UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
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Superior Energy Services, Inc. | ||||
(Name of registrant as specified in its charter) | ||||
(Name of person(s) filing proxy statement, if other than the registrant) | ||||
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Proxy Statement
2016
SUPERIOR ENERGY SERVICES
Focused.
SPN
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS |
Superior Energy Services, Inc.
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
Tuesday, May 24, 2016
9:00 a.m., Central Standard Time
1001 Louisiana Street
Houston, Texas 77002 USA
The annual meeting of stockholders of Superior Energy Services, Inc. will be held at 9:00 a.m., Central Standard Time, on Tuesday, May 24, 2016, at our headquarters located at 1001 Louisiana Street, Houston, Texas, 77002. At the annual meeting, our stockholders will be asked to vote on the following proposals:
1. | the election of the eight director nominees named in this proxy statement (Proposal 1); |
2. | an advisory vote on the compensation of our named executive officers (Proposal 2); |
3. | the adoption of the 2016 Incentive Award Plan (Proposal 3); |
4. | the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2016 (Proposal 4); and |
5. | any other business that may properly come before the meeting. |
The Board of Directors recommends that you vote FOR Proposals 1, 2, 3 and 4. Only holders of record of shares of our common stock as of the close of business on April 4, 2016 are entitled to receive notice of, attend and vote at the meeting.
Your vote is important. Whether or not you plan to attend the meeting, please complete, sign and date the enclosed proxy or voting instruction card and return it promptly in the enclosed envelope, or submit your proxy and/or voting instructions by one of the other methods specified in this proxy statement. If you attend the annual meeting, you may vote your shares of our common stock in person, even if you have sent in your proxy.
By Order of the Board of Directors,
William B. Masters
Executive Vice President, General Counsel and Secretary
Houston, Texas
April 13, 2016
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON May 24, 2016. This proxy statement and the 2015 annual report are available at
https://materials.proxyvote.com/868157
2016 SPN Proxy Statement
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2016 SPN Proxy Statement
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This summary highlights selected information contained in this proxy statement. This summary provides only a brief outline of the contents of this proxy statement and does not provide a full and complete discussion of the information you should consider. Before voting on the proposals to be presented at the annual meeting of stockholders, you should review the entire proxy statement carefully. For more complete information regarding our 2015 performance, please review our 2015 Annual Report on Form 10-K.
The 2015 Annual Report to stockholders, including financial statements, is being mailed to stockholders together with the proxy statement and form of proxy on or about April 13, 2016.
2016 ANNUAL MEETING OF STOCKHOLDERS
Time and Date: |
Tuesday, May 24, 2016, 9:00 a.m. (Central Standard Time) | |
Place: |
1001 Louisiana Street, Houston, Texas 77002 | |
Record Date: |
April 4, 2016 | |
Voting: |
Stockholders as of the record date are entitled to vote. Each share of common stock is entitled to one vote for each director position and one vote for each of the other proposals to be voted on. |
2015 A NEGATIVE MARKET ENVIRONMENT
Overall, 2015 presented the most challenging market environment faced by our industry and our Company in several decades. These challenges were particularly acute in the onshore US market, which had previously been a source of strong revenue generation for us. During this past year, West Texas Intermediate crude oil prices dropped 30%, continuing the steep declines that began in the fourth quarter of 2014. As a result, independent US oil and gas companies cut capital expenditures over 50% and reduced US land rig count commensurately. These significant headwinds led to declining revenues and slowed international expansion for our Company. Even in a cyclical industry such as ours, these dramatic reductions by our customers on the exploration and production side present challenges for the days ahead.
ADAPTING TO THE DOWN CYCLE
In response, we have taken positive action to position ourselves for the eventual market recovery and a return to growth. We did so, in part, by focusing our efforts on cost discipline and liquidity preservation. On the cost front, in 2015 we reduced capital expenditures by approximately $258 million, reduced general and administrative (G&A) expenses by approximately $114 million, and expect to save approximately $40 to $50 million in annual costs through consolidation and reorganization of several of our business units. On the liquidity front, we focused on generating free cash flow and maintaining a strong balance sheet. During this down-cycle, we have been able to generate $274 million in free cash flow (which we define as operating cash flows less capital expenditures), and to sustain our worldwide days sales outstanding (DSO) at 71 days, virtually unchanged from 2014. As a result of this focus, we grew our cash on hand at yearend 2015 to $564 million, providing us with strength on our balance sheet and optionality as we look at strategic opportunities. Additionally, in the first quarter of 2016, we extended the term of our revolving credit facility for an additional two years, so we have no current debt maturities until 2019.
Reducing Costs
Reduced Capital Expenditures by approximately $258 million (
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Reduced General & Administrative Expenses by approximately $114 million (
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$40 $50 million in Annual Cost Savings from Restructuring our Business Units
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2016 SPN Proxy Statement |
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PROXY SUMMARY |
And Preserving Cash
Achieved Free Cash Flow of $274 million |
Cash on hand of $564 million |
Extended Term of Revolving Credit Facility by Two Years 2019 Maturity
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POSITIONED FOR THE UPCYCLE
By taking the measures described above, we feel confident we have responded to the changing dynamics of the current market environment and remain well positioned for future growth, both domestically and internationally, when the cycle reverses and market conditions rebound. The weakness in the US land markets in 2015 highlighted the advantage of geographic diversification. In prior years we reinvested free cash, generated from our established US operations, to fund our geographic expansion to targeted international markets. In 2015 these international operations provided some diversification of revenue streams to mitigate some of the declines witnessed in the US land markets. Going forward, we continue to look for opportunities to expand our international footprint and diversify our sources of revenue, thereby reducing our exposure to any single market.
EXECUTIVE COMPENSATION HIGHLIGHTS (pages 29 65)
Our Compensation Committee has implemented a compensation program that strives to provide a balanced mix of performance-based compensation designed to motivate our executives to improve both our financial and stock-price performance and maintain alignment of both short- and long-term objectives. Highlights of our executive compensation program include the following:
| In response to current market conditions, significantly reduced payout opportunities under our annual incentive program for 2015 and 2016. |
| Did not increase the base salaries of named executive officers for 2015 and reduced by 15% the base salaries of named executive officers effective April 1, 2016. |
| Initiated new shareholder outreach program to continuously improve dialogue with and responsiveness to our stockholders. |
| Revised our annual incentive bonus program to better align payouts under the program with five key quantitative metrics regarding the Companys achievement of operational objectives: (i) reduction in G&A expenses; (ii) reduction in total cost of casualty claims; (iii) management of DSO; (iv) international revenue growth; and (v) Our Shared Core Values (code of conduct) training. |
CORPORATE GOVERNANCE HIGHLIGHTS (pages 4 8)
Our leadership structure and corporate policies are designed to strengthen board leadership, foster cohesive decision-making at the board level, solidify director collegiality, improve problem solving and enhance strategy formation and implementation. In establishing corporate policies, our Board examines the Companys organizational needs, managing its growth, competitive challenges, the potential of senior leadership, future development and possible emergency situations to help provide strategic plans.
| Our CEO and Chairman offices are separate to maximize the efficiency of management by allowing the CEO and Chairman to more fully focus on their respective responsibilities. |
| We have a non-management Lead Director to promote close and effective communication between the CEO and Chairman. |
| All of our directors are elected annually. |
| We hold annual say-on-pay votes to allow our stockholders to share their views of our executive compensation programs. |
| We maintain robust stock ownership guidelines for all directors. |
| We require annual performance evaluations of our Board and standing committees. |
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2016 SPN Proxy Statement |
PROXY SUMMARY |
AGENDA AND VOTING RECOMMENDATIONS
Item | Description | Board Vote Recommendation |
Page | |||
1 | Election of eight director nominees named in this proxy statement | FOR each nominee | 1 | |||
2 | Advisory vote on the compensation of our named executive officers | FOR | 14 | |||
3 | Adoption of the 2016 Incentive Award Plan | FOR | 15 | |||
4 | Ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2016 | FOR | 24 |
DIRECTOR NOMINEE HIGHLIGHTS
Name | Age | Director Since |
Principal Occupation |
Independent | Board Committees | |||||
Harold J. Bouillion |
72 | 2006 | Managing Director Bouillion & Associates, LLC. |
ü | Compensation Audit (Chair) | |||||
David D. Dunlap |
54 | 2010 | CEO & President Superior Energy Services, Inc. |
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James F. Funk |
66 | 2005 | President J.M. Funk & Associates |
ü Lead Director |
Compensation Nominating and Corporate Governance | |||||
Terence E. Hall |
70 | 1995 | Founder and Chairman of the Board Superior Energy Services, Inc. |
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Peter D. Kinnear |
69 | 2011 | Retired Chairman, CEO and President FMC Technologies, Inc. |
ü | Audit Nominating and Corporate Governance (Chair) | |||||
Janiece M. Longoria |
63 | 2015 | Chairman Port of Houston Authority |
ü | Audit Nominating and Corporate Governance | |||||
Michael M. McShane |
61 | 2012 | Advisor Advent International |
ü | Compensation Audit | |||||
W. Matt Ralls |
66 | 2012 | Executive Chairman Rowan Companies, plc |
ü | Compensation (Chair) Nominating & Corporate Governance |
2016 SPN Proxy Statement |
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ELECTION OF DIRECTORS (PROPOSAL 1)
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Information about Director Nominees
The biographies below provide certain information as of the record date, April 4, 2016, for each director nominee. The information includes the persons tenure as a director, business experience, director positions with other public companies held currently or at any time during the last five years, and the experiences, qualifications, attributes or skills that caused the Corporate Governance Committee and our Board to determine that the person should be nominated to serve as a director of the Company. Unless otherwise indicated, each person has been engaged in the principal occupation shown for the past five years.
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ELECTION OF DIRECTORS (PROPOSAL 1) |
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ELECTION OF DIRECTORS (PROPOSAL 1) |
Our Board unanimously recommends that stockholders vote FOR each of the eight director nominees named in this proxy statement.
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CORPORATE GOVERNANCE |
Our Board has three standing committees: an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. These committees regularly report back to the full Board with specific findings and recommendations in their areas of oversight and liaise regularly with the Chairman and Lead Director. The current members and primary functions of each board committee are described below.
Director
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Audit*
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Compensation
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Nominating
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H.J. Bouillion |
CHAIR | ü | ||||
J.M. Funk |
ü | ü | ||||
P.D. Kinnear |
ü | CHAIR | ||||
J.M. Longoria |
ü | ü | ||||
M.M. McShane |
ü | ü | ||||
W.M. Ralls |
CHAIR | ü |
* | Messrs. Bouillion, Kinnear and McShane are each an audit committee financial expert as defined by the SEC |
Audit Committee | Number of Meetings in 2015: 5 |
| Retain, terminate, oversee, and evaluate the independent registered public accounting firm |
| Review and discuss annual and quarterly financial statements, earnings releases, earnings guidance |
| Review critical accounting policies, accounting treatments and determine if there are any recommendations to improve controls or procedures |
| Discuss risk assessment, legal matters or any matters pertaining to the integrity of management |
| Please also see Audit Committee Report included in this proxy statement |
Compensation Committee | Number of Meetings in 2015: 4 |
| Establish, evaluate and approve the Companys executive compensation philosophy |
| Review and approve corporate goals and objectives for executive compensation |
| Review incentive compensation and other stock-based plans |
| Administer and approve awards under incentive compensation programs and supplemental benefits programs |
| Please also see Executive Compensation Compensation Discussion & Analysis included in this proxy statement |
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CORPORATE GOVERNANCE |
Nominating and Corporate Governance Committee | Number of Meetings in 2015: 4 |
| Lead search for director nominees and recommend director nominees to our Board |
| Review committee structure and recommend committee appointments |
| Develop and recommend to our Board an annual self-evaluation process |
| Review director compensation |
| Develop, recommend to our Board and implement our Corporate Governance Principles |
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CORPORATE GOVERNANCE |
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CORPORATE GOVERNANCE |
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DIRECTOR COMPENSATION |
The table below summarizes the compensation of our non-management directors for 2015. Mr. Dunlap does not receive any additional compensation for his service as a director. His compensation as an executive is reflected in the 2015 Summary Compensation Table under Executive Compensation. All non-management directors are reimbursed for reasonable expenses incurred in attending Board and committee meetings.
2015 Director Compensation
Name |
Fees Earned Or Paid in Cash(1) |
Stock |
All Other |
Total |
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Mr. Bouillion |
$118,049 | $ | 200,017 | $ 12,426 | $ | 330,492 | ||||||||||
Mr. Funk |
$125,000 | $ | 200,017 | $ 13,693 | $ | 338,710 | ||||||||||
Mr. Hall |
$100,000 | $ | 200,017 | $210,430 | $ | 510,448 | ||||||||||
Mr. Kinnear |
$106,099 | $ | 200,017 | $ 3,837 | $ | 309,953 | ||||||||||
Ms. Longoria |
$ 25,000 | $ | 99,998 | $ 0 | $ | 124,998 | ||||||||||
Mr. McShane |
$100,000 | $ | 200,017 | $ 3,455 | $ | 303,473 | ||||||||||
Mr. Ralls |
$109,148 | $ | 200,017 | $ 3,455 | $ | 312,621 | ||||||||||
Mr. Sullivan |
$107,935 | $ | 200,017 | $ 14,773 | $ | 322,725 |
(1) | Amounts shown reflect fees earned by the directors for their service on our Board during 2015. Mr. Ralls elected to defer his cash retainer into deferred stock units. |
(2) | Amounts reflect the aggregate grant date fair value of the RSU awards calculated in accordance with FASB ASC Topic 718 at the closing sales price of our common stock on the date of grant. On May 23, 2015, each non-employee director received an award of 8,515 RSUs, with a grant date fair value of $23.49 per unit. Upon her election to the board on October 7, 2015, Ms. Longoria received a pro rata award of 6,188 RSUs with a grant date fair value of $16.16 per unit. The aggregate RSUs held by our directors as of December 31, 2015 were as follows: Mr. Bouillion 46,048 RSUs; Mr. Funk 62,043 RSUs; Mr. Hall 23,278 RSUs; Mr. Kinnear 20,105 RSUs; Ms. Longoria 6,188 RSUs; Mr. McShane 18,952 RSUs; Mr. Ralls 18,952 RSUs and 4,704 DSUs; and Mr. Sullivan 66,799 RSUs. |
(3) | The amounts reflected in All Other Compensation include accrued dividend equivalents on outstanding RSUs that were granted prior to the Companys commencement of paying dividends on its common stock (accordingly the payment of dividends was not part of the grant date valuation of these awards). For Mr. Hall, this amount also includes the following amounts provided for under his senior advisor agreement: (i) $166,667 received as the pro rata portion of his final annual advisory fee and (ii) $38,876 representing the Companys reimbursement of fuel costs and services of a pilot. |
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The following table shows the number of shares of our common stock beneficially owned by holders as of March 31, 2016, known by us to beneficially own more than 5% of the outstanding shares of our common stock. The information in the table is based on our review of filings with the SEC.
Name and Address of Beneficial Owner |
Amount and Nature of Beneficial Ownership |
Percent of Class(1) | ||
BlackRock, Inc. 40 East 52nd Street New York, New York 10022 |
17,680,807(2) | 11.7% | ||
The Vanguard Group 100 Vanguard Boulevard Malvern, Pennsylvania 19355 |
10,351,072(3) | 6.8% |
(1) | Based on 151,412,233 shares of our common stock outstanding as of March 31, 2016. |
(2) | In the Schedule 13G filed on January 8, 2016 by BlackRock, Inc. (BlackRock), BlackRock reported that it has the sole power to dispose or direct the disposition of all the shares reported and the sole power to vote or direct the vote of 17,096,672 shares . |
(3) | In the Schedule 13G filed on February 10, 2016 by the Vanguard Group. (Vanguard), Vanguard reported that it has (i) the sole power to dispose or direct the disposition of 10,243,713 shares, (ii) the shared power to dispose or direct the disposition of 107,359 shares, and (iii) the sole power to vote or direct the vote of 107,859 shares of our common stock. |
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OWNERSHIP OF SECURITIES |
Management and Director Stock Ownership
The following table shows the number of shares of our common stock beneficially owned as of March 31, 2016, by (i) our current non-management directors, (ii) our named executive officers, as defined below in Executive Compensation Compensation Discussion and Analysis, and (iii) all of our current directors and executive officers as a group. The information in the table is based on our review of filings with the SEC. Each person listed below has sole voting and investment power with respect to the shares beneficially owned unless otherwise stated.
Name of Beneficial Owner |
Amount and Nature of Beneficial Ownership(1) |
Percent of |
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NON-MANAGEMENT DIRECTORS:(2) |
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Harold J. Bouillion |
69,235 | * | ||||||
James M. Funk |
68,538 | * | ||||||
Terence E. Hall |
1,088,165 | * | ||||||
Peter D. Kinnear |
43,766 | * | ||||||
Janiece M. Longoria |
10,188 | * | ||||||
Michael M. McShane |
72,781 | * | ||||||
W. Matt Ralls |
82,168 | * | ||||||
Justin L. Sullivan |
106,799 | * | ||||||
NAMED EXECUTIVE OFFICERS |
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David D. Dunlap |
1,119,345 | * | ||||||
Robert S. Taylor |
484,216 | * | ||||||
Brian K. Moore |
522,652 | * | ||||||
A. Patrick Bernard |
343,879 | * | ||||||
William B. Masters |
283,634 | * | ||||||
All directors and executive officers as a group (14 persons)(4) |
4,404,500 | 2.91% |
* | Less than 1%. |
(1) | Includes the number of shares subject to options that are exercisable within 60 days, as follows: Mr. Hall (803,088); Mr. Dunlap (692,498); Mr. Taylor (316,229); Mr. Moore (269,779); Mr. Bernard (237,520); Mr. Masters (189,007); and all directors and executive officers as a group (2,570,558). |
(2) | Includes the number of shares the non-management director will receive upon vesting of RSUs or the payout of deferred stock units, as noted, within 60 days, as follows: Mr. Bouillon (46,048); Mr. Funk (49,877, plus 9,433 deferred RSUs); Mr. Hall (23,278); Mr. Kinnear (20,105); Ms. Longoria (6,188); Mr. McShane (18,952); Mr. Ralls (18,952, plus 6,839 deferred RSUs); and Mr. Sullivan (53,138, plus 13,661 deferred RSUs). Each RSU granted to directors prior to 2013 vested immediately upon grant, but the shares of Company common stock payable upon vesting will not be delivered to the director until he ceases to serve on our Board. Beginning with the 2013 grants, the RSUs vest and pay out in shares of our common stock the year following the grant, subject to each directors ability to elect to defer receipt of the shares. |
(3) | Based on 151,412,233 shares of our common stock outstanding as of March 31, 2016. |
(4) | One executive officer (not a named executive officer) had previously pledged 7,778 shares to secure a personal line of credit. This pledge was in place prior to the adoption of our anti-pledging policy in 2013. |
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OWNERSHIP OF SECURITIES |
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our directors and executive officers to file with the SEC reports of ownership and changes in ownership of our equity securities. Based solely upon our review of the Forms 3, 4 and 5 filed during 2015, and written representations from our directors and executive officers, we believe that all required reports were timely filed during 2015, except for the following. In October 2015, Mr. Ralls filed an amendment to a Form 4 filed in July 2015 to correct the number of deferred stock units reported as granted by the Company. Due to an administrative error, shares on Table II were incorrectly reported as 1,246.2612 instead of 1,328.4322. In addition, Mr. Moore had a late Form 4 filed in February 2015 related to shares of Company stock withheld to cover taxes due upon the vesting of restricted stock.
