DEF 14A 1 nes_2019xdef14a.htm DEF 14A Document


 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
x Filed by the Registrant
¨   Filed by a Party other than the Registrant
 
Check the appropriate box:
¨  Preliminary Proxy Statement
¨  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
x  Definitive Proxy Statement
¨  Definitive Additional Materials
¨  Soliciting Material under §240.14a-12


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NUVERRA ENVIRONMENTAL SOLUTIONS, 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):
x
No fee required.
¨
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
 
(1) Title of each class of securities to which transaction applies:
 
(2) Aggregate number of securities to which transaction applies:
 
(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):
 
(4) Proposed maximum aggregate value of transaction:
 
(5) Total fee paid:
¨
Fee paid previously with preliminary materials.
¨
Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
 
(1) Amount Previously Paid:
 
(2) Form, Schedule or Registration Statement No.:
 
(3) Filing Party:
 
(4) Date Filed:


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NUVERRA ENVIRONMENTAL SOLUTIONS, INC.
6720 N. Scottsdale Road, Suite 190
Scottsdale, Arizona 85253
www.nuverra.com

April 30, 2019


Dear Stockholder:

On behalf of the Board of Directors, we are pleased to invite you to attend the 2019 Annual Meeting of Stockholders of Nuverra Environmental Solutions, Inc. (NYSE American: NES) to be held on June 18, 2019 at 3:00 p.m., Eastern Daylight Time.

To be cost-effective, we are holding a virtual Annual Meeting via the Internet. We are offering a live webcast of the Annual Meeting for our stockholders at www.virtualshareholdermeeting.com/NES2019 where you will be able to listen to the Annual Meeting, vote electronically, and submit questions.

In addition, we are pleased to take advantage of the United States Securities and Exchange Commission rule allowing companies to furnish proxy statement materials to their stockholders over the Internet. We believe that this delivery process will expedite stockholders’ receipt of proxy statement materials. This delivery process will also lower the costs and reduce the environmental impact of our Annual Meeting. On April 30, 2019, we mailed to our stockholders of record as of April 22, 2019 a Notice of Annual Meeting of Stockholders, as well as a Notice of Internet Availability of Proxy Statement Materials containing instructions on how to access our Proxy Statement and Annual Report for the fiscal year ended December 31, 2018. The Notice of Internet Availability of Proxy Statement Materials also provides instructions on how to receive a paper copy of the proxy statement materials by mail and how to vote at the 2019 Annual Meeting.

The matters to be acted upon are described in the Notice of Annual Meeting of Stockholders, the Notice of Internet Availability of Proxy Statement Materials and in the Proxy Statement. We encourage you to carefully read these materials, as well as the Annual Report for the fiscal year ended December 31, 2018.

We urge you to participate in the 2019 Annual Meeting. Whether or not you plan to attend our live webcast of the 2019 Annual Meeting, your vote is very important and we encourage you to vote promptly. You may vote your shares over the Internet or by mail, as described in the proxy materials. Instructions regarding the methods of voting are available in the Notice of Annual Meeting of Stockholders and on the proxy card. If you do attend the live webcast, you will have the right to revoke your proxy and vote your shares at that time if you so desire. If you hold your shares through an account with a broker, nominee, fiduciary or other custodian, please follow the instructions you receive from them to vote your shares.

Thank you for your ongoing support of and continued interest in Nuverra Environmental Solutions, Inc.

Sincerely,
 
 
 
 
 
/s/    Charles K. Thompson         
 
Charles K. Thompson
Chairman and Chief Executive Officer
 


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NUVERRA ENVIRONMENTAL SOLUTIONS, INC.
6720 N. Scottsdale Road, Suite 190
Scottsdale, Arizona 85253
www.nuverra.com

April 30, 2019
NOTICE OF THE 2019 ANNUAL MEETING OF STOCKHOLDERS
To be held June 18, 2019

To our Stockholders:
Notice is hereby given that the 2019 Annual Meeting of Stockholders of Nuverra Environmental Solutions, Inc., a Delaware corporation, will be held on June 18, 2019 at 3:00 p.m., Eastern Daylight Time, via the Internet at www.virtualshareholdermeeting.com/NES2019. Only stockholders of record that own our common stock at the close of business on April 22, 2019 are entitled to notice of and to vote at the Annual Meeting. For ten days prior to the Annual Meeting, a complete list of our stockholders entitled to vote at the meeting will be available for examination by any stockholder, for any purpose relating to the meeting, during ordinary business hours at our principal executive offices located at 6720 N. Scottsdale Road, Suite 190, Scottsdale, Arizona 85253.

The Annual Meeting will be held for the following purposes:

1.
To elect one Class II director to hold office for a three-year term expiring at the annual meeting of stockholders to be held in 2022 or until his respective successor is elected and qualified, or his earlier death, resignation, or removal. The Board of Directors (the “Board”) has nominated John B. Griggs for election as a Class II director at the Annual Meeting.

2.
To hold an advisory vote approving the compensation of our named executive officers.

3.
To ratify the appointment of Moss Adams, LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2019.

4.
To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.

Important Notice Regarding the Availability of Proxy Statement Materials for the Annual Meeting of Stockholders to be Held on June 18, 2019. Our proxy statement is attached. Our financial and other information is contained in our Annual Report for the fiscal year ended December 31, 2018. If you received a Notice of Internet Availability of Proxy Statement Materials by mail, you will not receive a printed copy of the proxy statement materials unless specifically requested. This proxy statement and our Annual Report for the fiscal year ended December 31, 2018 are available at http://ir.nuverra.com/sec-filings. If you received a Notice of Internet Availability of Proxy Statement Materials by mail and would like to receive a printed copy of our proxy statement materials, you should follow the instructions for requesting such materials included in the Notice of Internet Availability of Proxy Statement Materials. In addition, the Notice of Internet Availability of Proxy Statement Materials provides instructions on how stockholders may request to receive proxy statement materials for future Annual Meeting materials in printed or email form.

YOUR VOTE IS IMPORTANT: Whether you plan to attend our live webcast of the 2019 Annual Meeting or not, please vote your shares by the Internet or mail in order to ensure the presence of a quorum. If you attend the live webcast, you may choose to vote your shares at that time even if you have previously voted your shares. Any proxy may be revoked by the submission of a later dated proxy or a written notice of revocation before close of the 2019 Annual Meeting.


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Registered holders may vote:
1.
By the Internet: go to www.proxyvote.com; or
2.
By mail: mark, sign, date and promptly mail the enclosed proxy card in the postage-paid envelope.
 
Beneficial Stockholders. If your shares are held in the name of a broker, bank or other holder of record, follow the voting instructions you receive from the holder of record to vote your shares.

By Order of the Board of Directors,

/s/    Joseph M. Crabb
 
Joseph M. Crabb
Executive Vice President, Chief Legal Officer and Corporate Secretary
 



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NUVERRA ENVIRONMENTAL SOLUTIONS, INC.
6720 N. Scottsdale Road, Suite 190
Scottsdale, Arizona 85253
www.nuverra.com

TABLE OF CONTENTS

 
 
 
 
 
 
 
 
 
 

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NUVERRA ENVIRONMENTAL SOLUTIONS, INC.
6720 N. Scottsdale Road, Suite 190
Scottsdale, Arizona 85253
www.nuverra.com

PROXY STATEMENT FOR THE 2019 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 18, 2019

The accompanying proxy is being solicited by the Board of Directors (the “Board”) of Nuverra Environmental Solutions, Inc., a Delaware corporation (“we,” “our,” “us,” “Nuverra,” or the “Company”), in connection with its annual meeting of stockholders to be held on June 18, 2019, at 3:00 pm Eastern Daylight Time, (the “Annual Meeting”) via live webcast on the Internet at www.virtualshareholdermeeting.com/NES2019, or any postponement or adjournment thereof, for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders and as described below. We first made this proxy statement (“Proxy Statement”) available to stockholders on April 30, 2019. You are cordially invited to attend the live webcast of the Annual Meeting and are requested to vote on the proposals described in this Proxy Statement at the Annual Meeting.

The following proposals will be considered at the Annual Meeting:

1.
To elect one Class II director to hold office for a three-year term expiring at the annual meeting of stockholders to be held in 2022 or until his respective successor is elected and qualified, or his earlier death, resignation, or removal. The Board has nominated John B. Griggs for election as a Class II director at the Annual Meeting.

2.
To hold an advisory vote approving the compensation of our named executive officers.

3.
To ratify the appointment of Moss Adams, LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2019.

4.
To transact such other business as may properly come before the Annual Meeting or any adjournment or postponement thereof.

How to Participate in the Electronic Meeting

In order to participate in the Annual Meeting, please log on to www.virtualshareholdermeeting.com/NES2019, click on the “Investors” section and then the “Annual Meeting Webcast” link at least 15 minutes prior to the start of the 3:00 p.m. Eastern Daylight Time meeting to provide time to register and download the required audio software, if needed. All stockholders will need to register by entering your name and, if you would like to ask a question during the question and answer session following the Annual Meeting presentation, you will also need to enter the control number received with your Notice of Internet Availability of Proxy Statement Materials. Questions that would be appropriate to raise in person and that relate to the purpose of the meeting will be accepted during the meeting. To submit questions, please access the Annual Meeting webcast and select “Ask a Question.”

The webcast replay will be available at www.virtualshareholdermeeting.com/NES2019 until December 31, 2019.

Voting Rights and Outstanding Shares

Only stockholders of record as of the close of business on April 22, 2019 will be entitled to vote at the Annual Meeting and any adjournment or postponement thereof. As of that date, we had 15,694,857 shares of common stock outstanding, all of which are entitled to vote with respect to all matters to be acted upon at the Annual Meeting. Each stockholder of record as of that date is entitled to one vote for each share of common stock held by such stockholder. Our Third Amended and Restated Bylaws (“Bylaws”) provide that a majority of the outstanding shares of our common stock entitled to vote shall constitute a quorum for the transaction of business at the Annual Meeting. Votes for and against, abstentions and “broker non-votes” (shares held by a broker or nominee that does not have the authority, either express or discretionary, to vote on a particular matter) will each be counted as present for purposes of determining the presence of a quorum.


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Vote Required

If a quorum is present, the votes required for the proposals to be considered at the Annual Meeting and the treatment of abstentions and broker non-votes in respect of such proposals are as follows:

•
Proposal 1: The nominee for Class II director receiving the highest number of votes will be elected as the Class II director. Abstentions and broker non-votes will not have any effect on the election of directors. Note that if your shares are held by a broker or nominee, such broker or nominee will not have authority to vote your shares in the election of directors unless you provide instructions to him or her regarding how you would like your shares to be voted.

•
Proposals 2 and 3: Our Bylaws state that each of the items brought before the stockholders at the Annual Meeting requires the affirmative vote of the holders of a majority of the shares of our common stock present and entitled to vote at the Annual Meeting. Notwithstanding the vote required by our Bylaws, Proposal 2 and Proposal 3 are advisory only and are not binding on us. Our Board will consider the outcome of the votes on Proposals 2 and 3 in considering what action, if any, should be taken in response to the advisory vote by stockholders. Abstentions will have the same effect as an “against” vote, but broker non-votes will not have any effect on the outcome of the vote on these proposals. Note that if your shares are held by a broker or nominee, such broker or nominee may exercise his or her discretion to vote your shares for Proposal 3, but will not have authority to vote your shares on Proposal 2 unless you provide instructions to him or her regarding how you would like your shares to be voted.

Solicitation of Proxies

We will bear the expense of soliciting proxies. Our directors, officers, and other employees, without additional compensation, may solicit proxies personally or in writing, by telephone, e-mail, or otherwise. We are required to request that brokers and nominees who hold stock in their names furnish our proxy materials to the beneficial owners of the stock, and we will reimburse these brokers and nominees for their reasonable expenses incurred in doing so.

Voting Instructions and Revocation of Proxy

All shares of our common stock represented by properly executed proxies received before or at the Annual Meeting will, unless the proxies are revoked, be voted in accordance with the instructions indicated on those proxies. If no instructions are indicated on a proxy, the shares represented by such proxy will be voted as the Board recommends on each proposal. The persons named as proxies will vote on any other matters properly presented at the Annual Meeting in accordance with their best judgment. A stockholder giving a proxy has the power to revoke his or her proxy at any time before it is exercised by delivering to the Corporate Secretary of the Company a written notice revoking the proxy or a duly executed proxy with a later date, or by attending the live webcast of the Annual Meeting and voting his or her shares at that time. Attendance at the live webcast of the Annual Meeting will not, in and of itself, constitute revocation of a proxy.

Stockholders whose shares are registered in their own names may vote (1) via the Internet or (2) by returning a proxy card (if they have received one). Specific instructions to be followed by any registered stockholder interested in voting via the Internet are set forth in the Notice of Internet Availability of Proxy Materials and on the proxy card. The Internet voting procedures are designed to authenticate the stockholder’s identity and to allow the stockholder to vote his or her shares and confirm that his or her voting instructions have been properly recorded. If you do not wish to vote via the Internet, please complete, sign and return a proxy card (if you have received one). The Notice of Internet Availability of Proxy Materials provides instructions on how stockholders may request printed proxy materials (including a proxy card).

Interest of Certain Persons in Matters to Be Acted Upon

No director or executive officer, other than in his role as nominee, director or executive officer, associate of any director or executive officer or any other person has any substantial interest, direct or indirect by security holdings or otherwise, in the matters described herein which, to the extent such director, executive officer or associate of such director or executive officer is a stockholder of the Company, is not shared by all other stockholders pro rata and in accordance with their respective stock ownership interests.


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PROPOSAL 1 - ELECTION OF DIRECTORS

Background

We have a classified Board currently consisting of four directors, all but one of whom are non-employee directors, divided into three classes (Class I, Class II and Class III). Directors in each class are elected to serve for three-year staggered terms that expire in successive years. Our Class II director’s term expires this year. Accordingly, we are holding an election for our Class II director at the Annual Meeting, with the Class II director elected to serve a three-year term.

The Board has nominated John B. Griggs for election as a Class II director for a three-year term expiring at the annual meeting of stockholders to be held in 2022 or until his successor is elected and qualified, or his earlier death, resignation or removal. In the event Mr. Griggs declines to serve or becomes unavailable for any reason, or if any additional vacancy occurs before the election (although we know of no reason to anticipate that this will occur), the stockholders may vote for such substitute nominee at the Annual Meeting as the Board may designate. Mr. Griggs has consented to being named in this Proxy Statement and has agreed to serve if elected.

Vote Required and Board Recommendation

If a quorum is present and voting, the nominee for Class II director receiving the highest number of votes will be elected as the Class II director. Abstentions and broker non-votes will be counted as shares present for purposes of determining the presence of a quorum, but will have no effect on the result of the vote. Biographical information, including the principal occupation of and other directorships held by Mr. Griggs for at least the past five years as well as the specific experience, qualifications, attributes, and skills that led to the conclusion that Mr. Griggs should serve as a member of the Board is provided below, as well as the Class I and Class III directors whose terms of office will continue after the Annual Meeting.

THE BOARD RECOMMENDS A VOTE “FOR” THE NOMINEE NAMED ABOVE.


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Information Regarding Directors and Nominees

The following table sets forth information regarding our current directors, including the Class II nominee proposed to be elected at the Annual Meeting. There are no family relationships between any directors or executive officers of the Company.

Name
 
Position with our Company
 
Age
 
Director Since
Charles K. Thompson
 
Chairman, Chief Executive Officer, and Director
 
57
 
2017
John B. Griggs
 
Director
 
47
 
2017
Michael Y. McGovern
 
Director
 
67
 
2017
Lawrence A. First
 
Director
 
57
 
2018

Class II Director Nominated for Election at the 2019 Annual Meeting Whose Term, if Elected, Will Expire at the 2022 Annual Meeting of Stockholders

John B. Griggs: Mr. Griggs is the Chief Financial Officer and Executive Vice President for Conquest Completion Services, a Shreveport, Louisiana-based provider of coiled tubing and related completion services, where he is responsible for all finance, accounting, treasury, tax, risk management, FP&A, legal and corporate development activities as well as health, safety and environmental matters. Prior to joining Conquest, Mr. Griggs was the Chief Financial Officer of Rubicon Oilfield International, a Houston-based oilfield products manufacturing company he co-founded in early 2015. While at Rubicon, Mr. Griggs was responsible for the company’s accounting, treasury/finance, tax, risk management, and corporate development functions and was also intimately involved in the establishment of high-level strategic plans and overall company leadership. From 2011 through 2014, Mr. Griggs was a Managing Director at CSL Capital Management, an energy private equity firm. While at CSL, Mr. Griggs sponsored investments in and served on the boards of several oilfield services companies, including Independence Oilfield Chemicals and Delta Subsea. From 2005 through 2011, Mr. Griggs was a Senior Vice President for the direct capital arm of the D.E. Shaw Group where he focused on direct debt and equity investments in energy companies, with a particular focus on energy services and equipment, midstream and downstream companies. Mr. Griggs holds a B.A. from the University of Texas at Austin and an M.B.A. from the Harvard Business School, where he was a Baker Scholar.

