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
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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 2010
ANNUAL MEETING OF
STOCKHOLDERS
The 2010 Annual Meeting of Stockholders of Basic Energy
Services, Inc. will be held on Tuesday, May 25, 2010, 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 II directors to serve a
three-year term;
2. To ratify the appointment of KPMG LLP as our independent
auditor for fiscal year 2010; and
3. 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 6,
2010 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 2010 Annual Meeting of Stockholders to Be Held
on May 25, 2010: This notice, the proxy statement for the
2010 Annual Meeting of the Stockholders and our annual report on
Form 10-K
for the fiscal year ended December 31, 2009 are available
at https://www.proxydocs.com/BAS.
By Order of the Board of Directors,
Alan Krenek,
Secretary
Midland, Texas
April 22, 2010
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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i
PROXY
STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
MAY 25, 2010
GENERAL
This proxy statement is furnished in connection with the
solicitation of proxies by the Board of Directors in connection
with the 2010 Annual Meeting of Stockholders (the 2010
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 25, 2010, at 10:00 a.m. local time. Stockholders
of record at the close of business on April 6, 2010, 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 2010 Annual Meeting, other than (i) the election of
directors and (ii) the ratification of KPMG LLP as the
Companys independent auditor for fiscal year 2010.
Unless stockholders specify otherwise in their proxy, their
shares will not be voted in the election of the nominees listed
in this proxy statement 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 22, 2010.
VOTING
PROCEDURES
A majority of the outstanding shares of our common stock present
or represented by proxy at the 2010 Annual Meeting will
constitute a quorum for the transaction of business. Broadridge
Financial Solutions, Inc. 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. Under Delaware law, a broker non-vote or an
abstention is not considered to be a vote cast for any proposal
and will not have any impact on the outcome of such proposal.
Broker non-votes occur when brokers, banks or other
nominees that hold shares on behalf of beneficial owners do not
receive voting instructions from the beneficial owners prior to
the meeting and do not have discretionary voting authority to
vote those shares. Brokers that have not received instructions
from the beneficial owners are permitted to vote on
discretionary items, but they are not permitted to vote (a
broker non-vote) on non-discretionary items absent
instructions from the beneficial owner. As a result of a change
in the rules of the New York Stock Exchange (NYSE),
beginning with the 2010 Annual Meeting, brokers will no longer
have discretionary voting authority with respect to the election
of directors. Abstentions and broker non-votes will count in
determining whether a quorum is present at the 2010 Annual
Meeting. As a result, both abstentions and broker non-votes will
not have any effect on the outcome of voting on director
elections.
For 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. As a result, abstentions and broker non-votes will
have the same practical effect as votes against this proposal.
Because brokers generally have discretionary authority to vote
on the ratification of our independent auditors, broker
non-votes are generally not expected to result from the vote on
this proposal.
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 6, 2010, the record date, there were outstanding
41,267,517 shares of our common stock held of record by
approximately 335 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 II
directors will be elected at the 2010 Annual Meeting to serve
for a three-year term expiring at the Annual Meeting of
Stockholders in 2013. 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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William E. Chiles
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Mr. Chiles has served as a director of Basic Energy Services
since 2003. 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.
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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 a director of Basic Energy Services
since 2001. 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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Antonio O. Garza, Jr.
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Mr. Garza was appointed as a director of Basic Energy Services
in 2009. Mr. Garza joined ViaNovo, a management and
communications consultancy, as a partner in June 2009 and also
serves as the chair of its new business enterprise, ViaNovo
Ventures. Additionally, Mr. Garza currently acts as Counsel in
the Mexico City office of White & Case, an international
practice law firm. Prior to joining ViaNovo and White &
Case, Mr. Garza served as U.S. Ambassador to Mexico from the
summer of 2002 to May 2009. In 1998, Mr. Garza was elected to
the Texas Railroad Commission and served as Chairman of the
Commission from 1999 to 2002. Mr. Garza holds a B.B.A. from the
University of Texas at Austin and a J.D. from Southern Methodist
University School of Law.
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2009
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II
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3
Other Directors. The following table sets
forth certain information for the Class III and
Class I directors, whose terms will expire at the Annual
Meetings of Stockholders in 2011 and 2012, respectively.
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Director
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James S. DAgostino
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Mr. DAgostino has served as a director of Basic Energy
Services since 2004. Mr. DAgostino serves as Chairman of
the Board 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 as Chairman for its subsidiary, Encore Bank,
N.A., since July 2009 after serving as Encore Banks
Chairman, President and Chief Executive Officer 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 31 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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Thomas P. Moore, Jr.
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Mr. Moore has served as a director of Basic Energy Services
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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Director
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Sylvester P. Johnson, IV
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Mr. Johnson has served as a director of Basic Energy Services
since 2001. 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 a director of Basic Energy Services
since 2001. Mr. Webster has served as Co-Managing Partner 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 currently 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 previously served as a director of Pinnacle Gas
Resources, Inc. until June 2009; Encore Bancshares, Inc. until
May 2009; Solitario Exploration & Royalty Corp. until March
2009; Grey Wolf, Inc. until December 2008; Brigham Exploration
Company until April 2007; Goodrich Petroleum Corporation until
March 2007; Crown Resources Corporation until August 2006; and
Seabulk International, Inc. until March 2006. 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, an M.B.A. from Harvard Business School and an
honorary doctorate in management from Purdue University.
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2001
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Director Experience, Qualifications, Attributes and
Skills. The following is a brief discussion of
the experience, qualifications, attributes or skills that led to
the conclusion that the following persons should serve as a
director of the Company. Only one of our directors,
Mr. Huseman, is an officer of the Company.
Mr. Huseman, our Chief Executive Officer, has over
30 years of experience in our industry. The relevant
experience, qualifications, attributes and skills of our outside
directors include: for Mr. Chiles, oil and gas drilling and
other oilfield services; for Mr. DAgostino, banking,
investment management and insurance; for Mr. Fulton, oil
and gas drilling; for Mr. Garza, political, regulatory and
foreign (Mexico); for Mr. Johnson, oil and gas (including
as a Registered Petroleum Engineer); for Mr. Moore,
investment management (including as a Chartered Financial
Analyst), oilfield service and audit committee financial
expertise; and for Mr. Webster, oil and gas, oilfield
service and private equity.
5
BOARD OF
DIRECTORS AND COMMITTEES OF THE BOARD
Board of
Directors
Meetings. During fiscal
2009, the Board of Directors held six meetings of the full Board
and 17 meetings of committees. The Nominating and Corporate
Governance Committee held four meetings, the Compensation
Committee held five meetings and the Audit Committee held eight
meetings during fiscal 2009. 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, Chiles, DAgostino, Fulton, Johnson,
Moore and Webster attended our 2009 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 2009, 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, either (1) a stock
option to purchase 37,500 shares of our common stock at the
market price on the date of grant, which option vested ratably
over three years, or (2) since our 2005 initial public
offering, 37,500 shares of restricted stock that vest
ratably over three years.
In 2009, 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 2008, 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 2008 and 2009 that
vested upon issuance as consideration for services in his
capacity as Chairman and in lieu of his annual director fees.
During March 2010, due to the continued lower stock price per
share of common stock, the Board increased the number of
restricted shares issued as an annual retainer from
4,000 shares to 7,000 shares of restricted stock that
vest ratably over four years. Our Chairman was also granted an
additional 3,000 shares of restricted stock that vest
ratably over four years and $30,000 in cash as consideration for
services in his capacity as Chairman. The annual fees for
committee chairmen and per meeting fees of directors were held
the same as for 2009.
For additional information regarding fees earned for services as
a director effective in 2009, 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, Garza, Johnson and Moore.
The Board has determined that Messrs. DAgostino,
Chiles, Garza, Johnson and Moore 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 one of
the directors serves as an executive officer and director. 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 the past three years. Mr. Garza is counsel to a
law firm that was engaged by the Company to perform
6
services, but the fees for such services were less than $120,000
during 2009. In each case, these transactions 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 is independent and that none of these directors has a
material relationship with the Company.
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
|
|
|
|
|
|
|
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
|
|
|
|
|
|
Antonio O. Garza, Jr.
|
|
|
|
|
|
|
|
|
|
|
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;
|
7
|
|
|
|
|
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
|
|
|
|
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 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).
|
|
|
|
|
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;
|
|
|
|
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;
|
|
|
|
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;
|
|
|
|
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;
|
|
|
|
to have the sole responsibility for granting any waivers under
our Code of Ethics and Corporate Governance Guidelines; and
|
|
|
|
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 director
nominees. Among the many factors considered in identifying and
evaluating nominees, the Nominating and Corporate Governance
Committee first considers the Boards needs. Candidates
will first be interviewed by the Nominating and Corporate
Governance Committee. If approved by the Nominating and
Corporate Governance 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 Nominating and Corporate
Governance 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.
While the Nominating and Corporate Governance Committee may
consider diversity among other factors when considering director
nominees, it does not have any specific policy with regard to
diversity in identifying director nominees. In practice,
however, the Nominating and Governance Committee has considered
diversity as a significant factor, including in connection with
the appointment of Mr. Garza to the Board during 2009.