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ADVISORY VOTE ON OUR NAMED EXECUTIVE OFFICERS COMPENSATION (PROPOSAL 2)
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Our Board unanimously recommends that stockholders vote FOR the proposal to approve, on an advisory basis, the compensation of our named executive officers as disclosed in this proxy statement.
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ADOPTION OF THE 2016 INCENTIVE AWARD PLAN (PROPOSAL 3)
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ADOPTION OF THE 2016 INCENTIVE AWARD PLAN (PROPOSAL 3) |
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ADOPTION OF THE 2016 INCENTIVE AWARD PLAN (PROPOSAL 3) |
While equity-based awards are an important part of our long-term incentive compensation program, we are mindful of our responsibility to our stockholders to exercise judgment in granting equity-based awards and proactively manage dilution.
| Overhang. As of March 15, 2016, approximately 16,179,628 shares were subject to outstanding awards (under the Prior Plan and its predecessor plans) or remained available for future grants of awards under the Prior Plan, which represented approximately 10.69% of our fully diluted common shares outstanding, or our overhang percentage. If our stockholders approve the 2016 Plan, the five (5) million additional shares proposed to be reserved for issuance under the 2016 Plan would increase our overhang percentage by an additional 3.30% to approximately 13.99%. |
| Share Usage; Burn Rate. The following table provides data on our annual share usage under the Prior Plan and its predecessor plans for our last three fiscal years: |
Fiscal Year |
Total Shares Subject |
Total Shares |
Total Shares (Options plus Full Value Awards(1)) |
Weighted Average |
Annual |
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2013 |
406,185 | 1,456,101 | 1,862,286 | 159,205,769 | 2.08% | |||||||||||||||
2014 |
567,084 | 1,352,184 | 1,919,268 | 155,154,092 | 2.11% | |||||||||||||||
2015 |
612,665 | 2,162,146 | 2,774,811 | 150,461,403 | 3.28% | |||||||||||||||
Average Three-Year Burn Rate |
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2.49% |
(1) | For purposes of this column, each share subject to a full value award was counted as 2.0 shares for each share actually issued. The number of shares actually issued pursuant to full value awards is shown in the column entitled Total Shares Subject to Full Value Awards. |
(2) | Burn Rate is the annual number of all option equivalents (options and converted full value awards) divided by the weighted average of common shares outstanding. Option equivalents are calculated by converting all full value awards to options by multiplying the full value awards by a multiple based on the Companys three-year daily stock volatility. The Companys multiplier is 2.0. |
As shown in the table above, the Companys three-year average burn rate is under the 3.12% benchmark established by Institutional Shareholder Services for our industry.
| Current Awards Outstanding. Prior to the adoption of the 2016 Plan, the Prior Plan was the only plan under which stock-based awards could be granted. The table below sets forth information regarding shares outstanding as of March 15, 2016 under the Prior Plan and its predecessor plans. |
Options Outstanding |
Weighted Average |
Weighted Average Remaining Contractual Life of Options |
Restricted |
Total Shares Available for Issuance |
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6,239,938 |
$ | 19.49 | 6.6 Years | 4,233,636 | 3,197,692 |
(1) | Under the Prior Plan, stock-based awards are granted from a pool of available shares, with each share subject to an option reducing the share pool by one share and each share subject to a full value award reducing the share pool by 1.6 shares. |
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ADOPTION OF THE 2016 INCENTIVE AWARD PLAN (PROPOSAL 3) |
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ADOPTION OF THE 2016 INCENTIVE AWARD PLAN (PROPOSAL 3) |
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ADOPTION OF THE 2016 INCENTIVE AWARD PLAN (PROPOSAL 3) |
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ADOPTION OF THE 2016 INCENTIVE AWARD PLAN (PROPOSAL 3) |
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ADOPTION OF THE 2016 INCENTIVE AWARD PLAN (PROPOSAL 3) |
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ADOPTION OF THE 2016 INCENTIVE AWARD PLAN (PROPOSAL 3) |
The Board unanimously recommends that stockholders vote FOR the adoption of the proposed 2016 Incentive Award Plan.
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RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PROPOSAL 4)
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The Audit Committee and our Board unanimously recommend that stockholders vote FOR the ratification of the appointment of KPMG as our independent registered public accounting firm for the fiscal year ending December 31, 2016.
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RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM (PROPOSAL 4) |
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The Audit Committee assists the Board in its oversight of the integrity of the Companys financial statements, the independent auditors qualifications, independence and performance, the performance of the Companys internal audit function and the Companys compliance with legal and regulatory requirements. The Audit Committee is comprised of five non-employee directors, each of whom meet the independence and financial literacy requirements under the SEC rules and NYSE listing standards, including the heightened NYSE independence requirements for audit committee members, and four of whom qualify as an audit committee financial expert as defined by the SEC.
The Audit Committee operates under a written charter adopted by the Board that complies with all current regulatory requirements. The charter is reviewed at least annually. A copy of the charter can be found on the Companys website at http://ir.superiorenergy.com/phoenix.zhtml?c=97570&p=irol-govHighlights.
Management is responsible for preparing and presenting the Companys financial statements, and for maintaining appropriate accounting and financial reporting policies and practices, as well as internal controls and procedures designed to assure compliance with accounting standards and applicable laws and regulations. KPMG, our independent auditor, is responsible for performing an independent audit of our financial statements in accordance with generally accepted auditing standards, and expressing opinions on the conformity of the Companys audited financial statements with generally accepted accounting principles and on the Companys internal control over financial reporting. The members of the Audit Committee rely, without independent verification, on the information provided and representations made to them by management and KPMG.
In performing its oversight function, over the course of the year the Audit Committee, among other matters:
| reviewed and discussed with management, the Companys internal auditor and KPMG the Companys quarterly and annual earnings press releases, consolidated financial statements and Form 10-Qs filed with the SEC, including disclosures under Managements Discussion and Analysis of Financial Condition and Results of Operations; |
| reviewed and discussed with management, the Companys internal auditor and KPMG the Companys audited financial statements and related footnotes for the year ended December 31, 2015, including disclosures under Managements Discussion and Analysis of Financial Condition and Results of Operations; |
| reviewed and discussed with management, the Companys internal auditor and KPMG managements assessment of the effectiveness of the Companys internal controls over financial reporting and KPMGs evaluation of the Companys internal controls over financial reporting; |
| inquired about significant business and financial reporting risks, reviewed the Companys policies for risk assessment and risk management, and assessed the steps management is taking to control these risks; |
| met in periodic executive sessions with the CEO, the internal auditor, and KPMG, including to discuss the results of their examinations, their evaluations of internal controls, and the overall quality of the Companys financial reporting; |
| discussed with KPMG the matters required to be discussed by the independent auditor with the Audit Committee under the Public Company Accounting Oversight Board (PCAOB) applicable auditing standards, including Auditing Standard No. 16, Communications with Audit Committees; and |
| reviewed the policies and procedures for the engagement of KPMG, including the scope of the audit, audit fees, auditor independence matters and the extent to which KPMG may be retained to perform non-audit services. |
The Audit Committee leads in the selection of the lead audit engagement partner, working with KPMG with input from management, and annually reviews and assesses the performance of the KPMG audit team, including the lead audit engagement partner. As part of its auditor engagement process, the Audit Committee also considers
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AUDIT COMMITTEE REPORT |
whether to rotate the independent registered public accounting firm. Following this assessment and evaluation, the Audit Committee concluded that the selection of KPMG as the independent registered public accounting firm for fiscal year 2016 is in the best interest of the Company and its shareholders.
The Audit Committee also reviewed KPMGs independence, and as part of that review, received and discussed the written disclosures and the letter from KPMG required by applicable requirements of the PCAOB regarding the independent auditors communications with the Audit Committee concerning independence. Additionally, as further described under Pre-Approval Process, the Company maintains an auditor independence policy that requires pre-approval of all audit and permissible non-audit services provided by the independent registered public accounting firm. The Audit Committee considers whether KPMGs provision of these non-audit services to us is consistent with its independence, and concluded that it is.
Based on the reviews and discussions described above, and subject to the limitations on the roles and responsibilities of the Audit Committee referred to above and in its charter, the Audit Committee recommended to the Board that the Companys audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 for filing with the SEC.
THE AUDIT COMMITTEE
Harold J Bouillion (Chair)
Peter D Kinnear
Janiece M. Longoria
Michael M McShane
Justin L Sullivan
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Our practice has been that any transaction which would require disclosure under Item 404(a) of Regulation S-K of the rules and regulations of the SEC, with respect to a director or executive officer, must be reviewed and approved by our Audit Committee. The Audit Committee reviews and investigates any matters pertaining to the integrity of our executive officers and directors, including conflicts of interest, or adherence to standards of business conduct required by our policies. We are currently not a party to any transactions requiring such disclosure.
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COMPENSATION DISCUSSION AND ANALYSIS (CD&A)
This CD&A is designed to provide stockholders with an understanding of our compensation philosophy and objectives, as well as the analysis that we performed in setting executive compensation for 2015. It discusses the Compensation Committees (referred to as the Committee in this CD&A) determination of how and why, in addition to what, compensation actions were taken during 2015 for our Chief Executive Officer, our Chief Financial Officer and our three other highest paid executive officers (the named executive officers or NEOs):
| David D. Dunlap, our President and Chief Executive Officer; |
| Robert S. Taylor, our Executive Vice President, Chief Financial Officer and Treasurer; |
| Brian K. Moore, our Executive Vice President; |
| A. Patrick Bernard, our Executive Vice President; and |
| William B. Masters, our Executive Vice President and General Counsel. |
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EXECUTIVE COMPENSATION |
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EXECUTIVE COMPENSATION |
Summary of 2015 Incentive Measures, Company Results and 2015 Payouts
Our financial and operational performance during 2015 resulted in markedly reduced payouts under our annual incentive program and performance share units. The following components and results of our 2015 incentive programs are discussed in detail later in this CD&A.
Incentive Program Element |
Performance Category |
Performance Metric |
Company Performance v. Target |
Resulting |
Overall Payout Value | |||||
Annual Incentive Program (AIP) |
Financial | EBITDA (75% of Award) |
Below Minimum | 0% of Target (No Payout) |
31.25% of Target | |||||
Operational | Key Operational (25% of Award) |
Above Target | 125% of Target (Between Target and Maximum) |
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Long-Term Incentive (LTI) Program - Performance Share Units (PSUs) |
Financial |
Return on Invested (50% of Award) |
48.6 Percentile | 97.2% of Target (Between Minimum and Target) |
80.4% of Target | |||||
Stock Price | TSR Percentile Rank (50% of Award) |
31.8 Percentile | 63.6% of Target (Between Minimum and Target) |
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EXECUTIVE COMPENSATION |
KEY CHANGES TO 2015 COMPENSATION
In designing the 2015 executive compensation program, the Committee felt it was important to balance incentivizing our executives and protecting our stockholders interests during a cyclical downturn of unknown depth and duration. In response, the Committee took the following steps to ensure alignment of our 2015 executive compensation with the current environment and reduced TSR.
No Salary Increases for All Named Executive Officers In December 2014, the Committee elected not to increase the base salaries of our named executive officers in 2015. Additionally, as explained below in Approach to 2016 Compensation, the Committee has elected to reduce their base salaries by 15% in 2016.
Revised Annual Incentive Program (AIP) In March 2015, the Committee revised the parameters of the 2015 AIP to reduce the payout opportunities and focus performance metrics of the program to ensure executives focused on key deliverables to sustain the Company for the long-term. Specifically, the Committee made the following revisions:
| Reduced the potential payout opportunities (as a percentage of salary) by 37.5% for all executives: |
Named Executive Officer |
2014 Target |
2015 Target |
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Mr. Dunlap |
120% | 75% | ||||
Mr. Taylor |
80% | 50% | ||||
Mr. Moore |
75% | 46.88% | ||||
Mr. Bernard |
70% | 43.75% | ||||
Mr. Masters |
70% | 43.75% |
| Revised the payout range such that minimum payout level represents 87% of the target level, with maximum payout earned at a level that was equal to 113% of target performance. |
| Changed the financial component of the program, which represents 75% of the total payout, from pre-tax income to earnings before interest, taxes, depreciation and amortization (EBITDA).1 The minimum level of EBITDA represented 110% of the 2015 budget approved by the Board of Directors. |
| Changed the operational component of the program, which represents the remaining 25% of the total payout, to reflect the Committees assessment of the Companys achievement of quantitative metrics more focused on our stated strategy. The six key operational objectives focus on reducing overhead costs, increasing working capital and international revenue growth, and improving the Companys culture. |
As in years past, the entire amount of the AIP payout remained subject to a reduction of up to 15% based on the Companys overall safety performance for the year.
Special Strategic Grant In February 2014, the Committee approved the grant of a special one-time, two-year performance share award (SPSUs) for our executives (excluding the CEO) to incentivize them to focus, among other things, on generating free cash flow in order to build liquidity. The executives received previously approved grants of SPSUs in February 2014 and in March 2015, with each grant having a one-year performance period, and payout of both grants occurred in April 2016. In March 2016, the Committee determined the earned SPSUs would be paid out in cash in order to reduce share usage during periods of depressed stock prices. Importantly, this special grants focus on generating free cash flow contributed to our approximately $560 million cash balance as of December 31, 2015 providing a significant liquidity position during this challenging market environment.
The Committee felt the overall structure of the 2015 program, including the measures described above, would incentivize the executive team to focus on key short-term deliverables that would position the Company to withstand the current market downturn and emerge as an even stronger player in the industry when the market recovered. The Committee elected to use EBITDA, which is more closely linked to cash flow, as the financial metric in order to focus management on improving efficiency from existing operations. Also, the key operational measures were designed to increase cash flow and improve the Companys overall liquidity.
(1) | EBITDA is a non-GAAP financial measure. The Company provides reconciliations to the nearest GAAP measure for these and other non-GAAP measures on a quarterly basis (http://ir.superiorenergy.com/phoenix.zhtml?c=97570&p=irol-nonGaap). |
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EXECUTIVE COMPENSATION |
2015 Market Activity and the Impact of Stock Price on Executive Compensation
As noted above, 2015 was an extremely challenging year due to the significant and sustained downturn in crude oil prices, continuing a period of considerable volatility in oilfield service stock prices. Crude oil prices dropped approximately 30% from the beginning to the end of 2015. This decrease was largely related to macroeconomic forces such as significant oversupplyresulting principally from OPECs continued high levels of production and the sustained elevated production levels from the US land marketas well as a weakening global economy. This decline focused investors near-term preference away from commodity-based oilfield service stocks, furthering the decline in industry market capitalization. As a reflection of these events, during 2015 the Philadelphia Stock Exchange Oil Service Sector Index (OSX) declined by approximately 25%. During the current downturn, the Companys stock price has been closely correlated with crude oil prices and, accordingly, we experienced a parallel decline of 32% in our TSR, as seen in the chart below.
The change in oil prices and relative effect on the OSX and our stock price (SPN) during 2014 and 2015 is displayed in the following chart:
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EXECUTIVE COMPENSATION |
The structure of our executive compensation program for a given year is determined prior to or in the beginning of the calendar year. Specifically, base salary adjustments, if any, are effective January 1st, and the parameters of our AIP are established and grants under our LTI program are made effective early in the first quarter.
Over 87% of our CEOs target direct compensation is incentive-based, with a balance between incentives linked to the financial and operational performance of the Company and incentives that are tied directly to stock performance. The Committee believes it is important to have this balance so that executives are focused on both stockholder return and the financial metrics that promote the long-term stability of the Company. This is particularly important in a cyclical industry like ours.
The graph below clearly illustrates the parallel movement of our CEOs compensation compared to our TSR year-over-year and the strong pay-for-performance correlation in 2015, with CEO compensation trending down in lock-step with TSR. Overall, we reduced CEO compensation nearly 25% in 2015 compared to 2014, including an 84% reduction in the AIP component, as noted below.
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EXECUTIVE COMPENSATION |
Responding to the current market environment, the Committee revised our executive compensation program for 2015 by significantly reducing the payout opportunities under our annual incentive plan by 37.5%, as illustrated in the graph below, in addition to maintaining the 2015 base salaries of our named executive officers at 2014 levels. The 2016 base salaries of our named executive officers have been subsequently reduced by 15% beginning April 1, 2016.
Compensation Best Practices
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EXECUTIVE COMPENSATION |
APPROACH TO 2016 COMPENSATION
In designing the 2016 executive compensation program, the Committee remains committed to balancing incentivization and strategy alignment with stockholder interests. To that end, the Committee has decided to take the following action with respect to 2016 compensation:
Base Salary Reductions for Named Executive Officers After electing not to increase base salaries of our named executive officers in 2015, the Committee has elected to reduce by 15% their base salaries effective as of April 1, 2016.
Revised Annual Incentive Program (AIP) The Committee has determined to maintain the 37.5% reduced potential payout opportunities (as a percentage of salary) for all executives. The financial component of the program will remain based on EBITDA, and the operational component will continue to reflect the Committees assessment of the Companys achievement of quantitative metrics focused on our strategy.
Revised LTI Program The Committee granted 50% of the awards to our executives in options (instead of 25% restricted stock units and 25% options) in order to better align the interests of our executives with those of our stockholders by focusing them on share price appreciation.
The Committee feels the actions described above are appropriate in the current market environment, and that the structure of the 2016 program will continue to achieve the balance sought, as described above.
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EXECUTIVE COMPENSATION |
How We View Compensation Total Target Direct Compensation
Our executive compensation program is significantly performance-based, linking executive pay, Company performance and results for stockholders, and is appropriately balanced with short and long-term measures. The primary components of our executive compensation program are base salary, annual and long-term incentives (which we collectively refer to as our executives direct compensation). Consistent with this approach, our program features a minimal level of fixed compensation in the form of base salary for our executives (approximately 13% for our CEO and an average of approximately 23% for our other current named executive officers). Our program also features elements of compensation that vary with stock price (comprised of stock options and RSUs and PSUs). The annual and long-term incentives comprise the majority of our executives target direct compensation. As a result, a significant percentage of the compensation (50% for our CEO and our other current named executive officers) is based on measurable annual and long-term performance. The following charts illustrate the target mix of direct compensation elements for our CEO, and our other current named executive officers (an average) during 2015. Because our CEO did not receive a grant of SPSUs during 2015, we have not included the value of the performance awards granted to our other named executive officers in the charts below in order to promote consistency in the comparison.
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EXECUTIVE COMPENSATION |
Historical Impact of Financial Performance on Executive Pay
The charts below show how the annual and long-term performance components of our program have paid out, or not paid out, over the last three years, commensurate with our results under the applicable performance components:
As noted above, our 2015 AIP measured performance based on our achievement of pre-established EBITDA targets and selected quantitative operational objectives. As described further below, we achieved 62% of the EBITDA target set for 2015. This was under the minimum required for a payout of this portion under the program. In addition, the Committee determined that the Company had achieved above target performance under the operational objectives.