Directors Whose Terms Expire at the 2020 Annual Meeting of Stockholders (Class III Directors)

Charles K. Thompson: Mr. Thompson currently serves as our Chairman of the Board and Chief Executive Officer. He is currently a Managing Partner of PinHigh Capital Partners, a Houston-based family office affiliated investment partnership with a focus on private oil service and exploration and production (“E&P”) investments. Mr. Thompson currently serves as a member of the boards of directors of KSW Oilfield Services and Wayfinder Resources. Previously, Mr. Thompson spent two years at Nomura Securities building the oil and gas investment banking business, and from 2004 to 2014 he was an original partner of Legacy Partners Group, a boutique mergers and acquisitions firm based in New York that was sold to FBR Capital Markets in 2007. Mr. Thompson holds a B.A. in geology from Williams College and attended Columbia Business School.

Lawrence A. First: Mr. First currently serves as the Chief Investment Officer and Managing Director of Ascribe Capital LLC (“Ascribe”). Mr. First joined Ascribe in 2008. Prior to joining Ascribe, Mr. First was a Managing Director and Co-Portfolio Manager in Merrill Lynch’s Principal Credit Group, a proprietary investing platform for the firm’s capital, where he was responsible for evaluating and managing assets in the team’s North American portfolio, including non-investment grade bank loans, stressed/distressed fixed income investments and public and private equity. Prior to joining Merrill Lynch in 2003, Mr. First was a senior partner in the Bankruptcy and Restructuring department of the law firm of Fried, Frank, Harris, Shriver & Jacobson LLP, where he began his legal career in 1987. At Fried Frank, he represented both debtors and creditors in both in-court and out-of court restructurings as well as lenders to, investors in, and potential buyers and sellers of, financially troubled companies. Prior to his joining Fried Frank’s Bankruptcy and Restructuring department, he was a member of its Corporate Department, where he became a partner in 1994. On behalf of Ascribe Capital LLC, Mr. First has been a member of the boards of directors of Forbes Energy Services Ltd. since April 2017, Engineering Solutions & Products, LLC since November 2013, and Big Run, Inc. since March 2018. He was a director on the board of Geokinetics Inc. from 2013 to 2018, Alion Science and Technology Corp. from August 2014 to August 2015, and EnviroSolutions Inc. from July 2010 to March 2018. Mr. First received a Bachelor of Arts in History and Sociology from Haverford College, and a Juris Doctor from New York University School of Law. He also attended the London School of Economics.


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Director Whose Term Expires at the 2021 Annual Meeting of Stockholders (Class I Director)

Michael Y. McGovern: Mr. McGovern is currently the Chairman and Chief Executive Officer of Sherwood Energy, LLC, an aggregator of hydrocarbon reserves through direct ownership of working interests in oil and natural gas leases, and currently serves as a director for Cactus Wellhead, LLC, a manufacturer and servicer of pressure control equipment for offshore and onshore oil and gas production, and as a director of Fibrant LLC, a US unit of Fibrant BV, a Netherlands based global producer and supplier of high quality chemical performance products. Mr. McGovern has served previously as a director of various public and private companies operating in the oil and gas and energy industries, including Probe Holding Inc. (2014-2017), Quicksilver Resources Inc. (2013-2016), Long Run Exploration Ltd. (2008-2013); and Columbia Chemical Company (2010-2011). Mr. McGovern holds a B.S. from Centenary College and attended the Freeman School of Business at Tulane University from 1973-1974 and the Loyola University New Orleans College of Law from 1979-1980.

Corporate Governance Principles and Board Matters

We believe that effective corporate governance is critical to our long-term success and ability to create value for our stockholders. In connection with the emergence from our restructuring proceedings and subsequent listing on the NYSE American Stock Exchange (the “NYSE American”) in October 2017, the Board reviewed and updated, and from time to time as appropriate, the Board will continue to review and update, as appropriate or required, our corporate governance policies and practices, consistent with the provisions of the Sarbanes-Oxley Act of 2002, current and proposed rules of the United States Securities and Exchange Commission (“SEC”), and the corporate governance requirements of the NYSE American. Based upon its review, the Board has approved charters, policies, procedures and controls that we believe promote and enhance corporate governance, accountability and responsibility with respect to the Company, its management and employees, and a culture of honesty and integrity. Our corporate governance guidelines, code of business conduct and ethics, insider trading policy, communication policy, and the charters for each of our Board committees are available in the “Corporate Governance” section of our website at www.nuverra.com and are available free of charge upon request addressed to Corporate Secretary, Nuverra Environmental Solutions, Inc., 6720 N. Scottsdale Road, Suite 190, Scottsdale, AZ 85253.

Director Independence

We currently have four directors on our Board. Our Corporate Governance Guidelines and SEC rules require us to maintain a board of directors with at least a majority of independent directors. For a director to qualify as independent, the Board must affirmatively determine that the director has no material relationship with the Company, either directly or as a partner, stockholder or officer of an organization that has a relationship with the Company that, in the opinion of the Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.

Each member of the Board must meet certain mandatory qualifications for membership on the Board, and the Board as a whole must meet the minimum independence requirements imposed by our Corporate Governance Guidelines, the SEC, and any other laws and regulations applicable to us. Each member of the Board is required to promptly advise the Chairman of the Board and the Chairman of the Compensation and Nominating Committee of any matters which, at any time, may affect such member’s qualifications for membership under the criteria imposed by the SEC, any applicable exchange or market, any other laws and regulations or these guidelines, including, but not limited to, such member’s independence.

The Board has affirmatively determined that three of our four Board members, Messrs. Griggs, McGovern, and First, and all Board committee members, are independent under all applicable rules governing independence. In reaching its determination, the Board reviewed the Company’s Corporate Governance Guidelines, SEC rules, NYSE American listing rules, and the individual circumstances of each director and determined that each of the directors identified as independent satisfied the applicable standards. The Board determined that Mr. Thompson does not currently satisfy the independence standards due to his appointment as Chief Executive Officer.

Executive Sessions

NYSE American listing rules require the Company’s non-management directors to meet, at least annually, in regularly scheduled executive sessions without management present. Our Corporate Governance Guidelines, which are discussed more fully below under “Corporate Governance Guidelines,” provide that our non-management directors will meet in executive session without management directors or management present on a regularly scheduled basis, but not less than quarterly. We revised our Corporate Governance Guidelines following our emergence from our restructuring proceedings and in connection with our listing on the NYSE American in October 2017. Our non-management directors held 4 executive sessions during fiscal 2018. The director to preside during an executive session is determined at the beginning of the meeting. In addition, our Audit

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Committee charter requires that the members of the Audit Committee meet with our independent auditors in executive session. The members of the Audit Committee held 5 executive sessions with our independent auditors during 2018.

Committees and Meeting Attendance

The Board has established a standing Audit Committee and a Compensation and Nominating Committee. Each of these Board committees operates under a written charter adopted by the Board. The Board committee charters are available in the “Corporate Governance” area of our website at www.nuverra.com. All committees consist of two persons, none of whom is employed by us and all of whom are independent under SEC rules and NYSE American listing rules. From time to time, the Board will create special committees to address specific matters such as financial or corporate transactions.

The Board and its Audit and Compensation and Nominating Committees meet periodically in person and via conference calls throughout the year, and also hold special meetings and act by written consent from time to time as appropriate. The Board held 11 meetings during 2018, and as noted above, the non-management members of the Board held 4 executive sessions. Each director attended 100% of the meetings of the Board and the meetings held by all Board committees on which such person served.

The following table sets forth the two standing committees of the Board, the members of such committee and the number of meetings held by each committee during 2018.

Director
 
Audit Committee
 
Compensation and Nominating Committee
John B. Griggs
 
Chair
 
X
Michael Y. McGovern (1)
 
X
 
Chair
Charles K. Thompson (2)
 
 
 
 
Lawrence A. First
 
 
 
 
Number of Meetings Held in 2018
 
5
 
3

(1)
Mr. McGovern was appointed as Chair of the Compensation and Nominating Committee on March 1, 2018.
(2)
Mr. Thompson’s service on the Audit Committee and Compensation and Nominating Committee ceased following his appointment as Interim Chief Executive Officer on March 2, 2018. He was named non-interim Chief Executive Officer as of November 19, 2018.

Policy Regarding Director Attendance at Annual Meetings of Stockholders

Directors are encouraged to attend our annual meetings of stockholders and we currently expect all of our directors to be in attendance at the Annual Meeting on June 18, 2019. All of our directors attended the 2018 annual meeting of stockholders on August 7, 2018.

Audit Committee

The members of the Audit Committee are Messrs. Griggs (Chair) and McGovern. Currently, all members of the Audit Committee meet the independence requirements of the Company’s Corporate Governance Guidelines, the additional independence requirements of the SEC and NYSE American, and other applicable law. The Audit Committee’s written charter can be found in the “Corporate Governance” section of our website at www.nuverra.com under the Investors tab. The Audit Committee oversees our accounting and financial reporting processes, internal control systems, independent auditor relationships and the audits of our financial statements. The Audit Committee’s responsibilities include the following:

•
selecting and hiring of our independent registered public accounting firm;
•
evaluating the qualifications, independence and performance of our independent registered public accounting firm;
•
reviewing and approving the audit and non-audit services to be performed by our independent registered public accounting firm;
•
reviewing the design, adequacy, implementation and effectiveness of our internal controls established for finance, accounting, legal compliance and ethics;
•
reviewing the design, adequacy, implementation and effectiveness of our critical accounting and financial policies;
•
overseeing and monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to our financial statements and accounting matters;

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•
reviewing with management and our independent registered public accounting firm the results of our annual and quarterly financial statements;
•
reviewing with management and our independent registered public accounting firm any earnings announcements or other public announcements concerning our operating results;
•
reviewing and approving any related party transactions (See “Certain Relationships and Related Party Transactions” herein for further discussion); and
•
overseeing, discussing with our Board, management and our independent registered public accounting firm and, as necessary, making recommendations to our Board regarding how to address risks relating to accounting matters, financial reporting and legal and regulatory compliance and developments, and the services provided by our independent registered public accounting firm.

The Board has determined that Messrs. Griggs and McGovern are financially literate and qualify as “audit committee financial experts” as defined under SEC rules and regulations. As noted above, Messrs. Griggs and McGovern meet the applicable independence requirements.

Compensation and Nominating Committee
The members of the Compensation and Nominating Committee of the Board are Messrs. McGovern (Chair) and Griggs. All members of the Compensation and Nominating Committee meet the independence requirements of the SEC, NYSE American, and independent non-employee directors within the meaning of Rule 16b-3 promulgated under the Exchange Act. The Compensation and Nominating Committee’s written charter can be found in the “Corporate Governance” section of our website at www.nuverra.com. The Compensation and Nominating Committee has responsibility for the review, evaluation and approval of executive compensation, including the compensation philosophy, policies and plans for our executive officers.
On behalf of the Board, the Compensation and Nominating Committee monitors and assists the Board in determining compensation for our senior management, directors and employees and identifying individuals qualified to become directors consistent with criteria established by the Board. The Compensation and Nominating Committee’s responsibilities include the following:
•
setting performance goals for our officers and reviewing their performance against these goals;
•
reviewing and recommending compensation and benefit plans for our officers and compensation policies for the Board and members of the Board committees;
•
reviewing the terms of employment agreements and arrangements with our officers;
•
reviewing and discussing with the Company’s management the section of this Proxy Statement entitled “Executive Compensation” and determining whether to recommend to the Board that such section be included in our Proxy Statement and in our annual report on Form 10-K;
•
producing an annual report on executive compensation for inclusion in our Proxy Statement;
•
overseeing, discussing with our Board and management, and, as necessary, making recommendations to the Board regarding how to address risks relating to employment, compensation and benefits policies. To assist it in satisfying these oversight responsibilities, the Compensation and Nominating Committee meets regularly with management to understand the financial, human resources and stockholder implications of compensation decisions being made;
•
evaluating the composition, size and governance of the Board and its committees and making recommendations regarding future planning and the appointment of directors to committees of our Board;
•
administering a policy for considering nominees for election to the Board;
•
overseeing our directors’ performance and self-evaluation process;
•
reviewing our corporate governance principles and providing recommendations to the Board regarding possible changes; and
•
overseeing, discussing with our Board and management and, as necessary, making recommendations to the Board regarding how to address risks relating to management and Board succession planning, ethics, corporate governance and business practices.

The Board and the Compensation and Nominating Committee do not discuss or make decisions regarding an executive officer’s compensation in the presence of such executive officer. Except for consulting from time to time at the Compensation and Nominating Committee’s request with our Chairman and Chief Executive Officer, our executive officers, including the named executive officers (as defined below under “Executive Compensation”), do not have any role in determining the form or amount of compensation paid to our named executive officers. The Compensation and Nominating Committee continued its engagement of Pearl Meyer & Partners, LLC (“Pearl Meyer”) as an independent compensation consultant during 2018 for the provision of data and recommendations to the Compensation and Nominating Committee during its monitoring, evaluations and actions with regard to executive compensation.

13


Selection of Board Nominees
On May 1, 2017, the Company and certain of its material subsidiaries filed voluntary petitions under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) to pursue prepackaged plans of reorganization (together, and as amended, the “Plan of Reorganization”). On July 25, 2017, the Bankruptcy Court entered an order confirming the Plan of Reorganization, which became effective on August 7, 2017 (the “Effective Date”).

On the Effective Date of the Plan of Reorganization all of our prior directors (other than Mark D. Johnsrud, who was serving as our Chairman of the Board and Chief Executive Officer at that time) were deemed to have resigned, and our current directors were selected to serve as directors, commencing on the Effective Date (other than Mr. First whose appointment occurred on May 1, 2018), by certain parties holding director designation rights as set forth in the Plan of Reorganization.
Future director candidates will be evaluated by the Compensation and Nominating Committee in accordance with its charter and our Corporate Governance Guidelines. The Compensation and Nominating Committee’s consideration of a candidate for director will include assessment of the individual’s understanding of our business, the individual’s professional and educational background, skills and abilities and potential time commitment, and whether such characteristics are consistent with our Corporate Governance Guidelines and other criteria established by the Compensation and Nominating Committee from time to time. In addition, the Compensation and Nominating Committee will take into account diversity of background and experience that the individual will bring to the Board. In evaluating potential director candidates, the Compensation and Nominating Committee will consider a variety of factors, in addition to personal and professional integrity, including the following:
•
experience in corporate management;
•
experience with complex business organizations;
•
experience as a board member or officer of another publicly held company;
•
diversity of expertise, experience in substantive matters related to the Company’s business and professional experience as compared to existing members of our Board and other nominees; and
•
practical and mature business judgment.

The Compensation and Nominating Committee may also adopt such procedures and criteria not inconsistent with our Corporate Governance Guidelines as it considers advisable for the assessment of director candidates. Other than the foregoing, there are no stated minimum criteria for director nominees. The Compensation and Nominating Committee does, however, recognize that each member of the Audit Committee must be financially literate, as such qualification is interpreted by the Board in its business judgement, at least one member of the Audit Committee should meet the criteria for an “audit committee financial expert” as defined by SEC rules, and that a majority of the members of the Board must meet the definition of “independent director” under applicable rules governing independence. Although we do not have a formal policy with regard to the consideration of diversity in identifying candidates for election to the Board, the Compensation and Nominating Committee recognizes the benefits associated with a diverse board, and intends to take diversity considerations into account when identifying candidates. The Compensation and Nominating Committee will utilize a broad conception of diversity, including diversity of professional experience, employment history, prior experience on other boards of directors, and more familiar diversity concepts such as race, gender and national origin. These factors, and others considered useful by the Compensation and Nominating Committee, will be reviewed in the context of an assessment of the perceived needs of the Board at a particular point in time. The priorities and emphasis of the Compensation and Nominating Committee and of the Board may change from time to time to take into account changes in business and other trends and the portfolio of skills and experience of current and prospective board members.

