2008, the Committee approved and implemented the 2008
Long-Term Incentive Program consisting of the Three-Year PB
Incentive Program and discretionary, time-based restricted stock
awards. The rationale behind this was to create a program
consistent with the Companys philosophy of tying a
significant portion of each executives compensation to
performance because this aligns the executive officers
compensation to shareholder interests, while maintaining an
opportunity for increased equity ownership by the executives to
further the link between the creation of shareholder value and
long term incentive compensation.
In 2009, the Committee approved and implemented its 2009
Long-Term Incentive Program consisting of substantially the same
Three-Year PB Incentive Program and discretionary, time-based
restricted stock awards for the same rationale.
Perquisites. The Company
provides limited perquisites to its senior executives.
Perquisites may include vehicle allowances, club memberships and
long-term disability insurance. During 2008, those perquisites
were provided to senior management based on individual
employment agreements. Each category of perquisites and amounts
are set forth in the footnotes to the Summary Compensation Table
below under Executive Compensation Matters.
Severance Benefits. We
entered into amended and restated employment agreements with
each of our named executive officers as of December 31,
2006. In addition, in November 2008, in connection with the
promotion of officers into new positions, new agreements were
entered into with Charles W. Swift, our Senior Vice
President Operations Support (now currently our Vice
President Gulf Coast Region, who executed an amended
and restated agreement in March 2009 containing the lower
Tier III severance terms as set forth below), and Thomas
Monroe Patterson, our Senior Vice President Rig and
Truck Operations. Pursuant to these agreements, each of the
named executive officers are entitled to severance payments in
the event the officer is terminated at any time by us without
Cause as defined in the agreements or by the officer
for Good Reason. In addition, each of the named
executive officers is entitled to severance payments in the
event of a
change-in-control
if the officers employment is terminated for certain
reasons within the six months preceding or the twelve months
following a change in control of our company.
The severance payments outside a
change-in-control
are based on a multiple (for Mr. Huseman 3.0
times; for Messrs. Krenek and Patterson 1.5
times; and for Mr. Tyner and (currently)
Mr. Swift 0.75 times) of the sum of the
officers base salary plus his current annual incentive
target bonus for the full year in which the termination of
employment occurred.
The severance payments associated with a
change-in-control
are based on a multiple (for Mr. Huseman 3.0
times; for Messrs. Krenek and Patterson 2.0
times; and for Mr. Tyner and (currently)
Mr. Swift 1.0 times) of the sum of the
officers base salary plus the higher of (i) his
current annual incentive target bonus for the full year in which
the termination of employment occurred or (ii) the highest
annual incentive bonus received by him for any of the last three
fiscal years. Mr. Husemans current agreement reduced
his previous enhanced
change-in-control
benefit level that was agreed upon while the Company was a
private, controlled company prior to its initial public offering.
The officers employment agreements were initially
effective through December 31, 2008 (other than those of
Messrs. Huseman, Swift and Patterson, whose remain
effective through December 31, 2009) and automatically
renew for subsequent one year periods unless notice of
termination is properly given by us or the officer. In the event
that the employment agreement of Messrs. Huseman, Krenek,
Swift or Patterson is not renewed by us and a new employment
agreement has not been entered into, the officer will be
entitled to the same severance benefits described above. We
believe this severance requirement is reasonable and not
uncommon for persons in the offices and rendering the level of
services performed by these individuals.
We selected higher multiples for terminations associated with a
change-in-control
to provide additional reasonable protections and benefits to the
officers in such event, while basing these
change-in-control
termination payments on a double trigger requiring
additional reasons such as Good Reason or the officer being
terminated without Cause. We believe that providing higher
multiples for
change-in-control
terminations for up to a one-year period after a change in
control will provide for their commitment to the Company or its
potential acquirer through a
change-in-control
event providing a continuity of leadership and preserving the
shareholders interests before and after a transaction.
22
The employment agreements for Messrs. Huseman, Krenek,
Swift and Patterson also provide for gross up payments to the
extent Section 280G of the Internal Revenue Code would
apply to such payments as excess parachute payments.
The employment agreement for the other named executive officer
does not contain these provisions.
For information regarding the
change-in-control
benefits to our chief executive officer based on a hypothetical
termination date of December 31, 2008, see Executive
Compensation Matters Potential Payments upon
Termination or
Change-in-Control.
Board Process. The
Compensation Committee of the Board of Directors reviews all
compensation and awards to executive officers. The Compensation
Committee on its own, based on input from the Nominating and
Governance Committee and discussions with other persons and
advisors as it deems appropriate, reviews the performance and
compensation of the CEO and approves his level of compensation.
For the other executive officers, the Compensation Committee
receives recommendations from the CEO. These recommendations are
generally approved with minor adjustments. The Compensation
Committee grants options and restricted stock, generally based
on recommendations from the CEO, pursuant to its authority under
the Compensation Committee Charter and the Companys 2003
Incentive Plan.
Compensation of
Directors. The Compensation Committee is also
responsible for determining the annual retainer, meeting fees,
stock options and other benefits for members of the Board of
Directors. The Compensation Committees objective with
respect to director compensation is to provide compensation
incentives that attract and retain individuals of outstanding
ability.
Directors who are Company employees do not receive a retainer or
fees for service on the board or any committees. The Company
pays non-employee members of the board for their service as
directors. Directors who are not employees received in 2008 and
continue to receive as of March 2009:
|
|
|
Annual director fee: |
|
$35,000 |
|
Committee Chairmen annual fees: |
|
|
|
Audit Committee |
|
$15,000 |
|
Compensation Committee |
|
$10,000 |
|
Nominating and Corporate Governance Committee
|
|
$10,000 |
|
Attendance fees (per meeting): |
|
|
|
Board |
|
$2,000 (whether in person or telephonic) |
|
Committee |
|
$2,000 (whether in person or telephonic) |
|
Equity-based compensation: |
|
|
|
Upon election |
|
37,500 shares of the Companys common stock at the
market price on the date of grant that vest ratably over three
years. This prior policy remains subject to change whenever
applicable for future directors based on the stock price at such
time. |
|
Annual awards |
|
In March 2008, each non-employee director was granted
4,000 shares of restricted stock that vest ratably in four
increments of 1,000 shares on March 15, 2010, 2011,
2012 and 2013. In March 2009, each non-employee director was
granted 4,000 shares of restricted stock that vest ratably
in four increments of 1,000 shares on March 15, 2011,
2012, 2013 and 2014. Our Chairman was also granted an additional
4,000 shares of restricted stock in each of March 2008 and
2009 that was vested upon issuance as consideration for services
in his capacity as Chairman and in lieu of the 2008 and 2009
annual director fees, respectively. |
23
Directors are also reimbursed for reasonable out-of-pocket
expenses incurred in attending meetings of the board or
committees and for other reasonable expenses related to the
performance of their duties as directors. Director compensation
currently in effect for 2009 was based in part on a review and
recommendations by Pearl Meyer & Partners.
Compensation
Committee Report
The Compensation Committee has reviewed and discussed the above
Compensation Discussion and Analysis with management and, based
on such review and discussions, the Compensation Committee
recommended to the Board of Directors that the Compensation
Discussion and Analysis be included in this Proxy Statement.
This report of the Compensation Committee shall not be deemed
soliciting material, or to be filed with
the Securities and Exchange Commission or subject to
Regulation 14A or 14C or to the liabilities of
Section 18 of the Securities Exchange Act of 1934 (the
Exchange Act), except to the extent that the Company
specifically requests that the information be treated as
soliciting material or specifically incorporates it by reference
into a document filed under the Securities Act of 1933 (the
Securities Act) or the Exchange Act.
William E. Chiles, Chairman
James S. DAgostino, Jr.
H. H. Wommack, III
24
EXECUTIVE
COMPENSATION MATTERS
Summary
Compensation Table
The following information relates to compensation paid by the
Company for fiscal 2008, 2007 and 2006 to the Companys
Chief Executive Officer, Chief Financial Officer and each of the
other three most highly compensated executive officers in fiscal
2008, 2007 and 2006:
Summary
Compensation Table
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Change in
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Pension
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Value and
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Non-Equity
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Nonqualified
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Incentive
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Deferred
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Stock
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Option
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Plan
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Compensation
|
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All Other
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|
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Salary
|
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Bonus
|
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Awards
|
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Awards
|
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Compensation
|
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Earnings
|
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Compensation
|
|
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Total
|
|
Name and Principal Position
|
|
Year
|
|
|
($)(1)
|
|
|
($)(2)
|
|
|
($)(3)
|
|
|
($)(3)
|
|
|
($)(4)
|
|
|
($)
|
|
|
($)(5)
|
|
|
($)
|
|
|
Kenneth V. Huseman,
|
|
|
2008
|
|
|
$
|
550,000
|
|
|
|
|
|
|
$
|
380,585
|
|
|
$
|
449,536
|
|
|
$
|
330,000
|
|
|
$
|
|
|
|
$
|
9,200
|
|
|
$
|
1,719,321
|
|
President and Chief
|
|
|
2007
|
|
|
$
|
515,384
|
|
|
|
|
|
|
$
|
799,460
|
|
|
$
|
322,565
|
|
|
$
|
400,000
|
|
|
$
|
|
|
|
$
|
8,800
|
|
|
$
|
2,046,209
|
|
Executive Officer
|
|
|
2006
|
|
|
$
|
382,692
|
|
|
|
|
|
|
$
|
785,250
|
|
|
$
|
256,281
|
|
|
$
|
400,000
|
|
|
$
|
|
|
|
$
|
16,142
|
|
|
$
|
1,840,365
|
|
Alan Krenek,
|
|
|
2008
|
|
|
$
|
300,000
|
|
|
$
|
50,000
|
|
|
$
|
161,516
|
|
|
$
|
142,579
|
|
|
$
|
170,000
|
|
|
$
|
|
|
|
$
|
9,200
|
|
|
$
|
833,295
|
|
Senior Vice President,
|
|
|
2007
|
|
|
$
|
258,462
|
|
|
|
|
|
|
$
|
28,704
|
|
|
$
|
244,738
|
|
|
$
|
240,000
|
|
|
$
|
|
|
|
$
|
8,800
|
|
|
$
|
780,704
|
|
Chief Financial Officer, Treasurer and Secretary
|
|
|
2006
|
|
|
$
|
227,308
|
|
|
|
|
|
|
$
|
|
|
|
$
|
235,719
|
|
|
$
|
240,000
|
|
|
$
|
|
|
|
$
|
10,619
|
|
|
$
|
713,646
|
|
Charles W. Swift,
|
|
|
2008
|
|
|
$
|
250,000
|
|
|
|
|
|
|
$
|
140,765
|
|
|
$
|
116,962
|
|
|
$
|
75,000
|
|
|
$
|
|
|
|
$
|
20,796
|
|
|
$
|
603,523
|
|
Senior Vice President,
|
|
|
2007
|
|
|
$
|
200,000
|
|
|
|
|
|
|
$
|
104,474
|
|
|
$
|
87,058
|
|
|
$
|
160,000
|
|
|
$
|
|
|
|
$
|
10,597
|
|
|
$
|
562,129
|
|
Operations Support
|
|
|
2006
|
|
|
$
|
176,154
|
|
|
|
|
|
|
$
|
87,250
|
|
|
$
|
76,067
|
|
|
$
|
200,000
|
|
|
$
|
|
|
|
$
|
12,081
|
|
|
$
|
551,552
|
|
T.M. Roe Patterson,
|
|
|
2008
|
|
|
$
|
243,846
|
|
|
|
|
|
|
$
|
109,553
|
|
|
$
|
57,663
|
|
|
$
|
150,000
|
|
|
$
|
|
|
|
$
|
20,233
|
|
|
$
|
581,295
|
|
Senior Vice President,
|
|
|
2007
|
|
|
$
|
167,692
|
|
|
|
|
|
|
$
|
17,224
|
|
|
$
|
32,051
|
|
|
$
|
140,000
|
|
|
$
|
|
|
|
$
|
18,764
|
|
|
$
|
375,731
|
|
Rig and Truck Operations
|
|
|
2006
|
|
|
$
|
118,462
|
|
|
|
|
|
|
$
|
|
|
|
$
|
34,079
|
|
|
$
|
140,000
|
|
|
$
|
|
|
|
$
|
4,542
|
|
|
$
|
297,083
|
|
James E. Tyner
|
|
|
2008
|
|
|
$
|
190,000
|
|
|
$
|
30,000
|
|
|
$
|
55,228
|
|
|
$
|
57,297
|
|
|
$
|
80,000
|
|
|
$
|
|
|
|
$
|
9,546
|
|
|
$
|
422,071
|
|
Vice President,
|
|
|
2007
|
|
|
$
|
158,462
|
|
|
|
|
|
|
$
|
11,480
|
|
|
$
|
35,937
|
|
|
$
|
80,000
|
|
|
$
|
|
|
|
$
|
7,219
|
|
|
$
|
293,098
|
|
Human Resources
|
|
|
2006
|
|
|
$
|
135,891
|
|
|
|
|
|
|
$
|
|
|
|
$
|
60,313
|
|
|
$
|
140,000
|
|
|
$
|
|
|
|
$
|
6,484
|
|
|
$
|
342,688
|
|
|
|
|
(1) |
|
Under the terms of their employment agreements,
Messrs. Huseman, Krenek, Swift, Patterson and Tyner are
entitled to the compensation described under Employment
Agreements below. |
|
(2) |
|
Reflects special bonuses paid during 2008 relating to the
terminated merger with Grey Wolf, Inc. |
|
(3) |
|
Reflects the dollar amounts recognized for financial reporting
purposes with respect to the fiscal year in accordance with
FAS 123R. For Stock Awards, includes performance-based
awards granted in March 2008 that were earned and issued in
March 2009 at 100% of target shares. During 2008 it was
estimated that 85% of the target shares would be granted in
March 2009. There were no forfeitures in 2008. For Option
Awards, assumptions made in the valuation are included in
Note 10 to the Companys audited financial statements
for the year ended December 31, 2008. |
|
(4) |
|
Reflects aggregate bonus payments made utilizing metrics under
our annual incentive compensation plan and
division-level Quarterly Incentive Bonus Plan.
Messrs. Huseman and Krenek did not participate in any of
the Quarterly Incentive Bonus Plans during 2006, 2007 or 2008
and received only an annual cash bonus in early 2007, 2008 and
2009, respectively. Mr. Swift participated in the
division-level Quarterly Incentive Bonus Plan for the first
three quarters of 2006 and received an annual cash bonus in
early 2007 and participated in the Quarterly Incentive Bonus
Plan in the third and fourth quarters of 2007 and all of 2008
and received an annual cash bonus in early 2008 and 2009.
Messrs. Patterson and Tyner each participated in the
Quarterly Incentive Bonus Plans in 2006, 2007 and 2008 and
received an annual cash bonus in early 2007, 2008 and 2009,
respectively. |
|
(5) |
|
Includes employer contributions to Executive Deferred
Compensation Plan for 2006 as follows: for Huseman, $16,142; for
Krenek, $10,619; for Swift, $2,481; and for Tyner, $6,484.
Includes employer contributions to |
25
|
|
|
|
|
Executive Deferred Compensation Plan for 2007 as follows: for
Huseman, $8,800; for Krenek, $8,800; for Swift, $457; for
Patterson, $8,624; and for Tyner, $7,219. Includes employer
contributions to Executive Deferred Compensation Plan for 2008
as follows: for Huseman, $9,200; for Krenek, $9,200; for Swift,
$9,936; for Patterson, $9,373; and for Tyner, $9,546. Includes
vehicle allowance of $9,600 for 2006, $10,140 for 2007 and
$10,860 for 2008 for Mr. Swift and of $4,542 for 2006,
$10,140 for 2007 and $10,860 for 2008 for Mr. Patterson. |
Grants of
Plan-Based Awards
The following table sets forth information concerning grants of
awards to each of our named executive officers under our 2003
Incentive Plan during fiscal 2008:
Grants of
Plan-Based Awards 2008
|
|
|
|
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|
|
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|
|
|
|
|
|
|
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|
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|
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|
|
|
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|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts
|
|
|
Estimated Future Payouts
|
|
|
Number of
|
|
|
Number of
|
|
|
Exercise or
|
|
|
Grant Date
|
|
|
|
|
|
|
Under Non-Equity Incentive
|
|
|
Under Equity Incentive
|
|
|
Shares of
|
|
|
Securities
|
|
|
Base Price
|
|
|
Fair Value
|
|
|
|
|
|
|
Plan Awards
|
|
|
Plan Awards
|
|
|
Stock or
|
|
|
Underlying
|
|
|
of Option
|
|
|
of Stock
|
|
|
|
Grant
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Units
|
|
|
Options
|
|
|
Awards
|
|
|
and Option
|
|
Name
|
|
Date
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
(#)
|
|
|
($/Sh)
|
|
|
Awards
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
|
(k)
|
|
|
(l)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth V. Huseman
|
|
|
03/18/08
|
(1)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
45,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
927,900
|
|
|
|
|
03/11/08
|
(2)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
22,500
|
|
|
|
33,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
404,876
|
|
|
|
|
03/11/08
|
(3)
|
|
$
|
0
|
|
|
$
|
330,000
|
|
|
$
|
495,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alan Krenek
|
|
|
03/18/08
|
(1)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
22,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
463,950
|
|
|
|
|
03/11/08
|
(2)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
12,000
|
|
|
|
18,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
215,934
|
|
|
|
|
03/11/08
|
(3)
|
|
$
|
0
|
|
|
$
|
150,000
|
|
|
$
|
225,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charles W. Swift
|
|
|
03/18/08
|
(1)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
17,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
360,850
|
|
|
|
|
03/11/08
|
(2)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
10,000
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
179,945
|
|
|
|
|
03/11/08
|
(3)
|
|
$
|
0
|
|
|
$
|
125,000
|
|
|
$
|
187,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T.M. Roe Patterson
|
|
|
03/18/08
|
(1)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
16,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
340,230
|
|
|
|
|
03/11/08
|
(2)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
8,000
|
|
|
|
12,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
143,956
|
|
|
|
|
03/11/08
|
(3)
|
|
$
|
0
|
|
|
$
|
137,500
|
|
|
$
|
206,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James E. Tyner
|
|
|
03/18/08
|
(1)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
7,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
144,340
|
|
|
|
|
03/11/08
|
(2)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
4,000
|
|
|
|
6,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
71,978
|
|
|
|
|
03/11/08
|
(3)
|
|
$
|
0
|
|
|
$
|
76,000
|
|
|
$
|
142,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
(1) |
|
Shares of restricted stock were granted by our Compensation
Committee to certain of our employees, including our named
executive officers, on March 18, 2008. The shares of
restricted stock vest in one-fourth increments on each of
March 15, 2010, 2011, 2012 and 2013. The shares of
restricted stock were granted pursuant to our 2003 Incentive
Plan. |
|
(2) |
|
Performance-based stock awards approved by our Compensation
Committee to certain members of management including our named
executive officers on March 11, 2008. The performance-based
awards consist of the Company achieving certain earnings per
share growth targets and certain return on capital employed
performance, over the performance period from January 1,
2006 through December 31, 2008 as compared to other member
of a defined peer group. The number of shares to be issued could
have ranged from 0% to 150% of the target number of shares
depending on the performance noted above. The number of target
shares set forth for each named executive officer was earned and
issued in March 2009. These shares will vest in one-third
increments on each of March 15, 2010, 2011, and 2012. |
|
(3) |
|
Cash incentive bonuses are determined by our Compensation
Committee utilizing a set of metrics along with board
discretion. These bonuses for 2008 performance were paid in
March 2009. Performance targets were communicated to the named
executive officers and other members of management that
participate in the bonus on March 11, 2008. Potential
annual cash awards for our CEO ranged from zero to 90% of base
pay with a target level of 60%. Potential annual cash awards for
our Tier II named executive officers (Messrs. Krenek,
Swift and Patterson) ranged from zero to 75% of base salary,
with a target level of 50%. Potential annual cash awards for our
Tier III named executive officer (Mr. Tyner) ranged
from zero to 60% of base salary, with a target level of 40%. |
26
Employment
Agreements
Pursuant to our employment agreement with Kenneth V. Huseman,
our President and Chief Executive Officer, Mr. Huseman is
entitled to an initial annual base salary of $400,000.