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EXECUTIVE COMPENSATION |
Target Total Direct Compensation v. Realizable Pay Analysis
In making its compensation decisions, the Committee focuses on target total direct compensation of our executives, and also evaluates target compensation against the compensation that is ultimately realized by our executives. The charts below highlight, for our CEO and our other named executive officers as a group, the differences between the target total direct compensation opportunity approved by the Committee, the 2015 compensation reported in the Summary Compensation Table and the realizable pay resulting from our performance. The following summarizes how target total direct compensation and realizable compensation are calculated, and how they differ from the amounts reported in the Summary Compensation Table.
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EXECUTIVE COMPENSATION |
One-Year Absolute Perspective
Based on the decreased annual incentive payout and below target achievement of the PSUs earned in 2015, the realizable compensation of our CEO and other named executive officers was well below the target direct compensation and also lower than the values reported in the Summary Compensation Table. The realizable compensation for our CEO was nearly 30% below the values in the Summary Compensation Table and approximately 39% below the target direct compensation. Similarly, for our other named executive officers, the realizable compensation was about 32% below the values in the Summary Compensation Table and approximately 40% below the target direct compensation.
Three-Year Relative Perspective
To demonstrate the alignment of our CEOs pay with our performance, the following graph compares our CEOs realizable pay as a percent of target total direct compensation for the three-year period from 2013 through 2015 to our TSR performance relative to our Compensation Peer Group (as later defined) over the same period.
Three-Year CEO Realizable Pay vs. Performance
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40 | ||||
EXECUTIVE COMPENSATION |
EXECUTIVE COMPENSATION PHILOSOPHY
The Committee is responsible for designing, implementing, and administering our executive compensation program. The Committee seeks to increase stockholder value by:
Ø | rewarding performance; and |
Ø | ensuring that we can attract and retain executives with the skills, educational background, experience and personal qualities needed to successfully manage and contribute to expanding our business. |
In structuring our executive compensation program, the Committee is guided by the following principles:
Principle | Implementation | |
Compensation should be performance driven and incentive compensation should comprise the largest part of an executives compensation package. |
Ø The largest portion of our target executive compensation (comprised of LTI and AIP) is at-risk and performance based.
Ø Basesalary, the only fixed element of compensation in our executive compensation program, accounts for approximately 13% of our CEOs compensation and an average of 23% of our other named executive officers compensation. | |
Compensation levels should be competitive in order to attract and retain talented executives. |
Ø TheCommittee annually seeks input from its independent compensation consultant regarding the competitiveness of our pay strategy relative to the market. We have established a process for evaluating the competitiveness of all elements of direct compensation. | |
Incentive compensation should balance short and long-term performance, including balancing short-term growth with long-term returns. |
Ø OurAIP rewards executives for the achievement of annual goals based on our profitability and achievement of operational metrics.
Ø Weprovide long-term incentive opportunities that have significantly more potential reward value to the executive if goals are met and our share price grows.
Ø Inorder to encourage our executives to prudently grow our business without sacrificing long-term returns, the performance metrics used for our PSUs are our three-year relative TSR as compared to our peers and our three-year relative ROIC for PSUs granted prior to 2015 and our three-year relative ROA for PSUs granted in 2015 and thereafter.
Ø TheCommittee annually evaluates with its independent compensation consultant whether the program is balanced in terms of base pay and incentives, both short and long-term. | |
Compensation programs should provide an element of retention and motivate executives to stay with the Company long-term. | Ø Executivesforfeit their opportunity to earn a payout from the PSUs if they voluntarily leave the Company before the three-year performance cycle is complete, except in the case of retirement. Also, the use of time-vested RSUs and stock options provide a strong incentive for employees to stay with the Company.
Ø Theretirement benefits provided under the Supplemental Executive Retirement Plan (SERP) increase the longer the executive remains with the Company. | |
Compensation programs should encourage executives to own Company stock, thus aligning their interests with our stockholders. | Ø Ourstock ownership guidelines require our executive officers to own shares of Company stock equivalent to a stated multiple of the executives base salary. The multiple varies depending on the executives job title. See Executive Compensation Policies Stock Ownership Guidelines for more information.
Ø Allof our executives far exceed these ownership requirements. We grant shares of time-vested RSUs as one of our long-term incentives, and may also elect to pay up to 50% of the value of our PSUs in common stock. |
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EXECUTIVE COMPENSATION |
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EXECUTIVE COMPENSATION |
Performance Peer Group* | ||||
Performance g Used to measure our financial performance under our LTI program, in particular the PSUs. |
Baker Hughes, Inc. Cameron International Corp. Halliburton Co. Helmerich & Payne, Inc. Nabors Industries Ltd. Oceaneering International, Inc. Patterson-UTI Energy, Inc. Schlumberger Ltd.
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Basic Energy Services, Inc. FMC Technologies, Inc. Helix Energy Solutions, Group, Inc. Key Energy Services, Inc. National Oilwell Varco, Inc. Oil States International, Inc. RPC, Inc. Weatherford International, Ltd. | ||
*Reference group for the PSUs granted in 2015 | ||||
Compensation Peer Group | ||||
Compensation g Used to evaluate and benchmark executive compensation. |
Baker Hughes, Inc. Cameron International Corp FMC Technologies, Inc. Helix Energy Solutions Group, Inc. National Oilwell Varco, Inc. Oil States International, Inc. Weatherford International, Ltd. |
Basic Energy Services, Inc. Ensco plc Halliburton Co. Key Energy Services, Inc. Oceaneering International, Inc. RPC, Inc. |
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EXECUTIVE COMPENSATION |
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44 | ||||
EXECUTIVE COMPENSATION |
Named Executive Officer | Minimum | Target | Maximum | |||||||||
Mr. Dunlap |
37.50% | 75.00% | 150.00% | |||||||||
Mr. Taylor |
25.00% | 50.00% | 100.00% | |||||||||
Mr. Moore |
23.44% | 46.88% | 93.75% | |||||||||
Mr. Bernard |
21.88% | 43.75% | 87.50% | |||||||||
Mr. Masters |
21.88% | 43.75% | 87.50% |
Determination of 2015 Results
In January 2016, the Committee reviewed the Companys financial results for 2015 and evaluated a detailed report regarding managements efforts and accomplishments with respect to the key operational objectives. As for the financial metric, the Company achieved 62% of the EBITDA target established for 2015, which was below the threshold necessary for achievement of a payout. As for the key operational objectives, several of these objectives were deemed most critical for reducing costs and generating free cash flow in order to optimize liquidity in the current market downturn and position the Company to respond quickly when more favorable market conditions return. Due to the Companys strong level of performance, particularly in light of the current market environment, the Committee determined it was appropriate to approve a payout of 62.5% of the 200% maximum payout for this component. In its assessment of these operational objectives and determining the appropriate payout, the Committee noted the following achievements which, with the exception of international growth, significantly exceeded target levels:
| Reduction in G&A Costs: Targeted a reduction of 5% to 15% from 2014 G&A expenses. We achieved an 18.2% reduction in 2015. |
| Reduction in Total Cost of Casualty Claims: Targeted a reduction of $4 million to $8 million from 2014 total cost of workers compensation and vehicular claims, along with associated premiums. We achieved an $11 million reduction in 2015. |
| Manage DSO: Targeted to end 2015 with a DSO of 71 to 80 days. We achieved a DSO of 71 days. |
| International Revenue Growth: Targeted revenue levels from $240 million to $264 million in 2015 for certain select international countries. In this challenging market environment, we achieved $197 million, which was approximately 82% of the minimum target and thus slightly below our ambitious threshold. |
| Shared Core Values Training: Targeted to train 80-95% of our leadership on the Companys shared core values program. We trained all identified employees in leadership roles and also trained all identified non-supervisory personnel. |
| Succession Planning: Identified high-potential employees through a three-step program: (i) Identify candidates, (ii) centrally assess candidates through a rigorous review of leadership capabilities throughout the organization, and (iii) measure candidate progress and identify new high-potentials during executive team review meetings twice a year. This process was reviewed by the Committee in December 2015. |
Goal |
%
of Award |
Target Achieved |
Resulting
Payout % |
Overall Payout | ||||
EBITDA Target |
75% | 62% | 0% | 31.25% | ||||
Key Operational Objectives |
25% | Above Target | 125% |
In light of the Companys strong safety record during 2015, the Committee determined not to exercise its discretion to reduce the ultimate payout to each executive. Specifically, we improved our year-over-year safety performance, as our Total Recordable Incident Rate, tracking less severe recordable injuries, improved by 37%, and our Lost Time Incident Rate, tracking more severe recordable injuries, improved by 31%
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EXECUTIVE COMPENSATION |
Long-Term Incentives
2015 LTI Program At-A-Glance
Component of LTI Program |
Terms |
How the Award Furthers our Compensation Principles | ||
Stock Options (25% of grant value) |
Exercise price at fair market value on grant date Vests in equal annual installments over 3-year period, subject to continued service 10-year term |
Motivates executives to continue to grow the value of the Companys stock over the long term as the value of the stock option depends entirely on the long-term appreciation of the Companys stock price. | ||
RSUs (25% of grant value) |
Pays out in equivalent number of shares of our common stock Vests in equal annual installments over 3-year period, subject to continued service |
Widely used in the energy industry to strengthen the link between stockholder and employee interests, while supporting long-term retention goals. Provides a bridge between the short and long-term interests of stockholders, and reduces the impact of share price volatility over industry cycles, as has occurred in recent years. Motivates executives to take measured risks because the incentive value to the executive is not entirely dependent on significant price appreciation.
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PSUs (50% of grant value) |
3-year performance period Initial value of $100 per unit Payout range $0 to $200 per unit based on performance compared to our Performance Peer Group Performance measures: ¡ 50% Relative ROA ¡ 50% Relative TSR Payout in cash, although up to 50% of value may be paid in shares of stock in the Committees discretion |
Performance criteria link the Companys long-term performance directly to compensation received by executive officers and other key employees and encourage them to make significant contributions towards increasing ROA and, ultimately, stockholder returns. Use of TSR to better align the interests of our executives with those of our stockholders. |
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EXECUTIVE COMPENSATION |
2015 LTI Program Awards
After considering Pearl Meyers market study and in order to remain competitive with the market median and the competitive market for executive talent in the Companys business areas, and taking into account Mr. Dunlaps recommendations for the executives other than himself, the Committee set the target percentages of the named executive officers 2015 LTI awards based on each officers position with the Company, which percentages were consistent with their respective 2014 award levels. To maintain alignment with stockholder interests, 50% of PSU realized value remained determined by relative TSR, as described above in the section titled 2015 LTI Program At-A-Glance.
The award mix for executive officers remained 50% in PSUs, 25% in stock options and 25% in RSUs. The table below shows the 2015 target LTI percentages and the approximate total value of the 2015 LTI grants (amounts reflected in Summary Compensation Table for stock options, PSUs and RSUs reflect actual grant date fair values).
Named Executive Officer |
2015 LTI % of Salary |
Total Value Granted as PSUs |
Total Value Granted as Options |
Total Value Granted as RSUs |
Total Value of 2015 LTI Awards |
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Mr. Dunlap |
600% | $3,000,000 | $1,500,000 | $1,500,000 | $6,000,000 | |||||||||||||
Mr. Taylor |
360% | 973,440 | 486,720 | 486,720 | 1,946,880 | |||||||||||||
Mr. Moore |
300% | 885,750 | 442,875 | 442,875 | 1,771,500 | |||||||||||||
Mr. Bernard |
300% | 627,750 | 313,875 | 313,875 | 1,255,500 | |||||||||||||
Mr. Masters |
250% | 602,000 | 301,000 | 301,000 | 1,204,000 |
Structure of PSUs
For the PSUs granted for the 2015-2017 cycle, under both performance criteria, the maximum, target and minimum levels are met when our ROA and TSR are in the 75th percentile, 50th percentile and 25th percentile, respectively, as compared to the ROA and TSR of the Performance Peer Group, as described in the table below:
Performance Level Relative to Performance Peer Group |
Percent of Date-of-Grant Value of PSU Received for Relative ROA Level |
Percent of Date-of-Grant |
Total Percent of Date-of-Grant | |||
(Below 25th Percentile) |
0% | 0% | 0% | |||
Minimum (25th Percentile) |
25% | 25% | 50% | |||
Target (50th Percentile) |
50% | 50% | 100% | |||
Maximum (75th Percentile or above) |
100% | 100% | 200% |
For all PSUs granted, results that fall in-between the maximum, target and minimum levels of both performance criteria will be calculated based on a sliding scale. For purpose of determining the Companys ROA rank in the Performance Peer Group, we generate the results using income from operations data and net operating asset data derived from financial statements as reported by each peer company in their year-end annual report on Form 10-K, uniformly adjusted for any non-operational charges as determined by established, independent third-party financial data providers. All calculations are validated by the Committees independent compensation consultant.
Payout of 2013-2015 PSUs
The PSUs granted for the performance period beginning in January 2013 vested at the end of 2015, and were paid out to the PSU recipients in April 2016 under the terms of the award. The Company ranked in the 48.6 percentile of relative ROIC (the metric used before ROA was implemented) and in the 31.8 percentile of relative TSR, each achieving a performance level between minimum and maximum and both as compared to its peers, resulting in a payout to the named executive officers of $80.40 per PSU. The terms of the award provide for a cash payout, unless the Committee elects to pay up to 50% of the cash value in shares of our common stock.
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EXECUTIVE COMPENSATION |
The Committee elected to pay the award in cash. The total value of the payout received by each named executive officer is reflected in the table below and in the Summary Compensation Table herein under the column Non-Equity Incentive Plan Compensation.
Named Executive Officer |
Number of Units |
Value of PSU Payout |
||||||
Mr. Dunlap |
28,800 | $2,315,520 | ||||||
Mr. Taylor |
9,270 | 745,308 | ||||||
Mr. Moore |
8,436 | 678,254 | ||||||
Mr. Bernard |
5,979 | 480,712 | ||||||
Mr. Masters |
5,473 | 440,029 |
The table below reflects the target value of the SPSU grants made in 2015, the target number of SPSUs granted (determined by dividing the target value by the closing price of our common stock on the applicable grant date), and the realized value of the 2015 SPSUs:
Named Executive Officer |
Target Value of SPSUs Granted in 2015 |
2015 SPSUs Granted |
Realized Value of 2015 | |||
Mr. Dunlap |
N/A | N/A | N/A | |||
Mr. Taylor |
$324,480 | 14,499 | $285,551 | |||
Mr. Moore |
295,250 | 13,193 | 259,830 | |||
Mr. Bernard |
209,250 | 9,350 | 184,148 | |||
Mr. Masters |
200,667 | 8,966 | 176,599 |
The target value of the SPSUs awarded to each executive was based on a percentage of his 2015 base salary and equates to one-third of the executives target value awarded under our LTI program for 2015, split between the two grants. The actual grant date fair value of these awards granted to our named executive officers (other than Mr. Dunlap) in 2015 is reflected in the Summary Compensation Table.
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48 | ||||
EXECUTIVE COMPENSATION |
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49 | ||||
EXECUTIVE COMPENSATION |
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50 | ||||
EXECUTIVE COMPENSATION |
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51 | ||||
EXECUTIVE COMPENSATION |
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board has reviewed and discussed the Compensation Discussion and Analysis with management, and based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement.
Submitted by the Compensation Committee
on March 30, 2016:
W. Matt Ralls (Chair)
Harold J. Bouillion
James M. Funk
Michael M. McShane
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52 | ||||
EXECUTIVE COMPENSATION |
The following table summarizes the compensation of our named executive officers for the three years ended December 31, 2015, 2014 and 2013.
2015 Summary Compensation Table
Name and Principal Position |
Year |
Salary |
Bonus |
Stock Awards(1) |
Option Awards(2) |
Non-Equity Incentive Plan Compensation(3) |
All Other Compensation(4) |
Total |
||||||||||||||||||||
David D. Dunlap |
2015 | $ | 1,000,000 | $ | 0 | $ | 1,500,003 | $1,500,000 | $2,690,520 | $308,179 | $ | 6,998,702 | ||||||||||||||||
President & Chief |
2014 | 1,000,000 | 0 | 1,500,001 | 1,499,998 | 5,175,000 | 129,972 | 9,304,971 | ||||||||||||||||||||
Executive Officer |
2013 | 960,000 | 0 | 1,439,997 | 1,439,997 | 1,716,000 | 97,651 | 5,653,645 | ||||||||||||||||||||
Robert S. Taylor |
2015 | $ | 540,800 | $ | 0 | $ | 811,208 | $ 486,719 | $ 880,508 | $348,951 | $ | 3,068,186 | ||||||||||||||||
Executive Vice |
2014 | 540,800 | 0 | 811,234 | 486,722 | 1,765,280 | 339,570 | 3,943,606 | ||||||||||||||||||||
President, Chief Financial Officer, and Treasurer |
2013 | 515,000 | 0 | 463,502 | 463,503 | 520,000 | 162,521 | 2,124,526 | ||||||||||||||||||||
Brian K. Moore |
2015 | $ | 590,500 | $ | 0 | $ | 738,131 | $ 442,875 | $ 816,652 | $277,709 | $ | 2,865,867 | ||||||||||||||||
Senior Executive |
2014 | 590,500 | 0 | 738,144 | 442,875 | 885,750 | 145,869 | 2,803,138 | ||||||||||||||||||||
Vice President |
2013 | 562,400 | 0 | 421,794 | 421,800 | 0 | 125,991 | 1,531,985 | ||||||||||||||||||||
A. Patrick Bernard |
2015 | $ | 418,500 | $ | 0 | $ | 523,135 | $ 313,875 | $ 572,259 | $312,777 | $ | 2,140,546 | ||||||||||||||||
Senior Executive |
2014 | 418,500 | 0 | 523,139 | 313,876 | 1,183,800 | 147,359 | 2,586,673 | ||||||||||||||||||||
Vice President |
2013 | 398,600 | 0 | 298,952 | 298,953 | 427,100 | 106,484 | 1,530,089 | ||||||||||||||||||||
William B. Masters |
2015 | $ | 481,600 | $ | 0 | $ | 501,658 | $ 301,000 | $ 545,379 | $167,473 | $ | 1,997,110 | ||||||||||||||||
Executive Vice |
2014 | 481,600 | 0 | 501,654 | 300,998 | 1,205,440 | 68,477 | 2,558,169 | ||||||||||||||||||||
President and General Counsel |
2013 | 437,800 | 0 | 273,619 | 273,621 | 318,500 | 245,796 | 1,549,336 |
(1) | For 2015, amounts reflect the aggregate grant date fair value of the RSUs and SPSUs granted in 2015. RSUs and SPSUs, which vest and payout on the basis of a free cash flow metric, are valued based on the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 at the closing sale price per share of our common stock on the date of grant. The SPSUs are valued at target level and were settled in cash. The values of our named executive officers 2015 SPSUs at maximum level are as follows: Mr. Taylor- $486,720; Mr. Moore $442,878; Mr. Bernard $313,880; and Mr. Masters $301,011. Please see the Grants of Plan-Based Awards Table for more information regarding the stock awards we granted in 2015. |
(2) | The Black-Scholes option model was used to determine the grant date fair value of the options that we granted to the named executive officers during 2015. For a discussion of valuation assumptions, see Note 7 to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2015. See the Grants of Plan-Based Awards Table for more information regarding the option awards we granted in 2015. |
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53 | ||||
EXECUTIVE COMPENSATION |
(3) | Amounts disclosed for 2015 reflect the annual cash incentive awards received by our named executive officers and the payout of PSUs with a performance period ending on the last day of 2015. The PSUs payout in cash, unless the Compensation Committee elects to pay a portion of the aggregate payout value (up to 50%) in shares of our common stock. For 2015, the amount reflected in the table represents the aggregate cash payout value of the PSUs. Please see the Executive Compensation Compensation Discussion and Analysis Long-Term Incentives for more information regarding the PSUs. |
Name |
Annual Cash Incentive |
Aggregate PSU Payout | ||
Mr. Dunlap |
$375,000 | $2,315,520 | ||
Mr. Taylor |
$135,200 | $ 745,308 | ||
Mr. Moore |
$138,398 | $ 678,254 | ||
Mr. Bernard |
$ 91,547 | $ 480,712 | ||
Mr. Masters |
$105,350 | $ 440,029 |
(4) | For 2015, includes (i) annual contributions to the executives retirement account under the supplemental executive retirement plan and matching contributions to our 401(k) plan, (ii) life insurance premiums paid by the Company for the benefit of the executives, and (iii) the value of perquisites, consisting of payments made under the ArmadaCare program during 2015, the provision of an automobile allowance, including fuel and maintenance costs, commuting expenses, relocation expense reimbursements to our executives and accrued dividend equivalents for outstanding time-based stock awards that were granted prior to the Companys payment of dividends, and thus for which payment of dividends was not part of the grant date valuation, as set forth below: |
Name |
Retirement Plans Contributions |
Life Insurance Premiums |
ArmadaCare |
Automobile and |
Relocation |
Dividends | ||||||
Mr. Dunlap |
$268,485 | $1,331 | $12,006 | $19,233 | $ | $ 7,125 | ||||||
Mr. Taylor |
$295,976 | $1,331 | $26,307 | $23,025 | $ | $ 2,312 | ||||||
Mr. Moore |
$235,444 | $1,331 | $ 9,414 | $ 9,970 | $ | $21,550 | ||||||
Mr. Bernard |
$163,674 | $1,331 | $16,323 | $20,183 | $109,812 | $ 1,454 | ||||||
Mr. Masters |
$128,036 | $1,331 | $11,858 | $24,889 | $ | $ 1,360 |
Please see Executive Compensation Compensation Discussion and Analysis for more information regarding our relocation program. |
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54 | ||||
EXECUTIVE COMPENSATION |
The following table presents additional information regarding stock and option awards, as well as non-equity incentive plan awards granted to our named executive officers during the year ended December 31, 2015.