The Compensation and Nominating Committee also has responsibility for establishing procedures for the nomination process and recommending candidates for election to the Board. It is anticipated that consideration of new Board nominee candidates will involve a series of internal discussions, review of information concerning candidates, and interviews with selected candidates. Board members or employees typically suggest candidates for nomination to the Board. In 2018, we did not employ a search firm or pay fees to other third parties in connection with seeking or evaluating Board nominee candidates.

Stockholder Nominations

The Compensation and Nominating Committee will consider stockholder recommendations for candidates for the Board if the stockholder complies with the advance notice, information and consent provisions contained in our Bylaws. See “Stockholder Proposals For the 2020 Annual Meeting” below for more information on these requirements. The Compensation and Nominating Committee will evaluate recommendations for director nominees submitted by directors, management or qualifying stockholders in the same manner. All directors and director nominees will be required to submit a completed directors’ and officers’ questionnaire as part of the nominating process. The process may also include interviews and additional background and reference checks for non-incumbent nominees, at the discretion of the Compensation and Nominating Committee.

14



To be in proper written form, our Bylaws provide that a stockholder’s notice to the Corporate Secretary must set forth as to each person whom the stockholder proposes to nominate as a director: (i) the name and record address of such stockholder, (ii) the class or series and number of shares of capital stock of the Company that are owned beneficially or of record by such stockholder, (iii) a description of all arrangements or understandings between such stockholder and any other person or persons (including their names) with respect to the nomination, including the nominee, (iv) any derivative positions with respect to shares of the Company’s capital stock held or beneficially held by or on behalf of such stockholder, the extent to which any hedging or other transaction or series of transactions has been entered into with respect to shares of the Company’s capital stock by or on behalf of such stockholder, and the extent to which any other agreement or understanding has been made, the effect or intent of which is to mitigate loss to, manage risk or benefit of share price changes for, or increase or decrease the voting power of such stockholder with respect to shares of the Company’s capital stock, (v) a representation that such stockholder is a holder of record entitled to vote at the annual meeting and intends to appear in person or by proxy at the annual meeting to bring such nomination before the annual meeting, (vi) a representation whether the stockholder intends or is part of a group which intends (A) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Company’s outstanding capital stock required to elect the nominee and/or (B) otherwise to solicit proxies from stockholders in support of such nomination, and (vii) any other information relating to such stockholder required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for the election of directors in an election contest pursuant to and in accordance with Section 14(a) of the Exchange Act and the rules and regulations promulgated thereunder.

In addition, the stockholder’s notice to our Corporate Secretary with respect to persons that the stockholder proposes to directly nominate as a director must set forth (A) as to each individual whom the stockholder proposes to nominate, all information relating to the person that is required to be disclosed in solicitations of proxies for the election of directors or is otherwise required, pursuant to Regulation 14A (or any successor provisions) under the Securities Exchange Act of 1934, as amended (including their name, age, business address, residence address, principal occupation or employment, the number of shares beneficially owned by such candidate, and the written consent of the such person to be named in the proxy statement as a nominee and to serve as a director if elected), and (B) such person’s written consent to being named in the proxy statement as a nominee and to serving as a director if elected.

There have been no material changes to these procedures since last disclosed by the Company.

Stockholder Communications with the Board

Stockholders may communicate with any of the Company’s directors, including the chair of any of the committees of the Board or the non-management directors as a group by writing to them c/o Corporate Secretary, Nuverra Environmental Solutions, Inc., 6720 N. Scottsdale Road, Suite 190, Scottsdale, Arizona 85253. Please specify to whom your correspondence should be directed. The Corporate Secretary will promptly forward all correspondence to the Board or any specific committee member, as indicated in the correspondence, except for junk mail, mass mailings, job inquiries, surveys, business solicitations or advertisements, or patently offensive or otherwise inappropriate material. The Company’s Corporate Secretary may forward certain correspondence, such as product-related or service-related inquiries, elsewhere within the Company for review and possible response.

Any interested party, including any employee, may make confidential, anonymous submissions regarding questionable accounting or auditing matters or internal accounting controls and may communicate directly with the Chairman by letter to the above address, marked for the attention of the Chairman. Any written communication regarding accounting, internal accounting controls or other financial matters are processed in accordance with procedures adopted by the Audit Committee.

Code of Business Conduct and Ethics
The Company has a Code of Business Conduct and Ethics that is applicable to all directors, officers and employees of the Company. The Code of Business Conduct and Ethics is available in the “Corporate Governance” section of the Company’s website at www.nuverra.com and a printed copy may also be obtained by any stockholder upon request directed to Nuverra Environmental Solutions, Inc., 6720 N. Scottsdale Road, Suite 190, Scottsdale, Arizona 85253, Attention: Corporate Secretary. The Company intends to post amendments to or waivers, if any, from its Code of Business Conduct and Ethics (to the extent applicable to the Company’s directors or its principal executive officer, principal financial officer, or principal accounting officer) at this location on its website. Among other matters, our Code of Business Conduct and Ethics is designed to promote:
•
honest and ethical conduct;
•
avoidance of conflicts of interest;
•
full, fair, accurate, timely and understandable disclosure in reports and documents that we file with, or submit to, the SEC and in our other public communications;

15


•
compliance with applicable governmental laws and regulations and stock exchange rules;
•
prompt internal reporting of violations of the Code of Business Conduct and Ethics to an appropriate person or persons identified in the code; and
•
accountability for adherence to the Code of Business Conduct and Ethics.

Corporate Governance Guidelines

The Company has adopted Corporate Governance Guidelines that we believe reflect the Board’s commitment to a system of governance that enhances corporate responsibility and accountability. The Compensation and Nominating Committee is responsible for implementing the guidelines and making recommendations to the Board concerning corporate governance matters. The guidelines are available in the “Corporate Governance” section of our website at www.nuverra.com. We will also furnish copies of the guidelines to any person who requests them. Requests for copies should be directed to Nuverra Environmental Solutions, Inc., 6720 N. Scottsdale Road, Suite 190, Scottsdale, Arizona 85253, Attention: Corporate Secretary.
Among other matters, the Corporate Governance Guidelines include the following:
•
The Board will be made up of a majority of independent directors who, at a minimum, meet the criteria for independence required by NYSE American listing rules, the requirements of the SEC, and any additional requirements the Board deems appropriate.
•
Non-management directors will meet in executive session without management present on a regularly scheduled basis, but not less frequently than quarterly. In the event that the non-management directors include directors that are not independent under the NYSE American listing rules, the independent directors should schedule an executive session at least once a year.
•
The Board and its committees each conduct an annual self-evaluation.
•
Directors are expected to regularly attend all meetings of the Board and of the committees of which they are members.
•
To effectively discharge their oversight duties, directors have full and free access to our officers and employees.

Board Leadership Structure and Role in Risk Management

Our Corporate Governance Guidelines provide that the Board may select our Chief Executive Officer as Chairman or appoint a Chairman who does not also serve as Chief Executive Officer. In determining the appropriate leadership structure, the Board considers many factors, including the specific needs of the business, fulfilling the duties of the Board, and the best interests of the Company’s stockholders.
The Board believes the appointment of Mr. Thompson as Chairman and Chief Executive Officer is best for the Company at this time as a combined role of Chairman and Chief Executive Officer will promote unified leadership and direction for the Company.
The Board believes that this leadership structure achieves independent oversight and management accountability through regular executive sessions of the non-management directors that are mandated by our Corporate Governance Guidelines and through a Board composed of a majority of independent directors. We do not have a designated lead independent director, instead allowing our independent directors as a group to choose who among them is best suited to serve as chairman of each executive session.
In the normal course of its business, the Company is exposed to a variety of risks, including operational risks such as long-term changes in commodity prices affecting its customer base or causing shifts in its customers’ operations, governmental policy decisions, and increasing competition from renewable sources of power generation, legislative and regulatory risks, including those related to climate change and air emissions, and general economic, credit and investment risks. Additional risks are disclosed in our filings with the SEC, including our Form 10-K for the fiscal year ended December 31, 2018. The Board is actively involved in oversight of risks that could affect the Company with an emphasis on understanding the key enterprise risks affecting the Company’s business. In addition, the Board monitors the ways in which the Company attempts to prudently mitigate risks, to the extent reasonably practicable and consistent with the Company’s long-term strategies. This oversight is conducted primarily through committees of the Board, as set forth in the descriptions of each of the committees above, but the full Board has retained responsibility for general oversight of risks. The Board satisfies this responsibility through periodic reports by each committee chair regarding the committee’s considerations and actions, as well as through periodic reports directly from key operating, finance and legal officers responsible for oversight of particular risks within the Company. The Board also receives periodic updates during the year on particular matters relating to risks and risk controls that management believes need to be brought to its attention.

16


Audit Committee Report
The Audit Committee is comprised of two non-employee directors, Messrs. Griggs (Chair) and McGovern, and operates under a written charter, adopted by the Board, which is posted on the “Corporate Governance” section of the Company’s website at www.nuverra.com. We believe the charter is in compliance with SEC regulations and NYSE American rules.
The primary purposes of the Audit Committee are to assist the Board in fulfilling its responsibility to oversee (i) the integrity of the financial statements of the Company, (ii) the Company’s compliance with legal and regulatory requirements, (iii) the Company’s independent registered public accounting firm’s qualifications and independence, and (iv) the performance of the Company’s independent registered public accounting firm and internal audit function. The independent registered public accounting firm reports directly to the Audit Committee.
Management has the primary responsibility for the preparation of the Company’s financial statements and the internal financial controls and reporting process. The Company’s management has represented to the Audit Committee that the Company’s Consolidated Financial Statements for the fiscal year ended December 31, 2018 were prepared in accordance with generally accepted accounting principles in the United States. The Company’s independent registered public accounting firm is responsible for auditing these Consolidated Financial Statements. In the performance of its oversight function, the Audit Committee reviewed and discussed the audited Consolidated Financial Statements with management and the independent registered public accounting firm. The Audit Committee discussed with management the critical accounting policies and estimates applied by the Company in the preparation of its Consolidated Financial Statements. The Audit Committee also discussed with the Company’s management the process for certifications by the Chief Executive Officer and Chief Financial Officer with respect to such financial statements as well as management’s assessment of internal control over financial reporting as of December 31, 2018. The Audit Committee discussed with the independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards No. 61, as amended (AICPA, Professional Standards, Vol.1, AU section 380), as adopted by the Public Company Accounting Oversight Board in Rule 3200T.
In addition, the Audit Committee received from the independent registered public accounting firm the written disclosures required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communication with the Audit Committee concerning independence and discussed with such firm its independence. The Audit Committee also evaluated whether the independent registered public accounting firm’s provision of tax services to the Company was compatible with the registered public accounting firm’s independence and determined it was compatible, due to the fact that the independent registered public accounting firm did not provide tax services to the Company in 2018.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board, and the Board approved, that the audited Consolidated Financial Statements be included in Nuverra Environmental Solutions, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2018 for filing with the SEC.
The Audit Committee has selected Moss Adams, LLP (“Moss Adams”) as the Company’s independent registered public accounting firm for the year ending December 31, 2019, and has asked the shareholders to ratify the selection.
/s/ John B. Griggs (Chair)
/s/ Michael Y. McGovern
 
The Report of the Audit Committee does not constitute soliciting material, and shall not be deemed to be filed or incorporated by reference into any other Company filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Company specifically incorporates the Report of the Audit Committee by reference therein.
Independent Registered Public Accounting Firm’s Fees and Services
The following is a summary of the independent registered public accounting fees billed to us for professional services rendered by our current auditor Moss Adams and Hein & Associates LLP (“Hein”) for the fiscal years ended December 31, 2017 and 2018.
 Fee Category
 
Moss Adams 2018
 
Moss Adams 2017
 
Hein 2017 (1)
Audit Fees
 
$
312,320

 
$
202,250

 
$
100,025

Audit Related Fees
 
33,300

 
—

 
67,200

Tax Fees
 
—

 
—

 
—

All Other Fees
 
—

 
—

 
—

Total Fees
 
$
345,620

 
$
202,250

 
$
167,225


17


(1)
On November 16, 2017, Hein combined with Moss Adams and Hein’s partners and employees joined Moss Adams. As a result of this combination, on November 16, 2017, Hein resigned as the Company’s independent registered public accounting firm. Concurrent with Hein’s resignation, on and effective as of November 16, 2017, the audit committee of the Company’s Board approved the engagement of Moss Adams as the new independent registered public accounting firm for the Company to audit the Company’s financial statements for the fiscal year ended December 31, 2017.
Audit fees consist of fees billed for each of 2018 and 2017 for professional services rendered in connection with the audit of our annual Consolidated Financial Statements and reviews of our interim Consolidated Financial Statements included in our periodic reports. All of Moss Adams’ services in auditing the Company’s financial statements for the fiscal year ended December 31, 2018 were performed by full-time permanent employees of Moss Adams.
Audit related fees consist of fees that are reasonably related to the performance of the audit or review of our financial statements and are not reported under the caption “Audit Fees.” For fiscal 2018, this included fees and audit-related work in connection with the adoption of ASC 842, Leases, and the filing of a Form S-1 for a rights offering. For fiscal 2017, this includes fees and audit-related work in connection with our fresh start accounting in fiscal 2017 following our emergence from chapter 11 on the Effective Date.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm

The Audit Committee has, by resolution, adopted policies and procedures regarding the pre-approval of the performance by the independent registered public accounting firm of audit and non-audit services. The independent registered public accounting firm may not perform any service unless the approval of the Audit Committee is obtained prior to the performance of the services, except as may otherwise be provided by law or regulation. All services described above were pre-approved by the Audit Committee in accordance with this policy.


18


PROPOSAL 2 - ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
Background
In accordance with requirements of Section 14A of the Securities Exchange Act, as amended, and the related rules of the SEC, we are providing our stockholders with the opportunity to cast a non-binding, advisory vote to approve the compensation of our named executive officers as disclosed pursuant to the SEC’s executive compensation disclosure rules and set forth in this Proxy Statement (including the “Executive Compensation” section, compensation tables and narratives accompanying those tables).
Our executive compensation programs are designed and regularly reviewed by the Compensation and Nominating Committee of the Board, which consists entirely of independent directors. As described more fully under “Executive Compensation” later in this Proxy Statement, our executive compensation programs are designed to achieve the following objectives:
•
provide a competitive total compensation package sufficient to attract, motivate and retain high caliber executives who will deliver long-term shareholder value;
•
support and recognize attainment of our tactical and strategic goals;
•
maintain an appropriate balance between fixed and variable compensation, and long-term and short-term incentives, with recognition of our senior executives’ responsibility for the Company’s overall performance and market value; and
•
ensure internal alignment of executive activities and actions with Company financial and operating objectives, without undue risk.
We request stockholder approval of the compensation of our named executive officers as disclosed pursuant to the SEC’s executive compensation disclosure rules and set forth in this Proxy Statement (including the “Executive Compensation” section, compensation tables and narratives accompanying those tables).
As an advisory vote, this Proposal is not binding upon the Company. However, the Compensation and Nominating Committee of the Board, which is responsible for designing and administering our executive compensation programs, values the opinions expressed by stockholders in their vote on this Proposal, and will consider the outcome of the vote when making future compensation decisions for named executive officers.

Vote Required and Board Recommendation

The affirmative vote of a majority of the shares of common stock present and entitled to vote at the Annual Meeting is required to approve Proposal No. 2. Abstentions and broker non-votes will be counted as present for purposes of determining whether a quorum is present. Abstentions will have the same effect as an “against” vote, but broker non-votes will not have any effect on the outcome of this Proposal.

THE BOARD RECOMMENDS A VOTE FOR PROPOSAL NO. 2.


19


Executive Officers

The Company’s executive officers are appointed by the Board and serve at the discretion of the Board. Set forth below are the names and certain biographical information regarding the Company’s executive officers as of April 22, 2019.

Name
 
Position with our Company
 
Age
 
Executive Officer Since
Charles K. Thompson (1)
 
Chairman and Chief Executive Officer
 
57
 
2018
Robert Y. Fox (2)
 
President and Chief Operating Officer
 
57
 
2018
Stacy W. Hilgendorf (3)
 
Vice President and Chief Financial Officer
 
49
 
2018
Joseph M. Crabb
 
Executive Vice President, Chief Legal Officer and Corporate Secretary
 
51
 
2014

(1)
See “Proposal 1-Election of Directors-Information Regarding Directors and Nominees” for biographical information regarding Mr. Thompson.
(2)
Mr. Fox joined the Company as President and Chief Operating Officer effective as of June 18, 2018.
(3)
Mr. Hilgendorf was appointed as Chief Financial Officer as of November 15, 2018. He previously served as the Company’s Vice President and Corporate Controller since 2013.