Mr. Huseman is also entitled to an annual performance bonus
if certain performance criteria are met. In addition,
Mr. Huseman is eligible from time to time to receive grants
of stock options and other long-term equity incentive
compensation under our equity compensation plan. If
Mr. Husemans employment were to be terminated for
certain reasons, he would be entitled to a lump sum severance
payment equal to three times the sum of his base salary plus his
current annual incentive target bonus for the full year in which
the termination of employment occurred. Additionally, if
Mr. Husemans employment were to be terminated for
certain reasons within the six months preceding or the twelve
months following a change in control of our company, he would be
entitled to a lump sum severance payment equal to three times
the sum of his base salary plus the higher of (i) his
current annual incentive target bonus for the full year in which
the termination of employment occurred or (ii) the highest
annual incentive bonus received by him for any of the last three
fiscal years. Mr. Husemans employment agreement is
effective through December 31, 2009 and will automatically
renew for subsequent one year periods unless notice of
termination is properly given by us or Mr. Huseman. In the
event that Mr. Husemans employment agreement is not
renewed by us for any reason other than cause and a new
employment agreement has not been entered into prior to the
expiration of the then-current term, Mr. Huseman will be
entitled to the same severance benefits described above.
We have also entered into employment agreements with Alan
Krenek, our Senior Vice President, Chief Financial Officer,
Treasurer and Secretary, Charles W. Swift, our Vice
President Gulf Coast Region, and Thomas Monroe
Patterson, our Senior Vice President Rig and Truck
Operations. Pursuant to their agreements, Messrs. Krenek,
Swift and Patterson are entitled to initial base salaries of
$240,000, $250,000 and $275,000, respectively. Each of
Messrs. Krenek, Swift and Patterson is also entitled to an
annual performance bonus if certain performance criteria are
met. In addition, each of Messrs. Krenek, Swift and
Patterson is eligible from time to time to receive grants of
stock options and other long-term equity incentive compensation
under our equity compensation plan. If the employment of any of
these officers was to be terminated for certain reasons, he
would be entitled to a lump sum severance payment equal to 1.5
times the sum of his base salary plus his current annual
incentive target bonus for the full year in which the
termination of employment occurred. Additionally, if the
employment of any of these officers was to be terminated for
certain reasons within the six months preceding or the twelve
months following a change in control of our company, he would be
entitled to a lump sum severance payment equal to two times the
sum of his base salary plus the higher of (i) his current
annual incentive target bonus for the full year in which the
termination of employment occurred or (ii) the highest
annual incentive bonus received by him for any of the last three
fiscal years. Each of these employment agreements is effective
through December 31, 2009 and will automatically renew for
subsequent one year periods unless notice of termination is
properly given by us or the officer. In the event that any of
these employment agreements is not renewed by us for any reason
other than cause and a new employment agreement has not been
entered into prior to the expiration of the then-current term,
the officer will be entitled to the same severance benefits
described above. In March 2009, Mr. Swifts position
was changed from Senior Vice President Operations to
Vice President Gulf Coast Region.
The employment agreements for Messrs. Huseman, Krenek,
Swift and Patterson also provide for gross up payments to the
extent Section 280G of the Internal Revenue Code would
apply to such payments as excess parachute payments.
We have also entered into an employment agreement with James E.
Tyner, our Vice President Human Resources. Pursuant
to his agreement, Mr. Tyner is entitled to an initial base
salary of $140,000. Mr. Tyner is also entitled to an annual
performance bonus if certain performance criteria are met. In
addition, Mr. Tyner is eligible from time to time to
receive grants of stock options and other long-term equity
incentive compensation under our equity incentive plan. If
Mr. Tyners employment was to be terminated for
certain reasons, he would be entitled to a lump sum severance
payment equal to 0.75 times the sum of his base salary plus his
current annual incentive target bonus for the full year in which
the termination of employment occurred. Additionally, if
Mr. Tyners employment was to be terminated for
certain reasons within the six months preceding or the twelve
months following a change in control of our company, he would be
entitled to a lump sum severance payment equal to one times the
sum of his base salary plus the higher of (i) his current
annual incentive target bonus for the full year in which the
termination of employment occurred or (ii) the highest
annual incentive bonus received by him for any of the last three
fiscal
27
years. Mr. Tyners employment agreement is effective
through December 31, 2009 and will automatically renew for
subsequent one year periods unless notice of termination is
properly given by us or Mr. Tyner. In the event that within
the six months preceding or the twelve months following a change
in control of our company, Mr. Tyners employment
agreement is not renewed by us for any reason other than cause
and a new employment agreement has not been entered into prior
to the expiration of the then-current term, Mr. Tyner will
be entitled to the change of control severance benefits
described above.
As consideration for us entering into the above employment
agreements, each of Messrs. Huseman, Krenek, Swift, Tyner
and Patterson has agreed in his employment agreement that, for a
period of 6 months following the termination of his
employment by us without cause or by him for good reason, and
for a period of two years following the termination of his
employment for retirement or any other reason, he will not,
among other things, engage in any business competitive with
ours, render services to any entity that is competitive with us
or solicit business from certain of our customers or potential
customers. These non-competition restrictions will not apply in
the event that such termination is within 12 months of a
change of control of our company. Additionally, each officer has
agreed not to solicit any of our employees to terminate, reduce
or otherwise adversely affect his or her employment with us for
a period of two years from such officers termination of
employment for any reason.
The Board initially approved 2009 base salaries for our named
executive officers as follows: Huseman $550,000;
Krenek $300,000; Patterson $275,000;
Swift $200,000; and Tyner $190,000. In
connection with salary and wage reductions for employees
throughout the company that were effective March 30, 2009,
the 2009 base salaries for our named executive officers other
than Mr. Swift were reduced to: Huseman
$495,000; Krenek $276,000; Patterson
$253,000; and Tyner $176,700.
28
Outstanding
Equity Awards at Fiscal Year-End
The following table sets forth information concerning
unexercised stock options and unvested restricted stock of each
of our named executive officers as of December 31, 2008:
Outstanding
Equity Awards at Fiscal Year-End 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Market
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
or Payout
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
Number of
|
|
|
Unearned
|
|
|
|
Number of
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
Unearned
|
|
|
Shares,
|
|
|
|
Securities
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Shares or
|
|
|
Shares,
|
|
|
Units or
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
or Units of
|
|
|
Units of
|
|
|
Units or
|
|
|
Other
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
|
|
|
|
Stock That
|
|
|
Stock That
|
|
|
Other Rights
|
|
|
Rights
|
|
|
|
Options
|
|
|
Options
|
|
|
Unearned
|
|
|
Exercise
|
|
|
Option
|
|
|
|
Have Not
|
|
|
Have Not
|
|
|
that Have
|
|
|
That Have
|
|
|
|
(#)
|
|
|
(#)
|
|
|
Options
|
|
|
Price
|
|
|
Expiration
|
|
|
|
Vested
|
|
|
Vested
|
|
|
Not Vested
|
|
|
Not Vested
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
(#)
|
|
|
($)
|
|
|
Date
|
|
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
Kenneth V. Huseman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/5/2003
|
|
|
148,200
|
|
|
|
|
|
|
|
|
|
|
$
|
4.00
|
|
|
|
5/4/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/2/2005(1)
|
|
|
50,000
|
|
|
|
50,000
|
|
|
|
|
|
|
$
|
6.98
|
|
|
|
3/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/15/2006(2)
|
|
|
15,000
|
|
|
|
45,000
|
|
|
|
|
|
|
$
|
26.84
|
|
|
|
3/14/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/15/2007(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
$
|
65,200
|
|
|
|
|
|
|
|
|
|
3/15/2007(4)
|
|
|
|
|
|
|
60,000
|
|
|
|
|
|
|
$
|
22.66
|
|
|
|
3/15/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/11/2008(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
22,500
|
|
|
$
|
293,400
|
|
|
|
|
|
|
|
|
|
3/18/2008(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
45,000
|
|
|
$
|
586,800
|
|
|
|
|
|
|
|
|
|
Alan Krenek
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/26/2005
|
|
|
76,250
|
|
|
|
|
|
|
|
|
|
|
$
|
5.16
|
|
|
|
1/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/2/2005(1)
|
|
|
12,500
|
|
|
|
12,500
|
|
|
|
|
|
|
$
|
6.98
|
|
|
|
3/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/15/2006(2)
|
|
|
6,250
|
|
|
|
18,750
|
|
|
|
|
|
|
$
|
26.84
|
|
|
|
3/14/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/15/2007(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
$
|
130,400
|
|
|
|
|
|
|
|
|
|
3/15/2007(4)
|
|
|
|
|
|
|
15,000
|
|
|
|
|
|
|
$
|
22.66
|
|
|
|
3/15/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/11/2008(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
12,000
|
|
|
$
|
156,480
|
|
|
|
|
|
|
|
|
|
3/18/2008(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
22,500
|
|
|
$
|
293,400
|
|
|
|
|
|
|
|
|
|
Charles W. Swift
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8/13/2001
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
$
|
4.00
|
|
|
|
8/12/2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5/5/2003
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
$
|
4.00
|
|
|
|
5/4/2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/2/2005(1)
|
|
|
17,500
|
|
|
|
17,500
|
|
|
|
|
|
|
$
|
6.98
|
|
|
|
3/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/15/2006(2)
|
|
|
3,750
|
|
|
|
11,250
|
|
|
|
|
|
|
$
|
26.84
|
|
|
|
3/14/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/15/2007(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
6,000
|
|
|
$
|
78,240
|
|
|
|
|
|
|
|
|
|
3/15/2007(4)
|
|
|
|
|
|
|
12,000
|
|
|
|
|
|
|
$
|
22.66
|
|
|
|
3/15/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/11/2008(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
$
|
130,400
|
|
|
|
|
|
|
|
|
|
3/18/2008(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
17,500
|
|
|
$
|
228,200
|
|
|
|
|
|
|
|
|
|
T.M. Roe Patterson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/15/2006(2)
|
|
|
3,750
|
|
|
|
11,250
|
|
|
|
|
|
|
$
|
26.84
|
|
|
|
3/14/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/15/2007(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
6,000
|
|
|
$
|
78,240
|
|
|
|
|
|
|
|
|
|
3/15/2007(4)
|
|
|
|
|
|
|
5,000
|
|
|
|
|
|
|
$
|
22.66
|
|
|
|
3/15/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/11/2008(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,000
|
|
|
$
|
104,320
|
|
|
|
|
|
|
|
|
|
3/18/2008(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
16,500
|
|
|
$
|
215,160
|
|
|
|
|
|
|
|
|
|
James E. Tyner
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/2/2005(1)
|
|
|
5,000
|
|
|
|
5,000
|
|
|
|
|
|
|
$
|
6.98
|
|
|
|
3/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/15/2006(2)
|
|
|
3,750
|
|
|
|
11,250
|
|
|
|
|
|
|
$
|
26.84
|
|
|
|
3/14/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/15/2007(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
4,000
|
|
|
$
|
52,160
|
|
|
|
|
|
|
|
|
|
3/11/2008(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
4,000
|
|
|
$
|
52,160
|
|
|
|
|
|
|
|
|
|
3/18/2008(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
7,000
|
|
|
$
|
91,280
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
One half of the unvested options vested on January 1, 2009.
The remainder will vest on January 1, 2010. |
|
(2) |
|
One third of the unvested options vested on January 1,
2009. The remainder will vest in equal increments on
January 1, 2010 and 2011. |
29
|
|
|
(3) |
|
One fourth of the unvested shares of restricted stock vested on
March 15, 2009. The remainder will vest in equal increments
on March 15, 2010, 2011 and 2012. |
|
(4) |
|
One fourth of the unvested options vested on January 1,
2009. The remainder will vest in equal increments on
January 1, 2010, 2011 and 2012. |
|
(5) |
|
Unvested shares of restricted stock will vest in three equal
increments on March 15, 2010, 2011 and 2012. |
|
(6) |
|
Unvested shares of restricted stock will vest in four equal
increments on March 15, 2010, 2011, 2012 and 2013. |
Option
Exercises and Stock Vested
The following table sets forth information concerning exercises
of stock options and vesting of restricted stock of each of our
named executive officers during fiscal 2008:
Option
Exercises and Stock Vested 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
|
|
|
Number of
|
|
|
|
|
|
|
Shares
|
|
|
Value
|
|
|
Shares
|
|
|
Value
|
|
|
|
Acquired
|
|
|
Realized on
|
|
|
Acquired
|
|
|
Realized on
|
|
|
|
on Exercise
|
|
|
Exercise
|
|
|
on Vesting
|
|
|
Vesting
|
|
Name
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
Kenneth V. Huseman
|
|
|
316,205
|
|
|
$
|
6,345,422
|
|
|
|
112,500
|
|
|
$
|
2,352,375
|
|
Alan Krenek
|
|
|
11,750
|
|
|
$
|
187,330
|
|
|
|
|
|
|
$
|
|
|
Charles W. Swift
|
|
|
23,225
|
|
|
$
|
534,392
|
|
|
|
12,500
|
|
|
$
|
261,375
|
|
T.M. Roe Patterson
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
James E. Tyner
|
|
|
500
|
|
|
$
|
9,010
|
|
|
|
|
|
|
$
|
|
|
Nonqualified
Deferred Compensation Plans
The following table sets forth information concerning the
nonqualified deferred compensation of our named executive
officers during fiscal 2008:
Nonqualified
Deferred Compensation 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Executive
|
|
|
Registrant
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
Aggregate
|
|
|
|
Contributions
|
|
|
Contributions
|
|
|
Earnings in
|
|
|
Withdrawals/
|
|
|
Balance at
|
|
|
|
in Last FY
|
|
|
in Last FY
|
|
|
Last FY
|
|
|
Distributions
|
|
|
Last FY
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
(a)
|
|
(b)(1)
|
|
|
(c)(2)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)(3)
|
|
|
Kenneth V. Huseman
|
|
$
|
85,308
|
|
|
$
|
9,200
|
|
|
$
|
(147,114
|
)
|
|
$
|
|
|
|
$
|
170,398
|
|
Alan Krenek
|
|
$
|
46,192
|
|
|
$
|
9,200
|
|
|
$
|
(60,580
|
)
|
|
$
|
|
|
|
$
|
96,128
|
|
Charles W. Swift
|
|
$
|
39,205
|
|
|
$
|
9,936
|
|
|
$
|
(44,085
|
)
|
|
$
|
|
|
|
$
|
84,226
|
|
T.M. Roe Patterson
|
|
$
|
20,798
|
|
|
$
|
9,373
|
|
|
$
|
(14,277
|
)
|
|
$
|
|
|
|
$
|
36,055
|
|
James E. Tyner
|
|
$
|
99,591
|
|
|
$
|
9,546
|
|
|
$
|
(105,606
|
)
|
|
$
|
|
|
|
$
|
170,843
|
|
|
|
|
(1) |
|
Executive contributions during 2008 are included in the
executives salary and bonus amounts, as applicable, as
reported in the Summary Compensation Table. |
|
(2) |
|
Registrant contributions during 2008 are included in all other
compensation in the Summary Compensation Table. |
|
(3) |
|
All amounts were previously reported as compensation in the
Summary Compensation Tables for previous years. |
Each of our named executive officers is permitted to participate
in our Executive Deferred Compensation Plan. An executive
permitted to participate in this plan may defer a portion of his
compensation, up to a maximum of 50% of his annual salary and
100% of his annual cash bonus, into his plan account. We make an
annual matching
30
contribution to each participating executives plan
account, with the Company matching 100% of the first 3% of the
executives salary that is deferred, and 50% of the next 2%
of the executives salary that is deferred, up to a
plan-year maximum of $9,200. We may also make discretionary
contributions into an executives plan account from time to
time as we deem appropriate. Subject to certain exceptions, our
matching and discretionary contributions vest in one-fourth
increments determined by the executives years of service,
with vesting beginning after two years of service, and full
vesting occurring after five years of service. Each executive is
always fully vested in his own contributions to his plan
account. Earnings on an executives plan account for any
given year are dependent upon the investment options chosen by
the executive for such plan account. Generally, participants
under this plan may elect when and how distributions of vested
amounts in a plan account will be made, including whether such
distributions are in annual installments or a lump sum. However,
certain key employees, including our named executive officers,
may not receive distributions before a date six months after the
date their employment with us is terminated for any reason other
than death or disability.