Grants of Plan-Based Awards During 2015
Name |
Grant |
No. of Units Granted Under Non-Equity Incentive Plan Awards(3) |
Estimated Future Payouts |
All Other Stock Awards: Number of Shares of Stock or Units |
Estimated Future Payouts |
All Other Option Awards: Number of Securities Underlying Options(4) |
Exercise or Base Price of Option Awards |
Grant Date Fair Value of Stock and Option Awards |
||||||||||||||||||||||||||||||||||||||
Threshold
|
Target |
Maximum |
Threshold
|
Target |
Maximum |
|||||||||||||||||||||||||||||||||||||||||
David D. Dunlap |
|
|||||||||||||||||||||||||||||||||||||||||||||
Annual Bonus(1) |
$ | 375,000 | $ | 750,000 | $ | 1,500,000 | ||||||||||||||||||||||||||||||||||||||||
PSUs |
1/15/2015 | 30,000 | 1,500,000 | 3,000,000 | 6,000,000 | |||||||||||||||||||||||||||||||||||||||||
RSUs |
1/15/2015 | 86,856 | (4) | $1,500,003 | ||||||||||||||||||||||||||||||||||||||||||
Stock Options |
1/15/2015 | 240,000 | $17.27 | 1,500,000 | ||||||||||||||||||||||||||||||||||||||||||
Robert S. Taylor |
|
|||||||||||||||||||||||||||||||||||||||||||||
Annual Bonus(1) |
$ | 135,200 | $ | 270,400 | $ | 540,800 | ||||||||||||||||||||||||||||||||||||||||
PSUs |
1/15/2015 | 9,734 | 486,700 | 973,400 | 1,946,800 | |||||||||||||||||||||||||||||||||||||||||
SPSUs |
3/01/2015 | 14,499 | (5) | 7,249 | 14,499 | 21,748 | $ 324,488 | |||||||||||||||||||||||||||||||||||||||
RSUs |
1/15/2015 | 28,183 | (4) | 486,720 | ||||||||||||||||||||||||||||||||||||||||||
Stock Options |
1/15/2015 | 77,875 | 17.27 | 486,719 | ||||||||||||||||||||||||||||||||||||||||||
Brian K. Moore |
|
|||||||||||||||||||||||||||||||||||||||||||||
Annual Bonus(1) |
$ | 138,398 | $ | 276,797 | $ | 553,594 | ||||||||||||||||||||||||||||||||||||||||
PSUs |
1/15/2015 | 8,858 | 442,900 | 885,800 | 1,771,600 | |||||||||||||||||||||||||||||||||||||||||
SPSUs |
3/01/2015 | 13,193 | (5) | 6,598 | 13,193 | 19,789 | $ 295,259 | |||||||||||||||||||||||||||||||||||||||
RSUs |
1/15/2015 | 25,644 | (4) | 442,872 | ||||||||||||||||||||||||||||||||||||||||||
Stock Options |
1/15/2015 | 70,860 | 17.27 | 442,875 | ||||||||||||||||||||||||||||||||||||||||||
A. Patrick Bernard |
|
|||||||||||||||||||||||||||||||||||||||||||||
Annual Bonus(1) |
$ | 91,547 | $ | 183,094 | $ | 366,188 | ||||||||||||||||||||||||||||||||||||||||
PSUs |
1/15/2015 | 6,278 | 313,900 | 627,800 | 1,255,600 | |||||||||||||||||||||||||||||||||||||||||
SPSUs |
3/01/2015 | 9,350 | (5) | 4,675 | 9,350 | 14,025 | $ 209,253 | |||||||||||||||||||||||||||||||||||||||
RSUs |
1/15/2015 | 18,175 | (4) | 313,882 | ||||||||||||||||||||||||||||||||||||||||||
Stock Options |
1/15/2015 | 50,220 | 17.27 | 313,875 | ||||||||||||||||||||||||||||||||||||||||||
William B. Masters |
|
|||||||||||||||||||||||||||||||||||||||||||||
Annual Bonus(1) |
$ | 105,350 | $ | 210,700 | $ | 421,400 | ||||||||||||||||||||||||||||||||||||||||
PSUs |
1/15/2015 | 6,020 | 301,000 | 602,000 | 1,204,00 | |||||||||||||||||||||||||||||||||||||||||
SPSUs |
3/01/2015 | 8,966 | (5) | 4,483 | 8,966 | 13,450 | $ 200,659 | |||||||||||||||||||||||||||||||||||||||
RSUs |
1/15/2015 | 17,429 | (4) | 300,999 | ||||||||||||||||||||||||||||||||||||||||||
Stock Options |
1/15/2015 | 48,160 | 17.27 | 301,000 |
(1) | The amounts shown reflect possible payments under our annual incentive bonus program for fiscal year 2015 under which the named executive officers were eligible to receive a cash bonus based on a target percentage of base salary upon our achievement of certain pre-established performance measures. Please see Executive Compensation Compensation Discussion and Analysis for more information regarding our annual incentive program. |
(2) | On December 8, 2014, the Compensation Committee approved the PSU, RSU and stock options awards for each of our named executive officers, which were effective January 15, 2015. |
(3) | The amounts shown reflect grants of PSUs under our incentive award plan. The PSUs have a three-year performance period. The performance period for the PSUs granted on January 15, 2015 is January 1, 2015 through December 31, 2017. Please see Executive Compensation Compensation Discussion and Analysis for more information regarding the PSUs and the LTI awards made by the Compensation Committee. |
(4) | The stock options and RSUs were granted under our incentive award plan, and vest ratably over a three-year period. Please see Executive Compensation Compensation Discussion and Analysis for more information regarding the LTI awards made by the Compensation Committee. |
(5) | The SPSUs were granted under our incentive award plan. On the grant date, each recipient received an award of a target number of SPSUs, entitling him to earn between 0% and 150% of the target award based on the level of free cash flow achieved by the Company for the fiscal year ending December 31, 2015. All earned SPUs have a value equal to an equivalent number of shares of the Companys common stock and were paid out in early April 2016. Please see Executive Compensation Compensation Discussion and Analysis for more information regarding the LTI awards made by the Compensation Committee. |
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55 | ||||
EXECUTIVE COMPENSATION |
The following table sets forth the outstanding equity awards held by our named executive officers as of December 31, 2015.
Outstanding Equity Awards at 2015 Year-End
Name |
Option Awards | Stock Awards | ||||||||||||||||||||||||||||||
Number of Unexercised Options |
Number of |
Option |
Option |
Number of |
Market |
Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested(3) |
Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(2) |
|||||||||||||||||||||||||
David D. Dunlap |
144,370 | | $25.49 | 04/28/2020 | 146,130 | $1,968,371 | | | ||||||||||||||||||||||||
60,211 | | $34.60 | 12/10/2020 | |||||||||||||||||||||||||||||
66,716 | | $28.59 | 12/08/2021 | |||||||||||||||||||||||||||||
36,960 | | $28.57 | 02/10/2022 | |||||||||||||||||||||||||||||
106,904 | 53,452 | $23.03 | 01/15/2023 | |||||||||||||||||||||||||||||
71,943 | 143,884 | $26.02 | 01/15/2024 | |||||||||||||||||||||||||||||
| 240,000 | $17.27 | 01/15/2025 | |||||||||||||||||||||||||||||
Robert S. Taylor |
| 47,362 | $637,966 | 14,499 | $195,302 | |||||||||||||||||||||||||||
24,000 | | $24.99 | 02/23/2016 | |||||||||||||||||||||||||||||
14,591 | | $35.69 | 12/14/2016 | |||||||||||||||||||||||||||||
15,908 | | $35.84 | 12/06/2017 | |||||||||||||||||||||||||||||
41,186 | | $12.86 | 12/04/2018 | |||||||||||||||||||||||||||||
27,655 | | $20.30 | 12/10/2019 | |||||||||||||||||||||||||||||
40,725 | | $21.93 | 04/01/2020 | |||||||||||||||||||||||||||||
18,246 | | $34.60 | 12/10/2020 | |||||||||||||||||||||||||||||
20,237 | | $28.59 | 12/08/2021 | |||||||||||||||||||||||||||||
13,419 | | $28.57 | 02/10/2022 | |||||||||||||||||||||||||||||
34,410 | 17,205 | $23.03 | 01/15/2023 | |||||||||||||||||||||||||||||
23,344 | 46,688 | $26.02 | 01/15/2024 | |||||||||||||||||||||||||||||
| 77,875 | $17.27 | 01/15/2025 | |||||||||||||||||||||||||||||
Brian K. Moore |
19,918 | | $20.01 | 04/20/2016 | 43,096 | $580,503 | 13,193 | $177,710 | ||||||||||||||||||||||||
20,998 | | $16.56 | 01/31/2017 | |||||||||||||||||||||||||||||
31,437 | | $16.29 | 03/20/2017 | |||||||||||||||||||||||||||||
44,276 | | $23.29 | 01/31/2021 | |||||||||||||||||||||||||||||
40,077 | | $28.09 | 01/31/2022 | |||||||||||||||||||||||||||||
31,314 | 15,657 | $23.03 | 01/15/2023 | |||||||||||||||||||||||||||||
21,241 | 42,482) | $26.02 | 01/15/2024 | |||||||||||||||||||||||||||||
| 70,860 | $17.27 | 01/15/2025 | |||||||||||||||||||||||||||||
A. Patrick Bernard |
| 30,544 | $411,428 | 9,350 | $125,945 | |||||||||||||||||||||||||||
15,000 | | $24.99 | 02/23/2016 | |||||||||||||||||||||||||||||
9,120 | | $35.69 | 12/14/2016 | |||||||||||||||||||||||||||||
13,729 | | $35.84 | 12/06/2017 | |||||||||||||||||||||||||||||
33,824 | | $12.86 | 12/04/2018 | |||||||||||||||||||||||||||||
22,712 | | $20.30 | 12/10/2019 | |||||||||||||||||||||||||||||
40,725 | | $21.93 | 04/01/2020 | |||||||||||||||||||||||||||||
14,984 | | $34.60 | 12/10/2020 | |||||||||||||||||||||||||||||
16,621 | | $28.59 | 12/08/2021 | |||||||||||||||||||||||||||||
5,666 | | $28.57 | 02/10/2022 | |||||||||||||||||||||||||||||
22,194 | 11,097 | $23.03 | 01/15/2023 | |||||||||||||||||||||||||||||
15,054 | 30,108 | $26.02 | 01/15/2024 | |||||||||||||||||||||||||||||
| 50,220 | $17.27 | 01/15/2025 | |||||||||||||||||||||||||||||
William B. Masters |
8,413 | | $40.69 | 02/28/2018 | 29,101 | $391,990 | 8,966 | $120,772 | ||||||||||||||||||||||||
25,227 | | $12.86 | 12/04/2018 | |||||||||||||||||||||||||||||
16,939 | | $20.30 | 12/10/2019 | |||||||||||||||||||||||||||||
32,000 | | $21.93 | 04/01/2020 | |||||||||||||||||||||||||||||
11,175 | | $34.60 | 12/10/2020 | |||||||||||||||||||||||||||||
12,395 | | $28.59 | 12/08/2021 | |||||||||||||||||||||||||||||
7,461 | | $28.57 | 02/10/2022 | |||||||||||||||||||||||||||||
20,313 | 10,157 | $23.03 | 01/15/2023 | |||||||||||||||||||||||||||||
14,437 | 28,872 | $26.02 | 01/15/2024 | |||||||||||||||||||||||||||||
| 48,160 | $17.27 | 01/15/2025 |
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56 | ||||
EXECUTIVE COMPENSATION |
(1) | The shares of restricted stock and restricted stock units held by our named executive officers as of December 31, 2015 vest as follows, subject to continued service through the vesting date: |
Name |
Total Unvested Restricted Stock/RSUs |
Vesting Schedule | ||
Mr. Dunlap |
146,130 | 69,010 shares vesting on 1/15/16 | ||
48,168 shares vesting on 1/15/17 | ||||
28,952 shares vesting on 1/15/18 | ||||
Mr. Taylor |
47,362 | 22,339 shares vesting on 1/15/16 | ||
15,629 shares vesting on 1/15/17 | ||||
9,394 shares vesting on 1/15/18 | ||||
Mr. Moore |
43,096 | 20,326 shares vesting on 1/15/16 | ||
14,222 shares vesting on 1/15/17 | ||||
8,548 shares vesting on 1/15/18 | ||||
Mr. Bernard |
30,544 | 14,407 shares vesting on 1/15/16 | ||
10,079 shares vesting on 1/15/17 | ||||
6,058 shares vesting on 1/15/18 | ||||
Mr. Masters |
29,101 | 13,626 shares vesting on 1/15/16 | ||
9,665 shares vesting on 1/15/17 | ||||
5,810 shares vesting on 1/15/18 |
(2) | Based on the closing price of our common stock on December 31, 2015 of $13.47, as reported on the NYSE. |
(3) | Represents the maximum award of SPSUs granted to and held by each of our named executives (other than Mr. Dunlap), which awards are earned based on the level of the Companys 2015 free cash flow and continued service during the three-year period ending December 31, 2017. |
(4) | Options will vest ratably over a three-year period from the date of grant, subject to continued service through the vesting date. |
The following table sets forth certain information regarding the exercise of stock options and the vesting of restricted stock and restricted stock units during the fiscal year ended December 31, 2015 for each of the named executive officers.