8
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 (i) the
stockholder giving notice and (ii) if any, (A) the
beneficial owner on whose behalf the nomination is made,
(B) any affiliates or associates of such stockholder or any
beneficial owner described in clause (A), and (C) each
other person with whom any of the foregoing persons either is
acting in concert with respect to the Company or has any
agreement, arrangement or understanding (whether written or
oral) for purpose of acquiring, holding, voting (except pursuant
to a revocable proxy given in certain specified circumstances)
or disposing of any capital stock of the Company or to cooperate
in obtaining, changing or influencing the control of the Company
(except independent financial, legal and other advisors acting
in the ordinary course of their respective businesses) (each
such person in clauses (A), (B) and (C) referred to as
a Stockholder Associated Person): (1) a
description of each agreement, arrangement or understanding with
any Stockholder Associated Person; (2) the name and record
address, as they appear on the Companys books, of the
stockholder proposing such business, such stockholders
principal occupation and the name and address of any Stockholder
Associated Person; (3) the class or series and number of
equity and other securities of the Company which are, directly
or indirectly, held of record or beneficially owned by such
stockholder or by any Stockholder Associated Person, the dates
on which such stockholder or any Stockholder Associated Person
acquired such shares and documentary evidence of such record or
beneficial ownership; (4) a list of all Derivative
Interests (as defined in the Bylaws) held of record or
beneficially owned by the stockholder or any Stockholder
Associated Person; (5) the name of each person with whom
the stockholder or any Stockholder Associated Person has a
Voting Agreement as defined in the Bylaws;
(6) details of all other material interests of each
stockholder or any Stockholder Associated Person in the proposal
of the nominee or any security of the Company (collectively,
Other Interests); (7) a description of all
economic terms of all such Derivative Interests, Voting
Agreements or Other Interests and copies of all agreements and
other documents relating to each such Derivate Interest, Voting
Agreement or Other Interest; and (8) a list of all
transactions by such stockholder and any stockholder Associated
Person involving any securities of the Company or any Derivative
Interests, Voting Agreements or Other Interests within the
six-month period prior to the date of the notice.
To be timely, a stockholders notice given in the context
of an annual meeting of stockholders shall be delivered to or
mailed and received at the principal executive office of the
Company not less than 90 days nor more than 120 days
in advance of the first anniversary of the date of the
Companys previous years annual meeting of
stockholders; provided, however, that if no annual
meeting was held in the previous year or the date of the annual
meeting of stockholders has been changed by more than 30
calendar days from the date of the previous years annual
meeting, the notice must be received by the Company not less
than 90 days nor more than 120 days prior to such
annual meeting date or, if the first public announcement of such
annual meeting is less than 100 days prior to the date of
such annual meeting, the tenth (10th) day following the day on
which the public announcement of the date of such meeting is
first made by the Company.
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 Nominating and
Corporate Governance 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.
9
Compensation Committee. The
responsibilities of the Compensation Committee, composed of
Messrs. Chiles (Chairman), DAgostino and Garza,
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.
10
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 6, 2010 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
|
|
Credit Suisse AG, including DLJ Merchant Banking Partners III,
L.P. and affiliated funds(1)
|
|
|
18,086,378
|
|
|
|
43.8
|
%
|
FMR LLC(2)
|
|
|
5,015,040
|
|
|
|
12.2
|
%
|
Barclays Global Investors, NA.(3)
|
|
|
2,372,189
|
|
|
|
5.7
|
%
|
Kenneth V. Huseman(4)
|
|
|
1,055,123
|
|
|
|
2.5
|
%
|
Alan Krenek(5)
|
|
|
235,740
|
|
|
|
*
|
|
T.M. Roe Patterson(6)
|
|
|
94,010
|
|
|
|
*
|
|
James F. Newman(7)
|
|
|
41,575
|
|
|
|
*
|
|
James E. Tyner(8)
|
|
|
53,665
|
|
|
|
*
|
|
Douglas B. Rogers(9)
|
|
|
29,976
|
|
|
|
*
|
|
Stephen J. McCoy(10)
|
|
|
12,438
|
|
|
|
*
|
|
Steven A. Webster(11)
|
|
|
378,450
|
|
|
|
*
|
|
James S. DAgostino, Jr.(12)(13)
|
|
|
99,450
|
|
|
|
*
|
|
William E. Chiles(12)(14)
|
|
|
35,250
|
|
|
|
*
|
|
Robert F. Fulton(12)(15)
|
|
|
115,250
|
|
|
|
*
|
|
Sylvester P. Johnson, IV(12)(16)
|
|
|
115,250
|
|
|
|
*
|
|
Thomas P. Moore, Jr.(12)(17)
|
|
|
123,250
|
|
|
|
*
|
|
Antonio O. Garza(18)
|
|
|
44,500
|
|
|
|
*
|
|
Directors and Executive Officers as a Group (14 persons)(19)
|
|
|
2,433,927
|
|
|
|
5.8
|
%
|
|
|
|
* |
|
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 AG, 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. |
|
|
|
Credit Suisse AG and 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 5,015,040 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 investment company, Fidelity Low
Priced Stock Fund, amounted to 4,050,000 shares of common
stock. |
11
|
|
|
|
|
Edward C. Johnson 3d and FMR LLC, through its control of
Fidelity, and the funds each has sole power to dispose of the
5,015,040 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 498,198 shares of restricted stock, a portion of
which are subject to forfeiture and generally vest over the next
four years. Includes 323,200 shares issuable within
60 days upon the exercise of options granted under our 2003
Incentive Plan. Does not include 45,000 shares underlying
options that are not exercisable within 60 days granted
under our 2003 Incentive Plan. Includes 504,035 shares
owned subject to bank pledges. |
|
(5) |
|
Includes 108,040 shares of restricted stock, a portion of
which are subject to forfeiture and generally vest over the next
four years. Includes 127,500 shares issuable within
60 days upon the exercise of options granted under our 2003
Incentive Plan. Does not include 13,750 shares underlying
options that are not exercisable within 60 days granted
under our 2003 Incentive Plan. |
|
(6) |
|
Includes 73,710 shares of restricted stock, a portion of
which are subject to forfeiture and generally vest over the next
four years. Includes 13,750 shares issuable within
60 days upon the exercise of options granted under our 2003
Incentive Plan. Does not include 6,250 shares underlying
options that are not exercisable within 60 days granted
under our 2003 Incentive Plan. |
|
(7) |
|
Includes 24,075 shares of restricted stock, a portion of
which are subject to forfeiture and generally vest over the next
four years. |
|
(8) |
|
Includes 34,415 shares of restricted stock, a portion of
which are subject to forfeiture and generally vest over the next
four years. Includes 18,750 shares issuable within
60 days upon the exercise of options granted under our 2003
Incentive Plan. Does not include 3,750 shares underlying
options that are not exercisable within 60 days granted
under our 2003 Incentive Plan. |
|
(9) |
|
Includes 29,976 shares of restricted stock, a portion of
which are subject to forfeiture and generally vest over the next
four years. |
|
(10) |
|
Includes 12,438 shares of restricted stock, a portion of
which are subject to forfeiture and generally vest over the next
four years. |
|
(11) |
|
Includes 22,000 shares of restricted stock, a portion of
which are subject to forfeiture and generally vest over the next
four years. Includes 96,250 shares issuable within
60 days upon the exercise of options granted under our 2003
Incentive Plan. Does not include 1,250 shares underlying
options that are not exercisable within 60 days granted
under our 2003 Incentive Plan. |
|
(12) |
|
Includes 19,000 shares of restricted stock, a portion of
which are subject to forfeiture and generally vest over the next
four years. |
|
(13) |
|
Includes 76,250 shares issuable within 60 days upon
the exercise of options granted under our 2003 Incentive Plan.
Does not include 1,250 shares underlying options that are
not exercisable within 60 days granted under our 2003
Incentive Plan. |
|
(14) |
|
Includes 16,250 shares issuable within 60 days upon
the exercise of options granted under our 2003 Incentive Plan.
Does not include 1,250 shares underlying options that are
not exercisable within 60 days granted under our 2003
Incentive Plan. |
12
|
|
|
(15) |
|
Includes 96,250 shares issuable within 60 days upon
the exercise of options granted under our 2003 Incentive Plan.
Does not include 1,250 shares underlying options that are
not exercisable within 60 days granted under our 2003
Incentive Plan. |
|
(16) |
|
Includes 96,250 shares issuable within 60 days upon
the exercise of options granted under our 2003 Incentive Plan.
Does not include 1,250 shares underlying options that are
not exercisable within 60 days granted under our 2003
Incentive Plan. |
|
(17) |
|
Includes 41,250 shares issuable within 60 days upon
the exercise of options granted under our 2003 Incentive Plan.
Does not include 1,250 shares underlying options that are
not exercisable within 60 days granted under our 2003
Incentive Plan. |
|
(18) |
|
Includes 44,500 shares of restricted stock, all of which
are subject to forfeiture and generally vest over the next three
years. |
|
(19) |
|
Includes an aggregate of 942,352 restricted shares, of which
603,465 remain subject to vesting, and an aggregate of
905,700 shares issuable within 60 days upon the
exercise of options granted under our 2003 Incentive Plan. Does
not include 76,250 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, 2009:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
|
Number of
|
|
|
|
|
|
Securities
|
|
|
|
Securities to be
|
|
|
|
|
|
Remaining
|
|
|
|
Issued Upon
|
|
|
Weighted Average
|
|
|
Available for
|
|
|
|
Exercise of
|
|
|
Exercise Price of
|
|
|
Future Issuance
|
|
|
|
Outstanding
|
|
|
Outstanding
|
|
|
Under Equity
|
|
Plan Category
|
|
Options
|
|
|
Options
|
|
|
Compensation Plans
|
|
|
Equity compensation plans approved by stockholders(1)
|
|
|
1,480,925
|
|
|
$
|
11.37
|
|
|
|
2,143,551
|
|
Equity compensation plans not approved by stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
1,480,925
|
|
|
$
|
11.37
|
|
|
|
2,143,551
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Consists of the Basic Energy Services, Inc. Fourth Amended and
Restated 2003 Incentive Plan (effective May 26, 2009). |
13
COMPENSATION
DISCUSSION AND ANALYSIS
The following discussion and analysis addresses compensation
with respect to our named executive officers, including the
actions and decisions of the Compensation Committee of our Board
of Directors, which oversees our compensation policies and sets
or recommends executive officer compensation, during 2009
through March 2010. For 2009, our named executive officers
consisted of Kenneth V. Huseman, Alan Krenek, T.M.