Potential
Payments upon Termination or
Change-in-Control
Each of our named executive officers is party to an employment
agreement as described above. Pursuant to these agreements,
these officers are entitled to certain severance benefits. In
addition, the grant agreements relating to our executives
stock option and restricted stock awards provide for accelerated
vesting under certain circumstances. The tables below quantify
amounts that would have been paid assuming the following events
took place on December 31, 2008:
Potential
Post-employment Payments as of December 31,
2008 Kenneth V. Huseman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CIC with
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
Termination
|
|
|
Change in
|
|
|
for Good
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
by Company
|
|
|
by Executive
|
|
|
Control
|
|
|
Reason or
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
|
|
|
Termination
|
|
|
Except for
|
|
|
for Good
|
|
|
without
|
|
|
without
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
Retirement(1)
|
|
|
for Cause(2)
|
|
|
Cause
|
|
|
Reason(3)
|
|
|
Termination(4)
|
|
|
Cause
|
|
|
Death
|
|
|
Disability
|
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance(5)
|
|
$
|
|
|
|
|
N/A
|
|
|
$
|
|
|
|
$
|
2,640,000
|
|
|
$
|
2,640,000
|
|
|
$
|
|
|
|
$
|
2,850,000
|
|
|
$
|
|
|
|
$
|
|
|
Bonus(6)
|
|
$
|
|
|
|
$
|
330,000
|
|
|
$
|
|
|
|
$
|
330,000
|
|
|
$
|
330,000
|
|
|
$
|
|
|
|
$
|
330,000
|
|
|
$
|
330,000
|
|
|
$
|
330,000
|
|
Long-term Incentive(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of Unvested Stock Options
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
303,000
|
|
|
$
|
|
|
|
$
|
|
|
Acceleration of Unvested Restricted Stock
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
880,200
|
|
|
$
|
|
|
|
$
|
1,092,100
|
|
|
$
|
1,092,100
|
|
|
$
|
945,400
|
|
|
$
|
945,400
|
|
Benefits & Perquisites(8):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employer Contributions to Executive Deferred Compensation Plan
|
|
$
|
|
|
|
|
N/A
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
COBRA Continuation
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
21,062
|
|
|
$
|
21,062
|
|
|
|
N/A
|
|
|
$
|
21,062
|
|
|
$
|
|
|
|
$
|
|
|
280G Tax
Gross-up
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
|
|
|
$
|
330,000
|
|
|
$
|
|
|
|
$
|
3,871,262
|
|
|
$
|
2,991,062
|
|
|
$
|
1,092,100
|
|
|
$
|
4,596,162
|
|
|
$
|
1,275,400
|
|
|
$
|
1,275,400
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31
Potential
Post-employment Payments as of December 31,
2008 Alan Krenek
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CIC with
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
Termination
|
|
|
Change in
|
|
|
for Good
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
by Company
|
|
|
by Executive
|
|
|
Control
|
|
|
Reason or
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
|
|
|
for
|
|
|
Except for
|
|
|
for Good
|
|
|
without
|
|
|
without
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
Retirement(1)
|
|
|
Cause(2)
|
|
|
Cause
|
|
|
Reason(3)
|
|
|
Termination(4)
|
|
|
Cause
|
|
|
Death
|
|
|
Disability
|
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance(5)
|
|
$
|
|
|
|
|
N/A
|
|
|
$
|
|
|
|
$
|
675,000
|
|
|
$
|
675,000
|
|
|
$
|
|
|
|
$
|
1,080,000
|
|
|
$
|
|
|
|
$
|
|
|
Bonus(6)
|
|
$
|
|
|
|
$
|
150,000
|
|
|
$
|
|
|
|
$
|
150,000
|
|
|
$
|
150,000
|
|
|
$
|
|
|
|
$
|
150,000
|
|
|
$
|
150,000
|
|
|
$
|
150,000
|
|
Long-term Incentive(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of Unvested Stock Options
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
75,750
|
|
|
$
|
|
|
|
$
|
|
|
Acceleration of Unvested Restricted Stock
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
449,880
|
|
|
$
|
|
|
|
$
|
658,520
|
|
|
$
|
658,520
|
|
|
$
|
580,280
|
|
|
$
|
580,280
|
|
Benefits & Perquisites(8):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employer Contributions to Executive Deferred Compensation Plan
|
|
$
|
|
|
|
$
|
10,071
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
10,071
|
|
|
$
|
10,071
|
|
|
$
|
10,071
|
|
COBRA Continuation
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
21,062
|
|
|
$
|
21,062
|
|
|
|
N/A
|
|
|
$
|
21,062
|
|
|
$
|
|
|
|
$
|
|
|
280G Tax
Gross-up
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
|
|
|
$
|
160,071
|
|
|
$
|
|
|
|
$
|
1,295,942
|
|
|
$
|
846,062
|
|
|
$
|
658,520
|
|
|
$
|
1,995,403
|
|
|
$
|
740,351
|
|
|
$
|
740,351
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential
Post-employment Payments as of December 31,
2008 Charles W. Swift
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CIC with
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
Termination
|
|
|
Change in
|
|
|
for Good
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
by Company
|
|
|
by Executive
|
|
|
Control
|
|
|
Reason or
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
|
|
|
for
|
|
|
Except for
|
|
|
for Good
|
|
|
without
|
|
|
without
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
Retirement(1)
|
|
|
Cause(2)
|
|
|
Cause
|
|
|
Reason(3)
|
|
|
Termination(4)
|
|
|
Cause
|
|
|
Death
|
|
|
Disability
|
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance(5)
|
|
$
|
|
|
|
|
N/A
|
|
|
$
|
|
|
|
$
|
562,500
|
|
|
$
|
562,500
|
|
|
$
|
|
|
|
$
|
900,000
|
|
|
$
|
|
|
|
$
|
|
|
Bonus(6)
|
|
$
|
|
|
|
$
|
125,000
|
|
|
$
|
|
|
|
$
|
125,000
|
|
|
$
|
125,000
|
|
|
$
|
|
|
|
$
|
125,000
|
|
|
$
|
125,000
|
|
|
$
|
125,000
|
|
Long-term Incentive(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of Unvested Stock Options
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
106,050
|
|
|
$
|
|
|
|
$
|
|
|
Acceleration of Unvested Restricted Stock
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
358,600
|
|
|
$
|
|
|
|
$
|
502,040
|
|
|
$
|
502,040
|
|
|
$
|
436,840
|
|
|
$
|
436,840
|
|
Benefits & Perquisites(8):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employer Contributions to Executive Deferred Compensation Plan
|
|
$
|
|
|
|
|
N/A
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
COBRA Continuation
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
15,096
|
|
|
$
|
15,096
|
|
|
|
N/A
|
|
|
$
|
15,096
|
|
|
$
|
|
|
|
$
|
|
|
280G Tax
Gross-up
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
|
|
|
$
|
125,000
|
|
|
$
|
|
|
|
$
|
1,061,196
|
|
|
$
|
702,596
|
|
|
$
|
502,040
|
|
|
$
|
1,648,186
|
|
|
$
|
561,840
|
|
|
$
|
561,840
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32
Potential
Post-employment Payments as of December 31,
2008 T.M. Roe Patterson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CIC with
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
Termination
|
|
|
Change in
|
|
|
for Good
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
by Company
|
|
|
by Executive
|
|
|
Control
|
|
|
Reason or
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
|
|
|
for
|
|
|
Except for
|
|
|
for Good
|
|
|
without
|
|
|
without
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
Retirement(1)
|
|
|
Cause(2)
|
|
|
Cause
|
|
|
Reason(3)
|
|
|
Termination(4)
|
|
|
Cause
|
|
|
Death
|
|
|
Disability
|
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance(5)
|
|
$
|
|
|
|
|
N/A
|
|
|
$
|
|
|
|
$
|
618,750
|
|
|
$
|
618,750
|
|
|
$
|
|
|
|
$
|
830,000
|
|
|
$
|
|
|
|
$
|
|
|
Bonus(6)
|
|
$
|
|
|
|
$
|
137,500
|
|
|
$
|
|
|
|
$
|
137,500
|
|
|
$
|
137,500
|
|
|
$
|
|
|
|
$
|
137,500
|
|
|
$
|
137,500
|
|
|
$
|
137,500
|
|
Long-term Incentive(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of Unvested Stock Options
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Acceleration of Unvested Restricted Stock
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
319,480
|
|
|
$
|
|
|
|
$
|
449,880
|
|
|
$
|
449,880
|
|
|
$
|
397,720
|
|
|
$
|
397,720
|
|
Benefits & Perquisites(8):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employer Contributions to Executive Deferred Compensation Plan
|
|
$
|
|
|
|
$
|
9,570
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
9,570
|
|
|
$
|
9,570
|
|
|
$
|
9,570
|
|
COBRA Continuation
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
21,062
|
|
|
$
|
21,062
|
|
|
|
N/A
|
|
|
$
|
21,062
|
|
|
$
|
|
|
|
$
|
|
|
280G Tax
Gross-up
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
N/A
|
|
|
$
|
N/A
|
|
|
|
N/A
|
|
|
$
|
395,583
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
|
|
|
$
|
147,070
|
|
|
$
|
|
|
|
$
|
1,096,792
|
|
|
$
|
777,312
|
|
|
$
|
449,880
|
|
|
$
|
1,843,595
|
|
|
$
|
544,790
|
|
|
$
|
544,790
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential
Post-employment Payments as of December 31,
2008 James E. Tyner
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CIC with
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
Termination
|
|
|
Change in
|
|
|
for Good
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
by Company
|
|
|
by Executive
|
|
|
Control
|
|
|
Reason or
|
|
|
|
|
|
|
|
|
|
Voluntary
|
|
|
|
|
|
for
|
|
|
Except for
|
|
|
for Good
|
|
|
without
|
|
|
Without
|
|
|
|
|
|
|
|
|
|
Termination
|
|
|
Retirement(1)
|
|
|
Cause(2)
|
|
|
Cause
|
|
|
Reason(3)
|
|
|
Termination(4)
|
|
|
Cause
|
|
|
Death
|
|
|
Disability
|
|
|
Compensation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Severance(5)
|
|
$
|
|
|
|
|
N/A
|
|
|
$
|
|
|
|
$
|
199,500
|
|
|
$
|
199,500
|
|
|
$
|
|
|
|
$
|
330,000
|
|
|
$
|
|
|
|
$
|
|
|
Bonus(6)
|
|
$
|
|
|
|
$
|
76,000
|
|
|
$
|
|
|
|
$
|
76,000
|
|
|
$
|
76,000
|
|
|
$
|
|
|
|
$
|
76,000
|
|
|
$
|
76,000
|
|
|
$
|
76,000
|
|
Long-term Incentive(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of Unvested Stock Options
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
30,300
|
|
|
$
|
|
|
|
$
|
|
|
Acceleration of Unvested Restricted Stock
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
143,440
|
|
|
$
|
|
|
|
$
|
221,680
|
|
|
$
|
221,680
|
|
|
$
|
195,600
|
|
|
$
|
195,600
|
|
Benefits & Perquisites(8):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employer Contributions to Executive Deferred Compensation Plan
|
|
$
|
|
|
|
$
|
5,337
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
5,337
|
|
|
$
|
5,337
|
|
|
$
|
5,337
|
|
COBRA Continuation
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
15,096
|
|
|
$
|
15,096
|
|
|
|
N/A
|
|
|
$
|
15,096
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
|
|
|
$
|
81,337
|
|
|
$
|
|
|
|
$
|
434,036
|
|
|
$
|
290,596
|
|
|
$
|
221,680
|
|
|
$
|
678,413
|
|
|
$
|
276,937
|
|
|
$
|
276,937
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Retirement. Retirement is defined
for purposes of Mr. Husemans employment agreement as
his voluntary termination of his employment after attaining
age 60 and accruing five years of service with us, and for
purposes of each other executives employment agreement, as
such executives voluntary termination of his employment
after attaining age 65 and accruing ten years of service
with us. For purposes of the acceleration of unvested stock
options, Retirement means the voluntary termination
of his employment by an executive after he has attained the age
of 65. |
|
(2) |
|
Cause. Under each executives employment
agreement, the definition of Cause includes, among
other things, conviction of the executive of a crime involving
moral turpitude or a felony, commission by the executive of
fraud upon, or misappropriation of funds of, the Company,
knowing engagement by the executive in any activity in direct
competition with the Company, and a material breach by the
executive of such employment agreement. For purposes of the
acceleration of unvested stock options, Cause has
the same |
33
|
|
|
|
|
meaning as it has for purposes of the 2003 Incentive Plan. For
purposes of the acceleration of unvested restricted stock,
Cause has the same meaning as it has for purposes of
the executives employment agreement. |
|
(3) |
|
Good Reason. Under each executives
employment agreement, the definition of Good Reason
includes, among other things, a reduction in the
executives base salary or bonus opportunity, a relocation
of more than fifty miles of the executives principal
office, a substantial and adverse change in the executives
duties, control, authority, status or position, the failure of
the Company to continue in effect any pension plan, life
insurance plan,
health-and-accident
plan, retirement plan, disability plan, stock option plan,
deferred compensation plan or executive incentive compensation
plan under which the executive was receiving material benefits,
or the Companys material reduction of the executives
benefits under any such plan, and any material breach by the
Company of any other material provision of such employment
agreement. Prior to terminating his employment for Good Reason,
the executive must comply with the notice provisions of his
employment agreement. For purposes of the acceleration of
unvested stock options, Good Reason has the same
meaning as it has for purposes of the 2003 Incentive Plan,
except that any reduction in the executives salary, bonus
opportunity or benefit must follow a change in control. For
purposes of the acceleration of unvested restricted stock,
Good Reason has the same meaning as it has for
purposes of the executives employment agreement. |
|
(4) |
|
Change in Control. Under each executives
employment agreement, the definition of Change in
Control (or CIC) includes, subject to certain
exceptions, (i) acquisition by any individual, entity or
group of beneficial ownership of 50% or more of either the then
outstanding shares of common stock of the Company or the
combined voting power of the then outstanding voting securities
of the Company entitled to vote generally in the election of
directors, (ii) approval by the shareholders of the Company
of a merger, unless immediately following such merger,
substantially all of the holders of the Companys
securities immediately prior to merger beneficially own more
than 50% of the common stock of the corporation resulting from
such merger, and (iii) the sale or other disposition of all
or substantially all of the assets of the Company. For purposes
of the acceleration of unvested stock options, Change in
Control has the same meaning as it has for purposes of the
2003 Incentive Plan. For purposes of the acceleration of
unvested restricted stock, Change in Control has the
same meaning as it has for purposes of the executives
employment agreement. For purposes of the executive deferred
compensation plan, Change in Control means, subject
to certain exceptions, (i) the acquisition by any person
other than DLJ Merchant Banking and its affiliates of 40% or
more of the combined voting power of the Companys
securities, (ii) the directors serving on the
Companys Board of Directors at the time the plan was
adopted ceasing to constitute a majority of the Companys
Board of Directors, or (iii) the liquidation or dissolution
of, or the sale of substantially all of the assets of, the
Company. |
|
(5) |
|
Severance. |
|
|
|
Termination except for Cause or termination of his own
employment for Good Reason or Retirement
Each executive would be entitled to a lump sum severance
payment equal to a multiple of the sum of his base salary plus
his current annual incentive target bonus for the full year in
which the termination of employment occurred. For
Mr. Huseman, the multiple is three, for
Messrs. Krenek, Swift and Patterson, the multiple is 1.50,
and for Mr. Tyner, the multiple is 0.75. During 2008, the
annual incentive target bonus for our named executive officers
utilized was 60% for Mr. Huseman, 50% for
Messrs. Krenek, Swift and Patterson and 40% for
Mr. Tyner, in each case of their annual salary as of the
end of the fiscal year. We paid annual incentive bonuses to our
named executive officers of between approximately 30% and 60% of
their annual salaries as of the end of the fiscal year. |
|
|
|
Termination except for Cause, or termination of his own
employment for Good Reason or Retirement, within the six months
preceding or the twelve months following a Change in Control
Each executive would be entitled to a lump sum severance
payment equal to a multiple of the sum of his base salary plus
the higher of (i) his current annual incentive target bonus
for the full year in which the termination of employment
occurred or (ii) the highest annual incentive bonus
received by him for any of the last three fiscal years. For
Mr. Huseman, the multiple is three, for
Messrs. Krenek, Swift and Patterson, the multiple is two,
and for Mr. Tyner, the multiple is one. |
|
(6) |
|
Bonus. In addition to severance payments, the
named executive officers are entitled to a pro rata portion of
their estimated bonus upon certain events of termination. The
above tables reflect the annual incentive target bonus for the
named executive officers for 2008. |
34
|
|
|
(7) |
|
Long-Term Incentive. |
|
|
|
Stock Options
In the event of a termination of the executive by the
Company for Cause or voluntary termination by the executive
(other than for Retirement), all vested and unvested stock
options expire on the termination date. In the event of
Retirement, all unvested stock options expire on the termination
date and all vested options expire six months after the
termination date. In the event of death or disability, all
unvested stock options expire on the termination date and all
vested options expire one year after the termination date. In
the event of any other involuntary or voluntary termination, all
unvested stock options expire on the termination date and all
vested options expire 90 days after the termination date.