Option Exercises and Stock Vested in 2015
Option Awards | Stock Awards | |||||||
Number of Shares Acquired on Exercise |
Value Realized on Exercise(1) |
Number of Shares Acquired on Vesting |
Value Realized on Vesting(2) | |||||
David D. Dunlap |
| | 56,240 | $1,024,012 | ||||
Robert S. Taylor |
60,000 | $228,900 | 18,192 | $ 331,520 | ||||
Brian K. Moore |
| | 81,715 | $1,224,703 | ||||
A. Patrick Bernard |
37,500 | $166,875 | 11,834 | $ 215,355 | ||||
William B. Masters |
| | 9,949 | $ 181,978 |
(1) | The value realized on exercise of option awards is based on the difference between the closing sale price on the exercise date and the exercise price of each option. |
(2) | The value realized is based on the closing sale price on the vesting date of the award. |
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57 | ||||
EXECUTIVE COMPENSATION |
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58 | ||||
EXECUTIVE COMPENSATION |
Nonqualified Deferred Compensation for 2015
Name |
Executive Contributions in 2015(1) |
Registrant Contributions in 2015(2) |
Aggregate Earnings in 2015 |
Aggregate Withdrawals/ Distributions |
Aggregate Balance at 12/31/15 | |||||
David D. Dunlap |
||||||||||
NQDC Plan |
| | $ 331(3) | | $ 283,529 | |||||
SERP |
| $257,885 | $ 17,642(4) | | $ 709,036(6) | |||||
Robert S. Taylor |
||||||||||
NQDC Plan |
| | | | | |||||
SERP |
| $285,376 | $ 45,836(4) | | $1,457,302(6) | |||||
Brian K. Moore |
||||||||||
NQDC Plan |
| | | | ||||||
SERP |
| $224,844 | $ 8,082(4) | | $ 431,607(6) | |||||
A. Patrick Bernard |
||||||||||
NQDC Plan |
$557,627 | | $164,041(3) | | $5,551,020(5) | |||||
SERP |
| $153,074 | $ 28,060(4) | | $ 870,490(6) | |||||
William B. Masters |
||||||||||
NQDC Plan |
$235,525 | | $ 7,417(3) | | $ 333,724(5) | |||||
SERP |
| $117,436 | $ 11,986(4) | | $ 423,413(6) |
(1) | Of the contributions reflected in this column, the following contributions are part of the total compensation for 2015 and are included under the salary column in the Summary Compensation Table herein: Mr. Bernard $43,460 and Mr. Masters $50,012. The remainder of the contributions reported in this column for Mr. Bernard and Mr. Masters were part of the total compensation reported for 2014 but paid in 2015. |
(2) | The amounts reflected are part of each executives total compensation for 2015, and are included under the all other compensation column in the Summary Compensation Table herein. |
(3) | With regard to the NQDC Plan, participant contributions are treated as if invested in one or more investment vehicles selected by the participant. The annual rate of return for these funds for fiscal year 2015 was as follows: |
Fund | One Year Total Return | |
Nationwide VIT Money Market V |
0% | |
JPMorgan IT Core Bond 1 |
-1.12% | |
PIMCO VIT Real Return Admin |
-2.70% | |
MFS VIT Value Svc |
-0.93% | |
Dreyfus Stock Index Initial |
1.11% | |
American Funds IS Growth 2 |
6.86% | |
JPMorgan IT Mid Cap Value 1 |
-2.66% | |
Janus Aspen Enterprise Svc |
3.77% | |
DFA VA U.S. Targeted Value |
-5.23% | |
Vanguard VIF Small Company Growth Inv |
-2.75% | |
MFS VIT II International Value Svc |
6.32% | |
American Funds IS International 2 |
-4.53% | |
Invesco VIF Global Real Estate I |
-1.48% |
(4) | Pursuant to the terms of the SERP, aggregate earnings for 2015 were calculated at a rate of interest equal to 4.06%, which was our after-tax long-term borrowing rate. |
(5) | With regard to the NQDC Plan, of the contributions reflected in this column, $555,925 and $146,635 of Mr. Bernards contributions are part of his total compensation for 2014 and 2013, respectively, and $209,491 and $21,865 and of Mr. Masters contributions are part of his total compensation for 2014 and 2013, respectively, each of which are included under the applicable columns in the Summary Compensation Table herein. |
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59 | ||||
EXECUTIVE COMPENSATION |
(6) | With regard to the SERP, the following amounts reflected in this column for each named executive officer are part of his total compensation for 2014 and are included under the all other compensation column in the Summary Compensation Table: Mr. Dunlap $75,000, Mr. Taylor $108,160, Mr. Moore $88,575, Mr. Bernard $62,775 and Mr. Masters $36,120. The following amounts reflected in this column for each named executive officer are part of his total compensation for 2013 and are included under the all other compensation column in the Summary Compensation Table: Mr. Dunlap $67,425, Mr. Taylor $131,000, Mr. Moore $105,859, Mr. Bernard $74,439 and Mr. Masters $40,087. |
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60 | ||||
EXECUTIVE COMPENSATION |
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL
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61 | ||||
EXECUTIVE COMPENSATION |
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62 | ||||
EXECUTIVE COMPENSATION |
Transaction
Value |
Sharing
Pool |
Sharing Pool as a Percentage of Transaction Value (Approximate) | ||
$1.0 |
$14,200,000 | 1.42% | ||
$2.0 |
$17,125,601 | 0.86% | ||
$2.5 |
$17,726,908 | 0.71% | ||
$3.0 |
$18,345,266 | 0.61% | ||
$3.5 |
$18,981,202 | 0.54% | ||
$4.0 |
$19,635,260 | 0.49% | ||
$4.5 |
$20,308,000 | 0.45% | ||
$5.0 |
$21,000,000 | 0.42% | ||
$5.5 |
$21,692,000 | 0.39% | ||
$6.0 |
$22,403,260 | 0.37% | ||
$6.5 |
$23,134,358 | 0.36% | ||
$7.0 |
$23,885,889 | 0.34% | ||
$7.5 |
$24,658,465 | 0.33% | ||
$8.0 |
$25,452,719 | 0.32% | ||
$8.5 |
$26,269,301 | 0.31% | ||
$9.0 |
$27,108,880 | 0.30% | ||
$9.5 |
$27,972,146 | 0.29% | ||
$10.0 |
$28,859,811 | 0.29% | ||
$10.5 |
$29,772,605 | 0.28% | ||
$11.0 |
$30,711,283 | 0.28% | ||
$20.0 |
$34,000,000 | 0.17% |
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63 | ||||
EXECUTIVE COMPENSATION |
Name |
Lump Sum Severance Payment |
Outstanding |
Outstanding Stock/RSUs |
Outstanding |
Outstanding |
Health Benefits |
Tax Gross-Up |
Total |
||||||||||||||||||||||
David D. Dunlap |
||||||||||||||||||||||||||||||
Retirement |
n/a | (2 | ) | (2 | ) | n/a | (3 | ) | n/a | n/a | | |||||||||||||||||||
Death |
n/a | $ 0 | $1,968,371 | n/a | (3 | ) | n/a | n/a | $ | 1,968,371 | ||||||||||||||||||||
Disability/Incapacity |
$ | 4,250,000 | $ 0 | $1,968,371 | n/a | (3 | ) | $30,858 | n/a | $ | 6,249,229 | |||||||||||||||||||
Termination No Cause |
$ | 4,250,000 | (2 | ) | (2 | ) | n/a | (3 | ) | $30,858 | n/a | $ | 4,280,858 | |||||||||||||||||
Termination Good Reason |
$ | 4,250,000 | n/a | n/a | n/a | (3 | ) | $30,858 | n/a | $ | 4,280,858 | |||||||||||||||||||
Termination in connection with Change of Control(1) |
$ | 9,356,971 | $ 0 | $1,968,371 | n/a | $12,000,000 | $30,858 | n/a | $ | 23,356,200 | ||||||||||||||||||||
Robert S. Taylor |
||||||||||||||||||||||||||||||
Retirement |
n/a | (2 | ) | (2 | ) | $548,970 | (3 | ) | n/a | n/a | $ | 548,970 | ||||||||||||||||||
Death |
n/a | $ 0 | $ 893,990 | $548,970 | (3 | ) | n/a | n/a | $ | 1,442,960 | ||||||||||||||||||||
Disability/Incapacity |
$ | 1,892,800 | $ 0 | $ 893,990 | $548,970 | (3 | ) | $30,858 | n/a | $ | 3,366,618 | |||||||||||||||||||
Termination No Cause |
$ | 1,892,800 | (2 | ) | (2 | ) | $548,970 | (3 | ) | $30,858 | n/a | $ | 2,472,628 | |||||||||||||||||
Termination Good Reason |
$ | 1,892,800 | n/a | n/a | $548,970 | (3 | ) | $30,858 | n/a | $ | 2,472,628 | |||||||||||||||||||
Termination in connection with Change of Control(1) |
$ | 1,980,218 | $ 0 | $ 893,990 | $548,970 | $3,893,600 | $30,858 | n/a | $ | 7,347,636 | ||||||||||||||||||||
Brian K. Moore |
||||||||||||||||||||||||||||||
Retirement |
n/a | (2 | ) | (2 | ) | $499,508 | (3 | ) | n/a | n/a | $ | 499,508 | ||||||||||||||||||
Death |
n/a | $ 0 | $ 813,453 | $499,508 | (3 | ) | n/a | n/a | $ | 1,312,961 | ||||||||||||||||||||
Disability/Incapacity |
$ | 2,011,391 | $ 0 | $ 813,453 | $499,508 | (3 | ) | $26,126 | n/a | $ | 3,350,478 | |||||||||||||||||||
Termination No Cause |
$ | 2,011,391 | $ 0 | (2 | ) | $499,508 | (3 | ) | $26,126 | n/a | $ | 2,573,025 | ||||||||||||||||||
Termination Good Reason |
$ | 2,011,391 | n/a | n/a | $499,508 | (3 | ) | $26,126 | n/a | $ | 2,573,025 | |||||||||||||||||||
Termination in connection with Change in Control |
$ | 2,098,690 | $0 | $813,453 | $499,508 | $3,543,200 | $26,126 | n/a | $ | 6,980,977 | ||||||||||||||||||||
A. Patrick Bernard |
||||||||||||||||||||||||||||||
Retirement |
n/a | (2 | ) | (2 | ) | $354,019 | (3 | ) | n/a | n/a | $ | 354,019 | ||||||||||||||||||
Death |
n/a | $ 0 | $ 576,529 | $354,019 | (3 | ) | n/a | n/a | $ | 930,545 | ||||||||||||||||||||
Disability/Incapacity |
$ | 1,386,281 | $ 0 | $ 576,529 | $354,019 | (3 | ) | $30,858 | n/a | $ | 2,347,687 | |||||||||||||||||||
Termination No Cause |
$ | 1,386,281 | (2 | ) | (2 | ) | $354,019 | (3 | ) | $30,858 | n/a | $ | 1,771,158 | |||||||||||||||||
Termination Good Reason |
$ | 1,386,281 | n/a | n/a | $354,019 | (3 | ) | $30,858 | n/a | $ | 1,771,158 | |||||||||||||||||||
Termination in connection with Change of Control(1) |
$ | 1,429,152 | $ 0 | $ 576,529 | $354,019 | $2,511,200 | $30,858 | n/a | $ | 4,901,758 | ||||||||||||||||||||
William B. Masters |
||||||||||||||||||||||||||||||
Retirement |
n/a | (2 | ) | (2 | ) | $339,484 | (3 | ) | n/a | n/a | $ | 339,484 | ||||||||||||||||||
Death |
n/a | $ 0 | $ 550,303 | $339,484 | (3 | ) | n/a | n/a | $ | 889,787 | ||||||||||||||||||||
Disability/Incapacity |
$ | 1,595,300 | $ 0 | $ 550,303 | $339,484 | (3 | ) | $30,858 | n/a | $ | 2,515,945 | |||||||||||||||||||
Termination No Cause |
$ | 1,595,300 | (2 | ) | (2 | ) | $339,484 | (3 | ) | $30,858 | n/a | $ | 1,965,642 | |||||||||||||||||
Termination Good Reason |
$ | 1,595,300 | n/a | n/a | $339,484 | (3 | ) | $30,858 | n/a | $ | 1,965,642 | |||||||||||||||||||
Termination in connection with Change of Control(1) |
$ | 2,994,862 | $ 0 | $ 550,303 | $339,484 | $2,408,000 | $30,858 | n/a | $ | 6,323,507 |
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64 | ||||
EXECUTIVE COMPENSATION |
(1) | Certain of the benefits described in the table would be achieved in the event of a change of control alone, and would not require a termination of the executives employment. In particular, pursuant to the terms of our incentive award plans and the individual award agreements, upon a change of control as defined in the plans, (i) all outstanding stock options would immediately vest, (ii) all restrictions on outstanding restricted shares and RSUs would lapse, (iii) all outstanding SPSUs would be paid out as if the maximum level of performance had been achieved and (iv) all outstanding PSUs would be paid out as if the maximum level of performance had been achieved. In addition to the amounts set forth in the table above, upon a qualifying termination in connection with a change in control, each executive is also entitled to outplacement assistance of up to $10,000, and the lump sum severance payment due each executive would also include the following: |
Name |
Change of Control Severance Plan Payment |
Target Bonus | ||
Mr. Dunlap |
$8,606,971 | $750,000 | ||
Mr. Taylor |
$1,726,691 | $253,527 | ||
Mr. Moore |
$1,803,440 | $295,250 | ||
Mr. Bernard |
$1,246,059 | $183,094 | ||
Mr. Masters |
$2,784,162 | $210,700 |
(2) | Pursuant to the terms of the restricted stock, RSUs and stock option agreements, upon termination of the executives employment as a result of retirement without cause or termination by the Company, the Compensation Committee, in its discretion, may elect to accelerate the vesting of such awards. For purposes of the table above, we have assumed that none of the executives restricted stock, RSUs and stock options would accelerate on the applicable termination date. |
(3) | Pursuant to the terms of the PSU and SPSU award agreements, if an executives employment terminates prior to the end of the applicable performance period as a result of retirement, death, disability, or termination for any reason other than the voluntary termination by the executive or termination by the Company for cause, then the executive retains a pro-rata portion of outstanding award based on his employment during the performance period, and the remaining units will be forfeited. The retained units will be valued and paid out to the executive in accordance with their original payment schedule based on the Companys achievement of the applicable performance criteria. Upon a voluntary termination by the executive or a termination by the Company for cause, all outstanding units are forfeited. With respect to the SPSUs, in March 2016, the Compensation Committee determined that the Company had achieved the maximum level of performance of the free cash flow metric applicable to the outstanding SPSUs, thus the amounts in the table reflect the year-end value of 150% of the target 2014 and 2015 SPSU award. |
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65 | ||||
QUESTIONS AND ANSWERS ABOUT THE 2016 ANNUAL MEETING
|
Why am I receiving this proxy statement?
On what matters will I be voting?
When and where will the annual meeting be held?
How many votes may I cast?
How many shares of our common stock are eligible to be voted?
How many shares of our common stock must be present to hold the annual meeting?
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66 | ||||
QUESTIONS AND ANSWERS ABOUT THE 2016 ANNUAL MEETING |
What are my voting options on each proposal? How does our Board recommend that I vote? How many votes are required to approve each proposal?
Proposal | Your Voting Options | Boards Recommendation |
Vote Required to Approve the Proposal | |||
No. 1: Election of the eight director nominees | You may vote FOR each nominee or choose to WITHHOLD your vote for all or none or one of the nominees | FOR each of the eight director nominees | Directors will be elected by plurality. That means the nominees who receive the greatest number of for votes will be elected, except that a nominee who receives a greater number of withhold than for votes must tender his resignation | |||
No. 2: Approval of the say-on-pay proposal (advisory) | You may vote FOR or AGAINST this proposal or ABSTAIN from voting | FOR approval of our executive compensation for 2015 as disclosed in this proxy statement | Affirmative vote of the holders of a majority of the shares of our common stock present and entitled to vote on the proposal | |||
No. 3: Adoption of the 2016 Incentive Award Plan | You may vote FOR or AGAINST this proposal or ABSTAIN from voting | FOR approval of our 2016 Incentive Award Plan | Affirmative vote of the holders of a majority of the shares of our common stock present and entitled to vote on the proposal | |||
No. 4: Ratification of KPMG as our independent registered public accounting firm for 2016 | You may vote FOR or AGAINST this proposal or ABSTAIN from voting | FOR ratification of our selection of KPMG as our independent auditor for 2016 | Affirmative vote of the holders of a majority of the shares of our common stock present and entitled to vote on the proposal |
What is the difference between holding shares as a stockholder of record and as a beneficial owner?
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67 | ||||
QUESTIONS AND ANSWERS ABOUT THE 2016 ANNUAL MEETING |
What happens if I complete the proxy or voting instruction card? What if I dont vote for a proposal? On which proposals may my shares be voted without receiving voting instructions from me?
What are the effects of abstentions and broker non-votes on each proposal?
How do I vote?
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68 | ||||
QUESTIONS AND ANSWERS ABOUT THE 2016 ANNUAL MEETING |
Can I change my vote?
Who pays for soliciting proxies?
Could other matters be decided at the meeting?
What happens if the meeting is postponed or adjourned?
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69 | ||||
2017 STOCKHOLDER NOMINATIONS AND PROPOSALS
|
If you want us to consider including a proposal in next years proxy statement, you must deliver it in writing c/o Secretary, Superior Energy Services, Inc., 1001 Louisiana Street, Suite 2900, Houston, Texas 77002, by December 15, 2016.
Our Bylaws require that stockholders who wish to make a nomination for the election of a director or to bring any other matter before a meeting of the stockholders must give written notice of their intent to our Secretary not more than 120 days and not less than 90 days in advance of the first anniversary of the preceding years annual meeting of stockholders. For our 2017 annual meeting, a stockholders notice must be received by our Secretary between and including January 24, 2017 and February 23, 2017. Such notice must comply with the requirements set forth in our Bylaws. A copy of our Bylaws is available upon request c/o Secretary, Superior Energy Services, Inc., 1001 Louisiana Street, Suite 2900, Houston, Texas 77002. We urge our stockholders to send their proposals by certified mail, return receipt requested.
By Order of the Board of Directors,
WILLIAM B. MASTERS
Executive Vice President, General Counsel and
Secretary
Houston, Texas
April 13, 2016
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70 | ||||
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SUPERIOR ENERGY SERVICES, INC.
2016 INCENTIVE AWARD PLAN
1. Purpose.
The Plans purpose is to enhance the Companys ability to attract, retain and motivate persons who make (or are expected to make) important contributions to the Company by providing these individuals with equity ownership opportunities. Capitalized terms used in the Plan are defined in Section 11.
2. Eligibility.
Service Providers are eligible to be granted Awards under the Plan, subject to the limitations described herein.
3. Administration and Delegation.
(a) Administration. The Plan is administered by the Administrator. The Administrator has authority to determine which Service Providers receive Awards, grant Awards and set Award terms and conditions, subject to the conditions and limitations in the Plan. The Administrator also has the authority to take all actions and make all determinations under the Plan, to interpret the Plan and Award Agreements and to adopt, amend and repeal Plan administrative rules, guidelines and practices as it deems advisable. The Administrator may correct defects and ambiguities, supply omissions and reconcile inconsistencies in the Plan or any Award or Award Agreement as it deems necessary or appropriate to administer the Plan and any Awards. The Administrators determinations under the Plan are in its sole discretion and will be final and binding on all persons having or claiming any interest in the Plan or any Award.
(b) Appointment of Committees. To the extent Applicable Laws permit, the Board may delegate any or all of its powers under the Plan to one or more Committees. The Board may abolish any Committee or re-vest in itself any previously delegated authority at any time.
4. Stock Available for Awards.
(a) Number of Shares. Subject to adjustment under Section 8 and the terms of this Section 4, the aggregate number of Shares which may be issued pursuant to Awards under the Plan is the sum of (i) five million (5,000,000) Shares, plus (ii) any Shares which, as of the Effective Date, remain available for issuance under the Prior Plan, plus (iii) any Shares subject to awards outstanding under the Prior Plan as of the Effective Date which, on or after the Effective Date, are forfeited or otherwise terminate or expire for any reason without the issuance of Shares to the holder thereof (the Share Limit). Shares issued under the Plan may consist of authorized but unissued Shares, Shares purchased on the open market or treasury Shares.
(b) Share Recycling. Except as provided in subsection (c) below, if all or any part of an Award (or, after Effective Date, an award granted under the Prior Plan) expires, lapses or is terminated, exchanged for cash, surrendered, repurchased, canceled without having been fully exercised or forfeited, in any case, in a manner that results in the Company acquiring Shares covered by the Award or award (as applicable) for less than Fair Market Value or not issuing any Shares covered by the Award or award (as applicable), the unused Shares covered by the Award or award (as applicable) will become or again be available for Award grants under the Plan.
(c) Limitation on Share Recycling. Notwithstanding anything to the contrary contained herein, the following Shares shall not be added to the Shares authorized for grant under Section 4(a) and shall not be available for future grants of Awards:
(i) Shares tendered by a Participant or withheld by the Company in payment of the exercise price of an Option;
(ii) Shares tendered by the Participant or withheld by the Company to satisfy any tax withholding obligation with respect to an Award;
2016 SPN Proxy Statement |
A-1 |
ANNEX A |
(iii) Shares subject to a Stock Appreciation Right that are not issued in connection with the stock settlement of the Stock Appreciation Right on exercise thereof; and
(iv) Shares purchased on the open market with the cash proceeds from the exercise of Options.
In addition, the payment of Dividend Equivalents in cash in conjunction with any outstanding Awards shall not be counted against the Shares available for issuance under the Plan.