Robert Y. Fox, President and Chief Operating Officer

Mr. Fox serves as the Company’s President and Chief Operating Officer. Mr. Fox has over 25 years of senior management experience in the transportation and logistics businesses. Prior to joining the Company on June 18, 2018, Mr. Fox served in various senior executive positions with Comcar Industries, Inc. from 2001 to June 2018, including as Executive Vice President, Chief Operating Officer and Chief Financial Officer. Mr. Fox also previously held senior management positions with Rocor International, Builder’s Transport, Inc. and Burlington Northern Motor Holdings, Inc. Mr. Fox is a graduate of the University of Texas at Arlington, with a B.B.A. in accounting and he is a Certified Public Accountant.

Stacy W. Hilgendorf, Vice President and Chief Financial Officer

Mr. Hilgendorf serves as the Company’s Vice President and Chief Financial Officer. He is responsible for all accounting and external financial reporting responsibilities of the Company. Mr. Hilgendorf has served in his present position since November 15, 2018 and previously served as the Company’s Vice President and Corporate Controller since 2013. Before joining Nuverra in 2013, he was most recently the Senior Director of Corporate Accounting for Starwood Hotels & Resorts since 2004. Previously, Mr. Hilgendorf held a variety of finance and accounting roles with The Dial Corporation and ISC, Inc., both publicly traded corporations. He began his career as an Audit and Assurance Manager with the Big Four accounting firm of Ernst & Young in Los Angeles. Mr. Hilgendorf is a Certified Public Accountant in the State of Arizona and graduated with a Bachelor’s Degree in Accounting from the University of Arizona.

Joseph M. Crabb, Executive Vice President, Chief Legal Officer and Corporate Secretary

Mr. Crabb serves as the Company’s Executive Vice President, Chief Legal Officer and Corporate Secretary. He has served in his present position since joining Nuverra in 2014. Prior to joining the Company, Mr. Crabb was in private practice with the law firm now known as Squire Patton Boggs (US) LLP, where he was a partner in the corporate practice group in the firm’s Phoenix office. Mr. Crabb received his B.A. degree in History and his J.D. degree from the University of Iowa.

Executive Compensation

Introduction

We are currently considered a smaller reporting company for purposes of the SEC’s executive compensation disclosure rules. In accordance with such rules, we are required to provide a Summary Compensation Table and an Outstanding Equity Awards at Fiscal Year-End Table, as well as limited narrative disclosures. Our disclosure includes the individuals currently serving as our Chief Executive Officer, our Chief Financial Officer, our two next most highly compensated executive officers and our former Chief Executive Officer and Chief Financial Officer. We refer to the aforementioned individuals throughout this section as the “NEOs” and their names, titles and positions are as follows:

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Name
 
Title
Current Executive Officers
Charles K. Thompson
 
Chairman of the Board and Chief Executive Officer
Robert Y. Fox
 
President and Chief Operating Officer
Stacy W. Hilgendorf
 
Vice President and Chief Financial Officer
Joseph M. Crabb
 
Executive Vice President, Chief Legal Officer and Corporate Secretary
 
 
 
Former Executive Officers
Mark D. Johnsrud (1)
 
Former Chairman of the Board and Chief Executive Officer
Edward A. Lang III (2)
 
Former Executive Vice President and Chief Financial Officer

(1)
Mr. Johnsrud resigned all officer positions in connection with his departure from the Company effective March 2, 2018. Details of his departure and transition were included in the Company’s Current Report on Form 8-K filed with the SEC on March 5, 2018.
(2)
Mr. Lang resigned all officer positions in connection with his departure from the Company effective November 30, 2018. Details of his departure and transition were included in the Company’s Current Report on Form 8-K filed with the SEC on December 3, 2018.

Overview of Executive Compensation

The overarching objective of our executive compensation program is to attract, motivate and retain executives who will deliver short and long-term stockholder value through the use of competitive compensation programs with strong links to Company and individual performance. Nuverra seeks to achieve this objective by providing a market-competitive compensation program that consists of base salary, short-term incentives and longer-term incentives.

In 2018, Nuverra’s executive compensation program was focused on attracting and retaining key executives to serve in senior management positions, particularly following the Effective Date of the Company’s Plan of Reorganization in 2017. As a result, the Company entered long-term, equity-based compensation arrangements with certain of its executive officers in 2018, as further described herein, including restricted stock unit awards to certain executive officers that potentially vest over multi-year time periods. In 2019 and beyond, the Company expects to continue its focus on attracting and retaining qualified senior executives while also emphasizing pay-for-performance alignment, by basing a significant portion of target total direct compensation on short-term and long-term incentive pay. Short-term and long-term incentives align executives with stockholder interests by basing the potential receipt of incentives on successful achievement of Company business objectives, including defined financial performance targets, which are intended to drive stockholder value.

Incentive-pay structures provide for maximum payouts in instances when Company performance both exceeds internal expectations and results in positive returns for stockholders relative to our industry peers. Furthermore, we align financial interests of our executives with those of our stockholders through emphasis on long-term incentives and encouragement of equity ownership.

We seek to deliver pay-for-performance while meeting the following objectives:

•
Attract, motivate and retain highly qualified executives;
•
Establish challenging but realistic performance objectives, balanced between short-term and long-term measurable results;
•
Provide a substantial portion of executive compensation in the form of variable (versus fixed) pay, with a significant portion of variable compensation in the form of possible incentive and equity payouts; and
•
Ensure internal alignment of executive activities and actions with Company financial performance and operating objectives, without undue risk.

Components of Named Executive Officer Compensation

The Compensation and Nominating Committee is committed to a strong, positive link between our compensation practices and our Company’s short- and long-term objectives. The executive compensation program for our named executive officers is comprised of the following components: base salary, short-term incentive awards, long-term incentive awards, health and welfare benefits, retirement benefits, and post-employment agreements.

Base Salary.  Base salary is a fixed component of compensation for our executives. We establish base salary levels which are competitive with companies of comparable revenue and size and which enable us to attract and retain top executive talent. Annual

21


merit increases for named executive officers are not automatic or guaranteed. Merit increases for named executive officers other than the Chairman and Chief Executive Officer are based on the Chairman and Chief Executive Officer’s evaluation of each named executive officer’s performance, competitive positioning, as well as the Company’s performance and outlook for the upcoming fiscal year. It is the responsibility of the Compensation and Nominating Committee to review the performance of the Chairman and Chief Executive Officer and recommend an annual merit increase, if warranted.

As of December 31, 2018, the annual base salaries for Messrs. Thompson, Fox, Hilgendorf and Crabb were $600,000, $425,000, $240,000 and $400,000, respectively. Prior to their resignation from the Company in 2018, the annual base salaries of Messrs. Johnsrud and Lang were $700,000 and $350,000, respectively.

Short-Term Cash Incentive Awards

2018 Bonus Plan

On February 22, 2018, the Compensation and Nominating Committee adopted the Senior Executive Bonus Plan (the “2018 Bonus Plan”), which provides for potential annual cash bonus awards to the executives, with a target payment amount determined as a specified percentage of each executive’s annual base salary. Target payment amounts in fiscal 2018 as a specified percentage of base salary were established at 125% for Mr. Johnsrud and 85% for Mr. Lang and Mr. Crabb, respectively. When Mr. Fox joined the Company in June 2018, the Board established his target bonus payment amount for 2018 at 85% of his annual base salary, with Mr. Fox’s bonus to be payable in the Board’s discretion (rather than based on achievement of the 2018 Bonus Plan criteria described below) and prorated to reflect his service time with the Company in 2018.

Under the 2018 Bonus Plan, the participating executives were eligible to receive annual bonus awards for fiscal 2018 based upon three performance targets relating to adjusted earnings before interest, taxes, depreciation, and amortization (“Adjusted EBITDA”), Company-wide safety statistics, and individual performance. Bonus awards were weighted with 70% of the payment amount based on Adjusted EBITDA, 10% based on Company-wide safety statistics, and 20% based on individual performance. No bonuses were paid to any participating executives under the 2018 Bonus Plan for achievement of the targets based on Adjusted EBITDA or Company-wide safety statistics. The Board elected to award discretionary bonuses for 2018 to Mr. Fox, Mr. Hilgendorf and Mr. Crabb in the amounts of $67,500, $22,500 and $40,000, respectively.

2019 Bonus Plan

For fiscal 2019, the Board has established a senior executive bonus plan (the “2019 Bonus Plan”) that sets forth bonus targets of 65% of annual base salary for each of Mr. Fox, Mr. Hilgendorf and Mr. Crabb. Under the 2019 Bonus Plan, the participating executives will be eligible to receive up to one-half of the target bonus amount based on the achievement of the Company’s annual 2019 Adjusted EBITDA objective, as determined by the Board, and the other one-half will be discretionary based on the Board’s consideration of individual performance, regional and business unit performance, and such other factors as it may determine. For the portion of the target bonus based on the Company’s Adjusted EBITDA objective, 50% of that portion (i.e., 50% of one-half of the target bonus amount) will be earned if the Company achieves at least 80% of the Board-approved Adjusted EBITDA objective, with the percentage increasing ratably up to 100% (i.e., 100% of one-half of the target bonus amount) at achievement of 100% of the Adjusted EBITDA objective.

Other Cash Awards

Upon joining the Company in June 2018, Mr. Fox received a one-time signing bonus of $40,000 in lieu of a relocation allowance. In connection with the Plan of Reorganization which became effective in August 2017, the Company agreed to pay Mr. Crabb a retention bonus of $150,000 which was paid in December 2018.

Other than as described above, no outstanding employment agreement for our named executive officers currently provides for an annual bonus in a guaranteed amount.

Long-Term Equity Incentive Awards 

2017 Long-Term Incentive Plan

As part of the Company’s Plan of Reorganization, the Bankruptcy Court approved the terms of a management incentive plan, under which certain time-based and performance-based awards would be available for issuance to the executive officers and other key employees of the Company. The total number of shares available for issuance was an amount equal to 12.5% of the outstanding equity securities of the Company on a fully-diluted basis as of the Effective Date. Pursuant to the requirements of the Plan of

22


Reorganization, the Board enacted the Nuverra Environmental Solutions, Inc. 2017 Long Term Incentive Plan (the “MIP”) on February 22, 2018, which was deemed to have become effective on the Effective Date. The MIP is intended to provide for the grant of equity-based awards to designated members of the Company’s management team. The MIP is administered by the Compensation and Nominating Committee (or by the Board, to the extent the Board elects to administer the MIP). The Compensation and Nominating Committee has broad authority under the MIP to, among other things: (i) designate participants; (ii) determine the type or types of awards to be granted to a participant and the number of shares that are subject to such awards; (iii) determine the terms and conditions of any award and modify, waive, or adjust any term or condition of an award that has been granted; (iv) determine the treatment of an award upon termination of employment or other service relationship; and (v) interpret and administer the MIP.

Individuals eligible to receive awards under the MIP include officers, employees, and directors of the Company or any of its affiliates. The types of awards that may be granted under the MIP include stock options, stock appreciation rights, restricted stock, restricted stock units, stock awards, dividend equivalents, cash awards, performance-based awards, and other forms of stock-based awards as determined by the Compensation and Nominating Committee, or any combination of the foregoing.

The maximum number of shares of the Company’s common stock available for the issuance of awards under the MIP is 1,772,058 shares. If all or any portion of an award granted under the MIP expires or is cancelled, forfeited, exchanged, settled in cash, or otherwise terminated, the shares of common stock subject to such award will not be considered delivered shares for purposes of the MIP and will be available for future awards under the MIP. As is customary in management incentive plans of this nature, the number and kind of shares available and the share limitations under the MIP and any outstanding awards, as well as the exercise and purchase prices of awards, and performance targets under certain types of performance-based awards, are subject to adjustment in the event of certain recapitalization, reclassification, stock dividend, extraordinary dividend, stock split, reverse stock split, or other distribution with respect to the common stock or any merger, reorganization, consolidation, combination, spin-off, or other similar corporate change or any other change affecting the common stock.

The Company has authorized the grant of certain of performance-based restricted stock units (“PRSUs”) and time-based restricted stock units (“TRSUs”) under the MIP, as described below. Vesting of PRSUs is subject to the achievement of pre-established performance targets during the applicable performance measurement periods. The performance targets are established by the Compensation and Nominating Committee and communicated to the executives in writing not later than the beginning of the applicable performance period, or as soon as reasonably practicable thereafter. The Compensation and Nominating Committee determines the applicable targets for each of these performance metrics, with the understanding that the Compensation and Nominating Committee retains the discretion to modify any such targets if, in the reasonable and good faith judgment of the Compensation and Nominating Committee, such modification is necessary in order to equitably adjust for changes that may occur in the underlying assumptions or is otherwise appropriate under the circumstances. For both PRSUs and TRSUs, the participating executives must remain in the continuous service of the Company through the applicable vesting date, and in the case of PRSUs the performance target for the applicable performance measurement period must have been satisfied on the applicable vesting date, in order for the applicable TRSUs or PRSUs to vest, subject to accelerated vesting upon certain circumstances as set forth in the MIP and applicable grant documentation.

TRSUs held by an executive become fully vested upon the termination of the executive by the Company without Cause, as defined in their respective employment agreements, or termination by the executive for Good Reason, as defined in their respective employment agreements.

The PRSUs and TRSUs do not carry voting rights, except with respect to shares of common stock that are delivered upon settlement of vested PRSUs or TRSUs. All PRSUs and TRSUs granted are subject to forfeiture if, prior to the applicable vesting date, the Company terminates an executive’s employment for Cause, as defined in each executive’s employment agreement with the Company, or an executive voluntarily terminates employment without Good Reason, as defined in each executive’s employment agreement with the Company. Both PRSUs and TRSUs become fully vested upon death or disability.

On February 22, 2018, the Compensation and Nominating Committee authorized the grant of PRSUs to each of Messrs. Johnsrud, Lang and Crabb, as described below:

•
Although the MIP became effective upon the Company’s emergence from bankruptcy on the Effective Date, no awards were actually issued under the MIP, including the awards contemplated by Mr. Johnsrud’s amended and restated employment agreement, until February 2018. Mr. Johnsrud received an award of 531,618 PRSUs. The award was scheduled to vest in equal installments on the first two anniversaries of the Effective Date pursuant to Mr. Johnsrud’s amended and restated employment agreement. The first installment was subject to a performance measurement period beginning on January 1, 2018 and ending on June 30, 2018, and the second installment was subject to a performance measurement period beginning on July 1, 2018 and ending on June 30, 2019. Pursuant to the Separation and Mutual

23


Release entered March 2, 2018 by the Company and Mr. Johnsrud (the “Johnsrud Separation Agreement,”), Mr. Johnsrud was entitled to continue to hold a pro rata portion of the first installment, which equated to 88,603 PRSUs, which was eligible for vesting if the applicable performance criteria were ultimately satisfied, and the remaining 443,015 PRSUs were forfeited as of his separation date of March 2, 2018. As the performance criteria were not met, the 88,603 PRSUs were forfeited on June 30, 2018.

•
Mr. Lang and Mr. Crabb each received an award of 62,022 PRSUs. The awards are scheduled to vest in three equal installments on December 31, 2018, December 31, 2019, and December 31, 2020, respectively. The first installment was subject to a performance measurement period beginning on January 1, 2018 and ending on December 31, 2018, the second installment is subject to a performance measurement period beginning on January 1, 2019 and ending on December 31, 2019, and the third installment is subject to a performance measurement period beginning on January 1, 2020 and ending on December 31, 2020. Based upon the applicable performance targets for fiscal 2018, Mr. Crabb received 20% (or 4,135 shares) and Mr. Lang received a pro rata portion, based on his service time during 2018, of 20% (or 3,784 shares) of the first installment of PRSUs. Pursuant to a Separation Agreement and Mutual Release entered into between Mr. Lang and the Company (the “Lang Separation Agreement”) on November 28, 2018, all other unvested PRSUs granted to Mr. Lang under the Incentive Plan were forfeited as of his separation date of November 30, 2018.

On February 22, 2018, the Compensation and Nominating Committee also authorized the grant of TRSUs to each of Messrs. Johnsrud, Lang and Crabb, as described below.

•
Mr. Johnsrud received an award of 531,618 TRSUs, which were to vest in three equal installments. The first installment vested on the date of issuance, and the second and third installments were scheduled to vest on the first two anniversaries of the Effective Date, pursuant to Mr. Johnsrud’s amended and restated employment agreement. Pursuant to the Johnsrud Separation Agreement, all such TRSUs vested as of the separation date of March 2, 2018.