If the executives employment is terminated by the Company
other than for Cause or terminated by the executive for Good
Reason, in either case within two years after a Change in
Control, all unvested stock options will immediately vest
pursuant to the terms of the grant agreement and the 2003
Incentive Plan. |
|
|
|
Restricted Stock
All unvested shares of restricted stock will be forfeited by
the executive if the executives employment is terminated
by the Company for Cause or by the executive other than for Good
Reason or as a result of a Change in Control. For awards granted
after March 1, 2005, if the executives employment is
terminated by the Company other than for Cause or terminated by
the executive for Good Reason, in either case within two years
after a Change in Control, all unvested shares of restricted
stock will immediately vest pursuant to the terms of the grant
agreement. For awards on or prior to March 1, 2005, in the
event of a Change in Control, all unvested shares of restricted
stock will immediately vest pursuant to the 2003 Incentive Plan. |
|
(8) |
|
Other Benefits and Perquisites. |
|
|
|
Employer Contributions to Executive Deferred Compensation
Plan
Each executive will become fully vested in all unvested
matching and discretionary contributions made by the Company
into his plan account upon (i) obtaining the age of 65,
(ii) his death or disability or (iii) a termination
for any reason whatsoever within 24 months following a
Change in Control. Otherwise, each executive will forfeit any
unvested portion of his plan account upon a termination for any
reason. Additionally, certain key employees, including the named
executive officers, may not receive distributions before a date
six months after the date they separate service from the Company
for any reason other than death or disability. |
|
|
|
COBRA Continuation
In addition to the above cash benefits paid pursuant to each
executives employment agreement, the Company will continue
to provide the executive and his dependents with health benefits
for up to 18 months. |
|
|
|
280G Tax
Gross-up
The employment agreements for Messrs. Huseman, Krenek,
Swift and Patterson provide for gross up payments to the extent
Section 280G of the Internal Revenue Code would apply to
any payments as excess parachute payments. The
employment agreement for Mr. Tyner does not contain this
provision. |
Any benefits payable as described above are payable in a cash
lump sum not later than 60 calendar days following the
termination date. The employment agreements of the named
executive officers also contain certain non-competition and
non-solicitation provisions. For additional information
regarding these employment agreements, see Executive
Compensation Matters Employment Agreements.
35
Director
Compensation
The following table sets forth information concerning the 2008
compensation of each of our directors other than Kenneth V.
Huseman, who is a named executive officer and receives no
compensation for serving as a director:
Director
Compensation 2008
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension Value
|
|
|
|
|
|
|
|
|
|
Fees
|
|
|
|
|
|
|
|
|
|
|
|
and
|
|
|
|
|
|
|
|
|
|
Earned or
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
Paid in
|
|
|
Stock
|
|
|
Option
|
|
|
Incentive Plan
|
|
|
Deferred
|
|
|
All Other
|
|
|
|
|
|
|
Cash
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Compensation
|
|
|
Total
|
|
Name
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Earnings
|
|
|
($)
|
|
|
($)
|
|
(a)
|
|
(b)
|
|
|
(c) (1)
|
|
|
(d) (2)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
Steven A. Webster
|
|
$
|
8,000
|
|
|
$
|
114,639
|
|
|
$
|
44,337
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
166,976
|
|
H.H. Wommack, III
|
|
$
|
59,000
|
|
|
$
|
29,959
|
|
|
$
|
44,337
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
133,296
|
|
Sylvester P. Johnson, IV
|
|
$
|
67,000
|
|
|
$
|
29,959
|
|
|
$
|
44,337
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
141,296
|
|
William E. Chiles
|
|
$
|
77,000
|
|
|
$
|
29,959
|
|
|
$
|
44,337
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
151,296
|
|
Robert F. Fulton
|
|
$
|
49,000
|
|
|
$
|
29,959
|
|
|
$
|
44,337
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
123,296
|
|
James S. DAgostino, Jr.
|
|
$
|
69,000
|
|
|
$
|
29,959
|
|
|
$
|
44,337
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
143,296
|
|
Thomas P. Moore, Jr.
|
|
$
|
82,000
|
|
|
$
|
29,959
|
|
|
$
|
75,012
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
186,971
|
|
|
|
|
(1) |
|
The grant date fair value of stock awards granted in 2008 were
as follows: Steven A. Webster: $169,360; all other directors:
$84,680 each. Each of our directors had the following aggregate
number of restricted stock awards outstanding at
December 31, 2008: Steven A. Webster: 16,000; H. H.
Wommack, III: 8,000; Sylvester P. Johnson, IV: 8,000;
William E. Chiles: 8,000; Robert F. Fulton: 8,000; James S.
DAgostino, Jr.: 8,000; and Thomas P. Moore, Jr.: 8,000. |
|
(2) |
|
Each of our directors had the following aggregate number of
option awards outstanding at December 31, 2008: Steven A.
Webster: 97,500; H. H. Wommack, III: 97,500; Sylvester P.
Johnson, IV: 97,500; William E. Chiles: 17,500; Robert F.
Fulton: 97,500; James S. DAgostino, Jr.: 77,500; and
Thomas P. Moore, Jr.: 42,500. |
For additional information regarding fees earned for services as
a director in 2008, including annual retainer fees, committee
and chairmanship fees, and meeting fees, see Board of
Directors and Committees of the Board Board of
Directors Compensation. For additional
information regarding fees earned for services as a director
effective beginning in 2007, see Compensation Discussion
and Analysis Board Process Compensation
of Directors.
Transactions
with Related Persons, Promoters and Certain Control
Persons
Transactions with Related Persons. During
2008, there were no transactions with related persons that were
required to be disclosed in this proxy statement.
Review, Approval or Ratification of Transactions with Related
Persons. Pursuant to the charter of the Audit
Committee, the Audit Committee is responsible for establishing
procedures for the approval of all related party transactions
between the Company and any officer or director that would
potentially require disclosure. The Board of Directors has
adopted a written policy regarding related party transactions
that is to be administered by the Audit Committee. The policy
applies generally to transactions, arrangements or relationships
in which the Company was, is or will be a participant, in which
the amount involved exceeds $60,000 and in which any related
person had, has or will have a direct or indirect material
interest. Related persons include, among others, directors and
officers of the Company, beneficial owners of 5% or more of the
Companys voting securities, immediate family members of
the foregoing persons, and any entity in which the foregoing
persons are employed, are a principal or in which such person
has more than a 10% beneficial ownership interest. The
Companys Chief Financial Officer is responsible for
submitting related person transactions to the Audit Committee
for approval by the committee at regularly scheduled meetings,
or, if such approval is not practicable, to the Chairman of the
Audit Committee for approval
36
between such meetings. When considering related person
transactions, the Audit Committee, or where submitted to the
Chairman, the Chairman, will consider all of the relevant facts
available, including, but not limited to: the benefits of the
transaction to the Company; the impact on a directors
independence in the event the related person is a director; the
availability of other sources for comparable products or
services; the terms of the transaction; and the terms of
comparable transactions available to unrelated third parties or
to employees of the Company generally. The Company is not aware
of any transaction that was required to be reported in its
filings with the SEC where such policies and procedures either
did not require review or were not followed.
Compensation
Committee Interlocks and Insider Participation
Messrs. Chiles (Chairman), DAgostino and Wommack
serve as the members of our Compensation Committee. The Board of
Directors has determined that Messrs. Chiles,
DAgostino and Wommack are independent directors (as
defined by NYSE listing standards). None of our executive
officers serves as a member of the board of directors or
compensation committee of any entity that has one or more of its
executive officers serving as a member of our Board of Directors
or Compensation Committee.
37
AUDIT
RELATED MATTERS
Audit
Committee Report
The Audit Committee of the Board of Directors consists of three
directors who are independent, as defined by the standards of
the New York Stock Exchange and the rules of the Securities and
Exchange Commission. Under the charter approved by the Board,
the Audit Committee assists the Board in overseeing matters
relating to the accounting and financial reporting practices of
the Company, the adequacy of its internal controls and the
quality and integrity of its financial statements and is
responsible for selecting and retaining the independent
auditors. The Companys management is responsible for
preparing the financial statements of the Company and the
independent auditors are responsible for auditing those
financial statements. The Audit Committees role under the
charter is to provide oversight of managements
responsibility. The Committee is not providing any expert or
special assurance as to the Companys financial statements
or any professional certification as to the independent
auditors work. The Committee met seven times during the
year ended December 31, 2008.
The independent auditors provided the Committee a written
statement describing all the relationships between the auditors
and the Company that might bear on the auditors
independence consistent with Independence Standards Board
Standard No. 1, Independence Discussions with Audit
Committees. The Committee also discussed with the auditors
any relationships that may impact the independence of the
auditors.
The Committee discussed and reviewed with the independent
auditors all communications required to be discussed by
standards of the Public Company Accounting Oversight Board,
including those described in Statement of Auditing Standards
No. 61, as amended, Communication with Audit
Committees.
The Committee reviewed the Companys audited financial
statements as of and for the year ended December 31, 2008,
and discussed them with management and the independent auditors.
Based on such review and discussions, the Committee recommended
to the Board that the Companys audited financial
statements be included in its Annual Report on
Form 10-K
for the fiscal year ended December 31, 2008, for filing
with the Securities and Exchange Commission.
This report of the Audit Committee shall not be deemed
soliciting material, or to be filed with
the Securities and Exchange Commission or subject to
Regulation 14A or 14C or to the liabilities of
Section 18 of the Securities Exchange Act of 1934 (the
Exchange Act), except to the extent that the Company
specifically requests that the information be treated as
soliciting material or specifically incorporates it by reference
into a document filed under the Securities Act of 1933 (the
Securities Act) or the Exchange Act.
Thomas P. Moore, Jr., Chairman
James S. DAgostino, Jr.
William E. Chiles
38
Independent
Auditor and Fees
KPMG LLP, a registered public accounting firm, audited the
Companys consolidated financial statements for fiscal
2008, and has advised the Company that it will have a
representative available at the 2009 Annual Meeting to respond
to appropriate questions. Such representative will be permitted
to make a statement if he or she so desires.
KPMG LLP has billed the Company and its subsidiaries fees as set
forth in the table below for (i) the audits of the
Companys 2007 and 2008 annual financial statements,
reviews of quarterly financial statements, and review of the
Companys documents filed with the Securities and Exchange
Commission, (ii) assurance and other services reasonably
related to the audit or review of the Companys financial
statements, and (iii) services related to tax compliance.
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Audit-Related
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Audit Fees
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Fees
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Tax Fees(1)
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Fiscal 2008(3)
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$
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1,513,000
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$
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140,729
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(2)
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$
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Fiscal 2007(3)
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$
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1,250,000
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$
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$
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Tax Fees are paid for professional services relating
to tax compliance, planning and advice. |
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(2) |
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Fees were related to the terminated merger with Grey Wolf, Inc. |
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(3) |
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There were no fees billed in 2008 or 2007 that would constitute
All Other Fees. |
Audit
Committee Pre-Approved Policies and Procedures
The Audit Committee of the Board of Directors has adopted
policies regarding the pre-approval of auditor services.
Specifically, commencing in 2006, the Audit Committee began
approving at its May meeting all services provided by the
independent public accountants. All additional services must be
pre-approved on a
case-by-case
basis. The Audit Committee reviews the actual and budgeted fees
for the independent public accountants at its 1st and
4th meetings. All of the services provided by KPMG LLP
during fiscal 2008 were approved by the Audit Committee.
39
PROPOSAL 2:
APPROVAL
OF FOURTH AMENDED AND RESTATED
BASIC ENERGY SERVICES, INC. 2003 INCENTIVE PLAN
The Board of Directors has adopted and is hereby recommending
the Fourth Amended and Restated Basic Energy Services, Inc. 2003
Incentive Plan (the Restated Incentive Plan)
for approval by the stockholders.
The amendments in the Restated Incentive Plan consist primarily
of:
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increasing the total number of shares of our common stock
available for issuance from 5,000,000 to 7,100,000;
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increasing the annual limits of options, restricted stock,
phantom shares and other stock-based awards that may be granted
to any participant from 100,000 shares to
300,000 shares; and
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increasing the annual limit of maximum value of performance
awards that can be granted to any participant from $500,000 to
$2,000,000.
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A copy of the Restated Incentive Plan is attached to this proxy
statement as Annex A.
As of April 23, 2009, there were no shares of common
stock available for issuance under the 2003 Incentive Plan.
Increasing the total number of shares available is necessary for
the Company to have additional shares available for issuance as
awards. The Board also believes that the amendments are
necessary in light of the current market price for our shares of
common stock, and that the proposed amendments will give the
company better flexibility when making awards in the future with
respect to annual limits. In addition, Mr. Huseman has been
granted a performance-based award with a target of 82,500 shares
and a maximum of 123,750 shares. The issuance of a portion of
these shares to Mr. Huseman is limited by the number of
shares available for issuance under the existing plan and by
limitations on annual awards to an individual participant
(currently 100,000 shares), and accordingly the issuance of all
shares when earned will be contingent on shareholder approval of
the Restated Incentive Plan. Accordingly, the Board of
Directors unanimously recommends that you vote FOR this
proposal.
Summary
of Key Terms of the Restated Incentive Plan
Shares
Available; Types of Awards
The aggregate number of shares with respect to which awards may
be granted under the Restated Incentive Plan is up to
7,100,000 shares of the Companys common stock.
The Restated Incentive Plan permits the granting of the
following types of awards to officers, employees, directors and
consultants of the Company: (i) stock options to purchase
shares of common stock (Options), which may be
either (a) incentive stock options within the meaning of
Section 422 of the Internal Revenue Code or
(b) nonqualified stock options that are not intended to
satisfy the requirements of Section 422 of the Internal
Revenue Code; (ii) restricted stock (Restricted
Stock); (iii) performance awards, which are
designated as a cash amount at the time of grant but may be paid
in cash
and/or
shares at the time earned or vested (Performance
Awards); (iv) bonus shares (Bonus
Shares); (v) phantom shares (Phantom
Shares); (vi) cash awards (Cash Awards);
and (vii) other stock-based awards (Other Stock-Based
Awards, and collectively with Options, Restricted Stock,
Performance Awards, Bonus Shares, Phantom Shares and Cash
Awards,Awards).
Eligibility
for Participation
Incentive stock options may be granted only to individuals who
are employees (whether or not they are directors) of the Company
and its parent corporation and subsidiary corporations (within
the meaning of Section 424 of the Internal Revenue Code
while each such entity is a Corporation as described
in Section 7701(a)(3) of the Internal Revenue Code and
Treas. Reg.
Section 1.421-1(i)(1))
of the Company. All other Awards may be granted to any employee
of the Company or an affiliate of the Company, directors of the
Company, or consultants of the Company or an affiliate of the
Company. As of the date of this Proxy Statement, approximately
4,200 employees and seven non-employee directors are eligible to
participate in the Restated Incentive Plan. The Company has not
40
issued Awards under the existing plan to any consultants and
does not currently have any plans to do so under the Restated
Incentive Plan.
Administration
The Restated Incentive Plan will be administered by the
Compensation Committee of the Board, consisting of not less than
two non-employee, outside directors of the Company appointed by
the Board. The members of the Compensation Committee, as of the
date of this Proxy Statement, are Messrs. William E. Chiles
(Chairman), James S. DAgostino and H. H.
Wommack, III. Subject to the terms and conditions of the
Restated Incentive Plan, the Compensation Committee will have
authority to: (i) designate the employees, directors and
consultants who are to be granted Awards; (ii) determine
the type or types of Awards to be granted; (iii) determine
the number of shares to be covered by, or with respect to which
payments, rights or other matters are to be calculated in
connection with, Awards; (iv) determine the terms and
conditions of any Award; (v) determine whether, to what
extent, and under what circumstances Awards may be settled or
exercised in cash, shares, other securities, other Awards or
other property, or canceled, forfeited, or suspended, and the
method or methods by which Awards may be settled, exercised,
canceled, forfeited, or suspended; (vi) determine whether,
to what extent, and under what circumstances any Award will be
deferred; (vii) interpret and administer the Restated
Incentive Plan and any instrument or agreements relating to an
Award; (viii) establish, amend, suspend, or waive such
rules and regulations and appoint such agents as it may deem
appropriate for the proper administration of the Restated
Incentive Plan; and (ix) make any other determination and
take any other action that it deems necessary or desirable for
the administration of the Restated Incentive Plan.
Amendment
and Termination
Except as required by applicable law or the rules of the New
York Stock Exchange (or other principal exchange on which the
Companys shares are traded), and subject to certain
limitations regarding effects on Awards granted, the Board or
the Compensation Committee in its discretion may amend, alter,
suspend, discontinue or terminate the Restated Incentive Plan.
Accordingly, any amendment would require the approval of the
stockholders of the Company if required by applicable law or the
rules of the New York Stock Exchange. In addition, no amendment,
suspension or termination of the Restated Incentive Plan, and no
amendment or alteration of any Award, shall, without the consent
of the holder of an Award, reduce the benefit to such holder.
Furthermore, any action that may constitute a
repricing must be approved by the entire Board of
Directors, and any such Board-approved repricing will be
inoperative and ineffective unless and until approved by the
stockholders of the Company. Subject to certain limitations, the
Compensation Committee is authorized to make adjustments to
Awards in recognition of unusual or nonrecurring events
affecting the Company whenever the Compensation Committee
determines that such adjustments are appropriate in order to
prevent dilution or enlargement of the benefits or potential
benefits intended to be made available under the Restated
Incentive Plan.