Roe Patterson, James F. Newman and James E. Tyner.
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attract, reward and retain individuals of the highest quality in
these key positions;
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recognize individual performance and the performance of the
Company relative to the performance of other companies of
comparable size, complexity and quality;
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provide motivation toward, and reward the accomplishment of,
corporate annual objectives;
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align the executive officers compensation to shareholder
interests; and
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align the executive officers incentives with both the
short-term and long-term goals of the Company.
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We also have the following compensation objectives when setting
the compensation programs for our executive officers:
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provide a significant percentage of long-term equity
compensation that is at-risk based on predetermined performance
criteria;
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maintain an opportunity for increased equity ownership by the
Companys executive officers; and
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set compensation levels that are competitive within the market
in which positions are located.
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In addition, the Compensation Committee considers the
anticipated tax treatment of the Companys executive
compensation program.
2009 Elements of
Compensation. The executive compensation
program for our named executive officers and other senior
executive officers included five principal elements that, taken
together, constitute a flexible and balanced method of
establishing total compensation. These elements are:
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base salary;
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quarterly incentive bonus plan cash awards to certain executive
officers (excluding our CEO and CFO);
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annual cash incentive bonuses;
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long-term incentive awards (which during 2009 consisted solely
of restricted stock awards); and
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in 2009, a performance-based incentive program (the
Three-Year PB Incentive Program) based on a
three-year performance period using EPS growth and ROCE,
performance factors contained in the 2003 Incentive Plan, as the
applicable metrics. If the performance measures are met, the
participants earn their restricted stock awards,
which shares of restricted stock are then issued and remain
subject to time-based vesting in one-third increments in each of
the subsequent three years. In March 2010, the Company revised
both the period and metrics for its 2010 performance-based
incentive program awards to base the awards on total shareholder
return over the prior year. If the performance measure is met,
the participant will earn their restricted 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.
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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 executive officers compensation to
performance because this aligns the executive
14
officers compensation to shareholder interests. Under the
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 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 executive officers by the Company
not for cause, termination by executive officers for good
reason, the death or disability of the executive officers, or,
under certain agreements and with additional limitations, the
retirement of the executive officers. These time-based awards
also provide an opportunity for increased equity ownership by
the executive officers to further the link between the executive
officers interests, shareholder interests and the
short-term and long-term goals of the Company.
In addition, during 2009 the Company used market survey data
from comparable companies to set base salary and total
compensation levels that are competitive within the market.
During 2010, based on the compensation consultants view
that industry salary structures were generally frozen, if not
reduced, and that a new survey would unlikely yield meaningful
new information, the Company did not request a survey and
assumed that executive-level salaries had been rolled back by
12-15% from
2008 year levels.
Selection of Elements to Provide Competitive
Levels of Compensation. The Compensation
Committee generally attempts to provide the Companys
senior executive officers 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 Compensation
Committee has determined a competitive level of compensation for
each executive officer 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.
During 2009, 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. During February and March 2010, the Company
used survey data for 2008 compensation and assumed that
executive-level salaries had been rolled back in 2009 by
12-15% from
2008 year levels. 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 2009 and March 2010, the Company continued to make equity
grant levels higher than what it believes is the median,
particularly with respect to its CEO, as part of its objective
to weight compensation generally toward long-term incentives.
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. For 2009
bonuses paid in 2010 and new salaries and equity grants made in
2010, Pearl Meyer noted certain salary decreases and wage
freezes 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
2010. While the targeted value of an executive officers
compensation package may be competitive, its actual value may
exceed or fall below market average levels depending on
performance, as discussed below.
The employment agreements of our executive officers generally
contain streamlined severance and non-competition provisions
among our executive officers in three tiers, with our CEO in one
tier, our Senior Vice
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Presidents (two during 2009 our CFO and Senior Vice
President Rig and Truck Operations) and our Group
Vice President Completion and Remedial in a second
tier, and our Vice President Human Resources in a
third tier. Severance benefits are discussed below under
Severance Benefits.
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
officer. The following general percentage mix would apply to the
typical approach in establishing the total compensation for the
Companys executive officers at 2009 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 = 15% to 30%
Long-term compensation annualized = 40% to 55%
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For the other named executive officers:
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Base pay = 35% to 45%
Bonus compensation at target = 15% to 25%
Long-term compensation annualized = 30% to 50%
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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. During March 2009, in
connection with wage and salary reductions announced throughout
the Company, the Company also reduced the salary of our CEO by
10% and the salaries of all of our other named executive
officers between 7-8%, from their previously approved 2009 base
salary levels. In March 2010, our Compensation Committee, based
on its discussion with its compensation consultant, approved
base salaries for each of our named executive officers that
returned the officers to their initially approved 2009 base
salary levels.
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 2009, corporate-level bonuses were tied to
the Companys region and division-level bonuses.
Messrs. Huseman and Krenek did not participate in any of
the Quarterly Incentive Bonus Plans during 2009.
Messrs. Patterson, Newman and Tyner, each participated in
the corporate-level Quarterly Incentive Bonus Plans in
2009, which payments were factored into annual cash bonuses
received by them in early 2009. There was no annual cash bonus
paid to the named executive officers in early 2010 relating to
2009 performance.
Annual Cash Bonuses (Non-Equity Incentive Plan
Compensation). The purpose of annual cash
bonuses under our Fourth 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 2009 were paid as non-equity incentive
plan compensation based upon the achievement of corporate
performance objectives.
2009 Annual Cash
Bonuses. During 2009 and March 2010, the
Compensation Committee established and considered a set of
metrics, which we refer to as our 2009 annual incentive
compensation plan, for determining
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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 2009 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 2009 for our CEO
ranged from zero to 90% of base salary, with a target level of
60%. Potential annual cash awards for 2009 for our Tier II
named executive officers (Messrs. Krenek, Patterson and
Newman) ranged from zero to 75% of base salary, with a target
level of 50%. Potential annual cash awards for 2009 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 (loss) per share factor used by the Compensation
Committee in 2009 included the impact of the goodwill impairment
recognized in March 2009, for an actual result of $(6.39)
compared to a target of $(0.54). The actual result for
three-year average ROCE was 0.8% compared to an 18.2% target.
The total reportable incident rate and preventable motor vehicle
accident rate were 9% below (i.e., better than) target levels,
thus resulting in
higher-than-target
factor allocations. Notwithstanding one non-discretionary metric
being exceeded, the Compensation Committee did not grant any of
the named executive officers an annual cash bonus for 2009.
Messrs. Patterson, Newman and Tyner received payments under
the Quarterly Incentive Bonus Plan during 2009 equal to
approximately 10%, 19%, and 11% of base salary, respectively.
Payments under these metrics were not qualified
performance based compensation within the meaning of
Section 162(m) of the Code.
2009 Equity Awards. To
determine the potential value of equity incentive rewards in the
form of 2010 performance-based restricted stock or restricted
stock, the Compensation Committee used (i) performance
against peer group based on the EPS growth factor and the ROCE
factor, resulting in an award of 30% of target 2010
performance-based share quantity, and (ii) individual
performance evaluations and salary survey data (same as
presented in 2009 reduced by 12%) for 2010 restricted stock
grants. Targeted equity awards ranged 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 our other named executive officers. These awards were issued
in March 2010 based on 2009 performance.
The Compensation Committee used the same bonus metrics to
determine the potential value of equity incentive awards in the
form of 2009 performance-based restricted stock and 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 our other named
executive officers. These awards were issued in March 2009 based
on 2008 performance.
The Companys annual performance measures for executive
officers for 2009 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 2009 were paid to each of our executive
officers during March of 2010. 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.
17
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 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
represented 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. In 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 long-term incentive
program, which awards are also discussed further below.
In March 2010, the Compensation Committee and the Board changed
the performance-based Three-Year PB Incentive Program to a One
Year PB Incentive Program consisting of:
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a performance-based plan looking at total share holder return of
the prior year compared to a predefined peer group with shares
being earned based on the Companys performance
compared to the peer group; and
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discretionary, time-based restricted stock awards.
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The 2009 long-term incentive program was 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 changes of both
metrics and period of time for awards granted in 2010 were made
due to market conditions, the Companys historical
performance and a desire to focus management on more current
metrics relative to its peers during 2010. Each of the 2009 and
the new 2010 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
executive officers, 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 officer have no
bearing on the size of a performance award.
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 2009 and 2010, the
Compensation Committee made grants of restricted stock, which
vest ratably over a four-year period beginning in 2011 and 2012,
respectively.
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.
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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.
Under the Three-Year PB Incentive Program
initially implemented during March 2008 and continued during
2009 and discontinued in 2010, the executive officers and
certain middle management personnel (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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In March 2010, the Compensation Committee recommended, and the
Board approved, a One-Year PB Incentive Program for executive
officers and certain middle management personnel (a total of 19
participants for 2010 awards). Under this plan, award recipients
may earn restricted stock at the end of a one-year period, based
on the Companys performance over that one-year period. The
performance measure is based on the Company achieving a
pre-established target relative to its selected peer group (the
same PB Peer Group as under the 2009 Three-Year PB
Awards) based on one factor, total shareholder return, subject
to forfeiture or a negative adjustment of 100% if the Company
ranks the worst or second worst when included with the PB Peer
Group.