•
Mr. Lang and Mr. Crabb each received an award of 62,022 TRSUs, which vest in three equal installments on December 31, 2018, December 31, 2019, and December 31, 2020, respectively, but which vested in full for Mr. Lang on November 28, 2018 per the terms of the Lang Separation Agreement.

On May 29, 2018, the Compensation and Nominating Committee authorized the grant of 5,889 restricted stock units to Mr. Thompson, which vested immediately on the date of grant, in connection with his service as Interim Chief Executive Officer.

Effective November 19, 2018, the Board appointed Mr. Thompson to serve as Chief Executive Officer, and as the Company’s principal executive officer, on a non-interim basis. In connection with Mr. Thompson’s appointment, he entered into an Employment Agreement with the Company (the “Thompson Employment Agreement”), effective as of November 19, 2018. Under the Thompson Employment Agreement, Mr. Thompson was entitled to receive a grant under the Company’s Incentive Plan of 210,000 TRSUs scheduled to vest on December 31, 2020. These TRSUs were granted by the Compensation and Nominating Committee on December 31, 2018 and do not provide for any incremental vesting between the grant date and the vesting date.

In connection with Mr. Fox’s appointment as President and Chief Operating Officer, he was entitled to receive an initial grant of restricted stock units under the MIP with a target grant date value of $1,250,000 (the “Initial Award”). The Initial Award is comprised of one-half TRSUs that vest in one-third increments. The first one-third of the TRSUs granted to Mr. Fox vested on the grant date or, March 5, 2019, the second one-third will vest on December 31, 2019, and the third one-third will vest on December 31, 2020. The other half of the Initial Award is PRSUs that will vest based on 2019 partial-year and full-year performance measurements.

Health, Welfare, and Retirement Plans 

We offer all eligible employees, including the named executive officers, a health and welfare benefits package which includes coverage for medical, dental, vision, disability, life, accidental death and dismemberment, and employee assistance. The named executive officers participate in these benefit arrangements on the same basis as all eligible employees.

We maintain a defined contribution plan, intended to qualify under Section 401(k) of the Internal Revenue Code, which is available to all employees, including our named executive officers, to assist them in saving for retirement. Under this plan, a participant may contribute a percentage of their salary on a pre-tax basis up to the IRS maximum through payroll deductions. The plan permits catchup contributions on a pre-tax basis for employees at least 50 years old up to the IRS maximum, and Roth deferrals on a post-tax basis. Effective April 1, 2017, the Company reinstated a discretionary matching contribution under the plan, pursuant to which the Company makes a cash matching contribution in an amount equal to 100% of the first 3% of base salary contributed, and 50% of the next 2% of base salary contributed, by participating employees.


24


Severance and Transition Arrangements and Change-in-Control Payments

We have entered into employment agreements with Mr. Thompson, Mr. Fox, Mr. Hilgendorf and Mr. Crabb that contain provisions that provide for certain severance and change-in-control benefits, which are discussed in more detail in the “Executive Employment Agreements” and “Potential Payments upon Termination or Change-in-Control” sections herein. We believe these employment agreements provide severance and change-in-control protection in a manner consistent and competitive with common practice in the marketplace.

Our outlook with respect to these change-in-control provisions is that they are appropriate because they make it easier for the executive to focus on the best interests of our Company and stockholders rather than the personal implications in the event our Company faces the possibility of a change-in-control. These provisions were designed to:

•
Be consistent and competitive with current market practices;
•
Afford reasonable protection without creating any undue windfall;
•
Enhance the Company’s ability to retain key employees during critical but uncertain times; and
•
Enhance an acquirer’s potential interest in retaining key executives.

Severance payments are only made under the employment agreements if the named executive officer executes a full general release of claims in favor of the Company. We believe that these severance and change-in-control payment provisions in our executive employment agreements are necessary for us to provide competitive compensation and benefits within our industry. They encourage our named executive officers to remain in our employ, while also protecting the interests of the Company and its stockholders in certain circumstances of a key executive’s separation from employment.

As discussed below, the Company and Mr. Johnsrud entered into the Johnsrud Separation Agreement in connection with his departure from the Company on March 2, 2018, which provided for certain post-employment payments and the vesting of certain equity-based incentives substantially on the terms set forth in his amended and restated employment agreement and in the documentation pursuant to which such equity awards were issued, as applicable.

Additionally, the Company and Mr. Lang entered into the Lang Separation Agreement in connection with his departure from the Company on November 30, 2018, which provided for certain post-employment payments and the vesting of certain equity-based incentives substantially on the terms set forth in his employment agreement and in the documentation pursuant to which such equity awards were issued, as applicable.


25


2018 Summary Compensation Table

The following table summarizes the compensation during the last two fiscal years (as applicable) to the Company’s named executive officers. Compensation data is not shown for years in which the executive officer was not serving in such position.
Name and Principal Position
Year
Salary ($)
 
Bonus ($)
 
Stock Awards
($) (1)
 
Option Awards ($) (2)
 
Non-Equity Incentive Plan Comp ($)
 
All Other Comp ($)
 
Total ($)
Current Executive Officers
Charles K. Thompson*
Chairman of the Board and Chief Executive Officer
2018
$
788,735

(3)
$
—

 
$
1,878,392

(4) (5)
$
—

 
$
—

 
$
—

 
$
2,667,127

Robert Y. Fox**
President and Chief Operating Officer
2018
212,500

 
107,500

(6)
—

(7)
—

 
—

 
10,587

(8)
330,587

Stacy W. Hilgendorf***
Vice President and Chief Financial Officer
2018
191,654

(9)
22,500

 
—

 
—

 
—

 
23,623

(10)
237,777

Joseph M. Crabb
2018
400,000

 
190,000

(11)
2,418,858

(12)
—

 
—

 
27,069

(13)
3,035,927

Executive Vice President, Chief Legal Officer and Corporate Secretary
2017
400,000

 
300,000

(14)
—

 
—

 
67,905

(15)
23,229

 
791,134

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Former Executive Officers
Mark D. Johnsrud****
2018
700,000

 
700,000

(16)
20,733,102

(12)
7,099,419

(17
)
—

 
8,863

(18)
29,241,384

Former Chairman of the Board and Chief Executive Officer
2017
700,000

 
699,997

 
—

 
—

 
—

 
29,284

 
1,429,281

Edward A. Lang III*****
2018
336,539

 
—

 
2,418,858

(12)
—

 
—

 
25,749

(19)
2,781,146

Former Executive Vice President and Chief Financial Officer
2017
125,192

 
25,000

 
—

 
—

 
—

 
4,573

 
154,765


*
Mr. Thompson was named Chairman and Interim Chief Executive Officer on March 2, 2018, and Chief Executive Officer on a non-interim basis on November 19, 2018. The amounts provided for Mr. Thompson include all compensation paid by the Company to Mr. Thompson in 2018.
**
Mr. Fox joined the Company as President and Chief Operating Officer effective as of June 18, 2018.
***
Mr. Hilgendorf was named Vice President and Chief Financial Officer effective as of November 15, 2018.
****
Mr. Johnsrud resigned from his position effective March 2, 2018.
*****
Mr. Lang resigned from his position effective November 30, 2018.

(1)
The amounts reported in this column represent the aggregate grant date fair value of awards of restricted stock or restricted stock units granted to the named executive officers in each covered fiscal year and do not reflect whether the recipient

26


has actually realized a financial benefit from the award. The assumptions used in the calculations of these amounts are included in Note 18 in the Notes to the Consolidated Financial Statements to the Company’s Form 10-K filed on March 12, 2019.
(2)
The amount reported in this column reflects the aggregate grant date fair value of stock options, in accordance with the Financial Accounting Standards Board Accounting Standards Codification Topic 718 (“ASC 718”), and does not reflect compensation actually realized by our named executive officers. Additional information regarding the assumptions used to estimate the fair value of the stock option awards is included in Note 18 in the Notes to the Consolidated Financial Statements to the Company’s Form 10-K filed on March 12, 2019.
(3)
The amount reported in this column for fiscal 2018 represents amounts paid to Mr. Thompson as follows: (a) $642,581 for his service as the Interim Chief Executive Officer, (b) $46,154 for his service as non-interim Chief Executive Officer, and (c) $100,000 for his service as a Director. Mr. Thompson was not eligible for benefits coverage in 2018.
(4)
In December 2018, Mr. Thompson received a two year time-based RSU award for 210,000 shares, which potentially vests on the second anniversary of the grant date (i.e., December 31, 2020), subject to the satisfaction of applicable vesting criteria, but does not vest incrementally prior to such date.
(5)
The amount reported in this column for fiscal 2018 represents amounts paid to Mr. Thompson as follows: (a) stock awards of $84,272 for his service as the Interim Chief Executive Officer, (b) stock awards of $1,722,000 for his service as the non-interim Chief Executive Officer, and (c) stock awards of $72,120 for his service as a Director.
(6)
The amount reported represents a $40,000 sign-on bonus paid in lieu of a relocation allowance in June 2018 and a $67,500 discretionary bonus earned for 2018 which was paid in March of 2019.
(7)
As contemplated by his offer letter and as disclosed in the Current Report on Form 8-K filed by the Company on June 21, 2018, Mr. Fox received certain equity grants in March 2019, consisting of time-based and performance-based RSUs for an aggregate of up to 119,275 shares, subject to the satisfaction of applicable vesting criteria.
(8)
The amount reported in this column for fiscal 2018 represents $5,231 in 401(k) match, $4,434 in medical premiums, $124 in dental premiums, $746 in disability premiums and $52 in life insurance premiums.
(9)
The amount reported in this column for fiscal 2018 represents amounts paid to Mr. Hilgendorf as follows: (a) $189,623 for his service as Vice President and Corporate Controller and (b) $2,031 for his service as Vice President and Chief Financial Officer.
(10)
The amount reported in this column for fiscal 2018 represents $7,554 in 401(k) match, $13,303 in medical premiums, $373 in dental premiums, $2,237 in disability premiums and $156 in life insurance premiums.
(11)
The amount reported represents a $150,000 retention bonus paid in December 2018 and a $40,000 discretionary bonus earned for 2018 which was paid in March of 2019.
(12)
Includes time-based RSUs and performance-based RSUs issued in February 2018 and vesting incrementally over a multi-year period ending on December 31, 2020.
(13)
The amount reported in this column for fiscal 2018 represents $11,000 in 401(k) match, $13,303 in medical premiums, $373 in dental premiums, $2,237 in disability premiums and $156 in life insurance premiums.
(14)
Reflects incentive bonus paid immediately following the effective date of the Company’s Plan of Reorganization in 2017, as set forth in Mr. Crabb’s employment agreement.
(15)
The amount reported in this column for fiscal 2017 represents monthly incentive payments earned under a performance-based incentive plan that was in effect during the Company’s chapter 11 proceeding for the months of January through July of 2017.
(16)
The amount reported represents the 2018 bonus due to Mr. Johnsrud per the Johnsrud Separation Agreement which was paid in March of 2019.
(17)
The amount reported in this column for fiscal 2018 represents 708,822 options that became fully vested on March 2, 2018 pursuant to the Johnsrud Separation Agreement. These options were not exercised prior to their expiration on March 2, 2019.
(18)
The amount reported in this column for fiscal 2018 represents $4,846 in 401(k) match, $3,326 in medical premiums, $93 in dental premiums, $559 in disability premiums and $39 in life insurance premiums.
(19)
The amount reported in this column for fiscal 2018 represents $11,000 in 401(k) match, $12,195 in medical premiums, $341 in dental premiums, $2,070 in disability premiums and $143 in life insurance premiums.

Outstanding Equity Awards at 2018 Fiscal Year End

The following table discloses certain information regarding all outstanding equity awards held by each of our named executive officers as of December 31, 2018. All of these awards were granted under either our MIP or a separate Notice of Grant of CEO Stock Options and Stock Option Award Agreement, dated February 23, 2018, by and between the Company and Mr. Johnsrud. Some values contained in the table below have not been, and may never be, realized.


27


 
 
Option Awards
 
Stock Awards
Name
Award Date
Number of Securities Underlying Unexercised Options (#) Exercisable
 
Option Exercise Price ($)
Option Expiration Date
 
Number of Shares or Units of Stock That Have Not Vested (#)
 
Market Value of Shares or Units of Stock that Have Not Vested ($)
Current Executive Officers
Charles K. Thompson *
3/16/2018

—

 
$
—

—

 
4,688

(1)
$
38,442

 
12/31/2018

—

 
$
—

—

 
210,000

(2)
$
1,722,000

Robert Y. Fox (3)
—

—

 
$
—

—

 
—

 
$
—

Stacy W. Hilgendorf
—

—

 
$
—

—

 
—

 
$
—

Joseph M. Crabb
2/22/2018

—

 
$
—

—

 
82,696

(4)
$
678,107

 
 
 
 
 
 
 
 
 
 
Former Executive Officers
Mark D. Johnsrud
8/7/2017

354,411

(5)
$
37.03

3/2/2019

 
—

 
$
—

 
8/7/2017

354,411

(5)
$
41.31

3/2/2019

 
—

 
$
—

Edward A. Lang III
—

—

 
$
—

—

 
—

 
$
—


*
The amounts provided for Mr. Thompson include all awards by the Company to Mr. Thompson in 2018.
(1)
The restricted stock award fully vested on the first anniversary of the grant date, or March 16, 2019.
(2)
Represents a TRSU award which assuming continued employment with the Company will vest in full on December 31, 2020.
(3)
As contemplated by his offer letter and as disclosed in the Current Report on Form 8-K filed by the Company on June 21, 2018, Mr. Fox received certain equity grants in March 2019, consisting of time-based and performance-based RSUs for an aggregate of up to 119,275 shares, subject to the satisfaction of applicable vesting criteria.
(4)
Represents 41,348 TRSUs which assuming continued employment with the Company will vest in two equal installments on December 31, 2019 and December 31, 2020. Additionally, represents 41,348 PRSUs which assuming continued employment with the Company will vest in two equal installments on December 31, 2019 and December 31, 2020, subject to the achievement of pre-established performance targets during the applicable performance measurement periods.
(5)
The option award vested on March 2, 2018 pursuant to the Johnsrud Separation Agreement. These options were not exercised prior their expiration on March 2, 2019.

Executive Employment Agreements

Thompson Employment Agreement. On March 2, 2018, the Board appointed Mr. Thompson, a member of the Company’s Board, to serve as Chairman of the Board and Interim Chief Executive Officer, following Mr. Johnsrud’s departure. Until his appointment as non-interim Chief Executive Officer, the equity compensation Mr. Thompson received as a non-employee member of the Board in 2018 did not change. As the Chairman of the Board and Interim Chief Executive Officer, Mr. Thompson received a monthly cash consulting fee of $75,000 and an equity grant with a target grant date value of $200,000 for his service as Interim Chief Executive Officer.

On November 19, 2018, Mr. Thompson was appointed as non-interim Chief Executive Officer. Mr. Thompson continues to serve as a member and Chairman of the Board. In connection with Mr. Thompson’s appointment, he entered into the Thompson Employment Agreement, effective as of November 19, 2018. Pursuant to the Thompson Employment Agreement, Mr. Thompson serves as the Chief Executive Officer of the Company for a term ending on the earlier of (i) a termination of Mr. Thompson’s employment pursuant to the Thompson Employment Agreement and (ii) December 31, 2020; provided, however, that the Company shall provide written notice to Mr. Thompson at least ninety days prior to December 31, 2020 confirming the term shall end on such date. Under the Thompson Employment Agreement, Mr. Thompson is paid an annual base salary of $600,000, which is reviewed annually by the Board or its Compensation and Nominating Committee to determine whether the annual base salary should be increased and, if so, in what amount. In addition, Mr. Thompson receives insurance benefits and is entitled to participate in any of the Company’s current or future incentive compensation plans. Mr. Thompson also received a grant under the Company’s MIP of 210,000 time-based Restricted Stock Units which will vest on December 31, 2020, subject to potential accelerated vesting upon the termination of Mr. Thompson’s employment by the Company without Cause (as defined in the Thompson Employment Agreement) or voluntary termination by Mr. Thompson for Good Reason (as defined in the Thompson Employment Agreement).