Options
The Compensation Committee will have the authority to grant
Options (subject to the limitations set forth below) to such
participants, in such amounts and with such terms and conditions
as it may from time to time approve, subject to the terms of the
Restated Incentive Plan. Subject to adjustment under the
Restated Incentive Plan, no participant may receive more than
300,000 Options under the Restated Incentive Plan during any
calendar year.
Manner
of Exercise
To exercise an Option granted under the Restated Incentive Plan,
the person entitled to exercise the Option must deliver to the
Company payment in full of the exercise price for the shares
being purchased, together with any required withholding taxes.
The Compensation Committee will determine the method or methods
by which, and the form or forms in which, payment of the
exercise price may be made or deemed to have been made which may
include, without limitation, cash, check acceptable to the
Company, shares of common stock held for the period required to
avoid a charge to the Companys reported financial earnings
and owned free and clear of any liens, claims, encumbrances or
security interests, outstanding Awards, a Company-approved
cashless broker exercise,
41
other securities or other property, notes approved by the
Compensation Committee, or by any combination thereof, having a
fair market value on the exercise date equal to the relevant
exercise price. The value of each share of common stock
delivered will be deemed to be equal to the closing sales price
of a share on the applicable date (or if there is no trading on
such date, on the next preceding date on which there was
trading).
Exercise
Price
The price at which shares of common stock may be purchased upon
the exercise of an Option will be determined by the Compensation
Committee at the time the Option is granted, but will not be
less than the fair market value per share on the grant date,
which value will be based on the closing sales price of a share
on the applicable date (or if there is no trading on such grant
date, on the next preceding date on which there was trading).
The Restated Incentive Plan expressly prohibits the repricing of
Options except in the event of adjustments (i) to
stock-based Awards for a change in corporate capitalization,
such as a stock split or dividend; corporate transactions, such
as a corporate merger, a corporate consolidation, any corporate
separation and any corporate reorganization; any partial or
complete corporate liquidation; a change in accounting rules
required by the Financial Accounting Standards Board; or
(ii) to any Award (that is not intended to meet the
requirements of the performance based compensation exception to
Section 162(m) of the Internal Revenue Code) to reflect a
significant corporate event.
Option
Term
Subject to the terms of the Restated Incentive Plan, the
Compensation Committee will determine the term of each Option,
provided that in no event will the term of any Option exceed a
period of 10 years from the date of its grant.
Additionally, no Option that is intended to be an incentive
stock option will be exercisable after the expiration of
10 years from its date of grant. The Compensation Committee
may, in its discretion, (i) establish terms and conditions
for the transfer of a nonqualified stock option to immediate
family members or related family trusts, or similar entities,
and (ii) allow Awards (other than incentive stock options)
to be transferred pursuant to a qualified domestic relations
order, notwithstanding anything in the Restated Incentive Plan
to the contrary.
Restricted
Stock
The Compensation Committee will have the authority to grant
awards of Restricted Stock (subject to the limitations set forth
below) and to determine (i) the participants to whom
Restricted Stock will be granted, (ii) the number of shares
of Restricted Stock to be granted to each such participant,
(iii) the duration of the period of restrictions, and if
the restrictions do not lapse, the conditions under which the
Restricted Stock will be forfeited to the Company, and
(iv) the other terms and conditions of such grants of
Restricted Stock. Subject to adjustment under the Restated
Incentive Plan, no participant may receive more than
300,000 shares of Restricted Stock under the Restated
Incentive Plan during any calendar year.
Dividends
As determined by the Compensation Committee in its discretion,
dividends paid on Restricted Stock may be paid directly to the
participant, may be subject to risk of forfeiture
and/or
transfer restrictions during any period established by the
Compensation Committee or sequestered and held in a bookkeeping
cash account (with or without interest) or reinvested on an
immediate or deferred basis in additional shares of common stock.
Forfeiture
and Restrictions Lapse
Except as otherwise determined by the Compensation Committee or
the terms of the Award that granted the Restricted Stock, upon
termination of a participants employment for any reason
during the applicable period of restriction, all Restricted
Stock will be forfeited by the participant and reacquired by the
Company. Unrestricted shares of common stock will be issued to a
holder of Restricted Stock promptly after the applicable
restrictions have lapsed or otherwise been satisfied.
42
Performance
Awards
The Compensation Committee will have the authority to grant
Performance Awards (subject to the limitations set forth below)
to such participants, in such amounts and with such terms and
conditions as it may from time to time approve, subject to the
terms of the Restated Incentive Plan. Performance Awards will be
denominated as a cash amount (.e.g, $100 per award unit) a the
time of grant and confer on the participant the right to receive
payment of such Award, in whole or in part, upon achievement of
Performance Objectives (as defined in the Restated
Incentive Plan) during the performance periods established by
the Compensation Committee with respect to the Awards. No
participant may receive more than $2,000,000 (calculated as of
the date of grant) of Performance Awards under the Restated
Incentive Plan during any calendar year.
Performance
Objectives (for Performance Awards or other
Awards)
Performance Objectives under the Restated Incentive
Plan will include the objectives, if any, established by the
Compensation Committee that are to be achieved with respect to
an Award granted under the Restated Incentive Plan. These
objectives may be described in terms of Company-wide objectives,
in terms of objectives that are related to performance of a
division, subsidiary, department or function within the Company
or a subsidiary by which the participant is employed or in
individual or other terms, and will relate to the period of time
determined by the Compensation Committee.
With respect to any Award that is intended to meet the
requirements of Section 162(m) of the Internal Revenue
Code, the performance goal or goals for such award will be
designed to be objective and will be with respect to one or more
of the following: net earnings; operating income; earnings
before interest, taxes, depreciation and amortization expenses
(EBITDA); earnings before interest and taxes
(EBIT); earnings before taxes and unusual or
nonrecurring items; net income before interest, income and
franchise taxes, depreciation and amortization expenses, and any
unusual or non-recurring non-cash expenses or income
(Company EBITDA); revenue; return on investment;
return on equity; return on total capital; return on assets;
total stockholder return; return on capital employed in the
business; stock price performance; earnings per share growth;
and cash flows. The performance objectives need not be based on
increases or positive results, but may be based on maintaining
the status quo or limiting economic losses, for example. Which
performance objectives to use with respect to a Performance
Award, the weighting of the performance objectives if more than
one is used, and whether the performance objective is to be
measured against a Company-established budget or target, an
index or a peer group of companies, will be determined by the
Compensation Committee at the time of grant of the Performance
Award.
Payment
of Performance Awards
To the extent earned and vested, Performance Awards will be
paid, in cash
and/or in
shares, in the sole discretion of the Compensation Committee, in
a lump sum following the close of the performance period. To the
extent that the final settlement of a vested Award is made in
shares, the amount payable under a Performance Award will be
divided by the fair market value per share of common stock on
the determination date and the value of any fractional shares
will be paid in cash.
Bonus
Shares
Grants of Bonus Shares will be subject to the discretion of the
Compensation Committee. Bonus Shares will be in lieu of a cash
bonus that otherwise would be granted, and each Bonus Share will
constitute a transfer of an unrestricted share of common stock
to the participant, without other payment therefor, as
additional compensation for the participants services to
the Company.
Phantom
Shares
The Compensation Committee may grant awards of Phantom Shares
(subject to the limitations set forth below) to such
participants, in such amounts and with such terms and conditions
as it may from time to time approve, subject to the terms of the
Restated Incentive Plan. Phantom Shares are rights to receive a
specified number of shares of common stock or cash equal to a
specified number of shares of common stock at the end of a
stated period of restriction. During the period of restriction,
the participant will not have (i) any right to transfer any
rights under
43
the Phantom Shares, (ii) any rights of ownership in the Phantom
Shares, or (iii) any right to vote the Phantom Shares. The
Compensation Committee has discretion to place restrictions on
dividends or other distributions paid on the Phantom Shares
during the period of restriction of such shares. Subject to
adjustment under the Restated Incentive Plan, no participant may
receive more than 300,000 Phantom Shares under the Restated
Incentive Plan during any calendar year.
Cash
Awards
In tandem with any other grant of an Award under the Restated
Incentive Plan, the Compensation Committee may grant a Cash
Award that will entitle the participant to receive a specified
amount of cash from the Company upon such other tandem Award
becoming taxable to the participant. Such cash amount awarded
pursuant to a Cash Award may be based on a formula relating to
the anticipated taxable income associated with such other tandem
Award and the payment of the Cash Award, except that no Cash
Award will be granted if it would (i) cause application of
Section 409A of the Internal Revenue Code to either the
Cash Award or such other tandem Award or (ii) result in
adverse tax consequences under Section 409A of the Internal
Revenue Code should that code section apply to either Award.
Other
Stock-Based Awards
In addition to other Awards, the Compensation Committee in its
discretion may grant Other Stock-Based Awards (subject to the
limitations set forth below) to such participants, in such
amounts and with such terms and conditions as it may from time
to time approve, subject to the terms of the Restated Incentive
Plan. Other Stock-Based Awards are Awards denominated or payable
in, valued in whole or in part by reference to, or otherwise
based on or related to, shares of the Companys common
stock and deemed by the Compensation Committee to be consistent
with the purposes of the Restated Incentive Plan. Other
Stock-Based Awards will be paid in a lump sum, or share
certificates will be issued, no later than
21/2
months after the date such awards vest. Subject to adjustment
under the Restated Incentive Plan, the maximum number of shares
or value pursuant to Other Stock-Based Awards that may be
granted to any participant during any calendar year will not
exceed 300,000 shares, if an Award is in Shares, or,
$500,000, if the award is in dollars.
General
Provisions Regarding All Awards
Term
of the Restated Incentive Plan and Term of Awards
No Award will be granted under the Restated Incentive Plan after
the 10th anniversary of the earlier of adoption by the
Board or approval by the stockholders. However, unless otherwise
expressly provided in the Restated Incentive Plan or in an
applicable Award agreement, any Award granted prior to the
termination of the Restated Incentive Plan, and the authority of
the Board or the Compensation Committee to amend, alter, adjust,
suspend, discontinue, or terminate any such Award or to waive
any conditions or rights under such Award, will extend beyond
the termination date of the Restated Incentive Plan.
Subject to the provisions of the Restated Incentive Plan, the
Compensation Committee may determine the period for each Award,
but in no event will the term of any Award exceed a period of
10 years from the date of its grant.
Limits
on Transfer of Awards
Awards under the Restated Incentive Plan are generally not
transferable, but, notwithstanding anything in the Restated
Incentive Plan to the contrary, to the extent specifically
provided for by the Compensation Committee with respect to a
grant, (i) a nonqualified stock option may be transferred
to immediate family members or related family trusts or similar
entities on such terms and conditions as the Compensation
Committee may establish, and (ii) an Award other than an
incentive stock option may be transferred pursuant to a
qualified domestic relations order.
Adjustments
to Shares
In the event that the Compensation Committee determines that any
dividend or other distribution (including, but not limited to,
cash, shares, other securities, or other property),
recapitalization, stock split, reverse stock split,
44
reorganization, merger, consolidation,
split-up,
spin-off, combination, repurchase, or exchange of shares or
other securities of the Company, issuance of warrants or other
rights to purchase shares or other securities of the Company, or
similar corporate transaction or event affects the shares of
common stock such that an adjustment is appropriate to prevent
dilution or enlargement of the benefits or potential benefits
under the Restated Incentive Plan, the Compensation Committee
will make an appropriate and equitable adjustment to any or all
of (i) the number and type of shares (or other securities
or property) with respect to which Awards may be granted,
(ii) the maximum number and type of shares (or other
securities or property) with respect to which Awards may be
granted to any single individual during any calendar year,
(iii) the number and type of shares (or other securities or
property) subject to outstanding Awards, and (iv) the grant
or exercise price with respect to any Award or, if deemed
appropriate, make provision for a cash payment to the holder of
an outstanding Award.
Change in
Control
A change in control is defined under the Restated Incentive Plan
generally as: (i) the consummation of any transaction
(including, without limitation, any merger, consolidation,
tender offer or exchange offer by one or more individuals or
persons (as defined in the Restated Incentive Plan) but
excluding certain permitted persons specifically mentioned in
this definition), which results in an individual or person
becoming the beneficial owner, directly or indirectly, of
securities of the Company representing 40% or more of the
combined voting power of the Companys then-outstanding
securities; (ii) the individuals who, as of the date of the
Restated Incentive Plan, constitute the Board cease for any
reason to constitute at least a majority of the Board, subject
to the exceptions in the Restated Incentive Plan; (iii) the
sale, lease, transfer, conveyance, or other disposition
(including by merger or consolidation), in one or a series of
related transactions, of all or substantially all of the assets
of the Company to an unrelated person; or (iv) the adoption
of a plan relating to liquidation or dissolution of the Company.
Notwithstanding any other provision of the Restated Incentive
Plan to the contrary, all outstanding Awards granted on or prior
to March 1, 2005 will automatically become fully vested
immediately prior to an event that constitutes a change in
control, any and all restrictions with respect to such Awards
will lapse, and any and all performance criteria with respect to
such Awards will be deemed to have been met in full (at the
highest level).
For Awards granted after March 1, 2005, and notwithstanding
any other provision of the Restated Incentive Plan to the
contrary, if a participants employment with the Company
(or a successor) and all of its Affiliates terminates within two
years after a change in control and (i) the termination was
initiated by the Company (or a successor) other than a
termination for cause or (ii) the termination was initiated
by the participant after the participants good-faith
determination that the termination was for good reason, then all
Awards held by the affected participant will become fully vested
immediately as of such employment termination date, any and all
restrictions with respect to such Awards will lapse, and any and
all performance criteria with respect to such Awards will be
deemed to have been met in full (at the highest or maximum
level). Unless the Company survives as an independent publicly
traded company and subject to the exceptions listed in the
Restated Incentive Plan, all Options outstanding at the time of
the events giving rise to each affected participants right
to change in control benefits under the Restated Incentive Plan
will terminate and each affected holder of Options will be paid
an amount in cash according to the terms of the Restated
Incentive Plan.
U.S.
Federal Income Tax Consequences of the Plan
In
General
The Plan is not qualified under Section 401(a) of the
Internal Revenue Code (the Code).
The following summary is based on the applicable provisions of
the Code as currently in effect and the income tax regulations
and proposed income tax regulations thereunder.
Status
of Options
Options granted under the Plan may be either incentive stock
options or nonqualified options. Under certain circumstances, an
incentive stock option may be treated as a nonqualified option.
The tax consequences both to the
45
optionee and to the Company differ depending on whether an
Option is an incentive stock option or a nonqualified option.
Nonqualified
Options
No federal income tax is imposed on the optionee upon the grant
of a nonqualified option. Upon the exercise of a nonqualified
option, the optionee will be treated as receiving compensation,
taxable as ordinary income in the year of exercise. The amount
recognized as ordinary income upon exercise will be the excess
of the fair market value of the shares of common stock at the
time of exercise over the exercise price paid for such common
stock. At the time common stock received upon exercise of a
nonqualified option is disposed of, any difference between the
fair market value of the shares of common stock at the time of
exercise and the amount realized on the disposition will be
treated as capital gain or loss.
Upon an optionees exercise of a nonqualified option, and
subject to the application of Section 162(m) of the Code as
discussed below, the Company may claim a deduction for the
compensation paid at the same time and in the same amount as
compensation is treated as being received by the optionee,
assuming the Company satisfies the federal income tax reporting
requirements with respect to such compensation. The Company is
not entitled to any tax deduction in connection with a
subsequent disposition by the optionee of the shares of common
stock.
Incentive
Stock Options
No federal income tax is imposed on the optionee upon the grant
of an incentive stock option. The optionee would recognize no
taxable income upon exercise of an incentive stock option if the
optionee (a) does not dispose of the shares of common stock
acquired pursuant to the exercise of an incentive stock option
within two years from the date the Option was granted or within
one year after the shares of common stock were transferred to
the optionee (the Holding Period) and (b) is an
employee of either (i) the Company, (ii) the parent
company or a subsidiary of the Company or (iii) a
corporation which has assumed such Option as a result of a
corporate reorganization, merger or similar transaction. Such
employment must continue for the entire time from the date the
Option was granted until three months before the date of
exercise, or 12 months before the date of exercise if
employment ceases due to permanent and total disability. If
common stock received upon exercise of an incentive stock option
is disposed of after completion of the Holding Period, any
difference between the exercise price paid for such common stock
and the amount realized on the disposition would be treated as a
capital gain or loss. The Company would not be entitled to any
deduction in connection with the grant or exercise of the Option
or the disposition of the shares of common stock so acquired.
Restricted
Stock
A participant generally will not recognize taxable income upon
the grant of Restricted Stock, and the recognition of any income
will be postponed until such shares are no longer subject to
restrictions on transfer or the risk of forfeiture. When either
the transfer restrictions or the risk of forfeiture lapses, the
participant will recognize ordinary income equal to the fair
market value of the Restricted Stock at the time of such lapse.
A participant may elect to be taxed at the time of the grant of
Restricted Stock and, if this election is made, the participant
will recognize ordinary income equal to the excess of the fair
market value of the Restricted Stock at the time of grant
(determined without regard to any of the restrictions thereon)
over the amount paid, if any, by the participant for such
Restricted Stock. In each case, subject to Section 162(m) of
the Code as discussed below, the Company will be entitled to a
deduction for the corresponding amount.
Performance
Awards and Other Stock-Based Awards
In general, a participant who receives a Performance Award or
Other Stock-Based Award will not be taxed on receipt of the
Award, but instead the fair market value of the cash or common
stock received will be taxable as ordinary income on the date
that the cash or common stock is received in payment of the
Award. Subject to the application of Section 162(m) of the
Code as discussed below, the Company will be entitled to a
deduction for the corresponding amount.
