Incentive Plan

During the three months ended June 30, 2016 and 2015, compensation expense related to share-based arrangements was approximately $2.3 million and $3.3 million, respectively. For compensation expense recognized during the three months ended June 30, 2015, Basic recognized a tax benefit of approximately $1.2 million. During the six months ended June 30, 2016 and 2015, compensation expense related to share-based arrangements was approximately $5.1 million and $7.2 million, respectively. For compensation expense recognized during the six months ended June 30, 2015, Basic recognized a tax benefit of approximately $2.6 million.

As of June 30, 2016, there was approximately $12.6 million of total unrecognized compensation related to non-vested share-based compensation arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of 2.0 years. The total fair value of share-based awards vested during the six months ended June 30, 2016 and 2015 was approximately $2.5 million and $5.0 million, respectively. During the six months ended June 30, 2016 and 2015, there was no excess tax benefit due to the net operating loss carryforwards (“NOL”). If there was no NOL, there would have been an excess tax benefit of approximately $11,000 at June 30, 2015.

Stock Option Awards

The fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option-pricing model. Options granted under the Plan expire 10 years from the date they are granted, and generally vest over a three- to five-year service period.

The following table reflects changes during the six month period and a summary of stock options outstanding at June 30, 2016:



					Weighted
					Average
			Weighted		Remaining	Aggregate
	Number of		Average		Contractual	Intrinsic
	Options		Exercise		Term	Value
	Granted		Price		(Years)	(000's)
Non-statutory stock options:
Outstanding, beginning of period	175,000		$	26.29
Options expired	(152,000	)	26.84
Outstanding, end of period	23,000		$	22.66	0.7	$	—
Exercisable, end of period	23,000		$	22.66	0.7	$	—
Vested or expected to vest, end of period	23,000		$	22.66	0.7	$	—

The total intrinsic value of share options exercised during the six months June 30, 2015 was approximately $37,000. There were no stock options exercised during the six months ended June 30, 2016.

Cash received from share option exercises under the Plan was approximately $724,000 for the six months ended June 30, 2015. During the six months ended June 30, 2016 and 2015, there was no excess tax benefit due to the NOL. If there was no NOL, there would have been no tax benefit for at June 30, 2016, and an excess tax benefit of approximately $534,000 at June 30, 2015.

Restricted Stock Awards

A summary of the status of Basic’s non-vested share grants at June 30, 2016 and changes during the six months ended June 30, 2016 is presented in the following table:



			Weighted Average
	Number of		Grant Date Fair
Nonvested Shares	Shares		Value Per Share
Nonvested at beginning of period	1,967,376		$	14.34
Granted during period	790,263		2.73
Vested during period	(858,705	)	15.02
Forfeited during period	(7,612	)	23.81
Nonvested at end of period	1,891,322		$	9.14

Phantom Stock Awards

On March 24, 2016, Basic’s Board of Directors approved grants of performance-based phantom stock awards to certain members of management. The performance-based phantom stock awards are tied to Basic’s achievement of total stockholder return (“TSR”) relative to the TSR of a peer group of energy services companies over the performance period (defined as the two-year calculation period starting on the 20th NYSE trading day prior to and including the last NYSE trading day of 2015 and ending on the last NYSE trading day of 2017). The number of phantom shares to be issued will range from 0% to 150% of the 705,263 target number of phantom shares, depending on the performance noted above. Any phantom shares earned at the end of the performance period will then remain subject to vesting in one-half increments on March 15, 2018 and 2019 (subject to accelerated vesting in certain circumstances). As of June 30, 2016, Basic estimated that 100% of the target number of performance-based awards will be earned. The Board of Directors also approved grants of phantom restricted stock awards to certain key employees. The number of phantom shares issued was 552,100. These grants remain subject to vesting annually in one-third increments over a three-year period, with the first portion vesting March 15, 2017 (subject to accelerated vesting in certain circumstances).

Key Employee Retention Plan and Key Employee Incentive Plan

In June 2016, in order to retain top-tier executive talent, Basic entered into (i) Key Employee Retention Bonus ("KERP") agreements with certain of its employees, and (ii) Key Employee Incentive Bonus ("KEIP") agreements with certain of its executive officers. The Company’s Board of Directors authorized the KERP and KEIP, which are designed to supplement Basic’s existing employee compensation programs. The KERP and KEIP programs are to be paid in cash. The first installment of the KERP was paid in June 2016. The remaining payments are to be paid on each of August 15, 2016, November 15, 2016 and February 15, 2017. The first payment of the KEIP was paid in June 2016, and remaining payments under the KEIP bonus are subject to the attainment of certain goals related to restructuring of the Company's debt.

Under the retention bonus agreements, if prior to June 20, 2017 either (i) a recipient voluntarily terminates his employment with the Company other than as an eligible retirement or (ii) his employment is terminated by the Company for cause then the recipient will both forfeit his right to payment of any remaining installment payments and be obligated to repay the Company for the total amount of any installment payments previously paid prior to such termination. The recipient will be eligible to receive any scheduled installment payments under the plans in the event of a termination of employment prior to the vesting date that is without cause, as an eligible retirement or by reason of disability or death.