28



In the event Mr. Thompson is terminated for Cause or voluntarily terminates his employment without Good Reason he shall be entitled to payment of accrued and unpaid base salary and reimbursement for expenses incurred through the last day of his employment. In the event Mr. Thompson is terminated without Cause or terminates his employment for Good Reason, Mr. Thompson shall be entitled to (i) payment of accrued and unpaid base salary, unused vacation, and reimbursement for expenses incurred through the last day of his employment, (ii) a lump sum severance pay amount equal to the sum of 12 months base salary in effect immediately prior to the date of termination and 12 months of the Company’s COBRA premiums in effect on the date of termination, (iii) a lump sum amount equal to at least 100% of any bonus or bonuses attributable to the fiscal year during which the termination occurs based on actual performance results through the full fiscal year, and (iv) acceleration in full of the vesting and/or exercisability of all non-performance based equity awards outstanding.

During and after termination of the Thompson Employment Agreement, Mr. Thompson is obligated to maintain the confidentiality of the Company’s confidential information. In addition, he agrees to certain non-competition and non-solicitation covenants for a one-year period following any termination of his employment.

Fox Employment Agreement. On June 18, 2018, the Company appointed Mr. Fox as the Company’s President and Chief Operating Officer. In connection with Mr. Fox’s appointment, he entered into an Employment Agreement with the Company (the “Fox Employment Agreement”), effective as of June 18, 2018. Pursuant to the Fox Employment Agreement, Mr. Fox serves as the President and Chief Operating Officer of the Company for a three year term, with such term to be automatically extended for successive one-year periods thereafter, unless either the Company or Mr. Fox provide at least three months prior written notice of termination pursuant to the terms of the Fox Employment Agreement. For Mr. Fox’s services, he is paid an annual base salary of $425,000, which is reviewed annually by the Board or its Compensation and Nominating Committee to determine whether the annual base salary should be increased and, if so, in what amount. In connection with the commencement of Mr. Fox’s employment, he received a one-time cash bonus of $40,000. Mr. Fox receives insurance benefits and is entitled to participate in any of the Company’s current or future incentive compensation plans.

In the event Mr. Fox is terminated for Cause (as defined in the Fox Employment Agreement) or voluntarily terminates his employment without Good Reason (as defined in the Fox Employment Agreement) he shall be entitled to payment of accrued and unpaid base salary, unused vacation, and reimbursement for expenses incurred through the last day of his employment. In the event Mr. Fox is terminated without Cause or terminates his employment for Good Reason, in each case that occurs without connection to a Change of Control (as defined in the Fox Employment Agreement), Mr. Fox shall be entitled to (i) payment of accrued and unpaid base salary, unused vacation, and reimbursement for expenses incurred through the last day of his employment, (ii) a lump sum severance pay amount equal to the sum of 12 months base salary in effect immediately prior to the date of termination and 12 months of the Company’s COBRA premiums in effect on the date of termination, (iii) a lump sum amount equal to at least 100% of the bonus or bonuses attributable to the fiscal year during which the termination occurs based on actual performance results through the full fiscal year, and (iv) acceleration in full of the vesting and/or exercisability of all time-based equity awards outstanding and a pro rata portion of any performance-based equity awards outstanding (which will continue to be subject to applicable vesting criteria). In the event Mr. Fox is terminated without Cause or terminates his employment for Good Reason, either of which occurs within 12 months after a Change of Control, or if Mr. Fox is terminated by the Company without Cause within 6 months prior to a Change of Control if such termination was in contemplation of such Change of Control, he shall be entitled to the payment described above with the following revisions: (i) Mr. Fox will receive an additional lump sum severance payment equal to the sum of 12 months base salary in effect immediately prior to the date of termination and 12 months of the Company’s COBRA premiums in effect on the date of termination, (ii) in lieu of the lump sum bonus amount described above, he will receive a lump sum payment equal to 100% of all bonuses attributable to the fiscal year during which the termination occurs at target, and (iii) acceleration in full of a pro rata portion of all performance-based equity awards without regard to applicable performance targets (in addition to acceleration of any time-based equity awards).

During and after termination of the Fox Employment Agreement, Mr. Fox is obligated to maintain the Company’s confidential information in confidence. In addition, he agreed to certain non-competition and non-solicitation covenants for a one-year period following any termination of his employment.

Hilgendorf Employment Agreement. Effective November 15, 2018, the Board appointed Mr. Hilgendorf to serve as the Chief Financial Officer of the Company. Mr. Hilgendorf previously served as the Company’s Vice President and Chief Accounting Officer, and he will continue to serve as the Company’s principal accounting officer as well as principal financial officer. In connection with Mr. Hilgendorf’s appointment, he entered into an Employment Agreement with the Company (the “Hilgendorf Employment Agreement”), effective as of November 15, 2018. Pursuant to the Hilgendorf Employment Agreement, Mr. Hilgendorf will serve as the Vice President and Chief Financial Officer of the Company for a three year term, with such term to be automatically extended for successive one-year periods thereafter, unless either the Company or Mr. Hilgendorf provides at least three months prior written notice of termination pursuant to the terms of the Hilgendorf Employment Agreement.

29



For Mr. Hilgendorf’s services, he is paid an annual base salary of $240,000, which is reviewed annually by the Board or its Compensation and Nominating Committee to determine whether the annual base salary should be increased and, if so, in what amount. In the event Mr. Hilgendorf is terminated for Cause (as defined in the Hilgendorf Employment Agreement) or voluntarily terminates his employment without Good Reason (as defined in the Hilgendorf Employment Agreement) he shall be entitled to payment of accrued and unpaid base salary and reimbursement for expenses incurred through the last day of his employment. In the event Mr. Hilgendorf is terminated without Cause or terminates his employment for Good Reason, Mr. Hilgendorf shall be entitled to (i) payment of accrued and unpaid base salary and reimbursement for expenses incurred through the last day of his employment, (ii) periodic payments in an amount equal to Mr. Hilgendorf’s then-current base salary for a period of eighteen months following the effective date of termination of employment, and (iii) a lump sum amount equal to the sum of twelve months of the Company’s COBRA premiums in effect on the date of termination. These potential termination payments are substantially consistent with the terms in effect under Mr. Hilgendorf’s existing employment agreement prior to his appointment as Chief Financial Officer in November 2018.

During and after termination of the Hilgendorf Employment Agreement, Mr. Hilgendorf is obligated to maintain the Company’s confidential information in confidence. In addition, he agreed to certain non-competition and non-solicitation covenants for a one-year period following any termination of his employment.

Crabb Employment Agreement. On August 7, 2017, the Company entered into an amended and restated employment agreement with Mr. Crabb (the “Crabb Employment Agreement”). Pursuant to the Crabb Employment Agreement, Mr. Crabb serves as the Executive Vice President and Chief Legal Officer of the Company for a three year term, with such term to be automatically extended for successive one-year periods thereafter, unless either the Company or Mr. Crabb provide at least three months prior written notice of termination pursuant to the terms of the Crabb Employment Agreement. For Mr. Crabb’s services, he is paid an annual base salary of $400,000, which is reviewed annually by the Board or its Compensation and Nominating Committee to determine whether the annual base salary should be increased and, if so, in what amount. Mr. Crabb receives insurance benefits and is entitled to participate in any of the Company’s current or future incentive compensation plans. The Crabb Employment Agreement also provided for the payment of an incentive bonus upon the Company’s emergence from bankruptcy and an additional retention payment that was paid in December 2018.

In the event Mr. Crabb is terminated for Cause (as defined in the Crabb Employment Agreement) or voluntarily terminates his employment without Good Reason (as defined in the Crabb Employment Agreement) he shall be entitled to payment of accrued and unpaid base salary, unused vacation, and reimbursement for expenses incurred through the last day of his employment. In the event Mr. Crabb is terminated without Cause or terminates his employment for Good Reason, in each case that occurs without connection to a Change of Control (as defined in the Crabb Employment Agreement), Mr. Crabb shall be entitled to (i) payment of accrued and unpaid base salary, unused vacation, and reimbursement for expenses incurred through the last day of his employment, (ii) a lump sum severance pay amount equal to the sum of 24 months base salary in effect immediately prior to the date of termination and 12 months of the Company’s COBRA premiums in effect on the date of termination, (iii) a lump sum amount equal to at least 100% of the bonus or bonuses attributable to the fiscal year during which the termination occurs based on actual performance results through the full fiscal year, and (iv) acceleration in full of the vesting and/or exercisability of all time-based equity awards outstanding and a pro rata portion of any performance-based equity awards outstanding (which will continue to be subject to the applicable vesting criteria). In the event Mr. Crabb is terminated without Cause or terminates his employment for Good Reason, either of which occurs within 12 months after a Change of Control, or if Mr. Crabb is terminated by the Company without Cause within 6 months prior to a Change of Control if such termination was in contemplation of such Change of Control, he shall be entitled to the payment described above with the following revisions: (i) Mr. Crabb will receive an additional lump sum severance payment equal to 12 months of the Company’s COBRA premiums in effect on the date of termination, (ii) in lieu of the lump sum bonus amount described above, he will receive a lump sum payment equal to 100% of all bonuses attributable to the fiscal year during which the termination occurs at target, and (iii) acceleration in full of a pro rata portion of all performance-based equity awards without regard to the applicable performance targets (in addition to acceleration of any time-based equity awards).

During and after termination of the Crabb Employment Agreement, Mr. Crabb is obligated to maintain the Company’s confidential information in confidence. In addition, he agreed to certain non-competition and non-solicitation covenants for a one-year period following any termination of his employment.

Johnsrud Employment Agreement. On April 28, 2017, immediately prior to the chapter 11 filing, the Board approved an amended and restated employment agreement with Mr. Johnsrud that maintained his base salary at the existing level and also provided for a retention bonus equal to 100% of his base salary, of which one-third was payable as soon as administratively practicable following the execution of the amended and restated employment agreement and the remaining two-thirds was payable within 15 days following the Company’s emergence from bankruptcy. The amended and restated employment agreement with Mr. Johnsrud

30


further provided that following emergence from bankruptcy, Mr. Johnsrud would receive an award of stock options in two tranches to purchase (i) 2.5% of the outstanding equity securities of the reorganized Company, on a fully diluted basis, at a premium exercise price equal to the value of a share of the reorganized Company’s common stock at an enterprise valuation of $475 million and (ii) 2.5% of the outstanding equity securities of the reorganized Company, on a fully diluted basis, at a premium exercise price equal to the value of a share of the reorganized Company’s common stock at an enterprise valuation of $525 million, with each tranche of options vesting in substantially equal installments on the first three anniversaries following the Effective Date. The amended and restated employment agreement with Mr. Johnsrud further provided that the Company would establish a management incentive plan under which shares of common stock of the Company equal to 12.5% of the outstanding equity securities of the Company would be available for issuance, and to issue to Mr. Johnsrud, as soon as reasonably practicable following the consummation of the Plan of Reorganization, certain time-based and performance-based restricted stock units representing 7.5% of the outstanding equity securities of the reorganized Company, on a fully diluted basis. The amended and restated employment agreement also contained provisions regarding Mr. Johnsrud’s right to certain payments upon termination of employment under various scenarios, certain post-employment confidentiality and non-competition obligations, and various other terms and conditions. As described herein, the Company and Mr. Johnsrud entered into a Separation Agreement in connection with his departure from the Company on March 2, 2018, the financial terms of which are substantially consistent with the provisions of his amended and restated employment agreement relating to a termination of his employment by the Company without cause.

Lang Employment Agreement. On August 23, 2017, in connection with Mr. Lang joining the Company as Executive Vice President and Chief Financial Officer, the Company entered into a new employment agreement with Mr. Lang, which provided for a base salary of $350,000 per year and a one-time signing bonus of $25,000, which was subject to reimbursement if Mr. Lang resigned from his position within the first 12 months. The agreement also contained provisions regarding Mr. Lang’s right to certain payments upon termination of employment under various scenarios, certain post-employment confidentiality and non-competition obligations, and various other terms and conditions. As described herein, the Company and Mr. Lang entered into a Separation Agreement in connection with his departure from the Company effective November 30, 2018, the financial terms of which are substantially consistent with the provisions of his employment agreement relating to a termination of his employment by the Company without cause.

Separation Agreements

Departure of Mr. Johnsrud. On March 2, 2018, the Company announced the departure of Mr. Johnsrud from his roles as a director and officer of the Company and its subsidiaries and the execution of the Johnsrud Separation Agreement. Under the Johnsrud Separation Agreement, the Company agreed (i) to continue to pay Mr. Johnsrud’s base salary at the rate currently in effect from March 2, 2018 through April 28, 2020; (ii) to pay annual bonuses to Mr. Johnsrud for fiscal years 2018 and 2019 at a rate equal to 100% of his base salary for the applicable years; (iii) to provide certain reimbursements to Mr. Johnsrud for the cost of continuing health care plan coverage; (iv) to accelerate the vesting of unvested time-based restricted stock units; (v) to accelerate the vesting of unvested stock options, which will remain exercisable for one-year following Mr. Johnsrud’s separation date; and (vi) to permit Mr. Johnsrud to continue to hold performance-based restricted stock units, which were eligible to vest based on the achievement of the pre-established performance measures for the performance measurement period beginning on January 1, 2018 and ending on June 30, 2018. The benefits provided to Mr. Johnsrud under the Johnsrud Separation Agreement were substantially consistent with the benefits Mr. Johnsrud would have been entitled to receive under his amended and restated employment agreement had his employment been terminated by the Company without cause.

Departure of Mr. Lang. On November 21, 2018, Mr. Lang, the Company’s former Executive Vice President and Chief Financial Officer, left the Company to pursue other opportunities, effective November 30, 2018. Pursuant to the Lang Separation Agreement, Mr. Lang ceased to be an employee of the Company as of the Separation Date (as defined in the Lang Separation Agreement). The benefits provided to Mr. Lang under the Lang Separation Agreement are substantially consistent with the benefits Mr. Lang would have been entitled to receive under his Employment Agreement, dated August 23, 2017, Notice of Grant of Performance Restricted Stock Units and Award Agreement, dated February 23, 2018, and Notice of Grant of Restricted Stock Units and Award Agreement, dated February 23, 2018, had Mr. Lang’s employment been terminated by the Company without cause.

Potential Payments upon Termination or Change-in-Control

Charles K. Thompson

Mr. Thompson’s employment agreement provides for the following potential payments upon termination. The total amounts payable for certain severance benefits to Mr. Thompson may be reduced to the extent necessary so that the amount payable is not subject to excise tax under Section 4999 of the Internal Revenue Code.


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Termination without Cause or Resignation for Good Reason. Mr. Thompson’s employment agreement provides for the following payments and benefits:
•
Payment of 12 months of the Base Salary in effect immediately prior to the termination date;
•
Payment of 12 months of the Company’s COBRA premiums in effect on the termination date;
•
Payment of at least 100% of the bonus attributable to the fiscal year during which the termination date occurs if such bonus would have been earned and paid but for the termination of Mr. Thompson’s employment; and
•
Full vesting of all then outstanding time-based equity awards and a pro rata portion (based on the portion of the applicable performance period actually served prior to termination) of all then outstanding performance-based awards regardless of whether or not such performance-based awards would become vested and exercisable based on the applicable performance criteria.

Change-in-Control. Mr. Thompson’s employment agreement does not provide for separate payments and benefits, in lieu of those described above, following a termination without cause or resignation for good reason, in connection with a change-in-control of the Company (which generally means a termination within 6 months prior to, or one year after, a change-in-control).

Death or Disability. If Mr. Thompson’s employment terminates due to death or disability, his employment agreement provides for full vesting of all then outstanding time-based equity awards and a pro rata portion (based on the portion of the applicable performance period actually served prior to termination) of all then outstanding performance-based awards regardless of whether or not such performance-based awards would become vested and exercisable based on the applicable performance criteria. In order to receive the severance payments and benefits described above (other than those provided in the event of his death), Mr. Thompson is required to execute a full general release of claims in favor of the Company.

Cause and Good Reason Defined. For purposes of the Thompson Employment Agreement, “cause” is generally deemed to exist, subject to applicable notice and cure provisions, if the executive at any time: commits a material breach of his employment agreement, is guilty of gross insubordination, gross negligence, recklessness or willful misconduct in connection with or affecting the business or affairs of the Company, engages in material and intentional unauthorized use, misappropriation, destruction or diversion of any tangible or intangible asset or corporate opportunity of the Company, alcohol or substance abuse that interferes with executive’s ability to discharge the duties and responsibilities of his position, committing a knowing breach of executive’s fiduciary duties to the Company and its stockholders, or is convicted of, or pleads no contest to, a felony criminal offense.

For purposes of the Thompson Employment Agreement, “good reason” generally means a material reduction in base salary, a material reduction in an executive’s authority, duties, and executive responsibilities with the Company, a material change in geographic location(s) at which the executive must perform services or in the location of the Company’s principal office at which the executive renders services, excluding required business travel, or a material breach of his employment agreement by the Company. “Good reason” also means a change in direct reporting to anyone other than the Board of the Company.