46
Bonus
Shares
In general, the fair market value of Bonus Shares will be
taxable as ordinary income on the date the Bonus Shares are
received. Subject to the application of Section 162(m) of
the Code as discussed below, the Company will be entitled to a
deduction for the corresponding amount.
Phantom
Shares
The amount received upon receipt of cash or stock pursuant to an
award of Phantom Shares is included in taxable income at the
time the cash or stock is received. In the case of receipt of
stock the amount included in income is the fair market value of
the stock received. Subject to Section 162(m) of the Code
as discussed below, the Company will be entitled to a deduction
for the corresponding amount.
Cash
Awards
Generally, a Cash Award would be compensation income, subject to
tax at ordinary income tax rates when paid. Subject to the
application of Section 162(m) of the Code as discussed
below, the Company will be entitled to a deduction for the
corresponding amount.
Additional
Tax Consequences
Section 162(m) of the Code places a $1 million cap on
the deductible compensation that may be paid to certain
executives of publicly traded corporations. Amounts that qualify
as performance based compensation under
Section 162(m)(4)(C) of the Code are exempt from the cap
and do not count toward the $1 million limit. Generally,
Options granted with an exercise price at least equal to the
fair market value of the stock on the date of grant will qualify
as performance-based compensation. Other Awards may or may not
so qualify, depending on their terms.
47
PROPOSAL 3:
RATIFICATION
OF INDEPENDENT AUDITOR
The Audit Committee has selected KPMG LLP as the Companys
independent auditor for fiscal year 2009, and the Board of
Directors is asking stockholders to ratify that selection.
Although current law, rules, and regulations, as well as the
charter of the Audit Committee, require the Companys
independent auditor to be engaged, retained and supervised by
the Audit Committee, the Board is submitting the selection of
KPMG LLP for ratification by stockholders as a matter of good
corporate practice. If the selection is not ratified, the Audit
Committee will consider whether it is appropriate to select
another registered public accounting firm. Even if the selection
is ratified, the Audit Committee in its discretion may select a
different registered public accounting firm at any time during
the year if it determines that such a change would be in the
best interests of the Company and our shareholders.
The affirmative vote of holders of a majority of the shares of
common stock present or represented by proxy at the meeting and
entitled to vote is required to approve the ratification of the
selection of KPMG as the Companys independent auditor for
the current fiscal year. The Board of Directors unanimously
recommends that you vote FOR this proposal.
48
OTHER
MATTERS
Management knows of no other business that will be presented to
the meeting for a vote. If other matters properly come before
the meeting, the persons named as proxies will vote on them in
accordance with their best judgment.
The Company is soliciting proxies for the 2009 Annual Meeting
and will bear the cost of solicitation. In addition to
solicitation by mail, certain of the directors, officers or
regular employees of the Company may, without extra
compensation, solicit the return of proxies by telephone or
electronic media. Arrangements will be made with brokerage
houses, custodians and other fiduciaries to send proxy material
to their principals, and the Company will reimburse these
parties for any out-of-pocket expenses.
PROPOSALS OF
STOCKHOLDERS FOR 2010 ANNUAL MEETING
The Company expects that its 2010 annual meeting of stockholders
will be held in May 2010 consistent with prior annual meetings.
Stockholders of record who intend to submit a proposal at the
annual meeting of stockholders in 2010 must provide written
notice to the Company in accordance with the Companys
Bylaws. Under the Companys Bylaws, such notice must be
received at the Companys principal executive offices,
addressed to the Secretary of the Company, no later than
January 20, 2010, which is a date at least at least
80 days prior to the date the Company currently intends to
distribute its proxy statement with respect to its 2010 annual
meeting of stockholders.
Stockholders who intend to submit a proposal at the annual
meeting of stockholders in 2010 and desire that such proposal be
included in the proxy materials for such meeting must follow the
procedures prescribed in the Companys Bylaws and Rule
l4a-8 under
the Securities Exchange Act of 1934, as amended. To be eligible
for inclusion in the proxy materials, stockholder proposals must
be received by the Secretary of the Company at the
Companys principal executive offices no later than
January 20, 2010, which the Company believes is a
reasonable time before it will begin to print and send its proxy
materials.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of reports on Forms 3 and 4 and
amendments thereto furnished to the Company during fiscal 2008,
reports on Form 5 and amendments thereto furnished to the
Company with respect to fiscal 2008, and written representations
from officers and directors that no Form 5 was required to
be filed, except as set forth below, the Company believes that
all filing requirements applicable to its officers, directors
and beneficial owners of more than 10% of the Common Stock under
Section 16(a) of the Securities Exchange Act of 1934, as
amended, were complied with during fiscal 2008. Mr. Moore
filed a Form 4 on November 17, 2008 with respect to two
reportable transactions which occurred on November 12, 2008.
ADDITIONAL
INFORMATION
We are required to provide an Annual Report to stockholders of
the Company for the year ended December 31, 2008, including
audited financial statements, to stockholders who receive this
proxy statement. We will also provide copies of the Annual
Report to brokers, dealers, banks, voting trustee and their
nominees for the benefit of their beneficial owners of record.
Additional copies of the Annual Report along with copies of our
Annual Report on
Form 10-K
for the year ended December 31, 2008 (without exhibits),
are available free of charge to stockholders who forward a
written request to Secretary, Basic Energy Services, Inc.,
500 W. Illinois, Suite 100, Midland, Texas 79701.
You may also review the Companys filings with the
Securities and Exchange Commission by visiting our website at
www.basicenergyservices.com.
49
The Securities and Exchange Commission has adopted rules that
permit companies and intermediaries such as brokers to satisfy
delivery requirements for proxy statements with respect to two
or more stockholders sharing the same address by delivering a
single proxy statement addressed to those shareholders. This
process, which is commonly referred to as
householding, potentially provides extra convenience
for stockholders and cost savings for companies. Some brokers
household proxy materials, delivering a single proxy statement
to multiple shareholders sharing an address unless contrary
instructions have been received from the affected shareholders.
Once you have received notice from your broker that they will be
householding materials to your address, householding will
continue until you are notified otherwise or until you revoke
your consent. If, at any time, you no longer wish to participate
in householding and would prefer to receive a separate proxy
statement, or if you are receiving multiple copies of the proxy
statement and wish to receive only one, please notify your
broker.
The Corporate Governance Guidelines, the Code of Ethics and the
charters of the Audit Committee, the Nominating and Corporate
Governance Committee and the Compensation Committee are also
available on the Companys website
(www.basicenergyservices.com), and copies of these
documents are available to stockholders, without charge, upon
request.
50
ANNEX A
RESTATED INCENTIVE PLAN
Fourth
Amended and Restated
Basic Energy Services, Inc.
2003 Incentive Plan
(effective
May 26, 2009)
SECTION 1. Purpose
of the Plan.
The Fourth Amended and Restated Basic Energy Services, Inc. 2003
Incentive Plan (the Plan) is intended
to promote the interests of Basic Energy Services, Inc.
(formerly named BES Holding Co.), a Delaware corporation (the
Company), by encouraging officers,
employees, directors and consultants of the Company and its
Affiliates to acquire or increase their equity interest in the
Company and to provide a means whereby they may develop a sense
of proprietorship and personal involvement in the development
and financial success of the Company, and to encourage them to
remain with and devote their best efforts to the business of the
Company thereby advancing the interests of the Company and its
stockholders. The Plan is also contemplated to enhance the
ability of the Company and its Affiliates to attract and retain
the services of individuals who are essential for the growth and
profitability of the Company.
Effective as of the effective date of the Plan as set forth in
Section 10 hereunder, all outstanding stock options and
other Awards granted under the Plan (including Awards previously
assumed by the Company under predecessor plans) prior to this
amendment and restatement, are assumed and continued hereunder.
All outstanding Awards that are assumed and continued under this
Plan, as amended and restated, shall remain subject to their
individual Award Agreements for each such outstanding Award.
SECTION 2. Definitions.
As used in the Plan, the following terms shall have the meanings
set forth below:
Affiliate shall mean (i) any
entity in which the Company, directly or indirectly, owns 50% or
more of the combined voting power, as determined by the
Committee, (ii) any parent
corporation of the Company (as defined in
Section 424(e) of the Code) and (iii) any
subsidiary corporation of any such parent (as
defined in Section 424(f) of the Code) thereof.
Award shall mean any Option,
Restricted Stock, Performance Award, Phantom Shares, Bonus
Shares, Other Stock-Based Award or Cash Award.
Award Agreement shall mean any written
or electronic agreement, contract, or other instrument or
document evidencing any Award, which may, but need not, be
executed or acknowledged by a Participant.
Board shall mean the Board of
Directors of the Company.
Bonus Shares shall mean an award of
Shares granted pursuant to Section 6(d) of the Plan.
Cash Award shall mean an award payable
in cash granted pursuant to Section 6(f) of the Plan.
Change in Control shall mean the
occurrence of any one of the following:
(a) the consummation of any transaction (including without
limitation, any merger, consolidation, tender offer, or exchange
offer) the result of which is that any individual or
person (as such term is used in
Sections 13(d)(3) and 14(d)(2), of the Securities Exchange
Act of 1934 (the Exchange Act)), other
than (i) Southwest Royalties Holdings, Inc. and its
affiliates (as such term is defined in
Rule 144 under the Exchange Act), (ii) Credit Suisse
First Boston Corporation and its
affiliates (as such term is defined in
Rule 144 under the Exchange Act), (iii) the Company or
any Affiliates controlled by the Company, (iv) any employee
benefit plan of the Company or any of its Affiliates or
(v) an underwriter temporarily holding securities pursuant
to an offering of such securities, becomes the
beneficial owner (as such term is
defined in
Rule 13d-3
and
Rule 13d-5
under the Exchange Act), directly or indirectly, of securities
of the Company representing 40% or more of the combined voting
power of the Companys then-outstanding securities;
51
(b) the individuals who, as of the effective date of the
Plan, constitute the Board (the Incumbent
Board), cease for any reason to constitute at
least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof
whose election, or nomination for election by the Companys
stockholders, was approved by a vote of at least a majority of
the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result
of either (i) an actual or threatened election contest (as
such terms are used in
Rule 14a-11
of Regulation 14A promulgated under the Exchange Act), or
an actual or threatened solicitation of proxies or consents by
or on behalf of a Person other than the Board, or (ii) a
plan or agreement to replace a majority of the members of the
Board then comprising the Incumbent Board;
(c) the sale, lease, transfer, conveyance or other
disposition (including by merger or consolidation) in one or a
series of related transactions, of all or substantially all of
the assets of the Company to an unrelated person; or
(d) the adoption of a plan relating to the liquidation or
dissolution of the Company.
Solely with respect to any Award that is subject to
Section 409A of the Code, this definition is intended to
comply with the definition of change in control under
Section 409A of the Code as in effect commencing
January 1, 2005 and, to the extent that the above
definition does not so comply, such definition shall be void and
of no effect and, to the extent required to ensure that this
definition complies with the requirements of Section 409A
of the Code, the definition of such term set forth in
regulations or other regulatory guidance issued under
Section 409A of the Code by the appropriate governmental
authority is hereby incorporated by reference into and shall
form part of this Plan as fully as if set forth herein verbatim
and the Plan shall be operated in accordance with the above
definition of Change in Control as modified to the extent
necessary to ensure that the above definition complies with the
definition prescribed in such regulations or other regulatory
guidance insofar as the definition relates to any Award that is
subject to Section 409A of the Code.
Code shall mean the Internal Revenue
Code of 1986, as amended from time to time, and the rules and
regulations thereunder.
Committee shall mean the committee
appointed by the Board to administer the Plan or, if none, the
Board.
Company shall mean the corporation
described in Section 1 of the Plan.
Consultant shall mean any individual,
other than a Director or an Employee, who renders consulting or
advisory services to the Company or an Affiliate for a fee.
Covered Person shall mean any of the
Chief Executive Officer of the Company and the four
(4) highest paid officers of the Company other than the
Chief Executive Officer as described in Section 162(m)(3)
of the Code.
Director shall mean a
non-employee director of the Company,
as defined in
Rule 16b-3.
Employee shall mean any employee of
the Company or an Affiliate.
Exchange Act shall mean the Securities
Exchange Act of 1934, as amended.
Fair Market Value shall mean, with
respect to Shares, the fair market value determined in good
faith by the Committee, which may be conclusively deemed by the
Committee to be the closing sales price (or, if applicable, the
highest reported bid price) of a Share on the applicable date
(or if there is no trading in the Shares on such date, on the
next preceding date on which there was trading) as reported in
The Wall Street Journal (or other reporting service
approved by the Committee). If the Shares are not publicly
traded at the time a determination of its fair market value is
required to be made hereunder, the determination of fair market
value shall be made in good faith by the Committee.
Option shall mean an option granted
under Section 6(a) of the Plan. Options granted under the
Plan may constitute incentive stock
options for purposes of Section 422 of the
Code or nonqualified stock options that are not intended to
satisfy the requirements of Section 422 of the Code.
Other Stock-Based Award shall mean an
award granted pursuant to Section 6(g) of the Plan that is
not otherwise specifically provided for, the value of which is
based in whole or in part upon the value of a Share.
52
Participant shall mean any Director,
Employee or Consultant granted an Award under the Plan.
Performance Award shall mean any right
granted under Section 6(c) of the Plan.
Performance Objectives means the
objectives, if any, established by the Committee that are to be
achieved with respect to an Award granted under this Plan, which
may be described in terms of Company-wide objectives, in terms
of objectives that are related to performance of a division,
subsidiary, department or function within the Company or a
subsidiary in which the Participant receiving the Award is
employed or in individual or other terms, and which will relate
to the period of time determined by the Committee. The
Performance Objectives intended to qualify under
Section 162(m) of the Code shall be with respect to one or
more of the following: (i) net earnings;
(ii) operating income; (iii) earnings before interest
and taxes (EBIT); (iv) earnings
before interest, taxes, depreciation, and amortization expenses
(EBITDA); (v) earnings before
taxes and unusual or nonrecurring items; (vi) net income
before interest, income and franchise taxes, depreciation and
amortization expenses, and any unusual or non-recurring non-cash
expenses or income (Company EBITDA);
(vii) revenue; (viii) return on investment;
(ix) return on equity; (x) return on total capital;
(xi) return on assets; (xii) total stockholder return;
(xiii) return on capital employed in the business;
(xiv) stock price performance; (xv) earnings per share
growth; and (xvi) cash flows. Which objectives to use with
respect to an Award, the weighting of the objectives if more
than one is used, and whether the objective is to be measured
against a Company-established budget or target, an index or a
peer group of companies, shall be determined by the Committee in
its discretion at the time of grant of the Award. A Performance
Objective need not be based on an increase or a positive result
under a particular business criterion and may include, for
example, maintaining the status quo or limiting economic losses.
Person shall mean individual,
corporation, partnership, association, joint-stock company,
trust, unincorporated organization, government or political
subdivision thereof or other entity.
Phantom Shares shall mean an Award of
the right to receive Shares issued at the end of a Restricted
Period (an amount of cash equal to a specified number of Shares,
or a combination thereof) which is granted pursuant to
Section 6(e) of the Plan.
Plan shall mean the plan described in
Section 1 of the Plan and set forth in this document, as
amended from time to time.
Restricted Period shall mean the
period established by the Committee with respect to an Award
during which the Award either remains subject to forfeiture or
is not exercisable by the Participant.
Restricted Stock shall mean any Share,
prior to the lapse of restrictions thereon, granted under
Sections 6(b) of the Plan.
Rule 16b-3
shall mean
Rule 16b-3
promulgated by the SEC under the Exchange Act, or any successor
rule or regulation thereto as in effect from time to time.
SEC shall mean the Securities and
Exchange Commission, or any successor thereto.
Shares or Common
Shares or Common Stock
shall mean the common stock of the Company, $.01 par value,
and such other securities or property as may become the subject
of Awards under the Plan.
Termination for Cause shall mean,
unless eliminated or otherwise defined by the Committee in a
Participants Award, the occurrence of any of the following
events:
(i) the commission by Participant of a material act of
willful misconduct including, but not limited to, the willful
violation of any material law, rule, regulation or cease and
desist order applicable to Participant or the Company (other
than a law, rule or regulation relating to a minor traffic
violation or similar offense), or an act which constitutes a
breach of a fiduciary duty owed to the Company by Participant
involving personal profit;
(ii) the commission by Participant of an act of dishonesty
relating to the performance of Participants duties,
habitual unexcused absence from work, willful failure to perform
duties in any material respect (other than any such failure
resulting from Participants incapacity due to physical or
mental illness or disability), or gross negligence in the
performance of duties resulting in material damage or injury to
the Company, its reputation or goodwill (provided, however, that
in the event of Participants willful failure to perform
duties in
53
any material respect, Participant shall be provided with written
notice of such event and shall be provided with a reasonable
opportunity, and in no event more than 30 days, to cure
such failure to perform his duties); or
(iii) any felony conviction of Participant or any
conviction involving dishonesty, fraud or breach of trust (other
than for a minor traffic violation or similar offense), whether
or not in the line of duty.
Termination for Good Reason shall
mean, unless eliminated or otherwise defined by the Committee in
a Participants Award, any nonconsentual (i) material
reduction in the Participants authority, duties or
responsibilities; (ii) reduction in the Participants
compensation by more than 20 percent from the compensation
(excluding Awards pursuant to this Plan or other stock-based
compensation) paid by the Company during the completed fiscal
year prior to the Change of Control; or (iii) change caused
by the Company in the Participants office location of more
than 35 miles from its location on the date of the Change
in Control; provided, however, that the Participant terminates
his employment with the Company and its Affiliates hereunder
within 120 days following the date on which the Participant
has actual notice of the event that gives rise to the
Termination for Good Reason.
SECTION 3. Administration.