If the performance measures are met for either program, 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
combination of the performance period and the vesting schedule
results in the awards being realized by the executive officer
over a period of 4 years from the initial award date.
Achievement of the maximum goals will require superior
performance of the executive officers 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 executive
officers, including risk factors disclosed in the Companys
Form 10-K
and other periodic filings.
Target award levels for 2009 and in 2010 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 an
estimated $10 price applicable on the dates the proposed grant
schedule was prepared, compared to an actual lower price on the
date of the Compensation Committees March 13, 2009
and March 9, 2010 meetings at which the awards were
actually approved. In determining the number of shares of
restricted stock to award, the Compensation Committee used this
same price.
For awards in each of 2009 and 2010, 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.; (9) Superior Energy
Services, Inc.; and (10) Key Energy Services, Inc.
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In general terms for the 2009 Three-Year PB Incentive Program,
if we ranked first among our applicable peer group for both the
EPS growth and ROCE measures, our executive officers would 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 was between the minimum (resulting in
forfeiture) and maximum limits, our executive officers would
earn a percentage of restricted shares between
50-140%.
For the Three-Year PB Incentive Program awards granted in March
2009, the total maximum number of shares for all participants
(150% of target) was 397,500 shares, which earned shares
remained subject to time-based vesting over a three-year period.
Of these shares, 229,500 was the maximum number of shares which
could have been earned by the named executive officers if the
Company ranked 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 three years ended December 31, 2009, the Compensation
Committee determined in March 2010 that an aggregate of
45,900 shares (30% of target) were actually earned by the
named executive officers under these 2009 awards.
The following LTIP payout grid shows the actual effect of
2007-2009
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
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The total maximum number of shares for all participants for the
One-Year PB Incentive Program awards granted in March 2010 (150%
of target) was 285,278 shares, which earned shares will
then remain subject to time-based vesting in increments over a
three-year period. Of these shares, 157,224 is the maximum
number of shares which may be earned by the named executive
officers if the Company ranks as the first, second or third
highest in its PB Peer Group for the total shareholder return
performance measure. Annual awards earned are not determinable
by the Compensation Committee until peer performance data is
available. When available, the data will be compiled and
compared to the Companys actual total shareholder return
for the year.
The 2008, 2009 and 2010 awards under the Three-Year PB Incentive
Program and the One-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 and the One-Year PB Incentive Program are
consistent with the Companys philosophy of tying a
significant portion of each executive officers
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 executive officers 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 Compensation Committee has used
traditional discretionary grants of restricted stock to
supplement the Three-Year PB Incentive Program for approximately
50% of total potential awards and starting in 2010 supplementing
the One-Year PB Incentive Program for approximately two-thirds
of total potential awards. Because any awards of restricted
stock earned under the Three-Year PB Incentive Program or the
One-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 Compensation 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 executive officers 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, the One-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 executive officers 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, 2009 and current 2010
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, 2009 is
discussed below under Severance
Benefits.
CEO Compensation. A separate
process of evaluating Mr. Huseman was conducted for
purposes of determining his 2009 annual bonus paid during March
2010. Specifically, the Compensation 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 2009. Based
on these considerations, Mr. Huseman was not granted an
annual cash bonus for 2009 performance.
Compensation of Other Named Executive
Officers. The Compensation Committee reviewed
the recommendations of the CEO regarding 2009 bonuses and
awards. The Compensation Committees considerations
included the same general Company performance-based factors as
well as the individual performance of each of the officers. The
other named executive officers were not granted an annual cash
bonus for 2009 performance.
21
During 2008, 2009 and 2010, the Compensation Committee has
elected to use restricted stock awards as the primary component
of long-term compensation for our executive officers. 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.
Beginning in 2008, the Compensation Committee approved and
implemented the 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 executive officers
compensation to performance because this aligns the executive
officers compensation to shareholder interests, while
maintaining an opportunity for increased equity ownership by the
executive officers to further the link between the creation of
shareholder value and long term incentive compensation. In 2009,
the Compensation Committee approved and implemented a 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. In 2010, the
Compensation Committee approved and implemented a continued
long-term incentive program, consisting of the One-Year PB
Incentive Program and discretionary, time-based restricted stock
awards that were approved in 2008 and 2009, for the same
rationale.
Perquisites. The Company
provides limited perquisites to its senior executive officers.
Perquisites may include vehicle allowances, club memberships and
long-term disability insurance. During 2009, 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. Pursuant
to our employment agreements with each of the named executive
officers, the named executive officers are entitled to severance
payments in the event the executive officer is terminated at any
time by us without Cause as defined in the
agreements or by the executive 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 executive 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, Patterson and
Newman 1.5 times; and for
Mr. Tyner 0.75 times) of the sum of the
executive 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, Patterson and Newman
2.0 times; and for Mr. Tyner 1.0 times) of the
sum of the executive 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.
Messrs. Krenek and Tyners employment agreements were
initially effective through December 31, 2008 while
Messrs. Huseman, Patterson, and Newmans were
effective through December 31, 2009, and each
officers agreement automatically renews for subsequent
one-year periods unless notice of termination is properly given
by us or the executive officer. In the event that the employment
agreement of Messrs. Huseman, Krenek or Patterson is not
renewed by us and a new employment agreement has not been
entered into, the executive 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
executive 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 executive
22
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.
The employment agreements for Messrs. Huseman, Krenek,
Patterson and Newman 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 our 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, 2009, 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 2009 and
continue to receive as of March 2010 (except as noted below):
|
|
|
Annual director fee: |
|
$35,000; for 2010, our Chairman will receive $70,000 |
|
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 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 March 2009 that was
vested upon issuance as consideration for services in his
capacity as Chairman and in lieu of the 2009 annual director
fees. In |
23
|
|
|
|
|
March 2010, each non-employee director was granted
7,000 shares of restricted stock that vest ratably in four
increments of 1,750 shares on March 15, 2012, 2013, 2014
and 2015. Our Chairman was granted an additional
3,000 shares of restricted stock that vest ratably over the
same period as the standard non-employee director award. |
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
in effect for 2009 and currently in effect for 2010 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.
Antonio O. Garza, Jr.
24
EXECUTIVE
COMPENSATION MATTERS
Summary
Compensation Table
The following information relates to compensation paid by the
Company for fiscal 2009, 2008 and 2007 to the Companys
Chief Executive Officer, Chief Financial Officer and each of the
other three most highly compensated executive officers in fiscal
2009, 2008 and 2007:
Summary
Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Value and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity
|
|
Nonqualified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Deferred
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
Plan
|
|
Compensation
|
|
All Other
|
|
|
|
|
|
|
Salary
|
|
Bonus
|
|
Awards
|
|
Awards
|
|
Compensation
|
|
Earnings
|
|
Compensation
|
|
Total
|
Name and Principal Position
|
|
Year
|
|
($)(1)
|
|
($)
|
|
($)(2)
|
|
($)(2)
|
|
($)(3)
|
|
($)
|
|
($)(4)
|
|
($)
|
|
Kenneth V. Huseman,
|
|
|
2009
|
|
|
$
|
510,008
|
|
|
$
|
|
|
|
$
|
894,431
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
9,800
|
|
|
$
|
1,414,239
|
|
President and Chief
|
|
|
2008
|
|
|
$
|
550,000
|
|
|
$
|
|
|
|
$
|
1,332,776
|
|
|
$
|
|
|
|
$
|
330,000
|
|
|
$
|
|
|
|
$
|
9,200
|
|
|
$
|
2,221,976
|
|
Executive Officer
|
|
|
2007
|
|
|
$
|
515,384
|
|
|
$
|
|
|
|
$
|
113,300
|
|
|
$
|
711,000
|
|
|
$
|
400,000
|
|
|
$
|
|
|
|
$
|
8,800
|
|
|
$
|
1,748,484
|
|
Alan Krenek,
|
|
|
2009
|
|
|
$
|
282,661
|
|
|
$
|
|
|
|
$
|
377,208
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
9,800
|
|
|
$
|
669,669
|
|
Senior Vice President,
|
|
|
2008
|
|
|
$
|
300,000
|
|
|
$
|
50,000
|
|
|
$
|
679,884
|
|
|
$
|
|
|
|
$
|
170,000
|
|
|
$
|
|
|
|
$
|
9,200
|
|
|
$
|
1,209,084
|
|
Chief Financial Officer,
|
|
|
2007
|
|
|
$
|
258,462
|
|
|
$
|
|
|
|
$
|
226,600
|
|
|
$
|
177,750
|
|
|
$
|
240,000
|
|
|
$
|
|
|
|
$
|
8,800
|
|
|
$
|
911,612
|
|
Treasurer and Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T.M. Roe Patterson,
|
|
|
2009
|
|
|
$
|
259,123
|
|
|
$
|
|
|
|
$
|
219,387
|
|
|
$
|
|
|
|
$
|
25,537
|
|
|
$
|
|
|
|
$
|
21,020
|
|
|
$
|
525,067
|
|
Senior Vice President,
|
|
|
2008
|
|
|
$
|
243,846
|
|
|
$
|
|
|
|
$
|
484,186
|
|
|
$
|
|
|
|
$
|
150,000
|
|
|
$
|
|
|
|
$
|
20,233
|
|
|
$
|
898,265
|
|
Rig and Truck Operations
|
|
|
2007
|
|
|
$
|
167,692
|
|
|
$
|
|
|
|
$
|
135,960
|
|
|
$
|
59,250
|
|
|
$
|
140,000
|
|
|
$
|
|
|
|
$
|
18,764
|
|
|
$
|
521,666
|
|
James F. Newman
|
|
|
2009
|
|
|
$
|
197,923
|
|
|
$
|
|
|
|
$
|
153,605
|
|
|
$
|
|
|
|
$
|
38,021
|
|
|
$
|
|
|
|
$
|
18,729
|
|
|
$
|
408,278
|
|
Group Vice President,