Robert Y. Fox

Mr. Fox’s employment agreement provides for the following potential payments upon termination or a change-in-control of the Company. The total amounts payable for certain severance benefits to Mr. Fox may be reduced to the extent necessary so that the amount payable is not subject to excise tax under Section 4999 of the Internal Revenue Code.

Termination without Cause or Resignation for Good Reason. Mr. Fox’s employment agreement provides for the following payments and benefits:
•
Payment of 12 months of the Base Salary in effect immediately prior to the termination date;
•
Payment of 12 months of the Company’s COBRA premiums in effect on the termination date;
•
Payment of at least 100% of the bonus attributable to the fiscal year during which the termination date occurs if such bonus would have been earned and paid but for the termination of Mr. Fox’s employment; and
•
Full vesting of all then outstanding time-based equity awards and a pro rata portion (based on the portion of the applicable performance period actually served prior to termination) of all then outstanding performance-based awards (which will continue to be subject to applicable vesting criteria).

Change-in-Control. Mr. Fox’s employment agreement provides for the following payments and benefits, in lieu of those described above, following a termination without cause or resignation for good reason, in connection with a change-in-control of the Company (which generally means a termination within 6 months prior to, or one year after, a change-in-control):

•
Payment of 24 months of the Base Salary in effect immediately prior to the termination date;
•
Payment of 24 months of the Company’s COBRA premiums in effect on the termination date;

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•
A lump-sum payment equal to 100% of the bonus attributable to the fiscal year during which the termination date occurs at target; and
•
Full vesting of all then outstanding time-based equity awards and a pro rata portion (based on the portion of the applicable performance period actually served prior to termination) of all then outstanding performance-based awards without regard to applicable performance targets.

Death or Disability. If Mr. Fox’s employment terminates due to death or disability, his employment agreement provides for full vesting of all then outstanding equity awards (other than awards whose vesting is based on performance-based criteria - which are subject to pro rata accelerated vesting if and to the extent the performance criteria are ultimately satisfied). In order to receive the severance payments and benefits described above (other than those provided in the event of his death), Mr. Fox is required to execute a full general release of claims in favor of the Company.

Cause and Good Reason Defined. For purposes of the Fox Employment Agreement, “cause” is generally deemed to exist, subject to applicable notice and cure provisions, if the executive at any time: commits a material breach of his employment agreement, is guilty of gross insubordination, gross negligence, recklessness or willful misconduct in connection with or affecting the business or affairs of the Company, engages in material and intentional unauthorized use, misappropriation, destruction or diversion of any tangible or intangible asset or corporate opportunity of the Company, alcohol or substance abuse that interferes with executive’s ability to discharge the duties and responsibilities of his position, committing a knowing breach of executive’s fiduciary duties to the Company and its stockholders, or is convicted of, or pleads no contest to, a felony criminal offense.

For purposes of the Fox Employment Agreement, “good reason” generally means a material reduction in base salary, a material reduction in an executive’s authority, duties, and executive responsibilities with the Company, a material change in geographic location(s) at which the executive must perform services or in the location of the Company’s principal office at which the executive renders services, excluding required business travel, or a material breach of his employment agreement by the Company. “Good reason” also means a change in direct reporting to anyone other than the Board or Chief Executive Officer of the Company.

Stacy W. Hilgendorf

Mr. Hilgendorf’s employment agreement provides for the following potential payments upon termination or a change-in-control of the Company. The total amounts payable for certain severance benefits to Mr. Hilgendorf may be reduced to the extent necessary so that the amount payable is not subject to excise tax under Section 4999 of the Internal Revenue Code.

Termination without Cause or Resignation for Good Reason. Mr. Hilgendorf’s employment agreement provides for the following payments and benefits:

•
Payment of 18 months of the Base Salary in effect immediately prior to the termination date; and
•
Payment of 12 months of the Company’s COBRA premiums in effect on the termination date.

Change-in-Control. The Hilgendorf Employment Agreement does not provide for separate payments and benefits, in lieu of those described above, following a termination without cause or resignation for good reason, in connection with a change-in-control of the Company.

Death or Disability. The Hilgendorf Employment Agreement does not provide for separate payments and benefits, in lieu of those described above, following a termination in connection with death or disability. In order to receive the severance payments and benefits described above (other than those provided in the event of his death), Mr. Hilgendorf is required to execute a full general release of claims in favor of the Company.

Cause and Good Reason Defined. For purposes of the Hilgendorf Employment Agreement, “cause” is generally deemed to exist, subject to applicable notice and cure provisions, if the executive at any time: commits a material breach of his employment agreement, is guilty of gross insubordination, negligence, recklessness or willful misconduct in connection with or affecting the business or affairs of the Company, engages in material and intentional unauthorized use, misappropriation, destruction or diversion of any tangible or intangible asset or corporate opportunity of the Company, alcohol or substance abuse that interferes with executive’s ability to discharge the duties and responsibilities of his position, committing a knowing breach of executive’s fiduciary duties to the Company and its stockholders, or is convicted of, or pleads no contest to, a felony criminal offense.

For purposes of the Hilgendorf Employment Agreement, “good reason” generally means a material reduction in base salary, a material reduction in an executive’s authority, duties, and executive responsibilities with the Company, a material change in geographic location(s) at which the executive must perform services which requires the executive’s ordinary commuting distance

33


to increase by fifty or more miles, or the Company’s delivery of a notice that it is electing to not extend the initial term or any renewal term of the employment agreement.

Joseph M. Crabb

Mr. Crabb’s employment agreement provides for the following potential payments upon termination or a change-in-control of the Company. The total amounts payable for certain severance benefits to Mr. Crabb may be reduced to the extent necessary so that the amount payable is not subject to excise tax under Section 4999 of the Internal Revenue Code.

Termination without Cause or Resignation for Good Reason. Mr. Crabb’s employment agreement provides for the following payments and benefits:

•
Payment of 24 months of the Base Salary in effect immediately prior to the termination date;
•
Payment of 12 months of the Company’s COBRA premiums in effect on the termination date;
•
Payment of at least 100% of the bonus attributable to the fiscal year during which the termination date occurs if such bonus would have been earned and paid but for the termination of Mr. Crabb’s employment; and
•
Full vesting of all then outstanding time-based equity awards and a pro rata portion (based on the portion of the applicable performance period actually served prior to termination) of all then outstanding performance-based awards (which will continue to be subject to applicable vesting criteria).

Change-in-Control. Mr. Crabb’s employment agreement provides for the following payments and benefits, in lieu of those described above, following a termination without cause or resignation for good reason, in connection with a change-in-control of the Company (which generally means a termination within 6 months prior to, or one year after, a change-in-control):

•
Payment of 24 months of the Base Salary in effect immediately prior to the termination date;
•
Payment of 24 months of the Company’s COBRA premiums in effect on the termination date;
•
A lump-sum payment equal to 100% of the bonus attributable to the fiscal year during which the termination date occurs at target; and
•
Full vesting of all then outstanding time-based equity awards and a pro rata portion (based on the portion of the applicable performance period actually served prior to termination) of all then outstanding performance-based awards without regard to applicable performance targets.

Death or Disability. If Mr. Crabb’s employment terminates due to death or disability, his employment agreement provides for full vesting of all then outstanding equity awards (other than awards whose vesting is based on performance-based criteria - which are subject to pro rata accelerated vesting if and to the extent the performance criteria are ultimately satisfied). In order to receive the severance payments and benefits described above (other than those provided in the event of his death), Mr. Crabb is required to execute a full general release of claims in favor of the Company.

Cause and Good Reason Defined. For purposes of the employment agreement, “cause” is generally deemed to exist, subject to applicable notice and cure provisions, if the executive at any time: commits a material breach of his employment agreement, is guilty of gross insubordination, negligence, recklessness or willful misconduct in connection with or affecting the business or affairs of the Company, engages in material and intentional unauthorized use, misappropriation, destruction or diversion of any tangible or intangible asset or corporate opportunity of the Company, alcohol or substance abuse that interferes with executive’s ability to discharge the duties and responsibilities of his position, committing a knowing breach of executive’s fiduciary duties to the Company and its stockholders, or is convicted of, or pleads no contest to, a felony criminal offense.

For purposes of the employment agreement, “good reason” generally means a material reduction in base salary, a material reduction in an executive’s authority, duties, and executive responsibilities with the Company, a material change in geographic location(s) at which the executive must perform services or in the location of the Company’s principal office at which the executive renders services, excluding required business travel or a material breach of his employment agreement by the Company. “Good reason” also means a change in direct reporting to anyone other than the Board or CEO of the Company.

2018 Director Compensation

Background, Fees, and Awards

Directors of publicly traded companies have substantial responsibilities and time commitments, and there is a competitive market for highly qualified and experienced directors. As such, the Compensation and Nominating Committee seeks to provide appropriate compensation to directors taking into account these factors.

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Following our emergence from bankruptcy on the Effective Date, the Compensation and Nominating Committee recommended and the Board approved compensation for non-employee Board members of $100,000 in cash and, in addition, an annual equity grant. The Compensation and Nominating Committee also recommended, and the Board approved, additional annual cash compensation for the Chair of the Audit Committee and the Chair of the Compensation and Nominating Committee in the amounts of $15,000 and $10,000, respectively. On February 22, 2018, the Compensation and Nominating Committee authorized an award of restricted stock under the 2018 Restricted Stock Plan for Directors (the “Directors Plan”), which was issued upon ratification of the Directors Plan at the 2018 annual meeting, in the amount of 3,342 shares of restricted stock for service during fiscal year 2018 and an additional partial-year award grant of 1,346 shares of restricted stock for service during the portion of fiscal 2017 following the Effective Date, all of which were granted on March 16, 2018 and fully vested on the first anniversary of the grant date. For 2019 and subsequent fiscal years, it is anticipated that the non-employee directors will receive an annual grant of restricted stock with a target grant-date value of $50,000.

2018 Board Compensation Table

The following table provides information for compensation of the non-employee members of our Board as of December 31, 2018. As the Chairman of the Board and Chief Executive Officer, Mr. Thompson’s compensation related to his service as a member of the Board is provided in the 2018 Summary Compensation Table.
Name
 
Fees Earned or Paid in Cash ($) (1)
 
Stock Awards ($) (2)
 
Total ($)
John B. Griggs
 
$
115,000

 
$
72,120

 
$
187,120

Michael Y. McGovern
 
105,861

 
72,120

 
177,981

Lawrence A. First (3)
 
41,944

 
—

 
41,944


(1)
Directors receive $100,000 annually. The Audit Committee Chair, Mr. Griggs, receives $15,000 annually for this role. The Compensation and Nominating Committee Chair, Mr. McGovern, receives $10,000 annually for this role. As Mr. McGovern was appointed as the Chair of the Compensation and Nominating Committee on March 1, 2018, he received a pro-rated portion of the Compensation and Nominating Committee Chair fee during 2018.
(2)
Represents award grants of 3,342 shares of restricted stock to each non-employee director for service during fiscal 2018, with a grant date fair value of $21.58 calculated pursuant to ASC 718.
(3)
Mr. First was appointed to the Board on May 1, 2018, and therefore received pro-rated compensation during 2018. Mr. First’s compensation was received by Ascribe Investments II LLC and Ascribe Investments III LLC on Mr. First’s behalf. Mr. First has directed the Company to pay any director compensation owed to him to Ascribe’s affiliates. Mr. First has declined to receive any equity-based compensation for his service as a director, either personally or through Ascribe’s affiliates.

The following table provides information on the stock options and unvested restricted stock held by our non-employee directors as of April 22, 2019.
Name
 
Number of Awards (1)
John B. Griggs
 
5,669

Michael Y. McGovern
 
5,669

Lawrence A. First (2)
 
—


(1)
Represents award grants of restricted stock to each non-employee director for service during fiscal 2019.
(2)
Mr. First was appointed to the Board on May 1, 2018. Mr. First has declined to receive any equity-based compensation for his service as a director, either personally or through Ascribe’s affiliates.
Compensation and Nominating Committee
/s/ Michael Y. McGovern
Michael Y. McGovern
Chair
/s/ John B. Griggs
John B. Griggs
Committee Member

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PROPOSAL 3 - RATIFICATION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Background

We are asking the stockholders to ratify the Audit Committee’s appointment of Moss Adams as our independent registered public accounting firm for the year ending December 31, 2019. Moss Adams is a registered public accounting firm with the Public Company Accounting Oversight Board (the “PCAOB”), as required by the Sarbanes-Oxley Act of 2002 and the rules of the PCAOB. Although stockholder ratification is not required by our Bylaws or otherwise, the Company is submitting the selection of Moss Adams to its stockholders for ratification to permit stockholders to participate in this important decision. In the event the stockholders fail to ratify the appointment, the Audit Committee will reconsider this appointment. Even if the appointment is ratified, the Audit Committee, in its discretion, may direct the appointment of different independent registered public accounting firm at any time during the year if the Audit Committee determines that such a change would be in the Company’s and its stockholders’ best interests.

Moss Adams representatives are expected to attend the Annual Meeting via conference call. They will have an opportunity to make a statement if they desire to do so and will be available to respond to appropriate stockholder questions.

Vote Required and Board Recommendation

The affirmative vote of a majority of the shares of common stock present and entitled to vote at the Annual Meeting is required to ratify the appointment of Moss Adams as the Company’s independent registered public accounting firm for 2019. Abstentions and broker non-votes will be counted as present for purposes of determining whether a quorum is present. Abstentions will have the same effect as an “against” vote, but broker non-votes will not have any effect on the outcome of this Proposal.

THE BOARD RECOMMENDS A VOTE FOR PROPOSAL NO. 3.


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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Our Board has adopted a written policy regarding the review, approval and ratification of any related party transaction. Under this policy, the Board’s Audit Committee will review the relevant facts and circumstances of each related party transaction, including if the transaction is on terms comparable to those that could be obtained in arm’s length dealings with an unrelated third party and the extent of the related party’s interest in the transaction, and either approve or disapprove the related party transaction. Any related party transaction may be consummated, and may continue, only if the Audit Committee has approved or ratified such transaction in accordance with the guidelines set forth in the policy.

A “related party transaction” is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which we were, are or will be a participant and in which any related party had, has or will have a direct or indirect interest (other than solely as a result of being a director or a less than five percent beneficial owner of another entity). A “related party” is any (a) person who is or was (since the beginning of the company’s last fiscal year) an executive officer, director or nominee for election as a director, (b) greater than five percent beneficial owner of any class of the Company’s voting securities, or (c) immediate family member of any of the foregoing, which means any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law or sister-in-law of such person, and anyone (other than a tenant or employee) sharing the household of such person. Disclosure is required for each related party transaction that exceeds $120,000.

Related-Party Transactions with Management
Mr. Johnsrud, our former Chairman and Chief Executive Officer, is the sole member of an entity that owns land in North Dakota on which three of our saltwater disposal wells are situated. We have agreed to pay the entity a per-barrel royalty fee in exchange for the use of the land, which is consistent with rates charged by non-affiliated third parties under similar arrangements. We paid royalties of approximately $114,000, $43,500 and $69,200 during years ended December 31, 2018, 2017 and 2016, respectively. There was $15,200 of royalties payable to the entity as of December 31, 2018, and no royalties payable to the entity as of December 31, 2017.
On December 6, 2017, following the approval of the transaction by the Company’s Audit Committee in accordance with the Company’s Corporate Governance Guidelines, we entered into a Salt Water Injection Easement and Surface Use Agreement with Mr. Johnsrud and his spouse for the Best I-1 and Best E-1 wells, which are to be located in McKenzie County, North Dakota. The wells are being constructed on land owned by Mr. Johnsrud and his spouse as part of a joint scientific study with the University of North Dakota Energy & Environmental Research Center. Mr. Johnsrud will be entitled to receive a royalty for salt water injected into the Best I-1 and Best E-1 wells after they become operational.

Other Relationships

In addition to such related party transactions above, Mr. First, a director of the Company, serves as the Chief Investment Officer and Managing Director of Ascribe. Ascribe and/or one or more of its affiliates own approximately 44.74% of the outstanding common stock of the Company as of April 22, 2019, and is owed approximately $4.9 million of the aggregate principal amount of the Second Lien Term Loan Credit Agreement, as amended, that the Company entered into on the Effective Date as a result of Bankruptcy Court approval of the Plan of Reorganization. Under the Plan of Reorganization, Ascribe designated Mr. Griggs and Mr. First to serve as directors of the Company. Moreover, affiliates of Ascribe are parties to that certain Registration Rights Agreement dated as of the Effective Date by and among the Company and certain stockholders of the Company.