(a) General. The Plan shall be
administered by the Committee. Should any class of Common Stock
be registered under Section 12(g) of the Exchange Act, the
Committee shall be composed of not less than two
(2) members of the Board, each of whom shall meet the
definition of nonemployee director for
purposes of
Rule 16b-3
promulgated by the SEC under the Exchange Act and an
outside director under
Section 162(m) of the Code. A majority of the Committee
shall constitute a quorum, and the acts of a majority of the
members of the Committee who are present at any meeting thereof
at which a quorum is present, or the acts unanimously approved
by the members of the Committee in writing, shall be the acts of
the Committee.
(b) Committee Authority. Subject to the
terms of the Plan and applicable law, and in addition to other
express powers and authorizations conferred on the Committee by
the Plan, the Committee shall have full power and authority to:
(i) designate Participants; (ii) determine the type or
types of Awards to be granted to a Participant;
(iii) determine the number of Shares to be covered by, or
with respect to which payments, rights, or other matters are to
be calculated in connection with, Awards; (iv) determine
the terms and conditions of any Award; (v) determine
whether, to what extent, and under what circumstances Awards may
be settled or exercised in cash, Shares, other securities, other
Awards or other property, or canceled, forfeited, or suspended
and the method or methods by which Awards may be settled,
exercised, canceled, forfeited, or suspended;
(vi) determine whether, to what extent, and under what
circumstances cash, Shares, other securities, other Awards,
other property, and other amounts payable with respect to an
Award shall be deferred either automatically or at the election
of the holder thereof or of the Committee; (vii) interpret
and administer the Plan and any instrument or agreement relating
to an Award made under the Plan; (viii) establish, amend,
suspend, or waive such rules and regulations and appoint such
agents as it shall deem appropriate for the proper
administration of the Plan; and (ix) make any other
determination and take any other action that the Committee deems
necessary or desirable for the administration of the Plan;
provided, however, the Committee shall not take any action
otherwise authorized under this Section 3(b) to the extent
that (i) such action would cause (A) the application
of Section 162(m) or 409A of the Code to the Award or
(B) create adverse tax consequences under
Section 162(m) or 409A of the Code should either or both of
those Code sections apply to the Award or (ii) materially
reduce the benefit to the Participant without the consent of the
Participant. No member of the Committee shall vote or act upon
any matter relating solely to himself and grants of Awards to
members of the Committee must be ratified by the Board. Unless
otherwise expressly provided in the Plan, all designations,
determinations, interpretations, and other decisions under or
with respect to the Plan or any Award shall be within the sole
discretion of the Committee, may be made at any time and shall
be final, conclusive, and binding upon all Persons, including
the Company, any Affiliate, any Participant, any holder or
beneficiary of any Award, any stockholder and any Employee. No
member of the Board or Committee shall be liable for any action
or determination made in good faith with respect to the Plan or
any Award granted hereunder and the members of the Board and
Committee shall be entitled to indemnification and reimbursement
by the Company and its Affiliates in respect of any claim, loss,
damage or expense (including legal fees) arising therefrom to
the full extent permitted by law.
54
SECTION 4. Shares
Available for Awards.
(a) Shares Available. Subject to
adjustment as provided in Section 4(c), the aggregate
number of Shares with respect to which Awards may be granted
under the Plan shall be up to 7,100,000 Shares (including
after giving effect to a
5-for-1
stock split effected as a stock dividend on September 26,
2005). Except for withholding of Shares for payment of taxes or
exercise price, if any Award is exercised, paid, forfeited,
terminated or canceled without the delivery of Shares, then the
Shares covered by such Award, to the extent of such payment,
exercise, forfeiture, termination or cancellation, shall again
be Shares with respect to which Awards may be granted. Awards
will not reduce the number of Shares that may be issued pursuant
to the Plan if the settlement of the Award will not require the
issuance of Shares, as, for example, an Other Stock-Based Award
that can be satisfied only by the payment of cash.
(b) Sources of Shares Deliverable Under
Awards. Any Shares delivered pursuant to an Award
may consist, in whole or in part, of authorized and unissued
Shares or of treasury Shares and shall be fully paid and
nonassessable.
(c) Adjustments. In the event that the
Committee determines that any dividend or other distribution
(whether in the form of cash, Shares, other securities, or other
property), recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation,
split-up,
spin-off, combination, repurchase, or exchange of Shares or
other securities of the Company, issuance of warrants or other
rights to purchase Shares or other securities of the Company, or
other similar corporate transaction or event affects the Shares
such that an adjustment is determined by the Committee to be
appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available
under the Plan, then the Committee shall, in such manner as it
may deem equitable, adjust any or all of (i) the number and
type of Shares (or other securities or property) with respect to
which Awards may be granted, (ii) the maximum number and
type of Shares (or other securities or property) with respect to
which Awards may be granted to any single individual during any
calendar year, (iii) the number and type of Shares (or
other securities or property) subject to outstanding Awards, and
(iv) the grant or exercise price with respect to any Award
or, if deemed appropriate, make provision for a cash payment to
the holder of an outstanding Award.
SECTION 5. Eligibility.
Any Employee, Director or Consultant shall be eligible to be
designated a Participant and receive an Award under the Plan.
SECTION 6. Awards.
(a) Options. Subject to the provisions of
the Plan, the Committee shall have the authority to determine
the Participants to whom Options shall be granted, the number of
Shares to be covered by each Option, the purchase price therefor
and the conditions and limitations applicable to the exercise of
the Option, including the following terms and conditions and
such additional terms and conditions, as the Committee shall
determine, that are not inconsistent with the provisions of the
Plan.
(i) Exercise Price. The purchase price
per Share purchasable under an Option shall be determined by the
Committee at the time the Option is granted, but shall not be
less than the Fair Market Value per Share on such grant date.
(ii) Time and Method of Exercise. The
Committee shall determine the time or times at which an Option
may be exercised in whole or in part (which may include the
achievement of one or more Performance Objectives), and the
method or methods by which, and the form or forms, in which
payment of the exercise price with respect thereto may be made
or deemed to have been made (which may include, without
limitation, cash, check acceptable to the Company, Shares held
for the period required to avoid a charge to the Companys
reported financial earnings and owned free and clear of any
liens, claims, encumbrances or security interests, outstanding
Awards, a cashless-broker exercise
(through procedures approved by the Committee and the Company),
other securities or other property, notes approved by the
Committee, or any combination thereof, having a Fair Market
Value on the exercise date equal to the relevant exercise
price); provided, however, in
55
order to exercise an Option, the Person or Persons entitled to
exercise the Option shall deliver to the Company payment in full
for the Shares being purchased and, unless other arrangements
have been made with, or procedures have been established and
approved by, the Committee, any required withholding taxes.
(iii) Incentive Stock Options. The terms
of any Option granted under the Plan intended to be an incentive
stock option shall comply in all respects with the provisions of
Section 422 of the Code, or any successor provision, and
any regulations promulgated thereunder. Incentive stock options
may be granted only to employees of the Company and its parent
corporation and subsidiary corporations, within the meaning of
Section 424 of the Code while each such entity is a
Corporation described in Section 7701(a)(3) of
the Code and Treas. Reg.
Section 1.421-1(i)(1).
To the extent the aggregate Fair Market Value of the Shares
(determined as of the date of grant) of an Option to the extent
exercisable for the first time during any calendar year (under
all plans of the Company and its parent and subsidiary
corporations) exceeds $100,000, such Option Shares in excess of
$100,000 shall be nonqualified stock options. No Option that is
an incentive stock option shall be exercisable after the
expiration of 10 years from its date of grant.
Notwithstanding anything herein to the contrary, in no event
shall any person owning stock possessing more than 10% of the
total combined voting power of the Company and its Affiliates be
granted an incentive stock option hereunder unless (1) the
Option exercise price shall be at least 110% of the Fair Market
Value of the Shares subject to such Option at the time the
Option is granted and (2) the term during which such Option
is exercisable does not exceed five years from its date of grant.
(iv) Limits. Subject to adjustment as
provided in Section 4(c), the maximum number of Options that may
be granted to any Participant during any calendar year shall not
exceed 300,000 Shares.
(b) Restricted Stock. Subject to the
provisions of the Plan, the Committee shall have the authority
to determine the Participants to whom Restricted Stock shall be
granted, the number of Shares of Restricted Stock to be granted
to each such Participant, the duration of the Restricted Period
during which, and the conditions, including Performance
Objectives, if any, under which if not achieved, the Restricted
Stock may be forfeited to the Company, and the other terms and
conditions of such Awards.
(i) Dividends. Dividends paid on
Restricted Stock may be paid directly to the Participant, may be
subject to risk of forfeiture
and/or
transfer restrictions during any period established by the
Committee or sequestered and held in a bookkeeping cash account
(with or without interest) or reinvested on an immediate or
deferred basis in additional shares of Common Stock, which
account or shares may be subject to the same restrictions as the
underlying Award or such other restrictions, all as determined
by the Committee in its discretion.
(ii) Registration. Any Restricted Stock
may be evidenced in such manner as the Committee shall deem
appropriate, including, without limitation, book-entry
registration or issuance of a stock certificate or certificates.
In the event any stock certificate is issued in respect of
Restricted Stock granted under the Plan, such certificate shall
be registered in the name of the Participant and shall bear an
appropriate legend referring to the terms, conditions, and
restrictions applicable to such Restricted Stock.
(iii) Forfeiture and Restrictions
Lapse. Except as otherwise determined by the
Committee or the terms of the Award that granted the Restricted
Stock, upon termination of a Participants employment (as
determined under criteria established by the Committee) for any
reason during the applicable Restricted Period, all Restricted
Stock shall be forfeited by the Participant and reacquired by
the Company. Unrestricted Shares, evidenced in such manner as
the Committee shall deem appropriate, shall be issued to the
holder of Restricted Stock promptly after the applicable
restrictions have lapsed or otherwise been satisfied.
(iv) Transfer Restrictions. During the
Restricted Period, Restricted Stock will be subject to the
limitations on transfer as provided in Section 6(h)(i).
(v) Limits. Subject to adjustment as
provided in Section 4(c), the maximum number of Shares of
Restricted Stock that may be granted to any Participant during
any calendar year shall not exceed 300,000 Shares of
Restricted Stock.
56
(c) Performance Awards. The Committee
shall have the authority to determine the Participants who shall
receive a Performance Award, which shall be denominated as a
cash amount (e.g., $100 per award unit) at the time of grant and
confer on the Participant the right to receive payment of such
Award, in whole or in part, upon the achievement of such
Performance Objectives during such performance periods as the
Committee shall establish with respect to the Award.
(i) Terms and Conditions. Subject to the
terms of the Plan and any applicable Award Agreement, the
Committee shall determine the Performance Objectives to be
achieved during any performance period, the length of any
performance period, the amount of any Performance Award and the
amount of any payment or transfer to be made pursuant to any
Performance Award. In the case of any Performance Award granted
to a Covered Employee in any calendar year in which any class of
Common Stock is registered under Section 12(g) of the
Exchange Act, performance goals shall be designed to be
objective and shall otherwise meet the requirements of
Section 162(m) of the Code and regulations issued
thereunder (including Treasury
Regulation Section 1.162-27
and any successor regulation thereto), including the requirement
that the level or levels of performance targeted by the
Committee are such that the achievement of performance goals is
substantially uncertain at the time of grant. In
addition, achievement of performance goals in respect of
Performance Awards shall be measured over a performance period
of not less than six (6) months and not more than ten
(10) years, as specified by the Committee. Performance
goals in the case of any Performance Award granted to a Covered
Person in any year in which any class of Common Stock is
registered under Section 12(g) of the Exchange Act shall be
established not later than ninety (90) days after the
beginning of any performance period applicable to such
Performance Award, or at such other date as may be required or
permitted for performance-based
compensation under Section 162(m) of the
Code. Subject to Section 8, the Committee shall not
exercise discretion to increase any amount payable in respect of
a Performance Award which is intended to comply with
Section 162(m) of the Code.
(ii) Payment of Performance
Awards. Performance Awards, to the extent earned
and vested, shall be paid (in cash
and/or in
Shares, in the sole discretion of the Committee) in a lump sum
following the close of the performance period. Except as may
otherwise be required under Section 409A of the Code, cash
payments or tendered stock certificates described in the
immediately preceding sentence shall be made by the later of
(i) the date that is
21/2
months after the end of the Participants first taxable
year in which the Performance Award is earned and payable under
the Plan and (ii) the date that is
21/2
months after the end of the Companys first taxable year in
which the Performance Award is earned and payable under the
Plan, and such payment shall not be subject to any election by
the Participant to defer the payment to a later period. To the
extent that the final settlement of a vested Award is to be made
in Shares, the amount payable under a Performance Award shall be
divided by the FMV Per Share of Common Stock on the
determination date and a stock certificate evidencing the
resulting shares of Common Stock (to the nearest full share)
shall be delivered to the Participant, or his personal
representative, and the value of any fractional shares will be
paid in cash. The Company will also retain the right under any
of its deferred compensation plans to make additional
contributions related to these Awards into a deferred
compensation plan, which Award will not vest until retirement or
certain conditions of termination as provided by that plan.
(iii) Limits. The maximum value of
Performance Awards that may be granted to any Participant during
any calendar year shall not exceed $2,000,000 calculated as of
the date of grant.
(d) Bonus Shares. The Committee shall
have the authority, in its discretion, to grant Bonus Shares to
Participants. Each Bonus Share shall constitute a transfer of an
unrestricted Share to the Participant, without other payment
therefor, as additional compensation for the Participants
services to the Company. Bonus Shares shall be in lieu of a cash
bonus that otherwise would be granted.
(e) Phantom Shares. The Committee shall
have the authority to grant Awards of Phantom Shares to
Participants upon such terms and conditions as the Committee may
determine.
(i) Terms and Conditions. Each Phantom
Share Award shall constitute an agreement by the Company to
issue or transfer a specified number of Shares or pay an amount
of cash equal to a specified number of Shares, or a combination
thereof to the Participant in the future, subject to the
fulfillment during the Restricted Period of such conditions,
including Performance Objectives, if any, as the Committee may
specify at the date
57
of grant. Payment shall be made in a lump sum no later than
21/2 months
after the end of the Restricted Period. During the Restricted
Period, the Participant shall not have any right to transfer any
rights under the subject Award, shall not have any rights of
ownership in the Phantom Shares and shall not have any right to
vote such shares.
(ii) Dividends. Any Phantom Share award
may provide that an amount equal to any or all dividends or
other distributions paid on Shares during the Restricted Period
be credited in a cash bookkeeping account (without interest) or
that equivalent additional Phantom Shares be awarded, which
account or shares may be subject to the same restrictions as the
underlying Award or such other restrictions as the Committee may
determine.
(iii) Limits. Subject to adjustment as
provided in Section 4(c), the maximum number of Phantom Shares
that may be granted to any Participant during any calendar year
shall not exceed 300,000 Phantom Shares.
(iv) Additional
Limitations. Notwithstanding any other provision
of this Section 6(e) to the contrary, any such Phantom
Shares Award granted under the Plan shall contain terms that
(i) are designed to avoid application of Section 409A
of the Code to the Award or (ii) are designed to avoid
adverse tax consequences under Section 409A of the Code
should that Code section apply to the Award.
(f) Cash Awards. The Committee shall have
the authority to determine the Participants to whom Cash Awards
shall be granted, the amount, whether the Cash Awards may be
voluntarily or shall be involuntarily deferred in a Company
deferred compensation plan, and the terms or conditions, if any,
as additional compensation or as deferred compensation for the
Participants services to the Company or its Affiliates. If
granted, a Cash Award shall be granted (simultaneously or
subsequently) in tandem with another Award and shall entitle a
Participant to receive a specified amount of cash from the
Company upon such other Award becoming taxable to the
Participant, which cash amount may be based on a formula
relating to the anticipated taxable income associated with such
other Award and the payment of the Cash Award; provided,
however, a Cash Award shall not be granted in tandem or in
combination with any other Award if that would (i) cause
application of Section 409A of the Code to either Award or
(ii) result in adverse tax consequences under
Section 409A of the Code should that Code section apply to
either Award.
(g) Other Stock-Based Awards. The
Committee may also grant to Participants an Other Stock-Based
Award, which shall consist of a right which is an Award
denominated or payable in, valued in whole or in part by
reference to, or otherwise based on or related to, Shares as is
deemed by the Committee to be consistent with the purposes of
the Plan. Subject to the terms of the Plan, including the
Performance Objectives, if any, applicable to such Award, the
Committee shall determine the terms and conditions of any such
Other Stock-Based Award. Notwithstanding any other provision of
the Plan to the contrary, any Other Stock-Based Award shall
contain terms that (i) are designed to avoid application of
Section 409A of the Code or (ii) are designed to avoid
adverse tax consequences under Section 409A should that
Code section apply to such Award. Payment shall be made in a
lump sum, or Share certificates issued, no later than
21/2 months
after the date such Other Stock-Based Award becomes vested.
Subject to adjustment as provided in Section 4(c) insofar
as that provision relates to Shares, the maximum number of
Shares or value for which Other Stock-Based Awards may be
granted to any Participant during any calendar year shall not
exceed 300,000 Shares, if the Award is in Shares, or
$500,000, if the Award is in dollars.
(h) General.
(i) Limits on Transfer of Awards.
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A.
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Except as provided in (C) below, each Award, and each right
under any Award, shall be exercisable only by the Participant
during the Participants lifetime, or by the person to whom
the Participants rights shall pass by will or the laws of
descent and distribution.
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B.
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Except as provided in (C) below, no Award and no right
under any such Award may be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered by a
Participant otherwise than by will or by the laws of descent and
distribution (or, in the case of Restricted Stock, to the
Company). Any such attempted or purported assignment,
alienation, pledge,
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attachment, sale, transfer or encumbrance shall be void,
ineffective and unenforceable against the Company or any
Affiliate, and shall give no right to the purported transferee,
and shall at the sole discretion of the Committee result in the
forfeiture of the Award with respect to the Award involved in
such attempted or perpetual transfer or encumbrance.