|
|
|
2008
|
|
|
$
|
92,481
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
60,000
|
|
|
$
|
|
|
|
$
|
6,554
|
|
|
$
|
159,035
|
|
Completion and Remedial Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James E. Tyner,
|
|
|
2009
|
|
|
$
|
180,281
|
|
|
$
|
|
|
|
$
|
147,126
|
|
|
$
|
|
|
|
$
|
19,516
|
|
|
$
|
|
|
|
$
|
8,422
|
|
|
$
|
355,345
|
|
Vice President,
|
|
|
2008
|
|
|
$
|
190,000
|
|
|
$
|
30,000
|
|
|
$
|
216,318
|
|
|
$
|
|
|
|
$
|
80,000
|
|
|
$
|
|
|
|
$
|
9,546
|
|
|
$
|
525,864
|
|
Human Resources
|
|
|
2007
|
|
|
$
|
158,462
|
|
|
$
|
|
|
|
$
|
90,640
|
|
|
$
|
|
|
|
$
|
80,000
|
|
|
$
|
|
|
|
$
|
7,219
|
|
|
$
|
336,321
|
|
|
|
|
(1) |
|
Under the terms of their employment agreements,
Messrs. Huseman, Krenek, Patterson, Newman and Tyner are
entitled to the compensation described under Employment
Agreements below. |
|
(2) |
|
This column represents the total grant date fair value of
restricted stock awards granted to each of the applicable named
executive officers. The fair value of restricted stock awards
was calculated based upon the closing market price of the
Companys common stock on the grant date. The actual value
that an executive officer will realize upon vesting of
restricted stock awards will depend on the market price of the
Companys stock on the vesting date, so there is no
assurance that the value realized by an executive officer will
be at or near the value of the market price of the
Companys stock on the grant date. There were no option
awards granted in 2008 or 2009. |
|
(3) |
|
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 2007, 2008 or 2009
and received only an annual cash bonus in early 2008 and 2009,
respectively. Messrs. Patterson, Newman and Tyner each
participated in the Quarterly Incentive Bonus Plans in 2007,
2008 and 2009 and received an annual cash bonus in early 2008
and 2009, respectively. |
|
(4) |
|
Includes employer contributions to Executive Deferred
Compensation Plan for 2007 as follows: for Huseman, $8,800; for
Krenek, $8,800; for Patterson, $8,624; for Newman, $0; 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 Patterson, $9,373; for Newman,
$0; and for Tyner, $9,546. Includes employer contributions to
Executive Deferred Compensation Plan for 2009 as follows: for
Huseman, $9,800; for Krenek, $9,800; for Patterson, $9,800; for
Newman, $8,459; and for Tyner, $8,422. Includes vehicle
allowance of $10,140 for 2007, $10,860 for 2008, $11,220 for
2009 for Mr. Patterson and $6,554 for 2008 and $10,270 for
2009 for Jim Newman. |
25
Grants of
Plan-Based Awards
The following table sets forth information concerning grants of
awards to each of our named executive officers under our 2003
Incentive Plan during fiscal 2009:
Grants of
Plan-Based Awards 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All Other
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Awards:
|
|
|
|
|
|
|
|
|
Estimated Future Payouts
|
|
Estimated Future Payouts
|
|
Number of
|
|
Number of
|
|
Exercise or
|
|
Grant Date
|
|
|
|
|
Under Non-Equity Incentive
|
|
Under Equity Incentive
|
|
Shares of
|
|
Securities
|
|
Base Price
|
|
Fair Value
|
|
|
|
|
Plan Awards
|
|
Plan Awards
|
|
Stock or
|
|
Underlying
|
|
of Option
|
|
of Stock
|
|
|
Grant
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Threshold
|
|
Target
|
|
Maximum
|
|
Units
|
|
Options
|
|
Awards
|
|
and Option
|
Name
|
|
Date
|
|
($)
|
|
($)
|
|
($)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
(#)
|
|
($/Sh)
|
|
Awards
|
(a)
|
|
(b)
|
|
(c)
|
|
(d)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
(i)
|
|
(j)
|
|
(k)
|
|
(l)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Kenneth V. Huseman
|
|
|
03/13/09
|
(1)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
49,388
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
306,206
|
|
|
|
|
03/13/09
|
(2)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
82,500
|
|
|
|
123,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
588,225
|
|
|
|
|
03/13/09
|
(3)
|
|
$
|
|
|
|
$
|
297,000
|
|
|
$
|
445,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alan Krenek
|
|
|
03/13/09
|
(1)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
26,340
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
163,308
|
|
|
|
|
03/13/09
|
(2)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
30,000
|
|
|
|
45,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
213,900
|
|
|
|
|
03/13/09
|
(3)
|
|
$
|
|
|
|
$
|
138,000
|
|
|
$
|
207,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
T.M. Roe Patterson
|
|
|
03/13/09
|
(1)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
17,560
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
108,872
|
|
|
|
|
03/13/09
|
(2)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
15,500
|
|
|
|
23,250
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
110,515
|
|
|
|
|
03/13/09
|
(3)
|
|
$
|
|
|
|
$
|
126,500
|
|
|
$
|
189,750
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James F. Newman
|
|
|
03/13/09
|
(1)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
10,975
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
68,045
|
|
|
|
|
03/13/09
|
(2)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
12,000
|
|
|
|
18,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
85,560
|
|
|
|
|
03/13/09
|
(3)
|
|
$
|
|
|
|
$
|
96,600
|
|
|
$
|
144,900
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James E. Tyner
|
|
|
03/13/09
|
(1)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
8,780
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
54,436
|
|
|
|
|
03/13/09
|
(2)
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
13,000
|
|
|
|
19,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
92,690
|
|
|
|
|
03/13/09
|
(3)
|
|
$
|
|
|
|
$
|
70,680
|
|
|
$
|
106,020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
(1) |
|
Shares of restricted stock were granted by our Compensation
Committee to certain of our employees, including our named
executive officers, on March 13, 2009. The shares of
restricted stock vest in one-fourth increments on each of
March 15, 2011, 2012, 2013 and 2014. 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 13, 2009. 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,
2007 through December 31, 2009 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 2010. These shares will vest in one-third
increments on each of March 15, 2011, 2012, and 2013. |
|
(3) |
|
Cash incentive bonuses are determined by our Compensation
Committee utilizing a set of metrics along with board
discretion. These bonuses for 2009 performance were paid in
March 2010. Performance targets were communicated to the named
executive officers and other members of management that
participate in the bonus on March 13, 2009. Potential
annual cash awards for our CEO ranged from zero to 90% of base
salary, with a target level of 60%. Potential annual cash awards
for our Tier II named executive officers
(Messrs. Krenek, Patterson, and Newman) 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%. |
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
26
severance payment equal to three times the sum of his annual
base salary plus his current annual incentive target bonus for
the full year in which the termination of employment occurred.
Additionally, if Mr. 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 annual base salary plus the
higher of (i) his current annual incentive target bonus for
the full year in which the termination of employment occurred or
(ii) the highest annual incentive bonus received by him for
any of the last three fiscal years. Mr. Husemans
employment agreement is effective through December 31, 2010
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, Thomas Monroe Patterson, our Senior
Vice President Rig and Truck Operations and James F.
Newman, our Vice President Completion and Remedial
Services. Pursuant to their agreements, Messrs. Krenek,
Patterson and Newman are entitled to initial annual base
salaries of $240,000, $275,000 and $210,000, respectively. Each
of Messrs. Krenek, Patterson and Newman is also entitled to
an annual performance bonus if certain performance criteria are
met. In addition, each of Messrs. Krenek, Patterson and
Newman 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 were to be terminated for certain reasons, he would be
entitled to a lump sum severance payment equal to 1.5 times the
sum of his annual base salary plus his current annual incentive
target bonus for the full year in which the termination of
employment occurred. Additionally, if the employment of any of
these officers were to be terminated for certain reasons within
the six months preceding or the twelve months following a change
in control of our company, he would be entitled to a lump sum
severance payment equal to two times the sum of his annual base
salary plus the higher of (i) his current annual incentive
target bonus for the full year in which the termination of
employment occurred or (ii) the highest annual incentive
bonus received by him for any of the last three fiscal years.
Each of these employment agreements is effective through
December 31, 2010 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.
The employment agreements for Messrs. Huseman, Krenek,
Patterson and Newman 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 Mr. Tyner does not contain
these provisions.
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
annual 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 were 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 annual 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 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 one times the
sum of his annual base salary plus the higher of (i) his
current annual incentive target bonus for the full year in which
the termination of employment occurred or (ii) the highest
annual incentive bonus received by him for any of the last three
fiscal years. Mr. Tyners employment agreement is
effective through December 31, 2010 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.
27
As consideration for us entering into the above employment
agreements, each of Messrs. Huseman, Krenek, Patterson,
Newman and Tyner has agreed in his employment agreement that,
for a period of six months following the termination of his
employment by us without cause or by him for good reason, and
for a period of two years following the termination of his
employment for retirement or any other reason, he will not,
among other things, engage in any business competitive with
ours, render services to any entity that is competitive with us
or solicit business from certain of our customers or potential
customers. These non-competition restrictions will not apply in
the event that such termination is within twelve months of a
change 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 annual base salaries for our
named executive officers as follows: Huseman
$550,000; Krenek $300,000; Patterson
$275,000; Newman $210,000; and Tyner
$190,000. Subsequently, during 2009, in connection with salary
and wage reductions for employees throughout the Company that
were effective March 30, 2009, the Board reduced base
salaries from previously determined levels for our named
executive officers to the following: Huseman
$495,000; Krenek $276,000; Patterson
$253,000; Newman $193,200; and Tyner
$176,700. In March 2010, our Compensation Committee, based on
its discussion with its compensation consultant, approved base
salaries for each of our named executive officers that returned
the officers to their initially approved 2009 base salary levels.