Registration Rights Agreement

On the Effective Date, pursuant to the Plan of Reorganization, the Company entered into a Registration Rights Agreement with certain of our pre-Effective Date creditors that, in the aggregate, received approximately 90% of our common stock on the Effective Date. Pursuant to the Registration Rights Agreement, any holder that, together with its affiliates, (i) beneficially owned 10% of the aggregate outstanding shares of common stock on the Effective Date and (ii) continues to beneficially own at least 5% of the aggregate outstanding shares of common stock (“Demand Holder”), may request registration of its common stock at any time under the Securities Act on Form S-1 (“Long-Form Registration”), if Form S-3 is not available to the Company, or on Form S-3, or any similar short-form registration statement (“Short-Form Registration”), if available. The Company, however, is not required to conduct more than three Long-Form Registrations for each holder, but is required to conduct an unlimited number of Short-Form Registrations for each holder.


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In addition, promptly after the Effective Date, the Company was required to use its reasonable best efforts to cause a shelf registration (“Shelf”) on Form S-1 to be declared effective as promptly as reasonably practicable thereafter for the offer and resale of the Common Stock on a delayed or continuous basis. At any time and from time to time after the Shelf has been declared effective, any Demand Holder may request to sell all or any portion of their common stock in an underwritten offering that is registered pursuant to the Shelf, and any holder may participate in such a Shelf takedown. On March 16, 2018, the Company filed a Registration Statement on Form S-1 pursuant to the foregoing obligation, and the registration statement was declared effective on May 3, 2018.
Pursuant to the Registration Rights Agreement, holders also have customary piggyback registration rights with respect to any offering by the Company under the Securities Act. The registration rights are subject to certain conditions and limitations, including our ability to suspend registration statement under certain circumstances. We will generally pay all fees and expenses in connection with our obligations under the Registration Rights Agreement. The rights granted in the Registration Rights Agreement are subject to customary indemnification and contribution provisions. No separate review of this transaction was performed by the Audit Committee as it was a requirement of the Plan of Reorganization.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The following table presents information concerning our equity compensation plans, including the MIP, certain stock options issued to Mr. Johnsrud and the Directors Plan, as of December 31, 2018:

Plan Category
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights or Vesting of Restricted Stock
(a)
 
Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b)
 
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))
(c)
Equity compensation plans approved by security holders
1,015,582

 
$
39.17

 
937,176

Equity compensation plans not approved by security holders
—

 
—

 
—

Total
1,015,582

 
$
39.17

 
937,176


SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Beneficial ownership of shares and percentage ownership are determined in accordance with the rules of the SEC. Except as otherwise indicated by footnote, and subject to community property laws where applicable, the persons named in the table below have reported that they have sole voting and sole investment power with respect to all shares of common stock shown as beneficially owned by them. No shares of common stock held by a director or officer have been pledged as security. The Company is not aware of any arrangement or pledge of common stock that could result in a change of control of the Company.

Unless otherwise indicated, the address for each director and officer is c/o Nuverra Environmental Solutions, Inc., 6720 N. Scottsdale Road, Suite 190, Scottsdale, AZ 85253. The information in this table is based on statements in filings with the SEC, or other reliable information available to the Company.

The following table sets forth information known to the Company regarding the beneficial ownership of its common stock as of April 22, 2019 by (i) each director, (ii) each of our named executive officers, and (iii) all executive officers and directors serving as of April 22, 2019 as a group. An individual’s percentage ownership of common stock outstanding is based on 15,694,857 shares of our common stock outstanding as of April 22, 2019. Mr. Johnsrud and Mr. Lang resigned all director and officer positions effective March 2, 2018 and November 30, 2018, respectively, and their beneficial ownership as of April 22, 2019 is not known to the Company. Pursuant to Rule 13d-3(d)(1) under the Exchange Act, shares of common stock subject to stock options currently exercisable or exercisable within 60 days, as well as shares of common stock issuable upon the settlement of vested restricted stock units, are deemed outstanding for purposes of computing the percentage ownership of the person holding such securities and the management group but are not deemed outstanding for computing the percentage ownership of any other person.

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Shares Beneficially Owned
Name of Beneficial Owner
 
Amount and Nature of Beneficial Ownership
 
Percent of
Class
Current Executive Officers and Directors
 
 
 
 
Charles K. Thompson (1)
Chairman of the Board and Chief Executive Officer
 
18,591

 
*

Robert Y. Fox (2)
President and Chief Operating Officer
 
14,041

 
*

Stacy W. Hilgendorf (3)
Vice President and Chief Financial Officer
 
—

 
0
%
Joseph M. Crabb
Executive Vice President, Chief Legal Officer, and Corporate Secretary
 
17,280

 
*

John B. Griggs
Director
 
4,688

 
*

Michael Y. McGovern
Director
 
4,688

 
*

Lawrence A. First
Director
 
—

 
0
%
Shares owned by executive officers and directors as a group
 
59,288

 
 

*
Less than 1% of shares outstanding
(1)
Mr. Thompson was named Chairman and Interim Chief Financial Officer on March 2, 2018, and Chief Executive Officer on a non-interim basis on November 19, 2018.
(2)
Mr. Fox joined the Company as President and Chief Operating Officer effective as of June 18, 2018.
(3)
Mr. Hilgendorf was named Vice President and Chief Financial Officer effective as of November 15, 2018.

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The following table sets forth information known to the Company regarding the beneficial ownership of common stock as of April 22, 2019 of persons or groups that own or have the right to acquire more than 5% of our common stock.
 
  
Shares Beneficially Owned
Name and Address of Beneficial Owner
  
Amount and Nature of Beneficial Ownership
 
Percent of Class
Ascribe II Investments LLC (1)
Ascribe III Investments LLC
299 Park Avenue, 34th Floor, New York, NY 10171
  
7,021,879

 
44.74
%
ECF Value Fund, LP (2)
ECF Value Fund II, LP
ECF Value Fund International Master, LP
1177 Ave. of Americas, 46th Floor, New York, NY 10036
  
7,035,687

 
44.83
%
(1)
Ascribe is the investment manager of Ascribe III Investments LLC (“Fund III”). Ascribe Management LLC (“Ascribe Management”) is the investment manager of Ascribe II Investments LLC (“Fund II”, and together with Fund III, the “Ascribe Funds”). The Ascribe Funds hold Common Stock. American Securities LLC (“American Securities”) is the 100% owner of Ascribe and Ascribe Management. Ascribe Opportunities Fund III, L.P. (“Opportunities III”) and Ascribe Opportunities Fund III(B), L.P. (“Opportunities III(B)”) are the sole members of Fund III. Ascribe Associates III, LLC (“Associates III”) is the general partner of Opportunities III and Opportunities III(B). Ascribe Opportunities Fund II, L.P. (“Opportunities II”) and Ascribe Opportunities Fund II(B), L.P. (“Opportunities II(B)”) are the sole members of Fund II. Ascribe Associates II, LLC (“Associates II”) is the general partner of Opportunities II and Opportunities II(B). Mr. First is the Chief Investment Officer and Managing Director of each of Ascribe and Ascribe Management, which are the investment managers to the Ascribe Funds, and may be deemed to have voting and dispositive power over the shares of Common Stock held by each of the Ascribe Funds. Each of Ascribe, Ascribe Management, American Securities, Associates III, Opportunities III, Opportunities III(B), Associates II, Opportunities II, Opportunities II(B) and Mr. First may be deemed to share beneficial ownership of the Common Stock held by the Ascribe Funds. Each of Ascribe, Ascribe Management, American Securities, Associates III, Opportunities III, Opportunities III(B), Associates II, Opportunities II, Opportunities II(B) and Mr. First disclaims beneficial ownership of the Common Stock held by the Ascribe Funds, except to the extent of its pecuniary interests. In accordance with the Plan of Reorganization, on the Effective Date, Ascribe designated Mr. Griggs to serve as a director of the Company and on May 1, 2018, Ascribe designated Mr. First to serve as a director of the Company. Number of shares beneficially owned is based solely on a Schedule 13D filed jointly with the SEC on January 7, 2019 by (i) Ascribe Capital; (ii) American Securities; (iii) Ascribe Funds; (iv) Opportunities III; (v) Opportunities III(B); (vi) Associates III; (vii) Ascribe Management; (viii) Opportunities II; (ix) Opportunities II(B); and (x) Associates II.
(2)
Gates Capital Management, L.P. (“Gates Capital”), acts as the investment manager to certain funds directly holding Common Stock (the “Gates Capital Funds”). Gates Capital Management GP, LLC (the “General Partner”) is the general partner of Gates Capital, with respect to the shares of Common Stock directly held by the Gates Capital Funds. Gates Capital Management, Inc. (the “Gates Corporation”) is the managing member of the General Partner with respect to the shares of Common Stock directly held by the Gates Capital Funds. Jeffrey L. Gates serves as President of the Gates Corporation with respect to the shares of Common Stock directly held by the Gates Capital Funds. Each of Gates Capital, the General Partner, the Gates Corporation and Mr. Gates, may be deemed to share beneficial ownership of the Common Stock held by the Gates Capital Funds. Each of Gates Capital, the General Partner, the Gates Corporation and Mr. Gates, disclaims beneficial ownership of the Common Stock held by the Gates Capital Funds except to the extent of its pecuniary interests. In accordance with the Plan of Reorganization, the Gates Corporation designated Mr. McGovern and Mr. Thompson to serve as directors of the Company. Number of shares beneficially owned is based solely on a Schedule 13G/A filed jointly with the SEC on February 14, 2019 by (i) Gates Capital; (ii) General Partner; and (iii) Gates Corporation.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company’s officers and directors, and persons who own more than ten percent (10%) of a registered class of the Company’s equity securities, to file reports of securities ownership and changes in such ownership with the SEC. Officers, directors and greater than ten percent stockholders also are required by rules promulgated by the SEC to furnish the Company with copies of all Section 16(a) forms they file. Based solely on a review of the copies of such forms in our possession and on written representations from reporting persons, we believe that during fiscal 2018 all of our executive officers and directors filed the required reports on a timely basis under Section 16(a).


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STOCKHOLDER PROPOSALS FOR THE 2020 ANNUAL MEETING

Pursuant to Rule 14a-8 promulgated under the Exchange Act, proposals of stockholders intended for inclusion in the proxy statement to be furnished to all stockholders entitled to vote at our 2020 annual meeting of stockholders must be received at our principal executive offices not later than January 1, 2020, which is 120 days prior to the first anniversary of the mailing date of this Proxy Statement. Any proposal must comply with the requirements as to form and substance established by the SEC for such proposal to be included in our proxy statement.

Our Bylaws require that any stockholder proposal that is not submitted for inclusion in next year’s proxy statement under SEC Rule 14a-8, but is instead sought to be presented directly at the 2020 annual meeting, must be received at our principal executive offices not earlier than the close of business on the 120th day and not later than the close of business on the 90th day prior to the first anniversary of the 2019 Annual Meeting. As a result, proposals, including director nominations, submitted pursuant to these provisions of our Bylaws must be received no earlier than the close of business on February 19, 2020 and no later than the close of business on March 20, 2020.

In addition, our Bylaws provide certain requirements that must be met for business to be properly brought before an annual meeting of stockholders. Pursuant to our Bylaws, only business brought before the 2020 annual meeting in accordance with the following procedures may be transacted. Business may be brought before an annual meeting of stockholders only (1) if specified in the notice of meeting by or at the direction of the Board or (2) by a stockholder who is a stockholder of record at the time of the giving of the required notice described below, who is entitled to vote at the meeting, and who complies with the following notice procedures. For business to be properly brought before an annual meeting by a stockholder, such stockholder must have given timely notice of such business in proper written form to our Corporate Secretary.

Our Bylaws provide that to be timely, a stockholder’s notice must be delivered to our Corporate Secretary at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting. However, if the date of the annual meeting is advanced by more than 30 days prior to or more than 60 days after the anniversary of the prior year’s annual meeting, notice by a stockholder for the current year’s annual meeting must be delivered (A) not earlier than the close of business on the 120th calendar day prior to such annual meeting nor (B) later than the close of business on the 10th calendar day following the earlier of (1) the day on which notice of the meeting was mailed or (2) the day on which we first publicly announce the date of such meeting.

To be in proper written form, our Bylaws provide that a stockholder’s notice to the Corporate Secretary must set forth as to each matter such stockholder proposes to bring before the annual meeting (i) the name and record address of such stockholder, (ii) the class or series and number of shares of capital stock of the Company that are owned beneficially or of record by such stockholder, (iii) a description of all arrangements or understandings between such stockholder and any other person or persons (including their names) with respect to the proposal, (iv) any derivative positions with respect to shares of the Company’s capital stock held or beneficially held by or on behalf of such stockholder, the extent to which any hedging or other transaction or series of transactions has been entered into with respect to shares of the Company’s capital stock by or on behalf of such stockholder, and the extent to which any other agreement or understanding has been made, the effect or intent of which is to mitigate loss, manage risk or benefit share price changes, or increase or decrease the voting power of such stockholder with respect to shares of the Company’s capital stock, (v) a representation that such stockholder is a holder of record entitled to vote at the annual meeting and intends to appear in person or by proxy at the annual meeting to propose such business at the annual meeting, (vi) a representation whether the stockholder intends or is part of a group which intends (A) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Company’s outstanding capital stock required to adopt the proposal and/or (B) otherwise to solicit proxies from stockholders in support of such proposal, and (vii) any other information relating to such stockholder required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for the proposal pursuant to and in accordance with Section 14(a) of the Exchange Act and the rules and regulations promulgated thereunder.

In addition, the stockholder’s notice to our Corporate Secretary with respect to any other business (other than the nomination of persons for the election of directors) must set forth (i) a brief description of the business desired to be brought before the annual meeting (ii) the text of the proposal or business (including the text of any resolutions proposed for consideration), (iii) the reasons for conducting such business at the annual meeting, and (iv) any material interest in such business of such stockholder.

Stockholders should submit their proposals to Nuverra Environmental Solutions, Inc., 6720 N. Scottsdale Road, Suite 190, Scottsdale, Arizona 85253, Attention: Corporate Secretary.


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DELIVERY OF DOCUMENTS TO STOCKHOLDERS SHARING AN ADDRESS

To reduce the expense of delivering duplicate proxy statement materials to stockholders who may have more than one account holding the Company’s common stock but sharing the same address, we have adopted a procedure approved by the SEC called “householding.” Under this procedure, certain stockholders of record who have the same address and last name, and who do not participate in electronic delivery of proxy statement materials, will receive only one copy of our Notice of Internet Availability of Proxy Statement Materials and, as applicable, any additional proxy statement materials that are delivered until such time as one or more of these stockholders notifies us that they want to receive separate copies. This procedure reduces duplicate mailings and saves printing costs and postage fees, as well as natural resources.

If you receive a single set of proxy statement materials as a result of householding, and you would like to have separate copies of our Notice of Internet Availability of Proxy Statement Materials, annual report, Shareholders Letter or proxy statement mailed to you, please submit a request to Nuverra Environmental Solutions, Inc., 6720 N. Scottsdale Road, Suite 190, Scottsdale, Arizona 85253, Attention: Investor Relations or contact the Company at (602) 903-7802, and we will promptly send you what you have requested without charge. However, please note that if you want to receive a paper proxy statement or other proxy statement materials for purposes of this year’s Annual Meeting, you should follow the instructions included in the Notice of Internet Availability of Proxy Statement Materials that was sent to you. You can also contact our Investor Relations department at the phone number above if you received multiple copies of the annual meeting materials and would prefer to receive a single copy in the future, or if you would like to opt out of householding for future mailings.

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OTHER MATTERS
We are not aware of any matters other than those discussed in the foregoing materials contemplated for action at the Annual Meeting.
Any stockholder or stockholder’s representative who, because of a disability, may need special assistance or accommodation to allow him or her to participate at the Annual Meeting, may request reasonable assistance or accommodation from the Company by contacting the Company by mail at Nuverra Environmental Solutions, Inc., 6720 N. Scottsdale Road, Suite 190, Scottsdale, Arizona 85253, or by phone at (602) 903-7802. To provide the Company sufficient time to arrange for reasonable assistance or accommodation, please submit all requests by May 31, 2019.
Whether you intend to attend the live webcast of the Annual Meeting or not, we urge you to return your signed proxy promptly.
By Order of the Board of Directors,
 
 
/s/ Joseph M. Crabb     
 
Joseph M. Crabb
 
Executive Vice President, Chief Legal Officer and Corporate Secretary
 



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