(d) Incentive Stock Option Limitations. Notwithstanding anything to the contrary herein, no more than 1,000,000 Shares may be issued pursuant to the exercise of Incentive Stock Options, and no Shares may again be optioned, granted or awarded if it would cause an Incentive Stock Option not to qualify as an Incentive Stock Option.
(e) Substitute Awards. In connection with an entitys merger or consolidation with the Company or the Companys acquisition of an entitys property or stock, the Administrator may grant Awards in substitution for any options or other stock or stock-based awards granted before such merger or consolidation by such entity or its affiliate. Substitute Awards may be granted on such terms as the Administrator deems appropriate, notwithstanding limitations on Awards in the Plan. Substitute Awards will not count against the Share Limit, except that Shares acquired by exercise of substitute Incentive Stock Options will count against the maximum number of Shares that may be issued pursuant to the exercise of Incentive Stock Options under the Plan.
(f) Individual Award Limitations. Notwithstanding any provision in the Plan to the contrary, and subject to adjustment as provided in Section 8, the maximum aggregate number of Shares with respect to one or more Awards denominated in Shares that may be granted to any one person during any fiscal year of the Company shall be 1,000,000 Shares and the maximum aggregate amount of cash that may be paid in cash to any one person during any fiscal year of the Company with respect to one or more Awards payable in cash and not denominated in Shares shall be $10,000,000. In addition, no more than five percent (5%) of the shares subject to the Share Limit may be issued as Restricted Stock, Restricted Stock Units and Other Stock or Cash Based Awards that are denominated in Shares without compliance with, and all Options and Stock Appreciation Rights granted to Employees must comply with, the minimum vesting periods provided in Section 9(k) of the Plan; provided, that no Awards may be granted under the foregoing five percent (5%) limit to Employees subject to Section 16 of the Exchange Act.
(g) Non-Employee Director Award Limit. Notwithstanding any provision to the contrary in the Plan, the maximum aggregate grant date fair value of Awards granted to a non-employee Director as compensation for services as a non-employee Director during any fiscal year of the Company may not exceed $400,000. The Administrator may make exceptions to this limit for individual non-employee directors in extraordinary circumstances, as the Administrator may determine in its discretion, provided that the non-employee director receiving such additional compensation may not participate in the decision to award such compensation or in other compensation decisions involving non-employee Directors.
5. Stock Options and Stock Appreciation Rights.
(a) General. The Administrator may grant Options or Stock Appreciation Rights to Service Providers subject to the limitations in the Plan, including Section 9(i) with respect to Incentive Stock Options. The Administrator will determine the number of Shares covered by each Option and Stock Appreciation Right, the exercise price of each Option and Stock Appreciation Right and the conditions and limitations applicable to the exercise of each Option and Stock Appreciation Right. A Stock Appreciation Right shall entitle the Participant (or other person entitled to exercise the Stock Appreciation Right pursuant to the Plan) to exercise all or a specified portion of the Stock Appreciation Right (to the extent then exercisable pursuant to its terms) and to receive from the Company an amount determined by multiplying the difference obtained by subtracting the exercise price per share of the Stock Appreciation Right from the Fair Market Value on the date of exercise of the Stock Appreciation Right by the number of Shares with respect to which the Stock Appreciation Right shall have been exercised, subject to any limitations of the Plan or as the Administrator may impose.
A-2 | 2016 SPN Proxy Statement |
ANNEX A |
(b) Exercise Price. The Administrator will establish each Options and Stock Appreciation Rights exercise price and specify the exercise price in the Award Agreement. The exercise price will not be less than 100% of the Fair Market Value on the grant date of the Option or Stock Appreciation Right.
(c) Duration of Options. Each Option or Stock Appreciation Right will be exercisable at such times and as specified in the Award Agreement, provided that the term of an Option or Stock Appreciation Right will not exceed ten years.
(d) Exercise. Options and Stock Appreciation Rights may be exercised by delivering to the Company a written notice of exercise, in a form the Administrator approves (which may be electronic), signed by the person authorized to exercise the Option or Stock Appreciation Right, together with, as applicable, payment in full (i) as specified in Section 5(e)for the number of Shares for which the Award is exercised and (ii) as specified in Section 9(e) for any applicable withholding taxes. Unless the Administrator otherwise determines, an Option or Stock Appreciation Right may not be exercised for a fraction of a Share.
(e) Payment Upon Exercise. The exercise price of an Option must be paid in cash or by check payable to the order of the Company or, subject to Section 10(i), any Company insider trading policy (including blackout periods) and Applicable Laws, by:
(i) if there is a public market for Shares at the time of exercise, unless the Administrator otherwise determines, (A) delivery (including telephonically to the extent permitted by the Company) of an irrevocable and unconditional undertaking by a broker acceptable to the Company to deliver promptly to the Company sufficient funds
(ii) pay the exercise price, or (B) the Participants delivery to the Company of a copy of irrevocable and unconditional instructions to a broker acceptable to the Company to deliver promptly to the Company cash or a check sufficient to pay the exercise price;
(iii) delivery (either by actual delivery or attestation) of Shares owned by the Participant valued at their Fair Market Value, provided (A) such payment method is then permitted under Applicable Laws, (B) such Shares, if acquired directly from the Company, were owned by the Participant for a minimum time period that the Company may establish and (C) such Shares are not subject to repurchase, forfeiture, unfulfilled vesting or other similar requirements;
(iv) surrendering Shares then issuable upon the Options exercise valued at their Fair Market Value on the exercise date;
(v) to the extent permitted by the Administrator, delivery of a promissory note or any other property that the Administrator determines is good and valuable consideration; or
(vi) any combination of the above permitted payment forms (including cash or check).
(f) Additional Terms of Incentive Stock Options. The Administrator may grant Options intended to qualify as Incentive Stock Options only to employees of the Company, any of its present or future parent corporations or subsidiary corporations as defined in Sections 424(e) or (f) of the Code, respectively, and any other entities the employees of which are eligible to receive Incentive Stock Options under the Code. No person qualifying as a Greater Than 10% Stockholder may be granted an Incentive Stock Option. The Administrator may modify an Incentive Stock Option with the holders consent to disqualify such Option as an Incentive Stock Option. All Options intended to qualify as Incentive Stock Options will be subject to and construed consistently with Section 422 of the Code. By accepting an Incentive Stock Option, the Participant agrees to give prompt notice to the Company of dispositions or other transfers (other than in connection with a Change in Control) of Shares acquired from the Option made within (i) two years from the grant date of the Option or (ii) one year after the transfer of such Shares to the Participant, specifying the date of the disposition or other transfer and the amount the Participant realized, in cash, other property, assumption of indebtedness or other consideration, in such disposition or other transfer. Neither the Company nor the Administrator will be liable to a Participant, or any other party, (i) if an Option (or any part thereof) intended to qualify as an Incentive Stock Option fails to qualify as an
2016 SPN Proxy Statement |
A-3 |
ANNEX A |
Incentive Stock Option or (ii) for the Administrators actions or omissions that cause an Option not to qualify as an Incentive Stock Option, including the conversion of an Incentive Stock Option to a Non-Qualified Stock Option or the grant of an Option intended as an Incentive Stock Option that fails to qualify as an Incentive Stock Option. Any Option that is intended to qualify as an Incentive Stock Option, but fails to qualify for any reason, including the portion of any Option becoming exercisable with respect to Shares having a fair market value exceeding the $100,000 limitation under Treasury Regulation Section 1.422-4, will be a Non-Qualified Stock Option.
6. Restricted Stock; Restricted Stock Units.
(a) General. The Administrator may grant Restricted Stock, or the right to purchase Restricted Stock, to any Service Provider, subject to the Companys right to repurchase all or part of such shares at their issue price or other stated or formula price from the Participant (or to require forfeiture of such shares if issued at no cost) if conditions the Administrator specifies in the Award Agreement are not satisfied before the end of the applicable restriction period or periods that the Administrator establishes for such Award. In addition, the Administrator may grant to Service Providers Restricted Stock Units, which may be subject to vesting and forfeiture conditions during applicable restriction period or periods, as set forth in an Award Agreement. The Administrator will determine and set forth in the Award Agreement the terms and conditions for each Restricted Stock and Restricted Stock Unit Award, subject to the conditions and limitations contained in the Plan.
(b) Restricted Stock.
(i) Dividends. Participants holding shares of Restricted Stock will be entitled to all ordinary cash dividends paid with respect to such shares, unless the Administrator provides otherwise in the Award Agreement. In addition, unless the Administrator provides otherwise, if any dividends or distributions are paid in Shares, or consist of a dividend or distribution to holders of Common Stock of property other than an ordinary cash dividend, the Shares or other property will be subject to the same restrictions on transferability and forfeitability as the shares of Restricted Stock with respect to which they were paid. Notwithstanding anything to the contrary herein, with respect to any award of Restricted Stock with performance-based vesting, dividends which are paid prior to vesting shall only be paid out to the Participant holding such Restricted Stock to the extent that the performance-based vesting conditions are subsequently satisfied. All such dividend payments will be made no later than March 15 of the calendar year following the calendar year in which the right to the dividend payment becomes nonforfeitable.
Stock Certificates. The Company may require that the Participant deposit in escrow with the Company (or its designee) any stock certificates issued in respect of shares of Restricted Stock, together with a stock power endorsed in blank.
(iii) Section 83(b) Election. If a Participant makes an election under Section 83(b) of the Code to be taxed with respect to Shares of Restricted Stock as of the date of transfer of the Restricted Stock rather than as of the date(s) on which such Restricted Stock would otherwise be taxable to the Participant under Section 83(a) of the Code, the Participant shall be required to deliver a copy of such election to the Company promptly after filing such election with the Internal Revenue Service along with proof of the timely filing thereof with the Internal Revenue Service.
(c) Restricted Stock Units.
(i) Settlement. When a Restricted Stock Unit vests, the Participant will be entitled to receive from the Company one Share, an amount of cash or other property equal to the Fair Market Value of one Share on the settlement date or a combination of both, as the Administrator determines and as provided in the Award Agreement. The Administrator may provide that settlement of Restricted Stock Units will occur upon or as soon as reasonably practicable after the Restricted Stock Units vest or will instead be deferred, on a mandatory basis or at the Participants election, in a manner intended to comply with Section 409A.
(ii) Stockholder Rights. A Participant will have no rights of a stockholder with respect to Shares subject to any Restricted Stock Unit unless and until the Shares are delivered in settlement of the Restricted Stock Unit.
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7. Other Stock or Cash Based Awards; Dividend Equivalents.
(a) Other Stock or Cash Based Awards may be granted to Participants, including Awards entitling Participants to receive Shares to be delivered in the future and including annual or other period or long-term cash bonus awards (whether based on specified Performance Criteria or otherwise), in each case subject to the conditions and limitations in the Plan. Such Other Stock or Cash Based Awards will also be available as a payment form in the settlement of other Awards, as standalone payments and as payment in lieu of compensation to which a Participant is otherwise entitled. Other Stock or Cash Based Awards may be paid in Shares, cash or other property, as the Administrator determines. Subject to the provisions of the Plan, the Administrator will determine the terms and conditions of each Other Stock or Cash Based Award, including any purchase price, performance goal (which may be based on the Performance Criteria), transfer restrictions, and vesting conditions, which will be set forth in the applicable Award Agreement.
(b) Dividend Equivalents. If the Administrator provides, a grant of Restricted Stock Units or an Other Stock Award may provide a Participant with the right to receive Dividend Equivalents. Dividend Equivalents may be paid currently or credited to an account for the Participant, settled in cash or Shares and subject to the same restrictions on transferability and forfeitability as the Award with respect to which the Dividend Equivalents are paid and subject to other terms and conditions as set forth in the Award Agreement. Notwithstanding anything to the contrary herein, Dividend Equivalents with respect to an Award with performance-based vesting that are based on dividends paid prior to the satisfaction of the applicable performance conditions shall only be paid out to the Participant to the extent that the performance-based vesting conditions are subsequently satisfied. All such Dividend Equivalent payments will be made no later than March 15 of the calendar year following the calendar year in which the right to the Dividend Equivalent payment becomes nonforfeitable, unless determined otherwise by the Administrator.
8. Adjustments for Changes in Common Stock and Certain Other Events.
(a) In connection with any Equity Restructuring, notwithstanding anything to the contrary in this Section 8, the Administrator will equitably adjust each outstanding Award as it deems appropriate to effect the Equity Restructuring, which may include adjusting the number and type of securities subject to each outstanding Award and/or the Awards exercise price or grant price (if applicable), granting new Awards to Participants, and making a cash payment to Participants. The adjustments provided under this Section 8(a) will be nondiscretionary and final and binding on the affected Participant and the Company; provided that the Administrator will determine whether an adjustment is equitable.
(b) In the event that the Administrator determines that any dividend or other distribution (whether in the form of cash, Shares, other securities, or other property), reorganization, merger, consolidation, combination, repurchase, recapitalization, liquidation, dissolution, or sale, transfer, exchange or other disposition of all or substantially all of the assets of the Company, or sale or exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, or other similar corporate transaction or event, as determined by the Administrator, affects the Common Stock such that an adjustment is determined by the Administrator to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended by the Company to be made available under the Plan or with respect to any Award, then the Administrator may, in such manner as it may deem equitable, adjust any or all of:
(i) the number and kind of Shares (or other securities or property) with respect to which Awards may be granted or awarded (including, but not limited to, adjustments of the limitations in Section 4 hereof on the maximum number and kind of shares which may be issued and specifically including for the avoidance of doubt adjustments to the
(ii) individual award limitation set forth in Section 4(f));
(iii) the number and kind of Shares (or other securities or property) subject to outstanding Awards;
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(iv) the grant or exercise price with respect to any Award; and
(v) the terms and conditions of any Awards (including, without limitation, any applicable financial or other performance targets specified in an Award Agreement).
(c) In the event of any transaction or event described in Section 8(b) hereof (including without limitation any Change in Control) or any unusual or nonrecurring transaction or event affecting the Company or the financial statements of the Company, or any change in any Applicable Laws or accounting principles, the Administrator, on such terms and conditions as it deems appropriate, either by the terms of the Award or by action taken prior to the occurrence of such transaction or event and either automatically or upon the Participants request, is hereby authorized to take any one or more of the following actions whenever the Administrator determines that such action is appropriate in order to (x) prevent dilution or enlargement of the benefits or potential benefits intended by the Company to be made available under the Plan or with respect to any Award granted or issued under the Plan, (y) to facilitate such transaction or event or (z) give effect to such changes in Applicable Laws or accounting principles:
(i) To provide for the cancellation of any such Award in exchange for either an amount of cash or other property with a value equal to the amount that could have been obtained upon the exercise or settlement of the vested portion of such Award or realization of the Participants rights under the vested portion of such Award, as applicable; provided that, if the amount that could have been obtained upon the exercise or settlement of the vested portion of such Award or realization of the Participants rights, in any case, is equal to or less than zero, then the vested portion of such Award may be terminated without payment;
(ii) To provide that such Award shall vest and, to the extent applicable, be exercisable as to all shares covered thereby, notwithstanding anything to the contrary in the Plan or the provisions of such Award;
(iii) To provide that such Award be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and applicable exercise or purchase price, in all cases, as determined by the Administrator;
(iv) To make adjustments in the number and type of Shares (or other securities or property) subject to outstanding Awards, and/or in the terms and conditions of (including the grant or exercise price), and the criteria included in, outstanding Awards;
(v) To replace such Award with other rights or property selected by the Administrator; and/or
(vi) To provide that the Award will terminate and cannot vest, be exercised or become payable after the applicable event.
(d) Notwithstanding Section 8(b) or 8(c) above, if a Change in Control occurs and a Participants then-outstanding Awards are not continued, converted, assumed, or replaced with a substantially similar award by (i) the Company, or (ii) a successor entity or its parent or subsidiary (an Assumption), then immediately before the Change in Control such Awards will become fully vested, exercisable and payable, as applicable, and all forfeiture, repurchase and other restrictions on such Awards will lapse. Such Awards will be canceled upon the Change in Control in exchange for the right to receive the Change in Control consideration payable to other holders of Common Stock, which (A) may be on such terms and conditions generally applicable to holders of Common Stock under the Change in Control documents (including any escrow, earn-out or other deferred consideration provisions) or such other terms and conditions as the Administrator may provide, and (B) is determined based on the number of Shares subject to such Awards and net of any applicable exercise price; provided that if any Awards constitute nonqualified deferred compensation not payable upon the Change in Control without the imposition of taxes under Section 409A, the timing of such payments will be governed by the Award Agreement (subject to any deferred consideration provisions under the Change in Control documents); and provided, further, that if the amount to which a Participant would be entitled upon the settlement or exercise of
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such Award upon the Change in Control is zero or less, then such Award may be terminated without payment. The Administrator shall determine whether an Assumption of an Award has occurred in connection with a Change in Control.
(e) In the event of any pending stock dividend, stock split, combination or exchange of shares, merger, consolidation or other distribution (other than normal cash dividends) of Company assets to stockholders, or any other extraordinary transaction or change affecting the Shares or the share price of Common Stock, including any Equity Restructuring or any securities offering or other similar transaction, for administrative convenience, the Administrator may refuse to permit the exercise of any Award for up to 60 days before or after such transaction.
(f) Except as expressly provided in the Plan or the Administrators action under the Plan, no Participant will have any rights due to any subdivision or consolidation of Shares of any class, dividend payment, increase or decrease in the number of Shares of any class or dissolution, liquidation, merger, or consolidation of the Company or other corporation. Except as expressly provided with respect to an Equity Restructuring under Section 8(a) above or the Administrators action under the Plan, no issuance by the Company of shares of any class, or securities convertible into shares of any class, will affect, and no adjustment will be made regarding, the number of Shares subject to an Award or the Awards grant or exercise price. The existence of the Plan, any Award Agreements and the Awards granted hereunder will not affect or restrict in any way the Companys right or power to make or authorize (i) any adjustment, recapitalization, reorganization or other change in the Companys capital structure or its business, (ii) any merger, consolidation dissolution or liquidation of the Company or sale of Company assets or (iii) any sale or issuance of securities, including securities with rights superior to those of the Shares or securities convertible into or exchangeable for Shares. The Administrator may treat Participants and Awards (or portions thereof) differently under this Section 8.
(g) No action shall be taken under this Section 8 which shall cause an Award to fail to comply with Section 409A of the Code or the Treasury Regulations thereunder, to the extent applicable to such Award.
9. General Provisions Applicable to Awards.
(a) Transferability. Except as the Administrator may determine or provide in an Award Agreement or otherwise, in accordance with Applicable Laws (and subject to the applicable requirements for Shares underlying Awards to be registered on Form S-8 under the Securities Act), Awards may not be sold, assigned, transferred, pledged or otherwise encumbered, either voluntarily or by operation of law, except by will or the laws of descent and distribution, or, subject to the Administrators consent, pursuant to a DRO, and, during the life of the Participant, will be exercisable only by the Participant. Any attempted sale, assignment, transfer, pledge, encumbrance or other disposition of an Award (or right or interest therein) that is not specifically permitted in accordance with this Section 9(a) shall be null and void ab initio and shall have no force or effect. References to a Participant, to the extent relevant in this context, will include references to a Participants authorized transferee that the Administrator specifically approves under Applicable Laws.