28
Outstanding
Equity Awards at Fiscal Year-End
The following table sets forth information concerning
unexercised stock options and unvested restricted stock of each
of our named executive officers as of December 31, 2009:
Outstanding
Equity Awards at Fiscal Year-End 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
Awards:
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
Market
|
|
|
|
|
|
|
Incentive
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
or Payout
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
Value of
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
Market
|
|
Number of
|
|
Unearned
|
|
|
Number of
|
|
Number of
|
|
Number of
|
|
|
|
|
|
|
Number of
|
|
Value of
|
|
Unearned
|
|
Shares,
|
|
|
Securities
|
|
Securities
|
|
Securities
|
|
|
|
|
|
|
Shares
|
|
Shares or
|
|
Shares,
|
|
Units or
|
|
|
Underlying
|
|
Underlying
|
|
Underlying
|
|
|
|
|
|
|
or Units of
|
|
Units of
|
|
Units or
|
|
Other
|
|
|
Unexercised
|
|
Unexercised
|
|
Unexercised
|
|
Option
|
|
|
|
|
Stock That
|
|
Stock That
|
|
Other Rights
|
|
Rights
|
|
|
Options
|
|
Options
|
|
Unearned
|
|
Exercise
|
|
Option
|
|
|
Have Not
|
|
Have Not
|
|
that Have
|
|
That Have
|
|
|
(#)
|
|
(#)
|
|
Options
|
|
Price
|
|
Expiration
|
|
|
Vested
|
|
Vested
|
|
Not Vested
|
|
Not Vested
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
(#)
|
|
($)
|
|
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)
|
|
|
75,000
|
|
|
|
25,000
|
|
|
|
|
|
|
$
|
6.98
|
|
|
|
3/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/15/2006(2)
|
|
|
30,000
|
|
|
|
30,000
|
|
|
|
|
|
|
$
|
26.84
|
|
|
|
3/14/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/15/2007(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
3,750
|
|
|
$
|
33,375
|
|
|
|
|
|
|
|
|
|
3/15/2007(4)
|
|
|
15,000
|
|
|
|
45,000
|
|
|
|
|
|
|
$
|
22.66
|
|
|
|
3/15/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/11/2008(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
22,500
|
|
|
$
|
200,250
|
|
|
|
|
|
|
|
|
|
3/18/2008(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
45,000
|
|
|
$
|
400,500
|
|
|
|
|
|
|
|
|
|
3/13/2009(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
49,388
|
|
|
$
|
439,553
|
|
|
|
|
|
|
|
|
|
3/13/2009(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
24,750
|
|
|
$
|
220,275
|
|
|
|
|
|
|
|
|
|
Alan Krenek
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1/26/2005
|
|
|
76,250
|
|
|
|
|
|
|
|
|
|
|
$
|
5.16
|
|
|
|
1/25/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/2/2005(1)
|
|
|
18,750
|
|
|
|
6,250
|
|
|
|
|
|
|
$
|
6.98
|
|
|
|
3/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/15/2006(2)
|
|
|
12,500
|
|
|
|
12,500
|
|
|
|
|
|
|
$
|
26.84
|
|
|
|
3/14/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/15/2007(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
$
|
66,750
|
|
|
|
|
|
|
|
|
|
3/15/2007(4)
|
|
|
3,750
|
|
|
|
11,250
|
|
|
|
|
|
|
$
|
22.66
|
|
|
|
3/15/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/11/2008(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
12,000
|
|
|
$
|
106,800
|
|
|
|
|
|
|
|
|
|
3/18/2008(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
22,500
|
|
|
$
|
200,250
|
|
|
|
|
|
|
|
|
|
3/13/2009(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
26,340
|
|
|
$
|
234,426
|
|
|
|
|
|
|
|
|
|
3/13/2009(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
9,000
|
|
|
$
|
80,100
|
|
|
|
|
|
|
|
|
|
T.M. Roe Patterson
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/15/2006(2)
|
|
|
7,500
|
|
|
|
7,500
|
|
|
|
|
|
|
$
|
26.84
|
|
|
|
3/14/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/15/2007(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
4,500
|
|
|
$
|
40,050
|
|
|
|
|
|
|
|
|
|
3/15/2007(4)
|
|
|
1,250
|
|
|
|
3,750
|
|
|
|
|
|
|
$
|
22.66
|
|
|
|
3/15/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/11/2008(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
8,000
|
|
|
$
|
71,200
|
|
|
|
|
|
|
|
|
|
3/18/2008(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
16,500
|
|
|
$
|
146,850
|
|
|
|
|
|
|
|
|
|
3/13/2009(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
17,560
|
|
|
$
|
156,284
|
|
|
|
|
|
|
|
|
|
3/13/2009(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
4,650
|
|
|
$
|
41,385
|
|
|
|
|
|
|
|
|
|
James F. Newman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/13/2009(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
10,975
|
|
|
$
|
97,678
|
|
|
|
|
|
|
|
|
|
3/13/2009(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
3,600
|
|
|
$
|
32,040
|
|
|
|
|
|
|
|
|
|
James E. Tyner
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/2/2005(1)
|
|
|
5,000
|
|
|
|
2,500
|
|
|
|
|
|
|
$
|
6.98
|
|
|
|
3/1/2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/15/2006(2)
|
|
|
7,500
|
|
|
|
7,500
|
|
|
|
|
|
|
$
|
26.84
|
|
|
|
3/14/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3/15/2007(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
3,000
|
|
|
$
|
26,700
|
|
|
|
|
|
|
|
|
|
3/11/2008(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
4,000
|
|
|
$
|
35,600
|
|
|
|
|
|
|
|
|
|
3/18/2008(6)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
7,000
|
|
|
$
|
62,300
|
|
|
|
|
|
|
|
|
|
3/13/2009(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
8,780
|
|
|
$
|
78,142
|
|
|
|
|
|
|
|
|
|
3/13/2009(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
3,900
|
|
|
$
|
34,710
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
The unvested options vested on January 1, 2010. |
|
(2) |
|
One half of the unvested options vested on January 1, 2010.
The remainder will vest on January 1, 2011. |
29
|
|
|
(3) |
|
One third of the unvested shares of restricted stock vested on
March 15, 2010. The remainder will vest in equal increments
on March 15, 2011 and 2012. |
|
(4) |
|
One third of the unvested options vested on January 1,
2010. The remainder will vest in equal increments on
January 1, 2011 and 2012. |
|
(5) |
|
One third of the unvested shares of restricted stock vested on
March 15, 2010. The remainder will vest in equal increments
on March 15, 2011 and 2012. |
|
(6) |
|
One fourth of the unvested shares of restricted stock vested on
March 15, 2010. The remainder will vest in equal increments
on March 15, 2011, 2012 and 2013. |
|
(7) |
|
Unvested shares of restricted stock will vest in four equal
increments on March 15, 2011, 2012, 2013, and 2014. |
|
(8) |
|
Unvested shares of restricted stock will vest in three equal
increments on March 15, 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 2009:
Option
Exercises and Stock Vested 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
$
|
|
|
|
|
1,250
|
|
|
$
|
7,825
|
|
|
|
|
|
Alan Krenek
|
|
|
|
|
|
$
|
|
|
|
|
2,500
|
|
|
$
|
15,650
|
|
|
|
|
|
T.M. Roe Patterson
|
|
|
|
|
|
$
|
|
|
|
|
1,500
|
|
|
$
|
9,390
|
|
|
|
|
|
James F. Newman
|
|
|
|
|
|
$
|
|
|
|
|
|
|
|
$
|
|
|
|
|
|
|
James E. Tyner
|
|
|
|
|
|
$
|
|
|
|
|
1,000
|
|
|
$
|
6,260
|
|
|
|
|
|
Nonqualified
Deferred Compensation Plans
The following table sets forth information concerning the
nonqualified deferred compensation of our named executive
officers during fiscal 2009:
Nonqualified
Deferred Compensation 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
$
|
76,490
|
|
|
$
|
9,800
|
|
|
$
|
98,544
|
|
|
$
|
|
|
|
$
|
355,233
|
|
Alan Krenek
|
|
$
|
52,746
|
|
|
$
|
9,800
|
|
|
$
|
64,981
|
|
|
$
|
|
|
|
$
|
223,656
|
|
T.M. Roe Patterson
|
|
$
|
16,582
|
|
|
$
|
9,800
|
|
|
$
|
23,902
|
|
|
$
|
|
|
|
$
|
86,339
|
|
James F. Newman
|
|
$
|
21,148
|
|
|
$
|
8,459
|
|
|
$
|
4,067
|
|
|
$
|
|
|
|
$
|
33,675
|
|
James E. Tyner
|
|
$
|
20,275
|
|
|
$
|
8,422
|
|
|
$
|
(23,016
|
)
|
|
$
|
|
|
|
$
|
176,524
|
|
|
|
|
(1) |
|
Executive contributions during 2009 are included in the
executives salary and bonus amounts, as applicable, as
reported in the Summary Compensation Table. |
|
(2) |
|
Registrant contributions during 2009 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. |
30
Each of our named executive officers is permitted to participate
in our Executive Deferred Compensation Plan. An executive
officer permitted to participate in this plan may defer a
portion of his compensation, up to a maximum of 50% of his
annual salary and 100% of his annual cash bonus, into his plan
account. We make an annual matching contribution to each
participating 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 $9,800. We
may also make discretionary contributions into an executive
officers 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. Effective January 1,
2010, we suspended our annual matching contribution. Each
executive officer is always fully vested in his own