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C.
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Notwithstanding anything in the Plan to the contrary, to the
extent specifically provided by the Committee with respect to a
grant, (1) a nonqualified stock option may be transferred
to immediate family members or related family trusts, or similar
entities on such terms and conditions as the Committee may
establish, and (2) an Award other than an Incentive Stock
Option may be transferred pursuant to a qualified domestic
relations order described in Section 414(p) of the Code.
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(ii) Term of Awards. Subject to the terms
of the Plan, the term of each Award shall be for such period as
may be determined by the Committee; provided, that in no event
shall the term of any Award exceed a period of 10 years
from the date of its grant.
(iii) Share Certificates. All
certificates for Shares or other securities of the Company
delivered under the Plan pursuant to any Award or the exercise
thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan
or the rules, regulations, and other requirements of the SEC,
any stock exchange upon which such Shares or other securities
are then listed, and any applicable federal or state laws, and
the Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such
restrictions.
(iv) Consideration for Grants. Awards may
be granted for no cash consideration or for such consideration
as the Committee determines including, without limitation, such
minimal cash consideration as may be required by applicable law.
(v) Delivery of Shares or other Securities upon Payment
by Participant of Consideration. No Shares or
other securities shall be delivered pursuant to any Award until
payment in full of any amount required to be paid pursuant to
the Plan or the applicable Award Agreement is received by the
Company (including Shares being withheld in accordance with
Section 8(b) or any applicable Award agreement).
(vi) Section 409A
Considerations. Notwithstanding any other
provision of the Plan to the contrary, any Award granted after
December 31, 2004 shall contain terms that (i) are
designed to avoid application of Section 409A of the Code
to the Award or (ii) are designed to avoid adverse tax
consequences under Section 409A of the Code should that
Code Section apply to the Award. Dividend payments under any
Award (which are paid directly to any Participant and which are
otherwise subject to Section 409A) shall be made monthly
(if any) as of the last business day of each month, which
payment date is intended to be a fixed time or schedule under
Treasury
Regulation 1.409A-3(a)(4).
(vii) 409A Specified Employee. If the
Participant is a specified employee, as defined in
409A and the applicable regulations, except to the extent
permitted under Section 409A of the Code, no payment of any
Award that is subject to Section 409A of the Code (after
taking into account all applicable exceptions to
Section 409A of the Code, including but not limited to the
exceptions for short-term deferrals and for separation pay
only upon an involuntary separation from service) shall be
made under the Plan on account of the Participants
separation from service, as defined in
Section 409A of the Code, with the Company until the later
of the date prescribed for payment in the Award and the first
day of the seventh calendar month that begins after the date of
the Participants separation from service (or, if earlier,
the date of death of the Participant). Any such amounts shall be
aggregated and paid in a lump sum.
SECTION 7. Amendment
and Termination.
Except to the extent prohibited by applicable law and unless
otherwise expressly provided in an Award Agreement or in the
Plan:
(a) Amendments to the Plan. Except as
required by applicable law or the rules of the principal
securities exchange or market on which the shares are traded and
subject to Section 7(b) below, the Board or the Committee
59
may amend, alter, suspend, discontinue, or terminate the Plan
without the consent of any stockholder, Participant, other
holder or beneficiary of an Award, or other Person.
(b) Amendments to Awards. Subject to
(d) below, the Committee may waive any conditions or rights
under, amend any terms of, or alter any Award theretofore
granted, provided no change, other than pursuant to
Section 7(c), in any Award shall reduce the benefit to
Participant without the consent of such Participant. In no event
shall the Committee, if not the Board, take action without the
approval of the Board that constitutes a
repricing of an Option for financial
accounting purposes, and any Board-approved repricing shall be
inoperative and ineffective unless and until approved by the
stockholders.
(c) Adjustment of Awards Upon the Occurrence of Certain
Unusual or Nonrecurring Events. Subject to
(d) below, the Committee is hereby authorized to make
adjustments in the terms and conditions of, and the criteria
included in, Awards in recognition of unusual or nonrecurring
events (including, without limitation, the events described in
Section 4(c) of the Plan) affecting the Company, any
Affiliate, or the financial statements of the Company or any
Affiliate, or of changes in applicable laws, regulations, or
accounting principles, whenever the Committee determines that
such adjustments are appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be
made available under the Plan; provided, that any such election
would not (i) cause the application of Section 409A of
the Code to the Award or (ii) create adverse tax
consequences under Section 409A of the Code should
Section 409A apply to the Award.
(d) Section 162(m). The Committee,
in its sole discretion and without the consent of the
Participant, in addition to adjustments that may be made
pursuant to Section 7(c) above, may amend (i) any
stock-based Award to reflect (1) a change in corporate
capitalization, such as a stock split or dividend, (2) a
corporate transaction, such as a corporate merger, a corporate
consolidation, any corporate separation (including a spinoff or
other distribution of stock or property by a corporation), any
corporate reorganization (whether or not such reorganization
comes within the definition of such term in Section 368 of
the Code), (3) any partial or complete corporate
liquidation, or (4) a change in accounting rules required
by the Financial Accounting Standards Board and (ii) any
Award that is not intended to meet the requirements of the
performance based compensation exception to Section 162(m)
of the Code, to reflect a significant event that the Committee,
in its sole discretion, believes to be appropriate to reflect
the original intent in the grant of the Award. With respect to
an Award that is subject to Section 162(m) of the Code,
subject to Section 8, the Committee (i) shall not take
any action that would disqualify such Award as performance based
compensation and (ii) must first certify that the
Performance Objectives, if applicable, have been achieved before
the Award may be paid.
SECTION 8. Change
in Control.
(a) Awards Granted on or Prior to March 1,
2005. Notwithstanding any other provision of this
Plan to the contrary, in the event of a Change in Control of the
Company all outstanding Awards granted on or prior to
March 1, 2005 shall automatically become fully vested
immediately prior to such Change in Control (or such earlier
time as set by the Committee), all restrictions, if any, with
respect to such Awards shall lapse, and all performance
criteria, if any, with respect to such Awards shall be deemed to
have been met in full (at the highest level).
(b) Awards Granted After March 1,
2005. With respect to Awards granted after
March 1, 2005, notwithstanding any other provision of this
Plan to the contrary, in the event that a Participants
employment with the Company (or a successor) and all of its
Affiliates terminates within 2 years after a Change in
Control of the Company and (i) such termination of
employment was initiated by the Company (or a successor) other
than for a Termination for Cause or (ii) such termination
of employment was initiated by a Participant after determining
in the Participants good faith reasonable judgment that
the termination is a Termination for Good Reason, all such
Awards of each affected Participant shall become fully vested
immediately as of such employment termination date, all
restrictions, if any, with respect to such Awards shall lapse,
and all performance criteria, if any, with respect to such
Awards shall be deemed to have been met in full (at the highest
or maximum level). Unless the Company survives as an independent
publicly traded company, all Options outstanding at the time of
the events that give rise to each affected Participants
right to Change in Control benefits hereunder shall terminate
and the Optionee shall be paid, with respect to each Option, an
amount in cash equal to the excess of the Fair Market Value of a
Share over the Options exercise price (if the Option
exercise price exceeds the Fair Market Value of a Share on such
date, the
60
Optionee shall be paid an amount in cash equal to the lesser of
$1.00 or the Black-Scholes value of the cancelled Option as
determined in good faith by the Board), unless and except to the
extent provision is made in writing in connection with such
Change in Control event or transaction for the continuation of
the Plan
and/or the
assumption of the Options theretofore granted, or for the
substitution for such Options of new options covering the stock
of a successor entity, or the parent or subsidiary thereof, with
appropriate adjustments as to the number and kinds of shares and
exercise prices, in which event the Plan and Options theretofore
granted shall continue as fully vested and immediately
exercisable Options in the manner and under the terms so
provided.
SECTION 9. General
Provisions.
(a) No Rights to Awards. No Director,
Employee, Consultant or other Person shall have any claim to be
granted any Award. There is no obligation for uniformity of
treatment of Participants or holders or beneficiaries of Awards,
and the terms and conditions of Awards need not be the same with
respect to each recipient.
(b) Withholding. The Company or any
Affiliate is authorized to withhold from any Award, from any
payment due or transfer made under any Award or under the Plan
or from any compensation or other amount owing to a Participant
the amount (in cash, Shares, other securities, Shares that would
otherwise be issued pursuant to such Award, other Awards or
other property) of any applicable taxes payable at the minimum
statutory rate in respect of an Award, its exercise, the lapse
of restrictions thereon, or any payment or transfer under an
Award or under the Plan and to take such other action as may be
necessary in the opinion of the Company to satisfy all
obligations for the payment of such taxes at the minimum
statutory rate. In addition, the Committee may provide, in an
Award Agreement, that the Participant shall have the right to
direct the Company to satisfy the Companys actual tax
withholding obligation through the constructive
tender of already-owned Shares or the withholding of Shares
otherwise to be acquired upon the exercise or payment of such
Award.
(c) No Right to Employment. The grant of
an Award shall not be construed as giving a Participant the
right to be retained in the employ of the Company or any
Affiliate. Further, the Company or an Affiliate may at any time
dismiss a Participant from employment or other service
relationship at any time, free from any liability or any claim
under the Plan, unless otherwise expressly provided in the Plan
or in any Award Agreement.
(d) Governing Law. The validity,
construction, and effect of the Plan and any rules and
regulations relating to the Plan shall be governed by and
construed in accordance with the laws of the State of Delaware
and applicable federal law.
(e) Severability. If any provision of the
Plan or any Award is or becomes or is deemed to be invalid,
illegal, or unenforceable in any jurisdiction or as to any
Person or Award, or would disqualify the Plan or any Award under
any law deemed applicable by the Committee, such provision shall
be construed or deemed amended to conform to the applicable
laws, or if it cannot be construed or deemed amended without, in
the determination of the Committee, materially altering the
intent of the Plan or the Award, such provision shall be
stricken as to such jurisdiction, Person or Award and the
remainder of the Plan and any such Award shall remain in full
force and effect.
(f) Other Laws. The Committee may refuse
to issue or transfer any Shares or other consideration under an
Award if, acting in its sole discretion, it determines that the
issuance of transfer or such Shares or such other consideration
might violate any applicable law or regulation or entitle the
Company to recover the same under Section 16(b) of the
Exchange Act, and any payment tendered to the Company by a
Participant, other holder or beneficiary in connection with the
exercise of such Award shall be promptly refunded to the
relevant Participant, holder or beneficiary.
(g) Unfunded Plan. Neither the Plan nor
the Award shall create or be construed to create a trust or
separate fund or funds. Neither the Plan nor any Award shall
establish any kind of a fiduciary relationship between the
Company or any Affiliate and a Participant or any other Person.
To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Award,
such right shall be no greater than the right of any general
unsecured creditor of the Company or any Affiliate.
(h) No Fractional Shares. No fractional
Shares shall be issued or delivered pursuant to the Plan or any
Award, and the Committee shall determine whether cash, other
securities, or other property shall be paid or
61
transferred in lieu of any fractional Shares or whether such
fractional Shares or any rights thereto shall be canceled,
terminated or otherwise eliminated.
(i) Substitute Awards. Awards may be
granted from time to time in substitution for similar awards
held by employees or directors of other corporations who become
Employees or Directors of the Company or its Affiliates as the
result of a merger or consolidation of such director or
employees employing corporation with the Company or any
Affiliate, or the acquisition by the Company or any Affiliate of
the assets of such director or employees employing
corporation, or the acquisition by the Company or any Affiliate
of the stock of such director or employees employing
corporation. The terms and conditions of substitute Awards
granted shall comport with the terms and conditions set forth in
the Plan.
(j) Shareholder Agreements. The Committee
may condition the grant, exercise or payment of any Award upon
such person entering into a stockholders agreement or
repurchase agreement in such form as approved from time to time
by the Board.
(k) Gender, Tense and Headings. Whenever
the context requires, words of the masculine gender used herein
shall include the feminine and neuter and words used in the
singular shall include the plural. Headings are given to the
Sections and subsections of the Plan solely as a convenience to
facilitate reference. Such headings shall not be deemed in any
way material or relevant to the construction or interpretation
of the Plan or any provision thereof.
(l) No Guarantee of Tax
Consequences. None of the Board, the Company nor
the Committee makes any commitment or guarantee that any
federal, state or local tax treatment will apply or be available
to any person participating or eligible to participate hereunder.
(m) Section 162(m) Special Transition
Rule. Should any class of Common Stock be
registered under Section 12(g) of the Exchange Act, the
Plan is intended to qualify for the transition relief provided
under Treasury Regulation § 1.162-27(f). Accordingly,
all compensation realized by Participants in connection with
Awards granted under the Plan within the reliance period
described therein is intended to be exempt from the limitation
on tax deductibility under Section 162(m) of the Code. For
purposes of the Plan, the reliance period will expire on the
earlier of (i) the expiration of the Plan, (ii) a
material modification of the Plan (within the
meaning of Treasury Regulation § 1.162-27(h)(1)(iii)),
(iii) the issuance of all Common Stock that has been
allocated under the Plan, or (iv) the first meeting of
stockholders of the Company at which directors are to be elected
that occurs after the close of the third calendar year following
the calendar year in which the Common Stock is first registered
under Section 12(g) of the Exchange Act.
SECTION 10. Effective
Date of the Plan.
The Plan, as hereby amended and restated, shall be effective on
the date it is approved and adopted by the Board, including with
respect to all Awards granted on or after March 1, 2005,
except as otherwise provided in the Plan.
SECTION 11. Term
of the Plan.
No Award shall be granted under the Plan after the
10th anniversary of the earlier of the date this Plan is
adopted by the Board or the date the Plan is approved by the
stockholders of the Company. However, unless otherwise expressly
provided in the Plan or in an applicable Award Agreement, any
Award granted prior to such termination, and the authority of
the Board or the Committee to amend, alter, adjust, suspend,
discontinue, or terminate any such Award or to waive any
conditions or rights under such Award, shall extend beyond such
termination date.
62
0
BASIC ENERGY SERVICES, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS ON MAY 26, 2009
The 2009 Annual Meeting of the Stockholders of Basic Energy Services, Inc. (the Company) will be
held on Tuesday, May 26, 2009, at 10:00 a.m. local time, at the Petroleum Club of Midland, located
at 501 W. Wall, Midland, Texas 79701.
The undersigned, having received the notice and accompanying Proxy Statement for said meeting,
hereby constitutes and appoints Kenneth V. Huseman and Alan Krenek, or either of them, his/her true
and lawful agents and proxies, with power of substitution and resubstitution in each, to represent
and vote at the 2009 Annual Meeting scheduled to be held on May 26, 2009, or at any adjournment or
postponement thereof, on all matters coming before said meeting, all shares of Common Stock of the
Company which the undersigned may be entitled to vote. The above proxies are hereby instructed to
vote as shown on the reverse side of this card.
YOUR VOTE IS IMPORTANT TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE SIGN, DATE AND RETURN
YOUR PROXY AS PROMPTLY AS POSSIBLE. AN ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES, IS ENCLOSED FOR THIS PURPOSE.
(Continued and to be signed on the reverse side.)
14475 |
ANNUAL MEETING OF STOCKHOLDERS OF
BASIC ENERGY SERVICES, INC.
May 26, 2009
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL:
The Notice of Meeting, Proxy Statement, Proxy Card are available at htpps://www.proxydocs.com/BAS
Please sign, date and mail your proxy card in the envelope provided as soon as possible.
Please detach along perforated line and mail in the envelope provided.
20330030000000000000 6 052609
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR
BLACK INK AS SHOWN HERE
FOR AGAINST ABSTAIN
1. To elect THREE Class I directors to serve a three-year term.
2. APPROVAL OF FOURTH AMENDED AND RESTATED BASIC ENERGY SERVICES, INC. 2003 INCENTIVE PLAN
Nominees for election as Class I directors:
To approve the Fourth Amended and Restated Basic Energy O STEVEN A. WEBSTER
FOR ALL NOMINEES O SYLVESTER P. JOHNSON, IV
Services, Inc. 2003 Incentive Plan
O H. H. WOMMACK, III
WITHHOLD AUTHORITY
3. RATIFICATION OF AUDITORS To ratify the selection of KPMG LLP as the Companys independent
FOR ALL NOMINEES
FOR ALL EXCEPT
auditor for fiscal year 2009
(See instructions below)
In the discretion of the proxies, such other business as may properly come before the meeting and
at any adjournments or postponements thereof.
This proxy, when properly executed, will be voted in the manner directed herein. If no direction is
made, this proxy will be voted FOR the election of the nominees as director, FOR the approval of
the Fourth Amended and Restated Basic Energy Services, Inc. 2003 Incentive Plan, FOR the
ratification of the selection of KPMG LLP as the Companys independent auditor and, in the
discretion of
INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark FOR ALL EXCEPT
and fill in the circle next to each nominee you wish to withhold, as shown here:
the proxies, with respect to such other business as may properly come before the meeting.
The Board of Directors recommends a vote FOR the election of the nominees as director, FOR the
approval of the Fourth Amended and Restated Basic Energy Services, Inc. 2003 Incentive Plan and FOR
the ratification of the selection of KPMG LLP as the Companys independent auditor.
To change the address on your account, please check the box at right and indicate your new address
in the address space above. Please note that changes to the registered name(s) on the account may
not be submitted via this method.
Signature of Stockholder Date:
Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly,
each holder should sign. When signing as executor, administrator, attorney, trustee or guardian,
please give full title as such. If the signer is a corporation, please sign full corporate name by
duly authorized officer, giving full title as such. If signer is a partnership, please sign in
partnership name by authorized person. |