(b) Documentation. Each Award will be evidenced in an Award Agreement, as the Administrator determines. Each Award may contain terms and conditions in addition to those set forth in the Plan.
(c) Discretion. Except as the Plan otherwise provides, each Award may be made alone or in addition or in relation to any other Award. The terms of each Award to a Participant need not be identical, and the Administrator need not treat Participants or Awards (or portions thereof) uniformly.
(d) Termination of Status. The Administrator will determine how the disability, death, retirement, authorized leave of absence or any other change or purported change in a Participants Service Provider status affects an Award and the extent to which, and the period during which, the Participant, the Participants legal representative, conservator, guardian or Designated Beneficiary may exercise rights under the Award, if applicable.
(e) Withholding. Each Participant must pay the Company, or make provision satisfactory to the Administrator for payment of, any taxes required by law to be withheld in connection with such Participants Awards by the date of the event creating the tax liability. Except as the Company otherwise determines, all such
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payments will be made in cash or by check, payable to the order of the Company. Notwithstanding the foregoing, Participants may satisfy such tax obligations (i) in whole or in part by delivery of Shares, including Shares retained from the Award creating the tax obligation, valued at their Fair Market Value, and (ii) if there is a public market for Shares at the time the tax obligations are satisfied (A) delivery (including telephonically to the extent permitted by the Company) of an irrevocable and unconditional undertaking by a broker acceptable to the Company to deliver promptly to the Company sufficient funds to satisfy the tax obligations, or (B) delivery by the Participant to the Company of a copy of irrevocable and unconditional instructions to a broker acceptable to the Company to deliver promptly to the Company cash or a check sufficient to satisfy the tax withholding; provided, however, that if the Participant makes an election under Section 83(b) of the Code with respect to Shares of Restricted Stock, then such Participant may not satisfy tax obligations relating to such Restricted Stock in accordance with this sentence. If any tax withholding obligation will be satisfied under clause (i) of the immediately preceding sentence by the Companys retention of Shares from the Award creating the tax obligation and there is a public market for Shares at the time the tax obligation is satisfied, the Company may elect to instruct any brokerage firm determined acceptable to the Company for such purpose to sell on the applicable Participants behalf some or all of the Shares retained and to remit the proceeds of the sale to the Company or its designee, and each Participants acceptance of an Award under the Plan will constitute the Participants authorization to the Company and instruction and authorization to such brokerage firm to complete the transactions described in this sentence. The Company may, to the extent Applicable Laws permit, deduct an amount sufficient to satisfy such tax obligations from any payment of any kind otherwise due to a Participant.
(f) Amendment of Award. The Administrator may amend, modify or terminate any outstanding Award, including by substituting another Award of the same or a different type, changing the exercise or settlement date, and converting an Incentive Stock Option to a Non-Qualified Stock Option. The Participants consent to such action will be required unless (i) the Administrator determines that the action, taking into account any related action, would not materially and adversely affect the Participant, or (ii) the change is permitted under Section 8 or pursuant to Section 9(i) or Section 10(f).
(g) Conditions on Delivery of Stock. The Company will not be obligated to deliver any Shares under the Plan or remove restrictions from Shares previously delivered under the Plan until (i) all Award conditions have been met or removed to the Companys satisfaction, (ii) as determined by the Company, all other legal matters regarding the issuance and delivery of such Shares have been satisfied, including any applicable securities laws and stock exchange or stock market rules and regulations, and (iii) the Participant has executed and delivered to the Company such representations or agreements as the Administrator deems necessary or appropriate to satisfy any Applicable Laws. The Companys inability to obtain authority from any regulatory body having jurisdiction, which the Administrator determines is necessary to the lawful issuance and sale of any securities, will relieve the Company of any liability for failing to issue or sell such Shares as to which such requisite authority has not been obtained.
(h) Acceleration. The Administrator may at any time provide that any Award will become immediately vested and fully or partially exercisable, free of some or all restrictions or conditions, or otherwise fully or partially realizable.
(i) Prohibition on Repricing. Subject to Section 8, the Administrator shall not, without the approval of the stockholders of the Company, (i) authorize the amendment of any outstanding Option or Stock Appreciation Right to reduce its price per share, or (ii) cancel any Option or Stock Appreciation Right in exchange for cash or another Award when the Option or Stock Appreciation Right price per share exceeds the Fair Market Value of the underlying Shares. Subject to Section 8, the Administrator shall have the authority, without the approval of the stockholders of the Company, to amend any outstanding Award to increase the price per share or to cancel and replace an Award with the grant of an Award having a price per share that is greater than or equal to the price per share of the original Award.
(j) Cash Settlement. Without limiting the generality of any other provision of the Plan, the Administrator may provide, in an Award Agreement or subsequent to the grant of an Award, in its discretion, that any Award may be settled in cash, Shares or a combination thereof.
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(k) Vesting Limitations. Notwithstanding any other provision of the Plan to the contrary, but subject to Section 8 above, with respect to Awards of Other Stock or Cash Based Awards that are denominated in Shares, Restricted Stock, Restricted Stock Units, Options and Stock Appreciation Rights issued pursuant to the Plan, no portion of such Awards shall vest prior to the first (1st) anniversary of the applicable grant date (and, for the avoidance of doubt, with respect to any such Award subject to performance-based vesting, the applicable performance period may be no shorter than one (1) year); provided, however, that, notwithstanding the foregoing, (i) the Administrator may provide that such one-year vesting restrictions may lapse or be waived upon the Participants Termination of Service due to death, retirement or disability and/or in connection with a Change in Control, and (ii) subject to Section 4(f) above, Awards of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units and Other Stock or Cash Based Awards that are denominated in Shares and cover, in the aggregate, no more than five percent (5%) of the shares subject to the Share Limit may be granted to any one or more Participants without respect to such minimum vesting requirement.
(l) Payments. Notwithstanding anything herein to the contrary, no Participant who is a Director or an executive officer of the Company within the meaning of Section 13(k) of the Exchange Act shall be permitted to make payment with respect to any Awards granted under the Plan, or continue any extension of credit with respect to such payment, with a loan from the Company or a loan arranged by the Company in violation of Section 13(k) of the Exchange Act.
10. Miscellaneous.
(a) No Right to Employment or Other Status. No person will have any claim or right to be granted an Award, and the grant of an Award will not be construed as giving a Participant the right to continued employment or any other relationship with the Company. The Company expressly reserves the right at any time to dismiss or otherwise terminate its relationship with a Participant free from any liability or claim under the Plan or any Award, except as expressly provided in an Award Agreement.
(b) No Rights as Stockholder; Certificates. Subject to the Award Agreement, no Participant or Designated Beneficiary will have any rights as a stockholder with respect to any Shares to be distributed under an Award until becoming the record holder of such Shares. Notwithstanding any other provision of the Plan, unless the Administrator otherwise determines or Applicable Laws require, the Company will not be required to deliver to any Participant certificates evidencing Shares issued in connection with any Award and instead such Shares may be recorded in the books of the Company (or, as applicable, its transfer agent or stock plan administrator). The Company may place legends on stock certificates issued under the Plan that the Administrator deems necessary or appropriate to comply with Applicable Laws.
(c) Effective Date and Term of Plan. The Plan will become effective on the date on which it is approved by the Companys stockholders (the Effective Date), provided that the Plan is adopted by the Board prior to such stockholder approval. The Plan shall be submitted for approval of the Companys stockholders within twelve (12) months after the date of the Boards initial adoption of the Plan. As of the Effective Date, no further awards may be granted under the Prior Plan; however, any awards under the Prior Plan that are outstanding as of the Effective Date shall continue to be subject to the terms and conditions of the Prior Plan. No Awards may be granted under the Plan after ten years from the earlier of (i) the date the Board adopted the Plan or (ii) the date the Companys stockholders approved the Plan, but Awards previously granted may extend beyond that date in accordance with the Plan.
(d) Amendment of Plan. The Administrator may amend, suspend or terminate the Plan at any time; provided that no amendment, other than an increase to the Share Limit, may materially and adversely affect any Award outstanding at the time of such amendment without the affected Participants consent. Awards outstanding at the time of any Plan suspension or termination will continue to be governed by the Plan and the Award Agreement, as in effect before such suspension or termination. The Board will obtain stockholder approval of any Plan amendment to the extent necessary to comply with Applicable Laws. For the avoidance of doubt, the Administrator may not, except as provided in Section 8(b), increase the limit imposed in Section 4(a) on the maximum number of Shares which may be issued under the Plan or the Individual Award Limitations imposed in Section 4(f) without approval of the Companys stockholders given within twelve (12) months before or after such action.
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(e) Provisions for Foreign Participants. The Administrator may modify Awards granted to Participants who are foreign nationals or employed outside the United States or establish subplans or procedures under the Plan to address differences in laws, rules, regulations or customs of such foreign jurisdictions with respect to tax, securities, currency, employee benefit or other matters.
(f) Section 409A.
(i) General. The Company intends that all Awards be structured to comply with, or be exempt from, Section 409A, such that no adverse tax consequences, interest, or penalties under Section 409A apply. Notwithstanding anything in the Plan or any Award Agreement to the contrary, the Administrator may, without a Participants consent, amend this Plan or Awards, adopt policies and procedures, or take any other actions (including amendments, policies, procedures and retroactive actions) as are necessary or appropriate to preserve the intended tax treatment of Awards, including any such actions intended to (A) exempt this Plan or any Award from Section 409A, or (B) comply with Section 409A, including regulations, guidance, compliance programs and other interpretative authority that may be issued after an Awards grant date. The Company makes no representations or warranties as to an Awards tax treatment under Section 409A or otherwise. The Company will have no obligation under this Section 10(f) or otherwise to avoid the taxes, penalties or interest under Section 409A with respect to any Award and will have no liability to any Participant or any other person if any Award, compensation or other benefits under the Plan are determined to constitute noncompliant, nonqualified deferred compensation subject to taxes, penalties or interest under Section 409A.
(ii) Separation from Service. If an Award constitutes nonqualified deferred compensation under Section 409A, any payment or settlement of such Award upon a termination of a Participants Service Provider relationship will, to the extent necessary to avoid taxes under Section 409A, be made only upon the Participants separation from service (within the meaning of Section 409A), whether such separation from service occurs upon or after the termination of the Participants Service Provider relationship. For purposes of this Plan or any Award Agreement relating to any such payments or benefits, references to a termination, termination of employment or like terms means a separation from service.
(iii) Payments to Specified Employees. Notwithstanding any contrary provision in the Plan or any Award Agreement, any payment(s) of nonqualified deferred compensation required to be made under an Award to a specified employee (as defined under Section 409A and as the Administrator determines) due to his or her separation from service will, to the extent necessary to avoid taxes under Section 409A(a)(2)(B)(i) of the Code, be delayed for the six-month period immediately following such separation from service (or, if earlier, until the specified employees death) and will instead be paid (as set forth in the Award Agreement) on the day immediately following such six-month period or as soon as administratively practicable thereafter (without interest). Any payments of nonqualified deferred compensation under such Award payable more than six months following the Participants separation from service will be paid at the time or times the payments are otherwise scheduled to be made.
(g) Limitations on Liability. Notwithstanding any other provisions of the Plan, no individual acting as a director, officer, other employee or agent of the Company will be liable to any Participant, former Participant, spouse or beneficiary for any claim, loss, liability, or expense incurred in connection with the Plan or any Award, and such individual will not be personally liable with respect to the Plan because of any contract or other instrument executed in his or her capacity as an Administrator, director, officer, other employee or agent of the Company.
(h) Data Privacy. As a condition for receiving any Award, each Participant explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of personal data as described in this paragraph by and among the Company and its Subsidiaries and affiliates exclusively for implementing, administering and managing the Participants participation in the Plan. The Company and its Subsidiaries and affiliates may hold certain personal information about a Participant, including the Participants name, address and telephone number; birthdate; social security, insurance number or other identification number; salary; nationality; job title(s); any Shares held in the Company or its Subsidiaries and affiliates; and Award details, to implement, manage and administer the Plan and Awards (the Data). The Company and its Subsidiaries and
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affiliates may transfer the Data amongst themselves as necessary to implement, administer and manage a Participants participation in the Plan, and the Company and its Subsidiaries and affiliates may transfer the Data to third parties assisting the Company with Plan implementation, administration and management. These recipients may be located in the Participants country, or elsewhere, and the Participants country may have different data privacy laws and protections than the recipients country. By accepting an Award, each Participant authorizes such recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, to implement, administer and manage the Participants participation in the Plan, including any required Data transfer to a broker or other third party with whom the Company or the Participant may elect to deposit any Shares. The Data related to a Participant will be held only as long as necessary to implement, administer, and manage the Participants participation in the Plan. A Participant may, at any time, view the Data that the Company holds regarding such Participant, request additional information about the storage and processing of the Data regarding such Participant, recommend any necessary corrections to the Data regarding the Participant or refuse or withdraw the consents in this Section 10(h) in writing, without cost, by contacting the local human resources representative. The Company may cancel Participants ability to participate in the Plan and, in the Administrators discretion, the Participant may forfeit any outstanding Awards if the Participant refuses or withdraws the consents in this Section 10(h). For more information on the consequences of refusing or withdrawing consent, Participants may contact their local human resources representative.
(i) Severability. If any portion of the Plan or any action taken under it is held illegal or invalid for any reason, the illegality or invalidity will not affect the remaining parts of the Plan, and the Plan will be construed and enforced as if the illegal or invalid provisions had been excluded, and the illegal or invalid action will be null and void.
(j) Governing Documents. If any contradiction occurs between the Plan and any Award Agreement or other written agreement between a Participant and the Company (or any Subsidiary) that the Administrator has approved, the Plan will govern, unless it is expressly specified in such Award Agreement or other written document that a specific provision of the Plan will not apply.
(k) Governing Law. The Plan and all Awards will be governed by and interpreted in accordance with the laws of the Commonwealth of Delaware, disregarding any states choice-of-law principles requiring the application of a jurisdictions laws other than the Commonwealth of Delaware.
(l) Claw-back Provisions. All Awards (including any proceeds, gains or other economic benefit the Participant actually or constructively receives upon receipt or exercise of any Award or the receipt or resale of any Shares underlying the Award) will be subject to any Company claw-back policy implemented to the comply with Applicable Laws, including any claw-back policy adopted to comply with the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules or regulations promulgated thereunder, as set forth in such claw-back policy or the Award Agreement.
(m) Titles and Headings. The titles and headings of the Sections in the Plan are for convenience of reference only and, if any conflict, the Plans text, rather than such titles or headings, will control.
(n) Conformity to Securities Laws. Participant acknowledges that the Plan is intended to conform to the extent necessary with Applicable Laws. Notwithstanding anything herein to the contrary, the Plan and all Awards will be administered only in conformance with Applicable Laws. To the extent Applicable Laws permit, the Plan and all Award Agreements will be deemed amended as necessary to conform to Applicable Laws.
(o) Relationship to Other Benefits. No payment under the Plan will be taken into account in determining any benefits under any pension, retirement, savings, profit sharing, group insurance, welfare or other benefit plan of the Company or any Subsidiary except as expressly provided in writing in such other plan or an agreement thereunder.
(p) Section 162(m). The Committee, in its sole discretion, may determine at the time an Award is granted or at any time thereafter whether such Award is intended to qualify as performance based
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compensation within the meaning of Section 162(m) of the Code (Performance-Based Compensation). For the avoidance of doubt, nothing herein shall require the Committee to structure any awards in a manner intended to constitute Performance-Based Compensation and the Administrator shall be free, in its sole discretion, to grant Awards that are not intended to be Performance-Based Compensation. Notwithstanding any other provision of the Plan and except as otherwise determined by the Administrator, any Award which is granted to a Participant who is or could become a covered employee within the meaning of Section 162(m) of the Code (a Covered Employee) and is intended to qualify as Performance-Based Compensation shall be subject to any additional limitations set forth in Section 162(m) of the Code or any regulations or rulings issued thereunder that are requirements for qualification as Performance-Based Compensation, and the Plan and the applicable program and Award Agreement shall be deemed amended to the extent necessary to conform to such requirements. In addition, Awards of Restricted Stock, Restricted Stock Units and Other Stock or Cash Based Awards that are intended to qualify as Performance-Based Compensation shall be subject to the following provisions, which shall control over any conflicting provision in the Plan or any Award Agreement:
(i) To the extent necessary to comply with the requirements of Section 162(m)(4)(C) of the Code, no later than ninety (90) days following the commencement of any Performance Period or any designated fiscal period or period of service (or such earlier time as may be required under Section 162(m) of the Code), the Committee shall, in writing, (A) designate the Participant to receive such Award (B) select the Performance Criteria applicable to the performance period, (C) establish the Performance Goals, and amounts of such Awards, as applicable, which may be earned for such Performance Period based on the Performance Criteria, and (D) specify the relationship between Performance Criteria and the Performance Goals and the amounts of such Awards, as applicable, to be earned by each Covered Employee for such Performance Period.
(ii) Following the completion of each Performance Period, the Committee shall certify in writing whether and the extent to which the applicable Performance Goals have been achieved for such Performance Period. In determining the amount earned under such Awards, the Committee shall have the right to reduce or eliminate (but not to increase) the amount payable at a given level of performance to take into account additional factors that the Committee may deem relevant, including the assessment of individual or corporate performance for the Performance Period.
(iii) Unless otherwise specified by the Committee at the time of grant, the Performance Criteria with respect to an Award intended to be Performance-Based Compensation payable to a Covered Employee shall be determined on the basis of Applicable Accounting Standards.
(iv) No adjustment or action described in Section 8 or in any other provision of the Plan shall be authorized to the extent that such adjustment or action would cause such Award to fail to so qualify as Performance-Based Compensation, unless the Administrator determines that the Award should not so qualify.
11. Definitions. As used in the Plan, the following words and phrases will have the following meanings:
(a) Administrator means the Board or a Committee to the extent that the Boards powers or authority under the Plan have been delegated to such Committee.
(b) Applicable Accounting Standards means the U.S. Generally Accepted Accounting Principles, International Financial Reporting Standards or other accounting principles or standards applicable to the Companys financial statements under U.S. federal securities laws.
(c) Applicable Laws means the requirements relating to the administration of equity incentive plans under U.S. federal and state securities, tax and other applicable laws, rules and regulations, the applicable rules of any stock exchange or quotation system on which the Common Stock is listed or quoted and the applicable laws and rules of any foreign country or other jurisdiction where Awards are granted.
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(d) Award means, individually or collectively, a grant under the Plan of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units or Other Stock or Cash Based Awards.
(e) Award Agreement means a written agreement evidencing an Award, which may be electronic, that contains such terms and conditions as the Administrator determines, consistent with and subject to the terms and conditions of the Plan.
(f) Board means the Board of Directors of the Company.