contributions to his plan account. Earnings on an executive
officers 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 executive
officers 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, 2009:
Potential
Post-employment Payments as of December 31,
2009 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
|
|
|
$
|
|
|
|
$
|
2,376,000
|
|
|
$
|
2,376,000
|
|
|
$
|
|
|
|
$
|
2,685,000
|
|
|
$
|
|
|
|
$
|
|
|
Bonus(6)
|
|
$
|
|
|
|
$
|
297,000
|
|
|
$
|
|
|
|
$
|
297,000
|
|
|
$
|
297,000
|
|
|
$
|
|
|
|
$
|
297,000
|
|
|
$
|
297,000
|
|
|
$
|
297,000
|
|
Long-term Incentive(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of Unvested Stock Options
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
48,000
|
|
|
$
|
|
|
|
$
|
|
|
Acceleration of Unvested Restricted Stock
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,774,553
|
|
|
$
|
|
|
|
$
|
2,175,053
|
|
|
$
|
2,175,053
|
|
|
$
|
1,807,928
|
|
|
$
|
1,807,928
|
|
Benefits & Perquisites(8):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employer Contributions to Executive Deferred Compensation Plan
|
|
$
|
|
|
|
|
N/A
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
COBRA Continuation
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
24,433
|
|
|
$
|
24,433
|
|
|
|
N/A
|
|
|
$
|
24,433
|
|
|
$
|
|
|
|
$
|
|
|
280G Tax
Gross-up
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
|
|
|
$
|
297,000
|
|
|
$
|
|
|
|
$
|
4,471,986
|
|
|
$
|
2,697,433
|
|
|
$
|
2,175,053
|
|
|
$
|
5,229,486
|
|
|
$
|
2,104,928
|
|
|
$
|
2,104,928
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31
Potential
Post-employment Payments as of December 31,
2009 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
|
|
|
$
|
|
|
|
$
|
621,000
|
|
|
$
|
621,000
|
|
|
$
|
|
|
|
$
|
1,032,000
|
|
|
$
|
|
|
|
$
|
|
|
Bonus(6)
|
|
$
|
|
|
|
$
|
138,000
|
|
|
$
|
|
|
|
$
|
138,000
|
|
|
$
|
138,000
|
|
|
$
|
|
|
|
$
|
138,000
|
|
|
$
|
138,000
|
|
|
$
|
138,000
|
|
Long-term Incentive(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of Unvested Stock Options
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
12,000
|
|
|
$
|
|
|
|
$
|
|
|
Acceleration of Unvested Restricted Stock
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
808,476
|
|
|
$
|
|
|
|
$
|
1,008,726
|
|
|
$
|
1,008,726
|
|
|
$
|
875,226
|
|
|
$
|
875,226
|
|
Benefits & Perquisites(8):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employer Contributions to Executive Deferred Compensation Plan
|
|
$
|
|
|
|
$
|
10,264
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
10,264
|
|
|
$
|
10,264
|
|
|
$
|
10,264
|
|
COBRA Continuation
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
16,634
|
|
|
$
|
16,634
|
|
|
|
N/A
|
|
|
$
|
16,634
|
|
|
$
|
|
|
|
$
|
|
|
280G Tax
Gross-up
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
493,332
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
|
|
|
$
|
148,264
|
|
|
$
|
|
|
|
$
|
1,584,110
|
|
|
$
|
775,634
|
|
|
$
|
1,008,726
|
|
|
$
|
2,710,956
|
|
|
$
|
1,023,490
|
|
|
$
|
1,023,490
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential
Post-employment Payments as of December 31,
2009 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
|
|
|
$
|
|
|
|
$
|
569,250
|
|
|
$
|
569,250
|
|
|
$
|
|
|
|
$
|
806,000
|
|
|
$
|
|
|
|
$
|
|
|
Bonus(6)
|
|
$
|
|
|
|
$
|
126,500
|
|
|
$
|
|
|
|
$
|
126,500
|
|
|
$
|
126,500
|
|
|
$
|
|
|
|
$
|
126,500
|
|
|
$
|
126,500
|
|
|
$
|
126,500
|
|
Long-term Incentive(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of Unvested Stock Options
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Acceleration of Unvested Restricted Stock
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
512,284
|
|
|
$
|
|
|
|
$
|
621,309
|
|
|
$
|
621,309
|
|
|
$
|
552,334
|
|
|
$
|
552,334
|
|
Benefits & Perquisites(8):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employer Contributions to Executive Deferred Compensation Plan
|
|
$
|
|
|
|
$
|
15,504
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
15,504
|
|
|
$
|
15,504
|
|
|
$
|
15,504
|
|
COBRA Continuation
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
24,529
|
|
|
$
|
24,529
|
|
|
|
N/A
|
|
|
$
|
24,529
|
|
|
$
|
|
|
|
$
|
|
|
280G Tax
Gross-up
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
N/A
|
|
|
$
|
N/A
|
|
|
|
N/A
|
|
|
$
|
387,392
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
|
|
|
$
|
142,004
|
|
|
$
|
|
|
|
$
|
1,232,563
|
|
|
$
|
720,279
|
|
|
$
|
621,309
|
|
|
$
|
1,981,234
|
|
|
$
|
694,338
|
|
|
$
|
694,338
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
32
Potential
Post-employment Payments as of December 31,
2009 James F. Newman
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
$
|
|
|
|
$
|
434,700
|
|
|
$
|
434,700
|
|
|
$
|
|
|
|
$
|
579,600
|
|
|
$
|
|
|
|
$
|
|
|
Bonus(6)
|
|
$
|
|
|
|
$
|
96,600
|
|
|
$
|
|
|
|
$
|
96,600
|
|
|
$
|
96,600
|
|
|
$
|
|
|
|
$
|
96,600
|
|
|
$
|
96,600
|
|
|
$
|
96,600
|
|
Long-term Incentive(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of Unvested Stock Options
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
Acceleration of Unvested Restricted Stock
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
204,478
|
|
|
$
|
|
|
|
$
|
257,878
|
|
|
$
|
257,878
|
|
|
$
|
204,478
|
|
|
$
|
204,478
|
|
Benefits & Perquisites(8):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employer Contributions to Executive Deferred Compensation Plan
|
|
$
|
|
|
|
$
|
9,621
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
9,621
|
|
|
$
|
9,621
|
|
|
$
|
9,621
|
|
COBRA Continuation
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
7,918
|
|
|
$
|
7,918
|
|
|
|
N/A
|
|
|
$
|
7,918
|
|
|
$
|
|
|
|
$
|
|
|
280G Tax
Gross-up
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
263,319
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
|
|
|
$
|
106,221
|
|
|
$
|
|
|
|
$
|
743,696
|
|
|
$
|
539,218
|
|
|
$
|
257,878
|
|
|
$
|
1,214,936
|
|
|
$
|
310,699
|
|
|
$
|
310,699
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential
Post-employment Payments as of December 31,
2009 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
|
|
|
$
|
|
|
|
$
|
185,535
|
|
|
$
|
185,535
|
|
|
$
|
|
|
|
$
|
316,700
|
|
|
$
|
|
|
|
$
|
|
|
Bonus(6)
|
|
$
|
|
|
|
$
|
70,680
|
|
|
$
|
|
|
|
$
|
70,680
|
|
|
$
|
70,680
|
|
|
$
|
|
|
|
$
|
70,680
|
|
|
$
|
70,680
|
|
|
$
|
70,680
|
|
Long-term Incentive(7)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acceleration of Unvested Stock Options
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
4,800
|
|
|
$
|
|
|
|
$
|
|
|
Acceleration of Unvested Restricted Stock
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
291,742
|
|
|
$
|
|
|
|
$
|
376,292
|
|
|
$
|
376,292
|
|
|
$
|
318,442
|
|
|
$
|
318,442
|
|
Benefits & Perquisites(8):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Employer Contributions to Executive Deferred Compensation Plan
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
COBRA Continuation
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
|
$
|
16,378
|
|
|
$
|
16,378
|
|
|
|
N/A
|
|
|
$
|
16,378
|
|
|
$
|
|
|
|
$
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
|
|
|
$
|
70,680
|
|
|
$
|
|
|
|
$
|
564,335
|
|
|
$
|
272,593
|
|
|
$
|
376,292
|
|
|
$
|
784,850
|
|
|
$
|
389,122
|
|
|
$
|
389,122
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 officer after he has attained
the age of 65. |
|
(2) |
|
Cause. Under each executive officers
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 executive
officers 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 executive
officers 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 officer would be entitled to a lump sum
severance payment equal to a multiple of the sum of his base
salary plus his current annual incentive target bonus for the
full year in which the termination of employment occurred. For
Mr. Huseman, the multiple is three, for
Messrs. Krenek, Patterson and Newman the multiple is 1.50,
and for Mr. Tyner, the multiple is 0.75. During 2009, the
annual incentive target bonus for our named executive officers
utilized was 60% for Mr. Huseman, 50% for
Messrs. Krenek, Patterson and Newman, and 40% for
Mr. Tyner, in each case of their annual salary as of the
end of the fiscal year. We did not pay annual incentive bonuses
to our named executive officers 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 officer would be entitled to a lump sum
severance payment equal to a multiple of the sum of his base
salary plus the higher of (i) his current annual incentive
target bonus for the full year in which the termination of
employment occurred or (ii) the highest annual incentive
bonus received by him for any of the last three fiscal years.