(g) Change in Control means:
(i) a transaction or series of transactions (other than an offering of Common Stock to the general public through a registration statement filed with the Securities and Exchange Commission) whereby any person or
related group of persons (as such terms are used in Sections 13(d) and 14(d)(2) of the Exchange Act) directly or indirectly acquires beneficial ownership (within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) of securities of the Company possessing more than fifty percent (50%) of the total combined voting power of the Companys securities outstanding immediately after such acquisition; provided, however, that the following acquisitions shall not constitute a Change in Control: (w) any acquisition by the Company or any of its Subsidiaries; (x) any acquisition by an employee benefit plan maintained by the Company or any of its Subsidiaries, (y) any acquisition which complies with subsections (iii)(A), (iii)(B) or (iii)(C); or (z) in respect of an Award held by a particular Participant, any acquisition by the Holder or any group of persons including the Participant (or any entity controlled by the Participant or any group of persons including the Participant); or
(ii) during any period of two (2) consecutive years, individuals who, at the beginning of such period, constitute the Board together with any new Director(s) (other than a Director designated by a person who shall have entered into an agreement with the Company to effect a transaction described in subsection (i) or (ii) whose election by the Board or nomination for election by the Companys stockholders was approved by a vote of at least two-thirds of the Directors then still in office who either were Directors at the beginning of the two (2)-year period or whose election or nomination for election was previously so approved, cease for any reason to constitute a majority thereof; or
(iii) the consummation by the Company (whether directly involving the Company or indirectly involving the Company through one or more intermediaries) of (x) a merger, consolidation, reorganization, or business combination, (y) a sale or other disposition of all or substantially all of the Companys assets in any single transaction or series of related transactions or (z) the acquisition of assets or stock of another entity, in each case other than a transaction:
(A) which results in the Companys voting securities outstanding immediately before the transaction continuing to represent (either by remaining outstanding or by being converted into voting securities of the Company or the person that, as a result of the transaction, controls, directly or indirectly, the Company or owns, directly or indirectly, all or substantially all of the Companys assets or otherwise succeeds to the business of the Company (the Company or such person, the Successor Entity)) directly or indirectly, at least a majority of the combined voting power of the Successor Entitys outstanding voting securities immediately after the transaction, and
(B) after which no person or group beneficially owns voting securities representing fifty percent (50%) or more of the combined voting power of the Successor Entity; provided, however, that no person or group shall be treated for purposes of this clause (B) as beneficially owning fifty percent (50%) or more of the combined voting power of the Successor Entity solely as a result of the voting power held in the Company prior to the consummation of the transaction; and
(C) after which at least a majority of the members of the board of directors (or the analogous governing body) of the Successor Entity were Board members at the time of the Boards approval of the execution of the initial agreement providing for such transaction; or
2016 SPN Proxy Statement |
A-13 |
ANNEX A |
(iv) The date which is ten (10) business days prior to the completion of a liquidation or dissolution of the Company.
Notwithstanding the foregoing, if a Change in Control would trigger a payment or settlement event for any Award that constitutes nonqualified deferred compensation, the transaction or event constituting the Change in Control must also constitute a change in control event (as defined in Treasury Regulation §1.409A-3(i)(5)) to trigger the payment or settlement event for such Award, to the extent required by Section 409A.
(h) Code means the Internal Revenue Code of 1986, as amended, and the regulations issued thereunder.
(i) Committee means one or more committees or subcommittees comprised of one or more Company directors or executive officers, to the extent Applicable Laws permit. To the extent required to comply with the provisions of Rule 16b-3, it is intended that each member of the Committee will be, at the time the Committee takes any action with respect to an Award that is subject to Rule 16b-3, a non-employee director within the meaning of Rule 16b-3; however, a Committee members failure to qualify as a non-employee director within the meaning of Rule 16b-3 will not invalidate any Award granted by the Committee that is otherwise validly granted under the Plan. To the extent an Award is intended to qualify as performance based compensation within the meaning of Code Section 162(m), it is intended that each member of the Committee will be an outside director within the meaning of Code Section 162(m).
(j) Common Stock means the common stock of the Company, par value $0.001 per share.
(k) Company means Superior Energy Services, Inc. or any successor.
(l) Consultant means any person, including any adviser, engaged by the Company or any Subsidiary to render services to such entity if the consultant or adviser: (i) renders bona fide services to the Company; (ii) renders services not in connection with the offer or sale of securities in a capital-raising transaction and does not directly or indirectly promote or maintain a market for the Companys securities; and (iii) is a natural person.
(m) Designated Beneficiary means the beneficiary or beneficiaries the Participant designates, in a manner the Administrator determines, to receive amounts due or exercise the Participants rights if the Participant dies or becomes incapacitated. Without a Participants effective designation, Designated Beneficiary will mean the Participants estate.
(n) Director means a Board member.
(o) Dividend Equivalents means a right granted to a Participant under Section 7(b) to receive the equivalent value (in cash or Shares) of dividends paid on Shares.
(p) DRO means a domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended, or the rules thereunder.
(q) Employee means any employee of the Company or its Subsidiaries.
(r) Equity Restructuring means, as the Administrator determines, a nonreciprocal transaction between the Company and its stockholders, such as a stock dividend, stock split, spin-off or recapitalization through a large, nonrecurring cash dividend, affecting the Shares (or other Company securities) or the share price of Common Stock (or other Company securities) and causing a change in the per share value of the Common Stock underlying outstanding Awards.
(s) Exchange Act means the Securities Exchange Act of 1934, as amended.
A-14 | 2016 SPN Proxy Statement |
ANNEX A |
(t) Fair Market Value means, as of any date, the value of Common Stock determined as follows: (i) if the Common Stock is listed on any established stock exchange, the closing sales price for such Common Stock as quoted on such exchange for such date, or if no sale occurred on such date, the first market trading day immediately before such date during which a sale occurred, as reported in The Wall Street Journal or another source the Administrator deems reliable; (ii) if the Common Stock is not traded on a stock exchange but is quoted on a national market or other quotation system, the closing sales price on such date, or if no sales occurred on such date, then on the date immediately before such date on which sales prices are reported, as reported in The Wall Street Journal or another source the Administrator deems reliable; or (iii) without an established market for the Common Stock, the Administrator will determine the Fair Market Value in its discretion.
(u) Greater Than 10% Stockholder means an individual then owning (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or its Subsidiary or parent corporation, as defined in Section 424(e) and (f) of the Code, respectively.
(v) Incentive Stock Option means an Option intended to qualify as an incentive stock option as defined in Section 422 of the Code.
(w) Non-Qualified Stock Option means an Option, or portion thereof, not intended or not qualifying as an Incentive Stock Option.
(x) Option means an option to purchase Shares.
(y) Other Stock or Cash Based Awards means cash awards, awards of Shares, and other awards valued wholly or partially by referring to, or are otherwise denominated in, based on or linked to, Shares or other property.
(z) Participant means a Service Provider who has been granted an Award.
(aa) Performance Criteria means mean the criteria (and adjustments) that the Administrator may select for an Award to establish performance goals for a performance period, which may include the individual criteria listed below. For Awards of Restricted Stock, Restricted Stock Units and Other Stock or Cash Based Awards that are intended to qualify as performance based compensation within the meaning of Code Section 162(m), the Performance Criteria shall be determined as follows:
(i) The Performance Criteria used to establish Performance Goals are limited to the following: (A) earnings before or after deduction for all or any portion of interest, taxes, depreciation, and amortization (EBITDA) and/or any unusual or non-recurring events, whether or not on a continuing operations or an aggregate or per share basis; (B) one or
(ii) more operating ratios or metrics; (C) free cash flow or increases in cash flow; (D) borrowing levels, leverage ratios or credit rating; (E) operating or pre-tax income; (F) return on equity, invested capital or assets, whether or not relative to cost of capital; (F) an economic value added measure; (G) stockholder return or stockholder value; (H) stock price; (I) days sales outstanding and/or collection of outstanding accounts or debts; (J) sales of particular services or products, including rentals; (K) safety, health or environmental performance; (L) expense or cost targets; (M) customer acquisition or retention; (N) compliance, acquisitions and divestitures (in whole or in part); (O) gross or operating margins; or (P) any combination of the foregoing, any of which may be measured either in absolute terms or as compared to any incremental increase or decrease or as compared to results of a peer group or to market performance indicators.
(iii) The Administrator may, in its sole discretion, but within the time prescribed by, and otherwise in compliance with, Section 162(m) of the Code, provide that one or more objectively determinable adjustments shall be made to one or more of the Performance Goals. Such adjustments may include one or more of the following: (A) items related to a change in accounting principle; (B) items relating to financing activities; (C) expenses for restructuring or productivity initiatives; (D) other non-operating items; (E) items related
2016 SPN Proxy Statement |
A-15 |
ANNEX A |
to acquisitions; (F) items attributable to the business operations of any entity acquired by the Company during the Performance Period; (G) items related to the disposal of a business or segment of a business; (H) items related to discontinued operations that do not qualify as a segment of a business under Applicable Accounting Standards; (I) items attributable to any stock dividend, stock split, combination or exchange of stock occurring during the Performance Period; (J) any other items of significant income or expense which are determined to be appropriate adjustments; (K) items relating to unusual or extraordinary corporate transactions, events or developments; (L) items related to amortization of acquired intangible assets; (M) items that are outside the scope of the Companys core, on-going business activities; (N) items related to acquired in-process research and development; (O) items relating to changes in tax laws; (P) items relating to major licensing or partnership arrangements; (Q) items relating to asset impairment charges or other non-cash charges; (R) items relating to gains or losses for litigation, arbitration and contractual settlements; (S) items attributable to expenses incurred in connection with a reduction in force or early retirement initiative; or (T) items relating to any other unusual or nonrecurring events or changes in Applicable Law, accounting principles or business conditions. For all Awards intended to qualify as Performance-Based Compensation, such determinations shall be made within the time prescribed by, and otherwise in compliance with, Section 162(m) of the Code.
(bb) Performance Goals shall mean, for a Performance Period, one or more goals established by the Administrator for the Performance Period based upon one or more Performance Criteria. Depending on the Performance Criteria used to establish such Performance Goals, Performance Goals may be expressed in terms of overall Company performance or the performance of a Subsidiary, division, operating or business unit, or an individual.
(cc) Performance Period shall mean one or more periods of time, which may be of varying and overlapping durations, as the Administrator may select, over which the attainment of one or more Performance Goals will be measured for the purpose of determining a Participants right to, and the payment of, an Award.
(dd) Plan means this 2016 Incentive Award Plan.
(ee) Prior Plan means the Companys Amended and Restated 2013 Stock Incentive Plan.
(ff) Restricted Stock means Shares awarded to a Participant under Section 5(f) subject to certain vesting conditions and other restrictions.
(gg) Restricted Stock Unit means an unfunded, unsecured right to receive, on the applicable settlement date, one Share or an amount in cash or other consideration determined by the Administrator to be of equal value as of such payment date, subject to certain vesting conditions and other restrictions.
(hh) Rule 16b-3 means Rule 16b-3 promulgated under the Exchange Act.
(ii) Section 409A means Section 409A of the Code and all regulations, guidance, compliance programs and other interpretative authority thereunder.
(jj) Securities Act means the Securities Act of 1933, as amended.
(kk) Service Provider means an Employee, Consultant or Director.
(ll) Shares means shares of Common Stock.
(mm) Stock Appreciation Right means a stock appreciation right granted under Section 5.
(nn) Subsidiary means any entity (other than the Company), whether domestic or foreign, in an unbroken chain of entities beginning with the Company if each of the entities other than the last
A-16 | 2016 SPN Proxy Statement |
ANNEX A |
entity in the unbroken chain beneficially owns, at the time of the determination, securities or interests representing at least 50% of the total combined voting power of all classes of securities or interests in one of the other entities in such chain.
(oo) Termination of Service means the date the Participant ceases to be a Service Provider.
* * *
2016 SPN Proxy Statement |
A-17 |
Superior Energy Services, Inc.
1001 Louisiana
Street, Suite 2900
Houston, TX 77002
713-654-2200
www.superiorenergy.com
0 ¢
SUPERIOR ENERGY SERVICES, INC.
1001 LOUISIANA STREET
HOUSTON, TEXAS 77002
YOUR PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR USE AT THE ANNUAL MEETING OF STOCKHOLDERS ON MAY 24, 2016.
By signing this proxy card, you revoke all prior proxies and appoint Porter Nolan, with full power of substitution, to represent you and to vote your shares on the matters shown on the reverse side of this proxy card at our annual meeting of stockholders to be held at 9:00 a.m. Central Time on Tuesday, May 24, 2016, at our headquarters located at 1001 Louisiana Street, Houston, Texas 77002 and any adjournments thereof. To obtain directions to our headquarters, please contact us at (713) 654-2200.
(CONTINUED AND TO BE SIGNED ON THE REVERSE SIDE)
¢1.1 |
14475 ¢ |
ANNUAL MEETING OF STOCKHOLDERS OF
SUPERIOR ENERGY SERVICES, INC.
May 24, 2016
SUBMITTING YOUR PROXY AND VOTING INSTRUCTIONS
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INTERNET - Access www.voteproxy.com and follow the on-screen instructions or scan the QR code with your smartphone. Have your proxy card available when you access the web page.
Submit your proxy and voting instructions online until 11:59 p.m. Central Time the day before the meeting.
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MAIL - Sign, date and mail your proxy card in the envelope provided as soon as possible.
IN PERSON - You may vote your shares in person by attending the Annual Meeting.
GO GREEN - e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy materials, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.amstock.com to enjoy online access. |
COMPANY NUMBER
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ACCOUNT NUMBER
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IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 24, 2016 The accompanying proxy statement and the 2015 annual report are available at https://materials.proxyvote.com/868157
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i Please detach along perforated line and mail this proxy card in the envelope provided IF you are not submitting your proxy and voting instructions via the Internet.i
n | 20833030000000000000 8 | 052416 |
OUR BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR PROPOSALS 1, 2, 3 AND 4.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTING INSTRUCTIONS IN BLUE OR BLACK INK AS SHOWN HERE x. |
FOR | AGAINST | ABSTAIN | ||||||||||||||
1. Election of the eight director nominees.
NOMINEES: |
2. Approval, on an advisory basis, of the compensation of our named executive officers as disclosed in the accompanying proxy statement. |
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FOR ALL NOMINEES
WITHHOLD AUTHORITY FOR ALL NOMINEES
FOR ALL EXCEPT (See instructions below) |
O Harold J. Bouillion O David D. Dunlap O James M. Funk O Terence E. Hall O Peter D. Kinnear O Janiece M. Longoria O Michael M. McShane O W. Matt Ralls |
3. Adoption of the 2016 Incentive Award Plan which provides for the grant of equity-based incentives to our employees and directors, as more fully disclosed in the accompanying proxy statement.
4. Ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2016.
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IF YOU WISH YOUR SHARES TO BE VOTED ON ALL MATTERS AS SUPERIORS BOARD OF DIRECTORS RECOMMENDS, OR IF YOU WISH YOUR SHARES TO BE VOTED AS YOU SPECIFY ON A MATTER OR ALL MATTERS, PLEASE MARK THE APPROPRIATE BOXES ON THIS VOTING INSTRUCTION CARD, SIGN, DATE AND RETURN IT IN THE ENCLOSED ENVELOPE AS SOON AS POSSIBLE.
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INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark FOR ALL EXCEPT and fill in the circle next to each nominee you wish to withhold, as shown here: l |
THE STOCKHOLDER OF RECORD WILL VOTE YOUR SHARES AS YOU SPECIFIED ON THIS VOTING INSTRUCTION CARD; HOWEVER, IF NO VOTING INSTRUCTIONS ARE INDICATED ON THIS VOTING INSTRUCTION CARD, THE STOCKHOLDER OF RECORD CAN ONLY VOTE YOUR SHARES ON PROPOSAL 4 (RATIFICATION OF AUDITORS) WITHOUT YOUR INSTRUCTIONS. | |||||||||||||||
PLEASE MARK, SIGN, DATE AND RETURN THIS VOTING INSTRUCTION CARD PROMPTLY USING THE ENCLOSED ENVELOPE. | ||||||||||||||||
To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method. | ¨ |
Signature of Stockholder |
Date: | Signature of Stockholder | Date: |
n | Note: | Please sign exactly as your name or names appear on this proxy card. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. | n |
ANNUAL MEETING OF STOCKHOLDERS OF
SUPERIOR ENERGY SERVICES, INC.
May 24, 2016
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS
FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 24, 2016
The accompanying proxy statement and the 2015 annual report are available
at https://materials.proxyvote.com/868157
Please mark, sign, date,
and return your voting
instruction card in the
envelope provided as soon
as possible.
i Please detach along perforated line and mail this voting instruction card in the envelope provided. i
n | 20833030000000000000 8 | 052416 |
SUPERIORS BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE FOR PROPOSALS 1, 2, 3 AND 4.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTING INSTRUCTIONS IN BLUE OR BLACK INK AS SHOWN HERE x. |
FOR | AGAINST | ABSTAIN | ||||||||||||||
1. Election of the eight director nominees
NOMINEES: |
2. Approval, on an advisory basis, of the compensation of our named executive officers as disclosed in the accompanying proxy statement. |
¨ | ¨ | ¨ | ||||||||||||
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¨ |
FOR ALL NOMINEES
WITHHOLD AUTHORITY FOR ALL NOMINEES
FOR ALL EXCEPT (See instructions below) |
O Harold J. Bouillion O David D. Dunlap O James M. Funk O Terence E. Hall O Peter D. Kinnear O Janiece M. Longoria O Michael M. McShane O W. Matt Ralls |
3. Adoption of the 2016 Incentive Award Plan which provides for the grant of equity-based incentives to our employees and directors, as more fully disclosed in the accompanying proxy statement.
4. Ratification of the appointment of KPMG LLP as our independent registered public accounting firm for 2016.
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¨
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IF YOU WISH YOUR SHARES TO BE VOTED ON ALL MATTERS AS SUPERIORS BOARD OF DIRECTORS RECOMMENDS, OR IF YOU WISH YOUR SHARES TO BE VOTED AS YOU SPECIFY ON A MATTER OR ALL MATTERS, PLEASE MARK THE APPROPRIATE BOXES ON THIS VOTING INSTRUCTION CARD, SIGN, DATE AND RETURN IT IN THE ENCLOSED ENVELOPE AS SOON AS POSSIBLE.
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INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark FOR ALL EXCEPT and fill in the circle next to each nominee you wish to withhold, as shown here: l |
THE STOCKHOLDER OF RECORD WILL VOTE YOUR SHARES AS YOU SPECIFIED ON THIS VOTING INSTRUCTION CARD; HOWEVER, IF NO VOTING INSTRUCTIONS ARE INDICATED ON THIS VOTING INSTRUCTION CARD, THE STOCKHOLDER OF RECORD CAN ONLY VOTE YOUR SHARES ON PROPOSAL 4 (RATIFICATION OF AUDITORS) WITHOUT YOUR INSTRUCTIONS. | |||||||||||||||
PLEASE MARK, SIGN, DATE AND RETURN THIS VOTING INSTRUCTION CARD PROMPTLY USING THE ENCLOSED ENVELOPE. | ||||||||||||||||
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Signature of Beneficial Owner |
Date: | Signature of Beneficial Owner | Date: |
n | Note: | Please sign exactly as your name or names appear on this voting instruction card. When shares are owned jointly, each owner should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. | n |
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