For Mr. Huseman, the multiple is three, for
Messrs. Krenek, Patterson and Newman 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 2009. |
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. |
|
(8) |
|
Other Benefits and Perquisites. |
|
|
|
Employer Contributions to Executive Deferred Compensation
Plan
Each executive officer will become fully vested in all
unvested matching and discretionary contributions made by the
Company into his plan account upon (i) obtaining the age of
65, (ii) his death or disability or (iii) a
termination for any reason whatsoever within 24 months
following a Change in Control. Otherwise, each executive officer
will forfeit any unvested portion of his plan account upon a
termination for any reason. Additionally, certain key employees,
including the named executive officers, may not receive
distributions before a date six months after the date they
separate service from the Company for any reason other than
death or disability. |
|
|
|
|
|
COBRA Continuation
In addition to the above cash benefits paid pursuant to each
executive officers 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,
Patterson, and Newman 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 2009
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 2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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)
|
|
(e)
|
|
(f)
|
|
(g)
|
|
(h)
|
|
Steven A. Webster
|
|
$
|
12,000
|
|
|
$
|
49,600
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
61,600
|
|
Sylvester P. Johnson, IV
|
|
$
|
65,000
|
|
|
$
|
24,800
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
89,800
|
|
William E. Chiles
|
|
$
|
81,000
|
|
|
$
|
24,800
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
105,800
|
|
Robert F. Fulton
|
|
$
|
49,000
|
|
|
$
|
24,800
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
73,800
|
|
James S. DAgostino, Jr.
|
|
$
|
71,000
|
|
|
$
|
24,800
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
95,800
|
|
Thomas P. Moore, Jr.
|
|
$
|
84,000
|
|
|
$
|
24,800
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
108,800
|
|
Antonio O. Garza, Jr.
|
|
$
|
30,962
|
|
|
$
|
377,250
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
408,212
|
|
H.H. Wommack, III(2)
|
|
$
|
25,500
|
|
|
$
|
24,800
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
50,300
|
|
|
|
|
(1) |
|
This column represents the total grant date fair value of
restricted stock awards granted to each of the applicable
directors. The fair value of restricted stock awards was
calculated based upon the closing market price of the
Companys common stock on the grant date. The actual value
that a director will realize upon vesting of restricted stock
awards will depend on the market price of the Companys
stock on the vesting date, so there is no assurance that the
value realized by a director will be at or near the value of the
market price of the Companys stock on the grant date. |
|
(2) |
|
Mr. Wommack resigned as a director on June 3, 2009.
Mr. Wommack was paid $25,500 in annual cash retainer and
for board and committee meetings attended prior to his
resignation. All of the stock awards granted in 2009 set forth
above were forfeited upon his resignation. |
For additional information regarding fees earned for services as
a director in 2009, including annual retainer fees, committee
and chairmanship fees, and meeting fees, see Board of
Directors and Committees of the Board Board of
Directors Compensation and Compensation
Discussion and Analysis Board Process
Compensation of Directors.
Transactions
with Related Persons, Promoters and Certain Control
Persons
Transactions with Related Persons. During
2009, 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
36
scheduled meetings, or, if such approval is not practicable, to
the Chairman of the Audit Committee for approval between such
meetings. When considering related person transactions, the
Audit Committee, or where submitted to the Chairman, the
Chairman, will consider all of the relevant facts available,
including, but not limited to: the benefits of the transaction
to the Company; the impact on a 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 Garza serve
as the members of our Compensation Committee. The Board of
Directors has determined that Messrs. Chiles,
DAgostino and Garza 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.
Leadership
Structure of the Companys Board
Mr. Webster is the Chairman of the Board. The Chairman is
not the principal executive officer of the Company. The Board
believes that the separation of the Chairman and the Chief
Executive Officer functions in this structure is appropriate for
oversight purposes on behalf of its investors and given that the
Companys common stock is publicly traded.
Board
Role in Risk Oversight of the Company
The Board has delegated certain responsibilities to the Audit
Committee under the Companys Audit Committee Charter.
These responsibilities include: (i) meeting periodically
with management
and/or the
Companys Chief Financial Officer and Controller to review
and discuss (A) the Companys major financial risk
exposures and steps management has taken to monitor and control
such exposures, including guidelines and policies with respect
to risk management and risk assessment and (B) the effects
of regulatory and accounting changes; (ii) reviewing and
discussing with the Companys independent auditor reports
that the independent auditors are required to provide to the
Audit Committee relating to significant financial reporting
issues and judgments made in connection with the preparation of
the Companys financial statements; (iii) discussing
periodically with members of management, the Companys
internal auditors and the Companys independent auditor the
adequacy and effectiveness of the Companys disclosure
controls and procedures and internal control over financial
reporting, any changes in internal controls, and any significant
deficiencies or material weaknesses in the design or operation
of internal controls; and (iv) establishing and maintaining
whistleblower procedures for complaints received by the Company
regarding accounting, internal accounting controls and auditing
matters, and for the confidential, anonymous submission by
Company employees of concerns regarding questionable accounting
or auditing matters. In connection with these risk oversight
matters, the Audit Committee also regularly reviews with
management safety and litigation matters.
The Board receives regular reports from the Chairman of the
Audit Committee regarding its activities and actions, as well as
any issues that arise with respect to the quality or integrity
of the Companys financial statements, the Companys
compliance with legal or regulatory requirements, the
performance and independence of the auditors, and the
performance of the internal audit function.
The Board does not have any separate risk committees. However,
the Compensation Committee, in connection with setting 2009 and
2010 compensation, has considered whether its compensation
policies and practices are reasonably likely to cause a material
adverse effect on the Company. Risk oversight with respect to
other Company matters, to the extent applicable, remains with
the Board or the Companys management.
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, 2009.
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, 2009,
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, 2009, 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
2009, and has advised the Company that it will have a
representative available at the 2010 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 2008 and 2009 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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There were no fees billed in 2009 or 2008 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 2009 were approved by the Audit Committee.
39
PROPOSAL 2:
RATIFICATION
OF INDEPENDENT AUDITOR
The Audit Committee has selected KPMG LLP as the Companys
independent auditor for fiscal year 2010, 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.
40
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 2010 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 2011 ANNUAL MEETING
The Company expects that its 2011 annual meeting of stockholders
will be held in May 2011 consistent with prior annual meetings.
Stockholders of record who intend to submit a proposal at the
annual meeting of stockholders in 2011 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, not earlier than
January 25, 2011 nor later than February 24, 2011,
which are dates at least 90 days but not more than
120 days in advance of the first anniversary of the date of
the Companys 2010 Annual Meeting.
Stockholders who intend to submit a proposal at the annual
meeting of stockholders in 2011 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 not earlier than
January 25, 2011 nor later than February 24, 2011.
Stockholders are also advised to review our Bylaws, which
contain additional requirements about advance notice of
stockholder proposals and director nominations.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of reports on Forms 3 and 4 and
amendments thereto furnished to the Company during fiscal 2009,
reports on Form 5 and amendments thereto furnished to the
Company with respect to fiscal 2009, 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 2009. Mr. Webster
filed a Form 4 on March 10, 2009 with respect to a
reportable transaction that occurred on March 5, 2009.
Mr. Tyner filed a Form 4 on April 13, 2009 with
respect to a reportable transaction that occurred on March 19,
2009. Mr. Rankin filed a Form 4 on April 13, 2009
with respect to a reportable transaction that occurred on
March 19, 2009. Mr. Rogers filed a Form 4 on
April 5, 2010 with respect to a reportable transaction that
occurred on July 16, 2009.
ADDITIONAL
INFORMATION
We are required to provide an Annual Report to stockholders of
the Company for the year ended December 31, 2009, 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 trustees 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, 2009 (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.
41
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.
42
ANNUAL MEETING OF STOCKHOLDERS OF
BASIC ENERGY
SERVICES, INC.
May 25, 2010
NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL:
The Notice of Meeting,
Proxy Statement, Proxy Card and Annual Report
are available at htpps://www.proxydocs.com/BAS
Please sign, date and mail
your proxy card in the
envelope provided as soon
as possible.
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↓ Please detach along perforated line
and mail in the envelope provided. ↓
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g 20330000000000000000 9
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052510 |
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PLEASE
SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK
YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x
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1. To
elect THREE Class II directors to serve a three-year term.
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FOR |
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AGAINST |
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ABSTAIN |
c FOR
ALL NOMINEES
c WITHHOLD
AUTHORITY
FOR
ALL NOMINEES
c FOR
ALL EXCEPT
(See
instructions below)
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Nominees
for election as Class I directors:
O WILLIAM E. CHILES
O ROBERT F. FULTON
O ANTONIO O. GARZA,
JR.
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2. RATIFICATION
OF AUDITORS
To ratify the selection of KPMG LLP as the Companys independent
auditor for fiscal year 2010
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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 not be voted
in the election of the nominees as director, FOR the ratification
of the selection of KPMG LLP as the Companys independent auditor
and, in the discretion of 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, and FOR the ratification of the selection of
KPMG LLP as the Companys independent auditor.
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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: n |
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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. |
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Signature of Stockholder
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Date:
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Signature of Stockholder
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Date: |
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Note: |
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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. |
BASIC ENERGY
SERVICES, INC.
PROXY SOLICITED
ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS ON MAY 25, 2010
The 2010 Annual Meeting of the Stockholders of Basic Energy Services, Inc. (the "Company")
will be held on Tuesday, May 25, 2010, 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 2010 Annual Meeting scheduled to be held on May 25, 2010, 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.)